Chapter 5 — Organising

Definition: Organising is a managerial function by which work is divided into tasks, grouped into departments, authority and responsibility are assigned, and relationships are established to enable people to cooperate effectively to achieve organisational objectives.

Two senses: (a) Organising (process) – the ongoing managerial activity of establishing structures, dividing work and assigning responsibilities. (b) Organisation (structure) – the formal arrangement or pattern of relationships among people and resources.

Key features: It is a continuous and dynamic managerial function; involves division of work, departmentalisation, delegation of authority, assignment of responsibility, and establishment of lines of reporting and coordination.

Elements / components: identification and division of work, departmentalisation (grouping similar activities), assignment of duties, delegation (granting authority), establishing reporting relationships (chain of command) and ensuring coordination between units.

Process/steps of organising: 1) Identify objectives and activities to be performed. 2) Group related activities into departments. 3) Assign duties and allocate resources. 4) Delegate authority and assign responsibility. 5) Establish reporting relationships and communication channels. 6) Fix controls and provide facilities. 7) Review and adapt structure as environment changes.

Principles to follow: unity of command, unity of direction, scalar chain (clear line of authority), span of control (appropriate number of subordinates per manager), parity of authority and responsibility, delegation, balance and flexibility.

Importance: clarifies roles and responsibilities, promotes specialisation and efficiency, avoids duplication of efforts, helps in growth and expansion, facilitates coordination and control, improves communication and decision-making.

Distinction (brief): Organising (process) creates the organisation (structure). The process is managerial and continuous; the structure is the outcome — a formal framework of relationships.

Definition: Organising is the process of identifying and grouping the activities to be performed, assigning duties, delegating authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.

Core elements of organising:

• Division of work (specialisation)
• Departmentalisation (grouping similar activities)
• Assignment of duties and authority
• Establishing relationships and coordination
• Provision for adjustment and growth

Importance of organising:

• Clarity in working relations: Organising defines who reports to whom, reducing confusion and overlap. Example: a clear org chart at a school shows principal → head of departments → teachers.
• Efficient use of resources: Resources (human, physical, financial) are allocated according to needs, minimising waste. Example: inventory-control department prevents overstocking in retail chains.
• Specialisation and division of work: Breaking tasks into smaller jobs increases skill and speed. Example: assembly-line workers each perform a specific task, speeding up production.
• Defines authority and responsibility: Employees know their duties and who can give instructions, which improves accountability and decision-making.
• Improves co-ordination: Departments and individuals work together toward common objectives through clear channels and procedures. Example: marketing and production coordinate launch schedules to meet demand.
• Facilitates managerial control: With organised structures, managers can monitor performance and take corrective action easily.
• Encourages growth and diversification: A good organisational structure can be expanded or adjusted when the business grows or diversifies into new lines.
• Promotes initiative and leadership development: By delegating authority, employees get opportunities to take decisions and develop managerial skills.
• Adaptation to change: Proper organising with flexible departments and clear communication helps the firm respond to market or technological changes quickly.

Need for organising (why it is required):

• To achieve common objectives in an orderly manner.
• To ensure effective utilisation of resources and reduce costs.
• To minimise duplication of efforts and reduce conflicts.
• To establish clear job roles, responsibilities and accountability.
• To create an adequate chain of command for communication and decision-making.
• To facilitate delegation which improves managerial efficiency.
• To prepare the enterprise for expansion by creating a scalable structure.

Practical outcome: Organising turns plans into action by arranging the human and material resources needed. Well-organised firms are more efficient, flexible, and better able to meet customer needs.

Organising is a managerial function that establishes structure of roles, relationships and authority to achieve organisational objectives efficiently. The Principles of Organising are general guidelines to design an effective organisational structure and to ensure smooth coordination of activities.

Key principles (brief description and purpose):

• Specialisation (Division of Work): Break down tasks into smaller parts so people can develop expertise. Purpose: higher efficiency and better quality.
• Departmentation (Grouping of Activities): Group related jobs into units (functions, products, regions, customers). Purpose: clarity, coordination and scale.
• Authority and Responsibility: Authority is the right to give orders; responsibility is the obligation to perform. Principle: authority and responsibility should be balanced so people can be held accountable.
• Delegation of Authority: Assigning work along with the necessary authority and responsibility to subordinates. Purpose: faster decisions, manager focus on planning.
• Unity of Command: Each person should receive orders from only one superior to avoid confusion and conflict.
• Unity of Direction: Activities having the same objective should be placed under one manager and one plan. Purpose: coordinated action towards common goals.
• Scalar Chain (Chain of Command): A clear, formal line of authority from top to bottom. Purpose: clarity in reporting and decision flow; use of 'gang plank' for quicker lateral communication if needed.
• Span of Control (Span of Management): Number of subordinates a manager can effectively supervise. Wider spans suit simpler, standardized tasks; narrower spans suit complex, variable work.
• Order (Principle of Order): Right person and right material at right place and time. Purpose: systematic arrangement and fewer delays.
• Equity: Fairness in treatment of employees to inspire loyalty and commitment.
• Stability of Tenure: Reasonable employee security to reduce turnover and retain skills.
• Initiative: Encourage subordinates to take thoughtful initiatives. Purpose: innovation and commitment.
• Esprit de Corps (Team Spirit): Promote unity and harmony among employees to improve morale and performance.
• Centralisation vs Decentralisation: Extent to which decision-making authority is concentrated at top levels (centralisation) or dispersed among lower levels (decentralisation). Choose the mix depending on environment, size and managerial capability.
• Coordination: Harmonising activities and efforts across different units. It is both a principle and the outcome of good organising.

Why these principles matter: They help managers design structures that reduce confusion, avoid overlapping duties, speed up decision-making, ensure accountability, motivate employees and adapt to change.

Application tips: Match span of control to task complexity; use departmentation that fits strategy (product for diversified firms, functional for single-line firms); delegate but retain accountability; establish clear reporting lines and procedures for lateral communication; balance centralisation and decentralisation according to control needs and environmental uncertainty.

Organising is the management function that establishes an intentional structure of roles, responsibilities and relationships so organisational objectives can be achieved efficiently. The process of organising converts plans into action by defining who does what, how work is grouped, and how authority and responsibility flow.

1. Identify and divide work into tasks

   Start by studying the plan and determining the activities needed to achieve objectives. Break the total work into manageable tasks (work analysis). This clarifies what must be done before grouping or assigning.

2. Group activities into departments (Departmentalisation)

   Cluster related tasks into departments or units based on function, product, region, process, customer or matrix combinations. Departmentalisation creates specialization and coordination within similar activities.

3. Assign duties and delegate authority

   Allocate specific tasks to individuals or posts. Provide the necessary authority to perform those duties (delegation). Delegation involves giving responsibility plus commensurate authority and ensuring accountability.

4. Allocate resources and responsibilities

   Provide people, budget, equipment and time required for each role. Clarify who is responsible and what resources they control so they can complete assigned tasks.

5. Establish reporting relationships (Span of control & Chain of command)

   Decide who reports to whom. Define a clear chain of command (scalar chain) and an appropriate span of control (how many subordinates a manager supervises) to ensure supervision and communication are effective.

6. Coordinate activities

   Create mechanisms (meetings, committees, reporting systems, liaison roles) to integrate and align the departments and individuals so that interdependent tasks are synchronized.

7. Establish policies, procedures and structure

   Document standard operating procedures, rules and an organisational chart that shows formal relationships and authority lines. This institutionalises behaviour and makes the structure transparent.

8. Review and adjust

   Continuously monitor performance and environment. Revise the structure, authority, or processes where needed to correct inefficiencies or respond to change.

Key considerations and common principles: unity of command (each person reports to one superior), unity of direction (activities with same objective under one manager), span of control (wider spans suit routine tasks; narrow spans suit complex tasks), delegation, and departmental balance between specialization and coordination.

Definition
Departmentation (or departmentalisation) is the process of grouping activities and people into manageable units (departments) so that an organisation’s objectives can be achieved efficiently. It is a key step in organising that creates a formal structure, defines roles and responsibilities, and establishes channels of coordination and control.

Objectives

• Group similar activities for specialization and expertise.
• Clarify authority and responsibility relationships.
• Improve coordination and control within units.
• Facilitate use of resources and managerial supervision.
• Help define career paths and training needs.

Key features / principles

• Division of work: activities are divided into logical groups.
• Unity of command within each department (one immediate superior).
• Functional specialisation: each department focuses on related tasks.
• Span of control: number of subordinates a manager can effectively supervise.
• Coordination mechanisms are needed to integrate departments.

Common bases (types) of departmentation

• Functional – grouping by functions (e.g., Finance, Marketing, Production, HR). Best for small/medium firms with homogeneous products.
• Product – each major product or product line has its own department (e.g., Cars division, Trucks division). Useful for diversified product lines.
• Geographical / Territorial – departments by region or territory (e.g., North Zone, South Zone). Useful for firms operating across wide areas.
• Customer – grouped by customer categories (e.g., Retail customers, Corporate clients, Government). Focuses on customer needs.
• Process / Equipment – grouping by production processes or equipment used (e.g., Cutting, Welding, Assembly).
• Project – temporary departments formed for projects (e.g., construction projects, IT implementations).
• Matrix – dual-reporting structure combining functional and product (or project) lines. Encourages flexibility but requires strong coordination.
• Time-based – shifts or time slots as departments (e.g., Morning, Evening, Night operations).

Advantages

• Specialization improves efficiency and expertise.
• Clear responsibility and authority lines reduce confusion.
• Better supervision and control within manageable units.
• Easier performance measurement and accountability by department.
• Flexibility to grow by adding new departments (e.g., new product lines or regions).

Limitations / disadvantages

• Risk of departmental silos and poor inter-departmental coordination.
• Duplication of resources (e.g., multiple marketing units) can increase costs.
• Potential conflicts of interest between departments (e.g., sales vs. production).
• Matrix structures can create confusion due to dual authority.

Factors affecting choice of departmentation

• Size and scale of the organisation.
• Nature and diversity of products/services.
• Geographical spread and market characteristics.
• Managerial capability and span of control.
• Need for flexibility and speed of decision-making.
• Cost considerations and resource availability.

Steps in creating departments

1. Analyse and group activities by logical similarity (function, product, process, etc.).
2. Decide department boundaries and size considering span of control.
3. Assign authority and responsibility for each department.
4. Establish coordination mechanisms between departments (liaison, committees, integrators).
5. Review and adjust structure periodically as needs change.

Coordination methods: cross-functional teams, liaison officers, committees, standard operating procedures, information systems, and matrix arrangements.

Practical tip for students: In exam answers, define departmentation, list main types (at least 4–5), give advantages and limitations, and illustrate using a short example relevant to the question.

Definition: Delegation of authority is the process by which a manager assigns responsibility and grants authority to a subordinate to carry out specific activities, while retaining ultimate accountability.

Core elements:

• Authority – the right to take decisions, use resources and give orders.
• Responsibility – the obligation to perform assigned tasks.
• Accountability – the requirement to answer for the outcomes; it flows upward and cannot be delegated.

Process (Stepwise):

1. Identify and define the task to be delegated.
2. Assign responsibility for the task to an appropriate subordinate.
3. Grant the necessary authority to carry out the task.
4. Establish accountability and set performance standards.
5. Provide guidance and resources; monitor and give feedback.

Principles of effective delegation:

• Principle of clarity: Duties, authority and expected results must be clearly defined.
• Parity of authority and responsibility: Authority granted should match the assigned responsibility.
• Scalar principle: Delegation should respect the chain of command.
• Unity of command: A subordinate should report to only one superior for a given task.
• Accountability: Delegation does not remove the delegator s overall accountability.
• Exception principle: Managers should intervene only when performance deviates materially from standards.

Advantages: Faster decision making, managerial time freed for planning, employee motivation and development, better use of expertise, flexibility and quicker response to issues.

Disadvantages / Risks: Poor delegation can cause confusion, loss of control, inconsistent decisions, lower morale if responsibility is dumped without authority, or mistakes if subordinates are not trained.

Barriers to delegation: fear of loss of control, lack of trust in subordinates, inadequate training, unclear job descriptions, poor communication, managers habitually doing routine work themselves.

Ways to overcome barriers: select and train right people, give clear instructions, provide resources, allow autonomy, ensure two-way communication and follow-up with feedback.

Delegation vs Decentralisation: Delegation is a unitary process where authority is passed downward; decentralisation is the systematic effort to disperse decision making across the organisation. Delegation is a building block of decentralisation. Decentralisation is measured organisation-wide; delegation is manager to subordinate.

Practical tips for managers: delegate whole tasks not fragments, match tasks to competence, state expected outcomes, set limits of authority, schedule review points, coach rather than re-do the job.

Quick reminder: Authority flows downward, responsibility flows downward, accountability flows upward.

Definition: Decentralisation is the systematic delegation of authority to lower levels of management so that decision-making is dispersed throughout the organisation rather than being concentrated at the top.

Key points / Characteristics:

• It is a process and a structural feature: authority is permanently spread across levels.
• Delegation is a tool; decentralisation is the broader outcome or policy.
• Authority and responsibility are distributed to managers at various levels.
• It is a continuum from centralisation (little decentralisation) to full decentralisation.

Decentralisation vs Delegation (brief):

• Delegation is a one-to-one process (superior to subordinate) of transferring authority. Decentralisation refers to widespread delegation across the organisation.
• Delegation can exist without full decentralisation; decentralisation implies systematic, long-term dispersal.

Advantages:

• Faster decision-making and better responsiveness to local conditions.
• Improved motivation and development of managers through autonomy.
• Relieves top management, allowing focus on strategic issues.
• Better use of local knowledge and customer orientation.
• Encourages innovation and entrepreneurship within units.

Disadvantages / Risks:

• Potential loss of control and inconsistent policies across units.
• Higher risk of poor decisions if subordinates lack competence.
• Difficulty in coordination and standardisation; duplication of efforts.
• May increase administrative costs for local units.

Factors affecting the extent of decentralisation:

• Size and complexity of the organisation.
• Competence, experience and loyalty of subordinates.
• Top management philosophy and trust in subordinates.
• Nature of business and need for uniformity or local responsiveness.
• Cost and time required for centralised vs decentralised decisions.
• Environmental uncertainty and speed of change.

Principles / Good practices for implementing decentralisation:

• Clearly define authority and responsibility limits.
• Ensure adequate training and selection of managers.
• Provide required resources and information systems.
• Set measurable performance standards and controls.
• Maintain coordination through policy guidelines and reporting.

When to decentralise: When local responsiveness, speed, managerial development and use of local information outweigh the need for strict central control or uniformity.

Summary: Decentralisation improves responsiveness and managerial initiative but must be balanced with control, coordination and adequate training to avoid inconsistency and loss of strategic direction.

Overview
Authority, responsibility and accountability are three interlinked concepts in the process of organising. They define who can make decisions (authority), who must do the work (responsibility), and who must answer for results (accountability).

Definitions

• Authority: The formal right given to a person to give orders, make decisions and allocate resources to achieve organisational objectives. It flows downward in the hierarchy and is backed by the organisation.
• Responsibility: The obligation of an individual to perform assigned tasks and duties to the expected standard. It flows upward — from the subordinate who performs the task to the manager who assigned it.
• Accountability: The obligation to report and justify the results of delegated work and to face consequences for performance or non-performance. It remains with the person who delegates work (often the superior) or the person ultimately responsible, depending on organisational rules.

Characteristics and principles

• Unity (Principle of Parity): Authority and responsibility should be coextensive — the person given responsibility should have corresponding authority.
• Delegation: Authority can be delegated but not accountability. The process of delegation involves assignment of duties, granting of authority and creating accountability.
• Scalar Chain: Authority follows the chain of command; clear lines reduce confusion.
• Responsibility can be shared: Multiple people can share responsibility but accountability for results normally rests with a single person (or clearly defined group).

Delegation: process and elements

1. Assignment/Delegation of duty: The superior assigns specific tasks or objectives.
2. Granting authority: The superior gives the subordinate the right to make decisions and use resources to accomplish the task.
3. Creation of accountability: The subordinate is expected to report results and is answerable for performance.

Types of authority

• Line authority: Direct chain of command (e.g., manager to supervisor).
• Staff authority: Advisory authority (e.g., HR, legal) — recommends but does not command in other units.
• Functional authority: Limited authority over specific activities across departments (e.g., quality-control manager can instruct on quality matters).

Relationship & key points

• Authority enables responsibility — a person cannot be expected to perform tasks without the power to do so.
• Accountability ensures that delegated authority is used responsibly; it creates answerability for outcomes.
• Effective delegation balances authority and responsibility and specifies accountability clearly.

Importance

• Clarifies who does what (reduces conflict and duplication).
• Improves managerial efficiency through delegation.
• Facilitates coordination and faster decision-making.
• Strengthens control and performance measurement through accountability.

Common problems & remedies

• Mismatch of authority and responsibility: Remedy — follow parity principle; give adequate authority to meet responsibility.
• Reluctance to delegate: Remedy — train managers in delegation, set clear controls and feedback systems.
• Ambiguous accountability: Remedy — define roles and reporting relationships clearly.

How CBSE exams may ask

• Define each term and explain their interrelationship.
• Give examples of delegation and explain why authority and responsibility must be equal.
• State features and principles of delegation, and methods to make delegation effective.

Span of Control — Meaning

Span of control (or span of management) is the number of subordinates that a manager can effectively supervise and control. It determines how many employees report directly to a single manager.

Types

• Wide span: One manager supervises many subordinates. Fewer hierarchical levels, greater delegation and autonomy.
• Narrow span: One manager supervises few subordinates. More hierarchical levels, closer supervision and tighter control.

Factors Affecting Span of Control

• Nature of work: Routine, simple tasks allow a wider span; complex or specialized work requires a narrower span.
• Manager’s competence: Skilled, experienced managers can handle a wider span.
• Subordinates’ ability: Well-trained, motivated employees reduce supervisory needs and permit a wider span.
• Availability of systems and technology: Good information systems, reporting tools and standard procedures increase the feasible span.
• Geographical dispersion: If subordinates are spread out, span tends to be narrower.
• Nature of organisation: Small/flexible organisations often have wide spans; large/formal organisations may have narrow spans.
• Degree of centralisation: High decentralisation supports wider spans; centralised decision-making supports narrower spans.

Advantages and Disadvantages

Wide span — Advantages

• Lower managerial costs (fewer managers).
• Faster decision-making and greater flexibility.
• Greater employee autonomy and responsibility.

Wide span — Disadvantages

• Manager may be overburdened.
• Less close supervision; potential for communication gaps.

Narrow span — Advantages

• Closer supervision and control; easier coordination.
• Better training and guidance for subordinates.

Narrow span — Disadvantages

• Higher managerial costs (more levels).
• Slower decision-making and possible over-control.

Practical implications

Span of control affects organisational structure: a wider span tends to produce flatter structures (fewer levels), while a narrower span produces taller structures (more hierarchical layers). The choice of span should balance cost, control needs, and effectiveness.

Definition: Organisational structure (or design) is the formal system of tasks, reporting relationships and communication channels that link people into a working unit to achieve organisational goals. It shows how jobs are grouped, who reports to whom and how decisions are made.

Purpose & Importance: A good structure clarifies roles and responsibilities, improves coordination, enables effective decision-making, avoids duplication, and supports strategy implementation and growth.

Key Elements:

• Division of Work (specialisation) — grouping tasks into jobs.
• Departmentalisation — grouping jobs into units (by function, product, region, customer, process).
• Chain of Command (scalar chain) — the line of authority from top to bottom.
• Span of Control — number of subordinates a manager supervises.
• Unity of Command — each employee should report to only one superior.
• Authority and Responsibility — right to give orders and expectation to perform tasks; these should be balanced.
• Centralisation vs Decentralisation — where decision-making authority resides.
• Formalisation — degree to which jobs are standardized and rules/procedures used.

Common Types of Organisational Structure (with brief pros & cons):

• Functional Structure: Departments by function (e.g., marketing, finance). Pros: efficiency, expertise development. Cons: poor inter-department coordination, slower decision-making for cross-functional tasks.
• Divisional Structure: Units by product, geography or customer. Pros: product focus, accountability, faster decisions. Cons: duplication of resources, higher cost.
• Matrix Structure: Dual reporting (functional + project/product managers). Pros: efficient use of specialists, flexible. Cons: complexity, potential conflict from dual authority.
• Line Structure: Simple, direct chain (suitable for small organisations). Pros: clear authority. Cons: overburdened managers as organisation grows.
• Line & Staff Structure: Line managers (authority) supported by staff specialists (advisory). Pros: expert advice without losing command. Cons: possible conflicts between line and staff.
• Committee/Team Structure: Decisions made by groups/committees. Pros: democratic, better decisions. Cons: slow, diffusion of responsibility.
• Flat vs Tall: Flat structures have few levels, wide span of control (suitable for startups). Tall structures have many levels, narrow spans (common in large bureaucracies).

Principles of Good Organisational Design:

• Fit with strategy — design should support the organisation’s strategic objectives.
• Clarity — roles, responsibilities and reporting lines must be clear.
• Balance of centralisation and decentralisation — depending on environment and strategy.
• Coordination mechanisms — use committees, liaison roles, integrators or cross-functional teams where needed.
• Flexibility — structure should adapt to change (technology, markets).
• Economy — avoid unnecessary layers and duplication.

Factors Influencing Choice of Structure: size of organisation, organisational goals/strategy, environment (stable vs turbulent), technology and routine of tasks, workforce skills and culture, geographical dispersion.

Design Process (basic steps): Identify missions and tasks → Group tasks into jobs → Group jobs into departments → Establish reporting relationships → Distribute authority → Create coordination and control mechanisms → Review and adjust.

Common Problems & Remedies: Poor coordination — introduce cross-functional teams or integrators. Excessive centralisation — delegate decision rights. Over-bureaucracy — reduce layers and empower employees. Ambiguous roles — clarify job descriptions and reporting lines.

Summary: Organisational structure is the backbone that aligns people and processes to strategy. The best design balances clarity and flexibility, supports coordination, and matches the organisation’s size, technology and environment.

Introduction: Organisational structure defines how tasks, authority and responsibility are formally arranged and coordinated in an organisation. Choice of structure depends on size, strategy, environment and technology.

Main types:

• Functional Structure
  • Definition: Employees are grouped by functions (e.g., production, marketing, finance, HR) under functional heads who report to top management.
  • When used: Stable environment, relatively small to medium or large firms wanting specialization and efficiency.
  • Advantages: Specialisation, economies of scale, clear career paths, centralised control.
  • Disadvantages: Poor inter-department coordination, narrow outlook, slow decision-making for cross-functional issues.
• Divisional Structure
  • Definition: Organisation is divided into semi-autonomous units (divisions) by product, geography (territory), customer or process. Each division has its own functional departments.
  • When used: Large, diversified companies operating in different markets or products.
  • Advantages: Focus on product/market, faster decisions, accountability, easier performance measurement.
  • Disadvantages: Duplication of resources, higher costs, potential for inter-division rivalry.
• Line Organisation
  • Definition: Simple, clear chain of command — direct vertical links from top to bottom; every subordinate has one boss.
  • When used: Small organisations or military-type organisations requiring clear authority.
  • Advantages: Simplicity, quick decision-making, clear responsibility.
  • Disadvantages: Overloaded managers, limited specialization, unsuited for complex operations.
• Line and Staff Organisation
  • Definition: Combines line (direct authority) with staff (advisory specialists) who support line managers without direct authority over subordinates.
  • When used: Medium to large organisations needing specialist advice (e.g., legal, HR, R&D).
  • Advantages: Specialist support, better planning and control, retains clear command.
  • Disadvantages: Possible conflicts between line and staff, costs of staff departments.
• Matrix Organisation
  • Definition: Dual command structure where employees report to both functional managers and project/product managers. Organised along two dimensions (e.g., function and project).
  • When used: Knowledge-intensive, project-driven firms (R&D, IT, aerospace) requiring flexibility and resource sharing.
  • Advantages: Efficient resource use across projects, better communication, flexible, encourages teamwork.
  • Disadvantages: Confusion from dual authority, potential power struggles, complex reporting.
• Committee Organisation
  • Definition: Authority vested in a group of persons (committee) rather than a single manager; decisions are collective.
  • When used: Policy-making bodies, cross-functional issues requiring consensus (e.g., board committees, academic senates).
  • Advantages: Collective wisdom, better acceptance of decisions.
  • Disadvantages: Slow decision-making, risk of compromise solutions, diffusion of responsibility.
• Project Organisation
  • Definition: Formed for a specific task or project; team is built with required specialists and disbanded when project ends.
  • When used: Construction, engineering, film-making, IT projects.
  • Advantages: Clear focus on objectives, flexibility, accountability for project outcomes.
  • Disadvantages: Temporary nature can cause uncertainty for staff, resource duplication.
• Network / Virtual Organisation (Modern variant)
  • Definition: Core organisation outsources major functions to external partners; relies on networks and technology to coordinate.
  • When used: Firms seeking agility and low fixed costs (platform companies, design firms outsourcing manufacturing).
  • Advantages: Flexibility, access to specialist capabilities, lower capital requirement.
  • Disadvantages: Dependency on partners, control & coordination challenges, confidentiality risks.

Choosing a structure: Consider size, strategy, environment, technology, degree of centralisation, need for specialization, and need for flexibility. No one structure is best; many organisations use hybrids (e.g., divisional units with functional departments, or matrix overlay on a functional base).

Formal Organisation

Definition: A formal organisation is a deliberately planned structure of roles, responsibilities, authority and communication designed to achieve stated organisational goals. It is created by management and documented in charts, job descriptions, rules and procedures.

• Key features: Clearly defined roles and hierarchy; written rules and procedures; official communication channels; authority flows through chain of command; emphasis on organisational objectives.
• Advantages: Clarity of duties, predictability, easier coordination, accountability, efficient resource allocation, scalability.
• Limitations: Can be rigid, slow to adapt, may stifle creativity and informal cooperation.

Informal Organisation

Definition: An informal organisation is the network of personal and social relations that arise spontaneously among employees based on common interests, friendships, proximity and social needs. It is not officially prescribed but exists alongside the formal structure.

• Key features: Emerges naturally, flexible, based on interpersonal relationships, communicates through grapevine, serves social and psychological needs.
• Advantages: Faster communication, morale and cohesion, social support, transfer of unofficial information, can aid innovation and problem solving.
• Limitations: Information may be inaccurate (rumours), can resist formal policies, create cliques or factions, may undermine authority if misaligned with organisational goals.

Relationship and Interaction

Formal and informal organisations coexist and influence each other. The informal organisation fills gaps in the formal structure (e.g., faster problem solving, emotional support). Management should recognise and channel informal networks positively—using opinion leaders to implement change, reducing harmful rumours by improving formal communication, and aligning informal group goals with organisational objectives.

How to manage the balance

• Encourage positive informal networks (team-building, open communication).
• Use formal channels to clarify roles and reduce harmful rumours.
• Identify informal leaders (opinion makers) and involve them in change initiatives.
• Document essential procedures, but allow flexibility for creative solutions.

Summary

Formal organisation provides the official framework for achieving organisational objectives; informal organisation supplies the human, social fabric that can accelerate or obstruct those objectives. Effective management recognises, monitors and harmonises both.

Definition — Organisational Hierarchy
Organisational hierarchy is the arrangement of positions and levels of authority in an organisation showing superior-subordinate relationships from top management down to operational staff. It defines who reports to whom, lines of command, levels of responsibility and authority.

Definition — Organisational Chart
An organisational chart (org chart) is a graphic representation of the organisational structure. It depicts positions (usually as boxes) and the formal reporting relationships (lines) among them. It makes the hierarchy visible and easy to understand.

Key elements & concepts

• Chain of command (Scalar chain): The continuous line of authority from top to bottom.
• Unity of command: Each subordinate should have only one direct superior to avoid confusion.
• Span of control: Number of subordinates who report directly to a manager.
• Levels of management: Layers such as top, middle and lower management; the number of levels defines the height of the hierarchy (tall vs flat).
• Formal vs. informal relationships: Org charts show formal reporting lines; informal relationships (networks) are not usually shown.
• Solid lines vs dotted lines: Solid line = direct authority; dotted line = advisory or secondary reporting.

Types of organisational charts

• Vertical (Hierarchical) chart: Top-down, common in traditional organisations.
• Horizontal (Flat) chart: Fewer levels, wider spans — used in small/start-up firms or teams.
• Functional chart: Departments by function (e.g., HR, Finance) reporting to top management.
• Divisional chart: Organisation split by product, geography or customer; each division has its own functional departments.
• Matrix chart: Dual reporting (functional manager + project manager); shows cross-functional teams.

How hierarchy and org chart relate
The hierarchy is the conceptual framework of authority and levels; the org chart is its visual map. The chart helps communicate the hierarchy clearly to employees, stakeholders and outsiders.

Advantages

• Clarifies roles, reporting lines and responsibility.
• Helps coordination and control by showing authority relationships.
• Assists in workforce planning, delegation and identifying gaps or overlaps.
• Useful for induction, performance appraisal and succession planning.

Limitations

• May hide informal communication and networks important for real work.
• Can be rigid — discourage initiative if overly hierarchical.
• Complex organisations may produce confusing, large charts.

Practical tips for drawing an org chart

• Start with the highest authority (CEO/Principal) at the top.
• Place direct reports below, connected with solid lines for authority.
• Use dotted lines to show advisory/secondary reporting.
• Group similar functions and use consistent box sizes and spacing.
• Use color coding to show departments, divisions or permanent vs temporary roles.
• Keep it readable — consider multiple charts (top-level + detailed unit charts) for large organisations.

Definition: Coordination is the process of integrating the activities of different departments and individuals so that they work together harmoniously towards common organizational objectives.

Key points:

• Continuous process: Coordination is not one-time; it must be maintained while the organization functions.
• Pervasive and integrative: It applies to all levels and departments and brings diverse activities into a unified whole.
• Goal-oriented: Coordination directs efforts toward shared objectives and avoids counter-productive activity.
• Dynamic and reciprocal: It involves mutual adjustments among departments; feedback and follow-up are essential.

Importance: Effective coordination ensures unity of effort, reduces duplication of work, improves resource utilisation, speeds up decision-making, resolves conflicts, enhances flexibility, and raises overall efficiency and customer satisfaction.

Process/Steps to achieve coordination:

1. Set common goals and clarify objectives.
2. Define and assign responsibilities and authority to avoid overlaps.
3. Establish effective communication channels for timely information flow.
4. Compare and balance departmental plans and schedules.
5. Take follow-up actions, provide feedback and make mutual adjustments.

Techniques/Devices used to secure coordination: committees and task forces, liaison officers, cross-functional teams, standing orders, coordination departments/units, regular inter-departmental meetings, information systems, standard procedures and policies, and mutual adjustment through informal contacts.

Barriers to coordination: departmental selfishness, unclear goals/authority, poor communication, resistance to change, rivalry, inadequate resources and conflicting priorities.

Coordination vs Cooperation (brief): Cooperation is willing assistance by individuals/departments; coordination is the managerial process that integrates that cooperation toward a common plan and timing. Cooperation may exist without planned coordination; effective coordination normally results in purposeful cooperation.

Introduction: Organising involves arranging resources and activities to achieve objectives. While forming structure and assigning work, organisations commonly face practical problems that reduce efficiency, create conflicts or slow decision-making. Understanding these problems and their remedies helps managers design better structures and improve performance.

Common Problems in Organising

• Unclear lines of authority and responsibility: Employees don’t know who is accountable or who can make decisions, causing confusion and delays.
• Poor delegation: Managers either refuse to delegate (over-centralization) or delegate without adequate authority, resulting in bottlenecks or inability to perform.
• Excessive specialization: Too-narrow job roles lead to boredom, low motivation and inflexibility.
• Inadequate span of control: Too wide a span overwhelms managers; too narrow a span creates unnecessary managerial layers and high costs.
• Too many hierarchical levels (tall structure): Slows communication and decision-making; increases costs.
• Poor coordination between departments: Functional silos and lack of inter-departmental cooperation hinder goal achievement.
• Line and staff conflicts: Staff specialists give advice but line managers resist or misuse it, causing friction.
• Resistance to change: Rigid structures and vested interests block necessary reorganisation or innovation.
• Inadequate staffing and mismatched skills: Wrong people in wrong jobs reduce productivity and create turnover.
• Ambiguous job descriptions and authority overlaps: Lead to duplication of work and conflicts.

Remedies (How to Overcome These Problems)

• Clarify authority and responsibility: Issue clear job descriptions, organograms and written delegations so everyone knows reporting lines and expectations.
• Effective delegation: Follow the delegation chain—assign responsibility, grant sufficient authority, and ensure accountability. Use training and follow-up rather than micromanagement.
• Right span of control: Adjust the number of subordinates per manager depending on task complexity, geographical spread and required supervision.
• Sensible centralization vs decentralization: Decentralize routine and local decisions to lower levels while keeping strategic decisions centralized. Empower subordinate managers with authority & resources.
• Reduce unnecessary levels: Flatten structures where possible to speed decisions and cut costs; use team-based structures for flexibility.
• Improve coordination mechanisms: Use cross-functional teams, liaison roles, committees and integrated IT systems to share information and align goals.
• Resolve line–staff conflict: Define staff roles clearly, emphasize advisory nature, and promote mutual respect and joint accountability for outcomes.
• Job rotation and enrichment: Broaden job roles to reduce monotony and build multi-skilled employees for flexibility.
• Training and development: Build managerial and technical skills to reduce staffing mismatches and improve delegation capability.
• Use formal policies and performance systems: Standard operating procedures, KPIs and appraisal systems reduce ambiguity and align individual actions with organisational goals.
• Communicate change and involve people: Involve employees in design changes, explain reasons, and offer support to overcome resistance.

Summary: Problems in organising arise from unclear authority, poor delegation, wrong structure and weak coordination. The remedies focus on clarifying roles, redesigning structures (appropriate span and levels), empowering people, improving coordination and developing skills. Applying these remedies together creates an organisation that is responsive, efficient and aligned with its objectives.

What is an organising system? An organising system is the set of principles, structures and processes that allocate tasks, group activities, distribute authority and establish relationships so that organisational goals are achieved efficiently and effectively. A good organising system provides clarity, coordination and control while being flexible enough to adapt to change.

Key features and qualities of a good organising system

• Clear objectives: Every unit and position must understand the organisation’s goals and how its work contributes. This prevents overlap and conflict.
• Defined division of work (specialisation): Tasks are divided into jobs that match skills and resources, increasing efficiency and expertise.
• Clear lines of authority and responsibility: Who gives orders, who executes them, and who is accountable must be unambiguous to ensure discipline and control.
• Unity of command: Each person should report to one direct superior to avoid conflicting instructions and confusion.
• Appropriate span of management: The number of subordinates reporting directly to a manager must be optimal — not so many that control is lost, not so few that hierarchy becomes too tall.
• Proper delegation of authority: Authority must match responsibility. Managers should delegate authority with accountability to speed up decision-making and empower subordinates.
• Coordination of efforts: Different departments and individuals must work together through communication, rules and procedures so that activities align with organisational objectives.
• Simplicity: The structure and procedures should be simple and easy to understand and operate; unnecessary complexity must be avoided.
• Flexibility: The system should be able to adapt to changing technology, markets and internal growth without major disruption.
• Balance: Workload, authority and responsibility should be balanced across positions and departments to prevent bottlenecks and overload.
• Efficiency and economy: Resources (human, financial, material) should be used optimally so the system achieves goals at minimum reasonable cost.
• Stability: The system must provide continuity and dependable routines, yet allow controlled change when needed.
• Effective communication channels: Open, timely and appropriate flows of information vertically and horizontally are essential for decision-making and coordination.
• Accountability and control: Mechanisms for monitoring performance and enforcing standards ensure objectives are met.
• Suitability to objectives and environment: The structure must fit the size, strategy, technology and environment of the organisation (no one-size-fits-all).

Why these qualities matter (brief): A system with these qualities reduces role conflict, speeds up decisions, maximises use of skills, enhances coordination and enables the organisation to respond to change — all of which improve performance and employee morale.

How to judge an organising system in practice: Look for clear job descriptions, visible reporting lines (organisational chart), balanced spans, documented authority limits, regular coordination meetings, efficient communication channels and documented performance controls.