Meaning & Definition of Organising :
Organising is the second fundamental function of management. The
organising process results in the creation of a formal organisation structure. It is a
process which consist of determining the activities to be performed in an organisation,
grouping these activities and assigning managerial authority and responsibility to
people employed in the organisation. The organising function primarily deals with the
grouping of activities and establishment of authority relationships among various
people working in the organisation. Organising involves the preparations necessary for
implementing plans. The manager must determine who reports to whom in the
According to Theo Haimann , “Organising is the process of defining and grouping the
activities of the enterprise and establishing the authority relationships among them”
According to Louis Allen, “Organising is the process of identifying and grouping the
work to be performed, defining and delegating responsibility and authority and
establishing relationships for the purpose of enabling people to work most effectively
together in accomplishing objectives”
Nature of Organising :
The nature of organising are explained as follows :
i) Organization is a group of Individuals: Organization can consider as a group of individuals who
comes together and make co-operative relationship with each-other and contributing their efforts
with a view to attain pre set goals. Infact, in the absence of group of individuals there is no
existence of organization. Thus it is clear that organization is a group of individuals.
ii) Organization is a process: The feature of organization can put to be as a process, because a
large number of events are done under organizing process towards the attainment of
predetermined goals, such as determination of various activities, grouping of activities,
allocation of work amongst the employees and delegation of authority as well. Hence,
organization is a process.
iii) Organization is an important Function of Management: It is an essential feature of
organisation. Organization refers to an important function of management because all
other functions of management like staffing, directing, controlling etc,will become
ineffective in the absence of this function.
iv) Organization is related to its Objectives: Organization is directly concerned with the
objectives of enterprise. In the absence of objectives there is no life of organization. If there
is an organization then the objectives must be attached with it. Hence, Organization is
related with its goals.
Importance/ Significance of Organising :
A sound organizing facilitates administration, promotes specialization, encourages growth, and stimulates creativity. It can
contribute to the success of an organization. Hence, the significance of organizing may be discussed as below:
i) Efficient Administration: Organizing is an important and the only tool to achieve enterprise goals. A sound organizing helps the
management in many ways. It defines various activities and their authority relationships in the organizational structure. It can avoid
confusion and delays as well as duplication of work and overlapping of effort. It is the mechanism by which management directs,
controls, and coordinates the various activities in the enterprise.
ii) Optimum Use of Human Resources: Sound organizing ensures that every individual is placed on the job for which he is best
suited. Such matching of jobs and individuals helps in better use of human talent. It also provides the benefits or specialization, which
results in economy of operations and reduction in costs.
iii) Coordination and Communication: Organizing is an important means of creating coordination and communication among different
departments of the enterprise. Different jobs and positions are welded together by structural relationship. It also specifies the channels of
communication among different members of the enterprise.
iv) Training and Development: A sound organizing provides a good scope for the development of managerial ability through
proper delegation of authority and decentralization. It provides responsibility, sufficient freedom to the supervision and creative
thinking in different levels. By this practice, managers are trained, developed and tested for assuming greater
responsibilities in the future.
v) Productivity and Job Satisfaction: A sound organizing is based on democratic and participative management.
Hence, the entire organizational environment is favourable for productivity and job satisfaction.
Process of Organising :
The process of organising consist of 4 steps which are explained as follows :
i) Identification and Division of work:
The organising function begins with the division of total work into smaller units. Each unit of total
work is called a job. And an individual in the organisation is assigned one job only. The division of work
into smaller jobs leads to specialization because jobs are assigned to individuals according to their
qualifications and capabilities. The division of work leads to systematic working. For example, in a bank
every individual is assigned a job. One cashier accepts cash, one cashier makes payments, one person
issues cheque books, one person receives cheques, etc. With division of work into jobs the banks work
very smoothly and systematically.
ii) Grouping the Jobs and Departmentalisation:
After dividing the work in smaller jobs, related and similar jobs are grouped together and put under
one department. The departmentation or grouping of jobs can be done by the organisation in different
ways. But the most common two ways are:
(a) Functional departmentation:
Under this method jobs related to common function are grouped under one department. For
example, all the jobs related to production are grouped under production department; jobs
related to sales are grouped under sales department and so on.
(b) Divisional departmentation:
When an organisation is producing more than one type of products then they prefer
divisional departmentation. Under this jobs related to one product are grouped under one
department. For example, if an organisation is producing cosmetics, textile and medicines
then jobs related to production, sale and marketing of cosmetics are grouped under one
department, jobs related to textile under one and so on.
iii) Assignment of Duties:
After dividing the organisation into specialised departments each individual working in
different departments is assigned a duty matching to his skill and qualifications. The work is
assigned according to the ability of individuals. Employees are assigned duties by giving
them a document called job description. This document clearly defines the contents and
responsibilities related to the job.
iv) Delegation of Authority :
Any position in the organisation comes into existence only when the positions are
empowered to carry out the activities, for which the positions are designed. This means injecting the
positions with managerial authority. To carry out any activity, one must have enough authority.
Meaning of Authority:
Authority is the right to direct the behaviour of others in the organisation and also the
right to expand the organisational resources towards the attainment of the organisational objectives.
Authority includes the right to make decisions and to discharge one’s responsibilities. Authority is the
formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to
achieve organizationally desired outcomes.
Organizational authority has three important underlying principles:
• Authority is based on the organizational position, and anyone in the same position has the same
• Authority is accepted by subordinates. Subordinates comply because they believe that managers
have a legitimate right to issue orders.
• Authority flows down the vertical hierarchy. Positions at the top of the hierarchy are vested with
more formal authority than are positions at the bottom.
Meaning of Power:
Many people confuse power with authority. Power is the ability to command or apply force and
is not necessarily accompanied by authority. In the organisational processes, power means the ability
to enforce managerial authority. It is influence that causes subordinates to do what the manager
requests. The influence may take various forms including force and persuasion.
Concept of Responsibility & Accountability:
Responsibility is an obligation to perform. It comes into existence when a person, with
authority, accepts the obligation to perform the work. Authentic body of an organization is top level
management, top level management direct the subordinates. Departmental managers and other
personnel take the direction from top level management to perform the task. Authority is necessary to
perform the work .only authority is not provided to the people but obligation is also provided. So the
obligation to perform the duties and task is known as responsibility.
Characteristics of Responsibility:
• It always originates from the superior-subordinate relationship.
• It can never be transferred
• Responsibility can be specific or general, it may either be continuous or for some special purpose.
Meaning of Accountability:
Subordinates receive the authority from top level of the organization and they also receive the
command and direction to perform the work. In other words, they are authorized and responsible for
a specific function. Sometimes the task may not be performed effectively by the subordinates or may
not be performed effectively. In this situation, the subordinates must report to boss about the assigned
task. She/he must answer his/her performance which is known as accountability.
Meaning of Centralisation:
Centralisation is the systematic and consistent reservation of authority at central points in the
organisation. Centralisation involves systematic reservation of authority of central points within an
enterprise. In other words, a majority of decisions regarding the work are made not by those who are
actually doing the work but at a point higher up in the organisation.
Advantages of Centralisation:
• It may facilitate greater uniformity.
• It is easier to adopt uniform strategies throughout the organisation.
• Close supervision and control can be exercised.
• Effective utilisation of talents of the top management.
Disadvantages of Centralisation:
• Due to the fact that all decisions are made at the top it might result in delays in decision-making
• Centralised organisation faces the problem of lower motivation levels among workforce.
Meaning of Decentralisation:
Decentralisation is the result of delegation of authority. In other words, decentralisation
refers to dispersion of decision making authority to the downward. Every organisation practices some
degree of decentralisation. It is opposite of centralisation. It is autonomy in decision making.
According to Koontz and Weinrich, “Decentralisation is the tendency to disperse decision making
authority in an organised structure”
Advantages of Decentralisation:
• Decentralisation reduces the workload of top executives.
• Decision making is quicker.
Disadvantages of Decentralisation:
• Decentralisation increases the administrative expenses and each division or department has to be
sufficient in terms of physical facilities and trained personnel.
• There might be lack of uniformity and inconsistent procedures as each department might have the
authority to formulate its own policies and procedures.
• There may be problems of coordination and control.
• Increase in cost.
Meaning of Delegation of Authority:
Delegation of authority is a downward process. It is the process by which formal authority is
transferred to subordinates for completion of specific jobs. It is the means for getting the jobs done
through other people. Managers assign a portion of their workload to subordinates through
delegation. The superior exercise control over the performance of subordinates. It is superior-
All activities are not performed by one person. Authority should be provided to the
subordinates too. Process of transferring authority and creation of responsibility between superior and
subordinates to accomplish a certain task is called delegation of authority.
Delegation of authority is the base of superior-subordinate relationship, it involves following
components or steps:
i) Assignment of Duties - The delegator first tries to define the task and duties to the subordinate.
He also has to define the result expected from the subordinates. Clarity of duty as well as result
expected has to be the first step in delegation.
ii) Granting of authority - Subdivision of authority takes place when a superior divides and shares
his authority with the subordinate. It is for this reason, every subordinate should be given
enough independence to carry the task given to him by his superiors. The managers at all levels
delegate authority and power which is attached to their job positions. The subdivision of powers
is very important to get effective results.
iii) Creating Responsibility and Accountability - The delegation process does not end once
powers are granted to the subordinates. They at the same time have to be obligatory towards the
duties assigned to them. Responsibility is said to be the factor or obligation of an individual to
carry out his duties in best of his ability as per the directions of superior. Responsibility is very
important. Therefore, it is that which gives effectiveness to authority. At the same time,
responsibility is absolute and cannot be shifted. Accountability, on the others hand, is the
obligation of the individual to carry out his duties as per the standards of performance.
Therefore, it is said that authority is delegated, responsibility is created and accountability is
imposed. Accountability arises out of responsibility and responsibility arises out of authority.
Therefore, it becomes important that with every authority position an equal and opposite
responsibility should be attached.
Advantages of Delegation of Authority:
i) Builds Trust and Understanding:
Delegation involves trusting in someone's abilities and relying on them. This helps build a feeling
of mutual understanding and trust. It gives managers the opportunity to understand the employees'
approach towards work.
ii) Motivates Employees:
Entrusting employees with additional responsibilities works as a great motivator at the
workplace. An employee who feels trusted; i.e. when he knows that the higher management trusts
him and relies on his capabilities, he works with greater efficiency. Delegation of authority makes
him feel important and more responsible.
iii) Tests Employee Skills:
With authority comes added responsibility, shouldering which, is not easy. It requires one to work
with greater focus and efficiency, and to take initiatives, be alert, think creatively, analyze situations,
and take decisions. Assessing how well the delegates are functioning can help a manager rate their
performance and take decisions about their promotions.
iv) Gives Scope for Innovation:
To implement new ideas in the organization, one needs to have certain powers and the right
amount of freedom. A rigid framework and lack of authority may restrict an individual from
thinking differently. If deserving individuals are given the right authorities, they may be able to
bring innovation. Delegation of authority may invite out-of-the-box ideas and positive changes
in the organization.
Disadvantages of Delegation of Authority:
i) Misuse of Power:
In delegating authority, there is a risk of the delegate misusing his power for personal gains.
He may have access to confidential information, which he may leak to the competitors, or
involve himself in other fraudulent activities. This possibility raises a question mark on the
employee's integrity, in which case, choosing such an individual as the delegate would be a
ii) Failure to Fulfil the Tasks:
The manager's instructions may not be well taken care of by the delegate, or he may not be
very particular about following them. This may breed from unwillingness or incapacity of
The delegate may take long to understand the new responsibility. As he has authority,
delayed actions on his part may hamper his team's performance. A delay in planning or
taking decisions may not be affordable for the organization. Hence, it is not advisable to
delegate authority when there is a time crunch.
iv) Impact on Quality of Work:
There are chances of quality being affected simply because the employee is new to the
work. The experience and knowledge that the manager has, may be lacking in the delegate.
He might make mistakes. His way of working may be different. This may impact the overall
quality of work. Thus, it is important for a manager to understand that his responsibility
does not end after delegation.