Topic 3: Organizational Management

1. Topic 3: Organizational Management

2. 3.1 Organization “An organization represents a group of people who work together for the achievement of common objective.” • An organization is referred to a group of persons formed to achieve certain goals. • It is necessary whenever two or more people combine their efforts towards same goal. • Organization may be defined as the process of identify and grouping the work to be performed, defining and delegating responsibility and authority.

3. 3.1 Organization • Organization may be defined as process of: • Identifying & grouping the work to be performed. • Defining & delegating responsibility & authority, and • Establishing relationships among the members, so that they work effectively together to accomplish objectives.

4. 3.1.1 Steps In forming an Organization 1. Determine the Activities 2. Group the Activities 3. Assign grouped Activities to individuals 4. Delegate authority & fix responsibilities 5. Coordinates authority & responsibility relationships 6. Provide physical facilities & proper environments

5. 3.1.2 Compare

6. 3.2 Types of Organization • The various types of organization are as follows: • Line organization • Line & staff organization • Functional organization • Project type organization

7. 3.2.1 LineOrganization • It is also called scalar or military organization. • Oldest and simplest form; direct flow of authority from CEO to subordinates. • In a line organization the positions having authority & responsibility are arrange in a linear relationships. • The authority flows from top to bottom & accountability from bottom to top. • Application :- suitable for small org. manufacturing simple products where the no. of employees is less. Sugar factory, small workshop, paper industry etc.

9. 2. Line & staff Organization • It is a modification of the line organization. • Combines line departments and staff departments. • Line departments participate directly in decisions that affect the core operations of the organization. • Staff departments lend specialized technical support like R & D, HRD, Planning, Marketing & so on. • Application:-it is very common among the medium & large scale industries such as automobile, power generation, engineering, pharmaceutical, etc.

12. 3. FunctionalOrganization • It is called staff organization. • In a functional organization the whole task of management & directing the subordinates is divided according to the type of work. • The function in which a staff executive is expert, will be given the authority & responsibility of supervision & administration of that particular function. • Application:-it is used in some organizations where highly specialized work is to be performed by subordinates. E.g. in a college different subjects are taught by different lecturers & student gets instructions from all of them including HOD & principal.

14. 4. Project type Organization • In this type organization, a group of individuals possessing the required skills are organized in an autonomous unit for a particular. • The project is headed by a project manager. He co-ordinate & motivates other people in various activities of manufacturing, engineering etc. • The project manager is fully responsible for the project under his control. • Application:- it is used in companies which are project businesses, such as L&T, IRB infrastructure, Infosys, Wipro, TCS etc.

16. Authority • It is the key to the managerial job • It is the lifeblood of the managerial position • It gives legitimate power to the manager or supervisor to give directives to subordinates • It is limited in scope by both internal and external factors

17. 3.3 Departmentation • Departmentalization: it is process of dividing work activities into units within the organization. • It refers to grouping the activities or operations of an enterprise into various units. • Major forms of departmentalization subdivide work by: • Product • Geographic Area • Customer • Function • Process

18. Aims of departmentalization:- • Smooth & efficient administration & working. • To attain common goals. • Division of work in groups & subgroups. • Specialization.

19. 3.3.1 Process of Departmentation 1. Identify the tasks 2. Analyze each task 3. Describe the functions 4. Group the functions 5. Assign groups to separate heads 6. Provide suitable staff faculties & support

20. 3.3.4 Bases of departmentation • Departments can be made on the basis of: • Products:- such as motor cycle, scooter, moped etc. • Process:- such as casting, welding, forging, machining etc. • Functions:- such as production, finance, marketing, purchase etc. • Territory:- such as north zone, east zone, west zone, south zone etc. • Customers:- such as wholesale, retail & export or government or general public etc. • Numbers:- e.g. an army battalion, or the building contractors, work-force. • Time of duty:- e.g. staff is divided as per the time or shift basis. • Service:- such as Legal, house-keeping, maintenance, medical facilities etc.

21. 3.3.4.1 Departmentation by Product • It organizes based on which product line they work with. • All the activities related to each product are grouped separately. • E.g. an org. manufacturing mobile phones, TV, music systems, computers etc. • The dept. in this type of company operate autonomously from each other.

22. 3.3.4.1 Departmentation by Process • By process the employees are grouped into different departments on the basis of the processes involved in production. • E.g. in a textile unit departmentation can be done on the basis of process i.e. spinning, weaving, dyeing, printing.

23. 3.3.4.1 Departmentation by Function • Functional departmentalization organizes employees based on function or skill set. • Salespeople & marketers work together in the marketing dept., employees involved in making the company’s products work in the production dept. & employees involved is designing new products work in the research & development dept.

24. 3.4 Principles of organization • The common principles of Org. • Authority & Responsibility • Span of control • Delegation of authority • Balance, Stability & flexibility • communication

25. Authority & Responsibility • It is the key to the managerial job • It is the lifeblood of the managerial position. • It gives legitimate power to the manager or supervisor to give directives to subordinates • It is limited in scope by both internal and external factors

26. Types of Authority 1.Line Authority:- it consists of the right to make decisions & to give order concerning the production, sales or finance related behavior of subordinates & all other related matters. 2.Staff Authority:- it consists of the right to advise or assist those who posses line authority as well as other staff personnel. 3.Functional Authority:- it consists of the right to give orders within a segment of the organization.

27. Responsibility • It is duty of the person to complete the task assigned to him. • Responsibility flows from bottom to top • It can be specified as: • A person is expected to carry out duties as specified or instructed. • A person is expected to advice subordinates as specified. • A person is expected to provide resources(men, machines, materials etc.) & services to various parties. • A person is expected to inspect material, components, products, equipment etc. • A person is expected to co-ordinate & co-operate with others to achieve the objectives of organization.

28. 2. Span of control(Management) • It is also called span of management and span of supervision. • It refers to the number of subordinates a supervisor has. • It is the number of subordinates that a manager directs and supervises. • The number of subordinates varies. • The smaller or narrower the span, the more levels of management will be required. • Some managers are able to supervise more subordinates than are others.

29. Factors affecting Span of control • 1. Geographical location. • 2.Capability of the superior • 3. capability of subordinates • 4.Nature of task • 5.Plan & policies • 6.Objectives criteria of performance evaluation • 7.Rate of change

30. 3. Delegation of authority • Delegation is the process of entrusting (assign the responsibility for doing something to) a part of one’s work with subordinates. • When the in charge divides up what needs to be done with supporting members of his team, it is called delegation. • Delegation is used when there is more than one person available to work on a particular project.

31. TEN Effective Delegation • 1. Plan Ahead:- a leader who delegates needs to think a couple of steps ahead of his group members to ask for help early. • 2.Assign duties to the individual best suited for the tasks:- the leader should be able to assess the subordinates strengths & weakness & effectively delegate tasks to people who can complete them. • 3.Delegate the objective, not the procedure:- • 4. Be prepared to train your helper:- to teach your helper how to do the task you have delegated to him or her. • 5.Allocate the resources necessary to complete the task.

32. TEN Effective Delegation • 6. Be patient:- she/he is learning how to do a new task. It is a part of the learning process. • 7.Be prepared for likely difficulties:- implement backup plans & be ready to jump in if things go wrong. • 8. Motivate your team members:- giving feedback that a person is doing well on task. • 9. Know what should & should not be delegated:-do not only delegate the horrible tasks that you yourself do not want to complete. • 10.Show appreciation for the completed tasks:- make sure you thank the person for completing the task & doing a good job.

33. 4 Balance, Stability & flexibility • Balance:- All depts. Of the org. should be developed in proportion to their contribution to success & a correct balance should be maintained. • Stability:- The capacity to withstand the losses of key employees is called stability. • Flexibility:- It allows an org. to adjust its current structures & practices(work assignments, facilities, manpower etc.) in response to changes in the environment.

34. 5. Communication • It is the meaningful exchange of information between two or more participants. It requires a sender, a message, a medium & a recipient. • Communication may be oral or written communication. • It may be vertical or horizontal. • Vertical Communication:- it may be downward or upward. • Downward:-it flows in the downward direction from boss to subordinate. E.g. supervisor giving instruction to worker. • Upward:-information given by subordinates to superior. • Horizontal Communication:- it is interactions between two employees of same level. E.g. purchase manager informing production manager.

35. 5. Methods of Communication • 1. Web based communication • 2. Video conferencing • 3. Emails • 4. Reports • 5. Presentations • 6. Telephoned meetings • 7. Face-to-Face Meetings • 8.Suggestion box

36. 3.5 Forms of Ownership • The various forms of business ownerships are listed below:- • Proprietorship (the owner of business) • Partnership • Joint stock company • Co-operative Society • Government Sector

37. 1. Proprietorship (the owner of business) • A business owned and operated by one person. • The owner is responsible for all operations of the business and assumes all the risk. • Ex. Medical shop, small Engg. Firm, traders, caterers, bicycle/automobile showroom, TV/computer repairs shop

38. Advantages of a sole proprietorship • Owner makes all decisions • Owner is her or her own boss • Owner keeps all the profits • All financial information can be kept secret • This type of business is easy to start or close Disadvantages of a sole proprietorship • Owner has responsibility for all debts • Costs and time commitment can be high • Funding can be difficult to obtain • Owner is responsible for all aspects of the business • Owner doesn’t have fringe benefits

39. 2. Partnership • A form of business organization in which two or more people own and operate the business together. • Legal requirements • Each partner must make a contribution to the Partnership. • Life of the Partnership is not separate from the lives of the partners • Partners are jointly and severally liable for debts on the business

40. Types of partnerships • General partnership: A partnership in which all partners have unlimited personal liability and take full responsibility for the management of the business. 2. Limited partnership: A partnership in which the partners’ liability is limited to their investment. 3. Joint venture: A partnership in which two companies join to complete a specific project. The partnership ends after a specified period of time. 4. Strategic alliance: A partnership in which two businesses work together for mutual benefit

41. Advantages of a partnership • Partners co-own the business • They share responsibilities • They may have greater financial resources than sole proprietors • They share business losses • They share time commitment Disadvantages of a Partnership • Partners have unlimited personal liability for all the other partners • They may have conflicts • Profits are shared • Partnerships are more difficult to close down than sole proprietorships

42. 3. Joint Stock company • “It is an association of individuals who contribute the required capital to start a business. • The investors who are liable for the company’s debts only to the value of the money they invested in the company.” • Certificates of ownership(shares) are issued by the company to the investors. • The shareholder receive profits in the form of dividend.

43. Types of Joint stock company • Private limited company:- (Features) • A private limited company is an association of 2 to 50 members. • It should have a minimum paid-up share capital of 100/- thousand.(1 Lakh) • The liability of members is limited to their investment. • The transfer of shares is limited to its members. • Applications:- sun marketing services pvt.ltd., Hindustan publishers & distributors, alpha system etc. 2. Public limited company:- (Features) • It is an association of a minimum seven members but there is no limit to maximum number. • It must have minimum paid-up capital of 500/-thousand.(5 Lakh) • The company has a separate legal existence.

44. Types of Joint stock company 2. Public limited company:- (Features) • It is an association of a minimum seven members but there is no limit to maximum number. • It must have minimum paid-up capital of 500/-thousand.(5 Lakh) • The company has a separate legal existence. • Application :- Reliance industries ltd., Larsen & Toubro ltd., TATA motors, Infosys, Wipro, ICICI, HDFC etc.

45. 4. Co-operative Society • It is a voluntary association of individuals who work together to promote their economic interest. • Main objective is to provide service to the members & not to earn profit. • It work on the principle of self- helps as well as mutual help(i.e. co-operation) • Applications:- sahkari bhandar, Haryana handloom, amul milk products, MAEER’S MIT, sugar mills, urban co-operative bank etc.

46. Advantages of a co-operative • Members own and control the business • Members share the start-up costs and the running of the business • They share the financial risk • Members may pay less for goods and services and get more for those they sell Disadvantages of a co-operative • Because each member only has one vote, members may not want to invest money for expansion • Because of the number of members, making decisions can be difficult • Members can have conflicts

47. 5. Government Sector(Public Sector) • “A commercial or industrial undertaking owned & managed by the government with a view to maximize social welfare is called public sector enterprise.” • Features:- • Owned & managed by the government • The public enterprise get their capital from government funds. • Public enterprises are accountable to the parliament or state assembly.