Fundamentals of Management

Part 1: Management Principles

Chapter 4: Organizing

Fundamentals of Management 1
During this lecture we will
learn:
 Concept of organizing and its process
 Formal structure of an organization
 Concept of delegation and the difference
between authority, responsibility and
accountability
 Difference between decentralization and
delegation
 Factors affecting decentralization
Fundamentals of Management 2
What is Organizing?

Can be defined as process of determining

the activities to be performed, arranging
these activities to administrative units, as
well as assigning managerial authority and
responsibilities to people employed in the
organization
Importance of organizing

 Focus on and facilitate the attaining of

objectives
 Arrangement of positions and jobs
within the hierarchy
 Define responsibilities and line of
authority of all levels
 Creating relationships that will
minimize friction..
Basic Elements of Organization

 Centralization and decentralization

 Delegation of Authority
 Span of Control
 Departmentalization
Elements of organization

1. Centralization: Concentration of decision

making and actions at high level
management

2. Decentralization: Consistent delegation of

authority to the lower levels where the
work is performed
Advantages of Centralization

 Provide Power and prestige for manager

 Promote uniformity of policies, practices
and decisions
 Minimal extensive controlling procedures
and practices
 Minimize duplication of function
Disadvantages of Centralization

 Neglected functions for mid. Level, and

less motivated beside personnel.

 Nursing supervisor functions as a link

officer between nursing director and first-
line management.
Advantages of Decentralization

 Raise morale and promote interpersonal

relationships
 Relieve from the daily administration
 Bring decision-making close to action
 Develop Second-line managers
 Promote employee’s enthusiasm and
coordination
 Facilitate actions by lower-level managers
Disadvantages of
Decentralization

 Top-level administration may feel it would

decrease their status
 Managers may not permit full and maximum
utilization of highly qualified personnel
 Increased costs. It requires more managers
and large staff
 It may lead to overlapping and duplication
of effort
Delegation of Authority

 Process off assigning work from a top

organizational level to a lower one or from
superior to subordinate and giving that
person the authority to accomplish them

 A downward flow of authority from

HIGHER level in the organization to
LOWER level
The Delegation Process

1. Allocation of duties
2. Delegation of authority
3. Assignment of responsibility
4. Creation of accountability
The Delegation Process Contd:

 Authority: It is a right to take a final decision

and command others. It moves in a downward
direction

 Responsibility: It is an obligation to perform a

duty. It cannot be delegated.

 Accountability: subordinates must be held

answerable to their carried out duties
Types of Authority

 Formal: Delegated within an organization for

e.g. superior-subordinate authority

 Functional: Authority based on specialized

knowledge like staff authority or the authority
delegated to assist line managers

 Personal: Authority based on seniority and

relationship
Factors determining degree of
authority delegation

 Organization’s size...
 Importance of duty or decision...
 Task complexity...
 Organizational culture...
 Qualities of subordinates
Main principles of Delegation

 Responsibility cannot be delegated

 Authority and responsibility should be

equal in proportion
Barriers to successful
delegation

 Lack of superior’s ability to direct the

subordinates

 Lack of confidence in subordinate

 Absence of control
Major Causes of manager’s
refusal to delegate

 Tendency to do things personally

 Desire to dominate the knowledge,

information, and/or skill’s

 Unwillingness to accept risks of wrongs

Reason’s for why subordinates
avoiding delegation

 Decision-making is a hard mental work,

and people seek ways of avoiding it
 Fear of criticism for mistakes
 Lack off necessary information and
resources to do a good job
 Overload of work
 Positive incentives may be inadequate
Span of Control

 Number of subordinates that can be

adequately supervised by one supervisor

 Span of control consists of two

dimensions
Narrow Span of control
Wide span of control
Narrow span of control

The Manager supervises a small number

of people or subordinates
Advantages of Narrow Span of
control

 Close supervision

 Close control

 Fast communication between

subordinates and superiors.
Disadvantages of Narrow span
of control

 Superiors tend to get too involved in

subordinates’ work

 Many levels of management

 High costs due to many levels

Wide span of control

The Manager supervises a large number of

people
Advantages of Wide span of
control

 Superiors are forced to delegate

 Clear policies must be made

 Subordinates must be carefully selected

Disadvantages of wide span of
control

 Tendency of overload superiors to take

most or all decisions

 Danger of superior’s loss of control

 Requires exceptional quality of managers

Factors determining span of
control

 The competence of both the supervisor and

the subordinate
 The degree of interaction between the units or
personnel being supervised
 Other duties of the top manager
 Lower-level managers have a wider range of
span than top-level manager
 The similarity or dissimilarity of activities being
supervised
Factors determining span of
control contd:

 The similarity or dissimilarity of activities

being supervised
 The incidence of new problems in the Unit
 Availability of plans of work, policies and
standardized procedures
 The degree of physical distribution
 The nature of work (stability, complexity,
etc…)
Division of Service

Dividing large activities to be distributed

among several people.
Advantages of Division of
service

 Allow an employee to master a task with a

maximum skill

 Dividing work among individuals according

to their specialization leads to accuracy

 Accomplishment of tasks within assigned

period or deadline
Disadvantages of Division of
service

 Creates many different, narrow jobs, which

need effective managerial coordination

 Human problems have been created from

division of service, fatigue and stress, and
which lead to less quantity and quality of
work, increased absenteeism and higher
turnover
Departmentation

 Departmentation can be described as

grouping of functions and tasks

 Consisted of main methods such as:

Functional
Geographical
Product or Service
Customer
Functional Departmentation

 Based on the functions or the operations

carried within the organization

 For e.g. production, selling, marketing,

distributing and financing

 Type of organization or an enterprise affects

the formation of different departments
Geographical Departmentation

 Division of activities among branches or

subsidiaries that are away from the main office
or the headquarters

 A manager is put in-charge of the area and

made responsible for all the divisions

 Results in lower cost of operating, but harder to

control by the parent company or the head office
Product or service departmentation

 Departmentation by product or service e.g.

Production unit

 A wide delegation of authority takes place

from top management to a division or a plant

 May have co-ordination problem and

duplication of service
Customer Departmentation

 Usually found in sales or marketing

departments

 Involves division of customer base in terms of

types of customers like individual buyers,
industrial buyers or wholesalers

 For e.g. banking services, credit card services,

auto companies
Process or equipment
departmentation

 Aims at achieving economies or effective

utilization of the company’s resources by
grouping activities around a process

 Similar types of labor and equipments are

brought together

 For e.g. Jewellery makers, shoe makers and

oil companies