BUSINESS STUDIES – CLASS 12

CHAPTER 5: ORGANISING

1. Meaning of Organising

• Organising is the second function of management, performed after planning.
• It refers to the process of identifying, grouping and assigning activities, and establishing authority–responsibility relationships.
• It ensures that the right people do the right jobs at the right time.
• Organising creates a structure within the organisation to achieve the determined objectives efficiently.
• It involves:
  1. Identifying the work to be done
  2. Dividing the work into manageable sections (departmentation)
  3. Assigning jobs to suitable individuals
  4. Delegating authority for performing tasks
  5. Establishing clear reporting relationships
• Organising provides clarity about who will do what, how, and under whose authority.
• It brings coordination, avoids duplication of efforts, and ensures smooth functioning.

2. Steps in the Process of Organising

1. Identification and Division of Work

• The total work is identified, analysed and divided into smaller tasks.
• Work is divided based on functions, skills or activities.
• Division of work reduces workload and increases efficiency.

2. Grouping of Activities (Departmentalisation)

• Similar or related activities are grouped into departments.
• Common bases:
  • Functional (production, finance, HR, marketing)
  • Product (electronics, textiles, FMCG)
  • Geographical (north zone, south zone etc.)
  • Process (fabrication, assembly)

3. Assignment of Duties

• After grouping activities, specific jobs are assigned to individuals.
• Each person is given work according to their skills, qualification and experience.
• Clear job roles ensure accountability.

4. Establishing Authority and Responsibility Relationships

• Authority is given to individuals to perform assigned duties.
• A clear chain of command is established, showing who reports to whom.
• This creates an organisation structure with defined superiors and subordinates.

5. Providing Equipment and Resources

• Necessary tools, resources, workplace facilities and technology are provided.
• Adequate support ensures smooth functioning.

6. Coordinating Activities

• Coordination ensures that departments and individuals work harmoniously.
• Conflicts are resolved and communication channels are established.

3. Importance of Organising

1. Benefits of Specialisation

• Division of work results in specialisation.
• Employees become experts and efficiency increases.
• Time and resources are saved.

2. Clarity in Working Relationships

• Organising defines roles and responsibilities of every individual.
• Misunderstanding and confusion are avoided.
• Clear authority–responsibility relationships improve discipline.

3. Optimum Use of Resources

• Organising ensures proper utilisation of manpower, money, materials and machinery.
• Duplication and wastage are minimised.

4. Facilitates Coordination

• Different departments work harmoniously because tasks are clearly linked.
• Coordination also helps in achieving organisational goals smoothly.

5. Adaptability to Change

• A good organisational structure can adjust quickly to environmental changes.
• New tasks or departments can be added easily.

6. Effective Administration

• Clear division of work and authority helps in smooth day-to-day operations.
• Managers can focus on important issues rather than micro-managing everything.

7. Development of Personnel

• Delegation of authority provides opportunities for employees to grow.
• Subordinates learn decision-making and leadership skills.

8. Expansion and Growth

• Efficient organising enables organisations to expand.
• New branches, products or markets can be incorporated smoothly.

4. Organisation Structure

• It refers to the formal arrangement of jobs, duties, authority and communication within an organisation.
• It shows how work is divided and how coordination will take place.
• It defines the chain of command, span of control, and level of management.

Key Features

• Formal framework for managerial functioning
• Shows who reports to whom
• Establishes authority levels
• Helps in allocating resources
• Enables performance monitoring

Two Main Types

1. Functional Structure
2. Divisional Structure

5. Types of Organisation Structure

A. Functional Structure

Meaning

• Activities are grouped based on functions.
• Example departments: Production, Finance, Marketing, Human Resource.

Advantages

• Specialisation is promoted
• Clarity in roles
• Cost reduction due to efficiency
• Supervision becomes easier
• Suitable for small and medium-sized organisations

Disadvantages

• Functional rigidity – employees think only about their department
• Poor coordination among departments
• Slow decision-making
• Not suitable for organisations with diversified products

B. Divisional Structure

Meaning

• Organisation is divided into divisions based on products, regions, or customers.
• Each division acts as a separate unit with its own resources.

Advantages

• Fast decision-making
• Better coordination within a division
• Accountability improves
• Suitable for large, diversified organisations

Disadvantages

• Duplication of resources (separate staff for each division)
• Expensive
• Conflicts among divisions possible
• Increased administrative overheads

6. Formal and Informal Organisation

A. Formal Organisation

Meaning

• It is the officially designed structure created by management.
• Shows authority, responsibility and communication relationships in official form.

Features

• Planned and deliberately created
• Based on rules and procedures
• Hierarchical structure
• Communication follows official channels
• Aimed at achieving organisational goals

Advantages

• Clear roles
• Systematic working
• Discipline
• Unity of direction
• Easy to monitor performance

Disadvantages

• Rigid structure
• Delayed communication
• Employees may feel restricted
• Less flexibility

B. Informal Organisation

Meaning

• A network of personal and social relations that naturally develops among employees.
• Not created by management; emerges spontaneously.

Features

• No formal rule or written structure
• Based on friendships, interests, likes and dislikes
• Quick communication
• Flexible in functioning

Advantages

• Fast communication (grapevine)
• Helps managers understand employee needs
• Supports formal organisation
• Enhances job satisfaction

Disadvantages

• Rumours can spread
• Informal groups may oppose decisions
• Difficult to control
• Can affect discipline

7. Delegation

Meaning

• Delegation is the process through which a manager assigns tasks to subordinate and gives them authority to carry out those tasks.
• It involves sharing authority and responsibility.
• It reduces workload of managers and helps develop employees.

Elements of Delegation

1. Authority – Right to take decisions
2. Responsibility – Obligation to perform tasks
3. Accountability – Being answerable for results

Principles

• Accountability cannot be delegated
• Authority should match responsibility
• Delegation should be clear and complete

Advantages

• Reduces manager’s workload
• Improves efficiency
• Motivates employees
• Develops managerial talent
• Ensures quick decision-making

8. Decentralisation

Meaning

• Systematic delegation of authority at all levels of management.
• Decision-making power is pushed downward to lower levels.
• It is a philosophy where authority is not concentrated only at the top.

Features

• Wider delegation
• Empowerment of employees
• Autonomous units
• Promotes responsibility and accountability

9. Importance of Decentralisation

1. Develops Managerial Talent

• Lower-level managers get opportunities to make decisions.
• Creates future leaders.

2. Relief to Top Management

• Top managers can focus on policy-making and long-term planning.

3. Quick Decision-Making

• Decisions are taken near the point of action.
• Saves time and increases efficiency.

4. Motivation to Employees

• Empowerment increases confidence and job satisfaction.

5. Better Control

• With clear responsibilities, performance can be evaluated more accurately.

6. Growth and Expansion

• Divisions become self-sufficient.
• Organisation can expand without overburdening top management.

7. Better Adaptability

• Local managers can respond quickly to local needs and changes.

10. Conclusion

• Organising is a fundamental managerial function that turns plans into workable structures.
• It ensures systematic allocation of work, proper authority relationships, coordination and efficient functioning.
• A sound organisational structure is essential for achieving objectives, promoting employee growth, and responding effectively to environmental changes.
• Delegation and decentralisation empower employees, speed up decision-making and support organisational growth.
• Therefore, organising plays a crucial role in building a strong, flexible and successful organisation.