Organising Class 12 Notes

Organising is the process of establishing the structure through which the work of the enterprise is to be performed, and the chapter sets out the features that make the structure a management structure and not merely a grouping of people.

• It involves a division of the work, so the total work of the enterprise is broken up into the smaller and the manageable tasks, and without this division the work of a large enterprise cannot be done by a single person.
• It involves a grouping of the activities, so that the related tasks are collected into departments, and the logic used for the grouping is the similarity of the functions, the similarity of the product or the common process, and this is what decides whether a department of production, of marketing or of finance is created.
• It involves establishing the authority and the responsibility relationship, so that each person knows what he is answerable for and by whom he is supervised, and this is what Fayol meant when he said that the responsibility must be given with the authority.
• It involves the assignment of the work, so that the right work is given to the right person, and the assignment should be on the basis of the competence and not on the basis of the liking.
• It is a continuous process, because the work keeps changing, the people keep changing and the structure has to be revised, and an organisation that is not revised becomes rigid and begins to cost more than it gives.
• It is a pervasive function, because every organisation has a structure whether it was designed or not, and the enterprise that never thinks about its structure has a structure anyway, only an accidental one.

The organisation structure is the framework within which the organisation is formed, and the chapter distinguishes the three concepts that together make it, namely the organisation structure, the organisation chart and the organisation manuals.

• The organisation structure is the system of the relationships and the interactions among all the members of the organisation, and it defines the positions, the duties and the authority of each, and the structure exists to be filled by the people and the work.
• The organisation chart is the graphic representation of the structure, and it is drawn as a chart with the boxes and the lines, and it shows the positions and the lines of authority, but it does not show the informal relationships and it does not show the actual work.
• The chart is the pictorial and the graphic description, while the structure is the framework itself, so the structure is the reality and the chart is only a representation of it, and a chart that is not up to date misleads everyone who uses it.
• The organisation manual is the document in which the rules, the procedures and the instructions are written down, so it is the written statement of the duties, the powers and the procedures of each post.
• The chart is mainly the means of the communication and it is a brief statement, while the manual is a detailed statement, and the chart is mainly the pictorial, the graphic and the portrait, while the manual is largely the written document.
• The importance of the structure: it removes the overlapping of the work, it clarifies the authority and the responsibility, it improves the communication, it provides the framework for the control, and it helps in the recruitment of the right person for the right post.

The formal and the informal organisation form the standard comparison of the chapter, and it is asked every year, so the pairs should be memorised exactly.

• The formal organisation is the structure that the management creates deliberately for the attainment of the objective, and it is created and designed by the management, while the informal organisation is the structure that arises out of the social relationship among the people, and it comes into being without being planned by anyone.
• The formal organisation is purposive and the informal is natural, and the formal is authorised while the informal is unauthorised, and the formal is deliberate and the informal is spontaneous.
• The formal organisation is impersonal and it treats the individual as a post holder, and the informal is personal and it treats the individual as a person, so the informal organisation is more powerful at the lower levels and more powerful in the social sphere.
• The formal organisation is based on the division of work and the informal on the friendship, and the formal is a part of the conscious design and the informal a part of the unconscious.
• The formal organisation is open to the scrutiny of everyone and is documented, while the informal is closed and is not documented, and the formal does not change with the change of the personnel while the informal changes with them.
• The authority in the formal organisation is the authority of the position and it is the official authority, and in the informal it is the authority of the person and it is the personal authority, and the person with the greater personal authority may get the work done even without the position.
• The two systems are not exclusive, because every organisation has both, and the formal sets the limits within which the informal operates, and the informal fills the gaps that the formal leaves, and the discipline of the formal is necessary because the informal may work against the organisation.

Centralisation and the decentralisation are not two kinds of organisation but the two ends of a scale, and the management of every organisation is somewhere on that scale.

• Centralisation is the concentration of the authority at the top, and it is a high degree of the centralisation when the decisions are taken by one or two individuals at the top, and a low degree when the lower level may also take them, and the two are not rigidly opposite but each is a degree of the other.
• The centralisation is used by the small organisation, in which the managers are few, the work is simple and the capital is limited, and the concentration makes the communication faster and the coordination easier.
• The disadvantages of the centralisation: the burden on the top management becomes too heavy, the junior staff are demotivated because they have no freedom, the decisions are delayed because they must go to the top, and the diversity of the problems cannot be handled by one person because the expertise of the lower level is not used.
• Decentralisation is the dispersal of the authority to the lower level, and it is the principle of the delegation, and it frees the top management from the burden and puts the decision at the level where the information about the problem is available.
• The advantages of the decentralisation: the top management is freed for the work of the policy, the burden on the executives is reduced, the decisions are made near the point of the work and are therefore faster and better, and the junior staff are developed and trained for the higher posts, which prepares the succession.
• The decentralisation is not simply the distribution of the authority, because the authority can be distributed without the responsibility, and that would be dangerous, and the authority without the responsibility is an autocracy.
• The way in which the decentralisation is introduced is the delegation, which is the transfer of a part of the authority or the power of the command to a subordinate on a specific occasion and for a specific period, and it is made downward, and it is made on the basis of the person and not of the post, and it is accompanied by a written statement of the authority delegated.

The three are examined together because the difference between them is the standard question of the chapter, and the difference is only a matter of the amount.

• Delegation is the transfer of a part of the authority or the power of the command to a subordinate on a specific occasion and for a specific period, and the subordinate does the work on his own responsibility but the superior remains responsible for the final result, and the superior is accountable for the work of the person to whom he has delegated.
• Decentralisation is the distribution of the authority among the subordinates over a wide area, and it is a large scale process, and it is a permanent or a continuing transfer while the delegation is a specific and a temporary one.
• Decentralisation is a principle and the delegation is a method or a technique, so the decentralisation is what the organisation does and the delegation is how it is done, and the decentralisation is concerned with the position while the delegation is concerned with the person.
• The centralisation and the decentralisation are the two ends of the same scale, and the authority always has to be centralised to some extent, and the statement of the chapters that the decentralisation is a policy and the delegation is a technique is the sentence that answers the comparison.
• The difference between the authority, the power and the responsibility: the authority is the right of the individual to give the orders and to take the decisions, the power is the right of the individual to do something or not to do something, and the responsibility is the duty of the individual to perform the work assigned to him.
• The responsibility of the subordinate is absolute, for the work assigned to him, while the responsibility of the superior is relative, for the work of the person to whom he has delegated, and both the points are examinable.

The last section of the chapter asks the question that a structure question usually turns on, which is whether the work should be grouped by the function that is performed or by the product or the division that is made, and the answer decides the whole organisation.

• The functional structure groups the work by the function, so there is a production department, a marketing department, a finance department and a personnel department, and each is headed by a functional manager, and every employee of the department reports to that manager.
• The divisional structure groups the work by the product or by the division, so each product line or each region becomes a self-contained division with its own production, its own marketing and its own finance, and the head of the division is answerable for the profit of that division.
• The main advantage of the functional structure is the low cost and the specialisation, because the experts are together and the work of a department is done once instead of being repeated in every division, and the main limitation is the load on the functional head and the slowness when a decision cuts across the departments.
• The main advantage of the divisional structure is the identification of the responsibility with the profit of the division, and the limitation is the duplication, because the same function is repeated in every division and the cost therefore rises.
• A large firm that produces several products in several regions usually ends up with a hybrid, with the functions at the head and the divisions below, and the practical answer is that the functional structure suits the single-product firm and the divisional structure suits the multi-product or the multi-region firm.
• The choice is a decision about where the authority should lie, and it is made in the light of the size of the firm, the diversity of the products and the spread of the operations, and the structure that is chosen must be the structure that the workload can support.