UNIT-III F&if Organization-Organization Chart

8/3/2019 UNIT-III F&if Organization-Organization Chart

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UNIT-III

Functional area of

management


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ORGANIZATION

Organizing- process of identifying and

grouping of activities to attain the objectives

As a process, organization refers to the

process of determining ,arranging, grouping

and assigning the activities to be performed


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Nature of organization

Main characteristics are:

Common objectives Division of labour

Authority of structure

Group of persons

Co-ordinationcommunication& environment

Rules and regulations


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Purpose of organization

Facilitate administration

Increase the efficiency of management

Optimum use of man and material resources

Facilitates co ordination and communication

Optimum use of technological innovation Stimulate creativity and initiative


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Formal and informal organization


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Formal organization

An organization with classical hierarchical

structure in which positions, responsibility,authority, accountability and the line of

command are clearly defined.


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Characteristics of formal organization

Properly planned

Based on the principle of division of work Concentrates more on performance

Organization chart is usually drawn

Coordination and control is easy Unity of command is maintained


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Advantages

Definite boundary for each worker

No overlapping of responsibility Sense of security

Motivates employees


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Informal organization

Organization which establishes the

relationship on the basis of membersinteraction, communication, personnel liking

etc.,


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Characteristics of informalorganization

Arises without any external cause i.e., voluntarily

Created due to some similarity between members No organization chart

No clear structure

A person can be member of several organization

Rules not written


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Advantages

Gives satisfaction to workers

Encourages the workers Fills the gap and deficiency of formal

organization


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Organization chart

Graphical representation of the various

positions in the enterprise and formal relationbetween them.


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Types of organization chart

Vertical chart

Horizontal chart Circular or concentric chart


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Vertical chart

Chairman

Production manager Marketing manager Personal manager

Supervisor Supervisor Supervisor

Workman I

Workman II

Workman III

Managing Director


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Horizontal chart

ChairmanManaging

director

Top level

Managers

Top level

Managers

Top levelManagers

Branch

manager I

Branch

manager II

Branchmanager III

Sales man

Sales man

Sales man


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Circular or concentric chart

Chairman

Marketing

Financepersonal

Production

Supervisor I

Supervisor II


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Advantages of organization chart

Clearly shows various positions

Identify limits of individuals Reporting relationships enhances

Provides clues for lines of promotion

Outsiders can understand the organizationsetup easily

Provides framework for organization


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Limitations of organization chart

Clear picture of only formal authority

More rigidity of formal relationships Shows only relationship which must exist

than what practically exists

Creates psychological problems to

individuals


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The structure and process of

organizing

Determination of activities

First step to identify the work Entire work divided into groups

No single activity is left without assigning, no

extra work included


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organizing

Grouping of activities

Grouping of similar activities into departments Grouping done on the basis of

Functions

Process

Location

Products

Customers


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organizing

Assignment of duties

Groups assigned to mangers Assigned to managers based on their skill set

Eg.,

Production unit to production manager

Product quality checking to quality control manager..


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organizing

Delegation of authority

Duties assigned by delegation of authority Without authority it is very difficult to manage

Establishment of structural relationship

Relationship between various positions &

Channel of communication must be clearlydefined

Organization chart shows it clearly


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organizing

Co-ordination of activities

Co-ordination necessary to attain the objective Responsible person must see whether all the

activities are in track


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DEPARTMENTATION

Definition:

Process of grouping similar activities

Koontz and odonnell defined, A departmentation isa process of dividing the large monolithic functional

organization into small and flexible administrativeunits


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Importance ofDepartmentation

Limited number of people controlled by manager

Increases operating efficiency

Helps in fixing responsibility

Through Departmentation jobs can be completed efficiently

Better co ordination

Efficient budget preparation

Control of expenditure


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Departmentation by different strategies

Departmentation by numbers

Departmentation by time Departmentation by enterprise function

Departmentation by territory or geography

Departmentation by customers

Departmentation by equipment or process Departmentation by products and service


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Departmentation by numbers

Departments created based on the number of

persons forming them

Each group controlled by supervisor

Limitations

Groups must be created based on skills not by numbers

Useful for lower level organization structure


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Departmentation by time

Grouped based on time of performance

Eg., 3 shifts/day - 8 Hrs/Shift

Activities grouped shift wise having separate dept. Advantages:

Round the clock service

Never interrupted process

Equipment efficiently used

Provides part time jobs

Disadvantages Supervising lack during night shifts

Several shifts may increase the problems on communication


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Departmentation by enterprise function

Activities grouped based on functions

Department head responsible for each department

People with similar background, similar interests

grouped together


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Departmentation by enterprise function

Advantages:

M

ost Logical, scientific method Specialized people grouped therefore more efficient

Facilitates coordination

Disadvantages Managers are expertise only in their area

Communication between departments are often

discouraged


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Departmentation by functions

President

Marketing Dept. Production Dept. Personal Dept. Financial Dept.

Vice-president

Managing Director

Documents

UNIT-III F&if Organization-Organization Chart