What are the Main Principles and Importance of Organizing Management Function in an Organization?

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By: Site Engineer, Staff

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The organization consists of people whose efforts are directed towards the achievement of certain specified goals. The organization consists of people who have come together because of common interest or are employed by an entity to enhance its goals as established by the founders.

Nature of Organizing

With so many people in an organization engaged in a variety of tasks, how can the specified goals be expected and be achieved?

In other organizations, various functions are distributed amongst several members. Organizing, therefore, involves the orderly arrangement of roles in such a way that each, functioning together with other roles, achieves the goals established for the entire organization.

Organizing may be defined as the process of designing and maintaining the roles necessary to effectively and efficiently accomplish specified goals.

This article focuses the one nature of organizing and the problems encountered by managers in their attempt to design and maintain roles in a business enterprise.

Purpose of Organizing

The purpose of organizing is to achieve efficiency and effectiveness in attaining goals. A goal is efficiently accomplished if the cost associated with achieving it is relatively low. Cost may be in terms of the value of resources utilized, time taken, or satisfaction of employees. Organizing ensures that people and resources are judiciously allocated to tasks necessary to accomplish goals. By specifying the types of people and resources needed, as well as the procedures to be followed, organizing minimizes waste of time and resources.

Organizing also contributes to the satisfaction of employees by reducing the amount of conflict in the business enterprise. This is achieved by specifying objectives and sub-objectives, the responsibility of each role, the authority relationships between roles and the lines of communication in the organization. Organizing also enhances the achievement of goals. It enables individual and group efforts to be directed towards the goals of the enterprise.

Organization Structure

A major aspect of organizing is the grouping of activities which must be performed to realize the goals of the enterprise. The organization may be split into departments, units, and sections. The task of grouping activities is called departmentalization. When the relationships between roles within a department and between departments in the business enterprise are established, the result is an organizational structure. There is no single structure that it is suitable for all organizations. A structure that is adequate for a small enterprise whose operations do not extend beyond the city in which it is located, may not be suitable for a medium-size business organization that operates nationwide. Similarly, the structure of a manufacturing company will be different from and be unsuitable for, a wholesaling or retailing company. In general, however, tasks or activities may be grouped according to function, geography, product, customer or process.

Departmentalization by Function

A popular basis of departmentalization among business enterprises is by function. Activities and people are grouped according to the organic functions of business which are production, marketing, finance, and personnel. Thus, for example, the activities connected with the disposal of the output of the business organization to consumers are grouped under marketing, while those concerned with the transformation of raw materials into finished products are grouped under production.

The function that is most important to the success of the business enterprise varies from time to time, and also from one enterprise to the other. Consequently, some functions may be combined in one enterprise, while more functions are created in another. In a large manufacturing enterprise, activities may be grouped into Production, Research, and Development, Engineering, Personnel, Administration, Marketing and Finance Departments; whereas in a medium-size retail business, only Merchandizing, Finance, and Administration Departments may be created.

Departmentalization by Geography

A large-scale organization is more likely to have branches in every part of the country. Most large companies in the country, such as the oil companies, Banks, Post and Telecommunications, and so forth, establish departments in the different states either on geographical or state basis. Most of these organizations have their head offices in the country’s federal capital, but establish departments in the states to facilitate administration, decision-making and customer service.

The purposes of departmentalization by geography are many.

These include:

  • Placing responsibility at the lower levels of the organization;
  • Concentration on local markets;
  • Improving management of the organization in the states;
  • Allowing for local participation;
  • Encouraging easy communication between customers and management;
  • Providing local training to employees.

Most regional departments are set up only as operational units, but decision-making relating to organizational goals is highly centralized. However, regional offices participate in vital decisions relating to the operation of the enterprise. In the banking industry, for example, regional headquarters often have to clear from the central office before granting to a customer a loan above a certain limit.

It is no longer true in developed countries that the reason for geographic departmentalization is due to poor communication. In the developing world, however, poor communication facilities are still a major reason for this type of departmentalization.

Departmentalization by Product

Companies that diversify into many product lines may base departmentalization on the type of products carried. Departmentalization along product lines is mostly to be found in large-scale enterprises. Some group of companies assigns management responsibilities according to product lines. There are departments dealing solely with building materials, machinery, industrial hardware or office equipment. Some other automobile companies departmentalize on the basis of the type of vehicle or equipment carried.

Manufacturers who base departmentalization on product line are conscious of a profitable development of high technical and managerial expertise along product lines. At each product departmental level, managers and technical personnel are specifically trained in relation to the product lines. As a result, planning for profits becomes the responsibility of each department’s or product line’s managers.

Departmentalization by Customers

When it is important to cater to the special needs of customers, departmentalization may be by customer. For example, it is common in the retail business for departments to be established according to the type of customers served. A retail organization may be departmentalized, for example, to cater for the needs of children, ladies, men, house wear bridal furnishings, baby-care items, and expectant mothers’ needs.

Departmentalization by the customer may also be done according to socio-economic class. Stores which cater exclusively for the needs of the upper class may be established. Such stores are usually located in suburban areas where the wealthy live. The same company may also establish stores in poor neighborhoods, to care for the needs of people in the lower class. The quality of materials sold in stores for the upper class and the lower class varies greatly.

Departmentalization by Process

This means that departments are created according to the processes of manufacturing or operations. In the manufacturing of a product, several processes are required. The raw materials are first inspected, washed, dried, roasted, ground into powder, inspected again, mixed with other ingredients, canned and packaged. This process may form the basis of departmentalization so that people and equipment performing similar activities in the production process are grouped together. This form of departmentalization is often found in chemical industries, such as those engaged in petroleum refining.

Rationale for Departmentalization

The aim of departmentalization is to facilitate the efficient management of human and materials resources so that the goals or objectives of the organization can be achieved. The prime motive of any business organization is the profit or reward that will accrue to the owners or shareholders. A business concern may create departments, in consideration of the number of people to be directly controlled by one manager, supervisor or foreman, in an attempt to enhance the achievement of its goals.

The rationale for the structuring of an organization is based on the principles of:

Division of Labour Structuring an organization starts with the division of labor. The task is divided into sub-tasks that can be assigned to an individual. Departments can be created according to the work process or work to be done, and individuals can be trained specifically to fit into the work processes or activities. It can be noted here that the more an organization structure reflects the tasks or activities necessary to attain goals and assists in their coordination, and the more roles are assigned to fit the capabilities and motivations of people available to fill them, the more effective and efficient the organization will be.

The division of labor leads to specialization of function. The more a repetitive task is done, the more efficient one becomes. The major criticisms of the division of labor are that:

  • It creates over-specialization
  • The work no longer challenges the workers, and as a result, interest is lost;
  • Over repetitiveness creates boredom;
  • It leads to poor work habits.

Span of Management

This is the number of persons that a manager or supervisor can adequately supervise. The span of management determines the number of hierarchical levels in the organization, which, in turn, is a measure of the length of that organization’s lines of communication.

The General Manager directly supervises the Manager, Sales; Manager, Purchasing, Managing, Distribution; Manager, Accounting; Manager, Personnel and Manager, Marketing.

There are seven people reporting or directly accountable to the General Manager. At each departmental level, the managers are also responsible for the work of at least eight or more supervisors. Each supervisor is in charge of several workmen. According to the principle of the span of management, as espoused by Hamilton, a human being is only capable of supervising the work of three to six workers. Lyndall Urwick supported Sir Hamilton’s assertions that the ideal number of managers to be supervised by the general manager should not be more than four, and at the lowest levels of the organization, it should be six.

The implication of a limited span of management is that as the organization increases in size, additional authority levels must be created. This result has implications for effective communication in the organization. In practice, therefore, the manager must strike a balance between the needs to limit the span of management and to ensure adequate communication in the organization.

Unity of Command

Closely following the span of management is the principle of ‘unity of command’. The unity of command principle places a limit on the number of superiors an individual employee can report to or be accountable to, at the same time, in this case, the individual worker should have not more than one boss to report to. If a person is made accountable to more than one boss, there is a tendency for conflict to develop. The unity of command principle, however, makes the operation of the organization rigid, as most communications must go through prescribed channels. For example, the General Manager may be the supervisor of several departments, but not every worker has access to him. The only persons who have access to him may be his immediate subordinates, the heads of division. The Heads of Division may be accessible to workers.

Lines of Authority

The level of authority in an organization is patterned along two basic dimensions:

  1. Line, and
  2. Staff

Before we deal with these two dimensions, it is important to discuss authority in an organization.

Authority has been defined by many people in different ways. Most of the definitions are all-embracing. Weber, for example, feels that authority infers that specific commands from a given source will be obeyed by a given group of people since the one who uses power can command others to respond to his needs without questions. Authority in a formal sense is therefore based on the individual’s obedience, and willingness to suspend his own criteria for decision-making. Weber discussed many forms of authority to which individuals in organizations are subjected.

There are:

  • Charismatic Authority is based on the peculiar characteristics and qualities of a person. People willingly accept the authority of an individual whose qualities they are interested in emulating. Men like celebrities and several others possessed charismatic qualities by which they were able to elicit a strong emotional response from their followers.
  • Traditional Authority is implicit in a position by custom. People are loyal to obey the position rather than the individual who occupies it. In Africa, traditional authority is vested in traditional rulers or chiefs, such as Obas (kings), Emirs, Chiefs and heads of villages. Inhabitants are forced to uphold traditions through loyalty to Obas and Emirs. Traditional authority can only be conferred or revoked by the people, acting in unison.
  • Legal Authority is that which is derived from the laws made for the common good of the people. The laws of a country are the basis of the authority of all those who implement them. The authority of the policeman to arrest a criminal is derived from the law, which prescribes the offending behavior of the criminal. In the organization, legal authority is derived from rules, regulations, and procedures legitimately made by management, or through joint decision-making by both management and workers.
  • Formal Authority is vested in the organization. Formal authority can be considered as laws binding the conduct of the business of the organization reflected rules and regulations. The employee, upon appointment, is expected to obey the rules and regulations of the organization. The performance of assigned responsibility is within the formal authority. This means that responsibilities in an organization are hierarchically ascribed that is lines of authority are clearly depicted.
  • Functional Authority is based on technical competence, and the level of responsibility an individual occupies in an organization. Weber discussed functional authority in relation to the legal-rational pattern, of bureaucracies, that is, competence or expertise acquired on a position. This means that a manager who has just elementary education is a competent authority because he has worked in a particular position for several years. Holy and Mishel disagreed. Their argument was that technical competence could provide the source for legitimate control and directives in a formal organization, regardless of the specific position held.

The point here is that a junior worker who is technically competent in an aspect of an organization’s production can be considered to possess functional authority, not necessarily bureaucratic.

Line and Staff Relationship

An organization is hierarchically structured to provide the basis for operation toward goal achievement. The organization is structured along a line and staff continuum.

The concept of line and staff is as old as the organization itself. The functional responsibility vouched by Taylor, (father of scientific management) in the early part of the twentieth century, provided new ideas about the relationship between managers and their assistants. Essentially, a certain category of officers (line officers) was entrusted with the responsibility of planning, organizing, leading, directing, staffing and controlling the resources of the organization. The responsibility of the line office is to act or make decisions based on his experience of the objectives of the organization.

The line officer is one with the authority to make decisions about the future of the organization. The line position is the nerve center where decisions flow down to those whose role is to implement. The decisions flow down from the managing director to the managers on a broader basis. The managers narrow the decisions according to their functional operational responsibilities, or authority of the departments, and direct the information according to the level of responsibility.

At this level, the manager further translates the information about decisions to the supervisors and to the workers. The longer the chain of command, the longer the channel of communication. The line officers are the executives of the organization, that is, the Managing Director, General Manager, and sectional managers. There is a clear area of authority assigned to line officers. At each level of the organizational hierarchy, decisions are made to enhance the achievement of the goals of the organization. Line officers are those officers, whose operational activities directly affect production, manufacturing, servicing, and distributing the product or service of an organization. In other words, their decisions affect the goals of the organization.

Staff officers in organizations are concerned with carrying out the responsibility assigned to them by the management. The staff is technical experts in a particular area, who work to achieve efficiency in production. Their main role is to advise managers on the best way to achieve organizational effectiveness and efficiency in output production. The staff officer can think but cannot act. Their responsibilities are to make recommendations, which may be rejected by the line officer, no matter how plausible. Decision-making is the prerogative of the line officer.

Delegation of Authority

Delegation of authority implies that the person who is in possession of the power to act, as in the case of the line officer, may assign part of his powers to his subordinates. The line officer, say, the managing director of a company, cannot by himself perform all the functions necessary, to achieve the goals of the organization. While it may be possible for a small retail businessman to perform the accounting, purchasing, selling, organizing, personnel, and managing functions, it will be an impossible task for a managing director of a limited liability company of moderate size to perform the same functions.

The complexity of an organization determines the level of delegation of authority. In some small companies, a manager may occupy a staff position, in which his obligation is limited to advising the chief executive (line officer). In highly complex organizations, on the other hand, sectional or departmental managers are authorized to make decisions that may affect the future or the goals of the organization, without clearance from the managing director. Such absolute powers or authority to act are rare in real life. The managing director must be aware of decisions affecting the goals of the organization, but in most cases, decision-making is reserved for line officers, who are authorized to make decisions relevant to their area of expertise (i.e production, marketing, etc).

In the delegation of authority, there are specified procedures for accomplishing tasks. The line officers are guided by these procedures. The one who delegates authority determines the specific procedures for carrying out the functions of the authority.

Problems in Organizing

There are several problems of organizing which are peculiar to African business situations. Some of these are:

  1. Lack of Expertise: For many years, managers were hand-picked from among clerical officers with just elementary education (Standard Six) or less, but who had many years of service in the company. In many companies in Africa, managers were promoted from among different grades of officers, especially from among the few graduates who majored in History, Geography, English, etc.

The result is that these individuals had no theoretical background upon which to operate.

The level of managerial training in Africa, or the lack of expertise in management, could be traced to the lack of programmes in business administration in African universities, until the early 1960s. The lack of expertise in production management, marketing, and financing could be attributed also to the non-development of business education programmes in African universities. As a result, managers had to learn through their own mistakes. In business, any mistake is a costly occurrence which must be paid for, often by consumers.

The establishment of the Centre for Management Development by the Federal Government was intended to provide in-service managerial training to personnel, in industry and government. Since good management ability is derived from training and experience in real business situations in terms of planning, leading, directing, controlling and coordinating, Africa still lacked experience in industrial management.

Most universities that have business departments are yet to develop into specialized academic areas. Most of the programmes fall into the area of general business management, with no specialized skill development in production management, financing, operations research, marketing, and personnel. Over twenty years after the first programme in business administration was started at the University of Nigeria, Nsukka, Nigeria was still importing managerial personnel to help plan, organize staff, direct and coordinate business functions in industry and government.

  1. Limited Experience in Area of Operation: The problems of management in the African business sector could also be attributed to the limited experience in the area of operation of a company. In order to meet the requirement, many individuals have been promoted to managerial positions, in which they have little or no standing experience, to make decisions regarding the goals of the organization. Therefore, because of limited experience, the companies are not able to provide national leadership, and cannot follow the technological development trends in the industry.
  2. Lack of Exposure to Technical Situations: Another problem faced by industries in African countries is that most managers in training are not usually exposed to practical training. The managers in training are exposed in most cases to theoretical knowledge. These individuals are usually made managers without the necessary technical experience of the industry, in order to be able to provide technical advice to the line officers for the sake of decision-making.

Some universities in Africa have started by bridging the gap between theory and practice by the establishment of an electronic company. Engineering students will be made to spend specific periods in the plant during their training.

4. Lack of Delegation of Authority: The problems of education, lack of experience, lack of exposure, and lack of expertise lead to another problem, that of the delegation of authority. Authority to act or make decisions regarding the future of an organization is the preserve of the top manager or managing director. Power to make decisions is highly concentrated at the top. As a result, many general managers are appointed to meet the prescription of the quota. This caliber of managers has no authority to act. This is because their decisions may bind the company unnecessarily. They have no voice, as far as profit from the general operation of the companies is concerned.

 

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