What is an Organization and Elements of Organizing?

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By: Site Engineer, Staff

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An organization is a group of people bound together to provide unity of action for the achievement of a predetermined objective.

For proper and easy organization, organization chart is always devised to help employees, the board of directors and shareholders to see at a glance, the division of responsibilities and lines of authority.

Organizational structure should be followed by an entrepreneur in an articulated procedure like a job description, departmentalization, span of control and delegation of authority. The span of control depends on the complexity of the task, ability of the supervisor, proximity of the task, variety of the jobs, quality of personnel and the use of personal assistants.

Entrepreneurs should be prepared to apply the organizing principles in their organizations.

Every organization is made of human and physical resources. These resources are brought together in order to accomplish a predetermined goal. In order to accomplish these objectives, it is the function of management to determine the best structure that will optimize the utilization of resources. It is the organization that organizes these resources; manage the people and their relationship in an enterprise. The organization is a means of achieving the best result and also determines the type of people required.

Meaning of Organization

It can be seen as a process of coordinating individual efforts to accomplish a common objective. An organization can be seen as an entity. This is true of all business enterprises, hospitals, or clubs.

An organization is a group of people bound together to provide unity of action for the achievement of predetermined objectives. The organization is very fundamental to human nature. The subject of the organization is central to sociology, psychology, and even anthropology.

The organization can be classified into two broad headings:

  • Formal organization is a planned pattern of group behavior designed to achieve an objective.
  • The Informal organization is the human interaction that occurs simultaneously and natural without other influence.

Organization Charts

An organizational chart is a visual device that shows the various departments and how they relate to one another. The organization chart helps the employees, the board of directors and stockholders to see at a glance, the division of responsibility and lines of authority.

One of the major advantages of an organization chart is that it helps in studying how to modify or improve the relationships and areas of responsibilities within the organizational structure.

The organization can operate without a formal, drawn organization chart, but the presence of the chart gives evidence of a thoughtfully planned structure. The shows the existence of certain positions identified by shapes and line of authority shown by solid straight lines connection.

The best organizational design is one that leads to the attainment of organizational objectives.

The system is subjected to change when the environment in which it operates changes or when the company is expanding its operations or changing its objectives or during the process of re-organization, therefore a good organizational design is the one that accommodates change when required. A good organization is judged by its economic performance, the ability to survive in a dynamic environment and the growth and satisfaction of the members.

Organizing is not possible without planning; it is a follow-up to planning. Remember planning determines the objectives to be achieved, organizing on the other set objectives. Organizing establishes a role environment for performance by individuals operating together in a formally structured enterprise.

How to Design the Organizational Structure

In designing the organizational structure the entrepreneur should follow some procedures:

1. Job Description

This is the detailed description of employees’ jobs and responsibilities. It normally involves what is to be done and how it is to be done. Conflicts and job overlapping in an organization are always avoided through this process. The job is equally specified and classified. A specification of the qualifications necessary to fill each of the defined job is done under job specification.

Departmentalization

The process of combining already defined jobs into groups of related activities is known as departmentalization.

We have three common ways of departmentalization namely functional, product and departmentalization.

  • Functional Departmentalization: The first thing in functional departmentalization is to be able to identify the major functions of the enterprise. All the entrepreneur needs to do is to be able to determine the departments or major form organize. Functional departmentalization is the most common way of grouping related tasks in an organization for a clear realization of organizational objectives. Since different organizations have different organizational targets, it is therefore, means that different organizations are differently departmentalized. Examples: service organizations, manufacturing organizations, and banks are departmentalized differently.
  • Product Departmentalization: The employees and activities are grouped together on the basis of products of the firm. The manager usually takes responsibility, authority accountability of definite product entrusted to him. He coordinates the sales, production and financial well-being of the product, profitability can easily be measured for product and those that are not doing well can be easily identified. This type of departmentalization is highly recommended to large companies with many product lines.
  • Territorial Departmentalization: With the increase in organizational growth, some organizations grow out of their base of operation to other geographical areas to seek more businesses. When such things happen, the organization can create regional managers to take charge.

3. Span of Control

The span of control involves the determination of the number of employees that should report to a superior manager in the performance of their duties. The span of control can be wide or narrow depending on the organizational policy and quality of the employees. It is wide when more people report to one source and narrow when few people report to one source.

Factors That Affect the Span of Management

  • Congruence of Goals: Employees who believe in the organization and see it as the ladder, through which they attain their goals, are self-motivated to work without supervision. It is different from a group of dissatisfied employees who will work hard only in the presence of the supervisor.
  • Type of Work: The type of work employees are doing will influence the span of control.
  • The Ability of the Supervisor: Some supervisors are capable of controlling more subordinates than others even if their work “interlocks”. Generally, in designing the organization, it is the ability of the average supervisor that will be used to determine the span of control.
  • The Ability of the Employees: Employees with adequate skill, experience and training require little or no supervision in the discharge of their regular functions. A supervisor in charge or these professionals can supervise a large number of employees.
  • Importance of the Work: Some jobs require closer supervision than others. For example, a quality control job requires close supervision than an ordinary job.
  • Geographical Location: It is easier to supervise people working together than scattered all over a large geographical region.

4. Delegation of Authority

No organization can function effectively without delegation. Delegation is the organization transfer of authority from superior to a subordinate. A delegation of authority empowers a subordinate to make commitments, use resources and take action in relation to duties assigned to him. The division of an organization into units or departmentalization involves delegation.

Delegation originates from the fact that the person alone cannot successfully discharge all the responsibilities in an organization. In essence, a delegation of authority means that a subordinate has the power to make decisions and to act within explicit limits without checking with superiors. Delegated authority enables the superior to share responsibility with his subordinate.

When one delegate, three major factors are implicit:

  • There is an assignment of responsibility
  • There is an assignment of authority
  • There is a creation of accountability

Principles of Organizing

The delegation involves accessibility. Accountability means answering for the use of your formal authority by someone else. A delegation of formal authority to another person does not relieve one of the necessities of accounting. Subordinate must account for the use of delegated authority because an obligation is created. A subordinate is held responsible for assigned tasks and he is accountable for the satisfactory completion of the duty. Accountability to one’s superior is, therefore, absolute; that is, it can neither be transferred nor delegated.

The Principle of Unity of Command

This principle states that a subordinate should be accountable to one and only one superior at a time. It is important for the subordinate to report to only one superior in order to maintain the chain of command. The essence of the unity of command is to avoid conflicting instructions. It is essential in all organizations for an employee to require delegated authority from one boss and is accountable to the same boss for the assigned task.

Other principles of organizing which the entrepreneur should know are:

  • The Principle of Functional Definition: This states that jobs must be clearly defined in an organization such that there should be no ambiguity as regards any body’s job. An employee should know what he should be doing in the organization.
  • Scalar Principle: The scalar principle states that there should be a clear line of authority from the lowest to the highest worker in the organization. This ensures that even employee in the organizational knows who to report to and who should report to him.
  • The Principle of Span of Control: The entrepreneur should be able to determine the number of people that he can effectively directly supervise. The entrepreneur should always be at alert not to over-load any section under a supervisor so as to maintain elective control.
  • Principles of Parity of Authority and Responsibility: This principle states that authority should be delegated when responsibility is delegated for respective tasks to be done.
  • The Principle of Authority Level: This principle states that the authority with which the worker performs must be within his level. This is to avoid a situation where the entrepreneur ends up taking all the decisions in the organization personally.

 

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