Organising

Once the goals and plans exist, someone has to decide who does what. Organising turns plans into an arrangement of people, tasks and authority.

This unit covers the concept and principles of organising, approaches to organising, structuring an organisation, departmentalisation, span of control, authority and delegation, centralisation versus decentralisation, mechanistic and organic designs, and modern structures: matrix, team and network.

4.1 Concept and principles of organising

Organising is the management function of dividing the total work into tasks, grouping the tasks into jobs and departments, assigning authority and responsibility, and establishing relationships and coordination so that people can work together effectively towards the goals.

The result is an organisation structure, often drawn as an organisation chart.

Process of organising (structuring)

1. Review plans and objectives.
2. Identify and list the activities required.
3. Divide work into manageable tasks (job design; division of labour).
4. Group tasks into jobs and departments (departmentalisation).
5. Assign authority and responsibility; decide reporting relationships and span of management.
6. Provide resources and staff the positions (staffing).
7. Coordinate vertically and horizontally; review and adjust.

Principles of organising

Objective (every part contributes to the objective); specialisation (division of work); unity of command (one boss); scalar chain (clear line of authority); span of control (limit on the number of subordinates); authority–responsibility parity (authority equals responsibility); delegation (push authority down); balance (neither over-centralised nor over-decentralised); flexibility; continuity; coordination; simplicity and clarity; efficiency; exception principle (managers handle only the exceptions).

4.3 Departmentalisation

Departmentalisation groups jobs into units. Bases:

Basis	Grouping	Example	Advantage	Disadvantage
Functional	by function: production, marketing, finance, HR, IT	a factory	specialisation, economies of scale, clear career paths	silo thinking; slow cross-function coordination
Product	by product line	a bank's loans, cards and insurance divisions	focus on products, accountability for results	duplication of resources
Geographic (territorial)	by area	Province 1, Bagmati, Gandaki branches	local knowledge, quick response	duplication; control from the centre is harder
Customer	by type of customer	retail, corporate, government	tailored service	duplication, underused resources when demand is low
Process / equipment	by the production stage	cutting, assembly, packing	efficient use of machines	only for certain operations
Time (shift)	by working period	day, night shifts	continuous operation	supervision at night
Project / matrix	by project (below)	software projects	focus	conflicts of authority
Hybrid	most real organisations mix bases

4.4 Span of management and organisation shape

The span of management (control) is the number of subordinates reporting directly to a manager. A narrow span gives a tall organisation (many levels); a wide span gives a flat one.

	Tall (narrow span)	Flat (wide span)
Control	tight supervision	loose; subordinates more independent
Communication	slow, distorted through many levels	quick and direct
Cost	many managers, high cost	fewer managers, lower cost
Motivation	little autonomy	more autonomy and responsibility
Suits	complex, risky or unskilled work	skilled, routine work and experienced staff

Factors that widen the span: capable, trained subordinates; clear plans and standards; similar, simple, routine tasks; good communication and information systems; a capable manager; subordinates in one place.

Graicunas's formula shows why a manager cannot supervise too many: the number of possible relationships (direct single, cross and group) for n subordinates is n(2ⁿ⁻¹ + n − 1): n = 3 → 18; n = 4 → 44; n = 5 → 100; n = 6 → 222 — the relationships grow explosively, so spans of 4–8 are typical (wider at lower levels).

4.5 Authority, responsibility and accountability

• Authority: the right to make decisions, give orders and use resources. Power is the ability to influence (can come from expertise or personality, not only position).
• Responsibility: the obligation to perform assigned duties.
• Accountability: the answerability for results to the one who assigned them.

Parity principle: authority should equal responsibility; responsibility cannot be delegated away entirely (accountability remains with the manager).

Conflicts: line may resent staff advice; staff may feel unheard. Remedy: clear roles, mutual respect, staff "sell" ideas, line uses them.

4.6 Delegation of authority

Delegation is assigning authority and responsibility (to perform specific tasks) from a manager to a subordinate, while the manager retains accountability. Steps: assign the duties → grant authority → create the obligation → keep accountability.

Features: it is an act of the superior; it does not reduce the superior's ultimate accountability; the subordinate gets the authority needed; it is a continuous process.

Advantages: frees managers for higher tasks; faster decisions; develops subordinates; improves motivation and morale; allows expansion.

Barriers: managers — fear of losing control or of being outshone, belief that "I can do it better", lack of trust, poor ability to explain; subordinates — fear of failure or criticism, lack of confidence, no extra reward; organisation — vague roles, centralised culture, no information flow.

Making it effective: choose the right person, define results clearly, give authority equal to the task, set standards and checkpoints, trust, give feedback, reward success, and accept some mistakes.

4.7 Centralisation, decentralisation and devolution

• Centralisation: decision-making authority is concentrated at the top.
• Decentralisation: authority is systematically dispersed to lower levels (formally and as a policy).
• Devolution: the complete transfer of authority and responsibility to independent units or lower governments (in Nepal, the federal structure devolves powers to provinces and local governments).
• Delegation vs decentralisation: delegation is individual and can be withdrawn; decentralisation is organisation-wide policy.

	Centralisation	Decentralisation
Advantages	uniform policy, tight control, top-level expertise, economy, quick in a crisis	faster local decisions, motivation, development of managers, relieves the top, suits large and diverse organisations
Disadvantages	slow decisions, overloaded top, demotivated lower levels	loss of uniformity and control, duplication, risk of local interest over the whole
Suits	small, stable, crisis, uniform products	large, complex, geographically spread, fast-changing

Factors: size, geographic spread, cost and importance of the decision, managers' ability, the environment's dynamism, the organisation's history and culture, availability of information technology.

4.9 Modern organisational structures

• Matrix structure: people report to two bosses — a functional manager (e.g. software engineering) and a project manager. Advantages: flexible use of specialists across projects, better coordination, project focus. Disadvantages: dual command (violates unity of command), power struggles, confusion, stress. Typical in software and consulting firms.
• Team-based structure: the organisation is built from cross-functional teams (self-managed or project teams) with the authority to do whole tasks. Advantages: speed, innovation, motivation, breaks silos. Disadvantages: slow decisions by consensus, team conflicts, free-riders, difficult accountability.
• Network (virtual) structure: a small core organisation outsources most functions (manufacturing, design, distribution, IT) to partners connected by technology and contracts. Advantages: low overhead, flexibility, focus on the core competence, access to global talent. Disadvantages: less control, dependence on partners, quality and security risks, coordination cost.
• Others: divisional (multi-product), boundaryless organisation, flat/holacracy, hybrid.

4.10 Staffing (the human side of organising)

Staffing means filling and keeping filled the positions in the structure: human-resource planning (forecasting needs), recruitment (attracting candidates: advertisements, campus drives, referrals), selection (screening, tests, interviews, reference checks, medical, offer), orientation/induction, training and development, performance appraisal, compensation, promotion, transfer and separation.

Good staffing puts "the right person at the right job at the right time."

(a) Nepal Rastra Bank, Pokhara office

(b) Head office and regional office

4.6.1 Eight advantages of delegation

1. It frees managers for important work. A manager who does everything personally has no time for planning or for solving serious problems. Delegating routine tasks, such as approving small expenses, lets a branch manager think about growth and customers. The manager's time is the scarcest resource in an organisation.
2. It speeds up decisions. When a decision must travel up to the top and back, customers wait and chances are lost. A counter officer who may approve a small cash withdrawal on the spot serves the customer in minutes. Delegation moves the decision to where the information is.
3. It develops subordinates. People learn by taking responsibility, making decisions and sometimes making mistakes. A teacher who is asked to organise the examination timetable learns skills that prepare for the role of head of department. Delegation is therefore also a training method.
4. It improves motivation and morale. Staff who are trusted with real authority feel respected and take more pride in their work. Their commitment is stronger than when they only follow orders. Higher morale reduces absence and turnover.
5. It makes better use of expert knowledge. The person closest to a task often knows it best. A sales officer in Biratnagar understands local buyers better than the head office in Kathmandu does. Delegating to such people gives better decisions.
6. It supports growth. An organisation whose owner makes every decision cannot grow beyond what one person can handle. Delegation lets a small shop become a chain of shops by creating managers who run each outlet. This is how many Nepali family businesses have expanded.
7. It prepares successors. When a manager leaves or falls ill, a delegated team can continue the work without a crisis. Delegation therefore reduces the risk of depending on one person. It also gives the organisation a ready pool of future managers.
8. It makes the structure more flexible. Authority spread through the organisation lets each unit adjust to local changes without waiting for orders. A decentralised organisation (Plate 4.1) can respond to different regions while following one policy. Responsibility and accountability, however, stay with the delegating manager, who must still control the results.

(a) One conductor, a large group

(b) Graicunas relationships and levels for 4,096 staff

Formula and fact sheet

• Organising process: objectives → activities → divide work → group (departmentalise) → assign authority → staff → coordinate.
• Departmentalisation bases: function, product, geography, customer, process, time, project/matrix.
• Graicunas: relationships = n(2ⁿ⁻¹ + n − 1): 18, 44, 100, 222 for n = 3–6.
• Levels needed = repeated division of operatives by span; 625 operatives: span 5 → 4 levels/156 managers; span 25 → 2 levels/26 managers.
• Authority (right) vs responsibility (duty) vs accountability (answerability); accountability cannot be delegated away.
• Line = command; staff = advice; functional = limited command by a specialist.
• Mechanistic (stable) vs organic (turbulent); matrix = two bosses; network = outsourced core.

Chapter summary

• Organising divides work, groups it into departments, assigns authority and responsibility and coordinates people through a structure.
• Classical, behavioural and contingency views give different designs; the choice depends on the situation.
• Span of management shapes tall or flat structures; Graicunas shows why spans are limited.
• Line authority commands, staff authority advises; delegation passes authority but not accountability; decentralisation spreads authority by policy and devolution transfers it fully.
• Mechanistic structures suit stable environments, organic ones turbulent; matrix, team and network structures answer modern needs.

Practice

1. Define organising and explain its process and principles.
2. Compare the classical, behavioural and contingency approaches to organising.
3. Explain any four bases of departmentalisation with advantages and disadvantages.
4. What is span of management? Differentiate tall and flat structures and compute managers needed for 810 operatives with span 3 (assuming exact division).
5. Compare line and staff authority.
6. Define delegation. Discuss its advantages and the barriers to it.
7. Differentiate centralisation, decentralisation and devolution.
8. Distinguish mechanistic and organic organisations.
9. Describe the matrix, team and network structures with their strengths and weaknesses.
10. Draw an organisation chart for a college with functional departmentalisation.

Answers and worked solutions

1. See 4.1: dividing work, grouping, assigning authority, establishing relationships; process: objectives → activities → divide → group → authority → staff → coordinate.

2. Classical: efficiency, principles, hierarchy; behavioural: human needs, groups and participation; contingency: fit to size, technology, environment.

3. E.g. functional (specialisation but silos), product (focus but duplication), geographic (local response but duplication), customer (tailored but costly).

4. Span = number of direct subordinates; tall = many levels and a narrow span; flat = few levels and a wide span. For 810 operatives and span 3, round up at each level: 270 → 90 → 30 → 10 → 4 → 2 → 1. That is 7 levels and 270 + 90 + 30 + 10 + 4 + 2 + 1 = 407 managers — a narrow span is expensive (with span 10 the same 810 operatives need only 81 + 9 + 1 = 91 managers).

5. Line: direct command in the chain; staff: advice and service; functional: limited line-like authority in a specialist area.

6. Delegation = assigning authority and responsibility to subordinates, accountability stays. Advantages: time, speed, development, motivation. Barriers: fear of losing control, lack of trust, fear of failure, vague roles.

7. Centralisation = authority at the top; decentralisation = dispersal by policy; devolution = complete transfer to independent units, e.g. federal powers to local governments.

8. Mechanistic: rigid, formal, centralised, stable environment; organic: flexible, lateral communication, decentralised, changing environment.

9. Matrix: two bosses, flexible but dual command; team-based: cross-functional, fast but consensus is slow; network: outsourced core, low overhead but less control.

10. Principal/Campus chief at the top; below him Academic, Administration, Finance, Examination, and IT departments; under Academic: BCA programme, BBS programme, library, labs.

Model answers (5 and 10 marks)

Q1 (5 marks). What is departmentalisation? Explain its bases with examples.

Introduction. Departmentalisation is the grouping of jobs and activities into units (departments) so that related work is coordinated under one manager. The basis chosen shapes the whole structure; Figure 4.2 shows four common ones.

1. Functional. Jobs are grouped by the business function: production, marketing, finance and personnel. The gain is efficient use of specialised skills; the weakness is slow cooperation between departments.
2. Product. Each product line has its own team, for example noodles, biscuits and beverages in a food company. It gives product focus and clear profit responsibility but duplicates staff.
3. Geographic. Units are set up by region, such as central, western and eastern branches of a bank. It gives local knowledge and quick service but may lead to inconsistent standards.
4. Customer. Units serve types of buyers such as retail, hotel and government customers. It offers tailored service but needs many specialists.
5. Process and project. Jobs are grouped by stages of work (cutting, stitching, packing in a garment factory) or by project (a construction team for each building).

Conclusion. No basis is best everywhere; large organisations combine several, for example functional departments at the head office and geographic units in the field.

Q2 (5 marks). Explain span of management. State the factors affecting it and show with Graicunas's formula why it should be limited.

Introduction. The span of management is the number of subordinates who report directly to one manager. It decides whether the organisation is tall or flat (Figure 4.3).

1. Tall and flat. A narrow span gives many levels, close supervision and slow communication; a wide span gives few levels, quick communication and more independence for staff. With 4,096 operating staff, a span of 4 needs 1,365 managers in six levels, but a span of 8 needs only 585 in four levels.
2. Factors widening the span. Skilled and trained subordinates, clear plans and standards, similar and routine tasks, good communication systems, a capable manager and staff working in one place.
3. Factors narrowing the span. Complex or risky work, unskilled staff, scattered locations and a manager with many other duties.
4. Graicunas's formula. The number of possible relationships for n subordinates is n(2^{n-1} + n - 1). For n = 4 it is 4 x (8 + 3) = 44; for n = 5 it is 5 x (16 + 4) = 100; for n = 6 it is 6 x (32 + 5) = 222; for n = 8 it is 8 x (128 + 7) = 1,080.
5. Meaning. Each added subordinate multiplies, rather than adds to, the manager's coordination load, so there is a practical limit, often quoted as about five to eight at the top and wider at the operating level.

Conclusion. The right span is a balance between control and cost and depends on the people and the task.

Q3 (10 marks). Explain authority, responsibility and accountability. Describe delegation of authority, its process, barriers and the principles of effective delegation. Distinguish centralisation from decentralisation.

Introduction. Organising joins people through relationships of authority. Understanding authority, responsibility, accountability and delegation is central to the structure in Figure 4.1 and to the head-office and regional arrangement in Plate 4.1.

Authority, responsibility and accountability. Authority is the right to make decisions, give orders and use resources. Responsibility is the obligation to perform the assigned duties.

Accountability is the duty to report on results and accept the consequences.

Authority can be delegated; accountability cannot; and responsibility should be matched with authority, otherwise a person is held to blame without the power to act.

Line authority runs down the chain of command, while staff authority is advisory (Figure 4.1).

Delegation. It is the process by which a manager assigns part of the work together with the authority to do it, and creates the obligation of the subordinate to complete it.

Its steps are: (1) assign the duty clearly; (2) grant the necessary authority; (3) create the obligation to perform; (4) keep accountability with the delegating manager and follow up. Its advantages are in section 4.6.1.

Barriers. The manager may fear losing power, think "I can do it faster myself", lack trust in subordinates or lack skill in explaining the task. Subordinates may fear mistakes, lack confidence or feel they are overloaded.

Principles of effective delegation. Delegate results, not methods; match authority to responsibility; choose the right person; give clear instructions and deadlines; establish controls and feedback; and accept that mistakes will happen and are used for learning.

Centralisation and decentralisation. Centralisation keeps most decision-making at the top; decentralisation spreads it to lower levels. Delegation is the process, while decentralisation is the result when delegation is systematic and wide.

Basis	Centralisation	Decentralisation
Decision-making	at the top	spread through levels
Speed	slow for local matters	quick
Uniformity	high	may vary by unit
Managerial training	little	much
Suits	small organisations, crises	large, diverse, quickly changing ones
Nepali example	a small family shop	regional offices such as NRB Pokhara

Conclusion. Effective organising matches authority with responsibility, uses delegation to speed decisions and to build people, and chooses an appropriate degree of decentralisation. However much is delegated, the manager remains accountable.

Q4 (5 marks). Distinguish mechanistic from organic organisations (Burns and Stalker).

Introduction. Tom Burns and G. M. Stalker (1961) found that firms in stable conditions used rigid structures, while firms in rapidly changing conditions used flexible ones.

Basis	Mechanistic	Organic
Tasks	narrow, specialised	broad, shared
Rules	many, formal	few, flexible
Authority	at the top, strict chain	spread, based on knowledge
Communication	vertical, orders downward	lateral, advice and discussion
Decisions	centralised	decentralised
Environment	stable	changing and uncertain
Example	government revenue office	software start-up

Conclusion. Neither is better in itself; the right structure depends on the environment, which is the contingency view.