Organising
Core rules
- Organising is identifying and grouping work, defining responsibility and establishing authority relationships.
- Process: division of work, departmentalisation, assignment of duties and establishing reporting relationships.
- Functional structure groups work by function such as marketing or finance. It suits single-product firms and gives specialisation but may cause departmental conflict.
- Divisional structure groups by product or region. It suits multi-product firms and gives product focus but duplicates resources.
- Delegation has three elements: authority (right to command), responsibility (obligation to perform) and accountability (answerability for results). Authority can be delegated; responsibility cannot; accountability flows upward.
- Decentralisation is the systematic dispersal of authority to lower levels. It is broader than delegation and is not merely a superior-subordinate act.
Worked example
A retailer appoints a sales manager and gives her power to appoint two salespersons and spend up to ₹50,000 on local promotion. She remains answerable to the owner for sales targets. Here authority and responsibility are delegated, but accountability stays with the owner. If sales fall, the owner cannot escape final answerability. Reasoning: delegation transfers operating authority, not ultimate accountability.
Traps
Do not say responsibility can be delegated. Do not equate decentralisation with delegation: decentralisation is organisation-wide and policy-driven. Informal organisation arises from social interaction and is not created by management. In a divisional structure each division may have its own functional specialists, so claiming there is no duplication is false.