Organising
Domain 5 - Organising - tests organisational structure, delegation and its elements, decentralisation, and formal versus informal organisation.
Meaning and steps
Organising identifies and groups work, assigns duties, defines authority and responsibility, and builds working relationships. Steps: division of work → departmentalisation → assignment of duties → establishing reporting relationships.
Structure
- Functional: grouped by function (production, marketing, finance). Suits single-product firms; gives functional specialisation, but departmental goals may override organisational goals.
- Divisional: grouped by product or territory. Gives product specialisation and clear accountability, but duplicates resources and raises cost.
Delegation
Elements: authority (right to command), responsibility (obligation to perform), accountability (answerability for results). Authority flows downward, responsibility upward. Authority can be delegated; responsibility cannot; accountability cannot be delegated at all.
Decentralisation
Systematic dispersal of decision-making authority to lower levels. It is an extension of delegation: delegation is between one superior and one subordinate and can be withdrawn; decentralisation is organisation-wide and cannot be fully withdrawn.
Formal vs informal
Formal: deliberately designed, written rules, authority flows downward. Informal: arises from social interaction, no written rules, grapevine communication, satisfies social needs, but can spread rumours.
Worked example
A ₹500-crore firm with three unrelated lines (soap, cement, software) should choose a divisional structure: each product faces different customers, technology and competitors, so functional grouping would overload one marketing department and blur profit accountability. A ₹50-crore single-product firm would gain little from division and would merely duplicate finance and HR.
Traps
Writing "responsibility can be delegated" is wrong. Decentralisation is not a synonym for delegation.