Organising
Organising is identifying and grouping work, defining responsibility and authority, and creating relationships so that people work together effectively. The exam tests organisation structure, formal and informal organisation, delegation, decentralisation and span of management.
Core concepts
- Process: division of work, departmentalisation, assignment of duties, and establishing reporting relationships.
- Functional structure: departments by function (production, marketing, finance); good for specialisation and efficiency but may cause departmental conflict.
- Divisional structure: divisions by product, territory or customer; each division has its own functions; good for accountability but costly and may duplicate resources.
- Formal organisation is deliberately designed; informal organisation arises from social interaction and is not created by management.
- Span of management: narrow span → tall structure; wide span → flat structure.
Delegation and decentralisation
Delegation has three elements: authority (right to command), responsibility (duty) and accountability (answerability). Authority flows downward; responsibility can be assigned but accountability cannot be delegated. Decentralisation is the systematic dispersal of authority to lower levels and is an extension of delegation.
Worked example
A retail chain with stores in three cities uses a divisional structure by city. Each city manager gets authority to hire staff up to ₹20,000 salary and is accountable for sales. The manager cannot delegate accountability to a store supervisor. Head office keeps pricing policy centralised, so decision-making is partly decentralised and partly centralised.
Traps
Do not say delegation and decentralisation are the same. Do not claim accountability can be delegated. Informal organisation is not created by management and cannot be abolished by a formal order. A narrow span does not mean more delegation.