Organising
Process and structures
Organising follows four steps: identification and division of work → departmentalisation → assignment of duties → establishing reporting relationships. Functional structure groups activities by function (production, marketing) and suits single-product firms. Divisional structure groups by product or territory, creating profit centres and faster decisions, but duplicates resources.
Delegation: three elements
- Authority: right to command; can be delegated; flows downward.
- Responsibility: obligation to complete the task; cannot be delegated.
- Accountability: answerability for results; cannot be delegated; flows upward.
Decentralisation
Decentralisation is the systematic dispersal of decision-making authority to the lowest levels. It is not a synonym for delegation: delegation is between two persons, decentralisation is organisation-wide; delegation can occur without decentralisation, but full decentralisation requires delegation. Its extent is a deliberate choice of management.
Formal versus informal organisation
Formal organisation is deliberately designed, with authority fixed by rules and communication along the scalar chain. Informal organisation arises from social interaction, has no fixed rules, uses grapevine communication, satisfies social needs, but can spread rumours.
Worked example
A manager asks an assistant to prepare a report but keeps the signing power himself. He delegated work, not final authority, and he remains accountable to his own superior. That one line - accountability stays with the delegator - is what examiners look for.
Traps that cost marks
- Saying responsibility can be delegated.
- Using decentralisation and delegation interchangeably.
- Forgetting that informal organisation is not created by management.