Wipro Technologies is striving to become a leading global technology services company, competing with IBM and Accenture.
A key strategy was restructuring to enhance customer orientation.
Wipro decentralized into subsidiaries based on product lines (telecommunications, engineering, financial services, etc.).
Each subsidiary:
Generates approximately 300 million in annual earnings.
Operates autonomously with independent accounting, personnel, and administration.
Shifted from a centralized to a decentralized management system to empower business leaders with greater growth responsibility.
An entire layer of executives was removed to de-layer the organization.
Learning Objectives
Explain the concept of organising.
Explain the process of organising.
Describe the importance of organising.
Explain the meaning, advantages and disadvantages of functional organisation.
Explain the meaning, advantages and disadvantages of divisional organisation.
Explain the meaning, advantages and disadvantages of formal and informal organisation.
Distinguish between formal and informal organisation.
Explain the concept of delegation and decentralisation.
Describe the importance of delegation and decentralisation.
Distinguish between delegation and decentralisation.
Introduction to Organizing
Organizing is crucial for structuring work in a way that adapts to the dynamic business environment.
Successful implementation of plans requires resources, optimum resource utilization, attainable tasks, and workforce empowerment.
Wipro's customer-focused approach and diversification by product lines demonstrate the importance of organizing.
The organizing function ensures efforts align with goals set in the planning phase, optimizing resource use and promoting effective teamwork.
Organizing translates plans into action.
It creates an organizational structure that defines roles, allocates skills, clarifies relationships, eliminates ambiguity, and establishes authority and responsibility.
Meaning of Organising
Organizing coordinates human efforts, assembles resources, and integrates them to achieve specific objectives.
Organizing is defined as a process that initiates implementation of plans by clarifying jobs, working relationships, and effectively deploying resources for desired results (goals).
Example: A school fete is organized by dividing activities into task groups (food, decoration, ticketing) under an official in charge, with coordinating relationships established.
Steps in the Process of Organising
Organizing involves a series of steps to achieve the desired goal.
Example: Students working in the school library over the summer need to unload books, stock shelves and dispose of waste; this work needs to be supervised, divided and quotas assigned.
Steps:
Identification and division of work:
Divide the total work into manageable activities based on previously determined plans.
Avoid duplication and share the workload among employees.
Departmentalization:
Group similar activities together to facilitate specialization.
Create departments based on criteria like territory (north, south, west, etc.) or products (appliances, clothes, cosmetics, etc.).
Assignment of duties:
Define job positions and allocate work to employees based on their skills and competencies.
Match the nature of the job with the individual's ability.
Establishing authority and reporting relationships:
Establish clear lines of communication.
Each individual should know who to take orders from and to whom they are accountable.
Create a hierarchical structure and facilitate coordination among departments.
Definitions of Organising
Louis Allen: "Organizing is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives."
Theo Haimman: "Organizing is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them."
Importance of Organising
Organizing enables a smooth transition of the enterprise in accordance with the dynamic business environment.
It supports the survival and growth of an enterprise and equips it to meet challenges.
Key benefits include:
Benefits of Specialisation:
Systematic allocation of jobs enhances productivity.
Workers gain experience and specialize through repetitive performance.
Clarity in Working Relationships:
Clear lines of communication and reporting relationships eliminate ambiguity.
Establish a hierarchical order and fixes responsibility and authority.
Optimum Utilisation of Resources:
Proper allocation of jobs avoids overlapping and makes the best use of resources.
Avoidance of duplication minimizes waste.
Adaptation to Change:
Allows a business to accommodate changes in the business environment.
Modifies the organization structure and revises inter-relationships among managerial levels.
Effective Administration:
Clear job descriptions avoid confusion and duplication.
Clarity in working relationships enables proper execution of work.
Development of Personnel:
Stimulates creativity among managers.
Managers can delegate routine tasks, explore new methods, and innovate.
Develops subordinates' ability to deal with challenges and realise their potential.
Expansion and Growth:
Helps in growth and diversification by enabling deviation from existing norms and undertaking new challenges.
Allows adding job positions, departments, and diversifying product lines.
Organisation Structure
The outcome of the organizing process; an effective structure increases profitability.
Needed when an enterprise grows in size or complexity.
Those enterprises which do not focus on growth that can maintain a particular structure for a long period of time.
Coordination becomes difficult due to new functions and increased hierarchies.
Peter Drucker: "Organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and even destroy it."
Definiton: Framework within which managerial and operating tasks are performed, specifying relationships between people, work, and resources.
Allows correlation and coordination among human, physical, and financial resources.
Shown in an organisation chart.
Span of management (number of subordinates managed by a superior) shapes the structure; determines levels of management.
Essential for smooth communication and control.
Enables the enterprise to function as an integrated unit by regulating and coordinating responsibilities.
Types of Organisation Structures
Vary based on the nature and types of activities performed.
Two main categories:
Functional structure
Divisional structure
Functional Structure
Groups jobs of similar nature under functional departments reporting to a coordinating head.
Division of work into key functions like production, purchase, marketing, accounts, and personnel.
Departments may be further divided into sections.
Advantages of Functional Structure
Occupational specialisation: Promotes efficiency as employees perform similar tasks.
Control and coordination: Easier within a department due to task similarity.
Increased efficiency: Managerial and operational efficiency increases profits.
Minimal duplication: Results in economies of scale and lowers costs.
Easier training: Focus is on a limited range of skills.
Due attention: Ensures different functions receive proper focus.
Disadvantages of Functional Structure
Less emphasis on overall objectives: Functional heads may prioritize departmental goals over enterprise objectives, leading to functional empires.
Coordination problems: Information exchange across departments can be challenging.
Conflict of interests: Arise when departmental interests are incompatible.
Inflexibility: Narrow perspectives may hinder appreciation of other viewpoints; limited training for top management positions.
Suitability of Functional Structure
Suitable for large organisations with diversified activities requiring a high degree of specialisation.
Divisional Structure
Large organizations with diversified activities may shift from functional to divisional structure.
Each division has a divisional manager responsible for performance and authority.
Manpower is grouped by products manufactured.
Each division is multifunctional (production, marketing, finance, purchase, etc.) working towards a common goal.
Divisions are self-contained, with expertise in all functions related to a product line.
Functional structure tends to be adopted within each division, but functions may vary across divisions.
Each division works as a profit center; the divisional head is responsible for profit or loss.
Advantages of Divisional Structure
Product specialisation: Develops varied skills in divisional heads, preparing them for higher positions.
Accountability for profits: Revenues and costs easily identified and assigned, providing a basis for performance measurement.
Flexibility and initiative: Each division functions autonomously, leading to faster decision making.
Facilitates expansion and growth: New divisions can be added without interrupting existing operations.
Disadvantages of Divisional Structure
Conflict among divisions: Over allocation of funds; divisions may maximize profits at the expense of others.
Increase in costs: Duplication of activities across products increases expenditure.
Ignoring organisational interests: Divisional managers may gain power and assert independence, ignoring organizational interests.
Suitability of Divisional Structure
Suitable for business enterprises manufacturing a large variety of products using different productive resources.
Adopted when an organisation grows and needs to add employees, create departments, and introduce new management levels.
Formal and Informal Organisation
Employees are guided by rules and procedures; formal organization enables smooth functioning.
Formal organisation: Designed by management to accomplish specific tasks; specifies authority and responsibility boundaries.
Louis Allen: "The formal organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability."
Chester Barnard: "Formal organisation is a system of consciously coordinated activities of two or more persons toward a common objective."
Features of Formal Organisation
Specifies relationships among job positions and their inter-relationships; clarifies reporting lines.
Achieves objectives specified in plans by laying down essential rules and procedures.
Coordinates, interlinks, and integrates efforts of various departments.
Deliberately designed by top management to facilitate smooth functioning.
Emphasizes work to be performed over interpersonal relationships.
Advantages of Formal Organisation
Easier to fix responsibility due to clearly defined relationships.
No ambiguity in roles due to specified duties, avoiding duplication.
Unity of command is maintained through an established chain of command.
Effective accomplishment of goals by providing a framework for operations.
Provides stability to the organisation due to specific rules guiding behaviour.
Limitations of Formal Organisation
Procedural delays due to established chain of command.
Poor recognition of creative talent as deviations from rigid policies are not allowed.
Difficult to understand all human relationships; emphasizes structure and work over interpersonal aspects.
Informal Organisation
Arises from interaction among people at work; a network of social relationships among employees.
Emerges from within the formal organisation when people interact beyond officially defined roles.
Based on interaction and friendship, forming groups with common interests.
No written rules, fluid in form and scope, and no fixed lines of communication.
Chester Barnard: "An informal organisation is an aggregate of interpersonal relationships without any conscious purpose but which may contribute to joint results."
Keith Davis: "Informal organisation is a network of personal and social relations not established or required by the formal organisation but arising spontaneously as people associate with one another."
Features of Informal Organisation
Originates from within the formal organisation as a result of personal interaction.
Standards of behaviour evolve from group norms rather than laid down rules.
Independent channels of communication without specified direction.
Emerges spontaneously, not deliberately created by management.
No definite structure or form; a complex network of social relationships.
Advantages of Informal Organisation
Faster spread of information and quicker feedback as prescribed lines are not followed.
Helps meet social needs of members and find like-minded people; enhances job satisfaction.
Contributes to fulfilling organizational objectives by compensating for inadequacies in the formal organisation.
Disadvantages of Informal Organisation
Spreading rumours can become destructive and go against the interest of the formal organisation.
Resistance to change may delay or restrict growth if the informal organisation opposes changes.
Pressurization of members to conform to group expectations can be harmful.
Delegation
Managers cannot do every task alone; delegation of authority is essential to meet organizational goals.
Downward transfer of authority from superior to subordinate; a pre-requisite for efficient functioning.
Enables managers to use their time on high-priority activities; provides subordinates with opportunities to develop and exercise initiative.
Does not mean abdication; managers remain accountable for performance.
Authority can be taken back and redelegated; managers remain accountable to the same extent as before delegation.
Louis Allen: "Delegation is the process a manager follows in dividing the work assigned to him so that he performs that part which only he because of his unique organisational placement, can perform effectively and so that he can get others to help with what remains."
Theo Haimann: "Delegation of authority merely means the granting of authority to subordinates to operate within prescribed limits."
Elements of Delegation
(i) Authority: The right of an individual to command subordinates and take action within their position's scope.
Arises from the established scalar chain.
Right to make decisions and expect compliance.
Originates from an individual’s position; highest at top management levels.
Flows from top to bottom; superiors have authority over subordinates.
Restricted by laws and organizational rules.
(ii) Responsibility: The obligation of a subordinate to properly perform the assigned duty.
Arises from superior–subordinate relationships.
Flows upwards; subordinates are responsible to their superiors.
(iii) Accountability: Being answerable for the final outcome.
Cannot be delegated.
Flows upwards; subordinates are accountable to superiors.
Manager must ensure proper discharge of duties by subordinates.
Enforced through regular feedback.
Importance of Delegation
Ensures subordinates perform tasks on behalf of the manager, reducing workload and providing more time to concentrate on important matters.
Benefits:
(i) Effective management: Empowers managers to function efficiently, providing opportunities to excel in new areas.
(ii) Employee Development: Provides opportunities to utilise talent and develop skills for complex tasks, improving career prospects.
(iii) Motivation of Employees: Builds self-esteem and improves confidence; encourages better performance.
(iv) Facilitation of Growth: Provides a ready workforce to take up leading positions in new ventures.
(v) Basis of management hierarchy: Establishes superior-subordinate relationships; determines the power of each job position.
(vi) Better Coordination: Clearly defines powers, duties, and answerability, avoiding overlapping and duplication.
Decentralisation
Centralized organisations: Decision-making authority lies with top management.
Decentralized organisations: Authority is shared with lower levels.
Decentralisation: Delegation of authority throughout all levels of the organization; decision-making authority is placed nearest to the points of action.
When decisions taken by the lower levels are numerous as well as important an organization can be regarded as greatly decentralised.
Importance of decentralisation
Louis Allen: Decentralisation refers to systematic effort to delegate to the lowest level all authority except that which can be exercised at central points.
Henri Fayol: Everything which goes to increase the importance of a subordinate’s role is decentralisation, everything that goes to reduce it is centralisation.
Benefits:
(i) Develops initiative among subordinates: Promotes self-reliance and confidence by giving lower levels freedom to make their own decisions.
(ii) Develops managerial talent for the future: Provides experience and identifies executives with the potential to become dynamic leaders.
(iii) Quick decision making: Decisions are taken at levels nearest to the points of action, reducing the time taken as the process is much faster.
(iv) Relief to top management: Reduces direct supervision and allows top management to devote time to important policy decisions.
(v) Facilitates growth: Awards greater autonomy to lower levels, fostering competition and increasing productivity.
(vi) Better control: Makes it possible to evaluate performance at each level; departments can be individually held accountable for their results.