Organising

ORGANISING: CONCEPT AND DEFINITION

**Organising** is a management function that initiates the implementation of plans by clarifying jobs and working relationships and effectively deploying resources for the attainment of identified and desired results (goals).

**Definition by Louis Allen**: "Organising 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."

**Definition by Theo Haimman**: "Organising is the process of defining and grouping the activities of the enterprise and establishing authority relationships among them."

**Meaning**: Organising essentially implies a process which coordinates human efforts, assembles resources and integrates both into a unified whole to be utilised for achieving specified objectives. It is a means for translating plans into action. The organising function leads to the creation of an organisational structure which includes:

Designing of roles to be filled by suitably skilled people

Defining the inter-relationship between these roles to eliminate ambiguity in performance of duties

Ensuring productive cooperation between personnel

Clarification of extent of authority and responsibility for results

Logical grouping of activities

**Real-Life Example (Wipro Technologies)**: Wipro restructured itself by separating into several subsidiaries by product line (telecommunications, engineering, financial services, etc.). Each subsidiary became self-sufficient with own accounting books, personnel, and administrative functions. Wipro shifted from centralised to decentralised management system, empowering business leaders with growth responsibility. This restructuring was critical for improved customer-orientation and becoming a global giant.

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STEPS IN THE PROCESS OF ORGANISING

The organising process involves a series of sequential steps that must be taken in order to achieve desired goals:

(i) Identification and Division of Work

**Definition**: The first step involves identifying and dividing the work that has to be done in accordance with previously determined plans.

**Process**: Work is divided into manageable activities so that duplication can be avoided and the burden of work can be shared among employees.

**Outcome**: Creates smaller, more manageable task units that are easier to supervise and execute.

**Example**: In a library stocking operation with 12 students, work must first be identified as unloading shipment, stocking bookshelves, and disposing waste before dividing tasks among groups.

(ii) Departmentalisation

**Definition**: Once work has been divided into small and manageable activities, those activities which are similar in nature are grouped together.

**Purpose**: Grouping facilitates specialisation and efficient task execution.

**Basis of Departmentalisation**: Departments can be created using several criteria:

**Functional basis**: Production, Marketing, Finance, HR, etc.

**Territory basis**: North, South, East, West regions

**Product basis**: Appliances, Clothes, Cosmetics, etc.

**Customer basis**: Retail customers, Wholesale customers, Corporate clients

**Process basis**: Processing and Assembly divisions

(iii) Assignment of Duties

**Definition**: It is necessary to define the work of different job positions and accordingly allocate work to various employees.

**Process**: Once departments have been formed, each is placed under the charge of an individual, and jobs are allocated to department members according to their skills and competencies.

**Critical Requirement**: A proper match must be made between the nature of a job and the ability of an individual. Work must be assigned to those best fitted to perform it well.

**Example**: In Sunita's travel agency, the Operations department assigns reservation specialists to ticketing roles and customer care experts to handle client relationships based on their competencies.

(iv) Establishing Authority and Reporting Relationships

**Definition**: Merely allocating work is insufficient. Each individual must know who they take orders from and to whom they are accountable.

**Outcome**: Creation of hierarchical structure with clear chain of command.

**Benefits**:

Helps coordination amongst various departments

Clarifies lines of authority and responsibility

Removes ambiguity in reporting

Creates clear escalation paths for issues

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IMPORTANCE OF ORGANISING

(i) Benefits of Specialisation

Organising leads to systematic allocation of jobs amongst the workforce.

Reduces individual workload and enhances productivity.

Specific workers performing a particular job on a regular basis gain experience in that area.

Repetitive performance leads to specialisation and higher efficiency.

Workers become experts in their designated functions.

(ii) Clarity in Working Relationships

Establishment of working relationships clarifies lines of communication.

Specifies who is to report to whom, removing ambiguity in transfer of information and instructions.

Helps in creating hierarchical order.

Enables fixation of responsibility and specification of extent of authority.

**Example**: In a corporate structure, a marketing executive knows they report to the Marketing Manager, who reports to the General Manager, ensuring clear accountability.

(iii) Optimum Utilisation of Resources

Organising leads to proper usage of material, financial, and human resources.

Proper assignment of jobs avoids overlapping of work.

Avoidance of duplication prevents confusion and minimises wastage of resources and efforts.

Ensures best use of all available resources.

**Example**: Wipro's divisional structure ensured each subsidiary independently managed resources without duplication from parent organisation.

(iv) Adaptation to Change

The organising process allows a business enterprise to accommodate changes in the business environment.

Allows organisational structure to be suitably modified to meet new challenges.

Enables revision of inter-relationships amongst managerial levels.

Provides stability allowing the organisation to survive and grow despite changes.

**Example**: During economic shifts, companies reorganise departments to focus on growth areas.

(v) Effective Administration

Provides clear description of jobs and related duties.

Helps avoid confusion and duplication.

Clarity in working relationships enables proper execution of work.

Makes management of enterprise easy and brings effectiveness in administration.

**Outcome**: Smoother operations with fewer errors and better coordination.

(vi) Development of Personnel

Organising stimulates creativity amongst managers.

Effective delegation allows managers to reduce workload by assigning routine jobs to subordinates.

Reduction in workload gives managers time to explore areas for growth and innovate.

Strengthens company's competitive position.

Delegation develops subordinates' ability to deal with challenges and helps them realise full potential.

**Example**: When senior managers delegate routine work, they can focus on strategic planning and developing new products.

(vii) Expansion and Growth

Organising helps in the growth and diversification of an enterprise.

Enables organisations to deviate from existing norms and take up new challenges.

Allows adding more job positions, departments, and diversifying product lines.

New geographical territories can be added to current areas of operation.

Helps increase customer base, sales, and profit.

**Example**: Wipro's divisional structure by product lines enabled expansion into multiple technology service segments.

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ORGANISATION STRUCTURE

**Definition**: Organisation structure is the framework within which managerial and operating tasks are performed. It specifies the relationships between people, work and resources. It allows correlation and coordination among human, physical, and financial resources and enables a business enterprise to accomplish desired goals.

**Importance** (as stated by Peter Drucker): "Organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and even destroy it."

**Representation**: The organisation structure of a firm is shown in an **organisation chart**, which visually depicts the hierarchy, reporting lines, and departmental relationships.

**Key Concept - Span of Management**: Span of management refers to the number of subordinates that can be effectively managed by a superior. This determines the levels of management in the structure.

**Wide Span**: Few hierarchy levels but more subordinates per manager

**Narrow Span**: More hierarchy levels but fewer subordinates per manager

**Functions of Organisation Structure**:

Provides framework enabling enterprise to function as integrated unit

Regulates and coordinates responsibilities of individuals and departments

Ensures smooth flow of communication

Provides better control over operations

Creates clear reporting relationships and authority distribution

Facilitates coordination between different functional areas

**Example (Sunita's Travel Agency)**:

**Division of work on functional basis**: Operations, Sales, Administration

**Operations Department**: Travel counsellor, Reservation and Ticketing, Customer Care

**Sales Department**: Accounts Executive

**Administration Department**: Book Keeper, Cashier, Utility Personnel

**Outcome**: Clear organisation structure specifying line of authority and responsibility, enabling harmonious relationships between customers and employees.

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TYPES OF ORGANISATION STRUCTURES

The type of structure adopted by an organisation varies with the nature and types of activities performed. Organisation structures are classified into two main categories:

I. FUNCTIONAL STRUCTURE

**Definition**: Grouping of jobs of similar nature under functional areas and organising these major functions as separate departments creates a functional structure. All departments report to a coordinating head.

**Structure**: A functional structure is an organisational design that groups similar or related jobs together. All departments report to a coordinating head (Managing Director/Chief Executive).

**Example of Functional Departments in Manufacturing Concern**:

Production Department

Purchase Department

Marketing Department

Accounts Department

Personnel/Human Resources Department

Each major function may be further divided into sections and sub-sections.

#### Advantages of Functional Structure:

**(a) Occupational Specialisation**: The structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance continuously.

**(b) Control and Coordination**: It promotes control and coordination within a department because of similarity in tasks being performed. Managers can easily supervise and guide employees performing identical functions.

**(c) Increased Efficiency**: Helps in increasing managerial and operational efficiency and this results in increased profit. Managers become experts in their functional areas, improving performance quality.

**(d) Minimal Duplication**: Leads to minimal duplication of effort which results in economies of scale and lowers cost. No overlap between departments ensures resource optimization.

**(e) Easier Training**: Makes training of employees easier as the focus is only on a limited range of skills. Employees need to be trained in specific functional competencies.

**(f) Functional Focus**: Ensures that different functions get due attention and resources are allocated to each function appropriately.

#### Disadvantages of Functional Structure:

**(a) Emphasis on Functional Objectives over Organisational Objectives**: The structure places less emphasis on overall enterprise objectives than the objectives pursued by a functional head. Departmental interests may be pursued at cost of organisational interests. This may lead to **functional empires** wherein the importance of a particular function may be overemphasised. Different departments may not cooperate effectively.

**(b) Inter-departmental Coordination Problems**: May lead to problems in coordination as information has to be exchanged across functionally differentiated departments. Slow decision-making if information requires approval from multiple departments.

**(c) Conflict of Interests**: A conflict of interests may arise when interests of two or more departments are not compatible. **Example**: Sales department insisting on customer-friendly design may cause difficulties in production department. Such dissension hinders fulfillment of organisational interest. Inter-departmental conflicts can arise in absence of clear separation of responsibility.

**(d) Inflexibility**: May lead to inflexibility as people with same skills and knowledge base may develop a narrow perspective and have difficulty in appreciating other points of view. Functional heads do not get training for top management positions because they are unable to gather experience in diverse areas. Creates rigid thinking patterns.

#### Suitability:

Functional structure is most suitable when:

Size of organisation is large

Organisation has diversified activities

Operations require high degree of specialisation

Coordination between functions is manageable

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II. DIVISIONAL STRUCTURE

**Definition**: Many large organisations with diversified activities have reorganised themselves away from the simpler functional structure towards a divisional structure which is more suited to their activities. Divisional structure groups activities on the basis of products, territories, customers, or processes.

**Need for Divisional Structure**: Large organisations with more than one category of products require divisional structure because:

Each division can focus on specific product category

Divisions can operate more independently

Better accountability for each product line

More responsive to market changes in each division

**Basis of Division**: Divisional structures can be organised on the basis of:

**Product Division**: Each division handles a specific product or product line

**Example (Wipro)**: Telecommunications Division, Engineering Services Division, Financial Services Division - each bringing in $300 million in annual earnings with self-sufficient accounting, personnel, and administrative functions

**Territorial Division**: Each division manages specific geographic region

**Example**: North Region Division, South Region Division, East Region Division with regional managers responsible for all functions in their territory

**Customer Division**: Each division serves specific customer segment

**Example**: Retail Division, Wholesale Division, Corporate Division

**Process Division**: Each division handles specific process in value chain

**Example**: Manufacturing Division, Packaging Division, Distribution Division

#### Advantages of Divisional Structure:

**(a) Autonomy and Flexibility**: Each division can operate independently and make decisions quickly. Divisional managers have authority to take decisions relevant to their division without waiting for approval from corporate office. This flexibility allows rapid response to market changes.

**(b) Accountability and Performance**: Each division has clear profit and loss responsibility. Performance of each division can be measured independently. This clarity in accountability motivates divisional managers to improve performance.

**(c) Focus on Specific Products/Markets**: Each division can focus entirely on its specific product, territory, or customer segment. This focused approach often leads to better market understanding and responsiveness.

**(d) Development of Future Leaders**: Divisional structure provides opportunity for managers to develop diverse experience across multiple functions. Unlike functional structure, divisional managers gain experience in production, marketing, finance, HR within their division. This prepares them better for top management positions.

**(e) Better Coordination within Division**: Within a division, all functions (production, sales, finance, HR) work together for divisional objectives. This creates better internal coordination.

**(f) Easier Expansion**: Organisation can easily add new divisions to expand into new products or territories without disturbing existing structure.

#### Disadvantages of Divisional Structure:

**(a) Duplication of Activities**: Each division may duplicate functions like finance, HR, purchase, etc. This leads to higher costs and wastage of resources. **Example**: If Wipro has separate HR departments in Telecommunications, Engineering, and Financial Services divisions, there is duplication of HR functions.

**(b) Higher Operational Costs**: Duplication of efforts and resources makes divisional structure more expensive to operate than functional structure. Each division maintains separate support systems.

**(c) Interdepartmental Coordination Difficulty**: Coordination between divisions becomes difficult as each division focuses on its own objectives. This can lead to unhealthy competition between divisions.

**(d) Complex Management**: Overall management and control becomes complex as multiple independent units need to be coordinated. Parent organisation needs strong control mechanisms.

**(e) Difficult Standardisation**: It is difficult to maintain standardised practices across different divisions. Each division may develop its own systems and procedures.

#### Suitability:

Divisional structure is most suitable for:

Large organisations with diverse product lines

Organisations operating in multiple geographical territories

Companies serving different customer segments requiring specialised approaches

Organisations needing rapid market responsiveness and independent decision-making

Enterprises where divisions can operate as profit centres

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COMPARISON: FUNCTIONAL VS DIVISIONAL STRUCTURE

| **Aspect** | **Functional Structure** | **Divisional Structure** |

|---|---|---|

| **Basis of Grouping** | Similar functions grouped together | Products, territories, or customers |

| **Specialisation** | High specialisation within functions | Moderate specialisation per division |

| **Decision-Making** | Centralised; slower | Decentralised; faster |

| **Cost** | Lower (economies of scale) | Higher (duplication of functions) |

| **Coordination** | Within departments; between departments difficult | Within division easy; between divisions difficult |

| **Accountability** | Functional focus | Divisional profit/loss responsibility |

| **Flexibility** | Rigid; slow to adapt | Flexible; quick to adapt |

| **Employee Development** | Limited to functional skills | Diverse functional experience |

| **Suitable for** | Large organisations with similar operations | Large diversified organisations |

| **Example** | Manufacturing with Production, Marketing, HR depts | Wipro with product divisions |

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FORMAL ORGANISATION

**Definition**: Formal organisation is the structure officially laid down by the enterprise to accomplish specific objectives. It is created intentionally by management following a deliberate plan. All roles, relationships, authority, and responsibility are officially defined.

**Characteristics of Formal Organisation**:

**Deliberately Created**: Formal organisation is intentionally designed and created by management to achieve enterprise objectives.

**Official Structure**: It has an official structure shown in organisation charts and documented in organisation manuals.

**Pre-defined Roles and Relationships**: All job positions, roles, responsibilities, and reporting relationships are clearly defined in job descriptions and organisation charts.

**Established Authority Structure**: Authority relationships are formally established through the hierarchy. Each position has clearly defined authority and responsibility.

**Written Rules and Procedures**: Formal organisation is governed by written rules, procedures, policies, and guidelines that must be followed by all employees.

**Logical Grouping**: Activities are grouped logically by function, product, territory, or customer segment.

**Channels of Communication**: Official channels of communication (downward, upward, horizontal) are established and must be followed.

**Performance Standards**: Performance standards and evaluation criteria are officially established.

**Example (Sunita's Travel Agency)**:

Officially divided into three departments: Operations, Sales, Administration

Each department has clearly defined positions and reporting lines

Job descriptions specify duties of Travel Counsellor, Reservation Executive, Accounts Executive, etc.

Official communication channels flow through the hierarchy

Policies and procedures are documented

**Features**:

Stable and permanent structure

Creates order and coordination

Facilitates planning and control

Ensures accountability through clear hierarchy

Makes task assignment and performance measurement easier

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INFORMAL ORGANISATION

**Definition**: Informal organisation refers to the network of social relationships and unofficial groups that develop among workers within the formal organisation structure. It emerges spontaneously based on personal relationships, common interests, and social interactions.

**Characteristics of Informal Organisation**:

**Spontaneous Development**: Informal organisation develops naturally and spontaneously without being deliberately created by management. It emerges from social interactions among employees.

**Based on Personal Relationships**: It is based on personal relationships, likes, dislikes, common interests, and shared values among employees.

**Unofficial Structure**: It has no official or documented structure. Relationships are not formally defined or shown in organisation charts.

**Unwritten Rules and Norms**: Informal organisation is governed by unwritten norms, values, and expectations that develop through social interaction rather than formal rules.

**Informal Leadership**: Leaders emerge based on personal qualities, popularity, expertise, or social influence rather than official position. An informal leader may have more influence than formal authority.

**Unofficial Channels of Communication**: Communication flows through informal channels like grapevine, social gatherings, casual conversations rather than official channels.

**Flexible Boundaries**: The boundaries and membership of informal groups are flexible and can change based on situations and changing interests.

**Multiple Groups**: Multiple informal groups may exist within an organisation based on different interests, departments, locations, or social circles.

**Examples**:

Group of employees from different departments who lunch together daily develop informal relationship and may share information through unofficial channels

Employees bonding over sports may form an informal group that influences workplace dynamics

Workers may develop unofficial mentor-mentee relationships based on personal compatibility

Informal leaders like respected senior workers may guide junior employees despite lacking formal authority

**Functions of Informal Organisation**:

**Social Needs**: Fulfils social and psychological needs of employees for friendship, belonging, and recognition that formal organisation may not provide.

**Information Sharing**: Facilitates faster information sharing through grapevine that supplements official communication channels.

**Support and Cooperation**: Creates support systems and cooperation among workers that enhances motivation and team spirit.

**Feedback Channel**: Provides management with feedback about employee concerns, grievances, and suggestions that may not come through formal channels.

**Stress Relief**: Provides informal support system for employees to deal with work stress and challenges.

**Cultural Expression**: Allows expression of common values, interests, and norms that bond employees together.

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COMPARISON: FORMAL VS INFORMAL ORGANISATION

| **Aspect** | **Formal Organisation** | **Informal Organisation** |

|---|---|---|

| **Creation** | Deliberately created by management | Develops spontaneously among workers |

| **Structure** | Officially documented and shown in charts | Unwritten; no official structure |

| **Basis** | Logical grouping of activities and roles | Personal relationships and common interests |

| **Authority** | Based on official position and hierarchy | Based on personal qualities and influence |

| **Rules** | Written policies, procedures, rules | Unwritten norms and values |

| **Communication** | Official downward, upward, horizontal channels | Grapevine and casual conversations |

| **Leadership** | Designated managers and supervisors | Emergent leaders based on popularity |

| **Flexibility** | Rigid; changes require formal decisions | Flexible; changes occur naturally |

| **Duration** | Permanent and stable | Temporary; fluid membership |

| **Purpose** | Achieve organisational objectives | Meet social and psychological needs |

| **Performance Focus** | Evaluation based on job performance | Group norms and peer pressure influence |

| **Example** | Departments, hierarchy, job descriptions | Lunch groups, informal mentors, friend circles |

**Key Difference**: Formal organisation is what management creates; informal organisation is what workers create for themselves within the formal structure.

**Managerial Perspective**:

Good managers recognize both formal and informal organisations

Informal organisation can support or hinder organisational goals

Managers should try to align informal groups with organisational objectives

Suppressing informal organisation is counterproductive; better to channel it positively

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DELEGATION

**Definition**: Delegation is the process of assigning work, authority, and responsibility to subordinates and creating obligation on the part of subordinates to perform the assigned work and exercise the delegated authority.

**Meaning**: Delegation involves three essential elements:

1. **Assignment of Work**: Manager assigns specific tasks and duties to subordinate

2. **Grant of Authority**: Manager grants authority to subordinate to perform the assigned work

3. **Creation of Responsibility**: Subordinate accepts responsibility to perform the work and is accountable for results

**Key Principle**: While authority and responsibility can be delegated, ultimate accountability remains with the manager.

The Delegation Process: Authority, Responsibility, and Accountability

**Authority**:

Right to make decisions and command action

Can be delegated from superior to subordinate

Flows downward through hierarchy

Once delegated, subordinate has authority to act within defined limits

Authority comes with the position/job title

**Responsibility**:

Obligation to perform assigned work

Created when work is assigned to subordinate

Subordinate accepts responsibility for performing the assigned tasks

Can be delegated

Subordinate becomes answerable for the assigned work

**Accountability**:

Obligation to explain and justify the use of delegated authority

Reporting back to superior on work performed

Cannot be delegated; always remains with the person to whom the authority was originally assigned

**Critical Point**: A manager cannot escape accountability by delegating work to subordinates

**Example**: If Manager A delegates work to Manager B, Manager A is still accountable to their superior for that work's completion

**Example**: Sales Manager delegates responsibility to Sales Executive to achieve monthly sales target of Rs. 10 lakhs.

**Authority delegated**: Authority to contact customers, prepare offers, conduct negotiations, approve discounts up to 5%

**Responsibility created**: Sales Executive is responsible for achieving the target

**Accountability remains**: Sales Manager is accountable to General Manager for the target achievement

Importance of Delegation

**(a) Enables Growth and Expansion**: Delegation enables organisations to grow as managers can handle increased volume of work without being overwhelmed. New activities and divisions can be added without proportional increase in management layers.

**(b) Develops Subordinates**: Delegation gives subordinates opportunity to learn new skills, take on challenging assignments, and develop for future roles. Prepares them for higher positions.

**(c) Reduces Managerial Burden**: Manager cannot personally do all work. Delegation reduces their workload and allows them to focus on strategic thinking, planning, and innovation.

**(d) Improves Decision-Making**: Decisions are made by people closest to the problem, often resulting in better and faster decisions. Reduces delays caused by waiting for approval from higher levels.

**(e) Motivates Employees**: Delegation shows trust in employees' abilities. It enhances motivation, job satisfaction, and employee engagement when employees are given responsibility.

**(f) Improves Efficiency**: Decentralised decision-making and faster problem-solving improve organisational efficiency.

**(g) Succession Planning**: Delegation prepares employees for leadership roles by giving them experience in handling responsibilities.

**(h) Better Utilisation of Resources**: Enables better utilisation of subordinates' skills and abilities. Proper delegation ensures right person gets the right task.

Barriers to Effective Delegation

**Managerial Barriers**:

Fear that subordinates may fail or perform poorly

Fear of losing control

Lack of confidence in subordinates' abilities

Belief that doing it oneself is faster

Perfectionism; unwillingness to accept work done differently

Lack of trust

Poor job descriptions making it difficult to delegate clearly

**Subordinate Barriers**:

Fear of taking on new responsibilities

Lack of confidence in their abilities

Lack of required skills or knowledge

Unwillingness to take risks

Previous negative experiences with delegation

Lack of understanding about what is expected

Absence of necessary resources to complete delegated work

**Organisational Barriers**:

Lack of clear policies on authority and responsibility

No mechanism for providing feedback

Inadequate training and development opportunities

Absence of incentive system for taking on delegated responsibilities

Inadequate communication systems

Rigid hierarchical structure that discourages delegation

Guidelines for Effective Delegation

**Delegate Clear, Specific Tasks**: Clearly define what needs to be done and expected outcomes

**Select Right Person**: Delegate to person with required skills and capability

**Provide Necessary Authority**: Give sufficient authority to accomplish the task

**Communicate Expectations**: Clearly communicate standards and deadlines

**Provide Resources and Support**: Ensure subordinate has tools, information, and support needed

**Allow Autonomy**: Give freedom in how to accomplish the task while monitoring progress

**Provide Feedback**: Give regular feedback on performance

**Trust and Confidence**: Show trust in subordinate's ability to perform

**Accountability**: Clearly define who is accountable for results

**Encouragement**: Encourage questions and provide guidance when needed

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DECENTRALISATION

**Definition**: Decentralisation refers to systematic delegation of authority throughout the organisation to the lowest feasible level. It is the extension and continuation of delegation throughout the organisational hierarchy. Authority is distributed downward to multiple levels of management rather than concentrated at top.

**Meaning**: Decentralisation is a philosophy and policy of dispersing decision-making authority and responsibility to lower levels of management and even to non-managerial employees. It is broader than delegation and involves structural changes in the organisation.

**Key Features of Decentralised Organisation**:

**Distributed Authority**: Authority is systematically distributed throughout the hierarchy, not concentrated at top

**Multiple Decision-Making Centres**: Decision-making authority exists at multiple levels, allowing local managers to make decisions

**Employee Participation**: Non-managerial employees have some decision-making authority in their areas

**Reduced Dependence on Top Management**: Lower levels can function independently without constant approval from top

**Organisational Restructuring**: Decentralisation requires structural changes like creating autonomous divisions, profit centres, or business units

**More Hierarchical Levels**: Often requires more intermediate levels of management to handle distributed authority

**Delegation at All Levels**: Managers at all levels delegate to their subordinates

**Example (Wipro Technologies)**:

"Wipro shifted from a centralised to decentralised management system. All responsibilities for growth lay with the management of each entity. We tried to de-layer the organisation and empower our business leaders with a much higher degree of growth responsibility."

Each Wipro subsidiary (Telecommunications, Engineering, Financial Services) operates as autonomous unit with:

Independent decision-making authority

Separate profit and loss responsibility

Own accounting books, personnel, administrative functions

Self-sufficiency in operations

Factors Favouring Decentralisation

**Large Organisation Size**: Larger organisations benefit from decentralisation as centralised decision-making becomes bottleneck

**Geographically Dispersed**: Organisations with multiple locations need local decision-making authority

**Diverse Products/Markets**: Different products or markets require different strategies best decided locally

**Rapid Market Changes**: Fast-changing environments require quick decisions possible only with decentralised authority

**Need for Innovation**: Decentralisation encourages innovation and entrepreneurship at local levels

**Availability of Capable Managers**: Organisations with well-trained managers can decentralise effectively

**Organisational Culture Supporting Initiative**: Culture that values employee initiative supports decentralisation

Factors Against Decentralisation

**Strategic Decisions**: Some strategic decisions must remain centralised for overall organisational coherence

**Coordination Requirements**: Some functions like finance, legal require centralisation for consistency

**Small Organisation**: Small organisations cannot afford multiple decision-making centres

**Lack of Capable Managers**: If lower-level managers lack competency, decentralisation is risky

**Consistency Requirements**: Functions requiring standardisation across organisation need centralised control

**Cost Implications**: Decentralisation can increase costs through duplication and reduced economies of scale

**Control Requirements**: Some organisations need tight centralised control for compliance or safety reasons

Importance of Decentralisation

**(a) Faster Decision-Making**: Decisions are made by people closest to situation without waiting for approval from distant headquarters. This enables faster response to market opportunities and problems.

**(b) Better Local Decisions**: Local managers have better knowledge of local conditions, customer needs, and market dynamics. Decisions made with local knowledge are often better than centrally made decisions.

**(c) Employee Motivation**: Giving authority and responsibility motivates employees and enhances job satisfaction. Employees feel valued when entrusted with decision-making.

**(d) Development of Managers**: Decentralisation develops future leaders by giving managers at all levels experience in decision-making and responsibility.

**(e) Reduces Organisational Burden**: Top management is freed from routine decisions to focus on strategy and planning.

**(f) Encourages Innovation**: Decentralisation encourages entrepreneurial thinking and innovation as local units can experiment with new approaches.

**(g) Organisational Flexibility**: Decentralised structure allows organisation to adapt quickly to environmental changes.

**(h) Better Utilisation of Talent**: Allows organisations to utilise talent and expertise at all levels rather than concentrating power at top.

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COMPARISON: DELEGATION VS DECENTRALISATION

| **Aspect** | **Delegation** | **Decentralisation** |

|---|---|---|

| **Definition** | Assignment of specific work and authority to subordinate | Systematic delegation of authority throughout organisation to lower levels |

| **Scope** | Limited to specific task or responsibility | Broad; affects entire organisational structure |

| **Level of Application** | Between two people (manager-subordinate) | Throughout all levels of organisation |

| **Nature** | Can be temporary or for specific project | Permanent philosophy and organisational design |

| **Authority Source** | Manager delegates to direct subordinate | Authority distributed throughout hierarchy |

| **Purpose** | Get specific work done; develop subordinate | Organisational restructuring; strategic approach |

| **Accountability** | Still rests with delegating manager | Distributed among multiple managers |

| **Reversal** | Can be withdrawn or changed easily | Difficult to reverse; requires restructuring |

| **Organisational Structure** | Does not require structural changes | Requires structural changes |

| **Example** | Manager assigns report preparation to assistant | Company creates autonomous divisions with independent decision-making authority |

| **Necessity** | Part of good management | Optional; depends on organisation size and nature |

| **Dependency** | Depends on manager's decision | Built into organisational design |

**Key Distinction**:

**Delegation is a one-to-one relationship**: Manager A delegates to Manager B

**Decentralisation is organisational-wide**: Authority is distributed to many managers at multiple levels throughout organisation

**Delegation is a management technique**: Tool used by managers

**Decentralisation is an organisational philosophy**: Way the organisation is structured and managed

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EXAM-IMPORTANT POINTS FOR CASE STUDY ANSWERS

For 6-Mark Questions on Organising:

**Structure of Answer**:

1. **Identify the Concept**: Name the organising principle/concept evident in case

2. **Define the Concept**: Give clear definition

3. **Explain with Features**: Explain 3-4 key features

4. **Link to Case**: Show how case demonstrates this concept

5. **Benefits/Impact**: Highlight positive outcomes

**Common Case Scenarios**:

**Delegation**: When manager assigns work to subordinate

**Decentralisation**: When organisation moves from centralised to autonomous units (like Wipro)

**Formal Organisation**: When structure is officially defined

**Informal Organisation**: When employees form unofficial groups

**Functional vs Divisional**: When organisation reorganises from function-based to product-based structure

For MCQ Questions on Organising:

**Likely Question Types**:

1. **Identify Management Level**: "Which level of management conducts delegation?" → Managers at all levels

2. **Identify Type**: "What type of structure divides work by product lines?" → Divisional structure

3. **Principle Identification**: "Which Fayol principle relates to organising?" → Division of work, Authority and responsibility, Scalar chain, Order

4. **Distinguish Between**: "Difference between authority and responsibility?" → Authority is right to decide; responsibility is obligation to perform

5. **Scenario-Based**: "If company creates autonomous profit centres, what is being adopted?" → Decentralisation

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KEY DEFINITIONS FOR CBSE BOARD EXAM

**Organising**: Process of identifying and grouping work, defining and delegating responsibility and authority, establishing relationships to enable people to work effectively together for accomplishing objectives.

**Organisation Structure**: Framework specifying relationships between people, work, and resources that enables enterprise to accomplish goals.

**Functional Structure**: