CH-4 MGT Int
CH-4 MGT Int
2
Span of Management /span of control/- refers to the number of subordinates that a single manager can
directly, immediately and effectively supervise. It is related to the levels. We can have wide span, which is
associated with few organizational levels; and a narrow span which results in many levels.
Advantage: Disadvantage:
Supervisors are forced to delegate Tendency of overloaded superiors to become
Clear policies must be made decision bottlenecks.
Subordinates must be carefully selected Dangers of superior's loses of control
Requires exceptional quality of managers.
Organizations with narrow span
Advantages: Disadvantage:
Close supervision Superiors tend to get too much involved in
Close control subordinate's work
Fast communication between subordinates and Many levels of management
superiors High costs due to many levels
Excessive distance between lowest level and top level.
Departmentalization makes organizations to expand to an indefinite degree. It also helps increasing
efficiency of organization in the following ways:
Specialization, Fixation of responsibility, Feeling of autonomy, Development of management,
Facility in appraisal
The Bases of Departmentalization
The most common bases of departmentalization used by organizations are:
1. Functional departmentalization 4. Customer departmentalization
3
2. Product departmentalization 5. Process departmentalization
3. Geographic / Territorial departmentalization 6. Matrix /project/ and task force
1. Functional Departmentalization: Functions refer to the various responsibility areas of an
organizational component. It is the process of grouping the organization's activities in to units in logical
manner on the basis of essential functions that must be performed to attain organizational
objectives/goals.
These functions include marketing, finance, operations, manufacturing personnel, engineering etc.
CEO/President General
Manager
Advantages: It is logical, scientific and time-tested method because it groups like or similar activities
together which facilitates specialization. (Efficiency is fostered through specialization.)
- It makes supervision easier, since each manager is an expert in only a narrow range of skills.
- Tight control of all functional units is assured, because the top managers are responsible for the end
results.
- It simplifies training.
Disadvantage:
- People in a functional department may lose sight of the overall operations of the business; it in turn
invites employees to de-emphasize the overall company objective.
- Workers may develop highly specialized skills, but not general managerial abilities. Consequently,
functional departmentalization is not an ideal training ground for top level managers.
- Although there is strong relationship between within a function, co-ordination between functions is
reduced.
- Sometimes conflict develops among departments as each unit competes for resources.
- The geographic area served; or the type of product or product line produced may require a different type
of departmentalization.
- Responsibility for profit is at the top.
Despite its disadvantages, it is widely used by various managers.
2. Product Departmentalization: It is the grouping of activities on the basis of product or product line. It
is adopted by (commonly used by) manufacturers who produce and sell a number of product lines made
up of several different items; such as drug, food, clothing, machines, automobiles etc.
E.g. Product departmentalization of an automobile management enterprise.
General Manager
Production Marketing
Finance Personnel
4
Advantage:
- It enables the enterprise to focus attention effort on product lines, making it easier for to management to
see the efficiency and effectiveness of production determining which product is profitable or not.
- It improves co-ordination between functions relating to a particular product.
- Furnishes measurable training ground for general managers.
- Facilitates use of specialized capital, facilities, skills and knowledge.
Disadvantages:
- Requires more persons with general manager abilities.
- There is an ever-present danger of duplication of activities.
- It presents increased problem of top management control.
3. Departmentalization by Geographical Area/Territory: It is often referred to as area or territorial
departmentalization, and it groups business activities on the basis of geographic region or territory,
enabling a firm to adapt to local customs and laws and to survey customer more quickly. It is especially
attractive to large-scale firms or other enterprises whose activities are physically or geographically
dispersed.
President
Advantages:
- Results in great saving in time and money. The enterprise can benefit from lower freight, lower rents and
lower labor costs. Thus, it takes advantages of economics of local operations (places emphasis on local
markets and operations)
- Places responsibility at lower level (There will be quick decision.)
- Places measurable training ground for general managers.
- Better face to face communication with local interests.
Disadvantages:
- Requires more persons with general manager abilities /it is costly to implement.
- Duplication of effort
- Increase problem of top management control (This is because of having flat span of management.)
Sometimes, the decision to set up geographic departments is based on economic considerations; such as,
transportation costs for raw materials, for distribution, etc.
4. Customer Departmentalization: It is the grouping of enterprise activities based on customers' interests.
Companies that must provide special services to different groups set up departments by types of
customers, using customer departmentalization. For example, a manufacturer may have both an
industrial products division for its industrial customers and consumer products division for other
consumers. An airlines company may make departments its selling departments for travelling agencies,
government passengers, tourists and other customers. Normally, setting up departments by customers is
not a primary form of departmentalization. It is used instead within some other framework.
General Manager
5
Production Marketing Finance Personnel
Advantages:
- Encourages concentration on customer needs
- Giving customers feeling that they have an understanding supplier
- Develops expertise in customer area.
Disadvantage:
May be difficult to coordinate operations between competing customer demands.
Requires managers and staff expert in customer's problems
It may result in underutilization of resources in some departments.
Customer groups may not always be clearly defined.
There may be duplication of activities.
5. Process or Equipment Departmentalization: It is the grouping of enterprise activities according to the
products' manufacturing process. This method of departmentalization is logical and used when the
machines or equipment used require special skill for operating and are of large capacity which eliminate
organizational diving or have technical facilities which strongly suggest a concentrated location. For
example, a textile factory. May be classified in to Spinning, Walling, processing, etc.
- Economic and Technological considerations are the foremost reasons for adopting process
departmentalization.
- It is mostly found in production departments.
President
Production Manager
Advantage: Disadvantage:
- Achieves economic advantage - Coordination of departments is difficult
- Uses specialized knowledge - Responsibility for profit is at the top
- Simplifies training - It is unsuitable for developing general
- Sues specialized technology managers
6
President
Production Manager
Advantage Disadvantage
Since there are a number of managers, there are Conflict in organization authority exists (it lends
more channels of information itself to power struggle.
It is oriented toward end results. (The project Possibility of disunity of command exists
objectives are clear.) It also /results in higher overhead costs because
Professional identification is maintained. more managerial positions are created.
Resources are used efficiently because workers Requires manager effective in human relations.
are assigned to different projects as needed and
groups or projects can share equipment.
4.2.2. Delegation
Because of human limitation, a single person can't do all tasks necessary for accomplishing a group purpose.
By the same taken, as enterprises grow, it is difficult for one person to exercise all the authority for making
decisions. To solve these problems managers share their authority and responsibility to their subordinates
which is delegation.
Managers get things done through other people. Since top managers cannot personally oversee all the
activities of an organization, they delegate authority to their subordinate managers. It is this delegation of
authority that gives subordinate managers the means with which to act.
Definition: It is the act of assigning formal authority and responsibility for completion of specific activities
to a subordinate.
Delegation is the assignment to another person of authority and responsibility to carry out specific
activities.
Delegation is the process of allocating tasks to subordinates giving them adequate authority to carry out
those assignments and making obligated to complete the tasks satisfactorily.
To delegate means to entrust authority to a deputy so as to enable him to accomplish the tasks assigned
to him.
The Importance of Delegation:
It frees a manager from some time-consuming duties that can be adequately handled by subordinates and
lets the manager devote more time to problems requiring his/her full attention.
Decisions made by lower level managers are timelier than those that go through scalar layers of
management.
7
Subordinate managers can reach their full potential of and only if they are given the chance to make
decisions and to assume responsibility for them.
Advantages:
- Relives top management of some burden of decision making and forces upper level managers to let go.
- Encourages decision making and assumption of authority & responsibility.
- Gives managers more freedom and independence in decision making.
- Makes comparison of performance of different organizational units possible.
- Promotes development of general managers.
- Aids in adaptation to fast changing environment.
Limitations of Decentralization:
- It increases the chances that a lower-level manager will take undesirable action.
- It decreases control and monitoring of subordinates' activities and also may hinder co-ordination between
diverse units.
- Makes it more difficult to have a uniform policy.
- Can be limited by the availability of qualified managers.
- Involves considerable expenses for training managers.
4.3. Organizational Relationships
4.3.1. Formal and Informal organizations & their relationships
The design (framework) of an organization can be divided into two categories: The formal and informal organization.
Formal Organization: It is an organization, which is established with intentional structure of roles in a
formally organized enterprise. It is one, which is drafted by top management. It is the organization structure,
which defines everything clearly, and explicitly. It is consciously, deliberately, and rationally designed by
management to achieve predetermined objectives.
Thus, formal organization has the following important points:
It is consciously brought in to existence for the achievement of predetermined objectives.
Authority and responsibility are clearly defined.
The line of communication is also formalized (It is shown in organization charts)
The relationship of the superior and the subordinate is fixed. (It is deliberately impersonal it is
bureaucratic in nature and operated by the rules & regulations; personal issues are not entertained.)
It exists in a written form.
Informal Organization: It is a network of personal and social relations not established or required by the
formal organization but arising spontaneously as people associate with one another.
It is undocumented and officially unrecognized relationship between members of an organization that
inevitably emerges out of the personal & group needs of employees. It is an organization, which consists of
small social groups and friendly associations with in the formal organization. It is genuine that whenever
formal organizations are formed, informal social groups are created within its framework. Such groups are
created on the basis of similarity of status, interests, beliefs, attitudes, back grounds, etc.
Such small groups are results of the need of people for social interaction, & for friendly associations. They
affect the formal organization positively or negatively, however, management neither creates nor abolishes
them. Therefore, managers should learn how to live with it, how to influence it, and how to direct its energy
and initiative towards constructive channels.
Managers, to deal with informal organizations the following general suggestions are helpful:
- Managers accept and understand the informal organizations
- Consider possible effects on informal organizations when they take any action.
- Integrate, as far as possible, the interests of informal groups with those of the formal organization.
9
4.3.2. Line and Staff Relationships
The concept of line and staff is related to authority and positions/functions.
Line and staff authority
This is the relationship between different types of authority exercised by managers of an organization. These
three forms of authority are called line staff and functional authority.
Line authority: the authority of those managers directly responsible, throughout the organization chain of
command, for achieving organizational goals. It enables a manager to tell subordinates what to do. This
authority is represented by the chain of command, which links superiors and subordinates from top to bottom
in an organization. Both line and staff managers have line authority over their subordinates.
Staff authority: The authority of those groups of individuals who provide line managers with advice and
services. People in staff positions assist and advice line managers. They relieve some of the line managers'
burdens by giving them the information they need to make operational decisions. People in these positions
have the authority to offer advice and make recommendations; they have staff authority.
Functional Authority: The authority of staff department members to control the activities of workers of
other departments that are related to specific staff responsibilities. This authority is exercised over people or
activities in other departments. Usually limited in scope and duration; it is exercised one level below the
person wholes it.
4.3.3. Line and staff positions/functions:
To classify a position as line or staff, it is related to the degree to which the function in question contributes
to the direct achievement of organizational objectives. The line functions contribute directly to
accomplishing to firm's objectives, while staff functions facilitate the accomplishment of the major
organizational objectives.
- The line functions of an organization are those functions that contribute directly to the creation and
distribution of the goods or services of the organization.
- People with line positions are responsible for physically producing the product or service and for selling
it.
- All staff positions are advisory, staff people may make recommendations, but line managers retain
formal authority and decide what to do with a staff person's advice.
Production
Workers
11