Page 94 - DMGT402_MANAGEMENT_PRACTICES_AND_ORGANIZATIONAL_BEHAVIOUR

Unit 4: Organising

3. Co-ordination: Organisation involves division of work among people whose efforts must Notes
be co-ordinated to achieve common goals. Co-ordination is the orderly arrangement of
group effort to provide unity of action in the pursuit of common purpose.

4. Clear unbroken line of Authority: It points out the scalar principle or the chain of command.
The line of authority flows from the highest executive to the lowest managerial level and
the chain of command should not be broken.
5. Responsibility: Authority should be equal to responsibility i.e., each manager should
have enough authority to accomplish the task.
6. Efficiency: The organisation structure should enable the enterprise to attain objectives
with the lowest possible cost.
7. Delegation: Decisions should be made at the lowest competent level. Authority and
responsibility should be delegated as far down in the organisation as possible.
8. Unity of Command: Each person should be accountable to a single superior. If an individual
has to report to only one supervisor there is a sense of personal responsibility to one
person for results.

9. Span of Management: No superior at a higher level should have more than six immediate
subordinates. The average human brain can effectively direct three to six brains (i.e.,
subordinates).
10. Communication: A good communication sub-system is essential for smooth flow of
information and understanding and for effective business performance.
11. Flexibility: The organisation is expected to provide built in devices to facilitate growth
and expansion without dislocation. It should not be rigid or inelastic.

Task Choose three organisations of your choice in the FMCG industry.

1. Analyse their organisational design and structure.
2. Differentiate among their productivity on the basis of their structures.
3. Analyse the effect of their different structures on their success.

4.3.4 Formal and Informal Organisation

The formal organisation refers to the structure of jobs and positions with clearly defined functions
and relationships as prescribed by the top management. This type of organisation is built by the
management to realise objectives of an enterprise and is bound by rules, systems and procedures.
Everybody is assigned a certain responsibility for the performance of the given task and given
the required amount of authority for carrying it out. Informal organisation, which does not
appear on the organisation chart, supplements the formal organisation in achieving
organisational goals effectively and efficiently. The working of informal groups and leaders is
not as simple as it may appear to be. Therefore, it is obligatory for every manager to study
thoroughly the working pattern of informal relationships in the organisation and to use them
for achieving organisational objectives.
1. Formal Organisation: Chester I Bernard defines formal organisation as, "a system of
consciously coordinated activities or forces of two or more persons. It refers to the structure
of well-defined jobs, each bearing a definite measure of authority, responsibility and

LOVELY PROFESSIONAL UNIVERSITY 89