Test: Organising - 1 - Commerce MCQ

Informal Organisation is not an element of delegation. Delegation involves:

• Authority: The power to command and make decisions.
• Responsibility: The obligation to perform assigned tasks.
• Accountability: Being answerable for the outcomes of those tasks.

For example, a manager may assign work to a subordinate, allowing them to execute specific activities. This process is crucial for effective management and leadership.

Informal organisation is a network of social relationships that develops spontaneously through interactions among employees at work. It is characterised by the following features:

• Origin: It arises from personal interactions within the formal organisation.
• Behaviour: Group norms shape behaviour rather than official rules.
• Communication: Information flows freely without a specified direction.
• Spontaneity: It emerges naturally and is not created by management.
• Structure: Lacks a definite form, representing a complex network of relationships.

An informal organisation can enhance job satisfaction by fulfilling social needs and providing a sense of belonging among employees. However, it also has disadvantages:

• It can spread rumours, which may harm the formal organisation.
• It may resist changes proposed by management, hindering growth.
• It can pressure members to conform to group norms that conflict with organisational interests.

Overall, while informal organisations can support formal structures, their existence should be acknowledged and managed effectively.

A tall structure of organisation consists of multiple levels of hierarchy. This type of structure is characterised by a narrow span of management, meaning that a manager oversees only a few subordinates. Here are some key points:

• A tall structure has many layers of management.
• Each manager is responsible for a limited number of employees.
• This can lead to closer supervision and more control.
• However, it may also result in slower decision-making due to the number of levels involved.

In summary, a tall organisational structure is defined by its narrow span of management, allowing for detailed oversight but potentially hindering agility.

Centralisation refers to the retention of decision-making authority by higher management levels. In a centralised system:

• Decision-making power is concentrated at the top.
• Lower management levels cannot intervene in policy-making.
• Authority remains with a few individuals.

This structure can lead to:

• Slower decision-making due to the need for approvals from higher levels.
• A lack of responsiveness to changes in the operating environment.
• Potential bottlenecks in communication.

In summary, centralisation centralises authority, limiting the role of lower management in decision-making processes.

Delegation and the Essentiality of Responsibility and Authority

Delegation involves assigning tasks and responsibilities to others to enhance efficiency within an organisation. For delegation to be effective, it is vital that responsibility is paired with the necessary authority. This ensures that the individual assigned the task has the power to make decisions and take actions needed to complete it successfully. Without authority, responsibility can lead to ineffective delegation and reduced productivity.

Why is authority essential for effective delegation?

• Decision-making: Authority allows individuals to make decisions related to the task without needing constant approval, speeding up the process.
• Flexibility: With authority, individuals can adapt to unexpected situations and make necessary adjustments.
• Accountability: Authority ensures that the person responsible for the task is also accountable for its success or failure.
• Efficiency: When given authority, individuals can access the resources needed to perform tasks effectively, improving overall efficiency.
• Timely completion: Authority enables individuals to prioritise tasks and allocate resources to ensure timely completion.

In summary, while responsibility is crucial in delegation, it must be accompanied by the necessary authority. Authority empowers individuals to take ownership of their tasks, make decisions, and achieve desired outcomes, leading to effective delegation and organisational success.

Span of management is commonly referred to as the span of control in business management, particularly in human resource management. It indicates the number of subordinates that a supervisor can effectively manage.

This concept is crucial because:

• Determines management levels: The span of management influences how many levels of management exist within an organisation.
• Affects communication: A proper span ensures smooth communication and control over operations.
• Facilitates coordination: It helps in regulating and coordinating the responsibilities of individuals and departments.

For example, in a travel agency, the manager may divide tasks into operations, sales, and administration to ensure effective management of employees and customer relations.

Rumours often arise from informal organisations, which can negatively impact the workplace. These rumours may lead to:

• Conflicts among employees, disrupting harmony.
• Damage to superior-subordinate relationships, especially if unfounded claims about management circulate.

For instance, if a group of employees discusses a rumour about their manager, it could create tension and misunderstandings.

While informal organisations can fulfil social needs and enhance job satisfaction by fostering a sense of belonging, they can also hinder organisational objectives if they resist necessary changes.

Grouping of activities on the basis of product lines is a part of

In an organisation with multiple product lines, activities are grouped according to these lines. This method of organisation is referred to as divisional organisation. Each division typically has its own sub-departments, such as:

• Production
• Finance
• Marketing
• Human Resources

This structure allows each division to operate semi-autonomously, focusing on its specific product line while still contributing to the overall goals of the organisation.

Functional Organisation involves grouping similar functions within an organisation. Each group forms a separate department that reports to a single head. For example:

• Departments may include production, human resources, and marketing.
• Each department focuses on its specific tasks, improving efficiency.

This structure allows for:

• Clear lines of authority and responsibility.
• Enhanced specialisation, leading to better performance.
• Streamlined operations, as similar tasks are grouped together.

Overall, a functional organisation is effective for managing large teams and diverse activities, ensuring that each function receives the attention it needs.

Peter Drucker highlights the importance of having an appropriate organisation structure. He asserts that a suitable structure is vital for business success, while an unsuitable one can significantly impair performance and potentially lead to failure.

The organisation structure acts as a framework for managerial and operational tasks. It defines the relationships between individuals, work, and resources, facilitating coordination among human, physical, and financial resources. This structure is often depicted in an organisation chart.

Key aspects of organisation structure include:

• Span of management: This refers to the number of subordinates a manager can effectively oversee, which influences the levels of management within the structure.
• A well-designed organisational structure is essential for achieving business goals, particularly as a company grows in size or complexity.
• Focusing on an adequate structure aids in adapting to changes and optimising performance.