9 Important Principles of Organisation | Management

This article throws light upon the nine important principles of organisation. The principles are: 1. Consideration of Objectives 2. Relationship of Basic Components of the Organisation 3. Responsibility and Authority 4. Span of Control 5. Dividing and Grouping Work (Including Coordination) 6. Effective Delegation 7. Communication 8. Line and Staff Functions 9. Balance, Stability and Flexibility.

Principle # 1. Consideration of Objectives:

Since the objectives of the enterprise have an important bearing on the organisation structure, only those objectives should be taken up and accomplished for which there is real need in the organisation e.g., measures may be taken to increase productivity, improve product quality etc.

Principle # 2. Relationship of Basic Components of the Organisation:

Objectives as decided in step-I above determine the work to be performed and the type of work dictates the selection of Personnel and physical facilities.

Principle # 3. Responsibility and Authority:

Responsibility means accountability. It may be considered as the obligation of a subordinate to his boss to do a work given to him. Authority means right (to command) and power to act. Since the top man in the organisation cannot do each and everything himself alone, a definite chain of responsibility and authority is provided from the top executive to each employee, of course through several levels or layers in between. As far as possible a person should take direct orders from only one superior and he should know to whom he is accountable.

Lines of responsibility should be made very clear in order to facilitate ready flow of communi­cation and control. Authority empowers the superior to make a subordinate to do the work. Everybody in the organisation, from top level downwards, possesses some authority to secure cooperation from subordinates. Lines of authority should be very clearly established in the structure of organisation in order to avoid overlapping actions, omission of acts etc.

Authority and responsibility must go together if the goals of the organisation are to be achieved efficiently and effectively. Whenever an employee is made responsible to accomplish a particular task, he must be given due authority also to control and direct efforts towards completing the task. When an employee is authorised to take up a job, he is held responsible for its performance also. Whereas authority to command and act can be delegated, the responsibility cannot.

The responsibility of the boss for the acts of his subordinates is absolute. The chief executive is still held responsible for poor quality of the products made by his subordinates. Since every action involves an element of risk in decision, the best course of action would be that a decision should be arrived at from the pooling of judgement of all those (e.g., chief executive and a team of staff specialists) who share in authority and responsibility for the situation in question. Everybody in the organisation structure must understand the limits of his authority and responsibility, i.e., he should know where his responsibility and authority start and stop.

Principle # 4. Span of Control:

(i) Span of control or span of management refers to the number of subordinates that report to an executive or the number of subordinates that an executive can supervise directly.

(ii) An executive should not have more subordinates looking to him for guidance than he can reasonably be expected to serve; because:

(a) The executive has limited time available for his activities, and

(b) He has limited available energy.

(iii) Depending upon the conditions of the business enterprise, the span of control may be any number varying from 2 to 20.

Some writers have concluded that ideal span is between four and eight; but it is fairly common to see as many as twelve or more workers reporting to a foreman.

(iv) If the span is small, an executive may tend to over supervise and may do even spoon feeding to his subordinates. On the other hand if the span is large, the executive may not be able to supervise his subordinates efficiently and they may start thinking that they are too remote from the point of control and may become careless or they may feel that they are impersonal and unimportant part of the organisation machinery.

(v) The span of control varies with and depends upon the following considerations:

a. Trained and experienced subordinates need less direction and hence a large number of them can work under one executive.

b. Span of control can be large for workers, all doing specialised and same work at one table or very close to each other. For example, wider spans are suitable for assembly line work or routine clerical jobs.

c. For maintenance and R&D departments and other departments which require many policy decisions and coordination with the work of others, a small span of control is the ideal.

d. A small span of control is also ideal when a number of employees are working in isolated areas, doing different type of works and require close supervision and control.

e. Complex nature of work demands a small span of control.

f. Span of control even for the same nature of job varies from executive to executive and depends upon his capacity to guide and work.

g. Wider span of control can be employed if the organisation and its control system are efficient and communication is good.

h. Span of control can be widened by providing personal assistant to an executive; because a good P.A. can offset a good amount of routine work-load associated with a wide span of control.

i. Span of control is decidedly small for an executive who goes to the extent of checking each and every action of his subordinates.

j. A wider-span of control can be employed in an organisation which has clear and definite objectives, policies and plans with no confusion in the minds of employees; and if each employee knows about his job (work), duties, responsibility and authority.

k. Besides certain weaknesses of a wider span and control [refer (iv) above], it has an advantage also (but not always); since the executive personally is unable to supervise the actions of all his subordinates, he will have to delegate authority to his subordinates who in turn will be forced to learn their jobs better and hence acquire a sense of accomplishment, responsibility and high morale.

Principle # 5. Dividing and Grouping Work (Including Coordination):

(a) Dividing:

Divisionalisation provides a broader perspective, a greater sense of responsibility on the part of the personnel and more clear-cut control over profits. Head of each division has a considerable freedom to act and adopt to local needs.

(b) Grouping:

Departmentation i.e., the process of grouping is essential for specialisation and coordination.

(c) Specialisation:

Specialisation may be in terms of product, process, labour etc. Specialisation is essential for attaining familiarity and proficiency within a particular area of activity. A specialised person understands his job thoroughly and is in a better position to do and further improve the work or product etc.

(d) Coordination:

Coordination means weaving together the segments of an organisation into a coherent whole in such a way that all parts operate at the most efficient level and produce maximum profit. Coordination is necessary to hold the specialised parts together and to have one suitably big team than a lot of little ones. Coordination unifies the purposes and efforts of the employees working in a concern.

Coordination can be achieved through:

1. Cooperation of both executives and subordinates.

2. Good human relations.

3. Understanding of the goals or objectives of the organisation (common to everybody in the organisation).

4. Communication, i.e., effective means of communication among the people working for the organisation.

An organisation makes use of the following tools for achieving coordination:

(i) Organisation Chart:

An organisation chart helps understanding organisational relationships. An organisation chart shows the groupings of major activities into departments and the main lines of authority and responsibility among these departments.

(ii) Organisation Manual:

Whereas an organisation chart shows only job titles and their relationship to each other, organisation manual outlines in detail all the duties and responsibilities for different positions the chart shows.

Organisation Manual:

(a) Makes everybody clear as what he is to do and what is his authority;

(b) Eliminates overlapping of duties and responsibility, and

(c) Is valuable in training new personnel.

An organisation manual is written information about the various positions in an organisation and is generally kept in loose leaf form to facilitate revision which is very necessary if the (organisation) manual has to remain useful and purposeful.

(iii) Standard Practice Instructions:

a. They describe how the various tasks are to be performed in the organisation.

b. Examples of various tasks and operations are-receiving materials from the suppliers, calculat­ing vacation salaries, requisitioning supplies etc.

Principle # 6. Effective Delegation:

Effective delegation is said to be existing when an executive instead of doing all the thinking for the unit himself, passes down to his subordinates any task on which they can take decisions themselves and perform it efficiently and effectively. By doing so, the executive gives a chance to his subordinates to think and to develop and at the same time keeps himself free to deal with managerial responsibilities such as handling special problems that arise, coordinating, planning improvements etc.

Principle # 7. Communication:

Communication serves as a linking process by which parts of an organisation are tied together. Communicating means transmitting instructions and information within the organisation and to outside customers, suppliers, etc., i.e., to all those who are affected. Since, employees in any organisation possess different levels of education and ability, an ineffective and improper communication may lead to fears, mistrust, confusion and even strikes. Good communication is essential if all employees are to know what to do in order to achieve the goals of the organisation.

For better results, it should be a free two-way communication. Not only the executive should pass down information to the subordinates, there should be feedback, i.e., replies should come from those also who are given instructions. A narrow span of control improves communication, helps implementing decisions correctly, and the executive can visualise a clear picture of the effects of his decisions.

Types of Communication:

(i) Downward communication i.e., the transmission of instructions and information from top executive downwards to the lowest grade employee.

(ii) Upward communication i.e., the transmission of feedback, orientation, complaints, suggestions for improvements etc., from the lowest grade employees to top executive.

(iii) Horizontal communication i.e., the transmission of information between persons having the same level of authority in the organisation.

(iv) Unofficial communications or rumours which are inevitable in any organisation, sometimes, may be correct but they present the distorted picture. The damaging effects of such unofficial communi­cations can be minimized by effective official communication.

Principle # 8. Line and Staff Functions:

All activities of an organisation can be classed into two main categories:

(a) Primary activities, and

(b) Supporting activities.

For example, in Army, Infantry and Artillery perform primary activity, i.e., fighting whereas Corps of EME, AMC (Army Medical Corps), ASC (Army Supply Corps) etc., perform different supporting activities.

Primary activities or line functions are those which contribute directly and vitally to the objectives of an organisation. Examples of line functions in a business organisation are production, sales, etc.

Supporting activities or staff functions are those that aid the line or are auxiliary to line functions. Examples of staff functions in a business organisation are Accounting, Administration, Personnel, Maintenance, etc.

The concept of line and staff functions is very valuable in organisational planning.

Principle # 9. Balance, Stability and Flexibility:

(a) Balance:

All units of an organisation should be balanced (i.e., developed in proportion to its contribution to the overall success of the organisation). In the absence of such balance (between different units or departments), the goals of the organisation cannot be achieved economically and effectively.

For example, if the purchase department is underdeveloped (i.e., it has neither adequate staff, nor resources, nor authority, etc.) as compared to other departments, it will seriously handicap the firm that may otherwise be very strong and modern in Production and Sales.

(b) Stability:

Organisational stability refers to the capacity to withstand the losses of key personnel (if they leave to join another concern) without serious loss to the effectiveness of the organisation in performing its work. A long range planning programme with regard to manpower requirements accompanied by positive executive training and development programmes will add to the organizational stability.

(c) Flexibility:

Organisational flexibility specifies the capacity to adjust work assignments, person­nel and facilities to temporary changes in the volume of work. Flexibility is the ability to bend and blend without (and before) experiencing any serious setback.