Main steps involved in the process of organizing an Organisation are: 1. Identification and Division of Work 2. Departmentalisation 3. Assignment of Duties 4. Establishing Reporting Relationships!

1. Identification and Division of Work:

The process of organising starts with the identification and division of work. The whole work is to be divided into manageable activities so that duplication is avoided and work can be completed as per predetermined goals.

Division of work facilitates specialization in work and skills which are essential, as no individual can perform the entire work efficiently and effectively.

For example, the work in a bank may be divided into four simple activities Mr. Rahim looks after receiving cash, Mr. Jecob takes care of disbursing cash, Mr. Parminder gets involved in processing of loan applications and Mr. Ram ensures sanctioning of loans.


Here, work of Mr. Rahim and Mr. Jecob being similar in nature can be grouped under job of Cash Clerk while work of Mr. Parminder and Mr. Ram can be grouped under job of Loan Officer. This is how division of work in an organization can be accomplished.

2. Departmentalisation:

Departmentalisation refers to the process of grouping the activities of similar nature under same departments. This facilitates specialisation and coordination in the organisation.

Following are the various ways of departmentalisation:

(i) On the basis of functions:


Numerous activities are grouped into different departments on the basis of various functions. For example, Purchase Department for purchase functions, Finance Department for financing activities etc.

(ii) On the basis of type of products manufactured:

In this case, activities are grouped into different departments on the basis of products manufactured or produced by organisation. For example, textile division, food division etc.

(iii) On the basis of territory:


Here, activities are grouped into offices/branches on the basis of four directions (or locations) North, East, West, South (NEWS) e.g., Southern Zone, Eastern Branch etc.

3. Assignment of Duties:

Once the departments have been formed; the next step is to assign the work to the employees according to their skills and competencies. In order to ensure effective performance in an organization, it is essential that a balance is created between the nature of a job and ability of the employee responsible for that job.

4. Establishing Reporting Relationships:

Establishing responsibility relationships in an organisation structure implies the allocation of authority and responsibility among employees of the enterprise in such a way that each person should know who is responsible to whom and for what.

It is essential that there should be no disparity between authority granted and responsibility imposed. It further creates hierarchy management in which top management enjoys maximum authority and as one moves downward, the authority decreases.


This step involves providing information to the workers regarding who they will be receiving orders from and who they will be reporting to. This helps in creating hierarchy structure among various departments. Further, establishing reporting relationships facilitates coordination also amongst various departments.

For example, Sales Manager will inform about sales forecast to the General Manager who will, on the basis of that forecast, direct Production Manager to arrange production of a certain quantity within a specified period etc.