Organizing is the function of management which follows planning.

It is a function in which the

synchronization and combination of human, physical and financial resources takes place. All the
three resources are important to get results. Therefore, organizational function helps in
achievement of results which in fact is important for the functioning of a concern. According
to Chester Barnard, Organizing is a function by which the concern is able to define the role
positions, the jobs related and the co-ordination between authority and responsibility. Hence, a
manager always has to organize in order to get results.
A manager performs organizing function with the help of following steps:1. Identification of activities - All the activities which have to be performed in a concern
have to be identified first. For example, preparation of accounts, making sales, record
keeping, quality control, inventory control, etc. All these activities have to be grouped
and classified into units.
2. Departmentally organizing the activities - In this step, the manager tries to combine
and group similar and related activities into units or departments. This organization of
dividing the whole concern into independent units and departments is called
departmentation.
3. Classifying the authority - Once the departments are made, the manager likes to classify
the powers and its extent to the managers. This activity of giving a rank in order to the
managerial positions is called hierarchy. The top management is into formulation of
policies, the middle level management into departmental supervision and lower level
management into supervision of foremen. The clarification of authority help in bringing
efficiency in the running of a concern. This helps in achieving efficiency in the running of
a concern. This helps in avoiding wastage of time, money, effort, in avoidance of
duplication or overlapping of efforts and this helps in bringing smoothness in a concerns
working.
4. Co-ordination between authority and responsibility - Relationships are established
among various groups to enable smooth interaction toward the achievment of the
organizational goal. Each individual is made aware of his authority and he/she knows
whom they have to take orders from and to whom they are accountable and to whom they
have to report. A clear organizational structure is drawn and all the employees are made
aware of it.
5. Importance of Organizing Function
1. Specialization - Organizational structure is a network of relationships in which the work
is divided into units and departments. This division of work is helping in bringing
specialization in various activities of concern.
2. Well defined jobs - Organizational structure helps in putting right men on right job
1

which can be done by selecting people for various departments according to their
qualifications, skill and experience. This is helping in defining the jobs properly which
clarifies the role of every person.
3. Clarifies authority - Organizational structure helps in clarifying the role positions to
every manager (status quo). This can be done by clarifying the powers to every manager
and the way he has to exercise those powers should be clarified so that misuse of powers
do not take place. Well defined jobs and responsibilities attached helps in bringing
efficiency into managers working. This helps in increasing productivity.
4. Co-ordination - Organization is a means of creating co-ordination among different
departments of the enterprise. It creates clear cut relationships among positions and
ensure mutual co-operation among individuals. Harmony of work is brought by higher
level managers exercising their authority over interconnected activities of lower level
manager.
Authority responsibility relationships can be fruitful only when there is a formal
relationship between the two. For smooth running of an organization, the co-ordination
between authority- responsibility is very important. There should be co-ordination
between different relationships. Clarity should be made for having an ultimate
responsibility attached to every authority. There is a saying, Authority without
responsibility leads to ineffective behaviour and responsibility without authority makes
person ineffective. Therefore, co-ordination of authority- responsibility is very
important.
5. Effective administration - The organization structure is helpful in defining the jobs
positions. The roles to be performed by different managers are clarified. Specialization is
achieved through division of work. This all leads to efficient and effective administration.
6. Growth and diversification - A companys growth is totally dependant on how
efficiently and smoothly a concern works. Efficiency can be brought about by clarifying
the role positions to the managers, co-ordination between authority and responsibility and
concentrating on specialization. In addition to this, a company can diversify if its
potential grow. This is possible only when the organization structure is well- defined.
This is possible through a set of formal structure.
7. Sense of security - Organizational structure clarifies the job positions. The roles assigned
to every manager is clear. Co-ordination is possible. Therefore, clarity of powers helps
automatically in increasing mental satisfaction and thereby a sense of security in a
concern. This is very important for job- satisfaction.
8. Scope for new changes - Where the roles and activities to be performed are clear and
every person gets independence in his working, this provides enough space to a manager
to develop his talents and flourish his knowledge. A manager gets ready for taking
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independent decisions which can be a road or path to adoption of new techniques of

production. This scope for bringing new changes into the running of an enterprise is
possible only through a set of organizational structure.
The organizing process can be done efficiently if the managers have certain guidelines so that
they can take decisions and can act. To organize in an effective manner, the following principles
of organization can be used by a manager.
1. Principle of Specialization
According to the principle, the whole work of a concern should be divided amongst the
subordinates on the basis of qualifications, abilities and skills. It is through division of
work specialization can be achieved which results in effective organization.
2. Principle of Functional Definition
According to this principle, all the functions in a concern should be completely and
clearly defined to the managers and subordinates. This can be done by clearly defining
the duties, responsibilities, authority and relationships of people towards each other.
Clarifications in authority-responsibility relationships helps in achieving co-ordination
and thereby organization can take place effectively. For example, the primary functions
of production, marketing and finance and the authority responsibility relationships in
these departments shouldbe clearly defined to every person attached to that department.
Clarification in the authority-responsibility relationship helps in efficient organization.
3. Principles of Span of Control/Supervision
According to this principle, span of control is a span of supervision which depicts the
number of employees that can be handled and controlled effectively by a single manager.
According to this principle, a manager should be able to handle what number of
employees under him should be decided. This decision can be taken by choosing either
froma wide or narrow span. There are two types of span of control:a. Wide span of control- It is one in which a manager can supervise and control
effectively a large group of persons at one time. The features of this span are:i.

Less overhead cost of supervision

ii.

Prompt response from the employees

iii.

Better communication

iv.

Better supervision

v.

Better co-ordination

vi.

Suitable for repetitive jobs

According to this span, one manager can effectively and efficiently handle a large
number of subordinates at one time.
b. Narrow span of control- According to this span, the work and authority is
divided amongst many subordinates and a manager doesn't supervises and control
a very big group of people under him. The manager according to a narrow span
supervises a selected number of employees at one time. The features are:i.

Work which requires tight control and supervision, for example,

handicrafts, ivory work, etc. which requires craftsmanship, there narrow
span is more helpful.

ii.

Co-ordination is difficult to be achieved.

iii.

Communication gaps can come.

iv.

Messages can be distorted.

v.

Specialization work can be achieved.

Factors influencing Span of Control

1. Managerial abilities- In the concerns where managers are capable, qualified and
experienced, wide span of control is always helpful.
2. Competence of subordinates- Where the subordinates are capable and
competent and their understanding levels are proper, the subordinates tend to very
frequently visit the superiors for solving their problems. In such cases, the
manager can handle large number of employees. Hence wide span is suitable.
3. Nature of work- If the work is of repetitive nature, wide span of supervision is
more helpful. On the other hand, if work requires mental skill or craftsmanship,
tight control and supervision is required in which narrow span is more helpful.
4. Delegation of authority- When the work is delegated to lower levels in an
efficient and proper way, confusions are less and congeniality of the environment
can be maintained. In such cases, wide span of control is suitable and the
supervisors can manage and control large number of sub- ordinates at one time.

5. Degree of decentralization- Decentralization is done in order to achieve

specialization in which authority is shared by many people and managers at
different levels. In such cases, a tall structure is helpful. There are certain
concerns where decentralization is done in very effective way which results in
direct and personal communication between superiors and sub- ordinates and
there the superiors can manage large number of subordinates very easily. In such
cases, wide span again helps.
4

Principle of Scalar Chain

Scalar chain is a chain of command or authority which flows from top to bottom. With a
chain of authority available, wastages of resources are minimized, communication is
affected, overlapping of work is avoided and easy organization takes place. A scalar chain
of command facilitates work flow in an organization which helps in achievement of
effective results. As the authority flows from top to bottom, it clarifies the authority
positions to managers at all level and that facilitates effective organization.

Principle of Unity of Command

It implies one subordinate-one superior relationship. Every subordinate is answerable and
accountable to one boss at one time. This helps in avoiding communication gaps and
feedback and response is prompt. Unity of command also helps in effective combination
of resources, that is, physical, financial resources which helps in easy co-ordination and,
therefore, effective organization.
Authority Flows
from Top to Bottom
Managing Director

Marketing Manager

Sales/ Media Manager

Salesmen
According to the above diagram, the Managing Director has got the highest level of
authority. This authority is shared by the Marketing Manager who shares his authority
with the Sales Manager. From this chain of hierarchy, the official chain of communication
becomes clear which is helpful in achievement of results and which provides stability to a
concern. This scalar chain of command always flow from top to bottom and it defines the
authority positions of different managers at different levels.
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Organizations are basically clasified on the basis of relationships. There are two types of
organizations formed on the basis of relationships in an organization
1. Formal Organization - This is one which refers to a structure of well defined jobs each
bearing a measure of authority and responsibility. It is a conscious determination by
which people accomplish goals by adhering to the norms laid down by the structure. This
kind of organization is an arbitrary set up in which each person is responsible for his
performance. Formal organization has a formal set up to achieve pre- determined goals.
2. Informal Organization - It refers to a network of personal and social relationships
which spontaneously originates within the formal set up. Informal organizations develop
relationships which are built on likes, dislikes, feelings and emotions. Therefore, the
network of social groups based on friendships can be called as informal organizations.
There is no conscious effort made to have informal organization. It emerges from the
formal organization and it is not based on any rules and regulations as in case of formal
organization.
Relationship between Formal and Informal Organizations
For a concerns working both formal and informal organization are important. Formal
organization originates from the set organizational structure and informal organization originates
from formal organization. For an efficient organization, both formal and informal organizations
are required. They are the two phase of a same concern. Formal organization can work
independently. But informal organization depends totally upon the formal organization. Formal
and informal organization helps in bringing efficient working organization and smoothness in a
concern. Within the formal organization, the members undertake the assigned duties in cooperation with each other. They interact and communicate amongst themselves. Therefore, both
formal and informal organizations are important. When several people work together for
achievement of organizational goals, social tie ups tends to built and therefore informal
organization helps to secure co-operation by which goals can be achieved smooth. Therefore, we
can say that informal organization emerges from formal organization.
Line organization is the most oldest and simplest method of administrative organization.
According to this type of organization, the authority flows from top to bottom in a concern. The
line of command is carried out from top to bottom. This is the reason for calling this organization
as scalar organization which means scalar chain of command is a part and parcel of this type of
administrative organization. In this type of organization, the line of command flows on an even
basis without any gaps in communication and co-ordination taking place.
Features of Line Organization
1. It is the most simplest form of organization.
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2. Line of authority flows from top to bottom.

3. Specialized and supportive services do not take place in these organization.
4. Unified control by the line officers can be maintained since they can independently take
decisions in their areas and spheres.
5. This kind of organization always helps in bringing efficiency in communication and
bringing stability to a concern.
Merits of Line Organization
1. Simplest- It is the most simple and oldest method of administration.
2. Unity of Command- In these organizations, superior-subordinate relationship is
maintained and scalar chain of command flows from top to bottom.
3. Better discipline- The control is unified and concentrates on one person and therefore, he
can independently make decisions of his own. Unified control ensures better discipline.
4. Fixed responsibility- In this type of organization, every line executive has got fixed
authority, power and fixed responsibility attached to every authority.
5. Flexibility- There is a co-ordination between the top most authority and bottom line
authority. Since the authority relationships are clear, line officials are independent and
can flexibly take the decision. This flexibility gives satisfaction of line executives.
6. Prompt decision- Due to the factors of fixed responsibility and unity of command, the
officials can take prompt decision.
Demerits of Line Organization
1. Over reliance- The line executives decisions are implemented to the bottom. This
results in over-relying on the line officials.
2. Lack of specialization- A line organization flows in a scalar chain from top to bottom
and there is no scope for specialized functions. For example, expert advices whatever
decisions are taken by line managers are implemented in the same way.
3. Inadequate communication- The policies and strategies which are framed by the top
authority are carried out in the same way. This leaves no scope for communication from
the other end. The complaints and suggestions of lower authority are not communicated
back to the top authority. So there is one way communication.

4. Lack of Co-ordination- Whatever decisions are taken by the line officials, in certain
situations wrong decisions, are carried down and implemented in the same way.
Therefore, the degree of effective co-ordination is less.
5. Authority leadership- The line officials have tendency to misuse their authority
positions. This leads to autocratic leadership and monopoly in the concern.
What is Controlling?
Controlling consists of verifying whether everything occurs in confirmities with the plans
adopted, instructions issued and principles established. Controlling ensures that there is effective
and efficient utilization of organizational resources so as to achieve the planned goals.
Controlling measures the deviation of actual performance from the standard performance,
discovers the causes of such deviations and helps in taking corrective actions
According to Brech, Controlling is a systematic exercise which is called as a process of
checking actual performance against the standards or plans with a view to ensure adequate
progress and also recording such experience as is gained as a contribution to possible future
needs.
According to Donnell, Just as a navigator continually takes reading to ensure whether he is
relative to a planned action, so should a business manager continually take reading to assure
himself that his enterprise is on right course.
Controlling has got two basic purposes
1. It facilitates co-ordination
2. It helps in planning
Features of Controlling Function
Following are the characteristics of controlling function of management1. Controlling is an end function- A function which comes once the performances are
made in confirmities with plans.
2. Controlling is a pervasive function- which means it is performed by managers at all
levels and in all type of concerns.
3. Controlling is forward looking- because effective control is not possible without past
being controlled. Controlling always look to future so that follow-up can be made
whenever required.
8

4. Controlling is a dynamic process- since controlling requires taking reviewal methods,

changes have to be made wherever possible.
5. Controlling is related with planning- Planning and Controlling are two inseperable
functions of management. Without planning, controlling is a meaningless exercise and
without controlling, planning is useless. Planning presupposes controlling and
controlling succeeds planning.
Controlling as a management function involves following steps:
1. Establishment of standards- Standards are the plans or the targets which have to be
achieved in the course of business function. They can also be called as the criterions for
judging the performance. Standards generally are classified into twoa. Measurable or tangible - Those standards which can be measured and expressed
are called as measurable standards. They can be in form of cost, output,
expenditure, time, profit, etc.
b. Non-measurable or intangible- There are standards which cannot be measured
monetarily. For example- performance of a manager, deviation of workers, their
attitudes towards a concern. These are called as intangible standards.
Controlling becomes easy through establishment of these standards because controlling
is exercised on the basis of these standards.
2. Measurement of performance- The second major step in controlling is to measure the
performance. Finding out deviations becomes easy through measuring the actual
performance. Performance levels are sometimes easy to measure and sometimes difficult.
Measurement of tangible standards is easy as it can be expressed in units, cost, money
terms, etc. Quantitative measurement becomes difficult when performance of manager
has to be measured. Performance of a manager cannot be measured in quantities. It can
be measured only bya. Attitude of the workers,
b. Their morale to work,
c. The development in the attitudes regarding the physical environment, and
d. Their communication with the superiors.
It is also sometimes done through various reports like weekly, monthly, quarterly, yearly
reports.

3. Comparison of actual and standard performance- Comparison of actual performance

with the planned targets is very important. Deviation can be defined as the gap between
actual performance and the planned targets. The manager has to find out two things hereextent of deviation and cause of deviation. Extent of deviation means that the manager
has to find out whether the deviation is positive or negative or whether the actual
performance is in conformity with the planned performance. The managers have to
exercise control by exception. He has to find out those deviations which are critical and
important for business. Minor deviations have to be ignored. Major deviations like
replacement of machinery, appointment of workers, quality of raw material, rate of
profits, etc. should be looked upon consciously. Therefore it is said, If a manager
controls everything, he ends up controlling nothing. For example, if stationery charges
increase by a minor 5 to 10%, it can be called as a minor deviation. On the other hand, if
monthly production decreases continuously, it is called as major deviation.
Once the deviation is identified, a manager has to think about various cause which has led
to deviation. The causes can bea. Erroneous planning,
b. Co-ordination loosens,
c. Implementation of plans is defective, and
d. Supervision and communication is ineffective, etc.

4. Taking remedial actions- Once the causes and extent of deviations are known, the
manager has to detect those errors and take remedial measures for it. There are two
alternatives herea. Taking corrective measures for deviations which have occurred; and
b. After taking the corrective measures, if the actual performance is not in
conformity with plans, the manager can revise the targets. It is here the controlling
process comes to an end. Follow up is an important step because it is only through
taking corrective measures, a manager can exercise controlling.
Planning and controlling are two separate fuctions of management, yet they are closely related.
The scope of activities if both are overlapping to each other. Without the basis of planning,
controlling activities becomes baseless and without controlling, planning becomes a
meaningless exercise. In absense of controlling, no purpose can be served by. Therefore,
planning and controlling reinforce each other. According to Billy Goetz, " Relationship between
the two can be summarized in the following points

10

1. Planning preceeds controlling and controlling succeeds planning.

2. Planning and controlling are inseperable functions of management.
3. Activities are put on rails by planning and they are kept at right place through
controlling.
4. The process of planning and controlling works on Systems Approach which is as follows
:
Planning

Results

Corrective Action

Planning and controlling are integral parts of an organization as both are important for
smooth running of an enterprise.
5. Planning and controlling reinforce each other. Each drives the other function of
management.
In the present dynamic environment which affects the organization, the strong relationship
between the two is very critical and important. In the present day environment, it is quite likely
that planning fails due to some unforeseen events. There controlling comes to the rescue. Once
controlling is done effectively, it give us stimulus to make better plans. Therfore, planning and
controlling are inseperate functions of a business enterprise.

1.4 Planning, Organizing, Leading, and Controlling

LEARNING OBJECTIVES
Know the dimensions of the planning-organizing-leading-controlling (P-O-L-C)
framework.
2.
Know the general inputs into each P-O-L-C dimension.
1.

A managers primary challenge is to solve problems creatively. While drawing from a variety of
academic disciplines, and to help managers respond to the challenge of creative problem solving,
principles of management have long been categorized into the four major functions of planning,
organizing, leading, and controlling (the P-O-L-C framework). The four functions, summarized
11

in the P-O-L-C figure, are actually highly integrated when carried out in the day-to-day realities
of running an organization. Therefore, you should not get caught up in trying to analyze and
understand a complete, clear rationale for categorizing skills and practices that compose the
whole of the P-O-L-C framework.
It is important to note that this framework is not without criticism. Specifically, these criticisms
stem from the observation that the P-O-L-C functions might be ideal but that they do not
accurately depict the day-to-day actions of actual managers. [1] The typical day in the life of a
manager at any level can be fragmented and hectic, with the constant threat of having priorities
dictated by the law of the trivial many and important few (i.e., the 80/20 rule). However, the
general conclusion seems to be that the P-O-L-C functions of management still provide a very
useful way of classifying the activities managers engage in as they attempt to achieve
organizational goals. [2]
Figure 1.7 The P-O-L-C Framework

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Planning
Planning is the function of management that involves setting objectives and determining a course
of action for achieving those objectives. Planning requires that managers be aware of
environmental conditions facing their organization and forecast future conditions. It also requires
that managers be good decision makers.
Planning is a process consisting of several steps. The process begins with environmental
scanning which simply means that planners must be aware of the critical contingencies facing
their organization in terms of economic conditions, their competitors, and their customers.
Planners must then attempt to forecast future conditions. These forecasts form the basis for
planning.

13

Planners must establish objectives, which are statements of what needs to be achieved and when.
Planners must then identify alternative courses of action for achieving objectives. After
evaluating the various alternatives, planners must make decisions about the best courses of action
for achieving objectives. They must then formulate necessary steps and ensure effective
implementation of plans. Finally, planners must constantly evaluate the success of their plans and
take corrective action when necessary.
There are many different types of plans and planning.
Strategic planning involves analyzing competitive opportunities and threats, as well as the
strengths and weaknesses of the organization, and then determining how to position the
organization to compete effectively in their environment. Strategic planning has a long time
frame, often three years or more. Strategic planning generally includes the entire organization
and includes formulation of objectives. Strategic planning is often based on the organizations
mission, which is its fundamental reason for existence. An organizations top management most
often conducts strategic planning.
Tactical planning is intermediate-range (one to three years) planning that is designed to develop
relatively concrete and specific means to implement the strategic plan. Middle-level managers
often engage in tactical planning.
Operational planning generally assumes the existence of organization-wide or subunit goals and
objectives and specifies ways to achieve them. Operational planning is short-range (less than a
year) planning that is designed to develop specific action steps that support the strategic and
tactical plans.
Organizing
Organizing is the function of management that involves developing an organizational structure
and allocating human resources to ensure the accomplishment of objectives. The structure of the
organization is the framework within which effort is coordinated. The structure is usually
14

represented by an organization chart, which provides a graphic representation of the chain of

command within an organization. Decisions made about the structure of an organization are
generally referred to as organizational designdecisions.
Organizing also involves the design of individual jobs within the organization. Decisions must be
made about the duties and responsibilities of individual jobs, as well as the manner in which the
duties should be carried out. Decisions made about the nature of jobs within the organization are
generally called job design decisions.
Organizing at the level of the organization involves deciding how best to departmentalize, or
cluster, jobs into departments to coordinate effort effectively. There are many different ways to
departmentalize, including organizing by function, product, geography, or customer. Many larger
organizations use multiple methods of departmentalization.
Organizing at the level of a particular job involves how best to design individual jobs to most
effectively use human resources. Traditionally, job design was based on principles of division of
labor and specialization, which assumed that the more narrow the job content, the more
proficient the individual performing the job could become. However, experience has shown that
it is possible for jobs to become too narrow and specialized. For example, how would you like to
screw lids on jars one day after another, as you might have done many decades ago if you
worked in company that made and sold jellies and jams? When this happens, negative outcomes
result, including decreased job satisfaction and organizational commitment, increased
absenteeism, and turnover.
Recently, many organizations have attempted to strike a balance between the need for worker
specialization and the need for workers to have jobs that entail variety and autonomy. Many jobs
are now designed based on such principles as empowerment, job enrichment and teamwork. For
example, HUI Manufacturing, a custom sheet metal fabricator, has done away with traditional
departments to focus on listening and responding to customer needs. From company-wide

15

meetings to team huddles, HUI employees know and understand their customers and how HUI
might service them best. [3]
Leading
Leading involves the social and informal sources of influence that you use to inspire action taken
by others. If managers are effective leaders, their subordinates will be enthusiastic about exerting
effort to attain organizational objectives.
The behavioral sciences have made many contributions to understanding this function of
management. Personality research and studies of job attitudes provide important information as
to how managers can most effectively lead subordinates. For example, this research tells us that
to become effective at leading, managers must first understand their subordinates personalities,
values, attitudes, and emotions.
Studies of motivation and motivation theory provide important information about the ways in
which workers can be energized to put forth productive effort. Studies of communication provide
direction as to how managers can effectively and persuasively communicate. Studies of
leadership and leadership style provide information regarding questions, such as, What makes a
manager a good leader? and In what situations are certain leadership styles most appropriate
and effective?
Controlling
Controlling involves ensuring that performance does not deviate from standards. Controlling
consists of three steps, which include (1) establishing performance standards, (2) comparing
actual performance against standards, and (3) taking corrective action when necessary.
Performance standards are often stated in monetary terms such as revenue, costs, or profits but
may also be stated in other terms, such as units produced, number of defective products, or levels
of quality or customer service.

16

The measurement of performance can be done in several ways, depending on the performance
standards, including financial statements, sales reports, production results, customer satisfaction,
and formal performance appraisals. Managers at all levels engage in the managerial function of
controlling to some degree.
The managerial function of controlling should not be confused with control in the behavioral or
manipulative sense. This function does not imply that managers should attempt to control or to
manipulate the personalities, values, attitudes, or emotions of their subordinates. Instead, this
function of management concerns the managers role in taking necessary actions to ensure that
the work-related activities of subordinates are consistent with and contributing toward the
accomplishment of organizational and departmental objectives.
Effective controlling requires the existence of plans, since planning provides the necessary
performance standards or objectives. Controlling also requires a clear understanding of where
responsibility for deviations from standards lies. Two traditional control techniques are budget
and performance audits. An audit involves an examination and verification of records and
supporting documents. A budget audit provides information about where the organization is with
respect to what was planned or budgeted for, whereas a performance audit might try to determine
whether the figures reported are a reflection of actual performance. Although controlling is often
thought of in terms of financial criteria, managers must also control production and operations
processes, procedures for delivery of services, compliance with company policies, and many
other activities within the organization.
The management functions of planning, organizing, leading, and controlling are widely
considered to be the best means of describing the managers job, as well as the best way to
classify accumulated knowledge about the study of management. Although there have been
tremendous changes in the environment faced by managers and the tools used by managers to
perform their roles, managers still perform these essential functions.

17

1.
2.
3.
4.
5.
6.

The principles of management can be distilled down to four critical functions. These
functions are planning, organizing, leading, and controlling. This P-O-L-C framework
provides useful guidance into what the ideal job of a manager should look like.
EXERCISES
What are the management functions that comprise the P-O-L-C framework?
Are there any criticisms of this framework?
What function does planning serve?
What function does organizing serve?
What function does leading serve?
What function does controlling serve?

18