The process and principles of organisation that make running of modern businesses possible.

Division of work makes authority-responsibility relationship between the superiors and their subordinates possible. Without adequate delegation of authority managers, supervisors and workers will not be expected to be held responsible for any failure. Everyone in the enterprise must work under one command and unity of direction.

There are various steps followed in the process of setting organisation structures in an enterprise. The first thing to do is to determine the various processes and then divide them into various tasks. The division of work should be done in such a way that the worker is assigned just a part of the whole process of production. In modern day enterprises the various divisions of work are usually manufacturing, marketing, financing, purchasing and personnel. The various divisions of work are then grouped into departments and divisions according to their similarity in operations. These could be divided into similar groups depending on the products, territories or customers whichever of these will make coordination and policy control of the enterprise simpler. Duties and responsibilities are then assigned to the various departments and divisions in such a way that the workers will be aware of their responsibly. In this way cases of overlapping or duplication of responsibilities and activities amongst the various departments and divisions will be minimized. Every individual in the enterprise must be given authority and responsibility commensurate with his position in the organisation chart. The authority is derived from the shareholders and passed through the top management to the lowest level of management in the organisation through the principle of delegation of authority and responsibility. Delegation of authority and responsibility makes possible various departments in the enterprise to be linked to one another horizontally and vertically.

Principles that help in designing a sound organisation structure.

The principles of unity of objectives, efficiency and division of work.

All the divisions and departments must be geared towards a single set objective to the benefit of the whole enterprise. When the organisation structures are set in such a way that the objectives of the enterprise is realized then it is said to be soundly structured. The objectives of the enterprise must be reached at minimum cost for the enterprise to be said to run efficiently. The various tasks that are followed before the final produce is realized in an enterprise should be divided as much as possible so that every worker is responsible for as few functions as possible. This is referred to as division of work.

The principles of span of control, scalar and delegation.

Every manager and supervisor should only be assigned a reasonable number of people to control. When the span of control of a person is too large, they are not able to efficiently supervise their subordinates. In this regard an enterprise sets up authority-responsibility system whereby everyone in the enterprise is only responsible for a particular operation or section and reports to only one superior. You will not expect an employee to take orders from two bosses and still work efficiently. The managers and supervisors derive their authority from the higher levels of management in the organisation chart through the principle of delegation of authority. Authority should be delegated to the lowest level as possible so that decision making is made as close as possible to the point of action.

The principles of absoluteness of responsibility, correspondence and unity of command.

The duties and responsibility of every manager and worker must be clear so that there must not be overlapping of duties. The responsibility of managers to their subordinates must be absolute so as to minimize cases of escape of responsibility. Subordinates must be totally responsible for the performance of the job assigned them. This can only be possible if clear responsibilities are spelt out. No manager or worker should be expected to be responsible for a task that he is not delegated the right amount of authority so as to work efficiently. It should also be made sure that everyone is only expected to serve a single master in an enterprise. In this way every worker will working towards one plan for the benefit of the enterprise.

The principles of balance, exception and coordination.

When each and every function in the organisation is given the same importance, there is no case where production comes to a halt unnecessarily due to one section lacking the necessary resources to help in performing its part of responsibility. Every manager must be given an opportunity to take decisions which his authority and responsibility allow. They should only be expected to forward to managers in the higher levels if the responsibility and authority vested on them do not allow them to perform certain tasks. All the people working in the enterprise should be united in that they all work as a group towards a common purpose. This is the only way that an enterprise can realise its objectives effectively and at minimum costs.


Author: Umesh Chandra Bhatt20 Feb 2023 Member Level: Gold   Points : 5

A very elaborate write up on the process and principles in business organisations. For running the organisation, natutally, recruitment is done so that there is a sufficient number of persons in the organisation for the production of material or delivering of services to be done in an effective manner. But that is only one side of the story. Once the people are in place, than the main problem comes in assigning them their task and then making their teams in such a manner that a common objective of company is achieved. This is the process which is very difficult to achieve and many companies fail on this front and then their productivity is badly effected. Management gurus suggest that the employees of an organisation or business unit should be, from time to time, given training on the aspects of their work as well as for understanding the reasons of coherence and unity under a common leader. This is to be taught to all the employees from time to time on a regular basis either through refresher courses or through job enrichment. Until and unless the employees are aligned to the common objective line of the company, the productivity will not increase. Employees have to start feeling that they areowning the organisation themselves and sharing its profit. Once they understand that their improved productivity is related to increase in the earning of the organisation which is directly proportional to their salary and bonuses whenever and wherever applicable, they will work hard and follow the team leader.

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