Organizing Plan

          The final product of the organizing is called an organization plan. It should accomplish four things:

1.   Divide the entire firm into manageable departments.
2.   Establish authority for each task assigned.
3.   Properly decentralize the management work.
4.   Provide an overall structure for the entire organization.

          The final organization plan may divide the firm into subunits according to functions, processes, geographical areas, products, or customers. Most important, it must make the authority and responsibility clear to those who perform the assigned tasks. We should note that it's easier to describe the organizing process, as we have just done, than it is to organize a specific firm in actual practice. The process of organizing a business firm is not easy or simple. Best result are achieved through a knowledge of sound and accepted principles of business management. Let's look at some of those principles now.

The Process of Organizing

The purpose of organizing is to develop a structure of tasks and authority that brings about the most efficient performance of a company's entire operations. What is involved in this process? How is it accomplished?
          Two things are necessary for successful organizing is a full understanding of the functions of management-planning, organizing, directing, and controlling. This enables the organizers to identify and separate the levels of management that will be needed in the entire firm. Second, the organizers must have complete knowledge about each task to be performed. This allows them to divided each task into its basic parts so that the least amount of effort is required to accomplish them.
         Organizers usually begin with the lowest-level positions in the firm and then work their way up. Each job or task is divided into manageable parts, and then the supervision of these jobs is assigned so that everything can be directed and controlled properly. Supervisors at this level must, in turn, report to the next-higher level of management. Thus, each level of managers is responsible for the performance of employees under them, and each level is held accountable by the next-higher level of management, to which they report.
          A basic assumption throughout the organizing process is that the higher the position of employees, the greater are their qualifications and responsibilities. The result is an internal organization that provides a manager or supervisor for each person in the firm, and there are clear lines of authority throughout.

Simple Versus Complex Organizations

          The basic nature of a business firm affects the complexity of its internal organization. A fairly large factory making only a few products may need only one chief executive and several managers to head its manufacturing, marketing, and financial divisions. The firm can rely on supervisors to direct its factory operations. Similarly a large drugstore needs only one manager and some well-trained department heads to supervise the employees within their departments. But as a firm becomes larger, it usually also becomes more complex and more difficult to manage. It is the internal organization that must adjust to meet these challenges.
          Many things may necessitate special arrangements in the internal organization of a business firm. Sometimes the need is basic. Such as dividing areas of research within a laboratory to meet safety standards, or making a change to settle conflicts among employees. Usually, though, a firm makes adjustments to resolve one of the following complications of growth:

•   Expanded markets
•   A need to decentralize the firm
•   Multiplant manufacturing
•   Special projects
•   A need for specialists in certain areas
•   Internal operations
•   Technical production processes
•   A need to delegate authority and save executive' time
•   Special jobs, titles, or divisions of the company's operations

Control, Too, Never Ends

         It's always pleasant when those in charge of the controlling function can report to top management, "All is well: all goals have been achieved." But such a report is likely to be the exception, not the rule, in today's dynamic business world. And even if such reports were common, that would not eliminate the need for control. Like the other basic functions of management, controlling the organization's efforts is an ongoing requirement. It never ends. In a sense, that's what business is all about, and what make it exciting: controlling the known and the unknowns to accomplish a purpose.

Preconditions for Effective Control

          From the above examples, you can see that the controlling function keeps many managers busy. But that's not enough. Unless it is effective, the controlling function serves no purpose (just as worrying about grades-in itself-does nothing to raise them). And for the controlling function to be effective, at least three organizational arrangements, or preconditions, are necessary:

1.)   Standards of performance must be established in advance. Actual results are measured against established standards. These must be determined for every phase of a firm's operations-not only for production schedules, but also for sales, purchasing, finance, accounting, and personnel. The importance of establishing sound, useful standards cannot be over-emphasized.

2.)   A system for collecting data about performance must be established. Information about performance (called feedback) enables managers to make evaluations and accomplish their controlling function. Unless they have complete, carefully prepared data, the controlling function cannot be performed properly.

3.)   Managers must have authority to initiate corrective action when it is found necessary. When evaluation of performance shows that standards have not been met, managers must find out why, and they may have to suggest corrective action. This could require changes in policies affecting personnel, prices, sources of raw materials, production methods, equipment, packaging, sales territories, or many other things. To perform the controlling function effectively, managers must have the authority and responsibility to take action that corrects the problems.