Organizing: Principles, Process & Structure

TAKEAWAYS:

• Organizing is the process of defining roles, grouping tasks, and establishing authority relationships to achieve goals efficiently.
• Division of work and departmentalization create specialized units (e.g., marketing, finance) that improve productivity.
• Span of control and chain of command determine how many subordinates report to a manager and the hierarchy’s clarity.
• Coordination ensures all departments work toward shared objectives (e.g., Daraz’s logistics and customer service alignment).
• Informal organization (unofficial networks) can complement formal structures but may create resistance if mismanaged.
• Real-world example: Nabil Bank uses a functional structure (HR, IT, Loans) to streamline operations, while Pathao’s geographic departmentalization optimizes delivery routes.

What is Organizing?

Organizing is the process of arranging resources (human, financial, physical) and activities to implement plans effectively. It involves:

• Defining jobs (roles, responsibilities).
• Grouping jobs into departments (e.g., sales, production).
• Establishing authority (who reports to whom).
• Coordination to ensure smooth workflow.

Why is it important? Without organizing, chaos reigns—like a Khalti payment system failing due to unstructured coding teams or Daraz’s warehouse collapsing under poor inventory management. Organizing ensures:

• Efficiency: Tasks are assigned logically (e.g., NTC’s regional offices handle specific zones).
• Accountability: Clear roles prevent blame games (e.g., a bank loan officer’s failure is isolated to their team).
• Adaptability: Structures can evolve (e.g., Pathao shifting from bikes to electric scooters).

Principles of Organizing

These are the rules of thumb for building effective structures. Violating them leads to inefficiency (e.g., Nepal’s traffic jams due to poor road network planning).

1. Division of Work

"Specialization increases efficiency."

• Breaks complex tasks into smaller, manageable parts (like Adam Smith’s pin factory).
• Example: At Himalayan Java, roasting, packaging, and marketing are separate teams.

Advantages:

• Expertise: Workers master skills (e.g., a Ncell technician specializes in network towers).
• Time-saving: No reinventing the wheel (e.g., eSewa’s IT team reuses payment gateways).

Disadvantages:

• Boredom: Repetitive tasks reduce motivation (e.g., a Daraz packer doing the same job daily).
• Dependency: Over-specialization creates bottlenecks (e.g., if one NTC engineer quits, repairs halt).

2. Departmentalization

Grouping jobs by similarity to optimize resources. Common types:

Real-World Trace: Daraz uses product-based departmentalization for electronics, groceries, and fashion. However, their geographic warehouses (e.g., Kathmandu, Lalitpur) create coordination challenges during festivals (e.g., Dashain sales spikes).

3. Span of Control

"How many subordinates can one manager effectively supervise?"

• Narrow span (3–5 subordinates): Tall hierarchy, tight control (e.g., military, banks).
• Wide span (10+ subordinates): Flat structure, faster decisions (e.g., startups, Pathao’s delivery teams).

Optimal Span:

• 1:5 to 1:10 ratio is ideal for most organizations.
• Example: A Daraz store manager oversees 8–10 employees (cashiers, stockers, customer service).

Impact on Organizations:

Case Study: NTC vs. Ncell

• NTC: Narrow span (regional managers oversee few engineers) → slow repairs but high accuracy.
• Ncell: Wide span (zonal managers handle 15+ staff) → faster rollouts but higher error rates.

4. Authority and Responsibility

"Power comes with accountability."

• Authority: Right to give orders (e.g., a bank branch manager approving loans).
• Responsibility: Duty to perform (e.g., a loan officer verifying customer documents).
• Accountability: Answering for results (e.g., a Pathao driver facing penalties for delays).

Unity of Command Principle:

• "One boss, one plan." Employees report to only one manager to avoid confusion.
• Violation Example: A Daraz employee getting conflicting orders from HR and Operations → low productivity.

5. Coordination

"The glue that binds departments." Without coordination:

• Silos form: Marketing promises features IT can’t deliver (e.g., eSewa’s failed app launches).
• Wasted resources: Overlapping efforts (e.g., NTC and Ncell bidding for the same fiber routes).

Coordination Techniques:

1. Direct Contact: Managers meet daily (e.g., Daraz’s morning stand-ups).
2. Indirect Contact: Reports, emails (e.g., Nabil Bank’s monthly financial reviews).
3. Informal Organization: Unofficial networks (e.g., Khalti’s WhatsApp groups for troubleshooting).

Real Example: Kathmandu Traffic

• Poor coordination between Metro, buses, and rickshaws causes jams.
• Solution: Geographic zoning (like Pathao’s delivery routes) could reduce congestion.

Process of Organizing

A step-by-step framework to build an organization’s structure:

Step-by-Step Trace: Starting a Nepali Tech Startup

1. Objective: Build a food delivery app (like Pathao).
2. Divide Work:
   • App development (coders)
   • Customer support (chat team)
   • Delivery logistics (rider managers)
3. Departmentalize:
   • Functional: IT, Operations, Marketing.
   • Geographic: Kathmandu, Pokhara zones.
4. Assign Authority:
   • CEO → Managers → Team leads → Riders.
5. Coordinate:
   • Daily syncs between IT and Operations to fix app crashes during peak hours (e.g., lunch time).
6. Evaluate:
   • If riders complain about unclear routes, redesign the geographic zones.

Organizational Structures

How departments are arranged and connected. Common types:

1. Line Structure

• Simplest form: Direct vertical chain of command (e.g., small businesses, military).
• Pros: Clear authority, fast decisions.
• Cons: No specialization, slow adaptation.

graph TD
    A["CEO"] --> B["Production Manager"]
    A --> C["Sales Manager"]
    B --> D["Worker 1"]
    B --> E["Worker 2"]
    C --> F["Salesperson 1"]

Example: A local bakery with the owner overseeing bakers and cashiers.

2. Functional Structure

• Groups by expertise (e.g., Nabil Bank: HR, Loans, IT).
• Pros: Economies of scale, deep specialization.
• Cons: Slow cross-functional decisions.

graph TD
    A["CEO"] --> B["HR Head"]
    A --> C["Finance Head"]
    A --> D["IT Head"]
    B --> E["Recruiters"]
    C --> F["Accountants"]

Case Study: Himalayan Java

• Functional structure helps roasters focus on quality while marketers handle promotions.
• Challenge: New product launches take time due to silos (e.g., IT and Marketing misaligning on app features).

3. Divisional Structure

• Groups by product/region (e.g., Unilever: Personal Care, Home Care).
• Pros: Flexibility, focused teams.
• Cons: Duplication of resources.

graph TD
    A["CEO"] --> B["Electronics Division"]
    A --> C["Fashion Division"]
    B --> D["Smartphones Team"]
    C --> E["Clothing Team"]

Example: Daraz has divisions for electronics, groceries, and fashion, each with its own supply chain.

4. Matrix Structure

• Combines functional and divisional: Employees report to two bosses (e.g., project manager + functional head).
• Pros: Flexibility, shared resources.
• Cons: Confusion, power struggles.

Example: NTC’s fiber-optic project team includes engineers (functional) and project leads (divisional).

5. Informal Organization

• Unofficial networks (e.g., Khalti’s WhatsApp groups, Ncell’s "tea-time gossip"**).
• Pros: Faster problem-solving, morale boost.
• Cons: Rumors, resistance to change.

Real Example: At Pathao, riders share unofficial routes via WhatsApp to avoid traffic, but this can bypass official dispatch systems.

## In the Real World

How these principles play out in Nepali and global companies:

1. eSewa’s Payment Gateway

   • Principle: Division of Work + Functional Structure.
   • How: Separate teams handle user authentication, bank integrations, and fraud detection. If one team (e.g., fraud) fails, others (e.g., payments) suffer.
   • Real Impact: During Dashain, eSewa’s narrow span of control (few managers overseeing many fraud analysts) helps block scams in real time.

2. Daraz’s Warehouse Management

   • Principle: Departmentalization (Geographic) + Coordination.
   • How: Warehouses in Kathmandu, Pokhara, and Biratnagar are managed separately but must sync inventory to avoid stockouts.
   • Challenge: During Tihar, demand spikes 300%, requiring real-time coordination between warehouses and delivery teams.

3. Nabil Bank’s Loan Approval

   • Principle: Span of Control + Unity of Command.
   • How: A loan officer (wide span: handles 20+ applications) reports to a branch manager (narrow span: oversees 5 officers).
   • Problem: If the officer delegates poorly, loans get delayed (e.g., student loan processing during exam seasons).

## Exam Tip

This unit is highly conceptual but loved by examiners for diagrams, comparisons, and real-world links. Here’s how to score full marks:

1. Define Clearly

   • Start every answer with a one-sentence definition (e.g., "Organizing is the process of arranging resources to achieve goals efficiently.").

2. Use Diagrams

   • Draw organization charts (line, functional, matrix) for 5–10 marks.
   • Example question: "Draw the functional structure of NTC." → Label CEO, regional managers, engineers.

3. Compare Structures

   • For 10-mark questions, compare two structures in a table (e.g., line vs. functional).

4. Link to Nepal

   • Examiners love examples from NTC, Ncell, Daraz, or banks. Always tie theory to local businesses.

5. Process Questions

   • For "Explain the process of organizing," use the 6-step flowchart and trace a real company (e.g., Pathao’s startup).

6. Common Pitfalls

   • ❌ Vague examples: Don’t say "a company"—name Daraz, Nabil Bank.
   • ❌ Ignoring disadvantages: Always mention cons (e.g., "Functional structure slows cross-department decisions").
   • ❌ Skipping diagrams: Even if not asked, add a small org chart in the margin.

## Practice Question with Model Answer

Question: "Explain the principles of organizing with reference to a Nepali company. Discuss how division of work and coordination contribute to its effectiveness."

Model Answer: Organizing principles are guidelines to structure an organization efficiently. Let’s analyze Nabil Bank, Nepal’s leading commercial bank, using division of work and coordination.

1. Division of Work

   • Application: Nabil Bank divides roles into HR, Loans, Operations, and IT.
     • HR: Recruits and trains staff.
     • Loans: Processes applications (e.g., home loans, student loans).
     • Operations: Manages ATMs and branches.
     • IT: Maintains the core banking system.
   • Effectiveness:
     • Specialization: Loan officers focus only on credit checks, reducing errors.
     • Efficiency: IT doesn’t waste time on customer queries (handled by Operations).
   • Challenge: Silos exist—e.g., IT and Loans miscommunicate on digital loan portal updates, causing delays.

2. Coordination

   • Techniques Used:
     • Daily stand-ups: Branch managers sync with loan and IT teams to resolve system outages (e.g., during Dashain, when transactions peak).
     • Cross-functional teams: For new product launches (e.g., Nabil e-Banking), Loans, IT, and Marketing collaborate.
   • Real Example:
     • During lockdowns, Nabil Bank’s coordination between Operations (ATM maintenance) and IT (online banking) ensured uninterrupted service.
   • Failure Case:
     • In 2021, a loan processing delay occurred because HR (new hires) and Loans (training) were not coordinated, leading to customer complaints.

Visual:

Conclusion: Nabil Bank’s division of work ensures expertise, while coordination prevents siloed failures. However, over-specialization (e.g., IT not understanding loan needs) remains a challenge—cross-training could improve this.

## Quick Revision Table

## Final Checklist Before Exam

• Can you draw 3 organizational structures (line, functional, matrix)?
• Do you know 5 Nepali companies and their structures (e.g., NTC = line, Daraz = divisional)?
• Can you compare two principles (e.g., division of work vs. coordination) in a table?
• Have you practiced tracing a process (e.g., "How would you organize a new startup?")?
• Do you link theory to real-world failures (e.g., Nepal’s traffic = poor coordination)?