The process of organization brings relationships among employees at different levels, materials, money and machines. An organization is defined as â€œthe process of identifying and grouping the work to be performed defining and delegating responsibility and authority and establishing relationships for the purpose of enabling the people to work most effectively together in accomplishing objectives. The relationships that exist in an organization may be formal and/or informalâ€?.
A formal organization is a system of well defined jobs, each bearing a definite measure of authority, responsibility and accountability. The manager describes organizational relationships in a written and graphic manner. He tells the participants to do certain things in a specified manner, to obey orders from designated individuals, and to work co-operatively with others.
If bank officers decide to meet every Saturday evening for two hours and form a recreation club to play games outside the bank, they are meeting in an informal organization. However, when the same group meets to discuss about bank recovery for the next two months, it is in the context of a formal organization. Thus, while the informal organization is spontaneous, the formal organization is the result is the result of a deliberate and planned effort to pattern activities and relationships in a specified way to facilitate the achievement of goals in a smooth manner. The informal structure refers to the social groups or friendships which people working together may form. Understanding how these informal groups function, now they support or detract from the formal structure and how communications flow to and from them is critical for the manager who expects to oversee the total, living organization.
Responsibility is defined as oneâ€™s obligation to perform the functions assigned to the best of oneâ€™s ability in accordance with directions received. Responsibility is derived from function which is the origin for relationship. Hence, is called functional derivative. The important principles which could be observed in delegating responsibility are:
1. Absence of overlapping responsibilities i.e. one function should not be assigned to more than one individual employee.
2. Functional similarity which facilitates specialization should be taken into consideration while delegating responsibility.
3. Clear identification of responsibility limits.
4. Avoidance of gaps in delegation of responsibility.
5. Unnecessary function or responsibility which does not contribute to organizational goals should not be entrusted.
Though a certain part of the responsibility is delegated to the subordinate the original and entire amount of the responsibility still rests with the superior.
Authority is the right to give orders and the power to exact obedience. It is the right to decide what should be done or the right to do it oneself or to require someone else to do it. The authority is power to command or to exact action from others in the process of discharging the delegated responsibility. Thus, authority is derived from responsibility just as responsibility is derived from functions. The important principle of authority is:
Authority and responsibility should be equal. In other words required amount of authority should be delegated to discharge responsibility. This principle avoids misuse of authority and at the same time helps in proper discharge of responsibility.