CAIIB ABFM Module A Unit 3 : Organising

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Oct 3

CAIIB Paper 3 ABFM Module A Unit 3 : Organising (New Syllabus)

IIBF has released the New Syllabus Exam Pattern for CAIIB Exam 2023. Following the format of the current exam, CAIIB 2023 will have now four papers. The CAIIB Paper 3 (ADVANCED BUSINESS & FINANCIAL MANAGEMENT) includes an important topic called "Organising". Every candidate who are appearing for the CAIIB Certification Examination 2023 must understand each unit included in the syllabus.

In this article, we are going to cover all the necessary details of CAIIB Paper 3 (ABFM) Module A (THE MANAGEMENT PROCESS) Unit 3 : Organising, Aspirants must go through this article to better understand the topic, Organising and practice using our Online Mock Test Series to strengthen their knowledge of Organising. Unit 3 : Organising

Organising

Organising entails assigning tasks, grouping tasks into departments, and assigning authority with adequate responsibility, as well as allocating resources within an organisation to achieve common goals.
Organising is the process of establishing or organising effective authority relationships between selected tasks, individuals, and workplaces to group work together in an efficient manner, as well as the process of separating work into sections and departments.
If managerial planning is concerned with establishing what tasks should be performed, then organising is concerned with determining how those tasks should be performed

Stages In Organising Process

There are five stages in the organising process, which are as follows:

Defining and reviewing the plans and objectives of the company.
Determining the work activities needed to accomplish the objectives
Categorising and grouping essential work activities into manageable units
Assigning activities and delegating authority
Designing a hierarchy of relationships

Principles of Organising

Work Specialisation

Work specialisation refers to the degree to which tasks within an organisation are broken up into distinct jobs. This concept is synonymous with the term "division of labour" Every worker receives instruction on how to carry out the particular responsibilities that are associated with their particular function.

Authority

The legitimate power that is delegated to managers so that they may make decisions, issue orders, and allocate resources on behalf of the organisation in order to accomplish the goals of the organisation is referred to as authority. The manager's job role determines the scope of his or her authority as well as the level of authority that comes with

Chain of Command

It is the continuous chain of authority that, in the end, connects every individual with the most senior position in the organisation, with a managerial position serving as the connecting link at each successive level in between.
The concepts of responsibility and accountability are enforced through a chain of command. The two guiding principles that underpin it are the Scalar Principle and the Unity of Command.
According to the principle of unity of command, each worker should have just one manager, supervisor, or other reporting authority to whom he or she is directly accountable for work-related matters.
According to the scalar principle, there ought to be a transparent chain of command that extends from the position of supreme authority at the very top of the organisation to each and every person working there, connecting all of the managers working at the various levels. It involves a concept known as a 'gang plank', which allows a subordinate to contact a superior or his superior in an emergency using a method that contradicts the hierarchy of control.

Delegation

The act of delegating responsibilities or authority at work to other people, such as workers or subordinates, is known as delegation.

Span Control

The number of workers who are under a manager's supervision is referred to as their "span of control," which is also sometimes referred to as their "span of management." It refers to the number of people who report directly to a manager and are accountable for the boss's actions.
When a manager has a high number of people reporting to him, there is said to be a wide span of influence over the organisation. structure. A manager is said to have a restricted range of authority when there are fewer direct reporters under their supervision.

Types Of Organisation

The basic types of organisations may be classified as follows:

Centralised and decentralized organization
Line and Staff Organisation
Functional Organisation
Committee Organisation

Centralised and Decentralised Organisation

Centralised Organisation: A centralised business structure is one in which key decisions, such as those on resource allocation, are made by a single individual, and that individual also provides the primary strategic direction for the company.
Most small firms are run in a centralised manner, in which the business owner is responsible for making all essential choices concerning products, services, strategic direction, and other crucial areas. On the other hand, the size of an Organisation is not necessary for it to be centralised.
Decentralised Organisation: It functions by delegating decision making capabilities to multiple teams across geographies. Most of the planning, strategy and decision making is dome by middle and low level management with the involvement of team members.

Line And Staff Organisation

"line-staff organisation" refers to the method by which authorities (such as managers) formulate objectives and instructions, which are subsequently carried out by employees and other workers. A large and complicated business may use a line-staff organisational structure in an effort to increase their level of adaptability without giving up their managerial authority.

Line executives always hold the authority of command, and the primary responsibilities of staff supervisors are to guide, advise, and counsel line executives.
Within the line and staff organisation, work is segmented and specialised in accordance with individual needs.
The entirety of the organisation is broken up into a variety of functional divisions, each of which has staff specialists assigned to it.The characteristics of specialisation make it possible to achieve efficiency in one's work.
There are two different channels through which authority might flow simultaneously in a company or organisation: Line Authority b. Staff Authority
The line executive retains control of the commanding role, while staff members are limited to advisory roles.

Advantages of Line and Staff Organisation

Providing relief to line of executives
Professional counsel
Benefits of specialization
Improvement in co-ordination
Benefits of Research and Development
Training
Balanced decisions
Unity of action

Disadvantages of Line and Staff Organisation

A fundamental misunderstanding
Lack of reliable guidance
Conflicts between line and staff
Expensive
Assumption of authorit
Staff steals the show

Functional Organisation

A functional organizational structure organizes a company into different departments based on areas of expertise. It contributes to the preservation of quality as well as uniformity in the performance of a variety of functions across the entire company.
FW Taylor was the one who initially proposed the idea of a functional organisation and advocated for the placement of knowledgeable individuals in key roles.
All the activities of a functional organisation are broken down into their respective functions, which include functions like operations, finance, marketing, and personal relations.

There are three different authorities: line, staff, and function

Each functional area is assigned to functional specialists who are vested with the authority to make all decisions pertaining to that function anytime that function is carried out anywhere within the organisation.
The principle of unity of command does not apply to such an organisation because it already has a line structure in place for that purpose.

Advantages of Functional Organisation

Specialisation
Efficient Control
Efficiency
Cost-Effectiveness
Expansion

Disadvantages of Functional Organisation

Confusion
Lack of coordination
Difficulty in determining accountability
Conflicts
Expensive

Committee Organisation

A committee organization represents a group of people with various kinds of knowledge, which is formally constituted to solve specific problems of the organization.
A committee helps to gather collective ideas and information, properly analyze them which helps to make strong managerial decisions and solve difficult problem.

Advantages of Committee Organisation

Improved Quality of Decisions
Establishing goals, plans, and policies
Participatory Management
Decrease Prejudice and Conflicts
Dealing with Complicated Problems
Commitment to Implementation
Sharing of authority

Disadvantages of Committee Organisation

Creating Conflict
Delay in Decisions
The Possibility of Diversion
The Shifting Tendency
Lack of Secrecy
Distribution of Responsibilities
Division of Accountability

Organisation Structure

Formal Organisation

As a result of the planning process, managers create an organisational structure to achieve methodical work and effective utilization of resources. This structure will be the outcome of organising the process.
The accomplishment of the organisational goals is intended to serve as the motivation for the formal organisation structure.
A formal organisational structure delegates distinct responsibilities to each individual member of the group.
In a formal organisation, each member is given a specific amount of authority or decision-making power, depending on the nature of the organisation.
The establishment of hierarchical connections between superiors and subordinates is a direct consequence of a formal organisational structure.
The organisation's formal organisational structure serves as the backbone of its hierarchical communication.

Advantages of Formal Organisation

Organised Tasks
Successful Completion of Organisational Objectives
Avoidance of duplication of functions
Harmony
Establishing One's Place in the Chain of Command
Placement of a greater emphasis on work

Disadvantages of Formal Organisation

Postponing an Action
Does not consider the employees' social requirements:
Placement of exclusive emphasis on work

Informal Organisation

Individuals create some social and friendly groups within the organisation because of the interactions that take place between them while working in various employment positions. This structure is formed by a network of social and friendly groups.
Unofficial organisational structures spring into existence on their own, and the primary purpose of these structures is to facilitate the attainment of psychological fulfilment.
An informal organisational structure does not have a predetermined chain of command or set way for information to flow through it.
Under an informal structure, it is impossible to determine the origin of information because any individual can contact any other member of the organisation.
The formal organisation structure is necessary for the existence of informal organisational structures.

Advantages of Informal Organisation

Effective and Rapid Communication
Satisfies societal requirement
Correct response
Utilisation of informal organisation as a strategic tool

Disadvantages of Informal Organisation

Engage in Rumour-Spreading
No Organised Tasks
Potential to have unfavourable effects
Placement of a greater emphasis on individual interests

Organisation Charts And Manuals

According to George R. Terry, an organisation chart is a "graphical form" that illustrates the essential components of an organisation. These components include key functions and the relationships that are associated with them, channels of supervision, and the degree to which each employee is in charge.
In larger firms, organisation charts are frequently accompanied with organisation manuals to provide further context. Organisation manuals are limited to being in the form of brief notes and can only include departmental charts to illustrate the activities of each department and their relationship to the operations of other departments.
In a nutshell, the Organisation Manual is a pamphlet that outlines all of the specifics of the organisation, including its goals and policies, authority, functions, tasks, and responsibilities of each unit, as well as all of the information related to it.

Organisation Charts

Organisation charts can be divided into two parts:

Master Charts: This chart displays the entirety of the formal organisation structure.
Supplementary Charts: Supplementary charts provide an in-depth look at the linkages, authorities, and responsibilities that exist inside a particular department or significant component of an organisation's specified area of responsibility.

Organisation charts can also be classified into the following three types based on how organisation charts are prepared:

Vertical chart or Top-down chart: Vertical chart, also known as top-down chart depicts the level of organisation as a hierarchical pyramid with a line of command that descends from the highest level to the lowest.
Horizontal Chart or left to right chart: The levels of organisation are shown going from left to right in this diagram. The chain of command is broken up into horizontal sections.
Circular Chart: A circular form can be used to display a variety of jobs or functions that are held inside an organisation. A concentric or circular chart illustrates the vertex by placing it at the centre of a series of concentric circles. Locations that are regarded as having approximately the same level of significance can be found on concentric circles that are the same distance from the centre. Channels of formal power are represented visually by lines connecting various blocks of functions or positions.

Organisation Manuals

An organisation manual adds to the information that is provided in an organisation chart by providing more data and serving as a supplement.
A compact book that contains information about the aims of the organisation, the authority and responsibilities of various positions, as well as the processes and procedures that are to be followed is called an organisation manual.

The organisation manual can be broken up into the following four sections:

Policy Manual
Operational Manual
Organisational Manual
Rules and Regulations Manual

Advantages of Organisation Chart and Manual

Management Tool: Both the Organisation Chart and the Organisation Manual contain information about the structure, positions, and authorities inside the organisation.
Avoidance of Overlapping and Duplicate Activities: The organisation chart and manual are prepared after careful analysis of the jobs and positions requirements in the organisation. As a result, this ensures that all activities are covered properly by various positions.
Resolution of Organisational Conflicts: An Organisation Chart and Manual Both clearly show Positions, Authority Relationships, and Procedures as a result, they serve as an easily accessible resource for resolving organisational problems.
Training Guides: The organisation chart and manual both serve to evolve the work that is expected of employees in the organisation. As a result, they have the potential to serve as a method of on -the-job training.
Reference to Outsiders: Because the organisational manual and chart clearly indicate the position, authority, and responsibility, outsiders who are unfamiliar with the organisation may know very easily with whom they must interact for a particular work task.

Disadvantages of Organisation Chart and Manual

Rigidity: The organisational functioning is made more rigid with the help of charts and manuals. While the organisation chart and manual are being produced, there are several changes that take place within the organisation. As a result, the incorporation of modifications requires some time.
A Partially Completed Picture: They only depict official ties and operating procedures. To exert more effective control over the actions of the organisation's members, managers need to be familiar not only with formal but also with informal patterns of interaction.
Inadequate Description: An organisational chart just illustrates the reporting linkages, or who is responsible for what. The figure does not reveal the precise proportion of authority and responsibility that each person holds. As a result, the Organisation chart offers an inaccurate representation of authority.
Potential for Psychological Issues: Because the chart places individuals in either a higher or lower position, respectively, a feeling of superiority or inferiority may arise, which may be counterproductive to the development of team spirit. It is possible that those at lower levels of an organisation won't be happy with the chart being maintained.

The Organisation Culture

The values, attitudes, beliefs, and behaviours that characterise and contribute to an organisation's one-of-a-kind social and emotional work environment are referred to as the organisation's culture. Organisational culture is also referred to as corporate culture.
The organisational culture is one of the things that is the most difficult to change because it is unique to each company and is comprised of both written and unwritten rules that have been developed over the course of time.

Types of Organisational Culture

The Clan Culture: This culture has its foundation in working together. Members have a lot in common with one another and have the perception that they are part of a large family that is very involved in activities. The organisation is held together by its commitments and traditions, and leadership takes the form of mentoring for its members.
The Adhocracy Culture: This culture is characterised by a high level of energy and inventiveness. It is expected of leaders to be innovative and entrepreneurial, and employees are actively encouraged to take calculated risks. Experimentation, with an emphasis on individual ingenuity and freedom, is the primary means by which the organisation maintains its cohesion.
The Culture of the Market: This culture is founded upon the competitive nature of the market and the pursuit of tangible success. The focus is on achieving the goals, and the leaders are known to be strict and demanding. The organisation's members are all working toward the same objective, which is to achieve an edge over all of their competitors. Market share and profitability are the primary factors that determine value.
The Hierarchy Culture: This culture is characterised by its emphasis on hierarchy and control. The atmosphere at work is very formal, and there are stringent protocols established by the institution to provide direction. A culture that places an emphasis on productivity and predictability is conducive to leadership because it requires organised coordination and monitoring.

Authority And Responsibility

Authority

A superior has the legal right to issue commands to those under his or her supervision.
The position of the boss within the organisation is the primary factor that, in most cases, determines who has authority.
A superior can give his subordinate the authority to do something under his supervision.
The chain of command moves from superior to subordinate in a downward direction.
Authority can be defined as the legitimate power that an individual or group possesses over other individuals.

Responsibility

A subordinate is obliged to his or her superior authority to complete the tasks that have been delegated to them.
Responsibility is an outcome of the superior-subordinate relationship, in which the subordinate accepts the obligation to carry out the responsibilities that have been delegated to him.
The subordinate cannot delegate this responsibility to anyone else.
The chain of responsibility moves from the subordinate to the superior position in an ascending order.
It means making a moral commitment to complete the work that has been allotted.

Sources of Authority

Legitimate Authority: This type of power typically originates from the status quo and the cultural system of obligations that govern our rights and responsibilities. As a result, the "position" is accepted by the people as being "legitimate."
Coerciveness: It is based on the ability of one person to instil fear in another person and is founded on the subordinate's expectation that punishment will be met for not agreeing or complying with superior orders or beliefs.
Rewarding Authority: This results from the fact that some individuals possess the ability to reward you. Permitting Company paid vacations is example of awards.
Expertise: This refers to the power that comes from having knowledge, abilities, and expertise in a particular field. Because superiors are in possession of this knowledge, subordinates strive to acquire it and carry out their instructions.
Referent Authority: The recognition of a person's faith as a leader who is held in high esteem, admiration, and often imitation by those who are subordinate to them is the foundation upon which referent power is built.

Forms of Responsibility

There are two forms of responsibility:

Operating responsibility:

Individuals are held accountable for their own actions in the workplace through the concept of "operating responsibility."
The person who is doing the work is the one who is responsible for, or obligated to fulfil, operating responsibility.

Ultimate Responsibility:

The manager is ultimately responsible for fulfilling his or her final task, which is to see to it that the work is carried out effectively by the staff members.

Organisational Change

The term "organisational change" refers to the actions that are taken by a company or business to modify a significant aspect of their organisation. These aspects may include the company's culture, the underlying technologies or infrastructure that it makes use of to function, or their internal procedures.

The need for organisational transformation is driven by a variety of variables:-

New management at the helm of the business entity or in other areas or departments within the organization
Alterations to the organisational structure of teams
The introduction of innovative technologies
The adoption of novel business models

There are three primary categories of organisational changes, which are as follows:

Developmental Change: Any modification to an organisation that results in an improvement to the processes and procedures that have already been established.
Changes during Transition: This type of change moves an organisation away from its existing state and into a new state to address a problem, such as implementing a merger and acquisition or automating a task or process.
Transformational changes: Such changes refer to the transformation of an organisation's culture and way of doing business that is both drastic and fundamental in nature. When undergoing transformative change, it is possible that the final effect will not be known. For instance, a company might branch out into whole new product categories or market niches.

Management of Change

A methodical and systematic strategy for addressing the transition or change of an organisation's objectives, procedures, or technologies, is referred to as "change management.
The goal of change management is to put into action tactics that will bring about change, control change, and assist individuals in becoming accustomed to change.
The evaluation of each change request in terms of its potential effect on the project is an essential part of project management, and thus plays an important part in change management.

Resistance to Change

The act of rejecting or battling against modifications or changes that affect the status quo is what we mean when we talk about change resistance. This resistance may show itself in a single worker or permeate the entire workplace.
A lack of readiness to adjust one's behaviour in response to changing conditions can be defined as resistance to change. It can be done in an indirect or direct manner, organised or on a personal level.

There is a clear indication of resistance to change in functions such as:

Denunciation or Fault Finding
Nit-picking over tiny details
Offensive or Insulting remarks
Absence in meetings
Dishonouring commitments
Continuous arguments
Disruptive behaviour

Approaches to Change Management

Lewin's Change Management Model: The model consists of three primary phases, which are Unfreeze, Change, and Refreeze,

Unfreeze: According to Lewin's methodology, the process of transformation begins with the preparation of the change. This indicates that the organisation must be prepared not only for the possibility of change but also for the fact that change is both significant and essential. Making people realise why there is a need to change the existing method and how change can offer benefits is the most important thing that can be done here
Change: The true transformation or change happens during this step of the process. This process can take some time to complete because people typically need some time to adjust to new happenings, advancements, and changes in their environment. At this point, strong leadership and assurance are essential.
Refreeze: At this stage, the people in the company or organisation have shown that they are willing to accept, embrace, and work to put the change into effect. As a result, the firm or organisation starts returning to its previous state. Because of this, the stage is referred to as the recycling stage. This is the point in time when workers and processes begin to re-freeze, and things start getting back to the normal speed and routine that they were previously in.

McKinsey 7S Model:

The Seven Stages of the model:

Strategy: A company's strategy is the game plan it devises to overcome its rivals and achieve its objectives. According to McKinsey's 7-S framework, this is the first stage of change, and it involves the development of a step-by-step procedure or future plan
Structure: Structure is the stage or characteristic of this model that pertains to the division of the organisation or the structure it follows.
Systems: This stage is related to the manner in which the day-to-day activities are carried out in order to complete a task, and it focuses on how the task is carried out.
Values that are shared: Shared values are the fundamental or primary principles that an organisation bases its operations and decisions on in order to function effectively.
Style: The term "style" refers to the manner in which changes in leadership and organisational structure are accepted or put into effect.
Staff: The term "staff" can refer to either the workforce as a whole or individual employees, as well as their individual capacities for work.
Skills: The employees of the organisation possess a variety of skills in addition to their core competencies, which are described here.

Kotter's Change Management Principles: His theory of change management is structured in eight phases, with each phase concentrating on a key principle that addresses people's reactions to change.

A rising sense of urgency
Putting together the team
Getting the vision right
Communicating
Getting things off the ground
Concentrating on goals for the near term
Not giving up
Adapting to new circumstances

Nudge Theory:

The essence of this principle consists of gently nudging or pushing someone, as well as encouraging and motivating them to make a change. It is based on indirect encouragement and enablement.
It avoids direct instruction or enforcement. Instead of telling people to change, you pave the way for them to choose to do so by themselves.

ADKAR Model:

The ADKAR Model or theory of change is a goal-oriented tool or model that enables various change management teams to concentrate on the steps or activities that are directly related to the goals it wants to achieve.
Change managers can use models to identify various gaps or gaps in the process of change management in order to provide efficient training to employees.

A: Awareness/Consciousness - regarding the requirement and prerequisite for change

D: Desire - to both be a part of and contribute to the process of change.

K: Knowledge - how to effect this transformation

A: Ability - the ability to integrate change on a consistent basis

R: Reinforcement - both to maintain its current position and to add additional support later.

Bridges' Transition Model:

This approach, model, or theory is distinguished by the fact that it concentrates on progression rather than modification and, as a result, remains static.

The model centres on three primary steps, which are described in the following order:

End, give up and let go
Neutral zone
New beginning

Kubler-Ross Five Stage Model:

This model is also known as the grief model because it discusses the various emotional states and stages that people go through when they become aware that their time on earth is ending. The model, which assists in comprehending and coping with one's own personal trauma, has gained widespread acceptance all over the world.

Denial
Anger
Bargaining
Depression
Acceptance

Conflict Management

The process of resolving conflicts through conflict management aims to achieve a balance between minimising the potential for negative outcomes and maximising the potential for positive outcomes. The goal is to improve learning and group outcomes, such as an organization's efficiency or performance in a given environment.

Some Examples of Skills needed for conflict management are given below: