CHAPTER3ORGANIZATION STRUCTURE AND DESIGNIntroduction To OrganisationOrganisation is one important element of the management process. It is next to planning. In management, organisation is both the process as well as the end-product of that process which is referred to as organisation structure. Such structure acts as the foundation on which the whole super-structure of management is built. Sound organisation structure is essential for the conduct of business activities in an efficient manner. It is within the framework of the organisation that the whole management process takes place. The success of the management process will be determined by the soundness of the organisation structure. Organising involves integration of resources in order to accomplish the objectives.Just as human beings have skeletons that define their parameters likewise organisations have structures that define their parameters. While preparing an architectural plan, an architect considers different factors such as space, cost, time, special features and resources. In the same way, a manager is expected to take into account factors such as channels of communication, before designing Organisation structure.Organisation structure specifies which individuals will work as subordinates to which superiors. It defines the interpersonal relationships that should exist between individuals and work. Such invisible framework is intended to promote co-ordination in the functions and activities of members of the group. Because of specific assignments of authority and responsibility, each person will look after his part of pre-established plans in proper relation to the parts of others in the group. Organisation suggests the structure within which people associate for the attainment of an objectiveThe term 'Organisation' is derived from the word 'organism' which means a structure of body divided into parts that are held together by a fabric of relationship as one organic whole. In an enterprise, many managers and employees work together for achieving common objectives. It is the organisation structure which binds them together and brings proper adjustment and coordination in their work. The division of work and authority and the establishment of relationship among individuals or groups are possible due to the organisation structure.In simple words, organizing means arranging the ways and means for the execution of business plan. It is the creation of administrative set-up for the execution of the plan. It suggests the framework within which the management functions. The term organisation suggests a functional group working together for achieving common purposes/objectives. Organisation provides mechanism for integrated and co-operative action by two or more persons with a view to implementing any plan. Organisation facilitates efficient administration, direction and control. It avoids wastage of raw materials and human efforts. Every management has to establish its own organisation structure for efficient conduct of business activitiesThere are different structures which can be given to an organisation. They include line, functional and so on. An organisation deals with a number of elements which defines the relationships between the members of a group. It is concerned with the channels of communication and lines of authority. It also defines the degree of authority and responsibility of each person in the organisation. In short, organisation clarifies relationships and provides a framework within which all managerial actions take place.Organisation involves the following aspects:-a. Identifying the activities required to achieve organizational objectives.b. Grouping up of these activities into workable units (Departmentation).c. Assigning duties and responsibilities to subordinates in order to achieve the tasks assigned.d. Delegating authority necessary and useful for the accomplishment of tasks assigned.e. Establishing superior-subordinate relationship.f. Providing a system of co-ordination for integrating the activities of individuals and departments.

2. Definitions of Organisation1. An Organisation has been defined byE. F. L. Breachas"a system of structural interpersonal relationships. In it, individuals are differentiated in terms of authority, status and roles with the result that personal interaction is prescribed, and anticipated reactions between individuals tend to occur while ambiguity and spontaneity are decreased".2. According toLouis A. Allen, Organisation is"the process of identification and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives".3. James Mooney defines organisation as"the form of every human association for attainment of a common purpose".

Importance of Organisation1. Ensures optimum utilisation of human resources:Every enterprise appoints employees for the conduct of various business activities and operations. They are given the work according to their qualifications and experience. Organisation ensures that every individual. Is placed on the job for which he is best suited.2. Facilitates coordination:It acts as a means of bringing coordination and integration among the activities of individuals and departments of the enterprise. It establishes clear-cut relationships between operating departments and brings proper balance in their activities.3. Facilitates division of work:Different departments are created for division of work, specialization and orderly working of the enterprise. Similarly, delegation relieves top level managers from routine duties.4. Ensures growth, expansion and diversification:Sound Organisation structure facilitates expansion/diversification of an enterprise. Organisation structure has in-built capacity to absorb additional activities and also effective control on them. A business enterprise brings diversification in its activities within the framework of its Organisation.5. Stimulates creativity:Organisation provides training and self-development facilities to managers and subordinates through delegation and departmentation. It also encourages initiative and creative thinking on the part of managers and others.6. Facilitates administration:Effective administration of business will not be possible without the support of sound organisation structure. Delegation, departmentation and decentralisation are the tools for effective administration.7. Determines optimum use of technology:Sound Organisation structure provides opportunities to make optimum use of technology. It facilitates proper maintenance of equipment and also meets high cost of installation.8. Determines individual responsibility:Responsibility is an obligation to perform an assigned work. In a sound Organisation, the manager finds it easy to pinpoint individual responsibility when the work is spoilt.

4. Organization As A StructureThe term organisation can be studied as a structure and also as a process. In a static sense, organisation is a structure. A group of people functions within this structure and try to accomplish certain objectives. Organisation is a structure for the conduct of business activities efficiently. In the words ofKast and Rosenzweig,"structure is the established pattern of relationships among the component parts of the organisation". In this sense, Organisation structure refers to the network of relationships among individuals and positions in an Organisation. 5. Organization Structure Suggests Its FrameworkJust as human beings have skeletons that define their parameters likewise organisations have structures that define their parameters. While preparing an architectural plan, an architect considers different factors such as space, cost, time, special features and resources. In the same way, a manager is expected to take into account factors such as channels of communication, before designing Organisation structure.Organisation structure specifies which individuals will work as subordinates to which superiors. It defines the interpersonal relationships that should exist between individuals and work. Such invisible framework is intended to promote co-ordination in the functions and activities of members of the group. Because of specific assignments of authority and responsibility, each person will look after his part of pre-established plans in proper relation to the parts of others in the group. Organisation suggests the structure within which people associate for the attainment of an objective

6. Organisation As A structure - Implies 4 Elementsa. Intentionally created:In order to attain specific goals, Organisation structure is deliberately created which converts resources (of management) into a productive enterprise.b. Provides framework:Organisation structure usually takes the shape of a pyramid. Once established, it acts as a framework that can either constrain or facilitate managerial actions.c. Use of Chart:In an Organisation, the structural relationships are normally shown through Organisation charts. These charts indicate the intended final relationships at a given time.d. Provides formal picture:Organisation structure may be horizontal or vertical. The horizontal aspects display basic departmentalization and vertical aspects display creation of hierarchy of superiors and subordinates.7. Principles of Organisation / OrganisingThere are some principles which are common to all organisations that are established in a classical form i.e. the form where there is hierarchy of authority and responsibility and it flows downwards.The principles of Organisation offer guidance for the creation of a sound, efficient and effective Organisation structure. In other words, these principles are the sound criteria for efficient organising. They ensure smooth and orderly working of a business enterprise.Principles of organising are not given in a serial order by any authority on management. Management thinkers(Henry Fayol, F. W. Taylor, U. L Urwick and others)have laid down certain statements regarding organising function of management. Such statements are treated as principles of organisation. Well accepted principles of organisation/organising are as explained below.1. Unity of Objectives:Objectives of the enterprise influence the Organisation structure and hence the objectives of the enterprise should first be decided clearly and firmly. In addition, there should be unity among the objectives decided. This gives clear direction to the whole Organisation and it will be geared for the achievement of such objectives. The Organisation acts as a tool for achieving the objectives. The objectives may be divided into departmental objectives and organizational objectives. There should be unity of objectives as such unity gives one clear direction to the whole Organisation. In addition, objectives should be made clear to all concerned persons so as to enable them to do their best to achieve the objectives.2. Division of Work and Specialization:Division of work leads to specialization. Every department of an Organisation should be given specialized functions. This will raise the overall efficiency and quality of work of an Organisation. At the same time, specialization and departmentation should not have any adverse effect on the total integrated system. Coordination must be established among the departments and activities. Specialization is necessary for raising the efficiency of the whole Organisation structure. The functions given to each department should be preferably only of one category. Employees should be assigned duties to different departments as per their qualifications, qualities and so on.3. Delegation of Authority:There should be proper delegation of authored in every Organisation, particularly in large organisations. The basic idea behind delegation is to see that decision-making power is placed at a proper place. Delegation should go to the lower levels of management. Every one should be given authority which is adequate to accomplish the task assigned to him. Delegation is useful for getting the things done through others. A successful manager normally does not perform the jobs by himself. He delegates the authority and responsibility to his subordinates. He also motivates his subordinates and see that they take initiative, work efficiently and contribute for achieving organizational objectives.4. Coordination:Organisation involves division of work and departmentation. This naturally suggests the need of proper coordination among the departments and efforts of people working in an Organisation. Due to coordination one clear-cut direction is given to people/ departments and efforts will not be wasted or misdirected. Coordination also brings integration in the basic functions of management. The principle of coordination is important as it facilitates achievement of overall objectives of a business Organisation. It also brings unity of action in the Organisation. Coordination will not be available automatically. For this, working relationships need to be established within the Organisation.5. Unity of Command:Unity of command principle suggests that each subordinate should have only one superior whose command he has to obey. Dual subordination is undesirable as it leads to confusion, disorder, uneasiness and indiscipline. An employee should not have more than one boss to whom he has to report and also function as per his orders and instructions. Reportiing to more than one boss leads to confusion.6. Flexibility:According to the principle of flexibility, the Organisation structure should be flexible and not rigid. Such structure is adaptable to changing situations and permits expansion or replacement without any serious dislocation and disruption. There should be an in-built arrangement to facilitate growth and expansion of an enterprise.7. Simplicity:The Organisation structure should be simple for clear understanding of employees. The structure should be easy to manage. Internal communication will be easy due to simplicity of Organisation. The Organisation structure should be simple as far as possible. The levels of management should also be limited.8. Span of Control:The span of control, as far as possible, should be small and fair. This means a manager should not be asked to keep supervision on large number of subordinates. The span of control should be narrow and manageable. It should be properly balanced.9. Scalar Principle (Chain of Command):The principle of chain of command suggests that the line of authority from the chief executive to the first line of superior should be clearly defined. The line of authority should be properly defined so as to avoid any confusion as regards the line of authority. This principle suggests that as far as possible, the chain of authority should be short and should not be broken.10. Exception Principle:The executives at the higher level are busy in important matters and have limited time for the study of routine administrative matters. It is not desirable to take routine matters to the top level managers frequently. Very crucial and exceptionally complex problems should be referred to the top executives and routine matters should be dealt with by the junior executives at the lower levels. Moreover, time of top executives is saved. They can use their time for dealing with more important and complex problems.11. Authority and Responsibility:Authority acts as a powerful tool by which a manager can achieve a desired objective. Authority of every manager should be clearly defined. Moreover, it should be adequate to discharge the responsibilities assigned. The superior should be held responsible for the acts of his subordinates. He cannot run away from the responsibility simply by delegating authority to his subordinates. In fact, the responsibility of the superior for the acts of his subordinates is absolute.12. Efficiency:The Organisation structure should enable the enterprise to function efficiently. This will enable the enterprise to accomplish its objectives quickly and also at the lowest cost. For this, the structure introduced should be suitable to the nature, size, activities etc. of the Organisation. A suitable Organisation structure ensures full and purposeful utilisation of available human and material resources and ensures efficiency.13. Proper Balance:Proper balance is necessary in different aspects of the Organisation. This means there should be reasonable balance in the size and functions of departments, centralisation and decentralisation of the Organisation, span of control, chain of command and finally in between human and material resources. This principle of balance suggests that the top management should see that the vertical and horizontal dimensions of the Organisation are fairly balanced.14. Separation of line and staff functions:Line functions should be separated from the staff functions even when they are supplementary in character. Line functions are directly connected with operations while staff functions are auxiliary to the line functions. These functions should be coordinated when necessary but normally they should be kept separate.

8. Types of Organisation StructureOrganisation structure is defined as"The logical arrangement of task and the network of relationships and roles among the various positions established to carry out the activities necessary to achieve the predetermined objectives of business". Internal Organisation structure constitutes the arteries and veins through which the blood of work flows in the body of Organisation.Internal Organisation structures can be broadly classified into the following types/forms:1. Line Organisation structure.2. Functional Organisation structure.3. Line and staff Organisation structure.4. Product Organisation structure.5. Committee andMatrix Organisation structure.

8.1 Line Organisation StructureLine Organisation (also called Military/Scalar Organisation) is the oldest and the simplest form of internal Organisation structure. It was first developed by the Roman army and later adopted by armies all over the world. Factory owners also used line Organisation structure in its purest form in the nineteenth century in England.In the line Organisation, the line of authority moves directly from the top level to the lowest level in a step-by-step manner. It is straight and vertical. The top-level management takes all major decisions and issues directions for actual execution. The general manager, for example, issues order to various departmental managers. Thereafter, the departmental manager issues instructions to works manager. The works manager will issue instructions to foreman. In this manner, the orders and instructions will be issued to the workers working at the lowest level. Thus authority moves downward and also step-by-step. The responsibility, on the other hand, moves in the upward direction.Line Organisation structure is given in the following chart:

8.1.1 Advantages of Line Organisation Structure1. Simplicity:Line Organisation structure is easy to understand and follow by superiors and subordinates. It is simple and clear as regards authority and accountability.2. Prompt decisions:Line Organisation facilitates prompt decision-making at all levels as the authority given is clear and complete.3. Discipline:It brings discipline in the Organisation due to unity of command, delegation of authority and direct accountability.4. Economical:Line Organisation is economical as experts are not appointed.5. Attraction to talented persons:Line Organisation brings out talented workers and develops in them quality of leadership. It offers opportunities of self-development to employees.6. Quick communication, high efficiency, flexibility and high employee moraleare some more advantages of line Organisation structure.8.1.2 Limitations of Line Organisation Structure1. Heavy burden on line executives:The line executives are given too many duties and responsibilities. Even the quality of the decisions of executives may suffer due to heavy burden of duties and responsibilities.2. Non-availability of services of experts:There is absence of skilled experts in line organisation. Expert assistance is not available promptly when needed by line executives.3. Favoritism:There is wide scope for favoritism and nepotism in the line organisation. Leadership of departmental executive is autocratic due to heavy concentration of powers. He may favour some employees at the cost of others.4. Too much dependence on limited executives:In the line organisation, all powers are concentrated in the hands of a few executives. Naturally, the success and stability of the entire organisation depends on their personal skill, initiative and interest. Special difficulties arise when one executive is to be transferred/replaced/promoted.5. Rigidity:There is rigidity in the working of line organisation.6. Delays in communication, limited freedom to employees and unsuitability to modern large business unitsare some more demerits of line Organisation.

8.2 Functional Organisation StructureF.W.Taylor, founder of scientific management, conceived the functional Organisation structure. According to him, it is unscientific to overload a foramen with the entire responsibility of running a department. He introduced a system of functional foremanship in his Organisation. In his functional foremanship, there will be eight specialists' foremen who will be required to guide, direct and control the work. Workers at the plant level will have to follow the instructions of all these eight specialists called bosses.In the functional Organisation suggested byF.W.Taylor, the job of management is divided according to specialization. As a result, functional departments are created. For example, the personnel department will look after the recruitment, selection, training, wage payment, etc. of all persons of the Organisation. Similar will be the position of other departments like production, sales, etc. The scope of work of the department is limited but the area of authority is unlimited.In the functional Organisation structure, there will be separation of planning of work and execution of the plan prepared. The basis of division is the function and naturally the Organisation structure created will be called "Functional Organisation".In the functional foremanship, there will be eight specialists/functional heads called bosses. Out of eight bosses, four bosses will be at the planning level and the remaining four will be at the slop floor level.

8.2.1 Foremen At Planning Level (Planning Dept.)1. Time and Cost Clerk:He is concerned with preparing standard time for the completion of certain piece of work and compiling the cost of that work.2. Instruction Card Clerk:He lays down the exact method of doing the work. He specifies the tools to be used for conducting the production and also gives other instructions on the instruction cards prepared by him.3. Route Clerk:The route clerk lays down the exact route through which each and every piece of work should move through various stages till completion. He decides the production schedule and the sequence of steps by which the production process is to move.4. Shop Disciplinarian:He is concerned with the discipline, insubordination, violation of rules of discipline and absenteeism. All cases relating to these matters will be managed by the shop disciplinarian.

8.2.2 Foremen At Shop Floor Level (Shop Floor)1. Gang Boss:He assembles and sets up various machines; and tools for a particular piece of work. He is in-charge of assembling line of production.2. Speed Boss:He is concerned with the speeding of machines used for production. He keeps proper speed of the machines and see that workers complete the production work as per the schedule time.3. Repair Boss:The repair boss looks after the proper maintenance of machines, tools and equipments required during the production process.4. Inspector:The inspector controls quality of the products by keeping adequate check/control when the production work is in progress.The functional Organisation structure is given in the following chart:-

8.2.3 Merits of Functional Organisation Structure1. Facilitates specialization:Functional Organisation structure facilitates division of work and specialization. Each boss has specialized knowledge of his functional area. He is in a better position to guide and help the workers.2. Benefits of large-scale operations:Functional Organisation offers the benefit of economy of large-scale operation. In this Organisation, one administrative unit manufactures all products. The available machinery, equipment and facilities are used fully for large-scale production.3. Facilitates effective coordination:Functional Organisation facilitates effective coordination within the function. This is possible as one boss is in-charge of a particular function and he looks after all activities, which come within that function.4. Operational flexibility:Functional Organisation possesses operational flexibility. Necessary changes can be introduced easily to suit the needs of the situation without any adverse effect on the efficiency.5. Ensures effective supervision:Functional Organisation facilitates effective supervision by the functional heads and foremen. Due to specialization, they concentrate on the specific functional area and also keep effective supervision on their subordinates.

8.2.4 Demerits of Functional Organisation Structure1. Absence of unity of command:Unity of command is absent in the functional Organisation as each worker gets orders and instructions from several bosses.2. Fixing responsibility is difficult:In functional Organisation, responsibility is difficult to fix on a specific person. This is because the responsibility itself is divided among many.3. Unsuitable to non-manufacturing activities:Functional Organisation can be introduced in the case of manufacturing activities. However, its application to non-manufacturing activities such as marketing, etc. has not been successful.4. Costly:Functional Organisation is costly, as more specialists are required to be appointed.5. Creates confusion among workers:Functional Organisation is based on specialization as function is taken as a base for dividing the work. The authority is overlapping the responsibility is divided. This confuses workers.6. Conflicts among foremen, delays in decision-making and limited discipline within the departmentsare some more demerits of functional Organisation.

9. Line and Staff Organisation StructureIn the line and staff Organisation, line executives and staff (specialists) are combined together. The line executives are 'doers' whereas staff refers to experts and act as 'thinkers'. The following chart shows line and staff Organisation structure:

The line executives are concerned with the execution of plans and Policies. They do their best to achieve the organizational objectives. The staff concentrates their attention on research and planning activities. They are experts and conduct advisory functions.Staff specialists are regarded as 'thinkers" while execution function is given to line executives who are "doers". The staff is supportive to line. The staff specialists offer guidance and cooperation to line executives for achieving organizational objectives. This reduces the burden of functions on the line executives and raises overall efficiency of the Organisation. For avoiding the conflicts between line and staff, there should be clear demarcation between the line and staff functions. This avoids overlapping of functions and possible conflicts. In short, the line and staff functions are different but are supportive and can give positive results if adjusted properly i.e. by avoiding the conflicts. They suggest/recommend but have no power to command the line executive. However, their advice is normally accepted because of their status in the Organisation.According to Louis Allen,"Line refers to those positions and elements of the Organisation, which have the responsibility and authority and are accountable for accomplishment of primary objectives. Staff elements are those which have responsibility and authority for providing advice and service to the line in attainment of objectives".

9.1 Characteristics of Line and Staff Organisation1. Planning and execution:There are two aspects of administration in this Organisation, viz., planning and execution.2. Combining line and staff:Planning function is entrusted to staff specialists who are 'thinkers' while execution function is given to line executives who are 'doers'. The staff is supportive to line.3. Role of authority:The line managers have authority to take decisions as they are concerned with actual production. The staff officers lack such authority.4. Guidance from staff:The staff provides guidance and advice to line executives when asked for. Moreover, line executives may or may not act as per the guidance offered.5. Exercising control:The staff manager has authority over subordinates working in his department.6. Scope for specialization:There is wide scope for specialization in this Organisation as planning work is given to staff and execution work is given to line executives.7. Possibility of conflicts:Conflicts between line and staff executives are quite common in this Organisation but can be minimized through special measures.8. Suitability:Line and staff Organisation structure is suitable to large-scale business activities.

9.2 Merits of Line and Staff Organisation1. Less burden on executives:Line executives get the assistance of staff specialists.This reduces the burden of tine executives. This raises overall efficiency and facilitates the growth and expansion of an enterprise.2. Services of experts available:The benefits of services of experts are provided to line managers. Highly qualified experts are appointed and they offer guidance to line executives.3. Sound decision-making:Line and staff Organisation facilitates sound management decisions because of the services of experts and specialists. The decisions are also taken in a democratic method i.e. in consultation with the experts.4. Limited tension on line managers:The pressure of work of line bosses is brought down as they are concerned only with production management.5. Benefits of specialization:There is division of work and specialization in this Organisation. Naturally, the benefits of division of work and specialization are easily available.6. Training opportunities to employees:Better opportunities of advancement are provided to workers. The scope for learning and training for promotions are available.

9.3 Demerits of Line and Staff Organisation1. Delay in decision-making:The process of decision-making is delayed, as line executives have to consult staff experts before finalizing the decisions. The decisions of line managers are likely to be delayed due to this lengthy procedure.2. Buck passing among executives:The line bosses are concerned with actual execution of work. However, they depend on staff experts for guidance. If something goes wrong, the attempt is made to pass on the blame by one party to the other. Thus, there is shifting of responsibility or buck-passing.3. Conflicts between line and staff executives:In this Organisation, quarrels and conflicts between line managers and staff specialists are quite common. The line managers are generally not interested in the advice offered by experts. Secondly, specialists feel that the line bosses lack knowledge of new ideas. Such conflicts lead to bitterness.4. Costly Organisation:Line and staff Organisation is a costly Organisation as the line executives are supported by highly paid staff executives who are experts. All this adds to the overhead expenses and the cost of production increases.5. Complicated operation:This Organisation is too complicated in actual operation because of dual authority, division of functions and too much dependence on staff. The unity of command principle is violated.6. Internal discipline is affected adversely:The internal discipline is likely to be affected adversely due to decentralisation and division of loyalty of subordinates.

9.4 Conflict between Line and Staff ManagersOne serious problem in the line and staff Organisation is the possible conflict between the line executives and staff specialists.Line executives have complaints against staff officers and staff officers have complaints against line executives.

9.5 Conflict between Line and Staff Executives.

9.6 Arguments of Line Executives against Staff Managers / Officers1. Dilution of authority:Line executives argue that the introduction of staff managers dilutes their authority and also leads to interference in their work. They feel that their jobs become less important.2. Stealing show:Line managers feel that the staff executives tend to steal show for the work that turns out to be successful. On the other hand, when things go wrong, they alone have to face the blame and criticism.3. Lacks practical knowledge:Line executives argue that staff executives are not familiar with the situation where actual work is carried out. The services offered by the staff executives are rather theoretical and not practical.4. Lacks human skills:Line executives argue that staff managers with human relations skills are rarely available. Staff presents matters mechanically.5. Domination of staff managers:Line executives argue that staff managers always feel that they are superior as regards education and skills. They dominate line executives. This is treated as unwanted interference.6. Easy access to top management:The staff managers work at the head office and have easy access to top level management. They try to show their superiority to top level management by making new plans and suggestions which may not be acceptable to line executives. The top management feels that the line executives are incompetent due to which the services of staff officers are required. This is a source of agony for line managers.7. Stress on paper work:The staff executives are engaged in the paper work. In addition, they need information and various details from the line executives. As a result, there is increase in the paper work of line executives, which they resent.

9.7 Arguments of Staff Managers against Line Executives1. Resistance to new plans and ideas:According to staff managers, the line managers usually oppose/resist new plans/ideas. They treat this as interference in their routine work. A staff manager is a professional critic. He suggests modifications, which are useful, but the suggestions are opposed as unnecessary interference. This leads to conflicts.2. Inadequate support from line executives:Staff managers argue that line Managers do not take benefit of their services. Their services are used only as a measure of last resort.3. Inadequate scope for the use of authority:Staff managers argue that line managers do not give importance to suggestions given by them. This reduces the scope of activities of staff managers. Moreover, the suggestions of staff managers are not binding on line executives and this affects their importance and contribution.4. Lack of support from top management:Staff managers also feel that they do not get full support from the top management. The top management is more concerned with regular production. As a result, it gives better treatment to line bosses.5. Limited cooperation from line executives:Staff managers argue that line executives adopt negative approach towards them even when both are working in the same Organisation with identical objectives. Line executives do not take the advice/suggestions of staff managers in the right spirit. They reject suggestions on the ground that they are not practicable even without giving fair trail. This indicates limited co-operation from line executives.6. Supply of inadequate information:Staff managers argue that line executives do not approach them well in advance with all necessary details of the problems faced by them. They do not supply relevant information but want the solution quickly. If solution is suggested within the time limit, it is again rejected on the ground that it is not workable. This leads to dissatisfaction and conflicts.7. Absence of authority:Staff managers feel frustrated as they offer suggestions for solving the problem through hard work and also by using their skills and experience. However, they do not have commanding authority to execute their suggestions.

10. Organisation ChartOrganisation structure of a company can be shown in a chart. Such chart indicates how different departments are interlinked on the basis of authority and responsibility. It is a simple diagrammatic method of describing an Organisation structure. It indicates how the departments are linked together on the basis of authority and responsibility. Such Organisation chart provides information of the Organisation structure at a glance. Organisation chart is like a blue print of a building. It indicates the number and types of departments, superior-subordinate relationship, chain of command and communication.

10.1 Definition of Organisation Chart.According toGeorge Terry, Organisation chart is"a diagrammatical form which shows important aspects of an Organisation, including the major functions and their respective relationships, the channels of supervision and the relative authority of each employee who is in-charge of each respective function".10.2 Features of Organisation ChartThe definition noted above indicates the following features of Organisation charts:1. Organisation chart is a diagrammatical presentation.2. It represents the formal Organisation structure.3. It shows the lines of authority in the Organisation.4. It indicates the channel of communication.5. It indicates who supervises whom and how various units are inter-related.

10.3 Advantages of Organizational Chart.1. Brings clarity to the Organisation:The very process of preparing a chart makes the executive think more clearly about the Organisation relationships.2. Provides dear picture of the Organisation:Once the charts are prepared, they provide lot of information about the Organisation, both to the members of the Organisation as well as to the outsiders. This information relates to number and types of departments, superior subordinate relationships, chain of command and communication and job titles of each employee.3. Facilitates training of employees:Organisation charts are useful in familiarizing and training new employees.4. Ensures organizational changes:Organisation charts provide a starting point for planning organizational changes after having discovered the weaknesses of the existing structure.5. Provides quick understanding:A chart serves as a better method of visualizing an Organisation than a lengthy written description of it.

10.4 Limitations of Organizational Chart1. Details are not provided:The Organisation chart does not provide all the details of Organisation structure created. For example, the chart will show the line of authority but not the extent of authority.2. Informal relationship is not shown:The chart fails to give details of informal relationship available in a firm. In fact, human relationships cannot be shown on a chart.3. Updated position is not available:The chart shows the position of Organisation structure when it was formed. It gives a static picture of the Organisation. Changes made thereafter may not be available in such charts.4. Fosters buck-passing:The charts tend to foster 'buck-passing' and emphasize only formal channels of communication.5. Lacks flexibility:Organisation chart lacks an element of flexibility. Such chart also brings an element of rigidity in the working of an Organisation.6. Creates rank consciousness:An Organisation chart leads to rank consciousness among the staff. It destroys team spirit and collective approach on the part of the staff.

10.5 Types of Organisation Chart1. Vertical chart:One of the most popular methods is the vertical chart in which the highest job is shown at the top with other jobs shown in a descending order, connected by lines to show the authority and the line of communication.2. Horizontal chart:This chart shows the Organisation structure in the form of a pyramid.3. Circular chart:The top management is shown at the centre of the circle and other management levels are shown in concentric circles.4. Departmental chart:This chart is devoted exclusively to particular department and gives details of relationships, authority, responsibility, etc. within the department.

10.6 Uses of Organisation Chart1. An Organisation chart facilitates ready reference. It enables the management to find out different positions of authority and their relationships in the Organisation structure.2. It provides proper guidance to managers in executing, their assignments and helps them to avoid overlapping and duplication of work.3. It provides complete information to understand the character of an Organisation.4. An Organisation chart indicates ways to better utilisation of available manpower.5. An organisation chart points out the consistencies and deficiencies of an Organisation and enables the management to correct them.Span of ControlAccording to this principle, span of control is a span of supervision which depicts the number of employees that can be handled and controlled effectively by a single manager. According to this principle, a manager should be able to handle what number of employees under him should be decided. This decision can be taken by choosing either froma wide or narrow span. There are two types of span of control:-a. Wide span of control-It is one in which a manager can supervise and control effectively a large group of persons at one time. The features of this span are:-a. Less overhead cost of supervisionb. Prompt response from the employeesc. Better communicationd. Better supervisione. Better co-ordinationf. Suitable for repetitive jobsAccording to this span, one manager can effectively and efficiently handle a large number of subordinates at one time.b. Narrow span of control-According to this span, the work and authority is divided amongst many subordinates and a manager doesn't supervises and control a very big group of people under him. The manager according to a narrow span supervises a selected number of employees at one time. The features are:-a. Work which requires tight control and supervision, for example, handicrafts, ivory work, etc. which requires craftsmanship, there narrow span is more helpful.b. Co-ordination is difficult to be achieved.c. Communication gaps can come.d. Messages can be distorted.e. Specialization work can be achieved.Factors influencing Span of Controla. Managerial abilities-In the concerns where managers are capable, qualified and experienced, wide span of control is always helpful.b. Competence of subordinates-Where the subordinates are capable and competent and their understanding levels are proper, the subordinates tend to very frequently visit the superiors for solving their problems. In such cases, the manager can handle large number of employees. Hence wide span is suitable.c. Nature of work-If the work is of repetitive nature, wide span of supervision is more helpful. On the other hand, if work requires mental skill or craftsmanship, tight control and supervision is required in which narrow span is more helpful.d. Delegation of authority-When the work is delegated to lower levels in an efficient and proper way, confusions are less and congeniality of the environment can be maintained. In such cases, wide span of control is suitable and the supervisors can manage and control large number of sub- ordinates at one time.e. Degree of decentralization-Decentralization is done in order to achieve specialization in which authority is shared by many people and managers at different levels. In such cases, a tall structure is helpful. There are certain concerns where decentralization is done in very effective way which results in direct and personal communication between superiors and sub- ordinates and there the superiors can manage large number of subordinates very easily. In such cases, wide span again helps.Centralization and decentralization Centralizationis said to be a process where the concentration of decision making is in a few hands. All the important decision and actions at the lower level, all subjects and actions at the lower level are subject to the approval of top management. According to Allen, Centralization is the systematic and consistent reservation of authority at central points in the organization. The implication of centralization can be :-1. Reservation of decision making power at top level.2. Reservation of operating authority with the middle level managers.3. Reservation of operation at lower level at the directions of the top level.Under centralization, the important and key decisions are taken by the top management and the other levels are into implementations as per the directions of top level. For example, in a business concern, the father & son being the owners decide about the important matters and all the rest of functions like product, finance, marketing, personnel, are carried out by the department heads and they have to act as per instruction and orders of the two people. Therefore in this case, decision making power remain in the hands of father & son.On the other hand,Decentralizationis a systematic delegation of authority at alllevels of managementand in all of the organization. In a decentralization concern, authority in retained by the top management for taking major decisions and framing policies concerning the whole concern. Rest of the authority may be delegated to the middle level and lower level of management.The degree ofcentralization and decentralizationwill depend upon the amount of authority delegated to the lowest level. According to Allen, Decentralization refers to the systematic effort to delegate to the lowest level of authority except that which can be controlled and exercised at central points.Decentralization is not the same as delegation. In fact, decentralization is all extension of delegation. Decentralization pattern is wider is scope and the authorities are diffused to the lowest most level of management. Delegation of authority is a complete process and takes place from one person to another. While decentralization is complete only when fullest possible delegation has taken place. For example, the general manager of a company is responsible for receiving the leave application for the whole of the concern. The general manager delegates this work to the personnel manager who is now responsible for receiving the leave applicants. In this situation delegation of authority has taken place. On the other hand, on the request of the personnel manager, if the general manager delegates this power to all the departmental heads at all level, in this situation decentralization has taken place. There is a saying that Everything that increasing the role of subordinates is decentralization and that decreases the role is centralization. Decentralization is wider in scope and the subordinates responsibility increase in this case. On the other hand, in delegation the managers remain answerable even for the acts of subordinates to their superiors.Implications of Decentralization1. There are fewer burdens on the Chief Executive as in the case of centralization.2. In decentralization, the subordinates get a chance to decide and act independently which develops skills and capabilities. This way the organization is able to process reserve of talents in it.3. In decentralization, diversification and horizontal can be easily implanted.4. In decentralization, concern diversification of activities can place effectively since there is more scope for creating new departments. Therefore, diversification growth is of a degree.5. In decentralization structure, operations can be coordinated at divisional level which is not possible in the centralization set up.6. In the case of decentralization structure, there is greater motivation and morale of the employees since they get more independence to act and decide.7. In a decentralization structure, co-ordination to some extent is difficult to maintain as there are lot many department divisions and authority is delegated to maximum possible extent, i.e., to the bottom most level delegation reaches. Centralization and decentralization are the categories by which the pattern of authority relationships became clear. The degree of centralization and de-centralization can be affected by many factors like nature of operation, volume of profits, number of departments, size of a concern, etc. The larger the size of a concern, a decentralization set up is suitable in it.

Advantages / Importance of Decentralization:1. Decentralisation helps to improve the quality of decisions/decision-making at the top level management : Decentralisation of authority among other executives at all levels in the Organisation relieves the top executive of the excessive burden saving his valuable time, which he can devote to more important and long-term problems. This is bound to improve the quality of his decisions regarding such problems.2. Decentralisation facilitates diversification of activities: It is a matter of common experience that an Organisation with departmentation on the basis of products facilitates diversification of products or market even when the authority is centralized. Decentralisation takes this process a step further. Managers of semi-autonomous product divisions are able to utilize their skills and experienced judgment. This has a bearing on their products and the market. The enterprise also attains maximum possible growth. Decentralisation is beneficial when new product lines or new activities are introduced in an Organisation. Such policy creates self sufficient units under overall co-ordination of top level management.3. Decentralisation encourages development of managerial personnel : Most companies find lack of managerial talent as a limiting factor in their growth. A company cannot expand effectively beyond the scope and abilities of its managerial personnel. Capable managers, however, can be developed only by giving managerial jobs to suitable persons and delegating them the authority to make important decisions. Such wide exposure gives them opportunity to grow and to have self development for higher positions. The more talented and capable persons will learn and improve and qualify themselves for higher managerial positions. Only a decentralized Organisation can offer such opportunities to future managers without involving additional expenditure. A decentralized Organisation also allows its managers adequate freedom to try new ideas, methods or techniques. In brief, decentralisation creates a team of competent managers at the disposal of the company.4. Decentralisation improves motivation: Research conducted by social scientists has proved that the Organisation structure itself exercises some influence on the motivation of the people working within it. An Organisation structure which facilitates delegation, communication and participation also provides greater motivation to its managers for higher productivity. Decentralized Organisation structure is most favorable for raising the morale and motivation of subordinates which is visible through better work performance.5. Decentralisation makes decision-making quicker and better: Since decisions do not have to be referred up through the hierarchy, quicker and better decisions at lower levels can be taken. Divisional heads are motivated to make such decisions that will create the maximum profit because they are held responsible for the effect of their decisions on profits. Thus decentralisation facilitates quick and result-oriented decisions by concerned persons.6. Decentralisation provides opportunity to learn by doing: Decentralisation provides a positive climate where there is freedom to make decisions, freedom to use judgment and freedom to act. It gives practical training to middle level managers and facilitates management development at the enterprise level.Limitation of decralization:1. Decentralisation may lead to the problem of co-ordination at the level of an enterprise as the decision-making authority is not concentrated.2. Decentralisation may lead to inconsistencies (i.e. absence of uniformity) at the Organisation level. For example, uniform policies or procedures may not be followed for the same type of work in different divisions.3. Decentralisation is costly as it raises administrative expenses on account of requirement of trained personnel to accept authority at lower levels. Even the services of such highly paid manpower may not be utilized fully, particularly in small organizations.4. Introduction of decentralisation may be difficult or may not be practicable in small concerns where product lines are not broad enough for the creation of autonomous units for administrative purposes.5. Decentralisation creates special problems particularly when the enterprise is facing number of uncertainties or emergency situations. The decision-making process gets delayed and even correct decisions as per the changing situations may not be possible.Advantages of centralization: Facility for personnel leadership: There is absolutely no doubt that the centralized Office organization helps in establishing a personnel leadership which may even be able to convert a losing business house into a profitable one because of strong, efficient, purposeful and non controversial central leadership. Equitable distribution of work.: In order to group together and economies the working as well as cost the grouping of two and more departments into one also placing the same under one control goes a long way in equitably distributing in workload not only between different departments but between individual worker as well. This brings economy and speed. Uniformity of activities:Obviously when centralized, the activities will be either in the hand of one individual or a few one but under his (one) direct, control. This will result into uniformity of activities and thereby ensuring uniform decision and uniform process. Specialization: Specialization of work as well as process and handling of the work by the staff that has specialized in the work he is handling are a few of the meaningful advantages of specialization. Economy: The uniformity of activities and specialization of work lead to economic operation and best utilization of the staff services. This brings efficiency and smoothness as well. All these bring economy. No duplication of work: centralized personal leadership, uniformity of activities and specialization leave any scope for duplication of work in the office. Thus extra labor and extra cost involved in duplication is avoided and economy is ensured. Quick decision: For taking advantage of rare opportunities coming in the way, it is necessary that decision should be quickly taken lest the opportunity so available may be slipped away. Centralized office organization helps in such a quick decision. Greater flexibility: In case of any emergency arising the uniformity of activities help in adjusting the activities, procedure and decisions taken. This adjustment ensures flexibility the opportunity for which is available in centralized office organization in greater degree. Standardization and training facilities enhanced:Centralized office organization helps in standardizing the work and thereby helps in extending the training facilities to everyone and every work in the organization which needs specialization, standardization and attention the new staff member can easily pick up the work and can easily be accommodated and adjusted in such a set-up. Effective control: Uniformity in activities, specialization and standardization facilitates greater degree or supervision, effective co-ordination, self and departmental integration and thus ensure effective control. Fixing of responsibility is facilitated: It is possible in decentralized system to locate the fault and detect the deviations and thus is able to pinpoint and take effective measures to improve by knowing and then fixing the responsibility and thereby improving the working and efficiency.Disadvantages of centralization:However, a centralized set-up suffers from the following disadvantages: Delay in work:Quick decision is possible but only at the top level, since decision is take only by the top, it is not possible to take quick decision whenever the top is neither available nor is in a mood to take one. This results in delaying the work since it is the top that is to take decision and none else. Bureaucracy: Bureaucracy leads to red tapism. A centralized set-up breads red-tapism which does not only delay the work but also sometimes helps in the raining of eye brows because bureaucracy always leads to discrimination. Distinctive to subordinates: Subordinate in such a set up only is required to implement whatever it is asked to carry out. No independent decision making authority. A mechanical working always creates mental reservation. The subordinate does not take imitative nor is he allowed to do so. Thus there remains no charm in either the work or the organization as he knows fully well that no upper ladder is there for him as he is not allowed to take any initiative. No loyalty:Since the initiative is not there, charm is not there. Zeal is absent. No involvement is there. Only the implementation of job is there. This means work like a machine as ordered. Such a psychology always never works. Thus neither the work for the organization is treated as own one, obviously from a servant loyalty can be expected only when he is allowed to think that he is very much the part of the department and the organization. This is always missing. This brings lack of loyalty among the working force. Lack of secrecy:Secrecy in a centralized set up cannot be maintained as the orders and decisions flow from one place and conveyed to all. Moreover, all work at a place, under one roof, one control and one office department. Thus secrecy even if tried cannot be maintained as effectively as might be required.FormalizationFormalization is the extent to which rules and procedures are followed in an organization. This element varies greatly across organizations. For example, in some organizations arrival and departure times to and from work are specified to the minute, with time clocks used to control deviant behavior. In other organizations it is understood that employees will spend sufficient time on the job to get the work done. In some organizations rules and procedures cover most activities, while in others people are allowed to exercise their own judgment.

In assessing the degree of formalization, one needs to use care. In some organizations many rules are codified in huge manuals, but no one pays attention to them. In others little is written down, but rules are informally understood and followed. Thus the most useful definition of formalization is that it represents the use of rules in an organization. The degree to which rules are followed not the degree to which they are codified is the key factor.

Organizations use formalization to increase their rationality. In one sense formalization is an attempt to make behavior more predictable by standardizing it. Standard procedures for production workers or quality control checklists that must be used and submitted before a product can be shipped are examples of this kind of formalization.Formalization may also be an attempt to make explicit and visible the structure of relationships among organizational participants. It can establish status differences among organizational members in a way that is objective and external to the participants themselves.

Formalization makes the process of succession routine and regular so that people can be replaced when necessary with minimal disturbance to an organization's functioning. The orderly selection of cardinals and popes in the Roman Catholic Church and the succession plan for the U.S. presidency are good examples of this function of formalization.Alongside formal structures are aspects of organizations that are not formally planned but that more or less spontaneously evolve from the needs of the people. Thus, formal structures are the norms and behaviors that exist regardless of individuals; informal structures are interactions based on the personal characteristics or resources of the individuals involved. Informal structures are not without form; those forms are not determined simply by the organization but grow out of the relationships of the participants. Informal life is structured and orderly; it simply reflects the hearts and minds of an organization's members.Formalization in One area of an organization brings about pressures for less formalization in other areas. For example, one set of researchers studying employment security agencies found that strict conformity with civil service standards fostered decentralization, which permitted greater flexibility. Perhaps there has to be some give and take if organizations are to function well.Formalization is influenced by technology, size, and organizational traditions. One can categorize technologies as routine and non routine. Organizations or work units in which work is routine are more likely to be highly formalized than those in which technologies are less routine.

Obviously, size influences formalization. Large organizations have greater needs to formalize their activities than do small organizations. The mom and pop corner store that grows into a chain will experience a greater need for formalization, as rules will need to be createdand probably codifiedto accommodate the increased relationships and interactions involved.

Tradition also influences formalization. If an early top executive believed that rules and procedures should he followed to the letter, this set of beliefs was codified into the organization's procedures manuals. The organization would then remain more formalized over time than existing conditions might have predicted.What happens to members of rigidly formalized organizations or work groups? In these organizations strict rules limited the functioning of all individuals in the organization. Workers came to follow rules for the sake of the rules themselves since that determined how they were rewarded. More and more rules were created, with the result that the organizations became very unresponsive to customers and their environments. People failed to strive for autonomy and sought to decrease the amount of uncodified activity they performed. The consequences were declining competitiveness, lost worker productivity, higher operating costs, higher prices, and degradation of labor. These negative consequences of rigid formalization have long been recognized.

A number of studies show that professionalization is incompatible with formalization. The greater the degree of formalization in organizations, the higher the alienation of members who are professionals. But formalization and professionalization are meant to do the same thing. Formalization is the internal process through which an organization sets rules, standards, and procedures to ensure that things get done correctly. Professionalization is an external means for accomplishing the same result: business schools teach future managers behaviors that will be expected of them in their work organizations. From an organization's viewpoint, both processes are effective. If it acquires a professional work force, the organization itself simply is not paying the costs of inculcating standardized practices. Nevertheless, there could be tension between the standards learned by the professionals and the demands of the organization.1