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UNIT-2

BASIC CONCEPTS RELATED TO ORGANIZATION

NATURE AND PROCESS OF ORGANISATION

MEANING AND DEFINITION

Organization is the back bone of management and a means of multiplying the strength of an

individual. It takes the knowledge of individuals and uses it as the resource. To organize manpower

means to build a structure, not of wood and steel, but of human beings. The people are the material

for the construction, their loyalty is the foundation and their cooperative spirit the moral that holds

the structure together and gives it vitality.

The concept of organization has been perceived differently by different persons. The

biologists consider the human body as an organization. The sociologists think of society as an

organization and the political scientists think of government as an organization. Generally speaking,

an organization is the rational coordination of the activities of a number of people for the

accomplishment of some common goals, through division of lab our and function, and through a

hierarchy of authority and responsibility are as follows:

It is a cooperative relationship of two or more persons.

Its purpose is to accomplish certain goals.

Its members can communicate with each other.

The behavior of the group is regulated through their own bye-laws.

SIGNIFICANCE OF ORGANIZATIONS

An organization is not merely a chart or a lifeless structure. It is the mechanism through which

management directs, coordinates and controls the business. It is indeed the foundation of

management. A good organization is important because:

1. It facilitates administration.

2. It makes growth and diversification possible.

3. It stimulates independent, creative thinking, and initiative through well-defined areas of work.

4. It provides for the optimum use of technological improvements.

PROCESS OF ORGANIZATION

Organization is a structure or mechanism that enables human beings to work together. The

work of organizing, therefore, looks to the structural and functional aspects of business as well as

correlates the different factors with their functions. The following are the important steps involved

in the work of organizing.1. Determination of objectives:

An organization is always related to certain clear-cut objectives. It is, therefore, necessary for the

management to identify the objectives in definite and clear terms prior to the commencement of any

activity.

2.Division of work:

Activities of any business undertaking need to be closely identified and classified into various

categories like production, purchase, marketing, finance, etc. This will enable the people to know

what is expected of them as members of the group and help in avoiding duplication of efforts.

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3. Classification of activities:

The next step is to classify activities in accordance with their similarities, common purposes, and

functions. All similar activities are brought together and dissimilar activities are covered under

different departments.

4. Fitting individuals into jobs:After classifying the activities, the next step is to appoint suitable persons for various jobs. In this

process, each person is given a specific job to do and is made responsible for it. Each person is also

given adequate authority to do the job.

5. Developing relationships:

Since there are many individuals in the organization, the management is responsible to lay down the

structure of relationships in the organization. There should be a clear definition of authority and

responsibility associated with each job. Thus every person should know as to whom he is

accountable to.

6. Coordination of activities:

Coordination is essential to bring about an uninterrupted sequence of operations. Purchase,

production, and sales departments can function successfully only if there is coherence in their

policies.

FORMAL ORGANIZATION

The formal organization refers to the structure of jobs and positions with clearly-defined

functions and relationships as prescribed by the top management. This type of organization is

bound by rules, systems and procedures and is deliberately built by the management to accomplish

organizational goals. But the degree of its success depends on the attitudes and capacities of the

people within the organization.

It is a prescribed structure of role and relationship consciously coordinate towards a

common goal.

It is based on division of lab our and specialization.

Its structure is pre-determined by the top management.

It does not consider the emotional aspect.

The authority and responsibility relationships created by the organization structure need to

be honored by everyone.

INFORMAL ORGANIZATION

Informal organization refers to the relationships between people in an organization based not on

procedures and regulations but on personal attitudes, whims, prejudices, likes, dislikes, etc. It arises

from the personal and social relations of the people which cut across formal channels to

communicate with one another. Sometimes, it is afflicted with rumors and offers resistance to the

new ideas of management.

It arises spontaneously.

Its formation is a natural process.

It reflects human relationships.

Its membership is voluntary.

It is based common taste, whims, prejudices, etc.

Formal Organization vs. Informal Organization

Formal Organization Informal Organization

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1. It is deliberately formed. 1. It originates automatically.

2. It has pre-determined purposes. 2. It has no pre-determined purposes.

3. It is a structure of well-defined 3.Its structure is based on personal

Authority and responsibility. attitudes, whims, and friendships, Relationship.

4. It is usually stable. 4. It does not last too long.

5. It does not human sentiments. 5. It reflects human emotions.6. It follows a fixed chain of command. 6. It does not follow a fixed chain Of command.

PRINCIPLES OF ORGANIZATION

Principles denote a body of laws or a guide to action. Principles of organization, therefore, imply

that there exists a body of laws guides to help in organizing an enterprise. Taylor, Fayola and Uric

have advocated various principles for a sound organization. Some of these principles are as follows:

Unity of objectives:

An organization is a mechanism to accomplish certain objectives. The principle of unity of

objectives states that every part of the organization should pull together to accomplish those pre-

determined objectives.

Unity of command:

Command is decisively a personnel function. There should be a unity of command in the

organization for fixing responsibility and avoiding conflict of command. The principle of unity of

command states that each subordinate should have only one superior and dual subordination should

be avoided.

Unity of direction:

Unity of command cannot exist without unity of direction. If command is a personnel function,

direction relates to the body corporate. The principle of unity of direction states that there should be

one plan for a group of activities having common objectives.

Division of work:

The departments of a good organization must reflect the most efficient breakdown of the

organizational activities. This is also known as the principle of specialization. The more a person

concentrates on a specific job the better will be his performance.

Efficiency:An organization should function on the principle of efficiency to enable it to attain its

objectives at a minimum cost.

Span of management. Span of control means the number of subordinates a manager can directly

supervise. There is a limit for it. But a span is said to be ideal when it facilitates effective control

and supervision.

Scalar principle:

The scalar principle represents the vertical division of authority. For instance, from the chief

executive, a line of authority may proceed to departmental managers, to supervisors or foremen and

finally to workers. Thus scalar principle contemplates superior subordinate relations from the top to

the bottom of the organization.

Exception principle:

The principle of exception states that only exceptionally complex problems are to be referred to

higher levels of management and the routine problems should be decided by the subordinates

themselves.Principle of authority:

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Authority means power to command others. There should be free flow of authority in an

organization so as to enable people to take decision without delay.

Principle of responsibility:

Responsibility means obligation to do a particular task. Authority and responsibility should go and

hand in hand. Although a subordinate is responsible to his superior, the responsibility of the

superior is absolute for the acts of the subordinates.Balance:

There should be balance in the formal structure of the organization between the factor shaving

conflicting claims. For example, between centralization and decentralization, between span of

supervision and lines of communication and authority allocated to departments and personnel at

various levels.

Flexibility:

Flexibility is the ability to change with the environment to maintain competitive advantage. Thus a

good organization should be flexible.

Simplicity:

Simplicity ensures efficiency. An organization is said to be good if it is simple with a minimum

number of levels.

Continuity:

Change is the law of nature. Thus, specific attention should be paid to implement reorganization as

a continuous process.

ORGANIZATION STRUCTURE

An organization structure denotes the pattern of relationship among the positions and jobs

within an organization. It is the structure of human relationships or the network of horizontal and

vertical dimensions designed to achieve common goals. It is a systematic combination of peopleand facilities which may take the from of line, staff and line and staff.

The structure of an organization is generally shown in an organization chart. It shows

the authority and responsibility relationship between various positions in the organization. A goodorganization structure should be dynamic and capable of changing in accordance with the situations

or conditions. Thus, while designing the organization structure, due attention should be paid to the

principles of should organization.

Organization structure helps in the efficient functioning of concerns on account of the followingreasons:

1. It allocates authority and responsibility.

2. It lays down the pattern of communication and coordination.3. It creates proper balancing of activities.

4. It facilitates growth of the enterprise.

5. It is adaptable to changes.

Determining the kind of structure

Since an organization structure is an indispensable means for the goal seeking activities,

a wrong structure will seriously impair business performance and may even destroy it. It is,therefore, essential that an organization structure is created after a careful and comprehensiveanalysis of the needs of the proposed organization. To this end, PeterDrucker points out the

following three kinds of analysis.

Activities analysis:The aim of the activities analysis is to find out activities are needed to accomplish the goals of the

organization. While making this type of analysis, it should also be determined as to be emphasized

in the organization structure.

Decisions analysis:

Decision analysis is required to determine the number of levels in the organization. At this stage, itis determined as these decisions will have to be made and how each manager should be involved in

them.

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Relations analysis:

Relation analysis is an examination of the various types of relationships are vertical, lateral anddiagonal.

ORGANISATION CHART

An organization chart is a diagrammatic representation of the structure of an organization. In

other words, it is a graphic portrayal of positions in the organization and of formal lines

communication among them. The organization chart provides a birds eye view of the relationship

between different departments of an organization of as well as the relationship between the

executives and the subordinates at various levels.

In the words of Louis A. Allen, the organization chart is a graphic means of

showing organization data. Organization charts are snapshots; they show only the formal

organization and depict it only at a given moment in time. Thus the main features of an

organization chart are as follows:

It is a diagrammatical presentation.

It shows the relationship between different authorities.

It shows the kind of relationships prevailing in the organization.

It shows the authority and responsibility of various authorities.

The organization chart should not be confused with the organization structure. The

organization chart is a schematic representation of the formal organization as given in Figure.

Benefits of the Organization Chart

The main advantages of the organization chart are the following.

It facilitates organizational planning and manpower planning.

It helps to avoid overlapping of authority.

It enables the executives to know and appreciate their own position vis--vis others in the

organization.

It is a source of authoritative information about the organization.

It helps to analysis an organization for effecting improvements.

Limitations of the organization chart

The organization chart has the following limitations, in spite of the aforesaid benefits.

It does not guarantee an effective structure.

It may induce rigidity.

It requires frequent updating.

It does not incorporate the informal organization.

DEPARTMENTATION:

The first real task in designing an organization structure is the identification of activities and

to group them properly. the process of grouping the activities is commonly known as

departmentation. The terms used to designate departments may vary in different organizations of

the same nature.

Need and importance of Departmentation

The basic need for departmentation arises because of specialization of work and the limitation on

the number of sub ordinates that can be directly controlled by a superior. If there is no

departmentation, there would be serious limitation on the size of the organization. Grouping of

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activities and consequently of personnel into departments makes it possible to expand an

organization to any extent. However, when departments are created to overcome this basic

limitation, they serve a number of other functions leading towards the organizational efficiency.

The major importance of the departmentation is along the following lines:

Advantages of specialisation: Probably the most important single principle in an analysis of theclassical approach to organizational design is specialization of work. The basic advantage of the

specialization lies in terms of efficiency with which the work is performed because a person focuses

his attention on a narrow aspect of the work and he gets mastery over that aspect.

1. Fixation of Responsibility: Departmentation helps in fixing the responsibility and consequently

accountability for the results. Responsibility can be discharged properly when it is clear, precise,

and definite.

2. Development of Managers: Departmentation helps in the development of managers.

Development is possible because of two factors. First, the manager focuses their attention on some

specific problems which provides them effective on-the-job training. second.

3. Facility in Appraisal: Managerial performance can be measured when the area of activities can

be specified and standards in respect of these can be fixed. Departmentation provides help in both

these areas. When a broader function is divided in to small segments and a particular segment is

assigned to each manager, the area to be appraised is clearly known.

4.Feeling of Autonomy: Departmentation provides motivation by developing feeling of autonomy

to the extent possible. Normally; departments are created in the organization with certain degree of

autonomy and freedom. The manager in charge of a department can take independent decisions

within overall framework of the organization.

TYPES OF DEPARTMENTATION

The managerial problems associated with departmentation are directly related to the degree

to which individual jobs have been specialized, that is , the number of ways to group jobs increases

with the number of different specialized jobs. Thus, a small business owner employing three-four

persons may not require any departmentation because he can control all the persons personally

himself.

Functional departmentation:

It refers to the grouping of common activities to form an organizational unit is known as

functional departmentation, that is, the units are organized around common functions. Functional

departmentation is the most widely used basis for organizing activities and is present almost in

every large organization at some level.

Basic functions

The basic or major functions are those which are essential for the organizations and their operations

contribute to the organizational efficiency.

Advantages of Functional departmentation

Functional departmentation is most commonly used because it offers certain advantages which

include advantages of specialization, ensuring performance of activities necessary for the

achievement of organizational objective, elimination of unnecessary activities, and easier control

over functions and maintaining the relative importance of functions in the organization.

Disadvantages of Functional departmentation

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In functional departmentation the problems like lack of responsibility for end results, over-

specialization and consequently lack of general management point of view, and problems of

conflicts and coordination among functional departments.

Product wise departmentation:

Product departmentation involves the grouping together of all activities necessary to

manufacture a product or product line. As the organization grows in size, it becomes difficult for

managers to coordinate the activities of the expanding product lines . One commonly adopted

strategy is to establish departments based on products. Product differentiation is preferred for

product expansion and diversification when manufacturing and marketing characteristics of each

product are of primary concern.

Advantages of product departmentation

Product departmentation offers several advantages like reduces problems of coordination for

different products, provides opportunities for further diversification and expansion of organization

and provides product specialization necessary for managers especially when each product is

different from others.

Disadvantages of product departmentation

It presents problems at the top management level for coordination, multiplicity of efforts because

same functional facilities are required foe different products and also the problem in maintaining

economical central staff services.

GEOGRAPHICAL DEPARTMENTATION:

Territorial or geographical departmentation is especially useful to large-sized organizations

having activities which are physically spread such as banking, insurance, transportation etc.

For example Insurance Corporation of India has grouped its activities as shown in the chartAdvantages of geographical Departmentation

Production

Manager

Production

Manager

Production

Manager

Production

Manager

Managing Director

Chief Executive

Radio Division TV Division Computer Division

Production Marketing Finance Personnel

Board of Directors

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Territorial Departmentation is especially suitable to large scale organizations whose activities are

physically spread. In such cases, Territorial Departmentation provides certain efficiency in

operation.

Disadvantages of geographical Departmentation

The foremost problem is communication and the next problem is which comes in the way is

The distance between policy framers and policy executors.

CUSTOMER WISE DEPARTMENTATION:

Customer-base departmentation is basically market-oriented in which departments are

created around marketing channels. Grouping of activities around marketing channels involves

making an organization structure reflect the ways an organization reaches an ultimate customer.

Therefore, it is suitable mainly to those organizations which either serve different customers such as

pharmaceutical company supplying to hospitals, government, retail-stores etc.

Advantages

The most important advantage is that it focuses on customers who are ultimate suppliers of money

to the organization.

Disadvantages

Coordination between sales and other functions becomes difficult because this method will

followed only in marketing division. Duplication and confusion may arise in product research and

development activities as well as in manufacturing.

ADVANTAGES DEPARTMENTATION

Each of the bases of departmentation has its suitability, advantages, and disadvantages.

Consequently, the selection of bases of departmentation involves a consideration of the relative

advantages of each base for the organization suitable basis of departmentation is one which

facilitates the performance of organizational functions efficiently and effectively so that its

objectives are achieved. Therefore, determination of suitability of departmentation bases should be

considered in the light of various factors affecting the functioning of an organisation. Such factorsmay be of the following types:

Marketing Manager

Wholesale Retail Govt agencies Export

CEO (Head Office)

9mumbai)

Eastern Zone Northern Zone Southern Zone Western Zone

Production Marketing Finance

HR

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1. Specialization: The basis of departmentation should reflect the specialization in performing the

work. The more an organization structure reflects the division of work in an organization through

grouping of activities in departmental form, the more efficiently and effectively it tends to

contribute to organizational operation. This is possible because of specialization of work.

2. Coordination: Coordination involves that all the related activities are performed in a way that

their performance is synchronized so that each activity contributes to others. In a sense, all activitiesgrouped in various forms have the same objective of achieving organizational goals, though they

may be dissimilar in nature and their performance may require different skills. The best result can

be achieved when all activities are performed in a coordinated way and each activity contributes in

the positive way to others.

3. Control: It is the process of analyzing whether the intended results are being achieved by a

particular department or not. If not, what can be done to bring the situation to a desirable level.

Control measures and their effectiveness depend on the way in which activities are grouped in to

departments. Normally, more the clearly-defined activities and consequently responsibilities of

departments are, more are the chances for effective control because the manager can know very

easily what is to be controlled.

4. Economy: A balance should be maintained between the cost of creating a department and its

contribution. Creation of departments involves costs on the part of the organisation. Cost involved

may be of two types. First, when a new department is created, it requires personnel and other

matching facilities which involves cost. Second, creation of additional department means creation

of additional interactions in the organization requiring additional time of managers which is very

important for them. For example, if too many staff departments have been created, they may pose

severe time constraints on line managers.

5. Focus on Results: In an organization, the final results are achieved through the achievement of

subordinate results. Therefore; all those activities which contribute to the achievement of these

results should be given proper attention. Thus, activities whose contributions are higher are likely to

get more prominence.

6. Local conditions: While creating departments, adequate consideration should be given to the

requirements of local conditions. This is more important to those organizations which operate in

different geographical areas.

7. Human Consideration: Departmentation should also take in to consideration of the human

factor in the organisation. Because departments should be created on the basis of availability of

personnel, their aspirations and value systems, informal work groups and attitudes of people

towards organizational structure.

CENTRALISATION AND DECENTRALISATION

Another highly important issue in organizing is the extent to which authority is centralized, or its

opposite, decentralized, in a formal organization structure. In management, centralization identifies

concentration of authority and decentralization dispersion of authority. However; both these terms

are used to give various connotations. These words are used in the context of administrative

processes, physical and geographical location, physical or geographical decentralization refers to

dispersion of an organizations operations throughout the country. When centralization and

decentralization are used in the context of degree of authority at various levels and associated

management practices, they denote different degrees of delegation of authority.

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For example, Allen has defined both the terms as follows:

Centralization is the systemic and consistent reservation of authority at central

points within an organization. Decentralization applies to the systemic delegation of authority in an

organization-wide context.

In a centralised organisation head office(or a few senior managers) will retain the major

responsibilities and powers. Conversely decentralised organisations will spread responsibility for

specific decisions across various outlets and lower level managers, including branches or units

located away from head office/head quarters. An example of a decentralised structure is Tesco the

supermarket chain. Each store of Tesco has a store manager who can make certain decisions

concerning their store. The store manager is responsible to a regional manager .

Organisations may also decide that a combination of centralisation and decentralisation is more

effective. For example functions such as accounting and purchasing may be centralised to save

costs. Whilst tasks such as recruitment may be decentralised as units away from head office may

have staffing needs specific only to them.

Certain organisations implement vertical decentralisation which means that they have handed the

power to make certain decisions, down the hierarchy of their organisation. Vertical decentralisation

increases the input, people at the bottom of the organisation chart have in decision making.

Horizontal decentralisation spreads responsibility across the organisation. A good example of this is

the implementation of new technology across the whole business. This implementation will be the

sole responsibility of technology specialists

Advantages of Centralised Structure For

Organisations

Advantages of Decentralised

Structure For Organisations

Senior managers enjoy greater control

over the organisation.

Senior managers have time to

concentrate on the most important

decisions (as the other decisions can be

undertaken by other people down the

organisation structure.

The use of standardised procedures can

results in cost savings.

Decision making is a form of

empowerment. Empowerment can increase

motivation and therefore mean that staff

output increases. Decisions can be made to benefit the

organisations as a whole. Whereas a

decision made by a department

manager may benefit their department,

but disadvantage other departments.

People lower down the chain have a

greater understanding of the environment

they work in and the people (customers and

colleagues) that they interact with. This

knowledge skills and experience may enable

them to make more effective decisions than

senior managers.

The organisation can benefit from the

decision making of experienced senior

managers.

Empowerment will enable

departments and their employees to respond

faster to changes and new challenges.

Whereas it may take senior managers longer

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to appreciate that business needs have

changed.

In uncertain times the organisation will

need strong leadership and pull in the

same direction. It is believed that strong

leadership is often best given from

above.

Empowerment makes it easier for

people to accept and make a success of more

responsibility.

Factors determining degree of decentralization

A basic question that arises while designing the organization structure is: how much to

decentralize the authority? Managers cannot ordinarily be for or against decentralization of

authority. They may prefer to delegate authority, or they may like to make all decisions.

1. Size of organization: Decenentralisation depends on the size of the organisation.The larger thesize of the organization, the more urgent is the need for decentralisation.In a large organization, .

2. History of organization: Decentralization of authority depends on the way the organization has

been built up over the period of time. Normally those organizations which expand from within or

expand under the direction of the owner- founder show a marked tendency to keep authority

centralized.

3. Availability of Managers: Availability of Managers directly affects the degree of

decentralization because exercise of authority requires competence on the part of those who

exercise authority. If better quality managers are available, there is more chance for decentralization

because of two reasons. First, these managers can handle the problems of decentralized units

effectively. Second, such managers have higher need for degree of autonomy which is possible in

decentralized structure only. Moreover, decentralization also works as training ground for managers

which increase the ability of good managers.

4. Control Techniques: Development and use of control techniques affect the degree of

decentralization by ensuring whether the performance of various levels and points of the

organizations is in line with planning. Higher the degree of development and use of control

techniques better is the prospect for decentralization.

5. Decentralised Activities: In many cases, decentralization of authority becomes necessary

because there is decentralization based on other factors like economies of division of labour, the

opportunities for using physical facilities at various locations, and the nature of work. For example,

the activities of banking, insurance and transport organizations have to be decentralized..

6. Rate of change in organization: The rate of change in the organization also affects the degree of

which authority may be decentralized. If the business of the organization is fast developing and it is

facing the problems of expansion.

CENTRALISATION BENEFITS:

Centralization, as discussed earlier, is the systematic and consistent reservation of

authority at central points within the organization. This results into a number of benefits in the

organization.

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1. Centralization provides opportunity for personal leadership.

2. It facilitates integration of efforts.

3. Quick decisions are possible; hence emergencies can be handled very easily.

4. It makes communication and control easier in the organization.

5. It helps in reducing wastage of efforts by avoiding duplication.

6. There is uniformity in actions throughout the organization and thus, coordination can be

achieved easily.

Limitations of centralization:

1. Employees dissatisfaction regarding decision-making: In case of centralization employees

will not get an opportunity to participate in decision-making process which leads to dissatisfaction

in their jobs.

2. Conflicts between levels of management: Top level management will not encourage lower

level management people and middle level management people. It may leads to conflicts between

different levels of management.

3. Improper utilization of talents: The skills and talents of lower level management people will

not be utilized properly by top level management people which is one of the major limitations of

centralization.

4. Inefficient in decision-making:proper decisions may not be taken in the case of centralization.

DECENTRALISATION BENEFITS:

1. It reduces burden of the top management so that it can focus more attention on strategic

management.

2. It facilitates growth and diversification in the organization.

3. It is a good philosophy to motivate managers.

4. It encourages development of managers by providing them opportunities to shoulder more

responsibility.

5. It emphasis on horizontal growth of the organization thereby reducing the number of

management levels and increasing the span of management.

6. It pinpoints more accurately on the results to be achieved by each unit of the organization by

making various units autonomous.

LIMITATIONS:

1. If not followed properly, decentralization will create chaos in the organization in the absence

of proper control.

2. It tends to increase costs by making most units autonomous for facilities.

3. In decentralized structure, there is no more need for good managers. Unless these, managers

are available, decentralization cannot be effective.

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4. Decentralization requires high degree of self-motivation and self-control because of autonomy

given to managers.

FORMS OF ORGANISATION STRUCTURE

When two men work together to move a stone they are increasing their individual strength by

pooling them and when they recognize this, they deliberately from organization. - CHESTER

I.BARNARD

INTRODUCTION

Organization structure is basically concerned with allocation of tasks and delegation of

authority its forms differ from one enterprise to another. Thus any one of the following forms of

organization structure may be set up depending on the nature and objectives of the enterprise.

Design of organization structure is considered to be a matter of choice among a large

number of alternatives. There are various forms of organization structure; however, not all of them

are suitable for all situations because of the differences in contextual variables which affect the

organization structure as discussed in chapter 11. From this point of view, managers must be aware

of the various alternatives so that they are able to choose a suitable structure for the organization.

The classification of organization structure is based on the way; various activities are

grouped together to create deportments and units as prescribing their relationship in the

organization. Thus, there are seven types of organization structure-line, line and staff, functional,

divisional, project, matrix, and free form. Each of these emphasizes different arrangement of

organization activities. Some of these are designed on mechanistic pattern, for example, line, line

and staff structures; some are designed on organic or dynamic pattern, for example matrix and free

form structures. Others have a combination of both mechanistic and organic patterns in varying

degrees.

1. Line organization

2. Functional organization

3. Line and staff organization

4. Committee pattern organization

Line organization structure

Line or military organization is the oldest and simplest form of organization .Line structure is

generally found in small business units, although this is the basic framework of organization in

large business units. Other forms are simply the modification of the line structure.

Under this system the authority flows vertically from top to bottom. On the other hand responsible

for his work and is accountable to his boss. Since authority and responsibility flow in an unbroken

straight line this type of organization is strictly based on the principles of 'unity of command' and

'scalar chain .

Line organization structure is also know as scalar, military, or vertical organization and

perhaps is the oldest form. This concept holds that in any organization or hierarchy derived from a

scalar process, there mist be a single head who commands it. Although an executive can delegate

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authority, he has ultimate responsibility for results .Line organization can be designed in two

ways .they are

1. Pure line organization

2. Departmental line organization

1. Pure line organization:

Under this form, similar activities are performed at a particular level. Each group of activities is

self-contained unit and able to perform the assigned activities without the assistance of others. It

may be depicted as follows.

2. Departmental line organization:

Under this form, entire activities are divided into different departments on the basis of similarity

of activities each department is placed under one departmental superintendent. All persons in the

department are subjected to control by the departmental head. The basic objectives of this form are

to have uniform control, authority, and responsibility.

Characteristics of line organization structure:

Lines of authority and instructions are vertical, that is they flow from the top to bottom.

The unity of command is maintained in a straight and unbroken line .It implies that each

subordinate receives instructions from his immediate superior alone and is responsible to

him only.

All persons at the same level of organization are independent of each other .It implies that

all the departmental heads are supreme in their respective areas and independent of one

another and are responsible to the chief executive .This applies to all other positions also.

This structure specifies responsibility and authority for all the positions limiting the area of

action by a particular position holder.

It comprises direct vertical relationships.

Each position enjoys general authority over all the lower positions in the hierarchy.

The principles of unity of command and scalar principle are followed.

Responsibility goes upwards.

There is no provision for the staff specialist.

Merits:

1. Simplicity:

This organization is quite simple in both understanding and implementation .every person is clear

about what is expected of him. Since a person is receiving orders and instructions from only one

superior , he does not have any confusion in his mind about his role and responsibility in the

organization.

2. Discipline:

Since each position is subject to control by its immediate superior position, often the maintenance

of discipline is easy.

3. Orderly communication:

Line organization follows scalar chain method of communication. It implies that communication

going up and down will pass through the immediate superiors. This system of communication is

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easy to maintain, orderly in nature, supports the authority of superior, and provides for closeness of

contact thereby reducing changes of miscommunication.

4. Easy supervision and control:

The line organization provides for easy supervision and because each subordinate is controlled by a

single superior. The superior has direct and close contact with his subordinates who facilitate

supervision and control.5. Economical:

The line organization is quite economical because it does not use staff specialists whose

appointment is a costly affair especially for small organizations. Every person in the organization is

directly responsible for his contribution to the organizational objectives.

6. Overall development of the managers:

Since the line organization does not have provision for staff specialists, the various managers have

to combine among themselves the expertise of a staff member

7. Unity of command: It makes for unity of command and also conforms to scalar principle of

organization.

8. Stability: It is stable.

9. Not expensive: It is not expensive because no staff personnel are involved.

10. Fixation of responsibility: It fixes responsibility for the performance of tasks in a definite

manner upon definite individuals.

Demerits

Line organizations offer many problems and limitations which are as follows:

1. Not suitable: It is not suitable for big organizations as specialization is absent.

2. Rigidity: It is rigid and inflexible.

3. Favouritism: It is likely to encourage favoritism.

4. Lack of expert advice: It suffers from lack of expert staff advice.

5. No proper communication: There is no communication from bottom upwards as authority is

concentrated at the top level.

6. Lack of specialization:

The line organization does not offer scope for specialization. A manager has to perform a variety

of functions which may not necessarily be closely interrelated

7. Autocratic approach:

The line organization is based upon autocratic approach. The line of authority being direct,

demands high level of obedience on the part of the subordinates.

In spite of the above said limitations the line organization can be successfully followed

1) In continuous process industries.

2) In small-scale business where the subordinates are not many.

3) Where labor-management problems are not difficult to solve.

4) Where the work is largely of routine nature and

5) Where the machinery is nearly automatic.

Suitability

The line organization is not suitable for large-scale organizations because it cannot fulfill the

requirements of large organizations .However ,it quite suitable to small- organizations where the

number of subordinates is quite small .The need for small organization is centralized control calledonly few levels of authority , direct interpersonal communication ,and direct control and

supervision.

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2. Functional organization

Functional structure is a means of putting the specialists in top positions

throughout the organization. They have only a limited power of command. Their functional

authority remains confined to functional guidance of different departments. Under this system the

whole work of management and direction of subordinates are divided in accordance with the type ofwork involved. At higher levels the functional organization refers to the structure that is formed by

grouping all the works into major functional departments.

The initial concept of the functional organization is credited to F.W.Taylor. He

recommended fictionalization even at the shop level and suggested the scheme of functional

foremanship. The functional foremanship recommended by Taylor has already been explained in

previous fig 4 is the functional organization at the management level showing the direct authority of

the personnel manager over the personnel in the works department.

Suitability:

Functional organizational structure is the most widely used in the medium and large organizations

having limited number of products. This structure emerges from the idea that the organization

must perform certain functions in order to carry on its operations . As it grows and division of

labor leads to specialization, the organization has more work to do, it adds new specialties and

further divides its presently employed specialties.

Features of the functional organization

The following are the important features of the functional organization

The whole activities of the organization are divided into various functions in accordance

with the type of work involved

Each functional area is put under the charge of one executive or specialist

If anybody wants to take any decision relating to a particular function he has to consult the

functional specialist.

Specialists often operate with considerable independence.

Specialization by functions.

Emphasis on goals.

Line and staff division

Functional authority relationships among various departments

Limited span of management and tall structure.

Advantages of the functional organization

Route

clerk

Timeand cost

clerk

Gang

bossDisciplarian Inspector

Instruction

card clerkSpeed

Boss

Work manager

Accountant Suertendentent Supervisor

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The benefits of the functional organization are a follows

It ensures division of labor and specialization based on individual proficiency and

specialized knowledge

It ensures separation of manual and mental functions so as to facilitate quick decision and

mass production

The limitations of one-man control under the line organization are largely alleviated here

It ensures easy implementation and control of decision

Fictionalization helps in better utilization of employees and development of there skills and

also better utilization of resources also.

It promotes professional achievement as a person is restricted to his own area of

specialization. Thus, it provides satisfaction to specialists.

There is a high degree of control and coordination of functions because all work of one kind

is under one manager.Disadvantages of the functional organization:

The disadvantages of the functions of the functional organization is as follows

Functional structure offers usually line and staff conflict and inter departmental conflict.

The heightened degree of such a conflict becomes detrimental to organizational efficiency.

It is difficult to establish because of the high degree of specialization.

It is unstable because it weakens the discipline.

Specialists are seldom all- rounders so that a deficiency of leadership is almost perennially

felt.

Overlapping of authority and responsibility often leads to conflict among foremen of equal

status.

Difficulty in achieving control and coordination on account of considerable independence of

specialists.

3. Line and Staff organization

Line and staff organization refers to a pattern in which staff specialists advice line manages to

perform that duties when the work of an executive increases , its performance requires the services

of specialists which he himself cannot provide because of his limited capabilities on these fronts

In actual practice, some times it is difficult to determine which departments line or staff .The

problem can usually be solved by classifying activities within organizations in two ways

1. That which substantive (direct) in its contribution to the organizations. overall objectives, and

2. that which is objective (indirect) in its contribution .The departments perform formal group of

activities are lined once, and those performing later group of activities are staff once.

Both the line and functional systems are inadequate in the sense that the line system concentrates

too much on authority and the functional system divides the authority too much but the line and

staff system strikes a happy balance between the two in this system the administrative work is

divided into two divisions namely the

1. Staff function and

2. Line function

The staff is responsible for planning and the line for the actual execution of the work. The staff

personnel only give advice to the line officials but do not enforce it. They prepare plans and

recommend them to the line officials who implement them. Under the line and staff organization

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the line is supplemented by the staff. The staff refers to officers who are not line managers. The

staff consists of:

1. Personal staffsuch as a personal assistant or adviser attached to a line executive.

2. Specialized staffsuch as accountant a personal manager a public relations officer ,etc and.

3. General staff such as other experts in different fields who advise the top management and

normally operate at higher levels.Features of the line and staff organization

The important features of the line and staff organization are as follows

1. The staff supplements the line.

2. This organization clearly distinguishes between the two aspects of administration, viz. planning

and execution.

3. Since the staff officers provide advice only to the line officers they do not have any power of

command over them.

4. In the line and staff organization, line authority moves down in the same manner as in the line

organization.

Advantages of the line and staff organization [or] Merits

The advantages of the line and staff organization are as follows:

Merits

1.Planned specialization: Line and staff structure is based upon the principle of specialization .the

managers are responsible for operations contributing directly to the achievements of the

organizational objectives whereas staff people are there to provide expert advice on the matters of

their concern.

2. Quality of Decisions: The quality of decisions in line and staff structures is high because the

decisions come after careful consideration and thought. Each expert gives his advice in the area of

his specialization which is reflected in the decisions.

3. Prospect for Personal Growth: this system of organizing offers ample prospect for efficient

personal to grow in the organization. Not only has that it offered opportunity for for concentrating

in a particular area, thereby increasing personal efficiency.

4. Training Ground for Personnel: it provides training ground for the personnel in two ways.

First, since everybody is expected to concentrate on one field, ones training needs can easily be

identified.

5. Specialization: The principle of specialization is attained through the clear-cut demarcation

between thinking and doing.

6. Expert advice: Line managers can seek assistance from specialists by way of advice.

7. Flexibility: The line and staff organization is highly flexible because new activities may be

introduced through additional staff without disturbing the line procedure.

8. Better decision: Better management decisions are possible as the decisions are made by experts.

9. Reduction of burden: The burden of the line officials is reduced as the staff specialists look

after the detailed analysis of each important activity

10. Development of employees: In the line and staff structure a greater variety of responsible jobs

are available enabling developments of capable employees.

Disadvantages of the line and staff organization [or] Demerits :

The line and staff structure suffers from limitations which particularly become acute when it is notimplemented properly. Following are some basic problems and limitations

1. Lack of well defined Authority:

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Though it is easy to say about line and staff authority, often in practice, it becomes difficult to

differentiate clearly between line and staff because, in actual practice, the authority is often

diffused.

2. Conflict between line and staff: The line and staff relationships are often tenuous and lead to

numerous frictions and jealousies. There is a danger that the staff officers may encroach on the line

authority.3. Confusion: Confusion may prevail when the line and staff relationship is not properly

understood

4. Loss of judgment and initiative: Line managers may depend to much on staff experts. it may

therefore lead to loss of judgment and initiative on the part of line officials.

5. Ineffective staff: The staff experts may feel ineffective as they do not get the authority to

implement their recommendations.

6. Expensive: This type of organization may prove very expensive as a large number of specialists

are appointed.

7. Line staff conflict

Line and staff structure is based on the assumption that both will help and support each other. But

often both try to dominate each other .This leads to numerous frictions and jealousies. In this

respect the view points of both line and staff are as follows:

Committee organization structure:

A committee does not represent a separate type of organization like the line, line and

staff or functional. It is rather a device which is used as supplementary to or in addition to A

committee does not represent a separate type of organization like the line, line and staff or

functional. It is rather a device which is used as supplementary to or in addition to any of the above

types of organizations. A committee may be defined as a group of people performing some aspect of

managerial function. It represent a group of persons to whom a task has been committed thus a

committee is a body of persons appointed or elected for the consideration of specific matters

brought before it.

Committees function in almost all types of undertakings and organizations. Religious and social

institutions prefer the committee pattern to achieve wider participation in their affairs. Most of the

functions in educational institutions are performed through various committees. In business also

committees are rampant.

Committee is another form of formal group. Committees are found in every large organization.

Exact definition of a committee is slightly difficult because there are too many variations in the

scope and functions of committees. Literally the word committee means those whom some matter or

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charge is committed. Thus, committee can be defined as body of persons appointed to meet on an

organized basis for the discussion and dealing of matters brought before it. Based on this definition,

following features of committee are identified.

In an organization, there can be several types of committee, for examples, finance

committee, budget committee, purchase committee, grievance committee, and welfare committee

and so on.

Features of committee

1. A committee as a group of persons. It implies that there should be at least two persons.

There are no limitations on the maximum number of persons in a committee. However,

beyond a certain number, deliberations at committee meetings become difficult.

2. A committee can deliberate only on matters that are brought before it. It cannot go for

action in all spheres of activities. When a committee is constituted, there are strictly

defined jurisdictions within which it is expected to justify its existence.

3. Members of the committee draw authority though delegation. The authority of members is

usually expressed in terms of one for each member for deciding the matters.

4. The type of authority delegated to a committee may vary from making final decisions on a

matter to mere submission of relevant information on the matter concerned

5. A committee may be constituted at any level of the organization and its members can be

drawn from any level or function.

Reasons for use of committees

1.pooling of knowledge and experience:

The most important advantages in using committees is that knowledge and experience can be

pooled together and decisions can be arrived at through group deliberations judgment. A committee

works on the theme that two heads are better than one.

2. Facility for coordination:

Committees are very useful for coordinating activities among various functional units. When it is

necessary to integrate and unify various viewpoints which cannot conveniently and effectively be

coordinated by individuals, the committee may be useful in bringing all those concerned together.

3. Representation on Interest Groups:

Committees are often used to give representation to various interest groups. Such

types of committees are quite popular in government, educational and other institutions wherepeople from diversified groups should have their say in the functioning of the organization. Even in

business organization such committees may be set up, for example board of directors, welfare

committee.

4. Fear Too Much Authority in Single person.

Sometimes committees are constituted to avoid the concentration of too much

authority in a single individual. This problem is more prominent in government and educational

organizations and less in business organizations.

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5. Consolidation of Authority:

A committee can be used to consolidate splintered authority. A manger of department

or of a section may have only limited amount of authority necessary to accomplish a programme.

Therefore, the manager cannot solve a problem with out simultaneous exercise of authority by other

mangers related to the problem

6. Transmission and sharing of information:Committees are useful for transmission and sharing of information. All parties and

persons interested in a problem have simultaneous face-to-face communication through the

proceedings of the committee meetings. Doubts and ambiguity may be removed at the spot. This

saves a lot of time in communication. The spoken words, with the possibilities for overtones and

emphasis and the opportunities

7. Motivation through Participation:

People do better when they participate in decisions affecting their working because

when they participate in decision making, they accept and live with that decision; they feel

committed to the decision. This feeling of involvement and commitment motivates them for better

performance

8. A Tool of management Development:

A committee can be used as a tool of management development like many other tools .A

manager can be developed through learning from experience .While experience of a manager on his

job may restrict him to know about his job only, committees may widen his knowledge and he can

learn how his job is related with others; in what way it affects others and is affected by others..

9. Avoidance of Action:

A committee can be used to avoid action on a problem being faced by the manager. He may

not like to take action but he may not be in a position to avoid action also. Therefore, he can find

out the best solution to refer the matter to committee. Thus, a committee can be used to cool off

agitation and temper on the part of affected people.

Benefits of committees

1. Integrated group knowledge and judgment.

2. Representation of different interest groups.

3. Coordination of plans and policies.

4. Executive team work and personal interactions.

5. Wider participation and motivation.

6. Improved communication.

7. Training ground for executives.

Limitations of committees [or] Problems in committees

1. High cost:

Constitution of a committee may be costly both in terms of time and money. Committee

meetings may take time of various managers which can be spent otherwise for the organization. If

the decisions are arrived at very quickly, it shows mere formality of holding meeting without any

contributions from the members

2. Slow Decisions:

Committee decisions are essentially slow because of the basic nature of decision-making

process in a committee. In a group decision making, all members to consider a problem must beinformed about it. This may require staff work to prepare a report giving members the basic facts. It

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may take time. Similarly, in the meeting, deliberations take lot of time. Each member is expected to

be heard.

3. Indecision:

Many times, committee meetings result into indecision. The meetings may be adjourned

because of lack of time for thorough deliberations so that agreement can be arrived at. Thus, there

can be deadlock on the matter and no action can be taken. Further, agreement is reached on thebasis of compromise.

4. Splitting of Responsibility:

People work more efficiently when they have clear authority and responsibility. In taking a

group decision, an individual member of the group feels a lower degree of responsibility than if the

decision had to be taken by him. A major drawback in committee decision is that it splits the

responsibility and no member really feels responsible for group action.

VIRTUAL ORGANISATION

The concept of virtual organization or corporation along with virtual team and office has

entered management field very recently. The literal meaning of virtual is having the efficiency

without the material part unreal but capable of being considered as real for the purpose. Based on

this concept, virtual corporation has been defined as follows.

Virtual corporation is a temporary network of independent companies-suppliers, customers,

even erstwhile rivals-linked by information technology to show the skills, costs and access to one

anothers market. It will have neither central office nor organization chart. It will have no

hierarchy, no vertical integration.

Thus, virtual organization is temporary alliance between two or more organization that band

together to undertake a specified venture. Recently, in telecommunication sector in India, many

virtual organizations have been created to provide different services. Business Week has identified

five basic features of a virtual organization which are as follows.

Technology: Informational networks will provide far-flunged companies and entrepreneurs to

link up work together from start to finish. The partnerships will be based on electronic contrasts to

keep the lawyers away and speed the linkup.

Opportunism: Partnership will be loss permanent, less formal and more opportunistic.

Companies will band together to meet a specific market opportunity and, more often than not fall

apart once the need evaporates.

Excellence: Because each partner brings its core competence to the effort, it may be possible to

create a best-of-everything organization .Every function and process could be world class-

something that no single company could achieve

Trust: These relationships make companies far more reliant on each other and require for more

trust than even before .They will share a sense of co-destiny, meaning that the fate of each partner is

dependent on other.

No Borders: The new corporate model redefines the traditional boundaries of the company. More

cooperation among competitors, suppliers, and customers makes it harder to determine where one

company ends and another begins.

Reasons for Virtual organization

The basic reason behind creating a virtual organization is to generate synergy through

temporary alliancesHowever, management scholars have divided opinions over the effectiveness of virtual

organizations because of the trust that is required in creating such organization. Often, clash of

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interest generates much sooner than expected. For example, one of the virtual organizations created

by Intel, USA and Japanese company could not work properly because the Japanese company was

not able to complete its part of the project, leaving Intel with a major product delivery problem.

Intel was not happy about that venture and decided not to participate any venture.

Virtual office

Along with virtual organizations, the concept of virtual offices has also emerged in whichphysical office space and individual desks have been replaced with an array of portable

communication tools email, cellular phones, voice mail system, laptop computers, fax

machines ,modems, vedio conferencing systems etc. Employees armed with these tools perform

their works without going to their offices but do this from homes, cars, customers offices etc.

Thus, the work is performed through telecommuting.

It is flexible to employees in designing their work schedule and workplace. The initial

reactions of the employees have been mixed one pleased. While some employees have found it

quite attractive others have not been pleased. They feel that the virtual office system denies an

opportunity for the social interaction as they still need tom gather informally, exchange ideas and

experiences face-to-face and develop a sense of teamwork, to over come this hybrid system is

adopted in which the employees attend their office at pre determined day and time while on other

days they can work through telecommuting.

MATRIX ORGANIZATION STRUCTURE

Matrix organization structure is essentially a violation of unity of command and,

therefore, whole classical concepts related to the principle of unity of command are violated. Matrix

structure is the realization of two- dimensional structure which emanates directly from two

dimensions of authority. Two complementary structures -pure structure and functional structure-are

merged together to create matrix structure. Thus, matrix structure not only employs a multiple

command but also related support mechanism and associated organizational culture and behaviour.

Thus, it shows many organizational overlaps not only in terms of command system but also in

terms of whole organizational processes and behaviour.

Sometimes, matrix and project structures are considered to be the same. How

ever, there is a difference between the two. In project organization, separate identifiable units are

created for taking and managing projects, and complete responsibility for the tasks as well as all the

resources needed for their accomplishment are usually assigned to one project manager.

Design of Matrix Structure:

In matrix organization structure, a project manager is appointed to coordinate the activities of the

project. Personal are drawn from their respective functional departments. Upon completion of the

project these people may return to their original departments for further assignment. Thus, each

functional staff has two bosses-his administrative head and his project manager.

Suitability of Matrix Structure:

Matrix structure is of recent origin but its use has spread in various fields. For example, Davis and

Lawrence have observed that matrix structure can be successfully applied to the following types of

activities: manufacturing activities - aerospace, chemicals, electronics, heavy equipment, industrial

products and pharmaceutical; service activities-banking, brokerage, construction, insurance and

retailing; professional activities-accounting, advertising, consulting, and law; and non -profit

organizations-government agencies, hospital, united nations and universities.

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Merits of Matrix Structure:

1. Matrix structure focuses resources on a single project, permitting better planning and control to

meet the project deadline. In project management, time is of prime importance and, therefore, it

should be completed within the specified time. However, since the organization can not create

many project divisions, matrix serves s the purpose adequately.

2. It is quite flexible structure as compared to traditional hierarchical structure.3. It emphasizes on professional by elaborating authority of knowledge rather than authority of

position.

4. It improves motivation because people can focus more directly on completion of one project than

they can in the traditional functional structure. It also improves communication by discarding

hierarchical system which produces more inhibiting factors.

5. It relieves top management for taken a long-term course of action so that the organization can

design its strategies suitable to environmental needs.

Demerits of Matrix Structure:

Matrix structure has many problems in practice because of its too much flexibility. The major

problems of matrix structure are as follows and managers should take adequate precautions to

overcome these.

1. There is always power struggle in matrix structure. The essence of matrix structure is dual

command, and to survive such a form, there needs to be balance of power. However, this power

balance shifts constantly as people try to maximize their benefits. This results into power struggle

among people which may become dysfunctional if top management does not play active role in

balancing the power.

2. Matrix structure can develop anarchy if not managed properly. People have work under multiple

commands. Besides, there may be informal relations among people.

3. This structure may not work very well when there is economic crunch. In the case of economic

crunch, the organization may not be in the same position as there may be many changes in market

position, pressure on profit margin, and financial problems.

4. If matrix organization is not followed properly, there is delay in decision making. The

decision making process is such that many persons are involved in the decision.

5. At the initial level, matrix structure becomes quite costly because of top heavy management. It

does seem to double up management because of dual chain of command.

CEO / President

R&D

specialists

Financedepartment

Marketing

departmentPersonnel

department

Production

department

Project

A

R&Dspecialists

Financespecialists

Marketingspecialists

Personnelspecialists

Productionspecialists

Project

B

R&D

specialists

Finance

specialists

Marketing

specialists

Personnel

specialists

Production

specialists

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TEAM :

In order to meet the challenges of dynamic business environment, more and more organizations are

replacing old hierarchies with teams of different types in the form of work teams or project teams.

A team is a group of people in the organization constituted for completing certain assignments. A

team is like a task force with a major difference. A task force is created to solve unusual problemsthat an organization may face occasionally. In contrast to this, work teams are constituted quite

frequently. For example, in information technology companies, most of the work is done by teams

which are constituted on project-to-project basis.

TYPES OF TEAM:

In an organization, there may be different types of teams. Typology of teams may be based on

their constitution, purpose, power entrusted, duration, etc. The more common type of teams that

may be found in an organization are lead teams, cross-functional teams, problem-solving teams, and

self-managing teams. Several teams may be created in each type.

Lead Team:

A lead team consists of managers and their direct subordinates. This is the most usual form of

team which works in every part of an organization. A basic feature of this type of team is that it is

created on the basis of hierarchical relationships as organizational administrative units.

Cross-functional Team:

A cross-functional team is constituted by drawing personal from different functional areas,

particularly from those functions which have high interdependence. The basic objective of such a

team is to solve problems and take decisions in those areas which cannot be done by a particular

functional department. Because of the interdependence of various functions in an organization.

Problem-solving Team:

A problem-solving team, also known as corrective action team, is constituted to solve specific

problems which an organization may be facing. Team members for such a team are drawn from

those areas where the problems requiring solution exist.

Self-managing Team:

In todays context, more emphasis is given on self-managing teams, also known as empowered or

self-directed team.

1. Defining Areas of Responsibility:

To begin with, management should define the areas of responsibility of the team. It should be

define with the consultation of the possible members. The areas of responsibility may include

productivity, quality, safety, maintenance, personnel, and administration.

2. Measures, Boundaries, and Feedback Methods :

The second step is to decide measures,boundaries, and feedback methods for each area of

responsibility. Measures imply the means adopted to identify the extent to which responsibility is

being discharged. Boundaries prescribe the limits of responsibility. Feedback relates to get

information on how the responsibility is being discharged in different areas.

3. Specific team Members Responsibilities:

Apart from the team responsibility, responsibility of each member is also defined. Thus, a team

member is responsible for his own job as well as the job of the entire team. The team members will

assume to track and review performance data, plan and coordinate activities to achieve their goalsand identify and solve problems.

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4. Determination of Training Needs :

At this stage, managers, in consultation with team members identify the training needs for the

members and train them to carry out their responsibility.

5. Plan for Transition:

At the final stage, there is transition from the old way of working to empowered team working and

new responsibilities may gradually be added.Effective Team

An effective team is one which contributes to the achievement of organizational objectives by

performing the task assigned to it and providing satisfaction to its members.

Skills and Role Clarity:

For an effective team, two things are required from its members: skills which are complementary to

the team requirement and understanding of ones own role as well as roles of other members.

Supportive Environment:

A team loaded with skilled members cannot perform well if the organizational climate is not

supportive for that. If the organizational climate is not in tune with high achievement, team

members may not show high degree of enthusiasm and they will use only a part of their skills in

performing the jobs.

Super ordinate Goals:

Super ordinate goals are those which are above the goals of a single team or a single individual.

Team Rewards:

Team performance depends on how reward is linked to team performance and how members

perceive this linkage. If team members perceive that reward is contingent on team performance,

they will put their maximum. Rewards of both types-financial and non-financial-should be taken

into consideration.

FLAT AND TALL ORGANIZATIONS

Flat organizations are those, which have relatively few or even one level of management. Many

enterprises have adopted flatter structures to reduce levels of management and bureaucracy and give

their workforce greater decision-making responsibilities. A service organization with 3 equal

partners and 30 employees is the best example for a flat structure. Flat organizations are known by

their wider span of control. In other words, each manager controls more number of employees at a

given point of time. Flat structured organizations facilitate communication across the organization.

Tall organizations have many levels of management. Tall structure organizations focus on vertical

communication through the levels of grades in it.

Managing Director

Managing Director Managing Director Managing Director Managing Director

Managing Director

Additional Managing Director

Sales

Manager

Production

Manager

Personnel

Manager

Finance

Manager

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Tall organization structures involve a narrower span of management. Wide and narrower span of

management are evaluated as given below:

Wide span of control:

Advantages:

Fewer levels of management and decision-making.

Lower supervision costs.

The subordinates feel more satisfied on the job front with greater decision-making authority.

Disadvantages:

Makes it difficult to supervise the subordinates directly.

Flat structures may not work as the business expands.

Narrow span of control:

Advantages:

Allows for tight control and supervision.

Communication with subordinates is easier.

Disadvantages:

Subordinates may feel left out of the decision-making process and may lack motivation.

Costs related to management and administrations tend to increase.

Coordinating decisions of numerous managers becomes difficult.

Too much supervision may hinder initiative and motivation.

To keep the organizations vibrant, cost-effective and competitive the modern trend is to reduce thesize and length of organizations to lean and flat. Most of the public and private organizations

announce golden handshake schemes to motivate people to leave the organization.

Boundary less organization

A boundary less organization is a contemporary approach in organization design. It is an

organization that is not defined by, or limited to, the horizontal, vertical, or external boundaries

imposed by a predefined structure. This term was coined by formerGeneral Electric chairman Jack

Welch because he wanted to eliminate vertical and horizontal boundaries within the company and

break down external barriers between the company and its customers and suppliers. To achieve

Boundary less Information Flow, an organization needs to put in place infrastructure services that

bring data sources together and provide that information to those users and applications that need it.

Creating the environment for integrated information has been a challenge. What were once regarded

as necessary boundaries between the different stages in operational processes designed to achieve

the benefits of specialization, now represent silos delivering outmoded solutions, which do not

allow for the sharing of information. Barriers at the business and technical levels must be broken

down.

MERITS:

1. Flexibility: A boundary less organization is flexible when compared with other organization

structures.

2. Quick decision-making: in case of boundary less organization decisions taken by top level

management is quick without losing any opportunities.

3. Quality: in case of boundary less organization quality decisions will be taken and

qualitative products will be produced.4. Timeliness: corrective and proper actions will be implemented and timeliness in running of

business operations will be possible in case of boundary less organization.

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DEMERITS:

1. Difficult of maintenance: maintenance of different operations at all levels of management

is difficult in case of boundary less organization.

2. Lack of proper understanding: the lower level management people may not get clear cutdivision of work which acts as one of the major limitation of boundary less organization

3. Costlier: it is very expensive to prepare reports in case of boundary less organization which

acts as one of the major limitation.

Inverted pyramid structure

Inverted pyramid structure is an alternative to the traditional chain of command. This is a structure

which is narrow at the top and wide at the base. It includes levels of management.

MERITS:

1. Unity of command: in case of Inverted pyramid structure only one manager will make

commands over lower level managers as well as employees and workers.

2. Span of control: power will be vests in the hands of one person and its the ability of

manager to control more number of employees.

3. Effective decision-making: effective decisions will be possible in case of Inverted pyramid

structure.

DEMERITS:

1. Overlapping of activities: the major limitation of Inverted pyramid structure is

overlapping of activities at the same point of time.

2. Time constraint: the major drawback of Inverted pyramid structure is lack of time in taking

decisions.

3. Conflicts: there will be a chance of arising conflicts between levels of management in the

organization structure in case of Inverted pyramid structure.

CELLULAR ORGANIZATION STRUCTURE

In cellular organizations workers manufacture total product or sub assembles in teams [cells]. Every

team of workers has the responsibility to improve or maintain the quality and quality of its

products. Each team is free to reorganize itself improve performance and product quality. The cells

comprise self managed teams.

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MERITS:

1. Improvement in performance: the performance of employees will be increased in case of

cellular organizations.

2. Quality: the quality in case of production and goods will be possible in case of cellular

organizations.3. Understanding capacity: all the members will be able to understand the orders of

managers in cellular organizations.

DEMERITS:

1. problem in division: division of cells in the organization is the biggest problem in cellular

organizations.

2. Time constraint: lot of time is required for dividing the organization into different cells is a

problem in cellular organizations.