Understanding and Managing Organization System1

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Understanding and managing organization system

Concept of organization

Organization is a cooperative social system involving the coordinated efforts of two or more people sharing a common purpose

Peter F. Drucker

An organization is a body that manages, organizes and coordinates human and technological resources to perform a particular

objective. For example:

1. A firm produces goods and services to sell to its customers.2. Police is there to keep peace between mutually hostile groups of people.

There are three pillars of resources of all organizations:

People Organization Technology

Career

Education

TrainingAttitude

Participation

Monitoring

Environment

Strategy

Policy

Mission statementCulture

Management

Bureaucracy

Competition

Environment

Hardware

Software

TelecommunicationsInformation Systems

Common characteristics of Organization:

Edgar Schein, a famous organizational psychologist believes that all organizations have four characteristics which include

*coordination of efforts

*Common goal

*Division of labour

*Hierarchy of authority

1 .Coordination of efforts

If individuals in different departments, having different orientations, time horizons etc. and individual specialists

perform their tasks independently, without having any regard for each other, it may lead to chaos.

2. Common goal

Common goal or purpose gives the organization focus and its members a rallying point.

3. Divison of labour

The early proponents of this characteristic of organization were Adam Smith, Frederick Taylor and Henri

Fayol. Division of labour refers to systematically dividing complex tasks into specialized jobs.

4. Hierarchy of Authority

When work is divided among different levels of an organization, superior-subordinate relationships are

created. This results in a hierarchical ladder or chain of command. Jay R. Galbraith and Edward E. Lawler criticized the idea of

hierarchy.


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Concept of organizational structure

Organizational structure is comprised of functions, relationships, responsibilities, authorities and communication between

individuals within each department.

Organizational structure refers to the formal configuration between individuals and groups with respect to the allocation of

tasks, responsibilities and authority within the organization.

The organizational structure:-

1. Defines every employees job, duty and objective.2. Establishes authority-responsibility relationships for co-ordinated efforts.3. Creates a network of communication for the purpose of achieving the enterprise objectives.4. Provides a framework within which an enterprise functions and also helps in meetin challenges and finding

opportunities for growth.

5. Stimulates creative thinking and initiative among organized members.6. Provides framework of decision making.

Form/Types of Organizational Structure

1. Line organizationThe line structure is defined by its clear chain of command, with final approval of decision affecting the operations of

the company from top to down to the operative level of the workers.

Advantages

Simple, uncomplicated and easily understandable. Clear cut authority and responsibility. Control is easier and effective Facilitate quick decision and quick action Rapid communication is made possible.

President

Plant manager

Foreman A Foreman B Foreman C

Worker Worker Worker

Disadvantages:-

Require talented and capable person who may be difficult to find.


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Exit of a few top executives might cripple the enterprise. The spirit of teamwork may be lacking.

Suitability:-

Where business is carried on a small scale and few subordinates are employed. Where the work is largely of routine nature and the methods of operation are simple. Automatic machines are used so that there is less demand of managerial personnel.

Line and staff organization

In this form of organization, functional specialists are added to the line, giving the line the advantage of specialization.

Board of directors

Executive committee Managing Director Controller of Finance

Assistant to Managing Director

Manager Division A Manager Division B Manager Division C

Advantages of line and staff organization:

1. Better decisions:Staff specialists help the line executives in taking better decisions by providing them with adequate information of the

right type at the right moment and also give them their expert opinion.

2. Specialized knowledge:Line managers get the benefit of specialized knowledge of staff specialized at various levels.

3. Reduction of burden:Staffs carry out detailed investigation and supply information to line executives. Therefore, one burden of line

executive is reduced.

4. FlexibilityGeneral staff can be employed to help line managers at various levels.

5. Proper weightageMany problems that are ignored or poorly handled in the line organization can be properly covered in line and staff

organization by the use of staff specialists.

Disadvantages:

1. ConflictThe line usually complains that if things go right then the staff takes the credit and if things go wrong then the line

gets the blame for it.2. Duties are not clear

This may hamper coordination in the organization.

3. Staff not accountableStaff members are not accountable for the results even though they may not be performing well.

4. Ideas are not practicalStaff is generally younger and more educated and did not go through the run of mill and hence their ideas may be

more theoretical and academic rather than practical.


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Functional organization

Concept propounded by F.W. Taylor

The functional organization allows specialist to enforce his directives within the clearly defined scope of his authority.

Therefore, a functional manager can make decisions and issue orders to persons in divisions other than his own, with a right to

enforce his advice.

Functional Organization

Director Marketing Director HR Director Production Director Finance

GM Division X GM Division X GM Division X

Advantages:

1. Decision can be easily implemented and controlled.2. Decision making becomes easier and quicker.3. It enables the organization to make full use of expert knowledge.4. It facilitates specialization.5. It permits economic flexibility and leads to economy of operations.

Disadvantages:

1. It violates the principles of unity of command.2. It often results in overburdening of operating subordinates.3. It tends to weaken the position of and influence of line supervisor.4. It tends towards centralization of authority in organization.5. The task of coordination becomes difficult.6. It makes the organization authoritative and autocratic.

Committees:

1. Formal and informal committeesWhen a committee is constituted by the management of organization and it is a part of the organizational structure, it

is called a formal committee. It has a definite jurisdiction. Its authority and scope of operations are well defined.

Informal committees do not form the part of the organization.

2. Standing and ad-hoc committeesFormal committees which are permanent in nature are known as standing committee. Ad-hoc committees areconstituted to deal with some special problems. When the problem is resolved, these are dissolved by the

management.

3. Executive committeesThis is a very powerful committee which has executive and administrative powers to control the affairs of business.

4. Coordinating committeesThey consist of members of different departments who meet periodically to discuss their general and common

problems.

Documents

Understanding and Managing Organization System1