ORGNISATION PAGE NO.

601 RS
INTRODUCTION: Let us first define the organisation.
1. Organization is a rational coordination of the activities of a number of people to achieve
some common, explicit goal through division of labour and function and through hierarchy
of authority and responsibility.
2. It is the grouping of activities necessary to attain enterprise--objectives and assignment of
each grouping to a manager with authority necessary to supervise it. - Koonlz. and
O'Donnell
3. Organization is the process of identifying and grouping 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 - Allen
4. Organization is a system, having an established structure and conscious planning in
which people work and deal with one another in a coordinated and cooperative manner for
the accomplishment of recognized goals.
Organization is thus:
(i) a system
(ii) established structure
(iii) people work and deal with each other in coordinated and cooperative way.
(iv) grouping of work
(v) established relationship for authority and delegation
(vi)attainment of common goal of the enterprise
(vi) internal structure for performance

(viii) definition of functional role of each personnel and outline of his responsibility
for business performance
(ix) a constituent of:
(a) division of labour,
(b) identification of the source of authority and
(c) establishment of enterprise relationship

PRINCIPLES OF SOUND ORGANISATION

There are some general guiding principles, including their influence, which help
to form (Figure38.1) a good organization. These principles are:

1. Principle of Organizational Objective : It should be same consistent,

defined and clear. It should aim at achieving high production with customer
focus, growth and survival. At the core, there should be unity of objective

2. Principle of Division of Work and Specialization: Every unit or person of an

organization is assigned to a specific task and accomplishment . For this, there is a need
to focus our specialization and assignment of specific work to individuals.
3.Principle of Parity of Responsibility and Authority : Responsibility is the
obligation on the part of a person towards the boss for completing the assigned task. It
is also called as accountability . A person at a higher position in the organization
exercises authority or power over his subordinates for getting the task done. Authority
is vested in the superior of the organization so as to extract work from subordinates.
Therefore, authority is always associated with responsibility to get things done. There
should be a balance between authority and responsibility.

4. Principle of Functional Definition: Each employee must be assigned specific task,

role, relationship and job-related activities. What is expected of him, must be defined in
the organisation.

5. Principle of Scalar Chain: Scalar chain, chain of command or line of authority, means
that there should be a continuous line of authority (or scalar chain) from top of the
organizational pyramid to the lower levels. The chain provides a superior-subordinate
relationship. Levels above in the chain are superiors while lower levels in the scalar chain are
subordinates. Scalar chain is useful in the delegation of authority down the chain. It is also
useful in maintaining effective communication between different layers of the organization.
6. Principle of Unity of Command: Unity of command means that there should be only one
source of authority for each subordinate. This also means: one subordinate-one boss.
The principle of unity of command is important for maintaining discipline and for fixing
responsibility for the result.
7. Principle of Balance: All the techniques and values of the organization must be
effectively balanced. Many issues have divergent focus in organization. These are: line vs.
staff; centralization vs. decentralization, unity of command vs. specialization, vertical
hierarchy vs. span of control, etc. Proper balance between these issues must be maintained.
8. Principle of Flexibility: Flexibility means adaptability to change. This is needed due to
uncertainty, scope for diversification and growth, new opportunity, and competitive forces in
the environment. Organization-design should have some in-built flexibility to withstand the
red-tapism, excessive control, complicated procedure, etc.

9. Principle of Delegation: Authority need to be delegated in the organisation. Delegation is

for empowering the subordinates to achieve results.
10. Principle of Efficiency: Organization structure should be useful in achieving the optimum
utilization of resources at least cost and least effort. Considering system view of the
organization (which is input-processing-output framework), the maximization of output and
minimization of inputs will improve the efficiency.
11. Principle of Continuity: Continuity means survival and existence despite turbulence in
market forces. Therefore, the organization must look at long-term goals rather than mere
profit-making and short-terms goals.

12. Principle of Cooperation: Cooperation means involvement as a team and solving the
functional goal of the organization as one unit. This can be achieved by evolving a proper code
of conduct, rule of business, conflict resolution mechanism and cooperation.
13. Principle of Coordination: There are many functions, such as marketing, finance, HRD,
etc., in an organization. Different groups have different priorities and local level objectives.
Proper coordination is needed to work in one direction and for achieving the overall (global)
corporate goals. Proper communication, meetings, news-letters, etc., are helpful to achieve
this.


14. Principle of Span of Control: Any superior can handle only limited numbers of subordines.
Narrow span of control is useful for complex jobs while wider span of control is useful for
routine type of jobs. By span of control, we mean how many subordinates a manager (or,
superior) can handle. The span of control may be determined on the basis of many criteria, such
as:
a) Capacity and the ability of superior
b) Capability and the skill of subordinate
c) Nature and importance of work to be supervised
d) Clarity of plans and responsibility
e) Level of de-centralisation, etc.
Graicunas defined three types of relationships between superior and subordinates:
(i) direct single relationship among all the subordinates
(ii) direct group relationship
(iii) cross-relationship.
These relationships increase dramatically as the number of subordinates increases. With 5
subordinates, it is 100 while with 6 it is 222. With 10 subordinates the total relationships are
5210 which are difficult to handle effectively (Table 38.1). Therefore, not more than six
subordinates are recommended for a common type of organization

ORGANISATION STRUCTURE
Organization structure is the system of job-positioning, role-assignments, authority-definition and
superior-subordinate relationship. It is the network of jobs roles and organizational relationship
for achieving the goals of the organization. The structure is generally, a pyramid structure in
which there are fewer positions as we move up in the high . In other words, the graphical
representation of the people working in the enterprise showing their lines of authority
responsibility and coordination is known as organization structure.
Organisation structure is so designed that at horizontal levels, different specializations of tasks
are separated. Vertical hierarchy is due to structure for control and maintenance of authority. It
also facilitates superior-subordinate relationship. The lateral relationship is for better coordination
among different functional groups (Figure 38.2).

ORGANISATION DESIGN
The organization's structure has basically two main objectives. First, it facilitates the flow of
information within the organization so as to reduce uncertainty in decision making. Therefore, the
first purpose of the organization design would be to facilitate the collection of information that
managers need for decision making. Second objective of organization design is to achieve,
effective coordination in an integrated way. The structure should integrate organizational
behaviour across the different parts of the organization so that it is effectively coordinated.
Organisational design is, thus, the allocation of resources and people to a specified mission or
purpose and the structuring of these resources to achieve the mission. It should fit in its
environment and should provide the information and coordination needed for the management of
resources.

Functional Approach
In this approach, different people are organized in such a way that they Work together in groups
to form departments. The focus is common skill and synchronized wok activities such as
marketing , engineering, maintenance, accounting, etc. This is the most commonly adopted form
of organization structure. In same aspects, it exists in most organisations. A key characteristic
organization is specialization by functional area (Figure 38.3).

TYPES OF ORGANIZATION STRUCTURE

The pattern of an organization structure may differ depending upon the specific requirements of
enterprise but there are -following four classical types of organization structures according to the
size and requirements of enterprise.
(1) Line Organization.
(2) Functional Organization.
(3) Line and Staff Organization.
(4) Line, Staff and committee Organization.

1. Line Organization
It is the oldest type of organization. It is simple too. It is generally known as the military type of
organization. In this type of organization, authority flows directly from the top may be General
Manager to the various executives (who are subordinate to G.M.) and from them to lower level
charge men or supervisors who in their own turn issue directions to workers. The superior has full
authority over his subordinates for their all activities as per the terms of contract between the
employees and the organization. In such system, immediate superior is the one who gives orders
to his subordinates, assign them jobs, hires and dismisses as well as takes disciplinary action.
The difference between this form and other forms of organization lies in the absence of
specialists -at various levels. A line form of organization structure for a manufacturing enterprise
is shown in Fig.
In the organization, the channel of communication and the line of authority & responsibility
is very clear and there is no problem of interference. In its simple form, it is to be found only in
very small enterprises having eight to ten employees . Basic point to be noted is that while
authority flows from higher to lower level, the line of responsibility moves upwards from a lower
to a high level.

Advantages:
1. It is simple and easy to understand by the members of the enterprise.
2. Quick decisions can be taken.
3. It provides a clear cut division of authority and responsibility.
4. Maintenance of discipline is easy.
5. Direct Flow of authority and responsibility is good feature of this type of organization which
in turn eliminates or minimizes confusion.
Limitations:
(i) This type of organization is not suitable for complex and large enterprises.
(ii) Executives become overloaded with too many duties.
(iii) Departmental heads are generally biased and independent authority given to them makes
them whimsical and to act according to their sweet desires.
(iv) Specialization cannot be practiced.
(v) Line type of organization cannot enjoy the blessings of the division of labour which is only
incidental.

2. Functional Organization
To rectify the weaknesses of line type of organization, F W Taylor suggested a functional
organization at the level of foreman. Functional organization as conceived by Taylor is a line
type of organization with a difference that foreman and the immediate supervisors are replaced
by eight categories of functional foreman, four of them are to be located in the shop floors and
four of them in the office but all having direct authority over the workers. Each of these
foreman have to be in charge of function i.e. an activity or a group of relaled activities.

This set up permitted the individual foreman, in-charge of each function to specialize in it or the
enterprise could employ specialists. The functional organization as advocated by Taylor is
shown in Fig.

Functional Foreman Duties are as follows:

1. In the Office:
(a) Work & Route Clerk: In-charge of routing and issuing work orders.
(b) Instruction Card Clerk: Responsible for issuing job specifications and related
instructions to workers.
(c) Shop Disciplinarian: Responsible for keeping personnel records and handling the cases
of indiscipline.
(d) Time and Cost Clerk: In charge of keeping time and cost records of worker's activities.
2. At the Shop floors:
(a) Gang Boss Foreman: In-charge of preparatory work till the job is loaded on the machine.
(b) Speed Boss Foreman: Ensures the supply of proper cutting tools and sees that optimum
cutting speeds, depth of cut and feed rates are used at right time.
(c) Repair Boss Foreman: Responsible for .repair and maintenance of equipment and m/C.
(d) Inspection Boss Foreman: Responsible for inspection and quality control of the products.
Advantages
.
Following are the advantages of functional organization
(1) Functional organization works on the basis of expert knowledge.
(2) It relieves the line executives of specialized decisions
(3) Quality of work .
(4) Expertise at various levels reduces the number of accidents and wastage of materials, man and
machine hours.
Limitations of Functional Organization
(1) There will the much expenditure in coordinating the efforts of various functional foreman.
(2) The inability to locate and fix responsibility may lead to indiscipline.

(3) Overlapping authority may create friction between various executives.

.

3.Line and Staff Organization

The line organization and functional organization gave evolution to third one as line and staff
organization, which has got good features of both these. With the growth of industry in size and
complexity, the line executives could not perform properly other functions such as advertising,
planning and marketing etc. This necessiated the use of functional executives to assist the line
executives. So basically, it is a form of line organization where some functional experts are
recruited at different levels.
In this way the advantages of specialization are utilized without inherent limitations of
functional organization. Thus line executives retain supreme authority and control over the
work of their subordinates where as the functional executives relieve them of certain specialized
work.
In this type of organization inspite of the presence of functional executives at various levels, the
line executives directly execute the work which may be related to production, sales and finance
whereas the staff executives advise and recommend. Thus the final decision whether to accept
or reject and then implement the recommendations of the functional executive remain in hands
of the line executives. Fig 8.3 shows line and staff type of organization.
Advantages of Line and Staff Organization
(1) it makes the provision for specialists at various levels.
(2) Load on already overloaded line executives is reduced.
(3) The authority of the executives over their subordinates practically remain same though the
activities of the line executives decrease.

(4) The confusion of functional or staff organization is avoided.

Limitation of Line and Staff Organization
(1) To some extent the prestige of the line executives suffers since their work is already planned
and many decisions are already made for them.
(2) Original initiative of line executives in thought and action is lost due to their dependence on
staff experts.
(3) The functional executives may be ineffective for the lack of authority to see its
recommendations being carried out.
(4) Product cost may increase because of high salaries of functional executives.

4.Line Staff and Committee Organization

The line staff and committee type of organization is generally seen in complex and large size
industrial enterprises. The theory behind the use of committees to supplement the line is that
pooling the thoughts of several experts on problems involving several functions shall give better
plans and policies for operation and result in better co-operation in their execution than if they
were determined by line executives alone.
Committees are supplementary to the line or line and staff type of organizational . Committee is
purely an advisory group setup to investigate operating difficulties which occur from time to time
and make required recommendations. In large scale enterprises or cooperative organizations
where multifaceted problems are too big for one individual to cope with, the use of committee is
highly desirable. Committees may be formal or informal in nature, they may be temporary or
permanent, advisory or managerial.