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Organisation structure and relationship

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Organisation structure and relationship

  2. 2. ABSTRACT To understand how an organisational structure is an interesting fundamental challenge in the area of organisationbehavior. In this report,we study about organisation, different types of structure of an organisation , representation of an organisation’s structure via organization charts and different types of organisational relationships. Organisational structureprovides a structure of (interlevel) relationships between these multiple sets of dynamicproperties. Thus organisational structure is reflected in formalisation of the dynamics of organisationalbehaviour. As an illustration,we have also added questionnaire depicting the organisational relationship and structure in ICICI bank. 2
  4. 4. Hierarchical organisational chart: 23 Matrix organisational chart 24 Flat or Horizontal 25 Line or Direct 26 Functional Organizational Chart 27 Line and Staff Organizational Chart 28 Committee Organizational Chart 28 DEPARTMENTATION 30 Common Bases For Departmentation 30 Need and importance of departmentation 31 PATTERNS OF DEPARTMENTATION Functional Departmentation: 33 Products Territories Customers Process or Equipment Departmentation Time Departmentation Composite or Combined Departmentation Departmentation 32 SPAN OF MANAGEMENT 34 35 36 37 38 38 39 Theoretical considerations 41 Factors determining the span of management: 42 FUTURE ORGANISATION 43 ORGANIZATIONAL RELATIONSHIPS 45 LINE ORGANIZATION:- 45 STAFF ORGANIZATION:- 48 4
  6. 6. ORGANISATION-DEFINITIONS An organisation is a social entity that has a collective goal and is linked to an external environment. The word is derived from the Greek word organon, which is derived from the better-known word ergon which means "organ" – a compartment for a particular task.According to Mooney and Reily, "Organisation is the form of every human association for the attainment of a common purpose." Organisation is related with developing a frame work where the total work is divided into manageable components in order to facilitate the achievement of objectives or goals.An organization is defined by the elements that are part of it (who belongs to the organization and who does not), its communication (which elements communicate and how do they communicate), its autonomy (the changes that are executed autonomously by the organization or its elements), and its rules of action compared to outside events (the factors that cause an organization to act as a collective actor). By coordinated and planned cooperation of these elements, the organization is able to solve tasks that lie beyond the abilities of the individual elements. The price paid by the elements is the limitation of the degrees of freedom of the same. Advantages of organizations are enhancement (more of the same features), addition (combination of different features) and extension. The disadvantages could be inertness (through co-ordination) and the loss of interaction. In the social sciences, organizations are the object of analysis for a number of disciplines, such as sociology, economics, political science, psychology, management, and organizational communication. The broader analysis of organizations is commonly referred to as organizational structure, organizational studies, organizational behaviour, or organizational analysis. Every discipline derives its own meaning of organisation.In the social and political sciences in general, an "organization" may be more loosely understood as the planned, coordinated and purposeful action of human beings working through collective action to reach a common goal or construct a tangible product. This action is usually framed by formal membership and form i.e. institutional rules. Sociology distinguishes the term organization into planned formal and unplanned informal i.e. spontaneously formed organizations. Sociology analyses organizations in the first line from an institutional perspective. In this sense, organization is a permanent arrangement of elements. These elements and their actions are determined by rules so that a certain task can be fulfilled through a system of coordinated division of labour. From an institutional perspective, an organization is viewed as a purposeful structure within a social context. Economic approaches to organizations take the division of labour as the starting point. The division of labour allows for economies of specialization. Increasing specialization necessitates coordination. From an economic point of view, markets and organizations are alternative coordination mechanisms for the execution of transactions. 6
  7. 7. Like 'management', the term 'organisation' has also been used in a number of ways. Broadly speaking, the term 'organisation' is used in four different senses: as a process, as a structure of relationship, as a group of persons and as a system, as given below: Organisation as a Process: In this first category, organisation is treated as a dynamic process and a managerial activity which is essential for planning the utilization of the company's resources, plant and equipment, money and people to accomplish the various objectives. Organisation as a Framework of Relationship: In the second category, organisation refers to the structure of relationships and the positions or jobs which are created to attain certain objectives. The definitions of Henry, Urwick, Farland, Northcourt, Lansburgh and Spriegel Breach, Davis, Mooney and Reily etc., come under this group. Organisation as a Group of persons: Under this an organisation is very often viewed as a group of people contributing their efforts towards certain goals. An organisation begins when people combine their efforts for some common purpose. It is a universal truth that an individual is unable to fully utilise all resources by himself. According to Chester I. Barnard, "Organisation is a system of co-operative activities of two or more persons." Organisation as a System: In the fourth category, the organisation is viewed as a system. System concepts recognize that organizations are made up of components each of which has unique properties, capabilities and mutual relationships. The constituent elements of a system are linked together in such complex ways that actions taken by one producer have far reaching effect on others. Thus an organisation is defined in a variety of ways which depends on the scholar defining it and the discipline for which it is being defined. There are some features however that remains constant in all these definitions. Some of these are the objective of an organisation, assignment of duties and creating an authority relationship. It is the existence of these features that make the study of organisations imperative. 7
  8. 8. ADVANTAGES OF ORGANISATION The well-known industrialist of U.S.A. late Andrew Carnegie, showed his confidence in organisation by uttering the following words, "Take away our factories, take away our trade, our avenues of transportation, our money, leave nothing but our organisation, and in four years, we shall re-established ourselves." Since ages and in every walk of life, organisation has been playing a vital role. The significance or main advantages of organisation are as follows: Facilitates Administration and management: Organisation is an important and the only tool to achieve enterprise goals set by administration and explained by management.A sound organisation increases efficiency, avoids delay and duplication of work, increases managerial efficiency, increases promptness, motivates employees to perform their responsibility. Helps in the Growth of Enterprise: Good organisation is helpful to the growth, expansion and diversifications of the enterprise. Ensures Optimum Use of Human Resources:Good organisation endows people with different interests, skills, knowledge and viewpoints. Stimulates Creativity: A sound and well-conceived organisation structure is the source of creative thinking and initiation of new ideas. Tool for Achieving Objectives: Organisation is a vital tool in the hands of the management for achieving set objectives of the business enterprise. Prevents Corruption: Usually corruption exists in those enterprises which lack sound organisation. Sound organization prevents corruption by raising the morale of employees. They are motivated to work with greater efficiency, honesty and devotion. Co-ordination in Enterprises: Different jobs and positions are welded together by structural relationship of the organisation. The organizational process exerts its due and balanced emphasis on the co-ordination of various activities. Eliminates Overlapping and Duplication or work: Over lapping and duplication of work exists when the work distribution is not clearly identified and the work is performed in a haphazard and disorganized way. Since a good organisation demands that the duties be clearly assigned amongst workers, such overlapping and duplication is totally eliminated. 8
  9. 9. CLASSICAL THEORY OF ORGANISATION The classical theory of organization has withheld the test of many upheavals in the changes that have accrued in the management of organizations. The modern organizations in the private as well as in the public sector are facing an environment which does not seem to be conducive to their structure that is based on the principles of the classical theory of organizations. The classical school of organization pursued the development of universal principles that would apply to all organizations in all situations. The classical theorists conceived of organizations as mechanical devices to achieve an organization's goals and objectives. The era of classical theory of organization covers the period from 1900's to mid1930s.It is during this period that the classical theories of organization began to emerge. The important pioneers among them are F.W. Taylor, Henri Fayol, Max Weber, and Mary Parker Follett. The classical theory is based on the following three assumptions: 1. The relationship between employees and management is defined by means of a formal structured communication process, defined tasks and accountability and formalized procedures and practices to avoid any conflict in their relationship. 2. Workers have been assumed to be in the form of an “economic man” who can be motivated by means of money only. 3. The third assumption is that workers have been considered to be a factor of production or as a cog in the wheel. The classical theories of organization were structured by the scholars with certain objectives in mind. Henry Fayol, a French engineer-cum-manager in Europe who is generally considered to be the founder and father of the classical school of organization initiated the administrative theory of management. He analysed the process of management in terms of the technical ability which is more pronounced in the lower and middle levels of management whereas managerial ability is more important in the higher levels of management. He considered sound management practices to be a cohesive doctrine of management, one that retains its utility even in the present theoretical frameworks of organization. Fayol insisted that management should be considered as a skill like any other one that could be taught once its underlying principles were understood. In 1916, Fayol in his world renowned book "General and Industrial Management described a number of management/organization principles with can be analysed in terms of (i) human relations, (ii) production efficiency, and (iii) administration. These three principles again can be divided into fourteen principles of organization. 9
  10. 10. CRITICALEVALUATION OF THE CLASSICAL THEORY OF ORGANISATION Classical theorists view organization as a closed system influenced only by certain immutable laws in its design and management. For the most part, people have not been considered important elements of production but rather a cog in the whole process of production and management. Thus it suffers from superficiality, over simplification and lack of realism. Its scholars have confined themselves closely to the mechanism of authority, whether real or ideal, and have failed to address other equally important factors affecting the performance of the organization. It has been observed, that there are several characteristics which may impede rather than aid the achievement of efficiency. Excessive hierarchy, over-developed specialization, promotion by seniority, and rigid adherence to rules could cause “bureau-pathological behaviour one of the fundamental problems with the classical theory of organization is that it does talk of a certain aspect of human behaviour but the importance given to it is almost negligible. The criticism by the behaviourists was that that the classical pioneers totally ignored the behavioural dimension of organization and oversimplified the mechanistic assumption for the smooth running of organizations, ignoring all the complexities of human behaviour at work i.e. the social, psychological, and motivational aspect of human behaviour. Thus the focus of classical theory is on "organization without people". It has been said that specialization, as visualized by Max Weber, creates sub unit conflicts. Functional sub unit goals can override the goals of the organization. The other major weakness is obsessive concern over following rules. The specialization of labour often inhibits effective communication among technical workers and specialists. In addition the rules, regulations, and procedures generally encourage managers to act mechanically rather than exercising discretion and taking initiative in making decisions. This often results in resistance to change and innovation. Taylor's principles are basically confined to production management. He ignored certain essential aspects of management like finance, accounting, marketing, consumer behaviour, which are an integral part of business management. Scientific management firmly believes in economic incentives and sanctions as a means to improving productivity. However concepts like job satisfaction, participative management, and the job itself have become important elements in increasing productivity. However the Classical theory still plays an important role in organisational theory and the reasons for that would be explained subsequently. 10
  11. 11. RELEVANCE The benefits of the classical theory of organisations are given as follows: Hierarchical Structure One of the advantages of the classical management structure is a clear organizational hierarchy with three distinct management levels. Each management group has its own objectives and responsibilities. The top management is usually the board of directors or the chief executives who are responsible for the long-term goals of the organization. Middle management oversees the supervisors, setting department goals according to the approved budget. At the lowest level are the supervisors who oversee day-to-day activities, address employee issues and provide employee training. The levels of leadership and responsibilities are clear and well defined. While the three-level structure may not be suitable for all small businesses, it can benefit those that are expanding. Division of Labour One of the advantages of the classical management approach is the division of labour. Projects are broken down into smaller tasks that are easy to complete. Employees' responsibilities and expectations are clearly defined. This approach allows workers to narrow their field of expertise and to specialize in one area. The division of labour approach leads to increased productivity and higher efficiency, as workers are not expected to multitask. Small-businesses owners can benefit from taking this approach if they are looking to increase production with minimal expense. Monetary Incentive According to classical management theory, employees should be motivated by monetary rewards. In other words, they will work harder and become more productive if they have an incentive to look forward to. This gives management easier control over the workforce. Employees feel appreciated when being rewarded for hard work. A small-business owner can take this approach to motivate the employees to achieve production goals. Autocratic Leadership The autocratic leadership approach is the central part of classical management theory. It states that an organization should have a single leader to make decisions, to organize and direct the employees. All decisions are made at the top level and communicated down. The autocratic leadership approach is beneficial in instances when small-business decisions need to be made quickly by a leader, without having to consult with a large group of people, such a board of directors. Small businesses, especially sole proprietorships, can have an advantage in taking this approach, as they need a strong leader to grow. 11
  12. 12. NEO-CLASSICAL THEORY OF ORGANISATION Previous theoretical models had made considerable efforts to ensure that the employee would enhance the output of the organisation. With the introduction of the human relations movement by Elton Mayo in 1933, focus was shifted to the study of the individual in the organization. The human relations movement focused on social factors, such as treatment by management and relationships among colleagues, and not economic factors, as the driving force behind human behaviour in an organization. Mayo based much of his work on the results of the famous Hawthorne studies of 1927. The Hawthorne research team worked to determine the ideal conditions to bring productivity to capacity level. This end was approached through series of trials in which the level of lighting in the factory work area was adjusted. The research collected during these studies suggested that the attention of the research team, the relationships of the employees, and employee motivation, rather than an ideal work condition (e.g., lighting, comfort, temperature), altered the observed level of work performance (Roethlisberger and Dickson 1939).McGregor's work was also one of the seminal contributions to understanding the role of psychological variables in the effective functioning and design of an organization. McGregor argued that the classical view of human nature as lazy and unambitious, contradicted actual human nature, which is such that individuals seek out responsibility and have an innate desire to achieve success. McGregor's Theory is indicative of the neoclassical approach to organizational design and management. It encourages managers to place decision-making capabilities with their subordinates, empowering them to become personally involved in the organization's goals by increasing their participation level (McGregor1960). This idea of decentralizing authority within the organizational structure is the key contribution of the neoclassical approach, which emphasizes employee satisfaction as integral to the organization's success. The neoclassical organizational theorists of the early to mid- 19th century protested classical organizational theory without really offering solutions. They could see that current theory wasn’t working and sounded the alarm. In 1946, Herbert Simon launched an all-out attack on classical principles of management published by Fayol, Gulick and others. Simon asserted that the so-called principles of management were more like proverbs, which could be applied with equal validity to opposite circumstances. Specialization, for example, can cause as many, or more, problems in an organization as it solves. Two years later, Peter Selznick published his article, Foundations of the Theory of Organization in the American Sociological Review. Selznick approaches the organization from the viewpoint of a sociologist, rather than a management or business specialist, asserting that an organization probably would not behave the way it ought, because it is composed of people with motivations and goals that not necessarily aligned with those of the organization. He also says that an organization can be looked at either as an economy, or an adaptive social structure. To look at the organization as an economy is scientific and measurable, while an adaptive social structure leans toward the non-exact 12
  13. 13. behaviouralsciences. Because of the type of thinking that had dominated science for the previous several hundred years, it was thought that the laws governing behaviour could be measured and known, in the same the way we had come to know the laws of gravity and energy. Selznick proposes that to maintain a system, these imperatives can be applied: 1. The security of the organization as a whole in relation social forces in its environment. How the people within and outside the system get along with each other and what effect that has on the system. 2. The stability of the lines of authority and communication. How much control the leaders have over the ranks. 3. The stability of informal relations within the organization. How well people get along within the organization and how that can be used to control them. 4. The continuity of policy and the source of its determination. Arbitrary or unpredictable changes in policy undermine the stability of the organization. 5. Homogeneity of outlook with respect to the meaning and role of the organization. “If you’re not with us, you’re against us”. The three major ideas in Selznick’s theory of organization are; organizations as cooperative, adaptive social systems; the conflict of personal and organizational goals and needs; and controlling conflict for the good of the organization. He was also the first to talk about cooptation, which is a method of protecting the organization and its mission by inviting threatening elements into the policy making process. While the neo-classicists shook the foundation of organizational theory, they pointed out its shortcomings without offering solutions. These theorists were the first to consider people within an organization as autonomous beings outside governable scientific laws. The reality that behavioural science might be considered an oxymoron was dawning on these neoclassicist theorists. It was possible that men might have different motives and values than those held by the organization, and the conflict of those must be addressed. The classical theorists could predict how a system ought to behave, and under certain economical and societal conditions it did behave that way. As the standard of living went up and America experienced peace, or at least national security, men and women became less controllable aspects of the organization. The work force was growing with the addition of women and minorities. Unions were gaining power as they protected the rights of workers. Einstein and Heisenburg destroyed the idea that we could know anything for certain. The very fact that we observe a system might cause it to behave differently. While they didn’tseem to have the answers yet, Simon, Selznick, and their contemporaries laid the foundation for current organizational theory to build on. 13
  14. 14. MODERN THEORY OF ORGANISATION Traditional theories regarded organizations as closed systems that were autonomous and isolated from the outside world. In the 1960s, however, more holistic and humanistic ideologies emerged. Recognizing that traditional theory had failed to take into account many environmental influences that impacted the efficiency of organizations, most theorists and researchers embraced an open-systems view of organizations.This is also known as the Open Systems Theory. The term "open systems" reflected the newfound belief that all organizations are unique— in part because of the unique environment in which they operate—and that they should be structured to accommodate unique problems and opportunities. For example, research during the 1960s indicated that traditional bureaucratic organizations generally failed to succeed in environments where technologies or markets were rapidly changing. They also failed to realize the importance of regional cultural influences in motivating workers. Environmental influences that affect open systems can be described as either specific or general. The specific environment refers to the network of suppliers, distributors, government agencies, and competitors with which a business enterprise interacts. The general environment encompasses four influences that emanate from the geographic area in which the organization operates. These are: Cultural values, which shape views about ethics and determine the relative importance of various issues. Economic conditions,which include economic upswings, recessions, regional unemployment, and many other regional factors that affect a company's ability to grow &prosper. Economic influences also partially dictate organization's role in the economy. Legal/political environment, which effectively helps to allocate power within a society and to enforce laws. The legal and political systems in which an open system operates can play a key role in determining the long-term stability and security of the organization's future. These systems are responsible for creating a fertile environment for the business community, but they are also responsible for ensuring—via regulations pertaining to operation and taxation—that the needs of the larger community are addressed. Quality of education, which is an important factor in high technology and other industries that require an educated work force. Businesses will be better able to fill such positions if they operate in geographic regions that feature a strong education system. 14
  15. 15. The open-systems theory also assumes that all large organizations are comprised of multiple subsystems, each of which receives inputs from other subsystems and turns them into outputs for use by other subsystems. The subsystems are not necessarily represented by departments in an organization, but might instead resemble patterns of activity. 15
  16. 16. ORGANISATIONAL STRUCTURE An organizational structure consists of activities such as task allocation, coordination and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective through which individuals see their organization and its environment. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. Organizations are a variant of clustered entities .An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs. Organizational structure affects organizational action in two big ways. First, it provides the foundation on which standard operating procedures and routines rest. Second, it determines which individuals get to participate in which decision-making processes, and thus to what extent their views shape the organization’s actions. Organizational structures developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today's post-industrial structures.As pointed out by Mohr (1982), the early theorists of organizational structure, Taylor, Fayol, and Weber "saw the importance of structure for effectiveness and efficiency and assumed without the slightest question that whatever structure was needed, people could fashion accordingly. Organizational structure was considered a matter of choice... When in the 1930s, the rebellion began that came to be known as human relations theory, there was still not a denial of the idea of structure as an artefact , but rather an advocacy of the creation of a different sort of structure, one in which the needs, knowledge, and opinions of employees might be given greater recognition." In the 21st century, organizational theorists such as Lim, Griffiths, and Sambrook (2010) are once again proposing that organizational structure development is very much dependent on the expression of the strategies and behaviour of the management and the workers as constrained by the power distribution between them, and influenced by their environment and the outcome. The structure defined how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management.A structure depends on the organization's objectives and strategy. In a centralized structure, the top layer of management has most of the decision making power and has tight control over departments and divisions. In a decentralized structure, the decision making power is distributed and the departments and divisions may have different degrees of independence. A company such as Proctor & Gamble that sells multiple products may organize their structure so that groups are divided according to each product and depending on geographical area as well. 16
  17. 17. PRINCIPLES OF FORMAL ORGANISATION The basic principles of a formal organisation are as follows: 1. Unity of objective-An organisation structure is sound when it facilitates the accomplishment of objectives. Therefore, the organisation as a whole and every part of it must be geared to the basic objectives of the enterprise. 2. Specialisation or division of work-The activities of every member of the organisation should be confined, as far as possible, to the performance of a single function. 3. Span of control-Every manager should have a limited number of sub ordinates reporting to him directly. Generally, the span should be narrow for complex work and wide for simple and routine work. Span should be neither too wide nor too narrow. 4. Scalar principle-There should be a clear chain of command extending from top to the bottom of the organisation. Every subordinate should know who his superior is and who his subordinates are. 5. Functional definition-The duties (functions), authority and responsibility of every position should be clearly defined so as to avoid duplication of work and overlapping of functions. 6. Exception principle-Only exceptional matters which are beyond the authority of lower level persons should be referred to higher levels. Routine matters should be dealt with by executives at lower levels. This is also known as Authority Level principle. 7. Unity of command-Each subordinate should have only one superior whose command he has to obey. This is necessary to ensure discipline and to fix responsibility for results. 8. Balance-A proper balance between centralisation and decentralisation should be kept. Each function in the organisation should be developed to the point at which the value received is at least equal to costs. 9. Efficiency-The organisation structure should facilitate the achievements of objectives at minimum possible cost. It should permit the optimum use of resources. 10. Flexibility-The organisation structure should be adaptable enough to accommodate technical and other changes in the environment. Therefore, complicated procedures, red tape and complexity of control should be avoided. At the same time, the organisation structure should be reasonably stable so as to withstand changes. 11. Continuity-Proper arrangements should be made for the training and development of executives. 17
  18. 18. 12. Facilitation of leadership-Organisation structure should be so devised that there is enough opportunity for the management to give effective leadership to the enterprise. 13.Parity of authority and responsibility-In every position, the authority and responsibility should correspond. Adequate authority should be delegated to all levels and wherever authority is delegated the person should be held responsible. 14.Coordination-The organisation structure should facilitate unity of effort and coordination among different individuals and groups. Channels of communication should be open and clear. Thus these are the pillars on which a formal organisation is built. 18
  19. 19. METHODS TO FIND OUT WHAT STRUCTURE IS NEEDED Peter F. Drucker suggested three ways of discovering the kind of structure needed to attain objectives of business Activities analysis Decision analysis Relations analysis Activities analysisIt is necessary to find out what activities are needed to attain the objectivesof the enterprise before an organization structure is devised for it. The activities may be identified and listed in their order of importance. Then the whole work is to be divided and sub-divided into smaller homogenous and manageable units for assignment to persons working in the organization. This process leads to standardization, division of labour and specialization. Decision analysisThe decision analysis is another method to find out what structure is needed. This involves two steps. They are 1. To identify major decisions which are needed to obtain the performance necessary to attain the business objectives; and 2. To classify the decisions according to type and character. The decision-making powers are entrusted to various people in the organization. The authority of decision-making may be spread out so much that all units are almost independent of each other. Relations analysisThe relations analysis tells us the formal relationship of a manager with his superiors, subordinates and other managers of equal rank. Thus, relationships have to be studied from three angles- upward downward and sideways. 19
  20. 20. ORGANISATIONAL CHART Organisation structure of a company can be shown in a chart. Such chart indicates how different departments are interlinked on the basis of authority and responsibility. It is a simple diagrammatic method of describing an organisation structure. It indicates how the departments are linked together on the basis of authority and responsibility. Such organisation chart provides information of the organisation structure at a glance. Organisation chart is like a blue print of a building. It indicates the number and types of departments, superior-subordinate relationship, chain of command and communication. Definition of Organisation Chart According to George Terry, Organisation chart is "a diagrammatical form which shows important aspects of an Organisation, including the major functions and their respective relationships, the channels of supervision and the relative authority of each employee who is in-charge of each respective function". 20
  21. 21. Features of Organisation Chart 1. 2. 3. 4. 5. Organisation chart is a diagrammatical presentation. It represents the formal Organisation structure. It shows the lines of authority in the Organisation. It indicates the channel of communication. It indicates who supervises whom and how various units are inter-related. Advantages of Organisational Chart 1. Brings clarity to the Organisation: The very process of preparing a chart makes the executive think more clearly about the Organisation relationships. 2. Provides dear picture of the Organisation: Once the charts are prepared, they provide lot of information about the Organisation, both to the members of the Organisation as well as to the outsiders. This information relates to number and types of departments, superior subordinate relationships, chain of command and communication and job titles of each employee. 3. Facilitates training of employees: Organisation charts are useful in familiarizing and training new employees. 4. Ensures organizational changes: Organisation charts provide a starting point for planning organizational changes after having discovered the weaknesses of the existing structure. 5. Provides quick understanding: A chart serves as a better method of visualizing an Organisation than a lengthy written description of it. Limitations of Organisational Chart 1. Details are not provided: The Organisation chart does not provide all the details of Organisation structure created. For example, the chart will show the line of authority but not the extent of authority. 2. Informal relationship is not shown:The chart fails to give details of informal relationship available in a firm. In fact, human relationships cannot be shown on a chart. 3. Updated position is not available:The chart shows the position of Organisation structure when it was formed. It gives a static picture of the Organisation. Changes made thereafter may not be available in such charts. 4. Fosters buck-passing:The charts tend to foster 'buck-passing' and emphasize only formal channels of communication. 5. Lacks flexibility:Organisation chart lacks an element of flexibility. Such chart also brings an element of rigidity in the working of an Organisation. 6. Creates rank consciousness:An Organisation chart leads to rank consciousness among the staff. It destroys team spirit and collective approach on the part of the staff. 21
  22. 22. TYPES OF ORGANISATION CHART 1. Divisional organizational chart marks off the organizational structure according to the specific demands of products, markets or customers in their specific business environment. Therefore, each division often has all the necessary resources and functions within it to satisfy the demands based on the working of an organization.You can divide the organizational chart by product line, geographic area or marketing area. Staffs with similar skills are placed in different divisions. 22
  23. 23. 2. Hierarchical: In Hierarchical organization chart the organization is divided in to different levels where the line of command follows downwards from the top level to the bottom or the lower level.The hierarchical organizations charts work best in stable environments that do not require rapid change of strategy or in organizations that provide multiple services or products. A hierarchy is typically visualized as a pyramid, where the height of the ranking or person depicts their power status and the width of that level represents how many people or business divisions are at that level relative to the whole—the highestranking people are at the apex, and there are very few of them; the base may include thousands of people who have no subordinates). These hierarchies are typically depicted with a tree or trianglediagram, creating an organizational chart or organigram. Those nearest the top have more power than those nearest the bottom, and there being fewer people at the top then at the bottom. As a result, superiors in a hierarchy generally have higher status and command greater rewards than their subordinates. Members of hierarchical organizational structures chiefly communicate with their immediate superior and with their immediate subordinates. Structuring organizations in this way is useful partly because it can reduce the communication overhead by limiting information flow; this is also its major limitation 23
  24. 24. 3. Matrix organisational chart is a popular organizational chart that defines more complex structures to emphasis efficiency, creativity and innovation. It uses to describe the areas of communication on a matrix-shaped chart for smaller companies. A matrix structure involves no set divisions or departments. It focus on hierarchy with multiple levels of communication responsibilities in a company. Employees may develop their own projects and assemble a team to work on them. Or the company may be organized around customers, with different groups assigned to different customers. Matrix organizational chart is more complex than traditional organizational charts such as functional organizational chart, divisional organizational chart and hierarchical organizational chart. However, the matrix organizational structure allows for better understanding of organization structure where various levels may answer to more than one department master. In organizations where there are multiple departments that share authoritative responsibilities, a matrix organizational chart is the most effective way to present 24
  25. 25. 4. Flat or Horizontal: In Flat organizational chart there are few or no levels. It may consist of only managers and the workers and this type of organizational charts are possible only in small or individual unit organizations. The flat organization model promotes employee involvement through a decentralized decision-making process. By elevating the level of responsibility of baseline employees and eliminating layers of middle management, comments and feedback reach all personnel involved in decisions more quickly. Expected response to customer feedback becomes more rapid. Since the interaction between workers is more frequent, this organizational structure generally depends upon a much more personal relationship between workers and managers. Hence the structure can be more time-consuming to build than a traditional hierarchical model. 25
  26. 26. The chart also shows relationships between staff in the organization which can be: Line - direct relationship between superior and subordinate. Lateral - relationship between different departments on the same hierarchical level. Staff - relationship between a managerial assistant and other areas. The assistant will be able to offer advice to a line manager. However, they have no authority over the line manager actions. Functional - relationships between specialist positions and other areas. The specialist will normally have authority to insist that a line manager implements any of their instructions. Line or Direct The line organizational chart depicts a straight line of command. Authority is said to flow downwards onlyin the line organization. The line organizational structure is found in schools or in the military. 26
  27. 27. Functional Organizational Chart The Functional organization chart is a diagram of an organization that is arranged by its functions. For example, there is a manager in charge of marketing, and another in charge of production. This type of organization has an advantage over the Line as experts are appointed to run each department. All managers report to the General Manager. The Functional organizational chart combines the straight line of command of the line organization with horizontal dotted diagonal lines representing functional authority. The dotted diagonal lines in the figure above show the authority that the Human Resource Manager has over other departments. The Human Resource Manager is allowed authority in these department over human resource matters only e.g. to hire and fire workers. He therefore cannot give directives on production or marketing matters. 27
  28. 28. Line and Staff Organizational Chart The Line and Staff organizational chart combines the line and functional organization with the addition of staff personnel. Staff workers assist and advise line workers. Staff workers include consultants, advisors, company lawyers, executive secretary, auxiliary workers etc. Staff officers do not have authority, that is, the power to delegate tasks to subordinates in the organization. Their main role is to advise and assist line officers. This is why there are no vertical lines connecting staff officers to any other member of staff on the chart. They are therefore, placed at the side directly below the line officer whom they assist or advise. Committee Organizational Chart Committees are advisory bodies. They are usually appointed to advise organizations. Examples of committees include; parent teachers associations and student councils which are committees within a school organization. Committees usually delegate certain duties to sub-committees. For example, an executive committee may appoint a finance committee to advise it on financial matters. Note that an element of the line organization exists in the committee organization as all sub-committees are responsible to the executive committee. 28
  29. 29. Uses of Organisation Chart 1. An Organisation chart facilitates ready reference. It enables the management to find out different positions of authority and their relationships in the Organisation structure. 2. It provides proper guidance to managers in executing, their assignments and helps them to avoid overlapping and duplication of work. 3. It provides complete information to understand the character of an Organisation. 4. An Organisation chart indicates ways to better utilisation of available manpower. 5. An organisation chart points out the consistencies and deficiencies of an Organisation and enables the management to correct them. There are several limitations of organizational charts: If updated manually, organizational charts can very quickly become out-of-date, especially in large organizations that change their staff regularly. They only show 'formal relationships' and tell nothing of the pattern of human (social) relationships which develop. They also often do not show horizontal relationships. They provide little information about the managerial style adopted (e.g. 'autocratic', 'democratic' or an intermediate style) In some cases, an organigraph may be more appropriate, particularly if one wants to show non-linear, non-hierarchical relationships in an organization. It often does not include customers. 29
  30. 30. DEPARTMENTATION The process of grouping of activities into units for the purpose of administration is called departmentation. It can be defined "as the process by which activities or functions of enterprise are grouped homogeneously into different groups."The administrative units are called divisions, units or departments. Common Bases ForDepartmentation What organizations actually do is group people in a way that relates to the task they perform. This still leaves a lot of possibilities. Here are six common bases for departmentation: 1. Knowledge and Skill. People are grouped by what they know. For example, hospitals have departments like Neurology, Allergy, Cardiology, Internal Medicine, GastroEnterology, etc. 2. Work Process. Workers are grouped based on the process or activity used by the worker.For example, a manufacturing company may create separate casting, welding and machining groups. Often, it is the underlying technology that determines the departmentation. For example, a print shop may have separate letterpress and offset departments-two different processes for getting the same outputs. 3. Business Function. Grouping by the basic function in the organization: purchase supplies, raise capital, generate research, etc. This leads to the familiar departments of manufacturing, marketing, engineering, finance, and so on. 4. Time. When work is done. For example, shifts in a factory or hospital or hotel. 5. Output. Grouping based on the products or services that the employee works on. For example,a manufacturer may have different divisions for each of its product lines. 6. Client. Grouping based on the type of clients their work is ultimately sold to. For example, computer companies often have different sales departments for home, small business, educational, government and large business customers. 7. Place. Groups are based on the geographical areas that they serve. For example, during WW2, the US War Dept. was organized into 7 "theatres" corresponding to regions of the world where the US was fighting. Similarly, Post Offices are often divided by regions and zipcodes. There are, however, two approaches to departmentation- top down and bottom-up approaches.In the top-down approach, activities are divided step by step downward form the chief executive's job to the operating jobs. In the bottom-up approach, the division of activities is carried on in a reverse order.Starting form operating jobs, there arise sections form combining some correlated jobs, departments from combining some sections and finally the chief executive position form putting departments together. While the top-down approach gives emphasis on co-ordination and managerial action, the bottom-up approach gives emphasis on co-ordination and managerial action, the bottom-up approach focuses attention on employee performance. Although the top-down approach is easy for understanding the departmentation process, both the approaches are utilized in actual practice. 30
  31. 31. Need and importance of departmentation The basic purpose of departmentation is to make the size of each departmental unit manage-able and to secure advantages of specialisation. Departmentation is necessary on account of the following reasons: 1. Specialization: Departmentation enables an organisation to avail of the benefits of specialization. When every department looks after one major function, expertise is developedand efficiency of operations increases. 2. Expansion: One manager can supervise and direct only a few subordinates. Grouping of activities and personnel into departments makes it possible for the enterprise to expand andgrow. If there is no departmentation, the size of the organisation will be restricted to a manager’sspan of control. 3. Autonomy: Departmentation results in the division of the enterprise into semiautonomous units. In these units, every manager is given adequate freedom. The feeling of autonomyprovides job satisfaction and motivation which in turn lead to higher efficiency of operations. 4. Fixation of responsibility: Departmentation enables each person to know the specificpart he is to play in the total organisation. It provides a basis for building up loyalty and commitment. The responsibility for results can be defined more precisely and an individual can beheld accountable for performance. 5. Appraisal: Appraisal of managerial performance becomes easier when specific tasks areassigned to departmental personnel. The sources of information, the skills and competencerequired for total managerial decisions can be located. 6. Management development: Departmentation facilitates communication, coordinationand control. It simplifies the training and development of executives by providing them opportunity to take independent decisions and to exercise initiative. 7. Administrative control: Departmentation is a means of dividing the large and complexorganisation into small and flexible administrative units. Grouping of activities and personnelinto manageable units facilitates administrative control. Standards of performance for eachand every department can be precisely determined. Excessive departmentation may result inseveral organisational problems such as erosion of the line of command, multiple accountability, dysfunctional conflicts and difficulty of co-ordination and control 31
  32. 32. PATTERNS OF DEPARTMENTATION After the work to be completed is organized into identifiable jobs through a process of dividing labor, jobs are then combined into logical sections or departments. Doing so allows for effective coordination of effort. There are many ways to departmentalize, each of which has important advantages and disadvantages. One of the most common forms is functional departmentalization, which involves grouping similar jobs into a common department, such as accounting, sales, human resources, and engineering. Another form is product departmentalization, which involves organizing around an enterprise's various product lines. Other ways of departmentalizing include organizing by customer and by geographic territory. In practice, most large companies use a hybrid form of departmentalization, which means they combine one or more of the above methods to form their organizational structure. 32
  33. 33. 1. Functional Departmentation: - This is the simplest form of departmentation when grouping of departments is done on the basis of functions such as production finance marketing sales purchase and personnel etc, it is known as functional departmentation. Further sub divisions of the functions may be formed like marketing can be divided in to advertisement sales and after sales service. So we can classify functions into two parts: Basic functions i.e. Production,Marketing ,Finance and Personnel. Secondary Functions: - These are further parts of basic functions according to the organizational needs or operations like Production: - Product planning, R&D, Quality control and material handling. Functional departmentation is useful where there is production of single product or similar kind of product, for example TV Computer monitor or TFT. Advantages: Advantage of specialization Easy control over functions Pinpointing training needs of manager It is very simple process of grouping activities. Disadvantages Lack of responsibility for the end result Overspecialization or lack of general management It leads to increase conflicts and coordination problems among departments. 33
  34. 34. 2. Products: - When grouping of activities and departments formed are given name on the basis of products manufactured in an organization, it is called products departmentation. It is applied where there is a large range of products are manufactured. When there are several product lines and each product line consists of a variety of items, functional classification fails to give balanced emphasis on each product. Apart form this use; product or services may be made the basis of major divisions by a departmental store, a banking concern and an insurance company. Again, manufacturing an marketing departments may subdivide their activities on the basis of products. Advantages It ensures better customer service Unprofitable products may be easily determined It assists in development of all around managerial talent Makes control effective It is flexible and new product line can be added easily. Disadvantages It is expensive as duplication of service functions occurs in various product divisions Customers and dealers have to deal with different persons for complaint and information of different products. 34
  35. 35. 3. Territories: - Like the products basis, geographical regions are adopted for main division as well as for subdivision purposes. When activities of an organization are physically dispersed in different locations territorial departmentation is adopted. Units that are located at different areas are made so many self-contained divisions of the organization. Marketing activities are very often subdivided on the basis of geographical areas. This form of departmentation can be useful where business is on national or international level. For eg. Indian railways, insurance company use territorial departmentation. Advantages Help to cater to the needs of local people more satisfactorily. It facilitates effective control Assists in development of all-round managerial skills Disadvantages Communication problem between head office and regional office due to lack of means of communication at some location Coordination between various divisions may become difficult. Distance between policy framers and executors It leads to duplication of activities which may cost higher. 35
  36. 36. 4. Customers: - When departments are formed to cater different kind of customers it is known as customer departmentationthis basis of classification is widely followed in subdividing activities of the marketing department. When the products are offered to market through various channels and outlets, it has the special merit of supplying goods in accordance with the peculiar needs of customers. Customers may be classified according to buying capacity or nature like whole sale, retail and export or government or general public. Most departmental stores may attempt t reach customers preferring low price or higher price Advantages It focused on customers who are ultimate suppliers of money Better service to customer having different needs and tastes Development in general managerial skills Disadvantages Sales being the exclusive field of its application, co-ordination may appear difficult between sales function and other enterprise functions. Specialized sales staff may become idle with the downward movement of sales to any specified group of customers. 36
  37. 37. 5. Process or Equipment Departmentation: Under this basis, activities are grouped on the basis of production processes or equipment involved. This is generally used in a manufacturing enterprise and at lower levels of organisation. For example, a textile mill may be organised into ginning, spinning, weaving and dyeing departments. Similarly, a printing press may consist of composing, proofreading, printing and binding departments. Such departmentation may also be used in engineering and oil industries. The main object is to achieve efficiency and economy of operations. Advantages There is clear-cut technical division of work. This ensures specialisation and facilitates training of junior executives. It is possible to appoint persons with special education and experience for each process. Location of similar type of machines in one place results in economies in costs of re-pairs and maintenance.” Disadvantages There may be difficulty in co-ordinating different process departments. Conflicts among man-agers of different processes may arise. It cannot be used where manufacturing activity does notinvolve distinct processes. It is suitable only for special and composite type of plants. 37
  38. 38. 6.TimeDepartmentation Under this basis activities are grouped on the basis of the time of their performance. For example, a factory operating twenty-four hours may have three departments, one each for morning, day and night shifts. The idea is to obtain the advantages of people specialized to work ina particular shift.In case of departmentation by simple numbers, activities are grouped on the basis of theirperformance by a certain number of persons. For example, in the army soldiers are groupedinto squads, battalions, companies, brigades and regiments on the basis of the number pre-scribed for each unit. This basis of departmentation is used at the lower levels of hierarchy.Departmentation by numbers is useful when the work is repetitive and unskilled, wheremanpower is the most important, where group efforts are more important than individualefforts and where the group performance can be measured. It is useful only at the lowest level. 7. Composite or Combined DepartmentationDepartmentation is not an end in itself butA means for achieving organisational objectives. Each basis of departmentation has its own merits and demerits. Therefore, the relative advantages and limitations of various types of departmentation should be analyzed in the light of the needs and circumstances of the particular enterprise. That basis of departmentation is the best which facilitates the achievement of organisational objectives most economically and efficiently. In practice, no single pattern is ideal to suit all situations. Therefore, no single basis is followed for grouping activities. Rather, most of the big enterprises follow a composite or combination of several bases. Generally, functional departmentation is used at the top level. Activities of the sales department may be grouped on product or territorial basis which may further be sub-divided on customer basis. Similarly, activities in the production department may be grouped on the basis of process or equipment employed 38
  39. 39. SPAN OF MANAGEMENT Span of management refers to the number of subordinates that a manger can efficiently manage. Number of subordinate directly reporting to a manager is known as span. It signifies how the relations are planned between superior and subordinates in an organization. Span of management is important for Determining the complexity of an individual manager’s job and Determining shape and structure of the organization Span of management is generally categorized under two headsNarrow span Wide span Narrow Span of management means a single manager or supervisor oversees few subordinates. This gives rise to a tall organizational structure. While, a wide span of management means a single manager or supervisor oversees a large number of subordinates. This gives rise to a flat organizational structure.There is an inverse relation between the span of management and the number of hierarchical levels in an organization, i.e., narrow the span of management , greater the number of levels in an organization. 39
  40. 40. Narrow span of management is more costly compared to wide span of management as there are larger number of superiors/ managers and thus there is greater communication issues too between various management levels. The less geographically scattered the subordinates are, the better it is to have a wide span of management as it would be feasible for managers to be in touch with the subordinates and to explain them how to efficiently perform the tasks. In case of narrow span of management, there are comparatively more growth opportunities for a subordinate as the number of levels is more. The more efficient and organized the managers are in performing their tasks, the better it is to have wide span of management for such organization. The less capable, motivated and confident the employees are, the better it is to have a narrow span of management so that the managers can spend time with them and supervise them well. The more standardized is the nature of tasks ,i.e., if same task can be performed using same inputs, the better it is to have a wide span of management as more number of subordinates can be supervised by a single superior. There is more flexibility, quick decision making, effective communication between top level and low level management,and improved customer interaction in case of wide span of management. Technological advancement such as mobile phones, mails, etc. makes it feasible for superiors to widen their span of management as there is more effective communication. An optimal/ideal span of control according to the modern authors is fifteen to twenty subordinates per manager, while according to the traditional authors the ideal number is six subordinates per manager. But actually, an ideal span of control depends upon the nature of an organization, skills and capabilities of manager, the employees skills and abilities, the nature of job, the degree of interaction required between superior and subordinates. 40
  41. 41. Theoretical considerations The first to develop a more general theory of management was Henri Fayol, who had gathered empirical experience during his time as general manager of a coal and steel company, the Commentary-Fourchambault Company. He was first to add a managerial perspective to the problem of organizational governance. The rationale for defining a strict hierarchy of communication channels is found in the need for vertical integration of activities, imposed by management's need for control and information. However, exercising control over activities performed by subordinates and monitoring their communication, the nodes at the upper hierarchical levels would be suffering from information overload, since all communication to other branches of the organizational structure would be routed through them. In addition, a larger number of subordinates also requires supervisors to monitor a high number of interactions below their own level, i.e. that information overload and span of control are positively correlated. Graicunas distinguished three types of interactions – direct single relationships, crossrelationships, and direct group relationships – each of them contributing to the total amount of interactions within the organization. According to Graicunas, the number of possible interactions can be computed in the following way. Let n be the number of subordinates reporting to a supervisor. Then, the number of relationships of direct single type the supervisor could possibly engage into is The number of interactions between subordinates (cross relationships) he has to monitor is and the number of direct group relationships is The sum of these three types of interactions is the number of potential relationships of a supervisor. Graicunas showed with these formulas, that each additional subordinate increases the number of potential interactions significantly. It appears natural, that no organization can afford to maintain a control structure of a dimension being required for implementing a scalar chain under the unity of command condition. Therefore, other mechanisms had to be found for dealing with the dilemma of maintaining managerial control, while keeping cost and time at a reasonable level, thus making the span of control a critical figure for the organization. Consequently, for a long time, finding the optimum span of control has been a major challenge to organization design. 41
  42. 42. Factors determining the span of management: Capacity of manager: Each manager has different capacity and ability in terms of decision making, leadership, communication, judgment, guidance and control etc. mangers having more abilities in respect to these factors may have more number of subordinates. Capacity of subordinates: capacity of subordinates also affects the span of a manager. Efficient and trained subordinates may work without much help of their manager. They may just need broad guidelines and they will perform accordingly. They would require lesser time from their superior due to which manager can have large number of subordinates under him. Nature of work: If subordinates are performing similar and repetitive routine work they can do their work without having much time of the manager. Frequent changes in work would require more detailed instructions from manager whenever there is change in work. Type of technology used also affects the span of control. Degree of Decentralization: degree of centralization or decentralization affects the span by affecting the involvement in decision making process. If manager clearly delegates his authority and defines it fully this would require less time to devote to manage his subordinates as subordinates will take most of the actions by their own. Hence manager can have wider span. Degree of Planning: If the planning is effectively done particularly if standing plans procedures rules methods are clear then subordinates can make their decisions on their own. If they have to make their own plans they would require more guidelines by superiors and manager can handle narrow span in the case of improper planning. Communication System: If communication system is modern i.e. tools like electronic devices will save time of face to face interaction, which require more time, span of manager can be increased Level of Management: level of management also affects the span. Higher the level of management lesser the number of subordinates as higher level management does not have much time to supervise. They spend their most of time in planning and other functions. Lower level managers can have wider span than the higher level managers. Physical location: If all the persons to be supervised are located at same place within the direct supervision of manager, he can supervise more number of people. If subordinates are at different locations then manager can supervise less number of spans. 42
  43. 43. FUTURE ORGANISATION The mental maps of leaders and organisations need to change drastically for organisations to be successful and survive in the future. Mental Maps •Assumptions, generalizations or images that influence how we understand the world and behave accordingly. •Make sense of our environment to predict and control the future. •Filter to process, make sense of and respond to information; guides our thinking and behaviour. •Cognitive system reacts to input from the environment –processed and expanded on to create map of environment –determine response. •Broader, more comprehensive map allow for appropriate new action/ direction. •Individuals act according to the way they think –may allow us to predict certain outcomes under certain conditions. •Learning/ Expanding our mental maps enhances the ability to evaluate the future and act differently. •Expanding and enabling our mental maps allow readiness for the changes we can’t see yet, and successfully lead change in an increasingly uncertain and complex world. 43
  44. 44. The Future Organisation: •Concrete strategic plans & budgets replaced by responsive, flexible and abstract outcomes. •Joint responsibility for success, including external interfaces. •Flexible, adaptive and responsive. •Larger community/ societal considerations. •Sustainability –Triple Bottom Line. •Integrative culture, shared values. •Requisite Leadership attributes not the same as in the past. •Industrial era –command and control •New requirements: –Emotional Intelligence –Cross-cultural understanding –Multi-disciplinary –Communication –Networking •New generations’ expectations: –Authenticity –Significance –Excitement –Community •Developing leaders for the future organization 44
  45. 45. ORGANIZATIONAL RELATIONSHIPS Organizational structure involves, in addition to task organizational boundary considerations, the designation of jobs within an organization and the relationships among those jobs. This network of relationships which define the hierarchical structure of an organization is called organizational relationship.There are numerous ways to structure jobs within an organization, but two of the most basic forms include simple line structures and line-and-staff structures. The other forms are the staff structure, the functional structure ,the committee structure and the audit structure of organization. LINE ORGANIZATION:Line organization is the most oldest and simplest method of administrative organization. According to this type of organization, the authority flows from top to bottom in a concern. The line of command is carried out from top to bottom. This is the reason for calling this organization as scalar organization which means scalar chain of command is a part and parcel of this type of administrative organization. In this type of organization, the line of command flows on an even basis without any gaps in communication and co- ordination taking place. Here the top management has complete control, and the chain of command is clear and simple. Examples of line organizations are small businesses in which the top manager, often the owner, is positioned at the top of the organizational structure and has clear "lines" of distinction between him and his subordinates . 45
  46. 46. Features of Line Organization 1. 2. 3. 4. It is the most simplest form of organization. Line of authority flows from top to bottom and responsibility flows upward. Specialized and supportive services do not take place in these organization. Unified control by the line officers can be maintained since they can independently take decisions in their areas and spheres. 5. This kind of organization always helps in bringing efficiency in communication and bringing stability to a concern. Types Of Line OrganizationPure Line Organization- Here activities in any one level remains the same ie. Every employee more or less has the same type of work. The divisions exist solely for control and direction Departmental Line Organization- In this type of organization, the whole enterprise is divided into different departments that are convenient for control purposes.In setting up of the departments the similarity of functions is considered. Each department is a self sufficient unit and one departmental head does not give or receivers from other departmental head. Merits Of Line organization 1. Simplest and less expensive- It is the most simple and oldest method of administration and as there is no expenditure on staff personnel.it is less expensive too. 2. Unity of Command- In these organizations, superior-subordinate relationship is maintained and scalar chain of command flows from top to bottom. 3. Better discipline- The control is unified and concentrates on one person and therefore, he can independently make decisions of his own. Unified control ensures better discipline. 4. Fixed responsibility- In this type of organization, every line executive has got fixed authority, power and fixed responsibility attached to every authority. 5. Flexibility- There is a co-ordination between the top most authority and bottom line authority. Since the authority relationships are clear, line officials are independent and can flexibly take the decision. This flexibility gives satisfaction of line executives. 6. Prompt decision- Due to the factors of fixed responsibility and unity of command, the officials can take prompt decision. 46
  47. 47. Demerits of Line Organization 1. Over reliance- The line executive’s decisions are implemented to the bottom. This results in over-relying on the line officials. 2. Lack of specialization- A line organization flows in a scalar chain from top to bottom and there is no scope for specialized functions. For example, expert advices whatever decisions are taken by line managers are implemented in the same way. 3. Inadequate communication- The policies and strategies which are framed by the top authority are carried out in the same way. This leaves no scope for communication from the other end. The complaints and suggestions of lower authority are not communicated back to the top authority. So there is one way communication. 4. Lack of Co-ordination- Whatever decisions are taken by the line officials, in certain situations wrong decisions, are carried down and implemented in the same way. Therefore, the degree of effective co- ordination is less. 5. Authority leadership- The line officials have tendency to misuse their authority positions. This leads to autocratic leadership and monopoly in the concern. 47
  48. 48. STAFF ORGANIZATION:The staff refers to those elements in the organization which provide advice and service to the line. The work of investigation, research, recording, standardization and advising is in the hands of staff. The responsibility of line is to arrange the actual execution of the work planned by the staff. It is often said that the staff ‘thinks’ while line ‘acts’ . Types Of StaffPersonal Staff- The personal staff is meant to serve the executives only. A managing director for example may have a staff secretary to assist him in carrying out various jobs such as attending the telephone calls, typing letters, fixing appointments etc Specialised Staff- The specialized staff helps the line by performing work that requires special skills or more objectivity than the line can normally be expected to possess. Such specialized areas are- Accounting, Personnel, Public Relations, Research and Development etc General Staff-This category of staff serves as advisers to top management in specialized areas. Eg . In the figure above, secretary is the personal staff of the chief executive and the finance manager is specialized staff to advise the chief executive and managers on financial matters. Completed staff workStaff men are supposed to go into depth of the problem. The head of the staff division should be concerned more with approving or rejecting the proposal prepared by his staff. It has rightly been said “ completed staff work is the study of a problem and presentation of a solution by a staff officer in such a form that all remains to be done on the part of the head of the staff division is to indicate his approval or disapproval of the completed action .” 48
  49. 49. LINE AND STAFF ORGANIZATIONThe line-and-staff organization combines the line organization with staff departments that support and advise line departments. Most medium and large-sized firms exhibit line-andstaff organizational structures. The distinguishing characteristic between simple line organizations and line-and-staff organizations is the multiple layers of management within line-and-staff organizations. A wide variety of positions exist within a line-and-staff organization. Some positions are primary to the company's mission, whereas others are secondary to the form of support and indirect contribution. Although positions within a line-and-staff organization can be differentiated in several ways, the simplest approach classifies them as being either line or staff. A line position is directly involved in the day-to-day operations of the organization, such as producing or selling a product or service. Line positions are occupied by line personnel and line managers. Line personnel carry out the primary activities of a business and are considered essential to the basic functioning of the organization. Line managers make the majority of the decisions and direct line personnel to achieve company goals. An example of a line manager is a marketing executive.Althougha marketing executive does not actually produce the product or service, he or she directly contributes to the firm's overall objectives through market forecasting and generating product or service demand. Therefore, line positions, whether they are personnel or managers, engage in activities that are functionally and directly related to the principal workflow of an organization. Staff positions serve the organization by indirectly supporting line functions. Staff positions consist of staff personnel and staff managers. Staff personnel use their technical expertise to assist line personnel and aid top management in various business activities. Staff 49
  50. 50. managers provide support, advice, and knowledge to other individuals in the chain of command. Although staff managers are not part of the chain of command related to direct production of products or services, they do have authority over personnel. An example of a staff manager is a legal adviser. He or she does not actively engage in profit-making activities, but does provide legal support to those who do. Therefore, staff positions, whether personnel or managers, engage in activities that are supportive to line personnel. Chief Characteristics Of Line and Staff organization. It clearly distinguishes between the two aspects of administration viz. planning and execution. The staff is a supplement to the line. The staff provides counsel, advice and guidance and does not enjoy command prerogative. Also, it provides facts and information to the authorities. The staff works through influence as they have no right to command. Staff managers have line authority within their own fields. Line and Staff ConflictDue to different positions and types of authority within a line-and-staff organization, conflict between line and staff personnel is almost inevitable. Although minimal conflict due to differences in viewpoints is natural, conflict on the part of line and staff personnel can disrupt an entire organization. There are many reasons for conflict. Poor human relations, overlapping authority and responsibility, and misuse of staff personnel by top management are all primary reasons for feelings of resentment between line and staff personnel. This resentment can result in various departments viewing the organization from a narrow stance instead of looking at the organization as a whole. 50
  51. 51. Arguments of Line Executives against Staff Managers / Officers 1. Dilution of authority: Line executives argue that the introduction of staff managers dilutes their authority and also leads to interference in their work. They feel that their jobs become less important. 2. Stealing show: Line managers feel that the staff executives tend to steal show for the work that turns out to be successful. On the other hand, when things go wrong, they alone have to face the blame and criticism. 3. Lacks practical knowledge: Line executives argue that staff executives are not familiar with the situation where actual work is carried out. The services offered by the staff executives are rather theoretical and not practical. 4. Lacks human skills: Line executives argue that staff managers with human relations skills are rarely available. Staff presents matters mechanically. 5. Domination of staff managers: Line executives argue that staff managers always feel that they are superior as regards education and skills. They dominate line executives. This is treated as unwanted interference. 6. Easy access to top management: The staff managers work at the head office and have easy access to top level management. They try to show their superiority to top level management by making new plans and suggestions which may not be acceptable to line executives. The top management feels that the line executives are incompetent due to which the services of staff officers are required. This is a source of agony for line managers. 7. Stress on paper work: The staff executives are engaged in the paper work. In addition, they need information and various details from the line executives. As a result, there is increase in the paper work of line executives, which they resent. Arguments of Staff Managers against Line Executives 1. Resistance to new plans and ideas: According to staff managers, the line managers usually oppose/resist new plans/ideas. They treat this as interference in their routine work. A staff manager is a professional critic. He suggests modifications, which are useful, but the suggestions are opposed as unnecessary interference. This leads to conflicts. 2. Inadequate support from line executives: Staff managers argue that line Managers do not take benefit of their services. Their services are used only as a measure of last resort. 3. Inadequate scope for the use of authority: Staff managers argue that line managers do not give importance to suggestions given by them. This reduces the scope of activities of staff managers. Moreover, the suggestions of staff managers are not binding on line executives and this affects their importance and contribution. 4. Lack of support from top management: Staff managers also feel that they do not get full support from the top management. The top management is more concerned with regular production. As a result, it gives better treatment to line bosses. 51
  52. 52. 5. Limited cooperation from line executives: Staff managers argue that line executives adopt negative approach towards them even when both are working in the same Organisation with identical objectives. Line executives do not take the advice/suggestions of staff managers in the right spirit. They reject suggestions on the ground that they are not practicable even without giving fair trail. This indicates limited co-operation from line executives. 6. Supply of inadequate information: Staff managers argue that line executives do not approach them well in advance with all necessary details of the problems faced by them. They do not supply relevant information but want the solution quickly. If solution is suggested within the time limit, it is again rejected on the ground that it is not workable. This leads to dissatisfaction and conflicts. 7. Absence of authority: Staff managers feel frustrated as they offer suggestions for solving the problem through hard work and also by using their skills and experience. However, they do not have commanding authority to execute their suggestions. Remedies for conflictFortunately, there are several ways to minimize conflict. One way is to integrate line and staff personnel into a work team. The success of the work team depends on how well each group can work together in efforts to increase productivity and performance. Another solution is to ensure that the areas of responsibility and authority of both line and staff personnel are clearly defined. With clearly defined lines of authority and responsibility, each group may better understand their role in the organisation. Also management should place qualified and trained personnel in staff positions. This will ensure sound advice to the line managers and they will be able to convince the line managers about its practicality.A third way to minimize conflict is to hold both line and staff personnel accountable for the results of their own activities. In other words, line personnel should not be entirely responsible for poor performance resulting from staff personnel advice. In advent of line managers ignoring staff advice there should be proper grounds for it. Merits Of Line And Staff OrganizationLine officers can secure help from specialists by way of advice and this strengthens the line positions. The services of staff can be used for training some of the line officers. It enables the line officers to work faster and better as they can concentrate on ‘doing’ part and for expert knowledge they can rely upon the staff. The stability and discipline of the line organization are preserved; only the expertise is added. There is greater flexibility in the organization as new activities may be introduced. 52
  53. 53. Demerits Of Line And Staff OrganizationIt may create confusion when the line and staff relationship is not understood properly. Line managers may depend too much on staff experts. This may lead to loss of judgement and initiative on the part of the line managers. Also the staff departments may undermine the authority of the line officers. The staff officers may remain ineffective because they do not possess the authority to get their recommendations implemented. A serious weakness of staff is that they have no responsibility. Therefore, the staff people may not take proper care before advising the line managers. The allocation of authority and responsibility may not be clear between line and staff executives. 53
  54. 54. FUNCTIONAL ORGANIZATION Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an organization in which we can define as a system in which functional department are created to deal with the problems of business at various levels. Functional authority remains confined to functional guidance to different departments. This helps in maintaining quality and uniformity of performance of different functions throughout the enterprise. The concept of Functional organization was suggested by F.W. Taylor who recommended the appointment of specialists at important positions. For example, the functional head and Marketing Director directs the subordinates throughout the organization in his particular area. This means that subordinates receives orders from several specialists, managers working above them. In the functional foremanship, there will be eight specialists/functional heads called bosses. Out of eight bosses, four bosses will be at the planning level and the remaining four will be at the slop floor level. Foremen At Planning Level (Planning Dept.) 1. Time and Cost Clerk: He is concerned with preparing standard time for the completion of certain piece of work and compiling the cost of that work. 2. Instruction Card Clerk: He lays down the exact method of doing the work. He specifies the tools to be used for conducting the production and also gives other instructions on the instruction cards prepared by him. 3. Route Clerk: The route clerk lays down the exact route through which each and every piece of work should move through various stages till completion. He decides the production schedule and the sequence of steps by which the production process is to move. 4. Shop Disciplinarian: He is concerned with the discipline, insubordination, violation of rules of discipline and absenteeism. All cases relating to these matters will be managed by the shop disciplinarian. Foremen At Shop Floor Level (Shop Floor) 1. Gang Boss: He assembles and sets up various machines; and tools for a particular piece of work. He is in-charge of assembling line of production. 2. Speed Boss: He is concerned with the speeding of machines used for production. He keeps proper speed of the machines and see that workers complete the production work as per the schedule time. 3. Repair Boss: The repair boss looks after the proper maintenance of machines, tools and equipments required during the production process. 4. Inspector: The inspector controls quality of the products by keeping adequate check/control when the production work is in progress. 54
  55. 55. The functional Organisation structure is given in the following chart:- Features of Functional Organization 1. The entire organizational activities are divided into specific functions such as operations, finance, marketing and personal relations. 2. Complex form of administrative organization compared to the other two. 3. Identical functions of various departments in the organization are performed by specialists. 4. Each functional area is put under the charge of functional specialists and he has got the authority to give all decisions regarding the function whenever the function is performed throughout the enterprise. 5. Specialists often operate with considerable independence. 55
  56. 56. Merits of Functional Organization 1. Specialization- Better division of labour takes place which results in specialization of function and it’s consequent benefit. 2. Effective Control- Management control is simplified as the mental functions are separated from manual functions. Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of various sections. 3. Efficiency- Greater efficiency is achieved because of every function performing a limited number of functions. 4. Economy- Specialization compiled with standardization facilitates maximum production and economical costs. 5. Expansion- Expert knowledge of functional manager facilitates better control and supervision. Demerits of Functional Organization 1. Confusion- The functional system is quite complicated to put into operation, especially when it is carried out at low levels. Therefore, co- ordination becomes difficult. 2. Lack of Co- ordination- Disciplinary control becomes weak as a worker is commanded not by one person but a large number of people. Thus, there is no unity of command. 3. Difficulty in fixing responsibility- Because of multiple authority, it is difficult to fix responsibility. 4. Conflicts- There may be conflicts among the supervisory staff of equal ranks. They may not agree on certain issues. 5. Costly-Maintainance of specialist’s staff of the highest order is expensive for a concern. 56
  57. 57. COMMITTEE ORGANIZATIONCommittee is a group of persons to whom as a group some matter is committed. It is appointed by an authority with some delegated powers. It brings into decision making the experience and expertise of two or more persons. In corporate enterprise committees have become popular to an extent that the companies are described as a hierarchy of committee. At the apex is the Board of Directors- the highest policy making body of the company. The Board appoints various sub-committees to go into specific problems. Managing committees are formed for project planning, budgeting , deciding disputes, solving specific problems and review and reporting purposes. The top executive may appoint committees of line officers, line and staff officers or staff officers to deliberate on specified matters. These committees may be ebtusted such jobs as investigating into certain incidents, finding facts and figures relating to a proposed project, negotiation with some outside agency deciding some dispute and coordinate and control the activities of different divisions or departments. When the problem may be of technical nature and line people are involved , the committee may consist of line managers and experts. When the issue relates to various departments, the selected line and staff managers may form the committee. The management committee may also consist staff officers when the object is to seek advice on matters which may not be of direct concern to line managers. Merits And Demerits Of Committee OrganisationCommittees facilitate group deliberations and judgement. Various interests and viewpoints are represented on it. It helps in democratizing the internal administration of the organization and motivates people by providing them opportunity to express themselves in committee meetings. The committees are also an effective instrument of communication in any organization. It can serve as a link between the authority which appoints it and the level of personnel whose problems are investigated by it. Sometimes, committees are also used to postpone an issue successfully. But on the other side, committees may suffer from indecision. The matter may be unnecessarily dragged and delayed in committee meetings. The minority interests may be ignored by the members in majority. Compromises may be made on the last common denominator which may be harmful for the organization. The committee members may shirk from responsibility on the plea that the decision is of the group and they have no choice. Again committees incur costs which may at times be heavier than the gain from committee deliberations Inspite of the limitations, committee is an effective form of organization and is widely used in business. 57
  58. 58. AUDIT RELATIONSHIP: The audit managers are those who evaluate or appraise the work of others periodically to tell them how well they are performing it. For example, traditional auditors used to tell whether a department has stayed within its budget or how closely it is meeting standard cost targets. Quality inspectors appraise the quality of work completed by the department. Personnel attached to the works may, by looking at turnover, grievances, absenteeism etc. will be able to assess whether or not a supervisor has been able to maintain cordial relationships with people working with him. The audit relationship should not be passive. The auditors must realize the constraints under which the departments work and the managers function. Similarly the managers must realize that adherence to certain standards and rules and regulations are in their interest and deviations from them should be permitted in exceptional cases. When certain standard set appears to be wrong yhe manager should get it changed by convincing the auditors. 58
  59. 59. OBJECTIVE An organization can be structured in many different ways, depending on their objectives. The structure ofan organization will determine the modes in which it operates and performs.It provides the foundation on which standard operating procedures and routines rest and the designation of jobs and the relationships among those jobs which we call organizational relations determines which individuals get to participate in which decisionmaking processes, and thus to what extent their views shape the organization’s actions. The structure and relationship is very important for an organization. A sound structure and an efficient organizational relationship is the backbone for successful running of an organization. The purpose of this report is to study the structure and relationship of an organization and understand its hierarchical structure as well as the network of relationships among those structures. METHODOLOGY Selection of organizationWe have taken ICICI bank limited as the subject organization of our study. It is the second largest bank in India by assets and third largest by market capitalization. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank has a network of 2,772 branches and 9,363 ATM's in India, and has a presence in 19 countries, including India. By studying its structure and organizational relationship we aim to understand its hierarchical structure and see how one of the most successful and preferred banking organization of India works through the various modelling of its structure and the designation of jobs and relationships between them help determine the ground in which it operates and performs. Out of the several branches of ICICI, we have taken the ICICI Rohini branch, sector8 for our survey. Sample sizeTo achieve a good understanding and to arrive at a better conclusion we have taken a sample size of 15 employees of the rohini branch, ICICI. 59
  60. 60. 1 Thegoalsofthisorganizationareclearly stated.. 2 Thedivisionoflaborofthisorganizationisflexible. 3 Myimmediate supervisorissupportiveofmy efforts 4 Myrelationshipwithmy supervisorwasa Harmoniousone. Myimmediate supervisorhasideasthatarehelpfultomeand my workgroup Thisorganizationis not resistanttochange. 5 6 7 8 Thedivisionoflaborinthisorganizationisintendedtohelpit reach Itsgoals Theleadershipnormsofthisorganizationhelpits progress 9 Ican alwaystalk with my superior ifIhavea work-related Problem 10 The manner in which work tasks are divided is a logical one 11 This organization’s leadership efforts result in the organization’s fulfilment of its purposes. 12 The opportunity for promotion exists in this organization. 13 There are a few supervisors in charge of employees. 14 The structure of my work unit is well designed 15 It is clear to me whenever my boss is attempting to guide my work Efforts 16 1 had enough input from my superior in deciding my work-unit goals 17 The division of labor in this organization actually helps it to reach its goals 18 I understand my boss’s efforts to influence me and the other members of the work unit 19 This organization’s planning and control efforts are helpful to its growth and development 20 The organizational structure has the ability to change 60 DisagreeStrongly Disagree DisagreeSlightly Neutral AgreeSlightly Agree AgreeStrongly Design of Questionnaire
  61. 61. We have designed a questionnaire of 20 questions divided into 7 parameters namely – purposes, structure ,leadership , relationships, rewards, helpful mechanism and attitude towards change. Each parameter has been given equal weightage with 5 questions each. Answer to each question is assigned different score as in Agree strongly = 1 Agree= 2 Agree slightly=3 Neutral=4 Disagree slightly=5 Disagree=6 Disagree strongly=7 61