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The managerial function organizing may be understood as “Defining and grouping the activities of the enterprise and establishing authority, responsibility and relationships among them”. It results in the creation of a structure most appropriate for the organisation’s objectives and other internal and external factors. The best structure is the one that enables the organisation to interact effectively with its environment, to efficiently channelize the efforts of its people, to make efficient use of its resources. Thus, while planning specifies the objectives, organizing facilitates the accomplishment of objectives. Organisation involves division of work among people whose efforts must be co-ordinated to achieve specific objectives and to implement pre-determined strategies. Organisation is the foundation upon which the whole structure of management is built. It is the backbone of management. After the objectives of an enterprise are determined and the plan is prepared, the next step in the management process is to organise the activities of the enterprise to execute the plan and to attain the objectives of the enterprise. The term Organising organisation is given a variety of interpretations. In any case, there are two broad ways in which the term is used.
Organisation is understood as a dynamic process and a managerial activity which is necessary for bringing people together and tying them together in the pursuit of common objectives Organisation means the determination and assignment of duties to people, and also the establishment and the maintenance of authority relationships among these grouped activities. It is the structural framework within which the various efforts are coordinated and related to each other. Sound organisation contributes greatly to the continuity and success of the enterprise. Without organising managers cannot function as managers.
The distinguished industrialist of America, Andrew Carnegie has shown his confidence in organisation by stating that: “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 have re-established ourselves.” That shows the significance of managerial skills and organisation. However, good organisation structure does not by itself produce good performance. But a poor organisation structure makes good performance impossible, no matter how good the individual may be.
The term ‘Organisation’ connotes different things to different people. Many writers have attempted to state the nature, characteristics and principles of organisation in their own way. It can be used as a group of persons working together or as a structure of relationships or as a process of management. Now, let us analyse some of the important definition of organising or organisation, and understand the meaning of organisation.
According to Sheldon, “Organisation is the process of so combining the work which individuals or groups have to perform with facilities necessary for its execution, that the duties so performed provide the best channels for efficient, systematic, positive and coordinated application of available effort.”
In the words of Chester I Bernard, “Organisation is a system of co-operative activities of two or more persons.”
Mc Ferland has defined organisation as, “An identifiable group of people contributing their efforts towards the attainment of goals”.
According to Louis A Allen, “Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.
According to North Whitehead, “Organisation is the adjustment of diverse elements, so that their mutual relationship may exhibit more pre-determined quality.”
In the words of Theo Haimann, “Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them. In performing the organising function, the manager defines, departmentalises and assigns activities so that they can be most effectively executed.”
In the words of Mooney and Railey, “Organisation is the form of every human association for the attainment of a common purpose.”
In the words of Koontz and O’Donnell, “Organisation involves the grouping of activities necessary to accomplish goals and plans, the assignment of these activities to appropriate departments and the provision of authority, delegation and co-ordination.”
According to Noirthcott, C H, “Organisation refers to arrangements by which tasks are assigned to men and women so that their individual efforts contribute effectively to some more or less clearly defined purpose for which they have been brought together.”
In the words of G E Milward, “Organisation is a process of dividing work into convenient tasks or duties, of grouping such duties in the form of posts of delegating authority to each post and of appointing qualified staff to be responsible that the work is carried out as planned.”
1. Consideration of Unity of Objectives: The objective of the undertaking influences the organisation structure. There must be unity of objective so that all efforts can be concentrated on the set goals.
2. Responsibility: Authority should be equal to responsibility i.e., each manager should have enough authority to accomplish the task
3. Co-ordination: Organisation involves division of work among people whose efforts must be co-ordinated to achieve common goals. Co-ordination is the orderly arrangement of group effort to provide unity of action in the pursuit of common purpose.
4. Clear unbroken line of Authority: It points out the scalar principle or the chain of Organising command. The line of authority flows from the highest executive to the lowest managerial level and the chain of command should not be broken.
5. Delegation: Decisions should be made at the lowest competent level. Authority and responsibility should be delegated as far down in the organisation as possible.
6. Unity of Command: Each person should be accountable to a single superior. If an individual has to report to only one supervisor there is a sense of personal responsibility to one person for results.
7. Specialisation: Effective organisation must include specialisation. Precise division of work facilitates specialisation.
8. Efficiency: The organisation structure should enable the enterprise to attain objectives with the lowest possible cost.
9. Span of Management: No superior at a higher level should have more than six immediate subordinates. The average human brain can effectively direct three to six brains (i.e., subordinates).
10. Flexibility: The organisation is expected to provide built in devices to facilitate growth and expansion without dislocation. It should not be rigid or inelastic.
11. Communication: A good communication sub-system is essential for smooth flow of information and understanding and for effective business performance.
Organisation is the process of establishing relationship among the members of the enterprise. The relationships are created in terms of authority and responsibility. To organise is to harmonise, coordinate or arrange in a logical and orderly manner. Each member in the organisation is assigned a specific responsibility or duty to perform and is granted the corresponding authority to perform his duty. The managerial function of organising consists in making a rational division of work into groups of activities and tying together the positions representing grouping of activities so as to achieve a rational, well co- ordinated and orderly structure for the accomplishment of work. According to Louis A Allen, “Organising involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among them for the accomplishment of organisational objectives.
The various steps involved in this process are:
1. Determination of Objectives: It is the first step in building up an organisation. Organisation is always related to certain objectives. Therefore, it is essential for the management to identify the objectives before starting any activity. Organisation structure is built on the basis of the objectives of the enterprise. That means, the structure of the organisation can be determined by the management only after knowing the objectives to be accomplished through the organisation. This step helps the management not only in framing the organisation structure but also in achieving the enterprise objectives with minimum cost and efforts. Determination of objectives will consist in deciding as to why the proposed organisation is to be set up and, therefore, what will be the nature of the work to be accomplished through the organisation.
2.Enumeration of Objectives: If the members of the group are to pool their efforts effectively, there must be proper division of the major activities. The first step in organising group effort is the division of the total job into essential activities. Each job should be properly classified and grouped. This will enable the people to know what is expected of them as members of the group and will help in avoiding duplication of efforts. For example, the work of an industrial concern may be divided into the following major functions – production, financing, personnel, sales, purchase, etc.
3.Classification of Activities: The next step will be to classify activities according to similarities and common purposes and functions and taking the human and material resources into account. Then, closely related and similar activities are grouped into divisions and departments and the departmental activities are further divided into sections.
4.Assignment of Duties: Here, specific job assignments are made to different subordinates for ensuring a certainty of work performance. Each individual should be given a specific job to do according to his ability and made responsible for that. He should also be given the adequate authority to do the job assigned to him. In the words of Kimball and Kimball, “Organisation embraces the duties of designating the departments and the personnel that are to carry on the work, defining their functions and specifying the relations that are to exist between department and individuals.”
5.Delegation of Authority: Since so many individuals work in the same organisation, it is the responsibility of management to lay down structure of relationship in the organisation. Authority without responsibility is a dangerous thing and similarly responsibility without authority is an empty vessel. Everybody should clearly know to whom he is accountable; corresponding to the responsibility authority is delegated to the subordinates for enabling them to show work performance. This will help in the smooth working of the enterprise by facilitating delegation of responsibility and authority.
The characteristics of and organisation are as follows:
1. Division of Work- Division as work is the basis of an organisation. No organisation can work without division of work. Under this the entire work of business is divided into many departments and every department is sub-divided into sub-work and every individual is given a particular work according to their preference. In this way and objective is achieved successfully.
2. Co-ordination- Different persons are assigned different work it aims that all the persons achieve the objective of an organisation. As the work or the employees of an organisation depends upon one another there should be coordination among each person carrying different works. The work from one person starts from the ending of the work of another person. The non- Completion as work of one person may affect everybody. Therefore an organisation should establish co-ordination and the strength in working department who ensure smooth functioning.
3. Organisation is Dynamic- Organisation includes people, knowledge and experience they undergo and this keeps on changing. The impact of this change affects various functions like authority and responsibility, mutual relationship, data mining activities. Executing the work of an organisation is not a process that can be decided for all times backed. It has to undergo with the changes.
4. Organisation is Universal Process- We can say that organisation is universal. As it is just needed both in business and non-business organisation. Organisation is needed two or more people work jointly. Therefore it shows quality of universality.
5. Organisation is a Machine of Management- Organisation is considered to be a machine of Management because of its efficiency. All the functions depends on effective organisation it is appropriate to call organisation a machine of management. From others point of view it is a machine and no part can be ill fitted or be non-functional. This means that if the division of work is not done properly the whole system of management can be collapsed.
6.Plurality of Persons- Organisation is a group of many people who assemble to fulfill common purpose as the single individual cannot create organisation.
7. Well-Defined Authority and Responsibility- Under organisation a chain is established between different posts right from top to bottom. There is a clearly defined authority and responsibility at each post every individual working in an organisation has given has been given some authority to do their work efficiently and they are also given some responsibility so as they satisfy the work.
8. Superior-Subordinate Relationship- The relationship between persons working on different posts in organisation is decided by their seniors. It is just decided who is at Superior Powers and who is a supporting aid. The person working on top level is superior to a person working on a lower level and can give order and commands to supporting aids.
Organisation is a framework through which managers get things done through people. It’s importance are as follows:
1. Optimum Use of Resources– In an organisation all the jobs are clearly defined and differentiated. This means a right person can be fitted for the right job to achieve the objectives. Organisation helps in avoiding duplication of any work, overlapping of responsibility, and all of burdening on employees and working units. The role, authority and responsibility of every job is clearly defined.
2. Aid to management- Organisation focuses managing attention and see objectives and it ensures that all the possible mechanism is provided which is needed to do a work and who enables management to predict situations and activities and take right action at right time.
3. Specialisation- In an organisation there is specialization of work as total work is divided and sub-divided into convenient jobs and departments. These similar jobs consists of a single department and the expert is given particular kind of job to do which leads to efficiency and speedy performance of tasks.
4. Training and Development of Personnel- Some organisation encourages initiative and creative thinking on part of employees. Access the data development of managerial and the technical advantages of distribution of rewards.
5. Security and Support- A sound organisation structure is a source of security, support and satisfaction to managers and workers performing their assigned task.
Organisation design may be defined as a formal, guided process for integrating the people, information and technology of an organisation. Organisation design involves the creation of roles, processes, and formal reporting relationships in an organisation. One can distinguish between two phases in an organisation design process: strategic grouping, which establishes the overall structure of the organisation, (its main sub-units and their relationships), and operational design, which defines the more detailed roles and processes. It is used to match the form of the organisation as closely as possible to the purpose(s) the organisation seeks to achieve. Through the design process, organisations act to improve the probability that the collective efforts of members will be successful. Thus it may said to be a process for improving the probability that an organisation will be successful.
Western organisations have been highly influenced by the command and control structure of ancient military organisations, especially those of USA and by the turn of the century introduction of Scientific Management. Most organisations today are designed as a bureaucracy in whom authority and responsibility are arranged in a hierarchy. Within the hierarchy, the laws, policies, and procedures are uniformly and impersonally applied to exert control over member behaviours. Activity is organised within departments in which people perform specialized functions such as manufacturing, sales, or accounting. People who perform similar tasks are clustered together. The same basic organisational form is assumed to be appropriate for any organisation, be it a government, school, business, church, or fraternity. It is familiar, predictable, and rational. It is what comes immediately to mind when we discover that we really have to get organised.
As rational as the functional hierarchy may be, there are distinct disadvantages to blindly applying the same form of organisation to all purposeful groups. To state a few,
1. Different groups wish to achieve different outcomes.
2. Different groups have different members, and that each group possesses a different culture.
These differences in desired outcomes, and in culture, should alert the mangers to the danger of assuming there is any single best way of organising. To be complete, however, also observe that different groups will likely choose different methods through which they will achieve their purpose. Service groups will choose different methods than manufacturing groups, and both will choose different methods than groups whose purpose is primarily social. One structure cannot possibly fit all.
Organisations are an invention of man. They are contrived social systems through which groups seek to exert influence or achieve a stated purpose. People choose to organise when they recognize that by acting alone they are limited in their ability to achieve. We sense that by acting in concert we may overcome our individual limitations. When we organise we seek to direct, or pattern, the activities of a group of people toward a common outcome. How this pattern is designed and implemented greatly influences effectiveness. Patterns of activity that are complementary and interdependent are more likely to result in the achievement of intended outcomes. In contrast, activity patterns that are unrelated and independent are more likely to produce unpredictable, and often unintended results. The process of organisation design matches people, information, and technology to the purpose, vision, and strategy of the organisation. Structure is designed to enhance communication and information flow among people. Systems are designed to encourage individual responsibility and decision making. Technology is used to enhance human capabilities to accomplish meaningful work. The end product is an integrated system of people and resources, tailored to the specific direction of the organisation.
Organisation design begins with the creation of a strategy – a set of decision guidelines by which members will choose appropriate actions. The strategy is derived from clear, concise statements of purpose, and vision, and from the organisation’s basic philosophy. Strategy unifies the intent of the organisation and focuses members toward actions designed to accomplish desired outcomes. The strategy encourages actions that support the purpose and discourages those that do not. Creating a strategy is planning, not organising. To organise we must connect people with each other in meaningful and purposeful ways. Further, we must connect people with the information and technology necessary for them to be successful. Organisation structure defines the formal relationships among people and specifies both their roles and their responsibilities. Administrative systems govern the organisation through guidelines, procedures and policies. Information and technology define the process(es) through which members achieve outcomes. Each element must support each of the others and together they must support the organisation’s purpose.
Example: Many organisations including GP have used evolutionary computational methods to optimize various kinds of systems in ways that rival or exceed human capabilities.
The purpose for which a group exists should be the foundation for everything its members do.
Including the choice of an appropriate way to organise. The idea is to create a way of organising that best suits the purpose to be accomplished, regardless of the way in which other, dissimilar groups are organised. Only when there are close similarities in desired outcomes, culture, and methods should the basic form of one organisation be applied to another. And even then, only with careful fine tuning. The danger is that the patterns of activity that help one group to be successful may be dysfunctional for another group, and actually inhibit group effectiveness. To optimize effectiveness, the form of organisation must be matched to the purpose it seeks to achieve.
An organisation structure shows the authority and responsibility relationships between the various positions in the organisation by showing who reports to whom. Organisation involves establishing an appropriate structure for the goal seeking activities. It is an established pattern of relationship among the components of the organisation. March and Simon have stated that-“Organisation structure consists simply of those aspects of pattern of behaviour in the organisation that are relatively stable and change only slowly.” The structure of an organisation is generally shown on an organisation chart. It shows the authority and responsibility relationships between various positions in the organisation while designing the organisation structure, due attention should be given to the principles of sound organisation.
1. Properly designed organisation can help improve teamwork and productivity by providing a framework within which the people can work together most effectively.
2. Organisation structure determines the location of decision-making in the organisation.
3. Sound organisation structure stimulates creative thinking and initiative among organisational members by providing well defined patterns of authority.
4. A sound organisation structure facilitates growth of enterprise by increasing its capacity to handle increased level of authority.
5. Organisation structure provides the pattern of communication and coordination.
6. The organisation structure helps a member to know what his role is and how it relates to other roles.
According to Peter F Drucker-“Organisation is not an end in itself, but a means to the end of business performance and business results. Organisation structure is an indispensable means; and the wrong structure will seriously impair business performance and may even destroy it. Organisation structure must be designed so as to make possible to attainment of the objectives of the business for five, ten, fifteen years hence”. Thus it is essential that a great deal of care should be taken while determining the organisation structure. Peter Drucker has pointed out three specific ways to find out what kind or structure is needed to attain the objectives of a specific business:
1. Relations Analysis: Relations Analysis will include an examination of the various types of relationships that develop within the organisation. These relationships are vertical, lateral and diagonal. Where a superior-subordinate relationship is envisaged, it will be a vertical relationship. In case of an expert or specialist advising a manager at the same level, the relationship will be lateral. Where a specialist exercises authority over a person in subordinate position in another department in the same organisation it will be an instance of diagonal relationship. Peter Drucker emphasises that-“the first thing to consider in defining a manager job is the contribution his activity has to make to the larger unit of which it is a part.” Thus, downward, upward and lateral (side-ways) relations must be analysed to determine the organisation structure.
2. Activities Analysis: The purpose of ‘activities analysis’ is to discover the primary activity of the proposed organisation, for it is around this that other activities will be built. It may be pointed out that in every organisation; one or two functional areas of business dominate. For example, designing is an important activity of the readymade garments manufacturer. After the activities have been identified and classified into functional areas, they should be listed in the order of importance. It is advisable to divide and sub-divide the whole work into smaller homogeneous units so that the same may be assigned to different individuals. Thus, in devising an organisational structure, it is important to divide the entire work into manageable units. It has rightly been said that the job constitutes the basic building block in building up an organisational structure.
3. Decision Analysis: At this stage, the manager finds out what kinds of decisions will need to be made to carry on the work of the organisation. What is even more important, he has to see where or at what level these decisions will have to be made and how each manager should be involved in them. This type of analysis is particularly important for deciding upon the number of levels or layers in the organisation structure. As regards decision analysis, Peter Drucker, has emphasised four basic characteristics. They are:
a. The degree of futurity in the decision
b. The impact that decision has on other functions
c. The character of the decision determined by a number of qualitative factors, such as, ‘basic principles of conduct, ethical values, social and political beliefs etc., and
d. Whether the decisions are periodically recurrent or rates as recurrent decisions may require a general rule whereas a rate decision is to be treated as a distinctive event.
e. A decision should always be made at the lowest possible level and so close to the scene of action as possible.
The formal organisation refers to the structure of jobs and positions with clearly defined functions and relationships as prescribed by the top management. This type of organisation is built by the management to realise objectives of an enterprise and is bound by rules, systems and procedures. Everybody is assigned a certain responsibility for the performance of the given task and given the required amount of authority for carrying it out. Informal organisation, which does not appear on the organisation chart, supplements the formal organisation in achieving organisational goals effectively and efficiently. The working of informal groups and leaders is not as simple as it may appear to be. Therefore, it is obligatory for every manager to study thoroughly the working pattern of informal relationships in the organisation and to use them for achieving organisational objectives.
Chester I Bernard defines formal organisation as -“A system of consciously coordinated activities or forces of two or more persons. It refers to the structure of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability.” The essence of formal organisation is conscious common purpose and comes into being when persons–
1. Are able to communicate with each other
2. Are willing to act and
3. Share a purpose.
The formal organisation is built around four key pillars. They are:
1. Division of labour
2. Scalar and functional processes
3. Structure and
4. Span of control
Thus, a formal organisation is one resulting from planning where the pattern of structure has already been determined by the top management.
1. Formal organisation structure is laid down by the top management to achieve organisational goals.
2. Formal organisation prescribes the relationships amongst the people working in the organisation.
3. The organisation structures is consciously designed to enable the people of the organisation to work together for accomplishing the common objectives of the enterprise
4. Organisation structure concentrates on the jobs to be performed and not the individuals who are to perform jobs.
5. In a formal organisation, individuals are fitted into jobs and positions and work as per the managerial decisions. Thus, the formal relations in the organisation arise from the pattern of responsibilities that are created by the management.
6. A formal organisation is bound by rules, regulations and procedures.
7. In a formal organisation, the position, authority, responsibility and accountability of each level are clearly defined.
8. Organisation structure is based on division of labour and specialisation to achieve efficiency in operations.
9. A formal organisation is deliberately impersonal. The organisation does not take into consideration the sentiments of organisational members.
10. The authority and responsibility relationships created by the organisation structure are to be honoured by everyone.
11. In a formal organisation, coordination proceeds according to the prescribed pattern.
1. The formal organisation structure concentrates on the jobs to be performed. It therefore, makes everybody responsible for a given task.
2. A formal organisation is bound by rules, regulations and procedures. It thus ensures law and order in the organisation.
3. The organisation structure enables the people of the organisation to work together for accomplishing the common objectives of the enterprise
1. The formal organisation does not take into consideration the sentiments of organisational members.
2. The formal organisation does not consider the goals of the individuals. It is designed to achieve the goals of the organisation only.
3. The formal organisation is bound by rigid rules, regulations and procedures. This makes the achievement of goals difficult.
Informal organisation refers to the relationship between people in the organisation based on personal attitudes, emotions, prejudices, likes, dislikes etc. an informal organisation is an organisation which is not established by any formal authority, but arises from the personal and social relations of the people. These relations are not developed according to procedures and regulations laid down in the formal organisation structure; generally large formal groups give rise to small informal or social groups. These groups may be based on same taste, language, culture or some other factor. These groups are not pre-planned, but they develop automatically within the organisation according to its environment.
1. Informal organisation is not established by any formal authority. It is unplanned and arises spontaneously.
2. Informal organisations reflect human relationships. It arises from the personal and social relations amongst the people working in the organisation.
3. Formation of informal organisations is a natural process. It is not based on rules, regulations and procedures.
4. The inter-relations amongst the people in an informal organisation cannot be shown in an organisation chart.
5. In the case of informal organisation, the people cut across formal channels of communications and communicate amongst themselves.
6. The membership of informal organisations is voluntary. It arises spontaneously and not by deliberate or conscious efforts.
7. Membership of informal groups can be overlapping as a person may be member of a number of informal groups.
8. Informal organisations are based on common taste, problem, language, religion, culture, etc. it is influenced by the personal attitudes, emotions, whims, likes and dislikes etc. of the people in the organisation.
1. It blends with the formal organisation to make it more effective.
2. Many things which cannot be achieved through formal organisation can be achieved through informal organisation.
3. The presence of informal organisation in an enterprise makes the managers plan and act more carefully.
4. Informal organisation acts as a means by which the workers achieve a sense of security and belonging. It provides social satisfaction to group members.
5. An informal organisation has a powerful influence on productivity and job satisfaction.
6. The informal leader lightens the burden of the formal manager and tries to fill in the gaps in the manager’s ability.
7. Informal organisation helps the group members to attain specific personal objectives.
8. Informal organisation is the best means of employee communication. It is very fast.
9. Informal organisation gives psychological satisfaction to the members. It acts as a safety valve for the emotional problems and frustrations of the workers of the organisation because they get a platform to express their feelings.
10. It serves as an agency for social control of human behaviour.
Formal organisation, no doubt is an important part of the organisation but it alone is not capable of accomplishing the organisational objectives. Informal organisation supplements the formal organisation in achieving the organisational objectives. If handled properly, informal organisation will help in performing the activities of the organisation very efficiently and effectively. In the words of Keith Davis-“An informal organisation is a powerful influence upon productivity and job satisfaction. Both formal and informal systems are necessary for group activity just as two blades are essential to make a pair of scissors workable”. As both formal and informal organisations are quite essential for the success of any organisation, a manager should not ignore the informal organisation. He should study thoroughly the working pattern of informal relationship in the organisation and use the informal organisation for achieving the organisational objectives.
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The pattern of network of relations between the various positions in an organisation as well as between the persons who hold those positions is referred to as “Organisation chart”. Organisation data are often shown in the form of graphic chart. Organisation charts are the important tool for providing information on managerial positions and relationships in an organisation.
According to Harold Koontz and Cyril O’ Donnell, “Every organisation can be charted, for a chart is nothing more than an indication of how departments are tied together along their principal lines of authority.”
In the words of George R Terry, “A 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.”
According to Louis A Allen, “The organisation chart is a graphic means of showing organisation data. Organisation charts are snap-shots; they show only the formal organisation and depict it for only a given moment in time.”
In the word of J Batty, “An organisation chart is a diagrammatic representation of the framework or structure of an organisation.”
According to Henry H Albens, “An organisation chart portrays managerial positions and relationships in a company or department unit.”
From the above definitions, it is clear that an organisation chart is a diagrammatical form which shows important aspects of an organisation including the major functions and their respective relationships. It is a graphic portrayed of positions in the enterprise and of the formal lines of communication among them. It enables each executive and employee to understand his position in the organisation and to know to whom he is accountable.
The organisation chart has the following characteristics:
1. It is a diagrammatical presentation.
2. It shows principal lines of authority in the organisation.
3. It shows the interplay of various functions and relationships.
4. It indicates the channels of communication.
5. The organisation chart should not be confused with the organisation structure.
6. An organisation chart is merely a type of record showing the formal organisational relationships which management intends should prevail. It is, therefore, primarily a technique of presentation.
Organisation chart gives a clear picture of the organisation structure and the relationships that exist in an organisation.
1. It shows at a glance the lines of authority and responsibility. From it, the individuals can see who their associates are, to whom they report and from whom they get instructions.
2. By providing a detailed and clear picture of the authority relationships existing in an organisation, they help to avoid misunderstanding of jurisdictional problems and minimise organisational conflicts.
3. It plays a significant part in organisation improvement by pointing out inconsistencies and deficiencies in certain relationships. When management sees how its organisation structure actually looks, it may discover some unintended relationships.
4. With the help of an organisation chart, outsiders can easily know the persons whom they have to approach in connection with their work. This helps the outsiders to save their time and also to form a better opinion of the concern.
5. By providing a clear picture of the lines of authority and responsibilities, they help to avoid overlapping and duplication of authority and secure unity of command.
6. It serves as a valuable guide to the new personnel in understanding the organisation and for their training.
7. It provides a framework of personnel classification and evaluation systems. They show to the personnel what promotions they can expect, and what extra training is required for promotion to a higher position.
1. Organisation chart shows only the formal relationships and fails to show the informal relations within the organisation. Informal relationships are also important in any organisation.
2. Organisation charts, no doubt show the line of authority but they do not show the quantum of authority vested in different managerial positions. Thus, it is not bale to answer the questions like how much authority can be exercised by a particular executive, how far he is responsible for his functions and to what extent he is accountable.
3. An organisation chart is incomplete. It is not possible to include all information affecting the organisation.
4. It shows a static state of affairs and does not represent flexibility which usually exists in the structure of a dynamic organisation.
5. When there is an organisation chart, the personnel in the organisation become too conscious of their responsibilities and boundary line. This injects rigidity and inflexibility into the organisation structure. Updating is not possible without disturbing the entire set-up.
6. Organisation chart gives rise to a feeling of superiority and inferiority which causes conflicts in the organisation and affects team-spirit adversely.
7. It does not show the relationships that actually exist in the organisation but shows only the “supposed to be” relationships.
8. The organisation charts just display the organisation structure. They neither guarantee a good organisation structure nor good management.
An organisation chart can be drawn in different forms. They are:
1. Top-to-down chart or vertical chart
2. Left-to-right chart or Horizontal chart
3. Circular chart.
Top-to-down chart or vertical chart: Most organisations use this type of chart which presents the different levels of organisation in the form of a pyramid with senior executive at the top of the chart and successive levels of management depicted vertically below that. The following diagram illustrates this type of chart.
Left-to-right or Horizontal Chart: Horizontal charts which read from left to right are occasionally used. The pyramid lies horizontally instead of standing in the vertical position. The line of command proceeds horizontally from left to right showing top level at the left and each successive level extending to the right. The following diagram illustrates this type of chart:
Circular Chart: In this chart, top positions are located in the centre of the concentric circle. Positions of successive echelons extend in all directions outward from the centre. Positions of equal status lie at the same distance from the centre on the same concentric circle. The following diagram illustrates the circular chart.
An organisation chart shows who has the authority over whom but does not state that extent of authority or the duties each person in the organisation is expected to perform. In order to supplement the information of this chart, an organisation may prepare a Manual or Management Guide. Manual sets down in the form of a book or booklet all the details of the organisation, its objectives and policies, authorities, functions, duties and responsibilities of each unit and all information relating thereto. A manual can be a useful instrument of management which more than justifies the amount of work and money involved in its compilation. Where a good manual is in use, each person can determine the responsibilities of his job and its proper relationship with other jobs in the organisation. Jurisdictional conflicts and overlapping can be avoided. A manual provides quick settlement of all misunderstandings. It relieves the manager from the botheration of repeating the same information time and again. It provides uniformity and consistency in the procedures and practises. If, a good organisation manual is in use, each personnel in the organisation can know the responsibilities of his job and its relationship with other jobs in the organisation. Good organisation manual has the following contents.
1. Nature of the enterprise
2. Objectives of the enterprise
3. Policies of the management
4. Job Descriptions
5. Duties and responsibilities of various personnel
6. Instructions relating to the performance of standard as well as non-standard jobs.
The different types of manuals are:
1. Policy Manuals: It describes the overall limitations within which activities are to take place and thus reveals the broad courses of managerial action likely to take place under certain conditions.
2. Operations Manual: It is prepared to inform the employees of established methods, procedures and standards of doing the various kinds of work.
3.Organisation Manual: It explains the organisation, the duties and responsibilities of various departments, and their respective sub-divisions. Promotional charts may be included in the organisation manual which will show possible promotional lines throughout the entire organisation.
4. Departmental Practice Manual: It deals in detail with the internal policies, organisation and procedures of one department.
5. Rules and Regulations Manual: It gives information about the operating rules and employment regulations. It is a handbook of employment rules.
1. It contains in writing all-important decisions relating to internal organisation of the enterprise.
2. It avoids conflicts and overlapping of authority.
3. It enables new employees to know the various procedure and practice in the shortest possible time.
4. It enables quick decisions.
5. It contains rules and regulations which employees must follow.
1. The preparation of manual is costly and time consuming and process.
2. Manuals leave little scope of individual’s initiative and direction.
3. Manuals bring rigidity to the organisation.
4. Manuals may put on record those relationships which no one would like to see exposed.
Organisations are in different sizes and may be producing single product or multiple products. May be operating in small geographic area or different areas in the world. To cope with these varied objectives, strategies and situations, managers adopt different design/models of organisation structure. Departmentation is the process of dividing the organisation’s overall task into manageable submits. The subunits are often referred to as departments, divisions, or sections. By whatever name the units are called, the process of creation of such sub-units to facilitate the performance of activities is known as Departmentation.
This is perhaps the most logical and simple form of departmentation. Functional departmentation is the process of creating organisational units on the basis of the firm’s major activities. It involves grouping employees according to the broad tasks they perform. Normally separate departments are created for all the key activities of the business. For example, in a manufacturing company, the activities essential to the existence of the company relate to production, marketing human resources and finance. However, in non-manufacturing concerns the primary activities may differ. In a transport company, the key areas may be operations, sales and finance. Thus, public utility concerns like electricity, transport, banking, insurance and hospitals have their own distinct key functional areas.
In all these cases, under functional departmentation, major or primary departments are created along the key functional areas of the respective business. If the organisation is large, or in other words, as the organisation grows, major departments can be subdivided. These sub divisions or departments are called derivative departments. The essential idea is to take advantage of specialization. A typical functional organisation with major departments and derivative departments is shown in figure
The following are the advantage and disadvantages of Functional Departmentation.
1. It is the most logical and simple form of departmentation;
2. It makes efficient use of specialized resources and skills;
3. It makes supervision easier, since each manager has to be an expert in only his or her functional area of operation;
1. Functional departmentation is often found to be inadequate to meet the growing needs of the business, particularly as the organisation expands or diversifies its activities;
2. Further, decision-making becomes slow as the functional managers have to get the approval of the headquarters;
3. It is also difficult to determine accountability in a functional structure. If a product fails, the question as to who is responsible cannot be easily answered; and
4. Functional managers tend to develop narrow perspective and loose sight of the bigger picture.
5. Members of each department feel isolated from those in other departments. For example, manufacturing department may be obsessed with cost reduction and meeting the delivery dates neglecting the quality control. As a result, marketing department may be flooded with complaints.
As organisations are not static, they grow in size either by broadening its product line, or by expanding geographically. Further, as the size of the organisation increases, some of the disadvantages become more apparent. The organisation is rather forced to look for other models in tune with the requirements. In such situations, managements opt for various other types of departmentation, in order to have the right focus on the product or market or the process. Three patterns are adopted generally by organisations depending on the specific requirements to overcome the limitations of functional structure. They are product, territorial and customer departmentation.
One of the most common ways in which businesses grow is by expanding the product mix. If the organisation is successful in expansion, several product lines may attain such high sales volume that each product category or line may be a separate division. Large organisations like Kirloskar, Hindustan Unilever, Godrej have managed such expansion of product lines effectively by creating separate departments or divisions for the various products. Under product departmentation, a single manager, often referred to as the product manager, is delegated authority over all activities required to produce and market that product. The focus in the product departmentation, therefore, shifts on to the product and all the activities related to the production and marketing of the product. As against functions in the functional departmentation, basic products or services become the primary or major departments in the product departmentation as could be seen in the following figure
1. Product departmentation places emphasis on the basic products, the success of which is critical to the survival of the organisation;
2. Since all revenues and costs are assigned to a particular product, cost centres can be established. High profit areas can be encouraged and low/unprofitable product lines can be dropped. Thus, responsibility for cost reduction and profits can be established at the division level;
3. Proper coordination of all functional areas can be achieved as all the functional managers work as a team under close supervision of the product manager. Since the department or division is multifunctional, it often operates like an independent division or company within the large company;
4. Enables quick-response to changes in environment as compared to functionally organized firm;
5. Provide managers a training ground in general management which is useful in overcoming narrow functional perspective; and
6. Expansion and diversification of business is made easy by creating new departments for the new products that are added to the existing business.
1. Requires adequate availability of persons with general management abilities as more and more departments are created for the various products;
2. The product departments may try to become too autonomous thereby making top management control difficult; and
3. It is also common to find product departments engaged in the duplication of efforts. Each product unit has its own functional departments. These may not be sufficiently large to make maximum use of facilities. Thus product departmentation becomes an expensive organisational form, if adopted without proper justification in terms of the products strengths and market potential.
It is common that some organisations sell a wide variety of goods or services that appeal to different groups of customers, each of which has distinguished needs. Each customer group may have to be addressed differently. In such a case, departments may be created around customer groups. For instance, commercial banks organize their activities around customer groups to cater to their specific needs. As such, we find separate departments or divisions for agricultural, industrial and merchant banking operations. Similarly, we find an air-conditioning company like Blue Star organizing its business around domestic and industrial air-conditioning units.
1. Customer departmentation facilitates concentration on customer needs. This is in line with the customer orientation professed by many organisations these days;
2. Customers feel that they have an understanding supplier. For example, the manufacturer may sell to wholesalers and industrial buyers. Wholesaler requires a product of dependable quality with assured supplies. The industrial buyer wants products of high quality plus a service that includes installation and repair of the product and specific training of the company’s employees; and
3. Helps the organisation to get the correct feel of the market dynamics in terms of preferences of the customers, degree of competition, competitors’ strategies, etc.
1. Difficult to coordinate operations between competing customer demands;
2. Requires considerable expertise on the part of managers in understanding customers’ problems and specific needs; and
3. There is a possibility of under utilization of facilities and employees specialized in terms of customer groups. Small organisations particularly cannot afford the expenditure involved because some amount of duplication of the facilities is inevitable.
The process of creating departments along the geographical areas that the enterprise serves is termed territorial depart mentation. This method is adopted when an organisation operates in different geographical areas, each with distinct needs and dynamics. Territorial Depart mentation makes it easier for the organisation to cope with variations in laws, local customs and customer needs. Public utilities like transport companies, insurance companies, etc., adopt territorial depart mentation. Similarly, a large scale organisation operating both in domestic and international markets may have separate departments for both the markets. Again, different departments or divisions may be created for different regions of the world. Many multinational companies organize their global activities with regional headquarters in different regions of the world.
1. Territorial departmentation makes it possible to concentrate on markets and marketing channels in different geographical areas;
2. Develops opportunities for more efficient marketing activities because of better face-to-face communication with local stakeholders; and
3. Makes possible effective utilization of locally available resources besides being able to cater to the region specific variations in terms of preferences and sentiments of the people.
1. In this type of depart mentation, there are problems in training people to think in terms of markets rather than products;
2. Requires more persons with general managements abilities; and
3. Increases problem of top management control because of the distance between the corporate headquarters and the regional officers.
4. The three patterns of depart mentation discussed above – product, customer and territorial depart mentation broadly characterize the divisional structure. All the three patterns have advantages and disadvantages. The choice of any of these structures, therefore, would be based on which of the factors management judges to be more important and critical in the light of the strategies and objectives.
The matrix structure is a hybrid organisation form, containing of characteristics of both project and functional structures. In consumer goods industries, it could contain the characteristics of both product and functional departments. This structure allows operational responsibilities to be divided into two parts. One part contains all the responsibilities associated with the management of an independent business and it’s given to an individual who is called “business manager” or “product manager”. The other part contains all the responsibilities related to the management of resources needed to get the job done. The person responsible for these is the “functional manager” or “resource manager” in charge of the functions like production, marketing, finance, personnel and so on. The matrix is built around a cooperative relationship between the project/ product manager and the functional/ resource manager. Thus, project staff members in a matrix structure have a dual responsibility. First, they are responsible to the head of their line superior and will continue to be so. But the project manager exercises what is called project authority over the project staff. Figure presents these dual responsibilities in a matrix form of organisation. When the concepts of functional and project authority are brought together, the result is an organisation structure that is both vertical and horizontal. The vertical pattern is brought about by the typical line authority flowing down from superior to subordinate. The horizontal authority flow runs through both the scalar principle. Companies like Larsen & Tourbro (L&T), U.P. Construction Corporation, Afcons-Pauling, etc., adopt this structure for the execution of various projects. For instance, L&T’s construction of Jawaharlal Football Stadium in Chennai and Afcons-Pauling’s laying the East Coast Road are big projects themselves. The execution of such projects is entrusted to a team drawn from the functional departments of the headquarters. The overall responsibility for the project lies with project manager. The people who work in the project are responsible to the project manager as well as their functional head from whom they are drawn. The matrix may be temporary or permanent. In construction and turnkey activities, project is disbanded after the execution, whereas it may take a permanent form in the case of consumer goods company.
1. Specialized knowledge is available to all projects or products on an equal basis. Knowledge and experience can be transferred from one project to another;
2. Utilization of manpower can be flexible because a reservoir of specialists is maintained in functional departments. These specialists can be deployed to the various projects for optimum use of their services;
3. Responsibility for the overall execution, management, and profit is with the project manager who acts like a chief executive;
4. Project people have a functional home when they are no longer needed on a given projects; and
5. A better balance between time, cost and performance can be obtained through the built-in checks and balances and the continuous negotiations carried on between the project and the functional organisation.
In spite of its advantages, matrix structure suffers from some disadvantages. Mangers have to learn to deal effectively with them.
1. If the organisation has too many projects, the result may be severe layering of matrixes. Uncontrolled growth of matrix structures often results in power struggles between managers;
2. The major disadvantage relates to power struggles. Since use of the matrix means use of dual command, managers often end up in conflicts;
3. Matrix entails wide use of group decision making because group cooperation is required for success. The inevitability of group cooperation at times delays decision making; and
4. Matrix structure may be expensive. The dual chain of command may cause management costs to double.
Despite the drawbacks, matrix structure is preferred by many organisations because of the overriding advantages. In addition to construction and engineering, consumer goods, banking, insurance and computer companies are now using it. Variations of matrix are also used by hospitals and other professional organisations.
Organisation requires the creation of structural relationship among different departments and the individuals working there for the accomplishment of desired goals. Organisation structure is primarily concerned with the allocation of tasks and delegation of authority. The establishment of formal relationships among the individuals working in the organisation is very important to make clear the lines of authority in the organisation and to coordinate the efforts of different individuals in an efficient manner. According to the different practices of distributing authority and responsibility among the members of the enterprise, several types of organisation structure have been evolved. They are:
1. Line organisation
2. Line and staff organisation
3. Functional organisation
4. Committee organisation
This is the simplest and the earliest form of organisation. It is also known as “Military”, “traditional”, “Scalar” or “Hierarchical” form of organisation. The line organisation represents the structure in a direct vertical relationship through which authority flows. Under this, the line of authority flows vertically downward from top to bottom throughout the organisation. The quantum of authority is highest at the top and reduces at each successive level down the hierarchy. All major decisions and orders are made by the executives at the top and are handed down to their immediate subordinates who in turn break up the orders into specific instructions for the purpose of their execution by another set of subordinates. A direct relationship of authority and responsibility is thus established between the superior and subordinate. The superior exercises a direct authority over his subordinates who become entirely responsible for their performance to their commanding superior. Thus, in the line organisation, the line of authority consists of an uninterrupted series of authority steps and forms a hierarchical arrangement. The line of authority not only becomes the avenue of command to operating personnel, but also provides the channel of communication, coordination and accountability in the organisation. Professor Florence enunciates three principles which are necessary to realise the advantages of this system and the non-observance of which would involve inefficiency. They are-
1. Commands should be given to subordinates through the immediate superior; there should be no skipping of links in the chain of command.
2. There should be only one chain. That is, command should be received from only one immediate superior.
3. The number of subordinates whose work is directly commanded by the superior should be limited.
The following Figure depicts the line organisation:
1. It is the easiest to establish and simplest to explain to the employers.
2. It fixes responsibility for the performance of tasks in a definite manner upon certain individuals.
3. There is clear-cut identification of authority and responsibility relationship. Employees are fully aware of the boundaries of their job.
4. It is most economical and effective.
5. It makes for unity of control thus conforming to the scalar principle of organisation.
6. It ensures excellent discipline in the enterprise because every individual knows to whom he is responsible. The subordinates are also aware of the necessity of satisfying their superior in their own interests.
7. It facilitates prompt decision-making because there is definite authority at every level.
8. As all the activities relating to one department or division are managed by one executive, there can be effective coordination of activities.
9. This system is flexible or elastic, in the sense that, as each executive has sole responsibility in his own position and sphere of work, he can easily adjust the organisation to changing conditions.
10. Under this system, responsibility and authority are clearly defined. Every member of the organisation knows his exact position, to whom he is responsible and who are responsible to him. Because of the clear fixation of responsibility, no person can escape from his liability.
1. With growth, the line organisation makes the superiors too overloaded with work. Since all work is done according to the wishes of one person alone, the efficiency of the whole department will come to depend upon the qualities of management displayed by the head of that department. If therefore, something happens to an efficient manager, the future of the department and of the concern as a whole would be in jeopardy.
2. Being an autocratic system, it may be operated on an arbitrary, opinionated and dictatorial basis.
3. Under this system, the subordinates should follow the orders of their superior without expression their opinion on the orders. That means there is limited communication.
4. There may be a good deal of nepotism and favouritism. This may result in efficient people being left behind and inefficient people getting the higher and better posts.
5. The line organisation suffers from lack of specialised skill of experts. Modern business is so complex that it is extremely difficult for one person to carry in his head all the necessary details about his work in this department.
6. Line organisation is not suitable to big organisations because it does not provide specialists in the structure. Many jobs require specialised knowledge to perform them.
7. If superiors take a wrong decision, it would be carried out without anybody having the courage to point out its deficiencies.
8. The organisation is rigid and inflexible.
9. There is concentration of authority at the top. If the top executives are not capable, the enterprise will not be successful.
Professor Florence, sums up the inefficiencies of the line organisation system under three heads:
1. Failure to get correct information and to act upon it;
2. Red-tape and bureaucracy;
3. Lack of specialised skill or experts… while commands go down the line under the hierarchical system information is supposed to be coming up the line.” In spite of these drawbacks, the line organisation structure is very popular particularly in small organisations where there are less number of levels of authority and a small number of people.
In line and staff organisation, the line authority remains the same as it does in the line organisation. Authority flows from top to bottom. The main difference is that specialists are attached to line managers to advise them on important matters. These specialists stand ready with their speciality to serve line mangers as and when their services are called for, to collect information and to give help which will enable the line officials to carry out their activities better. The staff officers do not have any power of command in the organisation as they are employed to provide expert advice to the line officers. The combination of line organisation with this expert staff constitutes the type of organisation known as line and staff organisation. The ‘line’ maintains discipline and stability; the ‘staff’ provides expert information. The line gets out the production, the staffs carries on the research, planning, scheduling, establishing of standards and recording of performance. The authority by which the staff performs these functions is delegated by the line and the performance must be acceptable to the line before action is taken. The following Figure depicts the line and staff organisation:
1. Under this system, there are line officers who have authority and command over the subordinates and are accountable for the tasks entrusted to them. The staff officers are specialists who offer expert advice to the line officers to perform their tasks efficiently.
2. Under this system, the staff officers prepare the plans and give advice to the line officers and the line officers execute the plan with the help of workers.
3. The line and staff organisation is based on the principle of specialisation.
1. It brings expert knowledge to bear upon management and operating problems. Thus, the line managers get the benefit of specialised knowledge of staff specialists at various levels.
2. The expert advice and guidance given by the staff officers to the line officers benefit the entire organisation.
3. As the staff officers look after the detailed analysis of each important managerial activity, it relieves the line managers of the botheration of concentrating on specialised functions.
4. Staff specialists help the line managers in taking better decisions by providing expert advice. Therefore, there will be sound managerial decisions under this system.
5. It makes possible the principle of undivided responsibility and authority, and at the same time permits staff specialisation. Thus, the organisation takes advantage of functional organisation while maintaining the unity of command.
6. It is based upon planned specialisation.
7. Line and staff organisation has greater flexibility, in the sense that new specialised activities can be added to the line activities without disturbing the line procedure.
1. Unless the duties and responsibilities of the staff members are clearly indicated by charts and manuals, there may be considerable confusion throughout the organisation as to the functions and positions of staff members with relation to the line supervisors.
2. There is generally a conflict between the line and staff executives. The line managers feel that staff specialists do not always give right type of advice, and staff officials generally complain that their advice is not properly attended to.
3. Line managers sometimes may resent the activities of staff members, feeling that prestige and influence of line managers suffer from the presence of the specialists.
4. The staff experts may be ineffective because they do not get the authority to implement their recommendations.
5. This type of organisation requires the appointment of large number of staff officers or experts in addition to the line officers. As a result, this system becomes quite expensive.
6. Although expert information and advice are available, they reach the workers through the officers and thus run the risk of misunderstanding and misinterpretation.
7. Since staff managers are not accountable for the results, they may not be performing their duties well.
8. Line mangers deal with problems in a more practical manner. But staff officials who are specialists in their fields tend to be more theoretical. This may hamper coordination in the organisation.
The difficulty of the line organisation in securing suitable chief executive was overcome by F.W. Taylor who formulated the Functional type of organisation. As the name implies, the whole task of management and direction of subordinates should be divided according to the type of work involved. As far as the workman was concerned, instead of coming in contact with the management at one point only, he was to receive his daily orders and help directly from eight different bosses; four of these were located in the planning room and four in the shop. The four specialists or bosses in the planning room are:
1. Route Clerk: To lay down the sequence of operations and instruct the workers concerned about it.
2. Instruction Card Clerk: To prepare detailed instructions regarding different aspects of work.
3. Time and Cost Clerk: To send all information relating to their pay to the workers and to secure proper returns of work from them.
4. Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
The four specialists or bosses at the shop level are:
1. Gang Boss: To assemble and set up tools and machines and to teach the workers to make all their personal motions in the quickest and best way.
2. Speed Boss: To ensure that machines are run at their best speeds and proper tools are used by the workers.
3. Repair Boss: To ensure that each worker keeps his machine in good order and maintains cleanliness around him and his machines.
4. Inspector: To show to the worker how to do the work.
The features of functional organisation are as follows:
1. The work of the enterprise is divided into different functional departments and the different functional departments are placed under different specialists.
2. The functional specialist has the authority or right to give orders regarding his function whosesoever that function is performed in the enterprise.
3. Under this system, the workers have to receive instructions from different specialists.
4. If anybody in the enterprise has to take any decision relating to a particular function, it has to be in consultation with the functional specialist.
5. Under this system, the workers have to perform a limited number of functions.
1. Functional organisation is based on expert knowledge. Every functionary in charge is an expert in his area and can help the subordinates in better performance in his area.
2. Division of labour is planned not incidental.
3. As there is not scope for one-man control in this form of organisation, this system ensure co-operation and teamwork among the workers.
4. This system ensures the separation of mental functions from manual functions.
5. It helps mass production by standardization and specialization.
6. This system ensures maximum use of he principle of specialisation at every work point.
7. As there is joint supervision in the organisation, functional organisation reduces the burden on the top executives.
8. Functional organisation offers a greater scope for expansion as compared to line organisation. It does not face the problem of limited capabilities of a few line managers.
9. The expert knowledge of the functional mangers facilitates better control and supervision in the organisation.
1. It is unstable because it weakens the disciplinary controls, by making the workers work under several different bosses. Thus, functional organisation violates the principle of unity of command.
2. Under this type of organisation, there are many foremen of equal rank. This may lead to conflicts among them.
3. The co-ordinating influence needed to ensure a smoothly functioning organisation may involve heavy overhead expenses.
4. The inability to locate and fix responsibility may seriously affect the discipline and morale of the workers through apparent or actual contradiction of the orders.
5. This system is very costly as a large number of specialists are required to be appointed.
6. A functional manager tends to create boundaries around himself and think only in term of his own department rather than of the whole enterprise. This results in loss of overall perspective in dealing with business problems.
7. It is difficult for the management to fix responsibility for unsatisfactory results
Committee organisation as a method of managerial control has very little practical importance, because it is managed by a senior member of the committee only. But the committee organisations are widely used for the purpose of discharging advisory functions of the management. Committees are usually relatively formal bodies with a definite structure. They have their own organisation. To them are entrusted definite responsibility and authority. According to Hicks, “A committee is a group of people who meet by plan to discuss or make a decision for a particular subject.”
According to Louis A Allen, “A committee is a body of persons appointed or elected to meet on an organised basis for the consideration of matters brought before it.”
A committee may formulate plans, make policy decisions or review the performance of certain units. In some cases, it may only have the power to make recommendations to a designated official. Whatever may be the scope of their activities, committees have come to be recognised as an important instrument in the modern business as well as non-business organisations.
Committees are constituted to achieve one or more of the following objectives:
1. To have consultations with various persons to secure their view-points.
2. To give participation to various groups of people.
3. To secure cooperation of different departments.
4. To coordinate the functioning of different departments and individuals by bringing about unity of directions.
1. Line committee: If a committee is vested with the authority and responsibility to decide and whose decisions are implemented, it is known as line committee.
2. Staff committee: If a committee is appointed merely to counsel and advise, it is known as a staff committee.
3. Formal committee: When a committee is constituted as a part of the organisation structure and has clear-cut jurisdiction, it is a formal committee.
4. Informal committee: An informal committee is formed to advice on certain complicated matters. It does not form part of the organisation structure.
5. Coordinating committee: It is constituted to coordinate the functioning of different departments.
6. Executive committee: It is a committee which has power to administer the affairs of the business.
7. Standing committee: are formal committees that are of permanent character.
8. Ad hoc committee: They are temporary bodies. It is appointed to deal with some special problem and stops functioning after its job are over.
1. A committee is an effective method of bringing the collective knowledge and experience of a number of persons. Therefore, many multi-dimensional and complex problems of modern enterprises, which cannot be solved satisfactorily by individual managers, can be solved by committees.
2. Committees offer scope for group deliberations and group judgment. Results obtained by group deliberation and group judgment are likely to be better than those obtained by individual judgment.
3. When it is necessary to integrate varying points of view, which cannot conveniently be coordinated by individuals, the committee may be used to bring about coordination.
4. The management can give representation to the employees in various committees. This will motivate the employees for better performance as they feel that they have a say in the affairs of the organisation.
5. A committee form of organisation facilitates pooling of authority of individual managers for making some type of decisions of an inter-departmental nature.
6. A committee form of organisation tends to promote organisational cohesiveness. Group endeavour, team spirit and collective responsibility are control to the philosophy of committees.
1. If a manager has an opportunity to carry a problem to a committee, he may take it as a means of avoiding decision-making or to escape the consequences of an unpopular decision.
2. Sometimes, a committee may not be able to take the needed decision because of the conflicting views of the members.
3. Committees take more time in procedural matters before any decision is taken. In some cases, slowness seriously handicaps the administration of the organisation.
4. Committees are an expensive device both in terms of cost and time.
5. When the committee findings represent a compromise of different viewpoints, they may be found to be weak and indecisive.
6. No member of a committee can be individually held responsible for the wrong decision taken by the committee.
7. It is very difficult to maintain secrecy regarding the deliberations and the decisions taken by a committee, especially when there are many members in the committee
When we talk about culture, we are typically referring to the pattern of development reflected in a society’s system of knowledge, ideology, values, laws, social norms and day-to-day rituals. Accordingly, culture varies from one society to another. The word “culture” has been derived metaphorically from the idea of “cultivation” the process of Organising tilling and developing land. Thus, culture can be considered as a constellation of factors that are learned through our interaction with the environment. The organisational culture is a system of shared beliefs and attitudes that develop within an organization and guides the behaviour of its members. There are clear-cut guidelines as to how employees are to behave generally within organization. The employees need to learn how the particular enterprise does things.
A few definitions on the term organisational culture are given below:- According to Larry Senn, The corporate culture “consists of the norms, values and unwritten rules of conduct of an organization as well as management styles, priorities, beliefs and inter-personal behaviour that prevail. Together they create a climate that influences how well people communicate, plan and make decisions”
From the above definitions it is clear that culture is how an organization has learned to deal with its environment. It is a complex mixture of assumptions, behaviours, myths and other ideas that fit together to define what it means to work in a particular organization.
Edgar H Schein suggests that culture exists on three levels: artefacts, espoused values and underlying assumptions.
1. Artefacts: According to Schein, Artefacts are the first level of organisational culture.Artefacts are the things that come together to define a culture and reveal what the culture is about to those who pay attention to them. They include products, services, and even behaviour patterns of the members of an organization. Schein has defined Artefacts as things that “one sees, hears, and feels when one encounters a new group with an unfamiliar culture”.
2. Espoused Values: Espoused values are the second level of organisational culture. Values are things worth doing, or the reasons for doing what we do. Values are the answers to the “why” questions. For examples, why are you reading this book? To know more about Organization Behaviour. Why is that Important? To be a better HR Manager. Why do you need more money? To fulfil my wife’s desire to own a farm house. Such questions go on and on, until you reach the point where you no longer want something for the sake of something else. At this point, we have arrived at a value. Corporations have values, such as size, profitability, or making a quality product. Espoused values are the reasons that we give for doing what we do. Schein argues that most organisational cultures can trace their espoused values back to the founders of the culture.
3. Basic Assumptions: The third level of organisational culture, are the beliefs that organization members take for granted. Culture prescribes “the right way to do things” at an organization, often through unspoken assumptions.
Research conducted by D.R Denison and A.K Mishra, show that organisational culture is related to organisational success. Organisational culture is a framework that guides day-to-day behaviour and decision making for employees and directs their actions toward completion of organisational goals. Culture is what gives birth to and defines the organisational goals. Culture must be aligned with the other parts of organisational actions, such as planning, organizing, leading, and controlling; indeed, if culture is not aligned with these tasks, then the organization is in for difficult times.
Features of Successful Organisation Culture are:
1. Adaptability: is the ability to notice and respond to changes in the organisation’s environment.
2. Involvement: In cultures that promote higher levels of employment in decision making employees feel a greater sense of ownership and responsibility.
3. Clear Mission: Mission is a company’s purpose or reason for existing. In organisational cultures in which there is a clear organisational vision, the organisation’s strategic purpose and direction are apparent to everyone in the company.
4. Consistency: In consistent organisational cultures, the company actively defines and teaches organisational values, beliefs and attitudes. Consistent organisational cultures are also called strong cultures, because the core beliefs and widely shared and strongly held
Conclusion: Organisational culture refers to a system of shared meaning held by members that distinguishes the organisation form other organisations. Organisational culture is concerned with how employees perceive the characteristics of an organisation’s culture. It represents a common perception held by the organisation’s members.
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