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When there are activities of two or more persons, the organisation starts evolving. Organisations can be simple or complex. They have both macro and micro aspects. basic elements of organisation have remained the same over the years. They have a purpose. They attract people. They acquire resources which they use. They aspire to achieve the set of objectives. They use some form of structure to decide the work load and co-ordinate the activities. They depend upon certain positions/people to lead/ manage others. While these basic elements are common to all organisations, what differentiates them is their purpose, structure and style of functioning.
“Organisation is to determine the activities to accomplish a job and arrange the distribution of activities among the people.”-L. Urwick
“Organisation is a harmonious adjustment of specialized parts for the accomplishment of some common purpose or purposes”.-L.H. Haney
“Organisation is an identifiable group of people contributing their efforts towards the attainment of goals.” -Mc. Farland
“Organisation is a combination of necessary human beings, materials, tools, equipments, working space and apparatuses, brought together in a systematic and effective co-relation to accomplish some desired objects.”-J.N. Schulze
“Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibilities and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives,”Louis A. Allen
“Organisation is the process of combining the work which individuals and groups have to perform with the facilities necessary for its execution that the duties so formed provide the best channels for efficient, systematic, positive and co-ordinated application of available efforts.” Oliver Sheldon
“Organisation is the form of every human association for the attainment of a common purpose. They visualise it as the process of relating specific duties or functions in a co-ordinated whole.”Mooney & Railey
The nature of the organisation can be discussed by the two concepts:
1. Organisation as a social system.
2. Formed on the basis of mutual interest.
1. Organisation As A Social System: From sociology, we learn that organisations are social systems. Consequently, activities therein are governed by social laws as well as psychological laws. Just as people have psychological needs, they also have social roles and status. Their behaviour is influenced by their group as well as their individual drives. There are two types of social systems exist side by side in organisations. One is formal system and other is the informal social system.
The existence of social system implies that the organisational environment is one of the dynamic change, rather than a static set of relations. All parts of the system are interdependent and subject to influence by any other part.
2. Formed On The Basis Of Mutual Interest: Mutual interest is represented by the statement “Organisation need people, and people also need organisation.” Organisations have a human purpose. They are formed and maintained on the basis of some mutuality of interest among the participants. People see organisations as a means to help reach organisational objectives. If mutuality is lacking, it make no sense to try to assemble a group and develop co-operation, because there is no common base on which to build. The given figure shows that mutual interest provides a superordinate goal that integrates the efforts of individuals and groups.
Features of A Good Organisation Structure :
A good organisation structure should meet various needs and requirements of the enterprise. The following are the features of a good organisation structure:
1. Adequate delegation of authority.
2. Simple and flexible
3. Span of control
4. Clear line of authority.
5. Less managerial levels
1. Adequate delegation of authority: Delegation of authority must be commensurate with the responsibility assigned. If the authority is not sufficient for getting the assigned task then. the work will not be completed. Sometimes, managers assign work to subordinates without giving them properauthority, it shows lack of decision making on their part. An adequate authority will create problems for the subordinates because they may not be able to accomplish the task.
2. Simple and flexible: Organisational structure should be very simple. There should not be unnecessary levels of management. A good structure should avoid ambiguity and confusion. The system should also be flexible to adjust according to the changing needs. There may be an expansion or diversification which requires re-classification of duties and responsibilities. The organisation structure should be able to incorporate new changes without altering the basic elements.
3. Span of control: Span of control refers to the number of people a manager can directly supervise. A person should supervise only that number of subordinates to whom he can directly keep under contact. The number of people to be supervised may not be universally fixed because it will be influenced by the nature of work. Efforts should be made to keep a well managed group under a supervisor other wise there will be inefficiency and low performance.
4. Clear line of authority: There should be a clear line of authority from top to the bottom. The delegation of authority should be done step by step and according to the nature of work assigned. Every body in the organisation should be clear about his work and authroity delegated to him. In the absence of this clarity, there will be confusion, friction and conflict.
5. Less managerial levels: As far as possible, minimum levels of management may be created. More the number of these levels, more the delays in communication. It will take more time to convey the decisions from the top to the bottom. Similarly, information from lower levels will take much time in reaching at the top.
The number of managerial levels depends upon the nature & scale of operations. No specific number of levels may be specified for each and every concern but efforts should be made to keep them at the minimum.
The management of every enterprise has to evolve its own organisation structure. The form of organisation structure mainly depends upon the nature of the activities of business, competence of personnel and the philosophy of management. There are three basic types of organisation structures which are used by different enterprises. These are :
1. Line Organisation.
2. Line and Staff Organisation.
3. Functional Organisation.
The meaning, features and the distinction between these forms of structures are discussed below.
It is the oldest and simplest form of organisation structure and is also known as the scalar or military type organisation. Under this form of organisation, line of authority flows vertically from the topmost executive to the lowest.subordinate throughout the entire organisational structure. The authority is the highest at the top and reduces through each successive level down the organisational scale. The direct vertical flow of authority creates superior-subordinate relationships as a scalar chain from top to bottom .
The activities of the business are divided into several departments and the authority flows downward from the Chief Executive through the departmental managers to the lower levels in the organisation. The figure shows that organisational activities have been divided into three departments. namely, production, finance and marketing. Each departmental manager derives authority from the General Managers and has complete authority over his own department. No departmental manager can issue orders andinstructions to the employees of other departments.
The features of line organisation are as under :
1. Under the line organisation, every person is in the command. The line of authority consists of an uninterrupted seriesdirect chain of authority ladders or steps and forms a hierachical arrangement.
2. The line of authority not only becomes the avenue of command to operating personnel, but also provides the channels of communication, coordination and accountability in the enterprise.
3. Line authority gives a right to the superior to take disciplinary action against the subordinates who fail to carry out their responsibilities.
4. There is a complete unity of command as every subordinate receivesorders from one boss only.
Merits. The merits of line organisation are as under :
1. Simplicity. It is very simple to establish and can be easily understood by the employees.
2. Clear-cut Relationships. There is clear-cut identification of authorityand responsibility relationships.
3. Unity of Command. It facilitates unity of command and thus conforms to the scalar principle of organisation. Every subordinate gets orders and instructions from one superior only. Thus, there is no chance of conflicting orders.
4. Discipline. It ensures discipline in the enterprise because every individual knows to whom he is responsible.
5. Quick Decision-making. It facilitates prompt decision-making because there is definite authority at every level. An executive cannot shifthis duty of decision making to others, nor can the blame be shifted.
6. Flexibility. It can be easily adapted to the requirements of the enterprise. Each manager has exclusive authority over his unit and so he can easily make changes in the functioning of the unit, when required by the circumstances.
7. Fixation of Responsibility. Under line organisation, every individual knows his responsibility or obligation to his superior. There is no overlapping of responsibility. In case of any wrong action, it is easy to hold the individual responsible.
Demerits. The demerits of line organisation are discussed below:
1. There is concentration of authority at the top. If the top executives are not capable, the enterprise will not be successful.
2. There is practically no communication from bottom upwards because of concentration of authority at the higher levels.
3. With growth, the line organisation makes the top executives too much overburdened with work.
4. Line organisation: is not suitable for big organisations because oflack of specialisation. Many jobs create problems of their own whichrequire the assistance of specialists.
Despite these drawbacks, the line organisation is very popular particularly in small organisations where there are two or three levels of authority and a small number of employees. A modification of this structure is line and staff organisation under which specialists are attached to line executives to provide them specialised assistance on matters of great importance to the enterprise.
According to Louis A. Allen, “Line refers to those positions and elements of the organisation which have the responsibility and authority and are accountable for accomplishment of primary objectives. Staff refers to those elements which have responsibility and authority for providing advice and service to line in attainment of objectives.” Line elements provide decision authority and a central means for the flow of communication through a scalar chain of authority. Staff elements facilitate decision process by bringing in expert and specialised knowledge.
Line and staff organisation provides for the services of specialists to the line executive as shown in given figure below. Thus, it is an improvement over line organisation. Three kinds of staff may be used as discussed below:
1. Personal Staff. It refers to the positions created to help a manager in carrying out those parts of his responsibilities which he cannot or does not want to delegate to others. Personal staff is required by top managers because their responsibilities grow beyond their personal capacities. For instance, a general manager of a company may have a personal secretary to help him in carrying out his responsibilities.
2. Specialised Staff. It counsels, advises and helps all line and other staff elements in the organisation. It consists of specialists in different areas like accounting, quality control, personnel, public relations, etc. Staff specialists generally provide both advice and service to the line departments of the organisation.
3. General Staff. It consists of a group of experts in different areas who are attached to the central office of the organisation. It is generally employed to provide advice on special matters to the top management.
Board of Directors
The features of line and staff organisation are as under:
1. In line and staff organisation, line authority moves down in thesame manner as in the line organisation.
2. Specialists are attached to line managers to advise them on important matters. They stand ready with their speciality to serve line managers as and when their services are called for to collect information and to give expert advice.
3. The staff officers do not have any power of command in theorganisation as they are employed to provide advice to the line officers.
4. In most organisations, the use of staff can be traced to the need for help in handling details, gathering data and offering advice onspecific managerial problems.
Merits. The line and staff organisation has the following merits:
1. Specialised knowledge. Line managers get the benefit of specialised knowledge of staff specialists at various levels.
2. Reduction of burden. Staff specialists relieve the line managers ofthe botheration of concentrating on specialised functions likeaccounting, selection and training, public relations, etc.
3. Proper weightage. Many problems that are ignored or poorly handled in the line organisation can be properly covered in the line and staff organisation by the use of staff specialists.
4. Better decisions. Staff specialists help the line executives in takingbetter decisions by providing them with adequate information ofright type at the right moment and expert advice.
5. Line and staff organisation is more flexible as compared to the line organisation. General staff can be employed to help line managers at various levels.
6. Unity of command. Under this system, the experts provide special guidance without giving orders. It is the line manager who only has got the right to give orders. The result is that the enterprise takes advantage of functional specialisation while maintaining theunity of command, i.e., one subordinate receiving orders from oneboss only.
Demerits. Line and staff organisation suffers from the followingdrawbacks:
1. There is generally a conflict between the line and staff executives.There is a danger that the staff men may encroach on the line authority. Line managers feel that staff specialists do not always give right type of advice, and staff officials generally complain thattheir advice is not properly attended to.
2. The allocation of duties between the line and staff executives is generally not very clear. This may hamper coordination in the organisation.
3. Since staff men are not accountable for the results, they may not beperforming their duties well.
4. There is a wide difference between the orientations of the line andstaff men. Line executives deal with problems in a more practicalmanner. But staff officials who are specialists in their fields tend tobe more theoretical.
Line and staff organisation structure gained popularity because certain problems of management became so complex that in order to deal with them expert knowledge became necessary which could be provided by the staff officers. For instance, personnel department is established as a staff department to advise the top executives and other line executives on personnel matters. Similarly, accounts, law and public relations departments may be set up to advise on problems related to accounting, legal issues and public relations.
Line and staff organisation is more suitable for a large organisation as compared to line organisation because of the need of expert advice and up to-date information for taking important decisions. Lastly, line can exist independently, but staff leans heavily on the line organisation for its existence. Line managers can make use of the expert advice of staff specialists in case of line and staff organisation. Therefore, line and staff organisation is certainly better than line organisation.
| Line Organisation | Line and Staff Organisation |
| 1. Line refers to those positions which have the responsibility of achieving the primary objectives of the organisation.
2. There are no experts to assist and advise the line officials.
3. There is strict discipline.
4. There is no scope of friction between line and staff officials.
5. It is not based upon planned specialisation.
6. Certain line men may become key men as they occupy those positions on which the survival of the organisation depends. |
1. Staff refers to those positions which have responsibility for providing advice and service to the line in attainment of organisational objectives.
2. There are experts known as staff to assist and advise the line officials.
3. There is loose discipline.
4. There is always a risk of friction between line and staff people over their respective roles. 5. It is based upon planned specialisation.
6. This is not possible in case of line and staff organisation as staff officials always share credit with line officials. |
Functional authority occupies a mid-way position between line and staff authority. It is a means of putting the specialists in top positions throughout the enterprise. It confers upon the holder of a functional position a limited power of command over the people of various departments concerning his function. Functional authority remains confined to functional guidance of different departments. It helps in maintaining quality and uniformity of the performance of functional areas throughout the organisation.Functional Organisation:
Under functional organisation, various activities of the enterprise are classified according to certain functions like production, marketing, finance, personnel, etc. and are put under the charge of functional specialists. A functional incharge directs the subordinates throughout the organisation in his particular area of business operation. That means subordinates receive orders and instructions not from one superior but from several functional specialists. In other words, the subordinates are accountable to different functional specialists for the performance of different functions.
It was F.W. Taylor who evolved functional organisation for planning and controlling manufacturing operations on the basis of specialisation. But in practice, functionalisation is restricted to the top of the organisation structure and is not carried down to the lowest level in the organisation as recommended by Taylor. The functional foremanship recommended by Taylor has been found to be impracticable as a worker can’t pursue the instructions of eight functional foremen..
The features of functional organisation are enumerated below :
1. The entire organisational activities are divided into specified functions such as operations, finance, marketing, personnel, public relations, etc.
2. Each functional area is put under the charge of a functional specialist. The specialist has the authority or right to give orders regarding his function where so ever that function is performed in the enterprise.
3. If anybody in the enterprise has to take any decision relating to aparticular function, it has to be in consultation with the functionalspecialist.
Merits. The merits of functional organisation have been discussed below:
1. Functional organisation helps in achieving the benefits of specialisation of work. Every functional incharge is an expert in his area and can help the subordinates in better performance in his area.
2. Executive development. A functional manager is required to have expertise in a particular function only. This makes it easy to develop the executives.
3. Reduction of workload. Functional organisation reduces the burden on the top executives. There is joint supervision in the organisation. And every functional incharge looks after his functional area only.
4. Scope for expansion. 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.
5. Better control. The expert knowledge of the functional managersfacilitates better control and supervision in the organisation.
Demerits. Functional organisation suffers from the followingdrawbacks:
1. Functional organisation violates the principle of unity of command since a person is accountable to a number of bosses.
2. The working of functional organisation is too complicated to beeasily understood by the workers. Workers are supervised by anumber of bosses. This creates confusion in the organisation.
3. Functional organisation develops specialists rather than generalists. This may create problem in succession of top executive positions.
4. A functional manager tends to create boundaries around himself and thinks only in terms of his own rather than of thewhole enterprise. This results in loss of overall perspective in dealing with the business problems.
5. There is generally lack of coordination among the functional executives and delay in decision-making when a decision problem requires the involvement of more than one specialist.
| Line Organisation | Functional Organisation |
| 1. The line of authority is vertical as it follows the principle of scalar chain.
2. Line managers are generalists.
3. There is unity of command.
4. There is strict discipline.
5. It is suitable for small scale operation. |
1. The line of authority is functional or diagonal. The functional manager has authority over his function wherever it is performed.
2. Functional managers are specialists in their respective areas.
3. Unity of command is not followed as each subordinate gets instructions from his line boss and the functional bosses.
4. There is loose discipline.
5. It is suitable for large scale operations where use of expert knowledge in certain fields is a must. |
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