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Types of Organisation: Full Overview

Organisation

Introduction

The division of labour and management span concepts are used to create the different types of organisations. The expertise and competency of the organization’s officials determine the organization’s success. To obtain the intended outcomes, it is necessary to draw a line of authority among the individuals that work in an organisation.

Furthermore, it entails assigning roles to officers and integrating the activity of all officers to achieve the desired goals. “The difficulty of an organisation is to choose and combine the efforts of personnel with suitable traits in order to generate the desired outcomes,” say Kimball and Kimball.

Internal organisation is often determined by the kind, scope, and size of the firm. The following frequent kinds of organisations have a position in the internal organisational structure.

  1. Organizations may be classified as Line, Military, or Scalar.
  2. Organizational structure that is functional.
  3. Organization of lines and personnel.
  4. The formation of a committee
  5. Project management.
  6. Matrix management.
  7. Organization that is unstructured.

The following is a basic description of the many sorts of organisations:

1. Line Organisation

Line organisation is the most basic and oldest sort of organisation used in businesses. Each department in a line organisation is usually a self-contained entity. A single individual will be in charge of the department’s operations, and he will have complete authority over it.

Certain powers will be granted to line executives, allowing them to make judgments as needed. He informs his subordinates of his choice and commands. Subordinates may then transmit them to people who are directly under them.

Such decision-making power should be delegated from the top to the bottom. Top management executives have more decision-making power than lower-level executives. It’s worth noting that in this sort of company, an executive is separate from other executives at the same level (say departmental heads).

To put it another way, same-level executives do not issue or receive instructions from one another. They do, however, take commands from their immediate superior (general manager) and pass them on to their subordinates.

As a result, it is well understood that the general manager is accountable for all department heads. The board of directors, in turn, is answerable to the general manager. The shareholders, who are the owners, keep the board of directors accountable.

The army follows a similar trend in terms of organisation. As a result, it is known as a military organisation. The chain of authority in this sort of organisation runs vertically from top to bottom. As a result, it’s known as line organisation.

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Characteristics of Line Organisation

  1. It is made up of vertically direct linkages.
  2. From the top to the bottom, authority flows.
  3. Department chiefs have complete power over their departments.
  4. Each member is aware of who he should receive commands from and who he should give orders to.
  5. This method is incredibly simple to use.
  6. A senior member commands his subordinates directly.
  7. A direct link exists between bosses and subordinates.
  8. Each member understands who is accountable for the achievement of the organization’s goals.
  9. Within the limits of his power, the superior makes choices.

Benefits of Line Organisation

  1. Simplicity: Creating a line organisation is fairly simple. Its employees have no trouble comprehending concepts and relationships with others. Ideals don’t have any complications.
  2. Division of authority and responsibility: Each individual has a clear understanding of his or her sphere of authority. As a result, he understands who he is accountable to when it comes to completing the task. After his responsibility had been set, no one could share it.
  3. Uniformity of command: Uniformity of command states that an individual may only receive commands from one superior. It signifies that a subordinate has just one superior and receives only commands from him.
  4. Quick action: There is an appropriate distribution of power and responsibility, as well as unity of command, in line organisation. As a result, a person may make quick judgments and carry out plans.
  5. Discipline: Authority is delegated from the top to the bottom. Loyalty and discipline among the organization’s personnel may be maintained with relative ease.
  6. Line organisation is cost-effective since it is a single form of organisation.
  7. Coordination: The business activities are divided into categories based on their purpose. Each department is in charge of a certain function, allowing department leaders to coordinate with their subordinates.
  8. At all levels of the organisation, there is a direct interaction between the superior and the subordinate. This will assist in getting to know each other better. This will guarantee direct communication between staff members and boost employee efficiency.
  9. Flexibility: Changes in the organisation may be made quickly to meet changing business circumstances.

Disadvantages of Line Organisation

  1. Lack of specialisation: Each individual is solely accountable for the general display of activity related to his or her department. He won’t be expected to be an expert in every facet of management. He just delivers orders to his subordinates and is not an expert in all parts of the operation.
  2. Overloading: As the scope of operations or the size of the business unit grows, this mechanism transfers work to current executives. As a result, they are unable to adequately lead and manage the efforts of their subordinates.
  3. Lack of initiative: Because top management has the most power, departments will lack the drive to encourage their employees.
  4. When there is the potential for favouritism and nepotism, only one person supervises the actions of the department.
  5. Dictatorial: In a line organisation, a subordinate is expected to follow out the superior’s instructions and commands. He will be punished if he does not comply. This necessitates an authoritarian and aristocratic style to governance. As a result, instead of becoming leaders, managers will become tyrants.
  6. Limited communication: Communication usually travels downhill in normal time, but it seldom flows upwards. Orders, directions, and other forms of downward communication may be used. If upward communication is permitted, management may be aware of employee complaints. Top management, on the other hand, dislikes upward communication. As a consequence, communication is restricted.
  7. Unitary administration: Each department’s operations are overseen by a single executive who is responsible for all of his department’s decisions. As a result, his talents are critical to the department’s success.
  8. Subjective perspective: The availability of authority is greater for superiors than for subordinates. As a result, the superior makes decisions without consulting the subordinates. The superior’s judgments should be followed by the subordinate.
  9. Instability: The success of this sort of organisation is largely dependent on the skill of a few powerful men, and its downfall is almost certainly due to the incapacity of the same individuals.
  10. Lack of coordination: It is difficult to develop coordination among department leaders. The reason for this is because the executive of one department does not value the importance of other departments. As a consequence, there will be a lack of cooperation and team spirit.
  11. Unsuitability for a large-scale company that demands specialisation: This sort of line organisation is not appropriate for a large-scale operation that requires specialisation.
  12. Rather of following a scientific strategy, company operations may be separated according to the manager’s wishes.
  13. The system has no way of rewarding the productive worker and penalising the ineffective one.
  14. Effective people are critical to top management in a line organisation. In practise, finding effective people for small businesses is quite challenging. 15. Managerial planning, research and development, and regulating operations of the organisation take more time and effort than is available.

Suitability

  1. Small company units will benefit from this sort of organisation.
  2. Where the actions are regular or mechanical in character.
  3. If the company’s actions are centred on customer service.
  4. Where a tiny number of people are employed.
  5. The essence of the company activity is straightforward.
  6. A company unit with well-defined operating procedures.

II. Functional Organisation

A single person is in charge of all operations of the respective department in a line organisation. The person in charge here finds it difficult to effectively manage all of the operations. The reason for this is because the individual lacks the necessary ability and training. To get around the drawbacks of line organisation, F.W. Taylor coined the term “functional organisation” to describe a new style of organisation.

Different experts are chosen for various duties done in an organisation under functional organisation. These experts will take care of tasks that are similar to many distinct departments’ activities. Workers get guidance from a variety of professionals via functional organisation.

The professionals are in charge of the oversight. As a result, employees are responsible not just to one expert, but also to the specialist who gives them instructions. This organisation, according to Taylor, is an important part of the scientific management plan. Work should be directed by functions rather than by simple authority.

The necessity for functional organisation stems from the following factors:

I The contemporary and large-scale organization’s complexity;

(ii) a desire to fully use the specialisation; and

(iii) To relieve line managers of the burden of complicated challenges and decision-making.

Characteristics of Functional Organisation

  1. The task is broken down into several functions.
  2. A expert is granted authority to provide commands and instructions related to a certain role.
  3. With regard to his designated region, the functional authority has the right and ability to issue commands along the line.
  4. Only after consulting with the functional authorities in his specialised field does he make a decision.
  5. Executives and supervisors are in charge of carrying out functional authority responsibilities.

F.W. Taylor, the pioneer of scientific management, advocated for a top-down organisation of operations. According to Taylor, a foreman should not be responsible for all of his work’s actions. Instead, he should enlist the help of a team of experts to solve the issues. The diagram below will also assist you in comprehending the functional organisation.

  1. He is a technological specialist, according to the route clerk. He determines the path that each job must take to reach the completion stage.
  2. On the basis of the route set by the route clerk, he is supposed to produce instructions to employees on instruction cards. On a separate card, these instructions are provided.
  3. Time and cost clerk: This clerk establishes the normal time for each job as well as the cost incurred. He instructs the employees to keep track of the time they spend on the job and the real costs they incur in comparison to the normal time and cost.
  4. The gang master expects this worker to inspect the numerous equipment and supplies that have been set aside for employees to complete the task.
  5. Pace Boss: Given the speed of the equipment, he instructs the worker to do the job in the allotted time. Furthermore, the speed boss monitors whether or not each task is accomplished on time.
  6. Inspector: The Inspector inspects each piece of work for quality and certifies it as standard. In reality, the correctness of the job is tested against the specification.
  7. Repair boss: His task begins only after the employees have completed the real work. He is responsible for the maintenance of machinery and other equipment. It signifies that the maintenance of machinery is the duty of the repair supervisor.
  8. Disciplinarian: He is in charge of enforcing the organization’s rules and regulations. He is the organization’s peacemaker. He also double-checks that each task is completed in a methodical and flawless way.

The planning section employs route clerks, directions clerks, and time and cost clerks. The manufacturing part of the organisation houses the gang leader, speed boss, inspector, and repair boss. The disciplinarian is not a member of any section’s staff, but he is in charge of the employees’ behaviour.

Benefits / Advantages of Functional Organisation

  1. The benefit of specialisation is that each task is carried out by an expert in the functional organisation. It contributes to the organization’s efficiency. Each task is meticulously distributed among the personnel.
  2. Application of expert knowledge: The planning and execution functions are separated, and each function is delegated to a line organisation specialist. As a result, the professionals may apply their technical knowledge to practical work.
  3. Workload reduction: Each individual is responsible for just one sort of job. It cuts down on the amount of work they have to do that isn’t required. As a result, the job is of high quality, and the work is under effective management.
  4. Efficiency: Because each person is accountable for their own job, they may focus on the tasks that have been assigned to them. They could ensure that the job was completed to a high standard. 5. Adequate supervision: Each employee is in charge of a certain task. As a result, he will be able to dedicate sufficient time to overseeing the staff.
  5. Line executives are relieved since the instructions are supplied via functional organisation. straight from the professional to the real workforce As a result, the line executive has no issues with the usual tasks.
  6. Collaboration: A single individual could not have complete control over the organization’s employees. As a result, among the organization’s executives, there is the chance of advancement.
  7. Mass production: With the aid of specialisation and standardisation, large-scale manufacturing may be realised.
  8. Economy: In a functional organisation, each expert is accountable for completing a task. Wastage in the manufacturing process may be eliminated, and costs can be significantly lowered.
  9. Flexibility: Any change in the organisation may be implemented with ease.

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Disadvantages of Functional Organisation

  1. Under the functional organisation, a single worker works under the supervision of eight experts. It is quite difficult for a worker to be accountable to everyone. As a consequence, the employees and the expert are at odds.
  2. When a single worker is required to serve many masters, maintaining discipline among the employees is very difficult.
  3. Overspecialization: The organisation may benefit from specialisation, but there may be overlapping authority and split responsibilities as a result.
  4. Ineffective coordination: The scope of a specialist’s authority is not clearly defined. It causes issues when attempting to elicit cooperation from professionals.
  5. Speed of action: When a worker’s control is shared among experts, the employees’ speed of action may be restricted.
  6. Centralization: Eight professionals supervise and direct the work of the workforce. As a result, the personnel are unable to complete the task on their own. This results in the concentration of power.
  7. Lack of accountability: If there is a problem with the work, the management is unable to assign blame. The reason for this is because none of the eight experts are prepared to take on the job. They may assign blame for the work’s poor performance to anybody among them.
  8. Increasing overhead costs: A specialist’s compensation may be more than that of a foreman or supervisor.
  9. Poor management: Because several experts are in charge of the same group of employees, there is no way to assure good worker management.

Suitability

It’s ideal for businesses that do a lot of manufacturing.

III. Line & Staff Organisation

In both the line and functional organisation, there are certain benefits and downsides. A new style of organisation, called line and staff organisation, is being created in order to gain the benefits of both line and functional organisation. The problems of line and functional organisation may be mitigated to some degree using line and staff organisation.

Line officers have the power to make choices and put them into action in order to fulfil the organization’s goals. While framing policies and strategies and making judgments, line officers may be aided by staff officers.

Line officers are unable to gain technical expertise in today’s rapidly evolving industrial environment. For example, in order to make the best judgments about manufacturing, technical expertise is required.

With the assistance of staff officers, this sort of gap may be filled. Staff officers might be professionals in a certain subject. Before making final judgments, the line officers might seek professional opinion from the staff officers. “Staff refers to those parts of the organisation that give guidance and assistance to the line,” says Allen.

The line officers transmit power from the top to the bottom of the organisation, while the staff officers assigned to the different departments advise the departments. The staff officers have no power over anybody else in the organisation. Furthermore, staff officers do not have the authority to force line officers to accept their advise.

Each department is led by a line officer who, with the assistance of staff officers, has complete power over the planning, implementation, and supervision of personnel under his command. There is no link between employees and any department’s staff officials. The line officers are the sole ones who give orders to the employees. As a result, this organisation adheres to the principles of command unity and specialisation.

Types of Staff

Personal staff: A person who efficiently aids another person in the execution of a task is referred to as personal staff. Line officers could not transfer their responsibilities in such a situation. This individual is appointed at the highest level of an organisation. Line officers’ subordinates are not supervised by personal staff officers.

Specialist staff: At all levels of the organisation, specialised staff officers provide support to line officers. With certain limitations, the expert staff officers provide advise. The management has set these conditions.

General Staff Assistants: General staff assistants are a group of people that serve as consultants to high management on a variety of topics. The major function of the general staff is to provide recommendations on the organization’s overarching strategies and policies. They are not, however, experts in any field.

Functions of Staff

  1. The staff officers support the line officers in business activity planning.
  2. The board of directors formulates the company’s policy based on proposals from the staff officers.
  3. The managers may seek advice from the staff officers on personnel selection, ‘training,’ placement, and compensation fixation.
  4. The staff officers provide advice on how to improve the product, how to reduce manufacturing costs, how to increase the company’s revenues, and so on.
  5. The line officers must follow the processes prescribed by the staff officers while implementing policies and programmes.
  6. A department’s staff officers assist the manager in preparing the department’s budget.
  7. Staff officers may be relied upon to resolve administrative issues that line officers face in general.

Line officers in many organisations provide complete cooperation to staff officers and vice versa. This guarantees the organization’s seamless operation. Conflicts between staff officers and line police may emerge under specific situations. The smooth operation of the company is harmed when one officer blames other police for a lapse.

Arguments of Line Officers against Staff Officers

  1. Staff officers only have theoretical academic knowledge and no practical experience.
  2. Staff officers often claim power over line officers outside their field of responsibility.
  3. The staff officers’ advice is often impracticable.
  4. Staff officers promote unproductive ideas since they are not accountable for the outcomes.
  5. Line officers’ paperwork is unduly increased by staff officers.
  6. Staff officers provide advise without taking into account the nature of the firm as a whole.
  7. Staff officers’ thoughts are based only on the goals of the departments to which they are assigned, rather than the overall goals of the company.
  8. Rather than giving advise, staff officers are more interested in becoming line officers of the organisation.
  9. Staff officers blame line officers for the project’s failure, but they are eager to take credit for its success.

Arguments of Staff Officers against Line Officers

  1. The advise supplied by the staff officers is entirely ignored by the line officers.
  2. New ideas are met with scepticism by the line officers.
  3. Line officers do not always heed the advise of staff officers.
  4. Some line officers just dismiss the advise without giving it a second thought.
  5. Some line officers are hesitant to seek help from the staff offices.
  6. The line officers try to persuade management not to give staff officials power to execute new initiatives.
  7. Line officers do not fully use the services of staff officers.

Solution to the Conflict between Line Officers and Staff Officers

The following approaches may help to resolve the issue between line police and staff officers.

  1. Both line police and staff officers should be aware of the nature of their working relationship.
  2. To promote cooperation between line officers and staff officers, a separate staff member should be established.
  3. Staff officers should be encouraged to consult with line officers.
  4. Only competent individuals should be chosen and assigned to positions as staff officers.
  5. If the line officers do not accept the staff officers’ suggestions, the line officers must persuade them.
  6. Both line cops and staff officers might be held accountable for the outcomes.
  7. While it is the responsibility of staff officers to urge line officers to engage in the planned scheme of change, certain line officers may reject it.
  8. Only experienced executives should be promoted to line executive positions.
  9. For the outcomes produced, the staff officers may give entire credit to the line officers.
  10. Remove the uncertainty among line and staff officers about whether new ideas or suggestions will be appropriately implemented.
  11. The line officers may appreciate the staff officers if favourable outcomes are accomplished.
  12. The line officers may be granted a specific privilege to reject or accept the advise of the staff officers.

Benefits Of Line & Staff Organisation

  • It allows people to operate more efficiently and effectively.
  • When staff officers focus on the planning role and line officers focus on the implementation function, specialisation is achieved.
  • It allows the organisation to make good use of the staff officer’s knowledge and guidance.
  • With the support of competent counsel from staff officers, line officers may make smart judgments.
  • Without causing any disruption, a new technology or technique may be implemented into the organisation.
  • If line officers are freed of the responsibility of making decisions, their workload will be lessened to some degree.
  • Skilled personnel might be assigned to a new set of responsibilities.
  • It encourages line officers to work more efficiently.
  • In the line and staff organisation, the idea of unity of command is observed. As a result, the line officers can maintain worker discipline and exert control over them.
  • Young people are given an excellent chance to get training.

Disadvantages of Line & staff Organisation

  • If the line officers’ and staff officers’ powers of responsibility are not clearly defined, there may be misunderstanding across the organisation.
  • When line officers refuse to follow the recommendations of staff officers, it is very difficult to maintain control.
  • The line officers have the option of rejecting the recommendation without providing any explanation.
  • Line officers’ power may be underestimated by staff officers. They are superior to the line officers for this reason.
  • The staff officers are not engaged in the program’s actual execution. As a result, they are not obligated to provide counsel with care and caution.
  • It necessitates the employment of specialised staff officers in numerous fields. It raises the organization’s administrative costs.
  • If favourable outcomes are not produced, the staff officers are not liable.
  • Staff officers do not have the ability to force line officers to accept and follow their recommendations.
  • Between line cops and staff officers, there is a communication gap. It has a negative impact on their ability to work together.
  • Line officers and staff officers will have divergent viewpoints, defeating the purpose of specialisation.
  • Line officers may misunderstand the advice offered by staff officers, resulting in ineffective consequences. Staff officers are often unable to provide clear recommendations to line officers.
  • Line officers criticise staff officers for poor performance and want to be rewarded for excellent achievements.
  • Line officers often seek assistance from staff officers not just on major subjects, but also on mundane issues. It weakens the efficacy of line officers’ control.

IV. COMMITTEE ORGANISATION

When two or more people are needed to accomplish the same administrative activity collectively in today’s corporate environment, certain administrative activities cannot be completed by a single person alone. It takes the form of an organization’s committee.

A committee is a group of people to whom certain administrative responsibilities have been delegated and who are expected to provide advice or suggestions. “A committee,” according to Hicks, “is a group of persons who meet on a regular basis to debate or make a decision on a certain issue.”

The top management determines the committee’s tasks, responsibilities, and authority, and the committee is answerable to the management.

The committee, according to Terry, is a “body of individuals chosen or appointed to meet on a regular basis for the purpose of discussing and acting with topics brought before it.”

“Body of individuals assigned or chosen to evaluate, investigate, take action on, and typically report about some topic or business, as by a court, legislative body, or a number of persons,” according to Webster’s New International Dictionary.

“A committee,” according to Haimahh, is “a group of individuals nominated or elected to convene for the purpose of evaluating items allocated to it.”

Types of Committee

1.Advisory committee (or problem-solving committee): This body investigates the issues that have been brought to its attention.

When a committee is asked to address an issue, it should come up with the best answer. The reason for this is because the committee members have a broad range of expertise, give diverse perspectives, and propose solutions to problems.

Before fixing an issue, members of the committee examine it from many perspectives. The committee comes up with a solution after weighing the benefits and drawbacks of the various options.

2.Fact Finding Committee: A fact-finding committee is one that is constituted only for the purpose of gathering information on a certain topic. The management receives a full report with suggestions. In every organisation, this is the most typical committee to organise.

3.Action Committee or Exceutive Committee: This body, sometimes known as the action committee or executive committee, is made up of line officers. This committee has the authority to make decisions and to carry them out. The committee will be in place indefinitely. The finest example of an Action Committee is a company’s Board of Directors.

Functions of a Committee

  1. Collect the relevant information from various sources and organise it in a logical manner.
  2. The information gathered is analysed attentively.
  3. Prepare a thorough report that includes the recommendations for implementation.
  4. Create a performance standard that will be used to evaluate real performance in the future.
  5. If the committee is asked to make a decision, do so.
  1. Organizing the organization’s policies.
  2. Personnel to carry out company activities might be chosen by the committee.
  3. Regularly directing and controlling the officers in order to fulfil the above-mentioned objectives.

Advantages of Committee Organisation

  • The committee has the ability to make important decisions. When making judgments, committee members might draw on their expertise and knowledge.
  • The committee avoids making hasty conclusions. In most cases, hasty judgments do not help the organisation to the greatest extent possible. From a long-term perspective, hasty judgments are unworthy.
  • Members of the committee are urged to take part in the decision-making process. Each committee member may learn about and comprehend the sentiments of individuals in various sectors of the organisation. The committee makes its conclusion in light of these considerations.
  • The judgments made by the committee will undoubtedly be the finest. “Two heads are better than one,” says an adage.
  • An officer is encouraged to accept and execute the conclusion without delay after participating in the decision-making process.
  • Because the committee comprises of members from multiple departments, coordination across departments becomes quite simple. According to Koontz and O’Donnell, “Committee is a good technique for co-ordinating company planning and the implementation of business policies.”
  • The members of the committee have the ability to carry out the decisions. If an individual makes a decision, the committee may not be able to carry it out. The reason for this is because the committee does not have the power to carry out an individual’s choice.
  • If a young person is motivated to engage in a committee’s decision-making process, he may get excellent instruction. It’s one way he can make the most of the chance he’s been given.
  • The committee is usually made up of experts from diverse professions. The committee may then come up with new ideas in the areas of production, sales, customer service, and so on.
  • Every time a decision is made in an organisation, it should be shared with all personnel. The members of the committee may promptly inform the workers of the committee’s decision. It saves a lot of time when it comes to communicating.
  • The committee’s conclusion reflects the sentiments, views, and opinions of the majority of the committee members. Only after obtaining the consent of all those involved in the decision-making process is a decision made.
  • Sometimes, a conclusion is reached after consulting with all of the participants involved in the decision-making process. As a result, the committee makes decisions in a democratic manner.
  • Even if a person disagrees with the committee’s decision, he may accept it. He will behave in this manner, despite the fact that he will not be forced to accept the choice. It entails the involved individuals’ voluntary acceptance.
  • Members of the committee are encouraged to freely express their opinions, ideas, and feelings. It will reduce conflicts of interest among the organization’s workers. Wages, salaries, bonuses, social programmes, and other topics may be discussed.
  • The line executives are involved in the decision-making committee. It prevents line executives from feeling as though they haven’t been consulted when choices are made.
  • If the committee needs to address an issue, it may do so by following the concept of division of labour. Each committee member may look at the issue from several perspectives at the same time and come up with a viable solution.
  • When a person has complete authority and responsibility, he is able to make decisions and put them into action. To put it another way, power and responsibility are concentrated. In the committee structure, there is no concentration of power or responsibility. All members of the committee have power and duty in this organisation.
  • Typically, the committee is made up of members that are interested in the organisation.

Disadvantages of Committee Organisation

  • The committee is made up of men from diverse areas. Each team member presents his or her own thoughts, opinions, and solutions. As a consequence, making a choice takes longer.
  • It raises the organization’s administrative costs. Whenever the committee meets to solve an issue or make a decision, expenses are spent.
  • If there is a lack of mutual cooperation and members do not have faith in the capacity of the other members of the committee, they will fail to function properly and the committee will be disbanded without making any decisions.
  • Under committee organisation, the secret of the committee’s decision cannot be preserved. The reason for this is because a committee has a significant number of members.
  • If the choice does not yield positive benefits for the organisation, no one can be held responsible. Each accuses the other of poor decision-making and unfavourable outcomes.
  • When a decision does not represent the members of the committee’s viewpoints, it may be made on the basis of compromise.
  • It has been noted that sometimes irrelevant topics are addressed. Within a brief amount of time, a committee should make a conclusion.
  • Each committee member is asked to share his or her own thoughts. It might lead to a heated debate among the committee members. It does not help the organisation in any way.
  • Because of their ignorance or the committee members’ dominance, committee members do not exercise their initiative. As a result, the committee’s conclusion does not retain its representative character.
  • Members of committees that meet regularly may not be able to pay their entire attention to their responsibilities.
  • As in a democracy, a committee is created to enjoy the rewards. However, in the vast majority of situations, the committee serves as a stooge of the management.
  • Individually, the committee members are unable to develop their abilities or capabilities. Furthermore, it impairs the committee members’ competence in a variety of other areas.

Recommendations for Efficient Functioning of a Committee

For the effective operation of a committee-type organisation, the following suggestions are made:

  1. Clear objectives: A committee may work well provided the organization’s goals are communicated clearly. The scope of a committee’s job should be clearly defined.
  2. Committee size: The number of members on a committee should not be too huge or tiny. In a committee, only required members should be included. Executive committee members should not serve on more than three committees. A committee should include between 6 and 8 members.
  3. Selection of meetings: Meetings should be chosen carefully since the success of a committee is determined on its members. As a result, while appointing a committee member, management should use extreme caution. When choosing a committee member, consideration should be given to the person’s competence, expertise, and experience.
  4. Committee role: A committee’s power and responsibilities should be clearly defined. If this is the case, the members of a committee will operate in accordance with the rules established by the committee.
  5. The chairman’s role: When choosing a chairman for a committee, extreme caution should be used. The chairman of a committee is sometimes chosen by the members of the committee or recommended by management. The chairman should function as a guy to whom every committee member has easy access, and he should encourage and cooperate with all committee members.
  6. Preparation for a meeting: The committee meeting should be held on a regular basis so that timely decisions and actions may be taken to address management issues. Correct judgments should be made to keep the work flow going. It’s a good idea to gather all of the required facts before making a choice.
  7. Follow-up: All members of a committee should be informed of the meeting minutes. The follow-up process is also carried out to ensure that the choices are properly implemented.
  8. Evaluation: The committee’s performance should be assessed on a regular basis. Certain members of the committee may be added or removed if the necessity arises. The committee’s advantages should outweigh the expenditures paid in order for the committee to operate well.
  9. Subject matter selection: Certain types of topics may only be dealt with by a single person. This sort of topic cannot be brought up in front of the committee for consideration. The committee can only deal with difficult issues.

V. Project Management

Following WWII, the concept of project management was created. The goal of this organisation is to eliminate the flaws that exist in effective organisations. One of the flaws of functional organisation is the time it takes to make choices and the lack of coordination.

Project management is created with the goal of completing a programme or project. After a programme or project is completed, the project organisation is no longer required. In addition to its particular programmes or projects, the project organisation is made up of a core of functional departments. In other words, project management is made up of key functional department heads.

A project organisation is best suited to the completion of a few significant projects. “A project organisation may also be the start of an organisation,” Middleton says. cycle. The initiative might turn into a long-term or ongoing endeavour that leads to the creation of a programme or branch organisation. The latter may then be detached from the parent company and created as a full-fledged product division with its own functional structure.”

Feature of Project Organisation

  1. The effectiveness of a project’s organisation is determined by how well its operations are coordinated.
  2. Each project’s operations are grouped together, resulting in the establishment of a new line of authority.
  3. Each group’s responsibility for their individual initiatives is established, resulting in meaningful control.

Drawbacks of Project Organisation

  1. Professionals are assigned to the project, but there is no guarantee that they will work on it continuously in a project organisation.
  2. There is a lack of adequate communication and criteria for comparing performance in project management, which diminishes motivation and restricts personnel in an organisation.
  3. Under the pressure of upper management, a decision is made in the project organisation, which has grave ramifications.
  4. The top management does not provide complete cooperation for the project organization’s proper functioning, and the top management may be an impediment.

VI. MATRIX ORGANIZATION

Each department in a matrix organisation is given a specific mission, and each department may utilise the organization’s available resources as well as the coordination of other departments.

According to Stanley Davis and Paul Lawrence, a matrix organisation is “any organisation that utilises a multiple command structure, as well as related support systems and an associated organisational culture and behaviour pattern,” and may be used to handle a large number of minor projects.

Conditions for Effective Matrix Organisation

  1. The matrix organisation does not follow the scalar chain of command concept, which requires a project manager to provide his report to several superiors.
  2. There should be an agreement among the management on the power to use the available resources, which includes physical, financial, and human resources.
  3. When managers disagree on how to use existing resources, there should be a shared desire among power holders to confront the disagreements and work to resolve them.

Advantages of Matrix Organisation

  1. Attainment of goals: The matrix organisation combines the advantages of functional, line, and staff organisation to assure the achievement of goals via technical specialisation.
  2. Best resource utilisation: The available resources are employed by the managers for the defined project, while the resources are also used by the managers with full comprehension.
  3. Appropriate structure: Matrix organisation is an appropriate structure for an organisation to adapt to external changes, such as meeting consumer wants according to expectations without impacting the marketing of an existing product in order to survive the competition.
  4. Flexibility: The matrix organisation is a very adaptable organisation, with rules and procedures based on the organization’s experience.
  5. Motivation: If a department is taking too long to complete a project, proper motivation is given to that department.
  6. Personal development: The matrix organisation provides a wonderful opportunity for effective people to be trained and developed.

Demerits of Matrix Organisation

The following are some of the drawbacks or drawbacks of matrix organisation:

  1. Complex relationship: The matrix organisation does not follow the scalar chain of command principle, in which a single person reports to multiple superiors, resulting in fewer opportunities for rapport with their respective superiors.
  2. Influence struggle: A subordinate is ruled by a number of superiors, implying that several authority holders wield power over the subordinate, delaying the project’s completion.
  3. Excessive focus on group decision-making: The department uses available resources to make group choices, and there is no spirit of accommodation and understanding in the matrix organisation, therefore there is a delay in reaching a group decision, which delays the project’s completion.
  4. Arising conflect resolution: The resolution or decision is made in a matrix organisation with too much self-analysis by decision makers, which may cause the decision makers’ or managers’ work to be late in the project’s completion.
  5. Heterogeneous: A matrix organisation is created by deputing skilled professionals from various departments on a temporary basis. It is difficult to coordinate the work of skilled staff members when there is a lack of unity of command in an organisation.

VII. FREE FORM ORGANISATION

In many ways, the Free Form Organization resembles the project and matrix organisations, and it is also known as organic or adhoc (ratio) organisation. It is formed whenever a need arises to form an organisation for the purpose of achieving a specific goal, and it will be dissolved once the goal is achieved.

The establishment of the Free Form Organization is determined by the organization’s external environment; if the external environment has a significant impact on the business, the Free Form Organization will be formed.

In a Free Form Organization, decisions are made without regard to policies or guidelines that have been established in advance. Normally, decisions are made in any organisation by adhering to the organization’s policies, rules, and regulations, which have been established in advance and are followed when making decisions.

When the structure of a Free Form Organization changes, no tasks are assigned to it specifically; nevertheless, tasks are assigned to superiors and subordinates based on their level of experience and competence. As a result, authority is available to the person.

Because the Free Form Organization lacks a formal structure, communication may flow in any direction, including upwards, downwards, and horizontally.

Other Related Topics

Organisation: Full Overview

organisation

Introduction

 The word “organisation” is derived from the word ‘organism’ which means an organised body with connected interdependent parts sharing common life. When a group of persons working together to achieve a common goal, the problems such as who decides what issues, who does what work and what action should be taken on the basis of certain conditions common life. When a group may arise.

Organisation is a mechanism or structure which helps the activities to be performed effectively. The organisation is established for the purpose of achieving the business structure which helps the activities to be performed be the business objectives, there is a need of objectives. The business objectives may differ from one business to another. Whatever may be the businesss objectives, there is a need of an organisation.

Meaning

Organisation is the detailed arrangement of work and working conditions in order to perform the assigned activities in an effective manner. Organsisation can be compared to a human body.

The human body consists of hands, feet, eyes, ears, nose, fingers, mouth, etc. These parts are performing their work independently and at the same time, one part cannot be a substitute to another. The same compared to a human body.

The human body , can be identified in the organisation also. The organisation consists of different departments. Each department performs its work independently and cannot be a substitute principles to another.

Definition

Haney ” Organisation is a harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes.”

 Mc Farland “An  identified group of people contributing their efforts towards the attainment of goals is called an organisation.”

Allen, ”The process of identifying and grouping the work is 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.”

Mooney and Reily, “Organisation is the form of every human association for the attainment of a common purpose.”

Chester Bernard, “A system of co-operative activities of two or more persons is called organisation.”

R.C. Davis, “Any group of people, large or small, which has been implemented adequately and is co-operating willingly under the direction of competent executive leadership in an effective, economical accomplishment of certain common objective.”

G.R. Terry, “Organising is the establishing of effective beha-vioural relationships among persons so that they may work together effectively and gain personal satisfaction in doing selected tasks under given environmental conditions for the purpose of achieving some goal or objective.”

Koontz O’Donnel, “Organising involves the establishment of an international structure of roles through determination and enumeration of the activities required to achieve the goals of an enterprise and each part of it; the grouping of these activities, the assignment of such groups of activities to the manager, the delegation of authority to carry them out and provision for co-ordination of authority and informational relationship, horizontally and vertically, in the organisation structure.”

Louis Al Allen, “Organisation is that 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.”

Oliver Sheldon, “Organisation is the process of so combining the work which the individual or groups have to perform with the facilities necessary for its creation that the duties so performed provide the best channels for the efficient, systematic, positive and coordinated application of the available efforts.”

Spriegel, “In its broadest sense, organisation refers to the relationship between the various factors present in a given endeavour. Factory organisation concerns itself primarily with the internal relationships within the factory such as responsibilities of personnel arrangement and grouping of machines and material control. From the stand-point of the enterprise as a whole, organisation is the structural relationship between the various factors in an enterprise.”

Wheeler, “Internal organisation is the structural framework of duties and responsibilities required to personnel in performing various functions within the company. It is essentially a blue print for action resulting in a mechanism for carrying out the function to achieve the goals set up by the company management.”

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Functions of Organisation

organisation functions

From the above definitions, it is understood that the functions of organisation includes determination of activities, grouping of activities, allotment of duties to specified persons, delegation of authority, defining relationships and the co-ordination of various activities.

1. Determination of activities: It includes the deciding and division of various activities required to achieve the objectives of the organisation. The entire work is divided into various parts and again each part is sub-divided into various sub-parts. For example, the purchase work may be divided into requisition of items, placing of an order, storage and so on.

2. Grouping of activities: The next function of organisation is that the identical activities are grouped under one individual or a department. The activities of sales such as canvassing, advertisements and debt collection activities are grouped under one department i.e., sales department.

3. Allotment of duties to specified persons: In order to ensure effective performance, the grouped activities are allotted to specified persons. In other words, the purchasing activities are assigned to the Purchase Manager; the production activities are assigned to Production Manager; the sales activities are assigned to Sales Manager and the like. Besides, adequate staff members are appointed under the specified persons. The specified persons are specialised in their respective fields. If there is any need, appropriate training would be provided to such persons.

4. Delegation of authority: Assignment of duties or allotment of duties to specified persons is followed by delegation of authority. It will be very difficult for a person to perform the duties effectively, if there is no authority to do it.

While delegating a authority, responsibilities are also fixed. Thus, the Production Manager may be delegated with the authoriy to produce the goods and fixed with the responsibility of producing quality goods.

5. Defining relationship: When a group of persons is working together for a common goal, it becomes necessary to define the relationship among them in clear terms. If it is he is answerable.

In another sense, each boss should know what authority he has and over each person will know who is his boss, from whom he has to receive orders and to whom which person.

 6 Co-ordination of various activities: The delegated authority and responsibility should be co-ordinated by the Chief Managerial Staff. The reason is that there must be a separate and responsible person to see whether all the activities are going on to accomplish the objectives of the organisation or not.

Principles of Organisation

The work can be completed in time whenever a technique or principle is adopted. So, the success or failure of an organisation depends upon the principles to be followed in the organisation. Some experts like Taylor, Fayol and Urwick have given the principles of organisation. They are briefly discussed below:

1. Principle of definition: It is necessary to define and fix the duties, responsibilities and authority of each worker. In addition to that the organisational relationship of each worker with others should be clearly defined in the organisational set up.

2. Principle of objective: The activities at all levels of should be geared to achieve the main objectives of the organisation. The activities of the different departments or sections may be different in nature and in approach, but these should be concentrated only for achieving the main objectives.

3. Principle of specialisation or division of work: Division means that or sections. waste the entire activities of the organi-sation are suitably grouped into departments.

The departments or sections may be further divided into several such units so as to ensure maximum efficiency. This will help to fix up the right man to the right job and reduce of time and resources.

The work is assigned to each person according to his educational qualification, experience, skill and interests. He should be mentally and physically fit for performing the work assigned to him. The required training may be provided to the needy persons. It will result in attaining specialisation in a particular work or area.

4. Principle of co-ordination: The objectives of the organisation may be achieved quickly whenever co-ordination exists among the workers. At the same time each work can be done effectively by having co-ordination. The final objective of all organisations is to get smooth and effective co-ordination.

5. Principle of authority: When many persons are working together in one place there will be a difference of power and authority. Of these persons, some will rule and others will be ruled. Normally, maximum powers are vested with the top executives of the organisation.

These senior members should delegate their authorities to their subordinates on the basis of their ability. In certain cases, the subordinates are motivated through the delegation of authority and they perform the work efficiently with responsibility.

6. Principle of responsibility: Each person is responsible for the work completed by him. Authority is delegated from the top level to the bottom level of the organisation. Bu the responsibility can be delegated to some extent.

While delegating the authority, there is no need of delegation of responsibility. So, the responsibility of the junior staff members should be clearly defined.

7. Principle of explanation: While allocating duties to the persons, the extent of liabilities of the person would be clearly explained to the concerned person. It will enable the person to accept the authority and discharge his duties.

8. Principle of efficiency: Each work can be completed efficiently wherever the climate or the organisational structure facilitates the completion of work. The work should be completed with minimum members, in less time, with minimum resources and within the right time.

9. Principle of uniformity: The organisation should make the work distribution in such a manner that there should be an equal status and equal authority and powers among the same line officers. It will avoid the problems of dual subordination or conflicts in the organisational set up. Besides, it increases co-ordination among the officers.

10. Principle of correspondence: Authority and responsibility should be in parity with each other. If it is not so, the work cannot be effectively discharged by any officers, whatever his ability may be.

At the same time, if authority alone is delegated without responsibility, the authority may be misused. In another sense, if responsibility is delegated without the authority, it is a dangerous one.

11. Principle of unity of command: This is also sometimes called the principle of responsibility. The organisational set up should be arranged in such a way that a subordinate should receive the instruction or direction from one authority or boss. If there is no unity of command in any organisational set up, the subordinate may neglect his duties.

It will result in the non completion of any work. In the absence of unity of command, there is no guidance available to the subordinates and there is no controlling power for the top executives of the organisation. Further, some subordinates will have to do more work and some others will not do any work at all.

12. Principle of balance: There are several units functioning separately under one organisational set up. The work of one unit might have been commenced after the completion of the work by another unit. So, it is essential that the sequence of work should be arranged scientifically.

13. Principle of equilibirum balance: The expansion of business activities require some changes in the organisation. In certain periods, some sections or departments are overloaded and some departments are under loaded.

During this period, due weightage should be given on the basis of the new work load. The overloaded sections or departments can be further divided into sub sections or sub-departments. It would entail in the effective control over all the organisational activities.

14. Principle of continuity: It is essential that there should be a re-operation of objectives, re-adjustment of plants and provision of opportunities for the development of future management. This process is taken over by every organisation periodically. 

15. Principle of span of control: This is also called span of management or span of supervision or levels of organisation. This principle is based on the principle of relationship. Span of control refers to the maximum number of members effectively supervised by a single individual.

The number of members may be increased or decreased according to the nature of work done by the subordinate or the ability of the supervisor. In the administration,area, under one executive, nearly four or five subordinates may work.

In the lower level the factory level, under one supervision, the twenty or twenty five number of workers work. The span of control enables the smooth functioning of the organisation.

16. Principle of leadership facilitation: The organisational set up may be arranged in such a way that the persons with leadership qualities are appointed in key positions. The leadership qualities are honesty, devotion, enthusiasm and inspiration.

17. Principle of exception: The junior officers are disturbed by the seniors only when the work is not done according to the plans laid down. It automatically reduces the work of middle level officers and top level officers.

So, the top level officers may use the time gained by reduction in workload for framing the policies and chalking out the plans of organisation.

18. Principle of flexibility: The organisational set up should be flexible to adjust to the changing environment of business. The organisation should avoid the complicated procedures and permit an expansion or contraction of business activities.

19. The scalar principle: This is also called chain of command or line of authority. Normally, the line of authority flows from the top level to bottom level. It also establishes the line of communication. Each and every person should know who is his superior and to whom he is answerable.

20. Principle of simplicity and homogeneity: The organisation structure should be simple. It is necessary to understand a person who is working in the same organisation. If the organisation structure becomes a complex one, junior officers do not undestand the level and the extent of responsibility for a particular activity.

The simplicity of the organisational structure enables the staff members to maintain equality and homogeneity. If equality and homogeneity are maintained in one organisation, it is possible to determine whether the staff members discharge their duties to realise the objective of the organisation.

21. Principle of Unity of Direction: This is also called the principle of co-ordination. The major plan is divided into sub-plans in a good organisational set up. Each sub-plan is taken up by a particular group or department. All the groups or departments are requested to co-operate to attain the main objectives or in implementing major plan of the organisation.

22. Principle of joint decisions: In the business organisation, there are number of decisions taken by the officers to run the business. If a complicated problem arises more than one member examines the problems and takes the decisions.

Whenever the decision is taken jointly, the decision gives the benefit for a long period and the decision is based on various aspects of the organisational set up.

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Nature or Characteristics of Organisation

organisation

Organisation is the pioneering step of the management. The functions of management are sitting over the strong organisational set up. A palace may be constructed only when a very strong foundation is laid.

The same principle is followed here. Organisation is the foundation of management. Without organisation, the functions of management such as planning, organising, staffing, directing, co-ordinating and controlling cannot succeed.

Organisation supplies the human and material resources and helps to achieve the objectives of business. The organisation provides the means or techniques with strong efforts for more production and effective completion of the work. Organisation increases the certainity and promptness in the completion of work by assigning fixed duties to every person.

Whenever the duties are fixed, it automatically develops team spirit towards the realisation of common goals. Initially, the total work of the enterprise can be divided into various parts and then linked with all the parts as and when the need arises to achieve main objectives.

The connection of various parts of the organisation is given by the authority relationship of organisational structure. The relationship may operate upward, downward, and sidewise of the organisation.

1. Division of labour: The total work can be divided into many parts for effective performance of the work. Each part of work may be completed by one person or a group of persons. But, all the parts of the work are done with the aim to achieve the main objective of the organisation. The work is assigned to a person who is specialised in that particular work.

If there is a proper division of labour, no person will be allowed to do anything according to his own way unless and otherwise he is not well equipped. The division of labour results in the creation of specialised persons because a person does the same work again and again.

No waste of time, energy and resources are some of the advantages of division of labour. In addition to this, the division of labour results in the increase of quality output and quantity of product without any additional capital.

2. Co-ordination: Different persons are assigned different works in one organisation. But, all the works are performed to achieve the objectives. It implies that there is a need of co-ordination among the workers in an organisation. Each and every department or section of the organisation should have relationship with each other, to get mutual co-operation.

3. Objectives: The objectives of the organisation should be defined clearly. The objectives cannot be achieved without the existence of a good organisational structure. In turn, the organisation cannot exist without objectives for a long period.

4. Authority-responsibility structure: An organisation means an arrangement of position of executives by adopting a rank system. In other words, a subordinate has one boss and a superior has control over the subordinate specifically. The position of each of the executives is defined with regard to the extent of authority and responsibility vested in him to discharge the duties.

5. Communication: Every organisation has its own communication system and the methods. The success of management depends upon the effective system of communication. The reason is that each and every person working in an organisation should know the techniques of communication and the importance of communication. The channels of communication may be divided into formal, informal, downward and upward or horizontal.

Importance / Advantages of Organisation

Organisation creates the relationship between top level executives and lower level staff members. The top level executives perform the functions, like planning, organising, staffing, directing, controlling the lower level people. The actual work is completed at lower level of the organisation. In this way, the organisation maintains the relationship with each other in an enterprise.

1. Facilatate administration: Administration aims at earning the highest profit by utilising the available resources properly. There is a planning, policy making, direction and co-ordination in the administration level to achieve the objectives.

Besides, the administration classifies the activities of the business department-wise and appoints the officers, assistants, supervisors, executives to facilitate the achievement of objectives.

There should be an effective administration to achieve the allocation of duties and responsibilities, absence of co-ordination, communication gap, Duplication of work, wrong planning, inefficient personal, lack of motivation, improper improper instructions are the ingredients of ineffective administration. This ineffective administration can be removed by having a sound organisation.

Allen observes that “A properly designed and balanced organisation facilitates both management and operation of the enterprise. Inadequate organisation may not only discourage but also actually preclude effective administration”.

2. Increases the efficiency of management: Under good organisation, there is a chance of exhausting the worker’s ability in full and utilisation of resources Confusion, delay and duplication of work are avoided in good organisation. It automatically motivates the employees who are working in an organisation and increases the efficiency of management.

3. Facilitates growth and diversification: The structure of the company depends upon the structure of the organisation. The structure of the company can be changed whenever the growth and expansion activities are carried out. The growth of business means an increase in the scale of operation and diversification means starting of production of a new type of products.

Changes in the organisation may result in the appointment of additional staff members, de-centralisation of authority and responsibility, raising of additional capital, identification of the consumer’s satisfaction and preferences, expansion of sales promotion activities and the like.

4. Ensures optimum utilisation of material resources and human efforts: Division of work and specialisation are the tools used to achieve the objective of optimum utilisation of material, resources and human efforts. Right man, right time and the right job can also be applied to them. Good organisation increases the efforts of the employees and the working facilities.

5. Adoption of new technology: The effectiveness of an enterprise is measured by the reaction of staff members to the adopting of a new technology. In the scientific world, there is a lot of innovations and inventions identified in the area of production, distribution and personnel management.

If the new technology is adopted by the enterprise, the maximum benefits can be obtained in any field or activity. A flexible organisational structure is needed to adopt a new technology.

6. Places proportionate importance to the various activities of the enterprise: Organisation classifies the entire business activities into departments. Each department is receiving attention according to its importance it has in the achievement of business objectives.

Money and efforts are spent in proportion to the contribution made by each and every department. It does not mean that less important department activities are neglected. It means that due importance is given to each department according to its contribution towards the achievement of the objectives.

7. Encourages creativity and initiative: A sound organisational structure will give an opportunity for the staff to show their hidden talents which will help the enterprise to achieve the business goals and earn higher profits.

Clear distribution of authority and responsibility, incentives offered for specialised work and freedom given to personal work, increases the spirit of constructive and creative approach in management.

8. Facilitates co-ordination: The activities of different departments are grouped together to achieve the business objectives. Each department performs its own function in a closely related manner and not as competitors.

9. Facilitates training and development of managerial personnel: A sound organisational provides training to new staff members before placement and give refresher training to the existing staff members to improve their efficiency.

The training may be given within the company or outside the company according to the training facilitates available. Now-a-days training institutes give training to the needy persons with the help of the different experts from various fields. These training institutes are collecting data directly from the field used in the training.

10. Prevents the growth of secret, influence and corruption: Sound organisation develops the morale, honesty, devotion to duty and loyalty of business organisations. Normally, these help remove corruption, secret and influence. Only an unsound organisation develops secret, influence and corruption.

CLASSIFICATION OF ORGANISATION

The organisation can be classified on the basis of authority and responsibility assigned to the personnel and the relationship with each other. In this way, an organisation can be either formal or informal.

organisaton - formal & informal

Formal Organisation

The formal organisation represents the classification of activities within the enterprise, indicates who reports to whom and explains the vertical journal of communication which connects the chief executive to the ordinary workers. In other words, an organisational structure clearly defines the duties, responsibilities, authority and relationships as prescribed by the top management.

In an organisation, each and every person is assigned the duties and given the required amount of authority and responsibility to carry out this job. It creates the co-ordination of activities of every person to achieve the common objectives. It indirectly induces the worker to work most efficiently. The inter-relationship of staff members can be shown in the organisation chart and manuals under formal organisation.

Characteristics of Formal Organisation

The important characteristics of a formal organisation are given below: 

1. It is properly planned.

2. It is based on delegated authority.

3. It is deliberately impersonal.

4. The responsibility and accountability at all levels of organisation should be clearly defined.

5. Organisational charts are usually drawn.

6. Unity of command is normally maintained.

7. It provides for division of labour.

Advantages of Formal Organisation

1. The definite boundaries of each worker is clearly fixed. It automatically reduces conflict among the workers. The entire building is kept under control. 

2. Overlapping of responsibility is easily avoided. The gaps between the responsibilities of the employees are filled up.

3. Buck passing is very difficult under the formal organisation. Normally exact standards of performance are established under formal organisation. It results in the motivating of employees.

4. A sense of security arises from classification of the task.

5. There is no chance for favouritism in evaluation and placement of the employee. 6. It makes the organisation less dependent on one man.

Keith Davis observes that formal organisation is and should be our paramount organisation type as a general rule. It is the pinnacle of man’s achievement in a disorganised society. It is man’s orderly, conscious and intelligent creation for human benefit.

Arguments against Formal Organsiation

1. In certain cases, the formal organisation may reduce the spirit of initiative. 

2. Sometimes authority is used for the sake of convenience of the employee without considering the need for using the authority.

3. It does not consider the sentiments and values of the employees in the social organisation.

4. The formal organisation may reduce the speed of informal communication.

5. It creates the problems of coordination.

Informal Organisation

Informal organisation is an organisational structure which establishes the relationship on the basis of the likes and dislikes of officers without considering the rules, regulations and procedures.

These types of relationships are not recognised by officers but only felt. The friendship, mutual understanding and confidence are some of the reasons for existing informal organisation. For example, a salesman receives orders or instructions directly from the sales manager instead of his supervisors.

The informal organisation relationship exists under the formal organisation also. The informal organisation relationship or informal relations give a greater job satisfaction and result in maximum production.

According to C.J. Bernard, “Informal organisation brings cohesiveness to formal organisation. It brings to the members of a formal organisation a feeling of belonging, status of self respect and gregarious satisfaction. Informal organisations are important means of maintaining the personality of the individual against certain effects of formal organisation which tend to disintegrate personality.”

Characteristics of Informal Organisation

1. Informal organisation arises without any external cause i.e., voluntarily. 

2. It is a social structure formed to meet personal needs.

3. Informal organisation has no place in the organisation chart.

 4. It acts as an agency of social control. 

5. Informal organisation can be found on all levels of organisation within the managerial hierarchy.

6. The rules and traditions of informal organisation are not written but are commonly followed.

7. Informal organisation develops from habits, conduct, customs and behaviour of social groups.

8. Informal organisation is one of the parts of total organisation.

9. There is no structure and definiteness to the informal organisation.

Advantages of Formal Organisation

1. It fills up the gaps and deficiency of the formal organisation.

2. Informal organisation gives satisfaction to the workers and maintains the stability of the work.

3. It is a useful channel of communication.

4. The presence of informal organisation encourages the executives to plan the work correctly and act accordingly.

5. The informal organisation also fills up the gaps among the abilities of the managers.

Disadvantages of Informal Organisation

1. It has the nature of upsetting the morality of the workers.

2. It acts according to mob psychology.

3. Informal organisation indirectly reduces the efforts of management to promote greater productivity.

4. It spreads rumour among the workers regarding the functioning of the organisation unnecessarily.

DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANISATION

Formal OrganisationInformal Organisation
1It arises due to delegation of authoriy.It arises due to social interaction of people.
2It gives importance to terms of authority and functions.It gives importance to people and their relationships.
3It is created deliberately.It is spontaneous and natural.
4The formal authority is attached to a position.The informal authority is attached to a person.
5Rules, duties and responsi-bilities of workers are given in writing.No such written rules and duties followed in informal organisation.
6Formal organisation comes from outsiders who are superior in the line of organisation.Informal organisation comes from those persons who are objects of its control.
7Formal authority flows from upwards to downwards.Informal authority flows upwards to downwards from or horizontally.
8Formal organisation may grow to maximum size.Informal organisation tends to remain smaller.
9It is created for technological purposes.It arises from man’s quest for social satisfaction.
10Formal organisation is per-manent and stable.There is no such permanent nature and stability.



THEORIES OF ORGANISATION

organisation theories

Organisation theory means the study of the structure, functioning and performance of organisation and the behaviour of individual and groups within it.

The various theories of organisation are given below:

1. Classical theory.

2. Neo-classical theory.

3. Modern theory.

4. Motivation theory.

5. Decision theory.

1. CLASSICAL THEORY

The classical theory mainly deals with each and every part of a formal organisationThe classical theory was found by the father of scientific management, Frederick W.TaylorNext, a systematic approach to the organisation was made by Monney and Reicey.

The classical theory is based on the following four principles:

A. Division of Labour

B. Scalar and functional processes

C. Structure, and

D. Span of control

A. Division of labour: This theory fully depends upon the principle of division of labour. Under the division of labour, the production of a commodity is divided into the maximum number of different divisions. The work of each division is looked after by different persons.

Each person is specialised in a particular work. In other words, the work is assigned to a person according to his specialisation and the interest he has in the work. The division of labour results in the maximum production or output with minimum expenses incurred and minimum capital employed.

B. Scalar and functional processes: The Scalar process deals with the growth of organisation vertically. The functional process deals with the growth of organisation horizontally. The scalar principles refer to the existence of relationship between superior and subordinate.

In this way, the superior gives instructions or orders to the subordinates (various levels of management) and gets back the information from the subordinate regarding the operations carried down at different levels or stages. This information is used for the purpose of taking decision or remedial action to achieve the main objectives of the business.

The Scalar chain means the success of domination by the superior on the subordinate from the top to the bottom of organisation. The line of authority is based on the principle of unity of command which means that each subordinate does work under one superior only.

C. Structure: The organisational structure may be defined as the prescribed patterns of work related behaviour of workers which result in the accomplishment of organisational objectives. The organisational structure is used as a tool for creating a relationship among the various functions which make up the organisation.

Specialisation and co-ordination are the main issues in the design of an organisational structure. The term specialisation includes the division of labour and the usage of special machines, tools and equipments.

Specialisation is obtained when a person is requested to do a single work and it results in the increase in productivity. The facilities or advantages of suitable training, easy allocation of work, job scheduling and effective control are also obtained from specialisation.

Co-ordination means an orderly performance in operations to achieve organisational objectives. Normally, the business units are organised on a functional basis. The functions performed by different persons of different nature. It is also necessary to co-ordinate the various functions to achieve the main objectives and at the same time a function does not I conflict with any other function. are

D. Span of control: Span of control means an effective supervision of maximum number of persons by a supervisor. According to Brech, “Span refers to the number of persons, themselves carrying managerial and supervisory responsibilities, for whom the senior manager retains his over-embracing responsibility of direction and planning, co-ordination, motivation and control.”

From the above discussion, we can know that the classical theory emphasised unity of command and principle of co-ordination. Most of the managers’ time is wasted in the coordination and control of the subordinates. In many organisations, a single supervisor supervises the work of 15-20 workers and does not follow the principle of span of control.

Some of the experts hold that a manager can supervise 4-8 members at higher levels and between 8-20 members at the lower levels of the organisation. But according to Lyndall Urwick, a maximum of 4 members at higher levels and between 8-12 members at lower levels can be supervised by the superior to constitute an ideal span of control.

Characteristics of Classical Theory

1. It is based on division of labour.

2. It is based on objectives and tasks of organisation.

3. It is concerned with formal organisation.

4. It believes in human behaviour of the employees

5. It is based on co-ordination of efforts.

6. Division of labour has to be balanced by unity of command.

7. It fixes a responsibility and accountability for work completion. 8. It is centralised.

Criticisms of Classical Theory

1. This theory is based on authoritarian approach.

2. It does not care about the human element in an organisation.

3. It does not give two way communication.

4. It underestimates the influence of outside factors on individual behaviour.

5. This theory neglected the importance of informal groups.

6. The individual is getting importance at the expense of the group.

7. It also ignores the influence of outside factors on individual behaviour. 

8. The generalisations of the classical theories have not been tested by strict scientific methods.

9. The motivational assumptions underlying the theories are incomplete and consequently inaccurate.

2. NEO-CLASSICAL THEORY

This theory is developed to fill up the gaps and deficiencies in the classical theory. It is concerned with human relations movement. In this way, the study of organisation is based on human behaviour such as how people behave and why they do so in a particular situation. The neo-classical scholars used classical theory as the basis for their study and modified some of the principles for the study. The neo-classicals have only given new insights rather than new techniques.

The scholars also pointed out the practical difficulties of the working of scalar and functional processes. The main contribution of this theory highlights the importance of the committee management and better communication. Besides, this theory emphasised that the workers should be encouraged and motivated to evince active participation in the production process. The feelings and sentiments of the workers should be taken into account and respected before any change is introduced in the organisation.

The classical theory was production-oriented while neo-classical theory was people-oriented.

Contributions of Neo-Classical Theory

1. Person should be the basis of an organisation.

2. Organisation should be viewed as a total unity.

3. Individual goals and organisation goals should be integrated.

4. Communication should be moved from bottom to top and from top to bottom. 

5. People should be allowed to participate in fixing work standards and decisionmaking.

6. The employee should be given more power, responsibility, authority and control. 

7. Members usually belong to formal and informal groups and interact with others within each group or sub-group.

8. The management should recognise the existence of informal organisation.

 9. The members of sub-groups are attached with common objectives.

Criticism of Neo-Classical Theory

A survey conducted by American Management Association (AMA) indicates that most the companies reported found little or nothing useful in behavioural theory. According Ernest Dale, “neither classical theory nor neo-classical theory provides clear guidelines the actual structuring of jobs and provision for co-ordination.”

3. MODERN THEORY

The other name of Modern Theory is Modern Organisation Theory. According to one authority, it was organised in the early 1950s. This theory composed of the ideas of different approaches to management development. The approach is fully based on empirical research data and has an integrating nature. The approach reflects the formal and informal structures of the organisation and due weightage is given to the status and roles of peronnel in an organisation.

organisation - modern theory

Like the general system theory, modern organisation theory studies: 

1. The parts (individual) in aggregates and the movement of individuals and out of the system.

2. The interaction of individual with the environment found in the system.

3. The interaction among individual in the system.

Essentials of Modern Theory

1. It views the organisations as a whole.

2. It is based on systems analysis.

3. The findings of this theory are based on empirical research.

4. It is integrating in nature.

5. It gives importance to inter-disciplinary approach to organisational analysis. 

6. It concentrates on both quantitatives and behavioural sciences. 

7. It is not a unified body of knowledge.

Criticism of Modern Theory

1. This theory puts old wine into a new pot.

2. It does not represent a unified body of knowledge. There is nothing new in this theory bacause it is based on past empirical studies.

3. This theory forms only the questions and not the answers. 

4. It is based on behavioural, social and mathematical theories. These are management theories in themselves.

4. MOTIVATION THEORY

It is concerned with the study or work motivation of employees of the organisation. The works are performed effectively if proper motivation is given to the employees.

The motivation may be in monetary and non-monetary terms. The inner talents of any person can be identified after giving adequate motivation to employees. Maslow’s hierarchy of needs theory and Honberg’s two factor theory are some of the examples of motivation theory.

5. DECISION THEORY

The other name of decision theory is decision making theory. This theory was given by Herbert. A. Simon. He was awarded Nobel Prize in the year of 1978 for this theory. He regarded organisation as a structure of decision makers. The decisions were taken at all levels of the organisation and important decisions (policy decisions) are taken at the higher levels of organisation.

Simon suggested that the organisational structure be designed through an examination of the points at which decisions must be made and the persons from whom information is required if decisions should be satisfactory.

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