Board of Directors

28 29

General Managers

1. Pure line organization: Under this form, similar activities are performed at a particular level. Each group
of activities is self-contained unit and able to perform the assigned activities without the assistance of others. It may be depicted as follows.

Finance (Manager)

Production (Manager)

Personnel (Manager)

Marketing (Manager)

2. Departmental line organization: Under this form, entire activities are divided into different departments on the basis of similarity of activities each department is placed under one departmental superintendent. All persons in the department are subjected to control by the departmental head. The basic objectives of this form are to have uniform control, authority, and responsibility. Characteristics of line organization structure: Lines of authority and instructions are vertical, that is they flow from the top to bottom. The unity of command is maintained in a straight and unbroken line.

Superintendent plant 1

Superintendent plant 2

Foremen \ Workers

Foremen

All persons at the same level of organization are independent of each other. Each position enjoys general authority over all the lower positions in the hierarchy. Workers The principles of unity of command and scalar principle are followed. Responsibility goes upwards. There is no provision for the staff specialist. Board of directors General Manager

Benefits of the Organization Chart: It facilitates organizational planning and manpower planning. It helps to avoid overlapping of authority. It enables the executives to know and appreciate their own position vis--vis others in the organization. It is a source of authoritative information about the organization. It helps to analysis an organization for effecting improvements

Limitations of the organization chart It does not guarantee an effective structure. It may induce rigidity. It requires frequent updating. It does not incorporate the informal organization. TYPES OF ORGANIZATION STRUCTURES: The classification of organization structure is based on the way; various activities are grouped together to create deportments and units as prescribing their relationship in the organization. Thus, there are seven types of organization structure-line, line and staff, functional, divisional, project, matrix, and free form. Each of these emphasizes different arrangement of organization activities. 1. LINE ORGANIZATION STRUCTURE Line organization structure is also known as scalar, military, or vertical organization. Line or military organization is the oldest and simplest form of organization .Line structure is generally found in small business units, although this is the basic framework of organization in large business units. Other forms are simply the modification of the line structure. Under this system the authority flows vertically from top to bottom. On the other hand responsible for his work and is accountable to his boss. Since authority and responsibility flow in an unbroken straight line this type of organization is strictly based on the principles of 'unity of command' and 'scalar chain. Line organization can be designed in two ways .they are 1. Pure line organization 2. Departmental line organization

Purchase manager

Production manager

Sales manager

Finance manager

Purchase assistants

Superintendent

Supervisor

Financial assistants

Workers Merits: 1. Simplicity:

Workers

Workers

Workers

This organization is quite simple in both understanding and implementation. every person knows clearly from whom he receives commands it avoids confusion in the workers mind. 2. Discipline: Since each position is subject to control by its immediate superior position, often the maintenance of discipline is easy. 3. Orderly communication: This system of communication is easy to maintain, orderly in nature, supports the authority of superior, and provides for closeness of contact thereby reducing changes of miscommunication. 4. Easy supervision and control: The line organization provides for easy supervision and because each subordinate is controlled by a single superior. 5. Economical: The line organization is quite economical because it does not use staff specialists whose appointment is a costly affair especially for small organizations.

30

31

6. Stability: It is stable. Demerits 1. Not suitable: It is not suitable for big organizations as specialization is absent. 2. Rigidity: It is rigid and inflexible. 3. Lack of expert advice: It suffers from lack of expert staff advice. 4. No proper communication: There is no communication from bottom upwards as authority is concentrated at the top level.-9 5. Lack of specialization: The line organization does not offer scope for specialization. A manager has to perform a variety of functions which may not necessarily be closely interrelated Suitability The line organization is not suitable for large-scale organizations because it cannot fulfill the requirements of large organizations .However ,it quite suitable to small- organizations where the number of subordinates is quite small .The need for small organization is centralized control called only few levels of authority , direct interpersonal communication ,and direct control and supervision. 2. FUNCTIONAL ORGANIZATION Functional structure is a means of putting the specialists in top positions throughout the organization. They have only a limited power of command. Their functional authority remains confined to functional guidance of different departments. Under this system the whole work of management and direction of subordinates are divided in accordance with the type of work involved. At higher levels the functional organization refers to the structure that is formed by grouping all the works into major functional departments. The initial concept of the functional organization is credited to F.W.Taylor. He suggested the scheme of functional foremanship. The functional foremanship recommended by Taylor has already been explained in the fig is the functional organization at the management level showing the direct authority of the personnel manager over the personnel in the works department.

It ensures separation of manual and mental functions so as to facilitate quick decision and mass production The limitations of one-man control under the line organization are largely alleviated here It ensures easy implementation and control of decision Fictionalization helps in better utilization of employees and development of there skills and also better utilization of resources also. It promotes professional achievement as a person is restricted to his own area of specialization. Thus, it provides satisfaction to specialists. There is a high degree of control and coordination of functions because all work of one kind is under one manager. Disadvantages of the functional organization: Functional structure offers usually line and staff conflict and inter departmental conflict. The heightened degree of such a conflict becomes detrimental to organizational efficiency. It is difficult to establish because of the high degree of specialization. It is unstable because it weakens the discipline. Specialists are seldom all- rounders so that a deficiency of leadership is almost perennially felt. Overlapping of authority and responsibility often leads to conflict among foremen of equal status. Difficulty in achieving control and coordination on account of considerable independence of specialists. Work manager

Accountant

Superintendent

Supervisor

Suitability: Functional organizational structure is the most widely used in the medium and large organizations having limited number of products. Features of the functional organization Each functional area is put under the charge of one executive or specialist If anybody wants to take any decision relating to a particular function he has to consult the functional specialist. Specialists often operate with considerable independence. Specialization by functions. Emphasis on goals. Line and staff division Functional authority relationships among various departments. Advantages of the functional organization: It ensures division of labor and specialization based on individual proficiency and specialized knowledge

Route clerk

3.

Time and cost clerk

Gang boss

Disciplarian

Inspector

Instruction card clerk

Speed Boss

Line and Staff organization Line and staff organization refers to a pattern in which staff specialists advice line manages to perform that duties when the work of an executive increases , its performance requires the services of specialists which he himself cannot provide because of his limited capabilities on these fronts The line and staff system strikes a happy balance between the two in this system the administrative work is divided into two divisions namely the 1. Staff function and 2. Line function The staff is responsible for planning and the line for the actual execution of the work. The staff personnel only give advice to the line officials but do not enforce it. They prepare plans and recommend them to the line officials who implement them. Under the line and staff organization the line is supplemented by the staff. The staff refers to officers who are not line managers. The staff consists of:

32

33

1. Personal staff such as a personal assistant or adviser attached to a line executive. 2. Specialized staff such as accountant a personal manager a public relations officer ,etc and. 3. General staff such as other experts in different fields who advise the top management and normally operate at higher levels. Features of the line and staff organization 1. The staff supplements the line. 2. This organization clearly distinguishes between the two aspects of administration, viz. planning and execution. 3. Since the staff officers provide advice only to the line officers they do not have any power of command over them. 4. In the line and staff organization, line authority moves down in the same manner as in the line organization. Advantages of the line and staff organization [or] Merits 1. Planned specialization: Line and staff structure is based upon the principle of specialization .the managers are responsible for operations contributing directly to the achievements of the organizational objectives whereas staff people are there to provide expert advice on the matters of their concern. 2. Quality of Decisions: The quality of decisions in line and staff structures is high because the decisions come after careful consideration and thought. Each expert gives his advice in the area of his specialization which is reflected in the decisions. 3. Prospect for Personal Growth: This system of organizing offers ample prospect for efficient personal to grow in the organization. Not only has that it offered opportunity for concentrating in a particular area, thereby increasing personal efficiency. 4. Training Ground for Personnel: It provides training ground for the personnel in two ways. First, since everybody is expected to concentrate on one field, ones training needs can easily be identified. 5. Flexibility: The line and staff organization is highly flexible because new activities may be introduced through additional staff without disturbing the line procedure. Disadvantages of the line and staff organization [or] Demerits: 1. Lack of well defined Authority: Though it is easy to say about line and staff authority, often in practice, it becomes difficult to differentiate clearly between line and staff because, in actual practice, the authority is often diffused. 2. Conflict between line and staff: The line and staff relationships are often tenuous and lead to numerous frictions and jealousies. There is a danger that the staff officers may encroach on the line authority. 3. Confusion: Confusion may prevail when the line and staff relationship is not properly understood 4. Loss of judgment and initiative: Line managers may depend to much on staff experts. it may therefore lead to loss of judgment and initiative on the part of line officials. 5. Ineffective staff: The staff experts may feel ineffective as they do not get the authority to implement their recommendations.

6. Expensive: This type of organization may prove very expensive as a large number of specialists are appointed.

Committee organization structure: A committee does not represent a separate type of organization like the line, line and staff or functional. It is rather a device which is used as supplementary to or in addition to A committee does not represent a separate type of organization like the line, line and staff or functional. It is rather a device which is used as supplementary to or in addition to any of the above types of organizations. Committee is another form of formal group. Committees are found in every large organization. Exact definition of a committee is slightly difficult because there are too many variations in the scope and functions of committees. In an organization, there can be several types of committee, for examples, finance committee, budget committee, purchase committee, grievance committee, and welfare committee and so on. Def: A committee is a group of people who meet by plan to discus or to make a decision for a particular problem or subject. Committee can be defined as body of persons appointed to meet on an organized basis for the discussion and dealing of matters brought before it. Based on this definition, following features of committee are identified. Features of committee 1. A committee as a group of persons. It implies that there should be at least two persons. There are no limitations on the maximum number of persons in a committee. 2. A committee can deliberate only on matters that are brought before it. It cannot go for action in all spheres of activities. When a committee is constituted, jurisdictions within which it is expected to justify its existence. 3. Members of the committee draw authority though delegation. The authority of members is usually expressed in terms of one for each member for deciding the matters. 4. The type of authority delegated to a committee may vary from making final decisions on a matter to mere submission of relevant information on the matter concerned 5. A committee may be constituted at any level of the organization and its members can be drawn from any level or function. Reasons for use of committees 1. Pooling of knowledge and experience: there are strictly defined

34

35

The most important advantages in using committees are that knowledge and experience can be pooled together and decisions can be arrived at through group deliberations judgment. A committee works on the theme that two heads are better than one. 2. Facility for coordination: Committees are very useful for coordinating activities among various functional units. When it is necessary to integrate and unify various viewpoints which cannot conveniently and effectively be coordinated by individuals, the committee may be useful in bringing all those concerned together. 3. Representation on Interest Groups: Committees are often used to give representation to various interest groups. Such types of committees are quite popular in government, educational and other institutions where people from diversified groups should have their say in the functioning of the organization. Even in business organization such committees may be set up, For example board of directors, welfare committee. 4. Fear Too Much Authority in Single person. Sometimes committees are constituted to avoid the concentration of too much authority in a single individual. This problem is more prominent in government and educational organizations and less in business organizations. 5. Transmission and sharing of information: Committees are useful for transmission and sharing of information. All parties and persons interested in a problem have simultaneous face-to-face communication through the proceedings of the committee meetings. Doubts and ambiguity may be removed at the spot. This saves a lot of time in communication. 6. Motivation through Participation: People do better when they participate in decisions affecting their working because when they participate in decision making, they accept and live with that decision; they feel committed to the decision. This feeling of involvement and commitment motivates them for better performance Benefits of committees 1. Integrated group knowledge and judgment. 2. Representation of different interest groups. 3. Coordination of plans and policies. 4. Executive team work and personal interactions. 5. Wider participation and motivation. 6. Improved communication. 7. Training ground for executives. Sales manager Managing director General Manager Work manager Personnel manager

Limitations of committees [or] Problems in committees 1. High cost: Constitution of a committee may be costly both in terms of time and money. Committee meetings may take time of various managers which can be spent otherwise for the organization 2. Slow Decisions: Committee decisions are essentially slow because of the basic nature of decision-making process in a committee. This may require staff work to prepare a report giving members the basic facts. It may take time. Similarly, in the meeting, deliberations take lot of time. Each member is expected to be heard. 3. Splitting of Responsibility: People work more efficiently when they have clear authority and responsibility. A major drawback in committee decision is that it splits the responsibility and no member really feels responsible for group action. VIRTUAL ORGANISATION The concept of virtual organization or corporation along with virtual team and office has entered management field very recently. The literal meaning of virtual is having the efficiency without the material part unreal but capable of being considered as real for the purpose. Based on this concept, virtual corporation has been defined as follows. Virtual corporation is a temporary network of independent companies-suppliers, customers, even erstwhile rivals-linked by information technology to show the skills, costs and access to one anothers market. It will have neither vertical integration. Thus, virtual organization is temporary alliance between two or more organization that band together to undertake a specified venture. Recently, in telecommunication sector in India, many virtual organizations have been created to provide different services. Business Week has identified five basic Features Of a virtual organization which are as follows. Technology: Informational networks will provide far-flunged companies and entrepreneurs to link up work together from start to finish. The partnerships will be based on electronic contrasts to keep the lawyers away and speed the linkup. Opportunism: Partnership will be loss permanent, less formal and more opportunistic. Companies will band together to meet a specific market opportunity and, more often than not fall apart once the need evaporates. Excellence: Because each partner brings its core competence to the effort, it may be possible to create a best-of-everything organization .Every function and process could be world class-something that no single company could achieve Trust: These relationships make companies far more reliant on each other and require for more trust than even before .They will share a sense of co-destiny, meaning that the fate of each partner is dependent on other. No Borders: The new corporate model redefines the traditional boundaries of the company. More cooperation among competitors, suppliers, and customers makes it harder to determine where one company ends and another begins. Reasons for Virtual organization central office nor organization chart. It will have no hierarchy, no

Sales function

Employment officer

Production superintendent

Forman Workers

Forman Workers

Forman Workers

36

37

The basic reason behind creating a virtual organization is to generate synergy through temporary alliances However, management scholars have divided opinions over the effectiveness of virtual organizations because of the trust that is required in creating such organization. Often, clash of interest generates much sooner than expected. For example, one of the virtual organizations created by Intel, USA and Japanese company could not work properly because the Japanese company was not able to complete its part of the project, leaving Intel with a major product delivery problem. Intel was not happy about that venture and decided not to participate any venture. Virtual office Along with virtual organizations, the concept of virtual offices has also emerged in which physical office space and individual desks have been replaced with an array of portable communication tools email, cellular phones, voice mail system, laptop computers, fax machines ,modems, video conferencing systems etc. Employees armed with these tools perform their works without going to their offices but do this from homes, cars, customers offices etc. Thus, the work is performed through telecommuting. . MATRIX ORGANIZATION STRUCTURE Matrix organization structure is essentially a violation of unity of command and, therefore, whole classical concepts related to the principle of unity of command are violated. Matrix structure is the realization of two- dimensional structure which emanates directly from two dimensions of authority. Two complementary structures -pure structure and functional structure-are merged together to create matrix structure. Thus, matrix structure not only employs a multiple command but also related support mechanism and associated organizational culture and behaviour. Thus, it shows many organizational overlaps not only in terms of command system but also in terms of whole organizational processes and behavior. Design of Matrix Structure: In matrix organization structure, a project manager is appointed to coordinate the activities of the project. Personal are drawn from their respective functional departments. Upon completion of the project these people may return to their original departments for further assignment. Thus, each functional staff has two bosses-his administrative head and his project manager. Suitability of Matrix Structure:- Matrix structure is of recent origin but its use has spread in various fields. For example, Davis and Lawrence have observed that matrix structure can be successfully applied to the following types of activities: manufacturing activities - aerospace, chemicals, electronics, heavy equipment, industrial products and pharmaceutical; service activities-banking, brokerage, construction, insurance and retailing; professional activities-accounting, advertising, consulting, and law; and non -profit organizations-government agencies, hospital, united nations and universities. Merits of Matrix Structure: 1. Matrix structure focuses resources on a single project, permitting better planning and control to meet the project deadline. In project management, time is of prime importance and, therefore, it should be completed within the specified time. 2. It is quite flexible structure as compared to traditional hierarchical structure. 3. It emphasizes on professional by elaborating authority of knowledge rather than authority of position.

4. It improves motivation because people can focus more directly on completion of one project than they can in the traditional functional structure. It also improves communication. 5. Pin points profits responsibility. Demerits of Matrix Structure: Matrix structure has many problems in practice because of its too much flexibility. The major problems of matrix structure are as follows and managers should take adequate precautions to overcome these. 1. There is always power struggle in matrix structure. The essence of matrix structure is dual command, and to survive such a form, there needs to be balance of power. 2. This structure may not work very well when there is economic crunch. In the case of economic crunch, the organization may not be in the same position as there may be many changes in market position, pressure on profit margin, and financial problems. 3. If matrix organization is not followed properly, there is delay in decision making . The decision making process is such that many persons are involved in the decision. 4. Possibility Of disunity of command. 5. in effective human relations.
CEO / President

R&D specialists

Finance department

Marketing department

Personnel department

Production department

Project A

R&D specialists

Finance specialists

Marketing specialists

Personnel specialists

Production specialists

Project B

R&D specialists

Finance specialists

Marketing specialists

Personnel specialists

Production specialists

TEAM In order to meet the challenges of dynamic business environment, more and more organizations are replacing old hierarchies with teams of different types in the form of work teams or project teams. A team is a group of people in the organization constituted for completing certain assignments. A team is like a task force with a major difference. A task force is created to solve unusual problems that an organization may face occasionally. In contrast to this, work teams are constituted quite frequently. For example, in information technology companies, most of the work is done by teams which are constituted on project-to-project basis. TYPES OF TEAM: In an organization, there may be different types of teams. Typology of teams may be based on their constitution, purpose, power entrusted, duration, etc. The more common type of teams that may be found in an organization are lead teams, cross-functional teams, problem-solving teams, and selfmanaging teams. Several teams may be created in each type. Lead Team:

38

39

A lead team consists of managers and their direct subordinates. This is the most usual form of team which works in every part of an organization. A basic feature of this type of team is that it is created on the basis of hierarchical relationships as organizational administrative units. Cross-functional Team: A cross-functional team is constituted by drawing personal from different functional areas, particularly from those functions which have high interdependence. The basic objective of such a team is to solve problems and take decisions in those areas which cannot be done by a particular functional department. Because of the interdependence of various functions in an organization. Problem-solving Team: A problem-solving team, also known as corrective action team, is constituted to solve specific problems which an organization may be facing. Team members for such a team are drawn from those areas where the problems requiring solution exist. Self-managing Team: In todays context, more emphasis is given on self-managing teams, also known as empowered or self-directed team. Effective Team An effective team is one which contributes to the achievement of organizational objectives by performing the task assigned to it and providing satisfaction to its members. FLAT AND TALL ORGANIZATIONS Flat organizations are those, which have relatively few or even one level of management. Many enterprises have adopted flatter structures to reduce levels of management and bureaucracy and give their workforce greater decision-making responsibilities. A service organization with 3 equal partners and 30 employees is the best example for a flat structure. Flat organizations are known by their wider span of control. In other words, each manager controls more number of employees at a given point of time. Flat structured organizations facilitate communication across the organization.
Managing Director

TALL ORGANIZATION: Tall organizations have many levels of management. Tall structure organizations focus on vertical communication through the levels of grades in it.
Managing Director

Additional Managing Director

Sales Manager

Production Manager

Personnel Manager

Finance Manager

Advantages: Allows for tight control and supervision. Communication with subordinates is easier. Disadvantages: Subordinates may feel left out of the decision-making process and may lack motivation. Costs related to management and administrations tend to increase. Coordinating decisions of numerous managers becomes difficult. Too much supervision may hinder initiative and motivation. Boundary less organization A boundary less organization is a contemporary approach in 0. It is an organization that is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure. This term was coined by former General Electric chairman Jack Welch because he wanted to eliminate vertical and horizontal boundaries within the company and break down external barriers between the company and its customers and suppliers. To achieve Boundary less Information Flow, an organization needs to put in place infrastructure services that bring data sources together and provide that information to those users and applications that need it. Creating the environment for integrated information has been a challenge. What were once regarded as necessary boundaries between the different stages in operational processes designed to achieve the benefits of specialization, now represent silos delivering outmoded solutions, which do not allow for the sharing of information. Barriers at the business and technical levels must be broken down. MERITS: 1. Flexibility: A boundary less organization is flexible when compared with other organization structures. 2. Quick decision-making: in case of boundary less organization decisions taken by top level management is quick without losing any opportunities. 3. Quality: in case of boundary less organization quality decisions will be taken and qualitative products will be produced. 4. Timeliness: corrective and proper actions will be implemented and timeliness in running of business operations will be possible in case of boundary less organization. DEMERITS:

Managing Director

Managing Director

Managing Director

Managing Director

Advantages: Fewer levels of management and decision-making. Lower supervision costs. The subordinates feel more satisfied on the job front with greater decision-making authority. Disadvantages: Makes it difficult to supervise the subordinates directly. Flat structures may not work as the business expands

40

41

1. Difficult of maintenance: maintenance of different operations at all levels of management is difficult in case of boundary less organization. 2. Lack of proper understanding: the lower level management people may not get clear cut division of work which acts as one of the major limitation of boundary less organization 3. Costlier: it is very expensive to prepare reports in case of boundary less organization which acts as one of the major limitation. INVERTED PYRAMID STRUCTURE Inverted pyramid structure is an alternative to the traditional chain of command. This is a structure which is narrow at the top and wide at the base. It includes levels of management. MERITS: 1. Unity of command: in case of Inverted pyramid structure only one manager will make commands over lower level managers as well as employees and workers. 2. Span of control: power will be vests in the hands of one person and its the ability of manager to control more number of employees. 3. Effective decision-making: effective decisions will be possible in case of Inverted pyramid structure. DEMERITS: 1. Overlapping of activities: the major limitation of Inverted pyramid structure is overlapping of activities at the same point of time. 2. Time constraint: the major drawback of Inverted pyramid structure is lack of time in taking decisions. 3. Conflicts: there will be a chance of arising conflicts between levels of management in the organization structure in case of Inverted pyramid structure.

2. Quality: the quality in case of production and goods will be possible in case of cellular

organizations.
3. Understanding capacity: all the members will be able to understand the orders of managers in

cellular organizations. DEMERITS: 1. Problem in division: division of cells in the organization is the biggest problem in cellular organizations. 2. Time constraint: lot of time is required for dividing the organization into different cells is a problem in cellular organizations.

CELLULAR ORGANIZATION STRUCTURE In cellular organizations workers manufacture total product or sub assembles in teams [cells]. Every team of workers has the responsibility to improve or maintain the quality and quality of its products. Each team is free to reorganize itself improve performance and product quality. The cells comprise self managed teams. MERITS:
1. Improvement in performance: the performance of employees will be increased in case of

cellular organizations.