basics of organisation

7/29/2019 BASICS OF ORGANISATION

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BASICS OF ORGANISATION



INTRODUCTION

Human beings cannot live in isolation.They are unable to fulfill their needs anddesires alone, because any one individual

lacks the strength, ability, time andpotential. He has to get the co-operation of other persons in achieving the goals.

Organization is viewed as a group of persons formed to seek certain goals.



DEFINITION OF ORGANIZATION

According to Mooney and Reliey.

’’organization is defined as the form of human association for attaining common

objectives” According to Koontz and O'Donnell.

“The establishment of authority

relationships with provision for coordinationbetween them, both vertically and horizontallyin the enterprise structure, is the essence of organization”



Cont…..

►An organization is a group of peopleintentionally organized to accomplish an overall,common goal or set of goals.

►Non- random arrangement of components or

parts interconnected in a manner as to constitutea system identifiable as a unit.

►Sequential or spatial form in which a body of

knowledge, data, things, people or otherelements, are purposefully arranged.



Cont…

►Social unit of people, systematically arranged or

managed to meet a need or pursue collective

goals on a continuing basis.

►An organization is a product of its environment,

and it exist to satisfy some need in the

environment whether the organization be a

business, governmental unit or a charityorganization.



Why Have a Structure?

►All businesses have to organise

what they do

►A clear structure makes it easier to see which

part of the business does what

►There are many ways

to structure a business



STRUCTURE CONCEPTS

►Functional

►Geographical

►Product

►Customer

►Process



Ways to Structure a Business

►By function: arranging the businessaccording to what each section

or department does

►By product or activity: organising

according to the different products made

►By area: geographical or regionalstructure



Ways to Structure a Business

►By customer: where different customer groupshave different needs

►By process: where products have to go throughstages as they are made



Functional Structure

Advantages

► Specialisation – eachdepartment focuses on itsown work

► Accountability – someone isresponsible for the section

► Clarity – know your andothers’ roles

Disadvantages

► Closed communicationcould lead to lack of focus

► Departments can become

resistant to change

► Coordination may take toolong

► Gap between top and bottom



Organisation by Product/Activity

Advantages

► Clear focus on market

segment helps meetcustomers’ needs

► Positive competitionbetween divisions

► Better control as each

division can act asseparate profit centre

Disadvantages

► Duplication of functions

(e.g. different sales forcefor each division)

► Negative effects of

competition

► Lack of central controlover each separate

division



Organisation by Area

Advantages

► Serve local needs better

► Positive competition

►More effective

communication between

firm and local customers

Disadvantages

► Conflict between local and

central management► Duplication of resources and

functions



Other Organisational Structures

►By Customer:

Similar effects to structuringby product

►By Process:

Similar to structuring by function



ORGANIZATIONAL CHART

►Representing the formal structure of a firm in

terms of authority , functions and relations.

► It also a diagram that shows the structure of an

organization as well as the relationships and

relative ranks of its position.

►This helps managers to navigate through patterns

in their employees.



ORGANISATIONAL CHART

Board of Directors

(Chairman)

General

Manager

(CEO)

Finance

Manager

Marketing

Manager

Production

Manager

Lab &

Production

Stores &

Administration



TYPES OF ORGANISATION

An organization structure is mainly

concerned with the allocation of duties

and responsibilities and delegation of authority. It helps in allocating authority

and responsibility in the business.



The following are some of the important

forms or types of organization.

A. Line organizationB. Functional organization

C. Line and staff organization

D. Committee form of organization



LINE ORGANIZATION

►It represents a direct vertical relationshipthrough which authority flows.

►This is the simplest and oldest, known aschain of command or scalar principle.

► Authority flows from top to the lowerlevels.



In the words of J. M. Lundy,” It is

characterized by direct lines of authority flowing

from the top to the bottom of the organizational

hierarchy and lines of responsibility flowing in

an opposite but equally direct manner”.



TYPES OF LINE ORGANISATION

a) PURE LINE ORGANISATION

FOREMAN A FOREMAN B FOREMAN C

PRODUCTION MANAGER

WORKERS WORKERS WORKERS

1 2 3 4(GROUP A)

1 2 3 4 1 2 3 4

(GROUP B) GROUP C



► In pure line organization all persons at a

given perform the same type of work.

►The above divisions are solely for the

purpose of control and direction.

►The departmental divisions are made only

for the sake of convenience and control.



b) DEPARTMENTAL LINE ORGANIZATION

General Manager

Finance ManagerProductionManager

MarketingManager Personal manager

DEPUTY MANAGER-I DEPUTY MANAGER-II

SUPERVISOR SUPERVISOR SUPERVISOR SUPERVISOR

WORKERS WORKERS WORKERS WORKERS



► These type organizations divides the

enterprise into different departments.► There is a unit of control and line of

authority flows from top to bottom.

To become successful the following

conditions have to satisfy:1) There should be hierarchical arrangement of

giving commands

2) There should be a single line of command

3) All persons at the same level of authorityshould be independent of one another

4) The number of subordinates should be such

that they are properly supervised.



Merits of Line Organization

► Simplicity

►Co-ordination

► Effective Communication

►Unity of Command

►Quick Decisions

► Flexibility



Demerits of line Organization

►Excess Work

►Lack of Specialization

►

Lack of co-ordination►Improper communication

►Lack of initiative

►Instability



B FUNCTIONAL ORGANISATION

BOARD OF DIRECTORS

CHIEF EXECUTIVE

WORKS MANAGER

PRODUCTION MANAGER

RouteClerk Instruc-tion

Clerk

TimeClerk Discipli-narian GangBoss RepairBoss SpeedBoss

InspetorBoss

OFFICE SPECIALISTS SHOP SPECIALISTS

WORKS



► Functional organization also known as staff organization

►The task of management and direction of subordinates should be divided according to thetype of work involved.

► F. W. Taylor, father of scientific management,

developed the concept of functional organization.



Advantages of Functional organization

►Specialization

►Increase in efficiency

►

Scope for growth►Flexibility

►Relief to top executives

►Economy of operations►Better supervision



Disadvantages of Functional Organization

►Conflict in authority

►Lack of co-ordination

►

Difficulty in fixing responsibility►Delay in taking decisions

►Expensive

►Poor discipline►Group Rivalries

Difference between Line and Functional



Difference between Line and Functional

organizationLine Organization Functional Organization

►Doing of actual work ►Centralized authority

►One supervisor and

subordinate►Less expensive

►Responsibility fixed

►

Suitable for smallbusiness

►Have authority of command that flows

downwards

►Doing specialized funct.►Decentralized authority

►Several advisors to one

subordinate►More expensive

►No fixed responsibility

►

Suitable for bigbusiness

►Have authority of ideasand knowledge



C LINE AND STAFF ORGANISATION

► Line organization is autocratic, and staff organization on the other hand has loosecontrol .

►Line and staff organization eliminates thedrawbacks of both and also has the good

points of them .



► A line manager is responsible for makingimportant decisions and is also accountable fortheir implications

►The authority flows vertically from top to bottom► Staff officers are attached to line managers to

advise them in the field of their specialization

►

Staff officers role is of advisers .



Louis Allen has clarified these roles as,

“line refers to those positions and elements of

the organization which have the responsibility

and authority and are accountable for theaccomplishment of primary objectives. Staff

elements are those which have responsibility and

authority for providing advice and service to theline in the attainment of objectives.”



Board of Directors

Chief Executive

Assistant Assistant

PersonnelManager

LegalManager

FinanceManager

ProductionManager

SalesManager

Foreman-1Foreman-2

Foreman-3

Workers Workers Workers



Advantages of Line and Staff Organization

►Specialization

►Better discipline

►

Balanced and prompt decisions►Growth and expansion

►Development of employees

►Quick actions



Disadvantages of Line and Staff Organization

►Conflict between Line and staff personnel

►More dependence on staff

►

Lack of co-ordination►Ineffective staff

►Expensive



Difference between Line and Staff

Staff Organization Line organization

►Staff thinks

►Staff advises►Staff tells the line whatto do

►Staff has the authorityof line

►No fixed responsibility

►No authority only

power to recommend

►Lines do

►Lines perform►Lines tell staff whereto go

►Line have the authorityto command

►Fixed responsibility

►Line is responsible for

actual execution of work



D Committee Form of Organization

► It is a method of collective thinking, corporate judgment and common decision

► It is a method of attaching persons or groups to

line departments for advise and guidance inbusiness planning and execution

►Because of collective information and analysis,committees are more likely to come up withsolutions to complex problems



Types of Committees

►Formal and informal committees

► Advisory committees

►

Line committees



ADVANTAGES OF COMMITTEES

►Pooling of opinions

►Better co-ordination

►

Balancing of views►Motivation

►Better acceptance of decisions

►Better communication



DISADVANTAGES OF COMMITTEES

►Delay

►Compromise

►

No accountability►Strained relations

►Lack of effectiveness



ORGANISATION THEORY

► It furnishes a general frame of reference for

explaining and understanding behaviour

patterns in organization► There are three organization theories and

these are discussed as follows:

I Classical organization theoryII Neo- Classical organization theory

III Modern Organization theory



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