types and levels of organisation.docx

7/28/2019 TYPES AND LEVELS OF ORGANISATION.docx

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TYPES AND LEVELS OF ORGANISATION

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 organisation can be either formal or informal.

Formal organisation:

Provides a framework for defining responsibility, authority, delegation and accountability.

Depending on the organizational philosophy, the formal structure may be rigid or loose.

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.

An organisational structure clearly defines the duties, responsibilities, authority andrelationships 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 coordination of activities of every person to achieve the common objectives.It indirectly induces the worker to work most efficiently.

The interrelationship of staff members can be shown in the organisation chart andmanuals under formal organisation.

Characteristics of formal organisation:

It is properly planned. It is based on delegated authority. It is deliberately impersonal.


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The responsibility and accountability at all levels of organisation should be clearlydefined.

Organisational charts are usually drawn. Unity of command is normally maintained. It provides for division of labour.

Advantages of formal organisation:

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

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

3. Buck passing is very difficult under the formal organisation. (Normally exact standardsof 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 choice for favouritism in evaluation and placement of the employee.6. It makes the organisation less dependant 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 mans achievement in a disorganised society. It is

mans orderly, conscious and intelligent creation for human benefit.

Criticisms:

In certain cases, the formal organisation may reduce the spirit of initiative. Sometimes authority is used for the sake of convenience of the employee without

considering the need for using the authority.

It does not consider the sentiments and values of the employees in the social organisation. It may reduce the speed of informal communication (rules/regs).

Informal organisation:


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Informal organisation is an organisational structure which establishes the relationship onthe 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 eg., a salesman receives orders or instructions directly from the sales manager

instead of his supervisors).

The informal organisation relationship or informal relations give a greater job satisfactionand result in maximum production.

According C.J. Bernard, informal organisation brings cohesiveness to formalorganisation.

It brings to the members of the formal organisation a feeling of belonging, status of selfrespect and gregarious satisfaction.

Informal organisations are important means of maintaining the personality of theindividual against certain effects of formal organisation which tends to disintegrated

personality.

Characteristics of informal organisation:

1. Informal organisation arises without any external cause ie., 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 self control.5. Informal organisation can be found on all levels of organisation with in the managerial

hierarchy.

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

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

8. Informal orgn is one of the parts of total organisation.9. There is no structure and definiteness to the informal organisation.


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Advantages of informal organisation:

It fills up the gaps and deficiency of the formal organisation. Informal organisation gives satisfaction to the workers and maintains the stability of the

work.

It is a useful channel of communication. It encourages the executives to plan the work correctly and act accordingly. It fills up the gaps among the abilities of the managers.

Disadvantages of informal organisation:

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

It acts according to mob psychology. It indirectly reduces the efforts of management to promote greater productivity. It spreads rumour among the workers regarding the functioning of the organisation

unnecessarily.

Difference between formal and informal organisation

Formal organization Informal organisation

It arises due to delegation of authority. It arises due to social interaction of people.

It gives importance to terms ofauthority

and functions.

It gives importance to people and their

relationships.

It is created deliberately It is spontaneous and natural.

The formal authority is attached to a

position.

The informal authority is attached to a

person.

Rules, duties and responsibilities ofworkers are given in writing.

No such written rules and duties followed ininformal organisation.

Formal organisation comes from outsiders

who are superior in the line of

organisation.

Informal organisation comes from those

persons who are objects of its control.


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Formal authority flows from upwards to

downwards.

Authority flows upwards to downwards

from or horizontally.

Formal organisation may grow to

maximum size.

Informal organisation tends to remain

smaller.

It is created for technological purpose. It arises from mans quest for social

satisfaction.

It is permanent and stable There is no such permanent nature and

stability.

Types of organisation (Levels of Organisation):

Broadly there are 3 types of organisation:

1. Line organisation2. Staff organisation3. Functional organisation.An institution or enterprise may adopt one or other type of organisation or more than one

type of organisation depending upon its needs.

Line organisation:

It is the oldest and the simplest form of organisation. It is also known as the military or scalar organization. Line functions -where superior exercises direct supervision over a subordinate an

authority relationship in direct line or steps.

The line of authority is straight and vertical and each person at the same level performsthe same functions.

In an enterprise or institution, the chief executive leads the entire organisation. Here themaximum authority rests on the top or highest levels of management and the quantum of

authority decreases in a step ladder fashion for the subsequent levels of management in

the hierarchy.


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The line or straight or vertical line of authority serves as the channel of:

i) Commandii) Communicationiii) Directioniv) Coordinationv) Control And accountability The departments/divisions are formed depending upon the responsibilities involved and

work to be carried out by each department / division.

each department and each division is headed by a divisional/departmental head.The following two figures will describe the functions of a line organisation

Board of Director/Management

Chief executive

Manager manager manager manager managerProduction materials marketing finance admn

Supervisor supervisor supervisor supervisor supervisor

Staff staff staff staff staff

Medical superintendent

Nursing superintendent

Deputy nursing superintendent

ANS ANS ANS ANS

Surgical medical paediatric outpatientsDivision division division division


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Ward sister W/S W/S W/S

Surgical medical paediatric outpatients

Staff nurse S/N S/N S/N

Surgical medical paediatric outpatients

Line organization in hospital nursing services

There are possibilities that more subsections/ divisions may exist under each branch. In this type of organisation the direction flows from top, transmitted through the

managers to the supervisors and then to the workers or staff.

The hierarchy is maintained as per the figures shown. There is no scope for downward to upward or upward to lower downward movements.

(The authority is only the chief executive and what he describes must be carried out. If

one has to say something to the lower level he/she can only approach the immediate boss

and not anyone above).

Only one supervisor issues command and the number of persons normally limited lessthan one supervisor.

There are advantages or merits:

Simplicity Unity of control Better discipline Fixed responsibility: responsibities are well defined and persons are accountable to

someone in the line form.

Flexibility: the executives generally enjoy autonomy and freedom within their definedsphere of activities.

Prompt decision: because of the chain of command, unified control and fixedresponsibilities, it is possible to take prompt decisions.

Demerits:

Lack of specialization: this system does not provide any scope for employing specialists.


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Overloading or overreliance: the departmental head is all in all of his department/division in this type of organisation.

Inadequate communication: there is no down to upward communication in this type oforganisation.

Favouritism: since one man is the decision maker and also opinion maker it is possiblehe/she may be influenced by a few people.

Functional organisation:

Under line organisation, a single person is incharge of all the activities of the concerned dept.

Here the person incharge finds it difficult to supervise all the activities efficiently. Thereason is that the person does not have enough capacity and require training.

In this the functional departments are created at the factory, office or enterprise level todeal with the problems of business at each successive level. (Although the expert and

specialized services are mainly concentrated on the top, every section or unit can make

use of their services).

The functions under this type of organisation may be classified as purchasing, marketing,production, research and development, finance, office management, personnel etc in a

business enterprise.

Functional dept as patient care services, pharmaceutical services, laboratory services etcin a hospital setting.

Although agreed to be a scientific type of system, there are certain prerequisites for this

system:

All activities must be divided into functions carefully and then allotted to functionaldepartments.

Only interrelated jobs are allotted to one department There should be no duplication i.e activity allotted to one dept cannot be allotted to

another.

The figure below illustrates a functional organization:


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M.D or Genel.Mg

Chief Admn. Service

Recruitment finance training office public relations

Staff and workers

Functional organisation, follows the scientific management method to overcome thelimitations of line organisation, (F.W.Taylor, the father of scientific management,

recommended a functional organisation of activities at the top level).

According to Taylor, a foreman should not be burdened with looking after all theactivities of work. Instead he should be assisted by a number of specialists in solving the

problems.

Various specialists are selected for various functions performed in an organisation.

Workers, under functional organisation, receive instructions from various specialists. Thespecialists are working at the supervision level.

Thus, workers are accountable not only to one specialist but also to specialist from whominstructions are received.

Directions of work should be decided by functions and not by mere authority.The need for functional organisation arises out of :

1) The complexity of modern and large scale organisation.2) A desire to use the specialisation in full.3) To avoid the workload of line managers with complex problems and decision making.

Characteristics of Functional Organisation:

The work is divided according to specified functions.


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Authority is given to a specialist to give orders and instructions in relation to specificfunction.

Functional authority has right and power to give command throughout the line withreference to his specified area.

The decision is taken only after making consultations with the functional authorityrelating to his specialised area.

The executives and supervisors discharge the responsibilities of functional authority.Advantages of functional organisation:

1. Benefit of specialisation:Under the functional organisation, each work is performed by a specialist. It helps to

maintain efficiency of the organisation. Each work is divided among the workers

scrupulously.

2. Application of expert knowledge:Planning function and execution function are divided separately and each function is

entrusted to a specialist in the line organisation. So the specialists can use their expert

knowledge in the actual performance of work.

3. Reducing the work load:Each person is expected to look after only one type of work. Hence the quality of work

and effective control over the work are achieved.

4. Efficiency:Since each worker is responsible for each work, the workers can concentrate on the work

allotted to them. They could assure proficiency in the work.

5. Adequate supervision:Each staff member is incharge of a work. So he can devote enough time to supervise the

workers.

6.Relief to line executives

:

The instructions are given by the specialist directly to the actual workers. Hence the line

executive does not have any problems regarding the routine works.

7. Mass production: large scale production can be achieved with the help of specialisationand standardisation.

8. Economy: each specialist is responsible to the performance of the work. Wastage in theproduction can be avoided and the expenditure could be considerably reduced.


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9. Flexibity: any change in the orgn can be introduced without any difficulty.Disadvantages of functional orgn

1. Complex relationship: a single worker is working under 8 specialists it is very difficultfor the worker to be responsible to all persons. This results in conflict between the

workers and the specialists.

2. Discipline: it is very difficult to maintain discipline among the workers when a singleworker has to serve many masters.

3. Over specialisation: There might be overlapping of authority and divided responsibility.4. Ineffective coordination: the extent of authority of a specialist is not correctly defined. It

creates problems while getting the cooperation among the specialists.

5. Speed of action: when the control of a worker is divided among the specialists, the speedof action of the workers may be hampered.

6. Centralisation: eight specialists are guiding and directing the workers to perform thework. So the workers do not have any scope for doing the job on their own. This leads tothe centralisation of authority.

7. Lack of responsibility: if there is any defect in the performance of work, themanagement is not in a position to fix the responsibility for it. The reason is that none of

the eight specialists is ready to own the responsibility. They may shift the responsibility

to any one among themselves for the poor performance of work.

8. Poor admn: since many specialists control the same gp of workers no effective admn ofworkers could be ensured.

It is very suitable to a business unit which is engaged in manufacturing activities.

C. The line and staff organisation:

In order to strike a balance between the line and functional organisation, it is believed that the

best system to adopt in any progressive and elite organization is the line and staff organisation.

The line officers have authority to take decisions and implement them to achieve theobjectives of the orgn.

The line officers may be assisted by the staff officers while framing the policies and plansand taking decisions.

In the fast developing industrial world, the line officers are not in a position to acquire thetechnical knowledge. For eg., while taking decisions regarding the production, technical

knowledge is needed to take correct decisions.


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This type of gap may be bridged with the help of staff officers. The staff officers may beexperts in a particular field.

Then the line officers can get expert advice from the staff officers before taking the finaldecisions.

Here there is scope for having experts and advisors to advice the commander or leader ofthe team whenever and wherever required. The suggestions are honoured and

implemented by the manager to the extent possible.

The staff or workers are permitted to voice their views in this type of organisations. Theirviews and concerns are appreciated, implemented wherever necessary.

While maintaining the line type of organisation it also takes care of the staff andcoordination between / among the staff with in hierarchial framework makes a good

organisation.

Staff or worker and their functions get lot of prominence in this type of organisation.Staff functions can be divided into 2 areas.

A) Staff advice and b) staff service.

While staff advice relates to staff functions at the higher levels; the staff service relates to

staff functions at lower levels.

Normally there are two types of staff:

General staff: they are normally located at the head quarters or regional offices to assist, support

and advise top management on day to day activities and problems in the organisation in general

and are shared by different divisions.

Specialised staff: each line official has special assistants or advisors to provide advice and

services to the executives with whom they are attached.Nurses, doctors and other professionals

belong to the category of staff advice, in the industrial concerns.

Merits:

Experts advice becomes available to the line management.

There is benefit of planned specialization.


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Line managers get more time to devote to their own functions. This results in greaterefficiency.

Chances of advancement of employees become better as more jobs become available.Demerits:

Staff tend to assume line authority and thus may become a cause of friction between thetwo.

Sometimes staff do not give sound advice because the staff are not accountable for theimplementation of the advice.

Staff steal credit, although the direction and planning are done by the manager throughsheer hard work and intelligence.

Staff fail to see the whole picture as they lack the mind of relating advice to the task andobjectives of the enterprise.

Figure:

Advisor specialist Specialist AdvisorIn hosp mgmt

(Here the Heads of departments of surgery, medicine etc and nursing superintendent while acting

as line managers for their respective departments, act as specialised staff for advising matters

related to their respective disciplines like surgery, medicine, nursing etc.,

......... shows staff authority.

Fig 2.

(L)

Chief administrator

hos ital

All heads of depts

surgery,

Medicine, obs & gyn,

paediatrics

Dy.Chief (admn) Nsg suptdt Dy.chief (finance &

accounts)

Marketing

managerPersonal asst

to the

managing

director


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(S)

(L) (personal staff)

(L) (L) (L) (S)element fn

(L)operators (L) clerks (L) sales rep

(S) (S)

Clerks(s) clerks(s)

Committee organisation Project organisation:

Matrix organisation:

Matrix structures are characterised by teams built directly into the organisationalstructure.

These teams are coordinated both vertically (within the hierarchy) and horizontally(among the groups involved).

The team has formal authority to make and enforce decisions. Matrix structure involves less rigid adherence to rules and procedures. Free form organisational structures are called matrix organisations. The matrix organisation design enables timely response to external competition and to

facilitate efficiency and effectiveness internally through cooperation among disciplines.

Characteristics:

1. Maintenance of old-line authority structures.2. Specialist resources obtained from functional areas.3. Promotion of formation of new organisational units.4. Occurrence of decision making at the organisational level of group consensus, the middle

management level.

Asst managing

director

Works

manager

Company

secretary

accountant

Sales

mangerPersonnal

manager

Training

officer

Employme

nt officer


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5. The matrix manager exercising authority over the functional manager.6. Cooperative planning of program development and allocation of resources to accomplish

program objectives.

7. Assignment of functional managers to teams that respond to the chief of the functionaldiscipline and matrix manager.

Advantages:

1. Improved communication through vertical, horizontal control and coordination ofinterdisciplinary patient care systems.

2. Increased organizational adaptability and flexibility to respond to environmental changes.3. Increased efficiency of resource use with fewer organisational levels and decision making

closer to primary care operations.

4. Improved human resource management because of increased job satisfaction withachievement and fulfilment, improved communication, improved interpersonal skills and

improved collegial relationships.

Disadvantages:

Potential conflict because of dual or multiple lines of authority, responsibility andaccountability relationships.

Role ambiguity. Loss of control over functional discipline due to multidisciplinary team approach.

Adhocracy:

Adhocracy models of organisation are like matrix models. There are simple teams or taskforces that exists on an adhoc basis.

They are formed, complete their goals and are disbanded. New groups are then formed to meet changing and dynamic mission and objectives. It

employs participatory management.

types and levels of organisation.docx

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