Welingkar’s Distance Learning Division

CHAPTER-11

TYPES OF ORGANISATION

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Introduction

o Organisation is designed on the basic of principles of labour and span of management. The success of the organisation depends upon the experience and competence of the officers of the organisation. Nature, scale and size of the business are the normal factors which determine forms of internal organisation. The following common types of organisation find a place in the structure of internal organisation.

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Introduction

o Line, Military or scalar organisation o Functional organisation o Line and staff organisation o Committee organisation o Project organisation o Matrix organisation o Freeform organisation

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Line Organisation

o Line organisation is the simple and oldest type of organisation followed in an organisation. Under line organisation, each department is generally a complete self-contained unit.

o A separate person will look after the activities of the department and he has full control over the department.

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Line Organisation

o The same level executives do not give or receive orders amongst themselves. But they receive orders from their immediate boss and give orders to their subordinates. Hence, all the heads are responsible to the general manager, the general manager, in turn, is responsible to the shareholders who are the owners.

o This type of organisation is followed in the army on the same pattern. So, it is called military organisation. Under type of organisation, the line of authority flows from the top to bottom vertically. So it is called line organisation.

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Characteristics of line organisation

o It consists of direct vertical relationships. o Authority flows from top-level to level to

bottom level. o Departmental heads are given full freedom to

control their departments. o Each member knows from whom he would

get orders and to whom he should give his orders.

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Characteristics of line organisation

o A senior member has direst command over his subordinates.

o Operation of this system is very easy. o Existence of direct relationship between

superiors and subordinates. o The superior takes decisions within the scope

of his authority

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Advantages and Disadvantages of Line Organisation

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Advantages of line organisation Disadvantages of line organisation

1. Simplicity 1. Lack of specification

2. Division of authority and responsibility 2. Over loading

3. Unity of control 3. Lack of initiative

4. Speedy action 4. Scope for favoritism

5. Discipline 5. Dictatorial

6. Economical 6. Limited communication

7. Co-ordination 7. United administration

8. Direct communication 8. Subjective approach

9. Flexibility 9. Instability

10. Lack of co-ordination

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Suitability

o This type of organisation is suitable to small size business units.

o Where the activities are of routine nature or machine based.

o If the business activities are service mined.o Where the number of persons working is small o The business operation is simple in nature. o A business unit which has straight methods of

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Functional organisation

o Under line organisation, a single person is in charge of all the activities of the concerned department. The person in charge finds it difficult to supervise all the activities efficiently.

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Functional organisation

o The reason is that the person does not have enough capacity and required training. Under functional organisation, various specialists are for various functions performed in an organisation. These specialists will attend to the work which is common to different functions of various departments. Workers, under functional organisation, receive instructions from various specialists.

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Functional organisation

o The need for functional organisation arises out of:

o The complexity of modern and large-scale organisation

o A desire to use the specialization in full and; o To avoid the work-load of line managers with

complex problems and decision-making

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Characteristics of functional organisation

o The work is divided according to specified functions.

o Authority is given to a specialist to give orders and instructions in relation to specific function.

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

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Characteristics of functional organisation

o The decision is taken only after making consultations with the functional authority relating to his specialized area.

o The executives and supervisors discharge the responsibility of functional authority.

- Route clerk- instruction card clerk- time and cost clerk- Gang boss- Speed boss- Inspector- Repair boss- Disciplinarian

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Advantages and Disadvantages of Functional Organisation

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Advantages of functional organisation

Disadvantages of functional organisation

o Benefit of specializationo Application of expert knowledgeo Reducing the work loado Efficiencyo Adequate supervisiono Relief to line executiveo Co-operationo Economyo Flexibilityo Mass production

o Complex relationshipo Disciplineo Over specializationo Ineffective co-ordinationo Speed of actiono Centralizationo Lack of responsibilityo Increasing the overhead expenseso Poor administrationo Suitability of functional

organisation

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Line and staff organisation

o The line officers have authority to take decisions and implement them to achieve the objectives of the organisation.

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

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Line and staff organisation

o The authority flows from top level to the lower level of the organisation through the line officers while the staff officers attached to the various departments advise the departments. The staff officers are not in a position to compel the line officers to follow the advice by them. Each department is headed by a line officer who exercises full authority regarding the planning.

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Types of staff

o Personal staff

o Specialized staff

o General staff assistant

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Functions of staff officers

o The staff officers assist the line officers in the planning of business activity.

o The board of directors frames the policies of the business on the basis of recommendations given by the staff officers.

o The managers can get the advice from the staff officers regarding the selection. ‘training’ placement and remuneration fixation the personnel

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Functions of staff officers

o The staff officers give regarding the method of improving the product, the technique of reducing the cost of production, increasing the profits of the concern.

o The staff officers prescribe the procedures to be followed by the line officers in the execution of policies and programs.

o Staff officers of a department help the manager in the preparation of budget of the department.

o the staff officers may be called to solve the administrative problems encountered by the line officers in general.

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Arguments of staff officers against line officers

o The staff officers have only theoretical academic knowledge but not practical knowledge.

o The staff officers go beyond their sphere of activity and assume that they have line officer’s authority.

o Much of the advice given by the staff officers is impractical

o Since the staff officers unnecessary increases the paperwork of the line officers.

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Arguments of staff officers against line officers

o The staffs give advice without considering the nature of business as a whole.

o Staff officers are very much interested in becoming line officers of the organisation rather than impairing advice to them.

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Solution to the conflict between line officers and staff officers

o Both line officers and staff officers should clearly understand the nature of relationship prevailing between them.

o A separate staff member should be appointed to bring about co-operation between the line officers and staff officers.

o The line officers should be encouraged to use the advice of staff officers.

o Only qualified persons should be selected and placed as staff officers.

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Solution to the conflict between line officers and staff officers

o The staff officers should be convinced by the line officers if their advice is not accepted

o The responsibility for results could be fixed on both line officers and staff officers

o Only experienced persons alone should be promoted as line executives..

o Remove the fear of the line officers and staff officers whether the new ideas of advice would be properly put into use or not.

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Advantages of line and staff organisation Disadvantages of line and staff organisation

Facilitates to work faster and better If powers are not defined then get confusion

Specialization is attained Line officers may reject advice without any reason for their action

Enables to utilize experience and advice Staff officers are not responsible if favorable results are not obtained.

Officers can take sound advice Difference between line and staff officers will defeat the very purpose of specialization

New technology or procedure can be introduced without any dislocation

Line officers blame staff officers for unfavorable results and want to get rewards for favorable results

Promotes efficient functioning of line officers

Very good opportunity is made available to young person to get training

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Committee organisation

o “A Committee as a group of persons either appointed or elected who are to meet for the purpose of considering matters assigned it”

Types of committeeo Advisory committee problem solving committees

o Fast-finding committee

o Action committee We Learn – A Continuous Learning Forum

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Functions of a Committee

o Collect the necessary information from different sources and arrange the information orderly.

o The collected information is critically analyzed.o Draft a detailed report containing the

recommendations for the purpose of implementation.

o Formulate the standard of performance for the purpose of evolution of actual performance in future.

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Recommendations for efficient functioning of a committee

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Selection of subject matter

CommitteeRole of

chairman

Preparation for a meetingClear Objective

Role of committee

Size of the committee

Selection of meeting

Follow up

evolution

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Project organisation

o The project organisation idea was developed after the second war.

o A project organisation can also be the beginning of an organisation cycle. The project may become a long term or permanent effort that eventually becomes a program or branch organisation

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Features of project organisation

o The Success of the project organisation depends upon the co-ordination of activities

o There is a grouping of a activities for each project. It leads to the introduction of a new line of a authority.

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Drawbacks of Project Organisation

o The professionals are deputed for the project. But there is an assurance of continuous work for the professional in a project organisation.

o The decision is taken in the project organisation under pressure of the top controls the staff in an organisation.

o The top management does not extend its full co-operation for the effective functioning of the project organisation. Some hindrance may be caused by the top management.

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Matrix organisation

o “Any organisation that employs a multiple command structure but also related support mechanisms and an associated organizational culture and behavior pattern” The matrix organisation may be followed where a large of small projects have to be managed.

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Conditions for effective matrix organisation

o The principle of chain of command is not followed in the matrix organisation. A project manager should give his report to more than one superior.

o There should be an agreement among the managers regarding the authority of utilizing the available resources. The term resources include physical resources, financial resources and human resources.

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Merits and Demerits of Matrix organisation

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Merits of Matrix organization

Demerits of matrix organization

o Achievement of objectiveso Best utilization of

resourceso Appropriate structureo Flexibilityo Motivationo Personal development

o Complex relationshipo Struggle for powero Excessive, emphasis on

group decision-makingo Arising conflict resolutiono Heterogeneous

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Free form organisation

o This type of organisation is formed whenever a need arises to form an organisation, for achieving a particular object. it will be dissolved after achieving the object of the organisation. The free form organisation resembles the project and matrix organisation. It otherwise called organic or ratio organisation.

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