Organization

Concept
 According to Oxford Dictionary

An organized group of people with a particular

purpose, such as a business or government
department.

The action of organizing something

The quality of being systematic and efficient

The way in which the elements of a whole are

arranged
 Organization- Meaning
• As an Entity
• As a Group of People
• As a Structure
• As a Process
 Principles of Organization
• Unity of objective: Goal Oriented Organization

• Division and specialization of work: The organization should be

framed in a manner such that every individual should get

work according to his ability, skills and knowledge.

• Authority and responsibility: Delegation of authority to subordinates

to complete the task. Responsibility lies with the person delegating

work.

• Unity of command: There should be unity of command in the

organization. An employee should be controlled by one boss and

should report to the same superior. To avoid confusions and conflicts.

 Principles of Organization
• Span of control: There should be proper span of control.

Span of control is the number of subordinate reporting

directly to a manger. Proper span for proper authority

• Scalar chain: There should be proper chain

of command from top level to lower level in vertical

direction. This also shows the direction of communication

in the organization. This suggests that communication

should pass through each position placed in the chain.

 Principles of Organization
• Exception Principles: Only exceptional matters which are beyond the

authority of lower level persons should be referred to higher levels.

• A proper balance between centralization and decentralization should

be maintained.

• Flexibility: Scope to adapt according to changes in the environment

• Leadership

• Proper channels of communication and Coordination

Factors affecting organization structure

• Environment
• Strategy
• Technology
• Size
• People
 Need and Significance of Organization
Structure
• Facilitates administration
• Facilitates growth and diversification
• Optimization of resources and enhanced
productivity
• Brings in systemization and efficiency
• Improvement in working environment
• Brings in job satisfaction
• Defined areas of work, clarity in work-profit,
authority-responsibility relationships
 Forms of organization Structure
• Line Organization Structure
• Line and Staff Organization Structure
• Functional Organization structure
• Divisional Organization Structure
• Project Organization Structure
• Matrix Organization Structure
• Team-based Organization Structure
• Committee form of organization
Line Organization Structure- Characteristics

• Line of authority and instructions are vertical i.e.

from top to bottom
• Unity of command. Each subordinate receives
instructions from his immediate superior.
• All persons at the same level of organization are
independent of each other. (Applies to
departmental heads)
• Specifies authority and responsibility for all
positions.
Pure line organization structure

Production
Manager

Foreman A Foreman B Foreman C

Workers Workers Workers

Departmental Line Organization structure

Production
Manager

Foreman Foreman Foreman Forman

Spinning Weaving Dyeing Finishing

Workers Workers Workers Workers

 Line and Staff organization structure
• Refers to a pattern in which staff specialists
advise the managers on how to perform their
duties.
• Such advise is provided by staff personnel who
are generally specialists in their fields.
• The staff positions or departments are advisory
in nature. They have a right to recommend, but
no right to enforce their preference on other
departments.
 Line and Staff organization structure
Secretary General Manager Public Relations Officer

Finance Manager Personnel Manager

Production Manager Marketing Manager

Production Engineer Sales officer

Foreman Sales supervisor

Workers Salesmen
 Functional Organization
• Created by grouping activities on the basis of
functions required for achievement of
organizational goals.
• Primary functions: like production, marketing
• support Functions: finance, accounting,
personnel, legal etc.
• Line and Staff divisions, pyramidal growth of
organization
 Functional Organization
Top Management

Plant 1 Plant 2

Production Marketing
Finance Head Personnel Head
Function Head Function Head

Sales and Advertising and

Market Research
Distribution Promotion
Function Manager
Function Manager Function Manager
 Divisional Organization Structure
• Product Divisionalization:
• In this form, each major product or product line
is organized as a separate unit.
• Each unit has its own functional structure.
• Territorial Divisionalization:
• The business is geographically spread and
Regional offices are established as separate units.
• Each regional office has its own functional
departments
 TOP MANAGEMENT

Division Product A Division Product B Division Product C

Production Production Production

Finance Finance Finance

Marketing Marketing Marketing

R&D R&D R&D

 Project organization structure
• Activities taken up on project basis.
• Appointment of project manager
• Each project has individual functions to be performed.
• The functional personnel are drawn from various
functional departments.
• No vertical authority of project manager on the
functional personnel
• Functional division so created is dissolved after
completion of project.
Forms of Project organization structure

• Pure project organization:

• Small number of larger projects of long
duration
• Functional department of a permanent nature
• Matrix organization:
• Large number of smaller projects
• Temporary departments
 Matrix Organization- Features
• Hybrid Structure : Matrix organization is a hybrid
structure. It is a combination of two or more
organization structures. It combines functional
organization with a project organization.
Therefore, it has the merits and demerits of both
these organization structures.
• The Functional Manager has authority over the
technical (functional) aspects of the project.
 Top Management

General Manager

Production Marketing Finance Personnel

Project A
Production Marketing Production Production

Project B
Production Marketing Production Production

Project C
Production Marketing Production Production

Project D
Production Marketing Production Production
 General Manager

Project A Project B

Quality Quality
R&D Purchasing Engineering R&D Purchasing E
Control Control

Contract Scheduling Contract Schedu

Administration Administration

Manufacturing
 Team based organization
• Small no of people
• Complementary skills
• Common purpose
• Goal oriented actions
• Common approach- Team spirit
• Mutual accountability
 Committee Organization
A committee is a group of persons formed to-
• Discuss on issues and problems
• Find solutions to the problems
• Recommend the solutions to the concerned
authority/ organization
 Types of Committees
Types of Committees Characteristics

Standing Committee Permanent committee for an indefinite period

Ad hoc Committee Temporary

For a specific period
Dissolved when purpose is solved
Executive Committee Has authority to make and execute decisions

Advisory Committee Only can make recommendations

Line committee Coordinates and controls the activities of

subordinates
Staff committees Disseminates information
Provides advice and assistance to line managers

Formal committees Constituted as per organizational policies & rules

Informal committee Formed due to informal interactions between

employees