Introduction to Modern Management (IMM) - BUS230

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Modern Management (IMM) - BUS230

Assoc. Prof. Dr. Ab Rahman Ahmad Assoc. Prof. Dr. Ab Rahman Ahmad Faculty of Computing and Information Faculty of Computing and Information

Technology, Technology, King Abdulaziz University, King Abdulaziz University,

Rabigh Branch, KSA Rabigh Branch, KSA Mobile:

Mobile: 05618421520561842152 Email: [email protected] Email: [email protected]

(IMM) BUS230

••Refers to the formal Refers to the formal grouping of people and grouping of people and

ti iti t f ilit t ti iti t f ilit t CHAPTER

CHAPTER 3 3: ORGANIZING : ORGANIZING

activities to facilitate activities to facilitate achievement of the achievement of the company’s objectives.

company’s objectives.

Relationships of objectives Relationships of objectives and the organization is and the organization is hierarchical.

hierarchical.

IMM – BUS230 CHAPTER

CHAPTER 3 3: ORGANIZING : ORGANIZING

Hierarchy of objectives Hierarchy of objectives

IMM – BUS230 CHAPTER

CHAPTER 3 3: ORGANIZING : ORGANIZING

Hierarchy of organization Hierarchy of organization

study of structure, functioning and study of structure, functioning and performance of organizations and performance of organizations and

b h i f d i di id l

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3..1 1: : ORGANIZING THEORY ORGANIZING THEORY

behavior of groups and individuals behavior of groups and individuals within them. It is defined as a set of within them. It is defined as a set of interrelated constructs, definitions, and interrelated constructs, definitions, and propositions that present a systematic propositions that present a systematic views of individual, groups and sub views of individual, groups and sub-- groups interacting in patterned groups interacting in patterned sequence of activity, goal

sequence of activity, goal--directed. directed.

Approaches

Approaches–– organization as a organization as a dynamic process and a managerial dynamic process and a managerial activity necessary to bring people activity necessary to bring people

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y y g p p

together and unify them to pursuit together and unify them to pursuit common objectives, i.e., organizing.

common objectives, i.e., organizing.

Also refers to structure of relationship Also refers to structure of relationship among positions and jobs to attain among positions and jobs to attain goals. Others as a social system, or a goals. Others as a social system, or a system with inputs and process, input system with inputs and process, input is converted to output.

is converted to output.

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Common features Common features: :

••Division of laborDivision of labor–– organization organization

t t i t h

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3..1 1: : ORGANIZING THEORY ORGANIZING THEORY

structure exists when common structure exists when common objectives is divided into activities and objectives is divided into activities and functions such as production,

functions such as production, marketing, finance and personnel.

marketing, finance and personnel.

••CoordinationCoordination–– link up or integrate link up or integrate various division, function and activities various division, function and activities so all of them unified in harmony.

so all of them unified in harmony.

Common features Common features: :

••Accomplishment of goals or Accomplishment of goals or objectives

objectives–– it has to be built around it has to be built around

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3..1 1: : ORGANIZING THEORY ORGANIZING THEORY

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certain clear

certain clear--cut goals or objectives. cut goals or objectives.

••AuthorityAuthority--responsibility structureresponsibility structure––

it consists of various positions in it consists of various positions in hierarchy with clear definition towards hierarchy with clear definition towards these. It cannot serve certain purposes these. It cannot serve certain purposes or goals unless some positions are or goals unless some positions are place above others and bind.

place above others and bind.

Process of organizing Process of organizing::

••Determination of objectivesDetermination of objectives–– a a business firm must decide objectives business firm must decide objectives

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jj such as publish books, manufacture such as publish books, manufacture cloths, sell machinery or car rentals.

cloths, sell machinery or car rentals.

These depends short These depends short--term, term, intermediate or long

intermediate or long--term objectives.term objectives.

••Enumeration of activitiesEnumeration of activities–– division division of total jobs such as in production, of total jobs such as in production, financing, purchasing, sales, personnel financing, purchasing, sales, personnel

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3..1 1: : ORGANIZING THEORY ORGANIZING THEORY Feasibility Studies and

Feedback

3 Identify and

1. Enterprise objectives.

2. Supporting Objectives Policies and Plans

3. Identify and classify activities 4. Group activities – resource and situation 5. Delegation of Authority 6. Horizontal and vertical coordination of Authority and Information

7. Staffing 8. Leading 9. Controlling.

••Classification of activitiesClassification of activities––

according to similarities, common according to similarities, common

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g ,

purpose and function taking human purpose and function taking human and materials into account. For each and materials into account. For each may departmental or section and may departmental or section and connected to one department.

connected to one department.

••Fitting individual to function Fitting individual to function –– each each person given specific part and be person given specific part and be responsible for it.

responsible for it.

Process of Organizing:

Process of Organizing:

••Assignment of authority for action Assignment of authority for action

H i b i th ibilit

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–– Having been given the responsibility Having been given the responsibility for its completion, he will be able to for its completion, he will be able to proceed only when he has the proceed only when he has the authority to proceed with it. Hence, authority to proceed with it. Hence, delegation of authority to help delegation of authority to help

complete the assigned part of the job is complete the assigned part of the job is the next step in organizing.

the next step in organizing.

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Activity Analysis:

Activity Analysis:

••Discover the primary activity of Discover the primary activity of organization, by Peter

organization, by Peter DruckerDrucker––

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3..1 1: : ORGANIZING THEORY ORGANIZING THEORY

g , y

around this only other activities will be around this only other activities will be built. The manager responsible for built. The manager responsible for organization building and development organization building and development will also determine what activities can will also determine what activities can be grouped together and how each be grouped together and how each activity needs to be emphasized in the activity needs to be emphasized in the organization structure.

organization structure.

Decision Analysis

Decision Analysis ––The manager The manager finds out what kinds of decision finds out what kinds of decision needed to carry on the work of the needed to carry on the work of the

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3..1 1: : ORGANIZING THEORY ORGANIZING THEORY

yy

organization, important for him to see organization, important for him to see where or at what level these decisions where or at what level these decisions will have to be made and how each will have to be made and how each manager should be involved in them. It manager should be involved in them. It is particularly important for deciding is particularly important for deciding upon the number of levels or layers in upon the number of levels or layers in the organization structure.

the organization structure.

Formal And Informal Organization Formal And Informal Organization––

F l O i ti

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Formal Organization Formal Organization

Refers to the structure of jobs and Refers to the structure of jobs and positions with clearly defined functions positions with clearly defined functions and relationship as prescribed by the and relationship as prescribed by the top management and bound by rules, top management and bound by rules, systems and procedures.

systems and procedures.

Informal Organization

Informal Organization –– relationships relationships between people in an organization between people in an organization based not on procedures and based not on procedures and

l ti b t l ttit d

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regulations but on personal attitudes, regulations but on personal attitudes, whims, prejudices, likes, dislikes, etc.

whims, prejudices, likes, dislikes, etc.

With basis of the emotions and With basis of the emotions and attitudes of people, management attitudes of people, management cannot be effective and expeditious cannot be effective and expeditious unless it recognizes and makes use of unless it recognizes and makes use of the informal organization for realizing the informal organization for realizing organizational objectives.

organizational objectives.

Importance Of Organization Importance Of Organization –– Organization comprises people and Organization comprises people and through which management performs through which management performs th i t t f ti f di ti th i t t f ti f di ti

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the important functions of direction, the important functions of direction, coordination and control. Foundation of coordination and control. Foundation of management as well as its chief tool. It management as well as its chief tool. It facilitates administration, makes growth facilitates administration, makes growth and diversification possible, provides and diversification possible, provides for the optimum use of technological for the optimum use of technological improvements, and stimulates creative improvements, and stimulates creative thinking.

thinking.

The success or failure of an The success or failure of an

organization would be revealed by its organization would be revealed by its

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3..2 2: : PRINCIPLES OF PRINCIPLES OF ORGANIZING ORGANIZING

o ga at o ou d be e ea ed by ts o ga at o ou d be e ea ed by ts results. Able to achieve the desired results. Able to achieve the desired objects then sound and efficient. Fails objects then sound and efficient. Fails to do so, then something wrong the to do so, then something wrong the organizational structure. However, the organizational structure. However, the success of a business organization can success of a business organization can perhaps be ensured better if the perhaps be ensured better if the following basic principles are observed.

following basic principles are observed.

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Basic principles:

Basic principles:

••Unity of objective Unity of objective –– every part of the every part of the

i ti d th i ti

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3..2 2: : PRINCIPLES OF PRINCIPLES OF ORGANIZING ORGANIZING

organization and the organization as a organization and the organization as a whole should be geared to the basic whole should be geared to the basic objective determined for the enterprise.

objective determined for the enterprise.

••Efficiency Efficiency –– the organization should the organization should be able to attain the predetermined be able to attain the predetermined goals and objectives at the minimum goals and objectives at the minimum cost. If it does so, it will satisfy the test cost. If it does so, it will satisfy the test of efficiency.

of efficiency.

Basic principles:

••Efficiency (continued) Efficiency (continued) –– From the From the

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3..2 2: : PRINCIPLES OF PRINCIPLES OF ORGANIZING ORGANIZING

point of view of an individual, a good point of view of an individual, a good organization should provide the organization should provide the maximum work satisfaction. Similarly, maximum work satisfaction. Similarly, from the social point of view, an from the social point of view, an organization will be efficient when it organization will be efficient when it contributes the maximum towards the contributes the maximum towards the welfare of the society.

welfare of the society.

Basic principles:

••Span of managementSpan of management–– it is widely it is widely

i d th t di tl

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recognized that a manager can directly recognized that a manager can directly supervise only a limited number of supervise only a limited number of executives. It is necessary to have a executives. It is necessary to have a proper number of executives, proper number of executives, answerable to the top manager. Most answerable to the top manager. Most of the authorities prescribe a maximum of the authorities prescribe a maximum of six for this (Figure

of six for this (Figure 33..33).).

narrow span narrow span

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3..2 2: PRINCIPLES OF : PRINCIPLES OF ORGANIZING ORGANIZING

wide span wide span

Narrow span Narrow span –– Advantage

Advantage ––Close supervision, Close supervision,

l t l f t i ti

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close control, fast communication close control, fast communication between higher and lower between higher and lower department.

department.

Disadvantage

Disadvantage ––Higher tend to Higher tend to lower work, many level

lower work, many level

management, high costs due to management, high costs due to many levels, excess distance from many levels, excess distance from lowest to top level

lowest to top level

Wide span Wide span –– Advantage

Advantage ––superior are force tosuperior are force to

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Advantage

Advantage superior are force to superior are force to delegate, clear policies must be delegate, clear policies must be made, lower must proper selected made, lower must proper selected Disadvantage

Disadvantage ––tend to overloads tend to overloads superior may cause bottlenecks, superior may cause bottlenecks, danger superior lost of control, danger superior lost of control, requires exceptional quality of requires exceptional quality of managers.

managers.

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••Division of workDivision of work–– a good a good

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3..2 2: : PRINCIPLES OF PRINCIPLES OF ORGANIZING ORGANIZING

gg organization should consist of organization should consist of departments established to reflect the departments established to reflect the most efficient breakdown of enterprise most efficient breakdown of enterprise activities. Proper departmentalization is activities. Proper departmentalization is an important principle of sound an important principle of sound organization.

organization.

Basic principles:

F ti l d fi iti

F ti l d fi iti th d tith d ti dd

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3..2 2: : PRINCIPLES OF PRINCIPLES OF ORGANIZING ORGANIZING

••Functional definitionFunctional definition–– the duties and the duties and the authority relationships in a good the authority relationships in a good organization must be properly and organization must be properly and clearly defined, so that there is no clearly defined, so that there is no confusion or overlapping.

confusion or overlapping.

Basic principles:

••Scalar Principle (Chain of Scalar Principle (Chain of d)

d) thth h ih i ff dd

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command)

command)–– the chain of command or the chain of command or the line of authority must be clearly the line of authority must be clearly defined for building sound

defined for building sound

organization. Every subordinate must organization. Every subordinate must know who is superior and to whom know who is superior and to whom policy matters beyond his own policy matters beyond his own authority must be referred for decision.

authority must be referred for decision.

Basic principles:

••Exception principleException principle–– a good a good

i ti i d th t l

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organization is so arranged that only organization is so arranged that only exceptionally complex problems are exceptionally complex problems are referred to the higher levels of referred to the higher levels of management and the routine matters management and the routine matters are dealt with by executives at lower are dealt with by executives at lower levels. This is called exception levels. This is called exception principle.

principle.

Basic principles:

••Unity of commandUnity of command–– in a good in a good

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y

y gg

organization, each subordinate should organization, each subordinate should have one superior whose command he have one superior whose command he has to obey. This will avoid conflict of has to obey. This will avoid conflict of commands and help in fixing commands and help in fixing responsibility.

responsibility.

Basic principles:

••Unity of directionUnity of direction–– there must be there must be

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y y

only one plan for a group of activities only one plan for a group of activities directed towards the same end. If each directed towards the same end. If each person in a department begins to work person in a department begins to work under a different plan or program of under a different plan or program of action, nothing but confusion will action, nothing but confusion will follow.

follow.

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Basic principles:

••ResponsibilityResponsibility–– in a good in a good

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3..2 2: : PRINCIPLES OF PRINCIPLES OF ORGANIZING ORGANIZING

p y

p y gg

organization, the superior is organization, the superior is responsible for the activities of his responsible for the activities of his subordinates and the subordinates subordinates and the subordinates must be held responsible to their must be held responsible to their superiors for the performance of the superiors for the performance of the tasks assigned to them.

tasks assigned to them.

Basic principles:

••Authority and responsibilityAuthority and responsibility–– the the

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3..2 2: : PRINCIPLES OF PRINCIPLES OF ORGANIZING ORGANIZING

y p y

authority and responsibility must be authority and responsibility must be coexisting in an organization. If it is not coexisting in an organization. If it is not so, the subordinates cannot discharge so, the subordinates cannot discharge their responsibility for want of

their responsibility for want of necessary power to proceed with the necessary power to proceed with the task assigned.

task assigned.

Basic principles:

••BalanceBalance–– some matters may be left to some matters may be left to

b di d f b th b di t t

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be disposed of by the subordinates at be disposed of by the subordinates at the lower of the lowest level while the lower of the lowest level while some other (say, control over capital some other (say, control over capital expenditure) must be centralized and a expenditure) must be centralized and a balance between centralization and balance between centralization and decentralization should thus be decentralization should thus be achieved.

achieved.

Basic principles:

Fl ibilit

Fl ibilit thth i tii ti tt

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••FlexibilityFlexibility–– the organization must the organization must avoid complicated procedures, red avoid complicated procedures, red-- tapism

tapism and excessive complication of and excessive complication of control so that it can adapt itself easily control so that it can adapt itself easily and economically to business and and economically to business and technical changes.

technical changes.

Basic principles:

C ti it

C ti it thth i tii ti t bt b

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••ContinuityContinuity–– the organization must be the organization must be so arranged as to provide for the so arranged as to provide for the continuity of the enterprise. For this, continuity of the enterprise. For this, there must be proper provision for there must be proper provision for executive development or training.

executive development or training.

Basic principles:

F ilit ti f l d hi F ilit ti f l d hi thth

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••Facilitation of leadershipFacilitation of leadership–– the the organization structure should be so organization structure should be so devised that there is enough devised that there is enough

opportunity for the management to give opportunity for the management to give effective lead to the enterprise.

effective lead to the enterprise.

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The problem in organizing is to The problem in organizing is to

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

p g g

select and combine the efforts of select and combine the efforts of personnel so as to produce the personnel so as to produce the desired result. The following are the desired result. The following are the broad patterns of organizing the broad patterns of organizing the personnel.

personnel.

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3..3 3: TYPES OF : TYPES OF ORGANIZATION ORGANIZATION

Broad Patterns of Broad Patterns of Organizing the Personnel Organizing the Personnel

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General Manager

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3..3 3: TYPES OF : TYPES OF ORGANIZATION ORGANIZATION

FIGURE

FIGURE 33..44: Military or Line : Military or Line Type of Organization Type of Organization Manager

Division 1

Manager District 1

Manage Division 2

MILITARY OR LINE ORGANIZATION MILITARY OR LINE ORGANIZATION

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

Under this system, authority flows from the Under this system, authority flows from the person at the top to the lowest person, person at the top to the lowest person, vertically. In pure organization, the activities at vertically. In pure organization, the activities at any one level are the same, with each person any one level are the same, with each person performing the same type of work, and the performing the same type of work, and the divisions exist solely for control and direction.

divisions exist solely for control and direction.

General Manager:

••In the departmental line, the general In the departmental line, the general

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manager may be put in charge of the manager may be put in charge of the whole organization

whole organization–– the business unit may the business unit may be divided into departments headed by be divided into departments headed by departmental heads. A departmental head departmental heads. A departmental head may receive orders from the general manager may receive orders from the general manager and pass them on to his immediate

and pass them on to his immediate subordinates.

subordinates.

Subordinates:

Subordinates:

M i il l i t th

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••May similarly communicate the May similarly communicate the order to the workers

order to the workers–– the various the various persons heading the different persons heading the different departments would be perfectly departments would be perfectly independent of each other and would independent of each other and would enjoy equal status.

enjoy equal status.

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MILITARY OR LINE ORGANIZATION MILITARY OR LINE ORGANIZATION

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

In an industrial concern, for instance, a In an industrial concern, for instance, a foreman neither receives any

foreman neither receives any instructions from, nor issues instructions from, nor issues commands to, another foreman.

commands to, another foreman.

He has to perform all the functions He has to perform all the functions connected with production connected with production

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

p p including : including :

••Planning of workPlanning of work

••Ensuring proper condition of Ensuring proper condition of equipments

equipments

••Training of workersTraining of workers

••Instructing them in their workInstructing them in their work

Further promotion of the workers would Further promotion of the workers would depend upon the reports made about them by depend upon the reports made about them by the foreman concerned The orkers do not the foreman concerned The orkers do not

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the foreman concerned. The workers do not the foreman concerned. The workers do not have the authority to approach higher officers have the authority to approach higher officers except through their immediate boss. In case, except through their immediate boss. In case, the manager of one department wishes to the manager of one department wishes to issue guidance or directions to a subordinate issue guidance or directions to a subordinate in another department, he will go up the line in another department, he will go up the line and convey the message to the top manager, and convey the message to the top manager, who will then pass it down the line in the other who will then pass it down the line in the other department.

department.

••MERITSMERITS

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••SimplicitySimplicity–– it is the easiest to it is the easiest to establish and simplest to explain to the establish and simplest to explain to the employees.

employees.

••Unified controlUnified control–– it makes for unity of it makes for unity of control thus conforming to the scalar control thus conforming to the scalar principle of organization.

principle of organization.

••MERITSMERITS

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••Strong disciplineStrong discipline–– it ensures excellent it ensures excellent discipline. This is because of unified discipline. This is because of unified control. The subordinates have no doubt control. The subordinates have no doubt regarding the person from whom they regarding the person from whom they receive instructions. They are also aware receive instructions. They are also aware of the necessity of satisfying the superior of the necessity of satisfying the superior in their own interests.

in their own interests.

MERITS MERITS

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••Fixed responsibilityFixed responsibility–– everybody in everybody in this type of organization knows to this type of organization knows to whom he is responsible, and who are whom he is responsible, and who are responsible to him.

responsible to him.

••Prompt decisionPrompt decision–– the unification of the unification of authority and responsibility ensures authority and responsibility ensures quick and prompt decisions.

quick and prompt decisions.

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MERITS MERITS

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••FlexibilityFlexibility–– since each executive has since each executive has sole responsibility of his position and sole responsibility of his position and sphere of work, he can easily adjust sphere of work, he can easily adjust the organization to changes in the the organization to changes in the business situation.

business situation.

DEMERITS DEMERITS

3

••OverloadingOverloading–– the chief disadvantage of the the chief disadvantage of the system is that too much is expected of the system is that too much is expected of the person in authority. Since all work is done person in authority. Since all work is done according to the wishes of one person alone, according to the wishes of one person alone, the efficiency of the whole department will the efficiency of the whole department will come to depend upon the qualities of come to depend upon the qualities of management displayed by the head of that management displayed by the head of that department.

department.

DEMERITS DEMERITS

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••Lack of specializationLack of specialization–– it suffers from it suffers from lack of specialized skill of experts. For lack of specialized skill of experts. For example, it is not possible for a foreman example, it is not possible for a foreman alone to give full guidance on all matters alone to give full guidance on all matters relating to use of materials, use of relating to use of materials, use of machines, methods, personnel practice machines, methods, personnel practice etc.

etc.

DEMERITS DEMERITS

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••Inadequacy of communicationInadequacy of communication–– there there is usually no communication from the is usually no communication from the lower ranks. Moreover, their suggestions lower ranks. Moreover, their suggestions cannot be utilized because generally the cannot be utilized because generally the higher officers look down upon the views higher officers look down upon the views of their subordinates.

of their subordinates.

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

••Scope for favoritismScope for favoritism–– if an officer is if an officer is partial he may judge people according partial he may judge people according to his own notions, and therefore, it is to his own notions, and therefore, it is possible that efficient people may be possible that efficient people may be left behind and inefficient people may left behind and inefficient people may get higher and better posts.

get higher and better posts.

••DEMERITSDEMERITS

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

••SuitabilitySuitability–– the system can be followed the system can be followed successfully only: (i) in small businesses with successfully only: (i) in small businesses with a small number of subordinates, (ii) in routine a small number of subordinates, (ii) in routine type of concerns, (iii) in industries where type of concerns, (iii) in industries where continuous processes are followed, and (iv) in continuous processes are followed, and (iv) in industries where automatic machinery is industries where automatic machinery is installed, so that the foreman is not called installed, so that the foreman is not called upon to exercise his judgment frequently.

upon to exercise his judgment frequently.

(10)

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FUNCTIONAL ORGANIZATION FUNCTIONAL ORGANIZATION

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

Most of the business houses have Most of the business houses have separate departments to look after separate departments to look after production, sales and the general production, sales and the general office. Each one of these departments office. Each one of these departments (Figure

(Figure 33..55) would serve the rest of the ) would serve the rest of the organization.

organization.

Works Manager

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3..3 3: TYPES OF : TYPES OF ORGANIZATION ORGANIZATION

FIGURE

FIGURE 33..55: Functional : Functional Type of Organization Type of Organization

Engineer

worker worker

Superintendent

Chemist

FUNCTIONAL ORGANIZATION FUNCTIONAL ORGANIZATION

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However, vigil should be exercised to However, vigil should be exercised to see:

see:

••That the entire work has been divided That the entire work has been divided into various departments

into various departments

••There is no duplicationThere is no duplication

••The work allotted to one department The work allotted to one department consists of interrelated jobs

consists of interrelated jobs

FUNCTIONAL ORGANIZATION FUNCTIONAL ORGANIZATION

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All related and similar work is placed in All related and similar work is placed in one department or division under one one department or division under one executive. Thus, the marketing executive. Thus, the marketing manager will be responsible for all manager will be responsible for all marketing work of the company, of all marketing work of the company, of all the plants and for all product lines.

the plants and for all product lines.

MERITS MERITS

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••Ensures that a greater division of labor and enables Ensures that a greater division of labor and enables the concern to take advantage of specialization of the concern to take advantage of specialization of functions.

functions.

••Makes for a higher degree of efficiency as the workers Makes for a higher degree of efficiency as the workers and others in the organization have to perform a limited and others in the organization have to perform a limited number of operations

number of operations

••Ensures the separation of mental and manual Ensures the separation of mental and manual functions

functions

••Facilitates mass production through specialization and Facilitates mass production through specialization and standardization.

standardization.

••DEMERITSDEMERITS

••Unstable because it weakens the disciplinary controls,Unstable because it weakens the disciplinary controls,

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Unstable because it weakens the disciplinary controls, Unstable because it weakens the disciplinary controls, by making the workers work under several different by making the workers work under several different bosses.

bosses.

••Too complicated in operation because it entails the Too complicated in operation because it entails the division of functions into a number of sub division of functions into a number of sub--functions. functions.

This also leads to lack of coordination among the This also leads to lack of coordination among the workers.

workers.

••Makes difficult for the management to fix responsibility Makes difficult for the management to fix responsibility for unsatisfactory results.

for unsatisfactory results.

••May also lead to conflict among foremen of equal May also lead to conflict among foremen of equal rank.

rank.

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LINE AND STAFF ORGANIZATION LINE AND STAFF ORGANIZATION Line and staff organization (Figure

Line and staff organization (Figure 33 66) refers to a) refers to a

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

Line and staff organization (Figure

Line and staff organization (Figure 33..66) refers to a ) refers to a pattern in which staff specialists advise line managers pattern in which staff specialists advise line managers in performing their duties. When the work of an in performing their duties. When the work of an executive increases, its performance requires the executive increases, its performance requires the services of specialists. The staff positions are of purely services of specialists. The staff positions are of purely advisory in nature. They have the right to recommend, advisory in nature. They have the right to recommend, but have no authority to enforce their preference on but have no authority to enforce their preference on other departments. In reality, it is difficult to determine other departments. In reality, it is difficult to determine which departments are line or staff. The problem can which departments are line or staff. The problem can usually be solved by classifying activities within an usually be solved by classifying activities within an organization in two ways:

organization in two ways:

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

FIGURE

FIGURE 33..66: Line and Staff : Line and Staff Type of Organization Type of Organization

LINE AND STAFF ORGANIZATION LINE AND STAFF ORGANIZATION

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••That which is substantive (direct) in its That which is substantive (direct) in its contribution to the organization’s overall contribution to the organization’s overall objectives

objectives

••That which is objective (indirect) in its That which is objective (indirect) in its contribution. The departments performing contribution. The departments performing former group of activities are in line ones, and former group of activities are in line ones, and those performing latter group of activities are those performing latter group of activities are staff ones.

staff ones.

MERITS MERITS

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••Planned specialization: Planned specialization: the line and staff the line and staff structure is based upon the principle of structure is based upon the principle of specialization. The line managers are specialization. The line managers are responsible for operations contributing responsible for operations contributing directly to the achievement of organizational directly to the achievement of organizational objectives, whereas staff people are there to objectives, whereas staff people are there to provide expert advice on the matters of their provide expert advice on the matters of their concerns.

concerns.

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••Quality decisions: Quality decisions: the quality of the quality of decisions in line and staff structure is decisions in line and staff structure is high because the decisions come after high because the decisions come after careful consideration and thought.

careful consideration and thought.

Each expert gives his advice in the Each expert gives his advice in the area of his specialization, which is area of his specialization, which is reflected in the decisions.

reflected in the decisions.

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••Prospect for personnel growth: Prospect for personnel growth: this this system of organizing offers ample system of organizing offers ample prospect for efficient personnel to grow prospect for efficient personnel to grow in the organization. It also offers in the organization. It also offers opportunity for concentrating in opportunity for concentrating in particular area, thereby increasing particular area, thereby increasing personnel efficiency.

personnel efficiency.

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••Training ground for personnel: Training ground for personnel: it provides training it provides training

d t th l i t Fi t i

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

ground to the personnel in two ways. First, since ground to the personnel in two ways. First, since everybody is expected to concentrate in one field, everybody is expected to concentrate in one field, one’s training needs can easily be identified. Second, one’s training needs can easily be identified. Second, the staff with expert knowledge provides opportunities the staff with expert knowledge provides opportunities to the line managers for adopting rational multi to the line managers for adopting rational multi-- dimensional view towards a problem. Thus, by dimensional view towards a problem. Thus, by observing how staff people look at solving particular observing how staff people look at solving particular problem, line managers themselves sharpen their problem, line managers themselves sharpen their diagnostic and problem

diagnostic and problem--solving abilities. Thus, they solving abilities. Thus, they easily take the wholesome of view of the organizational easily take the wholesome of view of the organizational functioning.

functioning.

L k f ll d fi d th it

L k f ll d fi d th it ii titi it iit i

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3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

••Lack of well defined authority: Lack of well defined authority: in practice, it is in practice, it is difficult to differentiate clearly between the line and difficult to differentiate clearly between the line and staff because the authority is often diffused. Thus the staff because the authority is often diffused. Thus the managers may not be clear as to what is expected of managers may not be clear as to what is expected of them or what is the actual area of the operation of their them or what is the actual area of the operation of their authority. Thus confusion may be created in the authority. Thus confusion may be created in the organization.

organization.

••Line and staff conflicts: Line and staff conflicts: such conflicts may be such conflicts may be because of various reasons and sometimes the because of various reasons and sometimes the organizational conflicts may be taken as personal organizational conflicts may be taken as personal conflicts resulting in interpersonal problems.

conflicts resulting in interpersonal problems.

••Suitability: Suitability: this structure can be followed in large this structure can be followed in large

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organizations where specialization of activities is required organizations where specialization of activities is required because it offers ample opportunity for specialization. When because it offers ample opportunity for specialization. When employed in the large organizations, its success depends employed in the large organizations, its success depends upon the degree of harmony that is maintained among upon the degree of harmony that is maintained among various departments and personnel, the clarity in line of various departments and personnel, the clarity in line of authority, and interpersonal contact of executives particularly authority, and interpersonal contact of executives particularly in line and staff positions. In the natural course of growth, an in line and staff positions. In the natural course of growth, an expanding organization may adopt this structure to enhance expanding organization may adopt this structure to enhance the efficiency. This structure, however, is not suitable for the efficiency. This structure, however, is not suitable for small organizations as it is quite costly for them. Moreover, small organizations as it is quite costly for them. Moreover, they cannot take the full advantage of experts because of they cannot take the full advantage of experts because of lack of adequate activities for them.

lack of adequate activities for them.

MATRIX ORGANIZATION MATRIX ORGANIZATION The matrix design (Figure

The matrix design (Figure 33 77) is created by) is created by

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The matrix design (Figure

The matrix design (Figure 33..77) is created by ) is created by superimposing a set of project structures on top of a superimposing a set of project structures on top of a functional structure. Members of each project team are functional structure. Members of each project team are selected or assigned from the functional department.

selected or assigned from the functional department.

The matrix design features a multiple command The matrix design features a multiple command structure in which an individual may have any number structure in which an individual may have any number of superiors, including one functional superior and one of superiors, including one functional superior and one or more project manager. The matrix structures has or more project manager. The matrix structures has been found to be successful under three major been found to be successful under three major situations.

situations.

MATRIX ORGANIZATION MATRIX ORGANIZATION

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First, where is strong environmental pressure, First, where is strong environmental pressure, such as intense competition, which calls for such as intense competition, which calls for stronger marketing efforts, while the diversity stronger marketing efforts, while the diversity of firm’s product call for individualized of firm’s product call for individualized marketing program. Second, when there is a marketing program. Second, when there is a need to share and integrate vast amounts of need to share and integrate vast amounts of information within the company. Third, when information within the company. Third, when there are limited resources to be shared.

there are limited resources to be shared.

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3

3..3 3: : TYPES OF TYPES OF ORGANIZATION ORGANIZATION

FIGURE

FIGURE 33..77: Matrix type of Organization: Matrix type of Organization

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MATRIX ORGANIZATION MATRIX ORGANIZATION

3

Advantages Advantages ––

•• It is oriented towards end resultsIt is oriented towards end results

•• Professional identification is maintainedProfessional identification is maintained

•• Pinpoints productPinpoints product--profit responsibilityprofit responsibility Disadvantages

Disadvantages ––

••Conflict in organization authority possibleConflict in organization authority possible

••Possibility of disunity of command Possibility of disunity of command

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••Involves and challenges matrix team Involves and challenges matrix team members.

members.

••provides enlarged tasks for people.provides enlarged tasks for people.

••Develops employee skills.Develops employee skills.

••Encourages people to identify with end Encourages people to identify with end products.

products.

••Fosters flexibility throughout the Fosters flexibility throughout the organization

organization..

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••Motivates Motivates interdisciplinary cooperation.interdisciplinary cooperation.

••Provides for integration of organizational Provides for integration of organizational information.

information.

••Fosters the development of managerial Fosters the development of managerial skills.

skills.

••Frees top management for effective Frees top management for effective planning.

planning.

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••Demands high level of interpersonal Demands high level of interpersonal skills.

skills.

••Leaves negative impact on morale Leaves negative impact on morale when personnel are reshuffled.

when personnel are reshuffled.

••Fosters confusion and frustration Fosters confusion and frustration from its multiple

from its multiple--command structurecommand structure..

DEMERITS DEMERITS

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••Leads Leads to power struggles between to power struggles between functional and project managers.

functional and project managers.

••Causes to lose sight of broader Causes to lose sight of broader organizational goals.

organizational goals.

••Causes duplication of efforts by Causes duplication of efforts by project groups.

project groups.

••Costly to implement and maintain.Costly to implement and maintain.

Principles of Management, Principles of Management,

IMM – BUS230 References:

References:

Principles of Management, Principles of Management, M.

M. GovindarajanGovindarajan, S. , S. NatarajanNatarajan, , PHI Learning Private Limited, PHI Learning Private Limited, 2008

2008..