ORGANISATION STRUCTURE

An organization structure defines how jobs and tasks are formally divided, grouped and co-
ordinate.

Six key elements are:

• Work specialization and specification.

• Departmentalization

• Chain of control

• Span of control

• Centralization and decentralization

• Formalization

Work specialization: Example Henrey Ford’s automobile assembly line.

1) Work can be performed more efficiently if persons are allowed to specialize. This is also
known as division of labour.

2) Rather than the entire job, by one individual it is broken down into a number of steps, with
each step being computed by a separate individual. Individuals specialize in doing a part of
an activity.

3) Management saw this as a means of making the most efficient use of employee skills
.They felt that if all workers had to do all activities. They would have had to be trained in all
skills demanded by the job. The result is that except hen doing the most skilled or highly
complex task, employees would be working beyond their skill level. They would have to be
paid more as wages are determined by the highest level of skill.

4) Skill increases with repetition. Less time is spent in changing tasks, in putting away tools
and equipments of one job and getting ready for another. Its easier and less costly to train
workers to do highly repetitive work It increases productivity.

5. By the 1960s :- studies revealed that people suffered from boredom , fatigue, stress, low
productivity , poor quality , increased absenteeism &high turnover.

II Departmentalization:-
 1. Once jobs have been divided as per speciation they are to be grouped together so that
common tasks can be co-ordinated. This is called departmentalization .it is process of .

2. The major benefit is that it provides for efficiency by putting specialists together
dividing the work of an organization into various departments

3. Jobs can be departmentalsed by the type of product .each product is departmentalized

proctor & gambles. Cadburys. this leads to increased accountability for product
performance. Since all activity are under the supervision of one manager.

4. It may be departmentalized by the service offered payroll - retirement, expense, taxes,

etc.

5. Departmentalization can be done on the basis of geography or territory. Coal fields……

eastern/western, sales department.

6. Process departmentalization: - this is based on the process of production

7. Type of customers: - this helps to solve problem of customers because generally they
tend to have similar type of problems & needs.

Chain of command: - authority & unity of command is spelt out.

Choosing the basis for departmentalization:

Each basis has its own advantages and limitation one basis may not beneficial for another.

It has, however been seen that a composite of several basis

Factors:-

1. Specialization:- The organization is merely division of work. Fayol said that the more an
organization structure reflect the economic division of work in an enterprise through grouping of
activities is a departmental form ,the more effective and efficient it is in attaining organization
goals. This is called specialization but if the work is over specialized, there is a loss of
motivation as well as accomplishment.

2. Coordination:- Every department has the same organization goal-there may be a difference
in departments, the nature of jobs and skills required. Therefore, there must be coordination and
cooperation. In order to make the best use, sometimes different jobs and skills are put under one
manager for better coordination.

3. Control:- Control means to ensure that work is going on as per plan, and to locate the point
of direction where there is a discrepancy. Departmental bifurcation helps not only in physical
control, but also control over production and ensure accountability.

4. Economy: Departmentalization costs more money. New departments require additional

managerial personnel, equipments, manpower etc. After there is interpersonal departmental
interaction which require extra time. This may put heavy burden on the organization.

5. Recognition of local condition:- Manpower and departments should be formed as per

availability of member and skill of local people available. So that people get full-time work.

6. Adequate Attention: - There should be adequate attention for each department so that work
goes on smoothly and no duplication of work .Future organization requirement should also be
kept under consideration.
7. Human consideration: - All aspects need not be considered mechanically human aspects
should also be paid to aspects like culture, tradition, value system, attitudes, etc.

[III] Chain of command /span of control

The span of control also decides the number of individuals to be employed. It has to be
decided how many persons or departments can be placed under the span of control of one
manager. A superior is responsible for all activities of persons working under him. The span of
control determines the shape or configuration of the organization. It also determines the
complexity of individual’s manager’s jobs.
Factors
The number of relationships that can be managed by a superior.
(a) Capacity of manager(physical & psychological
fatigue) attitude, communication, decision-making.
(b) Capacity of subordinates: - Efficient subordinates do not need much supervision.
(c) Nature of work
1. Similar work
2. Dissimilar work
 3. Rate of change
4. Type of production-mass scale
5. Low rate of change over
6. Better technology

4. Degree of Decentralization:-

Higher the degree of decentralization, wider the span of management.

Work delegated competently, leaves the manager with more time for supervision. But if there is
not enough authority or there is ambiguity, frequent consultations are required.

5. Planning:-

If subordinates know their jobs & there is taken care well at planning stage
they need to consult the supervisor less frequently.

6. Use of staff assistance:-

This helps to reduce the manager’s load and increases the span of
management.

7. Communication Technique:-

If communication is moder and fast, much managerial time is saved.

8. Supervision from others:-

Optimum span is 5-10

Higher level is 8-10

Lower level – depends on the technology

Centralization & Decentralization:-

1. Delegation is the authorization to act in a certain way.

2. Authority is delegated to subordinates, but still retains authority.

3. Authority delegated can be enhanced, reduced or withdrawn.

4. Manager cannot delegate authority which he himself does not possess or his entire
authority.
 5. Can be specific/general- written/unwritten.

6. It is an art. There are certain rules.

DESIGNING ORGNISATION STRUCTURES

Structure is the pattern in which various parts of components are interconnected

-describes the various activities.

-describe the interpersonal relationship.

Structure is the arrangements of its subsystems and component at a given moment of time
this includes the structure as well as process.

Design involves

-work division groups

-the co-ordination required

Need:-

1. Facilitating management:- in both management & operation different departments are

created.

2. Encouraging growth:- it is the framework with their which the organization this
requires a flexible structure.

3. Optimal use of technical improvement it involves cost and producers results.

4. Encouraging human use of human beings:-

Provides psychological satisfactions to employees.

5. Stimulating creativity:- a sound organization well designed stimulates creativity.

Feature of good organization structure

There is no best way. That design is good which meets the requirements,

1. Simplicity

2. Flexibility

3. Clear Line of Authority

4. Application of ultimate responsibility

5. Proper delegation of authority

6. Minimum possible managerial levels – boll needs

7. Unity of direction and command

• One plan , one man

• Work should be specifically allotted

• One person should receiver order from one ……..

8. Proper Emphasis on staff

Different Approaches of Design:-

1. Process Approach:- identifying the sequence of events and there deciding the various
units of orgn Emphasizes on;

• All necessary activities are performed

• No unnecessary duplication of work

• All necessary activities are performed in ……..manner

Advantages:-

1. It brings about Knowledge of dynamics of operation and requirement of the ……..

2. This way proper systems like communication denaturalization can be adopted.

 3. Helps in improver cooed of function.

Limitations:-

Work well in comparatively smaller organization which consummates on fewer number

of related process

2. Result Approach:-

Steps:-

1) Defining business on the basic of market opportunities

2) Establishing objectives to be achieved

3) Determining the requirement for success and function skills to meet them.

4) Determining the degree of authority and centralization…..

3) Decision Approach:-

Question are asked and answers invited:

1) What decision are needed for obtaining organization objective?

2) What is the nature of such decision?

3) What is the level which such decision are taken?

4) What are the activities involved or affected by the decision?

The answers would determined this degree of authority in a position, it interaction with other
positions and the placement of the position in the organization.

There three approaches are integrated aspects of design.

Process in Design:-

1) Identification of activities

2) Grouping of activities

3) Delegation in authority

FORMAL & INFORMAL ORGANIZATION

I) FORMAL ORGANIZATION: Called Structure

It is a deliberately designed organization built on 4 pillars:

 - division of labor

- scalar & functional process

- structure

- span of control

CHRACTERISTICS:

1. Designed by top management to attain organization goal.

2. Structure is based on principles of division of labor.

3. Stress in given for the performance of a job in totality.

4. Authority & Responsibility has to be adhere to

5. Procedures and guidelines fix the co-ordination

II) INFORMAL ORGANIZATION:

They are natural grouping on the basis of some similarity.

CHARACTERSTICS:

1. Natural outcome at the workplace. Not designed or planned.

2. Created on the basis of similarly amongst members

3. Membership is informal. A person may become members if more than on organization at

a time.

4. Behavior is co-ordinate and controlled by group norms.

DIFFERENCE: FORMAL INFORMAL

1. Origin Planned/ deliberate spontaneous

2. Purpose well set goals social interaction

3. Structure well structured unstructured

4. Nature official unofficial

5. Focus positions persons

6. Leadership superior any one

7. Source of power delegated given by group

8. Guidelines for rules &procedures group norms

Behavior

9. Source of control reward/punishment sanctions

10. Abolition any time difficult.

RESONS FOR INFORMAL ORGANISATION- There are inevitable. True picture of

organization can be had only when both formed be informal groups are considered. Inadequacy
of formal organization structure to needs of both members and organization.
1. Desire to socialize with others.
2. Psychological fatigue of routine tasks.
3. Hierarchical control and communication.
4. Various functions & informal organization to control to contribute to member interest.

 Protecting their interests.

 Working as regulatory device.

 Protecting of cultural values.

 Exploitation and development of leadership potential.

 Filling gaps in managerial attributes.

WORKING OF INFORMAL ORGANISATION

1. Authority structure – no formal structure

2. Leadership – through persuasion

3. Communication- develops its own media and channels –mostly oral-speedier-

grapevine

DIFFICULTIES DUE TO INFORMAL ORGANISATION

Informal organization produces both functional and disfunctional effects – especially if it is not
handle properly.

1. Resistance to change – Every group promotes certain value and norms soon these become
law to those groups. Any change is ephemerally resisted. Modern organization requires many
changes.

2. Generation of ramous - They usually are the basis’s of release of tension. It may go against
directives.

3. Role conflict – Official and satisfaction of others.

4. Social conflict - Jokes, gossips, idle conversation at the cost organizational time is costly.

Need for formal organization:--

(1) Facilitating Management Action: There has been some sort of formal structure.

(2) Encouraging efficiency: Helps to bring about efficiency in work.

(3) Communication:

PRINCIPLES OF ORGANIZATION DESIGN

1. The organization structure should direct management attention to the companies’ sources
of competitive advantage.

The company should ask

a. Which market should it compete in.

b. How will it gain advantage over its competitor?

The structure should distribute responsibilities in such a way that management attention is
focused on targeted customers. If no particular unit has the responsibility of the target market,
the organization structure should be revamped

2. The organization structure should enable the corporate parent to add value to the
organization.

The corporate head quarters have to do such functions as maintaining govt. relation, research,
coordination between units. Each assignment must have a manager with specific
assignments.
 3. The structure reflects the strength, weakness and motivation of employees.

The design should we such as to check whether organization structure provides

appropriate responsibilities and reporting relationship for its manager requirement of
highly skill staff should be identified changes bring about dissatisfaction.

4. The company considers all the constraint that may impede the implementation of the
organization structure.

While designing, legal aspects have to be taken into consideration the interest of the stock
holders must also be taken care of.

5. The organization structure protects business units that need distinct cultures.

In some organization there are departments like research, product development units
which require specialist areas they should be insulted from other departments.

6. The organization structure provides coordination’s solutions for unit to unit link. It is
important for different unit to coordinate with each other .this kind of coordination helps
in total collaboration between units.

7. The organization structure does not have many parents’ level and units. Front line units
should be allowed to take decision and these decisions should be put up to upper level for
approval when those decision can add value unnecessary level should be removed.

8. Organization structure supports effective control. Accountability for performance is

important for decentralization of work there should be no blurred responsibility and
fuzzy measures.

9. The organization structure facilitated development of new strategies and provides the
flexibility to adopt to change. A good organization is fit for the present as well as flexible
for future.

CONTEMP ORGANISATION TRENDS

1. Classical

2. Neo classical

3. Modern

1. Classical organization theory-

a. Pruitt on accounting model

 b. Maximizes neatness & control

c. Emphasis on the detection of errors and their correction after they have happened.

d. Classical embodiment of extra pair of hand theory.

e. These theory considered man to be relatively homogenous and relatively

unmodifiable

f. Stability (minimum change within the employees in a goal in the organization.)

g. Behavior in centralization and centralization of authority and control.

There are two distract streams in the classical organization theories

1. Scientific management stream

2. Administrative

Scientific management: - Tylors frank and Lillian gilbraith, henrey Gantt and Harrington
Emersson. Effective use of human beings in industrious have been investigated,
especially in routine tasks. There jobs are usually performed on the work floor operative
levels.

1. They are largely repetitive and cyclic in nature.

2. The task do not require complex problem-solving problem

Tylor based on his studies in Midvale and Bethlehem perceived several new function of
manager.

a. Explain routine jobs with scientific determinants of each method.

b. Scientific training of workmen.

c. Co-operations of management and labor.

Tylor have given various principles of scientific management as fallow –

 Separation of planning from doing.

 Supervision of different areas by the some supervisors or job analysis used in time
motion and fatigue.

 Standardization of task, period of work, working condition.

  Scientific selection and training of worker

 Financial incentives to motivate workers.

Critical analysis :-

1. The application was not broad. It limited itself to shop floss.

2. They emphasis the psychological variables offering human behavior –more

relevant to mechanization and automation –technical aspects of efficiency
rather than behavior in an organization

Administrative management theory -

To Max weber , Henry fayol, L Gulick, Oliver Sheldon, J.D. nooney and A.C. Reiley.

This theories views the central problem as being one where there must be
identification of tasks necessary for achieving the general purpose of the organization and
the grouping of people into department.

Max weber has emphasized that autocratic organization is the most rational means of
caring out total control over human being there most specialization hierarchy, authocity,
impersonal relation in a bureaucracy

Fayol classic theory:-

The organization functioning from managements point to view and found the
activities of an organization to the divided into 6 group-

1. Technical

2. Financial

3. Accounting

4. Commercial

5. Security

6. Managerial

a. Planning

b. Controlling

c. Organizing

d. Commanding
 e. controling

PRINCIPLES OF CLASSICAL THEORY:-

1. Division of work:- benefits of specialisation.

2. Authority and Responsibility.

3. Discipline:- obedience, application, energy, behaviour ,respect shown by employees.

4. Unity of command.

5. Unity of direction.

6. Subordination of individual to general interest.

7. Remuneration of personnel.

8. Centralization.

9. Scalar Chain:- ranging from highest to lowest. flowing through each position in the line
of authority.

10. Order:-There should be a place for every person and thing.

11. Equity:-Combination of justice and kindness. good sense, experience and good nature.

12. Stability of Tenure.

13. Initiative:-Thinking out and executing a plan.

14. E-spirit de Corps:-Union is strength. Team work.

SUMMARY

1. Division of work.

2. Departmentalisation.

3. Coordination.

4. Human Behaviour in Organisation.

 CRITICISM

1. Close-system Assumptions: no interaction with environment.

2. Static-View of Organisation: rigid and static view. no need for adjust.

3. Unrealistic about Human Behaviour: ignores socio-psychological and motivational

aspects.

4. Lack of Empirical Research: based only on personal experience.

5. Lack of Universality: None of the principles are applicable in all circumstances.

Neo-Classical Theory:-

This has developed as a reaction to rationality and efficiency obsession of the classical theory
because it disregarded the impact of human beings on an organization. This theory started from
the findings of hawthorne Experiments.

Essence:-

1.Organisations started should be viewed not only as an organization of technical and economic
existences, but also as a social organization.

2.It is important to understand the social process of group behaviour.

The main propositions are:-

1. The organization is a social system.

2. The social environment of the job affects people and also affects the department. It is not
affected by management alone.
 3. Both informal as well as formal organizations exist within the organization.

4. Human beings are not totally rational0-behaviour can be predicted in terms of social and
psychological factors.

5. Human diverse motivational pattern and tries to fulfill different types of needs.

6. The integration between individuals and the organization is very important. Its
importance increases especially when there is a conflict between individuals and
organization.

7. Communication is necessary because it not only carries information necessary for the
functioning of the organ, it also coveys the feelings and sentiments of the people.

8. Team -work is essention –This does not come automatically, but through behavioural
approach.

Neo Classical thory & organisation design

The organization should be designed in such a way that meets the basic postulates. The
emphasis is on flat stretch and provision of informal organizations. There should be wide
span of control.

Essential factors:-

1. Flat structure:- Tall structures lead to increased difference between decision makers &
implementers, lack of motivation ,also expensive because of too many levels.

2 Decentralization:-

3. Informal organization:- this help the limitation of the formal system to meet the members
need. Especially the psychological needs.

Appraisal of neo classical theory:-

Has given a new dimension to managed in an organization .the major problem are ,

1. Neo. Classical theory lack unified approach of organization theory this is merely a
modification of classical theory. It suffers from the same problem.

2. Host of the assumption on which the theory is based are not true. It is not true that

-it is always possible to find a solution that satisfies everybody.

 -there are sharp conflicts and difference among people

3. Various structures and designs gives by the neo classical theory are not applicable to
all situations. Consideration on for the people working in an organization is important but
it has the limitations .a suitable organization is which takes care of different variables and
factor. people may by fast one of the factors.

Modern organization theory:-

This is a sophisticated and scientific way of explaining a complex organization. It is

comparatively systematic and highly constructively .it has the system approach &
contingencies approach.

system approach:- an integrative system which deals with the organization is it’s
totality .it studies and analysis the mutually dependent variables is the organization. It
suggests 3 aspects of organization structure.

1.modern organization model:- this approach recognizes the problems involved in

managing large and complex organization .it understands the need for flexibility and
adaptability in organization structure. they use different models such as matrix task forces
etc. they easily copy with the envero dynamics.

2:- lateral relationships:- emphasis is laid on the lateral approach and relationship among
people. This is in contrast to vertical relationship emphasized by classical theory. And
horizontal relationship of new- classic theory. Though both are important later
relationship achieves co-ordination more effectively by eliminating heirarchial control

3. cybernetics:- means direction of involves communication and control. it is concerned

with the flow of information in complex systems. It is applicable is not only mechanistic
organization ,but also in social systems it regulates complex systems , it has become a
model for thinking in regard to advanced information technology. That is why M.I.S
system are adopted in modern organisation

ORGANISATIONAL EFFECTIVENESS

This is also called organisation process or grwoth. It is called efficiency, productivity,

profiatbility, organisation growth..

AMITAI ETZIONI: “Effectiveness may be defined as the degree to which an organisation

realises its goal.”

JOHN KIMBERLY: “Effectiveness of an organisation can be seen in terms survival of the

organisation”
EPHRAM YERKHMAN: “An organisation remains effective as long as it uses its resources in
an effective as long as it uses its resources in an effeicient manner & contributes to the large
system.”

JOHN P.CAMPBEL: “Since an organization can be effective or non effective on a number of

differnt facts that may be relatively different from one another, OE has no operational
definition.”

EFFICIENCY EFFECTIVENESS:

CHESTER I .BERNARD says that there are 3 types of situations:

1. An organisation may be efficient but not effective.

2. An organisation may be effective but not the efficient.

3. An organisation may be both effective as well as efficient.

1) Efficiency refers to the internal process. Effectiveness refers to external phenomenon. An

organisation may be low – cost producing but it is not able to get matching price
LAMEBRETTA SCOOTER.

2) It may be inefficient but because of external enviornment it may earn profit & show
effectiveness.

3) Both efficient & effectiveness. This is required for long term survival.

MEASUREMENT OF EFFECTIVENESS:

REASONS:

1. Management must know whether things are being done rightly. what else?

2. Organisation must satisfy the needs of people by measuring the volumes of satisfaction
may be weighed.

4 TYPES OF APPROACHES TO MEASUREMENT:-

I. GOAL APPROACH:-

Effectiveness is measurement in terms of goal achivement. This is the most widely

accepted approach.
 Assumptions:- 1. Organisation have a goal towards which they are striving.

2. That the utlimate goal can be measured and identified empirically.

a) They can be: --Profit maximisation.

--Providing efficient service.

--High productivity.

--Good employee morale.

Factors-

 Quality

 Produtivity

 Readiness

 Effciency

 Profit or return

 Morale

 Motivation

 Satisfaction

b) Multiple criteria:- Many managers follow many goals simultaneously.the

fulfilment of these goals can be taken as the measure of effectiveness. In this
method the degree of goal achivement may be compares over a period of time,
say 10 years or with other organisation at a particular point of time.

Limitations:-

1. Different organisation have different goals. Comparision is difficult because of variable

externals.
 2. Goals as ideal states, do not offer the possibility of realistic assessment.

3. Goals often arise outside the organisation,as cultural entities.

4. It is difficult to identify organisation goals.

II. BEHAVIORAL APPROACH:

In this approach, organisation effectiveness is measured by taking into account the behaviour of
the people who make up the organisation.

Assumptions:- 1. Individuals have one knid of goal & collectively. They have other goals.

2.Degree of organisation effectiveness depends on the degree of integration of

organisation & individual Goals.

Alternatives:-

 Low degree of goal integration:- Effectiveness is individual opposed to organisation

goals.

 Moderate degree of goal organisation:- there is moderate degree of integration of

organisation and individuals.

 High degree of goal interaction:-

Limitations:-

1. It doesnot really offer criteria for measuring effectiveness in an organisation.

2. It provides clues for achieving effectiveness & helps in assessing effectiveness.

III. SYSTEM-RESOURSE APPROACH:-

INPUT – THOROUGHPUT – OUTPUT

This model emphasizes the distinctiveness of the organisation as an identifiable social structure
or entity & it emphasizes the interdependency of processes. This takes the form of INPUT –
OUTPUT transactions of various kinds relating to various things. These are scarce and valued
resources. They are generally means or facilities that are potentially controlled by social
organisation and are usable in relationship between an organisation and its enviornment.
Organisation effectiveness is defined in terms of bargaining position, as reflected in the ability of
the organisation, in either absolute or relative terms, to exploit its enviornment in the acquisition
of scarce and valued resources. It excludes any specific goal as the ultimate criterion of
organisation to generate its own resources. Specific goals may be incorporated in 2 ways:-

1. As a specification of the means or strategies employed by members towards enhancing

the bargaining position of the organisation.

2. As a specification of personal goals of certain members or classes of members within an

organisation.

Thus the better the bargaining position of the organisation. The more capable it is in obtaining its
varied goals. It also becomes more capable of attaining the personal goals of its members.

The mobilization of resources is not a sufficient cause for organisation effectiveness.

Effectiveness also includes the process and the output of the inputs. This must be compared with
organisation in the external environment. To do this, the following steps must be taken:-

1. To make a list of all resources required (taxonomy)

2. Identify different types of resources that are required.

3. To determine their relative positions of the compared organisation.

Limitations:-

1. Measurement of resources required to attain goals is difficult.

2. Movement towards achievement of goals is impossible to measure.

3. The goal is not greatly different from the goal approach.

IV. STRATEGIC CONSTITUENCIES APPROACH:-

This approach considers only relevant environment of the organisation under reference and takes
into account those factors which have impact on the operation of the organisation.

This approach considers not only the inputs received from the environment, but also the exports
that are outputs to the environment. The organisation effectiveness depends on the degree to
which the organisation is able to satisfy the constituencies.

1. Identify the relevant 7 strategic constituencies & their impact on the organisation.

2. Identify the expectations of the constituencies & the way to meet lose expectations.