Read this article to learn about the 3, 4, and 5 types of organizational structure studied in Management . Learn about:- 1. 4 Types of Organizational Structure 2. Types of Organisational Structures and their Advantages and Disadvantages 3. Organizational Structure Examples.
This article will Help you to get the answer of:
- What are the types of Organisational structure?
- What are the three types of organizational structures?
- What is organization and types of organization?
- What are the types of Organisational culture?
- What are the 4 types of organizational structures?
- What are the 3 types of organizations?
Answer 1. 4 Types of Organizational Structures:
Type # 1. Project Organisation:
A temporary organisation designed to achieve specific results by using teams of specialists from different functional areas is a project organisation. The team focuses all of its energies and skills on the assigned project. Once the project is completed, the team is broken up and its members are reassigned to their regular positions in the organisation or to other projects.
i. Project organisations are purely temporary structures. Project is a onetime task and is definable in terms of a single, specific goal. By definition, a project ends at an objective point in time.
ii. A team of experts possessing requisite skills, knowledge and experience relating to an assignment come together to deliver results within a time frame. Upon completion of a project, the project team is disbanded and members move on to the next one.
iii. Project Managers here serve as facilitators, mentors and coaches. Since they deal with highly qualified workforce, they must have excellent interpersonal skills to get all team members to work on the project cooperatively.
iv. Project teams enjoy lot of flexibility in that everything required—in terms of resources, people, information etc. to complete a project are made available.
v. It is Best Suited to an Organization that (According to Stewart)-
a. Handles complex assignments that call for a high degree of interdependence among members.
b. Takes care of crucial jobs that affect an organisation in a significant way.
c. Undertakes work that demands support, expertise and close coordination between a numbers of specialists working in various functional departments within an organisation.
The Nature of Project Management:
A. Project Manager:
Project management calls for the appointment a project manager who is responsible for the completion of the project. He runs the show and delivers results on time, performing certain key roles –
i. The project manager makes sure that the project does not get lost in the shuffle of organizational activities.
ii. He specifies what to be done, when it is to be completed and from where the requisite resources need to obtained and deployed judiciously. In turn, the functional managers decide who in their units will perform the task and how it will be done.
iii. The project manager is a unifying agent and a focal point for the project activities.
iv. He is always there to put out fires between project team members. He is expected to show restraint, emotional balance and excellent interpersonal skills while trying to bring people to a common platform.
v. He is accountable for the team’s performance and is expected to deliver results as per schedule.
vi. Finally, the project manager is expected to –
a. Listen others and allow people to come forward with feedback and valuable suggestions
b. Select right people for the project
c. Delegate tasks and manage the team effectively
d. Build trust and confidence among members
e. Know what is required and when
f. Keep track of the health of the project, making it easier to for members to handle risks and challenges that may spring surprises from time to time
g. Should pool resources and put them to best use
h. Conduct the orchestra in a competent manner
i. Negotiate with project teams, client and suppliers in an effective way
B. Team Members:
The project involves members from various functional departments or from outside. Team members report directly the project manager. Membership is temporary. The size of the group may change with the different phases of the work. As soon as the project is completed, team members go to another project.
C. Project Authority:
A project possesses a vertical as well as a horizontal dimension. It cuts across the normal organization structure. A project manager is expected to work with various functional managers by seeking their support through persuasive bargaining. He must convince them that they should help the project by lending its manager the support needed to finish the given task within the time. In reality, the project managers face an ‘authority gap’. They do not have authority to promote or reward their personnel.
They lack complete authority over the team and possess what is known as ‘project authority’. Further, in a project structure the role perceptions are unclear and lack specificity. The relationship of project manager with functional heads is quite ambiguous. His authority is more fluid than in a stable organization composed of line and staff relationships only. The project manager is expected to accomplish goals by working not only with the functional groups of the company but also with outside organizations. ‘The total project organization has no discrete boundaries; it is a complex structure that facilitates the coordination and integration of many project activities.’
Advantages:
1. Project management allows maximum use of specialized knowledge which is available to all projects on an equal basis. Knowledge and experience can be transferred from one project to another.
2. Project people have a functional home when they are no longer required on a given project. In between they are provided with stimulating opportunities to participate in the decision process.
3. The project structure reduces environmental complexity. It facilitates rapid collection and processing of new information.
4. Project structures are one way of promoting and maintaining organizational flexibility. Through projects, specialists possessing expert knowledge required to achieve a goal are brought together for as long as necessary, but no longer.
5. Project organisation, most importantly, allows concentrated attention of experts on a complex project for a given time without disturbing the normal routine work.
i. Project structure creates feelings of insecurity and uncertainty among members. Their relationship with functional members is unclear. Dual loyalty creates anxiety and tension.
ii. The project structure is an ad hoc arrangement, having a limited life. Once the project is completed, the project team is disbanded. In other words, the project manager and project staff work themselves out of a job. Some people feel lost without a permanent department with which they can identify. Security for such people is threatened when it appears that the organization’s only commitment to them is a temporary project. They fear that completion of the project will mean the end of their job. This can encourage project slowdowns.
iii. The project management violates the principle of unity of command. Role prescriptions are unclear. The relationship between functional managers and the project manager is not defined properly leading to ambiguity and conflict.
iv. The project structure creates insecurity and fear of unemployment as the project nears completion. Members may even create work to avoid dangers of being laid off.
v. Contacts with the mainstream of organizational life are severed. Members may be bypassed when opportunities arise in their fields leading to career advancement.
vi. Project manager has to perform a tightrope walk: he must build the team straightaway; obtain, cooperation from other departments; battle to meet the schedule; grapple with cost figures and decide things quickly. Decisions to sacrifice time for cost, cost for quality or quality for time, are common in most projects and the project manager must be able to make them without panicking.
vii. The project organization creates an authority gap for project managers where responsibility outweighs authority. Most projects are not self-sufficient. They need support from various quarters. Top management can easily jeopardize the projects’ success by lack of awareness. Functional cooperation may be difficult to obtain. All such factors seriously hamper the project performance.
Type # 2. Matrix Organisation:
A permanent organisation designed to achieve specific results by using teams of specialists from different functional areas in the organisation is a matrix organisation. It is actually hybrid structure combining both functional and product structures in the same organisation. In the matrix structure, specialists from different functional departments work on projects that are led by a project manager.
The project manager has authority over the functional managers who are part of his team in areas related to the project’s goals. However, decisions regarding promotions, rewards, annual performance reviews typically remain the functional manager’s responsibility. To work effectively both managers have to be in touch with each other regularly. They need to work in close coordination, resolving conflicts smoothly.
Let us examine these closely:
i. Hybrid Structure- It has a hybrid structure, combining both a functional organisation and project organisation structure. On the right hand side of the picture you have functional heads running the show. On the left hand side you have project managers leading teams of specialists. Employees have to work under two bosses simultaneously.
i. Top Leadership:
The top leader holds the balance of power. He must be willing to delegate decisions. He must emphasize direct contact and group problem solving at lower levels so as to promote effective communication throughout the organization. He must also see that the power balance is maintained properly.
ii. Functional Heads:
The functional heads take care of issues relating to their function—such as promotion, salary recommendations, annual reviews etc. They are mainly concerned with the operational aspects of their department.
iii. Matrix Bosses:
Matrix bosses/project managers have authority over project employees relative to projects’ goals. They share subordinates in common with other bosses. They do not have full control over subordinates. The functional head’s responsibilities pertain to functional rules and standards—what to do, how to do and when to do etc. and review performance periodically.
The project manager acts as an integrator. He is required to achieve the specific project by balancing time, cost and performance. Matrix bosses must also be willing to face one another on disagreements. Managing highly competent professional employees demands a great deal of time, patience, and skill from project heads.
iv. Matrix Subordinates:
Matrix subordinates are often confronted with an agonizing choice. They suffer from what is known as jurisdictional clarity. The dual assignments—one reporting to their functional head and simultaneously work on a specialized project—might cause role ambiguity and career related issues.
Matrix subordinates—also known as two boss managers—might have to work under a tough and demanding functional head and report to a project head who might encourage them to experiment, innovate and take considerable amount of risk. Reporting to two bosses (in a matrix form, the unity of command principle is violated) can create confusion and a difficult interpersonal situation unless steps are taken to prevent these problems from arising.
v. The Problem of Unity of Command:
In the matrix structure, the matrix subordinates or two boss managers are at the receiving end, because they have to report to two superiors. This means prioritizing multiple commands (from functional head as well as the project head—one may ask them to run and the other might ask them to go slowly) and sometimes even receiving conflicting orders.
As rightly pointed out by Bateman and Snell, “some people function poorly under this ambiguous, conflictual circumstance: sometimes this signals the end of their career with the company. Others learn to be proactive, communicate effectively with both superiors, rise above the difficulties, and manage these work relationships constructively”.
Reasons for Introducing Matrix Structures:
A. Historical Reasons:
The matrix began in the American Aerospace Industries in the early 1960s. The American Government made it a condition for research and development contracts that the contracting firms should have a project management system. This actually paved the way for the introduction of matrix form. One of the main reasons for the growth of matrix organization is the need to deal with increasing complexity. Matrix structure is the organization’s response to a turbulent field environment.
B. Conflicting Environmental Pressures:
In aerospace firms the emphasis is on maintaining technical excellence and also meet unique customer requirements that will invariably be linked to schedule (deadlines) and cost limitations. Such a situation can be met either by organizing entirely on a project basis or by superimposing project management on top of the existing functional pyramid. Matrix structures enable the organization to meet the dual demands from the environment. Resources can be allocated across different products and the organization can adapt to changing external requirements.
C. High Information Processing:
Matrix structures are found in organizations which demand responses to rapid change in markets and technology which face uncertainties that generate high information processing requirements. The greater the uncertainty of the task, the greater the amount of information to be processed among decision makers during task execution. A matrix form offloads part of the information processing task to lower levels of the organization through direct inter-functional contacts.
D. The Need for Better Resource Use:
If a project requires half a computer scientist, it does not need to support a whole one half employed. Matrix form provides an excellent opportunity to star performers and possessors of rare skill to contribute to more than one project or to more than one functional department.
The traditional forms simply lock up the scarce inputs in one functional department or product organization. They tend to view internal resources as their property consequently, the scarce resources are underutilized. The matrix form emphasizes the interdependence of departments rather than boundaries between them.
The differences between a project structure and a matrix structure may be summarized thus:
Project Organisation vs. Matrix Organisation:
Projects Organisation:
1. Purely temporary.
2. Project managers’ authority could range from very low to very high.
3. Low information processing.
4. Power struggles avoidable in case of projects having limited life span.
5. In a pure project organization, the project manager takes change of information, resources and people.
Matrix Organisation:
1. Relatively permanent.
2. Project managers’ authority distributed reasonably. They are, more or less, at par with functional heads.
3. High information processing.
4. Power struggles a distinct possibility – between functional managers and project heads.
5. Project heads have to share resources with functional heads.
Strengths:
Many people have sung the praises of matrix organization forms, from time to time.
In fact matrix form attempts to achieve the benefits of both the functional organizations and the product organization:
A. Efficiency:
A matrix form permits efficient utilization of resources, especially manpower. Resources can be freely allocated across different products. It facilitates the efficient allocation of specialists. Specialized knowledge is available to all products/projects on an equal basis. Further, knowledge and experience can be transferred from one project to another.
Each project can share the specialised resource with other units, rather than duplicating it to provide independent coverage for each. ‘If a project demands half an astrophysicist, it does not need to support a whole one half occupied.’ It allows the pooling and sharing of specialised resources across products in a natural, routine way.
B. Flexibility:
Matrix forms encourage constant interaction among project unit and functional department members. The direct and frequent contact between different specialties in the matrix can make for better communication and more flexibility. Information permeates the organization and reaches those people who need to take account of it. Quick decisions can be taken and the organization can encounter the challenging and uncertain environment in a better way.
C. Technical Excellence:
Matrix structures ensure the maintenance of high technical standards. They facilitate high quality and innovative solutions to technical problems. Frequent interactions among project unit and functional department members encourage cross fertilization of ideas. Each specialist is forced to listen, understand and respond to the views of the other.
D. Balance:
Matrix structure is a way of balancing customer’s need for project completion and cost control with the organization’s need for economic cooperation and development of technical capability for the future. ‘A better balance between time, cost and performance can be obtained through the built in checks and balances and the continuous negotiations carried on between the project and functional organizations.’ Further, matrix reduces bureau-pathologies. The dual lines of authority reduce tendencies of departmental managers to become so busy protecting their little worlds that goals become displaced.
E. Freeing Top Management:
Matrix structure permits decision-making at lower levels. Since many decisions are made at lower levels, the top management has more time to interact with the environment. The top management need not bury itself in endless daily routine; it can concentrate more on long range planning. Matrix structure facilitates a rapid management response to changing market and technical requirements.
F. Motivation:
Traditional organization structures are based on the assumption that position level equals contribution and contribution equals rewards. In other words, the higher the individual is in organization, the more authority he has, the greater the knowledge he possesses; the more he contributes, and the more he should be rewarded. In many organizations this holds good even today.
A 60-year old full professor receives a fat salary of Rs. 1, 40,000 per month for teaching organization theory to post-graduate students while a 25-year old lecturer receives only Rs. 30,000 p.m. for teaching another section of the same course in the university. The reward structure will be more frustrating in case we assume that the young scholar had just published two brilliant research papers while the older one had produced nothing in years.
Fortunately in matrix structures more emphasis is placed on the authority of knowledge than the position of an individual in the organizational hierarchy. Membership of the team is based on special knowledge for given aspects of the work. As a result, lower level people can have a greater say in important decisions. The opportunity to participate in important decisions fosters higher levels of motivation and commitment.
G. Development:
A matrix structure helps employees to develop and grow. It enlarges their experience and broadens their outlook. It exposes them to a wider arena full of challenges. The process of job rotation helps them to learn something of value from other specialties; auditors will learn about marketing, engineers develop knowledge of financial matters and accountants learn about quality control.
A matrix structure gives persons of high potential an excellent means of demonstrating their capabilities and make a name for themselves (employees can acquire either functional or general management skills depending on their interests). It provides a stimulating atmosphere more in line with the democratic norms preferred by scientific and professional employees.
A matrix structure is far from being a cure-all for embarrassments, expenses and delays that plague even the best managed organizations. They are seen as ‘hurried improvisations’ rather than as ‘thought-through transformations’.
A. Power Struggles:
Matrix fosters power struggles between product and functional managers. Unfortunately, both functional and product managers share the same set of resources leading to unhealthy competition. Each manager tries to safeguard his undisputed control over a given sphere of operations by building protective walls.
For example, functional managers form coalitions to undermine the power of project specialists. Matrix intensifies defensive behaviour and hostile attitudes between managers. It is a sure recipe for interpersonal conflict.
B. Stress:
Matrix organizations can be stressful places to work in. As pointed out by R.L. Kahn et al, stress at work arises from three factors: role conflict, role ambiguity and role overload. The use of matrix means use of dual command. Managers often end up jockeying for power and influence. “The individuals are subjected to conflicting and confusing expectations from others. The subordinate becomes a political football of the ‘two superpowers’ in the organization”.
Members of project teams possess only de facto decision-making power. As a result, important decisions are vetoed by superiors in preference to decisions based on individual power and influence. In such ambiguous situations accountability becomes unclear. Role overload arises because of too many demands placed on an individual. An employee is expected to shoulder normal operating responsibilities as usual and also find time to participate in endless meetings and tedious discussions.
Additional demands arise from these discussions leading to an increase in overall work load. Confusion exists over who reports to whom. The comfort of bureaucracy’s predictability is replaced by growing insecurity and stress.
C. Costs:
The matrix organization incurs great administrative costs than a conventional hierarchy. In an attempt to cover themselves against blame, managers try to put everything in writing. The dual chain of command turns the matrix structure into another form of anarchy. It increases the management costs to double. The decision-making process is slowed down. Members have to spend far more time at meetings and discussions than doing work. More information has to be processed through written reports.
D. Balance:
It is rather difficult to strike a stable balance between project and functional authority. The two kinds of influence are negatively correlated. The more successful lateral collaboration is achieved at a given level, the greater are the stresses up through the vertical hierarchy, with more senior managers resentful of being bypassed. And conversely, the better the vertical relationships in the line hierarchy, the more likely the lateral activities are to suffer from boundary disputes and communication blocks.
Thus matrix organizations have been reported as costly, cumbersome and bureaucratic, inhibiting technical achievement, overburdening top management, and de-motivating employees and detrimental to their development.
Making Matrix Organisation Work:
How matrix organizations can be made to work effectively?
The following guidelines will help solve this question:
A. Definition of Roles:
The roles of project and functional managers must be clearly defined. For example the functional manager may decide who should do and how, whereas the project manager decides what should be done, when and at what cost. Now-a-days prudent companies spell out in writing the details of a matrix project in advance to avoid misunderstandings.
B. Organization Development:
Organizational development techniques can be employed to improve cross functional, collaboration. Other techniques like sensitivity training, team building activities, training in group and interpersonal skills etc., can be employed to facilitate new norms of behaviour.
C. Guidelines:
Project membership should be perceived as an important and rewarding assignment. It should not take the form of an imposition. Project teams must be filled with people having relevant information. The project decisions should be based not on rank but on knowledge and information.
The meetings of project teams should be preceded and followed by meetings within the functional departments who draft the team. This helps in clarifying the problem; members are well informed and involved in the developments relating to the project. At times it may be appropriate for leadership to pass from one member to another as the project moves from stage to stage in its progress.
Type # 3. The Network Organisation Structure:
The most recent approach to divisionalisation extends the idea of horizontal coordination and collaboration beyond the boundaries of the organization. The network structure (a more dynamic and flexible version is also known as virtual or modular organisation) means that the firm sub-contracts many of its major functions to separate organisations and coordinates their activities from a small headquarter organisation. The services are outsourced to separate firms that are connected electronically to the central office. Sub-contractors flow into and out of the organisation, depending on the changing needs of a firm.
Another novel outcome of the network is the virtual network organisation which is a continually evolving group of companies that unite temporarily to exploit specific opportunities or attain strategic advantages and then disband when objectives are met. A virtual or modular organisation is composed of temporary arrangements among members that can be assembled and reassembled to meet a changing environment.
Data and information sharing takes place over the net (electronically) among participating companies. Unlike the network structure in which the hub organisation maintains control over work processed by various sub-contractors, in a virtual unit each independent company gives up some control to temporarily become part of a larger network. Companies like Nike and Reebok have succeeded by concentrating on their core strengths in design and marketing and contracting all their footwear manufacturing to outside suppliers.
Key Attributes of a Virtual Organisation (Luthans):
Virtual organisation is a temporary network of companies that come together quickly to accomplish a specific venture. The opportunity is usually something that needs a quick response to maximize the market opportunity. Responding slowly would result in losses. So, the individual outfits generally join hands, bring their knowledge, expertise and competencies together without worrying about learning how to undertake a project that they have never done before.
Important features of a virtual organisation may be listed thus:
I. Technology- Partnerships between far flung companies help each outfit develop products and services based on their individual expertise and competencies, cost effectively and quickly.
II. Opportunism- Partnerships help exploit market opportunities in an opportunistic manner; once the purpose is achieved, such partnerships may get dissolved quickly.
III. No borders- Partnerships between competitors, suppliers and customers make it difficult to find where one company ends and another begins. The operations of individual outfits defy conventional logic and go beyond traditional boundaries.
IV. Trust- Each outfit will be dependent on the other for its own survival and growth.
V. Excellence- “Because each partner brings its core competence to the effort, it may be possible to create a ‘best of everything’ organisation. Every function and process could be world-class—something that so single company could achieve”
Successful networks potentially offer flexibility, innovation, quick responses to threats and opportunities and reduce costs. When formed in an appropriate manner, network structures help even the smaller firms can compete on a global scale.
They can pool resources, put knowledge and skills to good use and offer best quality at competitive prices. The smaller firm can exploit market gaps quite effectively. It can have a lean structure and yet maintain high quality specialists and offer unbeatable service at an economical price.
When the Network Structure Delivers Results?
Network organisations, to be successful, must take care of the following: The firm must choose the right specialty. It must be something (good or service) that the market needs and which the firm is better at providing than other firms.
The firm must choose collaborators that also are excellent at which they do and that produce complementary strengths.
The firm must make certain that all parties fully understand the strategic goals of the partnership.
Each party must be able to trust all the others with strategic information and also trust each other collaborator will deliver quality products even if the business grows quickly and makes heavy demands (R.E. Miles and C.C. Snow, Fit, Failure and the Hall of Fame)
The major limitation, however, is lack of hands-on control. The sub-contractors many fail to deliver things, at times, on schedule. The headquarters organisation may find itself out of business in such a scenario. If one of Nike’s suppliers, for example, failed to perform well, Nike could easily replace it by forming a contract with another.
But how easy is it to find reliable software companies who can both do the job and be trusted not to take proprietary information and use it themselves or give to a company’s competitors? The emotional bond between organisation and employee is weak since he always feels threatened by feelings of insecurity of being replaced by contract services and uncertainty over continuance.
Type # 4. Free Form Organisation:
A free form of organisation is purely an adhocratic structure. It has no boundaries. It is flexible, adaptive and is built around special problems to be solved by a group of experts possessing diverse professional skills. These experts have decision making authority and other powers. The adhocratic Structure is usually small, with an ill-defined hierarchy. Such a design is suitable for high technology and high growth organizations where an arranged and inflexible structure may be a handicap.
Jack Welch is famous for having using the boundary less structure for making GE more efficient and effective. A boundary less organisation, according to Jack Welch was an open, anti-parochial environment, friendly toward the seeking and sharing of new ideas, regardless of their origin. The purpose of this initiative was to remove barriers between various departments as well as between domestic and international operations.
The following figure illustrates an adhocratic type of organizational structure:
The Boundary Less Organisation:
The Boundary less organisation is composed of people who are linked by computers, faxes, computer-aided design systems and video teleconferencing and who may rarely or ever see one another face to face. People come and go as their services are needed, much as in a matrix structure. They are, however, not formal members of an organisation. They are independent functional experts who form an alliance with an organisation, fulfill their contractual obligations and then move on to the next project.
The free form organisation offers some significant advantages to firms which have a genuine hunger for growth and diversification:
i. It is highly flexible and dynamic and can be followed in order to suit the unique requirements of each project.
ii. There is very little focus and emphasis on positions, departments and divisions. The focus is on getting the project completed on schedule as per the requirements of the customer. Pooling of talent and expertise is the biggest worry here.
iii. Authority is not pinned down to specific positions. It is passed on to people who matter most, who can deliver results.
iv. People are expected to slip into roles that are not clearly defined. They need to perform anything and everything, depending on the demands made by a specific problem. Role clarity is missing but in its place people are greeted with an exciting opportunity to do things on their own. They need to meet the deadlines, schedules and expectations by doing everything possible. It is a question of converting a pious dream into a concrete reality.
v. Communication can flow in any direction. The primary focus is on making people realizing the importance of working in teams, maintaining friendly relations. In place of commands and instructions you have people trying to reach out to others—wherever they are—through open, transparent and friendly communications.
As can be seen from the above, the free form of organisation is suitable for industries which operate in dynamic settings, marked by rapid change—where decisions have to be taken quickly.
Choosing the Organizational Structure:
Organization design is a continuous process. While a simple design is needed for simple strategies, complex designs are required when organizational strategies involve complex interactions. The choice of any type of organizational design should be in consonance with the organizational requirements, strategy and environment.
The simple centralized and bureaucratic organizational design based on functional departmentation focuses on work and is thus better suited for getting work done efficiently. The team or project type of organizational design is appropriate where inputs from several functional areas are required. The divisional structure is appropriate if performance and results are to be assessed. Matrix and adhocratic designs focus on coordination and relationship.
Answer 2. Types of Organizational Structure and their Advantages and Disadvantages: (6 types)
Organization structure is primarily concerned with the allocation of tasks and delegation of authority.
As a result several types of organization structure are explained below:
1. Line organization
2. Functional organization
3. Line and staff organization
4. Project organization
5. Matrix organization
6. Committees organization
1. Line Organization:
It is also known as scalar organization, military organization, vertical organization etc. This is the simplest and oldest form of structure. The main characteristic of this type is superior sub-ordinate relationship. Authority flows vertically from top level person to all the persons responsible for the execution of work. Everybody is responsible for his work and is accountable to his boss. Since authority and responsibility flow in an unbroken straight line, it is called line organization.
According to J.M. Lundy, “it is characterized by direct lines of authority flowing from top to the bottom of the organization hierarchy and lines of responsibility flowing in an opposite but equally direct manner”.
This organization structure can be of two types:
(a) Pure line organization and
(b) Departmental line organization,
(a) Pure Line Organization:
In this pattern of structure, all persons at a given level perform the same type of work. The diversions are solely for the purpose of control and direction. This type is very simple but in modern industries it does not exist. It is suitable for small units producing only one item where activities can be grouped according to their nature.
(b) Departmental Line Organization:
In this pattern, general manager may be put in charge of the whole organization. The organization may be divided into departments and each department will be headed by departmental heads. The head will receive orders from general manager and passes them on his immediate subordinates. The heads enjoy equal status and work independently.
Characteristics of Line Organisation:
The main features of line organisation are as follows:
1. Orders and instructions flow from top to the bottom, whereas requests and / suggestions move from bottom to top.
2. The principle of unity of command is the most salient feature of this type of organisation. In simple words, the orders are received by the sub-ordinates from one boss.
3 The sub-ordinates are accountable to their immediate superior.
4. There are limited numbers of sub-ordinates under one superior.
5. This is simple to operate and control.
6. Co-ordination can be easily achieved.
Advantages of Line Organisation:
Following are the main advantages of line organization:
1. Simplicity:
It is very simple to establish and operate. It can be easily understood by the employees.
2. Fixed Responsibility:
Duties and responsibilities are clearly defined for each individual with reference to the work assigned to him. As a result everybody knows to whom he is responsible and who are responsible to him. Nobody can avoid responsibility.
3. Discipline:
This type of organisation ensures better discipline in the enterprise. Singleness of responsibilities facilitates discipline in the organisation. The workers at the lower levels will be more loyal and responsible to one single boss rather than to a number of bosses.
4. Flexibility:
It is flexible in the sense that it is subject to quick adjustments to suit to changing conditions. In the words of Wheeler, “It permits rapid and orderly decisions in meeting problems at various levels of organisation”. In simple words, it is more adaptive to the changed circumstances.
5. Co-Ordination:
It helps to achieve effective co-ordination. All the activities pertaining to single department are controlled by one person.
6. Direct Communication:
As there will be direct communication between the superior and the sub-ordinates at different levels it would be helpful in achieving promptness in performance.
7. Unity of Command:
Every worker is accountable to one boss in the department under this type of organisation. In this manner it is in accordance with the principle of unity of command.
8. Economical:
It is not complex and expensive. It is simple and economical in operation. It does not need any expert and specialized personnel.
9. Quick Decisions:
On account of its simple operation and unified control and responsibility, decisions can be taken promptly. The process of decision-making is further quickened as the decision is taken by one person.
10. Executive Development:
Under this organisation, the departmental head is fully responsible for every activity in his department. He discharges his responsibilities in an efficient manner. He comes across many problems and obstacles in performing his duties. This provides him an ample opportunity to enhance his capabilities and organizational abilities and is greatly helpful in his overall development and performance.
Disadvantages of Line Organization:
Following are the main drawbacks of line organisation:
1. Overloading:
The main disadvantage of this system is that it tends to overload the existing executive with too many responsibilities. The work may not be performed effectively on account of innumerable tasks before the single executive.
2. Lack of Specialization:
Absence of managerial specialization is the major drawback of this system. On account of many functions and complexities it is very difficult for a single individual to control all the matters effectively. The executive may not be expert in all aspects of managerial activities. The burden of responsibilities on the shoulders of the manager can crush him under the heavy workload.
3. Scope for Favoritism:
There may be a good deal of favoritism and nepotism under this type of organization. As the concerned officer will judge the performance of the persons at work according to his own norms, it is possible that efficient people may be left behind and inefficient or ‘yes men’ may get higher and better posts.
4. Lack of Co-Ordination:
In reality it is very difficult to achieve proper co-ordination among various departments operating in an organisation. This is because each departmental manager or head carries the functioning of his department in accordance with the ways and means suitable to him. This leads to lack of uniformity in operation among various departments which is detrimental in achieving proper co-ordination in the overall functioning of the various departments operating in the organisation.
5. Lack of Initiative:
Under line organisation ultimate authority lies in the hands of top management, departmental managers or heads have little powers. This adversely affects their initiative and enthusiasm to motivate the sub-ordinates working under them.
6. Lack of Communication from Lower Ranks:
Under line organisation suggestions move from down to upwards. The superiors usually do not pay attention to suggestions sent by lower ranks. This leads to inadequacy of communication from sub-ordinates to superiors.
Type # 2. Functional Organization:
The line organization suffers from a number of drawbacks. The expansion of business and large-scale production has necessitated the use of experts in different fields. As the name implies, under functional authority relationships, the whole task of management is divided according to the type of work involved.
The normal operations to be performed in a business house are production, research and development, personnel, purchasing, finance, etc., these activities are assigned to various departments and functional experts are appointed to look after those activities.
F. W. Taylor, Father of scientific management, developed the concept of functional organization. He recommended functional organization even at the shop level where workers have to produce goods. He suggested the substitution of line authority by functional foremanship at the lower level of the organization structure.
Taylor suggested the division of supervisory functions into two groups, namely:
(1) Office specialist and
(2) Shop specialist.
(1) Office Specialist:
They are concerned with the design, scheduling, recording and planning of work.
The office staff consists of following persons:
(i) Route Clerk:
The route clerk is responsible for planning the route from which will pass from machine to machine. He schedules the work in such a way that finished goods are ready in time.
(ii) Instruction Card Clerk:
This clerk records instructions for doing every piece of work. The exact method of doing the work is recorded.
(iii) Time and Cost Clerk:
He lays down the standard time for completing a particular work. He supplies every information required for completing the job. He also records the time taken for completing a job. This helps him in working out the cost of various jobs.
(iv) Disciplinarian:
He ensures the implementation of various rules and regulations. He tries to maintain proper discipline at work.
(2) Shop Specialists:
They guide and supervise the work in the factory.
Following are the shop specialist:
(i) Gang Boss:
He should arrange machines and tools at the work. He ensures adequate work for the workers and sees that necessary tools, etc., are available to the workers. He also tries that every work is completed at the earliest.
(ii) Speed Boss:
He determines the speed at which work should go on. It is his duty to ensure that work is completed at standard time. He also guides the workers in keeping proper pace of work.
(iii) Repair Boss:
The duty of repair boss is to ensure that achiness and tools are maintained in proper condition. He should see that workers clean their machines properly and regularly and maintain them with standard care.
(iv) Inspector:
The inspector ensures that the work is done according to the prescribed standards and qualities. The workers should also maintain workmanship of the goods manufactured.
Features:
The main characteristics of the functional organization are as follows:
(i) The whole task of the enterprise is divided into specialized functions.
(ii) Each function is performed by a specialist.
(iii) The specialist in charge of a functional department has the authority over all other employees for his function.
(iv) Specialist operates with considerable independence.
Advantages of the functional Organization:
The following are the advantages:
(i) It ensures a greater division of labour and enables concern to take advantage of functional expert’s services.
(ii) It makes for a higher degree of efficiency in the workers to get instructions from experts in their field and workers have to perform a limited number of operations.
(iii) It is a very flexible pattern of organization. Any change in organization can be made without disturbing whole organization.
(iv) It facilitates mass production through specialization and standardization of operations.
(v) Other advantages-
(a) It ensures the separation of mental and manual function,
(b) More and more division of work and assignment of duties are possible,
(c) It gives an incentive to the workers.
Disadvantages of the Functional Organization:
(i) This authority relationship violates the principle of unity of command. It creates several bosses instead of one line authority. It creates conflicts in the minds of workers to whom they should obey and to whom they should ignore. Their loyalty is divided.
(ii) Due to decentralization of control and division of loyalty of sub-ordinates, the discipline of the enterprise becomes loose.
(iii) Use of several functions of experts in organization creates the problem of co-ordination,
(iv) It makes difficult for the top management to fix responsibility for unsatisfactory results.
(v) It is too complications in operation because it entails the division of function into a number of sub-functions.
(vi) It may also lead to conflict among foremen or bosses of equal rank. This conflict lacks their zeal and initiative. They work only as a machine in a routine manner. It harms to the efficiency of sub-ordinates also.
(vii) This pattern of organization is quite impracticable and expensive also. So small organization cannot follow it.
Functional organization is generally for large and medium sized concerns. But it should be applied at higher levels it does not work well at the lower levels.
Type # 3. Line and Staff Organization:
Perhaps the most widely used but confused concept in the organization theory is the concept of ‘line and staff authority relationship’. Misunderstanding about this concept is one of the major sources of friction in the literature of management. Problems In line and staff relationships have been made by the some authorities to discard this concept. But still now, regardless of the problems, it remains a popular organization concept and it is very important to understand their exact meaning and fundamental features of their working.
Meaning and Definition of Line and Staff Concept:
This pattern of organization is an improvement over line organization and functional organization. Under this system of organization, the staff personnel are provided advisory staff positions. They do not possess any line authority. Thus, staff members are thinkers. While line officials are doers i.e., line officials execute them with the help of their department. Line officers are responsible for the accomplishment of various objectives.
Line and staff concept has been defined in two ways. One of the view points of the line and staff is that they denote different functions within the organization.
This view point has been supported by L. A. Allen, L. A. Appley and R. C. Simpson, etc., in the words of Allen, “line function are those who have direct responsibility for accomplishing the objectives of the enterprise and that staff refers to those elements of the organization that help the line to work most effectively in accomplishing the primary objectives of the enterprise”.
According to Cleland and King, “line refers to those positions and elements of the organization which have the responsibility and authority and are accountable for accomplishment of primary objectives. Staffs refer to those elements which have responsibility and authority for providing advice and service to line in attainment of objectives”.
The second approach to ‘line and staff’ concept is that it refers to authority relationship in the organization. The concept is supported by J. D. Mooney and Koontz and O’ Donnell, etc. According to it, line officials are viewed as those having direct and unlimited authority over their sub-ordinates. Staff officials do not have any direct authority over their sub-ordinates. Staff officials do not have any direct authority over them. They can contact them through their line officials only.
Advantages:
Line and staff organization offers the following advantages:
1. Specialization:
This type of organisation is based on planned specialization and brings about the expert knowledge for the benefit of the management.
2. Better Decisions:
Staff specialists help the line manager in taking better decisions by providing them adequate information of right type at right time.
3. Lesser Burden on Line Officers:
The work of the line officers is considerably reduced with the help of staff officers. Technical problems and specialised matters are handled by the Staff and the routine and administrative matters are the concern of Line Officers.
4. Advancement of Research:
As the work under this type of organisation is carried out by experts, they constantly undertake the research and experimentation for the improvement of the product. New and economical means of production are developed with the help of research and experimentation.
5. Training for Line Officer:
Staff services have proved to be an excellent training medium for Line Officers.
Disadvantages of Line and Staff Organization:
1. Conflict between Line on Staff Authorities:
There may be chances of conflict between line and staff authorities. Line Officers resent the activities of staff members on the plea that they do not always give correct advice. On other hand staff officials complain that their advice is not properly carried out.
2. Problems of Line and Staff Authority:
There may be confusion about the relationship of line and staff authorities. Line Officers consider themselves superior in comparison to Staff Officers. The Staff Officers object to it.
3. Lack of Responsibility:
As the staff specialists are not accountable for the results, they may not perform their duties well.
4. The System is Quite Expensive:
The appointment of experts involves a heavy expenditure. Small and medium size organizations cannot afford such a system.
5. More Reliance on Staff:
Some of the line officers excessively rely on the staff. This may considerably reduce the line control.
Line and Staff Conflicts:
Line and staff personnel are expected to support each other and work harmoniously to achieve organizational goals and objectives. But, conflicts between the two often crop up. This is one of the major sources of frictions in many organizations. This friction leads to loss of time and reduces organizational effectiveness. Hence, the sources of such conflicts should be identified and necessary action should be taken to overcome them. Line and staff conflicts may arise due to various factors.
These factors can be grouped into three categories:
1. The view point of line managers,
2. The view point of staff managers and
3. The nature of line and staff relationships.
1. Viewpoint of Line Managers:
Line managers are held responsible for the achievement of organizational objectives. They tend to view staff as people who create more problems than they solve.
They feel that the staff personnel work against them in the following ways:
i. Lack of Accountability:
The general perception of line managers is that the staff personnel are not accountable for their actions. Line mangers feel that this prompts staff personnel to ignore the overall objectives of the organization. Whenever, the established targets and actual performance of the organization fail to match, criticism will be directed at line managers, but when things go well, the staff personnel get reward. This incongruity between authority and accountability is a source of conflict between line and staff.
ii. Encroachment of Line Authority:
Line mange perceives staff personnel as in voiding their territory by giving recommendation and advice on matters that come within the purview of line managers. Thus, the encroachment of his authority by staff functions. This makes line managers reluctant to accept staff advice and recommendations. It may also lead to opposition and animosity towards the staff personnel.
iii. Dilution of Authority:
The certain of the staff function dilute the line manager’s authority and influence. There is a feeling of insecurity among line managers that their responsibilities may be reduced and their jobs may become less challenging due to the induction of staff personnel. The line manager resents the loss of functions delegated to the staff. This makes line managers insecure and gives rise to conflicts.
iv. Theoretical Bias:
Staff personnel tend to be specialists in area like industrial and labour relations, engineering etc., they generally limit their thinking to their own specialty and depend upon the guidelines prescribed in their own discipline. They fail to relate their recommendations to the overall needs and goals of the organization. Moreover, as staff personnel do not have a first-hand experience of operations, they are unable to appreciate the actual dimensions of the problem.
In other words, staff managers may be cut off from the day-today operational realities that the line managers face and therefore, the suggestions made by them may lack applicability. Sometimes, the ideas recommended by them may be feasible in other organizations and in other situations, but not in their own organization in the present context.
2. View Point of Staff Managers:
Staff personnel also have their own grievances against line managers.
Some of these are:
i. Lack of Proper use of Staff:
Quite often, decisions are made by line managers without seeking any input from the staff personnel. Staff personnel are informed or notified only after the decision has been taken, making them feel that line managers do not make proper and efficient use of their services.
As a line manager has considerable authority and control over the activities in his department, he may amend, accept, or reject ideas given by the staff, irrespective of their quality and feasibility. Moreover, when the management finds fault with the line manager’s decisions, or if something goes wrong, it is the staff personnel responsible for these decisions who get the blame.
ii. Resistance to New Ideas:
New ideas are often rejected by line managers as they feel that these ideas have resulted because of there being something wrong with existing way of functioning. Line managers resist these ideas and try to find faults with them. Hence, the contribution of new and innovative ideas by the staff personnel is often opposed discarded by the line managers.
iii. Lack of Proper Authority:
Staff members often feel that though they have the best solutions to the problem in their area of spatiality, they do not have enough authority to implement them. They contribute to the realization of organizational objectives without enjoying the real authority. Since the line manager holds the authority and is the chief power centre in the organization, he may not consider it necessary to consult the staff personnel arriving at a decision.
3. Nature of Line and Staff Relationship:
The very nature of line and staff relationships leads to conflicts between line managers and staff personnel.
The sources of conflicts are discussed below:
i. Different Backgrounds:
Line and staff personnel usually have different technical backgrounds. Further, in comparison to line personnel, staff personnel generally younger, academically better qualified, dynamic and individualistic and display greater poise in social interactions. They often look down on line managers, who may not be highly educated but may have reached their present position by gradually working their way up the corporate ladder.
The reverse of this situation may also exist, when line managers with good academic qualifications are designated as general managers. Such line managers may consider themselves superior to the staff personnel who are functional experts with a lot of experience, but without professional qualification in that field. These differences could create an atmosphere of mistrust and resentment between the line and staff personnel.
ii. Lack of Demarcation between Line and Staff Authority:
Although theoretically, there is a distinction between line and staff functions, in reality, there is no clear demarcation between them. Many of tasks of line and staff are not clearly defined and it is also not clear how the tasks are related to each other. This often leads to duplication of efforts and gaps in authority and responsibility. Both line and staff managers may claim credit for the successful completion of task on the other hand, when work is not completed on time, each may try to shift the blame on to the other.
iii. Lack of Proper Understanding of Authority:
The employees of an organization may not clearly understand the nature of line and staff and functional authority. Failure to understand the exact nature of line, staff and functional authority causes misunderstanding between line and staff personnel.
This may lead to encroachment upon each other’s area of authority, which in turn, leads to further conflicts. Staff personnel may have to approach a common superior for getting their ideas and recommendation approved by line managers and this might make the line managers feel that they are being influenced and pressurized by the superior to accept the recommendation and ideas of staff personnel.
Achieving Co-Operation between Line and Staff:
A certain amount of conflicts might be inevitable and even desirable. But extreme and prolonged line-staff conflict can be very dangerous to the organization. Therefore, it is necessary that line and staffs works together as a team for the smooth working of the enterprise.
The following steps may be taken to improve line-staff relationships:
1. The limits of line authority and staff authority should be defined clearly and precisely.
2. Line should give due consideration to the staff advice and should follow the recommendations if they are in the best interests of the organization.
3. Line executives should consult and seek staff advice as a matter of habit.
4. Line managers should not take action directly affecting staff without informing the staff. They should keep the staff fully informed of their problems and requirements.
5. Staff specialists should appreciate and understand the problems of line.
6. Staff should encourage and educate line managers by letting them know what they can do for line.
7. Staff should try to recognize and overcome resistance to change on the part of line.
8. Staff experts should fully consider their suggestions before putting them before line executives.
9. Line and staff should understand the orientations of each other.
10. Committees of line and staff executives should be constituted.
11. Wherever, possible staff specialists should be placed in the position of line managers. Such position rotation will improve understanding and initial co-operation among line and staff.
Thus, we see line-and- staff concepts are an important part of the literature of management. If used effectively it can contribute a lot in structuring the tasks and improvement of the business enterprise.
Type # 4. Project Organization:
Project organization under project organization each project is organized as a semi- autonomous project division. A project is a unique and complex cluster of activities designed around a distinct mission and a specific time frame. A project team consists of specialists in different fields. The activities of project team members are co-ordinate by a project manager who is ultimately responsible for the successful completion of the project division undertakes a new project.
This type of organization can be effectively used under the following conditions:
1. This offers a unique or unfamiliar challenge.
2. This has definite goals and well defined specialization.
3. Successful completion of the project is critical to the organization.
4. The project is complex with interdependent tasks.
5. The assignment is to be completed within the given time limit.
Advantages:
This type of organization offers following advantages:
1. It facilitates concentrated attention that a complex project requires.
2. It allows maximum use of specialized and skill knowledge.
3. It provides greater flexibility in handling specialized project.
4. It provides better co-ordination of organizational resources.
5. Unity of command is maintained.
Disadvantages:
This type of organization suffers from the following disadvantages:
1. The job of the project manager becomes very difficult due to lack of clearly defined responsibilities, lack of clear communication lines and lack of performance standards for various professionals.
2. The project manager has to devise a decision process where information could be mentioned quickly and without much delay in decisions.
3. There is a greater uncertainty because the project manager has to deal with specialist from the number of diverse fields.
Type # 5. Matrix Organization:
A matrix structure is a type of departmentalization that superimposes a horizontal set of divisional reporting relationship onto a hierarchical functional structure. This organization is also called is a grid organization. The main feature of this organization is that functional or project or product patterns of Departmentation are combined in the some organization structure. Thus, a matrix structure can be termed to the both functional and divisional at the same time. A matrix structure has two chains of command- Vertical and horizontal.
Advantages:
The following are the advantages of matrix organization:
1. This facilitates decentralization of decisions.
2. This design brings about horizontal co-ordination to projects.
3. This structural form allows the organizational to keep a check on the environmental conditions with respect to both the projects and the functional areas.
4. It allows effective use of human resources.
5. Costs can be brought down by allocating support system such as computers, software and special equipment among the different projects, according to their requirements.
Disadvantages:
The following are the disadvantages:
1. Administrative costs are higher because of the additional hierarchy of project managers and their immediate support staff.
2. As the individuals working within the matrix structure report to two bosses, they are unclear about who has the authority and responsibility for decision-making.
3. Due to dual authority system and the need for greater communication, the possibility of conflicts is greater, particularly between functional managers and project managers.
4. In this form of structure, individuals are too engrossed with maintaining good relations with their peers and tend to neglect the project goals and clients.
5. Matrix organization encourages group decision-making. However, group effort may sometimes be carried out to such an extent that even minor decisions are made in groups which bring down productivity levels.
Type # 6. Committee Organization:
A number of persons may come together to take a decision, decide a course of action, advice line Offices on some matters, it is a committee form of organization. It is method of collective thinking, corporate judgment and common decision. A committee may be assigned some managerial functions or some advisory or exploratory service may be expected from it.
According to Allen, “A committee is a body of persons appointed or elected to meet on an organised basis for the consideration of matters brought before it”.
According to Hicks, “A committee is a group of people who meet by plan to discuss to make a decision for a particular subject”.
Thus, a group of competent and interested persons pool their thoughts for facilitating decision making process.
Objectives of the Committee:
Committees have become an important instrument of management in modern organizations.
They may be used for the following objectives:
1. To secure viewpoints and consultation of various persons in the organization.
2. To give participation and representation to different groups or interests.
3. To co-ordinate the activities of different departments.
4. To review the performance of certain units,
5. To facilitates communication and co-operation among diverse groups.
Advantages:
The following are the advantages:
1. Committee provides opportunities for pooling of ideas and leading to integrated group decisions. Personal bias and prejudice eliminated from such decisions.
2. Through brainstorming and other group creativity communities can produce creative ideas valuable o practical every organization function.
3. Committee organization encourages group co-operation and team spirit in the organization.
4. Committees promote co-ordination of various activities of an enterprise.
5. A committee is an excellent means of transmitting information and ideas to interested organizational members.
6. By participating in discussion or decisions in a committee, a member will naturally, be more highly motivated.
7. A committee can be an excellent means of collecting and combining the authority of several individual members.
8. A committee may often be a meeting ground where differences are resolved and compromises are reached.
9. Where an executive wishes to avoid action on specific problem he may assign it to a committee and avoid the action?
10. In some circumstances it is desirable that a committee take responsibility for actions for which individuals do not wish to be responsible.
11. Committee train members in the dealing of various problems and make for continuity and stability as some members may stay on the committee while others retire.
12. A manager may wish advice and counsel before making a decision.
13. The decisions taken by experienced, liberal and group members can never be narrow. They will be a blending of various good characteristics, e.g., balance, co-ordination, comprehensiveness and liberalness, etc.
Disadvantages:
Committees suffer from die following limitations:
1. Committee meetings are costly affair both in terms of money and time.
2. The functioning of a committee is slow and it cannot take quick decisions. A lot of time is involved in calling meetings, debate and discussion of the issue, etc.
3. While reaching the decision, committees tend to adopt the path of least resistance. A compromise or unanimity is sought to accommodate opposite viewpoints.
4. Very often a few local members dominate committee deliberations.
5. The responsibility for wrong decision by a committee can’t be fixed on any one individual.
6. Committees are sometimes misused to avoid action, to take unpleasant decisions or to delay decisions.
Making Committees Effective:
Management can take the following measures to make committees a useful tool of administration:
1. A committee should be large enough to promote deliberations and breadth of experience.
2. The members of a committee should be carefully chosen with due regard to ability, commitment, temperament and status.
3. The purpose and authority of a committee should be clearly defined.
4. The chairman of the committee should be effective in directing group thinking towards committee objectives.
5. The meeting of the committee should be well planned.
6. Minutes of the committee meeting should be recorded and carefully circulated for correction.
Types of Committees:
On the basis of their constitution and functions, committees may be classified into the following categories:
1. Standing or Ad Hoc Committee:
A standing or permanent committee exists continuously for an indefinite period of time. On the other hand, an ad hoc or temporary committee is constituted for a specific purpose. It is dissolved when the purpose is served.
2. Executive or Advisory Committee:
An executive committee has the authority to make an execute decision. It is also known as ‘plural executive’ on the contrary, an advisory committee has authority only to make recommendation.
3. Line or Staff Committee:
A line or staff committee is a plural executive as it coordinates and controls the activities of subordinates. But a staff committee simply disseminates information, advice and assistance to line managers.
4. Formal or Informal Committee:
Formal committees are duly constituted by management as per organizational policies and rules. They are a part of the organization structure and they are depicted on the organization chart. Informal committees, on the other hand, are not constituted and no specific responsibilities are assigned to them. They arise when some employees informally meet and discuss common problems due to the desire for group thinking. They cut across formal lines of authority.
Answer 3. Organizational Structure Examples (studied in HRM)
Designing an organization involves choosing an organizational structure that will enable the company to most effectively achieve its goals. We are discussing some form of structures that are generally used by organizations. These are the basic kind of structures, which can be used as they are, or by combining their features, or by modifying them according to the specific needs.
We can broadly categorise these structures as:
1. Traditional structures
2. Modern structures
1. Traditional Structures:
Traditional structures are commonly seen in most of the organizations. These are somewhat rigid in that they consist of very clearly delineated jobs, have a well- defined hierarchical structure, and rely heavily on the formal chain of command for control.
They may be broadly categorized as follows:
i. Line organizations (like Weber’s bureaucracy)
ii. Line and Staff organizations
iii. Functional organizations
iv. Committee organizations
i. Line Organizations:
Line organizations, originated probably in the military establishment of ancient powers, with a big boss giving all orders through channels and to whom all subordinates are responsible, directly or indirectly. This form of organization is characterized by a rational, goal-directed hierarchy, impersonal decision making, formal controls, and subdivision into managerial positions and specialization of labour.
Line organisations have tall structure, in which people become relatively confined to their own area of specialization. They are driven by a top-down or command and control approach in which managers provide considerable direction and have considerable control over others.
Each departmental head has under him many officers and assistants in a succession of status and each assistant or officer is responsible to his immediate superior and no one is under two bosses. But the ultimate responsibilities of management devolve on the departmental head.
All activities of this type of organisation are operational in nature. So departments of line organisation may be termed as ‘operational departments’ and are basic and fundamental to the very existence of the business.
Merits of Line Organisations:
1. The organisation structure is simple and easily understood by all employees.
2. The lines of authority and responsibility are definite. The chances of overlapping of authority and confusion are completely eliminated. No one can avoid his obligation.
3. Discipline can be effectively maintained because of unified control. Unity of command helps in the elimination of confusion and dual commands.
4. Quick decisions can be taken as departmental managers have full and complete authority as well as responsibility.
5. It is a flexible structure as it can be easily expanded or contracted according to the requirements of the business since each executive has sole responsibility in his own sphere.
Demerits of Line Organisations:
1. The rigid line organization does not lend itself to functional specialisation, requiring instead that each department manager do his own purchasing, training, personnel recruiting and selecting and so on. This would result in overburdening him. At the same time each task can’t be done with an expertise.
2. Since few managers hold unquestioned authority in the organization, if they leave the unit, it may cripple the organisation.
3. There is so much over-emphasis of discipline that change is rarely allowed. It would result in rigid organisation structure.
4. A few managers at the top enjoy complete authority over other personnel in the organisation. The managers may take arbitrary decisions which will finally lead to nepotism in the organisation.
ii. Line and Staff Organizations:
The line and staff organisations came into being as a result of inability of the departmental managers to investigate, think and plan at the same time, as they were performing the ordinary tasks of production and selling; the staff being the thinkers and the line being the doers.
In very large firms the task of the managers became too much for them to handle alone, which led to the use of assistants. Their function was to solve problems and give advice. The further growth of such firms caused staff men to be replaced by staff departments, whose members were area specialist and whose function was to provide information and advice.
Line officers still may take the operating decisions and gave all order to line persons. Staff specialist were back up men, solving problems; whether specifically referred or on their own – and recommending optimum courses of action.
Staff men can only make recommendations. They cannot give orders directly to anyone in the line organization. However, senior staff officers enjoy line authority over their own staff subordinates. At times staff officers possess functional authority over the line officers.
For example a cost accountant in the head office might prescribe both the policies and the procedures to be followed in accumulating payroll and in reporting direct and indirect labour expenses to head office. This limit the powers conferred on the separate plant manager. But this is functional; procedural authority rather than general authority over people.
In a nutshell, this type of organization balances the features of both the line and functional forms. The organizational structure is basically of the line type, but staff or functional personnel are engaged to advise the line officers.
Merits of Line and Staff Organizations:
1. Line officials can concentrate mainly on the doing function as the work of planning and investigation is performed by the staff. Specialization provides for expert advice and efficiency in management.
2. The staff officers supply complete factual data to the line officers covering activity within and without their own units. This knowledge helps in coordinating with other units.
3. Adequate organisational balance among the various activities can be attained easily.
4. The staff service provides a training ground for the different positions.
Demerits of Line and Staff Organizations:
1. If the allocation of authority and responsibility is not clear, members at the lower levels may be confused by various line orders and staff advices.
2. The separation of planning from execution weakens both the types of executives who escape overall responsibility.
3. Too much reliance on staff officers may also not be beneficial to the business because line officials may lose much of their judgment and initiative.
4. Conflict between line and staff may create more complications rather than facilitating the work.
5. Since staff specialists demand higher payments it is expensive. Huge amount is also to be spent on research work.
6. The staff experts do not get the authority to implement their recommendations, so they become ineffective. It make them careless and indifferent towards their jobs.
iii. Functional Organisations:
When F.W. Taylor was a foreman, he recognised that a foreman must have multiple qualities in order to perform his job well under the line organisation. He listed 10 such qualities viz. brain, education, special of technical knowledge, manual dexterity of strength, tact, energy, grit, honesty judgment or common sense and good health.
Since it was practically impossible to find all the qualities in one man, Taylor suggested his plan of functional organisation to remove the dilemma of multiple jobs. All work of the same type is grouped together and brought under one department, managed by an expert. Each department performs a specialised function for the entire organisation.
Examples of such specialized function are legal, personnel, purchasing market research, finance, engineering Taylor’s functional organisation can by depicted as follows-
“Functional organisation refers to the organisation which is divided into a number of functions such as finance, production, sales, personnel, office and research and development and each of the functions are performed by an expert” -Terry.
Merits of Functional Organizations:
1. It allows for and makes use of the specialised knowledge and expertise of different functional heads.
2. Standardisation of operations, methods and equipment becomes possible.
3. Mental and manual functions can be separated. There is, therefore, better use of technical knowledge.
4. A manager and his department have to perform only a limited range of activities, making for higher efficiency.
5. Policies may be consistent due to regulation by functional specialists.
Demerits of Functional Organizations:
1. There is too much of division of labour and specialisation.
2. Decisions requiring consideration or action by different functions may be delayed.
3. It is very difficult to coordinate the functioning of various work units under the same functional head.
4. Levels of authority can remain blurred causing duplication, overlapping, or even avoidance of work and responsibility. If a factory manager works on the advice of the personnel officer and trouble erupts, who is responsible?
5. Authority and responsibility not being at the same point there can be weakening of discipline and loss in effectiveness of control.
iv. Committee Organisations:
A body of persons, jointly entrusted with the responsibility of performing a task and jointly endowed with adequate authority is a Committee or task force. The most common example is the Board of Directors of a company. No single director has any responsibility or authority. He functions as a director only when he sits along with other directors at the Board Meeting.
No director makes a decision himself. Only the Board, as a collective body, can make a decision. Executive Committees or Meetings of shareholders are also examples of such small or big bodies. Very rarely are organisations formed entirely as Committees. However, Committees exist along with other forms of organisations, line, or line and staff. Committees may be permanent or temporary.
Committees are sometimes vested with line authority, in which case, it exercises authority and assumes responsibility, functioning as an executive. The effectiveness of the Committee depends on the competences and attitudes of the members of the Committee and of the Chairman in conducting discussions and generating consensus decisions.
The Committee form is best suited when-
1. There are too many complex factors to be considered
2. Multiple skills are required
3. Decisions have long-term impact
4. Decisions involve consideration of varied technical data
Merits of Committee Organizations:
1. It enables comprehensive, in-depth study of complex issues
2. It enables cross-checking of alternatives with experts in different fields so that the uncertainties in planning and decision can be reduced.
3. Coordination among different functions (who may be represented in the Committee) becomes very good.
4. Interdepartmental misunderstandings and conflicts can be avoided.
5. Commitment to agreed objectives improves.
6. Quick responses to changes is possible
Demerits of Committee Organizations:
1. Committees take plenty of time in processing varied information and coming to conclusions.
2. No individual becomes responsible for the decisions of the committee.
3. Final decisions tend to be less than optimal because of attempts to compromise, dominate, withdraw, etc. This happens when some of the members are not assertive or adequately interested.
Note that the traditional organizational structures are high in complexity, formality and centralization. In most of them, unity of command principle is ensured with the existence of formal hierarchy of authority, where each person controlled and supervised by one superior. As the distance between top and bottom of the organization increase, top management would increasingly impose rules and regulations.
2. Modern Structures:
In contrast with the traditional structures, modern structures are low in complexity and formalization, and are decentralized. They originated to meet the demand of fast changing business environment. These are comparatively loose structures so that they can change rapidly as needs require.
Few of these structures are discussed below:
i. Project organization
ii. Matrix organization
iii. Boundary less organization
i. Project Organisations:
Project organisations are designed for a specific task (project). Under this structure, different project managers are given separate resources for completing their respective projects. In case of a large project, its structure resembles with a semi-autonomous division. Once a project is completed, the team is dispersed (possibly to other projects).
If the project organization is created for one time project, it will have temporary set up and will be disbanded when the project is completed. However, in practice, it takes a permanent form when the organization keeps getting similar kind of projects requiring more or less similar team.
This sort of organisation is often used in case of large civil engineering contractors, which will form a project team for each contract – a stretch of motorway, a large public building, etc. The team is set up with a core project management team, staffs are added as their expertise is required, and the team members are reassigned when their expertise is no longer needed.
In selecting a project form, one should consider:
1. The stake of the project
2. The degree of technological uncertainty
3. The “criticalness” of time and cost goals
4. The uniqueness of the project
Merits of Project Organizations:
1. Maximum control over resources by the project manager,
2. Independent systems can be instituted on a project by project basis,
3. Conflict and interface problems minimised on the project,
4. Team responsibility and single point accountability,
5. Able to develop technical base,
6. Able to manage cost, time performance tradeoff,
7. Copes with unstable environment,
8. Uses individual expertise,
9. Deals directly with the Customer.
Demerits of Project Organizations:
1. Duplication of resources in different projects separately organized.
2. Task of project manager becomes very difficult as he has to deal with diverse specialists.
3. No functional home for team members. They always live in uncertainness of being chucked out on the completion of project.
4. Loose structure may lead to unclear lines of responsibility, authority and communication.
ii. Matrix Organizations:
In mathematics, a matrix is an array of vertical columns and horizontal rows; hence the name matrix organisation is applied to the two- directional organizational structure where a person works under vertical as well as horizontal lines of command.
The matrix combines two forms of departmentalisation – functional and project. The project teams draw people from the functional departments who are assigned to the project for a specific period or for the duration of the project. When their assignment is complete, they return to the functional departments to which they belong.
It is used in advertising agencies, aerospace firms, research and development laboratories, construction companies, hospitals, government agencies, universities, management consulting firms, and entertainment companies.
The most obvious structural characteristic of the matrix is that it breaks the unity-of- command concept. Employees in the matrix have two bosses – their functional department managers and their project managers. Therefore, the matrix has a dual chain of command.
The need for matrix organisation was felt because neither of the two types of structures- functional and project, meets all the needs of every organization. In a functional structure, specialized skills may become increasingly sophisticated but coordinated performance of project may be difficult to achieve.
In a project structure, required functional expertise may not be available. Moreover when an organization has to undertake different projects from time to time, a core functional team may be required.
The matrix structure attempts to combine the benefits of both types of designs while avoiding their drawbacks. However, the matrix structure is found much less frequently in organizations than are the functional and project structures.
Merits of Matrix Organizations:
1. Make use of specialists as well as functional skills.
2. Permit flexible use of an organization’s human resources.
3. Provides an efficient means of responding quickly to changing environment.
4. Economies of scale in using internal resources.
5. Employees have no fear of being chucked out on completion of project.
Demerits of Matrix Organization:
1. No formal direct responsibility for total project.
2. Interface management is difficult.
3. Frustration and stress faced by two boss managers.
4. The danger that one of the two authority systems (functional and project) will overwhelm the other.
5. Consistently high levels of cooperation required.
6. Difficulty in coordination and control.
7. Motivation and innovation often difficult.
Although the matrix structure may be easy to design and appears to have great advantages over the functional structure, it may be difficult to implement. Problems can arise over shared responsibility, the use of resources in common and the question of priorities.
One manager may be played off against another by employees, the project manager, For example- is told that the functional manager have decided to pull an individual out of the team to work elsewhere. If this happen without proper consultation it can cause great problems for the project team.
Project versus Matrix Structure:
Matrix form works best where there are a variety of different projects going on at once and where all can share functional resources on a part-time basis. Project form works better when there is less variety among projects, when specialists must be devoted full- time, and when complete project authority is desired. Both forms are applicable when projects are an organisation’s “way of life,” although they can be applied temporarily to infrequent, one-shot projects when the stakes are high.
Though there is no “best” to suit every situation, there are some criteria that can help to guide in deciding on the most appropriate form for a given project.
Four criteria are:
1. Frequency of new projects (how often, or to what degree the parent company is involved in project-related activity).
2. Duration of project (how long a typical project last).
3. Size of projects (level of human, capital, or other resources in relation to other activities of the company).
4. Complexity of relationships (number of functional areas involved in the project and degree of interdependency).
iii. Boundary Less Organisations:
The final concept in organizational design that we want to cover is the idea of the ‘no predefined structure’. What do we mean by “boundaries”? Think of the horizontal boundaries imposed by departmentalisation, the vertical boundaries that separate employees into organizational levels and hierarchies, and the external boundaries that separate the organization from its all-important suppliers, customers, and other stakeholders.
The boundary less organization has discovered that it can function efficiently and effectively by breaking down the artificial boundaries created by a fixed structural design.
This may sound pretty odd or strange, yet many of today’s most successful organizations are finding that they can most effectively operate in today’s environment by remaining flexible and unstructured; that the ideal structure for them is not having a rigid, predefined structure. Instead, they want a structure that lets them meet the demands of each situation as it arises.
What factors have contributed to the rise of the boundary less organization?
The need to respond to complex, rapidly changing, and highly competitive global environments has created the necessity for an organization that can adapt quickly in order to take advantage of opportunities that arise anywhere in the world.
Also, the changing face of global trade has opened up new doors for organizations. No longer is a company limited to manufacturing and/or selling in a limited territory. So we find organizations moving to a fluid, flexible structure that is, in effect, custom designed as situations arise.
For instance, Nike didn’t stick to a rigid structure. It determines its structure as the situation demands. When it found that it could sell billions of dollars of shoes and earn a competitive profit even though it has no shoe-manufacturing facilities of its own. Instead, it has chosen to outsource its manufacturing to suppliers in Asia.
Merits of Boundary less Organizations:
1. Able to respond to the highly volatile environment.
2. Performance oriented.
3. Highly flexible.
Demerits of Boundary less Organizations:
1. Needs very brilliant conception to survive.
2. Uncertainty in interrelationship of various components.
3. High level of communication and coordination required.
4. May backfire in a very short time if not handled properly.