Basics of Management

Concepts and structure of an Organisation

The objective of this post is explain main topic and highlighting them for preparing for the examination of the Basics of Management.

Meaning of Organisation

Dictionary meaning of Organisation is an organized group of people. In simple words, organization means deciding the work, dividing the work load, deciding the work of various departments and then to decide the role of each individual for the achievement of common goals and objectives.


Definitions of organizations

Different authors have defined organisation in different ways. The main definitions of organisation are as follows:

  • According to keith Davis, “Organisation may be defined as a group of individuals, large of small, that is cooperating under the direction of executive leadership in accomplishment of certain common object.”
  • According to Chester I. Barnard, “Organisation is a system of co-operative activities of two or more persons.”
  • According to Louis A. Allen, “Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives.”
  • According to Mooney and Railey, “Organisation is the form of every human association for the attainment of a common purpose.”


Concept of organization Structure

There are two concepts of organisation:-
1. Static Concept: Under static concept ‘organisation’ is used as structure , an entity or a network of a specified relationship . In this sense , organisation is a group of people bound together in a formal relationship to achieve common objectives.
2. Dynamic Concept: Under dynamic concept ,‘organisation’ is used as a process of an ongoing activity. In this sense , organisation is a process of organising work , people and the system.
Nature of an Organization
A set of five processes in commonly accepted as five functions of organization which represents nature of
organization, they are
1. Subdivision of main work into small groups.
2. Based on principles of equality division of different activities ties.
3. Selection of suitable personnels and allocation of jobs according to suitability.
4. Allotments of rights and authority to those who have been assigned the job so that may be able to accomplish their job satisfactorily.
5. Determination of positions at different levels.
Importance of Organization
Any effective organization.
1. Makes the management simple and efficient.
2. Encourages specialization.
3. Improves techniques.
4. Encourages constructive thinking.
5. Increase productivity and
6. Accelerates the progress.
Types of Industrial Organizational  Structure

1. Line Organization

This is the simplest and oldest form of organisation. It is also referred as the ‘Military’ or ‘Traditional’ or ‘Scalar’ or ‘Hierarchical” form of organisation. An important feature of such types of organisation is the superior- sub-ordinate relationship. In this type of organisation authority descends from the top to its bottom level through downward delegation of authority.

Sub-ordinates become responsible to their immediate superiors. All decisions and orders are made by the top executives and handed down to sub-ordinates. This type of organisation is as that of military administration. The topmost management has full control over the entire enterprise. This form is suitable:

(a) If the business is comparatively small.

(b) If the labour management problems are easy to solve.

(c) If the processes are easily directed.

(d) If the work is of a routine nature.

Merits of Line Organization

1. It is simple to work.

2. It is economical and effective.

3. It is easy to fix responsibility.

4. It facilitates quick decisions and prompt actions.

5. Quick communication is easy.

6. Discipline can easily be maintained.

Demerits of Line Organization

1. The organization is rigid and inflexible.

2. It works on a dictatorial basis.

3. Departmental heads act in their own whims and desires; as such it is difficult to secure co-ordination of the activities of workers and department.

4. In big business it does not operate satisfactorily.

2. Functional Organization

The limitations of line organisation have been removed under this system. All types of work of the organisation are grouped and managed by the top executive.

There are separate functional departments for major functions of the enterprise, for example personnel department, sales department, purchase department, finance department, etc. Each department does its function for the entire organisation. Sales department does its function for the whole organisation.

Purchase department does its function for the whole enterprise. The functional organisation works through the line organisation. Functional organisation is based on expert knowledge and makes the greatest use of division of labour resulting in high efficiency and specialisation.

Features (Functional Organization)

1. The whole task of the enterprise is divided into specialized functions.

2. Each function is performed by a specialist.

3. The specialist in charge of a functional department has the authority over all other employees for his function.

4. Specialists operate with considerable independence.

Merits of Functional Organization

1. Greatest use of division of labour is possible.

2. The system is based on expert knowledge.

3. Functional efficiency of the worker can be maintained.

4. Mass production is made by standardization and specialization.

5. Separation of mental and manual functions is possible.

6. Methods and operations can be standardized.

Demerits of Functional Organization

1. Too many experts and bosses (high officials) create confusions in the minds of the worker.

2 It is difficult to fix responsibility on workers.

3. Discipline and morale of the workers are seriously affected, because of contradictory orders from different experts.

4. There are heavy overhead expenses.

3. Line and Staff Organization

In this type, the organisation is based on the line organization and the functional experts advice the line officers as to the functions of the enterprise. The line officers are the executives and the staff officers are their advisors. Though the staff officers do not have the power to command the line officers, their advice is generally adhered to.

The combination of line organisation with this expert staff forms the type of organisation-line and staff. The Tine’ keeps the discipline and the staff provides expert information. The line gets out the production and the staff carries on research, planning, fixing standard etc. This type of organisation is suitable for large concerns.

The line officers give orders, decisions etc., to sub-ordinates in consultations or guidance with the staff officers. The underlying idea of this method is that specialised work is to be left to experts, who will give advice on specialised grounds- investigation, research, etc. The staff officers have no executive positions in the concern and are the thinkers, while the line officers are the doers.

Merits of Line and Staff Organization

1. This type is based on specialization.

2. It brings expert knowledge upon the whole concern.

3. Increased efficiency of operations may be possible.

4. Mass production is possible.

Demerits of Line and Staff Organization

1. There arises confusion unless the duties and responsibilities are clearly. Indicated by charts and office manuals.

2. Advice and expert information are given to the workers through the line officers. It is possible that the workers may misunderstand or misinterpret.

4. Committee Organization

Committee organization is widely used for the purpose of discharging advisory functions of the management. Committees are found in different levels of organization. A committee is a group of people who meet by plan to discuss or make a decision on a particular subject.

Because of its advantages, committee organization is preferred. Committee means a body of persons, for example, Management committee consisting of General Manager and Departmental heads.

Committees have become an important instrument of management in modern organisations; they may be used for the following objectives:

1. To secure view-point and consultation of various persons in the organisations.

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 facilitate communication and co-operation among diverse groups.

Merits of committee organisation

1. It facilitates co-ordination of activity of various departments.

2. Pooled knowledge and judgment become available to the business thus its efficiency increases.

3. It is a good media of training and educating employees.

4. It helps to improve the motivation and morale of employees.

5. It promotes mutual understanding, teamwork and co-operation among employees.

Demerits of Committee Organisation

1. It is not only costly in terms of time it consumes, but also in terms of money involved.

2. Difficulty in reaching agreement results in indecision.

3. Compromise at the cost of efficiency is often affected.

4. Indecision may lead to a breakdown of group action.

5. Committee management is slower in reaching decisions than a one-man rule.


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