Organisation Structure

Departmentation and Organization Structure
Chapter 6
 Process of grouping activities into units for the purpose of
effective management
 Grouping of jobs, processes and resources into logical units
to perform some organizational task
Importance of Departmentation
 Specialization
 Growth
 Sovereignty
 Performance appraisal easier
 Boosts efficiency
 Helps in coordination within departments
 Defined responsibilities
 Helps in control
Bases of Departmentation
 By functions
 By Area
 By Product
 By Customer
 By Process
 By Task Force
 By time
 By Numbers
Organization as a structure
Network of relationships among individuals
and positions in the organization
Relationships between positions on one hand
and jobs on the other
Types of Organizational Structures
 Line Organization
 Functional Organization
 Line and Staff Organization
 Matrix Organization
 Formal and Informal Organization
Line Organization
 Simplest and oldest form
 Also called scalar or military type Organisation
 Direct flow of authority
 Unity of Command
 Clear responsibility
 Suitable to small Organisations
 Lack of specialisation
 Easy coordination
 Better relationships
 Quick decision making
Functional Organization
 Introduced by Taylor
 Each function managed by a functional expert
 Each functional expert may serve the other functional
experts also
Encourages specialization
Reduced pressure
Optimum use of resources
Higher efficiency
Lack of unity of command
Line and Staff Organization
 Combination of activities of line executives and staff experts
 Line executives-decision makers, staff-advisors or planners
 Line executives implement plans, staff engage in research and
Need for staff due to growth of organizations, technological
developments and uncertainties
Suitable for large organizations
Conflicts between line and staff possible
Conflicts between line and staff
Complaints of line against staff
 Grabbing compliments
 Unfamiliar with actual work
 Interference
 Superiority complex
 Excessive paper work
 Easy access to management
Complaints of staff against Line
 Last minute advice
 Irresponsible
 Lack clarity
 Shift responsibility
 Reluctant to accept new ideas
 Lack respect
Matrix Organization
 Uses two or more co-existing structures-functional and
Hybrid structure
In functional organization , the manager has absolute
responsibility for the project and the resources required, in
matrix organization the project manager shares resources
with the rest of the organization.
Problem of unity of command
Suitable for multi projects organizations
Formal and Informal Organization
 Formal:
 Two or more persons consciously coordinated towards a
common objective
 Informal:
 A network of personal, and social relations not established or
required by the formal organization but arising spontaneously as
people associate with each other (through grapevine)
Features of Formal Organization
 Specific Duties and responsibilities
 Well defined goals
 Clear superior- subordinate relationships
 System of Authority and Coordination
 Set of rules and regulations
Features of Informal Organization
 No specific goals
 No established superior subordinate relationships
 No system of authority or coordination
 Communication through grapevine
 Develops social and personal ties
Differences between Formal and
Informal Organizations
 Authority
 Flow of Communication
 Creation
 Stability
 Importance of Rules
Thank You

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