The types of organization can be studied under the following heads:
1. Formal Organisation 2. Informal Organisation. Some of the types of organization are: 1. Line Organisation 2. Functional Organisation 3. Line and Staff Organisation 4. Committee Organisation 5. Project Organisation 6. Matrix Organisation 7. Free Form Organisation.
Types of Organization: Line Organisation, Functional Organisation, Project Organisation and Matrix Organisation
Types of Organization – Line Organisation, Functional Organisation, Line and Staff Organisation, Matrix Organisation and Project Organisation
Organisations are formed with a specific purpose which explains the functions and relations of all the employees in the enterprise. It involves the determination of duties and their assignment among the various personnel of the enterprise. The form of organisation should be adopted in an enterprise which may be deemed as most suitable to the particular circumstances of that enterprise.
There are following types of organisation:
1. Line Organisation:
Line organisation is the oldest type of organisation refers to a direct chain of command from top to bottom levels of the organisational hierarchy. It is also known as scalar organisation or military organisation because it is developed in army where juniors get orders from their seniors. It serves as a means of command to operating personnel.
The following are opinions about line organisation:
Line organisation is characterized by direct line of effort flowing from top to bottom of the organisational hierarchy and lines of responsibility flowing in an opposite but equal direct manner. – James L. Lundy
Line organisation is the chain of command that extends from the Board of Directors through the various delegations and re-delegations of authority and responsibility to the point where the primary activities of the company are performed. – Louis A. Allen
Thus in line organisation each department is under the control of a departmental head who is completely responsible for organising the department. There is a General Manager to whom all the department heads are responsible.
Every superior has complete command over his subordinates and he is directly answerable to only one superior. The superior makes decisions within the scope of authority derived by him from his own boss.
The basic features of line organisation are as follows:
(a) There is a scalar chain from top to bottom.
(b) Senior officer has full command over his subordinates.
(c) The instructions are given by the superior directly to his subordinates.
(d) The communication between all the employees of organisation is serially arranged.
(e) The authority is highest at the top and reduces through each successive level down.
(f) The superior at each level is independent and makes decisions within the scope of his authority.
(g) There is no provision for staff specialists.
(h) The number of subordinates under the control of every superior is retain and limited.
The line organisation if of two types:
(i) Pure line organisation
(ii) Departmental line organisation.
(i) Pure Line Organisation:
In this type of organisation, the activities at any one level are same and all the individuals perform same type of job.
They are divided into groups to enable effective control and supervision. All the employees from top to bottom perform similar type of activities. This type of organisation is not suitable for modern large industry but only suitable for small scale organisation producing a single item shows a pure line organisation.
(ii) Departmental Line Organisation:
In this type of organisation, the whole enterprise is divided into different department and each department is under the control of a departmental head. Each Departmental head derives his authority from chief executive officer and has complete control over his own department.
All departmental head enjoy equal states and work independently. No departmental head can pass on a message directly to a subordinate of another department. All communication must flow through the proper channel.
Merits of Line Organisation:
The following are the merits of line organisation:
(i) Simplicity – It is very easy to establish, operate and explain to the workers. Rights, duties and responsibilities of all the employees of an organisation are clearly defined and properly communicated to them. The only one formal authority relationship exists in the organisation.
(ii) Determination of Responsibility – As rights, duties and responsibilities of all the employees are well defined, therefore, every employee can be held responsible for specific duties assigned to him. There is no overlapping of authority and confusion.
(iii) Easy to Control – All the subordinates clearly know to whom they are responsible. The responsibility of performance at each level is clearly defined, the effective control be-comes possible.
(iv) Flexibility – This type of organisation is elastic. Each Superior officer has full authority and responsibility for his job, he is free to take necessary decisions for the performance of duties. He can easily adjusted to the requirements to the business.
(v) Proper Discipline – Unity of command, effective control and coordination develops the feeling of discipline among all the employees and officer of the organisation. As subordinates receives orders from only superior and he is fully accountable to only that manager.
(vi) Effective Coordination – All the activities relating to one department and head is directly responsible for the performance of his department, there is a possibility for effective coordination among employees of the department.
(vii) Speedy Action – As the authorities are centralised and well defined, the senior executives can take quick decisions and executed promptly. No any other staff specialists are to be consulted before taking decisions.
(viii) Economical – The line organisation is economical because it does not employ expert staff personnel.
(ix) Executing Development – It provides opportunities for all round development of executive because every executive has the role charge of his department or section.
Demerits of Line Organisation:
The line organisation suffers from the following disadvantages:
(i) Overburden – The executives are over loaded with work because they deal with all the aspects of their department. They may not be in a position to direct control the efforts of his subordinates properly.
(ii) Lack of Specialisation – All the activities of one department are under the control of one executive and no one person can be supposed to be expert of all the activities to be performed in his department. He becomes the jack of all trade but master of none.
(iii) Autocratic Leadership – All the decisions relating to a department are taken by one executive, that is, departmental head and lack of upward communication may create nepotism and favoritism in the department.
(iv) Lack of Initiative at Lower Level – The lack of initiative at lower levels is observed in this type of organisation because they have no decision making power.
(v) Lack of Coordination – The coordination becomes difficult between various departments because each department is autonomous in nature and less communication is possible between departments.
(vi) Inflexibility – The success and survival of the organisation depends upon a few executives. Therefore a little scope is possible for expansion of business.
(vii) Stability – This type of organisation tends to become personality based. If the few powerful executive leave the organisation a vacuum arises and the smooth working of business is disrupted.
(viii) Efficiency – The success of an organisation entirely depends upon the efficiency of top executives. If any of its top executive is not so much efficient, his department will be lacking success.
Suitability of Line Organisation:
In spite of many disadvantages, the line organisation is suitable only in the following conditions:
(i) The size of organisation is small.
(ii) The number of employees is limited.
(iii) The work is simple and routine in nature.
(iv) The division of work can be made clearly.
(v) The number of activities to be performed is limited.
(vi) The top executives are capable and experienced.
(vii)The labour management relations simple.
(viii) The do not have many subordinates.
2. Functional Organisation:
This type of organisation is based on the principle of specialisation. F.W. Taylor proposed a functional type of organisation in which men with special abilities or training in a specialised function may be employed.
The specialists will be performing the functions which are common to different departments under one organisation. A functional specialists directs the subordinates throughout the organisation in the field of his particular function.
The subordinates are accountable to different functional specialists for the performance of different functions. Functional authority is a limited form of line authority given to functional experts over employees in other departments. Taylor emphasized ten qualities of an employee so that he may discharge his duties properly.
These qualities were as under:
(iii) Special or technical knowledge,
(v) Manual strength,
(ix) Judgment power
(x) Good health.
F.W. Taylor has also mentioned the following authorities in a functional organisation:
(i) Gang Boss – He is the officer who determines the work of individual workers issues orders and instructions to them so that they may do their work and makes all necessary arrangements to increase their efficiency .
(ii) Speed Boss – He is the officer who makes the necessary steps to increase the efficiency of workers. He issues the necessary instructions and demonstrates the procedure of doing a particular work.
(iii) Routine Clerk – He prepares the plans of routine work be performed in the organisation. He also prepares the list of person by whom this work will be done and decides how the work should be done.
(iv) Inspector – He is the person who checks the performance of work and ensures that work is being performed according to pre-determined standards.
(v) Repair Boss – He is the person who is to see the repair and maintenance of machines and makes the necessary arrangements to keep the machines in running condition.
(vi) Instruction Card Clerk – He prepares the instruction cards for the use of planning department. He also prepares a programme and issues the necessary instructions to the officer of different departments.
(vii) Time and Cost Clerk – This person is responsible for keeping the account of time and cost. He records the time taken by the workers for different activities and calculates the cost of labour on the basis of time taken for a job.
(viii) Shop Disciplinarian – This person is liable for maintaining discipline in the organisation. He enforces rules and regulations and deal with the problems of discipline.
The Taylor called ‘functional foremanship’ because the workers are required to take orders from all the eight specialists.
The following features of functional organisation:
(i) The functional organisation structure depends on the principle of specialisations.
(ii) The total work of the organisation is divided into major functions.
(iii) The every function is under the charge of a specialist.
(iv) The specialists are in direct touch with the workers.
(v) The every subordinate receives orders and instructions from different specialists at a time.
Taylor’s functional system involves the grouping of all functions into major functional departments and entrusting each department to one manager. For example, the personnel manager may be interested with personnel matters relating to all departments in the same way finance manager may be responsible to manage funds for all the department and so on. The line executive receives orders from his line boss at the same time also from one or more specialists.
Advantages of Functional Organisation:
The following are the main advantages of the functional organisation:
(i) Specialisation – It ensures the use of principle of specialisation. Every manager is an expert of his own field and benefits of his expertise is available to all departments in the organisation.
(ii) Efficiency – Specialist knowledge is applied at each and every point. The workers have to perform a limited number of function, then efficiency would be very high.
(iii) Mass Production – The large scale production can be undertaken without much inconvenience.
(iv) Flexibility – This type of organisation is more flexible because any change can be introduced without disturbing the whole organisation.
(v) Relief to Executive – As the instructions flow directly from specialists to lower levels, the line executives are free from worries about technical problems faced by workers.
(vi) Growth and Expansion – The growth of the organisation is not hampered because every person grows in his own limited area of specialty.
Disadvantages of Functional Organisation:
The following are disadvantages of functional organisation:
(i) Discipline – As the workers have to work under different bosses. It is difficult to maintain discipline among them. They may gel; conflicting orders and their moral go down.
(ii) Lack of Co-ordination – Every Specialist operates with independence and may take a narrow view of the organisation. The lack of coordination is found in this type of organisation because many specialists with equal rank and status.
(iii) Speed of Action – As the decisions are divided among various specialists the speed of action is very much hampered particularly when more than one specialists is involved.
(iv) Expensive – This form of organisation increases the organisations expenses due to division of activities and establishment of different department.
(v) Complexity – This type of organisation contains too many cross relationship between different personnel. It causes a great difficulty in the proper discharging of duties.
(vi) Lack of Responsibility – As the complexity of organisation, it is very difficult to determine the responsibility.
(vii) In Stability – This type of organisation is rarely used in its pure form because changes is personnel are likely to create instability in the organisation.
3. Line and Staff Organisation:
Line and staff organisation is a combination of both, line and staff organisation. It is designed to maintain a proper balance between centralisation and division of work. This type of organisation is that form of organisation which combines the advantages of both line and functional organisations.
There is a direct line of authority and specialists are attached to line managers to advise them on important matters. The staff personnel only give advice to the line officials. The line managers who have the ultimate authority to take decisions.
Line and staff organisation have been defined as under:
“The specialist is introduced in an advisory capacity and without any apparent authority”. – Kimball and Kimball
“Lines are those which have direct responsibility for accomplishing the objectives of the enterprise and staff refers to those elements of the organisation that help the live organisation to work most effectively in accomplishing the primary objectives of the enterprise”. – Louis A. Allen
The line executive exist to take and execute decisions while staff executives exist to provide specialised knowledge for taking decisions.
“The Line and staff organisation in a modern enterprise, is nearly always the departmental live organisation with staff functions added”. – W.R. Spriegal.
This organisation structure provides the benefits of specialisation because staff officer is concerned with only one aspect of the total assignment of line officer. It also avoid the confusion and conflicts.
Type of Staff:
Staff specialists may be of three kinds as given below:
(i) Personal Staff – The personal assistants or adviser attached to key line executive. They assist the line executive in his day to day work. For example, private secretary or personal assistant.
(ii) Specialised Staff – Finance manager, personnel manager, public relations officer, they have specialised knowledge in their field. Legal advisor, quality control inspectors and maintenance engineers are also specialised staff.
(iii) General Staff – The other expert staff indifferent field such as – typing, dispatching are the example of general staff.
Merits of Line and Staff Organisation:
The merits of line and staff organisation are as follows:
(i) Specialisation – The services of specialists of their fields are made available to the officers of different departments so that they may solve the problems of their departments with greater efficiency and accuracy. By this method specialisation is attained.
(ii) Flexibility – The staff can be added to the line and new activities may be introduced without disturbing the line procedure. The staff helps in taking care of increasing complexity caused by expansion and environmental charges.
(iii) Research and Investigation – In this type of organisation, the experts are appointed in different departments. They are continuously engaged on the work of research and investigation in their field. It encourages the research and development activities.
(iv) Opportunity for Advancement – A greater variety of responsible positions exists in line and staff organisation. This provides more opportunities for advancement of capable workers.
(v) Counselling and Execution – Under this type of organisation, there is a clear distinction between counselling and execution. The officer of staff cadre are responsible only to advice the departmental heads on various problems while officer of line cadre are responsible to execute the decision and policies.
(vi) Sound Decision – As expert advice is made available to the heads departments it enables them to take sound and better decisions. The proper balance among various activities is maintained.
(vii) Discipline – The executive officers are empowered to execute the policies and decision. They are fully empowered to do according to their own decisions. There is complete unity of command. As a result, discipline and stability can be maintained in the organisation.
Demerits of Line and Staff Organisation:
The following demerits of line and staff organisation:
(i) Confusion – The authority and responsibility between line and staff executives is not clearly indicated, and employees at lower level may be confused as to who is to do what and how.
(ii) Conflicts – The conflicts between line executives and staff experts are very common. The line managers feel that they are empowered to take decision at their own and may ignore staff advice thinking it impracticable.
(iii) Costly – This type of organisation requires the appointment of a large number of experts involving heavy expenditure.
(iv) Lack of Coordination – Lack of coordination between line and staff cadre is observed in this type of organisation. Teamwork and has many of work becomes difficult.
(v) Ineffective Staff – The staff may feel ineffective as it does not have authority to command and implement its suggestions. It may also be ignorant of practical routine of the organisation.
Line and Staff Organisation as a Better Organisation:
The line and staff organisation is a better organisation due to following reasons:
(i) Relief to Line Executives – The staff executives look after complicated problems of their respective areas. As such line executives are relieved of matters of technical nature.
(ii) Expert Advice – Line executives get the benefit of expert advice of staff executives. They should state reasons in case they cannot accept the advice. The staff authority should be restarted to an advisory role.
(iii) Benefits of Research Work and Development – The staff officers constantly undertake research work and help in improving the quality of products. The new and economical methods of production are developed by them. The advice of staff should be realistic and practical.
(iv) Training Facilities – Staff officers provide training and guidance to the officers. Line officers are benefited by their expert knowledge.
(v) Better Decision – Both line and staff should try to understand each other’s responsibilities and difficulties and try to cooperate with each other for the achievement of organisation objectives.
This type of organisation is more suitable for large organisation as compare to line organisation and functional organisation.
4. Matrix Organisation:
This is one of the latest type of organisational structure which facilitates flexible stricture in which each employee reports to both functional manager and group manager. It is created by merging the two complementary organisation the project and the functional. Functional departments create a vertical chain of command while project teams form the horizontal chain.
This is a multiple command system. The employees will have two bosses and they work in two chains of command. As the business activity is becoming more and more global, matrix organisations which are complex in nature are emerging.
The matrix organisation originated in the defence and aero-space industries in the USA. It differs sharply from the typical one boss command structure based on the principle of unity of command.
Matrix organisation has been defined as – “any organisation that employs a multiple command system that includes not only the multiple command structure but also related support mechanisms and on associated organisational structure and behaviour pattern”. – Davis and Lawrence.
The salient features of the matrix organisation are as follows:
(i) It focuses attention on specific projects. The project manager is authorised to complete with the time, cost, and quality.
(ii) The project manager draws groups of personnel from various functional departments.
(iii) The project manager exerts a general management view point with regard to his project
(iv) The functional manager is responsible for maintaining the integrity of his function.
(v) Management by project objectives is paramount to the way of thinking and working is a matrix organisation.
(vi) The level of participation by various work groups depends upon the nature of each project
Advantages of Matrix Organisation:
The following are the advantages of matrix organisation:
(i) It is an efficient means for bringing together the diversified specialised skills required to solve a complex problem.
(ii) It is more flexible than traditional functional structure it can better respond to the changes in technologies and market conditions.
(iii) It provides a balance between time, cost and performance. The balance can be achieved through the built in checks.
(iv) It provides an environment in which professionals can test their competence and make maximum contribution.
(v) It helps in improving flow of communication around the organisation as required in-formation is communicated both vertically as well as horizontally.
(vi) The each project is assigned the physical resources and personnel. Their unnecessary duplication is avoided.
(vii) It encourages specialisation and organisation gets benefits and economies arising out of specialisation.
(viii) The interactions between specialists encourage creativity and broadening or vision.
(ix) It provides a great deal of cost saving flexibility.
Disadvantages of Matrix Organisation:
The disadvantages of matrix organisation structure are as follows:
(i) It violates the classical principle of unity of command because each employee has two bosses.
(ii) The workers do not easily adapt to a matrix system as members may not possess interpersonal skill.
(iii) The problem of coordination is more complicated because neither functional head has an authority over project unit in a direct manner nor the project manager has full authority over project activities.
(iv) The hierarchy is not firmly fixed; there will be danger of conflicting directives and ill-defined responsibility.
(v) The dual reporting system can contribute to indiscipline, ambiguity and role conflict.
In pure matrix form of organisation, the general manager of the organisation directly controls the project managers as well as functional manager. As the organisation grows in size and as the number of projects handled by the organisation increases it will be difficult for General Manager to have direct control over all project managers and functional managers.
The modified form of organisation evolved to handle such a situation in which a Dy. General Manager (Projects) was entrusted with exclusive charge of the projects handled by the organisation (Fig.-14). The Dy GM will report to GM and will control all the project managers.
5. Project Organisation:
Project organisation structure is created when the project is subject to high standards of performance as in case of aircraft companies. Lock head of USA makes use of extensive project organisation for its aircraft programmes. The core concept of project organisation is to form a team of specialists to work on and complete a particular project. It industrial organisation, project teams may be formed to facilitate the designing and development of new products. The project staff is separate and functional department is independent. The simple project organisation is presented in Fig-14 in which project managers form their own team in addition to normal functional departments.
Generally project team is a temporary setup. Once the project is completed, the project team is disbanded and the functional specialists go back to their respective departments or assigned some other project.
Advantages of Project Organisation:
The advantages of project organisation are as under:
(i) It Permits the timely completion of a project without disturbing the normal routine of rest of the organisation.
(ii) It provides a logical approach and challenges in the form of a large project.
(iii) It employees specialists in various fields.
(iv) It encourages initiative and creativity on the part of project staff by giving them a free hand to accomplish work.
(v) It accommodates the formal ideas of classical thinking together with team and participate ideas of behavioural contributions.
Limitations of Project Organisation:
The limitations of project organisation are as under:
(i) There is organisational uncertainty because a project manager has to deal with professionals drawn from various field.
(ii) The organisational uncertainties may lead to interdepartmental conflicts.
(iii) The job of project manager becomes very difficult because of lack of clearly defined responsibility, lack of communication pattern and lack of performance standards of various professionals.
(iv) Decision making is made very difficult because there are unusual pressure from various professionals.
Types of Organization – Formal and Informal Organisation
Form of organisation is known as structure or type of organisation. It differs from one organisation to other on the basis of difference in nature, objectives and character of enterprise.
From this viewpoint it can broadly classified into 2 heads:
1. Formal organisation.
2. Informal organisation.
The formal is again divided into three forms:
(a) Line organisation
(b) Line and staff organisation
(c) Functional organisation.
(a) Line Organisation:
This is also known as scalar and vertical organisation. It presupposes that direct authority is exercised by a superior over his subordinates. The flow of this authority is always downwards. According to Lundy “line organisation is characterised by direct lines of authority flowing from top to the bottom of the organisational hierarchy and lines of responsibility flowing in an opposite but equally direct manner. The line of author not only serves as the avenue of command to operating personnel but also provides the channel of communication coordinate and accountability in the enterprise.”
Merits and Demerits:
The advantages of line organisation are its simplicity, fixed responsibility, unified control, quick decision and flexibility while the demerits are overloading and lack of specialization, autocratic leadership, difficulty in staffing, instability and suitability.
(b) Line and Staff Organisation:
Line and staff organisation is a combination of the line structure and the functional structure. Line executives stand in the primary chain of command and are directly concerned with the accomplishment of primary objectives. Staff positions are created to give advice and information on specific managerial problems and are attached to line managers. Staff positions only provide advice they have no power command. The need of staff positions areas due to increased work and its efficient performance.
Merits and Demerits:
Merits of line and staff are planned specialisation, balanced decisions. Discipline Undivided responsibility, flexibility, executive development and demerits are conflicts, lack of co-ordination ineffective staff, expensive and lack of creativity.
(c) Functional Organisation:
Under this type of organisation there are number of specialists each having authority to command once a particular or group of related function.
In this multiplicity of authority is introduced as said by Taylor, each worker instead of getting order and instructions from different bosses, every boss gives order and issue instructions pertaining to his specialised function. Functional organisation is used at higher as well as lower levels.
The worker in this form of organisation is responsible and answerable to all his superiors from whom he lakes orders and instructions for each of his specialised jobs. The authority here is divided and does not flow from one but from many in a diffused manner.
Merits and Demerits:
(2) Reflective thinking
(3) Better supervision
(4) Democratic Control
(5) Scope for expansion
(1) Poor Discipline
(2) Divided responsibility
(3) Lack of co-ordination
(4) Delay in Decision making
Organisation is designed on the basis of principles of division of labour and span of management. The success of the organisation depends upon the experience and competence of the officers of the organisation. There is a necessity of chalking out the line of authority among the people who are working in an organisation to achieve the desired results.
Besides, it involves the determination of duties among the officers and combining the activities of all officers to get the desired results. Nature, scale and size of the business are the normal factors which determine forms of internal organisation.
The following common types of organisations find a place in the structure of internal organisation:
1. Line, Military or Scalar organisation
2. Functional organisation
3. Line and staff organisation
4. Committee organisation
5. Project organisation
6. Matrix organisation
7. Freeform organisation.
A brief explanation of the above types of organisations is given below:
Line organisation is the simple and oldest type of organisation followed in an organisation. Under line organisation, each department is generally a complete self-contained unit. A separate person will look after the activities of the department and he has full control over the department.
There are certain powers which will be given to line executives to take decisions whenever a need arises. He communicates his decision and orders to his subordinates. The subordinates, in turn, can communicate them to those who are immediately under them.
Such decision making authority is to flow from the top management level to the bottom. The top management people have greater decision making authority than the bottom level executives. It should be noted that in this type of organisation, an executive is independent of other executives of the same level (say departmental heads). In other words, the same level executives do not give or receive any orders amongst themselves. But they receive orders from their immediate boss (general manager) and give orders to their subordinates.
Hence, it is known that all the departmental heads are responsible to the general manager. The general manager, in turn, is responsible to the board of directors. The board of directors is responsible to the shareholders who are the owners.
This type of organisation is followed in the army on the same pattern. So, it is called military organisation. Under this type of organisation, the line of authority flows from the top to bottom vertically. So, it is called line organisation.
i. It consists of direct vertical relationships.
ii. Authority flows from top level to bottom level.
iii. Departmental heads are given full freedom to control their departments.
iv. Each member knows from whom he would get orders and to whom he should give orders.
v. Operation of this system is very easy.
vi. A senior member has direct command over his subordinates.
vii. Existence of direct relationship between superiors and subordinates.
viii. Each member knows to whom he is responsible for the accomplishment of objectives of the organisation.
ix. The superior takes decisions within the scope of his authority.
ii. Division of authority and responsibility – Each person has his area of authority which is clearly explained to him. So he knows to whom he is responsible for doing the job. No person could share off his own responsibility after it has been fixed.
iii. Unity of control – According to unity of control, an individual can receive orders only from one superior. It means, that a subordinate is responsible only to one superior and he gets orders only from him.
iv. Speedy action – Under line organisation, there is a proper division of authority and responsibility and unity of command. Hence, an individual can take decisions and execute the plans without any delay.
vii. Co-ordination – The business activities are grouped on functional basis. Each department is responsible for a function, so the department heads can get co-ordination from the workers who are working under them.
viii. Direct communication – There is a direct relationship between the superior and the subordinate at all levels of organisation. This will help to know each other intimately. This ensures direct communication between the staff members and increases the efficiency of the employees.
i. Lack of specialization – Each person is responsible for the overall exhibition of activities relating to his department alone. He is not expected to be an expert in all aspects of managerial task. He simply gives instructions to his subordinates and does not specialize in certain phases of operation.
ii. Over loading – Whenever the scale of operations (or) size of the business unit increases, this system gives over work to the existing executives. So, they are not in a position to direct and control the efforts of their subordinates properly.
v. Dictatorial – Under line organisation, a subordinate should carry out the instructions and orders which are given by the superior. If not, he will be penalised. This entails in autocratic and aristocratic approach in administration. So, managers will become dictators and not leaders.
vi. Limited communication – In normal time, the communication moves downwards but very rarely it moves upwards. The downward communication may be orders, instructions etc. If upward communication is allowed, the management may know the grievances of employees. But upward communication is not preferred by the top management. So it results in limited communication.
vii. Unitary administration – Each department’s activities are looked after by a single executive who takes all the decisions relating to his department. Hence, the successful functioning of that department depends on his abilities.
viii. Subjective approach – The degree of availability of authority is more to the superior than to the subordinates. So the superior takes decision without considering the opinions of the subordinates. The subordinate should follow the decisions taken by the superior.
ix. Instability – The success of this type of organisation depends mostly on the ability of only few strong men and the failure of this organisation is likely due to the inability of the same persons.
x. Lack of co-ordination – The co-ordination among the departmental heads is not easy to achieve. The reason is that the executive of a department does not consider other departments importance. This will result in the lack of co-operation and team spirit.
xii. The business activities may be divided according to the will of the manager rather than according to any scientific plan.
xiii. The system has no means of appreciating the efficient worker and punishing of the inefficient worker.
xiv. Under line organisation, efficient persons are essential to the top management. Practically, it is very difficult to find efficient persons for small organisations.
xv. The required time and efforts are insufficient for managerial planning, research and development and controlling activities of the organisation.
i. This type of organisation is suitable to small size business units.
ii. Where the activities are of routine nature or machine based.
iii. If the business activities are service minded.
iv. Where the number of persons working is small.
v. The business operation is simple in nature.
vi. A business unit which has straight methods of operations.
Under line organisation, a single person is incharge of all the activities of the concerned department. Here, the person incharge finds it difficult to supervise all the activities efficiently.
The reason is that the person does not have enough capacity and required training. In order to overcome the limitations of line organisations, F.W. Taylor proposed a new type of organisation called functional organisation.
Under functional organisation, various specialists are selected for various functions performed in an organisation. These specialists will attend to the work which is common to different functions of various departments. Workers, under functional organisation, receive instructions from various specialists.
The specialists are working at the supervision level, thus, workers are accountable not only to one specialist but also to the specialist from whom instructions are received. Taylor advocated this organisation as a point of the scheme of scientific management. Directions of work should be decided by functions and not by mere authority.
The need for functional organisation arises out of:
(i) The complexity of modern and large-scale organisation;
(ii) A desire to use the specialisation in full and;
(iii) To avoid the work-lead of line managers with complex problems and decision-making.
i. The work is divided according to specified functions.
ii. Authority is given to a specialist to give orders and instructions in relation to specific function.
iii. Functional authority has right and power to give command throughout the line with reference to his specified area.
iv. The decision is taken only after making consultations with the functional authority relating to his specialised area.
v. The executives and supervisors discharge the responsibilities of functional authority.
F.W. Taylor, the father of scientific management, recommended a functional organisation of activities at the top level. According to Taylor, a foreman should not be burdened with looking after all the activities of his work. Instead, he should be assisted by a number of specialists in solving the problems.
iii. Time and cost clerk – This clerk fixes the standard time for each work and the cost incurred for each work. He gives instructions to the workers to record the time actually spent by the workers and actual cost incurred for completion with standard time and cost.
vii. Repair boss – His work starts only after the actual work is performed by the workers. He is concerned with the up-keep of machines and other equipments. It means that the responsibility of the repair boss is the maintenance of machines.
viii. Disciplinarian – He implements the rules and regulations of the entire organisation. He is a peacemaker of the organisation. He also checks whether each work is performed in a systematic and perfect manner.
The route clerk, the instructions clerk and time and cost clerk work in the planning department. The gang boss, speed boss, inspector, and repair boss belong in the factory section of the organisation. The disciplinarian is not a staff of any section but he is responsible for the worker’s conduct.
Advantages of Functional Organisation:
i. Benefit of Specialisation – Under the functional organisation, each work is performed by a specialist. It helps to enhance the efficiency of the organisation. Each work is divided among the workers scrupulously.
ii. Application of expert knowledge – Planning function and execution function are divided separately and each function is entrusted to a specialist in the line organisation. So, the specialists can use their expert knowledge in the actual performance of work.
iii. Reducing the work load – Each person is expected to look after only one type of work. It reduces the unnecessary work allotted to them. Hence, the quality of work and effective control over the work are achieved.
iv. Efficiency – Since each worker is responsible for each work, the workers can concentrate on the work allotted to them. They could assure proficiency in the work.
v. Adequate supervision – Each staff member is incharge of a work. So, he can devote enough time to supervise the workers.
vi. Relief to line executives – Under functional organisation, the instructions are given by the specialist directly to the actual workers. Hence, the line executive does not have any problems regarding the routine work.
vii. Co-operation – A single person could not have full control over the workers in the organisation, So, there is a possibility of promotion among the executives of the organisation.
ix. Economy – Under functional organisation, each specialist is responsible to the performance of a work. Wastage in the production can be avoided and the expenditure could be – considerably reduced.
x. Flexibility – Any change in the organisation can be introduced without any difficulty.
Disadvantages of Functional Organisation:
i. Complex relationship – A single worker is working under eight specialists under functional organisation. It is very difficult for the worker to be responsible to all persons. This results in conflict between the workers and the specialist.
ii. Discipline – It is very difficult to maintain discipline among the workers when a single worker has to serve many masters.
iii. Over specialization – The organisation can reap the advantages of specialisation. But at the same time, there might be overlapping of authority and divided responsibility.
iv. Ineffective co-ordination – The extent of authority of a specialist is not correctly defined. It creates problems while getting the co-operation among the specialists.
v. Speed of action – When the control of a worker is divided among the specialists, the speed of action of the workers may be hampered.
vi. Centralisation – Eight specialists are guiding and directing the workers to perform the work. So, the workers do not have any scope for doing the job on their own. This leads to the centralisation of authority.
vii. Lack of responsibility – If there is any defect in the performance of work, the management is not in a position to fix the responsibility for it. The reason is that none of the eight specialists is ready to own the responsibility. They may shift the responsibility to any one among themselves for the poor performance of the work.
There are some advantages and disadvantages both in the line organisation and functional organisation. In order to reap the advantages of both line organisation and functional organisation, a new type of organisation is developed, i.e., line and staff organisation. Under line and staff organisation, the disadvantages of line organisation and functional organisation may be avoided to some extent.
This type of organisation is best suited for medium and large size industries. When an organisation size is increased, it is necessary to go for staff organisation. Staff organisation consists of special executives from different fields e.g. planning, design, sales, quality control, personnel etc. These executives are arranged along with the line executives (works manager, superintendent, foremen etc.) in order to carry out the work.
The line executives have authority and therefore they can maintain discipline and stability whereas the staff do not have any authority to direct the workers and have only advisory work.
The line officers have authority to take decisions and implement them to achieve the objectives of the organisation. The line officers may be assisted by the staff officers while framing the policies and plans and taking decisions.
In the fast developing industrial world, the line officers are not in a position to acquire the technical knowledge. For example, while taking decisions regarding the production, technical knowledge is needed to take correct decisions.
This type of gap may be bridged with the help of staff officers. The staff officers may be experts in a particular field. Then, the line officers can get expert advice from the staff officers before taking the final decisions. Staff refers to those elements of the organisation which provide advice and service to the line.
The authority flows from top level to the lower level of the organisation through the line officers while the staff officers attached to the various departments advise the departments. The staff officers do not have any authority to control anybody in the organisation. Besides, the staff officers are not in a position to compel the line officers to follow the advice given by them.
Each department is headed by a line officer who exercises full authority regarding the planning, implementation and control of workers under him with the help of staff officers. There is no connection between workers and the staff officers of any department. The workers get the instructions only from the line officers. Hence, the unity of command and specialisation are followed in this organisation.
In many organisations, the line officers extend their full co-operation to staff officers and vice-versa. This ensures smooth functioning of the organisation. In certain circumstances, conflicts may arise between the staff officers and line officers. When an officer blames the other officers for some lapse, it affects the smooth functioning of the business.
i. It facilitates the workers to work faster and better.
ii. Specialisation is attained when the staff officers concentrate on planning function and the line officers concentrate on execution function.
iii. It enables the organisation effectively utilise the staff officer’s experience and advice.
iv. The line officers can take sound decisions with the help of proper advice from the staff officers.
v. A new technology or a new procedure may be introduced in the organisation without any dislocation.
vi. A new variety of responsible jobs can be given to skilled workers.
vii. The work of line officers would be reduced to some extent if they are relieved of the work of taking decisions.
viii. It promotes the efficient functioning of the line officers.
ix. The principle of unity of command is followed in the line and staff organisation. Hence, the line officers can maintain discipline among the workers and exercise control over the workers.
x. A very good opportunity is made available to the young persons to get training.
i. If the powers of authority pertaining to the line officers and staff officers are not clearly defined, there is a possibility of confusion throughout the organisation.
ii. The line officers may reject the advice without assigning any reasons for their action.
iii. The staff officers may underestimate the authority of line officers. The reason is that they are superior to the line officers.
iv. The staff officers are not involved in the actual implementation of the programme. So, it is not obligatory on their part to give advice with care and caution.
v. The staff officers are not responsible if favourable results are not obtained.
vi. It requires the appointment of staff officers who are specialised in various areas. It increases the administrative expenses of the organisation.
vii. There is no authority to the staff officers to compel the line officers to accept and implement the advice given by them.
viii. There is a communication gap between line officers and staff officers. It reduces the degree of co-operation between them.
ix. The difference of opinion between line officers and staff officers will defeat the very purpose of specialisation.
x. The line officers may misunderstand the advice given by the staff officers and proper results cannot be obtained. Sometimes, the staff-officers cannot give unambiguous advice to the line officers.
xi. Line officers blame the staff officers for unfavourable results and want to get rewards for favourable results.
xii. Frequently, the line officers want to get advice from the staff officers not only on important matters, but also on ordinary matters. It reduces the effectiveness of control of line officers.
A committee is a group of competent and interested persons who work collectively, discuss and recommend solution to the problems which arise from time to time and cannot be solved by an individual. A committee is purely an advisory group and gives better solutions.
In industries, committees are formed in the top level. Such committees are executive committee, finance committee, advisory committee, manufacturing committee, bonus committee and safety committee etc. Committees may be permanent or temporary.
A committee is a group of persons to whom certain managerial functions are assigned and from whom some advice or recommendations are expected. A committee is a group of people who meet by plan to discuss or make a decision for a particular subject. The duties, responsibilities and authority are fixed by the top management and the committee is accountable to the management.
This committee examines the problems which are referred to it.
If a committee is requested to solve a given problem, it should give the best solution. The reason is that the committee members have wide knowledge, offer different opinions and suggest approaches to solve a problem.
Before solving a problem, it is analysed by the committee members from different angles. A solution is found out by the committee after considering the pros and cons of the proposed solutions.
This type of committee is formed only for the purpose of collecting information on a particular subject. A detailed report is submitted with recommendations to the management. This is the most common committee formed in any organisation.
This committee consists of line officers. This committee can take the decisions and it has power to implement the decisions. The committee is permanent in nature. Board of Directors of a company is the best example for the Action committee.
i. Collect the necessary information from different sources and arrange the information in order.
ii. The collected information is critically analysed.
iii. Draft a detailed report containing the recommendations for the purpose of implementation.
iv. Formulate the standard of performance for the purpose of evaluation of actual performance in future.
v. Take a decision if the committee is requested to do so.
vi. Framing the policies of the organisation.
vii. The committee can select personnel to carry out the business operations.
viii. Directing and controlling the officers at regular intervals to achieve the goals.
i. The committee can take valuable decisions. The committee members can make use of their experience and knowledge while taking decisions.
ii. Hasty decisions are avoided by the committee. Normally, the hasty decisions do not give maximum benefit to the organisation. Hasty decisions are not worthy from a long term point of view.
iii. The committee members are encouraged to participate in the decision making process. Each committee member can acquire a knowledge and understand the feelings of the people in other parts of the company. Keeping these in view, the decision is taken by the committee.
iv. The committee decisions will certainly be the best one. There is a proverb, “Two heads are better than one.”
v. By participating in the decision making process, an officer is persuaded to accept the decision and implement it without any delay.
vi. Co-ordination between the various departments becomes very easy, because, the committee consists of members from various departments. Committee is a useful device for coordinating business planning and the execution of the business policies.
vii. The committee members have authority to implement the decisions. If any individual takes a decision, the decision may not be implemented by the committee. The reason is that there is no authority for the committee to implement the decision taken by an individual.
viii. If a young person is motivated to participate in the decision making process of a committee, he can get a very good training. It is one way of utilising the opportunity offered to him.
ix. Normally the committee consists of specialists from various fields. New ideas may be developed by the committee in the area of production, sales, customer services and the like.
x. Whenever a decision is taken in an organisation, it should be communicated to all the employees. The committee members can disseminate the decision taken by the committee to the employees immediately. It saves a considerable time in communication.
xi. The decision taken by the committee reveals the feelings, ideas and thoughts of all the members of the committee. The decision is taken only after having obtained the approval of all the persons who are participating in the decision making.
xii. Sometimes, the decision is arrived at after getting the approval of the majority of the members participating in the decision making. So, the committee follows a democratic process in the decision making.
xiii. Committee members are requested to express their views, ideas and feelings freely. It will minimise the clashes of interests among the employees of the organisation. The discussion may be pertaining to wages, salary, bonus, welfare schemes and the like.
xiv. The line executives are included in the committee for decision making. It encourages the line executives.
xv. If any problem is to be solved by the committee, it can be done by following the principle of division of labour. Each committee member can analyse the problem from various angles simultaneously and take fruitful solution.
xvi. An individual is empowered to take decision and implement it when he has full authority and responsibility.
xvii. Normally, the committee is formed with the interested persons of the organisation.
i. Men from various fields are included in the committee. Each member expresses his own ideas and decisions or solutions. It results in delay in taking a decision.
ii. It increases the administrative expenses of the organisation.
iii. In case, if there is an absence of mutual co-operation, they fail to work efficiently and the committee is dissolved without any decision being taken.
iv. The secrecy of the committee’s decision cannot be maintained under committee organisation. The reason is that there are a large number of members in a committee.
v. The responsibility cannot be fixed on any person if the decision does not produce favorable results to the organisation. Each one blames the other for faulty decision making and unfavourable results.
vi. Sometimes, the decisions may be taken on the basis of compromise.
vii. It has been observed that irrelevant matters are sometimes discussed. The decision should be taken by a committee within a short period of time.
viii. In the committee organisation, each member is expected to express his own ideas. It may result in heated argument among the committee members. It does not give any benefit to the organisation.
ix. The members of a committee do not use their initiative because of their ignorance, or dominance by the committee members.
x. The committee members who meet frequently, may not be able to devote fall attention to their duties.
xi. A committee is formed to reap benefits as in a democracy. But, in majority of the cases the committee acts as a puppet of the management.
xii. The committee members are not able to develop their own ability or talents individually. Further, it deteriorates the ability of the committee members in various other fields.
Project organisation is suitable for taking projects of various types. Each project is organised as a separate division consisting of specialists in different fields. The activities of the project team specialists are coordinated by a project manager. The success and failure of a project is mainly depends upon the activities of a manager. Once a project is completed, the project team will take over the next project and so on.
Project organisation is designed with the object of accomplishing a programme or project. The project organisation is dispersed after the accomplishment of a programme or project. The project organisation is composed of a core of functional departments in addition to its specific programmes or projects. In other words, project organisation consists of important functional departmental heads.
i. The success of the project organisation depends upon the co-ordination of activities.
ii. There is a grouping of activities for each project. It leads to the introducing of a new line of authority.
iii. The responsibility is fixed for each group with regard to the respective projects and it results in the meaningful control.
i. The professionals are deputed for the project. But there is no assurance of continuous work for the professionals in a project organisation.
ii. Under project organisation, there is absence of proper communication and standards for comparing the performance. It reduces the motivation and controls the staff in an organisation.
iii. The decision is taken in the project organisation under pressure of the top management. It results in dangerous consequences.
iv. The top management does not extend its full co-operation for the effective functioning of the project organisation. Some hindrance may be caused by the top management.
There are several departments under Matrix organisation. Each department is assigned with a specified task. The available resources of the organisation can be used by each department along with the co-ordination of other departments in an organisation.
Matrix organisation is used to handle various projects ranging from small to large. It is a project organisation along with functional organisation. The project teams are selected from the functional departments to carry out the project work.
After completion of the project, they are returned to their respective departments. During the project work, they have to answer with two bosses, (ie) one from the functional department and another from the concerned department.
The merits of a matrix organisation are discussed below:
i. Achievement of objectives – The matrix organisation reaps the benefits of functional organisation and line and staff organisation. It ensures the achievement of objectives with technical specialisation.
ii. Best utilisation of resources – The available resources are used by the managers for the specific project. At the same time, the resources are utilised by the manager with full understanding among them.
iii. Appropriate structure – Matrix organisation is an appropriate structure of an organisation to adopt to the external changes. For example, in order to survive the competition, matrix organisation is used to meet customer demands according to the expectations without affecting the marketing of the existing product.
The following are the demerits:
ii. Struggle for power – A subordinate is controlled by many superiors. It means the power is used over the subordinate by many authority holders. It results in delay in the completion of the project.
iii. Excessive emphasis on group decision-making – The available resources are utilised by the department for taking group decisions. There is no spirit of accommodation and understanding under the matrix organisation. So, there is a delay in the completion of the project.
iv. Heterogeneous – A matrix organisation is created by deputing the staff temporarily. They are skilled professionals of various departments. It is difficult to co-ordinate the work of the skilled staff members when there is a lack of unity of command in an organisation.
This type of organisation is formed whenever a need arises to form an organisation, for achieving a particular object. It will be dissolved after achieving the object of the organisations. In many ways, the Free Form Organisation resembles the project and matrix organisation. It is otherwise called organic or adhoc (ratio) organisation.
The formation of the Free Form Organisation depends upon the external environment of the business. If the business is highly affected by the external environment, the Free Form Organisation will be established.
Decision is taken under Free Form Organisation without following the policies or guidelines which are determined in advance. Normally, the decision is taken in any organisation by following the organisational policies, rules and regulations. These are framed well in advance and followed while taking decisions.
The structure of Free Form Organisation is related to individual expertise used in resolution of the problems at hand. The nature of problems may be changed according to the situations prevailing in the business world. When there is a change in structure of Free Form Organisation, no task is assigned to it specifically.
But tasks are assigned to superiors and subordinates according to level of experience and competence. So, the authority is available to the persons according to their competence in performing the given task under this organisation.
There is no channel of communication due to the absence of a formal structure in the Free Form Organisation. So, the communications flows in any direction viz., upwards, downwards, and horizontally.