TYPES OF ORGANIZATION

Organization Organization is a formalized intentional structure of roles and positions. Organization is an identified group of people contributing their efforts towards the attainment of goals. Organization is a harmonious adjustment of specialized parts for the accomplish of some common purpose.

Formal Organization Formal Organization means the intentional structure of roles in a formally organized enterprise. Formal Organization refers to the structure of well defined jobs, each bearing a definite measure of authority, responsibility and accountability. In formal Organization, Each & every person is assigned the duties, authority , responsibilities & relationship as prescribed by the top management.

Advantages & Disadvantages of Formal Organization Advantages (1) Optimum use of resources (2) Job Satisfaction (3) Motivating Employees (4) Facilitating Management Action Disadvantages (1) Doesn’t allow flexibility (2) Doesn’t allow long term planning (3) Limited scope of Creativity

Informal Organization Informal Organization means a network of interpersonal relationships that arise when people associate with each other. Informal Organization means natural grouping of people in the work situation. Informal Organization is a network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another.

Benifits of Informal Organization To the Employees: (1) Job Satisfaction. (2) Earn sympathy; guidance & advice. (3) Get help in critical situation. (4) Atmosphere favorable to research is built. (5) Social control on members (6) If a manager tries to misuse his powers, informal organization puts a check on him.

To the Managers: (1) Reduces burden. (2) If manager is weak, informal group come to his help. (3) Helps formal organization in realizing its objectives. (4) Additional means of effective & quick communication.

Disadvantages of Informal Organization (1) Rumors spread swiftly. (2) It oppose change. (3)Individuals personal need may go unsatisfied. (4)Members have to observe norms & values. (5) Gives importance to group relation which sometimes challenge the authority of the management (6) Group leaders sometimes uses group influence to promote his personal ends

Differenece between Formal Organization & Informal Organization Basis of Distinction Formal Organization Informal Organization Purpose It is created to achieve pre determined objective It has no pre determined objectives. It arises due to social interaction of people. Formation Formal relations are well planned and are created deliberately. Informal relations are unplanned and they originate automatically. Structure Well structured Unstructured Nature Official Unofficial Focus Positions Persons Source of Power Delegated Given by group Leadership Managers Informal Leader Source of control Reward/Punishment Social Sanctions

Differenece between Formal Organization & Informal Organization Basis of Distinction Formal Organization Informal Organization Guidelines for behavior Rules and Procedures Group Norms Stability Stable (Long term) Unstable (Short term) Size large Small Flexibility Rigid Structure Highly flexible Communication Chain of command Grapevine

Organization Structure Organization Structure refers to the hierarchical arrangement of various positions in the organization. Organization Structure defines the relationship between various positions, departments and persons. Organization Structure helps in allocating authority and responsibility formally and decides who is to report to whom, who is superior to whom and who are his subordinates.

Types of Organization There are basic Four types of organization structure, which are more popular in the business word. These are; (1) Line Organization (2) Functional/Staff Organization (3) Line and Staff Organization (4) Committee Organization

Line Organization Business unit is organized not according to functions, but on the basis of responsibility and authority. Authority flows from the top to the bottom in a line, the responsibility flows in the opposite direction from the bottom to top. So it is known as line organization.

Advertisement manager Board of Directors Managing director Production Purchase manager Workshop manager Foreman foreman Marketing Sales manager Advertisement manager Office Accountant secretary

Advantages of line organisation Simplicity Fixed authority and responsibility Discipline Quick decision-making Development of skill Effectiveness Chances of success Easy location of responsibility Flexibility

Disadvantages of line organisation Lack of all rounders Overloading Difficulties in departmentation Difficulties in co operation & co ordination Lack of specialization Centralization of authority Neglect of planning & research Corruption Difficulties of transfer

Staff organisation The whole task of management is divided according to the type of function involved. Every person has to perform a special function under this organization. So it is called staff organization.

General Manager Personal officer Foreman A Chief engineer Foreman B Workmen Purchase officer Foreman C

Advantages of staff organization Specialization Benefits of large scale production Scientific recruitment and training Co-operation Decentralization of authority Easy expansion Flexibility

Disadvantages of staff organization Expensive Violation of Unity of command Difficult to locate responsibilities Lack of discipline & control Absence of quick decision Difficulties of co ordination Increase in clerical work

Line and staff organisation Line officials do administrative work as usual, but they are assisted by the experts. This group of experts is known as ‘staff’. Line officers have the authority to issue orders while staff experts have the authority to give advice and instructions.

Advantages of Line and Staff organisation Simplicity Balance Co-ordination Prompt Decision Less Burden on Line Officers Blending of Abilities of Line Officers and Experts Flexibility Location of Responsibilities

Disadvantages of Line and Staff Organisation Conflict among officials Evading responsibility Expensive Disregard for line officers suggestion Carelessness of line officers Conflict between old & new

COMMITTEE ORGANISATION The above three forms of organization cannot fully satisfy the requirements of modern business. Hence to supplement them, committee organisation began to be adopted. Dr. Terry has defined committee as a “body of persons elected or appointed to meet on an organized basis for the discussion and dealing of matters brought before it.”

Importance and Usefulness This pattern of organization is gradually gaining importance and popularity. The committee organization is being used in the line and staff organization to keep the head of every department fully informed of the activities of the other department heads. The committee organization has been in use in the business units both in the private and public sector. It is widely used also in education, religious and social institution as also in hospitals and minicipal corporation.

Top Management Committee Sales Committee Distribution Committee Salesmen Advertisement Committee Employees Production Committee Purchase Committee Works Committee Foremen Workers Stores Committee Administrative Committee Secretary Accountant

Advantages of Committee organization Best means of group deliberation Decentralization of authority Co operation Co ordination Matured decisions Useful for training Improvement in labor relations Continuity in managerial policy Helpful to research Helpful to administrative officers Helpful to communication

Disadvantages of committee organization Delay in decision making Injustice to minorities Business secrets Difficulty of fixing responsibility Laxity in organization conflict & bitterness Expensive