ORGANISATION STRUCTURE

DEFINITION Organisation structure refers to the differentiation and integration of activities and authority, roles and relationships in the organizations. According to Koontz and Donnel, “ Organization structure is the establishments of authority relationships with provision for co ordination between them both vertically and horizontally in the enterprise structure”

FEATURES OF GOOD ORGANISATION STRUCTURE Simplicity Flexibility Clear line of authority Application of ultimate responsibility Proper delegation of authority Minimum possible managerial levels. Principles of unity of directions and command Proper emphasis on staff Provision for Top Management.

PURPOSE OF ORGANISING Divides work to be done in specific jobs & dept Assign tasks and responsibilities associated with individual jobs Coordinates diversified organizational tasks Establishes relationship between individual, groups and department Establishes formal lines of authority Allocates organizational resources Cluster job in to units

TYPES OF ORGANISATIONAL STRUCTURE 1.Line Organizational Structure 2.Functional Authority Organizational Structure 3.Line and Staff Organizational Structure 4. Divisional Organizational Structure 5. Project Organizational Structure 6. Matrix Organizational Structure 7. Hybrid Organizational Structure 8.Combined Organizational Structure

TYPES OF ORGANISATIONAL STRUCTURE 1.Line Organizational Structure A line organization has only direct, vertical relationships between different levels in the firm. There are only line departments-departments directly involved in accomplishing the primary goal of the organization.

TYPES OF ORGANISATIONAL STRUCTURE 2.Functional Authority Organizational Structure The jobs or positions in an organization can be categorized as: (i) Line position: A position in the direct chain of command that is responsible for the achievement of an organization's goals and (ii) Staff position: A position intended to provide expertise, advice and support for the line positions. In the line organization, the line managers cannot be experts in all the functions they are required to perform. But in the functional authority organization, staff personnel who are specialists in some fields are given functional authority 

TYPES OF ORGANISATIONAL STRUCTURE 2.Staff or Functional Authority Organisational Structure

TYPES OF ORGANISATIONAL STRUCTURE 3)Line and Staff Organizational Structure: Most large organizations belong to this type of organizational structure. These organizations have direct, vertical relationships between different levels and also specialists responsible for advising and assisting line managers. Such organizations have both line and staff departments. Staff departments provide line people with advice and assistance in specialized areas (for example, quality control advising production department). The line functions are production and marketing whereas the staff functions include personnel, quality control, research and development, finance, accounting etc

TYPES OF ORGANISATIONAL STRUCTURE

TYPES OF ORGANISATIONAL STRUCTURE 4)Divisional Organizational Structure: In this type of structure, the organization can have different basis on which departments are formed. They are: (i) Function, (ii) Product, (iii) Geographic territory, (iv) Project and (iv) Combination approach.

TYPES OF ORGANISATIONAL STRUCTURE

TYPES OF ORGANISATIONAL STRUCTURE 5. Project Organizational Structure: A project organization is a temporary organization designed to achieve specific results by using teams of specialists from different functional areas in the organization. The project team focuses all its energies, resources and results on the assigned project. Once the project has been completed, the team members from various cross functional departments may go back to their previous positions or may be assigned to a new project. Some of the examples of projects are: research and development projects, product development, construction of a new plant, housing complex, shopping complex, bridge etc.

TYPES OF ORGANISATIONAL STRUCTURE

TYPES OF ORGANISATIONAL STRUCTURE 6. Matrix Organizational Structure: It is a permanent organization designed to achieve specific results by using teams of specialists from different functional areas in the organization. 

TYPES OF ORGANISATIONAL STRUCTURE In matrix structures, there are functional managers and product (or project or business group) managers. Functional manager are in charge of specialized resources such as production, quality control, inventories, scheduling and marketing. Product or business group managers are incharge of one or more products and are authorized to prepare product strategies or business group strategies and call on the various functional managers for the necessary resources.

TYPES OF ORGANISATIONAL STRUCTURE 7)Hybrid Structure: This structure is a form of departmentalization, which combines both functional and divisional structure. Particularly large organizations adopt this structure to gain the advantages of both functional and divisional structures. Functional structure gives the benefits of economies of scale, in- depth expertise and resource utilization efficiencies, whereas, divisional structure gives the benefits of specialization of products, services and markets. In India, the most of the public sector units and departmental undertaking like railways, etc., follow this structure. A typical hybrid structure of an organization is illustrated below:

TYPES OF ORGANISATIONAL STRUCTURE 7. Hybrid Organisational Structure:

TYPES OF ORGANISATIONAL STRUCTURE 8) Combination structure: A combination or matrix organizational structure is the combination of two or more types of structures. For example, a company may use both a product- and customer-oriented structure, striving to use the advantages of both types. Combination structures are sometimes used temporarily for ad hoc or special projects. For example, a small restaurant company may need an employee from each department to test market a new chicken sandwich. Finance can oversee the sales and profits, and marketing research can track visit frequency and consumer interest.

TYPES OF ORGANISATIONAL STRUCTURE 8) Combination structure:

Effects of Improper organization structure: The effects of improper organization structure are as follows: 1)Low Motivation and Morale: It may results from apparently inconsistent and arbitrary decisions, insufficient delegations of decision making, lack of clarity in job definition and assessment of performance, competing pressures from different parts of the organization and managers and supervisors overloaded through inadequate support systems. 2) Poor response to new opportunities and external change: It may result from failure to establish specialist jobs concerned with forecasting environmental change, failure to give adequate attention to innovation and planning of change as main management activities, inadequate coordination between identification of market changes and research into possible technological solutions.

Effects of Improper organization structure: 3) Decision making is delayed or Lacking in quality: Decision makers may be overloaded because the hierarchy may lead them to many problems and decisions on them. Delegation to lower levels may be insufficient. Another cause of poor quality decisions is that information may not reach the correct people. Information linkages in wither the vertical or horizontal direction ma be inadequate to ensure decision quality 4) Organization does not respond innovatively to a changing environment: One reason for lack of innovation is that departments are not coordinated horizontally. The identification of customer needs by the marketing department and the identification of technological development in the research department must be coordinated. Organization structure also has to specify departmental responsibilities that include environmental scanning and innovations

Effects of Improper organization structure: 5) Employee performance declines and goal are not being met: Employee performance may decline because the structure does not provide clear goals, responsibilities and mechanisms for coordination. The structure should reflect the complexity of the market environment and be straight forward enough for employees to effectively work within 6) Too much conflict is evident: Organization structure is intended to enable departmental goals to combine into a single set of goals for the entire organization. When departments act at cross purposed or departments priorities are out of alignment with those attributed to the wider organization, it may be that the structure has incorporated insufficient horizontal linkages.

Formation of organization structure Various steps in the formation of Organization Structure are: 1. Clearly defined objectives: The first step in developing an organizational structure is to lay down its objectives in very clear terms. This will help in determining the type and basic characteristics of the organization, Infact, organization activities are detailed in terms of objectives to be achieved. 2)Determining activities: In order to achieve the objectives of the enterprise, certain activities are necessary. The activities will depend upon the nature and size of the enterprise. For example, a manufacturing concern will have production, marketing and other activities. There is no production activity in retail establishment. Each major activity is divided into smaller parts. For instance, production activity may be further divided into purchasing of materials, plant layout, quality control, repairs and maintenance, production research etc.

Formation of organization structure 3. Assigning duties: The individual groups of activities are then allotted to different individuals according to their ability and aptitude. The responsibility of every individual should be defined clearly to avoid duplication and overlapping of effort. Each person is given a specific job suited to him and he is made responsible for its execution. Right man is put on the right job. 4. Delegating authority: Every individual is given the authority necessary to perform the assigned activity effectively. By authority we mean power to take decisions, issue instructions, guiding the subordinates, supervise and control them. Authority delegated to a person should commensurate with his responsibility. An individual cannot perform his job without the necessary authority or power. Authority flows from top to bottom and responsibility from bottom to top.

Formation of organization structure 5. Co-ordinating activities: The activities and efforts of different individuals are then synchronized. Such co-ordination is necessary to ensure effective performance of specialized functions. Inter-relationship between different jobs and individuals are clearly defined so that everybody knows from whom he has to take orders and to whom he is answerable. 6. Providing physical facilities and right environment: The success of an organization depends upon the provision of proper physical facilities and right environment. Whereas it is important to have right persons on right jobs, it is equally important to have right working environment. This is necessary for the smooth running and the prosperity of the enterprise.

Formation of organization structure 7. Establishment of structural relationship for overall control. It is very essential to establish well defined clear-cut structural relationships among individuals and groups. This will ensure overall control over the working of all departments and their co-ordinated direction towards the achievement of pre-determined goals of business. It is thus clear from the foregoing analysis that organization provides a structural framework of duties and responsibilities. It not only establishes authority relationships but also provides a system of communication.

Importance of organization structure Organization structure is important in the following ways: 1)Coordination: The organization structure serves as a mechanism for coordination and unification of efforts of people. Harmony of work is brought about by higher level managers exercising their authority over interconnected activities of lower level managers. 2) Source of support and security: It is a source of support, security and satisfaction to managers and employees in performing their assigned tasks. It recognizes the relative status levels of members each one of the member enjoys a definite status and position in the organization 3) Adoption: It facilities adjustments to changes in work load caused by changing conditions in the external environment related to technology, markets, products and services

Importance of organization structure 4) Chain of Command: The role of the organization structure is to set up a chain of command or reporting structure among workers. Chain of command refers to the hierarchy or rank of various employees For Eg: Vice Presidents usually report to the president, director’s report to vice presidents and manager’s report to directors. Managers often have coordinators or analysts working under them. Chain of command allows companies to assign a supervisor for one or more employees 5) Decision Making: One of the important role of organization structure is decision making. For Eg: In decentralised structures front line employees are often empowered to make on the spot decisions to meet customer needs. An example of this the clothing store clerk who is able to offer a refund or exchange without management’s authorization. In centralized structures, low level employees pass critical information to managers, who make the majority of decisions.

Importance of organization structure 6) Efficiency: organizational structure also enhances efficiency. In a functional organization where a small company is more departmentalized , the head of the department usually delegates certain project tasks to directors or managers. This individuals inturn, divide task with various coordinators and analysts.