Module 2 Organizing.pdf

This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. Organizing A. Definition and Meaning of Organization  The term 'organisation' is used in many ways.  It means d...

This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. Organizing A. Definition and Meaning of Organization  The term 'organisation' is used in many ways.  It means different things to different people.  Currently, the following uses of the term are popular: o A group of people united by a common purpose. o An entity, an on-going business unit engaged in utilizing resources to create a result. o A structure of relationships between various positions in an enterprise. o A process by which employees, facilities and tasks are related to each other, with a view to achieve specific goals.  The static (as a structure) and dynamic (as a process) interpretations of the term organisation are quite commonly used and these are explained below: B. Organisation as a Structure  According to classical theorists (Faye!, Taylor, Weber), structure is essential for achieving stated goals.  The manager determines the work activities to get the job done, writes job descriptions, and puts people into stoups aid assigns them to superiors.  S/He then, fixes goals, issues deadlines and establishes standards of performance.  Operations are controlled through a reporting system.  The whole structure takes the shape of a pyramid.  Thus, the term organisation structure describes the organisation's framework.  It reveals the established pattern of relationships among the constituent pans of the organisation.  According to Koontz and O'Donnell, 'organisation is a structural relationship by which an enterprise is bound together and the framework in which individual effort is coordinated'.  It is nothing but a chart of relationships.  However, organisation is much more than a network of formal, superior- subordinate relationships. Informal relationships also play an important role in processing work.  Organisation, as a structure, has the following features: I. Two or more persons:  Organisation is a form of human association for achieving common goals. The human association consists of two or more persons. II. Common goals:  The organisation exists to achieve some common goals. Structure ensures the smooth achievement of goals. III. Cooperative efforts:  Structure permits members to work in a cooperative way, without any friction.  The members combine their efforts with a view to achieve goals. Page 1  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. IV. Division of work:  The work is divided into small parts and assigned to people working at various levels.  This ensures speedy execution of work. V. Communication:  People communicate along specified routes. Mainly downward communication takes place in the form of superiors issuing commands, orders, directives, etc. VI. Rules and regulations:  Rules and regulations define the territorial jurisdiction of members.  Members have to observe and implement these rules consistently. VII. Pyramidal shape:  Organisation structure takes a pyramidal shape, generally.  Each superior will have a limited number of people reporting to him, at any point of time. C. Organisation as a Process (Organising)  Organising is the process by which employees, facilities and tasks are related to each other, with a view to achieve specific goals.  It refers to the way; work is arranged and allocated among members of the organisation, so as to achieve the goals.  As a process, organisation thus refers to one of the important functions of management, i.e., organising.  According to Allen, organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. The process of organising, thus, involves the following steps: I. Identifying the work:  We organise to achieve objectives.  So, it is essential to identify the total work necessary to achieve the goals.  The work must be classified in a systematic way so that each person in the organisation gets a separate and distinct task.  Work must be divided and distributed because no one can handle the total work in an organisation single handedly.  Identification and classification of work enables managers to concentrate on important activities, avoiding unnecessary duplications, overlapping and wastage of efforts. II. Grouping the work  Division of work creates the need for coordination.  In order to provide for a smooth flow of work all closely related and similar activities must be grouped together.  Thus, departments and divisions are created under the direction of a manager. Page 2  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. III. Establishing relationships:  In order to secure compliance to organisatonal directives, reporting relationships must be specified.  Once formal relationships are established, it would help individuals know what must be done, how it must be done, to whom the matters must be referred and how particular jobs relate to one another, etc.  Without formal relationships, it would be difficult to process the total work because there is no way to know how the work is progressing, who is supposed to handle the work, where the work has to be coordinated so as to achieve enterprise objectives.  As soon as the formal relationships are established, they would provide a framework for assigning duties and responsibilities to individuals in a clear fashion. IV. Delegating authority:  Authority is the right to act, to issue orders and exact obedience from others. Without authority, a manager may not be able to perform the tasks with confidence and show results.  While assigning duties, the manager should clearly specify authority and responsibility limits, so that the subordinate knows well in advance as to what type of work is expected of him by the superior. V. Providing for coordination and control  The interrelationships between various positions must be specified clearly.  The activities and efforts of various individuals must be coordinated.  The performance must be measured, evaluated and controlled at frequent intervals.  If deviations occur, they must be spotted early and appropriate remedial steps taken immediately. D. ORGANISATION AS A GROUP  Some writers have tried to strike a balance between the two aspects-dynamic as well as static-by placing greater emphasis on human interaction in an organisation.  In the words of Barnard, "Organisation is a system of consciously coordinated activities or forces of two or more persons."  Etzioni, in a similar vein expressed thus: 'Organisations are social units (or human groupings) deliberately constructed and reconstructed to seek specific goals.'  A more refined version is provided by W J. Duncan, Page 3  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. “An organisation is a collection of interacting and interdependent individuals who work toward common goals and whose relationships are determined according to a certain structure." E. Features of Organizations  These definitions clearly bring out five essential features common to all organisations:  An organisation always refers to people.  An organisation is developed for people.  People interact with one another in some way.  These interactions are specified by some sort of structure.  Interactions are ordered to achieve joint objectives. F. Importance of Sound Organisation  Sound organisation is an essential prerequisite of efficient management.  It helps an organisation in the following ways: I. Enlarges abilities:  It helps individuals to enlarge their capabilities.  Division of work enables an individual to specialise in the job, in which he is proficient, leading to better utilisation of resources and talents. II. Facilitates administration:  It facilitates administration by avoiding waste motions, overlapping work and duplication of effort.  Departmentation enables proper planning of work.  Confusion and misunderstanding, over who is to perform what work, is avoided by specifying the role of managers clearly.  Proportionate and balanced emphasis is put on various activities. III. Facilitates growth and diversification:  Sound organisation helps in keeping activities under constant vigil and control.  The organisation can undertake more activities without dislocation. Talents and resources are put to good use.  Opportunities are seized quickly and exploited fully, when ultimately pave way for growth and diversification. IV. Permits optimum use of resources:  Human, technical and material resources are put to good use.  Right persons are given right jobs.  There is proper allocation of work. People know that they are supposed to do, well in advance.  Necessary functions are determined and assigned, so that personnel and physical facilities are utilised effectively. V. Stimulates creativity:  It offers stimulating opportunities to people at all levels, to use their skills on jobs best suited to their nature.  Delegation helps people at lower levels to do more challenging work. Page 4  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  The higher-ups, in turn, can concentrate on strategic issues-putting their creative abilities to good use. VI. Facilitates coordination:  Organisation is an important way of achieving coordination among different departments of an enterprise.  Clear authority relationships and proper assignment of work facilitates the task of achieving coordination at all levels.  Poor organisation leads to improper arrangement of duties and responsibilities.  As a result, unimportant and trivial issues are given top priority.  Activities that should be integrated or centralised are spread out and put to improper supervision. Incompetent individuals are overused while talented people are under-utilised.  Delays, duplications and waste motions occur with frustrating regularity.  Expenses mount up.  These would create utter confusion, chaos and conflict.  Poor organisation may mean improper arrangement of facilities and failure to achieve awls. G. Principles of Organisation  The important principles of organisation, as listed by Koontz, may be stated thus: I. The purpose of organising:  Organisation should facilitate the achievement of enterprise objectives in an efficient way. a. Principle of unity of objective:  An organisation structure is effective when it helps the achievement of enterprise objectives. b. Principle of organisational efficiency:  An organisation structure is efficient if it facilitates the achievement of objectives with minimum costs.  An efficient organisation structure operates without wastage of resources, allows maximum utilisation of human resources, offers clear lines of authority and responsibility and provides a means for personal development. II. The cause of organising:  Span of management is the basic cause of an organisation structure. But for the principle of span of management, firms would for ever remain small-managed by only one manager. a. Principle of span of management: A manager should have a limited number of subordinates reporting to him directly. Generally, the span should be short for novel, complex work and long for routine, simple work. Page 5  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. III. The structure of organisation (Authority):  Authority is the cementing force in every organisation. It is the means by which groups of activities can be put under a manager.  It enables the top management to coordinate enterprise work effectively.  A manager can show proper direction and create an environment for sound individual performance. a. Principle of scalar chain:  A scalar chain or chain of command refers to the unbroken line of authority from the top level to the bottom of an organisation.  A clear chain of command facilitates communication. b. Principle of authority and responsibility:  Adequate authority must be given to managers at the lower level.  The superior must state clearly what he expects, when he expects it to be done and by whom.  The subordinate on his part, must show good performance, following the directives of the superior.  Responsibility, in simple terms, is the obligation of a subordinate to perform the duty as required by the superior.  As a matter of principle, there should be parity between authority and responsibility.  Authority without corresponding responsibility results in misuse of authority while responsibility in the absence of adequate authority brings about frustration and ineffective performance.  More importantly, it should be noted here, responsibility is final and it cannot be delegated.  By delegating work to lower levels, the superior is not relieved of hisresponsibility in any way. He is still responsible for the final result. c. Principle of unity of command:  The unity of command principle states that for any given activity an employee should be made accountable to only one superior. d. Authority level principle:  Decisions within the authority of individuals should be made by them and not referred upward in the organisation structure.  Delegation would be a futile exercise, if the subordinates wait at the doorsteps of a superior for an audience before they take actions within their authority. IV. The structure of organisation (departmentation):  The primary purpose of organising is to provide a basic structure in the form of a departmental framework.  Principle of functional definition:  The duties, authorities and responsibilities of every individual must be clearly stated.  People at various levels must know what they are supposed to do, when, and for whom. They must also know the limits to their behaviour. Page 6  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. V. The process of organising:  The process of organising becomes easy when the following principles are applied sincerely: a. Principle of balance:  Different departments and activities in an organisation should be given a balanced and proportionate emphasis in relation to their overall contribution to objectives. b. Principle of flexibility:  The organisation structure should be designed in a flexible way. It should be possible to effect changes in the structure depending on situational requirements. c. Principle of stability:  At the same time, the organisation structure should be reasonably stable. Stability refers to the organisation's ability to withstand changes so as to meet stated organisational goals in an efficient manner. d. Principle of simplicity  The structure should be simple so that personnel follow the assignment of work and allocation of duties and responsibilities.  This facilitates leadership activity also. H. Formal vs. Informal Organisation  A formal organisation is a group of people working together cooperatively, under authority towards goals that mutually benefit the participants and the organisation.  It is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability.  The manager describes organisational relationships, in written and graphic form.  S/He tells the participants to do certain things in a specified manner, to obey orders from designated individuals, and to work cooperatively with others.  It is believed that stable and consistent relationships promote order and facilitate planning and controlling functions.  The environment is specified as to place, time and resources available. Rewards are available for those, who achieve the stated goals.  The official structure, however, is only a portion of the story.  There emerges another structure consisting of informal relationships.  The interactions between participants arise spontaneously and are not prescribed by the formal structure, nor can they be completely controlled by formal authority.  Unlike formal organisations, where the emphasis is on authority, responsibility and accountability, the emphasis in informal organisations is on status, power and politics.  The informal organisation can be viewed as a shadow organisation.  It arises naturally, spontaneously from the interactions of people. Page 7  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  It refers to unofficial and unauthorised relationships that inevitably occur between individuals and groups within the formal organisation. It exists within the confines of the formal authority structure.  However, the interactions that occur informally are not prescribed by the formal structure nor can they be completely controlled by the formal structure.  It is a by-product of human nature and is affected by the formal structure. Point Formal Organization Informal Organization Deliberately created; Aries spontaneously; reflected reflects organizational individual and group goals; Origin and goal goals; basic purpose is to basic purpose is to improve achieve organization goals. human relations. It has been definite structure and is reflected in Structureless; organization Structure an organization chart built chart built around people. around group positions. Formal organization held Held together by feelings of Integrating together by rules, friendship, mutual help and Mechanisms regulations and trust procedures. Depends on formal, official Designs its own Communication channels of communication popularly communication. Size Tend to be larger size Tends to be small Tend to be permanent and Durability Characterized by instability stable It is more or less, an A highly flexible structure impersonal and arbitrary designed to satisfy social and Orientation structure, to which psychological needs of individuals must adjust. individual. I. Nature of Delegation  Ferry manager must delegate some tasks or duties to subordinates, since management means getting work done through others.  Organisation becomes operational through delegation only.  Effective managers will normally delegate as many operating tasks as possible to subordinates and concentrate their efforts on (exceptional) management tasks.  Theoretically speaking, to delegate means to grant or confer; hence the manager grants or confers on others Work certain duties in the form of work and authority.  It is an authorisation to a subordinate manager to act in a certain manner independently.  The delegation of authority is the delivery by one individual to another of the right to act, to make decisions, to requisition resources and to perform other tasks in order to fulfil job responsibilities.  Some of the important features of delegation may be listed thus: a) Two-sided relationship:  Delegation is a two-sided relationship.  It is a demanding function; it requires sacrifices from both the assignor and the assignee. Page 8 This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  The superior must be willing to sacrifice a portion of his authority and the subordinate must be prepared to shoulder additional responsibilities. b) Act of trust:  Delegation is an act of trust, an expression of confidence that the individual to whom duties are assigned will discharge them in a manner which satisfies the intention of the assignor.  This also involves an assumption on the part of the assignor that the individual to whom duties are assigned possesses the necessary skill and strength to be able to discharge those duties and that he possesses the requisite application and dedication to duty to be willing to discharge them. c) Freedom to think and act:  Delegation is a state of mind.  A manager who indulges in second guessing, in being ultra-critical when mistakes are made, or in retaining inflexible and elaborate controls is virtually defeating delegation.  Delegation means freedom of action sufficient to get the tasks accomplished. It means freedom to make decisions, freedom to make mistakes and freedom to use one's full capacities.  This does not mean that the manager leaves the subordinate on his own to sink or swim.  Nor does it mean that he gives him a life preserver. It does mean that the manager assumes the role of a coach. d) Dependency relationship:  Unfortunately, delegation creates a relationship of dependency between the superior and the subordinate.  The subordinate is dependent on his superior for continued favour and for consistent support, to back him up if he runs into trouble, while sitting through the tasks entrusted to him.  His conduct tends to be determined by the personal contacts and sentiments he forms toward his superior.  In effect, his behaviour over the course of time becomes similar to that of his superior. e) A challenging task:  Delegation of authority is a courageous act.  The fear of being ultimately responsible compels many managers to indulge in under-delegation.  In fact, delegation poses an interesting paradox; the delegator gives and retains authority simultaneously and creates responsibility, yet does not escape ultimate authority.  On the other hand, the manager is expected to adopt an attitude of hands off, once the grant of authority is made.  Additionally he must create such an administrative structure where the freedom of different persons does not clash and where orderly relationships prosper.  On the other hand, authority delegation is not responsibility delegation; it is impossible for the manager ever to surrender his ultimate responsibilities.  Thus, delegating duties seems to be an easy concept to grasp, but a difficult one to put into practice.  Delegation demands expression of some positive human traits. Page 9  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  To delegate effectively, a manager must be prepared to give off his time, his interest and his effort with no promise of immediate return.  Delegation of an inevitably, a risky proposition and the manager who is not willing to accept the risk of poor subordinate performance is really not qualified for managerial berth in the organisation.  Delegation, thus, is a challenging task, it is, in fact, a skill that separates the men from the buys in management f) Forward-thinking principle:  Delegation, from a behavioural point of view, is the most forward thinking principle.  It opens a new chapter in superior subordinate relationships.  The granting of freedom to act by the superior is evidence of confidence in the subordinate.  The subordinate responds by developing a constructive sense of responsibility. He is cognizant of the fact that he is an end in himself, and not simply a means towards the ends of his superior.  The acceptance of responsibility by the subordinate means changed responsibilities for the superior, and each finds himself playing a new dynamic role.  The superior-subordinate relationship is now looked at from a new angle. Advantages of Delegation a) Superior related advantages:  The essence of delegation process is empowering another person to act for the manager.  There are certain practical reasons for this managerial preference: o To reduce the burden of responsibility carried by him o To provide more time for constructive review, or deliberation in the interests of progress o To enable selected activities or services to be more expertly covered and provided o To provide for the extension of facilities by the establish pent of local centres in different areas  Instead of carrying a briefcase full of problems home daily and bury himself in endless routine, the manager, through delegation, would be better off sharing his ever-increasing workload with others and concentrate on important issues.  Delegation frees top management from operational responsibilities.  It helps the managers to distribute their lead of work to others and thus multiply their limited personal capacities.  Delegation determines the effectiveness of the manager in his work it is both the gauge and the means of a manager's accomplishment." b) Subordinate related advantages,  Delegation has a 'tonic effect on the psychology of subordinates.  It allows subordinates to grow, enlarge their understanding and develop their capacities.  It causes subordinates to accept responsibility and exercise judgement. It raises the subordinate’s position in stature and importance.  It is delegation of authority that gives subordinates the meant with which to act and learn. Page 10  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  Improves behavioural climate: Authority centralisation may be highly fascinating to authoritarians leaders.  Such leaders believe in making decisions themselves, giving detailed instructions so their subordinates and exercise control from close quarters.  Consequently, they overburden themselves to the extent that they never find enough time to concentrate on their own responsibilities of planning, organising and controlling.  The subordinates, in turn, may refuse to obey rules and regulations continuously, their morale will be low and performance may be mediocre.  Delegation implies freedom of action sufficient to get the work done.  It means freedom to make decisions, so commit mistakes and use one's capacities fully.  Without giving the necessary amount of freedom, it may be virtually impossible to rally men and women toward a common purpose.  The granting of freedom to act by the superior is evidence of confidence in the subordinate.  The subordinate responds by developing a constructive sense of responsibility.  Delegation, thus, improves the behavioural climate in the organisation and paves the way for improved job satisfaction and productivity. c) Advantages to organisation.  At the extreme, if there is no delegation, one person has to do everything and hence, there would be no organisation.  But for delegation, firms would remain small and, an increase in their size would burn up the candle of managerial energies too so.  The primary purpose of delegation is to make organisation possible.  Delegation leads to better decisions, since subordinates closer to the firing line are likely to have a clearer and more complete view of the facts.  In addition, effective delegation speeds up decision making in an organisation. Disadvantages of Delegation a) Loss of control:  When you delegate authority, you are giving up some control over the task or project.  This can be difficult for some managers, especially those who are used to being in control of everything. b) Reduced quality:  There is always a risk that the task or project will not be completed to the same standard as if you had done it yourself.  This is especially true if you are delegating to someone who is less experienced or skilled than you. c) Increased time and effort:  It can take more time and effort to delegate a task or project than it would to do it yourself.  This is because you need to explain the task or project to the person you are delegating to, answer any questions they have, and monitor their progress. d) Potential for conflict:  If the task or project is complex or difficult, there is a potential for conflict between you and the person you are delegating to.  This can happen if there is disagreement about how the task or project should be completed, or if the person you are delegating to does not meet your expectations. Page 11  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. J. Centralization Vs. Decentralization  We live in a world that drenches us with information.  The scarce resource is the processing ability to attend to information.  The ever expanding horizons of knowledge, the ever-increasing size of the organisation, the wide variations in the number and the nature of products, services and markets - all these factors will have a cumulative effect in turning administration into a funnel where the manager may find it extremely difficult to process the bundles of data and take decisions in an appropriate way.  As the organisation becomes more complex in terms of increasing size, interdependence of work flow, complexity of tasks and spatial-physical barriers within and among groups, a functional requisite for efficiency is to move decisions to the operating level (Melcher).  Managers, if overworked will prove to be wasteful and unproductive; a liability for the organisation.  To avoid such an unfortunate situation, it is necessary for the manager to delegate part of his work to hers and allow them to take decisions independently on various matters.  Centralisation actually refers to the degree to which authority is delegated to lower levels.  Studies show that poor delegation is a primary cause of managerial conflict and failure.  In one survey of managers who had supervised other managers who failed, inability to delegate was mentioned more than any other item (Gauder and Carli).  Accepting decentralisation amounts to accepting philosophy of life (Pfiffner and Sherwood).  Decentralisation is an extension of the concept (more appropriately, a refinement) of delegation and cannot exist unless authority is delegated. In decentralisation, a great deal of authority is delegated and more decisions are made at lower levels.  It gives added responsibility to managers at all levels below the top.  Centralisation is the opposite action. Authority and responsibility are tightly held by upper levels of the organisation and are not delegated.  As Fayol stated 'everything which goes to increase the subordinate's role is decentralisation, everything which goes to reduce it is centralisation. a. Centralisation  According to Allen, centralisation is the systematic and consistent reservation of authority at central points within the organisation.  In centralisation, little delegation of authority is the rule; power and discretion are concentrated at the top levels.  Control and decision making reside at the top levels of the management.  The more highly centralised the organisation, the more control and decision making reside at the top.  However, absolute centralisation is untenable because it would mean that subordinates have no duties, power, or authority.  Most organisations start with centralisation of authority initially Such an arrangement helps the manager to be in touch with all operations and facilitates quick decision-making.  Centralisation may be essential in case of small organisations to survive in a highly competitive world. Page 12 This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  But, as the organisation becomes more complex in terms of increasing the interdependence of work-flow, complexity of tasks and spatial physical barriers within and among groups, a functional requisite for efficiency is to move decision- making centres to the operating level.  Thus, the larger the size of an organisation, the more urgent is the need for decentralisation.  This does not mean that decentralisation is good and centralisation is bad.  Centralisation or decentralisation may be, in part, merely the result of circumstances (Dale). There are certain special circumstances forcing managers to reserve authority and centralise decision-making power 1. To facilitate personal leadership:  Centralisation generally works well in the early stages of organisational growth.  Working under a talented and dynamic leader, a small firm can derive advantages in the form of quick decisions, enterprising and imaginative action, and high flexibility.  Centralisation enables a small organisation to capitalise on the loyalties, ability and experience of its most talented top management people.  Under this arrangement, the manager is in touch with all operations, makes all decisions, and gives all instructions.  Thus, centralisation can project the personality and skills of one outstanding leader more meaningfully 2. To provide for integration:  Under centralisation, the organisation moves like one unit. It keeps all parts of the organisation moving together harmoniously towards a common goal.  It assures uniformity of standards and policies among organisational units.  The danger of actions drifting and getting off course is minimised.  The manager acts like a unifying force and provides direction to enterprise activities.  In the process, duplication of effort and activity are also avoided.  To see that all units do the same thing in the same way or at the same time without wasteful activity, centralisation is essential. 3. To handle emergencies:  Centralisation is highly suitable in times of emergency.  The resources and information can be mobilised quickly and efficiently.  Quite often, emergency situations like declining sales, introduction of a highly sophisticated competitive product, government policy changes may force the organisation to cut down costs, maintain inventories at an optimum level, utilise resources effectively and instantaneously.  Centralisation of decision-making esure prompt action necessary to meet the emergencies.  In addition, centralisation forces managers to develop an overall organisation perspective, instead of a 'parts' mentality, leading to better decisions in terms of long-range interests of the organisation.  More centralised decisions could reduce total management costs also. If managerial talent happen to be in short supply, centralisation is the best answer.  Further, it is easier for corporate executives to control individual divisions when reporting systems are uniform. Page 13  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  Unique systems in operating divisions are regarded as an impediment to adequate control (Glaser).  Thus, if the communication and data processing systems are fast, centralisation can be an effective means of controlling the operational units (Carlule). b. Decentralisation  Decentralisation is the systematic effort to delegate to the lowest levels all authority except that which can be exercised at central points.  It is the pushing down of authority and power of decision-making to the lower levels of the organisation.  The centres of decision-making are dispersed throughout the organisation.  However, the essence of decentralisation is the transference of authority from a high level to a lower level.  Decentralisation, in recent years, has come to be accepted as a 'golden calf of management philosophy.  It has come to be associated as a fundamental principle of democratic management where each individual is respected for his inherent worth and constitution.  As pointed out earlier, absolute centralisation (where there is no room for subordinates) or absolute decentralisation (where there is no coordinated, organised activity) is fictitious in practice, it is a matter of degree along a continuum.  Generally speaking, decentralisation is said to be greater: o When more decisions are made at lower levels. o When more important decisions are made at lower levels. o When more functions are affected by decisions made at lower levels. o When the checking on the decisions made at lower levels is minimal. K. Line, Staff and Line & Staff Organization 1. Line Organisation  The line, or military organisation, is the simplest and the oldest form of organisation.  Line structures are more common in small-scale units.  Authority flows in a direct line from superiors to subordinates.  Each employee knows who his superior is and who has authority to issue orders.  The one-man one boss principle is strictly applied.  Managers have full authority in their own areas of operation and are responsible for final results.  Similarly, each subordinate is directly responsible for the performance of assigned duties.  If the subordinates fail to carry out reasonable orders or directives, the superior has the right to take disciplinary action.  Thus, authority flows downward and responsibility flows upward, throughout the organisation.  The essential characteristics of line organisation are the flow of authority that is straight and vertical.  In line organisation, every superior enjoys line authority. Page 14  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  This is often referred to as direct authority because it is directly associated with the attainment of the primary objectives of the organisation.  In other words, line authority implies the right to give orders and to have decisions implemented.  For example, in a military organisation, the General has line authority over the Colonel, who has line authority over the Major, and so on down the hierarchy.  Figure provides an illustration of a line organisation. Advantages A line organisation is simple to establish and easy to explain to Simplicity: employees. It is easy to understand and follow Responsibility is fixed. Each employee knows who his superior is and Fixed who has authority to issue orders. Each employee knows to whom he responsibility is responsible and who is or are, in turn, responsible to him. This facilitates the fixing of accountability for non-performance In a line organisation, all the activities affecting one department are controlled by one executive. He is in complete charge of all operations Quick in the department. Direct lines of authority eliminate a considerable decisions amount of bureaucratic buck-passing, thus the line organisation enables a manager to take quick decisions The line manager is responsible for results. He is charged with getting things done properly. Non-performance may mean demotion and loss Develops of prestige. To survive and succeed, he has to accomplish tasks, thus managers utilising his potential fully. It can be concluded then that a line organisation encourages and forces managers to grow. Each executive has full freedom to make decisions in his area of Flexibility: command. This enables him to adjust policies and procedures to the changing needs. A line organisation is economical for a small business, as no specialists are needed and a limited number of executives are Economical employed. Quick decisions, better coordination and prompt actions contribute greatly to organisational success. Disadvantages With growth and diversification, organisational problems multiply Lack of in number. Factors like changing economic conditions, specialisation technological innovations, and ever-growing competition turn administration into a funnel where the executives may find it Page 15  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. extremely difficult to process bundles of data and take appropriate decisions. Capable line executives who can look after such diverse activities like planning activities, office operations, research activities, personnel policies, etc., are rarely available With growth, the Scarce talent: manager's duties, too, continue to expand. Working under time and cost constraints, managers may overlook or ignore important activities and are forced to grapple with trivial issues. Line organisation is based on the one-man management principles. Arbitrary The evils are well known. Work may be divided arbitrarily and actions assigned to incompetent individuals. Nepotism and favouritism may prevail in the selection, recruitment, and training of operatives. The line organisation may frustrate attempts to coordinate work in a useful way. Each manager may try to develop his own department Difficult to is a narrow way at the cost of other departments. Broad coordinate organizational objectives may be sacrificed to meet narrow sectional interests. Line organization sows the seeds of internal strife and conflict. 2. Functional Organisation  Functional organisation is an organisation where line authority, staff authority and functional authority exist together.  Functional authority is a limited form of line authority given to functional experts over certain specialised activities under the normal supervision of managers belonging to other departments.  Managers who enjoy functional authority have the right to issue directives on matters over which they do not have direct line authority otherwise.  Thus, a foreman in the production department may receive instructions not only from the superintendent who is his line boss but also from the personnel manager, financial manager, marketing manager, etc.  Under functional organisation, identical functions of various departments in an organisation are performed by a specialist in each of several supervisory functions which are assigned to different specialists (Figure). Advantage Page 16  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. The functional organisation is based on the principle of specialisation. It is built around experts. Each functional specialist has academic excellence and requisite training in the area assigned to him. He devotes all his time to one phase of work. As an expert, he can solve highly technical and complex problems more quickly and effectively Specialisation than the line executive. Specialisation being built into the organisation brings about competitive advantage for the firm. By putting its limited resources into one specialised activity, 'even the small company can compete with the giant corporation on quantity, delivery and price. : Functional design has the great advantage of clarity. Everybody has Clarity a home. Everybody understands his own task. As a result, functional structures bring order and clarity to organizational activities. Economies of It provides economies of scale within functions. It reduces duplication scale within and waste. For example, the total floor space shared by several functions products in functional organisation leading to economy of operations. The functional structure also promotes skill development of In-depth skill employees. Employees are exposed to a range of functional activities development within their departments allowing them to embody their outstanding skills in every activity of the company The functional specialists enjoy the right to command the line units in Satisfying matter relating to the functional areas in which he specialises work Freedom to act and use resources is stimulating and satisfying. (vi): The functional organisation draws the curtain between thinking and doing functions. Specialists can provide expert advice and Eases the guidance to operating personnel, while line managers are not over- burden of top burdened with routine activities. Complex matters are referred to managers specialists and this frees them for more creative activities. They can process the work comfortably and more objectively, keeping the broad interests of the organisation in mind. The functional type of organisation is best for small to medium sized organisations producing one or a few products where the dominant competitive issue and goals of the organisation emphasise functional Suitability specialisation's efficiency and quality. In fact, Fayol's model for functional structure was a coal-mining company where there was only one product, demanding simple mechanical operations. The operations were more or less standardised. Disadvantages Leads to Violation of the principle of single accountability creates confusion conflicts and promotes conflicts in the organisation. Page 17  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. Functional organisation adversely affects the morale of employees. Each employee has a number of superiors, and may be forced to choose between the devil and the deep sea. Between two bosses, an employee is in a poor position to decide whose orders should be Affects obeyed promptly and which can be postponed. When specialists morale disagree, the worker is at a loss as to which superior's decision to accept and implement. In course of time, frustration develops because the employee cannot live up to all that is expected of him. The functional specialist gains respect as more and more orders are Weakens the issued to guide the efforts of the operating people. This, admittedly, influence of dilute the authority of the supervisor and can depreciate his status in the line the eyes of his subordinates If the functional structure is used supervisors extensively, the line manager may, in course of time, become little more than a figurehead. As pointed out by Drucker, "Every functional manager considers his function the most important one, tries to build it up and is prone to Lack of subordinate the welfare of the other functions if not of the entire coordination business, to the interests of his unit. Every functional manager considers his function the most important one and develops a narrow dimension of the organisation. : In the functional organisation, the decision-making process is slowed down to a feeble walk Experts rarely agree on what should be Delayed done, and action is painfully slow When a decision needs to be decisions reached among a group of specialists, a compromise may be necessary and considerable time may be lost in reaching it. Divided : If everything goals well, each expert tries to steal the credit. responsibility However, if something goes wrong, all try to disown responsibility Mutual recrimination and shifting of blame takes place Managerial Emphasis on functional skill makes a man unfit for top management Vacuum post requiring a broad perspective on the organisation's activities. Functional structure does not prepare people for tomorrow, for it has no position in which a functional head can learn and prepare to handle complexities inherent in the chief executive's position. In course of time, a chronic shortage of top management generalists may be felt. 3. Line and Staff Organisation  The line and staff organisation combines the good features of both the line organisation and functional organisation.  The staff specialists provide advice and support to the line managers in getting the work done.  Staff specialists concentrate on a narrow portion of the firm's activities. However, their authority is purely advisory, not functional. Page 18  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material.  Thus, when the staff organisation is superimposed on the line organisation, the result is a line- staff organisation!  The line organisation is paramount and the staff organisation is created to service it.  The role of staff is considered a 'service' to managers.  It is characterised by two features: it provides service to the line and it is devoid of the right to command.  The staff man advises, but his sole authority lies in the authority of ideas.  On the other hand, line authority is characterised by two important features-the right to decide and right to direct.  Line elements have a 'direct responsibility for the accomplishment of the objective of an enterprise.  They have the ultimate authority to command. act, decide, approve or disapprove of all the organisational activities.  Both line and staff department managers exercise line authority over their immediate subordinates.  In fact, all managers exercise line authority over their subordinates!  Figure reflects the line and staff organisation, as it is commonly employed in organisations. Advantages As business grows, the pure line organisation may overburden the line managers with complex problems, and the need for staff Planned assistance would be felt acutely. The primary advantage of line and Specialisation staff organisation is that it uses the expertise of specialists, ie, it brings expert knowledge to bear upon managerial and operational Page 19  This material is for reading purpose only. Instructor of the subject is not responsible for any unauthorized use of material. problems. Line executives can, then, plan effectively and be responsible for proper execution while the staff specialists assist as and when needed. The actions of a line manager can become more scientific by means Scientific of concentrated and skilful examination of business problems. actions Expert advice definitely helps line executives in arriving at a sound decision In a line-staff organisation, authority and responsibility are fixed. The unity of command principle is honoured as each individual reports to only one superior, while specialised help is available as Definiteness: and when needed. In addition, accountability is definite. Only line executives are accountable for the results of their divisions or departments. Undivided responsibility compels line executives to enforce discipline strictly. Control and coordination are effective Training As everyone is expected to concentrate on one area, one's training ground for needs can be expressed easily. Line managers can improve their developing problem-solving abilities by observing staff specialists' work on people complex problems. Disadvantages Potential for Line and staff personnel can have different perspectives and conflict: priorities, which can lead to conflict. The line and staff structure can create communication challenges, Communication as line and staff personnel may need to coordinate their efforts challenges: closely. The line and staff structure can be more expensive than other Cost: organizational structures, as it requires additional staff personnel to provide support and expertise. Confusion over Line and staff personnel may have overlapping responsibilities, authority and which can lead to confusion over who is responsible for what. This responsibility: can also lead to conflict and inefficiency. Page 20