1. Introduction To Organisation.

Organisation is one important element of the management process. It is next to planning. In management,
organisation is both the process as well as the end-product of that process which is referred to as organisation
structure. Such structure acts as the foundation on which the whole super-structure of management is built. Sound
organisation structure is essential for the conduct of business activities in an efficient manner. It is within the
framework of the organisation that the whole management process takes place. The success of the management
process will be determined by the soundness of the organisation structure. Organising involves integration of
resources in order to accomplish the objectives.

3. Importance of Organisation.

1. Ensures optimum utilisation of human resources: Every enterprise appoints employees for the conduct of
various business activities and operations. They are given the work according to their qualifications and
experience. Organisation ensures that every individual. Is placed on the job for which he is best suited.

2. Facilitates coordination: It acts as a means of bringing coordination and integration among the activities of
individuals and departments of the enterprise. It establishes clear-cut relationships between operating
departments and brings proper balance in their activities.

3. Facilitates division of work: Different departments are created for division of work, specialization and
orderly working of the enterprise. Similarly, delegation relieves top level managers from routine duties.

4. Ensures growth, expansion and diversification: Sound Organisation structure facilitates

expansion/diversification of an enterprise. Organisation structure has in-built capacity to absorb additional
activities and also effective control on them. A business enterprise brings diversification in its activities
within the framework of its Organisation.

5. Stimulates creativity: Organisation provides training and self-development facilities to managers and
subordinates through delegation and departmentation. It also encourages initiative and creative thinking
on the part of managers and others.

6. Facilitates administration: Effective administration of business will not be possible without the support of
sound organisation structure. Delegation, departmentation and decentralisation are the tools for effective
administration.

7. Determines optimum use of technology: Sound Organisation structure provides opportunities to make
optimum use of technology. It facilitates proper maintenance of equipment and also meets high cost of
installation.

8. Determines individual responsibility: Responsibility is an obligation to perform an assigned work. In a

sound Organisation, the manager finds it easy to pinpoint individual responsibility when the work is spoilt.

8.1 Line Organisation Structure.

Line Organisation (also called Military/Scalar Organisation) is the oldest and the simplest form of internal
Organisation structure. It was first developed by the Roman army and later adopted by armies all over the world.
Factory owners also used line Organisation structure in its purest form in the nineteenth century in England.

In the line Organisation, the line of authority moves directly from the top level to the lowest level in a step-by-step
manner. It is straight and vertical. The top-level management takes all major decisions and issues directions for
actual execution. The general manager, for example, issues order to various departmental managers. Thereafter,
the departmental manager issues instructions to works manager. The works manager will issue instructions to
foreman. In this manner, the orders and instructions will be issued to the workers working at the lowest level. Thus
authority moves downward and also step-by-step. The responsibility, on the other hand, moves in the upward
direction.
 Line Organisation structure is given in the
following chart:8.1.1 Advantages of Line
Organisation Structure.

1. Simplicity: Line Organisation structure is

easy to understand and follow by
superiors and subordinates. It is simple
and clear as regards authority and
accountability.

2. Prompt decisions: Line Organisation

facilitates prompt decision-making at all
levels as the authority given is clear and
complete.

3. Discipline: It brings discipline in the

Organisation due to unity of command,
delegation of authority and direct
accountability.

4. Economical: Line Organisation is

economical as experts are not appointed.

5. Attraction to talented persons: Line Organisation brings out talented workers and develops in them quality
of leadership. It offers opportunities of self-development to employees.

6. Quick communication, high efficiency, flexibility and high employee morale are some more advantages of
line Organisation structure.

8.1.2 Limitations of Line Organisation Structure.

1. Heavy burden on line executives: The line executives are given too many duties and responsibilities. Even
the quality of the decisions of executives may suffer due to heavy burden of duties and responsibilities.

2. Non-availability of services of experts: There is absence of skilled experts in line organisation. Expert
assistance is not available promptly when needed by line executives.

3. Favoritism: There is wide scope for favoritism and nepotism in the line organisation. Leadership of
departmental executive is autocratic due to heavy concentration of powers. He may favour some employees
at the cost of others.

4. Too much dependence on limited executives: In the line organisation, all powers are concentrated in the
hands of a few executives. Naturally, the success and stability of the entire organisation depends on their
personal skill, initiative and interest. Special difficulties arise when one executive is to be
transferred/replaced/promoted.

5. Rigidity: There is rigidity in the working of line organisation.

6. Delays in communication, limited freedom to employees and unsuitability to modern large business units
are some more demerits of line Organisation.

In the functional Organisation structure, there will be separation of planning of work and execution of the plan
prepared. The basis of division is the function and naturally the Organisation structure created will be called
"Functional Organisation".

In the functional foremanship, there will be eight specialists/functional heads called bosses. Out of eight bosses,
four bosses will be at the planning level and the remaining four will be at the slop floor level.
 8.2.1 Foremen At Planning Level (Planning Dept.)

1. Time and Cost Clerk: He is concerned with preparing standard time for the completion of certain piece of
work and compiling the cost of that work.

2. Instruction Card Clerk: He lays down the exact method of doing the work. He specifies the tools to be used
for conducting the production and also gives other instructions on the instruction cards prepared by him.

3. Route Clerk: The route clerk lays down the exact route through which each and every piece of work should
move through various stages till completion. He decides the production schedule and the sequence of steps
by which the production process is to move.

4. Shop Disciplinarian: He is concerned with the discipline, insubordination, violation of rules of discipline and
absenteeism. All cases relating to these matters will be managed by the shop disciplinarian.

8.2.2 Foremen At Shop Floor Level (Shop Floor)

1. Gang Boss: He assembles and sets up various machines; and tools for a particular piece of work. He is in-
charge of assembling line of production.

2. Speed Boss: He is concerned with the speeding of machines used for production. He keeps proper speed of
the machines and see that workers complete the production work as per the schedule time.

3. Repair Boss: The repair boss looks after the proper maintenance of machines, tools and equipments
required during the production process.

4. Inspector: The inspector controls quality of the products by keeping adequate check/control when the
production work is in progress.

The functional Organisation structure is given in the following chart:-

8.2.3 Merits of Functional Organisation

Structure.

1. Facilitates specialization: Functional

Organisation structure facilitates division
of work and specialization. Each boss has
specialized knowledge of his functional
area. He is in a better position to guide
and help the workers.

2. Benefits of large-scale operations:

Functional Organisation offers the benefit of economy of large-scale operation. In this Organisation, one
administrative unit manufactures all products. The available machinery, equipment and facilities are used
fully for large-scale production.
 3. Facilitates effective coordination: Functional Organisation facilitates effective coordination within the
function. This is possible as one boss is in-charge of a particular function and he looks after all activities,
which come within that function.

4. Operational flexibility: Functional Organisation possesses operational flexibility. Necessary changes can be
introduced easily to suit the needs of the situation without any adverse effect on the efficiency.

5. Ensures effective supervision: Functional Organisation facilitates effective supervision by the functional
heads and foremen. Due to specialization, they concentrate on the specific functional area and also keep
effective supervision on their subordinates.

8.2.4 Demerits of Functional Organisation Structure.

1. Absence of unity of command: Unity of command is absent in the functional Organisation as each worker
gets orders and instructions from several bosses.

2. Fixing responsibility is difficult: In functional Organisation, responsibility is difficult to fix on a specific

person. This is because the responsibility itself is divided among many.

3. Unsuitable to non-manufacturing activities: Functional Organisation can be introduced in the case of

manufacturing activities. However, its application to non-manufacturing activities such as marketing, etc.
has not been successful.

4. Costly: Functional Organisation is costly, as more specialists are required to be appointed.

5. Creates confusion among workers: Functional Organisation is based on specialization as function is taken
as a base for dividing the work. The authority is overlapping the responsibility is divided. This confuses
workers.

6. Conflicts among foremen, delays in decision-making and limited discipline within the departments are
some more demerits of functional Organisation.

9. Line and Staff Organisation Structure.

9.5 Conflict between Line and Staff Executives.

9.6 Arguments of Line Executives against Staff

Managers/Officers.

1. Dilution of authority: Line executives

argue that the introduction of staff
managers dilutes their authority and also
leads to interference in their work. They
feel that their jobs become less
important.
 2. Stealing show: Line managers feel that the staff executives tend to steal show for the work that turns out to
be successful. On the other hand, when things go wrong, they alone have to face the blame and criticism.

3. Lacks practical knowledge: Line executives argue that staff executives are not familiar with the situation
where actual work is carried out. The services offered by the staff executives are rather theoretical and not
practical.

4. Lacks human skills: Line executives argue that staff managers with human relations skills are rarely
available. Staff presents matters mechanically.

5. Domination of staff managers: Line executives argue that staff managers always feel that they are superior
as regards education and skills. They dominate line executives. This is treated as unwanted interference.

6. Easy access to top management: The staff managers work at the head office and have easy access to top
level management. They try to show their superiority to top level management by making new plans and
suggestions which may not be acceptable to line executives. The top management feels that the line
executives are incompetent due to which the services of staff officers are required. This is a source of agony
for line managers.

7. Stress on paper work: The staff executives are engaged in the paper work. In addition, they need
information and various details from the line executives. As a result, there is increase in the paper work of
line executives, which they resent.

10. Organisation Chart.

Organisation structure of a company can be shown in a chart. Such chart indicates how different departments are
interlinked on the basis of authority and responsibility. It is a simple diagrammatic method of describing an
Organisation structure. It indicates how the departments are linked together on the basis of authority and
responsibility. Such Organisation chart provides information of the Organisation structure at a glance. Organisation
chart is like a blue print of a building. It indicates the number and types of departments, superior-subordinate
relationship, chain of command and communication.

10.1 Definition of Organisation Chart.

According to George Terry, Organisation chart is "a diagrammatical form which shows important aspects of an
Organisation, including the major functions and their respective relationships, the channels of supervision and the
relative authority of each employee who is in-charge of each respective function".

10.2 Features of Organisation Chart.

The definition noted above indicates the following features of Organisation charts:

1. Organisation chart is a diagrammatical presentation.

2. It represents the formal Organisation structure.

3. It shows the lines of authority in the Organisation.

4. It indicates the channel of communication.

5. It indicates who supervises whom and how various units are inter-related.

10.3 Advantages of Organisational Chart.

1. Brings clarity to the Organisation: The very process of preparing a chart makes the executive think more
clearly about the Organisation relationships.

2. Provides dear picture of the Organisation: Once the charts are prepared, they provide lot of information
about the Organisation, both to the members of the Organisation as well as to the outsiders. This
information relates to number and types of departments, superior subordinate relationships, chain of
command and communication and job titles of each employee.

3. Facilitates training of employees: Organisation charts are useful in familiarizing and training new
employees.