UNIT-I

INTRODUCTION TO MANAGEMENT

INTRODUCTION TO MANAGEMENT: .

When human being started group activities for the attainment of same common objectives
whenever a group is formed and a group activity is organized to achieve certain common
objectives, management is needed to direct, co-ordinate and integrates the individual activities
of a group and secure teams work to accomplish organizational objectives. The objectives of
all business are attained by utilizing the scare resources like men, materials, machines, money
etc.

In process of management, a manager uses human skills, material resources and

scientific methods to perform all the activities leading to the achievement of goals.

DEFINITION:
“Management is the art of getting things done through and with people in formally organized
groups”.
-Harold Koontz.
“To manage is to forecast and plan, to organize, to command, to co-ordinate and to control.”
-Henri
Fayol.
“Management is an operational process that can be dissected into five essential managerial
functions. They are: planning, organizing, staffing, directing and leading, and controlling.”
-Koontz and
O’Donnel

NATURE OF MANAGEMENT:
The study and application of management techniques in managing the affairs of the
organization have changed its nature over the period of time.

Management is a social process: Social process refers to the series of activities that are
performed in the society. These activities are carried out by administrators, politicians,
economists, housewives, parents, doctors, lawyers and so on. Management helps everyone to
carry out the activities in the society effectively.

Management also denotes a ‘body of people’ involved in decision making: When an

institution is very well run, it is said that the management of that institution takes personal
interest in the institution. Here, management denotes a body of people involved in decision
making.

Management is omnipresent and universal: Successful organizations show that

management principles apply to every kind of organization and also to every level in it.
Hence it is called omnipresent and universal.

Management is complex: Management functions are complex. They call for fairly

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professional approach to manage a given situation or organization.
Management is an inexact science: Management principles are not like those in science or
Maths where things are fairly clear and exact. Hence, they cannot be generalized precisely.

Management is situational in nature: The same style of management cannot work for the
same situation every time. The change in the situation may call for change in the style of
functioning of the manager.

Management is a Science and also an Art: There is a controversy whether management is

science or art. However, management is both a science and art as it satisfies all the
characteristics of art and science.

Management is a profession: Profession refers to a branch of advanced learning such as

engineering or medicine. The managers are professional in their approach and governed by
code of ethics.

IMPORTANCE OF MANAGEMENT:
Management is viewed as a very significant tool for the following reasons:

 It facilitates the achievement of goals through limited resources.

 It ensures smooth sailing in case of difficulties.
 It ensures continuity in the organization
 It ensures economy and efficiency
 It focuses on group efforts.
 It is a key to economic growth.

FUNCTIONS OF MANAGEMENT:

There are various functions of management. Most of the important functions of

managements are given by Henry Fayol, Luther Gullick, Koontz. According to Henry Fayol,
the functions of management include planning, organizing, commanding, controlling. Luther
Gullick defines functions of management as planning organizing, staffing, directing,
coordinating, reporting, and budgeting. But the widely accepted theory of functions of
management was given by Koontz and O’Donnell. It includes planning, organizing, staffing,
directing & controlling.

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future. Planning involves essentially four stages:

(a) Identifying the goal to be achieved.

(b) Exploring the courses of action available for implementation
(c) Evaluating each course of action on merits, and
(d) Finally selecting best course for implementation.

procedures, schedules, Budgets.

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1. Planning: - Planning is nothing but deciding in advance about what should be done in

Elements of planning are Forecasts, objectives, policies, strategies, programmes,

2. Organizing:-Organizing is bringing together all resources and then developing productive

relationship among those resources. The characteristics of organizing are as follows.
1. It divides the total work into different departments for better performance.
2. Delegation of authority by superior to his subordinates.
3. Identification of activities to be performed

3. Staffing:-Every organization must employ right kind of people to do various jobs in the
organization within the right time is said to be called as staffing. It is concerned with
performance of following activities.
1. Recruitment and selection of employees.
2. Training and development.
3. Wage and salary administration.
4. Performance appraisal.
5. Employee transfer, promotion and termination.

4. Directing:-Directing is a process of issuing orders and instructions to guide and teach the
subordinates the proper methods of work and ensuring that they perform their job as planned.
The manager has to perform following functions while directing:
1. Leading
2. Motivating
3. Communicating
4. Coordinating

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5. Coordinating:-Coordination is essential to channelize the activities of various individuals
in the organization for achievement of common goals. It creates team spirit. It can be
achieved by the following ways.
1. Planning
2. Rules & procedure
3. Proper use of Hierarchy.
4. Effective communication
5. Creation of separate departments.
6. Controlling:-The Controlling is the process which enables the management to get its
policies implemented and take corrective actions if performance is not according to pre-
determined standards. Process of controlling involves
1. Establishment of standard.
2. Measurement of actual performance.
3. Making a comparison between actual performance & standard performance.
4. Finding out deviation & taking collective actions.

TAYLOR’S SCIENTIFIC MANAGEMENT: The utility of scientific methods to problems

of management was first introduced by F.W.Taylor

Definition: Scientific management may be defined as the “Art of knowing exactly what is to
be done and the best way of doing it”.
Scientific management is the result of applying scientific knowledge and scientific
methods to the various aspects of management and the problems that arise from them.

Scientific Management Process contained the following elements:

 Develop a scientific method for each operation replacing opinions or rule of thumb.
 Determine accurately in a scientific way the correct time and method for each job.
 Develop a suitable organization to make the workers responsible.
 Select and train the workers.
 Convince the management that scientific approach is better than arbitrary methods of
controlling workers, and thus, they need to cooperate with workers for better results.

Taylor’s Experiment:

This experiment dealt with the study of efforts of two first class Shovelers. Each man had
his own personal shovel (a traditional tool) with which he used to shift coal. This shovel
was used to shift every type of coal or ore. Earlier, the average shovel load was about 38
pounds and at this rate, each handled about 25 tonnes of material a day. As a part of
experiment, each worker was given a smaller shovel to study the impact of size of shovel
on productivity. Amazing! The daily tonnage went up to 30 tonnes! In due course the
workers’ output was observed with several different sizes of shovel. There was rise in the
daily output averaging about 21 pounds per load. The workers who could achieve these
standards were promised an increase in wages by 60 percent.

Criticism of Scientific Management:

 It ignores the functional areas of management such as marketing, finance, and so on.

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  Individual creativity is ignored by favouring one best way.

 Worker is reduced to cog in the machine.

 Mobility among workers gets restricted because of narrow specialization.

Benefits from Scientific Management:

 Increase in productivity.
 Rational approach to measure the tasks
 Lay foundation for work study and other related techniques.
 Replace thumb rule method
 Change in physical working conditions.
 Piece rate wage system, incentives were evolved.

MODERN MANAGEMENT/ ADMINISTRATIVE MANAGEMENT THEORY

(HENRI FAYOL’S PRINCIPLES):

Henri Fayol is called as father of Modern Management.

He established the pattern of management and the pyramidal form of organization. He pointed
out that technical ability is more dominating on the lower level of management, managerial
ability is more important on the higher level of management.

Henri Fayol analyzed the process of management and divided the activities of an industrial
undertaking into six groups: Technical activities, Commercial activities, financial activities,
Security activities, Accounting activities, Managerial activities.

Henry Fayol developed 14 basic principles of management. They are

1. Division of work:-By this we mean that the total work done is divided into small parts
according to the individual talents and skills. This is referred to as work specialization.
2. Authority and responsibility:-Authority is nothing but official right of the manager to
issue orders where as responsibilities is an obligation to perform the work effectively.
3. Discipline:- Having proper respect for the rules and regulations of the organization is
called discipline. This principle of management signifies that every employee of an
organization should stick on to the rules and regulations of the organization.
4. Unity of command:-According to this principle, an employee should receive orders
from one superior only. If at all there are two superiors in an organization, the employee
will find difficulty in reporting to the managers. Therefore, unity of command should be
followed.
5. Unity of direction:-It means that the efforts of all the members of a department must
be directed towards the achievement of organizational goals.
6. Subordination of individual interest to common or general interest:-This principle
of management suggests that individual & their interest are not valid in an organization.
Always employees should work in the contest of organizational interest.

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 7. Remuneration:-It means payment of the employees. Henry Fayol used that payment to
the employees (remuneration) must be there and it should give maximum satisfaction
that promotes work culture.
8. Effective Centralization: - Centralization means concentration of authority in the
hands of few, i.e. top management. Everything which goes to increase the importance
of subordinate’s role is decentralization. A balance must be maintained between
centralization and decentralization of authority to attain best results.
9. Scalar chain:-It is the representation of line of superiors ranging from highest to lowest
level in the organization. It means communication should follow the prescribed line of
authority.
10. Order:-Fayol talks about two types of orders physical order & social order. Physical
order means a proper place for everyone and everything in its right place. Hence, social
order means a place for everyone and every one in his appointed place.
11. Equity:-The principle of equity ensures fairness, kindness and justice. In the treatment
of employees, by their managers. It means managers should be impartial towards their
subordinates.
12. Stability of tenure:-It means that an employee shall not be shifted unnecessary from
one job to another. He should have got fixed schedule of this job.
13. Initiative:-The freedom to think and act in an organization will lead to higher level of
job satisfaction.
14. Esprit-de-corps:- Organization should encourage spirit and cooperation amongst the
members of various departments within the organization, such a movement will bring
good levels of performance in a organization.

MOTIVATION: The process of stimulating the employees to perform more effectively

using their abilities and full potential is called motivation.

MONETARY AND NON MONETARY INCENTIVES TO MOTIVATE WORK

TEAMS:

Incentive is an act or promise for greater action. It is also called as a stimulus to greater
action. Incentives are something which are given in addition to wagers. It means additional
remuneration or benefit to an employee in recognition of achievement or better work.
Incentives provide a spur or zeal in the employees for better performance.

Monetary incentives- Those incentives which satisfy the subordinates by providing them

rewards in terms of rupees. Therefore, in many factories, various wage plans and bonus
schemes are introduced to motivate and stimulate the people to work.

Non-monetary incentives- Besides the monetary incentives, there are certain non-financial

incentives which can satisfy the ego and self- actualization needs of employees. The
incentives which cannot be measured in terms of money are under the category of “Non-
monetary incentives”. Non- financial incentives can be of the following types:-

a. Job Security
b. Praise or recognition
c. Suggestion scheme
d. Job enrichment
e. Promotion opportunities

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 The above non-financial tools can be framed effectively by giving due concentration
to the role of employees. A combination of financial and non- financial incentives
help together in bringing motivation and zeal to work in a concern.

MOTIVATION THJEORIES:

HAWTHORNE EXPERIMENT/ ELTON MAYO’S HUMAN RELATIONS

MOVEMENT:

The human relations movement was founded by sociologist George Elton Mayo in the 1930s
following a series of experiments known as the Hawthorne studies, which focused on
exploring the link between employee satisfaction/wellbeing and workplace productivity.
Elton Mayo generally recognized as father of human relations approach.

In 1927, researchers were trying to determine the optimal amount of lighting, temperature,
and humidity for assembling electronic components at Western Electric's Hawthorne plant.
The results showed that lighting had no consistent effect on production. Researchers were
frustrated to discover that increasing light increased output, but reducing light also increased
output. The common factor, it seemed, was that something in the work environment was
changed, and that positive effects were then observed. An analysis of this showed that
workers were highly motivated more for the importance given to them.

Essentially the Hawthorne studies concluded that:

 When employers take an interest in workers and make decisions based on their
natural needs and psychological makeup, productivity increases.
 They also found that people work best when organized into groups.
 When they can have effective two-way communication with their leaders, and when
leaders communicate and share information freely as part of an overall cohesive
decision-making process, it leads to employee motivation.
 Changes in the work environment had little long-term effect upon worker
productivity.
 Recognizing the emotions of workers could enhance the productivity and physical
well being of the employees.
 The sense of belongingness and effective management were the two secrets unfolded
by the Hawthorne experiments.
 Need for status and belongingness to a group were viewed as more important than
monetary incentives or good physical working conditions.

The human relations movement is seen as the precursor of the modern human resources
function. Before the human relations movement, workers were typically seen as replaceable
cogs in organizational systems that put the ultimate value on higher output.

MASLOW’S THEORY OF MOTIVATION:

Maslow’s level of hierarchy about human relations and behavioral science approach,
his assumptions are based mainly on theory of ‘Human Needs’, he has defined five level of
hierarchy of needs starting from the biological need and then coming to more intangible
ones .

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 1. Physiological/ Physical needs like food, clothes and shelter
2. Safety needs freedom from fear of insecurity
3. Social needs include a sense of being accepted in the society or environment one
finds him in.
4. Esteem needs include feeling of important and recognition
5. Self actualization needs include need or desire for personal fulfillment of
individual potential and activity.

Self
Actualization
Needs

Ego needs

Social needs

Safety needs

Physiological/Physical needs

Douglas McGregor Theory: He divides leadership is two styles labeled theory “X” and
theory “Y”. The traditional styles of leadership and controls stated in theory ‘X’ by
McGregor, is exercised to managers on the basis of his assumptions about human beings.
These assumptions as laid down or observed by McGregor for theory ‘X’ are
Theory “X”:
1. An average human being does not like to work and he tries to avoid it as far as
possible.
2. He avoids accepting responsible and challenging tasks, has no ambition but wants
security above all.
3. Because of this, the employees are to be forced, concerned and threatened with
punishments to make them put their best efforts.

These people would not work sincerely and honestly under democratic conditions.
However the above assumptions re not based on research finding. The autocratic style
basically presumes that workers are generally lazy, avoid work and shrink responsibilities. It
is believed that workers are more interested in money and security based on these
assumptions the leadership styles developed, insists on tighter control and supervision.
Theory “Y”:
It focuses a totally different set of assumptions about the employees
1. Some employees consider work as natural as play or rest.
2. These employees are capable of directing and controlling performance on

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 their own
3. They are much committed to the objectives of the organization
4. Higher rewards make these employees more committed to organization.
5. Given an opportunity they not only accept responsibility but also look for
opportunities to outperform others.
6. Most of them highly imaginative, creative and display ingenuity in
handling ORGANIZATIONAL ISSUES.
HERZBERG’S TWO-FACTORS THEORY: Maslow’s theory has been modified by
Herzberg and he called in two-factors theory of motivation. According to him the first group
of needs are such things are such things as company policy and administration, supervision,
working conditions, interpersonal relations, salary, status, job security and personal life.

“Herzberg called these factors as ‘dissatisfiers’ and not motivators, by this he means
their presence or existence does not motivate in the sense of yielding satisfaction, but their
absence would result in dissatisfaction. These are also referred to as ‘hygiene’ factors.

In the second group are the ‘satisfiers’ in the sense that they are motivators, which are
related to ‘Job content’. He included the factors of achievement, recognition, challenge work,
advancement and growth in the job. He says that their presence will yield feelings of
satisfactory or no satisfaction, but not dissatisfaction.

Maintenance factors or dissatisfier Motivational factor or satisfier

Job context Job content

Company policy and Administration Achievement

Quality of supervision Recognition
Relations with supervision Advancement

Relations with subordinates Possibility of growth

Pay Responsibility

VROOM’S EXPECTANCY THEORY:

Vroom developed the expectancy theory of motivation. It suggests that individuals are
motivated to act in a certain way because they strongly expect that a particular action
will lead to a desirable result. According to this theory,
Force= valence x expectancy
Where force is due strength of a person’s motivation, valence is the strength of
individual’s desire for a particular outcome and expectancy is the probability that a
particular action will lead to a desired result.

LEADERSHIP AND LEADERSHIP STYLES:

Leader:
One who leads a given group or team of people is called leader. If you can influence

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 people to perform better in a given organizational setting, that means you are a leader.

Leadership is ability to influence people to achieve the given goals in an organization.

A true leader is one who shares success with followers and absorbs all failures.

QUALITIES OF A SUCCESSFUL LEADER:

The leader is characterized by his vision, ability to inspire followers, communication skills,
and personality characteristics such as charisma, appearance maneuvering skills, high energy
levels, adaptability, aggressiveness, enthusiasm, self-confidence, initiative and a strong
capacity to convert the unfavourable situation to a favourable one for the benefit of the
organization. Further a manager is expected to have the following qualities:

o Self-assessment: Effective leaders periodically take stock of their personal strengths

and shortcomings. They ask: “What do I like to do? What am I really good at?” “What are my
areas of weakness, and what do I dislike doing?”
o Knowing your areas of weakness does not make you weak; on the contrary, it allows
you to delegate to others who have those abilities, in order to achieve the common goal.
Rather than clinging to the false belief that they can do it all, great leaders hire people who
complement, rather than supplement, their skills. Working on your areas of weaknesses will
improve your leadership ability – and recognizing them makes you more human.
o Sharp perception:  If you really want to know what people think, just ask them. You
may receive feedback that you’re not listening or showing appreciation as well as you could
be. If you’ve established an environment of honest and open communication, you should be
able to ask about your good qualities and the areas you need to improve on. Your staff will
appreciate your effort.
o Responsive to the group’s needs: Being perceptive can also help a leader be more
effective in knowing the needs of the team. Some teams value trust over creativity; others
prefer a clear communicator to a great organizer. Building a strong team is easier when you
know the values and goals of each individual, as well as what they need from you as their
leader.
o Knowing the organization: Effective leaders know the organization’s overall
purpose and goals, and the agreed-upon strategies to achieve these goals; they also know how
their team fits into the big picture, and the part they play in helping the organization grow and
thrive. Full knowledge of your organization – inside and out – is vital to becoming an
effective leader.
o Communication – Good communication skills are required at every level of
business, but leaders must possess outstanding communication skills. Luckily, this is a skill
that can be learned.
o Motivating teams – Inspiring others is the mark of an effective leader.  Motivation is
best done by example and guidance, not by issuing commands.
o Team building – Putting together strong teams that work well is another trait of great
leaders. The opposite is also true: if a team is weak and dysfunctional, it is generally a failure
in leadership.
o Risk taking – You can learn how to assess risk and run scenarios that will help you
make better decisions. Great leaders take the right risks at the right time.

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o Vision and goal setting – A team depends on its leader to tell them where they are
going, why they are going, and how they’re going to get there. People are more motivated
when a leader articulates his or her vision for a project or for the organization, along with the
steps – or goals – needed to achieve it.

Types of Leadership Styles:

Leader has to ensure that people under his guidance are comfortable and their good work is
recognized.
A good leader has to adopt such a style of working that takes care of people around him.
There are also some leader who do not care for people and who care more for the task
completion.

Autocratic leadership: Here, leader command the followers and expects compliance from
them for all the instructions given, leaders are more dogmatic and positive. They lead by his
ability to withhold or give rewards or punishments. Here, no suggestions from the followers
are entertained and almost to-down approach is seen. They direct others. They do not allow
any participation.

Democratic leadership: Here leaders consult subordinates and involve them in decision
making. They encourage discussion with the group leaders believes in two-way
communication. They listen to followers; try to facilitate the decision making.

Free – Rein leadership: Free – Rein leaders exercises little authority and give maximum
freedom to subordinates while making decisions. It is bottom-up approach. Suggestions from
the followers are encouraged and rewarded. They give high degree of independence
subordinates in their operations.

DECISION MAKING:

Decision making is an important job of a manager. Every day he has to decide about doing or
not doing a particular thing. A decision is a selection from among alternatives.
Definition: “Decision making is a selection based on some criteria from two or more possible
alternatives”. -George Terry
“A decision is an act of choice wherein an executive forms a conclusion about
what must be done in a given situation. A decision represents a course of behavior chosen
from a number of possible alternatives.” -MacFarland
Steps involved in decision making: - It involves the following steps.
PROCESS OF DECISION MAKING

Defining the problem

Analysis of Problem

Alternative Courses of Action

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 Evaluation of Alternatives

Taking Decision and Following up

1. Defining the problem:- The first step in decision making is to find the problem correctly.
It is not easy to define the problem. It should be seen what is causing the trouble and what
will be the possible solution. No problem presents itself in a manner that an immediate
decision is taken.
2. Analysis of problem:- After defining the problem the manager should analyze it. He
should collect all possible information about the problem and then decide whether it will
be sufficient to take a decision or not.
3. Alternative courses of Action:- Every problem has the number of solutions. If there is
only one solution, there is no need for decision making. A manager must find out various
alternatives in order to get satisfactory results of a decision. The manager should prevent
from making wrong decision.
4. Evaluation of alternatives:- After developing various alternatives, the next step is to
evaluate them and select the right one. It pros and cons of different proposals should be
considered. The alternatives should be evaluated in relation to time and money involved
in them. The alternative which gives maximum economy should be selected.
5. Taking decision and following up:- When various alternatives are properly evaluated
then the final decision is taken. The decision is communicated to the concerned person for
action, which requires co-operation of sub-ordinates.

ORGANISATION:

Organization refers to a social group designed to achieve certain goals. Organization involves
creating a structure of relationships among people working for the desired results. It refers to
the institutions wherein the management functions are performed.

“Organisations are intricate human strategies designed to achieve certain objectives.”

ORGANISING:

Organising aims at creating a structure of relationships. Organising is one of the functions of

management. It is the means to achieve the plans. The ultimate result of organising is
organisation.

“Organising is the process of identifying and grouping the work to be performed,

delegating authority and responsibility and establishing relationships for the purpose of
enabling people to work effectively together in accomplishing objectives”.

STEPS IN ORGANISING PROCESS:

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 1. Determination of objectives, strategies, plans and policies: Objectives should be
clear and precise, because the entire organization is to be built around the objectives
of the enterprises.
2. Determination of activities: Determine activities needed to execute these plans and
policies and accomplish the objectives. The work load is broken into component
activities that are to be performed by all the employees. The activities are so split to
determine the job which can be performed by an individual.
3. Separation and grouping of activities: To attain the benefits of specialization and
division of labour, every company, will separate its activities on the basis of primary
functions like finance, engineering, purchasing, production, sales and industrial
relations. All the similar or directly related activities are grouped together in the form
of departments.
4. Delegation of authority: Authority is necessary for the performance of the job and
therefore authority is delegated to the subordinates for enabling them to carry out
their work smoothly and efficiently.
5. Delegation of responsibility: Responsibility may be described as the obligation and
accountability for the performance of delegated duties. A superior is always
accountable for the acts of his subordinate. Therefore, responsibility always flows
from subordinates to superiors.
6. Establish inter-relationships: The grouped activities are placed in the overall
organization structure at appropriate level. It is necessary to integrate or group these
of activities through.
a) Authority relationship horizontally, vertically and diagonally.
b) Organized information or communication system i.e., with the help of effective
coordination and communication.
7. Physical facilities and proper environment: Physical facilities means provide
machinery, tools equipments, infrastructure etc, environment means provide proper
lighting, ventilation, heating, cooling arrangement at the work place, reasonable hours
of work, safety devices, job security etc

PRINCIPLES FOR CREATING/ DESIGNING ORGANISATIONS:

1. Principle of unity of objectives: An organization structure is effective if it enables

individuals to contribute to entire objectives.
2. Principles of organizational efficiency/ Cost effective Operations: An organization
is efficient it is structured to aid the accomplishment of enterprise objective with a
minimum of unsought consequences or costs.
3. Span of control principle/ Optimum number of subordinates: Span of control
means how many subordinates can be supervised by the superiors. The number of
subordinates should be such that the superior should be able to control the work
effectively.
4. Principle of specialization:-The organization should be set up in such a way that
every individual should be assigned a duty according to his skills and qualification.
The persons should continue the same work so that he specializes in his work and
helps to increase the production.
5. Principle of parity of authority and responsibility: The responsibility for actions
should not be greater than that of authority delegated, nor should it be less. There
should be balance between authority and responsibility delegated.

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 6. Principle of unity of command: A person should be answerable to one boss only. If
a person is under the control of more than one person then there will be confusion and
conflict.
7. Principle of exception: This principle states that the top management should
interfere only when something goes wrong i.e in exceptional cases. If the things are
done as per plans then there is no need for the interference of top management.
8. Principle of Flexibility: The organization should be amendable according to the
changing situations. Every day there are changes in methods of production and
marketing systems etc.
9. Principle of continuity: The organization structure should provide for the
continuation of activities. There cannot be any breakdown in the activities of the
organization for the reasons such as change in the policies or retirement or death of
any key employee in the organization.

TYPE S OF ORGANIZATION:

The traditional organizations also known as mechanistic organizations are classified on

the basis of authority relationships as follows:
1. Line organization or Military organization or Scalar organization
2. Line and Staff organization
3. Functional organization
4. Committee organization
5. Matrix organization
1. Line organization or Military organization or Scalar organization: It is said to be
the oldest and most traditional type of organization, which is widely used even today.
This is called line organization because managers in this organization have direct
responsibility for the results. It can be drawn as follows:

Engineer

Draughtsman I Draughtsman II Draughtsman III

(Design &Drawings) (Design &Drawings) (Specifications)

Merits Demerits
1. It is simple to understand. 1. There is no scope for
2. It is flexible. specialization.
3. It facilitates quick decisions and 2. There is more scope for
prompt actions. favouritism.

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 3. It is likely that the line manager is
over burdened with all tasks.

2. Line and Staff organization: In this organization, we have both line managers and
staff managers. Staff managers support the functions of the line managers. The staff
managers are specially appointed to give advice, suggest, or assist the line managers
in their day to day matters.
Eg. A software engineer appointed in a private company is responsible to design
software, Here, is a line manager. If he joins the bank as a technical advisor then he
acts as staff manager.

Engineer

Admin Officer Accountant

Draughtsman II (Design &Drawings)

Draughtsman I (Design &Drawings) Draughtsman III (Specifications)

Merits Demerits
1. It may create conflicts
1. It enhances quality of between line and staff
decisions. managers.
2. There is greater scope for 2. Staff suggestions are seldom
advancement. implemented.
3. It relieves the line managers. 3. It is expensive to have both
staff and line managers.

3. Functional organization: F.W. Taylor suggested functional organization. Taylor

observed that one single foremen was overburdened with all the operations such as
task setting, time recording, quality inspection, disciplinary jobs and so on. Hence
the planning and control functions are divided to ensure division of work.

Works Manager

Planning function Control Function

RC IC SD TCC GB SB RB Quality
Inspector

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WORKERS
RC=Route clerk, IC=Instruction clerk, TCC=Time and cost clerk, SD= Shop Disciplinarian,
GB= Gang Boss, SB= Speed Boss, RB=Repair Boss.

Merits Demerits
1. Planned specialisation.
1. Very costly.
2. Separates activities related to
2. Calls for more coordination
planning and control function.
3. Less appropriate when an
3. Offers clear career paths for
organization diversifies.
functional specialists.

4. Committee organization: A committee is formed when two or more persons are

appointed to work as a team to arrive at a decision on the matters referred to it. It is
intended to utilize the knowledge, skills, and experiences of all the concerned parties.
Particularly, in large organizations, problems are too big to be handled by one single
expert.

Executive Council Vice Chancellor Academic Senate

Finance Committee Rector Board of Studies

Registrar

5. Matrix organization: This is also called as project organization. It is a

combination of all relationships in the organization in vertical, horizontal
and diagonal. It is mostly used in complex projects. It provides a high
degree of operational freedom, flexibility and adoptability for both the
Merits Demerits
Selection Committee Purchase Committee Convocation Committee
1. It pools up the organizational
e 1. Responsibility of decisions
resources in terms of knowledge skills
cannot be fixed on a particular
and experiences.
person.
2. It yields good results if the committee
2. It calls for high degree of
is headed by taskmaster like chairman
coordination.
and time bound in terms of decision-
1. It involved high cost in terms of
making.
time and money.
3. It minimizes the fear of too much
authority vested in one person.
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 line and staff managers in performing their respective roles. The main
objective of matrix organization is to secure a higher degree of
coordination than what is possible from the conventional organizational
structure as the line and staff.

President

Vice-President Vice-President
Vice-President
(Marketing) (Finance)
(Production)

Project-A W W
W
Manager

Project-B W W W
Manager

Merits Demerits
1. It calls for greater degree of
1. It offers operational freedom and coordination.
flexibility. 2. It violates unity of command
2. It seeks to optimize the utilization of principle.
resources. 3. Employees may find it
3. It focuses on results. frustrating to work with two
bosses.

ORGANIC STRUCTURES /MODERN TRENDSIN ORGANISATIONAL

STRUCTURE DESIGNS:

Organizations in the recent times have been gearing themselves to suit to the growing
demands from their stakeholders in terms of responsiveness, flexibility, agility, adaptability
etc. In this process, they are following organic structure, which are more agile, flexible and

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adaptable to the changing circumstances. Virtual organizations, cellular organizations, team
structure, boundary less organization and inverted pyramid and different forms of organic
structure that are widely seen among most of the sun-rise sectors such as financial services,
Information Technology (IT) and IT enabled services. These structures have been
contributing to the organic growth of the organization.

The focus of organic structures is to do away with those activities which do not
directly contribute to the growth of the organization and focus only on those activities which
directly lead the organization for the achievement of the given goals.

These are discussed below:

Virtual Organisation:

The virtual organization is a temporary network of companies that come together quickly to
exploit fast changing opportunities. Virtual organizations appear to be bigger than traditional
organizations. As virtual organizing required a strong information technology (IT) platform,
The boundaries that traditionally separate a firm form its suppliers, customers and even
competitors are largely eliminated, temporarily and in respect to a given transaction or
business purpose. Virtual organizations come into being ‘as needed’ when alliances are called
into action to meet specific operating needs and objectives. When the task is complete, the
alliances rest until next called into action. Each partner in the alliance contributes to the
virtual organization what it is best as-its core competence.
Cellular Organization:

Organizations structured around the units/cells that complete the entire assembly
process are called cellular organizations. In the modern organizations, cellular organizations
have been replacing the continuous line or linear production process system. In cellular
organizations, workers manufacture total product or sub-assemblies in teams (cells). Every
team (cell) of workers has the responsibility to improve or maintain the quality and quantity
of its products. Each team is free to recognize itself to improve performance and product
quality. These cells comprise self-managed teams. They monitor themselves and also correct
where necessary on their own. Cellular organizations are characterized by much smaller staff
all over the organization with middle management positions reduced and lean management
members at the top. It is both a lean and flat structure.

Team Structure:

A structure in which the entire organization is made up of work groups or teams is known as
team structure. Team structures are both permanent and temporary in nature as situation
demands. Traditional organizations are characterized by vertical structures and modern
organizations are identified by the horizontal i.e., team structures. ‘We report to each other’ is
the main feature of team structure. It leads to boundary less organsiation in a borderless
world. In team structures, we find cross-functional teams meant for improving lateral
relations, solving problem, completing special projects and accomplishing routine tasks. A
cross-functional team comprises members from different functional departments such as
marketing, finance, HR, production etc. Project teams are convened for a particular task or
project and these get dissolved once task is completed. The intention here is to quickly bring

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together the people with the needed talents and focus their efforts intensely to solve a problem
or take advantage of a special opportunity.
Boundary less Organization:

At the name indicates, a boundary less organization eliminates internal boundaries among
subsystems and external boundaries with external environment. It is a combination of team
and network structures with the addition of temporariness. Such type of organization structure
is characterized by spontaneous teamwork and communication. This replaces formal chain of
command. It is a dynamic organization structure wherein organizational needs are met
through a judicious mix of outsourcing contracts and alliances as and when needed. The key
features of boundary less organization include knowledge-sharing, absence of hierarchy and
bureaucracy, empowerment voluntary participation of expert members, technology utilization
and temporariness. The focus is on mustering necessary talent and competencies required for
the achievement of a task without any bureaucratic restrictions. Creativity, quality, timeliness,
increase in speed and flexibility are the benefits the boundary less organization yields. It also
reduces inefficiencies. The boundary less organization is highly flexible and responsive.
These draw on talent wherever it is found. Sometimes, they are ineffective due to problems in
communication.

Inverted Pyramid:

This is an alternative to the traditional chain of command. This is a structure, which is narrow
at the top and wide at the base. It includes a few levels of management. For instance, sales
people and sales support staff sit on the top as the key decision makers for all the issues
related to sales and dealing with the customers. Since the sales staffs are in touch with the
customer and aware of the requirements of the customers, they are given all the freedom to
follow their own best judgment at all levels.

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