Organizing New
Organizing New
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Difference Between Delegation & Decentralization 2. Each subordinate gets instructions & directions
from his immediate superior.
Delegation Decentralization 3. Each subordinate is accountable to his
1 Managers delegate 1 Right to take decision is immediate superior.
some of their function shared by top Mgt & 4. There exists proper channel of communication.
& authority to their other levels of Mgt.
subordinates. Advantages of Line Organisation
2 It is a process. 2 It is the end result of
delegation. 1. Simplicity: - This organization is quite simple in
3 Scope is limited 3 It has wide scope. both understanding & implementation. Every
4 It is essential for Mgt 4 It is optional. person is clear about what is expected of him.
process 2. Discipline: - Since each position is subject to
5 It is a technique of Mgt. 5 It is a philosophy of Mgt. control by its immediate superior position,
6 Full responsibility & 6 Full responsibility &
often the maintenance of discipline is easy.
accountability is not accountability is
transferred. transferred. 3. Prompt Decision: - Most of the decisions in
7 Responsibility remains 7 Responsibility is also such organizations are taken by the superiors
with the transferee. transferred. concerned. This makes the decision making
8 Delegated authority 8 It is considered as a process easier & less time consuming.
can be taken back. general policy of top 4. Orderly Communication: - Line organization
Mgt. follows scalar chain method of communication.
It implies that communication going up & down
Forms of Organization will pass through the immediate superiors.
5. Easy Supervision & Control: - It provides for
On the basis of line of authority, organization structure easy supervision & control because each
can be classified as : - subordinate is controlled by a single superior.
The superior has direct & close contact with his
Line Organisation
subordinates which facilitate supervision &
Functional System.
control.
Line & Staff System.
6. Economical: - The line organization is quite
Committee.
economical because it does not use staff
Line Organisation specialists whose appointment is costly affair
especially for small organizations.
The earliest & simplest type of organization is the line 7. Overall Development of the Managers: - Since
organization. In this, line of authority is vested vertical. the line organization does not have provision
It refers to the chain of authority or command from top for staff specialists, various managers have to
mgt down to the lower levels of the organization. combine among themselves the expertise of a
staff member. Thus the functions of managers
In this, business undertaking is divided into different
are more comprehensive which leads to the
departments. The departmental heads get authority
overall development of the managers
from the top mgt. He delegates his authority to his
concerned.
subordinates who regulate the work at lower levels.
Demerits
Features
1. Lack of Specialization: - The line organization
1. Authority flows from top to bottom.
does not offer scope for specialization. A
manager has to perform a variety of functions
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which may not necessarily be closely 5. There is high degree of control & co ordination
interrelated. of functions because all work of one kind is
2. Absence of Conceptual Thinking: - The under one manager.
managers in this system do not find time for
conceptual thinking so essential for Demerits
organizational growth & development because 1. Responsibility for ultimate performance cannot
they remain quite busy in their day to day be fixed in functional structure because no one
managerial problems. is responsible for product cost & profit.
3. Autocratic Approach: - The line authority, being 2. Functional structure essentially generates slow
direct, demands high level of obedience on the decision making process because the problem
part of the subordinates. requiring a decision has to go through various
4. Problems of Co ordination: - Co ordination departments as all of them have something to
among various activities & the departments is say on the matter.
achieved through horizontal relationships, 3. Functional structure lacks responsiveness,
whereas the line organization stresses only necessary to cop up with new & rapidly
vertical relationships. changing work requirements.
Functional/Staff Organization 4. Absence of Unity of Command.
5. Chances for indiscipline.
Functional system implies the placement of specialists
in line positions. Functional specialists are endowed Line Organization Vs Functional Organization
with authority over the subordinates. This system is also
Line Organization Staff Organization
known as functional foremanship & was conceived by
FW Taylor. 1 No specialization 1 Functions are divided on
the basis of nature.
Functional structure is created by grouping the activities 2 Unity of command is 2 No unity of command
on the basis of functions required for the achievement possible
3 Responsibility can be 3 Responsibility cannot be
of organizational objectives.
located. fixed.
Merits of Staff Organization 4 Co ordination is easy. 4 Lack of co ordination.
Disadvantages
Informal Organization
1. Conflict of interest between line & staff officers.
2. Staff officers become ineffective since they do The term informal organization refers to those personal
not possess any authority. & social relations which arise spontaneously.
3. Since staff officers are not held responsible for According to Prof. Keith Davis, informal organization is
results, they may become passive. that network of personal & social relations which is not
4. Line officers are prone to blame the staff established or required by formal organization.
officers for the failures of the policy.
Characteristics of Informal Organization
On the basis of formation, there are two types of
organizations – Formal Organisation & Informal 1. It arises spontaneously.
Organisation. 2. It is a social structure framed to meet personal
needs.
Formal Organization 3. It acts as an agency of social control.
A formal organization is one in which position, 4. It is indefinite & structureless.
responsibility, authority & accountability of each level is Advantages of Informal Organization
clearly defined.
1. It fills the deficiencies in the formal
According to Barnard, an organization is formal when organization.
the activities of two or more persons are consciously co 2. It gives satisfaction & stability to work group.
ordinate towards a given objective. 3. It is a useful channel of communication in
Characteristics of Formal Organisation certain circumstances.
4. It fills gaps in a manager’s abilities.
1. It is consciously planned.
2. It is based on delegated authority. Disadvantages
3. Position, responsibility & accountability of each 1. It acts according to mob psychology.
level is clearly defined. 2. It tends to nullify the efforts of Mgt. to promote
4. Unity of command is usually maintained. greater productivity.
5. It provides for division of labor. 3. It spreads rumour.
Advantages Formal Organization & Informal Organization
1. Definite boundaries will reduce conflicts.
2. Overlapping of responsibility is avoided. Formal Organization Informal Organization
3. A sense of security arises from clarification of 1 It arises on account of 1 It arises on account of
task. delegation of authority. social interaction of
people.
Demerits 2 The emphasis is on 2 The emphasis is on
terms of authority & people & their
1. It acts as a damper on the spirit of initiative. functions. relationships.
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3 It is created 3 It is spontaneous &
deliberately. natural.
4 Roles, duties & 4 No written rules &
responsibilities are well regulations.
defined.
5 Authority flows from 5 There is no such
the top to bottom. definite channel.
6 It is permanent & more 6 It is less permanent &
stable. less stable.