Organization

and
Organizational
Structure

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 Introductio
n
 Organization is a social group in which
distributes tasks for a collective goal.
 Organizational Structure means
organizational actions. The ways of
affecting organizational structure are:
 It provides the foundation of Standard
Operating Procedures (SOP)
 It determines which individuals get to
participate in determining decision making
process.
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 Introduction
o The following common types of
organization find a place in the structure
of internal organization.

o Line, Military or scalar organisation

o Line and staff organization
o Functional organisation
o Project organisation
o Matrix organization
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 1. Line
Organisation

o Line organisation is the simple and oldest type of

organisation followed in an organization. It is
characteristics by direct vertical authority-
responsibility-accountability relationship.

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 Line Organisation
o This type of organization is followed in the
army on the same pattern. So, it is called
military organization. Under type of
organization, the line of authority flows
from the top to bottom vertically. So it is
called line organization.

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 Characteristics of line
organisation
o It consists of direct vertical relationships.
o Authority flows from top-level to level to
bottom level.
o Departmental heads are given full freedom to
control their departments.
o Each member knows from whom he would
get orders and to whom he should give his
orders. 10/23/2024 7
 Characteristics of line
organisation
o A senior member has direct command
over his subordinates.
o Operation of this system is very easy.
o Existence of direct relationship between
superiors and subordinates.
o The superior takes decisions within the scope
of his authority
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 Advantages and Disadvantages of Line
Organisation

Advantages of line organisation Disadvantages of line organisation

1. Simplicity 1. Lack of specification
2. Division of authority and responsibility 2. Over loading
3. Unity of control 3. Lack of initiative
4. Speedy action 4. Scope for favoritism
5. Discipline 5. Dictatorial
6. Economical 6. Limited communication
7. Co-ordination 7. United administration
8. Direct communication 8. Subjective approach
9. Flexibility 9. Instability
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10. Lack of co-ordination
 Suitabilit
y
o This type of organisation is suitable to small size
business units.
o Where the activities are of routine nature or
machine based.
o If the business activities are service mined.
o Where the number of persons working is
small
o The business operation is simple in nature.
o A business unit which has straight methods of
operations.
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 2. Line and staff
organisation
It is called secondary
functional differentiation at
horizontal level.

The line officers have

authority to take decisions
and implement them to
achieve the objectives of the
organisation.

The line officers may be

assisted by the staff officers
while framing the policies
and plans and taking
decisions organisation.
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 Line and staff
organisation
 o The authority flows from top level
to the lower level of the organisation
through the line officers while the
staff officers attached to the various
departments advise the departments.
 The staff officers are not in a position
to compel the line officers to follow
the advice by them. Each
department is headed by a line 10/23/2024 12

officer who exercises full authority

Advantages of line and staff Disadvantages of line and staff
organisation organisation
Facilitates to work faster and better If powers are not defined then get confusion

Specialization is attained Line officers may reject advice without any

reason for their action
Enables to utilize experience and advice Staff officers are not responsible if favorable
results are not obtained.
Officers can take sound advice Difference between line and staff officers will
defeat the very purpose of specialization
New technology or procedure can be Line officers blame staff officers for unfavorable
introduced without any dislocation results and want to get rewards for favorable
results

Promotes efficient functioning of line officers

Very good opportunity is made available to

young person to get training 10/23/2024 13
 Functional organization

 A functional organization is a widely used organizational

structure in which the organization is divided into smaller

groups based on specialized functional areas such as finance,

marketing, and production. These functional areas are also

referred to as ‘silos’. Each function is managed by a

departmental head who has a dual responsibility to be

accountable to the top management and to direct the

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respective department to achieve favorable performance

 Functional organisation
 o The reason is that the person does
not have enough capacity and
required training. Under functional
organisation, various specialists are
for various functions performed in an
organisation. These specialists will
attend to the work which is common
to different functions of various
departments. Workers, under
functional organisation, receive
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instructions from various specialists.

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 Functional organisation

o The need for functional organisation arises

out of:
o The complexity of modern and large-scale
organisation
o A desire to use the specialization in full
and;
o To avoid the work-load of line managers with
complex problems and decision-making10/23/2024 17
 Characteristics of functional
organisation
o The work is divided according to specified
functions.
o Authority is given to a specialist to give orders
and instructions in relation to specific
function.
o Functional authority has right and power to
give command throughout the line with
reference to his specified area. 10/23/2024 18
 Advantages and Disadvantages of
Functional Organisation
Advantages of functional Disadvantages of functional
organisation organisation
o Benefit of specialization o Complex relationship
o Application of expert knowledge o Discipline
o Reducing the work load o Over specialization
o Efficiency o Ineffective co-ordination
o Adequate supervision o Speed of action
o Relief to line executive o Centralization
o Co-operation o Lack of responsibility
o Economy o Increasing the overhead expenses
o Flexibility o Poor administration
o Mass production o Suitability of functional
organisation

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 Project
organisation

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 Project
organisation

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 Advantages of project
organization
1. It is an effective way of producing highly complex product
systems.

2. Project organization, based on team concept, is the best means

of getting the right things done right.

3. In a turbulent environment, such organization is preferable for

planning, implementing and control of costs projects.

4. Diverse interests are consolidated to the above problems.

5. Creativity is developed through interaction with various

specialists.

6. It leads to the development of strong team-work and teams with

identity fully with project goals.
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 Disadvantages of project
organization
1. A deliberate conflict is established between the project officer
and the existing department heads because of the overlapping of
authority delegation.

2. At the close of the project, there is every likelihood of

insecurity of employment.

3. There always lurks and danger of over-specialization in the

course of project involvement.

4. Rotation from project to project reduces employees’ loyalty to

the parent functional
department.

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 Matrix
organisation
 o “Any organisation that employs a
multiple command structure but also
related support mechanisms and an
associated organizational culture and
behavior pattern” The matrix
organisation may be followed where a
large of small projects have to be
managed.
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Matrix organisation

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 Conditions for effective
matrix organisation
o The principle of chain of command is not followed in
the matrix organisation. A project manager should
give his report to more than one superior.

o There should be an agreement among the managers

regarding the authority of utilizing the available
resources. The term resources include physical
resources, financial resources and human resources.

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 Merits and Demerits of Matrix
organisation
Merits of Matrix Demerits of matrix
organization organization
o Achievement of objectives o Complex relationship
o Best utilization of o Struggle for power
resources o Excessive, emphasis on
o Appropriate group decision-
structure making
o Flexibility o Arising conflict
o Motivation resolution
o Personal o Heterogeneous
development
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