PRNT. CH 6; Organization Structure

8/22/2019 PRNT. CH 6; Organization Structure

http://slidepdf.com/reader/full/prnt-ch-6-organization-structure 1/11

Page 1 of 11

ORGANIZATION STRUCTURE Chapter 6



Page 2 of 11

6. ORGANIZATIONAL STRUCTURE

(i) Define Organization Structure?

(ii) Basic Types of Organizational Structure.

(iii) Organizational Structures Merits and Demerits.

(iv) “Structure is not Organization” – Explain

(v) General Types of Departmentation Done by a Manager in an

Organization.



Page 3 of 11

Define Organization Structure ?

Organizational structure and design include work specialization, departmentalization,

chain of command, span of control, centralization and decentralization and common

organizational designs. Departmentalization is discussed here.

All Organizations have a management structure that determines the relationships b/w

functions and positions and subdivides and delegates roles, responsibilities and

authority to carry out defined tasks.

It is a framework within which an Organization arranges it’s lines of authorities and

communications and allocates rights and duties.

To put it in simple words Organisational structure refers to the levels of management

and division of responsibilities within an organisation.



Page 4 of 11

Basic Types of Organizational Structure ?

Organizational Structures Merits and Demrits.

Line OrganisationIn this kind of structure every manager exercise a direct authority over his subordinate who in

turn directly reports to their superiors.

1. There is a hierarchical arrangement of authority.

2. Lines of authority are vertical i.e. from top to bottom.

3. There are no staff specialists.

Advantages

1. Simple to establish and operate

2. Promotes prompt decision making.

3. Easy to control as the managers have direct control over their subordinates.

4. Communication is fast and easy as there is only vertical flow of communication.

Disadvantages

1. Lack of specialization

2. Managers might get overloaded with too many things to do.

3. However, line structures are suitable for small businesses where there are few

subordinates



Page 5 of 11

Functional Organisation

The organisation is divided into a number of functional areas. This organisation has grouping

of activities in accordance with the functions of an organisation such as production, marketing,

finance, human resource and so on.

Advantages

1. Is logical and reflection of functions

2. Simplifies training

3. Better control as the manger in charge of each functional department is usually an specialist.

Disadvantages

1. Reduced coordination between functions.

2. Conflicts between different functions could be detrimental for the organisation as a

whole.

3. Difficult for general managers to coordinate different departments.



Page 6 of 11

Line and Staff Organisation

It is a combination of line and functional structures. In this organisation a structure, the

authority flows in a vertical line and get the help of staff specialist who are in advisory. When

the line executives need advice, information about any specific area, these staff specialists are

consulted.

Advantages

1. Line managers are provided by expert advice by these specialists.

2. Staff managers provide specialist advice which can improve quality of decisions in

various departments.

Disadvantages

1. Line managers and staff managers might have conflicts on particular issues.

2. Co-ordination may be a problem.

3. Staff personnel are not accountable for the results and thus may not take tasks

seriously.



Page 7 of 11

Project Organisation

The project structure consists of a number of horizontal organisational units to complete

projects of a long duration. A team of specialists from different areas is created for each

project. Usually this team is managed by the project manager.

Advantages

1. Special attention can be provided to meet the complex demand of the project.

2. Project staff works as a team towards common goal which results in high motivation

level for its members.

Disadvantages

1. As the project staff consists of personnel from diverse fields, it might be quite

challenging for the project manager to coordinate among them.



Page 8 of 11

Matrix Organisation

Matrix organisation combines two structures – functional departmentation and project

structure.

Functional department is a permanent feature of the matrix structure and retains authority for

overall operation of the functional units.

Project teams are created whenever specific projects require a high degree of technical skill

and other resources for a temporary period.

Project team form the horizontal chain and functional departments create a vertical chain of

command.

Advantage

1. Is oriented towards end results.

2. Professional identification is maintained

3. Pinpoints product-profit responsibility

Disadvantages

1. Conflict in organisation authority exists.

2. Possibility of disunity of command exists

3.

Requires manager effective in human relations



Page 9 of 11

“Structure is not Organization” – Explain

"An organization's structure is not an end in itself. It merely sets the context for managerial

action. The most wonderfully designed structure provides no guarantee that the desired actions

will follow. Structure is just one useful tool that managers can employ to achieve this

objective."

An effective HR professional creates an effective and strong organization. Organization is not

structure or process; it is a distinct set of capabilities. Capability represents what the

organization is good at and known for.

We specify five key capabilities that organizations of the future must demonstrate (talent,

leadership, agility, outside-in, and purpose). We select these five because they are the

capabilities required to cope in the business world of tomorrow.

We propose five capabilities for dealing with the global trends of the future:

1. Talent

2. Leadership

3. Agility

4. Outside-in Connection

5. Strategic Unity

Talent: the ability to attract, retain, and deploy human capital demonstrating competence and

knowledge of the workforce

Leadership: the ability to build leadership as an organizational capability in order to turn

customer expectations into employee actions and increase leadership brand

Ability: the ability to respond quickly, change, be flexible, learn, and transform

Outside-in Connection: the ability to turn outside expectations from customers, investors,and communities into internal organization actions

Strategic Unity: the ability to create a shared point of view and common behaviors in anincreasingly diverse work setting



Page 10 of 11

General Types of Departmentation

Departmentation fixes the responsibilities to the managers or in charge of the concern

departments.

Types/Forms/Methods of departmentation

There are different basis or methods of departmentation some of the importance methods are:-

1. Departmentation by functions/Functional department

2. Departmenation by product or product wise department

3. Departmentation by territory/Geography

4. Departmentation by customers

5. Departmentation by time

6. Departmentation by process

7. Departmentation by sequence

8. Departmentation by numbers

1. Departmentation by functions/Functional department

If the departments of an organization are formed or established on the basis of major

functions to be conducted by the organization than such types of departmentation is

known as functional departmenational.

2. Departmenation by product or product wise department

If an organization produces or deals more than one product or a variety of products, in

such cases product departmentation can be formed. It is popular and useful to

diversify the products.



Page 11 of 11

3. Departmentation by territory/Geography

If the operation of a business organization is spread over a large geographical or

territorial reason or area than such business organizationan make departments on the

basis of territory or geography.

4. Departmentation by customers

If an organization creates its department on the basis of customers to fulfill the

demands, expectation or desire of customers more effectively and properly than such

organization can formed customer wise departmentation. Since customer is regarded as

the king of the business, customers should be focused properly present business era -

o'u_ is customer centric era.

5. Departmentation by time

If a business runs continuously or without only breaks then such organization can adopt

time wise departmention. Manufacturing concerns, hospitals and nursing homes, utility

service provides etc may establish their department on the basis of time.

6. Departmentation by process

If an organization established its departments on the basis of process or steps of

activities than it is called process wise departmention. Generally manufacturing units

adopt this types of departmentation.

7. Departmentation by sequence

A sequential departmentation adopts alphabetical or numerical sequence as the basis of

departmentation. A commercial bank may adopt sequential departmentation in its

deposit and without functions and e.g. is

8. Departmentation by numbers

This types of departmentation is followed by those organization where numbers of

members or employees or customers are in large numbers and personal businessis tried

to be ignored.

Documents

PRNT. CH 6; Organization Structure