ORGANISATIONS

Definition of Organization
Organizations are social arrangements
for achieving controlled performance
in pursuit of collective goals.

Organizational Dilemma
Organizational
dilemma concerns
the question of how
to reconcile the
potential
inconsistency
between individual
needs and
aspirations on the
one hand, and the
collective purpose
of the organization
on the other.

Nature of Organising
O Identification and classification of
activities
O Grouping activities
O Assignment of each group
O Provision for coordination in the
organization structure

Elements Of Organisation
o
o
o
o
o

Line & staff

Line
Line employees are workers who are
directly responsible for manufacturing
goods or providing a service.
Referred to as chain of command. A
line structure deals with a companys
core task.

Staff
Staff employees are workers who are in
advisory positions and who use
specialized expertise to support the
production efforts of line employees

Functional Authority
A functional relationship exists where a
staff department has the authority to
insist that the line manager
implement its instructions concerning
a particular issue.

Hierarchy

Hierarchy
refers to the
number of
levels of
authority to
be found in
an
organization.

Span of Control
Span of control is the number of
subordinates who report directly to a
single manager/supervisor.
One of the surest sources of delay
and confusion is to allow any superior
to be directly responsible for the
control of too many subordinates." Graicunas

A Sample Organization Chart

Vice President
Finance

Chief
Accountant

Budget
Analyst

Vice President
Manufacturing

Plant
Maintenance
Superintendent Superintendent

Director
Human Resources

Training
Specialist

Benefits
Administrator

Organisational Chart
Organisational chart is a pictorial
record that shows the formal relations
that the company intends should
prevail with it.
The chart shows the main
departments & senior positions within
the organisation.
It is the usual way to examine the
structure of an organisation.

Structure - Purpose
An organization structure is designed to
clarify:
O who is to do what tasks
O who is responsible for what results
O remove obstacles to performance caused
by confusion and uncertainty of assignment
O furnish decision making and communication
networks that reflect and support
organization objectives

Organisational Structure
Structure is a means for
attaining the objectives and
goals of an organization
Peter Drucker (1974)

Organisational Design
In designing the organization, the leader
should focus on optimizing the response
time to changes in the external
environment.
(Stata, 1989)
Competitiveness does not lie in downsizing
it lies in design (Dodds,1993)

Organisational Design-Change
For managers, the dynamics of
knowledge impose one clear
imperative: every organization has to
build the management of change into
its very structure. (Drucker,1992)

Organisational Design:
Structural perspective
Peoples attitudes are shaped as much by
the org in which they work as by their preexisting personality variables.
Stresses the logical and rational elements
of org and de-emphasises peoples
preferences and feelings.

Organisational Design:
Behavioural perspective
Internal (individual) factors are main
determinants of human behaviour in org
rather than external (structural) ones.
Behavioural scientists have found that
there is an important relationship between
a units or individuals assigned activities
and the unit members pattern of thought
and behaviour.

Organizational Choice
Corporations, long have wrested with the
problem of how to structure organizations to
enable employees, particularly the specialists, to
do their jobs with maximum efficiency &
productivity.
The perplexing issue is whether to organize
around functions or products.

Types Of Organisations
Functional Organisation
Divisional Organisation
Matrix Organisation

Functional Organisation
Job specialisation in the horizontal
dimension is an inherent part of
every organisation, indeed every
human activity. Mintzberg, 1979

Functional Org Structure

Manager
Manager
Manager
Production Engineering Marketing

Manager
R&D

Manager
Manager
Personnel Accounting

Lower-level managers, specialists, and operating personnel

Functional Organisation(Merits)
Logical reflection of functions
Maintains power-prestige of functions
Occupational specialization
Simplifies training & enables
professional development
Tight control

Functional Organisation
(Demerits)
Over specialisation-narrow viewpoints
Reduces coordination between
functions
De-emphasis of overall objectives
Slow adaptation to environmental
changes
Conflicts over which products have
priority

Divisional Organisation
This type of structure occurs when
the organisation is arranged around
the main products or services.
Specialisation by location divides the
organisation geographically usually
according to location of customers.

Divisional Org Structure

Corporate Staff

Manager
Production

Manager
Engineering

Division A

Division B

Division C

General Manager

General Manager

General Manager

Manager
Marketing

Manager
R&D

Manager
Personnel

Manager
Accounting

Lower-level managers, specialists, and operating personnel

Organized
similarly to
Division 1

Divisional Organisation(Merits)
Focused on product line & customer needs
Growth & diversity of products
Improves coordination & response to
changes in demand pattern
Responsibility of profits at divisional level
Training ground for general managers

Divisional Organisation
(Demerits)
Requires more persons with general
management capabilities
Maintenance of central economical
services difficult
Lesser control by top management
May develop a product focus at
expense of wider company interests

Matrix Organisation
Combination of functional and
product structures. It attempts to
capture the advantages of each of
these approaches.
On one axis is a range of products or
projects, with a manager responsible
for each. On the other are the various
functional groups.

Matrix Org Structure

Manager
Administration
and Human
Resources

Manager
Projects

Project A

Project B

Project C

Project D

Manager
Manufacturing

Manager
Engineering

Manager
Marketing

Manager Public
Relations

Matrix Organisation(Merits)
More than one critical orientation to
the company operations
Oriented toward end results
Pinpoints responsibility
Specialised knowledge is widely
shared but developed within the
functional group

Matrix Organisation(Demerits)
Conflict in organizational authority
Problem of defining the extent of
Project Managers authority.
Functional groups may tend to
neglect their normal duties.
Results in a complex structure and
difficult to manage

Choice of structure
(1) Which provides the most efficient utilization of
machinery and equipment?
(2) Which provides the best hope of obtaining the
required control and coordination?
(3) Which approach permits the maximum use of
special technical knowledge?
Analysts usually fail to recognize the complex set of
trade-offs involved in these decisions.

Informal Organisation
Defined as a network of personal
and social relations not established or
required by the formal organization
but arising spontaneously as people
associate with one another. Keith
Davis.
Within the formal structure an
informal organization will always be
present.

Decentralisation
Decentralisation implies more than
delegation: it reflects a philosophy of
organization and management. It requires
a careful selection of which decisions to
push down into the organization structure
and which to hold near the top
It is the tendency to disperse decisionmaking authority in an organization
structure. Tends to create a climate for
more rapid growth and development of
personnel.

Centralisation
Centralisation and decentralisation are
tendencies.
Centralisation is the degree to which
authority is retained by higher-level
managers in an organization rather than
being delegated.
If a limited amount of authority is
delegated, the organization is usually
characterized as being centralized.