🧬 Division of work: Tasks are divided among group members for efficiency and specialization.
🧬 Cooperative efforts: Members work together vertically and horizontally across different units to achieve desired goals.
🧬 Communication: Effective integration and coordination require communication among people in the organization.
🧬 Central Authority: A central authority guides the group, structuring a hierarchy and chain of command for control.
🧬 Rules and Regulations: Central authority enforces rules and regulations for orderly and systematic member work.
🏆 Clear-cut Authority Relationships: Structure allocates authority and responsibility, clarifying roles and relationships.
🏆 Pattern of Communication: Grouping activities and people aids communication and coordination, allowing problem-solving and information sharing.
🏆 Location of Decision Centres: Structure determines where decisions are made, whether at department or top levels, considering interdependence and needs.
🏆 Proper Balancing: Structure balances and emphasizes critical activities, placing important functions at higher levels.
🏆 Stimulating Creativity: Clear authority patterns promote creative thinking and initiative, clarifying areas of specialization and appreciation.
🏆 Encouraging Growth: A flexible structure supports growth by accommodating challenges and opportunities.
🏆 Making Use of Technological Improvements: Adaptable structures leverage technology by adjusting authority-responsibility relationships.
Organisation as a System
📌 The system approach views organizations as composed of
interconnected components, each with unique properties and
relationships.
Open and Closed Systems
Systems can be closed or open; open systems interact with the external environment. In open systems, the organization takes inputs from the environment and transforms them into outputs. The organization receives feedback from the environment and adjusts to meet challenges and expectations. Inputs and outputs of one system may interact with other systems, influencing their performance.
The basic concepts are given below-
1. Inputs: The system takes in human resources, capital, materials,
technology, and information from the environment.
2. Transformation/Throughput: Inputs are processed within the
organization through a hierarchy of sub-systems like production,
marketing, finance, and personnel to produce desired outputs.
3. Outputs: Intended outputs, such as high productivity, are achieved,
while unintended outputs, like informal relations, may also occur.
4. Environment: As an open dynamic system, the organization interacts
with suppliers, customers, and regulatory agencies. Feedback from the
environment guides the organization, which uses boundary spanners to
maintain an effective interface.
Micro and Macro Perspective of an Organisation
🎀 Micro Perspective: Focuses on the individual within an organization, examining psychological factors, learning, motivation, and leadership strategies. Recognized as the discipline of Organizational Behavior.
🎀 Macro Perspective: Considers the organization as a whole, including its goals, structure, technology, and interactions with the environment. Recognized as the discipline of Organizational Theory.
Types of Organisations
Based on Functions
🫥 Economic Organisations:
These organizations focus on producing goods and services for society, aiming to generate profits. They include industrial, commercial, and trading enterprises.
🫥 Political Organisations:
Political organizations serve society by upholding cherished values and promoting peace and stability. They collect resources and work through government agencies and departments to provide these services.
Based on Relations
🏡 Formal Organisation
The formal organization is a structured design by management to achieve goals. It consists of well-defined jobs with clear authority, responsibility, and accountability.
The structure is intentionally created to help members work together toward common objectives. Individuals must adapt to the formal organization, following orders and cooperating with others as specified.
Features of Formal Organisation
- Designed by top management for smooth organizational functioning.
- Specifies relationships among job positions, clarifying reporting lines.
- Helps achieve objectives by setting rules and procedures.
- Focuses on tasks rather than interpersonal relationships.
- Communication occurs through a structured hierarchy (scalar chain).
- Authority comes from one's management position.
- Rules set standards of behavior.
Significance of Formal Organisation
- Formal organization helps set objectives for various departments, aiding goal achievement.
- It enables optimal use of resources and adoption of new technology.
- Clarifies authority and responsibility, improving communication.
- Establishes clear division of work, preventing overlap and resource wastage.
- Balances activities across different departments.
- Chain of command provides promotion pathways and qualifications for personal achievement.
- Maintains stability with procedures, policies, and rules, ensuring continuity despite personnel changes.
Advantages of Formal Organisation
- It is easier to fix responsibility since mutual relationships are clearly defined.
- It helps in avoiding duplication of efforts because of clarity of jobs/duties to be performed.
- Unity of command is maintained through an established chain of command
- It leads to the effective accomplishment of goals by providing a framework for the operations to be performed
- It provides stability to the organisation. This is because the behavior of employees can be fairly predicted since there are specific rules to them.
Disadvantages of Formal Organisation
- Formal organization can cause procedural delays due to the chain of command.
- Rigid policies may stifle creative talent by not allowing deviations.
- It may not fully capture human relationships as it focuses more on structure and work.
🏡 Informal Organisation
The informal organisation refers to the relationship between people in the organisation based on personal attitudes, emotions, prejudices, likes, dislikes, etc.
Features of Informal Organisation
- An informal organization arises within a formal one due to social interactions among employees.
- It forms naturally and isn't created by management.
- Standards come from group norms rather than official rules.
- Communication occurs freely in any direction without fixed lines.
- It lacks a clear structure, forming a complex social network.
- Authority is based on personal qualities.
Advantages of Informal organisation
- Informal organization speeds up information flow and feedback due to free communication.
- It meets members' social needs, enhancing job satisfaction and sense of belonging.
- It compensates for formal organization's shortcomings, aiding in organizational objectives, such as testing plans through informal networks.
Disadvantages of Informal organisation
- Informal organization can disrupt the formal organization by spreading rumors, harming its interests.
- It may resist change, impeding management's efforts and delaying growth.
- It pressures members to conform to group norms, which can be harmful if these norms conflict with organizational goals.
Organisation Structure
📌 Organisation structure refers to the framework within which managerial and operating tasks are performed. It specifies the relationship between people, work and resources.
In other words, it shows the authority and responsibility relationships between the various positions in the organisation by showing who reports to whom.
Features of Organisation Structure
🧬 Division of work and specialisation
- Work should be divided into parts so each individual focuses on a single job matching their skills and abilities.
- This principle of specialization leads to improved performance over time as individuals continue in their roles.
🧬 Chain of Command
- Individuals should receive orders from one supervisor and be accountable to one boss at a time.
- Avoiding dual subordination fosters personal responsibility for results and prevents conflicting instructions.
🧬 The Span of Control
- Individuals should receive orders from one supervisor and be accountable to one boss at a time.
- Avoiding dual subordination fosters personal responsibility for results and prevents conflicting instructions.
🧬 Departmentalisation
- Departmentalisation is the process of grouping similar activities together which have emerged from the division of work.
🧬 Centralisation and Decentralisation
- Centralization: Concentrates decision-making authority at a single point in the organization.
- Decentralization: Distributes decision-making authority widely throughout the organization.
🧬 Formalisation
- Formalization refers to the degree to which jobs in an organization are standardized and rules, methods, and procedures for performing these jobs have been prescribed.
➡️ Different organization structures are as follows
✅Traditional Organisation Structure
- Line Organization
- Line and Staff Organisation
- Functional Organisation
✅Modern Organisation Structure
- Divisional Structure
- Project Structure
- Matrix Structure
- Horizontal Structure
- Network Structure
- Boundaryless Structure
- Learning Organisation
Line Organisation
The line organization represents the structure in a direct vertical relationship through which authority flows. Under this, the line of authority flows vertically downward from top to bottom throughout the organization.
Line and Staff Organisation
According to this organizational structure, supportive activities are attached to the line of command by appointing staff supervisors and staff specialists who are attached to the line of authority.
Line Organisation vs line & Staff Organisation
A functional structure is an organisational structure formed by the grouping of jobs of similar nature under major functions and organising these functions as separate departments such as the Human Resource (HR) department, Marketing Department, Finance Department, Production Department, etc.
Divisional Structure
A divisional structure is an organisation structure comprising separate business units or divisions created on a certain basis e.g., products manufactured.
Project Structure
In a project organization, a team of specialists from different areas is created for each project and is put under the project manager who is responsible for execution of the project.
- It is oriented towards completion of a number of big projects
Matrix Structure
Matrix organisation or grid organisation is a hybrid structure
combining two complementary structures – functional departments with
pure project structure.
Flat Organisation Structure
In flat organizations, the number of people directly supervised by each manager is large.
- The model promotes employee involvement through a decentralized decision-making process.
Network/Virtual Structure
A network organisation is based on the networking between a number of organisations to accomplish a predetermined assignment. It is also known as a virtual organisation.
Boundaryless Organisation
It is an organization that is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure.
- It is based on free flow of information and ideas to drive innovation, efficiency and growth in a world that’s constantly changing.
Learning Organisation
Learning organisations are those which can create, acquire and transfer knowledge and also modify their behaviours to reflect new knowledge and insights.
A learning organization is the business term given to a company that facilitates the learning of its members and continuously transforms itself.
- They are more relevant in research organizations where freedom of experimentation given to scientists is the key to innovations and inventions
Characteristics
- Holds a shared vision
- Discards old ways of thinking
- Views organizations as system of relationships
- Communicates openly
- Works together to achieve shared vision
Graicunas Theory of Span of Management
📌 V.A Graicunas a French Management Consultant, made a study on superior- subordinate relationship based on a mathematical formula. He suggested that the number of possible relationships increases with the number in the number of subordinates.
According to him, there are three specific kinds of superior-subordinate
relationships-
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