Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.

com

Chapter 03
Organization

Organization:
It is a formalized intentional structure of roles or positions. What does intentional structure of roles
means? In the first place, people working together must fill certain roles. In the second place, the
roles people are asked to fill should be intentionally designed to ensure that required activities are
done and that activities fit together so that people can work smoothly, effectively, and efficiently
in groups. That is, the organization can be viewed as a prescribed pattern of relations among
various tasks and the individuals who perform the tasks.

a) Formal organization: means the intentional structure of roles in a formally organized

enterprise. Describing an organizing “formal”, however, does not mean there is anything
inherently inflexible or unduly confining about it.

b) Informal organization: a network of personal of social relations not established or required

by the formal organization but arising spontaneously as people associated with one another.

Informal Formal
organizat organizat

Organizational Structure: The systems of formal authority within the organization and the
formal communication networks is building among its members.

Organizational Division (Department): one aspect of organizing is the establishment of

departments. The word department designates a distinct area, division, or branch of an organization
over which a manager has authority for the performance of specified activities. For example, the
production division, the sales department, the market research section etc.

The process of organizing requires one to understand division of labor and span of management.

Division of labor: Implies that the total work to be done be broken into component parts, which
should be assigned to individual workers who specialize in these tasks.

Span of Management:
Horizontal dimension of an organization structure, and
Span of control:
refers to the number of subordinates an executive can
Span of supervision:
effectively supervise. The more the people supervised by
the manager. The wider the span.

Relationship between span and levels:

 Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.com

There is an increased relationship between the arrange span of management and the number of
organizational levels:

Narrow span: M

M = Manager
X = none. Managerial employee M M

M M M M

X X X X X X X

Advantages Disadvantage

- Close supervision - Superior tend to get too involved in

- Close control subordinates work
- Fast communication between subordinates - Many levels of management
and superiors - High cost due to many level
- Excessive distance between lowest level of
top level

Wide span:

M M M M M M M

X X X X

Advantages: Disadvantage:

- Supervisors are forced to delegate - Overloading of supervisors might happen

- Clear policies must be made leading to decision bottlenecks
- Subordinate must be carefully selected - Danger of superior’s loss of control
- Requires exceptional quality of managers
 Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.com

What should be the maximum size of the span?

Graicunas focused on the numerical limitation of span of management. He postulated that the
number of relationship would increase geometrically as the number of sub-ordinates increase
arithmetically. He developed the following mathematical formula to demonstrate that with the
addition of each subordinate, the number of superior-subordinate relationships increases rapidly.

 2n 
R=n + n − 1
2 
R = number of relationship
n = number of sub-ordinates

The following table shows the significance of this formula to the increase in the number of
relationships that a manager has to manage as a result of addition of more subordinates.

Subordinates Relationship
1 1
2 6
3 18
4 44
5 100
6 ---------

Graicunas suggested 6 as the maximum span

Criticism

1. Redundant (unnecessary) relationship

2. How often interactions and their demand on managers’ time and energy

Organizational Structures

Organizational structures differ from one another in the way responsibility-authority and
interactional relationships are established among jobs, personnel and physical factors. The basic
organization structures are:

(i) Line organization:

 Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.com

• Such organization plan is the simplest and most clear-cut in that its chain of command is direct.
• It assumes a direct line responsibility and control from the chief executive.
• Suitable for use in small organization.
It has two outstanding characteristics:
1. Each individual reports to only one supervisor
2. Its divisions are not supported by any kind of staff or service assistance.

G. M.

Parts & service Storage of replenishing Sales manager

manager Manager
Sales man
Shop foremen Forklift operator

Mechanics

Advantages: Disadvantage:

- Adaptable to quick decisions of action - It is relatively inflexible

- Authority and responsibility clear
- It is simple and easily understood
- Discipline is maintained
- Leads to one man autocratic rule
- Cooperation & coordination less
- Tends to resists improvement
- Delegation of responsibility is made with
Inadequate authority

(ii) Line and staff organization

• Staff units are created to provide specialized advice, service and support to line executives.
• This type is a combination of pure line organization and a functional organization.
• Line heads are final authority & responsible for basic function.

G. M

Line
relationships
Staff
Sales Personnel Production
manager Manager manager
relationships

Recruitment Training
manager manager
 Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.com

Advantages: Disadvantage:

- Max. overall efficiency - Clash and conflicts between line-staff

- Time for line head relationships
- Suitability to modern business - Weak staff
- Clear cut control and co-ordination - Weak line leadership
- Utilization of specialist skill - If requires high degree of executive co-
- Elimination of multiple bosses. operation

(iii) Functional organization

• Functional structures are created when a staff specialist not merely renders advice and service
to a line executive, but also exercises command authority of a specific nature in relation to a
line executive. For example, if a quality control manager not merely advisees a production
manager, but prescribes quality specifications which are binding on the latter, he exercises
functional authority over latter.

Line authority
G. M Staff-advisory
relationships
Functional authority

Production manager Personnel manager

Advantages Disadvantage

- Have uniform policies, systems, and procedure - De-emphasis of overall company objectives
thought the organization - Overspecializes and narrows viewpoints of
key personnel
- Follows principle of occupational specialization
- Reduces coordination between functions
- Simplifies training
- Responsibility for profits is at the top only
- Furnishes means of tight control at top
- Limits development of general managers

(iv) Committee structure

• Committees are created in almost all large organizations, on a permanent (standing committee)
or ad hoc basis. The primary function of committees is to make suggest decisions on problems
requiring an integration of needs of various departments or divisions, viewpoints or ideas.
• Generally speaking, permanent committees are policy-making and decision-making bodies
such as the executive committee, the finance committee, the purchase committee etc.
 Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.com

• Ad hoc committees generally concern themselves with specific problems and are disbanded
after performing after the specific functions assigned to them.

Bonus and salary Board of Executive

committee
directors committee

Finance G.M Appointment

committee
s and

Purchase Materials Production

committee manager manager

Advantages: Disadvantage:

- Helps in setting objectives, plans an policies - Acceptable decisions rather than the optimal
of the organization
- Dealings with complex problems
- Reduce bias
- Improving interpersonal relations
- Democratizing
- Commitment to implement decisions
decisions
- Often committees results into more conflicts
than problem solving
- Committee discussions often tend to move
toward non-problems.
- Committees are a terribly time consuming
process of decision making
- Nobody is accountable for committee
decisions.

(v) Project structure

• Line, line and staff and functional organization structures emphasizing unity of command,
vertical distribution of authority and specialization of tasks have been found unsuitable for
managing organizations facing volatile environments.
• Firms dealing in multiple products, facing changing technologies and major uncertainties in
the market are moving toward project management.
• The emphasis on project organization is on horizontal relationships and creation of teams for
the achievement of specific goal.
 Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.com

Chief
executive

Industrial Research & Accounting Finance Personnel

engineering development

Project (A)
manager

Industrial Electronics Design Accoun Personnel

engineering engineering engineer -ting

Advantages: Disadvantage:

- Flexibility and responsiveness to innovative - It often creates a situation of conflict of

ides
- Where unique solutions are needed to cope
with a changing environment and resistance to
change is a major organizational problem, the
project structure is more effective for goal
accomplishment.
authority between the project manager and
corporate functional heads. The project
manager is responsible for the completion of
his project. The functional department head is
responsible for the technical excellence and
quality of performance in his area of expertise.
Technicians and specialist thus have multiple
superior, which may create complexity

(vi) Matrix structure

Matrix structures have gained popularity during the last few years. In matrix organization authority
flows vertically within functional departments, while authority of project managers flows
horizontally crossing vertical lines. This two-way flow of authority creates a grid or matrix of
 Pranob Halder,M.Sc in Tex BUTex,pranob1987@gmail.com

authority flows. Thus, a matrix structure is created when project management is superimposed on
a stable hierarchical structure, usually a functional nature. This combination of functional and
project structures overcomes the disadvantages of both when used singly.

Director of
engineering

Chief of Chief Chief Chief Chief

preliminary mechanical electrical hydraulic metallurgical
design engineering engineering engineering engineering
Project A
manager

Project B
manager

Project C
manager

Project D
manager

Advantages: Disadvantage:

- Is oriented toward end results - Conflict in organization authority exists

- Professional identification is maintained - Possibility of dis-unity of command exists
- Pinpoints product-profit responsibility - Requires manager effective in human relations