UNIT 2

ORGANISATIONAL STRUCTURE
 ORGANIZATIONAL STRUCTRES

• Meaning-
• When the managers are performing, organising, function an
organisational structure gets created automatically forms which
defines the job position, the authority, responsibilities of different
employees.
• An organization defines activities such as task allocation
coordination and supervision are directed toward the
achievement of organizational aims.
• Organization structure is way in which a company or organization
is organized including the types of relationships that exist
between the directors, managers and other employees.
 Importance of Organizational Structure

• 1) Structure properly all the operations of business and ensures

better flow of communication.
• 2) A clear structure makes it easy to check the responsibility of each
part of business.
• 3) A clear idea about the working style of an enterprise be known
from organizational structure.
• 4) It clearly defines the levels of management and span of control
under each level.
• On the basis of nature, different method and level of authority and
responsibility organization structure are divided into 6 types.
• There are majorly five main types of formal organizational structures
– line, functional, line and staff, project management and matrix.
Each of these has their own advantages and drawbacks.
 TYPES OF ORGANIZATION STRUCTURE ARE-:

• 1) Line Organization
• 2) Line and Staff organization
• 3) Functional Organization
• 4) Project Organization
• 5) Matrix Organization
• 6) Committee Organization
 Line Organizational Structure

• Line organizational structure is one of the simplest 

types of organizational structures. Its authority flows from top
to bottom.  Unlike other structures, specialized and supportive
services do not take place in these organizations.
• The chain of command and each department head has control
over their departments. The self-contained department
structure can be seen as its main characteristic. Independent
decisions can be taken by line officers because of its unified
structure.
• The main advantage of a line organizational structure can be
identified as effective communication that brings stability to the
organization.
 Line and Staff Organization

• Line and staff organization is a modification of line

organization and it is more complex than line
organization. According to this administrative
organization, specialized and supportive activities are
attached to the line of command by appointing staff
supervisors and staff specialists who are attached to
the line authority. The power of command always
remains with the line executives and staff supervisors
guide, advice and council the line executives. Personal
Secretary to the Managing Director is a staff official.
•                                                MANAGING DIRECTOR                                                                   
• ↓
• ↓
• ↓
• Production Manager
• Marketing Manager
• Finance Manager
• ↓
• ↓
• ↓
• Plant Supervisor
• Market Supervisor
• Chief Assisstant
• ↓
• ↓
• ↓
• Foreman
• Salesman
• Accountant
• Features of Line and Staff Organization
• There are two types of staff :
• Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.
• Staff Supervisor- Operation Control Manager, Quality Controller, PRO
• Line and Staff Organization is a compromise of line organization. It is more
complex than line concern.
• Division of work and specialization takes place in line and staff organization.
• The whole organization is divided into different functional areas to which
staff specialists are attached.
• Efficiency can be achieved through the features of specialization.
• There are two lines of authority which flow at one time in a concern :
– Line Authority
– Staff Authority
• Power of command remains with the line executive and staff serves only as
counsellors.
• Merits of Line and Staff Organization
• Relief to line of executives- In a line and staff organization, the advice and counseling which is provided to the line
executives divides the work between the two. The line executive can concentrate on the execution of plans and
they get relieved of dividing their attention to many areas.
• Expert advice- The line and staff organization facilitates expert advice to the line executive at the time of need.
The planning and investigation which is related to different matters can be done by the staff specialist and line
officers can concentrate on execution of plans.
• Benefit of Specialization- Line and staff through division of whole concern into two types of authority divides the
enterprise into parts and functional areas. This way every officer or official can concentrate in its own area.
• Better co-ordination- Line and staff organization through specialization is able to provide better decision making
and concentration remains in few hands. This feature helps in bringing co-ordination in work as every official is
concentrating in their own area.
• Benefits of Research and Development- Through the advice of specialized staff, the line executives, the line
executives get time to execute plans by taking productive decisions which are helpful for a concern. This gives a
wide scope to the line executive to bring innovations and go for research work in those areas. This is possible due
to the presence of staff specialists.
• Training- Due to the presence of staff specialists and their expert advice serves as ground for training to line
officials. Line executives can give due concentration to their decision making. This in itself is a training ground for
them.
• Balanced decisions- The factor of specialization which is achieved by line staff helps in bringing co-ordination. This
relationship automatically ends up the line official to take better and balanced decision.
• Unity of action- Unity of action is a result of unified control. Control and its effectivity take place when co-
ordination is present in the concern. In the line and staff authority all the officials have got independence to make
decisions. This serves as effective control in the whole enterprise.
• Demerits of Line and Staff Organization
• Lack of understanding- In a line and staff organization, there are two authority flowing at one
time. This results in the confusion between the two. As a result, the workers are not able to
understand as to who is their commanding authority. Hence the problem of understanding can
be a hurdle in effective running.
• Lack of sound advice- The line official get used to the expertise advice of the staff. At times the
staff specialist also provide wrong decisions which the line executive have to consider. This can
affect the efficient running of the enterprise.
• Line and staff conflicts- Line and staff are two authorities which are flowing at the same time.
The factors of designations, status influence sentiments which are related to their relation, can
pose a distress on the minds of the employees. This leads to minimizing of co-ordination which
hampers a concern’s working.
• Costly- In line and staff concern, the concerns have to maintain the high remuneration of staff
specialist. This proves to be costly for a concern with limited finance.
• Assumption of authority- The power of concern is with the line official but the staff dislikes it
as they are the one more in mental work.
• Staff steals the show- In a line and staff concern, the higher returns are considered to be a
product of staff advice and counseling. The line officials feel dissatisfied and a feeling of distress
enters a concern. The satisfaction of line officials is very important for effective results.
• Functional Organizational Structure
• Every company needs an organizational structure, it basically defines the hierarchy of
the company. In simple words, it defines who works for whom and who reports to
who.
• Without this structure, there would be chaos and inefficiency. Now one of the most
common forms of formal organization is the functional organizational structure.
• In a functional organization structure, the entire organization is divided into smaller
groups or departments based on specialized functions.
• So for example in such an arrangement there will be a finance department, an IT
department, marketing department etc. This allows for greater cohesiveness and
efficiency in the work of the employees.
• Since the work is divided into smaller sectors, so is the management. The
management is also sub-divided according to the type of work being done.
• So every department has their own head or executive. And the reporting structure
can also differ from department to department.
• Types of Functional organization
• Geographic differentiation
• Product differentiation
• Customer differentiation
• Process differentiation
 Advantages of Functional Organizational Structure

• The executive or the team leader has the knowledge and experience of that
particular field. For example, the person heading the IT department will have the
education and skill necessary to shoulder this responsibility and successfully run
his team.
• Because the employee has expertise in that particular field, the work is more
efficient and precise. There are fewer mistakes. This also helps with the 
motivation of the employees of the company.
• Since all team members come from similar backgrounds it allows them to share
ideas and come up with solutions. There is a sharing of knowledge, which is
always beneficial.
• The employees also having a clear idea of the hierarchy of the firm. They need
not report or answer to several managers.
• Also, the employees feel secure in their work. They see that their work and
efforts is not going unnoticed. This sense of security helps them perform better.
 Disadvantages of Functional Organizational Structure

• The work can be quite one dimensional. After a while, the employees may
start feeling monotony or boredom. The lack of new challenges can make
them unenthusiastic for the job at hand.
• In this structure, the manager must take care of the appraisal system. If the
correct approach is not taken then conflicts may arise between the
employees regarding promotions or appraisals.
• Also, this form of organization requires a high degree of specialization which
is difficult to establish
• If there is a necessary change of personnel it can disrupt the whole system
and its balance. Also, it is quite a rigid structure, not leaving a lot of scope for 
adaptation.
• In Functional Organizational Structure, the employees never gain any
knowledge or skills outside their own department. This can cause difficulties
in inter-departmental communication.
 Project organizational structure

•  
• What Is Organizational Structure in Project Management?
• A project management organizational structure is used to determine
the hierarchy and authority of people involved in a specific project.
The structure defines each team member’s function and the reporting
lines on a chart for team members to reference during a project.
• Types of Project Organizational Structures
• There are three types of organizational structures in project
management: functional, matrix, and projectized. Each project
structure framework is determined by the authority, roles, and
responsibilities of the team members within the existing
organizational structure. 
• Because no two projects are alike, no organizational structure will be exactly the
same. The role of the project manager changes within each of these frameworks, and
each project’s organizational structure is highly nuanced. Understanding the vertical
or horizontal coordination of each framework and the role that the project manager
will hold can help you to develop a successful strategy.
• The project organizational structure is an essential configuration for determining the
hierarchy of people, their function, workflow and reporting system.
• It is a factor in business that plays a fundamental role in guiding and defining the way
in which the organization carries out its operations.
• There are different project organizational structures defined according to the area in
which the organization operates and activities related to the core business.
• If an organization is dealing with temporary jobs for example, the structure will
probably better manage the recruitment and dismissal of employees as needed.
• On the other hand, if the organization is involved in a production chain that requires
continuous operation, it will have a different structure. In this case, the task assigned,
will be in order to support employees for a longer time to achieve the goals of the
organization.
• As organizations grow or their needs change, the organizational structure must adapt
to support the new goals.
 MATRIX ORGANIZATION
• What is a matrix organization?
• A matrix organization is a work structure where team members report to multiple leaders. In a
matrix organization, team members (whether remote or in-house) report to a project manager
as well as their department head. This management structure can help your company create
new products and services without realigning teams.
• A matrix organizational structure is a combination of two or more organizational structure
types. The matrix organization is the structure uniting these other organizational structures to
give them balance.
• Usually, there are two chains of command, where project team members have two bosses or
managers, a functional manager and a project manager. These roles are fluid and not fixed, as
the hierarchical structure between these two kinds of managers isn’t organizationally defined.
• This two-boss matrix will employ the best of both organizational charts and management styles
to strengthen strengths and make up for weaknesses. This way, if an organization is working on
producing two products or services at the same time, they can organize both and use that
duality to their advantage through the matrix organizational structure.
• Managing multiple projects requires robust project management software. Project Manager
has an overview section that includes portfolio roadmaps. This Gantt chart view lets you see all
the projects in your portfolio on one page to better strategize resource planning. Get better
organized today by trying our tool for free.
• Cons
• As usual, there’s also some cons associated with the use of matrix organizational
structures:
• There can be some confusion about the organization’s hierarchical structure when a
team member is subject to two managers, and it can be difficult to reach a balance of
power between them. That can also create unnecessary conflict.
• Limited resources can become an issue if managers don’t communicate during the
resource planning process.
• There are a lot of managers in a matrix organizational chart, which is not to everyone’s
liking. And having more people in managerial positions affects the company’s costs.
• Team members can feel the strain of working in a matrix organizational structure, in
that their workload can be heavy.
• Project management software can help you work better together by giving transparency
to your matrix organizational structure. Project Manager has boards, project
management calendars and Gantt charts that show managers their team’s workflow
without getting in their way. They can see where there will be potential blocks in
production and thereby allocate resources to keep the channels open. Other resource
management features, such as a workload chart, keep the team’s tasks balanced.
 Types of Matrix Organizational Structures

• The main difference between these matrix structure types is the balance of power
between the functional manager and the project manager. Let’s see how they differ.
•  
• Weak Matrix Organization
• In a weak matrix organization, the functional manager oversees all project management
areas and is the highest authority in the decision-making process throughout the
project. The project manager on the other hand has a much lower authority and has to
answer to the functional manager.
•  
• Balanced Matrix Organization
• In this type of matrix structure, the project manager has more authority than in a weak
matrix organization. The functional manager still acts as the primary managerial
authority in the decision-making process.
•  
• Strong Matrix Organization
• In a strong matrix organization, the project manager has equal or more power than the
functional manager. The project manager has control over resource planning and task
management.
 Committee Organizational Structure

• A committee organization is an association of individuals set up to reach

at resolutions to common challenges which are faced by the organization.
• It gives the line individuals opportunities to discuss their challenges in the
committee. The committee organizational structure is not like a 
line or functional organization.
• But it is like to staff organization. Its decisions are executed, whereas staff
decisions are not certainly implemented.  
• It is an official part of the organizational structure wherein the members
are maybe as for an example in the finance committee, it will include all
the functional managers who are the best in their skill i.e. Marketing
Manager, Production Manager, Personnel Managers and the Managing
Director will be in the role as the chairperson and they will do the
discussion on the financial requirements of every department and what
challenges they are facing and how to resolve them.
• And, the final decisions taken by the committee are followed by the
line people, we can say that the committees are the representatives
of various functional departments.A committee is common in all
types of orgainztions.

• A committee may be of two types: Executive Committee (Permanent

Committee) and Advisory Committee (Ad Hoc Committee).
• Permanent Committee (Executive Committee) – Permanent
committees perform their functions on regular basis. They are
involved in the planning and decision-making functions of the
organization. They solve all types of problems that crop in the
organization.
• Advisory Committee (Ad Hoc Committee) – Ad Hoc Committee is
formed for a specific purpose to play an advisory role. An Ad Hoc
Committee is formed for a temporary period and automatically
dissolved after completion of the given work or time.
 Committee Organization Advantages and Disadvantages

• Advantages:
• 1. Quality of Decision
• Quality of decision is one of the major advantages of committee organization. Here, members having knowledge from
various fields and experiences are gathered. Through gathering collective ideas and analyzing them they come to the right
decision for solving the complex problems.
• 2. Setting Objectives, Plans, and Policies
• Every organization is formed with definite objectives, to achieve it, and it is necessary to formulate plans and policies.
Committee provides the framework for setting organizational objectives. It also provides suggestions and information for
making plans and policies to achieve defined objectives.
• 3. Participative Management
• Committee organization ensures the participation of competent members in management. Here, all the members have the
right to put their ideas and views in the decision-making process. The democratic process is taken into consideration in the
decision making.
• 4. Reduce Bias and Conflicts
• The committee facilitates the development of relations among members and their relation with the line management. They
help in maintaining close communication and transformation of information among authorities. Thus, there is less
probability of bias or decision making mistakes. In a similar way, the development of mutual relationships helps to resolve
conflicts among members.
• 5. Dealing with Complex Problems
• Committee organization facilitates in dealing with complex and difficult types of problems. In some situations, during
operation, many complex or critical problems may arise in an organization. It is more difficult to solve such 
problems by line authority and even by the top management. In such cases, committees are formed by pooling experts from
the concerned field so that it becomes easy to resolve such problems in a systematic manner.
• 6. Commitment To Implement
• A committee is formed to resolve complex and difficult problems. Members of the committee are experienced and experts
in their own fields. Besides, expert representatives from top-level management also involved in committees. They come to
conclusion after a detailed discussion and evaluation of the impact of alternatives decisions.
• 7. Pooling Authorities
• In the process of investigation and research, some authority of the top management is also shared among the committee
members. The committee embers can perform their works independently by remaining within the defined area. All the
• Disadvantages:
• 1. Creating Conflict
• Conflict is common in committee because of more heads. In some situation, committee organization
creates confusions or conflicts in the decision-making process. Ideas or views of a member may be in
conflict with the views of other members.
• 2. Delay in Decision
• The committee members take more time to discuss the various factors of a problem. The valuable time
of the committee members spent on the discussion. The delay in the decision may result in an extra
financial burden to the management.
• 3. Probability of Diversion
• In some cases, committee discussion may be diverted to other subject matter. In such a situation,
committee members can not come to conclusion within the given time frame. They have to meet many
times to come to a suitable outcome.
• 4. Tendency of Shifting
• It is common to shift the tendency of decisions to committees. When the executives feel difficult to take
a decision on important problems, they often shift it to the committee. This attitude of line authorities
minimizes their initiative and creativity, which provides a negative impact on organizational
performance.
• 5. Lack of Secrecy
• Maintaining secrecy of internal matters is difficult in committee organization. All the members of the
committee discuss the problems in detail and in the process they get knowledge about internal matters
of the organization. Thus, there is more probability of leakage of internal plans and strategies of the
organization.
•  
• What is horizontal organizational structure?
• Horizontal organizational structure is a flat management
structure. Organizations with these structures often have few
managers with many employees, and they allow employees
to make decisions without needing manager approval.

• Providing employees with autonomy often helps employees

feel empowered and motivated, increasing their connection
to the company and its goals. The relaxed structure of
horizontal organizational structures also often naturally
encourages collaboration.
• What is vertical organizational structure?
• Vertical organizational structure is a pyramid-like top-down management
structure. These organizations have clearly defined roles with the highest
level of leadership at the top, followed by middle management then
regular employees. Decision making often works from top to bottom, but
work approval will work from bottom to top.
•  
• Vertical organizational structures define a clear chain of command. The
highest levels of managers make decisions about sales, marketing,
customer service and other standards and communicate them to middle
managers. Middle managers assign work to employees and communicate
processes and goals. Employees complete the work, and the work goes
through middle management and upper management for approval.
• Meaning of Centralization
• Centralization is a form of organizational structure where the decision
making capability rests with the top management. A couple of hand-
picked members are entitled to create strategies, determine the goals
and objectives based on which an organisation will function.
• In a centralized organisation, the top management sets rules and
procedures which are then communicated to the lower-level
employees, who are expected to carry out the same without
questioning the authority.
• The advantage of such a structure is, it allows employees to have a
well-defined framework within which all work needs to carried out.
• The disadvantage of such a structure is that it increases the time taken
to arrive at a decision. As decision-making authority lies with selected
people from top management, it may result in biased decision making.
• Meaning of Decentralization
• Decentralization is another form of organizational structure that
functions by delegating decision-making capabilities to multiple teams
across geographies.
• In such an organization, most of the planning, strategy and decision to
implement them are taken by the people in the middle and lower level
of management.
• The advantage of decentralization is that the employees are
empowered to make their own decisions that will benefit the
organization, which results in a high level of employee satisfaction and
boosts the productivity of an organization.
• Decentralization enables low-level employees to gain leadership skills,
which can contribute to the growth of the organization in the long run.
• Let us look at the most crucial points of difference between
centralization and decentralization in the following table.
 ORGANIZATIONAL DESIGN

• What is organizational structure?

• It is how job tasks are formally divided,
grouped, and coordinated within an
organization. When managers develop or
change the structure, they are engaged in
organizational design, a process that involves
decisions about six key elements: work
specialization, departmentalization, chain of
command, span of control, centralization and
decentralization, and formalization.
 Work Specialization

• Adam Smith first identified division of labour and concluded that it contributed to
increased employee productivity. Early in the twentieth century, Henry Ford applied this
concept in an assembly line, where every Ford employee was assigned a specific,
repetitive task. Also known as Division of work.

• work specialization to describe the degree to which tasks in an organization are

subdivided into separate jobs. The essence of work specialization is that an entire job is
not done by one individual but instead is broken down into steps, and each step is
completed by a different person. Individual employees specialize in doing part of an
activity rather than the entire activity. When work specialization was implemented in the
early twentieth century, employee productivity rose initially, but when used to extreme,
human diseconomies from work specialization—boredom, fatigue, stress, poor quality,
increased absenteeism, and higher turnover—more than offset the economic advantages.
Most managers today see work specialization as an important organizing mechanism but
not as a source of ever-increasing productivity. McDonald’s uses high work specialization
to efficiently make and sell its products, and employees have precisely defined roles and
standardized work processes. However, other organizations, such as Bolton, Ontario–
based Husky Injection Molding Systems and Ford Australia, have successfully increased
job breadth and reduced work specialization. Still, specialization has its place in some
organizations.
• Work specialization ensures that all employees have specific duties that
they are expected to perform based on each employee’s work experience,
education and skills. This prevents an expectation that employees will
perform tasks for which they have no previous experience or training and
to keep them from performing beneath their capacities.
• Departmentalization: – Departmentalization refers to how the
organizational structure groups the company’s functions, offices and
teams. Those individual groups are typically referred to as departments.
Departments are usually sorted on the basis of the kinds of tasks the
workers in each department perform, but this is not the only way to
create a company’s departmental breakdown. Once jobs have been
divided up through work specialization, they have to be grouped back
together so that common tasks can be coordinated. The basis on which
jobs are grouped together is called departmentalization. Every
organization will have its own specific way of classifying and grouping
work activities.
• There are five common forms of departmentalization.
• Functional departmentalization groups jobs by functions
performed. This approach can be used in all types of
organizations, although the functions change to reflect the
organization’s purpose and work.
• Product departmentalization groups jobs by product line. In this
approach, each major product area is placed under the authority
of a manager who is responsible for everything having to do with
that product line. For example, Estée Lauder sells lipstick,
eyeshadow, blush, and a variety of other cosmetics represented
by different product lines. The company’s lines include Clinique
and Origins, in addition to Canadiancreated MAC Cosmetics and
its own original line of Estée Lauder products, each of which
operates as a distinct company.
• Geographical departmentalization groups jobs on the basis of
territory or geography, such as the East Coast, Western Canada, or
Central Ontario, or maybe by US, European, Latin American, and
Asia–Pacific regions.
• Process departmentalization groups jobs on the basis of product or
customer flow. In this approach, work activities follow a natural
processing flow of products or even of customers. For example, many
beauty salons have separate employees for shampooing, colouring,
and cutting hair, all different processes for having one’s hair styled.
• Finally, customer departmentalization groups jobs on the basis of
customers who have common needs or problems that can best be
met by having specialists for each. There are advantages to matching
departmentalization to customer needs.
• Managers use cross-functional teams—teams made up of groups of
individuals who are experts in various specialties and who work together—to
increase knowledge and understanding for some organizational tasks.
•  
• Chain of Command: – Most organizations, from businesses to non-profits
organizations to the military, utilize a chain of command. This helps eliminate
inefficiencies by having each employee report to a single manager, instead of
to several bosses. The chain of command is reflected in the organizational
structure and affects job descriptions as well as office hierarchies.
• Managers assign tasks, communicate expectations and deadlines to
employees, and provide motivation on a one-to-many basis.
• The chain of command is the continuous line of authority that extends from
upper organizational levels to the lowest levels and clarifies who reports to
whom. It helps employees answer questions such as “Who do I go to if I have
a problem?” or “To whom am I responsible?” You cannot discuss the chain of
command without discussing these other concepts: authority, responsibility,
accountability, unity of command, and delegation.
• Authority refers to the rights inherent in a managerial position to tell people what to
do and to expect them to do it.4 To facilitate decision making and coordination, an
organization’s managers are part of the chain of command and are granted a certain
degree of authority to meet their responsibilities. As managers coordinate and
integrate the work of employees, those employees assume an obligation to perform
any assigned duties. This obligation or expectation to perform is known as
responsibility.
• Responsibility brings with it accountability, which is the need to report and justify
work to a manager’s superiors. Sobeys maintains an environmental scorecard where it
tracks its performance on environmental pledges such as reducing greenhouse gas
emissions by 15 percent, reducing landfill waste by 30 percent, and selling only
sustainable seafood products.
• The unity of command principle helps preserve the concept of a continuous line of
authority. It states that every employee should receive orders from only one superior.
Without unity of command, conflicting demands and priorities from multiple
managers can create problems. Because managers have limited time and knowledge,
they may delegate some of their responsibilities to other employees.
• Delegation is the assignment of authority to another person to carry out specific
duties, allowing the employee to make some of the decisions. Delegation is an
important part of a manager’s job, as it can ensure that the right people are part of
the decision-making process.
• Line and Staff Authority In many organizations, a distinction
can be made between line and staff authority. Line managers
are responsible for the essential activities of the organization,
including production and sales. Line managers have the
authority to issue orders to those in the chain of command.
The president, the production manager, and the sales
manager are examples of line managers. Staff managers work
in the supporting activities of the organizations, such as
human resources or accounting. Staff managers have advisory
authority and cannot issue orders to those in the chain of
command (except those in their own department).
• Span of Control: – An organization’s span of control defines how many
employees each manager is responsible for within the company. There
is no single type of span of control that’s ideal for all companies or even
for all businesses in a specific industry. The optimal span will depend on
a number of factors, including the size of the workforce, how the
company is divided into departments and even the company’s specific
business goals and strategies.
• How many employees can a manager efficiently and effectively
manage? This question of span of control is important because, to a
large degree, it determines the number of levels and managers an
organization needs. All things being equal, the wider or larger the span,
the more efficient the organization. span of control recognizes that
many factors influence the appropriate number of employees a
manager can efficiently and effectively manage. These factors include
the skills and abilities of the manager and the employees, and the
characteristics of the work being done.
• Centralization vs. Decentralization: – Organizational structures also rest
somewhere on a spectrum of centralization. Generally, more conservative
corporate entities adopt a centralized structure. Centralizing authority in a
business means that middle management typically is left with little to no
input about the goals the company sets. This system is typical in larger
corporate organizations, as well as at companies in more conservative
industries. On the other hand, a company could adopt a more
decentralized approach. A decentralized system allows all levels of
management the opportunity to give input on big-vision goals and
objectives. There has been a rise in decentralized organizations, as is the
case with many technology startups. This allows companies to remain fast,
agile, and adaptable, with almost every employee receiving a high level of
personal agency.
• In some organizations, top managers make all the decisions and lower-level
managers and employees simply carry out their orders. At the other
extreme are organizations in which decision making is pushed down to the
managers who are closest to the action. The former organizations are
centralized, and the latter are decentralized.
• Centralization describes the degree to which decision making is
concentrated at a single point in the organization. If top managers make the
organization’s key decisions with little or no input from below, then the
organization is centralized. In contrast, the more that lower-level employees
provide input or actually make decisions, the more decentralization there is.
• Keep in mind that the concept of centralization/decentralization is relative,
not absolute—an organization is never completely centralized or
decentralized. Few organizations could function effectively if all decisions
were made by only a select group of top managers; nor could they function
if all decisions were delegated to employees at the lowest levels. Nestlé uses
decentralized marketing with centralized production, logistics, and supply
chain management. Another term for increased decentralization is
employee empowerment, which means giving more decision-making
authority to employees.
• Formalization: – Finally, organizational structures implement some degree of formalization.
Formalization is the element that determines the company’s procedures, rules and
guidelines as adopted by management. Formalization also determines company culture
aspects, such as whether employees have to sign in and out upon arriving and exiting the
office, how many breaks workers can take and how long those breaks can be, how and
when employees can use company computers and how workers at all levels are expected to
dress for work.
• Formalization refers to the degree to which jobs within the organization are standardized
and the extent to which employee behaviour is guided by rules and procedures. If a job is
highly formalized, the person doing that job has little freedom to choose what is to be
done, when it is to be done, and how he or she does it. Employees can be expected to
handle the same input in exactly the same way, resulting in consistent and uniform output.
Organizations with high formalization have explicit job descriptions, numerous
organizational rules, and clearly defined procedures covering work processes. On the other
hand, where formalization is low, job behaviours are relatively unstructured, and
employees have a great deal of freedom in how they do their work. The degree of
formalization varies widely among organizations and even within organizations. For
example, at a newspaper, news reporters often have a great deal of discretion in their jobs.
They may pick their news topics, find their own stories, research them the way they want
to, and write them up, usually within minimal guidelines. In contrast, employees who lay
out the newspaper pages do not have that type of freedom. They have constraints—both
time and space—that standardize how they do their work.
 Principles of an Organizational Structure

• Following are the Principles of an Organizational Structure: –

• Principle of Unity of Objectives: – An enterprise should have a clearly defined purpose (or
objectives). An organization structure is effective if it facilitates the contribution made by all the
individuals in the enterprise towards the attainment of the objectives of the enterprise.
• Principle of Specialization: – The principle of specialization states that each person should play
the role for which he is naturally best suited and should not interfere in any other occupation.
• Principle of Coordination: – Coordination is the process which ensures smooth interaction. It is
between the forces and functions of the various constituent parts of the organization. Thus, it
aims to gain from maximum collaborative effectiveness and minimum friction.
• Principle of Authority: – Authority principle refers to a person’s tendency to comply with
people in positions of authority, such as government leaders, law-enforcement representatives,
doctors, lawyers, professors, and other perceived experts in various fields.
• Principle of Delegation: – According to this principle, if a subordinate is given the responsibility
to perform a task, at the same time he should be given sufficient freedom and power to
perform that task effectively.
• Principle of Efficiency: – Efficiency requires minimizing the number of unnecessary resources
used to produce a given output, including individual time and energy. It is a measurable
concept that can be determined using the ratio of total inputs to useful outputs.
• Principle of Unity of Command: – The concept of unity of command requires that each
member of an organization must report to one and only one leader. For example, a
company’s HR team would have just one supervising head, rather than two or three, to
systematically set up the work environment. With the help of Unity of Command principle
there is a proper hierarchy which is established in the company.
• Principle of Span of Control: – In simple words, span of control means a manageable number
of subordinates of a superior. The more subordinates a manager controls, the wider his span
of control.
• Principle of Balance: – The principle of balance states that there should be a proper balance
between the different parts of the organization. Two-way communication between superiors
and subordinates helps to unite the organization to work as an operating system effectively.
• Principle of Personal Ability: – According to this principle, the employees who are deployed
should be able to perform the tasks for which they are hired.
• Principle of Flexibility: – The principle of flexibility states that an accounting information
system must be able to adapt to changes based on company needs, operations and
management.
• Principle of Simplicity: – The organizational structure should be simple so that it can be easily
understood by everyone. The rights, responsibilities and position of every person should be
clarified so that there is no confusion about these things. It helps the organization to run
smoothly.
• Staffing is the process of hiring eligible candidates in the organization or company for
specific positions. In management, the meaning of staffing is an operation of
recruiting the employees by evaluating their skills, knowledge and then offering them
specific job roles accordingly. Let us find out more about what is Staffing and what it
entails along with its functions and characteristics.
• Definition: Staffing can be defined as one of the most important functions of
management. It involves the process of filling the vacant position of the right
personnel at the right job, at right time. Hence, everything will occur in the right
manner.
• It is a truth that human resource is one of the greatest for every organization
because in any organization all other resources like- money, material, machine etc.
can be utilized effectively and efficiently by the positive efforts of human resource.
• Therefore it is very important that each and every person should get right position in
the organization so as to get the right job, according to their ability, talent, aptitude,
and specializations so that it will help the organization to achieve the pre-set goals in
the proper way by the 100% contribution of manpower. Thus it can be said that it is
staffing is an essential function of every business organization.
• Characteristics of Staffing
• People-Centered
• Staffing can broadly view as people-centered function and therefore it is relevant for all types of
organization. It is concerned with categories of personnel from top to bottom of the organization.
• Blue collar workers (i.e., those working on the machines and engaged in loading, unloading etc.) and
white collar workers (i.e., clerical employees).
• Managerial and Non Managerial personal.
• Professionals (eg.- Chartered Accountant, Company Secretary)
• Responsibility of Manager
• Staffing is the basic function of management which involves that the manager is continuously engaged
in performing the staffing function. They are actively associated with the recruitment, selection,
training, and appraisal of his subordinates. Therefore the activities are performed by the chief
executive, departmental managers and foremen in relation to their subordinates.
• Human Skills
• Staffing function is mainly concerned with different types of training and development of human
resource and therefore the managers should use human relation skill in providing guidance and training
to the subordinates. If the staffing function is performed properly, then the human relations in the
organization will be cordial and mutually performed in an organized manner.
• Continuous Function
• Staffing function is to be performed continuously which is equally important for a new and well-
established organization. Since in a newly established organization, there has to be recruitment,
selection, and training of personnel. As we compare that, the organization which is already a running
organization, then at that place every manager is engaged in various staffing activities.
• Therefore, he is responsible for managing all the workers in order to get work done for the
accomplishment of the overall objectives of an organization.
• Functions of Staffing
• The first and foremost function of staffing is to obtain qualified
personnel for different jobs position in the organization.
• In staffing, the right person is recruited for the right jobs, therefore it
leads to maximum productivity and higher performance.
• It helps in promoting the optimum utilization of human resource
through various aspects.
• Job satisfaction and morale of the workers increases through the
recruitment of the right person.
• Staffing helps to ensure better utilization of human resources.
• It ensures the continuity and growth of the organization, through
development managers.
 Importance of Staffing

• Efficient Performance of Other Functions

• For the efficient performance of other functions of management, staffing is its key. Since,  if an
organization does not have the competent personnel, then it cannot perform the functions of
management like planning, organizing and control functions properly.
• Effective Use of Technology and Other Resources
• What is staffing and technology’s connection? Well, it is the human factor that is instrumental in the
effective utilization of the latest technology, capital, material, etc. the management can ensure the right
kinds of personnel by performing the staffing function.
• Optimum Utilization of Human Resources
• The wage bill of big concerns is quite high. Also, a huge amount is spent on recruitment, selection, training,
and development of employees.  To get the optimum output, the staffing function should be performed in
an efficient manner.
• Development of Human Capital
• Another function of staffing is concerned with human capital requirements. Since the management is
required to determine in advance the manpower requirements. Therefore, it has also to train and develop
the existing personnel for career advancement. This will meet the requirements of the company in the
future.
• The Motivation of Human Resources
• In an organization, the behaviour of individuals is influenced by various factors which are involved such as
education level, needs, socio-cultural factors, etc. Therefore, the human aspects of the organization have
become very important and so that the workers can also be motivated by financial and non-financial
incentives in order to perform their functions properly in achieving the objectives.
• Building Higher Morale
• The right type of climate should be created for the workers to contribute to the achievement of the
organizational objectives. Therefore, by performing the staffing function effectively and efficiently, the
 Staffing Process

• It is a truth that human resource is one of the greatest for every organization because in any
organization all other resources like- money, material, machine etc. can be utilized effectively and
efficiently by the positive efforts of human resource.
• Therefore it is very important that each and every person should get right position in the organization
so as to get the right job, according to their ability, talent, aptitude, and specializations so that it will
help the organization to achieve the pre-set goals in the proper way by the 100% contribution of
manpower.
• (Source: canstockphoto)
• Steps involved in Staffing Process
• Manpower Planning
• Recruitment
• Selection
• Placement
• Training
• Development
• Promotion
• Transfer
• Appraisal
• Determination of Remuneration
• Now, the process of Staffing can be explained in the following ways as follows-
• 1. Manpower Planning
•  Manpower planning can be regarded as the quantitative and
qualitative measurement of labour force required in an
enterprise. Therefore, in an overall sense, the planning process
 involves the synergy in creating and evaluating the manpower
inventory and as well as in developing the required talents
among the employees selected for promotion advancement
• 2. Recruitment
• Recruitment is a process of searching for prospective employees
and stimulating them to apply for jobs in the organization. It
stands for finding the source from where potential employees
will be selected.
• Selection
• Selection is a process of eliminating those who appear
unpromising. The purpose of this selection process is to
determine whether a candidate is suitable for employment
in the organization or not. Therefore, the main aim of the
process of selection is selecting the right candidates to fill
various positions in the organization. A well-planned
selection procedure is of utmost importance.
• 4.  Placement
• Placement means putting the person on the job for which he
is selected. It includes introducing the employee to his job.
• . Training
• After selection of an employee, the important part of the programmed is to provide
training to the new employee. With the various technological changes, the need for
training employees is being increased to keep the employees in touch with the various
new developments.
• 6. Development
• A sound staffing policy provides for the introduction of a system of planned promotion
in every organization. If employees are not at all having suitable opportunities for their
development and promotion, they get frustrated which affect their work.
• 7. Promotions
• The process of promotion implies the up-gradation of an employee to a higher post
involving increasing rank, prestige and responsibilities. Generally, the promotion is
linked to increment in wages and incentives but it is not essential that it always relates
to that part of an organization.
• 8. Transfer
• Transfer means the movement of an employee from one job to another without
increment in pay, status or responsibilities. Therefore this process of staffing needs to
evaluated on a timely basis.