Derived from

The term Organisation is derived from the word Organism,

means

A structure of body divided into parts that are held together by a fabric of relationship as one organic whole.
Organisation suggests the structure within which people associate for the attainment of an objective.

In an enterprise, many managers and employees work together for achieving common objectives. It is the organisation structure which binds them together and brings proper adjustment and coordination in their work. The division of work and authority; and the establishment of relationship among individuals or groups are possible due to the organisation structure.

Organisation Involves

Identifying the activities required to achieve organisational objectives. Grouping up of these activities into workable units

(Departmentation) Assigning duties and responsibilities to subordinates in order to achieve the tasks assigned. Delegating authority if necessary Establishing superiorsubordinate relationship. Providing a system of co-ordination for integrating the activities of individuals and departments.

Organization: Definition
According to Louis A. Allen, Organisation is "the process of identification and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives". James Mooney defines organisation as "the form of every human association for attainment of a common purpose".

employees' responsibilities

In an organization of any size or complexity, employees' responsibilities are defined by what they do and who they report to and for managers, who reports to them. Over time these definitions are assigned to positions in the organization rather than to specific individuals.

Organisation structure refers to the network of relationships among individuals and positions in an Organisation

Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met.
Organization Structure Suggests Its Framework .

Organisation structure is defined as "The logical arrangement of task and the network of relationships and roles among the various positions established to carry out the activities necessary to achieve the predetermined objectives of business".

Internal Organisation structure constitutes the arteries and veins through which the blood of work flows in the body of Organisation.

FACTORS

The best organizational structure for any organization depends on many factors including the work it does its size in terms of employees revenue, and the geographic dispersion of its facilities the range of its businesses (the degree to which it is diversified across markets).

WHY

When a work group is very small and face-toface communication is frequent, formal structure may be unnecessary,

BUT
In a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions. It is these decisions that determine the organizational structure.

Importance
1. Ensures optimum utilisation of human resources. Every enterprise appoints employees for the conduct of various business activities and operations. They are given the work according to their qualifications and experience. Organisation ensures that every individual is placed on the job for which he is best suited.

2. Facilitates Co-Ordination Organisation involves division of work and departmentation. This naturally suggests the need of proper coordination among the departments and efforts of people working in an Organisation. Due to coordination one clear-cut direction is given to people/ departments and efforts will not be wasted or misdirected. Coordination also brings integration in the basic functions of management. The principle of coordination is important as it facilitates achievement of overall objectives of a business Organisation. It also brings unity of action in the Organisation. Coordination will not be available automatically. For this, working relationships need to be established within the Organisation.

It acts as a means of bringing co-ordination and integration among the activities of individuals and departments of the enterprise. It establish a clear-cut relationships between operating departments and bring proper balance in their activities.

3.

Division of Work and Specialization: Division of work leads to specialization. Every department of an Organisation should be given specialized functions. This will raise the overall efficiency and quality of work of an Organisation. At the same time, specialization and departmentation should not have any adverse effect on the total integrated system. Coordination must be established among the departments and activities. Specialization is necessary for raising the efficiency of the whole Organisation structure. The functions given to each department should be preferably only of one category. Employees should be assigned duties to different departments as per their qualifications, qualities and so on.

4. Ensures growth, expansion and diversification Sound Organisation structure facilitates expansion/diversification of an enterprise. Organisation structure has in-built capacity to absorb additional activities and also effective control on them. A business enterprise brings diversification in its activities within the framework of its Organisation 5. Stimulates creativity: Organisation provides training and self-development facilities to managers and subordinates through delegation and departmentation. It also encourages initiative and creative thinking on the part of managers and others

6. Facilitates administration: Effective administration of business will not be possible without the support of sound organisation structure. Delegation, departmentation and decentralisation are the tools for effective administration.

7. Determines optimum use of technology: Sound Organisation structure provides opportunities to make optimum use of technology. It facilitates proper maintenance of equipment and also meets high cost of installation.

8. Determines individual responsibility:

Responsibility is an obligation to perform an assigned work. In a sound Organisation, the manager finds it easy to pinpoint individual responsibility when the work is spoilt/spoiled.
.

9. Delegation of Authority:
Delegation should go to the lower levels of management. Every one should be given authority which is adequate to accomplish the task assigned to him. Delegation is useful for getting the things done through others. A successful manager normally does not perform the jobs by himself. He delegates the authority and responsibility to his subordinates. He also motivates his subordinates and see that they take initiative, work efficiently and contribute for achieving organizational objectives.

10. Efficient administration, direction and control. 11. It avoids wastage of raw materials and human efforts.
12. Efficient conduct of business activities

WHY Different Types Of Organisation Structure

Needed ?

Necessity Is The Mother Of Invention

The diverse and complex nature of the current business environment has led to the emergence of several types of organizational structures. Organizational designs are believed to be better adapted to the needs of the emerging business environment. Each structure has unique qualities to help businesses handle their particular environment.

Classification of Internal Organisation structures/ Types Of Organisation Structure

Internal Organisation structures can be broadly classified into the following types/forms: 1. Line Organisation structure. 2. Functional Organisation structure. 3. Line and staff Organisation structure. 4. Product Organisation structure. 5. Committee and Matrix Organisation structure.

Line / Military/Scalar Organisation Structure

Line Organisation (also called Military/Scalar Organisation) is the oldest and the simplest form of internal Organisation structure.

In the line Organisation, The line of authority moves directly from the top level to the lowest level in a step-by-step manner. It is straight and vertical. The top-level management takes all major decisions and issues directions for actual execution. For example, The general manager issues order to various departmental managers. Thereafter, the departmental manager issues instructions to works manager. The works manager will issue instructions to foreman. In this manner, the orders and instructions will be issued to the workers working at the lowest level. Thus, authority moves downward and also step-by-step. The responsibility, on the other hand, moves in the upward direction.

Advantages of Line Organisation Structure

Simplicity: Line Organisation structure is easy to understand and follow by superiors and subordinates. It is simple and clear as regards authority and accountability. Prompt decisions: Line Organisation facilitates prompt decision-making at all levels as the authority given is clear and complete. Discipline: It brings discipline in the Organisation due to unity of command, delegation of authority and direct accountability.

Economical: Line Organisation is economical as experts are not appointed. Attraction to talented persons: Line Organisation brings out talented workers and develops in them quality of leadership. It offers opportunities of self-development to employees. Quick communication, high efficiency, flexibility and high employee morale are some more advantages of line Organisation structure.

Limitations/Disadvantage of Line Organisation Structure

Heavy burden on line executives: The line executives are given too many duties and responsibilities. Even the quality of the decisions of executives may suffer due to heavy burden of duties and responsibilities.

Non-availability of services of experts: There is absence of skilled experts in line organisation. Expert assistance is not available promptly when needed by line executives.

3. Favoritism & Nepotism

Forms of nepotism :
Relative Nepotism; Friend Nepotism ; a real morale killer because it is so blatantly unfair to the "not-so-good friends" of the boss.

Favoritism Preferential treatment when someone appears to be treated better than others not necessarily due to superior work performance;discrimination ; reduces morale, violates corporate culture; increases employee turnover, and slows down career advancement (selfdevelopment); demotivates workforce; upset coworkers ; unfair

Nepotism Showing of favoritism toward relatives and friends, based upon that relationship, rather than on an objective evaluation of ability, meritocracy or suitability. (giving much higher standard than the rest of the team) Loss of productivity; a real morale killer Disruption of the workforce Risk of lawsuits

Forms of nepotism

Connection Nepotism Relative Nepotism Friend Nepotism Referral Nepotism Contribution Nepotism etc

Leadership of departmental executive is autocratic (self assured i.e. bossy way of ordering others) due to heavy concentration of powers. He may favour some employees at the cost of others. Too much dependence on limited executives: In the line organisation, all powers are concentrated in the hands of a few executives. Naturally, the success and stability of the entire organisation depends on their personal skill, initiative and interest. Special difficulties arise when one executive is to be transferred/replaced/promoted. Rigidity: There is rigidity (stiff / resisting flexibility) in the working of line organisation. limited freedom to employees

II. Functional Organisation Structure

Functional Organisation suggested by F. W. Taylor says that the job of management is divided according to specialization. As a result, functional departments are created. Employees within the functional structure are differentiated to perform a specialized set of tasks. For instance, the marketing department would be staffed only with marketers responsible for the marketing of the company's products.

Functional departmentalisation

Advantages Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations Coordination within functional area In-depth specialization Disadvantages Poor communication across functional areas Limited view of organisational goals

Geographical Departmentalisation

Functional Organisation Structure Includes

The functional structure of the organisation should include the names of all key managers and staff. This information is needed to identify responsibilities and dependencies which will be useful in the early stages of the emergency. An example of a functional organisation chart is as follows. This specialization leads to operational efficiencies where employees become specialists within their own realm of expertise.

In the functional foremanship, there will be eight specialists/functional heads called bosses. Out of eight bosses, four bosses will be at the planning level and the remaining four will be at the shop floor level.

Foremen At Planning Level (Planning Dept.)

Time and Cost Clerk: He is concerned with preparing standard time for the completion of certain piece of work and compiling the cost of that work. Instruction Card Clerk: He lays down the exact method of doing the work. He specifies the tools to be used for conducting the production and also gives other instructions on the instruction cards prepared by him. Route Clerk: The route clerk lays down the exact route through which each and every piece of work should move through various stages till completion. He decides the production schedule and the sequence of steps by which the production process is to move. Shop Disciplinarian: He is concerned with the discipline, insubordination, violation of rules of discipline and absenteeism. All cases relating to these matters will be managed by the shop disciplinarian.

2. Foremen At Shop Floor Level

Gang Boss: He assembles and sets up various machines; and tools for a particular piece of work. He is in-charge of assembling line of production. Speed Boss: He is concerned with the speeding of machines used for production. He keeps proper speed of the machines and see that workers complete the production work as per the schedule time. Repair Boss: The repair boss looks after the proper maintenance of machines, tools and equipments required during the production process. Inspector: The inspector controls quality of the products by keeping adequate check/control when the production work is in progress. The functional Organisation structure is given in the above chart

Functional organizational structures are best suited for companies producing standardized

goods

and services at large volumes and low cost.

Therefore, functional structures are most effective for companies.

Functional structure works best when the surrounding environment is stable, and when customers expect a standardized range of products not subject to continuous change. If the environment becomes more complex and uncertain, the functional structure may not be the best suited structure for the company, and the company may need to change their structure to be able to cope with new challenges and uncertainties.

Advantages of Functional Organisation Structure

The major potential advantages include: Economies of scale with efficient use of resources Task assignments consistent with technical training High quality technical problem solving In-depth training and skill development within functions. The human resource abilities are constantly nurtured by concentrated tutoring, leadership, and guidance Clear cut career paths within functions

Provides an easy path for the employees to grow within the organization sideways as well as upwards in the organizational tree

Disadvantage of the Functional Structure is that

employees tend to identify themselves with their respective departments but not so much with the organization as a whole.

Poor communication and coordination across functions (different departments) Failure to communicate and extend support across department lines.

One of the most serious disadvantages occurs when members of functional departments become overspecialized, develop self-centered, narrow viewpoints, and lose the total system perspective.

Grouping based on functions results in a lack of broader view from employees resulting in narrowed vision of overall organizational objective

What is an alternative structure then?

Organizational structures such as the divisional structure and the matrix structure could be the solution for companies operating in more uncertain and complex environments, and the solution for companies offering a broad range of products to different customer segments.

Divisional Organisation Structure

Functional structures are useful for relatively big companies. Employees within the functional structure are differentiated to perform a specialized set of tasks. For instance, the marketing department would be staffed only with marketers responsible for the marketing of the company's products.

i.e. When a company expands to supply goods or services to a variety of customers, offers a variety of different products or are engaged in business in several different markets, the company could adopt a divisional organizational structure. The divisional structure is broken down into three areas: product, market, and geographic. Product Structure Product structure groups employees together based upon specific products produced by the company. An example of this would be a company that produces three distinct products, "product a", "product b", and "product c". This company would have a separate division for each product. Market Structure Market structure groups employees together based upon specific markets in which the company sells. Geographic Structure Geographic structure groups employees together based upon specific geographic location. The benefit of this organizational structure is that companies are able to specialize its activities into self-reliant divisions, each capable of satisfying customer demands and changes within the business environment.

The advantage of the Divisional Structure lies mainly in the coordination of functions within the separate divisions. Behind any single product group or market group or geographic group is one person who is in charge of all the functions within his division. This improves the ability of a company to respond to customer issues, because there is more accountability everyone in a given division reports to a single individual at the top of the division, rather than to a mere supervisor of a department. This arrangement also helps to develop managerial skills and executive skills, because people working in a Divisional Structure are exposed to all of the other functions, unlike as in a straight Functional Structure.

A solid example of Divisional Structure can be seen in the Boeing Company. Boeing has three divisions within its organization: the Commercial Airline division; the Military Aircraft division; and a fledgling new division or product group called Private Aviation. Each of these divisions is a functional organization onto itself, each with its own R&D and Production and Sales and Accounting teams; yet, each is only a component of a much larger organization called Boeing Company.

Matrix Structure:
Other types of organisational structure do not emphasize a hierarchy.

Hierarchical:

This structure shows people's position in the business and the layers of responsibility that are associated with that level. The Chain of Command shows who reports to whom within the hierarchy.

A hierarchical organisation chart in a typical school. The chart shows different levels of responsibility at each level.

Matrix Structure
In a matrix structure, each individual may have a specific role or function and may work within a functional area but the matrix structure is designed to show that every person in the organisation has an important role to play. It does not suggest that one person's role is any more important or valuable than another.

This diagram shows how a matrix structure might be represented. There are five people working on the main part. Each person has a role to play and we all rely on each other to carry out those roles and to support the others in helping them do their jobs effectively.

MATRIX

An example of a matrix structure at a software development company. Business analysts, developers, and testers each report to a functional department manager and to a project manager simultaneously.

Matrix Structures incorporate elements of both Functional and Divisional structures

Project-based matrix structure

A Matrix structure organisation contains teams of people created from various sections of the business. These teams will be created for the purposes of a specific project and will be led by a project manager. Often the team will only exist for the duration of the project and matrix structures are usually deployed to develop new products and services.

The manager of each project has no staff at all. His job is to assemble his staff from the functional areas of the organization in order to see his project through from conception to completion. The project manager, in other words, must borrow his staffing from each department.

ADVANTAGES
Individuals can be chosen according to the needs of theproject. The use of a project team which is dynamic and able to view problems in a different way as specialists have been brought together in a new environment. Project managers are directly responsible for completing the project within a specific deadline and budget.

Disadvantages

The disadvantages of a matrix organization arise from the dual reporting structure. The organization's top management must take particular care to establish proper procedures for the development of projects and to keep communication channels clear so that potential conflicts do not arise and hinder organizational functioning.

If teams have a lot of independence, difficult to monitor.

Global Matrix Structure

Chairman of the Board
Executive Committee

Management

Strategic Business units

N. America

Latin America

Europe

Asia

autos

light trucks

sports utilities

parts

financing

Combined Functional and Divisional Structure

Chair and CEO

Vice Chair and COO

Exec VP, Finance

Exec VP, Fresh Dairy

Exec VP, Water

Exec VP, Biscuits and Cereal Snacks

Exec VP, Asia-Pacific

Exec VP, Intl Strategy

Line-and-Staff Organization Structure

In a line organization, top management has complete control, and the chain of command is clear and simple. The line-and-staff organization combines the line organization with staff departments that support and advise line departments. Most medium and large-sized firms exhibit line-and-staff organizational structures.

Difference?

The distinguishing characteristic between simple line organizations and line-and-staff organizations is the multiple layers of management within line-and-staff organizations.

Advantage & Disadvantage

An advantage of a line-and-staff organization is the availability of technical specialists. Staff experts in specific areas are incorporated into the formal chain of command. A disadvantage of a line-and-staff organization is conflict between line and staff personnel

LINE-AND-STAFF POSITIONS

LINE-POSITIONS A line position is directly involved in the day-to-day operations of the organization, such as producing or selling a product or service. Are occupied by line personnel and line managers. Line personnel carry out the primary activities of a business and are considered essential to the basic functioning of the organization.

STAFF POSITIONS Staff positions serve the organization by indirectly supporting line functions.

Staff positions consist of staff personnel and staff managers. Staff personnel use their technical expertise to assist line personnel and aid top management in various business activities

Line managers make the majority of the decisions and direct line personnel to achieve company goals. Ex. of a line manager is a marketing executive. Although a marketing executive does not actually produce the product or service, he or she directly contributes to the firm's overall objectives through market forecasting and generating product or service demand. Therefore, line positions, whether they are personnel or managers, engage in activities that are functionally and directly related to the principal workflow of an organization

Staff managers provide support, advice, and knowledge to other individuals in the chain of command. An example of a staff manager is a legal adviser. He or she does not actively engage in profit-making activities, but does provide legal support to those who do. Therefore, staff positions, whether personnel or managers, engage in activities that are supportive to line personnel.

In an organisation, there are three types of authority.

Line Authority is given to line managers for achieving the objectives of the organisation. Staff Authority is given to staff managers for giving advice and service to the line managers. Functional Authority is given to a line or staff manager to do a specific job. When the job is completed, the authority is taken back.

LINE-AND-STAFF AUTHORITY

LINE AUTHORITY
Line authority is the right to carry out assignments and exact performance from other individuals. Line authority flows down the chain of command.

STAFF AUTHORITY
Staff authority is the right to advise or counsel those with line authority.

line authority gives an individual a certain degree of power relating to the performance of an organizational task

For example, line authority gives a production supervisor the right to direct an employee to operate a particular machine.

Therefore, line authority gives an individual a certain degree of power relating to the performance of an organizational task.

For example, human resource department employees help other departments by selecting and developing a qualified workforce. A quality control manager aids a production manager by determining the acceptable quality level of products or services at a manufacturing company, initiating quality programs. Therefore, staff authority gives staff personnel the right to offer advice in an effort to improve line operations.

LINE-AND-STAFF CONFLICT

Due to different positions and types of authority within a line-and-staff organization, conflict between line and staff personnel is almost inevitable. differences in viewpoints is natural. Many reasons for conflict conflict on the part of line and staff personnel can disrupt an entire organization

How to minimize conflict ?

1. Integrate line and staff personnel into a work team. The success of the work team depends on how well each group can work together in efforts to increase productivity and performance. 2. Ensure that the areas of responsibility and authority of both line and staff personnel are clearly defined.

3. Hold both line and staff personnel accountable for the results of their own activities. i.e. In other words, line personnel should not be entirely responsible for poor performance resulting from staff personnel advice.

Network Organisational Structure

Network Organisation Structure

Network Organisation Structure

With staff strength of more than 1500 permanent and contractual employees, the organisation operates through its nationwide network of fully equipped and fully functional zonal offices.

A network-based organization structure outsources business functions; harnesses volunteer labor; leverages information technology services and adopts a minimalist model.

Outsourcing Business Functions

A network-based organization structure outsources a variety of tasks and business functions for the purposes of cutting costs, maintaining a flexible infrastructure and aiding in the scalability of the company. For example, outsourcing specific tasks overseas with lower labor costs may be advantageous for the company both in terms of efficiencies and lowering operating expenses. (Medical Transcription)

Volunteer Labor
Volunteer labor may also lower operating expenses with the added benefit of harnessing social capital and proven talent for future projects. Volunteer labor can be either professional or amateur in terms of scope and quality. User-generated content is a form of volunteer labor defined within a virtual environment, where volunteers may contribute content, perform tasks and/or improve a company's services.

Leveraging(advantage) Information Technology

Network-based organization structures greatly benefit from information technology services by leveraging communication capabilities that may be largely free, For example: email, chatting services, voiceover Internet protocol (VoIP), a Web presence, community forums and social media. Moreover, information technology services provide an instant means of communicating, ensuring a rapid exchange of vital information.

Adopting a Minimalist Model Outsourcing tasks combined with leveraging information technologies and volunteer labor allows for network-based organizations to significantly reduce operating expenses to the bare minimum required for operating. For example, minimalist models employ just enough full-time workers to maintain essential functions necessary for day-to-day operations.

Vertical Organization

Vertical Organization

In a vertical organization, authority for setting objectives rests with a single leader, such as a chief executive, or a small group such as a board of directors.

The visual symbol of a vertical structure is the organization chart that shows the hierarchy of leaders and subordinates.

Horizontal Organisation

Horizontal structures have more of a team approach.

A horizontal structure gives authority to individuals, teams and work groups with no hierarchical relationship among different groups i.e. A specific hierarchy does not exist. A horizontal organization would also have a leader or business owner at the top with ultimate responsibility for strategic decisions. Other groups have the authority to make their own decisions.

Organic Organization Structure

organic organization Definition Organizational structure characterized by (1) Flatness: Communications and interactions are horizontal, (2) Low specialization: Knowledge resides wherever it is most useful, and (3) Decentralization: great deal of formal and informal participation in decision making. Organic organizations are comparatively more complex and harder to form, but are highly adaptable, flexible, and more suitable where external environment is rapidly changing and is unpredictable. Also called

open organizations.

Delegation (Assigning work)

Delegation means assigning of certain responsibilities along with the necessary authority by a superior to his subordinate managers Delegation is very essential for getting the work done through others. It is necessary to have brief understanding of three terms connected with the concept and process of delegation. Authority Responsibility Accountability In Management

Responsibility

Responsibility indicates the duty assigned to a position. The person holding the position has to perform the duty assigned. Responsibility is often referred to as an

obligation to perform a particular task assigned to a subordinate.

Responsibility is an obligation of individual to perform assigned duties to the best of his ability under the direction of his executive leader."

Authority

Authority is the right or power assigned to an executive or a manager in order to achieve certain organizational objectives. "Authority is the right or power to give orders

Accountability

Every employee/manager is accountable for the job assigned to him. He is supposed to complete the job as per the expectations and inform his superior accordingly.

Accountability means that the subordinate should explain the factors responsible for non-performance or lack of performance
Accountability is the obligation of an individual to report formally to his superior about the work he has done to discharge the responsibility."

Four Stages In Process of Delegation of Authority

Assignment of duties to subordinates. Transfer of authority to perform the duty. Acceptance of the assignment. Creation of Obligation / Accountability / Responsibility.

Objectives of Delegation of Authority

To reduce the excessive burden on the superiors i.e., executives and managers functioning at different levels. To provide opportunities of growth and self development to junior executives. To create a team of experienced and matured managers for the Organisation. It acts as a technique of management and human resource development. To improve individual as well as overall efficiency of the Organisation.

Process of Delegation of Authority

Authority, Responsibility and Accountability are Inter-related

The superior transfers his duties/responsibilities to his subordinate and also give necessary authority for performing the responsibilities assigned. At the same time, the superior is accountable for the performance of his subordinate.

Formal Organisation & Informal Organisation

Formal Organisation is formed when two or more persons come together. They have a common objective or goal. They are willing to work together to achieve this similar objective. Informal Organisation is a network of personal and social relationships

Formal Formed by Whom? A formal organisation is formed by the top level management

Informal

An informal organisation is formed by social forces within the formal organisation.

Rules and Regulations to follow? The members of a formal organisation have to follow certain rules and regulations. These rules are available in writing (documented). They are made by a formal authority (superiors). If the members follow these rules properly, then they will be rewarded. However, if they do not follow these rules, they will be punished.

The members of an informal organisation do not have to follow any rules and regulations.

Any Duties and Responsibilities? In a formal organisation, the duties, responsibilities, authority and accountability of each member is well-defined. Is any Objectives or Goals ? In a formal organisation, the objectives or goals are specific and well-defined. The main objectives of a formal organisation are productivity, growth, and expansion

In an informal organisation, there are no fixed duties, responsibilities, authority, accountability, etc. for the members. In an informal organisation, the objectives are not specific and well-defined. The main objectives of an informal organisation are friendship, security, common interest, individual and group satisfaction, etc.

How far it is Stable?

A formal organisation is stable. A formal organisation has a system of co-ordination. It also has a system of authority. It has a clear superior-subordinate relationship. In a formal organisation, the objectives are specific and welldefined. Ex. a company, a school, a college, a bank, etc.

An informal organisation is not stable. It has no system of co-ordination and authority. It doesn't have any superiorsubordinate relationship nor any specific and well-defined objectives. They work, travel, and eat together. Therefore, they become good friends and companions. There are many groups of friends in a formal organisation. These groups are called informal organisation.

A formal organisation is shown on the organisation chart. A formal organisation uses formal channels of communication In a formal organisation, there exist a superiorsubordinate relationship. The members of the formal organisation get financial benefits and perks like wages or salaries, bonus, traveling allowances, health insurance, etc.

An informal organisation is not shown on the organisation chart. An informal organisation uses informal channels of communication (i.e. grapevine) In an informal organisation, there is no such superiorsubordinate relationship The members of informal organisation get social and personal benefits like friend circle, community, groups, etc.

Theory Z - William Ouchi

Ouchi was born and educated in America, but was of Japanese descent. During the 1970s, William Ouchi, took the Theory X, Theory Y concept one step further: Theory Z. This is the participative model. He visited Japan and studied their success with team and participative management and developed this theory.

Ouchi contrasted American types of organizations (Type A) that were rooted in the United States' tradition of individualism with Japanese organizations (Type J) that drew upon the Japanese heritage of collectivism. He argued that an emerging management philosophy, which came to be called Theory Z, would allow organizations to enjoy many of the advantages of both systems.
i.e.Theory Z is a hybrid management approach combining Japanese management philosophies with U.S. culture

Theory Z management approach could lead to greater employee job satisfaction, lower rates of absenteeism and turnover, higher quality products, and better overall financial and other performance.

motivation, and commitment

Theory X Theory Y Theory Z Workers' Motivation.

Theory X

Theory Y

Theory Z

Manager assumes that the only motivation that works for employees is

$$money$$.

Manager assumes that employees are motivated by their needs to fulfill their social, esteem, selfactualization, and

Manager assumes that employees are motivated by a strong sense of commitment to be a part of something worthwhile -- the selfactualization need. Workers' attitude toward work.

Manager assumes that the employees dislike work, avoids responsibility, and seeks only security from work (the paycheck!).

Manager believes that employees see work as a natural activity and will seek out opportunities to have increased responsibility and understanding of their tasks.

Manager believes that employees will not only seek out opportunities for responsibility, in fact, they crave opportunities to advance and learn more about the company.

Manager believes that workers will only respond to coercion (act), control, direction (telling them exactly what to do), or threatening punishment or firing

Manager believes that workers will respond best to favorable working conditions that do not pose threats or strong control.

Manager believes that employees should learn the business through the various departments, come up through the ranks slowly, and that the company will get the best benefits from that employee by making it possible for him/her to have "lifetime employment." The result will be strong bonds of loyalty

Managers assume the average worker is gullible and not very bright. is indifferent to the organization's needs. dislikes work. is motivated only by financial incentives. must be closely supervised.

Managers assume the average worker: feels work is natural. can enjoy work. is motivated by the desire to do a good job. might do a better job if control is minimized. has potential for development and advancement.

Managers assume the average worker wants to be involved in managing a company and building trust among all organizational members is central to raising productivity.

Japanese Management

1.

Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity", Richard Schonberger presented nine "lessons" the world could learn from the Japanese. These lessons included: Management technology is a highly transportable technology. Just-in-time production exposes problems otherwise hidden by excess inventories and staff. Quality begins with production, and requires a company-wide "habit of improvement." Culture is no obstacle; techniques can change behavior. Simplify, and goods will flow like water. Flexibility opens doors. Travel light and make numerous trips More self-improvement, fewer programs, less specialist intervention. Simplicity is the natural state. .

U.S. Vs Japaneese Management

U.S.
With short-term commitments by employees. Employment at will (the employer or the employee can terminate the employment relationship at any time)

Japaneese
Long-term employment

life-long commitments to their employees and expect loyalty in return. stability in the organization and job security among employees

Emphasizes individual decision-making.

Individual accountability and performance appraisal, recognizing individual achievements. Short-term evaluations of performance and rapid promotion of high achievers

Emphasizes communication, collaboration, and consensus( Involving the willing participation of all parties) in decision making. Oriented to the group

Slow evaluation and promotion.

Specialized career paths, with employees avoiding jumps from functional area to another. Concern for employees within the workplace.

Non-specialized career paths. (Less specialised).

Concern for employees that goes beyond the workplace.

Quantitative Systems for Operations Management

Increasing quality of managerial decision-making through the application of mathematical and statistical methods. The systems focuses on understanding the organization as an open system that transforms inputs into outputs. It is too abstract and too complex. Emerges from operations research and management science. It is a mathematical and statistical solution to problems using optimization models.

Contingency Approach

Contingency refers to the immediate (contingent or touching) circumstances. The contingency school focuses on applying management principles and processes as dictated by the unique characteristics of each situation. It emphasizes that there is no one best way to manage and that it depends on various situational factors, such as the external environment, technology, organizational characteristics, characteristics of the manager, and characteristics of the subordinates. The contingency approach believes that it is impossible to select one way of managing that works best in all situations ( Taylor.)

Their approach is to identify the conditions of a task (scientific management school), managerial job (administrative management school) and person (human relations school) as parts of a complete management situation and attempt to integrate them all into a solution which is most appropriate for a specific circumstance.

The manager has to systematically try to identify which technique or approach will be the best solution for a problem which exists in a particular circumstance or context.

The situational or contingency theory asserts that when managers make a decision, they must take into account all aspects of the current situation and act on those aspects that are key to the situation at hand.

It is important to note that the contingency approach stresses the need for managers to examine the relationship between the internal and external environment of an organization.

Decentralisation

Decentralisation, the authority is distributed to all the levels of management. Delegation is very essential for getting the work done through others. Therefore, it is used by all organisations.
OR

Decentralisation of authority means conscious/systematic effort to bring dispersal (spreading) of decision making power to the lower levels of the Organisation.

Delegation takes place from superior to subordinate. Delegation may be refused by subordinates. In delegation, the ultimate responsibility lies with the superior. In delegation the final control lies with the superior. That is, in delegation the superior keeps complete control.

Decentralisation take place from the top level management to the different departments. Decentralisation is wide because it involves all the department of the organisation.

In decentralisation the controlling is done by the head of departments. The top level management keeps minimum control.

In decentralisation, the ultimate responsibility lies with the head of department (HOD). Decentralisation is optional. Therefore, it is not used by all organisations. It is only used by large organisations.

After delegation, it is very easy to withdraw (take back) the authority from the subordinate.

After decentralisation, it is very difficult to withdraw the authority from the department

The decentralisation of Coca-Cola Coca-Cola decentralised its organisational structure by cutting half of the staff at its Atlanta headquarters and moving the regional chieftains closer to their local markets. In India, decision making has been moved further down to different areas of that diverse country.

Forces for ( de)centralisation de)centralisation

Henry Mintzberg

Henry Mintzberg, synthesized organisational design literature into five ideal organisational forms or configurations that do not exist in the real world, but provide consultants and managers a framework to understand and design organisational structures.

Mintzberg defined organisational structure as "the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them". Each configuration contains six components: operating core: the people directly related to the production of services or products; strategic apex: serves the needs of those people who control the organisation; middle line: the managers who connect the strategic apex with the operating core; technostructure: the analysts who design, plan, change or train the operating core; support staff: the specialists who provide support to the organisation outside of the operating core's activities; ideology: the traditions and beliefs that make the organisation unique. The components are linked by four flows: authority; work material; information; decision processes. The organisation's structure depends on the organisation itself, its members, the distribution of power, the environment and the technical system. Design decisions can be grouped into the: design of positions; design of superstructure; design of lateral linkages; design of decision making system. Work constellations are quasi-independent cliques of individuals who work on decisions appropriate to their level in the hierarchy. These groups range from the formal to the informal. Mintzberg used the components, flows, work constellations and coordination mechanisms to define five configurations: 1. Simple Structure Entrepreneurial setting: relies on direct supervision from the strategic apex, the CEO. 2. Machine Bureaucracy Large organisations: relies on standardisation of work processes by the techno-structure. 3. Professional Bureaucracy The professional services firm: relies on the professionals' standardisation of skills and knowledge in the operating core. 4. Divisionalised Form Multi-divisional organisation: relies on standardisation of outputs; middle-line managers run independent divisions. 5. Adhocracy Project organisations: highly organic structure with little formalization; relies on mutual adjustment as the key coordinating mechanism within and between these project teams. In later work Mintzberg added two more configurations: 6. Missionary Form Coordination occurs based on commonly held ideologies or beliefs: standardisation of norms. 7. Political Form No coordination form is dominant: control is based on forming alliances. Each configuration represents a force that pulls organisations in different structural directions. For example, operators want to professionalize in their drive to control their work. Therefore, they favour a professional bureaucracy based on the standardisation of skills. The structure an organisation chooses depends, to a great extent, on the power of each of Minzberg's six components.