Organization

Organization
• The word organization was derived from the Greek word
“Organon”, which means “Organ”.
• Any organization consist of people with a basic goal towards
the organization for the purpose it exists.
• An organization has several departments, including human
resources, and public Administrators, and people work on
strategizing these functions to maintain competitive
advantage through administration.
Organization
• Organization is the foundation upon which the whole structure of
management is built. It is the backbone of management.
• Organizations are human associations.
• They are established to achieve goals.
• They have structure and technology.
• They operate in a dynamic environment.
• An organization can be stated as the formal association of two or
more people to accomplish given objectives.
Organization
• Chester I. Bernard:
Organization is a system of consciously
coordinated activities of two or more persons
• Mooney and Reiley:
Organization is the form of every human
association for the attainment of a common purpose.
Organization
• Amitai Etzioni:
Organization is planned units, deliberately structured
for the purpose of attaining specific goals.
• Robins:
An organization is a consciously coordinated social unit
composed of two or more people who function on a relatively
continuous basis to achieve a common goal or set of goals.
Organization
• Griffin:
Organization is a group of people working
together in a structured and coordinated fashion to
achieve a set of goals.
Characteristics/Features of Organization
• There should be two or more people and perform various
function
• Organizations are goal-oriented.
• Organizations have continuity. They tend to stay alive.
• Organizations use technology to transform inputs into
outputs. Technology refers to the knowledge and skills
required to perform tasks.
Characteristics/Features of Organization
• Organizations have structures. Structures define jobs
and relationship. It implies differentiation of activities
and integration of efforts.
• Organizations are an open system and consists of
several sub-systems.
• Organizations are of many types: business, government,
service, unions, international, political, cultural, etc.
Characteristics/Features of Organization
• Organizations have several levels - top, middle, and
lower as well as differentiated functions
• An Organization is managed by its leader
Types of Organization
• Formal Organization
• Informal Organization
Formal Organization
• It is a type of organization, which is deliberately created by management to
accomplish goals.
• It is defined by organizational structure.
• It is shown in organizational chart.
• It is based on; division of work among members; clearly defined superior-
subordinate relationships and; communication channels based on scalar
principle.
• According to Koontz and Weitirich:
Formal organization means the intentional structure of roles in a formally
organized enterprise.
Characteristics of Formal Organization
• It is deliberately created by management
• It is created to accomplish predetermined goals
• It is based on division of work and job specialization
• Authority-responsibility of every position is clearly defined
• Communication channel is through scalar chain
• Members are guided by formal policies, plans, rules and
procedures.
Characteristics of Formal Organization
• It has a long life in terms of continuity
• Much emphasis is placed on efficiency, discipline,
conformity, consistency and control
• It is slow in adapting to environmental changes.
Informal Organization
• It is not defined by organizational structure.
• It is the result of human associations at the workplace.
• It emerges spontaneously.
• It results from proximity, personal interactions,
sentiments, and social activities.
• Informal groups represent informal organizations.
Informal Organization
• According to Keith Davis:
Informal organization is a network of personal and social
relation not established or required by the formal organization
but arising spontaneously as people associate with one another.
• According to Chester Barnard:
Informal organization is any joint personal activity without
conscious joint purpose, although contributing to joint results.
Characteristics of Informal Organization
• It is unplanned and spontaneous.
• It is based on common interests, attitudes, and work-related
needs.
• It results from human interactions or social relationships.
• It has no written plans, policies, rules and procedures.
• It is guided by customs, conventions culture, group norms, values,
and beliefs.
• Its membership is voluntary
Characteristics of Informal Organization
• It quickly adapt the environmental change
• It has tendency to resist changes within the group.
• The communication is through grapevine or
informal channel.
• It coexists with the formal organization
• Its primary focus is person
Characteristics of Informal Organization
• It has an informal system of reward and punishment
• Its goals are not well-defined and consistent
• Power in an informal organization is given by group
members rather than delegated by the manager
• They do not have well-defined tasks; they are not divided
and subdivided.
• The relationship is interpersonal, not impersonal
Advantages of Informal Organization
• Provides a sense of belonging and security to members
• Acts as a safety valve for emotional problems
• Members get help on the job from one another
• Serves as an important channel of communication
• Social control through group norms is possible
• The authority of members can be kept in check
Advantages of Informal Organization
• Reduces need for close supervision by management
• Employees reaction about proposed managerial
actions can be known in advance
Disadvantages of Informal Organization
• Resistance to change
• Rumor spreading
• Interference on management decision
Reasons for emergence or need for informal
organization
• To fulfill social security, affiliation, esteem, etc.
• To work in close proximity with group.
• To share view with people with similar social,
cultural, economic, etc. composition
• To interacts with others.
Organizational Structure
• Organizational structure is the framework for creating specific
relationship patterns in the organization to achieve goals.
• According to Stoner and Other “organizational structure is the
way in which an organization’s activities are divided, organized
and coordinated”.
• Organizational structure, is thus, a framework that manages
the device for dividing and coordinating the activities or
members of an organization
Types of Organizational Structure
• Line organization
• Line and staff organization
• Functional organization
I. Line Organization
• In Line organization structure, authority flows from top to bottom
level step by step in the organization hierarchy in a more or less
straight vertical line.
• It is a line organization because authority flows through a direct line
top to down. It is based on the scalar principle, and it is called a
scalar structure.
• Line organization is also called military organization because it is
widely used in military organizations.
• It is the oldest form of organization structure
The Major
Characteristics Line Organization
• There is direct and fixed line of authority between
superior and subordinate
• Authority flows from top to down in the organizational
hierarchy
• It entitles a manager to direct the work of subordinates
• Unity of command pervades because one employee has
only one boss.
The Major
Characteristics Line Organization
• There is direct and fixed line of authority between
superior and subordinate
• Authority flows from top to down in the organizational
hierarchy
• It entitles a manager to direct the work of subordinates
• Unity of command pervades because one employee has
only one boss.
II. Line and Staff Organization
• Line and staff organization is characterized by both line and staff
positions.
• A line portion is a position in the direct chain of command that is
responsible for the achievement of an organization’s goal.
• Line functions directly contribute to goal accomplishment.
• It contains the power to make and execute decisions.
• A staff position is intended to provide expertise, advice, and
support for line positions.
II. Line and Staff Organization
• Staff functions contribute indirectly to goal
accomplishment.
• Members with staff authority are purely advisory.
• They do not have decision-making power.
• Their advice is not binding on line members.
• Legal advisors and other advisors to the prime minister
are examples.
Major
Characteristics of Line and Staff Organization

• It combines both line and staff positions. The line

position holds decision making power whereas the
staff position holds advisory power
• Staff specialists think and the line manager acts
• It provides s balance of work to line members
III. Functional Organization

• Organizations are often described as a set of functions.

• A function, in this sense, is a collection of similar
activities in an organization such as marketing, finance,
etc.
• Functional organization brings together in one
department everyone engaged in one activity or several
related activities.
III. Functional Organization

• F. W. Taylor-father of scientific management-

originally developed the concept of functional
structure.
• Every manager concentrates on a particular function.
• It, thus, focuses on specialization. It is most
commonly used by small size organization.
Characteristics of Functional Organization

• Organizational members are grouped into functional

departments
• It focuses on specialization as every manager concentrates on a
particular function
• It focuses only on organizational functions such as marketing,
finance, rather than the basic managerial functions such as
planning or controlling
• A subordinate refers to multiple bossed for different functions
Characteristics of Functional Organization

• Specialist managers increase efficiency

• It makes supervision easier since each manager must be
expert in only a narrow range of skills
• It makes it easier to mobilize specialized skills and bring
them to bear where they are most needed
• Facilitates career progression within functional areas
• Overburden of work is reduced
Coordination or Coordinating

• Coordination is major element of organization.

• It achieves unity of action and harmonization of
efforts of people and department to achieve goals.
• It is the essence of all management functions.
• It is the responsibility of all managerial levels.
Coordination or Coordinating

• Coordinating can be described as the process of linking together the

activities of various department and people to achieve unity of action
and harmonization of efforts for the accomplishment of organizational
goals.
• Stoner and Others: Coordination is the integration of the activities of
the separate parts of an organization to accomplish organizational
goals
• W. H. Newman: Coordination deals with synchronization and unifying
the actions of a group of people towards common objectives.
Features/ Nature of Coordination

• Coordination is an ongoing continuous process. It is a dynamic

concept
• It is a conscious and deliberate effort
• It a pervasive function as it is performed at all levels of
management
• It provides unity of action for harmonization of efforts to achieve
goals
• It is goal-oriented; it aims achieving overall organizational goals
Features/ Nature of Coordination

• Cooperation and voluntary

• It integrates activities of individuals and department
• It is a complement, even a counter balance, to the
division of work and job specialization
• It can also occur among people working at different
organizations.
Responsibility and Authority

• Responsibility means the obligation of a subordinate to obey orders.

• It is a subordinates’ obligation to whom a duty has been assigned to
perform the duty. It is performing of assigned job. Its essence is then
obligation.
• It arises from the superior-subordinate relationship. It is person
specific. The person assumes it. It arises from the fact that someone
has the authority to require specified service from another person. It
may be a continuing obligation or it may be discharged by a single
action
Responsibility and Authority

• Jo Lo Massie:
Responsibility refers to the obligation or duty of
a person to act
• S. P. Robbins:
Responsibility is the obligation to perform
delegated duties and task
Characteristics of Responsibility

• It is an obligation to perform job

• It arises from superior-subordinate relationship
• It is person-specific
• It is assumed and cannot be delegated
• It flows upward in the hierarchy
• It is commensurate with authority
• It can be continuing or one-shot obligation
Authority

• Authority is a form of power.

• It is the rights to give order or decide.
• It is assigned to positions and department.
• It is legitimate power.
• It is the right to influence the actions of
subordinates to achieve goals.
Authority

• Henry Fayol:
Authority is the right to give orders and power
to exact obedience
• H. A. Simon:
Authority may be defined as the power to make
decisions, which guide the actions of another.
Features/Characteristics of Authority

• It is the legitimate right to give orders

• It is the right to make decisions and use research
• It can be delegated to subordinates. It can be added, reduced and
withdrawn
• It is related with the portion in the organizational hierarchy
• It is specified in the job description of employee
• It is maximum at the top level and minimum at the bottom level of
management
Features/Characteristics of Authority

• Use of the authority is determined by personality factor

of the possessor
• Use of authority may control the negative aspects or
behavior
• Authority can be line authority, staff authority or
functional authority
• It is goal oriented
 Base Authority Responsibility
Difference between Authority and Responsibility
Meanin It is a legitimate power It is an obligation to obey
g to give order order
Nature It is position-specific It is person-specific
Flow It flows downward: It flows upward
maximum at top and
minimum at bottom
Delegat It can be delegated; It cannot be delegated.
ion added, reduced, and It cannot be greater than
withdrawn. authority.
Life It is continuous with It comes to end after job
span position performance
Accoun Accountability arises It has implied accountability
Organizational Chart

• An organization chart means the pattern of network of

relations between various positions in organization as well as
between the persons who hold those positions.
• Ivem Cerich and Others: An organizational chart shows jobs
and departments and is the most tangible depiction of
organizational structure. The solid lines connecting the
positions indicate reporting relationships and channels of
communication
Organizational Chart

• G. R. Terry:
Organizational chart is a chart in a
diagrammatical form which shows important aspects
of an organization including the major functions and
their respective relationship, the channel of
supervision, and the relative authority of each
employee who is in charge of respective function.
Form/Types of Organization Chart

• I. Top –Down chart:

Here, major functions are at the top with subordinate
functions in successive lower portions. It is widely used. It
is simple to use and understand.
• II. Left to right/horizontal chart:
Here, the highest positions are put at the left and
those decreasing authority moves towards the right
Form/Types of Organization Chart

• III. Circular chart:

Here, the highest position is put at the center
and other positions are clustered around it. Positions
of less authority are more distinct from it.