Organizational Structures: Types and Functions
Organizing: Introduction to Organization design, basic types of Departmentalization, Co-ordination, Authority.
An organization is a group of persons united to achieve any task. It can also be described as a coordinated set of activities and resources designed to support the pursuit of shared goals and objectives. Examples of organizations include companies, government departments, business units, institutes, NGOs, student organizations, Organizational Structures Types Functions etc.
Internal Organizations can be broadly classified into the following types/forms:
- Line Organization structure.
- Functional Organization structure.
- Line and staff Organization structure.
1. Line Organization Structure:
Line Organization (also called Military/Scalar Organization) is the oldest and the simplest form of internal organization structure. Originally established by the Roman army, this structure was later embraced by military forces worldwide. In a line organization, authority flows in a clear, hierarchical sequence from the top level to the lowest level, following a straight, vertical path. Authority moves downward in a step-by-step manner, while responsibility ascends upward Organizational Structures Types Functions.
Advantages of Line Organization Structure
1. Simplicity: The line organization structure is easy to understand and implement, providing clear authority and accountability. Its straightforward design allows both superiors and subordinates to easily grasp their roles and responsibilities.
2. Quick Decision-Making: This structure enables swift decision-making across all levels, as roles and responsibilities are well-defined and authority is absolute.
3. Discipline: With a clear chain of command, delegated authority, and direct accountability, the system promotes organizational discipline.
4. Cost-Effective: The line organization minimizes costs since it operates without the need for specialized experts.
5. Recognition of Talent: It encourages talented employees to shine, fostering leadership qualities and career growth.
5. Autonomy in Decisions: Department heads enjoy the independence to make decisions within their areas of responsibility.
6. Additional advantages of the line organization structure include quick communication, which facilitates faster decision-making, high efficiency due to clear authority, flexibility in adapting to changes, and elevated employee morale resulting from well-defined roles and responsibilities Organizational Structures Types Functions.
Disadvantages of Line Organization Structure
1. Excessive Responsibility on Line Executives: Line executives often face an overwhelming workload due to multiple duties and responsibilities assigned to them. The person in authority being fully busy in routine work, does not find time to think about improvement Organizational Structures Types Functions.
2. Non-availability of services of experts: There is an absence of skilled experts in the line organization. A person who is in charge of various departments may not possess knowledge of all the trades.
3. Favouritism: There is wide scope for favoritism and nepotism in the line organization. This may cause apathy in the workers and lead to an increase in inefficiency in work.
4. Dependence on a Few Key Executives: In a line organization, decision-making authority is concentrated in the hands of a limited number of executives. This reliance can lead to disruptions in operations during transfers, promotions, or replacements.
5. Communication Barriers: The hierarchical structure often results in communication gaps between lower and upper levels, potentially delaying the flow of information and decision-making Organizational Structures Types Functions.
2. Functional Organization :
Functional Organization Structure: In a functional organization, the company is divided into various departments, each specializing in a specific function or task. These different departments are headed by specialists appointed to look after each department. Such an organization where each person performs a specialized function is called a functional organization. The basic object of this organization is to divide the work so that each person has to do minimum work Organizational Structures Types Functions.
Advantages of Functional Organization Structure:
1. Facilitates specialization: Each departmental head has specialized knowledge of his functional area. He is in a better position to guide and help the workers Organizational Structures Types Functions.
2. Greater Efficiency: The division of work is planned on a specific basis, since there is an expert involved in each of the specialized fields, leading to greater efficiency.
3. Development in work: The functional heads are given work of one department only. Hence, they get more time to think and plan the development of work.
4. Operational Flexibility: The functional organization allows for easy implementation of changes to adapt to evolving situations without compromising efficiency or performance.
5. Enhanced Supervision: Specialization enables managers to focus on specific functional areas, ensuring thorough oversight and effective supervision of their subordinates Organizational Structures Types Functions.
Disadvantages of Functional Organization Structure:
1. Absence of unity of command: Unity of command is absent as each worker gets orders and instructions from several functional heads Organizational Structures Types Functions.
2. Difficulty in Assigning Responsibility: In a functional organization, it is challenging to assign responsibility to a single individual, as duties are divided among multiple specialists, leading to ambiguity in accountability.
3. Unsuitable to non-manufacturing activities: Functional Organization can be introduced in the case of manufacturing activities. However, its application to non-manufacturing activities such as marketing, etc. has not been successful.
4. Expensive Structure: A functional organization is costly to maintain due to the need for hiring multiple specialists. Additionally, administrative expenses, including high stationery usage, add to the overall cost.
5. Internal Conflicts and Inefficiencies: Frequent conflicts among departmental heads, delays in decision-making, and a lack of strict discipline within departments are common drawbacks of the functional organization structure Organizational Structures Types Functions.
3. Line and Functional organization:
This form is a combination of good points from both the line and functional organizations. The complete work is divided into two groups โ The planning group and the Executive group. The planning group works on planning, designing, and preparing policies; while the Executive group works on the actual implementation of policies. Line executiveโs “doers” develop & execute Plans and Policies. Staff specialists โthinkers” suggest Plans and Policies. This type of organization is suitable for carrying on a big business Organizational Structures Types Functions.
Advantages of Line and Staff Organization:
1. Economical: As the number of specialists is reduced, the organization becomes economical.
2. Fewer burdens on Line executives: Line executives get the suggestions of staff specialists. They are not concerned with planning work.
3. Services of experts available: Highly qualified experts are appointed and they offer guidance to line executives.
4. Sound decision-making: The decisions are also taken in a democratic method i.e., in consultation with the experts. It avoids confusion that may exist in functional organization.
5. Increase Profit: Specialists are meant only to think about the ways to improve the rate of production and increase profits.
6. Training Opportunities for Employees: Employees are provided with improved advancement opportunities, including access to learning and training programs that enhance their chances for promotion Organizational Structures Types Functions.
Disadvantages of Line and Staff Organization:
1. Delay in Decision-Making: The decision-making process tends to be delayed because of the lengthy procedure involved, which affects the efficiency of line managers Organizational Structures Types Functions.
2. Buck Passing Among Executives: Line managers, focused on the execution of work, may attempt to shift the blame to others when issues arise, leading to a cycle of responsibility avoidance.
3. Conflicts Between Line and Staff Executives: Line managers often disregard the advice from specialists, while experts believe line managers lack awareness of innovative approaches. This clash of perspectives can breed resentment and tension.
4. Complicated Operations: The organization becomes overly complicated in practice due to the dual authority structure and division of functions, violating the principle of unity of command.
5. Adverse Impact on Internal Discipline: The decentralization of authority and division of responsibilities may negatively affect internal discipline, making it harder to maintain order and control Organizational Structures Types Functions.
Departmentation:
Departmentation is the process of organizing activities into units or departments for administrative purposes. It can be defined “As the process by which activities or functions of enterprise are grouped homogeneously into different groups.” The administrative units are called divisions, units or departments Organizational Structures Types Functions.
The followings are the basic types of departmentation:
1. When departmentation is done on the basis of functions, the departments created are production, marketing, accounting, finance and personnel departments.
2. When departmentation is done on the basis of territorial area, the departments are known as eastern department, western department, northern and southern department.
3. Departmentation can be done on the basis of customers.
4. Departmentation can be done on the basis of product handled Organizational Structures Types Functions.
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