Organization is a formalized intentional structure of roles and positions. Organization is an identified group of people contributing their efforts towards the attainment of goals. Organization is a harmonious adjustment of specialized parts for the accomplish of some common purpose.
Formal Organization means the intentional structure of roles in a formally organized enterprise. Formal Organization refers to the structure of well defined jobs, each bearing a definite measure of authority, responsibility and accountability. In formal Organization, Each & every person is assigned the duties, authority, responsibilities & relationship as prescribed by the top management.
Advantages (1) Optimum use of resources (2) Job Satisfaction (3) Motivating Employees (4) Facilitating Management Action Disadvantages (1) Doesnt allow flexibility (2) Doesnt allow long term planning (3) Limited scope of Creativity
Informal Organization means a network of interpersonal relationships that arise when people associate with each other. Informal Organization means natural grouping of people in the work situation. Informal Organization is a network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another.
To the Employees: (1) Job Satisfaction. (2) Earn sympathy; guidance & advice. (3) Get help in critical situation. (4) Atmosphere favorable to research is built. (5) Social control on members (6) If a manager tries to misuse his powers, informal organization puts a check on him.
To the Managers: (1) Reduces burden. (2) If manager is weak, informal group come to his help. (3) Helps formal organization in realizing its objectives. (4) Additional means of effective & quick communication.
(1) Rumors spread swiftly. (2) It oppose change. (3)Individuals personal need may go unsatisfied. (4)Members have to observe norms & values. (5) Gives importance to group relation which sometimes challenge the authority of the management (6) Group leaders sometimes uses group influence to promote his personal ends
Basis of Distinction Formal OrganizationInformal Organization PurposeIt is created to achieve pre determined objective It has no pre determined objectives. It arises due to social interaction of people. FormationFormal relations are well planned and are created deliberately. Informal relations are unplanned and they originate automatically. StructureWell structuredUnstructured NatureOfficialUnofficial FocusPositionsPersons Source of PowerDelegatedGiven by group LeadershipManagersInformal Leader Source of controlReward/PunishmentSocial Sanctions
Basis of Distinction Formal OrganizationInformal Organization Guidelines for behavior Rules and ProceduresGroup Norms StabilityStable (Long term)Unstable (Short term) SizelargeSmall FlexibilityRigid StructureHighly flexible CommunicationChain of commandGrapevine
Organization Structure refers to the hierarchical arrangement of various positions in the organization. Organization Structure defines the relationship between various positions, departments and persons. Organization Structure helps in allocating authority and responsibility formally and decides who is to report to whom, who is superior to whom and who are his subordinates.
There are basic Four types of organization structure, which are more popular in the business word. These are; (1) Line Organization (2) Functional/Staff Organization (3) Line and Staff Organization (4) Committee Organization
Business unit is organized not according to functions, but on the basis of responsibility and authority. Authority flows from the top to the bottom in a line, the responsibility flows in the opposite direction from the bottom to top. So it is known as line organization.
Board of Directors Managing director Production Purchase manager Workshop manager ForemanforemanMarketingSales manager Advertisement manager OfficeAccountantsecretary
Simplicity Fixed authority and responsibility Discipline Quick decision-making Development of skill Effectiveness Chances of success Easy location of responsibility Flexibility
Lack of all rounders Overloading Difficulties in departmentation Difficulties in co operation & co ordination Lack of specialization Centralization of authority Neglect of planning & research Corruption Difficulties of transfer
The whole task of management is divided according to the type of function involved. Every person has to perform a special function under this organization. So it is called staff organization.
General Manager Personal officer Foreman A Chief engineer Foreman B Workmen Purchase officer Foreman C
Specialization Benefits of large scale production Scientific recruitment and training Co-operation Decentralization of authority Easy expansion Flexibility
Expensive Violation of Unity of command Difficult to locate responsibilities Lack of discipline & control Absence of quick decision Difficulties of co ordination Increase in clerical work
Line officials do administrative work as usual, but they are assisted by the experts. This group of experts is known as staff. Line officers have the authority to issue orders while staff experts have the authority to give advice and instructions.
Simplicity Balance Co-ordination Prompt Decision Less Burden on Line Officers Blending of Abilities of Line Officers and Experts Flexibility Location of Responsibilities
Conflict among officials Evading responsibility Expensive Disregard for line officers suggestion Carelessness of line officers Conflict between old & new
The above three forms of organization cannot fully satisfy the requirements of modern business. Hence to supplement them, committee organisation began to be adopted. Dr. Terry has defined committee as a body of persons elected or appointed to meet on an organized basis for the discussion and dealing of matters brought before it.
This pattern of organization is gradually gaining importance and popularity. The committee organization is being used in the line and staff organization to keep the head of every department fully informed of the activities of the other department heads. The committee organization has been in use in the business units both in the private and public sector. It is widely used also in education, religious and social institution as also in hospitals and minicipal corporation.
Top Management Committee Sales Committee Distribution Committee Salesmen Advertisement Committee Employees Production Committee Purchase Committee Employees Works Committee ForemenWorkers Stores Committee Employees Administrative Committee SecretaryEmployeesAccountantEmployees
Best means of group deliberation Decentralization of authority Co operation Co ordination Matured decisions Useful for training Improvement in labor relations Continuity in managerial policy Helpful to research Helpful to administrative officers Helpful to communication
Delay in decision making Injustice to minorities Business secrets Difficulty of fixing responsibility Laxity in organization conflict & bitterness Expensive