Departmentation and Organization Structure Chapter 6

Departmentation Process of grouping activities into units for the purpose of effective management Grouping of jobs, processes and resources into logical units to perform some organizational task

Importance of Departmentation Specialization Growth Sovereignty Performance appraisal easier Boosts efficiency Helps in coordination within departments Defined responsibilities Helps in control

Bases of Departmentation By functions By Area By Product By Customer By Process By Task Force By time By Numbers

Organization as a structure Network of relationships among individuals and positions in the organization Relationships between positions on one hand and jobs on the other

Types of Organizational Structures Line Organization Functional Organization Line and Staff Organization Matrix Organization Formal and Informal Organization

Line Organization Simplest and oldest form Also called scalar or military type Organisation Direct flow of authority Unity of Command Clear responsibility Suitable to small Organisations Lack of specialisation Easy coordination Better relationships Quick decision making

Functional Organization Introduced by Taylor Each function managed by a functional expert Each functional expert may serve the other functional experts also Encourages specialization Reduced pressure Optimum use of resources Higher efficiency Lack of unity of command Expensive

Line and Staff Organization Combination of activities of line executives and staff experts Line executives-decision makers, staff-advisors or planners Line executives implement plans, staff engage in research and planning Need for staff due to growth of organizations, technological developments and uncertainties Suitable for large organizations Conflicts between line and staff possible Expensive

Conflicts between line and staff Complaints of line against staff Grabbing compliments Unfamiliar with actual work Interference Superiority complex Excessive paper work Easy access to management Complaints of staff against Line Last minute advice Irresponsible Lack clarity Shift responsibility Reluctant to accept new ideas Lack respect

Matrix Organization Uses two or more co-existing structures-functional and project Hybrid structure In functional organization , the manager has absolute responsibility for the project and the resources required, in matrix organization the project manager shares resources with the rest of the organization. Problem of unity of command Suitable for multi projects organizations

Formal and Informal Organization Two or more persons consciously coordinated towards a common objective Informal: A network of personal, and social relations not established or required by the formal organization but arising spontaneously as people associate with each other (through grapevine)

Features of Formal Organization Specific Duties and responsibilities Well defined goals Clear superior- subordinate relationships System of Authority and Coordination Set of rules and regulations

Features of Informal Organization No specific goals No established superior subordinate relationships No system of authority or coordination Communication through grapevine Develops social and personal ties

Differences between Formal and Informal Organizations Authority Flow of Communication Creation Stability Importance of Rules

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