DD: Organization

Organisation: Collective group of persons engaged in pursuing specified objectives. May be formal or informal. 

Formal Organisation Structure: Structure of jobs and positions with defined functions and relationships. This type of organization is built by management to realize the objectives of an enterprise.

Can be classified as under:

1. Line organization 
2. Functional Organization 
3. Line and staff organization 
4. Project Management Organization 
5. Matrix Organization 

Line Organization: 

• Oldest pattern of organization. 
• Line functions refer to those employees who have direct responsibility for accomplishing the objective of the enterprise. 
• A supervisor exercises direct supervision over a subordinate and authority flows from the person at the top to the person at the lowest ring 
• Also known as military or scalar type of organization.
• It benefits from unified control and undivided loyalty, therefore gaining discipline. 
• However, it suffers from lack of specialization. 

Functional Organisation:

• The task of management and direction of subordinates is divided according to the type of work involved. 
• The functional organization refers to the structure that is formed by grouping all the work into major functional departments. Related and similar work is done in one department under one executive. 
• Ensures division of labour and specialization. 
• However, it is difficult to establish.

Line and Staff Organization 

• Whereas the line system concentrates on authority too much,  the purely functional plan divides it too much. The line and staff strikes a balance by supplementing the line with staff. The staff refers to officers who aren't line managers but more or less permanently detailed to special services or to the study of some phases of operations. They act as the advisory group adjacent to the line. 
• However, this system often leads to numerous frictions and jealousies. 

Project Management Organization

• Set up within an existing organization for the purpose of completing a project or accomplishing  assigned objectives in time, and within cost and profit goals as laid down by the management in this connection. Project organization is directed by the project manager responsible for project goals. 
• Project management organization is independent and cuts horizontally across the normal organization. 
• Requires prompt decisions and actions from a number of functional areas, flow of information is largely lateral and not vertical. 

Matrix Organization

• Combines functional departmentation with product or project organization.
• The functional departments constitute the vertical chains of command, while project organization or product divisions form the horizontal chains of command. 
• Designed to derive the benefits of both the functional structure and the divisional structure. 
• However, multiplicity of vertical and horizontal relationships impair organizational efficiency. 

Informal Organization

• Relationships between people that isn't based on procedures but personal attitudes, prejudices, likes and dislikes. 
• Developed spontaneously, not established by formal managers. 
• Based on informal authority attached to the person, and not the position. 
• Maintain and continue the cultural values and lifestyle of the group. 
• Resistance to change - tendency for the group to become overly protective of itself in the face of change. 
• Quest for social satisfaction may lead members away from organizational objectives. 

Authority: Right of a manager to command subordinates. 

Responsibility: Obligation on the part of a manager to perform a task - those that accept the task should be held responsible for their performance as well. 

Accountability: Answerability for the accomplishment of the task assigned by the superior to his subordinate. 

Authority vs. Power: Authority may be regarded as the right to command and power as the capacity to influence the behaviour of others. 

Ideally, authority, power, responsibility and accountability should be equal to one another in every position in the firm.

Delegation: Administrative process of getting things done by others by giving them responsibility.

Centralization is the tendency to withhold a larger part of formal authority at higher echelons of management hierarchy.  

Decentralization is delegation of the larger part of the authority to lower echelons so that decisions are made as close to the source of information and action as possible. 

Place of decision making authority in the management hierarchy and degree of decision making power at lower echelons are the two important tests. 

Decentralization shouldn't be confused with delegation of authority.