TYPES AND LEVELS OF ORGANISATION

Classification of organisation
The organisation can be classified on the basis of authority and responsibility assigned to the personnel and the relationship with each other.

In this way organisation can be either formal or informal. Formal organisation: Provides a framework for defining responsibility, authority, delegation and accountability. Depending on the organizational philosophy, the formal structure may be rigid or loose. The formal organisation represents the classification of activities within the enterprise, indicates who reports to whom and explains the vertical journal of communication which connects the chief executive to the ordinary workers. An organisational structure clearly defines the duties, responsibilities, authority and relationships as prescribed by the top management. (In an organisation, each and every

person is assigned the duties and given the required amount of authority and responsibility to carry out this job). It creates the coordination of activities of every person to achieve the common objectives. It indirectly induces the worker to work most efficiently. The interrelationship of staff members can be shown in the organisation chart and manuals under formal organisation. Characteristics of formal organisation: It is properly planned. It is based on delegated authority. It is deliberately impersonal.

The responsibility and accountability at all levels of organisation should be clearly defined. Organisational charts are usually drawn. Unity of command is normally maintained. It provides for division of labour.

Advantages of formal organisation: 1. The definite boundaries of each worker is clearly fixed. It automatically reduces conflict among the workers. The entire building is kept under control. 2. Overlapping of responsibility is easily avoided. The gaps between the responsibilities of the employees are filled up. 3. Buck passing is very difficult under the formal organisation. (Normally exact standards of performance are established under formal organisation. It results in the motivating of employees). 4. A sense of security arises from classification of the task. 5. There is no choice for favouritism in evaluation and placement of the employee. 6. It makes the organisation less dependant on one man. Keith davis observes that formal organisation is and should be our paramount organisation type as a general rule. It is the pinnacle of mans achievement in a disorganised society. It is mans orderly, conscious and intelligent creation for human benefit. Criticisms: In certain cases, the formal organisation may reduce the spirit of initiative. Sometimes authority is used for the sake of convenience of the employee without considering the need for using the authority. It does not consider the sentiments and values of the employees in the social organisation. It may reduce the speed of informal communication (rules/regs).

Informal organisation:

Informal organisation is an organisational structure which establishes the relationship on the basis of the likes and dislikes of officers without considering the rules, regulations and procedures.

These types of relationships are not recognised by officers but only felt. The friendship, mutual understanding and confidence are some of the reasons for existing informal organisation. (For eg., a salesman receives orders or instructions directly from the sales manager instead of his supervisors).

The informal organisation relationship or informal relations give a greater job satisfaction and result in maximum production. According C.J. Bernard, informal organisation brings cohesiveness to formal organisation. It brings to the members of the formal organisation a feeling of belonging, status of self respect and gregarious satisfaction. Informal organisations are important means of maintaining the personality of the individual against certain effects of formal organisation which tends to disintegrated personality.

Characteristics of informal organisation: 1. Informal organisation arises without any external cause ie., voluntarily. 2. It is a social structure formed to meet personal needs. 3. Informal organisation has no place in the organisation chart. 4. It acts as an agency of self control. 5. Informal organisation can be found on all levels of organisation with in the managerial hierarchy. 6. The rules and traditions of informal organisation are not written but are commonly followed. 7. Informal organisation develops from habits, conduct, customs and behaviour of social groups. 8. Informal orgn is one of the parts of total organisation. 9. There is no structure and definiteness to the informal organisation.

Advantages of informal organisation: It fills up the gaps and deficiency of the formal organisation. Informal organisation gives satisfaction to the workers and maintains the stability of the work. It is a useful channel of communication. It encourages the executives to plan the work correctly and act accordingly. It fills up the gaps among the abilities of the managers.

Disadvantages of informal organisation: It has the nature of upsetting the morality of the workers. It acts according to mob psychology. It indirectly reduces the efforts of management to promote greater productivity. It spreads rumour among the workers regarding the functioning of the organisation unnecessarily. Difference between formal and informal organisation
Formal organization It arises due to delegation of authority. Informal organisation It arises due to social interaction of people.

It gives importance to terms of authority It gives importance to people and their and functions. It is created deliberately relationships. It is spontaneous and natural.

The formal authority is attached to a The informal authority is attached to a position. person.

Rules, duties and responsibilities of No such written rules and duties followed in workers are given in writing. informal organisation.

Formal organisation comes from outsiders Informal organisation comes from those who are superior in the line of persons who are objects of its control.

organisation.

Formal authority flows from upwards to Authority flows upwards to downwards downwards. Formal organisation may grow from or horizontally. to Informal organisation tends to remain smaller. It arises from mans quest for social satisfaction. It is permanent and stable There is no such permanent nature and stability.

maximum size. It is created for technological purpose.

Types of organisation (Levels of Organisation): Broadly there are 3 types of organisation: 1. Line organisation 2. Staff organisation 3. Functional organisation. An institution or enterprise may adopt one or other type of organisation or more than one type of organisation depending upon its needs. Line organisation: It is the oldest and the simplest form of organisation. It is also known as the military or scalar organization. Line functions -where superior exercises direct supervision over a subordinate an authority relationship in direct line or steps. The line of authority is straight and vertical and each person at the same level performs the same functions. In an enterprise or institution, the chief executive leads the entire organisation. Here the maximum authority rests on the top or highest levels of management and the quantum of authority decreases in a step ladder fashion for the subsequent levels of management in the hierarchy.

The line or straight or vertical line of authority serves as the channel of: i) ii) iii) iv) v) Command Communication Direction Coordination Control And accountability The departments/divisions are formed depending upon the responsibilities involved and work to be carried out by each department / division. each department and each division is headed by a divisional/departmental head.

The following two figures will describe the functions of a line organisation

Board of Director/Management Chief executive Manager manager Production materials manager marketing manager manager finance admn

Supervisor supervisor Staff staff

supervisor staff

supervisor staff

supervisor staff

Medical superintendent Nursing superintendent Deputy nursing superintendent ANS Surgical Division ANS medical division ANS paediatric division ANS outpatients division

Ward sister Surgical Staff nurse Surgical

W/S medical S/N medical

W/S paediatric S/N paediatric

W/S outpatients S/N outpatients

Line organization in hospital nursing services There are possibilities that more subsections/ divisions may exist under each branch. In this type of organisation the direction flows from top, transmitted through the managers to the supervisors and then to the workers or staff. The hierarchy is maintained as per the figures shown. There is no scope for downward to upward or upward to lower downward movements. (The authority is only the chief executive and what he describes must be carried out. If one has to say something to the lower level he/she can only approach the immediate boss and not anyone above). Only one supervisor issues command and the number of persons normally limited less than one supervisor. There are advantages or merits: Simplicity Unity of control Better discipline Fixed responsibility: responsibities are well defined and persons are accountable to someone in the line form. Flexibility: the executives generally enjoy autonomy and freedom within their defined sphere of activities. Prompt decision: because of the chain of command, unified control and fixed responsibilities, it is possible to take prompt decisions. Demerits: Lack of specialization: this system does not provide any scope for employing specialists.

Overloading or overreliance: the departmental head is all in all of his department/ division in this type of organisation. Inadequate communication: there is no down to upward communication in this type of organisation. Favouritism: since one man is the decision maker and also opinion maker it is possible he/she may be influenced by a few people.

Functional organisation: Under line organisation, a single person is incharge of all the activities of the concerned dept. Here the person incharge finds it difficult to supervise all the activities efficiently. The reason is that the person does not have enough capacity and require training. In this the functional departments are created at the factory, office or enterprise level to deal with the problems of business at each successive level. (Although the expert and specialized services are mainly concentrated on the top, every section or unit can make use of their services). The functions under this type of organisation may be classified as purchasing, marketing, production, research and development, finance, office management, personnel etc in a business enterprise. Functional dept as patient care services, pharmaceutical services, laboratory services etc in a hospital setting. Although agreed to be a scientific type of system, there are certain prerequisites for this system: All activities must be divided into functions carefully and then allotted to functional departments. Only interrelated jobs are allotted to one department There should be no duplication i.e activity allotted to one dept cannot be allotted to another. The figure below illustrates a functional organization:

M.D or Genel.Mg Chief Admn. Service

Recruitment finance training office public relations Staff and workers

Functional organisation, follows the scientific management method to overcome the limitations of line organisation, (F.W.Taylor, the father of scientific management, recommended a functional organisation of activities at the top level).

According to Taylor, a foreman should not be burdened with looking after all the activities of work. Instead he should be assisted by a number of specialists in solving the problems.

Various specialists are selected for various functions performed in an organisation. Workers, under functional organisation, receive instructions from various specialists. The specialists are working at the supervision level. Thus, workers are accountable not only to one specialist but also to specialist from whom instructions are received. Directions of work should be decided by functions and not by mere authority.

The need for functional organisation arises out of : 1) The complexity of modern and large scale organisation. 2) A desire to use the specialisation in full. 3) To avoid the workload of line managers with complex problems and decision making.

Characteristics of Functional Organisation: The work is divided according to specified functions.

Authority is given to a specialist to give orders and instructions in relation to specific function. Functional authority has right and power to give command throughout the line with reference to his specified area. The decision is taken only after making consultations with the functional authority relating to his specialised area. The executives and supervisors discharge the responsibilities of functional authority.

Advantages of functional organisation: 1. Benefit of specialisation: Under the functional organisation, each work is performed by a specialist. It helps to maintain efficiency of the organisation. Each work is divided among the workers scrupulously. 2. Application of expert knowledge: Planning function and execution function are divided separately and each function is entrusted to a specialist in the line organisation. So the specialists can use their expert knowledge in the actual performance of work. 3. Reducing the work load: Each person is expected to look after only one type of work. Hence the quality of work and effective control over the work are achieved. 4. Efficiency: Since each worker is responsible for each work, the workers can concentrate on the work allotted to them. They could assure proficiency in the work. 5. Adequate supervision: Each staff member is incharge of a work. So he can devote enough time to supervise the workers. 6. Relief to line executives: The instructions are given by the specialist directly to the actual workers. Hence the line executive does not have any problems regarding the routine works. 7. Mass production: large scale production can be achieved with the help of specialisation and standardisation. 8. Economy: each specialist is responsible to the performance of the work. Wastage in the production can be avoided and the expenditure could be considerably reduced.

9. Flexibity: any change in the orgn can be introduced without any difficulty. Disadvantages of functional orgn 1. Complex relationship: a single worker is working under 8 specialists it is very difficult for the worker to be responsible to all persons. This results in conflict between the workers and the specialists. 2. Discipline: it is very difficult to maintain discipline among the workers when a single worker has to serve many masters. 3. Over specialisation: There might be overlapping of authority and divided responsibility. 4. Ineffective coordination: the extent of authority of a specialist is not correctly defined. It creates problems while getting the cooperation among the specialists. 5. Speed of action: when the control of a worker is divided among the specialists, the speed of action of the workers may be hampered. 6. Centralisation: eight specialists are guiding and directing the workers to perform the work. So the workers do not have any scope for doing the job on their own. This leads to the centralisation of authority. 7. Lack of responsibility: if there is any defect in the performance of work, the management is not in a position to fix the responsibility for it. The reason is that none of the eight specialists is ready to own the responsibility. They may shift the responsibility to any one among themselves for the poor performance of work. 8. Poor admn: since many specialists control the same gp of workers no effective admn of workers could be ensured. It is very suitable to a business unit which is engaged in manufacturing activities.

C. The line and staff organisation: In order to strike a balance between the line and functional organisation, it is believed that the best system to adopt in any progressive and elite organization is the line and staff organisation. The line officers have authority to take decisions and implement them to achieve the objectives of the orgn. The line officers may be assisted by the staff officers while framing the policies and plans and taking decisions. In the fast developing industrial world, the line officers are not in a position to acquire the technical knowledge. For eg., while taking decisions regarding the production, technical knowledge is needed to take correct decisions.

This type of gap may be bridged with the help of staff officers. The staff officers may be experts in a particular field. Then the line officers can get expert advice from the staff officers before taking the final decisions. Here there is scope for having experts and advisors to advice the commander or leader of the team whenever and wherever required. The suggestions are honoured and implemented by the manager to the extent possible.

The staff or workers are permitted to voice their views in this type of organisations. Their views and concerns are appreciated, implemented wherever necessary. While maintaining the line type of organisation it also takes care of the staff and coordination between / among the staff with in hierarchial framework makes a good organisation.

Staff or worker and their functions get lot of prominence in this type of organisation.

Staff functions can be divided into 2 areas. A) Staff advice and b) staff service. While staff advice relates to staff functions at the higher levels; the staff service relates to staff functions at lower levels. Normally there are two types of staff: General staff: they are normally located at the head quarters or regional offices to assist, support and advise top management on day to day activities and problems in the organisation in general and are shared by different divisions. Specialised staff: each line official has special assistants or advisors to provide advice and services to the executives with whom they are attached.Nurses, doctors and other professionals belong to the category of staff advice, in the industrial concerns. Merits: Experts advice becomes available to the line management. There is benefit of planned specialization.

Line managers get more time to devote to their own functions. This results in greater efficiency. Chances of advancement of employees become better as more jobs become available.

Demerits: Staff tend to assume line authority and thus may become a cause of friction between the two. Sometimes staff do not give sound advice because the staff are not accountable for the implementation of the advice. Staff steal credit, although the direction and planning are done by the manager through sheer hard work and intelligence. Staff fail to see the whole picture as they lack the mind of relating advice to the task and objectives of the enterprise. Figure: Advisor specialist In hosp mgmt
Chief administrator Specialist hospital

Advisor

All heads of depts surgery, Medicine, obs & gyn, paediatrics

Dy.Chief (admn)

Nsg suptdt

Dy.chief (finance & accounts)

(Here the Heads of departments of surgery, medicine etc and nursing superintendent while acting as line managers for their respective departments, act as specialised staff for advising matters related to their respective disciplines like surgery, medicine, nursing etc., ......... shows staff authority.

Fig 2. (L)
Marketing manager Personal asst to the managing director

(S) (L)
Asst managing director

(personal staff)

Works manager

(L)

Company secretary accountant

(L)

Sales manger

(L)

Personnal (S)element manager

fn

(L)operators

(L) clerks

(L) sales rep (S)

Training officer

Employme nt officer

(S)

Clerks(s) Committee organisation Project organisation: Matrix organisation:

clerks(s)

Matrix structures are characterised by teams built directly into the organisational structure. These teams are coordinated both vertically (within the hierarchy) and horizontally (among the groups involved). The team has formal authority to make and enforce decisions. Matrix structure involves less rigid adherence to rules and procedures. Free form organisational structures are called matrix organisations. The matrix organisation design enables timely response to external competition and to facilitate efficiency and effectiveness internally through cooperation among disciplines.

Characteristics: 1. Maintenance of old-line authority structures. 2. Specialist resources obtained from functional areas. 3. Promotion of formation of new organisational units. 4. Occurrence of decision making at the organisational level of group consensus, the middle management level.

5. The matrix manager exercising authority over the functional manager. 6. Cooperative planning of program development and allocation of resources to accomplish program objectives. 7. Assignment of functional managers to teams that respond to the chief of the functional discipline and matrix manager. Advantages: 1. Improved communication through vertical, horizontal control and coordination of interdisciplinary patient care systems. 2. Increased organizational adaptability and flexibility to respond to environmental changes. 3. Increased efficiency of resource use with fewer organisational levels and decision making closer to primary care operations. 4. Improved human resource management because of increased job satisfaction with achievement and fulfilment, improved communication, improved interpersonal skills and improved collegial relationships. Disadvantages: Potential conflict because of dual or multiple lines of authority, responsibility and accountability relationships. Role ambiguity. Loss of control over functional discipline due to multidisciplinary team approach.

Adhocracy: Adhocracy models of organisation are like matrix models. There are simple teams or task forces that exists on an adhoc basis. They are formed, complete their goals and are disbanded. New groups are then formed to meet changing and dynamic mission and objectives. It employs participatory management.