Organisation Structure and Behaviour - F.Y.

BCA (Sem 2), VNSGU, Surat

CHAPTER 1

INTRODUCTION TO ORGANIZATION

DEFINITION OF ORGANISATION
According to Keith Davis, "Organization may be defined as a group of individuals, large or small, that
is cooperating under the direction of executive leadership in accomplishment of certain common
object."
This means that
- Organisation is a group of individuals
- Group of individuals work in cooperation
- Organisation has leadership for directing the group of individuals
- Organisation is formed for achieving some common objective.

FEATURES/CHARACTERISTICS OF ORGANISATION
The main characteristics of organization are as follows:

Setting Objectives: 
The basic purpose of forming any organisation is to achieve objectives. The basic objective of any
organisation is to attain profits. There are other objectives which supports the main profit objective.
For example, organizations can have objectives like social wellbeing. For example, Government
works for the welfare of the country.

Common Objectives:
There are various parts of an organisation with different functions to perform but all move in the
direction of achieving a general objective. Every department of an organisation works for a common
goal of the company. The objective could be profit, social welfare etc.

Identifying the Activities: 

After the objective is selected, the management has to identify tasks involved in achieving the
objectives. This task has to be divided and grouped into closely related activities. For example
activities like sales, market research, advertisement etc are all closely related and named as
“Marketing”. All these activities have same purpose and are similar in function.

Division of Work:
Division of work is the basis of an organisation. In other words, there can be no organisation without
division of work. Under division of work, the entire work of business is divided into many departments.
The work of every department is further subdivided into sub works.

Assigning the Duties: 

Once the division of work is done, it is important for the organisation to assign duties to individuals
according to his/her skills.

Coordination:
Under organisation different persons are assigned different work but the aim of all these persons
happens to be the same - the attainment of the objectives of the enterprise. Organisation ensures that the
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work of all the persons depends on each other’s work even though it happens to be different. Hence, it
helps in establishing coordination.

Group of Persons:
Organisation is a group of many persons who come together to fulfil a common purpose. A single
individual cannot create an organisation.

Organisation is a Machine of Management:

Organisation is considered to be a machine of management. It is that machine in which each and every
part of it must function well. In other words, if the division of work is not done properly or job positions
are not created correctly the whole system of management fails.

Defining Authority: 
The authority and responsibility should be well defined. The authority and responsibility decides the
boundary within which a person will work. A close relationship between authority and responsibility
should be established.

Creating Authority Relationship: 

After assigning duties and authorities, the relationship is established. It involves deciding who will act
under whom, who will be his subordinates, what will be his span of control and what will be his status
in the organization.

SIGNIFICANCE/IMPORTANCE/NEED/ADVANTAGES OF ORGANISATION
Some of the importance/significance of organizing an organization is as follows:

1. Benefits in specialisation:
In organising, every individual is assigned a part of total work and not the whole task. Due to this
division of work into smaller units and assignment of units according to the qualification leads to
specialisation. The specialisation automatically comes when an individual is performing one job
repeatedly.

2. Role Clarity:
In the organising function the employees are assigned different jobs and the managers clearly define the
jobs. The jobs are defined on the written document called job description which clearly says what
exactly has to be done in every job. This description of job brings clarity in the minds of employees.

3. Clarity in working relationship:

In the organising function, it is clearly defined that what all and how much power and authority is
enjoyed by different individuals or managers. Each manager knows very clearly to whom he can give
order and from whom he has to receive the order. The superior-subordinate relation is clearly defined in
organising.

4. Optimum utilization of resources:

In the organising function there are very few chances of duplication of work or over-lapping of work
because the jobs are assigned to different individuals by clearly defining the job in job description
document. So, there are no chances that the same work is performed by two or more individuals.

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5. Co-ordination and effective administration:

In the organising function, the similar and related jobs are grouped under one department. The
organising function establishes relation between different departments keeping in mind the co-ordination
among different departments. By bringing clarity in working relationship administrative efficiency
improves.

6. Adoption to change:
Whenever the changes take place in the business environment then with the help of organising function
these changes can be adopted systematically because organising function creates different departments.
With this, changes can be adopted only in that area which may be affected by these changes and changes
can be easily communicated to whole organisation through departments. Organisational structures can
be suitably modified according to changes.

7. Expansion and Growth:

With optimum utilization of resources and proper division of work and departmentation, companies can
easily meet the challenges and can expand their activities in a planned manner. This helps in the growth
of the organisation.

8. Development of personnel:
Delegation of authority is an important part of organising. By delegating, the managers can concentrate
to develop new methods and ways of performing job. It gives them time to innovate new technologies
and areas for growth of the companies. Delegation not only reduces the work load of managers but it
also helps them to use and realise their full potential for more creative work.

STRUCTURE OF ORGANIZATION

Meaning of Organisation Structure:

In simple terms, an organizational structure is a plan that shows the organization of work and the
systematic arrangement of work. Organizational structure determines the manner and extent to
which roles, power, and responsibilities are delegated, controlled, and coordinated, and it shows
how information flows between levels of management.
Types of Organizational Structure:
There are different types of organization structures of a company based on different factors like
geographical regions, products or hierarchy. Organizational structures can be basically classified into
following major types:
1. Formal structure
2. Informal structure

1. FORMAL ORGANIZATION STRUCTURE:

 Line organization, Functional organization, Line and Staff organization, Committee
organization, and Matrix organization are examples of formal organization as they are set up
under definite rules and procedures.
 The activities and inter-relations between persons at different levels of management in these
organizations are planned systematically.
 The authority and responsibility are assigned to each person as per the rules.
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 Each person has a fixed place and acts like a part of a machine.
 Formal organization is deliberately created to perform a certain task.
 Formal organization is established by the people to achieve predetermined goals. A distinctive
feature of formal organization is that a hierarchy of authority exists.
Main characteristics of formal organization
 Deliberately planned and created
 Concerned with the co-ordination of activities
 Hierarchically structured with stated objectives
 Based on certain principles such as the specification of tasks
 Organization structure is laid down by the top management to achieve organizational goals.
 Organization structure is based on division of labour and specialization to achieve efficiency in
the operations.
 The authority and responsibility relationships created by the organization structure are to be
honoured by everyone.
 Developed through delegation of authority
 Organization structure concentrates on the jobs to be performed and not the individuals who are
to perform jobs.
 The organization does not take into consideration the sentiments of organizational members.

Following are the types of formal organisational structures;

a. Line Structure – This is the kind of structure that has a very specific line of command. The
approvals and orders in this kind of structure come from top to bottom in a line. Hence the
name given is “line” structure.

This kind of structure is suitable for smaller organizations like small accounting firms and law offices.
This is a type of structure that allows for easy decision making.

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b. Line and Staff Structure – Line structure is generally not effective for larger companies. This is
where the line and staff organizational structure is used.

Line and Staff structure combines the line structure where information and approvals come from top
to bottom, with staff departments for support and specialization. Line and staff organizational
structures are more centralized. Managers of line and staff have authority over their subordinates, but
staff managers have no authority over line managers and their subordinates. The decision making
process becomes slower in this type of organizational structure because of the layers.

c. Functional structure – This kind of organizational structure classifies people according to the
functions performed by them in the organization.

The organization chart for a functional based organization consists of Vice President, Sales
department, Customer Service Department, Engineering or Production department, Accounting
department and Administrative department.
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 Organisation Structure and Behaviour - F.Y. BCA (Sem 2), VNSGU, Surat
d. Divisional Structures - This is the kind of structure that is based on the different divisions in the
organization. These structures can be further divided into:

(i) Product structure – A product structure is based on organizing employees and work on the
basis of the different types of products. If the company produces three different types of
products, they will have three different divisions for these products.

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(ii) Market Structure – Market structure is used to group employees on the basis of specific
market the company sells in. A company could have 3 different markets they use and each
would be a separate division in the structure.

MANAGING DIRECTOR

Marketing Manager Marketing Manager Marketing Manager

HOSPITALS GOVT. LAB UNI. LAB

(iii) Geographic structure – large organizations have offices at different place, for example
there could be a north zone, south zone, west and east zone. The organizational structure would
then follow a zonal region structure.

MANAGING DIRECTOR

Marketing Manager Marketing Manager Marketing Manager

North Zone South Zone West Zone

e. Matrix organization - This is a structure, which is a combination of function, and product

structures. This structure is the most complex organizational structure.
This organizational type assigns each worker two bosses in two different hierarchies. One hierarchy is
"functional" and assures that each type of expert in the organization is well-trained, and measured by a
boss who is super-expert in the same field. The other direction is "executive" and tries to get projects
completed using the experts. Projects might be organized by products, regions, customer types, or
some other schema.
Example: A company might have separate individuals with overall responsibility for Product X and
Product Y, and different individuals with overall responsibility for Engineering, Quality Control, etc.
Individuals responsible for quality control of project X with therefore have two reporting lines.

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2. INFORMAL ORGANIZATION :

 This organization is the group is not formally structured. It is not determined by the
organisation.
 Informal organization is formed naturally. Four employees belonging to different departments
taking lunch together is an example of Informal organisation.

 Informal organizations are observed within formal organizations.

 The informal organizations are based on personal relations.

 The idea of informal organization was first introduced in management science by Chester
Barnard. Wherever persons come into contact with one another, informal organization emerges
out of their inter-relations.

 Informal organization refers to that organization which is not based on the rules and
regulations, but on personal bias, belief and attitudes, preferences of individuals concerned.

 Previously informal organizations were ignored. But now, importance of informal

organizations has been realised.

 These organizations satisfy people’s desire to work in group, to hold some status, to build
affinity with others, and to realize their personal goals etc.

 It increases the efficiency of the unit, make communication and control more effective and
raise morale of the employees by generating sense of belongingness.

Main characteristics of informal organization

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 The informal organization is flexible and loosely structured
 Relationships may be left undefined
 Membership is spontaneous and with varying degrees of involvement
 Involves two or more people
 Informal relationships, groupings & interactions
 Repeated contacts but without any conscious joint purpose
 Involves the human need to socialize
 Includes both friendly and hostile relationships and interactions
 Informal association precedes formal organization, as it requires preliminary (informal) contact
and interaction before establishment

IMPORTANCE / SIGNIFICANCE OF ORGANISATION STRUCTURE

Facilitates Administration: If the organization is efficient, all managers would be able to perform
their duties smoothly and freely. An efficient organization relieves executives of their routine duties so
that they can devote much of the energies in planning, preparing programmes for their departments
and coordinating the activities of his department with those of other departments.

Specialization is made possible: An important aspect of organizing is to undertake division of work

and assigning these to various persons who are competent to perform them. Thus, special activities are
performed by specialized personnel only. Only in good organization, experts can be employed. In
inefficient organization, a person is asked to perform many functions, which are left incomplete or
done inefficiently.

Clarifies Authority and Responsibilities: Each employee knows his duties and responsibilities as
well as his authority. There is no confusion as far as their duty is concerned. It provides opportunity to
the members of organization to show their hidden creative talents. This will increase the efficiency of
organization as a whole.

Maximum use of Scare Resources: As all staff members know what to do and what is expected from
them, they do it efficiently. This leads to maximum use of minimum resources. In other words, it leads
to maximization of profit by optimum use of resources.

Facilitate Growth and Diversification: An efficient organization leads to easy growth and
development. It facilitates the increase in scale of operations and starting new types of related
activities.

Encourage Creativity and Initiative: An ideal organization provides an opportunity to staff

members to discover new and improved method. They have scope for taking initiative and show their
talents.

Facilitates New Technology: An efficient organization is so flexible that it accommodates the use of
new developing technology. Use of a new machine, a tool or a new method may necessitate change.
The organization must be capable of adopting such changes.

Accomplishing Objective: The main objective of any organization is to achieve its goal. An efficient
organization provides guideline and means for accomplishing such goals.

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 Organisation Structure and Behaviour - F.Y. BCA (Sem 2), VNSGU, Surat
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