Classification of Organization

Organizations are basically classified on the basis of relationships. There are two types of organizations formed on the basis of relationships in an organization

1.       Formal Organization - This is one which refers to a structure of well define jobs each bearing a measure of authority and responsibility. It is a conscious determination by which people accomplish goals by adhering to the norms laid down by the structure. This kind of organization is an arbitrary set up in which each person is responsible for his performance. Formal organization has a formal set up to achieve pre-determined goals.

Informal Organization – It refers to a network of personal and social relationship which spontaneously originates within the formal set up. Informal organizations develop relationships which are built on likes, dislikes, felling and emotions. Therefore, the network of social groups based on friendships can be called as informal organizations. There is no conscious effort made to have informal organization. It emerges from the formal organization and it is not based on any rules and regulations are in case of formal organization.  

Types of Organization

Line organization

Line organization is the oldest and simplest method of administrative organization. According to this type of organization, the authority flow top to bottom in a concern. The line of command is carried out from to bottom. This is the reason for calling this organization as scalar organization which means scalar chain of command is a part and parcel of this type of administrative organization. In this type of organization, the line of command flow basis without any gaps in communication and co-ordination taking place.

Features of Line Organization

1.       It is the most simplest form of organization

2.       Line of authority flow from top to bottom.

3.        Specialized and supportive services do not take place in these organization

4.       Unified control by the line officers can be maintained since they can independently take decisions in their areas and spheres.

5.       This kind of organization always helps in bringing efficiency in communication and bringing stability to a concern.

Merits of Line Organization

1.       Simplest- It is the most simple and oldest method of administration.

2.       Unity of Command- In these organizations, superior-subordinate relationship is maintained and scalar chain of command flows from top to bottom.

3.       Better discipline- The control is unified and concentrates on one person and therefore. He can independently make decisions of his own. Unified control ensures better discipline.

4.       Fixed responsibility: in this type of organization, every line executive has hot fixed authority, power, and fixed responsibility attached to every authority.

5.       Flexibility: There is a co-ordination between the top most authority and bottom line authority. Since the authority relationships are clear, line officials are independent and can flexibly take the decision. This flexibility gives satisfaction of line executives.

6.       Prompt decision: due to the factors of fixed responsibility and unity of command, the officials can take prompt decision.

Demerits of Line Organization

1.       Over reliance: the line executive’s decisions are implemented to the bottom. This results in over-relying on the officials.

2.       Lack of specialization: A line organization flows in a scalar chain from top to bottom and there is no scope for specialization functions.

3.       Inadequate communication: the policies and strategies which are framed by the top authority are carried out in the same way. This leaves no scope for communication from the other end. The complaints and suggestions of lower authority are not communicated back to the top authority. So there is one way communication.

4.       Lack of Co-ordination: Whatever decisions are taken by the line officials, in certain situations wrong decisions, are carried down and implemented in the same way. Therefore, the degree of effective co-ordination is less.

5.       Authority leadership: the line officials have tendency to misuse their authority positions. This leads to autocratic leadership and monopoly in the concern.

Line and staff organization:

Line and staff organization is a modification of line organization and it is more complex than line organization. According to this administrative organization, specialized and supportive activities are attached to the line of command by appointing staff supervisors and staff specialists who are attached to the line authority. The power of command always remains with the line executives and staff supervisors guide, advice and counsel the line executives. Personal Secretary to the Managing director is a staff official.

Features of Line and Staff Organization

1.       There are two types of staff.

a.       Staff Assistants: P.A. to Managing Director, Secretary to Marketing Manager.

b.      Staff Supervisor: Operation Control manager, Quality Controller, PRO

2.       Line and staff organization is a compromise of line organization. It is more complex than line concern.

3.       Division of work and specialization takes place in line and staff organization

4.       The whole organization is divided into different functional areas to which staff specialists are attached.

5.       Efficiency can be achieved through the features of specialization

6.       There are two lines of authority which flow at one time in a concern

a.       Line authority

b.      Staff authority

7.       Power of command remains with the line executive and staff serves only as counselors.

Merits of line and staff organization

                Relief to line of executives: in a line and staff organization, the advice and counseling which is provided to the line executives divides the work between the two. The line executive can concentrate on the execution of plans and they get relieved of dividing their attention to many areas.

                Expert advice: the line and staff organization facilitates expert advice to the line executive at the time of need. The planning and investigation which is related to different matters can be done by the staff specialist and line of officers can concentrate on execution of plans.

                Benefit of specialization: line and staff through division of whole concern into two types of authority divides the enterprise into parts and functional areas. This way every officer or official can concentrate in its own area.

                Better co-ordination: line and staff organization through specialization is able to provide better decision making and concentration remains in few hands. This feature helps in bringing co-ordination in work as every official is concentrating in their own area.

Benefits of Research and Development: Through the advice of specialized staff, the line executives, the line executives get time to execute plans by taking productive decisions which are helpful for a concern. This gives a wide scope to the line executive to bring innovation and go for research work in those areas. This is possible due to the presence of staff specialists.

Training: due to the presence of staff specialists and their expert advice serves as ground for training to line officials. Line executives can give due concentration to their decision making. This in itself is a training ground for them.

Balanced decisions: the factor of specialization which is achieved by line staff helps in bringing co-ordination. This relationship automatically ends up the line official to take better and balanced decision.

Unity of action: Unity of action is a result of unified control. Control and its affectivity take place when co-ordination is present in the concern. In the line and staff authority all the officials have got independence to make decisions. This serves as effective control in the whole enterprise.

Demerits of line and staff organization

1.       Lack of understanding: in a line and staff organization there are two authorities flowing at one time. This results in the confusion between the two. As a result, the workers are not able to understand as to who is their commanding authority. Hence the problem of understanding can be a hurdle in effective running.

2.       Lack of sound advice: the line official get used to the expertise advice of the staff. At times the staff specialist also provides wrong decisions which the line executive has to consider. This can affect the efficient running of the enterprise.

3.       Line staff conflicts: line and staff are tow authorities which are flowing at the same time. The factors of designations, status influence sentiments which are related to their relation, can pose a distress on the minds of the employees. This leads to minimizing of co-ordination which hampers a concern’s working.

4.       Costly: in line and staff concern, the concerns have to maintain the high remuneration of staff specialist. This proves to be costly for a concern with limited finance.

5.       Assumption of authority: The power of concern is with the line official but the staff dislikes it as they are the one more in mental work.

6.       Staff steals the show: In a line and staff concern, the higher returns are considered to be a product of staff advice and counseling. The line officials feel dissatisfied and a feeling of distress enters a concern. The satisfaction of line officials is very important for effective results.

Functional Organization

Functional organization has been divided to put the specialists in the top position throughout the enterprise. This is an organization is which we can define as a system in which functional department are created to deal with the problems of business at various level. Functional authority remains confined to functional guidance to different departments. This helps in maintaining quality and uniformity of performance of different functions throughout the enterprise.

Features of Functional Organization:

1.       The entire organizational activities are divided into specific functions such as operations, finance, marketing and personal relations.

2.       Complex form of administrative organization compared to the other two.

3.       Three authorities exist: line, staff and function

4.       Each functional area is put under the charge of functional specialists and he has got the authority to give all decisions regarding the function whenever the function is throughout the enterprise

5.       Principle of unity of command does not apply to such organization as it is present in line organization

Merits of functional organization:

1.       Specialization: better division of layout takes place which results in specialization of function and its consequent benefit.

2.       Effective control:  management control is simplified as the mental functions are separated from manual functions. Checks and balances keep the authority within certain limits. Specialists may be asked to judge the performance of various sections.

3.       Efficiency: Greater efficiency is achieved because of every function performing a limited number of functions.

4.       Economy: Specialization compiled with standardization facilitates maximum production and economical costs.

5.       Expansion: expert knowledge of functional manager facilitates better control and supervision.

Demerits of Functional Organization

1.       Confusion: The functional system is quite complicated to put into operation, especially when it is carried out at low level. Therefore, co-ordination becomes difficult.

2.       Lack of Co-ordination: disciplinary control becomes weak as a worker is commanded not by one person but a large number of people. Thus, there is no unity of command.

3.       Difficulty is fixing responsibility: Because of multiple authority, it is difficult to fix responsibility

4.       Conflicts: there may be conflicts among the supervisory staff of equal ranks. They may not agree on certain issues

5.       Costly: maintenance of specialist’s staff of the highest order is expensive for a concern.

Roles of Planning in Management

Features of planning

Planning is goal-oriented

                               

The goals established should general acceptance otherwise individual efforts and energies will go misguided and misdirected

Planning identifies the action that would lead to desired goals quickly and economically

It provides sense of direction to various activities

Planning is looking ahead

                Planning di done for future

                It requires peeping (glancing/looking) in future, analyzing it, and predicting it

Thus planning is based on forecasting

                It is a synthesis of forecast

Planning is an intellectual process

Planning is a mental exercise involving creative thinking sound judgment and imagination

                It is not a mere guesswork but a rotational thinking

                Planning is always based on goals, facts and considered estimates

Planning involves choice & decision making

                Planning essentially involves choice among various alternatives

                Thus decision making is an integral part of planning

Planning is the primary function of management/ primacy of planning

                Planning lays foundation for other functions of management

It serves as a guide for organizing, staffing, directing, and controlling

All the functions of management are performed within the framework of plans laid out

Therefore, planning is the basic or fundamental function of management

Planning is a continuous process

                Planning is a never ending function due to the dynamic business environment

Plans are also prepared for specific period of time and at the end of that period, plans are subjected to revaluation and review in the light of new requirement and changing conditions

Planning never comes into end till the enterprise exists issues, problems may keep cropping up and they have to be tackled by planning effectively

Planning is all pervasive (universal)

                It is required at all level of management and in all departments of enterprise

The top level may be more concerned about planning the organization as a whole whereas the middle level may be more specific in departmental plans and the lower level plans implementation of the same

Planning is designed for efficiency

                Planning leads to accomplishment of objectives at the minimum possible cost

It avoids wastage of resources and ensures adequate and optimum utilization of resources

                A plan is worthless or useless if it does not value the cost incurred on it

Therefore planning must lead to saving of time, effort, and money

Planning leads to proper utilization of men, money, materials, methods, and machine

Planning is flexible

                Planning is done for the future

Under changed circumstances, the original plan of action must be revised and updated to make it practical

Objectives of planning:

Planning facilities management by objectives

                Planning begins with determinations of objectives

It highlights the purposes for which various activities are to be undertaken

In fact, it makes objectives more clear and specific

Planning brings order and rationality into the organization

Planning minimizes uncertainties

                Business is full of uncertainties

There are risks of various types due to uncertainties

Planning helps in reducing uncertainties of future as it involves anticipation of future

Although future cannot be predicted with cent percent accuracy but planning helps management to anticipate future and prepare for risks by necessary provision to meet unexpected turn of events

Planning facilitates co-ordination

                Planning revolves around organizational goals

All activities are directed toward common goals

There is an integrated effort throughout the enterprise in various departments and groups

It avoids duplication of efforts. In other words, it leads to better co-ordination

It helps in finding out problems of work performance and aims at rectifying the same

Planning improves employee’s moral

                Planning creates an atmosphere of order and discipline in organization

Employees know in advance what is expected of them and therefore conformity can be achieved easily

Planning creates a healthy attitude towards work environment which helps in boosting (increasing) employees moral and efficiency

Planning helps in achieving economies

Effective planning secures economy since it leads to orderly allocation of resources to various operations

It also facilitates optimum utilizations of resources which brings economy is operations

Is also avoids wastage of resources by selecting most appropriate use that will contribute to the objective of enterprise.

Planning facilitates controlling

                Planning facilitates existence of certain planned goals and standard of performance

It provides basis of controlling

Planning provides pre-determined goals against which actual performance is compared

Planning provides competitive edge

Planning provides competitive edge to the enterprise over the others which do not have effective planning this is because of the fact that planning may involve changing in work methods, quality, quantity designs, extension of work, redefining of goals etc.

Planning leads to best utilization of possible resources, improves quality of production and thus the competitive strength of the enterprise is improved

Planning encourages innovations

In the process of planning managers have the opportunities of suggesting ways and means of improving performance

Planning is basically a decision making function which involves creative thinking and imagination that ultimately leads to innovation of methods operations for growth and prosperity of enterprise

Disadvantages of planning:

Internal Limitations

There are several limitations of planning. Some of them are inherit (overcome) in the process of planning like rigidity and other arise due to shortcoming of the techniques of planning and in the planners themselves.

Rigidity:

Planning has tendency to make administration inflexible

Planning implies prior determination of policies, procedures and programs and a strict adherence to them in all circumstances

There is no scope for individual freedom

The development of employees is highly doubted because of which management might have faced lot of difficulties in future

Planning therefore introduces inelasticity and discourages individual initiative end experimentation

Misdirected planning

Planning may be used to serve individual interests rather than the interest of the enterprise

Attempts can be made to influence setting of objectives, formulation of plans and programs to suit one’s own requirement rather than that of whole organization

Machinery of planning can never be freed of bias. Every planner has his own likes, dislikes, preferences, attitudes and interests which is reflected in planning

Time consuming

Planning is a time consuming process because it involves collection of information, its analysis, and interpretation thereof. This entire process takes a lot of time specially where there are a number of alternatives available

Planning is not suitable during emergency or crisis when quick decisions are required

Probability in planning

Planning is based on forecasts which are mere estimates about future

These estimates may prove to be inexact due to the uncertainty of future

Any change in the anticipated situation may render plans ineffective

False sense of security

Elaborate planning may create a false sense of security to the effect that everything is taken for granted

Managers assume that as long as they work as per plans, it is satisfactory

Therefore they fail to take up timely actions and an opportunity is lost

Employees are more concerned about fulfillment of plan performance rather than any kind of change

Expensive

Collection, analysis and evaluation of different information, facts and alternatives involves a lot of expense in terms of time, effort and money

External limitations of planning

Political climate: change of government from congress to some other political party, etc.

Labor Union: strikes, lockouts, agitations

Technological changes: modern techniques and equipment’s, computerization

Natural calamities: earth quakes and floods

Changes in demand and prices: change in fashion, change in tastes, change in income level, demand falls, price falls etc.

Functions of management

Functions of management:

Management has been described as a social process involving responsibility for economical and effective planning and reoperations of an enterprise in the fulfillment of given purposes. It is a dynamic process consisting of various elements and activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common every manager irrespective of his level or status.

Planning:

It is the basic function of management. It deals with chalking (sketching) out a future course of action and deciding in advance the most appropriate course of actions for achievement of pre-determined goals.

Planning is a systematic thinking about ways and means for accomplishment (achievement) of pre-determined goals. Planning is necessary to ensure proper utilization of human and non-human resources.

Organizing:

It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. To organize a business involves determining and providing human and non-human resources to the organizational structure. Organizing process involves

Identification of activities

Classification of grouping of activities

Assignment of duties

Delegation of authority and creation of responsibility

Coordinating authority and responsibility relationships

Staffing:

It is the function of manning (handling) the organization structure and keeping it manned (handled). Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc.  The main purpose of staffing is to put right man on right job. Staffing involves:

Manpower planning (estimating man power in terms of searching, choose the person and giving the right place)

Recruitment (enrolment), selection, and placement

Training and development

Remuneration (reward)

Performance appraisal (judgment)

Promotions and transfer

Directing:

It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it is motion the action of people because planning organizing and staffing are the mere preparations for doing the work. Direction is that inner-personnel aspect (phase) of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Directions have following elements:

Supervision: it implies overseeing the work of subordinates by their superiors. It is the act of watching and directing work and workers.

Motivation: it means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative monetary, non-monetary incentives may be used for this purpose.

Leadership: it may define as a process by which manager guides and influences the work of subordinates inn desired direction.

Communication: it is the process of passing information, experience, opinion etc. from one person to another. It is a bridge of understanding.

Controlling:

It implies measurement of achievement against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards.  An efficient system of control helps to predict deviations before they actually occur.

Therefore controlling has following steps:

Establishment of standard performance

Measurement of actual performance

Comparison of actual performance with the standards and finding out deviation if any

Corrective action

Levels in Management

Levels of Management:

The level of management determines a chain of command, the amount of authority and status enjoyed by any managerial positions. The levels of management can be classified in three broad categories:

Top level / Administrative level

Middle level / Executor (organizer)

Low level / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three levels is discussed below:

Top level: execute (perform) coaching, change management, leadership, delegation, and empowerment, etc.

Middle level: problem solving, team building, talent development, performance management etc.

Low level: emotional intelligence and coaching or performance, etc.

Top Level of Management

It consists of board of directors, chief executive, or managing director. The top management is the ultimate source of authority and it manages goals and polices for an enterprise. It devotes more time on planning and coordinating and functions.

Top management lays down the objectives and broad polices of the managers:

·         It issues necessary instructions for preparation of department budgets, procedures, schedules etc.

·         It prepares strategic plans and polices for the enterprises.

·         It appoints the executive for maintaining a contact with the outside world.

·         It controls and coordinates the activities of all the departments.

·         It is also responsible for maintaining a contact with the outside world.

·         It provides guidance and direction.

·         The top management is also responsible towards the shareholders for the performance of the enterprise.

Middle Level of Management

The branch managers and department managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote (assign) more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as-

They execute the plans of the organizations in accordance with the policies and directives of the top management.

They make plans for the sub-units of the organization.

They interpret and explain policies form top level management to lower level

They participate in employment and training of lower level management.

They are responsible for coordinating the activities within the division or department

It also sends important reports and other important data to top level management.

They evaluate performance of junior manager.

They are also responsible for inspiring lower level managers towards better performance.

         

Lower level of management:

Lower level is also known as supervisory/ operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. in other words, they are concerned with direction and controlling function of management. Their activities include:

Assigning of jobs and tasks to various workers

They guide and instruct workers for day to day activities

They are responsible for the quality as well as quantity of production

They are also entrusted with the responsibility of maintaining good relation in the organization

They communicate workers problems, suggestions, and recommendatory appeals etc. to the higher level and higher level goals and objectives to the workers

They help to solve the grievances (criticisms/problems) of the workers

They supervise and guide the sub-ordinates

They responsible for providing training to the workers

They arrange necessary materials, machines, tools etc. for getting the things done

They prepare periodical reports about the performance of the workers

They ensure discipline in the enterprise

They motivate (encourage) workers

They are the image builders of the enterprise because they are in direct contact with the workers