The organisational structure represents relationships between different positions in the organisation. It helps in streamlining the functions that help in attaining the organisational goals.
The organisational structure depends on the size and the nature of the organisation. Much of organising depends on the size of the organisation. The lar3ger the organisation, the more departments are created, or larger is the size of each department.
Organisation helps in formation- of structural relationship among different departments and the individuals working in it with the common objective of achieving goals of the organisation. While establishing this relationship, it is necessary to make clear the lines of authority in the organisation besides coordinating the efforts of different individuals in an efficient manner.
Some of the types of organisation structure are:- 1. Line Organisation 2. Line and Staff Organisation 3. Functional Organisation 4. Divisional Organisation 5. Committee Organisation 6. Project Organisation 7. Matrix Organisation.
Types of Organisational Structure
Types of Organisational Structure – 4 Major Types (With Features, Advantages and Disadvantages)
The organisational structure represents relationships between different positions in the organisation. It helps in streamlining the functions that help in attaining the organisational goals. The organisational structure depends on the size and the nature of the organisation. Much of organising depends on the size of the organisation. The larger the organisation, the more departments are created, or larger is the size of each department.
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Departments denote the division of work into different categories. As the organisation grows in size the depth of specialised work and skills required also increases proportionately.
The work continues to be divided and distributed among the people and the objective of this distribution is the need for a proper functioning of the various departments of the organisation so that organisational goals are achieved with the least distortion. The organisational structure is very important for every business organisation. The correct structure imparts strength and cohesiveness to an organisation, whereas the wrong structure may likely bring an organisation on its knees.
Types of Organisational Structures:
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The flow of formal authority is a criterion for classifying an organisation.
Listed below are the ways of classifying an organisation on the basis of the chain of command:
1. Line Organisation:
In this type of organisation, the flow of formal authority is from the top to bottom, following the natural gravity of flow from high to low. The flow of command and communication is from the top to bottom in an unbroken line, often referred as the Scalar Chain. Line organisations can also be called Hierarchical Organisation. It is signified by vertical relationships connecting the position and tasks of each level with those below and above it.
Line managers take independent decisions in their departments. The strength of the line organisation lies in its simplicity and one-pointed nature of command. All line managers have fixed and well-defined authority and accountability with the overall control lying in the hands of one person at the top. The flow of command is easy and without bottleneck; responsibility is easily fixed and corrective measures taken speedily. The reporting head has complete command over his immediate subordinate and the subordinate takes instructions from and is directly responsible to him only.
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Features of Line Organisation:
i. It is the simplest form of organisation.
ii. Line of authority flows from the top to the bottom.
iii. Line managers can take decisions independently. Therefore, there is unified control throughout the organisation.
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Advantages of Line Organisation:
Line organisation has the below mentioned advantages:
i. Unity of command- Scalar chain of command flows from top to bottom. Hence, the organisation maintains the superior-subordinate chain of command.
ii. Better discipline- Because the control is unified and concentrated in one person, he is able to take independent decisions. Each employee is subordinated to his immediate superior who promotes better discipline throughout the organisation.
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iii. Fixed responsibility- The authority of every line manager is fixed. Every employee knows from whom to take instructions, and to whom he is responsible. This helps in fixing responsibility. At the same time, it eliminates ambiguity and duplication of instructions.
iv. Speedy decision-making- Since all line managers know the extent of their authority, they can take quick decisions. Lines of communications are simple and effective and help in disseminating information.
v. Economy- Line organisation dispenses with the need for specialists, thus, bringing about economy to the organisation.
vi. Flexibility- The clear and unambiguous lines of authority introduce an element of flexibility into the organisation. Independent judgments can be arrived at and decisions taken by managers.
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Disadvantages of Line Organisation:
The possible drawbacks of line organisation are presented below:
i. Autocratic authority- Sometimes the line authority can become very authoritative and this can be a cause of dissatisfaction to the members of the department or the concerned organisation. In such cases, authority can be misused. Favoritism and red tape can kill the initiative.
ii. Lack of specialisation- In a line organisation, a manager has to perform a number of operations during the course of his duty. His experience is varied, but he lacks specialisation. This reduces the depth of his effectiveness as a manager.
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iii. Over-reliance- Since the line manager has to do all the managerial work of his department, he often gets overburdened by the work. The departmental needs are diverse, while the skills of the manager are limited. In such a scenario, all problems areas may not receive proper attention and the manager, too, may become loaded with too much work at the same time.
iv. One-way communication- The lines of communication are from the top to bottom. The views and opinions of the lower levels may not be reported to the top management. This at times can be prove costly to the organisation
2. Line and Staff Organisation:
In this type of structure line authority is present, but there are specialists who are attached to the line authority because there is greater complexity and vastness in the organisation. The work of the line managers is well expanded, and to help them with more inputs, advice, information, etc. are put more staff whose job is to assist them with support service.
We can say that line and staff relationships allows line managers to get specialised assistance and inputs when required, thus making possible for better decision-making and coordination. Examples can be of supervisors to assist line managers. The nature of their work could be advisory, with the final decision resting with the line managers.
The line and staff combination addresses the issue of lack of specialisation in the line organisation. It brings in specialisation while maintaining the unity of command.
Features of Line and Staff Organisation:
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The major features are listed below:
i. Combination- It is a combination of line organisation that includes specialists. However, the specialists are in an advisory position rather than an authority position. This imparts a complexity to the organisation.
ii. Division of work- Division of work and specialisation are elements of the line and staff organisation. There is now more scope for improved division of work.
iii. Specialisation and efficiency- The specialisation brought in by staff experts promotes efficiency within the organisation.
Advantages of Line and Staff Organisation:
The advantages of the line and staff organisation are shown below:
i. Specialisation – The line and staff organisation allows bifurcation of the line functions into conceptual and executive functions. This permits the line managers to concentrate on executive functions while the staff specialists concentrate on the conceptual functions.
ii. Better Co-Ordination – A line and staff organisation facilitates better decision- making. However, the decision-making power rests in a few hands. This helps in coordinating the work as every employee concentrates on his own area.
iii. Balanced Decision-Making – Now that the line managers have expert help to guide and counsel them they are able to take better decisions in the day-to-day management of the affairs of the organisation.
iv. Scope for Growth and Expansion – A line and staff organisation presents more scope for the growth and expansion of the business. Additional staff experts can be brought in and activities of the company can be expanded without overburdening the line managers.
v. Expert Advice – The staff executives are always available to give expert advice and help to the line managers during times of need. Line managers can focus on execution of plans while planning can be done by the staff personnel.
Disadvantages of Line and Staff Organisation:
The main disadvantages of line and staff organisation are listed below:
i. Lack of Understanding – In a line and staff organisation, two authoritative figures exists at the same time which may result in confusion between the employees. The staff members are not able to figure out exactly who is their commanding authority. Thus, problem could arise in effective running of the organisation.
ii. Line and Staff Conflicts – This has been identified as the main problem of line and staff structure. The conflict between line and staff managers may be because of various reasons such as poor human relations, overlapping authority and responsibility and the misuse of staff personnel by top management. Sometimes, the organisational conflicts may be taken as personal conflicts resulting in interpersonal resentment.
iii. Lack of Sound Advice – The line managers may be at times provided with erroneous facts and figures or unsound advice and they may make wrong choices. This can affect the efficient running of the enterprise. This becomes all the more possible when line managers become used to asking for expert advice and following it blindly.
iv. Expensive – When the line and staff organisation is compared with the line organisation, it is seen that the former is more expensive because two sets of personnel have to be employed here. Thus, it can be a failure from the point of being economical.
v. Lack of Creativity – There could be a lack of creativity if there is an over- dependence on staff for all sorts of help and advice. The judgment and initiative of the line managers may get affected. They may also lose creativity.
Functional and Divisional Organisation:
The organisational structure of a business unit may also be based on the basis of its major functions, or on the basis of its products and services.
3. Functional Organisation:
A Functional Organisation is one wherein different departments are created to take care of every day work related to carrying out the organisation’s business. This system was suggested by F.W. Taylor and is signified by the fact that the organisation is divided into departments on the basis of the different business operations they perform.
Each department is under the supervision or management of one person who is seen as qualified and experienced in that area of work. For example, the accounts department will be under the command of a formally qualified and trained accountant, while the production department will be headed by a person who has experience of the intricacies of producing that particular product.
Features of Functional Organisation:
i. The organisational activities are divided into specific functions such as production, finance, marketing and personal relations.
ii. Principle of unity of command does not apply as it applies in the case of line organisation.
iii. It is a more complex form of administrative organisation compared to line organisation.
iv. Three authorities exist- line, staff and function.
v. Each functional area is under the charge of functional specialists.
Advantages of Functional Organisation:
The advantages accruing from functional organisations are shared below:
i. Specialisation – Better division of labour takes place that results in specialisation of function and its consequent benefits.
ii. Efficiency – Since everyone performs a limited number of functions, they acquire increased experience with the passage of time. This results in a greater efficiency within the organisation and optimum utilisation of available manpower.
iii. Effective control – Management control is simplified; checks and balances keep the authority within certain limits. Specialists evaluate the performance of various sections, thereby, exercising effective control.
iv. Economical cost of production – In a functional organisation there is specialisation since each major function is organised as a separate department. This work arrangement promotes standardisation and facilitates maximum production at the most economical costs.
v. Ease of supervision and coordination – The managers quickly acquire familiarity with the process of production and related tasks and chain of commands. This facilitates easy supervision and coordination.
Disadvantages of Functional Organisation:
Defined below are the disadvantages of the functional organisation:
i. Lack of coordination – Disciplinary control may become weak as a worker may have to report to not one but more than one person. Thus, at times there may be no unity of command.
ii. Potentially conflicting – This could become a potentially conflicting situation when managers try to build up their individual areas of influence letting personal interest override the organisational interest. Disagreements may arise on different issues which may be contrary to interest of the company.
iii. Inflexibility – Since the functional heads specialise in their specific functions, they may lack the required experience to take up responsibilities of higher management.
iv. Difficulty in fixing responsibility -The presence of multiple authorities to whom a worker may be reporting makes it very difficult to pinpoint responsibilities. Managers and departments may shift blame to others when it comes to accepting responsibilities.
v. Delayed decision-making – As a functional organisation grows larger, the successive levels in the hierarchy also increase. As a result of departments growing large, time taken for formal communication may get delayed which may result in delayed decision-making.
4. Divisional Organisation:
In a divisional organisation, the organisational activities are divided into a number of separate divisions created on the basis of the products. Each division looks after one complete product and including its sales. Such divisional organisations are common in products that are very complex and a considerable amount of capital is invested in them. Within each division there are different departments looking after different functions, but each department concentrating on just one divisional product.
Features of Divisional Organisation:
i. Specialised Product – The product range may be specialised to such an extent that every product may get the attention of an individual division. All the activities right from its production to product sales and after-sales service are looked after by an individual division.
ii. Large Investment – Divisional organisations are common where products are very complex and a remarkable capital is invested in them. Within each division there are different departments looking after different functions but each concentrating on just one divisional product. Such organisations are common in the electronics industry producing microprocessors and other microminiaturised electronic components.
Advantages of Divisional Structure:
The following are the advantages of a divisional structure:
i. Facilitates coordination – Since all activities of a particular product are concentrated at one point, coordination becomes easy.
ii. Flexibility – It imparts flexibility and adaptability to the unit.
iii. Specialised supervision – The top management can pay attention to each division as each represents one specific product line.
iv. Ease of operation – It becomes easier for each division to expand its operations as expansion does not affect any other division.
v. Facilitates experience and skills – The divisional structure facilitates the growth of top managers of the future for its managers acquire different management skills under one roof.
Disadvantages of Divisional Structure:
The disadvantages of the divisional structure are listed below:
i. Greater susceptibility to market fluctuation – One serious drawback is that the entire division suffers, if its product falls in demand. In such a case, the machinery and human resources will remain underutilised. Thus, the impact of loss is more serious in case of divisionally structured organisations.
ii. High operating costs – Each division maintains its own facilities and workforce which may result in waste of resources because the divisional set up permits no sharing of resources. This pushes up the operating costs.
iii. Potential conflict – Potential conflicts may arise between divisions with regards to sharing of corporate funds and other resources.
iv. Overall organisational loyalty missing – The loyalty of employees may be restricted for a particular division when the need may actually require overall organisational loyalty.
v. Lack of centralised benefits – The divisions may suffer from lack of centralised activities, like corporate advertising, public relations, etc. Thus, the long-term benefits of centralised management may not be available to organisations with a decentralised structure.
Types of Organisational Structure – 6 Important Types
Organisation helps in formation- of structural relationship among different departments and the individuals working in it with the common objective of achieving goals of the organisation. While establishing this relationship, it is necessary to make clear the lines of authority in the organisation besides coordinating the efforts of different individuals in an efficient manner.
There is need for specific structural relationship in order to organise the efforts of individuals.
For this purpose, any of the following types of organisation structures may be set up:
1. Line organisation
2. Line and staff organisation
3. Functional organisation
4. Committee organisation
5. Project Organisation
6. Matrix organisation.
Among the structures of organisation mentioned above, the first three, i.e., Line, Line and Staff, and Functional organisations have been discussed in detail whereas a brief overview of the remaining three organisations has been given.
Type # 1. Line Organisation:
In this kind of structure, there is direct vertical relationship through which authority flows. The quantum of authority is highest at the top and reduces at each successive level down the hierarchy. Every person in the organisation is in the direct chain of command.
It is the simplest form of organisation structure and is also known as scalar or military organisation. In this structure, the line authority not only becomes the basis of command for operating personnel but also provides the channel of communication, coordination and accountability in enterprise.
Advantages of Line Organisation:
i. The line organisation is a simplest form of structure. Therefore, it is very easy to establish line organisation and it can be easily understood by the employees.
ii. It helps in ensuring unity of command and thus conforms to the scalar principle of organisation.
iii. The authority and responsibility relationship are clearly defined. Employees are fully aware of the limits of their jobs.
iv. It helps in promoting discipline in the enterprise because every individual is properly informed about their responsibility.
Demerits of Line Organisation:
i. As the organisation grows, the applicability of line organisation becomes difficult as it makes the superiors too overloaded with work as a result of which they are unable to pay- proper attention to each subordinate under them. Consequently, it affects their effectiveness.
ii. In case of this kind of organisation, there is concentration of authority -at the top level. Therefore, it is necessary that the executives at the top level shall be capable. Otherwise the enterprise will not be successful.
iii. This kind of structure is not suitable for big organisations because it does not provide assistance in the form of specialists in the structure. Many times, it happens that certain jobs require specialised knowledge to perform them. Therefore, the job would not be performed efficiently.
iv. The communication process is also affected as there is practically no communication from bottom level to top level due to concentration of authority at the higher levels. Even if superiors take a wrong decision, no one can dare to raise any objection against it.
Type # 2. Line and Staff Organisation:
The line structure, though inherited with number of limitations, is suitable for particularly small organisations having lesser number of hierarchical levels and employees. The lack of presence of specialist has limited its use in big organisation. The limitation of line organisation has been removed through its modification by including specialist in the structure.
The resulting structure is called ‘Line and Staff Organisation’. In line organisation, the executives at the scalar chain are generalists and do not possess specialised knowledge which is necessary to deal with complicated problems.
In order to give facility of specialist to line executives, staff positions are created throughout the structure. Staff elements bring expert and specialised knowledge to provide advice to line managers so that they can discharge their duties efficiently.
In this kind of structure, the line authority remains the same as it does in the line organisation. Authority flows from top to bottom. The main difference is that specialists are attached to line managers which was absent in the line organisation. The specialist advise them on important matters and provide instant support with their speciality to serve line men as and when their services are required. The staff officers do not have any power of command in the organisation as they are employed to provide expert advice to the line officers.
Staff simply provide a supporting function to help the line manager. In most organisations, the staff is used for seeking help in handling details, gathering data for decision-making and offering advice on specific managerial problems. Staff assist line managers in investigation and provide information and recommendations to managers who make decisions.
This kind of structure has gained popularity because nowadays there are certain problems which are very complex and expert knowledge is necessary to deal with them. This knowledge can be provided by the staff officers. For example, legal department is established as a staff department to advise on law related issues. Similarly, public relations departments may be set up to contact customers, suppliers, etc., for assisting Finance department and Human Resource department.
Advantages of Line and Staff Organisation:
The line and staff organisation has the following merits:
i. Specialised knowledge – The benefit of specialised knowledge of staff specialists is available to line managers at various levels.
ii. Reduction of burden – Since staff specialists take care of specialised functions like accounting, selection and training, public relations, etc., it relieves the line managers from some activities.
iii. Proper weightage – Many problems which are not given due importance are not ignored in this case. The line organisation can be properly covered in the line and staff organisation making use of staff specialists.
iv. Better decisions – Staff specialists provide line managers with adequate information as and when required along with the expert advice which assist the line executives in taking better decisions.
v. Flexibility – Line and staff organisation is more flexible as compared to the line organisation. General staff can be employed to help line managers at various levels.
vi. Unity of command – Under this system, it is the line manager who only has got the right to give orders whereas the staff specialist provide special guidance without giving orders. As a result of this, the organisation enjoys the advantage of functional organisation and at the same time, maintains the unity of command, i.e., one subordinate receiving orders from one boss only.
Demerits of Line and Staff Organisation:
The line and staff organisation suffers from the following drawbacks:
i. There are chances of a conflict between the line and staff executives. The line authority manager has an apprehension that staff men may rule over on the line authority. Sometimes, line managers feel that staff specialists do not always give right type of advice, and staff officials generally complain that their advice is not properly followed.
ii. The allocation of duties between the line and staff executives may be ambiguous which may obstruct the process of coordination in the organisation.
iii. As staff men have no responsibility and accountability for the results, they may not be concerned about their performance.
iv. Generally, there is a wide difference between the manner of looking at problems by the line and staff men. Line executives deal with problems in a more practical manner. But staff officials who are specialists in their fields tend to be more theoretical.
Superiority of Line and Staff Organisation over Line Organisation:
Line and staff organisation is considered better than the line organisation because of the following reasons:
i. In line and staff organisation, there is a staff which provide expert advice to the line executives to deal with complex problems of management.
ii. Better decisions are ensured in line and staff organisation as compared to a simple line organisation as lot of facts and information are considered along with its repercussion on any decision.
iii. For large organisation, line and staff structure is more suitable as expert advice is always available. The line managers can make use of the knowledge of staff specialists to resolve the complicated problems. Therefore, line and staff organisation is certainly better than line organisation.
Type # 3. Functional Organisation:
A functional structure is one of the most common organisational structures being used in the present environment. Under this structure, the organisation makes group of employees based on their specialisation and assign similar set of roles or tasks. Due to specialisation in specific areas, it helps in achieving operational efficiencies and increasing productivity levels. The jobs are timely performed as the workers because of their expertise and specialised skills can perform tasks quickly, efficiently and without any mistake or error.
F.W. Taylor evolved the concept of functional organisation for planning and controlling manufacturing operations on the basis of specialisation. However, the applicability of concept of functional organisation is restricted to the top level of the organisation structure and it is not applied at lowest level in the organisation as recommended by Taylor. It provides holder of a functional position a limited power of command over the people of various. A functional in charge directs the subordinates throughout the organisation in his particular area of business operation.
Thus, the subordinates receive orders and instructions not only from one superior but from several functional specialists. In other words, the subordinates are accountable to different functional specialists for the performance of different functions. The main purpose of this kind of structure is to bring the human resource and informational resources together to meet the organisation’s goals.
The features of functional organisation are as follows:
i. The entire organisational activities are divided into specified functions such as – operations, finance, marketing, personnel relations, etc.
ii. The functional area are headed by functional specialist who has the authority to give orders regarding his area.
iii. Any decision of the organisation pertaining to a particular functional unit has to be taken in consultation with the functional specialist.
iv. A functional authority occupies a mid-way position between line and staff authority.
v. It involves putting the specialists in top positions throughout the enterprise.
vi. The functional structures of organisation operates well in stable environments where business strategies are not subject to significant changes or dynamism.
vii. The extent of bureaucracy involved in this kind of structure makes it difficult for organisations to respond to changes in the market quickly.
viii. Due to standardised ways of operation and the high degree of formalisation, functional organisational structures faces problem of communication in organisations. This slow down the process of decision-making process.
ix. As functional units are often not accountable to each other, the performance of organisation may be effected.
x. It does not promote innovation and its restricted views of organisational goals affect employees’ motivation.
Advantages of Functional Organisation:
i. This organisation enable to achieve the benefits of specialisation as all functional heads are specialists in their respective areas. The subordinates can seek their advice on complex matters.
ii. It facilitates executive development because a functional head is required to be expert in his area. Therefore, it provides opportunities to executives in developing them in one particular area.
iii. It helps in reducing the burden of top executives since they have to be confined in their area only.
iv. Under this system, an organisation can have better control and supervision due to availability of experts in different areas.
v. It does not face the problem of limited capabilities of a few line managers as in the case of line organisation thus offers enough scope for expansion.
Disadvantages of Functional Organisation:
i. It violates the principle of unity of command as a subordinate may be accountable to number of functional heads.
ii. There can be an environment of confusion as workers are supervised by number of supervisors.
iii. This organisation help in development of specialist and not generalist. Therefore, there could be a confusion for top position of organisation.
iv. Since the functional heads are concerned only about their own department, the organisational interest may get ignored.
v. When a decision involves consultation of more than one functional head, it generally tend to get delayed due to difference of opinion among them.
In order to have better control in these type of organisations, it is better to make subordinate accountable to the line managers and not the functional authority of their department. The authority and responsibility in this regard shall be clearly laid down to prevent any confusion.
Type # 4. Committee:
Committee can be defined as a group of organisational members who discuss and develop solutions to problems. It can be either line or staff and can be established on a standing (permanent) or an ad hoc basis. According to Louis A. Allen, “A committee is a body of persons appointed or elected to meet on an organised basis for the consideration of matters brought before it.”
A committee is a group of persons performing a group task with the object of solving certain problems. The task to be dealt by a committee is determined by its constitution. Committee cannot be a substitute for any part of the organisational structure but they are relatively formal bodies with a definite structure. They have their own organisation. It may be to formulate plans, make policy decisions or review the performance of certain units.
In some cases, it may only have the power to make recommendations to a designated official. Committees are recognised as an important instrument in the modern business as well as nonbusiness organisations. They facilitate in taking collective decisions, coordinating the affairs of different departments and meeting communication requirements in the organisation. Committees exist both in business and non-business organisations.
The advantages or merits are discussed below:
i. Expert advice – In a committee, members having expert knowledge in their fields are included which will provide knowledge and judgment of experts for the solution of complex problems.
ii. Enforces participation – A committee involves the participation by different people in the organisation. This motivates the employees for better performance as they deal in the affairs of the organisation.
iii. Facilitates coordination – A committee may be used as a mechanism of coordination as it helps in integrating diverging points of view which in normal course cannot be coordinated by individuals. The direct contact among various individuals helps in sorting out contentious issue and facilitate the process of coordination in the activities of various departments and individuals.
iv. Overcoming resistance – The committee helps in overcoming resistance, opposition or pressure from the affected parties.
v. Check against misuse of powers – It acts as a check and safeguard against the abuse and misuse of powers.
i. Evasion of decision-making responsibilities – Sometimes, managers who want to escape responsibility, take recourse to committee as a device to avoid the laborious and difficult process of logical thinking.
ii. Slow decision-making – Committees generally take more time on procedural matters before any decision is taken. The delay in decision-making may reduce the significance of the decisions.
iii. Costly device – Committees are an expensive device both in terms of cost and time. Committee meetings take too much time which increases the sum total of the salary of its members for that time.
iv. Lack of definite decision – In case of committee decisions, it is very difficult to fix responsibility on a particular person. Therefore, the committee members may behave irresponsibly and indifferent. When the committee findings represent a compromise of different viewpoints, they may be found to be weak and indecisive.
v. Incompetent membership – When a committee is formed, it is expected that the individual members of the committee will present their ideas, suggestions, etc. But this may not happen in practice. The chairman or any strong member of the committee may force the committee to come to arrive at conclusion as deem fit by him and the other members may keep silent.
Type # 5. Project Organisation:
Project organisations are created for successful completion of a specific project. In order to create this system, a team of specialists from different areas are created for each project. The size of one project may vary from another project. The team so created is independent of functional departments and has separate existence. The activities of the project team are coordinated by the project manager.
A project manager is allowed to obtain advice and assistance of experts both inside and outside the organisation. The tenure of the project duration determines the life of project organisation. If the project organisation is created for one-time project, it will have temporary set-up and will be disbanded when the project is completed. When the duration of the project is quite long, it takes a permanent form.
The main features of project organisation are given below:
i. The project is a one-time assignment and the related activities are well-defined.
ii. The project has pre-determined life and must be completed within the given time.
iii. The project assignment provides a challenge.
iv. Successful completion of the project is essential for the organisation.
Merits of Project Organisation:
i. Project organisation helps in focusing entirely on specific and complex projects. It can be adjusted and altered in accordance with the requirements of a particular project.
ii. Project management engages specialists in various fields and allows them to make maximum use of specialised knowledge available with the organisation.
iii. Project organisation enables in adopting logical approach to any challenge in the form of a project with well-defined strategy.
iv. Project organisation achieves timely completion of a project without affecting the normal activities of the organisation.
Limitations of Project Organisation:
i. Due to lack of clear communication process and clearly defined objectives, the job of a Project Manager becomes very difficult.
ii. As project manager has to depend on advice of number of specialists, uncertainty in project structure arises.
iii. Decision-making process becomes complex because there are unusual pressures from specialists from diverse fields.
iv. There are chances of conflict between project managers and specialists because of their difference in approach in looking at main objective of the organisation.
Type # 6. Matrix Organisation:
Matrix organisations are combination of project organisation and functional organisations. These organisations are also called ‘Grids’. These are mainly used in large and complex organisations. They are created out of people from the functional departments who are assigned to the project for a specific period or for the duration of the project. When their assignment is complete, they return to the functional departments to which they belong. These type of organisations have greater flexibility than traditional forms of organisations.
In this kind of organisation, the project manager achieves the project objectives with the help of the functional groups who return back to their respective departments when their assignment is over. During the course of the project, the personnel deployed to the project are answerable to the functional department as well as their concerned project. Thus, the principle of unity of command, which states that no person in the organisation should report to more than one superior, is violated in this case. This results in number of problems for the organisation.
In order to overcome these problems, it is advisable that the exact authority and responsibility shall be examined in advance during the life of the project. Once this kind of set-up is made, employees receive orders only from one boss. The authority of a functional manager flows vertically downwards, and the authority of the project manager flows sideways. Since these authorities flow downward and sideways, this structure is called the matrix organisation structure. The project manager and the functional manager have different roles.
The project manager exerts a general management viewpoint with regard to his project. Each functional manager is responsible for maintaining the integrity of his function. However, both the project and functional managers are dependent on each other as they have to take several joint decisions in order to execute the project. So, there is proper coordination between the project and the functional groups.
Advantages of a Matrix Organisation Structure:
The following are a few advantages of a matrix organisation structure:
i. It facilitates sharing of highly skilled and capable resources between the functional units and projects.
ii. It allows more open communication lines which help in sharing the valuable knowledge within the organisation.
iii. The matrix structure is more dynamic than the functional structure because it allows employees to communicate more readily across the boundaries.
iv. It provides opportunities to employees for enhancing their skills and knowledge areas by participating in different kind of projects. The matrix structure provides a good environment for professionals to learn and grow their career.
v. As it ensures job security, employees perform well which help in increasing the efficiency of a matrix organization.
Disadvantages of a Matrix Organisation Structure:
The following are disadvantages of a matrix organisation structure:
i. Employees may have to report to two bosses. Thus, it violates the principle of unity of command.
ii. There are high chances of conflict between the project manager and the functional manager regarding the authority and power.
iii. Lack of clarity on priorities may lead to confusion among employees with regard to their role and responsibility.
A matrix structure is expensive to be maintained. Organisations are required to keep resources which may not be occupied at all times. Some resources are needed only for a short duration.
It is generally seen that matrix organisations have more managers than required, which make overhead cost high.
Types of Organisational Structure – Line Organisation, Staff or Functional Organisation and Line and Staff Organisation (With Suitability)
Organisation structure refers to the establishment of a formal hierarchical set up of the different departments, divisions and sub-divisions and also of the different individuals manning the different positions therein. It establishes the authority, responsibility and relationships which enhances optimum cooperation and co-ordination between all in the organisation.
Such a well-coordinated and well-structured organisation can ensure optimal utilization of resources and attainment of the organisational targets with greater certainty.
As per R. C. Davis, “Organisation structure is the sum total of objectives, functions, responsibility, power and obligation of members of the organisation.”
According to W. H. Newman, “Organisation structure is related with the matters of overall organisational system of the concern.”
The different types of organisation structure are as follows:
I. Line organisation.
II. Staff or Functional/Staff organisation.
III. Line and staff organisation.
Type # 1. Line Organisation:
It is the simplest form of organisation structure, which is also known as military, scalar or vertical organisation. In this type of organisation structure authority flows downwards from one hierarchical level to another. Hence, the extent of authority enjoyed by individuals in the highest hierarchical level is the maximum and it gradually diminishes at each successive level thereafter. In organisations following this type of an organisation structure there are no gaps in the communication process, thereby ensuring optimum co-ordination.
Line organisation is applicable and can reap good results in the following types of organisations:
1. Small-scale organisations.
2. Organisations with routine type and simple activities.
3. Organisations which are into a line of business or into the process of manufacturing of a continuous nature.
4. Organisations using modern and automated machineries.
5. Organisations where labour management relationships are relatively simple.
6. Organisations with disciplined work force.
Features of Line Organisation:
1. It is the simplest form of organisation structure.
2. In this type of structure the flow of authority, orders and instructions takes place from an individual in a higher hierarchical level to one in the lower hierarchical level.
3. On the contrary in this type of organisation accountability flows in an upward direction.
4. In this case the principle of unity of command is strictly followed as every individual in an organisation receives orders from one’s superior only.
5. In a line organisation each department is a self-contained unit and activities of all the departments are well coordinated.
6. The span of management or the number of subordinates working under a superior is limited in case of line organisation.
7. Each line manager has to render both basic and specialized activities.
Advantages of Line Organisation:
1. Simplicity – Owing to simplicity of this type of an organisation structure the extent of task assigned to each employee and to whom they are accountable, is easily comprehensible to the employees.
2. Decision making – Line organisation ensures faster decision making as authority, responsibility and relationships are predefined and line executives are empowered to take decisions in their own area of operation without consulting others.
3. Unity of command – Line organisation creates unity of command, which implies that every employee is accountable to only one superior from whom he/she has to receive orders and instructions. This promotes unity of control.
4. Fixed responsibility – In the line organisation responsibility of each and ever employee is pre-determined and fixed. Every employee has complete knowledge about who is responsible to him/her and to whom he/she is responsible.
5. Faster communication – Both upwards and downwards communication channels are pre-determined. Hence, communication is fast in line organisations.
6. Maintenance of discipline – In this type of an organisation every employee is under the direct supervision of a superior, therefore better discipline can be maintained in the organisation.
7. Effective control – Superiors can effectively control their subordinates as the span of control in this type of an organisation is limited.
8. Greater adaptability – Line organisations have greater adaptability to changes in the business environmental factors owing to their simple set up and prompt decision making abilities of the line managers.
Disadvantages of Line Organisation:
1. Lack of specialization – Line managers cannot be expected to possess expert knowledge in every aspect of business of an organisation. Hence, operational effectiveness and quality of decision making may suffer as there is no scope for managerial specialisation.
2. Excessive work load – Most of the line managers are overloaded with routine type functions and so they may not be in a position to excel in their area of operation.
3. Lack of initiative – In the line organisation the top management has the highest authority and line managers have a part of this authority in their hands, as is delegated to them. Due to this line managers may lack adequate initiative to motivate their subordinates.
4. Scope for favoritism – In this type of organisation the line manager is the only person entrusted with the responsibility of the affairs of a particular department. Hence, chances of favoritism and nepotism are high.
5. Low-morale – Here, grievances and suggestions of the subordinates are not much cared for, since communication in this type of organisation is mostly one way. This lowers the morale of the subordinates.
6. Lack of co-ordination – Line managers concentrate more on the performance of their respective departments only. This leads to lack of co-ordination between the different departments and team spirit is lost.
7. Greater concentration of authority – Concentration of authority in the hands of the line managers may lead to misuse of authority. They may become autocratic leaders. Hence, organisations may have to bear consequences of any error in decision making by the line managers owing to concentration of authority.
Type # 2. Staff or Functional Organisation:
With the growth in operations of any organisation, it becomes increasingly difficult for the line managers to efficiently look after all the activities of their respective departments. To resolve this problem F. W. Taylor proposed the concept of staff organisation.
Under the staff organisation structure the various functional areas of a business like production, finance, marketing, human resource, etc. are organized as a separate department. Thereafter, each functional area or department is headed by a specialist or expert of the respective field.
This functional head enjoys authority over all employees of the different departments or functional areas of the organisation in context to their area of concern.
Suitability of Functional Organisation:
Functional organisation structure can be suitably applied in the following types of organisation:
1. Large-scale organisations with one product line
2. Organisations which require functional specialisation
3. Organisations where services of functional specialists are required
4. Organisations which practice decentralized authority.
Features of Functional Organisation:
1. In the functional organisation structure organisational activities are at first broadly divided on the basis of different functions and then departments are formed.
2. Each department is headed by a manager who is an expert in that particular area of function.
3. Functional head enjoys ultimate authority over the particular area of function, irrespective of the departments where the function is performed.
4. Principle of unity of command is not applicable to functional organisations as in this case subordinates get instructions from both their immediate superiors and from the functional managers.
5. There is greater organisational complexity as the functional experts work in a coordinated way on the one hand and on the other hand they have authority over all the workers.
Advantages of Functional Organisation:
1. Benefits of specialization – Functional organisations make use of specialized knowledge of experts and hence can reap the benefits from it.
2. Faster decision making – The decision making process is faster in functional organisations as decision making is centralized and rests with the functional heads.
3. Increase in efficiency – Operational efficiency is ensured as workers get an opportunity to work under the supervision of experts who possess greater competency.
4. Scope for growth – There is greater scope for growth, and hence market expansion of functional organisations, as they are able to operate under the supervision of experts.
5. Economy – Functional organisations are able to reap several economies of operation. With increased specialisation, on one hand production increases and on the other hand resource utilization is optimized.
6. Employee morale – In this type of organisation structure employee morale is boosted as employees get an opportunity to make suggestions for improvement of work.
7. Flexible – The functional organisation structure is open to changes in the organisation.
Disadvantages of Functional Organisation:
1. Complex relationships – In functional organisation complexity of relationships arise, as every employee is to report to a number of functional experts as well as to their respective departmental heads at the same time.
2. Unity of command – In this type of organisation structure every employee is accountable to a multiple number of superiors, simultaneously. Thus, the principle of unity of command is violated.
3. Ineffective co-ordination – Existence of several experts may create problem of co-ordination.
4. Lack of responsibility – Fixation of responsibility is difficult in this type of an organisation structure. Thus, it becomes difficult to identify any particular employee for non-completion of a task. So the situation in the organisation becomes rather chaotic.
5. Lack of flexibility – Employees in this type of an organisation lose their flexibility to handle different types of work. They are trained to do a particular task and they repeatedly perform it in that particular department only.
6. Lack of discipline – In the organisation where there are multiple lines of command there is always a lack of discipline.
7. Expensive – Employing a large number of functional experts prove to be an expensive proposition for this type of an organisation.
8. Conflicts – Difference of opinions among the line and staff managers may cause conflicts hindering the smooth operation of the organisation.
Type # 3. Line and Staff Organisation:
This structure evolved to strike a balance between the line organisation structure and the staff organisation structure and to do away with the limitations inherent in these types of organisation structure. The line and staff organisation is structurally identical to that of the line organisation, but, functional officers are present to give expert advice to the line officers or departmental heads enabling them to discharge their responsibilities effectively. However, the functional officers have an entirely advisory role and execution of the advices rests solely with the line officers.
Suitability of Line and Staff Organisation:
Line and staff organisation structure is applicable to the following types of organisations:
1. Large-scale organisations
2. Organisations which require great extent of specialisation
3. Organisations which intend to diversify
4. Organisations which require services of experts to respond to the ever changing and dynamic business needs
Features of Line and Staff Organisation:
1. Two types of relationships – In this type of organisation structure there is coexistence of the line officers and the staff officers.
2. Separation of planning from execution – In the line and staff organisation structure, planning is done by the staff officers and execution of the plans is left with the line officers.
3. Extent of authority – Staff officers have the authority to advice the line officers.
4. Extent of responsibility – Line officers have the responsibility of actualizing organisational targets, while staff officers have the responsibility of supporting the line officers with their expert knowledge and guidance.
5. Independent work – There is no superior-subordinate relationship between the line officers and the staff officers. They work independently.
6. Role – Line officers have the role of commanding their subordinates to ensure achievement of organisational targets and staff officers have an advisory role.
Advantages of Line and Staff Organisation:
1. Specialisation – The line and staff organisation structure is able to get the benefits of specialisation as the line officers concentrate on the execution of tasks only, while the staff officers concentrate on advising and planning.
2. Increase in efficiency – Line managers’ efficiency improve as they are able to get help from the staff officers who have expert knowledge in their respective area of operation.
3. Reduction in work load – Line managers’ work load is reduced to a great extent as activities of greater managerial significance is handled by the staff managers.
4. Greater discipline – The line and staff organisation structure ensures greater discipline among all and hence a business environment that is conducive to progress. Discipline is possible due to existence of a direct chain of command and as there is no overlapping of activity. Line managers pass orders to the workers for completion of a task and staff officers do not interfere in this context.
5. Better decision making – Line managers are in a better position to take correct decisions as they can utilize the expertise and analytical skills of the staff officers, who advices them on different matters.
6. Providing scope for career advancement – The line and staff organisation leads to creation of a large number of posts due to separation of planning from execution. Thus, able employees have a scope for career advancement
7. Opportunities for exploring creativity – The staff managers of the different functional areas encourage research and development. As a result of this, the employees get a scope for exploring their creativity the results of which can be reaped by the organisation in the form of innovations.
Disadvantages of Line and Staff Organisation:
1. Line and staff conflict – On many occasions the line and staff officers may have difference of opinion among themselves. Furthermore, at times, the line officers may reject the recommendations given by the staff officers without assigning any specific reason. This may pose a hindrance to their harmonious coexistence.
2. Lack of creativity of the line officers – Since the line officers always look forward to the staff officers for their advices, their own creativity is lost.
3. Lack of responsibility of staff officers – In this type of an organisation structure, staff officers may lack seriousness to perform well as they know, the ultimate responsibility for non-performance of an organisation lies on the line officers.
4. Expensive – Setting up of a line and staff organisation entails greater expenditure for the organisation as two different sets of personnel have to be recruited in the organisation.
5. Lack of co-ordination – There may be a lack of co-ordination in this type of an organisation due to the complex organisation structure. There is lack of clarity regarding the line of authority between the line officers and the staff officers due to which co-ordination may suffer.
6. Lack of cooperation – The line officers and the staff officers may lack cooperation. That may lead to a strained relationship between them. Ultimately this leads to lack of co-ordination between their activities.
7. Delay in organisational progress – The staff officers of the organisation may suffer from a sense of being insignificant in the organisation as they are in no position to assert their opinions on the line officers. Thus, their sense of belonging to the organisation suffers and they do not actively participate for the organisation’s progress.
Conflict between Line and Staff Organisation:
Due to difference in opinions and beliefs conflicts arise. These are unavoidable in any group or organisation. Conflicts are unavoidable particularly in the line and staff organisation .structure as the relationship between line managers and staff officers is such that fixation of responsibility becomes difficult. However, harmonious coexistence of both the line officers and the staff officers are necessary for attaining organisational targets.
1. Reluctance to Shoulder Responsibility:
Both the line managers and staff officers are reluctant to shoulder their own responsibilities diligently. Both are eager to devise ways and means to pass their own responsibility to the other.
2. Lack of Acceptance:
Both categories of personnel are unwilling to accept each other. While the line managers complain about undue interference of the staff officers; the staff officers express resentment regarding non-acceptance of their recommendations by the line managers.
3. Delegation of Authority:
Conflict arises between the line managers and staff officers, as the line managers feel that the existence of staff officers will reduce their power or authority.
4. Problem of Practical Application:
Staff officers have profound theoretical knowledge and experience, but they lack practical exposure to the organisational issues. Thus, line managers often complain about the non-applicability of the suggestions recommended by the staff officers.
5. Unutilized Staff Officers:
When the recommendations of the staff officers are not continuously considered by the line managers, staff officers feel rejected and ignored. As a result, they may refrain from actively participating and contributing towards organisational progress.
6. Disparity between Authority and Responsibility:
Conflicts arise due to unequal distribution of authority and responsibility among the line managers and the staff officers. Staff officers enjoy authority but have no responsibility. The ultimate responsibility for non-completion of a task rests on the line managers. At the same time, the staff officers feel frustrated as their scope of work is limited to advising only, but they do not have the power of execution.
Measures to Overcome the Conflicts:
1. Clearly Defining Authority Relationships:
The scope of work of the line managers and the staff officers should be clearly defined to them. Line managers must respect the staff officers and rely on their expertise and staff officers should be made aware about the real-life organisational issues, for better applicability of their suggestions.
2. Optimum Utilization of Staff Officers:
Organisational efforts must be taken to ensure optimum utilization of the staff officers. Line managers must be made to change their mindset and accept the presence of the staff officers with greater willingness. Staff officers should be well integrated with the operations of the organisation.
3. Establishment of a Suitable Organisation Structure:
The organisation should be so structured that harmonious coexistence of both the line managers and staff officers is possible. There must be mutual respect between them and they must understand that their efforts complement each other, to steer the organisation in the right direction.
4. Working by Rotation:
Conflicts can be resolved by creating better understanding between the line managers and the staff officers. Better understanding can be promoted by encouraging working by rotation, so that they are able to understand the position and problems at work.