Organisation Chart

Organisation structure of a company can be shown in a chart. Such chart indicates how different departments are interlinked on the basis of authority and responsibility. It is a simple diagrammatic method of describing an Organisation structure. It indicates how the departments are linked together on the basis of authority and responsibility. Such Organisation chart provides information of the Organisation structure at a glance. Organisation chart is like a blue print of a building. It indicates the number and types of departments, superior-subordinate relationship, chain of command and communication.

Definition of Organisation Chart.

According to George Terry, Organisation chart is "a diagrammatical form which shows important aspects of an Organisation, including the major functions and their respective relationships, the channels of supervision and the relative authority of each employee who is in-charge of each respective function".

Features of Organisation Chart

The definition noted above indicates the following features of Organisation charts:

1. Organisation chart is a diagrammatical presentation.
2. It represents the formal Organisation structure.
3. It shows the lines of authority in the Organisation.
4. It indicates the channel of communication.
5. It indicates who supervises whom and how various units are inter-related. 

Advantages of Organisational Chart.

1. Brings clarity to the Organisation: The very process of preparing a chart makes the executive think more clearly about the Organisation relationships.
2. Provides dear picture of the Organisation: Once the charts are prepared, they provide lot of information about the Organisation, both to the members of the Organisation as well as to the outsiders. This information relates to number and types of departments, superior subordinate relationships, chain of command and communication and job titles of each employee.
3. Facilitates training of employees: Organisation charts are useful in familiarizing and training new employees.
4. Ensures organizational changes: Organisation charts provide a starting point for planning organizational changes after having discovered the weaknesses of the existing structure.
5. Provides quick understanding: A chart serves as a better method of visualizing an Organisation than a lengthy written description of it. 

Limitations of Organisational Chart

1. Details are not provided: The Organisation chart does not provide all the details of Organisation structure created. For example, the chart will show the line of authority but not the extent of authority.
2. Informal relationship is not shown: The chart fails to give details of informal relationship available in a firm. In fact, human relationships cannot be shown on a chart.
3. Updated position is not available: The chart shows the position of Organisation structure when it was formed. It gives a static picture of the Organisation. Changes made thereafter may not be available in such charts.
4. Fosters buck-passing: The charts tend to foster 'buck-passing' and emphasize only formal channels of communication.
5. Lacks flexibility: Organisation chart lacks an element of flexibility. Such chart also brings an element of rigidity in the working of an Organisation.
6. Creates rank consciousness: An Organisation chart leads to rank consciousness among the staff. It destroys team spirit and collective approach on the part of the staff. 

Types of Organisation Chart

1. Vertical chart: One of the most popular methods is the vertical chart in which the highest job is shown at the top with other jobs shown in a descending order, connected by lines to show the authority and the line of communication.
2. Horizontal chart: This chart shows the Organisation structure in the form of a pyramid.
3. Circular chart: The top management is shown at the centre of the circle and other management levels are shown in concentric circles.
4. Departmental chart: This chart is devoted exclusively to particular department and gives details of relationships, authority, responsibility, etc. within the department. 

Uses of Organisation Chart

1. An Organisation chart facilitates ready reference. It enables the management to find out different positions of authority and their relationships in the Organisation structure.
2. It provides proper guidance to managers in executing, their assignments and helps them to avoid overlapping and duplication of work.
3. It provides complete information to understand the character of an Organisation.
4. An Organisation chart indicates ways to better utilisation of available manpower.
5. An organisation chart points out the consistencies and deficiencies of an Organisation and enables the management to correct them.

Line and Staff Organisation Structure

In the line and staff Organisation, line executives and staff (specialists) are combined together. The line executives are 'doers' whereas staff refers to experts and act as 'thinkers'. The following chart shows line and staff Organisation structure:

The line executives are concerned with the execution of plans and Policies. They do their best to achieve the organizational objectives. The staff concentrates their attention on research and planning activities. They are experts and conduct advisory functions.

Staff specialists are regarded as 'thinkers" while execution function is given to line executives who are "doers". The staff is supportive to line. The staff specialists offer guidance and cooperation to line executives for achieving organizational objectives. This reduces the burden of functions on the line executives and raises overall efficiency of the Organisation. For avoiding the conflicts between line and staff, there should be clear demarcation between the line and staff functions. This avoids overlapping of functions and possible conflicts. In short, the line and staff functions are different but are supportive and can give positive results if adjusted properly i.e. by avoiding the conflicts. They suggest/recommend but have no power to command the line executive. However, their advice is normally accepted because of their status in the Organisation.

According to Louis Allen, "Line refers to those positions and elements of the Organisation, which have the responsibility and authority and are accountable for accomplishment of primary objectives. Staff elements are those which have responsibility and authority for providing advice and service to the line in attainment of objectives".

Characteristics of Line and Staff Organisation

1.   Planning and execution: There are two aspects of administration in this Organisation, viz., planning and execution.

2.   Combining line and staff: Planning function is entrusted to staff specialists who are 'thinkers' while execution function is given to line executives who are 'doers'. The staff is supportive to line.

3. Role of authority: The line managers have authority to take decisions as they are concerned with actual production. The staff officers lack such authority.
4. Guidance from staff: The staff provides guidance and advice to line executives when asked for. Moreover, line executives may or may not act as per the guidance offered.
5. Exercising control: The staff manager has authority over subordinates working in his department.
6. Scope for specialization: There is wide scope for specialization in this Organisation as planning work is given to staff and execution work is given to line executives.
7. Possibility of conflicts: Conflicts between line and staff executives are quite common in this Organisation but can be minimized through special measures.
8. Suitability: Line and staff Organisation structure is suitable to large-scale business activities.

Merits of Line and Staff Organisation

1.   Less burden on executives: Line executives get the assistance of staff specialists.This reduces the burden of tine executives. This raises overall efficiency and facilitates the growth and expansion of an enterprise.

2. Services of experts available: The benefits of services of experts are provided to line managers. Highly qualified experts are appointed and they offer guidance to line executives.
3. Sound decision-making: Line and staff Organisation facilitates sound management decisions because of the services of experts and specialists. The decisions are also taken in a democratic method i.e. in consultation with the experts.
4. Limited tension on line managers: The pressure of work of line bosses is brought down as they are concerned only with production management.
5. Benefits of specialization: There is division of work and specialization in this Organisation. Naturally, the benefits of division of work and specialization are easily available.
6. Training opportunities to employees: Better opportunities of advancement are provided to workers. The scope for learning and training for promotions are available.

Demerits of Line and Staff Organisation

1.      Delay in decision-making: The process of decision-making is delayed, as line executives have to consult staff experts before finalizing the decisions. The decisions of line managers are likely to be delayed due to this lengthy procedure.

2. Buck passing among executives: The line bosses are concerned with actual execution of work. However, they depend on staff experts for guidance. If something goes wrong, the attempt is made to pass on the blame by one party to the other. Thus, there is shifting of responsibility or buck-passing.
3. Conflicts between line and staff executives: In this Organisation, quarrels and conflicts between line managers and staff specialists are quite common. The line managers are generally not interested in the advice offered by experts. Secondly, specialists feel that the line bosses lack knowledge of new ideas. Such conflicts lead to bitterness.
4. Costly Organisation: Line and staff Organisation is a costly Organisation as the line executives are supported by highly paid staff executives who are experts. All this adds to the overhead expenses and the cost of production increases.
5. Complicated operation: This Organisation is too complicated in actual operation because of dual authority, division of functions and too much dependence on staff. The unity of command principle is violated.
6. Internal discipline is affected adversely: The internal discipline is likely to be affected adversely due to decentralization and division of loyalty of subordinates.

Conflict between Line and Staff Managers

·         One serious problem in the line and staff Organisation is the possible conflict between the line executives and staff specialists.

·         Line executives have complaints against staff officers and staff officers have complaints against line executives.

Functional Organisation Structure

F.W.Taylor, founder of scientific management, conceived the functional Organisation structure. According to him, it is unscientific to overload a foramen with the entire responsibility of running a department. He introduced a system of functional foremanship in his Organisation. In his functional foremanship, there will be eight specialists' foremen who will be required to guide, direct and control the work. Workers at the plant level will have to follow the instructions of all these eight specialists called bosses.

In the functional Organisation suggested by F.W.Taylor, the job of management is divided according to specialization. As a result, functional departments are created. For example, the personnel department will look after the recruitment, selection, training, wage payment, etc. of all persons of the Organisation. Similar will be the position of other departments like production, sales, etc. The scope of work of the department is limited but the area of authority is unlimited.

In the functional Organisation structure, there will be separation of planning of work and execution of the plan prepared. The basis of division is the function and naturally the Organisation structure created will be called "Functional Organisation".

In the functional foremanship, there will be eight specialists/functional heads called bosses. Out of eight bosses, four bosses will be at the planning level and the remaining four will be at the slop floor level.

Foremen At Planning Level (Planning Dept.)

1. Time and Cost Clerk: He is concerned with preparing standard time for the completion of certain piece of work and compiling the cost of that work.
2. Instruction Card Clerk: He lays down the exact method of doing the work. He specifies the tools to be used for conducting the production and also gives other instructions on the instruction cards prepared by him.
3. Route Clerk: The route clerk lays down the exact route through which each and every piece of work should move through various stages till completion. He decides the production schedule and the sequence of steps by which the production process is to move.
4. Shop Disciplinarian: He is concerned with the discipline, insubordination, violation of rules of discipline and absenteeism. All cases relating to these matters will be managed by the shop disciplinarian.

 Foremen At Shop Floor Level (Shop Floor)

1. Gang Boss:  He assembles and sets up various machines; and tools for a particular piece of work. He is in-charge of assembling line of production.
2. Speed Boss: He is concerned with the speeding of machines used for production. He keeps proper speed of the machines and see that workers complete the production work as per the schedule time.
3. Repair Boss: The repair boss looks after the proper maintenance of machines, tools and equipments required during the production process.
4. Inspector: The inspector controls quality of the products by keeping adequate check/control when the production work is in progress.
   
   
   
   

     Merits of Functional Organisation Structure

1. Facilitates specialization: Functional Organisation structure facilitates division of work and specialization. Each boss has specialized knowledge of his functional area. He is in a better position to guide and help the workers.
2. Benefits of large-scale operations: Functional Organisation offers the benefit of economy of large-scale operation. In this Organisation, one administrative unit manufactures all products. The available machinery, equipment and facilities are used fully for large-scale production.
3. Facilitates effective coordination: Functional Organisation facilitates effective coordination within the function. This is possible as one boss is in-charge of a particular function and he looks after all activities, which come within that function.
4. Operational flexibility: Functional Organisation possesses operational flexibility. Necessary changes can be introduced easily to suit the needs of the situation without any adverse effect on the efficiency.
5. Ensures effective supervision: Functional Organisation facilitates effective supervision by the functional heads and foremen. Due to specialization, they concentrate on the specific functional area and also keep effective supervision on their subordinates.   

Demerits of Functional Organisation Structure

1. Absence of unity of command: Unity of command is absent in the functional Organisation as each worker gets orders and instructions from several bosses. 
2. Fixing responsibility is difficult: In functional Organisation, responsibility is difficult to fix on a specific person. This is because the responsibility itself is divided among many.
3. Unsuitable to non-manufacturing activities: Functional Organisation can be introduced in the case of manufacturing activities. However, its application to non-manufacturing activities such as marketing, etc. has not been successful.
4. Costly: Functional Organisation is costly, as more specialists are required to be appointed.
5. Creates confusion among workers: Functional Organisation is based on specialization as function is taken as a base for dividing the work. The authority is overlapping the responsibility is divided. This confuses workers.
6. Conflicts among foremen, delays in decision-making and limited discipline within the departments are some more demerits of functional Organisation.

Line Organisation Structure

Line Organisation (also called Military/Scalar Organisation) is the oldest and the simplest form of internal Organisation structure. It was first developed by the Roman army and later adopted by armies all over the world. Factory owners also used line Organisation structure in its purest form in the nineteenth century in England.

In the line Organisation, the line of authority moves directly from the top level to the lowest level in a step-by-step manner. It is straight and vertical. The top-level management takes all major decisions and issues directions for actual execution. The general manager, for example, issues order to various departmental managers. Thereafter, the departmental manager issues instructions to works manager. The works manager will issue instructions to foreman. In this manner, the orders and instructions will be issued to the workers working at the lowest level. Thus authority moves downward and also step-by-step. The responsibility, on the other hand, moves in the upward direction.

Line Organisation structure is given in the following chart:

Advantages of Line Organisation Structure

1. Simplicity: Line Organisation structure is easy to understand and follow by superiors and subordinates. It is simple and clear as regards authority and accountability.
2. Prompt decisions: Line Organisation facilitates prompt decision-making at all levels as the authority given is clear and complete.
3. Discipline: It brings discipline in the Organisation due to unity of command, delegation of authority and direct accountability.
4. Economical: Line Organisation is economical as experts are not appointed.
5. Attraction to talented persons: Line Organisation brings out talented workers and develops in them quality of leadership. It offers opportunities of self-development to employees.
6. Quick communication, high efficiency, flexibility and high employee morale are some more advantages of line Organisation structure.

Limitations of Line Organisation Structure

1. Heavy burden on line executives: The line executives are given too many duties and responsibilities. Even the quality of the decisions of executives may suffer due to heavy burden of duties and responsibilities.
2. Non-availability of services of experts: There is absence of skilled experts in line organisation. Expert assistance is not available promptly when needed by line executives.
3. Favoritism: There is wide scope for favoritism and nepotism in the line organisation. Leadership of departmental executive is autocratic due to heavy concentration of powers. He may favour some employees at the cost of others.
4. Too much dependence on limited executives: In the line organisation, all powers are concentrated in the hands of a few executives. Naturally, the success and stability of the entire organisation depends on their personal skill, initiative and interest. Special difficulties arise when one executive is to be transferred/replaced/promoted.
5. Rigidity: There is rigidity in the working of line organisation.
6. Delays in communication, limited freedom to employees and unsuitability to modern large business units are some more demerits of line Organisation.

Types Of Organisation Structure

Organisation structure is defined as "The logical arrangement of task and the network of relationships and roles among the various positions established to carry out the activities necessary to achieve the predetermined objectives of business". Internal Organisation structure constitutes the arteries and veins through which the blood of work flows in the body of Organisation.

Internal Organisation structures can be broadly classified into the following types/forms:

1. Line Organisation structure.
2. Functional Organisation structure.
3. Line and staff Organisation structure.
4. Product Organisation structure.
5. Committee and Matrix Organisation structure.

These structures will be discussed in the following posts

Delegation Vs Decentralization

Basis	Delegation	Decentralization
Meaning	Managers delegate some of their function and authority to their subordinates.	Right to take decisions is shared by top management and other level of management.
Scope	Scope of delegation is limited as superior delegates the powers to the subordinates on individual bases.	Scope is wide as the decision making is shared by the subordinates also.
Responsibility	Responsibility remains of the managers and cannot be delegated	Responsibility is also delegated to subordinates.
Freedom of Work	Freedom is not given to the subordinates as they have to work as per the instructions of their superiors.	Freedom to work can be maintained by subordinates as they are free to take decision and to implement it.
Nature	It is a routine function	It is an important decision of an enterprise.
Need on purpose	Delegation is important in all concerns whether big or small. No enterprises can work without delegation.	Decentralization becomes more important in large concerns and it depends upon the decision made by the enterprise, it is not compulsory.
Grant of Authority	The authority is granted by one individual to another.	It is a systematic act which takes place at all levels and at all functions in a concern.
Grant of Responsibility	Responsibility cannot be delegated	Authority with responsibility is delegated to subordinates.
Degree	Degree of delegation varies from concern to concern and department to department.	Decentralization is total by nature. It spreads throughout the organization i.e. at all levels and all functions
Process	Delegation is a process which explains superior subordinates relationship	It is an outcome which explains relationship between top management and all other departments.
Essentiality	Delegation is essential of all kinds of concerns	Decentralization is a decisions function by nature.
Significance	Delegation is essential for creating the organization	Decentralization is an optional policy at the discretion of top management.
Withdrawal	Delegated authority can be taken back.	It is considered as a general policy of top management and is applicable to all departments.
Freedom of Action	Very little freedom to the subordinates	Considerable freedom

Departmentation

First task in designing an organization structure is the identification of activities and to group them properly. The process of grouping activities is commonly known as departmentation.

Need and importance of departmentalization

The basic need for departmentation arises because of specialization of work and the limitation on the number of subordinates controlled by a superior.

1.                  Advantages of specialization :

Thus if the managerial function is conceived as a set of activities facilitating the work of organization, these activities can be carried out more efficiently and effectively through the division of work leading to a specialization of managerial function.

2.                  Fixation of responsibility

Departmentation helps in fixing the responsibility and consequently accountability for the results.

3.                  Developed of managers

Departmentation helps in the development of managers.

4.                  Facility in Appraisal

Managerial performance can  be measured when the area of activities can be specified and standards in respect of these can fixed. Depertmentation provides helps in both these areas.

5.   Feeling of Autonomy :

Deprtmentation provides motivation by developing feeling of autonomy to the extent possible. There are several bases of departmentation. The more commonly used bases are function, produt, territory, process, customer, time etc. Some of these bases are internal-operation – oriented like function, process, time while others like product, territory and customer are output-oriented.

Choice of bases for departmentation

The selection of bases for departemntation involves a consideration of the relative advantages of each base for the organization. Ideally speaking, a suitable basis of departmentation is one which facilitates the performance of organizational functions efficiently and effectively so that its objective are achieved.

1.                  Specialization:

The basis of departmentation should reflect the specialization in performing the work.

2.                  Coordination:

Coordination involves that all the related activities are performed in a way that their performance is synchronized so that each activity contributes to others.

3.                  Economy

A balance should be maintained between the cost of creating a department and its contribution. The existence of a department is desirable only when it contributes more than its cost.

4.                  Focus on Result

Those activities which contribute to the achievement to these results should be given proper attention.

5.                  Local Conditions :

Local requirements of the organization should also the taken into account while creating departments.

6.                  Human Considerations :

Departments should be created on the basis of availability of personnel, their aspirations and value systems, informal work groups and attitudes of people towards various forms of organization structure.

Various Methods of Departmentation

1. Functional Departmentalization. (it groups jobs by functions performed. It can be used in all kinds of organizations; it depends on the goals each of them wants to achieve.)

The grouping of common or homogeneous activities to form an organization unit is known as functional departmentalization. Functional departmentalization is the most widely used basis for organizing activities and is present almost in every large organization at some level.

Functional departmentalization is most commonly used because it offers certain advantages which include advantages of specialization, ensuring performance of activities necessary for the achievement of organizational objectives, elimination of un -necessary activities, easier control over functions, easier way for pinpointing training need of the managers and maintaining the relative importance of functions in the organization.

 

                          Different aspects on this type of departmentalization:

Positive Aspects	Negative Aspects
o                                Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations o                                Coordination within functional area o                                In-depth specialization	o                                Poor communication across functional areas o                                Limited view of organizational goals

2. Product Departmentalization. (It groups jobs by product line. Each manager is responsible of an area within the organization depending of his/her specialization)
 

Product departmentalization involves the grouping together of all activities necessary to manufacture a product or product line. Product departmentalization is preferred for product expansion and diversification when manufacturing and marketing characteristics of each product are of primary concern. Product departmentalization offers several advantages places attention to product lines, reduces problems of coordination for different products, provides opportunities for further diversification and expansion of organization and provides product specialization necessary for managers specially when each product is different from other.

                        Different aspects on this type of departmentalization:

Positive Aspects	Negative Aspects
o                                Allows specialization in particular products and services o                                Managers can become experts in their industry o                                Closer to customers	o                                Duplication of functions o                                Limited view of organizational goals

3. Geographical Departmentalization. It groups jobs on the basis of territory or geography.

Territorial or geographical departmentalization is specially useful to large-sized organizations having activities which are physically  or geographically spread such as banking, insurance, transportation etc., Territorial departmentalization provides certain efficiency in operation. Local factors such as customers, culture, styles, preferences etc., always affect organizational functioning.

                       Different aspects on this type of departmentalization:

Positive Aspects	Negative Aspects
o                                More effective and efficient handling of specific regional issues that arise o                                Serve needs of unique geographic markets better	o                                Duplication of functions o                                Can feel isolated from other organizational areas

 4. Process Departmentalization. (It groups on the basis of product or customer flow.)

In  process departmentalization, processes involved in production or various types of equipments used are taken as basis for departmentalization. When the production activities involve the use of several distinctive processes, these can be used as the base for grouping of activities. Such activities may be textiles, oil production etc., The process are set in such a way that a series of operations is feasible making operations economic. It provides advantages of specialization required at each level of total processes, maintenance of plant can be done in better way, and manpower can be utilized effectively.

                         Different aspects on this type of departmentalization:

Positive Aspects	Negative Aspects
o                                More efficient flow of work activities	o                                Can only be used with certain types of products

5. Customer Departmentalization. (It groups jobs on the basis of common customers)

Customer based departmentalization is  basically market – oriented in which departments are created around the markets served or around marketing channels. The basic idea of this departmentalization is to provide services to clearly identified groups of customers. Each group of customers has different purchase behavior, payment schedule, demand pattern etc., Therefore they can be attracted to the organization’s business by satisfying them by providing services, payment schedule demand pattern etc.

                          
                              Different aspects on this type of departmentalization:

Positive Aspects	Negative Aspects
o                                Customers' needs and problems can be met by specialists	o                                Duplication of functions o                                Limited view of organizational goals