‘Any thing that is organized’ is organization. Organization is the back-bone of management. Without efficient organization, no management can perform its functions smoothly .Elements of organization are:

i. Organization is a group activity.

ii. Organization consists of assigning duties, granting of authority, fixing responsibility and co-coordinating activities .

iii. Organization is the means to achieve the objectives of the enterprise.

The term organization is used in management in two different ways:

i. As a structure , and

ii. As a process.

ORGANIZATION AS A STRUCTURE

According to this view organization as structure means coordinated relationship. As a structure, organization is the network of horizontal and vertical relationships among the members of a group designed to accomplish some common objectives

Organization as structure means the classified relationship between formal positions and jobs. It is static, because it establishes relationship between various positions in the enterprise instead of maintaining cordial relationship between persons occupying position.

As a systematic combination of people, functions and facilities, organization structure provides the mechanism within which people work together for accomplishment of desired objectives.

The formal structure of an organization is two-dimensional –horizontal and vertical. The horizontal dimension depicts differentiation of jobs into departments or divisions. The vertical dimension reflects the hierarchy of authority relationships with a number of levels from top to bottom. It is a structure of duties and responsibilities which are necessary for the achievement of objectives.

An organization structure should be designed to clarify who is to do what tasks and who is responsible for what results, to remove obstacles to performance caused by confusion and uncertainty of assignment, and to furnish decision making and communications networks reflecting and supporting enterprise objectives.

Thus, according to James D. Mooney, organization is the form of every human association for the attainment of a common purpose. Therefore organization structure is the skeleton framework of business.

Organization Process As a basic function of management ,organizing is the continuous and dynamic process of creating harmonious authority-responsibility relationships between specialized units .

Thus organizing is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them. In performing the organizing function ,the manager defines, departmentalizes and assigns activities so that they can be most effectively executed.

Organization as process consists of the following five functions:

i. Dividing functions into manageable units i.e. departments, sections and jobs.

ii. Grouping of identical functions / activities.

iii. Assigning duties to the right persons.

iv. Granting appropriate authority to the employees and also fixing their responsibilities.

v. Defining the mutual relationship between employees.

According to Koontz and O’Donnell, organizing involves “the establishment of an intentional structure of roles by identifying and listing the activity required to the purpose of an enterprise , the grouping of these activities , the assignment of such groups of activities to a manager , the delegating of authority to carry them out, and provision for coordination of authority relationship horizontally and vertically in the organization structure.”

“Organization is any form of human association for the attainment of a common purpose.” Mooney and Railey

‘Organization is a system of cooperative activities of two or more persons.”

Chester Barnard

“Organization is the grouping of activities necessary to attain enterprise objectives and the assignment of each grouping to a manager with authority necessary to supervise it.” Koontz and O’Donnell

“Organization is the arranging or combining of resources to achieve an economic betterment with the resources available to achieve the maximum result , or profit with the best least possible expenditure of resources.” F.J. Wright

Organization thus is an arrangement for internal administration of the enterprise. Organizing is the process of determining the total activities to achieve a given objectives.

Different authors look at the word ‘Organization’ from their own angle. One thing which is common in all the view points is that organization is the establishment of authority relationship among persons so that it helps in the achievement of organizational objectives. The main characteristics of organization are as follows:

i. Organization leads to Division of Work.

ii. Organization brings Co-ordination.

iii. Organization provides Common Objectives.

iv. Organization facilitates Co-operative Relationship.

v. Organization leads to well-defined Authority Responsibility relationship.

vi. Resources

vii. Environment

viii. Rules and regulations.

Organization structure is not static frame. It undergoes change with changes in the external environment and internal conditions. While framing the structure the factors like goals, strategy, size ,people, technology and environment should be considered.

Organization is the foundation upon which the whole structure of management is built. It is a backbone of sound management. A sound organization structure contributes to the success of the enterprise in the following ways:

1) Facilitates Administration

2) Facilitates growth and diversification.

3) Permits optimum use of technological improvements.

4) Encourages use of human beings.

5) Stimulates creativity.

6) Encourages good human relations.

7) Ensures continuity of enterprise.

8) Fosters coordination

Organization Process have got these steps:

i. Identifying the work – The first step is to identify and detail all the work that must be done to achieve the organizational objectives. Each organization will achieve its objectives in a different way. Therefore, it must identify the tasks which must be performed for the purpose.

ii. Division of Work –The need of setting up an organization will arise because the tasks to be accomplished by it cannot be performed by a single individual. The total workload of the organization is divided into various functions, sub-functions and further sub functions such that these may be logically and comfortably performed by one person or group of persons.

iii. Grouping of Similar Activities – The next step is to group the similar activities and then place each group of them under the charge of specialist individual or a department.

iv. Assignment of Duties –After grouping various activities into manageable units, suitable persons are selected to be assigned each group of activities. The assignment of duties should be appropriate, taking into consideration qualifications and experience, and also the physical capacity of the individual or group.

v. Delegation of Adequate Authority-Assignment of a group of activities to an individual is followed by delegation of appropriate authority to him to discharge his duties.

vi. Defining relationships between Senior and Subordinate- Where two or more persons work together for a common goal , it becomes necessary to define the relationship between them in clear terms. Each person should know who is his superior , from whom he has to take orders and to whom he will have to report. Similarly , each superior should know what authority he has over his subordinates.

vii. To bring Co-ordination among departments and Factors of Production- Individuals and groups within an organization carry out their specialized functions. Sometimes, this may result in conflict between them, which may adversely affect the achievement of organizational goals.

viii.Providing proper physical facilities- It is another one of the most important duty of the organization to provide a required and best physical infrastructure like proper machine proper material best quality of methods and good plant layout and plant design.

IdentificationOf activities

&jobs

DivisionOf work

Grouping of Similar

activities

Assignment Of duties

To bringCoordination&cooperation

Providing proper

Physicalfacilities

Definingrelationships

DelegationOf

Authority

Feedback

The basic principles of organization are as follows;

1. Unity of Objectives- An organization structure is sound when it facilitates the accomplishment of objectives. Therefore, the organization as a whole and every part of it must be geared to the basic objectives of the enterprise.

2. Principle of Specialization: The organization structure should be formulated in such a way that the activities of the enterprise are divided according to the different functions and the same are assigned to persons according to their specialization.

3. Principle of span of control: The span of control should be minimum because there is a limit to the number of person that can be effectively supervised by one boss.

4. Principle of exception: Only exceptionally complex matter should be referred to the executives for their decision and matters of routine nature should be decided by the subordinates themselves.

5. The Scalar Principle: For making management effective, there should be a clear line of authority from top to bottom of the organization. Every subordinate should know who his superior is and who his subordinates are.

6. The Principle of authority: Authority that is given to the manager enables him to accomplish the objectives of the enterprise. Hence, the authority of each manager should be clearly defined and also it should be equal to the responsibility entrusted to him.

7. Principle of Unity of command: each subordinate should have only one superior and dual subordination should be avoided. Dual subordination may result indiscipline in subordinates, undermining of authority, disorder, delay and confusion.

8. Principle of delegation: The organization structure should provide for the delegation of authority at every level. The authority delegated should be equal to responsibility so as to enable the concerned person to accomplish the task assigned to him by his superior.

9. Principle of Responsibility: The superior should not be allowed to avoid responsibility by delegating authority to his subordinates. It means that superior should be held responsible for the acts of his subordinates to whom he has delegated authority.

10.Principle of Flexibility: The organization structure should be such which should be adaptable to the changing circumstances.

11.Principle of Simplicity: The organization structure should be simple with a minimum number of levels. If the organization structure has a large number of levels, the problem of effective co-ordination and communication may arise.

12.Principle of continuity: The organization structure should be serviceable for a long time. This is possible if it is dynamic and capable of adapting itself to the needs of changing circumstances.

13.Principle of unity of direction: It means for a group of activities having the same objective, there should be one plan and one objective.

14.Principle of efficiency: The structure that is formulated should enable the business concern to function efficiently and achieve its objectives with minimum cost and effort.

Thus, we find that to develop a sound and efficient organization structure, certain principles are necessary . Every manager should have a knowledge of these principles and apply them efficiently.

One of the important components of the organization process is the creation of an appropriate organization structure. The organization structure represents the hierarchical arrangement of various positions in the enterprise. It helps in allocating authority and responsibility formally. But there is no best structure of the organizational relationship which may be suitable , for enterprise has to evolve its own organization structure based on the nature of the activities and business competence of personnel and the philosophy of the management. There are five types of the organization:

a) Line Organization

b) Line & Staff Organization

c) Functional Organization

d) Project or Matrix Organization

e) Committee Organization

Acc. to McFarland, “ Line structure consists of the direct vertical relationship which connect the positions and tasks of each level with those above and below it.”

The concept of the Line organization holds that in any organization derived from a scalar process ,there must be a single head who commands it.

Following is the chart showing the line organization:

Board of Directors

Managing Director

Divisional ManagerEastern

Divisional ManagerWestern

Assistant Manager A Assistant Manager B Assistant Manager C Assistant Manager D

Foreman

Workers Workers

Foreman

The concept of the Line organization holds that in any organization derived from a scalar process ,there must be a single head who commands it.

Following is the chart showing the line organization:

From the above chart, the following special features of the line organization come up:

a. There are many levels of management depending upon the scale of business and decision –making ability of managers. Each level of management has equal rights.

b. There is a vertical flow of authority and responsibility. The lower positions derive authority from the higher positions.

c. There is the unity of command.

d. There is scalar chain in the line organization.

e. There is limit on subordinates under one manager. A manager has control only over the subordinates of his department.

i. Simplicity

ii. Clear-cut division of authority and responsibility.

iii. Strong discipline

iv. Unified control

v. Prompt decisions

vi. Flexibility

i. Heavy burden of work

ii. Concentration of authority

iii. Lack of specialization

iv. Lack of communication

v. Scope for favoritism

The line and staff organization refers to a pattern in which the staff specialists advice the line managers to perform their duties. The main function of the staff is to help the line executives in such activities which require expert and specialist knowledge.

Following are the characteristics of the line and staff organization:

1. Managers are of two types-Line Managers and Staff managers.

2. The line managers perform the functions of decision-making, issuing orders and controlling while the Staff managers perform the functions of advising, assisting and providing expert and specialized services.

3. There is a unity of command.

4. There is a scalar chain.

Board of Directors

Managing Director

Line Position Staff Position

PersonnelManager

FinancialController

ProductionSupervisor

Asst.Sales

Manager

Asst.Sales

Manager

SalesManager

MarketResearch

OfficerProductionManager

IndustrialEngineer

ProductionSupervisor

1. Specialization

2. Encouragement to research and development programmes

3. Balanced decisions

4. Less burden on line managers

1. Confusion

2. Ineffectiveness of the staff

3. Conflict between the line and staff.