Types Of Organization Structure

When there is one man, there is hardly any need for any organization. When the enterprise expands, some pattern of organization should be adopted. Generally, the following are the types of organization.

A. Line Organization

This is the simplest and oldest form of organization. It is also referred as the 'Military' or 'Traditional' or 'Scalar' or 'Hierarchical' form of organization. An important feature of such types of organization is the superior sub-ordinate relationship. In this type of organization authority descends from the top to its bottom level through downward delegation of authority. Sub-ordinates become responsible to their immediate superiors. All decisions and orders are made by the top executives and handed down to sub-ordinates. This type of organization is as that of military administration. The topmost management has full control over the entire enterprise.

Features of Line Organization

1. There is no provision for staff experts.

2. Each subordinate is directly responsible to his superior for the work performance.

3. Every worker is responsible to one executive only.

4. The authority and responsibility of each position is specified.

5. The command is through a straight and unbroken line.

6. The line of authority are vertical flowing from the top to the bottom. 

This form is suitable:

(a) If the business is comparatively small.

(b) If the labour management problems are easy to solve.

(c) If the processes are easily directed.

(d) If the work is of a routine nature. 

Merits of Line Organization

1. It is simple to work.

2. It is economical and effective.

3. It is easy to fix responsibility.

4. It facilitates quick decisions and prompt actions.

5. Quick communication is easy.

6. Discipline can easily be maintained.

7. 'Unity of Command' principle is followed.

8. The hierarchy in management helps in achieving effective coordination.

Demerits of Line Organization

1. The organization is rigid and inflexible.

2. It works on a dictatorial basis.

3. Departmental heads act in their own whims and desires; as such it is difficult to secure co-ordination of the activities of workers and department. 

4. In big business it does not operate satisfactorily.

5. There is excessive work.

6. The emphasis is only on work related activities. 

7. Specialized services by experts is not available. 

8. There is scope of favoritism in the organization. 

There are two types of line organization, that is, (i) Pure and (ii) Departmental.

i. Pure Line Organization

In pure line, similar activities are performed at a particular level. Every employee performs, more or less, the same job. The division of work is simply for the purpose of better control and direction.

ii. Departmental Line Organisation

Under this form of organisation, the entire activities of the organisation are divided into various departments on the basis of some similarity headed by one departmental superintendent. Each department is self-contained unit in itself and is answerable only to the chief executive. (b) 

B. Functional Organisation

The limitations of line organisation have been removed under this system. All types of work of the organisation are grouped and managed by the top executive. There are separate functional departments for major functions of the enterprise, for example personnel dpeartment, sales department, purchase department, finance department, etc. Each department does its function for the entire organisation. Sales department does its function for the whole organisation. Purchase department does its function for the whole enterprise. The functional organisation works through the line organisation. Functional organisation is based on expert knowledge and makes the greatest use of division of labour resulting in high efficiency and specialisation.

Features (Functional Organisation)

1. The whole task of the enterprise is divided into specialised functions.

2. Each function is performed by a specialist.

3. The specialist incharge of a functional department has the authority over all other employees for his function.

4. Specialists operate with considerable independence.

Merits of Functional Organisation

1. Greatest use of division of labour is possible.

2. The system is based on expert knowledge.

3. Functional efficiency of the worker can be maintained. 

4. Mass production is made by standardisation and specialisation. 

5. Separation of mental and manual functions is possible. 

6. Methods and operations can be standardised.

Demerits of Functional Organisation

1. Too many experts and bosses (high officials) create confusions in the minds of the worker. 

2. It is difficult to fix responsibility on workers. 

3. Discipline and morale of the workers are seriously affected, because of contradictory orders from different experts.

4. There are heavy overhead expenses.

C. Line and Staff Organisation

In this type, the organisation is based on the line organisation and the functional experts advice the line officers as to the functions of the enterprise. The line officers are the executives and the staff officers are their advisors. Though the staff officers do not have the power to command the line officers, their advice is generally adhered to. The combination of line organisation with this expert staff forms the type of organisation-line and staff. The 'line' keep the discipline and the staff provides expert information. The line gets out the production and the staff carries on research, planning, fixing standard, etc. This type of organisation is suitable for large concerns. The line officers give orders, decisions, etc., to sub-ordinates in consultations or guidance with the staff officers. The underlying idea of this method is that specialised work is to be left to experts, who will give advice on specialised grounds investigation, research, etc. The staff officers have no executive positions in the concern and are the thinkers, while the line officers are the doers.

Features of Line and Staff Organization

1. Line authority achieves the major organizational goal and staff authority assists the line authority in achieving these goals.

2. Staff has specialized knowledge in their fields and offer suggestions to line managers when they feel necessary to do so.

3. No formal relationship is established between line and the staff.

Merits of Line and Staff Organization

1. This type is based on specialization 

2. It brings expert knowledge upon the whole concern 

3. Increased efficiency of operations may be possible 

4. Mass production is possible

Demerits of Line and Staff Organization

1. There arises confusion unless the duties and responsibilities are clearly / Indicated by charts and office manuals.

2. Advice and expert information are given to the workers through the line officers. It is possible that the workers may misunderstand or misinterpret.

D. Committee Organisation 

Committee organisation is widely used for the purpose of discharging advisory functions of the management. Committees are found in different levels of organisation. A committee is a group of people who meet by plan to discuss or make a decision on a particular subject. Because of its advantages, committee organisation is preferred. Committee means a body of persons, for example, Management committee consisting of General Manager and Departmental heads.

According to Davis, "A committee is a group of individuals who meet for the purpose of effecting an integration of ideas concerning a solution for some problems."

According to New man, "A committee consists of a group of persons specifically designated to perform some administrative act. It functions only as a group and requires the free intercharge of ideas among its members."

Committee have become an important instrument of management in modern organisations; they may be used for the following objectives:

1. To secure view-point and consultation of various persons in the organisations. 

2. To give participation and representation to different groups or interests;

3. To co-ordinate the activities of different departments;

4. To review the performance of certain units;

5. To facilitate communication and co-operation among diverse groups. 

Merits of committee organisation

1. It facilitates co-ordination of activity of various departments. 

2. Pooled knowledge and judgement become available to the business thus its efficiency increases.

3. It is a good media of training and educating employees. 

4. It helps to improve the motivation and morale of employees. 

5. It promotes mutual understanding, team work and co-operation among employees.

6. Intelligent solutions can be secured for complex problems.

7. It is useful in coordinating plans and in their execution.

8. It is an effective instrument of communication.

9. It is a method of executive development.

Demerits of committee organisation

1. It is not only costly in terms of time it consumes, but also in terms of money involved.

2. Difficulty in reaching agreement results in indecision.

3. Compromise at the cost of efficiency is often affected.

4. Indecision may lead to a breakdown of group action.

5. Committee management is slower in reaching decisions than a one-man rule.

Misuses of the committee organization

The committee organisations are generally found only in big business enterprise. Some examples of misuse of the committee organisation may be as under:

1. Decisions by Compromise

Decisions by compromise is a very common misuse of the powers of officers of the committee. It is interesting to note that some decisions are against the interests of firm.

2. Expensive

The members of the committee make many unnecessary expenses in the name of the organisation. 

3. Injustice with minority

All the decisions of the committee are taken by the rule of majority. The decisions of committee are imposed upon minority.

4. Domination of few persons

Practically the committee is dominated by a few persons who can speak loudly and fluently. Such members influence the decisions of committee in undesirable manner.

5. More problems but limited time

The members waste their time on meaningless and fruitless discussions. There are many problems to be solved but time is limited. It becomes difficult to determine the responsibility of an individual member.

Suggestions for making commitee effective

Committee Organization may be made effective by following the guidelines, in brief:

1. The objective for forming a committee must be clearly specified.

2. Members of the committee must be rationally nominated.

3. The agenda for discussion should be sent to members in advance.

4. The Chairman of the committee should be effective in directing group-thinking towards committee objectives.

5. The meetings of the committee should be well planned.

6. The authority of the committee should be well defined.

7. The scope of the committee must be clearly defined and properly communicated. 

8. The members must be capable enough to understand, analyse and decide the problems. 

9. It is essential that the rights and duties of all members of committee must be clearly defined.

10. There should be periodic review of the functioning of a committee. 

E. Project Organisation

The project structure consists of a number of horizontal organisational units to complete projects of long duration. Each project is vitally important to the organisation. A team of specialists from different areas is created for each project. The size of the project team varies from one project to another. The activities of a project team are coordinated by the project manager who has the authority to obtain advice and assistance of experts both inside and outside the organisation. A bridge, dam or fly-over are constructed as project organisations. Once the objective is framed, work force is gathered and authority-responsibility structure is created by giving the project manager authority to exercise control over the activities of group members.

A project team is a temporary set up. Once the project is complete the team is disbanded and the functioning specialists are assigned some other projects. According to Hodgetts who defined a project organisation as "the gathering of the best available talent to accomplish a specific and complex undertaking within time, cost and/or quality parameters, following by the disbanding of the team upon completion of the undertaking."

Benefits (Project Organisation)

1. It provides concentrated attention to the project.

2. It permits timely completion of the project.

3. The project manager lays responsibity of his group members and facilitates feedback and control.

4. It allows maximum use of specialized knowledge and skills.

5. It provides greater flexibility in handling specialized project.

Limitations (Project Organisation)

1. Organisational uncertainties may lead to inter-departmental conflict. 

2. Project managers of small project organisations do not have formal authority over their group members.

F. Matrix Organisation

Matrix organisation is also known as grid or project organisation. Matrix organisation is created by merging the two or more complementary organisations, say, purchase section and sales section. A team may be set up within the existing organisation, to conduct a study of a particular product or design or to complete a specific assignment in time. A project manager has a project team consisting of people from several functional sections. For instance, a project team is formed to market the television, and for this people will be drawn from different functional departments, say, production, research, marketing, engineering, etc. These specialists are drawn from respective departments, borrowed to perform their part in the project work. When the project work is complete, they go back to their respective departments. This type of organisation is needed when a special type of urgent assignment of jobs or complicated job or a new product etc., is introduced. Generally, such organisation may be temporary.

Merits (Matrix Organization)

1. Specialized product knowledge is acquired.

2. It is economical to draw experts from various sections.

3. Expansion, improvements, diversification, etc., are the result.

4. The chances of success of the project are higher.

5. It allows effective use of resources.

Demerits (Matrix Organization)

1. Administrative costs are high.

2. Workers under this type have to report to two bosses.

3. There arise conflicts between functional managers and project managers.

G. Network Organization

The network organization is a collection of independent, mostly single-function firms that collaborate to produce a goods or service. As depicted in chart, the network organization describes not one organization but the web of relationships among many firms. Network organisations are flexible arrangements among designers, suppliers, producers, distributors and customers where each firm is able to pursue its own distinctive competence yet work effectively with other members of the network. Often members of the network communicate electronically and share information to be able to respond quickly to customer demands. In effect, the normal boundary of the organization becomes blurred or porous, as managers within the organization interact closely with network members outside it. The network as a whole, then, can display the technical specialization of the functional structure, the market responsiveness of the product structure, and the balance and flexibility of the matrix.

A very flexible version of the network organization is the DYNAMIC NETWORK - also called MODULAR OR VIRTUAL Corporation. It is composed of temporary arrangements among members that can be assembled and reassembled to meet a changing competitive one environment. The members of the network are held together by contracts that stipulate results expected (market mechanisms) rather than by hierarchy and authority. Poorly performing firms can be removed and replaced.

Network organisation is "a multinational structural arrangement that combines elements of function, product and geographic designs, while relying on a network arrangement to link world wide subsidiaries." This organisational format helps MNC's to take advantage of global economies of scale along with catering to local customer demands. This structure links subsidiaries of a company that are spread world wide. Some subsidiaries specialise in manufacturing while others in sales. All of them are, however, linked with headquarters. Some are closely controlled by headquarters while others are more autonomous. The structure is, thus, a combination of geographic, functional and product elements.