An organization is a group of people
working together to achieve the
specified goal.
A group of people with defined
relationship to each other for example a
family a club or the boy scout
movement.
A collection of human and materials
resources, which are gather together
for a stated aim for example a factory,
a firm.
According to Louis Allen “Organization is the process of identifying and
grouping work to be performed, defining delegating responsibility and
authority and establishing relationships for the purpose of enabling people
to work most effectively together in accomplishing objectives.”
In the words of Allen, organization is an instrument for achieving
organizational goals. The work of each and every person is defined and
authority and responsibility is fixed for accomplishing the same.
The common view of an organization is a system that contains
one or more of the following elements:
1. A collection of people in formal and informal groupings.
2. Individuals who have defined tasks and responsibilities,
some of which may consist of specialization.
3. The manner in which these tasks interact and relate to each
other is defined.
4. The tasks all lead to achievement of a common aim.
Organization Grouping
structures
Line Hierarchical
Line-staff
Project base
Functional
Geographical
Matrix Matrix
Informal Informal
A traditional pyramid-shaped arrangement of authority and
responsibility within an organization.
Employees are organized into layers or levels of hierarchy, with
each level having a designated level of authority and reporting
relationships.
Hierarchical organizations, also know as bureaucratic structures
are characterized by the following:
1. A hierarchy of authority. The amount of authority and related
rewards, is clearly defined for each level within the hierarchy.
Authority is related to the position within the organization and
not to individuals.
2. Specialization of task.
3. A system of rules which tightly enforced throughout the
organization to ensure conformity.
4. Impersonality in the application of rules to ensure that the
organization functions as an efficient, impersonal operation. The
system must be fair and must be seen to be fair.
A traditional hierarchical structure in which authority flows in a
straight line from the top of the organization to the bottom.
There is a clear chain of command where each person reports to their
immediate superior, and decisions are made by those in higher
positions.
used in companies where there is a clear hierarchy and a need for tight
control over operations.
Seen in military organizations and in companies with a traditional,
bureaucratic structure.
A hybrid structure that combines both line and functional structures.
Line managers are responsible for achieving the primary goals and
objectives of the organization.
While staff managers provide support and assistance to the line managers
in the areas of expertise such as human resources, legal, and research and
development.
Staff managers do not have direct authority over line managers, but they
can provide advice and make recommendations.
Line Organization Line Staff Organization
1. Specialized support
1. Clear chain of command
functions
2. Decisions made by top 2. Decisions made by staff
management experts
3. Directly involved in 3. Not directly involved in
production production
4. Clear authority and 4. Limited authority and
responsibility responsibility
5. Focus on providing support
5. Focus on achieving goals
and advice
A project management organizational structure is used to determine
the hierarchy and authority of people involved in a specific project.
The advantages of this is that it provides a very clear project focus
and is probably best applied to very large projects.
Disadvantages is that for smaller project, it does not allow each
specialization to have the critical mass needed to invest in
equipment and skills.
Create inefficiencies by having to duplicate expensive equipment.
Managing Director
Project A Director Project B Director
Manufacturing Engineering Marketing Manufacturing Engineering Marketing
Manager Manager Manager Manager Manager Manager
Employees are grouped together according to their similar tasks,
skill and activities.
Each group is responsible for specialization.
It enables people to specialize and learn from each other within
their discipline.
It also close bonds between professionals.
Although the danger is that loyalty is given to the function rather
than company.
Managing Director
Manufacturing Engineering Marketing
Director Director Director
Manufacturing Hardware Software Product
Production Publicity
Engineering Design Design Manager
Line Manager Manager
Manager Manager Manager
A geographical organizational structure organizes people
within an organization by geographic location.
This structure creates specific divisions for each location.
Each division acts as if it is its own company, combining
different types of personnel for various business functions.
Managing Director
Director Europe Director Asia
Manufacturing Engineering Marketing Manufacturing Engineering Marketing
Manager Manager Manager Manager Manager Manager
A matrix organization, also referred to as the “multiple command
system” has two chains of command.
One chain of command is functional in which the flow of
authority is vertical.
The second chain is horizontal depicted by a project team, which
is led by the project, or group manager who is an expert in his
teams assigned area of specialization.
The organization is divided into different function e.g. purchase,
production, R&D etc. Each function has a functional manager, e.g.
purchase manager, production manager etc.
The organization is also divided on the basis of projects e.g.
Project A, Project B etc. Each Project has a Project manager, e.g.
Project A manager, Project B manager etc.
Matrix organization structure is essentially a violation of unity of
command.
Project Responsibility Functional Responsibility
1. Provide day to day guidance on 1. Provide personnel of correct skills
work to be done. for job to be done.
2. Determine all priorities related to 2. Determine methods to be used in
work. carrying out tasks, including tools.
3. Ensure funding levels available 3. Look after „pay and rations‟ of
for work including special tools. staff including personal
development.
4. Ensure conflicts between 4. Ensure technical know-how
functions resolved. transferred between projects.
5. Plan projects and ensure project 5. Monitor progress of functional
objectives are being met. contributors and help with technical
problems.
6. Provide customer interface.
7. Monitor project progress
including resource usage and spend.
Organizational structure without written guidelines for operating
but is based on norms and systems developed by members.
So, there are no formal and written rules, procedures, or chain of
command.
Informal organizations grow up within a company for several
reasons:
1. The failure of formal or official organization to provide
leadership.
2. The officials organization fails to provide the employees
concerned with a feeling of self respect in their work and a sense
of achievement.
3. The employees do not feel that they are receiving sufficient
recognition and development in their work.
Director
Manager A Manager B Manager C Manager D
(a) Formal
Director Manager B
Manager A Manager C Manager D
(b) Informal
