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Different types of organizations and departmentations implemented by companies or firms and their pros and cons
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Organizing and Departmentation
Types of Authority Relationships
Formal Organization
Line Organization
Functional Organization
Line & Staff Organization
Committee
Line Organization
Features:
No specialized and supportive services Unified Control
Efficiency in communication
Flows from top to bottom
Simplest form
Line Organization
Merits:
Simplest
Unity of command
Fixed responsibility
Better discipline
Flexibility
Prompt decision
Line Organization
Demerits:
Over reliance
Lack of specialization
Inadequate communication Lack of coordination
Authority leadership
Functional Organization
Features:
Divided into specific functions Complex
Three authorities
Unity of command does not apply
Under functional specialists
Functional Organization
Merits:
Specialization
Effective Control
Efficiency
Economy
Expansion
Functional Organization
Demerits:
Confusion
Lack of coordination
Difficulty in fixing responsibility Conflicts
Costly
Line & Staff OrganizationBoard of Directors
General Manager
Production Manager
Production Superintende
nt
Foremen
Workers
Finance Manager
Personnel Manager
Public Relations Officer
Research & Development
Staff
Chief ChemistProduction
Control Staff
& Staff
Line & Staff Organization
Advantages:
Specialization
Flexibility
Expert Advice
Sound Decisions
Relief to Line Executives
Opportunities for Advancement
Line & Staff Organization
Disadvantages:
Confusion
Advice Ignored
Encourages Carelessness
Expensive
Conflict between Line and Staff
Committee Organization
Types
Advisory Committee Executive Committee
Committee Organization
Advantages:
Better Understanding
Pooling of Knowledge
Better Cooperation
Better Coordination
Helps in Transmitting Information
Helps in Decision Making Process
Committee Organization
Disadvantages:
Delay
Expensive
Misinterpretation of Statements
Secrecy not Maintained
Wrong Decisions
Sometimes it is only a compromise
Centalization and Decentralization
Centralization
Advantages:
o Uniformity in policies and activities
o Evaluation of performance and results
o Facilitates quick decision making
o Better communication
o Creates a professional environment
Centralization
Disadvantages:
o Overburdening the top management
o Slow operations
o No specialization
o Wide gap between levels of management
o Rigidity in decisions
o Hampers growth of mangers
Decentralization
Advantages:
o Gives more time to top management
o Helps in development of managers
o Increases morale of subordinated
o Development of new ideas
o Improves performance
o Diversification of activities
Decentralization
Disadvantages:
o Requirement of competent managers
o May cause unhealthy competition
o May cause problems in coordination
o Wastage of resources
o May cause slow decision making in a holistic situation
o Difficulty in controlling
Span of Control
Level and Span of Management
CEO
MD - 1 MD - 2
Manager Manager Manager
Supervisors
Employees
Narrow Span:
Level and Span of Management
CEO
Manager Manager ManagerManagerManager
Employees
Wide Span:
DepartmentationNeed and Importance:
Increases skill
Increases efficiency
Increases self esteem of managers
Helps spot problem areas
Infinite scope of expansion
DepartmentationBy Function:
CEO
ProductionSales
DepartmentPurchase
DepartmentFinance
Department
DepartmentationBy Products or Services:
CEO
Product A Product B Product C
ManufacturingSellingFinanceAccountingPersonnelPublic Relation
ManufacturingSellingFinanceAccountingPersonnelPublic Relation
ManufacturingSellingFinanceAccountingPersonnelPublic Relation
DepartmentationBy Regions:
CEO
Sales ManagerHead Office
ManagerNorth Zone
ManagerSouth Zone
ManagerEast Zone
ManagerWest Zone
DepartmentationBy Customers:
Branch Manager
ManagerPersonal
Loans
ManagerHome Loans
ManagerEducation
Loans
ManagerBusiness
Loans
By Process:
Departmentation
ManagerGinning
ManagerSpinning
ManagerWeaving
ManagerDyeing
General Manager Textile
DEPARTMENTATION
By Time
By Numbers
By Marketing Channels
Management by Objectives
• It focuses on goals & their achievement.• It includes long term & short term objectives.• The philosophy of MBO views the organization has a dynamic entity.• It gives emphasis on effective performance.• Effective participation & involvement by each member is required to set up goals & its achievement.• It gives guidelines for appropriate systems, procedures, delegation of authority, allocation of resources etc.• Periodic review of performance is an essential feature of MBO.• The technique of MBO establishes a community of interest & shared sense of vision among all the managers.
1)Review Organizational Objectives
Management by ObjectivesSteps in
Process:
2) Set Worker Objectives
3) Monitor Progress
4) Evaluate Performance
5) Give Rewards
Thank You!
