Types of Authority Relationships

Formal Organization

Line Organization

Functional Organization

Line & Staff Organization

Committee

Line Organization
Features:
Simplest form Flows from top to bottom No specialized and supportive services Unified Control Efficiency in communication

Line Organization
Merits:
Simplest Unity of command Better discipline Fixed responsibility 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 Under functional specialists Unity of command does not apply

Functional Organization
Merits:
Specialization Effective Control Efficiency Economy Expansion

Functional Organization
Demerits:
Confusion Lack of coordination Difficulty in fixing responsibility Conflicts Costly

Board of Directors

Research & Development Staff

Personnel Manager Production Control Staff

General Manager
Production Manager

Public Relations Officer

Finance Manager Chief Chemist

Production Superintendent Foremen

Workers

Advantages:
Specialization
Flexibility

Expert Advice
Sound Decisions Relief to Line Executives Opportunities for Advancement

Disadvantages:
Confusion
Advice Ignored

Encourages Carelessness
Expensive Conflict between Line and Staff

Types

Advisory Committee

Executive Committee

Advantages:
Better Understanding
Pooling of Knowledge

Better Cooperation
Better Coordination Helps in Transmitting Information Helps in Decision Making Process

Disadvantages:
Delay
Expensive

Misinterpretation of Statements
Secrecy not Maintained Wrong Decisions Sometimes it is only a compromise

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

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

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

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

Narrow Span:
CEO

MD - 1

MD - 2

Manager

Manager

Manager

Supervisors

Employees

Wide Span:
CEO

Manager

Manager

Manager

Manager

Manager

Employees

Need and Importance:

Increases skill Increases efficiency Increases self esteem of managers Helps spot problem areas Infinite scope of expansion

By Function:
CEO

Production

Sales Department

Purchase Department

Finance Department

By Products or Services:
CEO

Product A

Product B

Product C

Manufacturing Selling Finance Accounting Personnel Public Relation

Manufacturing Selling Finance Accounting Personnel Public Relation

Manufacturing Selling Finance Accounting Personnel Public Relation

By Regions:
CEO

Sales Manager Head Office

Manager North Zone

Manager South Zone

Manager East Zone

Manager West Zone

By Customers:
Branch Manager

Manager Personal Loans

Manager Home Loans

Manager Education Loans

Manager Business Loans

By Process:
General Manager Textile

Manager Ginning

Manager Spinning

Manager Weaving

Manager Dyeing

By Time By Numbers

By Marketing Channels

 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.

Steps in Process:
1) Review Organizational Objectives 2) Set Worker Objectives 3) Monitor Progress 4) Evaluate Performance 5) Give Rewards