Business Organization & Management

Dr. Nuzhath Khatoon

Unit 4
Planning & Organizing
 Planning
• Definition: Planning is the fundamental management function,
which involves deciding beforehand, what is to be done, when is
it to be done, how it is to be done and who is going to do it. It is
an intellectual process which lays down an organization’s
objectives and develops various courses of action, by which the
organization can achieve those objectives. It chalks out exactly,
how to attain a specific goal.
• Planning is nothing but thinking before the action takes place. It
helps us to take a peep into the future and decide in advance the
way to deal with the situations, which we are going to encounter
in future. It involves logical thinking and rational decision
making.
 Characteristics of Planning
• Managerial function: Planning is a first and foremost managerial function provides the base for other
functions of the management, i.e. organizing, staffing, directing and controlling, as they are performed
within the periphery of the plans made.
• Goal oriented: It focuses on defining the goals of the organization, identifying alternative courses of
action and deciding the appropriate action plan, which is to be undertaken for reaching the goals.
• Pervasive: It is pervasive in the sense that it is present in all the segments and is required at all the
levels of the organization. Although the scope of planning varies at different levels and departments.
• Continuous Process: Plans are made for a specific term, say for a month, quarter, year and so on. Once
that period is over, new plans are drawn, considering the organization’s present and future requirements
and conditions. Therefore, it is an ongoing process, as the plans are framed, executed and followed by
another plan.
• Intellectual Process: It is a mental exercise at it involves the application of mind, to think, forecast,
imagine intelligently and innovate etc.
• Futuristic: In the process of planning we take a sneak peek of the future. It encompasses looking into
the future, to analyze and predict it so that the organization can face future challenges effectively.
• Decision making: Decisions are made regarding the choice of alternative courses of action that can be
undertaken to reach the goal. The alternative chosen should be best among all, with the least number of
the negative and highest number of positive outcomes.
• Planning is concerned with setting objectives, targets, and formulating plan to accomplish them. The
activity helps managers analyze the present condition to identify the ways of attaining the desired
position in future. It is both, the need of the organization and the responsibility of managers.
 Importance of Planning
• It helps managers to improve future performance, by establishing
objectives and selecting a course of action, for the benefit of the organization.
• It minimize risk and uncertainty, by looking ahead into the future.
• It facilitates the coordination of activities. Thus, reduces overlapping
among activities and eliminates unproductive work.
• It states in advance, what should be done in future, so it provides direction
for action.
• It uncovers and identifies future opportunities and threats.
• It sets out standards for controlling. It compares actual performance with
the standard performance and efforts are made to correct the same.
• Planning is present in all types of organizations, households, sectors,
economies, etc. We need to plan because the future is highly uncertain and no
one can predict the future with 100% accuracy, as the conditions can change
anytime. Hence, planning is the basic requirement of any organization for the
survival, growth and success.
Steps in Planning
 Components of Planning
i. Forecasting: Forecasting becomes an integral part of the planning process. It is a prediction of future events and conditions. It,
therefore, includes both the assessment of the future and the provision for it. It helps to reduce the uncertainties that surround
management, decision making.
ii. Objectives: Objectives are the ends toward which activity is aimed— they are the results to be achieved. They represent not
only the end point of planning but also the end toward which organizing, staffing, leading and controlling are aimed.
Organization can grow without any difficulty if it has well-defined objectives. These objectives should be clearly defined and
communicated throughout the organization. Such objectives must be realistic.
iii. Policies: Koonte and O’Donnell defines “policies are general statements or undertakings which guide or channel
thinking in decision-making of subordinates.” So, policies act as guides to thinking and action of subordinates in the
organizations. It should be clearly prescribed and understandable by all.
iv. Programs: It refers to the course of action of work to be carried out in proper sequence for the purpose of achieving specific
objectives.
v. Strategies: Konnoz and Heinz Weihrich defined strategies as “a general program of action and deployment of resources to
attain comprehensive objectives” or ” the determination of the basic long-term objectives of an enterprise “and the adoption
of courses of action and allocation of resources necessary to achieve these goals. It is specific type of plan for achieving
organizational goals.
vi. Schedules: Fixing a time sequence for every operation is known as schedules. Normally it forms part of programming a part
of action plan.
vii. Procedures: Procedures are plans that establish a required method of handling future activities. They are guides to action,
rather than to thinking and they detail the exact manner in which certain activities must be accomplished. They are
chronological sequences of required actions.
viii. Rules: Rules spell out specific required actions or non-actions, following no direction. They are usually the simplest type of
plan.
ix. Budgets: A budget is a statement of expected results expressed in numerical term. A budget may be expressed either in
financial terms or in terms of labor-hours, units of product, machine hours, or any other numerically measurable term. It helps
the organization to control the action by comparing budgetary and actual results.
 Advantages of Planning
1. Primacy of Planning: Even though there are other managerial functions such as organizing, staffing, directing and controlling which
helps to achieve the organizational goals, planning precedes all other managerial functions. It establishes objectives necessary for all
group effort.
2. Helping to Management: Since the planning is a future course of action, mangers are able to define their objectives and get direction.
Also it creates a unity of purpose.
3. Effective Utilization of Resources: Proper planning helps to proper and effective utilization of resources. Resources are identified for
optimum utility through planning. So waste or minimum waste of resources will not result and thereby idle time for workers and
downtime for machines will be reduced. This will lead to result in minimum cost of operations.
4. Minimum Cost: Planning helps to minimize cost by providing greater utilization of the available resources. All kinds of wastage of men,
materials, money and machines are prevented with the help of planning.
5. To help in Motivation: All employees of the organization can feel that we have taken this plan, if the plans are communicated to them. In
this case the sense of belonging of employees increases and therefore they will be highly motivated.
6. To Offset Uncertainty and Change: There may be continuous change in the environment and organization has to work in accelerating
change. This change is reflected in both tangible and intangible forms. Tangible changes are in the form of changes in technology, market
forces, and government regulations.
7. Help in Coordination: Proper planning is made by unifying all areas on departments of the organization. It wills leads to coordinate and
harmony among the departments is achieved.
8. Facilities Control: Planning provides performance standards and standards for measuring the progress of the organizations. Therefore
management can compare the actual performance with the standards. Manager can control action by looking at different if any deviation.
9. Facilitates Decision-making: Planning provides a framework for decision-making. Since the planning provides for feedback, periodic
evaluation, and indication for any deviation, corrective action can be taken which leads to better decision-making.
10. Encourage Innovation and Creativity: It brings about rationality in managerial approach and improvement in executive thinking. D. F.
Hussey said that, “A good planning process will provide avenues for individual participation will throw up more ideas about the
company and its environment, will encourage an atmosphere of frankness and corporate self-criticism and will stimulate managers
to achieve more.”
11. Improves Competitive Strength: Since the operations are planned in advance, company can take its action concretely. It improves the
competitive strength of the organization
 Limitation of Planning
1. Corporate Planning is not integrated into the Total Management System: The top
management fails to identify and associate properly the formal planning with the central concept
of the organization’s mission.
2. There is a Lack of Understanding of the Different Steps of the Planning Process: The
management may not be knowledgeable or skilled in understanding all steps of the planning
requirements.
3. Non-Availability of Correct Information and Data: Planning is made by having information
and data available. Generally correct information and data not available.
4. Management at Different Levels in the Organization has not Properly Contributed to
Planning Activities: Generally all strategic planning are made and conducted at top
management. So sometimes middle level and lower level of management, which are closer to the
operation, may not understand all aspects of planning. This will affect their fullest contribution.
5. Costly or Uneconomical: Planning is expensive. The cost of planning should not be in excess
of its contribution and managerial judgment is necessary to balance the expenses of preparing
the plans against the benefits derived from them.
6. The management is not always willing to cancel or modify your plans.
7. In starting formal planning, too much is attempted at once.
8. Resistance to change by organizational members.
9. Lack of contingency plans.
 Approaches to Planning
• Reactive - past oriented: Reactive planning is an active attempt to turn back the clock to the
past. The past, no matter how bad, is preferable to the present and definitely better than the
future will be. The past is romanticized and there is a desire to return to the "good old days."
These people seek to undo the change that has created the present, and they fear the future,
which they attempt to prevent.
• Inactive - present oriented: Inactive planning is an attempt to preserve the present, which is
preferable to both the past and the future. While the present may have problems it is better than
the past. The expectation is that things are as good as they are likely to get and the future will
only be worse. Any additional change is likely to be for the worse and should therefore be
avoided.
• Pre-active - predict the future: Pre-active planning is an attempt to predict the future and then
to plan for that predicted future. Technological change is seen as the driving force bringing
about the future, which will be better than the present or the past. The planning process will seek
to position the organization to take advantage of the change that is happening around them.
• Proactive - create the future: Proactive planning involves designing a desired future and then
inventing ways to create that future state. Not only is the future a preferred state, but the
organization can actively control the outcome. Planners actively shape the future, rather than just
trying to get ahead of events outside of their control. The predicted changes of the pre-active
planner are seen not as absolute constraints, but as obstacles that can be addressed and
overcome.
 Types of Planning
There are four types of planning. Each type of plan commits employees within different
departments and their resources to specific actions.
Operational Plans: Operational planning can be ongoing or single-use. The latter is usually
created for a specific event that will only occur once, such as a unique marketing campaign.
Ongoing plans can include rules and regulations, procedures, and the day to day running of the
company.
Strategic Plans: Strategic planning is the foundation of an organization. Essentially, strategic
plans dictate the important decisions made within a business. Strategic plans can have scopes
that range from three years to ten years. These plans include the organization’s mission, values,
and vision. A good strategic plan always considers things in the long-term and remembers the
big picture.
Tactical Plans: Tactical planning is supportive of the strategic plan. It involves the tactics that
will be used to execute the strategic plan. Within a tactical plan, there are specific questions
that need to be answered about what it will take to accomplish the goals set in the strategic
plan; the most important question being how the company will accomplish the mission. This
type of planning is very focused and short-term. Tactical plans are sometimes flexible and
often break the strategy down into several parts and assign actionable tasks to each part.
Contingency Plans: Contingency planning is important for any business because there is always
the possibility of unforeseen changes. A contingency plan is created for when the unexpected
occurs or a major change needs to be made in order to continue towards the goal. Not every
change can be anticipated which is why it’s imperative to have a contingency plan in place.
 Management by objectives ( MBO)
• Management by Objectives (MBO) is a strategic
approach to enhance the performance of an
organization. It is a process where the goals of the
organization are defined and conveyed by the
management to the members of the organization with
the intention to achieve each objective.
• An important step in the MBO approach is the
monitoring and evaluation of the performance and
progress of each employee against the established
objectives. Ideally, if the employees themselves are
involved in setting goals and deciding their course of
action, they are more likely to fulfill their obligations.
 Steps in MBO
1. Define organization goals: Setting objectives is not only critical to the success of any company, but it
also serves a variety of purposes. It needs to include several different types of managers in setting goals.
The objectives set by the supervisors are provisional, based on an interpretation and evaluation of what
the company can and should achieve within a specified time.
2. Define employee objectives: Once the employees are briefed about the general objectives, plan, and the
strategies to follow, the managers can start working with their subordinates on establishing their personal
objectives. This will be a one-on-one discussion where the subordinates will let the managers know
about their targets and which goals they can accomplish within a specific time and with what resources.
They can then share some tentative thoughts about which goals the organization or department can find
feasible.
 3. Continuous monitoring performance and progress: Though the management by objectives approach
is necessary for increasing the effectiveness of managers, it is equally essential for monitoring the
performance and progress of each employee in the organization.
 4. Performance evaluation: Within the MBO framework, the performance review is achieved by the
participation of the managers concerned.
5. Providing feedback: In the management by objectives approach, the most essential step is the
continuous feedback on the results and objectives, as it enables the employees to track and make
corrections to their actions. The ongoing feedback is complemented by frequent formal evaluation
meetings in which superiors and subordinates may discuss progress towards objectives, leading to more
feedback.
6. Performance appraisal: Performance reviews are a routine review of the success of employees within
MBO organizations.
Cont…
 Benefits of MBO
• Management by objectives helps employees appreciate their on-the-job
roles and responsibilities.
• The Key Result Areas ( KRA) planned are specific to each employee,
depending on their interest, educational qualification, and specialization.
• The MBO approach usually results in better teamwork and
communication.
• It provides the employees with a clear understanding of what is expected
of them. The supervisors set goals for every member of the team, and
every employee is provided with a list of unique tasks.
• Every employee is assigned unique goals. Hence, each employee feels
indispensable to the organization and eventually develops a sense of
loyalty to the organization.
• Managers help ensure that subordinates’ goals are related to the
objectives of the organization.
 Limitation of MBO
1. Inflexibility.
2. Lack of top management involvement and support.
3. Difficulty in setting realistic and meaningful objectives.
4. Managers may not have the requisite skills for identifying
the objectives.
5. It the reward, promotion, and such other incentives are not
allowed then with the passage of time consistent good
performance cannot be maintained.
6. MBO necessitates decentralization of decision-making
powers and delegation of au­thority so as to fulfill the
objectives. Too much decentralization is also problematic
sometimes.
 Organizing
Organizing is that managerial process which seeks to define the role
of each individual (manager and operator) towards the attainment
of enterprise objectives; with due regard to establishing authority-
responsibility relationships among all; and providing for co-
ordination in the enterprise-as an in-built device for obtaining
harmonious groups action. 
1. “Organizing is the establishment of authority relationships with
provisions for co-ordination between them, both vertically and
horizontally in the enterprise structure”.-Koontz and O ‘Donnell
2. “Organizing is the process of identifying and grouping the work
to be performed, defining and delegating the responsibility and
authority and establishing a pattern of relationship for the purpose
of enabling people work most effectively to accomplish the
objective”.– Louis A. Allen.
 Steps in Organizing
(i) Determination of the Total Work-Load: The very first step in the process of organizing is to make a
determination of all the activities which are necessary to be undertaken for the attainment of the enterprise
objectives. This step of organizing is, in fact, nothing but an estimation of the total work-load that must be done
for realizing objectives.
(ii) Grouping and Sub-Grouping of Activities i.e. Creation of Departmentation: Total activities determined for
achieving enterprises objectives must be classified i.e. putting similar or related activities at one place in the form
of a group or sub-group. This step of organizing directly leads to the process of creating departments
(iii) Creation of Manager-Ship through Delegation of Authority: After the scheme of departmentation is
finalized; the next step in the process of organizing would be to entrust the responsibility for the functioning of
each department to a distinct manager. Creation of manager-ship, in this manner, requires a requisite delegation of
authority to each manager to enable the manager to take care of the job assigned to him.
(iv) Division of Work within the Departmental Set-Up-Human Organization: Since no single individual can
undertake the performance of the whole of the work assigned to one department; it becomes necessary to resort to
division of work-assigning to each person only one part of the total job. As a result to undertaking division of
work for all departments; there emerges a human organization within the enterprise.
(v) Arrangement of Physical Facilities to Personnel within the Departmental Set-Up-Material Organization:
Each individual of the enterprise, working in whatever capacity, in any department, must need the basic physical
facilities-raw materials, machines and tools, technology and other inputs-for the proper execution of the assigned
task. When physical facilities are made available to all personnel in all departments; there emerges a material
organization (or a physical-technical organization) within the enterprise.
(vi) Definition and Establishment of Authority-Responsibility Relationships: Having created manager-ship and
a human organization within the enterprise; it becomes necessary to devise a system which provides for defining
and establishing authority-responsibility relationships among all personnel-managers and operators. As a matter
of fact, such relationships must be defined and established throughout the enterprise both-horizontally and
vertically.
 Importance of Organizing
• Efficient Administration: It brings together various departments by grouping similar and related jobs
under a single specialization. This establishes coordination between different departments, which leads
to unification of effort and harmony in work. It governs the working of the various departments by
defining activities and their authority relationships in the organizational structure. It creates the
mechanism for management to direct and control the various activities in the enterprise.
• Resource Optimization: Organizing ensures effective role-job-fit for every employee in the
organization. It helps in avoiding confusion and delays, as well as duplication of work and overlapping
of effort.
• Benefits Specialization: It is the process of organizing groups and sub-divide the various activities and
jobs based on the concept of division of labor. This helps in the completion of maximum work in
minimum time ensuring the benefit of specialization.
• Promotes Effective Communication: Organizing is an important means of creating coordination and
communication among the various departments of the organization. Different jobs and positions are
interrelated by structural relationship. It specifies the channel and mode of communication among
different members.
• Creates Transparency: The jobs and activities performed by the employees are clearly defined on the
written document called job description which details out what exactly has to be done in every job.
Organizing fixes the authority-responsibility among employees. This brings in clarity and transparency
in the organization.
• Expansion and Growth: When resources are optimally utilized and there exists a proper division of
work among departments and employees, management can multiply its strength and undertake more
activities. Organizations can easily meet the challenges and can expand their activities in a planned
manner.
Principles of Organizing
 Principle of Organizing
• Work Specialization: It is a degree to which organizational tasks are divided into separate jobs. Each employee is
trained to perform specific tasks related to their specialized function. Specialization is extensive, for example
running a particular machine in a factory assembly line.
• Chain of Command: The chain of command is an important concept to build a robust organization structure. It is
the unbroken line of authority that ultimately links each individual with the top organizational position through a
managerial position at each successive layer in between. Unity of command states that an employee should have one
and only one manager or supervisor or reporting authority to whom he is directly accountable to. This is done to
ensure that the employee does not receive conflicting demands or priorities from several supervisors at once, placing
him in a confused situation.
• Delegation: Another important concept closely related to authority is delegation. It is the practice of turning over
work-related tasks and/or authority to employees or subordinates. Without delegation, managers do all the work
themselves and underutilize their workers. The ability to delegate is crucial to managerial success. Authority is said
to be delegated when discretion is vested in a subordinate by a superior. Delegation is the downward transfer of
authority from a manager to a subordinate. Superiors or managers cannot delegate authority they do not have,
however, high they may be in the organizational hierarchy.
• Span of Control: Span of control /management refers to the number of employees who report to one manager. It is
the number of direct reportee’s that a manager has and whose results he is accountable for. Span of control is critical
in understanding organizational design and the group dynamics operating within an organization. Span of control
may change from one department to another within the same organization.
• Authority: Authority is the legitimate power assigned to a manager to make decisions, issue orders, and allocate
resources on behalf of the organization to achieve organizational objectives. Authority follows a top-down hierarchy.
Roles or positions at the top of the hierarchy are vested with more formal authority than are positions at the bottom.
The extent and level of authority is defined by the job role of the manager. Subordinates comply with the manager’s
authority as it is a formal and legitimate right to issue orders.
Process of Organizing
 Formal Organization
Formal Organization: An organization or a relationship existing within the
organization will be considered to be a formal if the job is well-defined as well as
there is a well- grounded system of hierarchy and authority that is being followed.
• The employees have been delegated tasks and objectives and they endeavor to
follow and achieve the goals, each person is held accountable for his or her job
performance. In such a setting, rules and regulations are in place, and employees are
supposed to follow them formally and unconditionally. The authority is well-rooted
here. In fact, authority and hierarchy are the cornerstones of any formal
organization.
• Characteristics of Formal Organization:
• 1. Created by the management.
• 2. Specialization or the division of labor is the basis of the formal organization.
• 3. The authority and responsibility of people in a formal organization is very clearly
defined.
• 4. There are formal rules and procedures.
• 5. There is a clear system of authority attached with each member.
• 6. There are clearly specified lines of communication.
 Advantages & Disadvantages of Formal
Organization
Advantages of Formal Organization:
1. Clear definition of roles and responsibilities of all members, helps in avoiding duplication
of efforts.
2. Accountability is easy to fix.
3. Provides stability to the organization.
4. Unity of command is maintained.
5. Tasks can be mastered with maximum skills in minimum time and with minimum efforts.
Disadvantages of Formal Organization:
1. Decision making can be a time consuming exercise as formal communication follows
established chain of command.
2. Established rules and policies can create organizational rigidity. Thus creativity may
suffer.
3. Formal organization can create too narrow jobs that may cost dear as far as very close
managerial supervision is concerned.
4. Formal organization focuses on formal structure and work. Thus, it can contribute to
creation of human problems.
 Informal Organization
An informal organization exists within a formal organization. It develops due to
friendly relations that spring up when people work together and develop common
interests. The common interests bring them together as a group.
• It is to be kept in mind that it is not necessary that there is supposed to be just one
informal group within an otherwise formal group. Any number of informal groups
may spring up within a formal group. It is also not necessary that informal group­
ings may work against the interests of the organization.
Characteristics of Informal Organization:
1. It is the result of relationships developing on the basis of common characteristics,
like race, religion, language, culture, etc.
2. It is marked by the absence of any written or formal rules and regulations.
3. It has no structure, nor is it shown on an organizational chart.
4. It fulfils the social and psychological needs of its members.
5. It is not bound by any departmental or functional barrier.
 Advantages & disadvantages of Informal
Organization
Advantages of Informal Organization:
1. Informal groupings can at times surpass the formal organization in terms of effectiveness
and the tendency to close ranks in the event of a perceived threat to the organization.
2. The social relationships formed in informal groupings can strongly motivate the workers
towards the organizational goals.
3. At times it can lead to better coordination as a result of friendly relations among the
members.
4. The flexibility in an informal organization helps in bridging the gaps in the shortcomings of
the management.
5. Innovation and creativity is promoted by the informal grouping, which in turn, helps in
personality development and leadership skills.
6. Work problems are solved through informal groupings and assistance of the group.
Disadvantages of Informal Organization:
1. There may be constant conflicts between the formal and the informal role of the member
which may impact the organization adversely. At times the interest of the informal group
may go against the interest of the organization, i.e. the formal group.
2. The informal organization sees changes as a threat to its interests. Thus, it may put up
resistance to changes within the formal organization, thereby, acting against the overall
interest of the organization.
Comparison of Formal & Informal
Organization
 Features of Line & Staff Organization
• There are two types of staff :
– Staff Assistants- P.A. to Managing Director, Secretary to Marketing Manager.
– Staff Supervisor- Operation Control Manager, Quality Controller, PRO
• Line and Staff Organization is a compromise of line organization. It is more
complex than line concern.
• Division of work and specialization takes place in line and staff organization.
• The whole organization is divided into different functional areas to which staff
specialists are attached.
• Efficiency can be achieved through the features of specialization.
• There are two lines of authority which flow at one time in a concern :
– Line Authority
– Staff Authority
• Power of command remains with the line executive and staff serves only as
counselors.
 Merit of L& S Organization
• Relief to line of executives- In a line and staff organization, the advice and counseling which is provided to the line
executives divides the work between the two. The line executive can concentrate on the execution of plans and
they get relieved of dividing their attention to many areas.
• Expert advice- The line and staff organization facilitates expert advice to the line executive at the time of need. The
planning and investigation which is related to different matters can be done by the staff specialist and line officers
can concentrate on execution of plans.
• Benefit of Specialization- Line and staff through division of whole concern into two types of authority divides the
enterprise into parts and functional areas. This way every officer or official can concentrate in its own area.
• Better co-ordination- Line and staff organization through specialization is able to provide better decision making
and concentration remains in few hands. This feature helps in bringing co-ordination in work as every official is
concentrating in their own area.
• Benefits of Research and Development- Through the advice of specialized staff, the line executives, the line
executives get time to execute plans by taking productive decisions which are helpful for a concern. This gives a
wide scope to the line executive to bring innovations and go for research work in those areas. This is possible due
to the presence of staff specialists.
• Training- Due to the presence of staff specialists and their expert advice serves as ground for training to line
officials. Line executives can give due concentration to their decision making. This in itself is a training ground for
them.
• Balanced decisions- The factor of specialization which is achieved by line staff helps in bringing co-ordination.
This relationship automatically ends up the line official to take better and balanced decision.
• Unity of action- Unity of action is a result of unified control. Control and its effectivity take place when co-
ordination is present in the concern. In the line and staff authority all the officials have got independence to make
decisions. This serves as effective control in the whole enterprise.
 Limitation of L & S Organization
• Lack of understanding- In a line and staff organization, there are two authority flowing at
one time. This results in the confusion between the two. As a result, the workers are not
able to understand as to who is their commanding authority. Hence the problem of
understanding can be a hurdle in effective running.
• Lack of sound advice- The line official get used to the expertise advice of the staff. At
times the staff specialist also provide wrong decisions which the line executive have to
consider. This can affect the efficient running of the enterprise.
• Line and staff conflicts- Line and staff are two authorities which are flowing at the same
time. The factors of designations, status influence sentiments which are related to their
relation, can pose a distress on the minds of the employees. This leads to minimizing of
co-ordination which hampers a concern’s working.
• Costly- In line and staff concern, the concerns have to maintain the high remuneration of
staff specialist. This proves to be costly for a concern with limited finance.
• Assumption of authority- The power of concern is with the line official but the staff
dislikes it as they are the one more in mental work.
• Staff steals the show- In a line and staff concern, the higher returns are considered to be a
product of staff advice and counseling. The line officials feel dissatisfied and a feeling of
distress enters a concern. The satisfaction of line officials is very important for effective
results.
 Conflicts Between L& S Organization
Grievances of Line against Staff:
(a) The staff authorities try to encroach upon the line authority and interfere with the work of line managers.
(b) Staff does not know its place in the structure and wants to assume line authority. This feeling is generated more when
the staff authority forgets his position and begins to dictate.
(c) Attitude: Staff wants to take full credit for success of programs and hold line men fully responsible for unsuccessful
programs.
(d) Approach: The advice of the staff authority may lack practicality as their advice purely academic and they do not
understand the reality of the situation.
(e) Capriciousness: The staff authorities may fail to study the problem fully and objectively as they are specialists in their
respective areas. So the staff authorities are considered to be short-sighted.
(f) Accountability: As the staff authority is not vested with accountability for performance they tend to be over-jealous and
recommend a course of action which is not practicable.
Grievances against Line by Staff: The staff authorities also complain against line executives: The causes of conflict as
reported by the staff are:
(a) Ego: The advice of staff is resorted to as the last step as the line executives feel that asking for advice is defeat.
(b) Frustration: The advice suggested by the staff may not be implemented. This causes resentment and frustration among
staff.
(c) Indifferent: The line authority often resists the new ideas given by the staff specialists and at times they are not
prepared to listen to the staff proposals.
(d) Sabotage: Line authorities are not making use of staff authorities full and try to sabotage the programs.
Besides these there are other reasons are also exist which are responsible for the conflicts:
(a) Inefficient Staff: The inefficient and incompetent authorities may create conflict.
b) Unity of Command: Violation of this concept also may create conflict.
(c) Poor Delegation: This is another source of conflict due to ambiguity in authority delegation and lack of clarity in
defining line and staff relationship.
 Resolving the Conflicts
The conflict disturbs the peace and harmony in the organization and
this should be resolved peacefully.
(a) Well defined Authority: It should be made clear that the line
authority is ultimately responsible for implementation of the
decisions and the staff is responsible only for providing advice
and service to the line executives.
(b) Due Consideration: Due consideration is to be to staff
proposals to act upon and the line executives are to give reasons
where they disagree with staff and convince them.
(c) Co-Operation: Both the authorities should try to understand the
orientation of each other. They should try to achieve and secure
co-operation among themselves.
 Organizational Structure
1. Functional Organizational Structure: One of the
most common types of organizational structures, the
functional structure departmentalizes an
organization based on common job functions.
An organization with a functional org structure, for
instance, would group all of the marketers together
in one department, group all of the salespeople
together in a separate department, and group all of
the customer service people together in a third
department.
 Cont…
2. Product-Based Divisional Structure: A divisional organizational structure
is comprised of multiple, smaller functional structures (i.e. each division
within a divisional structure can have its own marketing team, its own sales
team, and so on). In this case -- a product-based divisional structure -- each
division within the organization is dedicated to a particular product line.
• This type of structure is ideal for organizations with multiple products and
can help shorten product development cycles. This allows small businesses
to go to market with new offerings fast.
3. Market-Based Divisional Structure: Another variety of the divisional
organizational structure is the market-based structure, wherein the divisions
of an organization are based around markets, industries, or customer types.
• The market-based structure is ideal for an organization that has products or
services that are unique to specific market segments, and is particularly
effective if that organization has advanced knowledge of those segments.
This organizational structure also keeps the business constantly aware of
demand changes among its different audience segments.
 Cont…
4. Divisional Structure: The geographical organizational structure establishes its
divisions based on -- you guessed it -- geography. More specifically, the divisions of a
geographical structure can include territories, regions, or districts.
• This type of structure is best-suited to organizations that need to be near sources of
supply and/or customers (e.g. for deliveries or for on-site support). It also brings
together many forms of business expertise, allowing each geographical division to
make decisions from more diverse points of view.
5. Process-Based Structure: Process-based organizational structures are designed
around the end-to-end flow of different processes, such as "Research & Development,"
"Customer Acquisition," and "Order Fulfillment." Unlike a strictly functional structure,
a process-based structure considers not only the activities employees perform, but also
how those different activities interact with one another.
• In order to fully understand the diagram below, you need to look at it from left to right:
The customer acquisition process can't start until you have a fully developed product to
sell. By the same token, the order fulfillment process can't start until customers have
been acquired and there are product orders to fill.
• Process-based organizational structure is ideal for improving the speed and efficiency
of a business, and is best-suited for those in rapidly changing industries, as it is easily
adaptable.
 Cont…
6. Matrix Structure: Unlike the other structures we've looked at so far, a matrix organizational
structure doesn't follow the traditional, hierarchical model. Instead, all employees (represented by
the green boxes) have dual reporting relationships. Typically, there is a functional reporting line
(shown in blue) as well as a product- based reporting line (shown in yellow).
• When looking at a matrix structure org chart, solid lines represent strong, direct-reporting
relationships, whereas dotted lines indicate that the relationship is secondary, or not as strong. In our
example below, it's clear that functional reporting takes precedence over product-based reporting.
The main appeal of the matrix structure is that it can provide both flexibility and more balanced
decision-making (as there are two chains of command instead of just one). Having a single project
overseen by more than one business line also creates opportunities for these business lines to share
resources and communicate more openly with each other -- things they might not otherwise be able
to do regularly.
• 7. Circular Structure: While it might appear drastically different from the other organizational
structures highlighted in this section, the circular structure still relies on hierarchy, with higher-level
employees occupying the inner rings of the circle and lower-level employees occupying the outer
rings. That being said, the leaders or executives in a circular organization aren't seen as sitting atop
the organization, sending directives down the chain of command. Instead, they're at the center of the
organization, spreading their vision outward.
• From an ideological perspective, a circular structure is meant to promote communication and the
free flow of information between different parts of the organization. Whereas a traditional structure
shows different departments or divisions as occupying individual, semi-autonomous branches, the
circular structure depicts all divisions as being part of the same whole.
 Cont…
8. Flat Structure: While a more traditional organizational structure might look more like a
pyramid -- with multiple tiers of supervisors, managers and directors between staff and
leadership, the flat structure limits the levels of management so all staff are only a few steps
away from leadership. It also might not always take the form or a pyramid, or any shape for that
matter. As we mentioned earlier, It's also a form of the "Organic Structure" we noted above.
• This structure is probably one of the most detailed, It is also thought that employees can be more
productive in an environment where there's less hierarchy-related pressures. This structure might
also make staff feel like the managers they do have are more like equals or team members rather
than intimidating superiors.
9. Network Structure: A network structure is often created when one company works with another
to share resources -- or if your company has multiple locations with different functions and
leadership. You might also use this structure to explain your company workflows if much of your
staffing or services is outsourced to freelancers or multiple other businesses. 
• The structure looks nearly the same as the Divisional Structure, shown above. However, instead
of offices, it might list outsourced services or satellite locations outside of the office. If your
company doesn't do everything under one roof, this is a great way to show employees or
stakeholders how outsourcing of off-site processes work. For example, if an employee needs help
from a web developer for a blogging project and the company's web developers are outsourced,
the could look at this type of chart and know which office or which person to contact outside of
their own work location.
 Span of Management
Definition: The Span of Management refers to the number of
subordinates who can be managed efficiently by a superior.
Simply, the manager having the group of subordinates who report
him directly is called as the span of management.
• The Span of Management has two implications:
• Influences the complexities of the individual manager’s job
• Determine the shape or configuration of the Organization
The span of management is related to the horizontal levels of the
organization structure. There is a wide and a narrow span of
management.
With the wider span, there will be less hierarchical levels, and thus,
the organizational structure would be flatter.
Whereas, with the narrow span, the hierarchical levels increases,
hence the organizational structure would be tall.
 Factors determining Span of Management
Capacity of Superior: Here the capacity means the ability of a superior to comprehend the problems quickly and gel up
with the staff such that he gets respect from all. Also, the communication skills, decision-making ability, controlling
power, leadership skills are important determinants of supervisory capacity..
Capacity of Subordinate: If the subordinate is trained and efficient in discharging his functions without much help from
the superior, the organization can have a wide span. This means a superior can manage a large number of subordinates as
he will be required just to give the broad guidelines and devote less time on each.
Nature of Work: If the subordinates are required to do a routine job, with which they are well versed, then the manager
can have a wider span. But, if the work is complex and the manager is required to give directions, then the span has to be
Degree of Decentralization: If the manager delegates authority to the subordinates then he is required to give less
attention to them. Thus, higher the degree of decentralization, the wider is the span of management.
Planning: If the subordinates are well informed about their job roles, then they will do their work without consulting the
manager again and again. This is possible only because of the standing plans that they follow in their repetitive
decisions. Through a proper plan, the burden of a manager reduces manifold and can have a wider span of management.
Staff Assistance: The use of staff assistance can help the manager in reducing his workload by performing certain
managerial tasks such as collecting information, processing communications and issuing orders, on his behalf. By doing
so, the managers can save their time and the degree of span can be increased
Supervision from Others: The classical approach to the span of management, i.e., each person should have a single
supervisor is changing these days. Now the subordinates are being supervised by other managers in the organization
such as staff personnel. This has helped the manager to have a large number of subordinates under him.
Communication Techniques: The mode of communication also determines the span of management. If in the manager is
required to do a face to face communication with each subordinate, then more time will be consumed. As a result, the
manager cannot have a wider span. But in case, the communication is in writing and is collected through a staff
personnel; the manager can save a lot of time and can have many subordinates under him.