Business Studies XII Content
Line organization structure
It is the simplest and oldest form of organizational structure. The line of authority flows vertically from top most executive to the lowest subordinate throughout the organization. Where, managers have direct authority over their respective subordinates through the chain of command. Authority flows directly from top to bottom through various managerial positions. It is simple form of organization. Only one form of authority that is line authority exists in this form of organization. Line authority refers to the direct authority of a manager over his subordinates. The authority responsibility relationship is clearly established. All managers in line organization have full authority to decide things and act with respect to their related functions. in line organization department are created for basic activities and departmental heads are responsible for all activities performed in the department.
Merits of line organization:
1. It is very simple to establish.
2. It clearly defines the authority, responsibility and accountability of a job
3. It can be easily adapted to the requirement of the organization.
4. Managers have exclusive authority over their unit so they can easily make changes in the functioning of the unit when required
5. There is definite authority at every level so that everyone can take decisions quickly.
6. Every employee knows to whom he/she is responsible and from whom they receive their orders.
7. It confirms scalar principle of organization where one subordinate receives the orders from single superior.
8. All activities relating to single department are managed by one individual.
9. There is clear cut definition of authority and identification of responsibility, relationships and so on.
Demerits of line organization
1. The line executives are generalists and not specialists.
2. The top level managers are overloaded with work.
3. There is concentration of authority at top level only. If top level managers are not capable there may be failure.
4. All managers and supervisors handle their job on their own ways independently with grow the line organization my find it difficult to maintain effective coordination between different departments and units.
5. There is only one way communication i.e. from top to bottom
6. It is not suitable for large organization
7. There is possibility of nepotism and favoritism.
8. There is replacement problem during absenteeism of top authority
9. It can be autocratic.
Line and staff organization structure
In this type of organization structure two type of authority relationship exists. They are staff and line authority. Staff authorities’ means authority to advice, support and serve the line managers. All managerial functions are practiced by line authority with the help of specialized skill of staff authority. It is modification of line organization and is more complex than it. Staff managers and line managers are distinguished on the basis of their role. There is more specialization and division of work. However conflict may arise between line and staff authority.
Merits of line and staff organization structure:
1. The line executives are generalists and staff executives are specialists and they work together with coordination
2. The top level managers are not overloaded with work. Staff specialists give relief in critical matters.
3. There is no concentration of authority at top level only. Even if top level managers are not capable there is no failure because staff managers can help to overcome the problematic issues through proper decisions and specialization..
4. All problems are handled with care and are tries to solve with the help of staff specialists..
5. There is two way communications i.e. from top to bottom and bottom to top. There can be feedback and suggestion with orders too.
6. There is better decision taking and improvement in efficiency.
7. It is suitable for large organization
8. There is better utilization of personnel skills and knowledge.
Demerits of line and staff organization
1. It is difficult to establish and is costly too.
2. There is possibility of conflict between the line managers and staff managers. Line managers may ignore staff’s advice and complain that staff doesn’t give right type of advice. Staff managers can complain that their advice is not properly implemented.
3. The allocation of authority and responsibility between the line and staff official I generally not clearly defined.
4. Line managers may be too much dependant upon the staff authority. Staff authority however is not accountable for the result. Sometimes when staff authority do no perform well there may be failure
5. There is wide difference between the approach of line managers and staff managers.
6. There can be reduction of initiative power o line authority.
In functional organization all business activities of an enterprise are divided into number of fractions and each function is entrusted to a specialist, each specialist is known as functional specialist and authority delegated to him is known as functional authority. One of the main features of this organization is that a functional manager can exercise functional authority over his own sub-ordinate but also over all sub ordinates in all other functional departments. The principle of unity of command is not applied in his type of organizational structure. The sub-ordinate may be confused by the multiple command system. The functions are divided into units like marketing, production, research and development, human resource etc.
Merits of functional organization structure:
1. It provides benefits of specialist. Every manager is expert in his own field of knowledge. There is advantage of best managerial decisions
2. Here each department is given under supervision of specialist. All decisions about the departments are also taken with the help of specialists.
3. There is no concentration of authority at top level only. Even if top level managers are not capable there is no failure because functional managers can help to overcome the problematic issues through proper decisions and specialization.
4. Functional organization provides preference for growth and expansion of business activity.
5. There is separation of mental and manual work.
6. It is suitable for large organization
Demerits of functional organization
1. Subordinates are always in confusion to obey the orders due to multiple command system.
2. No formal relationship among the departmental specialist.
3. there is lack of mutual understanding and coordination of activities of different department
4. There is delay in decision making.
5. Narrow vision of departmental specialist creates problems in functional organizational.
6. There is weak discipline among the employees.
7. There is lack of fixed responsibility.