The well-known industrialist of U.S.A.

late Andrew Canrnegi, when sold his famous 'United

State Steel Corporation', showed his confidence in organisation by uttering the following
words, "Take away our factories, take away our trade, our avenues of transportation, our
money, leave nothing but our organisation, and in four years, we shall re-established
ourselves." Since ages and in every walk of life, organisation has been playing a vital role.
Sound or Good Organisation
Organisation is not an end it itself but a means to achieve an end. Whether an organisation is
good or bad depends on the fact as to how much efficiently and promptly it is in a position to
achieve the objectives. An ideal organisation is one which is expected by all. Some people think
that an ideal organisation stands in a dream only and actually it does not exist. However, it is a
wrong concept. An ideal organisation is a reality which can be achieved through the active
cooperation of all the members of an organisation and also by following the principles of
organisation is not an exact science as physics and chemistry. though a sound organisation is
mainly based on the active cooperation of all the members of the organisation and on certain
principles but also it is based on the capabilities of the individuals available to work along with
its simplicity and flexibility. An organisation conceived and developed on the above lines will
reward its leaders and well as its members (Personnel). Not only will the objectives be achieved
more easily, and conveniently, but the physical operation of the organisation will also be greatly
enhanced. Thus, a sound or good or ideal and result-oriented organisation must posses the
following characteristics.
Realization of Objectives: Organisation is tool of achieving objectives of an enterprise. For this
purpose, the organisation should be divided in several department, sub-departments, branches
and units etc.
Harmonious Grouping of Functions etc: For achieving the organisation objectives there must
be harmonious grouping of functions, jobs and sub-jobs in such a way so that there is action,
consultation and co-ordination without any delay and difficulty.
Reasonable Span of Control: Another characteristic of organisation is that it should have
reasonable span of control. Ordinarily, a person (personnel) cannot control more than five or six
subordinates.
Clear-cut allocation of Duties and Responsibilities: There must be clear-cut allocation of
duties and responsibilities in any scheme of sound organisation. Every executive must know his
scope of activities, the ideal number is three.
Promotion of Satisfaction: The most important element of any human organisation is the
promotion of satisfaction of workers. Man works in a group or in an organisation and hence the
success or failure of any organisation depends on as to how much the organisation is in a
position to provide satisfaction to individuals or group working under him.
Fullest Utilization of Manpower: Another important characteristic of an ideal organisation is as
to how far it is successful in making fullest and economical utilization of the available
manpower.
provision and Development and Expansion: Another important of an ideal organisation is that
there exists the necessary provision for development and expansion so that it is possible to
expand and develop any organisation according to needs and requirements and necessary
changes an alternatives may be made.
Coordination and cooperation: In order to achieve the objectives of the enterprise, there must
be close coordination and cooperation in the activities of everybody working in the organisation.
Further, there should also be active coordination and cooperation amongst the various
departments an sub-departments. It will also assist in elimination the evil of red tapism.
Unity of Command: There must be unity of command. No one in any organisation should report
to more than one line supervisor, and everybody must know to whom he reports and who reports
to him. No subordinate should get orders from more than one supervisor, otherwise it will lead to
confusion, chaos and conflict.
Effective System of Communication: An ideal organisation must possess effective system of
communication. The inter-communication system should be clear and easier and there should be
no ambiguity at and level.
High Morale: An ideal organisation is that in which the workers possess high morale. They
work with full capacity, energy, enthusiasm, devotion and sincerity.
Flexibility: The last but not the least important characteristic of an ideal organisation is that it
should be flexible so that necessary changes an modifications in the the size of the organisation
as well as technology could be easily and conveniently effected.

Principles of Organisation
There is no unanimity as to number of principles of organisation amongst the leading authors on
the subject. L.K. Urwick, in his paper 'Scientific Principles of Organisation' (1938) and 'Notes on
the Theory of Organisation' (1952) prescribed ten principles of organisation. Thereafter, many
other writers on the subject have added a few more principles of organisation. The main
principles of organisation are as follows:
The Principle of Objective
Every enterprise, big or small, prescribes certain basic objectives. Organisation serves as a tool
in attaining these prescribed objectives. Every part of the organisation and the organisation as a
whole should be geared to the basic objective determined by the enterprise.
Principle of Specialization
Precise division of work facilitates specialization. According to this principles division of work
between the employees must be based on their ability, capability, tasks, knowledge and interest.
This will ensure specialization and specialization will lead to efficiency, quality and elimination
of wastage etc.
The Scalar Principle
The principle is sometimes known as the 'chain command'. There must be clear lines of authority
running from the top to the bottom of the organisation.
The Principle of Authority
Authority is the element of organisation structure. It is the tool by which a manager is able to
create an environment for individual performance.
The Principle of Unity of Command
One subordinate should be kept in the supervision of one boss only. This principle avoids the
possibility of conflicts in instructions and develops the feeling of personnel responsibility for the
work.
The Principal Span of Control
It is also known as 'span of management', 'span of supervision' or 'levels of organisation', etc.
The Principle of Definition
The contents of every position should be clearly defined. The duties, responsibilities, authorities
and organizational relationship of an individual working on a particular position should be well
defined.
The Principle of the Unity of Direction
The basic rationale for the very existence of organisation is the attainment of certain objectives.
Major objective should be split into functional activities and there should be one objective and
one plan for each group of people.
The Principle of Supremacy of Organisation Objectives
The organisation goals and objectives should be given wide publicity within the organisation.
The people contributing to it, should be made to understand that enterprise objectives are more
valuable and significant and one should place one's personal motives under it.
The Principle of Balance
In every organisation structure there is need for balance. For effective grouping and assigning
activities, this principle calls for putting balance on all types of factors human, technical as well
as financial.
The Principle of Human Element
This principle indicates that the success or failure of an enterprise largely depends on the
handling of human element. If the organisation has sound labor policies along with a number of
welfare activities it is bound to succeed.
The Principle of Discipline
According to his principle, it is the responsibility of the management to maintain proper
discipline in the enterprise. Fayol considered discipline as 'respect for agreements which are
directed at achieving obedience, application, energy and outward mark of respect."
Steps in the Process of Organisation
Organisation means identifying, arranging and integrating different elements of organisation into
efficient working order. It requires the management to follow the following process of
organisation.
Division of work
The main function is divided into sub-functions and entrusted to the different departmental
heads. The result is the establishment of departments like Purchase, Sales, Production, Accounts,
Publicity and Public relations. The departments can be further classified just as production
department into (1) Planning (2) Designing, (3) Operations, (4) Production Control and (5)
Repairs and Maintenance. The division of the work is based upon the fact that specialization is
keynote of efficient organisation.
Grouping of Job and Departmentation
The second step is to group similar or related jobs into larger units, called departments, divisions
or sections. Grouping process is called departmentation.
The department may be based upon functions such as manufacturing, marketing and financing
etc. Department may also be based on products, such as textiles, cosmetic, stationery etc. These
departments may have different sections as per requirement.
Grouping jobs or Departmentation aims at achieving coordination and facilitates unity of efforts.
The departments are linked together on the basis of interdependence. The divided task is
assigned to specific individual or group of individuals who are supposed to be the most qualified
and specialized persons for the task.
Assigning duties
The work to be performed by every individual is clearly defined and made known to him. Every
one must know, what he is required to do in order to avoid any misunderstanding, duplication or
overlapping in the work.
Granting authorities and fixing responsibilities
Assigning of duties to individuals must coincide with the appropriate and relevant authorities.
Every employee must know, what the authorities granted to him and for what and to whom he
will be responsible, liable and accountable.
Delegation of authority
Those who are made responsible for specific tasks are given due authority. Both responsibility
and authority go hand in hand together. Reasonable powers are delegated to heads and
supervisory staff to enable them to do their work with ease and efficiency.
Effective communication
Effective communication is the keynote of efficient organisation. There should be proper
arrangement of communication messages from executives to subordinates and vice-versa. Proper
communication system establishes harmonious relationship between employees and enables
execution of work in the right manner at the appropriate time and in an atmosphere of perfect
mutual adjustment.
Co-ordination of activities for common objectives
Business activity is a team work or the group activity, so the efforts of every employee must be
co-ordinate effectively to achieve the common objectives of the enterprise.

In order to achieve the desired goals, sound and effective organizational structure is necessary.
Organizational structure, as we know is the system of job positions, roles assigned to these
positions and specifying authority, responsibility and task of every positions. The structure
undoubtedly provides basic framework for executive and employees to perform their task
smoothly. The following points must be taken into consideration while building organizational
structure.
Considerations for Building Organizational Structure

Job design
Jobs should be designed in such a way, that job should have specified and defined task to be
performed. Jobs should be designed in such fashion that every individual could contribute his
maximum worth to the enterprise. The major and related activities of the jobs should also be
specified.
Departmentation or Grouping of Identical Jobs
Identical and similar jobs should be grouped together in a department and placed under a
departmental head. Such departmentation will help in building coordination between different
jobs and managers. Departments can be established on different basis. It may have production,
marketing and finance departments, if it is based upon functions.
Span of Control
Under span of control, the number of employees and jobs managed by each manager is specified.
The chain of command is also clearly stated. It is specified that who will report whom is the
smooth performance of his duties. Effective span of control avoids overlapping, duplication and
confusion in the work.
Delegation of Authority
In order to get the job done properly and smoothly, requisite authorities are granted to the
managers. Authority is the power to command employees and instruct them to do a piece of
work. The authority empowers to know certain facts, to enjoy privileged position and command
respect and obedience from employees. Delegation is no doubt, sharing task with requisite
authority with subordinates. As such the manger multiplies himself through delegation.
(A) Functional Structure of Organisation
Grouping together the entire work into major functional departments and entrusting these
departments to functional specialists is known as functional structure of organisation. Each major
function of the enterprise is organized as a separate department. These departments may be
engineering, production, personnel, finance and marketing in a manufacturing company. If it is
retail stores, these departments may be purchase, sales and stores etc as per requirement. The
names of the departments can change as per the requirements, nature and size of the enterprise.
Major functions of the enterprise differ from each other on account of technicalities involved,
specialized education and training needed. However, these functions have common goal of
achieving maximum efficiency to maximize overall returns of the enterprise. The functional
heads are provided functional authority over the subordinates under their command.
Functional organisation is the developed form of Taylor's functional foremanship. In practice,
modern functional organisation is restricted to top level of the organizational structure and not
carried down to the lowest level as recommended by Taylor.
Functional structure of organisation is extensively used these days by almost every enterprise at
different levels. The sales, production, finance and marketing functions are so widely recognized
that almost every enterprise uses it as the basis of Departmentation.
Functional Organisation Structure diagram.
(B) Divisional Structure of Organizations
Grouping of activities or Departmentation on the basis of product lines and areas is known as
divisional structure of organisation. Divisional structure has been finding favor with the multiple
large scale enterprise. Under this structure the top level delegates extensive authorities to the
divisional heads. The divisional head is the in charge of the manufacturing, purchase, sales,
engineering and other departments of the division under his command. He is also made
responsible for the profit or loss of his division.
Product and product line is an important basis for Departmentation. It facilitates the use of
specialized and specialist services of the divisional managers in their product line. He can use his
personal skill and his specialized knowledge for the development of his department.
Organizations having their business all over the country may adopt divisional structure on the
basis of area, such as north division, south division, east, west and central division. The
organisation structure of LIC and Railways is also upon divisional structure.
The manufacturing enterprise producing variety of goods may have different division for
different products such as textile division, plastic division, stationary division etc


WHAT IS ORGANIZATIONAL STRUCTURE?
By structure, we mean the framework around which the group is organized, the
underpinnings which keep the coalition functioning. It's the operating manual that
tells members how the organization is put together and how it works. More
specifically, structure describes how members are accepted, how leadership is chosen,
and how decisions are made.
WHY SHOULD YOU DEVELOP A STRUCTURE
FOR YOUR ORGANIZATION?
Structure gives members clear guidelines for how to proceed. A clearly-
established structure gives the group a means to maintain order and resolve
disagreements.
Structure binds members together. It gives meaning and identity to the
people who join the group, as well as to the group itself.
Structure in any organization is inevitable -- an organization, by definition,
implies a structure. Your group is going to have some structure whether it
chooses to or not. It might as well be the structure which best matches up with
what kind of organization you have, what kind of people are in it, and what you
see yourself doing.
WHEN SHOULD YOU DEVELOP A STRUCTURE
FOR YOUR ORGANIZATION?
It is important to deal with structure early in the organization's development.
Structural development can occur in proportion to other work the organization is
doing, so that it does not crowd out that work. And it can occur in parallel with, at the
same time as, your organization's growing accomplishments, so they take place in
tandem, side by side. This means that you should think about structure from the
beginning of your organization's life. As your group grows and changes, so should
your thinking on the group's structure.
ELEMENTS OF STRUCTURE
While the need for structure is clear, the best structure for a particular coalition is
harder to determine. The best structure for any organization will depend upon who its
members are, what the setting is, and how far the organization has come in its
development.
Regardless of what type of structure your organization decides upon, three elements
will always be there. They are inherent in the very idea of an organizational structure.
They are:
Some kind of governance
Rules by which the organization operates
A distribution of work
Governance
The first element of structure is governance - some person or group has to make the
decisions within the organization.
Rules by which the organization operates
Another important part of structure is having rules by which the organization operates.
Many of these rules may be explicitly stated, while others may be implicit and
unstated, though not necessarily any less powerful.
Distribution of work
Inherent in any organizational structure also is a distribution of work. The distribution
can be formal or informal, temporary or enduring, but every organization will have
some type of division of labor.
There are four tasks that are key to any group:
Envisioning desired changes. The group needs someone who looks at the world
in a slightly different way and believes he or she can make others look at things
from the same point of view.
Transforming the community. The group needs people who will go out and do
the work that has been envisioned.
Planning for integration. Someone needs to take the vision and figure out how
to accomplish it by breaking it up into strategies and goals.
Supporting the efforts of those working to promote change. The group needs
support from the community to raise money for the organization, champion the
initiative in the state legislature, and ensure that they continue working towards
their vision.
COMMON ROLES
Every group is different, and so each will have slightly different terms for the roles
individuals play in their organization, but below are some common terms, along with
definitions and their typical functions.
An initial steering committee is the group of people who get things started.
Often, this group will create plans for funding, and organizational and board
development. It may also generate by-laws, and then dissolve. If they continue
to meet after approximately the first six months, we might say they have
metamorphosed into a coordinating council.
A coordinating council (also referred to as a coordinating committee, executive
committee, andexecutive council), modifies broad, organization-wide objectives
and strategies in response to input from individuals or committees.
Often, one person will take the place of the coordinating council, or may serve
as its head. Such a person may be known as the Executive Director, Project
Coordinator, Program Director, or President. He or she sometimes has a paid
position, and may coordinate, manage, inspire, supervise, and support the work
of other members of the organization.
Task forces are made up of members who work together around broad
objectives. Task forces integrate the ideas set forward with the community
work being done
CHOOSING YOUR ORGANIZATION' S
STRUCTURE
WHAT TYPE OF STRUCTURE SHOULD YOU CHOOSE?
First, decide upon the formality your organization will have. The following table,
adapted from The Spirit of Coalition Building can help you make this first decision.
Conditions favoring more or less formality in organizational
structures
Condition A looser, less formal,
less rule bound
structure would be
favored when...
A tighter, more
formal, more rule-
bound structure would
be favored when...
Stage of
organization
development
The organization is
just starting
The organization is in
later stages of
development
Prior relationships
among members
Many such
relationships already
exist
Few such relationships
already exist
Prior member
experience in
working together
Many such
experiences have
occurred
Few such experiences
have occurred
Member motivation
to be part of the
organization
Motivation is high Motivation is low
Number of
organization tasks
or issues (broadness
of purpose)
There is a single task
or issue
There are multiple tasks
or issues
Organization size The organization is
small
The organization is
large
Organization
leadership
The leadership is
experienced
The leadership is
inexperienced
Urgency for action There is no particular
urgency to take action
now
There is strong urgency
to take action now
Organizational structure is something that is best decided upon internally, through a
process of critical thinking and discussion by members of the group.
In your discussions, your answers to the following list of questions may guide your
decisions.
What is your common purpose? How broad is it? Groups with broader
purposes often have more complicated structures, complete with many layers
and parts, than do groups with more narrow purposes.
Is your group advocacy oriented or service oriented? Service organizations use
"top down," one-person-in-charge structure much more often than do advocacy
based groups.
Is your organization more centralized (e.g., through the work of a specific
agency ) or decentralized (e.g., different neighborhoods working independently
on the same problem)? A decentralized group might find a "top-down"
structure inappropriate, as such a group often has several peers working
together on an issue.
How large is your organization? How large do you envision it becoming? A
very small organization may wish to remain relatively informal, while a
community-wide group might require a more formal structure. A related
question, with similar consequences, is:
How large is the community in which you work?
How old is your organization? How long do you envision it lasting? A group
formed to resolve a single issue might not need a formal structure at all, while
an organization with long-term goals may want something more concrete, with
clearer divisional responsibilities and authority.
Is the organization entirely volunteer, or are there (or will there be) paid
staff? How many? An organization with many paid staff members may find it
more necessary to have people "in charge," as there are generally more rules
and responsibilities for paid staff members, and thus, there must be more
supervision in carrying out these roles.
Should yours be a new organization, or part of an existing structure? Do you
really need to form a new structure, or would it be better to work within
existing structures? Sometimes, your goals may be better met if you are part of
(or linked with) another organization.
IN SUMMARY
Structure is what ensures that your organization will function smoothly and as you
intended. You should think about structure early in the development of your
organization, but be aware that the type that fits best may change as your organization
grows.

Organisational efficiency is a measure of the relationship between organisational inputs
(resources) and outputs (goods and services provided) and in simple terms the more
output we can achieve with a given amount of inputs or resources, the more efficient
we are. For example, if we can make 100 cars with X value of resources we are more
efficient than someone else who only makes 80 identical cars with the same value of
resources. Efficiency relates to the term productivity and a major focus of all managers
is to maintain or improve the level of productivity of their work unit and organisation.
In simple terms, organisational effectiveness relates to goal attainment. An individual,
group or an organisation, that achieves their goals are said to be effective, and have
used their resources to achieve an effective outcome. But does this also mean they
have used their resources efficiently?