Chapter 5

Organization & Staffing

Organization
Louis A. Allen:

Organization is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives.

Importance of Organization

Facilitates administration Facilitates growth and diversification Permits optimum use of resources Stimulate creativity Encourages humanistic approach

Principles of Organization (14)

Principle of Objective Co-ordination Definition Balance Uniformity Exception Specialization Authority & Responsibility

Control
Continuity

Command

Efficiency

Simplicity Scalar Principle

Steps in Organization
Division of work Grouping of activities Allotment of duties

Delegation of authority

Organization Chart & Types of charts

An organizational chart is a diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs. 3 types of Orgl. Charts Vertical Horizontal

Circular

Vertical Organization Chart

Board of Directors

Chief Executive

VP Marketing

VP Human Resource

Mgr. South

Mgr. North Mgr. Recruitment Mgr. Training

Exec. Sales

Exec. Mktg

Exec. Sales

Exec. Mktg

Exec. Recruitment

Exec. Training

horizontal Organization Chart

B o a r d o f D i r e c t o r s C h i e f E x e c u t i v e Mgr. South VP Mktg Mgr. North Exec. Sales Exec. Mktg Exec. Sales Exec. Mktg Mgr. Recruitment VP HR Mgr. Training Exec. Training Exec. Recruitment

Circular Organization Chart

VP Mktg Chief Executive

Board of Director s VP Fin

VP HR

Types of Organization structure

Formal vs Informal Vertical vs Horizontal Line Organization Functional Organization Line and Staff Committee Matrix

Formal Organization
Formal organization is a fixed set of rules of intra-organization procedures and structures. It is usually set out in writing, with a language of rules that leave little discretion for interpretation . It is a structure of well defined jobs, each bearing a definite measure of authority, responsibility and accountability. Every member is responsible for the performance of a specified task assigned to him on the basis of authority responsibility relationship in an organization.

Well defined rules and regulation Determined objectives and policies Limitation on the activities of the individual Strict observance of the principle of co-ordination Messages are communicated through scalar chain

Easily understood and explained

Critical for dealing with situations that are known and consistent

Informal Organization
Informal organization refers to the relationship between people in an organization based on personal attitudes, emotion, likes and dislikes etc. These relations are not developed according to procedures and regulations laid down in the formal organization.

Dynamic and responsive Excellent at motivation Resistance to change Treats people as individuals Promote communication among members Role conflict Difficult to pin down Essential for situations that change quickly or are not yet fully understood Fills gap in management ability

Advantages Informal Org.

1. To employees (i) Sense of belongingness (ii) Value for emotional problems: (iii) Aid on the job (iv) Innovation and originality: By enabling members to modify the job situation more to their liking, the informal organization creates the necessary environment for individual innovation and originality. The individual can experiment with his ideas. (v) Important channel of communication: They are transmitters and receivers of information before it is officially released. (vi) Check on authority

2.

To management (i) Less supervision (ii) An aid to management

Disadvantages - Informal Org.

Resistance to change Role conflict

Subordination of Group interest to individual interest

Rumour / Grapevine communication Group think philosophy: Workers become loyal to their groups.

Vertical & Horizontal

Vertical (tall): These structures are hierarchical, with graduating levels of responsibility and power in one direction and diminishing levels of autonomy and authority in the other. Vertical structure can be efficient because there is ultimately one point of authority to make decisions and execute initiatives.

Horizontal (Flat): is the level distribution of power. Horizontal organizational structure allows each individual shape the company in which he works. It deemphasizes the value of power and underlines the value of collaboration.

Advantages & Disadvantages of Vertical

Benefits Better at designating tasks to employees or departments Have well-defined responsibilities for employees Easier to manage.

Disadvantages Dependent on a strong leader at the top. Weak upper management means that each successive hierarchical structure will get frustrated by poor decision making by the superior. Lack of transparency

Advantages & Disadvantages of Horizontal

Benefits Tend to have the best employee morale Costs less to run a horizontal company because managers cost more than rank-and-file employees.

Disadvantages Harder to implement than vertical companies Employees may be less sure about their roles and responsibilities Managers can be frustrated by their lack of authority.

Line Organization
1. Simplest form of organization. 2. Line of authority flows from top to bottom. 3. Specialized and supportive services do not take place in these org. 4. Unified control by the line officers can be maintained since they can independently take decisions in their areas and spheres.

Merits of Line Organization

1. Simplest 2. Unity of Command 3. Better discipline 4. Fixed responsibility 5. Prompt decision

Demerits of Line Organization

1. Over reliance 2. Lack of specialization 3. Inadequate communication. There is one way communication. Wrong decisions might be implemented. 5. Autocratic leadership- misuse of authority and monopoly.

Functional (staff) Organization

1. The entire organizational activities are divided into specific functions such as operations, finance, marketing and personal relations.

2.

Each functional area is put under the charge of functional specialists and he has got the authority to give all decisions regarding the function whenever the function is performed throughout the enterprise.
3. Principle of unity of command does not apply to such organization as it is present in line organization.

Merits of Functional Org.

1. Specialization 2. Effective Control- Management control is simplified as the mental functions are separated from manual functions. Specialists may be asked to judge the performance of various sections.

3. Efficiency
4. Economy

Demerits of Functional Org.

1. Confusion 2. Lack of Co-ordination- as there is no unity of command. 3. Difficulty in fixing responsibility- Because of multiple authority. 4. Conflicts- among the supervisory staff of equal ranks. They may not agree on certain issues. 5. Costly

Line and Staff Organization

The whole organization is divided into different functional areas to which staff specialists are attached. There are two lines of authority which flow at one time in a concern:

1. Line Authority 2. Staff Authority Power of command remains with the line executive and staff executive serves only as counselors.

Merits of Line and Staff Organization

Relief to line executives- Advice and counseling is provided by staff executive. Hence line executives can concentrate on the execution of plans.
Expert advice by the staff specialist. Benefit of Specialization Benefits of Research and Development

Training- Presence of staff specialists serves as ground for training to line officials.
Unity of action

Demerits of Line and Staff Organization

Line and staff conflicts Costly

Assumption of authority
Staff steals the show- In a line and staff concern, the higher returns are considered to be a product of staff advice and counseling.

Committee form of Organization

Matrix form of Organization

Methods (basis) of departmentation

Centralization & decentralization

Span of management
Span of control is a span of supervision which depicts the number of employees that can be handled and controlled effectively by a single manager.

Types of span of control

Narrow span of control: The features are:1. Work which requires tight control and supervision, for example, handicrafts, ivory work, etc. which requires craftsmanship, there narrow span is more helpful. 2. Co-ordination is difficult to be achieved. 3. Communication gaps can come. 4. Messages can be distorted. 5. Specialization work can be achieved. 1. Wide span of control- one manager can effectively and efficiently handle a large number of subordinates at one time. The features of this span are:1. Less overhead cost of supervision 2. Prompt response from the employees 3. Better communication 4. Better supervision 5. Better co-ordination 6. Suitable for repetitive jobs Manager supervises a selected number of employees at one time.

Factors influencing span of control

Managerial abilities Competence of subordinates Nature of work Delegation of authority Degree of decentralization

Staffing
Filling & Keeping filled, positions in the organization
The process by which an organization creates a pool of applicants and makes a choice from that pool to provide the right person at the right place at the right time to increase the organizational effectiveness.

The selection and training of individuals for specific job functions, and charging them with the associated responsibilities.

HR Planning - STEPS

Demand Forecasting

Inventory Analysis and Supply Forecasting

Reconciliation

Cost Benefit analysis

Implementation and control

Recruitment & Selection

Recruitment process of searching for prospective employees and stimulating them to apply for jobs in the organization.

Selection Process of choosing duly qualified persons according to the requirement of the job.

Factors affecting Recruitment

Size of Organization Salary structure and working conditions

Rate of growth of the organization

Employment conditions in the country

Sources of Recruitment
Internal Sources Transfers Promotions Reference from present employees External Sources Advertisement Employment exchanges

Educational institutions
Unsolicited applications

Placement agencies
Labour contractors Data banks Competitors

Steps in Selection
Receipt & Scrutiny of application Preliminary Interview Blank Application form

Reference Check Final Selection Physical Examination

Interviews

Tests

Placement & Orientation