Page 124 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes 3. Management's Attitude towards Informal Organisation: Formal organisation, no doubt
is an important part of the organisation but it alone is not capable of accomplishing the
organisational objectives. Informal organisation supplements the formal organisation in
achieving the organisational objectives. If handled properly, informal organisation will
help in performing the activities of the organisation very efficiently and effectively. In the
words of Keith Davis, "An informal organisation is a powerful influence upon productivity
and job satisfaction. Both formal and informal systems are necessary for group activity
just as two blades are essential to make a pair of scissors workable". As both formal and
informal organisations are quite essential for the success of any organisation, a manager
should not ignore the informal organisation. He should study thoroughly the working
pattern of informal relationship in the organisation and use the informal organisation for
achieving the organisational objectives.

7.4 Forms of Organisation

Organisation requires the creation of structural relationship among different departments and
the individuals working there for the accomplishment of desired goals. Organisation structure
is primarily concerned with the allocation of tasks and delegation of authority. The establishment
of formal relationships among the individuals working in the organisation is very important to
make clear the lines of authority in the organisation and to coordinate the efforts of different
individuals in an efficient manner. According to the different practices of distributing authority
and responsibility among the members of the enterprise, several types of organisation structure
have been evolved. They are:
1. Line organisation

2. Line and staff organisation
3. Functional organisation
4. Committee organisation

7.4.1 Line Organisation

This is the simplest and the earliest form of organisation. It is also known as "Military", "traditional",
"Scalar" or "Hierarchical" form of organisation. The line organisation represents the structure in
a direct vertical relationship through which authority flows. Under this, the line of authority
flows vertically downward from top to bottom throughout the organisation. The quantum of
authority is highest at the top and reduces at each successive level down the hierarchy. All major
decisions and orders are made by the executives at the top and are handed down to their
immediate subordinates who in turn break up the orders into specific instructions for the purpose
of their execution by another set of subordinates. A direct relationship of authority and
responsibility is thus established between the superior and subordinate. The superior exercises
a direct authority over his subordinates who become entirely responsible for their performance
to their commanding superior. Thus, in the line organisation, the line of authority consists of an
uninterrupted series of authority steps and forms a hierarchical arrangement. The line of authority
not only becomes the avenue of command to operating personnel, but also provides the channel
of communication, coordination and accountability in the organisation.
Prof. Florence enunciates three principles which are necessary to realise the advantages of this
system and the non-observance of which would involve inefficiency.

1. Commands should be given to subordinates through the immediate superior; there should
be no skipping of links in the chain of command.

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