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Management Practices and Organisational Behaviour

Notes three specific ways to find out what kind or structure is needed to attain the objectives of a
specific business:
1. Activities Analysis: The purpose of 'activities analysis' is to discover the primary activity
of the proposed organisation, for it is around this that other activities will be built. It may
be pointed out that in every organisation; one or two functional areas of business dominate.
For example, designing is an important activity of the readymade garments manufacturer.
After the activities have been identified and classified into functional areas, they should
be listed in the order of importance. It is advisable to divide and sub-divide the whole
work into smaller homogeneous units so that the same may be assigned to different
individuals. Thus, in devising an organisational structure, it is important to divide the
entire work into manageable units. It has rightly been said that the job constitutes the
basic building block in building up an organisational structure.
2. Decision Analysis: At this stage, the manager finds out what kinds of decisions will need
to be made to carry on the work of the organisation. What is even more important, he has
to see where or at what level these decisions will have to be made and how each manager
should be involved in them. This type of analysis is particularly important for deciding
upon the number of levels or layers in the organisation structure.
As regards decision analysis, Peter Drucker, has emphasised four basic characteristics.
They are:
(a) the degree of futurity in the decision,
(b) the impact that decision has on other functions,

(c) the character of he decision determined by a number of qualitative factors, such as,
'basic principles of conduct, ethical values, social and political beliefs etc., and
(d) whether the decisions are periodically recurrent or rates as recurrent decisions may
require a general rule whereas a rate decision is to be treated as a distinctive event.
A decision should always be made at the lowest possible level and so close to the scene of
action as possible.
3. Relations Analysis: Relations Analysis will include an examination of the various types
of relationships that develop within the organisation. These relationships are vertical,
lateral and diagonal. Where a superior-subordinate relationship is envisaged, it will be a
vertical relationship. In case of an expert or specialist advising a manager at the same
level, the relationship will be lateral. Where a specialist exercises authority over a person
in subordinate position in another department in the same organisation it will be an
instance of diagonal relationship. Peter Drucker emphasises that, "the first thing to consider
in defining a manager job is the contribution his activity has to make to the larger unit of
which it is a part." Thus, downward, upward and lateral (side-ways) relations must be
analysed to determine the organisation structure.

4.3.3 Principles of Organisational Structure

The following are the main principles that a manager has to keep in mind while formulating an
organisational structure.
1. Consideration of unity of objectives: The objective of the undertaking influences the
organisation structure. There must be unity of objective so that all efforts can be
concentrated on the set goals.
2. Specialisation: Effective organisation must include specialisation. Precise division of work
facilitates specialisation.

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