Chapter: Seven

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Chapter: Seven

Organizing and Staffing Function

Concept of Organizing
The term organizing is derided from word organism, which is an entity with parts so integrated that
their relation to each other is governed by their relation to the whole. When a group of two or more
persons work together toward a common goal, the relationship and interaction among them give rise to
problems such as who decides what issue, who does what work and what action should be taken. Thus
best way to group organizational activities and resources art to be devised for, what we call organizing.
Organizing is the establishing of effective behavioral relationship among persons so that they may
work together efficiently and gain personal satisfaction in doing selected tasks under given environmental
conditions for the purpose of achieving some goals or objective. As this definition suggests, the organizing
function of management brings together human and physical resources in an orderly manner and arranges
them in a coordinated pattern to accomplish planned objectives.
Principles of Organization:
Management experts have laid down the following principles of organization.
1. Principle of Objective: The objective of the organization should be clearly defined and fully
understood by all personnel. Objective provides the organization with a sense of purpose and
direction.
2. Principle of Functional Definition: The duties authority and responsibility of every individual
must be clearly and precisely defined. No individual should have confusion as to what he has to do
and for whom.
3. Principle of Division of Labor: Work should be divided into jobs that an employee can
concentrate on a specific job. However, excessive division of work and narrow jobs may create
boredom and monotony among employees.
4. Principle of Unity of Command: It means single source of authority over a subordinate. No
employee can effectively serve tow bosses simultaneously. Therefore, an employee should receive
orders and be accountable to one and only one superior.
5. Principle of Authority and Responsibility: Authority and responsibility are coextensive and two
side of the same coin. Therefore, they should go together. Authority without corresponding
responsibility results in misuse of authority while responsibility in the absence of adequate
authority leads to frustration in effective performance.
6. Principle of Balance: Different departments and activities of the organization should be given a
proper weightage in proportion to their contribution to the overall objectives. An appropriate mix
of centralization and decentralization should be created.
7. Principle of Coordination: This Principe requires that the diverse activities performed by
different individuals in the organization should be in proper harmony. Activities and functions of a
similar nature should be grouped together under one head.
8. Principle of Exception: This principle implies that only those matters should be referred to higher
levels of management which are exceptional nature or which cannot be handled effectively at
lower level. This principle makes delegation of authority really effective.
9. Principle of Simplicity: The organization structure should be simple so that the personnel can
understand assignment of duties and authority relationships. A simple and clear structure allows
the employees to work efficiently.
10. Principle of Flexibility: The organizational structure should be so designed that it is adjustable to
the changing condition and requirement s of the enterprise. It should be adjustable to change if it is
to remain efficient under changing environment.
11. Principle of Efficiency: The efficiency of an organization is judged by its capacity to achieve the
predetermined objectives at the minimum cost. The organizational structure should ensure
optimum utilization of all resources.

Chapter: Seven

12. Principle of Scalar Chain: The scalar chain should be clearly defined so that every subordinates
knows who is his superior and to whom should be referred for decision. The chain of command
should be as short as possible.
13. Principle of Span of Control: According to this principle there is a limit to the number of
subordinates which a manager can supervise and control. There in no ideal span and it varies from
situation to situation.
Approaches to Organizing:
1. Classical Approach:
2. Behavioral Approach:
3. Contingency Approach

Process of Structuring an Organization:

Departmentation
Departmentation is a means of dividing the large and complex organization into smaller, flexible
administrative unit. It is the organization-wise division of work into various manageable units or
departments. It refers to horizontal differentiation in an organization. It is the grouping of activities and
employees into departments.
Departmentation is defined as the establishment of distinct area, units or subsystem of an
organization over which a manager has authority for performance of specified activates and results. In
simple words, the organizational process of determining how activities are to be grouped is called
departmentation.
Types of Departmentation:
1. Departmentation by Function: Functional departmentation is the most widely employed basis for
organizing activities. The basic aim of functional departmentation is to simplify complexity by grouping
all the work to be done into major functional departments. It is quite logical to group the activities in the
organization into such typical departments as production engineering, sales, marketing, and finance etc.
President

Marketing Manger
Production Manager
Finance Manager
Strengths:
Functional departmentation is the best in stable environment.
It creates efficiency through specialization.
Economies of scale within functions can be gained by an organization where the firm is organized
as per function.
Functional departmentation is better suited in medium sized organization.
Weakness
Functional departmentation does not promote innovation.
It is not responsive to the environmental change.
It is very difficult to achieve coordination between and among functions.
The responsibility of top management increases because every manager supervises only a narrow
function.
2. Departmentation by Product: Departmentation by product is adopted in the case of a multiproduct enterprise. The product structure is organized according to organizational output. The
structure is divided into several fairly autonomous units. Each unit is relatively self-contained and
is headed by a product manager who is responsible for the companys investment in capital,
facilities as well as for the units progress. If the product fails the division/product manger is held
responsible.
Strengths:

Chapter: Seven

Departmentation by product is better in unstable environment.

It makes coordination across functions possible.
It is well-suited to large organizations.
Under this departmentation, attention can be directed toward specific product lines and
services.
Weakness:

Departmentation by product requires more personnel and resources, and hence is costly.

An organization may lose the economies of scale owing to functional departmentation.

Integration and standardization across product lines is impossible.

Departmentation by product results in poor coordination across the product lines.

3. Departmentation by Territory: Departmentation by territory, also known as geographical
departmentation, facilitates adaptation to territorial differences. Large companies that distribute
products on a massive scale nationally often cannot coordinate all regions from the headquarters.
Each region of the country has distinct needs, tastes, and facilities that demand coordination.
Strengths:
It enables the local the local manger to consider the local customers, their habits, customs, styles,
cultures, and social forces.
Big organization find it very easy to organize on the basis of zones, regions and territories..
It saves substantial amount of transportation costs.
It enables managers to consider an integrated view of the organization as a whole.
Weaknesses:
It gives rise to the problems of communication.
It gives rise to the cost of transportation due to the distance of different departments.
Coordination and control pose serious problems of departmentation by territory.
It may leave some inevitable gap among head, zonal and branch offices.
4. Departmentation by Customer: Under the departmentation by customer, separate departments
are created to serve the needs of particular customer. Such an organization helps manager to
satisfy the customers requirements more conveniently and successfully. Such departmentation are
more common in banking, book publishing, and food industry.
Strengths

An organization can consider the needs of variety of customers.

Organization can concentrate on clearly identified and potential customer.

Organizations can develop rapport with attractive and resourceful customers.

It is highly useful in customer oriented organization.

Weaknesses:

It is almost impossible to consider the entire customer, their interests, habits, and customs.

It leaves coordination problems between sales personnel and production people.

Organizations may discriminate the rich and first class customers with poor customers.

There may be waste of resources by duplication of efforts.

5. Departmentation by Process: Under departmentation by process, activities are grouped on the
basis of various manufacturing processes. Similar types of labor and equipment are brought
together. It permits intensive and economical usage of costly equipment.
Strengths:
This is advantageous when machines or equipment used require special operating skills.
It is better suited to manufacturing companies.
It enables the organization to get the advantages of specialization.
Responsibility in each process can clearly be defined.

Chapter: Seven

Weaknesses:
It makes coordination of various functions and products difficult.
It results in conflicts between different manages at different levels.
It is not suitable for small scale organizations.
Duplication of efforts leads to inefficiency and increased level of costs.

Delegation of Authority
Meaning:
Authority may be defined as the capacity of a superior to make decisions affecting the behavior of
subordinates it is the right to take actions and utilize organizational resources. To be precise, authority is
the right to decide, to direct others to take action or to perform certain duties in achieving organizational
goals.
Delegation of authority takes place when a manager assigns a part of his work to others and gives
them the authority to perform the assigned tasks. The manager who delegates authority holds his
subordinates responsible for proper performance of assigned tasks. Thus the process of delegation
involves assigning duties, entrusting authority and imposing responsibility on subordinates.
Features:
1.
Sharing of Power: Delegation involves sharing of authority with other. A person never delegates
his entire authority to his subordinates. If he does so his managerial position becomes empty. A
manager always retains the authority to supervise and control.
2.
Performed within a limit: Delegation is always done within certain limit. While delegating
authority, a manager defines the limit within which subordinates can exercise their authority.
3.
Bond by Responsibility Delegation never means abdication of responsibility. After delegating
authority, a manager remains responsible for the work which he has assigned to the subordinates.
4.
Does not reduce authority: Delegation does not imply reduction in the authority of the superior.
He can at any time take back or reduce the delegated authority.
5.
Exercise of control: A superior exercise control to ensure that the subordinates are using their
authority in proper manner because superior has to be answerable for the subordinates performance.
6.
Reduction of work load: Delegation does not mean avoiding decisions. A manager delegates
authority for routine matters so that he can concentrate on more important matters.
7.
Based on division of Labor: Delegation of authority is based on the elementary principle of
division of work. A person can delegate authority only when he himself has the authority.
8.
Systematic Process: Delegation of authority is a systematic process rather than an arbitrary or ad
hoc exercise. A hierarchy of managerial position is created when authority is delegated systematically.
Advantages:
1.
Relief to Top Executive: Delegation reduces the burden of work on senior executives. By
transferring routine work to subordinates, a manager can concentrate on important policy matters. He
can therefore make better use of his valuable time and ability.
2.
Scalar Chain: Delegation of authority creates a chain of superior-subordinate relationships among
managers. It provides meaning and content to managerial jobs. It also directs and regulates the flow of
authority from top to the bottom of organization.
3.
Specialization: Through delegation, an executive can assign jobs to his subordinates according to
their abilities and experience. In this way the can obtain the benefits of division of work.
4.
Quick Decisions: When authority is delegated, lower level employees can take decisions quickly
without consulting senior executives. Subordinates are better in touch with local conditions and can
take more practicable decisions within the policy framework laid down by top management.
5.
Motivation: Delegation provides a feeling of status and importance to subordinates. Their
independence and job satisfaction increases due to the authority they enjoy. They become more willing
to work hard and achieve the targets laid down by higher authority.

Chapter: Seven

6.

Executive Development: Delegation gives an opportunity to employees to learn decision-making

and leadership skills by exercising authority. It helps to improve the quality of personnel at lower
level.
7.
Growth and Diversification: As the quality of managerial talent improves the organization can
face the future challenges in better way. It can grow and expand to bigger size. It can also undertake
new types of business activities.

Barriers to Delegation
1. Reluctance to Delegate: Manager offers numerous explanations in support of their conservative
outlook.

Better Performance: I can do it better myself. Many managers, suffering from an inflated
sense of their own worth, believe that if you want something done right, do it yourself. Thus the
manager prefers not to delegate and do every thing by himself.

No trust. I can not trust other to do the job: A manager trapped in this fallacy may delegate
but control the subordinates actions so closely that he makes effective action rather impossible.
Thus, continuous interventions by higher executive prevent important motivational and growth
opportunity.

Subordinate may get credit. Ill lose importance if I let others do the job. Some managers
believe that if subordinates make decisions concerning the work, the superiors may not be kept
informed and will thus lose authority.
2. Reluctance to Accept Delegation: Normally the following of the delegatee attitude hinder the
delegation process.

Easy to ask. It is easier to ask the boss: wise decisions are products of hard mental work. Sharing
the burden with the superior is a safe practice to subordinate. Confronting the decision single-handed
is nothing but an open invitation to troubles later on.

Fear of criticism. Why should I stick my neck out for that guy? If there is failure the superior is
likely to criticize the subordinate for his performance. If delegation proves to be success then the
superior is likely to steal the credit away from the subordinate. The subordinate is always is in losing
side.

Lack of information resources. Nobody tells me anything: Taking greater responsibility may be
risky in the absence of necessary information. In many cases it is true that their duties are not clearly
defined, authority is not specific, and instructions are vague.

Too heavy. I am already overburdened: in the absence of adequate rewards for satisfactory
performance, subordinate are typically reluctant to assume added responsibilities. The risk of failure
is unpleasant and unless the inducements are attractive no on e is interested in accepting delegated
responsibility.

Centralization
Meaning:
Centralization is the systematic and consistent reservation of authority at central points within the
organization. In centralization little delegation of authority is the rule; power is concentrated at the top
level. In centralize organization top management has at absolute authority for making almost all decision.
Subordinates depend on the top management for instruction and guidance on all matters.
According to Ricky W. Griffin, Centralization is the process of systematically retaining power
and authority in the hands of higher level manager.
Thus centralization can be referred as systematic and consistent retention or concentration of
authority for decision making at higher level of top management.
Advantages:

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1.
2.
3.
4.
5.

Standardized Systems and Procedures: centralization provides opportunity to establish

standardized systems and procedures which facilitates smooth and effective functioning and working
in the organization. It makes and enables consistency in the day to day operation of business.
Professional and Personal Leadership: Centralization provides opportunity for effective and
efficient personal leadership. This will result in quick decision and imaginative action which are vital
for success of modern business.
Economy of operation: Centralization of authority will create economies of scale in terms of
large scale operation of business. There is centralized buying and selling which is bulk nature and
result in heavy discounts and savings in transportation cost.
Coordination and control of Functional Activities: Centralized organization structure brings the
coordination of various activities and functions of the organization. In this organization, management
will help in coordinating the work of different divisions, segments, productions, and functions.
Utilization of Personnel: Centralize organizational structure helps for better utilization of highly
qualified, professional skilled personnel in technical as well as administrative areas of different
segments of business. It reduces wastage of efforts by avoiding duplication.

Disadvantages:
1.
Individual Efforts are Restricted: Centralization revolves around one person only. One man
takes all the decisions and decides the modes of implementing them. It destroys the initiative of
subordinates. They are not in a position to offer suggestions and just carry on with whatever has been
conveyed to them.
2.
Over Burden of Work of Subordinates: the centralized system creates responsibilities to few
persons in the organization. They remain overburdened with routine work while subordinates do not
have sufficient work. The chief executives are not able to devote sufficient time for important tasks of
planning, coordinating, and motivation.
3.
Slow Operation of Business: The centralization of organizational structure will lead to slow down
in operational and functional activities of business. All decisions are taken by only one person and his
unavailability keep the matter pending.
4.
Distance form Customers: The customers do not come into contact with the policy makers of the
business they meet only those officials who dont have the powers to take decisions. Moreover, one
person cant meet and know the reactions of customers regarding products and service.
5.
No Scope for specialization: Centralization of authority does not offer any scope for
specialization. All decisions are taken by one person and he may not be a specialist in all the areas. In
the present competitive world, there is a need for employing the services of specialist.

Decentralization
Meaning: Decentralization is the systematic efforts to delegate to the lowest levels all authority except that
which can be exercised at central points. It is the pushing down of authority and power of decision making
to the lower levels of organization. The centers of decision making are dispersed throughout the
organization. However, the essence of decentralization is the transference of authority from a higher level
to a lower level.
According to Ricky W. Griffin, Decentralization is the process of systematically delegating
authority throughout the organization to middle and lower level managers.
Thus decentralization of authority can be defined as systematic dispersal of authority in all
departments and at all levels of management. In recent years, it has come to be associated as a
fundamental principle of democratic where each individual is respected for his inherent worth.
Advantages: 1.
Reduces Burden of Top Executive: Decentralization helps to reduce the work load of to
executives. They can devote greater attention to important and vital policy matters by decentralizing
authority for routine and operational and operational and also functional decisions.

Chapter: Seven

2.

Quick Decision: the decentralized decision-making powers are delegated to the level of actual
level of execution. As a result more accurate and quick decisions can be taken as the subordinates are
well aware of the realities of the situations.
3.
Motivation to Subordinates: The decentralization helps the subordinates to get opportunity for
taking decisions independently. It helps to improve the job satisfaction and morale of lower level
executives by satisfying their needs of independence, participation, and status.
4.
Growth and Diversification: The decentralization provides opportunity for growth and
diversification of the enterprise. Each product division is given sufficient autonomy for innovations
and creativity. A sense of competition can be created among different divisions.
5.
Management Development: Decentralization of authority provides subordinates get the
opportunity of exercising their own judgment. They learn how to decide and develop managerial
skills. This helps for better utilization of lower level executives which facilitates executive and
managerial development.
Disadvantages:
1.
Lack of Coordination: In decentralization, each department/ division has substantial autonomy.
Hence, coordination among different departments and divisions are becoming more and more difficult.
2.
Difficulty in Control: The decentralization provides that different departments and divisions
work independently and it is difficult to exercise control in their activities. Top management may not
be able to exercise effective control activities of various divisions and segments of business.
3.
High Cost of Operation: Decentralization increases the administration and establishment
expenses. Each division or department has to maintain self sufficiency in terms of physical facilities as
well as well trained personnel.
4.
Non Availability of Talented Managers: Decentralized system will be effective and suitable only
if competent and able persons are employed to manage various functional activities in different
segments. The well equipped and able managers may not be available sometime to fulfill the
requirements of this system.
5.
External Constraints: Decentralization may not be possible and effective due to external
constraint factors like market uncertainties, aggressive trade union movement, and government
interventions.
Difference between Delegation and Decentralization
Basis
Delegation
Decentralization
Nature
It is the process of devolution of authority. It is the end result which is achieved when
Delegation
can
result
without authority is delegated at different levels. It
decentralization. (It is cause)
cant result without delegation. (It is result)
Scope
It is confined to a manager and his It involves systematic dispersal of authority at
subordinates. It takes place when a all levels and in function of the organization. It
manager shares his authority with other.
has wider scope than delegation.
Significance It is means of doing things with other. It is It is a philosophy of management. Top
essential because a manager can not do management may or may not adopt it. Thus it
every thing by himself.
is matter of choice of top management.
Freedom of A manager has to regularly exercise Lower level managers enjoy greater freedom
Action
supervision and controls on the behavior of action in these organizations. Top
and performance of subordinate after management do not exercise close supervision
delegation.
and control.

Coordination of Activities
Meaning:
Coordination means harmonious combination or interaction. It is orderly arrangement of group effort, to
provide unity of action in the pursuit of a common purpose. Coordination in terms of timing, balancing,
and integration is essential at each managerial level.
The term coordination may be defined as the process of bringing about unity and harmony in the
functioning of all departments or divisions or diverse sub-systems involved in organization. Thus

Chapter: Seven

coordination is conscious and rational managerial function of pulling together various components of
organized activity and weaving them together into a unified and integrated whole for achieving
predetermined goals.
Purpose:
1.
Integration: Departmentalization creates differentiation of activities through division of labor.
These differentiations are to be integrated toward a common organizational goal. Unity of action and
harmonization of activities are necessary to direct all efforts in to one direction.
2.
Harmonize Conflict: There is always a divergence of opinion among individuals regarding the
methods to best advance the interests of the organization. It thus becomes the central task of the
manager to reconcile differences in approach, efforts so that they will bring about group objectives.
3.
Economy and Efficiency: Coordination makes it possible to achieve economy and efficiency in
operations. The economy is achieved through avoiding duplication of efforts and efficiency by proper
correlation of activities.
4.
Unity in Diversity: There are large numbers of employees and each has different ideas, views or
opinions, activities and back ground in a large organization. There is a diversified activity in big
business organizations where these activities will be inefficient in the absence of coordination.
5.
Key to Other Function: The importance of coordination largely lies in the fact that it is the key to
other functions of management such as planning organizing, and control. It makes planning more
purposeful, organizing more well knit, and control more regulative.

Forms of Organizational Structure

1. Line Organization:
Line organization is the oldest type of organization. Line organization is characterized by direct
lines of authority flowing from the top to the bottom levels of the organizational hierarchy and lines of
responsibility flowing in an opposite but equally direct manner. These direct vertical flows of authority
and responsibility create superior-subordinate relationship or a scalar chin from top to bottom.
Advantages:
A.
Simple: Authority and responsibility flow directly and people can easily know their respective
position in the organization. Only one form of authority relationship exists.
B.
Speedy Action: Decisions can be made and executed promptly. Quick decision helps to make the
best of business opportunities. No staff specialists are to be consulted before taking decisions.
C.
Flexibility: it can easily be adjusted to the requirements of the business. Necessary change can
easily be executed by the authority without any delay.
D.
Economical: Line organization does not employ expert staff personnel and it is, therefore, less
expensive than other types of organizations.
E.
Unified Control: Since the responsibility for performance at each level is clearly defined and is
absolute, effective control becomes possible.
Disadvantages:
A.
Overloading: This structure put heavy work load of diverse nature on few key executives. Most
of their time is spent on detailed operations neglecting long-term planning and control.
B.
Autocratic: There is too much concentration of authority at the top. Therefore subordinates may
have little initiative and freedom of action.
C.
Lack of Specialization: There is no functional specialization as each departmental managers has
to do his own purchasing, financing, staffing, etc.
D.
Inefficiency: In the absence of expert staff advice, executive decisions may be unbalanced. Errors
of judgment may result in inefficiency and loss.
E.
Lack of Stability: Line organization tends to become personality based. When few powerful
executive leave the enterprise, a vacuum arise and the smooth working of the business is disrupted.
Suitability:
Despite the drawback listed above, line organization is suitable under following conditions.
1.
When the scale of operation is small.
2.
There are few employees and less levels of authority.
3.
The work is simple and of routine nature.
4.
Machines used are mainly automatic.

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5.
6.

Labor management relations are simple.

Continuous system of production is employed.

2. Line and Staff Organization:

Line and staff organization is designed to maintain a proper balance between centralization and
division of work. It seeds to combine advantages of specialization and unity of command. Under this type
of organization, there is a direct line of authority as in the line organization. In addition, specialists are
attached to line manager to advice them on important matters. These staff officers do not have any power
of command.
Advantages:
A.
Specialization: line and staff organization provides chance of specialization in activities. The
expert advice of specialists is made available to line executive at all strategic points.
B. Coordination: In this type of organization, better coordination is possible because staff personnel
provide complete factual information to line executives.
C. Opportunity for Advancement: A greater variety of responsible position exists in line and staff
organization. Young staff executives get training in their respective fields.
D. Flexibility: This structure provides greater scope for the growth and expansion of business. The
staff executives help in taking care of increasing complexity caused by expansion and change.
E. Sound Decisions: The line officer can take better decisions with the help of information and
advice from staff experts. Proper balance among various activities.
Disadvantages:
A.
Conflict: Conflicts between line executive and staff experts are very common. Overambitious
staff experts may interfere with line authority to get their advice implemented. Where as, Line
executive may ignore staff advice thinking it impracticable.
B.
Confusion: Authority, responsibility relationships becomes more complex and people at lower
level may be confused as to what and how to do and report to whom.
C.
Overdependence: Line executive may depend too much on staff experts for idea and information.
As a result they may lose their own initiative, thinking, and judgment.
D.
Ineffective: The staff may feel ineffective as it does not have authority to command and
implement its suggestion.
E.
Costly: Two separate type of executives, line and staff, have to be employed at high salaries. Thus
the structure is more expensive then other.
3. Functional Organization
Functional organization refers to the organization in which various activities are classified into a
number of functions such as production, marketing, finance, personnel, etc and each function is placed
under the charge of functional expert. Functional structure tries to incorporate the positive aspects of
specialization. A functional specialist directs the subordinates throughout the organization in the field of
his particular function.
Advantages:
A. Clarity: Functional structure brings order and clarity to organizational activities because it is
simple to understand every body what is being expected from him.
B. Specialization: Functional organization employ expert manger in his own field and the benefit of
his expertise is available to all personnel in the enterprise. He enjoys functional authority over all the
employees with respect to his functional area.
C. Coordination: Functional organization provides benefits of easy coordination among different
functions. Centralized decision making ensures unity of performance.
D. Efficiency: In this organization, efficiency is higher because every person concentrates on a single
leading function. Specialization and standardization facilitates mass production.
E. Growth and Expansion: the growth and expansion is not hampered because every man grows in
his own limited areas of specialty.
Disadvantages:

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A.
B.
C.
D.
E.

10

Complexity: Functional structure contains too may cross relationship between different
personnel. This creates confusion and overlapping of authority.
Indiscipline: It becomes difficult to maintain discipline because every employee has several
bosses. He may get conflicting orders and his loyalty is divided.
Expensive: In functional structure amount of clerical work increases. Moreover, large salaries
have to be paid to staff experts.
Instability: The functional structure suffers from the problem of instability. Changes in personnel
are likely to create instability in the organization.
Delay: Decisions may be delayed because many experts have to be consulted. Excessive
specialization may lead to monotony and lack of initiative.

4. Committee Organization.
Meaning:
A committee is a group of persons formed to discuss and deliberate to take a decision, decide a
course of action, advise line officers on some matters. It is a method of collective thinking, corporate
judgment, and common decision. In committee organizational structure, a set of committee is added to
assists the functioning of line and staff personnel of the organization. Committee structure is suitable for
the medium or large organization.
Advantages:
A.
Quality Decision: The members of committees come from different background and areas of
expertise and have different view point and values. Thus the decisions made by such committee are
more accurate and logical.
B.
Participation: Committees serves as an important means of communication between the
members of an organization which ensure participation of each member in management.
C.
Coordination: Participation in committee meeting promotes mutual understanding, team work,
and cooperation among employees.
D.
Motivation: Committee helps to improve the motivation and morale of employees by providing
them an opportunity to express themselves.
E.
Executive Development: A committee serves as a useful means for educating and training
subordinate executives and managers. Participation in meetings provides opportunity for learning
through doing.
Disadvantages:
A. Delay in Decision: The committee members tend to indulge in lengthy discussion. Thus
committee takes longer time to get decision or action than decision taken by one individual.
B. Split Accountability: No members can be individually held responsibility for wrong decision. No
one feels accountable for the result.
C. Lack of Secrecy: It is difficult to maintain secrecy regarding the decision and actions taken by a
committee. A large number of persons participate in committee meetings.
D. Compromised Decision: Committee decisions are often made by compromise between conflicting
view points. The ultimate decision may reflect the opinion of none.
E. High Cost: A lot of expenditure and time is incurred in conducting meetings and payment of
traveling or other allowances to members.
5. Matrix Organization
Meaning:
A matrix structure is a mixed organizational form in which the normal vertical hierarchy is over
layered by some from of lateral structure. It combines characteristics of both functional and project
structures. It is defined as any organization that employs a multiple command system that includes related
support mechanisms and an associated organizational cultural and behavior pattern. In simple terms when
a project structure is superimposed on a functional structure the result is matrix organization.
Advantages:
A. Efficiency: A matrix form permits efficient utilization of resources. Resources can be freely
allocated across different products. It facilitates efficient allocation of specialists.

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B.

11

Flexibility: Matrix form can better respond to the inevitable changes in the market condition,
technologies etc that occur as work progresses o a project.
C. Motivation: It provides motivation to the project staff as they can focus directly on completion of
a particular project. Lines of communications are short and well established.
D. Development: It provides an environment in which professionals can test their competence and
make maximum contributions. It pushes decision making down the chain of command.
E. Freeing Top Management: Since decisions are made at lower levels, the top management has
more time to interact with the environment. It facilitates rapid management response to changing
market and technical requirement.
Disadvantages:
A. Multiple Commands: It violates the principle of unity of command. Each employee has two
bosses the functional boss and the project manager.
B. Power Struggles: Since both functional and project manager share same set of resources, matrix
organization foster power struggle between them.
C. Cost: the matrix organization incurs great administrative costs then a conventional hierarchy.
Members have to spend far more time at meetings and discussions than doing work.
D. Complex: In matrix organization, organizational relationships become very complex. Apart from
formal relationships, informal one also arises creating problems of coordination.