Modern Concepts of Organisation Theory: Organisational Structure | Commerce & Accountancy Optional Notes for UPSC PDF Download

Introduction

• An organization's structure is the established pattern of relationships among its components. It refers to the network of relationships among individuals and positions within an organization. Jennifer and Gareth define it as the formal system of task and reporting relationships that controls, coordinates, and motivates employees to work together to achieve the organization's goals. Much like how humans have skeletons that define their physical parameters, organizations have structures that define theirs. It's analogous to the architectural plan of a building, where various factors like cost, space, and special features are considered. Similarly, managers must consider factors like specialization benefits, communication problems, and authority levels when designing the organization's structure.
• The manager determines work activities, writes job descriptions, organizes people into groups, assigns them to superiors, sets goals and deadlines, and establishes performance standards. Operations are controlled through a reporting system, and the structure often takes the shape of a pyramid. The formal structure implies well-defined duties and responsibilities, hierarchical relationships between superiors and subordinates, assigned tasks, coordination of activities, and policies to guide people and activities.
• While the formal structure is deliberately planned, actual operations and behavior are often influenced by social and psychological forces, leading to a modified operating structure. This operating structure serves as the basis for the organization.

The organization's structure contributes to its efficient functioning in several ways:

• Clear-cut authority relationships: It allocates authority and responsibility, specifying roles and relationships.
• Pattern of communication: It facilitates communication and coordination by grouping activities and people.
• Location of decision centers: It determines where decisions are made, based on departmental conditions.
• Proper balancing: It emphasizes coordination and gives critical aspects priority.
• Stimulating creativity: It encourages creative thinking and initiative by providing defined patterns of authority.
• Encouraging growth: It provides a flexible framework for handling growth and change.
• Making use of technological improvements: It adapts to technological advancements, modifying authority-responsibility relationships accordingly.

Components of Organisation Structure

• A good organization structure is essential for effective management, improving teamwork and productivity by providing a framework for effective collaboration. It should be developed according to the organization's needs.
• Organizational structure influences the distribution of tasks, grouping of activities, coordination of activities, and overall task accomplishment. Given that organizational structure relates to relatively stable relationships and processes within an organization, all influencing factors must be analyzed when designing the organizational structure. According to Robbins, organizational structure stipulates how tasks are allocated, who reports to whom, and the formal coordinating mechanisms and interaction patterns that will be followed. John Ivancevich and Michael Matteson have also expressed the same view and advocated that managers are required to make the following four decisions for designing organizational structure: Division of overall tasks into smaller jobs, Distribution of authority among the jobs, Bases by which the individual jobs are to be grouped together, and The appropriate size of the group reporting to each superior. Let us discuss each of them in detail.

Division of Labor

• Adam Smith emphasized the division of labor in his celebrated work, Wealth of Nations. In the early twentieth century, Henry Ford used assembly line operations for manufacturing automobiles. He assigned a specific repetitive task to each worker. The whole tasks were broken into a number of smaller steps or activities. Each step was required to be completed by a separate individual. Thus, the individual attained specialization in performing that particular activity. The manufacturing sector has been using work specialization extensively all over the world. 
• The division of labor, which results in work specialization, provides the following benefits to the organization: The performance of specialized job enhances work efficiency, and hence, the employees' skills can be used in the most efficient way. Since the work cycles of the job are very short, the workers can attain perfection in that job quickly. It enhances productivity in the organization. The workers can be trained easily to perform the repetitive work. The training costs are reduced. It is easier to match workers with the specific job skills. 
• Despite these benefits, the division of labor has been criticized on the following grounds: It cannot be used for all types of jobs. It may lead to monotony and boredom. It focuses on the physical performance of the job and underestimates the behavioral aspects of the workers. The positive features of the division of labor overshadow the negative features. Hence, work specialization has been widely used as an important means for enhancing productivity in the organization.

Delegation of Authority

• Delegation is the process that a manager follows in dividing the work assigned to him so that he performs that part, which because of his position he can perform effectively. Delegation is legitimate authorization to a manager or employee to act in specified ways. It enables him to function independently without reference to the supervisor but within the limits set by the supervisor and the normal framework of organizational objectives, policies, rules, and procedures. 
• Thus, delegation involves: a) entrustment of work to another for performance, b) grant of power, right, or authority to be exercised to perform the work, c) creation of an obligation on the part of the person accepting delegation. Delegation of authority is one of the most important elements in the process of organization. Organizations are characterized by a network of activities and roles. Delegation is the process through which the interrelationships are created among individuals in their different roles in the organization. 
• Delegation is necessary because it is physically impossible for a single man to look after the affairs of a large organization. The success of a manager lies in his ability to multiply himself through other people. The organizations of today are not only large but also complex in character. No manager can claim to have all the skills and expertise to perform all the diverse kinds of jobs. Again, large-scale business activities are not confined to one place. It may have several branches and units at several places.