Bibliography http://www.businessdictionary.com/definition/line and-staff-management.html https://en.m.wikipedia.org/wiki/staff_and_line http://www.preservearticles.com/2012051832428/what -is-the-departmentation-by-functions-inmanagement-limitations.html https://www.referenceforbusiness.com/management/I nt-Loc/line-and-staff-Organizations.html Books referred : Essentials of management – Harold Koontz DEPARTMENTATION Departmentation is the process which is used to group activities into units for the purpose of administration at all levels. By this process, the personnel and functions of an enterprise are departmentalized by division into separate units The administrative units so created may be called as divisions, units, branches, or any other name. Types of Departmentation Departmentation by enterprise function Departmentation by territory or geography Departmentation by customer group Departmentation by product Departmentation by function The grouping of activities according to the functions of an enterprise is known as departmentation by function. This is the most common type of departmentation. The basic enterprise functions generally consist of production, sales, finance etc. Firstly, there is no generally accepted terminology as a manufacturing enterprise employs the terms production, sales and finance. A wholesaler, on the other side is involved with operations, traffic and finance. Contd.. Secondly, the basic activities often differ in importance. For example, hospitals have no sales department. This does not mean that these activities are not undertaken, rather they are unspecialized. Functional organizations are present in almost every enterprise and is the most widely used basis for organizing activities. Advantages of functional departmentation This method follows the principle of specialization It is a logical and time proven method Authority and responsibility can be clearly defined and fixed Since the top managers are responsible for the end results, control becomes effective. Disadvantages of functional departmentation It develops a loyalty towards the functions and not the enterprise as a whole. Co-ordination of different functions becomes difficult Only the departmental heads are held responsible for defective work Departmentation by territory When the organization is large and geographically dispersed , departmentation on territorial basis is the best. It is also considered suitable where the branches produce the same goods or perform similar services at various locations. For example: chain retailing, automobile assembling etc. Many government agencies like the tax department, the central bank, the courts and the postal services adopt this basis of organization. It is mostly used in sales and production and not in finance because the financial operations are usually handled at the hedquarters. Merits of territorial departmentation Sales activities can be conduced more effectively. The sales personnel can spend more time on sales rather than on travelling. The executives of territorial department can become familiar with the key details and can take on the spot decisions in times of emergency. The department will have an excellent training situation for all round managers needed in the future at higher levels. Demerits of territorial departmentation It requires more persons with general managerial abilities It tends to make maintenance of economical central services difficult and may require services such as personnel, or purchasing at the regional level. It increases the problem of top management control. Departmentation by customer group Grouping of activities that reflects a primary interest in customers is known as departmentation by customer. Under this method, the customers are divided into separate categories such as distributers, retailers and consumers, and the task of satisfying the needs of different categories of customers is assigned to different departments. Merits of customer departmentation Particularly in the modern times, the needs of the customers should be satisfied effectively. It aims to satisfy the needs of the customers in a better way. This method is highly useful where a product or service of wide variety is offered through many marketing channels and outlets. Demerits of customer departmentation There may not be enough work in each department. Hence, some workers would have to stay idle. It may also develop an unequal development of customer groups in times of expansion and disappearance of recession. This kind of departmentation may also create a tendency to remain rigid. Consequently, it may become difficult to adjust to the situation in case of any fluctuation. Departmentation by product This type of departmentation is desirable for large undertakings which deal with a variety of products or product lines. To departmentalize on product basis means to establish each product or group of closely related products in a product line as a relatively autonomous integrated unit within the overall framework of the company. Under this method, an executive will be in charge of and responsible for all the activities relating to a particular product from the production to distribution. Merits of product departmentation It facilitates optimum use of specialized skill, labour and capital. Various economies relating to production, assembly and handling can be availed. All the activities connected to a particular product can be effectively coordinated. Better timing and customer service can be ensured. Demerits of product departmentation It will often result in unnecessary duplication of work and ultimately result in increase in the production cost. The problem of maintaining headquarters control shall be more acute. There can be difficulties in coordination with the organizational structure. Successful managers will be tempted to acquire more and more powers and build up their own empire. This danger can be averted by centralizing all major policy decisions. Departmentation in conclusion Departmentation is not an end in itself but is simply a method of arranging activities to facilitate the accomplishment of objectives. Each method has its advantages and disadvantages. Consequently, the process of selection involves a consideration of the relative advantages of each pattern at each level in the organization structure. In all cases, the central question concerns the type of organizational environment that the manager wishes to design and the situation being faced. The preceding discussion of the alternative methods of departmentation shows that each method yields certain gains and involves certain costs. An introduction- Authority & power Power a much broader concept than authority, is the ability of individuals or groups to induce or influence the beliefs or actions of other persons or groups. Authority in an organization is the right in a position (and through it, the right of the person occupying the position) to exercise discretion in making decisions affecting others. It is of course a type of power, but power in an organizational setting. Line organization Line organization is the oldest and the simplest type of organization, also known as scalar organization or military type of organization It is characterized by direct lines of authority flowing from the top to bottom and lines of responsibility flowing in an opposite but equally direct manner. The most important feature of this type of organization is superior subordinate relation. The superior delegates the authority to the subordinate and so on, forming a line from the very top to bottom of the organizational structure. Principle of unity of command is the most salient feature of this type of organization, i.e. orders are received from only one boss and the subordinates are accountable to their immediate superior. It is very simple to establish and operate and can be easily understood by the employees. It is quiet flexible in the sense that it is subject to quick adjustments to suit the changing conditions. It also helps to achieve effective coordination as all the activities pertaining to a single department are controlled by one person. In addition to this, it is a very economical kind of organization. There are certain drawbacks of line organization… Overloading – this system tends to overload the existing executives with too many responsibilities. The work may not be performed effectively on account of innumerable tasks before the single executives. Lack of specialization –absence of specialization is the major drawback of this system. On account of many functions & complexities, it is very difficult for a single individual to control all the matters effectively. Scope for favoritism – there may be a good deal of favoritism under this organization. The concerned officer may judge the performance according to his own norms. Lack of coordination – in reality, it is very difficult to achieve proper coordination among various departments. Each departmental head carries out his own functions in their own ways and means this leads to lack of uniformity in operations among various departments. Line and staff organization The line and staff organization combines the line organization with the staff department. In staff hierarchy, the departments are revenue consumers, and their managers are responsible for activities that support line functions(such as accounting, maintenance, personnel management) However , in modern practice, the difference between the two hierarchies is not so clear cut and jobs often have elements of both types of functions. Line position A line position is directly involved in the day to day operations of the organization, such as producing or selling a product or service. A line personnel carries out the primary activities of a business and are considered essential to the basic functioning of the organization. Example : a marketing executive. Although, a marketing executive does not actually produce the product or service, he or she directly contributes to the firms overall objectives through market forecasting and generating product or service demand. Thus line positions whether they are personnel or managers, engage in activities that are functionally and directly related to the principal workflow of an organization. Staff position Staff positions serve the organization by indirectly supporting line functions. Staff personnel use their technical expertise to assist line personnel and aid top management in various business activities. Staff mangers provide support, advice and knowledge to other individuals in the chain of command. Example : a legal advisor. A legal advisor does not actively engage in profit making activities but does provide legal support to those who do. Therefore, staff positions whether personnel or managers, engage in activities that are supportive to the line personnel. Authority within line and staff There are three types of authority present within a line and staff organization: 1. line authority 2. Staff authority 3. Functional authority Line authority Line authority flows down the chain of command. For example: line authority gives the production supervisor the right to direct an employee to operate on a particular machine. Therefore, it gives an individual a certain degree of power relating to the performance of an organizational task. Staff authority Staff authority is the right to advise or counsel those with line authority. Example : human resource department employees help other departments by selecting and developing a qualified workforce. or A quality control manager aids production manager by determining the acceptable quality level of products at a manufacturing company. Functional authority Functional authority is referred to as limited authority. It gives a staff or line person power over a particular function. It can also be defined as the authority given to the line or staff manager to do a specific job. When the job is completed, the authority is taken back. Example : the normal job of marketing manager is to sell the products of the company. The MD of the company may give him the authority to conduct a new year party for the whole company. This is functional authority. This job is not his normal job. The manager already has a line or staff authority to do his normal job. thus, functional authority is the additional authority given to him to do the new job. Thus it is a special type of authority for staff personnel that must be designated by top management. Organizational design (approaches) Organizational design is the way an organization is to be structured and operated by its members. It is both a plan and a process. There is no particular theory of organizational design. However, some main approaches include: Simple or flat structure: a simple structure tends to be flat, meaning it doesent have a lot of managers. This approach consists of a lot of employees and a single boss. This works well for small businesses that operate in one location and depends on the owner for their direction. Team structure: it divides employees into groups. These groups work on projects or come up with solutions to specific problems usually the team leader reports to the management. This leader can be assigned by management or voted into the position by the individuals. Contd.. Functional structure: if a company has self contained departments that have many employees who require an overseeing manager or executive, a functional structure may work. Divisional structure: this structure enables different divisions to operate like businesses within the businesses. Each division has a manager who reports to the CEO and the division sets its own department(shipping, marketing etc). Matrix structure: in this, the employees may report to more than one person. Lines of authority can go both up and sideways. For instance a person may have to report to a divisional manager and the sales manager at the same time. Example: organizational design SRG aluminum Pvt. Ltd, an aluminum industry, recognized that they were becoming bureaucratic and unresponsive to their customer’s needs. Following a period of assessment of their strengths and weaknesses, they went through a process of organizational redesign in which they made their main functions more collaborative. In the pre design workflow, the tendency of most people in the organization was to think in terms of sale and organize people according to the similarity of functions. In the post design workflow, the company became more cross functional. They combined people from a number of departments into teams that took full responsibility of managing customer orders. Aas a result, the company was able to improve their total billings of a major product line by 25% This is the kind of integration and improved collaboration that can result from organizational design Corporate example for departmentation: Wallmart Wallmart was originally opened in Rogers, United States by Sam Walton in 1962 and has been growing since then. It carries general merchandise and a selection of groceries. Many stores also have a garden, pharmacy, optical centers, one hour photo processing lab, a bank branch, fast food outlets etc. Due to its huge workforce, good departmentation structure is very important. The retail store employees include the hourly workforce, store management and higher level managers such as district and regional managers. Contd.. The organizational structure of wallmart is a formal bureaucratic structure. The three successful operating divisions are logistics, real estate and store operations which are under a unified leadership team. Being geographically diverse, territorial departmentation is carried out too. This therefore, has taken wallmart from being departmentalized by function to geographical departmentalization. There is also a clear chain of command from the top to the bottom On the other hand, the span of control is narrow as the organization has management teams that decide how the merchandise gets priced, how the items are to be shipped and other items that need to be managed.
