organisation Development, definition, types, concepts, formal, informal,role of levels of management

1. Dr.T.Sivakami
Assistant Professor
Department of Management Studies
Bon Secours College for Women
Thanjavur
Organization Development

2. Organization: Meaning
• Organization is the structural framework of duties
and responsibilities required of personnel in
performing various functions with a view to achieve
business goals through organization. Management
tries to combine various business activities to
accomplish predetermined goals.

3. • Louis Allen, “Organization is the process of identifying and
grouping work to be performed, defining and delegating
responsibility and authority and establishing relationships for
the purpose of enabling people to work most effectively
together in accomplishing objectives.” In the words of Allen,
organization is an instrument for achieving organizational
goals. The work of each and every person is defined and
authority and responsibility is fixed for accomplishing the
same.
• L.H. Haney, “Organisation is a harmonious adjustment of
specialised parts for accomplishment of some common
purpose or purposes”. Organisation is the adjustment of
various activities for the attainment of common goals.

4. Concepts of Organisation
• There are two concepts of organisation:
• 1. Static concept
• 2. Dynamic concept,
• 1. Static Concept:
• Under static concept the term ‘organisation’ is used as a structure, an entity or a
network of specified relationship. In this sense, organisation is a group of people
bound together in a formal relationship to achieve common objectives. It lays
emphasis on position and not on individuals.
• 2. Dynamic Concept:
• Under dynamic concept, the term ‘organisation’ is used as a process of an on-
going activity. In this sense, organisation is a process of organising work, people
and the systems. It is concerned with the process of determining activities which
may be necessary for achieving an objective and arranging them in suitable
groups so as to be assigned to individuals. It considers organisation as an open
adoptive system and not as a closed system. Dynamic concept lays emphasis on
individuals and considers organisation as a continuous process.

5. Characteristics of
Organisation:
• 1. Division of Work:
• The total work of the enterprise is divided into activities and functions. Various activities
are assigned to different persons for their efficient accomplishment. This brings in
division of labour. One person cannot carry out many functions, but specializing in
different activities is necessary to improve one’s efficiency.
• 2. Co-Ordination:
• Coordination of various activities is as essential as their division. It helps in integrating
and harmonizing various activities. Coordination also avoids duplications and delays.
• 3. Common Objectives:
• All organizational structure is a means towards the achievement of enterprise goals. The
goals of various segments lead to the achievement of major business goals. The
organizational structure should build around common and clear cut objectives. This will
help in their proper accomplishment.

6. • 4. Co-operative Relationship:
• An organisation creates co-operative relationship among various
members of the group. An organisation cannot be constituted by one
person. It requires at least two or more persons.
• Organisation is a system which helps in creating meaningful
relationship among persons. The relationship should be both vertical
and horizontal among members of various departments..
• 5. Well-Defined Authority-Responsibility Relationships:
• An organisation consists of various positions arranged in a hierarchy
with well defined authority and responsibility. There is always a
central authority from which a chain of authority relationship
stretches throughout the organisation. The hierarchy of positions
defines the lines of communication and pattern of relationships.

8. • It consists of board of directors,
chief executive or managing
director.
• The top management is the
ultimate source of authority and
manages an enterprise's goals
and policies. It devotes more
time on planning and
coordinating functions.

9. Role of the top management
• a. Top management lays down the objectives and broad policies of the
enterprise.
• b. It issues necessary instructions for preparation of department
budgets, procedures, schedules etc.
• c. It prepares strategic plans & policies for the enterprise.
• d. It appoints the executive for middle level i.e. departmental managers.
• e. It controls & coordinates the activities of all the departments.
• f. It is also responsible for maintaining a contact with the outside world.
• g. It provides guidance and direction.
• h. The top management is also responsible towards the shareholders for
the performance of the enterprise.

10. • The branch managers and departmental
managers constitute middle level. They
are responsible to the top management
for the functioning of their department.
They devote more time to
organizational and directional functions.
• In small organization, there is only one
layer of middle level of management
but in big enterprises, there may be
senior and junior middle level
management.

11. Role of Middle Level of Management
• a. They execute the plans of the organization in accordance with the policies
and directives of the top management.
• b. They make plans for the sub-units of the organization.
• c. They participate in employment & training of lower level management.
• d. They interpret and explain policies from top level management to lower
level.
• e. They are responsible for coordinating the activities within the division or
department.
• f. It also sends important reports and other important data to top level
management.
• g. They evaluate performance of junior managers.
• h. They are also responsible for inspiring lower level managers towards better
performance.

12. 3. Lower Level of Management
• Lower level is also known as supervisory/operative level of
management. It consists of supervisors, foreman, section officers,
superintendent etc.
• According to R.C. Davis, “Supervisory management refers to those
executives whose work has to be largely with personal oversight and
direction of operative employees”.

13. Role of Lower Level of Management
• a. Assigning of jobs and tasks to various workers.
• b. They guide and instruct workers for day to day activities.
• c. They are responsible for the quality as well as quantity of production.
• d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
• e. They communicate workers problems, suggestions, and recommendatory appeals etc to
the higher level and higher level goals and objectives to the workers.
• f. They help to solve the grievances of the workers.
• g. They supervise & guide the sub-ordinates.
• h. They are responsible for providing training to the workers.
• i. They arrange necessary materials, machines, tools etc for getting the things done.
• j. They prepare periodical reports about the performance of the workers.
• k. They ensure discipline in the enterprise.
• l. They motivate workers.
• m. They are the image builders of the enterprise because they are in direct contact with the
workers.

14. Types of Organisation
• Organisations are a network of relationships amongst people working
together so as to get the best output in an enterprise. The two types
of the organisation formed on the basis of relationships are:
• Formal organisation
• Informal organisation

15. Formal Organisation
• Formal organisation refers to the official structure of well-defined
jobs, each being a measure of authority and responsibility. This
organisational structure is designed by the management to
accomplish a particular task. In formal organisation positions and
authority of each level are clearly defined.
• In this kind of organisation, each person is responsible for their
performance. It has a formal setup of superior-subordinate
relationships to achieve a predetermined goal. The structure of a
formal organisation can be functional or divisional.

16. Features of formal organisation:
• Features
• • Formation: Formal organisation is created by top-level management for the
smooth functioning of the organisation.
• • Purpose: It is created to achieve the organisational objectives, and it gives
more emphasis on work rather than interpersonal relationships.
• • Reporting Relationship: The position, responsibility, and accountability of
each person are clearly defined. These things clarify who will report to whom and
avoids confusion in an organisation.
• • Stability: Formal organisation is stable due to its well-defined structure.
• • Chain of Command and Communication: Formal organisation follows the
official chain of command and communication at every step.
• • Flexibility: Formal organisation is rigid because members are required to
behave in a prescribed manner.
• • Coordination: Formal organisation coordinates and integrates the effort of
various departments.

17. Advantages
• Following are the advantages of formal organisation:
• • Fixation of Responsibility: It is easier to fix responsibility because
mutual relationships are clearly defined.
• • Clarity of Duties: The role and duties of each member are clearly and
explicitly specified. So, there is no confusion, and it helps in avoiding
duplication of effort.
• • Unity of Command: There is unity of command as formal the
organisation makes more use of official channels of command and
communication.
• • Helpful in achieving Objectives: It leads to the effective
accomplishment of objectives by providing a framework for operations to
be performed and clarify of roles in the minds of employees.
• • Provides Stability: It provides stability to the organisation as the
behavior of employees can be fairly predicted since there are specific rules
to guide them.

18. Disadvantages
• Following are the disadvantages of formal organisation:
• • Delay in Action: Formal communication may lead to delays in
decision-making and action, as the official chain of command has to
be followed.
• • Lack of Initiative: Formal organisation does not allow any
deviation from policy and rules, which are laid down by the
management. It kills the spirit of initiative and creativity amongst the
members of the organisation.
• • Ignore Human Elements: Formal organisation has given more
emphasis on its work and structure. Therefore, it ignores the
importance of interpersonal relations and human needs.

19. Informal Organisation
• Informal organisation refers to a network of social relations, which
emerges on its own due to formal roles and relationships amongst
people. Informal organisations emerge from within the formal
organisation when people interact beyond their official defined roles.
• It arises to fill the social and personal needs of an individual, which
cannot be satisfied through a formal organisation. Informal
organisations have no prescribed rules and policies, but it comes into
existence through social relations.

20. Features
• Following are the features of informal organisation:
• • Formation: Informal organisation emerges on its own within the formal
organisation due to interaction amongst employees.
• • Purpose: The main purpose of an informal organisation is to satisfy social and
cultural needs and to fulfill the common interest of the members of the organisation.
• • Reporting Relationship: There is no definite pattern of authority and responsibility.
• • Stability: Due to the lack of a definite structure, the informal structure is less
stable.
• • Chain of Command and Communication: There is no definite direction of
communication for the flow of information. Information flows independently.
• • Flexibility: This organisation is flexible because it has no standard for measures of
behaviour.

21. Advantages
Faster Communication: Informal organisation follows the independent
channel of communication because there is no prescribed official channel. It
leads to a faster spread of information as well as quick feedback. Sometimes,
management also uses such communication to transmit certain information,
which the formal system fails to convey.
• • Fulfill Social Needs: Informal organisation satisfies the social needs of
the members, which are not satisfied in formal organisation. This enhances
their job satisfaction, as it gives them a sense of belongingness.
• • Help in achieving Organisational Objectives: It contributes towards
the fulfillment of organisational objectives by compensating for
inadequacies in the formal organisation. Informal organisation provides
feedback about the work experience as they discuss their views and ideas
with superiors.

22. Disadvantages
Resistance to Change: Informal organisation is bounded by custom and
culture, so it resists change. Such resistance may delay or restrict the
growth of the organisation.
• Spread of Rumours: When an informal organisation spreads rumours,
it becomes a destructive force and goes against the interest of the
formal organisation.
• Pressure of Group Norms: In the case of informal organisation, people
are under pressure to follow the group norms, even if such norms are
against the interest of the formal organisation.