An organization or organisation is an entity comprising multiple people, such as an institution or an association, that has a collective goal and is linked to an external environment

1. Organizational Basics
Krishantha Jayasundara
1

2. What is an organization?
• An organization is a social entity (an
institution or an association)
2

3. What is an organization?
• It has a collective goal linked to an external
environment.
3

4. What is an organization?
• The word is derived from the Greek
word organon, which means "organ" .
4

5. Types of Organizations
• Corporations
5

6. Types of Organizations
• Governments
6

7. Types of Organizations
• Non-Governmental Organizations
7

8. Types of Organizations
• International Organizations
8

9. Types of Organizations
• Armed Forces
9

10. Types of Organizations
• Charities
10

11. Types of Organizations
• Not-For-Profit Corporations
11

12. Types of Organizations
• Partnerships
12

13. Types of Organizations
• Cooperatives
13

14. Types of Organizations
• Universities
14

15. Hybrid Organization
• An organization operates in both public
sector and the private sector simultaneously.
15

16. Hybrid Organization
• It fulfills public duties and develops
commercial market activities.
16

17. Voluntary Association
• It is an organization consisting of volunteers.
• They are able to operate without legal
formalities.
• But, they depending on jurisdiction of the
country.
17

18. Illegal or Secret Organizations
Secret
Societies
Criminal
Organizations
Resistance
Movements.
18

19. Organizing
The process
of sourcing, allocating, and arranging of resources
and assigning the authority
to achieve the organizational objectives
effectively and efficiently
19

20. Process
• A set of inner related activities
20

21. Sourcing
• Searching for and obtaining necessary
instruments and information.
21

22. Allocating
• Assigning a specific area
22

23. Resources
• Essential items in production or service
Scare-limited
supply
Effective
allocation
Optimum use
Cost effective
manner
23

24. Activities
• Areas of work, activities, job tasks to be done
to achieve organizational objectives.
• All the activities should be productive.
24

25. Authority
• Right or power to give orders.
• Power to make decisions.
25

26. Organizational Structure
Arrangement of
people and tasks
Designed to
accomplish the goals
of the organization.
26

27. Organizational Structure
27

28. Organizational Structure
• Positions within the organization
• Their hierarchy
• Levels of authority
28

29. Organizational Structure
• Relationship among those positions
29

30. Organizational Structure
• Formal lines of communication
30

31. Organizational Chart
• Presenting the organizational structure in a
diagram showing the positions and
relationships among them.
31

32. Organizational Chart
• Shows hierarchy and chain of command
32

33. Organizational Chart
• Shows Formal lines of communication
33

34. Organizational Chart
• Shows Levels of authority
34

35. Organizational Chart
• Shows Span of control (number of
subordinates directly under a superior)
35

36. Organizational Chart
• It shows how work is divided.
36

37. Methods of Preparing Organizational
Charts
• Vertical method
Managing
Director
Sales Team
(Reps)
Account
Clerk
Admin
Clerk
37

38. Vertical Method
Managing
Director
Sales Team
(Reps)
Account
Clerk/Cashier
Admin Clerk
38

39. Horizontal Method
39

40. Circular Method
40

41. Determinants of Organizational
Structure
• Goals and objectives of the organization
41

42. Determinants of Organizational
Structure
• Size of the organization.
42

43. Determinants of Organizational
Structure
• Financial strength of the organization.
43

44. Determinants of Organizational
Structure
• Geological location of the organization
44

45. Determinants of Organizational
Structure
• Vision of the top management
45

46. What can a manager learn from an
organizational chart?
• reporting arrangements
46

47. What can a manager learn from an
organizational chart?
• Base of the organization (function-
wise/customer-wise/department-wise)
47

48. What can a manager learn from an
organizational chart?
• Hierarchy in decision making.
48

49. What can a manager learn from an
organizational chart?
• Authority relationships.
49

50. What can a manager learn from an
organizational chart?
• Line and staff relationship.
50

51. What can a manager learn from an
organizational chart?
• Formal line of communication
51

52. What can a manager learn from an
organizational chart?
• Pay structure.
52

53. Limitations in Use of Organizational
Charts
• Organizational charts can use relationships
only in a formal organization.
53

54. Limitations in Use of Organizational
Charts
• It shows what should the structure be but not
the actual structure.
54

55. Limitations in Use of Organizational
Charts
• The chart can easily be outdated in a less
effectively managed organization.
55

56. Limitations in Use of Organizational
Charts
• Authority, responsibilities, and activities of
people in an organization may not be
adequately represented.
56

57. Limitations in Use of Organizational
Charts
• Informal channel of communication is not
visible.
57

58. Different Types of Organizational
Structure
• Departmentalization
• Matrix Organization
58

59. Different Types of Organizational
Structure
Departmentalization
The work is divided
into departments.
Managers
manage/coordinate
the activities of
each department.
59

60. Key Principles of Departmentalization
Unity of
Command
Span of
Control
60

61. Key Principles of Departmentalization
Unity of Command
Subordinate should
have only one superior
Orders should be given
by the immediate
supervisor
Words of the top
management should be
communicated through
immediate supervisor
61

62. Key Principles of Departmentalization
Span of Control
Number of
subordinates directly
under a superior
Narrow span of
control
Wide span of control
62

63. Benefits of Departmentalization
• Clarity in activities.
• Easy distribution of authority.
• Easy communication and coordination.
• Independency in each area of activity.
• Clear and demarcated area of responsibility for
managers.
63

64. Complications of Departmentalization
Sub-Optimization
Conflicts among
departments due
to departmental
goals
64

65. Complications of Departmentalization
Sub-Optimization
Budgetary control by
the finance department
affects adverting of
marketing department
65

66. Types of Departmentalization
Departmentalization
by Functions.
Departmentalization
by Customers.
Departmentalization
by Product.
Geographical or
Territorial
Departmentalization.
66

67. Functional Departmentalization
• Departments are based on the functions
Chairman
CEO
Human
Resource
Department
Finance
Department
Marketing
Department
67

68. Functional Departmentalization
Advantage
Avoid
duplication of
work
68

69. Functional Departmentalization
Advantage
Efficiency
due to
specialization
69

70. Functional Departmentalization
Advantage
Easy control
and
coordination
70

71. Functional Departmentalization
Advantage
Benefits of
Specialization
71

72. Functional Departmentalization
Advantage
Recruitment of
specialist to lead
departments
72

73. Functional Departmentalization
Advantage
Top managers
can easily
control
73

74. Functional Departmentalization
Disadvantage
Priority for
departmental
objectives (Sub-
optimization)
74

75. Functional Departmentalization
Disadvantage
Lack of
cooperation
between
departments
75

76. Functional Departmentalization
Disadvantage
Difficultly in
demarcating the
responsibilities
76

77. Functional Departmentalization
Disadvantage
Not suitable
for flexible
situations
77

78. Functional Departmentalization
Disadvantage
Lack of personal
development due
to limited scope
78

79. Functional Departmentalization
Disadvantage
Lack of opportunity
for managers to
improve general
management skills
79

80. Functional Departmentalization
Disadvantage
Lack of chances
for innovative
thinking
80

81. Departmentalization by Customers
• Departments are based on specific needs of
the customers
Hospital
Service
Maternity
Accident
Service
ENT
81

82. Departmentalization by Customers
Advantages
Marketing
Strategies could
easily be
implemented
82

83. Departmentalization by Customers
Advantages
Can be adopted to
environmental
changes and
customer needs
83

84. Departmentalization by Customers
Advantages
Can be used to
train and
specialize
employees
84

85. Departmentalization by Customers
Disadvantages
Difficult to attain
the benefits of
centralization
85

86. Departmentalization by Customers
Disadvantages
Difficulty in
coordination
between
departments
86

87. Departmentalization by Customers
Disadvantages
Waste of
resources due to
repetitive work
87

88. Departmentalization by Customers
Disadvantages
Need to have
specialized
employees
88

89. Departmentalization by Products
• Suitable for organizations which need specific
resources for manufacturing.
• Suitable for organizations which need separate
distributional channels.
Marketing
Costumes perfumes
Agro
Chemicals
89

90. Departmentalization by Products
Advantages
High level of
attention to
the products
90

91. Departmentalization by Products
Advantages Specialization
91

92. Departmentalization by Products
Advantages
Better service
to the
customers
92

93. Departmentalization by Products
Advantages
Good for
volatile
markets
93

94. Departmentalization by Products
Advantages
Suitable to
train
employees
94

95. Departmentalization by Products
Advantages
Clear
responsibilities to
each departments
95

96. Departmentalization by Products
Disadvantages
Conflict between
organizational
goals and
departmental goals
96

97. Departmentalization by Products
Disadvantages
Not suitable
for all the
organizations
97

98. Departmentalization by Products
Disadvantages
Difficulty in
coordination
of activities
98

99. Departmentalization by Location
• Consideration is on transport cost
• Requirement to be close to customers
• Looking for cheap labour
• Access to resources
99

100. Departmentalization by Location
Marketing
Manager
Regional Manager
Western Province
Regional Manager
Southern Province
Regional Manager
Central Province
100

101. Departmentalization by Location
Advantages
More focused
on customers
in territory
101

102. Departmentalization by Location
Advantages
Economical
advantage
102

103. Departmentalization by Location
Advantages
Close
relations with
customers
103

104. Departmentalization by Location
Advantages
Close
relations with
customers
104

105. Departmentalization by Location
Advantages
Quick response
to customer
behaviour
105

106. Departmentalization by Location
Advantages
Ideal training
for managers
106

107. Departmentalization by Location
Disadvantages
Difficulty in
control and
coordination
107

108. Departmentalization by Location
Disadvantages High cost
108

109. Departmentalization by Location
Disadvantages
Difficult for top
management to
control
109

110. Departmentalization by Location
Disadvantages
Wastage of
resources due to
repetitive work
110

111. Departmentalization by Location
Disadvantages
Wastage of
resources due to
repetitive work
111

112. Departmentalization by Location
Disadvantages
Can not be
applied to every
organization
112

113. Matrix Organization
Temporary
organizational
structures.
For specific
projects.
To be completed
in a specific time.
Structure gets
cancelled once the
goals are
accomplished.
113

114. Matrix Organization
• Construction of a housing complex
• Doing a research project to develop a new
product
114

115. Features of Matrix Organizations
goals and projects
115

116. Features of Matrix Organizations
• The project must be a separate one. It should
not disturb the usual activities of the
organization.
116

117. Features of Matrix Organizations
• Project Manager should coordinate with
specialists
117

118. Features of Matrix Organizations
• Staff members attached to the project should
report the project manager.
118

119. Features of Matrix Organizations
• They should report to their immediate
supervisor for general matters.
119

120. Features of Matrix Organizations
• Transfers within projects are possible.
120

121. Matrix Structure
121

122. Advantages of Matrix Organizational
Structure
• Flexibility
• Cooperation between individuals and teams
• Cost effectiveness
• Proper utilization of skills
• Ability to face environmental changes
122

123. Disadvantages of Matrix
Organizational Structure
• Employees assigned to projects have two
superiors (Project Manager/Immediate
Supervisor)
• Too many instructions-violation of unity of
command.
• More time in discussions than implementation.
• Issue due to lack of skilled labour.
123

124. Advantages of a Tall Structure
• Controlling the subordinates is easy.
• Managers can plan well.
• Less mistakes by the employees due to more
advices from superiors.
• Authority is more centralized.
124

125. Advantages of a tall
structure are the
disadvantages of a
flat structure
125

126. Advantages of a Flat Structure
• Faster decision making.
• Less administrative cost due to few
management layers.
• Quick communication.
• Less coordination problems.
• More empowered decision making and
decentralized authority.
126

127. Principles of Organization
1. Span of Control – number of
subordinates directly under a supervisor.
“Only six employees can be efficiently
managed by a manager”
-Graicunas-
127

128. Narrow Span of Control
128

129. Wide Span of Control
129

130. Unity of Command
• One superior to give orders to one employee
• Clear instructions.
• Higher efficiency.
• Matrix organizations – No unity of command.
130

131. Unity of Command
• One superior to give orders to one employee
• Clear instructions.
• Higher efficiency.
• Matrix organizations – No unity of command.
131

132. Chain of Command
(Scalar Chain/Scalar Principle)
• Flow of information, orders and instructions
from the highest level of the employee to the
lowest level of employees
132

133. Unity of Objectives
• The activities of the organization must be in
line with the goals of the organization.
133

134. Unity of Objectives
• The activities of the organization must be in
line with the goals of the organization.
134

135. Management by Expectations
• Policy by which management devotes its time
to investigate only those situations in which
actual results differ significantly from planned
results.
135

136. Management by Objectives (MBO)
• Policy by which management devotes its time
to investigate only those situations in which
actual results differ significantly from planned
results.
136

137. Responsibility
• A subordinate should be made responsible to
the superior only for the level of authority
given to the subordinate
137

138. Accountability
• The subordinates are answerable to their
superiors for the work they carry out.
• Accountability flows upwards
• Authority flows downward.
138

139. Authority
Line Authority
Authority of the managers
who are directly involved
in attaining the primary
goals of the organizations
139

140. Authority
Staff Authority
Managers in
supporting services
to the managers are
called staff managers
140

141. Authority
Functional Authority
Authority given to functional managers
to give orders to another functional
manager who is not under him
141

142. Authority
Charismatic Authority
Authority possessed by a person for
his personality and leadership
qualities
142

143. Authority
Delegation of Authority
A superior may delegate his work with the
necessary authority to a subordinate. This
authority transferred is called delegated
authority.
143