Introduction to

UNIT 3 TYPOLOGY OF ORGANISATION Microbes

STRUCTURES
Objectives

After reading this unit, you should be able to :

understand the characteristics of different organisation structures,
explain the basis for evolving different types of organisation structures,
examine the advantages and disadvantages of different types of organisation
structures.

Structure
3.1 Introduction
3.2 Line Organisation
3.3 Line and Staff Organisation
3.4 Functional Organisation Structure
3.5 Product Organisation Structure/Divisional Structure
3.6 Hybrid Structure
3.7 Formal and Informal Organisation
3.8 Centralisation and Decentralisation
3.9 Vertical Structure
3.10 Horizontal Organisation
3.11 Project Organisation
3.12 Matrix Organisation
3.13 Virtual Organisation (Network Structure)
3.14 Boundaryless Organisation
3.15 Inverted Pyramid
3.16 Task Forces
3.17 Mechanistic and Organic Structures
3.18 Summary
3.19 Self-Assessment Questions
3.20 Further Readings

3.1 INTRODUCTION
An organisation structure specifies the various job tasks and shows how the
same are formally divided, grouped, and coordinated. It provides an appropriate
framework for authority relationship. It indicates the hierarchy of authority and
the reporting relationships. It is a means to help the management to achieve the
organisational objectives.

As the objectives of the organisation are derived from the overall strategy of
the organisation, it is logical that an organisation structure is closely linked to its
strategy. As such, if the management makes a significant change in the
organisation’s strategy, the organisation’s structure needs to be modified to
accommodate and support the change. There is considerable evidence to
indicate that choice of an organisation’s strategy (stability strategy/growth
strategy) is determined by three basic factors (contingency factors): (i) the
organisation’s size, (ii) technology used by the organisation (for converting the
1
Organisational Design financial, human and physical resources into products and services), and (iii)
environmental uncertainty (external environment).

Information technology and globalisation have had a tremendous impact on

organisation structures. Many of today’s managers realise that the traditional
organisation structures based on bureaucratic principles no longer provide
solutions to the challenges posed by the new paradigm environment. The needs
of flexibility, adaptability to change, creativity, innovation, knowledge and the
ability to overcome environmental uncertainties are among the biggest
challenges facing many of the organisations. The result has been that the
vertical (tall) structures are being replaced by horizontal (flat) structures, the
organisations with mechanistic structures are being transformed into ones with
organic structure . These shifts reflect a clear departure from the practice of
centralised decision-making to decentralised decision-making, from command to
consensus based self-control. The new forms of organisation structure that
have emerged are: taskforce, network, virtual, boundaryless structures. The
salient features of these and other organisation structures are briefly described
here to present an overview of different types of organisation structure and
their suitability under different situations.

3.2 LINE ORGANISATION

Line organisation is the simplest form of organisation structure. The line
structure is based on the scalar principle, which states that authority and
responsibility should flow in a direct line vertically from the highest level of the
organisation to the lowest level. The primary emphasis in the line organisation is
upon the superior-subordinate relationship. Every person in the organisation is in
the direct chain of command. (Figure 1).

Figure 1 : Line Organisation

‫‫‬
General
r* & & & " & !
Manager

Manager
r * && Manager
r + &% Manager
r * &&
( "&& &
Production e' ! &
Finance g +&" %
Marketing

( && ) && ) &&

Deputy Manager Deputy Manager Deputy Manager
r * && r + &% r * &&
Production
( "&& & Finance
e' ! &
Marketing
g +&" %

Foreman
n ' &" Accountants
s ' %& %
& Officers
) " !!

s - %#
Workers (%%!%
Assistants (& &
Salesman

One of the advantages of the line organisation is that it facilitates decision

making and execution because there is a definite authority at each level of the
hierarchy. However, the disadvantage is that if a wrong decision is made at
the top level, the same is carried out simply without anybody down the line
venturing to point out its deficiencies.

2
 Typology of Organisation
3.3 LINE AND STAFF ORGANISATION Structures

Most business organisations, except the very small, have this type of structure.
As the organisations have grown complex, the problems of line executives have
become sufficiently complicated. The line executives being generalists, need the
advice of personnel with specialised knowledge and functions to tackle these
problems. For this purpose, the staff positions are created in the organisation. In
line and staff organisation, the line authority remains the same as it does in the
line organisation i.e. the authority flows from top to bottom; and the line
executives perform the major functions; the staff functionaries support and
advise the line executives. For example, for sound management of human
resources, the line managers are provided specialised assistance through
personnel/Human Resource managers. As staff functionaries are employed to
perform supportive role, they do not have any power of command in the
organisation (Figure 2).

Figure 2 : Line and Staff Organisation

of (Directors
Board &&" &!&"!

‫‫‬
Financial  &' ! &&&%and
Advisor &! +&&&
Managing Manager

 Accounts
Chief ) && " !(%%&&
Officer ( !" &
Director HR


Manager Legal


Assistant  Managing Director
to

r +&&
Manager r * &&
Manager r
Manager
) %! %
Division-I I) ! %%
Division-II Division-II


denotes ### # #" #Authority
Line #
  y### # #" $#
denotes Staff Authority

The main advantage of line and staff organisation is that the staff specialists
relieve the line executives of the botheration of concentrating on specialised
functions like selection, training, development, wage and salary administration,
accounting, public relations etc. However, the disadvantage of this structure is
that since functionaries are not accountable for the results, they may not be
performing their duties effectively.

3.4 FUNCTIONAL ORGANISATION STRUCTURE

This is the most widely used form of organisation structure because of its
simple logic and commonsense appeal. Here the tasks are grouped together on
the basis of common functions. So, all production activities or all financial
activities are grouped into a single function which undertakes all the tasks
required of that function. A typical chart of a functional organisation is
presented in Figure 3.

The functional structure suits best to the small to medium organisations

producing one or a few products, where the goals of the organisation
emphasise functional specialisation, efficiency and quality.
3
Organisational Design Figure 3 : Functional Organisation Structure

Managing
r%#$## $#
Director

General
‫ ‫‬%
#$#! #
Manager

Chief Chief Chief Chief Chief

 r %# #!  r %# #!  r $$ # Manager
Manager
$!#$$ Manager
g&#! # Manager
e$ # Human
Manager
Production Marketing Finance Resources R&D

r#""
Manager Manager r$""
Manager r#""
Manager r#""
Manager
Manager
r$! " Manager
r#"" r#""
y$"!
Quality s"! g#"!"
Ads. Manager Manager Wage
# "! "
Production #" !
Purchase
l#"!
Engineering
g"""
" g$! "
Marketing Sales r%#$
Manager Manager
Control
%&$ #
Employment HRD Industrial & Salary
Relations Administration

The main advantages of this type of structure are that by grouping people
together on the basis of their specialist expertise, the organisation can facilitate
both their utilisation and their coordination in the service of the whole
organisation. The functional grouping also provides opportunities for promotion
and career development. One of the major disadvantages of this form of
organisation is the growth of sectional interest which may conflict with the
needs of the organisation as a whole. For example, the members of the
production department will see their activities from the narrow perspective of
their own department rather than viewing the same from the broader
perspective of the entire organisation.

3.5 PRODUCT ORGANISATION STRUCTURE /

DIVISIONAL STRUCTURE
This form of organisation structure is adopted by large companies producing a
wide range of products. Here, the activities are grouped on the basis of the

Figure 4 : Product-based Organisation Structure

Managing
r&#$## $#
Director

Director
$ "# Director
Director
%! ##!#
Director
%! #
e$$!$
%! #
e$ # Corporate Human
‫‮‬ s%#' ##
R&D Finance g&#! #
Marketing Resources

General General General General

‫ ‫‬r&###! # ‫ ‫‬r%#$#! # ‫ ‫‬r%"$""# ‫ ‫‬r
Manager
Manager
$### Manager
s%#! # Manager
s%##'  es r i l e
St
Vaccines Antibiotics Cosmetics Suppliers

Manager Manager Manager

r&#$   &&#$"$#! Manager
r&## r&##
$!$#$
Production Salesg&#!and
# $##$ Human
‫‮‬ s%#' ## %
Accounts
Marketing Resource
4
individual products manufactured by the company. Thus, one finds autonomous Typology of Organisation
Structures
“little companies within the company” adopting this type of organisation
structure. As such, within each of these little independent units, we find all
important functions viz. production, marketing, finance and human resources.
The organisation structure of a large multi-product pharmaceutical company is
illustrated in Figure 4.

One of the advantages of the product organisation is that it enables

diversification of the products to take place with minimal effort. Another
advantage is that it can cope better with technological change by grouping
people with expertise and their specialised equipment in one major unit. The
main disadvantage of the product organisation is that each product division
may promote its own product group in a way that creates problems to other
product divisions of the company.

3.6 HYBRID STRUCTURE

The hybrid form combines features of both functional and divisional forms.
When an organisation starts to get very large, it establishes some self-contained
units. Functions that are considered important to each product are decentralised
to the units; however, some functions like finance and accounting are
centralised at headquarters for practical reasons (Figure 5).
Figure 5 : A Hybrid Organisation Structure

t( #&&
President

( &&' '
Accounting e' " &
Finance

(!
Vice ( ! &%! ( #
Vice President
t( #&&
President g( &&" &
Engineering
Auto (Parts
' #&" s*&"&
Materials

n)'
Human
Sales
s( % g+&# &
Marketing
s) &&'
Resources

The functional part of the organisation is reflected in the departments

centralised at the corporate level. However, each of the product divisions has
specialists in functional areas for necessary assistance.
The important advantages of hybrid structure are:
1. The overall organisation enjoys the benefits of both functional and product
(decentralised) structures.
2. It provides the opportunity to improve coordination both within and among
divisions.
3. It enables the organisation to pursue an adaptive strategy within the product
divisions while at the same time achieving efficiency in the functional
departments.
4. It helps in proper alignment of corporate and divisional goals.

A major disadvantage of the hybrid structure is that it often leads to excessive

duplication of activities between functions and divisions. Another disadvantage is
its tendency to create conflict between headquarters and divisional functions.
5
Organisational Design
3.7 FORMAL AND INFORMAL ORGANISATION
The formal organisation structure refers to a structure of clearly defined jobs,
each bearing a definite amount of responsibility and authority. The formal
organisation lays down formal procedures, rules and regulations, which guide
the behaviour of individuals performing these jobs.

The informal organisation is the outcome of social interaction that takes place
between the individuals of the formal organisation. When people work together
they tend to form informal work groups, often spontaneously, because of
physical proximity, commonality of interest etc. These informal groups are
collectively known as informal organisation. Unlike the formal organisation, the
informal organisation is unstructured and not given. Generally, it is an unofficial
organisation born out of a formal organisation. An informal organisation has its
own structure, roles, procedures, norms and values which are unwritten and are
evolved through consensus among the members of the informal groups. An
informal organisation does not have a fixed chain of command. It is based on
the sentiments of the members. The communication patterns are not fixed and
as such communication may flow in any direction.

In contrast to formal organisation analysis, the dysfunctional aspects of informal

organisation such as conflicting objectives, restriction of output, resistance to
change have received more attention than the functional ones. In other words,
the informal organisation is often projected to be counter-productive to the
formal organisation. In reality, however, the informal organisation can benefit
the formal organisation in the following ways:
1. It serves as a useful channel of communication
2. It lightens the workload of the management, if the latter gives due
importance to the informal workgroups
3. It reduces the undesirable effects of the rigidities of the formal organisation
4. It provides a safety valve for employee emotions.
Activity A
Briefly describe the informal workgroup that are prevailing in your organisation
in terms of their leadership, their role and their contribution to the formal
organisation. Substantiate your statements with illustrations.
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3.8 CENTRALISATION AND DECENTRALISATION

The term Centralisation refers to concentration of decision making at a single
point in the organisation. In contrast, when the top management gives
maximum, though not complete, discretion to the lower level personnel in the
organisation to make decisions, then it can be said that there is decentralisation
in the organisation.

In a decentralised organisation, action can be taken more quickly to solve

problems, and more people provide inputs into decisions. For firms having a
number of plants, which are located at different places, decentralisation is more
6 beneficial. With most of the large companies now preferring to make
organisations more flexible and responsive, there has been a marked change Typology of Organisation
Structures
towards decentralised decision making.

The main advantages of decentralisation are:

1. It reduces the burden of the top management by freeing them from many
operational decisions, and enables them to concentrate on their strategic
responsibilities; and
2. It can contribute to staff motivation by enabling middle and lower level
managements to get a taste of responsibility, and by encouraging the use of
knowledge, innovation, and initiative by all employees.

The main disadvantages of decentralisation are:

1. It requires greater coordination by senior management to ensure that
individual units in the organisation are not working against the interests of
the whole organisation;
2. It can lead to inconsistency of treatment of customers, clients or public,
especially in service industries; and
3. Decentralisation does require a plentiful supply of capable and well-motivated
managers, who are able to cope with increased responsibility which
decentralisation brings about.

3.9 VERTICAL STRUCTURE

A vertical organisation is that in which the size of the hierarchical chain of
command is long i.e. the number of hierarchical levels are high. As such, more
people have to communicate to the top management through the intervening
layers of executives (Figure 6).

Figure 6 : Vertical Organisation Structure

Hierarchical
s ) !&# &# Levels
&'"

The main advantages of the vertical organisation are:

1. They provide better communication of the organisation’s mission, values, and
goals to all employees; and
2. These organisations have the ability to sustain a very high degree of
specialisation of functions and roles.

The principal disadvantages are:

1. Too many hierarchical levels consume more time for communication and the
same may lead to delays in decision making; and
7
Organisational Design 2. As the vertical structures go hand in hand with formality and
standardisation, the scope for initiative and risk taking at operational levels
becomes limited.
Activity B
Find out whether your organisation belongs to a centralised or decentralised
form of organisation. Specify the recommendations you would make in order
improve the present structure of your organisation.
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3.10 HORIZONTAL ORGANISATION

As the traditional vertical, hierarchical structures of the organisations are being
considered inappropriate to the requirements of the changing environment, an
increasing number of modern organisations are preferring the use of horizontal
structures. For example in the US, corporate giants like AT& T, General
Electric, Motorola and Xerox, among other firms, have moved to the principles
of the horizontal structure of organisations.

The horizontal structure facilitates cooperation, teamwork, and customer

orientation rather than a functional orientation.

Frank Ostroff, a McKinsey & Company consultant and his colleague Douglas
Smith are given credit for developing guiding principles that describe the
characteristics of the horizontal structure.

1. Horizontal structures are created around three to five core processes for the
time rather than traditional departmental functions.
2. The vertical hierarchy is flattened to reduce the levels of supervision. This is
done by combining the fragmented tasks, eliminating work that fails to add
value, and by cutting to the minimum activities within each process.
3. Multi-disciplinary/ cross functional self-managed teams (composed of
personnel from different functional areas like finance, marketing, human
resource, quality control and operations) are created to handle the core
processes, and each team is entrusted with a core process.
4. Customer satisfaction, net profits, is the primary driver and measure of
performance. As such, for horizontal structure to work, employees are
brought into direct contact with customers as well as suppliers. Where
relevant, customers and suppliers may be brought in as full working
members of the teams in charge of the core processes.
5. All employees should be provided with all data, and they should be trained
for analysing and use the data to make effective decisions as team
members.
6. All employees are encouraged to develop multiple skills; and those who
develop are rewarded.
7. The horizontal organisations need to build a corporate culture of openness,
cooperation and collaboration.

8
 Figure 7 : Horizontal Organisation Structure Typology of Organisation
Structures

s ( "&# & Levels

Hierarchical

Figure 7 gives an idea about the horizontal structure of an organisation.

The main advantages of horizontal organisation are:

1. Decisions can be taken more quickly to solve problems; and
2. A horizontal structure has fewer problems of coordination.

One of the disadvantages of the horizontal structure is the absence of proper

reporting to superiors by the subordinates because of decentralisation.

3.11 PROJECT ORGANISATION

When an organisation undertakes a big project or a number of small projects, it
creates project organisation(s) for the completion of the same. This is done
because the existing functional structure of the organisation may not be suitable
to complete the projects which are time bound and are subject to high
standards of performance as in the case of aero space and aircraft companies.
A project organisation (See Figure 8) is separate from and independent of
functional departments of the company. Headed by a Project Manager, every
project organisation consists of a team of specialists drawn from different
functional areas of the company or from outside. The size of the project team
varies from one project to another. Again, within a project, the size of the
group may change with the different phases of the work. A project organisation
has a temporary set up, and as soon as the project is completed it will be
disbanded. However, when the duration of the project is very long, the project
organisation takes a permanent form and it may become a regular autonomous
project division of the company.

The role of the Project Manager is quite challenging. He is responsible for the
completion of the project exacting to the time schedule and quality standards
Figure 8 : Project Organisation

General
‫‫‬ r* &&&$%"
Manager

 I ' $'! I
Project  ( #'!&
Project II

Project
t( #'
r+&'
Manager
Team
Members
t ' $'
Product y*'%
Quality
%$ %) ) g( ''! '
Engineering M(
HRM Sales Research
* &' &'
Management l(' '
Control 9
Organisational Design that are prescribed. The successful completion of the project depends on how
well he coordinates the activities of the project team and how he utilises the
advice and assistance of the internal experts (available within the company) and
those belonging to external agencies / organisations.

The project organisation is suitable when the company gets a one-time

assignment or a huge contract or when the company faces a unique challenge.

The main advantages of the project organisation are:

1. The participating specialists of the project team get opportunity for prompt,
expeditious and effective accomplishment of the goals of the project. This
motivates them to make maximum contribution to the execution of the
project;
2. It facilitates speedy communication between the project manager and the
team members; and
3. It provides flexibility in handling various tasks.

The major disadvantages of the project organisation are:

1. The entire project becomes meaningless, if the project manager fails to
coordinate the activities of the project properly;
2. The members of the project organisation have to sever the contacts with the
mainstream organisational life. As such, they may be bypassed when
opportunities arise in their respective fields for promotion; and
3. The job of the project manager becomes very difficult because he has to
deal with specialists from a number of diverse fields.

3.12 MATRIX ORGANISATION

The matrix organisation combines two forms of departmentalisation— functional
and product. It is built around a project which is headed by a Project Manager.
The Project Manager is also known as Product Manager as he is responsible
for the output (product) of the project.

The project teams comprise of employees (specialists) drawn from different

functional departments such as the Human Resources, Finance, Production,
Marketing, and Research & Development Departments of the Company. Thus,
the employees of the matrix have two bosses: their Functional Departmental
Managers (for example, the HR specialists of the project team have to report
to the Manager, Human Resources Department) and their Project Manager. In
other words, the matrix structure breaks the principle of unity-of-command which
states that no person in the organisation should report to more than one boss.

Figure 9 illustrates the Matrix Structure of an Engineering firm, which is

composed of two projects, each having its specific objective and specific time
for completion.

The matrix organisation is different from the functional organisation. In the

functional organisation, the project manager is given complete responsibility for
the project as well as the resources needed for its completion. But in the
matrix organisation, the Project Manager has to share the resources with the
rest of the enterprise.

The matrix structure is used in advertising agencies, aerospace firms, R & D

laboratories, construction companies, hospitals, government agencies, universities,
10 management consulting firms, and entertainment companies.
 Figure 9: Matrix Structure of an Engineering Firm Typology of Organisation
Structures

Managing
r* &&&' "&'
Director

General
l )&'
r * &'
Manager

r +%'
Manager
r +&'
Manager r * &'
Manager Manager Manager
n )&
Human
( #'' &
Production e' "'
Finance g
Marketing R & D
s)&&&
Resource

I ( #'!I
Project ( #'' &
Production HR( e' "'
Finance g
Marketing R & D
r * &'
Manager s''&&!
Specialists s('&&!
Specialists s(&&&"
Specialists Specialists Specialists

( #'!&
Project II ( #'' &
Production HR( e' "'
Finance g
Marketing R & D
r * &'
Manager s''&&!
Specialists s('&&!
Specialists s(&&&"
Specialists Specialists Specialists

Some of the advantages of the matrix structure are:

1. It facilitates coordination when the organisation has multiple complex and
interdependent activities;
2. It ensures the effective utilisation of the services of the people with highly
specialised skills; and
3. The direct and frequent contact between the different functional specialists
in the matrix ensures better communication and more flexibility.
The major disadvantages of the matrix structure are:
1. This structure breaks the unity-of-command concept. Reporting to one boss
introduces role conflict and role ambiguity;
2. It fosters power struggle between product (project) managers and functional
managers who share the same set of resources; and
3. A matrix organisation incurs higher costs than an organisation with a
conventional hierarchy.

3.13 VIRTUAL ORGANISATION (NETWORK

STRUCTURE)
A virtual organisation is a small, core organisation that outsources major
business functions. It is highly centralised, with little or no departmentalisation.

The virtual organisation creates network relationships with other organisations /

agencies located anywhere in the world for the purpose of contracting out
functions like manufacturing, distribution, marketing, R & D, etc. (Figure 10).
The networking is done through the electronic technology. As such, the
partnerships between the virtual organisation and other organisations (far-flung
companies) are based on electronic contracts. The partners are less permanent,
less formal, and more opportunistic. Each partner contributes to the virtual
organisation its core capabilities. The managers of the virtual organisations
spend most of their time in coordinating the various activities through the
networking. Examples of virtual organisations include Ford, Harley Davidson,
Nike, Rebok, Mobil Corp., IBM etc.
11
Organisational Design Figure 10: Virtual Organisation Structure

R&D Manufacturing
 ‫چ‬ ) ! ) !)!) '
Consulting Firm Company
&"
"" ! &% &
(located in New (Located in
  ( &)! ( &"
York, USA) Bangkok, Thailand)

‫‫‬ )&& ##&!

Central (Core)
* #' &' !
Organization
n" &&% &
(Located
, ' %&in
Sydney,
' &%
""
Australia)

g*&' ' " &

Manufacturing Distributing
y( ' +
Company Company
‫‮‬ ,#&&%%" &&
(Located "&%
in Pune, (Located in
India) Tokyo, Japan)

The major advantages of a virtual organisation are:

1. Through virtual organisation it is possible to create “best-of-everything”
organisation because each partner brings its “core competence.”
2. A virtual organisation allows someone with an innovative idea and little
money to successfully compete against large companies. This is possible
because of flexible nature.

The major disadvantages of the virtual structure are:

1. It reduces management’s control over the key parts of its business; and
2. The reliability of the partners may be doubtful.

3.14 BOUNDARYLESS ORGANISATION

General Electric Chairman, Jack Welch, coined the term boundaryless
organisation. The boundaryless organisation seeks to remove the vertical and
horizontal boundaries within the organisation and to break down external
barriers between the company and its customers and suppliers. Once the
management removes the vertical boundaries, the structure of the organisation
looks more like a silo than a pyramid.

To break down the vertical boundaries, the management adopts the following
strategies:
i. Creating cross-hierarchical teams (which includes top executives, middle
managers, supervisors, and operative employees);
ii. Encouraging participative decision making; and
iii. Making use of 360 degree performance appraisal (peers and others above
and below the employee evaluate his / her performance).

To reduce the barriers to the horizontal boundaries, the management adopts

the following strategies:
i. Replacing the functional departments with cross-functional teams and
organising activities around processes;
ii. Using lateral transfers; and
12 iii. Rotating people into and out of different functional areas.
The external boundaries can be reduced through practices like strategic Typology of Organisation
Structures
alliances, customer- organisation linkages and telecommuting (mainly with the
networked computers).

The major advantages of the boundryless organisation are:

1. It fosters teamwork among the employees;
2. It ensures speedy communication within the organisation (intra-organisational
communication) and between the organisation and the customers and
suppliers (inter-organisational communication); and
3. It can help competitiveness in the global economy.

A principal drawback of this form of organisation is that it is difficult to clearly

establish the relationship between superiors and subordinates in the organisation.

3.15 INVERTED PYRAMID

Organisations with this type of structure put the customers at the top and give
them the most important role in driving the business. The front-line employees
like sales representatives, people in charge of help-desk, etc. who come in
direct contact with the customers, are also given a similar position. The Chief
Executive Officer of the organisation is at the bottom of the structure
(Figure 11). Thus, in this form of organisation, the role of the management
changes from a commanding one to a supporting one.
Figure 11 : Inverted Pyramid Organisation Structure

Customers
s ) &&#

' #' ' "" " ! ' &

Front-line employees

' ' ' ' Staff

Supporting ' # ""

O(
CEO

Some of the advantages of the inverted pyramid are:

1. This structure gives first preference to the customers. Therefore, it becomes
easy for the organisation to know the customers’ choices, and to work out
appropriate strategies to ensure customers’ satisfaction; and
2. In this form of organisation, the employees are given more responsibility and
authority than the top management.

A major disadvantage of the inverted pyramid relates to formulation of

strategies. The frontline foremen are not quite equipped to formulate strategies
regarding the organisation. This leaves sufficient ground within the organisation
to doubt about their capabilities to make appropriate strategies.

13
Organisational Design
3.16 TASK FORCES
A task force is a temporary structure comprising of specialists from different
functional departments, formed primarily to accomplish a specific and complex
task. It co-exists with the traditional structure. As such, it can be viewed as a
scaled-down version of the temporary matrix. The members of a task force are
transferred to another task force, once the goal of their task force is achieved.

Ford Motor successfully experimented with the task force structure in the U.S.
in the early 1980s.

One of the advantages of the task force is that an organisation can enjoy the
benefits of both the traditional structure and the task force simultaneously. The
benefits are: stability, flexibility, and efficiency.

The major disadvantage is that, if the management fails in its job of

coordinating the activities of the task force and maintaining harmonious
interpersonal relationship within the task force, the very purpose of creating the
task force gets defeated.

3.17 MECHANISTIC AND ORGANIC STRUCTURES

In a landmark study conducted in 20 British firms during the 1960s, Tom Burns
and G.M.Stalker identified two types of organisations— mechanistic and
organic. They observed that the mechanistic organisation was characterised
by: rules, procedures, a clear hierarchy of authority, centralised decision making,
and the control of incoming and outgoing communications from the top and a
tendency for information to be provided on a need to know basis. By contrast,
the organic organisation was characterised by: low formalisation, rules and
regulations were not written or if written down were ignored, and open and
widely used communication patterns which incorporate horizontal, diagonal as
well as vertical channels.

Burns and Stalker’s research work stressed the belief that the organisation
could change its structure in relation to its environment. Thus, in a rapidly
changing environment, an organisation tends to change to organic form from the
mechanistic form in order to remain competitive. The mechanistic form of
organisation structure is adopted when there is relative stability in the
environment.

According to Stephen P. Robbins, these forms of organisation structures

represent two extremes of a continuum. While the mechanistic model is
generally synonymous with the bureaucracy, the organic model looks more like
the boundaryless organisation. The relation of one form to the other is elastic.
As such, an organisation may oscillate from one end (mechanistic) to the other
(organic) depending upon the nature of the environment and other factors like
the overall strategy of the organisation, organisation size, and technology.
Activity C
Briefly describe the structure of your organisation. Find out which type of
organisation structure it comes closer to.
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 Typology of Organisation
3.18 SUMMARY Structures

We have briefly described the various types of organisation structures that have
evolved over a period of time in response to the paradigm environment. The
continuum of structures ranges from the traditional bureaucratic structure to the
modern virtual organisation. Each type of structure has its advantages and
disadvantages. As the traditional structures no longer proved to be adequate in
the new paradigm environment, the modern horizontal, bounaryless, virtual
organisations have emerged. Organisations’ needs for flexibility, adaptability to
change, creativity, innovation, knowledge, and ability to overcome environmental
uncertainties are among the biggest challenges facing the modern organisations.
Some bureaucratic characteristics are in decline. But, bureaucracy is alive, and
perhaps will be in vogue in the distant future.

3.19 SELF-ASSESSMENT QUESTIONS

1. Distinguish between the functional organisation and the product organisation.
2. What is a matrix structure? When is it used?
3. Briefly describe the horizontal, boundaryless and virtual organisation designs.
Explain how they meet the challenges of the new environment.
4. Contrast the mechanistic organisation with the organic organisation.

3.20 FURTHER READINGS

Tom Burns and G.M. Stalker, 1961. The Management of Innovation, London:
Tavistock.

K Harigopal, 2001, Management of Organisational Change: Leveraging

Transformation, New Delhi: Response Books.

Fremont E Kast. and James E. Rosenzweig , 1974. Organisation and

Management, Tokyo: McGraw Hill Kogakusha Ltd.

Fred Luthans, 2002. Organisational Behavior, Boston: McGraw Hill Irwin.

V. Nilakant and S. Ramnarayan, 1988. Managing Organisational Change,

New Delhi: Response Books.

Robert A. Paton and James McCalman, 2000. Change Management, New

Delhi: Response Books.

V.S.P. Rao and P. S. Narayana, 1986. Organisational Theory and Behaviour,

New Delhi: Vani Educational Books.

Stephen P. Robbins, 2001. Organisational Behavior, New Delhi, Prentice Hall

of India Private Limited, (9th Edition).

B.P. Singh and T. N. Chhabra, 2002. Organisational Theory and Behaviour,

Delhi: Dhanpat Rai & Co. (P) Ltd.

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