Topic 3 Office Organization

Introduction

Organization structure has two complementary aspects.

1.      The form of structure where we can apply the principles of organization.

2.      The functions to be performed, i.e. activities to be pursued and the degree of specialization needed for such pursuit.

A planned or an effective organization defines functions, relates these functions in a systematic manner, and assigns authority and degree of responsibility to each function.

Sound organization is essential to the existence of an enterprise or institution (economic or social).

Organization structure has human beings as links who are responsible for planning, direction, coordination and controlling. 

Principles of Organization 

Objectives and purpose

·         Organization is the mechanism through which management directs, coordinates and controls the business.

·         The foundation of management.

·         Provides the framework within which all activities of the various connected work are carried out.

·         Purpose of the organization is to avoid waste of time and duplication of work and at the same time it aims at maximum coordination among department.

·         There must be unity of objectives so efforts can be concentrated on the set goal.

Specialization and definiteness

The principal of specialization is the division of work aiming at maximum results. The effective attainment of the objective needs specialization in organizational functions through the division of labour.

The activities of a concern are divided into many units and sub-units and suitable groupings into departmental activities, sectional activities etc. In a small business the manager does all the functions. But in modern business, the activities have become more involving complex specialized function. Through a good organization, each job is well defined and is distributed on the basis of skill, experience and ability of the person concerned.

Fixed responsibilities aid speeding up the work. Every employee must definitely know his position in the firm and purpose, so that he realizes his responsibility and work accordingly.   

Delegation and Authority

·         A clerk gets its authority from his section- head, to whom the worker is responsible for proper performance of the job assigned.

·         Authority always flows downward.

·         Responsibility always moves upward.

·         A clear definition of authority and responsibility is essential.

·         A busy management allocates tasks amongst subordinates.

·         A successful office manager never performs the tasks himself, but get the work done by himself.  

Span of Control

·         No executive must have too many subordinates reporting to him because control becomes defective.

·         The span of supervision or the span of authority or the span of control limits the number of subordinates reporting to a chief.

·         An office manager should be expected to supervise a reasonable number of subordinates.

·         A sound organization requires a proper balance between section head and workers.

·         The ratio between section head and workers may depend upon factors such as size of units, nature of organization, individual differences etc. 

Co-ordination and balance

·         Is essential to bring unity of action in the organization.

·         Centralization of control of an organization can be achieved through interlocking of all units in the organization.

·         To secure co-ordination, working relationship should be established.

·         Each worker should be known by the organization structure, his designation in it and the relationship of his work with the    other department as well as his executive.

·         Work of all departments should be balanced in order to avoid conflict or overlapping functions; with the object of ensuring smooth and efficient working of functions.

·         Co-ordination aims at higher efficiency.

·         Co-ordination is a facilitative function, it helps the integration of  the basic managerial function of planning, organizing, motivation etc. 

Decision-making and Continuity

The organization structure;

·         Should be capable of ensuring the continuity of existence of an enterprise.

·         Must permit growth and expansion without dislocation of existing methods.

·         Decision-making should be moved from bottom to upwards. 

Responsibility

·         Without authority there cannot be any responsibility.

·         Assignment of responsibility should be coupled with authority sufficient to carry them out.

·         There must be parity between authority and responsibility.

·         Each worker must have sufficient authority to discharge the responsibility discharged to him. 

Efficiency

Available human resources should be utilized to the best and fullest capacity in order to achieve the highest efficiency through operation. 

Grouping

The work of the enterprise is divided into certain groups of activities and placed in charge of departments or sections. The work load must be equally distributed to ensure smooth working of the enterprise. A periodic evaluation of the work load of departments and the workers should be made by management. 

Personal ability

Proper selection, placement and training are necessary. Organization structure must ensure optimum use of human resources. 

Flexibility

Organization must be flexible so that it can be adjusted to changing conditions. It must permit expansion, replacement, merger etc. It should not be rigid. 

Forms of Organization 

When there is one man, there is hardly any need for organization. When the enterprise expands some pattern of organization should be adopted. The types of organization are: 

Line Organization

·         Simplest and oldest form.

·         Also referred to as ‘Military ‘or ‘Traditional’ or Scalar’ or ‘Hierarchical.

·         Important feature of such types is the superior – subordinates relationship.

·         Authority descends from the top to the bottom through downward delegation of authority.

·         Subordinates responsible to immediate supervisors.

·         All decisions are made at the top. 

Line organization is suitable:

·         If the business is comparatively small.

·         If the labour management problems are easy to solve.

·         If the processes are easily directed.

·         If the work is of a routine nature. 

Advantages:

1.      It is simple to work.

2.      It is economical and effective.

3.      It is easy to fix responsibility.

4.      It facilitates quick decisions and prompt actions.

5.      Quick communication is easy.

6.      Discipline can easily be maintained. 

Demerits:

1.      The organization is rigid and inflexible.

2.      It works on dictatorial basis.

3.      Departmental head acts in their own whims and desires; as such it is difficult to secure co-ordination of the activities of workers and department.

4.      In big business it does not operate satisfactorily.

Functional Organization

All types of work of the organization are grouped and managed by top executive. Separate functional departments for major functions of the enterprise, for example, sales department, finance department.

·         Each department does its function for the entire organization.

·         Works through the line organization.

·         Is based on expert knowledge.

·         Makes greater use of division of labour.

·         Results in high efficiency and specialization.  

Features (Functional Organization)

The whole task of the enterprise is divided into specialized function.

1.      Each function is performed by a specialist.

2.      The specialist in charge of a functional department has the authority over all other employees for his function.

3.      Specialists operate with considerable independence. 

Merits

1.      Greater use of division of labour is possible.

2.      The system is based on expert knowledge.

3.      Functional efficiency of the worker can be maintained.

4.      Mass production is made by standardization and specialization.

5.      Separation of mental and manual function is possible.

6.      Methods of operation can be standardized. 

Demerits:

1.      Too many experts and bosses (high officials) create confusions in the minds of the worker.

2.      It is difficult to fix responsibility on workers.

3.      Discipline and morale of the workers are seriously affected, because of contradictory orders from different experts.

4.      There are heavy overhead expenses. 

Line and Staff Organization

·         Based on the line organization.

·         Functional experts advise the line officers.

·         Staff officers do not have power to command line officers, but their advice is adhered to.

·         Combination of line organization with this expert staff forms the type of organization- line and staff.

·         The ‘line’ keeps the discipline and the staff provides expert information.

·         The line gets out the production and the staff carries on research, planning, fixing standards etc.

·         Suitable for large concerns. 

Merits:

1.      This type is based on specialization.

2.      It brings expert knowledge upon concern

3.      Increased efficiency of operations may be possible

4.      Mass production is possible 

Demerits:

1.      There arises confusion unless the duties and responsibilities are clearly indicated by charts and office manuals.

2.      Advice and expert information are given to the workers through the line officers. It is possible that the workers may misunderstand or misinterpret.

 

Line staff Organization

·         Shareholders

·         Board of Directors

·         Managing Directors

·         Industrial Manager and Research 

Committee Organization

1.      Widely used for the purpose of discharging advisory functions of the management. Are found in different levels of organization.

2.      A group of people who meet by plan to discuss or make a decision on a particular subject.

3.      Committee means a body of persons, for example, management committee consisting of General Manager and Departmental heads.

Committee has become an important instrument of management in modern organization; may be used for the following objectives;

—  To secure view-point and consultation of various persons in an organization.

—  To give participation and representation to different groups or interest;

—  To co-ordinate the activities of different departments;

—  To review the performance of different departments;

—  To facilitate communication and co-operation among diverse groups. 

Merits:

1.      It facilitates co-ordination of captivity in various departments.

2.      Pooled knowledge and judgment become available to the business thus its efficiency increases.

3.      It is good media of training and educating employees.

4.      It helps to improve the motivation and moral of employees.

5.      It promotes mutual understanding, team work and co-operation among employees. 

Demerits:

1.      It is costly in terms of time and money

2.      Difficulty in reaching agreement, results in indecision.

3.      Compromise at the cost of efficiency

4.      Indecision may breakdown to group action.

5.      Committee management is slower in reaching decisions than a one-man-rule. 

Office system and routine

Three factors of office work;

—  person,

—  forms,

—  equipment 

1.      An office has its own systems to carry out the work. System means a pre-planned approach to the day-to-day to attain a goal.

2.      There are specific systems for office work, such as; filing system, mailing system, purchasing system, budgeting system and so on.

3.      According to Zene K. Quible, “A system represents inter-related procedures necessary to achieve a well-designed goal.” Each system is composed of a number of procedures. Procedures or routines or operations may be called the steps in the systems.

4.      According to Terry, “A system is a net-work of procedures which are integrated and designed to carry our a major activity.”

5.      According to Carl Heyel, “A system in an orderly arrangement of inter-dependent activities and related procedures which implements and facilitates the performance of a major activity of an organization.

6.      The definitions given made it clear that an office system is a standard sequence of operation in a particular business activity.

“A system is an organised combination of parts which form a complex entity, with inte-relationships or inter-action between the parts and between the system and environment.” – Mills and Standingford. 

Procedures

According to Charles O Libbey, “ Office procedures are a series of clerical acts organised under supervision to accomplish the purpose of the office.” Office procedures may also be term as routines. Thus “ office routines or procedures are a series of steps to be taken for doing a particular work in the office as per the office system. The term office procedure is used to describe an office system; procedures are made up of operations.

Carl Heyel describes, a procedure is a series of logical steps by which all repetitive business action is initiated, performed, control and finalised. A procedure establishes what action is required, who is required to act, and when the action is to take place. It’s essence is chronological sequence and its implementation is translated into results or actions.” 

Method

A method is the manual or mechanical means and devices by which each operation is performed. For each operation with in a procedure, there is a method for accomplishing that phase of work. For example, in the process of classifying records, there is method for receiving records; for examining them, filing them, and arranging them in proper order.

The following illustrates the relationship-

—  System,

—  Procedures

—  methods 

Purchase System

Procedure 1     Initiate Requisition

Methods A – Fill Purchase Requisition

Method B – Get necessary authorization

Procedure 2     Selection of supply source

Methods A – Fill out quotation form

Method B – Send the form to vendor

Method C – Get quotation from vendor

Method D – Prepare comparative statement

Procedure 3     Order for purchase

Methods A – Fill purchase order

Methods B – Get signature of Purchasing Officer

Method C – Send it to vendor 

Procedure 4     Receive supplies

Method  A – Verify quantity & quality of goods

Method B – Send the goods to department

Method C- Verify the bill 

Procedure 4     Payment

Methods A – Verify bill with the order

Method B – Prepare Voucher

Method C – Get approval of Account Section

Method D – Prepare cheque.

Method E – Send cheque 

Characteristics of a well design system

—  Flexibility

—  Adaptability

—  Systematic

—  Functional

—  Simple

—  Resourceful

—  Dependability

—  Acceptability 

Importance of Systems and Procedures

A good system reduces delay and avoids delays. Assist in speedy dispatch of work involves internal check, saves labour and overhead costs, makes it easier to train staff, assist in prevention of fraud and better control of work and ensures responsibility, enables uniform procedure to be followed.  

Job

1.      Job is a collection of tasks and responsibilities as a whole  assign to an individual.

2.      Job analysis is a procedure design to discover the facts about jobs including each job’s requirement in terms of personal qualities of a satisfactory job holder.

3.      Job description is an abstract of work performed. The responsibilities involved, the skills and training required and the type of personnel required.

4.      Job Specification specifies the type of employee required and assists in the selection  of appropriate personnel by outlining the particular working condition. It is a product of job description.

5.      Job Standardization involves the establishment of uniform mechanical facilities and methods and combines the specifications of human standards with the specifications of physical standards, so that efficiency can be maintained in keeping with the human element.

6.      Job Classification deals with comparative study of jobs. Similar jobs are grouped into classes so that identical and consistent titles may be assigned.

7.      Job Grading is the process by which the relative levels of various jobs are determined to establish the relative place of each job in the organization.

8.      Job Evaluation is the study of a job’s worth in relation to other jobs. This involves the direct assignment of kina value to jobs depending upon the method used.

9.      Worker Analysis focuses attention on appraisal of the characteristics of employment using physical examination, test, interview and other procedures for the purpose.

10.  Merit Rating is the relative value of the men as related to the particular jobs. It is also known as “Efficiency Rating”, “Service Rating”, “Performance Rating”, “Experience Rating”. 

Office manuals

The office system when it takes the form of a book is called an Office Manual. The Office Manual contains the details of the work to be done in the office and other particulars the concern.

It is useful to new comers to the office to understand the work and to follow the procedures set out for the jobs assigned to them.

Purpose of the office manual.

To make instructions definite,

To find answers in connection with procedures.

To improve administrative control.

Manuals must be complete and up-to-date to inform employees of what they have to do, when and how.

An office manual contains general information, general office rules and regulation, safety instructions, organizational policy, job description, office facilities, executive relationship, standard practices and general instructions. 

Advantages of office manuals

—  Easy for Office Manager to supervise the work.

—  Doubts can be referred to office manual.

—  Changes can be made whenever necessary.

—  Includes delegation of authority with assignments of jobs.

—  Reduce the cost of training

.

—  Workers understands the job to be perform because method is also written in it.

—  Responsibility is fixed on individuals.

—  Leads to reduction of office costs.

—  Employees can get necessary information at any time when needed. 

Disadvantages of office manuals

—  Costly and time consuming.

—  Difficult to keep a manual up-to-date.

—  Discourage team work because some may not like the recorded relationship.

—  Manual may be misinterpreted if not written clearly.

—  Details in a manual may be vague, inadequate or incomplete. 

Organization chart

Organization is made up of a group of persons working together towards the accomplishment of certain specific objectives. It has a structure of planned relationships among the group members which can be shown in an organization chart.

“An organization chart portrays managerial positions and relationship in a company or department unit”. Henry H Albers.

“The organization chart is a graphic means of showing organization data. Organization chart are snap shots; they show only the formal organization and they take it for only a given moment of time”. Allen.

“An organization chart is a diagram of formal authority structure”. Ernest Dale. 

Contents

—  An organization chart includes the following:

—  Structure of the organization.

—  Flow of authority.

—  Spheres of responsibility.

—  Line and staff relationship.

—  Name and status of personnel in different positions.

—  Number of personnel, proposed promotions or transfers, salary range etc.of staff.

—  An organization chart should be as simple as possible. 

Advantages and Disadvantages

—  Shows the whole organization structure at a glance.

—  It defines the line of authority and responsibility.

—  It enables management to locate defects.

—  It gives guidance to the employees. 

Disadvantages

—  It reveals only partial picture of organization.

—  It shows only the formal relationship and not the informal relationship.

—  Charts often lack flexibility. 

Process of delegation

1.      Performance of a function by an individual is called duty  and is answerable for the work he has done.

2.      Authority is a right of power required to perform a job on the basis of duty assigned to one. An authorized person is empowered to do the assign job and take a decision.

3.      Power means an ability to do things or get things done by others.

4.      Delegation means assigning work to others and giving them authority to do it.

5.      The Board of Directors/the partners/the sole trader possesses all the power or authority to run the firm.

6.      It is difficult for top management to do the work because of lack of time, So the work is divided and entrusted to persons who are appointed to look after the firm. After the appointment to do a particular job, it can be said that the duty has been assigned to them. The assignment of duty is followed by authority. When authority is passed to employees, there is a transfer of power to the subordinates, i.e delegation of power. 

Delegation of Authority

According to Allen, “Delegation is the dynamics of management, it is the process a manager follows in dividing the work assign to him so that he performs that part which only he, because of his unique organizational placement, can perform effectively and so that he can get others to help him with what remains”.

According to GR Terry, “to delegate means to grant or confer, and delegation means conferring authority from one executive or organization unit to another in order to accomplish particular assignment”.

In a business firms, the source of authority originates from the top of the firm and the authority, part by part, is delegated to the following persons. Directors, secretary, managers etc,.and further from these persons delegation of authority is transmitted to various subordinates.

1.      Delegation is essential for every organization or business firms.

2.      Ability of subordinates increases as they are given new responsibilities.

3.      Delegation of authority reduces workloads and help train subordinates

There are three process of delegation;

—  Responsibility,

—  Authority

—  Accountability. 

Responsibility

1.      Is the work or duty of subordinates in the organization?

2.      Is expressed in terms of objective.

According to Allen, “Responsibility is the work assign to a position. Responsibility refers to the mental and physical activities which must be performed to carry out a task or duty”.

Donnell states, “Responsibility may be defined as the obligation of a subordinate to whom duty has been assigned. To perform the duty”.  

Authority

Means the powers and rights entrusted to a person to supervise the performance of work delegated. A manager grants the authority i.e., rights  and power  to be exercised by the subordinates.

According to George R Terry, “Authority is the official and legal right to command action by others and to enforce compliance. Compliance is obtained in a number of ways, through persuasion, sanctions, request, coercion, constraint or force”. 

Accountability

It is an obligation to account for and report upon the discharge of responsibility, or use of authority. Accountability is the liability created for the use of authority. It is the answerability for performance of the assigned duties. Authority flows downward whereas accountability flows upwards. 

Centralization of authority

According to Allen, “Centralization is the systematic and consistent reservation of authority at central points within an organization.

Centralization of authority means all office work are carried on in a central place and managed by a single top official. It implies that decisions pertaining to office matters are taken at the top level. 

Decentralization of Authority

According to Allen, “Decentralization means the systematic effort to delegate to the lowest levels of authority except that which can only be exercised at the central point”. Everything that goes to increase the importance of the subordinates’ role in decentralization.

Decentralization of office means each departments of the firm possesses its own office. The authority to take decision is delegated to managers. The managers are responsible to their superiors.

Source:

Office Management by Pilai, R.S.N, Bagavathi. S.Chand & Company Ltd. Ram Nagar, New Delhi-110055, 2003.