The steps involved in planning are as follows

(i) Setting objectives : The first step involves establishing objectives

for the entire business at all levels based on the outcomes and goals
for each outcome. The outcomes, goals and objectives for a plan
broadly aim at identifying and allocating a business' resources in
accordance to the requirements of the market and internal working or
the business.
(ii) Considering planning premises : A premise is a statement on
certain assumptions about the business environment in which the plan
has to be carried out. This step involves forecasting methods on
determining possible sales, salaries, taxes, etc which the company can
obtain or is expected to obtain.
(iii) Identifying alternatives : This step involves determining
possible alternative course of actions or sequence of activities that will
be required to attain the required objectives. Alternative course of
actions can be evaluated by depicting comparative costs and benefits,
possible opportunities or risks etc.
(iv) Comparing alternatives : The alternatives identified from the
earlier step are examined for their strengths and weaknesses in
accordance to attaining organisational goals
(v) Choosing an alternative : This step involves choosing the right
plan to achieve the stated goals and objectives of the business by
following a thorough analysis among managers.
(vi) Implement the plan : After selecting a suitable plan, suitable
human and physical resources are allocated for effective
implementation of the plan. Sequential order of activities in the plan
are decided and quantified by making budgets that measures incomes,
expenditures, resultant profits or surplus. (vii) Follow-up action : The
implemented plan is followed up to review its progress to ensure all
actions mentioned in the plans successfully cater to organisational
goals and objectives.

Planning Process-Steps in Planning

1) Being aware of the opportunities: Awareness of opportunities in the environment bothexternal toand
internal in the organization isthe real beginning point for planning.Atthis stage, managers tend to create a
foundation from which they will develop their plans for the next planning period. This awareness stage
precedes actual planning process and is not strictly an actual part of the process.

2) Setting objectives: The first and foremost step is setting objectives. Every organisation must have certain
objectives. Objectives may be set for the entire organisation and each departmentor unit within the
organisation. Objectives or goals specify what the organisation wants to achieve. Objectives should be
stated clearly for all departments, units and employees. Theygive direction to all departments. Departments/
units then need to set their own objectiveswithin the broad framework of the organisation’s philosophy.
Objectives have to percolatedown to each unit and employees at all levels. At the same time, managers
must contributeideas and participate in the objective setting process. They must also understand how their
actions contribute to achieving objectives. If the end result is clear it becomes easier to work towards the
goal.

3) Developing premises: Planning is concerned with the future which is uncertain and every planner is using
conjecture about what might happen in future. Therefore, the manager is required to make certain
assumptions about the future. These assumptions are called premises. Assumptions are the base material
upon which plans are to be drawn.The base material may be in the form of forecasts, existing plans or any
past information about policies. The premises or assumptions must be the same for all and there should be
 total agreement on them.
Allmanagersinvolvedinplanningshouldbefamiliarwithandusethesameassumptions.For
example, forecasting is important in developing premises as it is a technique of gathering information.
Forecasts can be made about the demand for a particular product, policy change, interest rates, prices of
capital goods, tax rates etc. Accurate forecasts, therefore become essential for successful plans.

4) Identifying alternative courses of action: Once objectives are set and assumptions are made, then the next
step would be to act upon them. There may be many ways to act and achieve objectives.Allthe alternative
courses of action shouldbe identified.The course of action which may be taken could be either routine or
innovative. An innovative course may be adopted by involving more people and sharing their ideas. If the
project is important, then morealternatives should be generated and thoroughly discussed amongst the
members of the organisation.

5) Evaluating alternative courses: The next step is to weigh the pros and cons of eachalternative. Each
course will havemany variables which haveto be weighed against each other. The positive and negative
aspects of each proposal need to be evaluated in the light of the objective to be achieved. In financial plans,
for example, the risk-return trade-off is very common. The more risky the investment, the higher the returns
it is likely to give. To evaluate such proposals detailed calculations of earnings, earnings per share, interest,
taxes, dividendsare made and decisions taken. Accurate forecasts in conditions of certainty/uncertainty then
become vital assumptions for these proposals. Alternatives are evaluated in the light of their feasibility and
consequences.

6) Selecting a course: This is the real point of decision making. The best plan has to be adopted and
implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative
consequences. Most plans may not always be subjected to a mathematical analysis. In such cases,
subjectivity and the manager’s experience, judgement and at times, intuition play an important part in
selecting the most viable alternative. Sometimes, a combination of plans may be selected instead of one
best course. The manager will have to apply permutations and combinations and select the best possible
course of action.

7) Formulating supporting plans: This is the step where other managerial functions also come into the
picture.For example, if there is a plan to increase production then more labour, more material, more
machinery etc. will be required. Derivative plans are invariably required to support the basic plan

8) Quantifying plans by budgeting: After decisions are made and plans are set, the final step isto quantify
them by converting them into budgets. A properly prepared budget becomes a standard against which
progress can be measured.

Types of Planning
Planning is an essential part of every business, whether that is in the form of laying out a
strategic framework, or making contingency plans for emergencies. Organizations that are
not well-planned may be faced with serious consequences. The four main plans are
strategic, tactical, operational, and contingency.
The four main plans of business are strategic, tactical, operational and contingency.

 Strategic planning looks at the long-term issues of the organization, and helps
develop a plan for growth or change of business function. Goals developed at the
strategic planning-level are often increased by dividing them into tactical and
operational levels.
 Operations planning focuses on day-to-day issues, such as staffing levels or
inventory quantities. Operational-level planning includes more detailed objectives
with concrete deadlines and task assignments.
 Tactical planning is used to reach the goals set out by strategic and operational
planning. Tactical planning includes short-term objectives and tasks designed to
create specific results within a limited time span. Tactical plans often include
operational level plans, and make way for the development of contingency level
plans.
  Contingency-level planning includes more detailed action items with specified
responses in case of unexpected events or emergencies, such as natural disasters
or extreme weather events that disrupt business operations.

All four levels of planning are necessary for a business, or individual business projects to
succeed.

Strategic Planning
Strategic planning is a management process for defining a company's long-term vision,
direction, and actions. It is a strategy to figure out what potential business opportunities
exist for the company. It helps to align different initiatives, and get people focused on a
single goal.

Strategic planning is an organizational process that involves defining the current situation, setting goals for the future, and finding
a way to bridge the gap between the two.

A good example of strategic planning is when an organization wants to expand their

business globally. They will first need to define their current situation which might include
mapping out all their resources, setting goals for what they want to achieve, and assessing
how much resources are available in various regions. Once they have all this information,
they can then create a map of where they want to expand and what steps need to be taken
in order for them to get there.

Tactical Planning
Tactical planning is the practice of prioritizing tasks and delegating them to team members
in a way that will get the task accomplished. Tactical planning means figuring out what
needs to be done in order to achieve a goal, which team member can do it, and when they
can get it done.
The tactical planning process begins with a strategic plan. The strategic plan establishes
the goals for an organization or business unit. These goals are then translated into tactical
plans by identifying processes, and necessary tasks required to achieve these goals.
Tactical plans are assigned to individual team members who prioritize th

4 Types of Planning in Management

Now that you got a gist of its importance, here are the 4 types of planning in
management.
Operational Planning
It is the kind of planning required for day-to-day activities. Organisations use
such kind of planning with extreme detail to clearly identifying the who,
what, when, where and why of all parties involved.
And, there are some variations within it.
Operational planning can be of two types – either single-use plans or ongoing
plans.
Single Use Plans
As the name suggests, single-use plans can be used only until the objective
is achieved, after which they are of no purpose.
Example of single-use plan
You can think of single-use plan in the context of a marketing campaign.
There is one specific goal, and once it is achieved, the marketing department
may start with a different plan for another purpose.
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Ongoing Plans
Ongoing plans are repetitive in nature and can be modified for evolving
purposes in the future. They are also characterised by short-term plans.
Example of an ongoing plan
An easy example of an ongoing plan is perhaps the planning that goes into
the recruitment of employees in an organisation. The HR department’s
planning here is repetitive and short term. Once the objective is achieved,
the same process is followed in the future with little or no modifications.
Maybe the Top recruitment courses will steer your interest in the domain
more!
Contingency Planning
Also known as ‘special planning’ or colloquially 'Plan B', it is used for
situations when changes cannot be foreseen. It is that ‘what if’ scenario that
a business manager needs to consider so that the company does not face
losses. That ‘what if’ scenario can be loss of data in a data security firm,
failed product in the market, etc.
Probably the recent damaging ‘what if’ scenario for many businesses was the
pandemic. It was unprecedented. Many organisations that did not have a
solid contingency plan had to lay off their employees, and most small
businesses had to shut shop completely. The ones who did, shifted their
focus to growth prospects in the cloud or digital technologies.
Strategic Planning
Strategic planning is used in light of achieving big goals in the long term. It is
more of a high-level planning done by the top-level managers in the
organisation.
Such a kind of planning in management is used for starting a business. A
strategic plan includes the vision and mission of the company. It also
includes defining timelines, establishing KPIs (key performance
indicators) and tracking their progress.
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Its use is also seen when there is a sudden change in the market trend, and
the business has to adapt to it within a specific timeline.
Tactical Planning
Tactical planning refers to task prioritisation for achieving short term goals.
This is one of the crucial types of planning in management that helps
achieve those goals as prescribed in a strategic plan.
 In an organisation, tactical planning is approached by mid-level
management. The goals to be achieved are set for one or two departments
and then moving on to the next in a tactical plan.

What are the 4 Types of Planning?

Planning is an essential function of business. Effective
planning is crucial for every business to achieve the
desired goals effectively. The following are the four key
types of planning in management. Let’s explore them:
Strategic Planning
Definition: Strategic planning is like a roadmap for a
company’s long journey. It’s a big-picture plan that
guides where the company wants to go and how it aims
to get there.
Purpose: Think of it as setting the ultimate destination
for a road trip. It defines the company’s goals, vision, and
the main strategies to achieve them. It’s a big dream.

Key Details:
 Who Makes It: Top-level leaders and executives in the company are
like the masterminds behind this plan. They gather to brainstorm and
set the course for the future.
 Importance: Imagine trying to build a house without a blueprint.
Strategic planning provides focus and direction. It helps a company
grow, adapt to changes, and stay competitive.
 Example: Suppose a toy company decides it wants to be the leader in
eco-friendly toys within five years. Their strategic plan might include
goals like designing sustainable toys, expanding into new markets, and
improving their brand’s environmental image.

Operational Planning
Definition: Operational planning is the day-to-day plan
that keeps the company running smoothly. It’s like the to-
do list for each day, making sure everyone knows what
needs to be done.
Purpose: If strategic planning is the big dream,
operational planning is the practical step to make it
happen. It’s about managing resources, tasks, and
deadlines efficiently.

Key Details:
 Who Makes It: Operational plans are crafted by managers and
supervisors who oversee specific areas or teams. They take the big
 goals from strategic planning and break them into smaller,
manageable tasks.
 Importance: Without operational planning, it’s like having a dream
but not knowing how to take the first step. It ensures that everyone in
the company knows their role, resources are used wisely, and things
get done on time.
 Example: Consider a restaurant. The strategic plan might include a
goal to become the go-to place for healthy dining. The operational plan
for the kitchen staff would include tasks like sourcing fresh ingredients,
creating daily menus, and maintaining kitchen equipment to serve
healthy meals efficiently.

Tactical Planning
Definition: Tactical planning is like a playbook for a
sports team. It’s about making specific, short-term moves
to score points and win the game. In business, it’s all
about the specific details of a business.
Purpose: Think of this type of planning as breaking down
the big goals from strategic planning into smaller,
achievable actions. Tactical planning tells us exactly what
to do, like a game plan for success.
Key Details:
 Who Makes It: Middle-level managers are like the coaches here. They
take the strategic game plan and create tactical plays for their teams.
They decide who does what, when, and how.
 Importance: Imagine playing chess without thinking about your next
move. Tactical planning ensures that each part of the organization is
working together efficiently. It’s all about executing the strategy and
getting results.
 Example: If a tech company’s strategic plan is to dominate the mobile
app market, tactical planning might involve setting specific targets for
app downloads, designing marketing campaigns, and allocating
resources to app development teams.
Read More: Tactical Goals
Contingency Planning
Definition: Contingency planning is like having a backup
plan for when things go wrong. It’s preparing for
unexpected twists and turns, much like having a spare
tire in your car.
Purpose: This type of planning is all about being ready
for surprises. It’s like having a fire escape plan in case of
emergencies. It helps a company respond to unexpected
challenges effectively.

Key Details:
 Who Makes It: Just like having a first-aid kit at home, contingency
plans are developed by experts in risk management or crisis response.
They identify potential risks and create plans to deal with them.
 Importance: Life is unpredictable, and so is business. Contingency
planning ensures that when a crisis hits, the company knows exactly
what to do. It minimizes damage and helps the organization bounce
back quickly.
 Example: Consider a manufacturing company. While their strategic
plan may focus on increasing production, a contingency plan could
include steps to address disruptions like equipment breakdowns,
supplier issues, or even natural disasters. This way, they’re ready to
keep production going no matter what.

Types of Planning




One of the most significant processes that form the basis of

decision making and goal setting in the individual tasks as well
as in business strategies is planning. It entails anticipation and
planning to set a course in relation to certain objectives. Thus,
planning is a systematic way of providing understanding and
focalization of goals and objectives, determination of possible
threats and challenges and rational distribution of resources.
From business to projects and even individual self-
improvement, planning is the laid down process of tackling
issues and or managing chances and risks as they present
themselves in this world today where things are not easily
predictable and where changes are always an unpredictable
factor which you have to either embrace or avoid completely.
Finally, planning is looking at the future and liberating an ability
to meet challenges and foster sustainable success.
Types of Planning:
1. Strategic Planning
Features:
 Long-term Focus: Strategic planning deals with the long-
term goals and objectives that an organization wants to set
out to achieve on its vision and mission.
 Top Management Involvement: It usually comprises a
company’s top executives and decision-makers, who chart
the general course and goals that the company shall follow.
 Comprehensive Scope: Organizational environment
relates to measures and factors that span across the whole
organization or major parts of it pushing for higher success
rates.
Advantages:
 Clarity and Direction: Helps communicate direction of the
organization and how this is going to be realised, hence
facilitating organisational cohesiveness.
 Resource Allocation: Facilitates in identification of special
resources to focus on for financial, human and other
resource needs to support strategic initiatives.
 Competitive Advantage: Allows an organization to know
the business strengths to build on while having an insight of
the weaknesses to counter in the market.
 Long-term Sustainability: Provides a sure bet to
sustainable revenues that negate risks associated with the
future by taking time to analyze the market and its trends.
Disadvantages:
 Time-consuming: Thus, strategic planning may take a
considerable amount of time because of the need to collect,
sift through, and synthesize large amounts of information, as
well as to negotiate among the numerous interested parties.
 Resistance to Change: Success of strategic plans to be
implemented may be an issue of concern in an organization
since it may be met with little or lot of resistance depending
on the changes that are involved.
Examples:
 Market Expansion Strategies: Where organizations seek
new outlets and or markets to cover or expand on in a bid to
take advantage of growing markets.
 Restructuring Initiatives: More specifically, this type of
analysis applies to strategic plans that call for major
overhauls of the company’s organizational structure in order
to try and unlock efficiencies or respond better to shifts in
the marketplace.
 Diversification Strategies: Feasibility to start
diversification of products or services to prevent potential
risks as well as to have multiple sources of income.
2. Tactical Planning
Features:
 Shorter-term Focus: Tactical planning focuses on the
formulation of short-term to the medium-term goals that
 help in the attainment of the strategic goals of an
organization.
 Specific Goals: In operation, It turns strategic goals into
tangible activities and projects on the ground.
 Departmental or Functional Focus: Usually it is done at
the departmental or at the functional level in a given
organization.
 Flexible: This in turn, enables one to make flexible decisions
based on the realities of the information and events
happening in the field.
Advantages:
 Alignment with Strategy: common employee ensures that
all daily operations and decisions made by the organization
corresponds to the organizations’ strategic plan.
 Enhanced Efficiency: Summaries the plan that needs to be
implemented alongside achievable targets and the time that
is required to complete them.
 Coordination: It helps in organizing the functioning
between one department or a team and another department
or a team with a view to achieve goals that are common or
mutual.
 Quick Response: Allows the organization to respond to new
opportunities or threats in the market environment as and
when they arise.
Disadvantages:
 Narrow Focus: May be more short term oriented and thus
may not fully appreciated strategic consequences of short
term decisions.
 Risk of Inflexibility: The strong-form means that some
certain plans may close off chances for responding to change
or shift of market.
 Dependency on Strategic Alignment: Consequently, the
notion of tactical planning is strongly associated with the
quality and fit of strategic plans accomplished to drive it.
Examples:
 Inventory Management: Managing stocking policies and
ordering patterns of products to make them available while
at the same time keeping stock-outs and unnecessary
holding costs to a minimum.
 Customer Service Enhancements: Projects to enhance
customer service operations and enhancement of customers’
contentedness to certain standards within a given duration.
3. Operational Planning
Features:
 Detailed and Specific: This type of planning looks at the
daily, weekly and the actual activities necessary for
organizational effectiveness in the achievement of the
specific operations goals.
 Short-term Focus: In general, it deals with periods that
include days, weeks or months to enhance the working of
each day.
 Functional Scope: It is developed for certain organizational
activities or a certain division of the organization like
production, sales or customer service.
 Integration with Tactical Plans: They are also drawn from
the tactical plans and play a central role of ensuring the
strategy formulated is implemented.
Advantages:
 Enhanced Efficiency: Cuts costs of operation since it
organizes the executing processes and properly allocates the
resources that are available.
 Clear Direction: Major organizational advantage –
organisational objectives and expectations are clearly stated
and communicated to all employees, thus everyone is aware
of what is expected of him/her.
 Resource Optimization: Economical in the control of
resources be it human resources, materials and other
equipments.
 Continuous Improvement: This enables constant
assessment and optimization of the organizational
procedures for higher efficiency and effectiveness.
Disadvantages:
 Potential Rigidity: May be set in concrete and do not take
alterations even if new information or conditions are
introduced in the organization.
 Limited Strategic Focus: Tends to concentrate more on
the technical activities where it may be blind to the strategic
consequences.
 Time and Resource Intensive: Preparation of operational
strategies is also quite exhaustive in terms of time and other
resources that are required to prepare them.
Examples:
 Production Scheduling: Organizing production operations
with attention to demand requirements and time when the
equipment and labor shall not be overused.
 Inventory Management: Co-ordinate of inventory quantity
and purchase cycles to set up effective stock quantity
standards with unwanted value additions.
 Employee Shift Scheduling: Scheduling of employees to
work so that the organization is well staffed especially during
peak times, labor laws, and employee desires.
 Maintenance Planning: Scheduling of recurrent activities
to check on the health of the equipment in order to have
minimal cases of system failures.
4. Contingency Planning
Features:
 Preparation for Uncertainty: Contingency planning
mostly refers to identifying and coming up with a plan to
deal with an eventuality that is likely to cause disturbance to
the normal proceeding.
 Risk Assessment: It encompasses recognition of risk and
opportunities that are likely to threaten the organization.
 Alternative Strategies: Aims at creating new methods of
action and a backup plan for coping with interruptions.
 Cross-functional Collaboration: Usual it is a teamwork
that aims to cover all the aspects of preparation.
Advantages:
 Enhanced Resilience: Enhances the extent to which the
organisation can quickly control for incidents that occur and
prevent negativity arising out of such events from having a
disruptive effect.
 Risk Mitigation: Prevents adversity situations from
emerging, and has a positive impact on the company’s
financial and organizational losses.
 Maintains Reputation: It is an important tool in protecting
the organization’s reputation through showing that the
organization constantly actively work on crisis management
and continuity plans.
 Regulatory Compliance: Safeguards against
noncompliance with the legal and/or organizational
regulatory standards for disaster preparedness and business
continuity in an organization.
Disadvantages:
 Resource Intensive: It is not rare to hear that carrying out
and preserving detailed contingency plans may be time-
consuming and costly, as well as needing considerable staff
effort.
 Complexity: Making and updating contingency
management for different contingencies can prove to be
difficult and needs constant check up and changes.
 Over-preparation: It is possible to see companies over
planning for contingencies which they are very unlikely to
face, in turn the resources that could be used to fund
operations are lock up.
Examples:
 Disaster Recovery Plans: Policies describing the processes
to restore the company’s IT hardware and software once it
has been attacked or when the systems fail.
 Crisis Communication Plans: Strategies on how the
organisation will disseminate information to its’ stakeholders
during calamity to ensure a proper perception of the
occurrence is addressed.
5. Financial Planning
Features:
 Goal-Oriented: Budgeting involves identification of
appropriate goals towards which the finance should be
worked in the shortest time and the farthest future.
 Comprehensive: Topics that fall under personal finance
include; budgeting, saving, investment, planning for
retirement and managing for risks.
 Data-Driven: Depends on the figures, estimations, and
evaluations to make right decisions regarding the objects’
monetary assets.
 Continuous Process: It is a complex and gradual process of
evaluation and decision making that needs to be constantly
revised depending on the circumstances that exist at a given
time.
Advantages:
 Goal Achievement: Supports specific objectives related to
money, for instance, saving a particular amount, required
rate of investment returns, or payoff of a certain amount of
loan balances.
 Financial Security: Helps to attain and improve the overall
financial stability including the funds for the emergency, the
retirement, and other unforeseen situations.
 Risk Management: Reduces the possibility of exposure to
potential risks in the financial department by means of, for
instance, investing in other industries and when taking risks
ensuring that they take insurance for this purpose.
 Improved Decision-Making: It offers a basis for the sound
management of financial relations taking into account the
analysis and prognosis.
Disadvantages:
 Time-Consuming: Creating and updating the well-
coordinated budgetary plan can take much time and needs
comprehensive analyzing and control.
 Complexity: Personal and business finance can be involving
due to the clash of various requirements and objectives in
most cases.
 Uncertainty: Fluctuations in the markets and conditions in
the economy pose some drawbacks when preparing the
financial plans.
 Costly: If further specifications are outlined, it can be said
that acquiring independent financial consulting or employing
the help of financial planning software might be costly.
Examples:
 Personal Financial Planning: There is personal budgeting,
saving for future things like education, or for retirement,
acquiring of shares or debentures and wills.
 Corporate Financial Planning: This one includes
budgeting, management of cash flows, investment in capital,
and estimating the future financial status of the business as
a means of development.
 Risk Management Planning: For instance, it will involve
measures that guard against financial threats, for example,
acquiring insurance or operating in currency markets to
offset certain fluctuations.
 Retirement Planning: It entails determination of what is
required to fund one’s retirement, establishing of targets
towards the savings and provisions for investments in
instruments such as 401(k) or IRAs.
6. Project Planning
Features:
 Objective-Oriented: He elaborated that project planning
woodland centred on the provision of clear and clear
quantifiable goals, milestones or results required in a certain
project.
 Timeline and Milestones: It includes setting up of time
frames, target points and schedules for tracking work
progress on the project and determining when the project
should be completed .
 Resource Allocation: Encompasses the process of defining
how, where and by whom the project will be done, including
how much resources are going to be spent.
 Risk Management: Focuses on the potential threats and
manages ways to address them from initiation to the
project’s closure.
Advantages:
 Clarity and Focus: Helps create the basis for understanding
what is expected of everyone, what they should be doing
and what the project is about.
 Risk Mitigation: Ensures that probable problems are
considered and prevented, thus minimizing chances of
interuption of projects.
Disadvantages:
 Complexity: Project planning can be a lengthy process due
to the size of the project and involvement of various
stakeholders and project constraints.
 Resource Constraints: Constraints like inadequate funds,
quality manpower, will affect the planning of a project.
 Overemphasis on Planning: Excessive planning results to
either delay in the commencement of a project or over
documentation of the project hence affecting time.
 Scope Creep: This in planning causes scope creep which
affects outcomes of a project if there are uncontrolled
changes to project scope.
Examples:
 Software Development Projects: Some of the activities
that are involved in planning phases include defining scope,
requirements, development schedules, as well as the testing
plans.
 Construction Projects: This involves the time and kind of
explorations to be made about the site, designs of the
building and structural plans, construction phase plans,
procurement of materials and construction phase safety
measures.
 Event Planning: Concerns timely booking of places for the
event, arranging meals for those attending the event,
arranging or selecting speakers or entertainers, organizing
all the essential factors, and registration of all the attendees.
 Marketing Campaigns: It comprises of goal setting for the
campaign, financial resources allocation, work schedule,
media choice, and evaluation parameters.
7. Human Resource Planning
Features:
 Forecasting Needs: HRP stands for Human Resource
Planning it is the process of anticipating future human
resource requirements with a view of the organizational
objectives.
 Talent Acquisition: Some of them are ways of accessing,
evaluating, and nurturing human resources for organization’s
current and future requirements.
 Skills Development: Since HRP involves the identification
of training needs, it helps in a focus on the areas that require
improvement in the skill areas of the human resource.
 Succession Planning: It also helps maintain continuity
through the processes of talent management within the
organization and thus the nurturing of its own talent for
accordant positions in the company.
Advantages:
 Optimized Workforce: Managing the workforce in an
organization ensures a right number of employees are hired
and possess the right skills for the job hence increasing the
productivity and efficiency of the organization.
 Cost Efficiency: Cuts down on the expenses that come with
the process of recruiting new employees and preparing them
for duty through the right work force planning.
 Talent Retention: Improves employee self-esteem and
organizational commitment by providing promotions and
improving employee ‘employability’.
Disadvantages:
 Complexity: HRP may not be easy because certain factors
may put a strain on the process such as fluctuating business
environment, the laws governing employees, and the
general population.
 Uncertainty: It is generally difficult to forecast the demand
for workforce after five to ten years because of the
unpredictability of the economy.
 Resistance to Change: Change management is another
challenge on the execute phase to adopt the HRP strategies
since the employee or management resist the
implementation of change due to the new tradition that does
not exist or which they are unfamiliar with.
 Resource Intensive: Effort, time and money are some of
the most important resources that must be spent for the
formulation and sustenance of HRP activities.
Examples:
 Recruitment Strategies: Strategizing for recruitment and
selection of employees, especially the professional in the
organization’s employment needs.
 Training and Development Programs: Defining the areas
of competence deficiencies and creating programs for skills
development of personnel.
 Succession Planning: Main: this involves the process of
looking for employees who can be developed to assume
leadership positions in the future by establishing a good
mentorship and development plan.
 Workforce Diversity Initiatives: Coordinating methods for
the enhancement of diversity and policies in the
organization.
8. Succession Planning
Features:
 Long-term Perspective: It is a management strategy that
is concerned with the search and grooming of talent that has
the potential of succeeding in the leadership and important
positions.
 Talent Development: It entails a process of developing
employees to be in a position to perform the duties of the
next higher rank through training, coaching as well as staff
development.
 Risk Management: Minimises the risks stemming from
resignations or retirements of important individuals thus
creating organizational stability.
 Strategic Alignment: Brings succession plans in par with
the organizational goals and strategic plans to help
organizational sustainability.
Advantages:
 Continuity: Helps to maintain the stability and order in the
key positions of an organization thereby reducing the levels
of organizational disruption.
 Retention and Motivation: Helps to manage the turnover
rate and increase the level of motivation as all employees
can clearly see how they can progress within the company
and what training programs are available for them.
 Leadership Development: Grooms leadership talent,
guaranteeing that there a string of executives to be
prepared for leadership roles.
 Organizational Stability: Contributes to organizational
reliability by minimizing the degree to which organizations
depend on specific persons.
Disadvantages:
 Complexity: Succession management is always challenging,
particularly in extensive organizations since they are
characterized by multiple tiers of directors and high-demand
competencies.
 Resistance to Change: Succession implementation may
also experience some opposition from the existing leaders or
employees based on the fact that they seem to be sidelined
or substituted by other employees.
 Successor Readiness: Succession planning involves and
understanding, appraisal and development of talent for the
next line of succession.
 Resource Intensive: Apparently, creating and sustaining
succession processes with requisite skills depends on time,
energy, and resources in training and development.
Examples:
 Executive Succession: Sourcing requirements for ‘key’
executive positions like, Chief Executives, Chief Financial
Officers and other
 Key Role Succession: Succession planning and defining the
target candidates in key working positions or complex
technical niches in the company.
 Family Business Succession: The process of selecting the
right personnel to succeed the current owners’ generation in
family businesses.
 Leadership Development Programs: Initiating pro-
actively a systematic succession plan to nurture talent
through sponsorship, coaching and leadership development.
9. Sales and Marketing Planning
Features:
 Market Analysis: This fosters understanding of market
trends, consumer behaviours or buying patterns and their
competitors’ actions in the sales and marketing processes.
 Goal Setting: Defines clear sales and marketing targets and
goals, for instance revue goals, market share, and customer
acquisition goals.
 Integrated Approach: Syncs the needs of a company’s
selling and communicating strategies for better targeting
and efficiency in bridging the business’ objectives.
 Measurement and Evaluation: Contains factors and
indicators in order to assess and analyse the outcomes of
sales and marketing activities.
Advantages:
 Increased Revenue: With proper planning and strategic
marketing or sales initiatives, the sales and revenue can be
improved tremendously.
 Market Penetration: Assists to gain new markets or
increase the existing ones since it involves in the
identification of opportunities that can be exploited.
 Customer Engagement: Helps in creating better relations
with the customers by rolling out better marketing messages
and appealing sales strategies.
 Competitive Advantage: Helps in gaining a competitive
advantage and targeting clients since it engages in the
process of differentiating products or services and
establishing them in the market.
Disadvantages:
 Complexity: Sales and marketing planning can be rather
intricate, especially when it concerns one or several
channels, customers, and practices and promotions.
 Resource Intensive: Preparation of advanced sales and
marketing strategies takes a lot of resources like: time,
amount of money, and qualified human resource.
 Market Uncertainty: Environmental influences like the
present economic scenarios or shift in customer preferences
may affect the working of planned strategies.
 ROI Measurement: Lack of the ability to estimate a precise
return of investment of marketing effort and sales
campaigns.
Examples:
 Sales Promotions: Organizing and executing sale
campaigns, discounts, and offers to increase the demand to
the product and customers.
 Market Research and Analysis: Projects; Market research
to determine customer needs, desires and spending patterns
in selling and marketing products.
10. Business Continuity Planning
Features:
 Risk Assessment: Outlines potential losses and perils to
the running of a business like floods or fires, hacking or
interruptions of the source of materials.
 Continuity Strategies: Establishes ways and means of how
critical processes of business operations can be properly
addressed in and out of disruption.
 Emergency Response: Defines measures to be taken
concerning emergencies, safety of the employees,
customers and other stakeholders.
 Testing and Updates: Modified frequently enough to
determine the adequacy and ability to respond to new
threats and challenges facing the company’s business.
Advantages:
 Minimizes Downtime: Decreases the time taken for
business operations hence cutting on losses, and ensuring
customers confidence is not hindered.
 Enhances Resilience: Enhances the capacity of an
organization to reduce contingencies through planning for
them, thus boosting the organization’s ability to minimize
disruptions.
 Protects Reputation: Protects the company from potential
damages, revenue loss and legal complications while.
 passing a positive message to the stakeholders to improve
brand image.
 Regulatory Compliance: Oversees the maintenance of the
organization’s compliance with rules and regulations
concerning continuity of business and disaster management.
Disadvantages:
 Resource Intensive: Having good business continuity plans
that are outlined to ensure they are effective can become
costly in terms of time, money, and human resources.
 Complexity: To create a clear and smooth plan that works
for a large organization is not an easy task; this is due to the
fact that, such organizations are usually have many
branches, departments or functions.
 Dependency on Technology: Tightly linked with
technology and infrastructure which means risky IT failure or
a cyber attack is dangerous for businesses.
 Risk of Over-Reliance: This may create a problem of over
reliance in continuity plans while other potential risk
management strategies are not also given the attention that
they deserve.
Examples:
Supply Chain Continuity Plans: Some of the activities
concerned with minimizing risks and developing plans to tackle
any risks that may occur in the supply chain to ensure the flow
of the products.
Pandemic Preparedness Plans: Measures agreed upon to
ensure continued operations of business in case of flu or any
similar avian flu pandemic.
Conclusion
Altogether planning is important in various aspects of business
and organizational management. Regardless of whether it is
used in strategic planning where it has aspects of visioning
about the future general environment; in operation where it
may involve detailed planning of various activities; or in
contingency planning where it involves aspects of managing for
risk, uncertainty or adversity, each type is of prime importance
in the organization’s ability to manage and overcome some
forms of adversity and yet achieve its goals. There are steps for
resource optimization, better performance, risk management,
and innovation paths in the planning frameworks. However, on
the list of benefits of planning some issues like complication
and Employment of a great amount of resources illustrate the
value of planning like an essential tool for the improved
decision-making, flexibility, and constant competitiveness. In
conclusion, the broad approach to planning guarantees
preparedness to do well in uncertain situations and display
lasting improvement.

Formal and Informal Organisation

Organising refers to identifying and growing different activities in the organisation. It brings together
human and non-human resources to achieve organisational goals. Organising helps in the
implementation of the plan by clarifying job and working relationships for the attainment of desired
goals.

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

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. It is
deliberately designed to enable people to work together for achieving common objectives. It is a
deliberate determination by which people accomplish goals by adhering to the norms laid by the
structure. 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.

Features

Following are the features of formal organisation:

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.

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. When people have frequent
contact, they cannot be forced into a rigid formal structure. It means the informal organisation is not
pre-planned. It arises automatically due to frequent contact of people with each other. 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.

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.

What is decision making?

Decision making is simply the process of making a choice. But decision making often
isn’t easy and can be particularly complex in an organizational context.

What is Decision Making?

Decision-making is an integral part of modern management. Essentially, Rational or sound
decision making is taken as primary function of management. Every manager takes
hundreds and hundreds of decisions subconsciously or consciously making it as the key
component in the role of a manager.
Decisions play important roles as they determine both organizational and managerial
activities.

A decision can be defined as a course of action purposely chosen from a set of

alternatives to achieve organizational or managerial objectives or goals. Decision
making process is continuous and indispensable component of managing any organization
or business activities.

Decisions are made to sustain the activities of all business activities and organizational
functioning.

Decisions are made at every level of management to ensure organizational or business

goals are achieved. Further, the decisions make up one of core functional values that every
organization adopts and implements to ensure optimum growth and drivability in terms of
services and or products offered.

As such, decision making process can be further exemplified in the backdrop of the
following definitions.

Definition of Decision Making

According to the Oxford Advanced Learner’s Dictionary the term decision making means -
the process of deciding about something important, especially in a group of people or in an
organization.

Trewatha & Newport defines decision making process as follows:, “Decision-making

involves the selection of a course of action from among two or more possible
alternatives in order to arrive at a solution for a given problem”.

What Is an Organizational Structure?

An organizational structure is a system that outlines how certain activities are directed in order
to achieve the goals of an organization. These activities can include rules, roles, and
responsibilities.

The organizational structure also determines how information flows between levels within the
company. For example, in a centralized structure, decisions flow from the top down, while in a
decentralized structure, decision-making power is distributed among various levels of the
organization. Having an organizational structure in place allows companies to remain efficient
and focused.

What is 'Organizational
structure'
Organizational Structure
Definition of an Organizational Structure
A system that outlines how specific activities are handled to fulfill a
strategic mission is known as an organizational structure. Rules, roles,
and obligations are all part of these activities.

The organizational structure also determines the flow of information

between divisions within the corporation. A centralized structure, for
example, makes choices from the top-down, whereas a decentralized
structure distributes decision-making power throughout the
organization.

Let’s explore the 2 types of organizational structure below –

Organizational Structures: Centralized vs. Decentralized
A centralized or decentralized organizational structure exists.
Organizations have traditionally been organized with centralized
leadership and a well-defined chain of command.

The military is known for its highly centralized structure, which

includes a long and detailed hierarchy of leaders and subordinates. In a
centralized organizational system, each function has extremely clear
responsibilities, with junior roles relying on their superiors for
guidance.

As in the case with many technological businesses, there has been an

increase in decentralized organizations. As a result, businesses can
stay quick, flexible, and adaptive, and virtually every employee has a
high level of personal agency.

Hierarchies are generally prevalent even in decentralized businesses

(For example, the company's chief officer is a higher-ranking employee
than an entry-level associate.) On the other hand, teams are free to
make their own decisions and come to the best conclusion without
needing "approval" from the top.

Organizational Structures Types

Functional structure
It is often known as a bureaucratic organizational structure, which
divides a corporation into departments based on the specialization of
its employees.

Divisional or Multidivisional structure

This strategy structures a company's leadership team based on the
goods, projects, or subsidiaries it manages.

Structure of Flatarchy
It is a management style that flattens the hierarchy and chain of
command while giving employees a great deal of autonomy.

Structure of the Matrix

It's also the most confusing and underused. Employees are matrixed
across superiors, divisions, and departments under this system.

What is organizational structure?

An organizational structure is a system of rules and relationships that govern how an organization is
run.
An organizational structure defines how a company operates.
Since different divisions in a company have specific roles, an organizational structure helps determine
how decision-making is distributed, how work gets done, and how information flows.
What is an organizational structure?

An organizational structure outlines how responsibilities and roles

are assigned and grouped throughout an organization.

What is Organizational Structure?

Organizational structure (OS) is the systematic arrangement of human resources in

an organization so as to achieve common business objectives. It outlines the roles
and responsibilities of every member of the organization so that work and
information flow seamlessly, ensuring the smooth functioning of an organization.

Centralization or Centralized Organizational Structure

In this system, all the powers of decision-making rest at the topmost level of the management.
They take the shape of a pyramid with the leader or executive team at the top responsible for
making all decisions. Below them are departmental managers overseeing supervisors. These
supervisors lead the workers at the lowest level in the hierarchy.

A centralized OS structure gives uniformity of policy when the operational units face a conflict
of objectives and strategic goals. Also, it speeds up the decision-making process. This type of OS
is prevalent in the retail industry.
Decentralization or Decentralized Organizational Structure

In this system of OS, an organization’s middle- and lower-level managers make decisions as per
the local culture or laws. This leaves the top management to direct its attention to major
decisions. This type of OS flattens the hierarchy and empowers employees. It is widely
prevalent in the hotel sector.
The hotel sector has to comply with local laws to function properly in areas of food and
beverages, human resources (HR), and operations. Therefore, decentralization is required
because handling the guests, food, staff, and processes with a centralized structure is
impossible.

Types of Organizational Structure

Organizations implement different types of OS depending on the nature of their business,

needs of customers, types of products in demand, and services required. Here are some of the
popular organizational structures.

#1 – Hierarchical

This is a type of centralized organizational structure. There is a hierarchy of workers with

leaders at the top, the workers below, and supervisors placed in between to get the work done.
It is more of a linear OS where the delegation of power emanates from the top management. It
is a widely popular form of OS and is seen in companies like Amazon.

This system concentrates decision-making at the top level. As a result, the organization suffers
from a lack of creativity as innovative ideas have to work their way up through various levels of
management. Also, each employee communicates with their immediate superior and
subordinates only. This reduces coordination at various levels of power and departments.
Nevertheless, it is a salient feature of most government organizations.

#2 – Flat

This organizational structure is devoid of any hierarchy. No one commands or controls the
employees. Instead, decisions are made at every level of management. Therefore, it is usually
used in small companies with few employees or new startups. However, with time and business
growth, some form of hierarchy creeps into the organization; otherwise, it may cause chaos and
inefficiency in the organization.

#3 – Flatarchy

It includes features of both hierarchical and flat OS. It is a temporary form of OS that comes into
existence only when a new product is created, a new service is being tested, or when a
company seeks to develop a new customer support system.

By employing flatarchy, an organization can have specialized teams to handle the development
of new products or services more creatively and efficiently. It is the best tool for an organization
to tackle the change in market or industry sentiments without creating capital-intensive
departments or reforming the OS.

#4 – Functional

The functional organizational structure creates a fixed set of departments based on certain
functions like HR, accounts, marketing, etc. It segregates the workforce based on the
requirements of each department. For example, an accounting department will employ
accountants and work to manage the firm’s finances in the best possible manner.
Likewise, the HR department will look after the recruitment, payroll, and administration of the
firm. Moreover, the functional OS allows the employees to work for a particular functional role
without worrying about the other departments. So, for example, a sales executive won’t be
worried about a firm’s accounting work and vice versa.
#5 – Divisional

This type of organizational structure comes into play when a firm has grown exponentially to
become a giant in its sector. For example, a giant clothing company will require separate
divisions based on customer groups, product types, and geographical locations.

Hence, it will create a ladies’ fashion garment division, kids wear division, men’s wear division,
and affordable clothing division. Each division will have its own production, marketing, human
resource, IT, and sales teams. In this manner, the company could manage the product line or
geography with all necessary functional resources.
#6 – Matrix

Under this organizational structure, there is no clear demarcation of roles and responsibilities
of resources. Resources may be shared across different teams to ensure their maximum
utilization. It is the least used OS as it is quite complex and confusing and may prove counter-
productive.

The employees have to play a dual role in this OS. For example, the customer service
representative in many banks also acts as their cashier. It may reduce operating costs but badly
affects the employee’s quality of work and the firm’s efficiency. It is a form of decentralized OS.

Meaning of Centralization
Centralization is a form of organizational structure where the decision making capability rests with the top
management. A couple of hand-picked members are entitled to create strategies, determine the goals
and objectives based on which an organisation will function.

In a centralized organisation, the top management sets rules and procedures which are then
communicated to the lower-level employees, who are expected to carry out the same without questioning
the authority.

The advantage of such a structure is, it allows employees to have a well-defined framework within which
all work needs to carried out.

The disadvantage of such a structure is that it increases the time taken to arrive at a decision. As
decision-making authority lies with selected people from top management, it may result in biased decision
making.

Meaning of Decentralization
Decentralization is another form of organizational structure that functions by delegating decision-making
capabilities to multiple teams across geographies.

In such an organization, most of the planning, strategy and decision to implement them are taken by the
people in the middle and lower level of management.

The advantage of decentralization is that the employees are empowered to make their own decisions that
will benefit the organization, which results in a high level of employee satisfaction and boosts the
productivity of an organization.

Decentralization enables low-level employees to gain leadership skills, which can contribute to the growth
of the organization in the long run.
Let us look at the most crucial points of difference between centralization and decentralization in the
following table.

Decentralization Centralization

Definition

Decision-making capabilities delegated across Decision-making capability rests with the

multiple levels top management

Flow of Information

Open and free Vertical

Ideal for

Decentralization is ideal for large-sized Centralization is ideal for small-sized

organizations organizations

Decision-making speed

Significantly faster Comparatively slow

People Involved

In decentralization, a higher number of people In centralization, only a few handpicked

from each level are involved in the decision- people are involved in the decision-
making process making process

Employee Motivation

Highly motivated employee Demotivated employee

Conflict in Decision

Most likely to occur Least likely to occur

Burden

The burden gets shared among many levels Only one group is carrying the burden

Stability

Prone to instability due to multiple conflicting Relatively stable as decisions are made
decisions by a central authority sharing a common
ideology
 What is Centralization?
Centralization refers to the concentration of authority at the top level of the organisation. It is the
systematic and consistent reservation of authority at the central points within an organisation. In a
centralized organisation, managers at the lower level have a limited role in decision-making. They just
have to execute the orders and decisions of the top level.

What is Decentralization?
Decentralization means the dispersal of authority throughout the organisation. It refers to a systematic
effort to delegate to the lowest levels all authority except which can be exercised at central points. It is
the distribution of authority throughout the organisation. In a decentralized organisation, the authority
of major decisions is vested with the top management and balance authority is delegated to the middle
and lower levels.

What is Organisation
Organisation refers to a collection of people who are working towards a common goal and objective. In
other words, it can be said that organisation is a place where people assemble together and perform
different sets of duties and responsibilities towards fulfilling the organisational goals.

Types of Organisation and their Structure

There are two broad categories of organisation, which are:

1. Formal Organisation

2. Informal Organisation

Formal Organisation: Formal organisation is that type of organisation structure where the authority and
responsibility are clearly defined. The organisation structure has a defined delegation of authority and
roles and responsibilities for the members.

The formal organisation has predefined policies, rules, schedules, procedures and programs. The
decision making activity in a formal organisation is mostly based on predefined policies.

Formal organisation structure is created by the management with the objective of attaining the
organisational goals.

There are several types of formal organisation based on their structure, which are discussed as follows:

1. Line Organisation

2. Line and Staff Organisation

3. Functional Organisation

4. Project Organisation

5. Matrix Organisation

Let us learn about these organisation structures in detail in the following lines.
Line Organisation: Line organisation is the simplest organisation structure and it also happens to be the
oldest organisation structure. It is also known as Scalar or military or departmental type of organisation.

In this type of organisational structure, the authority is well defined and it flows vertically from the top
to the hierarchy level to the managerial level and subordinates at the bottom and continues further to
the workers till the end.

There is a clear division of accountability, authority and responsibility in the line organisation structure.

Advantages of Line organisation

1. Simple structure and easy to run

2. Instructions and hierarchy clearly defined

3. Rapid decision making

4. Responsibility fixed at each level of the organisation.

Disadvantages of Line organisation:

1. It is rigid in nature

2. It has a tendency to become dictatorial.

3. Each department will be busy with their work instead of focusing on the overall development of the
organisation.

Line and Staff Organisation: Line and staff organisation is an improved version of the line organisation. In
line and staff organisation, the functional specialists are added in line. The staff is for assisting the line
members in achieving the target effectively.

Advantages of Line and Staff organisation

1. Easy decision making as work is divided.

2. Greater coordination between line and staff workers.

3. Provides workers the opportunity for growth.

Disadvantages of Line and Staff Organisation

1. Conflict may arise between line and staff members due to the improper distribution of authority.

2. Staff members provide suggestions to the line members and decision is taken by line members, it
makes the staff members feel ignored.

Functional Organisation: Functional organisation structure is the type of organisation where the task of
managing and directing the employees is arranged as per the function they specialise. In a functional
organisation, there are three types of members, line members, staff members and functional members.
Advantages of Functional organisation

1. Manager has to perform a limited number of tasks which improves the accuracy of the work.

2. Improvement in product quality due to involvement of specialists.

Disadvantages of Functional organisation

1. It is difficult to achieve coordination among workers as there is no one to manage them directly.

2. Conflicts may arise due to the members having equal positions.

Project Organisation: A project organisation is a temporary form of organisation structure that is formed
to manage projects for a specific period of time. This form of organisation has specialists from different
departments who are brought together for developing a new product.

Advantages of Project organisation

1. The presence of many specialists from different departments increases the coordination among the
members.

2. Each individual has a different set of responsibilities which improves control of the process.

Disadvantages of Project Organization

1. There can be a delay in completion of the project.

2. Project managers may find it difficult to judge the performance of different specialists.

Matrix Organisation: Matrix organisation is the latest form of organisation that is a combination of
functional and project organisation. In such organisations there are two lines of authority, the functional
part of the organisation and project management part of the organisation and they have vertical and
horizontal flow of authority, respectively.

Advantages of Matrix Organisation

1. Since the matrix organisation is a combination of functional and project management teams, there is
an improved coordination between the vertical and horizontal functions.

2. Employees are motivated as everyone will be working towards one project.

Disadvantages of Matrix Organisation

1. Due to the presence of vertical and horizontal communication, there will be increased cost and
paperwork.

2.Having multiple supervisors for the workers leads to confusion and difficulty in control.
Informal Organisation: Informal organisations are those types of organisations which do not have a
defined hierarchy of authority and responsibility. In such organisations, the relationship between
employees is formed based on common interests, preferences and prejudices.
What is Span of Management?
No single executive should have more people looking to him for controlling & guidance than he can
reasonably manage because :-
Limited time
Limited available energy.

The numbers of persons which can be effectively supervised by single executive is 6 to 8 in an average
firm. However when activities are routine then executive can supervise 20 to 30.

If span is small, an executive may tend to over supervise & may even do span leading to his
subordinates.

If span is large, executive may not be able to supervise his subordinates effectively & they may become
careless or feel neglected.

Suppose, you have 4000 workers in Organization. If you divide those workers in 4 groups then you
need 1000 Managers. If a span is small, you need 1000 managers and will take large amount of money
in terms of Annual Salary of Managers. But Workers will get proper supervision. Now, if we divide
those workers in 8 groups then you need 500 Managers. If a span is big then you need 500 managers
and will save company’s money.

Merits of Span of Control :

1. Superior can supervise effectively and competently

2. Specialization is encouraged and utilized.
3. Superior can concentrate on limited area of operations.
4. Higher degree of disciplines can be exercised,
5. If results into all the advantages of tall structure.

Demerits of Span of Control :

1. It increases the scalar chain from top to bottom.

2. It demotivates the employees as the contacts between top and bottom is lengthened.
3. It results into all disadvantages of tall structure.

The advantages of a narrow span of control are :

A narrow span of control allows a manager to communicate quickly with the employees under them and
control them more easily Feedback of ideas from the workers will be more effective. It requires a higher
level of management skill to control a greater number of employees, so there is less management skill
required

The advantages of wide span of control are :

There are less layers of management to pass a message through, so the message reaches more
employees faster
It costs less money to run a wider span of control because a business does not need to employ as many
managers

What is the Span of Control?

Span of Control can be defined as the total number of direct subordinates that a manager
can control or manage. The number of subordinates managed by a manager varies
depending on the complexity of the work.

For example, a manager can manage 4-6 subordinates when the nature of work is complex,
whereas, the number can go up to 15-20 subordinates for repetitive or fixed work.
Definition and Explanation
The term “Span of Control” is popularly used in business management and human resource
management. Because this term is related to the management and controlling of
employees, the meaning of the word is the total number of subordinates that a manager or
supervisor can manage.

In the past, one manager was capable of managing 1-4 subordinates. Because of that,
there were many levels of management in one organization. In 1980, with the introduction
of information technology in business, many organizations flattened their management by
reducing the number of managers in an organization. After that, the span of one manager
increased from 1-4 to 1-10 subordinates.

This was possible because of inexpensive information technology. Technology helped in

easing out several middle managers’ tasks such as collection and manipulation of operation
information. Because of this, a manager became capable of managing more subordinates
at one time.

Several factors affect the span of control of a manager, such as the nature of work,
capabilities of the manager, capabilities of employees to be managed, and the
responsibilities of a manager. It can be of two types, such as a narrow and a wide span of
control. It is considered to be narrow when a manager manages 2 to 4 subordinates.

Advantages of a narrow span of control.

1. The manager can supervisor each of his subordinates intimately.

2. The nature of work is usually complicated.
3. Effective communication between the subordinates and their manager.
4. More layers in the hierarchy of management.

Despite many advantages, the narrow span of control is not free from disadvantages.

Disadvantages of a narrow span of control

1. Too much control over employees might hamper their original talent and creativity.
2. Extended hierarchy of control results in a long time in decision-making.
3. Narrow span of controlling prevents cross-functional problem-solving.

On the other hand, a span of control is wide when a manager manages or controls up to 20
subordinates.

Advantages of a wide span of control.

1. In a wide span of control, subordinates are more independent.

2. Fewer layers in the hierarchy of management.
3. The nature of work is repetitive.
4. Less direct communication between subordinates and managers.

Disadvantages of a wide span of control.

 1. Ineffective management.
2. Increased workload on managers.
3. The roles of team members are not clearly defined.
4. Less communication between managers and subordinates reduces the control of the
manager.

What is Scalar Chain?

The scalar chain principle of management is one of the 14 principles of management defined by Henri
Fayol. It states that an organization should have a clear line of authority and communication from the top
to the bottom. The scalar chain principle of management suggests that every employee should know who
their supervisor is, and all communication should flow through the chain of command.

The span of management refers to the ideal number of subordinates who report to and are supervised by
one manager.
Also known as the span of control (SOC), it determines how many subordinates are able to provide
maximum output without costing too much under one manager/supervisor.
It also relates to the Unity of Command principle under Fayolism, which discusses that there should be
one manager who should be providing guidance to subordinates.
Without determining an optimal number, a manager may be unable to perform the controlling function.
Likewise, coordinating, directing, etc., will also suffer. With that, the long-term plans suffer.

The Process of delegation of authority primarily refers to the centralization or decentralization of

authority.

Centralization is the degree to which decision making takes place at upper levels of the organization. If
top managers make key decisions with little input from below, then the organization is more centralized.
With a centralized structure, line and staff employees have limited authority to carry something out
without prior approval. Centralized organizations are known for decreased span of control – a limited
number of employees report to a manager, who then report to the next management level.

CENTRALIZATION is the degree to which decision making takes place at upper levels of the
organization.

(1) Environment is stable.

(2) Lower-level managers are not as capable or experienced.
(3) Decisions are relatively minor.
(4) Company is large.
(5) Lower-level managers do not want a say in decisions.

Advantages of Centralization :

1. Uniformity of decision can be maintained.

2. Quality of decision is better since each and every decision comes from top.
3. Duplication of resource utilization can be prevented.
4. Better integration of planning, directing and control activities.
5. Better coordination of work and efforts of different departments.
6. Flexibility will be high.

Decentralization is the degree to which decision making takes place at lower-level employees
provide input or actually make decisions, the more decentralization is there. Decentralization seeks to
eliminate the unnecessary levels of management and to place authority in the hands of first line
managers and staff – thus increasing the span of control with more employees reporting to one
manager.

DECENTRALIZATION is the degree to which decision making takes place at lower-level

 (1) Environment is complex, uncertain.
(2) Lower-level managers are capable or experienced at making decisions.
(3) Decisions are significant.
(5) Company is geographically dispersed.
(6) Lower-level managers want a voice in decisions.

Advantages of Decentralization

1. Higher level management can concentrate on work.

2. It develops lower level managers to be promoted to higher level responsibilities.
3. It develops creativity and innovativeness in lower level managers.
4. It increases the morale of the lower level employees.
5. It enables to use the opportunities and local level advantages.
6. It facilitates quick and spot decision making.
7. It helps in locating the responsibilities for wrong decisions.

Dictatorship is an example of centralized structure and democracy is an example of decentralization.

TALL AND FLAT STRUCTURE OF ORGANIZATION

If the span of control is narrow, then there will be many management levels. That is, there will be many
managers. This organization structure is called "Tall Organization Structure".
If the span of control is wide, then there will be fewer management levels. That is, there will be fewer
managers. This organization structure is called "Flat Organization Structure".
In Tall Organisation Structure, a manager has to manage only a few subordinates. Thus very good in terms
of Control, Close Supervision.
In Flat Organisation Structure, a manager has to manage many subordinates. Thus, there is loose control
and poor supervision.

TYPES OF ORGANIZATION

“Organization is a system of co-operative activities of two or more persons.” Organization is the process of dividing
up of the activities.

1) LINE ORGANIZATION : In this type of organization, authority flows from top to bottom and responsibility flows
from bottom to top.

2) FUNCTIONAL ORGANIZATION : The main feature of functional organization is the division of work and
specialization. In each department, there is one expert. An expert is not only a counselor but also an administrator.
He advices his subordinates. An Expert does not only bear responsibility of his department but also bear responsibility
of all departments.

3)LINE AND STAFF ORGANIZATION : Line and staff organization is that in which the line heads are assisted by specialist
staff. In each department, there is one expert and some line personnels / line officials. Line official will do all
managerial work and expert will give advice to line official or line personnel.

Line and Staff Organization

In a centralized structure, decisions are made by the managers and the decisions are flown
downward through the enterprise. However, as an organization grows in scope, complexity
increases, they need to be flexible with the control as centrally applied. The principle of line-staff
organization introduces this flexibility into hierarchical lines of authority, in a try to maintain a
unified command structure.
Line groups are engaged in tasks that focus on the technical core of the firm. They are involved
in achieving the primary objective of the enterprise. Line groups have the final decision-making
authority in relation to the technical organizational purposes.

Staff groups are in tasks that provide support to the line groups. Their work is like that of
advisory (legal), service (human resource), or control (the accounting) groups. Staff groups
support those who are engaged in the central productive activity of the enterprise. They back up
their work. Staff groups help the organization in analyzing, researching, counseling, monitoring,
and evaluating activities.

Level 1 is MANAGING DIRECTOR who has three subordinates

1. Production Manager
It has further two subordinates

 Plant Supervisor
 Foreman

2. Marketing Manager
It has further two subordinates

 Market Supervisor
 Sales

3. Finance Manager
It has further two subordinates

 Accountant
 Chief Accountant

Difference between Line and Staff Organization

The difference between the line and staff is better than we draft in points.

Difference 1. Purpose
Line Organization’s purpose is to work directly toward the organisational goals, while staff
advises, assists, and back to the line group to work towards the set goals. This is the main
difference.

Difference 2. Authority
Yet another important difference is authority. Line authority is considered or visualised as the
formal authority which is created by the organisational hierarchy. Staff groups do not get any
such recognition.

Difference 3. Personality of Individuals

The final point of difference between the line and staff in some organisations arises from the
personality possessed by such individuals who are involved in these groups. Line managers are
usually the senior people, and tend to be partially educated, and have risen through the
hierarchy of the organisational staff, while specialists are the younger ones, to be much
educated, and to have been hired directly into the upper-level staff positions because of their
expertise in their field. This difference might be a major source of line-staff conflict.

What is Organisation
Organisation refers to a collection of people who are working towards a common goal and objective. In
other words, it can be said that organisation is a place where people assemble together and perform
different sets of duties and responsibilities towards fulfilling the organisational goals.

Types of Organisation and their Structure

There are two broad categories of organisation, which are:
1. Formal Organisation
2. Informal Organisation

Formal Organisation: Formal organisation is that type of organisation structure where the authority and
responsibility are clearly defined. The organisation structure has a defined delegation of authority and
roles and responsibilities for the members.

The formal organisation has predefined policies, rules, schedules, procedures and programs. The
decision making activity in a formal organisation is mostly based on predefined policies.

Formal organisation structure is created by the management with the objective of attaining the
organisational goals.

There are several types of formal organisation based on their structure, which are discussed as follows:

1. Line Organisation
2. Line and Staff Organisation
3. Functional Organisation
4. Project Organisation
5. Matrix Organisation

Let us learn about these organisation structures in detail in the following lines.

Line Organisation: Line organisation is the simplest organisation structure and it also happens to be the
oldest organisation structure. It is also known as Scalar or military or departmental type of organisation.

In this type of organisational structure, the authority is well defined and it flows vertically from the top
to the hierarchy level to the managerial level and subordinates at the bottom and continues further to
the workers till the end.

There is a clear division of accountability, authority and responsibility in the line organisation structure.

Advantages of Line organisation

1. Simple structure and easy to run
2. Instructions and hierarchy clearly defined
3. Rapid decision making
4. Responsibility fixed at each level of the organisation.

Disadvantages of Line organisation:

1. It is rigid in nature
2. It has a tendency to become dictatorial.
3. Each department will be busy with their work instead of focusing on the overall development of the
organisation.

Line and Staff Organisation: Line and staff organisation is an improved version of the line organisation.
In line and staff organisation, the functional specialists are added in line. The staff is for assisting the line
members in achieving the target effectively.

Advantages of Line and Staff organisation

1. Easy decision making as work is divided.
2. Greater coordination between line and staff workers.
3. Provides workers the opportunity for growth.

Disadvantages of Line and Staff Organisation

1. Conflict may arise between line and staff members due to the improper distribution of authority.
2. Staff members provide suggestions to the line members and decision is taken by line members, it
makes the staff members feel ignored.

TYPES OF DEPARTMENTALIZATION

Departmentalization is the process of breaking down an enterprise into various departments.

(1)FUNCTIONAL DEPARTMENTALIZATION : Functional departmentalization defines departments by the

functions like accounting or purchasing.

GEOGRAPHICAL DEPARTMENTALIZATION : Geographical departmentalization is an arrangement of

(2)
departments according to geographic area or territory.

(3)PRODUCT DEPARTMENTALIZATION :
Companies may have multiple products. . All common activities required to produce and market a product
are grouped together.

(4) PROCESS DEPARTMENTALIZATION : Departmentalization is done on the basis of processing.

CUSTOMER DEPARTMENTALIZATION :
(5)
Customer divisions are divisions set up to service particular types of clients or customers

Departmentalization is the process of breaking down an enterprise into various departments. How
jobs are grouped together is called departmentalization. A Department is an organization unit that is
headed by a manager who is responsible for its activities. Departmentation and Division of labour are
same things. However technically both are different. Both emphasize on the use of the specialized
knowledge, but depratmentation has higher management level strategic considerations while the
division of labour has a lower level operating considerations.

Types / Methods/Basis of Departmentalization

There are five common forms of departmentalization

(1) Functional Departmentalization

(2) Geographical Departmentalization
(3) Product Departmentalization
(4) Process Departmentalization
(5) Customer Departmentalization

FUNCTIONAL DEPARTMENTALIZATION
It groups jobs according to function.
Functional departmentalization defines departments by the functions each one performs such as
accounting or purchasing. Every Organization must perform certain jobs in order to do its work.

For example, Manufacturing, Production, R & D, Purchasing etc. Same kinds of jobs are grouped
together in departments. This kind of departmentalization includes persons with same knowledge or
skills (like Accounting Department having persons of commerce, Marketing Department having MBA
persons). As in department people with same skill and knowledge are there. Their focus becomes
narrow and they cannot appreciate each other’s work in the same department.
Advantages :-
• Efficiencies from putting together similar specialist and people with common skills, knowledge,
and orientations.
• In-depth specialization.
• Co-ordination within functional area.

Limitations :-
• Poor communication across functional areas.
• Limited view of organizational goals.

GEOGRAPHICAL DEPARTMENTALIZATION
It groups jobs according to geographic region.

Geographical departmentalization is an arrangement of departments according to geographic area or

territory. It divides works well for international business. Geographical Departmentalization is beneficial
when Organization are spread over a wide area. Even each part or areas have different requirement or
interests.
For example, marketing a product in Western Europe may have different requirements than marketing
the same product in Southeast Asia. Market area is broken up into sales territories like Northern,
Southern, West, East. The Salesman appointed for each territory report to their regional or territorial
manager. These manager again reports to
the sales manager who is head of the sales department.

Advantages : -
• More effective and efficient handling of specific regional issues that arise.
• Serve needs of unique geographic markets better.

Limitations :-
• Duplication of functions.
• Can feel isolated from other organizational areas.

PRODUCT DEPARTMENTALIZATION
It groups jobs by product line.
Companies may have multiple products. Like Maruti is producing Alto, Zen, Swift. Large companies are
often organized according to the product. All common activities required to produce and market a
product are grouped together. Major disadvantages are duplication of resources. Each product requires
most of the same functional areas such as finance, marketing, production etc.
For example, Samsung manufactures Phones, T.V., Tablet etc. For each product, they have same
functional department like marketing, production etc. Thus, it is duplication of functions.

Product Departmentalization has become important for large complex organization.

Advantages :-
• Allows specialization in particular products and services.
• Managers can become experts in their industry.
• Closer to customers.
Limitations :-
• Duplication of functions.
• Limited view of organizational goals.

PROCESS DEPARTMENTALIZATION

It groups Jobs On The Basis Of Product Or Customer Flow.

Departmentalization is done on the basis of processing. In manufacturing organizations, the location of

manufacturing plant or department can be at different location due to cost of raw material and even
labour charges. Even departmentalization can be done depending on the types of machines required.
The similar types of machines can be kept at one place e.g. all lathes, all drilling machines, all shapers
etc. Activities are grouped into separate sections, each kept at one place.

Advantages :-
 More efficient flow of work activities.

Limitations :-
 Can only be used with certain types of products.

CUSTOMER DEPARTMENTALIZATION

It groups Jobs On The Basis of specific And Unique Customers

Customer divisions are divisions set up to service particular types of clients or customers.Some
companies or organization divides the different units based on customers or markets. For example, any
PC manufacturing company like HP has different divisions like Consumer PC, Commercial PC, and
Workstations etc. Nokia previously had three divisions like Consumer Phone, Business Phone & Smart
Phone. Recently Nokia had changed their departmentalization from customer to process base. Now
there are only two divisions : Hardware and Software base departmentalization. They will also sell their
software to other mobile company. Another example is an educational institution offers regular and
extension courses to cater to the needs of different students groups.

Advantages :-
 Customers’ needs and problems can be met by specialists

Limitations :-
 Duplication of functions.
Limited view of organizational goals.
What is an Organisation Structure?
An organisational structure is a framework that determines how an organisation is organised, including
the arrangement of roles, responsibilities, and tasks. It outlines the hierarchy, reporting relationships,
and communication channels within the organisation. By clarifying roles and responsibilities, the
structure helps to establish clear lines of authority and decision-making, promoting efficient
coordination and control. It also facilitates effective communication and collaboration by defining
information flow and channels. Additionally, the structure aids in resource allocation and utilisation,
allowing for specialisation and improved productivity. It promotes accountability and performance
evaluation by setting clear expectations and enabling assessment of individual and departmental
performance. Ultimately, an organisational structure plays a crucial role in shaping the organisational
culture, optimising workflows, and driving the achievement of organisational objectives.

Types of Organisation Structure

There are various types of organisational structures that an organisation can adopt, each with its
advantages and characteristics. The six main types of organisation structure are given below:

Line Organisation
Functional Organisation
Line and Staff Organisation
Project Organisation
Matrix Organisation
Committee Organisation
Here are brief explanations of some common types of organisational structures.
1. Line Organisation
Line Organisation

Line organisation, also known as a scalar or military organisation, is the simplest and oldest form of
organisational structure. It is characterised by a clear and direct chain of command, where authority
flows vertically from top to bottom. Each employee has a single supervisor to whom they report,
creating a clear line of responsibility and accountability. Decision-making is typically centralised at the
top of the hierarchy, with limited delegation. This structure is suitable for small organisations with a
straightforward hierarchy, where decision-making needs to be efficient and communication is direct.
However, it can lead to delays in decision-making as all decisions must pass through the hierarchy, and
communication can be limited to the immediate supervisor. No staff specialists are available in line
organisation and all the persons at the same level are independent of each other.

2. Functional Organisation
Functional Organisation

Functional organisation is a common structure where departments are organised based on specialised
functions or tasks. For example, there might be separate departments for marketing, finance,
operations, human resources, and so on. Each department is headed by a functional manager who has
expertise in that particular area. This structure allows for the efficient utilisation of specialised skills and
knowledge, as employees within each department can focus on their areas of expertise. It also enables
clear career paths within each function. Specialists operate here with considerable independence.
However, functional organisations can create silos, where departments become inwardly focused, and
communication and collaboration between departments may be limited. Coordination across functions
can also be challenging.

3. Line and Staff Organisation

Line and Staff Organisation

In a line and staff organisation structure, line positions focus on core operations, while staff positions
provide specialised support and guidance. Staff roles, like human resources or legal, offer expertise and
advice to line managers. This structure balances operational responsibilities with specialised support,
enabling better decision-making and problem-solving. Specialists in such organisations have advisory
nature as they do not have the power of command over subordinates in other departments. However,
clarifying roles and coordination between line and staff functions is important to avoid conflicts. This can
also lead to confusion and can be quite expensive for small firms.

4. Project Organisation
Project Organisation
A project organisation is a temporary structure formed specifically for a particular project or initiative. It
is characterised by a project team that is assembled to achieve specific goals within a defined
timeframe. The project team is led by a project manager who has authority over team members and
resources. This structure allows for a dedicated and focused approach to project management, with
team members working together to accomplish project objectives. It facilitates effective coordination,
communication, and collaboration within the project team. Once the project is completed, the team is
disbanded. Project organisation is particularly useful when organisations need to manage complex, time-
limited projects that require cross-functional collaboration and a dedicated team focus. In a Project
organisation, unity of command is followed.

5. Matrix Organisation
Matrix Organisation

A hybrid grid structure wherein pure project organisation is superimposed on a functional structure is
known as Matrix Organisation. It combines elements of both functional and project structures. It
involves dual reporting lines, where employees have both a functional manager and a project manager.
The functional manager oversees employees’ functional responsibilities, while the project manager
manages their involvement in specific projects. This structure allows for flexible resource allocation, as
employees can be assigned to different projects based on their skills and availability. There is always a
permanent functional setup and temporary cross-functional teams are created to handle short-term
projects, which are infrequent in nature.

It also promotes effective sharing of expertise and knowledge across projects and functional areas.
Communication is typically multi-directional, as employees interact with both their functional and
project managers. However, a matrix organisation can be complex to manage, as employees have
multiple reporting relationships, and conflicts can arise due to competing priorities and demands from
different managers.

6. Committee Organisation
Committee Organisation

The committee organisation structure distributes decision-making and authority across committees or
groups. These committees are formed to address specific areas or functions within the organisation,
bringing together individuals from different departments and levels. Decisions are made collectively
through discussions and consensus-building, ensuring diverse perspectives and expertise are considered.
The scope of its activities is limited and it cannot handle problems assigned to it. According to Allen,” A
committee is a body of persons appointed or elected to meet on an organised basis for the
consideration of matters brought before it.” Committee organisation promotes collaboration and
participation in decision-making processes. It gives secure viewpoints and consultations of various
persons in the organisation.
LINE-AND-STAFF ORGANIZATIONS
Organizational structure involves, in addition to task organizational boundary
considerations, the designation of jobs within an organization and the relationships
among those jobs. There are numerous ways to structure jobs within an organization,
but two of the most basic forms include simple line structures and line-and-staff
structures.
In a line organization, top management has complete control, and the chain of
command is clear and simple. Examples of line organizations are small businesses in
which the top manager, often the owner, is positioned at the top of the organizational
structure and has clear "lines" of distinction between him and his subordinates.
The line-and-staff organization combines the line organization with staff departments
that support and advise line departments. Most medium and large-sized firms exhibit
line-and-staff organizational structures. The distinguishing characteristic between simple
line organizations and line-and-staff organizations is the multiple layers of management
within line-and-staff organizations. The following sections refer primarily to line-and-staff
structures, although the advantages and disadvantages discussed apply to both types
of organizational structures.
Several advantages and disadvantages are present within a line-and-staff organization.
An advantage of a line-and-staff organization is the availability of technical specialists.
Staff experts in specific areas are incorporated into the formal chain of command. A
disadvantage of a line-and-staff organization is conflict between line and staff
personnel.

LINE-AND-STAFF POSITIONS
A wide variety of positions exist within a line-and-staff organization. Some positions are
primary to the company's mission, whereas others are secondary—in the form of
support and indirect contribution. Although positions within a line-and-staff organization
can be differentiated in several ways, the simplest approach classifies them as being
either line or staff.
A line position is directly involved in the day-to-day operations of the organization, such
as producing or selling a product or service. Line positions are occupied by line
personnel and line managers. Line personnel carry out the primary activities of a
business and are considered essential to the basic functioning of the organization.
Line managers make the majority of the decisions and direct line personnel to achieve
company goals. An example of a line manager is a marketing executive.
 Figure 1
Line-and-Staff Organization

Although a marketing executive does not actually produce the product or service, he or she
directly contributes to the firm's overall objectives through market forecasting and generating
product or service demand. Therefore, 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 positions serve the organization by indirectly supporting line functions. Staff
positions consist of staff personnel and staff managers. Staff personnel use their
technical expertise to assist line personnel and aid top management in various business
activities. Staff managers provide support, advice, and knowledge to other individuals in
the chain of command.
Although staff managers are not part of the chain of command related to direct
production of products or services, they do have authority over personnel. An example
of a staff manager is a legal adviser. He or she 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
line personnel.

LINE-AND-STAFF AUTHORITY
Authority within a line-and-staff organization can be differentiated. Three types of
authority are present: line, staff, and functional. Line authority is the right to carry out
assignments and exact performance from other individuals.

LINE AUTHORITY.
Line authority flows down the chain of command. For example, line authority gives a
production supervisor the right to direct an employee to operate a particular machine,
and it gives the vice president of finance the right to request a certain report from a
department head. Therefore, line authority gives an individual a certain degree of power
relating to the performance of an organizational task.
Two important clarifications should be considered, however, when discussing line
authority: (1) line authority does not ensure effective performance, and (2) line authority
is not restricted to line personnel. The head of a staff department has line authority over
his or her employees by virtue of authority relationships between the department head
and his or her directly-reporting employees.

STAFF AUTHORITY.
Staff authority is the right to advise or counsel those with line authority. For example,
human resource department employees help other departments by selecting and
developing a qualified workforce. A quality control manager aids a production manager
by determining the acceptable quality level of products or services at a manufacturing
company, initiating quality programs, and carrying out statistical analysis to ensure
compliance with quality standards. Therefore, staff authority gives staff personnel the
right to offer advice in an effort to improve line operations.

FUNCTIONAL AUTHORITY.
Functional authority is referred to as limited line authority. It gives a staff person power
over a particular function, such as safety or accounting. Usually, functional authority is
given to specific staff personnel with expertise in a certain area. For example, members
of an accounting department might have authority to request documents they need to
prepare financial reports, or a human resource manager might have authority to ensure
that all departments are complying with equal employment opportunity laws. Functional
authority is a special type of authority for staff personnel, which must be designated by
top management.

LINE-AND-STAFF CONFLICT
Due to different positions and types of authority within a line-and-staff organization,
conflict between line and staff personnel is almost inevitable. Although minimal conflict
due to differences in viewpoints is natural, conflict on the part of line and staff personnel
can disrupt an entire organization. There are many reasons for conflict. Poor human
relations, overlapping authority and responsibility, and misuse of staff personnel by top
management are all primary reasons for feelings of resentment between line and staff
personnel. This resentment can result in various departments viewing the organization
from a narrow stance instead of looking at the organization as a whole.
Fortunately, there are several ways to minimize conflict. One way is to integrate line and
staff personnel into a work team. The success of the work team depends on how well
each group can work together in efforts to increase productivity and performance.
Another solution is to ensure that the areas of responsibility and authority of both line
and staff personnel are clearly defined. With clearly defined lines of authority and
responsibility, each group may better understand their role in the organization. A third
way to minimize conflict is to hold both line and staff personnel accountable for the
results of their own activities. In other words, line personnel should not be entirely
responsible for poor performance resulting from staff personnel advice.
Line-and-staff organizations combine the direct flow of authority present within a line
organization with staff departments that offer support and advice. A clear chain of
command is a consistent characteristic among line-and-staff organizational structures.
Problems of conflict may arise, but organizations that clearly delineate responsibility can
help minimize such conflict.

Line and Staff Organization

Line and staff organization is a modification of line organization and it is more complex than
line organization. According to this administrative organization, specialized and supportive
activities are attached to the line of command by appointing staff supervisors and staff
specialists who are attached to the line authority. The power of command always remains
with the line executives and staff supervisors guide, advice and council the line executives.
Personal Secretary to the Managing Director is a staff official.

MANAGING
DIRECTOR

↓ ↓ ↓
Production Manager Marketing Manager Finance Manager

↓ ↓ ↓
Plant Supervisor Market Supervisor Chief Assisstant

↓ ↓ ↓
Foreman Salesman Accountant

Features of Line and Staff Organization

1. There are two types of staff :

a. Staff Assistants- P.A. to Managing Director, Secretary to Marketing
Manager.
b. Staff Supervisor- Operation Control Manager, Quality Controller, PRO
2. Line and Staff Organization is a compromise of line organization. It is more complex
than line concern.
3. Division of work and specialization takes place in line and staff organization.
4. The whole organization is divided into different functional areas to which staff
specialists are attached.
5. Efficiency can be achieved through the features of specialization.
6. There are two lines of authority which flow at one time in a concern :
a. Line Authority
b. Staff Authority
7. Power of command remains with the line executive and staff serves only as
counselors.

Merits of Line and Staff Organization

1. Relief to line of executives- In a line and staff organization, the advice and
counseling which is provided to the line executives divides the work between the
two.

The line executive can concentrate on the execution of plans and they get relieved of
dividing their attention to many areas.
 2. Expert advice- The line and staff organization facilitates expert advice to the line
executive at the time of need.

The planning and investigation which is related to different matters can be done by
the staff specialist and line officers can concentrate on execution of plans.

3. Benefit of Specialization- Line and staff through division of whole concern into two
types of authority divides the enterprise into parts and functional areas. This way
every officer or official can concentrate in its own area.
4. Better co-ordination- Line and staff organization through specialization is able to
provide better decision making and concentration remains in few hands. This feature
helps in bringing co-ordination in work as every official is concentrating in their own
area.
5. Benefits of Research and Development- Through the advice of specialized staff,
the line executives, the line executives get time to execute plans by taking productive
decisions which are helpful for a concern. This gives a wide scope to the line
executive to bring innovations and go for research work in those areas. This is
possible due to the presence of staff specialists.
6. Training- Due to the presence of staff specialists and their expert advice serves as
ground for training to line officials.

Line executives can give due concentration to their decision making. This in itself is a
training ground for them.

7. Balanced decisions- The factor of specialization which is achieved by line staff

helps in bringing co-ordination. This relationship automatically ends up the line
official to take better and balanced decision.
8. Unity of action- Unity of action is a result of unified control. Control and its effectivity
take place when co-ordination is present in the concern. In the line and staff authority
all the officials have got independence to make decisions. This serves as effective
control in the whole enterprise.

Demerits of Line and Staff Organization

1. Lack of understanding- In a line and staff organization, there are two authority
flowing at one time. This results in the confusion between the two. As a result, the
workers are not able to understand as to who is their commanding authority. Hence
the problem of understanding can be a hurdle in effective running.
2. Lack of sound advice- The line official get used to the expertise advice of the staff.

At times the staff specialist also provide wrong decisions which the line executive
have to consider. This can affect the efficient running of the enterprise.

3. Line and staff conflicts- Line and staff are two authorities which are flowing at the
same time. The factors of designations, status influence sentiments which are
related to their relation, can pose a distress on the minds of the employees. This
leads to minimizing of co-ordination which hampers a concern’s working.
 4. Costly- In line and staff concern, the concerns have to maintain the high
remuneration of staff specialist. This proves to be costly for a concern with limited
finance.
5. Assumption of authority- The power of concern is with the line official but the staff
dislikes it as they are the one more in mental work.
6. Staff steals the show- In a line and staff concern, the higher returns are considered
to be a product of staff advice and counseling. The line officials feel dissatisfied and
a feeling of distress enters a concern. The satisfaction of line officials is very
important for effective results.

LINE AND STAFF ASPECTS OF HRM

HR managers probably involve in different activities of a business like
recruiting, interviewing, selecting, training, promotion, staff compensation,
etc. These all activities comes under the umbrella of line and staff aspects
of HRM. Let’s check below one by one all these activities in detail that
deals with the line and staff aspects of Human Resource Management.

Table of Contents
 Line and Staff Aspect of HRM
o Authority
o Line VS. Staff Authority
o Cooperative Line and Staff HR Management
o Line Manager
o Staff Managers
o Human Resource Manager

Line and Staff Aspect of HRM

1. Authority

The right to make decisions is the authority or it is to give orders and to

direct the work of others. The managerial position has the inherent rights to
give order and expect the order to be fulfilled.

Read Also: Human Resource Management Environment

The main tenet of the early management writers was the authority, the glue
that keeps the organization together. It was to be assigned downward to
manager at lower-level.

Every management position has particular inherent rights that incumbents

get from the title or rank of position.

Authority ignores personal characteristics and is related to one’s position.

The authority remains with the position when a position of authority is
vacated.

Following are the two forms of authority have differentiated by early

management writers.
  Line Authority
 Staff Authority
 Functional Authority
Line Authority: Work of an employee is directed by manager and is
entitled as line authority. From top to bottom the employer-employee
authority relationship is extended in the form of line authority.

Works of employees are directed by line manager who makes particular

decisions without confer with anyone. Line managers are differentiated
from staff managers sometimes by the term “line”.

Line stresses managers whose organizational function give directly to the

accomplishment of organizational goals.

Staff Managers and Staff Authority: Staff authority is owned by staff

managers. On the basis of goals of organization, a manager’s function is
classified as line or staff.

As the organization becomes bigger and more complicated, line managers

ascertain that they do not have expertise, time and resources to perform
their duties effectively.

They make staff authority functions to assist, support, advice and usually
minimize some of informational burdens they have.

Functional Control: As a coordinator of personnel activities, the authority

exercise by personnel manager is refer to as functional control. In this case
the manager behaves as the “main arm of top executive”.

2. Line VS. Staff Authority

Line managers are authorized to manage the tasks of their assistants. Staff
managers are authorized to advise and help line managers in achieving
their fundamental objectives.

HR managers are usually staff managers. Many managers are responsible

for coordinative functions, line functions and some staff functions.

3. Cooperative Line and Staff HR Management

In hiring & recruiting, it’s usually the responsibility of line managers to

stipulate the qualifications employees require to fill particular positions.
After that HR staff assumes. They conduct initial screening interviews and
build sources of qualified applicants. The appropriate tests are
administered by them.

Then the best applicant is referred by them to the supervisor, who interview
and chooses the one he/she desires.

4. Line Manager

They are always someone’s boss because they are authorized the work of
their assistants. In addition, line managers are responsible for achieving the
organization’s fundamental objectives.

Following are the responsibilities of line managers’ human resource

management.

 Placement
 Training
 Orientation
 Improving job performance
 Interpreting policies and procedures
 Gaining creative cooperation
 Controlling labor costs
 Creating and maintaining departmental morale
 Developing employee abilities
 Protecting employees’ health and physical condition
5. Staff Managers

Staff managers are authorized to advise and assist line managers in

fulfilling their basic objectives. HR managers work as staff managers.

Staff managers’ advice and aid line managers in execution of their basic
objectives. In order to be successful, they are required to work in
partnership with each other.

Some examples of HR responsibilities of staff managers contain help in

hiring, evaluating, training, counseling, rewarding, promoting & firing of
employees and the administering of different advantageous programs.

6. Human Resource Manager

A person who generally behaves in a staff capacity or advisory, working

with other managers to assist them deal with human resource affairs known
as Human Resource Manager.
Read Also: Human Resource Management Functions

There is one general trend that an enhancing number of employees are

serviced by HR personnel. The human resource manager is mainly in
charge for coordinating the management of human resources to assist the
organization accomplishes its objectives.

There is shared responsibility between human resource professionals and

line managers.

The identification of HR as a legalize business unit has made it more

critical to accomplishing corporate goals and highly strategic in nature.

In order to succeed, complex organizational design must be understood by

the HR executives along with being able to ascertain the capacities of the
work force of organization, both recently and in future. It is assured that
organizations mission is supported by human resources by HR involvement
in strategy.

What is the meaning of delegation?

The delegation of authority refers to the division of labor and decision-making

responsibility to an individual that reports to a leader or manager.

It is the organizational process of a manager dividing their own work among all their
people. It involves giving them the responsibility to accomplish the tasks that are
delegated to them in the way they see fit.

Along with responsibility, they also share the corresponding amount of authority.
This ensures that tasks can be completed efficiently and that the individual feels
actually responsible for their completion.

On one level, delegation is just dividing work into tasks that others can do.

At its best, delegation is empowering people to do the work they are best suited to.
It allows them to invest themselves more in the work and develop their own skills
and abilities. It also allows the manager to do other important work that might be
more strategic or higher-level.

In other words, delegated authority is more than just parsing out work. It is truly
sharing responsibility, ownership, and decision-making. Delegated authority is
shared authority.

Delegating authority can also improve efficiency by making more employees

accountable for their own work and activities. Less time and energy is spent on
monitoring and micro-managing employees who are capable and competent. Your
team becomes more capable and able to achieve higher performance as a result.

Delegation is about entrusting another individual to do parts of your job and to

accomplish them successfully.
Central elements of how to delegate authority

There are three central elements involved in the delegation of authority:

1. Authority
In the context of a company, authority is the power and right of an individual to use
and allocate their resources efficiently.

This includes the ability to make decisions and give orders to achieve
the organizational objectives and goals .

This component should always be well-defined. Everyone with authority should

know the scope of their authority.

Essentially, it is the right to give a command, meaning the top-level management

always has the greatest authority.

There is a symbiotic relationship between authority and responsibility . So, authority,

especially authority in management, should always be accompanied by an equal
amount of responsibility if the task is to be completed successfully.

Similarly, there has long been a relationship between power and influence. Learn
what this relationship should look like in our article: Power versus influence: How to
build a legacy of leadership .

2. Responsibility
This refers to the specifics and scope of the individual to complete the task
assigned to them.

Responsibility without adequate authority can lead to:

 Discontent
 Dissatisfaction
 Conflicts
 Frustration for the individual

While authority flows from the top-down, responsibility flows from the bottom-
up. Middle management and lower-level management hold more responsibility.

3. Accountability
Unlike authority and responsibility, accountability cannot be delegated. Rather, it is
inherent in the bestowment of responsibility itself.

Anyone who sets out to accomplish a task and take on a job in a company becomes
accountable for the outcome of their efforts.

Accountability, in short, means being answerable for the end result. Accountability
arises from responsibility.

Authority flows downward, whereas accountability flows upward. The downward flow
of authority and upward flow of accountability must be the same at each position of
the management hierarchy.
The importance of delegation

Delegating has been shown to improve task efficiency and benefit the organization
in ways that aren't obvious at first.

A study by Harvard Business Review determined that delegating can

actually increase organizations’ income and overall efficiency .

Not only does delegation empower others in the organization , but it also helps
optimize the performance of the group.

Delegating empowers your team, builds trust, and motivates.

Thoughtful delegation, with support, is also a way to stretch and develop people
within the work. This is often more powerful than through periodic professional
development.

And for leaders, it helps you learn how to identify who is best suited to tackle tasks
or projects.

As outlined in a Harvard Business Review article , one team leader adopted a

delegation strategy and made the shift from simply being busy to being productive .

Of course, delegating tasks can also lighten your workload. But according to Dr.
Scott Williams , delegating does much more than just get stuff off your plate.

For one, the people who work for you will be able to develop new skills and gain
knowledge. This prepares them for more responsibility in the future.

Williams writes:

“Delegation can also be a clear sign that you respect your subordinates’ abilities
and that you trust their discretion … Employees who feel that they are trusted and
respected tend to have a higher level of commitment to their work, their
organization, and, especially, their managers.”

Delegation empowers teams by enabling them to demonstrate their capability to

take on new work.

What Is Delegation Of Authority?

The procedure of distributing tasks or responsibilities with their associated decisions to a subordinate
employee on a temporary or long-term basis is delegation of authority.
All medium and large corporations have a hierarchy of positions. Usually, the managing director or chief
executive officer holds the overall responsibility for the daily operations. However, it is not feasible to
expect them to perform all the tasks of the organisation themselves. So, leaders assign the work along
with the responsibilities and authority to make decisions to their employees. However, delegation
always takes place top-down, and juniors cannot pass tasks on to their seniors.
In a successful company, success is an outcome of shared authority and responsibility, which allows the
company to run in an organised manner. Delegation also promotes the development of employees and
improves their decision-making abilities by enabling them to demonstrate their accountability and
troubleshooting skills. It is the first step in recognising the potential in your employees to shoulder the
responsibility of promotion, thus helping them to achieve their career goals.
Moreover, delegation of authority doesn't just benefit junior employees. Sometimes, managerial staff
can get overburdened with essential activities. In such cases, they may assign some tasks to other
employees on a short-term basis to save time. However, they are still accountable to their own
superiors.

Delegation of Authority - Meaning,

Elements and its Process
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets,
the manager should delegate authority.

Delegation of Authority means division of authority and powers downwards to the

subordinate.

Delegation is about entrusting someone else to do parts of your job. Delegation of authority
can be defined as subdivision and sub-allocation of powers to the subordinates in order to
achieve effective results.

Elements of Delegation

1. Authority - in context of a business organization, authority can be defined as the

power and right of a person to use and allocate the resources efficiently, to take
decisions and to give orders so as to achieve the organizational objectives.

Authority must be well-defined. All people who have the authority should know what
is the scope of their authority is and they shouldn’t misutilize it. Authority is the right
to give commands, orders and get the things done. The top level management has
greatest authority.

Authority always flows from top to bottom. It explains how a superior gets work
done from his subordinate by clearly explaining what is expected of him and how he
should go about it.

Authority should be accompanied with an equal amount of responsibility. Delegating

the authority to someone else doesn’t imply escaping from accountability.
Accountability still rest with the person having the utmost authority.

2. Responsibility - is the duty of the person to complete the task assigned to him.

A person who is given the responsibility should ensure that he accomplishes the
tasks assigned to him. If the tasks for which he was held responsible are not
completed, then he should not give explanations or excuses. Responsibility without
adequate authority leads to discontent and dissatisfaction among the person.

Responsibility flows from bottom to top. The middle level and lower level
management holds more responsibility. The person held responsible for a job is
answerable for it. If he performs the tasks assigned as expected, he is bound for
 praises. While if he doesn’t accomplish tasks assigned as expected, then also he is
answerable for that.

3. Accountability - means giving explanations for any variance in the actual

performance from the expectations set.

Accountability can not be delegated. For example, if ’A’ is given a task with
sufficient authority, and ’A’ delegates this task to B and asks him to ensure that task
is done well, responsibility rest with ’B’, but accountability still rest with ’A’.

The top level management is most accountable. Being accountable means being
innovative as the person will think beyond his scope of job. Accountability, in short,
means being answerable for the end result.

Accountability can’t be escaped. It arises from responsibility.

For achieving delegation, a manager has to work in a system and has to perform following
steps : -

1. Assignment of tasks and duties

2. Granting of authority
3. Creating responsibility and accountability
 Delegation of Authority

Delegation of authority refers to the process by which a superior (usually a manager or leader)
assigns responsibility and authority to a subordinate to perform specific tasks while retaining
overall accountability.

Key Elements of Delegation:

1. Authority: The power to make decisions and use resources to accomplish assigned tasks.
2. Responsibility: The obligation to complete the assigned work.
3. Accountability: The subordinate is answerable to the superior for the task's performance.

Importance of Delegation:

 Improves efficiency and productivity.

 Develops employees' decision-making and leadership skills.
 Reduces workload on higher management.
 Enhances teamwork and trust within an organization.

Example of Delegation:

A CEO delegates marketing decisions to the Marketing Manager, who further delegates social
media handling to a Social Media Executive. While authority is shared, the CEO remains
accountable for overall business performance.

Would you like more details on types, advantages, or challenges of delegation? 😊

What is Delegation of Authority?

Delegation of authority is when a boss gives some of their responsibilities or tasks to

someone else, like an employee or a team member. Even though the boss gives away some tasks,
they are still responsible for the overall work being done.

Key Points:

1. Authority: The boss gives the employee the power to make decisions about the task.
2. Responsibility: The employee is expected to do the work.
3. Accountability: The employee will report back to the boss on how the task was done, but the
boss remains responsible for the final results.

Why is Delegation Important?

 It helps the boss get more things done because they aren't doing everything themselves.
 It gives employees a chance to learn new things and grow in their role.
 It helps teams work together and trust each other.

Simple Example:

A manager might ask an assistant to organize an event. The assistant gets the authority to
make decisions about the event, like booking a venue and sending invites. The assistant is
responsible for getting everything ready, but the manager will still be accountable if something
goes wrong.
 What is Organization Structure?
Organization structure refers to how the roles, responsibilities, authority, and communication are arranged in
an organization to achieve its goals. It shows who reports to whom and how tasks are divided.

Key Elements of Organization Structure:

1. Roles: The specific duties or tasks given to each employee.
2. Hierarchy: The levels of authority in the organization (who is in charge of whom).
3. Departments: The division of work into different areas (like marketing, finance, HR).
4. Communication: How information flows between different levels and departments.

Types of Organization Structures:

1. Hierarchical Structure: There are clear levels of authority. Higher levels control lower levels. (e.g., CEO
→ Manager → Employees).

2. Flat Structure: Fewer levels of management. Employees have more responsibility, and communication is
quicker.

3. Matrix Structure: Employees have more than one boss, as they report to both a functional manager and a
project manager.

4. Divisional Structure: The organization is divided into divisions based on product, service, or geography,
and each division has its own team.

Why is Organization Structure Important?

 It helps clarify who is responsible for what.
 It ensures smooth communication and decision-making.
 It improves efficiency and helps in achieving goals.

Simple Example:
In a restaurant:

 Owner is at the top (CEO).

 Managers handle different sections like kitchen, floor staff, and customer service.
 Chefs and waiters work under the managers and perform specific tasks.

What is Organization Structure?

Organization structure is like the "map" of a company that shows how everyone is connected and who reports
to whom. It explains how tasks are divided, who makes the decisions, and how work gets done in an organized
way.

Key Points:
 Roles: Who does what in the company.
 Hierarchy: Who's in charge of whom (like a boss or manager).
 Departments: Different parts of the company, like sales, marketing, or finance.
 Communication: How information flows between different people in the company.

Why is it important?
 Helps everyone know who to talk to about different things.
 Clarifies responsibilities so things get done smoothly.
 Makes the company more efficient.

Simple Example:
Think of a school:

 The principal is at the top.

 Teachers report to the principal.
 Students report to teachers.
 The janitor and other staff have specific jobs that they do, but they all know who to report to.