Traditional organisation theorists developed certain principles of organization structure. These principles are intended for universal application to all enterprises. The most important of these principles of organization structure can be listed under the following heads:
1. Division of Labor or Specialization
The classicists viewed specialization as the basis of efficiency. A group of individuals can secure better results by having division of work. F.W. taylor applied by breaking down jobs into single repetitive tasks performed on specialized tools. At higher levels, however, grouping jobs into manageable units and their co-ordination can pose serious problems.
The principle of specializations has been challenged by the behaviorists and others. Fatigue, monotony and boredom are the inevitable outcomes of division of labor. While specializations cause great function interdependency among operatives, it also depersonalizes their activities so that individuals find little meaning in the work. Moreover, functional interdependency among work activities causes strains and tensions. Specialization leaves to a different type of problems at the executive level. It tends to segment the organisation into enclaves of authority and influence. Often executives come to regard these domains as their own empires which receive their attention to the neglect of the organizational interest.
2. Consideration of Objectives
Organisation offers the structure that enables us to accomplish goals. Objectives are helpful in determining the activities and the structure itself. Once objectives are clearly defined, the organizer can conveniently proceed to group activities, delegate authority to individuals to whom activities have been assigned and coordinate their efforts for better results. Since objective have a direct bearing upon the organisation structure, one should take due cognizance of time, and develop and design the structures so as to facilitate accomplishment of objectives. The assumption underlying this principle is that the work firms and means adopted by the organisation are acceptable to the individuals and groups. However, in reality, there is often a divergence between individual needs and organizational goals.
3. The Scalar Principle
The vertical dimension of organization structure consists of levels of authority arranged in a hierarchy from the chide executive at the top to the first-line supervisor at the bottom. Existence of these levels is always the characteristic of organized and coordinated group efforts. Consider the members of a group formed spontaneously to help push a car out of mud. Someone sees it is desirable to call signals and gives the word at which every one exerts his effort in unison with the others. Clearly a leader has emerged producing a two-level group consisting of the leader at the top and the pushers as follows. In a complex business organisation, the number of levels may be substantially large.
The scalar principle holds that organisation consists of two or more levels of authority. The bias idea of this scale is that of grading or distributing a characteristic over a series of demarcated units. In organisations, the levels represent gradations of distributed authority. Each successively lowers down the management hierarchy represents a decreasing amount of authority.
4. The Principle of Departmentalization
Logical grouping of related jobs and functions is quite natural in developing the organization structure. Departmentalization requires analyzing everything that has to be done and determining the grouping in which it can be placed without violating the principle of homogeneity. Thus, financial aspects of the business can well be placed in one section, marketing aspects in another section etc. Departmentalization is desirable because individuals vary considerably in the range of activities which their abilities will permit then to perform effectively. Another advantage is that is focuses executive skills on logical and interrelated problems and provides a basis for top management to coordinate and control the efforts of the departments. Departmentalization breaks the work into manageable units. Gluck viewed four possible bases of Departmentalization-purpose, process, product and place. Choice of basis is a recurring question and changes as the organisation grows, develops or employs a new technology.
5. The Principle of Unity of Command
A business organisation must have a single head in whom all authority and responsibility is concentrated, but this has to be blended with the efforts of the organized people below. The single leader is the ultimate source of authority by which conflicts are minimized. Unity of effort, consistency of direction, high morale and effectiveness of coordination depend upon one executive as the locus of ultimate’s responsibility. To subject the person to the authority of more than one immediate superior tends to divide his loyalty and confuse his action.
6. The Principle of Span of Control
The idea of span of control is related to the horizontal dimension of an organisation structure. Span of control (also referred to as the span of supervisions or span of management) refers to the number of subordinates reporting directly to the executive the principle holds that larger the number of subordinates reporting directly to the executive, the more difficult it tends to be for him to supervise and coordinate them effectively.
It is to be admitted that there is a limit to the number of subordinates a manager can effectively supervise, but what should be that limit is yet an open question. In addition to the numbers, two other variables are involved in this principle. The first is the capacity of the higher executive to do his work efficiently, and second is the capacity of the executives to supervise. Since these variables differ considerably from individual to individual, it is hardly justified to lay down any fixed number of subordinates to be supervised by the manager.
7. The Principle of Flexibility
Organisation is created to accomplish certain goals. Both the environment and the individuals comprising the organisation are constantly in flux. To cope with these changes and get reach its objectives and organisation must be designed with sufficient amount of flexibility. A flexible organisation is able to withstand pressures, but gives way to the demand for genuine change without fundamentally altering the basic functions of the various segments of the structure.
8. The Principle of Balance
This principle implies that each area and function of an enterprise should operate with equal effectiveness in making its allotted contribution to the total purpose. Problems of balance arise from the tendency to sub-divide the work into small units. If sub-division is carried too far, the problem of timing, coordination and integrating the work sequences becomes very complex. The idea of balance applies to organisation structures as well as to functions and processes. The growth of business, whether sudden or gradual produces pressures which upsets the organizational balance. And therefore, changes n organization structure should be made after giving full consideration to balance, and by avoiding over-reliance upon and single type of structure. Horizontal and vertical dimensions should be kept in blanked relationship to one another.
9. The Exception Principle
The next very useful fundamental of organisation structure is the exception principle. This principle implies that only problems involving unusual matters should be referred upward and decided by higher level executives; and that reunite problems should be passed on to lower levels and resolved there it. It implies devising a method of control so that only exceptional results are flagged for management attention. This principle is based on the assumption that management at higher echelons of organisation structure has limited time and capacity. And they should devote a larger part of their time and abilities to important matters of planning and policy making.
Exception principle is also the principle underlying delegation of authority. If a subordinate does not make decision on problem falling within the limits of his authority and consumes disproportionate time than his senior, delegation applies at all levels in the organisation structure. By forcing a distinction between programmed decisions and the non-programmed decisions, the exception principle helps the manager to concentrate on un-programmed decisions involving new and unstructured elements.
10. Principle of Decentralization
This principle is of great significance in the organisation, especially to large enterprises. There is said to exits decentralization in an organisation if decision making authority is pushed down to its lower levels and near the source of information and action as possible. It is also frequently used to indicate either geographical dispersal or delegation. However, for Ducker’s views on decentralization are quite penetrating and interesting. He terms geographical dispersal or delegation as mere “administrative reforms” intended to relieve pressure on top management. Rather, decentralization provides a new ordering principle in which both centre and parts discharge real top management functions. He calls this as the principle of federal decentralization’ which is based on organisation of activities into separate product business with separate markets and production and profits goals for each. These views are in the idea of profit centers as organizational unit consonance with.
11. Principle of Simplicity
The idea of simplicity in organizational structure may at first appear facetious in view of the large size and complex nature of many of our business organisations. Nevertheless, simplicity is an objective of organizational planning.
Simplicity is an appealing objective because it implies economy of efforts. This principle in brief states: “it is desirable to consider simplicity of structure in developing and organisation, aiming for as clear-cut structure as will permit doing the necessary work efficiently”.
As noted earlier organisation structure is a means, not an end in itself. Thus, the notion of simplicity is identifiable with the convenience with which people- perhaps many having face-to-face personal contracts are able to combine into performing groups.
12. Combination of Line and Staff Functions
Organisation structures are usually of line, staff and functional types. Line structure is part of every organisation. The staff and functional types are modifications of the line structure. Staff functional structures seldom exeunt apart from a combination with line structure.
Line structure consists of vertical relationships with power to command and execute. Staff functions are auxiliary to the line functions and are advisory in nature. On the basis of distinction like this, it is argued that line and staff functions should not be combined in one individual or department where separation of the functions is possible. The reason is that these are basic authority relations, combination of which will result in confusion.
The above list of principles of organization structure is not intended to be complex, nor are these principles meant for application as immutable laws. These principles should be used as mere fundamentals or guides to actions while designing the organisation structure.