Directorate of distance education master of business administration

Lesson 2 - Organization of HRM 
lesson outline 
 
ӹ Nature of Organizational Structure 
 
ӹ Formal and Informal 
 
ӹ Requisites of a good Structure  
 
ӹ Line Authority and staff Authority   
 
ӹ Departmentation 
 
ӹ Organisation structure for HRM 
Learning Objectives  
After reading this lesson you should be able to  
 
ӹ Understand the organization structure 
 
ӹ Differentiate between formal and informal organization 
 
ӹ Appreciate line authority and staff authority 
 
ӹ Draw an organizational chart 
Introduction 
Organisation structure is a basic framework within which the 
managers’ decision making behaviour takes place.  Structure basically 
deals with relationships.  Structure is the pattern in which various parts or 
components are interrelated or interconnected.  Organization structure 
is the pattern of relationships among various components or parts of the 
organization.  This prescribes the relationships among various activities 
and positions.  Since the positions are held by various persons, the 
structure is the relationship among people in the organization. 

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Design of basic structure involves such issues as how the work 
of organization will be divided and assigned among various positions, 
groups, divisions, departments, etc., and how the coordination necessary 
to accomplish total organizational objectives will be achieved.  Besides the 
formally established organization structure, people create relationships 
independent of the formal relationships known as informal relationships 
or informal organization.  Thus organization structure should mean the 
totality of formal and informal relationships.  A good organizational 
structure is the pre-requisite for efficient HRM.  This is discussed in the 
following pages.