CruxBusiness Organisation and Management

A plan says what is to be done. Someone must then settle who does which part, with what power, and who reports to whom. That work is organising: dividing the work, grouping it, giving it to people along with the authority they need, and linking their efforts so that the plan can actually be carried out. Organising is the bridge between planning and action.

The result of organising is the organisation structure: the framework of jobs, departments and relationships inside which every managerial and operating task is done. It is usually drawn as an organisation chart (MP15-9). Peter Drucker held that structure is an indispensable means to performance, and that a badly chosen structure can do a business serious harm, even ruin it.

The process of organising

1. Identify and divide the work. List every activity the plan needs and split it into jobs one person can handle. Dividing it this way avoids gaps and duplication and shares the load.
2. Group similar jobs into departments. Jobs that need the same skills, or serve the same product, region or customer, are put together. This grouping is departmentalisation (MP15-3).
3. Assign the jobs to people. Each department is put under a head, and each job goes to the person whose skills fit it best.
4. Fix authority and reporting lines. Each person learns what they may decide, whose orders they take and to whom they answer. This is done through delegation (sub-topic 3).
5. Link the parts. Departments at the same level must pull together, such as sales and production (horizontal coordination), and so must the levels above and below each other (vertical coordination).

Why organising matters

Every reporting line rests on three linked ideas.

• Authority is the right to decide, to give orders and to use resources. It belongs to the position, not to the person who holds it. It flows downward: it is widest at the top and narrower at each level below. It is also limited by law and by the organisation's own rules.
• Responsibility is the duty to carry out an assigned task properly. It arises when a superior gives work to a subordinate, and it flows upward: the subordinate is responsible to the superior.
• Accountability is being answerable for the result: explaining what was done, what was not, and why. It also flows upward, and it is enforced through reports and reviews of the work.

One line holds the three together: authority is handed down, responsibility is taken on, and accountability is imposed.

Parity of authority and responsibility. The authority given must match the duty given. Too much authority for a small task invites misuse. Too little authority for a large task leaves the person unable to deliver, and frustrated.

Types of authority

A staff specialist still has line authority inside their own department: the head of the legal department commands the lawyers working in it.

No manager, however able, can do all the work of a unit alone. Delegation is how a manager shares it out. The manager keeps the part that only someone in that position can do well, hands the rest to subordinates, gives them the power needed to do it, and makes them answer for the results. Put simply, delegation is the downward transfer of authority from a superior to a subordinate, within set limits. Louis Allen saw it as three acts done together: entrusting work, granting authority and creating accountability.

The three elements

1. Entrusting responsibility. The manager assigns a task and says clearly what is expected.
2. Granting authority. The subordinate receives the power the task needs: to use resources, take decisions and, where necessary, direct others.
3. Creating accountability. The subordinate becomes answerable to the manager for results, judged against standards fixed in advance.

The three work like the legs of a three-legged stool. If one is short or missing, the whole arrangement tips over.

"Delegation is how a manager multiplies himself"

This common exam statement is true. Working alone, a manager's time, energy and knowledge set a hard limit on what gets done. Delegation lifts that limit:

• Reach. Several people act for the manager at the same time, so the manager's influence covers far more work than one person could handle.
• Time for the manager's own job. Routine work moves down, leaving the manager free for planning, policy and unusual problems.
• Faster, better decisions. People close to the work decide on the spot, and they often know the facts better than the manager does.
• More managers. Subordinates gain experience and confidence and become the heads of new branches and ventures, so the organisation's management capacity multiplies as well.
• Motivation. Being trusted with a task raises a person's self-esteem and commitment.
• Clear structure. Delegation creates the superior-subordinate links that make up the hierarchy, and defining each person's powers and duties prevents overlap and helps coordination.

The multiplying works only when delegation is done well. It is never abdication: the manager can take the authority back and give it to someone else, and stays answerable for the result.

"A manager who delegates is freed of responsibility": why this is wrong

Delegation passes down a share of the work and the power to do it. It does not pass down the manager's own answerability. This is the principle of absoluteness of responsibility.

1. The manager's responsibility comes from their own position: their superior still holds them answerable for the unit.
2. Delegation creates a new obligation (the subordinate to the manager); it does not cancel the old one (the manager to their superior).
3. The manager chose the person and the task, so a poor choice or poor supervision is the manager's own failure.
4. If delegating removed responsibility, every manager could escape blame by passing work down, and nobody would answer for results.

The process of delegation

1. Decide the results expected and set the standards. Before handing over a task, the manager fixes what is to be achieved and how performance will be judged. The subordinate must understand these standards and accept them, or accountability cannot work later.
2. Assign the duties. The manager picks the person whose ability suits the task and states the duty plainly: what, how much and by when.
3. Grant matching authority. The subordinate gets the power needed for exactly that task (parity of authority and responsibility).
4. Create accountability. The subordinate reports back on the results and is assessed on them.
5. Set up control and communication. Reports and reviews let the manager follow progress without daily interference. The subordinate settles everything within the authority given and refers upward any matter beyond it. The manager also steps in when results go off track.

Many managers are slow to delegate, and many subordinates are slow to accept. A good answer covers both sides.

Why managers hold back

Why subordinates hold back

• There is nothing in it for them. More authority usually means harder work under more pressure; without fair reward, people decline it.
• They fear criticism. If mistakes bring blame, or even dismissal, taking on a task looks dangerous.
• They lack confidence or information. People who feel untrained, or who are not given the facts they need, prefer not to decide.
• They avoid responsibility. Some would rather the boss took every decision and carried every risk.

Guidelines for effective delegation

These are the standard principles of delegation, arranged here by when they apply.

Before handing over

1. Delegate by results expected. Start from the goal, then give enough authority to reach it.
2. Define the job clearly (functional definition). The clearer the results and activities expected, the better the person can contribute.

While handing over

1. Match authority to responsibility (parity). Give neither more nor less authority than the task needs.
2. One boss (unity of command). Each subordinate takes orders from, and reports to, one superior.
3. A clear chain (scalar principle). Subordinates must know who gave them their authority and to whom they take matters beyond it.

Afterwards

1. Decide at your own level (authority-level principle). Decisions within a person's authority are made by that person, not pushed upward; only matters beyond it go up.
2. No escape from responsibility (absoluteness). The manager stays answerable for what has been delegated.

Practical habits that remove the barriers:

• Start small: hand over simple assignments first and widen the degree of delegation over time.
• Answer mistakes with more training, not with less delegation.
• Give real freedom, and accept that a subordinate may solve a problem in a different but equally good way.
• Talk to subordinates often, so the manager knows each one's abilities and can match tasks to people.
• Reward the extra effort that accepting authority demands.
• Keep controls that check results, not every step.

What to delegate and what to keep

Centralisation means keeping decision-making authority at the top: most important decisions are taken by top management, and lower levels mainly carry out instructions. It is common in small and owner-run firms.

Decentralisation means spreading the authority to decide down to lower levels, close to where the work is done, as a deliberate policy for the whole organisation. The top keeps only what must be decided centrally: policy, major investment and overall control. Two classic ways of putting it:

• Louis Allen described it as a planned, organisation-wide push of authority down to the lowest workable level, holding back only what must be settled at the centre.
• Henri Fayol offered a test: anything that makes the subordinate's part bigger is decentralisation; anything that shrinks it is centralisation.

They are relative terms. Total centralisation would mean the top decides everything, so no managers would be needed below it. Total decentralisation would mean the lower levels decide everything, so no top managers would be needed. Neither is realistic. Every organisation has some of each, and the real question is how far to decentralise. As a firm grows, it usually moves towards more decentralisation, because the people nearest an operation know it better than a distant head office.

What each offers and costs

• Centralisation gives uniform policies, firm control, quick action in an emergency and economy in managerial staff. Its costs: an overloaded top, delays, little initiative below, and a poor fit for large or diversified firms.
• Decentralisation speeds up decisions, since they are taken near the work and pass through fewer levels; frees top management for policy; allows each unit's performance to be judged on its own, so control works through results; develops initiative and self-reliance in lower managers; builds a pool of tested talent for promotion; and spurs units to compete and grow. Its costs: more expense, duplicated staff services, a risk of inconsistent policies, a need for able managers and good control systems, and a danger that units drift apart.

Balance is the key. Total decentralisation with no central lead would break the organisation into pieces that no longer serve one purpose. A well-balanced firm keeps vital matters central (financing, overall profit targets, capital spending, major new products, major marketing policy and basic personnel policy) and decentralises what needs speed and local knowledge.

Since decentralisation is a matter of degree, it can be measured. Look at the decisions taken below the top:

1. How many decisions are taken at lower levels. The more, the more decentralised.
2. How important they are: for example, how large a sum a branch head may spend without asking anyone.
3. How many functions they cover: only production, or purchase, staffing and marketing as well.
4. How much checking they need. The fewer approvals a lower-level decision needs before action, the more decentralised the firm; decentralisation is greatest when such checking is least.
5. How near the point of action they are taken.

Factors that decide how far to decentralise

The right degree also differs inside one firm: production and sales may be highly decentralised while finance stays fairly central.

Delegation versus decentralisation

Delegation is the act of one superior passing authority to a subordinate. Decentralisation is the result of delegation carried out systematically, at every level, as a policy of the whole organisation. Delegation is the building block; decentralisation is the pattern built from it.

Principles of organisation are guidelines, drawn from the experience of managers and of writers such as Henri Fayol, for building a sound structure. They are tests of good organising, not fixed laws: no single structure suits every organisation, or one organisation at every stage of its life.

Span of management

The span of management (or span of control) is the number of subordinates one superior can manage effectively. There is always a limit, because a manager's time and attention are limited. The span decides the shape of the structure:

• A wide span means fewer managers and fewer levels: a flat structure.
• A narrow span means more managers and more levels: a tall structure.

The classical writers suggested fixed numbers: about six subordinates at the top and twenty at the bottom. The modern view is that no single number fits, because too many things vary from one situation to another. The right span depends on how much time each subordinate needs from the manager.

(B.Com Hons only.) Organisational design is the process of deciding the shape of the organisation: how tasks are divided, grouped and coordinated, and how authority and responsibility are spread, so that its goals are reached efficiently. A plan says what is to be done; design settles who does which part, who reports to whom and where people and money go. Its outcome is a structure, usually shown on a chart, together with the rules, systems and relationships that make it work. Design is never finished: it is revisited as the organisation and its environment change.

A designer makes six linked choices:

1. Work specialisation: how narrowly jobs are divided.
2. Departmentalisation: on what basis jobs are grouped (sub-topic 3).
3. Chain of command: the line of authority from top to bottom.
4. Span of control: how many people each manager supervises, which makes the structure tall or flat.
5. Centralisation or decentralisation: where decisions are taken (MP14-5).
6. Formalisation: how far written rules and procedures govern the work.

The choices range between two poles. A mechanistic design is rigid, tall, centralised and rule-bound. An organic design is flexible, flat, decentralised and adaptive. Functional and divisional structures lean mechanistic; team and matrix structures lean organic. A network structure tries to get the benefits of both: efficiency from specialist partners and flexibility from changing them as needed.

The contingency approach to design

The contingency approach (MP03) holds that there is no one best design: the right design depends on the organisation's situation. The factors that matter:

Departmentalisation is grouping related jobs and activities into units (departments) so that each can be managed as one. It is the second step of organising (MP14-1). The common bases:

Large firms usually mix bases: product divisions at the top, functional departments inside each division.

By function and by product compared

Merits of departmentalisation by function

1. Simplicity. It follows the natural division of business work.
2. Career paths within each function.
3. Easy training and supervision, since each department works on a limited range of skills.
4. Control. Top management keeps the important decisions, and every function gets due attention.
5. Economy. Facilities and staff serve every product, so there is no duplication.
6. Expertise. Each department concentrates on one function, which raises efficiency.

Demerits of departmentalisation by function

1. Profit responsibility cannot be fixed below top management.
2. Few all-round managers. Each head knows one function, so few are ready to run the whole business.
3. Slow and rigid when the firm grows or diversifies; unsuited to many unrelated products.
4. Friction. Departments' interests clash (sales wants special designs that production finds hard), and conflicts pile up at the top.
5. Departmental tunnel vision. Departments chase their own goals and lose sight of the firm's ("functional empires").

These three structures are the oldest ways of arranging authority. The B.Com Hons guidelines name all of them.

Line organisation

Authority runs straight down from the top to the bottom, one level to the next. Every person has exactly one boss, and there are no advisers. Unity of command and the scalar chain are followed strictly. In words: owner → works manager → foremen → workers.

Suits: small firms with simple, routine work.

Line and staff organisation

Line authority runs down exactly as in line organisation, but staff specialists are attached to line managers to advise them (legal, accounts, personnel, research). The specialists sit outside the chain of command: they advise; they do not command the line. A staff head does command the people in their own department.

Suits: medium and large firms whose managers need specialist help but must keep one clear line of command.

Functional organisation

In a large, complex organisation one supervisor cannot be expert in everything a worker needs: the speed of the work, machine repairs, inspection, costs. In functional organisation different specialists give orders to the same worker, each only in their own field. This knowingly breaks unity of command. The same idea can run across units: in a hotel chain, each hotel's accounts officer takes daily orders from the hotel's general manager but follows head office's finance chief on accounting rules. Every unit then gets the expert's knowledge, and policies stay uniform.

In a divisional structure the organisation is split into self-contained units called divisions, each built around a product line, a region or a class of customer. Each division has its own production, marketing, finance and personnel, and is headed by a divisional manager who answers for its performance and, usually, its profit. Each division is therefore a profit centre. Head office keeps overall strategy, the allocation of capital and some common services (legal, research, corporate finance), and controls the divisions mainly through their results. Both courses name the divisional structure; the B.Com Prog line also names the product structure on its own.

• Product divisions: one division per product line (paints, adhesives, chemicals).
• Territorial divisions: one division per region (north, south, overseas), for firms whose customers differ by area.
• Customer divisions: one division per class of customer (retail, corporate, government).

Inside each division the work is again grouped by function. A firm moves to divisions when it diversifies: the heads of a single production department and a single marketing department can no longer give every product enough attention.

A divisional chart, in words

• Board of directors → chief executive, supported by head-office staff (finance, legal, research).
• Chief executive → three divisional managers: Home Care, Packaged Foods, Packaging.
• Each divisional manager → that division's own production, marketing, finance and human resources heads.

Suits: large firms with several distinct product lines, markets or regions, where quick decisions for each segment matter more than the savings of one shared set of departments. A small one-product firm is better served by a functional structure.

Traditional structures suit stable, repeated work. Large, technical, one-off tasks with tight deadlines need something more flexible. The project and matrix structures were the first answers.

Project organisation

A project organisation is a team of specialists set up to complete one large, well-defined task (a project) with a fixed objective, budget and deadline: building a plant, launching a satellite, installing a computer system. The team is separate from the functional departments and works under a project manager, who has full authority over its people and resources. While the project lasts, the functional heads give up their authority over the people lent to it. G. R. Terry saw it as the preferred choice when a well-defined project has to be handled, or when a task is larger than anything the firm normally does.

What happens at the end depends on the firm. A firm with a one-time project disbands the team, and its members go back to their departments. A firm that always has projects (a construction company, a shipbuilder) keeps project teams as a lasting feature and moves people on to the next project.

When it suits:

1. It is large and needs heavy capital spending.
2. It has a fixed deadline.
3. It is technical and must be done with great precision.
4. It is a one-off job with clear specifications, and the firm wants its regular work to carry on undisturbed.
5. It is important enough to justify dedicated people and resources.

Typical users: builders of ships, dams and metro lines, aircraft makers and space agencies, and firms installing large software systems.

Matrix organisation

A matrix organisation lays a project structure over the permanent functional structure. People stay members of their functional department (engineering, production, finance, personnel) and are also assigned to one or more projects. The functional departments form the vertical lines of authority and the projects the horizontal lines; where they cross, they form a grid, or matrix. So each team member has two bosses:

• the functional manager, who looks after technical standards, staffing and the person's career; and
• the project manager, who directs the project's work, schedule and budget within the time and cost limits set by top management.

When a project ends, its members return to their departments for the next assignment. The matrix knowingly breaks unity of command, so each boss's authority must be clearly marked out.

Why so many firms use the matrix despite its difficulties

The matrix is hard to run. Yet firms with many complex projects in a changing market adopt it, because no simpler structure gives all of these at once: shared experts, the freedom to start and end projects, one named manager for each project, the joining of many disciplines, and permanent departments that keep technical standards. It works when:

1. the division of authority between the two bosses is spelt out;
2. both managers share the project's goals, and top management backs the arrangement;
3. there is an agreed way to settle conflicts quickly;
4. both managers appraise each member jointly; and
5. people are trained in teamwork, and communication is good.

Project and matrix compared

These structures are flatter and more flexible still. The B.Com Hons guidelines name the team and boundaryless structures; the B.Com Prog line names the virtual organisation.

Team structure

In a team structure the organisation is built around teams instead of departments. The teams are usually cross-functional (members from design, production, marketing and finance) and often self-managed, and each is given a complete task, product, customer or project. Members share responsibility for results, take many decisions themselves and sometimes choose their own leaders. A whole organisation may be made of teams, or teams may be added to a traditional structure.

Network or virtual organisation

A network organisation is built around a small central firm, the hub. The hub keeps only what it does best (often design, brand and marketing) and has other firms do the rest under contract: manufacture, distribution, finance, transport, accounts, call centres. The partners are linked to the hub electronically, join and leave the network as its needs change, and have their work coordinated and controlled by the hub. The hub's own managers spend their effort on choosing partners, starting new relationships and ending old ones. It is also called a virtual organisation, because it works like a complete organisation without owning most of it.

Its features: teams that cut across levels, with shared decision-making; coordination and cooperation in place of command; heavy use of electronic links; and the ability to seize new opportunities quickly.

Boundaryless organisation

A traditional organisation has three kinds of walls: between levels (vertical), between departments (horizontal), and between the firm and its suppliers, customers and partners (external). A boundaryless organisation tries to remove or loosen all three, so that information and people move freely. Flat structures and teams that cut across levels lower the vertical walls; cross-functional teams lower the horizontal walls; networks and close partnerships lower the external walls. A network organisation is called boundaryless because so much of its work is done with partners beyond its own walls.

Why these structures suit a complex modern environment

• Speed and flexibility when technology and customer needs change fast.
• Innovation, by combining diverse knowledge inside teams and with specialist partners.
• Customer focus, with teams built around customers or products.
• Global reach, using partners in many countries.
• Lower cost, with fewer levels and no heavy fixed investment.
• Digital tools, which make coordination across teams and partners possible.

No structure is best everywhere. Each fits a particular situation:

How structures change over time

A structure that fits today may not fit in five years. As a firm adds employees, products, regions and levels of management, its structure must be reviewed and changed; a firm that never changes its structure risks stagnating. A common path of growth:

1. Simple line structure: the owner directs everyone.
2. Line and staff, or functional departments: the work grows and specialists are needed.
3. Divisional structure: the firm diversifies into distinct products or regions.
4. Matrix, team or network structures: markets change fast, projects multiply, and some work is better done by partners.

Firms rarely follow this path exactly. Many mix structures: divisions at the top, functional departments inside each, and project teams laid across them.

(B.Com Hons only.) An organogram, or organisation chart, is a diagram of an organisation's formal structure at a point in time. Boxes stand for positions or units; lines stand for relationships. A solid line usually shows line authority, and a dotted line a staff or advisory link. The chart shows the departments, the levels of management, who reports to whom and each manager's span.

Practical uses

1. The structure at a glance: departments, levels and spans.
2. Clear reporting: who reports to whom, which cuts confusion and conflict.
3. Fixing accountability: each position and its place in the hierarchy are visible.
4. Induction: newcomers see where they fit and whom to approach.
5. Communication: it shows the formal channels for passing information.
6. Organisational analysis: it reveals overlaps, gaps, too many levels or overloaded managers, which helps when restructuring.
7. Manpower planning: it shows vacancies and where successors will be needed.
8. Information for outsiders: investors, regulators, clients and partners see how the organisation is arranged.

Types of organogram

Charts are also drawn for each kind of structure: a hierarchy for line, line and staff, functional and divisional structures; a grid for a matrix; and a hub with its partners for a network.

Limitations

• It shows only formal relationships, not the informal organisation or how authority really works day to day.
• It does not show how much authority each position carries.
• It goes out of date quickly.
• It can make the structure look more rigid than it is.

So it is best read with job descriptions and an organisation manual, and kept up to date whenever the structure changes.

The formal organisation is the structure of positions, authority, responsibility and relationships that management designs on purpose to reach the organisation's objectives. It is what organising produces: it says who does what, under whom and with whom. It deals with posts and the work attached to them, not with the personalities of the people who fill them. It is usually written down in an organisation chart, job descriptions and rule books. Chester Barnard described it as a system in which the activities of two or more people are consciously coordinated towards a shared objective.

Features

Advantages

1. Specialisation and efficiency from the division of work.
2. Easier coordination. The relationships between departments are already laid down.
3. Stability and continuity. The structure does not depend on particular people; behaviour can be predicted because rules guide it, and work carries on when someone leaves.
4. Unity of command is kept through an established chain of command.
5. No confusion of roles. Everyone knows their duties and their boss, so two people do not end up doing the same job.
6. Answerability. Relationships are defined, so when something goes wrong the post responsible can be found.
7. Goals are reached systematically. It gives a framework for the work, and each person knows the part they must play.
8. Orderly growth. A clear structure can be enlarged step by step.

Limitations

1. An incomplete picture. By stressing structure and work, it misses the friendships, rivalries and loyalties that also decide how work gets done.
2. Red tape. Paperwork and procedure can become ends in themselves.
3. Rigidity. Fixed rules leave little room for deviation, so creative talent goes unrecognised and initiative is discouraged.
4. Delay. Every matter must go through the chain of command, so decisions take longer.
5. Distorted messages. Information passing through many levels may be filtered or bent on the way.

When people work together, they talk, help one another and make friends beyond what their job descriptions require. The informal organisation is the network of personal and social relationships that grows up this way. Nobody designs it; it arises on its own inside the formal organisation. Keith Davis described it as a web of personal and social ties that the formal organisation neither sets up nor requires, which forms naturally as people associate. Chester Barnard saw it as a set of personal relationships with no conscious common purpose that may still help joint results.

Features

• No fixed form. It is a shifting network that never appears on the chart.
• Its own leaders, chosen by the members for their personal qualities, who may or may not be managers.
• Group norms, not rules, set the standards of behaviour.
• Its own channels of communication, running in any direction (the grapevine).
• Arises on its own from personal interaction among employees; management does not create it.
• Grows inside the formal organisation, when people interact beyond their official roles.

Benefits

1. Social needs met. People find like-minded colleagues and a sense of belonging, which raises job satisfaction.
2. Gaps filled. Informal help and contacts make up for what the formal structure lacks: people help each other beyond their job descriptions.
3. A testing ground. Management can gauge how employees will react to plans and policies through the informal network.
4. Fast communication. News and feedback travel quickly because official lines are not followed.

Limitations

1. Pressure to conform. Members are pushed to follow group norms, which harms the organisation when those norms run against its interests.
2. Resistance to change. If the informal groups oppose a change, management may fail to carry it through, and growth is delayed.
3. Rumours. When it spreads rumours, it works against the formal organisation.

The grapevine

The grapevine is the informal channel of communication. It spreads through the organisation in every direction, with no regard for levels or departments. It is fast and hard to stop, and it often carries news before the official announcement. But it is also unreliable: messages get distorted, rumours spread, and nobody can be held responsible for a false story because its source is hard to trace. A wise manager listens to it to learn how people feel, uses it to pass on useful information, and answers false rumours quickly with accurate facts. Banning it is neither possible nor wise.

An informal group is a circle of employees that management did not form: colleagues who share a car to work, staff from the same town, people from different departments who organise the office festival together. It has no written rules or official posts, but it has its own leaders, norms of behaviour and grapevine.

Why informal groups form

Problems informal groups can create

1. Limits on output. A group may fix its own idea of a fair day's work and pressure members not to exceed it, whatever the targets or incentives.
2. Resistance to change. Groups protect their habits and may oppose new methods, technology or transfers that threaten them.
3. Conflicting goals and loyalties. Group goals may differ from the organisation's, and loyalty to the group can override loyalty to the firm.
4. Rival power centres. Informal leaders may carry more weight than managers and use it against management.
5. Role conflict. A member may be torn between what the supervisor wants and what the group expects.
6. Pressure to conform. Members hide their own views to avoid rejection, which stifles initiative and new ideas.
7. Rumours. The grapevine spreads half-truths that cause anxiety and distrust.
8. Cliques. Groups based on region, language or caste can split the workforce and shut others out.
9. Lost time in gossip and socialising during working hours.

How a manager should handle informal groups

Breaking up friendships only drives groups underground. The aim is to make them work for the organisation:

1. Recognise and understand them. Learn which groups exist, who leads each, what part each member plays and what the group treats as acceptable behaviour.
2. Work through the informal leaders. Consult them and win their support; they can carry a message further than a formal order.
3. Align the group's goals with the organisation's. Show how the firm's success benefits members, use group incentives, and avoid needless threats to group norms.
4. Use the grapevine. Listen to it to learn employees' feelings, feed it accurate information and correct rumours promptly through formal channels.
5. Involve the group in decisions that affect it, especially changes, so that it supports rather than resists them.
6. Protect their security. Explain changes in advance and introduce them gradually and with care.
7. Channel group ties into teamwork through team assignments, recreation and recognition.
8. Be firm but fair with harmful behaviour such as deliberate restriction of output or divisive cliques: counsel members, apply rules evenly and keep promotion and reward policies open.

"Both are needed, like the two blades of a pair of scissors"

A pair of scissors cuts only when both blades work together. An organisation reaches its goals in the same way only when its formal and informal sides work together.

• What the formal side gives: clear goals, roles, authority and accountability; division of work; official channels; rules for consistency and control; stability that does not depend on particular people.
• What the informal side gives: satisfaction of social needs and higher morale; fast communication that fills gaps in official channels; help and cooperation beyond job descriptions; flexibility to solve problems that procedures cannot; informal leaders who can carry the group with management.

Each needs the other. A formal structure without informal ties is lifeless: people do the bare minimum. Informal groups without a formal structure lack direction and may work against the organisation's goals. The informal side can support the formal one (quicker communication, team spirit, help beyond the rules) or undermine it (output limits, resistance to change, rumours). So a manager should neither ignore nor suppress it, but understand it, work with its leaders and use the grapevine alongside official communication, so that both blades cut together.