What is a line relationship in business

Manage a dotted-line relationship - Business Management Daily

what is a line relationship in business

Article (PDF Available) in African journal of business management 5(7) · May HR-line relationship is likely to maintain its importance in future. Organisation of the physical distribution function within business firms is a recent status of the relationship of line and staff positions among US business firms. Introduction Line and Staff are names given to different types of functions in organizations. A "staff function" supports the organization with specialized advisory and support functions. (2) The Staff hierarchy, in which the departments are revenue consumers, and their managers.

Recent empirical research has, for instance, found a significant negative correlation between background levels of corruption in US states and the value of firms located in that state Dass, Nanda and Xiao While the picture is not as clear as at aggregate level, most of the evidence suggests that the long-term and often indirect costs of corruption outweigh any short-term benefits Athanasouli et al.

This leads Nichols The evidence for such an assumption, however, is patchy, even where such activity is not detected by relevant authorities or regulators. Intuitively, bribery may appear to some firms as a sure-fire means of entering a market or protecting their market position from competitors. A few isolated studies side with this view. Dutt and Traca find some indication that collusion with corrupt officials can help firms negotiate barriers to trade in extremely corrupt or bureaucratic environments.

However, as shown in figure 1 below, aggregate sales growth of all firms in markets characterised by state capture is markedly lower than in markets without state capture Batra, Kaufmann and Stone A recent cross-national study used World Bank Enterprise Survey data to construct a stratified random sample of formal private sector business with five or more employees from countries. Vial and Hanoteau likewise find a positive relationship between corruption, firm output and labour productivity.

Other studies provide a more nuanced view. A survey of large multinational firms by Healy and Serafeim finds that, while companies with weaker integrity mechanisms are associated with greater sales growth in high corruption risk markets, the propensity to engage in bribery incurs additional costs with the result that their return on equity ROE actually declines.

In other words, while more corrupt large multinational firms may enjoy stronger sales in riskier markets, they actually become less profitable as the additional costs incurred from paying bribes are not fully recovered from higher prices or greater sales. Corruption as detrimental to firm performance While static analysis of corporate bribery as a one-off interaction might indicate a positive correlation with firm performance, there are two methodological issues to consider before turning to other empirical research that corruption imposes considerable costs on firms even where it remains undetected.

First, more sophisticated analysis of bribery treats it as a relationship, rather than a single interaction. Corruption is not exogenous to the wider relationship between a firm, its business partners, customers and the bureaucracy; willingness to pay bribes affects not merely a given transaction, but the nature of the entire relationship Nichols Viewed in this light, most scholars concur that the long-term costs of bribery outweigh any short-term benefits accrued from by-passing bureaucratic or regulatory processes.

This brings us to the second methodological issue with studies that point to positive correlations between firm bribery and performance. Some of these correlations may suffer from endogeneity issues; rapidly growing or successful firms may be more likely to be targeted by officials looking to extract bribes because of their increasing ability to pay Fisman and Svensson ; Wu Direct costs Kaufman and Wei propose a theoretical model predicting that bribe-paying firms are likely to encounter more harassment and demands for bribery than companies which act with integrity.

Where a firm has demonstrated its willingness to expend its chief resource — money — in exchange for services, resources or permissions provided at the discretion of a public official, that official has an incentive to construct new delays in order to continue to extract bribes Nichols This suggests that bribery may actually increase the direct costs a firm incurs due to bureaucratic interference.

This conclusion is corroborated by a number of other studies. De Rosa et al. Significantly, they also concluded that bribery entailed greater costs in countries with high levels of corruption than in less corrupt countries, indicating that even where bribery is an expected behaviour, those companies which commit bribery still incur costs rather than benefits relative to firms which do not pay bribes De Rosa et el. Even in absolute terms, bribery is an expensive activity; a study of transition economies in Europe and Central Asia found that, on average, firms spent 1.

A more recent OECD study Indirect costs In addition to the direct cost in time and money attributable to corporate bribery, there are a number of indirect costs of bribery which detract from firm performance. Anecdotally, there is some suggestion that firms which engage in corruption are making inefficient use of resources which could be more gainfully employed in improving business operations rather than flowing into the pockets of public officials.

Growth A study of 10, SMEs and large firms from 80 countries found that enterprises which report being severely constrained by demands for bribes have been found to have a growth rate 3. It is worth noting, however, that firms which engage in bribery may actually not view corruption as a constraint, so this indicator is an imperfect proxy for actual firm bribery. Using sales dynamics as an alternative proxy for growth, a study of 10, SMEs and large firms operating in sub-Saharan Africa by Pelizzo et al.

Other studies Athanasouli et al. In a study of a random stratified sample of Ugandan firms, Fisman and Svensson found, after controlling for the endogeneity effect of high-profit or turnover firms being disproportionately targeted, that higher corruption at firm level is strongly correlated with lower firm growth, even in the short term.

Moreover, their evidence suggests that paying bribes is three times as harmful to firm growth than paying the equivalent amount in taxation. Research looking at the factors of job creation in 70, enterprises across countries concludes that corruption hampers employment growth in small, medium and large firms Aterido and Hallward-Driemeier Looking at a business survey of middle and top managers from 29 countries predominantly in Latin America representing firms with a range of characteristics in terms of age, size, sector and location, d4bc25e6 Gaviria finds that bribe payments are correlated with lower growth in sales, employment and investment at the firm level, rendering a company less competitive.

Paying bribes is associated with higher transaction costs in terms of time and money relative to firms which act with integrity, even in markets with high corruption risks De Rosa et al.

In many instances, it is typically the less productive firms facing stiff competition who are most likely to turn to corruption to expand or maintain market share Faruq and Webb The evidence suggests, however, that corruption renders firms less competitive, triggering a vicious cycle Nichols As discussed in the following section, where anti-corruption and competition laws are effectively enforced, detection typically causes a significant detrimental impact on firm competitiveness due to various regulatory and market forces Serafeim Businesspeople may be conscious of the likely risk and impact of fines, penalties and legal costs should evidence of corporate malfeasance come to light.

As such, Thomas, Schermerhorn and Dienhart This is simple to operate and control. Co-ordination can be easily achieved. Advantages of line organization: Following are the main advantages of line organisation: It is very simple to establish and operate. It can be easily understood by the employees. Duties and responsibilities are clearly defined for each individual with reference to the work assigned to him. As a result everybody knows to whom he is responsible and who are responsible to him.

Nobody can avoid responsibility. This type of organisation ensures better discipline in the enterprise. Singleness of responsibilities facilitates discipline in the organisation. The workers at the lower levels will be more loyal and responsible to one single boss rather than to a number of bosses. It is flexible in the sense that it is subject to quick adjustments to suit to changing conditions.

In simple words, it is more adaptive to the changed circumstances. It helps to achieve effective co- ordination.

Line and Staff Relationship in Organization (with Example Diagram)

All the activities pertaining to single department are controlled by one person. As there will be direct communication between the superior and the subordinates at different levels it would be helpful in achieving promptness in performance.

Every worker is accountable to one boss in the department under this type of organisation. In this manner it is in accordance with the principle of unity of command.

what is a line relationship in business

It is not complex and expensive. It is simple and economical in operation. It does not need any expert and specialised personnel. On account of its simple operation and unified control and responsibility, decisions can be taken promptly. The process of decision-making is further quickened as the decision is taken by one person.

Under this organisation, the department head is fully responsible for every activity in his department.

Staff and line - Wikipedia

He discharges his responsibilities in an efficient manner. He comes across many problems and obstacles in performing his duties. This provides him an ample opportunity to enhance his capabilities and organisational abilities and is greatly helpful in his overall development and performance.

Disadvantages of line organization: Following are the main drawbacks of line organisation: The main disadvantage of this system is that it tends to overload the existing executive with too many responsibilities. The work may not be performed effectively on account of innumerable tasks before the single executive.

Absence of managerial specialisation is the major drawback of this system. On account of many functions and complexities it is very difficult for a single individual to control all the matters effectively.

The executive may not be expert in all aspects of managerial activities. The burden of responsibilities on the shoulders of the manager can crush him under the heavy workload.

There may be a good deal of favouritism and nepotism under this type of organization. This is because each departmental manager or head carries the functioning of his department in accordance with the ways and means suitable to him.

Under line organization, ultimate authority lies in the hands of top management and departmental managers or heads have little powers. This adversely affects their initiative and enthusiasm to motivate the subordinates working under them.

Lack of communication from lower ranks: Under line organisation suggestions move from down to upwards the superiors usually do not pay attention to suggestions sent by lower ranks.

This leads to inadequacy of communication from subordinates to superiors.

what is a line relationship in business

As the very name suggests, functional organisation implies that the organisation should be based on various functions. The principle of specialisation embodies the concept that both the workers and the supervisors can develop a higher degree of proficiency by separating the manual from the mental requirements. Taylor recommended that there should be functionalisation even at the shop level where workers have to produce goods. He felt that the usual practice of putting one foreman incharge of some 40 to 50 workers should be avoided.

Every worker in the organisation is directly connected with these foremen. The eight specialist foremen are: The first four bosses operate from Planning Department, whereas the other four are known as Executive Functional Bosses. They function in the production department. A brief explanation of these eight functional foremen is given below: He lays down the exact path or route to be followed by raw material transforming it into finished product.

He prepares detailed instructions to be followed in doing the work as per the route laid down by the route clerk. He determines the total time to be taken in the completion of a product and also works out the cost of production per unit and total cost. He prepares various work schedules and cost sheets in order to have proper control over time and cost incurred in producing goods.

He is responsible for maintaining proper discipline in the organisation. In fact, he is the guardian of orderliness in the factory. In the words of Kimball and Kimball Jr.

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He initiates a proper code of conduct in the organisation. He makes the availability of different machines and tools required by workers to carry out their work. He also provides various production designs, drawings, raw materials etc. He controls the speed of different machines operating in the organisation. He sometimes demonstrates the workers the proper speed with which the machines should operate.

He undertakes proper supervision over speed of machines. He is concerned with proper maintenance and repairs of machines for keeping them in working order. He checks and certifies the quality of work i. Achievement of pre-set standards is confirmed by the inspector.

Forms of Organisational Structure: Line , Functional, and Line and Staff Organisation

He develops the feeling of quality consciousness among the workers. In order to carry out his job effectively, an inspector must possess proper knowledge and the technicalities involved in quality control. While developing the concept of Functional Foremanship, F. Taylor suggested that it is unscientific to overload a foreman with entire responsibility of running a department.

He advocated that direction of work should be decided by functions and not be mere authority. He thought that to be successful in performing his duties a foreman should possess various qualities viz. Spriegel has nicely explained Functional Organization. The whole work in the organisation is divided in various departments. Similar type of work and transactions are put in one department under the control of a departmental manager or head.

Various departments are also known as functional areas of management viz. The respective managers of these departments will be responsible for carrying out various activities of their departments in the organisation. For example, marketing manager will be responsible for carrying out marketing activities and personnel manager will be responsible for looking after the personnel matters in all the departments of the organisation.

The underlying idea of functional organisation at the top level of management is that a subordinate anywhere in the organization will be controlled and commanded directly by number of managers operating in different departments. Advantages of functional organisation. Following are the main benefits derived from functional organisation: This system derives the benefits of specialisation. As every functional incharge is an expert in his area, he will guide using his specialisation and with the help of the subordinates, try to attain the specified objectives.

This type of organisation ensures enhanced efficiency as the workers operate under the expert and competent personnel and perform limited operations. The functional foremen have to carry out the limited number of duties concerning their area of work.

This considerably reduces the burden of work and makes possible for the foreman to carry out the work in the best possible manner.