In a departmental line organization, there is a chief executive at the top. Under him, there are a number of departments each headed by a departmental manager. Each departmental head drives his authority to his immediate subordinates. These subordinates in turn delegate authority to their own subordinates and so on
All department heads enjoy equal status and authority. Also, they function independently of one another. The production manager for example will not interfere in the decision-making by sales manager or finance manager and vice-versa. Even in a department there may be several sub-departments or units. Thus in the production department, there may be a number of foremen each having a certain number of workers under him. But between one foreman and another, there is no formal line of authority or responsibility. Each foreman is supposed to take his orders from the production manager and is responsible to him for planning and execution of the work assigned to him.
- Simplicity: Line organization is the simplest and oldest form. Due to the direct authority relationships there is no confusion or misunderstanding. Everyone knows clearly his position in the organization. It is, thus, easiest to establish and simple to understand.
- Flexibility: As each executive has full authority and responsibility for his job, required changes can be made quickly and easily.
- Quick decisions: Managers can take decisions quickly and act promptly as no staff officers are to be consulted and there is adequate authority at every level. Communication is easy and quick.
- Executive development: As both thinking and doing functions are combined at each level of authority, it provides opportunity for development of all-round executives.
- Unified control: All activities affecting a development are under the control of one executive. This makes for unified and effective control.
- Fixed responsibility: Every person knows from whom he gets orders and to whom he is accountable. Unity of command avoids buck passing. Every executive can be held fully responsible for the actions of his subordinates.
- Effective discipline: Unity of command and unified control promote effectiveness. Employees react more favourably to a single rather than multiple centres of command. There is no division of loyalties and no danger of conflicting orders.
- Economy: Line organization is less expensive in terms of overhead costs as there are no staff specialists.
- Overburdening: In line organization, key executives are overloaded with administrative work. Reflective thinking is absent as energies are consumed in operating details. Top executives have to be ‘superman’ to effectively control diverse activities. As the business grows in size, executives find it impossible to cope with their duties in the absence of staff assistance.
- Instability: The success and survival of the enterprise depends upon a few individuals. There is little scope for expansion of business beyond their capabilities. Loss of key executives may put the future of the concern in jeopardy.
- Lack of specialisation: There is no scope for specialization as one individual cannot be expert in all functions. Lack of specialization and overdependence on subordinates, lower efficiency of operation. Every executive is likely to become a “jack of all trades but a master of none.”
- Autocratic control: As each department is under the complete control of one executive there is danger of authoritarian rule. There is a possibility of favouritism.
- Difficulty in staffing: Executives in a line organization are required to have knowledge of diverse functions. It is difficult to recruit and train such executives.
- Inadequate communication: Subordinates are afraid of the boss. They hesitate to offer suggestions and to criticize a wrong decision taken by the superior. There is practically no upward communication. As a result, managers are deprived of the new ideas from lower ranks.