Organization refers to the structure of people that work for any establishment or institution including business firms, government departments, service organizations, and social institutions. Organization structure defines the relationships that exist between the people in an organization. Line organization is a type of organization structure based on direct boss and subordinate relationship between employees. In such an organization a person at the top of the organization is responsible for running all the affairs of the organization. This person has one or more person reporting to him as his subordinates. The people reporting to the top boss form the second level of people in the organization structure. Each of the person at the second level may have one or more persons reporting to him or her. Thus people at second level report to their manager and supervisor and, in turn, other employees report to them.
Employee at third level of organization may have other employees reporting to them. In this way an organization may have several levels, At the lowest level are employee who report to their boss, but no one reports to them. In this kind of organization a person is related to other persons in the organization only in the direct reporting relationship of subordinate and supervisor.
In a line organization a person receives orders and instructions only from his boss. Similarly a person is authorised to instruct and direct only the persons reporting directly to him or her. Compliance of decisions and directives of a person is dependent on the formal authority enjoyed by the person as a supervisor. A person can exercise no authority over an employee not reporting directly to him or her.