What is Organization? Meaning, Objectives, Characteristics, Process, Elements, Reasons, Goals

What is Organization?

Organization refers to a structured group of people who come together to achieve specific goals or purposes. It can be a business, government body, non-profit, club, or any other group that works in a coordinated way.

Meaning of Organization

The term “organization” refers to a mechanism which enables men to live together. It carries two distinct meanings. In the sense of structure, it refer to a system, whose parts are related to and are dependent on one another.

On the other hand, in the sense of a process i.e., the way in which work is arranged and allocated among the members of the organization. In other words, organizing refers to the process of bringing together physical, financial and human resources and establishing productive relations among them for the achievement of specific goals.

The need for organizing has grown with the expansion in size of business units. When a large number of people are employed in an enterprise, activities also get dispersed, the need for formal organizing becomes a absolutely necessary. Organization provides the framework within which managerial functions of planning, directions and control take place.

Hence, persons working together effectively , each doing what each can best do and persons achieving the best result are basic in the concept organizing.

Organization as a group

The term ‘organization’ is commonly used to represent a group of persons engaged in pursuing common objectives. The group members lay down patterns of communication and rules and regulations to control their activities. They also define authority-responsibility relationships among themselves. Thus, we can say

The features of organization as a group are as follows:

• It represents cooperative relationships of two or more persons.
  
  
• It is created to achieve certain common objectives.
  
  
• The group members are in a position to communicate with each other.
  
  
• The group lays down rules and regulations to regulate the behavior of group members.

Organization as a process

This view regarding organization as a process is gaining much popularity these days. It involves the grouping of activities necessary to accomplish goals and plans, the assignments of these activities to appropriate departments and the provision of authority delegation and coordination.

As a process, organizing is concerned with arranging in a logical and orderly manner the activities of all the employees. It also creates relationship of one job to another and lays down the scope or limits of authority and responsibility.

Organization as a structure

According to some scholars organization is merely a structure of relationships between the various positions in an enterprise. It is the structural framework of duties and responsibilities required of personnel on performing various functions within the company. It is essentially a blue print for action resulting in a mechanism for carrying out functions to achieve the goals set up by the company.

If this view is accepted the organization will mean merely a chart of relationships but an organization is certainly more than a chart of relations .Formal relationships are only one side of the coin, Informal relations are equally important .As already said, an organization is an entity consisting of individuals, objectives and relationships among the individuals. It should not be taken to mean only a structure of relationships.

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Objectives of organization

Organization refers to the assembling of various elements of business such as workforce, capital, raw materials, machinery, energy, information etc. in order to establish a harmonious and functional relationship among them.

To understand pervasiveness of the organization we have to list various objectives of organization, they are such as:

• Sound organization makes for effective management. It enables smooth operation of the enterprise by providing a framework within which management can perform the functions of planning directing, controlling etc.
  
  
• Growth and diversification become possible due to systematic division of work and consistent delegation of authority. An organization facilitates changes necessary for taking up new activities and new lines of business. An ideal organization would provide the flexibility and strength necessary for meeting new demands.
  
  
• A sound organization would help in the optimum utilization of technological innovations and human resources. It will avoid duplication of work and overlapping of work and overlapping of efforts. Optimum use of technological improvements can be made through a sound structure manned with efficient employees.
  
  
• In a sound organization, every individual is assigned the job for which he is best suited. The assignment of right jobs to right person improves job satisfaction and interpersonal relations.
  
  
• A well designed organization demands creative effort, encourages innovation and permits extensive delegation and decentralization. A sound organization also helps in the continuity of the firm by providing scope for the training and development of executives.
  
  
• Organization is an important means of unifying and interacting individual efforts. Its objective is putting balanced emphasis on different activities and in establishing effective relationships between the different departments or divisions of the enterprise.

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Characteristics of Organization

A proper analysis of the above discussion reveals the following characteristics of an organization:

• It is a group of individuals which may be large or small. • The group in the organization works under the executive leadership.
  
  
• It is a machine or mechanism of management.
  
  
• It has some directing authority or power which controls the concerted efforts of the group.
  
  
• The division of labour, power and responsibilities are deliberately planned.
  
  It implies a structure of duties and responsibilities.
  
  
• It is established for accomplishment of common objectives.
  
  
• It is a functional concept.

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Process of Organization

The process of organization includes following steps which are as under

• To divide the jobs to be performed by different workers.
  
  
• To divide into various departments and fields and thereafter to sub divide into groups and sub groups the processes relating to each other.
  
  
• To allocate jobs to the workers keeping in view their physical and mental ability.
  
  
• To delegate authority to the workers.
  
  
• To maintain coordination among the activities to be performed by different departments.

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Elements of Organization

An organization has the following elements:

• An organization is held together by the pursuit of specific and well defined objectives. In fact, just as objective cannot be accomplished without an organization, similarly organization also cannot exist for long without objective and goals.
  
  
• The important process in organization is to group similar or related jobs into larger units called department. The departmental activities are further divided into groups. Primary grouping is made on the basis of functions like sales, production, marketing, finance etc. Secondary grouping consists of geographical areas, types of customers, equipments use, and process adopted etc.
  
  
• Authority without responsibility is a dangerous thing and similarly responsibility without authority is a empty vessel. In fact, the various members of the organization, who perform the jobs, are linked by authority-responsibility relations through the process of organizing. Each position is assigned specific tasks and delegated the necessary authority to discharge them. Authority flows form the top managerial positions to the middle managerial positions and below in a graded manner.
  
  
• Communication is key note of efficient organization. There should be proper arrangement of communicating messages from executives to subordinates & vice-versa. Efficient, effective and proper communication system establishes harmonious relationship between employees and enables execution of work in the right manner at the appropriate time.
  
  
• Activities in any organization is a team work and so it has to adopt suitable methods to ensure that there is proper coordination of the different activities performed at various work points.
  
  
• Organization should have a formal relation and three should be formal relations amongst all the members. These relations may be by any designation, lower, top or boss or in any other form. There should be a clear marking of rights and duties in relations.
  
  
• Organization is not related to business and industry only but also to economic, social, religious, political and family today.

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Reasons for Organization

Last section establishes the pervasiveness of the organization in detail, now you will analyze the various reasons for organization. As you know the need for organization arises when two or more persons unite together to achieve some common objectives. This is because, it only under such circumstance, it will be necessary to know who is to do, what is to be done and how these activities are related to the activities of other persons. One-man business possibly requires no organization as long as that one man can efficiently manage everything all by himself.

Supposing one man is the owner, manager, director and operator of his entire business unit. But the moment he employs someone to assist him in performing the task he has to assign duties to that assistant and give him the necessary authority to enable him to perform task so assigned. As his business goes on expanding in size, he has to create sections, departments and divisions and delegate authority to the complexities of the subordinates. Furthermore, the problem of organizing tends to become complicated with the growth of this business.

It is under such circumstances that the need of organization arises. Thus, we need organization in which two or more persons are working together to perform a task which no one of them can perform singly because of his physical, psychological and social limitations. Organization provides a structural framework of duties and responsibilities. On the one hand it establishes authority relationships and on the other, provides a system of communication.

Good organization enables us to achieve ends that could not have been obtained, as efficiently or as effectively through our individual efforts. As a matter of fact, organization is not an end in itself. But means to an end. It is through organized effort that we accomplish organization goals.

The remarks made by Kenneth C. Towe, as a president of American Cyanamid company that a sound form of organization is the answer to every business problem; a poor organization even with a poor produce can run a good product out of the market; cannot be regarded as an exaggeration of the importance of a good organizational structure particularly when we evaluate the story behind the success of most of the business undertakings.

However, the right organizational structure is the necessary foundation; without it the best performance in all other areas of management will be ineffectual and frustrated. It is now clear that there cannot be any substitute for good organization.

In present context following are the main reasons for organization:

• The organization is to administer economy in production. Any industrial concern aims at reducing cost and maximizing production.
  
  
• The organization always lays stress on economy of time and labour. For this it adopts and uses the best available system with modern tools and equipments.
  
  
• To establish healthy relations between labour and capital. Human relations and behavioral sciences form the basis of an organization structure today.
  
  
• The use of men and material should be economized in order to guard against the future non-availability of resources. The stress must be given on the optimum use of resources.
  
  
• The aim of organization should not be earning profit only but to foster the growth and development of service motive.
  
  
• A properly designed organization is an aid to management. It facilitates both management and operation of the enterprise. By proper division of work, effective delegation, unity of command and direction, clear job definition, the organization structure siphons off the routine duties and makes them the responsibility of lower rated positions.
  
  
• Organization makes clear division of work. Every job is assigned to the right person thus promoting specialization, speedy performance of tasks and efficiency.
  
  
• Proper organization helps in avoiding duplication of work and overlapping in responsibilities among various relationships between various sections of the enterprise. It is because particular jobs are assigned to particular persons.
  
  
• Easy and smooth communication is the core of an organization. An organization provides channels of communication which indicate as to who will communicate with whom and on what subject. Thus, while superiors communicate their instruction to their subordinates, the latter on their part can communicate their problem to their superiors. All important function like planning, direction etc. are easily performed with the help of smooth communication.
  
  
• Any scheme for growth and diversification can proceed only when it is permitted by the organization structure. The recruitment of staff, delegation of authority, proper co-ordination and control can be arranged only in case the basic organization structure is properly designed.
  
  
• In a rapidly advancing LPG world, changes are bound to take place in the techniques of production, distribution and man-power management. Only an effective organization can be able to foresee such change and be prepared to face them.
  
  
• Sound organization stimulates independent creative thinking and initiative by providing well-defined areas of work with broad latitude of the development of new and improved ways of doing things.
  
  
• A sound organization has no place for corruption. If it is there then there is some lacunae in organization. When every part of organization works in the interest of the enterprise corruption cannot exist.
  
  
• In a good organization when all activities run in a systematic way, and all the employees perform the duties without interruption, not only production and marketing can be balanced but also income and expenditure can be balanced. This will give a balanced and all round development to the business.
  
  
• Sound organization avoids wasteful expenditure as identified group of people contributes its effort toward the attainment of common goal.
  
  
• A group is assigned the duty of picking up the best, competent and responsible persons for definite jobs. These persons so chosen are assigned different assignment keeping in view their might, capacities and capabilities.
  
  
• By Organizing, cooperation, coordination and adjustment amongst all persons is brought about and this cooperation and coordination helps them as they benefit other and equally they get benefited also. Coordination generates a feeling of group activity and this generates collective effort thereby fulfilling the objectives of the unit. The quantum of the achieved aims will decide the volume of success.
  
  
• Organization clearly defines the relationship amongst various departments and only competent and deserving persons are enlisted in the group. Their incentive, initiative and intellect are recognized and this helps others also to show their best so that these other persons may also be appropriately rewarded.
  
  
• Organization provides a sort of training to different heads of departments for future. They get much experience about different problems and events which they face in the organization from time to time.

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Significance of Goals in Organization

The goals of the organization reflect the reasons for its existence. Organizations produce and market product and services, organization of university provide teaching and research, government provide welfare and security and so on. Organizations are attainment instruments, without some purpose; there is no need for the organization. All organizations are goal seeking, that is, they exist for the purpose of the efficient achievement of some goals.

Goals serve the following functions:

• Goals describe the purpose of the organization, so that people know, what it stands for and will accept its existence and continuance. They help to legitimize the presence of organization in its environment. Goals help the organization emphasize its uniqueness and identity.
  
  
• Goals guide employee work and decision making. They provide guidelines for organizational activity . They keep attention focused on common purposes. They commit persons and organizations to verifiable accomplishment.
  
  
• Goals keep activities on the right track. Goals make behavior in organizations more rational, more coordinated and thus more effective because everyone knows the accepted goals to work toward. In setting effective goals managers help members at all levels of the organization to understand how they can best achieve their own goals by directing their behavior toward the goals of the organization.
  
  
• Goals serve as performance standards against which actual performance may be checked. They provide a benchmark for assessment.
  
  
• Goals are motivator. The setting of a goal that is both specific and challenging leads to an increase in performance because it makes it clear to the individual what he is supposed to do. He can compare how well he is doing versus how well he has done in the past and in some instances, how well he is performing in comparison to others.
  
  
• Goals specificity enables the workers to determine how to translate effort into successful performance by choosing an appropriate action plan.

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Characteristics of Business Organization Goals

Let’s prepare list of few basic characteristics of business organization goals:

To Built Systematic and Sound Management

Systematic and sound management largely depends upon effective goal. It is the effective goals, which ensures proper balance between authority and responsibility. It achieves clear line of communication, and defines the areas of work.

It is the goal which allows the top management to concentrate on overall planning and supervision, leaving the routine work for the lower levels of the organization. It saves the institution from ad-hocism, over-lapping and inefficiency.

High Productivity at Minimum Investment

The activities are allotted according to the principle of division of labour. The effective goals always encourage every worker to make his best contribution in producing output. The increase in output and control of wasteful expenditure helps to reduce the overall cost of production and by this profitability of the institution will also go up.

Consistent Growth and Diversification

A business organization must be a growing organization. With the passage of time; an institution must diversify its activities so that a rational product mix can be offered in the target market because it’s an age of competition and struggle.

A static business soon grows stale and out of run. It should grow from a small scale concern to a medium scale one and from a medium scale concern to large scale one. Effective design of business goals plays an important role in this respect. Execution of policies in organized manner builds the necessary capacity and confidence in undertaking bigger activities.

Work with Team Sprit

The structure of effective goals will succeed only if employees cooperate in the work. The employees learn working in closer co-operation with others. The management introduces various incentive schemes and gives monetary and other benefits to the employees, so that they work in a team spirit.

Community Service

Maximization of profits, no doubt, is the motive of every business. Without profit, no business can exist because business is a part of society at large. It can not survive long by exploiting consumers and society.

It has to serve the society by providing it with products of best quality at responsable prices. It has to ensure smooth supply of goodsas per the needs of consumers. The “service motto” can not be realized without a well-knit of goals. So, to discharge social obligation an important objective is building up of sound goals.

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Goal of an Organization

The goal of an organization is to build, develop and maintain a structure of working relationship in order to accomplish the objectives of an enterprise. Since ages and in all walks of life, organization has been playing a very significant role. Strictly speaking, the better the organizational goal, the higher would be the achievement of the common objective.

Thus while setting goals for organizations a manager must consider following principles:

• Principle of efficiency: A goal should be efficient only, if it is able to accomplish predetermined objective at minimum possible cost. A goal should also provide maximum possible satisfaction to its members and should contribute to the welfare of the workers community.
  
  
• Principle of division of work: A goal should divide total task in such a manner that the work of every individual in the organization is limited as far as possible to the performance of a single leading function. The activities of the enterprise should be so divided and grouped that there is most efficient breakdown of tasks.
  
  
• Scalar principle: During completion of goals, authority and responsibility should be in a clear unbroken line from the highest executive to the lowest executive. There must be a clear chain of command. Every subordinate must know who his superior is and to whom policy matters beyond his own authority should be referred for decision
  
  
• Principle of Delegation: During completion of goals, authority delegated to an individual manger should be adequate to enable him to accomplish results expected of him. Authority should be delegated to the lowest possible level, consistent with necessary control so that coordination and decision making can take place as close as possible to the point of action.
  
  
• Principle of unity of command: During completion of goals, each person should receive orders from only one superior and be accountable to him. This is necessary to avoid the problems of conflict in instructions and divided loyalty and to ensure the feeling of persons responsibility for results.
  
  
• Principle of Balance: During completion of goals, the various parts of an organization should be kept in balance and none of the functions should be given undue emphasis at the cost of others. In order to create organizational or structural balance it is necessary to maintain a balance between narrow span of management and one lines of communication, between line and staff etc.
  
  
• Exception Principle: During completion of goals, every manager should take all decision within the scope of his authority and only matters beyond the scope of his authority should be referred to higher levels of management. This principle is also known as authority level principle.
  
  
• Principle of coordination: There should be an orderly arrangement of group effort and unity of action during completion of goals, of a common purpose. The purpose of organizing is to secure unity of effort.
  
  
• Principle of Flexibility: During completion of goals, the organization must be free to handle complicated procedures and red tapism. Devices, techniques and environmental factors should be built into the structure to permit quick and easy adaptation of the enterprise to changes in its environment.
  
  
• Principle of Continuity: Change is the law of nature. The organization goals should be so structured as to have continuity of operations. Arrangements must be made to enable people to gain experience in positions of increasing diversity and responsibility . After a long discussion, now we can conclude this unit with