Organization: Definition, Meaning, Characteristics, Importance, Types, Functions and Facts


Organization: Definition,  Meaning, Characteristics, Importance, Types,  Functions  and Facts

Definition of Organization

The word ‘organization’ is used to denote the construction of the organization or the result of the administrative structure. Organization should, therefore, mean only ‘designing’ the administrative machine. Urwick (1944) defines organization as “determining what activities are necessary to any purpose and arranging them in groups which may be assigned to individuals.”

Other definitions given by various scholars are as follows:

Organization: Is the form of every human association for the attainment of a common purpose” (Mooney 1947). Organization: Is the arrangement of personnel for facilitating the accomplishment of some agreed purpose through allocation of functions and responsibilities” (White 1948).

Organization structure is a pattern of interrelated posts connected by line of delegated authority.

Organization is the formal structure of authority through which work sub-divisions are arranged, defined and coordinated for the defined objectives” (Gulick, 1937).

Meaning of Organization

However, in common usage the term organization means the act of putting things in working order. In public administration this term is used in three different ways. In the first place, it used as the act of designing the administrative structure in such a way that Mr. “X” is seen as a great organizing leader. In the second sense, it is used as designing and building the structure.

In the third sense, the term refers to administrative structure itself, as when we speak of the organization of the government of Japan, USA and UK. Some thinkers like Urwick confine the use of the term ‘organization’ to the first meaning. But many other thinkers, like Gladden, Pfiffner, Simon, etc. do not approve of this view and are of the opinion that Urwick has missed the human aspect of organization (Ekator, 2003).


Nature of Organization

1. Rules and regulations: Every organization is governed by a set of rules and regulations for the orderly functioning of people.

2. Division of labor: The work needed to accomplish the goals is divided into a number of functions and sub-functions. These, functions are organized in the form of departments. Each department is headed by a specialist. Such a division of function on specialty basis infuses specialization.

3. Communication: There is free flow of communication through various official channels among the people across various departments. Most of the communication is in a written form. However, grapevine communication is also in vogue.

4. Group:  It is people who constitute the dynamic element of an organization. They work in groups in the various departments of an organization.

5. Authority structure: There is an arrangement of positions into graded series. Such an arrangement creates a series of superior and subordinate relationships called chain of command. Authority and responsibility associated with various positions are defined.

6. Coordination: The diverse efforts of various functional departments are integrated towards the common objective through the process of coordination.

7. Environment: No organization is functioning in a vacuum. Social, political, economic and legal factors exert influence on the environment. Beside it is influenced by internal factors like materials, machines, level of technology, economic resources, human resources, etc.

8. Common goal: The main reason for the existence of an organization is to accomplish some common goals. The structure of the organization is bound by a common purpose.


Characteristics of Organizations

Nearly all organizations have certain basic characteristics.

There are five basic characteristics of an organization. They are as follows:

1. Membership: Most organizations comprise of a group of persons. Spiers writes that in the case of organizations, knowledge of belonging is a necessary criterion, and membership is nearly always voluntary, in that people are free to withdraw. He mentioned certain exceptions, e.g. the state, or enforced membership of a military organization.

2. Organizations are consciously purpose: Organizations are there to do something positive for their members, for society, or for both. Political parties contest elections and try to get control of government, business organizations produce goods, religious organizations save souls and minister to people spiritual needs, etc.

3. Formal structure: A very prominent feature of organizational life is the phenomenon of formal structure. Formal structure means the definition of functions in an organization and their arrangement into a total pattern. According to Spiers, the essence of formalism is that functions are defined primarily in relation to one another and persons are considered as fulfilling these functions.

4. Value system or Ideology: Spiers argues that all organizational life implies some reasonably coherent value system. The existence of such ideologies is equally observable in administrative and the political sphere. These ideologies affect the life and structure of organizations.

5. Corporate status: Organizations almost always have some legal status by which they can be treated as social and legal entities, irrespective of the persons who might be said to inhabit them.


Importance objectives of organization

Below are the importance objectives of an organization:

1. To Administer Economy in Production: Any company aims at reducing its cost of production. Similarly any commercial undertaking aims at a reduction of its operating cost. An effective and fruitful organization also aims at a reduction on cost of production, distribution or operation to justify its very existence. 

To affect economy in the whole organizational structure is a main task of an organization economy affected results into cheaper availability of goods to the ultimate consumer.

Even if the price of the commodity is not reduced due to some reason or the other; the quality improves, the workers get more wages and the profitability increases. Society stands benefited. Return on investment goes up ultimately leading to larger savings.

R. Davis opines that, the mission of the business organization is to acquire, produce and distribute certain values. The business objective, therefore, is the starting point for business thinking. The primary objectives of a business organization are always those of economic values with which we serve the customer.

2. To Serve the Society: Any organization aims at:

(a) Service of the society

(b) Service of the enterprise of which it is one of the part.

From service to the society it gains:

(i) Recognition

(ii) Strength

(iii) Stimulus.

Society needs goods at proper time, of standard quality, in adequate quality, at a cheaper rate and regularly. An organization ensures the society that it would not be lacking. Social gain should be the main aim of any organization. If the organization deviates from this goal certainly it is not going to stand benefited for a longer period since it is the society which helps an organization, management and enterprise to grow in structure. Goodwill is a gift given by the society to the enterprise and on its own will the society can withdraw it even without a moment’s notice.

3. To Economies the Use of Available Resources: Though in India men are in abundance and other resources are scarce. But the use, of both should be economized in order to guard against the future non-availability of resources. If this happens because of non-judicious and un-planned use of resources then future generation is not going to forgive us. For this reason also-economic use of available resources is desirable.

4. To Establish Healthy Relations between Labor and Capital: Human relations and behavioral sciences form the basis of any organizational structure today. A capital labor harmonious relation may help in attaining the objectives of the enterprise quickly and honestly. Prosperity to both is ensured by good, relations. Profitability and productivity both increase.

In India the capital and labor a not at their mutual best. Though we talk of ‘workers sector’ but we have made no sincere efforts in this direction. We have not been able to develop even harmonious relations between the two. A developing country like India can ill afford this situation. We have to find out some way out for better relations and effective achievement of the objectives of the company.

Types of Organizations

Maurice Spier (1975) mentions five types of organizations. These are: firms engaged in goods production: In this category are included:

i. Business firm engaged in goods production: In this category are included those forms which may not produce goods but are concerned with the provision of services, e.g. newspaper agencies.

ii. Those organizations that handle the administration of public services under this category are, the government Ministries/departments created to this laws and regulations of a country.

iii. Other types of organizations are the religious organizations: According to Spier, these are among the most influential bodies in terms of numbers.

iv. Private political organizations such as political parties: These include the pressure groups or interest groups. The main activity of these groups is to mobilize and represent the opinions of members. v. Military organization, i.e. armies. These organizations are geared towards welfare activities.


Functions of organization

1. Co-Ordination of Various Activities: The delegated authority and responsibility should be co-ordinate by the Chief Managerial Staff. The reason is that there must be a separate and responsible person to see whether all the activities are going on to accomplish the objectives of the organization or not.

2. Grouping of Activities: The next function of organization is that the identical activities are grouped under one individual or a department. The activities of sales such as canvassing, advertisements and debt collection activities are grouped under one department i.e., sales department.

3. Delegation of Authority: Assignment of duties or allotment of duties to specified persons is followed by delegation of authority. It will be very difficult for a person to perform the duties effectively, if there is no authority to do it. While delegating an authority, responsibilities are also fixed. Thus, the Production Manager may be delegated with the authority to produce the goods and fixed with the responsibility of producing quality goods.

4. Allotment of Duties to Specified Persons: In order to ensure effective performance, the grouped activities are allotted to specified persons. In other words, the purchasing activities are assigned to the Purchase Manager; the production activities are assigned to Production Manager; the sales activities are assigned to Sales Manager and the like. Besides, adequate staff members are appointed under the specified persons. The specified persons are specialized in their respective fields. If there is any need, appropriate training would be provided to such persons.

5. Defining Relationship: When a group of persons is working together for a common goal, it becomes necessary to define the relationship among them in clear terms. If it is done, each person will know who is his boss, from whom he has to receive orders and to whom he is answerable. In another sense, each boss should know what authority he has and over which person.

6. Determination of Activities: It includes the deciding and division of various activities required to achieve the objectives of the organization. The entire work is divided into various parts and again each part is sub-divided into various sub-parts. For example, the purchase work may be divided into requisition of items, placing of an order, storage and so on.


Principle of organization

The work can be completed in time whenever a technique or a principle is adopted. So, the success or failure of an organization depends upon the principles to be followed in the organization. The principles of organization may be termed as an instrument used by the organization. Some experts like Taylor, Fayol and Urwick have given the principles of organization.

1. Principle of Objective: The enterprise should set up certain aims for the achievement of which various departments should work. A common goal so devised for the business as a whole and the organization is set up to achieve that goal. In the absence of a common aim, various departments will set up their own goals and there is a possibility of conflicting objectives for different departments. So there must be an objective for the organization.

2. Principle of Specialization: The organization should be set up in such a way that every individual should be assigned a duty according to his skill and qualification. The person should continue the same work so that he specializes in his work. This helps in increasing production in the concern.

3. Principles of Co-ordination: The co-ordination of different activities is an important principle of the organization. There should be some agency to co-ordinate the activities of various departments. In the absence of co-ordination there is a possibility of setting up different goals by different departments. The ultimate aim of the concern can be achieved only if proper co-ordination is done for different activities.

4. Principle of Authority and Responsibility: The authority flows downward in the line. Every individual is given authority to get the work done. Though authority can be delegated but responsibility lies with the man who has been given the work. If a superior delegates his authority to his subordinate, the superior is not absolved of his responsibility, though the subordinate becomes liable to his superior. The responsibility cannot be delegated under any circumstances.

5. Principle of Definition: The scope of authority and responsibility should be clearly defined. Every person should know his work with definiteness. If the duties are not clearly assigned, then it will not be possible to fix responsibility also. Everybody’s responsibility will become nobody’s responsibility. The relationship between different departments should also be clearly defined to make the work efficient and smooth.

6. Span of Control: Span of control means how many subordinates can be supervised by a supervisor. The number of subordinates should be such that the supervisor should be able to control their work effectively. Moreover, the work to be supervised should be of the same nature. If the span of control is disproportionate, it is bound to affect the efficiency of the workers because of slow communication with the supervisors.

7. Principle of Balance: The principle means that assignment of work should be such that every person should be given only that much work which he can perform well. Some person is over worked and the other is under-worked, then the work will suffer in both the situations. The work should be divided in such a way that everybody should be able to give his maximum.

8. Principle of Continuity: The organization should be amendable according to the changing situations. Everyday there are changes in methods of production and marketing systems. The organization should be dynamic and not static. There should always be a possibility of making necessary adjustments.

9. Principle of Uniformity: The organization should provide for the distribution of work in such a manner that the uniformity is maintained. Each officer should be in-charge of his respective area so as to avoid dual subordination and conflicts.

10. Principle of Unity of Command: There should be a unity of command in the organization. A person should be answerable to one boss only. If a person is under the control of more than one person then there is a like-hood of confusion and conflict. He gets contradictory orders from different superiors. This principle creates a sense of responsibility to one person. The command should be from top to bottom for making the organization sound and clear. It also leads to consistency in directing, coordinating and controlling.

11Scalar Principle: This principle refers to the vertical placement of supervisors starting from top and going to the lower level. The scalar chain is a pre-requisite for effective and efficient organization.

12. Principle of Simplicity: The organizational structure should be simple so that it is easily understood by each and every person. The authority, responsibility and position of every person should be made clear so that there is no confusion about these things. A complex organizational structure will create doubts and conflicts among persons. There may also be over-lapping’s and duplication of efforts which may otherwise be avoided. It helps in smooth running of the organization.

13. Principle of Efficiency:  The organization should be able to achieve enterprise objectives at a minimum cost. The standards of costs and revenue are pre-determined and performance should be according to these goals. The organization should also enable the attainment of job satisfaction to various employees.

14. Principle of Exception: This principle states that top management should interfere only when something goes wrong. If the things are done as per plans then there is no need for the interference of top management. The management should leave routine things to be supervised by lower cadres. It is only the exceptional situations when attention of top management is drawn. This principle relieves top management of many botherations and routine things. Principle of exception allows top management to concentrate on planning and policy formulation. Important time of management is not wasted on avoidable supervision.

Problems of organization

The problems of organization from its start to later stages of growth have been outlined by two authorities as follows:

1. At the start, to create a new organizational system

2. Thereafter to survive

3. Then to stabilize

4. To earn a good reputation

5. To achieve uniqueness;

6. To earn respect and appreciation.

Major problems in administrative of an organization are indicated below:

1. How to integrate personal needs with organizational goals

2. How to distribute power and authority

3. How to develop mechanism capable of reducing intra-organizational conflicts

4. How to ensure effective adaptation to changes in the environment

5. How to assure vitality and growth and prevent delay


Analysis of Organizations

Spiers (1975) describes six such ways of looking at these organizations:

1. Organization as machines: The most basic of all approaches to the study of organizations assumes that organizational behavior can be considered broadly in mechanistic terms. That is to say, the organization is considered to be most usefully described in terms of machines.

According to Spiers, if one supposes that organizations can, in some sense, be perceived as machines, the following consequences ensue. First, the conception of organization as a system of interrelated parts predisposes one to think that coordination is a primary task in the evaluation of organizational behavior. Second, this necessitates the definition of functions in relation to work to be done, both for separate parts of the organization, and for interrelated parts. Third, behavior and activity are viewed primarily in term of their work coordination. Fourth, unsatisfactory circumstances are viewed in the same mechanical sense, i.e. as functional problems rather than any other way.

2. Organizations as needs and responses: There are certain thinkers who give more emphasis to structure and function in the interpretation of organizational behavior. The functionalist approach mainly concentrates on needs and responses to needs.

He defines needs in terms of the "goals" or "purposes" of:

(a) Individuals

(b) Groups within organization

(c) Organization as a whole

(d) A group wider than the organization but less than society

(e) Society itself.

3. Organization as societies: This analysis closely resembles the functionalist approach. It views organization as a miniature society. The functionalists believe that the central problem for society as a whole is the reconciliation of varying needs and interests of its members. The social functionalism, as it may be called, points out the prior necessity of a shared value system in order that such reconciliation may take place. The broad administrative consequence of this kind of approach is that there is a predisposition to see the organization not simply as a system of relatively discrete and interrelated parts but as a community of people. The structure of this community is analogous to the structure of society at large. This conception aids in understanding the internal life of an organization.

4. Organization and individual persons: Instead of seeing organizations as elements in society-wide systems, this approach concentrates on the experience of the individual member. This human relations approach stresses the need for organizations to make provision for the adjustment of individual psychological needs as expressed through small group relationships, to the wider needs of an organization’s behavior.

5. Organization and the technological core: There are some theorists who give importance to the concept of socio-technical system. This means that in any organization, there is always a kind of technological core. In administration, the work processes of routine information systems could be regarded as the technological core. They state that the consideration of internal technology must have certain important consequences for administrative action. First attention is shifted to the physical environment of the work process; secondly, the conception of the person and his physical environment leads to much more flexible possibilities to see that changing technology or even the technical expression of changing economic circumstances may have psychological effects because of its impact on the system.

6. Organization as Culture: This theory states that the activities of persons in organizations cannot be understood apart from meanings given to them by the persons themselves, colleagues, supervisors and official; goals which chiefly condition their actions and relationships.

The main impact of this cultural approach is that individuals and groups are seen as constrained, not by formal structures or even beliefs, but by roles and expectations, personally conceived, which in turn determine norms in an essentially relative fashion.

Secondly, it is assumed that the organizational change and possibilities for change have to take account of these roles and expectations. Next, it diverts attention towards the exploration of internal subcultures and subtle cultural factors which determine norms and attitudes to work, authority, and types of organization.





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