Major Paper II: Organizational Theory

Unit I

Lesson 1: Organisation: Meaning, Nature and Importance

Learning Objectives of the organization is to:

1. Understand the meaning of organization

2. Know the various definition of organization
3. Know the characteristics of organization
4. Know the elements of organization
5. Understand the bases of organization
6. Understand the nature of organization
7. Importance of organization.
8. Know the distinction between administration, organization and management.
1.1.Meaning of Organisation

The term Organization is derived from the word “Organicism” which means an
organized body of independent parts sharing common activity.

An organisation is a unit or a collection of people that are structured and managed

to meet a need or pursue collective goals. It is a unit of people working together under a
division of labour as well as a hierarchy of authority so as to achieve a common goal. An
organization is a social arrangement intended for the achievement of controlled
performance in pursuit of collective goals.

Organisation is not a new and modern invention or phenomenon. Ever since the
dawn of civilization, people have always formed organisations to combine their efforts
for the accomplishments of their common goals. Modern society however has more
organisation than ever before.

It consists of large and complex organisations dominating every sphere of human

activity in almost all countries of the world, irrespective of cultural, racial, ideological
and other differences. Organisations affect the quality of human life in the modern
society. The study of organisations is, thus, very essential for understanding the
behaviour of human beings.
1.2.Micro and Macro perspectives

Organisations may be studied from two perspectives viz. micro and macro. In
micro perspective, the focus of study is on the individual human being. It concerns itself
with each individual’s psychological makeup, his interaction with other individuals and
groups, variables that determine how a person is likely to react in a given situation etc.
The micro view also concerns itself with how an individual learns, what motivates him,
and what kind of leadership strategies might produce the behaviour the leader wants. This
micro view of individuals in organisations is recognized as a discipline called
Organisational Behaviour.

The macro view considers organisation as the unit of analysis in place of an

individual. It is concerned with organisational goals, organisational structure,
technologies used in organisation and how organisation interacts with the environment.
The macro perspective is recognized as a discipline called Organisational Theory. Both
these aspects taken together present a complete picture of organisational study.
Organisation theorist studies collection of people called organisation whereas
organisation behaviorist studies people as members of an organisation.

1.3.Difference between Administration, organization and management:

Administration consists of all those operations having for their purpose the fulfillment
or enforcement of public policy.

Organisation is a combination of the necessary human beings, materials, tools

equipmemnt and working space, appurtenances brought together in systematic and
effective co-relation to accomplish some desired object.

Management is that which leads guides and directs an organization for the
accomplishment of predetermined object.

To put the above in simple terms, administration sets the goal, management strives to
attain it and organization is the machine of the management for the attainment of the ends
determined by the administration.
According to Peter Drucker Management is associated with the business activity which
has to show economic performance, whereas administration is associated with the non-
business activities like activities of the government.

According to William Schulze, Administration is the force which lays down the object
for which an organization and its management are to strive and the broad policies under
which they are to operate.

Administration is a determinative function. Management is an executive function

carrying out the broad policies laid down by the administration.

1.4.Definition of Organization

The word orgnanisation is very difficult to define. It is precisely because the use of the
term organisation is not standardized. It is not static. It is dynamic and ever changing as
per the needs of society, its members, business objectives and environmental changes.
Organisation has been defined in different ways by different theorists, because different
theorists have emphasized different characteristics of organisation.

According to Mooney and Reiley:

“Organisation is defined as the form of human association for attaining common
objectives.”

According to Talcott Parsons:

“Organisation is defined as a social unit which is deliberately constructed and
reconstructed to seek specific goals.”

According to W.R. Scott:

“Organisations are defined as collectivities that have been established for the pursuit of
relatively specific objectives on a more or less continuous basis. Organisations have more
or less fixed boundaries, a normative order, authority rank, a communication system and
an incentive system which enables various types of participants to work together in the
pursuit of common goals.”
According to Chaster I. Barnard:
“Organisation is a system of consciously coordinated activities of two or more persons.

According to him there are four characteristics of organisation:

(i) Communication,

(ii) Cooperative efforts,

(iii) Common objectives, and

(iv) Rules and regulations.”

According to Max Weber:

“Organisation is defined as a corporate group. A corporate group is a social relation
which is either closed or limits the admission of outsiders by rules… its order is enforced
by the actions of specific individuals whose regular function this is.”

According to Louis A. Allen:

“Organisation can be defined as the process of identifying and grouping the work to be
performed, defining and delegating responsibility and authority and establishing
relationships for the purpose of enabling people to work most effectively together in
accomplishing objectives.”

According to Koontz and O’ Donnel:

“The establishment of authority relationships with provision for coordination between

them, both vertically and horizontally in the enterprise structure, is the essence of
organisation.

According to Luther Gullick

“Organization is the formal structure of authority through which work subdivisions are
arranged, defined and coordinated for the defined objective.”

According to Mooney

“Organization is the form of every human association for the attainment of common
purpose.”
According to Gladden

“Organization is concerned with the pattern of relationships between persons in an

enterprise, so constructed as to fulfill the enterpriser’s function.”

According to Simon

“By Organization we mean a planned system of cooperative effort in which each

participant has a recognized role to play and duties and task to perform.”

According to Pfiffner

“Organization consists of the relationship of individual to individuals and of group to

groups which are so related to bring about an orderly division of labour.”

According to L.D. White

“Organization is arrangement of personnel for facilitating the accomplishment of some

agreed purpose through allocation of functions and responsibilities.”

According to J.M.Gaus

“Organization is the relating efforts and capacities of the individuals and group engaged
upon a common task in such as a way as to secure the desired objectives with the list
friction and the most satisfaction for whom the task is done and those engaged in the
enterprise. ”

According to Urwick

“Organization is determining what activities are necessary to any porpuse and arranging
them in groups which may be assigned to individuals.”

According to Morstein Marx

“Organization is structure developed for carrying out the tasks entrusted to the chief
executive and his administrative subordinates in the government.”
Thus, from the above it is clear that Organization is the comprehensible harmonization of
the accomplishments of a number of people for the attainment of common goal by
authority, accountability, responsibility and division of labour.

1.5. Characteristics of Organization

According to Nicholas Henry there are different characteristics of organization. Such as

a. Organizations are purposeful, complex human collectivities.

b. Organizations are characterized by secondary or personal relationship.

c. Organizations are having limited goals.

d. Organizations are characterized by sustained cooperative activity.

e. Organizations are integrated with larger social system.

f. Organizations provide services and products to their environment.

g. Organizations are dependent upon exchanges with their environment.

1.6. Elements of Organization

According to L.D. White “There are three primary elements of the Organizations such as
persons, combined efforts, and a common efforts.”

According to C.I. Bernard “The elements of the Organizations are Common purpose,
communication, willing to serve.”

According to H. A. Simon “the functions of an organization includes dividing the work

among members, formulating standard practices , providing a communication system ,
transmitting decisions and training the members.”

However, there are five common elements of the Organizations. They are

a. Accomplishment of defined objectives

b. Subjective specialization and distribution of work
c. Effective interrelation and coordination.
d. Principle of Hierarchy and channels of command.
e. Fixed Authority to provide directions.