Organization: Meaning, Definition,

Meaning:
An entrepreneur organizes various factors of production like land, labour, capital, machinery, etc. for

channelizing them into productive activities. The product finally reaches consumers through various

agencies. Business activities are divided into various functions, these functions are assigned to

different individuals.

Various individual efforts must lead to the achievement of common business goals. Organization is

the structural framework of duties and responsibilities required of personnel in performing various

functions with a view to achieve business goals through organization. Management tries to combine

various business activities to accomplish predetermined goals.

Present business system is very complex. The unit must be run efficiently to stay in the competitive

world of business. Various jobs are to be performed by persons most suitable for them. First of all

various activities should be grouped into different functions. The authority and responsibility is fixed

at various levels. All efforts should be made to co-ordinate different activities for running the units

efficiently so that cost of production may be reduced and profitability of the unit may be increased.

Definitions:
Louis Allen, “Organization is the process of identifying and grouping 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.” In the words of Allen,

organization is an instrument for achieving organizational goals. The work of each and every person is

defined and authority and responsibility is fixed for accomplishing the same.

Wheeler, “Internal organization is the structural framework of duties and responsibilities required of

personnel in performing various functions within the company………… It is essentially a blue print for

action resulting in a mechanism for carrying out function to achieve the goals set up by company

management”. In Wheeler’s view, organization is a process of fixing duties and responsibilities of

persons in an enterprise so that business goals are achieved.

Koontz and O’Donnell, ‘The establishment of authority relationships with provision for co-ordination

between them, both vertically and horizontally in the enterprise structure.” These authors view

organization as a coordinating point among various persons in the business.

Oliver Sheldon, “Organization is the process so combining the work which individuals or groups have

to perform with the facilities necessary for its execution, that the duties so performed provide the best

channels for the efficient, systematic, positive and coordinated application of the available effort”.

Organization helps in efficient utilization of resources by dividing the duties of various persons.

Spriegel, “In its broadest sense organisation refers to the relationship between the various factors

present in a given endeavor. Factory organisation concerns itself primarily with the internal

relationships within the factory such as responsibilities of personnel, arrangement and grouping of

machines and material control. From the standpoint of the enterprise as a whole, organisation is the

structural relationship between the various factors in the enterprise”.

Spriegel has given a wide definition of the organization. He has described it as the relationship among

persons, factors in the enterprise. All factors of production are coordinated in order to achieve

organisational objectives.

George Terry, “Organising is the establishing of effective authority relationships among selected work,

persons, and work places in order for the group to work together efficiently”. According to Terry

organisation is the creation of relationship among persons and work so that it may be carried on in a

better and efficient way.

C.H. Northcott, ‘The arrangement by which tasks are assigned to men and women so that their

individual efforts contribute effectively to some more or less clearly defined purpose for which they

have been brought together”. According to Northcott the purpose of organisation is to co-ordinate the

activities of various individuals working in the organisation for the attainment of enterprise goals.

L.H. Haney, “Organisation is a harmonious adjustment of specialised parts for accomplishment of

some common purpose or purposes”. Organisation is the adjustment of various activities for the

attainment of common goals.

Principles of Organization
For timely and systematic completion of work it is must for every organization to adopt some techniques or
principles. Thus these principles would be the deciding factor for the success or failure of an organization.

1. Principle of Objective:All the enterprises whether large or small, set certain central objectives. Every
element of the organization and organization as whole should be geared to the central objectives
identified by the enterprise.
2. Principle of Specialization: Precise division of work facilitates specialization. According to this principle,
division of work among the employees should be based on their knowledge, skills, abilities, capabilities
and interests. This would lead to specialization which would in turn lead to efficiency, quality and
elimination of wastage of resources.
3. The Scalar Principle: This principle is sometimes referred to as the chain command. There must be clear
lines of authority running from the top to bottom of the organization and linking all the individuals in the
organization.
4. The Principle of Authority: Authority is an important ingredient of the organization structure. It is the
tool by which the manager can create an environment where an individual can perform with greater
efficiency.
5. The Principle of Span of Control: This principle states that there is a limit to the number of subordinates
that report to one superior. Supervision of too many people can lead to trouble and confusion. Also the
superior will not be able to spare time to supervise each of his subordinate. It will also lead to increased
complexity of the organization structure. The span of control depends upon a number of considerations.
It is easy to supervise a large number of subordinates involved in routine jobs and working in the same
room, whereas it is difficult to supervise highly diverse and specialized personnel scattered widely. The
ability of the employee, their willingness to assume responsibility and the attitude of management
towards delegating and decentralization should also be analyzed in detail while making a decision on
span of control.
6. The Principle of Unity of Command: This principle is basically about avoiding dual reporting. It states
that every individual employee working in the organization should be kept in the supervision of one boss
only. This principle eliminates the possibility of conflicts in instructions and fosters a feeling of personal
responsibility for work.
7. The Principle of Definition: Each individual in the organization should be made aware about his / her
responsibilities, duties, authorities and relations with the other job positions in the organization structure.
8. Principle of Unity of Direction: The basic motive for the existence of organization is the attainment of
certain objectives. Major objectives should be split into functional activities and there should be one
objective and one plan for each group of people.
9. The Principle of parity of Authority and Responsibility: The responsibility for execution of work must
be accompanied by the authority to control and direct the means of doing the work.
10. The Principle of Supremacy of Organizational Objectives: The organizational goals and objectives
should be given wide publicity within the organization. The people contributing to it should be made to
understand that enterprise objectives are more valuable and significant and one should give higher
priority to organization’s objectives in comparison to personal motives.
Nature of Organization
The following points explain the nature of organization:

1. Structure of relationships :

Organization is a system of well-defined tasks and duties assigned to people along with delegation of authority, responsibility and accountability.
Delegation provides formal structure to the organization. Constant interaction amongst individuals creates social relations helps and a structure
of informal organization.

2. Managerial function :

It is a function of management which integrates human and non-human (physical) resources for achieving organizational goals. It is a function in
itself and also helps in performing other managerial functions. For planning, directing and staffing functions to be effectively performed, it is
necessary that they are effectively organized.

3. Ongoing process:

Organizing is a process which involves a series of steps, from determination of objectives to accomplishment of objectives. It is a continuous
process which requires management to introduce changes (re-organization) in the way and organization works. Many organizations re-structure
their set-up every five to seven years.

4. Encourages teamwork :

Since the early times, people always lived in groups. With increase in size of these groups, it was not possible for one person to accomplish the
organizational task alone. The work, therefore, got divided amongst people and each person co-ordinate his work with other. This required
organizations the group activities towards common goal. According to Louis A. Allen: “Organization has enabled men to increase their teaches far
beyond the dreams of the wealthiest potentates of old by making effective use of a potent multiplier-meshing, power and mechanized tools”
Organization comes into existence when there are a number of persons in communication and relationship to each other who are willing to
contribute towards a common Endeavour.

5. Foundation of management :

Success of an institution depends upon its sound organization. Clear definition of jobs and their division amongst members with clear
identification of authority and res possibility is the foundation of successful management. Unless there is clarity of who is responsible to whom,
no management can function effectively.

6. Goal-oriented:
Every organization is formed for some objective; profit or service. All organizational activities are divided amongst members, departments are
created. Work is co-ordinate and continuous monition of activities is done to achieve the objective. The process of organization is, thus, a goal-
oriented process.

7. Adaptive to change:

Though organization structure provides stability to activities of members, it sis open to change. Changes in the environment, internal or external,
are incorporated into the organization structure. This makes organization and ongoing process.

8. Situational:

No structure can be described as best. Depending upon the nature of activates size of the organization and nature of relationship amongst
people, the organizing structure also varies.
Nature of Organisation:

There are some common features of organisation through which a clear idea about its nature

can be obtained. These are indicated below:

1. Process:

Organisation is a process of defining, arranging and grouping the activities of an enterprise and establishing

the authority relationships among the persons performing these activities. It is the framework within which

people associate for the attainment of an objective.

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The framework provides the means for assigning activities to various parts and identifying the relative

authorities and responsibilities of those parts. In simple term, organisation is the process by which the chief

executive, as a leader, groups his men in order to get the work done.

2. Structure:

The function of organising is the creation of a structural framework of duties and responsibilities to be

performed by a group of people for the attainment of the objectives of the concern. The organisation structure

consists of a series of relationships at all levels of authority.

An organisation as a structure contains an “identifiable group of people contributing their efforts

towards the attainment of goals.” It is an important function of management to organise the enterprise by

grouping the activities necessary to carry out the plans into administrative units, and defining the relationships

among the executives and workers in such units.

3. Dividing and Grouping the Activities:

Organising means the way in which the parts of an enterprise are put into working order. In doing such, it calls

for the determination of parts and integration of one complete whole on the other. In fact, organisation is a

process of dividing and combining the activities of an enterprise.

Activities of an enterprise are required to be distributed between the departments, units or sections as well as

between the persons for securing the benefits of division of labour and specialisation, and are to be integrated

or combined for giving them a commonness of purpose.

L. Urwick defines organisation as: ‘determining what activities are necessary to any purpose and arranging

them as groups which may be assigned to individual.

4. Accomplishment of Goals or Objectives:

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An organisation structure has no meaning or purpose unless it is built around certain clear-cut goals or

objectives. In fact, an organisation structure is built-up precisely because it is the ideal way of making a rational

pursuit of objectives. Haney defines organisation as: “a harmonious adjustment of specialised parts for

the accomplishment of some common purpose or purposes”.

5. Authority-Responsibility Relationship:

An organisation structure consists of various positions arranged in a hierarchy with a clear definition of the

authority and responsibility associated with each of these. An enterprise cannot serve the specific purposes or

goals unless some positions are placed above others and given authority to bind them by their decisions.

In fact, organisation is quite often defined as a structure of authority-responsibility relationships.

6. Human and Material Aspects:

Organisation deals with the human and material factors in business. Human element is the most important

element in an organisation. To accomplish the task of building up a sound organisation, it is essential to

prepare an outline of the organisation which is logical and simple. The manager should then try to fit in

suitable men. Henry Fayol says in this connection: “see that human and material organisations are

suitable” and “ensure material and human order”.