The authorities on management science consider organization as the practical side of business administration. Organization refers to the way in which the component parts of an enterprise are put into working order so as to achieve the definite objectives of the firm. Since management is concerned with the act of getting things done with the help of others, organization is essential to management. Without organizing, the administrators cannot function as administrators. If human and material resources remain unorganized, the broad business objectives cannot be attained. It is no exaggeration to say that without proper organization, other functions of management are of no use.
Meaning and Definition of Organization
The term organization, in the management terminology is used in two different senses. They are:
- Organization as a process, and
- Organization as a structure.
1. Organization as a Process: In a dynamic sense, organization is a process and it refers to the defining and grouping of the activities of the enterprise and establishing authority relationship among them. It is the framework within which people associate for the attainment of the broad objectives of the firm. The framework provides the means for assigning the task to various persons and identifying the relative authorities and responsibilities of these personnel. In other words, it is the process by which the Manager, as a leader, assembles his men, delegates authority, fixes the responsibility and gets the work done.
2. Organization as a Structure: In a static sense, the term organization, refers to the structure manned by a group of individuals who are working together towards a common goal. In other words, it refers to the structure of relationship among positions and jobs which is built up for the attainment of the common objectives. Thus, it is the logical arrangement of internal administration of a business enterprise.
The readers should note that the establishment of a business in one form or another like sole proprietorship, partnership or company is not what we mean by the term organization. In this context, it is used in a different sense. The term organization, here refers to the structure of relationship amongst the various levels of the management.
The organization structure is also viewed by different authors in different ways. Their approaches also differ. Authorities like Taylor, Mooney, Allen, etc., consider it as a formal structure and ignores the human aspects completely. On the other hand, the neo-classical theory introduces human relations approach in the classical theory of organization. The Modern management scholars view the organization as a system and studies in its totality as a complex human inter-relationship.
Owing to the differences of thought, the authors also differ in defining the term. Some of the important definitions are given below:
Definition of Koontz and O’Donnell:
Definition of Spriegal:
Definition of Kimball and Kimball:
Thus, it is clear that the organizational relationship is essential to the practice of management. It is a grand strategy to bring order when groups work together.
Primary Features of an Organization
According to Allen, there are three primary features in all business organizations. They are the following:
1. Division of Labour: This is the basis of an organization. An organization, in fact, comes into existence only when the total work to be performed is divided into activities and functions so that the objectives of the organization can be attained. No single person can individually perform all the functions of an organization. Hence, the division of work is the basis of all purposeful organizations.
2. Source of Authority: It presupposes the existence of some means securing compliance of individual members of the group in contributing their efforts to the common objectives. Directing authority or supervisory agency is required to secure performance of planned work.
In other words, an organization cannot attain its objectives unless some positions are placed above others i.e., some superiors are appointed above the subordinates and gave them power to direct their work.
3. Relationship: Establishing administrative and operating relationship is very important to plan and execute the work smoothly. Relationship within an organization means laying down the rules and regulations for team work and co-operative endeavor.
Principles of Organization
An organization is said to be sound and effective only when it is able to achieve the desired objectives or goals of the firm. If it fails to do so, the organization shall be considered to be a poor one. Hence, the success of any business enterprise depends largely on the soundness of its organizational structure.
Scholars like Taylor, Fayol, Urwick, etc.,suggest that the success of an organization can be ensured better if certain basic principles are observed. These principles are the laws which are capable of universal application. These principles are given below.
1. Objectives: Every organization should have some definite objectives or goals. The entire organization and every part of it should be geared towards the basic objectives of the enterprise.
2. Division of Work: No individual in the organization should be unduly loaded with diverse and unconnected duties. Besides, the work assigned should also be upto his ability, education and skill. Therefore, division of work and specialization should be adopted at all levels so that the aggregate productivity of the firm can be maximized.
3. Span of Control: A superior can effectively supervise and control only when the subordinates are few in number. Most of the authorities prescribe a maximum of six subordinates. If the number of subordinates working under one superior is less in number, direct communication is possible and the result can be evaluated more precisely.
4. Scalar Chain of Authority: The scalar chain or the chain of command or the line of authority must be clearly defined for building a sound organization. Every subordinate should know who his superior is and to whom policy matters beyond his own authority should be referred to a final decision.
5. Unity of Command: No individual can serve better under two masters, i.e., one can serve only under one master. While assigning the work to the subordinate, it should be seen that each subordinate always receive orders from one superior only. This will avoid conflict of commands and so the organization will become sound.
6. Balance: Various units of an organization should be kept in balance. A proper balance ensures smooth functioning of the enterprise.
It can be achieved by the following ways:
7. Parity of Authority and Responsibility: The principle of parity of authority and responsibility implies that equality should exist between authority and responsibility. While delegating the authority, the superior should see that powers and obligations of the subordinates are correlated. If not so, the subordinate cannot discharge his duties for want of necessary power to pursue the task assigned to him.
8. Authority Level for Decision-making: Functional Authority should exist at different levels for decision-making. The subordinate at the lower level should also have the authority to deal with certain matters. Only those decisions which cannot be taken at the lower level should be pushed upward.
9. Leadership Facilities: Every managerial position should be arranged in such a way as to facilitate the growth of leadership capacity.
10. Continuity: The organization should be so arranged as to provide for the continuity of the enterprise. The organizational structure should be flexible so that re-organization measures can be adopted in the context of the ever changing environment. If the structure is tight, it is not possible to keep the enterprise as a continuous and a dynamic unit.