Definition, Meaning & Characteristic of Organisation

Definition, Meaning & Characteristic of Organisation

Meaning of Organisation:

Organisation is the foundation upon which the whole structure of management is built. Organisation is related with developing a frame work where the total work is divided into manageable components in order to facilitate the achievement of objectives or goals. Thus, organisation is the structure or mechanism (machinery) that enables living things to work together. In a static sense, an organisation is a structure or machinery manned by group of individuals who are working together towards a common goal.

Organisation | Mind Map Art

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Alike ‘management’, the term ‘organisation’ has also been used in a number of ways. broadly speaking, the term ‘organisation’ is used in four different senses: as a process, as a structure of relationship, as a group of persons and as a system, as given below:

Organisation as a Process: In this first sense, organisation is treated as a dynamic process and a managerial activity which is essential for planning the utilization of company’s resources, plant an equipment materials, money and people to accomplish the various objectives.

Organisation as a Framework of Relationship: In the second sense organisation refers to the structure of relationships and among position jobs which is created to release certain objectives. The definitions of Henry, Urwick, Farland, Northcourt, Lansburgh and Spriegel Breach, Davis, Mooney and Reily etc., come under this group. For example: According to Mooney and Reily, “Organisation is the form of every human association for the attainment of a common purpose.”

Organisation as a Group of persons: In the third sense, organisation is very often viewed as a group of persons contributing their efforts towards certain goals. Organisation begins when people combine their efforts for some common purpose. It is a universal truth that an individual is unable ability and resources. Barnard has defined ‘Organisation’ as an identifiable group of people contributing their efforts towards the attainment of goals.


Organisation as a System: In the fourth sense, the organisation is viewed as system. System concepts recognize that organizations are made up of components each of which has unique properties, capabilities and mutual relationship. The constituent element of a system are linked together in such complex ways that actions taken by one producer have far reaching effect on others.

In short, organizing is the determining, grouping and arranging of the various activities deemed necessary for the attainment of the objectives, the assigning of people to those activities, the providing of suitable physical factors of environment and the indicating of the relative authority delegated to each individual charged with the execution of each respective activity.

Definitions of Organisation

Different authors have defined organisation in different ways. The main definitions of organisation are as follows:

  • According to keith Davis, “Organisation may be defined as a group of individuals, large of small, that is cooperating under the direction of executive leadership in accomplishment of certain common object.”
  • According to Chester I. Barnard, “Organisation is a system of co-operative activities of two or more persons.”
  • According to Louis A. Allen, “Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives.”
  • According to Mooney and Railey, “Organisation is the form of every human association for the attainment of a common purpose.”


Characteristics / Features of Organisation

The main characteristics or Features of organisation are as follows:

Outlining the Objectives: Born with the enterprise are its long-life objectives of profitable manufacturing and selling its products. Other objectives must be established by the administration from time to time to aid and support this main objective.

Identifying and Enumerating the Activities: After the objective is selected, the management has to identify total task involved and its break-up closely related component activities that are to be performed by and individual or division or a department.

Assigning the Duties: When activities have been grouped according to similarities and common purposes, they should be organized by a particular department. Within the department, the functional duties should be allotted to particular individuals.

Defining and Granting the Authority: The authority and responsibility should be well defined and should correspond to each other. A close relationship between authority and responsibility should be established.

Creating Authority Relationship: After assigning the duties and delegations of authority, the establishment of relationship is done. It involves deciding who will act under whom, who will be his subordinates, what will be his span of control and what will be his status in the organisation. Besides these formal relationships, some informal organizations should also be developed.

Importance / Need / Advantages / Significance of Organisation

The well-known industrialist of U.S.A. late Andrew Canrnegi, when sold his famous ‘United State Steel Corporation’, showed his confidence in organisation by uttering the following words, “Take away our factories, take away our trade, our avenues of transportation, our money, leave nothing but our organisation, and in four years, we shall re-established ourselves.” Since ages and in every walk of life, organisation has been playing a vital role. The significance or main advantages of organisation are as follows:

It Facilitated Administration and management: Organisation is an important and the only tool to achieve enterprise goals set b administration and explained by management. A sound organisation increases efficiency, avoids delay and duplication of work, increases managerial efficiency, increases promptness, motivates employees to perform their responsibility.

It Help in the Growth of Enterprise: Good organisation is helpful to the growth, expansion and diversifications of the enterprise.

It Ensures Optimum Use of Human Resources: Good organisation establishes persons with different interests, skills, knowledge and viewpoints.

It Stimulates Creativity: A sound and well-conceived organisation structure is the source of creative thinking and initiation of new ideas.

A Tool of Achieving Objectives: Organisation is a vital tool in the hands of the management for achieving set objectives of the business enterprise.

Prevents Corruption: Usually corruption exists in those enterprises which lack sound organisation. Sound organization prevents corruption by raising the morale of employees. They are motivated to work with greater efficiency, honesty and devotion.

Co-ordination in the Enterprises: Different jobs and positions are welded together by structural relationship of the organisation. The organizational process exerts its due and balanced emphasis on the co-ordination of various activities.

Eliminates Overlapping and Duplication or work: Over lapping and duplication of work exists when the work distribution is not clearly identified and the work is performed in a haphazard and disorganized way. Since a good organisation demands that the duties be clearly assigned amongst workers, such overlapping and duplication is totally eliminated.

Sound or Good Organisation

Organisation is not an end it itself but a means to achieve an end. Whether an organisation is good or bad depends on the fact as to how much efficiently and promptly it is in a position to achieve the objectives. An ideal organisation is one which is expected by all. Some people think that an ideal organisation stands in a dream only and actually it does not exist. However, it is a wrong concept. An ideal organisation is a reality which can be achieved through the active cooperation  of all the members of an organisation and also by following the principles of organisation is not an exact science as physics and chemistry. though a sound organisation is mainly based on the active cooperation of all the members of the organisation and on certain principles but also it is based on the capabilities of the individuals available to work along with its simplicity and flexibility. An organisation conceived and developed on the above lines will reward its leaders and well as its members (Personnel). Not only will the objectives be achieved more easily, and conveniently, but the physical operation of the organisation will also be greatly enhanced. Thus, a sound or good or ideal and result-oriented organisation must posses the following characteristics.

Realization of Objectives: Organisation is tool of achieving objectives of an enterprise. For this purpose, the organisation should be divided in several department, sub-departments, branches and units etc.

Harmonious Grouping of Functions etc: For achieving the organisation objectives there must be harmonious grouping of functions, jobs and sub-jobs in such a way so that there is action, consultation and co-ordination without any delay and difficulty.

Reasonable Span of Control: Another characteristic of organisation is that it should have reasonable span of control. Ordinarily, a person (personnel) cannot control more than five or six subordinates.

Clear-cut allocation of Duties and Responsibilities: There must be clear-cut allocation of duties and responsibilities in any scheme of sound organisation. Every executive must know his scope of activities, the ideal number is three.

Promotion of Satisfaction: The most important element of any human organisation is the promotion of satisfaction of workers. Man works in a group or in an organisation and hence the success or failure of any organisation depends on as to how much the organisation is in a position to provide satisfaction to individuals or group working under him.

Fullest Utilization of Manpower: Another important characteristic of an ideal organisation is as to how far it is successful in making fullest and economical utilization of the available manpower.

provision and Development and Expansion: Another important of an ideal organisation is that there exists the necessary provision for development and expansion so that it is possible to expand and develop any organisation according to needs and requirements and necessary changes an alternatives may be made.

Coordination and cooperation: In order to achieve the objectives of the enterprise, there must be close coordination and cooperation in the activities of everybody working in the organisation. Further, there should also be active coordination and cooperation amongst the various departments an sub-departments. It will also assist in elimination the evil of red tapism.

Unity of Command: There must be unity of command. No one in any organisation should report to more than one line supervisor, and everybody must know to whom he reports and who reports to him. No subordinate should get orders from more than one supervisor, otherwise it will lead to confusion, chaos and conflict.

Effective System of Communication: An ideal organisation must possess effective system of communication. The inter-communication system should be clear and easier and there should be no ambiguity at and level.

High Morale: An ideal organisation is that in which the workers possess high morale. They work with full capacity, energy, enthusiasm, devotion and sincerity.

Flexibility: The last but not the least important characteristic of an ideal organisation is that it should be flexible so that necessary changes an modifications in the the size of the organisation as well as technology could be easily and conveniently effected.

Principles of Organisation

There is no unanimity as to number of principles of organisation amongst the leading authors on the subject. L.K. Urwick, in his paper ‘Scientific Principles of Organisation’ (1938) and ‘Notes on the Theory of Organisation’ (1952) prescribed ten principles of organisation. Thereafter, many other writers on the subject have added a few more principles of organisation. The main principles of organisation are as follows:

The Principle of Objective

Every enterprise, big or small, prescribes certain basic objectives. Organisation serves as a tool in attaining these prescribed objectives. Every part of the organisation and the organisation as a whole should be geared to the basic objective determined by the enterprise.

Principle of Specialization

Precise division of work facilitates specialization. According to this principles division of work between the employees must be based on their ability, capability, tasks, knowledge and interest. This will ensure specialization and specialization will lead to efficiency, quality and elimination of wastage etc.

The Scalar Principle

The principle is sometimes known as the ‘chain command’. There must be clear lines of authority running from the top to the bottom of the organisation.

The Principle of Authority

Authority is the element of organisation structure. It is the tool by which a manager is able to create an environment for individual performance.

The Principle of Unity of Command

One subordinate should be kept in the supervision of one boss only. This principle avoids the possibility of conflicts in instructions and develops the feeling of personnel responsibility for the work.

The Principal Span of Control

It is also known as ‘span of management’, ‘span of supervision’ or ‘levels of organisation’, etc.

The Principle of Definition

The contents of every position should be clearly defined. The duties, responsibilities, authorities and organizational relationship of an individual working on a particular position should be well defined.

The Principle of the Unity of Direction

The basic rationale for the very existence of organisation is the attainment of certain objectives. Major objective should be split into functional activities and there should be one objective and one plan for each group of people.

The Principle of Supremacy of Organisation Objectives

The organisation goals and objectives should be given wide publicity within the organisation. The people contributing to it, should be made to understand that enterprise objectives are more valuable and significant and one should place one’s personal motives under it.

The Principle of Balance

In every organisation structure there is need for balance. For effective grouping and assigning activities, this principle calls for putting balance on all types of factors human, technical as well as financial.

The Principle of Human Element

This principle indicates that the success or failure of an enterprise largely depends on the handling of human element. If the organisation has sound labor policies along with a number of welfare activities it is bound to succeed.

The Principle of Discipline

According to his principle, it is the responsibility of the management to maintain proper discipline in the enterprise. Fayol considered discipline as ‘respect for agreements which are directed at achieving obedience, application, energy and outward mark of respect.”

Steps in the Process of Organisation

Organisation means identifying, arranging and integrating different elements of organisation into efficient working order. It requires the management to follow the following process of organisation.

Division of work

The main function is divided into sub-functions and entrusted to the different departmental heads. The result is the establishment of departments like Purchase, Sales, Production, Accounts, Publicity and Public relations. The departments can be further classified just as production department into (1) Planning (2) Designing, (3) Operations, (4) Production Control and (5) Repairs and Maintenance. The division of the work is based upon the fact that specialization is keynote of efficient organisation.

Grouping of Job and Departmentation

The second step is to group similar or related jobs into larger units, called departments, divisions or sections. Grouping process is called departmentation.

The department may be based upon functions such as manufacturing, marketing and financing etc. Department may also be based on products, such as textiles, cosmetic, stationery etc. These departments may have different sections as per requirement.

Grouping jobs or Departmentation aims at achieving coordination and facilitates unity of efforts. The departments are linked together on the basis of interdependence. The divided task is assigned to specific individual or group of individuals who are supposed to be the most qualified and specialized persons for the task.

Assigning duties

The work to be performed by every individual is clearly defined and made known to him. Every one must know, what he is required to do in order to avoid any misunderstanding, duplication or overlapping in the work.

Granting authorities and fixing responsibilities

Assigning of duties to individuals must coincide with the appropriate and relevant authorities. Every employee must know, what the authorities granted to him and for what and to whom he will be responsible, liable and accountable.

Delegation of authority

Those who are made responsible for specific tasks are given due authority. Both responsibility and authority go hand in hand together. Reasonable powers are delegated to heads and supervisory staff to enable them to do their work with ease and efficiency.

Effective communication

Effective communication is the keynote of efficient organisation. There should be proper arrangement of communication messages from executives to subordinates and vice-versa. Proper communication system establishes harmonious relationship between employees and enables execution of work in the right manner at the appropriate time and in an atmosphere of perfect mutual adjustment.

Co-ordination of activities for common objectives

Business activity is a team work or the group activity, so the efforts of every employee must be co-ordinate effectively to achieve the common objectives of the enterprise.

Structure of Organisation

In order to achieve the desired goals, sound and effective organizational structure is necessary. Organizational structure, as we know is the system of job positions, roles assigned to these positions and specifying authority, responsibility and task of every positions. The structure undoubtedly provides basic framework for executive and employees to perform their task smoothly. The following points must be taken into consideration while building organizational structure.

Considerations for Building Organizational Structure

Job design

Jobs should be designed in such a way, that job should have specified and defined task to be performed. Jobs should be designed in such fashion that every individual could contribute his maximum worth to the enterprise. The major and related activities of the jobs should also be specified.

Departmentation or Grouping of Identical Jobs

Identical and similar jobs should be grouped together in a department and placed under a departmental head. Such departmentation will help in building coordination between different jobs and managers. Departments can be established on different basis. It may have production, marketing and finance departments, if it is based upon functions.

Span of Control

Under span of control, the number of employees and jobs managed by each manager is specified. The chain of command is also clearly stated. It is specified that who will report whom is the smooth performance of his duties. Effective span of control avoids overlapping, duplication and confusion in the work.

Delegation of Authority

In order to get the job done properly and smoothly, requisite authorities are granted to the managers. Authority is the power to command employees and instruct them to do a piece of work. The authority empowers to know certain facts, to enjoy privileged position and command respect and obedience from employees. Delegation is no doubt, sharing task with requisite authority with subordinates. As such the manger multiplies himself through delegation.

(A) Functional Structure of Organisation

Grouping together the entire work into major functional departments and entrusting these departments to functional specialists is known as functional structure of organisation. Each major function of the enterprise is organized as a separate department. These departments may be engineering, production, personnel, finance and marketing in a manufacturing company. If it is retail stores, these departments may be purchase, sales and stores etc as per requirement. The names of the departments can change as per the requirements, nature and size of the enterprise.

Major functions of the enterprise differ from each other on account of technicalities involved, specialized education and training needed. However, these functions have common goal of achieving maximum efficiency to maximize overall returns of the enterprise. The functional heads are provided functional authority over the subordinates under their command.

Functional organisation is the developed form of Taylor’s functional foremanship. In practice, modern functional organisation is restricted to top level of the organizational structure and not carried down to the lowest level as recommended by Taylor.

Functional structure of organisation is extensively used these days by almost every enterprise at different levels. The sales, production, finance and marketing functions are so widely recognized that almost every enterprise uses it as the basis of Departmentation.

Functional Organisation Structure diagram.

(B) Divisional Structure of Organizations

Grouping of activities or Departmentation on the basis of product lines and areas is known as divisional structure of organisation. Divisional structure has been finding favor with the multiple large scale enterprise. Under this structure the top level delegates extensive authorities to the divisional heads. The divisional head is the in charge of the manufacturing, purchase, sales, engineering and other departments of the division under his command. He is also made responsible for the profit or loss of his division.

Product and product line is an important basis for Departmentation. It facilitates the use of specialized and specialist services of the divisional managers in their product line. He can use his personal skill and his specialized knowledge for the development of his department.

Organizations having their business all over the country may adopt divisional structure on the basis of area, such as north division, south division, east, west and central division. The organisation structure of LIC and Railways is also upon divisional structure.

The manufacturing enterprise producing variety of goods may have different division for different products such as textile division, plastic division, stationary division etc.

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