Organisation

ORGANIZATION

• An organization is a collection of people working together in a coordinated and structured manner to achieve one or more goals.

• Chester I. Barnard describes organization as a system of consciously coordinated activities or forces of two or more persons.

Importance/Significance of Organizing an Organisation

• Benefits in Specialisation: Enhances productivity by allowing individuals to focus on specific tasks.

• Role Clarity: Clearly defined roles facilitate accountability and performance.

• Optimum Utilization of Resources: Effective organization ensures that resources are used efficiently.

• Coordination and Effective Administration: Streamlines processes and improves overall management efficiency.

• Adaptation to Change: Organizations can respond promptly to environmental changes.

• Expansion and Growth: A well-organized structure allows for scalable growth.

PRINCIPLES OF ORGANIZATION

1. Principle of Unity of Objectives:

   • Effective goal achievement is compromised when goals at different levels contradict each other.

2. Principle of Specialization:

   • Specialization occurs when employees develop unique knowledge and skills in specific areas.

3. Principle of Coordination:

   • Achieved through collective effort that emphasizes unity in action.

4. Principle of Authority:

   • Authority enables the guidance and direction of actions to meet organizational goals.

5. Principle of Responsibility:

   • Responsibility accompanies authority, requiring individuals to fulfill their obligations to perform tasks.

6. Principle of Delegation:

   • Transferring authority and creating responsibility between superiors and subordinates to accomplish specific tasks.

7. Principle of Efficiency:

   • Effectiveness is demonstrated when organizational objectives are met at minimal cost.

8. Principle of Unity of Command:

   • Subordinates should report to only one superior at a time to ensure accountability.

9. Principle of Span of Control:

   • Helps determine the ideal number of subordinates a manager can effectively supervise.

10. Principle of Balance:

• Functional activities and performances should be properly balanced.

11. Principle of Communication:

• Communication involves the transfer of information across different organizational levels.

12. Principle of Personal Ability:

• Human resources are crucial; training and development are essential for skill enhancement.

13. Principle of Flexibility:

• Organizational structures should adjust to environmental dynamism and potential changes.

14. Principle of Simplicity:

• Organizations should maintain a simple structure with minimal levels for clarity in roles and responsibilities.

TYPES OF ORGANIZATIONS

1. Formal Organization

• A formal organization is a goal-oriented structure that consolidates individual efforts and includes clearly defined job functions, responsibilities, and authorities.

• Chester Barnard characterizes formal organizations as systems of consciously coordinated activities of two or more persons toward a common objective.

Characteristics of Formal Organization

1. Well-defined rules and regulations.

2. Arbitrary structure.

3. Determined objectives and policies.

4. Limitations on individual activities.

5. Strict adherence to coordination principles.

6. Communication flows through a vertical chain.

Limitations of Formal Organization

• Limited flexibility.

• Slowness in processing decisions.

• Communication barriers.

• Potentially compromised quality of decision making.

• Slow problem detection and resolution.

2. Informal Organization

• Informal organizations represent the social structures that govern interactions among individuals in practice, characterized by personal and professional relationships.

• Keith Davis defines informal organization as a network of interpersonal relationships arising from association.

Benefits of Informal Organization

• Increased job satisfaction among work groups.

• Lighter management workload.

• Improved total systems performance.

• Acts as an emotional safety valve.

• Fills gaps in communication.

• Encourages enhanced management.

Problems Associated with Informal Organization

1. Resistance to change.

2. Role conflict among members.

3. Spread of rumors.

4. Conformity pressures.

5. Undermining discipline.

6. Power politics.

7. Interpersonal and intergroup conflicts.

DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANIZATION