ORGANIZATION
Koontz & o’Donnell, “ The establishment of
authority relationship with provision or
coordination between them, both vertically &
horizontally in the enterprises structure.
 L.H. Haney, “Oragnisation is a harmonious
 replacement
of speclized part for the
accomplishment of some common purpose or
purposes.
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CONCEPTS OF ORGANISATION
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There are two Concepts of organization
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1.
Static Concept
2.
Dynamic Concept
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1.
Static Concept: Under static concept the terns 'organization' is used as a structure.
are emit) or a network of specified relationship. In this sense, organization is a group of
people bouts4 together in a formal relationship to achieve common objectives. It lass
emphasis on position and not on individuals.
2.
Dynamic Concept: Under dynatnic concept, the term 'organization' is used as a
process of an ongoing activity. In this sense, organization is a process of organizing work,
people and the systems. It is concerned with the process of determining activities which may
be necessary for achieving an objective and arranging than in suitable groups sons to be
assigned to individuals. It considers organization as an open adoptive system and not as a
closed system Dynamic concept lays emphasis on individuals and considers organization as
a continuous process
CHARACTERISTICS OF ORGANIZATION
DIVISION OF WORK: Organisation deals with the whole task of business.
The total work of the enterprise is divided into activities and functions.
Various activities arc assigned to different persons for their efficient
accomplishment. This brings in division of labour. It is not that one person
cannot carry our, many functions but specialization in different activities is
necessary to improve one's efficiency
CHARACTERISTICS OF ORGANIZATION
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Co-Ordination: Co-ordination of various activities is as essential as their division It helps in
integrating and harmonising various activities Co-ordination also avoids duplications and
delays.
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Common Objectives: An organizational structure is a means towards the achievement of
enterprise goals. The goals of various segments lead to the achievement of major business
goals. The organizational structure should build around common and clear cut objectives.
This will help in their proper accomplishment.
Co-Operative Relationship: An organization creates co-operative relationship among various
members of the group. An organization cannot be constituted by one person It requires at
least two or more persons. Organization is a system which helps in creating meaningful
relationship among persons.
Well defined Authority Responsibility Relationships: An organization consists of various
positions arranged in a hierarchy with well defined authority anti responsibility.
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Business Organization- An Art
• An art is a system or rules for the attainment of a given
end. T L. Massie says, "In any activity that is classed as an
art the emphasis is on applying skills mid knowledge and
accomplishing an end through deliberate effort." In the
words of G.R. Terry, art is "bringing about of a desired result
through application of skill." C I Barnard has remarked, "The
function of an art is to accomplish concrete ends, effectual,
produce situations that would not come about without the
deliberate effort to secure them."
• Art is. thus, concerned with the application of knowledge
and skills.(In this sense, business organization is an as one
has to use his skill and knowledge in solving many
complicated problems of business to achieve the enterprise
objectives. But with the passage of time, it was realized that
the principles of business organization can be codified and
communicated. Which gave birth to business organization as
a science
BUSINESS ORGANISATION- A SCIENCE
The word science literally means knowledge. In the words of Keynes,
"science is a systematized body of knowledge which establishes
relationship between Cause and effect "Science has three basic
features (i) it is a systematized body of knowledge that uses scientific
methods for observation, (ii) the principles are evolved on the basis of
continued observation. and (iii) the principles are exact and have
universal applicability without any limitation.
Business Organization is viewed as a science as it is an organized
body of knowledge built up by management practitioners, thinkers
and philosophers over a period of years. But it must be noted that
organization is a science but unlike Physics. Chemistry and Biology,
it is not an exact or accurate science. The principles of organization
cannot be considered as fundamental truths. At times, they may not
bring desired results and may not have universal applicability.
FORMAL & INFORMAL ORGANIZATION
PRINCIPLES OF ORGANIZATION
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Principle of Objective: The enterprise should set up certain aims for the achievement of which
various departments should work. A common goals so devised for the business as a whole and the
organization is set up to achieve that goal.
Principle of specialization The organization should be set up in such a way that every individual
should be assigned a duty according to his skill and qualification. The person should continue the
same work so that he specializes in his work. This helps in increasing production in the concern
Principles of Co-ordination: The co-ordination of different activities is an important principle of
the organization. There should be some agency to co- ordinate the activities of various departments.
In the absence of co-ordination there is a possibility of setting up different goals by different
departments.
Principles of Definition: The scope of authority and responsibility should be clearly defined tier)
person should know his work with definiteness. If the duties are not clearly assigned, then it sill
not be possible to fix responsibility also Everybody's responsibility will become nobody's
responsibility
Span of Control: Span of control means how many subordinates can be supervised by a supervisor.
The number of subordinates should be such that the supervisor should be able to control their work
effectively Moreover, the work in be supervised should be of the same nature If the wan of control
is disproportionate, it is bound to affect the efficiency of the workers because of s communication
with the supervisors
PRINCIPLES OF ORGANIZATION
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Principle of Balance: The principle means that assignment of work should be
such that every person should he given only that much work which he can
perform well.
Principle of Continuity: The organization should be amendable according to
the changing situations Everyday there are changes in methods of production
and marketing systems. The organization should be dynamic and not static.
Principle of Uniformity: The organization should provide for the distribution
of work in such a manner dun the uniformity is maintained. Each officer
should be incharge of his respective area so as to avoid dual subordination and
conflicts
Principle of Unity of Command: There should be n unity of command in the
organisation. A person should he answerable to one boss only. If a person is
under the control of more than one person
PRINCIPLES OF ORGANIZATION
• PRINCIPLE OF EXCEPTION: This
principle states that top management
should interfere only then something
goes wrong. If the things arc done as per
plans then there is no need for the
ignite/Terence of top management
• PRINCIPLE OF SIMPLICITY: The
organizational structure should be
simple so that it is easily understood by.
each and every person The authority,
responsibility mid position of every
person should be made clear so that
there is no confusion about these things.
• PRINCIPLE OF EFFICIENCY: The
organization should be able to achieve
enterprise objectives at minimum cast.
The standards of costs and revenue are
pm-determined and performance should.
• SCALER PRINCIPLE: This principle refers to
the vertical placement of supervisors starting
from rep and going to the lower level. The
scalar chain is a pre-requisite for effective and
efficient organization.
REQUISITES OF AN EFFICIENT
BUSINESS ORGANISATION
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Able Organisers. Success of an organization depends upon the competence and
calibre of those who arc at the helm of -affairs. The entrepreneur should
understand all aspects of the business so that he may properly organise various
aspects of the concerti;
Sound Business Politics. The management should be clear about the objective to
be achieved Various policies should be aimed to achieve the business goals.
Proper Supervision and Control: The success of an organization will depend
upon the effective supervision and control. If the activities of different
individuals are not properly controlled, then business goals will not be achieved
.A corrective action is necessary if the performance is less than the goal
Co-Operation and Co-Ordination It is necessary to get the co-operation of
everybody in the organization to make it a success The goals of the business arc
Common and everybody should try to achieve them in their respective fields
There should be sonic agency to co-ordinate the activities of various
departments
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Efficient Personal Organization: Management of personnel is
an important aspect of organization. Proper personnel
organization is necessary for enabling all persons to optimize
their contribution towards realizing the corporate objecting
Personnel organization includes recruitment training, job
evaluation, merit rating and fixing of remuneration
IMPORTANCE OF ORGANIZATION
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Helps in Optimum Utilization of Technological Innovations: The test of a
good organization is its success in adjusting to the new and changing situation. The
technological improvements are taking place every time and management is required to make use
of them to exist in competitive world. The organization should be flexible to microporate all new
requirements.
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Helps in Administration: An organization provides sound foundation for effective
managerial control. Various managerial function will be effectively performed with the help of
an organization. The functions like co-ordination and control require a proper division of various
functions and their assignment to suitable persons.
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Promotes Growth and Diversification: Area and activities of a business grow if it
has a well knil organization. There will be a need for employing more persons whenever
expansion and diversification takes place. A flexible organizational structure will divide and sub
divides the activities in such a way that the activities of different segments become
complementary. This will bring an automatic co ordination in the business
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Easy Co-Ordination Every enterprise has a number of departments and
sections. These are assigned different duties for achieving business objectives. There is a need
for co-coordinating the working of various segments.
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Training and Development of personnel: A good organization offers
an opportunity for the training and development of personnel. A
clearly defined authority provides a scope for the use of talent.
There will be a sufficient scope to try new ideas in improving the
working of the organization.
Encourages Initiative: A good organizational structure will
provide sufficient scope for taking initiative. Persons are allowed to
try new ideas for improving upon their work. The politics and
procedures are laid down for the guidance of managerial personnel.
But within these limits people are given freedom to show their
talent.
Better Human Relations: Human relations improve in a good
organizational set up. An origination consists of human beings and
their satisfaction will help in improving human relations. A clearly
defined work, authority, responsibility, accountability will enable
individuals to work in a free atmosphere.
OBJECTIVES OF ORGANISATION
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The organization aims at the achievement of the 'following
(i) To Help Management:
The organization helps management to have a control over various business
functions. The work is divided properly and control censers are established. The
authority is delegated and responsibilities are fixed. It helps management to have
a co-coordinated administration.
(ii) To Increase Production: The duties are assigned according to the principle of
division of labour. The efficient system of organization encourages every
employee to make hi.; best contribution in raising output. The increase in output
and control of wasteful expenditure helps to decrease the cost of production. The
profitability of the concern will also go up.
(iii) Co-Operation of Employees: The organizational structure will succeeds only
if employees co-operate with others. The manager introduces various incentives
schemes and gives monetary and other benefits to the employees so that they
work in a team spirit.
STEPS IN ORGANIZATION
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The following steps are necessary for setting-up proper
organizational structure in the business.
Division of Work. The job is divided into various functions. These
functions may be called production', financing. marketing,
staffing, etc. All business activities arc divided and subdivided
into various categories. The purpose of the division is to specialise
individuals into different roles. This also helps in increasing the
efficiency of employees.
 Classification of Activities. The activities arc classified under
various categories All similar activities arc grouped together The
activities relating to different functions arc covered under
different departments.
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• APPOINTING SUITABLE PERSONS:
When activities are divided into
different functions, the next step will be
to appoint suitable persons for various
jobs. Experts arc appointed as heads of
different departments Persons are
employed for all types of roles.
• Delegation of Authority: A person will
be able to perform this duty only when
he is given adequate authority required
for that job. If the work is assigned
without delegating authority. It will be
meaningless. The top management
should delegate authority to lower
levels of management
STEP (1)
IDENTIFICATIONAL AN
DIVISION OF WORK
STEP (2)
DEPARTMENTALISATION
STEP (3)
ASSIGNING OF DUTIES
STEP (4)
ESTABLISHING REPORTING
RELATIONSHIP
CLASSICAL ORGANZATION THEORY
Grouping or Departmentation: was also considered essential
for making the functions effective. Since this theory revolves
around structure it is also called “ structural theory of
organization.”
 Pillars of Organisation Theory: According to classical
writers, the organizations theory of built around four keys
pillars: division of work, scalar and functional processes,
structure and span of control.
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Division of labour
 Scalar and Functional Process
 Structure
 Span of Control
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APPRAISAL OF CLASSICAL THEORY
Neo-classical organization theory: The classical theory of
organization focused main attention on physiological and
mechanical variables of organizational functions.. New
classical approach is contained in two points.
 The main propositions is of neo- classical theory are given as
follows:
 The Organisation in general is a social system composed of
numerous interacting parts
 Human being is independent and his behaviour can be
predicted in terms of social factors at work
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MODERN ORGANIZATION THEORY
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System Approach
This approach studies the organization in its totally. The mutually
depended variables are property analyzed. Both internal and
external variables are studied in analyzing the nature of
organization.
Technical sub system concerned with the work that gets done
Supportive sub system of procurement, disposal and intuitional
relations
Maintenance of sub systems\ for trying people into their functional
roles
Adaptive sub systems concerned with organizational change and
ORGANIATIONAL CLIMATE
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According to BOW DITCH and BUONO “ Organizational
culture is connected with the nature of beliefs and expectations
about organizational life, while climate is an indicator of whether
these beliefs and expectations are being fulfilled
Characterstics of Organisational
Climate
 General Perception.
 Abstract and Intangible Concept:
 Unique and District Identity:
 Enduring Quality
 Multi Dimensional Concept
FACTORS INFLUENCING
ORGANIZATIONAL CLIMATE
• ORGANISATIONAL STRUCTURE,
INDIVIDUAL RESPONSIBILITY, RISK
AND RISK TAKING:
• WARMTH AND SUPPORT,
TOLERANCE AND CONFLICT:
IMPACT OF
ORGANIZATIONAL CLIMATE
• Organizational climate influences
to a great extent the performance of
the employees because it has a
major impact on motivation
and job satisfaction of individual
employees.
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The organizational climate can affect the human behaviour in the organization
through an impact on their performance, satisfaction and attitudes. There are
four mechanisms by which climate affec5trs the behaviour of the employees.
1. Constraint System.
2. Evaluation of Self and Others.
3. By Acting as Stimuli. Organizational factors can influence human
4. By Helping the Individual to Form a Perception.
Good organizational climate is instrumental to higher employee satisfaction,.
DIMENSIONS OF ORGANIZATIONAL CLIMATE
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Dominant Orientation
Inter- Personal Relationships
Individual Autonomy
Organizational Control System
Organizational Structure
Developing a Sound Organsational Climate
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Effective Communication System: There should be a two way communication in
the organization so that the employees know what is going on and react to it.
The manager can modify his decision on the basis of feedback received
Concern for people: The management should be interested in the human
resources development. It should work for the welfare of employees and an
improvement in their working conditions
Change in Politics, Procedures and Rules: The organizational climate can also
be changed by making changes in the politics, procedures and rules. It is a time
consuming process but the changes will also be long lasting, if the workers see
the changes in politics, procedures and rules as favourable to them.
PARTICIPATION AND
ORGANISATIONAL CLIMATE
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Full and free communication regardless of rank and power
A Reliance on consensus rather than on the more customary
forms of concretion or compromise to manage conflict
The idea that influence is based on technical competence and
knowledge than on the vagaries of personal whims or
prerogative of power.
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Mental and Emotional Involment:
Acceptance of Responsibility:
Motivation to Contribute: