BCom Notes Part II Management Organization

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Organization

Explain the term organization. Why is it regarded as the foundation upon which the whole structure of management is built? OR

Define organizing. Explain the nature and process.

Meaning and Definition of Organization

We live in the age of organizations. Modern civilization requires large aggressions of people working together to produce the goods and services efficiently. Organizations are grand strategies created to bring order out of chaos when works together. The structure resulting from three things is known organization. (i) identifying and grouping of work, (ii) defining and delegating authority and responsibility, and (iii) establishing relationships among those who are engaged in performing group activities. Without defined relationships, there will be no organization. Peter Drucker rightly says, An institution (organization) is like a tune it is not constituted by individual sounds but by the relating between them. Organization is a dynamic tool for interweaving six M’s, Men, Money, Machines, Materials, Methods and Markets. People work for organization’s objectives and manage its affairs for achieving them effectively and efficiently.

Some important definitions of organization may be given as follows:

Hodge and Johnson

An organization can be thought of as a complex relationships among human and physical resources and work, cemented together into a network of system.

James Mooney

Organization is the form of every human association for attainment of a common purpose.

J.L. Massie

Organization is the structure and process by which a cooperative group of human beings allocates its tasks among its members, identifies relationship and integrates its activities towards common objectives.

George Terry

Organizing is the establishing of effective Behavioral relationships among persons so that they may work together efficiency and gain personal satisfaction in doing selected tasks under given environmental conditions for the purpose of achieving some goal or objectives.

Organization Concepts

Every scholar has defined organization from his own perception. But in all, there are three concepts of organization as follows:

1. Structure
2. Process
3. System

1. Organization as a Structure

Weihrich and Koontz point out, Organization implies a formalized intentional structure of roles or positions. Organization structure may be defined as the established pattern of relationships among the component parts of an enterprise. In this sense, organization structure refers to the network of relationships among individuals and positions in an enterprise. It is the network of horizontal and vertical relationships among the members of group designed to accomplish some common objectives. This network governs the activities of people in the form of a social group. The horizontal dimension shows differentiation of job into departments, divisions or sections. The vertical dimension reflects what is known as hierarchy or chain of command, of authority. The organization structure is the skeleton framework of business enterprise. Thus, the organization structure implies the following things.

(a). Division of labor into group activities under departments, divisions or sections and also into various positions.

(b). Assignment of tasks and activities to different persons and departments.

(c). The formal relationships with well-defined responsibilities.

(d). The hierarchical relationships with allocation of authority between superior and subordinates – delegation and decentralization of authority.

(e). Span of control with defined number of subordinates under a superior.

(f). Coordination among different departments and people.

(g). A set of policies, procedures, standards (goals) and methods of evaluation of performance, all formulated to guide the people and their activities.

However, the actual operations and behavior of people are not always governed by the formal structure of relations. Hence, the formal structural arrangements are affected and modified by social and psychological forces combined known as informal organization.

2. Organization as a System

Organization as a system implies the component parts, each of which has its unique properties, capabilities and natural relationships and thus all are interrelated and interdependent. Hence, system implies an arrangement and set of relationships among multiple parts operating as a whole, each part being called a sub-system. Every sub-system is itself a system composed of smaller interrelated parts of sub-system. The system produce synergic effect which means that the sum of all the parts is greater then the whole i.e., 2 + 2 = more than 4. Organization as a system also implies that it is an open system, which means that it interacts with its environment for its survival, growth and development. An organization as a socio-technological system consists of the following components or elements:

(a). Inputs

The system takes certain inputs from its environment. These inputs are human resources, physical resources and facilities, energy, supplies, technology and information.

(b). Processing or Transformation

Processing or transformation involves the utilization of the inputs through some specified technique to convert them into outputs. A number of sub-systems are created for processing or transformations purpose, such as production, finance, personnel and research and development. Interrelatedness and interdependence of all these sub-systems is kept in mind.

(c). Output

The processing or transformation technique results in output that may be intended and unintended. Intended outputs are usually called objectives or goals. For example, high productivity and efficiency we intended objectives. The output may consist of goods and services. An unintended output may be informal relation among the group members.

(d). Distribution

For distributing the output to the target market or consumers, several sub-systems may be created, such as sales, marketing, advertising, etc. Distribution may be done directly or through intermediaries known as wholesalers, semi-wholesalers and retailers.

(e). Management

The management component of the organization system is concerned with the determination and implementation of processing and distribution activities in order to achieve system’s goals. It involves planning, organizing, staffing, directing and controlling.

(f). Feedback

For effective managing, feedback of information with regard to the quality, quantity, cost and time of system outputs is necessary. It also helps in establishing and enforcing standards for desired results. It facilities corrective action wherever needed in the system.

(g). Environment

The management components helps in coping with the environment, which is complex and fast changing in the modern world. Management takes adequate steps needed for availing the opportunities and averting the threats in the environment. If the organization system intends to survive, grow and develops, it has to interact properly and successfully with its environment.

3. Organization as a Process

Organization as a process is known as organizing. Weihrich and Koontz point out, Organizing is (1) the identification and classification of required activities, (2) the grouping of activities of activities necessary to attain objectives, (3) the assignment of each grouping to a manager with the authority (dilatation) necessary for coordination horizontally (on the same or a similar organizational level) and vertically (for example, corporate, headquarters, division, and department) in the organization structure.’