Management Study Organisation Study

Meaning, Definition, Process and Principles of Organisation

Principles of Organisation
Written by punit

For understanding the notion of organization, it is important to interpret the meaning of “organizing”. Organising means the process of forming a framework or a structure that helps the employees to work effectively for achieving the objectives, vision or goals laid down by an organisation. Organising comprises assigning various jobs to the relevant units, departments, and sections of the business, so as to attain the organisational objectives. It also requires proper coordination between these business units, departments, and sections, in order to obtain an integrated process. The process of organising is relatively simpler in small-scale organisations. It consists of deciding the necessary tasks to be performed and accordingly; assigning the same to various employees.

On the other hand, the process of organising is complicated in large business organisations. Here, the organising procedure involves division of work, assigning the jobs to respective business units, departments, and sections and delegating the authority to different positions in different departments. In fact, the process does not end at these activities, but it also includes setting-up efficient information and communication systems for ensuring coordination among all departments and activities to achieve the pre-determined objectives of the organisation.

According to Ralph C. Davis, “Organisation is a group of people who cooperate under the direction of leaderships, for the accomplishment of a common end”.

Process of Organisation

The process of organisation consists of the following steps:

1) Determining the Objectives: The first and foremost step in the process is determining the objectives or to identify the reasons or purposes for the establishment of the organisation. It also decides the nature of work undertaken by the organisation.

2) Division of Work: After determining the objectives, the next step is to divide the jobs into smaller tasks. These jobs are assigned to different departments according to the functions. In a typical organisation, the work is divided into few major departments such as production, finance, sales, marketing, purchasing, human resources, etc.

3) Grouping of Activities: The subdivided similar tasks are grouped and assigned to a certain department. Now, these departmental tasks are again subdivided into smaller activities. Various principles are considered for dividing and sub-dividing the tasks into groups. The primary grouping is performed on the basis of activities, such as sales, production, finance, etc. After that, the factors which form the basis for secondary grouping are geographical areas, types of consumers, processes undertaken, etc.

4) Assigning the Responsibility: At this stage, the sub-divided smaller jobs are assigned to different employees in the department so that the tasks can be completed efficiently.

5) Delegation of Authority: In this stage, authority is delegated to the responsible employees.  Similarly, responsibility without giving the necessary authority can prove to be of n0 use. Thus, when responsibility is given, correspondingly authority also needs to be given to enhance work performance.

6) Coordination; The final stage is achieving coordination among various departments. It is an essential function that integrates the entire organisation into a single entity. It is required to ensure the coordination among various departments so that individual and overall performance can be assessed and the common organisational goals can be achieved.

Principles of Organisation

An organisation can perform in a better way if the following principles are followed:

I) Unity of Objective:

Every section of the organisation and the organisation as a whole shall focus and strive to attain the core objective laid down for the organisation.

2) Efficiency:

The definition of efficiency differs according to different perspectives. There are basically three perspectives that define the term ‘efficiency’. From the business point of view, a company is considered as efficient when it is able to achieve the objectives at minimum possible cost. From the perspective of an individual, an organisation is considered as efficient when it is able to provide job satisfaction to the employee. the social perspective, an organisation is considered efficient when it contributes significantly to social welfare.

3) Span of Management:

Direct supervision by the manager is possible only for a limited number of executives. Therefore, an optimum number of executives are required who would be answerable to the top management. Usually, six executives should be there for an efficient span of management.

4) Division of Work:

A successful organisation consists of various departments that assist in breaking-down several jobs into smaller tasks for the efficient functioning of organisation. A sound organisation always focuses on a proper departmentation process.

5) Functional Definition:

The responsibilities entrusted and the authority provided should be clearly defined to avoid confusion and overlap. Hence, functional definition delineates work responsibilities and authority related to a position in the organisation.

6) Scalar Principle (Chain of Command):

An organisation should have a proper chain of authority that would run from the top level to the bottom level of management. Each employee working under an organisation structure should know his superiors and subordinates. An employee should also know the responsible authority to which he should refer for the matters outside his purview.

7) Exception Principle:

A proper and efficient arrangement of positions in an organisation gives scope for easy dealing of routine activities by the subordinates without any indulgence of higher authorities. Only complex matters arc discussed and dealt with by the senior executives. This process is referred to as the “exception principle”.

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8) Unity of Command:

Each employee in an organisation should receive orders from only one superior. This is very important, in order to prevent confusion and conflicts regarding assigned tasks. It also helps in assigning responsibilities to the positions.

9) Unity of Direction:

Every department or division of an organisation should follow the same plan of action. This helps in reducing conflicts and confusion among employees. It also improves coordination among various departments. If the departments start formulating their individual plans or programs, then there would always be a possibility of confusion.

10) Responsibility:

Every organisation has superiors who assign the jobs to their subordinates and are responsible for the assigned jobs. Similarly, the subordinates are considered responsible for their own performance regarding the assigned job.

11) Authority and Responsibility:

Every responsibility should be associated with an authority. Therefore, the subordinates should possess the necessary authority to discharge their duties in a rightful manner.

12) Balance:

In a good organization, a balance between centralization and decentralization should be achieved. Some of the routine decisions can be left to the subordinates, while some major decisions should be taken by the top-level only.

13) Flexibility:

Various business activities conducted in an organisation, including technical activities should be designed in a manner that can be flexible enough to adapt itself with the constantly changing environmental factors. Thus, it should avoid complicated processes, complex controlling mechanisms, and red-tapism in order to maintain flexibility.

14) Continuity:

The organisational structure should be formulated in a manner so that it helps in its continuity and survival. The efficient provision of training and development activities should be conducted to ensure continuity.

15) Facilitation of Leadership:

The management should be provided with the right opportunities to lead the organisation in an effective manner. Thus, the organisational structure should be designed according to the above requirements.

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