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Organisation: Definitions, Characteristics, Function, Elements, Principles

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Organisation is the backbone of management because without an efficient organization no management can perform its functions smoothly.

In the management process this organization stands as a second state which tries to combine various activities in a business to accomplish pre-determined goals.

It is the structural framework of duties and responsibilities required of personnel in performing various functions with a view to achieve business goals.

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In other words, organization is simply people working together for a common goal. It is a group of people assembling or congregating at one place and contributes their efforts to achieve a common goal.

Hence, it is coordinates different activities for running the business enterprise efficiently so that the common goal can be achieved.

Learn about:-

1. Definitions of Organisation 2. Meaning and Concept of Organisation 3. Scope 4. Characteristics 5. Nature

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6. Objectives 7. Elements 8. Analysis 9. Steps in Organisation Process 10. Requirements.

11. Functions 12. Principles 13. Parts 14. Types 15. Importance

16. Simon’s Theory 17. Process of Designing 18. Policies, Procedures, Guidelines 19. Advantages 20. Problems.

What is Organisation: Definitions, Characteristics, Functions, Principles, Advantages, Problems and Other Details


What is Organisation –  Definitions by Eminent Thinkers

Organisation is the backbone of management because without an efficient organization no management can perform its functions smoothly. In the management process this organization stands as a second state which tries to combine various activities in a business to accomplish pre-determined goals. It is the structural framework of duties and responsibilities required of personnel in performing various functions with a view to achieve business goals.

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In other words, organization is simply people working together for a common goal. It is a group of people assembling or congregating at one place and contributes their efforts to achieve a common goal. Hence, it is coordinates different activities for running the business enterprise efficiently so that the common goal can be achieved.

Alike ‘management’ the term ‘organization’ has also been defined in a number of ways such as a process, as a structure of relationship, as a group of persons and as a open dynamic system and so on. So some quotable definitions are enlisted below to understand the term organization in its totality.

Louis Allen:

Organisation is the process of identifying and grouping work to be performed, defining ad delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.” In the words of Allen, organization is an instrument for achieving organizational goals. The work of each and every person is defined and authority and responsibility is fixed for accomplishing the same.

Wheeler:

“Internal organization is the structural framework of duties and responsibilities required of personnel in performing various functions within the company, it is essentially a blue print for action resulting in a mechanism for carrying out function to achieve the goals set-up by company management”. In Wheeler’s view, organization is a process of fixing duties and responsibilities of persons in an enterprise so that organizational goals are achieved.

Koontz and O’Donnell:

The establishment of authority relationships with provision for co-ordination between them, both vertically and horizontally in the enterprise structure. These authors view organization as a coordinating point among various persons in the business.

Oliver Sheldon:

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“Organisation is the process so combining the work which individuals or groups have to perform with the facilities necessary for its execution, that the duties so performed provide the best channels for the efficient, systematic, positive and coordinated application of the available effort”. Organization helps in efficient utilization of resources by dividing the duties of various persons.

Spriegel:

In its broadest sense organisation refers to the relation­ship between the various factors present in a given endeavor. Factory organization concerns itself primarily with the internal relationships within the factory such as responsibilities of personnel, arrangement and grouping of machines and material control. From the standpoint of the enterprise as a whole, organization is the structural relationship between the various factors in the enterprise.

Spriegel has given a wide definition of the organization. He has described it as the relationship among persons, factors in the enterprise. All factors of production are coordinated in order to achieve organizational objectives.

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George Terry:

Organizing is the establishing of effective authority relationships among selected work, persons and work places in order for the group to work together efficiently”. According to Terry organization is the creation of relationship among persons and work so that it may be carried on in a better and efficient way.

C. H. Northcott:

“The arrangement by which tasks are assigned to men and women so that their individual efforts contribute effectively to some more or less clearly defined purpose for which they have been brought together”. According to Northcott the purpose of organization is to co-ordinate the activities of various individuals working in the organization for the attainment of enterprise goals.

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L.H. Haney:

“Organization is a harmonious adjustment of specialized parts for accomplishment of some common purpose or purposes. Organization is the adjustment of various activities for the attainment of common goals”.

Thus, from the above definitions, it may be concluded that organization is the mechanism developed by management to unite the efforts of the people (employees) in order to realize the set objectives.


What is Organisation –  Meaning and Concept of Organisation

Meaning of Organisation:

In common parlance, the word ‘organisation’ refers to ‘institution’. Educational institution, a private agency, Government department or business firm; all are organisations. In the context of management, it means formal arrangement of work amongst members of the institution with clear identification of authority and responsibility so that organisational goals can be achieved optimally. If duties of every member and their relationship with peers, superiors and subordinates are not defined, the planning process will be ineffective.

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Different authors have defined ‘organisation’ as follows:

Organisation is “the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.” — Louis A. Allen

Organisation defines the part which each member of an enterprise is expected to perform and the relations between such members, to the end that their concerted endeavour shall be most effective for the purpose of the enterprise.” — Alwin Brown

Organising is a “process of defining the essential relationships among people, tasks and activities in such a way that all the organisation’s resources are integrated and coordinated to accomplish its objectives efficiently and effectively.”— Pearce and Richard B. Robinson

The above definitions highlight organising as a (i) structure and (ii) process.

(i) As a Structure:

Organising is a set of relationships that defines vertical and horizontal relationships amongst people who perform organisational tasks and duties. The organisational task is divided into units, people in every unit (departments) are assigned specific tasks and their relationship aims to maximise organisational welfare and individual goals.

The relationship amongst people is both vertical and horizontal. As vertical relationships, the authority-responsibility structure of people at different levels in the same department is defined and as horizontal relationships, authority-responsibility structure of people in different departments at same levels is defined.

Organisation structure specifies division of work and shows how different functions or activities are linked; to some extent it also shows the level of specialisation of work activities. It also indicates the organisation’s hierarchy and authority structure and shows its reporting relationships. — Robert H. Miles

Organising as a structure is a network of relationships (authority-responsibility structure) amongst all those who are part of the organisation, working at different levels in different departments.

Organisation defines relationships amongst jobs and people working at the jobs at various levels. It emphasises more on positions than people.

(ii) As a Process:

Organising defines relationships amongst people through a process that aims to achieve organisational goals efficiently.

It Involves:

(i) Identification of work

(ii) Grouping of work into smaller groups

(iii) Assigning work to every individual at every level in every department

(iv) defining its authority and responsibility, and

(v) Establishing relationships amongst people to make them contribute towards organisational goals in an integrated manner.

Organisation structure and process are not independent concepts. They are complementary to each other. Once the organisation process is defined, organisation structure is the end result or outcome of that process. Organisation structure is the result of organisation process. Organisation is, in fact, a structured, on-going process that defines how to achieve pre-defined goals.

Concept of Organization:

An organization refers to a structure in which people come together to attain some common goals. People feel that they can fulfill their needs more effectively when they become part of a group. In an organization, the individual goals are foregone for the group goals and the group goals are compromised for organizational goals so the maximum benefit can be derived by using limited available resources.

An organization is influenced by many external and internal factors. External factors include politics, country’s economy, and legal rules and regulations; whereas internal factors include plans, objectives, and policies of an organization. Internal factors can be controlled by an organization; however, external factors are beyond the organization’s control. An organization requires constant caution and adaptability to effectively manage situations arising due to such factors.


What is Organisation –  Scope of Organisation

Organisation is the executive structure of an enterprise and a basic framework within which the executive’s decision making behaviour occurs.

Organisation, as an element of management, is concerned with the following aspects, called as scope of organisation:

1. Identifying and grouping of activities to attain corporate objectives and goals.

2. Assigning these activities to appropriate divisions, departments, sections and individuals.

3. Providing authority, delegation, co-ordination and communication.

4. Providing facilities and equipment, i.e. physical factors of good work environment. There are four basic elements of all forms of living organisations around which any organisation centers – (i) The work (ii) The People, (iii) The authority, responsibility and (iv) The relationships.

Clear-cut division of work defines and prescribes each part of the work to be handled by each person, giving allocation of duties and responsibilities and defining authority or power at each position in the organisation chart. Co-ordination and integration ensure elimination of duplication of work and unity of action.

A good organisation has to fulfill four special functions:

1. It must enable the management to maximise the outputs through provision of an efficient man-machine system.

2. It must ensure smooth and effective net-work of communication and information.

3. It must offer interesting and meaningful jobs to all individuals working in the organisation. This alone will ensure job satisfaction. Organisation is developed for people. It must, therefore, be humanistic also and not merely mechanistic. Both the approaches can be reconciled.

4. It must create, maintain and develop its own image or individuality. This ensures customer goodwill. Investors will also have confidence in the enterprise. Employees can develop a sense of belonging to the organisation.


What is Organisation – Different Characteristics

The following are the different characteristics of an organisation:

(a) Modern organisational is too large in terms of number of people in employment and in terms of the amount of investment. Direct contact between employer and employee is not possible in modern organisation.

(b) Division of Work:

In organisation the total work of the enterprise is divided into activities and functions. For efficient accomplishment various activities are assigned to different persons. This brings in division of labour. Specialisation in different activities is necessary to improve one’s efficiency. Organisation helps in division of work into related activities so that they are assigned to different individuals.

(c) Co-Ordination of Various Activities:

Co-ordination among various activities of a department and of the organisation is necessary for the harmonious functioning of the organisation. Co-ordination is done by the divisional head and the organisation-head.

(d) Huge Investment and Complicated Technology:

Modern organisation involves huge investment and complicated technology, their management and operation is a complex affair. It needs assistance from specialists at all levels.

(e) Mutually Agreed Purpose:

There must be mutually agreed purpose because all activities in an organisation are goal-oriented.

(f) Proper System of Working in All Organisations:

There must be proper system of working in all organizations. It means there must be well defined hierarchical levels, a chain of command, rules and procedures and communication network, so that consistency and uniformity in behaviour may exist.

(g) Differentiation is a Must:

A chain of systematic division of labour takes place by assigning authority and responsibility to an individual who is supposed to be specialized in the job and this leads to differentiation.

(h) Interaction with Other Systems is Also Must:

All systems are interdependent and exert influence on others and are influenced by others. Mutual dependence necessitates interaction and consequently adaptation.

Thus, the modern organisation is an ideal co-ordination of the functions of a number of people for attaining the mutually agreed purposes through a well-defined system of working, i.e., hierarchical levels, chain of command, rules and procedures and communications and through the principle of division of labour. It influences and is influenced by the social systems.


What is Organisation – Nature of Organisation and Nature Business Organisation

Nature of Organization:

1. Common goal – The main reason for the existence of an organization is to accomplish some common goals. The structure of the organization is bound by a common purpose.

2. Division of labour – The work needed to accomplish the goals is divided into a number of functions and sub-functions. These, functions are organized in the form of departments. Each department is headed by a specialist. Such a division of function on specialty basis infuses specialisation.

3. Authority structure – There is an arrangement of positions into graded series. Such an arrangement creates a series of superior and subordinate relationships called chain of command. Authority and responsibility associated with various positions are defined.

4. Group – It is people who constitute the dynamic element of an organization. They work in groups in the various departments of an organization.

5. Communication – There is free flow of communication through various official channels among the people across various departments. Most of the communication is in a written form. However, grapevine communication is also in vogue.

6. Coordination – The diverse efforts of various functional departments are integrated towards the common objective through the process of coordination.

7. Environment – No organization is functioning in a vacuum. Social, political, economic and legal factors exert influence on the environment. Beside it is influenced by internal factors like materials, machines, level of technology, economic resources, human resources, etc.

8. Rules and regulations – Every organization is governed by a set of rules and regulations for the orderly functioning of people.

Nature of Business Organisation:

At present a good deal of confusion has arisen about the nature of business organisation. Some authors are of this opinion that in nature of business organisation we may discuss whether business organisation is an art or a science.

(1) Business Organisation—an Art:

Before discussing business organisation as an art it is essential that we must know what is an art?

(a) “In any activity that is classed an art the emphasis is an applying skills and knowledge and accomplishing an end through deliberate effort.” – T. L. Massie

(b) “Art is bringing about of a desired result through application of skill”. – G. L. Terry

(c) According to C. L. Barnard-“The function of an art is to accomplish concrete ends, effect results, produce situations that would not come about without the deliberate effort to secure them”.

Therefore, an art is a system for the attainment of a given end. Art is concerned with the application of knowledge and skills. So, business organisation is an art in so far as one has to use his skill and knowledge in solving many complicated problems of business to achieve the enterprise objectives. Organisation is one of the most creative art in the sense that it is concerned with getting work done through others by motivating them to work and coordinating their activities.

In the ancient times it was felt that the skills of organizing business cannot be codified and communicated. But now, it has been realised that the principles of business organisation may be codified and communicated. This has given the concept of business organisation as a science.

(2) Business Organisation—a Science:

In the words of Keynes – “Science is a systematical body of knowledge which establishes relationship between cause and effect”.

Science has three basic important features:

(a) It is a systematized body of knowledge that uses scientific methods of observation.

(b) The principles are evolved on the basis of continued observation.

(c) The principles are exact and have universal applicability without any limitation.

Business organisation is a science as it is an organized body of knowledge built up by management practitioners, thinkers and philosophers, over a period of years. It has developed certain principles and rules after continued observation. But unlike Physics, Chemistry and Biology, business organisation is not an exact or accurate science. Its principles cannot be considered as fundamental truths.

Sometimes, they may not bring desired results and may not have universal applicability. The main reason for this in exactness is that it deals with human beings whose behaviour cannot be predicted. Thus, organisation is a ‘Soft Science’ or “Behavioural Science”.


What is Organisation – 4 Important Objectives

To achieve the following objectives a company sets up an organisation:

1. To Administer Economy in Production:

Any company aims at reducing its cost of production. Similarly any commercial undertaking aims at a reduction of its operating cost. An effective and fruitful organisation also aims at a reduction on cost of production, distribution or operation to justify its very existence. To effect economy in the whole organisational structure is a main task of an organisation economy affected results into cheaper availability of goods to the ultimate consumer.

Even if the price of the commodity is not reduced due to some reason or the other; the quality improves, the workers get more wages and the profitability increases. Society stands benefited. Return on investment goes up ultimately leading to larger savings.

In the words of R. C. Davis, “the mission of the business organisation is to acquire, produce and distribute certain values. The business objective, therefore, is the starting point for business thinking. The primary objectives of a business organisation are always those of economic values with which we serve the customer.”

2. To Serve the Society:

Any organisation aims at – (i) service of the society, and (ii) service of the enterprise of which it is one of the part. From service to the society it gains – (a) recognition, (b) strength, and (c) stimulus.

Society needs goods at proper time, of standard quality, in adequate quality, at a cheaper rate and regularly. An organisation ensures the society that it would not be lacking. Social gain should be the main aim of any organisation.

If the organisation deviates from this goal certainly it is not going to stand benefited for a longer period since it is the society which helps an organisation, management and enterprise to grow in structure. Goodwill is a gift given by the society to the enterprise and on its own will the society can withdraw it even without a moment’s notice.

3. To Economies the Use of Available Resources:

Though in India men are in abundance and other resources are scarce. But the use, of both should be economised in order to guard against the future non-availability of resources. If this happens because of non-judicious and un-planned use of resources then future generation is not going to forgive us. For this reason also-economic use of available resources is desirable.

4. To Establish Healthy Relations between Labour and Capital:

Human relations and behavioural sciences form the basis of any organisational structure today. A capital labour harmonious relations may help in attaining the objectives of the enterprise quickly and honestly. Prosperity to both is ensured by good, relations. Profitability and productivity both increase.

In India the capital and labour a not at their mutual best. Though we talk of ‘workers sector’ but we have made no sincere efforts in this direction. We have not been able to develop even harmonious relations between the two. A developing country like India can ill afford this situation. We have to find out some way out for better relations and effective achievement of the objectives of the company.


What is Organisation – 9 Essential Elements of a Good Organisation

The essential and important elements of a good organisation are as follows:

Element # 1. It Must be Helpful in the Achievement of Objectives:

A good organisation must be capable of overcoming the problems of an enterprise. An organisation is considered as good only when it is capable in achieving the predetermined objects of enterprise. It is not in a position to achieve these objects; it cannot be regarded as a good organisation.

Element # 2. There Must be Harmonious Grouping of Functions:

A good organisation should divide the functions of an enterprise in such a manner so that they may be implemented easily and successfully. There must be harmonious adjustment in different activities of the organisation.

Element # 3. An Organisation Must be Complete in All Respect:

A Very important essential element of a good organisation is that it must be complete in all respects. It must include all the activities of an enterprise. Further, there must not be the repetition of activities.

Element # 4. There Must be Perfect Co-Ordination in All the Activities of an Organisation:

Co-ordination is the essence of management. If the activities of an enterprise are not co-ordinated, the achievement of the objects of enterprise cannot be thought of. Therefore, all the activities of an organisation must be co-ordinated.

Element # 5. There Must be Reasonable Span of Control:

The span of control of officers must be limited because an officer cannot control a large number of sub-ordinates. Therefore, the number of sub-ordinates under the control of one officer should not be more than five to six. So that proper control may become possible at all levels of management.

Element # 6. Proper Utilisation of Resources be Made:

Success of a business and industrial enterprise depends to a large extent on the proper utilization of resources. If the resources are not properly utilized, the business enterprises cannot be successful.

Element # 7. Provision of Expansion:

The organisation must provide for adequate flexibility so that necessary adjustments may be made in it according to the need of changing circumstances. If it is not so, there may be a possibility of missing the opportunity.

Element # 8. Employees Satisfaction is Essential:

An organisation can be regarded as good and efficient if it satisfies its employees because it will increase the morale of its employees and they will be encouraged to do more work for the success of the enterprises.

Element # 9. Policy be Such Which Can be Executed Easily and Economically:

An organisation system can be regarded as good and efficient system, if the system can be easily understood and implemented. All the activities of the organisation should be framed in such a manner that all the employees may contribute their efforts in their execution. Therefore, all the functions of the organisation must be of the nature that they may be executed easily and economically.


What is Organisation – 7 Important Steps Involved in Organisation Process

Organising refers to the grouping of activities necessary for the attainment of objectives. It also indicates the authority and the responsibility assigned to individuals charged with the execution of their respective functions.

Following steps are involved in organising the structure of an enterprise:

Step # 1. Knowledge of Objectives:

While organising it is important to bear in mind the objectives or targets of the enterprise or department. The objectives must be determined keeping in view the environmental situation. They must be clear, precise but complete and free from ambiguity or confusion. Unless the manager or supervisor knows the objectives he may not be able to organise properly and motivate people towards the attainment of the objectives.

Step # 2. Division of Work into Activities:

After laying down the objectives, the manager must identify the total work involved in achieving them. The total work to be performed should be divided into component activities. For instance, the total work of a manufacturing enterprise may be divided into production, finance, personnel, marketing and such other activities.

Step # 3. Grouping the Activities:

The next step is to group the various activities into practical units based on similarity and importance as well as to indicate the person who would do the work. Similar activities should be grouped together under one heading, For instance purchasing, machining, assembling may be placed under manufacturing while recruiting, training, job grading, compensation may be placed under personnel, Other basis for grouping the activities may be utilised such as geographical location, particular equipment utilisation or process to be employed.

Step # 4. Defining and Assigning Activities to Jobs:

Jobs must be clearly defined and the activities related to them must be clearly identified and assigned. This will help the management to fix the authority and responsibility of the employees concerned.

Step # 5. Fitting Personnel into Jobs:

A job must be allotted to a properly qualified person so that none becomes a square peg in a round hole. Each person should be assigned specific job or jobs and be made responsible for it.

Step # 6. Delegation of Required Authority:

Proper authority must be vested in the personnel to enable them to carry out the job. Authority must be commensurate with responsibility. Authority without responsibility and vice-versa is meaningless and futile.

Step # 7. Creating Organisational Relationships:

Creation of different authority relationships such as line, functional or line and staff is essential for the achievement of the objectives. Everyone in the organisation must know as to whom he is accountable and his relationship with other persons in the organisation should be clearly established.


What is Organisation – 7 Requirements of a Sound Organisation

1. Realisation of Objectives:

Organisation is an instrument for realising the objectives, goals and purposes of the enterprise as a whole. Therefore every division, branch, department and section as well as the entire organisation must be tuned to the objectives and must contribute to their realisation.

2. Harmonious Grouping of Functions:

For achieving the objectives and goals of a business concern, the functions and tasks involved in the enterprise should be grouped in such a manner that active consultation and co-ordination can take place with a minimum of over lapping, delay or confusion.

3. Clear Allocation of Duties and Responsibilities:

There should be a clear organisational plan with well-defined duties, responsibilities and relationships. It is often achieved with the help of organisation charts.

4. Reasonable Span of Control:

The number of sub-ordinates over whom control is to be exercised at each level of management should neither be so large as to be unwieldy nor too small for the effective performance of the work or fuller utilisation of the managers ability to control.

5. Promotion of Satisfaction:

The most important element in organisation is human beings. For biological necessity they first seek to achieve their own personal goals. The objectives of the enterprises are realised more easily where there are good chances of the achievement of such personal goals. Moreover, in an organisation men work in groups rather than as individuals. Therefore the success of an organisation depends largely on how far it can promote the satisfaction of its members as individuals and as groups.

Better results are achieved psychologically if, along with a formal organisation structure, some informal relationships are build up within it during the day-to-day functioning of the organisation.

6. Effective Communication:

This is very essential for smooth working of an organisation. Top management must explain the policies and programmes of the enterprise to the rank and file workers. The later must also be given the opportunity to convey their feelings, reaction and grievances to the former. The flow of information must be quick, easy and two-way. It removes uncertainty, ambiguities, misunderstanding and friction. It provides co- ordination. Information is to organisation is what headlights are to a driver and lighthouse to a sailor.

7. Provision for Growth:

While an organisation ought to be fairly stable over a long period, it must contain within itself, the elements of growth and expansion. The mechanism must be such that it can adapt itself, to changing circumstances. A business organisation has to be dynamic in character in this changing work environment.


What is Organisation – 6 Main Functions of Organisation

The functions of organisation includes:

1. Determination of activities,

2. Grouping of activities,

3. Allotment of duties to specified persons,

4. Delegation of authority,

5. Defining relationships, and

6. The co-ordination of various activities.

1. Determination of Activities:

It includes the deciding and division of various activities required to achieve the objectives of the organisation. The entire work is divided into various parts and again each part is sub-divided into various sub-parts. For example, the purchase work may be divided into requisition of items, placing of an order, storage and so on.

2. Grouping of Activities:

The next function of organisation is that the identical activities are grouped under one individual or a department. The activities of sales such as canvassing, advertisements and debt collection activities are grouped under one department i.e., sales department.

3. Allotment of Duties to Specified Persons:

In order to ensure effective performance, the grouped activities are allotted to specified persons. In other words, the purchasing activities are assigned to the Purchase Manager; the production activities are assigned to Production Manager; the sales activities are assigned to Sales Manager and the like. Besides, adequate staff members are appointed under the specified persons. The specified persons are specialised in their respective fields. If there is any need, appropriate training would be provided to such persons.

4. Delegation of Authority:

Assignment of duties or allotment of duties to specified persons is followed by delegation of authority. It will be very difficult for a person to perform the duties effectively, if there is no authority to do it. While delegating a authority, responsibilities are also fixed. Thus, the Production Manager may be delegated with the authority to produce the goods and fixed with the responsibility of producing quality goods.

5. Defining Relationship:

When a group of persons is working together for a common goal, it becomes necessary to define the relationship among them in clear terms. If it is done, each person will know who is his boss, from whom he has to receive orders and to whom he is answerable. In another sense, each boss should know what authority he has and over which person.

6. Co-Ordination of Various Activities:

The delegated authority and responsibility should be co-ordinated by the Chief Managerial Staff. The reason is that there must be a separate and responsible person to see whether all the activities are going on to accomplish the objectives of the organisation or not.


What is Organisation – 22 Important Principles of an Organisation

The work can be completed in time whenever a technique or a principle is adopted. So, the success or failure of an organisation depends upon the principles to be followed in the organisation. The principles of organisation may be termed as a tool used by the organisation. Some experts like Taylor, Fayol and Urwick have given the principles of organisation.

They are briefly discussed below:

1. Principle of Definition:

It is necessary to define and fix the duties, responsibilities and authority of each worker. In addition to that the organisational relationship of each worker with others should be clearly defined in the organisational set up.

2. Principle of Objective:

The activities at all levels of organisation structure should be geared to achieve the main objectives of the organisation. The activities of the different departments or sections may be different in nature and in approach, but these should be concentrated only for achieving the main objectives.

3. Principle of Specialisation or Division of Work:

Division of work means that the entire activities of the organisation are suitably grouped into departments or sections. The departments or sections may be further divided into several such units so as to ensure maximum efficiency. This will help to fix up the right man to the right job and reduce waste of time and resources.

The work is assigned to each person according to his educational qualification, experience, skill and interests. He should be mentally and physically fit for performing the work assigned to him. The required training may be provided to the needy persons. It will result in attaining specialisation in a particular work or area.

4. Principle of Co-Ordination:

The objectives of the organisation may be achieved quickly whenever co-ordination exists among the workers. At the same time each work can be done effectively by having co-ordination. The final objective of all organisations is to get smooth and effective co-ordination.

5. Principle of Authority:

When many persons are working together in one place, there will be a difference of power and authority. Of these persons, some will rule and others will be ruled. Normally, maximum powers are vested with the top executives of the organisation. These senior members should delegate their authorities to their subordinates on the basis of their ability. In certain cases, the subordinates are motivated through the delegation of authority and they perform the work efficiently with responsibility.

6. Principle of Responsibility:

Each person is responsible for the work completed by him. Authority is delegated from the top level to the bottom level of the organisation. But the responsibility can be delegated to some extent. While delegating the authority, there is no need of delegation of responsibility. So, the responsibility of the junior staff members should be clearly defined.

7. Principle of Explanation:

While allocating duties to the persons, the extent of liabilities of the person would be clearly explained to the concerned person. It will enable the person to accept the authority and discharge his duties.

8. Principle of Efficiency:

Each work can be completed efficiently wherever the climate or the organisational structure facilitates the completion of work. The work should be completed with minimum members, in less time, with minimum resources and within the right time.

9. Principle of Uniformity:

The organisation should make the work distribution in such a manner that there should be an equal status and equal authority and powers among the same line officers. It will avoid the problems of dual subordination or conflicts in the organisational set up. Besides, it increases co-ordination among the officers.

10. Principle of Correspondence:

Authority and responsibility should be in parity with each other. If it is not so, the work cannot be effectively discharged by any officers, whatever his ability may be. At the same time, if authority alone is delegated without responsibility, the authority may be misused. In another sense, if responsibility is delegated without the authority, it is a dangerous one.

11. Principle of Unity of Command:

This is also sometimes called the principle of responsibility. The organisational set up should be arranged in such a way that a subordinate should receive the instruction or direction from one authority or boss. If there is no unity of command in any organisational set up, the subordinate may neglect his duties. It will result in the non-completion of any work. In the absence of unity of command, there is no guidance available to the subordinates and there is no controlling power for the top executives of the organisation. Further, some subordinates will have to do more work and some others will not do any work at all.

12. Principle of Balance:

There are several units functioning separately under one organisational set up. The work of one unit might have been commenced after the completion of the work by another unit. So, it is essential that the sequence of work should be arranged scientifically.

13. Principle of Equilibrium Balance:

The expansions of business activities require some changes in the organisation. In certain periods, some sections or departments are overloaded and some departments are under loaded. During this period, due weightage should be given on the basis of the new work load. The overloaded sections or departments can be further divided into sub sections or sub-departments. It would entail in the effective control over all the organisational activities.

14. Principle of Continuity:

It is essential that there should be a re-operation of objectives, re-adjustment of plants and provision of opportunities for the development of future management. This process is taken over by every organisation periodically.

15. Principle of Span of Control:

This is also called span of management or span of supervision or levels of organisation. This principle is based on the principle of relationship.

Span of control refers to the maximum number of members effectively supervised by a single individual. The number of members may be increased or decreased according to the nature of work done by the subordinate or the ability of the supervisor. In the administration area, under one executive, nearly four or five subordinates may work. In the lower level or the factory level, under one supervision, the twenty or twenty five number of workers may work. The span of control enables the smooth functioning of the organisation.

16. Principle of Leadership Facilitation:

The organisational set up may be arranged in such a way that the persons with leadership qualities are appointed in key positions. The leadership qualities are honesty, devotion, enthusiasm and inspiration.

17. Principle of Exception:

The junior officers are disturbed by the seniors only when the work is not done according to the plans laid down. It automatically reduces the work of middle level officers and top level officers. So, the top level officers may use the time gained by reduction in workload for framing the policies and chalking out the plans of organisation.

18. Principle of Flexibility:

The organisational set up should be flexible to adjust to the changing environment of business. The organisation should avoid the complicated procedures and permit an expansion or contraction of business activities.

19. The Scalar Principle:

This is also called chain of command or Line of authority. Normally, the line of authority flows from the top level to bottom level. It also establishes the line of communication. Each and every person should know who is his superior and to whom he is answerable.

20. Principle of Simplicity and Homogeneity:

The organisation structure should be simple. It is necessary to understand a person who is working in the same organisation. If the organisation structure becomes a complex one, junior officers do not understand the level and the extent of responsibility for a particular activity. The simplicity of the organisational structure enables the staff members to maintain equality and homogeneity. If equality and homogeneity are maintained in one organisation, it is possible to determine whether the staff members discharge their duties to realise the objective of the organisation.

21. Principle of Unity of Direction:

This is also called the principle of co-ordination. The major plan is divided into sub-plans in a good organisational set up. Each sub-plan is taken up by a particular group or department. All the groups or departments are requested to co-operate to attain the main objectives or in implementing major plan of the organisation.

22. Principle of Joint Decisions:

In the business organisation, there are number of decisions taken by the officers to run the business. If a complicated problem arises more than one member examines the problems and takes the decisions. Whenever the decision is taken jointly, the decision gives the benefit for a long period and the decision is based on various aspects of the organisational set up.


What is Organisation – Analysis of Organization: Activities Analysis, Decisions Analysis and Relations Analysis

Since, the process of organizing is related to specific needs and purposes it is important that an organization structure is created with a careful and comprehensive analysis of the needs of the proposed organization. Peter Duckers recommends three types of analysis.

They are:

1. Activities analysis,

2. Decisions analysis and

3. Relations analysis.

1. Activities Analysis:

This refers to very purpose of analyzing the purpose of existence of organization. That is objective of the organization. Once this is known, the manager will be able to find the activities required to accomplish desired goals and group them in an order, hand over each department to suitable and capable person and delegate the authority, so that everybody work to get the desired objective.

2. Decisions Analysis:

Once a person made responsible to do a job and given adequate authority, he decides what kind of decisions will need to be made to carry out the work of the organization. He must also see that where or at what level these decisions will have to be made and how each manager must be involved in them. In other words, this analysis will help the managers to fix up decision levels of organization.

3. Relations Analysis:

It will include the examination of the various types of relationships that develop within the organization. These relationships are Vertical, Lateral and diagonal. Where a superior subordinate relationship envisaged it is vertical relationship. In case of an expert or specialist advising a manager at the same level, the relationship is lateral. Where a specialist exercises authority over a person in subordinate position in another department in the same organization, it is known as diagonal relationship.


What is Organisation – Parts of an Organisation: According to Henry Mintzberg (With the Coordinating Mechanism)

Organizational Typology:

Henry Mintzberg (1979), the organizational theorist from McGill University, Canada has elegantly typified certain organizational configurations based on the key part of the organization and the predominating coordinating mechanism employed by that type.

The key parts of an organization are as follows:

1. Operating Core:

The operating core consists of operators who perform the main work directly related to the production of goods and services. For example, lecturers in a university or assembly line workers in an automobile plant would constitute the operating core of an organization.

2. Strategic Apex:

It refers to the top level management that has the ultimate responsibility of guiding the organization towards its mission and goals. For example, a company’s board of directors, its CEO, and VPs would constitute the strategic apex, primarily responsible to the company’s various stakeholders.

3. Middle Line:

The top management of a company is joined to its operating core by a chain of middle line managers, who are given formal authority. They play an important role in transferring information between the top-level management and the operating core.

For example, general managers, deputy-general managers, divisional managers, factory heads, managers, etc. of a multi-division, multi-unit company would constitute its range of middle-line managers.

4. Techno-Structure:

Different departments within an organization control particular forms of standardization in the organization. For example, the inspection department controls the quality of inputs, process, and the final output. The personnel department controls the quality of manpower according to their knowledge, expertise, skills, and attitude norms, while the design department specifies and standardizes product dimensions, processes, etc.

5. Support Staff:

This refers to all other departments/units that exist to provide support to the organization outside its main work area. For example, transportation department, canteen, security services unit, etc. Most of the times it makes a greater sense to outsource these specialized services.

Further as per Mintzberg (1979) there exist five types of mechanisms employed by the organizations to coordinate their various activities.

These coordinating mechanisms are:

1. Direct supervision – When one person supervises the work of others, as in the case of an entrepreneur in a small start-up who supervises his/her workers directly to achieve the objectives thus, acting as the main and only link to achieve coordination.

2. Mutual adjustment – This method of coordination can be achieved only when a degree of informal communication happens between different functional experts in a project team.

3. Work process standardization – The work process standardization itself can promote coordination between different units as is exemplified, for instance, in the process of an assembly line.

4. Outputs standardization – This happens when, for example, finished product or service specifications and standards act as means of coordinating work as the concerned departments have to coordinate till the output meets the specifications.

5. Skills or knowledge standardization – Often the qualifications, training, and experience of the personnel may act as a major source of coordination in an organization. For example, in an operation theatre of a hospital, the anesthetist, the surgeon, and the staff nurses coordinate to complete the operation successfully.

As an organization grows big and complex, the preferred means of coordination are from type 2 → 1 → 3 → 4, 5.

Taking into account the key role that the various parts of an organization play and the predominant or the main coordinating mechanism that they employ, Mintzberg further classifies organizations into the following configurations—simple structure, machine bureaucracy, professional bureaucracy, divisionalized form, and adhocracy.

1. Simple Structure:

A medium-sized retail store, a corporation run by an aggressive entrepreneur, a government run by an autocratic politician, etc. are all examples of a simple structure. The key part in this type of structure is the strategic apex that tries to centralize and control.

The main coordinating mechanism is direct supervision. The strategic apex, in order to centralize and coordinate by direct supervision, structures the organization as a simple structure.

2. Machine Bureaucracy:

A security agency, national post office, a steel company, a custodial prison, national railways, etc. are all examples of a machine bureaucracy. The chief component in this organization is the techno-structure and the main coordinating mechanism is the standardization of work processes.

The techno- structure strives to coordinate by the standardization of work processes and to structure the organization as a machine bureaucracy. The primary desire of the key part is to increase its influence.

3. Professional Bureaucracy:

A general hospital, a university, public accounting firms, and social work agencies are all examples of organizations that follow the structure of a professional bureaucracy. The key part in this type of structure is its operating core and the main coordinating mechanism is the standardization of skills.

The operators within this structure tend to professionalize, coordinate by standardization of skills, and structure the organization as a professional bureaucracy. The main desire of the key part is to maximize their autonomy.

4. Divisionalized Form:

The divisionalized structure is followed by a vast majority of private firms. The main part of such organizations is the middle line and the main coordinating mechanism is standardization of outputs. The middle management tries to group together the organization, with coordination restricted to the standardization of outputs, to structure the organization as a divisionalized form. The main desire of the key part is to garner autonomy so as to manage their units.

5. Adhocracy:

A space agency, an avant-garde film company, a factory manufacturing complex prototypes, consultancy organizations, etc. are all examples of adhocracy structures. The chief component in this structure is the support staff and the main coordinating mechanism, mutual adjustment.

The support staff tries to coordinate by mutual adjustment so as to structure the organization as an adhocracy. The main desire of the key part is for collaboration and innovation in decision-making.


What is Organisation – 6 Important Types of Organisations

Industrial or business organisations are set up as a legal entity under the rules and regulations for companies, partnership firms, etc. Thus, a manager must, know the legal constitution/entity of organisation to which he/she is associated for employment.

Broadly, there are following types of organisations:

a. A sole trader or a trading or a proprietary firm

b. A partnership firm

c. A co-operative society

d. A joint stock company, which may be a public limited company or a private limited company

e. A holding company

f. A subsidiary company

g. A public sector company

h. A corporation

i. An autonomous corporation/enterprise/organisation

j. A bank or financial institution

k. A foreign company

l. A joint venture company

m. A multinational company (MNC)

A manager must know about these types of organisations, since he may be working there for all the time of his life till his superannuation.

Here, very brief description about all these types of organisations is given to acquaint the manager as far as his interest and job requirements are concerned:

Type # 1. A Sole Trader or a Trading or a Proprietary Firm:

This type of organisation is owned by a single owner. Owner may be an individual or an individual family. ‘Proprietary’ means that besides it being owned by the single owner, it holds a single source of supply for the particular product or service. The particular product may have a unique quality and other technical parameters, which may not be available from others. Therefore, this type of organisations are called proprietary firms.

There are two categories:

i. One is sole trader or trading house

ii. And another is a proprietary firm

Type # 2. A Partnership Firm:

Contrary to the sole trader and trading house, a partnership firm is owned by more than one owner. These owners form a partnership firm registered under partnership act. Partners will be two or three or more with the agreed proportion of their ownership and investments.

Type # 3. A Co-Operative Society:

Co-operative societies are formed under the Co-operative Societies Act. There are several members in the society and managers are appointed to run the business transactions of the society (the organisation).

Type # 4. Joint Stock Company:

Joint stock companies are formed under the Companies Act. These companies are subject to the regulatory authority such as SEBI, if their shares are listed on a stock exchange.

Type # 5. Holding Company and Subsidiary Company:

Holding company has a control of the management of the subsidiary company. Thus, if a company has a control over the other company, this is known as a holding company.

Subsidiary company-A company is known as subsidiary company of another company, when the latter company has a control over the former company.

Type # 6. A Public Limited Company or a Private Limited Company or a Public Sector Company:

The organisation may be a public limited company or a private limited company or a public sector company. There is a difference between the private limited company and a public limited company. In case of a private limited company there are certain restrictions that the company cannot go for public selling of its shares. At the same time, its number of shareholders cannot be more than 50.

Whereas in the case of public limited company, there are no restrictions for selling of its shares to the public and its number of shareholders can be any number for which the company has been registered and permitted under the Companies Act. There are certain advantages and disadvantages in case of both the types of companies.

These are:

I. Decision-making

II. Tax and duty implications

III. Financing, etc.

A public sector company on the contrary is different from the private limited or public limited company under the private sector. This type of company is under the 100% control of State or Central Government. The ownership is with the Central or State Government. These companies have many restrictions on its managers who have to work strictly under the rules and regulations laid down by the Government.


What is Organisation – Importance of Organisation

Once A. Carnagie, a famous American industrialist said, “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 have re-established ourselves.” Every word of Carnagie’s thundering is important. Each word speaks and spells out the need and importance of an effective and fruitful organisation.

Mark Carnagie’s leave nothing but our organisation. How confident he was about his managerial skill and organisation structure. No factory, no money, no trade even no transport but organisation and only organisation.

An effective organization – (1) makes the management simple and efficient, (2) encourages specialisation, (3) improves techniques, (4) encourages constructive thinking, (5) increases productivity, and (6) accelerates the progress. The management asks the organisation to accomplish the tasks set-forth before it which an effective organisation is capable of achieving through its fruitful organisational framework.

This is why it is said that organisation is a foundation upon which the whole structure of management can be successfully built.


What is Organisation – Simon’s Theory of Organisation (A Modern Approach)

Base – Social Needs and Human Psychology:

Professor H. A. Simon based his theory of organisation on – 1. social need, and 2. human psychology. His two important books ‘Administrative Behaviour’ and ‘Organisation’ have recently come to occupy an important place-in already available literature on organisation and administration.

Organisation – A Decision Making Process:

Simon’s organisation is decision-making structure. He has concluded the principle of management and organisation are ambiguous and sometime contradictory. He discards the traditional approaches so the problems of organisation; He firmly believes that we have to develop new thinking conduct researches and formulate principles a fresh for development and progress.

He has advocated that principles are not important as the traditional or classical thinkers believe but in our approach which is an important factor in making the organisation dynamic and responsible. Our approach should be to make the organisation a decision-making structure in which day-to-day happenings should also be taken note of and incorporated.

He believes that behaviour of the some individual cannot remain static in all the circumstances hence sticking to principles of traditional nature would not help the management to grow in stature and progress of the enterprise may then not be as satisfactory as it is planned and expected.

Simon’s principles of organisation, therefore, are principles of decision-making in true sense of the term since his approach to the organisation is not that of classical but is modern one, it is based on the thinking that function of an organisation is only to take decision on one matter or the other.

Simon has emphasised in his ‘Administrative Behaviour’ that management principles are helpful in decision-making process.

His points of views are:

(i) That organisation is a difficult decision-making process,

(ii) That human behaviour is an important instrument with the help of which organisation achieves its objectives, and

(iii) That the working strength of an organisation is the decision of distribution and allotment of the work.

Simon’s Three Principles (Basic):

From the above it is abundantly clear that Simon gives greater importance to decision-making process. The decision taken on the top affects all in the enterprise. However, the decision at middle or lowest level affects only those who are concerned with these decision. This is why he lays stress on three fundamental points (principles) in preparing the structure of an organisation.

His three principles are as follows:

(i) Communication,

(ii) Authority, and

(iii) Loyalty to the Organisation.

The organisation should have such a communication system which would pass on all relevant informations to all concerned so that decision-­making become easy and acceptable process. In the absence of complete information a sound decision cannot be taken. Communication, according to Simon, should have an authority so as to make it acceptable. The decision-making and its implementation become easy when communication are acceptable to all concerned without any reservation. Reserved loyalty does no good to an organisation. Therefore, as far as possible decisions should be laudable and foolproof.

The Five Principles:

Based on his study and generalisations Simon later gave the following five principles of organisation:

(i) Suitability of a Decision:

Though every decision cannot suit each individuals (neither the decision are acceptable nor are suitable in all the circumstances) but decision should reasonably the sound and appropriate to the circumstances in which it has been taken. Decisions always depend on informations compiled and received. Hence this principle only indicate to the fact that reasonably a decision should be in the best interest of the enterprise and personnel’s affects by such decisions.

(ii) Acceptability of Authority:

Authority is exercised always with an aim in mind. It is exercised for common good and not for safeguarding the interest of an individual, Great care is to be taken before exercising one’s authority; Authority, if not acceptable to those who are to abide by the authority, carries no meaning.

(iii) Excellent Decision is no Substitute to a Satisfactory Decision:

The organisation is not expected to take always an excellent decision. ‘Excellent’ is a relative terms hence remain insignificant in any sense of the term it is being used. Decisions may be the best or may be not the best but it must be satisfactory and based on sound judgement. It should be taken without any prejudice and should receive wide acceptance.

(iv) Routine Process:

As far as possible decision making process be made a routine job. Secrecy should not shroud it. It should be open and should pass through a democratic process if permitted by the prevalent circumstances.

(v) Live to the Role:

Simon believes that decisions affect the working condition and zeal of a human being assigned to do a particular job. Hence, his behaviour before a decision is taken. Should be given due weight. It should be live to the role which an organisation is required to play in preparing a dedicated sincere and responsible working force. Human Psychology and behaviour form the fundamentals of Simon’s principles of organisation and it is here where it differs from the traditional organisation approach.

Koontz and O’Donnel:

Koontz and O’Donnel in his famous book Principles of Management has propounded fourteen principles of organisation, He has divided his principles in three broader groups in order to facilitate the organisation work.

(i) For the Purpose of Organisation:

(a) Principle of Unity of Objective.

(b) Principle of Efficiency.

(ii) For the Reason of Organisation:

(a) The Span of Management

(iii) For the Structure of Organisation:

(a) The Scalar Principle

(b) The Principle of Delegation

(c) The Principle of Responsibility

(d) The Principle of Parity of Authority and Responsibility

(e) The Principle of Unity of Command

(f) The Authority level Principle

(g) The Principle of Division of Work

(h) The Principle of Functional Definition

4. For the Process of Organisation:

(a) The Principle of Balance

(b) The Principle of Flexibility

(c) The Principle of Continuity


What is Organisation Process of Creating an Organization

The process of creating an organization includes:

1. Determination of Total Work:

The first and foremost step in organizing is to estimate and determine the total activity required for realising the objectives of the organization. For example, the total activities in a manufacturing organization include acquiring materials, conversion of materials into finished goods, identifying and employing human resources, arranging finance, marketing and selling goods, ensuring quality, earning returns and so on.

2. Departmentation:

The various activities identified in the earlier step are grouped on a logical basis in the form of departments like materials management, production, marketing, finance, human resources, product development, quality control, finance, etc.

3. Work/Duty Assignment:

Under this step, the individuals working in each and every department are assigned work in terms of their specialisation. For example, persons employed in marketing department may be assigned responsibilities like promotion of products, distribution of products, price determination, advertisement, market research, branding, packaging and so on.

Similarly persons employed in inventory department may be assigned responsibilities like identifying source of supply, inventory maintenance, material issue, quality control, storage of materials and so on.

4. Delegation of Authority:

Employees who are assigned duties or responsibilities cannot be expected to perform unless adequate authority is delegated to them to translate the responsibility into reality. For example, person put in charge of materials should be allowed to spend money to identify the sources of supply, to get the materials delivered to stores, to negotiate better terms for the company, to inspect the quality, protect the materials from damage, etc.

Similarly person in charge of maintenance should be authorized to buy spares from various sources, periodically inspect the condition of machines, determine optimum speed of machinery, service the machines, ensure safety of machinist, etc.

5. Creation of Accountability:

Employees who are given responsibilities should be made accountable to his superior for the use of authority and work performance. Superiors ensure that subordinates do the duties as assigned and do not misuse the authority.

6. Defining Relationship:

Management should determine the network of relationship between superior and subordinates. Based on the relationship defined, titles are given to employees.


What is Organisation – Policies, Procedures, Guidelines for Functioning of Organisations

Policies, procedures and guidelines help in the smooth functioning of various activities in the organisation. What are these? A manager may ponder himself in the context of his own job and performance, as to how to do, what to do, etc. There are many relevant points relating to these policies, procedures and guidelines, which are necessary to discuss and explain.

Thus, the important aspects related to these are outlined as under:

1. Meaning of policies, procedures and guidelines

2. Types of these

3. Need and importance

4. Who makes these?

5. Specific policies, procedures and guidelines

1. Meaning of Policies, Procedures and Guideline:

These are pre-decided, approved and declared directions, rules, regulations to be followed and implemented while performing various functions by the employees of the organisations for the output within the organisation, as well as outside the organisation.

As these are pre-determined and declared duly approved by the competent authorities, these are to be followed and implemented without any questions and clarifications by anyone in the organisation. Similarly, these are to be accepted by the outsiders also. Policies are made and approved by the Board of Directors, while the procedures and guidelines are prepared by the senior level managers and approved by the top level or chief executive officer of the organisation or unit.

Thus, these policies, procedures and guidelines are pre-determined written and approved rules, regulations, and manuals for conducting the business transactions of the organisation.

2. Types of Policies, Procedures and Guidelines:

These are:

I. External

II. Internal

When it is said external, it means that these policies, procedures, rules are mandatory to be followed by the organisations. These are made by the external agencies, specially the Government and its departments. As regards, the internal policies and procedures, it is stated that these are prepared by the organisation itself in respect of various functions with a view to perform the activities and perform the same smoothly.

As regards policies, rules made by external agencies, particularly Government and its departments, following broad areas are:

i. Income-tax on salaries and profit of the organisation

ii. Tax deduction at source (TDS)

iii. Service tax

iv. Sales tax

v. Entry tax

vi. Excise duty

vii. Customs duty

viii. Provident fund

ix. Employees State Insurance Contribution

x. Export/Import policies

xi. Licenses

xii. Insurance

xiii. Transport through external agencies including railways

xiv. Finance/funding Various rules/procedures by banks, Reserve Bank of India

xv. Foreign exchange regulations

xvi. Factories related rules and acts

xvii. Inspection of boilers, electrical connections, etc.

xviii. Labour related rules including gratuity act

xix. Mines lease and royalty payment rules

xx. Registration of companies

xxi. Listing of company with SEBI

xxii. Issue of shares

xxiii. Issue of bonds

xxiv. Public deposit schemes.

These are only a few. There may be many for which an organisation will depend upon the policies, procedures prepared by others. As regards internal policies and procedures, it is stated that internal policies, procedures, guidelines are made with the approval of the competent authority covering all the functions, where there is no external policy, procedure involved.

3. Need and Importance of Policies and Procedures:

Policies and procedures are useful and important in the context of management of organisations.

The main highlights are:

(i) Policies and procedures indicate the directions for doing the jobs.

(ii) They help in resolving the differences of opinion, as these are already approved policies and procedures, there will be no dispute and difference in carrying out a job by anybody.

(iii) They smoothen the working.

(iv) They save time, being transparent.

(v) They avoid confusion.

(vi) Therefore, functioning becomes easy and without any hindrance.

(vii) They avoid the duplication.

(viii) They help to adopt a right method of doing the things.

(ix) The policies and procedures become a basis for further improvements, modifications.

4. Who Makes the Policies, Procedures and Guidelines?

The next point is – Who makes these important working procedures and guidelines?

Policies, Procedures Related to Government:

Regarding Government dues, duties, taxes as brought out earlier, policies, procedures, rules, regulations, guidelines are issued by Government – Central, State including Government departments, as also Municipal and local bodies. For other matters like company formation, registration, licenses, export, imports, foreign exchange rules/regulations, etc., policies, procedures, rules/regulations are issued by various departments of Government.

Policies, Procedures, Rules other than Governments (Central and State) and its Departments:

Policies, procedures and guidelines in the organisation other than Government and Government departments are prepared by the prescribed/fully empowered/delegated authorities of the organisations.

These authorities are:

I. Board of Directors of the Company.

II. Chairman/Chief Executive/President of the Company.

III. Managing Director or a Director with delegation of powers by the Board of Directors.

IV. A Ministry concerned in case of a public sector organisation in case of certain policies, procedures not delegated to the Board of Directors of the public sector organisation.

V. A committee formed by the organisation.

To conclude, the policies, procedures, guidelines are the important matters in the context of the management of an organisation; hence these have to be issued by competent authorities only.

It may be added that there are other Government departments and organisations which make their own policies/procedures for their own workings as well as to be followed by the other organisations in connection with performance of their functions/jobs.

These organisations/departments are:

a. Banks including Reserve Bank of India

b. Insurance Companies

c. Income-tax Department

d. Sales-tax Department

e. Customs and Excise Department, etc.

5. Specific Policies, Procedures and Guidelines:

As has been stated, policies and procedures are the fundamentals and principles for the conduct and performance of the tasks of the organisations. Therefore, for almost all the areas of activities in the organisation, policies and procedures are made for proper and smooth functioning.

Following are the broad areas for which organisations make policies and procedures:

I. Investment decision-making and approval Project financing

II. Overall financing policy for debt and equity ratio

III. Personnel policy

IV. Personnel manual and various employee related policies and procedures

V. Marketing policy

VI. Research and Development policy

VII. Accounting policy

VIII. Credit policy

IX. Procurement policy

X. Payment policy and procedure

XI. Procedure for materials, stores and issues

XII. Risk insurance coverage

XIII. Procedure for dispatch, invoicing for sale of products

XIV. Rules and regulation for the earned leave, half pay leave, leave encashment, medical assistance, other perquisites, gratuity payment, final settlement of employees

XV. Procedure for contracts finalisation, i.e., contracts manuals, guidelines, procedure for contract closure, etc.

Similar to these policies and procedures pertaining to a manufacturing organisation, there may be policies and procedures identical or suiting to the organisational needs in respect of banks, insurance companies, construction companies, marketing and trading companies, consultancy organisations, etc.

It is concluded that in the organisation to achieve the main objective, various functions are required to be performed:

a. To accomplish these, there are laid down policies, procedures, rules and guidelines.

b. These policies and procedures provide direction to proceed to reach the final destination i.e., accomplishment of jobs, which are all centered towards achieving the main objective of the organisation.

c. These policies, procedures, guidelines are made by competent authorities including government departments and officials empowered to do so.


What is OrganisationAdvantages

1. Facilitates Administration:

Without a good organisation, effective administration becomes impossible. Organisation allows delegation of authority. It allows, therefore, management by exception and avoids management by crisis. Jobs are described sharply, and so confusion in the organisation and duplication of efforts are avoided.

2. Facilitates Growth and Diversification:

The organisational structure is the framework within which the company grows. Expansion and diversification tracks its course in the direction of the organisation structure. Some types of organisation augur well for the small company in its infancy; however, with the advent of growth and diversification these structures may prove inadequate.

The firm that grows beyond the scope of its existing organisation finds itself in a serious administrative crisis. It then undertakes reorganisation to cope with the growing work­load. On the other hand, a live organisation believes in planning for change to facilitate growth well ahead of the crisis created of its own making.

3. Provides Optimum Use of Technological Advances:

Technological advances exert a great influence on organisational structures and the heavy fixed costs of such equipment calls for proper organisation. Organisations must, therefore, adapt themselves to technological changes in the environment.

4. Encourages Human Relations Approaches:

The organisational structure can deeply affect the staff of the company. Proper organisation facilitates the intensive use of human resources.

5. Stimulates Creativity:

Second organisation gives a fillip to independent, creative thinking and initiative by providing sharp spheres of activity with broad latitude for the development of unconventional and better ways of doing things.

In short, a properly-designed organisational structure affords creative results from creative people and will siphon off routine and repetitive work to lower levels. By introducing clear- cut accountability, it paves the path for achievement motivation for the professionals and specialists.


What is Organisation – Problems of Organisation

The problems of organisation from its start to later stages of growth have been outlined by two authorities as follows:

1. At the start, to create a new organisational system;

2. Thereafter to survive;

3. Then to stabilize;

4. To earn a good reputation;

5. To achieve uniqueness;

6. To earn respect and appreciation.

Major problems in running an organisation are indicated below:

1. How to integrate personal needs with organisational goals?

2. How to distribute power and authority?

3. How to develop mechanism capable of reducing intra-organisational conflicts?

4. How to ensure effective adaptation to changes in the environment? And

5. How to assure vitality and growth and prevent delay?


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