Nature of an Organization

There are some common features of organization through which a clear idea about its nature can be obtained. These are indicated below:

1. Process

Organization is a process of defining, arranging and grouping the activities of an enterprise and establishing the authority relationships among the persons performing these activities. It is the framework within which people associate for the attainment of an objective.

The framework provides the means for assigning activities to various parts and identifying the relative authorities and responsibilities of those parts. In simple term, organization is the process by which the chief executive, as a leader, groups his men in order to get the work done.

2. Structure

The function of organizing is the creation of a structural framework of duties and responsibilities to be performed by a group of people for the attainment of the objectives of the concern. The organization structure consists of a series of relationships at all levels of authority.

An organization as a structure contains an “identifiable group of people contributing their efforts towards the attainment of goals.” It is an important function of man­agement to organize the enterprise by grouping the activities necessary to carry out the plans into administrative units, and defining the relationships among the executives and workers in such units.

3. Dividing and Grouping the Activities

Organizing means the way in which the parts of an enterprise are put into working order. In doing such, it calls for the determination of parts and integration of one complete whole on the other. In fact, organization is a process of dividing and combining the activities of an enterprise.

Activities of an enterprise are re­quired to be distributed between the departments, units or sections as well as between the persons for securing the benefits of division of labour and specialisation, and are to be inte­grated or combined for giving them a commonness of purpose.

L. Urwick defines organization as: ‘determining what activities are necessary to any purpose and arranging them as groups which may be assigned to individual.

4. Accomplishment of Goals or Objectives

An organization structure has no mean­ing or purpose unless it is built around certain clear-cut goals or objectives. In fact, an organization structure is built-up precisely because it is the ideal way of making a rational pursuit of objectives. Haney defines organization as: “a harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes”.

5. Authority-Responsibility Relationship

An organization structure consists of vari­ous positions arranged in a hierarchy with a clear definition of the authority and responsibility associated with each of these. An enterprise cannot serve the specific purposes or goals unless some positions are placed above others and given authority to bind them by their decisions.

In fact, organization is quite often defined as a structure of authority-responsibility relationships.

6. Human and Material Aspects

Organization deals with the human and material factors in business. Human element is the most important element in an organization. To accomplish the task of building up a sound organization, it is essential to prepare an outline of the organization which is logical and simple. The manager should then try to fit in suitable men. Henry Fayol says in this connection: “see that human and material organizations are suitable” and “ensure material and human order”.

From these features of organization, it emerges that, an organization is essentially an administrative ‘process’ of determining what activities are necessary to be performed for the achievement of objectives of an enterprise, dividing and grouping the work into individual jobs and, a ‘structure’ of positions arranged in a hierarchy with defined rela­tionships of authority and responsibility among the executives and workers performing these tasks for the most effective pursuit of common goals of the enterprise.