An organization is defined as a consciously coordinated social unit made up of two or more persons, who operate on a relatively continuous basis to accomplish certain objectives or a group of objectives.
Individuals and inter-group relations are managed effectively by using organizational structure, particularly between different divisions and functions.
It describes how people and resources are grouped by managers, along with the integration of people and groups to stimulate them to work together. Furthermore, it describes how organizational effectiveness and inter-group relationships are influenced by organizational norms and values.
Role of Structure and Culture
Managers try to build supportive work attitudes, encourage workers to work hard, and enable groups and individuals to cooperate and work together effectively. The behavior of people and groups is affected by the organization’s structure and culture.
Organizational structure is the formal system of reporting and task relationships that coordinates, controls, and motivates workers so they work together and cooperate to accomplish organizational objectives.
Organizations are:
- Goal Oriented
- Social Entities
- Linked to External Environment
- Deliberately Structured
Components of an Organization
The organizational design is influenced by the environment. The ability to react rapidly and creatively is significant when uncertainty exists.
By making behaviors and attitudes predictable, performance is improved when the environment is stable. Predictability and creativity are fostered by particular cultures and structures.
- Task: An organization’s purpose, mission, or objective for existence
- People: The organization’s human resources
- Structure: How divisions, departments, and the overall organization are designed at the macro level, and how work is designed at the micro level
- Technology: The mechanical and intellectual processes employed by an organization to convert inputs into products and services
Formal vs. Informal Organization
- Formal Organization: The component of the organization that has official recognition and legitimacy.
- Informal Organization: The unofficial component of the organization.
Why Do Organizations Exist?
Organizations exist for the following reasons:
- To increase division of labor and specialization
- To manage the external environment
- To exert control and power
- To utilize large-scale technology
- To economize on transaction costs
Factors Affecting Organizations
Following are the two factors that affect organizations:
- Organizational Environment
- Technological Environment
Organizational Process
The set of resources surrounding an organization is included in the organizational environment. This includes inputs, resources used to convert inputs, and the resources that organizations compete for, which are often scarce.
There is a high level of uncertainty in acquiring the required resources. Organizations secure and protect these resources by designing their cultures and structures in specific ways.
The second design contingency is the technology faced by an organization. The combination of raw materials, human resources, and equipment that employees use to transform inputs into goods or services is referred to as technology.
Each job is a component of the organization’s technology. An organization must design its culture and structure to support the functioning of its technology.
Plans of action are developed through organizational processes to compete successfully by acquiring resources and outperforming competitors. These plans of action are known as strategies.
Organizational Change
Organizational change is an ongoing process that has significant implications for the well-being of members of the organization and for overall performance.
Both the organization and its members must remain alert to changes in the external environment as well as internal conditions. They must also learn how to adapt to change effectively and quickly.
In many cases, major changes such as reengineering and restructuring become necessary because organizations and their managers either fail to recognize or ignore changes in their environment and do not make gradual improvements when needed.
The more effectively an organization manages change, the easier the process becomes over time. Building and managing a plan for change is essential for organizational success.
