After reading this article you will learn about the meaning and nature of organisation.

Meaning of Organisation:

In common parlance, ‘organisation’ refers to ‘institution’. An educational institution, private agency, Government department or a business firm are organisations. In the context of management, it refers to formal arrangement of work amongst members of the institution with clear identification of authority and responsibility to achieve organisational goals optimally. If duties of members and their relationship with peers, superiors and subordinates are well defined, the planning process will be effective.

Every institution should be based on sound principles of organisation to achieve its goals. The organisation should clearly define the tasks and duties of every member and relationship amongst them so that members co-ordinate their activities to achieve the goals. The term ‘organisation’ has emerged over a period of time from the traditional task-oriented to the modern people-oriented concept.

The evolution of ‘organisation’ as ‘a mechanism that enables people to work most effectively’ to attain organisational goals has emerged as follows:


1. The “Herd” concept:

It views organisation as a group of people who direct efforts towards organisational goals through coercion, punishment and strict adherence to rules and regulations. It empowers the superiors to decide for the subordinates and wants subordinates to obey their directions, orders and instructions.

2. The “person-to-person “concept:

Subordinates are not viewed as a ‘herd’ by the superiors. Superiors delegate them responsibility and authority to make them contribute towards organisational goals.


3. The “group” concept:

While ‘person-to-person’ concept emphasises on vertical relationships amongst superiors and subordinates, the ‘group’ concept recognises the lateral or horizontal relationships also amongst people working at the same level.

Interaction amongst people at all levels is the ‘group’ concept of organisation. This view is prevalent today and empirically proves that efforts of all individuals, as a group, are oriented towards a unified direction, that is, achieve maximum returns at minimum costs.

Viewed as a group concept, ‘organisation’ is defined 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”. — Alvin Brown

Nature of Organisation:

The following points explain the nature of organisation:

1. Structure of relationships:


Organisation is a system of well-defined tasks and duties assigned to people along with authority, responsibility and accountability. Delegation provides formal structure to the organisation. Constant interaction amongst people creates social relationships and a structure of informal organisation. This is independent of the formal relationships.

Though organisation structure designs only the pattern of formal relationships, informal structure of relationships emerges spontaneously. It is not governed by formally prescribed structure but is an important part of the interactions that take place in the organisation.

2. Managerial function:

It is a function of management which integrates human and non- human (physical) resources for achieving organisational goals. It is a function in itself and helps in performing other managerial functions. For planning, directing and staffing functions to be effectively performed, they are effectively organised.


3. Ongoing process:

Organising is a process which involves a series of steps, from determination of objectives to accomplishment of objectives. It is a continuous process which requires management to introduce changes (re-organisation) in the way an organisation works. Organisations re-organise their structure to keep updates with environmental changes.

4. Encourages teamwork:

Since the early times, people always lived in groups. With increase in size of these groups, it was not possible for one person to accomplish the organisational task alone. The work, therefore, got divided amongst people and each person co-ordinated his work with others. This required organising the group activities towards a common goal.


According to Louis A. Allen: “Organisation has enabled men to increase their riches far beyond the dreams of the wealthiest potentates of old by making effective use of a potent multiplier — machine, power and mechanised tools”. Organisation exists when there are a number of people in communication and relationship with each other willing to contribute towards a common endeavour.

5. Foundation of management:

Success of an institution depends upon its sound organisation. Clear definition of jobs and their division amongst members with clear identification of authority and responsibility is the foundation of successful management. Unless there is clarity of who is responsible to whom, management cannot function effectively.

6. Goal-oriented:


Every organisation is formed for an objective; profit or service. All organisational activities are divided amongst members, departments are created, work is co­ordinated and continuous monitoring of activities is done to achieve the objective. The process of organisation is, thus, a goal-oriented process.

7. Adaptive to change:

Though organisation structure provides stability to activities, it is open to change. Changes in the environment, internal or external, are incorporated in the organisation structure. This makes organisation an ongoing process.

8. Situational:

No structure can be described as the best. The organisation structure varies according to the nature of activities, size of the organisation and nature of relationships amongst people. Contemporary business environment is constantly changing and organisation structure has to adapt to the changing situations through its process.