After reading this article you will learn about:- 1. Meaning of Organisation 2. The Process of Organising 3. Principles 4. Importance.

Meaning of Organisation:

The word organisation is used and understood widely in our daily lives. The organising function is important in the managerial functions. It is the primary mechanism with which managers activate such plans.

“Organising” is the function of gathering resources, establishing orderly uses for such resources and structuring tasks to fulfill organisational plans. It includes the determination of what tasks are to be done, how the tasks are to be grouped, who is going to be responsible to do these tasks and who will make decisions about these tasks.

Organisation has been defined in a number of ways by psychologists, sociologists, management theorists as well as practitioners. A definition of organisation suggested by Chester Barnyard, a well-known management practioneer, nearly sixty five years ago still remains popular among organisation and management theorists.


According to him, an organisation is “a system of consciously coordinate activities or efforts of two or more persons”.

In other words, a formal organisation is a cooperative system in which people gather together and formally agree to combine their efforts for a common purpose. It is important to note that the key element in this rather simplistic definition is “conscious coordination” and it implies a degree of formal planning, division of labour, leadership and so on.

Ralph C. Paris has defined organisation in terms of people, while Oliver Sheldon, has defined it in terms of activities.

According to Davis, “Organisation is a group of people, who are cooperating under the direction of leadership for the accomplishment of common end”.


According to Sheldon “Organisation is the process of 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 effective systematic, positive and coordinated application of the available effort”.

Terry defined “Organisation is the establishing of effective behavioural relationships among persons so that they may work together efficiently and gain personnel satisfaction in doing selected tasks under given environmental conditions for the purpose of achieving some goal or objective.”

Koontz and O’Donnell, defined organisation as “the structural relationship by which an enterprise is bound together and the framework in which individual effort is coordinated.”

Urwick defines it as “dividing up of the activities which are necessary to any purpose and arranging them in groups which are assigned to individual.”


On the basis of these definition organisation is treated as a mechanism to achieve certain objectives by division of work, authority and responsibility among its members and coordinating their activities. It is structural framework within which the various efforts are coordinated and related to each other.

The Process of Organising:

The process of organising has the following steps:

1. Determination of objectives.

2. Determining activities.


3. Grouping activities.

4. Assigning duties.

5. Developing relationships.

1. Determination of Objectives:


The first step in the organising process is to determine the organisational goals and objectives. So it is necessary to state in clear terms what the objectives are.

2. Determining Activities:

Managers prepare and analyse the activities needed to accomplish the objectives in the second stop. There may be specific activities, which are unique to the type of business that an organisation is in. Example: In the restaurant, the two major activities or tasks are cooking food and serving customers.

3. Grouping Activities:


Once the tasks have been determined, these tasks must be classified into manageable work units. This is usually done on the basis of similarity of activities. The major categories of tasks can be subdivided into smaller units to facilitate operations and supervision.


There may be different persons for taking cocktail orders, for food orders and for clearing the tables in the area of serving customers in the restaurant.

4. Assigning Duties:


After grouping the various activities into manageable units, suitable persons are selected to be assigned the duty or responsibility for each group of activities.

For example:

The purchase manager is assigned the duties relating to purchase of goods, the sales manager relating to sale of goods.

5. Developing Relationships:

It is necessary to define the relationships among the employees, when two or more people work together. Here, everyone should clearly know who is his superior from whom he has to take orders and to whom he will be answerable. This will help the smooth working of the enterprise by facilitating the delegation of responsibility and authority.

Principles of Organisation:

The following important principles of organisation are given below:


1. The Lines of Authority should be Clearly Stated and should Run from Top to Bottom of the Organisation:

This principle is known as the scalar principle and the line of authority is referred to as chain of command. The major decisions are made and policies are formulated at the top management level and they filter down through the various management levels to the workers. The line of authority should be clearly established so that each person in this chain of command know his authority and its boundaries.

2. Each Person in the Organisation should Report to Only One Boss:

This is known as the principle of ‘unity of command’ and each person knows as to whom he reports to and who reports to him. This process eliminates ambiguity and confusion that can result when a person has to report to more than one superior.

3. The Responsibility and Authority of each Supervisor should be Established Clearly and in Writing:

This will clarify the exact role of the supervisor as to the limits to his authority. With clearly defined authority and responsibility it will be easier for the supervisor to trace and handle problems and make quick decisions when necessary.


4. The Higher Managers are Responsible for the Acts of their Subordinates:

The manager or the supervisor cannot dissociate himself from the acts of his subordinates. Hence, he must be accountable for the acts of his subordinates.

5. The Authority and Responsibility should be Delegated as far Down the Hierarchical Line as Objectively Possible:

This will place the decision making power near the actual operations. This would give the top management more free time to devote into strategic planning and overall policy making. This is especially necessary in large complex organisations. This principle is known as “Decentralisation of power” as against centralized power where all decisions are made at the top.

6. The Number of Levels of Authority should be as Few as Possible:

This would make the communication easier and clear and the decision making faster. A longer chain of command generally results in “run around”, because the responsibilities are not clearly assigned and hence become ambiguous. According to Gilmore, most organisations do not need more than six levels of supervision including the level of the president.


7. The Principle of Specialisation should be Applied wherever Possible:

Precise division of work facilitates specialisation. Every person should be assigned a single function wherever possible. This rule applies to individuals as well as departments. The specialised operations will lead to efficiency and quality. However, each area of specialization must be interrelated to the total integrated system by means of coordination of all activities of all departments.

8. The Line Function and the Staff Function should be Kept Separate:

The line functions are those that are directly involved with the operations that result in the achievement of the company objectives. Staff functions are auxiliary to the line function and offer assistance and advice. For example legal public relations and promotional functions are all staff functions. The activities of line managers and staff managers should be coordinated so as to achieve synergetic results.

9. The Span of Control should be Reasonable and Well Established:

The “span of control” determines the number of positions that can be coordinated by a single executive. The span of control could be narrow where there are relatively few individuals who report to the same manager or it could be wide where many individuals are under the supervision of the same manager.


However, such a span of control would depend upon the similarity or dissimilarity of the subordinate positions and how interdependent these positions are. The more interdependent this position is, the more difficult is the coordination. In such interlocking positions, it is advisable to have no more than five or six subordinates working under any one executive.

10. The Organisation should be Simple and Flexible:

It should be simple because it is easier to manage and it should be flexible because it can quickly adapt to changing conditions. It should be such that it can easily be expanded or reduced, as the times demand. Furthermore, simplicity would make the communication much easier, fast and accurate, which is necessary for successful organisations.

Importance / Benefits of Organisation:

Organisation is needed for an effective and successful organisation.

Thus the following are the importance of organising.

1. Attainment of Objectives:


A good organisation facilitates attainment of objectives through proper coordination of all activities.

2. Minimise Conflicts:

The conflicts between individuals over jurisdiction are kept to minimum since each person is assigned a particular job to perform; the responsibility of performing that job rests solely with him. Hence, the interdependency is reduced to a minimum.

3. Effective Administration:

It will avoid confusion and duplication and eliminate delay and inefficiency. It will remove all bottlenecks in the flow of work and facilitate quick and correct decisions, which help to efficient work.

4. Elimination of Overlapping and Duplication:

A good organisation eliminates overlapping and duplication of work. Since a good organisation demands that the duties be clearly assigned, the duplication of work is eliminated.

5. Facilitates Growth and Diversification:

Sound organisation helps in the growth and expansion of the enterprise through efficient management.

6. It decreases Likelihood of “Run Around”:

The “run around” occur when we do not know who is responsible for what and we are sent to wrong people for getting some work done. However, in a well-organised company where the responsibilities are clearly established, this does not occur.

7. Easy Communication:

Organisation structure provides the pathways for communication among organisational members as well as between the organisation and its environment. Since the lines of communication and the flow of authority is quite clear in the organisational chart, the inter communication is both clearer and easier. So it eliminates the ambiguity.

8. It Helps to Promotions:

The organisation chart indicate that each individual, to which level is reached and since each job is well described in terms of qualifications and duties, it can easily identify the promotional stage.

9. Encourage Creativity:

Responsibility, recognition of work, well-defined area of work, are clear-cut in a good organisation. Therefore, it encourages resourcefulness, initiative and a spirit of innovation and creativity.

10. It Aids in Wages and Salary Administration:

A fair and equitable wages and salary schedule is based on the premise that jobs with similar requirements should have similar benefits. If these be clearly established and the yearly increments or cost of living increments for each type of job is properly understood than compensation administration policies are easier to apply.

11. Optimum use of Organisational Resources:

Organisation structure tries to make optimum use of organisational resources by ensuring their allocation to points where these are needed. While efficiency in the use of organisational resources is necessary for organisational growth and validity, optimum allocation of resources is necessary for organisational growth and validity, optimum allocation of resources to various organisational units is equally important.

A good organisation leads to optimum use of human skill and efforts half of the work is completed when employees know what they have to do and how they have to do it. It helps in smooth operations and smooth flow thus avoiding bottlenecks idle time, and idle machines.

A good organisation requires the right person for the right job and this avoids misapplication of human resources thus resulting in optimal utilisation of employee efforts.

12. Reduction in the Workload of Top Management:

Since, the works are shared among the employees with necessary responsibilities, the workload of top management will be reduced. This allows the top management for effective planning and good policy making.

13. Increased Cooperating and a Sense of Pride:

An employee has adequate freedom within the domain of his responsibility and his authority. Since the authority and the extent of exercise of that authority is known, it develops a sense of independence in employees which in turn is morale- boosting element.