After reading this article you will learn about:- 1. Meaning of Organisation 2. Necessity of Organisation 3. Essential Elements 4. Characteristics 5. Process.

Meaning of Organisation:

An organisation is a large group of persons united in a structured way to achieve a specific or set of goals. It may also be defined as pooling of human physical and spiritual resources in order to achieve any predetermined task.

Organisation structure deals with the overall organisational arrangements in an enter­prise. A clear understanding of organisation structure is helpful in making the more frequent detailed adjustments in organisational arrangements.

An administrator, while designing an organisation structure must take into consideration the advantages of specialization, the limitations of authority, problems of communication and a variety of other specialized aspects of organisation. In designing an organisation structure, one should start with the objectives and activities of the enterprise.


Thus, the organisation structure means the systematic arrangement of the people working for the organisation, their positions, and the relationship between positions. The structure pro­vides an appropriate authority and responsibility relationships.

The organisation structure is generally shown on an organisation chart and the functions to be performed, and depends upon the goals and objectives established, the resources availability, the communications, and the working relationship of the individual participants, motivation and other factors.

For smooth running and regular functioning of large size manufacturing concern, it is very essential to distribute the administrative and managerial duties and other powers to different officers of various departments in an undertaking.

Necessity of Organisation:

An organisation is necessary with the increase in size of the manufacturing plant, introduc­tion of most complex methods of production, tough competitions between the enterprises, and labour problems for every industry so as to produce required quantity of products of required quantity, at required time with minimum production cost.


A well designed organisation structure with qualified personnel in all key positions achieves execution, coordination and control of all functions and policies of the company.

A good organisation is necessary due to following reasons:

1. It enables the use of large size industrial units, introduction of modern techniques, and modern machines.

2. It ensures the success in competitive market due to production of quality products economically.


3. By having good organisation structure, it is possible to have optimum utilization of resources.

4. With clearly defined responsibilities and authorities the individuals strive hard to achieve results.

5. A well organised industry is able to maintain good employer-employee relations.

6. A good organisation makes it possible to direct and coordinate the efforts of individu­als, departments etc.

Essential Elements of Good Organisation:


Essential elements of good organisation are:

1. It must be helpful in the achievement of objectives of the firm.

2. There must be harmonious grouping of activities so that they are implemented easily and effectively.

3. The activities of the organisation must be coordinated properly.


4. The organisation should have an effective system of communication.

5. The span of control should be reasonable.

6. There should be adequate flexibility for necessary changes according to the need.

7. It should have clear and well defined policies and procedures.


8. It should satisfy the employees, increase their morale and motivate them to work for the success of the enterprise.

9. Organisation should have proper division of authority and responsibility for smooth, effective and efficient working.

Characteristics of Organisation:

1. Organisation is a group of persons.

(а) It represents cooperative relationships between them.


(b) Organisation is created to achieve certain common objectives.

(c) The group members are in a position to communicate with each other.

(d) It lays down rules and regulations to regulate the behaviour of group members.

2. Organisation is a structure of relationships.

3. Organisation is a function of management.

4. Organisation specifies how the duties are to be divided among the departments and the employees.

Process of Organisation:


1. Determination of Objectives:

Identification of the objectives before starting any activ­ity, help the management in selecting the men and materials. Objectives serve as the guidelines for the management and the workers.

2. Identification and Grouping of Activities:

Each job should be properly classified and grouped to enable the people to know what is expected of them as members of the group and help in avoiding duplication of efforts.

3. Assignment of Duties:

Each individual is given a specific job to be performed according to his ability and made responsible for that. He should also be given adequate authority to do the job assigned to him.


4. Developing Authority. Responsibility Relationship:

It is necessary that everybody should clearly know to whom he is accountable.

Authority is the right given to superior for directing the action of his subordinates to extract the work given to them (smoothly and efficiently).

Responsibility is the obligation and accountability for the performance of delegated du­ties. A superior is always accountable for the acts of his subordinates, and therefore responsibil­ity is always flows from subordinates to superiors.

5. To Establish Inter-Relationships:

Various groups of activities are integrated:


(a) Through authority relationship horizontally, vertically, and laterally, and

(b) Through organised information or communication system. The integration of activi­ties is necessary to have unity of objectives, team work, and team spirit. It establishes harmony of efforts of different individuals and group avoiding conflicts arising out of it.

6. Providing Physical Facilities and Proper Environment:

Physical facilities include tools, equipment, machinery, plant, infrastructure etc.; whereas right environment means proper lighting, ventilation, cooling/heating arrangement at the workplace, reasonable hours of work and rest pauses, house-keeping, safety arrangement, job security, job satisfaction etc.

7. Preparation of Organisation Chart:

Organisation chart shows the formal organisation structure. It shows the formal superior-subordinate relationships, i.e., who supervises and con­trols whom and how the various units/departments or sections are inter-related.