Organization

Meaning
Organization is defined as a group of people trying to achieve some common goal. People in organization
come together to work for a defined purpose. In that sense people working in any organization contribute
together to achieve predetermined goal. People are born in organization. They are educated by
organization. Most of their life is spent working for organization. People need organization and
organization needs people.
According to Robbins and De Cenzo- Organization is systematic arrangement of people brought
together to accomplish some specific purpose.

Characteristics
1. Group of people (two or more people):
2. Common goal
3. Division of work (dividing the total work into different parts so that these works can be
performed by different individuals.
4. Coordination of effort (linking the activities among the all member of organizations)
5. Structure (it defined the formal relationship and position of people in organization and tells them
what they are supposed to do.)
6. System (converting raw materials into finished goods)
7. Environment (it exists in dynamic environment)
8. Technology ( creates new products and changing new technology)
9. Social entity

Types of organizations
1. Business organizations: Primary motive is to earn profit like Bank, Airline, restaurant, Transport
Company.
2. Government organization: Motive is to satisfy public needs like Government ministries,
government department, police office etc.
3. Service organization: Motive is to render services like public schools and hospital, social welfare
agency.
4. Political organization: Motive is to influences public policy and practices like political parties
and their sister organization.
5. Religious organization: Motive s to promote spiritual belief like Churches, temples etc.
6. Associative needs: Motive is to establish satisfy members need like labor unions, clubs etc.
7. Professional organization: Motive is to protect and promote professional rights and interest.
8. International organizations: Motive is to promote collective interest of member countries and
the world at large.

Organizational goal: concept and purpose

Meaning of organizational goal

Goals are end results to be achieved. Goal provides direction to the organization about what is to be done.
They guide action of the organization. They serve as standard of measuring performance.

Purposes of organizational goals

1. To provide guidelines and direction (where an organization wants to be in future and how to get
there.
2. To help develop sound planning (after setting the goal, planning appears to be key formulation.
Corporate plan, tactical plan, operational plan help to allocate resource efficiently and effectively)
3. To serve as a source of motivation ( people will be rewarded once the challenging goal is
achieved)
4. To allocate and utilize resources properly (clearly stated goal directs the way towards the better
utilization of resources)
5. To provide effective mechanism for evaluation and control (goals serve as an standard for
evaluation of actual performance)
6. To provide distinct image and identity (well-designed goal satisfy all the stakeholders and insures
organizational success)

Types of organizational goals

A) On the basis of level of management

Mission: Mission refers to what an organization wants to become. It provides basic

reasons for its existence. It is set by and for top manages. For example: Nokia speaks of
connecting people.
Strategic goal (SWOT analysis): It states how an organization will achieve its mission. It
outlines organizations overall goals related to different dimension. It is formulated by top
level management. For example: 20% return on investment at the end of 10 th year.
Tactical goals: Middle level managers are responsible to formulate tactical goals. They
are also called target goals for departments like production goal, marketing goal, sales
goals. For example: 60% increase in sales annually.
Operational goals: They are unit level goal set by the lower level managers. They are set
for a month. For example: 5% growth on sales monthly.
Individual goals: Daily or weekly task performance for employees

.
B) On the basis of nature of organization:
Survival goal
Growth and profit goal

 Leadership goal
Social responsibility goal

C) On the basis of time frame:

Long term goal( more than 10 years)

Medium term goal(one to five year)
Short term goal(one year or less)

Features of effective organizational goals (SMART)

1. Specific: Profit maximization is vague but 20% profit on sales is specific
2. Measurable: It should be quantitatively measurable.
3. Agreed upon: It shouldnt be imposed. It should be agreed upon with those persons who are
responsible for achieving them.
4. Realistic:
5. Time bound: Increase market share by 20% in five year.

Goal Formulation Process

1.
2.
3.
4.
5.

Environmental scanning
Political legal environment
Economic environment
Socio cultural environment
Technological environment

PEST and SWOT analysis

1. Formulation of overall goal goals: Mission and strategic goal
2. Formulation of specific goals

Approaches to goal formulation

1. Top-Down approach(management driven):
2. Bottom up approach(subordinate driven)
3. Participatory approaches(management and subordinate driven)

Goal succession and displacement

Goal succession: Goals are not static. They keep on changing due to the internal and external
environment of the organization. Goal succession is the intended change in goals. Organizations
incorporate new goals as soon as existing goals either achieved or irrelevant. Goals should be reviewed
and modified periodically for environment adaption.

Goal succession in organization may occur in three specific conditions.

1. Achievement of goal
2. Unachievable goal
3. Changes in external environment
Goal displacement: Goal displacement is unintentional changes in goal. The organization pursues goals
for which it was not established. For example, a cinema hall may turn to party palace.

Reasons for goal displacement

1.
2.
3.
4.
5.

Abstract goal
Excessive delegation of authority
Uncertainty
Employees attitude(if employees pessimistic)
Rigid rules and regulations

Problems in goal formulation

1. Inappropriate goal: If the goal is not related with mission. Mission may be providing of
maximum satisfaction to customer. But if the goals to produce low quality product are set, there is
contradiction. This is inappropriate goal.
2. Improper reward system: Rewards like promotion, incentives etc motivates employees to attain
goals
3. Environmental constraints: Rapidly changing political, economic environmental and
technological environment increase the complexity for organization in goal formulation
4. Resistance to change: Due to lack of confidence, employees may resist any kind of changesredesign of organization, to work with new technology, formulation of new goals
5. Resource constraints: Only the adequate resources ensure the smooth operation. But resource
constraints may hinder in developing goals in the organization
6. Poor integration of goals: There should be the well integration among the different types of
organizational goals

Changing perspectives on organization

1.
2.
3.
4.
5.

Globalization (open system)

Technology
Quality
Social responsibility
Human resource management (management of diverse work force)

6. Organization design (organizations are getting lean, flat and less hierarchical )
7. Cultural sensitivity ( cross cultural influences)
8. Learning system (organizations need continuous learning and knowledge updating to keep
themselves alert. Organizations also need to hire knowledge from outside)
9. Change management