DEFINITION, CONCEPTS, OBJECTIVES, TYPES, PRINCIPLES &

THEORIES OF ORGANIZATION

OBJECTIVES

This Chapter helps the Learner to

 understand about Organization

 define organization
 describe the concept of organization
 discuss the organizational development
 describe the organizational structure
 describe the organizational effectiveness
Introduction
Organizing the organization is an administrative function. It is transmitting the plan into action
which is specially concern with grouping the activities arranging and sequencing the various task
in terms of the relationships and their characteristics.

Definition
 Organization is a system of co-operative activities of two or more persons. (Bernad)

 Organization is the arrangement of personnel for facilitating the accomplishment of some

agreed purpose through allocation of functions and responsibilities. (L. White).

Concept
Organization structure determines employee behaviour through the effects of role, power, status,
responsibility. authority, centrality and communication.

Role: Role in the set of behaviours and attitudes expected of a person by those whom he or she
interact. For example, as an employee of health organization, a nurse may occupy several
occupational roles.
Power: Power is the ability to influence another to behave in accord with ones wishes. It may be
reward power,
Status: Status is the rank a group officers on a person in accord with the groups estimation of the
persons value
Responsibility: It is the obligation to account for ones conduct with respect to our assigned task,
eg. Nurses responsibility.
Authority: It is a person's right to make decisions and take action without approval by higher
administrations, plus the right to extract obedience from others. It is not absolute. Centrality: It is
the least organization distance from all other workers.
Communication: It is the facilitator for all work by a group of people. It consists of the
transmission of information and opinion between persons.

The key concepts of organization are

a) As entity
b) As group of people
c) As structure
d) As process

Organization as entity
Most frequent use of the term organization is an entity and it is referred to as enterprise as a
whole like company, corporation, partnership firm etc. In this form, organization defined as
collectively of people for achieving the common objectives. William Scott has defined
organization as follows "Organizations are collectives of people that have been established for
the pursuit of relatively specific objectives on a more or less on continuation basis

Organization as group of people

When organization is referred to as a group of people, it is mostly referred to as different groups
created formally or informally. In this form organization has the following features. An
organization always refers to the people. The organization is composed of people who interact
among themselves. The interactions are meant to achieve some sort of objectives

Organization as structure
Organization is referred to in the context of structure which prescribes the relationships among
individuals and positions they hold There may be different ways in which these relationships are
prescribed. Structure tends to somewhat permanent with a provision of incorporating changes
whenever required. However the use of lem structure to denote organization is not used
independently but it is combined with the term organization either in the form of organization
structure or structure of organization.

Organization as process
Use of term organization as a process more confusion has been created in management literature.
In the present context the term organization is mostly referred as entity. Whenever it is used as a
process, it is termed as organizing rather than organization. Organizing, being process, consists
of departmentation, linking departments, defining authority and responsibility and prescribing
authority relationships.

Objectives
The overall objective of organization is to develop teamwork that functions as a single
instrument for low cost production.
Primary
1. Distribution of services and maintaining harmony.
2. Satisfy personal objective of organization such as salary and personal benefits
3. Meet community and social objectives
Secondary
1. Economy of operational meeting of primary objectives.
2. Effectiveness of operation in meeting primary objective.

The others are

 To provide the structure within the functions of administration are performed
 To ensure an optimum use of human efforts through specialization and also makes use of
all resources, determines needs for innovative and new technologies in terms of cost
effectiveness
 To places a proportionate and balanced emphasis on various activities. To facilitate co-
ordination in the enterprises. To provide the scope of training and developing managers.
 To help to consolidate growth of expansion of the enterprise/ institution.

Advantages of having organization

 Encourages specialization which increase objective.
 Avoid duplication
 Promotes co-ordination.
 Increase expansion and growth of organization.
 Provide scope for training and developing managers.
 Invites creative ideas to working through adoption and human
 Prevent growth of corruption.
Types of organization
Broadly, the organization has been classified into,

1) Formal organization
2) Non formal organization
3) Informal organization
4) Line organization
5) Staff organization
6) Line and staff organization structure.
7) Committee organization
8) Social organization.

1) Formal organization
formal organization is a system of well-defined jobs, cach bearing definite measure of authority,
responsibility and accountability to enable the people of the enterprise to work most effectively
in accomplishing their objectives and organizational goals. It sets up boundaries and path which
must be followed to achieve the objectives

2) Non formal organization

Existing within formal organization is non formal organization that permits and sometimes
encourages behaviour by members. This non formal behaviour is frequently desirable and also
work oriented and contributes significantly to efficiency. Behavioural factors such as
unnecessary socializing on the job, group values and cultural likes and dislikes serve as bases for
non formal behaviour in formal organizations.

3) Informal organization
It refers largely to what people do because they are human personalities. Their actions are
directed in terms of needs, emotions and attitude and not only in terms of procedures and
regulations. In the informal organization, people work together because of their personal likes
and dislikes. Informal group may extend its activities to other groups as well as to the existing
one within the organizational unit. The effectiveness of this group depends upon the internal
relations, the recognition of common goal and desire to work together in accomplishing it.

4) Line organization
Commonly used for small enterprises, especially by retailer and manufacturers having perhaps
seven to eight employees.

5) Staff organization (Functional)

Staff means a supporting role and functions; it is intended to help the "order". Use of staff in
organization structure can be traced to the need for help in handling details, locating data
required for decisions, and offering counsel on specific managerial problems.

6) Line and staff organization

Though line structure is suitable for most organizations, especially small ones, it is not effective
for larger companies. This is where the line and staff organizational structure comes into play.
7) Committee organization
A body of persons elected or appointed to meet on an organized basis for the discussion and
dealing of mattes brought before it. Committees do exist at any organizational level, serve in
various capacities and for different purposes. The committee meets regularly, may be weekly,
makes decisions, ensures that they are enforced and participates in the management affairs of the
company or Hospital.

8) Social organizations
The ultimate authority of a business enterprise rests with public or society. The professional
privileges are derived and controlled through laws and marketing process. Then beginning with
the policies, a management system is organized to achieve the organizational objectives.

DEVELOPING ORGANIZATIONAL STRUCTURE AND LEVELS

Introduction:

Although planning is the key to effective management, the organizational structure furnishes the
formal framework in which the management processes take place. The organizational structure
should provide an effective work system, a network of communications, and identity to
individuals and the organization and should consequently foster job satisfaction

Definition:

An organization structure defines how job tasks are formally divided, grouped and coordinated

Organizational structures are formal structures adopted and used by organizations to organize
and direct the flow of work and activity and to define the relationships among the parts of an
organization (Minetzberg, 1983)

Each organization/ agencies contain both formal and an informal structure that governs work
flow and interpersonal relationship. The characteristics of formal and informal organization
structures are as follows:

Formal organizational structure:

The formal organizational structure is defined by executive decision determined by planning. It

can be diagrammed to show the relationships among people and their positions. It describes
positions, task and responsibilities and relationship.

Formal organization means the intentional structure of roles in a formally organized enterprise.
The formal organization structure is highly planned. Through departmentalization and work
division it provides a framework for defining the managerial authority, responsibility and
accountability.
In well defined formal structure roles and functions are defined and systematically arranged,
different people having different roles and rank and hierarchy are evident. Coordination among
members and their control are well specified through process, procedures, rules etc. The basic
forms of formal organizational structures are hierarchic, or bureaucratic model and the adaptive,
or organic model.

Informal organizational structure:

The informal organization comprises personal and social relationship that does not appear on the
organizational chart. This might include the group that usually takes breaks together, works
together on a particular unit, or takes a class together. Informal organization is based on personal
relationships ruler than on respect for positional authority.

Informal organizations means natural grouping of people in the work situations Informal
organization is a natural outcome at t work place it is not designed and planned Informal
structure is created on the basis of some similarity among its members. The basis of similarity
may be age, sex, place of origin, caste, religion, personality characteristics etc. membership in
Informal organization is voluntary. A person may become member of several Informal
organizations at the same time.

Behavior of members of the Informal organizations is coordinated and controlled by: gap norms
of the formal organization. The Informal organizational structure is important to management.
The manager should be aware of its existence, study its operating techniques, prevent
antagonism, and use it to meet the agency's objectives

Comparison of formal and informal organizations:

Basis of comparison Formal Informal

Formation Planned and deliberate Spontaneous

Purpose Well set goals Social Interaction
Nature Official Unofficial
Focus Position Persons
Leadership Superior Anyone
Source of power Delegated Given by group
Guideline for behavior Rules and procedures Group Norms
Source of control Rewards/Punishment Sanction

Elements:

There are six elements that the managers need to address when they design their organizations
structure. These are:
 1. Work specialization: breaking the jobs into small standardized tasks
2. Departmentalization: ones you have divided jobs up through work specialization, you
need to group these jobs together so that common tasks can be coordinated. The basis by
which jobs are grouped together is called departmentalization.
3. Span of control: How many employees can a manager efficiently direct? This question
of span of control is important because, to a large degree, it determines the number of
levels and managers an organization has. All things being equal, the wider or larger the
span, the more efficient the organization.
4. Chain of command: the chain of command is an unbroken line of authority that extends
from the top of the organization to the lowest echelon and clarifies who reports to whom.
5. Centralization and decentralization
6. Formalization: Refers to the degree to which jobs within the organization are
standardized. If the job is highly formalized, then the job incumbent has a minimum
amount of discretion over what is to be done, when it is to be done, and how it is to be
done

Components of organizational structure:

The main component of organizational structure is organizational chart. It is the diagrammatic

representation of the different positions in the hierarchy of an institution. It gives the executives
and the employees or the managers and the subordinates a quick view of the following:

 The relationships between the various departments and divisions

 The relationship between those, that exists between the different positions in the
management level and grass root level employees in an organization
 It also provides an opportunity to all from the top level administrators to the work force
to understand their positions, roles and to whom they are accountable or answerable

Characteristics of organization chart:

 It must be diagrammatic representation.

 It must denote the principle lines of authority between different positions within the
enterprise.
 It must show the interrelationship between various functions and authority positions.
 It must denote the channels of communication between the various positions and between
the executives and the subordinates.

Types of organization structure:

The type of organization structure used in health care facility affects communication patterns,
relationships and authority. The different types are as follows,

1. Line organization structure

 2. Line and staff organization structure
3. Functional organization structure
4. Product organization structure
5. Territorial organization structure
6. Matrix organization structure

1. Line structure:

It is the oldest and simplest form of organization. It is also known as the military or scalar
organization. A line structure is a purely hierarchical chain of command in which each employee
is supervised by and is responsible to a single, clearly identified supervisor. It is mostly found in
large health care facilities. The structure is very simple and facilitates the understanding of role
relationship. It provides clear cut authority and responsibility for each position.

Merits:

 Simplicity
 Unity of control
 Better discipline - Maintenance of discipline is easy since each subject is controlled by
his immediate supervisor
 Prompt decision - Decisions are taken by supervisors, hence it becomes easier and less
time consuming
 Fixed responsibility- Responsibilities are well defined and persons are accountable to
someone in the line form.
 Easy supervision and control
 Overall development of managers Since the line organization does not have provision for
staff specialist, the various managers have to combine among themselves the expertise of
the staff members. Thus the functions of the managers are more comprehensive which
leads to the overall development of the managers concerned.

Demerits:

 Lack of specialization - The manager has to perform variety of functions which may not
be necessarily of his specialization
 Autocratic approach - Line of authority is direct, demand high level of obedience on the
part of subordinates Leaves little consideration for their initiatives
 Problems of coordination - Stresses on vertical relationships hence problem of
coordination occurs
 Lack of sub ordinates training- The superiors take decisions and subordinates merely
transform them into action. They often produce monotony, alienate workers and adjust
rapidly to altered circumstances difficult.
  Inadequate communication- There is no down to up communication in this type of
organization
 Favoritism- Since one man is the decision maker and also opinion maker it is possible
he/she may influenced by a few people.

2. Line and Staff organization structure:

In order to strike the balance between the line and functional organization, it is believed that the
best system to adopt in any progressive organization is the line and staff organization. It refers to
a pattern in which staff specialists' advice line managers to perform their duties Here there is a
scope for having experts and adviser to advice the leader of the team whenever and wherever
required When the work of an executive increases, they require the work of specialists who has
done specialization in that field.

The staff or workers are permitted to voice their views in this type of organization. Their views
are considered, made note of, and implemented, wherever necessary However, the decision to
implement these views and suggestions within the department rests with the manager alone.

The staff functions can be divided into two areas, a) staff advice and b) staff service.

While the staff advice relates to staff functions at the higher level, the staff service relates to staff
functions at the lower levels.

Merits:

 Planned specialization - The line managers are responsible for operations contributing
directly to the achievement of organizational objectives.
 Expert's advice becomes available to the line management.
 Quality decisions - Here each expert gives his advice in the area of his specialization
which is reflected in the decisions.
 Prospect for persona growth- It offers opportunity for concentrating in a particular area
thereby increasing personal efficiency.

Demerits:

 Lack of well defined authority - It is difficult to differentiate between line and staff
authority because in actual practice the authority is often diffused
 Line and staff conflicts - Staff tend to assume line authority and thus may become a cause
of friction between the two.
 Sometimes the staff may not give sound advice because the staffs are not accountable for
the results of implementation of the advice.
 Staff steals credit, although the direction and planning are done by the manager.
3. Functional organization structure

The grouping of common homogenous activities to form an organization unit is known as

functional departmentalization. That means the units are organized around common functions.
This type is the most widely used basis for organizing activities and is present in every large
organization at some level.

Basic functions- these are the major functions which are essential for the organization and their
operations contributing to the organizational efficiency. For example, in a manufacturing
company basic functions can be production, marketing and finance. Similarly in finance
company, financing activities can be raising and dispersing financial recourses.

Secondary function- when departments are created on the basis of major functions and a
manager feels that his span of management is too wide to manage effectively.. he may create
departments within the major functional departments. Such departments will be created by
dividing major functions into sub functions. For example marketing department may be created
at top level. In order to function properly, it may be divided in selling, marketing research,
advertizing etc.

Merits:

 Better division of labor takes place which results in specialization of functions and its
consequent benefits.
 It separates manual and mental functions.
 Greater efficiency is ensured as every person performs a limited number of functions
 Ensuring performance of activities necessary for the achievement of organizational
objectives.
 Elimination of unnecessary activities
 Easier control of functions

Demerits:

 Lack of responsibility for the end results

 The system leads to conflict among foreman and supervisors of equal ranks
 Problems of conflict and coordination among functional departments. Therefore, the
functional departmentation is useful only up to top or immediately below the top level
 Accountability for inefficiency cannot be fixed.

4. Product organization structure:

It involves the grouping together of all activities necessary to manufacture a product or

product line. Product departmentation is preferred for product expansion and diversification
 when manufacturing and marketing characteristics of each product are of primary concern.
Generally used when the product is relatively complex and a greater deal of capital is
required for plant and other facilities. For example if the company has more than 20 products
as the basis of departmentation.

Merits:

 Organization having multiple products or operates in a single industry with products for
different uses.
 This type pays attention to product lines, reduce problems of coordination for different
products
 Provides opportunities for further diversification and expansion of organization

Demerit:

 It presents problem at the top level management for coordination.

 Multiplicity of efforts, because same functional facilities are required for different
products.
 Problem in maintaining economical, central staff services.

5. Matrix organization structure:

It is designed to focus on both product and function. The matrix structure both the components
are merged together. Function is described as all the tasks required to produce the product and
the product is the end result of the function. For ex: good patient outcomes are the product and
staff education and adequate staffing may be the functions necessary to produce the outcome.
The matrix organization structure has a formal vertical and m chain of command. Ifere there are
less formal rules and fewer levels of hierarchy

Merits:

 It focuses resources on a single project, permitting better planning and control to meet the
project deadline.
 It is flexible in nature, hence can work very well in dynamic environment. I improves
motivation because people can focus more directly on the completion of one project

Demerits:

 Decision making is slow because of necessity of information sharing and it can produce
confusion and frustration for workers because of its dual authority hierarchical design.
  This structure cannot work when there is financial problems. There is always struggle for
power since there is dual command. People have to work under multiple commands as
the subordinates are not clear of what they expected to do.

6. Territory organization structure:

This is specifically useful for large sized organizations having activities which are physically or
geographically spread such as banking insurance transportation etc. in such cases all the
activities are grouped into zones divisions, branches

Merits:

 Encourages local participation in decision making and improves coordination of activities

in a region
 Managers can give special attention to the needs and problems of the local markets
 Some costs of operations can be saved ex transportation cost

Demerits:

 Lack of communication
 Distance between policy framer and policy executers
 Tend to lead to duplication of services
 Top managers find it difficult to monitor the activities of the departments located in
various territories.

Organizational level:
Organizational levels exist because there is a limit to the number of persons an administrator can
supervise effectively. Based on the number of person under each organization, there are mainly
two levels of organization. They are as follows:

 Organization with narrow spans

 Organization with wide spans

Organization with narrow span:

Narrow span of control are a top level of organization. Here there is close supervision and close
control. There is quick communication between subordinates and supervisors. Here the
supervisor tends to get too involved in subordinates level There is excessive distance between
lowest level and top level.

Organization with wide span:

Wide span of control are at middle or lower level of organization. Here the supervisors are
forced to delegate and clear policies must be made. The subordinates must be carefully selected.
Limitations are as follows;

 Tendency of overloaded superiors have problem in decision making

 Requires highly qualified administrators.

Organizational levels based on job responsibilities:

1. Top level organization

2. Middle level organization
3. Lower level organization

1. Top level organization:

This looks at the organization as a whole, coordinating internal and external influences and
generally makes decisions with few guidelines or structures Examples of staff level
administrators include the organizations chief operating officer (COO) or chief executive officer
(CEO) chief nursing officer (CNO) Their responsibilities include determining the organizational
philosophy, setting policy and creating goals and priorities for resource allocation Top level
administrators have a greater need for leadership skills and are not as involved in routine daily
operations as like lower level administrators.

2. Middle level organization:

They coordinate the efforts of lower levels of the hierarchy and are conduit between lower and
top level administrators They carry out day to day operations but are still involved in some long
term planning and in establishing unit policies Ex, Nursing supervisors, Head nurses Many
health care facilities have renamed middle administrators as director.

3. Lower level organization:

Lower level organizations are sometimes referred as first level administrators. They are
concerned with their specific units work flow They deal with immediate problems in the units
daily operations with organizational needs and with personal needs of employees. They need
good managerial skills. Since they work close with people (example nurse with patients and
heath team members), they have an excellent opportunity to practice leadership role that will
greatly influence the productivity and the subordinates satisfaction Ex; Charge nurses team
leaders, primary nurse.

ORGANIZATIONAL EFFECTIVENESS
Organizational effectiveness is the concept of how effective an organization is in achieving
the outcomes the organization intends to produce. The idea of organizational effectiveness is
especially important for non-profit organizations as most people who donate money to non-profit
organizations and charities are interested in knowing whether the organization is effective in
accomplishing its goals.

 An organization's effectiveness is also dependent on its communicative competence and

ethics. The relationship between these three are simultaneous. Ethics is a foundation
found within organizational effectiveness. An organization must exemplify respect,
honesty, integrity and equity to allow communicative competence with the participating
members. Along with ethics and communicative competence, members in that particular
group can finally achieve their intended goals.
 Foundations and other sources of grants and other types of funds are interested in
organizational effectiveness of those people who seek funds from the foundations.
Foundations always have more requests for funds or funding proposals and treat funding
as an investment using the same care as a venture capitalist would in picking a company
in which to invest.
 Organizational effectiveness is an abstract concept and is basically impossible to
measure. Instead of measuring organizational effectiveness, the organization determines
proxy measures which will be used to represent effectiveness.
 Proxy measures used may include such things as number of people served, types and
sizes of population segments served, and the demand within those segments for the
services the organization supplies.

For instance, a non-profit organization which supplies meals to house bound people may collect
statistics such as the

 Number of meals cooked and served.

 The number of volunteers delivering meals.
 The turnover and retention rates of volunteers.
 The demographics of the people served.
 The turnover and retention of consumers.
  The number of requests for meals turned down due to lack of capacity (amount of food,
capacity of meal preparation facilities, and number of delivery volunteers)
 Amount of wastage.
 Since the organization has as its goal the preparation of meals and the delivery of those
meals to house bound people, it measures its organizational effectiveness by trying to
determine what actual activities the people in the organization do in order to generate the
outcomes the organization wants to create.

According to HENRI FAYOl Effectiveness is a function of clear authority and discipline within
an organization.

According to ELTON MAYO Effectiveness is a function of productivity resulting from

employee satisfaction.

EFFECTIVENESS CRITERIA

The organization must be

1. Effective in accomplishing its purpose.

2. Efficient in the acquisition and use of scarce resources

3. A source of satisfaction to its owners, employees, customers and clients, and society.

4. Adaptive to new opportunities and obstacles

5. Capable of developing the ability of its members and of itself

6. Capable of survival in a world of uncertainties.

APPROACHES TO MEASURING ORGANIZATIONAL EFFECTIVENESS

 Goal Approach: Effectiveness is the ability to excel at one or more output goals.
Preferred when goals are clear, time bound and measurable
  Internal Process Approach: Effectiveness is the ability to excel at internal efficiency,
coordination, motivation, and employee satisfaction. Preferred when costs, outputs &
satisfaction are easily measurable
 System Resource Approach: Effectiveness is the ability to acquire scarce and valued
resources from the environment. Preferred when a clear connection exists between inputs
and outputs
 Constituency Approach: Effectiveness is the ability to satisfy multiple strategic
constituencies both within and outside the organization. Preferred when constituencies
have powerful influence on the organization, and the organization must respond to
demands.
 Domain Approach: Effectiveness is the ability to excel in one or more among several
domains as selected by senior managers.
MODELS OF' ORGANIZATIONAL EF'F'ECTIVENESS

1. The Rational Goal Model

Reflects Management values of structural control and external focus. The goal model is the most
common theoretical perspec~ive on effectiveness. It is both simple and complex. In its simplest
form, the goal model defines effectiveness as the degree to which an organization realizes its
goals. The model posits that organizations can be understood as rational entities. Evaluators
assume that an organization's goals can be identified. Evaluators assume that organizations are
motivated to meet those goals and progress toward them can be measured.

2. Open Systems Model

Combination of external focus and flexible structure. Management's goals are primarily growth
and resource acquisition. Sub-goals are flexibility, readiness, and positive evaluation by the
external environment. Dominant value is establishing a good relationship with the external
environment to grow and acquire resources. Similar to the Systems Resource Model.

3. Internal Process Model

Reflects the values of internal focus and structural control Seeks a stable organizational setting
that maintains itself in an orderly way. Well established in environment and just wish to keep
their current position. Sub-goals include mechanisms for efficient communication, information
management, and decision-making.

4. Human Relations Model

Internal Focus and flexible structure. Management concern is on the development of human
resources. Employees are given opportunities for autonomy and development. Management
works toward sub goals of cohesion, morale, and training opportunities Organizations using this
are more concerned with employees than the environment.

5. The Contradiction Model of Organizational Effectiveness

The idea of trying to characterize a whole organization as totally effective or ineffective is

problematic. In any complex organization there may be parts of the organization that function
well and suggest effectiveness while other aspects of that same organization perform poorly.

Four Central Assumptions of the Contradictions Model

1. Organizations face complex environments that place multiple and conflicting demands
and constraints on them. It may not be possible to succeed in meeting all the
environmental conditions an organization faces.
2. Organizations have multiple, conflicting goals. It is impossible to maximize
achievement of all goals.
3. Organizations face multiple internal and external stakeholders or constituent groups that
make competing or conflicting demands. It may be impossible to satisfy all groups of
people who express interest in a company.
4. Organizations must manage multiple and conflicting time demands. Satisfying short- or
long-term demands at the expense of the other may result in sub-optimal performance.

VARIABLES DETERMINING EFFECTIVENESS

According to Likert there are three variables which affect effectiveness of organization
  CASUAL VARIABLES are those factors that influence the course of developments
within an organization and its results or accomplishments .these independent
variables can be altered by the organization and its management.
 INTERVENING VARIABLES are those variables that affect the human resources
or intervening variables in an organization. Intervening variables represent the current
status of the internal state of the organization.
 OUT, OR END RESULT, VARIABLES are the dependent variables that reflect the
achievement of the organization. In evaluating effectiveness, perhaps more than 90
percent of mangers in the organization look at measures of output alone.

Causal variables Intervening variables Output variables

Leadership Commitment to Production
strategies, skills and objectives,
styles. motivation and moral Costs
of members
Management Sales
decisions
Earnings
Organizational Skills in leadership,
philosphosy, communications, Management-Union
objectives, policies conflict resolutions, relations
and structure decision making,
problem solving Turnover
Technology

Relationship among Likert’s causal, intervening and output variables.

COMPONENTS OF ORGANIZATIONAL EFFECTIVENESS

Organizational effectiveness means to study the organizational structure in order to understand

the basic working. It helps in evaluating and analyzing the performance of the organization.
There are various components of organizational effectiveness they are:

1. Managerial Policies and Practices

2. Environmental Characteristics
3. Employee Characteristics
4. Organizational Characteristics

ASSESSMENT OF ORGANIZATIONAL EFFECTIVENESS

SETTING STANDARDS
Standards are set according to organizational function of goals, experience with previous
goals, and other organizations experience with these previous goals. Appropriate effectiveness
criteria depends on how clear the standards and cause effect relationships are known.
SELECTING INDICATORS
There are three basic types of indicators-this based in structures, on process, in outcomes.
Outcome focus on material or objects on which the organization has performed the operation.
These are the most common effectiveness measurements. Process measures assess effort rather
than effect. Structural indicators assess the capacity of the organization for effective
performance. These often include organizational features or participant characteristics.

SELECTING SAMPLES AND PROCEDURES

Selecting samples requires proper definition of the organization, its work and its ultimate
organizational goals. Samples will be according to the nature and area of assessment.
Organizational managers may emphasize features because they are more under their control.
Client and customer will focus on output measurements.
 EXPLAINING EFFECTIVENESS
Because many of the proposed measure of the effectiveness are negatively correlated, we
shouldn’t expect to “find general explanations that will distinguish organizations.” Given the
complexity of the organizations, we shouldn’t find a simple set of factors that account for
effectiveness either.

BENEFITS OF CREATING AND MAINTAINING AN EFFECTIVE ORGANIZATION

Improved:

• profitability

• competitiveness

• customer satisfaction

• management-employee relations

• focus on key goals

• communications

• teamwork

• employee morale

• company image

• revenue

• service to customers (internal & external)

• planning

• work environment

• decision making

Greater:
 • market share

• adaptability

Reduced:

• customer complaints

• warranty claims

• cost

• waste

• rework

• employee turn-over

Increased:

• employee involvement

• employee satisfaction

• ability to attract new customers

SUMMARY

In this content, it was discussed about Organization concept, types and levels of organization and
concept of organizational effectiveness.

Conclusion:

Organizational structure affects how people perceive their roles and the status given to them by
other people in the organization. Organizational structure is effective when the design is clearly
communicated, when there are few administrators to accomplish goals and good communication
is facilitated. A wide span of control results in a few organizational levels and a narrow span
result in many levels. An effective organization includes good subordinate training clarity of
authority delegated, the use of objective standards, use of effective communication technique and
the level in the organization.
I Multiple choice questions

1-Organisation establishes relationship between

(A) People, work and resources

(B) Customer, work and resources

(C) People, work and management

(D) Customer, work and management

(Ans: A)

2-Organisation is a process of
(A) Identifying and grouping of work to be performed

(B) Defining and delegating the responsibility and authority

(C) Both ‘A’ and ‘B’

(D) None of the above

(Ans: C)

3-Responsibility always flows from

(A) Superior to subordinate

(B) Subordinate to superior

(C) Both ‘A’ and ‘B’

(D) None of the above

(Ans: B)
4-Authority always flows from
(A) Superior to subordinate

(B) Subordinate to superior

(C) Both ‘A’ and ‘B’

(D) None of the above

(Ans: A)

5-‘No one on the organisation should have more than one boss’ is a statement of
(A) Principle of specialisation

(B) Principle of authority

(C) Principle of unity of command

(D) Principle of span of control

(Ans: C)

6-The number of persons which can be effectively supervised by a single executive or

departmental head should be limited to ___ in an average firm.
(A) Six

(B) Ten

(C) Fourteen

(D) Twenty

(Ans: A)
7-The following is not a principle of organisation
(A) Principle of exception

(B) Principle of balance

(C) Principle of complexity

(D) Principle of co-ordination

(Ans: C)

8-As per the principle of balance, there should be balance between

(A) The activities

(B) Authority and responsibility

(C) Standardisation of procedures and flexibility

(D) All of the above

(Ans: D)

9-The following is not a type of organisation structure

(A) Line organisation

(B) Functional organisation

(C) Line and staff organisation

(D) Flexible organisation

(Ans: D)
II Short Notes

1. Critically analyze the advantages and disadvantages of different leadership styles.

2. Discuss the different styles of leadership.
3. Explain the models of organizational effectiveness.
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York: McGraw Hill publishing company, 2006.
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Lippincott publishers; 2000