Business Organisation

Principles of an Ideal Organisation

Meaning of Organisation

The term Organisation means to put into working order or arrange in a system. It performs the task of arranging in order the various steps involved in the entire process of production. It is that device through which production is maximised at minimum cost. In other words, the task of establishing effective coordination among the various divisions of a unit is called ‘organisation’ in commercial terms.

If we study the definitions given by great philosophers, we can say that it includes the following five processes:

  1. To divide each process into sub-processes.
  2. To classify these sub-processes on the basis of the nature of the job.
  3. To recruit the right person for the right job.
  4. To give the necessary rights to the personnel recruited.
  5. To clarify the responsibility of each person and define their inter-relationship.

In short, we can say that it is the process which is carried out by a group of people to arrange and organise any activity in a phased manner.

Principles of an Ideal Organisation

  1. Principle of Achievement of Objectives

    The ideal organisation is that which has the capacity to fulfil its objectives quickly, overcoming all the hurdles in its way.

  2. Principle of Specialisation

    Each person is given only that work which he has the physical and mental ability to perform. In this way, one person is given only one job which makes him specialise in that job gradually.

  3. Principle of Expansion and Development

    An ideal organisation should have the capacity to expand and develop, when necessary.

  4. Principle of Reasonable Span of Control

    The span of control of each official should be limited. Each official should have a fixed number of sub-ordinates working under him, with whom he can easily control and delegate responsibility.

  5. Principle of Unity of Command

    The ideal organisation should follow the policy of single accountability, i.e., each subordinate should be accountable to a single official, also receiving commands from him only. If more than one official commands a single employee, it may confuse him generating a feeling of discontentment in the employees.

  6. Principle of Stability

    One of the important prerequisites is stability. It should be such that it can be run for a long period and earn long-term profits.

  7. Principle of Coordination

    Perfect coordination is the soul of an ideal organisation. The better the degree of coordination among different persons and divisions, the more successful it can become commercially.

  8. Principle of Homogeneity in Policies

    The basic objectives and policies of an ideal organisation should be well defined in a simple manner and put on paper. This helps each employee to understand them homogeneously and properly and perform their work accordingly.

Types of Organisations

In a big organisation where there are hundreds of employees. working and different types of activities are being carried out, it is more convenient to divide the work into groups and divisions, to make possible the achievement of the basic objectives of the establishment.

Organisations are important as they minimise the cost of production through supervision and control and make the position of the business more profitable. Therefore, in a business entity, the form of organisation should be adopted which is most suitable to the nature and circumstances of that very business.

  1. Line Organisation
  2. Functional Organisation
  3. Line and Staff Organisation
  4. Committee Organisation

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