Definitions

business organization

Organization

[awr-guh-nuh-zey-shuhn]
An organization (or organisation — see spelling differences) is a social arrangement which pursues collective goals, which controls its own performance, and which has a boundary separating it from its environment. The word itself is derived from the Greek word ὄργανον (organon) meaning tool. The term is used in both daily and scientific English in multiple ways.

In the social sciences, organizations are studied by researchers from several disciplines, the most common of which are sociology, economics, political science, psychology, management, and organizational communication. The broad area is commonly referred to as organizational studies, organizational behavior or organization analysis. Therefore, a number of different theories and perspectives exist, some of which are compatible, and others that are competing.

  • Organization – process-related: an entity is being (re-)organized (organization as task or action).
  • Organization – functional: organization as a function of how entities like businesses or state authorities are used (organization as a permanent structure).
  • Organization – institutional: an entity is an organization (organization as an actual purposeful structure within a social context)

Organization in sociology

In sociology "organization" is understood as planned, coordinated and purposeful action of human beings to construct or compile a common tangible or intangible product. This action is usually framed by formal membership and form (institutional rules). Sociology distinguishes the term organization into planned formal and unplanned informal (i.e. spontaneously formed) organizations. Sociology analyzes organizations in the first line from an institutional perspective. In this sense, organization is a permanent arrangement of elements. These elements and their actions are determined by rules so that a certain task can be fulfilled through a system of coordinated division of labor.

An organization is defined by the elements that are part of it (who belongs to the organization and who does not?), its communication (which elements communicate and how do they communicate?), its autonomy (Max Weber termed autonomy in this context: Autocephaly)(which changes are executed autonomously by the organization or its elements?) and its rules of action compared to outside events (what causes an organization to act as a collective actor?).

By coordinated and planned cooperation of the elements, the organization is able to solve tasks that lie beyond the abilities of the single elements. The price paid by the elements is the limitation of the degrees of freedom of the elements. Advantages of organizations are enhancement (more of the same), addition (combination of different features), and extension. Disadvantages can be inertness (through co-ordination) and loss of interaction.

Organization in management and organizational studies

Management is interested in organization mainly from an instrumental point of view. For a company organization is a means to an end to achieve its goals.

Organization theories

Among the theories that are or have been most influential are:

Organizational structures

The study of organizations includes a focus on optimizing organizational structure. According to management science, most human organizations fall roughly into four types:

Pyramids or hierarchies

A hierarchy exemplifies an arrangement with a leader who leads leaders. This arrangement is often associated with bureaucracy. Hierarchies were satirized in The Peter Principle (1969), a book that introduced hierarchiology and the saying that "in a hierarchy every employee tends to rise to his level of incompetence".

An extremely rigid, in terms of responsibilities, type of organization is exemplified by Führerprinzip.

Committees or juries

These consist of a group of peers who decide as a group, perhaps by voting. The difference between a jury and a committee is that the members of the committee are usually assigned to perform or lead further actions after the group comes to a decision, whereas members of a jury come to a decision. In common law countries legal juries render decisions of guilt, liability and quantify damages; juries are also used in athletic contests, book awards and similar activities. Sometimes a selection committee functions like a jury. In the Middle Ages juries in continental Europe were used to determine the law according to consensus amongst local notables.

Committees are often the most reliable way to make decisions. Condorcet's jury theorem proved that if the average member votes better than a roll of dice, then adding more members increases the number of majorities that can come to a correct vote (however correctness is defined). The problem is that if the average member is worse than a roll of dice, the committee's decisions grow worse, not better: Staffing is crucial.

Parliamentary procedure, such as Robert's Rules of Order, helps prevent committees from engaging in lengthy discussions without reaching decisions.

Staff organization or cross-functional team

A staff helps an expert get all his work done. To this end, a "chief of staff" decides whether an assignment is routine or not. If it's routine, he assigns it to a staff member, who is a sort of junior expert. The chief of staff schedules the routine problems, and checks that they are completed.

If a problem is not routine, the chief of staff notices. He passes it to the expert, who solves the problem, and educates the staff – converting the problem into a routine problem.

In a "cross functional team", like an executive committee, the boss has to be a non-expert, because so many kinds of expertise are required.

Organization: Cyclical structure

A theory put forth by renowned scholar Stephen John has asserted that throughout the cyclical nature of one’s life organizational patterns are key to success. Through various social and political constraints within society one must realize that organizational skills are paramount to success. Stephen John suggests that emphasis needs to be put on areas such as individual/ group processes, functionality, and overall structures of institutions in order to maintain a proper organization. Furthermore, the individual's overall organizational skills are pre-determined by the processes undertaken.:

Matrix organization

This organizational type assigns each worker two bosses in two different hierarchies. One hierarchy is "functional" and assures that each type of expert in the organization is well-trained, and measured by a boss who is super-expert in the same field. The other direction is "executive" and tries to get projects completed using the experts. Projects might be organized by regions, customer types, or some other schema. matrix management

Ecologies

This organization has intense competition. Bad parts of the organization starve. Good ones get more work. Everybody is paid for what they actually do, and runs a tiny business that has to show a profit, or they are fired.

Companies who utilize this organization type reflect a rather one-sided view of what goes on in ecology. It is also the case that a natural ecosystem has a natural border - ecoregions do not in general compete with one another in any way, but are very autonomous.

The pharmaceutical company GlaxoSmithKline talks about functioning as this type of organization in this external article from The Guardian.

"Chaordic" organizations

The chaordic model of organizing human endeavors emerged in the 1990s, based on a blending of chaos and order (hence "chaordic"), comes out of the work of Dee Hock and the creation of the VISA financial network. Blending democracy, complex system, consensus decision making, co-operation and competition, the chaordic approach attempts to encourage organizations to evolve from the increasingly nonviable hierarchical, command-and-control models.

Similarly, emergent organizations, and the principle of self-organization. See also group entity for an anarchist perspective on human organizations.

Organizations that are legal entities: government, international organization, non-governmental organization, armed forces, corporation, partnership, charity, not-for-profit corporation, cooperative, university.

The organization of the artist

The organization of the artist is a term first used by architect Frank Gehry to denote the organizational set-up he enforces in order to ensure that the architect/artist is in control of design through construction. The organization of the artist deliberately eliminates the influence of politicians and business people on design. The purpose of the organization of the artist is to ensure that it is the design of the architect/artist that is actually implemented and not some compromise decided by political and business interests.

Gehry initially developed the concept of the organization of the artist as a reaction against what he calls the "marginalization of the architect/artist." Gehry explains:

"There's a tendency to marginalize and treat the creative people like women are treated, 'sweetie, us big business guys know how to do this, just give us the design and we'll take it from there.' That is the worst thing that can happen. It requires the organization of the artist to prevail so that the end product is as close as possible to the object of desire [the design] that both the client and architect have come to agree on." (Flyvbjerg 2005, 53).

Gehry argues that the organization of the artist, in addition to making possible artistic integrity, also helps keep his buildings on time and budget, which is rare for the type of innovative and complex designs that Gehry is known for. The organization of the artist thus serves the dual purpose of artistic freedom and economic prudence.

Leadership in organizations

Leadership in formal organizations

An organization that is established as an instrument or means for achieving defined objectives has been referred to as a formal organization. Its design specifies how goals are subdivided and reflected in subdivisions of the organization. Divisions, departments, sections, positions, jobs, and tasks make up this work structure. Thus, the formal organization is expected to behave impersonally in regard to relationships with clients or with its members. According to Weber's definition, entry and subsequent advancement is by merit or seniority. Each employee receives a salary and enjoys a degree of tenure that safeguards him from the arbitrary influence of superiors or of powerful clients. The higher his position in the hierarchy, the greater his presumed expertise in adjudicating problems that may arise in the course of the work carried out at lower levels of the organization. It is this bureaucratic structure that forms the basis for the appointment of heads or chiefs of administrative subdivisions in the organization and endows them with the authority attached to their position.

Leadership in informal organizations

In contrast to the appointed head or chief of an administrative unit, a leader emerges within the context of the informal organization that underlies the formal structure. The informal organization expresses the personal objectives and goals of the individual Membership. Their objectives and goals may or may not coincide with those of the formal organization. The informal organization represents an extension of the social structures that generally characterize human life — the spontaneous emergence of groups and organizations as ends in themselves.

In prehistoric times, man was preoccupied with his personal security, maintenance, protection, and survival. Now man spends a major portion of his waking hours working for organizations. His need to identify with a community that provides security, protection, maintenance, and a feeling of belonging continues unchanged from prehistoric times. This need is met by the informal organization and its emergent, or unofficial, leaders.

Leaders emerge from within the structure of the informal organization. Their personal qualities, the demands of the situation, or a combination of these and other factors attract followers who accept their leadership within one or several overlay structures. Instead of the authority of position held by an appointed head or chief, the emergent leader wields influence or power. Influence is the ability of a person to gain cooperation from others by means of persuasion or control over rewards. Power is a stronger form of influence because it reflects a person's ability to enforce action through the control of a means of punishment.

Leader in organizations

An individual who is appointed to a managerial position has the right to command and enforce obedience by virtue of the authority of his position. However, he must possess adequate personal attributes to match his authority, because authority is only potentially available to him. In the absence of sufficient personal competence, a manager may be confronted by an emergent leader who can challenge his role in the organization and reduce it to that of a figurehead. However, only authority of position has the backing of formal sanctions. It follows that whoever wields personal influence and power can legitimize this only by gaining a formal position in the hierarchy, with commensurate authority.

Hybrid organizations

A hybrid organization is a body that operates in both the public sector and the private sector, simultaneously fulfilling public duties and developing commercial market activities. As a result the hybrid organization becomes a mixture of both a part of government and a private corporation.

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