Organisations

Organisation

An organisation can be defined as:

“A social arrangement which pursues collective goals, which controls its own performance, and which is a boundary separating it from its environment.”

An organisation can be defined as:

“A social arrangement which pursues collective goals, which controls its own performance, and which is a boundary separating it from its environment.”This is, perhaps, a deceptively simple definition. Probably the most important word is ‘social’. Organisations consist of people and we are all social animals. We have to get on with our colleagues; ideally we would like our boss, or at least respect our boss. We have to get on with customers; we have our own ambitions; we have our own motivations.

Early management theory tended to neglect the social side of organisations and management and had a rather cold, militaristic approach. Modern theories have changed this considerably.

Another important aspect of the definition is that of ‘collective goal’s. There has to be an assumption that people within an organisation are ultimately aiming at the same end results, if they are not, then chaos is likely to rule. One of the functions of management is to arrange the business and the people in it so that everyone is pulling in the same direction, and the collective goals are ultimately established.

System

The definition of an organisation included the terms ‘boundary’ and ‘environment’. These terms come from systems theory.

The environment is what the organisation sits or lives in. For example a business lives in its national or country environment and perhaps in the international environment. The boundary separates the environment from the organisational system. Input normally goes into the organisation and output comes out of the organisation; some sort of processing takes place within the organisation.

All organisations or systems can be divided into subsystems. For example, an organisation will have a sales and marketing department, an accounting department, a manufacturing department and so on. Subsystems can then be further split down into even smaller subsystems. For example, the accounting department will consist of the receivables ledger, the payables ledger, the cash book, the nominal ledger and so on.

Some systems are known as ‘closed systems’: they take no input from the environment and give no output to it. These are very theoretical and have no long life. It will be difficult to see an organisation continuing to compete successfully if it paid no heed to technological advances, or what its rivals were doing, or what its customers wanted.

Open organisations on the other hand do receive input from the environment and produce output which is sent to the environment. These are the only ones of any practical importance.