Principal

of
Management (POM)
[Link]
7th Semester
2023
Unit 1: The Nature of Organizations

´ Concept of organization.
´ Organizational goals – concept, purposes, and types.
´ Features of effective organizational goals.
´ Goal formulation – processes, approaches and problems.
´ Goal succession and displacement.
´ Changing perspectives of organization.
 Concept of Organization
´ An organization is a group of people who come together to achieve a shared
objective. It consists of a hierarchical structure, dividing work among employees
and aligning tasks with the organization’s goal.
´ Organization can be in any form; it can be formal or informal. People organize to
achieve short-term temporary goals, which can turn into a permanent structure.
´ The key charatersticis of organization are
ü Structure
ü Purpose
ü Cordination
ü Management
ü Resource
ü Adapadibility
Definition of Organization
´ Peter Drucker
“An organization is a group of people coming together for a
common purpose, structured to enable the effective use of resources
for the achievement of shared goals. It is a tool for converting the
potential of people into results.”
´Max Weber (Sociologist)
“Organization is a structured social entity characterized by a
hierarchy of authority, clear division of labor, formal rules and
regulations, and a rational system of decision-making. It is a means
of achieving efficiency and predictability in complex human
endeavors.”
´Moony and Reilly
“An organization is the form of every human association for the
attainment of a common purpose.”
Types of Organization

v Government Organization
v Business Organization
v Professional Organization
v Service Organization
v International Organization
Organizational Goals – Concept
´ An organizational goal is what an organization wants to
achieve shortly
´ Setting the goals of an organization is the initial function of
the management.
´ Goals give meaning and purpose to an organization
´ If an organization is a business organization, the main goal of
this organization is to earn maximum profit by supplying
goods and services to people.
´ Similarly, if an organization is a government organization, may
the main motive of this organization is to involve in public
welfare activities where its service concerns the public
welfare.
Organizational Goals – Concept
´ An aim, condition, or whatever you want to reach or obtain at
any given time is a goal.
´ Organizational goals are strategically set objectives that
outline expected results and guide employees’ efforts.
´ According to Moorhead and Griffin, ” Organizational goals
are the objectives that management seeks to achieve in
pursuing the firm’s purpose.”
 “We don’t meet our
traget every year,
Organizational goals – Purposes but …we ‘re looking
at continuous
improvement” –
RICHARD BARNES

´ Provides guidance and unified direction for people in the organization

´ Goals can help everyone understand where the organization is going and why
getting there is important
´ Goal setting practices strongly affect other aspect of planning.
´ Effective goal setting promotes good planning , and good planning facilitates future
goal setting.
´ Goal can be serve as source of motivation for employees of organization
´ Goals that are specific and moderately difficults can motivate people to work harder,
especially if attaining the goal is likely to result in reward
´ Goals provide an effective mechanism for evaluation and control.
´ This means that performance can be assessed in the future in terms of how
successfully todays goals are accomplished.
 Organizational goals – Types
´ Level ´ Time Frame
Organizational goal differs in the level of Organizations have many goals across
the organization structure or hierarchy. different time frames.
ü Missions ü Long-term goals
ü Strategic goals ü Medium-term goals
ü Tactical goals ü Short-term goals
ü Operational goals ´ On the basis of nature
´ Area ü Survival goals
Organizations set different goals for ü Profit goals
different areas more specifically different
ü Growth goals
departments.
ü Market share goals
ü Production goals
ü Productivity goals
ü HR goals
ü Social responsibility goals
ü Financial goals
ü Marketing goals
 Organizational Goals – Types
´ Strategic Goals
Strategic goals are goals set by and for top management of the
organization. These goals are made by focusing on broad general issues.
Strategic goals or strategies are usually long-term and from this goal, other
goals are made and set for different time-frames and areas.

´ Tactical Goals
´ Tactical goals are set for middle managers. These goals focus on how to operationalize actions
necessary to achieve the strategic goals.
´ Middle managers of various departments are usually responsible for their attainment.
´ Tactical goals are set by the middle managers, but often top-managers set tactical goals for the
middle managers.
´ Operational Goals
´ Operational goals are set by and for lower-level managers. Operational goals are usually made
to tackle shorter-term issues associated with the tactical goals and lower-managers are
responsible for their attainment.
 Features of Effective Organizational Goals
´ Specific
v It should focus on what the organization intends to accomplish. Organizational goals must be
precise. It must be clearly defined and should be understood by every concerned person.
´ Measurable
v Every goal should contain details about how particular aspects of performance will be measured.
It should be measurable in terms of quality and quantity.

´ Attainable
v Organizational goal should not be over ambitious it should be attainable but it should be
challenging.

´ Relevant
v It should be appropriate and consistent with the vision and
mission of the organization.
´ Time Bound
v Goal must be bound by the time frame. There must be a clear
estimation of time period for accomplishment of goals in future.
 Goal Formulation

´ Goal formulation or goal setting is the process

of specifying the desired goal. It is a complex
as well as a unique process in the
organization. Goals serve as the foundation of
all organizational decisions and give a unified
direction to which all management efforts are
directed.
´ The process of goal formulation differs from organization to
organization. It mainly depends on the size and nature of the
organization, the attitude of top management, the efficiency of
managers, and the participative culture.
Process of Goal Formulation

´ To review the organization’s mission before setting the goal

• The organization’s mission is its overarching goal
• Top management establishes objectives in order to achieve the organization’s
mission
• The mission of the organization should be addressed in organizational goals.

´ Evaluate available resources

• Human, physical, financial, and informational resources can all be used to
achieve goals; yet, goals cannot be attained without proper exploitation of
these resources.
 Process of Goal Formulation …Contd…
´ Determine the goals
• Goals should be set by individuals or with input from others.
• They should flow from the organization’s mission and represent the expected
outcomes.
• They should be explicit, quantifiable, attainable, relevant, and time-bound.
´ Write down and communicating the goals
• The management should write down the goals and communicate them to all
relevant people in the organization which aids in the effective implementation of
the goals.
´ Review of results
• It is necessary to ensure whether goals are being met or not?
• We can identify differences between goals and actual performance through
review of results.
• It makes easier to take corrective action.
 Goal Formulation :: Approaches
1. Top-down approach
Top-down approach is a directive approach. Under this approach, top executives first develop the
corporate goals and disseminates them to middle and lower level managers for implementation.
Top level mangers use their knowledge and experiences to formulate the goals.
2. Bottom-Up approach
1. Bottom-up approach is a participatory approach. Under this approach, functional workers
formulate goals for their positions and passes to the top level for final revision and approval. Top
level management finalizes the goals on the basis of mission statement and disseminate to
lower level for its implementation.
3. Management by Objectives (MBO):
1. MBO is initially suggested by Peter Durker in [Link] is the process under which both top level
and lower level management jointly formulate the goals for an organization. They determine
each individual’s major area of responsibility in terms of goals which gives employees a sense
of ownership and motivates further. The collective effort of both superior and subordinates in
goal setting process is the major advantage of MBO.
Goal Formulation : Problems

• Unattainable Goals – Unattainable goals decrease the morality of members.

Organizations try to set challenging goals to motivate employees but such goals can
also be ideal and unattainable.
• Lack of Intellectual Capacity – Goal setting also requires the intellectual capacity of
people associated with it. They should be qualified in terms of mathematical tools
and techniques. Also, have good knowledge of SWOT and PESTLE analysis.
• Resource Constraints – Lack of resources becomes a problem in goal formulation. It
decreases the confidence level in attaining the goal.
• Environmental Uncertain – The external environment is uncertain and complex. The
changes in such an environment such as technology change, high competition,
uncertainty in the political-legal environment, etc. can not be easily estimated.
• Reluctant to Change – Operating and middle-level managers may not easily accept
the change in responsibility and technology intended by the top management
which also creates difficulty in goal setting and implementation.
Goal Succession and Displacement

´ Goal Succession
• Goal succession is the act of conscious and intentional modification of an existing
goal.
• Goal succession is conscious attempt by management to adopt new goals.
• When an organization is faced with the problems such as acute competition,
declining sales, shortage of funds, etc. may challenge to meet the new goals for
survival.
• Goal succession is the result of achievement of original goals, change in
environment, unachievable goals, and change in priority of the organization.
´ Reasons of Goal Succession
1. Achievement of original goals
2. Changes in environment
3. Unachievable goals
4. Changes in priority
 Reason for Goal Succession:

1. Original goal achieved: When original goal is achieved in a living period of time
it is essential for an organization to set new goal. Setting new goal is necessary for
perpetual existence of an organization.

2. Environmental adaptation: Environment is the dynamic and regularly influences

organizational functioning. So, every organization needs to modify its original goal
in accordance with the environmental changes.

3. Unachievable goals: When original goal cannot be achieved even by the hard
work of the management it needs to received and modify the existent goal.
Modification in goal also be needed if actual performance, deviates significantly
from targets.
 Goal Succession and Displacement
´ Goal Displacement
•Goal displacement is the act of unintentional change in the original goal into the new goal.
•It is an unintentional shift in organizational goals by management.
•It occurs when deviations take place in goal encouragement.
•Such deviation is however, unplanned.
•When sub-goals become the primary goals in an organization, goal displacement takes place.
•Goal displacement is an unintentional shift in organizational goals by management.
• It brings total change in organizational goal.
•It is revolutionary change.
•It has long term effect on the organization.
´ According to Adam Jeffery's, “goal displacement is the tendency of organizations to
substitute alternate goals for the goals the organization was established to serve. The new
goals often serve the interest of the organization’s employees or leaders.”
´ Reasons of Goal Displacement
[Link] Conflict
[Link] goals
[Link]’s attitude
[Link] end inversion
[Link] delegation of authority
 Reason for Goal Displacement :
1. Goal conflict : When organizational goal conflict with individual goals and personal goal displacement takes
place. It basically occurs when there is absence of consensus in an organization.

2. Means-End Inversion :
End – Goal
Means – process, way
End is what is to be achieved and means is how it is to be achieved. When an management developed strict
rule regulation, policies and procedures to perform organizational functions then employee proper attention to
follow these rules and discipline not to the accomplishment of task due to which goal displacement takes place.

3. Abstract Goal : If original goal are abstract, uncertain and unclear displacement takes place. If the goals are not
made clear then members of the organization can not achieved it with limited resources. So, goal must be specific
and achievable that can be translated into operational goal, otherwise it is displaced.

4. Goal Substitution : When long term goal are substituted by short term goal displacement takes place. For
example: Increasing market share by 10% is the long term goal can be substituted by increases in productivity or
sell by 20% which is short term goal.
5. Employee Attitudes : Unproductive attitudes of employee to original goals lead to goal displacement if
employee have a positive goals they can be achieved in an effective way. But if employee and there union have a
negative attitudes towards it; they may not perform effectively and give priority to personal goal.
example

´ Goal Succession Example: ´ Goal Displacement Example:

´ Apple Inc. is known for its goal succession ´ In 2020, during the COVID-19 pandemic,
and iterative approach to product Apple experienced goal displacement in
development. A notable example is the its retail strategy. Apple's retail stores
evolution of the iPhone. When Apple worldwide were originally designed to
initially launched the iPhone in 2007, their provide a unique in-person customer
goal was to create a revolutionary experience, including product
smartphone with a touch interface. After demonstrations, workshops, and customer
the tremendous success of the first iPhone, support. However, due to the pandemic
Apple set new goals for successive and the need for social distancing, Apple
versions. These goals included improving had to temporarily close many of its retail
hardware performance, expanding the stores and shift its focus to online sales and
app ecosystem, enhancing camera customer support. The original goal of
capabilities, and integrating new features creating an immersive in-store experience
like Face ID. Each successful iteration of was displaced by a new goal of
the iPhone led to the establishment of new emphasizing online sales and remote
goals, driving ongoing innovation and customer assistance to adapt to changing
market leadership. circumstances.
Changing Perspectives of Organization

´ The organization is defined and viewed differently at different time period.

Previously, it was only considered as a people gathering place where workers do
what the employer asked them to do, there was no concerned about the relation of
work and people performance.
´ But as the time passes by, the concept of work, workers and workplace has been
gradually changing. Organization is not only the gathering place, it is a place
where people are embrace as an asset and help them to groom their abilities and
make them competent to accept and overcome any environmental changes.
 Mechanistic

Changing Perspectives of
perspective
Organic
perspective

Organization
System
perspective
Cultural
perspective
Learning
perspective
Global,
Perspective
 Changing Perspectives of Organization
Mechanistic perspective:
´ This is the traditional view on organizations. Many classical theories of organization represent mechanistic view. Many
management experts and economists like F.W Taylor, Henry Fayol, Adam Smith, and Moony contributed to develop
mechanistic perspective of organization. Mechanistic perspective is characterized by following features:
´ It assumes organizations as machines.
´ It assumes that organizations operate in a predictable and stable environment.
´ the prime goal of organization is to increase its efficiency through specialization and standardization of work.
´ It believes on fixed working hours, fixed production and maintenance schedule, financial control systems and quality
control systems to make controlling effective.
´ This perspective sets tall organizational structure with formal hierarchy of authority. This perspective sets sales targets
to improve profitability.
´ This perspective attempts to improve working environment for employee motivation and removing fatigue. This
perspective believes on one best way of doing jobs and solving each problem.
´ Though this perspective is popular among many management practitioners, it has some drawbacks.
´ They are: This perspective is suitable only in stable business environment which is almost impossible in current business
world. This perspective always ignores human aspects in organization. Thus, employees cannot be motivated.
´ This perspective assumes 'unique solution' for every problem.
´ There cannot be unique solution to every problem in every organization. Rigid working hours, production schedule
and control system makes the organization as a static organization which reduces the chance of goal attainment. .
 Changing Perspectives of Organization
2. Organic perspective:
´ This is the modern view on organization. It emphasizes on 'socio psychological aspects of human beings in
organization. Managers are suggested to analyze sociological and psychological aspects of employees to
motivate them. Main features of this approach are listed below:
• This perspective emphasizes on human interactions at work place.
• Social and psychological study of people helps increase organization effectiveness through their motivation.
• This perspective focuses on adjusting with situational change. Thus, change in business environment can be
accepted and managed effectively.
• This perspective emphasizes on redesigning the jobs to empower workers.
3. System perspective:
´ This perspective views organization as a unified whole structure of various interacting and interrelated parts. Only the
whole composition becomes able to achieve predetermined goals. It is assumed that all systems are composed of
five basics elements i.e. input, processing, output, feedback and environment.
´ According to this perspective, organization system should interact within open system i.e. functions of organization
should interact with external environmental factors. This perspective focuses on 'combined synergy' of these five
elements to achieve pre-determined goals. Major features of this perspective are summarized below:
• Organizations operate in open system. So, each organization should interact with environmental forces.
Organizations grab the business opportunities as well as face threats from environment.
• Every system has certain boundary. Such boundary provides the limitation to the organization. Each element of
system is goal oriented. The combined effect i.e. synergy of the element provides greater result than just the
arithmetic sum of output of each element individually.
• Every system has interrelated sub-systems. For example, within input there can be several systems which are sub-
systems for whole system. Feedback provides information regarding the work in progress as well as quality of output.
This helps adjust on the system to attain better result. Its main focus is to take the synergic benefits. Synergy here
means the whole is always greater than the sum of its parts i.e. 2+2> 4.
Changing Perspectives of Organization
Cultural perspective:
´ Every organization has certain patterns or norms of behavior. Organizations formulate certain shared values
which are collectively termed as organizational culture.
´ Cultural perspective of organization stresses on the organizational culture to define what is acceptable
and unacceptable in organizations in dealing and doing the things. These beliefs guide the employee's
behavior at organizational work setup.
´ Key features of cultural perspective are summarized below:
• This perspective focuses on mutual interest of management and employees for organizational culture. This helps
develop positive effect in organizational performance.
• This perspective is 'people focused'. Thus, mutual understanding, respect and collective efforts are available in the
organization.
• This perspective assumes that work autonomy to employees at their work area increases productivity.
• This perspective emphasizes open and two-way communication. Performance based reward system is focused. This
perspective believes that culture guides the behavior and performance of employees at the job.
5. Learning perspective:
This perspective views organization as a learning system. Modern organizations should be knowledge based.
They need to update knowledge continuously. For this, each member in the organization must be learner.
According to this perspective, each organization for continuous uplift, must search new methods and ideas to
maintain the learning environment Each member should share and gain knowledge openly. Organization must
maintain the knowledge of employees and should encourage for creativity.
Main features of this perspective are summarized as below:
• Organizational members share ideas and experiences to increase the productivity and organizational
effectiveness.
• This perspective focuses on analysis of environment on a regular basis which enables learning faster than
competitors.
Changing Perspectives of Organization

Globalization
´ The organizations are not limited within one country. The area of
organization has expanded all over the globe. Expansion of the market,
facilities in foreign trade, low cost, availability of resources, favorable
international laws and rules, etc. ‘ have encouraged globalization.