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What is an Organization?
Jaap de Jonge, Editor, Netherlands
Someone asked me the other day: what exactly is an organization?
DEFINITION OF AN ORGANIZATION
Well, in in simple terms, an organization is defined as: "an entity comprising one or more people that has at least one particular purpose". An organization is usually made up of various sub-organizations like business units and departments with specialized tasks.
EXAMPLES OF ORGANIZATIONS
Typical examples of organizations are:
CRITERIA FOR AN ORGANIZATION
As you can see in the above examples, organizations can differ a lot among each other. But organizations do have six things in common:
- PURPOSE: They have at least one purpose / goal (that could be a pure economic and/or a moral purpose);
- PEOPLE: They are comprised of at least one person, but normally of multiple people;
- STRUCTURE: They have some form of organizational structure (how they are built up internally);
- ASSETS: They normally have assets to accomplish their goals (machines, tools, but also knowledge and skills);
- CONTINUITY: They aim for continuity and are permanent (as long as their purpose is not achieved);
- COORDINATION AND DIVISION OF TASKS: In order to achieve their predetermined goal with a certain group of people, tasks will have to be distributed.
These 6 criteria set organizations apart from other social groups and coalitions.
FORMAL AND INFORMAL ORGANIZATION
A distinction can be made between the formal organization and the informal organization. The formal organization is the whole of the officially established procedures and decision-making rights, as established in the organization chart. The informal organization is the social structure of the employees, who discuss and align their work and conduct with each other.
THE STAKEHOLDERS OF A COMPANY
Stakeholders are interested parties, persons or organizations who can be influenced (in both positive and negative ways) by the organization, or who can exert influence on (part of) an organization (also in both positive and negative ways).
For example, stakeholders of companies include employees, local and national government, various pressure groups, etc.
LEGAL FORMS OF ORGANIZATIONS
Depending on the jurisdiction (country), organizations can take different legal forms. Roughly, a distinction can be made between organizations with legal personality and organizations without legal personality. The first group can independently participate in economic transactions and as such has its own rights and obligations.
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