Need for organization and its principles

An organization is a group of people who work together in a structured way to achieve common goals that one person cannot achieve alone.

Need for organizations

1. Achieving big goals: No single person can generate electricity for a country. The Nepal Electricity Authority (NEA) exists because hydropower, transmission and distribution need thousands of people working together.
2. Specialization and division of work: People do the job they are best at (engineer, accountant, lineman), which raises efficiency.
3. Use of resources: Money, machines, materials and skills are pooled and used economically.
4. Employment and income: Nepal Telecom, banks and factories give jobs and income to people.
5. Continuity and stability: Work continues even when individuals leave.
6. Social and personal needs: People get belonging, status and security.
7. Economic growth and services: Organizations produce goods and services, pay taxes and support development.

Principles of an organization

1. Unity of objective: All parts must work towards the common goal of the enterprise.
2. Division of work (specialization): Divide work according to skill to avoid overlap.
3. Unity of command: One employee should receive orders from one superior only.
4. Scalar chain: A clear line of authority from top to bottom, so everyone knows whom to report to.
5. Span of control: A manager can supervise only a limited number of subordinates effectively (usually 5 to 8).
6. Authority and responsibility: Authority given must be equal to responsibility; a person is accountable for the work.
7. Delegation: Authority is passed down to lower levels to reduce load on top managers.
8. Coordination: Activities of departments are harmonised.
9. Balance and flexibility: The structure should adapt to change in technology and market.
10. Continuity and simplicity: The structure should be simple, clear and able to survive over time.

A bank in Nepal, for example, divides work into credit, deposit, IT and operations (division of work), keeps a chain from branch manager to CEO (scalar chain), and each employee reports to one supervisor (unity of command).