What is an Organization? Definition, Characteristics, Examples, Importance, & Types

In the hustle and bustle of our daily lives, we are interdependent with various types of organisations either directly or indirectly to fulfil our needs. Hospitals, Banks, Schools, departmental stores, Transportation etc are some examples of organisations we depend on. In simple terms, an organisation is a group of people formed together to achieve a certain goal. Organisation is not a new or modern phenomenon.

Human life has always sought to form an organization since the beginning of civilization to achieve their common goal via combined efforts. For example, Emperor Qin Shi Huang formed an organization to build the Great Wall of China. Organizations affect the quality of life in the modern society. The study of the organisation is very crucial to understanding human behaviours.

What is an Organization?

The term organisation is very difficult to define accurately since the word is not standardised. It is dynamic and keeps changing as per the needs of society, people, business objectives and environmental factors. In simple words, an organisation is a group of people formed together to achieve some common goals and objectives forming a legal entity.

There are various definitions of organization by various theorists. A few definitions of organization are given below:

According to Max Weber:

“Organisation is defined as a corporate group. A corporate group is a social relation that is either closed or limits the admission of outsiders by rule. its order is enforced by the actions of specific individuals whose regular function this is.”

According to Talcott Parsons:

“Organisation is defined as a social unit which is deliberately constructed and reconstructed to seek specific goals.”

According to Mooney and Riley:

“Organisation is defined as the form of human association for attaining common objectives.”

According to Oliver Sheldon:

“Organisation is the process of combining the work which individuals or groups have to perform with the facilities necessary for its execution, that the duties so performed provide the best channels for the efficient, systematic, positive and coordinated application of the available effort.”

Characteristics of Organization

Lets dive into some of the few characteristics of Organization:

Association of people: Organizations unite individuals who possess a wide range of abilities, backgrounds, and experiences, thereby encouraging cooperation and coordination.

Common Goals: Organisations are motivated by common goals, which serve to foster a sense of direction and purpose and direct the endeavours of every member in the pursuit of a unified mission.

Deliberate Structure: Delineating roles, responsibilities, and hierarchies, organizations have a defined structure. This deliberate design guarantees lucidity and effectiveness in functioning.

Coordinated Activities: To accomplish the collective objectives, the numerous activities within an organization are synchronized. Coordination reduces conflicts and increases efficiency.

Task allocation: The distribution of work is determined by the talents and expertise of the group members. This method of labour allocation maximizes productivity and enables people to concentrate on their areas of expertise.

Environmental Influence: External factors including economic conditions, social trends, and technological advancements exert an impact on organizations. Environmental adaptability is an absolute necessity for long-term success.

Clearly Defined Relationships of Authority and Responsibility:
Clearly defined lines of responsibility and authority contribute to the maintenance of organizational order. It facilitates the establishment of accountability and guarantees the efficient execution of tasks.

Continuity: Organizations are structured to ensure continuity. These organizations strive for long-term viability rather than transience, frequently surpassing the terms of office held by their leaders or members.

Examples of an Organization

In our daily lives, we are interdependent with various types of organisations either directly or indirectly to fulfil our needs. Some common examples of organization are as:

  • Hospitals
  • Banks
  • Schools
  • Colleges
  • Clubs
  • Departmental stores
  • NGOs, etc.

Importance of Organization

In human life, organisation has become an inseparable part of daily life. We depend on various organisations for various services and products to run our lives. For example, if we are ill we go to the hospital for our treatments, to gain an educational degree we go to schools and colleges.

Productivity and Efficiency: The streamlining of processes by an organisation increases productivity and efficiency in both personal and professional contexts.

Time Management: Effective time management is a critical skill that enables well-organized individuals to prioritize tasks efficiently and accomplish objectives within predetermined time constraints.

Stress Alleviation: An approach and environment that are well-organized provide structure and order, thereby reducing the anxiety that is linked to disorder and anarchy.

Goal Achievement: The organization plays a pivotal role in both goal setting and achievement by furnishing a distinct strategy and a series of actionable steps that guarantee success.

Enhanced Decision-Making: The utilisation of structured information promotes enhanced decision-making, enabling teams and individuals to arrive at well-informed judgements.

Resource optimisation: Using efficient organisation, time, money, and materials are all utilised to their fullest potential, thereby preventing wastage and redundant endeavours.

Enhanced Collaboration: Clear communication is promoted by organizational structure and teamwork, which reduces the likelihood of misunderstandings and improves overall cooperation.

Enhanced Innovation and Creativity: The organization fosters an atmosphere that is not only formal but also conducive to innovative problem-solving and creative thought.

Accountability: The establishment of responsibilities within well-structured systems cultivates a perception of ownership and responsibility within individuals.

Adaptability and Resilience: In dynamic environments, organized entities are more adept at adjusting to change and exhibiting resilience.

A proficient reputation: A business or individual that exhibits effective organization projects a professional image, which in turn fosters favourable connections with stakeholders, clients, and customers.

Societal Impact: By effectively implementing policies and services, organizations contribute to societal progress, highlighting the organizations’ broader influence on communities.

Types of organization

Formal organisations: Formal organisations are highly structured entities that are distinguished by a purposeful hierarchy, clearly defined roles, and established protocols and regulations. These organisations establish a formal hierarchy of command, which serves to clearly define power and accountability. Generally, the organization maintains a documented set of policies and procedures to govern its operations, and each member has a distinct job function. Clarity is maintained in communication, decision-making procedures, and the overall operation of the organization due to the formal structure.

Informal Organisations: Informal organisations, as opposed to formal organisations, develop organically within a formal environment via social interactions, personal relationships, and shared interests. Informal structures are distinguished by their absence of formal hierarchies and their predominance of social networks, friendships, and mutual understanding.

Profit-oriented organisations: Profit-oriented organisations, alternatively referred to as for-profit or commercial entities, function with the aim of generating revenue and optimizing profit for the benefit of their shareholders or proprietors. These organisations conduct commercial operations, generate products or services, and maneuver through competitive markets to attain financial prosperity. They are motivated by market forces, with the dual objective of providing value to customers and assuring long-term profitability and growth for the benefit of stakeholders.

Service-oriented organizations: Service-oriented organisations, which are frequently denoted as non-profit or not-for-profit entities, place a higher emphasis on delivering community services or benefits or confronting causes rather than solely pursuing profit maximisation. These organisations function with a mission-oriented framework, prioritizing social welfare, advocacy, or the resolution of societal issues. Although achieving financial sustainability is crucial, the principal objective should be making a positive contribution to society by fostering constructive transformation and effectively addressing local concerns or broader concerns.


Organisations, which function as structured groups of individuals working toward common objectives, are, in essence, indispensable to our daily existence. It is defined as groups of individuals coming together for a common purpose, purposeful structure, coordinated endeavours, task distribution, adaptability to the environment, and continuity. Hospitals, banks, colleges, and non-governmental organisations are some examples.

Organisational significance is derived from their ability to improve outcomes such as collaboration, innovation, productivity, efficiency, time management, stress reduction, goal attainment, decision-making, and resource allocation. Formal organisations that adhere to hierarchical structures are distinguished from others; informal organisations emerge from social interactions; profit-driven entities prioritise financial success; and service-oriented organisations prioritise social benefits. The influence of organisations on human behaviour and societal development is critical.