Formation of Organizations

Organizations begin with goals. People form into groups or organizations for a purpose. This formation may take place because one individual, an entrepreneur, has a vision of a new product or service to bring to the market and she recruits others to help her accomplish that goal. Or the organization may be based on the congruence of desires or interest of a number of individuals who band together to achieve their goal. Whatever the stimulus, the core of the organization is its goal.

Organizations are simply social inventions for accomplishing tasks or goals. Everyone is familiar with organizations because we live in them from the day we are born. Common examples are families, schools, churches, and clubs. People create organizations because they realize that they can magnify their own abilities by working with others towards common objectives. Once people come together in groups, tasks must be differentiated and labor divided. Specialization and division of labor has two benefits; it permits the optimal use of group members’ abilities thus playing to their strengths; and it avoids redundancy of labor by clearly delineating who does what. The resulting structure, however, requires coordination of effort. It also becomes clear that results are more likely to be achieved if someone is in charge of keeping the group moving towards its goal. Then the essence of management is born. Today’s most complex organizations reflect these essential building blocks.

The primacy of goals to organizations is clear; we hear them espouse goals every day. Pro football teams strive to win the Super Bowl and baseball teams the World Series. A political party in power has the goal of remaining there, while the minority party has the goal of claiming power for itself. NASA accomplished its goal of putting an American astronaut on the moon, and Lee Iacocca reached his goal of turning Chrysler Corporation around.

Goals are a person’s or an organization’s desired state of affairs; they are wishes people and organizations have about where or what they want to be at some future time. Goals have traditionally been closely linked to organizational effectiveness; the degree to which an organization attains its goals is, in the judgment of many analysts, a measure of its effectiveness.

Goals possess four general functions:

1. They provide direction to the activities of individuals and groups;
2. They shape how organizations plan and organize their activities;
3. They are used to motivate people to perform at high levels;
4. They form the basis for evaluating and controlling organizational activities.

It is precisely because of their multiple uses, and the different activities they lead to, that the subject of goals constitutes one of the most complex and controversial topics in management. Given the variety of uses of goals, consensus about an organization’s goal is highly important to that organization. But such consensus rarely exists. This lack of agreement constitutes just one of the problems involved in grappling with organizational goals. Some of the shortcomings of the goals approach have lead researchers to devise alternative approaches to the study of organizations.