Organizational Goals: Definition and Formulation

Definition of Organizational Goals (3 marks)

An organizational goal is a desired point or destination toward which organizational activities are focused. It is the basis or reason for the existence of any organization. Goals provide direction to the organization so that all activities will be organized and controlled. A goal is the future destiny where the organization wants to reach, and it serves as a source of inspiration and motivation to all people associated with the organization.

In the context of strategic planning, organizational goals form one of the three core components alongside the organizational mission and organizational strategies. Goals answer the fundamental question: Where does the organization want to go?

Purposes of Organizational Goals

The main purposes of achieving organizational goals are:

1. To provide guideline and direction: A goal is a desired destination that the organization wants to reach. It provides the direction toward which all organizational activities should be focused.
2. To motivate employees: Goals act as a source of inspiration and motivation for all people associated with the organization.
3. Basis for planning and control: Goals form the foundation for planning, and the control function measures progress toward these goals.
4. Coordination: Goals integrate individual activities toward a common purpose, helping in cooperation and coordination among employees.

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Formulation of Organizational Goals (7 marks)

Organizational goals are formulated at different levels and on different bases. The process of goal formulation can be understood through the types of goals set by an organization, which together describe how goals are structured from the broadest vision down to the most specific operational targets.

1. On the Basis of Level of Organization

Goals are formulated hierarchically across three levels of management:

i) Mission

• Mission is a statement that describes the vision of top leadership about the organization and provides the reason for its existence.
• It is the broadest and most fundamental statement of purpose.
• It is formulated by the top level management (Board of Directors and Chief Executive Officers).
• Example: "To be the best school in Kathmandu Valley" may be the mission statement of a school in Kathmandu.

ii) Strategic Goals

• Strategic goals are derived from the mission and describe the long-term direction of the organization.
• They are formulated through a deliberate process involving the review of market conditions, customer needs, competitive strengths and weaknesses, and the availability of resources.
• They identify specific opportunities or threats facing the organization.
• Formulated by top level management.
• They are broad, long-term, and organization-wide in nature.

iii) Tactical Goals

• Tactical goals are set to translate the strategic goals into action.
• They are the target goals of departments, formulated by department heads or middle level managers.
• They are generally shorter time-framed, more specific, and strongly focused compared to strategic goals.
• Example: 20% increase in sales annually.

iv) Operational Goals

• Operational goals are unit or section level goals formulated by lower level managers.
• They are more defined and time-bound and help to achieve the tactical goals.
• They deal with day-to-day activities and immediate targets.
• Example: To produce 100 units of product each day.

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The Hierarchy of Goal Formulation (Summary Table)

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Key Principles in Goal Formulation

When formulating goals at any level, the following principles should be observed:

1. Clarity: Goals must be clearly stated so that all members understand what is to be achieved.
2. Specificity: Goals should be specific enough to guide action, especially at tactical and operational levels.
3. Time-bound: Goals should have a defined time frame for achievement.
4. Consistency: Goals at lower levels must be consistent with and supportive of goals at higher levels.
5. Achievability: Goals must be realistic given the resources available to the organization.

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Conclusion

Organizational goals are the cornerstone of management. They are formulated in a top-down hierarchical manner, starting from the broad mission and strategic goals set by top management, moving to tactical goals set by middle management, and finally to operational goals set by lower level managers. This structured formulation ensures that every level of the organization is aligned toward the same ultimate destination, enabling effective planning, coordination, and control.

What is Management? Principles of Management

Definition of Management

Management is the process of planning, organizing, leading, and controlling the activities of an organization in order to achieve its goals and objectives efficiently and effectively. It involves coordinating human, physical, and financial resources to accomplish organizational goals.

Management is intangible in nature -- it cannot be seen but its presence is felt through rules, regulations, output, and work climate. It is also multi-disciplinary, drawing principles and techniques from fields such as Engineering, Economics, Sociology, Psychology, Mathematics, and Statistics.

Key Characteristics of Management

• Management is a social process: The most important aspect of management is handling people organized in work groups, developing and motivating them, and taking care of their satisfaction as social beings.
• Management is situational: The success of management depends on, and varies from, situation to situation. There is no single best way of managing; principles are relative and do not hold good for all situations.
• Management is intangible: It is an unseen force felt through rules, regulations, output, and work climate.
• Management is multi-disciplinary: It requires wide knowledge about various disciplines covering handling of man, machine, and material.

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Principles of Management (Henry Fayol)

Henry Fayol, a French industrialist, developed the following 14 principles of management. The key principles are as follows:

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1. Division of Work

According to Henry Fayol:

"The worker always on the same post, the manager always concerned with the same matters, acquire an ability, sureness and accuracy which increases their output."

This principle means specialization. Each job and work should be assigned to the specialist of that job. A person is not capable of doing all types of work efficiently, so dividing work leads to increased productivity and efficiency.

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2. Authority and Responsibility

Authority and responsibility go together as two sides of a coin. If anybody is made responsible for any job, they must also be given the necessary authority to perform it. Without authority, responsibility cannot be fulfilled, and authority without responsibility leads to misuse of power.

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3. Discipline

Discipline is essential for the smooth functioning of an organization. Employees must obey and respect the rules and agreements that govern the organization. Good discipline results from effective leadership, clear agreements between management and workers, and the judicious use of penalties.

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4. Unity of Command

Each employee should receive orders and instructions from only one superior. If an employee receives orders from more than one manager, it leads to confusion, conflict, and undermining of authority.

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5. Unity of Direction

All activities with the same objective should be directed by one manager using one plan. This ensures that efforts are coordinated and focused toward achieving the organizational goal.

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6. Subordination of Individual Interest to General Interest

The interest of the organization as a whole must take priority over the personal interests of any individual employee or group. Personal goals should not conflict with organizational goals.

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7. Scalar Chain (Chain of Command)

Fayol defines scalar chain as:

"The chain of superiors ranging from the ultimate authority to the lowest rank."

There should be a clear line of authority from the top to the bottom of the organization. Communication should flow through this scalar chain. However, in urgent situations, a gangplank (direct communication between employees at the same level) may be used.

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8. Order

According to Fayol, there should be a proper, systematic, and orderly arrangement of physical and social factors such as land, raw materials, tools, equipment, and employees. There should be:

• A safe, appropriate, and specific place for every article.
• Every place to be used effectively for a particular activity.
• Selection and appointment of the most suitable person to every job.
• A specific place for everyone.

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9. Equality

The principle of equality should be followed and applicable at every level of management. There should be no discrimination regarding caste, sex, or religion. Effective management always involves sympathetic and human treatment. The management should be kind, honest, and impartial with the employees.

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10. Spirit of Co-operation (Esprit de Corps)

In order to achieve the best possible results, individual and group efforts must be effectively integrated and coordinated. Production is a team work for which the whole-hearted support and cooperation of members at all levels is required. Everyone should:

• Sacrifice personal interest for organizational goals.
• Contribute their best energies to achieve the best results.

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Summary Table

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Conclusion

Management is the backbone of any organization. Henry Fayol's principles of management provide a universal framework that guides managers in organizing and directing their organizations effectively. These principles, though developed in the early 20th century, remain highly relevant in modern organizational management.

Planning and the Major Steps Involved in the Planning Process

Concept of Planning

Planning can be defined as the process of formulating goals, identifying activities to be undertaken, and choosing the means to achieve those goals. Planning arises from the recognition that some intervention is necessary to bring about a change from the present state to some future desired state.

Planning is the primary function of management because it affects all other functions of management (organizing, leading, and controlling). It is concerned with deciding in advance what, when, where, why, how something is to be done, and who shall do it.

Key Characteristics of Planning

• Primary function - it precedes all other management functions
• Future oriented - it looks ahead to desired future states
• Goal oriented - it is directed toward achieving specific objectives
• Action oriented - it translates intentions into concrete activities
• Efficiency focused - it aims for optimal use of resources
• Flexible - it can be adjusted as circumstances change

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Major Steps Involved in the Planning Process

The planning process involves a series of systematic and interrelated steps. These steps are described below:

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Step 1: Setting Organizational Objectives / Goal Formulation

The first and most fundamental step in planning is to define the goals and objectives of the organization. These objectives specify what the organization wants to achieve in the future. Goals must be:

• Clear and specific
• Measurable and achievable
• Time-bound

Without clearly defined objectives, the entire planning process lacks direction and purpose.

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Step 2: Developing Planning Premises

Planning premises refer to the assumptions about the future environment in which the plans will be executed. These include:

• Economic conditions
• Market trends
• Government policies
• Technological changes
• Competitor behavior

Accurate premises help managers anticipate future conditions and prepare plans that are realistic and adaptable.

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Step 3: Identifying and Analyzing Opportunities and Threats

This step involves scanning the external environment to identify opportunities that the organization can capitalize on and threats that it must neutralize. This is often done through tools such as SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). A good plan must be able to:

• Take advantage of available opportunities
• Minimize or eliminate the impact of threats

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Step 4: Analyzing Organizational Resources

Organizational resources include abilities, competencies, information, human resources, financial resources, and technology that are required to improve organizational performance. In this step:

• Available resources are identified and evaluated
• Gaps between required and available resources are noted
• Optimal allocation of resources is planned to improve efficiency and effectiveness

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Step 5: Formulation of Plans

After completing the above steps, the draft for future activities is determined, i.e., plans are formally formulated. This involves:

• Developing comprehensive and integrated plans that cover all levels of management
• Identifying alternative courses of action
• Selecting the best alternative based on feasibility, cost, and expected outcomes
• Ensuring plans are aligned with organizational goals

Plans may be strategic, tactical, or operational depending on the level of management involved.

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Step 6: Implementation of Plans

Once plans are formulated, they are put into action. In this step:

• Resources are made available and allocated appropriately
• Tasks are assigned to individuals and groups
• Managers motivate and guide employees to complete planned activities within the stated time
• The manager's main task is to ensure the effective and efficient use of resources

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Step 7: Evaluation and Control

The final step in the planning process is to monitor the progress of implementation. This involves:

• Regularly evaluating actual performance against planned targets
• Identifying deviations and their causes
• Using a feedback system to initiate timely corrective actions and adjustments in the plan

This step ensures that the plan remains relevant and that the organization stays on track toward its goals.

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Summary Table

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Conclusion

Planning is the cornerstone of effective management. It provides direction, reduces uncertainty, improves efficiency, and facilitates coordination across all levels of an organization. By following the above systematic steps, managers can ensure that organizational goals are achieved in a structured and efficient manner.

Major Problems Facing Business in Nepal

Introduction

Nepal is one of the least developed countries in the world. Despite the restoration of democracy in 1990 and subsequent economic reforms, businesses in Nepal continue to face numerous challenges. These problems arise from both the internal management environment and the external business environment. The major problems are discussed below:

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1. Political Instability and Legal Problems

Nepal has experienced significant political ups and downs over the last two decades. This creates several business problems:

• Unstable government and frequent strikes by political parties and their sister organizations create chaos and uncertainty in the business environment.
• Frequent changes in policies create confusion and threats to both existing and newly invested companies.
• Violation of rules and regulations by organizations supported by political parties undermines the legal framework.
• Problems related to labor unions, employee dissatisfaction, human rights, and civic societies have not been properly addressed.
• Political interference leads to nepotism and favoritism at every level of organization, degrading productivity.

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2. Economic Problems

Nepal has adopted a mixed economy, but the economic environment remains challenging:

• Low economic growth rate (below 3%) combined with a high inflation rate (more than 10%) puts heavy pressure on low-income groups.
• There is a vast imbalance in income levels among the population.
• High trade deficit: imports from India, China, and third countries are increasing rapidly, while exports are declining due to weak and low-quality products and services.
• Limited access to financing hinders the growth and expansion of businesses, especially small and medium enterprises.
• The impact of globalization and the presence of multinationals in the market has hit small and cottage industries hard.

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3. Socio-Cultural Problems

The socio-cultural environment poses significant challenges to business operations:

• Caste discrimination and rigid social hierarchies still exist, affecting workplace dynamics and productivity.
• Low literacy rates in remote areas limit the availability of a skilled workforce.
• Brain drain: most younger people from villages migrate to Middle Eastern countries for better income, depriving Nepal of its human capital.
• Hierarchy and dominance: people in higher positions dominate lower-level staff, creating a poor working environment.
• Undue influence, hypocrisy, nepotism, and favoritism are common in both society and organizations.

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4. Technological Problems

Technology adoption remains a major challenge for Nepalese businesses:

• Very few industries keep pace with increasing improvements in technology.
• Only the financial and telecommunication sectors have adopted modern technology to some extent; most other sectors lag behind.
• Limited government spending on research and development slows technological progress.
• Lack of technology transfer and poor operational systems reduce productivity and competitiveness.
• Businesses struggle to compete with foreign companies that use advanced technology.

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5. Problems in Planning and Decision Making

Internal management practices create serious operational problems:

• Nepalese organizations follow a centralized mechanism in planning and decision making.
• Most decisions are made by top-level management only; middle and lower-level managers must wait for orders before performing their duties.
• Planning, policies, and programs are not properly integrated with the goals of the organization.
• There is often no matching of people, jobs, and departmental needs, leading to inefficiency.

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6. Problems in Authority Delegation and Responsibility

• Nepalese organizations are structured in a bureaucratic design.
• Delegation of authority and responsibility is done under the influence of top-level managers rather than in a way that achieves organizational goals.
• This leads to slow decision making, lack of initiative among employees, and overall organizational inefficiency.

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7. Organizational and Business Culture Problems

• Organizational shared values and beliefs are rigid and traditional in nature.
• Employees resist organizational change and development, making it difficult to modernize business practices.
• The majority of private sector businesses are family owned, and decisions are made based on family interest rather than professional management principles.
• Political interference in the workplace creates indiscipline and reduces productivity.

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8. Lack of Managerial and Human Resource Skills

• Managers are weak in leadership capabilities.
• Employees lack communication and interpersonal skills.
• Workers lack vocational and technical knowledge.
• These deficiencies create persistent problems in organizational performance and competitiveness.

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9. Infrastructure and Access to Finance Problems

• Poor infrastructure (roads, electricity, internet connectivity) increases the cost of doing business.
• Load shedding and power cuts disrupt manufacturing and service operations.
• Businesses, especially small and medium enterprises, face difficulty in accessing credit and financing from financial institutions.
• Bureaucratic hurdles and red tape slow down business registration, licensing, and operations.

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Summary Table

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Conclusion

The problems facing businesses in Nepal are deeply interconnected, spanning political, economic, socio-cultural, technological, and managerial dimensions. Addressing these challenges requires stable governance, economic reforms, investment in education and technology, and a shift toward professional management practices. Only through coordinated efforts by the government, private sector, and civil society can Nepal create a truly conducive environment for business growth and development.

Learning Organization and Benefits of Learning

What is a Learning Organization?

A learning organization is an organization that continuously learns from its history, experience, and environment and adjusts accordingly. It can be described as a living and thinking open system that develops new capabilities on a continuous basis to remain effective. In a learning organization, sharing knowledge, experience, and ideas is a common habit and practice among its members.

In simple terms, a learning organization is one that:

• Continuously acquires new knowledge and skills
• Adapts to changing environments
• Encourages open communication and knowledge sharing among employees

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Benefits of Learning in an Organization

The key benefits of learning in an organization are as follows:

1. Continuous Development of Capabilities

Learning enables organizations to develop new capabilities on a continuous basis. This helps the organization remain competitive and effective in a dynamic environment.

2. Better Adaptation to Change

A learning organization continuously learns from its environment and adjusts accordingly. This makes it more flexible and responsive to changes in the external environment, such as market shifts, technological advancements, and competition.

3. Knowledge and Experience Sharing

Learning promotes the habit of sharing knowledge, experience, and ideas among employees. This collective intelligence improves overall organizational performance and reduces duplication of effort.

4. Improved Decision Making

When employees and managers continuously learn, they gain better insights and information. This leads to more informed and effective decision making at all levels of management.

5. Innovation and Creativity

Learning encourages employees to think creatively and develop innovative solutions. Unlike mechanistic organizations that ignore imagination and creativity, learning organizations foster an environment where new ideas are welcomed and applied.

6. Enhanced Employee Performance

Learning helps employees develop their skills, competencies, and potential. As Chris Argyris suggested, individuals have potential that can be realized in the right environment, and learning creates that environment for growth and self-direction.

7. Effective Planning

Learning from past experiences and history helps organizations identify what activities need to be performed in the future. This contributes to more effective planning by providing insights into expectations, time frames, and skills necessary to achieve organizational goals.

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In summary, a learning organization thrives because it treats knowledge as its most valuable resource. By continuously learning and adapting, it improves efficiency, effectiveness, and long-term sustainability.

Motivation and Herzberg's Theory of Motivation

Definition of Motivation

Motivation is an inner state that energizes, activates, and directs the behaviour of employees towards achieving organizational goals. As a function of management, motivation is the process of inspiring people to take required actions by providing strength that satisfies their needs. Motivation is important because it improves productivity, creates willingness, develops a positive attitude in employees, ensures optimal use of resources, and helps in managing change.

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Herzberg's Motivation-Hygiene Theory (Two-Factor Theory)

The psychologist Frederick Herzberg extended the work of Maslow and proposed a new motivation theory popularly known as the Motivation-Hygiene Theory, also called the Two-Factor Theory.

Herzberg conducted research by asking employees what made them feel good or bad about their jobs. Based on his findings, he classified all job-related factors into two distinct categories:

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1. Motivational Factors (Satisfiers)

These are factors that are directly related to the job content itself. Herzberg labels these as motivators because their presence leads to job satisfaction and motivates employees to perform better. However, their absence does not necessarily cause dissatisfaction.

Examples of motivational factors include:

• Achievement
• Recognition
• The work itself
• Responsibility
• Advancement and growth

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2. Hygiene Factors (Dissatisfiers / Maintenance Factors)

These are factors related to the job environment or context. Herzberg labels these as hygiene or maintenance factors because their absence causes dissatisfaction, but their presence alone does not motivate employees or produce satisfaction.

Examples of hygiene factors include:

• Company policy and administration
• Supervision
• Salary and wages
• Interpersonal relationships
• Working conditions
• Job security

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Key Implication of the Theory

The most basic implication of this theory is that, in order to maximize human productivity, it is absolutely necessary to:

1. Satisfy employees' maintenance (hygiene) needs to prevent dissatisfaction, AND
2. Provide opportunities to fulfill motivational needs to actively drive performance and satisfaction.

The distinction between motivational and maintenance factors helps managers in encouraging individuals to pick up performance effectively.

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Summary Table

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Criticism of the Theory

• It oversimplifies the relationship between satisfaction and motivation.
• Salary is treated only as a hygiene factor, but for many employees it can also be a motivator.
• The theory may not apply equally across all cultures and job types.