What is the purpose of an organization and role of its stakeholders?

An organization is a group of individuals grouped in a controlled structure having a communication system to facilitate the flow of information, in order to meet needs and achieve specific objectives. The basic purpose of organization is that the organized and controlled group’s efforts are directed towards a common goal. The group effort can be achieved by coordination. Authority and responsibility relationship help to achieve coordination (Mowday, 1993).

The existence, growth and modernity of organizations can be explained through different theories and school of thoughts. While several theories have been advanced in an effort to explain the structure, functioning and management of organization, to date, none is considered as complete; or is accepted as final. Each theory has some limitations, and the field of management theory is still in the process of evolving (Longenecker, 1994).

Stakeholders

In the input – output model of organizations, the organization only take care of the desires and wishes of four parties which provide input to the organization, i.e. investors, employees, suppliers and customers.  On the contrary, stakeholder theory discusses that there are other groups which have stake in the organization (Phillips & Edward, 2003). These include governmental bodies, trade associations, trade unions, political groups, prospective employees, prospective customers etc. public and the competitors of the organizations are also consider as the stakeholder.

According to the new stakeholder theory that is now practiced in contemporary organizational mainstream the number and quantity of stakeholders that constitute the organizational framework of a non-profit organization can either be classified as external or internal. External stakeholders of the organization primarily comprise of people and general public belonging to a certain community or area that are either directly or indirectly influenced or affected by the working or the functioning of the organization (Post, 2002).The administration and executives of an organization usually formulate or try to formulate a strategy which satisfy all the stakeholders because they have overlapping goals and interests (Counte, 1995).

Responsibilities and Strategies

Effective and efficient governance of a an organization is a team effort which can be accomplished with the help and support of all the stakeholders. Governance is the primary focus of any organization because it is the governance which decides the fate of the organization; whether it is a good organization or bad. Governance of an organization is considered effective if it possesses the following traits and characteristics

·         It must be simple

·         Efficient

·         Allows and respect conflicts of ideas

·         It must be focused

·         Integrated and synergetic

·         Provide efficient and good results

·         Preserve community assets and

·         Provide good rewards

In order to achieve the goal of effective governance, the role of board revolves around three basic responsibilities: 

1.      Policy establishment

2.      Strategic and significant decision making and

3.      Oversee organization’s activity

Policy making:

Policies set the goals and define strategies to achieve these goals. A well-written and well-managed policy makes the target achievement much easier. It is the duty of the board that, for efficient and effective governance, does not try to implement policies. Board’s responsibility is to set the policy and leave the implementation to the management of the organization because board’s time is more valuable; it meets for only 24 hours in a year, so they have to utilize their time on more important issues. It is also the duty of the board to review the past policies and refine these policies, if necessary.