Oganizational Goals and Individual Goals

ORGANIZATIONAL AND INDIVIDUAL GOALS
(assist in UPSC Paper 2 Oganization Theory)

Edger H. Schein gave the view that there is a psychological contract between the individual and the organisation. Both the individuals and the organisation have mutual expectations from each other. This is beyond the formal contract of service between the two which lays down the economic terms and conditions of the employment.

The hierarchy of objectives makes clear distinction between individual and organisational goals. Organisational goals are framed for different levels of the organisation and individual goals represent the goals of people working in the organisation. Managers at different levels make different objectives in the organisational hierarchy.

Top managers or the Board of Directors make overall objectives of the firm and objectives for key result areas. Key result areas are marketing, innovation, human organisation, financial resources, physical resources, productivity, social responsibility and profit requirements — Drucker. Middle-level managers make objectives for the respective departments (production, sales etc.) and lower-level managers frame objectives for different units of each department and also their subordinates.

Though individual goals are at the end of the hierarchy, they are framed for all the individuals working at different levels of the organisation. At individual level, objectives are of two types: 

• one, performance of individuals which leads to attainment of overall goals and 
• two, personal objectives of individuals.

Individual goals should be consistent with organisational goals. Organisational and individual goals should be in complete harmony with each other. Managers at higher level should also set objectives for the development of individuals.

There are two view-points in this regard

1. Classical View Point:

This view point focuses more on the organisations and stresses on formal structure of jobs and work schedules to satisfy individual and organisational needs. Financial incentives are important contributors that affect organisational output.

People work to earn money to satisfy their individual goals. Satisfaction of organisational goals is, thus, the means to satisfy individual goals. If, however, there is conflict between individual goals and organisational goals, preference should be given to organisational goals, i.e., individual goals should not supersede the goals of the organisation.

2. HUMAN RELATIONS VIEW POINT

This is an improvement over the classical view point that changed the focus from work place conditions to human side of the organisation.

The focus changed from job to workers who performed those jobs. ‘Production-oriented’ approach was substituted by ‘people-oriented’ approach. It emphasises the importance of factors that affect human behaviour in organisations. 

It recognises that employees’ behaviour is not affected by job conditions alone. Internal reactions to the job situation also affect their behaviour.

This approach emphasises on the fact that “management does not do, it gets others to do”. When focus of management is human beings and human relations, the morale of workers goes up and productivity and efficiency of the organisations increase.

“Human relations refer to the ways in which managers interact with their subordinates.” Managers should know the factors that motivate the employees so that good human relations are developed in the organisations.

Conclusion of Theory

The classical organisation theorists assumed the organisational and individual goals to be complementary. According to them there was no conflict between these two goals. According to Henri Fayol “If at all, there is any conflict between the interests of the organisation and an individual, the organisational interest must prevail.” On the other hand, according to the Human relationists, the in-congruency between the goals of the organisation and individuals is inevitable.

They suggested the satisfaction of human needs and achieving good human relations in the organisation as means to the accomplishment of organisational goals. Thus, it is for the management to create environment for the satisfaction of individual needs for greater organisational effectiveness. According to this school of thought human satisfaction was viewed as a means for organisational goals rather than as an end in itself.

Attempts should be made to make individual goals and organisational objectives as compatible as possible. This requires the need for some kind of managerial action designed to ensure some degree of compatibility whereby the individual and the organisation seem to become part of each other.

Integration of Organisational and Individual Goals

In actual practice, no organisation and individual has completely opposite or completely compatible goals. We can say that some integration is always there between the individual and organisational goals. In this context, HARRY LEVINSON advocated the process of reciprocation. The process of fulfilling mutual expectations and satisfying mutual needs in the relationship between a man and his work organisation is conceptualized as a process of reciprocation. It is a complementary process in which the individual and the organisation seem to become a part of each other.

The person feels that he is a part of the organisation and concurrently, he is a symbol personifying the whole organisation. There are two models based on the reciprocation or the integration process through which the goals are integrated.

(a) Fusion process

(b) Inducement contribution process.

Fusion Process

The fusion process is based on the assumption that individual goals and organisational goals are not totally opposing. There is, generally, an interaction between these two.

This interaction leads to two sub processes:

(i) Socialization and 

(ii) Personalization.

According to E.W. Bakke and Chris Argyris, “as a result of socialisation, individuals are made into agents of the organisation and/or the informal groups. The process by which the individual is made into an agent of the formal organisation is called the formal socialising process and by which he is made an agent of the informal group is called the informal socialising process. And it is through personalisation process that the individual achieves his personal goal of self actualisation and by which organisation and informal groups are made into agencies for the individual.”

Both socialisation and personalisation processes occur simultaneously in the organisations.

If both are not coherent, two situations will arise i.e.

(i) If the organisational goals are being achieved without contributing much towards individual goals. The fusion process is based on the achievement of individual goals, it means that socialisation process is occurring much strongly.

(ii) If the individual satisfies his needs from work without totally opposing giving much to the organisation, personalisation process is operating much strongly.

Individuals, formal organisations and informal groups interact with each other to achieve a balance of equilibrium called fusion by Bakke and Argyris. The aim of the fusion process is to “establish and maintain for the organisation an internal and external integration which will at least leave its capacity to perform its functions unimpaired and at best will improve that capacity.

Operation of this process indicates that the organisation to some degree remakes the individual and individual to some degree remakes the organisation. Thus, it maintains the integrity of the organisation in the face of the divergent interests of individuals, groups, other organisation, itself, which each hope to realize through its contact with the other. The higher the fusion score better is the result for both the individual and the organisation.”

Inducement-Contribution Process

Another process for the integration of individual and organisational goals was developed byJames G. March and Herbert A. Simon. Their inducement-contribution process concentrates on those intellectual processes which tend to lie at the heart of large scale organisations.

Thus, individual goals are not subordinate to organisational goals. In fact, if individual goals are satisfied, it leads to effective attainment of organisational goals. Management should have fair agreement with the subordinates to satisfy their individual goals.

There should be compatibility between individual goals and organisational goals. Individuals and organisations, both are inevitable for each other and need each other to satisfy their respective needs. They should, work in the best interest of each other.

The basic characteristics of this process are as follows:

(i) Each organisational member gets inducements for the contributions made by him to the organisation.

(ii) Each member will continue to give his contributions so long as inducements are more or equal to contributions (assuming that the member is in a position to value both contributions and inducements).

(iii) The contributions from various members (and groups) are the source through which the organisation produces inducements for the members.

(iv) The organisation will continue to give inducements or receive contributions so long as contributions are sufficient to give inducements.

Conclusion

Both the fusion process and the inducement-contribution process emphasize that higher level of balance between the organisational and individual goals will bring higher satisfaction to organisational members and which in turn will lead to better organisational results.