Nature of Organization

With regard to organization, the key assumptions are that they are social systems and that they are formed on the basis of mutual interest.

1. Social Systems: From sociology, we learn that organizations are social system; consequently, activities therein are governed by social laws as well as psychological laws. Just as people have psychological needs, they also have social roles and status; their behavior is influenced by their group as well as by their individual drives. In fact, two types of social system exist by side in organizations. One is formal (official) social system, and the other is the informal social system. The existence of a social system implies that the organizational environment is one of dynamic change rather than a static set of relations as pictured on an organization chart. All part of the system are interdependent and each part is subject to influence by any other part. Everything is related to everything else. The idea of a social system provides a framework for analyzing organizational behavior issues. It helps to make organizational behavior problems understandable and manageable.
2. Mutual Interest: Mutual interest is represented by the statement "Organizations need people, and people also need organizations". Organizations have a human purpose. They are formed and maintained on the basis of some mutuality of interest among their participants. People see organizations as a means to help them reach their goals while at the some time organizations need  people to help reach organizational objectives. If mutuality is lacking, it makes no sense to try to assemble a group and develop co-operation, because there is no common base on which to build. Mutual interest provides a super-ordinate goal that unites the variety of needs that people bring to organizations. The result is that people are encouraged to attack organizational problems rather than each other.