Introduction

An organization, by its most basic definition, is an assembly of people working together to achieve common objectives through a division of labor. An organization provides a means of using individual strengths within a group to achieve more than can be accomplished by the aggregate efforts of group members working individually. Business organizations are formed to deliver goods or services to consumers in such a manner that they can realize a profit at the conclusion of the transaction. Over the years, business analysts, economists, and academic researchers have pondered several theories that attempt to explain the dynamics of business organizations, including the ways in which they make decisions, distribute power and control, resolve conflict, and promote or resist organizational change. As Jeffrey Pfeffer summarized in New Directions for Organization Theory, organizational theory studies provide "an interdisciplinary focus on • • • • • the effect of social organizations on the behavior and attitudes of individuals within them the effects of individual characteristics and action on organization the performance, success, and survival of organizations the mutual effects of environments, including resource and task, political, and cultural environments on organizations and vice versa concerns with both the epistemology and methodology that undergird research on each of these topics

Definition
Organizational theory is the systematic study and careful application of knowledge about how people - as individuals and as groups - act within organizations. It is also Study of organizational designs and organizational structures, relationship of organizations with their external environment, and the behavior of managers and technocrats within organizations. It suggests ways in which an organization can cope with rapid change. Organization theory tends to be more macro oriented than organization behavior and is primarily concerned with organization structure and design.

Future organizations must be capable of changing relative to a quickly changeable world. It may be relevant to include relations to society and the influence on and from other organizations. And naturally, there are also relations

between the organization’s own teams and individuals. Thus, an organization may be viewed from different angles.

APPLICATIONS OF ORGANIZATION THEORY Strategy/Financ e Those who want to improve the value of a company need to know how to organize to achieve organizational goals; those who want to monitor and control performance will need to understand how to achieve results by structuring activities and designing organizational processes. Marketers know that to create a successful corporate brand they need to get the organization behind the delivery of its promise; a thorough understanding of what an organization is and how it operates will make their endeavors to align the organization and its brand strategy more feasible and productive. The way information flows through the organization affects work processes and outcomes, so knowing organization theory can help IT specialists identify, understand and serve the organization’s informational needs as they design and promote the use of their information systems. Value chain management has created a need for operations managers to interconnect their organizing processes with those of suppliers, distributors and customers; organization theory not only supports the technical aspects of operations and systems integration, but explains their sociocultural aspects as well.

Marketing

Information technology

Operations

Aristotle addressed the topic of persuasive communication. and organization theory can provide content for executive training programs. One hundred years later. In the 1920s. Australian-born Harvard professor Elton Mayo and his colleagues conducted productivity studies at Western Electric's Hawthorne plant in the United States. German sociologist Max Weber wrote about rational organizations and initiated discussion of charismatic leadership. Frederick Winslow Taylor introduced the systematic use of goal setting and rewards to motivate employees. with Taylorism representing the peak . in order to design communication systems that are effective or to diagnose ways existing systems are misaligned with the organization’s needs. organizational studies is generally considered to have begun as an academic discipline with the advent of scientific management in the 1890s. organizational development and change are particularly important elements of HR that demand deep knowledge of organizations and organizing. Though it traces its roots back to Max Weber and earlier. In 1776.Human resources Nearly everything HR specialists do from recruiting to compensation has organizational ramifications and hence benefits from knowledge provided by organization theory. Corporate communication specialists must understand the interpretive processes of organizational stakeholders and need to address the many ways in which different parts of the organization interact with each other and the environment. Soon after. The writings of 16th century Italian philosopher Niccolò Machiavelli laid the foundation for contemporary work on organizational power and politics. Adam Smith advocated a new form of organizational structure based on the division of labour. Communication HISTORY The Greek philosopher Plato wrote about the essence of leadership.

and order. wage incentives. staffed by bureaucrats.of this movement. Weber based his model bureaucracy on legal and absolute authority. Abraham Maslow. Studies of different compensation systems were carried out. Influential work was done by Herbert . The Second World War further shifted the field. including systems theory. in part because of the influence of Frederick W. David McClelland. policies. Taylor outlined his theories and eventually implemented them on American factory floors. and the actualization of the goals of individuals within organizations. He is credited with helping to define the role of training. In a 1911 book entitled Principles of Scientific Management. and work standards in organizational performance. the focus of organizational studies shifted to analysis of how human factors and psychology affected organizations. and procedures. responsibilities for workers are clearly defined and behavior is tightly controlled by rules. the study of organizations with a complexity theory perspective and complexity strategy. Frederick Herzberg. and Victor Vroom. logic. motivation. employee selection. Henri Fayol. Interest grew in theory and methods native to the sciences. After the First World War. Weber believed that bureaucracies. represented the ideal organizational form. Of import during that period was the research of German sociologist Max Weber (1864-1920). Proponents of scientific management held that rationalizing the organization with precise sets of instructions and time-motion studies would lead to increased productivity. a transformation propelled by the identification of the Hawthorne Effect. as the invention of large-scale logistics and operations research led to a renewed interest in rationalist approaches to the study of organizations. Prominent early scholars included Chester Barnard. This Human Relations Movement focused on teams. In Weber's idealized organizational structure. Modern organization theory is rooted in concepts developed during the beginnings of the Industrial Revolution in the late 1800s and early 1900s. Taylor (1856-1915). Weber's and Fayol's theories found broad application in the early and mid1900s.

informed by.Alexander Simon and James G. or primary. much of it at Stanford University and Carnegie Mellon. A leading scholar was Karl Weick. Contingency and Organizational Ecology theories. new needs arise. psychology and sociology. An explosion of theorizing. Theory. Institutional Organization. for example. cultural explanations of organizations and change became an important part of study. The first was that people have different needs and therefore need to be motivated by different incentives to achieve organizational objectives. March and the so-called "Carnegie School" of organizational behavior. These assumptions led to the recognition. Informal Dependence. whereas past theories suggested that monetary rewards were the sole. The focus on human influences in organizations was reflected most noticeably by the integration of Abraham Maslow's "hierarchy of human needs" into organization theory. the field was strongly influenced by social psychology and the emphasis in academic study was on quantitative research. Qualitative methods of study became more acceptable. that assembly-line workers could be more productive if more of their personal needs were met. Maslow's theories introduced two important implications into organization theory. Resource Rationality. anthropology. meaning that as the needs of people lower in the hierarchy are met. motivators. among many others. . produced Bounded Theory. In the 1960s and 1970s. The second of Maslow's theories held that people's needs change over time. Starting in the 1980s.

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Therefore. and in doing so. Scientific Management is no longer prevalent as a managerial ideology. Scientific Management has had a decisive and long impact on the industrial practice and on the theoretical ideas of organizations in general. but also in the service sector. which created a new ism – Fordism. Taylor was the primary contributor. .There are so many organizational theories since 1900. cars were now constructed by mass production in fixed. The structure had to be adapted to the focus that was put on work processes. Since the employee and his handling of work processes was the starting point. which had considerable consequences throughout the system. Later on. From studies of time and carefully determined educational skills. Thus. Taylor’s starting point was the individual work process. Henry Ford is the most outstanding example of what is characterized as the ‘industrial revolution’. and Frederick W. the theory was criticized by both employees and managers as scientific time studies disregarded their own common sense and judgment. Taylor believed that it was possible to prescribe the processes that resulted in maximum output with a minimum input of energy and resources. However. Scientific Management was quickly adopted by large mass-producing industrial companies. not only in the industrial sector. Scientific Management was based on an idea of systematization where attempts were made to enhance the efficiency of procedures to best effect via scientific analyses and experiments. As a result of this resistance and the spread of other views of humanity. Hence. machine-like procedures. the manager lost his governing role as he was subjected to scientifically calculated solutions. Taylor’s approach is categorized as a bottom up approach. it was necessary to establish a staff of specialists who were capable of determining the optimum work processes. it still functions as a guideline for technical procedures. Some most significant theories which made important contribution were Scientific Management Theory Scientific Management originated in the beginning of the 20th century.

and he develops a normative ideal for bureaucracy. Weber established a number of criteria for bureaucracy: According to Weber. Bureaucracy must consist of neutral professional public employees so that the organizational hierarchy can function as smoothly and effectively as possible. which is reflected in his view of e.g. He believes that the understanding of organizations and their structure can be found in the historical context. the public employee.Bureaucracy Model Theory Max Weber is described as the father of sociology. which describes the performance of the work Separation of personal possessions and rights for the office Selection of staff according to technical qualifications Employment involves a career Additional to the emphasis on the hierarchical aspect of obedience. The fascination with goal-rational action is also expressed in Weber’s different perceptions of authority: • Traditional authority. goals in relation to side effects. and he has made great efforts to elucidate conditions in Western civilization. and finally. which considers goals. different possible goals in relation to each other. means in relation to goals. Based on historically created legitimacy where authority is hereditary and based on dependant subordinates. Acting goalrationally is an ideal approach. These three factors must be weighed in relation to each other. factors of emotion and value are not included in decisionmaking but are underlying rationality perceptions with a lower degree of rationality. According to Weber. Weber is different from Taylor and Fayol in that he has a broader approach to organizations as he includes the social and historical perspective. which is based on a legal and rule oriented authority” Bureaucracy has the following characteristics : • • • • • • Established distribution of work between the members of the organization An administrative hierarchy A rule-oriented system. He developed an understanding of bureaucracy. the public employee must act as if the superior’s interests were his own and thus stay in his bureaucratically assigned role9. bureaucracy is: “A specific administrative structure. In doing so. means and side effects. . Weber perceives goal-rational action as the optimum form of behavior. Bureaucracy is fundamental as it represents a basic pattern which exists in many variants.

A superior can only have the number of subordinates which he or she can manage (limited ‘span of control’) Routine work must be performed by subordinates so that the superior can attend to special tasks. is concerned with ways of grouping the organization’s activities most effectively in separate entities or . Although Fayol’s thoughts appeared at the beginning of this century. which inverts the focus of Scientific Management. The administrative principles in the form of the management’s hierarchical pyramid structure were to function as the basis of the part of the organization that involved activities. and there must be clarity in the administrative structure. Specialization: Distribution of activities in working groups • • • • • Formation of homogeneous groups according to: Purpose (Marketing or development department) Process (Typing. based on a type of ‘seduction’ and hence. Charismatic authority. the devotion of supporters. rule-oriented authority. administrative processes rather than technical processes were rationalized. coordination and specialization – which have more specific underlying demands: Coordination: Hierarchical pyramid • • • • All employees are accountable to one superior only. The personal authority. punching out beer bottle caps) Customer (Large.• • Legal. The bureaucratic type of authority.e. medium and small customers) Geography (Different service according to country or region) Thus. Specialization. i. viz. hierarchy etc. Henri Fayol developed another approach within the rational perspective. coordination is based on a hierarchical pyramid structure in which the members of the organization are linked to each other. Administrative Theory Around the same time as Taylor. a top down approach. based on normative rules for career. Now. Several different theoretical contributions to this administrative approach are concerned with two overall principles. they were not widespread outside France until 1949 when his studies were translated. on the other hand.

the ‘lowest’ unsatisfied need will be the most dominant for human behavior.departments. water. Fayol and others were pioneers in the creation of administrative theory. they express a high degree of formalization. Esteem needs: Need for self-esteem. As it appears from both coordination and specialization. they were later subjected to severe criticism for over-simplifying administrative conditions. . which is one of the principal themes of the rational perspective. and therefore. need for friendships. Maslow. Safety needs: Need for physical and psychological stability and safety. self-respect and appreciation from others. The idea of the hierarchy is to show that needs on a given level must be satisfied before the needs on the next level become interesting. need for relationships based on emotions.Hierarchy of Needs Theory Maslow believed that human needs could be classified in a hierarchy of five basic needs: • • • • • Self-actualization needs: Need to realize one’s deepest creative and productive potential. Physiological needs: Primary needs. Or expressed in another way. food and a home. Social needs: Need to socialize with other people. This is referred to as the principle of departmentalization where homogeneous or related activities are grouped in one entity.

McGregor's X-Y theory is a salutary and simple reminder of the natural rules for managing people. Therefore most people must be forced with the threat of punishment to work towards organisational objectives. which under the pressure of day-to-day business are all too easily forgotten. McGregor's XY Theory remains central to organizational development. which produces better performance and results. Maslow’s Hierarchy of Needs seems appealing. and allows people to grow and develop. safety needs and social needs will exert significantly greater influence on motivation than self-actualization needs. Theory X ('authoritarian management' style) • • • The average person dislikes work and will avoid it he/she can. and whilst more recent studies have questioned the rigidity of the model. Mcgregor's X-Y Theory remains a valid basic principle from which to develop positive management style and techniques. there seems to be consensus that needs are arranged hierarchically. an American social psychologist. and to improving organizational culture. In some cultures. to avoid responsibility. Theory x and theory y are still referred to commonly in the field of management and motivation.At a first glance. Enlightened managers use theory y. proposed his famous X-Y theory in his 1960 book 'The Human Side Of Enterprise'. McGregor maintained that there are two fundamental approaches to managing people. and wants security above all else. Mc Gregor Theory X and Theory Y Douglas McGregor. There is in fact good reason to assume that the needs hierarchy is structured differently in different cultures. is relatively unambitious. and generally get poor results. However. . However. but it is important to note that the model is only to a lesser degree supported by empirical research. The average person prefers to be directed. Many managers tend towards theory x. Maslow’s Hierarchy of Needs has been criticized from a cross-cultural perspective. it is important to keep in mind that Maslow imagined his needs theory as a humanist perspective on human motivation in general – not as a model which could form a basis for empirical testing.

In industry the intellectual potential of the average person is only partly utilised . distributed in the population. People usually accept and often seek responsibility. not narrowly. without external control or the threat of punishment. The capacity to use a high degree of imagination. People will apply self-control and self-direction in the pursuit of organisational objectives. ingenuity and creativity in solving organisational problems is widely.Theory Y ('participative management' style) • • • • • • Effort in work is as natural as work and play. Commitment to objectives is a function of rewards associated with their achievement.

The legal and political systems in which an open system operates can play a key role in determining the long-term stability and security of the organization's future. The specific environment refers to the network of suppliers. which effectively helps to allocate power within a society and to enforce laws. These are: • • Cultural values. research during the 1960s indicated that traditional bureaucratic organizations generally failed to succeed in environments where technologies or markets were rapidly changing. and many other regional factors that affect a company's ability to grow and prosper. Economic conditions. Legal/political environment. Quality of education. however. and competitors with which a business enterprise inter-acts. government agencies. Recognizing that traditional theory had failed to take into account many environmental influences that impacted the efficiency of organizations.Open Systems Theory Traditional theories regarded organizations as closed systems that were autonomous and isolated from the outside world. but they are also responsible for ensuring—via regulations pertaining to operation and taxation —that the needs of the larger community are addressed. Businesses will be better able to fill such positions if they operate in geographic regions that feature a strong education system. In the 1960s. recessions. which shape views about ethics and determine the relative importance of various issues. distributors. which is an important factor in high technology and other industries that require an educated work force. Economic influences may also partially dictate an organization's role in the economy. The general environment encompasses four influences that emanate from the geographic area in which the organization operates. Environmental influences that affect open systems can be described as either specific or general. which include economic upswings. For example. The term "open systems" reflected the newfound belief that all organizations are unique—in part because of the unique environment in which they operate—and that they should be structured to accommodate unique problems and opportunities. more holistic and humanistic ideologies emerged. They also failed to realize the importance of regional cultural influences in motivating workers. most theorists and researchers embraced an opensystems view of organizations. regional unemployment. • • The open-systems theory also assumes that all large organizations are comprised of multiple subsystems. each of which receives inputs from other . These systems are responsible for creating a fertile environment for the business community.

The subsystems are not necessarily represented by departments in an organization. Furthermore. technologies used. how it adapts to its environment. An important distinction between open-systems theory and more traditional organization theories is that the former assumes a subsystem hierarchy. but might instead resemble patterns of activity. meaning that not all of the subsystems are equally essential. By contrast. Four important ideas of Contingency Theory are: • • There is no universal or one best way to manage The design of an organizations and its subsystems must 'fit' with the environment Effective organizations not only have a proper 'fit' with the environment but also between its subsystems • . differences among resources and operations activities. etc. In other words: The optimal organization / leadership style is contingent upon various internal and external constraints.subsystems and turns them into outputs for use by other subsystems. Contingency Theory Contingency theories are a class of behavioral theory that contend that there is no one best way of organizing / leading and that an organizational / leadership style that is effective in some situations may not be successful in others. These constraints may include: the size of the organization. strategies. managerial assumptions about employees. traditional mechanistic theories implied that a malfunction in any part of a system would have an equally debilitating impact. a failure in one subsystem will not necessarily thwart the entire system.

organizational ecology examines the environment in which organizations compete and a process like natural selection occurs. This theory looks at the death of organizations (firm mortality) and the birth of new organizations (organizational founding). Fiedler’s approach departs from trait and behavioral models by asserting that group performance is contingent on the leader’s psychological orientation and on three contextual variables: group atmosphere. ∙ Organization ecology / Population ecology Theory Introduced in 1977 by Michael T. and/or group variables. Fiedler’s contingency theory: Fiedler’s theory is the earliest and most extensively researched. including:   Inertia and change Niche width . the success of the leader is a function of various contingencies in the form of subordinate. task. These theories stress using different styles of leadership appropriate to the needs created by different organizational situations.• The needs of an organization are better satisfied when it is properly designed and the management style is appropriate both to the tasks undertaken and the nature of the work group. task structure. leadership effectiveness is the result of interaction between the style of the leader and the characteristics of the environment in which the leader works. Freeman in their American Journal of Sociology piece The population ecology of organizations and later refined in 1989. The effectiveness of a given pattern of leader behavior is contingent upon the demands imposed by the situation. as well as organizational growth and change. In contingency theory of leadership. This theory explains that group performance is a result of interaction of two factors. These factors are known as leadership style and situational favorableness. In Fiedler's model. Hannan and John H. Organizational ecology contains a number of more specific 'theory fragments'. and leader’s power position.

however. Niche theory The theory fragment on niche width distinguishes broadly between two types of organizations: generalists and specialists. On the other hand. Thus. Given the limits on firm-level adaptation. Ecological studies usually have a large-scale. Resource partitioning . longitudinal focus (datasets often span several decades. Niche theory shows that specialisation is generally favoured in stable or certain environments. However. and the duration of environmental states is short relative to the life of the organization” . A key prediction of organizational ecology is that the process of change itself is so disruptive that it will result in an elevated rate of mortality.   Resource partitioning Density dependence Age dependence Organizational ecology has over the years become one of the central fields in organizational studies. A negative byproduct. of the need for reliability and accountability is a high degree of inertia and a resistance to change. Inertia and Change This theory fragment holds that organizations that are reliable and accountable are those that can survive (favored by selection). the main contribution of the niche theory is probably the finding that “generalism is not always optimal in uncertain environments” The exception is produced by environments which “place very different demands on the organization. sometimes even centuries). Theories about inertia and change are fundamental to the research program of organizational ecology. The theory shows how different structures in different industries (generalist vs specialist organizations) are shaped by relevant environments. quantitative character. generalist organizations accept a lower level of exploitation in return for greater security . and is known for its empirical. which seeks a better understanding of the broader changes in the organizational landscape. Hence organizational ecology has spent considerable effort on understanding the mortality rates of organizations. Specialist organizations maximize their exploitation of the environment and accept the risk of experiencing a change in that environment. most of these broader changes thus come from the entry and selective replacement of organizations. the niche theory explains variations in industrial structure in different industries.

The relationship between generalists and specialist organizations is further developed in the resource-partitioning model which includes predictions about the founding and mortality rates of both specialists and generalists as a function of market concentration. while competition at high numbers. Liability of adolescence.e. But when these initial resources become depleted. and the market becomes effectively partitioned. the risk of failure is high initially but declines as the organization ages. The two central mechanisms here are legitimation (the recognition or taken-forgrantedness of that group of organizations) and competition. despite the very concentrated generalists market. in the center of the market these generalists can thrive by exploiting economies of scale. The founding rate will therefore first increase with the number of organizations (due to an increase in legitimation) but will decrease at high numbers of organizations (due to competition).The abundance of resource in the periphery can then become hospitable to specialist organizations. Density dependence Organizational ecology also predicts that the rates of founding and the rates of mortality are dependent on the number of organizations (density) in the market. The result is that legitimation processes will prevail at low numbers of organizations. but so does competition (at an increasing rate). After all. generalists will always attempt to address the center of the market where most resources peak. Environment A stands for an unconcentrated mass market and environment B represents a concentrated mass market. The theory can be illustrated by describing two environments. where the generalist market is less concentrated” . Legitimation generally increases (at a decreasing rate) with the number of organizations. Age dependence How an organization's risk of mortality relates to the age of that organization has also been extensively examined. The risk of mortality will be low at first as the organization is buffered from failure due to support by external constituents and initial endowments. in the periphery of the market] is larger than in environment A. organizational ecologists have found a number of patterns:   Liability of newness. In environment B. Carroll concluded that “more available resources should translate into better chances of success for specialists when they operate in the more concentrated market”. the . Thus. Here. The reverse holds for mortality rates. the resource space outside this market [i. Here. the relationship of density to founding rates has an inverted U shape and the relationship of density to mortality rates follows a U-shaped pattern. claims however that “in environment B.

another example is adding extra safety buffers in product design due to uncertainty in product working conditions. Organizations need quality information to cope with environmental uncertainty and improve their decision making. or the frequency of changes to various environmental variables. systems thinking. A classic example of the first strategy is building inventory buffers to reduce the effect of uncertainty in demand or supply. A Learning Organization has five main features. Environmental uncertainty stems from the complexity of the environment and dynamism. organizations have two strategies to cope with uncertainty and increased information needs: • • develop buffers to reduce the effect of uncertainty implement structural mechanisms and information processing capability to enhance the information flow and thereby reduce uncertainty. Here. This could be due to a liability of senescence (internal inefficiences arising from the aging of the organization) or a liability of obsolescence (a growing external mismatch with the environment).  Liability of aging. An example of the second strategy is the redesign of business processes in organizations and implementation of integrated IS that improve information flow and reduce uncertainty within organizational subunits. shared vision and team learning. mental models. information processing capability. Typically. and the fit between the two to obtain optimal performance. Learning organization Theory A learning organization is the term given to a company that facilitates the learning of its members and continuously transforms itself. Learning Organizations develop as a result of the pressures facing modern organizations and enables them to remain competitive in the business environment.mortality hazard shoots up and then declines following the liability of newness pattern. the risk of failure increases with organizational age. personal mastery. A similar strategy is creating better information flow between organizations to address the uncertainties in the supply chain. . This theory identifies three important concepts: information processing needs.

a shared vision and team learning. Senge defines Learning Organizations as “Organizations where people continually expand their capacity to create the results they truly desire. This is a conceptual framework that allows people to study businesses as bounded objects. where new and expansive patterns of thinking are nurtured. however learning cannot be forced upon an individual if he or she is not receptive to learning. Personal mastery Personal mastery is the commitment by an individual to the process of learning. If one or more of these characteristics is missing then the organization will fall short of its goal. Systems thinking also states that all the characteristics listed must be apparent at once in an organization for it to be a Learning Organization. as. and where people are continually learning to learn together Characteristics of a Learning Organization Learning Organization exhibits five main characteristics. rather than the product of . where collective aspiration is set free. personal mastery. Some definitions are broader and encompass all kinds of organizational change rather than just change through learning . Individual learning is acquired through staff training and development. although the core concept between them all remains clear and has been summarised by Pedler et al. Systems thinking The idea of the Learning Organization originally developed from a body of work called systems thinking. rather than developed simultaneously. systems thinking. Learning Organizations employ this method of thinking when assessing their company and will have developed information systems that measure the performance of the organization as a whole and of its various components. reflecting the fact that change should not happen just for the sake of change. “an organization that facilitates the learning of all its members and continuously transforms itself". There is a competitive advantage for an organisation whose workforce can learn quicker than the workforce of other organisations. However O’Keeffee] believes that the characteristics of a Learning Organization are factors that are gradually acquired. whereas others include specifics about how a Learning Organization works. Pedler et al later redefined this concept to “an organization that facilitates the learning of all its members and consciously transforms itself and its context”. Research has shown that most learning in the workplace is incidental. but should be well thought out.Definition There are varying definitions of a Learning Organization in published literature. mental models.

therefore it is important that team members develop open communication. therefore it is important to develop a culture where personal mastery is practiced in daily life. Wang and Ahmed refer to this as ‘triple loop learning. To have become a Learning Organisation. The most successful visions build on the individual visions of the employees at all levels of the organisation and the creation of a shared vision is likely to be hindered by traditional structures where a company vision is imposed from above. which they intend to follow. Individuals tend to espouse theories. organisations tend to have ‘memories’ which preserve certain behaviours. which allow creation. acquisition.formal training. A Learning Organisation has been described as the sum of individual learning. shared meaning and understanding. Learning Organisations also have excellent knowledge management structures.’ Shared vision The development of a shared vision is important in incentivising the workforce to learn as it creates a common identity that can provide focus and energy for learning . Benefits . the Learning Organisation will have mechanisms for locating and assessing organisational theories of action. Similarly. In the creation of a learning environment it is important to replace confrontational attitudes with an open culture that promotes inquiry and trust. If there are unwanted values held by the organisation. norms and values. and theories-in-use. however Senge states that these are transitory goals and suggests that there should also be long term goals that are intrinsic within the company. these mental models must have been challenged. Learning Organisations have structures that facilitate team learning with features such as boundary crossing and openness. Mental models Mental models are the terms given to ingrained assumptions held by individuals and organisations. these need to be discarded in a process called ‘unlearning’. dissemination. Team learning Team learning is the accumulation of individual learning. To achieve this. Learning Organisations tend to have flat. The topic of shared vision is often to succeed against a competitor. Team learning requires individuals to engage in dialogue and discussion. As a result. The benefit of sharing individual learning is that employees grow more quickly and the problem solving capacity of the organisation is improved through better access to knowledge and expertise. which is what they actually do. but it is important for there to be mechanisms by which individual learning is transferred into organisational learning. decentralised organisational structures. and implementation of this knowledge throughout the organisation.

There are many benefits to improving learning capacity and knowledge sharing within an organization.       Maintaining levels of innovation and remaining competitive Being better placed to respond to external pressures Having the knowledge to better link resources to customer needs Improving quality of outputs at all levels Improving corporate image by becoming more people orientated Increasing the pace of change within the organization . The main benefits are.

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