Concept of Organisation theory:

An organisation theory furnishes a general frame of reference for explaining understanding behaviour
patterns in organisations. It also furnishes a scientific base for managerial actions for predicting,
controlling and influencing behaviour with a view to increase efficiency of the organisation. It also
encompasses the study of structure, functioning and performance of organisations and of the behaviour of
groups and individuals working in organisations.
According to Joe Kelly Organisation theory is a set of interrelated concepts, definitions and propositions
that present a systematic view of behaviour Organisation theory is a set of propositions which seeks to of
individuals, groups and subgroups interacting in some relatively patterned explain how individuals and
sequence of activity, the intent of which is goal directed.
Organisation theory is a macro analysis of an organisation, that is, how the organisation structure is
designed to integrate people with organisation. It is descriptive and predictive about a particular state of
affair in the organisation.
In simple words, organisation theory is a body of considerable knowledge and literature developed over
the years reflecting what goes on in organisations. It is a set of propositions which seeks to explain how
individuals and groups behave in different organisational structures and environment.
Classification Organisation Theories:
The evolution of organisation and management can be divided into three broad classifications as follows:
1. Classical Organisation Theory:
The classical theory represents the traditionally accepted views about organisations i.e. organisation was
viewed as machine and human beings as components of that machine. The classical theory is the
beginning of the systematic study of the organisations.
The classical theorists concentrated on organisation structure for the achievement of organisational goals,
thus, focusing on input-output mediators and giving less or no attention to facilitating and constraining
factors in the external environment. Many of the classical concepts and principles hold good even today.
The writers in this thought have dwelt on human behaviour only in rudimentary manner. The classical
theory can be identified into three streams of thoughts.
These are:
(i) Scientific Management introduced by F.W. Taylor
(ii) Administrative or Process management introduced by Henry Fayol and
(iii) Bureaucratic model introduced by Max Weber.
The scientific management group was mainly concerned with the tasks to be performed at the operative
levels. Henry Fayol studied for the first time the principles and functions of management. Max Weber
introduced bureaucracy as a form of rational organisation.
2. Neo-Classical Organisation Theory:
The classical theory of organisation focused its main attention on physiological and mechanical variables
of organisational functioning. The testing of these variables does not show positive results. The Neoclassical writers tried to remove the deficiencies of the classical school.
This theory consists of two schools of thought viz:
(i) Human Relations propounded by Elton Mayo and Roethlisberges
(ii) Behavioural Science Approach introduced by A. Maslow, D. McGregor, F. Herzberg and V. Vroom.
The Hawthorne studies conducted by Elton Mayo and associates discovered that real cause of human
behaviour was somewhat more than mere physiological variables. These studies revealed the importance
of social and psychological factors in determining workers productivity and satisfaction. The pioneers of
Behavioural Approach reasoned that in as much as managing involves getting things done with and
through people the study of management must be centered around people and their inter-personal
relations. The advocates of this theory concentrated on motivation, individual drives, group relations,
leadership, group dynamics and so forth.

3. Modern Organisation Theory:

Modern organisation theory is of recent origin, having developed in early 1960s. This theory has tried to
overcome the drawbacks of earlier theories.
They theory may be understood in two approaches:
(i) Systems Approach and
(ii) Contingency Approach.
The systems approach studies the organisation in its totality. The mutually dependent variables are
properly analyzed. Both internal and external variables are studied in analyzing the nature of organisation.
The contingency approach suggests that there is no best way to handle all of the management problems
and there is no organisational structure to suit all the situations. A structure will be suitable only if it is
trailer made for an enterprise. This approach suggests that needs, requirements, situations of a particular
concern should be considered while designing an organisational structure. The influence of both internal
and external factors should be considered in this context.