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LESSON-1

THEORIES OF ORGANISATION
Khushboo Garg
Associate Professor
I.P. University
According to Joe Kelly, “Organisation theory is a set of interrelated concepts, definitions and
propositions that present a systematic view of behavior of individuals, groups and subgroups
interacting in some relatively patterned sequence of activity, the intent of which is goal-
directed.”
There is a considerable body of knowledge and literature called organizational theories
developed over years reflecting what goes on in organizations. Organizational theories are a set
of propositions which seek to explain how individuals and groups behave in different
organizational structures and environment.
A central part of the study of organisation and management is the development of management
thinking and what might be termed management theory. The application of theory brings about
change in actual behavior. Managers reading the work of leading writers on the subject might see
in their ideas and conclusions a message about how they should behave. This will influence their
attitudes towards management practice.

The study of organizational theory is important for the following reasons:


1. It helps to view the interrelationships between the development of theory, behavior in
organizations and management practice.
2. An understanding of the development of management thinking helps in understanding
principles underlying the process of management.
3. Knowledge of the history helps in understanding the nature of management and
organizational behavior and reasons for the attention given to main topic areas.
4. Many of the earlier ideas are of continuing importance to the manager and later ideas on
management tend to incorporate earlier ideas and conclusions.
5. Management theories are interpretive and evolve in line with changes in the
organizational environment.

As McGregor puts it:


Every managerial act rests on assumptions, generalizations, and hypotheses – that is to say, on
theory. Our assumptions are frequently implicit, sometimes quite unconscious, often conflicting;
nevertheless, they determine our predictions that if we do a, b will occur. Theory and practice
are inseparable.

Miner makes the point that the more that is known about organizations and their methods of
operation, the better the chances of dealing effectively with them. Understanding may be more
advanced than prediction, but both provide the opportunity to influence or to manage the future.
Theory provides a sound basis for action. However, if action is to be effective, the theory must
be adequate and appropriate to the task and to improved organizational performance. It must be a
‘good’ theory.

However, the systematic development of management thinking is viewed, generally, as dating


from the end of the nineteenth century with the emergence of large industrial organizations and

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the ensuing problems associated with their structure and management.6 In order to help identify
main trends in the development of organizational behavior and management theory, it is usual to
categorize the work of writers into various ‘approaches’, based on their views of organizations,
their structure and management. Although a rather simplistic process, it does provide a
framework in which to help direct study and focus attention on the progression of ideas
concerned with improving organizational performance.

A framework of analysis
There are, however, many ways of categorizing these various approaches. For example, Skipton
attempts a classification of 11 main schools of management theory. Whatever form of
categorization is adopted, it is possible to identify a number of other approaches, or at least sub-
divisions of approaches, and cross-grouping among the various approaches. The choice of a
particular categorization is therefore largely at the discretion of the observer.
We here will be describing following four approaches in detail:
1. Classical – including scientific management, administrative management and
bureaucracy
2. Human relations – including neo-human relations
3. Systems approach
4. Contingency approach
Attention is also drawn to other approaches, including: Decision-making; Social action and Post-
modernism.

Classification of Organisational Theories


1. Classical Organisation theory
a. Scientific Management or Machine Theory
b. Administrative Management or Management Process
c. Bureaucracy
2. Neo-classical Organisation theory
3. Behavioral Science Approach
4. Social System Approach
5. Modern Organisational Theory
a. Systems Approach
b. Contingency Approach
Classical Organisational Theories
The classical theory represents the traditionally accepted views about organisatrions. It is said to
be the oldest school of thought about organization and its management. These can be traced
historically to the 19th century prototype industrial and military organizations. Several writers
namely: Taylor, Fayol, Weber, Luther, Gullick, Urwick, Mooney and Reiley and many others
have contributed to the classical thought. These writers have placed emphasis on planning of the
work, the technical requirements of the organization, principles of management, and the
assumption of rational and logical behavior. Organization here is treated like a machine and its

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efficiency can be increased by making each individual working in the organization efficient.
Classical approach of management is the first studies of management, which emphasized
rationality and making organizations and workers as efficient as possible. It offers a convenient
framework for the education and training of future managers. According to Batrol, the classical
school is characterized by highly structured, with emphasis on the formal organization with
clearly defined functions and detailed rules, autocratic leadership. The three greatest proponents
of classical theory were Taylor, Fayol, and Weber. Each identifies detailed principles and
methods through which this kind of organization could be achieved.
The classical thought can be studied under three streams, namely,

1. Scientific Management or Lower Level Management analysis.


2. Administrative Management or Comprehensive analysis of management.
3. Bureaucratic Management.

All the three concentrated on the structure of organization for greater efficiency. All these
theorists were concerned with the structure of organizations and that is why their approach is
also called as “Structural Theory of Organisation.”

Scientific Management
F.W Taylor was the first person who insisted on the introduction of scientific methods in
management. He launched a new movement during the last decade of 19th century which is
known as “Scientific Management”. That is why Taylor is regarded as the Father of Scientific
Management. Although the techniques of scientific management could conceivably be applied
to management at all levels, the research, research applications and illustrations relate mostly to
lower-level managers. Therefore theory is also referred to lower level management analysis.
Scientific management consists primarily of the work of Frederick W. Taylor, Frank and Lilian
Gilbreth, and Henry L. Gantt. Frederick W Taylor (1856-1915) is commonly called the father of
scientific management because of the significance of his contribution. He started his career as an
apprentice in a small shop in Philadelphia (USA) in 1875.Taylor witnessed much inefficiency
(Robbins et al, 2003). He sought to create a mental revolution among both workers and managers
by defining clear guidelines for improving production efficiency. He argued that the four
principles of management would result in prosperity for both workers and managers.
Scientific management means application of scientific methods to the problems of management.
He advocated scientific task setting based on time and motion study, standardization of
materials, tools and working conditions, scientific selection and training of workers and so on.
He laid emphasis on the following principles:
1. Science. Not rule of thumb: Develop a science for each element of a man’s work,
which replaces the old ‘rule of thumb’ method.
2. Harmony in group action, rather than discord.
3. Maximum output in place of restricted output.
4. Scientific selection, training and placement of the workers.
5. Almost equal division of work and responsibility between workers and managers.

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The basic idea behind above stated principles was to change the mental attitudes of the workers
and the management towards each other. Taylor called it ‘Mental Revolution’ which has three
implications:
i. All out efforts for increase in production;
ii. Creation of the spirit of mutual trust and confidence;
iii. Including and developing the scientific attitude towards problems.
Taylor’s thinking was confined to organization at the shop level. However, he demonstrated the
possibility and significance of the scientific analysis of various aspects of management. To put
the philosophy of scientific management into practice, Taylor and his associates suggested the
following techniques:
i. Scientific task setting to determine a fair day’s work.
ii. Work study to simplify work and increase efficiency. It includes method study, time
study and motion study.
iii. Standardization of materials, tools, equipment, costing system, etc.
iv. Scientific selection and training of workers.
v. Differential piece-wage plan to reward the highly efficient workers.
vi. Specialization in planning and operations through ‘functional foremanship’. Foremen in
the planning department include: route clerk, instruction card clerk, time and cost clerk
and shop disciplinarian and those in operations department include: gang boss, speed
boss, repair boss and inspector.
vii. Elimination of wastes and rationalization of system of control.
Other than Taylor, Frank Gilbreth (1868-1924) and Lilian Gilbreth (1878-1972) were also
significant contributors to the scientific method. As a point of interest, the Gilbreths focused on
handicapped as well as normal workers. Like other contributors to the scientific method, they
subscribed to the idea of finding and using the best way to perform a job. The primary
investigative tools in the Gilbreths research were motion study, which consist of reducing each
job to the most basic movements possible. Motion analysis is used today primarily to establish
job performance standards.
Henry L. Gantt (1861-1919) too, was interested in increasing worker efficiency. Gantt attributed
unsatisfactory or ineffective tasks and piece rates (incentive pay for each product piece an
individual produces) primarily to the fact that these tasks rate were set according to what had
been done by workers in the past or on somebody’s opinion of what workers could do.
Mooney and Reiley set out a number of common principles which relate to all types of
organizations. They place particular attention on:
1. the principle of co-ordination – the need for people to act together with unity of action,
the exercise of authority and the need for discipline
2. the scalar principle – the hierarchy of organisation, the grading of duties and the process
of delegation
3. the functional principle – specialisation and the distinction between different kinds of
duties.

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Brech attempts to provide a practical approach to organisation structure based on tried general
principles as opposed to the concentration on specific cases or complex generalizations of little
value to the practicing manager. He sets out the various functions in the organisation and the
definition of formal organizational relationships. Although clearly a strong supporter of the
formal approach in some of his views such as, for example, on the principle of span of control,
Brech is less definite than other classical writers and recognizes a degree of flexibility according
to the particular situation.
Brech does place great emphasis, however, on the need for written definition of responsibilities
and the value of job descriptions as an aid to effective organisation and delegation. This work
builds on the ideas of earlier writers, such as Urwick, and therefore provides a comprehensive
view of the classical approach to organisation and management.

Appraisal of Scientific Management


Taylor’s scientific management was associated with many benefits to the industry. The main
benefit of scientific management is “conservation and savings, making an adequate use of
everyone’s energy of any type that is expended”. Following are the benefits related to scientific
management:
1. It had replaced the traditional rule of thumb by making the use of scientific techniques for
each element of man’s work.
2. It involved proper selection and training of workers.
3. It established a harmonious relationship between workers and management.
4. Due to scientific management, equal division of responsibilities between workers and
management became possible.
5. Standardization of tools, equipment, materials and work method.
6. Detailed instructions and constant guidance of workers.

Apart from the above discussed long listed benefits Taylor’s theory of Scientific management
was highly criticized by the workers, managers, psychologists and even by the general public on
the following grounds:
1. The use of word ‘Scientific’ before ‘Management’ was highly objected because what it
actually meant by scientific management is nothing but a scientific approach to
management.
2. It was said that most of the principles of scientific management relates only to production
management and certain essential aspects of management i.e. finance, marketing,
personnel and accounting etc were ignored.
3. The concept of Functional Foremanship that aims at bringing specialization in the
organization advocated by Taylor was also criticized because in actual practice it is not
feasible for one worker to carry out instructions from eight foreman.
4. This part of classical theory is truly production centered as it concentrates too much on
technical aspects of work and undermines human factor in industry. It resulted in
monotony of job, loss of initiative, wage reductions, job insecurity, etc.
5. Scientific management theory simply ignores the social and psychological needs of
workers. Here workers were treated as ‘rational economic beings’. Human resources
were referred to as mere extensions of machines devoid of any feelings and emotions.

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Only monetary incentives and exercise of authority were considered as ways to make
them work.
6. Trade unionists criticized this theory and regarded it as the means to exploit labour
because the wages of workers were not increased in direct proportion to productivity
increase.
Many of the above mentioned criticisms were later remedied by the other contributors to
scientific management like Henri L. Gantt, Frank Gilberth, Lilian Gilberth and Harrington
Emerson. It can be said that Taylor introduced scientific reasoning to the disciplines was
management.

Administrative Management Theory


The advocates of this school undertook management as a process involving certain functions like
planning, organizing, directing and controlling. This is why it is called as the ‘functional’
approach. Henri Fayol is regarded as the Father of general management. Organization here is
defined in terms of certain functions where fourteen principles of management have universal
applicability. Fayol, Gulick, Sheldon, Mooney and Reiley and Urwick have contributed to this
stream of thought and gave functions of managers and propounded the principles of sound
organization and management that are said above.
Fayol initiated by classifying all operations in business organizations under six categories:
i. technical (production)
ii. commercial (purchase and sale)
iii. financial (funding and controlling capital)
iv. security (protection)
v. accounting (balance sheet; costing records)
vi. administrative or managerial (planning, organizing, commanding, coordinating and
controlling).
According to Fayol managerial activity deserved more attention. In his view management is the
process composed of five functions: planning, organizing, commanding, coordinating and
controlling where:
a. Planning means to study the future and arrange the plan of operations;
b. Organizing means to build up the material and human organization of the business;
c. Commanding means to make the staff do their work;
d. Coordinating means to unite all the activities;
e. Controlling means to see that everything is done as per the standards that have been laid
down and the instructions given.

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Fayol insisted that in order to be effective, management should be based on fourteen principles:

1. Division of work: A firm’s work should be divided into specialized, simplified tasks.
Matching task demands with workforce skills and abilities will improve productivity. The
management of work should be separated from its performance.
2. Authority and responsibility: Authority is the right to give orders, and responsibility is
the obligation to accept the consequences of using authority. No one should possess one
without having the other as well.
3. Discipline: Discipline is performing a task with obedience and dedication. It can be ex-
pected only when a firm’s managers and subordinates agree on the specific behaviors that
subordinates will perform.
4. Unity of command: Each subordinate should receive orders from only one hierarchical
superior. The confusion created by having two or more superiors will undermine
authority, discipline, order, and stability.
5. Unity of direction: Each group of activities directed toward the same objective should
have only one manager and only one plan.
6. Subordination of individual interest to general interest: The interests of individuals
and the whole organization must be treated with equal respect. Neither should be allowed
to supersede the other.

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7. Remuneration of Personnel: the pay received by employees must be fair and
satisfactory to employees as well as organisation. Pay should be distributed in proportion
to personal performance, but employees’ general welfare must not be threatened by
unfair incentive-payment schemes.
8. Centralization: centralization is the retention of authority by managers, to be used when
managers desire greater control. Decentralization should be used if subordinates’ opinion
and experience are needed.
9. Scalar chain: The scalar chain is a hierarchical string extending from the uppermost
manager to the lowest subordinate. The line of authority follows this chain and is the
proper route for organizational communications
10. Order: Order, or “everything in its place,” should be instilled whenever possible because
it reduces wasted materials and efforts. Jobs should be designed and staffed with order in
mind.
11. Equity: Equity means enforcing established rules with a sense of fair play, kindliness,
and justice. It should be guaranteed by management, as it increases members’ loyalty,
devotion, and satisfaction.
12. Stability: Properly selected employees should be given the time needed to learn and
adjust to their jobs. The absence of such stability undermines organizational performance.
13. Initiative: Staff members should be given the opportunity to think for themselves. This
approach improves the distribution of information and adds to the organization’s pool of
talent.
14. Esprit de corps (union is strength): Managers should harmonize the interests of
members by resisting the urge to split up successful teams. They should rely on face-to-
face communication to detect and correct misunderstandings immediately.
Fayol thought that these principles would be useful to all types of group activity. However he did
not consider these principles as immutable laws. The word principle is just used for convenience.
His theory of management completely revolutionized the thinking of managers as throughout his
treatise, there exists an understanding of the universality of the principles.

Criticism of Management Process or Functional Approach


Although the management process approach has made significant contribution to the
development of thought, their work still has been criticized on the following grounds:
1. There is no single classification of managerial functions acceptable to all the functional
theorists.
2. There exists lack of unanimity about the various terms such as management and
administration, commanding and directing, etc.
3. The functionalists have considered their principles to be universal in nature but many of
the principles have failed to deliver the desired results in certain situations.
4. In this theory theorists have not considered the external environment of business.
5. Fayol has over- emphasized on the intellectual side of management. He thought that
management should be formally taught, but he did not elaborate the nature and contents
of management education.

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Fayol v/s Taylor

Taylor (Scientific Management) Fayol (Administrative Management)


More attention was paid to shop and factory More attention was paid on the functions of
management. managers and the management process as a
whole.
He worked from bottom to top level. His centre He worked from top to bottom level laying
of study was the operator at the shop level. stress on unity of command, unity of direction,
coordination, espirit de corps.
His approach was a kind of efficiency He had a wider perspective. His scheme was to
movement. Thus he had a narrow perspective. evolve principles which could be applied to
administration in different spheres.
He gave stress on increasing productivity He showed regard for the human element by
rather than on human resources. advocating principles such as initiative,
stability of service and spirit of cooperation.
He is also known as Father of Scientific He is also known as Father of Administrative
Management. Management.

Bureaucracy

Bureaucratic management is a stream of classical theory of management. It is “a formal system


of organization that is based on clearly defined hierarchical levels and roles in order to maintain
efficiency and effectiveness.” This theory was developed by Max Weber and is widely used in
the management of both public and private sector organizations. According to the bureaucratic
management approach, organizations are usually divided into hierarchies. These divisions help in
creating “strong lines of authority and control within the organization.
Max Weber (1864-1924) was the first of management theorists who developed a theory of
authority structures and relations based on an ideal type of organization he called a bureaucracy
– a form of organization characterized by division of labor, a clearly defined hierarchy, detailed
rules and regulations, and impersonal relationships. Bureaucratic management depends upon
administration devices. Max Weber presents the ideal organization structure. According to
Weber the bureaucratic management approach is based on four principles -Hierarchical
positions, rules of system, division of labor for specialization, and impersonal relationship. Max
Weber contributed to the organization theory by introducing bureaucracy as an ideal form of
organization. His primary contribution includes his theory of authority structure and his
description of organization based on the nature of authority relations within them. Weber’s ideas
about organization design were influenced by:
a. The amazing growth of industrial organizations,
b. His military experience,
c. Lack of trust in human judgment and emotions.

It was Weber’s belief that there are three types of legitimate authority:
a. Rational-legal authority: Obedience is owned to a legally established position or rank
within the hierarchy of a business, military unit, government, and so on.

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b. Traditional authority: Here people obey a person because he belongs to certain class or
occupies a position traditionally recognized as possessing authority such as a royal
family.
c. Charismatic authority: Obedience here is based on the follower’s belief that is person
has some special power or appeal.
As per Weber’s theory of bureaucracy rational-legal authority is the most important type of
authority in the organization because in traditional authority, leaders are not chosen on the basis
of their capabilities and charismatic authority is too emotional and irrational.

Characteristics of Bureaucracy

1. Division of work: In bureaucracy, the degree of division of work is very high at both the
operative and administrative levels which results in specialization of work.
2. Hierarchy of Positions: In a bureaucratic organisation, there is a well defined hierarchy
of authority wherein each lower position is under the control of a higher one. Thus there
exists, Unity of command. Quantity of authority in such an organization increases as one
move towards the upper level in the organization.
3. Rules and regulations: There exists a very well defined set of rules and regulations in a
bureaucratic organization that are laid down by the top administrators that assures
standardized operations and decisions, protect the human resources and ensure equality of
treatment.
4. Impersonal Conduct: in such organization there exists impersonality of relationships
among the organizational members. There is no room for emotions and sentiments in

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bureaucratic structures and all decisions and rules and regulations framed are highly
impersonal.
5. Staffing: the employees are employed on contractual basis where in tenure of service is
based on the rules and regulations laid down by the top management. Each employee gets
a salary every month that is based on the job he handles and also on the length of service.
6. Technical Competence: Every selection in such organization is on the basis of technical
competence of bureaucrats. Promotions are also based on technical qualifications and
performance.
7. Official Records: This organizational structure follows an efficient system of record
keeping. All the decisions and activities are formally recorded and preserved safely for
future reference. This is made possible by extensive filing system.

Appraisal of Bureaucracy
Bureaucracy is an administrative device that can help in achieving following advantages:
1. There exists proper delegation of authority where every individual gets work on the basis
of their past performance as well as their capabilities.
2. Well defined set of rules and regulations assure consistent actions.
3. Employee’s behavior is rational and predictable because decision taken are bound to the
rules and regulations and not affected by emotions.
4. It leads to efficiency in the organization that result in specialization due to proper division
of work.
Just like any other theory there has been some criticisms by other theorists in regards to
bureaucracy. They are discussed as follow:
1. The rules laid may be followed in paper and not in reality. The strict rules or guidelines
can instead assure inefficiency. The rules may be misunderstood or misused by the
person concerned that may result in red tapism and technicalism.
2. Individuals cannot take any initiative on their own because they are supposed to follow
the defined code of conduct and rules.
3. Bureaucracy does not place any emphasis on individual goals.
4. Such organization does not consider informal organizational and inter-personal relations.
5. In such organization innovation is highly discouraged because every member of the
organization is supposed to behave in certain manner.
6. Since bureaucratic structures are very tall consisting of several layers of executives
communicating with top level can be difficult for the lower level.
7. Such organizational structure is not effective under dynamic environment because it
cannot undergo the changes that are demanded by the fast changing environment.

Appraisal of Classical Theory


Classical approach made a significant contribution to the development of management theories.
This perspective had three primary thrusts. Scientific management focused on employees within
organizations and on ways to improve their productivity. Administrative theory focused on the
total organization and on way to make it more efficient. Bureaucratic management focused on
eliminating managerial inconsistencies that means it emphasized the position rather than person

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and organization continues even when individual leave. Classical approach highlighted the
universal character of management principles. It made a clear distinction between operative
activities and managerial activities. It also identified the application of scientific method to the
problems of management and highlighted the need for mutual cooperation between employers
and employees.
The classical theory was highly criticized by the neo-classical and modern theorists. The neo-
classical writers attacked this theory on the basis of treatment given to human beings. Modern
theorists also criticized it on the basis of narrow view they have assumed for the organization by
ignoring the external environment of the organization. The classical writers have been criticized
generally for not taking sufficient account of personality factors and for creating an organisation
structure in which people can exercise only limited control over their work environment. The
idea of sets of principles to guide managerial action has also been subject to much criticism. For
example, Simon writes:
Organisational design is not unlike architectural design. It involves creating large, complex
systems having multiple goals. It is illusory to suppose that good designs can be created by using
the so-called principles of classical organisation theory.

Research studies have also expressed doubt about the effectiveness of these principles when
applied in practice. However, the classical approach prompted the start of a more systematic
view of management and attempted to provide some common principles applicable to all
organizations. These principles are still of relevance in that they offer a useful starting point in
attempting to analyze the effectiveness of the design of organisation structure. The application of
these principles must take full account of:
a) the particular situational variables of each individual organisation,
b) the psychological and social factors relating to members of the organisation.
The other objections against classical theory are:
1. Narrow view of Organisation: the classical writes have ignored human relations aspect
completely. They have stressed only on the formal organization, impersonal decision
making etc. informal groups, interplay of individual personalities, individual goals are all
neglected. It is said that the focus of this theory is on ‘organization without people’.
2. Assumption of closed system: An organisation is an open system that interacts with the
external environment. But in this theory organizational interaction with external
environment is not given any importance and is assumed that organization is a closed
system.
3. Static view of organization: The classical theorists have viewed organization as static
while organization is a dynamic system. The organization can instantly respond to
changes in the environment and adapt accordingly. The environment influences the
organization and is influenced by it too. Thus, the best organizational pattern should
meet the external and internal requirements and these requirements are ever-changing
and dynamic.
4. Unrealistic assumption about human behavior: Here in this theory certain unreal
assumptions have been made by human beings. They assumed human beings as an inert
machine that perform tasks assigned to them and ignore their social, psychological and
motivational aspects of human behavior. Human behavior is the most unpredictable and

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complex. This assumption of classical writers led the workers to frustration, conflict and
failure and thus made man subordinate to the organization.
5. Economic reward as the main motivators: They have assumed that money and
monetary incentives are the only means to make people work in an organization whereas
this is highly unreal. Non- monetary incentives like job enrichment, praise, respect,
recognition, a pat on the back also plays an important role and can work as real
motivators.
6. Lack of Empirical Verification: All the principles stated above were based on personal
judgments and experiences of the practitioners. The principles lack precision and
comprehensive framework for analysis. Moreover, it is also not clear whether these
principles are action recommendations or simply statements.
7. Neglect of Decision-Making: Decision making plays a vital role in an organization but
classical theorists have paid little attention to decision making process.
8. Hierarchial Structure: Classical theorists have attempted to define the ‘right’
organizational structure. But they did not explore why certain forms of organizational
structure are more effective than others.

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LESSON-2
NEO-CLASSICAL THEORY OF ORGANISATION
Khushboo Garg
Associate Professor
I.P. University
The classical writers Taylor, Fayol, Weber ignored the human relations aspect within an
organization. The neo-classical approach developed as a reaction to the classical principles but it
did not abandon them altogether.

Neo-classical approach is the extended form of classical approach of management. It builds on


Classical approach, but broadens and expands it; it does not totally divorce itself from its
predecessor. Rather, neoclassical theory adds a more human element to the science of
organization and management. The neo-classical writers have focused on human aspect of the
industry. They modified the classical theory by emphasizing on the fact that organization is a
social system and the human factor is the most important element within it. They conducted
some experiments known as Hawthrone Experiments and investigated informal groupings,
informal relationships, patterns of communication, patterns of informal leadership, etc. Elton
Mayo is generally recognized as the father of the Human Relations School. Other contributors
include: Roethliberger, Dickson, Dewey, Lewin, Simon, Smithburg, Thompson etc.
The human relations approach is concerned with the recognition of the importance of human
element in organizations. It revealed the importance of social and psychological factors in
determining workers’ productivity and satisfaction. According to them an organization cannot
achieve its objectives without the cooperation of people and such cooperation cannot be secured
or ordered. It has to be consciously achieved. Neo-classical approach concentrates on people-
oriented organization where both formal and informal organizations integrate.
Neo-classical approach is based on two main points:
1. Organizational situation should be viewed in social as well as in economic and
technical terms.

2. The social process of group behavior can be understood in terms of clinical


method analogous to the doctor’s diagnosis of human organism.
There are mainly three elements of neoclassical theory of management. They are Hawthorne
Experiment, Human Relation Movement, and Organizational Behavior.

Hawthorne experiments
The Hawthorne studies were a series of experiments conducted at the Western Electric
Company (USA) between 1927 and 1932 that provided new insights into individual and group
behavior (Griffin R W, 2006). The research, originally sponsored by General Electric, was
conducted by Elton Mayo and his associates. The studies focused on behavior in the workplace.
In one experiment involving this group of workers, for example, researchers monitored how
productivity changed as a result of changes in working conditions. The Hawthorne studies and
subsequent experiments lead scientists to the conclusion that the human element is very
important in the workplace.

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The Hawthorne studies were among the earliest attempts to use scientific techniques to examine
human behavior at work. A three-stage series of experiments assessed the effects of varying
physical conditions and management practices on workplace efficiency. The first experiment
examined the effects of workplace lighting on productivity; it produced the unexpected findings
that changes in lighting had little effect but that changes in social conditions seemed to explain
significant increases in group productivity. Additional experiments led the researchers to
conclude that social factors—in particular, workers’ desires to satisfy needs for companionship
and support at work-explained the results observed across all of the Hawthorne studies. The
Hawthorne experiments may classified into four stages: Illumination experiments, Relay
assembly test room experiments, Mass interviewing program, Bank wiring observation room
study.
Stage 1: Illumination Experiment: This was conducted to establish relationship between output
and illumination. The output tended to increase every time as the intensity of light was improved.
But the output again showed an upward trend when the illumination was brought down gradually
from the normal level. Thus, it was found that there is no consistent relationship between output
of workers and illumination in the factory. There were some other factors which influenced the
productivity of workers when the intensity of light was increased or decreased.
Stage 2: Relay assembly Room Experiment: Here, a small homogeneous work group of girls
was constituted. Several new elements were introduced in the work atmosphere of this group.
These included: job simplification, shorter work hours, rest breaks, friendly supervision,
improved physical conditions, free social interactions among the group and changed incentive
pay. Productivity and morale were maintained even if improvements in working conditions were
withdrawn. The researchers concluded that socio-psychological factors such as feeling of being
important, recognition, attention, participation, cohesive work-group, and non-directive
supervision held the key for higher productivity.
Stage 3: Mass Interview Program: Another significant phase of the experiments was the
interviewing program. The lighting experiment and the relay assembly test room drew attention
to the form of supervision as a contributory factor to the workers’ level of production. In an
attempt to find out more about the workers’ feelings towards their supervisors and their general
conditions of work, a large interviewing program was introduced. More than 20,000 interviews
were conducted before the work was ended because of the depression. Initially, the interviewers
approached their task with a set of prepared questions, relating mainly to how the workers felt
about their jobs. However, this method produced only limited information. The workers regarded
a number of the questions as irrelevant; also they wanted to talk about issues other than just
supervision and immediate working conditions.
As a result, the style of interviewing was changed to become more non-directive and open-
ended. There was no set list of questions and the workers were free to talk about any aspect of
their work. The interviewers set out to be friendly and sympathetic. They adopted an impartial,
non-judgemental approach and concentrated on listening. Using this approach, the interviewers
found out far more about the workers’ true feelings and attitudes. They gained information not
just about supervision and working conditions but also about the company itself, management,
work group relations and matters outside of work such as family life and views on society in
general. Many workers appeared to welcome the opportunity to have someone to talk to about
their feelings and problems and to be able to ‘let off steam’ in a friendly atmosphere. The

15
interviewing program was significant in giving an impetus to present-day human resource
management and the use of counselling interviews, and highlighting the need for management to
listen to workers’ feelings and problems. Being a good listener is arguably even more important
for managers in today’s work organizations and it is a skill which needs to be encouraged and
developed.

Stage 4: Bank Wiring Observation Room Experiment: This experiment was conducted on a
group of workers under conditions which were as close as possible to normal. This group
comprised of 14 workers. After the experiment, the production records of this group were
compared with their earlier production records. There were no significant changes in the two
because of the maintenance of ‘normal conditions’. However, existence of informal cliques in
the group and informal production norms were observed by the researchers. Major observations
were:
1. Each individual was restricting output.
2. The group had its own unofficial standards of performance.
3. Individual output remained fairly constant over a period of time.
4. Department records were distorted due to differences between actual and reported output.
Later re-analyses of the Hawthorne experiments not only found weaknesses in the studies’
methods and techniques, but also suggested that changes in incentive pay, tasks being per- formed,
rest periods, and working hours led to the productivity improvements attributed by researchers to
the effects of social factors. Nonetheless, the Hawthorne studies raised serious questions about the
efficiency-oriented focus of the scientific management and administrative principles perspectives.
In so doing, they stimulated debate about the importance of human satisfaction and personal
development at work. The human relations perspective of management thought that grew out of
this debate redirected attention away from improving efficiency and toward increasing employee
growth, development, and satisfaction.

Human relation movement


Taking a clue from the Hawthorne Experiments several theorists conducted research in the field
of interpersonal and social relations among the members of the organization. These relations are
known as human relations. A series of studies by Abraham H. Maslow, Douglas Mc Gregor,
Frederick Herzberg, Keth Davis, Rensis Likert and others lead to what is human relation
movement (Singh, 1983). Human relation movement argued that workers respond primarily to
the social context of the workplace, including social conditioning, group norms and interpersonal
dynamics.

Organizational Behavior
Several psychologists and sociologists began the study of group dynamics, Chris Argyris,
Homans Kurt Lewin, R.L. Katz, Kahn and others developed the field of organizational behavior.
It involves the study of attitudes, behavior and performance of individuals and groups in
organizational settings. This approach came to be known as behavioral approach. It is extended
and improved version of human relations movement. It is multidimensional and interdisciplinary
the application of knowledge drawn from behavioral sciences (Psychology, sociology,

16
anthropology, etc) to the management problems. Therefore, it is also called behavioral science
approach.

Features of Neo-classical Theory

1. The organization is a social system composed of several interacting parts.


2. The behavior of an individual is dominated by the informal group of which he is a
member.
3. The social environment on the job affects the workers and is also affected by them.
4. The informal organization also exists within the framework of formal organization and is
affected by the formal organization.
5. Monetary incentives are not the only sole motivators for an individual. Non-monetary
incentives also play a vital role in motivating employees.
6. In an organization it is ultimately cooperative attitude and not the mere command which
yields result.
7. There is generally a conflict between organizational and individual goals. For smooth
functioning of organization it is necessary to integrate individual goals with the
organizational goals and vice versa.
8. Morale and productivity can go hand in hand in an organization.
9. Management must aim at developing social and leadership skills in addition to technical
skills. It must take interest in welfare of organization.
10. Both- way communication is necessary in an organization.

Factors affecting Human Relations


Human relations in an organization are determined by the individual, work group, leader and
work environment.
Individual: Behavior of an individual is affected by his feelings, sentiments, values and
attitudes. Motivation of an individual should give due consideration to their economic, social and
psychological needs. Thus, motivation is a complex process.
Work-Group: The work group is the centre of locus of human relations approach. It helps in
determining the attitudes and performance of individual workers. The Hawthrone studies have
shown that informal groups have a majopr influence over the behavioural pattern of workers.
Work Environment: It has been recommended by several human relationist that a positive work
environment results in achievement of not only organizational goals but also leads to employee
satisfaction.
Leader: Leadership plays a major role in an organization. A leader must ensure full and effective
utilization of all organizational resources to achieve organizational goals. He must be patient,
strong, empathetic and should be able to adapt to various personalities and situations. As per
Hawthrone studies, a leader can contribute substantially in increasing productivity by providing a
free, happy and pleasant work environment where bossism is totally absent and where all
members are allowed to contribute towards decision making.

17
Contributions of Human Relations Approach or Hawthrone studies
1. Flat structure: Neo-classical theorists have suggested a flat structure against tall
structure (as given by classical theorists) where decision making involves everyone and is
quicker and much more effective. Here communication chain is shorter and suitable to
motivate employees as much more freedom is given to the employees over here.
2. Social System: the social system defines individual roles and establishes norms that may
differ from those of formal organization. The workers follow a social norm determined
by their co-workers, which defines the proper amount of work rather than try to achieve
the targets management thinks they can achieve, even though this would have helped
them to earn as much as they physically can.
3. Informal Organisation: classical theorists did not consider informal groups. Neo-
classical theorists felt that both formal and informal organization must be studied to
understand the behavior of organizations fully. Informal groups can be used by the
management for effective and speedy communication and for overcoming resistance on
the part of workers. Thus both formal and informal organizations are inter-dependent.
4. Decentralization of authority and Decision- making: This has allowed initiative and
autonomy at the lower levels.
5. Non- economic rewards: money is not assumed to be the sole motivator for human
beings. The social and psychological needs of the workers are also very strong. So non-
economic rewards like praise, status, inter-personal relations, etc play an important role
in motivating employees. Such rewards must be integrated with wages and fringe benefits
of the employees.
6. Conflicts: Conflict may arise between organizational goals and group goals. Conflicts
will harm the interest of workers if they are not handled properly. Conflicts can be
resolved through improvement of human relations in the organization.
7. Group Dynamics: A group determines norms of behavior for the group members and
exercises a powerful influence on the attitudes and performance of individual workers.
The management should deal with workers as members of work groups rather than
individuals.

Some leading contributors


Among the best-known contributors to the neo-human relations approach are Herzberg and
McGregor. Herzberg isolated two different sets of factors affecting motivation and satisfaction at
work. One set of factors comprises those which, if absent, cause dissatisfaction. These are
‘hygiene’ or ‘maintenance’ factors which are concerned basically with job environment.
However, to motivate workers to give of their best, proper attention must be given to a different
set of factors, the ‘motivators’ or ‘growth’ factors. These are concerned with job Content.
McGregor argued that the style of management adopted is a function of the manager’s attitudes
towards human nature and behavior at work. He put forward two suppositions called Theory X
and Theory Y which are based on popular assumptions about work and people. Other major
contributors to the neo-human relations approach are:

Likert, whose work includes research into different systems of management;


McClelland, with ideas on achievement motivation and

18
Argyris, who considered the effect of the formal organisation on the individual and psychological
growth in the process of self-actualisation. Argyris major contributions include his work on
organizational learning and on effective leadership.

The neo-human relations approach has generated a large amount of writing and research not only
from original propounders, but also from others seeking to establish the validity, or otherwise, of
their ideas. This has led to continuing attention being given to such matters as organisation
structuring, group dynamics, job satisfaction, communication and participation, leadership styles
and motivation. It has also led to greater attention to the importance of interpersonal interactions,
the causes of conflict and recognition of ‘employee relations’ problems.

Criticism of Human Relation Approach


Neoclassical theory has made significant contribution to an understanding of human behavior at
work and in organization. It has generated awareness of the overwhelming role of human factor
in industry. This approach has given new ideas and techniques for better understanding of human
behavior. Contributors to this approach recognize an organization as a social system subject to
the sentiments and cultural patterns of the member of the organization, group dynamics,
leadership, motivation, participation, job environmental, etc constitute the core of the
neoclassical theory. This approach changed the view that employees are tools and furthered the
belief that employees are valuable resources. It also laid the foundation for later development in
management theory.
The human relations approach has provided modifications to classical approach and has
considered the employees as humans that was missing in the classical theory. They understood
the need of two-way communication, informal groups, non-monetary incentives and several
other aspects that led to the betterment of employees in the organization. But still this theory
suffers from certain limitations. It was found incomplete, short-sighted and lack of integration
was found among many aspects of human relations studied by it. Some of those objections are
given below:
1. Limited Applicability: The various structures of organization given by neo-classical
theorists are not universal. Their application is limited. There is no particular structure
which may serve the purpose of all organizations. The relationists also overlooked
some of the environmental constraints which managers cannot ignore and this lapse
makes the applicability of this theory limited.
2. Lack of Scientific Validity: most of the conclusions of this approach were drawn
from Hawthrone studies. These conclusions were based on clinical insights rather
than on scientific evidence. The groups chosen for study were not representative in
character. The findings were based upon temporary groups that cannot be applied to
groups that have continuing relationship with one another.
3. Unreal Assumptions: the assumption that says that there is a solution of every
problem which satisfies everyone in the organization is unreal. Often there are
conflicts of interest among various groups in the organisation that are structural and
not merely psychological.
4. Negative View of Conflict between Organisational and Individual Goals: it views
conflict between the goals of the organization and those of individuals as destructive.

19
The positive aspects of conflicts such as overcoming weakness and generation of
innovative ideas are ignored.
5. Over-emphasis on Group: This approach has over emphasized on group and group
decision-making. But in actual practice, groups may sometimes create problems for
management and collective decision making may not lead to a rationale consensus.
6. Over-stretching of Human Relations: it is assumed here that satisfied workers are
more productive whereas this may not hold true always. This approach says that all
organizational problems are subject to solutions through human relations whereas this
might not hold true always.
7. Limited focus on work: this approach throughout has only talked about humans and
human relations in an organisation. It does not come out with new and better ways to
improve productivity n an organisation. It lacks adequate focus on work. It has over
emphasized the psychological aspects at the cost o9f the structural and technical
aspects.
8. Over-concern with Happiness: the Hawthrone studies suggested that happy
employees will be productive employees. This equation between happiness and job
satisfaction is unfortunate as it represents a naïve and simplistic view of the nature of
man. Studies have shown a consistent relationship between happiness or morale and
productivity. It is quite possible to have a lot of happy but unproductive workers.

Classical Vs Neoclassical theory:


Classical and neoclassical approach to management made outstanding contribution to the
development of management thought. Under classical approach, attention was focused on job
and machine. On the other hand, neoclassical approach to management emphasizes on increasing
production through an understanding of people. According to proponents of this theory, if
managers understand their people and adapt their organizations to them, Organization success
will usually follow. However, the classical theory stresses on task and structure while the
neoclassical theory emphasizes people aspect.

Points of Distinction Classical Approach Neo classical Approach


Focus Functions and economic demand of Emotions and human qualities
workers of workers

Structure Impersonal and mechanistic Social System


Application Autocratic management and strict Democratic process
rules
Emphasis Discipline and rationality Personal security and social
demand
Work goal of workers Maximum remuneration and Attainment of organisational
reward goals
Concept about men Economic being Social being
Relation Formal Informal
Nature Mechanistic Organistic
Content Scientific management, Hawthrone experiments,
administrative management and human relation movement and
bureaucratic management organisational behavior.

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Classical and Neo-classical: A concluding note
Classical and neoclassical approaches made a crucial role in the advancement of management
theories and practices. The adopted management approaches are important due to the facts that
determine the efficiency and congenial environment with which managerial activities are
performed. In this era of rapid economic development and industrial expansion of different
nations, classical and neoclassical theorists made an undeniable role by developing different
techniques of production and it enabled every nation to be involved in this global market.
Though classical theory is now treated to be outdated, it is important because it introduced the
concept of management as a subject for intellectual analysis and provided a basis of ideas that
have been developed by subsequent schools of management thought. Neoclassical approach put
overemphasis on human variables and symbolic rewards which may not be appreciated by the
recipient’s significant others”. It serves as the “backbone” to many current management theories.
So, it is clear that the field of management have some remarkable and pertinent theories which
are underpinned by pragmatic study evidence. This development holds a rather brighter future
for the study, research, and practice of management.
Behavioural Science Approach
Under behavioral science approach, the knowledge drawn from behavioral sciences, namely,
psychology, sociology and anthropology, is applied to explain and predict human behavior. It
focuses on human behavior in organisations and seeks to promote verifiable propositions for
scientific understanding of human behavior in organisations. It lays emphasis on the study of
motivation, leadership, communication, group dynamics, participative management, etc. it
believes that it is difficult to understand the sociology of a group separate from the psychology of
the individual comprising it and the anthropology of the culture within which it exists. Thus, the
behavioural sciences are transactional; they are concerned with all relevant aspects of human
behavior including the interactions among all important factors.
Data is objectively collected and analyzed by the social scientists to study varius aspects of
human behavior. The pioneers of this school reasoned that in as much as managing involves
getting things done with and thought people, the study of management must be centred around
people and their interpersonal relations.
Quantitative or Management Science Approach
The quantitative or mathematical approach uses pertinent scientific tools for providing a
quantitative basis for managerial decisions. The abiding belief of this approach is that
management problems can be expressed in terms of mathematical symbols and relationships.
The basic approach is the construction of a model because it is through this device that the
problem is expressed in its basic relationships and in terms of selected objectives. The users of
such models are known as management scientists.
The technique commonly used for managerial decision-making include Linear Programming,
Critical Path Method (CPM), Program Evaluation Review Technique (PERT), Games Theory,
queuing Theory and Break-Even Analysis. The application of such techniques helps in solving
several problems of management such as inventory control, production control, price
determination, etc.

21
LESSON-3
MODERN ORGANISATION THEORY
Khushboo Garg
Associate Professor
I.P. University

The modern management thinkers define organisation as a system and also consider the impact
of environment on the effectiveness of the organisation. This theory treats organisation as a
system of mutually dependent variables. This theory has been developed on a strong conceptual
analytical base and is based on empirical research data. The modern organisation theory has been
evolved on the pattern of General System Theory (GST). The General System Theory studies the
various parts of a system and interaction between them in an integrated manner an also considers
the interaction of the system with the external environment. The modern organisation theory uses
the concepts of GST and facilitates the analysis of nay organisation.
As a result, two approaches have gained importance after 1960s which are as follows:
a. Systems Approach
b. Contingency Approach
Systems Approach
The classical theories of organization were, in the first place, interested in the material and
financial aspects of the organization, and the human relations and human resources theories in
the psychological aspects of the organization.
The system method of treatment is relating to the investigating into the component part of the
organizational systems in the multidirectional connections between the causes and effects in the
organization. It is conceived of the feed forward and feedback information. With a system
approach we deal with the organization as a system whole consisting of the mutually connected
parts. The system approach means dealing with these parts in their mutual connection as a part
of the whole. A no system approach in the investigating into the organization, however, means
dealing with the parts of a whole, irrespective of the mutual connection. It is just for this reason
that the no system dealing with the organization is only a partial one and cannot explain the
organizational phenomena in their totality. The totality of the organization and of its phenomena
can be explained only by the system approach.
According to Kats and Rosenzweig, “A system is an organized, unitary whole composed of two
or more independent parts, components or sub-systems and delineated by identifiable boundaries
from its environmental supra system.” It is simply an assemblage or combination of things or
parts, forming a complex whole.

Features of Organisational system:


i. A system is goal-oriented.
ii. A system consists of several sub-systems that are interdependent and inter-related.
iii. A system is engaged in processing or transformation of inputs into outputs.
iv. An organisation is an open and dynamic system. It has continuous interaction with the
environment. It is sensitive to its environment such as government policies, competition
in the market, change in tastes and preferences of people, etc.
v. A system has a boundary which separates it from other systems.

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Open system Concept:
With the emergence in the 1960s of the open systems perspective, human relations concerns
related to employee satisfaction and development broadened to include a focus on organizational
growth and survival. According to the open systems perspective, every organization is a system
unified structure of interrelated subsystems and it is open subject to the influence of the
surrounding environment. Together, these two ideas form the essence of the open systems
approach, which states that organizations whose subsystems can cope with the surrounding
environment can continue to do business, whereas organizations whose subsystems cannot cope
will not survive. The systems approach views the organisation as a whole and involves the study
of the organisation in terms of the relationship between technical and social variables within the
system. Changes in one part, technical or social, will affect other parts and thus the whole
system.

Long-wall coal-mining study


The idea of socio-technical systems arose from the work of Trist and others, of the Tavistock
Institute of Human Relations, in their study of the effects of changing technology in the coal-
mining industry in the 1940s.

The increasing use of mechanization and the introduction of coal-cutters and mechanical
conveyors enabled coal to be extracted on a ‘long-wall’ method. Shift working was introduced,
with each shift specializing in one stage of the operation – preparation, cutting or loading.
However, the new method meant a change in the previous system of working where a small, self-
selecting group of miners worked together, as an independent team, on one part of the coalface –
the ‘single place’ or ‘short-wall’ method. Technological change had brought about changes in the
social groupings of the miners. It disrupted the integration of small groups and the psychological
and sociological properties of the old method of working. There was a lack of co-operation
between different shifts and within each shift, an increase in absenteeism and signs of greater
social stress. The ‘long-wall’ method was socially disruptive and did not prove as economically
efficient as it could have been with the new technology. The researchers saw the need for a
socio-technical approach in which an appropriate social system could be developed in keeping
with the new technical system. The result was the ‘composite long-wall’ method with more
responsibility to the team as a whole and shifts carrying out composite tasks, the reintroduction
of multi-skilled roles and a reduction in specialization. The composite method was
psychologically and socially more rewarding and economically more efficient than the ‘long-
wall’ method.

The socio-technical system


The concept of the organisation as a ‘socio-technical’ system directs attention to the
transformation or conversion process itself, to the series of activities through which the
organisation attempts to achieve its objectives. The socio-technical system is concerned with the
interactions between the psychological and social factors and the needs and demands of the
human part of the organisation, and its structural and technological requirements. Recognition of
the socio-technical approach is of particular importance today. People must be considered as at
least an equal priority along with investment in technology. For example, Lane et al. point out
that major technological change has brought about dramatic changes in worker behavior and

23
requirements. It is people who unlock the benefits and opportunities of information
communication technology.

Technology determinism
The concept of socio-technical systems provides a link between the systems approach and a sub-
division, sometimes adopted – the technology approach. Writers under the technology heading
attempt to restrict generalizations about organizations and management and emphasize the
effects of varying technologies on organisation structure, work groups and individual
performance and job satisfaction. This is in contrast with the socio-technical approach which did
not regard technology, per se, as a determinant of behaviour. Under the heading of the
technology approach could be included the work of such writers as Walker and Guest (effects of
the assembly line production method on employee behavior);
Sayles (relationship between technology and the nature of work groups); and Blauner (problems
of ‘alienation’ in relation to different work technologies).

In one of the seminal works on the open systems perspective, Daniel Katz and Robert Kahn
identified the process shown in Figure as essential to organizational growth and survival.
This process consists of the following sequence of events:

a. Every organization imports inputs, such as raw materials, production equipment, human
resources, and technical know-how, from the surrounding environment. For instance,
Shell Oil Company hires employees and, from sources around the world, acquires
unrefined oil, refinery equipment, and knowledge about how to refine petroleum
products.
b. Some of the inputs are used to transform other inputs during a process of throughput. At
Shell, employees use refinery equipment and their own know-how to transform unrefined
oil into petroleum products such as gasoline, kerosene, and diesel fuel.
c. The transformed resources are exported as outputs—saleable goods or services—to the
environment. Petroleum products from Shell’s refineries are loaded into tankers and
transported to service stations throughout North America.
d. Outputs are exchanged for new inputs, and the cycle repeats. Shell sells its products and
uses the resulting revenues to pay its employees and purchase additional oil, equipment,
and know-how.

Fig. The Open System Perspective


Source: Katz and Kahn, 1966

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According to Katz and Kahn, organizations will continue to grow and survive only as long as
they import more material and energy from the environment than they expend in producing the
outputs exported back to the environment. Information inputs that signal how the environment
and organization are functioning can help determine whether the organization will continue to
survive. Negative feedback indicates a potential for failure and the need to change the way things
are being done.
An open system obtains inputs such as raw materials, labor, capital, technology and information
from the environment. Operations are performed upon the inputs and combined with the
managerial process to produce desirable outputs which are supplied back to the environment i.e.
customers. Through a feedback process, the environment’s evaluation of the output becomes part
of the inputs for further organizational activity. If the environment is satisfied with the output,
business operations continue. If it is not, changes are initiated within the business system so that
the requirements of the customers are fully met. This is how an open system responds to the
forces of change in the environment.
After noting that every organization’s environment is itself composed of a collection of more or
less interconnected organizations supplier companies, competitors, and customer firms. Emery
and Trist proposed the existence of four basic kinds of environments.
a. The first kind, which they labeled the placid random environment, is loosely
interconnected and relatively unchanging. Organizations in such environments operate
independently of one another, and one firm’s decision to change the way it does business
has little effect on its rivals. These organizations are usually small for example, landscape
maintenance companies, construction firms, and industrial job shops and can usually
ignore each other and still stay in business by catering to local customers.
b. Placid clustered environments are more tightly interconnected. Under these conditions,
firms are grouped together into stable industries. Environments of this sort require
organizations to cope with the actions of a market fairly constant group of suppliers,
competitors, and customers. As a result, companies in placid clustered environments
develop strategic moves and countermoves that correspond to competitors’ actions.
Grocery stores in the same geographic region often do business in this type of
environment, using coupon discounts, in-store specials, and similar promotions to lure
customers away from other stores.
c. Disturbed reactive environments are as tightly interconnected as placid clustered
environments, but are considerably less stable. Changes that occur in the environment
itself have forceful effects on every organization. For instance, new competitors from
overseas, by increasing automation and changing consumer tastes in the U.S. automobile
market, revolutionized the domestic auto industry in the 1970s and 1980s. In response,
GM and Ford had to change their way of doing business, Chrysler ultimately merged
with Germany’s Daimler-Benz to become Daimler-Chrysler, and a fourth long-time
manufacturer, American Motors, ceased to exist. In such circumstances, organizations
must respond not only to competitors’ actions but also to changes in the environment
itself. Owing to their unpredictable ability, it is difficult to plan how to respond to these
changes.
d. Turbulent fields are extremely complex and dynamic environments. Companies operate
in multiple markets. Public and governmental actions can alter the nature of an industry

25
virtually overnight. Technologies advance at lightning speed. The amount of information
needed to stay abreast of industrial trends is overwhelming. As a result, it is virtually
impossible for organizations to do business in any consistent way. Instead, they must
remain flexible in the face of such uncertainty, staying poised to adapt themselves to
whatever circumstances unfold. Today’s computer and communications industries
exemplify such sort of environment. Technological change and corporate mergers are
creating and destroying entire categories of companies at ever-increasing rates.
Emery and Trist suggested that organizations must respond in different ways to different
environmental conditions. Tighter environmental interconnections require greater awareness
about environmental conditions, and more sweeping environmental change necessitates greater
flexibility and adaptability. Other open systems theorists, including Paul Lawrence, Robert
Duncan, and Jay Galbraith, have similarly stressed the need for organizations to adjust to their
environments.

Scott Model: Analysis of Organisation System


According to W.G. Scott, the systems theory asks a range of inter-related questions which are not
seriously considered by the classical and neo-classical theories. The important questions are:
1. What are the strategic parts of the system?
2. What is the nature of their mutual dependency?
3. What are the main processes in the system which link the parts together, and facilitate
their adjustment to each other?
4. What are the goals sought by the system?

Parts of the System


Scott has discussed five parts of the system:
1. Individual: Individual and his personality structure (motives and attitudes) is a basic part
of the system.
2. Formal Organisation: it is interrelated pattern of jobs which make up the structure of a
system. There is generally an incongruency between the goals of the organisation and
those of organisational members. Modern organisational theory has given considerable
attention to this aspect of inter-action of organisational and individual demands.
3. Informal Organisation: it comes into existence along with the formal organisation
automatically. Individuals have expectations from the informal organisation and the
informal organisation also demands same type of behavior from the individuals. Both
these sets of expectations interact resulting in modifying the behavior of one another.
4. Fusion Process: it is a force which acts to weld divergent elements together for the
preservation of organisational integrity. It may be noted that a part of modern
organisational theory rests on research findings in social psychology relative to reciprocal
patterns of behavior stemming from role demands generated by both formal and informal
organisation, role perceptions peculiar to the individual.
5. Physical Setting: the physical setting in which a job is performed is also very important.
Interactions present in the complex man-machine system need to be carefully studied.

26
The human engineer cannot approach this problem in a purely technical fashion. He has
to take the help of social theorists like psychologists and sociologists.
The various parts of a system are interwoven or interlinked. The interconnection is achieved by
three linking processes, namely, communication, balance and decision-making.
1. Communication: communication is viewed as the method by which action is evoked from
the parts of the system. Communication acts as stimuli resulting into action, and as a
control and coordination mechanism linking the decision centers in the system in a
synchronized pattern.
2. Balance: Balance refers to an equilibrating mechanism whereby the various parts of the
system are maintained in a harmoniously structured relationship to one another. Balance
appears in two varieties: quasi-automatic and innovative. Both act to ensure system
integrity in the face of changing environment. By quasi-automatic balance we mean that
the system has built in propensities to maintain steady states. If human organisations are
open, self-maintaining systems, then control and regulatory processes are necessary.
Adaptation by a system is generally automatic when changes are minor in nature. The
need for innovative balancing efforts arises when adaptation to a change is outside the
scope of the existing programs designed for the purpose of keeping the system in balance.
New programs have to be found out in order to maintain the integrity of the system.
3. Decision-Making: Decisions refers to the problem solving activity. Two types of
decisions are important, viz., decisions to produce and decisions to participate in the
system. Decisions to produce are largely a result of interaction between individual
attitudes and the demands of organisation. Motivation analysis has becoe central to
studying the nature and resultsof the interactions. Individual decision to participate in the
system reflect on such issues as the relationship between organisational rewards versus
the demands made by the organisation. Whatever may be the kind of decision, decisions
are internal variables in an organisation dependent upon jobs, individual expectations and
motivations, and or5ganisational structure.
Cybernetics: It is a crucial aspect of the systems approach as it is related to both communication
and control. It integrates the linking processes discussed above and creates self-regulatory
systems of flow of information. Cybernetics makes a deep and comprehensive study of
controlled and controllable systems to determine principles governing the organisation and
structure of control systems. It studies the common properties of different control systems and
also the properties which are quite independent of their material basis.
The control process generally involves the transmission, accumulation, storage and processing of
information about the controlled object, process, environment conditions, work program, etc. the
nature of information carried varies widely from system to system. Another characterstic feature
of the whole diversity of such systems is the feedback. Through it they receive information on
the effects or results of their control operations.
The purpose of cybernetics is to maintain system stability in face of change. Cybernetics can’t be
studied without considering communication networks, information flow and some kind of
balancing processes aimed at preserving the integrity of the system. A thorough knowledge of
cybernetics can be used to synthesise the proceses of communication and balance. It is quite

27
common that the organisation using sophisticated management information systems adopt
cybernetics models as an integral part of their mode of operation.
Goals of the System: to the system analysis, goals of an organisation are growth, stability and
interaction. The last goal refers to systems which provide a medium for association of members
with others. These goals seem to apply to different forms of organisation at varying levels of
complexity.

Features of Systems Approach


1. Open System view of Organisation: As per classical theory organisation was a closed
system. But modern theory considers organisation as an open system which has
continuous interaction with the environment. It gets various resources from the
environment and transforms them into outputs desired by the environment. Due weight
age has to be given to the environmental factors affecting the management of an
organisation.
2. Adaptive to dynamic environment: An organisation operates in an environment which
is dynamic in nature so a system that is adaptive to such dynamism is needed.
Management tends to bring changes in the sub-systems of the organisation to cope up
with the challenges of environmental forces.
3. Whole Organisation: This approach looks at the organisation as a whole that is greater
than the sum of its parts. The emphasis is given on the summation of various sub-systems
of the organisation to ensure overall effectiveness of the system.
4. Multi-Level Analysis: Systems approach has both macro and micro aspects. At the
macro level, it can be applied to the whole industry or the national economic system. At
the micro level, it can be applied to an organisation and even to a sub-system of the
organisation.
5. Multi-variety analysis: It takes into account many variables simultaneously. This means
that there is no single variable responsible for something to happen rather it may be the
result of many variables that may be interrelated or interdependent. This interrelatedness
and interdependence makes managing quite a complex process.
6. Synergy: the output of a system is always more than the combined output of its parts.
This is called the Law of synergy. The parts of a system become more productive when
they interact with each other than when they act in isolation.
7. Multi-disciplinary: Modern theory of Management is enriched by contributions from
various disciplines like psychology, sociology, economics, anthropology, mathematics,
operations, research and so on.
8. Probabilistic: modern organisation theory is probabilistic rather than deterministic. It
does not predict the outcome of any action because of a high degree of uncertainty in the
environment. Being probabilistic, it only points out the probability and never the certainty
of performance and consequent results.
9. It represents a balanced thinking on organisation and management, and provides a
unified focus to organizational efforts.

Limitations of Systems Approach


1. Lack of unification: this approach cannot be considered as a unified theory of
organisation. It cannot be applied to all types of organisation.

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2. Abstract Analysis: the systems theory is too abstract to be of much use to the practicing
managers. It indicates that various parts of the organisation are interrelated and its
interrelationship is dynamic. But it has failed to spell out the precise relationship between
various sub-systems.
3. Limited View of Organisation-Environment Interface: The systems approach has
failed to specify the nature of interactions and interdependencies between an organisation
and its external environment.
4. Limited Application: It has limited applications. It does not provide action framework
applicable to all types of organizations. Most of the concepts used here cannot be applied
in small organizational structures.

Contingency Approach
The classical approach suggested one best form of structure and placed emphasis on general sets
of principles while the human relations approach gave little attention at all to structure. In
contrast, the contingency approach showed renewed concern with the importance of structure
as a significant influence on organizational performance. The contingency approach, which can
be seen as an extension of the systems approach, highlights possible means of differentiating
among alternative forms of organisation structures and systems of management. There is no one
optimum state.
For example, the structure of the organisation and its ‘success’ are dependent, that is contingent
upon, the nature of tasks with which it is designed to deal and the nature of environmental
influences.
The most appropriate structure and system of management is therefore dependent upon the
contingencies of the situation for each particular organisation. The contingency approach implies
that organisation theory should not seek to suggest one best way to structure or manage
organizations but should provide insights into the situational and contextual factors which
influence management decisions.
It is an improvement over the systems and other approaches. The contingency approach to
management has its roots in general systems theory and the open systems perspective, as well as
in the Simon-March-Cyert stream of theory and research. Thompsom recognized the intersection
of these traditions and extended them in a landmark work that represents a cornerstone of
contingency approach.
The term contingency as used in contingency theory is similar to its use in direct practice. A
contingency is a relationship between two phenomena. If one phenomenon exists, then a
conclusion can be drawn about another phenomenon. For example, if a job is highly structured,
then a person with a freewheeling disposition will have problems with the job. Contingencies can
sometimes be considered conditions.
It suggests that managerial actions and organizational design must be appropriate to given
situation. The latest approach to management which integrates the various approaches to
management is known as “Contingency” or “Situational” approach. It is not new. Pagers and
Myers propagated this approach in the area of personnel management in 1950. However, the
work of Joan Woodward in the 1950s marked the beginning of the contingency approach to
organisation and management. Other contributors include Tom Burns, G.W. Stalker, Paul
Lawrence, Jay Borsch and James Thompson. They analyzed the relationship between the
structure of organisation and the environment. Thus, contingency approach incorporates external
29
environment and attempts to bridge the theory-practice gap. In simple words, contingency
approach also regards organisation as an open and dynamic system which has continuous
interaction with the environment.
As per the contingency approach, the task of managers is to try to identify which technique or
method will be more suitable for achieving the management objectives under the available
situation. Managers have to develop a sort of situational sensitivity in order to deal with their
managerial problems as they develop from time to time.
Contingency approach views are applicable in designing organisational structure and in deciding
the degree of decentralization in establishing communication and control systems and also in
deciding motivational and leadership approaches. In brief, it is applicable to different areas of
organisation and management it is an attempt to integrate various viewpoints and to synthesize
various fragmented approaches to management.
Contingency theory attempts to relate research on many management variables, for example,
research on professionalism and centralized decision making or worker education and task
complexity. It allows you to analyze a situation and determine what variables influence the
decision with which you are concerned.
This approach is based upon the fact that there is no one best way to handle any of the
management problems. The application of management principles and practices should be
contingent upon the existing circumstances. Functional, behavioral, quantitative and systems
tools of management should be applied situation ally. There are three major parts of the overall
conceptual framework for contingency management:
i. Management concepts,
ii. Principle and techniques;
iii. Contingent relationship between the above two.
Contingency theory attempts to analyze and understand interrelationships with a view towards
taking the specific managerial actions necessary to deal with the issue. This approach is both
analytical and situational with the purpose of developing a practical answer to the questions in
hand.
It has rejected universality of management principles and it appeals to common sense. It requires
the ability to analyze and diagnose a managerial situation correctly and act accordingly. Use of
contingency approach is not possible without the ability to match the management knowledge
and skills as per the management situation.
It is action-oriented as it directs towards the integrated application of systems concepts and the
knowledge gained from other approaches.
As per contingency approach managers should develop situational sensitivity and practical
selectivity. Adoption of these two traits can prove to be useful in formulating strategies,
designing effective organizations, planning information systems, establishing communication
and control systems, shaping motivational and leadership approach, resolving conflicts,
managing change, etc.
This approach says that there should be congruence between the organisation and its
environment and among the various sub-systems. The appropriate fit between the organisation

30
and its environment and the appropriate internal organizational design will lead to greater
effectiveness, efficiency and participant satisfaction. Thus, there is no standard design that could
be applied to all organizations under all situations. Managers have to apply different ideas to
different situations to cope with them and ensure effectiveness and efficiency in decision
making.
The open systems perspective views the complex organisation as a set of interdependent parts
that, together, constitute a whole which, in turn, is interdependent with some larger environment.
The interactive nature of the elements within the organisation - and between the organisation and
the environment - result in at least two open system characteristics that are central to the
contingency approach: adaptation and equi-finality. First, the principle of adaptation asserts that
the elements within the system adapt to one another to preserve the basic character of the system.
Second, the principle of equi-finality holds that a system can reach the same final state from
differing initial conditions and by a variety of paths.

The Simon-March-Cyert stream of work adds to the open systems perspective the view that
organisations are problem-facing and problem-solving entities. The organisation develops
processes for searching, learning and deciding — processes that attempt to achieve a satisfactory
level of performance under norms of bounded rationality. Organisational decision-makers
undertake rational decision processes designed to cope with the complexity and uncertainty of
their situations, all of which result in deliberate decisions by using a satisfying criterion for
performance.

As derived from these conceptual antecedents, the essential premise of the contingency approach
is that effectiveness, broadly defined as organisational adaptation and survival[26], can be
achieved in more than one way. For example, management theorists and researchers have
recognized more than one way to organize effectively, more than one strategy that maximizes
profitability and market position, and more than one leadership style that achieves organisational
goals.

Each way is not equally effective under all conditions; certain organisational actions or responses
are more appropriate than others, depending on the situation. The contingency approach
suggests, therefore, that we can observe wide variations in effectiveness, but that these variations
are not random. Effectiveness depends on the appropriate matching of contingency factors with
internal organisational designs that can allow appropriate responses to the environment.
Theoretical and practical contributions are achieved through:
1. Identifying important contingency variables that distinguish between contexts;
2. Grouping similar contexts based on these contingency variables, and
3. Determining the most effective internal organisational designs or responses in each major
group.
These contingency theory-building steps involve three types of variables;
1. Contingency variables: They represent situational characterstics are usually exogenous to
the organisation or manager. In most instances the opportunity to control or manipulate
these variables is, at best, limited and indirect.
2. Response variables: They are the organisational or managerial actions taken in response
to current or anticipated contingency factors.

31
3. Performance Variables: They are the dependent measures and represent specific aspects
of effectiveness that are appropriate to evaluate the fit between contingency variables and
response variables for the situation under consideration.
These steps typically result in contingency theories that focus primarily on outcome or content
issues, rather than on processes. They attempt to determine the organisation structure, strategy or
leadership style to be used in a particular situation, but do not emphasise on the dynamics of the
process by which an organisation adapts or a leader becomes effective.
Usually IF-THEN approach is followed where in If means environment that is an independent
variable and Then means management variable dependent factors. Whenever anything happens
in the environment then all the possible effects of this happening are studied on management
variable and then the most effective solution is selected.
Kats and Rosenzweig have analyzed the suitability of two kinds of structures under different
types of environment. These are:
Stable-mechanistic organizational design: It is used under following situations.
a) When environment is relatively stable and certain
b) Organizational goals are well-defined and enduring
c) Technology used is relatively stable and uniform
d) Productivity is of utmost importance
e) Routine activities take place
f) Decision making is programmable and coordination and control processes tend to make
tightly structured, hierarchical system possible.
Adaptive-organic organisational design: It is used in the following situations.
a) When environment is relatively uncertain and turbulent
b) Organizational goals are diverse and changing
c) Technology is complex and dynamic
d) There are many non-routine activities in which creativity and innovation hold extreme
importance
e) Innovative decision making processes are utilized and coordination and control occur
through reciprocal adjustments. The system is more flexible and less hierarchical.

Contingency Approaches in Organisational Behavior


Within the organisational behavior literature, the contingency approach has made its most
significant contribution in the area of leadership theory and research. Contingency approaches to
leadership tie the leader's effectiveness to the nature of the situation and acknowledge that
worker’s needs and problems vary, requiring that leadership style match the types of individuals
involved and the characteristics of their work situation.
While the situational approach has been used to study leadership since the 1950s
House proposed a theory of leadership that clearly illustrates the contingency approach. He
contends that the functions of a leader vary depending on the needs of subordinates and the type
of work to be accomplished. According to House's theory, a leader obtains good performance
from his/her work unit by increasing subordinates' personal rewards from goal attainment and by
making the path to these rewards easier to follow (e.g. by instructing, reducing roadblocks and

32
pitfalls, and increasing the opportunities for personal satisfaction along the way). To be effective,
the leader must tailor his/her style and approach to individual subordinates and situations. In
ambiguous situations (and with subordinates to whom ambiguity can be frustrating),
effectiveness is achieved when the leadership provides structure. In routine situations, on the
other hand, the additional structure provided may be viewed as redundant and insulting by
subordinates, who may consequently become dissatisfied. In essence, the theory holds that the
level of leader structure depends on the ambiguity of the task, and the level of leader
consideration depends on the intrinsic satisfaction of the task. The theory has been elaborated
and tested since it was proposed.

Appraisal of Contingency Approach


It is an improvement over systems approach. It can be easily applicable in all types of
organizations for all type of decision making. It holds a great promise for future development of
management theories. It rejects the notion of one best way of doing things. It believes in flexible
and adaptive methods to be used to solve management related issues. But still a lot more is
needed to be explored in this context. Contingency approach is not supported by much literature.

Merits
1. It is pragmatic and open minded. It discounts preconceived notions, and universal validity
of principles.
2. It relives managers from dogmas and set principles. It provides freedom to choose,
manage and judge the external environment and use the most suitable management
techniques. Here, importance is given to the judgement of the situation and not the use of
specific principles.
3. It has a wide-ranging applicability and practical utility in organisations. It advocates
comparative analysis of organisations to bring suitable adjustment between organization
structure and situational peculiarities.
4. It focuses attention on situational factors that affect the management strategy. The theory
combines the mechanistic and humanistic approaches to fit particular/specific situation. It
is superior to systems approach as it not only examines the relationship between sub-
systems of an organisation but also the relationship between the organisation and its
external environment.

Demerits

1. It is argued that the contingency approach lacks a theoretical base.


2. Under contingency approach a manager is supposed to think through all possible
alternatives as he has no dried principals to act upon. This brings the need of more
qualities and skills on the part of managers. The responsibility of a manager increases as
he has to analyze the situation, examine the validity of principles and techniques to the
situation at hand, make right choice by matching the technique to the situation and finally
execute his choice. The areas of operation of a manager are quite extensive under this
theory.

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Difference between Contingency and systems Approach:

Points of Distinction Systems approach Contingency Approach


Emphasis Interdependencies and It identifies nature of
interactions among systems interdependencies and the
and sub-systems impact of environment on
organizational design and
managerial styles.
Focus Internal Environment and External environment of
organizational sub-systems organization
Solutions It provides deterministic It provides probabilistic and
solutions to all managerial pragmatic solutions to all
problems managerial problems.
Organisational view It views all organisations It treats all organisations as
alike. separate unique entity.
Evolution Major contributors in systems Sociologists have contributed
approach have been to this approach. It has been
psychologists. built over systems approach.
Organisational Variables It is very broad considering all It concentrates on structural
personal, social, technical, adaptation of organisation.
structural, environmental and This approach tends to predict
organizational variables. the ultimate outcome of a
Therefore, managing involves disturbance of the
establishing relationships organizational equillibrium by
among them while a change in the task
undertaking any action. environment.
Model of Human Beings It usually employs a richer It is interested in structural
model of human beings than adaptation of organisation to
contingency model. It takes its task environment.
into account full range of Therefore, contingency
human behavior in the theories talk mostly in terms
organisation. of structural change in the
organisation in response to a
change in environment.
It is a combination of three It combines two or more of the
approaches: the classical other approaches depending
approach, the behavioral on the given situation.
approach and the management
science approach.
Other Organisational Approaches- A Brief Description
The Decision-making Approach
The systems approach involves the isolation of those functions most directly concerned with the
achievement of objectives and the identification of main decision areas or sub-systems. Viewing
the organisation as a system emphasizes the need for good information and channels of
communication in order to assist effective decision-making in the organisation. Recognition of

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the need for decision-making and the attainment of goals draw attention to a sub-division of the
systems approach, or a separate category, that of the decision-making (decision theory)
approach. Here the focus of attention is on managerial decision-making and how organisations
process and use information in making decisions. Successful management lies in responding to
internal and external change. This involves the clarification of objectives, the specification of
problems and the search for and implementation of solutions. The organisation is seen as an
information-processing network with numerous decision points. An understanding of how
decisions are made helps in understanding behavior in the organisation. Decision-making writers
seek to explain the mechanisms by which conflict is resolved and choices are made.

Some leading writers

Leading writers on the decision-making approach include Barnard, Simon and Cyert and March.
The scope of the decision-making approach, however, is wide and it is possible to identify
contributions from engineers, mathematicians and operational research specialists in addition to
the work of economists, psychologists and writers on management and organisation.
Barnard stressed the need for co-operative action in organisations. He believed that people’s
ability to communicate, and their commitment and contribution to the achievement of a common
purpose, were necessary for the existence of a co-operative system.

These ideas were developed further by Simon. He sees management as meaning decision-making
and his concern is with how decisions are made and how decision-making can be improved.
Simon is critical of the implication of man as completely rational and proposes a model of
‘administrative man’ who, unlike ‘economic man’, ‘satisfices’ rather than maximizes.
Administrative decision-making is the achievement of satisfactory rather than optimal results in
solving problems.

Economic models of decision-making, based on the assumption of rational behavior in choosing


from known alternatives in order to maximize objectives, can be contrasted with behavioral
models based not so much on maximization of objectives as on short-term expediency where a
choice is made to avoid conflict and to stay within limiting constraints. Managers are more
concerned with avoiding uncertainties than with the prediction of uncertainties.

Social action
Social action represents a contribution from sociologists to the study of organizations. Social
action writers attempt to view the organisation from the standpoint of individual members
(actors), who will each have their own goals and interpretation of their work situation in terms of
the satisfaction sought and the meaning that work has for them. The goals of the individual, and
the means selected and actions taken to achieve these goals are affected by the individual’s
perception of the situation. Social action looks to the individual’s own definition of the situation
as a basis for explaining behavior. Conflict of interests is seen as normal behavior and part of
organizational life.
According to Silverman, ‘The action approach . . . does not, in itself, provide a theory of
organizations. It is instead best understood as a method of analyzing social relations within
organizations.’

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Action Theory
A theory of human behavior from an ‘action approach’ is presented by Bowey. She suggests that
action theory, systems theory and contingency theory are not necessarily incompatible
approaches to the understanding of behavior in organizations. It would be possible to take the
best parts of the different approaches and combine them into a theory that would model
empirical behavior and also facilitate the analysis of large numbers of people in organizations.
Bowey goes on to present such a theory as a particular form of an action theory approach.
According to Bowey, action theory is not capable of dealing with the analysis of the behavior of
a large number of people in organizations. Her theory is based, therefore, on three essential
principles of action theory, augmented by four additional concepts taken from systems theory.
The three essential principles of action theory can be summarized as below:
1. Sociology is concerned not just with behavior but with ‘meaningful action’.
2. Particular meanings persist through reaffirmation in actions.
3. Actions can also lead to changes in meanings.

Bowey suggests that these three principles apply mainly to explanations of individual, or small-
scale, behavior. She gives four additional concepts, taken from systems theory, on which
analysis of large-scale behavior can be based. These concepts are redefined in accordance with
an action approach.
1. Role – this is needed for the analysis of behavior in organizations. It explains the similar
action of different people in similar situations within the organisation and the
expectations held by other people.
2. Relationships – This is needed to explain the patterns of interaction among people and
the behaviors displayed towards one another.
3. Structure – the relationships among members of an organisation give rise to patterns of
action which can be identified as a ‘transitory social structure’. The social factors, and
non-social factors such as payment systems, methods of production and physical layout,
together form the behavioral structure.
4. Process – human behavior can be analyzed in terms of processes, defined as ‘continuous
interdependent sequences of actions’. The concept of process is necessary to account for
the manner in which organizations exhibit changes in structure.

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LESSON-4
AUTHORITY AND POWER
Monika Kemani
Authority
The word authority is derived from the Latin word auctoritas, which means advice,
opinion, influence, or command. Authority is the power to manage the subordinates to control
them and to instruct them according to the rules and standards of the organization. According to
Henry Fayol, “Authority can be defined as the right to give orders and power to exact
obedience.”In the words of Mooney and Reily “Authority is the principle at the root of organisation and so
important that it is impossible to conceive of an organisation at all unless some persons are in a position
to require action of others.”
Thus, we can say that authority is the kind of right and power through which it guides and directs
the actions of others so that the organizational goals can be achieved. It is vested in particular
position, not to the person because authority is given by an institution and therefore it is legal.
Without authority, a manager ceases to be a manager, because he cannot get his policies carried
out through others. Authority is one of the founding stones of formal and informal organisations.
It indicates the right and power of making decisions, giving orders and instructions to
subordinates. Authority flows downwards as it is delegated from above but must be accepted
from below i.e. by the subordinates.
Responsibility
Responsibility refers to the duty assigned to a position or an obligation to perform a particular
task assigned to a subordinate. In an organisation, responsibility is the duty as per the guidelines
issued. According to Davis, “Responsibility is an obligation of individual to perform assigned
duties to the best of his ability under the direction of his executive leader." In the words of Theo
Haimann, “Responsibility is the obligation of a subordinate to perform the duty as required by
his superior". The essence of responsibility is the obligation of a subordinate to perform the duty
assigned. It always originates from the superior subordinate relationship. According to
McFarland “Responsibility is the duty and activity assigned to a position or an executive".
Normally, responsibility moves upwards, whereas authority flows downwards. Responsibility is
in the form of a continuing obligation. Responsibility cannot be delegated. The person accepting
responsibility is accountable for the performance of assigned duties.
Accountability
Every employee is accountable for the job assigned to him. He is supposed to complete the job as
per the expectations and inform his superior accordingly. Accountability is the answerability for
performance of the assigned duties. According, to McFarland, "Accountability is the obligation
of an individual to report formally to his superior about the work he has done to discharge the
responsibility." When authority is delegated to a subordinate, the person is accountable to the
superior for performance in relation to assigned duties. If the subordinate does a poor job, the
superior cannot evade the responsibility by stating that poor performance is the fault of the
subordinate. A superior is held responsible for all actions of groups under his supervision even if
there are several levels in the hierarchy.

Interrelation between authority, responsibility and accountability


In the process of delegation, the superior transfers his duties or responsibilities to his subordinate
and also give necessary authority for performing the responsibilities assigned. At the same time,

37
the superior is accountable for the performance of his subordinate. Every order which has been
given, and given correctly, carries responsibility. Responsibility implies accountability. Each
employee will be held accountable by a supervisor, who will hold a subordinate accountable.
Subordinates receive the authority from top level of the organization and they also receive the
command and direction to perform the work. In other words, they are authorized and responsible
for a specific function. Sometimes the task may not be performed effectively the subordinates
may not be performed effectively. The subordinates must report to boss about the assigned task.
They must answer their performance which is known as accountability.

Kinds of authority
The kinds of authority are discussed as follows:

1. Legal Authority
This is derived by a position holder from rules, regulations, policies and norms laid down
for the systematic functioning of an organisation. It is based on competence rather than
on tradition or charisma.
2. Traditional Authority
This is derived from tradition and not by competence. Obedience is owed to a person
because he occupies a position traditionally recognised as possessing authority.
3. Charismatic Authority
This is derived from the leader’s exceptional power. Charismatic leaders are generally
found in politics and religion. This authority cannot be delegated because others do not
possess the same qualities as possessed by the charismatic leader.

Major theories on sources of authority


The various theories about sources of authority are discussed as under:
1. Legal/Formal Authority
According to the formal authority theory, authority depends for its legitimacy on formal rules
and laws of the state which are usually written down. It is based upon the rank or position of the
person. The CEO of a company may take an action against an employee for not complying with
rules because the rules of the have given this authority to him. Thus, we see that authority flows
in a hierarchy i.e. scalar chain. The example of an ideal type of legal authority as discussed by
Weber is the bureaucracy.

2. Traditional Authority
The traditional authority is generally followed in Indian family system. It is the father who
generally guides the activities of the family and others obey out of age old traditions and respect.
When power passes from one generation to another, it is referred to as traditional authority. In
traditional form of authority there is no formal law or structured discipline. The relationships are
governed by loyalty and faithfulness rather than rules and regulations of the organisation.

3. Acceptance Theory
According to acceptance authority theory, the authority has its source in the acceptance of the
subordinates. The authority of the superior has no meaning unless it is accepted by the

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subordinates. If the subordinates do not accept the orders of a superior there will be no use of
exercising authority. Chester Bernard observed that a subordinate will accept an order if:
(i) He understands it well;
(ii) He believes it to be consistent with the organisational goals;
(iii) He feels it to be compatible with his personal interest.
(iv) He is fit (mentally and physically) to comply with it.

4. Competence Theory
According to competence authority theory, authority has its source in the technical competence
of the superior. The manager has no authority but his words are heard and orders are obeyed only
because of his intelligence, knowledge, skill competence and experience. If he has no skill or
knowledge, he can exercise no authority on others. The knowledge or competence of a person
gives him a status where his authority is accepted by others.

5. Charismatic Authority
According to charismatic authority theory, the authority rests on the personal charisma of a
leader who commands respect of his followers. The personal traits such as personality,
intelligence, integrity, etc., influence others and people follow the dictates of their leaders
because of such traits. For example the political leader Mahatma Gandhi comes under this
category. Weber explains that this form of authority is ‘resting on devotion to the exceptional
sanctity, heroism or exemplary character of an individual person and of the normative pattern or
order revealed or ordained by him’.

Power
Power is derived from the official position held by an individual in an organization. According to
Max Weber, “Power is the probability that one actor within a social relationship will be in a
position to carry out his own will despite resistance.”According to Pfeffer “ Power is the
potential ability to influence behaviour, to change the course of events, to overcome resistance,
and to get people to do things that they would not otherwise do." Authority and power are
synonymous. But in present environment it is observed that while authority remains constant
there is a tendency to exercise more power. This is because of the politics played by an
individual to maintain higher influence over resources. On the contrary, there may be situation
when an individual does not use full potential of his authority for one reason or the other.
Interpersonal and group conflicts are indicative of more influence one wants to exercise in the
organizational setting. These happening are common to every layers of organizational hierarchy.
Power is therefore personal and acquired. Power is an ability of a person to possess what he feels
as valuable and deprive another person of the same.

Sources of power
Psychologists John French and Bertram Raven provided five categories to the sources of
power which are described as below:

1. Coercive Power
Coercive power is derived from a person's ability to influence others via threats, punishments or
sanctions. It is conveyed through fear of losing one’s job, being demoted, and receiving a poor

39
performance review. It reflects the extent to which a manager can deny desired rewards or
administer punishment to control other people. For example, a threat to meet given targets
otherwise there would be demotion of an employee. A staff member may work late to meet a
deadline to avoid disciplinary action from his boss. Coercive power helps control the behaviour
of employees by ensuring that they follow the rules and regulations of the organization.

2. Reward Power
Reward power is derived from the ability of a person to influence the allocation of incentives in
an organization. These incentives include salary increments and promotions. This may be done
by giving a bonus or a promotion. Greater the perceived value of each reward the greater is the
power. These rewards include intrinsic rewards such as praise or recognition. Reward power
helps to motivate employees if used in an effective manner. But if it is applied through
favouritism or biasness, it can demoralize employees and reduce their productivity.

3. Legitimate Power
Legitimate power comes from having a position of power in an organization, such as being a key
member of a leadership team. This power is derived from the authority of an individual. It is the
power which is exercised in accordance with the rules and the authority of the organization.
Legitimate power is also known as positional power. It is derived from the position a person
holds in an organization's hierarchy. An example of legitimate power is that held by a company's
CEO.

4. Expert Power
Expert power is derived from the person’s experiences, skills and knowledge. As we gain
experience in particular areas, we begin to gather expert power that can be utilized to get others
to help us meet our goals. The people who have expert power are highly valued by organizations
for their problem solving skills. The suggestions and decisions of people with expert power
greatly influence the actions of their subordinates. A person who holds expert power can be
promoted to top level management, thereby giving him legitimate power.

5. Referent Power
Referent power is derived from the interpersonal relationships that a person cultivates with other
people in the organization. This depends on charisma or personal attraction of the individual.
Interpersonal skill and emotional support from others are the sources of power for a person.
Referent power is also derived from personal connections that a person has with key people in
the organization's hierarchy.

Sources of power: organizational based

1. Knowledge as power Information Technology has taken a big leap in the last two decades.
Information is necessary for top management to take decisions as it is vital to carry out various
operations in the business environment. Flow of information is necessary for continuous
production or service operations. Persons who are in position to control the flow of information
wield enormous power to influence the behaviour of others.

2. Resource as power Resources are necessary for any organization. While material or tangible
resources can be procured easily, it is the availability of these resources, at right time, at right

40
place in a required quality and at a competitive price. Any person having monopoly over scarce
resources enjoys power. Any person having direct or indirect control over making skilled persons
available holds power.

3. Decision making as power Decision making as power in organization rests with the head of
the organization. Decision making is delegated to departmental heads depending upon the nature
of work, ability of the departmental heads and the trust enjoyed by them. Decision making is one
of the most important processes of management. Both a person having decision making authority
and a person who can influence decision making have power in the organization.

4. Power Centers There exist people in the organization who desire to be stronger. They also
want people dependent on them. Specialists, people with special powers deliberately delay
decisions or hold resources so that they become more demanding. Power centers exist in various
departments.

5. Dependency Strength of power depends upon degree of dependency. Greater the dependency
on the power holder greater influence will the power holder exercised over his subordinates.
Dependency is directly related between power holder and those do not have it. Power holder
holds power of retention to be able to increase dependency.

Acquisition of Greater Position power in an Organisation


All managers have two dimensional power base. One is the power generated by the
organizational authority and the second, the personal power by virtue of personality. The
position power can be increased by the following factors:-

1. Centrality- Centrality refers to activities which are central to organizations. For example,
Finance is central activity in the organization hence the finance manager holds power in
excess of his authority. Finance manager further allocates funds to various departments.
Department heads therefore also become powerful not because they can further allocate
funds to their subordinates but because centrality of activity. Managers of various
departments have power based on their departmental position.

2. Scarcity- When resources are in abundance there is no problem as everybody would get
them based on their requirement. When resources become scarce, a person obtaining it
will appear to be more powerful. When the organisation is not able to supply sufficient
resources, there will be conflicts among different departments for maximum share of
these resources. The powerful unit will be able to have a greater share of the scarce
resources.

3. Uncertainity- The executives who can cope up with the uncertainity like fall in demand
of the organisation’s products or change in government policies will tend to acquire
power. A manager who has a vision and predictive power will definitely enjoy an
additional power.

4. Substitutability- If a person has greater value in the organisation he would hold greater
power and as a result demand higher salaries and incentives. The importance of the

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person in the organisation is the result of specialisation, expertise or experience that
cannot be substituted by others.
Distinction between authority and power

BASIS AUTHORITY POWER

NATURE Authority is the right to command Power is the ability to exercise


and resides in the position in the influence and is exercised by a
organisation. It is always person. It is not institutional,
legitimate and is conferred on the rather it is personal.
position.

POSITION Authority of a person is Power of a person is not


associated with the position in the associated with the position in
formal organisation structure. the formal organisation
Thus an idea about the authority structure. Thus an idea about the
centres can be taken by looking at power centres cannot be taken
its organisation chart. just by looking at its
organisation chart.

FLOW Authority is a downward flowing Power flows in all the


concept. directions.

RESPONSIBILITY Authority and responsibility are There is no such balancing


complementary to each other. factor in case of power.

RELATIONSHIP The organisation structure shows Some people may have power
its authority relationships. In and less authority or more
actual practice these relationships authority and less power.
are modified by power.

PERVASIVE Authority rests with important Power is all pervasive.


positions in the organisation.

FORMAL/INFORMAL Authority is formal in nature. Power can be both formal and


informal.

Politics
Politics is a process whereby power is acquired and used to influence behaviour of others. People
form groups, camps or cliques when they play politics. People playing politics for power where
ethics, moral values, organizational goals are of little concern. According to Tushman “Politics
refers to the structure and process of the use of authority and power to affect definition of goals,

42
direction and the other major parameters of the organisation. Decisions are not made in a rational
way but rather through compromise, accommodation and bargaining.”
Dalton identified following six areas where politics was being played actively:-
1. Pressure for economy
2. Co-operation of officially powerless experts with their administrative superior line and
staff-relationship.
3. The conflict between labour and management for interpreting agreements.
4. Uncertainly about standards and strategies of promotion.
5. Difficulty in linking reward with productivity
6. Practicality of policies

Status
Status refers to the relative rank that an individual holds which includes attendant rights, duties,
and lifestyle, in a social hierarchy based upon honour or prestige. It is a term that refers to one's
position in a social system. Individuals usually have multiple statuses assigned to them at any
given time. Status comes with a set of rights, obligations, behaviours, and duties that people of
certain positions are expected to perform. Occupying a high status due to a characteristic that one
possesses means that on the basis of that difference, an individual acquires more power and
privilege.

Ascribed and achieved status


An ascribed status is a social position a person receives at birth or assumes involuntarily later in
life. For example, being a daughter, a teenager, or a widower. Ascribed statuses are matters about
which people have little or no choice. It is beyond an individual’s control. Ascribed statuses that
exist in all societies include those based upon sex, age, race ethnic group and family background.
For example, a person born into a wealthy family characterized by traits such as popularity,
talents and high values will have many expectations growing up. By contrast, an achieved
status refers to a social position a person assumes voluntarily and that reflects personal ability
and choice. For example, being an Olympic athlete, a computer programmer or a thief. Achieved
status is a concept developed by the anthropologist Ralph Linton denoting a social position that a
person can acquire on the basis of merit; it is a position that is earned or chosen. Achieved status
means also what the individual acquires during his or her lifetime as a result of the exercise of
knowledge, ability, skill and perseverance. In practice, most statuses involve a combination of
ascription and achievement. That is, people’s ascribed statuses influence the statuses they
achieve. People who achieve the status of lawyer, for example, are likely to share the ascribed
trait of having been born into well-off families. By the same token, many less desirable statuses,
such as criminal, drug addict, or being out of work are more easily “achieved” by people born
into poverty.

Functional- scalar status


Scalar status refers to the status related to the ranking of an employee in the scalar chain. There
are different rankings of the employees at different levels of management based on the amount of
authority vested in them. Functional status refers to status related to the nature of functions
performed by a person on the group. For example, persons associated with finance department
enjoy higher status than persons in canteen and sanitation sections.

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Status symbol
A status symbol is an object which is meant to signify its owners' high social and economic
standing. A status symbol is a perceived visible, external denotation of one's social position and
perceived indicator of economic or social status. Many luxury goods are often considered status
symbols. Status symbol is also a sociological term relating to how individuals and groups
interact and interpret various cultural symbols. What is considered a status symbol will differ
among countries and cultural regions, based on their economic and technological development.
Status symbols used in the organisations are the titles and the designations, insignia, pay and
incentives and physical facilities.
Expensive goods like luxury vehicles and large houses are mostly out of reach for lower
economic classes, so these items serve as status symbols indicating that their owners are able to
afford their extremely high prices. Since much of the utility derived from status symbols comes
from their high price, an increased price for a status symbol may actually increase its demand,
rather than diminish it. A product which exhibits this phenomenon is known as a Veblen good.
Importance of status system
1. Satisfaction of needs The employees with the status needs feel motivated to perform in
an efficient and an effective manner if they feel that their performance would yield higher
status for them.
2. Prestige image In our society, prestige and value is attached to different professions and
jobs based on the importance of the job. Bollywood actors, for example, enjoy greater
prestige than theatre actors.
3. Reflection of achievements People with higher qualifications and achievements hold
higher level of status and enjoy better prestige and influence.
4. Improved social interactions A particular type of behaviour is expected from people at
the same level in the status hierarchy which helps to reduce complexity and uncertainty in
the social interactions.
5. Helps in organisation behaviour Status system helps management to determine the
informal leader of the group. It also helps the management to resolve conflicts and
problems. Employees with higher status needs can be motivated to qualify themselves for
high status jobs.
Demerits of status system
1. Unhealthy competition Distinction in status results in unhealthy competition among the
employees which adversely affect the organisational performance.
2. Status as an end The status differentials increases the war between superior and
subordinates which makes the status as an end. Nowhere goals of the organisation are
given any importance.
3. Complexity in relationships The people who hold higher status position have a false
sense of superiority and the people who hold lower status positions develop a feeling of
inferiority complex. This may lead to jealousy and hatred between the lower and higher
status people.
4. Financial problem A person who holds a higher status position is given certain facilities
which cannot be withdrawn. This increases the financial burden on the organisation.

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LESSON 5
ORGANISATIONAL BEHAVIOUR-MEANING
Monika Khemani
Organisational behaviour involves the understanding, prediction and control of human behaviour
and the factors which influence the performance of people as members of an organization. It is
the study of individual behaviour and group dynamics in organizations which focuses on the
individuals, the groups, the organisation and their interactional relationships. In brief, it is
concerned with the study of what people do in an organization and how their behaviour affects
the performance of the organizations.

According to Keith Davis "Organizational behaviour is the study and application at knowledge
about the how people - as individuals and a groups - act within organization. It strives to identify
ways in which people can act more effectively."

According to LM Prasad “Organizational behaviour can be defined as the study and application
of knowledge about human behaviour related to other elements of an organization such as
structure, technology and social systems.”

Organisation Behaviour involves integration of studies like economics, sociology, psychology,


anthropology, social psychology, economics, engineering and political science. Therefore,
organizational behaviour is a comprehensive field of study in which individual, group and
organizational structure is studied in relation to organizational growth. Organisation Behaviour
covers the core topics of motivation, personality, perception, leadership , authority, power and
status, interpersonal communication, group structure and process, learning, values and attitude,
dynamics of change, conflict, job design, control, transactional analysis, stress management,
quality of work life, organisation development.
NATURE AND SCOPE OF OB:

1. An interdisciplinary approach:
OB is an interdisciplinary approach because it tries to integrate the relevant knowledge
drawn from related disciplines like psychology, sociology, and anthropology to make
them applicable and to study OB.
2. An Integral part of Management:
OB represents behavioural approach to management Since human beings are the most
important asset of any organisation therefore OB has assumed the status of a distinct field
of study. Thus OB brings creative thinking among managers to solve human problems in
organisations.

3. A humanistic approach:
OB is a human tool for human benefit. It helps in understanding and predicting the
behaviour of individuals. It is based on the belief that the human beings have a desire to
be independent, creative, and productive.

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4. Science and Art:
OB is both a science and an art. The systematic knowledge about human behaviour is a
science. But it is not an exact science as it cannot provide specific answers to all
organizational problems. Pure science concentrates on fundamental research whereas OB
concentrates on applied research. The application of behavioural knowledge and skills is
an art. It is difficult to predict the behaviour of people working in the organization
therefore it is difficult to apply predictive models in all the situations. OB is also
considered as a normative science because the findings of applied science are applied to
socially accepted organizational goals.

5. A purposeful approach:
OB is a goal oriented field of study which aims at how to understand, explain and predict
human behaviour in the organisational scenario so that these generalisations can be used
to anticipate the effects of certain actions on human behaviour.

6. Satisfaction of human needs:


Every employee working in the organisation has needs and aspirations. It is the
responsibility of the organisation to provide a healthy environment so that employees
may get need satisfaction and the organisation may accomplish its objectives. OB helps
both the employees and the organisation to fulfil their respective objectives.

DETERMINANTS OF ORGANISATION BEHAVIOUR

The key determinants in organizational behaviour are people, structure, technology and the
external environment in which the organization operates. Each of the four determinants of
organizational behaviour are considered briefly in the following paragraphs:-

1. People- Organization consists of individual and groups. People are the main component of any
organization that has to be managed. Every individual wants to achieve a personal goal.
Organizations must identify the need spectrum of individuals and take suitable steps for its
fulfilment to enable them to perform effectively so that they complete their allotted task in time.
Relationship of employees with their subordinates and superiors should be established on the
basis of understanding and mutual trust so that it is easy to communicate and understand each
other’s views. Individual goals must be kept subordinate to organisational goals if there is any
mismatch between them. Accomplishment of team goals contribute towards the achievement of
organizational goals. Apart from managing internal workforce, it is also important to manage
customers, government, employees, social groups and non-governmental organizations (NGOs),
competitors, regulatory agencies, labour force, suppliers
and resource persons.

2. Structure- Structure defines the official relationships of people in the organizational


hierarchy. The structured relationship is the basis of formal policies, procedures, organisational
culture, hierarchical authority and responsibility. There are two types of organization structure
viz. formal and informal organization structure. A formal organization is a system of well
defined jobs with a prescribed pattern of communication, coordination and delegation of

46
authority. It consists of classical hierarchical structure in which positions; responsibility,
authority, accountability, the superior- subordinate relationship and the line of command are
clearly defined and established. In the formal organisational structure people are assigned
various job positions. While working at those job positions, the individuals interact with each
other and develop some social and psychological groups in the organisation. This network of
social and psychological groups automatically forms another structure in the organisation which
is called informal organisational structure.

3. Technology- People cannot do their work without the assistance of tools, equipments,
buildings, machines, processes and resources. Selection of technology, procurement, installation,
operation and maintenance is important and no compromise should be made in procuring latest
or advanced technology. Based on the technology, an organization should formulate job structure
and resultant procurement of human resource so that they are complimentary to each other.
Technology brings effectiveness because it incorporates technical skills, which encompass the
ability to apply specialised knowledge.

4. Environment- The business environment influences the people's behaviour at work.


Government policies, social systems, religious beliefs, family and economic conditions national
philosophies, employees 'psychology and other factors inside and outside the organisation have a
mutual influence on each other's behaviour. A manager should examine and analyse as to how he
is going to come up with the changes in the business environment. External environment
encompasses economic, cultural, social, government rules and regulations, legal aspects, political
climate, demographics and its impact. It is important to evaluate market situation, competitors,
and availability of raw material, technology, availability of skilled, semi skilled and non-skilled
personnel. In addition, evaluate prevailing culture and how individuals are likely to respond to
the call of the organization. Manager must therefore keep in mind the internal and external
factors and make the best amalgam and work to achieve organizational effectiveness.

EMERGING CHALLENGES FOR OB


Implementation of Organizational Behaviour involves various challenges on the one hand and
offers various opportunities on the other to enhance the overall effectiveness of individuals,
groups and the organization itself. The following are some of the critical issues confronting
managers for which the knowledge of Organizational Behaviour offers worthy solutions based
on behavioural science and other interdisciplinary fields.

Improving People Skills:


Change is inevitable and its impact is visible in very sphere, be it technology, environment or
structure. Such changes happen at a faster pace in business world to match with unprecedented
customer expectation and changing business needs and technology. Unless various stakeholders
are equipped to possess the required skills to get used to those changes, the achievement of goals
is tough. There are two different categories of skills – managerial skills and technical skills.
Some of the prominent managerial skills include listening, motivating, planning and organizing,
leading, problem solving, decision making etc. These skills can be enhanced by organizing a
series of training and development programmes, career development, induction and socialization

47
etc. Designing an effective performance appraisal system with in-built training facilities will help
upgrade the skills of the employees to cope up the demands of the external environment. The
lower level cadre in management is required to possess more of technical skills. As they climb
up the organization ladder, their roles will be remarkably changed and expected to have more of
human relations and conceptual skills rather being engaged in execution alone.

Improving Quality and Productivity:


Quality is the extent to which the customers or users believe the product or services surpass their
needs and expectations. Deming defined quality as a predictable degree of uniformity and
dependability, at low cost and suited to the market. Juran defined it as fitness for use. Managers
confront the challenges of meeting specific requirements of customers driven by new tastes and
preferences. Improving quality and productivity is possible through globally accepted programs
like total quality management and reengineering processes that require extensive employee
involvement. Total Quality Management (TQM): It is a philosophy of management that is driven
by the constant attainment of customer satisfaction through the continuous improvement of all
organizational process. Today’s managers understand that any efforts to improve quality and
productivity must have equal participation of their employees. These employees will always be a
major force in carrying out such changes and making it a success. Managers will put maximum
effort in meeting the customer’s requirements by involving everyone from all the levels and
across all functions. Regular communications (both formal and informal) across the various
levels is a must. Two way communications at all levels must be promoted. Identifying training
needs and relating them with individual capabilities and requirements is inevitable. Top
management’s participation and commitment and a culture of continuous improvement must be
established.

Managing Workforce Diversity:


This refers to employing different categories of employees who are heterogeneous in terms of
gender, race, ethnicity, relation, community, physical disadvantage, homosexuals, elderly people
etc. The primary reason to employ heterogeneous category of employees is to tap the talents and
potentialities, harnessing the innovativeness, obtaining synergetic effect among the divorce
workforce. In general, employees wanted to retain their individual and cultural identity, values
and life styles even though they are working in the same organization with common rules and
regulations. The major challenge for organizations is to become more accommodating to diverse
groups of people by addressing their different life styles, family needs and work styles. Managers
have to shift their philosophy from treating everyone alike to recognizing individual differences
and responding to those differences in ways that will ensure employee retention and greater
productivity while, at the same time not discriminating. If work force diversity is managed more
effectively, the management is likely to acquire more benefits such as creativity and innovation
as well as improving decision making skills by providing different perspectives on problems. If
diversity is not managed properly and showed biases to favour only a few categories of
employees, there is potential for higher turnover, more difficulty in communicating and more
interpersonal conflicts.

Responding to Globalization:
Today’s business is mostly market driven; wherever the demands exist irrespective of distance,
locations, climatic conditions, the business operations are expanded to gain their market share

48
and to remain in the top rank etc. Business operations are no longer restricted to a particular
locality or region. Company’s products or services are spreading across the nations using mass
communication, internet, faster transportation etc. An Australian wine producer now sells more
wine through the Internet than through outlets across the country. More than 95% of Nokia hand
phones are being sold outside of their home country Finland. Globalization affects managerial
skills in at least two ways: i) an Expatriate manager have to manage a workforce that is likely to
have very different needs, aspirations and attitudes from the ones that they are used to manage in
their home countries. ii) Understanding the culture of local people and how it has shaped them
and accordingly learn to adapt ones management style to these differences is very critical for the
success of business operations. One of the main personality traits required for expatriate
managers is to have sensitivity to understand the individual differences among people and
exhibit tolerance to it.

Empowering People
The main issue is delegating more power and responsibility to the lower level cadre of
employees and assigning more freedom to make choices about their schedules, operations,
procedures and the method of solving their work-related problems. Encouraging the employees
to participate in work related decision will sizably enhance their commitment at work.
Empowerment is defined as putting employees in charge of what they do by eliciting some sort
of ownership in them. Managers are doing considerably further by allowing employees full
control of their work. An increasing number of organizations are using self-managed teams,
where workers operate largely without boss. Due to the implementation of empowerment
concepts across all the levels, the relationship between managers and the employees is reshaped.
Managers will act as coaches, advisors, sponsors, facilitators and help their subordinates to do
their task with minimal guidance. The executive must learn to delegate their tasks to the
subordinates and make them more responsible in their work. And in so doing, managers have to
learn how to give up control and employees have to learn how to take responsibility for their
work and make appropriate decision. If all the employees are empowered, it drastically changes
the type of leadership styles, power relationships, the way work is designed and the way
organizations are structured.

Coping with Dynamic Environment


In recent times, the Product life cycles are slimming, the methods of operations are improving,
and fashions are changing very fast. In those days, the managers needed to introduce major
change programs once or twice a decade. Today, change is an ongoing activity for most
managers. The concept of continuous improvement implies constant change. In yester years,
there used to be a long period of stability and occasionally interrupted by short period of change,
but at present the change process is an ongoing activity due to competitiveness in developing
new products and services with better features. Everyone in the organization faces today is one
of permanent temporariness. The actual jobs that workers perform are in a permanent state of
flux. So, workers need to continually update their knowledge and skills to perform new job
requirements. Managers and employees must learn to cope with temporariness. They have to
learn to live with flexibility, spontaneity, and unpredictability. The knowledge of Organizational
Behaviour will help understand better the current state of a work world of continual change, the
methods of overcoming resistance to change process, the ways of creating a better organizational
culture that facilitates change process etc.

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Stimulating Innovation and Change
Success mantra is to foster innovation and be proficient in the art of change else face extinction
in due course of time from the business field. Victory is by-product of flexibility, superior
quality and beating the competition with a constant stream of innovative products and services.
For example, Compaq succeeded by creating more powerful personal computers for the same or
less money than IBM or Apple and by putting their products to market quicker than the bigger
competitors. Amazon.com is putting a lot of independent bookstores out of business as it proves
you can successfully sell books from an Internet website. Some of the basic functions of business
are being displaced due to the advent of a new systems and procedures. For example – books are
being sold only through internet. Internet selling an organization’s employees can be the impetus
for innovation and change otherwise they can be a major hindrance. The challenge for managers
is to stimulate employee creativity and tolerance for change.

CONTRIBUTING FIELDS TO ORGANIZATIONAL BEHAVIOUR

Organizational behaviour is interdisciplinary in nature that has grown out of contributions from
numerous fields of study like psychology, sociology, engineering, anthropology and
management have each contributed to our understanding of human behaviour in organizations.
The major contributions to of various disciplines to the study of organisation behaviour are
discussed as below:

1. Psychology- Psychology is an applied science, which attempts to explain human behaviour in


a particular situation and predicts actions of individuals. It seeks to measure, explain, and
sometimes change the behaviour of human beings. Psychologists have been able to modify
individual behaviour largely with the help of various psychological studies which include
learning process, motivation techniques, perception, personality development, emotions, training
and development, leadership effectiveness, needs and motivational forces, job satisfaction,
decision making processes, performance appraisals, attitude measurement, employee selection
techniques, work design, and job stress. Studies of these theories can improve personal skills,
bring change in attitude and develop positive approach to organizational systems.

2. Sociology- Science of Sociology takes society rather than the individual as its point of
departure. It studies the impact of culture on group behaviour and has contributed to a large
extent to the field of group dynamics, roles that individual plays in the organization,
communication, norms, status, power, social behaviour, status, social mobility, conflict
management, formal organization theory, group processes and group decision-making.
Sociologists study the social system in which individuals fill their roles; that is, sociology studies
people in relation to their fellow human beings. . Sociological concepts, theories, models and
techniques help significantly to understand better the group dynamics, organizational culture,
formal organization theory and structure, organizational technology, bureaucracy,
communications, power, conflict and inter-group behaviour. Individuals have a role set that is
determined by their social position, and roles affect how people interact within organizations.

3. Engineering- is the applied science of energy and matter. It enhances our understanding of the

50
design of work. Frederick Taylor took basic engineering ideas and applied them to human
behaviour at work, influencing the early study of organizational behaviour. With his engineering
background, Taylor placed special emphasis on human productivity and efficiency in work
behaviour. Job preparation and performance shifted from a long apprenticeship and a creative,
problem solving approach to work to training in and automated performance of simplified tasks.
His notions of performance standards and differential piece-rate systems still shape
organizational goal-setting programs.

4. Political science- Political science studies the behaviour of individuals and groups within a
political environment. It has contributed to the field of OB. Stability of government at national
level is one of the major determinants for promotion of international business, financial
investments, expansion and employment. Various government rules and regulations play a very
decisive role in growth of the organization. Political scientists contribute to understand the
conflict resolutions tactics, allocation of power, formation of coalition and how people
manipulate power for individual self interest. The knowledge of political science can be utilized
to the study the behaviour of employees at micro as well as macro level.

5. Economics- Economics contributes organizational behaviour to great extent in designing the


organizational structure. Transaction cost economics influence the organization and its structure.
Transaction costs economics implies costs components to make an exchange on
the market. This transaction cost economics examines the extent to which the organization
structure and size of an organisation varies in response to attempts to avoid market failures
through minimising production and transaction costs within the constraints of human and
environmental factors. Costs of transactions include both costs of market transactions and
internal co-ordination. A transaction occurs when a good or service is transferred across a
‘technologically separable barrier”

6. Anthropology- It is a field of study relating to human activities in various cultural and


environmental frameworks. It understands difference in behaviour based on value system of
different cultures of various countries. The study is more relevant to organizational behaviour
today due to globalization, mergers and acquisitions of various industries. Managers will have to
deal with individuals and groups belonging to different ethnic cultures and exercise adequate
control or even channelize behaviour in the desired direction by appropriately manipulating
various cultural factors. Organization behaviour has used the studies on comparative attitudes
and cross-cultural transactions. Environment studies conducted by the field of anthropology aims
to understand organizational human behaviour so that acquisitions and mergers are smooth. The
main aim of anthropology is to acquire a better understanding of the relationship between the
human being and the environment. Anthropologists contribute to study the following aspects in
organizational settings – comparative values, comparative attitudes, cross-cultural analysis
between or among the employees.

TYPES OF MODELS OF ORGANIZATIONAL BEHAVIOUR


The models of organizational behaviour are developed considering input, process and output.
Input contains various independent variables. Processes involve interaction with other
individuals and groups and take into consideration organisation resources, managerial roles,
leadership styles, motivational factors, and level of conflicts, stress factors, channels of

51
command and control, organisational development measures undertaken by the organization,
prevailing organizational culture and hosts of other factors. These factors then culminate into
output in the form of dependent variables discussed earlier. The models of organizational
behaviour have been developed through the historical development of management thoughts
discussed in chapter two of the book. In India, organizational behaviour models differ from
organization to organization. Every organization adopts one or more models of behaviour.

The different types or organizational behaviour models are discussed in succeeding paragraphs.

1. Autocratic model- Autocratic model of organisation behaviour is based on the concept


that managers are superior and it depends on the managerial power. In an autocratic
environment the employees are oriented towards obedience and dependence on the boss
and are controlled by the managers based on official authority and power attached to it. In
an autocratic environment, the managerial orientation is official authority. Management
does the thinking and the employees obey the orders. This model is based on the
assumption that nobody wants to work unless he is forced to do so therefore as per this
model employees are driven to work. Managers are considered neutral born leaders who
are obeyed and respected in all areas. The autocratic model has been successful where
workers are lazy and work shirker and where accomplishment of task is of utmost
importance. It is very commonly used in Indian organizations like, railways, defence
organization, police organization, banks etc.

2. Custodial Model- In Custodial model the owners of the organisation are the custodian of
resources of their organization and they are bound to look after the welfare of employees.
Employees are given an opportunity to bring their problems to the notice of the employer.
It is the duty of the employer to solve the problems of the employees. Employees depend
on the organization for their safety and security needs. The organizations provide wages
and salary while employees are in service and also provide retirement benefits to the
employees so that they can sustain their post retirement life comfortably. Therefore their
dependence of the employees on the organization increases as compared to the
dependence on the boss. Employees devote themselves for the organizational
development because they feel that the organization look after the employee welfare not
only during service but also post service periods. This model proposes that money is the
only motivating factor. If an organisation does not have the wealth to provide pensions
and pay other benefits, it cannot follow a custodial approach. The employees are satisfied
and happy but they are not strongly motivated, so they may give only passive co
operation. This model does not consider employee values, preferences, attitudes,
emotions and psychological motivational factors for organizational effectiveness.

3. Supportive Model- In this model employees are considered as active workers who have
their value, attitude, desire, and preferences. It depends on leadership instead of authority
or economic rewards. The leader assumes that the workers will take responsibility,
develop a drive to contribute, and improve them if management will give them a chance.
If employees are given opportunities they can increase their capacity to do a particular
work. Employees get opportunities for recognition. They develop positive outlook
towards work culture. Managers and workers participate together in the development of

52
organization while achieving development of their own skills.
Since management supports employees in their work, the psychological result is a feeling
of participation and task involvement in the organization. In other words, the supportive
model takes care of certain psychological needs of the employees in addition to their
subsistence and security needs. Thus, in this model employees are strongly motivated
than by earlier models because their status and recognition needs are met in a better way.
This model has limited application under Indian conditions because a majority of workers
at operative level are still working for the satisfaction of their physiological and security
needs.

4. The Collegial Model- Collegial model is an extension of the supportive model. The term
collegial relates to a body of people working together cooperatively. It is a team concept.
This model depends on management’s building a feeling of partnership with employees.
The result is that employees feel that managers are contributing also, so it is easy to
accept and respect their roles in their organization. Managers are considered as joint
contributors rather than as bosses. The managerial orientation is towards teamwork. The
employees become self disciplined. The result of the approach for the employee is that
they become self motivated and self disciplined. They also feel some degree of fulfilment
and self-actualization.

5. The System Model- The system model is an emerging model of organization behaviour.
This model is the result of search of the best model of OB for employees in the present
scenario. They expect more than a salary cheque and job security from their organization.
In this model the mangers try to convey all the employees that they are the part of the
whole system. Managers demonstrate a sense of caring and compassion. They become
sensitive to the needs of a diverse workforce with dynamic personal and family needs
in response to these employees reorganize the mutuality of company-employee
obligations in a system viewpoint. They experience a sense of psychological ownership
for the organization and its product and services.

The models of organization behaviour discussed have evolved over time and the
conclusion is that there is no best model which is applicable for all situations. These
models are linked with human needs. For example, autocratic model follows the carrot
and stick approach of motivation because it is concerned with physiological needs of the
people. The custodial model is used by the mangers to serve the safety and security needs
of the people. The supportive model is employed by the managers to fulfil the affiliation
and esteem needs. To conclude each successive model is an improvement over the
previous models as far as human needs and motivation are concerned.

OB MOD

Organisational behaviour modification is a sophisticated tool for improving the organisational


effectiveness. This technique is developed from the concept of Operant Conditioning by B.F.
Skinner which is used to modify undesirable behaviour and replace it with the behaviour that is
more compatible with goal attainment.

53
In words of Stephen P. Robbins, “OB Mod is a programme where managers identify
performance related employee behaviours and then implement an intervention strategy to
strengthen desirable behaviours and weaken undesirable behaviours.”

STEPS IN OB MOD

OB Mod is a tool and managers have to go through certain steps to apply it in practice. These
steps are discussed as below:
1. Identification of critical behavior- In order to apply OB Mod, it is necessary that
critical behaviours which have significant impact on the performance outcome of the
employees should be identified. Employees may be engaged in some of the critical
activities like absenteeism or attendance and doing or not doing a particular task. Critical
behaviours can be identified through the discussion with the particular employee and his
immediate superior as both are closely intimated with the job behaviours.

2. Measurement of the behavior- Here the critical behaviours are measured in terms of the
rate at which these are occurring. This allows the manager to determine his success in
changing the subordinate’s behaviour. If the rate of occurrence is within the acceptable
limit, no action may be required. If it is more, it is required to be changed.

3. Functional analysis of behavior- It involves a detailed examination of present


behaviours of employees to determine what consequences each of the behaviours
produces. Functional analysis must make sure that the contingent consequences are
identified. It pinpoints one of the most significant practical problems of using an OB Mod
approach to change critical performance behaviour.

4. Intervention- Intervention is the action taken for changing the undesirable critical
behaviour. It involves developing a strategy fir changing the behaviour, implementing the
strategy and measuring the frequency of the resulting behaviour. Positive reinforcement,
negative reinforcement, extinction and punishment are the strategies that can be used at
the intervention stage.

5. Systematic Evaluation- This is the last step in Ob Mod which would reveal whether the
undesirable behaviours have been substituted by desirable behaviours or not. Measures
like and quality and quantity, absenteeism and turnover may be used to evaluate the
success of OB Mod programme.

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STEPS IN OB MOD

UTILITY OF OB MOD

1. Modification of Undesirable behavior- OB Mod enables the management to


modify or eliminate undesirable behaviour or replace it with behaviour that is
more compatible with goal attainment. With the help of it, the manager can
effectively influence the behaviour of subordinate.

2. Development of Employees- OB Mod strategies can be used to make the people


learn new behaviours and replace the undesirable behaviour with the desirable
behaviours. Positive reinforcement can be used to encourage desirable behaviour
by the employees.

3. Controlled Behaviour- The Managers can use the operant conditioning


successfully to control and regulate the behaviour of subordinates by
manipulating the reward system. The behavioural consequences that are
rewarding increase the likelihood of desired behaviour whereas aversive
consequences decrease the likelihood of undesirable response.

55
4. Wide Application- OB Mod is widely applied in big organizations in the areas of
human resource management, executive development, motivation, introduction of
change and organisational development.

OBJECTIONS AGAINST OB MOD

1. OB Mod tends to equate rats with human beings

2. Operant conditioning techniques may not explain complex behaviours that


involve thinking and feeling. It ignores the individuality of persons and
constitutes a threat to the concept of personal autonomy.

3. OB Mod is based on the assumption that the man is totally shaped by his
environment. It doesn’t take care of people’s perception, beliefs, needs and
expectations.

4. Behaviour Modification restricts freedom of choice and utilization of personal


capability of individuals. OB Mod ignores the internal causes of behaviour and
emphasises external awards. It is too difficult to measure the complex behaviours
of the employees.

5. It may be difficult to teach reinforcement principles to lower level managers.

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LESSON-6

FORMAL AND INFORMAL STRUCTURE


Monika Khemani
Formal organization
According to Aller, “The formal organization is a system of well defined jobs, each bearing a
definite measure of authority, responsibility and accountability.”

A formal organization is a system of well defined jobs with a prescribed pattern of


communication, coordination and delegation of authority. It consists of classical hierarchical
structure in which positions, responsibility, authority, accountability, the superior-subordinate
relationship and the line of command are clearly defined and established.

In formal organization every person is assigned the duties and given the required amount of
authority and responsibility to carry out the job. It creates coordination between workers to
achieve the common goal. The interrelationship of staff members can be shown in the
organization chart and manuals under formal organization.

Features of Formal organisation


1. The purpose of the formal organisation structure is to accomplish the organisational
goals.
2. The formal organisational structure is deliberately created by the organisation for
achievement of the organisational goals.
3. Formal organisational structure is based on rules and procedures.
4. Formal organisational structure clearly defines superior and subordinate relationships.
The responsibility and accountability at all levels of organization should be clearly
defined.
5. Formal organisational structure creates a scalar chain of communication in the
organisation which works on the basis of division of work.
6. Formal organisational structure is impersonal in nature where personal feelings are
ignored.

Advantages of Formal Organisation


1. Achievement of Organisational Objectives- Formal organisational structure is
established for the accomplishment of organisational objectives.
2. Systematic and Smooth functioning- Formal organisation structure results in systematic
and smooth functioning of an organisation as it is based on rules and procedures.
3. No Overlapping of Work- In formal organisation structure work is systematically
divided among various departments and employees. As a result there is no chance of
duplication or overlapping of work. Also the principle of scalar chain and unity of
command is followed.

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4. Creation of Chain of Command- Formal organisational structure clearly defines
superior subordinate relationship, i.e., who reports to whom. It follows scalar chain of
communication in the organisation and works on the basis of division of work.
5. Increases Coordination- Formal organisational structure results in coordinating the
activities of various departments. The definite boundary of each worker is clearly defined
and the conflict among the workers is automatically reduced.
6. More Emphasis on Work and less personalisation- Formal organisational structure
lays more emphasis on work than interpersonal relations. This structure is impersonal
where the personal feelings are ignored.

Disadvantages of Formal Organisation


1. Delay in decision making process- Formal organisation structure follows scalar chain
and chain of command which delays the decision making process in the organisation as
compared to the informal organisation structure.
2. Ignores Social and psychological needs of employees- Formal organisational structure
does not give preference to social and psychological needs of employees which may
demoralise the employees.
3. No personalisation- Formal organisational structure gives importance to work only, it
ignores human relations, creativity and personal needs.
Informal organisation
In the formal organisational structure people are assigned various job positions. While working
at those job positions, the individuals interact with each other and develop some social and
psychological groups in the organisation. This network of social and psychological groups
automatically forms another structure in the organisation which is called informal organisational
structure. The existence of informal structure depends on the existence of formal structure. So, if
there is no formal structure, there will be no job position, there will be no people working at job
positions and there will be no informal structure. Informal organization is an organization which
establishes the relationship on the basis of members’ interaction, communication, personal
likings and dislikings and social contacts within as well as outside the organization.

Features of Informal Organisation


1. Informal organisational structure is created automatically and not deliberately by the
intended efforts of managers. It is a natural outcome at the workplace.
2. Informal organisational structure is formed by the employees to get psychological
satisfaction. It is created on the basis of some similarities among the members. The basis
of similarity may be age, sex, place of birth, caste, religion, liking, and disliking.
3. Informal organisational structure has no place in the organisation chart. It does not follow
any fixed path of flow of authority or communication.
4. The rule and traditions of informal organization are not written but are commonly
followed.
5. Source of information cannot be known under informal structure as any person can
communicate with anyone in the organisation. This results in rumours.
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6. The existence of informal organisational structure depends on the formal organisation
structure.
7. Informal organisation structure follows independent channels of communication. In
this organisation, relations among different people are not defined therefore the flow of
communication cannot be specified.
Advantages of Informal Organisation
1. Fulfilment of Social and Psychological Needs- Informal communication gives due
importance to social and psychological needs of employees which helps in motivating them.
2. Speedy Communication- Informal organisation structure does not follow the principle of
scalar chain and unity of command, so the communication process speeds up.
3. True Feedback- By using informal organisation structure the top level management can know
the true feedback of employees on various organisational policies and programmes.
4. Higher Efficiency- The knowledge and information about the informal group can be used to
gather support of employees and improve their performance.
5. Reduces the Workload of Management- Managers are less inclined to supervise their
workers when they know that informal organization is cooperating with them. This encourages
greater worker support which improves the overall performance of the organisation.
6. Provide social control- Informal organisation structure provides social control by influencing
and regulating behaviour of the individuals inside and outside the group. Internal control
persuades members of the group to conform to its lifestyle. External control is directed to such
groups as management, union leadership, and other informal groups.

Disadvantages of Informal organisation


1. Spread Rumours- Ill-informed employees communicate unverified and untrue information
that can create rumours among the employees. The rumours may mislead the employees which
further may reduce their productivity.
2. No Systematic Working- Informal structure does not form a structure for smooth working of
an organisation.
3. Resistance to change- If informal organisation resist the policies and changes of
management, then it becomes very difficult to implement them in organisation.
4. More Emphasis to Individual Interest- Informal organisation structure gives more
importance to satisfaction of individual interest as compared to organisational interest.
5. Role conflict- Employees try to fulfil the requirements of both the informal group and formal
group which results in role conflict. Role conflict can be reduced by integrating interests, goals
and evaluation systems of both the informal and formal organizations.

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Distinction between formal and informal organisation structure

BASIS OF FORMAL ORGANISATION INFORMAL


DISTINCTION ORGANISATION
1. 1. ORIGIN The formal organisational Informal organisational
structure is created deliberately structure is created
by the organisation for spontaneously and naturally.
achievement of the
organisational goals.
2. 2. PURPOSE It is created for the It is created for satisfying the
accomplishment of social and psychological
organisational objectives. needs of the members of the
informal groups.
3. NATURE OF The formal groups are well The informal groups are
GROUPS planned and are official in unplanned and unofficial in
nature. nature.
4. CHAIN OF Formal organisation follows a Informal organisation does
COMMAND formal chain of command not follow a formal chain of
known as scalar chain. command which is based on
the emotions and sentiments
of its members.
5. AUTHORITY Formal authority is Informal authority is personal
organisational and is attached and it is attached to a person.
to a position and a person
exercises it by a virtue of his
position.
6. FLOW OF Formal authority flows Informal authority can flow in
AUTHORITY downwards. all directions i.e. downward,
upward and horizontal.

7. COMMUNICATION Formal organisation follows Informal organisation does


formal communication not follow any pre-decided
channels laid down by the communication channel.
management.
8. FLEXIBILITY Formal organisation follows a Informal organisation is
fixed structure of formal flexible in nature.
relationships.
Grapevine Communication
A grapevine communication is a form of informal communication by which people communicate
with each other without any formal line of communication. It is called grapevine because just
like in the case of grapevine it is impossible to find the origin of information which results in
spread of rumours. Therefore, it has multidirectional flow of communication and does not follow
a step by step hierarchical approach to communication. It is used to supplement formal channels
of communication as it often travels more quickly than other channels. The grapevine is present
within all levels of the organisation. It exists because of a natural desire to know things and
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brings a sense of belonging to the employees. The grapevine consists basically of rumours and
gossip and travels between co-workers during lunch breaks, on their way home from work or
even in company parking lots. Employees and staff can communicate important topics using
their own language, instead of the technical jargon used in formal communication channels. If
managers can tap into the grapevine, they can learn a substantial amount about the issues and
problems of their employees. Since informal communication follows no rule, direction or
formality, it can quickly transmit any message in various directions.

Types of grapevine communication

1. Single strand or straight chain- Single strand network is an information network where
one person will tell a message to another person and he will communicate it to another
one person. The third person also will tell the same message to another one person.
2. Gossip or star chain- Here all the persons in the communication network talk one
another informally. In this network someone stays in the center of the system. He is the
main or pivotal person.
3. Probability chain- Probability network is an informational network where each of the
individual randomly tells others the same message. The source of information for each of
the person hearing the message is different.
4. Cluster chain- Cluster network is an informational network where someone first tells the
message to the selected individuals and those selected individuals pass the same
information to other selected individuals and the process continue in the same way. Most
of the informal communication follows this chain. Here the pivotal person passes the
information to the other persons who pass the information to the other selected persons.

Advantages of grapevine communication

1. Speedy Communication- Information passed through the grapevine communication


channel is extreme fast. It spreads faster than fire. The rumours spread rapidly to others in
the organization.
2. Sense of Unity- Grapevine communication tends to bring a sense of unity among the
employees of an organization when they meet to share and discuss certain issues. It
enhances group cohesiveness among the employees in the organisation.
3. Supplement to formal organization- Grapevine communication plays an instrumental role
in aiding the formal methods of communication in every organization.
4. Healthy relationship- Any problem between the workers and the management can be
solved by the informal system. So it makes good relationships among the employees and
the management. Cooperation and coordination in informal communication leads to
improve interpersonal relationship which is very much essential to carry out the business
activity smoothly.
5. Increase efficiency- Under the informal system, the employees discuss their problem
openly and are able solve it which results in efficiency and effectiveness in an employee’s
work.
6. Flexibility- Informal communication is more flexible than formal communication because
it is free from all type of formalities.

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Disadvantages of Grapevine communication
1. Wrong interpretation- Sometimes the meaning and the subject matter of the message is
distorted in the grapevine channel of communication. This information is largely based on
rumours which tends to carry along with it partial information which ends up not giving the real
state of affairs in an organization.
2. Hamper goodwill- Grapevine communication can damage the goodwill of the organization.
Rumours can gradually destroy the goodwill of the organization.
3. Unreliable- Grapevine communication cannot be relied upon because it is based on rumours
and is not trustworthy. If not managed properly it can hamper the effectiveness of the
organisation.
4. Difficulty in controlling- Under informal communication system no established rules or
policy is obeyed. So it is very much difficult to control the information.
SPAN OF MANAGEMENT
Span of management refers to the number of subordinates which a person can effectively manage
to accomplish the desired objectives of the organization. It is also known as ‘span of control’,
‘span of supervision’ and ‘span of authority’. It is a numerical limit of subordinates to be
supervised, directed and controlled by a manager. It is an important principle of organisation
based on the theory of relationships propounded by a French management consultant V.A
Graicunas.
Gracunas's theory
Graicunas distinguished three types of interactions – direct single relationships, cross-
relationships, and direct group relationships – each of them contributing to the total amount of
interactions within the organization. According to Graicunas, the number of possible interactions
can be computed in the following way. Let n be the number of subordinates reporting to a
supervisor. Then, the number of relationships of direct single type the supervisor could possibly
engage into is n. The number of interactions between subordinates (cross relationships) he has to
monitor is n (n-1) and the number of direct group relationships is n (2n-1-1).The sum of these
three types of interactions is the number of potential relationships of a supervisor. He has proved
that a number of direct, group and cross relationships exist between a manager and his
subordinates. With an increase in the number of subordinates reporting to a manager, the number
of direct and group relationship increases.

Tall and flat structure

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Tall structure
A tall organisation has many levels of management and supervision. If the span of control is
narrow, then there will be many management levels.
Advantages of tall structure
1. Close Supervision- There is a narrow span of control i.e. each manager has a small
number of employees under his control. This means that employees can be closely
supervised.
2. Clear lines of authority and responsibility- The function of each management layer
will be clear and distinct. There will be clear lines of responsibility and control and a
clear management structure.
3. Improved Performance- As each manager has a small number of employees to
supervise, the quality of performance and discipline will improve.
4. Coordination- There is a narrow span of control therefore there would be a better
relationship between superior and subordinates. Control and supervision would become
easier for the superior who will enhance the coordination and cooperation in the
organisation.
Disadvantages of tall structure
1. Lack of freedom- As each supervisor has less number of subordinates to control the
freedom and responsibility of subordinates is restricted.
2. Slow decision making- Decision making could be slowed down as approval may be
needed by each of the layers of authority.
3. High costs- Management costs are higher because managers are generally paid more than
subordinates. Each layer will tend to pay its managers more money than the layer below
it.
4. Limited application- Tall structures are not suitable for routine and standardised jobs.

Flat structure
Flat organization structure refers to having a relatively small number of layers in the
organizational chart. It is characterized by few levels of management and empowers the
employees. It enables the organization to take action more quickly and generates lower costs. A
flat structure has quick communications but can result in a heavy work load for managers.

Advantages of a flat structure


2. Faster decision making process- Fewer layers of management means fewer approvals in
decision making, so decisions can be made faster and the organization can respond more
quickly to new opportunities or threats.
3. Better understanding- Fewer layers of management can lead to better and more frequent
communication between higher-level managers and staffers, resulting in better
understanding of company goals for the staffers and a better understanding of daily
operational issues by the managers.
4. Team spirit- Fewer layers of management increase the interaction between employees at
different levels which leads to better team spirit.

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5. Reduction in cost- Fewer management layers may reduce costs as managers cost more
than non managers. Also employees at higher levels in the organisation expect to be paid
more than those on lower levels.
6. Suitable for small business- Flat structures work well for small businesses or those with a
small number of job roles. However, a business with a flat structure needs to ensure that
each manager's span of control does not become too wide so that they cannot manage their
direct reports effectively.
Disadvantages of a flat structure
1. Violation of Unity of Command- Employees may have more than one manager as there
are a number of managers at the same level in the organisation which may violate the
principle of unity of command.
2. Hinder growth- Fewer management layers may hinder the growth of the organisation
especially if managers have wide spans of control.
3. Limited application- Flat structure is limited to small organisations such as partnerships,
co-operatives and private limited companies.
DISTINCTION BETWEEN TALL AND FLAT STRUCTURES

BASIS OF DISTINCTION TALL STRUCTURE FLAT STRUCTURE


In the tall structure the span of In the flat structure the span of control
Meaning control is narrow which means is wide which means that there will be
that there will be many fewer management levels.
management levels.
Narrow span of control results Wide span of control results in Flat
Span of control in Tall Structure. There are Structure. There are few managers
many managers who manage who manage many subordinates.
only few subordinates.
A manager has to manage only A manager has to manage many
Formal and Informal a few subordinates therefore subordinates therefore informal
Relations informal relationships are relationships are impossible.
possible.
There is a close control There is a loose control because there
Control because there are few are many subordinates.
subordinates.
Good discipline can be The possibility of indiscipline exists
Discipline maintained because there are because there are many subordinates.
few subordinates.
It is costly as it has many It is less costly as it has fewer
Cost managers. managers.
Decision making is slow Decision making is quick because
Decision making because there are many levels there are few levels of management.
of management.
Communication may be Communication will not be distorted
Communication distorted and delayed because and delayed because there are few
there are many levels of levels of management.
management.

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Span of management
Span of management refers to the number of subordinates which a person can effectively
manage to accomplish the desired objectives of the organization. It is also known as
‘span of control’, ‘span of supervision’ and ‘span of authority’. It is a numerical limit of
subordinates to be supervised, directed and controlled by a manager. It is an important
principle of organisation based on the theory of relationships propounded by a French
management consultant V.A Graicunas.

Gracunas's theory
Graicunas distinguished three types of interactions i.e. direct single relationships, cross-
relationships and direct group relationships which contributes to the total amount of
interactions within the organization. According to Graicunas, the number of possible
interactions can be computed in the following way. Let n be the number of subordinates
reporting to a supervisor. Then, the number of relationships of direct single type the
supervisor could possibly engage into is n. The number of interactions between
subordinates (cross relationships) he has to monitor is n (n-1) and the number of direct
group relationships is n (2n-1-1).The sum of these three types of interactions is the
number of potential relationships of a supervisor. He has proved that a number of direct,
group and cross relationships exist between a manager and his subordinates. With an
increase in the number of subordinates reporting to a manager, the number of direct and
group relationship increases.

Determining span of supervision

1. Capability of subordinates- If workers are highly capable, need little supervision, and
can be left on their own, e.g.: Theory Y type of people, they need not be supervised much
as they are motivated and take initiative to work; as such the span of control will be
wider.
2. Capability of superior- An experienced boss with good understanding of the tasks, good
knowledge of the workers and good relationships with the workers, will be able to
supervise more workers.
3. Nature of work- If the tasks that the subordinates are performing are similar, then the
span of control can be wider, as the manager can supervise them all at the same time.
4. Volume of other tasks- If the boss has other responsibilities, such as membership of
committees, involvement in other projects, liaising with stakeholders, the number of
direct reports will need to be smaller.
5. Degree of decentralization- Under decentralisation, the power to make decisions is
delegated at lower levels thus making span of management narrower so as to exercise
more control.
6. Effectiveness of communication: An effective system of communication favours large
number of managerial levels as it would be easier to transmit the information.

65
Introduction- concept of bureaucracy
Bureaucracy is a major sub-field of Public Choice. Bureaucracy is the set of regulations drawn
by governments to control activity, usually in large organizations. It is represented by a
standardized procedure that dictates the execution of all processes within an institution, division
of power, hierarchy and relationships. Traditionally, the term bureaucracy was used to represent
state administration and a group of officials in an organization who run administration on
contract employment basis. In the modern sense, Dalton McFarland (1979) has defined
bureaucracy as a system of organization and management in which roles, tasks and relationships
among people are clearly defined, carefully prescribed and controlled in accordance with formal
authority. Examples of everyday bureaucracies include governments, armed forces, corporations,
some non-governmental organizations (NGOs), hospitals, courts, ministries and schools.
Four main concepts lie at the core of any definition of “bureaucracy”:
• A well defined division of administrative labour among personnel and offices,
• A personnel system with consistent patterns of recruitment and linear careers,
• A hierarchy among offices, so that the authority and status be differentially distributed
among personnel
• Formal and informal networks that connect the organizational personnel to one another
through flows of information and patterns of cooperation.
German sociologist and political economist Max Weber (1864 - 1920) famously noted six key
characteristic of bureaucratic structures. These are as follows:
• Hierarchy- The first principle of bureaucracy states that a formal hierarchy must exist.
The hierarchy consists of power levels that control each subsequent level. The top person
in power controls all levels. Common practice entails appointment by a superior rather
than election.
• Rules-The next characteristic of the bureaucratic form regards rules and decisions. The
strict structure of power requires plenty of control by rules and regulations. The top
power figures in the bureaucracy make the rules and decisions which must be followed
consistently throughout all levels of the structure.
• Function-The third principle of bureaucracy relates to organization and order.
Organization remains key to proper functioning of a bureaucracy. This principle
maintains that members organize by function and skill as to keep similar individuals
together.
• Focus-Defining the focus of the structure rests the fourth principle of bureaucracy as
outlined by Weber. An "in focus" form serves to fulfill the needs of members. Goals of
an in focus bureaucracy relate to market share and high profits. Opposed to in focus is up
focus. An up focus structure serves to profit stockholders and similarly powerful people.
• Impersonal-Weber's fifth characteristic relates to the treatment of all employees,
members and clients of the bureaucracy. Impersonality rests paramount to the success of
the structure. Equal treatment and uniform policies and procedures allow for uniformity
and impersonality.
• Qualification-The final characteristic of bureaucracies relates to employment standards.
Similar to impersonality, employment within the bureaucracy relies on qualifications
rather than connections and relationships.

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A bureaucratic organization is one with rigid and tight procedures, policies and constraints; and
the company reacts with stringent controls as well as a reluctance to adapt or change.
Bureaucracies are very organized with a high degree of formality in the way it operates.
Organizational charts exist for every department, and everyone understands who is in charge and
what his responsibilities are for every situation. Decisions are made through an organized
process, and a strict command and control structure is present at all times. Following are the
features of bureaucratic organizations:

• Impersonal- Bureaucratic organizations are impersonal places to work. Individuals


are valued by the tasks they perform, and these tasks are specific and detailed. Formal
structures exist that limit individual and personal decisions, and policies allow for little
deviation from the norm. Regulations are in place for every job title, and little
creativity is allowed. Titles for positions are prevalent, and everyone is expected to
behave according to company policy. Formality at all times is valued and strict
discipline is essential for success.
• Structure- Many layers of management are typical for a bureaucratic organization.
With a pyramid in mind, the leader or president is at the top of the company, and all
other departments cascade underneath that leader. Vice presidents report to the
president or chief executive officer, and in turn, directors report to the vice presidents.
Managers of departments are underneath the directors and these managers typically
have numerous supervisors reporting to them. Finally, the workers in a bureaucratic
organization report to the supervisors. Structure is important for a bureaucratic
company.
• Power- In bureaucratic organizations, power is concentrated in the hands of a few,
high-ranking managers. Decisions about company policy, personnel decisions and
financial objectives are made by the highest ranking leaders. Procedures are in place
that directs most decisions upward to these leaders where all important actions take
place. Slowness in decision making is typical in bureaucratic companies, and hands-on
management techniques apply at all levels. Micromanagement is common, and
workers look to their supervisors for all decisions about their work and assignments.
• Administrative- Administrative procedures, rules and policies are found in all
bureaucratic organizations. These procedures are so important that many employees
carry the administrative title in their job descriptions. Carefully worded policies are
crafted, updated, maintained and distributed to all associates, and compliance is
mandated. Reference to these administrative procedures is frequent, and work is often
defined by these policies. Interpreting these regulations is often a major job duty for
managers, and staying in compliance at all times becomes an important part of job
descriptions and performance reviews.

Max weber ideal bureaucracy


The study of bureaucracy began with German sociologist Max Weber. He gave ideal
bureaucracy to be used in the analysis of organized industrial society. According to Weber, in
order to legitimately order large number of people, the followers must feel obliged to obey the
order of the leader. The leader must believe that he/she has the right to order the followers.
The leader needs a tool so that he can administer orders to large number of members. These

67
are known as administrative methods which characterizes three methods of domination.
These are described as follows

1. Charismatic Power- It occurs when the leader can command followers because of
exceptional performance and because the followers believe in him personally. For Weber,
charisma applies to "a certain quality of an individual personality, by virtue of which he
is set apart from ordinary men and treated as endowed with supernatural powers". Weber
saw charismatic power as a relationship between the leader and his followers. Charisma
is valuable because a charismatic leader with other leadership skills can often be an
effective leader, but it is also dangerous because a leader with no other leadership skills
finds it easy to persuade followers to act in ways that are not beneficial. Examples might
be Jesus Christ or Mahatma Gandhi

2. Traditional Power- It occurs when the leader commands because of inherited position.
The followers believe that this is the leader’s inherent right because affairs have always
been conducted in this way. This power does not change overtime, does not facilitate
social change, tends to be irrational and inconsistent, and perpetuates the status quo.
Followers are appointed by the leader. Examples might be found in feudal societies with
kings and serfs.

3. Legal Power- It occurs when the leader has obtained a position through a legal procedure
that the followers consider as “right and correct”. Followers obey because they respect
the law and procedure. So, it is empowered by a formalistic belief in the content of the
law (legal) or natural law (rationality). This form of power is frequently found in the
modern state, city governments, private and public corporations, and various voluntary
associations. Compared to charismatic and traditional forms, the legal bureaucratic form
is rational and considered to be an ideal form of organization. Examples might be
military officers

To sum up, in traditional authority, the legitimacy of the authority comes from tradition.
Charismatic authority is legitimized by the personality and leadership qualities of the ruling
individual. Finally, rational-legal authority derives its powers from the system
of bureaucracy and legality.

Features of bureaucracy
According to Weber, bureaucracy is an abstract system for rational solution to management
problems. Hence, bureaucratic organizations are the most rational means of carrying out
impersonal control over human beings. He described the characteristics of administrative
framework which are discussed below
1. Division of work and specialization- Each task is broken down into smaller tasks,
and different people work on different parts of the task. Authority and responsibility
are clearly defined and officially sanctioned. Job descriptions are specified with
responsibilities and line of authority. Bureaucrats specialize in one area of the issue
their agency covers. This allows efficiency because the specialist does what he or she
knows best, then passes the matter along to another specialist.

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2. Management by rules- A bureaucracy follows a consistent set of rules that control
the functions of the organization. Management controls the lower levels of the
organization's hierarchy by applying established rules in a consistent and predictable
manner. Rules and controls are applied uniformly avoiding involvement with
personalities and personal preferences of employees. Rules serves purposes like
standardizing operations and decisions; serving as receptacles of past learning and
protecting incumbents by ensuring equality of treatments.
3. Formal hierarchical structure- An organization is organized into a hierarchy of
authority and follows a clear chain of command. A bureaucracy is set up with clear
chains of command so that everyone has a boss. At the top of the organization is a
chief who oversees the entire bureaucracy. Power flows downward. The hierarchical
structure effectively delineates the lines of authority and the subordination of the
lower levels to the upper levels of the hierarchical structure.
4. Impersonal relations- There is impersonality of relationships among organizational
members. The decisions are entirely guided by rules and regulations and are totally
impersonal. There is total depersonalization meaning that there is no room for
emotions and sentiments in this type of structure. Personality and emotionally based
relationships interfere with rationality. Therefore, nepotism and favoritism should be
eliminated from the organization.
5. Staffing- The personnel are employed by a contractual relationship between the
employer and the employee. The tenure of service is governed by rules and regulations
of the organization. The employees get a salary every month which is based on the job
they handle and also the length of service.
6. Personnel hired on grounds of technical competence- Appointment to a position
within the organization is made on the grounds of technical competence. Work is
assigned based on the experience and competence of the individual. Hence,
Employment decisions based on merit - Selection and promotion decisions are based
on technical qualifications, competence and performance of the candidates.
7. Written documents- All decisions, rules and actions taken by the organization are
formulated and recorded in writing. Written documents ensure that there is continuity
of the organization’s policies and procedures. Written documentation root out the
possibility of loopholes in the oral communication among the organizational members.
The filing system makes the organization independent of individuals. The employees
may leave the organization but files may serve as the memory of organization.

Types of bureaucracy
Besides government organizations, bureaucracy is also found in educational, social and other
organizations. Mintzberg identified two kinds of bureaucracies. These are discussed below:

1. Machine Bureaucracy- It represents the Weber’s type ideal bureaucracy. It is


characterized by highly specialized, routine operating tasks; very formalized
procedures in the operating core; a proliferation of rules, regulations, & formalized
communication; large-sized units at the operating level; reliance on the functional
basis for grouping tasks; relatively centralized power for decision making; an

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elaborate administrative structure with sharp distinctions between line and staff.
Because the machine bureaucracy depends primarily on the standardization of its
operating work processes for coordination, the techno structure emerges as the key
part of the structure. Machine bureaucratic work is found, in environments that are
simple and stable. Machine bureaucracy is not common in complex and dynamic
environments because the work of complex environments cannot be rationalized into
simple tasks and the processes of dynamic environments cannot be predicted, made
repetitive, and standardized. The machine bureaucracies are typically found in the
mature organizations, large enough to have the volume of operating work needed for
repetition and standardization, and old enough to have been able to settle on the
standards they wish to use. The managers at the strategic apex of these organizations
are mainly concerned with the fine-tuning of their bureaucratic machines. Machine
bureaucracy type structures are "performance organizations" not "problem solving"
ones.
Machine bureaucracy has certain disadvantages. It is often criticized as being too
impersonal as it does not considers human sentiments and expectations. It encourages
goal displacement by emphasizing rules and regulations and put a curb on innovation.

2. The Professional Bureaucracy- The central feature of the Professional Bureaucracy


is the large and semi-autonomous operating core. The operating core of the
professional bureaucracy is largely trained and indoctrinated outside of the
organization; Mintzberg refers to this as the standardization of skills. In a sense,
individuals largely (but not solely) bring their skills with them to an organization,
instead of learning them at the organization. (For example, doctors, teachers and
lawyers are hired by hospitals, schools and law firms having already learned their
basic skills.) Once employed, professionals use their skills; this requires a great deal of
discretion on the part of the professional, namely how, when and where to use the
various skills he knows. However, professionals are not simply free to practice their
craft. Professionals learn to deal with contingencies, or problems of people they are
trying to help where they then apply a ready made set of procedures which they have
learned. The Professional Bureaucracy configuration leads to a highly educated
operating core but one with an aversion to supervision. The leader of a Professional
Bureaucracy cannot simply give commands and expect them to be obeyed. The
autonomy created by the professionals' level of skill and training pose a clear obstacle
to leadership. Thus, professional administrators must rely heavily on coordination and
compromise. Some problems also arise inside and outside of the Professional
Bureaucracy. An internal problem arises from problems of discretion. Simply put,
professionals can be incompetent or unwilling to update their skills to deal with
problems. Also, there is usually a slack organizational loyalty on the part of
professionals, who adhere more to their craft than their organization. This can lead to
an undermining of the whole or sub-optimization and problems of coordination. In
sum, the Professional Bureaucracy is marked by the autonomy of its operating
members, and while this autonomy allows for more democratic working environments
and decentralization, this very decentralization can become an impediment for
effective leadership and organizational direction.

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Merits of bureaucracy
Weber’s ideal bureaucracy has been designed to bring rationality and predictability of
behaviors in organization. Bureaucracy is an administrative device that can help in achieving
the following advantages

1. Specialization- A bureaucratic organization provides the advantages of specialization because


every member is assigned a specialized task to perform.
2. Structure- A structure of form is created by specifying the duties and responsibilities and
reporting relationships within a command hierarchy. Structure sets the pace and framework for
the functioning of the organization.
3. Rationality- A measure of objectivity is ensured by prescribing in advance the criteria far
decision making in routine situations.
4. Predictability- The rules, regulations, specialization, structure and training import
predictability and thereby ensure stability in the organization. Conformity to rules and roles in
the structural framework bring about order to cope with complexity.
5. Democracy- Emphasis on qualifications and technical competence make the organization
more democratic. Officials are guided by the prescribed rules, policies and practices rather than
by patronage or other privileged treatment
6. Dispersal of Authority- Power is not vested in a single individual. There is proper delegation
of authority to different positions in the organizations
7. Efficiency- Bureaucracy leads to efficiency through rationality, predictability of behavior,
division of labor and specialization.

Demerits of bureaucracy
The larger an organization gets, the more likely it is that its functions will fall into layers of
bureaucracy. While bureaucracy can provide organizations with a framework to handle even the
most complicated of situations, the byproduct of this framework may prove to be its undoing.
Following are the demerits of bureaucracy
1. Rigidity- Rules and regulations in a bureaucracy are often rigid and inflexible. Rigid
compliance with rules and regulations discourages initiative and creativity. It may also provide
the cover to avoid responsibility for failures.
2. Goal Displacement- Rules framed to achieve organizational objectives at each level become
an end to themselves. When individuals at lower levels pursue personal objectives, the
overall objectives of the organization may be neglected.
3. Impersonality- A bureaucratic organization stresses a mechanical way of doing things.
Organizational rules and regulations are given priority over an individual’s needs and emotions.
4. Compartmentalization of Activities- Jobs ore divided into categories, which restrict people
from performing tasks that they are capable of performing. It also encourages preservation of
jobs even when they become redundant.
5. Paperwork- Bureaucracy involves excessive paperwork as every decision must be put into
writing. All documents have to be maintained in their draft and original forms. This leads to
great wastage of time, stationery and space.
6. Empire Building- People in bureaucracy tend to use their positions and resources to
perpetuate self interests. Every superior tries to increase the number of his subordinates as if this
number is considered a symbol of power and prestige.
7. Red Tape- Bureaucratic procedures involve inordinate delays and frustration in the
performance of tasks.

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Dysfunctional aspects of unintended consequences
Bureaucracies may lead to unintended consequences which are often referred to as dysfunctional
aspects of bureaucracy. There has been much disenchantment with the functioning of
bureaucracies which created many critics of bureaucracy. There is no agreement on whether all
the unintended outcomes of bureaucracy are really counterproductive, because some of them are
atleast are perceived at times as disguised blessings. The prominent among the dysfunctional
aspects are discussed below:
1. Trained Incapacity- It relates to a phenomenon where a person is trained to look at the
matter from a single point of view. Thus, he can solve the matter on the basis of his
training. However, though the person is trained into the field, he fails to take correct
perspective in solving the problem. The trained incapacity rules out the possibility of
introducing new techniques, new methods of solving problems and eventually the
organization has to bear the opportunity cost. Trained incapacity of members leads to
timidity, conservation and limited application of their knowledge to achieve
organizational goals and limits organizational efficacy.
2. Rigidity of Behavior- The demand of control by top management leads to increased
emphasis on the reliability of behavior of organizational members. The emphasis on the
reliability of behavior has three consequences. They are (i) reduction in personalized
relationships in the organization (ii) internalization of rules by individual members and
(iii) increased use of categorization as a decision making technique. These outcomes lead
to rigidity of behavior in the long run. It increases the amount of difficulty with clients of
the organization. The client dissatisfaction may in itself reinforce rigidity of behavior
through the felt need of defensibility of the individual action which is an unintended
outcome. Figure 1 shows Simplified Merton’s Model

Demand for
control
Emphasis on
Reliability Felt need of
Defensibility of defensibility of
individual action individual action
Rigidity of behavior
and organizational
Intended Effects defense of status
Unintended Effects

Amount of Client’s
Dissatisfaction

3. Goal Displacement- It occurs when resources are used for a purpose other than for
which the organization exists. Excessive emphasis is places on acquisition of resources
rather than on the use of resources. Goal displacement in a bureaucracy may occur in
following ways:

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 Fear of Censure: Bureaucracies emphasis strict adherence of rules and regulations
for achieving efficiency. The individuals fear censure or criticism if they don’t
follow a rule. The rules are taken as shelters for overcoming inefficiency. The
basic result is that people do not want to change and when they have to take
independent decisions, they follow rules. Hence, lack of security because of ear of
censure demotivates people to take innovative decisions.
 Focusing Secondary goals: Members of organization focus of secondary goals
rather than primary goals. In bureaucracy, people emphasis on certain aspects of
behavior without taking into account the overall organizational perspective. Since
this behavior is reinforced, they continue to engage in this kind of behavior.
 Emphasis on status: Goal displacement occurs when instrumental behavior has
desirable, unanticipated consequences for an organizational member. The
organization is based on hierarchy putting various individuals in superior-
subordinate positions. A superior may emphasis a behavior which may be
desirable for him though not for the organizational efficiency.
 Sub-unit goal internalization: An organization creates various units and subunits
that share organizational goals. Distortion occurs resulting into subunit goals
being given preference over the goals of organization.
G
O
A
L

D
Organizational goals Fear of Censure
I
Reinforced Behavior S
Bureaucratic Structure Delegation of P
Authority Behavior Substitution L
A
Sun-unit goal
Internalization C
E
Predictability, Reliability M
And efficiency E
N
T

4. Hoarding Authority- The bureaucrat who hoards authority attempts to gather as much
authority as possible. This type of bureaucrat sees himself as an infallible decision-maker
who is always eager to prove competence and ability. There are two situations in which
hoarding of authority occur. These are:
 Filling the gap- it occurs when some executive is avoiding responsibility creating
an organizational void. The gap filler may recognize this void fills the void by
going beyond the boundaries of legitimately assigned authority.

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 Empire building- it occurs when some executive recognizes the importance of an
office. The empire builder values the status, power and pay of a substantial
position. Thus status and power can be increased by enlarging one’s office.
5. Bureaucratic Sabotage- In a bureaucracy, there is enough scope of sabotaging the
superior by subordinate. The subordinate may hide necessary information required by
bureaucrat. The subordinates do only what superior directs. It results in sabotage because
superior possibly cannot tell everything to the subordinates. Here, it is the superior who is
held accountable for any loss
6. Client dissatisfaction- A client interacts with the organization for solution of his
problems. A client feels dissatisfied when neglected by a bureaucrat. Here the client may
appeal to the higher official in the hierarchy. But due to the pressure from the top
management to support the subordinate, the higher official may dismiss the client’s
appeal which may in turn accentuate dissatisfaction to the client. Thus stress on
depersonalization and application of rules rids the bureaucrat of emotions and sentiment
which may develop rigidity and arrogance.
Strategy to transform bureaucracy

There is a need to confront and transform bureaucracy into self-managing alternatives of


autonomous working groups, self-reliant communities, federations and networks, drawing on
experiences and insights from a variety of successful and unsuccessful grassroots campaigns to
change bureaucracy.

1. Link insiders and outsiders- Campaigns concerning bureaucracy are much more likely
to be effective if they involve coordinated efforts by people both inside and outside the
bureaucracy. Insiders know what is going on first-hand: work conditions, power
structures, attitudes, avenues for intervention. They can provide valuable information to
outsiders, can advise on what tactics might be misdirected or counterproductive, and can
sound out ideas informally. Outsiders have much greater freedom to act without putting
their careers in jeopardy. They can take overt stands not safe for insiders to take.
Outsiders also can have a wider picture of the role of particular bureaucracies, and are
closer in tune with community perceptions.
2. Emphasizing rules and regulations- Certain rules in bureaucracy are required by an
organization like rules required checking unpredictability and arbitrary action. Also,
hierarchical arrangement is also required to organize large number of people in large
organization. However, an overemphasis may decrease organizational effectiveness
3. Modifications in managerial behavior- Rather than sticking to rule based behaviour, it
is beneficial if managers adopt situation based behaviours. Adopting situational
behaviours is beneficial to both client and organization. Such behavioural patterns can
satisfy the organizational members as these are based on humanistic approach. They also
satisfy the clients because they are result oriented in nature
4. Promote Alternatives- To transform bureaucracy, there are many experiences and ideas
for self-managing organizational forms, including self-managing work groups,
cooperatives, federations, all as part of a society with much greater local autonomy and
self-reliance. But in spite of the wealth of experience in non-bureaucratic structures,
much more investigation and action is needed to develop stable, effective and attractive
alternatives. Formulating alternatives is essential in any bureaucracy campaign. If no

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alternative is offered, dissatisfaction will remain. Alternatives help people see
bureaucracy as a social product rather than as part of the inherent nature of society. But
more than this, alternatives provide a concrete basis for challenges to bureaucracy. An
alternative plan, for example may include self-managing work groups
5. Change in organizational design- Organic-adaptive structure as opposed to mechanistic
and deterministic structure is required to deal with dynamic environment and people with
a high level of professional competence. Thus by changing the organizational structure,
the management can adopt collateral structures like task forces, teams and committees
that can coexist with a bureaucratic setup.
6. Use political methods- There is little prospect of transforming bureaucracy by
exclusively using its own methods, in other words by working 'through the system.' One
approach to social change is the climbing the existing hierarchical ladders to obtain
formal positions of power, where supposedly one can then have some impact on social
directions. The trouble with this approach is that the institutions change most of the
individuals long before the individuals rise to positions to change the institutions. If
people in bureaucracies want to change its structure, they can begin at once by raising
issues with colleagues, speaking out on relevant issues, and being involved in action
groups inside and outside the organization.

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