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Classical Organization Theory

Commerce Classical Organization Theory

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Neoclassical Organization Theory

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The organization was seen by the

classical authors as a machine and
human beings as components of that
machine. They were of the belief that
the organization's e!ectiveness could be
enhanced by making human beings
successful. Specialization and
organization of events were their focus.
Most of the authors placed emphasis on
top-level productivity and a few on
lower organizational levels. That is why
streams have been created by this
theory; scienti"c leadership and
administrative leadership. The scienti"c
leadership group was primarily
concerned with the activities to be
carried out at the organizational level.

Henry Fayol learned the principles and

roles of management for the "rst time.
Some writers, such as Gullick, Oliver
Sheldon, Urwick, called the issue where
it is important to de"ne activities to
achieve organizational goals. To make
the functions e!ective, grouping, or
departmentation was also considered
necessary. Since this philosophy
revolves around the structure, it is also
called a structural organizational theory.

The conventional theory is the Classical

Theory, where more focus is placed on
the organization rather than the
workers working therein. The
organization is regarded as a machine
according to classical theory, and human
beings as various components/parts of
that machine.

Classical Organizational Theory is very

important as the "rst step toward a
systematic analysis of organizations.

It deals mainly with the morphology of

formal organizations and also treats one
as a machine and the workers as
components of the machine.

Therefore each employee employed in it

must become productive in order to
improve the organization's e#ciency.

What is Classical Organization

Theory?
The traditional Theory where instead of
emphasizing more on the employees,
more emphasis is on the Organization is
known as the Classical Organization
Theory. In this Theory, it is said that the
Organization is a machine wherein the
humans are di!erent components or
parts of that machine. Therefore, it is
considered by many experts that the
Classical Theory of Organization is
inadequate when it comes to dealing
with the complexities in the functioning
of the Organization as it focuses just on
the Organization.
According to the Classical Organizational
Theory, humans are considered just as
the means of production. The Classical
Organizational Theory most primarily
deals with formal Organizations. In
order to increase the e#ciency of the
Organizations in accordance with this
Theory, the e#ciency of the working
employees must be increased.

Classical Organization Theory- 6

Pillars
The 6 main Pillars or elements of the
Classical Organizational Theory are
listed below-

1. Division of Labor- Work must be

divided in an Organization for the
improvement in the performance
of individual workers and in order
to obtain a clear specialization.
The company must divide work in
order to achieve a speci"c
specialization in order to enhance
the e#ciency of individual
employees.

2. Departmentalization- Di!erent
departments must be created for
di!erent activities and jobs which
would allow the Organization to
minimize its costs and facilitate
administrative control. The
company needs to organize into
divisions di!erent tasks and jobs.
This enables expenditures to be
reduced and administrative
control facilitated as well.

3. Coordination- It should be ensured

by the Organization that there is
harmony among diverse functions.
This would provide unity of actions
as it allows the arrangement of
group e!orts in an orderly
manner. The company must
guarantee peace between the
di!erent functions. This allows the
collective e!ort to be organized in
an orderly way that o!ers unity of
action when serving a common
goal.

4. Scalar and Functional Processes-

The series chain of superior and
subordinate relationships from
the top to the bottom of the
Organization is known as the
scalar chain. It helps in the
facilitation of the delegation of the
authority, communication,
feedback, and remedial action.
The sequence of superior-
subordinate relationships in an
organization from top to bottom is
a scalar chain. It encourages the
delegation, contact or input, of
authority or order, and also
remedial action or decision.

5. Structure- Structure is the

conceptual relationship in an
organization between functions. In
addition, for e#cient goal
achievement, these functions are
organized. In an Organization, the
logical relationships of functions
constitute the structure of the
Organization. These functions are
then arranged in order to
accomplish the e!ective
objectives.

6. Span of Control- This includes the

total number of subordinates that
can be e!ectively supervised by a
manager. This is the number of
subordinates that can be
e#ciently overseen by a boss.

There have been critiques of classical

theory on many levels.

Criticisms of the Classical

Organizational Theory -

It takes a rigid view of

organizations as well as a static
one.

An organization is regarded by
most classical theorists as a closed
structure with no interaction with
its environment.

More on the systemic and even

the technical aspects of
organizations, the theory focuses.

It is founded on assumptions that

are oversimpli"ed and
mechanistic.

The emphasis of Classical Theory, in

simple terms, is on an organization
without individuals.

Therefore in dealing with the

complexities of the structure and
operation of an organization, many
experts consider it insu#cient.

In addition, it gives an imperfect

description of human actions in
corporations.

The new-classical approach is contained

in two points:

I. The organizational situation

should be perceived in social,
economic, and technological
terms

II. The social mechanism of group

behavior can be understood in
terms of the clinical method
analogous to the doctor's
diagnosis of the human body.

Formal and informal modes of

organization are seen as signi"cant in
this theory. The other contribution of
new-classical thinkers is the behavioral
approach adopted in this theory. The
foundations of classical theory, in other
words. Job division, department,
coordination, and human actions were
taken as given, but these postulates
were considered to be changed by
individuals acting individually or within
the informal organization context.
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FAQs (Frequently Asked Questions)

1. What are the Six Pillars of Classical

Organizational Theory? Why Did the
Classical Theory Receive Criticism?
The conventional theory is the Classical Theory,
where more focus is placed on the organization
rather than the workers working therein. The
organization is regarded as a machine
according to classical theory, and human beings
as various components/parts of that machine.
The six pillars are:

Division of Labor
Departmentalization
Coordination
Scalar and Functional Processes
Structure
Span of Control

Organizations are regarded by classical theory

as machines and human beings as parts of the
system. Classical thinkers, therefore, thought
that with the e!ectiveness of human beings,
the e#ciency of the company increases. This
theory does, however, take a rigid and static
view of organizations. It also focuses mainly on
an organization's operational and technical
aspects with the belief that it does not engage
with its environment.

Finally, mechanistic and oversimpli"ed

assumptions are the foundation of the theory.
The critique of Classical theory contributed to
these aspects.

2. What are some of the criticisms

faced by Classical Organizational
Theory?

3. What are some of the drawbacks of

Classical Theory?

4. Explain the characteristics of

Classical Theory?

5. What are some of the key

di!erences between Classical and Neo
Classical Theory?

6. What is meant by the Modern

Organization Theory?

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