Friday, October 07, 2011

ORGANISATION THEORIES
A Theory is a set of inter related concepts, definitions & propositions that present a systematic
view of phenomena. It also specifies the relationship among variables with purpose of
explaining and predicting the phenomena.
“Organization theory refers to the study of the phenomena of organizational functioning and
performance and of the behavior of Groups and individuals working in them.”

The main theories which seek to study the organization are:

 Classical theory
 Neo classical theory
 Bureaucratic theory
 Systems theory
 Contingency theory
These theories are based on the generally accepted principles ,set of assumptions and value
judgment. Each theory is based on How organization can be made effective.

Classical theory:
Classical theory is the beginning of the systematic study of the organization. It deals with the
anatomy of formal organizations.(job-unit/authority, accountability-responsibility).We know
that a formal organization is one which is deliberately created with defined jobs , a definite
measure of authority, responsibility & accountability.
The classical theorists considered organization as a machine –goal fulfilling machine and
workers were cogs in the machine. efficiency and productivity can be improved by improving
the efficiency of the workers.
 F.W.Taylor is the foremost among those thinkers.He is considered as the father of
scientificmanagement. Taylor's scientific management isoften called –physiological
organization theory ormachine theory-his associates gave a rigid machinemodel of
organization and concentrated onproduction.
He considered men also as machines, well maintained machines produce more so also men.
He assumed there is one best method for every job.
He introduced division of labour, Standardization of task, Analysis work and work and time
measurement. He introduced the concept of fair day wages for fair days work.His philosophy
can be summed up in the following words:
 Management is a science and not a rule of thumb.
 Production is improved by harmony and cooperationand not by discord.
 Team and team spirit and not a group of individuals

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 The goal is maximization of output and not restriction

 Production improves by:
a) Selection of men.
b)The best method of doing a job.
c)Appropriate tools.
d)Motivation.
e)Fair wages.

Other contributors:
 Sheldon ,mooneyurwick and Gullick. Sheldon introduced the concept of
humanorganization, the need for fellowship, and leisure.Urwick-the functions in an
organization
 Podscorb , the organization principles of unity of command ,subdivision of
tasks,delegation , span of control etc.

Criticism
 All the above treated organization as a closed system.
 Did not study the influence of environment on organization. This approach is known as
structural theory.
 It focuses on structure, processes and principles of organization

Neoclassical theorists:
 They considered good human relations as good management.
 The work on this subject was pioneered by Elton Mayo and his associates.
 These theories are also known as human relations theories.
 Elton mayo understood men as perfectly as Taylor understood machines.
 The essence of this revolution was focus on the organization as a social system .
Main contribution of neoclassical theorists:
The organization is a social system composed of various interacting parts. It is a group of
persons with a common objective. Within the organization there exists an informal
organization which interact with each other. Human beings are interdependent, their behavior
can be predicted based on social and psychological factors at work. Many socio- psychological
factors work to motivate people. Human being do not always react rationally-in terms of
rewards. There is a conflict of goals between that of organization and that of the individual-
this needs to be reconciled. Team work , essential for efficient functioning is not
automatic , is to be developed.
As a result of the approaches , the classical design of the organization has undergone a
number of changes:
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 Flat structure.
 Decentralization allowing autonomy and initiative at lower levels.
 Existence of informal organization and its interaction with formal organization.

Criticism
 Lacks unified approach.
 Suffers from incompleteness , a short sighted perspective, and lack of integration among
many facets of the human behavior.
 It is a trifling body of empirical and descriptive information.

Bureaucratic theory
The dominant form of today is bureaucratic form of organization. The word itself has a
negative impact, meaning thereby red tape corruption inefficiency and ineffectiveness. The
origin and nature of this concept of verband-meaning organization in German – goes back to
the German sociologist Weber and his philosophy of organization has become popular as
Weberism.
What is bureaucracy?
Bureaucracy is simply institution written large. Organization designed to accomplish large scale
administrative tasks by systematically coordinating the work of many individuals.
Salient features
 A person is said to have power or authority.
 If within the social framework his will can be enforced on others despite resistance for
structuring human groups , becomes a special instance of power called “authority" or
domination.
 For Weber an organization is an administrative body of appointed officials governed by
systematic rules –an impersonal formalized structure and legitimatized authority.

Systems Theory:
Systems theory views an organization as a complex set of dynamically intertwined and
interconnected elements, including inputs, processes, outputs, feedback loops, and the
environment. Any change in one element causes changes in other elements.
The learning organization.
 Built on the doctrines of participation
 Maslow’s hierarchy of needs.
 New component technologies (the five disciplines).
Personal mastery.
Mental models.

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Building shared vision.

Team learning.
Systems thinking.
A system is defined as an assemblage or a combination of things or parts forming a complex
unitary whole. Parts of the system are known as sub systems .The various subsystems are
aligned in some order so that the whole is better than the sum of the parts. A system has a
boundary .
They are classified into two types .
1) Open systems
2) Closed systems .
An open system interacts with the environment, a closed system does not. A living system is
an open system and all nonliving systems are closed system.
Bernard an American executive defined organization as a system of consciously coordinated
personal activities of two or more persons held together by a capacity to generate a common
purpose , by willingness on the part of its members to contribute to its processes and by
effective communications. He also proposed a theory of contributions inducements or
incentives for satisfaction and equilibrium .This theory has greatly influenced the later theories
of motivation.

Features:
 Open system considers organization environmental interface.
 Dynamic & adaptive.
 A multilevel multi-dimensional approach.
 Both micro and macro level aspects are considered.
 The systemic arrangement facilitates communication and control through man
machine systems.

Contingency theory:
 Is also known as situational theory.
 No particular design or managerial action can suit all time and all situations
 Contingency theory focuses on external determinants of organization structure and
behavior.
 It fills an important lacuna of the systems theory by spelling out relationship between
organization and its environment.
“There is no one best way to organize”

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The idea that the organizational structures and control systems manager choose depend on—
are contingent on—characteristics of the external environment in which the organization
operates.
There are various factors which determine the effectiveness of an organization structure and
those are:
 Environment
 Strategy
 Technology
 Size, and
 People

Different Types Of Structures that can be used for different situations:

Mechanistic Structure:
 Authority is centralized at the top.
 Emphasis is on strict discipline and order
 Employees are closely monitored and managed.
 Can be very efficient in a stable environment.
Organic Structure:
 Authority is decentralized throughout the organization.
 Departments are encouraged to take a cross-departmental or functional perspective.
 Works best when environment is unstable and rapidly changing.

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