Organisation theories

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  • 1. Friday, October 07, 2011ORGANISATION THEORIESA Theory is a set of inter related concepts, definitions & propositions that present a systematicview of phenomena. It also specifies the relationship among variables with purpose ofexplaining and predicting the phenomena.“Organization theory refers to the study of the phenomena of organizational functioning andperformance 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 theoryThese theories are based on the generally accepted principles ,set of assumptions and valuejudgment. 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 theanatomy of formal organizations.(job-unit/authority, accountability-responsibility).We knowthat a formal organization is one which is deliberately created with defined jobs , a definitemeasure of authority, responsibility & accountability.The classical theorists considered organization as a machine –goal fulfilling machine andworkers were cogs in the machine. efficiency and productivity can be improved by improvingthe efficiency of the workers.  F.W.Taylor is the foremost among those thinkers.He is considered as the father of scientificmanagement. Taylors 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 timemeasurement. He introduced the concept of fair day wages for fair days work.His philosophycan 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 individualsAssignment By Rajat Sharma Page 1
  • 2. Friday, October 07, 2011  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 organizationNeoclassical 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 ofpersons with a common objective. Within the organization there exists an informalorganization which interact with each other. Human beings are interdependent, their behaviorcan be predicted based on social and psychological factors at work. Many socio- psychologicalfactors work to motivate people. Human being do not always react rationally-in terms ofrewards. 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 notautomatic , is to be developed.As a result of the approaches , the classical design of the organization has undergone anumber of changes:Assignment By Rajat Sharma Page 2
  • 3. Friday, October 07, 2011  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 theoryThe dominant form of today is bureaucratic form of organization. The word itself has anegative impact, meaning thereby red tape corruption inefficiency and ineffectiveness. Theorigin and nature of this concept of verband-meaning organization in German – goes back tothe German sociologist Weber and his philosophy of organization has become popular asWeberism.What is bureaucracy?Bureaucracy is simply institution written large. Organization designed to accomplish large scaleadministrative 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 andinterconnected elements, including inputs, processes, outputs, feedback loops, and theenvironment. 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.Assignment By Rajat Sharma Page 3
  • 4. Friday, October 07, 2011 Building shared vision. Team learning. Systems thinking.A system is defined as an assemblage or a combination of things or parts forming a complexunitary whole. Parts of the system are known as sub systems .The various subsystems arealigned in some order so that the whole is better than the sum of the parts. A system has aboundary .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 isan open system and all nonliving systems are closed system.Bernard an American executive defined organization as a system of consciously coordinatedpersonal activities of two or more persons held together by a capacity to generate a commonpurpose , by willingness on the part of its members to contribute to its processes and byeffective communications. He also proposed a theory of contributions inducements orincentives for satisfaction and equilibrium .This theory has greatly influenced the later theoriesof 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”Assignment By Rajat Sharma Page 4
  • 5. Friday, October 07, 2011The idea that the organizational structures and control systems manager choose depend on—are contingent on—characteristics of the external environment in which the organizationoperates.There are various factors which determine the effectiveness of an organization structure andthose are:  Environment  Strategy  Technology  Size, and  PeopleDifferent 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.Assignment By Rajat Sharma Page 5