This document provides an overview of different theories of organization, including classical, neo-classical, modern, and contingency theories. Classical theories focused on structure and universal principles, viewing the organization like a machine. Neo-classical theories emphasized the importance of individuals and informal social systems within organizations. Modern system theories view organizations as goal-oriented systems transforming inputs to outputs through interconnected subsystems. Contingency theory posits that the most effective organizational design depends on external environmental factors and situations.

1.  Ques : 1 What is
Organization?
 Ans : “Organization is a
group of people who
cooperate under the
direction of leadership,
for the
accomplishment of a
common Goal”.

2.  The term theory implies drawing general
conclusion from the environment which has
universal applicability.

3.  Organization theory is the study of structure
functioning and performance of organization
and of the behavior of groups and individuals
working in the organization.

4.  “The study of the organization theory helps
to observe, explain and anticipate the
behavior of individuals, subgroups and
groups during or at the end of the work.

5.  It is a macro analysis of an organization i.e. how
the organization structure is designed to
integrate propel with organization.
 It is a way of thinking about organization.
 It is descriptive and predictive about a particular
state of affair in the organization.
 It is a practical discipline that helps in examining
organization more precisely and thoroughly.

6.  A scheme of classification of organization
theory may be put in into classical, neo-
classical, and modern.
 The classification is based on the nature of
organization structures, processes and
interdependence.

7. Classical Theory
Neo-Classical
Theory
Decision Making
Theory
System
Approach
Theory
Contingency
Organization
Theory

8.  Main idea of classical organizational theory
i. There is “one best way” to perform a task

9. The term classical means something traditionally
accepted or long established. In a way it signifies
the beginning of the systematic study of
organization.
The classical theorists concentrated on
organization structure for achievement on
organizational goals and also developed certain
principles of management.
The classical writers have viewed organization on a
machine and human being as different
components of that machine.

10.  1. Scientific Management
 2. Bureaucracy
 3. Administrative Theory

11.  Taylor has made two contributions
I. Mechanical : Taylor introduce time and
motion studies, standardization of tools,
methods and working conditions,
differential price rate for the payment of
wages etc.
II. Philosophical : On this side, Taylor
introduced the science of management
based in scientific on scientific investigation
and experiment.

12.  1. Traditional rule of thumb replaced by latest
scientific techniques as well as
standardization of tools, equipment's,
materials and work methods also improved
working in the organization.
 2. proper selection and training of workers
along with the detailed instructions and
constant guidance of the workers.

13.  Scientific management provides the real basis for
the clinical theory of organization.
 It also provides solutions to the engineering and
organizational problems.
 Taylor on the basis of his experiments perceived
several few functions of managers, these are :
 A) Scientific selection and training of workmen.
 B)co-operation of management and labour to
accomplish working accountability b/w managers
and workmen.

14.  Max Weber contributed to the organization
theory by propagating bureaucracy as an
ideal form of organization. Bureaucracy is a
social invention perfected during the
industrial revolution to organize and direct
the activities of the firm.

15. The administrative theorists like Weber, Fayol,
Gulick, Sheldon, Mooney and Reiky and Urwich
had viewed the control problem as being one
where there must be identification of tasks
necessary for achieving the general purpose of
the organization and of the grouping of
departmentation to take place to fulfill those
functions that mostly effect levels.

16.  This theory emphasis on establishing a
universal set of principles (principles of
management) that could be applied to all
organizations.
 According to this theory, there are prescribed
universal principles to achieve the goals of
formal organization.

17.  Henry Fayol is regarded as the father of this
school. He proposed that all operations in
business organization can be classified under
six headings :
1. Technical (production)
2. Commercial (purchase and sale)
3. Financial (funding and controlling capital)
4. Security (protection)
5. Accounting (balance sheet, costing records)
6. Administrative (planning, organizing,
commanding, coordinating and controlling)

18.  Fayol tried to develop a theory of
management and defined management in
terms of certain functions and then laid down
fourteen principles of management.
1) Division of work
2) Authority and Responsibility
3) Discipline
4) Unity of command
5) Unity of Direction

19. 6) Subordination of individual to general
interest
7) Remuneration of Personnel
8) Centralization
9) Scalar chain
10) Order
11) Equity
12) Stability
13) Initiative
14) Esperit de Corps

20.  Weber is the father of bureaucracy, a basic context of
classical organization theory relating to structure and
administrative process of the organization.
 Pillars of Classical Theory :-
1. Division of labour
2. Scalar and Functional process
 Scalar process refers to the growth of the chain of
command, the delegation of authority, the unity of
command and the obligation to repeat from the
bottom to the top.
 Functional process refers to the division of
organization into specialized parts and the
regrouping of the parts into compatible units.

21. 1. Coordination by Hierarchy
2. Delegation of Authority
3. Departmentalization
4. Unity of Command
5. Line and Staff Authority
6. Structure
7. Span of Management

22.  The neo-classical theories focused on the
importance of the individual within the
organization.
 The main concept behind neo-classical
theory is that productivity increases as a
result of higher employee morale.

23.  The main fact is that to get higher result in
organization the management should
recognize and maintain more personal
relationship with employees.

24.  1) The organization in general is a social
system which defines individual roles and
establishes norms that may differ from those
of the formal organization.
 2) It taught that it is necessary to relate work
and the organizational structure to the social
needs of the employee.
 3) At the workplace, the workers often do not
react as individuals but as member of groups.

25.  1. Certain assumptions are not true :
 Certain assumptions in which the neo-
classical theory is based do not seems to be
true.
For example, the assumption that there is a
solution of every problem, which satisfies
everyone in the organization, is not true

26.  2. Limited Application :
 The various formats and structures of
organization given by neo-classicists are not
universal. There is no particular structure,
which may serve the purpose of all the
organization.

27.  3. Lack of unified Approach:
This theory lacks the unified approach of the
organization theory. In fact, it is not a theory at
all. All that was done in neo-classical theory is
simply modification of classical theory.
4. More emphasis on Human Aspect :
The theory gives too much emphasis on human
aspects in organization. As the classified
concentrated on structural aspect, neo-
classical concentrate their attention the Human
Aspect.

28.  Herbert A. Simon regards the organization as
a structure of decision makers.
 Decisions are taken at various levels.

29.  Important decisions are taken at top level and
less important decisions are taken at lower
levels.
 So according to Simon organization should be
structured in terms of the points at which the
decisions must be made and also the persons
from whom information and influences must
flow so that decisions are effective.

30.  The system approach is a modern
organization theory that breaks structure into
mutually dependent subsystems. These
systems are connected through
communication, balance and decision
making.

31. Output (goods and services)
Information Processing
Input (Information, Energy and Material)
This interaction with the
organization can be well
understood by input output
model.

32. So in System approach
organization make use of
input-output analysis.

33.  A system is a goal oriented.
 A system is engaged in processing or
transformation of inputs into output.
 It consist of several sub-systems which are
interdependent and interrelated.
 An organization is an open and dynamic
system

34. 1. Individual
2. Formal Organization
3. Informal Organization
4. Fusion Process
5. Physical Setting

35.  1. Technical Sub-System
 2. Social Sub-System
 3. Power Sub-System

36.  This theory is of the opinion that there is no
prescribed managerial action or
organizational design which is suitable for all
organization.
 Instead these are depends on the situation.

37.  Contingency theory is based on the systems
view of the organization.
 It focuses on external dynamics .
 And the most important thing is that this
theory is basically a long range theory and
can be applied to the study of various sub-
units of an organization.

38. Classical views
1. Scientific Management principle
2. Bureaucracy
3. Universal Administrative
Neo-classical Approach
1. Human Relation
Approach
System Approach
1. Open System
2. Sub-system
3. Inter-dependent
Contingency Approach
1. Organization design
based on System interface
with Environment.
Behavioral Approach
1. Psychological,
Sociological and Cultural
factors