The document discusses three organizational theories: decision-making theory, systems approach, and Max Weber's theory of bureaucratic management. It describes decision-making theory as focusing on rational decision making that drives organizational actions and goals. The systems approach views an organization holistically as a system of interdependent subsystems. Max Weber's bureaucratic management theory proposes a hierarchical structure with specialized roles, formal processes, and impersonal relationships to ensure organizational efficiency.

1. GROUP 3
ORGANIZATIONAL
THEORIES
GELLIE A. MARAVILLA
Reporter

2.  DECISION-MAKING THEORY
 SYSTEM APPROACH
 MAX WEBER’S THEORY OF
BUREAUCRATIC MANAGEMENT

3. DECISION-MAKING THEORY
 Effective decision making is an integral part of modern
workplace management. Managers, team leaders and
even employees need to make rational and sound
decisions every day.
 The right decisions, choices and approaches help in meeting
organizational goals more efficiently. It helps organizations adopt
and implement measures that optimize growth in terms of
products and/or services offered. In other words, decisions drive
actions.

4. DECISION-MAKING THEORY
 Decision-making theory is a theory of how rational individuals
should behave under risk and uncertainty. The theory suggests
that decision-making means the adoption and application of
rational choice for the management of a private, business, or
governmental organization in an efficient manner.
 Simon suggested that decisions were critical because if they
weren’t taken on time, it will negatively impact an
organization’s objective.
 The concept can be divided into two parts:
1. the decision that someone arrives at, and
2. the process or actions taken.

5. THREE STAGES OF THE DECISION-MAKING PROCESS
 INTELLIGENCE ACTIVITY STAGE
 At this stage, identifying the issues and challenges faced by an
organization.
 DESIGN ACTIVITY STAGE
 identify and analyze possible solutions to the issues and
challenges and its respective risk category.
 CHOICE ACTIVITY STAGE
 After making a list of alternatives, the choice activity stage
begins that critically examines and evaluates the various
consequences of all the alternatives, selecting the most suitable
course of action.

6. Systems Approach
 Systems approach is a management perspective which
advocates that any business problem should be seen as
system as a whole which is made up of an hierarchy of sub-
systems. So rather than seeing the problem in parts it should
be seen as whole.
 Though it defines system as a whole but it keeps focus on the
subsystems and components as well on their role in the entire
system. It is linked closely to Systems Thinking. A defined
system has a clear boundary and is separate from the
environment. This makes it stand apart to look at the problem
and its solution. Each subsystem contributes to making this
system as a whole.

7. Importance of Systems Approach
 Systems approach is very important as it provides the bigger
picture. It sees all departments and subsystems as contributing
factors for the overall organization. Overall success of
organizations is seen as a whole and not success of one
department over the other.
 Systems approach gives insights into each components'
workings and helps see its contribution to the overall system.

8. Factors in Systems Approach
1. Dependency
Each part of the system derives inputs and information from
other system to achieve the business goal. The parts do not exist
in silos but are coupled with one another to work as part of an
entire working system.
2. Responsiveness
The system changes as per the environment and reacts to the
changes in the environment. If the external environment changes
then systems responds as well by making changes in its
parameters to stay relevant and work as per expectations.

9. 3. Results
Systems approach is focused on producing right results for the
overall system. Each part needs to work according to the
requirement of the overall system and product expected results.
4. Focus
The focus of each part of the system should be clearly and well
defined.
Example. All the departments in the organization should have
their clear responsibilities to make the system or organization
work. Overlapping responsibilities can reduce the focus and
effectiveness of the entire system.

10. ADVANTAGES OF SYSTEMS APPROACH
The benefits of this approach are:
1. It helps to see the problem at holistic level and resolves the
issues
2. Systems approach helps understand the problem in a better
way and comes up with more efficient solution
3. It clearly defines the scope or the boundary for systems and
problems where in influence of internal and external factors can
be seen

11. DISADVANTAGES OF SYSTEMS APPROACH
This approach has its disadvantages:
1. Sometimes problems are too complex and needs focus on the
sub-systems rather than keep seeing system as a whole.
2. While designing from bottom to top, focus on sub-systems is
required and important details can be left in case focus is only
kept on overall system
3. Many a times while solving a specific issue leads to focus on a
component and not on overall system

12. MAX WEBER’S THEORY OF BUREAUCRATIC MANAGEMENT
 Max Weber
 He was born on 1864
 Max Weber was a German sociologist and the author

13.  ‘Bureaucracy is an organizational structure that is characterized by
many rules, standardized processes, procedures and requirements,
number of desks, the meticulous division of labor and responsibility,
clear hierarchies and professional, almost impersonal interactions
between employees.’
 According to Max Weber’s bureaucratic management
theory, Weberian bureaucracy is a structure that must be
implemented in all big organizations. He proposed this to ensure
the structural operation of all tasks by a huge number of
employees. Furthermore, in Max Weber’s bureaucracy,
qualifications and competence are the only basis for hiring and
promotion of workers.

14.  Max Weber’s Six Principles Of Bureaucracy
Here are the six major Max Weber characteristics of bureaucracy:
1. Task Specialization
The Max Weber theory of bureaucracy proposes that all business tasks
must be divided among the employees. The basis for the division of
tasks should be competencies and functional specializations. In this
way, the workers will be well aware of their role and worth in the
organization and what is expected of them.

15. 2. Formal Selection
Hiring and onboarding of employees in the bureaucracy are
done exclusively according to the specialties and technical skills
of the candidates. These skills may have been acquired by the
candidates through education, training and experience.
3. Impersonal Relationships
Another principle of the bureaucratic theory is that the relationships among employees
and between managers and employees must be impersonal.
The impersonal relationships are A prominent feature of max weber’s bureaucracy.
Employees are not allowed to interfere with the affairs of other employees, managers
and the organization. Communication among the employees should not involve
emotions, personal sharing and feelings. The decision-making process must only
involve rationality instead of emotions.

16. 4. Hierarchical Layers Of Authority
These hierarchical positions in bureaucratic organizations are
essentially the trademark and foundation of max weber’s
bureaucracy. In this hierarchy of authority, positions are ranked in
order of precedence and the highest position in the ladder
generally has the highest authority in the organization. The
bottom hierarchical layers are generally the positions that are
supervised by higher layers.

17. 5. Rules And Regulations
Max Weber’s Theory Of Bureaucracy Clearly lays out that
every ‘rational organization’ must have A set of rules and
regulations. These rules and regulations must be followed
without any fault. This ensures uniformity in the business and
the staff members know what is expected of them.
6. Career Orientation
The Weberian Model Of Bureaucracy Selects employees on the basis of
technical skills, which helps optimize human capital. According to max
weber, selecting candidates according to their competency and skills
ensures that the right people are in the right jobs.

19. Risk Management and Decision-Making Theory – Indonesia Risk Management Professional
Association (irmapa.org)
Systems Approach - Meaning, Importance, Factors & Example | MBA Skool