Organization Theory

Organization -theory T.VENKATARAMANAN.FICWA.FCS

MEANING OF THEORY • Theory is a set of inter related concepts, definitions & propositions that present a systematic view of a phenomena. • It also specifies the relationship among variables with purpose of explaining and predicting the phenomena

According to D.S.Pugh . 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 1)classical theory 2)neo classical theory 3)bureaucratic theory 4)systems theory 5)contigency 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. They are predominantly descriptive and predictive in nature

Classical theory • Classical theory is the beginning of the systematic study of the organization • It deals with the anatomy of formal organizations.(p/44) 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

Classical theory continued • 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 scientific management. Taylor's scientific management is often called –physiological organization theory or machine theory-his associates gave a rigid machine model of organization and concentrated on production

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 w His philosophy can be summed up in the following words 1)Management is a science and not a rule of thumb. 2 )production is improved by harmony and cooperation and not by discord. 3)Team and team spirit and not a group of individuals 4)The goal is maximization of output and not restriction 5)Production improves by a) selection of men and trg .b)the best method of doing a job c)Appropriate tools. d)motivation. And e)fair wages.

Other contributors • Sheldon ,mooney urwick and gullick • Sheldon introduced the concept of human organization, 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 • All the above have contributed to the theory of administration

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 0n 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

The effect • As a result of the approaches , the classical design of the organization has undergone a number of changes • Flat structure. • Decentralization allowing autonomy and initiative at lower levels. • Existence of informal organization (p/36)and its” interaction with formal organization

criticism • Lacks unified approach • W.G.scott.-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.

Organization as a system • 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 .they are 1) closed systems 2) open systems .An open system inter acts with the environment. a closed system does not. A living system is a open system and all nonliving systems are closed system.

Chester .I. Bernard • 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

Comparative view of organization theories • See p/69 of study material • p/44 for formal & informal organization • Job-unit role-group • Authority Power • Accountability status • Responsibility Politics

For a change • • • • • •

Do not work for money Make money work for u Think how you can do it. Do not work for organizations Make organization work for you Think how you can make it