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The Nature of Organizational Theory
(Management Theory)
An organization is a collection of people working together under a division of labor and a hierarchy of authority to achieve a common goal. Continuously working together under authority toward a goal implies management. The activities of organized people don’t just happen, but they are managed.
Organizational theory is the study of organizational structure. And since all science has as its aim, the understanding, prediction, and control of an end, organizational theory is the process of creating knowledge to understand organizational structure so that we can predict and control organizational effectiveness or productivity by designing organizations.
There are four major contributing theories of organizations and management, namely: 1. Classical Theory.
- Human Relations Theory.
- Contingency/decision theory, and
- Modern Systems Theory. 1. Classical Theory: (Scientific management theory) ……………………………………….
Scientific management has been thought of broadly as the application of the scientific method of study, analysis, and problem solving to the organizational problems.
Scientific management assumptions:
- Improved practice will come from the application of the scientific method of analysis to organizational problems.
- The good worker is viewed as one who accepts orders, but does not initiate actions.
Elements of the classical theory:
There are four main elements determined by the classical theory:
- Principles of management.
- Concepts of line and staff.
- Committees.
- Functions of management.
1) Principles of management:
A principle of management is simply something seen as fundamental.
These principles include:
- Division of work (specialization) which gives higher productivity.
- Authority and responsibility : Authority is the right to give orders, while Responsibility is the obligation that individuals have for their
actions.
3. Discipline: There must be respect for, and obedience to, the rules and objectives of the organization. 4. Unity of command: Each member should receive orders from (and responsible to) one supervisor to reduce confusion and conflict. 5. Unity of direction: The organization is effective when members work together toward the same objectives. 6. Subordination of individual interest to general interest: The interests of one employee (or group of employees) should not prevail over that of the organization. 7. Remuneration of personnel: Pay should be fair and good performance should be rewarded. 8. Centralization: Good balance should be found between
centralization and decentralization.
4) Functions of management:
One of the most durable contributions of the classical theory is the study of management as a set of functions.
There have been many opinions of which management functions are important.
Management functions are classified into: planning, organizing, directing, and controlling, or planning, organizing, staffing, directing and controlling.
Fig. (3): Classical management functions.
Limitations of the scientific theory:
The classical view of organizations (and man) focused on structure, order, the formal organization, economic factors, and objective rationality.
It ignored factors such as individual freedom, motivation, consideration of the environment in which the organization functions.
2. Human Relations Theory:
(Neoclassical theory)
Neoclassical theory was built on the base of classical theory.
Assumption of the human relations theory: The psychological and social aspects of the worker as an individual and his work group ought to be emphasized.
The organization can be defined as "a group of persons with a common objective."
Elements of neoclassical theory:
- Emphasizing differences among individuals and as a result the ways of motivating people are different.
- Emphasizing the importance of the social aspects of the informal organizations that exists within the structure of the formal organizations.
- Emphasizing the importance of participative management and decision making.
Limitation of the theory:
- The major limitation is that many of the studies upon which the theory is based have been poorly designed.
- Limited view of human motivation.
- No consideration of the environment in which organization function.
3. Contingency/decision theory:
A number of writers in the 1960s focused on the relationship between the organization and its environment particularly in regard to technology.
Open system: Is one that interacts with the objects in its environment. ( i.e. the system which receives input from the environment and sends back output).
Closed system: Is one complete within itself, neither receiving from nor contributing to any environment.
Input (structure): Refers to the setting and the resources that are available to be utilized (processed) to achieve the end result.
Process: Refers to the actual activities carried out to achieve the end results.
Output: Refers to the results of the activities performed throughout the process.
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Systems Model of Management Systems Model of Management
Transformation (process through management functions )
environment
output to other systems
organizational goals & output
OutputsOutputs
OutputsOutputs
environment
output from other systems
aims & organizational objectives
Inputs Inputs
InputsInputs
FeedbackFeedback^ (Measure of Achievement)(Measure of Achievement)
Fig (4): The elements of the system
The chief characteristics of a system model:
- The system has three main parts: Input, process, and output.
- The nature of the central processes is prescribed by the desired goals.
- The environment places constrains on the system because it determine what materials are available as well as what happens to
the finished product.
- There must be a control mechanism which measures the actual
output against the desired output, and corrects the deviations.
- There are alternative processes in order to cope (adapt) with
variation (i.e., flexibility is required).
