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Organization -theory

• Theory is a set of inter related
concepts, definitions & propositions
that present a systematic view of a
• It also specifies the relationship
among variables with purpose of
explaining and predicting the
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
• 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
• 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
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
• 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
• 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
• 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
• 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
• 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
• Lacks unified approach
• W.G.scott.-suffers from
incompleteness , a short sighted
perspective, and lack of integration
among many facets of the human
• 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
• 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
• He also proposed a theory of contributions
inducements or incentives for satisfaction
and equilibrium .this theory has greatly
influenced the later theories of motivation
• Open system considers organization
environmental interface.
• Dynamic & adaptive
• A multilevel multi dimensional approach
• Both micro and macro level aspects are
• 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
• It fills an important lacuna of the systems
theory by spelling out relationship between
organization and its environment
Comparative view of organization
• See p/69 of study material
• p/44 for formal & informal
• 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