Theory of Organization

Slide 1What is an Organization?
“Organizations are social entities that are goal-oriented; are designed as deliberately structured and coordinated activity systems, and are linked to the external environment” (Daft, 2004).
Amity Business School
What is an Organization?...
It is the set of propositions (body of knowledge) stemming from a definable field of study which can be termed organizations science (Kast & Rosenzweig1970).
Organization Theory
Study of organization is an applied science because the resulting knowledge is relevant to problem solving or decision making in ongoing enterprises or institutions (Kast & Rosenzweig1970).
Organization Theory Cont..
Solving problems & managing resources
The interactions, relationship and activities need to be determined, co-ordinated and ‘ managed’ by a specified group of people with in the entity
It is goal-oriented and purposeful-one or more of such goals like survival, entertainment, salvation, profit, prestige, public service and so on..
WHY ORGANISATION
Right from primitive era, man realized that co-oprative activity of living together in an interdependent manner was more better than isolated individual existence and effort.
To neutralize several of his physical and other limitations through co-operative functioning
One man can not do, two man can do. What one man can do two can do better
Organization implies sense, order, form and pattern
Profit maximization
Firms function is to transform inputs into outputs
Staple environment in which firm operates
Concerned only with changes in prices and quantities of inputs and outputs
Organization theory and Management
“Management stems from organization theory and even more applied in the sense that it focuses on the practice of management in ongoing organizations”
It is traditionally accepted and long established.
1864-1920
Bureaucracy
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When we hear the term bureaucracy, we think of inefficiency and “red tape”, incompetence and ineffectiveness. However, when German sociologist Max Weber proposed the idea of bureaucratic organizations, monarchies were associated with these problems. Bureaucracy literally means to rule from a desk or office. In a bureaucracy, people would lead by virtue of rational-legal authority—from knowledge, expertise, and experience.
6. Recorded in writing
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The aim of bureaucracy is to achieve an organization’s goals in the most efficient way possible.
ELEMENT OF BUREAUCRACY
Very formalized rule and regulation
Tasks that are grouped into functional departments
Centralized authority
Frederick W. Taylor
Frederick Taylor is known today as the "father of scientific management.”
Frederick W. Taylor 1856-1915
the best, most efficient ways
“Seat-of-the Pants” Management
Before scientific management, organizational decision making could best be described as ‘seat-of-the-pants.” Decisions were made haphazardly with no standardization of procedures, systematic study, or collection of information. In contrast, scientific management thoroughly studied and tested different work methods to identify the best, most efficient ways to complete a job.
Scientific Management
An approach that emphasizes the scientific study of work in order to improve worker efficiency.
Taylor’s Four
Management Principles
Develop a science for each element of a man’s work,
which replaces the old rule-of-thumb method.
Scientifically select and then train, teach, and
develop the workman.
Cooperate with the men to insure all work is done in
accordance with the principles of the science.
There is almost equal division of the work and the
responsibility between management and workmen.
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Frederick W. Taylor, the “father of scientific management,” spent three years to improve output of workers who were deliberately restricting output. His principles are described on this slide.
Taylor’s key ideas have stood the test of time. These include:
using systematic analysis to identify the best methods
scientifically selecting, training, and developing workers
promoting cooperation between management and labor
developing standardized approaches and tools
setting specific tasks or goals and then rewarding workers with financial incentives
giving workers shorter work hours and frequent breaks
Administrative Theory
An approach that focuses on principles that can be used by managers to co-odinate the internal activity system.
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Henri Fayol is best known for developing five functions of managers and 14 principles of management, as well as his belief that management could and should be taught to others.
The five functions of successful management are: planning, organizing, coordinating, commanding, and controlling.
His principles of effective management are shown on this slide.
Impersonal, mechanical….Organisation is a social system.
Primary focus is on work and the economic needs of workers….Focus is on small groups, on emotional and human qualities.
Refinements In Neoclassical….
Maximize rewards, emphasis on order and rationality….Emphasis on personal security and social needs of workers while achieving organizational goals
Authoritarian practice …. democratic practice
Human Relations Management
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Scientific management focuses on improving the efficiency of manufacturing facilities and their workers. Bureaucratic management focuses on using knowledge, fairness, and logical rules to increate the organization’s efficiency. Administrative management focuses on how and what managers should do in their jobs.
In contrast, the human relations approach to management focuses on the psychological and social aspects of work. People are valuable organizational resources whose needs are important.
Human Relations Theory
A movement in management in thinking and practice that emphasized satisfaction of employees basic needs as the key to increased worker productivity.
Human Relations
Aimed to understand how psychological and social processes interact with the work situation to influence performance
Hawthorne Studies
Hawthorne Effect - workers perform and react differently when researchers observe them
Argued that managers should stress primarily employee welfare, motivation, and communication
Personalities
Social needs have precedence over economic needs
Psychological and social processes influence performance
Maslow’s hierarchy of need.
Research overturned the simplistic belief that happy workers are more productive
Key concepts
It emphasizes scientific research(into various disciplines such as psychology, sociology, anthropology, economics) as the basis for developing theories about human behavior in organizations that can used to develop practical guidelines for managers.
QUANTITATIVE APPROACH
It tries to increase decision –effectiveness through the use of sophisticated mathematical models and statistical methods
Operations management
SYSTEM APPROACH
It tries to solve problems by diagnosing them within a frame work of inputs, transformation processes, outputs and feedback.
It also emphasizes looking at forest rather than trees
CONTINGENCY (SITUATIONAL) APPROACH
Appropriate managerial action depends on the particular parameters of the situation
MODERN MANAGEMENT THEORY
Mary Parker Follett
Human factor is the most important factor of the organisation
Group standards are highly effective in establishing individual worker output
Happy employees are productive workers
Special attention causes people to increase their efforts
Exchange Theory
According to Bennis, the essential element of exchange theories is that they view the operation of an organization as the establishment of a balance or equilibrium between the individual workers and the formal organization. Both parties give something to the other end and in turn, receive something in return for what they have given.
All relationships have give and take, although the balance of this exchange is not always equal.
Group Theories
The group theories are those which take the point of view that association and human affiliation are primary work motivators, and that the degree of cooperation and cohesiveness in one’s primary group is very critical to a successful organization. Mayo, of course, was probably among the first to emphasize the importance of viewing any organization as a social system, rather than as an economic system.
Group Theories….
To Mayo, the essential element is the interaction between the organization and its members was that of cooperation. However, in order for such cooperation to take place, management has to be made aware of the importance of social aspects of work and its influence on the success of the organization.
Group Theories
Likert’s theory is very similar, in that it also emphasizes the importance of a cohesive primary work group, but Likert feels that cooperation between groups can be accomplished by what he has called “Linking Pins” rather than by having to train or convince all of management of the importance of social work group forces. The Linking Pin concept simply means that there should be at least one member of any organization who is also a member of the organizational unit immediately higher in the organizational hierarchy.
Group Theories…
In groups, people tend to be more extreme in their decisions.
People who tend to take risky decisions will make riskier decisions in a group as the risk is shared (risky shift).
People who are more conservative will tend to make very conservative decisions as they take on the persona of the group and try to protect them from the effects of any risky decisions.
Value Theories…
Value theory encompasses a range of approaches to understanding how, why, and to what degree humans should value things, whether the thing is a person, idea, object, or anything else.
These theories investigate how people positively and negatively value things and concepts, the reasons they use in making their evaluations, and the scope of applications of legitimate evaluations across the social world. When put into practice, these views are meant to explain our views of the good.
Value Theories….
At the general level, there is a difference between moral and natural goods. Moral goods are those that have to do with the conduct of persons, usually leading to praise or blame. Natural goods, on the other hand, have to do with objects, not persons. For example, to say that "Mary is a morally good person" might involve a different sense of "good" than that in the sentence "A banana split is good."
Value Theories….
Ethics tend to be more interested in moral goods than natural goods, while economics tends to be more interested in the reverse. However, both moral and natural goods are equally interesting to goodness and value theory, which is more general in scope.
Structural Theory
A structural theory may be defined as one which tends to organize a set of propositions—and, in the realm of the natural sciences, a set of observations to which they refer—as a whole made up of interdependent parts. A structure may be defined as a functional whole presiding over a system of transformations and governed by self-regulating mechanisms.
Situational Theory
Situational leadership theories in organizational studies are a type of leadership theory, leadership style, and leadership model that presumes that different leadership styles are better in different situations, and that leaders must be flexible enough to adapt their style to the situation they are in.
Situational Theory

Theory of Organization

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