Some of the most popular organizational theories are: 1. Classical Approach and Theory 2. The Neo-Classical Approach or Human Relations Approach 3. Systems Approach 4. Contingency Approach 5. Human Relations Approach
6. Systems Theory 7. The Modern Theories 8. Simon’s Theory of Organisation 9. Koontz and O’Donnell Theory 10. Graicuna’s Theory of Relationship or French Management Theory 11. Multivariate Approach.
Organizational Theory: Classical Theory, Neo-Classical Theory, Modern Theories, Simon’s Theory and More…
Organizational Theory – Top 4 Approaches: Classical Approach, Neo-Classical Approach, Systems Approach and Contingency Approach
There are many approaches to the study of organisations. However, we will distinguish only three major approaches to organisations for our purpose.
(1) Classical Approach:
It emphasizes the structural factors and the functions or activities to achieve the main objectives. Once the activities are known, we can have individual jobs, sections, departments, etc. Stress is laid on specialisation and co-ordination. Chain of command facilitates cso-ordination and communication; principles or rules of organisation act as criteria in developing sound organisation.
The classical theory rests on four key pillars:
(a) Division of labour,
(b) Scalar and functional processes,
(c) Structure, and
(d) Span of control.
(a) The division of labour is the cornerstone among the four elements. Other elements flow as corollaries.
(b) The scalar and functional processes deal with vertical and horizontal growth of the organisation. The scalar process refers to the growth of the chain of command, the delegation of authority and responsibility, unity of command, and the obligation to report.
(c) Structure is the logical relationship of functions in an organisation, arranged to achieve company objectives efficiently. The line and the staff are the two basic structures.
(d) The span of control concept relates to the number of subordinates a manager can effectively supervise. It governs the shape of the structure. Wide span gives a flat structure- short span yields a tall structure.
The classical theory of organisation has relevant insights into the nature of organisation, but the value of this theory is limited by its narrow concentration on the anatomy of formal organisation only and its gross negligence of the interplay of individual personality, informal or social groups, intra- organisational conflicts and its discounting of contributions of the behavioural sciences in general.
The classical theory (Theory X) views ‘organisation’ as a structure. The structure of formal organisation always centres around work (not around people). Management actions, policies and procedures under the classical approach reflect a Theory X view of man. Such a view of man as an economic being results in a carrot (money) and stick (threat of unemployment) approach to motivation.
The classical approach concentrated only on the formal organisation and ignored the importance of human values and informal or social organisation. The classical approach believed in bureaucracy and authoritarian or autocratic managerial style. Ultimately it provided a de humanised organisation structure devoid of flexibility or adaptability.
Under the classical approach an organisation is designed on the basis of some rational rules or principles, such as:
i. Division of labour;
ii. Unity of command;
iii. Scalar chain;
iv. Span of control, delegation;
v. Hierarchical (pyramid) type of organisation structure; and
vi. Line and staff.
The classical organisation structure, however, has a number of disadvantages, such as:
i. Ignoring human behaviour and human relations;
ii. Absence of rapid and free channels of communication;
iii. Discounting innovation, initiative and change;
iv. Lack of flexibility and adaptability;
v. Tight control through force or coercion;
vi. Absence of intrinsic rewards; and
vii. Giving greater importance to the job and not the job holder.
(2) The Neo-Classical Approach:
The neo-classical approach (Theory Y) reflects the human relations movement as well as the behavioural science approach. It studies motives, supervision, group and intergroup behaviours. It points out that effective co-ordination of activities is impossible without the willing co-operation of people and such co-operation cannot be automatically secured or ordered.
It has to be consciously developed. The neo-classical approach is supported by assumption of men under Theory Y. The neo-classical approach wants people-oriented organisation structure which will integrate informal and formal organisation. We can have democratic participative managerial style and organisational set up.
In this manner we have humanised organisation structure. The neo-classical organisation theory defines an organisation as a group of persons with a common objective. It emphasizes social factors at work (or the informal organisation) and emotions. Thus we have a people-centred organisation structure. The classical theory emphasizes economic man motivation.
The neo-classical movement introduced two new concepts in organisation, viz., the individual and the work group. Interpersonal relations and the need for two-way communications in the organisation demanded special attention in developing a humanised organisation structure.
Contribution of Neo-Classical Theory:
The neo-classical theory introduced modification of the pillars of classical doctrine and specially emphasized the role of informal organisation.
(a) The Division of Labour:
It received criticism from industrial psychologists. Fatigue and monotony were caused by specialisation. The neo-classical school has developed a large body of theory relating to motivation, co-ordination and leadership.
The classical theory assumed perfection in the processes of delegation and functionalisation. The neo-classical school points out that human problems are caused by imperfections in the way these processes are handled.
(b) Structure:
It provides endless avenues of analysis for the neo-classical theory of organisation. The criticism centres round frictions which appear internally among people performing different functions. Line-staff frictions received special attention.
Participation, junior boards, joint committees, recognition of human dignity and better communications were suggested by neo-classical theory to remove conflicts and secure harmony.
(c) Span of Control:
According to the neo-classical theory, rigid span of control (4 to 6) is silly. Individual differences in managerial ability, the type of people and functions supervised and the extent of communication effectiveness are some of the determinants of span of control. We have no universally applicable ratio for span of control.
A short span or a wide span may be suitable depending upon the situation. Due to individual and organisational differences, sometimes one is better than the other.
(d) Informal Organisations:
They act as agencies of social control. They have status and communication systems peculiar to themselves. They resist change. They have informal leaders. Group attitudes and group behaviour cannot be ignored by management.
(3) Systems Approach:
The modern theory considers organisation as a process or a dynamic concept. It defines organisation as a structured process in which individuals interact (act and react) for objectives. An organisation is an open adaptive system with its own environment. Such a systems approach acknowledges environmental influences (which were denied by the classical theory).
It emphasizes adaptability (ability to respond to change) as well as efficiency. The open system recognises that change is constant but often unpredictable. Hence, rigid rules and role relations cannot deal with uncertain and uncontrollable events. Similarly an organisation should be designed to emphasize human values and the meaning of the individual and his or her work.
It seems proper to define an organisation as a social system which is organised for achieving a specific type of goal; the attainment of that goal is at the same time a performance of a type of function on behalf of a more inclusive system, the society.
It is also recognised that an organisation as an open system need not be merely adaptive but anticipate, direct and help to create forces for change through appropriate leadership. An organisation influences or is influenced by its surrounding environment.
The systems approach lays emphasis on interrelationship and interdependence of all the components or sub-systems and management should integrate and co-ordinate all the sub-systems of an organisation.
Organisation as an open and adaptable system has five parts or components:
i. The individual;
ii. The formal structure;
iii. The group or informal organisation;
iv. Status and role patterns; and
v. The physical environment of work.
These parts are woven into a shape or configuration called organisation system.
The linking processes are:
i. Communication- formal, informal, vertical-horizontal, line-staff;
ii. The concept of balance; and
iii. The decision process.
The organisation system has three goals:
i. Growth;
ii. Stability; and
iii. Interactions among individuals and group and interactions with the environment.
Under the systems approach an organisation has three main components:
i. Individuals;
ii. Formal organisation; and
iii. Informal organisation (social group).
(4) Contingency Approach:
It has systems orientation with further modifications. It wants the emphasis to be on the need to adapt the organisation to the demands of technology, the need for innovation, generating from environmental and decision-making uncertainty.
Contingency approach points out that all types of organisation and all types of leadership can work under certain circumstances. Situational factor plays an important role in the designing of an appropriate organisation structure and suitable managerial style.
Environmental factors are responsible for the right use of principles and techniques of management. Internal environment covers structure, processes and technology. Eternal environment covers economic, social, technological, political and legal factors.
Appropriate management technique is governed by environmental or situational factors. Hence, we have no such universal principles and techniques of organisation and management as advocated by classical theory of organisation and management.
The management process path was split into the behavioural and quantitative paths. Quantitative approach has its roots in the scientific management movement which predates process approach. During 1960s the quantitative approach was indicated by the techniques of operations research.
Since 1970 the quantitative approach adopted a broader and refined perspective of management science.
Management Science Includes:
(a) Quantitative decision techniques;
(b) Model building;
(c) Operations management; and
(d) Computerised information system.
Thus, we have a more broadly based management theory.
At first the behavioural path was indicated by human relations. Since 1960 and by 1970 behavioural approach has expanded into broad based organisational behaviour approach which relies heavily on the behavioural sciences like psychology, sociology, etc. Organisational behaviour is the result of the interaction between the human resources and the formal organisation structure.
The systems approach was developed after 1960 and it took up where the process approach left off in unifying management theory. The systems approach has integrated management science and behavioural science approaches and it stresses the interrelatedness and interdependency of the parts or subsystems to the whole or the system.
Systems approach acts as a magnet to attract the quantitative and behavioural approaches to management. Today both management science as well as the organisational behaviour are based on the systems approach. The formal organisation is now considered as a system consisting of structure, processes and technology, and the human being.
At present it is becoming more and more apparent that neither the quantitative or management science approach nor behavioural sciences approach have all answers for all situations. Open and adaptive system-based theory with contingency approach can solve the quantitative behavioural deadlock or dilemma.
Contingency path seems better suited to lead management and organisation out of the present theory jungle. Lawrence and Lorsch have advocated contingency models of organisation structure. No single organisation design or structure can be considered as the best for all situations.
For example, bureaucracy may work best in a stable situation but it is unsuitable in a highly dynamic situation. Democratic and participative management structure works best in a dynamic situation. Technology, economic and social conditions, and human resources are important variables to be considered in evolving a contingent organisation design.
Organizational Theory – Classical Theory, Human Relation Approach, Systems Theory and Contingency Approach
The following are the theories of an organization:
1. Classical theory
2. Human relations approach
3. Systems theory
4. Contingency approach
1. Classical Theory:
i. Chief aim of the organization is productivity.
ii. It can be accomplished by a formal organization structure.
iii. The human resources have to work like cog in the machine. They have to be fitted into the organization.
iv. It is based on –
a. Rules and regulation.
b. Division of labour.
c. Role standardization.
d. Task assignment and responsibility.
e. Hierarchy of authority.
f. Control through hierarchy.
g. Order and discipline.
h. Observance of few other principles.
Merits and Demerits of Classical Theory:
Merits:
i. Prevention of over-lapping of authority.
ii. Helping workers with guidance and direction.
iii. Rules and regulations freeing the organization from personal bias, favoritism and nepotism.
iv. Monetary motivation helping workers to earn more.
v. Linking reward to productivity removes the heart burning among employees.
vi. Ensuring maximum prosperity for the employer and for the employees.
Demerits:
i. Ignoring human aspect of employees. Employees work like cogs in a machine.
ii. Blind application of principles of organization without considering specific circumstances produces unsatisfactory results.
iii. Ignoring the diversity in human behaviour.
iv. Static concept not considering interactions that take place among the different aspects of the organization.
2. Human Relation Approach:
Features:
i. Worker is a human being and is a member of a team.
ii. Non-economic reward plays a significant role in making him a willing worker.
iii. Contribution to output is determined as much by his physical capacity as his willingness to work.
iv. Formation of informal groups due to social nature of workers.
v. A manager should encourage –
a. Promoting formation of informal groups.
b. Using them as supplementary force to strengthen the formal organization.
c. Building both formal and informal channels of communication with the human resources.
d. Pursuing a relationship-oriented rather than task-oriented style of leadership.
e. Workers participation result in more output from workers.
Merits and Demerits of Human Relations Approach:
Merits:
i. It touches a responsive cord. It adds a new dimension to the organization.
ii. It provides the key to a manager’s understanding of a situation when monetary incentive fails.
iii. It provides a virtual check on militant trade union movement.
Demerits:
i. Human relations alone do not lead to increased productivity.
ii. The importance of financial incentives cannot be ignored. Money still continues to be a powerful motivator in under developed countries.
iii. There is a scope for manipulation.
iv. Promoting informal group is fraught with dangers.
v. This approach displays a lack of awareness of social, technological and other influence of the environment.
3. Systems Theory:
An organization is a system which is partly economic, partly technical and partly social.
i. It consists of parts, each of which is a sub-system.
ii. The organization is itself part of a larger system.
iii. There are inter-relationship among the parts of each system so that a change in one part leads to change in another.
4. Contingency Approach:
According to this approach, there is no one best type of organization which suits all enterprises. Different types of structures, processes and approaches are needed for different kinds of environments as well as internal situations. A large number of variables like goals, attitudes, sense of values, technology and conditions of market determine the structure. Organization should be so designed that, it is flexible enough to respond to any change in the environment.
Organizational Theory – Classical Theory, Neo-Classical Theory and Modern Theories
Organisation is a necessary social invention. It is as old as civilization. It reflects man’s collective and coordinated efforts undertaken for collective goals achievement. As organisation is rooted in the dynamics of development of civilization and society, it has passed through several experiments, tests, observations and conditions. In brief, according to William R. Spriegel, it has been hammered out of the fiery furnace of experience.
Hence, the very philosophy or the guiding principles of organisation has been modified, redefined and reconceptualised to suit the changing behaviour of society or human being. This has resulted in a number of approaches to organisation. These approaches are termed as the theories of organisation.
The main theories of organisation are generally put into the following categories:
1. The classical theory.
2. The neo-classical theory.
3. The modern theories.
1. The Classical Theory:
The classical theory of organisation has been regarded as the oldest theory of organisation. It is also termed as the traditional theory. Adam Smith is considered as the earliest contributor of this theory. Further, several other thinkers and authors have contributed significantly to the conceptualisation of this theory.
Of them, Henry Fayol is regarded as very important because he is the first who has propounded the principles of management. Urwick, Mooney and Reiley, Beach and Louis A. Allen have also contributed significantly. Similarly, after Fayol, Frederick W. Taylor also propounded the principles of scientific management.
The classical theory is based on division of work, delegation of authority and responsibility. The classical theory of organisation is guided by several principles discovered by this school of thought. These principles are – (Principles of) objectives, specialisation, coordination, authority, responsibility, efficiency, unity of command, span of management and balance.
According to Ernest Dale, “The classical principles are designed to provide guidance for the organiser, the manager who must answer such practical questions as – How should the work be divided by departments and individuals? How much authority to make decisions should be given to each jobholder? What means of coordination should be provided?”
The classical theory of organisation has important characteristics. First, it is based on division of work. Second, it is concerned with formal organisation not with informal organisation. Third, it is based on coordination of efforts of a group. Fourth, it is fundamentally based on objectives. Fifth, it is characterised by determination of responsibility and delegation of authority. Sixth, it believes in specialisation. Seventh, it is based on span of control and unity of command backed by the principle of balance. Eighth, it is essentially centralised in nature.
In spite of several features, the classical theory of organisation has been severely criticised. The theory has been attacked mainly by the behavioural scientists. First, this theory is too broad to provide much help in the actual work of organising. Second, this theory is too dogmatic in its approach and attitudes. Third, it is based on authoritarian approach. Fourth, it does not pay attention on the human element in an organisation. Fifth, it gives one way communication instead of two-way communication.
Sixth, it undervalues the impact of outside forces on the behaviour of individuals. Seventh, it ignores the role of informal groups. Eighth, the motivational assumptions underlying the theory are incomplete and inaccurate. Ninth, this theory represents “only a quite small part of the total theory relevant to organisation behaviour.” Tenth, according to Simon, some of the classical principles are “no more than proverbs.” Eleventh, the generalisation of the theory has not been tested by rigorous scientific methods.
In spite of severe criticism, the classical theory of organisation continues to command wide welcome by the management experts. It makes a realistic analysis of practical problems faced by managers.
2. Neo-Classical Theory:
The neo-classical theory is an improvement over the classical theory of organisation. It does not supplant but supplement the classical approach to organisation. This theory is also known as the human relations theory or behavioural theory of organisation. The void which left unfilled by the classical approach has been, to a greater extent, filled up by the neo-classical approach.
Thus, it makes an attempt to remove the deficiencies of classical theory. For example, while classical theory has laid emphasis on the inanimate aspects of organisation, the neo-classical theory lays emphasis on the animate aspects. It may be noted that the whole edifice of this theory has been built on the foundation of classical theory.
The neo-classical school of thought consists of industrial sociologists, social psychologists and cultural anthropologists. The prominent contributors of this school are – Elton Mayo, Chester I. Barnard, E. Wight Bakke, Chris Argyris, Douglas McGregor and Rensis Likert.
The neo-classical theory is basically associated with human relations movement. This theory advocates that in the process of designing a structure of organisation the people who make up the organisation and their behaviour should be taken into account. Accordingly, the people who make up the organisation are influenced and motivated by several psychological, sociological and other forces besides monetary factor.
Hence, the people working in the organisation should not be considered as a cog in the machine. They should be motivated and encouraged to become active participants in the productive process of organisation. The exponents of this theory have highlighted the role of committee and effective two-way communication. They have contributed significantly to the development of organisational theories.
The neo-classical theory has limitations. This theory fails to produce an integrated approach to organisation. Some of the critics are of the opinion that this theory is ‘more confusing than helpful.’ It is also regarded incomplete. It has a short-sighted perspective.
3. Modern Theories:
Modern theories are of recent origin. These theories do not represent a unified body of thought, rather a combination of several aspects.
The following main theories are put into the category of modern theories of organisation:
i. Decision-making theory, or the decision-making approach.
ii. Biological theory, or the biological approach.
iii. Mathematical theory, or the mathematical approach.
iv. Systems Theory, or the systems approach.
The decision-making approach has been developed by Herbert A. Simon. Simon considers an organisation as a decision-making structure. According to him, in any organisation, decisions are made at all levels-from top to bottom. Policy planning decisions are made at the top level whereas execution decisions are made at the lower levels.
Simon suggested that “the structure be designed through an examination of the points at which decisions must be made and the persons from whom information must be required, if decisions are to be satisfactory.” He has also “expanded the idea of hierarchy of decision-making into a method of actually structuring an organisation.”
The biological approach to organisation believes that “an organisation has many properties in common with a living organism.” It comes into existence; it then grows; it reaches a peak; then it declines; finally it dies, and it reaches to its environment where from it comes. Further, “like a biological organism it is made up of many parts that interact with each other in varying and complex ways.” This theory, thus, reveals that for an organisation to work effectively it is essential to maintain a proper balance among the constituents of organisation.
Mason Haire, in support of this idea, has developed a theory. This theory is called by him the ‘square-cube’ theory. According to Haire, as the mass of an object is cubed, its surface is only squared. He believes that something similar occurs in an organisation too. He found out “that a constant relationship continued to exist between ‘surface’ employees (those maintaining relationships with customers and others outside) and ‘insides’ employees.”
Mathematical approach reveals that with the help of mathematical tools, techniques and equipments the results of various organisational changes can be predicted to a greater extent, for example, by using computers. If computers are used, it is possible to take a very large number of variables into consideration.
But it may be observed that the variables affecting the functioning of an organisation are not only numerous but also difficult, if not impossible, to express in numbers. In order to overcome this difficulty the use of computer requires quantification. Similarly, the theory of probability has also been used to determine the size of certain groups. However, in the matters of organisation structure, it has limited use.
The systems approach advocates that an organisation is a system. It is a system in which a large number of variables interact.
In the words of Dale Ernest, “The systems approach is characterised by elements of both the organic and the mathematical theories. It is based on the idea that all organisms, including human organisations, are systems that probably follow the same rules to some extent. Therefore, an organisation should be studied not merely as a formal arrangement of superiors and subordinates or as a social system in which people influence each other, but as a total system in which the environment, the formal arrangements, the social system, and the technical systems are all constantly interacting.”
The systems approach stresses that organisation is not a static arrangement of jobs that can be captured in an organisation chart. In a real sense, organisation is a pattern or structure of “inputs, outputs, feedback, delays and flows”, of information, physical objects or materials or both. According to Dale Ernest, “if such a system is to survive, it can do so only if—after the various disturbances that are bound to occur because of external or internal changes—it settles down into a steady state in which inputs, outputs and flows are proceeding in an orderly way.”
Organizational Theory – Top 3 Theories (With Criticisms)
1. Classical Theory of Organisation:
The term classical does mean that something traditionally accepted or long established. The beginning of classical theory can be traced back to the industrial transformation during the second half of the nineteenth century. Before the industrial revolution, production was carried on by the cottage industries. These industries were producing customised products.
The changing technology and increasing population led to massive production – production of standard products. Industrial revolution led to the establishment of large-scale industries. Massive production, standard products and large-scale industrialisation created economic, social and psychological problems at the workplace.
Managements of large-scale industries created organisational forms to solve the problems at the workplace. This situation changed the work structure from the individualistic approach to the organisational form of structure. Organisational structure is building the relationships among the tasks, activities, operations, people, material, machines, etc.
Building the relationships can be done based on different approaches. One such approach is building the relationships based on mechanical approach. Mechanical approach is traditionally accepted by the classical management scientists. Thus, classical theory is the first one in the line of systematic study of the organisations.
Criticisms of the Classical Theory:
Classical organisation theory combines both psychological theory and administrative management theory. This theory was attacked from many quarters as it suffers from various limitations.
Criticisms against this theory include:
1. Unrealistic Assumptions:
The classical theory is based on certain assumptions.
The assumptions which are unrealistic are discussed hereunder:
i. Close System:
The classical theory emphasises the internal environment. It completely ignores the impact of external environment.
This theory fails to identify external environment. Therefore, this theory is incomplete and non- practicable.
ii. Static View of Organisation:
Classical theorists viewed the organisation as a static one. But we have a lot of experience that the organisations are dynamic.
iii. Human Behaviour:
The classical theory assumed that human behaviour is rational. But human behaviour is complex, irrational and difficult to predict. Thus, the assumption regarding human behaviour is unrealistic.
iv. Hierarchical Structure:
Classical theory favours narrow spans of management, too many supervisors and too many hierarchies. Consequently, the organisation structure is based on authority-responsibility-accountability relationship. This, in turn, results in superior- subordinate class conflict. Finally, the outcome of hierarchical structure is a tall structure.
2. Excessive Reliance on the Strength of Pillars:
The classical theorists excessively depend on the key pillars, viz., and division of labour, scalar functional process, structure and span of control. The neoclassical theorists attacked these key pillars.
But the neoclassical theorists criticise that bureaucracy kills individual initiativeness, creativity, innovativeness and voluntary contributions of the employees. In fact, bureaucracy results in red-tapism. Observation of rules, regulations, procedures and formalities become the main activities of the management rather than achieving the company objectives or goals.
2. Neoclassical Theory:
The classical organisation theory emphasised mainly on physiological and mechanical variables in constructing the organisation structure. The objectives of the classical organisation theory are to enhance employee efficiency and productivity. But the organisations designed based on this theory could not enhance employee efficiency and productivity. In other words, organisation structures based on this theory failed to achieve their objectives effectively.
The behavioural scientists enquired into the reasons for the failure of this theory in producing results. They investigated the human behaviour at work. They found that human behaviour is influenced by various factors other than physiological factors. These research studies generated the new dimensions of human behaviour in the organisations.
These research studies are referred to as behavioural theory of organisation, human view of organisation and human relations approach in the organisation. These approaches are also termed as neoclassical theory of organisation.
The neoclassical approach to organisational design was developed by Mary Parker Follett, Chester I Barnard and Elton Mayo and his associates.
The neoclassical theory was developed consequently upon the criticisms and reactions against the classical theory. The neoclassical approach emphasised- (i) social terms in addition to economic and technical factors and (ii) the social process of group behaviour can be understood in terms of the clinical method like the diagnosis of human organs by a medical doctor. This theory is developed to overcome the deficiencies of the classical theory.
Though this theory also supports the pillars of classical theory, it modified these factors by incorporating the informal groups, informal organisation and independent work of the employees. This theory combines both formal and informal organisations.
Criticism against Neo-Classical Theory:
i. Invalid Assumptions:
Neo-classical theory is based on certain assumptions. One of these assumptions include availability of solutions for every problem. This assumption is not valid. Thus, neo-classical theory is also based on invalid assumptions.
ii. Conflict of Interests Based on Structure:
There are certain group conflicts which are neither social nor psychological. But they are structural. Neo-classical theory is criticised for its excessive emphasis on social and psychological factors.
iii. Limited Application:
Principles developed by the neo-classical theorists are not universally applicable. They have only limited application. In fact, there is no single structure applicable to all companies. Even the same structure is not applicable to the same company in all situations.
iv. Ignorance of Environmental Factors:
It is criticised that this theory like classical theory ignored the external environmental factors in constructing this theory.
v. Absence of Total Approach:
The neo-classical theory does not have a unified and total approach. This theory is only a modification and improvement over the classical theory. Thus, it is criticised that neo-classical theory is not at all a theory by itself.
vi. Excessive Emphasis on Human Aspect:
Neo-classical theory gives more emphasis on the human behaviour in designing organisations. It is criticised that this theory ignores structural, mechanical and formal aspects.
Thus, the critics of the neo-classical theory feel that it is not a new theory, but only a modification or improvement over the classical theory.
3. Modern Organisation Theory:
Modern organisation theory has its origin from the General Systems Theory. The chief architect of this theory was Bertalanffy. This theory was developed during the early 1960s. This theory suggests two approaches, viz., systems approach and contingency approach. This theory is developed consequent upon the limitations of and criticisms against the classical and neo-classical theories.
Modem organisation theory combines social and psychological issues with the classical model. This theory is developed in the pattern of General Systems Theory.
Systems Approach:
A system is essentially a set or assemblage of things that are interconnected or interrelated or interdependent so as to form a complex whole. Kast Rosenzweig defines the term system as “an organized unitary whole composed of two or more independent parts, components or subsystems and delicated by identifiable boundaries from its environmental suprasystem.”
Systems can also be divided not only on the basis of main operative functions of a company but also on the basis of management functions like organisation systems, planning systems, directing system, controlling system, marketing functions, human resources management functions, financial management functions, operation management functions and information management functions.
Features of a System:
For the analysis of definitions of a system and its focus, we can derive the following features of a system:
i. Independent Parts:
System is a composition of several parts. All the parts are independent, interdependent and interrelated to each other. Each part is dynamic, affects all other parts and is being affected by other parts.
ii. A System is Composed of Several Sub-Systems:
Each system is composed of several sub-systems. Each sub-system is, in turn, composed of sub-sub-systems.
iii. Every System has Its Own Norms:
Though there are several systems and each system has several sub-systems, each system/sub-system can be distinguished from the others. They can be distinguished from others in terms of objectives, processes, roles, structures and norms of operations.
iv. Systems are Processors:
Systems receive inputs from the external environment and other sub-systems of the internal environment. The system processes the inputs and converts them into output and supplies the output to other sub-systems of the internal environment and to the systems in the external environment.
v. System Influences and is Influenced:
The systems are open. System influences other systems and sub-systems. In addition, all systems are influenced by other systems and sub-systems. For example, the sub-system of customer taste influences the product design and is influenced by the sub-system of technology upgradation subsystem.
vi. System Arranges the Parts in a Related Manner:
System does not simply mean a group of parts. It is a sequence of related parts. The sequence is arranged based on the purpose.
vii. Systems have Boundaries:
Every system has boundaries. Physical systems have fixed boundaries whereas social and psychological systems have flexible boundaries. Organisational system is composed of physical, social and psychological systems. Therefore, parts of the organisational system’s boundaries are fixed while the others are variable.
viii. Systems are Open and Close:
Systems are classified into two categories, viz. open system and closed system. The open systems influence and are being influenced by other systems while closed systems do not influence other systems.
The linking process takes place by building up relations, communication process, net-working process, authority, responsibility and accountability relationship, power, social relationship, team- building, decision-making process and goal formulation and achievement process.
Evaluation of Modern Organisational Theory:
The analysis of systems approach and contingency or situational approach of modem organisational theory shows that they have made significant contribution to the organisational design and structure.
The evaluation concludes that:
i. This theory has empirical and analytical base.
ii. Treats the organisation as a single and total system.
iii. Seeks interrelationships and interconnections among various sub-systems of the organisation.
iv. It clarifies or answers the questions relating to interconnections and interdependence.
v. This theory presents a holistic view. In other words, it presents the whole rather than the sum of the points.
vi. It presents the interdependency of each sub-system on the other sub-systems.
vii. It presents a realistic view of the organisation.
viii. This theory suggests open and humanistic or organic organisational system, and
ix. This theory analyses the micro sub-system of a macro system for the effective functioning of the latter. Thus, it follows the macro-micro-macro approach.
Criticism:
Despite these contributions of the modern theory, it is criticised for its shortcomings.
These criticisms include:
i. It is criticised that this theory is not lived up to its expectations it made at the initial stages;
ii. This theory failed in providing adequate and comprehensive explanation of an organisation;
iii. The initial enthusiasm could not live for long;
iv. Attempts made in this direction were just isolated but not integrative; and
v. This theory is still in the formative stage and not developed completely yet.
Organizational Theory – List of Organizational Theories: Classical Theory, Neo-Classical Theory, General System Theory and More…
1. Classical Theory of Organisation:
The propounder of this theory is dealt almost exclusively with the anatomy of formal organisation.
In this organisation has been treated like a machine and its efficiency can be increased by making each individual working in the organisation efficient.
(1) For Example F.W. Taylor emphasized on division of labour, fixing everybody’s work for the day and functional foremanship. That is why Taylor’s Scientific Management’ has been referred to as “machine theory”. Here the followers of scientific management group emphasized efficiency of lower levels of organisation.
(2) It was Henri Fayol who emphasized for the efficiency at the Higher Levels for the first time.
(3) Mooney and Reiley published ‘Onward Industry’ in 1931 in which they attempted to find organisation universals.
(4) Gullick, Oliver, Sheldon, Urwick, Weber and many others made notable contributions. All these theorists are concerned with the structure of organisations and that is why their approach is also labeled as “Structural Theory of Organisation”.
These authors treated organisations as closed systems and did not study the impact of external environment on the working of organisations.
(5) According to William G. Scott— Classical Organisation Theory is built around four key pillars, namely-
(I) Division of Labour;
(II) Scalar and Functional Process;
(III) Structure; and
(IV) Span of Control.
Mooney and Reiley regarded division of labour as the cornerstone among the four pillars of classical organisation theory. From it the other elements flow as corollaries.
For example – Scalar arid functional growth requires specialization of functions which is based on division of labour. The shape of organisation structure is determined by departmentalization based on division of labour. Finally, span of control problems result from the number of specialized functions under the jurisdiction of a manager. Further, classical administrative theory presented by Gullick and Urwick also made division of labour its central tenet.
(I) Division of Labour:
Division of Labour implies that work must be divided to obtain a clear cut specialization with a view to improve the performance of workers.
The classical authors pointed out that the division of labour has to be balanced by a unity of control. The tasks have to be broken up into components by a Central Authority in line with a Central Plan of Actions, the efforts of each work unit need to be supervised; and the various job efforts leading to the final product have to be co-ordinated. This is also called ‘Principle of Centralised Control’. The classical writers advocated the need for a single Centre of Authority and Control in the organisation.
Departmentation refers to – Grouping of various activities on some well-defined bases for the purpose of better Administrative Control and Co-ordination.
Most classical writers agreed that the departments may be created according to one or more of the four bases which are as follows:
(a) Purpose;
(b) Process;
(c) Clientele;
(d) Geographical Area.
(a) Purpose:
Departments may be created by purpose of the task. Workers who serve similar goals or sub-goals in the organisation should be attached to the same organizational unit or department. There would be as many departments in the organisation as there are goals or sub-goals.
Advantages:
Important advantages are three:
(i) It ensures the accomplishment of any given broad purpose by bringing the whole job under a single manager i.e., departmental head—with immediate control of all experts, agencies and services which are required in the performance of the work.
(ii) The manager does not have to wait for others or negotiate for their help and co-operation.
(iii) The manager can devote all his energies to get on with the job.
(b) Process:
Departmentation by process suggests that all work based on a particular process should be grouped together. This will help in making proper use of knowledge and skills available with the organisation. Thus, workers requiring the use of similar skills and procedures will be grouped together.
(c) Clientele:
All work directed to serve a specific group of clients is grouped in one department. Specialisation according to the type of clientele or customer is followed to give proper attention to clients or customers.
For instance – A big automobile service enterprise may organize its division as follows:
(i) Heavy vehile service division;
(ii) Car service division; and
(iii) Two wheeler service division.
(d) Geographical Area:
This basis of departmentation suggests that jobs performed in the same geographical area should be placed together. Here different types of jobs may fall in the same division as long as they are carried out in the same area or location.
(a) The above bases are ‘Prescriptive rather than descriptive’. They state how work should be divided rather than how work is actually divided.
(b) The actual planning of a department or division is governed by many considerations and not covered by the four bases suggested by the Classical Authors.
(c) The other factors include-
(i) Cultural factors;
(ii) Political factors;
(iii) Environmental factors; and
(iv) Availability of personnel.
(II) Scalar and Functional Process:
These processes deal with the vertical and horizontal growth of the organisation respectively.
Scalar Process:
It refers to growth of the chain of command, delegation of authority, unity of command and obligation to report. The functional process deals with the division of organisation into specialized parts or departments and the re-grouping of the parts into compatible (agreeable) units. It focuses on the horizontal evolution of the line and staff in a formal organisation.
(III) Structure:
Structure is the logical relationship of functions in an organisation arranged to complish its objectives efficiently. Structure is the vehicle for introducing logical and consistent relationships among the diverse functions which comprise the organisation.
Classical writers usually emphasizes two basic structures – (i) The Line; and (ii) The Staff. However, “Committees” fall quite readily into the preview of structural considerations.
(IV) Span of Control:
Means the number of sub-ordinates a manager can effectively supervise.
Graicunas:
First of all elaborated that there are numerical limitations to the subordinates a manager can control. Span of Control has significance in part for the shape of the organisation which evolves through growth.
Wide Span:
Yields a flat structure and small plan results in tall structure. The concept of span of control directs attention to the complexity of Human and Functional Inter-relationships in an organisation.
Appraisal or Criticism of Classical Theory:
The value of classical theory is limited by its narrow concentration on the formal anatomy of organisation.
Its important criticisms are as follows:
(1) Very narrow approach as it concentrated only on line and staff structures – Classical approach attempted to prescribe the ‘right’ organizational structure. But they did not explore why certain forms of organizational structure are more effective than others.
(2) While critising J.G.March and H.Simon in his book. ‘Organisations’, John Wiley, New York, 1959 page 33, has said that-Little attention was paid to the decision-making processes.” The constraints placed on the ‘man’ by his limitations as a complex information processing system were also ignored.
(3) Bennis feels that the focus of Classical Theory is on “Organisation without People”. The interplay of individual personality, informal groups and inter- organisational conflicts in the formal structure appears to be neglected by the classical writers
(4) They have make unrealistic assumptions for the smooth running of organisations ignoring the complexity of human behaviour. They lack sensitivity to the behavioural dimensions of an organisation. They take human beings in the organisation as an inert (inactive, slow, dull) instrument performing the task assigned to them.
(5) They have ignored the Socio-Psychological and Motivational Aspects of Human Behaviour. In this there is a tendency to view personnel as given rather than as a variable in this organisation.
(6) Classical theorists have viewed organisation as a closed system—i.e., having no interaction with the environment. This assumption is totally unrealistic. A modern organisation is an open dynamic system which has interaction with the environment.
2. Neo-Classical Organisation Theory Or Human Relations Approach:
This theory was conducted by George Elton Mayo and his associates at the Hawthorne Works of Western Electric Company, Chicago during 1927-32. They discovered that the real cause of human behaviour is somewhat more than mere physiological variables. These findings helped to focus attention on human beings in organisations.
Thus, the neo-classical approach includes a systematic treatment of the informal organisation showing its influence on the formal structure. Therefore, the major contribution of this school is the introduction of behavioural sciences in an integrated manner into the theory of organisation.
Main Propositions or Characteristics of the Neo-Classical Theory:
The main propositions of an organisation under neo-classical theory are as follows:
(1) It is a social system composed of numerous interacting parts,
(2) Informal organisations exist within the formal organisation, both are affected by and affect each other.
(3) Human being is interdependent and his behaviour can be predicted in terms of social factors at work.
(4) Many Socio-psychological factors, operate, to motivate human beings at work as motivation is a complex process.
(5) There is a need to reconcile the goals of the individual, with those of the organisation. A conflict between organizational and individual goals often exists.
(6) Team work is essential for higher productivity.
Improvement and Modifications over Classical Structure:
Neo-classical theorists offer the following organizational design which is evolved by modification of classical structure:
(1) Flat Structure
(2) Decentralisation
(3) Informal Organisation.
(1) Flat Structure:
Classical theory suggested “Tall-structure” but neo-classical theory suggested “Flat structure” These two structures are extensions of the Concept of Span of Control of Classical Theory.
Tall structure with narrow span of control creates the following problems:
(a) Lack of effective communication;
(b) Motivation problem; and
(c) Greater number of levels.
In a flat structure communication chain is shorter and is more suitable for motivating human beings in the organisation as it is possible to give autonomy to the people.
(2) Decentralisation:
The neo-classical writers advocate decentralized organized structure which is closely related to flat structure. It allows initiative and autonomy at the lower levels. It also develops the people to occupy higher positions in the future.
(3) Informal Organisation:
Neo-classists felt that both formal and informal organisations must be studied to understand the behaviour of organisations fully. Informal organisation was not discussed by the classical theorists. Formal organisation represents the deliberate intentions of top management for the purpose of inter-actions among the people.
But it has many limitations. Therefore, informal organisation is created to plug the loopholes of formal organisation and so satisfy the social and psychological needs of people. It should be used by the management for effective and speedy communication and for overcoming resistance to change on the part of the workers. Thus, both formal and informal organisations are interdependent upon each other.
Appraisal of Neo-Classical Theory:
Neo-classical school has given great importance to “Informal Organisations”. The school was of this opinion that this organisation involves Listening to Opinions, expressed for the group by the informal leaders—allowing group participation in decision-making and controlling the activities by prompt release of accurate information.
The neo-classists introduced behavioural science in the study of organizational functioning. This is really a valuable contribution to the organisation.
Defects – But it suffers from (a) incompleteness; (b) a short sighted perspective; and (c) lack of integration among the many facets of human behaviour studied by it.
Criticism – This theory has been criticized on the ground that-it is nothing more than “a triffling body of empirical and descriptive information as it was mainly based on Hawthorne Studies.”
3. Modern Organisation Theory or General System Theory:
As propounded by Kenneth E. Boulding “General System Theory—the skeleton of a science “Management Science”.
Modern organisation theory represents a frontier of research which has great significance for management. It emphasises study of organisation as a whole. It concentrates on the working of various sub-systems on the survival and growth of the organisation.
Further, modern organisation theory treats organisation as a system of mutually dependent variables. The districtive qualities of modern organisation theory are its (a) conceptual analytical base; (b) its reliance on empirical research data and above all; (c) its integrating nature. These qualities are framed in a philosophy which accepts the premise that the only meaningful way to study organisation is to study it as a system.
Modern organisation theory asks a range of inter-related questions which are not seriously considered by the classical and neo-classical theories.
The important questions are:
(1) What are the strategic parts of the system?
(2) What is the nature of their mutual dependency?
(3) What are the main processes in the system which link the parts together and facilitate their adjustment to each other?
(4) What are the goals sought by the system?
Parts of the System and their Interdependency:
W.G. Scott – has discussed five parts of the system:
They are as follows:
(1) Individual;
(2) Formal Organisation;
(3) Informal Organisation;
(4) Fusion Process; and
(5) Physical Setting.
(1) Individual – Individual and his personality structure (motives and attitudes) is the basic part of the system.
(2) Formal Oraganisation – It is the inter-related pattern of jobs which make up the structure of a system.
There is link between the goals of the organisation and those of organizational members. Modern organisation theory has given considerable attention to this aspect of interaction of organizational and individual demands.
(3) Informal Organisation – It comes into existence along with the formal organisation automatically. Individuals have expectations from the informal organisation and informal organisation also demands some type of behaviour from the individuals. Both these sets of expectations interact resulting in modifying the behaviour of one another.
(4) Fusion Process – The fusion process is a force which acts to weld divergent elements together for the preservation of organisational integrity.
Modern organisation theory rests on research findings in social psychology relative to reciprocal patterns of behaviour stemming from role demands generated by both formal and informal organisation and role perceptions peculiar to the individual.
(5) Physical Setting – The physical settings in which a job is performed are also very important. Interactions present in the complex man-machine systems need to be carefully studied. The human engineer cannot approach this problem in a purely technical fashion. He has to take the help of social theorists like Psychologists and Sociologists.
Linking Process:
The various parts of a system are inter-linked. This inter-linking is achieved by three linking processes namely:
(1) Communication;
(2) Balance; and
(3) Decision-making
(1) Communication:
It is a process of conveying messages (facts, ideas, attitudes and opinions) from one person to another. It helps management to understand the behaviour of people and effectiveness of the practices, procedures and explanations of the policies of the organisation.
It means-(i) Communication is a two way traffic; (ii) It is a continuous and unending process; (iii) It is a short lived process and lasts till the other person understands the message; (iv) The main purpose of communication is to make the message understand to others; (v) It aims at achieving the organizational objectives; (vi) It dispels the misunderstanding between persons.
Forms:
Neo-classists studied various forms of communication.
They are Four:
(a) On the Basis of Organizational Structure:
(i) Formal Communication; and
(ii) Informal Communication.
(b) On the Basis of Direction of Communication:
(i) Downward Communication;
(ii) Upward Communication; and
(iii) Horizontal Communication;
(c) On the Basis of Way of Expression:
(i) Verbal; and
(ii) Written.
(d) Line and Staff
The Mechanism of Communication:
The Mechanism of Communication i.e., Communication network has been studied by the modern organisation theory. Communication is viewed as the method by which action is evoked from the parts of the system. It acts as a stimuli resulting in action and as a control and co-ordination mechanism linking the decision centres in the system in a synchronized pattern.
(2) Balance:
Balance refers to-“an equilibrating mechanisms whereby the various parts of the system are maintained in a harmoniously structured relationship to one another”.
It appears in two varieties:
(a) Quasi-automatic Balance; and
(b) Innovative Balancing.
Both act to ensure system integrity in the face of changing environment.
(a) Quasi-automatic Balance – Quasi-automatic balance is that system in which the system is built in propensities to maintain steady states. If human organisations are open, self-maintaining systems, then control and regulatory processes are necessary. Adaptation by a system is generally automatic when changes are minor in nature.
(b) Innovative Balancing – In the innovative balancing, efforts arises when adaptation to a change is outside the scope of the existing programmes designed for the purpose of keeping the system in balance. New programmes have to be found out in order to maintain the integrity of the system.
(3) Decision-Making:
Decision refers to “The Problem Solving Activity.”
There are two types of decisions:
(a) Decision to produce; and
(b) Decision to participate in the system.
(a) Decision to Produce—Are largely a result of an interaction between individual attitudes and the demands of the organisation. Motivation analysis becomes control to studying the nature and result of the interaction.
(b) Decision to Participate—individual decisions to participate or not to participate in the system reflect on such issues as the relationship between organizational rewards versus the demands made by the organisation.
Whatever may be the kind of decision, decisions are internal variables in an organisation depending upon jobs, individual expectations and motivations and organizational structure.
There are four goals of an organisation. They are-(i) Growth; (ii) Stability; (iii) Interaction; and (iv) Systems.
Systems are such organisation which provide a medium for association of members with others. These goals seem to apply to different forms of organisation at varying levels of complexity.
Sub-Systems:
Sub-systems are the mutually dependent parts of the system i.e., organisation. These sub-systems interact and through interactions create new patterns of behaviour that are separate from but related to the pattern specified by the original system. A change in one the sub-systems will create changes in other sub-systems.
In an organisation the following sub-systems may be noted:
(1) Technical;
(2) Social;
(3) Structural; and
(4) Managerial.
(1) Technical Sub-System:
It includes the knowledge and techniques of doing the work. The basic component of the technical sub-system is a job. A job means a group of tasks or activities that can be performed by individuals. Technical subsystem constitutes formal organisation, i.e., inter-relationship of jobs which make up the structure, rules and procedures of the organisation.
The behaviour of individuals in the organisation is not explained fully by the Technical Sub-system along because of inherent conflict between the organizational demands and those of the individuals. The behaviour as required by the technical sub-system is modified by the social sub-system.
(2) Social Sub-System:
Social sub-system represents individuals and patterns of interactions among them. Such interactions are commonly known as ‘informal’ aspect of the organisation which is the result of the operation of socio- psychological forces at work place.
Informal organisation has an important influence on the behaviour of individuals.
Social sub-system also consists of-
(a) Status;
(b) Roles;
(c) Norms; and
(d) Values.
(a) Status is a position that has been determined as being important in this inter-personal relationship of group. In other words, it is a social rank of a person.
(b) Role is the pattern of actions expected of a person in his position in relation to others.
(c) Norm is the general expectation for all incumbents of the system.
(d) Value is the more generalized ideological justification and aspiration.
Role, Norm arid Value differ both with respect to generality and with respect to the type of justification mobilized to sanction behaviour. At the level of role behaviour, it is simply a matter of expectancy about task performance at the level of norms, it is a matter of following the legitimate requirements of the system, at the level of values, it is a matter of realizing higher moral demands.
(3) Structural Sub-System:
It refers to the patterns of inter-relationships among people. It aims at achieving co-ordination among the organizational members. It also includes physical setting of the environment in which the work is performed.
(4) Managerial Sub-System:
It operates to bring about co-ordination in the total system to achieve its goals.
In managing a system, two processes are involved:
(a) Operation and Control; and
(b) Review and Evaluation.
(a) Operation refers to conversion of inputs into outputs; and control refers to comparing the actual performance with the standards and activating various elements to correct deficiencies.
(b) Review and Evaluation—It pertains to ascertain how well the system has performed. It is different from control as control refers to operational efficiency, while review and evaluation refers to functioning of the entire system in relation to its objectives.
Appraisal or Evaluation of Modern Organisation Theory:
Modem organisation theory is on the periphery of general system theory.
Both General System Theory and Modern Organisation Theory Study:
(1) The parts (individuals) in aggregate and the movement of individuals into and out of the system;
(2) The inter-action of individuals with the environment found in the system;
(3) The inter-actions among individuals in the system; and
(4) General growth and stability problems of systems.
Modern organisation theory and general system theory are similar in that they look at the organisation as an integrated whole. They differ however, in terms of their generality. General system theory is concerned with every level of system, whereas modern organisation theory focuses primarily on human organisation.
4. Simon’s Theory of Organisation (A Modern Approach):
Professor H. A. Simon in his two recent books namely- (i) ‘Administrative Behaviour; and (ii) ‘Organisation’ has emphasized that the modern theory of organisation is based on two aspects:
(a) Social Need; and
(b) Human Psychology.
His opinion is that the Modern Organisation is “Decision-making Structure”. He has written that the Principle of Management and Organisation are ambigious and sometimes contradictory. He discards the traditional approaches to the problems of organisation. He firmly believes that—
(1) We have to develop new thinking;
(2) We will have to conduct researches;
(3) We have to formulate principles afresh for development and progress;
(4) He has advocated that principles are not important as the traditional or classical thinkers believe but in our approach organisation should be dynamic and responsible;
(5) Our approach should be to make the organisation a decision-making structure in which day to day happenings should also be taken note of and incorporated; and
(6) He believes that behaviour of some individual cannot remain Static in all circumstances.
Hence, sticking to principles of traditional nature would not help the management to grow in stature and progress of the enterprise may not be as satisfactory as it is planned and expected.
Therefore, Simon’s Principles of Organisation are Principles of Decision-making in true- sense of the term, since his approach to the organisation is not that classical but is a modern one. It is based on the thinking that function of an organisation is only to take decision on one matter or the other.
Simon has emphasized in his book ‘Administrative Behaviour’ that Management Principles are helpful in decision-making process.
His points of views are –
(1) That organisation is a difficult decision-making process;
(2) That human behaviour is an important instrument with the help of which organisation achieves its objectives; and
(3) That the working strength of an organisation is the decision of distribution and allotment of the work.
Three Basic Principles of Simon:
Simon gives greater importance to ‘decision-making process’. The decision taken on the top affects all in the enterprise. The decision at middle or lowest level affects only those who are connected with these decision. That is why he lays stress on three fundamental points (principles) in preparing the structure of an organisation.
His three principles are as follows:
(a) Communication;
(b) Authority; and
(c) Loyalty to the organisations.
The organisation should have such a communication system which would pass on all relevant information to all concerned to that decision-making becomes easy and an acceptable process. In the absence of complete information a sound decision cannot be taken.
Communication according to Simon should have an authority so as to make it acceptable. The decision-making and its implementation become easy when communication is acceptable to all concerned without any reservation. Reserved loyalty does no good to all organisation. Therefore, as far as possible decision should be laudable and full proof.
Based on his study and generalizations Simon later gave the following five principles of organisation:
(1) Suitability of a Decision;
(2) Acceptability of Authority
(3) Excellent Decision is no Substitute to a Satisfactory Decision;
(4) Routine Process;
(5) Live to the Role.
(1) Suitability of a Decision:
Though every decision cannot suit each individual (neither the decisions are acceptable nor are suitable in all the circumstances) but decision should reasonably be sound and appropriate to the circumstances in which it has been taken.
Decision always depends on information complied and received. Hence, this principle only indicate to the fact that reasonably a decision should be in the best interest of the enterprise and personnel affects by such decisions.
(2) Acceptability of Authority:
Authority is exercised always, with an aim in mind. It is exercised for common good and not for safeguarding the interest of an individual, great care is to be taken before exercising one’s authority. Authority if not acceptable to those who are to abide by the authority, carries no meaning.
(3) Excellent Decision is No Substitute to a Satisfactory Decision:
The organisation is not expected to take an excellent decision always. “Excellent” is a relative term hence remain insignificant in any sense of the term it is being used. Decisions may be the best or may not be the best, but it must be satisfactory and based on sound judgement. It should be taken without any prejudice and should receive wide acceptance.
(4) Routine Process:
As far as possible, decision-making process should be made a routine job. Secrecy should not shroud it. It should be open and should pass through a democratic process if permitted by the prevalent circumstances.
(5) Live to the Role:
Simon believes that decisions affect the working condition and Zeal of a human being assigned to do a particular job. Hence, his behaviour before a decision is taken should be given due weight. It should be, live to the role which an organisation in required to play in preparing a dedicated, sincere and responsible working force. Human Psychology and Behaviour form the fundamentals of Simon’s Principles of Organisation and it is where it differs from the traditional organisation approach.
5. Koontz and O’Donnell Theory:
Principles of Organisation – (A Modern Approach):
Koontz and O’Donnell in his famous book-“Principles of Management” has propounded fourteen principles of organisation. He has divided his principles in four broader groups in order to facilitate the organisation work –
(1) For the purpose of Organisation –
(a) Principle of Unity of objective.
(b) Principle of Efficiency.
(2) For the Reason of Organisation –
(c) The Span of Management.
(3) For the Structure of Organisation –
(d) The Scalar Principle.
(e) The Principle of Delegation.
(f) The Principle of Responsibility.
(g) The Principle of Parity of Authority and Responsibility.
(h) The Principles of Unity of Command.
(i) The Authority Level Principle.
(j) The Principle of Division of Work.
(k) The Principle of Functional Definition.
(4) For the Process of Organisation –
(I) The Principle of Balance.
(m) The Principle of Flexibility.
(n) The Principle of Continuity.
6. Graicuna’s Theory of Relationship or French Management Theory of Organisation:
V. A. Graicunas a French Management Consultant of Paris developed a concept and published it in the year 1933 popularly known as “Theory of Relationship in Organisation”. He has analysed sub-ordinate’s superior relationships in his paper and has demonstrated that the number of possible organizational relationships increase geometrically as the number of members increase literally.
He developed a mathematical formula for determining the number of possible relationships in an organisation under certain assumptions. He has mathematically proved that a number of direct group and cross relationship exist between a manager and his sub-ordinates.
With an increase in number of sub-ordinates attached to an executive the number of direct and group relationship increase. He explained his theory with the help of mathematical process.
He said that an Executive having four sub-ordinates under him is required to deal with –
(1) Four direct single relationships;
(2) Twelve cross relationships; and
(3) Twenty eight direct group relationships.
That is, in all forty four relationships.
His observations further were that with five sub-ordinates the executive will have a total relationship of hundred, with six (6) 222; with seven 490 and with eight 1080 relationships. He further observed that the ideal number of sub-ordinates is six who should be attached to an executive.
Graicunas has developed certain mathematical formulae, where n represents the number of sub-ordinates, the different formulae given by him are as follows:
1. For Cross Relationship N (n 1)
2. For Group Relationship N (2n/2) 1
3. For, Total Relationship N (2n/n + N) 1
Here,
N = represent total number of relationships; and
n = represent the number of sub-ordinates.
But the factor governing the Actual Span of Supervision is not given by Graicunas. The theory also does not deal with the frequency and severity of relationship which obviously is needed for determining the span of supervision.
Graicunas has also failed to take into account all relationships particularly when he deals with cross relationship. His theory is not of much help so far as the practical aspect of relationship is concerned.
7. Contingency Approach:
Contingency Approach has systems organisation with further modifications. It lays emphasis upon the need to adapt the organisation to the demands of technology, the need for innovation, generating from environmental and decision-making uncertainty. It points out that all types of organisation and all types of leadership may work under certain circumstances.
The situational factors play an important role in the designing of an appropriate organisation structure and suitable managerial style. Appropriate management technique is governed by environmental or situational factors. Internal environment includes structure, process, and technology. External environment includes economic, social technological, political and legal factors.
8. Multivariate Approach:
Multivariate approach regards an organisation as a system of four interacting variables –
(1) Task – That is basic business,
(2) Structure – Conversing system of authority work flow and communication;
(3) Technology – That is tools and equipment; and
(4) Actors – That is people and their bahaviour. The mechanistic structure is appropriate for a relatively stable organisation environment. The organic management is more suitable for coping with unstable and changing conditions and unpredictable problems. Multivariate approach was advocated by Cooper, Leavitt and Shelly in 1964.