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Presentation on theme: "THEORIES AND CONCEPTS OF ORGANIZATION"— Presentation transcript:


2 Organization Theory (Some Definitions)
A proposition or set of propositions that attempts to explain or predict how groups and individuals behave in differing organizational arrangements. Organizational theory attempts to explain the workings of organizations to produce understanding and appreciation of organizations. Some types of organizational theories include classical, neoclassical, contingency, systems and organizational structure

3 Organization Theory (Some Definitions)
Organization theory: is the set of propositions (body of knowledge) stemming from a definable field of study which can be termed organizations science. The study of organizations: is an applied science because the resulting knowledge is relevant to problem solving or decision making in ongoing enterprises or institutions.

4 Organization Theory (Some Definitions)
Classical organization theory combines aspects of scientific management, bureaucratic theory and administrative theory. Scientific management involves obtaining optimal equipment and personnel and then carefully scrutinizing each component of the production process, Neoclassical organization theory is a reaction to the authoritarian structure of classical theory. The neoclassical approach emphasizes the human needs of employees to be happy in the workplace,

5 Organization Theory (Some Definitions)
3. Contingency theory views conflict in the work place as inescapable, but also manageable. This differs from classical and neoclassical theories that interpret conflict as interference with organizational equilibrium 4. Systems theorists believe all organizational components are interrelated. Changes in one component may affect all other components 5. Organizational structure became an important aspect of organizational theory due to the increasing complexity of multinational organizations.

Human as Machine Human Relations Structuralists Theory Open Systems Contingency Heavy handed Hostility among workers Humanize Management Still accomplish goals Efficiency Understand tensions between production and humans Ways to adapt to environmental pressures Horizontal Communicat-ion Bridge from closed to open Systems Rationality Vs Irrationality

Human as Machine Human Relations Structuralists Theory Open Systems Theory Contingency Theory Frederick Taylor Mary Parker Follett Phillip Selznik Getzel and Guba Stogdill and Ohio State Henri Fayol Elton Mayo House and Mitchell Talcott Parsons Victor Vroom Max Weber Vilfredo Pareto Katz and Kahn Blake and Mouton Chester Barnard Robert Merton Abraham Maslow John Seiler Alvn Gouldner Fred Fiedler Stogill J.W. Forrester Hersey & Blanchard Fredrick Herzberg Andrew Halpin Porter & Lawler Douglas McGregor

8 Three Major Theories of Organization
3 Theories of Organizations Classical Theory Four Basic components to any Organization System of differentiated activities People Cooperation toward a goal Authority Neoclassical Theory Critique of the 4 structural principles of classical Theory Functional Scalar Line/Staff Span of control System theory Five parts of an organization Individuals Formal organization Small groups Status & Roles Physical setting

9 Classical Theory Organizations exist to accomplish production-related and economic goals. There is one best way to organize for production, and that way can be found through systematic, scientific inquiry. Production is maximized through specialization and division of labor. People and organizations act in accordance with rational economic principles.

10 Classical Theory (Covers the period from 1900's to mid-1930)
Three assumptions: The relationship between employees and management: formal structured communication process, defined tasks, defined accountability, and formalized procedures and practices to avoid any conflict in their relationship. The Workers have been treated as economic man who can be motivated by means of money only. The workers have been considered as a product of means of production or as a cog in the wheel.

11 Classical Theory Two perspectives:
Scientific management (Frederick Taylor)– focusing on the management of work and workers Administrative management (Henri Fayol Luther Halsey Gulick and Max Weber): addressing issues concerning how overall organization should be structured

12 Classical Theory (Fayol’s 5 Management Functions)
Fundamental roles performed by all managers: Planning Organizing Commanding Coordinating Controlling Additionally Fayol recognizes fourteen principles that should guide the management of organizations.

13 Classical Theory (Scientific Management Frederick W. Taylor, 1911)
Scientific management principles. Replacing traditional, rule of thumb methods of work accomplishment with systematic, more scientific methods of measuring and managing individual work elements; The scientific study of the selection and sequential development of workers to ensure optimal placement of works into work roles; Obtaining the cooperation of workers to ensure full application of scientific principles; And. Establishing logical divisions within work roles and responsibilities between workers and management.

14 Classical Theory (The fourteen principles of organization (Henry Fayol)
Division of Work Authority and Responsibility Discipline Unity of command Unity of Direction Subordination of Individual Interest of General Interest Remuneration of Personnel Centralization of Authority Scalar Chain Order Equity Stability of Tenure Initiative Esprit de Corps

15 Classical Theory (7 functions’ of management Luther H. Gulick)
Planning - developing an outline of the things that must be accomplished and the methods for accomplishing them Organizing - establishes the formal structure of authority through which work subdivisions are arranged, defined, and coordinated to implement the plan Staffing - selecting, training, and developing the staff and maintaining favorable working conditions Directing - the continuous task of making decisions, communicating and implementing decisions, and evaluating subordinates properly Coordinating - all activities and efforts needed to bind together the organization in order to achieve a common goal Reporting - verifies progress through records, research, and inspection; ensures that things happen according to plan; takes any corrective action when necessary; and keeps those to whom the chief executive is responsible informed Budgeting - all activities that accompany budgeting, including fiscal planning, accounting, and control

16 Classical Theory (Bureaucratic administration, Max Weber)
Power: any relationship within which one person could impose his will, regardless of any resistance from the other. Authority: existed when there was a belief in the legitimacy of that power. Charismatic Authority: based on the sacred or outstanding characteristic of the individual. Traditional Authority: essentially a respect for customs. Rational Legal Authority: based on a code or set of rules.

17 Relevance of the Classical Theory of Organization
Principle's of organizations formulated in the 18th century are not able to enhance performance in the changed environment and technology and contribute negatively to organizational performance. Fayol's principle: organization as a closed system, organizational factors are under the control of management.

18 Critics to the Relevance of the Classical Theory of Organization
Modern management operates in a dynamic environment constantly adopted to suit the changes in the environment. Modern organizations do not operate in vacuum environment. Modern organizations tend to provide maximum autonomy , free to take actions to solve problems: to think, innovate, explore and bring about positive and effective changes.

19 Thank You


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