theories of organisation type of theory.pptx

Theory of organisation in their principles of organisation with application of theories

1. ORGANIZATIONAL THEORIES

2. INTRODUCTION Organizational theory attempts to explain the workings of organizations to produce understanding and appreciation of organizations. Organizational theory draws from various bodies of knowledge and disciplines. Organization theory explains how organization structures are built. It also suggests how organization can be designed to improve their effectiveness.

3. DEFINITION Organization theory is a set of concepts, and principles that provide framework for systematic study of structure, functioning and performance of organization and of the behavior of individuals and groups working in them.

4. CLASSIFICATION The theory of organization can be classified into three broad categories: Classical Organization theory Neoclassical Organization theory Modern Organization theory

5. Classical Organizational Theory Classical organization theory evolved during the first half of this century. The classical theory viewed organisation as a machine and human beings as components of that machine. They were of the view that efficiency of the organisation can be increased by making human beings efficient. Their emphasis was on specialisation and co-ordination of activities. Most of the writers gave emphasis on efficiency at the top level and few at lower levels of organisation . Three main theories • Scientific management theory • Administrative management theory • Behavioural theory.

6. Scientific Management Theory Aroused because of the need to increase productivity and efficiency How to increase the output of the average worker How to improve the efficiency of management. Major contributors:- Frederick Taylor, Henry Gantt, and Frank and Lillian Gilbreth

7. Principles of Scientific Management Theory Work, equipment and processes should be standardized. Time and task study should be used to determine the standards for workers. Selection, training and developing workers instead of allowing them to choose their own tasks and train themselves. Cooperate fully with the workers to ensure they use the proper method. Divide work and responsibility so management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly. 

8. Administrative Management Theory Focused on total organization. Emphasis was on the development of managerial principles rather than work methods. Major Contributors:- Henry Fayol, Max Weber, Mary Parker Follet

9. Weber’s theory Disliked organizations managed on personal family like basis. Employees loyal to individual supervisors rather than organization. According to Weber:- M anagement should be managed impersonally. Formal organization structure, where specific rules are followed is important. Authority should be something that was part of a person’s job and passed from individual to individual as one person left and another took over.

10. Fayol’s Principles of Management Division of work Authority and responsibility Discipline Unity of command . Unity of direction Remuneration Subordination of personal interest to general interest Centralization Scalar chain Order Equity Stability of tenure Esprit de corps Initiative

11. Behavioural theories of Management Successful organization depends largely on a manager’s ability to understand and work with people. Addresses human dimensions of work: motivation, leadership, trust, teamwork and conflict management. Major contributions :- Hawthrone Experiement Maslow’s Need Hierarchy Theory Mc Gregor Theory of X & Y Herzberg’s Motivation Hygiene Theory 

12. Hawthrone Experiment Organization is a social system not just techno-economic system. Employers can be motivate by psychological and social wants because their behaviour is also influenced by feelings, emotions and attitudes. Economic incentives are not the only method to motivate people. Management must learn to develop co-operative attitudes and not rely merely on command. 

13. Maslow’s need hierarchy theory Theory of motivation Considerations on five groups of human needs Assumptions Human needs are never completely satisfied Human behaviour is purposeful and is motivated by the need for satisfaction Needs can be classified according to a hierarchical structure of importance, from the lowest to highest

14. Mc Gregor’s theory X and Y Dichotomy about the assumptions managers make about the workers and how these assumptions affect behaviour . Two basic kinds of manager exists Theory X manager Theory Y manager Hard guy, soft guy approach of managing people in the organization. 

15. theory X Negative assumptions about employee. Assumes that average person has an inherent dislike for work and will avoid if they can. Employees are lazy, untrustworthy and incapable for assuming responsibilities. They must be coerced, controlled, directed and threatened with punishment to get them put forth adequate efforts towards achievement of organization objectives. Average employee prefer to be directed. They wish to avoid responsibility and have little ambition. They are interested only in security.

16. Theory Y Work is as natural as play or rest if the conditions are favorable. Employees are not only trustworthy and capable of assuming responsibility, but also have high levels of motivation. People will exercise self-direction and self-control to achieve organizational objectives to which they are committed.

17. Characteristics of classical organization theory It is based on organization as a machine and individuals working in it as different components of this machine. It believed that efficiency of organization can be increased by making each individual more efficient. It deals with formal organization structures. It focuses on objectives and tasks and not on the human beings performing the tasks. It aims at maximizing control. It emphasizes on the direction on the detection of errors occurred and then correction.

18. Pillars of Organisation Theory The organisation theory is built around four key pillars:- Division of Labour Scalar and Functional Process Structure Span of Control

19. ( i ) Division of Labour : Division of labour implies that work must be divided to obtain specialisation with a view to improve the performance of workers. The classical theory rests on the assumption that more a particular job is broken into its simplest component parts, the more specialised a worker can become in carrying out his part of the job. The specialisation in workers will make the organisation efficient. Various activities of a job are specified and subdivided into different components so that these may be assigned to different persons. The workers will go on repeating their work under division of labour . The performance of same work will help workers to improve their efficiency and the organisation as a whole is benefitted by this exercise.

20. (ii) Scalar and Functional Process: The scalar process refers to the growth of chain of command, delegation of authority, unity of command and obligation to report. It is called scalar process because it provides a scale or grading of duties according to the degree of authority and responsibility. It generates superior- subordinate relationship in the organisation . The functional process deals with the division of organisation into specialised parts or departments and regrouping of the parts into compatible units.

21. ( iiI ) Structure: It is the framework of formal relationships among various tasks, activities and people in the organisation . The basic structural element in the classical theory is position. Each position is assigned a specific task and authority is delegated for its accomplishment. The efficiency with which these tasks will be accomplished will determine the effectiveness of the organisation .

22. (iv) Span of Control: The span of control means the number of subordinates a manager can control. Classical thinkers specified numbers at different levels which can be effectively supervised by a superior. A manager cannot exercise proper control if the number of subordinates increases beyond a certain figure, on the other hand if the number is less then his capacity and knowledge cannot be fully utilised .

23. DRAWBACKS OF CLASSICAL ORGANIZATION THEORY It ignores human aspect and views human beings as components of the organization machine. It believes that people at work can be motivated solely through monetary incentives. It is an authoritarian theory. It is based on certain principles which are based mainly on experience and not tested by scientific researches. It takes static view instead of dynamic view of the organization. It regards organization as a closed system instead of open system.. Thus it ignores the influence of external factors on organization and its members

24. Neo-Classical Organisation Theory: The classical theory of organisation focussed main attention on physiological and mechanical variables of organisational functioning. These studies focussed attention on human beings in the organisation . Neoclassical organizational 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, This allows creativity, individual growth and motivation, which increases productivity and profits. Managers utilizing the neoclassical approach manipulate the work environment to produce positive results .

25. Characteristics of Neo-classical organization theory The organisation in general is a social system composed of numerous interacting parts. Informal organisations exist within the formal organisation . Both are affected by and affect each other. Human being is independent and his behaviour can be predicted in terms of social factors at work. Motivation is a complex process. Many socio- psychological factors operate to motivate human beings at work.

26. Contd :- 5) A conflict between organisational and individual goals often exists. There is a need to reconcile the goals of the individual with those of the organisation . 6) Team-work is essential for higher productivity. 7) Man’s approach is not always rational. Often, he behaves non- logically in terms of rewards which he seeks from his work. 8) Communication is necessary as it carries information for the functioning of the organisation and the feelings of the people at work.

27. Improvements over Classical Theory: Neo-classical theory offers modifications and improvements over classical theory in some aspects such as: Flat structure, Decentralisation, Informal organisations.

28. Flat Structure: The classical theory suggested tall structure whereas neo-classical theory suggested flat structure. In tall structure there is a problem of communication because of differentiation between decision makers and implementers, the levels of management are too many and motivation of people is difficult. In case of flat structure the wide span of control helps in motivation, chain of communication is shorter and it is free from hierarchical control. Decentralisation : Neo-classical theory advocates decentralised organisation which is close to flat structure because of wider span of control. It allows autonomy and initiative at the lower level. It also develops people to occupy higher positions in future. Informal Organisation : The neo-classical theorists advocated the need for both formal and informal organisations . Formal organisation represents the intentions of top management for the purpose of interactions among the people. Informal organisation is necessary to plug the loop holes of formal organisation and to satisfy the social and psychological needs of people. Managements use informal organisation for overcoming resistance to change on the part of workers and also for fast communication process. Both formal and informal organisations are interdependent upon each other.

29. DRAWBACKS of Neo-classical theory It is not a new theory of organizations. It is merely a modification of classical theory. The structures of organization suggested by this theory are not suitable in all situations. The theory over- emphasizes on human aspect. Consequently, other aspects remained ignored or neglected. Certain assumptions of this theory are not true. Consequently, there are conflicts of interests of various groups in the organization.

30. Modern Organisation Theory: Modern organisation theory is of recent origin, having developed in early 1960’s. This theory has tried to overcome the drawbacks of earlier theories. The distinctive qualities of modern organisation theory are its conceptual analytical base, its reliance on empirical research data and, above all, 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. This theory may be understood in two approaches: systems approach and contingency approach.

31. System Approach This approach studies the organisation in its totality. The mutually dependent variables are properly analysed . Both internal and external variables are studied in analysing the nature of organisation . Organisation as a system can well be understood by identifying various sub-systems within it. Each sub-system may be identified by certain processes, roles, structures and norms of conduct.

32. SUB-SYSTEM OF SYSTEM APPROACH Katz and Kahu have identified five sub-systems of organisation : Technical sub-system concerned with the work that gets done; Supportive sub-system of procurement, disposal and institutional relations; Maintenance of sub-systems for tying people into their functional roles; Adaptive sub-systems concerned with organisational change; and Managerial sub-systems for direction, adjudication and control of the many sub-systems and the activities of the structure.

33. 5 elements of system approach Organization as a system is composed of five elements:- Inputs - human, finance, material, equipment, information. Transformational processes- technological and managerial. Outputs - products or services Feedback - reaction from the environment. Environment 

34. Contingency Theory Contingency approach suggests an organisational design which suits a particular unit. Contingency theory accepts that there is no universally ideal leadership style because each organization faces unique circumstances internally and externally. In contingency theory, productivity is a function of a manager’s ability to adapt to environmental changes. Managerial authority is especially important for highly volatile industries. This allows managers the freedom to make decisions based on current situations. The contingency theory reveals situations that require more intense focus and takes account of unique circumstances.

35. Characteristics of Modern organization theory I t considers organization as a system composed of many subsystems such as managerial, technical, social sub system. It regards individual as complex being who can be motivated in multitude of ways. It is descriptive approach of studying organizations. It is multi- disciplinary theory as draws concepts and principles from several disciplines such as sociology, psychology, economics, engineering and so on. It is dynamic in interaction with the structure. It is constantly subject to change as environment changes. Organization adapts itself suitably to the changing environment and it survives. It is both macro and micro in its approach. It is micro when considered with respect to the entire nation or industry. It is macro with respect to internal parts of the organization. It ensures better flow of communication at all the levels and ensures effective control.

36. DRAWBACKS of Modern Organization theory It is not a unified theory of organization but a mixture of several theories. It is based on past empirical studies and there is nothing new in it. It does not identify the precise relationships among the organization and its external system. I t is not useful for smaller organizations.

37. SUMMARY

38. REFERENCE https://bizfluent.com/list-7246182-causes-conflict-organizations-.html https://brainmass.com/business/entrepreneurial-issues/what-are-some-examples-of-organizational-theories-255341 https://www.yourarticlelibrary.com/organization/three-organisation-theories-classical-neo-classical-and-modern/53221