Organization Theories

Organization theories Classical Theory - Scientific Management theory - Administrative Management Theory - Theory of Bureaucracy Human Relation approach ( Hawthorne experiments) System theory Contingency Theory Organization theories

Scientific Management theory Given by Frederick W. Taylor Principles of scientific management : Substituting research science rules for rules of thumb Harmony in Group action Cooperation Maximum output in place of restricted output Scientifically select, train, teach and develop employees Scientific Management theory

Scientific Management theory Main features: Separation of planning from doing function Functional foremanship Standardize fair day’s work Work study -Method study - Motion study -Time study - Fatigue study Scientific Management theory

Scientific Management theory Rate setting Standardization Scientific selection & training Financial incentives Mental Revolution Scientific Management theory

Administrative theory Given By Henry Fayol Division of work Authority & Responsibility Discipline Unity of Command Unity Of direction Subordination of individual interest to Group interest Administrative theory

Administrative theory contd… Remuneration of personnel Centralization Scalar Chain Order Equity Stability of tenure Initiative Esprit de Corps Administrative theory contd…

Bureaucracy theory Given by Max Weber Division of Labor with highly skilled employees in each position Consistent organization rules and procedures Hierarchy of authority/chain of command Impersonality of interpersonal relationships Employment/Advancement based on competence Bureaucracy theory

Human relation approach Hawthorne experiments conducted by Elton Mayo Illumination experiment Relay assembly test room experience Mass interviewing programme Bank wiring observation room experiment Human relation approach

Findings of Hawthorne experiments Organizations are social organizations Informal group exists with formal groups Production norms decided by social norms not by physical capacity Money not a sole motivator Informal leader exists Friendly supervision Workers prefer cordial relationships Findings of Hawthorne experiments

The Systems Approach System Defined Basic Types of Systems A set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Basic Types of Systems Closed systems Are not influenced by and do not interact with their environment (all system input and output is internal). Open systems Dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments. 12

The Organization as an Open System

Characteristics of open system: Composed of subsystems Components are interrelated Environment awareness Feedback Cyclical character Balance of maintenance & adaptation activities Self regulatory mechanism Characteristics of open system:

Implications of the Systems Approach Coordination of the organization’s parts is essential for proper functioning of the entire organization. Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. Organizations are not self-contained and, therefore, must adapt to changes in their external environment. 15

The Contingency Approach Contingency Approach Defined Also sometimes called the situational approach. There is no one universally applicable set of management principles (rules) by which to manage organizations. Organizations are individually different, face different situations (contingency variables), and require different ways of managing. 16