Evolution of organisational theory

Are all groups organisations?

An organisation is a group of individuals who have come together under the supervision and conscious
coordination of some sort of management, to form a type of system that features a formal structure, is
intended to function continuously and carries out a variety of different tasks in order to achieve a common
goal that has been pre-established as it’s main reason for existence. To be actually classified as an
organisation, several prerequisites are required. Firstly the identifiable goal is needed. This goal can take
the form of a product or service and is what the organisation is ultimately created to produce. The
production must come about consciously, in that everyone knows what they are aiming for and thus strive
for it. In turn, they will receive rewards of some sort for their productivity. These rewards usually take the
form of wages or salaries. If the organisation is non profit based, social or voluntary in nature (like many
charity based groups i.e. The Salvation Army), then the rewards could simply be prestige, social
interaction or just the satisfaction of helping others. To join, individuals must go through some sort of
procedures or ceremony such as selection or interviews to define their suitability for membership. More
importantly, an organisation is a group that makes up a legal entity which has boundaries, holds
responsibilities to others, can be liable for all sorts of damages, and thus can be taken to court if they
conduct their business in an inappropriate manner which goes against morals, has ill effects on
individuals or other organisations. Even the organisation’s employees and members can sue if they feel
they are being treated unfairly. With this in mind, it becomes clear that not all groups are organisations.
Some groups that may seem to be like an organisation include Households, families and social groups
but can not be considered as such because they do not make up legal entities, rarely have a reward
system for their actions, have no predetermined goals (further than for their survival and minimal conflict),
nor are they formed with the intention of producing goods or services.

Examples of 'negative entropy' and 'equifinality'.

Entropy is defined as ‘a measure of the degradation of the universe’. As a scientific law it states that
everything will disintegrate within time. Thus negative entropy suggests growth as opposed to reduction.
Negative entropy is where a organisation can maintain itself, and quite possibly has managed to grow
since it first began. It has been suggested by ‘Robbins & Barnwell’ that an ‘open system’ of organisation is
meant to be able to maintain its structure through such things as repairs, avoiding closure and possibly
growing by importing ‘energy’ (external ideas and products). A good example of an organisation that has
experienced negative entropy would undoubtedly be the fast food chain giant ‘McDonalds’ which has
managed to almost invade every country world wide. By using external ‘energy’ like marketing and
advertising it has managed to survive when others have not. Equifinality is a concept that states that a
certain outcome can be achieved by many different means. For example, if a person decided they wished
to take a stroll with their dog around their block, they would be faced with the choice of walking clockwise,
or anti-clock wise around it. Either will lead to the same desired outcome. In a business sense, it would be
best to discover all the possible ways to achieve the set goals, and then distinguish the best by
considering all the factors involved with each possibility and then chose the most efficient.

Determinants of organisational structure.

An organisation’s structure is the frame work whereby the final desired goal can be achieved. It consists
of managerial defined tasks that are allocated to individual members, sets out how duties will be done
based on the best available methods (attempts to at least), reporting methods, and interaction patterns.
An organisation’s structure is said to have three major components, these include complexity,
formalisation, and centralisation. The degree of complexity is set out right at the beginning simply by the
amount of aims the business will have. Any business with only one goal will not be as complexed as one
with several. One goal in an organisation means it will not need as much specialisation, nor will it need a
high level of management hierarchy. Formalisation is the amount of rules an organisation will have and
it’s reliance on these rules and procedures to direct behaviour. This is usually proportional to the size of
the organisation and at times it’s standing within the community that it is based in. A small store will not
have as many rules and guidelines as would a police department that has many more obligations.
Centralisation is a way with which to considers where the decisions making powers within a organisation
will develop from. Some organisations choose to be highly centralised, and this means that most, if not all
decisions are made from the highest level of management, and all orders flow down to other members. If
there is a problem, the highest level of management will deal with it. In a decentralised organisation, the
authority to make decisions is more wide spread to all levels of management, and this means more
interaction, and less of a dictatorship style of management. But it should be noted that the centralised and
decentralised forms we have discussed here are extremes, and most businesses, organisations and
systems may use a variety of these forms at different levels, and at times possibly combine portions of
both. Other factors exists which can effect organisational structures, one of these is the external
environment. Price fluctuations, economies, laws etc. etc. (all being factors out of the organisation’s
control) can effect how a business or group will perform, and thus suitable changes will need to take place
within the structure in order for the organisation to survive.

 What Is Organization Theory?

 A proposition or set of propositions that attempts to explain or predict how

groups and individuals behave in differing organizational arrangements.

 What Is Organization Theory?

 Classic organizational 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.

 What Is Organization Theory?

 Theory derived from organizational structures and procedures during the

industrial revolution.

 Adam Smith and the pin factory.

– The Wealth of Nations, 1776.

• Laissez-faire.

– Economic rationale for the factory system.

– All formal organizations are force multipliers.

 The Origins of Scientific Management

 The basic problem with the traditional hierarchical organization was that it
was dependent upon the proper enculturation of individual supervisors at
every level for its success.

 Changes in the environment can make hierarchical organizations less

competent.

 The Origins of Scientific Management

 Origin of the staff concept to overcome limitations of a single mind and

fleeting time.

 The general staff concept has been adopted by industrial and governmental
organizations.

 The Origins of Scientific Management

 The influence of Frederick W. Taylor (1911).

– Father of the scientific management movement.

– 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.

• The Origins of Scientific Management

 Henri Fayol’s general theory of management (six principles, 1916, 1949).

– Technical (production of goods)

– Commercial (buying, selling, exchange).

– Financial (raising and using capital).

– Security (protection of property and people).

– Accounting.
 – Managerial (coordination, control, organization, planning and
command of people).

 The Origins of Scientific Management

 Fayol (contd.).

– Dominant principle was management.

• Division of work.

• Authority and responsibility.

• Discipline.

• Unity of command.

• Unity of direction.

• Subordination of individual interest to general interest.

• Remuneration of personnel.

 The Origins of Scientific Management

 Fayol (contd.).

– Dominant principle was management (contd.).

• Centralization.

• Scalar chains (supervisors).

• Order.

• Equity.

• Stability of personnel tenure.

• Initiative, and.

• Esprit de corps.

 The Period of Orthodoxy

 Interwar period a period of orthodoxy in public administration.

– Work of government could be divided between decision-making and

execution.

– Administration was a science with discoverable principles.

 The Period of Orthodoxy

 Paul Appleby’s polemic.

– Politics and administration inextricably entwined.

 Luther Gulick (1937, POSDCORB).

– Planning (outline and methods).

– Organizing (structure).

– Staffing (personnel).

– Directing (decision-making).

– Coordinating (task management).

– Reporting (communication and record-keeping).

– Budgeting (fiscal planning, accounting, and control).

 The Many Meanings of Bureaucracy

 First, “the bureaucracy is the totality of government offices or bureaus that

constitute the permanent government of the state.

 Second, “the bureaucracy” refers to all of the public officials of a

government, both high and low, elected and appointed.

 Third, bureaucracy is often used as a general invective to refer to any

inefficient organization encumbered by red tape.

 The Many Meanings of Bureaucracy

 Fourth, bureaucracy refers to a specific set of structural arrangements (Max

Weber).

– Bureaucrats are free as individuals, but not as employees.

– Hierarchy.

– Clearly specified functions.

– Freedom of hiring.

– Appointment by merit.

 The Many Meanings of Bureaucracy

 Fourth, bureaucracy refers to a specific set of structural arrangements.

– Due compensation and due process.

– Sole occupation.

– Advancement by merit or seniority.

– Non-proprietary rights in position.

– Strict controls.

 Neoclassical Organization Theory

 The neoclassical theorists gained their reputation by attacking the classical

theories.

– Important source of the power and politics, organizational culture, and

systems theory.

 Herbert Simon.

– Bounded rationality and satisficing.

– Programmed and unprogrammed decision-making.

– Management information systems.

 Neoclassical Organization Theory

 The impact of sociology.

– Philip Selznick – Organizations are made up of individuals whose goals

and aspirations may not coincide with the organization’s.

 Modern Structural Organization Theory

 Basic assumptions

– Organizations are rational institutions whose primary purpose is to

accomplish established objectives through control and coordination.

– There is a “best” structure for any organization in light of objectives,

environment, products or services, and the technology of the
production process.

– Specialization and division of labor increase the quality and quantity of

production.

– Most problems result from structural flaws.

 Modern Structural Organization Theory

 Mechanistic and organization systems.

– Mechanistic – traditional bureaucracy, best in stable conditions.

– Organic – less rigidity, more participation, and more reliance on

workers, best in dynamic conditions.

 Systems Theory

 Systems theory views an organization as a complex set of dynamically

intertwined and interconnected elements, including inputs, processes,
outputs, feedback loops, and the environment. Any change in one element
causes changes in other elements.

 Systems Theory

 Cybernetics – Norbert Wiener (1948).

 Systems Theory

 The learning organization.

– Built on the doctrines of participation

– Maslow’s hierarchy of needs.

– New component technologies (the five disciplines).

• Personal mastery.

• Mental models.

• Building shared vision.

• Team learning.

• Systems thinking.