The term organization is used in the following ways :
i. as entity
ii. as group of people
iii. as structure
iv. as process
The word ‘organisation’ was derived from the Greek word organon. Organization is the backbone of management. it is a structure and process which integrates, coordinates and mobilizes the employee’s activities adn establishes mutual and harmonized relationship between the work
According to William Scott
Organizations are collectivities of people that have been established for the pursuit of relatively specific objectives on a more or less continuous basis.
According to P.F Drucker
Organization is a means of multiplying the strength of an individual. it takes his knowledge and uses it as the source, the motivation and the vision of other workers.
According to Koontz and O’Donnell
The establishment of authority relationships with the provision for coordination between them both vertically in the enterprise structure.
According to Dalton McFarland
Organization is best as the structure or network of relationships among individuals and positions in a work setting and the process by which the structure is created, maintained and used.
According to Ralph C. Davis
Organization is a group of people who are cooperating under the direction of leadership for the accomplishment of common end.
According to E.F.L. Breach
Organization is the framework of management, because its sets out the dissections and distribution of total responsibility into relevant sections of groupings for more effective performance.
According to Joseph L. Massie
It is structure and process by which a cooperative group of human being can allocate its tasks among its members, identifies relationships and integrates its activities towards common objectives
According to Mooney and Riley
Organization is the form of every human association for the attainment of a common purpose.
Features of Organization
i. It is Identifiable Aggregation of Human Beings
ii. Organization is a deliberate and conscious creation.
iii. The organization is a purposive creation, that is all the organizations have some objectives or set of objectives.
iv. In organizations, there is a coordination of closely relevant activities of members. The coordination is necessary because all the members contribute to commonly agreed goals.
v. An organization has a definite structure. The coordination of human activities requires a structure wherein various individuals are fitted.
vi. In organization there is a rationality in coordination of activities or behavior . Every organization has some specified norms and standards of behaviour and every member of the organization is expected to behave according to these norms or standards.
Organization theory has been classified into three groups :
1. Classical Theory
1. Classical Theory
The classical theory is the beginning of the systematic study of organization. This theory is based on the contributions of scientific management by Taylor and others, administrative management by Fayol and others, and bureaucratic system by Weber.
Classical Theory and Organisation Structure
The classical organization theory has been based on four major factors also called the four pillars. These are:
i. Division of Labour
It means that work must be divided to achieve specialization with a view to improve the performance of individuals in the organization.
ii. Scalar and Functional Processes
It means that there is a chain of command throughout the organization. Scalar process refers to the growth of chain of command, delegation of authority, unity of command and the obligation to report. Functional process refers to the division of organization into specialized parts and the regrouping of the parts into compatible units. There are five basic components of scalar and functional processes :
b) Coordination by Hierarchy
c) Unity of Command
d) Delegation of Authority
e) Line and Staff Relationships
Structure is the framework of formal relationships among various tasks, activities and people in organization. It should be rational and logical. The basic element of the structure is position and various positions are grouped within the organization in various manners like horizontally, vertically or both. Each position holder is given a set of authorities and responsibilities. Depending upon the distribution of authority the organization structure may be centralized or decentralized.
iv. Span of Control
Span of control refers to the number of subordinates which can be effectively supervised by a superior.
i. Organizations have been treated as closed systems but in reality organization is an open system and is affected by its environment
ii. Classicists take static view of organization and assume that once the structure is created it will work for ever. But this is not true as environment, technology, size and people are not static and keep on changing with time.
iii. Classical organization theory relies too much on classical pillars like division of work, scalar functional processes, structural arrangement, and span of control. But these pillars are no longer applicable as one organization structure may differ from another because the requirement of the two may be different.
2. Neo Classical Organization Theory
Neoclassical theory was started from the findings of Hawthorne Experiments. Afterwards many contributions have been added to it.
The main assumptions of the theory are:
i. The organization is a social system.
ii. The social environment of the job affects people and is also affected by them and not by management alone.
iii. Informal organization also exists within formal organization and it affects and is affected by formal organization.
iv. Human beings are not totally rational and his behaviour can be predicted in terms of social and psychological factors.
v. Human beings has diverse motivational pattern and tries to fulfill different types of needs.
vi. Communication is necessary as it carries information necessary for organizational functioning and conveys the feelings and sentiments of people who work in the organization .
vii. Team work is important for cooperation among people.
Neoclassical Theory and Organization Structure
The basic emphasis of neoclassical theory is on :
i. Flat Structure
Neoclassical theory suggests flat structure as against tall structure. Flat structure with wide span of control is more suitable for motivating human beings in the organization.
Decentralization is closely related to flat structure as wide span of control will result in horizontal increase of people.
iii. Informal Organization
The informal organization is created to fulfill the psychological needs of the members. In an organization the behavior of members is determined with interaction of formal and informal organizations.
Major Problems in Neoclassical theory:
i. It is merely modification of classical concepts. Therefore it is merely concerned with organizational modification rather than organizational transformation. Thus it suffers from same problems as classical theory does.
ii. Most of the assumptions of neoclassical theory are not true. Thus if basic assumptions are not true, how can recommendations based on these be practical.
iii. Various structures and formats of organizations are not applicable to all situations. A suitable organization structure is one which takes care of different variables which affect the organizational functioning and people may be one of the various factors.
3. Modern Organization Theory
This theory is comparatively systematic and highly constructive. Modern organization theory can be understood in two approaches, though both of them are interrelated. These are systems approach and contingency approach.
Modern organization theory as system approach, is an integrative one which considers the organization in its totality. Since the organization is a system it contains various subsystems. In organization system, there are various ways of classifying subsystems.
Seiler has identified four components in an organization system :
- Human Inputs
- Technical Inputs
- Organizational Inputs
- Social Structure and norms
Kast and Rosenweig have identified five subsystems:
- Goals and values subsystem
- Psychological subsystem
- Technical subsystem
- Structural subsystem
- Managerial subsystem
Carzo and Yanouzas have identified three subsystems :
- Technical subsystem
- Social subsystem
- Power subsystem
Systems Approach of Organizational Design
There are various implications of systems approach in management including organizational design. Systems approach of modern organization theory has suggested three aspects relevant to design of organization structure. These are modern organization models, lateral relationships and cybernetics.
i. Moderns Organizational Models
The approach recognizes the need for flexibility and adaptability of organization, matrix organization , task force etc. The modern models of organization is such that it can cope up with the environment dynamics very easily.
ii. Lateral Relationships
System approach suggests lateral relationships among people in the organization. This emphasis is in contrast to vertical relationships emphasized by classical theory and horizontal relationships emphasized by neoclassical theory.
Cybernetics is a crucial aspect of systems theory. It involves communication and control. It is concerned with information flow in complex organizations.
It is extension of system approach. Contingency approach of organizational design suggests that
- Structure of the organization should be tailor made.
- Search for a typical structure applicable to all organizations is futile.
Thus the basic implication of this approach is that there cannot be a particular model or organization structure which can be applied in all situations.