ORGANIZATION-TYPES AND THEORIES

 Definition: ‘ Organization is a group of people working together and with each

other towards achievement of common goals.’
 “Organization is the form of every human association for the attainment of
common purpose and the process of relating specific duties or function in a
whole.”
-J D Mooney
 Types of organization:
 Formal organization
 Non formal organization
 Informal organization
 Line organization
 Staff organization
 Line and staff organization
 Committee organization
 Social organization.

1. Formal organization:
The formal organization is a system of well defined jobs; each bearing definite
measure  of authority, responsibility and accountability to enable the people of the
enterprise to work most effectively in accomplishing their objectives and goals. In
the formal organization, the work that each individual does it part of a larger
pattern, coordination proceeds according to a prescribed pattern in the formal
organization. It set up boundaries and path which must be followed to achieve the
objectives.

2. Non formal organization:

Existing within formal organization is nonformal organization that permits and
sometimes encourages behavior by members. This nonformal behavior is
frequently desirable and also work oriented and contributes significantly to
efficiency. Behavioral factor such as unnecessary socializing on the job, group
values and Cultural likes and dislikes serves as bases for nonformal behavior in
formal organization.
 -Non formal organization always exist along with formal organization.
-It serves as an adjunct, is intangible and takes of different degree of importance
depending upon the activity and the persons involved.

3. Informal organization:

It refers largely to what people do because they are human personalities. Their
actions are directed in terms of needs, emotions and attitude and not only in terms
of procedures and regulations. Organization is nothing system of employee and
employees groups which develop in any work environment for achieving explicit
goals.

-In the informal organization, people work together because of their personal likes
and dislikes. The effectiveness of this group depends upon the internal relations,
the recognition of common goals and desire to work together in accomplishing it.

- The formal organization which fails to recognize and provide for the effective
operation of such group loses its own effectiveness.

- Changing concept of organization requires distinction between the formal,

defined and highly structured organizations and informal organization. The
existence of both these organizations is necessary. The aim of management
should be to develop formal organization of such scope as to encompass the
varying ,highly personal needs of  informal organization.

4. Line organization:

The line type organization is commonly used for small enterprises, especially by
retailer and manufactures having perhaps seven to eight employees. It has
outstanding advantages: quick decision making is fosters; buck passing is
eliminated excellent management training experience provided; and the type of
authority relationships are clearly understood.

-This type of organization has inherent disadvantages, executives tend to be

overloaded with too many duties, specialization is not practiced, management
member may be difficult to replace, and insufficient time and effort is given to
activities such as managerial planning, research and development and overall
controlling measures.
 Director of nursing

Chief of nursing
officer

Deputy nursing officer

Deputy nursing officer Deputy nursing officer

Staff Nurses Staff nurses Staff nurses

(Simple Line Organization)

5. Staff organization:

The use of the “staff” gives rise to many misunderstanding in management.

Literally the word means stick carried in hands for support.Hense staff authority
relationships originally were thought of as those relationships used to support line
authority relationships.
-This concept exist today and is valid. Staff means a supporting role and function,
it is intended to help the “order”. With the passing of time additional meaning of
staff authority, or what this help consist of, have developed and the team support,
instead of staff is currently in use.
- In most enterprise use of staff in organization structure can be traced to the need
for help in handling details , locating data required for decision and offering
counsel on specific managerial problems.
-Most staff authority relationships are characteristically a manager –to manager
authority relationship and exist among any managerial level of an organization
structure. The managerial recipient of staff authority is commonly called a staff
executive or staff officer. He has the charge of this respective staff organizational
unit. The concept of staff authority is quite old; staffs were employed by
government and armies.
 6. Line and staff organization:

Most enterprises operate amid complexities and ever increasing advances in

knowledge and technologies. These along with expansion of an enterprise make it
necessary eventually to relieve management members with line authority of sudden
duties. The need for certain specialists is recognized. For example, the expert in
establishing work standards, the legal advisor, the researcher, and the tax expert are
incorporated in to the formal organization structure primarily so that the line
manager is relieved part of his duties and thus able to concentrate his efforts on the
direct ding activities in keeping with the enterprises objectives.
The line authority remains the avenues for command or performance of the work.
What are a line manager and what is a staff manager depends on the type of
authority possessed.

7. committee organization:

It can be defined as: “A body of persons elected or appointed to meet on an

organized basis for the discussion and dealing of mattes brought before it”.
-Committees are common yet controversial in most organizations. They can and do
exist at any organizational level, serve in various capacities and for different
purposes, are known by many different names, and enjoy wide degrees of
acceptance among management members. Extremely important work is
accomplished via the committee, route.
- Typically, educational enterprises are loaded with committee, and they are
common in government and in business. In trade associations and most
professional societies, the major portion of the organization structure is made up of
committees.
-The committee usually has a formally recognized and permanent place in the
organization structure. It make up, duties, membership and decision-making power
may be carefully spelled out. For example, some business enterprises have at the
top level, a planning and policy committee or a general management committee
made up of selected company executives. The committee meets regularly, may be
weekly, makes decisions, ensures that they are enforced, and participates in the
management affairs of the company or Hospital or Health care institution. The
reason for the widespread use of committees as given below:
A. Expert and collective knowledge can be concentrated upon a specific problem. A
wide range of experience can be tapped, exchange of ideas encouraged, and
effective give and take discussion encouraged.
B. Coordination is assisted: Different views can be unified and integrated. Agrees and
prescribed courses action established, and maximum understanding among
committee participants achieved.
C. Too much authority concentrated in one person is prevents: By its very nature, a
committee members, who can watch and check each other’s actions.
D. Social values are provided: committee membership provide prestige, permits
recognition as an equal with other members who have status, and tends to satisfy
the human desire for long and to do something worthwhile.
E. Motivations is supplied: people like participation, and committee use encourages
it. Cooperation is enhanced in the execution of a proposed action and is reasonably
assured if the committee develops the plan. There is also knowledge acquired by
the committees members and possibly pride of authorship gained by a member.
Such characteristics have strong motivational value.
F. Education of member is promoted: Each participant’s viewpoint is broadened; he
gains; and there is appreciation of the other unit’s problems as well as those of the
enterprise.

8.Social Organization:

It is apparent that in a democratic society the ultimate authority of a business

enterprise rests with public or society. The professional privileges are derived and
controlled through laws and marketing process. Then beginning with the policies, a
management system is organized to achieve the organizational objectives.
Procedures and control mechanism is introduced by the management in a
systematic way.
 THEORIES OF ORGANIZATION
Definition : Organizational theory (OT) is the study of organizations for the
benefit of identifying common themes for the purpose of solving problems,
maximizing efficiency and productivity, and meeting the needs of stakeholders.

TYPES OF ORGANIZATIONAL THEORIES

Classical Neoclassica Modern theories Individual

organization theory l theory processes

Taylor‘s scientific The systems approach Motivational theory

management approach
Weber‘s bureaucratic Socio-technical approach Role theory
approach

Administrative theory The contingency or Personality theory

situational approach

CLASSICAL ORGANIZATION THEORIES

The systemic study of management as a separate field of endeavor. It was

Robert Owen and Charles Babbage who gave serious thought to the problems of
management. It was Max Webber who introduced the bureaucratic model. It was
the emergence of first systemic management theory.

Robert Owen: Robert Owen was a scientific manager of his time and was
greatly admitted for giving human treatment to the workers. He worked throughout
his life for living up of a spirit of cooperation between the workers and the
management. He is noted for the development of personal relations, improved
conditions of employment, reform of working conditions.

Charles Babbage: Charles Babbage, the Cambridge professor of mathematics

propounded that methods of science and mathematics could be applied to the
operation of factories. He advocated that managers should take decisions through
rigid investigation, to divide work into physical and mental efforts, to determine
the cost for every process and to pay a bonus to the workers in proportion to their
efficiency. His contribution of significance are:
1. Cost accounting

2. The Babbage calculating machine

Management has always faced with the problem of selecting various concepts
from all these areas and integrating them in the process of decision making
regarding the major policies and day to day operations.

During the 19th century, the efforts of managers had been to cope up with
their environments and to organize and operate in those environment. During the
first one third of the country the attempt was to rationalize the way work was done.
The emphasis was to increase the productivity of the goods and services produced.
After the world war II there was a considerable change in the working conditions
of the working men. The working men began to demand that work environment
should meet part of their social needs in addition to the basic needs. Then emerged
the phase of human relations and the focus was on man’s social needs and the way
of meeting them to increase productivity, but in late 1960’s it became clear that
knowledge on which the management is based is no longer adequate even for the
basic areas here emerged needs for new knowledge particularly referred to
productivity organization structure, job design and management of people.

Following are the nine important concepts high-lighting the present concepts
of management:

• Scientific management a key to productivity

• Decentralization for quicker decisions and better control
• Personnel management as a means of selecting people into organization
• Managers development programmes to train managers how to meet the
needs to tomorrow
• Management accounting- a foundation for managerial decision making
• Marketing
• Long range planning
• Role of operational research in management decision making
• Financial management for effective utilization of money resources in the
organization.
Thus the process of development of management science can be studied under
following heads:
A) Taylor's scientific management approach

Is based on the concept of planning of work to achieve efficiency, standardization,

specialization and simplification. Taylor suggested that, to increase productivity
was through mutual trust between management and workers.

Taylor developed the following four principles of scientific management for

improving productivity:

1. Science, not rule-of-thumb Old rules-of-thumb should be supplanted by a

scientific approach to each element of a person's work.

2. Scientific selection of the worker Organizational members should be selected

based on some analysis, and then trained, taught and developed.

3. Management and labor cooperation rather than conflict Management should

collaborate with all organizational members so that all work can be done in
conformity with the scientific principles developed.

4. Scientific training of the worker Workers should be trained by experts, using

scientific methods.

B) Weber's bureaucratic approach

Weber (1947) based the concept of the formal organization on the following
principles:
1. Structure: In the organization, positions should be arranged in a hierarchy, each
with a particular, established amount of responsibility and authority.

2. Specialization: Tasks should be distinguished on a functional basis, and then

separated according to specialization, each having a separate chain of command.

3. Predictability and stability The organization should operate according to a

system of procedures consisting of formal rules and regulations.

4. Rationality: Recruitment and selection of personnel should be impartial.

5. Democracy: Responsibility and authority should be recognized by designations

and not by persons.

C) Administrative theory
The elements of administrative theory (Henri Fayol, 1949) relate to
accomplishment of tasks, and include,
o Principles of management
o The concept of line and staff
o Committees and
o Functions of management

 Principles of management:
• Division of work • Authority and responsibility
• Discipline • Unity of command
• Unity of direction • Subordination of individual interest to general
interest
• Remuneration of personnel • Centralization
• Scalar chain • Order
• Equity • Stability of tenure of personnel
• Initiative • Esprit de corps

 The concept of line and staff:

 The concept of line and staff is relevant in organizations which are large and
require specialization of skill to achieve organizational goals.
 Line personnel are those who work directly to achieve organizational goals.
 Staff personnel include those whose basic function is to support and help
line personnel.
 Committees:
• Committees are part of the organization.
• Members from the same or different hierarchical levels from different
departments can form committees around a common goal.
• They can be given different functions, such as managerial, decision making,
recommending or policy formulation.
• Committees can take diverse forms, such as boards, commissions, task groups or
ad hoc committees.
• Committees can be further divided according to their functions.
• For e.g. In agricultural research organizations, committees are formed for
research, staff evaluation or even allocation of land for experiments.

 Functions of management:
• Fayol (1949) considered management as a set of Planning, Organizing, Training,
Commanding and Coordinating functions.
• Gulick and Urwick (1937) also considered organization in terms of management
functions such as, Planning, Organizing, Staffing, Directing, Coordinating,
Reporting and Budgeting.

NEOCLASSICAL THEORY

It deals with the human factor. Mary parker Follett, Elton mayo and Roeth’s
Berges pioneered the human relations movement. in this new era, they proceeded
on the framework of the classical thinkers but introduced many new elements,
especially in the areas of leadership, group psychology, human relations and
organizational integration, the neo classical theory anticipated some of the recent
trends of the evident in the behavioural approaches.

New thinking in behavioural science started with the development of need

hierarchy by Abraham Maslow followed by the works of Fredric Herzberg,
douglas, Mc. Greger, Renis Likert, Chris Argyris, Oliver Sheldom Kurt, Slivin
Brown, Henry Hennison ,Mooney and Reiley, Lyndall Urwick, RM barues,
Drucker , Brech and Lupton.

The essence of behavioural approach is the integration between the needs of

employees and the goals of the organization. Behavioural science movement is
regarded as a further refinement of human relations movement. it covers much
wider aspects in interpersonal roles and relationships. Some of the important
aspects of behavioural science approach are:

 Employee motivation
 Organization as a social system
 Leadership
 Communication
 Employee development
Herzberg maintained that the working conditions should at least be kept at
satisfactory level for preventing dissatisfies the satisfiers must be introduced into
the work itself for obtaining a high level of performance.

Principles of the neoclassical approach:

• The individual: An individual is not a mechanical tool but a distinct social
being, with aspirations beyond mere fulfillment of a few economic and security
works. Individuals differ from each other in pursuing these desires. Thus, an
individual should be recognized as interacting with social and economic factors.

• The work group: The neoclassical approach highlighted the social facets of
work groups or informal organizations that operate within a formal organization.
The concept of 'group' and its synergistic benefits were considered important.

• Participative management: Participative management or decision making

permits workers to participate in the decision making process. This was a new
form of management to ensure increases in productivity.

MODERN THEORIES : It is based on the concept that the organization is a

system which has to adapt to changes in its environment.

• Notable characteristics of the modern approaches to the organization are:

1. A systems viewpoint
2. A dynamic process of interaction
3. Multileveled and Multidimensional
4. Multi motivated
5. Probabilistic
6. Multidisciplinary
7. Descriptive
8. Multivariable
9. Adaptive

The Systems Approach:

The systems approach views organization as a system composed of interconnected

- and thus mutually dependent - sub-systems.
-Sub-systems can have their own sub-sub-systems. A system can be perceived as
composed of some components, functions and processes (Albrecht, 1983).

The organization consists of the following three basic elements (Bakke, 1959):
(i) Components :
 The individual
 the formal and informal organization
 patterns of behavior emerging from role demands of the organization
  role comprehension of the individual, and
 the physical environment in which individuals work.

(ii) Linking processes:

• Communication: Is a means for eliciting action, exerting control and effecting

coordination to link decision centers in the system in a composite form.

• Balance : Is the equilibrium between different parts of the system so that they
keep a harmoniously structured relationship with one another.

• Decision analysis: Decisions may be to produce or participate in the system.

Decision to produce depends upon the attitude of the individual and the demands
of the organization. Decision to participate refers to the individual's decisions to
engross themselves in the organization process. That depends on what they get and
what they are expected to do in participative decision making.

(iii) Goals of organization: The goals of an organization may be growth, stability

and interaction. Interaction implies how best the members of an organization can
interact with one another to their mutual advantage.

Socio-Technical Approach:

• The socio-technical systems approach is based on the premise that every

organization consists of the people, the technical system and the environment
(Pasmore, 1988).
• People (the social system) use tools, techniques and knowledge (the technical
system) to produce goods or services valued by consumers or users (who are part
of the organization's external environment).
• Therefore, an equilibrium among the social system, the technical system and the
environment is necessary to make the organization more effective.

The Contingency Or Situational Approach:

• The situational approach is based on the belief that there cannot be universal
guidelines which are suitable for all situations.
• Organizational systems are inter-related with the environment.
• The contingency approach suggests that different environments require different
organizational relationships for optimum effectiveness, taking into consideration
various social, legal,political, technical and economic factors.

INDIVIDUAL PROCESSES :

1)Motivational Theory:
• Motivation drives behavior; it is the force behind an individual‘s decision to
commit or not commit to certain acts or behaviors.

• An individual calculates an ―”E” (energy, enthusiasm, effort) the product of

need, and prediction for likelihood of achieving the desired results.

• When a person enters into a contract with an organization some calculation will
be made in regards to the individual‘s ―”E” put forth.

• Organizations also put forth an ―”E”, either by resources alone (salary), or by

other items such as prestige and stature. This exchange sets the limits of a physical
and ―psychological contract between the organization and the person.
 Management must carefully consider how to maintain or adjust the
psychological contract in order to keep the person a productive member of the
team.

2)Role Theory

 In an organization roles can help to clearly define boundaries between

individuals.
 Organizations need to acknowledge that its employees manage many roles and
that problems or conflicts can arise and create tensions that can change the
ability of the individual to reach their goals.
 Organizations should be sure to support their team members in meeting new
roles by giving time for transition, or offering training and support.
 When role conflict arises the organization can nurture employee‘s ability to
relieve tension by allowing time to devote to caring for roles outside the office.

3)Personality Theory

• Personality is the unique and enduring traits, behaviors and emotional

characteristics in an individual.
• Personality can either aid or hinder meeting work goals dependent on fit.
For e.g. Personality types are Type a vs. Type B
• Type A personalities are competitive, impatient, seekers of efficiency and always
seem to be in a hurry.

• Type B personalities are laid back and possess more patience and emotional
stability, but tend to be less competitive.

• In a work environment Type A‘s tend to be more productive in the short term and
pursue more challenging work. However, they also have a greater tendency
towards health risks and are less likely than Type B‘s to be in top executive
positions.

• Organizations can play a role in developing their staff for success. Workshops,
seminars, even book clubs that focus on developing EQ an strengthen
organizational success.

• Allowing for a diverse set of experiences, with appropriate support can maximize
and expand the capabilities of each employee.