Organizational Theories

Organizational theories are classified into three major categories: Classical, neoclassical, and modern.

Classical Organizational Theories

Classical theories identify an organization as a machine whose major components comprise of human workers (Gulick, 1937, p 87-92). Here, the efficiency of the organization hugely relies on the efficiency of the workers, and for this reason, the theory places emphasis on activity coordination and specialization. Subsequently, this theory includes the streams of administrative and scientific management. The foundation of classical theory is based on four main pillars: division of labor, scalar and functional processes, structure, and span of control (Bacharach, 1989, p 496-515).Common inadequacies of the theory, however, highlight the theory’s deficiency in decision-making processes, concentration on line and staff structures, the assumption of an organization being a closed system, and ignorance of human behavior.

Neoclassical Organizational Theories

Unlike classical organizational theories, neoclassical theories focus on mechanical and psychological variables that govern the functioning of an organization. Studies conducted by Mayo and Lombard (1944)demonstrated that human behavior was characterized by extra factorsother thanphysiological variables.As such, this theory existsunder control of two points. The first proclaims that the management should view the organizational situation in light of economic, social and technical terms, while the second declares that managers can understand group behavior in terms of clinical approach related to the physician’s analysis of ahumanorganism.The propositions that lie beneath the theory are: (1) an informal organization exists within a formal one, (2) the organization is comprised of a social system with various interacting fragments, (3) a worker’s behavior is predictable via social factors at work, and thus independent, (4) motivation is complex, (5) teamwork is essential in attaining higher productivity, (6) a human being’s approach is not always rational, and (6) communication is a necessary instrument for effective functioning.

Neo-classical theories of organizational management offer alterations and enhancements over classical theories in aspects of informal organizations, decentralization, and flat structure. Even so, they face major criticisms with regard to the assumptions of finding single solutions that are acceptable to all, the restriction of organization structure to a universal configuration, and the nature of being a mere modification of the classical theories.

 Modern Organizational Theory


Following the appraisal of classical and neoclassical theories, modern organizational theory materialized in early 1960’s. The theory attempted to overcome the deficiencies of former theories by adopting another philosophy. According to Scott (1961, p 7-26), the distinctive qualities of a contemporary organization encompass its dependence on pragmatic data, its conceptual, analytical base, as well as its nature of integration.This means that the only profound way of studying an organization is through an analysis that treats it as a system.Through this definition, modern organizational theory is pivoted on two approaches: contingency approachand systems approach.

Contingency approach does not provide models that are entirely universal to all organizations. Rather, it suggests a design that suits a specific organization on the grounding that “structure is most suitable if it is particularly shaped to fit the context of a certain organization.” While framing such an organizational design, managers should consider both internal and external factors, as well as the needs of a specific matter or concern.The main factors at play within an organization decision-making process,in this context,include the environment, technology, size of operations, and people.On the other hand, systems approach scrutinizes the organization based on its totality. Here, the normally-dependent variables, including external and internal ones, are appropriately analyzed to portray an organization in light of the sub-systems that characterize it. Each subsystem is then identified by distinctive standards, configuration, roles and processes of comportment. The main components of an organization, as laid out in this theory, are norms and social structure, as well as human, organizational, and technological inputs (Mehrotra, 2005).

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