THEORIES AND
CONCEPTS
OF ORGANIZATION
CLASSICAL THEORY OF
ORGANIZATION
Presented by
MUHAMMAD YAHYA AHMAD
CEdAP STUDENT OF PCU MANILA
Organization Theory
(Some Definitions)
A proposition or set of propositions that attempts to explain or
predict how groups and individuals behave in differing
organizational arrangements.
Organizational theory attempts to explain the workings of
organizations to produce understanding and appreciation of
organizations.
Some types of organizational theories include classical,
neoclassical, contingency, systems and organizational structure
Organization Theory
(Some Definitions)
Organization theory: is the set of propositions (body
of knowledge) stemming from a definable field of
study which can be termed organizations science.
The study of organizations: is an applied science
because the resulting knowledge is relevant to
problem solving or decision making in ongoing
enterprises or institutions.
Organization Theory
(Some Definitions)
1. Classical organization theory combines aspects of
scientific management, bureaucratic theory and
administrative theory. Scientific management involves
obtaining optimal equipment and personnel and then
carefully scrutinizing each component of the
production process,
2. Neoclassical organization theory is a reaction to the
authoritarian structure of classical theory. The
neoclassical approach emphasizes the human needs
of employees to be happy in the workplace,
Organization Theory
(Some Definitions)
3. Contingency theory views conflict in the work place as
inescapable, but also manageable. This differs from
classical and neoclassical theories that interpret conflict as
interference with organizational equilibrium
4. Systems theorists believe all organizational components
are interrelated. Changes in one component may affect all
other components
5. Organizational structure became an important aspect of
organizational theory due to the increasing complexity of
multinational organizations.
PERSPECTIVES
OF ORGANIZATION THEORIES
Human as
Machine
Human
Relations
Structuralists
Theory
Heavy
handed
Humanize
Management
Hostility
among
workers
Still
accomplish
goals
Understand
tensions
between
production and
humans
Efficiency
Horizontal
Communication
Bridge from
closed to
open Systems
Rationality
Vs
Irrationality
Open
Systems
Theory
Understand
tensions
Contingency
Theory
Ways to
adapt to
environmental
pressures
CONTRIBUTORS TO ORGANIZATION THEORIES
Human as
Machine
Human
Relations
Structuralists
Theory
Open
Systems
Theory
Contingency
Theory
Frederick
Taylor
Mary Parker
Follett
Phillip
Selznik
Getzel and
Guba
Stogdill and
Ohio State
Henri Fayol
Elton Mayo
Victor Vroom
Max Weber
Vilfredo
Pareto
Talcott
Parsons
House and
Mitchell
Robert Merton
Alvn Gouldner
Abraham
Maslow
Fredrick
Herzberg
Douglas
McGregor
Chester
Barnard
Stogill
Andrew
Halpin
Katz and
Kahn
John Seiler
J.W.
Forrester
Porter &
Lawler
Blake and
Mouton
Fred Fiedler
Hersey &
Blanchard
Three Major Theories of Organization
3 Theories of
Organizations
Classical Theory
Neoclassical Theory
System theory
Four Basic components to
any Organization
Critique of the 4 structural
principles of classical
Theory
Five parts of an
organization
1)
Individuals
1) Functional
2)
Formal organization
2) People
2) Scalar
3)
Small groups
3) Cooperation toward a
goal
3) Line/Staff
4)
Status & Roles
4) Span of control
5)
Physical setting
1) System of differentiated
activities
4) Authority
Classical Theory
• Organizations exist to accomplish productionrelated 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.
Classical Theory
(Covers the period from 1900's to mid-1930)
Three assumptions:
1) The relationship between employees and
management: formal structured communication
process, defined tasks, defined accountability, and
formalized procedures and practices to avoid any
conflict in their relationship.
2) The Workers have been treated as economic man
who can be motivated by means of money only.
3) The workers have been considered as a product of
means of production or as a cog in the wheel.
Classical Theory
Two perspectives:
1) Scientific management (Frederick Taylor)–
focusing on the management of work and
workers
2) Administrative management (Henri Fayol
Luther Halsey Gulick and Max Weber):
addressing issues concerning how overall
organization should be structured
Classical Theory
(Fayol’s 5 Management Functions)
Fundamental roles performed by all managers:
 Planning
 Organizing
 Commanding
 Coordinating
 Controlling
Additionally Fayol recognizes fourteen principles that
should guide the management of organizations.
Classical Theory
(Scientific Management Frederick W. Taylor, 1911)
• 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.
Classical Theory
(The fourteen principles of organization (Henry Fayol)
– Division of Work
– Authority and
Responsibility
– Discipline
– Unity of command
– Unity of Direction
– Subordination of
Individual Interest of
General Interest
– Remuneration of
Personnel
– Centralization
of Authority
– Scalar Chain
– Order
– Equity
– Stability of
Tenure
– Initiative
– Esprit de Corps
Classical Theory
(7 functions’ of management Luther H. Gulick)
1)
2)
3)
4)
Planning - developing an
outline of the things that
must be accomplished and
the methods for
accomplishing them
Organizing - establishes the
formal structure of authority
through which work
subdivisions are arranged,
defined, and coordinated to
implement the plan
Staffing - selecting, training,
and developing the staff and
maintaining favorable
working conditions
Directing - the continuous
task of making decisions,
communicating and
implementing decisions, and
evaluating subordinates
properly
5)
6)
7)
Coordinating - all activities
and efforts needed to bind
together the organization in
order to achieve a common
goal
Reporting - verifies progress
through records, research,
and inspection; ensures that
things happen according to
plan; takes any corrective
action when necessary; and
keeps those to whom the
chief executive is responsible
informed
Budgeting - all activities that
accompany budgeting,
including fiscal planning,
accounting, and control
Classical Theory
(Bureaucratic administration, Max Weber)
1) Power: any relationship
within which one
person could impose his
will, regardless of any
resistance from the
other.
2) Authority: existed when
there was a belief in the
legitimacy of that power.
a) Charismatic Authority:
based on the sacred or
outstanding
characteristic of the
individual.
b) Traditional Authority:
essentially a respect for
customs.
c) Rational Legal
Authority: based on a
code or set of rules.
Relevance of the Classical Theory of
Organization
Principle's of organizations formulated in the 18th
century are not able to enhance performance in the
changed environment and technology and contribute
negatively to organizational performance.
Fayol's principle: organization as a closed system,
organizational factors are under the control of
management.
Critics to the Relevance of the Classical
Theory of Organization
Modern management operates in a dynamic environment
constantly adopted to suit the changes in the environment.
Modern organizations do not operate in vacuum
environment.
Modern organizations tend to provide maximum
autonomy , free to take actions to solve problems: to think,
innovate, explore and bring about positive and effective
changes.
Thank You