Introduction to the Organisation Theory
CHAPTER 1 – An overview
Main features of an organization:
o goals have to be set
o key areas of responsibility that are necessary to achieve the goals have to be identified
o pressures from the environment have to be identified and responded to -> subsequent
changes in the organisation goals
o culture of the organization is necessary (including the standards of behaviour and
attitudes towards work that reflect the values and necessary attitude)
= successful establishment, correct organisation theory and design
Organization is a consciously managed and coordinated social entity with an identifiable
boundary, which functions on a continuous basis to achieve a set of goals
- Managed and coordinated =involving management hierarchy in decision-making
- Social entity = people interacting with each other
- Identifiable boundary = distinguishing members from non-members
The interaction patterns that people follow in an organization are deliberately channelled in
directions which promote the organization’s interests, which means that interaction patterns
have to be coordinated and the results of that interaction have to be monitoring.
Organizational structure - the degree of complexity, formalization and centralization in an
organization
o complexity means the extent of differentiation within the organization, includes the
degree of specialization and division of labour
o formalisation means the degree to which an organisation relies on rules and
procedures to direct the behaviour of employees
o centralization means where the responsibility for decision-making authority lies
- centralized: just a few executives, or even one person, make the relevant
decisions
- decentralized: a greater number of people are involved in decision-making
Organization Theory - the discipline that studies the structure and design of organizations
Organization design - the construction and change of an organization structure to achieve
the goals
Organisational behaviour - the study of the way in which individuals and teams behave in
the workplace
System - a set of interrelated and interdependent parts which interact to produce a unified
outcome
o closed system is self-contained system that has no interaction with its environment
,Doesn’t exist solely closed-system organization apart from utopian communities or self-
contained religious groups. Even those are only temporarily closed
o open system is a dynamic system that interacts with and responds to the
environment
Characteristics of an open system:
- environment awareness means that the organization constantly interacts with its
environment
- feedback means that the system adjust to information from the environment
- cyclical character (consists of cycles of events)
- tendency towards growth
- steady state means that the system is unchanged over long periods of time
- movements towards growth and expansion (sophisticated system)
- subparts are in balance and able to adapt to the environment
- equifinality is the ability to reach the same state by a variety of paths
Organizational life cycle - the pattern of predictable change through which the organization
moves from start-up to dissolution
Life cycle stages:
1. Entrepreneurial stage: the formation stage
- uncertain goals
- high creativity and managerial input
- maintaining a steady supply of resources such as capital and labour
2. Collectivity stage: the stage continues the innovation of earlier stage
- organization’s mission is clarified
- communication and structure within the organization remain informal
- high commitment, long hours of work
3. Formalization-and-control stage: stabilization of the operation of the organization
- formal rules and procedures are introduced
- decision-making is clarified
- efficiency and stability become more important
4. Elaboration-of-structure stage: reaching a large size and bureaucracy
- searching for new products and growth opportunities
- structure becomes more complex and elaborated
- decision-making is decentralized
5. Decline stage: demand for its products or services shrinking
- new opportunities searching
- conflict promoted by shortage of resources and disagreements over strategy
- making decisions become more centralized
- the organization ceases to exist
Organization theories:
, o positivism: an assumption that the world may be known and improved by extending
knowledge through research
o normative: developing theories which may be applied across a wide range of
situations
o critical theory: an approach to studying organizations which concentrates on their
perceived shortcomings and deficiencies
o postmodernism: an approach to studying organizations which emerged from
European philosophical origins and rejects traditional approaches to studying
organizations
CHAPTER 2 – The evolution of Organisation Theory
Before the Industrial Revolution:
- farmers and labourers were hunting and forming their own food making own
supplies
- manufacturing was done in people's homes using hands tools or basic machines
- almost fully self-sufficient
People worked for themselves not for a wage. In 1820 only 20% of U.S. population dependent
on wage
After the Industrial Revolution:
- mass production appeared = low-skilled workers, repetitive tasks, high-tech and
new machinery on the production
- modern industrial structure = departmentalization, division into workers,
managers and general managers, working for wages, management control –
supervisor)
Basic principles of modern organizations:
1. division of labour = breaking down tasks into simple components, repetition and
specialization
2. bureaucracy = hierarchy, written rules and laws, formal selection procedures - selection
of employees who fit in
3. rational system perspective = goal specification and formalization
CLASSICAL PERSPECTIVE 1900 – 1930
- closed system perspective (without considering the impact of environment)
- managerial problems such as disciplining labourers, enhancing efficiency and
controlling labour unrest
Gold: to organize jobs as efficiently as possible (to minimize inputs and maximize output)
Frederick Taylor and scientific management
Frederick aimed to improve efficiency of factory work organizing work at the lowest level of the
organization.
, He initiated a movement oriented to achieve the “one best way” jobs should be done
by systematizing and standardizing jobs:
- equal division of responsibility between managers and workers
- shift in power from worker to manager
- managed production as a science
- deskilling of work
- centralization of decision-making
- manager's responsibility was to train and motivate and workers (using
punishments)
Henry Fayol and the 14 principles of organization
Henry developed principles for the whole management to identify the functions which a
manager should perform:
1. Division of labour, specialisation
2. Authority must equal responsibility
3. Discipline (obeying and respecting rules)
4. Unity of command ( only one superior for the group of employees)
5. Unity of direction (same tasks for one departments)
6. Subordination of individual interests to the general interests (no individual interests)
7. Remuneration (fair wages)
8. Centralization
9. Scolor chain (communication should follow the line of authority)
10.Order (people and materials should be in the right place at the right time)
11. Equity (being kind in fair)
12. Stability of tenure or personal (replacement has to be available to fill vacancies)
13. Initiative by employees
14. Espirit de corps (team spirit for the harmony)
Max Weber and bureaucracy
Weber created the “ideal type” organization structure based on:
- division of labour
- clear authority hierarchy
- formal selection procedures (finding best employees for the job)
- detailed rules and regulations
- impersonal relationship
- employment decisions based on merit
- career tracks
- separation of members’ organizational and personal lives
Ralph Davis and rational planning perspective
- development of clear goals
- plan to achieve these goals is identified
- the structure of organization is contingent on the organization’s objectives
CHAPTER 1 – An overview
Main features of an organization:
o goals have to be set
o key areas of responsibility that are necessary to achieve the goals have to be identified
o pressures from the environment have to be identified and responded to -> subsequent
changes in the organisation goals
o culture of the organization is necessary (including the standards of behaviour and
attitudes towards work that reflect the values and necessary attitude)
= successful establishment, correct organisation theory and design
Organization is a consciously managed and coordinated social entity with an identifiable
boundary, which functions on a continuous basis to achieve a set of goals
- Managed and coordinated =involving management hierarchy in decision-making
- Social entity = people interacting with each other
- Identifiable boundary = distinguishing members from non-members
The interaction patterns that people follow in an organization are deliberately channelled in
directions which promote the organization’s interests, which means that interaction patterns
have to be coordinated and the results of that interaction have to be monitoring.
Organizational structure - the degree of complexity, formalization and centralization in an
organization
o complexity means the extent of differentiation within the organization, includes the
degree of specialization and division of labour
o formalisation means the degree to which an organisation relies on rules and
procedures to direct the behaviour of employees
o centralization means where the responsibility for decision-making authority lies
- centralized: just a few executives, or even one person, make the relevant
decisions
- decentralized: a greater number of people are involved in decision-making
Organization Theory - the discipline that studies the structure and design of organizations
Organization design - the construction and change of an organization structure to achieve
the goals
Organisational behaviour - the study of the way in which individuals and teams behave in
the workplace
System - a set of interrelated and interdependent parts which interact to produce a unified
outcome
o closed system is self-contained system that has no interaction with its environment
,Doesn’t exist solely closed-system organization apart from utopian communities or self-
contained religious groups. Even those are only temporarily closed
o open system is a dynamic system that interacts with and responds to the
environment
Characteristics of an open system:
- environment awareness means that the organization constantly interacts with its
environment
- feedback means that the system adjust to information from the environment
- cyclical character (consists of cycles of events)
- tendency towards growth
- steady state means that the system is unchanged over long periods of time
- movements towards growth and expansion (sophisticated system)
- subparts are in balance and able to adapt to the environment
- equifinality is the ability to reach the same state by a variety of paths
Organizational life cycle - the pattern of predictable change through which the organization
moves from start-up to dissolution
Life cycle stages:
1. Entrepreneurial stage: the formation stage
- uncertain goals
- high creativity and managerial input
- maintaining a steady supply of resources such as capital and labour
2. Collectivity stage: the stage continues the innovation of earlier stage
- organization’s mission is clarified
- communication and structure within the organization remain informal
- high commitment, long hours of work
3. Formalization-and-control stage: stabilization of the operation of the organization
- formal rules and procedures are introduced
- decision-making is clarified
- efficiency and stability become more important
4. Elaboration-of-structure stage: reaching a large size and bureaucracy
- searching for new products and growth opportunities
- structure becomes more complex and elaborated
- decision-making is decentralized
5. Decline stage: demand for its products or services shrinking
- new opportunities searching
- conflict promoted by shortage of resources and disagreements over strategy
- making decisions become more centralized
- the organization ceases to exist
Organization theories:
, o positivism: an assumption that the world may be known and improved by extending
knowledge through research
o normative: developing theories which may be applied across a wide range of
situations
o critical theory: an approach to studying organizations which concentrates on their
perceived shortcomings and deficiencies
o postmodernism: an approach to studying organizations which emerged from
European philosophical origins and rejects traditional approaches to studying
organizations
CHAPTER 2 – The evolution of Organisation Theory
Before the Industrial Revolution:
- farmers and labourers were hunting and forming their own food making own
supplies
- manufacturing was done in people's homes using hands tools or basic machines
- almost fully self-sufficient
People worked for themselves not for a wage. In 1820 only 20% of U.S. population dependent
on wage
After the Industrial Revolution:
- mass production appeared = low-skilled workers, repetitive tasks, high-tech and
new machinery on the production
- modern industrial structure = departmentalization, division into workers,
managers and general managers, working for wages, management control –
supervisor)
Basic principles of modern organizations:
1. division of labour = breaking down tasks into simple components, repetition and
specialization
2. bureaucracy = hierarchy, written rules and laws, formal selection procedures - selection
of employees who fit in
3. rational system perspective = goal specification and formalization
CLASSICAL PERSPECTIVE 1900 – 1930
- closed system perspective (without considering the impact of environment)
- managerial problems such as disciplining labourers, enhancing efficiency and
controlling labour unrest
Gold: to organize jobs as efficiently as possible (to minimize inputs and maximize output)
Frederick Taylor and scientific management
Frederick aimed to improve efficiency of factory work organizing work at the lowest level of the
organization.
, He initiated a movement oriented to achieve the “one best way” jobs should be done
by systematizing and standardizing jobs:
- equal division of responsibility between managers and workers
- shift in power from worker to manager
- managed production as a science
- deskilling of work
- centralization of decision-making
- manager's responsibility was to train and motivate and workers (using
punishments)
Henry Fayol and the 14 principles of organization
Henry developed principles for the whole management to identify the functions which a
manager should perform:
1. Division of labour, specialisation
2. Authority must equal responsibility
3. Discipline (obeying and respecting rules)
4. Unity of command ( only one superior for the group of employees)
5. Unity of direction (same tasks for one departments)
6. Subordination of individual interests to the general interests (no individual interests)
7. Remuneration (fair wages)
8. Centralization
9. Scolor chain (communication should follow the line of authority)
10.Order (people and materials should be in the right place at the right time)
11. Equity (being kind in fair)
12. Stability of tenure or personal (replacement has to be available to fill vacancies)
13. Initiative by employees
14. Espirit de corps (team spirit for the harmony)
Max Weber and bureaucracy
Weber created the “ideal type” organization structure based on:
- division of labour
- clear authority hierarchy
- formal selection procedures (finding best employees for the job)
- detailed rules and regulations
- impersonal relationship
- employment decisions based on merit
- career tracks
- separation of members’ organizational and personal lives
Ralph Davis and rational planning perspective
- development of clear goals
- plan to achieve these goals is identified
- the structure of organization is contingent on the organization’s objectives
