Formal and Informal Organization Theory

1
Formal and Informal Organization Theory
2
Meaning of Org theory

• A way of predicting and controlling relationships
  in and around organizations.
• Examine organization as its own entity
• unit of analysis is an org. itself
• It looks at organization as a whole and to see
  the behavior of organizations in terms of its
  structure, goal setting, and organizational
  change
• It seeks to explain how groups and individuals
  behave in differing organizational arrangements

3
Classic Organization Theory

• The first theory of its kind
• Emerged during industrial revolution
• It was rooted in the professions of mechanical
  engineering, industrial engineering, and
  economics
• Heavily influenced by the context of industrial
  revolution with the focus on efficiency and
  productivity

4
Tenets of Classical Organization Theory

• Organizations exist to accomplish
  production-related and econ goals
• 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 orgs act in accordance with Rational
  economic principles

5
Influential Theorists

• Adam Smith the pin factory
• SPeicalziation
• Division of labor
• Frederick W. Taylor
• Father of scientific management
• One best way to accomplish any tasks
• Henri Fayol
• Principles of organization
• Technical, security, finance, managerial,
  accounting, and commercial
• Managerial is the most important aspect of
  organizations
• Gulick POSDCORB

6
Scientific Management

• Replacing traditional rule-of-thumb with
  scientific methods
• There is one best way to accomplish any tasks
• Managers are responsible for discovering these
  principles.
• The scientific study of the selection and
  sequential development of workers
• The emphasis is to ensure optimal outcomes or
  workers.
• Obtaining the cooperation of workers to ensure
  full application of scientific principles
• Apply scientific principles to workers

7
Neoclassical Organization Theory

• Criticisms of Classic Theory of Org
• The humanness of organizational members
• Ignore needs of employees
• Coordination needs among administrative units
• Internal-external organizational relations
• Static environment
• Organizational decision process
• Assume rational decision making within an
  organization

8
Influential Theorists

• Herbert Simon Bounded Rationality
• Humans are bounded in their decisions
• Limited by their cognitive ability, time,
  resources, and money to make comprehensive
  decisions
• Satisfice rather than optimal results
• Phillip Selznik
• Systems theory
• Peter Senge
• Organizational learning

9
Mechanistic Model of Organization

• Mechanistic
• Traditional pattern of hierarchy
• Reliance on formal rules and regulations
• Vertical communications
• Structured decision making is possible
• Specialization of functional tasks
• Closed system of organization
• Static environment assumption

10
Organic Model of an Organization

• Environment changes rapidly and not static.
• A form of organization is less rigid and more
  participative in nature.
• Rely on workers to define and redefine their
  positions
• The realistic nature of individual task is seen
  as set by the total situation of the concern.
• Adaptability to change outside of an
  organization.
• A horizontal gt vertical direction of
  communication resembling consultation rather than
  command