Introduction
The word “organisation” is derived from the word ‘organism’ which means an organised body with connected interdependent parts sharing common life. When a group of persons working together to achieve a common goal, the problems such as who decides what issues, who does what work and what action should be taken on the basis of certain conditions common life. When a group may arise.
Organisation is a mechanism or structure which helps the activities to be performed effectively. The organisation is established for the purpose of achieving the business structure which helps the activities to be performed be the business objectives, there is a need of objectives. The business objectives may differ from one business to another. Whatever may be the businesss objectives, there is a need of an organisation.
Meaning
Organisation is the detailed arrangement of work and working conditions in order to perform the assigned activities in an effective manner. Organsisation can be compared to a human body.
The human body consists of hands, feet, eyes, ears, nose, fingers, mouth, etc. These parts are performing their work independently and at the same time, one part cannot be a substitute to another. The same compared to a human body.
The human body , can be identified in the organisation also. The organisation consists of different departments. Each department performs its work independently and cannot be a substitute principles to another.
Definition
Haney ” Organisation is a harmonious adjustment of specialised parts for the accomplishment of some common purpose or purposes.”
Mc Farland “An identified group of people contributing their efforts towards the attainment of goals is called an organisation.”
Allen, ”The process of identifying and grouping the work is to be performed, defining, and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.”
Mooney and Reily, “Organisation is the form of every human association for the attainment of a common purpose.”
Chester Bernard, “A system of co-operative activities of two or more persons is called organisation.”
R.C. Davis, “Any group of people, large or small, which has been implemented adequately and is co-operating willingly under the direction of competent executive leadership in an effective, economical accomplishment of certain common objective.”
G.R. Terry, “Organising is the establishing of effective beha-vioural relationships among persons so that they may work together effectively and gain personal satisfaction in doing selected tasks under given environmental conditions for the purpose of achieving some goal or objective.”
Koontz O’Donnel, “Organising involves the establishment of an international structure of roles through determination and enumeration of the activities required to achieve the goals of an enterprise and each part of it; the grouping of these activities, the assignment of such groups of activities to the manager, the delegation of authority to carry them out and provision for co-ordination of authority and informational relationship, horizontally and vertically, in the organisation structure.”
Louis Al Allen, “Organisation is that process of identifying and grouping the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.”
Oliver Sheldon, “Organisation is the process of so combining the work which the individual or groups have to perform with the facilities necessary for its creation that the duties so performed provide the best channels for the efficient, systematic, positive and coordinated application of the available efforts.”
Spriegel, “In its broadest sense, organisation refers to the relationship between the various factors present in a given endeavour. Factory organisation concerns itself primarily with the internal relationships within the factory such as responsibilities of personnel arrangement and grouping of machines and material control. From the stand-point of the enterprise as a whole, organisation is the structural relationship between the various factors in an enterprise.”
Wheeler, “Internal organisation is the structural framework of duties and responsibilities required to personnel in performing various functions within the company. It is essentially a blue print for action resulting in a mechanism for carrying out the function to achieve the goals set up by the company management.”
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Functions of Organisation
From the above definitions, it is understood that the functions of organisation includes determination of activities, grouping of activities, allotment of duties to specified persons, delegation of authority, defining relationships and the co-ordination of various activities.
1. Determination of activities: It includes the deciding and division of various activities required to achieve the objectives of the organisation. The entire work is divided into various parts and again each part is sub-divided into various sub-parts. For example, the purchase work may be divided into requisition of items, placing of an order, storage and so on.
2. Grouping of activities: The next function of organisation is that the identical activities are grouped under one individual or a department. The activities of sales such as canvassing, advertisements and debt collection activities are grouped under one department i.e., sales department.
3. Allotment of duties to specified persons: In order to ensure effective performance, the grouped activities are allotted to specified persons. In other words, the purchasing activities are assigned to the Purchase Manager; the production activities are assigned to Production Manager; the sales activities are assigned to Sales Manager and the like. Besides, adequate staff members are appointed under the specified persons. The specified persons are specialised in their respective fields. If there is any need, appropriate training would be provided to such persons.
4. Delegation of authority: Assignment of duties or allotment of duties to specified persons is followed by delegation of authority. It will be very difficult for a person to perform the duties effectively, if there is no authority to do it.
While delegating a authority, responsibilities are also fixed. Thus, the Production Manager may be delegated with the authoriy to produce the goods and fixed with the responsibility of producing quality goods.
5. Defining relationship: When a group of persons is working together for a common goal, it becomes necessary to define the relationship among them in clear terms. If it is he is answerable.
In another sense, each boss should know what authority he has and over each person will know who is his boss, from whom he has to receive orders and to whom which person.
6 Co-ordination of various activities: The delegated authority and responsibility should be co-ordinated by the Chief Managerial Staff. The reason is that there must be a separate and responsible person to see whether all the activities are going on to accomplish the objectives of the organisation or not.
Principles of Organisation
The work can be completed in time whenever a technique or principle is adopted. So, the success or failure of an organisation depends upon the principles to be followed in the organisation. Some experts like Taylor, Fayol and Urwick have given the principles of organisation. They are briefly discussed below:
1. Principle of definition: It is necessary to define and fix the duties, responsibilities and authority of each worker. In addition to that the organisational relationship of each worker with others should be clearly defined in the organisational set up.
2. Principle of objective: The activities at all levels of should be geared to achieve the main objectives of the organisation. The activities of the different departments or sections may be different in nature and in approach, but these should be concentrated only for achieving the main objectives.
3. Principle of specialisation or division of work: Division means that or sections. waste the entire activities of the organi-sation are suitably grouped into departments.
The departments or sections may be further divided into several such units so as to ensure maximum efficiency. This will help to fix up the right man to the right job and reduce of time and resources.
The work is assigned to each person according to his educational qualification, experience, skill and interests. He should be mentally and physically fit for performing the work assigned to him. The required training may be provided to the needy persons. It will result in attaining specialisation in a particular work or area.
4. Principle of co-ordination: The objectives of the organisation may be achieved quickly whenever co-ordination exists among the workers. At the same time each work can be done effectively by having co-ordination. The final objective of all organisations is to get smooth and effective co-ordination.
5. Principle of authority: When many persons are working together in one place there will be a difference of power and authority. Of these persons, some will rule and others will be ruled. Normally, maximum powers are vested with the top executives of the organisation.
These senior members should delegate their authorities to their subordinates on the basis of their ability. In certain cases, the subordinates are motivated through the delegation of authority and they perform the work efficiently with responsibility.
6. Principle of responsibility: Each person is responsible for the work completed by him. Authority is delegated from the top level to the bottom level of the organisation. Bu the responsibility can be delegated to some extent.
While delegating the authority, there is no need of delegation of responsibility. So, the responsibility of the junior staff members should be clearly defined.
7. Principle of explanation: While allocating duties to the persons, the extent of liabilities of the person would be clearly explained to the concerned person. It will enable the person to accept the authority and discharge his duties.
8. Principle of efficiency: Each work can be completed efficiently wherever the climate or the organisational structure facilitates the completion of work. The work should be completed with minimum members, in less time, with minimum resources and within the right time.
9. Principle of uniformity: The organisation should make the work distribution in such a manner that there should be an equal status and equal authority and powers among the same line officers. It will avoid the problems of dual subordination or conflicts in the organisational set up. Besides, it increases co-ordination among the officers.
10. Principle of correspondence: Authority and responsibility should be in parity with each other. If it is not so, the work cannot be effectively discharged by any officers, whatever his ability may be.
At the same time, if authority alone is delegated without responsibility, the authority may be misused. In another sense, if responsibility is delegated without the authority, it is a dangerous one.
11. Principle of unity of command: This is also sometimes called the principle of responsibility. The organisational set up should be arranged in such a way that a subordinate should receive the instruction or direction from one authority or boss. If there is no unity of command in any organisational set up, the subordinate may neglect his duties.
It will result in the non completion of any work. In the absence of unity of command, there is no guidance available to the subordinates and there is no controlling power for the top executives of the organisation. Further, some subordinates will have to do more work and some others will not do any work at all.
12. Principle of balance: There are several units functioning separately under one organisational set up. The work of one unit might have been commenced after the completion of the work by another unit. So, it is essential that the sequence of work should be arranged scientifically.
13. Principle of equilibirum balance: The expansion of business activities require some changes in the organisation. In certain periods, some sections or departments are overloaded and some departments are under loaded.
During this period, due weightage should be given on the basis of the new work load. The overloaded sections or departments can be further divided into sub sections or sub-departments. It would entail in the effective control over all the organisational activities.
14. Principle of continuity: It is essential that there should be a re-operation of objectives, re-adjustment of plants and provision of opportunities for the development of future management. This process is taken over by every organisation periodically.
15. Principle of span of control: This is also called span of management or span of supervision or levels of organisation. This principle is based on the principle of relationship. Span of control refers to the maximum number of members effectively supervised by a single individual.
The number of members may be increased or decreased according to the nature of work done by the subordinate or the ability of the supervisor. In the administration,area, under one executive, nearly four or five subordinates may work.
In the lower level the factory level, under one supervision, the twenty or twenty five number of workers work. The span of control enables the smooth functioning of the organisation.
16. Principle of leadership facilitation: The organisational set up may be arranged in such a way that the persons with leadership qualities are appointed in key positions. The leadership qualities are honesty, devotion, enthusiasm and inspiration.
17. Principle of exception: The junior officers are disturbed by the seniors only when the work is not done according to the plans laid down. It automatically reduces the work of middle level officers and top level officers.
So, the top level officers may use the time gained by reduction in workload for framing the policies and chalking out the plans of organisation.
18. Principle of flexibility: The organisational set up should be flexible to adjust to the changing environment of business. The organisation should avoid the complicated procedures and permit an expansion or contraction of business activities.
19. The scalar principle: This is also called chain of command or line of authority. Normally, the line of authority flows from the top level to bottom level. It also establishes the line of communication. Each and every person should know who is his superior and to whom he is answerable.
20. Principle of simplicity and homogeneity: The organisation structure should be simple. It is necessary to understand a person who is working in the same organisation. If the organisation structure becomes a complex one, junior officers do not undestand the level and the extent of responsibility for a particular activity.
The simplicity of the organisational structure enables the staff members to maintain equality and homogeneity. If equality and homogeneity are maintained in one organisation, it is possible to determine whether the staff members discharge their duties to realise the objective of the organisation.
21. Principle of Unity of Direction: This is also called the principle of co-ordination. The major plan is divided into sub-plans in a good organisational set up. Each sub-plan is taken up by a particular group or department. All the groups or departments are requested to co-operate to attain the main objectives or in implementing major plan of the organisation.
22. Principle of joint decisions: In the business organisation, there are number of decisions taken by the officers to run the business. If a complicated problem arises more than one member examines the problems and takes the decisions.
Whenever the decision is taken jointly, the decision gives the benefit for a long period and the decision is based on various aspects of the organisational set up.
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Nature or Characteristics of Organisation
Organisation is the pioneering step of the management. The functions of management are sitting over the strong organisational set up. A palace may be constructed only when a very strong foundation is laid.
The same principle is followed here. Organisation is the foundation of management. Without organisation, the functions of management such as planning, organising, staffing, directing, co-ordinating and controlling cannot succeed.
Organisation supplies the human and material resources and helps to achieve the objectives of business. The organisation provides the means or techniques with strong efforts for more production and effective completion of the work. Organisation increases the certainity and promptness in the completion of work by assigning fixed duties to every person.
Whenever the duties are fixed, it automatically develops team spirit towards the realisation of common goals. Initially, the total work of the enterprise can be divided into various parts and then linked with all the parts as and when the need arises to achieve main objectives.
The connection of various parts of the organisation is given by the authority relationship of organisational structure. The relationship may operate upward, downward, and sidewise of the organisation.
1. Division of labour: The total work can be divided into many parts for effective performance of the work. Each part of work may be completed by one person or a group of persons. But, all the parts of the work are done with the aim to achieve the main objective of the organisation. The work is assigned to a person who is specialised in that particular work.
If there is a proper division of labour, no person will be allowed to do anything according to his own way unless and otherwise he is not well equipped. The division of labour results in the creation of specialised persons because a person does the same work again and again.
No waste of time, energy and resources are some of the advantages of division of labour. In addition to this, the division of labour results in the increase of quality output and quantity of product without any additional capital.
2. Co-ordination: Different persons are assigned different works in one organisation. But, all the works are performed to achieve the objectives. It implies that there is a need of co-ordination among the workers in an organisation. Each and every department or section of the organisation should have relationship with each other, to get mutual co-operation.
3. Objectives: The objectives of the organisation should be defined clearly. The objectives cannot be achieved without the existence of a good organisational structure. In turn, the organisation cannot exist without objectives for a long period.
4. Authority-responsibility structure: An organisation means an arrangement of position of executives by adopting a rank system. In other words, a subordinate has one boss and a superior has control over the subordinate specifically. The position of each of the executives is defined with regard to the extent of authority and responsibility vested in him to discharge the duties.
5. Communication: Every organisation has its own communication system and the methods. The success of management depends upon the effective system of communication. The reason is that each and every person working in an organisation should know the techniques of communication and the importance of communication. The channels of communication may be divided into formal, informal, downward and upward or horizontal.
Importance / Advantages of Organisation
Organisation creates the relationship between top level executives and lower level staff members. The top level executives perform the functions, like planning, organising, staffing, directing, controlling the lower level people. The actual work is completed at lower level of the organisation. In this way, the organisation maintains the relationship with each other in an enterprise.
1. Facilatate administration: Administration aims at earning the highest profit by utilising the available resources properly. There is a planning, policy making, direction and co-ordination in the administration level to achieve the objectives.
Besides, the administration classifies the activities of the business department-wise and appoints the officers, assistants, supervisors, executives to facilitate the achievement of objectives.
There should be an effective administration to achieve the allocation of duties and responsibilities, absence of co-ordination, communication gap, Duplication of work, wrong planning, inefficient personal, lack of motivation, improper improper instructions are the ingredients of ineffective administration. This ineffective administration can be removed by having a sound organisation.
Allen observes that “A properly designed and balanced organisation facilitates both management and operation of the enterprise. Inadequate organisation may not only discourage but also actually preclude effective administration”.
2. Increases the efficiency of management: Under good organisation, there is a chance of exhausting the worker’s ability in full and utilisation of resources Confusion, delay and duplication of work are avoided in good organisation. It automatically motivates the employees who are working in an organisation and increases the efficiency of management.
3. Facilitates growth and diversification: The structure of the company depends upon the structure of the organisation. The structure of the company can be changed whenever the growth and expansion activities are carried out. The growth of business means an increase in the scale of operation and diversification means starting of production of a new type of products.
Changes in the organisation may result in the appointment of additional staff members, de-centralisation of authority and responsibility, raising of additional capital, identification of the consumer’s satisfaction and preferences, expansion of sales promotion activities and the like.
4. Ensures optimum utilisation of material resources and human efforts: Division of work and specialisation are the tools used to achieve the objective of optimum utilisation of material, resources and human efforts. Right man, right time and the right job can also be applied to them. Good organisation increases the efforts of the employees and the working facilities.
5. Adoption of new technology: The effectiveness of an enterprise is measured by the reaction of staff members to the adopting of a new technology. In the scientific world, there is a lot of innovations and inventions identified in the area of production, distribution and personnel management.
If the new technology is adopted by the enterprise, the maximum benefits can be obtained in any field or activity. A flexible organisational structure is needed to adopt a new technology.
6. Places proportionate importance to the various activities of the enterprise: Organisation classifies the entire business activities into departments. Each department is receiving attention according to its importance it has in the achievement of business objectives.
Money and efforts are spent in proportion to the contribution made by each and every department. It does not mean that less important department activities are neglected. It means that due importance is given to each department according to its contribution towards the achievement of the objectives.
7. Encourages creativity and initiative: A sound organisational structure will give an opportunity for the staff to show their hidden talents which will help the enterprise to achieve the business goals and earn higher profits.
Clear distribution of authority and responsibility, incentives offered for specialised work and freedom given to personal work, increases the spirit of constructive and creative approach in management.
8. Facilitates co-ordination: The activities of different departments are grouped together to achieve the business objectives. Each department performs its own function in a closely related manner and not as competitors.
9. Facilitates training and development of managerial personnel: A sound organisational provides training to new staff members before placement and give refresher training to the existing staff members to improve their efficiency.
The training may be given within the company or outside the company according to the training facilitates available. Now-a-days training institutes give training to the needy persons with the help of the different experts from various fields. These training institutes are collecting data directly from the field used in the training.
10. Prevents the growth of secret, influence and corruption: Sound organisation develops the morale, honesty, devotion to duty and loyalty of business organisations. Normally, these help remove corruption, secret and influence. Only an unsound organisation develops secret, influence and corruption.
CLASSIFICATION OF ORGANISATION
The organisation can be classified on the basis of authority and responsibility assigned to the personnel and the relationship with each other. In this way, an organisation can be either formal or informal.
Formal Organisation
The formal organisation represents the classification of activities within the enterprise, indicates who reports to whom and explains the vertical journal of communication which connects the chief executive to the ordinary workers. In other words, an organisational structure clearly defines the duties, responsibilities, authority and relationships as prescribed by the top management.
In an organisation, each and every person is assigned the duties and given the required amount of authority and responsibility to carry out this job. It creates the co-ordination of activities of every person to achieve the common objectives. It indirectly induces the worker to work most efficiently. The inter-relationship of staff members can be shown in the organisation chart and manuals under formal organisation.
Characteristics of Formal Organisation
The important characteristics of a formal organisation are given below:
1. It is properly planned.
2. It is based on delegated authority.
3. It is deliberately impersonal.
4. The responsibility and accountability at all levels of organisation should be clearly defined.
5. Organisational charts are usually drawn.
6. Unity of command is normally maintained.
7. It provides for division of labour.
Advantages of Formal Organisation
1. The definite boundaries of each worker is clearly fixed. It automatically reduces conflict among the workers. The entire building is kept under control.
2. Overlapping of responsibility is easily avoided. The gaps between the responsibilities of the employees are filled up.
3. Buck passing is very difficult under the formal organisation. Normally exact standards of performance are established under formal organisation. It results in the motivating of employees.
4. A sense of security arises from classification of the task.
5. There is no chance for favouritism in evaluation and placement of the employee. 6. It makes the organisation less dependent on one man.
Keith Davis observes that formal organisation is and should be our paramount organisation type as a general rule. It is the pinnacle of man’s achievement in a disorganised society. It is man’s orderly, conscious and intelligent creation for human benefit.
Arguments against Formal Organsiation
1. In certain cases, the formal organisation may reduce the spirit of initiative.
2. Sometimes authority is used for the sake of convenience of the employee without considering the need for using the authority.
3. It does not consider the sentiments and values of the employees in the social organisation.
4. The formal organisation may reduce the speed of informal communication.
5. It creates the problems of coordination.
Informal Organisation
Informal organisation is an organisational structure which establishes the relationship on the basis of the likes and dislikes of officers without considering the rules, regulations and procedures.
These types of relationships are not recognised by officers but only felt. The friendship, mutual understanding and confidence are some of the reasons for existing informal organisation. For example, a salesman receives orders or instructions directly from the sales manager instead of his supervisors.
The informal organisation relationship exists under the formal organisation also. The informal organisation relationship or informal relations give a greater job satisfaction and result in maximum production.
According to C.J. Bernard, “Informal organisation brings cohesiveness to formal organisation. It brings to the members of a formal organisation a feeling of belonging, status of self respect and gregarious satisfaction. Informal organisations are important means of maintaining the personality of the individual against certain effects of formal organisation which tend to disintegrate personality.”
Characteristics of Informal Organisation
1. Informal organisation arises without any external cause i.e., voluntarily.
2. It is a social structure formed to meet personal needs.
3. Informal organisation has no place in the organisation chart.
4. It acts as an agency of social control.
5. Informal organisation can be found on all levels of organisation within the managerial hierarchy.
6. The rules and traditions of informal organisation are not written but are commonly followed.
7. Informal organisation develops from habits, conduct, customs and behaviour of social groups.
8. Informal organisation is one of the parts of total organisation.
9. There is no structure and definiteness to the informal organisation.
Advantages of Formal Organisation
1. It fills up the gaps and deficiency of the formal organisation.
2. Informal organisation gives satisfaction to the workers and maintains the stability of the work.
3. It is a useful channel of communication.
4. The presence of informal organisation encourages the executives to plan the work correctly and act accordingly.
5. The informal organisation also fills up the gaps among the abilities of the managers.
Disadvantages of Informal Organisation
1. It has the nature of upsetting the morality of the workers.
2. It acts according to mob psychology.
3. Informal organisation indirectly reduces the efforts of management to promote greater productivity.
4. It spreads rumour among the workers regarding the functioning of the organisation unnecessarily.
DIFFERENCE BETWEEN FORMAL AND INFORMAL ORGANISATION
| Formal Organisation | Informal Organisation | |
| 1 | It arises due to delegation of authoriy. | It arises due to social interaction of people. |
| 2 | It gives importance to terms of authority and functions. | It gives importance to people and their relationships. |
| 3 | It is created deliberately. | It is spontaneous and natural. |
| 4 | The formal authority is attached to a position. | The informal authority is attached to a person. |
| 5 | Rules, duties and responsi-bilities of workers are given in writing. | No such written rules and duties followed in informal organisation. |
| 6 | Formal organisation comes from outsiders who are superior in the line of organisation. | Informal organisation comes from those persons who are objects of its control. |
| 7 | Formal authority flows from upwards to downwards. | Informal authority flows upwards to downwards from or horizontally. |
| 8 | Formal organisation may grow to maximum size. | Informal organisation tends to remain smaller. |
| 9 | It is created for technological purposes. | It arises from man’s quest for social satisfaction. |
| 10 | Formal organisation is per-manent and stable. | There is no such permanent nature and stability. |
THEORIES OF ORGANISATION
Organisation theory means the study of the structure, functioning and performance of organisation and the behaviour of individual and groups within it.
The various theories of organisation are given below:
1. Classical theory.
2. Neo-classical theory.
3. Modern theory.
4. Motivation theory.
5. Decision theory.
1. CLASSICAL THEORY
The classical theory mainly deals with each and every part of a formal organisationThe classical theory was found by the father of scientific management, Frederick W.TaylorNext, a systematic approach to the organisation was made by Monney and Reicey.
The classical theory is based on the following four principles:
A. Division of Labour
B. Scalar and functional processes
C. Structure, and
D. Span of control
A. Division of labour: This theory fully depends upon the principle of division of labour. Under the division of labour, the production of a commodity is divided into the maximum number of different divisions. The work of each division is looked after by different persons.
Each person is specialised in a particular work. In other words, the work is assigned to a person according to his specialisation and the interest he has in the work. The division of labour results in the maximum production or output with minimum expenses incurred and minimum capital employed.
B. Scalar and functional processes: The Scalar process deals with the growth of organisation vertically. The functional process deals with the growth of organisation horizontally. The scalar principles refer to the existence of relationship between superior and subordinate.
In this way, the superior gives instructions or orders to the subordinates (various levels of management) and gets back the information from the subordinate regarding the operations carried down at different levels or stages. This information is used for the purpose of taking decision or remedial action to achieve the main objectives of the business.
The Scalar chain means the success of domination by the superior on the subordinate from the top to the bottom of organisation. The line of authority is based on the principle of unity of command which means that each subordinate does work under one superior only.
C. Structure: The organisational structure may be defined as the prescribed patterns of work related behaviour of workers which result in the accomplishment of organisational objectives. The organisational structure is used as a tool for creating a relationship among the various functions which make up the organisation.
Specialisation and co-ordination are the main issues in the design of an organisational structure. The term specialisation includes the division of labour and the usage of special machines, tools and equipments.
Specialisation is obtained when a person is requested to do a single work and it results in the increase in productivity. The facilities or advantages of suitable training, easy allocation of work, job scheduling and effective control are also obtained from specialisation.
Co-ordination means an orderly performance in operations to achieve organisational objectives. Normally, the business units are organised on a functional basis. The functions performed by different persons of different nature. It is also necessary to co-ordinate the various functions to achieve the main objectives and at the same time a function does not I conflict with any other function. are
D. Span of control: Span of control means an effective supervision of maximum number of persons by a supervisor. According to Brech, “Span refers to the number of persons, themselves carrying managerial and supervisory responsibilities, for whom the senior manager retains his over-embracing responsibility of direction and planning, co-ordination, motivation and control.”
From the above discussion, we can know that the classical theory emphasised unity of command and principle of co-ordination. Most of the managers’ time is wasted in the coordination and control of the subordinates. In many organisations, a single supervisor supervises the work of 15-20 workers and does not follow the principle of span of control.
Some of the experts hold that a manager can supervise 4-8 members at higher levels and between 8-20 members at the lower levels of the organisation. But according to Lyndall Urwick, a maximum of 4 members at higher levels and between 8-12 members at lower levels can be supervised by the superior to constitute an ideal span of control.
Characteristics of Classical Theory
1. It is based on division of labour.
2. It is based on objectives and tasks of organisation.
3. It is concerned with formal organisation.
4. It believes in human behaviour of the employees
5. It is based on co-ordination of efforts.
6. Division of labour has to be balanced by unity of command.
7. It fixes a responsibility and accountability for work completion. 8. It is centralised.
Criticisms of Classical Theory
1. This theory is based on authoritarian approach.
2. It does not care about the human element in an organisation.
3. It does not give two way communication.
4. It underestimates the influence of outside factors on individual behaviour.
5. This theory neglected the importance of informal groups.
6. The individual is getting importance at the expense of the group.
7. It also ignores the influence of outside factors on individual behaviour.
8. The generalisations of the classical theories have not been tested by strict scientific methods.
9. The motivational assumptions underlying the theories are incomplete and consequently inaccurate.
2. NEO-CLASSICAL THEORY
This theory is developed to fill up the gaps and deficiencies in the classical theory. It is concerned with human relations movement. In this way, the study of organisation is based on human behaviour such as how people behave and why they do so in a particular situation. The neo-classical scholars used classical theory as the basis for their study and modified some of the principles for the study. The neo-classicals have only given new insights rather than new techniques.
The scholars also pointed out the practical difficulties of the working of scalar and functional processes. The main contribution of this theory highlights the importance of the committee management and better communication. Besides, this theory emphasised that the workers should be encouraged and motivated to evince active participation in the production process. The feelings and sentiments of the workers should be taken into account and respected before any change is introduced in the organisation.
The classical theory was production-oriented while neo-classical theory was people-oriented.
Contributions of Neo-Classical Theory
1. Person should be the basis of an organisation.
2. Organisation should be viewed as a total unity.
3. Individual goals and organisation goals should be integrated.
4. Communication should be moved from bottom to top and from top to bottom.
5. People should be allowed to participate in fixing work standards and decisionmaking.
6. The employee should be given more power, responsibility, authority and control.
7. Members usually belong to formal and informal groups and interact with others within each group or sub-group.
8. The management should recognise the existence of informal organisation.
9. The members of sub-groups are attached with common objectives.
Criticism of Neo-Classical Theory
A survey conducted by American Management Association (AMA) indicates that most the companies reported found little or nothing useful in behavioural theory. According Ernest Dale, “neither classical theory nor neo-classical theory provides clear guidelines the actual structuring of jobs and provision for co-ordination.”
3. MODERN THEORY
The other name of Modern Theory is Modern Organisation Theory. According to one authority, it was organised in the early 1950s. This theory composed of the ideas of different approaches to management development. The approach is fully based on empirical research data and has an integrating nature. The approach reflects the formal and informal structures of the organisation and due weightage is given to the status and roles of peronnel in an organisation.
Like the general system theory, modern organisation theory studies:
1. The parts (individual) in aggregates and the movement of individuals and out of the system.
2. The interaction of individual with the environment found in the system.
3. The interaction among individual in the system.
Essentials of Modern Theory
1. It views the organisations as a whole.
2. It is based on systems analysis.
3. The findings of this theory are based on empirical research.
4. It is integrating in nature.
5. It gives importance to inter-disciplinary approach to organisational analysis.
6. It concentrates on both quantitatives and behavioural sciences.
7. It is not a unified body of knowledge.
Criticism of Modern Theory
1. This theory puts old wine into a new pot.
2. It does not represent a unified body of knowledge. There is nothing new in this theory bacause it is based on past empirical studies.
3. This theory forms only the questions and not the answers.
4. It is based on behavioural, social and mathematical theories. These are management theories in themselves.
4. MOTIVATION THEORY
It is concerned with the study or work motivation of employees of the organisation. The works are performed effectively if proper motivation is given to the employees.
The motivation may be in monetary and non-monetary terms. The inner talents of any person can be identified after giving adequate motivation to employees. Maslow’s hierarchy of needs theory and Honberg’s two factor theory are some of the examples of motivation theory.
5. DECISION THEORY
The other name of decision theory is decision making theory. This theory was given by Herbert. A. Simon. He was awarded Nobel Prize in the year of 1978 for this theory. He regarded organisation as a structure of decision makers. The decisions were taken at all levels of the organisation and important decisions (policy decisions) are taken at the higher levels of organisation.
Simon suggested that the organisational structure be designed through an examination of the points at which decisions must be made and the persons from whom information is required if decisions should be satisfactory.
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