Organisation Theory: Classical and Neo-Classical Origins and Future Forces Shaping Organisational Structures

This essay discusses the classical and neo-classical origins of organisation theory and the forces that will shape organisational structures in the future. It covers scientific management theory, principles of management, human relation school, contemporary marketing orientations, Japanese approach, and organisational learning. The essay highlights the importance of flexible structures, employee engagement, and learning culture in organisations.

Essay

Contents
Topic: Organisation theory from its classical and neo-classical origins and forces that will..........1
shape organizational structures in the future..................................................................................1
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................7

Topic: Organisation theory from its classical and neo-classical origins and
forces that will shape organisational structures in the future
INTRODUCTION
Classical approach is concerned with basic assumption which only prioritises profit
maximisation, labour specialisation and centralized authority in an organization (Al Lily,
Alhazmi, and Alzahrani, 2017. It works on a basic assumption that employees perform because
of their economic needs rather instead of job satisfaction. The neo-classical approach is mainly
concerned with informal organizations, shorter hierarchal levels, and decentralization of
authority as well as a responsibility to employees (Beynon-Davies, 2021). For developing
organizational structures effectively traditional hierarchal levels should be changed with
horizontal networks in the organization. Technological advancements, business strategies,
managerial perceptions, etc. are the main forces that influence organizational structures in the
future (Biehl, , 2017). This project highlights the discussion of all the above concepts in the
following assessment.
MAIN BODY
Scientific management theory profounded by Fredrick Taylor is based on the objective of
increasing productivity in business operations as well as identifying inefficient employees
(Dessers and Vrijhoef, 2017). He suggested that all the tasks should be performed in a
standardized way in order to gain more profits. He also introduced a reward system for efficient
employees and punishments for inefficient ones. He states that monetary incentives can increase
an employee's productivity. There should be proper distribution of responsibilities between
employee and employer. He suggests that there should be scientific methods for performing each
task rather than making assumptions. Henry Fayol had given the theory of principles of
management describing fourteen different aspects in order to understand business operations
strategically. He suggests that work should be divided strategically in order to gain the
specialization which further helps in improving profitability and productivity in business
operations. Fayol suggested that employees should follow organizational rules and regulations as
well as be self-disciplined. He also proposed that there should be unity of command which states
that an employee should take orders from only one superior at one time. This can reduce
confusion and ambiguity in organisation. He recommended that employees should be given fair
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pay in order to maintain a standard of living. He also highlights the key difference between
centralisation and decentralisation. He proposed that it is the responsibility of top management to
determine the organizational structure in the company. He stressed on maintaining the proper
hierarchal level in an organization which aids in the creation of reliable communication channels.
He suggested that in an organization all the things have a proper place and they should be kept
accordingly which reduces the efforts for finding them. Employees should be encouraged to take
initiatives but in a limited range. Taking initiatives should not mean disregarding all the earlier
processes and practices at once. Fayol also stressed maintaining team collaborations in an
establishment which helps in simplifying the complex job. These principles help managers to
perform varied business operations in an effective and strategic manner in order the productivity
of employees as well as the organization. Max Weber who was a German scientist coined the
term bureaucracy which stressed on building strict hierarchal levels, clear lines of authority and
structured regulations in an organization. He suggested that the systematic formation of
organizational structure helps an establishment to gain efficiency in its operations. He
recommended in his theory that tasks should be bifurcated into simple units that can be
performed by employees effectively. This theory proposed that employees should perform as per
their job roles as well as responsibilities and disrespecting these roles is not permitted in an
organization. Strict hierarchal levels are considered as a foundation of bureaucracy theory. This
practice reflects clear communication channels and the degree of delegation in an establishment.
Weber proposed a formal selection in an organization on the basis of the competence and
technical skills of candidates. He suggested that there should be formal rules and regulations to
determine the job role as well as responsibilities. In a bureaucratic organization, employees have
a chance to build their careers on the basis of their expertise in a particular field.
Mayo has coined the term human relation school which is particularly based on the
thought that managers are interested in motivating their employees so that innovative ideas can
be developed effectively (Diamond, 2020). This further helps an organization in generating more
sales and profitability. He instituted that employees are motivated through a clear and accurate
communication channel. He also suggested that managers should make cordial relationships with
their employees in order to increase their efficiency. He also stressed maintaining teams in an
organization. This theory has proposed that there should be good human relations among
employer and employee which helps in evaluating varied needs of personnel. Elton Mayo had
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conducted Hawthorne experiments in order to evaluate the inclination of some individuals to
perform better while in observation and analysis. This theory suggested that it is common
behavior of individuals to perform in the best way when someone observes them. Mayo has
instituted varied experiments such as textile mills, mass interviewing, illumination and bank
wiring. Illumination experiment examines the productivity of employees when there is a
reduction of lights in an organization. In this experiment, two groups were formed to check
whether an increase or decrease in illumination can affect productivity or not. It was concluded
that productivity is not affected by the level of illumination. For better results, other experiments
were performed. Mass interviewing was conducted in order to order to determine employees’
perspectives towards the company and its varied rules. This experiment helps in gaining valuable
insights into human behavior. These experiments are performed in order to gain insights into
how employees are motivated at work. It is assessed that management should recognize varied
social needs of employees to increase their productivity. Abraham Maslow has propounded the
hierarchal need theory which states that an individual has limitless wants. These wants needed to
be fulfilled through a hierarchal level. These needs are basic, safety, belonging, self-esteem and
self-actualization. In business parlance, basic needs relate to getting timely and fair pay for the
job performed. Safety needs are related to a secure and comfortable working environment.
Belonging needs are principally related to building an interpersonal relationship in an
organization. Self-actualization needs are those which essentially deal with growth and
development of individuals. He suggested that fulfillment of next level need depends on
satisfying lower level. Mc Gregor had propounded the theory X and Y which focuses on
evaluating motivational ways for employees. This theory delves into employees’ thought
processes for evaluating which factors motivated them the most. Theory X assumes that
employees should be compelled to work while attaining organizational objectives or goals. There
are individuals who enjoy this as they were just given orders instead of responsibility. Theory y
suggests that employees are self-motivated and directed towards organizational goals and
objectives. This helps them to increase their performance and productivity levels. Mc Gregor
concluded that theory Y will best suit the organization as it helps in increasing profitability and a
dedicated workforce.
Contemporary marketing orientations can be described as theories that principally focus
on customers rather than a market. These strategies assist in making a greater reach to consumers
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with a specific product or service. Contemporary marketing tools essentially comprises of cloud,
brand, influencer and many more. Contemporary marketing strategies are based on target market,
customer demands and profitability. These contemporary marketing approaches are helpful for
better organizational growth as it helps companies to build and maintain personal relationships
with consumers through sending them e-mails and messages. This approach helps in identifying
the targeted audience to be attracted by specific marketing strategies. This helps in reducing
advertisements cost of companies which they were incurring to persuade a large segment. These
approaches stress on developing innovative products or services that encourage employees to
think something big and different. It also allows flexibility in business operations which further
helps in developing organizational structure in a strategic manner. This helps in increasing
customer loyalty and satisfaction towards the brand which makes organizational structure more
functioning. In future, it is expected from top management to adopt flexible hierarchal channels
which helps in making the decision process faster. It also allows employees to innovate new
ideas for products (Gunz and Mayrhofer, 2018).
Organizational culture is essentially considered as a set of values and beliefs that is
needed to govern the behavior of team members in an organization. Culture excellence approach
refers to aim excellent results rather than a mediocre one in performing business activities. This
approach deals with setting attainable goals and achieving them in an excellent way by breaking
all the previous records. Leaders are needed to set specific as well as attainable goals and
encourage their team members to accomplish organizational objectives. Excellence in building
organizational culture helps in adapting flexible organization structure. This assists an
organization to function better as an authority, as well as responsibility, is delegated to
employees. They are responsible for the assigned task which further helps them to grow and
develop as future leaders. Organization structure will function smoothly if all employees as well
as managers understand their role in the development of establishment and perform accordingly
(Kaehne, 2019).
Japanese approach is concerned with maintaining superior quality in the manufacturing
process through providing proper training to their human resources. In management parlance,
Japanese approach emphasizes on maintaining the flow of information through proper hierarchal
channels. This results in efficient implementation of decisions as information has flowed to top
management who frame policies for the whole organization. A major responsibility of a Japanese
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manager is to provide a comfortable environment in organization so that employees can flourish
and give their feedback as well as suggestions. This approach stresses on building accurate
hierarchal levels that allow information to flow from bottom to top. It is necessary for
organizations as it helps in creating proper communication channels so that information did not
get distorted. This practice assists top management in taking efficient decisions for employees
and the organization as a whole. As per the Japanese approach, organization structure should be
hierarchal and decision-making powers should rest with top management in an organization
(Mouzelis, 2017).
Organizational learning is an exercise of creating and retaining knowledge in an
organization. It also involves transferring those sets of knowledge through a learning curve in
order to gain experience. It is necessary to promote a learning culture in organization for
enhancing employee's productivity. It is also significant for organizations as it provides an
environment where an individual can learn and grow. To enhance organizational learning, it is
desired to build flexible structures which help in proper flow of data by creating varied formal as
well as informal channels. Organizational learning help employees to gain experience from the
assigned jobs. It also helps in adopting a dynamic thought process which further assists in
gaining a competitive advantage to an organization. It allows increasing organizational efficiency
and accuracy. It is expected from top management to build organizational structure in a way that
principally promotes learning in an organization (Rajalo and Vadi, 2017).
CONCLUSION
From the above essay, it has been assessed that classical theory advocates that human
resources essentially work for monetary benefits. Whereas, in neoclassical theory, employees are
given more priority in an organization by providing them job satisfaction and security. Theory of
scientific management propounded by Fredrick Taylor has defined the standardized way for
performing every task. He stressed on adoption of scientific methods rather than a rule of thumb
in performing business operations. Fayol has given fourteen principles of management that can
be used by managers in supervision as well as controlling employees. Maslow had proposed a
theory of motivation that essentially helps in motivating and encouraging employees to attain
organizational objectives. Organizational learning, Japanese approach, contemporary marketing
orientations have greatly impacted the organization structure. In the future, organizations should
adopt flexible structures to gain more employee engagement in business operations.
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REFERENCES
Books and Journals:
Al Lily, A. E., Alhazmi, A. A. and Alzahrani, S., 2017. The theory of multiple stupidities:
education, technology and organisation in Arabia. Cognitive Processing. 18(4). pp.529-
541.
Beynon-Davies, P., 2021. Designing Organisation. In Business Analysis and Design (pp. 53-73).
Palgrave Macmillan, Cham.
Biehl, B., 2017. Dance and organisation: Integrating dance theory and methods into the study of
management. Routledge.
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Dessers, E. and Vrijhoef, H. J., 2017. How can we improve the organisation of care
coordination?. International Journal of Care Coordination. 20(3). pp.61-63.
Diamond, M. A., 2020. Psychoanalytic organisation theory and identity: A psychosocial
framework. Journal of Psychosocial Studies. 13(1). pp.99-116.
Gunz, H. and Mayrhofer, W., 2018. Career development: Insights from organisation theory.
In Contemporary Theories of Career Development (pp. 209-223). Routledge.
Kaehne, A., 2019. How organisation theory may help us understand integrated care. Journal of
Integrated Care.
Mouzelis, N. P., 2017. Organization and bureaucracy: An analysis of modern theories.
Routledge.
Rajalo, S. and Vadi, M., 2017. University-industry innovation collaboration:
Reconceptualization. Technovation. 62. pp.42-54.
Talleraas, C., 2019. Complementing theories: Institutional ethnography and organisation theory
in institutional analysis. In Institutional Ethnography in the Nordic Region (pp. 51-64).
Routledge.
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