Organisation Theory: Classical and Neoclassical Approaches and Future Forces Shaping Organisational Structures

This essay explores classical and neoclassical approaches in organisation theory and the forces that will shape organisational structures in the future. It discusses the scientific theory of management, principles of management, neoclassical theories, and more. The essay also covers contemporary marketing, cultural excellence, Japanese approach of quality control, and organisation learning.

ESSAY -
ORGANISATION
THEORY

Table of Contents
MAIN TOPIC...........................................................................................................................3
REFERENCES.........................................................................................................................9

MAIN TOPIC: Organisation theory from its classical and neo-classical origins and forces
that willl shape organizational structure in the future
Effective management policies and procedures are helpful in enhancing employee
productivity and operational efficiency through which they can engage in optimizing
available resources effectively and support businesses in facing a competitive business
environment. The classical theory of management is the approach to management that has
emerged since the late 19th century and over the 20th century (Harappa Diaries, 2021).
Neoclassical theories are modified, improved, and extended form of classical theories which
majorly focuses on human capital in the workplace. This theory is also known as the
behavioral theory of organization or human relations (Business Jargons, 2022). The forces
which will shape organizational structure are- technological, industrial, productivity,
automation, business values, complexity, innovation, business strategies, culture, resource
distribution, and many other forces (Vikram, Susanne and Rainer, 2017). The essay will
discuss the classical and neoclassical approaches in brief and will define forces that will be
helpful in shaping organizational structures for the company.
Classical organization theory refers to organizations as a machine and employees as
different elements of that machines. This focuses on centralized authority, labor
specialization, and incentives which helps in optimizing productivity and in driving profits.
The primary contributors of classical management theory are- F. W Taylor, Henri Fayol, and
Max Weber. Classical management theory outlines an ideal workplace that focuses on three
main concepts, which are- hierarchical structure, specialization, and incentives. This theory
of management helps businesses in having a clear structure through which they can
effectively perform functions and operations which will assist the company in meeting their
organizational objectives. Therefore, these theories are helpful in streamlining the operations
and increasing the productivity of employees and the overall organization. The scientific
theory of management was given by F.W Taylor which focuses on the efficiency and
productivity of an individual. The objective of this theory is to enhance production within an
organization which will be supporting in increasing the productivity of an individual (Jason
Gordon, 2021). The scientific theory of management states that employees can be motivated
through which organizations can enhance their efficiency and meet competitive advantage.
This theory is helpful in improving management methods through which labor productivity
can be enhanced and this will optimize their ability to meet organizational objectives. This
theory is helpful in standardizing the process, time, and cost across all processes and also

offers financing incentives as motivation for employees which will be helpful in boosting
their employee productivity. The scientific management theory helps in analyzing and
synthesizing the workflow. This theory helps organizations in improving the economic
efficiency of the business. Principles of management is a classical theory that helps managers
in getting the best employees through which they can manage organizational activities
effectively. The 14 principles of management were given by Henry Fayol which is a top-
down approach. As per this classical theory, there are 14 principles of management, which
are- the division of work, authority, discipline, unity of command, unity of direction,
remuneration, collective interest over individual interest, centralization, scalar chain, order,
equity, stability of tenure, initiative and esprit de corps (Simplilearn, 2021). Another classical
theory was given by Max Weber which defines bureaucracy which was started in the 20th
century. The theory of bureaucracy of Max Weber is based on six principles, which are-
specialization, formalized rules, well-trained employees, managerial dedication, the
impartiality of management (Patrick Ward, 2021). According to this theory, the organization
must have a hierarchical structure through which the company can meet its targets and
enhance organizational productivity. As per this classical theory of Max Webber, an
organization must have well-trained employees who can effectively perform the assigned task
and duties. Moreover, bureaucracy required managerial dedication and there must be
impartiality of management. As per the theory, setting clear rules and regulations, and lines
of authority helps the organization in effectively managing the organization.
The neoclassical approach states that an organization is a combination of formal and
informal forms of business. The informal structure of the organization is formed from social
interaction among workers which affects the formal structure of the business. Neoclassical
organizational theory is the working principle that is followed by many organizations. The
new classical theory states that individuals who are diversely motivated and want to meet
their certain needs through which they can effectively perform functions of the business.
Therefore, this extended version of classical management theory majorly focuses on human
relations and behavioral science (Harappa Diaries, 2022). This theory of management
highlights ideas that focus on the emotional beings of an organization. The three main
elements of new classical theories are- individual, workgroups, and participative
management. The behavioral science approach values human behavior and business and
promotes the development of human capital which will be helpful in offering benefits at the
individual and organizational levels. Some of the new classical theories are discussed in the

same paragraph. The human relation theory of organization is a school of organizational
thought which majorly focuses on the satisfaction of employees, informal workplace
organization, and a means of influencing employee productivity. This theory throws light on
the importance of employees as individuals which also supports maximizing their
productivity and performance in the workplace (Scott Colley, 2016). Hawthorne experiments
are the tendency of people to work harder and perform better while experimenting. This
theory is helpful in understanding industrial and organizational psychology. This theory states
that employees are highly responding when they get attention and supervision from superiors
(Kendra Cherry, 2020). Such attention can be helpful in increasing employee performance
and productivity. According to psychologist Abraham Maslow, needs are the drivers of
motivation which encourages employees to perform willingly and best in the organization
(MasterClass staff, 2019). This theory states that the needs are based on a different level
which starts from basic human needs and acquiring a need can encourage employees to look
forward to another stage that can motivate them. This theory of motivation states five human
needs which define human behavior. The needs are classified under different groups which
are- basic needs, psychological needs, and additional needs. The hierarchical theory of needs
states that employees look forward to meeting their needs from each level which will help
management in keeping their employees motivated. Theory X and Theory Y approach of
motivation focus on methodologies that help in keeping employees motivated (The Economic
Times, 2022). Theory X focuses on the importance of supervision whereas, Theory Y stresses
rewards and recognition. This theory states that companies that follow theory X follow the
authoritarian style. Whereas Theory Y states that in such theories employees take
accountability for their actions and work through which they can meet organizational
objectives.
Contemporary marketing is modern marketing strategy which focuses on customer
orientation by offering diversified range of product portfolio for creating a strong customer
base. This helps in making a conscious and informed decisions to avoid companies through
which an organization can gain sustainable competitive advantage. Therefore, this
contemporary marketing strategy is the marketing funnel which will be helpful for companies
to track their progress (Asiyesh Attar, 2018). Contemporary marketing strategy offers
products and services based on the target market desired. This strategy is helpful in offering
support for their customers and through which companies can take benefit from their
strategies. Contemporary marketing theory involves co-creation and shared values. The

theory of contemporary marketing assistant creating bridge between customers and business
through gamification which will be helpful in future growth of business. The company can
post through social media platforms which will be helpful in attracting customers towards the
brand and generating higher revenues. Another essential contemporary marketing theory is
shared value which considers the market that company wants to target through which they
can get various advantages and opportunities of business growth and development. For
example, the company Tesla has invested millions of dollars in building charging stations for
electric cars across Europe Asia and North America where different cars of different brands
can also use these charging stations (Will Williamson, 2021). Such strategy of Tesla focuses
on shared value where the company majorly focuses on attracting customers through which
they can improve the marketplace.
Cultural excellence reflects the aim for excellence and focuses on creating something
through which better results can be achieved. Cultural excellence will ensure employees that
they are working in a significant in purpose phase organization which will keep them
motivated. Through encouraging employees this will be helpful in enhancing their
performance and overall organization productivity which will ensure organization in setting
benchmarks through which they can get better outcomes and ensure cultural excellence.
Cultural excellence encourages organization to not settle for mediocre outcomes and aim for
higher results through which organization can ensure their competitive position within the
industry. The factors, such as- connectedness, toughness, trust and transparency are the
factors which helps an organization in creating cultural excellence which helps in inspiring
the employees through which they can be encouraged to perform effectively which will be
helpful in meeting organizational objective. As per theories, values and beliefs are the base
for culture which can motivate employees as the company shares their vision and goals which
will encourage employees to perform effectively through which organizational objectives can
be achieved and this will support companies in maintain their culture and competitive
position (Carvalho and et.al, 2019).
The Japanese approach of quality control will be helpful in developing superior
quality in production process through the development of team-oriented human resource
management (HRM) practices. The Japanese managements style was given by William Ouchi
in which focuses on increasing employee loyalty for an organization by offering a job for life
with strong focus on being of employees. This theory is also known as theory Z which
focuses on understanding the problem through which quality can be enhanced. In this theory

of management, it helps managers to focus on inhouse training, engage in decentralized
decision making, make extensive use of quality control approaches and carefully create set
working standards create harmonious relations among workers. The practice of Japanese
theory will be helpful an organization to focus on improving their quality standards through
the performance of employees can be enhanced and this will ensure quality of work life
balance which will motivate employees in that will help in meeting organizational objectives
and in achieving quality standards (Erthal and Marques, 2018).
Organization learning is the process of transferring knowledge within an organization.
Organization learning is based on four different types of categories, which are- individual,
group, organizational and inter organizational (Nicole Roder, 2019). As per theories
organization learning is essential and creates a pathway for learning new approaches of
performing business activities effectively which will ensure long term business success.
Organization learning involves training and development opportunities which are essential
for an organization as search development in employees play necessary role in effectively
managing the planned activities. Through organization learning, company can retainer
knowledge, develop knowledge can enhance awareness and transfer knowledge. The theory
of organization learning focuses on creation of knowledge and use hope that information
within an organization by interacting while finding and solving concerns. Moreover, the
companies which are engaged in organization development are helpful in meeting the
organizational objectives by engaging in continuous learning and development. According to
Peter Senge, learning organization is the term which defines companies that encourage
adaptive and generative learning, encourage their employees to think bigger which will be
helpful in finding unique and best options for resolving an issue (Dixita, 2021). Developing a
learning organization involves five pillars, which are- systems thinking, mental models,
personal mastery, team learning and shared vision.
From the information stated in above essay, it can be summarized that any
organization without proper management is similar to boat without a rudder. The classical
management theory comprises of various theories given by famous management gurus. This
theory states that an organization acts as a machine where each staff member is the
component of that machine. It can be stated that there are various classical management
theories such as scientific theory, principles of management and many others. The
neoclassical theories are the updated and modern version of classical management theory. As
per such theories, needs are the drivers of employees which can be helpful in encouraging

them and enhancing their performance through which an organization can gain competitive
advantage and follow constructive approaches for meeting objectives.

REFERENCES
Books and journals
Carvalho, A. M and et.al., 2019. Operational excellence, organisational culture and agility:
the missing link?. Total Quality Management & Business Excellence. 30(13-14).
pp.1495-1514.
Erthal, A. and Marques, L., 2018. National culture and organisational culture in lean
organisations: a systematic review. Production Planning & Control. 29(8). pp.668-687.
Online
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Will Williamson, 2021. TRADITIONAL VS CONTEMPORARY MARKETING
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