Organizational Theories: Classical and Neo-Classical Approaches

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Essay: Organizational Theory
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Table of Contents
Introduction......................................................................................................................................3
Discussion and Main Body Analysis...............................................................................................4
Conclusion.......................................................................................................................................9
Reference List................................................................................................................................10
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Introduction
In a rational organization system, it consists of two essential parts i.e. specificity of goals and
formalization. The purpose of the essay is to demonstrate the learners with a clear understanding
of the topic. In this essay, the major approaches to organizational theory will be explained along
with the utilization of appropriate theories and examples. The different forces that contribute in
shaping the organizations and their structure will be recognized and analyzed. Some of the forces
that affect organizational design and structure are organizational size, type of organizational
strategy and many more. Some organizational theories involve rational system perspective,
labour division, bureaucratic hypothesis and contingency theory.
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Discussion and Main Body Analysis
The concept of organizational theory defines the set of interconnected concepts, notions and
definitions that demonstrate the behaviour and performance of individuals or teams, who work in
the organization by interacting with each other in order to perform the allocated activities or
tasks intended towards the achievement of the goal or objectives. In general, the concept of
organizational theory studies the impact and influence of social relationships prevailing between
the employer and the employee along with all their specific actions on the organization. It also
studies the impact of both internal and external business environment on the organization such as
political, environmental, legal and cultural factors. Therefore, it is very much important to
understand the organisational theories just in order to acknowledge the different relationships
between the individual persons working together and their overall impact on the organizational
performance. The specific structure of an organization plays an important role in the success of
the business. Hence, the organizational theories help in identifying the appropriate organizational
structure, efficient to the maximum potential in order to prepare and deal with the particular
problems and issues (Luhmann, 2018).
The main emphasis of this Classical Approach (Theory X) approach was on the specialisation
and co-ordination of activities in order to accomplish the goals and objectives (Kohonen, 2012).
According to the classical writers, organization was termed as a machine and individuals
working for the organization were termed as various components of the machine. The classical
writers believed that the only way of making an organization efficient was to make the
individuals more efficient and effective. The main importance and focus was given to the top
levels of the organization and a minimum focus was laid on the low levels of the organization.
This classical approach is mainly based on the formation of the four major pillars of division that
are labour division, scalar process, structure and control span.
Labour Division is the this pillar implies that it is important to divide the work in order to attain
specialization with a specific view to scope the insight performance of the individual employees
and staffs. This theory or approach rests on the assumption or consideration that more the job is
breaded into small components more specialised an employee will become in acknowledging the
specific role and responsibilities (Shafritz et al., 2015). It is important to specialise the worker
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because this tends to develop the organization as more effective and efficient. The various tasks
and activities of the job role are categorized and divided into specific components and allocated
to the individuals appropriate for the tasks or activity. Scalar and Functional Process is
referred to as the growth and development of the chain of command, unity of command,
authority delegation and many more. This process is known as scalar process because it delivers
a scale or grading of duties in accordance with the degree of responsibility and authority. The
scalar process helps to generate a superior-subordinate kind of relationship within the
organization. The functional process is concerned with the organizational division into small-
specialised departments and then regrouping or assembling of the parts into companionable units
(Harper, 2015).
Structure is known as the specific framework of formal association among the operations and
individuals in the organization. Position is termed as the most basic element of structure in the
classical approach. Every task is allocated or assigned to a specific position and the management
authority is allotted for its achievement. The success of the organization is mainly determined by
the efficiency by which these tasks will be achieved by the position to which it had been
designated (Child, 2015). Control span pillar defines the total number of individual subordinates
the concerned manager can control and manage. Logically, it will not be possible for a manager
to appropriately control and manage all the increasing subordinates, whereas if the number of
total subordinates is less than the capacity of the manager, then the proper knowledge and
potential cannot be utilized to the maximum extent.
Neo-Classical Approach (Theory Y) definitely reflects behavioural science approach and
human relations movement. It guides in the study of motives, team behaviours and
administration. This approach mainly states that the effective collaboration or co-ordination of
operations is not possible without the effective and needed co-operation of the individuals. This
neo-classical theory or approach to organization circulates individual-oriented organizational
structure that tends to incorporate unofficial and official organizations. The two main concepts of
Theory-Y approach are known as work group and individual, i.e. inter-personal relations and the
requirement for two-way communication in the specific organization (Schreyögg and Sydow,
2011). The neo-classical approach possesses some specific customizations and improvements
over the classical theory approach to organization. The preference of classical approach was a
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tall structure and the suggestion of neo-classical theory was a flat structure. The suggestion
stated by classical approach was a little problematic due to the issue of communication in tall
structure. In the case of neo-classical approach’s suggestion i.e. flat structure, the vast span of
control helps in the motivation aspect and the chain of command or communication is shorter
(Lejeune, 2013). Neo-classical approach backs decentralised organization due to its wider span
time of control and it is close to flat structure.
Classical organization theories are the specific theories that are concerned with the official
organization and perception in order to increase the efficiency of the management. The three
theories that are involved in the classical approach to organization are Taylor’s Theory and
Weber’s approach. Taylor’s Scientific Management Approach is based on the ideology of work
planning in order to attain the efficiency, specialization and standardization. The main approach
to increase and improve the productivity level was via a developed mutual trust between the
management authority and the workers. Taylor’s theory was based on four principles and this
helped at improving the productivity levels of the organization. The methods of Taylor involved
acquiring and applying the appropriate equipments and the people and then examining individual
component or elements of the specific production process. This scientific theory of management
proved to be maximum successful in official industrialized organizations as it has not proved
well in modern business organizations (De Board, 2014).
In the Weber’s Bureaucratic Approach, Weber expanded on the scientific management theory
of Taylor’s and stressed the requirement to bring down the level of diversity and ambiguity in
organizations. The main concern and focus of Weber was on developing the clear and specific
lines of power and command. This bureaucratic theory of Max Weber mainly emphasized on the
requirement for a hierarchical structure of authority and power. It helped to acknowledge the
importance of labour division and specialization (Niskanen, 2017).
Neo-Classical Approach explains the movement of human relations evolved as a reaction to the
tough, classical theory’s authoritarian structure. It has identified many of the problems and issues
intrinsic in the classical approach or theory. Hawthorne Experiment states that an organization
might indulge itself in the updated management trends in order to generate a frequent and
continuous string of Hawthorne effects. The main criticism regarding this experiment is that it is
fable about the managers and researchers influencing and playing games on the employees and
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staffs. Some flawed conclusions are attained as it represents a managing and influencing attitude
and behaviour towards employees and staffs of the organization (Johnson, 2017). It is very much
important to choose the most appropriate structure of the organization as it needs to identify and
analyze the factors that helps in determining the success or failure of the organization. For
example – An organization that has a large employee capacity for different projects and
assignments can benefit from a specific structure in which the project managers and leaders are
authorized to take effective and vital decisions without any approval from the higher levels of
management. Some of the factors that affect organizational structure are size, business
development stage, type of the strategy and technology.
Strategy and the choices or decisions associated with it have an impact on the overall
organizational structure. The choice of the organizational structure appears to be dependent on
the organization’s strategy in aspect of size, diversity and services delivered. The existing
structure of the organization is properly maintained and not redesigned until and unless the
profitability of the strategy is increasingly inconsistent with the increasing sale of the
organization. An organization is primarily structured in order to identify the process of
establishing objectives and policies and to allocate the resources in the most appropriate way
(Galbraith, 2011). The structure of the organization is also influenced by the life-cycle stage of
the business. For example, an organization during its beginning stage is likely to concentrate
authority in the control of the founder. This is because during this stage, the organization does
not possess a formal and official design. However, as soon as the organization progresses into a
stage of growth, the authority and control transfers from the higher levels of management to the
most appropriate structure in which power is bound to be granted across a;ll the levels of the
organization (Galbraith, 2014).
The environment is the main place where all the organization operates and involves conditions
and circumstances that tend to have an impact on the organization like socio-cultural, legal and
political conditions. The concept of business environment is divided into two aspects such as
stable and dynamic. In a stable business environment, the demands and expectations of the
consumers are very well acknowledged and sustains consistent for a period of long-time. Some
appropriate examples of business organizations that deal with stable business environments are
paper products, detergent and many more. In a dynamic business environment, the demands and
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requirements of the consumers keep on fluctuating i.e. the opposite side of the business
environment. It is important for the organization to update its technology system in order to
adapt to the changing needs of the consumers. For example, electrical industry is an appropriate
example of an industry that operates in a dynamic business environment. The organizations
involved in the specific industry that operate in a dynamic and volatile environment more likely
to choose an organic structure in order to gain greatest advantages and benefits.
The most essential implementation associated responsibilities of the top-level management is the
decision of selecting an organizational structure that helps in the implementation operations and
activities. As mentioned above, various factors need to be considered into account before
choosing an organizational structure. There is no particular organizational design and structure
for a specific given strategy. When an organization initiates changes in its strategy in accordance
with the external and internal forces, the prevailing organizational structure becomes
unsuccessful.
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Conclusion
The purpose of the essay was to explain the different theories or approaches to organization and
analyze the different forces that shape organizations and their specific structure. In this essay, the
different approaches to organization such as classical and neo-classical approaches have been
explained along with the justification of specific theories and examples. Some of the factors that
shape the design and structure of the organizations have been analyzed and evaluated. It can be
concluded from the essay that organizational structure dictates the establishment of objectives
and policies and orders on how the various organizational resources will be allocated.
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Reference List
Child, J., 2015. Organization: contemporary principles and practice. John Wiley & Sons.
De Board, R., 2014. The psychoanalysis of organizations: A psychoanalytic approach to
behaviour in groups and organizations. Routledge.
Galbraith, J.R., 2011. Designing the customer-centric organization: A guide to strategy,
structure, and process. John Wiley & Sons.
Galbraith, J.R., 2014. Designing organizations. Jossey-Bass & Pfeiffer Imprints, Wiley,.
Harper, C., 2015. Organizations: Structures, processes and outcomes. Routledge.
Johnson, H.G., 2017. Macroeconomics and monetary theory. Routledge.
Kohonen, T., 2012. Self-organization and associative memory(Vol. 8). Springer Science &
Business Media.
Lejeune, C., 2013. Organizational learning and capabilities: An integrative conceptual
framework.
Luhmann, N., 2018. Organization and decision. Cambridge University Press.
Niskanen, J., 2017. Bureaucracy and representative government. Routledge.
Schreyögg, G. and Sydow, J., 2011. Organizational path dependence: A process
view. Organization Studies, 32(3), pp.321-335.
Shafritz, J.M., Ott, J.S. and Jang, Y.S., 2015. Classics of organization theory. Cengage Learning.
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