Approaches to organization and management - Business Environment

An important in sight into the principles which are felt to under lie the process of management can be gained by a brief examination of organisational theories. These theories or approaches some of which date back to the late nineteenth century represent the views of both practicing managers and academics as to the factors that determine organizational effectiveness and the influences on individuals and groups within the work environment. Broadly speaking, these approaches can be broken down into three main categories: the classical approach, the human relations approach, and the systems approach. Since the last of these encompasses the model presented here, particular attention is paid to this perspective..

The classical approach
One of the first schools of management thought, the classical management theory, developed during the Industrial Revolution when new problems related to the factory system began to appear. Managers were unsure of how to train employees (many of them non-English speaking immigrants) or deal with increased labor dissatisfaction, so they began to test solutions. As a result, the classical management theory developed from efforts to find the “one best way” to perform and manage tasks.

Defnition of Classical Approach
“Classical approach of management professes the body of management thought based on the belief that employees have only economical and physical needs and that the social needs and the need for job satisfaction either does not exist or are unimportant. Accordingly it advocates high specialization of labour, centralized decision making and profit maximization.”

Within the classical approach special attention is often given to two important sub-groupings, known as ‘scientific management’ and ‘bureaucracy’. The former is associated with the pioneering work of F.W.Taylor (1856–1915) who believed that scientific methods could be attached to the design of work so that productivity could be increased. For Taylor, the systematic analysis of jobs (e.g. using some form of work study technique) was seen as the key to finding the best way to perform a particular task and there by of achieving significant productivity gains from individuals which would earn them increased financial rewards. In Taylor’s view, the responsibility for the institution of a scientific approach lay with management, under whose control and direction the workers would operate to the mutual benefit of all concerned.

The second sub-group, bureaucracy, draws heavily on the work of Max Weber(1864–1920) whose studies of authority structures highlighted the importance of ‘office’ and ‘rules’ in the operation of organisations. According to Weber, bureaucracy with its system of rules and procedures, specified spheres of competence, hierarchical organisation of offices, appointment based on merit, high level of specialization and impersonality possessed a degree of technical superiority over other forms of organisation, and this explained why an increasing number of enterprises were becoming bureaucratic in structure. Over 50 years after Weber’s studies were first published in English, bureaucratic organisation remains a key feature of many enterprises through out the world and is clearly linked to increasing organizational size and complexity. Not with standing the many valid criticisms of Weber’s work, it is difficult to imagine how it could be otherwise.

The human relations approach

The classical approach which focused attention on the mechanical an physiological variables of organizational functioning was tested on the field to increase the efficiency of organisations. Surprisingly, positive aspects of these variables could not evoke positive response in work behaviour, and researchers tried to investigate the reasons for human behaviour at the work. They discovered that the real cause of human behaviour was something more than physiological variables. Such findings generated a new phenomenon about the human behaviour and focused attention of the human beings in the organizations. As such, this new approach has been called 'human approach of management'. Human relations theorists have primarily been concerned with issues such as individual motivation, leadership, communications and group dynamics and have stressed the significance of the informal pattern of relationships which exist within the formal structure. The factors influencing human behaviour have accordingly been portrayed as a key to achieving greater organisational effectiveness, thus elevating the management of people to a prime position in the determination of managerial strategies.

The early work in this field is associated with Elton Mayo(1880-1949) and with the famous Hawthorne Experiments, conducted at the Western Electric Company (USA) between 1924 and 1932. What these experiments basically showed was that individuals at work were members of informal (i.e. unofficial) as well as formal groups and that group influences were fundamental to explaining individual behaviour.

Later work by writers such as Maslow, McGregor, Argyris, Likert and Herzberg continued to stress the importance of the human factor in determining organizational effectiveness, but tended to adopt a more psychological orientation, as exemplified by hierarchy of needs and McGregor Theory X and Theory Y. central proposition was that individuals seek to satisfy specific groups of needs, ranging from basic physiological requirements (e.g. food, sleep, sex), through safety, loveand esteem, to self-actualisation (i.e. self-fulfilment); progressing systematically up the hierarchy as each lower-level need is satisfied. To McGregor individuals at work were seen by management as either inherently lazy (Theory X) or committed to the organisation objectives and often actively seeking responsibility (Theory Y). These perceptions consequently provided the basis for different styles of management, which ranged from the coercive to the supportive.

hierarchy of needs

McGregor concern with management styles is reflected in later studies, including

Ouichi notion of Theory Z.According to Ouichi one of the key factors in the success of Japanese manufacturing industries was their approach to the management of people. Theory Z organisations were those which offered workers long-term (often lifetime) employment, a share in decision making, opportunities for training, development and promotion, and a number of other advantages which gave them a positive orientation towards the organisation. For Ouichi, the key to organisational effectiveness lay in the development of a Japanese-style Theory Z environment, adapted to western requirements.

The systems approach
More recent approaches to organisation and management have helped to integrate previous work on structures, people and technology, by portraying organizations as socio-technical systems interacting with their environment. Under this approach which became popular in the 1960s organisations were seen as complex systems of people, tasks and technologies that were part of and interacted with a larger environment, comprising a wide range of influences. This environment was frequently subject to fluctuations, which on occasions could become turbulent (i.e. involving rapid and often unpredictable change). For organisations to survive and prosper, adaptation to environmental demands was seen as a necessary requirement and one which was central to the process of management.

The essence of the systems approach has been described in Chapter, but is worth repeating here. Organisations, including those involved in business, are open systems, interacting with their environment as they convert inputs into output.

Inputs include people, finance, materials and information, provided by the environment in which the organisation exists and operates. Output comprises such items as goods and services, information, ideas and waste, discharged into the environment for consumption by ‘end’ or ‘intermediate’ users and in some cases representing inputs used by other organisations.

Systems invariably comprise a number of sub-systems through which the process of conversion or transformation occurs. Business organisations, for example, usually have sub-systems which deal with activities such as production, marketing, accounting and human resource management and each of these in turn may involve smaller sub-systems (e.g. sales, quality control, training) which collectively constitute the whole. Just as the organisation as a system interacts with its environment, so do the sub-systems and their component elements, which also interact with each other. In the case of the latter, the boundary between sub-systems is usually known as an ‘interface’.

While the obvious complexities of the systems approach need not be discussed, it is important to emphasise that most modern views of organizations draw heavily on the work in this area, paying particular attention to the interactions between people, technology, structure and environment and to the key role of management in directing the organisation’s activities towards the achievement of its goals.

Broadly speaking, management is seen as a critical sub-system within the total organisation, responsible for the co-ordination of the other sub-systems and for ensuring that internal and external relationships are managed effectively. As changes occur in one part of the system these will induce changes else where and this will require a management response that will have implications for the organization and for its sub-systems. Such changes may be either the cause or effect of changes in the relationship between the organisation and its environment, and the requirement for managers is to adapt to the new conditions without reducing the organisation’s effectiveness.

Given the complex nature of organisations and the environments in which they operate, a number of writers have suggested a ‘contingency approach’ to organizational design and management (e.g. Lawrence and Lorsch, Woodward, Perrow,Burns and Stalker). In essence, this approach argues that there is no single form of organisation best suited to all situations and that the most appropriate organizational structure and system of management is dependent upon the contingencies of the situation (e.g. size, technology, environment) for each organisation.

In somecases a bureaucratic structure might be the best way to operate, while in others much looser and more organic methods of organisation might be more effective. In short, issues of organisational design and management depend on choosing the best combination in the light of the relevant situational variables; this might mean different structures and styles coexisting with in an organisation.

By a systems approach to management is meant the study of a firm in its totality so that the men and material resources of the firm can be organized to realize the firm's overall objectives as efficiently as possible. This approach is now becoming essential because of the growth of complexity of firms and the increasing potential of automatic computers. The systems approach to management implies that every manager should be much more precise about decision-making and information flow. For this to be effective, a company should have an overall system of corporate objectives.


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