FRESH LITERATURE - Management Hotel

The classical organisation theory focused attention on physiological and mechanical variables of the organisational functioning in order to increase the efficiency and productivity. But positive aspects of these variables could not produce the positive results in work behaviour and the researches tried to investigate the reasons for human behaviour at work. They discovered that the real cause of human behaviour is somewhat more than the physiological variable. These findings generated a new phenomenon about the organisational functioning and focused attention on human beings in the organisations. These exercises were given new names such as ‘behavioural theory of an organisation’, ‘human view of an organisation’ or ‘human relations approach in an organisation.’

The neo-classical approach was developed as a reaction to the classical approach which attracted so many behaviourist to make further researches into the human behaviour at work. This movement was started by ‘Mayo’ and his associates at Hawthorne Plant of the Eastern Electric Company, Chicago in the late twenties, gained momentum and continued to dominate till the sixties. An impressive account of thinking of human relations has been given by Douglas M. McGregor in his book entitled ‘The Human Side of Enterprise.’

The classical theory was the product of the time and the following reasons were responsible for its development:

  1. The management thinking was showing signs of change because of the improved standards of living and education level. The technological changes were forcing the management to expand the size of the organisation and complexities were increasing. This also led to the fact that the management be somewhat more sympathetic and considerate towards their workers.
  2. The trade union movement got momentum and made the workers conscious of their rights. It was no longer possible for the management to treat the human beings at work as ‘givens’.

These were two main reasons which were responsible for the change of management behaviour from autocratic to the custodial approach which was based on offer of fringe benefits apart from wages to meet their security needs.

Though neo-classical approach was developed as a reaction to the classical principles, it did not abandon the classical approach altogether, rather it pointed to the limitations of the classical approach and attempted to fill in the deficiencies through highlighting certain points which were not given due place in the classical approach. In this regard, there were two schools of thought—one school of thought with writers as Simon, Smithburg, and Thompson, pointed out the limitations of the classical approach to structural aspect only and the analysts called this group as ‘neo-classicists’. This school of thought suggested modifications to the classical principles but did not abandon the basic principles. The other school of thought which consisted of large number of writers focused on the human aspect neglected by the classicists. This group was called as human religionists or behaviorists. Both these schools were reactions to the classical theory but failed to suggest or develop any new theory except providing some points of criticism on varying counts. Both of them could be referred as neo-classicists. Neo-classicists, endeavored to identify the weaknesses of classicists through empirical research and most of the criticisms of classical theory have emerged through researches. Howthorne studies were the beginning of the series. The other contributors are Roethlisberger, Dickson, Whitehead, Lippitt and White, Coach and French Jr., etc.

Neo-classical approach is based on two main points:

  1. Organisational situation should be viewed in social as well as in economic and technical terms, and
  2. The social process of group behaviour can be understood in terms of clinical method analogous to the doctor’s diagnosis of human organism.

The neo-classicists view organisation as combination of formal and informal forms of the organisation. The informal form was missing in classical approach. They also introduced behavioural science to diagnose human behaviour and showed how the pillars of classical doctrines division of labour, functional processes, structure and scalar chain are affected and modified by human actions.

The main prepositions of neo-classical organisation theory are as follows:

  1. The organisation in general is a social system composed of numerous interacting parts.
  2. The social environment on the job affects the workers and is also affected by them. Management is not the only variable.
  3. The informal organisation also exists within the framework of formal organisation and it affects and is affected by the formal organisation.
  4. There is always a conflict between organisational and individual goals that always increases the importance of integration between these two.
  5. People are interdependent and their behaviour can be predicted in terms of social factors.
  6. Money is one of the motivators but not the sole motivator of the human behaviour. Man is diversely motivated and socio-psychological factors are more important.
  7. Man’s approach is not always rational. He behaves irrationally as far as rewards from the job are concerned.
  8. Both-way communication is necessary because it carries necessary information downward for the proper functioning of the organisation and transmits the feelings and sentiments of people who work in the organisation upward.
  9. Teamwork is essential for cooperative and sound functioning of the organisation.

The neo-classical theory provides various modifications and improvements over the earlier theory and offers a more humanistic view towards people at work. Neo-classicists have also introduced behavioural science in the study of organisational functioning which has helped managers quite a lot. This approach emphasised the micro-analysis of the human behaviour. The theory has brought into light certain important factors which were altogether ignored by the classicists such as informal group, group norms, informal leader, non-economic rewards, etc. Thus, the approach gives evidence of accepting the classical doctrine though superimposing its modifications, resulting from individual behaviour and the influence of the informal group.

The main criticisms of the neo-classical theory are as here under:

Certain assumptions on which the neo-classical theory is based do not seem to be true. For example, the assumption that there is a solution to every problem which satisfies everyone in an organisation is not true. Often there are conflict interests among various groups in the organisation that are structural and not merely psychological.

The various formats and structures of organisations given by neo-classicists are not universal. Their application is limited. There is no particular structure which may serve the purpose of all the organisations. It also overlooks some of the environmental constraints which managers cannot ignore and this lapse makes the practicability of the theory limited.

The theory lacks the unified approach of the organisation theory. In fact, it is not a theory at all. All that was done in neoclassical theory is simply modification of the classical theory rather than organisational transformation. So, this theory has almost the same limitations as the classical theory.

The theory gives too much emphasis on human aspects in the organisation. As the classicists concentrated on structural aspect, neo-classicists concentrate their attention on the human aspect. It ignores the other aspects such as formal structure, discipline, etc.

Some thinkers while criticising the theory have called it bankrupt because it suggests nothing new. Though, the theory has offered valuable contributions to the lore of organisation like the classical theory, it suffers from incompleteness, a shortsighted perspective and lack of integration among the many factors of human behaviour studied by it.

Howthorne studies at the Western Electrical Company, Chicago was the main source of inspiration to the neo-classical school. Mayo and his associates carried out several experiments there, by providing better working and living conditions and financial incentives, and they got amazing results. Productivity and efficiency went up considerably.

The following facts were uncovered by these experiments:

  1. The individual roles as defined and norms established by their social system differ from those of the formal organisation. Workers follow the social norms rather than try to achieve the target management thinks they can achieve even though this would have helped them earn better and as much as they physically can.
  2. Non-economic rewards and social sanctions also play quite a significant role in guiding the behaviour of the workers. It is their perception of the situation that matters and not that of the management. They fear retaliation for violating the group norms. So, they follow group norms and are not motivated by the economic incentive plans.
  3. The group plays an important role in determining the attitudes and performance of individual worker. Often workers do not act or react as individuals but as a member of their group. A worker can more readily accept the change in his behaviour if the group of which he is a member changes its behaviour.
  4. Informal leader and not the formal leader, i.e., the formal incharge of the group as supervisor or manager, sets and enforces the group norms. Formal leader is proved ineffective unless he conforms to the norms to the group of which he is incharge.
  5. There is need for communication between the ranks participation in decision-making and democratic leadership. It explains to the lower participants as to why the management has taken a particular decision. The lower ranks are allowed to share in the decisions taken by the higher management especially in matters concerning them. Thus, suggesting that the management is just, non-arbitrary and concerned with the problems of workers and not only with the work output.
  6. Increasing satisfaction leads to increased organisation effectiveness.
  7. The management should possess not only technical skills but also effective social skills.
  8. People are motivated in the organisation not merely by the satisfaction of lower needs but by fulfilling certain higher level needs.

The above conclusion of Hawthorne Experiments received a wide publicity and they changed the attitude and the thinking of the management significantly. This approach was further persuaded relentlessly by behaviorists.

We may look at the organisation from two different angles:

  1. We may consider the overall picture of the organisation as a unit; or
  2. We may consider the relationship between its various internal components.

When we consider the overall picture of the organisation, we consider all the elements internal and external and their effects on each other simultaneously. This approach may be called the ‘goalistic view’ because it tries to reach the goal of an organisation by unifying the efforts of all the elements. For example, when we consider finance, workers and their attitude, technological developments, etc. we are following goalistic view. It serves as a mean-ends analysis which in turn facilitates division of work and helps in judging the extent of success of comparing actual and targeted performance. But it does not answer many problems such as interdependence of elements, organisations environment, interface, etc. It gives a systematic view when we consider the second approach, i.e., we examine the relationship between each element of the organisation and their interdependence. If we examine employer-employee, customer and organisation, debtors-organisation relationships, we follow systematic view.

The systems approach focused attention on the following aspects:

  1. It integrates all elements for the proper and smooth functioning of the organisation.
  2. The organisation overall goals can be achieved successfully because it considers all the aspects of the problems deeply and maintains a harmonious relationship between various elements so that they work unitedly to achieve goals.
  3. The approach helps in acquisition and maintenance of various resources, i.e., man, material, money, and machinery, etc. for pertaining the smooth functioning of the organisation.
  4. It allows adaptation to internal requirements and environmental changes in order to survive and grow.

Kast and Rosenzweig define the system as an organised unitary whole composed of two or more interdependent parts, components or sub-systems and defined by identifiable boundaries form its environmental suprasystem. More simply, a system may be referred as units composed of several interdependent parts. System may be denoted as a grouping of parts and not simply an agglomeration of individual parts. Though each part performs its own functions yet they work towards a common goal. The behaviour of the entity is a joint function of the behaviours of the individual parts and their interactions. For instance, a human body may be regarded as a system, consisting of several sub-systems, such as circulatory, reproductive digestive, nervous systems, etc. Even though each sub-system performs different and distinguished function, they depend on each other. Similarly, an organisation is composed of a number of sub-systems of sub-systems such as internal organisation, technological, psychological, structural, managerial and environment etc. which are constantly changing and evolving. A change in one may affect the other.

From the analysis of foregoing definition and discussion following characteristics of a system emerge:

A system has several parts. Each part is dynamic and affects all other parts. They are interrelated and interdependent. Interdependence of different parts is must in an organisation as a system because of division of labour, specialisation, sharing of limited resources, scheduling of activities, etc. The work of the organisation is divided into various departments, sub-departments and so on, assigning each unit an independent specialised task, which on integration culminates into the accomplishment of overall organisational goals. These parts are interconnected in such a way that a change in one part may affect the other part and in this way, the whole organisation.

A system is composed of several sub-systems. For example, in a manufacturing organisation, total manufacturing is one system, within which may exist a complete production system which again may contain an inventory control system. Conversely, a system or sub-system may form part or container of other system. For example, an individual who may be a part of one system, may also be a part or container for another physiological system.

Every system may be distinguished from other systems in terms of objectives, processes, roles, structures, and norms of conduct. So, every system is unique if anything happens in the organisation, we regard it as an outcome of a particular system and we locate the fault in the system.

Almost all systems are open. Open system imports certain factors processes them and exports them to the environment. Organisation is also an open system. It imports matter, energy and informations, from its environments, transforms or converts them into a usable product or useful service and export that product or service to the environment. This process of importing, transforming and exporting goes on indefinitely. Though the organisation exports, they do not import all but retain some energy within themselves for survival and growth. As they are open, they are to absorb shocks and influences from the environment and those that are flexible respond to adapt themselves to the environment situation.

As systems are open, they influence other systems in the environment depending upon its strengths and capacities in relation to other systems. Obviously, the influence of environment, in most cases is greater than the system’s over impact on the environment.

System of Secondary Importance : In the previous section, we have suggested that a system is an integrated whole of various sub-systems. An organisation as a system can better be understood by identifying the various sub-systems within it. The levels of systems within a subsystem are called sub-systems and levels of systems within are identified by certain objectives, processes, role, structures and norms of conduct. A system is composed of various lower order sub-systems and is also a part of a super-system. The various sub-systems of the system constitute the mutually dependent parts of the large system, called organisation. These sub-systems interact, and through interaction create new patterns of behaviour that are separate from, but related to, the patterns specified by original system. The interdependence of different parts as characterised by Thompson, may be pooled, sequential, or reciprocal. When dependence is not direct, it is pooled interdependence. For example, an organisation, having sales divisions in different cities making their own buying and selling, but drawing upon its common funds is an example of pooled interdependence. When one sub-system is directly dependent upon another, it is sequential interdependence.

Such type of interdependence may be seen in production job or assembly line when output of one sub-system is the input for the other department or sub-system. Reciprocal interdependence refers to the situation where outputs of each unit becomes inputs for another such as in production and maintenance divisions. Thus, system behaviour emerged as one, and since different variables are mutually interdependent, the true influence of alerting one aspect of the system cannot be determined by changing it alone.

There are various ways of classifying sub-systems and one may support any of them. Each of the organisation unit may be treated as a sub-system. In other words, each functional unit of an organisation may be regarded as different sub-systems such as production sub-system, personnel or finance or sales sub-systems, etc. Seiler has classified four components in an organisation, i.e., human inputs, technological inputs, organisational inputs and social structure and norms. From these inputs, he has derived, the concept of socio-technical system, Kast and Rosenzweig have identified five sub-systems, i.e., goal and values sub-system, technical sub-system, psychological sub-system structural sub-system, and managerial sub-system. Katz and Kahn have identified five sub-systems. These are, technical sub-system concerned with the work that gets done; supportive sub-system concerning with the procurement, disposal and institutional relations; maintenance sub-system for uniting people into their functional roles; adaptive sub-system concerned with organisational change; and managerial sub-system for direction, adjudication and control of the many sub-systems and activities of the whole structure. Carzo and Yunouzas give three kinds of sub-systems in an organisation as a system, i.e., technical, social and power subsystems. We shall here discuss these three sub-systems.

The technical sub-system may be referred to as the formal organisation. It refers to the knowledge required for the performance of tasks including the techniques used in the transformation of inputs into outputs. Being a formal organisation, it decides to make use of a particular technology; there is a given layout; policies, rules and regulations are framed; different hierarchical levels are developed, authority is given and responsibilities are fixed; and necessary technical engineering and efficiency consideration are laid down. The behaviour in the organisation cannot be explained fully by technical sub-system, also because there is a fundamental conflict between the individual a part of the system and the system itself resulting from the expectancies of the organisation and that of the people regarding the work he has to perform. It requires certain modifications in the behaviour of the man through the social and power sub-systems.

The objective of the technical sub-system is to make necessary imports from the environment, transform them into products or services and export them back to the environment. For this purpose, it involves decisions, communications, action and balance processes. Through the decision process, three main problems of what to produce, for whom to produce and how to produce are resolved. Decisions are based on information gathered from various sources. Such information’s are communicated through the communication process to action centers to implement them. Through balance process, an administrative balance is obtained so that all parts may be coordinated and no one part can dominate all other parts in the organisation. These processes take place on the basis of roles assigned to people according to the requirements of the job. In order to handle the job properly one is given authority from the superiors and is assigned a status matching with the importance of the job and the individual’s ability to do the job. Norms of conduct are defined in the well-designed policies, norms, rules, procedures and description of the job. Thus, the arrangement of job in relation to each other, process and authority relations, etc. provide a structure to the technical sub-system. As we have explained earlier, there exists a conflict between an individual and the system itself because people differ very widely in abilities, capacities, attitudes and beliefs, likes and dislikes, etc. People find the formal set-up quite inadequate to satisfy all their needs especially social ones. Gradually they are seen interacting with each other and at times by cutting across the hierarchical and departmental lines, etc. on non-formal matters. Thus, they form groups to discuss their informal matters and display their positive and negative sentiments towards each other. Sometimes, one member gets the membership of different social groups for different purposes and thus social behaviour is patterned.

The interaction between individuals and the group are generally known as informal aspect of the organisation which is the result of operation of socio-psychological forces. Such interaction can be interpreted in terms of mutual expectancies. Informal group expects certain type of behaviour from its individual member and in turn, individual has expectancies of psychological satisfaction, he hopes form the association. In this an individual modifies his behaviour according to group norms and the group modifies its behaviour according to what is expected from it by its members.

Another group of elements in social sub-system consists of status, role, norms and values. Status is a position determined as being important in the interpersonal relationship of the group. Thus, it is a social rank, prestige, sentiments and feelings of a person in comparison with a social system. Some members come to be more highly respected than others while some others born to be followers. Role is a pattern of action, expected of a person in his position involving others. Thus, it describes specific form of behaviour and develops originally from the task requirements. Different members have to play different roles assigned to them by the group. Norm is that the general expectation demands character for all role incumbents of a system or sub-system. Unwritten norms are followed by the members of the group. Anybody not adhering to norms are reprimanded or punished. Value is the more generalized ideological justification and aspiration. Value guides the behaviour of the members.

Power behaviour of the people in an organisation plays a very important role. As the organisation starts functioning, people realise the importance of their job in relation to others in the organisation; the benefits of their experience to the organisation; the benefits of their experience to the organisation; the crucial location of their jobs, their personality characteristics; the fact of their access to the superior authority holder. In this way, they have acquired power to some degree or the other, based on the source of their power that influences the decision-making and regulate others behaviour.

Individual’s abilities to regulate the behaviour of others vary. Some persons are more powerful and some others have powerful influence areas than others have. Consequently, a power differentiation based on the amount of power enjoyed (which is again a function of success achieved and attempts made to influence the behaviour of others) develops in a power structure. It gives birth to politicking and people play opportunistic roles. Power minded people have no norms. Generally, norms are decided by the individual’s interests and the opportunity of serving those interests and, therefore, sheer expediency is the norm. The power holder enjoys the status in accordance with his abilities to influence the behaviour of others in order to carry out his wishes. This part of the system is known as power subsystem.

All the three sub-systems discussed above have distinct operational field. But, in actual practice, a clear-cut distinction among the three is very difficult to make and disentanglement of one sub-system from the other poses a serious problem. The three sub-systems are intertwined by considerable overlapping.

expectation demands character for all role incumbents of a system or sub-system. Unwritten norms are followed by the members of the group. Anybody not adhering to norms are reprimanded or punished. Value is the more generalized ideological justification and aspiration. Value guides the behaviour of the members.

Power behaviour of the people in an organisation plays a very important role. As the organisation starts functioning, people realise the importance of their job in relation to others in the organisation; the benefits of their experience to the organisation; the benefits of their experience to the organisation; the crucial location of their jobs, their personality characteristics; the fact of their access to the superior authority holder. In this way, they have acquired power to some degree or the other, based on the source of their power that influences the decision-making and regulate others behaviour.

Individual’s abilities to regulate the behaviour of others vary. Some persons are more powerful and some others have powerful influence areas than others have. Consequently, a power differentiation based on the amount of power enjoyed (which is again a function of success achieved and attempts made to influence the behaviour of others) develops in a power structure. It gives birth to politicking and people play opportunistic roles. Power minded people have no norms. Generally, norms are decided by the individual’s interests and the opportunity of serving those interests and, therefore, sheer expediency is the norm. The power holder enjoys the status in accordance with his abilities to influence the behaviour of others in order to carry out his wishes. This part of the system is known as power subsystem.

All the three sub-systems discussed above have distinct operational field. But, in actual practice, a clear-cut distinction among the three is very difficult to make and disentanglement of one sub-system from the other poses a serious problem. The three sub-systems are intertwined by considerable overlapping. Some behaviour pattern in the organisation are part of two subsystems; some others are part of all the three sub-systems; some other activities are exclusive to a particular system; and still there are few behaviours which do not fall in any of the subsystems.

These three sub-systems are mutually dependent parts of the larger system, the organisation. There is interdependence between these parts of sub-systems and the whole organisation. Moreover, organisation itself, is a sub-system of a larger system society and has many other systems in its environment. Besides each part, sub-system or system constitutes environment of the other. As such, each of them influences and in turn, gets influenced by others.

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