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Modern organisation theory has its evolution from the General Systems Theory whose inventor and chief architect was Bertalanffy. General system theory presents an integration of different levels of system. It provides a macro view from which we may look at all types of systems.

The modern organisation theory is of recent origin having developed in sixties, and flourished in seventies. The theory presents the answers of several questions remained unheeded to by the earlier theories. The modern theory has an analytical base and has sufficiently relied on empirical research. The theory is a fundamental one, though it presents a new paradigm. It is not simply an extension of the old theories like the classical or the neo-classical theories. Its premises are based upon a conception of organisations as open, organic and probabilistic system. It gives answers to many complex questions ignored by the classical or the neo-classical theorists as pointed out by Scott and Michell:

  1. What are the various parts of the system?
  2. What is the nature of their interdependency?
  3. What are the processes which link the various parts of the system and facilitate their adjustment to each other?
  4. What are the goals of the system?

We shall now discuss how these questions as answered by the modern theorists:

Significant Parts : As every system has several parts, so the organisation being treated as a system, must also have several parts. The parts of organisation system may be classified. Individual is an important part of an organisation and provides energy to matter and information the organisational inputs. Individuals in an organisation come together with varied backgrounds, attitudes, motives and sentiments, they interact and influence each other and things in their environment and are also influenced by them.

Every system is formal because it lays down certain principles, rules, regulations, procedures, and norms of conduct for its proper functioning. Such rules, etc. may be oral or written. There are also hierarchical levels through which communication flows downward and upward. Organisational charts and manuals also constitutes important parts of formal system.

In a formal system, people come together and interact with each other which causes development of certain relations and sentiments positive, negative or indifferent. These relations and developments steadily result in spontaneous development of informal groups, groups so formed satisfy many of the social needs that remained uncared for by the formal organisation.

Every organisation has hierarchical levels. It is like a pyramid consisting of layers and every layer has functional segmentation. The number of segments get reduced with the increasing level of the layer in the organisation and at the top only one layer remains that ultimately envelops the entire organisation. Every level and every individual at that level is assigned a role which is played by everybody in relation to those having role relationships. Accordingly, an individual gets certain privileges and prerogatives over others. The technical equipment, technology employed design of machines, arrangement of jobs, etc. constitute the physical environment of the work situation. It provides, implies or embraces the physical conditions under which a person is to perform the work and it affects skills, motivations and perceptions of people ultimately leading to a particular efficiency level.

Interdependent Nature : The above parts of a system of an organisation work unitedly for the attainment of a common goal. While performing their individual roles, they hardly work independently and to prove themselves productive, they work cooperatively and in collaboration with each other. Thus, these parts interact within and between themselves and such interaction may be interpret interactions and interpret interactions.

Each part of the organisation interact with all other parts. Individuals interact with informal organisations to get their social needs satisfied which formal organisation fails to satisfy. It makes modifications in individuals and expectations of the organisations. The individual may mould the group according to his point of view and by convincing the group, they can put their viewpoint before the organisation. Thus, each part interact affecting each other and resulting in mutual modification of expectancies. Consequently demands and expectations of individual reconcile for harmonious relationships. The same may happen with organisations.

Individual performs a very minute part of the total job and even for that limited task he is to seek assistance from others such as mechanic for removing the defects of a machine or for oiling the machine, etc. Thus, the individual’s job may be a part of the series of processes involved, i.e., one may be a supplier for raw material for a job while the other depends for raw materials on others. In this way no part can complete his job without the assistance of others and thus their actions affect each other.

System of Complementarily : As we have mentioned earlier no one part works in isolation. They are interdependent and interrelated. The linking processes are decision, communication, action and balance. The interrelationship between the parts effects decisions which conversely explains the relationship through the decision processes. This shows the flow of significant decisions and how decisions are arrived at through socio-metric authority, power, functional communication, etc. processes. All parts make decision and most of them especially the important ones are the product of joint efforts of various parts. Thus, the decision process links the various parts. Through communication process, various parts are able to get, store, retrieve and feed information to the action centers and such centers implement the decisions. So, through action process, decisions are implemented. Different units are controlled, integrated and balanced in order to be sure that no one part dominates the other parts.

Every system including the organisational system has certain goals. Leaving apart certain specific goals meant for a specific organisation or part, every organisation or system works towards the attainment of common goals which necessitates interaction, ability, adaptability and growth. Interaction takes place because parts are interdependent and interconnected. Stability is the objective of every system. However, static structure and the simple dynamic of every system do not seek adaptability and growth. The cybernetic system seeks adaptability but adaptability and growth are the objective or characteristics of all open living systems.

The modern organisational theory has made valuable contributions in the development of the organisational theories.

The following are important:

  1. The theory has an empirical and analytical base and looks at the organisations in system perspective.
  2. It seeks interrelationships and interconnections amongst various organisational parts and seeks an answer to the question arising out of such interdependence.
  3. It takes holistic view, i.e., a whole is not a sum of the parts. The system approach does not approve the separate study of different parts and then integrating them to make a whole. It opines that such integration is not possible and the total system should be studied as whole and not in parts.
  4. The concern of modern organisation theory is to study the interrelationships between parts and to know how these parts respond to it. Thus, the system approach opened up vast possibilities for the analysis of innumerable parts and sub-systems within an organisational system and its interaction with its environment.
  5. Unlike the classical or the behavioral approaches, modern theory adopts a realistic view regarding the principles of the organisation. The theory suggests as the organisation is composed of several sub-systems, it is quite impossible to prescribe certain principles which are universally applicable or appropriate to all organisations. Such principles are possible only when the system is stable, mechanistic, and effectively closed to intervening external variables. But once we take the organisation as an open system with interactive components, we can no longer think in simplistic and un-dimensional terms.
  6. The theory presents an open, organic and probabilistic system of the organisation as opposed to traditional theory’s closed, mechanistic and deterministic view. Open system refers to an exchange relationship of the organisation with the environment and its serious dominating influence. Organisations are organic systems because they have adaptability and flexibility to adapt themselves to the environmental situation. Organisations are probabilistic systems because nothing is certain in an organisation, only a probability can be forecasted.
  7. The classical approach followed a macro approach and the behaviorists, a micro approach but the modern organisation theory attempts a macro- micro-macro approach of the organisation. Besides, this attempt to comprehend the impact on the organisation to changes in environment has proved a new paradigm which is not merely an extension of old, rather it constitutes a real revolution in theory. It helps us understand the interrelationships between the major components of an organisation its goals, technology, structure and culture.

Though the modern theory has contributed a lot to the organisation, yet it is not free from criticisms. Notwithstanding its contribution to modern thinking, it has not lived up to the expectations, it raised at the beginning. It promised to provide an adequate and comprehensive explanation of the organisation, but this promise does not seem to be fulfilled. It was initially received enthusiastically but the initial enthusiasm could not be sustained for long.

It remains fragmented because isolated attempts have been made in this direction and no integration of techniques and concepts into a high level of abstraction was attempted. Its concepts are still evolving. Though critics regard it as an important theory of organisation, but undoubtedly it has not yet developed sufficiently as a theory of explanation in the realm of human behaviour. There is no such transformation in the theory that can eliminate the old and substitute the new.

overview of various management theories was provided. In depth, the analysis of classical and neoclassical theories was furnished. The key characteristics of classical organization theory being:

  1. Division of Labour
  2. Functional Process
  3. Structure and
  4. Span of Control.

The 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 limitation of classical approach.

Highlights of Hawthorne experiments were also described. The major facts discovered by these experiments include the important role of groups in determining the attitude of workers; need for communication among ranks; increasing satisfaction leads to effective organization and that people in an organization are motivating higher level needs. It also provided an overview of systems approach and the modern organisational theory.

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