ORGANIZATIONAL THEORY

ORGANIZATIONAL THEORY

Organizational theory is a loosely knit community of many approaches to organizational analysis. Its themes, questions, methods, and explanatory modes are extremely diverse.

Organizational theory is not a single theory. Dwight Waldo noted in a review of field work in 1978 : "Organization theory is characterized by vogues, heterogeneity, claims and counterclaims", and even greater differentiation in theory and practice have developed since then.

Organization theory certainly cannot be described as an orderly progression of ideas, or a unified body of knowledge in which each development builds carefully on and extends the one before it. Rather, developments in theory and prescriptions for practice show disagreement about the purposes and uses of a theory of organization, the issues to which it should address itself (supervisory style, organizational culture), and the concepts and variables that should enter into such a theory.

RİSE OF ORGANİZATİONS

Organizations are defined as social units of people that are structured and managed to meet a need, or to pursue collective goals.

Organizations in the United States are said to have risen within a variety of social and historical contexts. Several of those factors are credited with making organizations viable and necessary options for citizens, and they built on one another to bring organizations to the level of importance that they have as of 2015.

In 1820 about 20% of the United States population depended on a wage income. That number increased to 90% by 1950. Generally, by 1950, farmers and craftsmen were the only people not dependent on working for someone else. Prior to that time, most people were able to survive by hunting and farming their own food, making their own supplies, and remaining almost fully self-sufficient As transportation became more efficient and technologies developed, self-sufficiency became an economically poor choice.As in the Lowell Textile Mills, various machines and processes were developed for each step of the production process, thus making mass production a cheaper and faster alternative to individual control. In addition, as the population grew and transportation progressed, the pre-organizational system struggled to support the needs of the market. These conditions made for a wage-dependent population that sought out jobs in growing organizations, leading to a shift from individual and family production.

In addition to a shift to wage dependence, externalities from industrialization also created a perfect opportunity for the rise of organizations. Various negative effects such as pollution, workplace accidents, crowded cities, and unemployment became rising concerns. Rather than small groups such as families and churches being able to control these problems as they had in the past, new organizations and systems were required in order to keep their heightened effects down. The smaller associations that had contained various social issues in the past were no longer viable, and instead were collapsed into larger formal organizations. These organizations were less personal, more distant, and more centralized; but, what they lacked in locality, they made up for in efficiency. Along with wage dependency and externalities, the growth of industry also played a large role in the development of organizations. Markets that were quickly growing and expanding needed employees right away – because of that, a need developed for organizational structures that would help guide and support these new employees. Some of the first New England factories relied on daughters of farmers at their onset; later, as the economy changed, they began to gain work from the farmers, and finally, from European immigrants. Many Europeans left their homes for the promises of US industry, and about 60% of those immigrants stayed in the country. They became a permanent class of workers in the economy, which allowed factories to increase production and produce more than they had before. With this large growth came the need for organizations and for leadership that was not previously needed in small businesses and firms.

Overall, the historical and social context in which organizations rose in the United States allowed for not only the development of organizations, but also for their spread and growth. Wage dependency, externalities, and growth of industries all played into the change from individual, family, and small-group production and regulation to large organizations and structure.

Even though the decline in small business might not seem to substantiate how the development in organizations leads to increased aggregate economic return, it exemplifies the cut-throat nature of capitalism. As organizations develop, they devour the smaller organizations that cannot keep up, but also allow for the evolution of innovative management and production techniques for other larger companies. The development of organizations demands a higher level of skillset from workers as it continues to grow. It also builds precautionary measures on cutting-edge technology. It amplifies the need for specialization and accounts of functionalism in various organizations and their respective societies. Through much advancement in the interaction of capitalisticbureaucracies, the development of organizations is what has driven contemporary firms to thrive in its modern-day society.

COMPETING THEORIES OF ORGANIZATION

As organizations are implemented over time, many people experimented as to which one was best. These theories of organizations include Bureaucracy, Rationalization (Scientific Management), and the Division of Labor. Each theory provides distinct advantages and disadvantages when implemented.

Weber's ideal of bureaucracy

·        Official Jurisdiction on all areas are ordered by rules or laws already implemented.

·        There is an office hierarchy; a system of super- and subordination in which there is supervision of lower office by higher ones.

·        The management of the modern office is based upon written rule, which are preserved in original form.

·        Office management requires that of training or specialization.

·        When the office is developed/established it requires the full working capacity of individuals.

·        Rules are stable and can be learned. Knowledge of these rules can be viewed as expertise within the bureaucracy (these allow for the management of society)

When a bureaucracy is implemented, they can provide accountability, responsibility, control, and consistency. The hiring of employees will be an impersonal and equal system.

Although the classical perspective encourages efficiency, it is often criticized as ignoring human needs. Also, it rarely takes into consideration human error or the variability of work performances (each worker is different).

In the case of the Space Shuttle Challenger disaster, NASA managers overlooked the possibility of human error. (See also: Three Mile Island accident.)

Rational system perspective

In a rational organization system, there are two significant parts: Specificity of Goals and Formalization. Goal specification provides guidelines for specific tasks to be completed along with a regulated way for resources to be allocated. Formalization is a way to standardize organizational behavior. As a result, there will be stable expectations, which create the rational organizational system.

·        Scientific Management: Taylor analyzed how to maximize the amount of output with the least amount of input. This was Taylor’s attempt to rationalize the individual worker.

1.    Divide work between managers and workers

2.    Provide incentive system (based on performance)

3.    Scientifically trained workers

4.    Create a science for each individual’s responsibilities

5.    Make sure work is done on time/efficiently

There are problems that arose out of scientific management. One is that the standardization leads workers to rebel against mundanes. Another is that workers may reject the incentive system because they are required to constantly work at their optimum level, an expectation that may be unrealistic.

Division of labor

The division of labor is the specialization of individual labor roles. It is often associated with increasing output and trade. According to Adam Smith, the division of labor is efficient due to three reasons: occupational specialization, saving from not changing tasks, and machines taking the place of human labor. Occupational specialization leads to increased productivity and distinct skill. Also, Smith argued that human and physical capital must be similar or matched; if the skill of workers were matched with technological improvements, there would be a major increase in productivity.

Although the division of labor is often viewed as inevitable in a capitalistic society, there are several specific problems that may arise. They include a lack of creativity, monotony, and lack of mobility. Creativity will naturally suffer due the monotonous atmosphere that the division of labor creates. Doing the same routines may not be for everyone. Also, employees aren’t familiar with other parts of the job. They cannot assist employers of different parts of the system.

Modernization theory

Modernization “began when a nation’s rural population started moving from the countryside to cities” (Shah 3). It deals with the cessation of traditional methods in order to pursue more contemporary effective methods of organization. Urbanization is an inevitable characteristic of society because the formation of industries and factories induces profit maximization. It is fair to assume that along with the increase in population, as a result of the subsequent urbanization, is the demand for an intelligent and educated labor force (Shah 3). Following the 1950s, Western culture utilized the effects of mass media coverage to communicate their good fortune attributed to modernization. The coverage promoted “psychic mobility” among the social class and increased the aspirations of many hopefuls in developing economic countries (Shah 4). Under this theory, any country could modernize by using Western civilization as a template.

Although this theory of modernization seemed to pride itself on only the benefits, countries in the Middle East saw this movement in a new light. Middle Eastern countries believed that the media coverage of modernization implied that the more “traditional” societies have not “risen to a higher level of technological development” (Shah 6). Consequently, they believed a movement that benefits those who have the monetary resources to modernize technological development would discriminate against the minorities and poor masses (Shah 6). Thus, they were reluctant to modernize because of the economic gap it would create between the rich and the poor.

The growth of modernization took place beginning in the 1950s. For the ensuing decade, people analyzed the diffusion of technological innovations within Western society and the communication that helped it disperse globally (“Modernization theory”). This first “wave” as it became known had some significant ramifications. First, economic development was enhanced from the spread of new technological techniques. And second, modernization supported a more educated society (as mentioned above), and thus a more qualified labor force (“Modernization Theory”). The second wave took place between the years 1960 and 1970. This period was labeled anti-modernization, because it saw the push of innovations of Western society onto developing countries as an exertion of dominance (“modernization theory”). It refuted the concept of relying heavily on mass media for the betterment of society. The last wave of modernization theory, which took place in the 1990s, depicts impersonality (Perrow 737). As uses of newspapers, TVs, and radios become more prevalent, the need for direct contact, a concept traditional organizations took pride in, diminishes. Thus, organizational interactions become more distant (“Modernization Theory”).

According to Frank Dobbin, the modern worldview is the idea that “modern institutions are transparently purposive and that we are in the midst an evolutionary progression towards more efficient forms (138).” This phrase epitomizes the goal of modern firms, bureaucracies, and organizations to maximize efficiency. The key to achieving this goal is through scientific discoveries and innovations (Dobbin 139). Dobbin discusses the outdated role of culture in organizations. “New Institutionalists” explored the significance of culture in the modern organization (Dobbin 117). However, the rationalist worldview counters the use of cultural values in organizations, stating, “transcendental economic laws exist, that existing organizational structures must be functional under the parameters of those laws, and that the environment will eliminate organizations that adopt non-efficient solutions” (Dobbin 138). These laws govern the modern organizations and lead them in the direction that will maximize profits efficiently. Thus, the modernity of organizations is to generate maximum profit, through the uses of mass media, technological innovations, and social innovations in order to effectively allocate resources for the betterment of the global economy.