Organisational Theory

A sociological study of understanding organisations, primarily how they operate, especially behaviours of the staff and organisational culture, and are structured. There are different theories and classifications, with some having overlapping features of others, but a range of theories include the following:

1. Classical theory: Which can be considered to consist of
• Scientific management theory: This considers how individuals undertake and how management organise and direct work in order to improve levels of productivity.
• Bureaucratic theory (Weber): The exercising of authority over others, with it being applied by either charismatic authority, traditional authority, or rational legal authority. Bureaucracy is considered as being the more efficient method in managing an organisation.
• Administrative theory: Developed by Henri Fayol to focus on management activities, with an organisation having well defined departments and roles, being essentially a closed operating system. He had several Principles of Management, including the well-defined Division of work; Authority; Discipline; Unit of command; Unity of direction; Subordination of individual interests to the general interests of the organisation; Remuneration; Centralisation; Scalar chain (line of authority); Order; Equity; Stability of personnel; Initiative, and Esprit de Corps.

2. Neo-classical theory / Human relations: An adaptation of the classical theories, with a greater emphasis on human relations and behaviours.
• Human relations theory developed from work by Mayo and the Hawthrone studies in 1932, which identified benefits of understanding human emotions and morale for organisational success.
• The Behavioural science theory emphasises relationships and motivation for success.

3. Decision making theory. There are several theories, including:
• Prospect Theory, developed by Daniel Kahneman, which looks at how individuals make decisions based on their perceived risk of the expected outcome.
• Expected Utility Theory, is where an individual considers the probability of an expected outcome, thereby emphasising the extent of uncertainty in which a decision is to be made.
• Naturalistic Theories of Decision Making (NDM), which looks at how individuals relate their situation with their relevant knowledge and understanding of the situation.

4. Modern theory: divided into Systems theory and Contingency theory.
• Systems theory sees an organisation as consisting of one or usually more networks, with a well-defined boundary of operations, with an Open system (with input and output interactions outside of its boundary, which might be required for stakeholder engagement and feedback) and Closed (where operations are self-contained without any interactions outside of its work boundary, and which might be required where a confidential project is being undertaken) being the more well-known, but also having Adaptive (self-adapting systems that respond to external conditions, for example, automatic irrigation system which may adjust application rates depending on evapo-transpiration rates, so these are more technical aspects of a system), Contrived (an artificially created system, such as a model for demonstration purposes), Probabilistic (which provide probabilities of events occurring to varying degrees of accuracy, often depending on the extent of data provided), along with sub-systems of Technical and Social.
• Contingency theory considers that there is no pre-planned best way for organisational structure and management, but that it is contingent on the prevailing situation, which is influenced by external and internal factors, so flexibility and adaptation to events are key to a successful organisation.

5. Motivation theory reflects various proponents of motivation, including Herzberg, Maslow, and Likert’s participative management theory.

6. Low Heed, in which individuals pay little attention to others experiences and research. In some situations, this can encourage innovation and freedom of investigation, without potential prior constraints, although in others it ignores experiences of prior mistakes.