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The approach to the organization theory has changed significantly over the years. There have been a few incremental and some radical changes to the overall perception. The business environment has also become competitive due to the high-supply-lower-demand trend and this competitiveness is compelling organizations to adopt newer ways of meeting the escalating customer expectations. As a result, organizations have evolved from a ‘standardization driven’ machinery to a ‘living and breathing organism’. Even through these changes in the organization theory, the workplace remains the battleground between the organization’s cost savings strategy and its efforts to adapt to newer plans and targets, which serves as a critical enabler of innovation and transformation.
The business world has witnessed a marked evolution in the type and nature of organizations. Right from 1890, when Fredrick W. Taylor proposed his scientific selection of individuals, to Porter’s Five Forces analysis in 1985, experts have coined their own theories based on varied observations.
1890: Frederick Winslow Taylor
The science of managing people
The seed of workflow analysis was sown as early as the 1890s, when Fredrick Winslow Taylor, coined the theory of scientific management to analyze and synthesize workflows, with the objective of improving labor productivity.
Taylor believed that decisions based on tradition and rule of thumb should be replaced by precise procedures, developed after scientific study of an individual at work. In political and sociological terms, Taylorism can be seen as the division of labor pushed to its logical extreme, with a consequent de-skilling of the worker and dehumanization of the workplace.
The strongest reaction against scientific management methods was from the workers, who found the work boring and requiring little skill.
With increasing influence of economics, culture and politics in the early 1910s, organizations saw a shift in their outlook towards work environment.
1920: Max Weber
Max Weber, a sociologist and a political economist, during this period, profoundly influenced social theory and the discipline of sociology itself. Weber was the first to recognize several diverse aspects of social authority, which he categorized as charismatic, legal and traditional. ‘Charismatic’ was based on admiration of members of the organization for heroic qualities or ideas of a person. ‘Rational or legal’ was based on laws, contracts and rational calculations of costs and gains, and ‘traditional’ referred to those who adhere to customs and conventions. This concept typically applies to a modern public administration organization.
Interestingly, post this theory, Weber realized that bureaucracy has its ill-effects and would breed nepotism, corruption, political infighting and other degenerations that can counter the rule of impersonality and create a recruitment and promotion system not based on meritocracy. With the increasing need for the management to perform a role beyond supervision and control of the workforce in the organization, the need to understand these expectations emerged.
1924: Henri Fayol
Advent into modern management
Henri Fayol developed an independent theory of scientific management in the mid 1920s and claimed that the management of any organization must perform multi-dimensional functions. He propounded the five elements of administration, namely, planning, organization, commandment, coordination and control.
Though the theory limited itself to the set of activities, tasks and duties, it acted as a stepping stone for organizations to be looked at as operating systems, with responsibilities carved out in multiple dimensions.
1950: Russell Lincoln Ackoff
In the 1950s, one of the significant influencers in the area of evolution of organization came from the General Systems Theory (GST). Ackoff propounded that any human created system can be characterized as a "purposeful system", when its “members are also purposeful individuals, who intentionally and collectively formulate objectives and are parts of larger purposeful systems”. His scientific definition of systems holds that a system is a set of two or more elements that satisfy the following conditions: The behavior of each element has an effect on the behavior of the whole. The behavior of the elements and their effects on the whole are interdependent; however, subgroups of the elements are formed. All have an effect on the behavior of the whole but none has an independent effect on it.
The theory was considered rigid as it prescribed standard procedures making no room for adapting to newer and more complex organizational dimensions. Project based organizations had serious reservations to Ackoff’s theory of standardization.
1978: Harold Leavitt
Measuring human behavior
As an extension to the systems theory, Harold Leavitt in 1978 introduced a framework defining four interactive variables such as task, technology, people and structure, in order to approach a managerial complexity. This framework is most frequently used in the manufacturing organizations. Numerous models began to appear after Leavitt’s initial works. Furthermore, others added processes as one of the parameters apart from the former three. The theory, thus, was not ‘cast in stone’ and deemed too generic and adaptable for defining systems.
With the increasing scale and complexity of the operating environment, there emerged a need for creating multiple functions and, therefore, harnessing diverse expertise within an organization setting. Thus, from a single system view, the organizations’ paradigm gradually shifted to a sub-system view.
1979: Henry Mintzberg
Henry Mintzberg, in his theory of organizations in 1979, defined mechanisms in which organizations divide their workforce into distinct tasks and then achieve co-ordination amongst them. With the increase in size and scale of operations, the organizations divide labor into - core of operators, senior manager, middle line, techno-structure and support staff.
Intensified competition in a number of global industries and the increasing influence of the external environment to the adaptation of the organizations triggered a need to look at these systems from the prism of sustainability.
1985: Michael E. Porter
Five forces analysis
Porter’s Five Force Analysis in 1985 made some significant contribution to the study of the evolution of organizations. This, along with the contingency model of organization, emphasizes that market forces also influence shaping an organization. Porter calls it the ‘five forces’ that affect the company’s ability to serve its customers and make a profit. A change in any of the forces normally, requires a business unit to re-assess the marketplace, given the overall change in industry information. Porter’s five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.
The theory captures the influence of the external factors, but ignores the role of internal issues such as communication, tasks, management levels and decision making.
While going through the models over the last 100 years, it is evident that irrespective of the organizational model, work processes are becoming increasingly collaborative in nature. Flexibility and uncertainty in businesses are posing a challenge as to what collaborative workplace design will make sense in the present context. Therefore, it is required that organizations be perceived as a whole from five different dimensions - strategy, structure and processes, which address the systemic dimensions, and reward systems and people, that address cultural dimensions.
Anjan Bhowmick is Manager at ITC and a doctoral student with the Academy of HRD, Ahmedabad, and Parangat Ranjan is Assistant Manager at ITC.
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