Types of organization
- a) Formal: The part of the organization that has legitimacy and official recognition.
- b) Informal: The unofficial part of the organization.
- Components of Organization:
- Task
- People
- Structure
- Technology
- Task: This component can be defined as a mission or purpose of the existence of organization. Every organization is having a purpose of existence that is accomplished by Organization’s basic systems view producing certain goods and services as an output, which is termed as task.
- People: The workforce or human part of organization that performs different operations in the organization.
- Structure: Structure is the basic arrangement of people in the organization.
- Technology: The intellectual and mechanical processes used by an organization to transform inputs into products or services.
Systematic Approach to Management:
A system is an entity with a purpose that has interdependent parts. The systems approach suggests viewing the organization as a system. All systems have four basic characteristics: 1) they operate within an environment; 2) they are composed of building blocks called elements, components, or subsystems; 3) they have a central purpose against which the organization’s efforts and subsystems can be evaluated; and 4) essential systems thinking places focus on the interrelatedness among the subsystems and its environment. Systematic management emphasized internal operations because managers were concerned primarily with meeting the explosive growth in demand brought about by the Industrial Revolution. In addition, managers were free to focus on internal issues of efficiency, in part because the government did not constrain business practices significantly. Finally, labor was poorly organized. As a result, many managers were oriented more toward things than toward people. The influence of the systematic management approach is clear in the following description of one organization’s attempt to control its workers.
Open versus Closed Systems
A closed system does not interact with the outside environment. Although few systems actually take this form, some of the classical approaches treated organizations as closed systems. The assumption was that if managers improve internal processes, the organization would succeed. Clearly, however, all organizations are open systems, dependent on inputs from the outside world, such as raw materials, human resources, and capital, and output to the outside world that meet the market’s needs for goods and services. Above figure illustrates the open-system perspective. The organizational system requires inputs, which the organization transforms into outputs, which are received by the external environment. The environment reacts to these outputs through a feedback loop, which then becomes an input for the next cycle of the system. The process continues to repeat itself for the life of the system. As above Figure shows, a system is a set of interdependent parts that processes inputs (such as raw materials) into outputs (products). Business inputs typically known as resources including human, physical, financial etc resources. Most businesses use a variety of human, financial, physical, and informational resources. Manager’s function is to transform these resources into the outputs of the business. Goods and services are the outputs of the business. Some of the major components of the external environment include customers, competitors, suppliers, and investors.
Efficiency and Effectiveness
The closed-system focus of the classical theorists emphasized the internal efficiency of the organization; that is, these perspectives addressed only improvements to the transformation process. Efficiency is the ratio of outputs to inputs. Systems theory highlights another important dimension for managers: effectiveness. Effectiveness is the degree to which the organization’s outputs correspond to the needs and wants of the external environment. The external environment includes groups such as customers, suppliers, competitors, and regulatory agencies. Even a firm that has mastered Taylor’s scientific management techniques and become extremely efficient is vulnerable if, it does not consider the effectiveness of its output
Subsystem
Systems theory also emphasizes that an organization is one level in a series of subsystems. For instance, Pakistan Air force is a subsystem of our defense industry and the flight crews are a subsystem of Pakistan Air force. Again, systems theory points out that each subsystem is a component of the whole and is interdependent with other subsystems.
Synergy
Systems theory also popularized the concept of synergy, which states that the whole is greater than the sum of its parts. For example, 3M have applied its core technology of adhesives to many products, from industrial sealers to Post-it notes. 3M has not had to start from scratch with each product; its adhesives expertise provides synergies across products.
Human Relation Approach
Another approach to management, human relations, developed during the early 1930s. This approach aimed
at understanding how psychological and social processes interact work situation to influence performance. Human relations were the first major approach to emphasize informal work relationships and worker satisfaction. This approach owes much to other major schools of thought.
The Hawthorne Studies
Western Electric Company, a manufacturer of communications equipment, hired a team of Harvard researchers led by Elton Mayo and Fritz Roethlisberger. They were to investigate the influence of physical working conditions on workers’ productivity and efficiency in one of the company’s factories outside Chicago. This research project, known as the Hawthorne Studies provided some of the most interesting and controversial results in the history of management. The Hawthorne Studies were a series of experiments conducted from 1924 to 1932. During the first stage of the project (the Illumination Experiments), various working conditions, particularly the lighting in the factory, were altered to determine the effects of these changes on productivity. The researchers found no systematic relationship between the factory lighting and production levels. In some cases, productivity continued to increase even when the illumination was reduced to the level of moonlight. The researchers concluded that the workers performed and reacted differently because the researchers were observing them. This reaction is known as the Hawthorne Effect. This conclusion led the researchers to believe productivity may be affected more by psychological and social factors than by physical or objective influences. With this thought in mind, they initiated the other four stages of the project. During these stages, the researchers performed various work group experiments and had extensive interviews with employees. Mayo and his team eventually concluded that the informal work group influenced productivity and employee behavior.
The Human Relations Viewpoint
Human relations proponents argued that managers should stress primarily employee welfare, motivation, and communication. They believed social needs had precedence over economic needs. Therefore, management must gain the cooperation of the group and promote job satisfaction and group norms consistent with the goals of the organization. Another noted contributor to the field of human relations was Abraham Maslow. In 1943, Maslow suggested that humans have five levels of needs. The most basic needs are the physical needs for food, water, and shelter; the most advanced need is for self-actualization, or personal fulfillment. Maslow argued that people try to satisfy their lower level needs and then progress upward to the higher-level needs. Managers can facilitate this process and achieve organizational goals by removing obstacles and encouraging behaviors that satisfy people’s needs and organizational goals simultaneously. Although the human relations approach generated research into leadership, job attitudes, and group dynamics, it drew heavy criticism. Critics believed the philosophy, while scientific management overemphasized the economic and formal aspects of the workplace; human relations ignored the more rational side of the worker and the important characteristics of the formal organization. However, human relations were a significant step in the development of management thought, because it prompted managers and researchers to consider the psychological and social factors that influence performance.
Key Terms
Controlling: Specific activities are to set performance standards that indicate progress toward long-term goals Decisional roles included those of entrepreneur, disturbance handler, resource allocator, and negotiator activities. Disseminator is a conduit to transmit information to organizational members Disturbance handlers take corrective action in response to unforeseen problems Effectiveness: A measure of the appropriateness of the goals chosen (are these the right goals?), and the degree to which they are achieved Efficiency measure of how well resources are used to achieve a goal Entrepreneur: managers initiate and oversee new projects that will improve their organization’s performance Figurehead: duties that are ceremonial and symbolic in nature Informational roles included monitoring, disseminating, and spokesperson activities Interpersonal roles included figurehead, leadership, and liaison activities Leadership: hires, train, motivate, and discipline employees Leading: Leading is stimulating people to be high performers It is directing, motivating, and communicating with employees, individually and in groups. Liaison: contact outsiders who provide the manager with information. These may be individuals or groups inside or outside the organization. Line manager: Authorized to direct the work of subordinates—they’re always someone’s boss. In addition, line managers are in charge of accomplishing the organization’s basic goals. Management: Management is the process of working with different resources to accomplish organizational goals. Manager: The member of the organization who participates in the management process by planning, organizing, leading, or controlling the organization’s resources Monitor: collect information from organizations and institutions outside their own Negotiator role: discuss issues and bargain with other units to gain advantages for their own unit Organizing is assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals. Planning: Planning is specifying the goals to be achieved and deciding in advances the appropriate actions taken to achieve those goals. Resource allocators: responsible for allocating human, physical, and monetary resources Spokesperson: represent the organization to outsiders Staff manager: Authorized to assist and advise line managers in accomplishing these basic goals.