LESSON-1 THEORIES OF ORGANISATION

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1 LESSON-1 THEORIES OF ORGANISATION 1 Khushboo Garg Associate Professor I.P. University According to Joe Kelly, Organisation theory is a set of interrelated concepts, definitions and propositions that present a systematic view of behavior of individuals, groups and subgroups interacting in some relatively patterned sequence of activity, the intent of which is goaldirected. There is a considerable body of knowledge and literature called organizational theories developed over years reflecting what goes on in organizations. Organizational theories are a set of propositions which seek to explain how individuals and groups behave in different organizational structures and environment. A central part of the study of organisation and management is the development of management thinking and what might be termed management theory. The application of theory brings about change in actual behavior. Managers reading the work of leading writers on the subject might see in their ideas and conclusions a message about how they should behave. This will influence their attitudes towards management practice. The study of organizational theory is important for the following reasons: 1. It helps to view the interrelationships between the development of theory, behavior in organizations and management practice. 2. An understanding of the development of management thinking helps in understanding principles underlying the process of management. 3. Knowledge of the history helps in understanding the nature of management and organizational behavior and reasons for the attention given to main topic areas. 4. Many of the earlier ideas are of continuing importance to the manager and later ideas on management tend to incorporate earlier ideas and conclusions. 5. Management theories are interpretive and evolve in line with changes in the organizational environment. As McGregor puts it: Every managerial act rests on assumptions, generalizations, and hypotheses that is to say, on theory. Our assumptions are frequently implicit, sometimes quite unconscious, often conflicting; nevertheless, they determine our predictions that if we do a, b will occur. Theory and practice are inseparable. Miner makes the point that the more that is known about organizations and their methods of operation, the better the chances of dealing effectively with them. Understanding may be more advanced than prediction, but both provide the opportunity to influence or to manage the future. Theory provides a sound basis for action. However, if action is to be effective, the theory must be adequate and appropriate to the task and to improved organizational performance. It must be a good theory. However, the systematic development of management thinking is viewed, generally, as dating from the end of the nineteenth century with the emergence of large industrial organizations and

2 the ensuing problems associated with their structure and management.6 In order to help identify main trends in the development of organizational behavior and management theory, it is usual to categorize the work of writers into various approaches, based on their views of organizations, their structure and management. Although a rather simplistic process, it does provide a framework in which to help direct study and focus attention on the progression of ideas concerned with improving organizational performance. A framework of analysis There are, however, many ways of categorizing these various approaches. For example, Skipton attempts a classification of 11 main schools of management theory. Whatever form of categorization is adopted, it is possible to identify a number of other approaches, or at least subdivisions of approaches, and cross-grouping among the various approaches. The choice of a particular categorization is therefore largely at the discretion of the observer. We here will be describing following four approaches in detail: 1. Classical including scientific management, administrative management and bureaucracy 2. Human relations including neo-human relations 3. Systems approach 4. Contingency approach Attention is also drawn to other approaches, including: Decision-making; Social action and Postmodernism. Classification of Organisational Theories 1. Classical Organisation theory a. Scientific Management or Machine Theory b. Administrative Management or Management Process c. Bureaucracy 2. Neo-classical Organisation theory 3. Behavioral Science Approach 4. Social System Approach 5. Modern Organisational Theory a. Systems Approach b. Contingency Approach Classical Organisational Theories The classical theory represents the traditionally accepted views about organisatrions. It is said to be the oldest school of thought about organization and its management. These can be traced historically to the 19 th century prototype industrial and military organizations. Several writers namely: Taylor, Fayol, Weber, Luther, Gullick, Urwick, Mooney and Reiley and many others have contributed to the classical thought. These writers have placed emphasis on planning of the work, the technical requirements of the organization, principles of management, and the assumption of rational and logical behavior. Organization here is treated like a machine and its 2

3 efficiency can be increased by making each individual working in the organization efficient. Classical approach of management is the first studies of management, which emphasized rationality and making organizations and workers as efficient as possible. It offers a convenient framework for the education and training of future managers. According to Batrol, the classical school is characterized by highly structured, with emphasis on the formal organization with clearly defined functions and detailed rules, autocratic leadership. The three greatest proponents of classical theory were Taylor, Fayol, and Weber. Each identifies detailed principles and methods through which this kind of organization could be achieved. The classical thought can be studied under three streams, namely, 1. Scientific Management or Lower Level Management analysis. 2. Administrative Management or Comprehensive analysis of management. 3. Bureaucratic Management. All the three concentrated on the structure of organization for greater efficiency. All these theorists were concerned with the structure of organizations and that is why their approach is also called as Structural Theory of Organisation. Scientific Management F.W Taylor was the first person who insisted on the introduction of scientific methods in management. He launched a new movement during the last decade of 19 th century which is known as Scientific Management. That is why Taylor is regarded as the Father of Scientific Management. Although the techniques of scientific management could conceivably be applied to management at all levels, the research, research applications and illustrations relate mostly to lower-level managers. Therefore theory is also referred to lower level management analysis. Scientific management consists primarily of the work of Frederick W. Taylor, Frank and Lilian Gilbreth, and Henry L. Gantt. Frederick W Taylor ( ) is commonly called the father of scientific management because of the significance of his contribution. He started his career as an apprentice in a small shop in Philadelphia (USA) in 1875.Taylor witnessed much inefficiency (Robbins et al, 2003). He sought to create a mental revolution among both workers and managers by defining clear guidelines for improving production efficiency. He argued that the four principles of management would result in prosperity for both workers and managers. Scientific management means application of scientific methods to the problems of management. He advocated scientific task setting based on time and motion study, standardization of materials, tools and working conditions, scientific selection and training of workers and so on. He laid emphasis on the following principles: 1. Science. Not rule of thumb: Develop a science for each element of a man s work, which replaces the old rule of thumb method. 2. Harmony in group action, rather than discord. 3. Maximum output in place of restricted output. 4. Scientific selection, training and placement of the workers. 5. Almost equal division of work and responsibility between workers and managers. 3

4 The basic idea behind above stated principles was to change the mental attitudes of the workers and the management towards each other. Taylor called it Mental Revolution which has three implications: i. All out efforts for increase in production; ii. Creation of the spirit of mutual trust and confidence; iii. Including and developing the scientific attitude towards problems. Taylor s thinking was confined to organization at the shop level. However, he demonstrated the possibility and significance of the scientific analysis of various aspects of management. To put the philosophy of scientific management into practice, Taylor and his associates suggested the following techniques: i. Scientific task setting to determine a fair day s work. ii. Work study to simplify work and increase efficiency. It includes method study, time study and motion study. iii. Standardization of materials, tools, equipment, costing system, etc. iv. Scientific selection and training of workers. v. Differential piece-wage plan to reward the highly efficient workers. vi. Specialization in planning and operations through functional foremanship. Foremen in the planning department include: route clerk, instruction card clerk, time and cost clerk and shop disciplinarian and those in operations department include: gang boss, speed boss, repair boss and inspector. vii. Elimination of wastes and rationalization of system of control. Other than Taylor, Frank Gilbreth ( ) and Lilian Gilbreth ( ) were also significant contributors to the scientific method. As a point of interest, the Gilbreths focused on handicapped as well as normal workers. Like other contributors to the scientific method, they subscribed to the idea of finding and using the best way to perform a job. The primary investigative tools in the Gilbreths research were motion study, which consist of reducing each job to the most basic movements possible. Motion analysis is used today primarily to establish job performance standards. Henry L. Gantt ( ) too, was interested in increasing worker efficiency. Gantt attributed unsatisfactory or ineffective tasks and piece rates (incentive pay for each product piece an individual produces) primarily to the fact that these tasks rate were set according to what had been done by workers in the past or on somebody s opinion of what workers could do. Mooney and Reiley set out a number of common principles which relate to all types of organizations. They place particular attention on: 1. the principle of co-ordination the need for people to act together with unity of action, the exercise of authority and the need for discipline 2. the scalar principle the hierarchy of organisation, the grading of duties and the process of delegation 3. the functional principle specialisation and the distinction between different kinds of duties. 4

5 Brech attempts to provide a practical approach to organisation structure based on tried general principles as opposed to the concentration on specific cases or complex generalizations of little value to the practicing manager. He sets out the various functions in the organisation and the definition of formal organizational relationships. Although clearly a strong supporter of the formal approach in some of his views such as, for example, on the principle of span of control, Brech is less definite than other classical writers and recognizes a degree of flexibility according to the particular situation. Brech does place great emphasis, however, on the need for written definition of responsibilities and the value of job descriptions as an aid to effective organisation and delegation. This work builds on the ideas of earlier writers, such as Urwick, and therefore provides a comprehensive view of the classical approach to organisation and management. Appraisal of Scientific Management Taylor s scientific management was associated with many benefits to the industry. The main benefit of scientific management is conservation and savings, making an adequate use of everyone s energy of any type that is expended. Following are the benefits related to scientific management: 1. It had replaced the traditional rule of thumb by making the use of scientific techniques for each element of man s work. 2. It involved proper selection and training of workers. 3. It established a harmonious relationship between workers and management. 4. Due to scientific management, equal division of responsibilities between workers and management became possible. 5. Standardization of tools, equipment, materials and work method. 6. Detailed instructions and constant guidance of workers. Apart from the above discussed long listed benefits Taylor s theory of Scientific management was highly criticized by the workers, managers, psychologists and even by the general public on the following grounds: 1. The use of word Scientific before Management was highly objected because what it actually meant by scientific management is nothing but a scientific approach to management. 2. It was said that most of the principles of scientific management relates only to production management and certain essential aspects of management i.e. finance, marketing, personnel and accounting etc were ignored. 3. The concept of Functional Foremanship that aims at bringing specialization in the organization advocated by Taylor was also criticized because in actual practice it is not feasible for one worker to carry out instructions from eight foreman. 4. This part of classical theory is truly production centered as it concentrates too much on technical aspects of work and undermines human factor in industry. It resulted in monotony of job, loss of initiative, wage reductions, job insecurity, etc. 5. Scientific management theory simply ignores the social and psychological needs of workers. Here workers were treated as rational economic beings. Human resources were referred to as mere extensions of machines devoid of any feelings and emotions. 5

6 Only monetary incentives and exercise of authority were considered as ways to make them work. 6. Trade unionists criticized this theory and regarded it as the means to exploit labour because the wages of workers were not increased in direct proportion to productivity increase. Many of the above mentioned criticisms were later remedied by the other contributors to scientific management like Henri L. Gantt, Frank Gilberth, Lilian Gilberth and Harrington Emerson. It can be said that Taylor introduced scientific reasoning to the disciplines was management. Administrative Management Theory The advocates of this school undertook management as a process involving certain functions like planning, organizing, directing and controlling. This is why it is called as the functional approach. Henri Fayol is regarded as the Father of general management. Organization here is defined in terms of certain functions where fourteen principles of management have universal applicability. Fayol, Gulick, Sheldon, Mooney and Reiley and Urwick have contributed to this stream of thought and gave functions of managers and propounded the principles of sound organization and management that are said above. Fayol initiated by classifying all operations in business organizations under six categories: i. technical (production) ii. commercial (purchase and sale) iii. financial (funding and controlling capital) iv. security (protection) v. accounting (balance sheet; costing records) vi. administrative or managerial (planning, organizing, commanding, coordinating and controlling). According to Fayol managerial activity deserved more attention. In his view management is the process composed of five functions: planning, organizing, commanding, coordinating and controlling where: a. Planning means to study the future and arrange the plan of operations; b. Organizing means to build up the material and human organization of the business; c. Commanding means to make the staff do their work; d. Coordinating means to unite all the activities; e. Controlling means to see that everything is done as per the standards that have been laid down and the instructions given. 6

7 Fayol insisted that in order to be effective, management should be based on fourteen principles: 1. Division of work: A firm s work should be divided into specialized, simplified tasks. Matching task demands with workforce skills and abilities will improve productivity. The management of work should be separated from its performance. 2. Authority and responsibility: Authority is the right to give orders, and responsibility is the obligation to accept the consequences of using authority. No one should possess one without having the other as well. 3. Discipline: Discipline is performing a task with obedience and dedication. It can be expected only when a firm s managers and subordinates agree on the specific behaviors that subordinates will perform. 4. Unity of command: Each subordinate should receive orders from only one hierarchical superior. The confusion created by having two or more superiors will undermine authority, discipline, order, and stability. 5. Unity of direction: Each group of activities directed toward the same objective should have only one manager and only one plan. 6. Subordination of individual interest to general interest: The interests of individuals and the whole organization must be treated with equal respect. Neither should be allowed to supersede the other. 7

8 7. Remuneration of Personnel: the pay received by employees must be fair and satisfactory to employees as well as organisation. Pay should be distributed in proportion to personal performance, but employees general welfare must not be threatened by unfair incentive-payment schemes. 8. Centralization: centralization is the retention of authority by managers, to be used when managers desire greater control. Decentralization should be used if subordinates opinion and experience are needed. 9. Scalar chain: The scalar chain is a hierarchical string extending from the uppermost manager to the lowest subordinate. The line of authority follows this chain and is the proper route for organizational communications 10. Order: Order, or everything in its place, should be instilled whenever possible because it reduces wasted materials and efforts. Jobs should be designed and staffed with order in mind. 11. Equity: Equity means enforcing established rules with a sense of fair play, kindliness, and justice. It should be guaranteed by management, as it increases members loyalty, devotion, and satisfaction. 12. Stability: Properly selected employees should be given the time needed to learn and adjust to their jobs. The absence of such stability undermines organizational performance. 13. Initiative: Staff members should be given the opportunity to think for themselves. This approach improves the distribution of information and adds to the organization s pool of talent. 14. Esprit de corps (union is strength): Managers should harmonize the interests of members by resisting the urge to split up successful teams. They should rely on face-toface communication to detect and correct misunderstandings immediately. Fayol thought that these principles would be useful to all types of group activity. However he did not consider these principles as immutable laws. The word principle is just used for convenience. His theory of management completely revolutionized the thinking of managers as throughout his treatise, there exists an understanding of the universality of the principles. Criticism of Management Process or Functional Approach Although the management process approach has made significant contribution to the development of thought, their work still has been criticized on the following grounds: 1. There is no single classification of managerial functions acceptable to all the functional theorists. 2. There exists lack of unanimity about the various terms such as management and administration, commanding and directing, etc. 3. The functionalists have considered their principles to be universal in nature but many of the principles have failed to deliver the desired results in certain situations. 4. In this theory theorists have not considered the external environment of business. 5. Fayol has over- emphasized on the intellectual side of management. He thought that management should be formally taught, but he did not elaborate the nature and contents of management education. 8

9 Fayol v/s Taylor Taylor (Scientific Management) More attention was paid to shop and factory management. He worked from bottom to top level. His centre of study was the operator at the shop level. His approach was a kind of efficiency movement. Thus he had a narrow perspective. He gave stress on increasing productivity rather than on human resources. He is also known as Father of Scientific Management. Fayol (Administrative Management) More attention was paid on the functions of managers and the management process as a whole. He worked from top to bottom level laying stress on unity of command, unity of direction, coordination, espirit de corps. He had a wider perspective. His scheme was to evolve principles which could be applied to administration in different spheres. He showed regard for the human element by advocating principles such as initiative, stability of service and spirit of cooperation. He is also known as Father of Administrative Management. Bureaucracy Bureaucratic management is a stream of classical theory of management. It is a formal system of organization that is based on clearly defined hierarchical levels and roles in order to maintain efficiency and effectiveness. This theory was developed by Max Weber and is widely used in the management of both public and private sector organizations. According to the bureaucratic management approach, organizations are usually divided into hierarchies. These divisions help in creating strong lines of authority and control within the organization. Max Weber ( ) was the first of management theorists who developed a theory of authority structures and relations based on an ideal type of organization he called a bureaucracy a form of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships. Bureaucratic management depends upon administration devices. Max Weber presents the ideal organization structure. According to Weber the bureaucratic management approach is based on four principles -Hierarchical positions, rules of system, division of labor for specialization, and impersonal relationship. Max Weber contributed to the organization theory by introducing bureaucracy as an ideal form of organization. His primary contribution includes his theory of authority structure and his description of organization based on the nature of authority relations within them. Weber s ideas about organization design were influenced by: a. The amazing growth of industrial organizations, b. His military experience, c. Lack of trust in human judgment and emotions. It was Weber s belief that there are three types of legitimate authority: a. Rational-legal authority: Obedience is owned to a legally established position or rank within the hierarchy of a business, military unit, government, and so on. 9

10 b. Traditional authority: Here people obey a person because he belongs to certain class or occupies a position traditionally recognized as possessing authority such as a royal family. c. Charismatic authority: Obedience here is based on the follower s belief that is person has some special power or appeal. As per Weber s theory of bureaucracy rational-legal authority is the most important type of authority in the organization because in traditional authority, leaders are not chosen on the basis of their capabilities and charismatic authority is too emotional and irrational. Characteristics of Bureaucracy 1. Division of work: In bureaucracy, the degree of division of work is very high at both the operative and administrative levels which results in specialization of work. 2. Hierarchy of Positions: In a bureaucratic organisation, there is a well defined hierarchy of authority wherein each lower position is under the control of a higher one. Thus there exists, Unity of command. Quantity of authority in such an organization increases as one move towards the upper level in the organization. 3. Rules and regulations: There exists a very well defined set of rules and regulations in a bureaucratic organization that are laid down by the top administrators that assures standardized operations and decisions, protect the human resources and ensure equality of treatment. 4. Impersonal Conduct: in such organization there exists impersonality of relationships among the organizational members. There is no room for emotions and sentiments in 10

11 bureaucratic structures and all decisions and rules and regulations framed are highly impersonal. 5. Staffing: the employees are employed on contractual basis where in tenure of service is based on the rules and regulations laid down by the top management. Each employee gets a salary every month that is based on the job he handles and also on the length of service. 6. Technical Competence: Every selection in such organization is on the basis of technical competence of bureaucrats. Promotions are also based on technical qualifications and performance. 7. Official Records: This organizational structure follows an efficient system of record keeping. All the decisions and activities are formally recorded and preserved safely for future reference. This is made possible by extensive filing system. Appraisal of Bureaucracy Bureaucracy is an administrative device that can help in achieving following advantages: 1. There exists proper delegation of authority where every individual gets work on the basis of their past performance as well as their capabilities. 2. Well defined set of rules and regulations assure consistent actions. 3. Employee s behavior is rational and predictable because decision taken are bound to the rules and regulations and not affected by emotions. 4. It leads to efficiency in the organization that result in specialization due to proper division of work. Just like any other theory there has been some criticisms by other theorists in regards to bureaucracy. They are discussed as follow: 1. The rules laid may be followed in paper and not in reality. The strict rules or guidelines can instead assure inefficiency. The rules may be misunderstood or misused by the person concerned that may result in red tapism and technicalism. 2. Individuals cannot take any initiative on their own because they are supposed to follow the defined code of conduct and rules. 3. Bureaucracy does not place any emphasis on individual goals. 4. Such organization does not consider informal organizational and inter-personal relations. 5. In such organization innovation is highly discouraged because every member of the organization is supposed to behave in certain manner. 6. Since bureaucratic structures are very tall consisting of several layers of executives communicating with top level can be difficult for the lower level. 7. Such organizational structure is not effective under dynamic environment because it cannot undergo the changes that are demanded by the fast changing environment. Appraisal of Classical Theory Classical approach made a significant contribution to the development of management theories. This perspective had three primary thrusts. Scientific management focused on employees within organizations and on ways to improve their productivity. Administrative theory focused on the total organization and on way to make it more efficient. Bureaucratic management focused on eliminating managerial inconsistencies that means it emphasized the position rather than person 11

12 and organization continues even when individual leave. Classical approach highlighted the universal character of management principles. It made a clear distinction between operative activities and managerial activities. It also identified the application of scientific method to the problems of management and highlighted the need for mutual cooperation between employers and employees. The classical theory was highly criticized by the neo-classical and modern theorists. The neoclassical writers attacked this theory on the basis of treatment given to human beings. Modern theorists also criticized it on the basis of narrow view they have assumed for the organization by ignoring the external environment of the organization. The classical writers have been criticized generally for not taking sufficient account of personality factors and for creating an organisation structure in which people can exercise only limited control over their work environment. The idea of sets of principles to guide managerial action has also been subject to much criticism. For example, Simon writes: Organisational design is not unlike architectural design. It involves creating large, complex systems having multiple goals. It is illusory to suppose that good designs can be created by using the so-called principles of classical organisation theory. Research studies have also expressed doubt about the effectiveness of these principles when applied in practice. However, the classical approach prompted the start of a more systematic view of management and attempted to provide some common principles applicable to all organizations. These principles are still of relevance in that they offer a useful starting point in attempting to analyze the effectiveness of the design of organisation structure. The application of these principles must take full account of: a) the particular situational variables of each individual organisation, b) the psychological and social factors relating to members of the organisation. The other objections against classical theory are: 1. Narrow view of Organisation: the classical writes have ignored human relations aspect completely. They have stressed only on the formal organization, impersonal decision making etc. informal groups, interplay of individual personalities, individual goals are all neglected. It is said that the focus of this theory is on organization without people. 2. Assumption of closed system: An organisation is an open system that interacts with the external environment. But in this theory organizational interaction with external environment is not given any importance and is assumed that organization is a closed system. 3. Static view of organization: The classical theorists have viewed organization as static while organization is a dynamic system. The organization can instantly respond to changes in the environment and adapt accordingly. The environment influences the organization and is influenced by it too. Thus, the best organizational pattern should meet the external and internal requirements and these requirements are ever-changing and dynamic. 4. Unrealistic assumption about human behavior: Here in this theory certain unreal assumptions have been made by human beings. They assumed human beings as an inert machine that perform tasks assigned to them and ignore their social, psychological and motivational aspects of human behavior. Human behavior is the most unpredictable and 12

13 complex. This assumption of classical writers led the workers to frustration, conflict and failure and thus made man subordinate to the organization. 5. Economic reward as the main motivators: They have assumed that money and monetary incentives are the only means to make people work in an organization whereas this is highly unreal. Non- monetary incentives like job enrichment, praise, respect, recognition, a pat on the back also plays an important role and can work as real motivators. 6. Lack of Empirical Verification: All the principles stated above were based on personal judgments and experiences of the practitioners. The principles lack precision and comprehensive framework for analysis. Moreover, it is also not clear whether these principles are action recommendations or simply statements. 7. Neglect of Decision-Making: Decision making plays a vital role in an organization but classical theorists have paid little attention to decision making process. 8. Hierarchial Structure: Classical theorists have attempted to define the right organizational structure. But they did not explore why certain forms of organizational structure are more effective than others. 13

14 LESSON-2 NEO-CLASSICAL THEORY OF ORGANISATION Khushboo Garg Associate Professor I.P. University The classical writers Taylor, Fayol, Weber ignored the human relations aspect within an organization. The neo-classical approach developed as a reaction to the classical principles but it did not abandon them altogether. Neo-classical approach is the extended form of classical approach of management. It builds on Classical approach, but broadens and expands it; it does not totally divorce itself from its predecessor. Rather, neoclassical theory adds a more human element to the science of organization and management. The neo-classical writers have focused on human aspect of the industry. They modified the classical theory by emphasizing on the fact that organization is a social system and the human factor is the most important element within it. They conducted some experiments known as Hawthrone Experiments and investigated informal groupings, informal relationships, patterns of communication, patterns of informal leadership, etc. Elton Mayo is generally recognized as the father of the Human Relations School. Other contributors include: Roethliberger, Dickson, Dewey, Lewin, Simon, Smithburg, Thompson etc. The human relations approach is concerned with the recognition of the importance of human element in organizations. It revealed the importance of social and psychological factors in determining workers productivity and satisfaction. According to them an organization cannot achieve its objectives without the cooperation of people and such cooperation cannot be secured or ordered. It has to be consciously achieved. Neo-classical approach concentrates on peopleoriented organization where both formal and informal organizations integrate. Neo-classical approach is based on two main points: 1. Organizational situation should be viewed in social as well as in economic and technical terms. 2. The social process of group behavior can be understood in terms of clinical method analogous to the doctor s diagnosis of human organism. There are mainly three elements of neoclassical theory of management. They are Hawthorne Experiment, Human Relation Movement, and Organizational Behavior. Hawthorne experiments The Hawthorne studies were a series of experiments conducted at the Western Electric Company (USA) between 1927 and 1932 that provided new insights into individual and group behavior (Griffin R W, 2006). The research, originally sponsored by General Electric, was conducted by Elton Mayo and his associates. The studies focused on behavior in the workplace. In one experiment involving this group of workers, for example, researchers monitored how productivity changed as a result of changes in working conditions. The Hawthorne studies and subsequent experiments lead scientists to the conclusion that the human element is very important in the workplace. 14

15 The Hawthorne studies were among the earliest attempts to use scientific techniques to examine human behavior at work. A three-stage series of experiments assessed the effects of varying physical conditions and management practices on workplace efficiency. The first experiment examined the effects of workplace lighting on productivity; it produced the unexpected findings that changes in lighting had little effect but that changes in social conditions seemed to explain significant increases in group productivity. Additional experiments led the researchers to conclude that social factors in particular, workers desires to satisfy needs for companionship and support at work-explained the results observed across all of the Hawthorne studies. The Hawthorne experiments may classified into four stages: Illumination experiments, Relay assembly test room experiments, Mass interviewing program, Bank wiring observation room study. Stage 1: Illumination Experiment: This was conducted to establish relationship between output and illumination. The output tended to increase every time as the intensity of light was improved. But the output again showed an upward trend when the illumination was brought down gradually from the normal level. Thus, it was found that there is no consistent relationship between output of workers and illumination in the factory. There were some other factors which influenced the productivity of workers when the intensity of light was increased or decreased. Stage 2: Relay assembly Room Experiment: Here, a small homogeneous work group of girls was constituted. Several new elements were introduced in the work atmosphere of this group. These included: job simplification, shorter work hours, rest breaks, friendly supervision, improved physical conditions, free social interactions among the group and changed incentive pay. Productivity and morale were maintained even if improvements in working conditions were withdrawn. The researchers concluded that socio-psychological factors such as feeling of being important, recognition, attention, participation, cohesive work-group, and non-directive supervision held the key for higher productivity. Stage 3: Mass Interview Program: Another significant phase of the experiments was the interviewing program. The lighting experiment and the relay assembly test room drew attention to the form of supervision as a contributory factor to the workers level of production. In an attempt to find out more about the workers feelings towards their supervisors and their general conditions of work, a large interviewing program was introduced. More than 20,000 interviews were conducted before the work was ended because of the depression. Initially, the interviewers approached their task with a set of prepared questions, relating mainly to how the workers felt about their jobs. However, this method produced only limited information. The workers regarded a number of the questions as irrelevant; also they wanted to talk about issues other than just supervision and immediate working conditions. As a result, the style of interviewing was changed to become more non-directive and openended. There was no set list of questions and the workers were free to talk about any aspect of their work. The interviewers set out to be friendly and sympathetic. They adopted an impartial, non-judgemental approach and concentrated on listening. Using this approach, the interviewers found out far more about the workers true feelings and attitudes. They gained information not just about supervision and working conditions but also about the company itself, management, work group relations and matters outside of work such as family life and views on society in general. Many workers appeared to welcome the opportunity to have someone to talk to about their feelings and problems and to be able to let off steam in a friendly atmosphere. The 15

16 interviewing program was significant in giving an impetus to present-day human resource management and the use of counselling interviews, and highlighting the need for management to listen to workers feelings and problems. Being a good listener is arguably even more important for managers in today s work organizations and it is a skill which needs to be encouraged and developed. Stage 4: Bank Wiring Observation Room Experiment: This experiment was conducted on a group of workers under conditions which were as close as possible to normal. This group comprised of 14 workers. After the experiment, the production records of this group were compared with their earlier production records. There were no significant changes in the two because of the maintenance of normal conditions. However, existence of informal cliques in the group and informal production norms were observed by the researchers. Major observations were: 1. Each individual was restricting output. 2. The group had its own unofficial standards of performance. 3. Individual output remained fairly constant over a period of time. 4. Department records were distorted due to differences between actual and reported output. Later re-analyses of the Hawthorne experiments not only found weaknesses in the studies methods and techniques, but also suggested that changes in incentive pay, tasks being per- formed, rest periods, and working hours led to the productivity improvements attributed by researchers to the effects of social factors. Nonetheless, the Hawthorne studies raised serious questions about the efficiency-oriented focus of the scientific management and administrative principles perspectives. In so doing, they stimulated debate about the importance of human satisfaction and personal development at work. The human relations perspective of management thought that grew out of this debate redirected attention away from improving efficiency and toward increasing employee growth, development, and satisfaction. Human relation movement Taking a clue from the Hawthorne Experiments several theorists conducted research in the field of interpersonal and social relations among the members of the organization. These relations are known as human relations. A series of studies by Abraham H. Maslow, Douglas Mc Gregor, Frederick Herzberg, Keth Davis, Rensis Likert and others lead to what is human relation movement (Singh, 1983). Human relation movement argued that workers respond primarily to the social context of the workplace, including social conditioning, group norms and interpersonal dynamics. Organizational Behavior Several psychologists and sociologists began the study of group dynamics, Chris Argyris, Homans Kurt Lewin, R.L. Katz, Kahn and others developed the field of organizational behavior. It involves the study of attitudes, behavior and performance of individuals and groups in organizational settings. This approach came to be known as behavioral approach. It is extended and improved version of human relations movement. It is multidimensional and interdisciplinary the application of knowledge drawn from behavioral sciences (Psychology, sociology, 16

17 anthropology, etc) to the management problems. Therefore, it is also called behavioral science approach. Features of Neo-classical Theory 1. The organization is a social system composed of several interacting parts. 2. The behavior of an individual is dominated by the informal group of which he is a member. 3. The social environment on the job affects the workers and is also affected by them. 4. The informal organization also exists within the framework of formal organization and is affected by the formal organization. 5. Monetary incentives are not the only sole motivators for an individual. Non-monetary incentives also play a vital role in motivating employees. 6. In an organization it is ultimately cooperative attitude and not the mere command which yields result. 7. There is generally a conflict between organizational and individual goals. For smooth functioning of organization it is necessary to integrate individual goals with the organizational goals and vice versa. 8. Morale and productivity can go hand in hand in an organization. 9. Management must aim at developing social and leadership skills in addition to technical skills. It must take interest in welfare of organization. 10. Both- way communication is necessary in an organization. Factors affecting Human Relations Human relations in an organization are determined by the individual, work group, leader and work environment. Individual: Behavior of an individual is affected by his feelings, sentiments, values and attitudes. Motivation of an individual should give due consideration to their economic, social and psychological needs. Thus, motivation is a complex process. Work-Group: The work group is the centre of locus of human relations approach. It helps in determining the attitudes and performance of individual workers. The Hawthrone studies have shown that informal groups have a majopr influence over the behavioural pattern of workers. Work Environment: It has been recommended by several human relationist that a positive work environment results in achievement of not only organizational goals but also leads to employee satisfaction. Leader: Leadership plays a major role in an organization. A leader must ensure full and effective utilization of all organizational resources to achieve organizational goals. He must be patient, strong, empathetic and should be able to adapt to various personalities and situations. As per Hawthrone studies, a leader can contribute substantially in increasing productivity by providing a free, happy and pleasant work environment where bossism is totally absent and where all members are allowed to contribute towards decision making. 17

18 Contributions of Human Relations Approach or Hawthrone studies 1. Flat structure: Neo-classical theorists have suggested a flat structure against tall structure (as given by classical theorists) where decision making involves everyone and is quicker and much more effective. Here communication chain is shorter and suitable to motivate employees as much more freedom is given to the employees over here. 2. Social System: the social system defines individual roles and establishes norms that may differ from those of formal organization. The workers follow a social norm determined by their co-workers, which defines the proper amount of work rather than try to achieve the targets management thinks they can achieve, even though this would have helped them to earn as much as they physically can. 3. Informal Organisation: classical theorists did not consider informal groups. Neoclassical theorists felt that both formal and informal organization must be studied to understand the behavior of organizations fully. Informal groups can be used by the management for effective and speedy communication and for overcoming resistance on the part of workers. Thus both formal and informal organizations are inter-dependent. 4. Decentralization of authority and Decision- making: This has allowed initiative and autonomy at the lower levels. 5. Non- economic rewards: money is not assumed to be the sole motivator for human beings. The social and psychological needs of the workers are also very strong. So noneconomic rewards like praise, status, inter-personal relations, etc play an important role in motivating employees. Such rewards must be integrated with wages and fringe benefits of the employees. 6. Conflicts: Conflict may arise between organizational goals and group goals. Conflicts will harm the interest of workers if they are not handled properly. Conflicts can be resolved through improvement of human relations in the organization. 7. Group Dynamics: A group determines norms of behavior for the group members and exercises a powerful influence on the attitudes and performance of individual workers. The management should deal with workers as members of work groups rather than individuals. Some leading contributors Among the best-known contributors to the neo-human relations approach are Herzberg and McGregor. Herzberg isolated two different sets of factors affecting motivation and satisfaction at work. One set of factors comprises those which, if absent, cause dissatisfaction. These are hygiene or maintenance factors which are concerned basically with job environment. However, to motivate workers to give of their best, proper attention must be given to a different set of factors, the motivators or growth factors. These are concerned with job Content. McGregor argued that the style of management adopted is a function of the manager s attitudes towards human nature and behavior at work. He put forward two suppositions called Theory X and Theory Y which are based on popular assumptions about work and people. Other major contributors to the neo-human relations approach are: Likert, whose work includes research into different systems of management; McClelland, with ideas on achievement motivation and 18

19 Argyris, who considered the effect of the formal organisation on the individual and psychological growth in the process of self-actualisation. Argyris major contributions include his work on organizational learning and on effective leadership. The neo-human relations approach has generated a large amount of writing and research not only from original propounders, but also from others seeking to establish the validity, or otherwise, of their ideas. This has led to continuing attention being given to such matters as organisation structuring, group dynamics, job satisfaction, communication and participation, leadership styles and motivation. It has also led to greater attention to the importance of interpersonal interactions, the causes of conflict and recognition of employee relations problems. Criticism of Human Relation Approach Neoclassical theory has made significant contribution to an understanding of human behavior at work and in organization. It has generated awareness of the overwhelming role of human factor in industry. This approach has given new ideas and techniques for better understanding of human behavior. Contributors to this approach recognize an organization as a social system subject to the sentiments and cultural patterns of the member of the organization, group dynamics, leadership, motivation, participation, job environmental, etc constitute the core of the neoclassical theory. This approach changed the view that employees are tools and furthered the belief that employees are valuable resources. It also laid the foundation for later development in management theory. The human relations approach has provided modifications to classical approach and has considered the employees as humans that was missing in the classical theory. They understood the need of two-way communication, informal groups, non-monetary incentives and several other aspects that led to the betterment of employees in the organization. But still this theory suffers from certain limitations. It was found incomplete, short-sighted and lack of integration was found among many aspects of human relations studied by it. Some of those objections are given below: 1. Limited Applicability: The various structures of organization given by neo-classical theorists are not universal. Their application is limited. There is no particular structure which may serve the purpose of all organizations. The relationists also overlooked some of the environmental constraints which managers cannot ignore and this lapse makes the applicability of this theory limited. 2. Lack of Scientific Validity: most of the conclusions of this approach were drawn from Hawthrone studies. These conclusions were based on clinical insights rather than on scientific evidence. The groups chosen for study were not representative in character. The findings were based upon temporary groups that cannot be applied to groups that have continuing relationship with one another. 3. Unreal Assumptions: the assumption that says that there is a solution of every problem which satisfies everyone in the organization is unreal. Often there are conflicts of interest among various groups in the organisation that are structural and not merely psychological. 4. Negative View of Conflict between Organisational and Individual Goals: it views conflict between the goals of the organization and those of individuals as destructive. 19

20 The positive aspects of conflicts such as overcoming weakness and generation of innovative ideas are ignored. 5. Over-emphasis on Group: This approach has over emphasized on group and group decision-making. But in actual practice, groups may sometimes create problems for management and collective decision making may not lead to a rationale consensus. 6. Over-stretching of Human Relations: it is assumed here that satisfied workers are more productive whereas this may not hold true always. This approach says that all organizational problems are subject to solutions through human relations whereas this might not hold true always. 7. Limited focus on work: this approach throughout has only talked about humans and human relations in an organisation. It does not come out with new and better ways to improve productivity n an organisation. It lacks adequate focus on work. It has over emphasized the psychological aspects at the cost o9f the structural and technical aspects. 8. Over-concern with Happiness: the Hawthrone studies suggested that happy employees will be productive employees. This equation between happiness and job satisfaction is unfortunate as it represents a naïve and simplistic view of the nature of man. Studies have shown a consistent relationship between happiness or morale and productivity. It is quite possible to have a lot of happy but unproductive workers. Classical Vs Neoclassical theory: Classical and neoclassical approach to management made outstanding contribution to the development of management thought. Under classical approach, attention was focused on job and machine. On the other hand, neoclassical approach to management emphasizes on increasing production through an understanding of people. According to proponents of this theory, if managers understand their people and adapt their organizations to them, Organization success will usually follow. However, the classical theory stresses on task and structure while the neoclassical theory emphasizes people aspect. Points of Distinction Classical Approach Neo classical Approach Focus Functions and economic demand of Emotions and human qualities workers of workers Structure Impersonal and mechanistic Social System Application Autocratic management and strict Democratic process rules Emphasis Discipline and rationality Personal security and social demand Work goal of workers Maximum remuneration and Attainment of organisational reward goals Concept about men Economic being Social being Relation Formal Informal Nature Mechanistic Organistic Content Scientific management, Hawthrone experiments, administrative management and human relation movement and bureaucratic management organisational behavior. 20

21 Classical and Neo-classical: A concluding note Classical and neoclassical approaches made a crucial role in the advancement of management theories and practices. The adopted management approaches are important due to the facts that determine the efficiency and congenial environment with which managerial activities are performed. In this era of rapid economic development and industrial expansion of different nations, classical and neoclassical theorists made an undeniable role by developing different techniques of production and it enabled every nation to be involved in this global market. Though classical theory is now treated to be outdated, it is important because it introduced the concept of management as a subject for intellectual analysis and provided a basis of ideas that have been developed by subsequent schools of management thought. Neoclassical approach put overemphasis on human variables and symbolic rewards which may not be appreciated by the recipient s significant others. It serves as the backbone to many current management theories. So, it is clear that the field of management have some remarkable and pertinent theories which are underpinned by pragmatic study evidence. This development holds a rather brighter future for the study, research, and practice of management. Behavioural Science Approach Under behavioral science approach, the knowledge drawn from behavioral sciences, namely, psychology, sociology and anthropology, is applied to explain and predict human behavior. It focuses on human behavior in organisations and seeks to promote verifiable propositions for scientific understanding of human behavior in organisations. It lays emphasis on the study of motivation, leadership, communication, group dynamics, participative management, etc. it believes that it is difficult to understand the sociology of a group separate from the psychology of the individual comprising it and the anthropology of the culture within which it exists. Thus, the behavioural sciences are transactional; they are concerned with all relevant aspects of human behavior including the interactions among all important factors. Data is objectively collected and analyzed by the social scientists to study varius aspects of human behavior. The pioneers of this school reasoned that in as much as managing involves getting things done with and thought people, the study of management must be centred around people and their interpersonal relations. Quantitative or Management Science Approach The quantitative or mathematical approach uses pertinent scientific tools for providing a quantitative basis for managerial decisions. The abiding belief of this approach is that management problems can be expressed in terms of mathematical symbols and relationships. The basic approach is the construction of a model because it is through this device that the problem is expressed in its basic relationships and in terms of selected objectives. The users of such models are known as management scientists. The technique commonly used for managerial decision-making include Linear Programming, Critical Path Method (CPM), Program Evaluation Review Technique (PERT), Games Theory, queuing Theory and Break-Even Analysis. The application of such techniques helps in solving several problems of management such as inventory control, production control, price determination, etc. 21

22 LESSON-3 MODERN ORGANISATION THEORY Khushboo Garg Associate Professor I.P. University The modern management thinkers define organisation as a system and also consider the impact of environment on the effectiveness of the organisation. This theory treats organisation as a system of mutually dependent variables. This theory has been developed on a strong conceptual analytical base and is based on empirical research data. The modern organisation theory has been evolved on the pattern of General System Theory (GST). The General System Theory studies the various parts of a system and interaction between them in an integrated manner an also considers the interaction of the system with the external environment. The modern organisation theory uses the concepts of GST and facilitates the analysis of nay organisation. As a result, two approaches have gained importance after 1960s which are as follows: a. Systems Approach b. Contingency Approach Systems Approach The classical theories of organization were, in the first place, interested in the material and financial aspects of the organization, and the human relations and human resources theories in the psychological aspects of the organization. The system method of treatment is relating to the investigating into the component part of the organizational systems in the multidirectional connections between the causes and effects in the organization. It is conceived of the feed forward and feedback information. With a system approach we deal with the organization as a system whole consisting of the mutually connected parts. The system approach means dealing with these parts in their mutual connection as a part of the whole. A no system approach in the investigating into the organization, however, means dealing with the parts of a whole, irrespective of the mutual connection. It is just for this reason that the no system dealing with the organization is only a partial one and cannot explain the organizational phenomena in their totality. The totality of the organization and of its phenomena can be explained only by the system approach. According to Kats and Rosenzweig, A system is an organized, unitary whole composed of two or more independent parts, components or sub-systems and delineated by identifiable boundaries from its environmental supra system. It is simply an assemblage or combination of things or parts, forming a complex whole. Features of Organisational system: i. A system is goal-oriented. ii. A system consists of several sub-systems that are interdependent and inter-related. iii. A system is engaged in processing or transformation of inputs into outputs. iv. An organisation is an open and dynamic system. It has continuous interaction with the environment. It is sensitive to its environment such as government policies, competition in the market, change in tastes and preferences of people, etc. v. A system has a boundary which separates it from other systems. 22

23 Open system Concept: With the emergence in the 1960s of the open systems perspective, human relations concerns related to employee satisfaction and development broadened to include a focus on organizational growth and survival. According to the open systems perspective, every organization is a system unified structure of interrelated subsystems and it is open subject to the influence of the surrounding environment. Together, these two ideas form the essence of the open systems approach, which states that organizations whose subsystems can cope with the surrounding environment can continue to do business, whereas organizations whose subsystems cannot cope will not survive. The systems approach views the organisation as a whole and involves the study of the organisation in terms of the relationship between technical and social variables within the system. Changes in one part, technical or social, will affect other parts and thus the whole system. Long-wall coal-mining study The idea of socio-technical systems arose from the work of Trist and others, of the Tavistock Institute of Human Relations, in their study of the effects of changing technology in the coalmining industry in the 1940s. The increasing use of mechanization and the introduction of coal-cutters and mechanical conveyors enabled coal to be extracted on a long-wall method. Shift working was introduced, with each shift specializing in one stage of the operation preparation, cutting or loading. However, the new method meant a change in the previous system of working where a small, selfselecting group of miners worked together, as an independent team, on one part of the coalface the single place or short-wall method. Technological change had brought about changes in the social groupings of the miners. It disrupted the integration of small groups and the psychological and sociological properties of the old method of working. There was a lack of co-operation between different shifts and within each shift, an increase in absenteeism and signs of greater social stress. The long-wall method was socially disruptive and did not prove as economically efficient as it could have been with the new technology. The researchers saw the need for a socio-technical approach in which an appropriate social system could be developed in keeping with the new technical system. The result was the composite long-wall method with more responsibility to the team as a whole and shifts carrying out composite tasks, the reintroduction of multi-skilled roles and a reduction in specialization. The composite method was psychologically and socially more rewarding and economically more efficient than the longwall method. The socio-technical system The concept of the organisation as a socio-technical system directs attention to the transformation or conversion process itself, to the series of activities through which the organisation attempts to achieve its objectives. The socio-technical system is concerned with the interactions between the psychological and social factors and the needs and demands of the human part of the organisation, and its structural and technological requirements. Recognition of the socio-technical approach is of particular importance today. People must be considered as at least an equal priority along with investment in technology. For example, Lane et al. point out that major technological change has brought about dramatic changes in worker behavior and 23

24 requirements. It is people who unlock the benefits and opportunities of information communication technology. Technology determinism The concept of socio-technical systems provides a link between the systems approach and a subdivision, sometimes adopted the technology approach. Writers under the technology heading attempt to restrict generalizations about organizations and management and emphasize the effects of varying technologies on organisation structure, work groups and individual performance and job satisfaction. This is in contrast with the socio-technical approach which did not regard technology, per se, as a determinant of behaviour. Under the heading of the technology approach could be included the work of such writers as Walker and Guest (effects of the assembly line production method on employee behavior); Sayles (relationship between technology and the nature of work groups); and Blauner (problems of alienation in relation to different work technologies). In one of the seminal works on the open systems perspective, Daniel Katz and Robert Kahn identified the process shown in Figure as essential to organizational growth and survival. This process consists of the following sequence of events: a. Every organization imports inputs, such as raw materials, production equipment, human resources, and technical know-how, from the surrounding environment. For instance, Shell Oil Company hires employees and, from sources around the world, acquires unrefined oil, refinery equipment, and knowledge about how to refine petroleum products. b. Some of the inputs are used to transform other inputs during a process of throughput. At Shell, employees use refinery equipment and their own know-how to transform unrefined oil into petroleum products such as gasoline, kerosene, and diesel fuel. c. The transformed resources are exported as outputs saleable goods or services to the environment. Petroleum products from Shell s refineries are loaded into tankers and transported to service stations throughout North America. d. Outputs are exchanged for new inputs, and the cycle repeats. Shell sells its products and uses the resulting revenues to pay its employees and purchase additional oil, equipment, and know-how. Fig. The Open System Perspective Source: Katz and Kahn,

25 According to Katz and Kahn, organizations will continue to grow and survive only as long as they import more material and energy from the environment than they expend in producing the outputs exported back to the environment. Information inputs that signal how the environment and organization are functioning can help determine whether the organization will continue to survive. Negative feedback indicates a potential for failure and the need to change the way things are being done. An open system obtains inputs such as raw materials, labor, capital, technology and information from the environment. Operations are performed upon the inputs and combined with the managerial process to produce desirable outputs which are supplied back to the environment i.e. customers. Through a feedback process, the environment s evaluation of the output becomes part of the inputs for further organizational activity. If the environment is satisfied with the output, business operations continue. If it is not, changes are initiated within the business system so that the requirements of the customers are fully met. This is how an open system responds to the forces of change in the environment. After noting that every organization s environment is itself composed of a collection of more or less interconnected organizations supplier companies, competitors, and customer firms. Emery and Trist proposed the existence of four basic kinds of environments. a. The first kind, which they labeled the placid random environment, is loosely interconnected and relatively unchanging. Organizations in such environments operate independently of one another, and one firm s decision to change the way it does business has little effect on its rivals. These organizations are usually small for example, landscape maintenance companies, construction firms, and industrial job shops and can usually ignore each other and still stay in business by catering to local customers. b. Placid clustered environments are more tightly interconnected. Under these conditions, firms are grouped together into stable industries. Environments of this sort require organizations to cope with the actions of a market fairly constant group of suppliers, competitors, and customers. As a result, companies in placid clustered environments develop strategic moves and countermoves that correspond to competitors actions. Grocery stores in the same geographic region often do business in this type of environment, using coupon discounts, in-store specials, and similar promotions to lure customers away from other stores. c. Disturbed reactive environments are as tightly interconnected as placid clustered environments, but are considerably less stable. Changes that occur in the environment itself have forceful effects on every organization. For instance, new competitors from overseas, by increasing automation and changing consumer tastes in the U.S. automobile market, revolutionized the domestic auto industry in the 1970s and 1980s. In response, GM and Ford had to change their way of doing business, Chrysler ultimately merged with Germany s Daimler-Benz to become Daimler-Chrysler, and a fourth long-time manufacturer, American Motors, ceased to exist. In such circumstances, organizations must respond not only to competitors actions but also to changes in the environment itself. Owing to their unpredictable ability, it is difficult to plan how to respond to these changes. d. Turbulent fields are extremely complex and dynamic environments. Companies operate in multiple markets. Public and governmental actions can alter the nature of an industry 25

26 virtually overnight. Technologies advance at lightning speed. The amount of information needed to stay abreast of industrial trends is overwhelming. As a result, it is virtually impossible for organizations to do business in any consistent way. Instead, they must remain flexible in the face of such uncertainty, staying poised to adapt themselves to whatever circumstances unfold. Today s computer and communications industries exemplify such sort of environment. Technological change and corporate mergers are creating and destroying entire categories of companies at ever-increasing rates. Emery and Trist suggested that organizations must respond in different ways to different environmental conditions. Tighter environmental interconnections require greater awareness about environmental conditions, and more sweeping environmental change necessitates greater flexibility and adaptability. Other open systems theorists, including Paul Lawrence, Robert Duncan, and Jay Galbraith, have similarly stressed the need for organizations to adjust to their environments. Scott Model: Analysis of Organisation System According to W.G. Scott, the systems theory asks a range of inter-related questions which are not seriously considered by the classical and neo-classical theories. The important questions are: 1. What are the strategic parts of the system? 2. What is the nature of their mutual dependency? 3. What are the main processes in the system which link the parts together, and facilitate their adjustment to each other? 4. What are the goals sought by the system? Parts of the System Scott has discussed five parts of the system: 1. Individual: Individual and his personality structure (motives and attitudes) is a basic part of the system. 2. Formal Organisation: it is interrelated pattern of jobs which make up the structure of a system. There is generally an incongruency between the goals of the organisation and those of organisational members. Modern organisational theory has given considerable attention to this aspect of inter-action of organisational and individual demands. 3. Informal Organisation: it comes into existence along with the formal organisation automatically. Individuals have expectations from the informal organisation and the informal organisation also demands same type of behavior from the individuals. Both these sets of expectations interact resulting in modifying the behavior of one another. 4. Fusion Process: it is a force which acts to weld divergent elements together for the preservation of organisational integrity. It may be noted that a part of modern organisational theory rests on research findings in social psychology relative to reciprocal patterns of behavior stemming from role demands generated by both formal and informal organisation, role perceptions peculiar to the individual. 5. Physical Setting: the physical setting in which a job is performed is also very important. Interactions present in the complex man-machine system need to be carefully studied. 26

27 The human engineer cannot approach this problem in a purely technical fashion. He has to take the help of social theorists like psychologists and sociologists. The various parts of a system are interwoven or interlinked. The interconnection is achieved by three linking processes, namely, communication, balance and decision-making. 1. Communication: communication is viewed as the method by which action is evoked from the parts of the system. Communication acts as stimuli resulting into action, and as a control and coordination mechanism linking the decision centers in the system in a synchronized pattern. 2. Balance: Balance refers to an equilibrating mechanism whereby the various parts of the system are maintained in a harmoniously structured relationship to one another. Balance appears in two varieties: quasi-automatic and innovative. Both act to ensure system integrity in the face of changing environment. By quasi-automatic balance we mean that the system has built in propensities to maintain steady states. If human organisations are open, self-maintaining systems, then control and regulatory processes are necessary. Adaptation by a system is generally automatic when changes are minor in nature. The need for innovative balancing efforts arises when adaptation to a change is outside the scope of the existing programs designed for the purpose of keeping the system in balance. New programs have to be found out in order to maintain the integrity of the system. 3. Decision-Making: Decisions refers to the problem solving activity. Two types of decisions are important, viz., decisions to produce and decisions to participate in the system. Decisions to produce are largely a result of interaction between individual attitudes and the demands of organisation. Motivation analysis has becoe central to studying the nature and resultsof the interactions. Individual decision to participate in the system reflect on such issues as the relationship between organisational rewards versus the demands made by the organisation. Whatever may be the kind of decision, decisions are internal variables in an organisation dependent upon jobs, individual expectations and motivations, and or5ganisational structure. Cybernetics: It is a crucial aspect of the systems approach as it is related to both communication and control. It integrates the linking processes discussed above and creates self-regulatory systems of flow of information. Cybernetics makes a deep and comprehensive study of controlled and controllable systems to determine principles governing the organisation and structure of control systems. It studies the common properties of different control systems and also the properties which are quite independent of their material basis. The control process generally involves the transmission, accumulation, storage and processing of information about the controlled object, process, environment conditions, work program, etc. the nature of information carried varies widely from system to system. Another characterstic feature of the whole diversity of such systems is the feedback. Through it they receive information on the effects or results of their control operations. The purpose of cybernetics is to maintain system stability in face of change. Cybernetics can t be studied without considering communication networks, information flow and some kind of balancing processes aimed at preserving the integrity of the system. A thorough knowledge of cybernetics can be used to synthesise the proceses of communication and balance. It is quite 27

28 common that the organisation using sophisticated management information systems adopt cybernetics models as an integral part of their mode of operation. Goals of the System: to the system analysis, goals of an organisation are growth, stability and interaction. The last goal refers to systems which provide a medium for association of members with others. These goals seem to apply to different forms of organisation at varying levels of complexity. Features of Systems Approach 1. Open System view of Organisation: As per classical theory organisation was a closed system. But modern theory considers organisation as an open system which has continuous interaction with the environment. It gets various resources from the environment and transforms them into outputs desired by the environment. Due weight age has to be given to the environmental factors affecting the management of an organisation. 2. Adaptive to dynamic environment: An organisation operates in an environment which is dynamic in nature so a system that is adaptive to such dynamism is needed. Management tends to bring changes in the sub-systems of the organisation to cope up with the challenges of environmental forces. 3. Whole Organisation: This approach looks at the organisation as a whole that is greater than the sum of its parts. The emphasis is given on the summation of various sub-systems of the organisation to ensure overall effectiveness of the system. 4. Multi-Level Analysis: Systems approach has both macro and micro aspects. At the macro level, it can be applied to the whole industry or the national economic system. At the micro level, it can be applied to an organisation and even to a sub-system of the organisation. 5. Multi-variety analysis: It takes into account many variables simultaneously. This means that there is no single variable responsible for something to happen rather it may be the result of many variables that may be interrelated or interdependent. This interrelatedness and interdependence makes managing quite a complex process. 6. Synergy: the output of a system is always more than the combined output of its parts. This is called the Law of synergy. The parts of a system become more productive when they interact with each other than when they act in isolation. 7. Multi-disciplinary: Modern theory of Management is enriched by contributions from various disciplines like psychology, sociology, economics, anthropology, mathematics, operations, research and so on. 8. Probabilistic: modern organisation theory is probabilistic rather than deterministic. It does not predict the outcome of any action because of a high degree of uncertainty in the environment. Being probabilistic, it only points out the probability and never the certainty of performance and consequent results. 9. It represents a balanced thinking on organisation and management, and provides a unified focus to organizational efforts. Limitations of Systems Approach 1. Lack of unification: this approach cannot be considered as a unified theory of organisation. It cannot be applied to all types of organisation. 28

29 2. Abstract Analysis: the systems theory is too abstract to be of much use to the practicing managers. It indicates that various parts of the organisation are interrelated and its interrelationship is dynamic. But it has failed to spell out the precise relationship between various sub-systems. 3. Limited View of Organisation-Environment Interface: The systems approach has failed to specify the nature of interactions and interdependencies between an organisation and its external environment. 4. Limited Application: It has limited applications. It does not provide action framework applicable to all types of organizations. Most of the concepts used here cannot be applied in small organizational structures. Contingency Approach The classical approach suggested one best form of structure and placed emphasis on general sets of principles while the human relations approach gave little attention at all to structure. In contrast, the contingency approach showed renewed concern with the importance of structure as a significant influence on organizational performance. The contingency approach, which can be seen as an extension of the systems approach, highlights possible means of differentiating among alternative forms of organisation structures and systems of management. There is no one optimum state. For example, the structure of the organisation and its success are dependent, that is contingent upon, the nature of tasks with which it is designed to deal and the nature of environmental influences. The most appropriate structure and system of management is therefore dependent upon the contingencies of the situation for each particular organisation. The contingency approach implies that organisation theory should not seek to suggest one best way to structure or manage organizations but should provide insights into the situational and contextual factors which influence management decisions. It is an improvement over the systems and other approaches. The contingency approach to management has its roots in general systems theory and the open systems perspective, as well as in the Simon-March-Cyert stream of theory and research. Thompsom recognized the intersection of these traditions and extended them in a landmark work that represents a cornerstone of contingency approach. The term contingency as used in contingency theory is similar to its use in direct practice. A contingency is a relationship between two phenomena. If one phenomenon exists, then a conclusion can be drawn about another phenomenon. For example, if a job is highly structured, then a person with a freewheeling disposition will have problems with the job. Contingencies can sometimes be considered conditions. It suggests that managerial actions and organizational design must be appropriate to given situation. The latest approach to management which integrates the various approaches to management is known as Contingency or Situational approach. It is not new. Pagers and Myers propagated this approach in the area of personnel management in However, the work of Joan Woodward in the 1950s marked the beginning of the contingency approach to organisation and management. Other contributors include Tom Burns, G.W. Stalker, Paul Lawrence, Jay Borsch and James Thompson. They analyzed the relationship between the structure of organisation and the environment. Thus, contingency approach incorporates external 29

30 environment and attempts to bridge the theory-practice gap. In simple words, contingency approach also regards organisation as an open and dynamic system which has continuous interaction with the environment. As per the contingency approach, the task of managers is to try to identify which technique or method will be more suitable for achieving the management objectives under the available situation. Managers have to develop a sort of situational sensitivity in order to deal with their managerial problems as they develop from time to time. Contingency approach views are applicable in designing organisational structure and in deciding the degree of decentralization in establishing communication and control systems and also in deciding motivational and leadership approaches. In brief, it is applicable to different areas of organisation and management it is an attempt to integrate various viewpoints and to synthesize various fragmented approaches to management. Contingency theory attempts to relate research on many management variables, for example, research on professionalism and centralized decision making or worker education and task complexity. It allows you to analyze a situation and determine what variables influence the decision with which you are concerned. This approach is based upon the fact that there is no one best way to handle any of the management problems. The application of management principles and practices should be contingent upon the existing circumstances. Functional, behavioral, quantitative and systems tools of management should be applied situation ally. There are three major parts of the overall conceptual framework for contingency management: i. Management concepts, ii. Principle and techniques; iii. Contingent relationship between the above two. Contingency theory attempts to analyze and understand interrelationships with a view towards taking the specific managerial actions necessary to deal with the issue. This approach is both analytical and situational with the purpose of developing a practical answer to the questions in hand. It has rejected universality of management principles and it appeals to common sense. It requires the ability to analyze and diagnose a managerial situation correctly and act accordingly. Use of contingency approach is not possible without the ability to match the management knowledge and skills as per the management situation. It is action-oriented as it directs towards the integrated application of systems concepts and the knowledge gained from other approaches. As per contingency approach managers should develop situational sensitivity and practical selectivity. Adoption of these two traits can prove to be useful in formulating strategies, designing effective organizations, planning information systems, establishing communication and control systems, shaping motivational and leadership approach, resolving conflicts, managing change, etc. This approach says that there should be congruence between the organisation and its environment and among the various sub-systems. The appropriate fit between the organisation 30

31 and its environment and the appropriate internal organizational design will lead to greater effectiveness, efficiency and participant satisfaction. Thus, there is no standard design that could be applied to all organizations under all situations. Managers have to apply different ideas to different situations to cope with them and ensure effectiveness and efficiency in decision making. The open systems perspective views the complex organisation as a set of interdependent parts that, together, constitute a whole which, in turn, is interdependent with some larger environment. The interactive nature of the elements within the organisation - and between the organisation and the environment - result in at least two open system characteristics that are central to the contingency approach: adaptation and equi-finality. First, the principle of adaptation asserts that the elements within the system adapt to one another to preserve the basic character of the system. Second, the principle of equi-finality holds that a system can reach the same final state from differing initial conditions and by a variety of paths. The Simon-March-Cyert stream of work adds to the open systems perspective the view that organisations are problem-facing and problem-solving entities. The organisation develops processes for searching, learning and deciding processes that attempt to achieve a satisfactory level of performance under norms of bounded rationality. Organisational decision-makers undertake rational decision processes designed to cope with the complexity and uncertainty of their situations, all of which result in deliberate decisions by using a satisfying criterion for performance. As derived from these conceptual antecedents, the essential premise of the contingency approach is that effectiveness, broadly defined as organisational adaptation and survival[26], can be achieved in more than one way. For example, management theorists and researchers have recognized more than one way to organize effectively, more than one strategy that maximizes profitability and market position, and more than one leadership style that achieves organisational goals. Each way is not equally effective under all conditions; certain organisational actions or responses are more appropriate than others, depending on the situation. The contingency approach suggests, therefore, that we can observe wide variations in effectiveness, but that these variations are not random. Effectiveness depends on the appropriate matching of contingency factors with internal organisational designs that can allow appropriate responses to the environment. Theoretical and practical contributions are achieved through: 1. Identifying important contingency variables that distinguish between contexts; 2. Grouping similar contexts based on these contingency variables, and 3. Determining the most effective internal organisational designs or responses in each major group. These contingency theory-building steps involve three types of variables; 1. Contingency variables: They represent situational characterstics are usually exogenous to the organisation or manager. In most instances the opportunity to control or manipulate these variables is, at best, limited and indirect. 2. Response variables: They are the organisational or managerial actions taken in response to current or anticipated contingency factors. 31

32 3. Performance Variables: They are the dependent measures and represent specific aspects of effectiveness that are appropriate to evaluate the fit between contingency variables and response variables for the situation under consideration. These steps typically result in contingency theories that focus primarily on outcome or content issues, rather than on processes. They attempt to determine the organisation structure, strategy or leadership style to be used in a particular situation, but do not emphasise on the dynamics of the process by which an organisation adapts or a leader becomes effective. Usually IF-THEN approach is followed where in If means environment that is an independent variable and Then means management variable dependent factors. Whenever anything happens in the environment then all the possible effects of this happening are studied on management variable and then the most effective solution is selected. Kats and Rosenzweig have analyzed the suitability of two kinds of structures under different types of environment. These are: Stable-mechanistic organizational design: It is used under following situations. a) When environment is relatively stable and certain b) Organizational goals are well-defined and enduring c) Technology used is relatively stable and uniform d) Productivity is of utmost importance e) Routine activities take place f) Decision making is programmable and coordination and control processes tend to make tightly structured, hierarchical system possible. Adaptive-organic organisational design: It is used in the following situations. a) When environment is relatively uncertain and turbulent b) Organizational goals are diverse and changing c) Technology is complex and dynamic d) There are many non-routine activities in which creativity and innovation hold extreme importance e) Innovative decision making processes are utilized and coordination and control occur through reciprocal adjustments. The system is more flexible and less hierarchical. Contingency Approaches in Organisational Behavior Within the organisational behavior literature, the contingency approach has made its most significant contribution in the area of leadership theory and research. Contingency approaches to leadership tie the leader's effectiveness to the nature of the situation and acknowledge that worker s needs and problems vary, requiring that leadership style match the types of individuals involved and the characteristics of their work situation. While the situational approach has been used to study leadership since the 1950s House proposed a theory of leadership that clearly illustrates the contingency approach. He contends that the functions of a leader vary depending on the needs of subordinates and the type of work to be accomplished. According to House's theory, a leader obtains good performance from his/her work unit by increasing subordinates' personal rewards from goal attainment and by making the path to these rewards easier to follow (e.g. by instructing, reducing roadblocks and 32

33 pitfalls, and increasing the opportunities for personal satisfaction along the way). To be effective, the leader must tailor his/her style and approach to individual subordinates and situations. In ambiguous situations (and with subordinates to whom ambiguity can be frustrating), effectiveness is achieved when the leadership provides structure. In routine situations, on the other hand, the additional structure provided may be viewed as redundant and insulting by subordinates, who may consequently become dissatisfied. In essence, the theory holds that the level of leader structure depends on the ambiguity of the task, and the level of leader consideration depends on the intrinsic satisfaction of the task. The theory has been elaborated and tested since it was proposed. Appraisal of Contingency Approach It is an improvement over systems approach. It can be easily applicable in all types of organizations for all type of decision making. It holds a great promise for future development of management theories. It rejects the notion of one best way of doing things. It believes in flexible and adaptive methods to be used to solve management related issues. But still a lot more is needed to be explored in this context. Contingency approach is not supported by much literature. Merits 1. It is pragmatic and open minded. It discounts preconceived notions, and universal validity of principles. 2. It relives managers from dogmas and set principles. It provides freedom to choose, manage and judge the external environment and use the most suitable management techniques. Here, importance is given to the judgement of the situation and not the use of specific principles. 3. It has a wide-ranging applicability and practical utility in organisations. It advocates comparative analysis of organisations to bring suitable adjustment between organization structure and situational peculiarities. 4. It focuses attention on situational factors that affect the management strategy. The theory combines the mechanistic and humanistic approaches to fit particular/specific situation. It is superior to systems approach as it not only examines the relationship between subsystems of an organisation but also the relationship between the organisation and its external environment. Demerits 1. It is argued that the contingency approach lacks a theoretical base. 2. Under contingency approach a manager is supposed to think through all possible alternatives as he has no dried principals to act upon. This brings the need of more qualities and skills on the part of managers. The responsibility of a manager increases as he has to analyze the situation, examine the validity of principles and techniques to the situation at hand, make right choice by matching the technique to the situation and finally execute his choice. The areas of operation of a manager are quite extensive under this theory. 33

34 Difference between Contingency and systems Approach: Points of Distinction Systems approach Contingency Approach Emphasis Interdependencies and It identifies nature of interactions among systems interdependencies and the and sub-systems impact of environment on organizational design and managerial styles. Focus Internal Environment and External environment of organizational sub-systems Solutions It provides deterministic solutions to all managerial problems Organisational view It views all organisations alike. Evolution Major contributors in systems approach have been psychologists. Organisational Variables Model of Human Beings It is very broad considering all personal, social, technical, structural, environmental and organizational variables. Therefore, managing involves establishing relationships among them while undertaking any action. It usually employs a richer model of human beings than contingency model. It takes into account full range of human behavior in the organisation. It is a combination of three approaches: the classical approach, the behavioral approach and the management science approach. Other Organisational Approaches- A Brief Description organization It provides probabilistic and pragmatic solutions to all managerial problems. It treats all organisations as separate unique entity. Sociologists have contributed to this approach. It has been built over systems approach. It concentrates on structural adaptation of organisation. This approach tends to predict the ultimate outcome of a disturbance of the organizational equillibrium by a change in the task environment. It is interested in structural adaptation of organisation to its task environment. Therefore, contingency theories talk mostly in terms of structural change in the organisation in response to a change in environment. It combines two or more of the other approaches depending on the given situation. The Decision-making Approach The systems approach involves the isolation of those functions most directly concerned with the achievement of objectives and the identification of main decision areas or sub-systems. Viewing the organisation as a system emphasizes the need for good information and channels of communication in order to assist effective decision-making in the organisation. Recognition of 34

35 the need for decision-making and the attainment of goals draw attention to a sub-division of the systems approach, or a separate category, that of the decision-making (decision theory) approach. Here the focus of attention is on managerial decision-making and how organisations process and use information in making decisions. Successful management lies in responding to internal and external change. This involves the clarification of objectives, the specification of problems and the search for and implementation of solutions. The organisation is seen as an information-processing network with numerous decision points. An understanding of how decisions are made helps in understanding behavior in the organisation. Decision-making writers seek to explain the mechanisms by which conflict is resolved and choices are made. Some leading writers Leading writers on the decision-making approach include Barnard, Simon and Cyert and March. The scope of the decision-making approach, however, is wide and it is possible to identify contributions from engineers, mathematicians and operational research specialists in addition to the work of economists, psychologists and writers on management and organisation. Barnard stressed the need for co-operative action in organisations. He believed that people s ability to communicate, and their commitment and contribution to the achievement of a common purpose, were necessary for the existence of a co-operative system. These ideas were developed further by Simon. He sees management as meaning decision-making and his concern is with how decisions are made and how decision-making can be improved. Simon is critical of the implication of man as completely rational and proposes a model of administrative man who, unlike economic man, satisfices rather than maximizes. Administrative decision-making is the achievement of satisfactory rather than optimal results in solving problems. Economic models of decision-making, based on the assumption of rational behavior in choosing from known alternatives in order to maximize objectives, can be contrasted with behavioral models based not so much on maximization of objectives as on short-term expediency where a choice is made to avoid conflict and to stay within limiting constraints. Managers are more concerned with avoiding uncertainties than with the prediction of uncertainties. Social action Social action represents a contribution from sociologists to the study of organizations. Social action writers attempt to view the organisation from the standpoint of individual members (actors), who will each have their own goals and interpretation of their work situation in terms of the satisfaction sought and the meaning that work has for them. The goals of the individual, and the means selected and actions taken to achieve these goals are affected by the individual s perception of the situation. Social action looks to the individual s own definition of the situation as a basis for explaining behavior. Conflict of interests is seen as normal behavior and part of organizational life. According to Silverman, The action approach... does not, in itself, provide a theory of organizations. It is instead best understood as a method of analyzing social relations within organizations. 35

36 Action Theory A theory of human behavior from an action approach is presented by Bowey. She suggests that action theory, systems theory and contingency theory are not necessarily incompatible approaches to the understanding of behavior in organizations. It would be possible to take the best parts of the different approaches and combine them into a theory that would model empirical behavior and also facilitate the analysis of large numbers of people in organizations. Bowey goes on to present such a theory as a particular form of an action theory approach. According to Bowey, action theory is not capable of dealing with the analysis of the behavior of a large number of people in organizations. Her theory is based, therefore, on three essential principles of action theory, augmented by four additional concepts taken from systems theory. The three essential principles of action theory can be summarized as below: 1. Sociology is concerned not just with behavior but with meaningful action. 2. Particular meanings persist through reaffirmation in actions. 3. Actions can also lead to changes in meanings. Bowey suggests that these three principles apply mainly to explanations of individual, or smallscale, behavior. She gives four additional concepts, taken from systems theory, on which analysis of large-scale behavior can be based. These concepts are redefined in accordance with an action approach. 1. Role this is needed for the analysis of behavior in organizations. It explains the similar action of different people in similar situations within the organisation and the expectations held by other people. 2. Relationships This is needed to explain the patterns of interaction among people and the behaviors displayed towards one another. 3. Structure the relationships among members of an organisation give rise to patterns of action which can be identified as a transitory social structure. The social factors, and non-social factors such as payment systems, methods of production and physical layout, together form the behavioral structure. 4. Process human behavior can be analyzed in terms of processes, defined as continuous interdependent sequences of actions. The concept of process is necessary to account for the manner in which organizations exhibit changes in structure. 36

37 LESSON-4 AUTHORITY AND POWER Monika Kemani Authority The word authority is derived from the Latin word auctoritas, which means advice, opinion, influence, or command. Authority is the power to manage the subordinates to control them and to instruct them according to the rules and standards of the organization. According to Henry Fayol, Authority can be defined as the right to give orders and power to exact obedience. In the words of Mooney and Reily Authority is the principle at the root of organisation and so important that it is impossible to conceive of an organisation at all unless some persons are in a position to require action of others. Thus, we can say that authority is the kind of right and power through which it guides and directs the actions of others so that the organizational goals can be achieved. It is vested in particular position, not to the person because authority is given by an institution and therefore it is legal. Without authority, a manager ceases to be a manager, because he cannot get his policies carried out through others. Authority is one of the founding stones of formal and informal organisations. It indicates the right and power of making decisions, giving orders and instructions to subordinates. Authority flows downwards as it is delegated from above but must be accepted from below i.e. by the subordinates. Responsibility Responsibility refers to the duty assigned to a position or an obligation to perform a particular task assigned to a subordinate. In an organisation, responsibility is the duty as per the guidelines issued. According to Davis, Responsibility is an obligation of individual to perform assigned duties to the best of his ability under the direction of his executive leader." In the words of Theo Haimann, Responsibility is the obligation of a subordinate to perform the duty as required by his superior". The essence of responsibility is the obligation of a subordinate to perform the duty assigned. It always originates from the superior subordinate relationship. According to McFarland Responsibility is the duty and activity assigned to a position or an executive". Normally, responsibility moves upwards, whereas authority flows downwards. Responsibility is in the form of a continuing obligation. Responsibility cannot be delegated. The person accepting responsibility is accountable for the performance of assigned duties. Accountability Every employee is accountable for the job assigned to him. He is supposed to complete the job as per the expectations and inform his superior accordingly. Accountability is the answerability for performance of the assigned duties. According, to McFarland, "Accountability is the obligation of an individual to report formally to his superior about the work he has done to discharge the responsibility." When authority is delegated to a subordinate, the person is accountable to the superior for performance in relation to assigned duties. If the subordinate does a poor job, the superior cannot evade the responsibility by stating that poor performance is the fault of the subordinate. A superior is held responsible for all actions of groups under his supervision even if there are several levels in the hierarchy. Interrelation between authority, responsibility and accountability In the process of delegation, the superior transfers his duties or responsibilities to his subordinate and also give necessary authority for performing the responsibilities assigned. At the same time, 37

38 the superior is accountable for the performance of his subordinate. Every order which has been given, and given correctly, carries responsibility. Responsibility implies accountability. Each employee will be held accountable by a supervisor, who will hold a subordinate accountable. Subordinates receive the authority from top level of the organization and they also receive the command and direction to perform the work. In other words, they are authorized and responsible for a specific function. Sometimes the task may not be performed effectively the subordinates may not be performed effectively. The subordinates must report to boss about the assigned task. They must answer their performance which is known as accountability. Kinds of authority The kinds of authority are discussed as follows: 1. Legal Authority This is derived by a position holder from rules, regulations, policies and norms laid down for the systematic functioning of an organisation. It is based on competence rather than on tradition or charisma. 2. Traditional Authority This is derived from tradition and not by competence. Obedience is owed to a person because he occupies a position traditionally recognised as possessing authority. 3. Charismatic Authority This is derived from the leader s exceptional power. Charismatic leaders are generally found in politics and religion. This authority cannot be delegated because others do not possess the same qualities as possessed by the charismatic leader. Major theories on sources of authority The various theories about sources of authority are discussed as under: 1. Legal/Formal Authority According to the formal authority theory, authority depends for its legitimacy on formal rules and laws of the state which are usually written down. It is based upon the rank or position of the person. The CEO of a company may take an action against an employee for not complying with rules because the rules of the have given this authority to him. Thus, we see that authority flows in a hierarchy i.e. scalar chain. The example of an ideal type of legal authority as discussed by Weber is the bureaucracy. 2. Traditional Authority The traditional authority is generally followed in Indian family system. It is the father who generally guides the activities of the family and others obey out of age old traditions and respect. When power passes from one generation to another, it is referred to as traditional authority. In traditional form of authority there is no formal law or structured discipline. The relationships are governed by loyalty and faithfulness rather than rules and regulations of the organisation. 3. Acceptance Theory According to acceptance authority theory, the authority has its source in the acceptance of the subordinates. The authority of the superior has no meaning unless it is accepted by the 38

39 subordinates. If the subordinates do not accept the orders of a superior there will be no use of exercising authority. Chester Bernard observed that a subordinate will accept an order if: (i) He understands it well; (ii) He believes it to be consistent with the organisational goals; (iii) He feels it to be compatible with his personal interest. (iv) He is fit (mentally and physically) to comply with it. 4. Competence Theory According to competence authority theory, authority has its source in the technical competence of the superior. The manager has no authority but his words are heard and orders are obeyed only because of his intelligence, knowledge, skill competence and experience. If he has no skill or knowledge, he can exercise no authority on others. The knowledge or competence of a person gives him a status where his authority is accepted by others. 5. Charismatic Authority According to charismatic authority theory, the authority rests on the personal charisma of a leader who commands respect of his followers. The personal traits such as personality, intelligence, integrity, etc., influence others and people follow the dictates of their leaders because of such traits. For example the political leader Mahatma Gandhi comes under this category. Weber explains that this form of authority is resting on devotion to the exceptional sanctity, heroism or exemplary character of an individual person and of the normative pattern or order revealed or ordained by him. Power Power is derived from the official position held by an individual in an organization. According to Max Weber, Power is the probability that one actor within a social relationship will be in a position to carry out his own will despite resistance. According to Pfeffer Power is the potential ability to influence behaviour, to change the course of events, to overcome resistance, and to get people to do things that they would not otherwise do." Authority and power are synonymous. But in present environment it is observed that while authority remains constant there is a tendency to exercise more power. This is because of the politics played by an individual to maintain higher influence over resources. On the contrary, there may be situation when an individual does not use full potential of his authority for one reason or the other. Interpersonal and group conflicts are indicative of more influence one wants to exercise in the organizational setting. These happening are common to every layers of organizational hierarchy. Power is therefore personal and acquired. Power is an ability of a person to possess what he feels as valuable and deprive another person of the same. Sources of power Psychologists John French and Bertram Raven provided five categories to the sources of power which are described as below: 1. Coercive Power Coercive power is derived from a person's ability to influence others via threats, punishments or sanctions. It is conveyed through fear of losing one s job, being demoted, and receiving a poor 39

40 performance review. It reflects the extent to which a manager can deny desired rewards or administer punishment to control other people. For example, a threat to meet given targets otherwise there would be demotion of an employee. A staff member may work late to meet a deadline to avoid disciplinary action from his boss. Coercive power helps control the behaviour of employees by ensuring that they follow the rules and regulations of the organization. 2. Reward Power Reward power is derived from the ability of a person to influence the allocation of incentives in an organization. These incentives include salary increments and promotions. This may be done by giving a bonus or a promotion. Greater the perceived value of each reward the greater is the power. These rewards include intrinsic rewards such as praise or recognition. Reward power helps to motivate employees if used in an effective manner. But if it is applied through favouritism or biasness, it can demoralize employees and reduce their productivity. 3. Legitimate Power Legitimate power comes from having a position of power in an organization, such as being a key member of a leadership team. This power is derived from the authority of an individual. It is the power which is exercised in accordance with the rules and the authority of the organization. Legitimate power is also known as positional power. It is derived from the position a person holds in an organization's hierarchy. An example of legitimate power is that held by a company's CEO. 4. Expert Power Expert power is derived from the person s experiences, skills and knowledge. As we gain experience in particular areas, we begin to gather expert power that can be utilized to get others to help us meet our goals. The people who have expert power are highly valued by organizations for their problem solving skills. The suggestions and decisions of people with expert power greatly influence the actions of their subordinates. A person who holds expert power can be promoted to top level management, thereby giving him legitimate power. 5. Referent Power Referent power is derived from the interpersonal relationships that a person cultivates with other people in the organization. This depends on charisma or personal attraction of the individual. Interpersonal skill and emotional support from others are the sources of power for a person. Referent power is also derived from personal connections that a person has with key people in the organization's hierarchy. Sources of power: organizational based 1. Knowledge as power Information Technology has taken a big leap in the last two decades. Information is necessary for top management to take decisions as it is vital to carry out various operations in the business environment. Flow of information is necessary for continuous production or service operations. Persons who are in position to control the flow of information wield enormous power to influence the behaviour of others. 2. Resource as power Resources are necessary for any organization. While material or tangible resources can be procured easily, it is the availability of these resources, at right time, at right 40

41 place in a required quality and at a competitive price. Any person having monopoly over scarce resources enjoys power. Any person having direct or indirect control over making skilled persons available holds power. 3. Decision making as power Decision making as power in organization rests with the head of the organization. Decision making is delegated to departmental heads depending upon the nature of work, ability of the departmental heads and the trust enjoyed by them. Decision making is one of the most important processes of management. Both a person having decision making authority and a person who can influence decision making have power in the organization. 4. Power Centers There exist people in the organization who desire to be stronger. They also want people dependent on them. Specialists, people with special powers deliberately delay decisions or hold resources so that they become more demanding. Power centers exist in various departments. 5. Dependency Strength of power depends upon degree of dependency. Greater the dependency on the power holder greater influence will the power holder exercised over his subordinates. Dependency is directly related between power holder and those do not have it. Power holder holds power of retention to be able to increase dependency. Acquisition of Greater Position power in an Organisation All managers have two dimensional power base. One is the power generated by the organizational authority and the second, the personal power by virtue of personality. The position power can be increased by the following factors:- 1. Centrality- Centrality refers to activities which are central to organizations. For example, Finance is central activity in the organization hence the finance manager holds power in excess of his authority. Finance manager further allocates funds to various departments. Department heads therefore also become powerful not because they can further allocate funds to their subordinates but because centrality of activity. Managers of various departments have power based on their departmental position. 2. Scarcity- When resources are in abundance there is no problem as everybody would get them based on their requirement. When resources become scarce, a person obtaining it will appear to be more powerful. When the organisation is not able to supply sufficient resources, there will be conflicts among different departments for maximum share of these resources. The powerful unit will be able to have a greater share of the scarce resources. 3. Uncertainity- The executives who can cope up with the uncertainity like fall in demand of the organisation s products or change in government policies will tend to acquire power. A manager who has a vision and predictive power will definitely enjoy an additional power. 4. Substitutability- If a person has greater value in the organisation he would hold greater power and as a result demand higher salaries and incentives. The importance of the 41

42 person in the organisation is the result of specialisation, expertise or experience that cannot be substituted by others. Distinction between authority and power BASIS AUTHORITY POWER NATURE Authority is the right to command and resides in the position in the organisation. It is always legitimate and is conferred on the position. Power is the ability to exercise influence and is exercised by a person. It is not institutional, rather it is personal. POSITION Authority of a person is associated with the position in the formal organisation structure. Thus an idea about the authority centres can be taken by looking at its organisation chart. Power of a person is not associated with the position in the formal organisation structure. Thus an idea about the power centres cannot be taken just by looking at its organisation chart. FLOW RESPONSIBILITY Authority is a downward flowing concept. Authority and responsibility are complementary to each other. Power flows in all the directions. There is no such balancing factor in case of power. RELATIONSHIP PERVASIVE The organisation structure shows its authority relationships. In actual practice these relationships are modified by power. Authority rests with important positions in the organisation. Some people may have power and less authority or more authority and less power. Power is all pervasive. FORMAL/INFORMAL Authority is formal in nature. Power can be both formal and informal. Politics Politics is a process whereby power is acquired and used to influence behaviour of others. People form groups, camps or cliques when they play politics. People playing politics for power where ethics, moral values, organizational goals are of little concern. According to Tushman Politics refers to the structure and process of the use of authority and power to affect definition of goals, 42

43 direction and the other major parameters of the organisation. Decisions are not made in a rational way but rather through compromise, accommodation and bargaining. Dalton identified following six areas where politics was being played actively:- 1. Pressure for economy 2. Co-operation of officially powerless experts with their administrative superior line and staff-relationship. 3. The conflict between labour and management for interpreting agreements. 4. Uncertainly about standards and strategies of promotion. 5. Difficulty in linking reward with productivity 6. Practicality of policies Status Status refers to the relative rank that an individual holds which includes attendant rights, duties, and lifestyle, in a social hierarchy based upon honour or prestige. It is a term that refers to one's position in a social system. Individuals usually have multiple statuses assigned to them at any given time. Status comes with a set of rights, obligations, behaviours, and duties that people of certain positions are expected to perform. Occupying a high status due to a characteristic that one possesses means that on the basis of that difference, an individual acquires more power and privilege. Ascribed and achieved status An ascribed status is a social position a person receives at birth or assumes involuntarily later in life. For example, being a daughter, a teenager, or a widower. Ascribed statuses are matters about which people have little or no choice. It is beyond an individual s control. Ascribed statuses that exist in all societies include those based upon sex, age, race ethnic group and family background. For example, a person born into a wealthy family characterized by traits such as popularity, talents and high values will have many expectations growing up. By contrast, an achieved status refers to a social position a person assumes voluntarily and that reflects personal ability and choice. For example, being an Olympic athlete, a computer programmer or a thief. Achieved status is a concept developed by the anthropologist Ralph Linton denoting a social position that a person can acquire on the basis of merit; it is a position that is earned or chosen. Achieved status means also what the individual acquires during his or her lifetime as a result of the exercise of knowledge, ability, skill and perseverance. In practice, most statuses involve a combination of ascription and achievement. That is, people s ascribed statuses influence the statuses they achieve. People who achieve the status of lawyer, for example, are likely to share the ascribed trait of having been born into well-off families. By the same token, many less desirable statuses, such as criminal, drug addict, or being out of work are more easily achieved by people born into poverty. Functional- scalar status Scalar status refers to the status related to the ranking of an employee in the scalar chain. There are different rankings of the employees at different levels of management based on the amount of authority vested in them. Functional status refers to status related to the nature of functions performed by a person on the group. For example, persons associated with finance department enjoy higher status than persons in canteen and sanitation sections. 43

44 Status symbol A status symbol is an object which is meant to signify its owners' high social and economic standing. A status symbol is a perceived visible, external denotation of one's social position and perceived indicator of economic or social status. Many luxury goods are often considered status symbols. Status symbol is also a sociological term relating to how individuals and groups interact and interpret various cultural symbols. What is considered a status symbol will differ among countries and cultural regions, based on their economic and technological development. Status symbols used in the organisations are the titles and the designations, insignia, pay and incentives and physical facilities. Expensive goods like luxury vehicles and large houses are mostly out of reach for lower economic classes, so these items serve as status symbols indicating that their owners are able to afford their extremely high prices. Since much of the utility derived from status symbols comes from their high price, an increased price for a status symbol may actually increase its demand, rather than diminish it. A product which exhibits this phenomenon is known as a Veblen good. Importance of status system 1. Satisfaction of needs The employees with the status needs feel motivated to perform in an efficient and an effective manner if they feel that their performance would yield higher status for them. 2. Prestige image In our society, prestige and value is attached to different professions and jobs based on the importance of the job. Bollywood actors, for example, enjoy greater prestige than theatre actors. 3. Reflection of achievements People with higher qualifications and achievements hold higher level of status and enjoy better prestige and influence. 4. Improved social interactions A particular type of behaviour is expected from people at the same level in the status hierarchy which helps to reduce complexity and uncertainty in the social interactions. 5. Helps in organisation behaviour Status system helps management to determine the informal leader of the group. It also helps the management to resolve conflicts and problems. Employees with higher status needs can be motivated to qualify themselves for high status jobs. Demerits of status system 1. Unhealthy competition Distinction in status results in unhealthy competition among the employees which adversely affect the organisational performance. 2. Status as an end The status differentials increases the war between superior and subordinates which makes the status as an end. Nowhere goals of the organisation are given any importance. 3. Complexity in relationships The people who hold higher status position have a false sense of superiority and the people who hold lower status positions develop a feeling of inferiority complex. This may lead to jealousy and hatred between the lower and higher status people. 4. Financial problem A person who holds a higher status position is given certain facilities which cannot be withdrawn. This increases the financial burden on the organisation. 44

45 LESSON 5 ORGANISATIONAL BEHAVIOUR-MEANING Monika Khemani Organisational behaviour involves the understanding, prediction and control of human behaviour and the factors which influence the performance of people as members of an organization. It is the study of individual behaviour and group dynamics in organizations which focuses on the individuals, the groups, the organisation and their interactional relationships. In brief, it is concerned with the study of what people do in an organization and how their behaviour affects the performance of the organizations. According to Keith Davis "Organizational behaviour is the study and application at knowledge about the how people - as individuals and a groups - act within organization. It strives to identify ways in which people can act more effectively." According to LM Prasad Organizational behaviour can be defined as the study and application of knowledge about human behaviour related to other elements of an organization such as structure, technology and social systems. Organisation Behaviour involves integration of studies like economics, sociology, psychology, anthropology, social psychology, economics, engineering and political science. Therefore, organizational behaviour is a comprehensive field of study in which individual, group and organizational structure is studied in relation to organizational growth. Organisation Behaviour covers the core topics of motivation, personality, perception, leadership, authority, power and status, interpersonal communication, group structure and process, learning, values and attitude, dynamics of change, conflict, job design, control, transactional analysis, stress management, quality of work life, organisation development. NATURE AND SCOPE OF OB: 1. An interdisciplinary approach: OB is an interdisciplinary approach because it tries to integrate the relevant knowledge drawn from related disciplines like psychology, sociology, and anthropology to make them applicable and to study OB. 2. An Integral part of Management: OB represents behavioural approach to management Since human beings are the most important asset of any organisation therefore OB has assumed the status of a distinct field of study. Thus OB brings creative thinking among managers to solve human problems in organisations. 3. A humanistic approach: OB is a human tool for human benefit. It helps in understanding and predicting the behaviour of individuals. It is based on the belief that the human beings have a desire to be independent, creative, and productive. 45

46 4. Science and Art: OB is both a science and an art. The systematic knowledge about human behaviour is a science. But it is not an exact science as it cannot provide specific answers to all organizational problems. Pure science concentrates on fundamental research whereas OB concentrates on applied research. The application of behavioural knowledge and skills is an art. It is difficult to predict the behaviour of people working in the organization therefore it is difficult to apply predictive models in all the situations. OB is also considered as a normative science because the findings of applied science are applied to socially accepted organizational goals. 5. A purposeful approach: OB is a goal oriented field of study which aims at how to understand, explain and predict human behaviour in the organisational scenario so that these generalisations can be used to anticipate the effects of certain actions on human behaviour. 6. Satisfaction of human needs: Every employee working in the organisation has needs and aspirations. It is the responsibility of the organisation to provide a healthy environment so that employees may get need satisfaction and the organisation may accomplish its objectives. OB helps both the employees and the organisation to fulfil their respective objectives. DETERMINANTS OF ORGANISATION BEHAVIOUR The key determinants in organizational behaviour are people, structure, technology and the external environment in which the organization operates. Each of the four determinants of organizational behaviour are considered briefly in the following paragraphs:- 1. People- Organization consists of individual and groups. People are the main component of any organization that has to be managed. Every individual wants to achieve a personal goal. Organizations must identify the need spectrum of individuals and take suitable steps for its fulfilment to enable them to perform effectively so that they complete their allotted task in time. Relationship of employees with their subordinates and superiors should be established on the basis of understanding and mutual trust so that it is easy to communicate and understand each other s views. Individual goals must be kept subordinate to organisational goals if there is any mismatch between them. Accomplishment of team goals contribute towards the achievement of organizational goals. Apart from managing internal workforce, it is also important to manage customers, government, employees, social groups and non-governmental organizations (NGOs), competitors, regulatory agencies, labour force, suppliers and resource persons. 2. Structure- Structure defines the official relationships of people in the organizational hierarchy. The structured relationship is the basis of formal policies, procedures, organisational culture, hierarchical authority and responsibility. There are two types of organization structure viz. formal and informal organization structure. A formal organization is a system of well defined jobs with a prescribed pattern of communication, coordination and delegation of 46

47 authority. It consists of classical hierarchical structure in which positions; responsibility, authority, accountability, the superior- subordinate relationship and the line of command are clearly defined and established. In the formal organisational structure people are assigned various job positions. While working at those job positions, the individuals interact with each other and develop some social and psychological groups in the organisation. This network of social and psychological groups automatically forms another structure in the organisation which is called informal organisational structure. 3. Technology- People cannot do their work without the assistance of tools, equipments, buildings, machines, processes and resources. Selection of technology, procurement, installation, operation and maintenance is important and no compromise should be made in procuring latest or advanced technology. Based on the technology, an organization should formulate job structure and resultant procurement of human resource so that they are complimentary to each other. Technology brings effectiveness because it incorporates technical skills, which encompass the ability to apply specialised knowledge. 4. Environment- The business environment influences the people's behaviour at work. Government policies, social systems, religious beliefs, family and economic conditions national philosophies, employees 'psychology and other factors inside and outside the organisation have a mutual influence on each other's behaviour. A manager should examine and analyse as to how he is going to come up with the changes in the business environment. External environment encompasses economic, cultural, social, government rules and regulations, legal aspects, political climate, demographics and its impact. It is important to evaluate market situation, competitors, and availability of raw material, technology, availability of skilled, semi skilled and non-skilled personnel. In addition, evaluate prevailing culture and how individuals are likely to respond to the call of the organization. Manager must therefore keep in mind the internal and external factors and make the best amalgam and work to achieve organizational effectiveness. EMERGING CHALLENGES FOR OB Implementation of Organizational Behaviour involves various challenges on the one hand and offers various opportunities on the other to enhance the overall effectiveness of individuals, groups and the organization itself. The following are some of the critical issues confronting managers for which the knowledge of Organizational Behaviour offers worthy solutions based on behavioural science and other interdisciplinary fields. Improving People Skills: Change is inevitable and its impact is visible in very sphere, be it technology, environment or structure. Such changes happen at a faster pace in business world to match with unprecedented customer expectation and changing business needs and technology. Unless various stakeholders are equipped to possess the required skills to get used to those changes, the achievement of goals is tough. There are two different categories of skills managerial skills and technical skills. Some of the prominent managerial skills include listening, motivating, planning and organizing, leading, problem solving, decision making etc. These skills can be enhanced by organizing a series of training and development programmes, career development, induction and socialization 47

48 etc. Designing an effective performance appraisal system with in-built training facilities will help upgrade the skills of the employees to cope up the demands of the external environment. The lower level cadre in management is required to possess more of technical skills. As they climb up the organization ladder, their roles will be remarkably changed and expected to have more of human relations and conceptual skills rather being engaged in execution alone. Improving Quality and Productivity: Quality is the extent to which the customers or users believe the product or services surpass their needs and expectations. Deming defined quality as a predictable degree of uniformity and dependability, at low cost and suited to the market. Juran defined it as fitness for use. Managers confront the challenges of meeting specific requirements of customers driven by new tastes and preferences. Improving quality and productivity is possible through globally accepted programs like total quality management and reengineering processes that require extensive employee involvement. Total Quality Management (TQM): It is a philosophy of management that is driven by the constant attainment of customer satisfaction through the continuous improvement of all organizational process. Today s managers understand that any efforts to improve quality and productivity must have equal participation of their employees. These employees will always be a major force in carrying out such changes and making it a success. Managers will put maximum effort in meeting the customer s requirements by involving everyone from all the levels and across all functions. Regular communications (both formal and informal) across the various levels is a must. Two way communications at all levels must be promoted. Identifying training needs and relating them with individual capabilities and requirements is inevitable. Top management s participation and commitment and a culture of continuous improvement must be established. Managing Workforce Diversity: This refers to employing different categories of employees who are heterogeneous in terms of gender, race, ethnicity, relation, community, physical disadvantage, homosexuals, elderly people etc. The primary reason to employ heterogeneous category of employees is to tap the talents and potentialities, harnessing the innovativeness, obtaining synergetic effect among the divorce workforce. In general, employees wanted to retain their individual and cultural identity, values and life styles even though they are working in the same organization with common rules and regulations. The major challenge for organizations is to become more accommodating to diverse groups of people by addressing their different life styles, family needs and work styles. Managers have to shift their philosophy from treating everyone alike to recognizing individual differences and responding to those differences in ways that will ensure employee retention and greater productivity while, at the same time not discriminating. If work force diversity is managed more effectively, the management is likely to acquire more benefits such as creativity and innovation as well as improving decision making skills by providing different perspectives on problems. If diversity is not managed properly and showed biases to favour only a few categories of employees, there is potential for higher turnover, more difficulty in communicating and more interpersonal conflicts. Responding to Globalization: Today s business is mostly market driven; wherever the demands exist irrespective of distance, locations, climatic conditions, the business operations are expanded to gain their market share 48

49 and to remain in the top rank etc. Business operations are no longer restricted to a particular locality or region. Company s products or services are spreading across the nations using mass communication, internet, faster transportation etc. An Australian wine producer now sells more wine through the Internet than through outlets across the country. More than 95% of Nokia hand phones are being sold outside of their home country Finland. Globalization affects managerial skills in at least two ways: i) an Expatriate manager have to manage a workforce that is likely to have very different needs, aspirations and attitudes from the ones that they are used to manage in their home countries. ii) Understanding the culture of local people and how it has shaped them and accordingly learn to adapt ones management style to these differences is very critical for the success of business operations. One of the main personality traits required for expatriate managers is to have sensitivity to understand the individual differences among people and exhibit tolerance to it. Empowering People The main issue is delegating more power and responsibility to the lower level cadre of employees and assigning more freedom to make choices about their schedules, operations, procedures and the method of solving their work-related problems. Encouraging the employees to participate in work related decision will sizably enhance their commitment at work. Empowerment is defined as putting employees in charge of what they do by eliciting some sort of ownership in them. Managers are doing considerably further by allowing employees full control of their work. An increasing number of organizations are using self-managed teams, where workers operate largely without boss. Due to the implementation of empowerment concepts across all the levels, the relationship between managers and the employees is reshaped. Managers will act as coaches, advisors, sponsors, facilitators and help their subordinates to do their task with minimal guidance. The executive must learn to delegate their tasks to the subordinates and make them more responsible in their work. And in so doing, managers have to learn how to give up control and employees have to learn how to take responsibility for their work and make appropriate decision. If all the employees are empowered, it drastically changes the type of leadership styles, power relationships, the way work is designed and the way organizations are structured. Coping with Dynamic Environment In recent times, the Product life cycles are slimming, the methods of operations are improving, and fashions are changing very fast. In those days, the managers needed to introduce major change programs once or twice a decade. Today, change is an ongoing activity for most managers. The concept of continuous improvement implies constant change. In yester years, there used to be a long period of stability and occasionally interrupted by short period of change, but at present the change process is an ongoing activity due to competitiveness in developing new products and services with better features. Everyone in the organization faces today is one of permanent temporariness. The actual jobs that workers perform are in a permanent state of flux. So, workers need to continually update their knowledge and skills to perform new job requirements. Managers and employees must learn to cope with temporariness. They have to learn to live with flexibility, spontaneity, and unpredictability. The knowledge of Organizational Behaviour will help understand better the current state of a work world of continual change, the methods of overcoming resistance to change process, the ways of creating a better organizational culture that facilitates change process etc. 49

50 Stimulating Innovation and Change Success mantra is to foster innovation and be proficient in the art of change else face extinction in due course of time from the business field. Victory is by-product of flexibility, superior quality and beating the competition with a constant stream of innovative products and services. For example, Compaq succeeded by creating more powerful personal computers for the same or less money than IBM or Apple and by putting their products to market quicker than the bigger competitors. Amazon.com is putting a lot of independent bookstores out of business as it proves you can successfully sell books from an Internet website. Some of the basic functions of business are being displaced due to the advent of a new systems and procedures. For example books are being sold only through internet. Internet selling an organization s employees can be the impetus for innovation and change otherwise they can be a major hindrance. The challenge for managers is to stimulate employee creativity and tolerance for change. CONTRIBUTING FIELDS TO ORGANIZATIONAL BEHAVIOUR Organizational behaviour is interdisciplinary in nature that has grown out of contributions from numerous fields of study like psychology, sociology, engineering, anthropology and management have each contributed to our understanding of human behaviour in organizations. The major contributions to of various disciplines to the study of organisation behaviour are discussed as below: 1. Psychology- Psychology is an applied science, which attempts to explain human behaviour in a particular situation and predicts actions of individuals. It seeks to measure, explain, and sometimes change the behaviour of human beings. Psychologists have been able to modify individual behaviour largely with the help of various psychological studies which include learning process, motivation techniques, perception, personality development, emotions, training and development, leadership effectiveness, needs and motivational forces, job satisfaction, decision making processes, performance appraisals, attitude measurement, employee selection techniques, work design, and job stress. Studies of these theories can improve personal skills, bring change in attitude and develop positive approach to organizational systems. 2. Sociology- Science of Sociology takes society rather than the individual as its point of departure. It studies the impact of culture on group behaviour and has contributed to a large extent to the field of group dynamics, roles that individual plays in the organization, communication, norms, status, power, social behaviour, status, social mobility, conflict management, formal organization theory, group processes and group decision-making. Sociologists study the social system in which individuals fill their roles; that is, sociology studies people in relation to their fellow human beings.. Sociological concepts, theories, models and techniques help significantly to understand better the group dynamics, organizational culture, formal organization theory and structure, organizational technology, bureaucracy, communications, power, conflict and inter-group behaviour. Individuals have a role set that is determined by their social position, and roles affect how people interact within organizations. 3. Engineering- is the applied science of energy and matter. It enhances our understanding of the 50

51 design of work. Frederick Taylor took basic engineering ideas and applied them to human behaviour at work, influencing the early study of organizational behaviour. With his engineering background, Taylor placed special emphasis on human productivity and efficiency in work behaviour. Job preparation and performance shifted from a long apprenticeship and a creative, problem solving approach to work to training in and automated performance of simplified tasks. His notions of performance standards and differential piece-rate systems still shape organizational goal-setting programs. 4. Political science- Political science studies the behaviour of individuals and groups within a political environment. It has contributed to the field of OB. Stability of government at national level is one of the major determinants for promotion of international business, financial investments, expansion and employment. Various government rules and regulations play a very decisive role in growth of the organization. Political scientists contribute to understand the conflict resolutions tactics, allocation of power, formation of coalition and how people manipulate power for individual self interest. The knowledge of political science can be utilized to the study the behaviour of employees at micro as well as macro level. 5. Economics- Economics contributes organizational behaviour to great extent in designing the organizational structure. Transaction cost economics influence the organization and its structure. Transaction costs economics implies costs components to make an exchange on the market. This transaction cost economics examines the extent to which the organization structure and size of an organisation varies in response to attempts to avoid market failures through minimising production and transaction costs within the constraints of human and environmental factors. Costs of transactions include both costs of market transactions and internal co-ordination. A transaction occurs when a good or service is transferred across a technologically separable barrier 6. Anthropology- It is a field of study relating to human activities in various cultural and environmental frameworks. It understands difference in behaviour based on value system of different cultures of various countries. The study is more relevant to organizational behaviour today due to globalization, mergers and acquisitions of various industries. Managers will have to deal with individuals and groups belonging to different ethnic cultures and exercise adequate control or even channelize behaviour in the desired direction by appropriately manipulating various cultural factors. Organization behaviour has used the studies on comparative attitudes and cross-cultural transactions. Environment studies conducted by the field of anthropology aims to understand organizational human behaviour so that acquisitions and mergers are smooth. The main aim of anthropology is to acquire a better understanding of the relationship between the human being and the environment. Anthropologists contribute to study the following aspects in organizational settings comparative values, comparative attitudes, cross-cultural analysis between or among the employees. TYPES OF MODELS OF ORGANIZATIONAL BEHAVIOUR The models of organizational behaviour are developed considering input, process and output. Input contains various independent variables. Processes involve interaction with other individuals and groups and take into consideration organisation resources, managerial roles, leadership styles, motivational factors, and level of conflicts, stress factors, channels of 51

52 command and control, organisational development measures undertaken by the organization, prevailing organizational culture and hosts of other factors. These factors then culminate into output in the form of dependent variables discussed earlier. The models of organizational behaviour have been developed through the historical development of management thoughts discussed in chapter two of the book. In India, organizational behaviour models differ from organization to organization. Every organization adopts one or more models of behaviour. The different types or organizational behaviour models are discussed in succeeding paragraphs. 1. Autocratic model- Autocratic model of organisation behaviour is based on the concept that managers are superior and it depends on the managerial power. In an autocratic environment the employees are oriented towards obedience and dependence on the boss and are controlled by the managers based on official authority and power attached to it. In an autocratic environment, the managerial orientation is official authority. Management does the thinking and the employees obey the orders. This model is based on the assumption that nobody wants to work unless he is forced to do so therefore as per this model employees are driven to work. Managers are considered neutral born leaders who are obeyed and respected in all areas. The autocratic model has been successful where workers are lazy and work shirker and where accomplishment of task is of utmost importance. It is very commonly used in Indian organizations like, railways, defence organization, police organization, banks etc. 2. Custodial Model- In Custodial model the owners of the organisation are the custodian of resources of their organization and they are bound to look after the welfare of employees. Employees are given an opportunity to bring their problems to the notice of the employer. It is the duty of the employer to solve the problems of the employees. Employees depend on the organization for their safety and security needs. The organizations provide wages and salary while employees are in service and also provide retirement benefits to the employees so that they can sustain their post retirement life comfortably. Therefore their dependence of the employees on the organization increases as compared to the dependence on the boss. Employees devote themselves for the organizational development because they feel that the organization look after the employee welfare not only during service but also post service periods. This model proposes that money is the only motivating factor. If an organisation does not have the wealth to provide pensions and pay other benefits, it cannot follow a custodial approach. The employees are satisfied and happy but they are not strongly motivated, so they may give only passive co operation. This model does not consider employee values, preferences, attitudes, emotions and psychological motivational factors for organizational effectiveness. 3. Supportive Model- In this model employees are considered as active workers who have their value, attitude, desire, and preferences. It depends on leadership instead of authority or economic rewards. The leader assumes that the workers will take responsibility, develop a drive to contribute, and improve them if management will give them a chance. If employees are given opportunities they can increase their capacity to do a particular work. Employees get opportunities for recognition. They develop positive outlook towards work culture. Managers and workers participate together in the development of 52

53 organization while achieving development of their own skills. Since management supports employees in their work, the psychological result is a feeling of participation and task involvement in the organization. In other words, the supportive model takes care of certain psychological needs of the employees in addition to their subsistence and security needs. Thus, in this model employees are strongly motivated than by earlier models because their status and recognition needs are met in a better way. This model has limited application under Indian conditions because a majority of workers at operative level are still working for the satisfaction of their physiological and security needs. 4. The Collegial Model- Collegial model is an extension of the supportive model. The term collegial relates to a body of people working together cooperatively. It is a team concept. This model depends on management s building a feeling of partnership with employees. The result is that employees feel that managers are contributing also, so it is easy to accept and respect their roles in their organization. Managers are considered as joint contributors rather than as bosses. The managerial orientation is towards teamwork. The employees become self disciplined. The result of the approach for the employee is that they become self motivated and self disciplined. They also feel some degree of fulfilment and self-actualization. 5. The System Model- The system model is an emerging model of organization behaviour. This model is the result of search of the best model of OB for employees in the present scenario. They expect more than a salary cheque and job security from their organization. In this model the mangers try to convey all the employees that they are the part of the whole system. Managers demonstrate a sense of caring and compassion. They become sensitive to the needs of a diverse workforce with dynamic personal and family needs in response to these employees reorganize the mutuality of company-employee obligations in a system viewpoint. They experience a sense of psychological ownership for the organization and its product and services. The models of organization behaviour discussed have evolved over time and the conclusion is that there is no best model which is applicable for all situations. These models are linked with human needs. For example, autocratic model follows the carrot and stick approach of motivation because it is concerned with physiological needs of the people. The custodial model is used by the mangers to serve the safety and security needs of the people. The supportive model is employed by the managers to fulfil the affiliation and esteem needs. To conclude each successive model is an improvement over the previous models as far as human needs and motivation are concerned. OB MOD Organisational behaviour modification is a sophisticated tool for improving the organisational effectiveness. This technique is developed from the concept of Operant Conditioning by B.F. Skinner which is used to modify undesirable behaviour and replace it with the behaviour that is more compatible with goal attainment. 53

54 In words of Stephen P. Robbins, OB Mod is a programme where managers identify performance related employee behaviours and then implement an intervention strategy to strengthen desirable behaviours and weaken undesirable behaviours. STEPS IN OB MOD OB Mod is a tool and managers have to go through certain steps to apply it in practice. These steps are discussed as below: 1. Identification of critical behavior- In order to apply OB Mod, it is necessary that critical behaviours which have significant impact on the performance outcome of the employees should be identified. Employees may be engaged in some of the critical activities like absenteeism or attendance and doing or not doing a particular task. Critical behaviours can be identified through the discussion with the particular employee and his immediate superior as both are closely intimated with the job behaviours. 2. Measurement of the behavior- Here the critical behaviours are measured in terms of the rate at which these are occurring. This allows the manager to determine his success in changing the subordinate s behaviour. If the rate of occurrence is within the acceptable limit, no action may be required. If it is more, it is required to be changed. 3. Functional analysis of behavior- It involves a detailed examination of present behaviours of employees to determine what consequences each of the behaviours produces. Functional analysis must make sure that the contingent consequences are identified. It pinpoints one of the most significant practical problems of using an OB Mod approach to change critical performance behaviour. 4. Intervention- Intervention is the action taken for changing the undesirable critical behaviour. It involves developing a strategy fir changing the behaviour, implementing the strategy and measuring the frequency of the resulting behaviour. Positive reinforcement, negative reinforcement, extinction and punishment are the strategies that can be used at the intervention stage. 5. Systematic Evaluation- This is the last step in Ob Mod which would reveal whether the undesirable behaviours have been substituted by desirable behaviours or not. Measures like and quality and quantity, absenteeism and turnover may be used to evaluate the success of OB Mod programme. 54

55 STEPS IN OB MOD UTILITY OF OB MOD 1. Modification of Undesirable behavior- OB Mod enables the management to modify or eliminate undesirable behaviour or replace it with behaviour that is more compatible with goal attainment. With the help of it, the manager can effectively influence the behaviour of subordinate. 2. Development of Employees- OB Mod strategies can be used to make the people learn new behaviours and replace the undesirable behaviour with the desirable behaviours. Positive reinforcement can be used to encourage desirable behaviour by the employees. 3. Controlled Behaviour- The Managers can use the operant conditioning successfully to control and regulate the behaviour of subordinates by manipulating the reward system. The behavioural consequences that are rewarding increase the likelihood of desired behaviour whereas aversive consequences decrease the likelihood of undesirable response. 55