The two factors that determine how an organization functions in relation to its
internal and external environment are its structure and the processes that operate
within it. Organizations are also affected by the culture they develop, that is, the
values and norms that affect behaviour (see Chapter 21).
Much has been written to explain how organizations function and the first part of this chapter summarizes the various theories of organization. These theories provide the background to the last three sections of the chapter which deal with organization structure, types of organizations and organizational processes.
ORGANIZATION THEORIES
The classical school
The classical or scientific management school, as represented by Fayol (1916), Taylor (1911) and Urwick (1947), believed in control, order and formality. Organizations need to minimize the opportunity for unfortunate and uncontrollable informal relations, leaving room only for the formal ones.
The bureaucratic model
The bureaucratic model of organization as described by Perrow (1980) is a way of expressing how organizations function as machines and can therefore be associated with some of the ideas generated by the classical school. It is based on the work of Max Weber (1946) who coined the term ‘bureaucracy’ as a label for a type of formal organization in which impersonality and rationality are developed to the highest degree. Bureaucracy, as he conceived it, was the most efficient form of organization because it is coldly logical and because personalized relationships and non-rational, emotional considerations do not get in its way
The human relations school
The classical, and by implication, the bureaucratic model were first challenged by Barnard (1938). He emphasized the importance of the informal organization – the network of informal roles and relationships which, for better or worse, strongly influences the way the formal structure operates. He wrote: ‘Formal organizations come out of and are necessary to informal organizations: but when formal organizations come into operation, they create and require informal organizations.’ More recently, Child (1977) has pointed out that it is misleading to talk about a clear distinction between the formal and the informal organization. Formality and informality can be designed into structure.
Roethlisberger and Dickson (1939) reported on the Hawthorne studies – which highlighted the importance of informal groups and decent, humane leadership.
Much has been written to explain how organizations function and the first part of this chapter summarizes the various theories of organization. These theories provide the background to the last three sections of the chapter which deal with organization structure, types of organizations and organizational processes.
ORGANIZATION THEORIES
The classical school
The classical or scientific management school, as represented by Fayol (1916), Taylor (1911) and Urwick (1947), believed in control, order and formality. Organizations need to minimize the opportunity for unfortunate and uncontrollable informal relations, leaving room only for the formal ones.
The bureaucratic model
The bureaucratic model of organization as described by Perrow (1980) is a way of expressing how organizations function as machines and can therefore be associated with some of the ideas generated by the classical school. It is based on the work of Max Weber (1946) who coined the term ‘bureaucracy’ as a label for a type of formal organization in which impersonality and rationality are developed to the highest degree. Bureaucracy, as he conceived it, was the most efficient form of organization because it is coldly logical and because personalized relationships and non-rational, emotional considerations do not get in its way
The human relations school
The classical, and by implication, the bureaucratic model were first challenged by Barnard (1938). He emphasized the importance of the informal organization – the network of informal roles and relationships which, for better or worse, strongly influences the way the formal structure operates. He wrote: ‘Formal organizations come out of and are necessary to informal organizations: but when formal organizations come into operation, they create and require informal organizations.’ More recently, Child (1977) has pointed out that it is misleading to talk about a clear distinction between the formal and the informal organization. Formality and informality can be designed into structure.
Roethlisberger and Dickson (1939) reported on the Hawthorne studies – which highlighted the importance of informal groups and decent, humane leadership.
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