Neoclassical Organization Theory
The organization was seen by the classical authors as a machine and human beings as components of that machine. They were of the belief that the organization's effectiveness could be enhanced by making human beings successful. Specialization and organization of events were their focus. Most of the authors placed emphasis on top-level productivity and a few on lower organizational levels. That is why streams have been created by this theory; scientific leadership and administrative leadership. The scientific leadership group was primarily concerned with the activities to be carried out at the organizational level.
Henry Fayol learned the principles and roles of management for the first time. Some writers, such as Gullick, Oliver Sheldon, Urwick, called the issue where it is important to define activities to achieve organizational goals. To make the functions effective, grouping, or departmentation was also considered necessary. Since this philosophy revolves around the structure, it is also called a structural organizational theory.
The conventional theory is the Classical Theory, where more focus is placed on the organization rather than the workers working therein. The organization is regarded as a machine according to classical theory, and human beings as various components/parts of that machine.
Classical Organizational Theory is very important as the first step toward a systematic analysis of organizations.
It deals mainly with the morphology of formal organizations and also treats one as a machine and the workers as components of the machine.
Therefore each employee employed in it must become productive in order to improve the organization's efficiency.
What is Classical Organization Theory?
The traditional Theory where instead of emphasizing more on the employees, more emphasis is on the Organization is known as the Classical Organization Theory. In this Theory, it is said that the Organization is a machine wherein the humans are different components or parts of that machine. Therefore, it is considered by many experts that the Classical Theory of Organization is inadequate when it comes to dealing with the complexities in the functioning of the Organization as it focuses just on the Organization.
According to the Classical Organizational Theory, humans are considered just as the means of production. The Classical Organizational Theory most primarily deals with formal Organizations. In order to increase the efficiency of the Organizations in accordance with this Theory, the efficiency of the working employees must be increased.
Classical Organization Theory- 6 Pillars
The 6 main Pillars or elements of the Classical Organizational Theory are listed below-
Division of Labor- Work must be divided in an Organization for the improvement in the performance of individual workers and in order to obtain a clear specialization. The company must divide work in order to achieve a specific specialization in order to enhance the efficiency of individual employees.
Departmentalization- Different departments must be created for different activities and jobs which would allow the Organization to minimize its costs and facilitate administrative control. The company needs to organize into divisions different tasks and jobs. This enables expenditures to be reduced and administrative control facilitated as well.
Coordination- It should be ensured by the Organization that there is harmony among diverse functions. This would provide unity of actions as it allows the arrangement of group efforts in an orderly manner. The company must guarantee peace between the different functions. This allows the collective effort to be organized in an orderly way that offers unity of action when serving a common goal.
Scalar and Functional Processes- The series chain of superior and subordinate relationships from the top to the bottom of the Organization is known as the scalar chain. It helps in the facilitation of the delegation of the authority, communication, feedback, and remedial action. The sequence of superior-subordinate relationships in an organization from top to bottom is a scalar chain. It encourages the delegation, contact or input, of authority or order, and also remedial action or decision.
Structure- Structure is the conceptual relationship in an organization between functions. In addition, for efficient goal achievement, these functions are organized. In an Organization, the logical relationships of functions constitute the structure of the Organization. These functions are then arranged in order to accomplish the effective objectives.
Span of Control- This includes the total number of subordinates that can be effectively supervised by a manager. This is the number of subordinates that can be efficiently overseen by a boss.
There have been critiques of classical theory on many levels.
Criticisms of the Classical Organizational Theory -
It takes a rigid view of organizations as well as a static one.
An organization is regarded by most classical theorists as a closed structure with no interaction with its environment.
More on the systemic and even the technical aspects of organizations, the theory focuses.
It is founded on assumptions that are oversimplified and mechanistic.
The emphasis of Classical Theory, in simple terms, is on an organization without individuals.
Therefore in dealing with the complexities of the structure and operation of an organization, many experts consider it insufficient.
In addition, it gives an imperfect description of human actions in corporations.
The new-classical approach is contained in two points:
The organizational situation should be perceived in social, economic, and technological terms
The social mechanism of group behavior can be understood in terms of the clinical method analogous to the doctor's diagnosis of the human body.
Formal and informal modes of organization are seen as significant in this theory. The other contribution of new-classical thinkers is the behavioral approach adopted in this theory. The foundations of classical theory, in other words. Job division, department, coordination, and human actions were taken as given, but these postulates were considered to be changed by individuals acting individually or within the informal organization context.
FAQs on Classical Organization Theory
1. What are the Six Pillars of Classical Organizational Theory? Why Did the Classical Theory Receive Criticism?
The conventional theory is the Classical Theory, where more focus is placed on the organization rather than the workers working therein. The organization is regarded as a machine according to classical theory, and human beings as various components/parts of that machine. The six pillars are:
Division of Labor
Departmentalization
Coordination
Scalar and Functional Processes
Structure
Span of Control
Organizations are regarded by classical theory as machines and human beings as parts of the system. Classical thinkers, therefore, thought that with the effectiveness of human beings, the efficiency of the company increases. This theory does, however, take a rigid and static view of organizations. It also focuses mainly on an organization's operational and technical aspects with the belief that it does not engage with its environment.
Finally, mechanistic and oversimplified assumptions are the foundation of the theory. The critique of Classical theory contributed to these aspects.
2. What are some of the criticisms faced by Classical Organizational Theory?
Some of the criticisms that are faced by the Classical Organizational Theory are listed below-
Rigid as well as static views are taken by the Classical Theory.
Since there is no interaction with the environment of the Organization the Classical Theory is seen as a closed system by many Classical theorists.
The structural and technical aspects are given more attention in an Organization in the case of Classical Theory.
It is based upon mechanistic and oversimplified assumptions.
3. What are some of the drawbacks of Classical Theory?
Some of the drawbacks that Classical Theory possess are listed below-
Line and staff structures were the only part that the Classical thinkers concentrated upon.
There was no emphasis on the decision-making processes in this Theory.
Human behavior and the complexity of human nature were completely ignored. Classical thinkers considered human beings as inert instruments who would just perform the assigned tasks.
The assumption of Organization in a closed system is completely unrealistic in fact the Organization is greatly influenced by the environment.
4. Explain the characteristics of Classical Theory?
The classical theory has the following characteristics.
It is based upon a model of accounting.
It emphasizes the detection and correction of errors after they have been committed.
It is more about the quantity of production than about human beings.
It is considered that humans are relatively homogeneous and unmodifiable. Thus, on the basis of various forms of employment to be done in an organization, labor is not divided.
It is believed that workers in a company are relatively stable in terms of transition.
It is believed that in order to have a centralized and integrated structure, power and control should be delegated only to the central authority.
Classical Theory is built according to an accounting model.
In this Theory, errors are detected and are corrected once they are committed.
It focuses more on the amount of output rather than the human beings.
Employees are assumed to be relatively stable in terms of change in an Organization.
In order to have a centralized and integrated system, the authority and control are assumed to be vested with the central authority only.
Some writers of classical theory stressed the organization's technical aspects and how people can be made more effective, while others emphasized the organization's institutional aspects such that people can be made more efficient collectively. Thus this view of various writers resulted in the existence of two separate streams:
Scientific Management Stream
Administrative Management Stream
According to this theory, human beings are thus merely treated as a means of development.
5. What are some of the key differences between Classical and Neo Classical Theory?
In the Classical Theory, it is assumed that a worker is satisfied when his economic and physical needs are fulfilled while in the neoClassical Theory along with the physical and economical needs of the employee his other social needs and job satisfaction is also considered. Also, another key difference between both the theories is that while decision-making, the Classical Theory only considers one person while in the case of the neoClassical Theory a whole team is involved while making a decision. The Classical Theory is hierarchical while the neoClassical Theory is flat.
6. What is meant by the Modern Organization Theory?
When the social and behavioral sciences are integrated with the valuable concepts of the Classical models, the Theory is known as the modern Theory. According to this Theory, whenever there is a change in the environment either external or internal of an Organization, the system in the Organization also changes. It has been emphasized by many scientists that the Organizational interests of an individual and proper communication and integration are very important and are a prerequisite in an Organization in order to function smoothly.
To learn more about Modern Theory, students can visit Vedantu’s study material on Modern Theory for a better and in-depth understanding of the concept.