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Theories and Major Schools of Thoughts and Framework of Organization Analysis. Facilitator and Course Coordinator: Vinayshil Gautam PhD, FRAS(London) (Founder Director IIM K; Leader Consulting Team IIM S) A Al_Sager Chair Professor and First Head, Management Department, IIT D Chairman, DKIF.

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Theories and major schools of thoughts and framework of organization analysis l.jpg

Theories and Major Schools of Thoughts and Framework of Organization Analysis

  • Facilitator and Course Coordinator:

  • Vinayshil Gautam PhD, FRAS(London)

  • (Founder Director IIM K; Leader Consulting Team IIM S)

  • A Al_Sager Chair Professor and First Head,

  • Management Department, IIT D

  • Chairman, DKIF

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Introduction to Organization Theory


“A plan or scheme existing in the mind only, but based on principles verifiable by experiment or observation”

(Funk & Wagnalls page 1302)


“Organizations are social entities that are goal-oriented; are designed as deliberately structured and coordinated activity systems, and are linked to the external environment”

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Definition of Organization Theory

  • Organization theory: is the set of propositions (body of knowledge) stemming from a definable field of study which can be termed organizations science (Kast&Rosenzweig1970).

  • The study of organizations: is an applied science because the resulting knowledge is relevent to problem solving or decision making in ongoing enterprises or institutions (Kast&Rosenzweig1970).

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Management Theories- Evolution

  • Early examples of management

  • Captains of Industry (Localized)

  • Advent of communication channels

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1890 1900 1910 1920 1930 1940 1950 1960 1970 onwards











Current and

future revolutions







Evolution Of Management Thought

Classical Approaches

Contemporary Approaches

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Classical Theories of Organization Management

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Classical Organisation Theories

  • Scientific Management: F. W. Taylor

  • Three major theories:

  • Bureaucratic Theory: Max Weber

  • Principles of General and Administrative Management: Henry Fayol.

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The Scientific Management Theory : F.W. Taylor

  • Propounded by Frederick Taylor in 1900.

  • Advocated application of scientific methods to improve productivity.

  • Optimisation of performance of work to achieve one ‘best’ method.

  • Simplified skilled jobs to unskilled ones.

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  • Identified three main reasons for soldiering:

  • Increase in productivity would require fewer workers.

  • Employee would receive same pay for higher productivity; faster pace would be set as standard.

  • Used rule of thumb and wasted time.

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Time Studies

  • Used stop watches to time workers and to determine best way.

  • Most mindless jobs could be scientifically done to increase productivity.

  • Better than ‘Initiative and Incentive’ method.

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Four Principles of Scientific Management

  • Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.

  • Scientifically select, train, and develop each worker rather than passively leaving them to train themselves.

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Four Principles of Scientific Management

  • Cooperate with the workers to ensure that the scientifically developed methods are being followed.

  • Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.

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  • Increased the monotony of the work.

  • Dehumanisation.

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Bureaucracy Theory: Max Weber

  • Proposed by Max Weber in 1909.

  • Recognized bureaucracy as logical structure for large organizations.

  • Operations characterized by impersonal rules.

  • Impersonalisation and focus on the system.

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Key Principles of Bureaucracy

  • Insistence on following standard rules.

  • Systematic division of work.

  • Principle of hierarchy.

  • Knowledge of and training in the application of rules.

  • Recording in writing of administrative acts, decisions and rules.

  • Rational personnel administration.

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  • Pragmatic approach.

  • Focus on the system rather than the individual.

  • Sense of equity and fair play.

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  • Organizations tend to become too procedure oriented.

  • May lead to inefficiency.

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Principles of General Management: Henry Fayol

  • Published ‘Administrative Industrielle et Generale’ in 1916.

  • Complementary to Taylor’s work.

  • Proposed 14 principles of management.

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Principles of General Management

  • Division of work .

  • Authority and responsibility.

  • Discipline.

  • Unity of command.

  • Unity of direction.

  • Subordination of individual interest to general interest.

  • Remuneration of personnel.

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Principles of General Management

  • Centralization.

  • Scalar chain.

  • Order.

  • Equity.

  • Stability of tenure of personnel.

  • Initiative.

  • Esprit de corps.

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Merits and Demerits

  • Principles have universal support.

  • No empirical evidence.

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Behavioral Theories of Organization Management

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Elton Mayo: The Hawthorne Experiment

  • Contribution in terms of HUMAN RELATIONS and MOTIVATION THEORY

  • Elton Mayo examined productivity and work conditions.

  • Mayo studied the variables affecting productivity.

  • Conducted Hawthorne studies at Western Electric Hawthorne Works in Chicago.

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The Hawthorne Experiments

  • Illumination Experiments

  • Relay Assembly Test Group

  • Interviewing Program

  • The Bank Wiring Observation Room

  • Experiments

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Conclusions From Elton Mayo’s Theory

  • Work is a group Activity

  • The social world of an adult is primarily patterned about work activity.

  • The need for Recognition, Security and the Sense of belonging is more important in determining worker’s morale and productivity than the physical conditions under which e works.

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  • Informal groups within the work plants exercise strong social controls over the work habits and attitudes of the individual workers.

  • The change from an established society in the home to an adaptive society at the work plant resulting from the use of new techniques tends continually to disrupt the social organisation of the work plant and the industry generally.

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RensisLikert: Research on Human Behaviour

  • Particular to Industrial Situation

  • He contends “The form of organisation that will make greatest use of human capacity is highly effective work groups linked together in an overlapping pattern by other similarly work groups.

  • Four different management styles.

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RensisLikert: Management Styles

  • The Exploitive –Authoritative system

  • The Benevolent –Authoritative system

  • The Consultative System

  • The Participative –Group system

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RensisLikert: Effective Management

  • Modern principles of Motivation

  • Employees perspective

  • Group linkages for Organisation

  • Supportive Relationships in a Group.

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Chris Argyris:Maturity-Immaturity Theory

  • Descriptive and multidimensional development process.

  • Examined industrial organizations to determine the effect of management practices on individual behavior.

  • Noticed seven basic changes in mature peple

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Chris Argyris: Seven Basic Changes

  • Tendency to develop state of being

    • active as an adult

    • independent as an adult

    • able to behave differently as an adult

    • deeply interested in things as an adult

    • able to develop a long term

    • perspective

    • able to have a control over one self

    • able to move to superior positions

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Immaturity-Maturity Continuum

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Chris Argyris: Impact of the Theory

  • Widespread worker apathy

  • Design of the Formal Organisation

  • Leadership style and Management control

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Vroom’s Expectancy Theory

  • Alternative to content theories

  • Provides with a very comprehensible, Valid and useful approach to understand motivation

  • Assumes that behavior results from the conscious choices among alternatives whose purpose is to maximize pleasure and minimize pain.

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Vroom’s Expectancy Theory

  • Individuals have different set of goals and can be motivated if they believe :

    • In positive corelation between the efforts and performance

    • Favorable performance will result in desired award

    • Reward will satisfy an important need

    • Desire to satisfy the need is strong enough to make effort worthwhile

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Vroom’s Expectancy Theory

  • The theory is based on three beliefs:




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Vroom’s Expectancy Theory

  • Vroom suggests that an employee’s belief’s about expectancy, Instrumentality and valence interact psychologically to create a force such that the employee acts in a manner that brings pleasure and avoid pain.

  • This can be calculated via the formula: MOTIVATION=VALENCE*EXPECTANCY


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Vroom’s Expectancy Theory

  • The formula explains job satisfaction, one’s occupational choice, the likelihood of staying in a job, and the effort one might expend in work.

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Maslow’s Theory of Motivation

  • Man’s motivational needs can be arranged in a hierarchical order

  • Once a given level of need is satisfied it no longer serves to motivate

  • The next higher level of need has to be activated to motivate the individual

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5 Levels of Need Hierarchy

  • Physiological Needs

  • Safety Needs

  • Love Needs

  • Esteems Needs

  • Self- Actualization Needs

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Hierarchy of Work Motivation


Esteem Needs

Title, Status, Promotion etc

Belonging Needs

Formal, Informal work groups

Security Needs

Seniority plans, union etc

Basic Needs


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McGregor – Theory X and Theory Y

  • Theory X represents the old style authoritarian type of management and is based on 3 primary assumptions of human beings.

  • Theory Y marks the point of departure for the new behavioral approach to management.

  • Hawthorne studies, early leadership research, emphasis on participation, and general humanistic philosophies would fall between Theory X and Y.

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Theory X Assumptions

  • The average human being has an inherent dislike of work and will avoid it if he can.

  • Because of their dislike for work, most people must be controlled and threatened before they will work hard enough.

  • The average human prefers to be directed, dislikes responsibility, is unambiguous, and desires security above everything.

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Theory X Assumptions

  • These assumptions lie behind most organizational principles today, and give rise both to "tough" management with punishments and tight controls, and "soft" management which aims at harmony at work.

  • Both these are "wrong" because man needs more than financial rewards at work, he also needs some deeper higher order motivation - the opportunity to fulfill himself.

  • Theory X managers do not give their staff this opportunity so that the employees behave in the expected fashion.

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Theory Y Assumptions

  • The expenditure of physical and mental effort in work is as natural as play or rest.

  • Control and punishment are not the only ways to make people work, man will direct himself if he is committed to the aims of the organization.

  • If a job is satisfying, then the result will be commitment to the organization.

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Theory Y Assumptions

  • The average man learns, under proper conditions, not only to accept but to seek responsibility.

  • Imagination, creativity, and ingenuity can be used to solve work problems by a large number of employees.

  • Under the conditions of modern industrial life, the intellectual potentialities of the average man are only partially utilized.

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Hertzberg Theory of Motivation

  • Job satisfiers were related to job content and are called the MOTIVATORS

  • Job dissatisfiers are related to the job context and are called the HYGIENE FACTORS

  • They together form Hertzberg’s Two Factor Theory of Motivation

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Hygiene Factors

  • Hygiene factors are preventive and environmental in nature

  • Equivalent to Maslow’s lower level needs

  • They prevent dissatisfaction but do not lead to satisfaction.

  • Hygiene factors do not motivate.

  • Eg: Salary, Working conditions, interpersonal relations, supervisor, company policy and administration.

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  • Beyond a certain level, hygiene factors cannot motivate.

  • Hertzberg’s ‘Motivators’ can be mapped to Maslow’s higher level needs.

  • E.g: Achievement, recognition, responsibility advancement.

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  • The key controversy: The methodology used.

  • His model oversimplifies complex human motivational process.

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Modern Theories of Organization Management

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Systems Theory — DefinitionsProposed by Hungarian biologist Ludwig von Bertalanffy in 1928

  • Systems are elements in interaction

  • Systems thinking

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Systems types : Open v/s Closed

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Systems Concepts

  • Systems are nested in a Hierarchy. Example?

  • Boundaries

    • Friction

  • All systems have inputs, processes, and output.

  • Goal Seeking

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    System Theory


    Recognized the importance of the relationship between the organization and the environment


    Does not provide specific guidance on the function of Managers.

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    Three Distinct But Closely Interrelated Theories

    • General Systems Theory (GST): interested in systems in general; family systems theory is an extension of this branch.

    • Cybernetics: a science of communication concerned with the transmission and control of information; it examines the communication and manipulation of information in various systems.

    • Information theory: focuses on the reduction of uncertainty which is achieved by the acquisition of information.

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    General Systems TheoryRef: Dr. Ronald J Werner

    • Proposed by Ludwig von Bertalanffy in 1936.

    • GST is also a process of theory construction which focuses on building universal concepts, postulates, and principles.

    • General Systems Theory (GST) is used to explain the behavior of a variety of complex, organized systems.

    • GST, as a worldview, emphasizes interrelationships between objects

    • 9 Level complexity of GST

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    Assumptions of General Systems Theory

    • GST Has Potential for Unifying Science: suggests that there are unifying principles in every discipline.

    • A System Must Be Understood as a Whole

      • Von Bertalanffy: promoted the notion that a family, or any system, is greater than the some of it's parts.

      • Lewin: the whole is different from the sum of it's parts.

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    Cybernetics Theory

    • For a system to work properly, it must have feedback andcontrol mechanisms.

    • Cybernetics is the study of feedback & control

    • Feedback & control mechanisms

      Capture information about system outputs

      Evaluate information using goal related criteria

      Use evaluative information as additional inputs

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    Contingency Theory

    • No one type of organizational structure or leadership style is most appropriate for all situations.

    • Which management style is most effective depends on the degree to which the group situation enables the manager to exert influence.

    • Managers must be trained to modify their roles to fit the situation.

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    Contingency Theory


    Identified major contingencies

    Argued against universal principles of management


    Not all important contingencies have been identified

    Theory may not be applicable to all managerial issues

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    • Interpretation of an organization differs with perspectives.

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