Q.7. Explain the Theories of Organizations.
Ans. Theories Of Organizations: -
In recent years a considerable body of writing has appeared which seems to deal with so-called “organizational theory” - a fact which would seem to be ipso facto evidence that such theories do indeed exist. However, as far as your authors can tell, there seems to be no difference between these “organizational” theories and theories of management and/or leadership.
Bennis (1966) has grouped current organizational theories into five categories:
(A) Exchange Theories
1. Barnard-Simon
2. Levinson
(B) Group Theories
1. Mayo
2. Likert
(C) Value Theories
1. Argyris
2. Blake and Mouton
(D) Structural Theories
1. Shepard
(E) Situational Theories
1. McGregor
2. Leavitt
3. Thompson and Tuden
Exchange Theories: -
According to Bennis, the essential element of exchange theories is that they view the operation of an organization as the establishment of a balance or an equilibrium between the individual workers and the formal organization. Both parties give something to the other and, in turn, receive something in return for what they have given. The Barnard-Simon theory emphasizes the economic aspects of the exchange. Thus, they view the organization as offering wages, services, and income to the individual as inducements to his participation, while the individual offers his services as a worker as his part of the bargain. Organizational equilibrium is attained when the utility of the inducements is equal to the utility of the contributions. That is, when both worker and organization feel they are getting value received for value paid, then equilibrium exists.
The Levinson theory of exchange is very similar, except that the model is based more upon motivational aspects of work rather than upon the economic aspects of work. Thus, the worker must feel that feel that he is getting as many psychological reward units from the organization as he is giving up in order for balance to exist.
Group Theories: -
The group theories are those which take the point of view that association and human affiliation are primary work motivators, and that the degree of cooperation and cohesiveness in one’s primary group is very critical to a successful organization. Mayo, of course, was probably among the first to emphasize the importance of viewing any organization as a social system, rather than as an economic system.
To Mayo, the essential element is the interaction between the organization and its members was that of cooperation. However, in order for such cooperation to take place, management had to be made aware of the importance of the social aspects of work and its influence upon the success of any organization. Likert’s theory is very similar in that it also emphasizes the importance of a cohesive primary work group, but Likert feels that cooperation between groups can be accomplished by what he has called “linking pins,” rather than by having to train or convince all of management of the importance of social work group forces. The linking pin concept simply means that there should be at least one member of every organization unit who is also a member of the organizational unit immediately higher in organizational hierarchy.
Value Theories: -
Several theories are predicated upon the notion that the values of the organization are generally quite different from the values held by the individuals within the organization, and that this conflict of value system is what is critical to determining the effectiveness and the stability of the organizational system. Argyris, for example takes the point of view that the basic values of organizations are “bureaucratic” values, and that these values are shallow and impersonal. They lead to mistrust, conflict, lowered efficiency and poorer overall effectiveness. Managers should be trained in the development of competence in understanding and appreciating new values-values which include the expression of individual feelings, personal trust, and personal concern. It is basically a very humanistic theory.
The Blake and Mouton managerial theory is substantially different. It seems rooted in the notion demonstrated by the Ohio State leadership studies that the two major dimensions of managerial “style” are (1) concern for people and (2) concern for production. According to Blake and Mouton, one can find eight different styles of management, as defined by the particular combination of these two dimensions. They suggest that optimal style involves maximizing both dimensions, and suggest further that such a style can only be developed through extensive organizational training.
Structural Theories: -
The essential element of the structural theory or point of view proposed by Shepard and other is that organizations should not be viewed as being mechanistic nature. An organization is not a machine and it is, therefore, inappropriate to apply mechanistic principles to it. Instead, organizations should be viewed as “living” organisms which are dynamic, adaptive to change and, in general, highly responsive to the world around them.
