Neoclassical theorists recognized the importance of individual or group behavior and emphasized human relations. Based on the Hawthorne experiments, the neoclassical approach emphasized social or human relationships among the operators, researchers and supervisors (Roethlisberger - Dickson, 1943). It was argued that these considerations were more consequential in determining productivity than mere changes in working conditions. Productivity increases were achieved as a result of high morale, which was influenced by the amount of individual, personal and intimate attention workers received.
2. 3.2. Principles of the neoclassical approach
The classical approach stressed the formal organization. It was mechanistic and ignored major aspects of human nature. In contrast, the neoclassical approach introduced an informal organization structure and emphasized the following principles:
The individual: An individual is not a mechanical tool but a distinct social being, with aspirations beyond mere fulfillment of a few economic and security works. Individuals differ from each other in pursuing these desires. Thus, an individual should be recognized as interacting with social and economic factors.
The work group: The neoclassical approach highlighted the social facets of work groups or informal organizations that operate within a formal organization. The concept of 'group' and its synergistic benefits were considered important.
Participative management: Participative management or decision-making permits workers to participate in the decision making process. This was a new form of management to ensure increases in productivity.
Modern theories tend to be based on the concept that the organization is a system, which has to adapt to changes in its environment. In modern theory, an organization is defined as a designed and structured process in which individuals interact for objectives (Hicks - Gullet, 1975). The contemporary approach to the organization is multidisciplinary, as many scientists from different fields have contributed to its development, emphasizing the dynamic nature of communication and importance of integration of individual and organizational interests. These were subsequently re-emphasized by Bernard (1938) who gave the first modern and comprehensive view of management. Subsequently, conclusions on systems control gave insight into application of cybernetics. The operation research approach was suggested in 1940. It utilized the contributions of several disciplines in problem solving. Von Bertalanffy (1951) made a significant contribution by suggesting a component of general systems theory which is accepted as a basic premise of modern theory.
Some of the notable characteristics of the modern approaches to the organization are:
a systems viewpoint, a dynamic process of interaction, multileveled and multi-dimensional, multi-motivated, probabilistic, multidisciplinary, descriptive, multivariable and adaptive.
Modern understandings of an organization can be broadly classified into: the systems approach, socio-technical theory, and a contingency or situational approach.
The systems approach
The systems approach views organization as a system composed of interconnected - and thus mutually dependent - subsystems. These subsystems can have their own sub-subsystems. A system can be perceived as composed of some components, functions and processes (Albrecht, 1983). Thus, the organization consists of the following three basic elements (Bakke, 1959):
Components: There are five basic, interdependent parts of the organizing system, namely:
the individual, the formal and informal organization, patterns of behavior emerging from role demands of the organization, role comprehension of the individual, and the physical environment in which individuals work.
ulinking processes: The different components of an organization are required to operate in an organized and correlated manner. The interaction between them is contingent upon the ulinking processes, which consist of communication, balance and decision-making.
Communication: is a means for eliciting action, exerting control and effecting coordination to ulink decision centers in the system in a composite form.
Balance: is the equilibrium between different parts of the system so that they keep a harmoniously structured relationship with one another.
Decision analysis: is also considered to be a ulinking process in the systems approach. Decisions may be to produce or participate in the system. Decision to produce depends upon the attitude of the individual and the demands of the organization. Decision to participate refers to the individual's decisions to engross themselves in the organization process. That depends on what they get and what they are expected to do in participative decision-making.
Goals of organization: The goals of an organization may be growth, stability and interaction. Interaction implies how best the members of an organization can interact with one another to their mutual advantage.
It is not just job enlargement and enrichment, which is important, but also transforming technology into a meaningful tool in the hands of the users. The socio-technical systems approach is based on the premise that every organization consists of the people, the technical system and the environment (Pasmore, 1988). People (the social system) use tools, techniques and knowledge (the technical system) to produce goods or services valued by consumers or users (who are part of the organization's external environment). Therefore, equilibrium among the social system, the technical system and the environment is necessary to make the organization more effective.
3. 3.3. The contingency or situational approach
The situational approach (Selznick, 1949; Burns - Stalker, 1961; Woodward, 1965; Lawrence - Lorsch, 1967) is based on the belief that there cannot be universal guidelines, which are suitable for all situations. Organizational systems are inter-related with the environment. The contingency approach (Hellriegel and Slocum, 1973) suggests that different environments require different organizational relationships for optimum effectiveness, taking into consideration various social, legal, political, technical and economic factors.
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4. fejezet - 4. Structural characteristics of organizational forms
An organization is a general category which comprises production companies, healthcare and educational institutions and service providers as well as all those organizations which have specific and well-marked characteristics.
What should the structure of an organization be like? Is it good if all organizations are uniform? It would be easy for the leaders if the structure and the operation of all organizations were the same in all aspects. Thus, organizations would become recognizable, predictable and constant. Plato's mechanical paradigm envisions the world based on the operation of a machine, which always obeys rational, simple and eternal laws (Levie, 1993). In contrast with this, the organic paradigm considers the world similar to the human body, which allows non-rational behavior as well. This latter approach interprets man-made organizations differently from the former one. Organizations survive as long as they can react to the stimuli of the environment, can adapt to the changes of the environment and can acquire those resources from the environment, which are necessary for their survival. These evolution systems ensure their survival making decisions and via continuous communication with their environment (Baracskai, 1988). Barnard defines an organization as a system of two or more people's intentionally coordinated activities or efforts (Barnard, 1948).
Of course, several issues come up regarding organizations, such as division of labor, powers and responsibility, organizational scheme, the regulated state of discipline relationships and the forming of group structures. Organizations are complex systems and can be characterized and described with multiple factors.
4.1. ábra - Figure 1.: Classification of organizations by scale (based on Dobák, 1997)
The structural features are criteria which can be used to describe and demonstrate the structure of an organization. Dobák writes about four different structural features: division of labor, division of powers, coordination and configuration (Bakacsi et. all., 1988). In contrast with that, Kelly and Grimes denote the following internal structural features: structural scheme, regulation of powers and responsibilities, delegation, hierarchical relationships and decentralization. Besides all these features, when demonstrating organizational forms, one can also often encounter the issue of discipline relationships as an aspect of structural evaluation as well (Kelly – Grimes, 1993).
An organizational scheme is a figure or a line diagram, which displays the division of powers, the hierarchical relationships, the system and levels of hierarchy and the division of labor within an organization (Figure 2.).
4.2. ábra - Figure 2.: One dimension structure(based on Dobák, 1997)
The scheme also denotes the managerial functions and it also makes the group structure of the organization deductible. The organizational scheme also allows the members of the organization to see and understand the position and the role of each individual and unit within the company structure. They can see how each unit is connected to other units. The scheme also describes the official communication and information lines and routes and how the organization can be expanded in its breadth and depth. Of course, this scheme, which is often called a configuration, is a secondary structural feature since its function is to describe and formally display the structure, which has already been formed along different principles.
An organizational scheme is the result of a long-lasting development process. Division of labor or specialization is one of the most basic organization-forming factors. Even the simplest organizations have division of labor in some form or at some level. Division of labor divides the activities of an organization into well-defined partial activities or tasks and the different organizational units, groups and divisions are established to perform these tasks as efficiently as possible. Samuelson thinks that specialization is nothing else but acquiring and performing the knowledge, skills or a definite section of the activities. Samuelson thinks that the greatest economic success can be achieved when everybody utilizes their most valuable knowledge and everybody does what they are the best at (Samuelson, 1988). Torgersen thinks division of labor helps the increase of productivity in different ways. The simpler, well-structured and repetitive tasks improve the performance and the results by themselves. Training specialists is simpler and takes shorter time, the professional skills of a narrower field are easier to master and the training costs are lower as well. Also, auditing is simpler and the specific tools can be utilized more intensively (Torgerson, 1979).
How far can one go regarding division of labor? What restricting or negative effects limit the specialization? (Figure 3.)
Substitutability, monotony boredom and coordination difficulties should be mentioned as effects which limit exuberant organizational specialization. The substitutability of specialists is more difficult in a prosperous period since their knowledge is limited to a narrow field. The stronger the division of labor within an organization and the narrower the field the members of the organization must be specialized in, the more difficult their substitutability is. In many cases, organizations have to train their own specialists since the specialists with general skills are not suitable for these specific tasks any more (Figure 4).
4.4. ábra - Figure 4.: Division of labor-two dimensional organization (based on Dobák, 1997)
The tasks given to organizational units or members are smaller, more specific and simpler activities which require a narrower field of knowledge, less independence, less problem-solving and creativity (Berki – Berde, 1999).
Coordination is a structural factor parallel to organizational division of labor. The more diverse an organization is due to division of labor, the more important is the role of coordinating the activities of each organizational unit. That is, the structure resulting from the division of labor can only work through the coordination of the connected specialized units. Beyond a certain point, the coordination costs may increase faster than the savings coming from specialization. Any exuberant specialization within an organization is restricted by the efficiency of the operation (Figure 5.).