Classical And Contingency Theories For Organizational Design

Classical organization theory evolved during the first half of this century. It represents the merger of scientific management, bureaucratic theory, and administrative theory.

The contingency approach, founded in the 1970’s differs from the behavioral approach. “Examining various situational variables is central to understanding leadership in organizations, according to the contingency theorist” (Stojkovic, Klofas & Kalinich, 2012). Fiedler’s Contingency Model is one of those contingency theories.

It is depicted that modern organizations tend to incorporate the aspects of the open systems with those of the natural and rational perspectives. Examples include the institutional, transaction cost, and the contingency and the contingency theories. Organizations adopt the open system that accommodates the other two theoretical perspectives for it to exist (Davis & Scott, 2006). These organizations tend to have structures that are based on the processes, the products, and the function.

It is evident that both positive and negative aspects of both approaches exist in the current climate, and from a basic understanding it can be drawn that varying aspects of each approach can nullify the negatives of the other in some manner. Consequently I believe the works of the Burns and Stalker (as cited in Grey, 2012) should be considered, in which it is suggested organizations can be seen as mechanistic and organic (roughly translated to bureaucratic and post-bureaucratic) depending on contingencies. This contingency approach would see organizations exhibiting differing behaviors based on the environmental factors that they work within and the assets that they have so that they may better suit the needs of workers, employers, consumers

The Contingency theory, developed in 1950s, argues that there is no 'one best way ' to structure an organization and we face different possibilities when determining how it should be structured and how it should be managed. Successful organizations adopt structures that are an appropriate response to a number of variables, or contingencies (Enoch, 2006).

Weber’s bureaucratic approach focuses on the importance of hierarchy by putting great emphasis on the use of rules, procedures and making impartial personnel decisions when managing. He put great emphasis on the jurisdiction, explaining that work should be “divided according to type and purpose” staying within the correct working unit just as the organization’s rules and laws would state (Milakovich, et. al., 2013, p. 146). A hierarchy would be established with a chain of command clearly identifying a system of super- and

First, the contingency paradigm, a closed system, considers uncertainty and how changes in the environment affect the internal aspect of the firm (Tolbert & Hall, 2009, p. 162). The elements can include items such as size and technology, as it relates to customer demand to name a few. Another example might be that a small firm would function better in a centralized fashion verses a large firm that would benefit more from a decentralized method, whereas, fast paced environments may require high technology and slow paced industries do not. The point here is that there is not one best practice for leading or structuring a firm, hence, the company should fit within the environment depending on internal and external factors (Long, 2014). It is important to note, hhowever, coordination can become problematic in this theory. For illustration, let’s say some environmental factor cause a company to change structure from a simple structure to a more complex one. Problems with coordination in the separate departments could present itself as communication and interaction is vastly different. The key here is for the firm to adapt to the environment, as well as, integrate the activity to make a seamless whole and reduce uncertainty. In fact, the best way to organize should be contingent upon

“Management is the planning, organizing, leading, and controlling of mankind and other resources to achieve organizational goals efficiently and effectively (University, p 4 2011)”. The greatest achievement of an organization is to provide goods and services that customer’s value. The managerial department of an organization has the power to determine the performance of the employee’s, which directly affects the quality of the service or product that is being supplied to the customer. “Managerial tasks are essential for effective management, which involves planning, organizing, leading, and controlling (University, p 6 2011)”. Planning is the process of identifying the suitable goals of an organization and how they will be implemented in the company. Organizing is the procedure that determines the departments of an organization. When departments have been established the next step is to decide who will work best at a particular job. The development of organization inside a business will form the organizational structure for the company. “Leading is the ability to inspire and organize individuals to work as a team to complete the goals of the business in an efficient and effective manner (University, p 9 2011)”. Controlling is being able to assess the procedures of a company and eliminate or change any strategy plans that are not showing high- performance levels. Controlling may consist of monitoring

Thus, strategy changes are inevitable in all organizations leading to structure and designing changes. Along with the changing policies the theories of organizational behaviour keep evolving. Hence we have traditional classical theories on one hand while modern contingency approaches on other hand. In this essay, I will explore and discuss classical and contingency theories along with their contributions and limitations with the help of contemporary organizational practices of businesses like McDonalds and Walgreen. The conclusion will be the result of evaluation of various theories and thus answering the question which is the best structure and designing approach for an organization?

In the early 1900’s, some of the first ideas were thrown together to allow an organization to flourish in the upcoming modern era. The first theories were known as scientific and classical management, which focused on three separate theories from Frederick Taylor, Henri Fayol, and Max Weber. The three theories have similar ideology in the fact that organization is driven by management authority, employees only source of motivation is money, and organizations are machinelike with employees making up the parts of the machine (Papa, Daniels, & Spiker, 2008). In the Prophecy Fulfilled case study, Mary Ann (senior auditor) takes on a management role with subordinates similar to that of Weber’s Bureaucratic Theory (Daniels 1987, pp. 77-78).

According tot the Administrative Management Theory, management is the process of getting certain tasks completed through the use of people. In this theory developed by Henri Fayol, he believes that it was very important to have the use of a multiplied of people instead of just relying on one person alone. Henri Fayol is known today as the “Father of Modern Management”, his theory has shaped what is know today as the Administrative Model, which relies on Fayols fourteen principles of management. These principles have been a significant influence on modern management; they have helped early 20th century manager learn how to organize and interact with their employees in a productive way. Fayols principles of management were the ground work in which his theory was formed. He believed highly in the division of work throughout a project and within the project he believed that the task at hand had to be done with a certain level of discipline in order for the division of work to be able to run smoothly without error.

Early management theories adopted by such proponents as Henri Fayol, Mary Parker Follett and Max Weber are relevant in todays’ world. In this essay I am going to discuss about all three theorists and how their theories are still relevant for managers in the 21st century in meeting the challenges. In the classical approach to management there are three branches under it. They are, scientific management, administrative principles and bureaucratic organisation. Henry Fayol and Mary Parker Follett developed theories for administrative principles and Max Weber developed a theory for bureaucratic organisation (Schermerhorn et al. 2014, p.36). First we will be going through Henri Fayol and then Mary Parker Follett as they both made theories

Henri Fayol (1841-1925), was ‘’famous for the classical school of management, which emphasises command and control’’. (Robinson, 2005) He is deemed to be one of the founders of general management; also referred to as the administrative theory and later on becoming known as ‘Fayolism’.

Organization structure developed from the ancient times of hunters and collectors in tribal organizations through highly royal and clerical power structures to industrial structures and today’s post-industrial structures. According to Lawrence B.Mohr, Taylor, in the early theorists of organizational structure, Taylor, Fayol and Weber saw the importance of structure for effectiveness and efficiency, assumed without the slightest question that whatever structure was needed, people could fashion it. Organizational structure is a matter of choice.

Management is one of the most important human activities and has critical impact on life, growth, development or destruction of an organisation. In an organisation, managers with any rank or status should understand their basic duties i.e. maintaining a sustainable conductive environment where people can fulfil their commitments and objectives through collaborative approach. (Akhtar, 2011) A manager is responsible to achieve the business’s goals, visions and objectives by planning, organising, leading and controlling. Dubrin (1994) stated that in every organisation each member of staff must plan, organise, make decisions, and control the resources they need to accomplish the results expected