Organizational and Management Theories

Modified: 6th Dec 2017
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Organizational behavior is the backbone of any business. It is used to study about the internal character and the external character of the people in the firm. “Organizational behaviour is the study of how individuals and groups perform together within an organization. It focuses effectively on managing individuals, groups, organizations, and processes” (Steven Stralser, 2004).

“Organizational behavior is convenient shorthand that refers to the numerous interrelated influences on and patterns of behaviour of people within organizations.” (Porter, Lawler and Hackman)

The culture of the organization can be measured in the terms of the individuals, group as well as from the whole organization. So for the purpose of analyzing the factors that affect the organization we need to analyze the factors that will affect the character of the individual, group as well as the whole organization. The organization will run in different ways inside. Most of the times this is formal and sometimes this is informal as well. Most of the problems residing in the company are based on the interpersonal problems. To over come the problems within the employees the company has managed to come up with few ideas.

Understanding Organizational Behavior

Evolution of management:

“Classical organization theory evolved during the first half of this century. It represents the merger of scientific management, bureaucratic theory, and administrative theory.” (David S. Walonick, Ph.D.)

Scientific approach of management: (1) & (2)

The scientific management was formulated by Frederick Winslow Taylor (often called “Taylorism”) in the years of late 19th century in order to increase the productivity in the firm. His theory had four basic principles: 1) find the one “best way” to perform each task, 2) carefully match each worker to each task, 3) closely supervise workers, and use reward and punishment as motivators, and 4) the task of management is planning and control.

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Most of the principles are applicable to almost all the organizations and it was widely accepted by the firms in that time. The main objective that stands with this theorem is to gain economic growth by improving the labor productivity. All the things needed to increase the productivity of the firm had been included in this theorem. Taylor noticed most of the problems with the workers in terms of the intelligence, creativity, talent, motivation, skills and more. These differences are the main reason for the low productivity in the firm. Taylor was a lathe operator and foreman. The scientific approach developed by the Taylor is the first to use the science to weigh the value of the individual workers. He said that taking the decisions of the industry just by the wish of the decision maker and the thumb rule should be omitted and the importance should be given more to the careful study of the process of taking the decision. More analysis has to be done before taking any kind of decision. It created new era in the late 19th century and the early 20th century. Most of the firms in those days accepted the theorem as the new way to increase the productivity rather than taking the decisions by using the old imposed methods. The Taylors theorem was first coined as the term “shop management” or “process management”. Later it was changed to the name “scientific management”. This method is implemented in most of the firms to reduce the wastage of the resources and increasing the productivity in the company. Most of the industries in those days were based on product development. There were fewer firms based on the services oriented. So it was well applicable to those time period/ but later it was falling in the negative side, as it was giving more importance to the part of improving the productivity that the human value.

For example, during one of Taylor’s own implementations, a strike at the Watertown Arsenal led to an investigation of Taylor’s methods by a U.S. House of Representatives committee, which reported in 1912. The conclusion was that scientific management did provide some useful techniques and offered valuable organizational suggestions, but it gave production managers a dangerously high level of uncontrolled power. After an attitude survey of the workers revealed a high level of resentment and hostility towards scientific management, the Senate banned Taylor’s methods at the arsenal. (3)

Certainly Taylorism’s negative effects on worker morale only added more fuel to the fire of existing labor-management conflict, which frequently raged out of control between the mid-19th and mid-20th centuries. Thus it inevitably contributed to the strengthening of labor unions, which was the opposite of any of Taylor’s own hopes for labor relations. That outcome neutralized most or all of the benefit of any productivity gains that Taylorism had achieved. Thus its net benefit to owners and management ended up being small or negative. It would take new efforts, borrowing some ideas from Taylorism but mixing them with others, to produce a winning formula.

Classical theory of management:

The classical theory of management has done most of its work on the flow of the control and the decision making capacity in an organization. It splits the organization into three levels based on the power they are having in changing the firm with their decisions. They are classified as top level management, middle level management, and Low level management.

The top level management comprises of the directors and other board members who have the authority to take the decisions of the firm by themselves. In might include any acquisitions to be made, opening new departments, expanding in the international markets, applying innovations to create a new product, closing productivity of existing products etc. All the strategies that are going to affect the firm in a major aspect will have its birth from the table of the top level management.

The middle level management is the supervisors who carry the decisions made by the top level to the bottom level. The middle level management is there to manage the decisions taken and to process those things to split the work among the different personnel across the organization.

The low level persons are the real workers of the firm. They are the ones who execute the plans and the decisions of the top level management and the middle level management. These bottom line workers are the labors who were working for the hourly wage or sometimes as contractors. Most of the individuals in this level are low thinkers and capable of doing things they got expertise in.

Hawthorne studies: (4)

The Hawthorne effect – an increase in worker productivity produced by the psychological stimulus of being singled out and made to feel important. Along with Frederick Taylor’s work, this study gave rise to the field known as “Industrial Psychology” as social group influences and interpersonal factors must also be considered when performing efficiency research such as time and motion studies.

The major finding of the study was that almost regardless of the experimental manipulation employed, the production of the workers seemed to improve. One reasonable conclusion is that the workers were pleased to receive attention from the researchers who expressed an interest in them. The study was only expected to last one year, but because the researchers were set back each time they tried to relate the manipulated physical conditions to the worker’s efficiency, the project extended out to five years.

Four general conclusions were drawn from the Hawthorne studies:

The aptitudes of individuals are imperfect predictors of job performance. Although they give some indication of the physical and mental potential of the individual, the amount produced is strongly influenced by social factors.

Informal organization affects productivity. The Hawthorne researchers discovered a group life among the workers. The studies also showed that the relations that supervisors develop with workers tend to influence the manner in which the workers carry out directives.

Work-group norms affect productivity. The Hawthorne researchers were not the first to recognize that work groups tend to arrive at norms of what is a fair day’s work; however, they provided the best systematic description and interpretation of this phenomenon.

The workplace is a social system. The Hawthorne researchers came to view the workplace as a social system made up of interdependent parts.

Maslow’s Hierarchy Of Needs

Abraham Maslow developed a theory of personality that has influenced a number of different fields, including education. This wide influence is due in part to the high level of practicality of Maslow’s theory. This theory accurately describes many realities of personal experiences.

Maslow has set up a hierarchy of five levels of basic needs. Beyond these needs, higher levels of needs exist. These include needs for understanding, esthetic appreciation and purely spiritual needs. In the levels of the five basic needs, the person does not feel the second need until the demands of the first have been satisfied or the third until the second has been satisfied, and so on. Maslow’s basic needs are as follows:

Physiological Needs

These are biological needs. They consist of needs for oxygen, food, water, and a relatively constant body temperature. They are the strongest needs because if a person were deprived of all needs, the physiological ones would come first in the person’s search for satisfaction.

Safety Needs

When all physiological needs are satisfied and are no longer controlling thoughts and behaviours, the needs for security can become active. Adults have little awareness of their security needs except in times of emergency or periods of disorganization in the social structure (such as widespread rioting). Children often display the signs of insecurity and the need to be safe.

Needs of Love, Affection and Belongingness

When the needs for safety and for physiological well-being are satisfied, the next class of needs for love, affection and belongingness can emerge. Maslow states that people seek to overcome feelings of loneliness and alienation. This involves both giving and receiving love, affection and the sense of belonging.

Needs for Esteem

When the first three classes of needs are satisfied, the needs for esteem can become dominant. These involve needs for both self-esteem and for the esteem a person gets from others. Humans have a need for a stable, firmly based, high level of self-respect, and respect from others. When these needs are satisfied, the person feels self-confident and valuable as a person in the world. When these needs are frustrated, the person feels inferior, weak, helpless and worthless.

Needs for Self-Actualization

When all of the foregoing needs are satisfied, then and only then are the needs for self-actualization activated. Maslow describes self-actualization as a person’s need to be and do that which the person was “born to do.” However, it is not always clear what a person wants when there is a need for self-actualization.”

(from Psychology – The Search for Understanding

by Janet A. Simons, Donald B. Irwin and Beverly A. Drinnien

West Publishing Company, New York, 1987)

The hierarchic theory is often represented as a pyramid, with the larger, lower levels representing the lower needs, and the upper point representing the need for self-actualization – as below:

The above theories give rise to the necessity of Human relations and team dynamics which play a major role in the successful performance of a company.

Human Relations: (5)

Human relations can be defined as the cordial atmosphere in an organization in which people practice the art of living in such a way that they communicate, act, interact and transact in a cordial manner recognizing each others needs, views, values and temperaments so that every interaction and transaction which takes place in an organization would have concern for each others’ interests and feelings leading to better motivation and morale of people at all levels in the organization. The business organizations of today, and days to come, must employ and manage educated and enlightened human beings in their work force, in place of traditional, illiterate and less ambitious man power.

Team dynamics: (6)

Team Dynamics are the unseen forces that operate in a team between different people or groups. Team Dynamics can strongly influence how a team reacts, behaves or performs, and the effects of team dynamics are often very complex.

It is the responsibility of the manager to look into the group regarding the communication issues. The managers have to make sure that there are no personal disputes in the group and the communication mode is perfect in making the decisions within the group. And the authority given for a person is used in the right way and has never been misused. The responsibility to make sure that the ideas of any individuals are freely opening in the group resides with the manager. The group is made of individual characters. Hence the dispute between any two of the characters will lead to the destruction of the whole team. The team is made up of different people, different gender, from different location so they have to develop the skills to learn from each other. They should find the opportunity in the difficult times. That’s the real way to learn the things. People from different location can learn each others way of living, way of habit, their cultures and more. Even there may be difference in the way of learning. So, all the things will be helpful in a team.

The size of the team will also sometimes influence the way of attraction or the way that is causing the dispute between people. If the size of the team is too small in a single digit, then managing that group is somewhat easier than the other.

Some of the people in a group will actively participate in all the works of the group. But others used to avoid such things. They won’t actively participate in the team events.

Some of the positive aspects about the team dynamics are as follows:

This drags others in the team to get into the discussion, So that the team friendliness increases. Will increases the social feel to the group and the people start taking the things at ease. Remove their hesitation to play and having fun with other. And that kind of friendship asks them to be more informal and make their minds free of the stress. So the people will not have to expect the motivation and encouragement from any of the formal persons or through the beneficiary acts. Their team members are there to please them at the needed time.

But it has some negative effects too. If two people were friends in a group, then the other people might find it difficult to get between them. So eventually there will be two sub groups. Most of the information passed through these groups is not passed to other group. Social culture within them gets spoiled and the people are not actively participating in each others activities. The decision making of the group is to be done without the intervention of one of the groups. The miscommunication within the team will lead to the poor performance from that team. At the time of problem the members of the group have to find the solutions as a team. This will reduce the processing time of the problems as well as bring out lots of alternative solutions for a single problem. Likewise the solution may be innovative and smart and sometime it will reduce the amount of resource we need to reduce. Thus it reduces the cost of implementing the solution.

Let us consider an example to understand team dynamics:

Suppose in a small team of six people working in one office there are two people who have a particularly strong friendship. This friendship is a “natural force” that may have an influence on the rest of the team, and can be manifest in various ways, either positively or negatively.

The positive effect of a strong friendship in a team might be:

The friends communicate a lot together…

…which naturally results in other members being drawn into the discussion

…which results in a good ‘social’ feel to the group

…which makes people enjoy being in the group

…which improves motivation and commitment

The negative effect of a strong friendship might be:

To cause the other four people to feel excluded…

…which means they are less likely to include the two friends in decision making

…which means that there are likely to be two sub-groups

…which means that information may not flow across the whole group, but only within the subgroups

…which means that miscommunication may lead to misunderstanding and poor collective performance

Case Study:

To discuss the organizational structure and its patterns lets look into the following case study on Wipro Technologies

Wipro Technologies is one of the largest IT services firm in India that has been started in the year of 1985, by Azim Premji. The Wipro Technologies is the subsidiary of Wipro limited started first as the company that produced the sunflower oil and 787 laundry soap.

The IT services of the Wipro are being providing its services to the companies in Europe, America, Japan and almost all the parts of the world. The company majorly operates in three segments such as

  1. Global services
  2. India and Asia pacific services
  3. Consumer care and lightning

The company is having it services in almost all the parts of the business such as health care, insurance, banking, military, hospital, mobile, finance, media, business management and more. The services provided by the Wipro are as database management, customer relationship management, business consulting, business intelligence, network management, testing services, enterprise application development, security applications and more.

Wipro is one of the IT firms that is giving importance to the innovations of the tag line Wipro – Applying Thought

Wipro is having more than 40 “centers of excellence” that provide solutions to the number of industries across the nation. With its unmatched business solutions through the process excellence, service delivery innovations innovation, Wipro is the first company to receive the CMMI level 5 in the software services company. And also to receive the IEEE software process award by a company that is outside of the United States.

Wipro has strong faith in the innovation and according to them the innovation will act as a significant partner in developing the business and achieving high goals.

The top management of the Wipro was keen in looking for the innovation within the organizations. The top management believes that to become top most in the IT servicing firms, it has to make lots of changes in the innovative way. Some of the innovations made within the company as per the recent trends are introduction of home networking, wireless communications and workplace collaboration. Wipro is the first company to make the multiprocessor systems in India and making mini computer along with the compiler that was written in India. In the later years the company made its step into the IT related services. By the years of 1990’s it became one of the notable firm in providing the IT related services.

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After the Infosys and the Tata consultancy services, Wipro is the major software exporter of India. After globalization started making impact on the world market, the IT service providing in India got a boom. Wipro was one among them to take their ship in that wave and was successful eventually. However, just like any other organizations, Wipro has its own flaws and was not an exception, where the employees face the same challenges as any other IT firm would face.

Below are some of the common problems faced by the individuals in a software firm:


Whenever the software industry is in need to get the status of the multi national company they will have to show some internal status to get that MNC grade. For that they have to implement their offices for development as well as marketing in other nations also. Likewise they have to show the certain number of employees working in their company. Accordingly, more than the required number of employees will be employed for the projects. As some of the employees would not be assigned to any of the projects, they will be idle and this process is called being on “Bench”. During the bad economic times and recession they will terminate the employment of those who are not assigned to any of the send out the persons who were not assigned with any of the projects. The job of a person in the MNCs is not safe. But that person is provided with the huge salary.

Technical up gradation:

Most of the people in the software firm fail to update themselves with the software field needs updating frequently. Without the up gradation of knowledge no one can survive in the field. Since it is the emerging domain, employees have to keep themselves well prepared. The firms will keep on training the persons with new technology and keep on appraising on the basis of their knowledge. The persons showing poor result during the appraisals would be de-promoted or thrown out of the firm at any time. So, unless and until the employees keep themselves updated with the growing needs, their jobs are in danger.

Inadequate Time span:

The employees are getting less time to finish their projects and the companies are looking for cutting the unwanted cost and to gain more. The employees are stressed more to accomplish the tasks. So the software engineers are expected to put more hours to work which not only affects the potential of the individuals but also the work-life balance of ones life.

Lack of training:

Most of the people in the software firm are not getting enough training when they are placing them in new project with new technology. They are supposed to learn all those sort of new technologies by themselves. So their work will not have perfection.

High stress:

It is not the kind of job for the people who are not capable for solving their solving their stress. Because the software domain jobs are highly payable, it also produces more stress in you than other jobs. People work on their computers for longer periods of time without any movement around and cannot be felt relieved from stress. Though the entities are concentrating on the stress management programs, employees are not able to find value in them, as at the end of the day the project work is your first responsibility.

Recommendations for effective Management for the above discussed problems: (6)

Developing effective management skills to deal with specific challenges and problems of each organization is the urgent needs of many businesses and organizations in the global competitive environment, rapid changing of technology and environment. The new tendency of training and development of successful organizations over the world today is developing effective skills in dealing with specific challenge of their own organization to reach their own mission and objectives in the new organization that characterized by networked, flat, flexible, diverse, global organization.

An effective management should have the following skills.

Creative Problem Solving Skills:

This includes identifying the cause of the problem, analyzing the problem and developing and implementing a creative and sensible approach for the problem

Communication Skills:

The effective communication should ideally include listening, presentation and report writing skills where the employees should be provided adequate training and awareness on.

Conflict Management Skills:

Management should capable of identifying any sources of conflict, understanding the style of conflict resolution and should be able to choose the best strategy for dealing the conflict

Self-Awareness and Improvement:

The management should emphasize on the concept of self-management and the effectiveness of self-management. This can be done by developing a holistic thinking and understanding the emotions in the work place of the employees

Traditional versus Contemporary Organizational structure and Culture: (7)

Traditional organizations emphasize a strict division of labor, top-down decision-making, and extensive rules and procedures where as on the other hand the contemporary design flattens the traditional pyramid structure, facilitates the flow of information to all parts of the organization and reduces response time to external and internal demands. It is to be noted that the traditional organization is a pyramid with a president at the top, a few vice presidents, and layers of management and the majority of employees at the bottom. Jobs are specialized, and information and authority flow from higher to lower levels.

Wipro Technologies has been following the traditional organizational structure when it has first started with the production of sunflower oil and laundry soaps, until it entered the IT market. However, as the times passed by, due to the expansion of the firm in to global market with a variety of services, it chose to follow the modern organizational structure to grow as per the industry standards.

In the modern times, especially for an organization like Wipro where it has emerged in to the global markets, the contemporary or the modern organizational structure suits the best as it is in par with the changing times.


Thus, it is very evident that all the organizational and management theories put forward are to help the organizations to be successful in terms of their individual employees, groups, management and environmental changes. The organizations choose the type of organizational structure to be followed, either modern or traditional depending on the vision, industry and the market approach of the firm. It is no be noted that the individual employees contribute to the major part of the firm’s success and therefore the management should always bear in mind the human relations and team dynamics with in the organization while effectively managing the groups.


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