Neoclassical Organization Theory
The organization was seen by the classical authors as a machine and human beings as components of that machine. They were of the belief that the organization's effectiveness could be enhanced by making human beings successful. Specialization and organization of events were their focus. Most of the authors placed emphasis on top-level productivity and a few on lower organizational levels. That is why streams have been created by this theory; scientific leadership and administrative leadership. The scientific leadership group was primarily concerned with the activities to be carried out at the organizational level.
Henry Fayol learned the principles and roles of management for the first time. Some writers, such as Gullick, Oliver Sheldon, Urwick, called the issue where it is important to define activities to achieve organizational goals. To make the functions effective, grouping, or departmentation was also considered necessary. Since this philosophy revolves around the structure, it is also called a structural organizational theory.
The conventional theory is the Classical Theory, where more focus is placed on the organization rather than the workers working therein. The organization is regarded as a machine according to classical theory, and human beings as various components/parts of that machine.
Classical Organizational Theory is very important as the first step toward a systematic analysis of organizations.
It deals mainly with the morphology of formal organizations and also treats one as a machine and the workers as components of the machine.
Therefore each employee employed in it must become productive in order to improve the organization's efficiency.
What is Classical Organization Theory?
The traditional Theory where instead of emphasizing more on the employees, more emphasis is on the Organization is known as the Classical Organization Theory. In this Theory, it is said that the Organization is a machine wherein the humans are different components or parts of that machine. Therefore, it is considered by many experts that the Classical Theory of Organization is inadequate when it comes to dealing with the complexities in the functioning of the Organization as it focuses just on the Organization.
According to the Classical Organizational Theory, humans are considered just as the means of production. The Classical Organizational Theory most primarily deals with formal Organizations. In order to increase the efficiency of the Organizations in accordance with this Theory, the efficiency of the working employees must be increased.
Classical Organization Theory- 6 Pillars
The 6 main Pillars or elements of the Classical Organizational Theory are listed below-
Division of Labor- Work must be divided in an Organization for the improvement in the performance of individual workers and in order to obtain a clear specialization. The company must divide work in order to achieve a specific specialization in order to enhance the efficiency of individual employees.
Departmentalization- Different departments must be created for different activities and jobs which would allow the Organization to minimize its costs and facilitate administrative control. The company needs to organize into divisions different tasks and jobs. This enables expenditures to be reduced and administrative control facilitated as well.
Coordination- It should be ensured by the Organization that there is harmony among diverse functions. This would provide unity of actions as it allows the arrangement of group efforts in an orderly manner. The company must guarantee peace between the different functions. This allows the collective effort to be organized in an orderly way that offers unity of action when serving a common goal.
Scalar and Functional Processes- The series chain of superior and subordinate relationships from the top to the bottom of the Organization is known as the scalar chain. It helps in the facilitation of the delegation of the authority, communication, feedback, and remedial action. The sequence of superior-subordinate relationships in an organization from top to bottom is a scalar chain. It encourages the delegation, contact or input, of authority or order, and also remedial action or decision.
Structure- Structure is the conceptual relationship in an organization between functions. In addition, for efficient goal achievement, these functions are organized. In an Organization, the logical relationships of functions constitute the structure of the Organization. These functions are then arranged in order to accomplish the effective objectives.
Span of Control- This includes the total number of subordinates that can be effectively supervised by a manager. This is the number of subordinates that can be efficiently overseen by a boss.
There have been critiques of classical theory on many levels.
Criticisms of the Classical Organizational Theory -
It takes a rigid view of organizations as well as a static one.
An organization is regarded by most classical theorists as a closed structure with no interaction with its environment.
More on the systemic and even the technical aspects of organizations, the theory focuses.
It is founded on assumptions that are oversimplified and mechanistic.
The emphasis of Classical Theory, in simple terms, is on an organization without individuals.
Therefore in dealing with the complexities of the structure and operation of an organization, many experts consider it insufficient.
In addition, it gives an imperfect description of human actions in corporations.
The new-classical approach is contained in two points:
The organizational situation should be perceived in social, economic, and technological terms
The social mechanism of group behavior can be understood in terms of the clinical method analogous to the doctor's diagnosis of the human body.
Formal and informal modes of organization are seen as significant in this theory. The other contribution of new-classical thinkers is the behavioral approach adopted in this theory. The foundations of classical theory, in other words. Job division, department, coordination, and human actions were taken as given, but these postulates were considered to be changed by individuals acting individually or within the informal organization context.
FAQs on Classical Organization Theory: Key Principles
1. What is the Classical Organization Theory in simple terms?
The Classical Organization Theory is one of the earliest management theories. It views an organization as a machine and its employees as the parts of that machine. The primary focus is on achieving maximum efficiency through a clear organizational structure, specialised tasks, and formal rules. It mainly consists of two branches: Scientific Management, which focuses on tasks, and Administrative Management, which focuses on the overall organization.
2. What are the main principles of the Classical Organization Theory?
The theory is built on several key principles, often referred to as pillars, which are designed to create an efficient and structured organization. These include:
- Division of Labour: Breaking down large jobs into smaller, specialised tasks to increase efficiency.
- Scalar Chain: A clear line of authority from the top management to the lowest rank, ensuring orders and communication flow smoothly.
- Unity of Command: The principle that an employee should receive orders from only one superior.
- Span of Control: The idea that a manager should have a limited number of subordinates to supervise effectively.
- Departmentalisation: Grouping similar activities and functions into departments to maintain coordination.
- Authority and Responsibility: The concept that managers have the authority to give orders and are responsible for the outcomes.
3. Can you give a real-world example of a classical principle in action?
A great example is the division of labour on a fast-food assembly line. Instead of one person making an entire burger, one employee grills the patty, another adds the toppings, a third wraps it, and a fourth handles the payment. Each worker becomes highly efficient at their specific task, which speeds up the overall process, just as the classical theory suggests.
4. Why did the Classical Organization Theory receive so much criticism?
Despite its focus on efficiency, the classical theory was heavily criticised for several reasons. Its main weaknesses include:
- Ignoring the Human Element: It treats employees like cogs in a machine, overlooking their social and psychological needs, which can lead to low morale and motivation.
- Being Too Rigid: The theory works best in stable and predictable environments but is not flexible enough to adapt to change.
- Viewing the Organisation as a Closed System: It largely ignores the influence of the external environment, such as market competition, technology changes, and social factors.
- Oversimplified Assumptions: It assumes workers are only motivated by economic incentives, which is a very narrow view of human behaviour.
5. How is the Classical Theory different from the Neo-Classical Theory?
The Neo-Classical Theory was developed to address the shortcomings of the Classical Theory. The key difference is its focus. The Classical Theory concentrates on the 'anatomy' of the organisation—its structure, rules, and hierarchy. In contrast, the Neo-Classical Theory focuses on the people within the organisation, emphasising human relations, employee behaviour, and informal group dynamics.
6. Could a modern company operate successfully using only classical principles?
It would be very difficult for a modern company to succeed using only classical principles. While concepts like a clear hierarchy and division of labour are still useful, today's business world demands flexibility, innovation, and employee engagement—all areas where the classical theory is weak. A purely classical approach would likely struggle with employee motivation, customer responsiveness, and adapting to market changes. Most successful modern companies blend classical principles with more human-centric approaches.
7. Are principles from Classical Organization Theory still relevant today?
Yes, many foundational concepts of the classical theory are still highly relevant. Large organisations like the military, government agencies, and manufacturing plants rely heavily on classical principles like a clear scalar chain (hierarchy), division of labour, and standardised procedures to manage complex operations efficiently. While not a complete solution, these principles provide the basic structure upon which more modern, flexible management techniques are built.
