Modern organization theory

Table of content
Introduction​
​System approach
Socio-technical approach
Contingency or Situational approach
​
 Modern Theory-Human
enviornment relationship

• Classical and neo classical theories are

unable to address organizational
change demension thus modern theory
of organization evolved

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 Modern Theory

• The Modern Theory is the integration of valuable

concepts of the classical models with the social
and behavioral sciences. This theory posits that
an organization is a system that changes with the
change in its environment, both internal and
external.

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 Modern Theory

• Modern Organizational Theories is divided into

Three major types –
• System Theory
• Contingency Theory
• Socio-technical approach

MODERN ORGANIZATION THEORY 5

 System Theory of Management

• The Systems Theory was proposed during the early

1960s.
• Systems Theory considers organizations as a network of
systems. A system can be either an organized or
complex whole, that is, it can be referred to as a
combination or an assemblage of things or parts that
comprise a complex unitary whole.

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 System Theory of Management

• It views the organization as an open system made up of

interrelated and inter-dependent parts that interact as
sub-systems.
• organization comprises a unified singular system made
up of these subsystems. For example, a firm is a system
that may be composed of sub-systems such as
production, marketing, finance, accounting and so on.

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 System Theory of Management

• the various sub-systems should be studied in their inter-

relationships rather, than in isolation from each other.
• the systems approach assesses the overall effectiveness of
the system rather than the effectiveness of the sub-systems.
This allows for the application of system concepts, across
organizational levels in the organization - rather than only
focusing upon the objectives and performances of different
departments (subsystems).

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 System Theory of Management

• Organizational success depends upon interaction and

interdependence between the subsystems, synergy between the
sub-systems, and interaction between internal components
(closed system) and external components (internal system).
• The systems approach implies that decisions and actions in one
organizational area will affect other areas. For example, if the
purchasing department does not acquire the right quantity and
quality of inputs, the production department wont be able to do
its job.

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 characteristics of the System Approach

• Sub-Systems - Each organization is a system made up of a combination of many

sub-systems. These sub-systems are inter-related.
• Holism - Each sub-system works together to make up a single whole system.
Decisions made in any subsystem affect the entire system.
• Synergy - The collective output of the whole system is greater than the sum of
output of its sub-systems.
• Closed and Open Systems - The whole organization is an open system made up
of a combination of open and closed sub-systems.
• System Boundary - The organization is separate from the external environment
made up of other systems.

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 The system approach made up five
components:

• inputs - Raw Materials, Human Resources, Capital, Information,

Technology
• A Transformational Process - Employee Work Activities,
Management Activities, Operations Methods
• Outputs - Products or Services, Financial Results, Information,
Human Results
• Feedback - Results from outputs influence inputs.
• The Environment - These components make up internal and
external factors that affect the system.

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System Approach and its components

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 The system approach:

• Pros
• Simplicity: With only five components and a few foundational principles,
it's easy to understand this approach.
• Comprehensive troubleshooting: If you encounter a problem with one
aspect of an organisation, systems theory dictates that it might have a
cause elsewhere or that its effects might impact other areas of the
organisation.
• Transparency: When you and others in the organisation agree that
everything is interrelated, there's a greater incentive for cooperation and
transparency.

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 The system approach:

• Cons
• Vague: This approach is so simple that it's hard to refute. While this makes it
more convincing, it does limit its utility in more complex scenarios.
• Inadequate for complex organisations: In smaller organisations, you can
usually identify the components of a system quite easily. Conversely, in large
organisations with large departments performing multiple functions,
• Limited: Although it can describe the basics of organisational structure and
function, it excludes a lot of elements that you may want to understand or
explain, such as organisational hierarchies or inequalities.

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 Where did Socio-Technical Systems
Theory Originate?

• The socio-technical perspective originates from pioneering work at

the Tavistock Institute and has been continued on a worldwide
basis by key figures such as Harold Leavitt, Albert Cherns, Ken
Eason, Enid Mumford and many others.

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 Socio-technical approach

• A methodology to analyze relationships between people and

technologies in workplaces.
• An approach to complex organizational work design that recognizes the
interaction between people and technology in workplaces.
• Socio-technical theory has at its core the idea that the design and
performance of any organisational system can only be understood and
improved if both ‘social’ and ‘technical’ aspects are brought together and
treated as interdependent parts of a complex system.

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 Socio-technical approach

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 Socio-technical approach

• Pros
• allow people to work with technology in ways that benefit society
and advance organizational goals.
• Cons
• This approach is somewhat abstract and vague. It can be difficult
to apply to large and complex organizations. It does not provide
any tool and technique for managers.

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Contingency or Situational
Approach

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 Contingency or Situational
Approach

• Fiedler’s Contingency Theory states that, for a leader to be

effective, their leadership style must fit the situation.
• Fiedler believed the right leader must be chosen for each job
based on their skill set and the requirements of the situation.
• To help you determine your leadership style, Fiedler developed the
Least Preferred Coworker (LPC) scale. The scale asks you to
describe the coworker you least prefer to work with.

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 Contingency or Situational
Approach

• The more positively you rate your least preferred coworker on a

variety of different criteria, the more relationship-oriented you
are.
• The less favorably you rate them on the same criteria, the more
task-oriented you are.
• Essentially:
• If you’re a high LPC leader, you’re a relationship-oriented leader.
• If you’re a low LPC leader, you’re a task-oriented leader.

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 Contingency or Situational
Approach

• Relationship-oriented leaders are great at building

relationships, facilitating team synergy, and managing
interpersonal conflict.
• Task-oriented leaders tend to be skilled at organizing
projects and teams to accomplish tasks efficiently and
effectively.

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 Contingency or Situational
Approach

• Situational favorableness
• Fiedler’s model requires you to assess the situation at
hand.
• The favorability of a situation depends on how much
influence and power you have as a leader.

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 Contingency or Situational
Approach

• Situational favorableness is determined by three variables:

• Leader-member relations are all about trust. Does your team trust
you as a leader? The more they do, the higher your degree of
leader-member relations and the more favorable the situation is.
• Task structure refers to the clarity of the tasks required to
complete a project.
• Position power refers to the authority you have over your team as
a leader.

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