Understanding Organizational Theories and Principles
The Scientific School of Labor
This school of thought was initiated by F.W. Taylor, who applied scientific methods to the organization of work. Scientific management of labor leads to the following conclusions:
- Apply a scientific method to the study of each element of human labor.
- Foster cooperation and partnership to develop the work as a team.
- Provide adequate remuneration.
- Divide work between workers and management.
The goal is to investigate the relationships that can result in maximum production at minimum cost.
Henri Fayol’s 14 Principles of Management
Henri Fayol established fourteen principles for the direction of work, including:
- Division of work.
- Authority and responsibility.
- Unity of direction.
- A hierarchical chain of command.
He defended administration and a single unit of command.
The Theory of Bureaucracy
Max Weber is considered the father of bureaucratic theory, a formalized organizational structure. Levels of authority should be perfectly clear, with defined and written rules. This model features division of labor and was designed for large organizations.
The Human Relations School
Elton Mayo conducted a series of experiments with a group of operators. The test subjects were placed in a test room, where working conditions were altered. Every change led to higher production. Elton Mayo concluded that the spirit of collaboration was responsible for the desire to experiment.
Principles of Organization
The organizational structure of any company must meet a number of principles, the most important of which are:
- Unity of Objective: All components of the organization must contribute to the firm’s objective.
- Span of Control: It is necessary to determine the most convenient number of people that a manager can handle effectively.
- Unity of Command: Instructions given by more than one boss should not conflict.
- Hierarchical Principle: The line of authority must be clear in all areas of the firm.
- Delegation of Authority and Responsibility: Delegation consists of assigning a task to a subordinate, giving them responsibility and holding them accountable. A delegation that is not accompanied by the corresponding authority is not a real delegation.
- Division of Labor and Specialization: Work is divided into tasks according to the organization of labor. Work is formed by the set of tasks that a person performs in a company.
Centralization and Decentralization
Centralization and decentralization are extensions of delegation. Delegation refers to the act of entrusting responsibility. The convenience of decentralization is to “relieve the burden of the superior level” and to “facilitate diversification.” Decisions can be made at the appropriate level. The convenience of centralization is that “personal direction can be a decisive factor in the success of small businesses during their growth.” In emergency situations, centralization is very convenient for making emergency decisions.
Formal Organization
A formal organization is formed by formal groups, in which the limits of activities for individuals are defined, fixing responsibilities and authority, and how people should act to avoid interference with other individuals in the organization.
Informal Organization
Individuals with affinity tend to group together based on a common interest, mutual protection, power, or a desire to achieve their personal goals. Rules are created within the group, members interact socially, and informal channels of communication are created. The leader is usually the person holding the highest hierarchical level. There is a known “satellite”, a powerful figure for the management, who acts independently.