CLASSICAL THEORY OF ORGANISATION

The old theories of organisations are classified as classical theories of organisation. The origin of
classical theories can be traced back to the writings of F.W. Taylor, Max Weber, James Moorey,
E.F.L. Beach and Lois Allen. The impact of classical theory has been profound
Classical theory was developed in three streams: Bureaucracy, Administrative Theory, and Scientific
Management. These components of classical theory were developed on similar assumptions at about
the same time (1900-1950 AD). These components develop the idea of structure within the
connotation of organisation. Accordingly, organisation was defined as a structure of relationships,
power, objectives, roles, activities, communications and other factors that exist when persons work
together. Thus, these streams of classical theory view organisation as a mechanistic structure. Let us
learn these three streams of classical theory in detail.

Bureaucracy
Bureaucracy is a social invention perfected during the industrial revolution to organise and direct the
activities of a firm. It describes a system where the Government is run by officials, directly or
indirectly.
Bureaucracy is defined as a system of organisation in which roles, tasks and relationships among
people and positions are clearly defined, carefully prescribed and controlled in accordance with
formal authority and any deviations from rules and regulations is viewed very seriously. The
bureaucratic theory was systematically developed by Max Weber (1864-1920). Weber termed his
formulation of organisation as ideal type.
According to Max Weber, every organisation can be defined as a structure of activities (means)
directed towards the achievement of certain objectives (ends). Every organisation develops a system
of specialisation (division of tasks) and a set of systematic rules and procedures to maximise
efficiency and productivity.
Weber stressed that the bureaucratic form is capable of attaining the highest degree of efficiency, and
is in this sense, formally the most rational known means of carrying out control over human beings in
any organisation. It is superior to every other form in precision, stability, discipline and reliability.

Characteristics of Bureaucracy
The bureaucratic form of organisation is distinguished by the following structural and behavioural
characteristics:

Division of Labour and Specialisation : Specialisation based on division of labour is the cornerstone
of bureaucracy. It applies more to the job than to the individual. The roles of various officials based
on the division of job work are clearly defined. This leads to the clear definition of the job-content of
an individual and his position in the organisation set up which in turn leads to the clarity of the
goals/objectives of the organisation and helps in designing the hierarchical structure of the
organisation. It is based on a specified sphere of competence which involves:
(a) a sphere of applications to perform functions which has been marked off as part of a systematic
division of labour,
(b) the provision of the incumbent with necessary
authority, and
(c) the necessary means of compulsion are clearly defined and their use is subject to definite
conditions.

Hierarchy : Hierarchy is the second fundamental characteristic which is the feature of any
bureaucratic form of organisation. There is a clear separation between superior and subordinate
officers, i.e., each lower officer is under the control and supervision of a higher one. Remuneration is
fixed in accordance with the nature of the job and the grade of responsibility. Promotion and career
advancement is on the basis of seniority and merit.
Rules: Bureaucracy operates in accordance with a consistent system of abstract rules. The role of
rules has been stressed by Weber so that personal favouritism, arbitrariness or nepotism may not
hinder the working of an organisation. Every act of personal discretion of official must be justified by
impersonal ends.

Rationality: Weber’s ideas on efficiency and rationality are closely related to his ideal typical model
of bureaucracy. He observed that bureaucracy is the most rational known means of achieving
imperative control over human beings. It is capable of obtaining a high degree of efficiency since the
means used to achieve goals are rationally and objectively chosen towards the desired ends. An added
factor of efficiency is that personal whims of the leaders and traditional pressures are no longer
effective in such a system; it is run according to rules and there is a clearer demarcation between
personal and official affairs. Rationality is also reflected by the relatively easier means of calculability
of results in the organisation.

Impersonality: It should be observed by all officials in decision-making and in overall organisational

Neutrality: Neutrality in decision making and their implementation are the cardinal principles of
bureaucratic way of functioning. Bureaucracy is supposed to be a political and neutral in its
orientation. It is committed only to the work it is meant to perform.

Criticism of Bureaucracy

Max Weber gave the model which is normative in nature and could be followed by any large and
complex organisation. However, the actual practices of bureaucracy often fall short of these ideals.
Bureaucracy is a necessary evil in large and organisationally complex organisation. Following
demerits have been pointed out in the bureaucratic model by various scholars:

Impersonality: Relationships in a bureaucracy are secondary and contractual rather than being
primary and personal. The characteristics of impersonality, anonymity, neutrality to values etc. are
contradictory to the very basic nature of organisation where close cooperation between the people and
bureaucracy is desirable. Lack of personal involvement leads to poor productivity levels.

Delegation: It is criticised on the ground of the problems of delegation that crop up in operative
stages. The bureaucratic staff tend to concentrate power at higher positions and very little of
delegation of authority and responsibilities down the rank is seen. In absence of delegation,
organisational decisions are unnecessarily delayed.

Goal Displacement: Excessive adherence to rules and regulations lead to the problem of goal
displacement. The rules and regulations that are meant to facilitate the functioning of the organisation
are adhered irrespective of the fact whether they lead to goal achievement or not.

Strict Categorisation: In bureaucracy, coordination and specialisation are advantageous if there is

Cost of Controls: The cost of maintaining rules, regulations and sometime seemingly countless
procedures employed to gain conformity in bureaucracy is dysfunctional. There is frustration from
perceived excessive restrictions and delays imposed by bureaucratic procedures.
 Process management

Principle of management: -

1. Division of Work-
Henri believed that segregating work in the workforce amongst the worker will enhance the quality of the
product. Similarly, he also concluded that the division of work improves the productivity, efficiency,
accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a
technical work level.
2. Authority and Responsibility-
These are the two key aspects of management. Authority facilitates the management to work efficiently,
and responsibility makes them responsible for the work done under their guidance or leadership.
3. Discipline-
Without discipline, nothing can be accomplished. It is the core value for any project or any management.
Good performance and sensible interrelation make the management job easy and comprehensive.
Employees good behaviour also helps them smoothly build and progress in their professional careers.
4. Unity of Command-
This means an employee should have only one boss and follow his command. If an employee has to follow
more than one boss, there begins a conflict of interest and can create confusion.
5. Unity of Direction-
Whoever is engaged in the same activity should have a unified goal. This means all the person working in
a company should have one goal and motive which will make the work easier and achieve the set goal
easily.
6. Subordination of Individual Interest-
This indicates a company should work unitedly towards the interest of a company rather than personal
interest. Be subordinate to the purposes of an organization. This refers to the whole chain of command in a
company.
7. Remuneration-
This plays an important role in motivating the workers of a company. Remuneration can be monetary or
non-monetary. However, it should be according to an individual’s efforts they have made.
8. Centralization-
In any company, the management or any authority responsible for the decision-making process should be
neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that there
should be a balance between the hierarchy and division of power.
9. Scalar Chain-
Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest. This is
necessary so that every employee knows their immediate senior also they should be able to contact any, if
needed.
10. Order-
A company should maintain a well-defined work order to have a favourable work culture. The positive
atmosphere in the workplace will boost more positive productivity.
11. Equity-
All employees should be treated equally and respectfully. It’s the responsibility of a manager that no
employees face discrimination.
12. Stability-
An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job
security to their employees.
13. Initiative-
The management should support and encourage the employees to take initiatives in an organization. It will
help them to increase their interest and make then worth.
14. Esprit de Corps-
It is the responsibility of the management to motivate their employees and be supportive of each other
regularly. Developing trust and mutual understanding will lead to a positive outcome and work
environment.