CHAPTER 3
ORGANIZATIONAL THEORY AND
MANAGEMENT: CHARACTERISTICS
AND FUNCTIONS
⚫ Definition of Organization Theory
⚫ Classical Organization Theory
⚫ Neo-classical Organization Theory
⚫ Modern Organization Theory
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1. Definition of Organization Theory
Organization
“Is a group of people who jointly work to achieve at least one
common goal. It is to achieve certain value and objectives.
For public administration, it requires organization to
provide goods and services to the society”
Organization can take many forms and can maximize different
values. Different structures also affect the behavior of the This led to one
organization as a whole and the same is true of the process central question
through which organization operate.
how should public
Theory agencies/public
Is a proposition or a set of proposition that seek to explain or organizations be
predict something. (systematic view of phenomena)
organized?
In the case of organization theory, it tries to explain how group
and individual behave in different organizational
arrangement
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The 20th century was characterized by the development of an
“organizational society.” Inherent in modern organization
theory is the notion that organizations should be rationally
designed to achieve their purposes effectively and efficiently
• Public administration as an organization concerns organized
activity aimed at the provision of services and the application of
constraints to individuals and groups. It requires organization.
• Organization can take many different forms. The structure of an
organization affects the behavior of the organization as a whole and
that of its individual members.
• The same is true of the processes through which organizations
operate. The structure and process of an organization can also have
important impacts on its clients and customers.
• Through the design of organizational structures and processes of
one kind or another, different values can be maximized, different
needs can be served, and different purposes can be achieved
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However, rather than being tools for the rational attainment of goals, organizations can emerge
as powerful masters that seek their own survival, aggrandizement, and maximization of power.
Organizations can also infringe on the human rights of individuals to privacy, freedom of
expression and association.
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Organizational Theory
Organizational theory can be considered as practical instrument
for organizational design and administration.
It is generic in the sense that it does not make any distinction
between private and public organization. it believes all
organization share similar characteristics.
However, PA has always been concerned with improving
understanding of how public organization functions as
responsibilities and duties of the government become more
complex and often difficult.
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1. Classical Organization Theory
a. Scientific Management
It was popularized trough the work of Frederic Taylor. Taylor developed 4 core
principles of scientific management:
1. Management should study the mass traditional knowledge possessed by worker
and devise a way to accomplish each task, reducing it to a body of scientific law of
production. This require time and motion study that determine precisely the one
best way to perform the job
2. Workers should be scientifically selected based on physical, mental, and
psychological attributes.
3. The worker should be scientifically motivated to do as management instruct. Taylor
stressed tying productivity to pay through piece-rate plan, in which workers are
paid according to how much he or she should produce.
4. Work should be divided so that management has more responsibility for designing
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Taylor assumed that scientific management could yield greater cooperation between
worker and the management. He believes this system could lead to a greater efficiency
and productivity and therefore, higher standard of living . The greater productivity also
lead to profit.
Taylor’s scientific management has been practiced widely in professionalized
management, industrial engineering and other industries. In the public sector, position
classification and job design continue to reflect many of his principle
Criticisms
1. The idea strongly reemphasized individual should be treated as an appendage of
machine. Should perform only those functions that a machine could not perform
2. Worker should be prevented from participating in designing of work, process and
flows. The problem is what happens to the worker in the process e.g. tired, boredom,
alienation, lack of personal growth and others
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Your title here
4.7
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Category
4 2.8
Taylor assumed that scientific management could
4.5
yield greater cooperation between worker and the
management. He believes this system could lead to a
3
greater efficiency and productivity and therefore,
Category
3 1.8 higher standard of living . The greater productivity
3.5
also lead to profit.
2
Category
4.4
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2
2.5 Taylor’s scientific management has been
practiced widely in professionalized
2 management, industrial engineering and other
Category industries. In the public sector, position
1 2.4
classification and job design continue to reflect
4.3
many of his principle
Series 3 Series 2 Series 1
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b. Bureaucratic Model
Bureaucracy refers to a specific set of structural arrangements. Usually, the arrangement is for
administrative purposes. Max Weber was the first who described its characteristic systematically and
analyzed its roles. Weber developed an ideal type model called rational-legal bureaucracy.
Characteristics.
1. The bureaucrats must be free as individuals. Only can be bossed around with respect to the impersonal
duties of their offices
2. The bureaucrats are arranged in a clearly defined hierarchy of offices.
3. The functions of each office are clearly specified in writing
4. The bureaucrats accept and maintain their appointment freely
5. Appointments to the office are made on the basis of technical qualification
6. The bureaucrats receive a salary and pension right, which reflect the varying level of bureaucracy.
7. The office must be the bureaucrat's sole occupation
8. A career system is essential. Promotion may be the result of seniority and merit.
9. The bureaucrats do not have a property right to their office or any personal claim to the resources to go
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Criticisms
1. Only applicable to larger
organization
2. Most organization output
cannot be evaluated in
any market external to
the organization. the
value cannot be
expressed in term of
money.
3. Did not deal with socio-
psychological aspect
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c. Administrative Management
The principle of administration focuses on the design of the administrative structure before any other
consideration. It upholds organization efficiency and depends on a proper initial arrangement of the
parts. That is organizational subdivisions
Many principles of administrative management came from the works of Henry Fayol. Luther Gullick and
Urwick.
Characteristics
1. Organizational structure coordinated by management is the key to efficiency. People should be
appropriately fitted to the structure and the organizational chart is the basic tool for monitoring
and controlling the entire process.
2. Organization should be structured according to four basic criteria:
a) Purpose they serve
b) Persons and things dealt
c) Process they use
d) Place where the work is performed
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3. Unity of common by only one supervisor is essential
4. Authority and responsibility should be equal throughout the organization. they should be delegated down
to the hierarchy and top management should confine itself to setting of standards.
5. Narrow span of control is desirable
6. Systematic planning
7. Human psychological variable should be taken into consideration
For Gullick administration is entirely a process. He built seven administrative activities (POSDCORB)
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Coordinating/controlling
6. Reporting
7. Budgeting
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Scientific Management Focuses on the design of administrative
structure
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2. Neo-classical Theories
It refers to theoretical perspectives that revise the classical organization
theory which have been under massive criticism at that time. It
intended to fulfill the gap left by classical theories on several issues
particularly:
1. Humanness of organization members
2. Coordination needs among administrative units
3. Internal and external organizational relation
4. Organizational decision-making process
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George Elton Mayo: The Hawthorne Experiment
This research was the beginning of the ideological revolution in
organization theories.
Mayo conducted various experiments in the Western Electric Company and
found that the significant factor affecting the organizational productivity
was not the physical condition or monetary reward but from the
interpersonal relationship that develop on the job.
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Results: people are motivated by other factors
1. Psychological Contract
There is an unwritten understanding between the worker and employer regarding what is expected from
them.
2. Interest in Workers
A worker’s motivation can be increased by showing an interest in them.
3. Work is a Group Activity
Work is a group activity, team work can increase a worker’s motivation as it allows people to form strong
working relationships and increases trust between the workers.
4. Social Aspect of Work
Workers are motivated by the social aspect of work, as demonstrated by the female workers socialising
during and outside work
5. Recognise Workers
Workers are motivated by recognition, security and a sense of belonging.
6. Communication
The communication between workers and management influences workers’ morale and productivity.
Workers are motivated through a good working relationship with management.
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He also found that when informal group felt their own goal in conflict to
those of management and their control over the job environment was
slight, productivity will be low.
In addition, he claimed the behavior of worker
couldn’t be separated from their feeling and
sentiment, which is the product of the individual
personal history or social situation in the
organization (informal social force)
He disagrees with the classical approach that
considers the informal organization as a problem.
He reasoned that formal organization is a system of
consciously coordinated activities derived from
informal organization.
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Informal Organization is important since it enhanced communication by
1. Providing an alternative to formal channel
2. Maintaining the socio-psychological cohesiveness of the organization
3. Developing feelings of personal importance and efficacy.
Criticisms.
1. It lacks the capacity to explain many facets of organizational behavior.
Only some could be satisfied with good human relations.
2. Mayo’s theory fails to deal with the reality of conflict in the workplace
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3. Modern Organization Theory
Basic assumptions of the modern organization theory
1. Organizations are rational institution whose primary purpose is to
accomplish objective. Rational organization behavior is achieved
through a system of define rules and regulation and formal authority.
It can be done through control and coordination
2. There is a best structure for any organization. but it depends on the
context that it operates, its market, the competition, the objectives
and others
3. Specialization and division of labor increase the quantity and quality
of production.
4. Most of the problems in the organization result from structural flaw
and can be solved by changing the structure.
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1. The Open System Framework (system Theory)
It views organization as a complex set of dynamically intertwined and interconnected elements. Its input,
process, output, feedback loops and the environment in which its operates and with which it continuously
interact. Any changes in any element of the system cause changes in other element
Interconnection tend to be complex, dynamic and often unknown. The classical views organization as static
(unchanging structure) system theories see them as continuously changing process of interaction among
organization and environmental elements.
Whereas classical organization theory tends to be one-dimensional and somewhat simplistic, systems
theories tend to be multidimensional and complex in their assumptions about organizational cause-and-
effect relationships.
The classicalists viewed organizations as static (unchanging) structures; systems theorists see organizations
as continually changing processes of interactions among organizational and environmental elements.
Organizations, not being static, are in constantly shifting states of dynamic equilibrium.
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Organization is constantly changing and shifting to reach dynamic
equilibrium
ENVIRONMENT ENVIRONMENT
INPUT CONVERSION OUTPUT
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1. Input: both human and material form. It will be transform into product and
services using internal social and technological process
2. Output: export product to external environment. Become the input to other
organization.
3. Organization structures develop around pattern activities that form stable and
predictable input, throughput and output cycle. E.g. structural differentiation and
task specialisation
4. Feedback is a form of information about environmental response to organizational
activities.
5. Equilibrium both internally and in relation to external force.
Internally, organizations rely on effective functioning of key subsystem. Production,
technical, supportive, maintenance, adaptive, managerial subsystem.
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a. The Cybernetic Model (Organization as an Adaptive system)
Because organization is adaptive system that they are integral part of their
environment , they must adjust to changes in their environment if they
are to survive.
Cybernetic derived from Greek word meaning steersman the basic concept
behind cybernetic model is self regulation, biological, social system that
can identify problems do something about them and received feedback
to adjust themselves automatically.
This theory postulates that the tiniest change in the smallest part of a system can
eventually produce enormous effects. In weather forecasting this has become
known as the butterfly effect
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Contemporary public administrators are increasingly turning to the study
of complex adaptive systems.
In the spread of corona virus globally, public administration scholars have
become increasingly interested in thinking about organizations as
networks or systems capable of reacting to very quickly changing
circumstances and threats.
This means that a small change in one part of an organization may have a
very great effect on another part. (Health care, education, security,
economics etc.)
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b. Collaborative Management
Another major change in thinking about management and organizations is
understanding what happens on the boundaries. It is when organizations act in
concert with each other or in some form of networked relationship.
A model for organization and management has emerged that focuses on how
managers should operate in multi-organizational arrangements that is, on and around
their boundaries. Often these multi-organizational arrangements include private and
non-profit sector entities, networks, alliances, consortiums, partnerships, and other
hybrid organizations.
Robert Agranoff (2012) takes the model one step further by demanding that “Public
bureaucracies gear their structures and operations to external as well as internal
work . . . and as a result become more a ‘conducive agency’ that . . . dismantle[s] the
boundaries of its structure and functions by connecting with a variety of external
organizations and interests to strategically and operationally enhance its performance.
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Internally focused: Command & Control Externally focused: Collaborative Governance
leadership
Contract and
grants
Organizational
structure and Research and
Interagency
hierarchy University
agreement
arrangement
POSDCORB
Functions, budget, HR
Advisory
partnership
committee
Program evaluation/audit
Network and
forum
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Joseph Nye argued that the pressures of globalization, technology, and
marketization were forcing organizations to abandon centralization to
management for diffusion.
Daniel Bell’s quote that “the nation-state has become too small for the big
problems of life and too big for the small problems” (Nye, 2002 p. 4),
government action will give way to governance. Organizations, if they wish
to be relevant, must follow suit and abandon command, control, and
coordination for cooperation, collaboration, and engagement.
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Comparing Theories of Organization
Theory Key Thinker(s) Focus Strengths Criticisms
Taylor, Fayol, Efficiency, Mechanistic, ignores
Classical Clarity, control
Weber structure human needs
Motivation,
Neo-classical Mayo, Barnard Human relations Idealistic, lacks structure
morale
Katz & Kahn, Systems, Adaptive,
Modern Complex, hard to apply
Scott contingency comprehensive
Networks, Integration,
Collaborative Agranoff, Nye Blurred accountability
engagement flexibility
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Contemporary Extensions in Organizational Theory
○ New Public Management (NPM)
Efficiency, privatization, customer-orientation
○ New Public Service (NPS)
Networks, partnerships, co-production
○ Digital Era Governance (DEG)
Tech integration, digital public services
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Challenges in Applying Organizational Theories to Public Sector
1. Bureaucratic Inertia and Resistance to Change
Public organizations often maintain rigid structures and standard operating procedures, making them slow to adapt to new
ideas or reforms. E.g., Attempts to implement e-government services in some Malaysian agencies faced delays due to
entrenched manual processes and reluctance to shift to digital platforms.
2. Weak Coordination Across Ministries and Agencies
Siloed operations and overlapping jurisdictions hinder collaboration and lead to inefficiencies in service delivery.
During the early stages of the COVID-19 response in Malaysia, coordination between MOH, MKN, and other local
agencies led to confusion in SOP enforcement across states.
3. Balancing Efficiency with Equity and Participation
Organizational models often emphasize productivity, but in public administration, inclusiveness, fairness, and citizen
engagement must also be prioritized. The implementation of targeted fuel subsidies must not only be efficient but also
ensure that low-income groups are not unfairly excluded due to data inaccuracies or digital access gaps.
4. Managing Innovation in a Risk-Averse Culture
Public organizations typically avoid risk due to political scrutiny, audit pressure, and fear of failure, which limits innovation.
Innovation programs like MyGOVUC or Malaysia's data-sharing platforms were slow to scale because of concerns over
data security, accountability, and legal implications.
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Thank you!
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