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An organization in a simple term refers to a group of people working together. Chester Barnard came up with a more classic definition; an organization is ' a system of consciously coordinated activities of forces of two or more people'1. Pre-industrial society had a simpler form of organizations i.e. horizontal relationships, consensus building, egalitarian equality and empowerment (Daft 2000). Generally, organization is required to enhance creativity, ensuring continuity and optimum use of resources, work specialization, coordination and communication relationship. These are the typical importance of organizations.
Organizational structure has undergone many phases of evolution and transformation from traditional to contemporary organization as what we are facing now to achieve the diverse needs; new technology, globalization, as response to failures, to capture market share, to improve work process, generation transformation etc. All these reasons are endless but to achieve one main goal that is flexibility to ensure organization will fit in facing the rapid and mass change in organizational structure.
Contemporary organization is vital for implementation of business plans. In a firm, experience alone is insufficient for the achievement of the greatest benefits from collaboration2. Questions arise over whether Weber's bureaucracy theory is still relevant in the modern world? Is there any other theory best describe the main preoccupation of today's contemporary organizations? I shall now discuss and develop further these questions for a clearer perspective within the perimeter of business organizations.
1 Refer to a study by C.I.Barnard, The Functions of The Executive (Cambridge, MA: Harvard University Press, 1983), p. 73.
2 Bernard L Simonin, The Importance of Collaborative Know-How: An Empirical Test of the Learning Organization, p. 1150, published by: Academy of Management. Article Stable URL: http://www.jstor.org/stable/256930. Retrieved 2011-01-11.
The Organizational Theory - Development and Evolution
After the Second World War, the world had somehow met its turning point. Every phase of human lives have been proliferated by huge governmental and corporate bureaucracy. Bureaucratic theory was made famous by Max Weber (1864-1920), a German sociologist. His idea is often closely related to bureaucrats, power, machine metaphor and even described as pejorative. Max Weber had made bureaucracy an analytical concept, decoupled from the polemical context in which it had emerged (Albrow 1970) 3; and he came up with six main principle of bureaucracy. The principles are outlined as follows4:
A formal hierarchical structure
- There's a clear chain of command with each level responsible of the level below and controlled by the level above
Management by rules
- Rules are set to ensure reliable and predictable behavior of workers
- A clear division of labor with well-defined tasks and demarcation of jurisdiction
- Workers are selected and rewarded on the basis or formal education, merit, and tenure (meritocracy)
- The idea is to give equal treatment to all employees and customers despite having their own differences
- Records of decisions are made on paper to ensure it persist over time.
3 Article Maybe Its Time to Rediscover Bureaucracy from: Journal of Public Administration Research and Theory | Article date January 1, 2006. Author: Olsen, Johan P. Article at: http://www.highbeam.com/doc/1G1-141437072.html. Retrieved 2010-12-11.
4 Kenneth Johnston 2004. Busting Bureaucracy: About Max Weber. Visionary Publication, Inc. (online) Available at: http://www.bustingbureaucracy.com/excerpts/weber.html. Retrieved 2010-12-17.
'Based on organizational design theory, the authority obtained by top management over the entire organization is the prime benefit of the bureaucratic form- the captain of the ship is accountable for everything that happens on, off or to the ship'5. Consistency is seen as desirable. Back then in the agrarian societies, people were being discriminated through class, race, religion, and wealth. With the emergence of bureaucracy, these problems calumniate as people are given equal opportunity. Nepotism too is not favored but instead, fairness is being stressed. Rewards are given on basis of performance rather than simply favoritism. Efficiency on the other hand, according to Simon, Smithburg, and Thompson (1950), 'is a meaningful criterion only when an organizational choice is to be made in terms of agreed-upon objectives. When the very point at issue is the determination of what the organization objectives are to be, or what relative emphasis is to be placed on different objectives, efficiency cannot be the criterion of choice'6.
In my point of view, bureaucratic theory manages to set the standard high in such a way that organizations and the workers are mould to give their best at that point of time. The highly competitive world has brought great impacts to the society. Take Japan for example, workers are hired from the group of fresh graduates and it the group itself, they will obtain equal amount of salary. These workers are being hired for lives thus, foster strong and mutual loyalties. Apart from that, companies take into account of holistic involvement; home and workplace are not two distinct places but rather seen as one. Workers are being provided with home mortgages, recreation facilities, bonuses and pensions.
5 Kenneth Johnston 2004. Busting Bureaucracy: Benefits of Bureaucracy. Visionary Publication, Inc. (online) Available at: http://www.bustingbureaucracy.com/excerpts/benefits.html. Retrieved 2010-12-17.
6 Reorganizing Public Organizations: Alternatives, Objectives, and Evidence. An earlier version of this article was prepared for the Secretary of Energy Advisory Board Task Force on Radioactive Waste Management. Between 1991 and 1993, the Task Force considered alternative organizational arrangements for enhancing public trust and confidence in both the civilian and defense radioactive waste programs. 461/J-PART, 3(1993):4:457-486. Craig W. Thomas University of California, Berkeley.
The concept of bureaucracy however could not run from its own flaws as well as critiques. Due to the complexity of the modern world, disputation ascents on whether Weber's theory still fits the current situation. Similar to other classical theories (see Taylorism and Fordism), bureaucracy is also seen as a machine metaphor. One of Weber's famous metaphors was regarding the 'iron cage' through his writing in The Protestant Ethic and Spirit of Capitalism. 'Bureaucracy is that living machine which is also the 'Gehäuse jener Hörigkeit' - the housing of that enslavement. Weber also talks here about 'Gehorsams-Verhältnisse' (relations of obedience) whose usual counterpart is 'Herrschaftsver- hältnisse' (relations of dominations). Bureaucracies are simply the machine obedience and dominations'7. As Paul Du Gay (2000) said in his book In Praise of Bureaucracy,
'However, these are not the best days for bureaucracy. The bureau carries a very hefty 'charge sheet', inscribed with multiple offences ranging from relatively banal - procrastination, obfuscation, circumlocution and other 'typical products' of a 'red tape' mentality, genocide, totalitarianism, despotism. Indeed, to judge by some accounts 'bureaucracy', more often than not in conjunction with 'the state' appears to be responsible for most of the troubles of our times.' Du Gay P. (2000)
I believe that what is good for an organization is not necessarily ideal for the workers or even the society. 'Conflicts and pathology arise when they serve legitimate values and interest of participants and actors in the organizational environment- can have benign consequences'8.
7 The British Journal of Sociology Vol. 48, No. 4 (Dec., 1997), pp. 561-562. Published by: Blackwell Publishing on behalf of The London School of Economics and Political Science, http://www.jstor.org/stable/591596 Retrieved 2010-12-12.
8 Lloyd I. Rudolph and Susanne Hoeber Rudolph, Authority and Power in Bureaucratic and Patrimonial Administration: A Revisionist Interpretation of Weber on Bureaucracy, p. 196. Published by: Cambridge University Press. Article Stable URL: http://www.jstor.org/stable/2009942. Retrieved 2011-01-12.
Current Challenges - Why Transformation is Essential?
In this modern era of the 21st century, clearly the world has lot to offer. Every aspect of the world is moving fast; for instance from technology to even climbing up the social ladder. Those who are not able to keep up with the pace will be left behind when the others are moving forward. The speed and responsiveness are the keys to keep up with the vast competition. The step-up of online sales and digital workplace are among the examples. It is a new place where people meet in the virtual world and do business. In other words, 'anytime, anywhere access to the information and tools employees need to get their jobs done'9. Here, the bureaucratic concept and hierarchy are often neglected as the movement of it is seen as rather deadening.
Globalization is another major phenomenon in today's world. Globalization is a process where people, companies, organizations and governments of various nations interact and integrate with each other boundlessly. Weber's theory of rationalization10 was, at least in part, an early theory of globalization since he tended to see not only the incident increasingly dominated by rationalization, but also much of the rest of the world was destined to rationalize as well11.
9 The digital workplace by Toby Ward (2006). Retrieved 2012-12-16.
10 Globalization: A Basic Text by George Ritzer (2010), p.263. Theory of rationalization refers to the theory of bureaucracy.
11 Definition of globalization from Globalization 101 by the Levin Institute The State University of New York. Available at: http://www.globalization101.org/What_is_Globalization.html. Retrieved 2010-12-12.
The evolution from traditional and bureaucratic organizations to the contemporary ones comes hand in hand with the birth of new generations; silent generation (born before 1942), baby boomers (born between 1943-1960), generation X (born between 1961-1981), generation Y (born between 1982-2004) and generation Z (born after 2005) (see William Strauss and Neil Howe, 1991) 12. Because people are transmuting thus, the structure of organizations themselves vacillate. Majority of the workforce are from generation X and Y. They think, act and react rather differently from the baby boomers that govern most organizations and hold top management post today. Decades ago, organization were rigid and less complex, but as for now, they are seen as more flexible and driven by profitability and efficiency. The objectives of organizations thus mutate from what people used to perceive it to be.
12 Strauss and Howe (1991) discuss about a recurrent cycle of generations in the American history in their book, Generations: The History of America's Future, 1584-2069.
Contemporary Organization- Will There Still Be Room For Weber's Theory?
Transformation in an organization is seen as indispensable and same goes to organization theories. From classical theory to neoclassical theory. And later on, to the up rise of modern theories. Weber's theory of bureaucracy might be useful decades ago but in this modern world his theory is made belittled. Thence here, I would like to propose contingency theory as a solution.
The essence of contingency approach (also known as situational approach) is based on that there is no best definite way to manage. To ensure the effectiveness of an organization, the management process of planning, organizing, and controlling must be tailored to its current circumstances13. 'The competency of the contingency theory paradigm is resulted from the fitting characteristics of the organizational, such as its structure, to contingencies that reflect the situation of the organization (Burn and Stalker 1961; Lawrence and Lorsch 1967; Pennings 1992; Woodward 1965). Contingencies include the environment (Burns and Stalker 1961), organizational size (Child 1975), and organizational strategy (Chandler 1962)'14.
'The contingency approach to management suggests that in organizations management teams, there is no universal answer to such question- what is the ultimate way of managing? Organizations, people, and situations vary over time. Thus, the ideal step to take depends on a complex variety of critical environmental and internal contingencies'15.
13 Reference for Business, Encyclopedia of Business, 2nd ed., Contingency Approach to Management. Copyright 2011 Advameg, Inc. Available at: http://www.referenceforbusiness.com/management/Comp-De/Contingency-Approach-to-Management.html. Retrieved 2011-01-13.
14 Lex Donaldson (2001), The Contingency Theory of Organization: Core Paradigm and Theoretical Integration. pp. 1-2.
15 Read more: Contingency Approach to Management - organization, levels, school, company, business, Contingency perspective and organization theory, Contingency perspective and leadership. Available at: http://www.referenceforbusiness.com/management/Comp-De/Contingency-Approach-to-Management.html. Retrieved 2010-12-07.
A simple example to explain this concept would be the dramatic increase in customers' needs and wants. What should the manager decided to do- Increase in the amount of resources? Employ more workers? Or increase the price of the product to stabilize the demand and supply? A behavioral scientist would suggest the manager to create a working environment, which is psychologically motivating. The classical theorists on the other hand would vote for an increase in incentive scheme to the workers. The contingency approach would most probably agree on both, as both suggestions are viable. Despite having to agree on the suggestions, the contingency approach would suggest that every single circumstance is taken into account. This is due to the complexity of the situation and appropriate combination of techniques would meet its needs.
Back to the context of the discussion, I would say that there are still traces of Weber's idea in contemporary organizations. It is impossible to totally ignore its importance and relevance to organizations. Refer to the six principles of bureaucracy I have highlighted earlier, a formal hierarchical structure, just to name one, is still being adapted in most organization with some improvement from horizontal to vertical (matrix) 16 type of hierarchy. Thus, that is why in my opinion, contingency theory is the best theory not to replace but to improve Weber's bureaucracy theory.
16 Three main types of matrix: functional-product, functional-area, and product-area. Matrix structures are appropriate where there is dual focus. It's a more complex form of hierarchy, rather than being inherently organic structures (see Davis and Lawrence 1977).
In a nutshell, contemporary organizations are more than just about being flexible. Other preoccupations such as, profit requirements, marketing, innovation, human organization, productivity and social responsibility are just as important. These however depend on the structure of the organizations themselves. To achieve organizational goals and objectives individual and team works need to be coordinated and manage. The bureaucracy theory of organizational structure holds that bureaucratization is composed of specialization, standardization, formalization and centralization (Pugh, Hickson, Hinings, and Turner 1968). Bureaucracy theory took as its point of departure the model of bureaucracy that was originally advanced by Weber. Contingency theory research shift from his paragon-type to a multivariate framework that was used in quantitative studies comparing across organizations.
As we mature with time, past theories are becoming less relevant than they were before. However, without doubt these theories such as the one in this discussion; Weber's bureaucracy theory had brought a significant impact in our lives. The main idea of the theory is still being used in organizations today where as to some others; modification is required to move parallel with modern changes. For instance, George Ritzer's theory of McDonalization is being described as a modern Weberian theory. This shows that the idea of Weber's bureaucracy theory does still apply to some organizations.
The younger generations will replace the older ones and the circulation goes on and thus bringing fresh ideas and approach in handling organizations. Contingency theory might be seen as the relevant theory to substitute Weber's but, it is also possible for the theory itself to be replaced by a new one in the future. This is true as now; research is being done to reformulate contingency theory to neo-contingency theory.