So important is the formal organization theory that it is adopted as the base for all administrative reform committees: the content of the formal organization theory is the stuff the administrative reforms are made of.
Thus, both its advocates and its
critics pay tribute to it, the former by applauding it and the latter by
criticising it. Its proponents include J.IY. Mooney, A.C. Reiley, LF. Urwick,
R. Shelton, Henri Fayol, L. Gulick and others.
This theory is thus, developed by practitioners and it believes in the existence of certain principles of organization by the applications of which organization could be administered more efficiently. These principles are of universal application, not only spatially. The advocates of the theory believe that administration is administration regardless of the type of work being undertaken or the context within which it is performed. The formal organization theory deals with anatomy of organization, or to be more precise, formal organization.
According to the theory, an organization is a product of rational thought. An organization has an objective to achieve when it undertakes tasks. These tasks can be so organized as to accomplish efficiently the Organizational objectives. The theory assumes that the employee’s behaviour is rational and logical.
Rational here means that be human behaviour falls within the same system of rationality which permeates e setting up of an organization. It is thus, based on some defuctions and it attempts to specify what an organization should be. The formal organization theory is thus, analytical, developing normative models. The main elements for this theory are objectives, tasks, rational behaviour, co-ordination and authority.
This theory was first formulated in 1931 in U.S.A. when Mooney and Reiley (Both senior managers with General motors) published Onward Industry. In 1939 his book was published under the catchy title of The Principles of organization. Mooney and Reiley were trying to discover certain universal principles of organization and they enunciated the principles f co-ordination, hierarchy, functional differentiation (i.e division of York) and line and staff.
This theory is thus, developed by practitioners and it believes in the existence of certain principles of organization by the applications of which organization could be administered more efficiently. These principles are of universal application, not only spatially. The advocates of the theory believe that administration is administration regardless of the type of work being undertaken or the context within which it is performed. The formal organization theory deals with anatomy of organization, or to be more precise, formal organization.
According to the theory, an organization is a product of rational thought. An organization has an objective to achieve when it undertakes tasks. These tasks can be so organized as to accomplish efficiently the Organizational objectives. The theory assumes that the employee’s behaviour is rational and logical.
Rational here means that be human behaviour falls within the same system of rationality which permeates e setting up of an organization. It is thus, based on some defuctions and it attempts to specify what an organization should be. The formal organization theory is thus, analytical, developing normative models. The main elements for this theory are objectives, tasks, rational behaviour, co-ordination and authority.
This theory was first formulated in 1931 in U.S.A. when Mooney and Reiley (Both senior managers with General motors) published Onward Industry. In 1939 his book was published under the catchy title of The Principles of organization. Mooney and Reiley were trying to discover certain universal principles of organization and they enunciated the principles f co-ordination, hierarchy, functional differentiation (i.e division of York) and line and staff.
It is however, Henri Fayol (1841 to 1926) who is regarded as the most prominent enunciator of this theory. His General and Industrial Administration is a classic treatise and according to Urwick, this book had probably more influence on ideas of business management in Europe and especially in the Latin countries than any other work.22
Fayol classified all activities in an organization into the following six groups: technical, commercial, financial, security, accounting and administrative. Technical activities deal with production in manufacture adaptation. Commercial activities are concerned with buying, selling and exchange. Financial activities deal with provision, search for and optimum use of capital. Security activities deal with protection of properties and persons. Accounting activities cover stocktaking, balance sheet, costs and statistics. Administrative activities deal with planning, organization, command, co-ordination and control.
Administration according to him, is an independent activity and comprises the following five elements: forecasting and planning, organizing, commanding, co-ordinating and controlling. To administer to forecast and plan, to organize, to command, to co-ordinate and control. To foresee means to provide means, examining the future and drawing up the plan of action. To organize means building up the dual structure, material and human of the undertaking. To command means maintaining activity among the personnel. To co-ordinate means binding together, unifying and harmonizing all activity and effort. To control means seeing that everything occurs in conformity with established rules and expressed command.
Administration thus understood, is neither an exclusive privilege nor a particular responsibility of the head or senior members of the organization. It is an activity spread, like all other activities between head and members of the body corporate. The administrative function is quite distinct from the other five essential functions discussed earlier.
It should not be confused with government. To govern is to conduct the undertaking towards its objective by seeking to derive optimum advantage from all available resources and to assure the smooth working of the six essential functions.