Summary till session 4

Arpita Juby

07

A system can be open or closed. An open system derives its energy from the environment while a
closed system takes its energy from within. Thus an open system has 3 components: Input, process
and output. Organization is said to be an open system. In an open system, regular exchange
of feedback with the external environment takes place. It makes an organization dynamic
and adaptive. An open system constitutes of environment awareness, feedback,
maintenance and adaptive activities.

Closed
Mechanical eff. People and human relations

(1900-1930) (1930-1960)

Type 1 Type 2

Rational Social

Contingency design power and politics

(1960-1975) (1975-contd.)

Type 3 Type 4

Open

In type 1, mechanical outlook was given to the organization and it was thought that work should be
broken down to small components and level should be performed by a particular person. Then
human aspect was associated with the organization. Importance to the emotions of the workers
was given. This was type 2 theory. Later an increase in the size of their organization was seen which
increased the competition. It was observed that the organization continuously interacted with the
environment. Hence the type 3 theorists emerged. The type 4 theorists, which are the recent ones,
considered bounded rationality and used of power and politics as a means to achieve organizational
goals.

Organizational effectiveness is the central theme of organization theory.

Theories of organizational effectiveness:

 1) Resource based approach: the focus was on obtaining and managing valued resources i.e.
Input
2) Internal process approach: the focus was on the means used to maintain organizational
health and efficiency. i.e. Process
3) Goal based approach: the focus was on to achieve a particular goal rather the means
adopted to attain it. The final result was paramount. i.e. output.

All the above 3 approaches were combined and Competing Values Approach was designed. This
approach tells that the organization does many things and gets several outcomes. This
model combines several indicators of effectiveness into a single framework.

Human relationship emphasis Open system emphasis

Primary goal- HR development Primary goal- growth and resource

acquisition

Sub goals- cohesion, morale, training sub goals- flexibility, readiness

Internal process emphasis rational goal emphasis

Primary goal- stability, equilibrium primary goal- productivity, efficiency

Sub goals- information mgmt comm. sub goals- planning, goal setting

The first value dimension is whether dominant values concern issues that are internal or
external to the firm. The internal focus reflects the management concern for the well being
of the employees and the external emphasize on well being of the organization with respect
to the environment. The second value dimension pertains to the structure of the
organization, whether it is flexible or stable. Stability reflects the management value for
efficiency and control whereas flexibility represents the value for learning and change.

The combination of external focus and flexibility leads to an open system emphasis. The
organization wants to establish a good relation with the environment to acquire resources
and grow. The rational goal emphasis reflects that the organization want to achieve goals in
a controlled way. The internal process emphasis shows that the organizations are well
established in the environment and they simply want to maintain their current position. The
human relation emphasis incorporates the values of an internal focus and a flexible
structure. This part shows that management is concerned for the development of human
resources.