Organisational Theories And Related Management Practices

Weber’s theory of bureaucracy

What Is The Organisational Theories And Related Management Practices?

Organisational behaviour has become extremely complex which has led to formation of diverse organisational theories and management practices. The organisation theories today recognise the various aspects of organisations like bureaucracy and division of labour. Today organisations have evolved as members having a rich history and dynamic psychology. The assignment introduces the competing organisation theories of Weber, Taylor and Smith in the first section. The next section studies the complexities and the evolution organisations into social members having a definite thought process. The final section studies the complexities in the human behaviour in the organisations today. The paper critically analyses these  theories and issues like financial crisis and conflict taking Maybank of Malaysia as the company for the study.

Weber proposed the theory of bureaucracy and pointed out that organisations should follow bureaucracy to create a smooth flow of decision making process. He proposed that there should be official jurisdiction to ensure adherence to laws. His theory laid emphasis on superior and subordinate relationships which are based on written documents stating the ambit the power of each position. The theory of bureaucracy states that the management of the organisations should be run be experienced personnel who are accountable and responsible to the stakeholders (Wickert, Scherer and Spence 2016).

1. The management of the organisations are the highest decision making authorities who create the organisational culture and structure.
2. The business strategies are made according to the organisational structures and culture.
3. Bureaucracy marks areas of control of each executive and his responsibilities.
4. It leads to systematic decision making and accountability
5. The powers and responsibilities are based on written documents, so prevents overlapping of power between executives.
6. The theory stresses on strong management which leads to stability of the operations.

1. The theory stresses on positions with varying decision making powers. However, complex bureaucracy hampers quick decision making process. It leads to companies failing to take advantage of the dynamic market opportunities (Alexander, Walker and Naim 2014).
2. The superior subordinate relationship makes the organisational structure and culture complex which often neglects the requirements of the subordinates.
3. The complex structure often leads to lack of communication and creates conflict.

The bureaucratic framework of Weber is present in all the companies where the management consists of directors and CEOs who have years of experience. These directors and CEOs by the virtue of the competencies make strategies to capitalise of market opportunities. The able leadership of the CEOs lead the companies to gain strong market position and deal with market challenges like financial crises (Lean and Teng 2013).

The economies of East Asia like Malaysia are undergoing financial crises due to several problems like weak risk management of the banks. The macroeconomic factors pertaining to legal and economical areas are responsible for the crises (Kawai and Schmiegelow 2014). The management of Maybank, Malaysia in order to counteract the economic crises and diversify its risks, spread its operations into markets like Phillipines and Kuala Lampur. The multinational bank has its branches in countries like China, Hong Kong and Laos (maybank.com, 2017).

It can be pointed out the leadership of such a vast structure requires a strong bureaucratic control. Hence, the theory of Weber is applied in multinational companies to deal with the critical issue of financial crises.

Carpenter and Krause (2015) in their work point that bureaucracy aims at creating levels of decision making process based on transactional authority. However, these levels of authority create conflict in case of subjective matters.

A rational perspective theory is based on Taylor scientific management theory which determines two areas of concern, the organisational goal and formalisation. The organisational theory requires organisations to determine their long and short term goals in the first stage. This is followed by making strategies and setting of standard modes of operations to attain those goals. The organisations then allocate their resources according to the modes of operations (Witzel and Warner 2015).

Advantages of Weber’s theory

The organisational theory stands of the following pillars which are also the advantages of it:

1. Division of work between managers and subordinates
2. Incentive to motivate the workers to achieve higher targets based on the goals.
3. Scientific management of workers based on Taylorism which streamlines the actions sequentially to ensure smooth and timely fulfilling of targets (Dodge et al. 2016).

1. The division of work requires of intervention by management which affect its dynamism.
2. The system requires coordination of complex activities and job processes which often causes conflict.

The banks in Malaysia like Maybank use rational system perspective to allocate their resources to ensure customer satisfaction. They are allocating a huge of money towards maintenance of specialised teams of officers who are capable of handling complaints. This step of the banks aims to reduce customer complaint and increase customer satisfaction. Thus rational system theory of organisational behaviour can be used to manage customer issues in the organisations like Maybank (Thestar.com.my 2017).

The organisational theory of division of labour by Adam Smith deals with dividing the job among individual labour to increase efficiency and output. This system requires strong management to distribute the work among the available labour force.

            As pointed out by Adam Smith the advantages of division of labour has three advantages:

1. Workers doing specific tasks gain specialisation in the tasks which increases their efficiency. This helps in streamlining of the works which encourages high performance of the organisations as whole.
2. This type of organisational theory is helpful where the tasks are complex and involve machinery. The workers working on machines know the best ways of operating them, thus increasing productivity.

1. This theory is applicable in organisations which have strong and capable management. The management allocate the tasks appropriately which results in high productivity. Inappropriate allocation or division of labour creates conflict and hampers productivity.
2. The organisations with lack of participation from employees can not benefit from this behaviour.

The multinational banks like Maybank serve huge customer base with diverse needs. This requires the people serving the customers to be specialised in their areas. The bank divides the job responsibilities among its staffs depending on their experience and expertise. This division of labour results in timely achievement of targets and high performance. It is this division of labour which has allowed the bank to spread into markets like the United Kingdom, Bahrain and Myanmar. Thus, division of labour and strong bureaucratic control encourage global expansion and high market position. Azmeh and Nadvi (2014) in their state that division of labour is catalysing transformation of Asian companies to world class ones. This proves that division of labour is required to gain expertise and global position in the market.

Complexity theory and organisations or complexity strategy deals in complexity of organisational life. The complexity of organisations encompasses strategic management and organisational behaviour theories.

The complexity is a theory that encompasses several disciplines and has its roots in the system theory in 1960s.  The organisational theory studies how organisations adapt to the macro environmental market situations and deal with threats and challenges. The theory views that organisations are complex bodies consisting of several system and departments which deal with specific areas. The departments form dynamic networks of departments which interact with each other. The departments adapt with the micro economic situations and develop collective organisational behaviours.

The organisations have become very complex and adaptive to cater to the needs of the society which given birth to the concept of socially constructed organisations. The advancements in science and technology has affected the modes of operations of the organisations. They today operate in manner to create value for their consumers, stakeholders and the society at large. This has urged evolution of new organisation theories which embrace the environment, people and technology. The traditional organisations were limited to the products, their consumers and the shareholders. The society today is more educated about the corporate sector and has the power to decide their products, modes of operations and so on. This has changed the entire landscape the organisations work. The theory requires organisations to work as members of society and create value for it(Camargo-Borges and Rasera 2013).

Disadvantages of Weber’s theory

The field of organisational theory is an ever evolving theory which studies the complexities in the organisational structures and their survival. The theory studies organisations and their changing landscape delving into areas like changing role of society, global expansions, economic factors and so on. The theory studies the changing history of society and its impact on the organisational needs. Earlier theories viewed organisations as static product dispensing structures. The modern organisational theories view organisations as members of the society which have evolved historically and reached the stage of value creation for the society rather than only making products. The theory studies organisations as evolving and transforming social creations interacting the whole society to cater to their needs (Bushe and Storch 2015).

The increasing complexity of the organisational structures has resulted in mounting pressure on them and led to new theory-organisational psychology. The organisations today have changed their psychology to operate in a more interrelated society. The psychologists have described this psychology as a part of organisational theory. They recognise the areas of their activities that have humanitarian approach towards the society. The psychology has its roots in the philosophy which points out that the world has smaller components which interact and come together to the whole. Similarly, the theory points out the organisations do not exist alone in the society and are interdependent on the society. This theory makes the organisations act responsibly towards development of the society and connect to the society psychologically (Reichman 2014).

The organisational theories proposed by Weber, Adam Smith and Taylor have characteristics which make them interlinked. Weber emphasised on the importance of bureaucracy while Taylor’s rational system stresses on identification of organisational goal and adopting of strategies to achieve them.  The division of labour theory by Adam Smith lays emphasis on division of labour based on expertise. According to Frank Gobbin modern institutions work should work in transparent manner to increase their efficiency. The modern theory of organisational behaviour requires a strong bureaucratic management capable of deciding the goals and strategies and finally dividing tasks based on expertise. Thus, this theory proposed by Frank Dobbin embraces all the previous theories (Zorn et al. 2014).

Alternative framework approaches to management as a science which was developed by Seweryn Chatjman. The study evolved in order to create a transparent framework organisations should follow to abide by laws and regularity. The theory views organisations as identities created by man to produce things to cater to his needs. The machinery transforms the raw materials into desired output. The alternative theory views production as sequences driven by scientific processes which also involved human intervention(Dunning 2015).

The nature of behaviour of people working in an organisation has changed along with the organisational landscape.  The intense international competition, increased knowledge, advancement of science, emergence of stakeholders and society as a part of corporate strategies and so on have  made the human behaviour extremely complex.  Today companies, especially the multinational companies view their human resources as a part of strategic management. The organisations have much smaller hierarchy and leaner organisational structures. The organisations today have made their structure leaner to enable faster decision making process. This helps the companies to take advantage of market opportunities and generate profit from them. The companies like Maybank have branches in the several countries catering to customers having varied needs. Today, the human resources need to interact with consumers from varying cultures and backgrounds. This leads them to behave in diverse ways to adapt to the diverse markets. This has resulted in complex human behaviour and organisational behaviours (Fitzsimmons and Stamper 2014).

Management practice in companies

The human resources of Maybank and other multinational companies are trained so that they gain specialisation. They gain and use knowledge to cater to and retain the customers, thus accounting for the competitive advantages companies enjoy. This has led to employees gaining more decision making power and they collaborate with their superiors to achieve goals (Ramanathan, Bentley and Pang 2014).

The multinational companies are present in several countries through subsidiaries which work under the framework of the mother company. The intense competition has led the parent companies putting huge performance pressure on their subsidiaries. This creates a complex relationship between the employees of various locations regarding targets and achievements (Hoenen and Kostova 2015).

Conclusion:

Organisations have evolved into social members and interact with the society like never before. The organisation theories show that today the corporate bodies like Maybank combines the various theories like bureaucracy and division of labour to deal with the market situations. The intense competition and ever changing economic scenario have deep impact on the organisations and their employees. These have made the behaviour of the employees and their relationship with the organisation extremely complex.

References:

Alexander, A., Walker, H. and Naim, M., 2014. Decision theory in sustainable supply chain management: a literature review. Supply Chain Management: An International Journal, 19(5/6), pp.504-522.

Azmeh, S. and Nadvi, K., 2014. Asian firms and the restructuring of global value chains. International Business Review, 23(4), pp.708-717.

Bushe, G.R. and Storch, J., 2015. Generative Image. Dialogic Organization Development: The Theory and Practice of Transformational Change, p.101.

Camargo-Borges, C. and Rasera, E.F., 2013. Social constructionism in the context of organization development: Dialogue, imagination, and co-creation as resources of change. Sage Open, 3(2), p.2158244013487540.

Carpenter, D. and Krause, G.A., 2015. Transactional authority and bureaucratic politics. Journal of Public Administration Research and Theory, 25(1), pp.5-25.

Dodge, S., De Smet, T., Meldrim, J., Lennon, N., Perrin, D., Ferriera, S., Leber, Z., Friedrich, D., Gabriel, S., Lander, E.S. and Kieffer, D., 2016. USING DYNA?IC WORk DESIGN ?O HELP CURE CANCER? AND O??ER DISEASES?.

Dunning, J.H., 2015. Reappraising the eclectic paradigm in an age of alliance capitalism. In The Eclectic Paradigm (pp. 111-142). Palgrave Macmillan UK.

Fitzsimmons, S.R. and Stamper, C.L., 2014. How societal culture influences friction in the employee–organization relationship. Human Resource Management Review, 24(1), pp.80-94.

Hoenen, A.K. and Kostova, T., 2015. Utilizing the broader agency perspective for studying headquarters–subsidiary relations in multinational companies. Journal of International Business Studies, 46(1), pp.104-113.

Kawai, M. and Schmiegelow, H., 2014. Financial crisis as a catalyst of legal reforms: the case of Asia. In Institutional Competition between Common Law and Civil Law (pp. 381-420). Springer Berlin Heidelberg.

Lean, H.H. and Teng, K.T., 2013. Integration of world leaders and emerging powers into the Malaysian stock market: A DCC-MGARCH approach. Economic Modelling, 32, pp.333-342.

Malaysia, A. 2017. All Countries | Maybank. [online] Maybank Malaysia. Available at: https://www.maybank.com/en/worldwide/all-countries.page? [Accessed 1 May 2017].

Ramanathan, U., Bentley, Y. and Pang, G., 2014. The role of collaboration in the UK green supply chains: an exploratory study of the perspectives of suppliers, logistics and retailers. Journal of Cleaner Production, 70, pp.231-241.

Reichman, W. ed., 2014. Industrial and organizational psychology help the vulnerable: Serving the underserved. Springer.

Thestar.com.my. 2017. Malaysian banks take heed of complaints, making huge investments to improve services - Business News | The Star Online. [online] Available at: https://www.thestar.com.my/business/business-news/2013/03/25/malaysian-banks-take-heed-of-complaints-making-huge-investments-to-improve-services/ [Accessed 1 May 2017].

Wickert, C., Scherer, A.G. and Spence, L.J., 2016. Walking and talking corporate social responsibility: Implications of firm size and organizational cost. Journal of Management Studies, 53(7), pp.1169-1196.

Witzel, M. and Warner, M., 2015. Taylorism revisited: Culture, management theory and paradigm-shift. Journal of General Management, 40(3), pp.55-69.

Zorn, D., Dobbin, F., Dierkes, J. and Kwok, M.S., 2014. Managing investors: How financial markets reshaped the Americ