SUBJECT AND METHOD OF ORGANIZATION THEORY
Rudi Rozman
University of Ljubljana, Faculty of Economics
Kardeljeva plošèad, 1001 Ljubljana, Slovenia
Phone. (+386 61) 189 25 50
Fax: (+386 61) 189 26 98
E-mail:
Abstract
There exist different theories on organization explaining its phenomena or the phenomena of its parts. As the changes start to radically influence the studied subject and as the number of different theories on the subject is growing and becoming more and more complex, scientists start to combine and connect all the different theories on organization into one basic theory. At the same time, the theory of organization ought to be updated following all the progress in the practice of organization and in related areas. Included in this search is also the search for what might be the smallest unit of the organization.
This entire search will not yield results until we clearly define what is meant by the term organization. If the organization is understood as a social unit, different sciences propose theories on the organization. Approaches of different sciences are applied to the social units or their parts. If the organization is understood as the process of establishing the organization or organizing, organization is not explained, but the process of establishing it. If by “organization” the system of roles and/or of relationships is understood, they should cease to be subordinate to the social unit and people. They also should not be regarded in a static way or as achieving the goal of the social unit.
If we would like to study organization by a basic science of organization, we have to understand it as a system of relationships among people to ensure the existence, development and rational achievement of the social unit’s goal. That is proposed by Prof. Lipovec in his developed theory of organization. However, in order to build a theory it is not sufficient to define a special subject of research. It is also necessary to explain the method characteristic of this subject; a method which explains how the basic parts of the subject integrate into the entire subject. In this paper the author discusses the method of organization that without any doubt iscoordination. The process of coordination and the subject of organization and their connections to other organizational phenomena are discussed.
INTRODUCTION
Science explains phenomena of a given subject or area. It defines the subject and its characteristics. Scientific method involves the observation of facts connected to a given subject and verifies them through continuous observation. Science looks for facts that are common to all studied subjects of the same kind. After finding facts, science tries to find causal relationships among observed variables that explain the behavior of the subject.
Unverified relationships are hypotheses. Being verified they are called principles. Principles are thus fundamental truths explaining relationships among variables which explain the subject. Theory is a systematic grouping of interrelated principles. Science builds different theories on the subject or on parts of the subject. By theory we understand a complete cognition of one or more subjects or their parts. Theory is a verified explanation of a subject’s phenomena (Toš,1988, p.3). Theory explains the essence of the subject through facts and laws.
Dependent on the purpose of the research, theory focuses not on all but on the most important characteristics of the subject. Therefore, it is important to properly choose the characteristics to be studied according to the purpose of the study. For that reason it is very often discussed whether the right assumptions have been considered. Theory is known as the essence of all concrete subjects. The findings of theory should be relevant for all concrete subjects. Theory logically explains the behavior of subjects and forecasts their future. Theory enables us to understand causes and consequences. To be valid, each theory must be verified. Logical thinking, and especially evidence based on practice, verify the validity of theory.
Through empirical approach, science checks whether the theory is right. At the same time, empirical investigation opens new areas to be researched. One without the other proves dangerous. Theory requires the study of some aspects of the subject. Theory defines the subject conceptually and explains its phenomena.
The cognitive process of the subject and its phenomena is not a freely chosen process. Method should ensure that the cognition is objective, available, controlled, precise, common and systematic (Toš, 1988, p. 23). I would distinguish two understandings of method. The first is the basic scientific method or method of cognition. In the second sense, method represents the way to the subject. It is accepted that the method should be able to constitute or to design the subject (Šišul, 1994, p. 43). A consistent system of phenomena and their relationships in an area that contains its own method forms the theory (Lipovec, 1987, p. 350).
In this paper the subject of our study is organization. I will try to prove that the organization is the subject of the organizational science (of organization) and that the method used by organization is coordination. First, I will briefly explain the subject of organizational science. That is quite necessary because the term organization has several different meanings. I will not go into detail because I have already discussed it on some other occasion. I will give some basic ideas and add some specifics connected to this paper. Then I will focus on coordination as the method of organization and at the end combine different organizational processes. I will try to show that the most characteristic thing that happens within organization is the coordination of relationships. I have to mention that the basic theory on organization that I will deal with has been proposed by Prof. Filip Lipovec in his book “The Developed Theory of Organization” (1987). Let us also emphasize that we are discussing the overall organization and not parts of it.
For various reasons, I will base my research on the findings of classic writers on organization. Firstly, because they have defined and discussed the coordination to the greater extent than today’s authors. Today’s authors either accept the classic ideas on coordination or identify it with the organization and see no problem in the coordination process. Secondly, they interpret organization in a way that comes closer to our views on organization, whereas the later sociological approach - understanding organization as a social unit - has prevailed. Thirdly, they have defined organization and coordination within a much simpler environment. For these reasons their definitions are simple and understandable.
1. DEFINITION OF ORGANIZATION
As previously mentioned, I have discussed Lipovec’s definition of our subject - organization - in greater details on other occasions ((Rozman, 1996; and in my paper The Theory of Organization of Organizations; prepared for the 14th EGOS colloquium, 1998 in Maastricht). Although this theory appears - after being explained - either familiar to everybody (which reminds me of Columbus attempt to stand an egg on one end) or as something uncertain, especially in relation to other theories, I will define it very briefly and emphasize a few important issues for our discussion.
Organization can be defined in different ways. Firstly, it is often defined as a social unit consisting of members who have joined the social unit to fulfill its purpose and, at the same time, to attain their individual goals. I would assume that this understanding of organization is the most common these days. The organizations or parts of it (including people who are often seen as basic units of the social unit) according to this definition are studied from different approaches and by different sciences, especially sociology, economics, psychology, anthropology, and engineering. Many sciences study organization from their own aspects, using their own methods. I imagine that according to the above definition the science on organizations is either a special field of basic sciences (like the sociology of organization, psychology of organization, economics of organization, etc.) and/or an applied science consisting of the findings of different previously mentioned sciences. As an applied science, suited to managers, it can be science on management or administration. As Thompson (Zald, 1996, pp. 251-261) put it, “administrative science was an applied field, standing in relationship to the basic social sciences as did engineering to the physical sciences or medicine to the biological sciences.”
Many scientists and managers interpret organization as the establishing of a framework of activity grouping and authority relationships. This is what we call the technical definition of organization, the organization of work, or engineering (which was declared as an applied science). In this case the relationships and processes among materials, machines etc. are taken into consideration. The relationships and processes among people are also considered, but people seen as obedient and adaptable parts of the whole machinery, like all the other inputs. That was quite in line with the early approaches to organization. Organization is not understood as a process among people but as a process among things. This process among people and nature is studied by the applied science of engineering or work organization.
Yet a large number of organization theorists perceive organization as the sum total of human relationships in any group activity; they thus seem to make it equivalent to “social structure” (Koontz, Making Sense of Management Theory, in Toward a Unified Theory of Management, 1962, p.11). Through this approach the behavior of social units is explained. The relationships are still not seen as independent units studied by organization. In this approach the dynamic side of the organization and the goal of the organization have not been developed according to the development of the static, structural part of the organization. Relationships are still regarded as subordinate to people. Their goal is seen as the goal of the social unit.
Lipovec built his theory on the basis of all mentioned approaches. According to him (1987, p. 35), the general definition of organization of any social unit is the following: “Organization is the composition of relationships between people, who by relationships become members of a formed social unit. Organization ensures the existence and specific characteristics of the social unit and rational achievement of goals of the social unit.” According to this definition we study relationships or structures not only in a static way, as they are seen at a given moment. If considered static, they by themselves cannot ensure the rationality of a social unit’s goal achievement. They have to change, they have to become processes, too. Organizational processes can be understood as the dynamic, rationality ensuring relationships.
According to the definition, the smallest part studied by organizational science is the relationship. Who builds the relationship? Two individuals or two groups. But we do not study people or groups within organizational science; that is left to sciences such as sociology, psychology, biology, anthropology. As explained by Lipovec (1987, p. 343) two people or groups are hidden behind every relationship. Maybe we can say that a relationship consists of two roles. However, in this case as well we have to emphasize that the relationship defines the roles and that we play roles because of relationships, not vice versa. Relationships are changed, developed, built through (existent) relationships themselves. The relationship determines the relationship. The relationship introduces the relationship and it is simultaneously the studied subject, too. To study organization we remain within relationship: it is the subject, the object and the process. Lipovec talks about self organization. The entire subject of organization is included in one (rationality) ensuring relationship
Through relationship the relationship is developed (that is the reason why we do not need to define organizational processes separately as the smallest unit of organization or to discuss them as if they weren’t in connection to relationship). The subject is the organization that is both a structure and a process at the same time. A relationship is established by two persons and the relationship changes the relationship. Changes can be purposeful or formal (e.g. planning) or informal. Process changes the relationship. Process and the structure (consisting of relationships among more members) ensure rational achievement of the goal of the social unit. Based on the above definition, the organization becomes a specific, self-contained, autonomous phenomenon. It is studied by a basic science, the science of organization. This science studies relationships that ensure rational achievement of the social unit’s goal and explains how the social unit is formed. This subject - the organization as a system of ensuring relationships - should be now connected to coordination.
2. DIVISION OF LABOR AND COORDINATION OF DIVIDED LABOR
2.1 Division of labor
There exist two phenomena that have influenced the history of mankind to a high degree. The first is the division of labor. The social division and technical division of labor have to be distinguished. With social division of labor we include the division of labor among enterprises and other units producing different products and services. They have to exchange products and services. Coordination takes place and develops (also through the policies of governments and similar actions) as the enterprises meet on the markets. It is a kind of ex post coordination as explained by economists. In our discussion, as is usually the case in discussing organizational issues, we are interested in the technical division of labor which takes place within the enterprise. This is the (technical) division of labor inside the enterprise or any given social unit.
The basic advantage of the technically divided labor is that through an associated effort it enables people to carry out tasks which cannot be done by an individual person nor by more people that do not act in an associated manner. The advantages of divided labor are higher productivity, lower costs and higher quality. Throughout the industrial revolution the division of work was very important. The first authors on management emphasize it very strongly. For them it often represents the first principle of organization (e.g. Fayol, 1949, p. 20).
Basically we can distinguish between two types of the technical division of work. The first can be called horizontal. An examples is the division of a technical or a business process based on division of work according to steps of the process, according to products, according to regions, or based on some similar criteria. The second type is the vertical division of work. This one is more important to us. The foundation of all human activities is the simple working process. Each conscious working process consists of three basic steps: thinking ahead upon the process and the result; executing the plan; and establishing the will and efforts to act according to the plan. At the level of each individual working process we distinguish among planning, executing and controlling. This distinction is one of the most important for the organization. From it at least two important issues can be seen. Firstly, it can be seen quite clearly that the execution results in products and services. Planning and controlling do not result directly in products and services but they ensure that the execution will be conducted in a rational way. The other consequence is that on this basis we can arrive at organizational or managerial functions.
For that purpose let us imagine that more people together are conducting a working process. They plan jointly (or one person does it) the entire process and expected results. They cannot start the work until they assign parts of the divided work to individuals. Let us call this step the planning of organization. To start the execution, workers have to be hired, communicated with, and motivated. We call this phase the actuating (an expression used by Terry, 1964, p.51) of organization (which is approximately the same as staffing or human resources management and leading). We find the expression “actuation” very convenient. It is really the execution phase of the organizing process that is “executed” by managers themselves, whereas the execution of business process is done by non-managers. Following the actuation phase, members of the social unit start to execute their duties. They are controlled: the control of organization comes first. Finally, the whole business process and results are controlled.
Earlier, in the case of an individual we defined the working process as planning, executing, controlling. Now, in the case of more people joining to the social unit that becomes a new entity, there appear to be two interwoven processes: a business and an organization process. The first one consists of the planning, executing and control of business. The latter consists of planning organization, actuating and controlling organization. This is very similar to the distinction of planning, organizing, leading, and control in most authors’ explanations of managerial functions. However, because the authors do not distinguish between organization and business, they used planning meaning only planning of business; by organizing they meant establishing or planning an organization. Execution of business is not part of management, but the implementation of organization is part of management and is known as (staffing and) leading. By control most authors understand the control of business and the control of organization (auditing). In the division of labor, managers take over the organizational process and part of the business process (planning and controlling). In the latter case planning and controlling ensure efficiency. In the first case they ensure the rational achievement of the social unit goal. In the latter case we talk about the organization of work or about technical organization. In the first case we talk about organization as a system of dynamic relationships.
2.2 Coordination of divided work
Many advantages of the division of labor are known. But is it not enough only to divide the work. The disadvantage is the danger of irrational achievement of results, danger of chaos and the decreasing instead of increasing efficiency. Divided activities should be coordinated in the sense of location, sequence, time, content, and form.
Fayol (1949, p. 103), who determines the division of work as a basic managerial principle, defines coordination as the harmonization of all the activities of a concern so as to facilitate its working and its success. He mentioned different examples and defined coordination as “in a word, to accord things and actions their right full proportions, and to adapt means to ends.”
If there is no coordination, there is no rational achievement of the goal of the enterprise. Technical division is not possible without the coordination because the divided labor would not be connected to the entire work. Coordination can be defined as connecting the divided labor to a new, organized entity that will yield better results than the mere sum of individual efforts. Without the coordination of divided labor there are no relationships and no organization.