Organizations are primarily defined by their systems of management.
Organizations are primarily defined by their systems of management.

Organizations seem to take on a life of their own but there are many structural theories that define them. Any organization is people working together to achieve objectives through division of labor. Organizations use the unique talents of people to achieve more than can be accomplished by any one of them individually.

Contingency Theory

Contingency or situational organization theory is one in which uncertainty determines structure, and where variables can be neither controlled nor predicted. In this type of organization, no set management principles are defined. Each manager must perform and rely on their own experience and judgment to manage the uncertain circumstances they are facing. Different environments require different organizational relationships to effectively accomplish goals. Decisions are based on potential outcomes of any situation and are successful when relevant information is acted upon and irrelevant information is ignored.

Culture Theory

Culture organizational theory postulates that organizations are formed according to the cultural values, what is right or wrong, good or bad, and important or insignificant, of the employees. A country’s values, such as democracy, individual rights and freedoms, or a puritan work ethic, influence the organization as do regional and local values. Culture is enforced by ceremony, symbols and languages in the form of awards, mission statements and slogans. Knowledge of preferred technologies and traditions guide the organization.

Bureaucracy

Bureaucratic organizations have well-defined hierarchies, division of labor, specialization, regulations and impersonal relationships between managers and employees. Competence is the basis for all decisions made in hiring, job assignments and promotions. This eliminates personal bias and emphasizes ability and merit throughout the organization. These organizations are characterized by high-level officials supervising low-level employees with progress based on competence in a field.

Scientific Management

The scientific management theory emphasizes research to develop the best management system for the conditions in the workplace. Scientific management principles define the manager's role as the person responsible for increasing an organization's productivity. In this system, managers are responsible for selecting, training and developing employees with financial incentives as rewards. Close supervision of employees is considered to be most productive. Planning, organizing, staffing and controlling are primary functions of this type of organization.

Economic Organizations

Economic organizations are those influenced primarily by economic upswings, recessions and regional unemployment rates. These factors affect a company's ability to grow and prosper and may affect its role in the economy. For these organizations, as the economy grows, the organization becomes larger and more specialized. The legal and political environment significantly impacts the stability and security of the organization. Such things as regulations, taxes and employee rights laws hinder this organization’s ability to function efficiently.

Administrative Management Theory

Administrative management organizations favor bottom-to-top communications. Managers develop a sense of unity in the workforce where a willingness to cooperate and communicate is strongly encouraged. It emphasizes that employees must understand the communication and accept it as being consistent with the organization's purposes and those of other employees. The executive's main organizational function is to act as a channel of communication and maintain organizational operations. Key attributes are meaningfulness, responsibility and feedback on issues.