How organizations function
BASIC CONSIDERATIONS
The two factors that determine how an organization functions in relation to its
internal and external environment are its structure and the processes that operate
within it. Organizations are also affected by the culture they develop, that is, the
values and norms that affect behaviour (see Chapter 21).
Much has been written to explain how organizations function and the first part of
this chapter summarizes the various theories of organization. These theories provide
the background to the last three sections of the chapter which deal with organization
structure, types of organizations and organizational processes.
ORGANIZATION THEORIES
The classical school
The classical or scientific management school, as represented by Fayol (1916), Taylor
(1911) and Urwick (1947), believed in control, order and formality. Organizations
need to minimize the opportunity for unfortunate and uncontrollable informal rela-
tions, leaving room only for the formal ones.
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