The answer to this Question seems obvious at first glance. We all believe that we know what an organization is and that we can recognize one when we see it. But If we try to define an organization we will find ourselves facing many difficulties and unable to provide an inclusive and exclusive definition. By the end of this article you will find out what important aspects had been neglected in your initial perception of an organization and you will develop a better understanding of the concept.
The definition of an organization is a subject that management theorists agree very little on as they each define an organization in different ways. In this article I take into account the three approaches of Rational, Natural and Open Systems outlined in the book “Organizations and Organizing” (valuable work of Richard Scott and Gerald F. Davis) in an attempt to explore the essence of an organization. As you will notice while reading this article, each of these three approaches puts focus on a particular aspect of an organization and they complement each other in enhancing our knowledge of the concept of an organization. In the end I will show that the definitions provided in each of these three approaches have significant implications and practical uses in an organization and are not merely theoretical and abstract.
In this approach, an organizations are: “collectivities oriented to the pursuit of relatively specific goals and exhibiting relatively highly formalized structure”.
There are two important points in this definition. One is that organizations are goal-oriented and that these goals are clear and defined. These goals are imposed by the managers and are presented to subordinates in the form of “micro goals” and are used as a common destination towards which all behaviors and attitudes are set.
The other important point is that an organization has a formal social structure. This means that the expected behaviors and the rules governing these behaviors in all positions and jobs within an organization are clearly defined and whoever occupies these positions must act in accordance with the prescribed behaviors.
Having predetermined goals and a formal structure in the rational approach can be better clarified with an example. When you are sitting and chatting with your friends, this formed assembly is not an organization because nobody has officially specified the aim of this gathering in advance (no pre-defined goals) and the expected behaviors are not clearly and precisely designated (informality). But your university is an organization because it possesses clearly specified goal – recruiting and training students – as well as defined rules governing the conduct at every position within the institute, regardless of who occupies the position.
An organization in this approach is like a machine designed by its owner or manager with a specific purpose in mind and its parts are designed and assembled in a way that helps achieve that purpose.
Natural System Approach
This approach describes organizations as such: “organizations are collectivities whose participants are pursuing multiple interests, both disparate and common, but who recognize the value of perpetuating the organizations as an important resource. ”.
So what is the difference between this and the previous definition? Firstly, in a rational approach the goals are defined by managers (or owners) and it is assumed that there is a unity of purpose in the organization and the only goal is the one that has been defined. However, in this approach there is an accepted fact that the people in the organization may each have goals that differ from those of the organization. One of the main defined goals may be the expansion of the market whereas the main goal of many employees may instead be passing a good time with colleagues or maintaining the status quo and these goals may have a bigger influence on the behavior of the employees than the defined goals of the organization.
Another thing is that in a rational approach, an organization’s reason for being is the presence of a specific purpose and the organization is a means to achieve that purpose. For example, if the aim of building an organization is to help those who incurred damages or injuries in a war, then after having compensated these damages, the organization has outlived its purpose and should be dissolved. But in a natural system approach, the organization itself and its survival are themselves fundamental goals of its members. People in organizations have jobs that they don’t want to lose. Many of a person’s social needs are catered to in an organization through forming friendship groups. The social status of many individuals arises from their presence in a special organization and their financial security is provided by their membership in the organization. Thus the destruction of this organization would be very costly to its people and so sustaining it, even if it has lost its original purpose for existence, becomes a worthy cause.
Open System Approach
In this approach, organizations are expressed as “Masses of interrelated activities and processes that are placed in a broader environment”.
At first glance, this definition seems vague and confusing. But we can make it clearer by analyzing it. First, in this view an organization consists of the activities and not of individuals. People can enter and leave an organization and may even be members of several organizations. Because what constitutes an organization is not its persons but rather the activities and behaviors that they exhibit within it. Furthermore, these activities are interdependent. That is, they affect and are affected by each other.
As you know, there are two main constituents in every system: The components, and the relations between them. These two aspects are emphasized in the open system approach. The components of an organization’s system are basically the activities and behaviors. And these components are connected together and affect one another. Of course this connection and interdependence may vary in strength. In a mechanical system, such as a car engine, the movement of one component forces movement in other components. For example, the burning of fuel in the cylinders causes movement in the pistons and ultimately the wheels of the car. But in a social system such as an organization, this interconnection between components is not as sturdy and forceful. A boss’s orders aimed at costumer satisfaction might not have such a big effect on the behavior of the employees.
Another important point in this definition is a system’s exposure to and its affectability by the environment. Every organization inhabits a broader social system and is interacting with other systems. A factory manufacturing automobiles is located in a system consisting of suppliers, buyers, the government, competitors, etc. and the activities of these systems greatly affect the organization. Of course, this influence is reciprocal and the organization itself also affects its environment and other systems.
As you have seen, each of these three approaches emphasize a particular aspect of an organization and with some reflection, we can conclude that they are not in major conflict and can work together to complete our understanding of the idea of an organization.
The Rational System approach has focused on the normative structure of an organization, i.e. what an organization should be. Ideally, organizations should have clear and pre-defined objectives as well as precisely defined behavioral rules for every job position to make sure that the activities of each position contribute to achieving the goals of the organization.
The Natural Systems approach, unlike the rational approach, highlights the behavioral structure of an organization, i.e. what an organization actually is and not what it should be. What is really observed in organizations is that individuals have different goal which may not comply with those of the organizations. In this approach, an informal organization is of equal or even more importance than a formal one. Also, an organization is no longer just a medium for achieving a specific purpose as it, and its survival, are some of the main goals. The means become the ends.
One of the important distinctions between the rational and natural approaches is that in the former approach the organization is designed. Just like the way an engineer designs a bike and efficiently chooses its components based on its purpose. By contrast, in the natural approach the organization is simply created and then developed.
The open system approach takes into consideration an important component that is neglected in the other two approaches. That is the exposure between an organization and the environment and their mutual impact on each other.
These three approaches do not merely provide abstract and theoretical definitions that have no real application. The approach one chooses will determine the aspects of an organization they focus on and the measures they take towards solving the organization’s problems. For instance, consider the issue of low labor productivity; a person adhering to the rational approach will likely try to tackle this issue by focusing on the design of the work system and will carry out time and motion studies in order to improve the productivity and enhance the work structure. On the other hand, a person governed by the natural approach will probably deal with the same problem by concentration on the human factors of the workforce and will try to improve productivity through workforce morale improvement and conflict and dispute resolution. Finally, a person who follows the open system approach will confront this issue by focusing on the external systems, such as the labor legislation and its possible shortcomings or the society’s economic status, or the interactions between sub-systems within an organization.
* PhD Student in Human Resource Management, University of Tehran