Definition: The Modern Theory is the integration of valuable concepts of the classical models with the social and behavioral sciences. This theory posits that an organization is a system that changes with the change in its environment, both internal and external. #thesystemapproach
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The modern theories can be classified into types
1.The system approach
Subsystems in an organisation
A. Technical system
B. social system
C. power subsystem
D. managerial subsystem
2. The contingency theory
Modern Organisation Theory:
Modern organisation theory is of recent origin, having developed in early 1960’s. This theory has tried to overcome the drawbacks of earlier theories. In the words of W.G. Scott, ‘The distinctive qualities of modern organisation theory are its conceptual analytical base, its reliance on empirical research data and, above all, its integrating nature. These qualities are framed in a philosophy which accepts the premise that the only meaningful way to study organisation is to study it as a system.” This theory may be understood in two approaches: systems approach and contingency approach.
Systems Approach:
This approach studies the organisation in its totality. The mutually dependent variables are properly analysed. Both internal and external variables are studied in analysing the nature of organisation. Though this theory passes a much higher conceptual level as compared to earlier theories but different writers have given varied views of the system.
Organisation as a system can well be understood by identifying various sub-systems within it. Each sub-system may be identified by certain processes, roles, structures and norms of conduct. Seiler has classified four components in an organisation, human inputs, technological inputs, organisational inputs, and social structure and norms.
Katz and Kahu have identified five sub-systems of organisation:
(i) Technical sub-system concerned with the work that gets done;
(ii) Supportive sub-system of procurement, disposal and institutional relations;
(iii) Maintenance of sub-systems for tying people into their functional roles;
(iv) Adaptive sub-systems concerned with organisational change; and
(v) Managerial sub-systems for direction, adjudication and control of the many sub-systems and the activities of the structure.
Contingency Approach:
Even though systems approach presents a better understanding of organisational and managerial functioning but it does not provide solution for all types of organisational structures. Systems approach offers models which may not suit every type of organisation. A structure suitable for one unit may not be suitable for another. Contingency approach suggests an organisational design which suits a particular unit. A structure will be suitable only if it is tailor made for an enterprise.
Differences between the Systems and Contingency Organizational Theory
The systems theory focuses on the internal dynamics of an organization’s structure and behavior. On the other hand, the contingency organizational theory focuses on the external determinants of the organization’s behavior and structure.
The systems theory lays down universal principles for application in all situations. On the other hand, the contingency organizational theory works on the prescription which says that ‘it all depends’.
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