Organizational Theory and Management Principles

Defining the Concept of Organization

An organization is understood as an action, an object, or a goal; it is an intentionally organized group of people. As an action, it involves coordinating the work of several people through defined tasks. Its purpose is to provide teaching or direction, while the object represents the final result.

Types and Characteristics of Organizations

Organizations are shaped by human groups engaged in a common task. For an organization to be stable or lasting, the roles must be organized; the higher the specification, the greater the efficiency. Administration serves a social function, meaning all knowledge must have a productive purpose. Regarding formality, some organizations may lack formal systems for communication and control. A linear vertical organization is characterized by functional control.

The Scientific Management School

The Scientific Management School arose from the need to raise productivity in the mid-twentieth century. Especially in the United States, there was a limited supply of labor. The primary method to increase productivity was by improving the efficiency of workers.

Pioneers of Administrative Theory

Adam Smith, the father of administration and economics, established the Theory of Absolute Advantage, which was the first major explanatory factor in international trade. Frederick Taylor devised the scientific organization of work through the division of labor and timed tasks. Henri Fayol systematized the work process.

Fayol's 14 Principles of Management

1. Division of Labor: The more people specialize, the greater the efficiency for the job.
2. Authority: Managers should provide orders to ensure tasks are completed.
3. Discipline: Members of an organization must comply with the rules and agreements governing the entity.
4. Unity of Command: Each employee should receive instructions from a single individual.
5. Unity of Direction: Operations with the same objective should be directed by one manager using one plan.
6. Subordination of Individual Interests: Personal interests are secondary to the common good.
7. Remuneration: Compensation must be fair to both employees and employers.
8. Centralization: Refers to the degree of involvement in decision-making.
9. Hierarchy: The line of authority follows an order of rank.
10. Order: Materials and people should be in the right place at the right moment.
11. Equity: Managers should be kind and fair to their subordinates.
12. Stability of Personnel: Maintaining a stable workforce to ensure efficiency.
13. Initiative: Subordinates should have the freedom to design and implement their plans.
14. Esprit de Corps (Team Spirit): A sense of group unity will lead to greater organizational harmony.