Day 9: The Development of Organizational Theories – Human Relations Theory, Systems Theory, and Contingency Theory

Why Have Organizational Theories Evolved?

In the early 20th century, humans were often treated as mere mechanical components within the framework of organizational structures. In the name of efficiency, people became tools; performance was measured strictly in numerical terms, and workers were assumed to be purely rational, calculative beings. Frederick Taylor’s scientific management theory became a symbolic response to the needs of the industrial age. However, as time passed, the understanding of organizations began to transcend this mechanical perspective. Organizations were increasingly seen as complex entities, and their members were no longer perceived as passive agents simply following orders, but as emotional, social beings. This shift in perception became the central driving force behind the evolution of organizational theories.

Theory reflects the spirit of its time. As society changes, so too must the theoretical frameworks used to understand it. Technological innovation, evolving values, and diversified labor structures have profoundly influenced how organizations function and are perceived. Organizational theory, therefore, is not a fixed truth but a dynamic intellectual process—continually revised and refined in accordance with the level of understanding of human behavior and social interaction. The transformation in how we perceive humans has correspondingly led to fundamental changes in how we interpret organizations. Public administration, in this light, has matured beyond a discipline of rules and institutions into one that seeks to understand human behavior.

The recognition that human beings are not mere instruments marked a turning point in organizational thought with the advent of the Human Relations Theory in the 1930s. The famous Hawthorne Experiments revealed the overlooked significance of emotions and informal groups within the workplace, repositioning social interaction and psychological needs at the center of organizational behavior. Human Relations Theory emerged in this context, emphasizing a new approach grounded in a deeper understanding of individuals within the organization.

Then, in the 1960s, Systems Theory brought yet another revolutionary perspective. Whereas previous theories largely viewed organizations as closed entities focused on internal order, Systems Theory introduced the idea of organizations as open systems constantly interacting with their environments. Drawing on the General Systems Theory of Ludwig von Bertalanffy, this perspective offered a cyclical model—input, transformation, output, and feedback—that interpreted organizations as living organisms, adapting and responding to external changes.

Yet, it became increasingly evident that neither human behavior nor organizational structure could be fully explained by a single principle. This insight led to the rise of Contingency Theory, which boldly rejected the notion of a universal organizational formula. Scholars such as Burns & Stalker and Lawrence & Lorsch demonstrated that structure and leadership must adapt to variables like environmental uncertainty, organizational size, and technological complexity. The premise that there is no "one best way" to manage an organization became a foundational tenet.

The development of these theories was not a series of abrupt disconnections. Rather, each theory emerged in response to the limitations of its predecessors, building upon and refining earlier insights. Scientific management’s rational and productivity-centered perspective, Human Relations Theory’s focus on emotions and social needs, Systems Theory’s emphasis on interactive structures, and Contingency Theory’s call for adaptive design all contribute valuable analytical tools for understanding the complexities of modern organizations—especially in the public sector.

This article examines the intellectual roots, core concepts, and academic contributions of Human Relations Theory, Systems Theory, and Contingency Theory, comparing their explanatory powers and practical applications. In an age of administrative complexity, understanding the progression of these theories is not only academically necessary but also strategically vital for public administrators. These theories are not mere academic artifacts; they remain living frameworks that continue to offer critical insight into the operations of today’s public organizations.

Human Relations Theory - The Organization as a Social Entity

1. Historical Background: A New Perspective Born from the Shadows of Industrial Society

In the early 20th century, theories such as scientific management and administrative management gained prominence for their focus on maximizing efficiency and hierarchical control. However, these approaches tended to reduce organizations to mechanistic systems and treated members as mere instruments of productivity. Such perspectives overlooked emotional needs, social motivations, and the inherently interactive nature of human behavior. As mass production expanded and labor unrest intensified—particularly during the Great Depression—it became increasingly apparent that traditional organizational theories failed to capture the complexity of human experience within the workplace.

Emerging in response to these limitations, Human Relations Theory offered a groundbreaking alternative. It redefined the organization not merely as a bureaucratic structure but as a social community - a network of interpersonal relationships, informal norms, and emotional exchanges. This shift reframed the understanding of employees from passive, obedient laborers to active, expressive, and socially engaged individuals.

2. The Hawthorne Experiments: The Birth of Organizational Behavior Studies

The development of Human Relations Theory is closely tied to the Hawthorne Experiments conducted between 1924 and 1932 at the Western Electric Hawthorne Works in Chicago. Initially designed to examine the effect of lighting conditions on worker productivity, the experiments revealed unexpected outcomes. Productivity increased regardless of whether lighting was improved or dimmed.

Researchers concluded that this rise in output was due not to physical conditions but to psychological factors—namely, the workers' awareness that they were being observed and their perception of receiving attention. This phenomenon, later termed the “Hawthorne Effect,” indicated that social attention and emotional motivation could have a greater impact on performance than purely mechanical or environmental changes.

The implications were profound: organizational behavior could no longer be explained solely through formal structures or incentives; the informal dynamics and emotional needs of workers played a central role in shaping organizational outcomes.

3. Key Scholars and Core Concepts

At the forefront of this theoretical shift was Elton Mayo, who emphasized the importance of social relationships and emotional bonds within organizations. According to Mayo, a worker's sense of belonging, recognition, and participation significantly influenced morale and productivity. Organizations, therefore, needed to be understood as social systems in which informal groups and interpersonal dynamics were just as crucial as official procedures.

Mayo's work was further developed by Fritz Roethlisberger and William Dickson, who analyzed how informal organizations—those formed through personal interactions rather than official hierarchies—exerted powerful influence on behavior. They argued that such groups could shape norms, regulate conduct, and either reinforce or subvert formal authority structures. Their research underlined the necessity of understanding human emotions, communication patterns, and group psychology in managing organizations effectively.

4. Summary of Core Components

Category	Explanation
View of Organization	A social community based on relationships and mutual recognition
View of Human Nature	Emotional and social beings seeking meaning, acceptance, and identity
Role of Management	A coordinator, counselor, and facilitator rather than a commander
Informal Groups	Strongly influence behavior, morale, and communication patterns
Motivation Factors	Psychological needs often outweigh monetary or material incentives

5. Contributions and Impacts

Human Relations Theory marked a decisive departure from rigid command-and-control paradigms. By placing social needs and emotional dynamics at the center of organizational analysis, it broadened the field’s understanding of what drives human behavior within institutions. It shifted the manager’s role from enforcer to communicator and coach, recognizing that effective leadership depends on empathy, trust, and engagement.

In public administration, this theory has had lasting influence. Issues such as employee satisfaction, bureaucratic resistance, and organizational commitment are better understood through this lens. For example, resistance to policy implementation is often less a matter of legal deficiency and more a response to psychological alienation or informal group opposition. Human Relations Theory thus provides the foundation for studying motivation, morale, and interpersonal influence within public sector organizations.

6. Limitations and Criticisms

While Human Relations Theory introduced a humane perspective, it is not without its critiques. First, it offers limited insight into operational efficiency or measurable performance outcomes, as it underemphasizes structural and procedural dynamics. Second, by idealizing harmony and emotional bonds, it often neglects conflict, power asymmetries, and strategic interests. Third, social cohesion by itself cannot solve deeply embedded structural problems, particularly in complex public bureaucracies.

These limitations would later inspire the development of Systems Theory and Contingency Theory, both of which aim to address environmental complexity, structural adaptability, and the contextual nature of managerial decision-making.

Systems Theory - The Organization as a Living System

1. Background: From Isolated Structures to Interacting Organisms

While Human Relations Theory redefined organizations as social environments shaped by interpersonal relationships, it primarily focused on internal dynamics. However, as organizations grew more complex and interdependent, it became increasingly difficult to understand them without considering their external environments. Especially in the public sector, administrative institutions must constantly respond to political shifts, economic pressures, and civic expectations. These growing demands called for a more holistic and adaptive theoretical lens.

Systems Theory answered this call by conceptualizing the organization as an open system - a living organism that exchanges energy, resources, and information with its surrounding environment. Rather than viewing the organization as a self-contained structure, Systems Theory emphasized dynamic interactions, feedback loops, and mutual dependencies. This approach enabled a richer understanding of organizational behavior in complex and evolving contexts.

2. Theoretical Foundations: General Systems Theory

The intellectual roots of Systems Theory lie in General Systems Theory, formulated by Austrian biologist Ludwig von Bertalanffy. He proposed that biological, social, and technical systems could be understood through a universal framework that transcends disciplinary boundaries. Central to this theory is the open system model, which consists of four key components:

Stage	Description
Input	Acquisition of resources, information, and energy from the external environment
Transformation	Internal processing, adaptation, and coordination of input elements
Output	Delivery of services, products, or decisions to the environment
Feedback	External responses used to adjust and improve internal processes

This framework emphasized that survival and effectiveness depend on the organization's ability to adapt through a continuous cycle of interaction and response. The concept of self-regulation and environmental sensitivity became central tenets of Systems Theory.

3. Organizations as Systems: A Paradigm Shift

One of Systems Theory’s most transformative contributions is its challenge to closed, mechanistic views of organizational structure. It reframed organizations as adaptive, responsive entities embedded within broader ecosystems. These systems are not static; they evolve through continuous interaction with fluctuating external conditions, requiring both internal coherence and external alignment.

Systems Theory also introduced the idea of organizational boundaries as porous and fluid. No organization operates in isolation; even the most rule-bound public agencies are shaped by political expectations, economic trends, media narratives, and civil society pressures. As such, the administrator's role extends beyond managing internal operations to orchestrating external relationships and facilitating information flow between system components.

4. Key Scholars and Conceptual Extensions

The theory gained traction in organizational studies through scholars like Daniel Katz and Robert Kahn, whose seminal work The Social Psychology of Organizations explored the psychological and social dynamics of open systems. They emphasized how organizations process information, maintain equilibrium, and navigate external demands through structural and interpersonal mechanisms.

James D. Thompson, in his work Organizations in Action, further refined Systems Theory by introducing the concept of uncertainty as a defining characteristic of organizational environments. He argued that the central challenge for managers lies in stabilizing the organization’s core technology while adapting its peripheral structures to meet changing conditions. Thompson’s notion of interdependence highlighted that organizational units, environments, and stakeholders are linked through complex networks of influence.

5. Applications in Public Organizations

Systems Theory offers powerful insights for public organizations, which operate under intense environmental scrutiny. For example, during a public health crisis, a Ministry of Health must coordinate not only with hospitals but also with civil society groups, international agencies, and political authorities. This interdependence reflects the open-system model in action.

Local governments must also adjust their budgets, service strategies, and communication channels in response to citizen feedback, demographic trends, and national policies. These entities cannot afford to remain rigid or insular; instead, they must function as responsive, learning systems that absorb, process, and act upon environmental cues.

Systems Theory provides public administrators with a framework to diagnose organizational stagnation, assess environmental fit, and design mechanisms for adaptation, resilience, and innovation.

6. Strengths and Criticisms

Strengths:

Offers a comprehensive framework for understanding organizational-environment interactions
Facilitates diagnosis of systemic failures based on input–output imbalances
Emphasizes adaptability and feedback, vital for managing complex public systems

Criticisms:

Tends to be overly abstract, making practical implementation difficult
Neglects internal power dynamics, political conflict, and organizational culture
Prioritizes system flows over structural analysis or human agency

These critiques set the stage for Contingency Theory, which retains the environmental sensitivity of Systems Theory but introduces more nuanced variables such as strategy, structure, and situational factors. This evolution further enriched the understanding of organizational behavior and decision-making under uncertainty.

Contingency Theory - Understanding Organizations through Context

1. Background: No Universal Solutions in Organizational Design

Classical organizational theories, including Human Relations and Systems Theory, each proposed particular frameworks for managing and understanding organizations. These frameworks were valuable in their time but often sought generalizable principles that could apply across contexts. However, as organizational environments became more dynamic and complex, scholars began to question whether a one-size-fits-all model could truly explain the variety of organizational behaviors observed in practice.

Contingency Theory emerged from this critical insight: there is no universally optimal way to structure or manage an organization. Instead, effectiveness depends on the fit between an organization’s structure and the specific environmental conditions it faces. The theory emphasizes contextual adaptation, proposing that variables such as environment, technology, size, strategy, and even employee characteristics must be considered in organizational design.

In other words, successful organizations are those that can read their situation accurately and align their structure accordingly. This practical realism distinguished Contingency Theory from its predecessors and ushered in a new wave of strategic thinking in public and private management.

2. Core Concepts: Organizations as Contextual Constructs

Contingency Theory holds that organizations are not isolated or universally governed by abstract principles. Instead, they are shaped by the interplay of internal characteristics and external conditions. The key is to achieve “structural fit”—a harmony between organizational configuration and situational demands.

Variable	Description
Environment	Includes political, economic, social, and technological dynamics
Structure	Degree of centralization, formalization, specialization, hierarchy, etc.
Strategy	Defensive, aggressive, innovative, or stability-focused
Technology	The complexity, variability, and predictability of work processes
Organizational Culture	Dominant values, norms, and behavioral expectations

This perspective calls for multi-dimensional analysis, requiring managers to assess multiple variables in combination, rather than relying on singular solutions. Organizations must evolve structurally and strategically in alignment with their specific context.

3. Leading Scholars and Theoretical Contributions

▪ Burns & Stalker

In their seminal work, these scholars classified organizations into mechanistic and organic structures based on environmental stability.

Mechanistic organizations function best in stable, predictable environments, with rigid hierarchies and standardized roles.
Organic organizations excel in volatile, fast-changing contexts, emphasizing flexibility, collaboration, and decentralized decision-making.

Core Message: Structure should reflect the degree of environmental uncertainty.

▪ Lawrence & Lorsch

These scholars extended the theory by arguing that different departments within the same organization may face different environmental demands, and thus require differentiated structures. Yet, overall integration across the organization is essential to avoid fragmentation.

Core Message: Internal differentiation and external integration must be balanced.

▪ Jay Galbraith

Galbraith introduced the concept of information processing capacity, arguing that as uncertainty increases, organizations must enhance their ability to process information—through communication networks, feedback mechanisms, and technology.

Core Message: High-uncertainty environments demand better information systems and flexible coordination mechanisms.

4. Applications in Public Administration

Contingency Theory provides a highly relevant framework for public organizations, which operate under a wide range of conditions. For example:

The National Tax Service operates in a relatively stable legal and procedural environment. Thus, a mechanistic structure with formal rules and standardized protocols is effective.
By contrast, the Government Digital Innovation Unit operates in a fast-evolving technological landscape and benefits from an organic, flexible, and collaborative model.

At the local level, municipalities must tailor their administrative models to regional demographics, economic conditions, political oversight, and citizen engagement. A rural community with low complexity may function well under a centralized model, while a large urban government may require horizontal coordination and rapid feedback loops.

This diversity illustrates that effective governance requires more than technical expertise - it demands situational awareness and structural agility.

5. Contributions and Limitations

Contributions:

Encourages flexibility and realism in organizational design
Supports strategic alignment between internal structure and external conditions
Promotes a nuanced understanding of complexity in public sector environments

Limitations:

Difficult to quantify or standardize the variables involved in assessing “fit”
May overemphasize environmental determinism, underestimating leadership and strategic choice
Lacks prescriptive guidance for how to implement adaptation across multi-layered bureaucracies

These limitations prompted further developments in organizational theory, including Strategic Choice Theory and Cultural Perspectives, which argue that organizations not only adapt to environments but can also shape them through innovation, vision, and leadership.

Comparative Analysis and Integrated Implications

1. The Evolution of Organizational Theories as Intellectual Progression

While Human Relations Theory, Systems Theory, and Contingency Theory emerged from distinct philosophical premises and historical contexts, they are not isolated or mutually exclusive. Rather, they represent a cumulative intellectual progression, each responding to the limitations of its predecessors and contributing new dimensions to the understanding of organizations.

Human Relations Theory emerged to compensate for the dehumanizing focus of early mechanistic models by emphasizing emotion, social connection, and psychological motivation. Systems Theory, in turn, addressed Human Relations Theory’s inward-looking nature by incorporating external environments and dynamic flows. Contingency Theory advanced this evolution further by asserting that no single model is universally valid and that effective organizations must be designed according to the specifics of their situation.

Thus, the trajectory of these theories reflects a broader shift in organizational thought: from mechanistic efficiency → emotional and social factors → systemic interaction → contextual responsiveness. Modern organizational behavior theory is deeply indebted to this layered and evolving discourse.

2. Comparative Summary

Dimension	Human Relations Theory	Systems Theory	Contingency Theory
Core Focus	Social relationships, emotions, informal groups	Environmental interaction, open systems	Fit between structure and context
View of Humanity	Emotional and social beings	Adaptive organisms within systems	Behavior determined by situational variables
Understanding of Organization	A web of interpersonal ties	A living system with continuous input-output	A flexible configuration shaped by conditions
Role of Leadership	Communicator, counselor	Connector, coordinator	Context analyzer, strategist
Application Insight	Enhances morale, trust, communication	Strengthens adaptability and responsiveness	Optimizes structural alignment and performance
Key Contributors	Elton Mayo, Roethlisberger	Bertalanffy, Katz & Kahn, Thompson	Burns & Stalker, Lawrence & Lorsch, Galbraith

This table demonstrates how each theory offers a distinct yet complementary lens. Organizations are not merely technical systems or social collectives, but multifaceted entities shaped by human behavior, structural flows, and contextual demands. Effective organizational analysis requires integrating these perspectives.

3. Implications for Public Organizations

Today’s public organizations face an intricate web of policy responsibilities, stakeholder pressures, and citizen expectations. Relying on a singular theoretical framework is no longer sufficient. Instead, a blended application of all three theories offers a more realistic and strategic approach to governance.

Consider a local government launching a community health initiative:

Human Relations Theory underscores the importance of trust-building and emotional engagement among staff and citizens.
Systems Theory helps the organization map its connections to hospitals, non-profits, central agencies, and data platforms.
Contingency Theory guides decisions on resource allocation, communication strategies, and structural arrangements based on community demographics and political dynamics.

This example illustrates that real-world organizational problems are multi-dimensional. Applying an integrated theoretical framework equips administrators to balance human needs, systemic flows, and situational constraints in practical and adaptive ways.

4. Future Governance and the Need for Theoretical Integration

As digital transformation, demographic change, and global volatility redefine public administration, the need for integrated thinking has never been greater. New technologies demand flexibility, new values emphasize inclusivity, and new expectations call for transparency and innovation.

From Human Relations Theory, we learn to build empathic, participatory organizational cultures.
From Systems Theory, we gain tools for managing complexity and responsiveness.
From Contingency Theory, we understand the importance of tailoring strategies to context.

These are not competing doctrines but complementary insights, each enhancing the other. In this light, theory is not a constraint but a toolkit—equipping public administrators to lead with agility, foresight, and sensitivity in uncertain times.

Theoretical Convergence and Practical Wisdom in Organizational Behavior

The study of Human Relations Theory, Systems Theory, and Contingency Theory reveals that no single theoretical framework can fully encompass the complexity of organizational behavior. Each theory, emerging from its own historical necessity, corrects the blind spots of its predecessors and opens new intellectual pathways. Human Relations Theory restored the human soul to the heart of the organization. Systems Theory connected the organization to its broader ecosystem. Contingency Theory taught us that truth is not singular but situational.

Yet the true value of these theories lies not in their separation but in their convergence. Public organizations today face unprecedented pressures—digital transformation, aging populations, climate change, and geopolitical instability. Navigating this terrain requires more than technical knowledge or bureaucratic discipline. It calls for practical wisdom, the ability to discern what action fits what context, under what conditions, and for what public good.

In this regard, theories are not mere academic constructs. They are navigational tools, offering administrators a deeper lens through which to read their organizations and act within them. They help explain why some reforms fail, why some structures persist, and why leadership is as much about listening and adapting as it is about planning and commanding.

Furthermore, these theories provide an intellectual foundation for cultivating the next generation of public leaders—leaders who are neither technocrats nor idealists alone, but reflective practitioners equipped with critical understanding and strategic empathy.

The challenge before us is to go beyond merely citing these theories in policy documents or academic syllabi. The goal must be to internalize their wisdom, blend their insights, and apply them to the living, breathing complexity of organizational life. This demands intellectual humility, methodological flexibility, and moral clarity—traits that are as essential to sound governance as efficiency or accountability.

As we advance toward a future defined by uncertainty and interdependence, the convergence of Human Relations, Systems, and Contingency Theories offers not only a map but also a compass—a way of thinking that honors both the human condition and the systemic whole, both structure and spontaneity, both stability and change.