Rather than being a single theory, organizational theory is more a collective of broadly associated approaches to the analysis of organizations. In the most basic sense, organizations in this context are viewed as assemblages of individual persons working towards common goals. The character and methods of organizational theories are quite diverse, though there is some consensus that, at their hearts, organizations are information processing centers.
Gravitation towards organizational theories first arose in the 19th century, particularly during the Industrial Revolution, when more and more people were being forced to share the same production space and were collectively responsible for the results. German sociologist Max Weber was among the first important organizational theorists who concluded that organizations with effective, professional bureaucracies thrived best, especially when they had established rules and procedures. In the early 1900's, Henri Fayol outlined a four-part managerial system based on planning, organizing, staffing and controlling.
Despite the foundational influence of these early theories, their critical common weakness was that they cared little for analysis of the individual members of an organization or the so-called human element. This changed with the widespread integration of Abraham Maslow's Hierarchy of Human Needs, which inspired managers to look at their workforces as comprised of diverse persons whose needs changed over time. By the 1950's, Douglas McGregor offered his theories X and Y to explain worker behavior, arguing for both highly negative and highly positive views of human nature respectively.