The aim of this paper is to propose a new conceptualisation that can be used to analyse and understand formal organisations. Rather than relying on traditional sociological theories which some have criticised as conceptually soft and abstract, thermodynamics provides hard and measurable theoretical foundations upon which explanations of organisational characteristics can be based allowing dynamic modelling of the relationships between those characteristics and organizational performance. Classical thermodynamics, which forms the main discussion, clearly has intrinsic limitations as it disregards system structure and organisation. Yet, this perspective is expected to culminate in a basic organisational model that has the potential to generate a more comprehensive understanding of how formal organisations work, at least in steady state. This paper also draws upon the research of two of the authors into management practices in a wide range of organisations which put forward the argument that many models of analysis in organisational behaviour are overwhelmingly qualitative in nature and many presented in diagrammatic forms that suggest degrees of precision, insight and rigour far in excess of actuality. The proposed steady state model provides a foundation for ongoing work by the authors into to the application of nonequilibrium thermodynamics for explaining evolutionary and revolutionary change in formal organisations.