The Evolution ofThe Evolution ofOrganization Theory Organization Theory

Evolution Of Management Thought

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000+

Systematicmanagement

Administrativemanagement

Quantitativemanagement

Systemstheory

Current andfuture revolutions

Scientificmanagement

Humanrelations

Organizationalbehavior

Bureaucracy

Classical Approaches Contemporary Approaches

Contingencytheory

UPS

Post service company. Use time-study. Drivers should do 120 stops per day. Specified delivery time.

HINTS

The current state of OT is the result of an evolutionary process.

Theories and contributions have been introduced, evaluated, refined, and synthesized.

Contributors:Adam Smith

Division of labor would lead to significant economic efficiencies.

Industrial revolution: Machine power was rapidly replacing human power, and building railroads and transportation methods.

Building factories requires a creation of organization structure that facilitates efficiency.

Early Management Concepts And Influences

Industrial revolution– minor improvements in management tactics produced

impressive increases in production quantity and quality– economies of scale - reductions in the average cost of

a unit of production as the total volume produced increases

– opportunities for mass production created by the industrial revolution spawned intense and systematic thought about management problems and issues

• efficiency• production processes• cost savings

Dimensions of OT

It has been suggested that there are two underlying dimensions in the evolution of OT:

First: organizations are systems. Second: ends of organization structure.

First: organizations are systems

Prior 1960, organization are dominated by close system where organizations are seen as essentially autonomous and sealed off from their environment.

Beginning around 1960s, open system perspective begun to prevail.

Second: ends of organization structure.

Two positions 1- The rational perspective: the structure of

an organization is conceived as a vehicle to effectively achieve specified objectives.

2- The social perspective: structure is primarily the result of the conflicting forces by the organization’s constituents who seeks power and control.

Four theoretical classifications of OT

See table 2-1 page 31.

Rational

Closed Type 1

Social

Type 2

Type 3Open

Type 4

Type 1

Focus on efficiency in internal functions of the organization.

Economic motivates.

Type 1 Theories

The classical school. Organizations as a closed systems to

achieve goals efficiency.

Type 1 Theories (cont.)Fredrick Taylor

His book “principles of scientific management.” He observed that workers output was only one-

third of what was possible. Finding the “one best way” His focus was on the lowest level of the

organization. He explicitly demonstrated that managers should

carefully assess the one best way for each job to be done to maximize efficiency.

Type 1 Theories (cont.)Henry Fayol

His ideas were based on experience and practice not based on science.

He offered general principles applicable to all managers.

Type 1 Theories (cont.)Henry Fayol: 14 principles

See p. 36

Type 1 Theories (cont.)Max Weber

Ideal type. He argued that bureaucracy was the most

efficient means by which organizations can achieve their ends.

Division of labor, clear authority hierarchy, formal selection procedures, detailed rules and regulations, and impersonal relationships.

Bureaucracy

Bureaucratic structures can eliminate the variability that results when managers in the same organization have different skills, experiences, and goals

Allows large organizations to perform the many routine activities necessary for their survival

People should be treated in unbiased manner Personalities

– Max Weber

Type 1 Theories (cont.)Ralph Davis

Rational planning perspective: structure is the logical outcomes of the organization’s objectives.

Means that structure is contingent upon the organization’s objectives.

Management planning determines the organization’s objectives. These objectives, then, in logical fashion, determines the development of organization structure.

Type 1 Theories (cont.)Fredrick Taylor

Four principles– develop a scientific approach for each element of

one’s work instead of rule-of-thumb.– scientifically select, train, teach and develop each

worker– cooperate with workers to ensure that jobs match

plans and principles to achieve work objectives.– ensure appropriate division of labor by offering equal

division and responsibility between managers and workers.

Type 2

Theories operated under closed system assumptions and emphasized the informal relations and non-economic motives.

Type 2Elton Mayo and Hawthorne Studies

Illumination and productivity. Redesign job, change length of workday,

rest periods, and individual vs. group wage plans.

Type 2Chester Bernard and Cooperative

Systems The functions of the Executive. Tasks and people have to be maintained at

an equilibrium state. Managers should around the requirements

of the task to be done and the needs of the people.

Type 2Theory X and Y

– Theory X• managers assume that workers are lazy,

irresponsible, and require constant supervision

– Theory Y • managers assume employees want to work and

control themselves

Type 2Warren Bennis and the Death of

Bureaucracy He claimed that bureaucracy’s central

decision making, impersonal submission to authority, and narrow division of labor was being placed by decentralized and democratic structures organized around flexible groups.

Type 3

Emphasize rationality. Focus on size, technology, and

environmental uncertainty as a major contingency variables.

Proper alignment of structure to its contingencies would facilitate the achievement of the organization's goals.

Type 3Herbert Simon

The contingency theory. He argued that organization theory needed

to go beyond superficial and oversimplified principles to a study of the conditions under which competing principles were applicable.

Type 3Katz and Khan

Environmental perspective. Open system. Organizations need to adapt to a changing

environment if they are to survive. Various types of environment.

Type 3Technology and size

Woodward and Perrow (1960s) argue that technology determine the appropriate structure.

Aston University Group advocates organize size as an important factor influencing structure.

Type 4

Social perspective in an open system framework.

The outcome of the political struggles among coalitions within the organization for control would create the most effective structure.

Type 4March and Simon

They revised the rational-cooperative systems view.

They recognize the limits of a decision maker’s rationality and acknowledge the presence of conflicting goals.

Type 4Pfeffer’s organizations as political

arenas OT encompasses power collations, inherent

conflict over goals, and organizational decisions that favor the self-interest of those in power.

He proposes that control in organizations becomes an end rather then a means to rational goals such as efficient production of out put.

To understand how and why organizations are designed, we need to assess the preferences and interest of those who have power.