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PowerPoint Presentation by Rajeesh Viswanathan

Jansons school of Business

PowerPoint Presentation by Rajeesh Viswanathan

Jansons school of Business

Organization Theory

Structure, Design, and Applications

Organization Theory

Structure, Design, and Applications

Third Revised EditionThird Revised Edition

Stephen P. Robbins and Mary MathewStephen P. Robbins and Mary Mathew

C H A P T E R

2C H A P T E R

2PART I INTRODUCTION: WHAT’S IT ALL ABOUT?PART I INTRODUCTION: WHAT’S IT ALL ABOUT?

The Evolution of Organization TheoryThe Evolution of Organization Theory

After reading this chapter, you should be able to:

Describe the Type 1 through 4 classification framework. Identify Adam Smith’s contribution to organization theory. Explain how the Industrial Revolution changed organizations. Define the four principles of scientific management. Describe Henry Fayol’s contribution to organization theory. Define Max Weber’s bureaucracy. Describe the Hawthorne studies. Contrast Theory X with Theory Y. Identify the major contributors to the contingency approach. Contrast the rational and political perspectives of organizations.

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A theory is a coherent group of assumptions put forth to explain the relationship between two or more observable facts and to provide a sound basis for predicting future events.

Why?

1. Guide management decision.

2. Shape our view of organisation.

3. Make us aware of the business environment.

4. A source of new idea.

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1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

The Neo-HumanRelation Movement

The ContingencyApproach

The System Approach

The QuantitativeSchool

The Behavioral ScSchool

Classical ManagementTheories

Labo

r Sho

rtage

WW

1(19

14-19

18)

The G

reat

Depre

ssion

WW

11(19

41-19

45)

Deming

Lectu

re on

Quality

in Ja

pan

Protes

t Mov

emen

t

(60s

– 70

s)IB

M PC In

trodu

ced)

THE EMERGENCEOF M & O THEORIES

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TRADITIONAL THEORIES

MODIFICATION CONTEMPORARY

1900s 1940s 1970s

EVOLUTION OF ORGANISATION AND MANAGEMENT THEORIES

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Traditional/ Classical Theories

Modifications Contemporary

Approaches

Scientific Management

Efficient Task Performance

Bureaucratic Model

Administrative Theory

Universal Management Principles

Management Science

Economic Technical Rationality

System Approach

Contingency View

No Best Method

-Situational Factors.

Authority & Structure Human Relation

Subsystem & Environment

Behavourial Science

Psychology, Sociology, etc.

Evolution of Organization TheoryEvolution of Organization Theory

There are two underlying dimensions in the evolution of organization theory

First dimension reflects organizations are systems. Organizations were seen as essentially autonomous and sealed of from their environment

Second dimension views from two angles –

rational perspective - structure of organization is conceived as a vehicle to effectively achieve specified objectives.

Social perspective emphasizes that structure is primarily the result of the conflicting forces by the organization’s constituents who seek power and control.

The outcome of this led to classifying organization theory under four types

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Evolution of Contemporary Evolution of Contemporary Organization TheoryOrganization Theory

Approximate Time Frame

1900 – 1930 1930-1960 1960 – 75 1975 onwards

Systems perspective

Closed Closed Open Open

End perspective

Rational Social Rational Social

Central theme Mechanical efficiency

People and human relations

Contingency designs

Power and politics

Theoretical classification

Type – 1 Type – 2 Type – 3 Type – 4

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Type 1 TheoristType 1 TheoristType 1 theorist, were the ones who developed

the classical school, developed universal

principles that would apply in all situations.

F. W. Taylor – Scientific management Henry Fayol – Principles of organization Max Weber – Bureaucracy Ralph Davis – Rational planning

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Scientific Management

F.W. Taylor (1856–1917)

A mechanical engineer at Midvale and Bethlehem Steel company in Pennsylvania. Father of scientific management.

Principles of Scientific Management

Use of scientific methods to define the “one best way” for a job to be done perspective of improving the productivity and efficiency of manual workers applied the scientific method to shop floor jobs

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What does scientific management do?

1. Develop a science of work

2. Develop an efficiency technique that can be adopted by organizations.

3. Establish job design, scientific selection and development of workers.

4. Foster a rational approach to solving problems and lay the foundation for the professionalization of management.

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Limitations

• Does not take into account the human and social aspects.

• Lays emphasis on productivity/profit only.

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Administrative Management TheoryHenry Fayol (1804–1925)

Fayol developed 14 general principles applicable to

managers at all levels of an organization and described

the functions of each manager. His primary focus was

on the following areas:

1) To systematize an organization.

2) Use scientific forecasting and proper method of management.

3) The macro concept.

4) Focus on the formal organization structure that separates the basic process of general management.

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1. Division of work2. Authority and Responsibility3. Discipline4. Unity of Command5. Unity of Direction6. Subordination of individual interest to general interest7. Remuneration of personnel8. Centralization9. Scalar of Chain: authority10. Order: orderly place in organization11. Equity: equity and justice12. Stability of tenure of personnel: adaptation13. Initiative14. Esprit de corps

Fayol’s 14 Principles

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Max Weber developed a ideal structure bureaucracy. His

model was characterized by:

1) Division of labor

2) A clearly authority hierarchy

3) Formal selection procedures

4) Detailed rules & regulations and

5) An impersonality in inter-personnel relationships

6) Stressed the need for a strictly defined hierarchy governed by clearly defined regulations and lines of authority

Bureaucratic ModelMax Weber (1864–1920)

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Organizations take the form of a bureaucratic structure.

BUREAUCRATIC MODEL

RATIONAL-LEGAL AUTHORITY

The right to exercise authority based on position.

- position with power

- compensation : fixed salary

- hierarchy of authority

- technical competence

- governed by rules and regulations

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Bureaucratic Model

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Contribution of Fayol’s and Weber’s Theories

Concept of management skill

- Concept of identifiable principles for effective managerial behavior

- Made managers aware of the basic kinds of problems in any organization.

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Rational PlanningRalph Davis (1928–1951)

Davis stated that primary objective of a business firm is economic service.

The economic value is generated by the activities of the members, who engage in creating the products or services.

The management’s job is to group the activities in such a way that it forms a organization.

Hence, the structure of the organization is contingent upon the organizations objectives.

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Human Relations Movement

• Mary Parker Follet – considered workers as humans

• Chester Bernard – social and psychological need

Factors that would create effective human relations:

The individual and the group

The manager–subordinate relation

The social and the psychological

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The Hawthorne experiments were initially devised by Western Electric industrial engineers to examine the effect of various illumination levels on worker productivity (1924 – 27).

In 1927 Elton Mayo and his associates joined the study. It was found that social norms of the groups were the key determinants of individual behavior.

The Hawthorne Effect: The possibility that workers who receive special attention will perform better simply because they received that attention.

The Hawthorne ExperimentsThe Hawthorne Experiments

Hawthorne studies showed that workers did not respond to the classical motivational approaches like economic rewards, as suggested by Taylor. Instead, it was found that workers wanted to be accepted by their group.

Hawthorne studies helped managers to understand that organizations are not just a formal arrangement of different functions, but representatives of social systems.

Hawthorne studies paved a way for many other research studies, triggering a human relations movement.

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The Results:

The human relations movement brought forth the following assumptions:

Organizations are not merely technical systems; they are social systems.

People are motivated by many needs. People may not always behave in a logical or rational manner. People depend on each other for their work, and their behavior is

determined by the social context. The attitudes and performance of workers are determined to a

very great extent by the informal work group. The rules, regulations and economic rewards have a limited

impact on the behavior of employees. The informal group, on the other hand, has a stronger impact on the behavior of people.

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The Human Relations Movement

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Contribution of Human Relations

- Improved classical approach by stressing social needs.

- Focus on workers, not on techniques.

- Emphasized management skill rather than technical skill.

- Focus on group dynamics rather than individual.

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Douglas McGregor and Theory X–Theory Y

Douglas McGregor posited two distinct views on human beings: The

negative view – Theory X and the positive view – Theory Y.

Theory X

Employees inherently dislike work and avoid it.

They must be coerced, controlled or threatened with punishments to achieve desired goals.

Employees will shirk responsibilities and seek formal direction.

Most workers place security above all other factors associated with work and will display little ambition.

Theory Y

Employees can view work as being as natural as rest or play.

Human being will exercise self direction and self control if they are committed to the objectives.

The average person can learn to accept even seek responsibility.

They are more creative.

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Neither the mechanistic nor the humanistic forces of light could muster evidence that their solution was right for all occasions.

The conflict between thesis and anti thesis led to a synthesis that provided better guidance to managers.

This synthesis paved way to the development of contingency approach.

Type 3 TheoristType 3 Theorist

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Herbert Simon argued that organization theory needed to go beyond superficial and over simplified principles to a study of the conditions under which competing principles were applicable.

His main contribution was the rational decision making approach.

Hebert Simon and the Principles of Backlash

Katz and Kahn focused on open systems

perspective for examining the important

relations of an organization with its

environment and the need for organization to

adapt to a changing environment if they are to

survive.

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Katz and Kahn’s Environmental Perspective

Type 4 theoristType 4 theorist

The most recent theory focuses on the

political nature of organizations. James

March and Herbert Simon were involved in the

early formation of the type 4 theories. This was

further refined by Jeffrey Pfeffer.

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Pfeffer’s Organizations as Political Arenas

Pfeffer has built on March and Simon’s work to create a model of organization theory that encompasses power coalitions, inherent conflict over goals, and organizational designs that favor the self interest of those in power.

Pfeffer proposed that control in organization becomes an end rather than merely a means to rational goals such as efficient production of output.

According to Pfeffer, in order to design an organization designed, we need to assess the preferences and interests of those members in the organization who have influence over the design decisions.

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The Changing Face of Organization The Changing Face of Organization TheoryTheory

Organizations are no longer compartmentalized or restricted to their local employees.

Organizations are collaborating across countries and cultures using the benefits of the Internet and wireless communication networks in all possible areas.

Virtual organizations have emerged: this new status of organizations has revamped the way in which we approach organizational theory.

The boundaries of the organizations have become more fluid and flexible, those who have influence over organizational design decision have edge of getting the best talent to work.

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