Unit 2 Theories of OB

8/8/2019 Unit 2 Theories of OB

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CLASSICAL ORGANIZATIONTHEORY

Scientific Management approach Weber'sBureaucratic approach Administrative theory.

NEOCLASSICAL THEORY

MODERN ORGANIZATIONTHEORY

Systems approach Socio-technical approach Contingency or Situational approach


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Taylor's scientific management approach

Four principles of scientific management for improving

productivity:

Science, not rule-of-thumb

Scientific selection of the worker

Management and labour cooperation rather than conflict Scientific training of the worker

Taylor suggested that, to increase this level of trust,

the advantages of productivity improvement should go to

workers,

physical stress and anxiety should be eliminated as much as

possible,

capabilities of workers should be developed through training, and


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CLASSICAL ORGANIZATION THEORY contd

Weber's bureaucratic approach

Principles of this approach:

4 Structure In the organization, positions should be arranged

in a hierarchy, each with a particular, established amount of

responsibility and authority.

5 Specialization Tasks should be distinguished on a

functional basis, and then separated according to

specialization, each having a separate chain of command.

6Predictability and stability The organization should

operate according to a system of procedures consisting of

formal rules and regulations.


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7Rationality Recruitment and selection of personnel

should be impartial.

8Democracy Responsibility and authority should berecognized by designations and not by persons.

Weber's theory is infirm on account of dysfunctions

(Hicks and Gullett, 1975) such as rigidity, impersonality,displacement of objectives, limitation of categorization,

self-perpetuation and empire building, cost of controls,

and anxiety to improve status.


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Administrative theory

The elements of administrative theory (Fayol, 1949) relateto accomplishment of tasks, and include principles of

management, the concept of line and staff, committees and

functions of management.

1Division of work or specialization

2Authority and responsibility

3Discipline

4 Unity of command

5 Unity of direction


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Administrative theory contd.

6 Subordination of individual interest to general interest

7Remuneration of personnel

8Blend of Centralization and Decentralization

9 Scalar chain

10 Order

11Equity

12 Stability of tenure of personnel

13Initiative

14Esprit de corps


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15 The concept of line and staffThe concept of line and

staff is relevant in organizations which are large andrequire specialization of skill to achieve organizational

goals. Line personnel are those who work directly to

achieve organizational goals. Staff personnel include

those whose basic function is to support and help linepersonnel.

16 Committees Committees are part of the organization.

Members from the same or different hierarchical levelsfrom different departments can form committees around a

common goal. They can be given different functions, such

as managerial, decision making, recommending or policy

formulation.


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17Functions of managementFayol (1949) considered

management as a set of planning, organizing, training,commanding and coordinating functions. Gulick and

Urwick (1937) also considered organization in terms of

management functions such as planning, organizing,

staffing, directing, coordinating, reporting and budgeting.


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Neoclassical theory

Neoclassical theorists recognized the importance of

individual or group behaviour and emphasized human

relations. The classical approach stressed the formal

organization.

Principles of the neoclassical approach

1 The individualAn individual is not a mechanical tool but a

distinct social being, with aspirations beyond mere

fulfillment of a few economic and security works.Individuals differ from each other in pursuing these desires.

Thus, an individual should be recognized as interacting with

social and economic factors.


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2 The work group The neoclassical approach highlighted

the social facets of work groups or informal

organizations that operate within a formal organization.The concept of 'group' and its synergistic benefits were

considered important.

3Participative managementParticipative management or

decision making permits workers to participate in the

decision making process. This was a new form ofmanagement to ensure increases in productivity.


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Modern theories

Modern theories tend to be based on the concept that the

organization is a system which has to adapt to changes in itsenvironment.

Some of the notable characteristics of the modern

approaches to the organization are:a systems viewpoint,

a dynamic process of interaction,

multilevelled and multidimensional,

multimotivated,

multidisciplinary,

descriptive,

multivariable, and

adaptive.


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Modern understandings of the organization can be broadly

classified into:

the systems approach,socio-technical theory, and

a contingency or situational approach.

The systems approachThe systems approach views organization as a system

composed of interconnected - and thus mutually dependent

- sub-systems. These sub-systems can have their own sub-

sub-systems.


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The systems approach contd.

The organization consists of the following three basic

elements(I) Components There are five basic, interdependent parts of

the organizing system, namely:

the individual,

the formal and informal organization,

patterns of behaviour emerging from role demands of

the organization,

role comprehension of the individual, and

the physical environment in which individuals work.


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(II)Linking processes The interaction between them is

contingent upon the linking processes, which consist of

communication, balance and decision making.

Communication

Balance

Decision analysis

(III) Goals of organization The goals of an organization

may be growth, stability and interaction. Interaction

implies how best the members of an organization can

interact with one another to their mutual advantage.


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Contingency Theory

is a class of behavioural theory that claims that there is no

best way to organize a corporation, to lead a company, or

to make decisions. Instead, the optimal course of action is

contingent (dependant) upon the internal and external

situation. Several contingency approaches were developed

concurrently in the late 1960s.

William Richard Scott describes contingency theory in the

following manner: "The best way to organize depends onthe nature of the environment to which the organization

must relate".
http://en.wikipedia.org/wiki/William_Richard_Scotthttp://en.wikipedia.org/wiki/William_Richard_Scott


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http://www.fao.org/docrep/w7http://www.fao.org/docrep/w7
http://www.fao.org/docrep/w7503e/w7503e03.htmhttp://www.fao.org/docrep/w7503e/w7503e03.htmhttp://www.fao.org/docrep/w7503e/w7503e03.htm


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Principles of organizational structure

Specialization

CoordinationUnity of command

Scalar principle

Responsibility and authority principleSpan of control (Span of control refers to the number of

Specialized units of persons under one management ).


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Departmentalization

- functional

- product- territory

- process or equipment

Another important principle of organizationalstructuring is whether decision making is delegated to

lower levels (de-centralized) or concentrated at the top

(centralized). Observe that organizations have different

blends of centralization and de-centralization.


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Types of organizational structure

Classic organizational structure

Simple centralized design

Bureaucratic organization

Divisionalized organization (The divisionalizedorganization refers to a multiproduct or service design. )

Modern organizational design

Project organization

Matrix organization


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Designing organizational structures

Some important considerations in designing an effective

organizational structure are:

Clarity The structure of the organization should be such

that there is no confusion about people's goals, tasks, style offunctioning, reporting relationship and sources of information.

UnderstandingThe structure of an organization shouldprovide people with a clear picture of how their work fits into

the organization.


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De-centralization The design of an organization

should compel discussions and decisions at the lowest

possible level.

Stability and adaptability While the organizational

structure should be adaptable to environmental changes, it

should remain steady during unfavorable conditions.


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Modern organizational design

Project organization


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Project design is also called the team or task force type. It

is used to coordinate across departments for temporary,

specific and complex problems which cannot be handledby a single department.

This design facilitates inputs from different areas.

Members from different departments and functional areasconstitute a team, in which every member provides

expertise in their area of specialization.


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Matrix organization

This organizational type assigns each worker two bossesin two different hierarchies. One hierarchy is "functional"

and assures that each type of expert in the organization is

well-trained, and measured by a boss who is super-expert

in the same field.

The other direction is "executive" and tries to get projects

completed using the experts. Projects might be organized

by regions, customer types, or some other schema. matrixmanagement.


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An example would be a company that produces two

products, "product a" and "product b". Using the matrix

structure, this company would organize functions withinthe company as follows: "product a" sales department,

"product a" customer service department, "product a"

accounting, "product b" sales department, "product b"

customer service department, "product b" accountingdepartment. Matrix structure is the most complex of the

different organizational structures.


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Choosing the organizational structure

Organization design is a continuous process. While a simpledesign is needed for simple strategies, complex designs are

necessary when organizational strategies involve complex

interactions.

The choice of any type of organizational design should be inconsonance with the organizational requirements, strategy

and environment. The simple centralized and bureaucratic

organizational design based on functional departmentation

focuses on work and is thus better suited for getting workdone efficiently. The team or project type of organizational

design is appropriate where inputs from several functional

areas are required.


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Chain of command

The chain of command is the line of authority andresponsibility along which orders are passed within a

Organisational unit and between different units. Orders are

transmitted down the chain of command, from a higher-

ranked officers to lower-ranked personnel who either carryout the order personally or transmit it down the chain as

appropriate, until it is received by those expected to carry

it out.

In general, military personnel give orders only to those

directly below them in the chain of command and receive

orders only from those directly above them
http://en.wikipedia.org/wiki/Military_unithttp://en.wikipedia.org/wiki/Military_rankhttp://en.wikipedia.org/wiki/Military_rankhttp://en.wikipedia.org/wiki/Military_unit


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The concept of chain ofcommand also implies that

higher rank alone does not entitle a higher-ranking

service member to give commands to anyone of lowerrank. For example, an officer of unit "A" does not directly

command lower-ranking members of unit "B", and is

generally expected to approach an officer of unit "B" if he

requires action by members of that unit. The chain of

command means that individual members take orders

from only one superior and only give orders to a defined

group of people immediately below them.
http://en.wikipedia.org/wiki/Commandhttp://en.wikipedia.org/wiki/Command


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Delegation (also called deputation) is the assignment of

authority and responsibility to another person (normally

from a manager to a subordinate) to carry out specificactivities. However the person who delegated the work

remains accountable for the outcome of the delegated

work.

Delegation empowers a subordinate to make decisions,

i.e. it is a shift of decision-making authority from one

organizational level to a lower one


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AUTHORITY AND POWER

AUTHORITY AND POWER With authority comes

power. Power is the ability to influence people

toward organizational objectives. However, you have

limits on your authority and power.

Always assume you have enough authority and power to

meet your obligations, but do not exceed that limit.


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Authority

Authority only exists when subordinates accept the

idea that the supervisor has authority over them.

Subordinates can fail to recognize authority through

disobedience, denial, or work delays.

Subordinates usually accept authority readily;however, abusing your authority as a supervisor can

make you ineffective.


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Types of Authority

1. LINE AUTHORITY. Line authority is the authorityyou have over subordinates in your chain of

command. This type of authority corresponds

directly to your place within the chain of command

and does not exist outside the chain of command.

2. STAFF AUTHORITY. Staff authority is the

right of staff to counsel, advise, or make

recommendations to line personnel. This type ofauthority does not give staff the right to give line

personnel orders that affect the mission of the line

organization.


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3. FUNCTIONAL AUTHORITY. Certain staff

organizations are granted functional authority to direct line

units within the area of the staff's specialty. Examplesof staff organizations with functional authority include

the Legal, Equal Opportunity, and Safety Departments.

4. REWARD POWER. Reward power stems from youruse of positive and negative rewards to influence

subordinates. Positive rewards range from a smile or

kind word to recommendations for awards.


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Expert powerThis is based on personal skills,

knowledge, training, experience, etc. It cannot be

transferred by the organization since it is person-specific.

Charismatic powerThis derives from the sensitivity

of the owner. This facilitates association with others.


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Centralisation, orcentralization, is the process by which

the activities of an organisation, particularly those

regarding decision-making, become concentrated within aparticular location and/or group.

In the year when founder Henry ford was running the FordMotor Company, the auto manufacturer was a very

centralized organization. Every key decision and many

less important ones was made directly by Mr. Ford. For

example, he insisted on approving all purchase order within

the firm, a task that most CEOs of his stature delegated to

subordinates.


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Decentralized organization:

In such organizations responsibility for key decision is

distributed as far down in the management hierarchy as isprudently possible. One of the advantages of

decentralization is that it gives lower-level managers

substantial practice at making decision in preparation is

that for moving up the management hierarchy.


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Benefits of Decentralization:

1. Relieves Higher Executive

2. Facilitates managerial Development

3. Fosters Co-ordination: It results in the promotion of

intimate personalities which result in greater employeeco-ordination and enthusiasm.

4. Facilitates Control: The profit-centre concept can be

used for centralizing, divisional operations by

measuring performance against the standard of profits

generated by such divisions.


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5. Encourages Greater Efficiency: The competitive

atmosphere inculcated by the profit centre concept

increases the efficiency of the divisions.

6. Infuses Maximum Motivation: By placing greater

decision making power on mangers down the line,initiative is promoted and the managers are motivated to

higher performance.


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Disadvantages of Decentralization

1. Increased Costs: Unless the business size is large

enough, over head costs of decentralization would be

relatively too heavy as each division has to be a self

contained unit with all the service functions availablewith the division.

2. Need for Generalist Mangers: For success in

decentralization, it is necessary to have capableexecutives with general management ability as the

decentralized organisation has to place great reliance on

the divisional mangers effectiveness.


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Organizational Politics:

Legitimate Politics: It refers to normal everyday politics-

complaining to your supervisor, bypassing the chain of

command, forming coalitions, obstructing organizational

policies or decisions through inaction or excessive

adherence to rules.

Illegitimate political behaviors that violate the implied

rules of the organisation. Those who pursue such

extreme activities are often called individuals who playhardball. It includes

Whistle-blowing or groups of employees simultaneously

calling in sick.


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Types of

organizationalPolitical

activities

Blaming others

Managing

impressions

Association with

line executives

Increasing

indispensability

Formingcoalitions

Controlling

information channels

Selectively

distributinginformation


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In addition, an individuals investment in the organization,

perceived alternatives, and expectations of success will

influence the degree to which he or she will pursueillegitimate means of political action. The more a person

invested in the organization in terms of expectations of

increased future benefits, the more that person has to lose

if forced out and the less likely he or she is to useillegitimate means.


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Organisational Factors:

Political activity is probably more a function of an

organizations characteristics than of individual differencevariables.

Organisation downsize: When organizations downsize toimprove efficiency. It threatened with the loss of

resources, people may engage in political actions to

safeguard what they have.

Promotion Decisions: One of the most effective reason

for political actions.


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Role Ambiguity

The practice of performance evaluation.

The more that an organizations culture emphasizes the

zero-sum or win/lose approach to reward allocation, the

more employees will be motivated to engage in politicalactivities.


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Certain conditions favor organizational politics. Core of

theses conditions is scarce resources.

Managers and employees are more likely to act

politically when

(i) Decision making procedures and performance

measures are uncertain and complex, and(ii) Competition for scarce resources is strong.

Conversely, in more stable and less complex

environments where decision making processes are clear

and competitive behavior is less, excessive political

behavior is unlikely.


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Medium Probability

Low Probability

High Probability

Medium Probability

Low Complexity and High

UncertaintyLow

Co

mpetitio

namo


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The Answer for the question is Yes and No.

Reasons for good:

Organizational Politics include career advancement,

recognition and status for individuals looking after their

legitimate interests, and achievement of organizationalgoals - getting the job done- as a result of the normal

political process in the organization.


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Reasons for bad:

Blame game: To save the image people use to put the

faults on others.

Claim game: To get evaluate in a better way people useto take the credits of others achievements.

All these factors leads to dissatisfaction and de-

motivating to the individuals with ethical values.

Unit 2 Theories of OB

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