2. 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.
2-2
3. 2-3
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.
4. 2-4
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990
The Neo-Human
Relation Movement
The Contingency
Approach
The System Approach
The Quantitative
School
The Behavioral Sc
School
Classical Management
Theories
LaborShortage
WW
1(1914-1918)
TheGreatDepression
WW
11(1941-1945)
DemingLectureon
QualityinJapanProtestMovement
(60s–70s)
IBM
PC
Introduced)
THE EMERGENCE
OF M & O THEORIES
6. May 9, 2015 2-6
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.
7. 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
2-7
8. Evolution of ContemporaryEvolution 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
2-8
9. Type 1 TheoristType 1 Theorist
Type 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
2-9
10. 2-10
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
11. 2-11
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.
12. 2-12
Limitations
• Does not take into account the human and
social aspects.
• Lays emphasis on productivity/profit only.
13. 2-13
Administrative Management Theory
Henry 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.
14. 2-14
1. Division of work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interest to general interest
7. Remuneration of personnel
8. Centralization
9. Scalar of Chain: authority
10. Order: orderly place in organization
11. Equity: equity and justice
12. Stability of tenure of personnel: adaptation
13. Initiative
14. Esprit de corps
Fayol’s 14 Principles
15. 2-15
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 Model
Max Weber (1864–1920)
16. 2-16
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
18. 2-18
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.
19. 2-19
Rational Planning
Ralph 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.
20. May 9, 2015 2-20
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
21. 2-21
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
22. 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.
2-22
The Results:
23. 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.
2-23
The Human Relations Movement
24. 2-24
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.
25. 2-25
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.
26. 2-26
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
27. 2-27
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
28. 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.
2-28
Katz and Kahn’s Environmental
Perspective
29. 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.
2-29
30. 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.
2-30
31. The Changing Face of OrganizationThe 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.
2-31