3Organizations and People Organizations – Structure and DesignJames D. Mooney ( ) and Alan C. Reiley ( )Administrative TheorySpan of ControlToward a Top Management ViewpointRalph C. Davis ( )Harry A. Hopf ( )Ronald H. Coase (1910-
4James Mooney and Alan Reiley They searched for principles of organization both in historical examples and in large-scale enterpriseObjectives – “profit through service”Efficiency resided in organized group effortFormalism, the basis of an efficient organization, involved the “efficient coordination of all relationships”Management actuates, plans, and controls the plans and procedure of the organization.
5James Mooney and Alan Reiley – Onward Industry Coordination – rested on authorityAuthority was in the organization, while power was an individual possession“Doctrine” – ObjectivesScalar principle, which was founded in leadershipDelegation – conferring authorityFunctional principle – difference in duties performed (such as line-staff)Staff – represented the authority of ideasLine – represented the “authority of man.”
6Administrative Theory Luther Gulick (1892-1993) Luther Gulick is better known for his work in public administrationPOSDCORB – his view of the functions of the managerPlanning, organizing, staffing, directing, co-ordination, reporting, and budgetingDepartmentation and “principles of homogeneity” – grouping persons by:Purpose, process, persons or “things” and place
7Administrative Theory Lyndall Urwick (1891-1984) Lt. Col. Urwick attempted to synthesize a number of contributors to develop a general theory of organization and management.8 Principles of organizationAlong with Gulick, brought Fayol into the picture long before Fayol was recognized in the U.S.
8Span of Control – V. A. Graicunas Influenced by Urwick and the British general Sir Ian Hamilton.Put forth an argument for a narrow span of control due to “span of attention” and the relationships that managers must deal with.The mathematics of the different types of relationships indicated a geometric growth of relationships with an arithmetic increase in the number of subordinates
9Span of Control – Graicunas While the mathematics would indicate keeping the span of control narrow, Graicunas also includes a qualifier:Exceptions could be made if the work was routine, was done independently of others, and where supervisory responsibilities were less complex.See Bedeian, A.G. “Vytautas Andrius Graicunas: A Biographical Note,” Academy of Management Journal 17, no. 2 (June 1974) for fascinating account of Graicunas’ unusual life.
10V. A. GraicunasPapers on the Science of Administration by Urwick and Gulick.
12Toward a Top Management Viewpoint Ralph C. Davis ( ) was educated as a mechanical engineer, took an early shop management approach, encountered the Coubrough translation of Fayol, leading him to his top management contributions.Organic functions of management: planning, organizing, and controlling.
13Toward a Top Management Viewpoint Renewed interest in managerial work and seminal work in transaction costs and the nature of the firm is discussed here. This section is important as preparing the way for later developments in strategic management and organization theory.
14Ralph C. DavisManagement defined as “the function of executive leadership.”Unique insights into controlling with respect to its timing:Preliminary – trying to design in advance what would promote the planned performance.Concurrent – supervising, comparing, and taking corrective action as needed.
15Toward a Top Management Viewpoint Harry Hopf ( ) was influenced by Taylor and applied these ideas in a more general management setting.Interested in office worker and executive compensation, while others had focused on blue- collar workers.Interested in tying executive compensation to performance (still an important issue today).
16Harry Hopf – Form Follows Function & Optimology Was Harry Hopf ahead of A. D. Chandler Jr.’s “structure follows strategy?” Optimology is a view of the firm as a whole…serve society to maximize profits. How could this idea be used in strategy formulation?
17Holden, Fish, and Smith’s 1941 Study The study found the need for clearer objectives and plans.Do we still face the same issues?
18Other Studies of Top Management Sune Carlson found communications occupied a major portion of a manager's time (1951).Jackson Martindell created a management audita search for excellence before Tom Peters and Bob Waterman.
19What did Adam Smith say about those who manage “other peoples’ money?”
20Ownership and ControlAdolph Berle and Gardiner Means criticized executives and directors as “economic autocrats” who were removed from serving the interests of the shareholders. (1930s)
21Ownership and ControlRobert Gordon’s criticism was much the same, seeing top management as a self- perpetuating oligarchy serving their own interests. Why is ownership and control an ever recurring problem?
22Visible and Invisible Hands John R. Commons ( ), labor economist and founder of institutional economics, noted that the transactions were smallest unit of analysis.His ideas achieved wider appreciation later.John R. Commons,courtesy of the Wisconsin Electronic Reader
23Visible and Invisible Hands Ronald H. Coase (1910-) wrote his seminal work during this time about the nature of the firm.He saw the firm as the “visible hand” and superior, in most cases, to the market in allocating resources.Coase was continuing the tradition of J.B. Say and Alfred Marshall but his work received belated acclaim.Coase, from the University of Chicago, won the Nobel Prize in economics in 1991.
24SummaryContributors in this chapter were concerned with structuring activities and relationships for productivity and satisfaction at work:Mooney and Reiley presented rules of organization from history.Dennison’s work built on compatible work groups.Gulick, Urwick, and Graicunas focused on formalizing relationships.Davis focused on top management.Hopf applied the scientific approach to examining the whole firm.Coase and Commons introduced transaction cost economics.