1. Kay 235: Introduction to Management
Lecture 4
Subject: Fundamentals of Organization Theory
Reading: Grene, p

2. Two Options for Midterm 1
Date: November 8, Monday
Time: Class Time
Location: D13 Only
Questions: All Classic Essays, No Multiple choice or fill in the blanks
Exam 09:30
Option 2
Date: November 12, Friday
Time: Afternoon
Location: Two classes
Questions: Multiple choice and fill in the blanks, in addition to essays
Exam 13:30 or 14:00

3. Organization Greek Organon: meaning a tool or instrument.
So, organizations are tools or instruments to meet goals, objectives, to carry out tasks.
Kaynak: Gail Johnson, OT, 2003.

4. Organizations They are Definitions
The structure/context in which PA works
One of the principal focuses of PA
Definitions
Complex, goal-seeking units
Systems of consciously coordinated activities
Contain people
Include division of labor & specialization

5. Organizations: Definition
Implicit in the definition are four concepts:
Organizations are made up of people.
The necessity of the division of labor
Organizations have identifiable boundaries.
Organizations are purposeful, goal seeking work arrangements.
Kaynak: Wasti, 2010.

6. What is Organizational Theory?
Organizational Theory (OT)
Studies
Everything that is associated with organizations
Aims
To understand organizations and to improve them
Examines
Organizational Design
Motivation
Organizational Culture
Managerial Styles
Group Behavior
Leadership
Communication

7. Organizational Levels
Operational Level
Top Level
Middle (Mid) Level
Different levels of organization have different priorities in organizing.

8. Top Level Middle Level Operational Level Who: Top managers
What: Evaluating organizational data,
Planning ahead
Aim: Organizational strategy and planning
Operational Level
Top Level
Middle Level

9. Top Level Middle Level Operational Level Who: Middle Level Managers
What: Control of operational activities
Aim: Organizational Efficiency
Operational Level
Top Level
Middle Level

10. Top Level Middle Level Operational Level
Who: Workers-Street Level Bureaucrats
Their Supervisors
What: Redundant and repetitive jobs
Aim: Increasing organizational efficiency

11. Classical Theory of Organizations
Industrial Revolution
Large scale organizations and mass production
New patterns of relationships between workers and factory owners & managers
Emphasis on the formal structure
Notion of “economic man”
Emphasis on material rewards
Strictly define and control the work processes
“Employees are lazy and unreliable”
Theory X versus Theory Y

12. Key Pillars of the Classical Theory
Division of labor
Scalar and functional processes
Vertical and horizontal growth of the organization
Delegation of power and authority
Line and staff
Blue-collar and white-collar
Line: Initiators of key organizaitonal activities
Staff does not direct, it advises and serves
Reservoir of expert knowledge
(A limited) Span of control
The number of subordinates a manager can effectively supervise (5-6)

13. Frederick Taylor, 1856-1915 Peter Drucker, 1954
“Founder of Scientific Management”
“Father of Industrial Engineering”
“Frederick Taylor’s ideas may well be the most powerful, as well as the most lasting contribution America has made to Western thought since the Federalist Papers.”
Peter Drucker, 1954
Kaynak: Wasti, 2010.

14. Scientific Management
Time Studies – workers timed with stopwatches to identify “appropriate” time for specific tasks
Motion Studies – workers observed to identify “one best way” of completing a task
Frank Gilbreth credited with origins of Motion Studies

15. Scientific Management
Simple Method of Management
Break job into efficient parts – Division of Labor, Workers/Managers
Hire the right worker for the job
Give worker appropriate training – everyone is trainable
Introduce incentive pay plans – assumption workers are only motivated by money.
Huge productivity gains, allowed for Mass Production

16. Scientific Management
Scientific Management: Management method by which systems are broken down into individual components and each studied independently and optimized using scientific methods.

17. Man Against the Machine

18. Scientific Management
Simplify Work
“one best way”
Scientific Selection
Individual
Productivity
Scientific Training
Separate Planning
from Doing
Share Wealth
and Cooperation
Incentive Pay

19. Fordism
Meticulous time and motion study, perfection of each worker movement, specialized machines, conveyor belts.
Identifying work tasks and then making that method the standard, together with emphasis on inspection.

20. Pre-1912 20-30 per day 1913 100 per day 1914 1000 per day 1915
From Craft to Assembly Line Production at Ford’s Highland Park Plant
Model-T Production (Highland Park:1910)
Pre-1912
20-30 per day
1913
100 per day
1914
1000 per day
1915
3000 per day
Minutes of Effort to Assemble:
Late Craft Fall, 1913
Ass’y Line Spring 1914
% Reduced
Engine
594
226 62
Axle
150
26.5 83
Complete Vehicle
750 93 88

21. Fayol’s (1841-1925) Administrative Theory
Broad administrative principles to serve as guidelines for rationalization. “Top down” approach compared to Taylor.
Coordination:
Scalar principle: Hierarchical organizational form in which all participants are linked to a single pyramidal structure of control relations
Unity of command principle: No organizational participants should receive orders from more than one superior.

22. Fayol’s Administrative Theory (cont.)
Span of control principle: No superior should have more subordinates than can be effectively overseen.
Specialization: How various activities are to be distributed among organizational positions and how such positions can most effectively be grouped into work units/departments.

23. Fayol’s Administrative Theory (cont.)
Line and staff principle: All activities directly concerned with achieving organizational goals are line functions. Staff activities consist of advice, service, support. Staff units are to be segregated from the scalar organization of power and made responsible and subordinate to appropriate line units.

24. Max Weber, German Sociologist (1864-1920)
“The purely bureaucratic form of administrative organization […] is, as regards the precision, constancy, stringency, and reliability of its operations, superior to all other forms of administrative organization.” 24

25. Weber’s Theory of Bureaucracy
Three types of authority:
Traditional: Rests on established belief in the sanctity of immemorial traditions and the legitimacy of those exercising authority under them
Charismatic: Rests on devotion to the specific and exceptional sanctity, heroism, or exemplary character of a person
Legal- Rational : Rests on a belief in the legality of patterns of normative rules and the right of those elevated to authority under such rules to issue commands

26. Weber’s Theory of Bureaucracy (cont.)
Only traditional and rational-legal authority relations are sufficiently stable as basis of permanent administrative structures.
Charismatic forms arise in periods of instability and crisis.

27. Weber’s Theory of Bureaucracy (cont.)
Bureaucratization increases subdivision of the functions which the owner-managers of the early enterprises had performed personally.
Jurisdictional areas are clearly specified. Regular activities required of personnel are distributed in a fixed way as official duties.
Organization of offices follows the principle of hierarchy. Each lower office controlled and supervised by a higher one. Scope of authority over subordinates is circumscribed. Lower offices have a right to appeal.

28. Criticisms of Classical Principles
Division of labor
Repetitive work causes industrial fatigue and monotony
Scalar and functional processes
Too much or insufficient delegation of authority
Span of control
No single answer, depends on the organization and work

29. Neoclassical Theory of Organization
This school does not reject the principles of classical theory,
It criticizes them
Introduction of behavioral sciences to the study of organizations
Studies on motivation, coordination and leadership

30. The Human Relations School
Explored the role of groups and social processes in organizations.
Viewed organizations as open systems and began to emphasize organization context.
Notable works:
Mayo & Roethlisberger`s Hawthorne Studies,
Barnard’s Functions of the Executive,
McGregor’s The Human Side of Enterprise.

31. Hawthorne Studies ( )
Scientific Management study at Western Electric Hawthorne plant:
Question: How does workplace illumination affect worker productivity?
Results: Productivity went up when illumination was increased… productivity went up when illumination was decreased.
Research team shifted to examine other variables, always finding a greater productivity in group under study..
Hawthorne Effect: Productivity increased as a result of the attention received by workers under study.

32. Neoclassical Theory Human relations movement
Hawthorne studies ( )
Effects of changes in physical environment on output of workers
Temperature, hours of sleep, humidity, etc.
Importance of social systems, friendliness, etc.
Importance of “informal organization”
Natural groupings of people in work, a social need
Worker satisfaction- increased output

33. Human Relations – Elton Mayo
Analysis of the Hawthorne Studies:
Work is a group activity – man is a social creature
Need for Recognition, Security, and Sense of Belonging is more important in determining morale and productivity than physical working conditions.
Informal groups within the workplace exercise strong social controls over people’s work habits and attitudes.

34. Human Relations Opportunities for Social Interaction Satisfied Workers
Team
Productivity
Employee Input
Sensitive Supervision

35. Theory X and Theory Y Theory X Theory Y childlike adults
passive
lazy
resists work
want to be led
bare minimum
Theory Y
adults
desire to achieve
committed to work
responsible
lead, control their work
want to do a good job
Kaynak: Gail Johnson, OT, 2003.

36. Theory X and Theory Y
Theory X rests on four assumptions that an administrator holds about people in the organization.
They dislike work, must be supervised closely, will shirk responsibility and seek formal direction, and have little ambition.
Theory Y embraces four very different assumptions administrators hold about the nature of people at work.
They view work as satisfying, exercise initiative and self direction if committed to the organization, learn to accept responsibility and seek it, and have the ability to make good decisions.

37. Theory Z William Ouchi (1974) Theory Z Lifetime employment
Promotion based on seniority
Cross-training of workers
Collective decision-making process
Created after observing Japanese working culture

38. Pattern A & Pattern B Behavior
Chris Argyris explains how Theory X views give rise to Behavior Pattern A in leaders:
Pattern A, Hard: characterized by no-nonsense, strongly directive leadership, tight controls, and close supervision.
Pattern A, Soft: involves a good deal of persuading, “buying” compliance from subordinates, benevolent paternalism, or so-called good (that is, manipulative) human relations.

39. Maslow’s Need Hiearchy
Progressing Need Satisfaction
Self- Actualization
Regressing Need Satisfaction
Self-Esteem / Ego
Social Approval
Safety / Security
Physiological

40. Modern Theories of Organization
More than a synthesis of classical & neoclassical theories
Organization as a complex unit
Various types of social groups interact
Conflicts between
Management and workers
Formal and informal organizations
Organizations as systems
Environmental factors

41. Systems Approach to Organizations

42. Development of Systems Approach
Borrowed from Biology (Norbert Wiener)
Increasing division of labor and expertise
Every branch of science examining abstract areas
Weakening of links between these branches
Difficulty of understanding and solving complex problems
Search for an integrating theory

43. Types of Systems Closed systems Open systems
Not affected by external stimuli
Exists only in theory
Example: Electric circuit
Open systems
Interacts with the environment
Example: Every living creature

44. Environment Goals Culture Behaviors Processes Inputs Technology
Structure
Inputs
Outputs
Environment
Kaynak: Gail Johnson, OT, 2003.

45. Features of Open Systems
Input- Receiving energy
Interpretation of stimuli
Conforming to the environment, decision-making
Using energy
Transformation
Output
A good, service or a decision
Control/ Feedback
Positive or negative
Adaptation to changing conditions
Isomorphism
Fit between the parts of the system