Theories of OB

• -Need for supervisors (Shop Floor- Gang boss, Speed boss, Inspector and Repair boss / Planning Room - Route clerk, Time & Cost Clerk, Instruction Card Clerk, Disciplinarian)

Classical Theory

Scientific ManagementAdministrative ManagementBureaucracy

Bureaucracy

Max WeberGave 3 types of legitimate authority:- Rational-legal - Traditional- Charismatic

Characteristics of Bureaucracy

Division of workHierarchy of AuthorityRules and RegulationsImpersonal conductStaffingTechnical competenceOfficial Records

Advantages of Bureaucracy

Proper delegation of authorityConsistency of actionsBehaviour predictableLeads to efficiency

Disadvantages of Bureaucracy

No emphasis on individual goalsDiscourages innovationStructure is tall-communication problemNo consideration for informal or inter-personal difficultiesNot effective under dynamic environment

Scientific ManagementFrederick W. TaylorPrinciples of scientific management- one best way to do each job.- select the best individual for the position. - ensure that work be carried out in prescribed fashion through training and by increasing wages for those workers who follow current procedures. - equal division of work and responsibilities

Scientific Management•Mechanical

- Time and Motion Studies - Differential piece rate system

- Standardisation of tools, methods and working conditions

- Need for supervisorsShop Floor – Inspector, Gang boss, Speed boss,

Repair bossPlanning Room – Route clerk, Time and cost clerk,

Instruction Card Clerk, Disciplinarian

PhilosophicalAttitudinal change on the part of managementand workers- efforts for increase in production- spirit of mutual trust and confidence- developing scientific attitude towards problems

Criticism of Scientific Management

Confined mostly to production managementFunctional foremanship against unity of command

Administrative Management Theory

Henri FayolFather of general management5 functions of management14 principles of management- Division of work- Authority and Responsibility- Discipline- Espirit de corps

contd…Unity of commandUnity of directionSubordination of individual to general interestRemunerationCentralizationScalar chainOrderEquityStabilityInitiative

1. Functional Principle – Division of labor (Horizontal) – departments are set up so that people in each dept perform similar work• Allows one manager to supervise many similar tasks

2. Scalar Principle – Chain of command – (Vertical) structure of org such that each level has it’s own level of responsibility • each worker has only one supervisor to report to

3. Line/Staff Principle – Differentiates between personnel • Line – responsible for meeting org goals – production,

engineers, faculty, etc.• Staff – support line’s activities – personnel dept,

quality control, admin, custodial, etc.4. Span of Control – Number of subordinates under each mgr

• Flat – each worker has more autonomy• Tall – more authority to supervisors

Pillars of Classical Theory

Neo-Classical or Human Relations Approach

Inspiration of Neo-classical theorists was Hawthorne studies by Elton MayoStudy to determine effect of illumination and other conditions on productivity- Illumination Experiment- Relay Assembly Room Experiment

Shorter working hours, rest pauses, improved physical conditions,improved physical conditions,friendly and informal supervision

Contd…- Bank Wiring Observation Room Experiment

Group given room by themselves Records of 18 months kept prior to study were same No significant changes, observations were:

Each individual restricting outputGroup had own unofficial standards of performanceIndividual output remained fairly constant

Systems Theory – Katz & KahnSystems Theory – developed to account

for modern organization’s need to adapt to changing environment Must consider organization within the context of its relationship to the environmentCannot study individual or small group behavior in isolation, all part of an interacting system affecting all other parts

Systems Theory Model

Input Resources• Families• Banks• Environment• Material suppliers

Input• Human Resources• Financial Resources• Physical Resources• Materials• Information

Process• Organizational Structure• Admin Decision Making • Org policies, procedures• Production process• Org Climate

Output• Products/Services• Satisfaction • Reputation• Profit/loss• Wages/Salaries• Taxes

Output Users• Consumers• Clients• Government• Non-consumers

Feedback

Contingency Approach

Improvement over other approachesManagerial actions and organisational design appropriate to a given situationNo one best approach – situation dependentIs an outgrowth of systems approach

McKinsey 7S Framework

7 S

Strategy: The direction and scope of the company over the long term.Structure: The basic organization of the company, its departments, reporting lines, areas of expertise, and responsibility (and how they inter-relate).Systems: Formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call centre systems, online systems, etc).

7 S

Skills: The capabilities and competencies that exist within the company. Shared values: The values and beliefs of the company. Ultimately they guide employees towards 'valued' behavior.Staff: The company's people resources and how they are developed, trained, and motivated.Style: The leadership approach of top management and the company's overall operating approach.