Unit 3Notes on the

Theory of Organization

What Is Organization Theory?

A proposition or set of propositions that attem

pts to explain or predict how groups and indiv

iduals behave in differing organizational arran

gements.

What Is Organization Theory? Classic organizational theory.

Organizations exist to accomplish production-related and eco

nomic goals.

There is one best way to organize for production, and that wa

y can be found through systematic, scientific inquiry.

Production is maximized through specialization and division of

labor.

People and organizations act in accordance with rational econ

omic principles.

What Is Organization Theory? Theory derived from organizational structures

and procedures during the industrial revolution.

Adam Smith and the pin factory. The Wealth of Nations, 1776.

Laissez-faire. Economic rationale for the factory system. All formal organizations are force multipliers.

The Origins of Scientific Management The basic problem with the traditional hierarch

ical organization was that it was dependent up

on the proper enculturation of individual super

visors at every level for its success.

Changes in the environment can make hierarc

hical organizations less competent.

The Origins of Scientific Management

Origin of the staff concept to overcome limitat

ions of a single mind and fleeting time.

The general staff concept has been adopted

by industrial and governmental organizations.

The Origins of Scientific Management The influence of Frederick W. Taylor (1911).

Father of the scientific management movement.

Scientific management principles. Replacing traditional, rule of thumb methods of work accomplishment

with systematic, more scientific methods of measuring and managing

individual work elements;

The scientific study of the selection and sequential development of w

orkers to ensure optimal placement of works into work roles;

Obtaining the cooperation of workers to ensure full application of scie

ntific principles; And.

Establishing logical divisions within work roles and responsibilities bet

ween workers and management.

The Origins of Scientific Management Henri Fayol’s general theory of management (six pri

nciples, 1916, 1949). Technical (production of goods) Commercial (buying, selling, exchange). Financial (raising and using capital). Security (protection of property and people). Accounting. Managerial (coordination, control, organization, planning an

d command of people).

The Origins of Scientific Management Fayol (contd.).

Dominant principle was management. Division of work. Authority and responsibility. Discipline. Unity of command. Unity of direction. Subordination of individual interest to general interest. Remuneration of personnel.

The Origins of Scientific Management Fayol (contd.).

Dominant principle was management (contd.). Centralization. Scalar chains (supervisors). Order. Equity. Stability of personnel tenure. Initiative, and. Esprit de corps.

The Period of Orthodoxy Interwar period a period of orthodoxy in publi

c administration. Work of government could be divided between de

cision-making and execution. Administration was a science with discoverable pri

nciples.

The Period of Orthodoxy Paul Appleby’s polemic.

Politics and administration inextricably entwined. Luther Gulick (1937, POSDCORB).

Planning (outline and methods). Organizing (structure). Staffing (personnel). Directing (decision-making). Coordinating (task management). Reporting (communication and record-keeping). Budgeting (fiscal planning, accounting, and control).

The Many Meanings of Bureaucracy First, “the bureaucracy is the totality of government

offices or bureaus that constitute the permanent gov

ernment of the state.

Second, “the bureaucracy” refers to all of the public

officials of a government, both high and low, elected

and appointed.

Third, bureaucracy is often used as a general invecti

ve to refer to any inefficient organization encumbere

d by red tape.

The Many Meanings of Bureaucracy Fourth, bureaucracy refers to a specific set of

structural arrangements (Max Weber). Bureaucrats are free as individuals, but not as em

ployees. Hierarchy. Clearly specified functions. Freedom of hiring. Appointment by merit.

The Many Meanings of Bureaucracy Fourth, bureaucracy refers to a specific set of

structural arrangements. Due compensation and due process. Sole occupation. Advancement by merit or seniority. Non-proprietary rights in position. Strict controls.

Neoclassical Organization Theory The neoclassical theorists gained their reputation by

attacking the classical theories. Important source of the power and politics, organizational c

ulture, and systems theory. Herbert Simon.

Bounded rationality and satisficing. Programmed and unprogrammed decision-making. Management information systems.

Neoclassical Organization Theory The impact of sociology.

Philip Selznick – Organizations are made up of individuals whose goals and aspirations may not coincide with the organization’s.

Modern Structural Organization Theory Basic assumptions

Organizations are rational institutions whose primary purpose is to accomplish established objectives through control and coordination.

There is a “best” structure for any organization in light of objectives, environment, products or services, and the technology of the production process.

Specialization and division of labor increase the quality and quantity of production.

Most problems result from structural flaws.

Modern Structural Organization Theory Mechanistic and organization systems.

Mechanistic – traditional bureaucracy, best in stab

le conditions.

Organic – less rigidity, more participation, and mor

e reliance on workers, best in dynamic conditions.

Systems Theory Systems theory views an organization as a c

omplex set of dynamically intertwined and int

erconnected elements, including inputs, proc

esses, outputs, feedback loops, and the envir

onment. Any change in one element causes

changes in other elements.

Systems Theory Cybernetics – Norbert Wiener (1948).

Systems Theory The learning organization.

Built on the doctrines of participation

Maslow’s hierarchy of needs.

New component technologies (the five disciplines). Personal mastery.

Mental models.

Building shared vision.

Team learning.

Systems thinking.