TheEvolutionofOrganizationTheoryOrganization Theory by S. P. RobbinsUniversity of SeoulCollege of Business AdministrationSahangsoon Kim

MajorTheme• A cumulative Development• Introduced, evaluated, and refined• New insights tend to reflect the limitations of earlier theories

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DEVELOPINGAFRAMEWORK• Two underlying dimensions in OT• Organizations as systems• Ends of organization structure

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DEVELOPINGAFRAMEWORK• Organization as systems• Pre 1960• Closed system view• Internal characteristics of organization

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DEVELOPINGAFRAMEWORK• Ends of Organization Structure• Rational perspective

• A vehicle to effectively achieve specified objectives• Social perspective

• Structure is the result of the conflicting forces by the organization’s constituents who seek power and control

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DEVELOPINGAFRAMEWORKTime Frame 1900-1930 1930-1960 1960-1975 1975-

System Perspective Closed Closed Open Open

Ends Perspective Rational Social Rational Social

Central Theme Mechanical Efficiency

People and Human Relation

ContingencyDesigns

Power and Politics

Theoretical Classification Type 1 Type 2 Type 3 Type 4

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DEVELOPINGAFRAMEWORK• Type 1• Organizations as mechanical devices to achieve goals• Achieving efficiency in internal functions

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DEVELOPINGAFRAMEWORK• Type 2• Closed system assumptions• Informal relations and noneconomic motives• Coexistence of formality (formal relationship, rules, etc.) and

informality (communication, status, norms, and friendship)

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DEVELOPINGAFRAMEWORK• Type 3• Organizations as the vehicle for achieving goals• Major contingencies determine organization structure

• Size, technology, and environmental uncertainty• Proper alignment of structure to organizational contingency

facilitates the achievement of the organization’s goals

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DEVELOPINGAFRAMEWORK• Type 4• Social perspective with open-system framework• Structure is NOT the rational effort by managers to create the

most effective structure BUT the outcome of the political struggles among coalitions within the organization for control

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EARLYCONTRIBUTIONS• Organization theory issues addressed in the Bible• The thing thou doest is not good. Thou wilt surely wear away,

both thou, and this people that is with thee: for this thing is too heavy for thee; thou are not able to perform it thyself alone. Hearken now unto my voice, I will give thee counsel…. Moreover, thou shalt provide out of all the people able men… and place such over them, to be rulers of thousands, and rulers of hundreds, rulers of fifties, and rulers of tens: And let them judge the people at all seasons: and it shall be, that every great matter they shall bring unto thee, but every small matter they shall judge: So shall it be easier for thyself, and they shall bear the burden with thee. If thou shalt do this thing, and God command thee so, then thou shalt be able to endure, and all this people shall also go to their place in peace. 11

EARLYCONTRIBUTIONS• Message from the Biblical Language• Managers need to delegate authority in large organizations• Only the unusual or exceptional decisions should flow back up

the hierarchy for resolution

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EARLYCONTRIBUTIONS• The Best Structure for an Organization• Promotes effective work effort• Minimizes complexity• The most enduring and successful model• The Roman Catholic church

• The pope à cardinals à archbishops à bishops à parish priests

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EARLYCONTRIBUTIONS• Division of Labor• Adam Smith (1776)• Pin-manufacturing industry

• The Impacts of Industrial Revolution to the US• Machine power replacing human power• Rapid change of transportation methods

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TYPE1THEORISTS• Frederick Taylor and Scientific Management• Principles of Scientific Management• Worker output was only about one-third of what was possible• Manager’s job to find out ‘One best way (work design)’• Shop-level management

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TYPE1THEORISTS• Scientific Management• The replacement of rule-of-thumb methods for determining each

element of a worker’s job with scientific determination• The scientific selection and training of workers• The cooperation of management and labor to accomplish work

objectives• A more equal division of responsibility between managers and

works, with the former doing the planning and supervising, and the latter doing the execution

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TYPE1THEORISTS• Henri Fayol and Principles of Organization• From experience as a practicing executive• General principles for all managers at all levels• 14 principles

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TYPE1THEORISTS• Fayol’s 14 Principles• Division of work• Authority• Discipline• Unity of command• Unity of direction• Subordination of individual interests to the general interests• Remuneration• Centralization• Scalar chain• Order• Equity• Stability of tenure of personnel• Initiative• Esprit de corps 18

TYPE1THEORISTS• Max Weber and Bureaucracy• Ideal-type organization structure• Characteristics of Bureaucracy

• Division of labor• A clear authority hierarchy• Formal selection procedures• Detailed rules and regulations• Impersonal relationship

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TYPE1THEORISTS• Ralph Davis and Rational Planning• Structure as a logical outcome of the organization’s objectives• Economic service as the primary objective of a business firm• The role of management

• Group activities together to form the structure of the organization• A simple model for designing an organization

• Management’s formal planning à organization’s objectives à the development of structure

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TYPE2THEORISTS• The Common Theme among Type 2 Theorists• Recognition of the social nature of organizations• Human-relations school• Organizations as made up of both tasks and people

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TYPE2THEORISTS• Elton Mayo and the Hawthorne Studies• Hawthorne Studies

• The effect of various illumination levels on worker productivity

• Findings of Elton Mayo• Social norms of the group were the key determinants of

individual work behavior• Organizational humanism• Management should consider effects on work groups, employee

attitudes, and management-employee relationships

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TYPE2THEORISTS• Chester Barnard and Cooperative Systems• Cooperative systems as an equilibrium state of tasks and people• Managers need to organize around the requirements of the tasks

and the needs of the people• The Functions of the Executive• Authority should be defined in terms of the response of the

subordinate• The role of the informal organization• Manager’s roles as facilitating communications and stimulating

subordinates to high levels of effort

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TYPE2THEORISTS• Douglas McGregor and Theory X-Theory Y• Theory X’s four assumptions

• Employees inherently dislike work and, whenever possible, will attempt to avoid it

• Since employees dislike work, they must be coerced, controlled, or threatened with punishment to achieve desired goals

• Employees will shirk responsibilities and seek formal direction whenever possible

• Most workers place security above all other factors associated with work and will display little ambition

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TYPE2THEORISTS• Theory Y’s four assumptions• Employees can view work as being as natural as rest or play• Human beings will exercise self-direction and self-control if they

are committed to the objectives• The average person can learn to accept, even seek, responsibility• Creativity-that is, the ability to make good decisions-is widely

dispersed throughout the population and is not necessarily the sole province of those in managerial functions

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TYPE2THEORISTS• Implications of McGregor’s Theory X and Theory Y• Theory Y assumptions were preferable• Participative decision making, the creation of responsible and

challenging jobs for employees, and developing good group relatoinship

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TYPE2THEORISTS• Warren Bennis and the Death of Bureaucracy• Bureaucracy’s centralized decision making, impersonal

submission to authority, and narrow division of labor was being replaced by decentralized and democratic structures organized around flexible groups

• Authority-based influence was giving away to expertise-based influence

• From bureaucracy to flexible adhocracies

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TYPE3THEORISTS• Herbert Simon and Principles Backlash• 1940s• Criticized Type 1 principles• Promotes contingency approach

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TYPE3THEORISTS• Katz and Kahn’s Environmental Perspective• The Social Psychology of Organizations• Type 3 open-systems perspective• The relationship of an organization with its environment• The need for organizations to adapt to a changing environment

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TYPE3THEORISTS• The Case for Technology• Joan Woodward, Charles Perrow, & James Thompson• The importance of technology in determining the appropriate

structure for an organization

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TYPE3THEORISTS• The Aston Group and Organization Size• Organization size as an important factor influencing structure• An established pattern as organizations expand in size

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TYPE4THEORISTS• The Most Recent Approach• Political nature of organization• James March, Herbert Simon, and Jeffrey Pfeffer

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TYPE4THEORISTS• Mach and Simon’s Cognitive Limits to Rationality• Challenged the classical notion of rational or optimum decisions• Decision makers selected satisfactory alternative• The limits of a decision makers’ rationality• The presence of conflicting goals

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TYPE4THEORISTS• Pfeffer’s Organizations as Political Arenas• Model for power coalitions, inherent conflicts over goals, and

organizational-design decisions that favor the self-interest of those in power

• Control as end rather than a means to rational goals• Organization’s design as the result of the power struggles

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