(1) ORGANIZATIONAL THEORIES

Classical Organizational Theory

Which emerged in the first few decades of the 20th century

Classical Organizational Theory

Focuses mainly on structural relationships in organizations

system of differentiated activities

All organizations are composed of the activities and functions performed on them and the relationships among these activities and functions

People

Although organizations are composed of activities and functions, people perform tasks and exercise authority

Cooperation

toward a goal. Cooperation must exist among the people performing their various activities to achieve a unity of purpose in pursuit of their common goal

Authority

Is established through superior-subordinate relationships, and such authority is needed to ensure cooperation among people pursuing their goals

Functional Principle

the concept behind division of labor; organizations should be divided into units that perform similar functions (horizontal growth)

Scalar Principle

refers to the chain of command that grows with levels added to the organization (vertical growth)

Scalar Principle

Each level has its own degree of authority and responsibility in meeting organizational goals, with higher levels having more responsibility

Unity of Command

each subordinate should be accountable to only one superior

Line Functions

have the primary responsibility for meeting the major goals of the organization

Staff Functions

support the line’s activities, but are regarded as subsidiary in overall importance to the line functions

Span of Control

the number of subordinates a manager is responsible for supervising

Span of Control

According to Lyndall Urwick; the optimal range of span of control is about 5 to 6 subordinates

Scientific Management by Frederick Taylor

The organization is a machine—a pragmatic machine whose focus is simply to run more effectively

Taylorism

as this approach was sometimes called—had as its premise the notion that there is one best way to get the job done

Scientific Management by Frederick Taylor

Conduct studies that gather data indicating what the fastest and most efficient method is, then implement that method

Principles of Scientific Management

Management gathers data from the workers, who are in the best position to understand the job duties and tasks

Principles of Scientific Management

Workers are selected carefully (“scientifically”) and then trained so that they become more efficient than ever before

Principles of Scientific Management

Scientific selection, data collection, and training are combined to enhance efficiency

Principles of Scientific Management

The work itself is redistributed, with management taking over tasks previously left to subordinates (e.g., factory workers)

Max Weber

a German sociologist who studied organizations in the late 1800s and early 1900s

Bureaucracy

describes the structure, organization, and operation of many efficient organizations

Major Features of Bureaucracy

• Division of Labor

• Top-down Pyramidal Organization

• Delegation of Authorities

• Span of Control

Administrative Theory by Henri Fayol

Focused on the organization and structure of work tasks; looked at how management and workers are organized within a business to allow for the completion of tasks

Administrative Theory by Henri Fayol

• In contrast to the scientific approach to management, which posited that worker efficiency would lead to managerial efficiency

• Focused on what managers do

Functions of Management

• Planning

• Organizing

• Commanding

• Controlling

• Coordinating

Division of Labor

specialization of individuals

Authority

issues commands and comes with responsibility

Discipline

the subordinate must fully obey the superiors

Unity of Command

only one boss from whom a worker receives instructions

Unity of Direction

working under a singular plan

Subordination of Individual Interest

interests of individuals are subordinate to the general interests

Remuneration

compensation is used to incentivize worker performance

Centralization

decision-making is either centralized or decentralized

Line of Authority (Scalar Chain)

hierarchy of authority that places workers below managers in the reporting structure

Order

well-defined rules and standards for the work environment and work responsibilities

Equity

principle of fairness

Stability of Tenure

organizations need to have low turnover

Initiative

allowing employees to create plans and carry them out

Esprit de Corps

sense of belonging within the organization

Neoclassical Theory

a theory developed in the 1950s that described psychological or behavioral issues associated with an organization

Neoclassical

connotes a modernization or updating of the original (classical) theory, while still acknowledging its contributions

Neoclassical

There is no formal theory

Neoclassical

The primary contribution of neoclassical theory was to reveal that principles proposed by classical theory were not as universally applicable and simple as originally formulated

Core Principles of Neoclassical Organizational Theory

• Emphasis on the Human Factor

• Importance of Informal Organization

• Decentralization and Participation

• Focus on Communication and Group Dynamics

Hawthorne Experiment by Elton Mayo

Demonstrated that employee productivity is influenced not just by physical work conditions but also by social factors and the feeling of being valued and observed, leading to the discovery of the “Hawthorne Effect”

Hawthorne Effect

refers to the phenomenon where individuals change their behavior when they are aware that they are being observed or studied

Comprehensive Theory of Behavior In Formal Organization by Chester Barnard

Organizations are cooperative systems that exist to overcome individual limitations, requiring communication, cooperation, and a shared purpose

Comprehensive Theory of Behavior In Formal Organization by Chester Barnard

Effective organizations need to ensure that employees accept and act upon legitimate orders, and authority is established through the willingness of subordinates to follow directives

Application of Classical Theories to Current Situations of His Time by Herbert Simon

Human decision-making is bounded by limited information and cognitive abilities, leading to “satisfying” rather than optimizing, and organizations are complex systems best understood through a contingency approach

Growth Perspective by Argyris

Growth was a natural and healthy experience for an individual

Growth Perspective by Argyris

Organizations that acknowledged and aided this growth would be more likely to prosper than those that ignored or actively inhibited this growth

Growth Perspective by Argyris

Passive to active organisms

Modern Organizational Theory

it views organizations as complex, dynamic, and open systems that interact with their external environment

Modern Organizational Theory

Emphasize contingency and adaptation, recognizing that the most effective organizational structure and management style depend on the specific situation

Systems Theory

views the organization as a system composed of interconnected subsystems (e.g., departments, individuals, processes)

Systems Theory

Emphasizes the interdependence of these subsystems and the need for integration and coordination to achieve overall organizational goals

Contingency Theory (Situational Theory)

there is no one “best” way to organize or manage

Contingency Theory (Situational Theory)

The most effective organizational structure and management style are contingent upon various situational factors, both internal and external

Organizational Learning Theory

focuses on how organizations learn, adapt, and develop capabilities over time

Organizational Learning Theory

Emphasizes the importance of knowledge acquisition, sharing, and retention within the organization

Contingency Theory

• argues that there is no single “best” way to manage or lead an organization; instead, the most effective approach depends on the specific situation or context

• The “it depends” theory

Contingency Model by Joan Woodward (Technology)

different production technologies demand different organizational structures to be effective

Contingency Model by Joan Woodward (Technology)

Unit and Small-Batch Production: Low-volume, customized products (e.g., prototypes, tailored clothing)

Contingency Model by Joan Woodward (Technology)

Large-Batch and Mass Production: Standardized, high-volume products (e.g., assembly lines)

Contingency Model by Joan Woodward (Technology)

Continuous-Process Production: Highly automated, continuous flow of production (e.g., oil refineries, chemical plants)

Lawrence and Lorsch’s Model (Environment)

focuses on how organizations adapt to the demands of their external environment

Environmental Uncertainty

they viewed the environment as having different sub-environments with varying degrees of uncertainty

Differentiation

organizational subunits differ in terms of their goals, time horizons, interpersonal styles, and formality of structure

Integration

these differentiated subunits need to collaborate and coordinate their activities to achieve overall organizational goals

Fiedler’s Contingency Model (Leadership)

focuses on leadership effectiveness being contingent on the fit between the leader’s style and the favorableness of the situation

Leader-Member Relations

trust, confidence, and respect that subordinates have for their leader (good or poor)

Task Structure

which tasks are clearly defined, structured, and have clear procedures and goals (high or low)

Position Power

authority and influence the leader has due to their position in the organization (strong or weak)

Mintzberg’s Contingency Model (Configuration)

organizations naturally cluster into certain configurations or types, with each configuration being a relatively stable and effective combination of structure, situation (contingencies), and strategy

Age and Size

older and larger organizations tend to be more formalized

Technical System

complexity and sophistication of the technology used

Environment

stability, complexity, market diversity, and hostility

Power

external control and the power of various stakeholders

Motivation Theory

seeks to explain why individuals behave the way they do and what drives, directs, and sustains their actions

Motivation

a force that serves three functions: it energizes, or causes people to act; it directs behavior toward attainment of specific goals; and it sustains the effort expended in reaching those goals

Motivation

Three Individual Differences Traits that are Related to Work Motivation

Self-Esteem

the extent to which a person views him/herself as valuable and worthy

Chronic Self-Esteem

a person’s overall feeling about him/herself

Situational Self-Esteem

a person’s feeling about him/herself in a particular situation

Social Influenced Self-Esteem

how a person feels about themselves based on the expectations of others

Experience-with-Success

the employee is given a task so easy that he will almost certainly succeed

Galatea Effect

the power of self-expectations. An individual’s belief in their own abilities directly impacts their performance

Pygmalion/Rosenthal Effect

describes how high expectations from a superior or authority figure can lead to improved performance in a subordinate

Golem Effect

is the opposite of the Pygmalion effect, where negative or low expectations from others can lead to a decrease in performance

Intrinsic Motivation

they will seek to perform well because they either enjoy performing the actual tasks or enjoy the challenge of completing the task

Maslow’s Hierarchy of Needs

proposes a five-tiered hierarchy of needs (physiological, safety, social, esteem, and self-actualization) that individuals seek to satisfy sequentially. Lower-level needs must be met before higher-level needs become motivators

Physiological Needs

the most basic needs for survival, including food, water, shelter, and sleep

Safety Needs

security of body, employment, resources, morality, the family, health, and property

Love & Belonging Needs

focuses on the need for social connection, including friendship, family, intimacy, and a sense of belonging

Esteem Needs

need for respect, self-respect, status, recognition, strength, and freedom

Self-Actualization Needs

is the highest level, where individuals strive to become the best they can be, to fulfill their potential, and experience personal growth

Self-Actualization Needs

The first four levels (physiological, safety, love/belonging, and esteem) are often referred to as “deficiency needs” (D-needs)