Organizational Theory

Organization theory

defined as a set of propositions that explains or predicts how groups and individuals behave in varying organizational structures and circumstances

Organization

A coordinated group of people who perform tasks to produce goods or services, colloquially referred to as a company.

Classical theory

A theory developed in the early 20th century that described the form and structure of organizations.

Classical theory

begins with a statement of the basic ingredients of any organization and then addresses how the or- ganization should best be structured to accomplish its objectives.

• Organizations exist for economic reasons and to accomplish productivity goals.

• Scientific analysis will identify the one best way to organize for production.

• Specialization and the division of labor maximize production.

• Both people and organizations act in accordance with rational economic principles.

four basic tenets of classical theory

Great Britain; 1700s

the formal study of organizational theory appears to have begun when factories became popular in ____ in the ____

1. A system of differentiated activities

2. People

3. Cooperation toward a goal

4. Authority

four basic components to any organization

a system of differentiated activities

All organizations are composed of the activities and functions performed in them and the relationships among these activities and functions. A formal organization emerges when these activities are linked together.

people

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

cooperation toward a goal

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

authority

is established through superior—subordinate relationships, and such is needed to ensure cooperation among people pursuing their goals.

classical theory

addresses the various structural properties by which the organization should best reach its goals.

• functional principle

• scalar principle

• line/staff principle

• span-of-control principle

four major structural principles are the hallmarks in the history of organization theory':

functional principle

The concept that organizations should be divided into units that perform similar functions.

functional principle

is the concept behind division of labor

functional principle

relates to the horizontal growth of the organization

horizontal growth of the organization

that is, the formation of new functional units along the horizontal dimension

scalar principle

the concept that organizations are structured by a chain of command that grows with increasing levels of authority.

unity of command

Each subordinate should be accountable to only one superior, a tenet referred to as the ___

line/staff principle

The concept of differentiating organizational work into primary and support functions.

line functions

Organizational work that directly meets the major goals of an organization.

staff functions

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

human resources and quality control

typical staff functions

span-of-control principle

the concept that refers to the number of subordinates a manager is responsible for supervising.

2 subordinates

size for small span of control

15

size for large span of control

flat organizations

few levels between the top and bottom of the organization

classical theory

is credited with providing the structural anatomy of organizations. It was the first major attempt to articulate the form and substance of organizations in a comprehensive fashion.

scientific management and bureaucracy

Two particular developments occurred within classical organizational theory

scientific management

From the perspective of this framework, the organization is a machine—a pragmatic machine whose focus is simply to run more effectively.

scientific management

the ___ school conducted time and motion studies and analyzed temperature, illumination, and other conditions of work, all the while looking at the effects of these conditions on productivity and efficiency.

Taylorism

scientific management was also called

scientific management

had as its premise the notion that there is one best way to get the job done

Frederick Taylor

In the late 1800s and early 1900s, he provided a framework that he believed would be useful in structuring organizations

Max Weber

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

bureaucracy

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

division of labor

First, each job in a bureaucratic organization is a specialized position with its own set of responsibilities and duties. Weber called this idea _____—a rather simple approach in which employees are narrowly trained to do only the particular tasks and duties assigned to their jobs

delegation of authority

An approach whereby supervisors assign particular tasks to separate employees and hold them responsible for completing these tasks.

micro-managers

Managers who, instead of delegating individual tasks to employees, try to take charge of all tasks

• standardization of tasks

• centralized decision making

two additional issues that are important to Weberian bureaucracy:

Structure

formal component of an organization; arrangement of work functions within an organization designed to achieve efficiency and control.

humanistic theory

The relationship between supervisor and subordinate has been especially important in the _____ of organizations, which explains organizational success in terms of employee motivation and the interpersonal relationships that emerge within the organization

Theory X and Theory Y

Perhaps the best example of humanistic theory is D. M. McGregor’s (1960) work on ____

self-fulfilling prophecy

in which employees, over time, learn to act and believe in ways consistent with how managers think they act and believe—even if this wasn’t the case initially.

Theory X

Without a firm hand, it was thought, employees would be passive and unresponsive to the organization’s needs.

Theory X

it was the most prevalent set of beliefs about employees from the birth of industry until the mid-1900s.

Theory Y

takes a much more humanistic and developmental orientation, emphasizing not only the inherent goodness, capacity, and potential of employees but also their readiness to develop those inherent characteristics.

Theory Y

also emphasizes management’s responsibility for nurturing those qualities and providing employees with opportunities to develop their inherently positive characteristics in the workplace

Theory Y approach to organizational management

other developments in I/O psychology, you can see that they are all consistent with the human relations movement—or what McGregor called the

Open-systems theory

organizations develop and change over time as a result of both internal and external forces.

• inputs

• throughputs

• outputs

three key elements of open-systems theory

• Raw materials

• Human resources

• Energy

• Machinery

exaples of inputs in the open system theory

• Production processes

• Service processes

• Training processes

examples of throughputs in the open system theory

• products

• services

• knowledge

examples of outputs in the open system theory

entropy

is a principle in many branches of science positing that all forms of organization move toward disorganization or death

negative entropy

suggests that organizations must avoid this movement toward death by continuing to import energy from outside the system.

importation of energy

Energy is brought in from the external environment for use by the system.

throughput

That energy is transformed.

output

A product or service is exported.

systems as cycles

The pattern of importation of energy and exportation of products and services continues.

negative entropy

The tendency of all systems to move eventually toward death is reversed.

information input and negative feedback

allow the system to correct or adjust its course

differentiation

Open systems move toward more specialized functions

integration and coordination

Bringing the system together as a unified process is necessary for the system to continue

equifinality

There are many ways within the system to get to the same conclusion or end point.