A. ORGANIZATIONAL THEORY 20% - 20 ITEMS
(2) APPLY THE DIFFERENT ORG THEORIES TO HUMAN BEHAVIOR IN ORG. SETTINGS IN: |
INDUSTRIAL/ORGANIZATIONAL PSYCHOLOGY
- is a branch of psychology that applies the principles
of psychology to the workplace
● Purpose: “to enhance the dignity and performance of
human beings, and the organizations they work in, by
advancing the science and knowledge of human behavior”
Approaches in I/O Psychology
Industrial Approach
- Focuses on determining the competencies needed to
perform a job, staffing the organization with
employees who have those competencies, and
increasing those competencies through training
Organizational Approach
- Creates an organizational structure and culture that
will motivate employees to perform well, give them
the necessary information to do their jobs, and
provide working conditions that are safe and result
in an enjoyable and satisfying work/life
environment
MAJOR FIELDS IN I/O PSYCHOLOGY
● Personnel Psychology – concentrates on the selection and
evaluation of employees
- Analyzing jobs
- Recruiting applicants
- Selecting employees
- Determining salary levels
- Training employees
- Evaluating employee performance
● Organizational Psychology – investigates behavior of
employees with the context of an organization
- Issues of leadership
- Job satisfaction
- Employee motivation
- Organizational communication
- Conflict management
- Organizational change
- Group processes within an organization
● Human Factors/Ergonomics – interaction between
humans and machines
- Workplace design
- Human-machine interaction
- Ergonomics
- Physical fatigue and stress
ETHICAL DILEMMAS
● Are ambiguous situations that require a personal judgment
of what is right or wrong because there are no rules, policies,
or laws guiding such decisions
● Individuals often rely on their morals and personal values,
which often leads to different decisions by different people
in similar situations
Two Types of Ethical Dilemmas
Type A
- There is a high level of uncertainty as to what is
right or wrong, there appears to be no best solution,
and there are both positive and negative
consequences to a decision
Type B
- Also called rationalizing dilemmas, the difference
between right and wrong is much clearer in a Type
A dilemma
- Usually, individuals know what is right but choose
the solution that is most advantageous to
themselves
ORGANIZATIONAL THEORY
Organization – collectivities of parts that cannot accomplish
their goals effectively if they operated separately
- A tool people use to coordinate their actions to
obtain something they desire or value to achieve a
goal and create value (value generators)
- Social entity, made up of people that agree on, and
work towards goals
- Org creates value, or else the “die”
- How do org create value? Environment (Customers,
Suppliers) > Input (Raw Materials, IT, HR) >
Process (Machines, Computers, KSAOs) > Output
(Products, Services)
ORGANIZATIONAL THEORY – a set of propositions
that explains or predicts how groups and individuals behave
in varying organizational structures and circumstances; study
of the structures and operations of social organizations,
including companies and bureaucratic institutions, applied
through the organizational structures
- Organization – a coordinated group of people who
perform tasks to produce goods or services,
colloquially referred to as companies
● Set of propositions that explains or predicts how groups
and individuals behave in varying organizational structures
and circumstances
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● Includes analysis of productivity and performance of
organizations and the actions of the employees and groups
within them
● Aims to provide an overview of how organizations
functions and the things an organization needs to succeed -
become more efficient and become more profitable
4 Major Structural Principles
Functional Principle
- The concept behind division of labor; organizations
should be divided into units that perform similar
functions (horizontal growth) into areas of
specialization
- Orgs should be divided into units that perform
similar functions
- Relates to horizontal growth of the org - the
formation of new functional units (depts) along the
horizontal dimension
Scalar Principle
- Refers to the chain of command that grows with
levels added to the organization (vertical growth)
➢ 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
- Communication and authority should flow through
a defined chain of command
- Deals with orgs vertical growth
- Objectives: hierarchy, establishment,
decision-making, clarity, accountability,
communication flow
Line/Staff Principle - meet major goals of the organization
- Line Functions – have the primary responsibility for
meeting the major goals of the organization, like the
production department
- Staff Functions – support the line’s activities, but
are regarded as subsidiary in overall importance to
the line functions
Span of Control - Support line’s activities but are regarded
as subsidiary in overall importance to line functions
- The number of subordinates a manager is
responsible for supervising
➢ According to Lyndall Urwick; the optimal
range of span of control is about 5 to 6
subordinates
- Large Span-of-Control produce flat organizations,
whilst, smaller Span-of-Control produce taller
organizations
TYPES OF ORGANIZATIONAL THEORIES
Organizational
Theories
Focuses on WORK
- Routine tasks and
responsibilities of a position
- Highlights what is common
among individuals
Formal Organizational Structure
- Has set rules
- Expressed through hierarchies
(chain of command)
Theorists: Taylor, Weber, and Fayol
Neoclassical
Organizational
Theories
Focuses on WORKER
- The individual and how they
relate to others
- Highlights the individual
differences among employees
Informal Organizational Structure
- Has no set rules
- Negative and Positive Politics
Theorists: Mayo, Maslow, McGregor,
Argyris
Classical
Modern
Organizational
Theories
Focuses on INTERNAL and
EXTERNAL factors
- Integrates multiple disciplines
- Emphasizes that no
one-size-fits-all approach
exists
Theorists: Fiedler, Maslow, McGregor,
Herzberg, Argyris, Mintzberg
Note: Green highlight on TOS A 1.1 refers to the organizational
theories that are listed under TOS 1.3, and for those who are not
highlighted, we could assume that it is part of org theories that isn't
under the given list.
Classical Organizational Theory
➔ Which emerged in the first few decades of the
20th century
➔ Focuses mainly on structural relationships in
organizations
➔ Organizations exists for economic reasons and to
accomplish productivity goals
➔ The basic ingredient of any organization and then
addresses how organizations should best
structured to accomplish its objectives
➔ There is a “right” structure for an organization
➔ Assumes there is one best configuration to
accomplish goals
➔ Scientific Analysis will identify the one best way
to organize for production
➔ Deal with the formal organization and concepts
to increase management efficiency
➔ Both people and organizations act in accordance
with rational economic principles
➔ To be successful in this new economy, industrial
and mechanical engineers are needed to organize
production systems to keep the machines busy
and work flowing
➔ Views organizations as machines
➔ Has clearly defined roles, hierarchical structures,
and formal rules and procedures
➔ Emphasizes efficiency, specialization, and
predictability in achieving organizational goals
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Criticisms of Classical Theory
● Neglects the importance of informal groups
● Undermines the influence of outside factors on
individual behavior
● Does not care about humanistic elements
● Communication is one-way, not two-way
● Has little concern for participation, personality or
leadership style
● Assumes that there is only one best configuration
● Ignored the possibility that employee behavior
may also affect the organization in return
Application in HR Management
● Job Analysis and Job Description
● Training
● Compensation
● Hierarchical and Functional Organizational
Structures
4 Basic Tenets:
- A system of differentiated activities. All
organizations are composed of the activities and
functions performed on them and the
relationships among these activities and
functions; activities that are linked to each other
- 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
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
- Conduct studies that gather data indicating what
the fastest and most efficient method is, then
implement that method
➢ Conducted time and motion studies and
analyzed temperature, illumination, and
other conditions of work, all while
looking at the effects of these conditions
on productivity and efficiency
- Taylor believed that scientific principles could be
applied to the study of work behavior to help
increase worker efficiency and productivity
- Based on the concept of planning of work to
achieve efficiency, standardization,
specialization, and simplification
- The advantages of productivity improvement
should go to workers
- Physical stress and anxiety should be eliminated
- Capabilities of workers should be developed
through training
- Traditional boss concept should be eliminated
- Mainly associated with high levels of job
specialization and standardization
- The most effective companies have detailed
procedures and work practices developed by
engineers, enforced by supervisors, and executed
by employees
- Taylor, along with Frank and Lillian Gilbreth
implemented the principles of scientific
management
- Worker efficiency would lead to greater
managerial efficiency
- Scientific Selection of the worker
- Management and labor cooperation rather than
conflict
- Scientific training of the worker
● Highlights that there should be a system in managing
employees
- Planning of work to achieve efficiency
- Standardization
- Specialization and simplification
● Views the organization as a machine whose focus is to
run effectively by following a system
● Conducted time and motion studies to identify its
effects on productivity and efficiency
Four Principles of Scientific Management (Frederick
W. Taylor)
1. Science, Not Rule-of-Thumb
- Replace traditional "rule-of-thumb" methods
with scientific analysis of each job.
- Management gathers data and studies work
methods to determine the most efficient way to
perform tasks.
2. Scientific Selection and Training of Workers
- Workers are carefully (scientifically) selected
based on their qualifications and abilities.
- They are then trained and developed to perform
their jobs efficiently using the best methods.
3. Cooperation Between Management and Workers
- Management and labor should work together
rather than in conflict to ensure that scientifically
developed methods are followed.
- Scientific selection, training, and supervision are
combined to improve efficiency and productivity.
4. Equal Division of Work and Responsibility
- Management assumes responsibility for
planning, studying, and organizing the work,
while workers focus on performing the tasks.
- Work is redistributed, with management taking
over planning and decision-making
responsibilities that were previously left to
workers.
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Bureaucracy by Max Weber
- 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
- Ideal form of organization
- Includes formal hierarchy, division of labor, and
a clear set of operating procedures
- Well-defined authority hierarchy with strict rules
for governing behavior, with few members with
highest status on the top
- Increase productivity by reducing inefficiencies
in organizational operations
- Highlights the processes / rules and regulations
within the organization
- Characterized by rules, standardized processes,
procedures and requirements, meticulous
division of labor, and clear hierarchies
- Includes a formal hierarchy, division of labor,
and set of operating procedures
- Lengthy process = risk prevention
Characteristics of a Bureaucratic Organization
- Specialization of labor
- Well-defined Authority Hierarchy
- Formal Rules and Procedures
- Impersonality – behavior is based on logical
reasoning rather than emotional thinking
- Employment decisions based on merit
- Emphasis on written records
4 Major Features of Bureaucracy
Each job is specialized position with its own set of
responsibilities and duties
- Division of Labor: each job is a specialized
position with its own set of responsibilities and
duties; division of tasks performed in an
organization
➢ Employees do only the particular tasks
and duties assigned to their jobs
➢ Pros: allows for taking advantage of
strengths of individual
➢ One potential difficulty involves the
coordination of various tasks handled by
various employees
➢ Structure: formal way an org is designed
in terms of division of labor, delegation
of authority, and span of control
- Top-down Pyramidal Organization: tend to be
top-down pyramidal organization
➢ The organization has a clear hierarchy
➢ Higher-level managers supervise
lower-level employees.
- Delegation of Authority: approach whereby
supervisors assign tasks to separate employees
and hold them responsible for completing these
tasks (Micromanagers); information about which
lower-level employees report to higher-level
employees; supervisors assign particular tasks to
separate employees; avoid micromanaging
- Span of Control: number of subordinates who
report to a given supervisor; ensure proper
management and coordination
➢ A smaller span means closer
supervision, while a larger span means
one manager oversees more employees.
➢ Ideal is span is 4 members (higher
levels) and 8-12 members (lower levels)
Criticisms of Bureaucratic Approach
● Ineffective for orgs operating in rapidly changing
environments; difficult to adapt to changes
● Work can be so simplified and unchallenging that
workers might be dissatisfied and unmotivated
Principles of Bureaucratic Approach
Structure
- Hierarchy, top-down, and uses legitimate power
- Steps that have to be followed in order to do a
certain process (hierarchy)
Specialization
- Functional basis, separated according to
specialization
- Concentrating on and becoming expert in a
particular area
Predictability and Stability
- There must be rules and regulations
- Processes predict results
Rationality
- Equal treatment, no bias/subjective in selection
- No one is excluded from the rules simply
because of their background (ascribing to logic
rather than emotions
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
- Aims to improve organizational productivity by
focusing on methods that managers can use to
synchronize internal processes
- In contrast to the scientific approach to
management, which posited that worker
efficiency would lead to managerial efficiency
- Focused on what managers do
● Highlights the characteristics of admin / leadership
positions
- Accomplishment of tasks
- Include principles of management
- Concept of line and staff
- Committees and functions of management
● Do not see individual differences (more on business
side of the person)
Elements of Administrative Theory
1. Line and Staff
- Line: Managers who have direct authority over
employees and are responsible for achieving
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organizational goals.
- Staff: Specialists who advise and support line
managers (e.g., HR, Legal, Accounting).
2. Committee
- A group of people assigned to discuss problems,
make decisions, or provide recommendations.
- Encourages cooperation and better
decision-making.
3. Functions of Management
- Fayol identified the 5 main functions of
management:
➢ Planning – Setting goals and deciding
how to achieve them.
➢ Organizing – Arranging resources and
assigning tasks.
➢ Commanding – Directing and
supervising employees to accomplish
work.
➢ Leading (Directing) – Guiding and
motivating employees.
➢ Controlling – Monitoring performance
and correcting problems.
4. Principles of Administrative Theory
- The basic guidelines or rules for effective
management
- They explain how managers should organize,
lead, and coordinate an organization to improve
efficiency and achieve organizational goals.
14 Principles of Administrative Theory
Division of Work
- Individual functions based on specific job
specialization
- Can increase productivity
- Work should be divided into specialized tasks
to increase efficiency
- Employees can become more proficient in the
accomplishment of a limited set of activities –
thus, improving their output
- Employed: working in the person’s chosen
field of specialization
- Underemployed: employed in a field that is
not under a person’s specialization
- Unemployed: no work
Authority and Responsibility
- Issues commands and comes with
responsibility
- Imperative / Command to follow and
accomplish organizational objectives
- Managers should have the authority of issue
commands, but it comes with responsibility to
ensure the work gets done
Discipline
- The subordinate must fully obey the
instructions from superiors (discipline through
management)
- Impose disciplinary actions
- Exist across the hierarchy
Unity of Command
- Only one boss/executive from whom a worker
receives instructions
- Taking orders from one superior
Unity of Direction
- Working under a singular plan
- Each workgroup or department is working
under a singular plan that coordinates effort
(guided by one supervisor)
- Members of the organization should jointly
work toward the same goal
Subordination of Individual Interest
- Interests of individuals are subordinate to the
general interests of the group or department of
company
- Not one person is more important than the
others
- Everyone should benefit
Remuneration
- Compensation is used to incentivize worker
performance
- Can be based on diverse factors such as job
responsibility, length of stay, compensable
benefits, tenures, bonuses, hazard pay,
allowances, profit and gain sharing
Centralization
- Decision-making is either centralized or
decentralized depending upon the
characteristics of the organization and worker
competency
- All decisions are centered on the upper
management
- Decentralization: decisions come from lower
management
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
- There is a proper place for everyone in the
company
Equity
- Principle of fairness
- Fairness / justice should prevail in the
organization
- Ex. overhead costs for managers that have
more responsibilities
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Stability of Tenure
- Organizations need to have low turnover;
allows employees to learn their jobs, develop
skills, and acquire loyalty
- Job security improves performance
Initiative
- Allowing employees to create plans and carry
them out
- Should exist among the employees
Esprit de Corps
- Sense of belonging within the organization
- Team spirit / camaraderie in the organization
- Pride, allegiance, union is strength, sense of
belongingness
● Managerial practices are the key to driving efficiency in
organizations
● Seeks to heighten managerial performance instead on
individual worker efficiency
● Proposed the creation of work groups and functional
departments wherein distinct activities are performed
which contribute to the accomplishment of greater tasks
Progressive Discipline
- Method of discipline that uses graduated steps
for dealing with problems related to an
employee’s conduct or performance that do not
meet clearly defined standards and policies
POSDCORB is a foundational management framework
developed in 1937 by public administration experts Luther
Gulick and Lyndall Urwick
- POSDCORB is a framework that describes the
seven major functions of management performed
by managers to achieve organizational goals.
➢ Planning – Setting goals and determining
the best course of action.
➢ Organizing – Arranging resources, tasks,
and responsibilities.
➢ Staffing – Recruiting, selecting, training,
and developing employees.
➢ Directing – Leading, supervising, and
motivating employees.
➢ Coordinating – Ensuring that different
departments and activities work together
effectively.
➢ Reporting – Keeping supervisors and
stakeholders informed through reports and
communication.
➢ Budgeting – Planning, managing, and
controlling the organization's finances