Unit 3 Notes on the Theory of Organization

What Is Organization Theory? A proposition or set of propositions that attempts to explain or predict how groups and individuals behave in differing organizational arrangements.

What Is Organization Theory? Classic organizational theory.  Organizations exist to accomplish production-related and economic goals.  There is one best way to organize for production, and that way can be found through systematic, scientific inquiry.  Production is maximized through specialization and division of labor.  People and organizations act in accordance with rational economic 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, 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 hierarchical organization was that it was dependent upon the proper enculturation of individual supervisors at every level for its success. Changes in the environment can make hierarchical organizations less competent.

The Origins of Scientific Management Origin of the staff concept to overcome limitations 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 workers to ensure optimal placement of works into work roles; Obtaining the cooperation of workers to ensure full application of scientific principles; And. Establishing logical divisions within work roles and responsibilities between workers and management.

The Origins of Scientific Management Henri Fayol’s general theory of management (six principles, 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 and 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 public administration.  Work of government could be divided between decision-making and execution.  Administration was a science with discoverable principles.

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 government 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 invective to refer to any inefficient organization encumbered 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 employees.  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 culture, 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 stable conditions.  Organic – less rigidity, more participation, and more reliance on workers, best in dynamic conditions.

Systems Theory Systems theory views an organization as a complex set of dynamically intertwined and interconnected elements, including inputs, processes, outputs, feedback loops, and the environment. 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.