Kay 235: Introduction to Management

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Kay 235 Introduction to Management

• Lecture 4
• Subject Fundamentals of Organization Theory
• Reading Grene, p. 122-136.

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Two Options for Midterm 1

• Option 1
• Date November 8, Monday
• Time Class Time
• Location D13 Only
• Questions All Classic Essays, No Multiple choice
  or fill in the blanks
• Exam Begins _at_ 0930

• Option 2
• Date November 12, Friday
• Time Afternoon
• Location Two classes
• Questions Multiple choice and fill in the
  blanks, in addition to essays
• Exam Begins _at_ 1330 or 1400

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Organization

• Greek Organon
• meaning a tool or instrument.
• So, organizations are tools or instruments to
  meet goals, objectives, to carry out tasks.

Kaynak Gail Johnson, OT, 2003.
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Organizations

• They are
• The structure/context in which PA works
• One of the principal focuses of PA
• Definitions
• Complex, goal-seeking units
• Systems of consciously coordinated activities
• Contain people
• Include division of labor specialization

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Organizations Definition

• Implicit in the definition are four concepts
• Organizations are made up of people.
• The necessity of the division of labor
• Organizations have identifiable boundaries.
• Organizations are purposeful, goal seeking work
  arrangements.

Kaynak Wasti, 2010.
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What is Organizational Theory?

• Organizational Theory (OT)
• Studies
• Everything that is associated with organizations
• Aims
• To understand organizations and to improve them
• Examines
• Organizational Design
• Motivation
• Organizational Culture
• Managerial Styles
• Group Behavior
• Leadership
• Communication

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Organizational Levels

• Different levels of organization have different
  priorities in organizing.

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Who Top managers What Evaluating
organizational data, Planning
ahead Aim Organizational strategy and planning
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Who Middle Level Managers What Control of
operational activities Aim Organizational
Efficiency
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Who Workers-Street Level Bureaucrats Their
Supervisors What Redundant and repetitive
jobs Aim Increasing organizational efficiency
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Classical Theory of Organizations

• Industrial Revolution
• Large scale organizations and mass production
• New patterns of relationships between workers and
  factory owners managers
• Emphasis on the formal structure
• Notion of economic man
• Emphasis on material rewards
• Strictly define and control the work processes
• Employees are lazy and unreliable
• Theory X versus Theory Y

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Key Pillars of the Classical Theory

• Division of labor
• Scalar and functional processes
• Vertical and horizontal growth of the
  organization
• Delegation of power and authority
• Line and staff
• Blue-collar and white-collar
• Line Initiators of key organizaitonal activities
• Staff does not direct, it advises and serves
• Reservoir of expert knowledge
• (A limited) Span of control
• The number of subordinates a manager can
  effectively supervise (5-6)

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Frederick Taylor, 1856-1915
Founder of Scientific Management Father of
Industrial Engineering

• Frederick Taylors ideas may well be the most
  powerful, as well as the most lasting
  contribution America has made to Western thought
  since the Federalist Papers.
• Peter Drucker, 1954

Kaynak Wasti, 2010.
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Scientific Management

• Time Studies workers timed with stopwatches to
  identify appropriate time for specific tasks
• Motion Studies workers observed to identify
  one best way of completing a task
• Frank Gilbreth credited with origins of Motion
  Studies

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Scientific Management

• Simple Method of Management
• Break job into efficient parts Division of
  Labor, Workers/Managers
• Hire the right worker for the job
• Give worker appropriate training everyone is
  trainable
• Introduce incentive pay plans assumption
  workers are only motivated by money.
• Huge productivity gains, allowed for Mass
  Production

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Scientific Management
Scientific Management Management method by
which systems are broken down into individual
components and each studied independently and
optimized using scientific methods.
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Man Against the Machine
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Scientific Management
Simplify Work one best way
Scientific Selection
Individual Productivity
Scientific Training
Separate Planning from Doing
Share Wealth and Cooperation
Incentive Pay
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Fordism

• Meticulous time and motion study, perfection of
  each worker movement, specialized machines,
  conveyor belts.
• Identifying work tasks and then making that
  method the standard, together with emphasis on
  inspection.

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From Craft to Assembly Line Production at Fords
Highland Park Plant
Model-T Production (Highland Park1910)
Pre-1912 20-30 per day
1913 100 per day
1914 1000 per day
1915 3000 per day
Minutes of Effort to Assemble
Late Craft Fall, 1913 Assy Line Spring 1914 Reduced
Engine 594 226 62
Axle 150 26.5 83
Complete Vehicle 750 93 88
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Fayols (1841-1925) Administrative Theory

• Broad administrative principles to serve as
  guidelines for rationalization. Top down
  approach compared to Taylor.
• Coordination
• Scalar principle Hierarchical organizational
  form in which all participants are linked to a
  single pyramidal structure of control relations
• Unity of command principle No organizational
  participants should receive orders from more than
  one superior.

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Fayols Administrative Theory (cont.)

• Span of control principle No superior should
  have more subordinates than can be effectively
  overseen.
• Specialization How various activities are to be
  distributed among organizational positions and
  how such positions can most effectively be
  grouped into work units/departments.

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Fayols Administrative Theory (cont.)

• Line and staff principle All activities
  directly concerned with achieving organizational
  goals are line functions. Staff activities
  consist of advice, service, support. Staff units
  are to be segregated from the scalar organization
  of power and made responsible and subordinate to
  appropriate line units.

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Max Weber, German Sociologist (1864-1920)

• The purely bureaucratic form of administrative
  organization is, as regards the precision,
  constancy, stringency, and reliability of its
  operations, superior to all other forms of
  administrative organization.

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Webers Theory of Bureaucracy

• Three types of authority
• Traditional Rests on established belief in the
  sanctity of immemorial traditions and the
  legitimacy of those exercising authority under
  them
• Charismatic Rests on devotion to the specific
  and exceptional sanctity, heroism, or exemplary
  character of a person
• Legal- Rational Rests on a belief in the
  legality of patterns of normative rules and the
  right of those elevated to authority under such
  rules to issue commands

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Webers Theory of Bureaucracy (cont.)

• Only traditional and rational-legal authority
  relations are sufficiently stable as basis of
  permanent administrative structures.
• Charismatic forms arise in periods of instability
  and crisis.

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Webers Theory of Bureaucracy (cont.)

• Bureaucratization increases subdivision of the
  functions which the owner-managers of the early
  enterprises had performed personally.
• Jurisdictional areas are clearly specified.
  Regular activities required of personnel are
  distributed in a fixed way as official duties.
• Organization of offices follows the principle of
  hierarchy. Each lower office controlled and
  supervised by a higher one. Scope of authority
  over subordinates is circumscribed. Lower
  offices have a right to appeal.

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Criticisms of Classical Principles

• Division of labor
• Repetitive work causes industrial fatigue and
  monotony
• Scalar and functional processes
• Too much or insufficient delegation of authority
• Span of control
• No single answer, depends on the organization and
  work

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Neoclassical Theory of Organization

• This school does not reject the principles of
  classical theory,
• It criticizes them
• Introduction of behavioral sciences to the study
  of organizations
• Studies on motivation, coordination and leadership

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The Human Relations School

• Explored the role of groups and social processes
  in organizations.
• Viewed organizations as open systems and began to
  emphasize organization context.
• Notable works
• Mayo Roethlisbergers Hawthorne Studies,
• Barnards Functions of the Executive,
• McGregors The Human Side of Enterprise.

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Hawthorne Studies (1924-1932)

• Scientific Management study at Western Electric
  Hawthorne plant
• Question How does workplace illumination affect
  worker productivity?
• Results Productivity went up when illumination
  was increased productivity went up when
  illumination was decreased.
• Research team shifted to examine other variables,
  always finding a greater productivity in group
  under study..

Hawthorne Effect Productivity increased as a
result of the attention received by workers under
study.
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Neoclassical Theory

• Human relations movement
• Hawthorne studies (1927- 1932)
• Effects of changes in physical environment on
  output of workers
• Temperature, hours of sleep, humidity, etc.
• Importance of social systems, friendliness, etc.
• Importance of informal organization
• Natural groupings of people in work, a social
  need
• Worker satisfaction- increased output

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Human Relations Elton Mayo

• Analysis of the Hawthorne Studies
• Work is a group activity man is a social
  creature
• Need for Recognition, Security, and Sense of
  Belonging is more important in determining morale
  and productivity than physical working
  conditions.
• Informal groups within the workplace exercise
  strong social controls over peoples work habits
  and attitudes.

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Human Relations
Opportunities for Social Interaction
Team Productivity
Satisfied Workers
Employee Input
Sensitive Supervision
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Theory X and Theory Y

• Theory X
• childlike
• passive
• lazy
• resists work
• want to be led
• bare minimum

• Theory Y
• adults
• desire to achieve
• committed to work
• responsible
• lead, control their work
• want to do a good job

Kaynak Gail Johnson, OT, 2003.
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Theory X and Theory Y

• Theory X rests on four assumptions that an
  administrator holds about people in the
  organization.
• They dislike work, must be supervised closely,
  will shirk responsibility and seek formal
  direction, and have little ambition.
• Theory Y embraces four very different assumptions
  administrators hold about the nature of people at
  work.
• They view work as satisfying, exercise initiative
  and self direction if committed to the
  organization, learn to accept responsibility and
  seek it, and have the ability to make good
  decisions.

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Theory Z

• William Ouchi (1974)
• Theory Z
• Lifetime employment
• Promotion based on seniority
• Cross-training of workers
• Collective decision-making process
• Created after observing Japanese working culture

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Pattern A Pattern B Behavior

• Chris Argyris explains how Theory X views give
  rise to Behavior Pattern A in leaders
• Pattern A, Hard characterized by no-nonsense,
  strongly directive leadership, tight controls,
  and close supervision.
• Pattern A, Soft involves a good deal of
  persuading, buying compliance from
  subordinates, benevolent paternalism, or
  so-called good (that is, manipulative) human
  relations.

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Maslows Need Hiearchy
Self- Actualization
Self-Esteem / Ego
Social Approval
Safety / Security
Physiological
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Modern Theories of Organization

• More than a synthesis of classical neoclassical
  theories
• Organization as a complex unit
• Various types of social groups interact
• Conflicts between
• Management and workers
• Formal and informal organizations
• Organizations as systems
• Environmental factors

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Systems Approach to Organizations
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Development of Systems Approach

• Borrowed from Biology (Norbert Wiener)
• Increasing division of labor and expertise
• Every branch of science examining abstract areas
• Weakening of links between these branches
• Difficulty of understanding and solving complex
  problems
• Search for an integrating theory

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Types of Systems

• Closed systems
• Not affected by external stimuli
• Exists only in theory
• Example Electric circuit
• Open systems
• Interacts with the environment
• Example Every living creature

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Environment
Goals Culture
Behaviors Processes Technology Structure
Inputs
Outputs
Environment
Kaynak Gail Johnson, OT, 2003.
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Features of Open Systems

• Input- Receiving energy
• Interpretation of stimuli
• Conforming to the environment, decision-making
• Using energy
• Transformation
• Output
• A good, service or a decision
• Control/ Feedback
• Positive or negative
• Adaptation to changing conditions
• Isomorphism
• Fit between the parts of the system