 Organization: a social unit with some particular purposes

 Theory: A proposition or set of propositions that explain or predict something

 Rationale for the book is that a classic is a classic because it continues to be of value to each future generation

 Theories about organization reflect what is going on in the world, including the existing culture (don’t develop in a vacuum)

 Criteria for selection: 1) should a serious student of organization know this author? 2) Is it a significant theory? 3) Is the article readable?

 There is no such thing as the theory of organizations – there are many theories that attempt to explain and predict how organizations and the people in them will behave.

 The following terms serve as your guide. The midterm is multiple choice. If you know the terms and the following, you should do fie, although this does not replace the readings, presentations or discussions.

Herzberg’s two-factor theory, Hygiene factors, ***
French and Raven on Power
Maslow’s Hierarchy of Needs
Irving Janis’ Group Think
Hawthorne Studies
McGregor’s Theory X and Y
Herbert Simon
Classical Theory
Elton Mayo
Robert K. Merton
Henry Mintzberg
Chester Barnard
Mary Parker Follet
Luther Gulick
Neoclassical theory
Systems Theory
Frederick Winslow Taylor
Max Weber
John Gaus
Henry R.Towne
Katz and Kahn
“The Proverbs of Administration,” Herbert Simon
Adam Smith
Henri Fayol

Classical Organization Theory

Ancient Organization Management
 In the book of Exodus, Jethro (Moses’ father-in-law) chastises him for not delegating his responsibility for the administration of justice. In the end he “chose able men… and made them heads over the people.” He continued to judge the “hard cases” but his rulers “judged every small matter themselves.”

Socrates Discovers Generic Management

 Nicomachides is upset that Antisthenes has been elected general. He knows nothing about armies, but Socrates points out that “he is given to emulation” and that as chorus manager he had gained superiority in all his choruses, even though he knows nothing about music. The men debate whether leading a chorus and an army can be compared. Socrates argues that the skills are transferable whether a man leads a chorus, an army, a city or a family.

“Of the Division of Labor,” Adam Smith

 The division of labor occasions in every art a proportional increase of the productive powers of labor.

 This increase in productivity by division of labor owes itself to the increase in dexterity of the workman, to the saving of time lost one changing from one aspect of job to the next and the invention of many machines.

 Also notable is that these inventions are made not by those who use the machines, but by “philosophers and speculators” whose only job is to observe everything and combine “distant and dissimilar objects” in order to increase productivity.

 Metaphor: Woolen coat worn by laborer is the joint product of the shepherd, the sorter of wool, the wool comber, the dyer, the scribbler, the weaver, the dresser and many others.

 Without division of labor “the very meanest person in a civilized country” could not be provided for in the “falsely imagined simple manner” to which he is accustomed.

“Superintendent’s Report,” Homer Ramsdell

Outlines his plan for a more productive railway:
 Proper division of responsibilities

 Sufficient power conferred so that responsibilities can be carried out

 A means of knowing whether or not work is being properly performed

 Promptness in reporting derelictions of duty

 The ability to looking for information (“daily reports and checks”) in a way that will not embarrass the leaders or lessen their influence

 A system that will let the Supt. detect errors immediately and point out delinquents

“The Engineer as Economist,” Henry R.Towne

 People must control organizations of productive labor with executive ability, practical familiarity of the goods produced and the knowledge of how to observe, record, analyze, compare essential facts in relation to supplies, wages, and expense accounts

 The combination of a good businessman and a good mechanical engineer is essential to the successful management of industrial works.

 Author suggests that just as engineering is an art, so should the “management of works” be considered an art

 Enormous amount of information exists in field of engineering; improvements should benefit from work that was done before.

 The interchange of experience is necessary between “shop managers, shop accountants and shop forms and blanks makers,” which is how Towne breaks up the work done in an organization

 He suggests that the “medium” of this exchange be the publication of papers, reports and meetings to discuss findings and exchange opinions

 Chart on page 46 illustrates the reduction of labor costs for an organization using a unique system. If information about their piecework system is made available to the whole membership of society, they can examine it, improve upon it, recommend it, etc

“General Principles of Management,” Henri Fayol

 Division of Work: produce more and better work with less effort

 Authority and Responsibility: the right to give orders and the reward or sanction that comes from exercising power

 Discipline: obedience, application, energy, behavior and outward marks of respect; using clear agreements and applying sanctions judiciously

 Unity of Command: receiving orders from one superior only, as having more than one leader always results in some questions being ill-defined or approached differently, resulting in confusion or awkwardness for subordinates (turns on the functioning of organizations’ personnel)

 Unity of Direction: one head/one plan; a group of activities/individuals having the same objective; provided by sound organization of the body corporate

 Subordination of individual interest to general interest (Stone’s market?): interest of group should come before interest of one employee, can be achieved by firm good examples set by superiors, fair agreements and constant supervision

 Remuneration of Personnel: price of services rendered; should be fair, competitive and not lead to overpayment. Various modes of payment are by time (a day’s work under definite conditions), by job (the execution of work independent of length of time to completed), by piece (payment related to how many items, with no limit set), bonus (extra income/ supplement or reward to some or all employees), profit sharing (splitting profits among workers according to some system – problematic), payment in kind (non-financial incentives like heating, light, housing, etc)

 Centralization: the sending out of orders to an organism/organization from the brain/director to set something in motion and the sensations/information that converge toward the brain/director enabling it to do so. Anything that increases a subordinate’s role is decentralization, anything reducing it is decentralization

 Scalar Chain: chain of superiority ranging from the ultimate authority to the lowest ranks; examples must always be set from above

 Order: a place for everything and everybody AND everything and everybody in its place; both physical and social; not neatness, but a system to prevent the appearance of order covering over real disorder, the “right man in the right place.”

 Equity: the combination of fairness and justice with kindliness; don’t necessarily treat everyone the same

 Stability of tenure of personnel: giving an employee time to get used to new work and assuming that he WILL be able to do it before removing or transferring him; a mediocre manager that stays is preferable to outstanding management that comes and goes

 Initiative: the power of thinking out a plan and executing it

 Esprit de Corps: union is strength; don’t divide your personnel; any beginner can sow dissension but real talent is required to use each man’s abilities and reward merit without disturbing harmonious relations and arousing jealousies; correct verbally, not in writing

“The Principles of Scientific Management,” Frederick Winslow Taylor

 States that most workers firmly believe it is in their best interests to give as little work as possible in exchange for the money they get.

 Whenever labor saving devices are created, they make more, not less, work for men. For example, thanks to the loom (which was originally resisted) everyone can wear cotton, it’s not just for the wealthy

 Progress comes from the increase in the output of the individual all over the world

 Soldiering develops when a worker restricts his output to prevent negative consequences like cuts in salary or being ostracized from a group

 Unions are not to blame for soldiering, but do perpetuate it

 Scientific management is an earnest endeavor to remedy the evils of soldiering

 Scientific management is an evolution, not an invention

 The workmen are the chief beneficiaries, enjoying improved relationships and increased wages

 Scientific management can not exist without a complete mental revolution for everyone: the fact that if everyone pushes as hard as they can to get the most output as cheaply as possible, everyone benefits

 Scientific managers must gather together all traditional knowledge of their product, scientifically select the workmen, bring together the data and the workmen and then completely re-divide the work so that management is also working on part of the work

 Uses the Bethlehem Steel Works as an example of four steps

 Builds upon new progress. “You will outstrip us, but we will show you how so you do not waste time inventing things we’ve discarded already.”

“Bureaucracy,” Max Weber

I. Characteristics of Bureaucracy:
 Authority and regular activities are distributed in a fixed way as official duties and are determined by rules; only people who have regulated qualifications are employed (certified teachers?)

 It only exists in the most modern states and in the most advanced institutions of capitalism

 There are graded levels of authority and supervision of the lower offices by the higher ones

 Management is usually based upon written documents and policies; presupposes thorough and expert training

 Office usually demands full working capacity of the individual regardless of his “obligatory” hours of work

 Officials also follow rules and regulations

II. The Position of the Official:
 Office holding is a “vocation,”

 Loyalty is to organization not to a specific person

 The holder of the office enjoys a distinctive social esteem as opposed to the governed

 Usually possesses educational certificates

 In pure bureaucracies, officials are appointed, not elected

 Elected officials derive their power from below, appointed derive their power from those above them

 Position is usually held for life or “tenure” granted to ensure a strictly objective discharge free from all personal considerations

 Officials generally lack a feeling of dependency on the governed strata and depend on their equals

 Receives a pension, a salary measured according to status and length of office

 Officials generally move in order from lower to higher positions based on seniority

“Notes on the Theory of Organization,” Luther Gulick
I. The Division of Work

 It is not possible to determine how an activity is to be organized without considering how the work is to be divided. It is the foundation of an organization and the reason for the organization

 We divide work because man cannot be in two places at the same time and gain greatly in dexterity by specialization; in other words a question of human nature, time and space

 Dividing work increases productivity even without adding machinery; machinery separates based on who knows how to use the machine and who doesn’t; dependent upon aptitude and development and maintenance of skill

 Specialized skills evident in manual labor AND in law, ministry, teaching, accounting, aviation, etc

 The specialization of skills is subject to advances in science, progress of technology, invention of machines and changes in social systems

 As new skills evolve, they encompass past skills, making it impossible or atypical for any one individual to “know it all”

 The benefits of division are limited if further subdivision results in tasks that require less than the full time of one man or if custom prohibits it or passes from the physical into the organic (i.e. you don’t have the front half of a cow in the pasture while the back half is getting milked)

 In dividing up a “whole,” one must be certain that every “part,” including unseen elements and relationships, is accounted for. If the Venus de Milo is reduced to marble sand it is no longer a masterpiece, even if every last grain is preserved. If work is divided, great care must be taken that central ideas, relationships, etc are not lost

II. The Coordination of Work

 If work is subdivided, coordination becomes mandatory. The work can be coordinated by interrelating the subdivisions of work from top to bottom (organization) or by developing a singleness of purpose in the minds and wills of group members (dominance of idea)

 Size and time limit the degree of coordination; with larger organizations sometimes having tangled lines of authority or changes being implemented overnight instead of step by step

 Effective coordination requires that the job be defined, a director provided, that subdivided work be classified into group and specialized tasks and that the structure of authority between the director and the subdivisions be perfected

 The span of control is limited; just as the hand of man can only span a limited number of piano notes, so is the number of subordinates a man can effectively supervise limited by knowledge, time and energy

 “One master” instead of multiple commanders; claims that Taylor erred when he had separate foremen to deal with each area because men had too many different bosses giving too many different orders

 Technical efficiency involves the principal of homogeneity. From top to bottom, the group must be unified and direction given by people knowledgeable in specialized areas, not laymen. Otherwise there is friction. It doesn’t make sense to combine public education with the water supply company, for example.

 “Caveamous Expertum” or beware of the expert. Sometimes experts assume knowledge in fields where they have no real competence, like doctors assuming they know the law and vice versa. The competence in one field is not necessarily transferable

 History also shows that the “common man” often knows his own needs in the long run than any cult of experts. When kings rule rather than serve, they do not advance causes of mankind. The correct place of the expert is “on tap, not on top.”

III. Organizational Patterns

 Should people manage from top down or bottom up? It can be argued that as long as “whole” problems are examined and there is Top down sometimes thwarts individual effectiveness while bottom up sometimes thwarts group coordination. Therefore, problems should be approached from both top and bottom
 POSDCORB makes up the work of the chief executive; planning, organizing, staffing, directing, coordinating, reporting and budgeting

Neo-Classical Organization Theory
 No precise definition; basically anything that is critical of classical theory; transitional school of thought

“The Economy of Incentives,” Chester Barnard

 Incentives necessary to motivate cooperation

 Incentives either reduce burdens (shorten work) or add positives (more money)

 Organizations can either provide the incentives OR change the state of mind of a follower so that he is satisfied with what is offered (church is famous for this).

 Incentives can be material (money), personal (power, prestige), related to physical conditions or ideal benefactions (pride in workmanship, solidarity)

 If an organization can’t offer incentives, it will perish unless it uses persuasion to change the desires of enough workers (military, political movements)

 An organization which relies on material incentives could eventually be unable to offer the incentives, so it is more economical for it to use other forms of inducement related to pride, advancement, community sense, etc

“Bureaucratic Structure and Personality,” Robert K. Merton

Bureaucracy involves clear-cut division of integrated activities (see Max Weber)
 Dysfunctions of bureaucracy are many: “trained incapacity”

 Adherence to the rules becomes an end-in-itself and goals are often displaced when conformity to rules interferes with the achievement of organization’s purpose

 Esprit de corps leads personnel to defend their entrenched interests

 Pride of craft sometimes makes workers resistant to change

 Emotional attachment to bureaucratic symbols and status

 Relationships are depersonalized

 Power often leads to arrogance and domineering behavior, which increases tension and restricts output

 Apple-polishing, favoritism, nepotism are evident (or imagined)

“The Proverbs of Administration,” Herbert Simon

 Proverbs are quotable because they are contradictory

 For almost every principal, another can be found that disproves it, and vice-versa

 Author criticizes specialization as inevitable, not necessarily efficient. Asserts that it really means different people doing different things. Need to “specialize” in the most efficient manner for group as a whole

 Unity of command – the author believes it is incompatible with specialization. Proof is that so many functional superiors lack the authority to apply sanctions to those they supervise

 Span of control: Both increasing and decreasing the number of workers has positives and negatives. Where is the optimal point?

 Organizing by purpose, process, client, etc is contradictory to specialization. (Is fire protection the purpose or is public safety? Which is the organizing purpose?) There exists no guide to which means of organizing should be employed by different organizations

 General point of article is that no one area of administrative theory is important enough to stand on its own as a guiding principle

 Author’s approach to administrative theory involves describing the administrative situation, determining the limits on the ability to perform and to make correct decisions (can be limited by habits, values, etc), and assign weights to the criteria (which is most important?)

Chapter 12
“Foundations of the Theory of Organization,” Philip Selznick

 Individuals in an organization interact as “wholes” and not simply according to the roles assigned to them

 Organizational systems are both economies and social structures

 Individuals resist depersonalization and tend to spill over into other roles and functions

 Needs of individuals do not always permit single-minded focus on organizations goals

 There are informal cliques, unwritten rules and “knowing the score” of an organization and who has social power and authority

 Structural-Functional analysis describes cooperative systems interacting as wholes in relation to a formal system of coordination

 Structural functional analysis relates human behavior to a fairly stable system of needs and wants

 To “maintain a system,” one must examine the social forces at work in the organization’s environment, determine how stable the lines of authority are, see who is determining the policies and measure the homogeneity of the organization’s outlook

 The frame of reference for this chapter is that real human individuals work in groups, goals are variable/needs and self-defense mechanisms are stable and that recalcitrance can be a real factor in the quality of social action an organization is capable of

 Discussion of co-option, which is the absorption of new leadership elements as a means of averting threats to an organization’s stability or existence- the state of tension between formal authority and social power of individuals

“A Behavioral Theory of Organizational Objectives, “ Richard M Cyert and James G. March

 Instead of a normative theory, these two are looking to create an empirical theory (observable)

 Their interest is in how organizations make decisions, NOT how they ought to do so

 4 areas models can be divided into: theory of organizational objectives, theory of organizational expectations, theory of organizational choice and theory of organizational implementation. They only talk about the first one

 Organizations are “coalitions” of individuals with varying preferences

 Usually only vague or ambiguous goals get the agreement of a group

 When things get more specific, bargaining comes into play. Different individuals in an organization make different demands- 9 different committee members want something specific on an office painting, for example

 Budget preparation an example of a mutual control system at work, Severe costs to exceed but also severe costs if monies are not allocated properly

 The nature of employee demands change over time and with day-to-day experiences

 If an organization’s goals seem mutually exclusive, sometimes “-sequential” attention is paid. For example, should John Jones be shot or sainted? Can do either or first, and then the next. A halo can be attached as firmly to a dead man as to a live one and a saint is as susceptible to bullets as a sinner

 The construction of their predictive theory as to how an organization determines its objectives is bases upon assuming members of a coalition have a set of demands and problems. Basic mechanisms are in place – namely that the quantitative value changes over time, an attention focus mechanism moves from active to inactive to not consider for the coalition’s demands and problems. Also needed is a demand evaluation procedure that is consistent with the limited capacity of humans. Finally, a method for choosing a viable coalition to study must be employed.

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