Kay 235: Introduction to Management

1. Kay 235: Introduction to Management Lecture 4 Subject:Fundamentals of Organization Theory Reading: Grene, p. 122-136.

2. 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 @: 09:30 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 @: 13:30 or 14:00 Two Options for Midterm 1

3. 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.

4. 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

5. 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.

6. 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

7. Top Level Middle (Mid) Level Operational Level Organizational Levels • Different levels of organization have different priorities in organizing.

8. Top Level Middle Level Operational Level Who: Top managers What: Evaluating organizational data, Planning ahead Aim: Organizational strategy and planning

9. Top Level Middle Level Operational Level Who: Middle Level Managers What: Control of operational activities Aim: Organizational Efficiency

10. Top Level Middle Level Operational Level Who: Workers-Street Level Bureaucrats Their Supervisors What: Redundant and repetitive jobs Aim: Increasing organizational efficiency

11. 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

12. 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)

13. Frederick Taylor, 1856-1915 • “Founder of Scientific Management” • “Father of Industrial Engineering” • “Frederick Taylor’s 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.

14. 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

15. 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

16. Scientific Management • Scientific Management: Management method by which systems are broken down into individual components and each studied independently and optimized using scientific methods.

17. Man Against the Machine

18. Scientific Management Simplify Work “one best way” Scientific Selection Individual Productivity Scientific Training Separate Planning from Doing Share Wealth and Cooperation Incentive Pay

19. 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.

20. From Craft to Assembly Line Production at Ford’s Highland Park Plant Model-T Production (Highland Park:1910) Minutes of Effort to Assemble:

21. Fayol’s (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.

22. Fayol’s 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.

23. Fayol’s 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.

24. 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.”

25. Weber’s 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

26. Weber’s 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.

27. Weber’s 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.

28. 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

29. 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

30. 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 & Roethlisberger`s Hawthorne Studies, Barnard’s Functions of the Executive, McGregor’sThe Human Side of Enterprise.

31. 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.

32. 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

33. 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 people’s work habits and attitudes.

34. Human Relations Opportunities for Social Interaction Satisfied Workers Team Productivity EmployeeInput Sensitive Supervision

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

36. 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.

37. 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

38. 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.

39. Maslow’s Need Hiearchy Progressing Need Satisfaction Regressing Need Satisfaction Self- Actualization Self-Esteem / Ego Social Approval Safety / Security Physiological

40. 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

41. Systems Approach to Organizations

42. 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

43. 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

44. Environment Goals Culture Behaviors Processes Technology Structure Inputs Outputs Environment Kaynak: Gail Johnson, OT, 2003.

45. 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