Chapter 1 Introduction and Historical Background

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Learning Goals. Describe the concept of an organizationDistinguish between organizational behavior and organizational theoryExplain the role of theory and concepts in analyzing organizational issues and problemsAnalyze the consequences of behavior in organizationsUnderstand the historical founda

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Chapter 1 Introduction and Historical Background

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1. Chapter 1 Introduction and Historical Background

2. Learning Goals Describe the concept of an organization Distinguish between organizational behavior and organizational theory Explain the role of theory and concepts in analyzing organizational issues and problems Analyze the consequences of behavior in organizations Understand the historical foundations of modern organizational behavior

3. Chapter Overview Introduction Organizational Behavior and Organizational Theory Theories and Concepts Functional Analysis Historical Foundations

4. Introduction Organization System of two or more persons Engaged in cooperative action Trying to reach a goal Characteristics of definition Applies to any type of organization, small, large, profit, nonprofit Goal oriented Cooperative interaction of two or more people

5. Organizational Behavior and Organizational Theory Organizational behavior and organizational theory specialize in studying organizations Organizational behavior: understanding behavior, attitudes, and performance Organizational theory: design and structure of organizations

6. Theories and Concepts Basic content of each chapter Concepts are parts of theory Helpful tools for understanding behavior in organizations Develop your analytical skills in using these tools

7. Theories and Concepts (Cont.) “Nothing is as practical as a good theory”--Kurt Lewin Definition: “A theory is a plausible explanation of some phenomenon”

8. Theories and Concepts (Cont.) Theories and concepts as camera lenses A class of theories gives a wide-angle view of a behavioral scene Specific theories within a class can narrow that view Concepts within a theory act like a telephoto lens pulling in the detail of a behavioral scene

9. Functional Analysis Tool of anthropology that assesses the consequences of behavior Manifest consequences: intended results Latent consequences: unintended results Functional consequences: good results Dysfunctional consequences: bad results

10. Functional Analysis (Cont.)

11. Functional Analysis (Cont.) Mainly interested in understanding Manifest functional consequences: intended good effects Latent dysfunctional consequences: unintended bad effects

12. Historical Foundations 1911: Scientific Management Frederick W. Taylor 1919: Toward a Theory of Administration Henri Fayol 1922: Bureaucracy Max Weber 1925: Observations on Organizations and Management Mary Parker Follett

13. Historical Foundations (Cont.) 1934: The Functions of the Executive Chester Barnard 1939: The Hawthorne Studies Elton Mayo 1960: Theory X and Theory Y Douglas McGregor 1995: The Twentieth Century's Management Guru Peter F. Drucker

14. Historical Foundations (Cont.) Scientific Management: Frederick W. Taylor (1911)

15. Historical Foundations (Cont.) Scientific Management (cont.) Management and labor of that period had an antagonistic relationship Management wanted as much output as possible from labor at the lowest possible cost Workers tried to protect their interests by not working too hard Neither side felt cooperation could lead to maximum prosperity for both groups

16. Historical Foundations (Cont.) Scientific Management (cont.) Management and labor viewed their goals as mutually exclusive Management: maximize profits Labor: maximize wages Taylor felt his system of Scientific Management could maximize both goals Four principles underlie the approach

17. Historical Foundations (Cont.) Scientific Management’s principles Carefully study jobs to develop standard work practices. Standardize workers’ tools Scientifically select each worker Cooperation of management and workers to ensure work is done according to standard procedures Management plans and makes task assignments; workers carry out assigned tasks

18. Historical Foundations (Cont.) Toward a Theory of Administration: Henri Fayol (1919) Developed the first comprehensive theory of administration Describes the major functions of management Includes several principles that act as administrative guides

19. Historical Foundations (Cont.) Toward a Theory of Administration (cont.) Five functions of management Planning: the results desired and the way to reach them Organizing: designing the organization to reach the plan’s goals Command: guiding and directing organizational units toward the plan’s goal

20. Historical Foundations (Cont.) Toward a Theory of Administration (cont.) Five functions of management (cont.) Coordination: helping different organizational units reach the plan’s goal Control: monitoring progress toward the plan’s goal. Correcting variations from the plan Research evidence: management functions related to an organization’s performance

21. Historical Foundations (Cont.) Toward a Theory of Administration (cont.) Principles of administration “All must observe the same general principles” Set of tools a manager needs to perform the functions of management Applied with a sense of proportion: adapting to the specific situation

22. Historical Foundations (Cont.) Toward a Theory of Administration (cont.) Principles of administration (cont.) Division of labor: organization of the work of individuals and the entire organization Authority and responsibility: decision authority carries with it the responsibility for the decisions Principle of centralization Centralization: decision authority at top or organization Decentralization: decision authority dispersed

23. Historical Foundations (Cont.) Toward a Theory of Administration (cont.) Principles of administration (cont.) Delegation of authority: moves decision authority to lower levels in the organization Unity of command “an employee should receive orders from one superior only.” Felt strongly that managers should not violate this principle Modern matrix organizations (Chapter 17) routinely violate this principle

24. Historical Foundations (Cont.) Toward a Theory of Administration (cont.) Relationships among the principles Delegation of authority gets the desired degree of decentralization Delegation also affects the division of labor Unity of command helps guide an organization’s design

25. Historical Foundations (Cont.) Bureaucracy: Max Weber (1922) Bureaucracy Administrative structure Well-defined offices or functions Hierarchical relationships among functions Offices or functions have clearly defined duties, rights, responsibilities Designed each office or function without regard for who will hold the office

26. Historical Foundations (Cont.) Bureaucracy (cont.) Impersonal relationships within a bureaucracy Decisions made according to existing rules, procedures, policies Bureaucracies attain goals with precision, reliability, efficiency

27. Historical Foundations (Cont.) Bureaucracy (cont.) Bureaucracies use legal or rational authority Exists in position before a person takes the position or function Bureaucracy defines the authority when it develops its division of labor

28. Historical Foundations (Cont.) Bureaucracy (cont.) Person who takes a position assumes the authority of that position Rational authority brought stability to a bureaucracy because the authority stayed in the function

29. Historical Foundations (Cont.) Bureaucracy (cont.) Bureaucracy’s efficiency Clearly defined and specialized functions Use of legal authority Hierarchical form Written rules and procedures Technically trained bureaucrats

30. Historical Foundations (Cont.) Bureaucracy (cont.) Bureaucracy’s efficiency (cont.) Appointment to positions based on technical expertise Promotions based on technical competence Clearly defined career path

31. Historical Foundations (Cont.) Bureaucracy (cont.) Weber felt bureaucracies were rational, predictable systems Rationality followed from the objectivity and impersonality of decisions Consistent decisions based on fact, rules, and procedures Predictability Fixed formal relationships Clearly defined hierarchically organized functions

32. Historical Foundations (Cont.) Mary Parker Follett’s Observations on Organizations and Management (1925) Offered observations on management and organizations from mid-1920s to early 1930s Three of her observations: power, conflict, and leadership

33. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Power Capacity to get work done Distinguished from authority Can delegate authority but not power Two types of power: power-over and power-with

34. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Power (cont.) Power-over: dominance or coercion; control based on force Power-with: jointly developed power; closely related to cooperation Follett had a positive view of power and saw it as basic to organizations and management

35. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Conflict Observations appeared in her unusually titled paper “Constructive Conflict” Difference, not warfare Differences in opinions and interests Cannot avoid conflict in organizations Managers should put conflict to use in their organizations

36. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Managing conflict Dominance: one side wins over the other Compromise: each side gives up something to settle an issue

37. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Managing conflict (cont.) Integration of desires Find solution that fully meets goals of each party Neither party gives up anything Integration discovers something new; compromise uses only what exists

38. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Leadership Prevailing view of leadership was based on dominance and aggression Offered an alternative view of leadership with many positive qualities Action-oriented person clearly focused on the future

39. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Leadership (cont) A vision of the future Focuses the energies of people on that purpose Decisions made with an understanding of their long-term effects

40. Historical Foundations (Cont.) Mary Parker Follett's Observations on Organizations and Management (cont.) Leadership (cont.) Train and develop subordinates to become leaders Good leaders do not want passive followers Followers should try to influence their leaders by suggesting alternative courses of action Characteristics: "tenacity, steadfastness of purpose, tactfulness, steadiness in stormy periods”

41. Historical Foundations (Cont.) The Functions of the Executive: Chester I. Barnard (1938) Rich in basic contributions about organizations and management Selected observations from many in his book Lays a foundation for thinking about organizations and management Interpret executive as any level of management and supervision

42. Historical Foundations (Cont.) The Functions of the Executive (cont.) Definition of an organization “[A] system of consciously coordinated activities or forces of two or more persons” Implies that any system of two or more persons with consciously coordinated activities is an organization Note the importance of cooperation and conscious, deliberate purpose

43. Historical Foundations (Cont.) The Functions of the Executive (cont.) Purpose plus limitations leads to a system of cooperative action Purpose: the goal of the person who formed the organization Limitations: knowledge, financial resources, physical resources Person with purpose needs the cooperation of one or more people to achieve that purpose

44. Historical Foundations (Cont.) The Functions of the Executive (cont.) Use inducements to get people to join the organization and offer their contributions Inducements: salary, fringe benefits, and other rewards Contributions: work that needs to get done Inducements-contributions balance: if inducements are slightly greater than the contributions, the person joins the organization

45. Historical Foundations (Cont.) The Functions of the Executive (cont.) Types of motivation: Motivation to participate: Individual joins and stays with organization Performs at the minimally acceptable level Minimally acceptable level varies among organizations Person learns the minimum performance standards soon after joining the organization

46. Historical Foundations (Cont.) The Functions of the Executive (cont.) Types of motivation (cont.) Motivation to perform Level of performance above the minimally acceptable level Attend to this form of motivation after solving the problem of membership Managers use different incentives to affect the motivation to perform

47. Historical Foundations (Cont.) The Functions of the Executive (cont.) Relationships among Barnard's observations Definition of an organization emphasizes consciously coordinated activities Purpose plus limitations cause people to cooperate with others to achieve the purpose Attract people to the system by affecting the inducements-contributions balance

48. Historical Foundations (Cont.) The Hawthorne Studies (1939) Large social science-based research program at the Hawthorne plant of the Western Electric Company, 1920s-1930s Stimulated by some early illumination experiments done at the plant Productivity in the study’s groups increased no matter what level of lighting was used Later known as the Hawthorne effect: special attention in the study increased productivity

49. Historical Foundations (Cont.) The Hawthorne studies (cont.) Concluded that an empathic, people-oriented form of management increased productivity Better form of management than prevailing authoritarian, money-oriented management

50. Historical Foundations (Cont.) The Hawthorne studies (cont.) Weaknesses in the research design did not allow such strong conclusions Stands as a landmark event in American social science research about people in organizations

51. Historical Foundations (Cont.) Theory X and Theory Y: Douglas McGregor (1960) Managers can hold either of two sets of assumptions about human motivation Assumptions affect the manager’s behavior and management style Although called a theory, they are not theories as defined earlier in the chapter

52. Historical Foundations (Cont.) Theory X assumptions Average person dislikes working and will avoid it if possible Because people dislike working, managers must Tightly control Pressure people to work toward organizational goals Average person wants security, avoids responsibility, has little ambition

53. Historical Foundations (Cont.) Theory X assumptions (cont.) McGregor believed many managers held Theory X assumptions about workers Management behavior Close supervision Punish poor performance Give workers little latitude Use few rewards Typically give only negative feedback

54. Historical Foundations (Cont.) Theory Y assumptions Average person does not dislike work; it is as natural as play If a person is committed to goals, he or she will work toward them without external control Goal commitment follows from the satisfaction of a person's desire to achieve

55. Historical Foundations (Cont.) Theory Y assumptions (cont.) Average person can learn to accept responsibility Lack of ambition is not a basic human characteristic Creativity, ingenuity, imagination: widely dispersed human characteristics Modern organizations only partially use the potentialities of its workers

56. Historical Foundations (Cont.) Theory Y assumptions (cont.) Managers who hold Theory Y assumptions Positively view people Believe they have much hidden potential They will work toward organizational goals Management behavior: give workers more responsibility and rely on self-motivation

57. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (1995) Austrian born Peter F. Drucker ranks among the most widely read management scholars of the twentieth century Drucker has been a professor of management at Claremont College, California since 1971 Written almost 30 books and continued writing into the late 1990s

58. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (cont.) Strategy: how an organization will reach its long-term goals and allocate its resources Strategic planning Typical question: “What is most likely to happen?” Better question: “What has already happened that will create the future?”

59. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (cont.) Strategic planning (cont.) Fully understand existing demographics, economic forces, and technological changes These forces will unrelentingly shape the future the organization will face

60. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (cont.) Management by objectives and self-control (MBO) Senior management defined the long-range goals of the organization Lower level managers participated in setting their goals Each manager’s goals became the sources of self-control of the manager’s performance

61. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (cont.) Management by objectives and self-control (MBO) (cont.) Self-control came from quickly available performance information for the manager Went directly to manager, not to manager’s superior Helped managers guide their unit’s performance

62. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (cont.) Predictions for the future Rise in alliances, partnerships, and joint ventures on a global scale Technology will help link these parts of an emerging ”Network Society" Compelling need for decentralized organizations in an increasingly uncertain environment Related increase in the use of teams in organizations

63. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (cont.) Predictions for the future (cont.) Increase in number of knowledge workers Continual decline in blue-collar and agricultural workers in all developed free-market countries Twenty-first century will see the evolution of knowledge societies in developed countries

64. Historical Foundations (Cont.) The Twentieth Century’s Management Guru: Peter F. Drucker (cont.) Predictions for the future (cont.) Nonprofit volunteer activities will characterize English-speaking countries Appear less elsewhere Unquestionable formation of a world economy World markets will become more important than domestic markets

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