Amity School of Business
Management Foundation
Module-I
By
Neeti Saxena
Assistant Professor, ASB
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Classical Organization Theory: bureaucracy
theory+ administrative theory
The Theory had 2 major purpose.
1. To develop principles that could guide the design ,
creation and maintenance of large organizations.
2. To identify the basic functions of managing
organizations.
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CLASSICAL ORGANIZATION THEORY SCHOOL
 Theory of Bureaucracy : Organisation as a Bureaucracy contributed by Max
Weber (1864-1920 )
 Administrative Theory : Emphasized management functions and attempted to
generate broad administrative principles that would serve as guidelines for
organizational activities. Contributors Henri Fayol (1949 trans.), Mooney and
Reiley (1939) and Gulick and Urwick (1937)
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Bureaucracy Organizations
• Max Weber 1864-1920
• Prior to Bureaucracy Organizations
– European employees were loyal to a single
individual rather than to the organization or its
mission
– Resources used to realize individual desires rather
than organizational goals
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Max Weber
• The Bureaucracy Theory - An Efficient Organization should be based on 5
principles.
1. A managers’s formal authority should be derived from the position held
within the organization.
2. People should occupy positions in an organization based on their
performance / Qualifications and not social standing or personal contact.
3. Each Position’s authority , task responsibility and working relationship
should be clearly specified.
4. Reporting relationships should be clear and Organization’s hierarchy
should enable effective Authority.
5. To control behavior , manager’s must create a wel dfined system of ruls ,
SOP’s and norms.
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Bureaucracy Organizations
Division of labor
with Clear definitions of
authority and responsibility
Personnel are selected
and promoted based
on technical
qualifications
Positions organized
in a hierarchy of authority
Managers subject to
Rules and procedures
that will ensure reliable
predictable behavior
Administrative acts
and decisions recorded
in writing
Management separate
from the ownership
of the organization
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Bureaucracy : A Formal System
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Administrative Principles
• Contributors: Henri Fayol, Mary Parker, and
Chester I. Barnard
• Focus:
– Organization rather than the individual
– Described the management functions of
planning, organizing, commanding,
coordinating, and controlling
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Administrative Principles
•
•
Henry Fayol (1841-1925) :
Divided the manager’s job into five functions:
• Planning, organizing, staffing, commanding, coordination, and
control.
Developed 14 universal principles of management.
•
1.
2.
3.
4.
5.
6.
Fayol divided general and industrial management into following six groups
Technical activities (production, manufacture, adaptation).
Commercial activities (buying, selling and exchange).
Financial activities (search for and optimum use of capital).
Security activities (protection of property and persons).
Accounting activities (stock taking, balance sheet, cost, and statistics).
Managerial activities (planning, organising, command, coordination and
control)
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Henri Fayol 1841-1925
14 General Principles of Management
 Division of labor
 Authority
 Discipline
 Unity of command
 Unity of direction
 Subordination of
individual interest
 Remuneration
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 Centralization
 Scalar chain
 Order
 Equity
 Stability and tenure of
staff
 Initiative
 Esprit de corps
Fayol’s Contribution
• He gave overall concepts of general management and suggested the basic
functions of management.
• He recommended the selection and training of workers and managers.
• He also advocated the use of organisation charts. He suggested certain
qualities of manager’s winch include physical, mental, moral, educational
technical and experience.
• Fayol’s theory of management was the first complete theory of
management as we understand today. It incorporated proven principles,
elements, procedures and techniques based on his practical experience.
• Henry Fayol came to be recognised as the founder of modern
management theory.
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Mary Parker Follett 1868-1933
• Importance of common super-ordinate goals for reducing
conflict in organizations
• Follett defined management as: "the art of getting things done
through people".
• Her ideas are contradictory to the idea ofscientific management,
as she believed that managers and subordinates should fully
collaborate.
• Power is central to her ideas. Power is created and organized by
organizations, and according to her it is legitimate and
inevitable. Regarding to power Follett used the term
"integration," to refer to noncoercive power-sharing based on
the use of her concept of "power with" rather than "power
over.“
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Mary Parker Follett continued…
• Her ideas were formulated in three principles:
1. Functions are specific task areas within organizations. The
appropriate degree of authority and responsibility should be
allocated to them so tasks can be accomplished.
2. Responsibility is expressed in terms of an empirical duty:
People should manage their responsibility on the basis of
evidence and should integrate this effectively with the
functions of others.
3. Authority flows from an entitlement to exercise power,
which is based upon legitimate authority.
• Leadership – importance of people vs. engineering techniques
Ethics - Power - Empowerment
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Chester Barnard 1886-1961
• Informal Organization
– Naturally occurring social groupings
• Acceptance Theory of Authority
– Free will
– Can choose to follow management orders
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NEO CLASSICAL THEORY
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Humanistic Perspective
• Emphasized understanding human behavior, needs, and
attitudes in the workplace
● Human Relations Movement
● Human Resources Perspective
● Behavioral Sciences Approach
• The focus is on “People “ who staff for, and manage the
organisation rather than just the Organisation as an Entity.
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E
Early Advocates of OB
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
2–17
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Human Relations Movement
 The Human Relations Movement
– An effort to make managers more sensitive to their employees’ needs.
– Arose out the influences of
• the threat of unionization.
• the Hawthorne studies.
• the philosophy of industrial humanism.
Emphasized satisfaction of employees’ basic needs as the key to
increased worker productivity
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The Human Relations Movement Pyramid
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Human Resource Perspective
Suggests jobs should be designed to meet
higher-level needs by allowing workers to use
their full potential
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The Philosophy of Industrial Humanism
• Elton Mayo
– Believed emotional factors were more important determinants of
productive efficiency than were physical and logical factors.
• Mary Parker Follett
– Advocated that managers become aware of how complex each
employee is and how to motivate employees to cooperate rather than
to demand performance from them.
• Douglas McGregor
– Developed Theory X and Theory Y
• Theory X: management’s traditionally negative view of employees
as unmotivated and unwilling workers.
• Theory Y: the positive view of employees as energetic, creative,
and willing workers.
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Mary Parker Follett 1868-1933
• Importance of common super-ordinate goals for
reducing conflict in organizations
• Leadership – importance of people vs. engineering
techniques
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Abraham Maslow’s
1908-1970
Hierarchy of Needs
Selfactualization
Esteem
Belongingness
Safety
Physiological
Based on needs satisfaction
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Theory X and Theory Y
 Douglas McGregor (1906-1964)
 Articulated basic principles of human relations theory
 The Human Side of Enterprise (1960, 1985)
 To understand human behavior, one must discover the theoretical
assumptions upon which behavior is based
 Especially interested in the behavior of managers toward workers
 “Every managerial act rests on assumptions, generalizations, and hypotheses-that is to say, on theory . . . Theory and practice are inseparable.”
 Two Objectives:
 Predict and control behavior
 Tap Unrealized potential
 Theory X - Classical Theory
 Theory Y - Human Relations Theory
 FOCUS: Manager’s assumptions about HUMAN NATURE
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Douglas McGregor Theory X & Y
Theory X Assumptions
1906-1964
• Dislike work –will avoid it
• Must be coerced,
controlled, directed, or
threatened with
punishment
• Prefer direction, avoid
responsibility, little
ambition, want security
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Theory Y Assumptions
• Do not dislike work
• Self direction and self
control
• Seek responsibility
• Imagination, creativity
widely distributed
• Intellectual potential only
partially utilized
X&Y
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The Emergence of
Communication
 Chester Barnard
 Considered a bridge between classical and human relations
theories
 The Functions of the Executive (1938)
 Argues for . . .
 strict lines of communication - classical theory
 a “human-based system of organization”
 The potential of every worker and the centrality of
communication to the organizing process
 Six Issues Relevant to Organizational Communication
 Formal vs. Informal Organization
 Cooperation
 Communication
 Incentives
 Authority
 Zone of Indifference
Six Issues Relevant to Organizational Communication

Formal vs. Informal Organization
 Formal Organization - a system of consciously coordinated activities or forces of two or more persons.
(definite, structured, common purpose)
 Persons are able to communicate with one another
 Willing to contribute action
 To accomplish a common purpose
 Informal Organization - based on myriad interactions that take place thourghout an organization’s
history.





Indefinite
Structureless
No definite subdivisions of personnel
Results: customs, mores, folklore, institutions, social norms, ideals -- may lead to formal organization
Cooperation
 Necessary component of formal organization
 The expression of the net satisfactions or dissatisfactions experienced or anticipated by each individual
in comparison with those experienced or anticipated through alternative opportunities

Communication
 Critical to cooperation
 The most universal form of human cooperation, and perhaps the most complex, is speech
 The most likely reason for the success of cooperation and the reason for its failure
 System of communication: known, formal channels which are as direct (short) as possible, where the
complete line of communication is used, the supervisory heads must be competent, the line of
communication should not be interrupted, and every communication should be authenticated.
 Barnard’s system lacks relationship formation and maintenance mechanisms
• Six Issues Relevant to Organizational Communication
 Incentives
 Should be available
 Not discussed in detail
 Authority
 Associated with securing cooperation for organizational members
 The interrelationship among the originator of the communication, the
communication itself, and the receiver
 Authority of position OVER Authority of Leadership (knowledge & ability).
 Zone of Indifference - orders followed
 Marks the boundaries of what employees will consider doing without
question, based on expectations developed on entering the organization.
Barnard drew attention away from formal organizational structures toward
communication, cooperation, and the informal organization. His work was
integrated by other theorists in the human relations movement.
Behavioral Approach
• Lessons from the Behavioral Approach
– People are the key to productivity.
– Success depends on motivated and skilled
individuals committed to the organization.
– Managerial sensitivity to employees is necessary
to foster the cooperation needed for high
productivity.
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