Organization Theory
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Organization Theory
What makes an organization work / work well.
What are the important parts and how do they relate to one another.
to understand the system of roles, relationships, and mechanisms that lead to organizational outcomes
Empirical
Trying to describe what is
Normative
Trying to describe what out to be
Important Terms / Concepts / Topics
Empirical versus normative, Ad hoc organization
Specialization, division of labor, Homogeneity of labor
Hierarchy, coordination, unity of command, span of control
Line versus staff
Scientific management, Frederick Taylor, time and motion study, machine model
Organize by purpose, process, client, place
Authority: traditional, charismatic, rational-legal, Principal-Agent Problem
MORE Terms / Concepts / Topics
Open system, closed system, black box, feedback, organizational environment
Hawthorne Experiment, Theory X and Theory Y and assumptions of each
Abraham Maslow, KITA
Pluralism, Iron Triangles, interest group, congressional committee,
Public Choice theory
Pre-Industrialization
Most organizations were ad hoc
Barn Raising
Military
Most jobs performed by single craftsmen
Blacksmiths
Carpenters
Industrial Revolution
Larger organizations
Efficiency by specialization
Assembly line division of labor
Train unskilled (low cost) workers into a single task
A. Turn spokes for wheel
B. Carve rim for wheel
C. Drill holes for spokes
- - etc.
BUT . . . .
For divided labor to be efficient it must also be coordinated
Can’t drill any holes if person B hasn’t made the rims yet
How do you put this different pieces together to create an efficient whole?
Theories of Organization
Organization Theory
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I.
Structural
II.
Systems
III.
Humanist
IV.
Pluralist
And others
I. Structural Approach
The key is the structure of the organization
The boxes on an organizational chart and how they relate to one another.
The structure shapes the behavior of people in the organization
The Structure is hierarchy
The major goal is efficiency
Hierarchy
Homogeneity of Labor
Labor is coordinated by supervisor
A higher level to coordinate supervisors of task groups
And on up the hierarchy
Structural Elements
Span of control
Position / Office with defined roles
Key is office, not person
Unity of command
Line vs. staff differentiation
Impersonal, formal rules
Career service
Two Models of the Structural Approach
Classical model: Gulick (1930s)
Clearly bounded jurisdictions of authority and responsibility
Subdivision of positions immediately under the top position
Efficiency
Objective principles of organization: Gulick’s principles provide guides on how to organize
Bureaucratic model: Weber (1946)
Legitimacy of the system of authority
Luther Gulick
For Luther Gulick, the central problem of administration was determining how to achieve the
coordination and control necessary to accomplish organizational objectives.
His solution was to establish a strong chief executive to counter the divisive aspects of increasing
specialization and division of labor.
Gulick and Urwick
Management job is PODSCORB
Planning
Organizing
Directing
Staffing
Organization Theory
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Coordinating
Reporting
Budgeting
Organize by:
Purpose – defense, education, etc.
E.g., pull all units dealing with terrorism into a single department of homeland security
Process – central personnel or budget agencies (all accountants together)
Clientele – department of veterans affairs or agriculture
Place – regardless of purpose, single agency for all federal programs in California, or southern states
Bureaucratic Model: Max Weber
Traditional authority: depends on the loyalty of individuals to someone who has become chief
Charismatic authority: rests on personal devotion to an individual
Rational-legal authority: legally established impersonal order
Weber: most efficient
Weber: Principal-Agent Problem
Principals and agents
Principals: elected officials who make policy and delegate responsibility to public administrators
Agents: administrators charged with carrying out the law
Agencies: organizations established to do the work
Frederick W. Taylor and Scientific Management
Assumes there is a “One Best Way” to perform a task
time and motion studies to determine the “best way”
Best / most productive
Level of heat and light
New York Bureau of Municipal Research
Early think tank
What is the most efficient way to perform a task
The one best way
Taylor’s approach made a clear distinction between:
Brain workers: management who did the thinking.
Hand workers: those who did the labor.
He felt that brain workers should make all the key decisions in organizations.
Some Structural Approach Problems:
Elitism
Hierarchy / chain of command means you accept orders of superior
Why, superior know more – better qualified, sees the big picture, etc.
The logic is exactly the same as traditional aristocracy
Some Structural Approach Problems:
Cogs in a Machine?
the model that of the machine
The parts themselves are interchangeable.
Organization Theory
If one doesn’t work properly (ill, too old, etc.), replace it.
A complaint about bureaucracy is it is impersonal
Correct, that is what makes it efficient
But is it real or desirable?
Systems Theory
Systems theory: shares some key features of whole organization approach
Major alternative to hierarchical approach BUT still emphasizes structural elements
Entire organization versus its parts
Organization might be “black boxed”
Generalizes about all organizations, public and private, large and small
Systems Theory (continued)
Closed-system theorists: organization’s own operation is substantially unaffected by its environment
Open-system theorists: organization interacts with its environment
Most systems approaches are open
Open-System Approach
Open system: an organization is a system that receives inputs of resources, which it throughputs and
transforms to yield outputs (products or services)
Inputs: maintain the organization, overhead costs
Feedback loop: feedback can help flag problems and identify things that work
A reasonable way to look at government organizations
President-Congress or governor-legislature
Budget request for Department of Transportation (input)
And what will we get out of it? Miles of road paved?
Feedback – congressional hearings on how well you did
Organizational Environment
Important contribution is stressing environment
Not just customers and internal processes
Organizational health depends on many other factors as well
Systems Theory Features: Boundaries, and Purpose
System boundaries: defined by agency jurisdiction
Inputs to the system and the system’s outputs
Survival needs are adaptation to external environment
System purpose: agency mission
Translates inputs into outputs
Challenges to Structural Approach and Systems Theory
1. Humanist approach: wants to humanize organizations, condemns impersonality of bureaucratic
hierarchy
2. Pluralist approach: interest-group pressures, wants less orderly model of an organization’s
interactions
Challenges to Structural Approach and Systems Theory (continued)
Third-party approach: recognizes contracting out, delegation of authority to third parties
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Organization Theory
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Formal approach: structural perspective with emphasis on principal-agent theory, economic approach
Humanist Approach
A challenge that is both
1. Empirical
People cannot behave like cogs in a machine
2. Normative
Even if they could, it would be wrong
Organizational Humanism
Organizational humanism focused on the personal and informal dimensions of work.
Organizational humanists examined interpersonal relations, attitudes, and emotions.
Represented a contrast to the classical theorists and their focus on structure and function.
Organizational Humanism
Mary Parker Follett
Felt that workers should have input on matters in which they are qualified to have an opinion.
Believed that the nature of the task at hand should determine the work orders, not the imposition of
personal authority.
Hawthorne Experiments
Hawthorne plant of Western Electric Company
A Scientific Management, time and motion study
How would modifying light, heat, coffee breaks, etc. change
But found time and motion not the most important
Douglas McGregor
Theory X assumes average person:
Dislikes work and seeks to avoid it
Has little ambition
Would rather be led than lead
Does not care about organization
Resists change
Not very intelligent
Theory Y
Theory Y assumes:
Work is as natural as rest and play
People willingly work if they are committed to the goals
People are interested in self-fulfillment and may find that in work
Can handle and often seek responsibility
Creativity and ingenuity are widespread and not limited to an elite
Theory Y based partly on Abraham Maslow (psychologist)
Hierarchy of human needs
Theory X Management
Threats, close supervision, tight controls
Organization Theory
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KITA
Employee response is to do little and / or unionize
Requires extensive hierarchy for supervision
Theory Y Management
Decentralize
Delegate responsibility to workers and mid-level supervisors
Job enlargement – allow workers to do more
Organizational mission may be a valuable employee motivator
Humanism and how organizations work
Authority does not necessarily flow from top down
Workers have a psychological contract with the organization
A zone of indifference
Organizations must work with the worker-created part of the contract
Organizations can never be totally rational
The organization is a social system
Efficiency is sometimes sacrificed to the needs of the group
Workers develop norms of behavior
Restructuring the organization means modifying numerous social relationships and norms
Zip codes
Some organizational practices are attempts to achieve structural view
Employee training
Work rules and practices
Japanese Model: 1950s-1990s
Japanese economy growing faster than US
Japanese businesses making better and cheaper products than US Businesses
TV, stereos, cameras, cars
Focus on their business model and why it was winning over the US model
Japanese corporations far more productive than US ones
Lifetime employment
Responsibility and hierarchy were not identical
Decision making by all
Bottom up versus top down
Basis of GM’s Saturn Division
Pluralist Approach
Emphasizes the responsiveness of a government organization to society’s politically active interest
groups
Administrative organizations are the product of this conflict and accommodation of interests
Pluralism
Apology for non-democratic elements of US
Explains role of special interest groups as promoting democracy
Organization Theory
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We area a society of groups of everyone belongs
Government agencies and program often the results of group battles
Elected leaders try to give each group something
Often leads to vague and multiple agency / program goals
Agency job may be to maintain the compromise
Symbolic Organization
Departments of:
Education
Veterans Affairs
Agriculture
Pluralism Reflects Congressional Organization
Legislative committees
Each with a distinct subject matter
Agriculture, military procurement, etc.
Government agencies often mirror congressional committees that create and oversee them
And both mirror interest groups
Iron Triangles, Issue Networks, Policy Subsystems
Third-Party Approach
The more government relies on third-party tools, the less it fits structural models
Organizational structure: an administration’s internal framework
Contracting Out means organizational structure is smaller and devoted to monitoring over production
Administration through mixed public-private partnerships
Formal / Public Choice Approaches
Emerged from economics and economic theories
What can we expect from individual self-interest?
Bureaucracies are networks of contracts built around systems of hierarchies and authority
Transaction costs: the cost to the supervisor of supervising the subordinate
Public Choice Theory
Public choice applies economic thinking to problems of administration.
Assumes that individuals are materially self-interested and seek to advance the greatest personal
benefit at the lowest possible cost.
Anthony Downs found that public agencies tend to emphasize their benefits to society over their costs.
Agencies view growth as good since their services are of universal benefit.
Public Choice Theory
Without competition and free from market forces, government agencies can become bloated at the
public’s expense.
Vincent Ostrom proposed a market-like system, where citizens can choose the organization that best
meets their demands.
His theory supports the use of private and nonprofit organizations to deliver public services.
Conclusion
Each approach embodies some truth about government organizations
Organization Theory
Each also reaches a bit far
Claims true for all when may be only true for some
Cannot just blend them all together
They are inconsistent
Use as learning model
And to understand specific, but not all, agencies
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