CHAPTER 2
Organization
Theory and
Management
Thought
PowerPoint
Presentation by
Charlie Cook
The University of
West Alabama
Plunkett
Attner
Allen
© 2008 Thomson/South-Western All rights reserved.
Organization Theory
• William G.Scott
Classical Organization Theory
Neoclassical Organization Theory
Modern Organization Theory
© 2008 Thomson/South-Western. All rights reserved.
2–2
Classical Organization Theory
• Four key pillars
 The division of labor
 Structure
 The Scalar and functional process
 The span of control
© 2008 Thomson/South-Western. All rights reserved.
2–3
Classical Perspective
● Rational, scientific approach to
management – make organizations
efficient operating machines
● Scientific Management
● Bureaucratic Organizations
● Administrative Principles
© 2008 Thomson/South-Western. All rights reserved.
2–4
Scientific Management
• Fredrick Winslow Taylor
 The “father” of scientific management
 Published Principles of Scientific Management (1911)
 The
theory of scientific management
– Using scientific methods to define the “one best way” for a job to
be done:
• Putting the right person on the job with the correct tools and
equipment.
• Having a standardized method of doing the job.
• Providing an economic incentive to the worker.
© 2008 Thomson/South-Western. All rights reserved.
2–5
Exhibit 2–2
Taylor’s Four Principles of Management
1. Develop a science for each element of an individual’s work,
which will replace the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the
worker.
3. Heartily cooperate with the workers so as to ensure that all
work is done in accordance with the principles of the science
that has been developed.
4. Divide work and responsibility almost equally between
management and workers. Management takes over all work
for which it is better fitted than the workers.
© 2008 Thomson/South-Western. All rights reserved.
2–6
Bureaucratic 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
• Systematic approach –looked at organization
as a whole
© 2008 Thomson/South-Western. All rights reserved.
2–7
Characteristics of Weberian Bureaucracy
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
Exhibit 2.3
© 2008 Thomson/South-Western. All rights reserved.
2–8
Classical Administrative School
• Henri Fayol
 Believed specific management skills could be learned
and taught
 Developed 14 principles that form the foundation for
modern management practice and sound
administrative structure.
© 2008 Thomson/South-Western. All rights reserved.
2–9
Figure 2.2
Henri Fayol’s general principles of management
1. Division of Work
8.
Centralization
2. Authority
9.
Scalar Chain
3. Discipline
10. Order
4. Unity of Command
11. Equity
5. Unity of Direction
12. Stability of Tenure
of Personnel
6. Subordination of the
Individual to the
General Interest
13. Initiative
14. Esprit de Corps
7. Remuneration of
Personnel
Source: Adapted from General Principles of Management by Henri Fayol.
Copyright 1949 by Pitman Learning, Inc., 6 Davis Drive, Belmont, CA 94002.
© 2008 Thomson/South-Western. All rights reserved.
2–10
Neoclassical Organization Theory
• Embarked on the task of compensating for some
of the deficiencies in classical doctrine
 1. Fatigue and monotony caused by the
specialization of the work
 2. Human behavior thwarts the cleanness of the
logical relationships
 3. Overlapping of authority often causes clashes; and,
gaps in authority cause failures in getting jobs done,
with one party blaming the other for shortcomings in
performance.
 4. Universally applicable ratio of span of control is
silly.
© 2008 Thomson/South-Western. All rights reserved.
2–11
Hawthorne Studies
•
•
•
•
Started in 1895
Four experimental & three control groups
Five different tests
Test pointed to factors other than illumination for
productivity
• 1st Relay Assembly Test Room experiment, was
controversial, test lasted 6 years
• Interpretation, money not cause of increased output
• Factor that increased output, Human Relations
© 2008 Thomson/South-Western. All rights reserved.
2–12
Modern organization Theory
●Systems Theory
●Contingency View
© 2008 Thomson/South-Western. All rights reserved.
2–13
The Systems Approach
• System Defined
 A set of interrelated and interdependent parts
arranged in a manner that produces a unified whole.
• Basic Types of Systems
 Closed systems
 Are
not influenced by and do not interact with their
environment (all system input and output is
internal).
 Open systems
 Dynamically interact to their environments by
taking in inputs and transforming them into outputs
that are distributed into their environments.
© 2008 Thomson/South-Western. All rights reserved.
2–14
Exhibit 2–6
The Organization as an Open System
© 2008 Thomson/South-Western. All rights reserved.
2–15
Implications of the Systems Approach
• Coordination of the organization’s parts is
essential for proper functioning of the entire
organization.
• Decisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
• Organizations are not self-contained and,
therefore, must adapt to changes in their
external environment.
© 2008 Thomson/South-Western. All rights reserved.
2–16
The Contingency Approach
• Contingency Approach Defined
 Also sometimes called the situational approach.
 There is no one universally applicable set of
management principles (rules) by which to manage
organizations.
 Organizations are individually different, face different
situations (contingency variables), and require
different ways of managing.
© 2008 Thomson/South-Western. All rights reserved.
2–17
Exhibit 2–7
Popular Contingency Variables
• Organization size
• As size increases, so do the problems of coordination.
• Routineness of task technology
• Routine technologies require organizational structures,
leadership styles, and control systems that differ from
those required by customized or nonroutine technologies.
• Environmental uncertainty
• What works best in a stable and predictable environment
may be totally inappropriate in a rapidly changing and
unpredictable environment.
• Individual differences
• Individuals differ in terms of their desire for growth,
autonomy, tolerance of ambiguity, and expectations.
© 2008 Thomson/South-Western. All rights reserved.
2–18
Contingency View of Management
Exhibit 2.6
© 2008 Thomson/South-Western. All rights reserved.
2–19
TQM
• Focuses on managing the total organization to
deliver quality to customers.
• Four significant elements are
 Employee involvement
 Focus on the customer
 Benchmarking
 Continuous improvement
© 2008 Thomson/South-Western. All rights reserved.
2–20
The learning Organization
• As one in which everyone is engaged in
identifying and solving problems, enabling
the organization to continuously
experiment, change, and improve, thus
increasing in its capacity to grow, learn,
and achieve its purpose
© 2008 Thomson/South-Western. All rights reserved.
2–21
Elements of a Learning Organization
Horizontal Structure
Leadership
Emergent Strategy
Learning
Organization
Empowered
Employees
Open
Information
Exhibit 2.7
© 2008 Thomson/South-Western. All rights reserved.
Strong Culture
2–22
The learning Organization
• 1. Leadership
 The traditional view of leaders who set goals,
make decisions ,and direct the troops reflects
an individualistic view
 In learning organization, leaders need the
ability to build a shared vision, help people
see whole system, work together, design
horizontal structure, initiate change, expand
the capacity of people to shape the future.
© 2008 Thomson/South-Western. All rights reserved.
2–23
The learning Organization
• 2. Horizontal Structure
 New organization structure represent a
revolution in management thinking.
 The team is more important than the
individual, and teams are given major
responsibilities, such as producing a product
and service, making decision about work and
pay.
© 2008 Thomson/South-Western. All rights reserved.
2–24
The learning Organization
• 3. Employee empowerment
Giving employees the power, freedom,
knowledge, and skills to make decisions
and perform effectively
© 2008 Thomson/South-Western. All rights reserved.
2–25
The learning Organization
• 4. Open communication
 To identify needs and solve problems, people have to
aware of what’s going on
 They must understand the whole organization as well
as their part in it.
 Formal data about budgets, profits, and departmental
expenses are available to everyone.
© 2008 Thomson/South-Western. All rights reserved.
2–26
The learning Organization
• 5. Emergent strategy
 Strategy emerges from discussions among
employees.
 Emergent strategy relies on an experiment
mind-set.
 Employees are in touch with the environment,
providing data about external changes in
technology and customer needs. They are the
ones to identify needs and solutions , passing
these ideas into the organization for
discussion.
© 2008 Thomson/South-Western. All rights reserved.
2–27
The learning Organization
• 6. Strong culture
 The whole is more important than the part,
and boundaries among parts are minimized.
 The culture is egalitarian.
 The culture values improvement and
adaptation.
© 2008 Thomson/South-Western. All rights reserved.
2–28