IO (1-10, Aly)

Organizational Theory

• An organization is a collectivity of parts that cannot accomplish their goals effectively if they operated separately.
• It is a tool people use to coordinate their actions to obtain something they desire or value to achieve a goal.
• An organization is a social entity, made up of people that agree on, and work towards goals.
• Organizations create value, or else they "die".
• Organizations create value through the following process: Environment (Customers, Suppliers) > Input (Raw Materials, IT, HR) > Process (Machines, Computers, KSAOs) > Output (Products, Services).

Classical Theory

• Classical Organizational Theory states that organizations exist for economic reasons and to accomplish productivity goals.
• The basic ingredient of any organization is a system of differentiated activities.
• People perform tasks and exercise authority.
• Cooperation towards a goal is achieved through unity of purpose in pursuit of common goals.
• Authority ensures cooperation among people pursuing their goals.
• There is a "right" structure for an organization, which assumes there is one best configuration to accomplish goals.
• Scientific analysis will identify the one best way to organize for production.
• The theory deals with the formal organization and concepts to increase management efficiency.
• Both people and organizations act in accordance with rational economic principles.

Key Principles

• Functional Principle: concept behind division of labor, which divides organizations into units that perform similar functions into areas of specialization.
• Scalar Principle: deals with the organization's vertical growth and refers to the chain of command that grows with levels added to the organization.
• Line/Staff Principle: distinguishes between line functions (primary responsibilities for meeting the major goals of the organization) and staff functions (supporting line activities).
• Span-of-Control Principle: refers to the number of subordinates a manager is responsible for supervising.

Scientific Management

• Frederick Taylor believed that scientific principles could be applied to the study of work behavior to help increase worker efficiency and productivity.
• Scientific management is based on the concept of planning of work to achieve efficiency, standardization, specialization, and simplification.
• The advantages of productivity improvement should go to workers.
• Physical stress and anxiety should be eliminated.
• Capabilities of workers should be developed through training.
• The traditional boss concept should be eliminated.

Structural Theory

• Harry Mintzberg proposed that organizations evolve to reach a certain form and shape (structure) which permits the organization to function in its surroundings.
• The structure of an organization is an adaptive mechanism that permits the organization to function in its surroundings.

Seven Basic Parts of an Organization

• Operating Core: responsible for conducting basic work duties that give the organization its defining purpose.
• Strategic Apex: responsible for the overall success of the entire organization.
• Middle Line: ensures that overall goals set by strategic apex are being carried out by the operating core.
• Technostructure: possesses specific technical expertise that facilitates overall operation of the organization.
• Support Staff: aids the basic mission of the organization.
• Ideology: belief system that compels commitment to a particular value.
• Politics: side effect of ideology, causes divisiveness and conflict.

Neoclassical Theory

• Neoclassical Theory recognizes the importance of individual or group behavior and emphasizes human relations.
• Also known as Behavioral Theory of Organization, Human Relations, or New Classical Theory of Management.

Bureaucracy

• Described by Max Weber, bureaucracy is the ideal form of organization.
• Includes formal hierarchy, division of labor, and a clear set of operating procedures.
• Well-defined authority hierarchy with strict rules for governing behavior.
• Increase productivity by reducing inefficiencies in organizational operations.

Characteristics of a Bureaucratic Organization

• Specialization of labor.
• Well-defined authority hierarchy.
• Formal rules and procedures.
• Impersonality: behavior is based on logical reasoning rather than emotional thinking.

Administrative Management

• Aims to improve organizational productivity by focusing on methods that managers can use to synchronize internal processes.
• Elements of administrative theory include line and staff, committee, and function of management.
• Principles of administrative management include division of specialization, employed, and underemployed.

Humanistic Theory

• Humanistic Theory views organizational success in terms of employee motivation and the interpersonal relationships that emerge within the organization.
• Theory X and Theory Y (McGregor) describe managers' beliefs and assumptions about their employees.
• Self-fulfilling prophecy is a key concept in humanistic theory.

Theory X and Theory Y

• Theory X: employees are viewed as lazy, selfish, uninterested in work, lack in ambition, and not very intelligent.
• Theory Y: emphasizes the inherent goodness, capacity, and potential of employees, and their readiness to develop those inherent characteristics in the workplace.

Motivation

• The internal force that drives a worker to action, as well as the external factors that encourage that action.
• Ability and skill determine whether a worker can do the job, but motivation determines whether a worker can do it properly.

Consistency Theory

• Employees who feel good about themselves are motivated to perform better at work than employees who do not feel that they are valuable and worthy people.
• Employees try to perform at levels consistent with self-esteem.

Types of Self-Esteem

• Chronic self-esteem: a person's overall feeling about themselves.
• Situational self-esteem: a person's feeling about themselves in a particular situation.
• Socially influenced self-esteem: how a person feels about themselves on the basis of the expectations of others.

Increasing Self-Esteem

• Employees can attend workshops to gain insights into their strengths.
• Experience-with-success: giving employees tasks that are easy to succeed at.
• Galatea effect: the relationship between self-expectations and performance.
• Train supervisors to communicate a feeling of confidence in an employee.
• Pygmalion effect: if an employee feels that the manager has confidence in them, their self-esteem will increase.
• Golem effect: occurs when negative expectations of an individual cause a decrease in that individual's actual performance.### Pay for Performance and Merit Pay
• Pay for Performance (also called earnings-at-risk plans): pays employees based on how much they produce
• Merit Pay: bases incentives on performance appraisal scores rather than objective performance measures (sales, productivity)

Group Incentive Plans

• Profit Sharing: provides employees with a percentage of profits above a specific amount

Fairness of the Reward System

• Reinforcement: increases behavior
  • Positive: adding something to increase behavior
  • Negative: removing something to increase behavior
• Punishment: decreases behavior

4 Types of Schedules

• Fixed Interval
• Fixed Ratio
• Variable Interval
• Variable Ratio

Organizational Behavior Modification

• Certain target behaviors are specified, measured, and rewarded

Edwin Locke's Goal Setting Theory

• Emphasizes the role of specific, challenging goals and worker's commitment to those goals as key determinants of motivation
• Difficult or challenging goals will result in greater levels of motivation if they are accepted by the workers
• Goals should be SMART (Specific, Measurable, Attainable, Relevant, Time-Bound)

J. Stacey Adam's Equity Theory

• Based on the premise that our levels of motivation and job satisfaction are related to how fairly we believe we are treated in comparison with others
• Inputs: the elements we put into our jobs
• Outputs: the elements we receive from our jobs
• Employees subconsciously list all their outputs and inputs and then compute an input/output ratio by dividing the output value by input value
• If an employee's ratio is lower than those of others, they will become dissatisfied

Open Systems Theory by Katz & Kahn

• Organization develops and changes over time as a result of both external and internal forces
• Must interact with the environment in order to survive

3 Key Elements of Open Systems Theory

• Inputs: raw materials, human resources, energy, machinery
• Throughputs: production processes, service, training
• Outputs/Feedback: products, services, knowledge

Characteristics of Open Systems

• Organizations must be open to its environment to be effective
• Organizations thrive only as long as there is a continuous flow of energy from the external environment into the system and continuous export of products out of the system
• Too much Negative Entropy: (all forms of organization move towards disorganization or death), so orgs must avoid this movement
• The negative feedback loop provides information about where and how the organization is getting off-course; therefore, they could correct or adjust the course
• Equifinality: a system can reach the same end state in different ways (there isn't just one way to achieve a particular outcome)

Contingency Theory

• The "it depends" theory
• Behavior must be selected to fit the particular circumstance

A. Joan Woodward's Contingency Model

• For maximal performance, org structure needed to match the type of production technology
• 3 types of manufacturers:
  • Small-batch, mass production, and continuous production
  • Producers of small batches of specialty products required a span of control that was moderate in size and a short chain of command
  • Mass Production, large span of control and long chain of command
  • Continuous process, largest span of control
  • Deals only with manufacturing organizations

B. Lawrence and Lorsch's Model

• Asserted that two processes determine the company's ability to keep up with external changes: differentiation and integration
• Proposed that the stability of the environment dictates the most effective form of organization:
  • Depends on the environment of the company
  • Mechanistic Organization: an organization that depends on formal rules and regulations, makes decisions at higher levels of the organization and has smaller spans of control (for stable environments)
  • Organic Organization: organization with a large span of control, less formalized procedures, and decision-making at middle levels (for unstable environments)
• Differentiation: complexity of the org structure - number of units, various orientations and philosophies of the managers, and the goals and interests of the organization's members
• Integration: amount and quality of collaboration

C. Fiedler's Contingency Model

• Any individual's leadership style is effective only in certain situations

D. Mintzberg's Contingency Model

• Argued that one could describe an organization by looking at several categories of characteristics

Leadership Theories

Path-Goal Theory

• A leader can adopt one of four behavioral leadership styles to handle each situation:
  • Instrumental: Calls for planning, organizing, and controlling the activities of employees
  • Supportive: Shows concern for employees
  • Participative: Shares information with employees and lets them participate in the decision making
  • Achievement-Oriented: Challenging goals and rewards increases in performance

Situational Leadership Theory

• A leader typically uses one of the 4 behavioral styles:
  1. Delegating: Willing and able
  2. Directing: Unwilling and unable
  3. Coaching: Willing but unable
  4. Supporting: Unwilling but able

Leader-Member Exchange Theory (Vertical Dyad Linkage Theory)

• Concentrates on the interactions between leader and subordinates
• Leaders develop different roles and relationships with other people under them and thus act differently with different subordinates
• In-Group: HQ relationship with the leader, developed trusting and friendly relationship
• Out-Group: LQ relationship with the leader, developed

Ryan and Deci's Self-Determination Theory

• Defined as the person’s ability to make choices and manage their own life
• You feel in greater control, as opposed to being non-self-determined, which can leave you feeling that your life is controlled by others
• People are motivated to grow and change by three innate psychological needs:
  • Autonomy: People need to feel in control of their own behaviors and goals
  • Competence: People need to gain mastery of tasks and learn different skills
  • Connection or Relatedness: People need to experience a sense of belonging and attachment to people

Modern Organization Theory

• Based on the concept that the organization is a system which has to adapt to changes in its environment

Organization Approach

Systems Approach

• Considers organization as systems - a system is an organized or complex whole - an assemblage or combination of things or parts which form a complex unitary whole
• Subsystems: Different parts of the system, which are interrelated
• Open: Interact with the environment
• Closed: No interaction with the environment
• Adopts multi-level and multi-dimensional approach, which considers both macro and micro aspects
• Focuses on the internal dynamics of an organization’s structure and behavior
• Applicable to all situations

3 Basic Elements

• Components: Individual, formal and informal structure in an organization, physical environment
• Linking Process: Communication, balance, decision analysis
• Goals of Organization: Growth, stability, interaction

Socio-Technical Approach

• Based on the premise that every organization consists of the people, the technical system, and the environment
• People use tools, techniques, and knowledge to produce goods or services valued by consumers or users
• Equilibrium among the social system, technical system, and the environment is necessary to make the org more effective
• Joint Optimization: The idea that the social and technological systems should be designed to fit one another as well as possible
• Unit Control of Variance: Concerns who handles work problems when they arise

Motivation

• Motivated to make the ratios equal in one or more ways
• Our motivation decreases when our input/output ratios are lower than others

Vroom's Expectancy Theory

• Valence: desirability of a particular outcome to an individual
  • Extent to which an employee value a particular consequence
  • Gaano mo ka-gusto yung outcome
• Instrumentality: relationship between the performance of a particular behavior and the likelihood that a certain outcome will result
  • Link between one outcome and another outcome
  • Outcome of a worker's performance, if noticed, results in a particular consequence
  • The extent to which the performance will result to the desired outcome
  • Kapag bae to yung ginawa ko, yayaman ako?
• Expectancy:
  • Perceived relationship between the amount of effort an employee puts in and the resulting outcome
  • The extent to which the effort an employee exerted resulted to the outcome she wanted
  • Nag-aral ako ng mabuti, nag-trabaho ako ng maayos kaya eto mayaman na ako

Organization Justice Theory

• If employees are treated fairly, they will be more satisfied and motivated
• Focused on fairness of many aspects such as the process of decision making, outcome of decisions, and how it is communicated to employees
• Distributive Justice: fairness of the decision itself
• Procedural Justice: fairness of the procedures used to arrive with the decision

MARS Model of Individual Behavior and Performance

• Performance: is predicted by the Motivation, Ability, Role Perception, and Situational Factors
• All 4 factors are critical influences on an individual's voluntary behavior and performance, if one is low in a given situation, then, the employee will perform poorly
• Motivation, ability, and role perception is clustered together as they are located within the person

Motivation

• Represents the forces within a person that affect his or her direction, intensity, and persistence of voluntary behavior
• Direction: path along which people steer their effort
• Motivation is goal-oriented