Organizational Theory and Classical Theory

Organizational Theory

• Organization: a collectivity of parts that cannot accomplish their goals effectively if they operated separately; a tool people use to coordinate their actions to obtain something they desire or value to achieve a goal.
• Organizational Theory: a set of propositions that explains or predicts how groups and individuals behave in varying organizational structures and circumstances.

Classical Theory

• Classical Organizational Theory: organizations exist for economic reasons and to accomplish productivity goals.
• Assumes there is one best configuration to accomplish goals.
• Scientific Analysis: identifies the one best way to organize for production.
• Deals with the formal organization and concepts to increase management efficiency.
• Both people and organizations act in accordance with rational economic principles.

Principles of Classical Theory

• Functional Principle: organizations should be divided 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: line functions have primary responsibilities for meeting the major goals of the organization, while staff functions support the line's activities.
• Span-Of-Control Principle: refers to the number of subordinates a manager is responsible for supervising.

Scientific Management

• Scientific Management: emphasizes the application of scientific principles to improve worker efficiency and productivity.
• Principles: planning of work, standardization, specialization, simplification, and elimination of physical stress and anxiety.
• Goals: improve worker efficiency, increase productivity, and reduce costs.

Structural Theory

• Structural Theory: organizations evolve to reach a certain form and shape that permits the organization to function in its surroundings.
• Seven Basic Parts of an Organization: operating core, strategic apex, middle line, technostructure, support staff, ideology, and politics.

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.
• Emphasizes the importance of employee motivation and interpersonal relationships.

Bureaucracy

• Bureaucracy: a form of organization characterized by a formal hierarchy, division of labor, and a clear set of operating procedures.
• Characteristics: specialization of labor, well-defined authority hierarchy, formal rules and procedures, and impersonality.

Administrative Management

• Administrative Management: aims to improve organizational productivity by focusing on methods that managers can use to synchronize internal processes.
• Elements: line and staff, committee, and function of management.
• Principles: division of specialization, employed, and underemployed.

Humanistic Theory

• Humanistic Theory: organizational success is achieved through employee motivation and interpersonal relationships.
• Theory X and Theory Y: managers' beliefs and assumptions about their employees determine how they behave towards those employees.
• Self-Fulfilling Prophecy: employees learn to act and believe in ways consistent with how managers think they act and believe.

Motivation

• Motivation: the internal force that drives a worker to action, as well as the external factors that encourage that action.
• Intrinsic Motivation: employees perform well because they enjoy the tasks or the challenge of successfully completing the task.
• Extrinsic Motivation: employees perform well to receive a reward or avoid negative consequences.
• Work Preference Inventory: measures intrinsic and extrinsic motivation.

Other Humanistic/Motivational Theories

• Job Expectations Theory: a discrepancy between what an employee expected a job to be like and the reality of the job can affect motivation and satisfaction.
• Job Characteristics Theory: employees desire jobs that are meaningful, provide them with opportunity to be personally responsible for the outcome of their work, and provide them with feedback of the results of their efforts.
• Core Job Characteristics: skill variety, task identity, task significance, autonomy, and feedback.
• Abraham Maslow's Need Hierarchy: employees have different levels of needs, including physiological, safety, belongingness, esteem, and self-actualization.

ERG Theory

• ERG Theory: individuals can be motivated by multiple levels of need at the same time, and the level which is most important to them can change over time.

Herzberg's Two-Factor Theory

• Herzberg's Two-Factor Theory: some factors may cause job satisfaction and dissatisfaction, including motivators (related to the work itself) and hygiene (related to the context in which people perform the job).

McClelland's Achievement Motivation Theory

• McClelland's Achievement Motivation Theory: three needs are central to work motivation, including the need for achievement, power, and affiliation.

Four-Drive Theory

• Four-Drive Theory: emotions are the source of human motivation, and these emotions are generated through four innate and universal drives, including the drive to acquire, bond, comprehend, and defend.

Self-Regulation Theory

• Self-Regulation Theory: employees monitor their own progress toward attaining goals and then make the necessary adjustments.

Reinforcement Theory

• Reinforcement Theory: behavior is motivated by consequences, and employees will engage in behaviors for which they are rewarded and avoid behaviors for which they are punished.

Factors to Consider in Determining the Effectiveness of Incentive Programs

• Timing: reinforcers or punishers are most effective when they happen soon after the performance of the behavior.
• Contingency of Consequences: employees should understand the behavior that led to the reward or punishment.
• Type of Incentive: supervisors should know about different types of reinforcers.
• Premack Principle: reinforcement is relative, and a supervisor can reinforce an employee with something that seems insignificant.
• Financial Rewards: motivate better performance by making variable pay a part of the employee's compensation package or by using financial rewards as a bonus for accomplishing goals.
• Recognition: reward through a recognition program.
• Social Recognition: personal attention, signs of approval, etc.
• Travel: offer travel rewards instead of financial rewards.### Performance Management
• Pay for Performance: also known as earnings-at-risk (EAR) plans, where employees are paid based on their production.
• Merit Pay: bases incentives on performance appraisal scores rather than objective performance measures.

Group Incentive Plans

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

Fairness of the Reward System

• Reinforcement: increases behavior, and can be either positive (adding something) or negative (removing something).
• Punishment: decreases behavior.

Schedules

• 4 types of schedules: Fixed Interval, Fixed Ratio, Variable Interval, and Variable Ratio.

Organizational Behavior Modification

• Specifies, measures, and rewards certain target behaviors.

Edwin Locke's Goal Setting Theory

• Emphasizes the role of specific, challenging goals and worker commitment to achieve them.
• Difficult goals result in greater motivation if accepted by workers.
• Goals should be SMART (Specific, Measurable, Attainable, Relevant, Time-Bound).

J. Stacey Adams' Equity Theory

• Based on the premise that motivation and job satisfaction are related to fairness of treatment compared to others.
• Inputs: elements put into a job, such as effort and skills.
• Outputs: elements received from a job, such as pay and benefits.
• Employees compute an input/output ratio to determine fairness.

Industrial Psychology

Open Systems Theory by Katz & Kahn

• Organizations develop and change over time due to external and internal forces.
• Must interact with the environment to survive.
• 3 key elements: Inputs (raw materials, human resources, energy), Throughputs (production processes, service, training), and Outputs/Feedback (products, services, knowledge).

Contingency Theory

• The "it depends" theory, where behavior must be selected to fit the particular circumstance.
• A.Joan Woodward's Contingency Model: organization structure must match the type of production technology.
• B. Lawrence and Lorsch's Model: organization's ability to adapt to external changes depends on differentiation and integration.
• C. Fiedler's Contingency Model: leadership style is effective only in certain situations.
• D. Mintzberg's Contingency Model: organization can be described 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.
• Situational Leadership Theory: a leader typically uses one of four behavioral styles.
• Leader-Member Exchange Theory (Vertical Dyad Linkage Theory): focuses on the interactions between leader and subordinates.
• Ryan and Deci's Self-Determination Theory: defined as the person's ability to make choices and manage their own life.

Modern Organization Theory

• Based on the concept that the organization is a system that adapts to changes in its environment.

Organization Approach

• Systems Approach: considers the organization as a system, with subsystems, and focuses on internal dynamics and interaction with the environment.

Socio-Technical Approach

• Based on the premise that every organization consists of people, technical systems, and the environment.
• Equilibrium among the social system, technical system, and the environment is necessary for effectiveness.

Vroom's Expectancy Theory

• Valence: desirability of a particular outcome to an individual.
• Instrumentality: relationship between performance and the likelihood of a certain outcome.
• Expectancy: perceived relationship between effort and outcome.

Organization Justice Theory

• Focuses on fairness of decision-making processes, outcomes, and communication.
• Distributive Justice: fairness of the decision itself.
• Procedural Justice: fairness of the procedures used to arrive at the decision.

MARS Model of Individual Behavior and Performance

• Performance is predicted by Motivation, Ability, Role Perception, and Situational Factors.
• Motivation: represents the forces within a person that affect their direction, intensity, and persistence of voluntary behavior.
• Ability: includes both natural aptitudes and learned capabilities.
• Role Perceptions: how clearly people understand their job duties.
• Situational Factors: any context beyond the employee's immediate control.

Costa & McCrae's Five Factor Model of Personality

• The most researched and respected clustering of personality traits.
• Conscientiousness: organized, dependable, goal-focused, and industrious.
• Agreeableness: trusting, helpful, and good-natured.
• Neuroticism: anxious, insecure, and self-conscious.
• Openness to Experience: imaginative, creative, and autonomous.
• Extraversion: outgoing, talkative, and energetic.