IOPsych notes 2.docx

Classical organization theory Taylor's scientific management approach Weber's bureaucratic approach Administrative theory Classical organization theories (Taylor, 1947; Weber, 1947; Fayol, 1949) deal with the formal organization and concepts to increase management efficiency. Taylor presented scient...

Classical organization theory Taylor's scientific management approach Weber's bureaucratic approach Administrative theory Classical organization theories (Taylor, 1947; Weber, 1947; Fayol, 1949) deal with the formal organization and concepts to increase management efficiency. Taylor presented scientific management concepts, Weber gave the bureaucratic approach, and Fayol developed the administrative theory of the organization. They all contributed significantly to the development of classical organization theory. Taylor's scientific management approach The scientific management approach developed by Taylor is based on the concept of planning of work to achieve efficiency, standardization, specialization and simplification. Acknowledging that the approach to increased productivity was through mutual trust between management and workers, Taylor suggested that, to increase this level of trust, • the advantages of productivity improvement should go to workers, • physical stress and anxiety should be eliminated as much as possible, • capabilities of workers should be developed through training, and • the traditional 'boss' concept should be eliminated. Taylor developed the following four principles of scientific management for improving productivity: • Science, not rule-of-thumb Old rules-of-thumb should be supplanted by a scientific approach to each element of a person's work. • Scientific selection of the worker Organizational members should be selected based on some analysis, and then trained, taught and developed. • Management and labour cooperation rather than conflict Management should collaborate with all organizational members so that all work can be done in conformity with the scientific principles developed. • Scientific training of the worker Workers should be trained by experts, using scientific methods. Weber's bureaucratic approach Considering the organization as a segment of broader society, Weber (1947) based the concept of the formal organization on the following principles: • Structure In the organization, positions should be arranged in a hierarchy, each with a particular, established amount of responsibility and authority. • Specialization Tasks should be distinguished on a functional basis, and then separated according to specialization, each having a separate chain of command. • Predictability and stability The organization should operate according to a system of procedures consisting of formal rules and regulations. • Rationality Recruitment and selection of personnel should be impartial. • Democracy Responsibility and authority should be recognized by designations and not by persons. Weber's theory is infirm on account of dysfunctions (Hicks and Gullett, 1975) such as rigidity, impersonality, displacement of objectives, limitation of categorization, self-perpetuation and empire building, cost of controls, and anxiety to improve status. Administrative theory The elements of administrative theory (Fayol, 1949) relate to accomplishment of tasks, and include principles of management, the concept of line and staff, committees and functions of management. • Division of work or specialization This increases productivity in both technical and managerial work. • Authority and responsibility These are imperative for an organizational member to accomplish the organizational objectives. • Discipline Members of the organization should honour the objectives of the organization. They should also comply with the rules and regulations of the organization. • Unity of command This means taking orders from and being responsible to only one superior. • Unity of direction Members of the organization should jointly work toward the same goals. • Subordination of individual interest to general interest The interest of the organization should not become subservient to individual interests or the interest of a group of employees. • Remuneration of personnel This can be based on diverse factors such as time, job, piece rates, bonuses, profit-sharing or non-financial rewards. • Centralization Management should use an appropriate blend of both centralization and de-centralization of authority and decision making. • Scalar chain If two members who are on the same level of hierarchy have to work together to accomplish a project, they need not follow the hierarchy level, but can interact with each other on a 'gang plank' if acceptable to the higher officials. • Order The organization has a place for everything and everyone who ought to be so engaged. • Equity Fairness, justice and equity should prevail in the organization. • Stability of tenure of personnel Job security improves performance. An employee requires some time to get used to new work and do it well. • Initiative This should be encouraged and stimulated. • Esprit de corps Pride, allegiance and a sense of belonging are essential for good performance. Union is strength. • The concept of line and staff The concept of line and staff is relevant in organizations which are large and require specialization of skill to achieve organizational goals. Line personnel are those who work directly to achieve organizational goals. Staff personnel include those whose basic function is to support and help line personnel. • Committees Committees are part of the organization. Members from the same or different hierarchical levels from different departments can form committees around a common goal. They can be given different functions, such as managerial, decision making, recommending or policy formulation. Committees can take diverse forms, such as boards, commissions, task groups or ad hoc committees. Committees can be further divided according to their functions. In agricultural research organizations, committees are formed for research, staff evaluation or even allocation of land for experiments. • Functions of management Fayol (1949) considered management as a set of planning, organizing, training, commanding and coordinating functions. Gulick and Urwick (1937) also considered organization in terms of management functions such as planning, organizing, staffing, directing, coordinating, reporting and budgeting. Neoclassical theory Principles of the neoclassical approach Neoclassical theorists recognized the importance of individual or group behaviour and emphasized human relations. Based on the Hawthorne experiments, the neoclassical approach emphasized social or human relationships among the operators, researchers and supervisors (Roethlisberger and Dickson, 1943). It was argued that these considerations were more consequential in determining productivity than mere changes in working conditions. Productivity increases were achieved as a result of high morale, which was influenced by the amount of individual, personal and intimate attention workers received. Principles of the neoclassical approach The classical approach stressed the formal organization. It was mechanistic and ignored major aspects of human nature. In contrast, the neoclassical approach introduced an informal organization structure and emphasized the following principles: • The individual An individual is not a mechanical tool but a distinct social being, with aspirations beyond mere fulfilment of a few economic and security works. Individuals differ from each other in pursuing these desires. Thus, an individual should be recognized as interacting with social and economic factors. • The work group The neoclassical approach highlighted the social facets of work groups or informal organizations that operate within a formal organization. The concept of 'group' and its synergistic benefits were considered important. • Participative management Participative management or decision making permits workers to participate in the decision making process. This was a new form of management to ensure increases in productivity. Note the difference between Taylor's 'scientific management' - which focuses on work - and the neoclassical approach - which focuses on workers. Modern theories The systems approach Socio-technical approach The contingency or situational approach Modern theories tend to be based on the concept that the organization is a system which has to adapt to changes in its environment. In modern theory, an organization is defined as a designed and structured process in which individuals interact for objectives (Hicks and Gullet, 1975). The contemporary approach to the organization is multidisciplinary, as many scientists from different fields have contributed to its development, emphasizing the dynamic nature of communication and importance of integration of individual and organizational interests. These were subsequently re-emphasized by Bernard (1938) who gave the first modern and comprehensive view of management. Subsequently, conclusions on systems control gave insight into application of cybernetics. The operation research approach was suggested in 1940. It utilized the contributions of several disciplines in problem solving. Von Bertalanffy (1951) made a significant contribution by suggesting a component of general systems theory which is accepted as a basic premise of modern theory. Some of the notable characteristics of the modern approaches to the organization are: • a systems viewpoint, • a dynamic process of interaction, • multilevelled and multidimensional, • multimotivated, • probabilistic, • multidisciplinary, • descriptive, • multivariable, and • adaptive. Modern understandings of the organization can be broadly classified into: • the systems approach, • socio-technical theory, and • a contingency or situational approach. The systems approach The systems approach views organization as a system composed of interconnected - and thus mutually dependent - sub-systems. These sub-systems can have their own sub-sub-systems. A system can be perceived as composed of some components, functions and processes (Albrecht, 1983). Thus, the organization consists of the following three basic elements (Bakke, 1959): (i) Components There are five basic, interdependent parts of the organizing system, namely: • the individual, • the formal and informal organization, • patterns of behaviour emerging from role demands of the organization, • role comprehension of the individual, and • the physical environment in which individuals work. (ii) Linking processes The different components of an organization are required to operate in an organized and correlated manner. The interaction between them is contingent upon the linking processes, which consist of communication, balance and decision making. • Communication is a means for eliciting action, exerting control and effecting coordination to link decision centres in the system in a composite form. • Balance is the equilibrium between different parts of the system so that they keep a harmoniously structured relationship with one another. • Decision analysis is also considered to be a linking process in the systems approach. Decisions may be to produce or participate in the system. Decision to produce depends upon the attitude of the individual and the demands of the organization. Decision to participate refers to the individual's decisions to engross themselves in the organization process. That depends on what they get and what they are expected to do in participative decision making. (iii) Goals of organization The goals of an organization may be growth, stability and interaction. Interaction implies how best the members of an organization can interact with one another to their mutual advantage. Socio-technical approach It is not just job enlargement and enrichment which is important, but also transforming technology into a meaningful tool in the hands of the users. The socio-technical systems approach is based on the premise that every organization consists of the people, the technical system and the environment (Pasmore, 1988). People (the social system) use tools, techniques and knowledge (the technical system) to produce goods or services valued by consumers or users (who are part of the organization's external environment). Therefore, an equilibrium among the social system, the technical system and the environment is necessary to make the organization more effective. The contingency or situational approach The situational approach (Selznick, 1949; Burns and Stalker, 1961; Woodward, 1965; Lawrence and Lorsch, 1967) is based on the belief that there cannot be universal guidelines which are suitable for all situations. Organizational systems are inter-related with the environment. The contingency approach (Hellriegel and Slocum, 1973) suggests that different environments require different organizational relationships for optimum effectiveness, taking into consideration various social, legal, political, technical and economic factors. Structure of an organization Structure Designing organizational structures Principles of organization structure The term organization has been defined in several ways. Leavitt (1962) defines it as a specific configuration of structure, people, task and techniques. Structure describes the form of departments, hierarchy and committees. It influences the organization's efficiency and effectiveness. People refers to the skills, attitudes and social interaction of the members of the organization. Task refers to the goals of the individual and the organization. Techniques refers to the methodical approach used to perform tasks. Organizational structure thus refers to the institutional arrangements and mechanisms for mobilizing human, physical, financial and information resources at all levels of the system (Sachdeva, 1990). Organization is also defined as a system incorporating a set of sub-systems (Katz and Kahn, 1978). These sub-systems are related group of activities which are performed to meet the objectives of the organization. Organization has been viewed differently by numerous theorists. However, all definitions usually contain five common features: • composed of individuals and groups of individuals; • oriented towards achieving common goals; • differential functions; • intended rational coordination; and • continuity through time. Structure Structure is thus an integral component of the organization. Nystrom and Starbuck (1981) have defined structure as the arrangement and interrelationship of component parts and positions in an organization. It provides guidelines on: • division of work into activities; • linkage between different functions; • hierarchy; • authority structure; • authority relationships; and • coordination with the environment. Organizational structure may differ within the same organization according to the particular requirements. Structure in an organization has three components (Robbins, 1989): • Complexity, referring to the degree to which activities within the organization are differentiated. This differentiation has three dimensions: - horizontal differentiation refers to the degree of differentiation between units based on the orientation of members, the nature of tasks they perform and their education and training, - vertical differentiation is characterized by the number of hierarchical levels in the organization, and - spatial differentiation is the degree to which the location of the organization's offices, facilities and personnel are geographically distributed; • Formalization refers to the extent to which jobs within the organization are specialized. The degree of formalization can vary widely between and within organizations; • Centralization refers to the degree to which decision making is concentrated at one point in the organization. Designing organizational structures Some important considerations in designing an effective organizational structure are: • Clarity The structure of the organization should be such that there is no confusion about people's goals, tasks, style of functioning, reporting relationship and sources of information. • Understanding The structure of an organization should provide people with a clear picture of how their work fits into the organization. • De-centralization The design of an organization should compel discussions and decisions at the lowest possible level. • Stability and adaptability While the organizational structure should be adaptable to environmental changes, it should remain steady during unfavourable conditions. Principles of organization structure Modern organizational structures have evolved from several organizational theories, which have identified certain principles as basic to any organization. Specialization Specialization facilitates division of work into units for efficient performance. According to the classical approach, work can be performed much better if it is divided into components and people are encouraged to specialize by components. Work can be specialized both horizontally and vertically (Anderson, 1988). Vertical specialization in a research organization refers to different kinds of work at different levels, such as project leader, scientist, researcher, field staff, etc. Horizontally, work is divided into departments like genetics, plant pathology, administration, accounts, etc. Specialization enables application of specialized knowledge which betters the quality of work and improves organizational efficiency. At the same time, it can also influence fundamental work attitudes, relationships and communication. This may make coordination difficult and obstruct the functioning of the organization. There are four main causal factors which could unfavourably affect attitudes and work styles. These are differences in: • goal orientation; • time orientation; • inter-personal orientation; and • the formality of structure (Lawrence and Lorsch, 1967). Coordination Coordination refers to integrating the objectives and activities of specialized departments to realize broad strategic objectives of the organization. It includes two basic decisions pertaining to: (i) which units or groups should be placed together; and (ii) the patterns of relationships, information networks and communication (Anderson, 1988). In agricultural research institutions, where most of the research is multidisciplinary but involves specialization, coordination of different activities is important to achieve strategic objectives. Efficient coordination can also help in resolving conflicts and disputes between scientists in a research organization. Hierarchy facilitates vertical coordination of various departments and their activities. Organizational theorists have over the years developed several principles relating to the hierarchy of authority for coordinating various activities. Some of the important principles are discussed below. Unity of Command Every person in an organization should be responsible to one superior and receive orders from that person only. Fayol (1949) considered this to be the most important principle for efficient working and increased productivity in an organization. The Scalar Principle Decision making authority and the chain of command in an organization should flow in a straight line from the highest level to the lowest. The principle evolves from the principle of unity of command. However, this may not always be possible, particularly in large organizations or in research institutions. Therefore Fayol (1949) felt that members in such organizations could also communicate directly at the same level of hierarchy, with prior intimation to their superiors. The Responsibility and Authority Principle For successfully performing certain tasks, responsibility must be accompanied by proper authority. Those responsible for performance of tasks should also have the appropriate level of influence on decision making. Span of Control This refers to the number of specialized activities or individuals supervised by one person. Deciding the span of control is important for coordinating different types of activities effectively. According to Barkdull (1963), some of the important situational factors which affect the span of control of a manager are: • similarity of functions; • proximity of the functions to each other and to the supervisor; • complexity of functions; • direction and control needed by subordinates; • coordination required within a unit and between units; • extent of planning required; and • organizational help available for making decisions. Departmentalization Departmentalization is a process of horizontal clustering of different types of functions and activities on any one level of the hierarchy. It is closely related to the classical bureaucratic principle of specialization (Luthans, 1986). Departmentalization is conventionally based on purpose, product, process, function, personal things and place (Gullick and Urwick, 1937). Functional Departmentalization is the basic form of departmentalization. It refers to the grouping of activities or jobs involving common functions. In a research organization the groupings could be research, production, agricultural engineering, extension, rural marketing and administration. Product Departmentalization refers to the grouping of jobs and activities that are associated with a specific product. As organizations increase in size and diversify, functional departmentalization may not be very effective. The organization has to be further divided into separate units to limit the span of control of a manager to a manageable level (Luthans, 1986). In an agricultural research institution, functional departments can be further differentiated by products and purpose or type of research. In contrast to functional departmentalization, product-based departmentalization has the advantage of: • less conflict between major sub-units; • easier communication between sub-units; • less complex coordination mechanisms; • providing a training ground for top management; • more customer orientation; and • greater concern for long-term issues. In contrast, functional departmentalization has the strength of: • easier communication with sub-units; • application of higher technical knowledge for solving problems; • greater group and professional identification; • less duplication of staff activities; • higher product quality; and • increased organizational efficiency (Filley, 1978). Departmentalization by Users is grouping of both activities and positions to make them compatible with the special needs of some specific groups of users. Departmentalization by Territory or Geography involves grouping of activities and positions at a given location to take advantage of local participation in decision making. The territorial units are under the control of a manager who is responsible for operations of the organization at that location. In agricultural research institutions, regional research stations are set up to take advantage of specific agro-ecological environments. Such departmentalization usually offers economic advantage. Departmentalization by Process or Equipment refers to jobs and activities which require a specific type of technology, machine or production process. Other common bases for departmentalization can be time of duty, number of employees, market, distribution channel or services. De-centralization and Centralization De-centralization refers to decision making at lower levels in the hierarchy of authority. In contrast, decision making in a centralized type of organizational structure is at higher levels. The degree of centralization and de-centralization depends on the number of levels of hierarchy, degree of coordination, specialization and span of control. According to Luthens (1986), centralization and de-centralization could be according to: • geographical or territorial concentration or dispersion of operations; • functions; or • extent of concentration or delegation of decision making powers. Every organizational structure contains both centralization and de-centralization, but to varying degrees. The extent of this can be determined by identifying how much of the decision making is concentrated at the top and how much is delegated to lower levels. Modern organizational structures show a strong tendency towards de-centralization. Line and Staff Relationships Line authority refers to the scalar chain, or to the superior-subordinate linkages, that extend throughout the hierarchy (Koontz, O'Donnell and Weihrich, 1980). Line employees are responsible for achieving the basic or strategic objectives of the organization, while staff plays a supporting role to line employees and provides services. The relationship between line and staff is crucial in organizational structure, design and efficiency. It is also an important aid to information processing and coordination. In an agricultural research organization, scientists and researchers form the line. Administrative employees are considered staff, and their main function is to support and provide help to scientists to achieve organizational goals It is the responsibility of the manager to make proper and effective use of staff through their supportive functions. The staff may be specialized, general or organizational (Anderson, 1988). Specialized staff conduct technical work that is beyond the time or knowledge capacity of top management, such as conducting market research and forecasting. General staff consists of staff assistants to whom managers assign work. Organization staff (such as centralized personnel, accounting and public relations staff) provide services to the organization as a whole. Their role is to integrate different operations across departments. Line and staff personnel have different functions, goals, cultures and backgrounds. Consequently, they could frequently face conflict situations. A manager has to use his skills in resolving such conflicts. Type of organizational structure Classical organizational structure Modern organization designs An important issue in organizational structuring is whether the structure of an organization should be dynamic and change according to changes in the environment or remain stable in the face of such changes. Since an organization exists in an external environment, it cannot remain indifferent to changes in its external milieu. However, the extent of changes would depend upon the degree of influence the changing environment exerts on the efficient functioning of the organization and sub-units. Organizations can have simple to complex structures, depending upon organizational strategies, strategic decisions within the organization and environmental complexities. The structure of the organization can be traditional (bureaucratic) or modern (organic), according to needs. The traditional organizational structure is mechanistic and characterized by high complexity, high formalization and centralization. The classical organization structure designs are simple, centralized, bureaucratic and divisionalized. Modern organizational designs include project organization, matrix design and adhocracy design. Classical organizational structure In a simple centralized organizational structure, power, decision making authority and responsibility for goal setting are vested in one person at the top. This structure is usually found in small and single-person-owned organizations. The basic requirement of a simple centralized structure is that it has only one or two functions, and a few people who are specialists in critical functions. The manager is generally an expert in all related areas of functions and is responsible for coordination. Thus, the organization has only two hierarchical levels. However, this structure has to become more complex for growth, diversification or other reasons. The Bureaucratic Organization In large organizations and under well defined conditions, organization structure may be bureaucratic. The essential elements of a bureaucratic organization are: • the use of standard methods and procedures for performing work; and • a high degree of control to ensure standard performance. Figure 1 illustrates a bureaucratic organizational structure. Figure 1. Bureaucratic organizational structure Mintzberg (1981) has identified two types of bureaucracies. They are standard and professional bureaucracy. Standard bureaucracy is based on efficient performance of standardized routine work. Professional bureaucracy depends upon efficient performance of standardized but complex work. Thus, it requires a higher level of specialized skills. The structure of standard bureaucracy is based on functions, large technical staff and many mid-level managers. In contrast, professional bureaucracy has few mid-level managers. The Divisionalized Organization Divisionalized organizational design refers to a multiproduct or service design that separates different products or services to facilitate management planning and control. Different divisions in the organization can further have simple centralized or functional designs, depending upon their size and activities. This type of organizational design is favoured when different kinds of products or services require different kinds of management. Modern organization designs Modern approaches to organizational design include project, matrix and adhocracy types. Project design Project design is also called the team or task force type. It is used to coordinate across departments for temporary, specific and complex problems which cannot be handled by a single department. This design facilitates inputs from different areas. Members from different departments and functional areas constitute a team, in which every member provides expertise in their area of specialization. Such a structure generally coexists with the more traditional functional designs. An illustration of project type of the organizational structure is given in Figure 2. Figure 2. A Project-type organization Matrix Organization The matrix design blends two different types of designs, namely project and functional organizational designs (Kolodny, 1979). Since the project type of organizational design is not considered stable, the matrix design attempts to provide permanent management structures by combining project and functional structures. The main advantage of this combination is that the matrix design balances both technical and project goals and allocates specific responsibilities to both. Technical goals refer to how well work is done, while project goals relate to issues such as type of work to be done and its costs. Figure 3 shows a very simplified matrix organization design in which department heads have line authority over specialists in their departments (vertical structure). Functional specialists are assigned to given projects (horizontal structure). These assignments are made at the beginning of each project through collaboration between appropriate functional and project managers. Figure 3. Matrix organizational structure Matrix organizations are not without their problems (Davis and Lawrence, 1978): • Responsibility and jurisdiction are not clearly defined in matrix organizations. Bosses are also not clearly identified. Consequently, matrix organizations could lean towards chaos and disorder, and even lead to power struggles unless power between line and project manager is skilfully balanced. • Within the organization, matrix organizations may encourage the formation of cliques since all decisions are made in a group. This could reinforce group loyalties and create inter-group conflicts. • Matrix organizations need more human resources, particularly during initial periods. This means higher overheads and increased expenditure. • Matrix organization forms are usually found at the lower level of the organization. Adhocracy Adhocratic structures are also called 'free form' or organic organization structures. They stress managerial styles which do not depend upon formal structures. They are well suited for complex and non-standard work and rely on informal structures. An adhocratic structure is flexible, adaptive and organized around special problems to be solved by a group consisting of experts with diverse professional skills (Robbins, 1989). These experts have decision making authority and other powers. The adhocratic Structure is usually small, with an ill-defined hierarchy. Such a design is suitable for high technology and high growth organizations where an arranged and inflexible structure may be a handicap. Figure 4 illustrates an adhocratic type of organizational structure. Figure 4. Adhocratic organizational structure Choosing the organizational structure Organization design is a continuous process. While a simple design is needed for simple strategies, complex designs are necessary when organizational strategies involve complex interactions. The choice of any type of organizational design should be in consonance with the organizational requirements, strategy and environment. The simple centralized and bureaucratic organizational design based on functional departmentation focuses on work and is thus better suited for getting work done efficiently. The team or project type of organizational design is appropriate where inputs from several functional areas are required. The divisional structure is appropriate if performance and results are to be assessed. Matrix and adhocratic designs focus on coordination and relationship.