Organizational Behavior Zmf 1 PDF

Organizational Behavior Zmf 1 Introduction Why do we have organizations? Risk considerations Historically there are a few reasons why we have organizations: - We think it is useful to have them -> because they reduce risk. - Earlier in history they send ships to acquire goods. This was quite risk...

Organizational Behavior Zmf 1 Introduction Why do we have organizations? Risk considerations Historically there are a few reasons why we have organizations: - We think it is useful to have them -> because they reduce risk. - Earlier in history they send ships to acquire goods. This was quite risky, because of Pirates -> so to minimize the risk of ending without any goods we prefer getting 100 goods from 100 different ships. - This phenomenon also appears today. For example, we have the possibilities to buy just part of a firm, and not the whole -> we reduce risks. Efficiency considerations Because we have Organizations, we can produce a lot more. We produce even a bit more than we should, because of sustainability reasons. Advantages of division of labor and specialization Not every worker has the same abilitys, so with work division, we gain efficency, because everyone can do the one thing in the organization he is best in Exchange and coordination as the consequence of division of labor - Division of labor makes exchange and coordination paramount among the members of the organization: o Within an organization: Employees from the production department forward parts to the next employees in the supply chain; employees from product development and marketing need to exchange ideas and information. o Between organizations: A company sources parts and tools from a supplier and delivers her own products to the next company. - Exchange and coordination requires times, effort, and money. - Parts of the gains of division of labor is lost in the process -> transaction costs Organization can address two different meanings: Instrumental: - The organization is a means to an end with regards to the solution of an organizational problem. - A company has an organization. Institutional: -> We are having an institutional sight of organizations - The organization is a social construct that involves several distinctive individuals with individual and common interests. - A company is an organization. 1 Classical thoughts about the organization Metaphors involving the organization prominently featured the machine during the age of classical theorizing - "In the middle between the unfathomable and the self-evident, the metaphor creates the most knowledge” (Aristotle in Rhetoric, quoted in Morgan, 2018). -> how we talk affects the way we‘re thinking - Metaphors are a paraphrase for a general process using an image, where A is considered B. - The influence of the metaphor on language and communication has been subjected to a detailed analysis by Lakoff and Johnson (1980) -> worth reading! The world as a machine - Elements of a mechanistic theory first appear in the ideas of the Greek "atomists" between the 5th and 3rd centuries BC. - Mechanistic thinking influenced humanity well into the 20th century. o Within his physics, Isaac Newton developed the theory of the universe as a celestial machine. o Many scientists used machines as a means of understanding nature. o Aristotle used mechanistic principles to understand the movement of animals. o Archimedes and Galilei used mechanical devices to understand mathematics and physics. o Galileo strove for a science in which all explanations of reality were based on physical principles. o Einstein: "God does not play dice with the universe". o Laplace's demon: An intelligence, knowing the initial state and the laws of nature, could predict everything perfectly Humans as machines in the philosophy of René Descartes - Strong influence of mechanistic ideas on theories about the human mind as well as the nature of knowledge and reality. - Descartes separated mind and body, and his theories were also based on the atomism of the ancient Greeks. - Descartes believed that the material world could be explained by the mechanical interaction and movement of corpuscles, created and set in motion by God. - Plants and animals as superior machines in Descartes' philosophy. - Man was also regarded as machine-like, but differed from animals by his ability for complex language and logical deduction. - Descartes' ideas were developed to the extreme by the materialist Julien de LaMettrie (L'Homme Machine, 1748, Man is a machine). - Human behavior can be understood mechanistically. - LaMettrie was often sent into exile but was kindly received at the court of Frederick the Great (will be relevant later...). Humans as machines within behavioristic psychology and economics - Psychological behaviorism of the 1950s revisited human ideas as a predictable machine. - Human beings are the product of their environment (stimulus-reaction psychology). o B. F. Skinner showed his operand conditioning in animal experiments. o Pavlov showed classical conditioning (dog studies). o Pareto transferred mechanistic ideas to theories related to economy, state and society. Mechanistic thinking also influenced many organization theories - Classical management theory (Fayol, 1949; Mooney & Reiley, 1931; Gulick & Urwick, 1937) - Scientific Management (Taylor, 1911) - Bureaucratic organizations (Weber, 1921). ➔ Criticism comes from many thinkers of the 20th century (perhaps most prominently Marx). The origin of mechanistic models of the organization - Organization as an instrument for achieving goals, has its origin in „Organon“ (Greek) meaning tool or instrument - The earliest formal organizations were instruments for achieving objectives (pyramid building societies, churches, armies). 2 - With the industrial revolution, the number of operational organizations grew. - Machine metaphor was central. - Economic theories such as those of Adam Smith (1776) were developed just at this time. - The decision-making ability of the workers was constantly reduced in favor of control by machines and foremen. - Central role model: Military organization (Frederick the Great, see above) - Reduction of the human being to an input factor (labor: human, capital: machine). - Industrial production adopted strategies from the military (e.g. staff functions). - Organization was thought "from the machine". - In 1801, the first demonstration of mass production by Eli Whitney (Winchester rifles) took place. Bureaucracy theory of Max Weber (1864-1920) - Main concern: Being able to systematically describe, explain and understand the spread and consolidation of state administrative structures. - Core statement: Rules are more efficient than case-by-case analysis. -> it is declared very clearly, but that does not mean it is fair - Features of bureaucracy: Acting according to rules; keeping records; job holders are experts - Proposition: Bureaucracy is superior to other organizations because it is reliable. - Organizations are command and obedience associations - Bureaucracy is the place of legal rule (conditioned by rules); belief in the legitimacy of rules is based on the legitimacy of a "set order" and leads to obedience. ➔ Bureaucracy works best when we think of humans as mechanical objects -> So it has its problems, because the world is in fact not a machine! We have to reconsider individual situations because having a fix system, can be unfair for some. Classical management theory (Fayol, 1949) - Main concern: Coordination of the entire company, department formation - Means and methods: o Structuring the management activities into the five core tasks of planning, organization, management, coordination and control and their precise description. o Promotion of administrative training through the postulation of 14 "general administrative principles", in particular: o the principle of the unity of management and the unity of the assignment of tasks (single line system) o the principle of congruence of tasks, competences and responsibilities o Communication runs via hierarchy; in exceptional cases horizontal communication o the principle of the necessity of staff specialists Taylor‘s Scientific Management (Taylorism) - Founded by Frederick Taylor (1856-1915) - Analysis of individual work processes in order to determine the optimal type of implementation - Basic assumption: Man thinks and acts rationally and tries to maximize his economic advantages. - Taylor replaces diffuse empirical knowledge with a scientific method: the experiment. - one-best way principle - Core principles: - o Separation of manual and mental work with precise planning; Goal: unskilled workers should be able to carry out most of the work. o Function master system (multi-line system): Division of the master tasks into different function masters for work preparation, execution and supervision. o Money as a motivating factor o Organizational: Scientific Management is the starting point for the development of flow production at Ford's plants in 1918 for the production of the model The term "Taylorism" has a rather negative connotation: alienation of work and neglect of the social dimension. 3 Some ground rules of classical management theories (from Morgan, 2018) - uniformity in the placing of orders - single-line principle - span of control - Staff and line - Initiative - division of labor - authority and responsibility - centralization of authority - discipline - subordination of the individual interest to the general interest - constant personnel - community Similarities among classical management theories - Management as a process of planning, organization, instruction, coordination and control. - Basis for many management practices o MBO (Management-by-objectives) o PPBS (planning, programming, budgeting systems) - Rational planning and control - Theorists combined knowledge from the military field and engineering. - Hierarchically Structured Organizations - Precisely defined official channels - Orientation to machines ➔ Key question of this lecture: In how far does this make sense psychologically? What is the perfect organization from an employee perspective? Typical organizational structure of a manufacturing firm Checklist when evaluating service personnell in a fast-food chain 4 Strength and Weaknesses of the mechanistic views of the organization Strength Weaknesses - Organization as a framework for clearly defined actions - Underestimation of the human aspect - Coordination and control interconnected - - Clear structuring of operations Underestimation of the complexity of organizational tasks - Clearly defined roles for employees - Mechanization only possible for simple, deterministic tasks - Safety from arbitrary behavior - Difficulties in adapting to new environmental conditions - High precision and coherence of organizational behavior - No focus on innovation - High efficiency - Little flexibility - Institutionalized passivity - "Alienation" of the human being (Critique by Karl Marx) - Mechanistic organization does not do justice to the calibrated need structure of humans. Criticism also comes from the arts: Charlie Chaplins „Modern Times“ ➔ Short movie how Chaplin makes fun of the modern times 5