Lec_03_Organizational Theory.pptx

02 ORGANIZATIONAL THEORIES, MODELS, SYSTEMS, STRUCTURES, & DEVELOPMENT Lecture Adapted from Mendoza Organization – derived from Greek word organon, which means “tool” – a tool people use to coordinate their actions to obtain something they desire or value to achieve a goal – a group of p...

02 ORGANIZATIONAL THEORIES, MODELS, SYSTEMS, STRUCTURES, & DEVELOPMENT Lecture Adapted from Mendoza Organization – derived from Greek word organon, which means “tool” – a tool people use to coordinate their actions to obtain something they desire or value to achieve a goal – a group of people who work together in an organized way for a shared purpose Organizational Theory – Set of propositions that explains or predicts groups how and individuals behave in varying organizational structures and circumstances 1. Classical Theory 2. Structural Theory 3. Neoclassical 4. Humanistic Theory 5. Modern Organization Theory 6. Open Systems Theory 7. Contingency Theory Organizational Theory 1. Classical Theory - emphasized the architecture of the organization rather than the processes by which it operated - there is a “right” structure for an organization - formal study of organizational theory appears to have begun when factories in 1700s popular in Great Britain - organizations exists for economic reasons and to accomplish productivity goals Organizational Theory 1. Classical Theory  Functional Principle – concept behind division of labor, that Principles: organizations should is, be divided into units that perform functions into areas similar 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; Each subordinate should be accountable to only one superior (unity of command)  Line/Staff Principle Line Functions: have primary responsibilities for meeting the major goals of the organization, like the production department Staff Function: support the line’s activities but are regarded as subsidiary in overall importance to line functions  Span-Of-Control Principle – refers to the number of subordinates a manager is responsible for supervising Large Span-of-Control produce flat organizations, Organizational Theory 1. Classical Theory A. BUREAUCRACY – introduced by Max Weber –rigid and systematic structure with formal legitimate authority – relationships are informal –developed as a form of social protest against the excesses of favoritism and nepotism that had characterized most organizations of the 20th century BUREAUCRACY 4 MAJOR FEATURES DIVISION OF LABOR – division of tasks into departmental functions DELEGATIONS OF AUTHORITY – lower-level employees report to higher-level employees * Micro-managers: incapable of delegating, try to take charge of everything SPAN OF CONTROL – number of positions who report to an individual Too large: unable to manage too many Too small: overabundance of supervisors managing few employees STRUCTURE/TOP-DOWN PYRAMIDAL ORGANIZATIONS – the number of levels, the height of the organization Hierarchical system of supervision is necessary if the division of labor is to be beneficial. BUREAUCRACY Organizational Theory 1. Classical Theory B. SCIENTIFIC MANAGEMENT – conceptualized by Frederick Taylor –provided framework he believed be useful in structuring would organizations –organizations is a machine whose focus is simply to run more effectively –Scientific Management school conducted time and motion studies and analyzed temperature, illumination, and other conditions of work, all the while looking at the effects of these conditions on productivity and efficiency. TAYLORISM: believes that there’s one best way to get the job done. – Conduct studies that gather data indicating what the fastest and most efficient method is, then implement that method. – Factory workers would be much more productive if their work was designed scientifically and focused on monetary rewards. SCIENTIFIC MANAGEMENT Organizational Theory 1. Classical Theory C. ADMINISTRATIVE THEORY OF MANAGEMENT –Henri Fayol: Father of Administrative Theory of Management, often called Process Theory/ Structural theory. – Focused on organization & structure of work tasks –Looked at how management & are organized within a workers business to allow for the of tasks. completion to management (worker – In contrast efficiency to scientific greater approach managerial efficiency) – Focuses on what managers can do –Top-down approach to organizational and authority efficiency structure for organization –Departmentalization Principle: the creation work of groups and functional departments where activities are distinct performed – Similar task functions should be grouped with the same department or unit Organizational Theory 1. Classical Theory C. ADMINISTRATIVE THEORY OF MANAGEMENT – Objective of Fayol’s principles was to guide managers to efficiently organize and interact with employees 5 FUNCTIONS OF MANAGEMENT 1.Planning – flexible in nature to for contingencies that arise in allow process. the ✓Forecasting future conditions, objectives, developing means setting attain objectives to 2.Organizi – structuring activities and organizing individuals within ng firm. the ✓ Recruiting Equipping, Training , – direct supervision of employees and motivating their 3. Commanding toward a common efforts objective. 4. Coordinating – identifying, arranging and scheduling all activities carried out by subordinates. 5. Controlling – constant supervision of activities to identify accomplishments or goals and objectives. Organizational Theory 2. Structural Theory – Harry Mintzberg proposed how organizations evolve reach a to 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 Organizational Theory 2. Structural Theory Seven Basic Parts of an Organization: 1.Operating Core – responsible for conducting basic work duties that give the organization its defining purpose; transform raw goods into a sellable products 2.Strategic Apex – responsible for the overall success of the entire organization; associated with executive leadership 3.Middle Line – ensures that overall goals set by strategic apex are being carried out by the operating core Organizational Theory 4. Technostructure – possess specific technical expertise that facilitates overall operation of the organization; accounting, HR, IT, law departments 5. Support Staff – aid the basic mission of the organization and typically includes the mailroom, security, and janitorial services 6. Ideology – belief system that compels commitment to a particular value; organizations should have singularly devoted to a particular mission, and all its actions are in pursuit if that mission 7. Politics – side effect of ideology, causes divisiveness and conflict; the basis is the use of power that is neither formally authorized or widely accepted in the organization Organizational Theory Structural Theory Organizational Theory 3. Neoclassical Theory –also known as Behavioral Theory of Organization, Human Relations, or New Classical Theory of Management –Adds a personal or human element to the study of organizations –Considers interrelationships between an organization’s requirements and the characteristics of its members – Origins go back to the findings from the Hawthorne Studies –“Neoclassical” connotes a modernization or updating of the original (classic) –Reveals that principles of classical theory were not as universally applicable and simple –Drew heavily on behavioral research that revealed Organizational Theory 3. Neoclassical Theory A. Elton Mayo’s Hawthorne Experiment – Conducted in Western Electric Company Hawthorne, Chicago –Study if the workers would be more productive depending on the levels of illumination in the factory – Increased productivity when lighting conditions improved –Workers’ motivation increased due to interest shown by the company in them and their well- being Organizational Theory 3. Neoclassical Theory B. Chester Barnard’s Comprehensive Theory of Behavior in Formal Organizations –People in executive roles must foster a sense of purpose, moral codes, ethical visions, and create formal and informal communication systems –People should cooperate, thus making no place for conflicts among workers Organizational Theory 3. Neoclassical Theory C. Herbert Simon’s Application of Classical Theories to current situations of his time – Contradicted Henri Fayol’s Administrative Management – Human Relations Movement: social and psychological factors are important in determining worker productivity and satisfaction – Efficient leaders are employee-centric, follow a participative democratic, and style – Behavioral Movement: proposes ideas how managers should behave to motivate the employees Organizational Theory 3. Neoclassical Theory D. MCGREGOR’S THEORY X AND THEORY Y –Protest against the impersonal propositions of classic organizational theory –Proposed that the beliefs that managers hold about their subordinates influence their behavior toward those subordinates. THEORY X – Managers believe that subordinate behavior had to be controlled. – Use punishments and rewards as mechanisms of control. THEORY Y –Managers believe that subordinates were active and responsible & would be more motivated w/o constraining managerial control. – Provide expanded responsibilities and challenges to subordinates. Organizational Theory 3. Neoclassical Theory E. Argyris’ Growth Perspective – Growth was a natural and health experience for an individual –Organizations that acknowledged and aided this growth would be more likely to prosper than those that are ignored or actively inhibited this growth – Passive to active organisms Organizational Theory 4. Humanistic Theory – organizational success in terms of employee motivation and the interpersonal relationships that emerge within the organization ▪Theory X and Theory Y (McGregor) – managers’ beliefs and assumptions about their employees determine how they behave towards those employees ▪Self-Fulfilling Prophecy – employees, over time, learn to act and believe in ways consistent with how managers think they act and believe Organizational Theory 4. Humanistic Theory Theory X -employees are viewed to be lazy, selfish, uninterested in work, lack in ambition, and not very intelligent - managers control and direct employees in order to make outputs - employees is passive and unresponsive to organization needs - most prevalent set of beliefs about employees from the birth of industry - lack of focus would lead to apathy and resistance Theory Y -much more humanistic and developmental orientation, emphasizing not only the inherent goodness, capacity, and potential of employees but also their readiness to develop those inherent characteristics -emphasizes management’s responsibility for nurturing those qualities and providing employees with opportunities to develop their inherently positive characteristics in the workplace - without unduly constraining organizational or managerial controls Organizational Theory 4. Humanistic Theory Motivation – the internal force that drives a worker to action as well as the external factors that encourage that action – ability and skill determines whether the worker can do the job, but motivation determines whether a worker can do it properly Organizational Theory 4. Humanistic Theory Three Individual differences traits that are most related to work motivation 1. Self-Esteem – the extent to which a person views himself as valuable and worthy 2. Intrinsic Motivation – they will seek to perform well because they either enjoy performing the actual tasks or enjoy the challenge of successfully completing the task Extrinsic Motivation – they don’t particularly enjoy the tasks but are motivated to perform well to receive some type of reward or to avoid negative consequences Work Preference Inventory – measures the intrinsic and extrinsic motivation Organizational Theory 4. Humanistic Theory Three Individual differences traits that are most related to work motivation 3. Needs for Achievement and Power – employees differ in the extent to which they are motivated by the need for achievement, affiliation, and power - Employees who have strong need for achievement are motivated by jobs that are challenging and over which they have some control, whereas employees who have minimal achievement needs are more satisfied when jobs involve little challenge and have a high probability of success - Employees who have a strong need for affiliation are motivated by jobs in which they can work with and help other people -Employees who have strong need for power are motivated by a desire to influence others rather than simply to be successful Organizational Theory 4. Other Humanistic/Motivational Theories A. Job Expectations Theory –a discrepancy between what an expected a job to be like and the employee reality of the job can affect and satisfaction motivation met, the employee might feel – When expectations from the job was – not Realistic Job Preview is really important unmotivated B. Hackman and Oldham's Job Characteristics Theory/Model - employees desire jobs that are meaningful, provide them opportunity to be personally responsible for the outcome of their work, and provide them with feedback of the results of their efforts - Jobs will have motivation potential if they allow employees to use a variety of skills and to connect their meaning, efforts is useful, or is appreciated by coworkers to anasoutcome well aswhich by others has in society - Job Enrichment: redesigning jobs to give workers greater responsibility in the planning, execution, and evaluation of their work, raises the level of responsibility Organizational Theory 4. Other Humanistic/Motivational Theories C. Abraham Maslow’s Need Hierarchy -employees would be motivated by and satisfied with jobs at any given their point in time if certain needs were met - As the person satisfies the a lower-level need, the higher need in the next hierarchy becomes the next strongest motivator remains so even if never and satisfied - Motivation can be shaped by human thoughts 1. Physiological Needs – food, air, water, shelter 2. Safety Needs – physical, psychological, and 3. financial needs 4. Belongingness/Social needs – interaction with 5. others 6. Ego Needs – recognition and success 7. Self-Actualization – highest potential Organizational Theory 4. Other Humanistic/Motivational Theories D. Clayton Alderfer’s ERG Theory – states that individuals can be motivated by multiple levels of need at the same time, and that the level which is most important to them can change over time ▪Individual’s priorities and motivations may be fluid and can move between existence, relatedness, and growth Organizational Theory 4. Other Humanistic/Motivational Theories E. Frederick Herzberg’s Two-Factor Theory – some factors seemed to cause job satisfaction and dissatisfaction a. Motivators – related to the work itself, the type of work, level of responsibility, and the chances for recognition, advancement, and b. Hygiene personal – related to the context achievement in which people perform the job, e.g., benefits, working conditions, type of supervision, salary, company policies ▪Eliminate job dissatisfaction by basic hygiene providing factors (compensated properly, and provided treated well, with job security) Organizational Theory 4. Other Humanistic/Motivational Theories F. David McClelland’s Achievement Motivation Theory – three needs are central to work motivation: needs for achievement, power, and affiliation Need for Achievement – drive to success and get the job done; love the challenges of work, task-oriented, preferring situations offering moderate levels of risk or difficulty Need for Power – need to direct and control the activity of others and to be influential - Personal Power: used toward personal ends - Institutional Power: power that is oriented toward organizational objectives Need for Affiliation – desire to be liked and accepted by others Organizational Theory 4. Other Humanistic/Motivational Theories G. Four-Drive Theory – emotions are the source of human motivation and that these emotions are generated through four innate and universal drives 1. Drive to acquire – seek out, take, control, and retain objects and personal experiences 2. Drive to bond – variation of the need for belonging and affiliation, motivates the people to cooperate and, essentially, for organizations and societies 3.Drive to Comprehend – need to know, discover answers to unknown 4.Drive to defend – protect ourselves physically, psychologically, and socially Organizational Theory 4. Other Humanistic/Motivational Theories H. Self-Regulation Theory - employee monitor their own progress toward attaining goals and then make the necessary adjustments: that is to self-regulate I. Reinforcement Theory – draws principles of operant conditioning and states simply that behavior is motivated by consequences ▪Operan Conditioning – employees will engage in t for which they are rewarded and avoid behaviors behaviors they are punished for which Organizational Theory 5. Modern Organization Theory – based on the concept that the organization is a system which has to adapt to changes in its environment – Organization is defined as a and designed structured process in which interact individuals for objectives 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 -offer an open-system view of an organization and recognizes its environmental interface -adopts multi-level and multi-dimensional approach, which considers both macro and micro aspects -3 basic elements: Components, Linking Processes, Goals of Organization -focuses on the internal dynamics of an organization’s structure and behavior - applicable to all situations 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 -enhances the motivation, self-efficacy, and skills of the employee, and it saves the time of the specialist and supervisor -very useful because of the trend of downsizing in favor of advanced equipment/machinery/gadgets - reduces lag time associated with topo many moving parts Situational (Contingency) Approach – based on the belief that there cannot be universal guidelines suitable for all situations, thus, different environment requires different organizational relationships for optimum effectiveness, taking into consideration various social, legal, political, technical, and economic factors - focuses on external determinants of the organization’s behavior and structure - works on the prescription which says that “it all depends” Organizational Theory 5. Open Systems Theory – Katz & Kahn’s Open Systems Theory –organization develop and change over time as a result of both external and internal forces 3 Key Elements of Open System Theory 1. Inputs – materials, human resources, raw energy, 2. Throughputs machinery – production processes, service, training 3. Outputs – products, services, knowledge Organizational Theory 5. Open Systems Theory – Organization 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 they 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) – Surviving open systems are characterized by a balance in energy exchange – Open systems move toward more specialized functions –Bringing the system together as a unified process is necessary for the system to continue Systems Theory Organizational Theory 6. Contingency Theory –there is no best way to organize a corporation, to lead a company, or to make decisions; – recognizes the crucial leadership role of the manage – “Best fit” and main concern is adaptability – “it depends” theories –imply that behavior must be selected to fit the circumstances –Departed from the one best way approach of the classic theories, best way depends on circumstances of the organization Organizational Theory 6. Contingency Theory A. Joan Woodward’s Contingency Model – for maximal performance, organizational 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 Organizational Theory 6. Contingency Theory 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) less formalized procedures, and decision-making at middle levels - (forOrganic Organization: unstable organization with a large span of environments) - control, 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 Organizational Theory 6. Contingency Theory 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 the key mechanism by the organization for used coordinating its functions and roles of people in the organization efforts the context in which the organization operates the priority level depends on the goals