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Rational Organization

Rational Organization

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Published by: simply_coool on Jul 23, 2009
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LESSON 22:
RA
TIONAL ORGANIZA
TION
CHAPTER5:
INDIVIDUALINTHEORGANIZATION
 The topic for today’s discussion is Rational Organization.
Pointstobecoveredinthislesson:
 Traditional model of the organization: the organization as a“rational” structure
Employee’s duties towards the firm
Employer’s duties towards the employee What are the main problems faced by the employees in theorganization or what are the problematic characteristics of Business Organizations? Can you list down some of theseproblems on a piece of paper and then start analyzing what typeof organization are we talking about. The most problematic characteristics of organizations:
 The alienation experienced by workers doing repetitive work.
The feelings of oppression created by the exercise of authority.
 The responsibilities heaped on the shoulders of managers.
 The power tactics employed by managers anxious to advancetheir career ambitions.
 The pressure felt by the subordinates and superiors as they both try to get the jobs done.
Health problems created by unsafe working conditions.
Conflicts of interest created by an employee’s allegiance toother causes.
 The absence of due process for non-unionized employees.
Invasion of privacy by a management’s legitimate concern toknow its workers. This list could go on and on…………………………………..In this lecture I am going to explain the above-mentionedproblems and other problems raised by life within businessorganizations.In the next lectures we will discuss the two main ethical issuesraised by this more recent “political” analysis of the firm:employee rights and organizational politics then we will discussa very new view of the organization: the organization as anetwork of personal relations focused on caring.
Rational Organization
 The more traditional “rational” model of a business organiza-tion defines the organization as a structure of formal (explicitly defined and openly employed) relationships designed to achievesome technical or economic goal with max-imum efficiency.E. H. Schein provides a compact definition of an organiza-tionfrom this perspective:
 An organization is the rational coordination of theactivities of a number of peo-ple for the achievement of some common explicit purpose or goal, through di-visionof labor and function and through a hierarchy of authorityand responsibility.
If the organization is looked at in this way, then the mostfundamental re-alities of the organization are the formalhierarchies of authority identified in the “organizational chart”that represents the various official positions and lines oauthority in the organization. At the bottom of the organization is the “operating layer”:those em-ployees and their immediate supervisors who directly produce the goods and services that constitute the essentialoutputs of the organization. Above the operating layer of laborers are ascending levels of “middle managers” who directthe units below them and who are in turn directed by thoseabove them in ascending formal lines of authority. The plantmanager quoted above worked within these middle levels of the organization. At the apex of the pyramid is “top manage-ment”: the board of directors, the chief ex-ecutive officer, andhis or her staff. The pictorial description of the hierarchy of an organization isgiven below:
BoardofDirectorsPresidentV.P.ResearchV.P.ManufacturingV.P.MarketingPlantManager Operatinglayerthatistheworkers
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 The rational model of an organization supposes that mostinformation is collected from the operating layers of theorganization, rises through the vari-ous formal managementlevels, each of which aggregates the information, until it reachestop management levels. On the basis of this information the topmanagers make general policy decisions and issue generalcommands, which are then passed downward through the formalhierarchy where they are am-plified at each managerial level untilthey reach the operating layer as detailed work instructions. Thesedecisions of the top managers are assumed to be de-signed toachieve some known and common economic goal such asefficiency, productivity, profits, maximum return on investment,and so on. The goal is defined by those at the top of the hierarchy of authority who are assumed to have a legitimate right to makethis decision.
 What is the glue that holds together the organization’smany layers of employees and managers and that fixesthese people onto the organization’s goals and formalhierarchy? Contracts.
 The model conceives of the employee as an agent who freely andknowingly agreed to accept the organization’s for-mal authority and to pursue its goals in exchange for support in the form of a wage and fair working conditions. These contractual agreementscement each employee into the organization by formally defining each employee’s duties and scope of authority. By virtue of thiscontractual agreement, the employee has a moral responsibility toobey the employer in the course of pursuing the organization’sgoals, and the organization in turn has a moral responsibility toprovide the employee with the economic supports it haspromised. For, as we have already discussed at some length, when two persons knowingly and freely agree to exchange goodsor services with each other, each party to the agreement acquires amoral obligation to fulfill the terms of the contract.Utilitarian theory provides additional support for the view thatthe employee has an obligation to loyally pursue the goals of thefirm: Businesses could not function efficiently and produc- tively if their employees were not single--mindedly devoted topursuing their firm’s goals. If each employee were free to use theresources of the firm to pursue his or her own ends, chaos would ensue and everyone’s utility would decline.
The basic ethical responsibilities that emerge from these“rational” aspects of the organization focus on two reciprocalmoralobligations:
1. The obligation of the employee to obey organizationalsuperiors, to pursue the or-ganization’s goals, and to avoidany activities that might threaten that goal, and2. The obligation of the employer to provide the employee with a fair wage and fair working conditions. These duties in turn are presumed to be defined through theorganization’s formal lines of authority and through thecontracts that specify the employee’s duties and working conditions. We will examine these two reciprocal duties in thenext lectures.Hope the concept of this type of organization is clear to all of you. Rational Organization means following both the ap-proaches: Top down and bottom up. Bottom up approachmeans collecting information from the workers or the operating level of the organization and it goes up the ladder, all thedifferent levels add information expected from their departmentand finally it reaches the top level for the decision making process. Top down approach means the Top level takes a decision basedon the above-received information and then this decision goesdown the hierarchy. In Rational Organization hierarchy plays amajor role.
Overview
Concept of Rational Organization - an organization is therational coordination of the activities of a number of peo-ple for the achievement of some common explicit purposeor goal, through di-vision of labor and function andthrough a hierarchy of authority and responsibility.
Activity
 What is a Rational Organization? Discuss the role of hierarchy in a Rational Organization?
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