ORGANISATION & MANAGEMENT

Topic 1: Historical perspective

Berlin, London, Madrid, Paris, Turin
2022/2023

(Version 24-06-2022)
Getting to know your professor
Dilan Aksoy Yurdagul - daksoy@escp.eu

PhD in Business Administration and Quantitative Methods, UC3M, December 2013

• Spring 2012 Research Intern – LUISS Guido Carli University of Rome

• Fall 2012 Research Intern – University of Washington in Seattle

• 2014 – 2015 Assistant Professor – Rennes School of Business

• 2015 – 2021 Visiting Professor – University of Carlos III, Madrid

• 2022 – Present Assistant Professor – ESCP Business School

Research interests: Open and User Innovation, Business Strategy, Technology Management, AI-assisted innovation

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Objectives of Today’s Session

• To understand the organization of the course sessions

• To get a perspective on the historical evolution of organization and management
• To understand the conceptual and theoretical basis for the course and its limitations

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How you will be assessed
50% FINAL EXAM – November 15th (exact hour to be determined)

• You will receive an exam in classroom that incorporate

• Open questions (based on a newspaper excerpts) – 70%
• Multiple choice questions (based on the class material we cover during our sessions) – 30%

20% INDIVIDUAL QUIZ – It will take place on the 4th session of the course (Oct 10th to 13th)

• You will receive an individual quiz in classroom (via BB Collaborate) that incorporate
• 4-5 multiple choice questions (based on the class material we cover during our sessions)

30% GROUP PROJECT (presentation and report) – On the last session of the course between Oct 24th and Oct 27th (during class hour)

• You will be expected to deliver an oral group presentation that

• will last 10 minutes maximum (a copy of the slides will be sent to the instructor by email before the presentation).
• analyses a newspaper article/case whereby you will apply theoretical frameworks of the course for your analysis

• You will be also expected to hand in a short report – max 2 pages

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Organisation & Management Overview
INTRODUCTION

Historical perspective of
Organizing & Managing

DESIGNING ORGANIZATIONS

Work Structure Culture

MANAGING ORGANIZATIONS

Power &
Incentives Decision Making
Legitimacy

Dilan Aksoy-Yurdagul - daksoy@escp.eu

Historical Perspective Overview

Introduction

Focus 1: Focus 2: Focus 3:

Defining the field Founding fathers Taylorism today
of study

Conclusion

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Historical Perspective Overview

Introduction

Focus 1: Focus 2: Focus 3:

Defining the field Founding fathers Taylorism today
of study

Conclusion

7
Introduction
Perspective and aims of the Organization & Management course

Most courses within a business degree are:

• Specific to one function or field of expertise (marketing / finance / HR, information systems, etc.)
• Oriented towards the acquisition of some applied technical skills (financial valuation, designing business plan, mkg mix, etc.)

By comparison, the Organization & Management course:

• Adopts a transversal perspective: relevant for anyone or any function, as well as for a manager or a worker being managed.
• Covers key concerns for top managers:
…When and how to transform organizational culture / structure?
…How to make decisions?
…How to analyze conflicts and manage power relationships within teams?

The objectives of the course are to sharpen your understanding of management & organizations’ diversity and complexity…
• Through theories and analytical frameworks
• In connection to real life managerial situations

This course does not provide recipes or ready-made solutions for good management, but ways to boost your managerial intelligence,
wisdom and self-judgment.

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Introduction
Analysing complex organizations: A key managerial competency

“Very quickly, when managers reach their thirties,

professional potential and trajectories cease to be
driven by mere technical competencies. Those who
emerge out of the crowd are able to go beyond
technical considerations and managerial fads. […] A
key issue is to develop a fine grained understanding
of complex organizational phenomena”

Audencia & Essec (2014) report for Les Echos et l’Institut de l’Entreprise

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Introduction
Overview
ORGANIZATION &
MANAGEMENT

“Organization & How the organization is

Management” at ESCP structured, coordinated,
Business School is one and transformed
of the courses studying
human dimensions in
PSYCHOLOGY &
business MANAGEMENT
HUMAN RESOURCE
MANAGEMENT

Individual Formal policies

Interpersonal Practice and systems
Group behaviour Evaluation

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Introduction
Course objective: Understanding for acting!

Improve your understanding of organizations:

• Characterize different organizational forms and their culture
• Develop analytic skills to understand organizational mechanisms (power, incentives, decisions)

Improve your managerial skills:

• Formulate diagnosis and propose actions
• Anticipate unintended / side effects, and make more informed decisions

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Introduction
Those who succeed are those ...

…who analyse the context and who know how to adapt to it,
…who understand how decisions are made, to better channel their ideas to
decision makers
…who detect possible areas of conflict to offset them
…who know how to anticipate the unintended consequences of the
reorganization of their services

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Introduction
A basic starting point for the course

In a given organization of n individuals

n
Organizational performance
Perf (orga) = Perf (i) differs from the sum of individual
i=1
performances

Where does the difference come from?

• Quality of cooperation (interdependancies and complementarity)
• Culture
• Structure
• Decision making processes
• Organizational choices
• Etc.
Framing of individual performance to build collective performance!
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Historical Perspective Overview

Introduction

Focus 1: Focus 2: Focus 3:

Defining the field Founding fathers Taylorism today
of study

Conclusion

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Focus 1: Defining the field of study
Concepts & definitions

What is an organization?
• Talcott Parsons (1964) : “An organization is a set of social units essentially meant to reach specific objectives”
• Daniel Katz et Robert Kahn (1966) : “Organizations are open systems consisting of activities interwoven with individuals”
• Edgar Schein (1970) : “An organization is the rational coordination of activities of a certain amount of people in order to pursue common
implicit objectives and goals, through a division of work and functions, hierarchy and responsibilities”.
• Michel Crozier (1977) : "An organization is an answer to the problem of collective action".
• Howard Aldrich (1979) : "An organization is a set of activity systems orientated toward an end and maintaining their frontiers".
• Henry Mintzberg (1989) : “The organization defines itself as a collective action in search of a common mission”

Organizations consists in a stable collaboration of actors, following common general objectives through
division of work and functions, and through specific coordination mechanisms

Managers are in charge / responsible for the conduct of an organization (or some of its parts).
• Management is an action, an art, a way of conducting an organization and leading it, in order to plan its development and to control it
(Thiétard, 1960)
• Management is a set of processes through which those formally in charge of the organization (or a part of it) try to lead it, or at least to
orient it in its activities (Mintzberg, 1979)

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 Focus 1: Defining the field of study
Brief history of organization theory
A century long quest to balance “the things
of production” and “the humanity of
production”

Associated Reading:
Kiechel (2012) - The
management century,
Harvard Business Review

Associated Reading: Hatch

and Cunliffe (2013).
Organization
Theory: Modern, Symbolic,
and Postmodern
Perspectives; Chapter 2: A
brief history of
organization theory, p. 19-
53, Oxford University Press

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Source: Hatch and Cunliffe, 2013, p.20
Historical Perspective Overview

Introduction

Focus 1: Focus 2: Focus 3:

Defining the field Founding fathers Taylorism today
of study

Conclusion

17
 Associated Reading:
Kiechel (2012) - The
management century,
Focus 2: Founding fathers Harvard Business Review
Overview
Associated Reading: Hatch
and Cunliffe (2013).
Organization
Theory: Modern, Symbolic,
and Postmodern
Perspectives; Chapter 2: A
brief history of
organization theory, p. 19-
53, Oxford University Press

The economic relevance of the division of labor was first formalized by Adam Smith in 1776 (An Inquiry into the Nature and Causes of the Wealth of
Nations – description of the Pin Factory)

Large bureaucratic organizations became the dominant form of capitalism after the second industrial revolution, as part of a major social transformation
of our societies

Max Weber (1864 - 1920) Frederick Winslow Taylor (1856 - 1926) Henri Fayol (1841 - 1925)

Sociologist Max Weber related the
emergence of bureaucracy to a broader
movement of social transformation based on
rationality (rather than tradition), and
analyzed the characteristics and foundations
of such modern bureaucracies
.
Taylor identified and promoted principles to Fayol formalized principles for managers
develop rational operations
Both Taylor and Fayol were
engineers. They favor a rational,
universal, and scientific approach to
management (« one best way »), who
should enable, in all situations, to
balance the interests of top managers
and operational workers

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Focus 2: Founding fathers
Max Weber (1864 - 1920)
Max Weber was a lawyer and then became professor in Heidelberg and Freiburg. His writings on organization represent only a fraction of his research
(e.g. “Protestant ethics and the spirit of capitalism"). He is considered as one of the founding fathers of sociology.

His writings on bureaucracy can be found in « Economy and Society » (1922), which develops the key weberian concepts on contemporary
capitalism.

While researchers were usually concerned with the reasons why individuals would break the rules, he tried to understand instead what
would makes them obey.

He identifies three types of legitimacy that make people obey to authority:

• Traditional legitimacy : authority is founded on tradition, customs, “because it has always been so”
• Charismatic legitimacy : authority is founded on the belief, devotion, dedication to a sacred/heroic leader
• Rational-Legal legitimacy : authority is founded on stable, explicit, fair, impersonal rules. It lies in the hands of those who are rationally considered
the most capable and qualified for exercising it

Only this third type of legitimacy can replace discrimination, arbitrary power, and obedience to one’s free-will by the establishment of a new system
where people obey to rational and fair rules, to the function rather than the individual. This type of legitimacy is incarnated into organizations which
Weber calls the bureaucratic type.

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Focus 2: Founding fathers
Frederick Winslow Taylor (1856 - 1926) (1/2)
Biographical elements :
• Taylor was born in 1856 in a wealthy Quaker family in Germantown, Philadelphia, Pennsylvania.
• In 1874, Taylor passed the Harvard Law entrance examinations with honors. However, due allegedly to rapidly deteriorating eyesight, Taylor chose
a different path.
• After a four-year apprenticeship, he became a machine-shop laborer at Midvale Steel Works in 1878. He was quickly promoted to foreman, shop
manager, and chief engineer.
• He got formal recognition as an inventor (Taylor authored 42 patents, designed the « one best way » for steel industrial cutting, and won a golden
medal at the Universal Exposition in Paris in 1900)
• After his experience at Midvale Steel, he settled as a consulting engineer for systematizing Shop Management and decreasing Manufacturing Costs
• He published after 1890; his main work, « Scientific Management », was published in 1911

During his experience as a Shop Manager, Taylor observed a “powerless hierarchy”:

• hierarchical control is not the best tool for efficient coordination
• workers were not working nearly as hard as they could (a phenomenon Taylor called « soldiering »), in order to avoid being caught by management
in a spiral of rising objectives without proportional wage increase. Interests between workers and managers were not aligned.
• Because they master a unique technical know-how (which managers do not master), workers have the power to select their own working
processes, regardless of efficiency concerns.

As a result, Taylor designed an efficient system for coordinating and optimizing production, founded on a strict division between design and
production, as well as specialization and standardization of tasks

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Focus 2: Founding fathers
Frederick Winslow Taylor (1856 - 1926) (2/2)
The Principles of Taylorism : specializing and standardizing work:

1. Taylor wishes to replace empirical and inefficient management by Scientific Management:

• Observation of 10 to 15 skilled worker highly trained in their work
• Division of Work into a sequence of tasks
• Timing of each task for each individual. Any gesture not contributing to the completion of task is removed
• The best method (generally the fastest) is defined as the One Best Way, i.e. a performance standard which must be followed by
each worker.

2. Scientific Management is completed by a selection system (« the right man in the right place ») and a wage system
founded on individual performance (with a possibility for workers to get an extra 30% to 100% of salary according to extra
performance).

3. Lastly, the organization is founded on a form of supervision that is strictly separated from production, and founded on
two elements:
• Direct supervision from four different foremen, each in charge of a specific functional task. Each worker has several hierarchical
bosses.
• A centralized and powerful department, in charge of working methods, i.e. to prepare work, execution, hiring, paying and
discipline
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Focus 2: Founding fathers
Henri Fayol (1841 - 1925)
Fayol was a French engineer from the École des Mines de St Etienne, and became the General Manager of the Comentry-Fourchambault
company, mining coal and transforming metal. Within a few years, he brought this company back to profits.

After his successful experience as a top manager, he published a book in 1916 (“Administration Industrielle et Générale”). The book is
considered as one of the first book on management. Its influence has been very strong in Europe and in the United States.

Whereas Taylor argued for a one best way in production systems, Fayol foresees the possibility for rational principles for the organization
as a whole at each different levels.

Fayol identifies 6 different management functions within the company:

• Technical: production, processing, manufacturing
• Commercial: purchases, sales and exchanges
• Finance: fund raising and asset management
• Security: property and people protection
• Accounting: inventory, balance sheet, P&L, statistics
• Administration: planning, organizing, leading, controlling.

Saw the need for delivering systematic training to managers

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Historical Perspective Overview

Introduction

Focus 1: Focus 2: Focus 3:

Defining the field Founding fathers Taylorism today
of study

Conclusion

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 Focus 3: Taylorism Today
Why the ‘Fourth Industrial Revolution’ Looks Much Like the First

• “Seen from one angle, “The Fourth Industrial Revolution” is a marvel of enlightened scientific objectivity. It promises
to replace obsolete habits and mind-sets with frictionless, data-driven solutions. Unshackled from analogue-era
limitations, organisations and employees alike should be freer than ever to follow pathways to their own flourishing.”

• “So far, it hasn’t exactly worked out that way. At worst, waves of technological disruption have the potential to
dehumanise business, both literally and figuratively. The literal level consists of automation that may put as many as
half of all jobs at risk in the coming years. (The COVID-19 crisis adds a dangerous new wrinkle, as the system’s
insufficiencies – of leading and organising – are producing flagrant failures to safeguard human lives.) But algorithmic
efficiencies can also exert a more insidious squeeze upon the soul of the organisation. Increasingly, employees
are dancing breathlessly to a manic tune orchestrated by machines – with ruthless penalties for those who fall
behind."

Associated Reading: Kessler 2020 - Why the

Fourth Industrial Revolution Looks Much Like the
First - INSEAD Knowledge

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 Focus 3: Taylorism Today
Digital Taylorism

• “Taylor’s appeal lay in his promise that management could be made into a science, and workers into cogs in an
industrial machine.”

• “The best way to boost productivity, he argued, was to embrace three rules: break complex jobs down into simple
ones; measure everything that workers do; and link pay to performance, giving bonuses to high-achievers and sacking
sluggards.”

• The “new version of Taylor’s theory starts with his three basic principles of good management but supercharges them
with digital technology and applies them to a much wider range of employees —not just Taylor’s industrial
workers but also service workers, knowledge workers and managers themselves.”

• “In Taylor’s world, managers were the lords of creation. In the digital world they are mere widgets in the giant
corporate computer.”

Associated Reading: The Economist (2015) -

Digital Taylorism 25
Focus 3: Taylorism Today
Example: Amazon

2016 invented employee tracking wristbands

• To locate employee’s location in the warehouse
• Use vibrations to nudge the employees‘ hand to the correct direction

Amazon warehouse working environment

• Over hundreds of packages per day
• 1 package to be handle for every few seconds
• Penalized on point system
• Fired if too many points
• Employees get rewarded for $500 to report on their colleague

Associated Reading: Mcclelland (2012) I Was a

Warehouse Wage Slave (Mother Jones)

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Historical Perspective Overview

Introduction

Focus 1: Focus 2: Focus 3:

Defining the field Founding fathers Taylorism today
of study

Conclusion

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Conclusion
I can…

… explain the evolution of the Organisation & Management

research field.
… explain the writings and thoughts of the three founding fathers of
the field.
… explain how Taylorism is still present today.

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ORGANISATION & MANAGEMENT
Topic 1: Historical perspective
Berlin, London, Madrid, Paris, Turin
2022/2023

(Version 24-08-2020)