The Evolution Of

Organization Theory
Chapter 2

Session Agenda
Describe the Framework of Evolution of
Management Thought
Describe briefly the contributions of type 1
classical theorists
Describe the impact of Hawthorne Study on the
development of Type 2 Theorists or Human
Relations School
Discuss the concept of Contingency school or
Type 3 theorists
Describe briefly the main concerns of type 4
theorists

Developing Frame work

1.
a.
b.
2.
c.
d.

There are two underlying dimensions in the

evolution of organization theory and each
dimension in turn has opposed perspective
Organizations are systems
Prior to 1960 tended to be dominated by
closed system perspective
Beginning 1960, O.T began to take on
distinctly open system perspective
Deals with the ends of the organization
structure
Rational perspective emphasizes that
structure of an organization is conceived as a
vehicle to specifically achieve objectives
Social Perspective emphasize that
organization structure is primarily the result
of conflicting forces by the organizations
constituents who seek power and conflict

Evolution of Contemporary Organization Theorists

Approximat 1900 e Time
1930
Frame

19301960

1960 1975

1975 -

Systems
Perspective

Close

Close

Open

Open

Ends
Perspective
Central
Theme

Rational

Social

Rational

Social

Mechanical
Efficiency

Contingency
Frame work

Power and
Politics

Theoretical
Classification

Type 1

People and
human
relations
Type 2

Type 3

Type 4

Type 1 Theorists
Classical School
Developed universal Principles or
models that apply in all situations
Each perceived organization as
closed system to achieve goals
efficiently

Taylors Views On Problems of

Productivity
Matter of ignorance on part of
management and labor
Both dont know what constitutes a
Fair day work and Fair Pay
Both concerned too much with how
to divide profits that arose from
productivity and not enough with
increasing productivity

The Labor Question

1.
.
2.
>

Soldiering the real cause of low

labor productivity
Types of Soldiering
Natural Soldiering
Natural Tendency and instinct of
men to take it easy
Systematic Soldiering
Result of inherent relationship
with other men

Reasons for Systematic Soldering

1.
2.
3.
.

.
.
.

Natural Soldering could be overcome by a manager

able to inspire or force workers to come up to the
mark
Systematic soldering:
Work faster would throw large number of workers out
of work
The defective management systems then in use
forced workers to work slowly to protect their own
interests
Adherence to rule of thumb work methods
Taylor placed blame on managers and not workers
because it was management job to design the jobs
properly and to offer the proper incentives to
overcome their soldering
A daily or hourly wage system encouraged soldering
because pay was based on attendance and position
not effort
To work hard brought no rewards and actually
encouraged lazy worker
Piece rate system practiced at that time was defective
because standards were not set properly

Determining Fair Days Work and Fair Days Pay

Fair Days Work

Through Time and Motion Study
determine what workers can do with their
equipment and materials.
Develop a file of elementary movement
and times
Fair Days Pay
Set standards and rates scientifically
Use differential piece rate system

Summary of Taylors Work

Develop science for each element of
persons work
Scientifically select, train, teach and
develop workers
Cooperate with workers
Divide responsibility between
management and workers

Administrative Theorists

1.
2.
3.
4.
5.

Henri Fayol
Primary emphasis on establishing broad
administrative principles applicable to higher
management level
Definition of Management
Management is an overall function of conducting an
undertaking towards its objectives by trying to
make best possible use of all resources at its
disposal and to ensure smooth working the five
essential elements
Planning
Organizing
Command
Coordination
Control

Elements of Management
1.
.
.
1.
2.
3.
.
i.
ii.
iii.
iv.
.
.

Planning:
To Fayol, managing meant looking ahead and foresight
Any plan of action rested upon:
The firms resources
The nature of present work in progress
Future trends in all activities of the firm whose occurrence
could not be determined
A good plan of action has the characteristics of:
Unity one overall plan followed by specific plans for each
activity
Continuity both long range and short range
Flexibility to bend to unexpected events
Precision eliminating as much guess work as possible
Fayol advised series of separate plans which would
altogether comprise one entire plan for the firm
Fayols stress on long term plans were unique contribution
to management thought and his ideas are as important
today as hey were for his own time

Elements of Management
2. Organizing.
Included provisions for the structuring of activities and
relationships as well as the procurement, evaluation,
and training of personnel
As this element evolved later writers split Fayols
organizing elements into two elements organizing and
staffing
In organization theory, the organizational pyramid is
product of functional growth
Functional growth is horizontal in that more people are
added to functions a s the organizational workload
expands
Scalar growth is vertical and caused by the need to
add layers of supervision to direct and coordinate
lower echelons

Elements of Management
Organizing (Contd. )
Fayal built his functional and scalar growth
processes on the basis of 15 workers to a foreman
and a ratio of 4 supervisors to every other superior
Fayol advocated a relatively narrow span of
management control
The functions of staff were to:
i. Aid in carrying out the managers personnel
personal duties like correspondence, interviews,
interviews, conferences, etc.
ii. To aid in liaison and control
iii. To gather information and assist in formulating
future plans
iv. Search for improvements

Elements of Management

The function of staff was unique to

Fayol;
He postulated that operating
managers had neither the time nor
energy to devote long-term
research
The staff freed of daily cares could
search for better work methods,
perceive changes in business
conditions, and concern itself with
long range met

Elements of Management
4. Coordination
. Coordination was meant to harmonize all the activities of
a concern so as to facilitate its working and its success
. To Fayol, coordination was a balancing act of keeping
expenses to revenues, of maintaining equipment to meet
production goals, and insuring that sales and production
were consonant
. Organization and planning facilitated coordination by
specifying duties, establishing schedules, and focusing
responsibilities on the objectives
. Staff personnel ( liaison officers) should be used to
enhance coordination in the interim between conferences
and in the care of establishments located far away
. The liaison position supplemented coordination but did
not replace the direct responsibility of the manager

Elements of Management
5. Control
. Control consisted of verifying whether every thing occurs
is in conformity with plan adapted, instructions issued,
and for principles established
. The objective of control was to identify errors in order to
correct them and to prevent recurrence
. Effective control was based on prompt action, followed by
sanctions if necessary
. Control also had an integrative effect on all the four
elements because:
i. Stimulated better planning
ii. Simplified and strengthened the organization
iii. Increased efficiency of command
iv. Facilitated coordination

Fayols Fourteen Principles

1. Division of work:
2.
Authority:
3. Discipline
4. Unity of command
5.
Unity of direction
6. Subordination of individual interests to
general interest:

7.Remuneration of personnel
8. Centralization
9. The scalar Chain
10.Order
11. Equity: procedural justice
12. Stability of tenure of personnel
13. Initiative
14. Espirit de corps

Criticism

Static Consideration
Does not explain the impact of
Dynamic Environmental Factors
and its resultant complexities
Dehumanization of organizations
Criticism of universal principles
Unity of command principle
Authority and responsibility may
not be open
Span of control restricted to five

Max Webers Bureaucratic Model

System Of Administration
Division of Labor
Authority and responsibility well defined
Positions organized in Hierarchy of
authority resulting in clear chain of
command
Members selected on basis of technical
competence
Officials appointed not elected
System and procedures for dealing with
work situations
Impersonality in interpersonal relations

EXHIBIT 2.4: WEBERS IDEAL

BUREAUCRACY

2-21

Types of Authority
Rational Legal
Traditional
Charismatic

Rational Legal Authority

Provides a basis for continuity of
administration
Person chosen on the basis of
competence
Legal means of exercising authority
Function necessary to accomplish
task

Assessment of Bureaucratic Model

Functional consequences
Specialization
Predictability and stability
Rational
Dysfunctional Consequences
Rigidity
Impersonality
Displacement of objectives
Cost of control

Major assumptions of Classical Theorist

There is one best way

Rational Economic Man
Organization as Mechanistic System
Structuring and controlling Human
Participants
Management primary integrative force
and formal hierarchy the mechanism
for achieving coordination

Type 2 Theorists

Common Theme: Recognition of

the social nature of organization
View organizations as made up of
tasks and people ( Socio-technical
system)
Represent a human counterpoint
to Type 1 theorists
Commonly known as Human
relation or Behavioral school of
thought

Behavioral School

Hawthorne Experiments (Elton Mayo)

1924- 1927
Phase 1:
1. Illumination experiments
2. Relay room Experiment Small group of six
women
Variables studied: shorter working periods,
group incentive pay, and supervision
Results: productivity increased
Reasons: More freedom on job, No boss,
Setting their own work, Small group, the
way they were treated

Phase 2: Interviewing
Program

a.
b.

Non directive techniques

Complaints had two levels of content:
Manifest or material content
Psychological content or Pessimistic
Reveries
Conclusion:
New supervisor was to be more people
oriented, more concerned, less aloof and
skilled in handling social problems

Phase 3: Bank wiring Room Experiments

14 male operatives
The group job was to wire and solder of
equipment for general connecting
services
Conclusions:
Importance of group norms and standards
and the informal group
Group norms regarding rate of
productivity significantly influenced the
level of individual productivity
Informal authority of influential group
members often overrode formal authority
from the supervisor

Implications of Hawthorne
Studies
Identified that organizations are sociotechnical systems
Demonstrated the importance of
psychological or human factors on worker
productivity and morale
Signaled the criticality of certain variables
for worker satisfaction, autonomy on the
job, relative lack of need for the need for
close supervision, the importance of
receiving feedback on the direct
relationship between performance and
reward
Provided data and stimulus for group
dynamics, especially in work context

Type 3 Theorists
Neither mechanistic forces of
darkness nor the humanistic forces of
light could muster evidence that
their solution and only their solution
was right for all situations
The conflict between thesis and anti
thesis led to synthesis that provided
better guidance to managers
The synthesis was contingency
approach

Herbert Simon
Recognized in 1940 that Type 1principles
would have to give way to contingency
approach
Most classical principles were nothing
more than proverbs and contradicted each
other
Argued that organization theory needed to
go beyond superficial oversimplified
principles to a study of the conditions
under which competing principles were
applicable
Took 20 years before organization theorists
to effectively respond to Simon challenges

Katz and Kahns Environmental

Perspective

Daniel Katz and Robert Kahns book The social Psychology

of organizations was a major impetus towards promoting
the Type 3 open system perspective
Provided a convincing description of the advantages of an
open system perspective
Examined the relationship of an organization with its
environment and the need for an organization to adapt to
changing environment if they have to survive
Since Katz and Khans work numerous theorists like Burns
and Stalker, Emery and Trist, Lawrence and Lorsh have
investigated environment structure relationships
No current discussion of the organization theory would be
complete without a thorough assessment of environment as
an a major contingency factor influencing the preferred
form of structure

The Case for Technology

Research by Joan woodward,

Charles Perrow , and James
Thompson have shown the
importance of technology in
determining the appropriate
structure for an organization

The Aston Group and

Organization Size
Size as the major contingency factor in
influencing structure was championed by
University of Aston researchers
Large and small organizations have been
shown to have many common structural
components
The evidence suggest that certain of these
components follow an established as
organizations expand in size

Type 4 Theorists
Focuses on Political nature of organizations
March and Simons Cognitive limits to
Rationality ( Bounded Rationality)
Challenged the classical notion of rational or
optimum decisions
They argued that most decision makers due to
incomplete information, cognitive limitations,
conflicts, and time pressures select satisfactory
alternatives alternatives that were good enough
Only in exceptional cases would they be
concerned with discovery and selection of optimal
alternatives

Pfeffers Organizations as Political

Arenas
Henry Pfeffer model of organization theory
encompasses power coalitions, inherent
conflict over goals, and organization design
decisions that favor self interest of those in
power
Control in organizations become an end rather
than merely means to rational goals
Organizations are coalitions composed of
varying groups and individuals with different
demands
An organizations design represent the result
of power struggles by these coalitions
If one wants to understand why organizations
are designed the way they are, one needs to
assess the preferences and interests of those