CLASSICAL ORGANIZATION

THEORY
• Scientific Management approach
• Weber's Bureaucratic approach
• Administrative theory.

NEOCLASSICAL THEORY

MODERN ORGANIZATION
THEORY
· Systems approach
· Socio-technical approach
· Contingency or Situational approach
Taylor's scientific management approach
Four principles of scientific management for improving
productivity:
· Science, not rule-of-thumb
· Scientific selection of the worker
· Management and labour cooperation rather than conflict
· Scientific training of the worker

Taylor suggested that, to increase this level of trust,

· the advantages of productivity improvement should go to
workers,
· physical stress and anxiety should be eliminated as much as
possible,
· capabilities of workers should be developed through training, and
CLASSICAL ORGANIZATION THEORY contd……

Weber's bureaucratic approach

Principles of this approach:

4 Structure In the organization, positions should be arranged

in a hierarchy, each with a particular, established amount of
responsibility and authority.

5 Specialization Tasks should be distinguished on a

functional basis, and then separated according to
specialization, each having a separate chain of command.

6 Predictability and stability The organization should

operate according to a system of procedures consisting of
formal rules and regulations.
CLASSICAL ORGANIZATION THEORY contd……

7 Rationality Recruitment and selection of personnel

should be impartial.

8 Democracy Responsibility and authority should be

recognized by designations and not by persons.

Weber's theory is infirm on account of dysfunctions

(Hicks and Gullett, 1975) such as rigidity, impersonality,
displacement of objectives, limitation of categorization,
self-perpetuation and empire building, cost of controls,
and anxiety to improve status.
CLASSICAL ORGANIZATION THEORY contd……

Administrative theory
The elements of administrative theory (Fayol, 1949) relate
to accomplishment of tasks, and include principles of
management, the concept of line and staff, committees and
functions of management.
1 Division of work or specialization
2 Authority and responsibility
3 Discipline
4 Unity of command
5 Unity of direction
Administrative theory contd.

6 Subordination of individual interest to general interest

7 Remuneration of personnel
8 Blend of Centralization and Decentralization
9 Scalar chain
10 Order
11 Equity
12 Stability of tenure of personnel
13 Initiative
14 Esprit de corps
Administrative theory contd.

15 The concept of line and staff The concept of line and

staff is relevant in organizations which are large and
require specialization of skill to achieve organizational
goals. Line personnel are those who work directly to
achieve organizational goals. Staff personnel include
those whose basic function is to support and help line
personnel.
16 Committees Committees are part of the organization.
Members from the same or different hierarchical levels
from different departments can form committees around a
common goal. They can be given different functions, such
as managerial, decision making, recommending or policy
formulation.
Administrative theory contd.

17 Functions of management Fayol (1949) considered

management as a set of planning, organizing, training,
commanding and coordinating functions. Gulick and
Urwick (1937) also considered organization in terms of
management functions such as planning, organizing,
staffing, directing, coordinating, reporting and budgeting.
Neoclassical theory
Neoclassical theorists recognized the importance of
individual or group behaviour and emphasized human
relations. The classical approach stressed the formal
organization.
Principles of the neoclassical approach
1 The individual An individual is not a mechanical tool but a
distinct social being, with aspirations beyond mere
fulfillment of a few economic and security works.
Individuals differ from each other in pursuing these desires.
Thus, an individual should be recognized as interacting with
social and economic factors.
2 The work group The neoclassical approach highlighted
the social facets of work groups or informal
organizations that operate within a formal organization.
The concept of 'group' and its synergistic benefits were
considered important.

3 Participative management Participative management or

decision making permits workers to participate in the
decision making process. This was a new form of
management to ensure increases in productivity.
Modern theories
Modern theories tend to be based on the concept that the
organization is a system which has to adapt to changes in its
environment.
Some of the notable characteristics of the modern
approaches to the organization are:
 a systems viewpoint,
 a dynamic process of interaction,
 multilevelled and multidimensional,
 multimotivated,
 multidisciplinary,
 descriptive,
 multivariable, and
 adaptive.
Modern understandings of the organization can be broadly
classified into:
 the systems approach,
 socio-technical theory, and
 a contingency or situational approach.

The systems approach

The systems approach views organization as a system
composed of interconnected - and thus mutually dependent
- sub-systems. These sub-systems can have their own sub-
sub-systems.
The systems approach contd.

The organization consists of the following three basic

elements
(I) Components There are five basic, interdependent parts of
the organizing system, namely:

 the individual,
 the formal and informal organization,
 patterns of behaviour emerging from role demands of
the organization,
 role comprehension of the individual, and
 the physical environment in which individuals work.
(II) Linking processes The interaction between them is
contingent upon the linking processes, which consist of
communication, balance and decision making.

 Communication
 Balance
 Decision analysis

(III) Goals of organization The goals of an organization

may be growth, stability and interaction. Interaction
implies how best the members of an organization can
interact with one another to their mutual advantage.
Contingency Theory
is a class of behavioural theory that claims that there is no
best way to organize a corporation, to lead a company, or
to make decisions. Instead, the optimal course of action is
contingent (dependant) upon the internal and external
situation. Several contingency approaches were developed
concurrently in the late 1960s.

William Richard Scott describes contingency theory in the

following manner: "The best way to organize depends on
the nature of the environment to which the organization
must relate".
http://www.fao.org/docrep/w75
Principles of organizational structure

Specialization

Coordination
Unity of command
Scalar principle
Responsibility and authority principle
Span of control (Span of control refers to the number of
Specialized units of persons under one management ).
Departmentalization
- functional
- product
- territory
- process or equipment

Another important principle of organizational

structuring is whether decision making is delegated to
lower levels (de-centralized) or concentrated at the top
(centralized). Observe that organizations have different
blends of centralization and de-centralization.
Types of organizational structure

Classic organizational structure

Simple centralized design

Bureaucratic organization
Divisionalized organization (The divisionalized
organization refers to a multiproduct or service design. )

Modern organizational design

Project organization
Matrix organization
Designing organizational structures

Some important considerations in designing an effective

organizational structure are:

 Clarity The structure of the organization should be such

that there is no confusion about people's goals, tasks, style of
functioning, reporting relationship and sources of information.

 Understanding The structure of an organization should

provide people with a clear picture of how their work fits into
the organization.
 De-centralization The design of an organization
should compel discussions and decisions at the lowest
possible level.

 Stability and adaptability While the organizational

structure should be adaptable to environmental changes, it
should remain steady during unfavorable conditions.
Modern organizational design
Project organization
Project design is also called the team or task force type. It
is used to coordinate across departments for temporary,
specific and complex problems which cannot be handled
by a single department.
This design facilitates inputs from different areas.
Members from different departments and functional areas
constitute a team, in which every member provides
expertise in their area of specialization.
Matrix organization
This organizational type assigns each worker two bosses
in two different hierarchies. One hierarchy is "functional"
and assures that each type of expert in the organization is
well-trained, and measured by a boss who is super-expert
in the same field.
The other direction is "executive" and tries to get projects
completed using the experts. Projects might be organized
by regions, customer types, or some other schema. matrix
management.
An example would be a company that produces two
products, "product a" and "product b". Using the matrix
structure, this company would organize functions within
the company as follows: "product a" sales department,
"product a" customer service department, "product a"
accounting, "product b" sales department, "product b"
customer service department, "product b" accounting
department. Matrix structure is the most complex of the
different organizational structures.
Choosing the organizational structure

Organization design is a continuous process. While a simple

design is needed for simple strategies, complex designs are
necessary when organizational strategies involve complex
interactions.
The choice of any type of organizational design should be in
consonance with the organizational requirements, strategy
and environment. The simple centralized and bureaucratic
organizational design based on functional departmentation
focuses on work and is thus better suited for getting work
done efficiently. The team or project type of organizational
design is appropriate where inputs from several functional
areas are required.
Chain of command
The chain of command is the line of authority and
responsibility along which orders are passed within a
Organisational unit and between different units. Orders are
transmitted down the chain of command, from a higher-
ranked officers to lower-ranked personnel who either carry
out the order personally or transmit it down the chain as
appropriate, until it is received by those expected to carry
it out.
In general, military personnel give orders only to those
directly below them in the chain of command and receive
orders only from those directly above them
The concept of chain of command also implies that
higher rank alone does not entitle a higher-ranking
service member to give commands to anyone of lower
rank. For example, an officer of unit "A" does not directly
command lower-ranking members of unit "B", and is
generally expected to approach an officer of unit "B" if he
requires action by members of that unit. The chain of
command means that individual members take orders
from only one superior and only give orders to a defined
group of people immediately below them.
Delegation (also called deputation) is the assignment of
authority and responsibility to another person (normally
from a manager to a subordinate) to carry out specific
activities. However the person who delegated the work
remains accountable for the outcome of the delegated
work.
Delegation empowers a subordinate to make decisions,
i.e. it is a shift of decision-making authority from one
organizational level to a lower one
AUTHORITY AND POWER
AUTHORITY AND POWER With authority comes
power. Power is the ability to influence people
toward organizational objectives. However, you have
limits on your authority and power.

Always assume you have enough authority and power to

meet your obligations, but do not exceed that limit.
Authority
Authority only exists when subordinates accept the
idea that the supervisor has authority over them.
Subordinates can fail to recognize authority through
disobedience, denial, or work delays.
Subordinates usually accept authority readily;
however, abusing your authority as a supervisor can
make you ineffective.
Types of Authority

1. LINE AUTHORITY. —Line authority is the authority

you have over subordinates in your chain of
command. This type of authority corresponds
directly to your place within the chain of command
and does not exist outside the chain of command.
2. STAFF AUTHORITY. —Staff authority is the
right of staff to counsel, advise, or make
recommendations to line personnel. This type of
authority does not give staff the right to give line
personnel orders that affect the mission of the line
organization.
3. FUNCTIONAL AUTHORITY. —Certain staff
organizations are granted functional authority to direct line
units within the area of the staff's specialty. Examples
of staff organizations with functional authority include
the Legal, Equal Opportunity, and Safety Departments.
4. REWARD POWER. —Reward power stems from your
use of positive and negative rewards to influence
subordinates. Positive rewards range from a smile or
kind word to recommendations for awards.
 Expert power This is based on personal skills,
knowledge, training, experience, etc. It cannot be
transferred by the organization since it is person-
specific.

 Charismatic power This derives from the sensitivity

of the owner. This facilitates association with others.
Centralisation, or centralization, is the process by which
the activities of an organisation, particularly those
regarding decision-making, become concentrated within a
particular location and/or group.

In the year when founder Henry ford was running the Ford
Motor Company, the auto manufacturer was a very
centralized organization. Every key decision –and many
less important ones was made directly by Mr. Ford. For
example, he insisted on approving all purchase order within
the firm, a task that most CEOs of his stature delegated to
subordinates.
Decentralized organization:
In such organizations responsibility for key decision is
distributed as far down in the management hierarchy as is
prudently possible. One of the advantages of
decentralization is that it gives lower-level managers
substantial practice at making decision in preparation is
that for moving up the management hierarchy.
Benefits of Decentralization:
1. Relieves Higher Executive
2. Facilitates managerial Development
3. Fosters Co-ordination: It results in the promotion of
intimate personalities which result in greater employee
co-ordination and enthusiasm.
4. Facilitates Control: The profit-centre concept can be
used for centralizing, divisional operations by
measuring performance against the standard of profits
generated by such divisions.
5. Encourages Greater Efficiency: The competitive
atmosphere inculcated by the profit centre concept
increases the efficiency of the divisions.

6. Infuses Maximum Motivation: By placing greater

decision making power on mangers down the line,
initiative is promoted and the managers are motivated to
higher performance.
Disadvantages of Decentralization

1. Increased Costs: Unless the business size is large

enough, over head costs of decentralization would be
relatively too heavy as each division has to be a self
contained unit with all the service functions available
with the division.
2. Need for Generalist Mangers: For success in
decentralization, it is necessary to have capable
executives with general management ability as the
decentralized organisation has to place great reliance on
the divisional manger’s effectiveness.
Organizational Politics:
Legitimate Politics: It refers to normal everyday politics-
complaining to your supervisor, bypassing the chain of
command, forming coalitions, obstructing organizational
policies or decisions through inaction or excessive
adherence to rules.

Illegitimate political behaviors that violate the implied

rules of the organisation. Those who pursue such
extreme activities are often called individuals who “play
hardball”. It includes
Whistle-blowing or groups of employees simultaneously
calling in sick.
 Selectively
Blaming others distributing
information
Managing
impressions Controlling
Types of information channels
organizational
Political
activities
Association with
line executives Forming
coalitions
Increasing
indispensability
Causes of Political behavior
Individual Factors:
Employees who are high self-monitor, possess an internal
locus of control, and have a high need for power are more
likely to engage in political behavior.

The individual characterized by the will to manipulate and

the desire for power- is comfortable using politics as a
means to further his or her self-interest.
In addition, an individual’s investment in the organization,
perceived alternatives, and expectations of success will
influence the degree to which he or she will pursue
illegitimate means of political action. The more a person
invested in the organization in terms of expectations of
increased future benefits, the more that person has to lose
if forced out and the less likely he or she is to use
illegitimate means.
Organisational Factors:
Political activity is probably more a function of an
organization’s characteristics than of individual difference
variables.

Organisation downsize: When organizations downsize to

improve efficiency. It threatened with the loss of
resources, people may engage in political actions to
safeguard what they have.

Promotion Decisions: One of the most effective reason

for political actions.
Role Ambiguity

The practice of performance evaluation.

The more that an organization’s culture emphasizes the

zero-sum or win/lose approach to reward allocation, the
more employees will be motivated to engage in political
activities.
Certain conditions favor organizational politics. Core of
theses conditions is scarce resources.

Managers and employees are more likely to act

politically when
(i) Decision making procedures and performance
measures are uncertain and complex, and
(ii) Competition for scarce resources is strong.

Conversely, in more stable and less complex

environments where decision making processes are clear
and competitive behavior is less, excessive political
behavior is unlikely.
 Medium Probability High Probability

Low Probability Medium Probability

o ma noitit e p mo C

Low Complexity and High

wo L

Uncertainty
The Answer for the question is Yes and No.

Reasons for good:

Organizational Politics include career advancement,
recognition and status for individuals looking after their
legitimate interests, and achievement of organizational
goals - getting the job done- as a result of the normal
political process in the organization.
Reasons for bad:

Blame game: To save the image people use to put the

faults on others.

Claim game: To get evaluate in a better way people use

to take the credits of other’s achievements.

All these factors leads to dissatisfaction and de-

motivating to the individuals with ethical values.