ORGANIZATIONAL THEORY

& BEHAVIOUR

ORGANIZATIONAL THEORY

1
 ORGANIZATIONAL THEORY
• Organization theory has evolved over time to
assist in explaining human behaviour in
organizations.

• CLASSICAL SCHOOL

• HUMAN RELATIONS SCHOOL

• MORE RECENT SCHOOLS

2
 THEORY
• An attempt to identify general properties that
explain regularly observed events. Theories
form an essential element of all sociological
works.

• While theories tend to be linked to broader

theoretical approaches, they are also strongly
influenced by the research results they help
generate.
3
 CLASSICAL SCHOOL
• The classical theorists were principally
concerned with the structure and mechanics of
organizations.

• Some of the more noted pioneers were Henri

Fayol, F.W. Taylor, and Frank and Lilian
Gilbreth.

4
 CLASSICAL SCHOOL
• They were more theory oriented, and were of
the opinion that with a given structure the
organization would be successful.

• The human aspect to things was not

considered by these theorists as important,
since once decided the activity would have to
be accomplished.
5
 CLASSICAL SCHOOL
• These theorists can be seen as administrators,
very prescriptive in terms of what and how
things must be done.

• Administration is concerned with procedures,

accountability and risk avoidance, while
management aims at taking calculated risk, and
maintaining stability within the organization.
Administration aims at avoiding risk completely.
6
 FAYOL AND TAYLOR
• Henri Fayol was a French manager who wrote
at about the same time as Taylor; though his
works did not have a widely read English
translation until 1930.

• Once translated, they became very popular in

the United States. Fayol’s classical view of
administration complemented Taylor’s scientific
management in many ways.
7
 FAYOL
• Fayol listed the duties of a manager as
planning, organising, commanding employees,
co-ordinating activities and controlling
performance; he also specified the fourteen
principles of management.

8
 Fayol’s Principles of Management
• Division of Work – the specialisation of work.
• (work should be divided to assist
specialization).
• This is expected to improve productivity, as a
person will develop the skills needed for a
specific task)

• Authority – “the right to give orders, and power

to exact obedience”.
• (authority and responsibility should be equal.)
9
 Fayol’s Principles
• Discipline – “obedience, application, energy,
behaviour and outward marks of respect”.
• (discipline help workers to develop the above,
and diligence)

• Unity of command – “an employee should

receive orders from one superior only”.
• (an individual should also report to only one
supervisor.)
10
 Fayol’s Principles
• Unity of direction – “one head and one plan
for a group of activities having the same
objective”.
• (all operations with the same objective should
have one manager and one plan)

• Equity – equality of treatment’

• (employees should be treated with kindness
and justice.)
11
 Fayol’s Principles
• Subordination of individual interests to the
general interest – the interest of an individual
or group should not supersede the
organisation’s concerns

• (goal congruence is important – personal

development must be in keeping with the
organizational goals)
12
 Fayol’s Principles
• Remuneration – fair payment for services
• (the method and remuneration should be based
on the type of work to be done, also bearing in
mind the working conditions.

• By making fair payment employees will be more

productive, as well as motivated because of the
reward for their efforts.
13
 Fayol’s Principles
• Centralisation – degree of consolidation of
management functions.
• (managers must maintain final responsibility
but should delegate certain authority to
subordinates)

14
 Fayol’s Principles
• Scalar chain (line of authority) – “the chain of
superiors ranging from the ultimate authority to
the lower ranks”

• The chain of command should be clear. This

will help to ensure an orderly flow of information
and supplements the principle of unity of
command.

• An organizational chart will depict the various

levels within the organization. 15
 Fayol’s Principles
• Order – all materials and people should be in an
appointed place.
• A place for every thing and everything in place.

• The right people in the right place, things must be

placed closest to the users, taking into account the
frequent usage of the item.

• Proper scheduling of work and timetables to

complete work is important. This can ensure
materials are in the right place at the right time.
16
 Fayol’s Principles
• Stability of tenure of personnel – limited
turnover of personnel

• Management should work towards obtaining long-

term commitments from staff.
• Unnecessary turnover of staff is costly and works
against goal accomplishment.

• High turnover will affect output, as well as the

working relationship within the unit or section.
17
 Fayol’s Principles
• Initiative – “thinking out a plan and ensuring its
success”

• Workers should be allowed to conceive and

execute plans in order to develop their capacity
to the fullest and feel like an active part of the
organization.

18
 Fayol’s Principles
• Espirt de corp – “harmony, union among the
personnel of a concern”
• Unity is strength. Harmony and union help to
build the strength of an enterprise. It is an
extension of the principle of unity of command,
emphasizing the need for teamwork and the
importance of communication.

• A group that is not harmonious will not be an

effective group. 19
 FEATURES BASED ON THE
PRINCIPLES
• Organisational theories have identified four
features of organisations based on these
elements and principles.

• Organisations should specialise.

• This means that they should organise workers
according to logical groupings such as client,
place of work, product, expertise, or functional
area.
20
 FEATURES BASED ON THE
PRINCIPLES
• Unity of command dictates that each
organisational member should have exactly one
supervisor.

• You should not have more than one person

giving instruction to a subordinate. More than
one person giving instructions to an individual is
a recipe for disaster.

21
 FEATURES BASED ON THE
PRINCIPLES
• Reporting relationships should be clearly
defined within a formal organisational structure,
beginning with the least skilled employee and
extending to the chief administrator.

 
22
 FEATURES BASED ON THE
PRINCIPLES
• Managers must co-ordinate activities through
the use of mechanisms that ensure
communication between specialised groups.

• The various functions are inter-related and

inter-dependent on each other, since they do
not exist in isolation

23
 FAYOL’S CONTRIBUTION
• Fayol’s main contribution was the idea that
management was not an inborn talent but a skill
that could be taught.

• They remained important as they continue to

have a significant impact on current
management thinking.

24
 MAX WEBER
• Max Weber was more concerned with the basic
issue of how enterprises are structured. He was
a German sociologist and formulated ideas on
ideal management approach for large
organizations.

• He developed a set of ideas about structure of

an organization that define what we known as
bureaucracy.

25
 BUREAUCRACY
• The characteristics of an ideal formalized
organization as described in Weber’s Perspective on
Administrative Management are:

• A division of labour. In which authority and

responsibility are defined very clearly and set out as
official duties.
• Hierarchy of authority. Office or positions are
organized in a hierarchy of authority resulting in a
chain of command or the scalar principle.

26
 BUREAUCRACY
• Formal selection. All employees are selected
on the basis of technical qualifications through
formal examinations or by education or training

• Formal rules. Administrators should be subject

to strict formal rules and other controls
regarding the conduct of their official duties
(these rules and controls would be impersonal
and uniformly applied). 27
 BUREAUCRACY
• Career managers. Managers are professionals
who work for fixed salaries and pursue
‘careers’ within their respective fields. They are
not ‘owners’ of the units they administer.

28
 THE PIONEERS OF SCIENTIFIC
MANAGEMENT

• The pioneers of Scientific Management were

Taylor and the Gilbreths, who were interested
in Work Study. In 1911 F. W. Taylor published
his book Principles of Scientific Management.

• In the application to management, the scientific

approach of Taylor required the following steps:

29
 THE SCIENTIFIC APPROACH

• Develop a science for each operation to replace

opinion and rule-of-thumb.

• Determine accurately from science the correct

time and method for each job.

• Set up a suitable organization to take all

responsibility from the worker except that of
actual job performance.
30
 THE SCIENTIFIC APPROACH
• Select and train the workers.

• Accept that management itself be governed by

the science developed for each operation and
surrender its arbitrary power over the workers
i.e. cooperate with them.

• The following principles were also suggested to

guide management: 31
 THE SCIENTIFIC APPROACH
• Each worker should have a large, clearly
defined, daily task.

• Standard conditions are needed to ensure the

task is more easily accomplished.

• High payment should be made for successful

completion of tasks. Workers should suffer loss
when they fail to meet the standards laid down.
32
 H. L. GANTT
• H. L. Gantt worked with Taylor for a time and
improved upon Taylor’s ideas. He believed
management was responsible for creating a
favourable environment to obtain worker co-
operation. Some of his main contributions were:

• The setting up of a well-measured task for a

worker, thus giving him a goal to achieve – this
made the worker interested in attaining the
goal.
33
 H. L. GANTT
• He believed management had a responsibility
to train workers.

• He advocated proper methods of planning and

control. He used graphical recording systems,
machines and man record charts.

34
 FRANK AND LILIAN GILBRETH
• Frank and Lilian Gilbreth developed on
Taylor’s idea of work-study, which was
commonly referred to as motion study.

• Frank was interested in the ‘best way’ of doing

a job. This involved doing the job in the most
comfortable position, and in the fewest motions.

• He identified seventeen basic elements in job

motions, and any motion can be broken down
35
into all or some of the basic elements.
 FRANK AND LILIAN GILBRETH
• They developed a process chart called
Therbligs (Gilbreth spelt backwards, in effect),
which are the basic elements of on-the-job
motions. The Gilbreths were also of the opinion
that there was one best way of doing things.

36
 DECISION THEORY
• In the 1950s, Herbert Simon and James
March introduced the decision-making
framework for understanding organisational
behaviour.

• In many ways Simon and March elaborated on

the bureaucratic model by emphasising that
individuals work in rational organisations and
thus behave rationally.
37
 DECISION THEORY
• Their model suggested that when individuals
make decisions, they examine a limited set of
possible alternatives rather than all available
options.
• This is due to human bounded rationalities.

• Individuals “satisfice”; that is, they choose

satisfactory or “good-enough” choices, rather
than seeking optimal choices. In other words,
they make choices that are adequate and do not
search until they find perfect solutions to
38
problems.
 INDUSTRIAL PSYCHOLOGY
• Prior to the human relations was industrial
psychology, which emerged as a specific field
about 1913. It was concerned with the
problems of fatigue and monotony and
efficiency in work, as well as in the design of
equipment, lighting and other working
conditions.

• Industrial psychology emphasized the study of

large and small groups in industry.
39
 HUMAN RELATIONS SCHOOL
• The basis of the human relations movement
was the integration of various disciplines e.g.
Industrial psychology and sociology, applied
anthropology and social psychology, and was
concerned with the human problems which
management encountered.

• The theorists of human relations were

concerned with the human factors.
40
 HUMAN RELATIONS SCHOOL
• Beginning in 1924, the National Academy of
Sciences performed five studies of various work
groups. The first study looked at the effects of
lighting on the productivity of workers in different
departments of the company.

• Elton Mayo, Fritz Roethlisberger, William

Dickson and their colleagues examined the
impact of the rest pauses, shorter working days
and weeks, wage incentives, and the nature of
supervision on output, which was published in
41
1941.
 HUMAN RELATIONS SCHOOL
• They also suggested that something other than
the physical work environment (which Taylor
would have suggested) or the organisation
structure (which Fayol would have suggested)
resulted in improved productivity among
workers.

• In observing and interviewing the employees,

the researchers discovered that during the
experiments the employees felt that someone
cared about them, so their morale improved and
42
they produced more.
 HUMAN RELATIONS SCHOOL
• This Hawthorne Effect offered the first dramatic
indication that the attitudes and feelings of
workers could significantly influence
productivity.

• Other relations included Maslow and the

Hierarchy of Needs Theory, McGregor Theory
X Theory Y, Herzberg and his Motivation-
Hygiene Theory, Chris Argyris and Immaturity-
Maturity Theory, and Vroom and his
Expectancy Theory. 43
 HUMAN RELATIONS SCHOOL
• These were known as behavioural scientists
rather than members of the human relations
school.

44
 SYSTEMS THEORY
• Systems theory offers an integrated and
comprehensive view of organisational
functioning.

• It evolved from economic, sociological,

psychological and natural-science theories and
includes human, structural, environmental,
technological and other concerns.

45
 SYSTEMS THEORY
• An organisation, as a system is open and
dynamic; that is, it continually receives new
energy in the form of new resources (people,
materials, and money) or information
(concerning strategy, environment and history)
from the environment.

• The new energy, called inputs, is then

transformed into new output. Transformation
processes are key organisational components
that change inputs into outputs. 46
 SYSTEMS THEORY
• Transformation processes include the
interactions between the tasks, individuals
formal organisational arrangements, and the
informal organisation.

• The interaction during the process includes at

the formal, and informal levels.

• The transformation of inputs creates changes in

individual, group and organisational behaviours
and attitudes. 47
 SYSTEMS THEORY
• As a result of working together changes are
likely to occur in the behaviour of both the
group and individuals as they interact with each
other in their attempt to realise their targets or
goals.

• Individuals are expected to adapt to the

changing circumstances and environment as
they convert input into goods or services.

48
 SYSTEMS THEORY
• When organisations receive new inputs or
experience certain transformations, they
simultaneously seek balance or equilibrium.

• When organisations become unbalanced or

experience disequilibrium, such as when
changes in the environment make current
staffing inadequate, organisations attempt to
return to a steady state, which may mirror or
significantly differ from the original state of
equilibrium. 49
 SYSTEMS THEORY
• In an attempt to return to the optimum state of
balance within the organization decisions such
as whether to employ or retrench workers,
acquire new plant facility or discontinue
operations in certain locations will have to be
made.

• If the new plant facility entails new technology

then retraining may be needed or new
employees may be an alternative to overcome
the existing deficiency in terms of human
50
resource.
 SYSTEMS THEORY
• Organisations as open systems demonstrate
equifinality, which suggests that organisations
may employ a variety of means to achieve their
desired objectives.

• No single structure results in a predetermined

set of inputs, outputs and transformations.
Introducing an organic structure does not
necessarily result in increased productivity;
increasing the amount of individual involvement
in decision-making does not necessarily change
51
worker attitudes.
 SYSTEMS THEORY
• Thus organisations that survive adapt to a
particular situation. They respond to changes in
the environment with appropriate changes in the
systems.

• For an organization to remain competitive it has

to make the necessary changes to restore it to
the desired state, or the previously acceptable
state. The external environment is never static,
and as such monitoring of it is important if an
organization is to succeed in its objectives.
52
 SYSTEMS THEORY
• Systems can be divided into two categories:

• Deterministic, where the behaviour can be

completely determined.

• Probabilistic, where behaviour can only be

estimated within degrees of likelihood

53
 SYSTEMS THEORY
• Generally systems theory provides valuable
insights into the structure and process of
management.

• The systems approach recognizes variety, and

offers a way of interrelating differences by
reconciling them with the whole.

54
 SYSTEMS THEORY
• While earlier theorist focused on specific issues
such as structure or human resource, systems
theorists recognized that a comprehensive
approach is necessary if organizations are to
succeed.

55
 CONTINGENCY THEORY
• Burns and Stalker described two radically
different types of management systems:
mechanistic (machine-like) and organic (living,
human and flexible).
• Mechanistic systems have characteristics such
as those in the scientific and classical-
management traditions.
• Organic systems are much more flexible and
loosely structured, and allow more employee
influence over decisions than do mechanistic
systems. 56
 MECHANISTIC SYSTEMS
• Burns and Stalker described mechanistic
systems as appropriate to stable environmental
conditions and organic systems as appropriate
to changing organisations.

• In a static environment the mechanistic system,

which is more rigid is more appropriate since
the design would have taken into account most
of the important variables.
57
 CONTINGENCY THEORY
• Woodward found that the type of structure an
organisation develops (and should develop) is
influenced by the organisation’s technology: whether
the technology is unit, mass production, or a
continuous process.

• She suggested that a mechanistic type of

organisation fits best with mass production technology
– producing pins or manufacturing heavy equipment.
A more organic form of organisation responds best to
a unit (craft) or continuous process (e.g., gas refinery)
technology. 58
 CONTINGENCY THEORY
Contingency approach seeks to apply to real life
situations ideas drawn from various schools of
management thought. Different problems and
situations require different approaches and no
approach is universally acceptable.

Managers must seek to identify the approach

that will serve them best in any given situation,
so they can achieve their goal.

59
 CONTINGENCY THEORY
• It is important to note that the contingency
approach stresses the need for managers to
examine the relationship between the internal
and external environment of an organization.

• The systems approach to management

emphasizes that relationships between various
parts of an organization are interlocked. The
contingency approach has emphasized this
idea by focusing on the nature of such
relationships. 60
 CONTINGENCY THEORY
• Recent thinking in organisation design has re-
emphasised the importance of fitting
organisational structure to various
contingencies. Thus contingency theory has
also extended to leadership, group dynamics,
power relations and work design.

• The levels and departmentalisation of an

organisation should therefore be determined by
the circumstances both internally and
externally. 61