The Evolution of Management and Organization Theory

What Is Organization Theory?

 A proposition or set of propositions that attempts to explain or predict how groups and individuals behave in differing organizational arrangements.

What Is Organization Theory?

 Classic organizational theory.
Organizations exist to accomplish production-related and economic goals. There is one best way to organize for production, and that way can be found through systematic, scientific inquiry. Production is maximized through specialization and division of labor. People and organizations act in accordance with rational economic principles.

What Is Organization Theory?

 Theory derived from organizational structures and procedures during the industrial revolution.  Adam Smith and the pin factory.
The Wealth of Nations, 1776.
Laissez-faire.

Economic rationale for the factory system. All formal organizations are force multipliers.

The Origins of Scientific Management

 The basic problem with the traditional hierarchical organization was that it was dependent upon the proper enculturation of individual supervisors at every level for its success.  Changes in the environment can make hierarchical organizations less competent.

The Origins of Scientific Management

 Origin of the staff concept to overcome limitations of a single mind and fleeting time.  The general staff concept has been adopted by industrial and governmental organizations.

The Origins of Scientific Management

 The influence of Frederick W. Taylor (1911).
Father of the scientific management movement. Scientific management principles.
Replacing traditional, rule of thumb methods of work accomplishment with systematic, more scientific methods of measuring and managing individual work elements; The scientific study of the selection and sequential development of workers to ensure optimal placement of works into work roles; Obtaining the cooperation of workers to ensure full application of scientific principles; And. Establishing logical divisions within work roles and responsibilities between workers and management.

The Origins of Scientific Management

 Henri Fayols general theory of management (six principles, 1916, 1949).
Technical (production of goods) Commercial (buying, selling, exchange). Financial (raising and using capital). Security (protection of property and people). Accounting. Managerial (coordination, control, organization, planning and command of people).

The Origins of Scientific Management

 Fayol (contd.).
Dominant principle was management.
Division of work. Authority and responsibility. Discipline. Unity of command. Unity of direction. Subordination of individual interest to general interest. Remuneration of personnel.

The Origins of Scientific Management

 Fayol (contd.).
Dominant principle was management (contd.).
Centralization. Scalar chains (supervisors). Order. Equity. Stability of personnel tenure. Initiative, and. Esprit de corps.

The Period of Orthodoxy

 Interwar period a period of orthodoxy in public administration.
Work of government could be divided

between decision-making and execution. Administration was a science with discoverable principles.

The Period of Orthodoxy

 Paul Applebys polemic.
Politics and administration inextricably entwined.

 Luther Gulick (1937, POSDCORB).

Planning (outline and methods). Organizing (structure). Staffing (personnel). Directing (decision-making). Coordinating (task management). Reporting (communication and record-keeping). Budgeting (fiscal planning, accounting, and control).

The Many Meanings of Bureaucracy

 First, the bureaucracy is the totality of government offices or bureaus that constitute the permanent government of the state.  Second, the bureaucracy refers to all of the public officials of a government, both high and low, elected and appointed.  Third, bureaucracy is often used as a general invective to refer to any inefficient organization encumbered by red tape.

The Many Meanings of Bureaucracy

 Fourth, bureaucracy refers to a specific set of structural arrangements (Max Weber).
Bureaucrats are free as individuals, but not as

employees. Hierarchy. Clearly specified functions. Freedom of hiring. Appointment by merit.

The Many Meanings of Bureaucracy

 Fourth, bureaucracy refers to a specific set of structural arrangements.
Due compensation and due process. Sole occupation. Advancement by merit or seniority. Non-proprietary rights in position. Strict controls.

Neoclassical Organization Theory

 The neoclassical theorists gained their reputation by attacking the classical theories.
Important source of the power and politics, organizational culture, and systems theory.

 Herbert Simon.
Bounded rationality and satisficing. Programmed and unprogrammed decision-making. Management information systems.

Neoclassical Organization Theory

 The impact of sociology.
Philip Selznick Organizations are made up

of individuals whose goals and aspirations may not coincide with the organizations.

Modern Structural Organization Theory

 Basic assumptions
Organizations are rational institutions whose primary purpose is to accomplish established objectives through control and coordination. There is a best structure for any organization in light of objectives, environment, products or services, and the technology of the production process. Specialization and division of labor increase the quality and quantity of production. Most problems result from structural flaws.

Modern Structural Organization Theory

 Mechanistic and organization systems.
Mechanistic traditional bureaucracy, best in

stable conditions. Organic less rigidity, more participation, and more reliance on workers, best in dynamic conditions.

Systems Theory
 Systems theory views an organization as a complex set of dynamically intertwined and interconnected elements, including inputs, processes, outputs, feedback loops, and the environment. Any change in one element causes changes in other elements.

Systems Theory
 Cybernetics Norbert Wiener (1948).

Systems Theory
 The learning organization.
Built on the doctrines of participation Maslows hierarchy of needs. New component technologies (the five disciplines).
Personal mastery. Mental models. Building shared vision. Team learning. Systems thinking.

EVOLUTION OF MANAGEMENT THEORIES

 Over the last century, many management theorists and practitioners have been attempting to put a meaning to the word management and what managers do.  The theories help us to understand the challenges of management and how to deal with them. The theories are a product of experiences in management and there are various perceptions regarding how management can be undertaken

 These are the theories which are a source to the present day management theories. It concedes two perspectives 1. Classical organizational theory through 2. Humanistic Perspective 3. The management Science approach 4. The contemporary extensions approach 5. Recent or modern trends

Classical organizational theory /thought  This emerged because of the management challenges that were faced by various firms in the later part of the 20th c. and they include: i. Scientific management principle by  Frederick Taylor,  Henri Gantt and  Frank and Lilian Gilbreth ii. Administrative principle by Henri Fayol iii. Bureaucratic principle by Max Weber

SCIENTIFIC MANAGEMENT  The aim of Scientific Management was to determine scientifically the method of doing work in order to increase productivity. The fore runners of Scientific Management were Robert Owen and Babbage. Robert Owen advocated improvement of working hours and discouraged recruitment of children under the age 10.

 Work was organized and workers were paid according to how much they have produced.  Babbage advocated for division of labor and he was of the view that each operation during work should be analyzed; work should be divided so that skills could be developed. He also was of the view that more repetitive work is, the more skillful one becomes.

Fredrick Taylor 1856-1917

 He is normally referred to as the father of Scientific Management.  He wrote two books: Shop Management and Scientific Management.  During Taylors time, there was an industrial revolution.  He was a manager at Midvale steel works limited in the US and later progressed from the level of a laborer in a small machinery making shop to become a chief engineer.

 There was a need to improve on management of industries due to their expansion.  He carried out another experiment of unloading raw materials from incoming rail cars and loading the products on out going cars.  He developed a method of loading and unloading; and workers increased their loading from 12 tons to 47 tons.

 Taylor selected the best workers to do the job and he trained them.  Taylor also introduced what he referred to as differential rate system. Workers were paid more if they surpassed their previous production.  Taylor carried out research at Simonds Rolling Machine Company. The company employed 120 women to inspect bicycle ball bearings. He timed movements of the best workers and later trained them

 He introduced rest periods during work and also lay off poor workers.  He introduced differential pay rate system.  Expenses went down where as productivity went up. Taylor also invented a special shovel and high speed cutting machines.  He emphasized that managers prosperity can be through mutual interdependence with laborers / workers.  He observed that managers picked their skills through try and error and the thumb rule.

 Taylors view came at a point when there was shortage of skilled labor in the US and there was great need to increase productivity.  To be able to answer this, he recommended that the following four principles:  Develop a science for each element of an individual work which replaces the old rule of thumb

 He advocated for scientific selection, training, teaching and developing of workers so that each worker has equal opportunity.  Heartily cooperating with others so as to ensure that all work is done in accordance with principles of science developed

 He advocated for maximum specialization of labor.  He believed that the person should become a specialist and a master of specific tasks. And so work was to be divided almost equally between management and the workers

HENRY GANTT 1861-1919

 He worked with Taylor on a number of projects at Simonds and Bethlehem steel.  He regarded the differential rate system as unfair.  He came up with an idea that every worker who completes the days work is given a bonus, and also that a supervisor could earn a bonus for each worker who completed the days of assignment:

 and suggested extra bonus if all workers reached the desired target.  Workers productivity went up due to introduction of the bonus system.  Supervisors would train their juniors so as to be able to get the best out of them.

FRANK AND LILIAN GILBRETH