Theories of Organizations

							PREVIEW
   Review Classical Theories of Organizations
         • Taylor’s Theory of Scientific Management
         • Fayol’s Administrative Theory
         • Weber’s Theory of Bureaucracy
   Humanistic Theories of Organizations
       Human Relations Theory
         • The Hawthorne Studies
         • Chester Barnard
         • McGregor’s Theory X and Theory Y
       Human Resources Theory
         • Likert’s Systems Theory (Four Systems of Management)
         • Blake and Mouton’s (Blake and McCanse) Managerial Grid
Classical Theories Reviewed
   Classical Theories of Organizations (p. 36)
      Taylor’s Theory of Scientific Management (tasks)
      Fayol’s Administrative Theory (mgmt)
      Weber’s Theory of Bureaucracy (org structure)
   All 3 theories attempt to enhance management’s ability
    to predict and control the behavior of their workers
   Considered only the task function of communication
    (ignored relational and maintenance functions of
    communication)
   Designed to predict and control behavior in
    organizations
Classical vs. Humanistic
   Classical theories emphasized coercion, control, and punishment
    (FOCUS ON TASKS /PRODUCTION).
       Maintain predictability and control
       Decision-making power at top of hierarchy
       Minimize input from lower-level employees
       Rely on science and rules to guide behavior
       Regulate communication to increase predictability and decrease
        misunderstandings
       Result:
         • Workers feel they have no control over their work situation
         • Management does not care about their ideas
         • Feelings and ideas of workers are unimportant
   Humanistic theories were developed to promote the
    CONCERNS of the individual worker in an atmosphere that was
    too focused on production (FOCUS ON RELATIONAL &
    MAINTENANCE FUNCTIONS)
Principles of Human Relations Theory

   Human relations theory is characterized by a shift in emphasis
    from TASK to WORKER
   Go beyond physical contributions to include creative, cognitive,
    and emotional aspects of workers
   Based on a more dyadic (two-way) conceptualization of
    communication.
   SOCIAL RELATIONSHIPS are at the heart of organizational
    behavior--effectiveness is contingent on the social well-being of
    workers
   Workers communicate opinions, complaints, suggestions, and
    feelings to increase satisfaction and production
   Origins (Hawthorne Studies & work of Chester Barnard)
   Human Relations School of Management - Elton Mayo (Harvard
Origins of Human Relations Theory

   “The Hawthorne Studies
       Hawthorne Works of Western Electric Company
       1924 - Chicago
       Research focus: Relation of quality and quantity of illumination
        to efficiency in industry
       Four Important Studies
“The Hawthorne Studies”

   Illumination Study (November 1924)
        Designed to test the effect of lighting intensity on worker productivity
        Heuristic value: influence of human relations on work behavior
   Relay Assembly Test Room Study (1927-1932)
        Assembly of telephone relays (35 parts - 4 machine screws)
        Production and satisfaction increased regardless of IV manipulation
        Workers’ increased production and satisfaction related to supervisory practices
        Human interrelationships are important contributing factors to worker productivity
        Bottom Line: Supervisory practices increase employee morale AND productivity
   Interviewing Program (1928-1930)
        Investigate connection between supervisory practices and employee morale
        Employees expressed their ideas and feelings (e.g., likes and dislikes)
        Process more important than actual results
   Bank Wiring Room Observation Study (November 1931 - May 1932)
        Social groups can influence production and individual work behavior
        RQ: How is social control manifested on the shop floor?
        Informal organization constrains employee behavior within formal organizational
         structure
Hawthorne Studies - Implications

   Illumination Study (November 1924)
        The mere practice of observing people’s behavior tends to alter their behavior
         (Hawthorne Effect)
   Relay Assembly Test Room Study (1927-1932)
        Relationships between workers and their supervisors are powerful
        Human interrelationships increase the amount and quality of worker participation
         in decision making
   Interviewing Program (1928-1930)
        Demonstrated powerful influence of upward communication
        Workers were asked for opinions, told they mattered, and positive attitudes toward
         company increased
   Bank Wiring Room Observation Study (November 1931 - May 1932)
        Led future theorists to account for the existence of informal communication

   Taken together, these studies helped to document the powerful nature
    of social relations in the workplace and moved managers more toward
    the interpersonal aspects of organizing.
Hawthorne Studies - Criticisms

   Not conducted with the appropriate scientific rigor necessary
   Too few subjects (N=5)
   No control groups
   Subjects replaced with more “cooperative” participants

   WORTHLESS
   GROSS ERRORS
   INCOMPETENCE
The Emergence of Communication

   Chester Barnard
      Considered a bridge between classical and human relations theories
      The Functions of the Executive (1938)
      Argues for . . .
         • strict lines of communication - classical theory
         • a “human-based system of organization”
         • The potential of every worker and the centrality of communication
            to the organizing process
      Six Issues Relevant to Organizational Communication
         • Formal vs. Informal Organization
         • Cooperation
         • Communication
         • Incentives
         • Authority
         • Zone of Indifference
Six Issues Relevant to Organizational Communication


   Formal vs. Informal Organization
        Formal Organization - a system of consciously coordinated activities or forces of two or more
         persons. (definite, structured, common purpose)
           •   Persons are able to communicate with one another
           •   Willing to contribute action
           •   To accomplish a common purpose
        Informal Organization - based on myriad interactions that take place thourghout an
         organization’s history.
           •   Indefinite
           •   Structureless
           •   No definite subdivisions of personnel
           •   Results: customs, mores, folklore, institutions, social norms, ideals -- may lead to formal organization
   Cooperation
        Necessary component of formal organization
        The expression of the net satisfactions or dissatisfactions experienced or anticipated by each
         individual in comparison with those experienced or anticipated through alternative opportunities
   Communication
        Critical to cooperation
         The most universal form of human cooperation, and perhaps the most complex, is speech
        The most likely reason for the success of cooperation and the reason for its failure
        System of communication: known, formal channels which are as direct (short) as possible,
         where the complete line of communication is used, the supervisory heads must be competent,
         the line of communication should not be interrupted, and every communication should be
         authenticated.
        Barnard’s system lacks relationship formation and maintenance mechanisms
Six Issues Relevant to Organizational Communication


   Incentives
        Should be available
        Not discussed in detail
   Authority
        Associated with securing cooperation for organizational members
        The interrelationship among the originator of the communication, the
         communication itself, and the receiver
        Authority of position OVER Authority of Leadership (knowledge & ability).
   Zone of Indifference - orders followed
        Marks the boundaries of what employees will consider doing without question,
         based on expectations developed on entering the organization.

    Barnard drew attention away from formal organizational structures toward
    communication, cooperation, and the informal organization. His work was
    integrated by other theorists in the human relations movement.
Theory X and Theory Y: Douglas McGregor

   Douglas McGregor (1906-1964)
       Articulated basic principles of human relations theory
       The Human Side of Enterprise (1960, 1985)
       To understand human behavior, one must discover the theoretical
        assumptions upon which behavior is based
       Especially interested in the behavior of managers toward workers
       “Every managerial act rests on assumptions, generalizations, and
        hypotheses--that is to say, on theory . . . Theory and practice are
        inseparable.”
       Two Objectives:
          • Predict and control behavior
          • Tap Unrealized potential
       Theory X - Classical Theory
       Theory Y - Human Relations Theory
       FOCUS: Manager’s assumptions about HUMAN NATURE
Theory X and Theory Y: Douglas McGregor

   Theory X - Classical Theory
       Three Assumptions
          •   The average human being has an inherent dislike of work and will avoid it.
          •   Most people must be coerced, controlled, directed, and threatened with punishment
          •   The average human being prefers to be directed, wishes to avoid responsibility, has
              relatively little ambition, wants security.
       Neither explains nor describes human nature
   Theory Y - Human Relations Theory
       Assumptions
          •   Physical and mental effort in work is similar to play / rest.
          •   External control and the threat of punishment are not the only strategies
          •   Commitment to objectives is a function of the rewards associated with their achievement
          •   The average human being learns, under proper conditions, not only to accept but to seek
              responsibility
          •   The capacity to exercise a high degree of imagination, ingenuity, and creativity in the
              solution of organizational problems is widely distributed in the population
          •   Intellectual potentialities of the average human being are underutilized
       A more positive perspective of human nature
       The KEY to control and quality production is commitment to organizational
        objectives
Theory Y Prototype: The Scanlon Plan

   Participative Management
   Two Central Features
        Cost-reduction sharing for organizational members - sharing the economic
         gains from improvements in organizational performance
        Effective participation - a formal means of providing opportunities to every
         member of the organization to contribute ideas for improving organizational
         effectiveness.
   Must be implemented appropriately
   Wastes time and undermines managerial power?
   Magic formula for every organizational problem?
   CONCERN for RELATIONSHIPS in the organization.
   As the need to increase commitment grows, so does the need to develop strong,
    communication-based relationships among organizational members, particularly
    between supervisor and subordinate.
Miles’ Human Resources Theory

   Difficult to adopt principles of human relations theory -- misapplications and
    misunderstandings of both classical theory and human relations theory led to
    Human Resources Theory

   The key element to Human Relations Theory, participation, was used only to
    make workers feel as if they were part of the organizational decision-making
    processes

   Key to classical and human relations theory is compliance with managerial
    authority

   Workers are told that they are important but were not treated as such

   Major Distinctions between Human Resources and Human Relations Theory
        All people (not just managers) are reservoirs of untapped resources - manager responsibility to tap
         physical and creative resources
        Many decisions can be made more effectively and efficiently by workers most directly involved with
         their consequences
        Relationship between employee satisfaction and performance - improved satisfaction and morale
         contribute back to improved decision making and control
Miles’ Human Resources Theory

   Increased satisfaction is related to the improved decision making and self-control
    that occurs due to participation that is genuinely solicited and heard

   Two prevalent Human Resources Theories
        Rensis Liker
        Blake & Mouton (Blake & McCanse)

   Four Systems of Management: Rensis Likert (Figure 3.2, p. 56)
        Management is crticial to all organizational activities and outcomes
        Continuum that ranges from more classically oriented system to one based on human
         resources theory
        Of all the tasks of management, managing the human component is the central and
         most important task
        High producing departments and organizations tend toward System IV; low producing
         units favor System I
           •   System I - Exploitative Authoritative
           •   System II - Benevolent Authoritative
           •   System III - Consultative
           •   System IV - Participative
Blake and Mouton’s Managerial Grid

   Stresses interrelationship between production (task) and people
   Management’s main purpose is to promote a culture in the organization that
    allows for high production at the same time that employees are fostered in their
    professional and personal development
   Managerial Grid - now Leadership Grid (Blake & McCanse) (Figure 3.3, p. 59)
   FOCUS: Manger’s Assumptions about CONCERN for PEOPLE and CONCERN
    for PRODUCTION
   Concern for PEOPLE
        Degree of personal commitment to one’s job
        Trust-based accountability (vs. obedience-based accountability)
        Self-esteem for the individual
        Interpersonal relationships with co-workers
   Concern for PRODUCTION
        Use of people and technology to accomplish organizational tasks
        Concern for is not about quantity or quality
   Assessment instrument does not represent personality traits of the manager --
    instead, indicate a specific orientation to production and people
Blake and Mouton’s Managerial Grid

•Authority Compliance (9,1)
     •Classical theory
•Country Club (1,9)
     •Informal grapevine
•Impoverished (1,1)
     •Laissez-faire
•Middle-of-the-Road (5,5)
     •Compromise (carrot & stick)
•Team (9,9)
     •Human Resources Approach
     •Promote the conditions that
     integrate creativity, high
     productivity, and high morale
     through concerted team action
SUMMARY
   Humanistic Theories of Organizations
       Human Relations Theory
         • The Hawthorne Studies
         • Chester Barnard
         • McGregor’s Theory X and Theory Y
       Human Resources Theory
         • Likert’s Systems Theory (Four Systems of Management)
         • Blake and Mouton’s (Blake and McCanse) Managerial Grid


   The principles of human resources theory attempt to
    integrate the concern for production from classical
    theory with the concern for the worker from human
    relations theory -- more effective and satisfying!