Where does demand for organisations come from?
Executives and consultants: increase efficiency
Economists and sociologists: how industrialisation influence society
Adam Smith
DIVISION OF LABOUR CREATES ECONOMIC EFFICIENCY
specialise
task differentiation
explain social structure
Karl Marx
CAPITALISM
Survival needs create an economic order when people discover the economic efficiencies of
collective labor and social structure that support it (e.g. division of labor).
- Economic efficiency → resource surpluses of raw materials & time.
- Social conflict = laborers argue that they have performed the profitable work and capitalists claim
that without their investment, labor would have no means to work.
- Capitalists define labor as a cost of production → same as any other commodity
Emile Durkheim
division of labor + hierarchy + task interdependence.
Types of organisation:
* Formal = fixed rules, procedures and structures designed into an organization.
* Informal = to address sociability of workers → paved way for OB and organizational culture.
- Distinction shows tension between (hard) economic and (soft) humanistic aspects of organizing. Also echoes theory versus practice.
Karl Emil Max Weber
ROLES ANF FORMS OF AUTHORITY- BUREAUCRACY
Two types of authorities in pre-industrial societies
* Traditional authority = rests upon inherited status as defined by bloodlines, property ownership… → risk of nepotism
- Charismatic authority = exceptional individual gains influence based on the devotion of followers who sanctify that individual as heroic/exemplary → risks of personality cults.
- In industrial organizations, to alleviate risks: rational-legal authority = merit-based selection driven by rationally formulated rules and laws.
- the theory of bureaucracy = means to extend to the rest of society the technical efficiency demonstrated by industrial organizations.
→ Danger: treating humans like machines → iron cage. To avoid that, distinction between - Formal rationality = techniques of calculation developed to measure efficiency (built in
technology). - Substantive rationality = taking desired ends of action into account when assessing
effectiveness of an organization → question goals and values driving our actions.
Fredrick Taylor
methods to improve industrial efficiency
SCIENITFIC MANAGEMENT
Use of work standards and a target rate performance
all workers were motivated by money, so he promoted the idea of “a fair day’s pay for a fair day’s work.” :if a worker didn’t achieve enough in a day, he didn’t deserve to be paid as much as another worker who was highly productive.
Mary Parker Follett
workplace democracy and nonhierarchical structure
Domination and compromise = only one party’s interests are satisfied
* Integration = all parties’ interested are incorporated.
Henri Fayol
many administrative principles.
- Span of control = optimal number of subordinates to be overseen by a manager.
* Related but ≠ Unity of command = each subordinate should report to only one boss.
- Delegation = subordinates should handle routine matters using standard operating procedures.
- Departmentalization = grouping similar activities within units (or departments).
- Esprit de corps = unicity of sentiment and harmony existing among employees in smoothly
functioning organizations → reappeared in concept of strong culture.
Chester Barnard
importance of managing informal organization (Durkheim).
- The core: cooperation (= integrating work efforts through communication of gold) and attention to worker motivation → mix of Follett and Taylor.
Modern Organisation Theory
Modernist Perspective
Basic Assumptions:
- Organizations are a means to an end
- Organizations founded for performance of
collective tasks, which cannot be performed
by individuals
- Organizations are neutral entities
- It is possible to get scientifically objective
insights about the organization and its structure
Modernist: General Systems Theory
Goal: integrate all scientific knowledge → societies contain groups, groups contain individuals, individuals are composed of organs of cells
Law of requisite variety = lower-level systems are not complex enough to map into higher-order systems → any explanation of an organization will be partial at best.
Socio-technical systems theory
out of concern for the interaction between two primary organizational systems: social structure and technology.
❖ methods developed by autonomous workgroup, while not technically as efficient as those designed by company engineers, led to better performance and more job satisfaction.
❖ Shifted the focus to a number of humanistic issues: organizations as social systems, social & psychological impact of work design, importance of work group compared to individual…
Contingency Theory
The basic assumption of the contingency approach is that the dimensions of the social structure will depend on the relationship between an organization’s environment and its other factors
Symbolic (Interpretive) Perspective
Basic Assumptions:
- Focus on people and social relations - People construct meaning and act
accordingly
- Enactment – people behave and act
following their interpretation
- Relativistic findings due to context
dependent approach
Social construction theory
the social world is negotiated, organized and constructed by our interpretations of reality which are communicated through symbols.
❖ Interpretations involved in social construction of reality are based on implicit understandings formed intersubjectively.
Intersubjectivity
realm of subjective experience occurring between people that produces a sense of shared history & culture.
Social construction operates through three mechanisms:
- Externalization = meaning is carried by and communicated through symbols.
- Objectification = intersubjectively produced understandings.
- Internalization = one unquestioningly accepts the intersubjectively externalized and objectified
understandings of a social group as a reality.
Enactment Theory
Theory of Projections
the effect that when people act they bring structures and events into existence and set them in action.
reification = making something real.
❖ The organizing of organizations happens though enactment of beliefs about what is real.
- Sense-making is not about discovering the truth but about creating it by organizing experiences in ways that produce (make) understanding (sense).
- Organization = product of processes of organizational cognition.
Selznick’s theory of institutionalization
Organization = rational tool for achieving economic efficiency such that if another organization offers
greater efficiency, it will replace the first one → organizations should be dispensable.
- Institution = makes itself indispensable to society by asserting its value in symbolic terms.
Recognition of its claims to social legitimacy serve as the justification for its continued existence.
❖ Theory on institutional myth = social legitimacy hides the irrationality of organizational behavior from public
view by creating a myth that allows cooptation of resources to go undetected for long periods of time.
Postmodernistic view
Addresses power and control issues – an organization has a function to execute power and control people
Focus on analyzed statements and micro text of people
Weber’s ideal bureaucracy: the main elements
Fixed division of labor = splitting the work of the organization among employees each of whom performs a piece of the whole output-generating process.
- Departmentalization = grouping similar/closely related activities together into organizational units.
❖ Hierarchy of authority = clearly defined hierarchy of offices, each with its own sphere of competence.
❖ Formal rules and procedures = set of general rules governing the performance of offices; strict discipline
and control in the conduct of the office is expected.
- According to Weber, these can be used as a substitute for hierarchical authority.
- Formalization = extent to which explicit rules, regulation and policies govern organizational activities.
- Often contributes to feeling of impersonality associated with bureaucratic organizations.
❖ Other elements: - Candidates elected on the basis of technical qualifications and appointed (not elected) to office
- Official remunerated by fixed salaries paid in money.
- The office as the primary occupation for the office-holder (= their career).
- Promotion granted according to seniority/achievement (assessed by superiors).
- Official work separated from ownerships of the means of administration.
Rational Decision Making Model Assumptions
- The purpose and goal of the decision-making pre-exists, which will guide the behaviour during the process and is unified for the whole organisation;
- The search process for alternatives is costless, and many alternatives are considered;
- The consequences of alternatives are fully and completely anticipated;
- The alternative that maximises goal achievement is always chosen.
Problem Solving Under Bounded Rationality- Simons
- Satisfying instead of maximising: humans pick the first coming satisfactory alternative
- Search: if the performance is below the satisfaction people will search for new satisfactionary alternative
- Rule following: past determines the rules we learn from experiences : only incremental innovation is possible
- Disagreement on achieved/achievable results: the first assumption of rational-decision making is often not true as the goals of the organisation are not unified, instead there are multiple goals.
Political Model of decision making
- Different views, diversity: need of union
- Action over alternatives that are taken
- The final decision is based on negotiation and power
