Part 2 Pub Yang

Fredrick Winslow Taylor (1860-1915) • American mechanical engineer • Machinist • Machine-shop laborer at Midvale Steel Works • Research director • Chief engineer • Noticed workmen were not working their machines or themselves as hard as they could ("soldiering") • Began to study and analyze the productivity of men and machines • One of the first management consultants • Father of Scientific Management • Book: The Principles of Scientific Management (1911) The Principles of Scientific Management • The need to increase efficiency - Lost of jobs due to increase of efficiency - The workmen are the chief beneficiaries - Solution to labor dispute due to surplus The Principles of Scientific Management • Four principles 1. Scientific Knowledge • Deliberate gathering together of the great mass of traditional knowledge which, in the past, has been in the heads of the workmen • Recording it, tabulating it, reducing it in most cases to rules, laws, and in many cases to mathematical formula. Principle 1: find the one "best way" to perform each task. The Principles of Scientific Management • Four principles 2. Workmen (staff) • Deliberate selection • Deliberate training • Higher pay for higher performance Principle 2: Carefully match each worker to each task 3. Bring together the science and the trained workmen (motivation) • Better treatment • More kindly treatment • More consideration for their wishes • An opportunity for them to express their wants freely Principle 3: closely supervise workers, and use reward and punishment as motivators 4. Re-division of the work • Separate management from workmen • All the work formerly done by workmen alone is divided into two parts • Management: division of work • Better links to responsibilities of complaints Principle 4: the task of management is planning and control Example: Shoveling 4 principles: • Find the one "best way" to perform each task. • Carefully match each worker to each task • Closely supervise workers, and use reward and punishment as motivators • The task of management is planning and control Critiques? • First attempt to systematically treat management and process improvement as a scientific problem • Turning the worker into an "machine" • Motivation: money • There is one "best" way Max Weber (1864-1920) and Bureaucracy • German sociologist • Tried to explain bureaucracy from a rational point of view (Prescriptive) Characteristics of Bureaucracy - Division of Labor and specialized roles • Dividing jobs into a smaller set of tasks (increases efficiency) • Clearly identifies the regular tasks and duties - Managerial Hierarchy • Established chain of command that shows positions in an organization and how they relate to one another • Better communication - Formal Selection • Employees should be hired and promoted based upon technical qualifications and merit (e.g open competition) - Career Orientation • Employees should be career professional • Employees encouraged to look forward to a life-long career within organization - Formal Roles • Rules and policies should be written down - Impersonality • Rules should be applied uniformly across the organization • Response to monarchies and dictatorships • Merits: Critiques? - Emphasis on qualification (merits), specialization of labor roles, hierarchy of power, rules and discipline. • Weaknesses: - Dehumanization - Inflexible organization structure - Too much routine - Employee lacks the sense of belonging Luther Gulick (1892-1993) • American political scientist • Taught at Columbia University from 1931-1942 • In 1921 became president of its Institute of Public Administration and served until 1962 • Served as city administrator of New York City from 1954 to 1956 • Best known for the functions of the executive represented in the acronym POSDCORB Notes on the Theory of Organization • "Work division is the foundation of organization; indeed, the reason for organization." • Why divide work? - Men differ in nature, capacity and skill; the range of knowledge and skill is so grate that a man cannot within his life-span know more than a small fraction of it. POSDCORB • Gulick's question: "what is the work of the chief executive? What does he do?" (1937) - Planning • Working out in broad outline the things that need to be done and the methods for doing them to accomplish the purpose set for the enterprise - Organizing • The establishment of the formal structure of authority through which work subdivisions are arranged, defined and coordinated for the defined objective - Staffing • The whole personnel function of brining in and training the staff and maintaining favorable conditions of work - Directing • Continuous task of making decisions and embodying them in specific and general orders and instructions and serving as the leader of the enterprise - Coordinating • The all important duty of interrelating the various parts of the work - Reporting • Keeping those to whom the executive is responsible informed as to what is going on, which thus includes keeping himself and his subordinates informed through records, research, and inspection; - Budgeting • Fiscal planning, accounting, and control Critiques • Still heavily referenced in today's public administration and politics; • Instrumental in highlighting theories such as - Span of control: a limited number of immediate managerial contacts. - Unity of command : "A man cannot serve two masters" • Criticism - Run strictly by distinct guidelines, but not effective or relevant for general management. - Herbert Simon (1947) challenged POSDCORB principles by stating "for almost every principle one can find an equally plausible and acceptable contradictory principle." - Modern organizations do not hold POSDCORB in as high regards as it once was - A fixed formula Summary of Classical Organization Theory Tenets 1. Organizations exist to accomplish production-related and economic goals. 2. There is one best way to organize for production, and that way can be found through systematic, scientific inquiry. 3. Production is maximized through specialization and division of labor. 4. People and organizations act in accordance with rational economic principles. Common Criticisms of Classical Organizational Theory Classical principles of formal organization may lead to a work environment in which: • Employees have minimal power over their jobs and working conditions • Subordination, passivity and dependence are expected • Working conditions produce to psychological failure as a result of the belief that they are lower class employees performing menial tasks Neo-Classical Organization Theory • Gained reputation by attacking, modifying, adding to, and extending classical school: • Central focuses are still the same: efficiency, span of control, bureaucracy, unity of command, etc. • Initiated the theoretical movement away from the overly simplistic mechanistic views of classical organization theory • Became central to the foundations of most of the schools that have followed • E.g. : Intellectually vs. empirically The Proverbs of Administration • For almost every principle one can find an equally plausible and acceptable contradictory principle. - "Look before you leap" - "He who hesitates is lost." • "Although the two principles of the pair will lead to exactly opposite organizational recommendations, there is nothing in the theory to indicate which is the proper one to apply". Discussed Four Ambiguous "Principles" - Specialization - Unity of command - Span of control - Organization by purpose, process, clientele, place. • These ambiguous principles cannot be easily submitted to empirical test. An Approach to Administrative Theory Proposed by Simon "A valid approach to the study of administration requires that all the relevant diagnostic criteria be identified; that each administration situation be analyzed in terms of the entire set of criteria; and that research be instituted to determine how weights can be assigned to the several criteria when they are mutually incompatible. " Step 1: The description of administrative situations • To develop a set of concepts that will permit the description in terms relevant to the theory of administrative situations. - Must be scientifically useful and operational. • E.g. effectiveness • E.g. reputational • E.g. motivation Step 2: The diagnosis of administrative situations • What are the factors that determine the level of efficiency which is achieved by an administrative organization? - Ability to perform decisions - Ability to make correct decisions - Individual values - Individual knowledge - ..... Step 3: Assigning weights to the criteria • What is the assigned weights to span of control? • What is the assigned weights to levels of organization Example • Y (efficiency)=a*X1(span of control) +b*X2 (levels of organization)+c Selznick, P. (1948). Foundations of The Theory of organization • While it's possible to describe and design organizations in a purely rational manner, such efforts can never hope to cope with the non- rational aspects of organizational behavior. • Organizations consist not simply of a number of positions for management to control, but of individuals, whose goals and aspirations might not necessarily coincided with the formal goals of the organization. Selznick, P. (1948). Foundations of The Theory of organization • Also describes cooptation, which is the process of an organization bringing and subsuming new elements into the policy-making process in order to prevent such elements from becoming a threat to the organization or its mission. • Implications? - It's important to study organizations in relation to its environment - It's important to study organizations based on understanding of "human beings". Question to Think About: How To Increase Team Efficiency? • Let's say you are given a research question to examine by your supervisor who is a strong believer of Herbert Simon. He wants you to provide a research design plan based on Simon's approach proposed in "Proverbs of Administration" for studying the following research question: "How to increase team efficiency in a public agency? " Neo-Classical Strengths and Weaknesses • The focus is on "efficiency". • Strengths - It found "holes" in classical organization theory, attempted to revise it, and spurred almost all other schools that followed - Led to further research and study relating to the "humanness" of organizational members • Weakness - Did not develop a body of theory that could adequately replace the classical theory

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Hawthorne Studies (1927-1932) The experiments began in 1927 at the Hawthorne Works of the Western Electric Company in Chicaro, Illinois (1927-1932). Change of illumination intensity was NOT found to influence output unless it was decreased to that of ordinary moonlight Results showed an unexpected gradual rise in daily output. n The researchers, believing that something other than the changes had affected the output. n They believed that the girls' behaviors were related not to the technical but the social organization of work. "What actually happened was that six individuals became a team and the team gave itself wholeheartedly and spontaneously to cooperation in the experiment. The consequence was that they felt themselves to be participating freely and without afterthought, and were happy in the knowledge that they were working without coercion from above or limitation from below." n Bank Wiring Observation Room (14 workmen) § Social pressure was put on high performance employees to be accepted by the group § The lowest producer in the room ranked first in intelligence and third in dexterity; the highest producer was 7th in dexterity and lowest in intelligence. First, we have to learn to recognize a human problem when we see one; and second, upon recognizing it, we have to learn to deal with it as such and not as if it were something else. " Only in terms of powerful sentiments could these individuals differences in output level be explained. Abraham Maslow -Need Hierarchy Theory In 1943, Maslow proposed the Need Hierarchy Theory, which explained the sequential hierarchical order of the development of five basic needs: physiological needs; safety needs; love needs; esteem needs; self-actualization. n The crux of this theory is that as one need becomes fulfilled, its strength diminishes while the strength of the next need higher in the hierarchy increases. He called the conventional view of employees, "Theory X." The assumption underlying Theory X is that people are passive---even resistant---to organizational needs. -thus managers have to use external control of behavior , e.g., Money. n McGregor concluded that a different theory of human motivation was needed in the workplace, a theory based on the correct assumptions about human nature--- "Theory Y": emphasized self-control and self-direction. Modern Structural Organization Theory Burns & Stalker: Mechanistic and Organic Systems n Purpose: § There should not be one ideal management system for all organizations § This is a movement away from a notion that characterized early classical organization theory: that there is one ideal way to organize (Taylor). Instead, organization structure should conform to "extrinsic factors" (e.g., technological or market change) § Under different types of environmental contingencies, organizations should adopt different structures. § Organizational effectiveness results from fitting characteristics of the organization to contingencies that reflect the situation of the organization. Distinguished two types of organization structures: § Mechanistic structure: organizational roles were tightly defined by superiors who had the monopoly of organizational knowledge, § Organic structure: organizational roles were loosely defined and arrived at by mutual discussion between employees, with knowledge being dispersed among the employees who possessed varieties of expertise germane to the organizational missions. A mechanistic management system is appropriate to stable conditions n The organic form is appropriate to changing conditions, which give rise constantly to fresh problems and unforeseen requirements for action which cannot be broken down or distributed automatically arising from the functional roles defined within a hierarchic structure. Mintzberg 1979 and 1980 n Henry Mintzberg is one of the most influential researchers in management and business strategy n Takes a design view of organisations n Gives us a basis for understanding organization structure n Mintzberg proposes five main configurations, or kinds of organizations n These are consistent organizational designs in terms of design parameters (i.e. coordination mechanisms) and environmental conditions. The Five Basic Parts of Organization n Operating core § Those who perform the basic work related directly to the production of products and services n Strategic apex § Charged with overall responsibility for the organization—the chief executive officer (whether called president, superintendent, Pope, etc.) n Middle-line managers § Form a chain joining the strategic apex to the operating core by the use of delegated formal authority n Technostructure § The analysts who serve the organization by affecting the work of others. They may design it, plan it, change it, or train the people who do it, but they do not do it themselves n Support staff § Composed of specialized units that exist to provide support to the organization outside the operating work flow The Contingency Factors Effective structuring requires a close fit between contingency factor and design parameter, more specifically, that structure must reflect situation. n Four sets of contingency factors: § Age and size § Technical system § Environment § Power factors Five Configurations of Structure The Simple Structure (small shop , new agency agency) The Machine Bureaucracy A traditional airline A steel work A government directorate Post office Tax Collection The Professional Bureaucracy University Hosptial The Divisionalized Form A major corporation A regional health provider The Norwegian government sector The Adhocracy A project based consulting or R&D company Some highly innovative companies or agencies

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Organizational Economics Theory n The theory of organizational economics studies the nature of the obstacles to coordination of activities in and between organizations. nFocuses on "efficiency". n Organizational economists use concepts and tools from the field of economics to study the internal processes and structure of the firm. They ask questions such as: § Why do organizations exist? § What determines the size, scope and structure of an organization? § Why are some workers paid hourly rates while others receive salaries? § What factors determine organizational survival and growth? Organizational Economics Theory nMost of the developments in this field occurred in the second half of the 20th century, including the introduction of important ideas associated with: § Agency theory § Behavioral theory § Incomplete contract theory § Theory of teams § Transaction cost economics § Game theory Key Ideas nOne of the key ideas of this school is that by creating a hierarchy, an organization helps to reduce the costs of transactions. nThe owners ("principals") delegate some authority to the managers and other employees ("agents") out of necessity. To ensure that the agents act in the best interests of the principals (policy makers in the case of public and nonprofit organizations), the principals use both the price theory mechanisms (e.g., incentives) and hierarchy mechanisms (e.g., monitoring) to "limit the aberrant activities" of the agents. Transaction Cost Economics nAssumptions: § bounded rationality § principal-agent relationship (opportunism) nExplains how key transaction related problems (bilateral dependence, asset specificity, uncertainty, probity) affect organizational choice among market exchanges, hierarchical control, and various hybrid arrangements. nAlso explains how organizations make "make or buy" decisions. Define Transaction Cost nA transaction occurs when a good or service is transferred across a technologically separable interface; transaction cost is economic counterpart of friction, ie, whether the parties to the exchange operate harmoniously or misunderstandings and conflicts lead to breakdowns and other malfunctions (Williamson, 1981). TCE: Central Claim and Focus n Transaction will be handled in such a way as to minimize costs involved in carrying them out n The greater the transaction cost is, the more likely the organization should choose 'make' by itself rather than 'buy' from outside nExamines planning, adapting, and monitoring task completion under alternative governance structures (Williamson, 1981), it identifies three alternate forms of transaction governance: market, hybrid, and hierarchy n Focuses on explaining why a good or service is made internally, bought externally, or using a joint production. TCE: Theory Model nGovernance mode (hierarchy, hybrid, or market) that minimizes TC(transaction cost) is the preferred option. nAttributes of transactions § Asset specificity (whether specialized investments are required to produce the service) § Frequency of transaction § Uncertainty § Hazards of probity (=difficulties for political executive to ensure that such transactions are handled with loyalty and rectituded by assigned agents) Theories of Organizational Culture and Change Theories of Organizational Culture and Change nChallenge the basic views of the rational perspectives about how organizations make decisions and how and why organizations act as they do (1970s to 1990s) § Have different assumptions about organizations from Classical Organization Theory, Human Resource Theory, or Structural Organization Theory Assumptions nHumans are social beings and that behavior is determined by culture nHuman action is motivated by perceived needs and self-interest as influenced by cultural elements Dominant Models nInterpretive Model with residual influence of the rational model nThis resulted in the notions that organizations can and should manage their cultures nOne subset of scholars, however, adopted the interpretive model with facets of critical theory to advocate radical culture change. Main Arguments nThe organization culture movement developed the notion that organizations develop cultural and sub- cultural identities based on shared meanings, norms, values and expectations. nOrganizational culture is defined as the attitudes and behavior patterns handed down and passed along by socialization processes, complete with rites, rituals, myths, and symbols. An organization's culture, according to these theorists, determines individual and group behavior in much the same way that small group norms and values influence behavior. Main Arguments-Cont'd nThe scholars provided descriptions and analyses of the cultural aspects of organizations as socially constructed entities, products of the mind rather than rational and concrete entities. nOrganizational culturalists hypothesized that ambiguity and uncertainty inhibited rationality. As systems of shared meaning, organizations exist because of and as mechanisms for developing shared meaning, or inter- subjective relationships. nThis body of theory emphasizes the importance of perceptions, arguing that shared interpretations of organizational events are, in fact, reality. Main Arguments-Cont'd nThe metaphor was one of cultural systems, drawing heavily on the language of anthropology and ethnography. In dynamic cultural systems, organizations are the arenas in which complex interactions among members result in cultures. nThe organizational culture school adopted a social system perspective. Theorists acknowledged the external social environment but focused primarily on internal cultural factors. They worked from a process orientation, looking at sense-making and the negotiation of shared meanings. The dominant managerial perspective was developing ways to manage culture. Methodology nThe primary units of analysis is the organization or significant subsystems (divisions or departments) nThe methodology relied heavily on research methods less positivist in approach; research techniques from anthropology and ethnography, especially participant observation were key to theory development. Research Focus nThe theorists looked at issues of culture and organizational functioning and the impact of culture development and socialization on individual and group behavior. nMuch of the work focused on analysis of processes and tools through which cultures develop and change. These included cultural artifacts, rites, symbols, and myths. nIn an instrumental sense, the theorists attempted to identify strategies for managing and changing cultures and for examining transformational aspects of leadership. Theoretical Strengths n The primary theoretical strength of the organizational culture school is the exploration of new assumptions based in the interpretive model and its inter-subjective view of reality.This offered a new focus for organization theory, offering fresh explanations about cultural aspects of organization and richer views of leadership. n Employing new assumptions and research methods, the organization culture theorists offered alternatives to logical positivism to describe and analyze culture processes, sense-making and the ways that people in organizations develop shared meaning through myths, rituals, symbols and communication. n The organizational culture school theorists also developed a rich theory of organization learning and, in some cases, challenged the dominant values of society to advocate comprehensive social change. Main Weaknesses nWeaknesses of the organizational culture school included a somewhat narrow focus on the culturally determined aspects of individual and organizational behavior, an incomplete view of human nature, and a failure to deal with the complexity of individual differences and personalities. nThere was also a general disregard for the role of formal structure and the systems perspective; few of the theorists gave due acknowledgement to the role of external forces on culture. nIn some ways, the prescriptions for management of culture and culture change are manipulative in nature.

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