1142019 Organizational Theory and Behaviorhttpslearn..docx

1/14/2019 Organizational Theory and Behavior
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Organiza�onal Theory and Behavior
Organiza�onal behavior is the field of study that inves�gates h
ow organiza�onal structures
affect behavior within organiza�ons.
Organiza�onal behavior includes behavior within the organiza�
on
and in rela�on to other organiza�ons.
Micro organiza�onal behavior refers to individual and group
dynamics in an organiza�onal se�ng.
Macro organiza�onal theory studies whole organiza�ons and
industries, including how they adapt, and the strategies, structur
es,
and con�ngencies that guide them.
Concepts such as leadership, decision making, team building,
mo�va�on, and job sa�sfac�on are all facets of organiza�onal

behavior. They are management responsibili�es.
Company or corporate culture, although difficult to define, is
extremely relevant to organiza�onal behavior.
Key Term
behavior—the way a living creature acts
What Is Organiza�onal Behavior?
Learning Resource
Key Points
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As a field of study, organiza�onal behavior is concerned with t
he impact individuals, groups,
and structures have on human behavior within organiza�ons. It
is an interdisciplinary field that
includes sociology, psychology, communica�on, and manageme
nt. Organiza�onal behavior
complements organiza�onal theory, which focuses on organiza
�onal and intra‑organiza�onal
topics, and human‑resource studies, which is more focused on e

veryday business prac�ces.
Edgar Schein’s Organiza�onal Culture
Model
There are three central components of an
organiza�on’s culture: ar�facts (visual
symbols such as an office dress code),
values (company goals and standards), and
assump�ons (implicit, unacknowledged
standards or biases).
Types of Organiza�onal Behavior
Organiza�onal studies examine organiza�ons from mul�ple pe
rspec�ves, using various
methods and levels of analysis. Micro organiza�onal behavior r
efers to individual and group
dynamics in organiza�ons. Macro organiza�onal theory studies
whole organiza�ons and
industries, especially how they adapt; and the strategies, structu
res, and con�ngencies that
guide them. Some scholars also include the categories of meso‑s
cale structures involving
power, culture, and the networks of individuals in organiza�ons

. Field‑level analysis studies
how en�re popula�ons of organiza�ons interact.
Many factors come into play whenever people interact in organi
za�ons. Modern organiza�onal
studies a�empt to understand and model these factors. Organiza
�onal studies seek to control,
predict, and explain. Organiza�onal behavior can play a major r
ole in organiza�onal
development, enhancing not only the en�re organiza�on’s perf
ormance, but also individual
and group performance, sa�sfac�on, and commitment.
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Topics in Organiza�onal Behavior
Organiza�onal behavior study is par�cularly relevant in the fie
ld of management because it
encompasses many of the daily issues managers face. These incl
ude leadership, decision
making, team building, mo�va�on, and job sa�sfac�on. Under
standing not only how to

delegate tasks and organize resources but also how to analyze b
ehavior and mo�vate
produc�vity is cri�cal for success in management.
Organiza�onal behavior study also concentrates on culture. Alt
hough difficult to define,
corporate culture is extremely relevant to how organiza�ons be
have. A Wall Street stock‑
trading company, for example, will have a drama�cally differen
t work culture from an academic
department at a university. Understanding and defining these wo
rk cultures and their
behavioral implica�ons is also a central topic within the organi
za�onal behavior field.
Why Study Organiza�onal Theory?
Organiza�onal theory studies organiza�ons to iden�fy how the
y solve problems and how they
maximize efficiency and produc�vity.
Correctly applying organiza�onal theory can have several benef
its for
an organiza�on and society at large. Developments in organiza
�ons
help boost economic poten�al and help generate the tools neede
d to

fuel a capitalis�c system.
Once an organiza�on sees a window for expansion, it begins to
grow,
altering the economic equilibrium by catapul�ng itself forward.
This
expansion induces changes in the organiza�on’s infrastructure,
in
compe�ng organiza�ons, and in the economy as a whole.
One example of how development in organiza�onal theory impr
oves
efficiency is in factory produc�on. Henry Ford created the asse
mbly
line, a system of organiza�on that enabled efficiency and drove
both
Ford and the US economy forward.
Key Terms
Key Points
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efficiency—

the extent to which a resource, such as electricity, is used
for the intended purpose; the ra�o of useful work to energy
expended
norma�ve—of, pertaining to, or using a standard
Defini�on of Organiza�onal Theory
Organiza�onal theory studies organiza�ons to iden�fy the pa�
erns and structures they use to
solve problems, maximize efficiency and produc�vity, and meet
the expecta�ons of
stakeholders. These pa�erns are used to formulate norma�ve th
eories of how organiza�ons
func�on best. Therefore, organiza�onal theory can be a tool for
learning the best ways to run
an organiza�on or iden�fy organiza�ons that are managed in a
way that increases the
likelihood that they will succeed.
Applying Organiza�onal Theory
Correctly applying organiza�onal theory can have several benef
its for both the organiza�on
and society at large. As many organiza�ons strive to integrate t
hemselves into capitalis�c
socie�es, there is a ripple effect on compe�ng firms and the ec

onomy as a whole. Once an
organiza�on sees a window for expansion, it begins to grow by
producing more, and thus
alters the economic equilibrium by catapul�ng itself forward in
to a new environment of
produc�on. This expansion induces changes in the organiza�on
’s infrastructure, in compe�ng
organiza�ons, and in the economy as a whole. Other firms obse
rve innova�ve developments
and recreate them efficiently. Developments in organiza�ons he
lp boost economic poten�al in
a society and help generate the tools necessary to fuel the capita
lis�c system.
One example of how development in an organiza�on affects the
modern era is factory
produc�on. The concept of factory produc�on amplified produc
�on as a whole and allowed
for the organized division of labor. It centralized facets of the w
orkforce and began to define
the rules of produc�on and trade, which also led to specializa�
on.
Henry Ford implemented an innova�ve design by modifying fac
tory produc�on and crea�ng
the assembly line, which is s�ll used in many factories today. T

hese developments make it
easier for a company to produce, so firms are incen�vized to ag
gregate and use more efficient
methods for running their companies.
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Organiza�onal theory can also help iden�fy malicious or negli
gent corporate prac�ces,
informing the development of future precau�onary measures. T
he nuclear accident at Three
Mile Island helped determine ways to prevent similar incidents i
n the future. In that case,
developments in organiza�onal theory led to stronger governme
nt regula�ons and stronger
produc�on‑related safety mandates.
Licenses and A�ribu�ons
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1/14/2019 Classical Versus Behavioral Perspectives
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Classical Versus Behavioral Perspec�ves
The classical perspec�ve focuses on direct inputs to efficiency,
while the behavioral
perspec�ve examines both direct and indirect inputs to efficien
cy.
The classical perspec�ve of management emerged from the Ind
ustrial

Revolu�on and focuses on the efficiency, produc�vity, and out
put of
employees as well as the organiza�on as a whole. It generally d
oes
not focus on human or behavioral a�ributes or varia�on among
employees.
The classical perspec�ve of management is o�en cri�cized for
ignoring human desires and needs in the workplace and does not
consider human error in work performance. The classical perspe
c�ve
has strong influences on modern opera�ons and process
improvement.
The behavioral perspec�ve of management (some�mes called t
he
“human rela�ons perspec�ve”) takes a much different approach
from
the classical perspec�ve: It is generally more concerned with
employee well‑being and encourages management approaches th
at
consider the employee as a mo�vated person who genuinely wa
nts

to work.
Key Terms
micromanage—
to rely on extreme supervision and close monitoring
of employee work
Learning Resource
Key Points
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psychosocial—
related to one’s psychological development in, and
interac�on with, a social environment
The Classical Perspec�ve of Management
The classical perspec�ve of management, which emerged from t
he Industrial Revolu�on,
focuses on improving the efficiency, produc�vity, and output of
employees, as well as the
business as a whole. However, it generally does not focus on hu
man or behavioral a�ributes or

variances among employees, such as how job sa�sfac�on impro
ves employee efficiency.
Frederick Winslow Taylor
Scien�fic management theory, which was first introduced by Fr
ederick Winslow Taylor,
focused on produc�on efficiency and employee produc�vity. B
y managing produc�on
efficiency as a science, Taylor thought that worker produc�vity
could be completely controlled.
He used the scien�fic method of measurement to create guideli
nes for the training and
management of employees. This quan�ta�ve, efficiency‑based
approach is representa�ve of
the classical perspec�ve.
Max Weber
Another leader in the classical perspec�ve of management, Max
Weber, created the
bureaucracy theory of management, which focuses on the theme
of ra�onaliza�on, rules, and
exper�se for an organiza�on as a whole. Weber’s theory also f
ocuses on efficiency and clear
roles in an organiza�on, meaning that management should run a
s effec�vely as possible with

as li�le bureaucracy as possible. One example of Weber’s mana
gement theory is the modern
“flat” organiza�on, which promotes as few managerial levels as
possible.
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The classical perspec�ve of
management focused on improving
worker produc�vity.
Source: Sea�le Public Library, Wikimedia Commons.
Henri Fayol
Henri Fayol, another leader in classical management theory, als
o focused on the efficiency of
workers, but he looked at it from a managerial perspec�ve. He f
ocused on improving
management efficiency rather than each individual’s efficiency.
Fayol’s six func�ons of
management evolved into the four essen�al func�ons of manag
ement: planning, organizing,
leading, and controlling.

The classical perspec�ve of management theory pulls largely fr
om these three theorists
(Taylor, Weber, and Fayol) and focuses on the efficiency of em
ployees and improving an
organiza�on’s produc�vity through quan�ta�ve (i.e., measura
ble, data‑driven) methods. The
classical perspec�ve is o�en cri�cized for ignoring human desi
res and needs in the workplace.
It typically does not consider human error in work performance.
The classical perspec�ve
strongly influences process improvement in modern opera�ons,
in which quan�ta�ve metrics
determine how effec�vely a process is running.
The Behavioral Perspec�ve of Management
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The behavioral perspec�ve of management (some�mes called t
he “human rela�ons
perspec�ve”) takes a much different approach from the classica
l perspec�ve. It began in the

1920s with theorists such as Elton Mayo, Abraham Maslow, and
Mary Parker Folle�.
The Hawthorne Studies
The Hawthorne studies were an important start to the behavioral
perspec�ve of management.
These were a series of research studies were conducted with the
workers at the Hawthorne
plant of the Western Electric Company. The Hawthorne studies
found that workers were more
strongly mo�vated by psychosocial factors than by economic or
financial incen�ves.
Abraham Maslow
Around the �me of the Hawthorne studies, Abraham Maslow cr
eated his hierarchy‑of‑needs
theory, which showed that workers were mo�vated through a se
ries of lower‑level to higher‑
level needs. This theory has been applied in the workplace to be
�er understand “so�” factors
of employee mo�va�on, such as goal se�ng and team involvem
ent, in order to be�er manage
employees.
Douglas McGregor
Addi�onal theories in the behavioral perspec�ve include Dougl

as McGregor’s theory X and
theory Y, which address the percep�ons managers have about th
eir employees and how
employees react to those percep�ons. Theory X management as
sumes employees are
inherently lazy and need micromanagement. Theory Y managem
ent focuses on crea�ng work
condi�ons that foster workers’ inherent crea�vity, commitment
, and need for self‑fulfillment.
McGregor’s theory of management is an example of how behavi
or‑management theory looks
more into the “human” factors of management and encourages m
anagers to understand how
psychological characteris�cs can improve or hinder employee p
erformance.
Generally, the behavioral perspec�ve is much more concerned
with employee well‑being and
encourages management approaches that consider the employee
as a mo�vated worker who
wants to produce quality work. This theory, therefore, encourag
es a management approach
that is less focused on micromanaging and more focused on buil
ding rela�onships with
employees to help them achieve their workplace goals and work

as effec�vely and efficiently
as possible.
Scien�fic Management: Taylor and the Gilbreths
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Scien�fic management focuses on improving efficiency and out
put through scien�fic studies of
workers’ processes.
Scien�fic management, or Taylorism, is a management theory t
hat
analyzes work flows to improve economic efficiency, especially
labor
produc�vity. This management theory, developed by Frederick
Winslow Taylor, was dominant in manufacturing industries in th
e
1880s and 1890s.
Important components of scien�fic management include analysi
s,
synthesis, logic, ra�onality, empiricism, work ethic, efficiency,

elimina�ng waste, and standardized best prac�ces.
Taylor and the Gilbreths introduced methods of measuring work
er
produc�vity, including �me and mo�on studies, which are s�ll
used
today in opera�ons and management.
Key Terms
mo�on study—created by Frank and Lillian Gilbreth, a study
analyzing work mo�ons by filming workers and emphasizing ar
eas for
efficiency improvement by reducing mo�on
Taylorism—
also known as scien�fic management, an early twen�eth‑
century theory of management that analyzed workflows to impro
ve
efficiency
�me study—
created by Frederick Winslow Taylor, a study of a job
and its component parts used to determine the most efficient
method of working
scien�fic management—an early twen�eth‑century theory that

analyzed workflows in order to improve efficiency
Taylorism
Key Points
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Scien�fic management, or Taylorism, is a management theory t
hat analyzes work flows to
improve economic efficiency, especially labor produc�vity. Thi
s management theory,
developed by Frederick Winslow Taylor, was popular in the 188
0s and 1890s in manufacturing
industries.
While the terms scien�fic management and Taylorism are o�en
treated as synonymous, an
alterna�ve view considers Taylorism to be the first form of scie
n�fic management. Taylorism is
some�mes called the “classical perspec�ve,” meaning it is s�ll
observed for its influence but no
longer prac�ced exclusively. Scien�fic management was best k
nown from 1910 to 1920, but in

the 1920s, compe�ng management theories and methods emerge
d, rendering scien�fic
management largely obsolete by the 1930s. However, many scie
n�fic management themes are
s�ll seen in industrial engineering and management today.
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Frederick Winslow Taylor
Frederick Winslow Taylor is considered the creator of scien�fic
management.
Important components of scien�fic management include analysi
s, synthesis, logic, ra�onality,
empiricism, work ethic, efficiency, elimina�on of waste, and st
andardized best prac�ces. All of
these components focus on the efficiency of the worker and not
on any specific behavioral

quali�es or varia�ons among workers.
Today, an example of scien�fic management is determining the
amount of �me it takes
workers to complete a specific task and determining ways to dec
rease the amount of �me by
elimina�ng waste in the workers’ processes. A significant part
of Taylorism was �me studies.
Taylor was concerned with reducing process �me and worked w
ith factory managers on
scien�fic �me studies. At their most basic level, �me studies i
nvolve breaking down each job
into component parts, �ming each element, and rearranging the
parts into the most efficient
method of working. By coun�ng and calcula�ng, Taylor sought
to transform management into
a set of calculated and wri�en techniques.
Frank and Lillian Gilbreth
While Taylor was conduc�ng his �me studies, Frank and Lillia
n Gilbreth were comple�ng their
work in mo�on studies to further scien�fic management. The G
ilbreths filmed the details of a
worker’s ac�vi�es while recording the �me it took to complete
them. The films helped to

create a visual record of how work was completed, and emphasi
zed areas for improvement.
They were also used to train workers in the best way to perform
their work.
This method allowed the Gilbreths to build on the best elements
of the work flows and create
a standardized best prac�ce. Time and mo�on studies are used
together to achieve ra�onal
and reasonable results and find the best prac�ce for implemen�
ng new work methods. While
Taylor’s work is o�en associated with that of the Gilbreths, the
re is o�en a clear philosophical
divide between the two scien�fic‑management theories. Taylor
was focused on reducing
process �me, while the Gilbreths tried to make the overall proc
ess more efficient by reducing
the mo�ons involved. They saw their approach as more concern
ed with workers’ welfare than
Taylorism, in which workers were less relevant than profit. This
difference led to a personal ri�
between Taylor and the Gilbreths, which, a�er Taylor’s death, t
urned into a feud between the
Gilbreths and Taylor’s followers.

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Scien�fic management con�nues to make significant contribu�
ons to management theory
today. With the advancement of sta�s�cal methods used in scie
n�fic management, quality
assurance and quality control began in the 1920s and 1930s. Dur
ing the 1940s and 1950s,
scien�fic management evolved into opera�ons management, op
era�ons research, and
management cyberne�cs. In the 1980s, total quality managemen
t became widely popular, and
in the 1990s reengineering became increasingly popular. One co
uld validly argue that
Taylorism laid the groundwork for these influen�al fields prac
�ced today.
Bureaucra�c Organiza�ons: Weber
Weber’s bureaucracy focused on crea�ng rules and regula�ons
to simplify complex procedures
in socie�es and workplaces.
Max Weber was a member of the classical school of managemen

t,
and his wri�ng contributed to the field’s scien�fic school of th
ought.
He wrote about the importance of bureaucracy in society.
Weberian bureaucracy is characterized by hierarchical organiza
�on,
ac�on taken on the basis of (and recorded in) wri�en rules, and
bureaucra�c officials requiring expert training. Career advance
ment
depends on technical qualifica�ons judged by an organiza�on,
not
individuals.
Weber’s ideas on bureaucracy stemmed from society during the
Industrial Revolu�on. As Weber understood it, society was bein
g
driven by the passage of ra�onal ideas into culture, which, in tu
rn,
transformed society into an increasingly bureaucra�c en�ty.
Key Terms
bureaucracy—
a complex means of managing life in social ins�tu�ons
that includes rules and regula�ons, pa�erns, and procedures

designed to simplify the func�oning of complex organiza�ons
iron cage—
Weber’s theory that a bureaucra�c society would make it
impossible to avoid bureaucracy and, thus, society would becom
e
increasingly more ra�onal
Key Points
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bureaucra�c control—se�ng standards, measuring actual
performance, and taking correc�ve ac�on through administra�
ve or
hierarchical techniques like crea�ng policies
Max Weber was a German sociologist, poli�cal economist, and
administra�ve scholar who
contributed to the study of bureaucracy and administra�ve liter
ature during the late 1800s
and early 1900s. He was a member of the classical school of ma
nagement, and his wri�ng

contributed to the field’s scien�fic school of thought. Weber’s i
deas on bureaucracy stemmed
from society during the Industrial Revolu�on. As Weber unders
tood it, par�cularly during the
Industrial Revolu�on of the late nineteenth century, society was
being driven by the passage
of ra�onal ideas into culture, which in turn transformed society
increasingly into a
bureaucracy.
Bureaucracy Defined
Bureaucracy is a means of managing life in social ins�tu�ons t
hat includes rules and
regula�ons, pa�erns, and procedures designed to simplify the f
unc�oning of complex
organiza�ons. Income‑tax forms are an example of a bureaucra
�c tool. Specific informa�on
and procedures are required to fill them out, and many laws and
regula�ons dictate what can
and cannot be included. Bureaucracy simplifies the process of p
aying taxes by pu�ng the
process into a formulaic structure, but the rules and regula�ons
simultaneously complicate the
process.

Bureaucracy in the Workplace
Weber’s theories on bureaucracy include topics such as speciali
za�on of the workforce, the
merit system, standardized principles, and structure and hierarc
hy in the workplace. In his
wri�ngs, Weber focused on the idea of a bureaucracy, which dif
fers from a tradi�onal
managerial organiza�on because workers are judged by imperso
nal, rule‑based ac�vity, and
promo�on is based on merit and performance rather than on im
measurable quali�es.
Weberian bureaucracy is also characterized by hierarchical orga
niza�on, delineated lines of
authority in a fixed area of ac�vity, ac�on taken on the basis of
(and recorded in) wri�en rules,
and bureaucra�c officials requiring expert training.
In a bureaucracy, career advancement depends on technical qual
ifica�ons judged by an
organiza�on, not individuals. Weber’s studies of bureaucracy c
ontributed to classical
management theory by sugges�ng that clear guidelines and auth
ority need to be set to
encourage an effec�ve workplace. Weber did not see any altern
a�ve to bureaucracy and

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predicted that this would lead to an “iron cage,” or a situa�on i
n which people would not be
able to avoid bureaucracy, and society would thus become incre
asingly more ra�onal. Weber
viewed this as a bleak outcome that would affect individuals’ ha
ppiness, forcing them into a
highly ra�onal society—with rigid rules and norms—
that they wouldn’t be able to change. Of
course, with the behavior management movement that arose in t
he 1920s, this bleak situa�on
did not come to pass.
Administra�ve Management: Fayol’s Principles
Fayol’s approach differed from scien�fic management in that it
focused on efficiency through
management training and behavioral characteris�cs.
Fayol took a top‑down approach to management by focusing on
managerial prac�ces to increase efficiency in organiza�ons. Hi
s

wri�ng provided guidance to managers on how to accomplish th
eir
du�es and the prac�ces they should engage in.
The major difference between Fayol and Taylor is Fayol’s conce
rn
with the human and behavioral characteris�cs of employees, rat
her
than individual workers’ efficiency, and his focus on training
management.
Fayol stressed the importance and prac�ce of forecas�ng and
planning in order to train management and improve workplace
produc�vity.
Fayol is also famous for his 14 principles of management and 5
elements that cons�tute managerial responsibili�es.
Key Terms
top‑down—
Fayol’s approach that looked at the organiza�on from the
perspec�ve of the senior managers and not the workers as Taylo
r did
Fayolism—
an organiza�onal approach that emphasizes effec�ve

leadership from the top and that management is fundamentally a
bout
people
Key Points
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Henri Fayol
Fayol was a classical management theorist, widely regarded as t
he father of modern
opera�onal management theory. His ideas are fundamental to m
odern management concepts.
Comparisons with Taylorism
Fayol is o�en compared to Frederick Winslow Taylor, who dev
eloped scien�fic management.
However, Fayol differed from Taylor in his focus and developed
his ideas independently. Taylor
was concerned with task �me and improving worker efficiency,
while Fayol was concerned
with management, especially its human and behavioral elements
.

Another major difference between Taylor and Fayol’s theories i
s that while Taylor viewed
management improvements as happening from the bo�om up, F
ayol emphasized a top‑down
perspec�ve that was focused on educa�ng management on impr
oving processes first and then
moving to workers. Fayol believed that by focusing on manageri
al prac�ces, organiza�ons
could minimize misunderstandings and increase efficiency.
His wri�ngs guided managers on how to accomplish their mana
gerial du�es and on the
prac�ces in which they should engage. In General and Industria
l Management (1949) Fayol
outlined his theory of general management, which he believed c
ould be applied to the
administra�on of myriad industries. As a result of his concern f
or workers, Fayol is considered
one of the early fathers of the human rela�ons movement.
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Henri Fayol
Henri Fayol is considered a founder of
the human rela�ons movement.
Fayol’s 14 Principles of Management
Fayol developed 14 principles of management to help managers
be more effec�ve. They are
s�ll used today but o�en interpreted differently. The principles
are as follows:
1. division of work
2. delega�on of authority
3. discipline
4. chain of command
5. congenial workplace
6. interrela�on between individual interests and common organi
za�onal goals
7. compensa�on package
8. centraliza�on
9. scalar chains
10. order

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11. equity
12. job guarantee
13. ini�a�ves
14. team spirit
Fayol’s Five Elements of Management
Fayol is also famous for his five elements of management, whic
h outline the key
responsibili�es of good managers:
1. Planning. Managers should dra� strategies and objec�ves to
determine the stages of a
plan and the technology needed to implement it.
2. Organizing. Managers must organize and provide the resource
s necessary to execute a
plan, including raw materials, tools, capital, and human resourc
es.
3. Command. Managers must use their authority and a thorough
understanding of long‑
term goals to delegate tasks and make decisions for the be�erm

ent of the organiza�on.
4. Coordina�on. High‑level managers must work to integrate all
ac�vi�es to facilitate
organiza�onal success. Communica�on is key to success in this
component.
5. Monitoring. Managers must compare the ac�vi�es of person
nel to the plan of ac�on.
This is the evalua�on component of management.
Flaws in the Classical Approach
The classical approach to management is o�en cri�cized for vi
ewing a worker merely as a tool
to improve efficiency.
Under Taylorism, work effort increased in intensity, but eventua
lly
workers became dissa�sfied with the work environment and bec
ame
angry, decreasing overall work ethic and produc�vity.
Taylorism’s nega�ve effects on worker morale only added fuel
to the
fire of exis�ng labor‑management conflict and inevitably contri
buted
to the strengthening of labor unions.

Key Points
4055/View 15/17
The cri�cisms of classical management theory opened doors for
theorists such as George Elton Mayo and Abraham Maslow, who
emphasized the human and behavioral aspects of management.
The scien�fic management approach comes up short when appli
ed to
larger, more opera�onally complex organiza�ons. Managerial e
fficacy
and the empowerment of employees are more important to overa
ll
produc�vity when tasks are not simple and homogeneous.
Key Term
Taylorism—
scien�fic management, an early twen�eth‑century theory
of management that analyzed workflows in order to improve
efficiency.
The Downside of Efficiency

The classical view of management tends to focus on the efficien
cy and produc�vity of workers
rather than on their human needs. Generally the classical view i
s associated with Taylorism and
scien�fic management, which are largely cri�cized for viewing
the worker as a cog in a
machine, rather than an individual. Under Taylorism workers’ ef
fort increased in intensity, but
eventually workers became dissa�sfied and angry with the work
environment, which affected
their overall work ethic. This dissa�sfac�on undoes the value c
aptured via increased efficiency.
Taylorism’s nega�ve effects on worker morale only added fuel
to the fire of exis�ng labor‑
management conflict, which frequently raged out of control bet
ween the mid‑nineteenth and
mid‑twen�eth centuries (when Taylorism was most influen�al),
and thus inevitably contributed
to stronger labor unions. That outcome neutralized most or all o
f the benefit of any
produc�vity gains that Taylorism had achieved. The net benefit
to owners and management
ended up being small or nega�ve. It would take new efforts, bor
rowing some ideas from

Taylorism but mixing them with others, to produce more succes
sful formulas.
Factory workers
4055/View 16/17
Taylorism and classical
management styles nega�vely
affected the morale of workers,
which created a nega�ve
rela�onship between workers
and managers.
Scien�fic management also led to other pressures that made wo
rkers unhappy. Offshoring and
automa�on are two pressures that have led to the erosion of em
ployment. Both were made
possible by the de‑skilling of jobs, which arose because of the k
nowledge transfer that
scien�fic management achieved. Knowledge was transferred to
cheaper workers, and from

workers to tools.
The Human Factor
To summarize, the underlying weakness of the classical view of
management is that it views
employees first as resources rather than people. This cri�cism o
pened doors for theorists such
as George Elton Mayo and Abraham Maslow, who emphasized t
he human and behavioral
aspects of management. A�er all, what value is wealth if the in
dividual loses the sense of self‑
worth and happiness required to enjoy it? The behavioral approa
ch to management took an
en�rely different approach and focused on managing morale, le
adership, and other behavioral
factors to encourage produc�vity, rather than solely managing t
he �me and efficiency of
workers.
Corporate Growth
Another disadvantage of the classical perspec�ve arises from th
e growing size and complexity
of the modern organiza�on. Using metrics to examine specific e
mployee behavior may be

feasible in a smaller organiza�on pursuing homogeneous tasks,
but it becomes more difficult in
an organiza�on that has hundreds of employees pursuing variou
s complex func�ons. In the
situa�on with more complexity, it may be more beneficial to us
e tac�cs that are less focused
on the individual employee and more on improving overall prod
uc�vity. This will involve less
micromanaging and more trust that employees will do the right t
hing in the workplace. The
onus of enabling efficiency, therefore, shi�s from workers to m
anagers.
References
4055/View 17/17
Fayol, H. (1949). General and industrial management (C. Storrs,
trans.). London: Sir Isaac
Pitman & Sons.
Classical Versus Behavioral Perspec�ves (h�ps://courses.lume
nlearning.com/boundless‑

management/chapter/classical‑perspec�ves/) from Boundless M
anagement by Lumen
Learning, originally published by Boundless.com, is available u
nder a Crea�ve Commons
A�ribu�on‑ShareAlike 4.0 Interna�onal (h�ps://crea�vecomm
ons.org/licenses/by‑
sa/4.0/deed.en) license. UMUC has modified this work and it is
available under the original
license.
on. UMUC is not responsible for the validity or integrity of
informa�on located at external sites.
management/chapter/classical-perspectives/
https://creativecommons.org/licenses/by-sa/4.0/deed.en
1/14/2019 Behavioral Perspectives
4056/View 1/17
Behavioral Perspec�ves
The Behavioral Science Approach

Behavioral science uses research and the scien�fic method to d
etermine and understand behavior in the
workplace.
Behavioral science draws from a number of different fields and
theories, primarily
those of psychology, social neuroscience, and cogni�ve science
.
One applica�on of the behavioral science approach can be seen
in a field called
organiza�onal development—
an ongoing, systema�c process of implemen�ng
effec�ve organiza�onal change.
Behavioral sciences include rela�onal sciences, which deal with
rela�onships,
interac�on, communica�on networks, associa�ons, and rela�o
nal strategies.
The behavioral science approach is broadly about understanding
individual and
group behavioral dynamics to ini�ate meaningful organiza�ona
l development.
Key Term
organiza�onal development—
an ongoing, systema�c process of implemen�ng

effec�ve organiza�onal change using theories from behavioral
sciences
Behavioral science draws from a number of different fields and
theories, primarily those of psychology, social
neuroscience, and cogni�ve science. Behavioral science uses re
search and the scien�fic method to determine
and understand behavior in the workplace. Many of the theories
in the behavioral perspec�ve are included in
the behavioral science approach to management. For example, t
he Hawthorne studies used the scien�fic
method and are considered to be a part of the behavioral science
approach.
Behavioral science within the business management environmen
t is a specific applica�on of this field, and
employs a number of specific types of behavioral observa�ons.
This includes concepts such as informa�on
processing, rela�onships and mo�va�on, and organiza�onal d
evelopment.
Learning Resource
Key Points

4056/View 2/17
Informa�on Processing
Informa�on processing involves determining how people proces
s s�muli in their environment. This field deals
with the processing of s�muli from the social environment by c
ogni�ve en��es in order to engage in decision
making, social judgment, and social percep�on. The field is par
�cularly concerned with how people [or living
things] process informa�on and use it to func�on and survive i
n social environments.
The Organiza�onal Culture
Structure, process, and people all play a role in an organiza�on
’s culture.
Rela�onships
Behavioral sciences also include sciences that deal with rela�o
nships, interac�on, communica�on networks,
associa�ons, and rela�onal strategies or dynamics between org
anisms or cogni�ve en��es in a social system.
The emphasis on using quan�ta�ve data and qualita�ve researc
h methods to determine how people process
informa�on and understand social rela�onships is important to
helping managers be�er understand the
proven methods for increasing employee mo�va�on and produc

�vity. The behavioral science approach and
the myriad fields it encompasses is the most common area of ma
nagement science today.
Organiza�onal Development
4056/View 3/17
The behavioral science approach is applied primarily in the fiel
d of organiza�onal development. Organiza�onal
development is an ongoing, systema�c process of implemen�ng
effec�ve organiza�onal change.
Organiza�onal development is considered both a field of applie
d behavioral science that focuses on
understanding and managing organiza�onal change and a field
of scien�fic study and inquiry. It uses
components of behavioral sciences and studies in the fields of s
ociology, psychology, and theories of
mo�va�on, learning, and personality to implement effec�ve or
ganiza�onal change and facilitate employee
development.
The behavioral science approach is broadly about understanding
individual and group behavioral dynamics to

ini�ate meaningful organiza�onal development. The study of h
uman behavior in the context of organiza�onal
change is integral to empowering organiza�ons to grow, adapt,
and learn to capture compe��ve advantage.
Behaviorism: Folle�, Munsterberg, and Mayo
Behaviorism ini�ated a focus on the psychological and human f
actors influencing workers.
Mary Parker Folle�, Hugo Munsterberg, and Elton Mayo are all
considered pioneers
and founders of the behaviorism movement in management theo
ry. They wrote
about the importance of considering behavioral aspects of worke
rs in addi�on to
workers’ efficiency.
Mary Parker Folle� was an American social worker, manageme
nt consultant, and
pioneer in the fields of organiza�onal theory and organiza�ona
l behavior.
Hugo Munsterberg was a pioneer of applied psychology, extendi
ng his research and
theories to industrial/organiza�onal (I/O), legal, medical, clinic
al, educa�onal, and
business se�ngs.

Elton Mayo is known as the founder of the human rela�ons mov
ement. His research
includes the Hawthorne studies and his book The Human Proble
ms of an
Industrialized Civiliza�on.
Key Term
industrial psychology—
a field of study focused on topics such as hiring workers with
the personali�es and mental abili�es best suited to certain type
s of voca�ons
Mary Parker Folle�, Hugo Munsterberg, and Elton Mayo are all
considered pioneers and founders of the
industrial/organiza�onal psychology and behaviorism movemen
ts in management theory. They wrote about
the importance of considering behavioral aspects of workers in
addi�on to workers’ efficiency. This was in
many ways a con�nua�on of the scien�fic method, with the cri
�cal difference of incorpora�ng the human
factors involved in effec�ve management.
Key Points

4056/View 4/17
Folle�
Mary Parker Folle� was an American social worker, manageme
nt consultant, and pioneer in the fields of
organiza�onal theory and organiza�onal behavior in the late ni
neteenth and early twen�eth centuries. She
cri�cized the overmanagement of employees, a process now kno
wn as micromanaging. Folle� was known for
the concept of reciprocal rela�onships and the idea that authorit
y is inferior to integra�ve collabora�on.
Managers should enable, not dictate, she believed.
Folle� was sought out by President Theodore Roosevelt to be hi
s personal consultant on managing not‑for‑
profit, nongovernmental, and voluntary organiza�ons. As a man
agement theorist, she pioneered the
understanding of lateral processes within hierarchical organiza
�ons. Her contribu�ons helped the behaviorism
movement get started by recognizing the worker as different fro
m a machine.
Mary Parker Folle�
defined management as

“the art of ge�ng
things done through
people.”
Munsterberg
Hugo Munsterberg, who prac�ced around the same �me as Foll
e�, was a German‑American psychologist. He
was one of the pioneers of applied psychology, extending his re
search and theories to
industrial/organiza�onal (I/O), legal, medical, clinical, educa�
onal, and business se�ngs. Munsterberg’s
wri�ngs are considered the genesis of the industrial psychology
field.
Industrial psychology, according to Munsterberg, focuses on top
ics like hiring workers with the personali�es
and mental abili�es suited to certain types of voca�ons, as well
as on increasing mo�va�on, performance, and
worker reten�on. Munsterberg suggested that psychology could
be used in many different industrial
applica�ons, including management, voca�onal decisions, adve
r�sing, job performance, and employee
mo�va�on. Many of Munsterberg’s ideas, especially matching
an individual’s personality with the correct job
set and skills, are common in the use of I/O psychology today.

4056/View 5/17
Hugo Munsterberg
Munsterberg is considered the father of industrial/organiza�ona
l psychology.
4056/View 6/17
Mayo
George Elton Mayo was an Australian psychologist, sociologist,
and organiza�on theorist. Mayo is known as
the founder of the human rela�ons movement. His research incl
udes the Hawthorne studies and his book
(1933).
The Hawthorne studies of the 1930s showed the importance of g
roups in affec�ng the behavior of individuals
at work. Mayo’s employees Roethlisberger and Dickson conduct
ed the prac�cal experiments. Mayo made

deduc�ons about how managers should behave. He concluded th
at people’s work performance depends on
both social issues and job content. He suggested a tension betwe
en workers’ “logic of sen�ment” and
managers’ “logic of cost and efficiency” that could lead to confl
ict within organiza�ons. Mayo’s studies
contributed to the behaviorism movement in management, as ma
nagers became more aware of the “so�
skills” that are important to successful management.
Folle�, Munsterberg, and Mayo each introduced important com
ponents and ideas into the behaviorism
perspec�ve of management. They all believed that successful m
anagement comes from understanding how to
treat employees, mo�vate them, and help them succeed and bec
ome as efficient as possible in their jobs.
The Human Side: Hawthorne
The Hawthorne studies found that workers were more responsiv
e to group involvement and managerial
a�en�on than to financial incen�ves.
The Hawthorne studies, conducted by Elton Mayo and Fritz Roe
thlisberger in the
1920s with the workers at the Hawthorne plant of the Western E
lectric Company,

were part of an emphasis on sociopsychological aspects of huma
n behavior in
organiza�ons.
Hawthorne researchers hypothesized that choosing one’s own co
workers, working
as a group, being treated as special, and having a sympathe�c s
upervisor were
reasons for increases in worker produc�vity.
The Hawthorne studies found that monetary incen�ves and goo
d working
condi�ons are generally less important in improving employee
produc�vity than
mee�ng employees’ need and desire to belong to a group, and b
e included in
decision making and work.
Key Term
Hawthorne studies—
series of inves�ga�ons conducted in the 1920s emphasizing
the sociopsychological aspects of human behavior in organiza�
ons
Key Points

4056/View 7/17
The Hawthorne studies were conducted with the workers at the
Hawthorne plant of the Western Electric
Company by Elton Mayo and Fritz Roethlisberger in the 1920s.
The Hawthorne studies were part of a refocus
on managerial strategy incorpora�ng the sociopsychological asp
ects of human behavior in organiza�ons.
Site of the Hawthorne Studies
Western Electric Company factory near Chicago
The studies suggested that employees have social and psycholog
ical needs—as well as economic and financial
ones—
that must be met in order to be mo�vated to complete their assi
gned tasks. The human rela�ons
movement is concerned with morale, leadership, and factors that
help workers cooperate.
This theory of management was a by‑product of the issues that a
rose from the classical scien�fic perspec�ves
on management (i.e., Taylorism). The simplest explana�on of t
he hypothesis inves�gated is quite intui�ve.
Employees (i.e., human resources) are not merely mo�vated by
financial gain, and produc�vity is not simply a

by‑product of incen�ves and op�mized working spaces. People
are mo�vated by inclusion, construc�ve
feedback, interest, autonomy, and a wide variety of other factor
s aside from money and other tangible
resources.
Results of the Hawthorne Studies
The studies originally looked into whether workers were more r
esponsive and worked more efficiently under
certain environmental condi�ons, such as improved ligh�ng. T
he results were surprising, as Mayo and
Roethlisberger found that workers were more responsive to soci
al factors—such as the people they worked
with on a team and the amount of interest their manager had in t
heir work—than the factors (ligh�ng, etc.) the
researchers had gone in to inspect.
The Hawthorne studies indicated that workers were highly respo
nsive to addi�onal a�en�on from their
managers and the feeling that their managers actually cared abo
ut, and were interested in, their work. The
studies also concluded that although financial mo�ves are impo
rtant, social factors are equally important to
worker produc�vity.

4056/View 8/17
There were a number of other experiments conducted in the Ha
wthorne studies, including one in which two
women were chosen as test subjects and were then asked to cho
ose four other workers to join the test group.
Together, the women worked assembling telephone relays in a s
eparate room over the course of five years
(1927–1932), and their output was measured.
The measuring began in secret. It started two weeks before movi
ng the women to an experiment room and
con�nued throughout the study. In the experiment room, they h
ad a supervisor who discussed changes with
them and, at �mes, used their sugges�ons. The researchers then
spent five years measuring how different
variables impacted both the group’s and the individuals’ produc
�vity. Some of the variables included giving
two five‑minute breaks (a�er a discussion with the group on the
best length of �me), and then changing to
two 10‑minute breaks (not the preference of the group).
Intangible Mo�vators

Changing a variable usually increased produc�vity, even if the
variable was just a change back to the original
condi�on. Researchers concluded that the employees worked ha
rder because they thought they were being
monitored individually. They hypothesized that choosing one’s
own coworkers, working as a group, being
treated as special (by working in a separate room, as in the expe
riment), and having a sympathe�c supervisor
were the real reasons for the produc�vity increase.
The Hawthorne studies showed that people’s work performance
depends on social issues and job sa�sfac�on.
Further, the studies helped demonstrate that monetary incen�ve
s and good working condi�ons are generally
less important in improving employee produc�vity than mee�n
g people’s desire to belong to a group and be
included in decision making and work.
Managerial Assump�on: McGregor
McGregor introduced theories X and Y, which summarize and c
ompare the classical management and
behavioral management perspec�ves.
Douglas McGregor was a management professor at the MIT Sloa
n School of

Management. He wrote The Human Side of Management (1960),
which suggested
mo�va�ng employees through authorita�ve direc�on and empl
oyee self‑control,
respec�vely called theory X and theory Y.
Theory X, based more on classical management theory, assumes
that workers need a
high amount of supervision because people are inherently lazy.
It assumes that
managers need to mo�vate through coercion and punishment.
Theory Y assumes that employees are ambi�ous, self‑mo�vated
, exercise self‑
control, and generally enjoy mental and physical work du�es. T
heory Y is in line with
behavioral management theories.
Key Points
4056/View 9/17
Theories X and Y relate to Maslow’s hierarchy of needs in that t
hey see human

behavior and mo�va�on as the main priority in maximizing out
put in the workplace.
Key Terms
Theory X—
Employees are inherently lazy and irresponsible and will tend to
avoid
work unless closely supervised and given incen�ves.
Theory Y—
Employees are capable of being ambi�ous and self‑mo�vated u
nder
suitable condi�ons.
Douglas McGregor was a management professor at the MIT Sloa
n School of Management. He suggested
mo�va�ng employees through authorita�ve direc�on and empl
oyee self‑control (1960). McGregor’s book was
voted the fourth most influen�al management book of the twen
�eth century in a poll of the Fellows of the
Academy of Management.
McGregor’s main theory comprises theory X and theory Y. Theo
ry X, based more on classical management
theory, assumes that workers need a high amount of supervision
because people are inherently lazy. Theory Y
assumes that employees are ambi�ous, self‑mo�vated, exercise
self‑control, and generally enjoy mental and

physical work du�es. Theory Y is in line with behavioral mana
gement theories. O�en, how managers act is
affected by the theory they subscribe to.
Theory X
In theory X, managers tend to micromanage and closely supervi
se employees. Complex hierarchical structures
are needed in order to offer a narrow span of control at every le
vel of the organiza�on. Employees show li�le
ambi�on without an incen�ve program and avoid responsibility
whenever possible. Managers who believe
theory X rely more heavily on punishment, fear, and coercion—
and less on rewards—to mo�vate employees.
Manager‑employee rela�onships are generally not rewarding in
this environment of mistrust. Usually
managers in these situa�ons believe that the sole purpose of the
employee’s interest in his or her job is
money.
Theory Y
Theory Y managers generally believe the opposite. They believe
that given the proper condi�ons, employees
will learn to seek and accept responsibility and to be self‑direct
ed in accomplishing objec�ves, that most

people will want to do well at work, and that the sa�sfac�on of
doing a good job is a strong mo�vator. Many
people interpret theory Y as a posi�ve set of beliefs about work
ers.
McGregor thinks that theory Y managers are more likely than th
eory X managers to develop a climate of trust
with employees—
a required condi�on for human‑resource development. This typ
e of human‑resource
development is much more in line with how Maslow’s hierarchy
of needs operates and with the Hawthorne
studies’ findings than with any of the classical theories of mana
gement.
Theory X or Theory Y?
4056/View 10/17
Theories X and Y relate to Maslow’s hierarchy of needs in that t
hey see human behavior and mo�va�on as the
main priori�es in maximizing output. Both McGregor and Masl
ow would say that in order to help employees
achieve maximum efficiency and happiness in their work, a theo
ry Y manager would need to promote

morality, crea�vity, problem solving, and a lack of prejudice.
McGregor was a life�me proponent of theory Y.
Modern organiza�ons in developed countries generally side wit
h McGregor, in that they believe theory Y is
superior in ge�ng posi�ve results from employees (and job sa�
sfac�on for employees). However, both
theories are s�ll prominent in the workplace, where many mana
gers treat their employees as if they are lazy
and likely to perform poorly without stringent rules and supervi
sion. In management, just as everywhere else,
it is difficult to effect social change in the face of human nature
, even when the benefits are established.
Produc�vity: Argyris
Argyris’s theory of single‑ and double‑loop learning has been a
pplied to management theory to suggest the
best ways for employees to learn.
Argyris studied how humans design and decide on their ac�ons
under difficult or
stressful situa�ons. He believed that human ac�ons are controll
ed by environmental
variables, which determine the key differences between single‑l
oop learning and
double‑loop learning.

In single‑loop learning, individuals, groups, and organiza�ons
modify their ac�ons
according to the difference between expected and obtained outc
omes.
In double‑loop learning, individuals, groups, and organiza�ons
ques�on the values,
assump�ons, and policies that led to the ac�ons in the first pla
ce.
pplied to management
theory to suggest the best way for employees to learn and think
about new goals
and strategies for an organiza�on.
Key Terms
double‑loop learning—
a theory in which an organiza�on or individual ques�ons the
values, assump�ons, and policies that led to a given situa�on
learning organiza�on—
a company that facilitates the learning of its members and
con�nuously transforms itself
single‑loop learning—
a theory that individuals, groups, or organiza�ons modify their

ac�ons according to the difference between expected and obtain
ed outcomes
Key Points
4056/View 11/17
Chris Argyris (July 16, 1923 to November 16, 2013) was an Am
erican business theorist, professor at Harvard
Business School, and a thought leader at Monitor Group, a cons
ul�ng firm. He is known for his work on
learning theories within learning organiza�ons.
Argyris conducted a series of research studies in ac�on science,
which studies how humans design and decide
on their ac�ons under difficult or stressful situa�ons. Argyris b
elieved that human ac�ons are controlled by
environmental variables that determine the key differences betw
een single‑loop and double‑loop learning.
Single‑Loop Learning
In single‑loop learning, en��es (such as individuals, groups, or
organiza�ons) modify their ac�ons according to
the difference between expected and obtained outcomes. This es
sen�ally means that learning is through

experience and direct reflec�on on outcomes, where the ends ju
s�fy the means, and dictate the fulcrum of
the discussion and learning outcomes.
In many ways, this is a reac�onary approach. Individuals must i
den�fy successes and failures, and pursue
formulas for maximizing the former and minimizing the la�er.
While this type of learning, and the broader
behaviors, are extremely common in the real world, it is not the
ideal method for learning that can be adapted
to the broader organiza�on. It tends to be simple, short‑term, an
d not always conducive to sustainability.
Double‑Loop Learning
In double‑loop learning, the en��es ques�on the values, assum
p�ons, and policies that lead to ac�ons. If the
en��es can discern and modify the values, then second‑order o
r double‑loop learning has taken place. This is
a more integra�ve, process‑oriented, and collabora�ve approac
h. It is also much more complex, difficult, and
sensi�ve, as the core values and strategies in place must be anal
yzed, ques�oned, and defended (or
discarded).
The simple truth is that people fear change, ac�vely avoid confl
ict, and generally preserve the status quo.

Double‑loop learning requires the bravery to challenge what is e
stablished organiza�onally, iden�fy broader
systemic issues, and fix problems at their source.
4056/View 12/17
Chris Argyris wrote about the theories of single‑ and double‑loo
p learning, which determine
how people make decisions in difficult situa�ons.
For example, a company facing a problem with its management
strategy may decide to focus on how to
improve or implement the strategy in different ways. In this situ
a�on, the company is using single‑loop
learning: Management is focused on making changes without re
considering the fundamental standard or
strategy itself. However, if the company were to en�rely recons
ider the problema�c strategy and start from
scratch, this would exemplify double‑loop learning. Double‑loo
p learning may lead to a change in the original
strategy or even the goals the company had that led to its strateg
y.

pplied to management theory to suggest the
best way for employees to learn and think about new goals and s
trategies for an organiza�on.
References
Mayo, E. (1933). Human problems of an industrial civiliza�on.
New York, NY: Macmillan.
McGregor, D. (1960). The human side of enterprise. New York,
NY: McGraw‑Hill.
Behavioral Perspec�ves (h�ps://courses.lumenlearning.com/bo
undless‑management/chapter/behavioral‑
perspec�ves/) from Boundless Management by Lumen Learning
, originally published by Boundless.com, is
available under a Crea�ve Commons A�ribu�on‑ShareAlike 4.
0 Interna�onal
management/chapter/behavioral-perspectives/
https://creativecommons.org/licenses/by-sa/4.0/
4056/View 13/17
(h�ps://crea�vecommons.org/licenses/by‑sa/4.0/) license. UMU

C has modified this work and it is available
under the original license.
Behavioral Perspec�ves (h�ps://courses.lumenlearning.com/bo
undless‑management/chapter/behavioral‑
perspec�ves/) from Boundless Management by Lumen Learning
, originally published by Boundless.com, is
available under a Crea�ve Commons A�ribu�on‑ShareAlike 4.
0 Interna�onal
(h�ps://crea�vecommons.org/licenses/by‑sa/4.0/) license. UMU
C has modified this work and it is available
under the original license.
CC LICENSED CONTENT, SHARED PREVIOUSLY
Cura�on and Revision. Provided by: Boundless.com. License: C
C BY‑SA: A�ribu�on‑ShareAlike
(h�ps://crea�vecommons.org/licenses/by‑sa/4.0/)
CC LICENSED CONTENT, SPECIFIC ATTRIBUTION
Organiza�on development. Provided by: Wikipedia. Located
at: h�p://en.wikipedia.org/wiki/Organiza�on_development
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square‑knot‑6crossings.svg
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uare‑knot‑6crossings.svg). License: CC
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on. UMUC is not responsible for the validity or integrity of info
rma�on located at
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square-knot-6crossings.svg
1/14/2019 Modern Thinking
4057/View 1/24
Modern Thinking

Quan�ta�ve and Analy�cal Management Tools
Quan�ta�ve tools are used by management to determine where
a company is doing well or
struggling compared with its industry and compe�tors.
Many quan�ta�ve and analy�c tools are available for manager
s to
be�er understand workflow processes, financial management, a
nd
employee efficiency.
A decision tree is a decision support tool that uses a tree‑like gr
aph
or model of decisions and their possible consequences, includin
g
chance event outcomes, resource costs, and u�lity.
Simula�on is the imita�on of a real‑world process or system ov
er
�me.
Trend charts are o�en used in management to display data over
�me
to explore any poten�al trends, either posi�ve or nega�ve, that
require addi�onal a�en�on by management. It is important to
use

sta�s�cal confidence intervals when u�lizing this type of forec
ast.
Benchmarking allows a manager to see how different aspects of
a
business are performing compared to na�onal, regional, and ind
ustry
standards. It also allows management to explore how the compa
ny is
performing compared to its compe�tors.
Financial projec�ons and net‑present‑value (NPV) analyses are
also
commonplace when deciding upon new opera�ons quan�ta�vel
y—
where the company predicts profitability in today’s dollars.
Learning Resource
Key Points
4057/View 2/24
Key Terms

decision tree—a graphic visualiza�on—resembling a tree—of a
complex decision‑making situa�on and likely outcomes from
choosing different op�ons
benchmarking—
technique allowing a manager to compare metrics
like quality, �me, and cost, across an industry and against
compe�tors
Managers can use many different quan�ta�ve and analy�c tool
s to be�er understand
workflow processes, financial management, and employee effici
ency. These tools, such as
decision trees, simula�on, trend charts, benchmarking, and fina
ncial projec�ons, help
managers improve their decision‑making abili�es, determine ho
w their business is performing
rela�ve to compe�tors, and discover opportuni�es for improve
ment. Using these tools to
create quan�ta�ve and measurable metrics helps an organiza�o
n see exactly where it is
performing well and where it is performing poorly.
Decision Tree
A decision tree is a branching graph, or model of decisions and

their possible consequences,
including chance‑event outcomes, resource costs, and u�lity. D
ecision trees are commonly
used in opera�ons research (specifically in decision analysis) to
help iden�fy a strategy most
likely to reach a specified goal. They can also be used to map o
ut a thought process or the
possible consequences of a decision. A manager may use this to
ol when deciding between
different projects or investments.
Example of a Decision Tree
A decision tree to determine the consequences and poten�al out
comes (money lost or
gained at each step) along mul�ple poten�al paths of ac�on. T
he path resul�ng in the
highest financial gain by the end is generally the one that shoul
d be chosen.
4057/View 3/24
Simula�on

Simula�on is the imita�on of a real‑world process or system ov
er �me. The act of simula�ng
something first requires that a model be developed represen�ng
the key characteris�cs or
behaviors of a physical or abstract system or process. A simula
�on could be used to study
investment decisions by ac�vely playing out the outcomes of sp
ecific situa�ons.
Trend Charts
Trend charts are o�en used to display data over �me to explore
poten�al trends (either
posi�ve or nega�ve) that require addi�onal management a�en
�on. Many metrics—including
employee produc�vity, financial metrics, opera�onal efficiency
, and comparisons between
compe�tors—
are analyzed using trend charts. Trends are only ever in the past
, however, and
using confidence intervals in projec�ng trends is cri�cal to thei
r effec�veness.
This chart of US defense spending from 2000 to 2011 shows tha
t overall spending increased
from $300 billion to $700 billion due to increases in both the D
epartment of Defense (DOD)

budget and overseas (war‑related) spending.
4057/View 4/24
Benchmarking
Benchmarking allows managers to see how different aspects of t
heir business (usually quality,
�me, and cost) are performing compared to na�onal, regional,
and industry standards. It also
allows a manager to explore how the company is performing co
mpared to compe�tors. In the
process of benchmarking, management iden�fies the best firms
in the industry, or in another
industry where similar processes exist, and compares the results
and processes of the target
firms to management’s own results and processes. In this way,
management learns how well
the targets perform and, more importantly, the business process
es that explain why these
firms are successful.
Financial Projec�ons

Managers can also use financial analysis as a management tool.
When inves�ng in a project or
an acquisi�on of any kind, a manager will always want to know
how quickly the investment
will turn a profit. For example, when a company invests in a ne
w building, management will
calculate how long it will take for the building to generate enou
gh income to cover the upfront
costs. This calcula�on is some�mes called a payback period. A
ll else being equal, shorter
payback periods are preferable to longer ones. This is o�en refe
rred to as NPV, or net present
value, where the company calculates the future value of the proj
ect in today’s dollars. It is
cri�cal to remember that a dollar today and a dollar tomorrow h
ave different values.
Opera�ons Management Tools
Six Sigma and Lean are two popular opera�ons‑management th
eories that help managers
improve the efficiency of their produc�on processes.
The main tools of opera�ons management come from two popul
ar
theories of organizing business: Six Sigma and Lean.

Six Sigma relies on par�cular quality‑management methods, su
ch as
sta�s�cal analy�cs, and incorporates designa�ons like black b
elt and
Key Points
4057/View 5/24
green belt to indicate those within an organiza�on who are expe
rts in
these methods.
Lean is a produc�on theory that deems any expenditure of resou
rces
that doesn’t create value for customers wasteful—
and a target for
elimina�on.
By leveraging opera�onal paradigms constructed to deliberately
capture value through maximizing efficiency, managers can low
er
costs for companies and prices for consumers.
Key Terms

six sigma—
process improvement that focuses on using sta�s�cal
methods to reduce the number of defects
lean—
a produc�on strategy focused on elimina�ng all unnecessary
waste
Opera�ons management is a type of management that oversees,
designs (or redesigns), and
controls a company’s produc�on processes and business opera�
ons. Opera�ons managers are
responsible for ensuring that business opera�ons are efficient, b
oth in conserving resources
and mee�ng customer requirements. They manage the process t
hat converts inputs (materials,
labor, and energy) into outputs (goods and services). In order to
accomplish this task, managers
use various tools, including Six Sigma and Lean—
the two most influen�al ones.
Six Sigma
Six Sigma is a strategy designed to improve the quality of proce
ss outputs. It accomplishes this
by iden�fying and removing the causes of defects and errors, an
d by minimizing variability in

manufacturing and business processes.
The strategy relies on quality management methods like sta�s�
cal analy�cs, and incorporates
designa�ons like black belt and green belt to indicate those wit
hin an organiza�on who are
experts in these methods. Each Six Sigma project in an organiza
�on follows a defined
sequence of steps with quan�fied financial targets such as redu
cing costs or increasing profits.
Among the tools used in Six Sigma are process mapping, trendi
ng charts, calcula�ons of
poten�al defects, ra�os, and sta�s�cs. Six Sigma also includes
best prac�ces for working
within a team.
4057/View 6/24
Six Sigma Symbol
Six Sigma is a tool many managers use to reduce the
number of defects created by their processes.

Lean
Lean is similar to Six Sigma, but slightly less focused on defect
rate and more on elimina�ng
the amount of waste and excessive steps in an opera�on. Lean i
s a produc�on theory that
deems any expenditure of resources that doesn’t create value for
customers wasteful—and a
target for elimina�on. Beginning from the perspec�ve of the co
nsumer of a product or service,
value is defined as any ac�on or process that a customer would
be willing to pay for. Lean
employs tools to evaluate produc�on workflow and determine w
here there is waste. Examples
of waste include excess mo�on, inventory, and overproduc�on.
Examples of Six Sigma and Lean
In many ways, lean manufacturing and Six Sigma are reminisce
nt of Henry Ford’s focus on
systema�c process improvements. The overarching theme is sim
ply to minimize the �me
employees spend on tasks and maximize output with the same a
mount of input. Toyota, using
the Japanese concept of kaizen, exemplifies lean manufacturing
and just‑in‑�me (JIT)

inventory management. Toyota became famous for �ming each
specific element of the
manufacturing process to ensure minimal warehousing, deliveri
ng each component precisely
when and where it was needed. This created a process flow that
minimized space usage, which
lowered costs, op�mized �ming, and created widespread consis
tency of opera�onal flow.
4057/View 7/24
Lean and Six Sigma are the two main strategies for opera�ons
management. Both offer
managers an extensive toolbox to analyze the efficiency of their
produc�on. These tools
analyze workflow, uncover where and why there is waste, and d
ecrease defects in products or
services, all of which make a company more efficient.
The Systems Viewpoint
Systems thinking is an approach to problem solving that conside
rs the overall system instead
of focusing on its specific parts.

Systems thinking is an approach to problem solving that views
problems as part of an overall system. It is different from proble
m‑
solving strategies that only focus on specific parts or outcomes
of a
problem.
Systems thinking approaches problems as a set of habits or prac
�ces
within a framework. It is based on the belief that the component
parts of a system are best understood in the context of their
rela�onships with each other rather than in isola�on.
Systems thinking is opposed to fragmented thinking, which invo
lves
thinking about specific problems without considering the contex
t,
environment, and effects of similar problems.
Key Term
fragmented thinking—
looking at problems as isolated events instead
of considering the system as a whole
It is the process of understanding how people and situa�ons infl

uence one another within a
closed system. As in nature, where the air, water, movement, pl
ants, and animals interact with
one another—
and survive or perish in rela�onship with each other; in busines
s, management
also involves rela�onships and interac�ons.
Organiza�onal Systems
Key Points
4057/View 8/24
Organiza�onal systems consist of people, structures, and proces
ses working together to make
an organiza�on healthy or unhealthy. The end product of effec
�ve systems management is
synergy, in which the whole is greater than the sum of its parts.
Systems generally contain the
following:
inputs, such as people, �me, energy, and informa�on
processes or reac�ons, including tools, so�ware, and analyses

outputs, like products, reports, and plans
feedback mechanisms, including informa�on and reports
Systems thinking: Just as gears
work together, problems in one
area of a business can affect other
areas.
Problem Solving
When problem solving, advocates of systems thinking consider
specific problems within an
overall system, rather than reac�ng to specific issues or outcom
es. In systems thinking,
problems are conceptualized as a set of habits or prac�ces that
exist within a framework.
Prac��oners of systems thinking believe that the component pa
rts of a system can best be
understood and analyzed in the context of how the parts of a sys
tem are interrelated.
Systems thinking rejects a reduc�ve framework that a�empts to
focus on a single problem
without considering the context, environment, or impact of simi
lar problems. Fragmented

thinking o�en results in solu�ons that cannot be applied in oth
er situa�ons, so they lose their
4057/View 9/24
relevance over �me. With root causes le� unaddressed, manage
ment is con�nually pu�ng out
fires in a reac�ve mode.
Example
Imagine that the Human Resources department is beset with pro
blems in workflow and
efficiency. A manager who uses systems thinking to fix the prob
lem looks at Human
Resources in the context of all of the workflow in the company t
o see whether the
“Human Resources problem” could actually be a company‑wide
issue. Only a systems‑
thinking approach can lead to this realiza�on because systems t
hinking provides insight
into how problems that manifest in a specific loca�on can sprin
g from distant, seemingly
unrelated places. With a more accurate understanding of a probl

em, managers can
formulate a more effec�ve and las�ng solu�on.
The Con�ngency Viewpoint
The con�ngency viewpoint of management proposes that there i
s no standard for
management; instead, management depends on the situa�on.
The con�ngency viewpoint is a more recent development in
organiza�onal theory that a�empts to integrate a variety of
management approaches, proposing that there is no one best wa
y to
organize a corpora�on or lead a company.
Deba�ng which one of the previous approaches to management
is
“best” is irrelevant in con�ngency theory, since the heart of the
con�ngency approach is that there is no one best way for manag
ing
and leading an organiza�on.
The con�ngency viewpoint focuses on management’s ability to
achieve alignment and a good fit between employees and
circumstances by considering mul�ple solu�ons to determine t
he

best one for each par�cular problem.
Key Points
4057/View 10/24
The focal point, and modern relevance, of this perspec�ve is th
e
concept of adaptability. Technology and globaliza�on evolve th
e
business environment so rapidly that adaptable strategies are mo
re
appropriate than sta�c ones, making con�ngencies key to succe
ss.
Key Term
con�ngency viewpoint—
a management theory that proposes that
there is no standard for management prac�ce; instead, managem
ent
depends on the situa�on.
The con�ngency viewpoint is a more recent development of org
aniza�onal theory that

a�empts to integrate a variety of management approaches by pr
oposing that there is not one
best way to organize a corpora�on or lead a company. Instead, t
he op�mal course of ac�on is
con�ngent, or dependent upon internal and external contexts.
Perspec�ve on Previous Theories
The con�ngency approach claims that past theories, such as Ma
x Weber’s bureaucracy theory
and Taylor’s scien�fic management, are no longer prac�ced be
cause they fail to recognize that
management style and organiza�onal structure are influenced b
y various aspects of the
environment known as con�ngency factors. Deba�ng which one
of the previous approaches
to management is the best one is irrelevant, since the heart of co
n�ngency theory is that there
is not one best way to manage and lead an organiza�on.
4057/View 11/24
The basic premise of con�ngency theory is that there are limitle

ss possibili�es that companies
must be prepared to adapt strategically.
An Outline of Con�ngency Theory
By its nature, con�ngency theory avoids sta�c rules. There are,
however, common
con�ngencies that businesses must react to, including technolog
y, compe��on, governments,
unions, consumer interest groups, new markets and consumers,
and economic factors. Fred
Fiedler iden�fied three leadership styles and empirical situa�o
n measurements to assess the
degree of favorability a given con�ngency offers:
the leader‑member rela�onship, which is the most important var
iable in determining the
situa�on’s favorableness
the degree of task structure, which is the second most important
input into the
favorableness of the situa�on
the leader’s posi�on power obtained through formal authority
In other words, leadership needs to be able to assess a situa�on,
determine the task structure,
and obtain a posi�on of formal authority to adequately manage

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