Organizational Theory

1. Organizational Theory
Introduction to Public Administration

2. Introduction
• The managerial approach to public administration
• Organizational Theory – deals with the formal structure, internal workings and external
environment of complex human behavior within organizations.
• Borrows theories and principles from many other disciplines:
• Business administration
• Economics
• Political Science
• Psychology
• Statistics
• Sociology
• Public Administration
• Four schools of organizational theory:
• Formal theories
• Human relations
• Organizational humanism
• Modern organizational theory

3. Formal Theories of Organization
• Formal theory – stresses formal, structural arrangements within organizations, and “correct” or “scientific” methods to be followed in order to
achieve the highest degree of organizational efficiency.
• Max Weber – father of modern bureaucracy
• Developed hierarchy – clear vertical chain of command for organizing bureaucracy
• Five key elements:
• Division of labor and functional specialization
• Hierarchy
• Formal rules and procedures
• Maintenance of records
• Professionalization
• Goal: maximize control
• Encourages uniformity, not diversity
• Differences Between Weberian Model and American Experience
• Sometimes not a clear chain of command as there is response to demands from the outside the organization (political).
• Functional overlap – functions performed by one bureaucratic entity may be performed by another.
• Federalism
• Cross-jurisdiction of agencies
• Professionalization
• More mixed under the American system as bureaucrats receive their positions through multiple channels
• Merit employees
• Political appointments
• More bureaucratic professionals than professional bureaucrats
• Careerism is a recent phenomenon (1955)

4. Formal Theories of Organization
• Frederick Taylor and “Scientific Management”
• Scientific Management – organizational theory concerned with achieving efficiency in production, rational work
procedures, maximum productivity, and profit.
• Applied in private sector (unlike Weber)
• Formal rules (like Weber)
• Hierarchy (like Weber)
• Focus on needs at the top of the organization, not customers (private sector) or workers
• Four values:
• Efficiency (“one best way”)
• Rationality
• Productivity
• Profit
• Other aspects of Scientific Management:
• Selection of workers based on capabilities for task
• Time-motion studies
• Having standardized procedures
• Problems:
• Workers seen as cogs
• Assumes workers and management agree on objectives
• Assumed that supply = demand
• If it does not, then productivity is affected.
• Eventually formal theory critiqued for its lack of focus on the needs, emotions, and motivations of the individual worker.

5. Human Relations School
• Hawthorne Studies
• Western Electric Hawthorne
• Study with focus on:
• Worker reactions to management actions
• How work conditions affect output
• Effect of social interaction on job performance
• Two major experiments:
• #1 production stabilization (males)
• To the surprise of researchers, production levels stabilized because of the workers’ attitudes affected productivity
regardless of management.
• #2 Hawthorne/halo effect (females)
• No matter the change to working conditions, productivity improved because workers were being watched by management.
• What we learn:
• Social substructure of workers affects performance
• Informal structures create pressure to conform
• Importance of noneconomic motivations

6. Human Relations School
• Leadership Studies
• Leadership studies are primarily concerned with the effect of leadership on
organizations.
• Barnard (focused on the nature of authority)
• Dependent upon zone of acceptance – the extent to which a follower is willing to be led and
obey the leader’s directives.
• Operating authority – is granted by followers, not based on political, legal, or organizational
authority.
• Thus, formal authority was contingent upon operating authority.
• Leaders could incentivize workers to contribute to the success of the organization.
• The carrot was for effective than the stick.
• Kurt Lewin
• Experiment: leadership style effect on 10 year old boys making masks

7. Human Relations School
Leadership Style Productivity Positive Interaction
Authoritarian 1 3 (worst)
Laissez faire 3 2
Democratic 2 1

8. Human Relations School
• Critiques of Human Relations
• Fails to account for worker/management conflict
• Discounts the effects of formal structure
• No economic/rational focus
• Focus of formal theories
• Ignore impersonal/technological factors

9. Organizational Humanism
• Organizational Humanism – approach concerned with the organizational
factors that contributed to the psychological and psychosocial health of the
worker.
• Primary Ideas:
• Workers seek satisfaction in their work (both on job and off job).
• Work was more than something to be tolerated or endured for economic rewards.
• Management should promote positive motivation rather than assume workers want to
avoid work.
• Involving workers in major organizational decisions.

10. Organizational Humanism
• Douglas McGregor
• Theory X – model of behavior within organizations that assumes that workers
need to be motivated by extrinsic (external) rewards or punishments.
• Theory Y – model of organizational behavior that stresses self-motivation,
participation, and intrinsic (internal) job rewards.
• See Table 4-1 on pg. 158.
• Abraham Maslow
• Maslow’s hierarchy of needs

11. Organizational Humanism

12. Organizational Humanism
• Criticisms of Organizational Humanism
• One size fits all?
• Workers have varying needs
• One theory can’t fit all
• Work for different levels on Maslow’s hierarcy
• The model would not stand up to empirical testing
• Kind of work affects the approach
• Routine vs. non-routine
• Thus the nature of tasks is relevant to the success or failure of organizational humanism
in different work situations

13. Modern Organizational Theory
• Modern organizational theory – organizational theory emphasizing empirical
examination of organizational behavior, interdisciplinary research, and
attempts to reach generalizations that apply to many organizations.
• Separates facts from values (untested conventional wisdom)
• Use empirical research methods
• Interdisciplinary
• Attempts to generalize to various organizations

14. Modern Organizational Theory
• Systems theory – any organized collection of parts united by prescribed
interactions and designed for the accomplishment of a specific goal or general
purpose.
• David Easton’s Black Box
• Inputs (demands, votes, etc.)
• Outputs (services, rules, decisions)
• Feedback (letters, lawsuits, etc.)
• Closed systems – organizations that have very few internal variables and relationships
among those variables, and little vulnerability to forces in the external environment.
• Open systems theory – organizations that are highly complex, interdependent, and
characterized by an expectation of change and uncertainty, internally and externally.
• Highly complex
• Uncertainty
• Seek equilibrium
• Assumes interdependence between organizations and thus must adapt.

15. Modern Organizational Theory
• Other systems approaches
• Information theory – organizations gather information to prevent from entering a state of chaos or
randomness
• Game theory – views organizations as competition among members for resources, based on mathematical
assumptions and makes use of statistics and data collection methods.
• Other Modern Approaches
• Organizational change – theory that focuses on the characteristics of an organizations that promote or
hinder change.
• Organizational development – focus on organizational problems and formulation of solutions.
• Theory Z – Stresses deliberative, “bottom up” collective accountability and decision making, long-term
planning, and closer relationships among management and workers.
• TQM (Americanized version of Theory Z)
• Encourages teamwork
• Lower-level employee participation
• Problem solving techniques
• Brainstorming
• Quality circles

16. Modern Organizational Theory
• Many of these theories, which focus on inputs/outputs, development, etc.
suggest that organizations have the ability to grow and learn through
interacting with their environment
• Sometimes positive, sometimes negative
• Encourages new thinking
• Allows to adapt to new environment, technology, and information
• These are called learning organizations
• Continuous learning environment

17. Summary
• Organizational theories are useful but they have limitations
• They cannot account for complex interworking of all organizations
• They may not apply to all organizations
• There are some things that apply to all organizations