economics anf finance

1. Classical Theories of Organizations

2. PREVIEW
Classical Theories of Organizations
Taylor’s Theory of Scientific Management
Fayol’s Administrative Theory
Weber’s Theory of Bureaucracy

3. Organizational Communication
Foundations REVIEW
“…the process of creating, exchanging,
interpreting (correctly or incorrectly), and
storing oral, nonverbal, and written messages
within (and across the boundaries of) a system
of interrelated and interdependent people
working to accomplish common tasks and goals
within an organization.”
MESSAGE-CENTERED DEFINITION

4. Assumptions and Features
Communication is central to the existence of
the organization
Organizational communication is a complex
process (creating, exchanging, interpreting,
and storing messages)
Misunderstandings occur

5. Misunderstandings
“Instances in which people who are
communicating don’t share meanings as
well as situations in which features of
organizational life serve to impinge upon
the efficient and effective functioning of
organizational members.”

6. Three Important Constructs
Organizational Identification (process & product)
An active process by which individuals link themselves to
elements (people, policies, products, services, customers, values)
in the social scene.
Involves an individual’s sense of membership in and connection
with an organization.
Job Satisfaction
The degree to which employees feel fulfilled by their job and
related experiences.
A pleasurable or positive emotional state from the appraisal of
one’s job or experiences
Linked to absenteeism and turnover
Communication Satisfaction
The degree to which employees feel that communication is
appropriate and satisfies their need for information and work
relationships

7. Communication Satisfaction (CSQ)
Eight Factors concerned with communication information,
relationships, channels, and climate
Communication Climate
Relationship to Supervisors
Organizational Integration
Media Quality
Horizontal and Informal Communication
Organizational Perspective
Relationship with Subordinates
Personal Feedback
Communication satisfaction is often considered the “sum”
of an individual’s satisfaction with the above dimensions.

8. Primary Goal
Reduce misunderstandings
through communication.

9. Theory
An explanation for how or
why something occurs. . .
Question: What is the most
efficient and effective means
of running an organization?

10. Functions of Theory
Describe
Explain
Predict
Control
Classical approaches to organizational
management and early organizational theories
were designed to predict and control behavior
in organizations.

11. Classical Theories of
Organizations
Emerged in early part of the twentieth century.
Models were military and the Catholic Church.
Features
Strict CONTROL of workers
Absolute CHAINS of COMMAND
PREDICTABILITY of behavior
UNIDIRECTIONAL downward influence

12. Classical Theories of Organizations:
Relevancy and Metaphor
How and Why does studying classical theory
help us to understand how modern organizations
function and particularly the role that
communication plays in effective organizing?
What is the metaphor which characterizes the
classical approach to organizations?

13. The Metaphor of the Machine
Organizations are viewed as if they are machines.
Managerial principles
Modes of operation
Treatment of workers
Communication in the organization
Properties of Machines
Very predictable
Rarely deviates from the norm
Replace defective parts with other “standard” parts
Specific rules exist regarding repair and specific roles
Organizational Application
Workers behave predictably-management knows what to expect
Workers operating outside expectations are replaced

14. Minimizing Misunderstandings
Simple: Promote principles of SPECIALIZATION,
STANDARDIZATION, and PREDICTABILITY
STRICT RULES & REGULATIONS regarding . . .
how work is accomplished,
who could speak to whom and when, and
managing through fear.
PROBLEMS
Creativity and intelligence are underutilized
Increased dissatisfaction
Decreased motivation and commitment to task and organization
Decreased communication effectiveness and satisfaction

15. Distinguishing Classical Theories
“Creative Application Skit”
Theory “Matchbook Definition”
Describe the theory “in a nutshell”
Principles of Management
Major Elements of the Theory
Application in the Modern Workplace
Personal Example(s)
How are misunderstandings minimized?
What new forms of misunderstandings are created?
Unintentional by-products
Contributions to occurrences of different problems

16. Taylor’s Theory of Scientific Management
Frederick Taylor (1856-1915)
“The Father of Scientific Management”
Maximize worker capacity and profits
PROBLEM: Get employees to work at their maximum capacity
PRIMARY FOCUS: TASKS
http://www.northstar.k12.ak.us/schools/ryn/projects/inventors/taylor/taylor.html
Systematic Soldiering
Deliberately working slowly as to avoid expanding more effort
than deemed necessary
Reasons
Reduction in workforce due to decreased need
Piecework system of remuneration - raise production requirements
without increasing pay
Rule of thumb training methods - inefficient

17. Taylor’s Theory of Scientific Management
Elements of Scientific Management
Scientific design of every aspect of every task
Time and Motion Studies
Careful selection and training of every task
Proper remuneration for fast and high-quality work
Maximize output - increase pay
Equal division of work and responsibility between worker and manager
Underlying Themes
Managers are intelligent; workers are and should be ignorant
Provide opportunities for workers to achieve greater financial rewards
Workers are motivated almost solely by wages
Maximum effort = Higher wages
Manager is responsible for planning, training, and evaluating

18. Taylor’s Theory of Scientific Management
Application in the Modern Workplace
Assembly Line Plants as Prototypical Examples
“Prisoners of Taylorism”
System of Remuneration (quotas - commission)
Re-Design - Reengineering
Benchmarking
Data are used to refine, improve, change, modify, and
eliminate organizational processes
Lean Manufacturing

19. Fayol’s Administrative Theory
Henri Fayol (1841-1925)
General and Industrial Management
Principles and Elements of Management - how
managers should accomplish their managerial duties
PRIMARY FOCUS: Management
(Functions of Administration)
More Respect for Worker than Taylor
Workers are motivated by more than money
Equity in worker treatment
More PRESCRIPTIVE
http://www.lib.uwo.ca/business/fayol.html

20. Fayol’s Administrative Theory
Five Elements of Management -- Managerial Objectives
Planning
Organizing
Command
Coordination
Control
Keep machine functioning effectively and efficiently
Replace quickly and efficiently any part or process that did
not contribute to the objectives

21. Fayol’s Administrative Theory
Fourteen Principles of Management (Tools for Accomplishing Objectives)
Division of work - limited set of tasks
Authority and Responsibility - right to give orders
Discipline - agreements and sanctions
Unity of Command - only one supervisor
Unity of Direction - one manager per set of activities
Subordination of Individual Interest to General Interest
Remuneration of Personnel - fair price for services
Centralization - reduce importance of subordinate’s role
Scalar Chain - Fayol’s bridge
Order - effective and efficient operations
Equity - kindliness and justice
Stability of Tenure of Personnel - sufficient time for familiarity
Initiative - managers should rely on workers’ initiative
Esprit de corps - “union is strength” “loyal members”

22. Fayol’s Administrative Theory
Positioned communication as a necessary ingredient to
successful management
Application in the Modern Workplace
Fayol’s elements of management are recognized as the
main objectives of modern managers
Planning - more participatory
Organizing - human relationships and communication
IMPORTANT TABLE 2.1 Comparison of Managerial
Skills (p. 32)
Especially applicable for large organizations (military)

23. Weber’s Theory of Bureaucracy
Max Weber (1864-1920)
German Sociologist
Theory of Social and Economic Organization (1947)
Principles and Elements of Management - describe an
ideal or pure form of organizational structure (general
policy and specific commands
PRIMARY FOCUS: Organizational Structure
Worker should respect the “right” of managers to
direct activities dictated by organizational rules and
procedures
More DESCRIPTIVE
http://www2.pfeiffer.edu/~lridener/DSS/Weber/WEBRPER.HTML

24. Weber’s Theory of Bureaucracy
Bureaucracy allows for the optimal form of
authority - “rational authority”
Three types of Legitimate Authority
Traditional Authority - past customs; personal loyalty
Charismatic Authority - personal trust in character and
skills
Rational Authority - rational application of rules or
laws

25. Weber’s Theory of Bureaucracy
Tenets of Bureaucracy
Rules
Specified sphere of competence
Hierarchy
Specialized Training
Workers do not own technology
No entitlement to “official position” by incumbent
Everything written down
Maintenance of “ideal type” - bureaucracy

26. Weber’s Theory of Bureaucracy
Concerned with describing the ideal structure of
an organization
Cornerstone: existence of written rules
The rational application of written rules ensures
the promotion of legitimate authority and the
effective and efficient functioning of the
organization.

27. Weber’s Theory of Bureaucracy
Application in the Modern Workplace
Large organizations guided by countless rules
are bureaucracies
Linked with inefficient, slow-moving
organizations
Organizations have several characteristics of
bureaucracies

28. SUMMARY
Classical Theories of Organizations (p. 36)
Taylor’s Theory of Scientific Management
Fayol’s Administrative Theory
Weber’s Theory of Bureaucracy
All 3 theories attempt to enhance management’s ability to
predict and control the behavior of their workers
Considered only the task function of communication
(ignored relational and maintenance functions of
communication)
Designed to predict and control behavior in organizations

29. NEXT WEEK
Read CHAPTER 3: Humanistic Theories of Organizations
(pp. 39-62)
Human Relations Theory
The Hawthorne Studies
McGregor’s Theory X and Theory Y
Human Resources Theory
Likert’s Systems Theory (Four Systems of
Management)
Blake and Mouton’s (a.k.a. Blake and McCanse)
Managerial Grid