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Organizational Theory https://courses.lumenlearning.com/boundlessmanagement/chapter/why-study-organizational-theory/ o Why Study Organizational Theory  Organizational behavior studies the impact individuals, groups, and structures have on human behavior within organizations.  Micro organizational behavior refers to individuals and group dynamics in organizations  Macro strategic management and organizational theory studies whole organizations and industries  Organizational theory studies the organizations to identify how they solve problems and how they maximize efficiency and productivity o Classical Perspectives  Emerged from the Industrial Revolution, focus on improving efficiency, productivity, and output of employees. Does not focus on human or behavioral attributes.  Frederick Winslow Taylor introduced Scientific Management Theory.  Managing production efficiency as a science, he thought worker productivity could be completely controlled.  Created guidelines for the training and management of employees.  Max Weber created the bureaucracy theory of management which focused on rationalization, rules, and expertise for an organization as a whole.  Established clear roles.  Is now the modern flat organization which promotes as few management levels as possible  Henri Fayol focused on improving management efficiency rather than individual employees. Created six functions of management that are now four functions (planning, organizing, leading, and controlling).  Classical perspective of management theory largely pulls from these 3.  The behavioral perspective of management also known as the human relations perspective takes a different approach.  Began in 1920s  Hawthorne Studies o Found that workers were more strongly motivated by psychosocial factors than by economic or financial incentives  Abraham Maslow o Hierarchy-of-needs theory  Showed that workers were motivated through a series of low and high level needs  Douglas McGregor o Theory X and Y which had to do with the perceptions managers had about employees. o Theory X, manager assumes employees are lazy and must be micromanaged o Theory Y, managers are more laissez-faire and allow employees more freedom  Scientific Management

Focus on improving efficiency and output through scientific studies of workers’ processes Taylorism or scientific management Analyzes work flow to improve economic efficiency Prevalent between 1920 to 1920 Included analysis, synthesis, logic, rationality, empiricism, work ethic, efficiency, elimination of waste, and standardized best practices to improve efficiency of the worker. o Main focus was reducing time to complete a task  Frank and Lillian Gilbreth o Build on the best elements of work flows and create a standardized best practice o Time and motion studies to achieve rational and reasonable results and find best practice for implementing new work methods  Bureaucratic Organizations  Weber o Focused on creating rules and regulations to simplify complex procedures o Bureaucracy is a complex means of managing life in social institutions that includes rules, regulations, patterns, and procedures that are designed to simplify functioning of complex organizations.  Administrative management  Fayol’s principles o 14 principles of management  Division of work  Delegation of authority  Discipline  Chain of commands  Congenial workplace  Interrelation between individual interests and common organizational goals  Compensation package  Centralization  Scalar chains  Order  Equity  Job guarantee  Initiatives  Team spirit o 5 elements of management  Planning  Organizing  Command (delegation)  Coordination   o o o

 Monitoring  Flaws in the classical perspectives  Doesn’t focus on human needs  View worker as a gear in the machine  Leads to unsatisfied and disgruntled workers which affects work ethic o Behavioral Perspectives  The behavioral-science approach  Information processing involves determining how people process stimuli in their environment  Behavioral science also include relational sciences that deal with relationships, interaction, communication networks, associations, and relational strategies or dynamics between organisms or cognitive entities in a social system  Primary application can be seen in the field of organizational development o Organizational triangle shows that structure, processes, and people all play a role in the organizational culture  Behaviorism  Mary Parker Follett o Pioneered the understanding of lateral processes within organizations.  Hugo Munsterberg o Genesis of the field of industrial psychology o Focuses on topics such as hiring workers with personalities and mental abilities best suited to certain types of vocations as well as how to increase motivation, performance, and retention.  George Elton Mayo o Founder of the human relations movement o Participated in the Hawthorne studies o Peoples work performance is dependent on both social issues and job content  The Human Side: Hawthorne  Studies suggested that employees have social and psychological needs along with economic and financial needs that must be met in order to motivate employees.  Study helped conclude that workers were highly responsive to additional attention from their managers and feeling that their managers actually cared  Theories X and Y  Theory X assumes that workers need a high amount of supervision because people are inherently lazy o In line with the classical management theory o Micro-manage and closely supervise o Employees will then show little ambition  Theory Y assumes that employees are ambitious, self-motivated, exercise self-control, and generally enjoy mental and physical work duties.

o In line with behavioral management theories  Productivity: Argyris  Studied how humans design and decide on their actions under difficult or stressful situations  Single loop learning o Entities modify their actions according to the difference between expected and obtained outcomes, learning is through experience and direct reflection on outcomes  Double-loop learning o The entities question the values, assumptions, and policies that led to the actions in the first place. If they are able to view and modify those values, then second-order or double-loop learning has taken place. o Can identify broader systemic issues, and fix problems at the source o Modern Thinking  Quantitative and Analytical Management tools  Quantitative tools are used by management to determine where a company is doing well or struggling compared to the industry and competitors  Tools o Decision Tree  Branching graph or model of decisions and their possible consequences

o Simulation  The imitation of a real-world process over time  Requires that a model be developed that represents key characteristics or behaviors o Trend Chart

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Used to display data over time to explore potential trends

o Benchmarking  Allows a manager to see how different aspects of a business are performing compared to national, regional, and industry standards.  Explore how a company is doing compared to competitors. o Financial Projections  May calculate how long it will take for the building to generate enough income to cover the upfront cost of the building  Operations-Management Tools o Six Sigma  Designed to improve the quality of process outputs by removing causes of defects  Minimizes the variability present in manufacturing and business processes o Lean  Reduces waste and excessive steps in an operation  The Systems Viewpoint o Process of understanding how people and situations influence one another within a closed system o A system generally contain the following aspects  Inputs such as people, time, energy, and information  Processes or reactions such as tools, software, analysis  Outputs such as products, reports, and plans  Feedback mechanisms such as information and reports o Problems are conceptualized as a set of habits or practices that exist within a framework

o Parts of a system can best be understood and analyzed in the context of their relationships with other parts of a system o Example  A department has issues with workflow and efficiency. A manager looks at the problem to see if this is a departmental issue or a company-wide issue.  The contingency viewpoint o Past theories are no longer practiced because they fail to recognize that management style and organizational structure are influenced by various aspects of the environment known as contingency factors. o There is no one best way for managing o Three leadership styles and empirical situation measurements to assess the degree of favorability a given contingency offers  The leader-member relationship, which is the most important variable in determining the situation’s favorableness  The degree of task structure, which is the second most important input into the favorableness of the situation  The leader’s position power obtained through formal authority, this is the third most important dimension  Quality Control and Assurance o QA is a planned and systematic activity implemented in a quality system to fulfill quality requirements  Fit for purpose, the product should be suitable for its intended purpose  Right the first time, mistakes should be eliminated o QC is the process of testing finished products to uncover defects  Can include product inspection  Evidence based management o Used current best practices in managerial decision-making o Requires managers to collect data, run tests, generate hypotheses, and objectively interpret the findings to create an accurate depiction of the efficacy of a given managerial style or decision o Evolving Organizations  Knowledge Management and Behavior Modification  KM is the range of strategies and practices used by an organization to identify, create, represent, distribute, and enable the adoption of employee insights and experiences. This constitutes the company’s knowledge that is either embodied in individuals or embedded in organizations as processes or practices  Behavior Modifications is typically studied to examine how employees perceive their performance in relation to rewards o Accelerated Change and Adaptation

Change management is an approach to shifting and transitioning individuals, teams, and organizations from a current state to a desired future state  Requires managerial transparency about what is happening and why it is critical for employees to buy-in o The role of the manager in an evolving organization  They must facilitate the evolutionary process  Leader  Managers must be good leaders who organize and plan the change. They use leadership skills to inspire employees to embrace change.  Negotiator  Required to negotiate clearly and steadfastly with competitors, contractors, suppliers, and employees.  Figurehead  Must symbolize the organization, have a positive rapport with both customers and employees, and create a positive association of themselves with the organization at large.  Liaison and communicator  Must effectively communicate their vision for the organization. Transparency and empathy are integral to making employees aware of and comfortable with the changes taking place.  Current challenges in management https://courses.lumenlearning.com/boundlessmanagement/chapter/current-challenges-in-management/ o PESTEL: A framework for considering challenges  Highlights six critical factors for management to consider when approaching the general business environment  Politics play a role in business as there is a balance between free markets and systems of control  Economic factors are metrics which measure and assess the health of a given economic region  Social factors, or demographic factors, assess the mentality of the individuals/consumers within a given market.  Recognizing the potential technologies available to optimize internal efficiency, or to avoid letting a product or service become technologically obsolete, is a large challenge for management.  Consumers and governments both penalize companies who have a large adverse affect on the environment (or reward those who have a positive impact ).  Understanding the varying laws and regulations in a given region of operation is critical to avoiding unnecessary legal costs. o Globalization 

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Globalization is an influential modern topic that highlights the growing interdependence between different countries worldwide, necessitating managers to appropriately incorporate this trend within their strategies. The speed of modern globalization is often attributed to technological developments in communication and transportation, tasking managers with appropriately leveraging these technologies internally. Multinational companies cumulatively employ nearly half of the world’s population, creating a need for managers with a strong international awareness. Managers must understand that some processes can be performed universally and internationally, while others must be done in a localized fashion to adhere to each specific region’s tastes and customs. Critics of globalization cite the way in which it motivates an international culture over established domestic ones, as well as the negative environmental effects that result from business expansion. Being mindful of the potential opportunities in a global economy, along with knowledge of how to localize and sidestep the negatives in an international marketplace, can capture large value for effective managers. The Challenge of Ethics and Governance Business itself cannot be ethical: only the managers and corporate strategists can implement ethics within the framework of the business strategy. Corporate ethics and shareholder desires for profitability are not always aligned, and it is the responsibility of executive management to ensure ethics supersede profitability. In its simplest form, corporate ethics is a legal matter. Abiding by laws protecting workers’ rights and appropriate compensation is a top priority for management. Corporate governance and ethics become more difficult with the indirect implications of particular practices, making it important to assess the way in which certain operations may adversely affect the community at large. Managers are the primary decision makers, and therefore must hold themselves accountable for the way in which a business operates and affects stakeholders, shareholders, employees, and the community at large. The Challenge of Diversity In the 1960s, the U.S. begin identifying trends in workplace diversity and addressed them with legislation. This evolved into a societal change that embraces diversity as both valuable and ethical. Diversity poses various challenges in communication, from differences in language to differences in culture. Understanding these cultural differences and what they may accidentally communicate is critical to effective communication. Majority cultures have a tendency to create a homogeneous environment, possibly limiting the potential diverse opinions can provide.

Groupthink is a threat of which managers must be aware, particularly in meetings where dominant opinions steal most of the spotlight. Different perspectives are where the highest value can be captured in diverse environments.  The ability to manage diversity, as well as refine actions to communicate accurately and intentionally, are valuable and necessary aspects of effective management. o The Challenge of Technology  Managing new technology requires a thorough understanding of business technology management, which consists of four general parts.  Process, must be assessed for efficiency and effectiveness  Organization, Consider having an IT department  Information, perform appropriate research and analysis of the technological environment  Implementation, understand how to upgrade and implement technology to include monitoring investment return, maintaining equipment, and training users.  Managers must understand how to achieve internal efficiency by applying new technology to operational processes.  Businesses should create strategic business units focused solely upon managing a company’s technological strategy.  Keeping pace technologically requires extensive research and strategic analysis of the potential value of acquiring innovations.  Implementing new technology requires retraining staff and eliminating the natural friction that results from making operational changes.  Managers should be aware of the value in research, development, and forecasting future technological innovations to keep ahead of the competition. o The Challenge of Competition  Managers must know their business’s strengths and integrate them into the appropriate strategy to remain competitive.  Low-cost strategies are when companies sell a product or service at the lowest possible price point to stay competitive.  Differentiation is an alternative strategy to low cost in which companies fill a specific need that is not being filled or generate a brand image that increases their value-added proposition.  High quality is the antithesis of low cost; instead of efficiency, the strategy focuses on effectiveness, creating the best possible product to capture market share.  Companies also compete internally, either developing naturally competitive products or battling for funding based upon unit success.  Managers must understand all of these competitive strategies and align them with their perceived strategic advantage to stay competitive.  Organizational Structure: Trends in Organization https://courses.lumenlearning.com/boundless-management/chapter/trends-inorganization/ 

o Flattening Hierarchies  A hierarchy can link entities either directly or indirectly; it can also link entities either vertically or horizontally. The only direct links in a hierarchy are to a person’s immediate superior or subordinates.  The flat organization model essentially “flattens” the hierarchy and promotes employee involvement through a decentralized decision -making process.  According to the logic behind this model, well-trained workers will be more productive when they are directly involved in the decision-making process rather than closely supervised by many layers of management.  Flat organizations are most relevant in specific scenarios—most notably small organizations that are dependent upon creativity, freedom of action, and high-powered employees. o Decentralizing Responsibility  Decentralization is the process of dispersing decision making authority among the people, citizens, employees, or other elements of an organization or sector.  A decentralized organization shows fewer tiers in the organizational structure, a wider span of control, and a bottom-to-top flow of ideas and decision making.  The bottom-to-top flow of information allows lower-level employees to better inform the officials of the organization during any decision making processes.  When companies decentralize authority, however, there can be confusion as to how final decisions are made. o Increasing Empowerment  Empowerment is a process that enables individuals and groups to fully access their personal and collective power, authority, and influence, and to employ this power when engaging with other people, other institutions, or society.  Leaders within an organization can play a strong role in encouraging employees to put empowerment into practice.  To enable empowerment, managers can share information, provide employees with autonomy, and migrate to self-managed teams when possible.  Though the idea of empowerment can produce successful results, it is important to understand the risks. More decision -makers means more discussion about how a process should be accomplished and more moving parts within the organization, increasing complexity. o Increasing Adaptation  Technological advances, global market expansions, and the potential for constant (sometimes disruptive) innovation all point to the need for organizations to be adaptive.  Blockbuster and Netflix provide a classic example: in this case, Blockbuster ...