Historical Roots of Contemporary Organizational Forms

Historical Roots of Contemporary Organizational Forms

• Industrial revolution– Late 19th-early 20th century– Splits between public and private spheres– Served as impetus for these attempts to

analyze and direct organizational behavior

Max Weber’s “ideal type” -- Bureaucracy

• Spirit of capitalism: rationally calculate the exchange of commodities for ever-renewed profits; bureaucracies inescapable in society as they are efficient

• Ideology of technical rationality: series of interrelated beliefs that emphasize efficiency, predictability, calculability, and control over uncertainty

• “Iron cage” – we have constructed an iron cage where the satisfaction of our wants as consumers largely depends on restricting the employees who produce…can bureaucracy be blamed for society’s demands?

Components of BureaucracyMax Weber

• Division of labor – assumes work can best be accomplished if employees are assigned to a limited number of specialized tasks (i.e., specialization)

• Hierarchy – appointed place for each employee and task within organization; arranged in vertical, clearly defined hierarchy

Contd

• Centralization of decision-making and power – organizations most effective when mgmt has control over activities

• Importance of rules – rationally established and available for all possible contingencies

Limits to the “ideal type”

• Unadaptive – bureaucracies are set up to deal with stable, routine tasks; yet environments often turbulent and uncertain

• Over-emphasizes formal, vertical, and task-oriented communication

• Over-emphasizes organizational goals; stifles humanity

• Simplified view of worker motivation

Alternative Visionsfor Organizational Chart

Scientific ManagementFrederick W. Taylor

• Identification of strategies for designing tasks most efficiently (micro approach)

• Goals: reduce costs, labor conflict, improve worker performance

• Job design can be assessed objectively to determine “one best way to do a job”

Contd

• Time and motion studies: determine optimal standards of production– Bethlehelm Steel Corporation – optimal

amount of steel shoveled; reduced labor costs 65-75%; increased productivity by 300%

• Identify various working conditions serving as impediments to performance– Work-family policies– Employee assistance programs

Contd

• Piece rate salary system– Workers paid for amount of work performed– Minimum standards of production established– Wages based on abilities to meet standards– Bonuses paid for “pieces” over standards

• Contemporary pay for performance systems one of strongest contemporary trends in compensation administration

Types of PFP

• Individual – employee’s performance tied to measure of individual performance– E.g., merit pay for teachers; sales reps

• Group – based on measure of group productivity or performance– E.g., profit-sharing; ESOPs

Contd

• Poor perceived connection between performance and pay

• Level of PFP too low relative to base pay

• Workers must be capable of increasing output

• Creates hostile culture

Cx in classical theories

• Narrow scope for “appropriate” cx: task-oriented

• Emphasis on vertical flow

• Emphasis on written cx

• Characterized by “formal” tone

• Cx is routine, repetitive