Neoclassical theory displayed genuine concern for human needs.
One of the first experiments that challenged the classical view was conducted by Mayo and Roethlisberger in the late 's at the Western Electric plant in Hawthorne, Illinois Mayo, While manipulating conditions in the work environment e. The act of paying attention to employees in a friendly and nonthreatening way was sufficient by itself to increase output.
Uris referred to this as the "wart" theory of productivity. Nearly any treatment can make a wart go away--nearly anything will improve productivity. The Hawthorne experiment is quite disturbing because it cast doubts on our ability to evaluate the efficacy of new management theories. An organization might continually involve itself in the latest management fads to produce a continuous string of Hawthorne effects.
Pascale believes that the Hawthorne effect is often misinterpreted. It is a "parable about researchers and managers manipulating and 'playing tricks' on employees. Writing in , Barnard proposed one of the first modern theories of organization by defining organization as a system of consciously coordinated activities. He stressed in role of the executive in creating an atmosphere where there is coherence of values and purpose. Organizational success was linked to the ability of a leader to create a cohesive environment.
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He proposed that a manager's authority is derived from subordinates' acceptance, instead of the hierarchical power structure of the organization. Barnard's theory contains elements of both classical and neoclassical approaches. Since there is no consensus among scholars, it might be most appropriate to think of Barnard as a transition theorist.
Simon made an important contribution to the study of organizations when he proposed a model of "limited rationality" to explain the Hawthorne experiments. The theory stated that workers could respond unpredictably to managerial attention. The most important aspect of Simon's work was the rigorous application of the scientific method.
Reductionism, quantification, and deductive logic were legitimized as the methods of studying organizations. Taylor, Weber, Barnard, Mayo, Roethlisberger, and Simon shared the belief that the goal of management was to maintain equilibrium. The emphasis was on being able to control and manipulate workers and their environment. Classical and neoclassical theorists viewed conflict as something to be avoided because it interfered with equilibrium. Contingency theorists view conflict as inescapable, but manageable. Chandler studied four large United States corporations and proposed that an organization would naturally evolve to meet the needs of its strategy -- that form follows function.
Implicit in Chandler's ideas was that organizations would act in a rational, sequential, and linear manner to adapt to changes in the environment. Effectiveness was a function of management's ability to adapt to environmental changes. Lawrence and Lorsch also studied how organizations adjusted to fit their environment.
In highly volatile industries, they noted the importance of giving managers at all levels the authority to make decisions over their domain. Managers would be free to make decisions contingent on the current situation. Systems theory was originally proposed by Hungarian biologist Ludwig von Bertalanffy in , although it has not been applied to organizations until recently Kast and Rosenzweig, ; Scott, The foundation of systems theory is that all the components of an organization are interrelated, and that changing one variable might impact many others.
Organizations are viewed as open systems, continually interacting with their environment. They are in a state of dynamic equilibrium as they adapt to environmental changes. If I believe that my current state was created by somebody else, or by forces outside my control, why should I hold a vision? The central premise behind holding a vision is that somehow I can shape my future, Systems thinking helps us see how our own actions have shaped our current reality, thereby giving us confidence that we can create a different reality in the future.
A central theme of systems theory is that nonlinear relationships might exist between variables. Small changes in one variable can cause huge changes in another, and large changes in a variable might have only a nominal effect on another. The concept of nonlinearity adds enormous complexity to our understanding of organizations. In fact, one of the most salient argument against systems theory is that the complexity introduced by nonlinearity makes it difficult or impossible to fully understand the relationships between variables. Until recently, nearly all organizations followed Weber's concept of bureaucratic structures.
The increased complexity of multinational organizations created the necessity of a new structure that Drucker called "federal decentralization". In federal decentralization, a company is organized so that there are a number of independent units operating simultaneously.
The project management organizational structure has been used effectively in highly dynamic and technological environments French, Kast and Rosenzweig, The project manager becomes the focal point for information and activities related to a specific project. The goal is to provide effective integration of an organization's resources towards the completion of a specific project. Impementing a project management approach often involves dramatic changes in the relationships of authority and responsibility.
The matrix organizational structure evolved from the project management form Kolodny, It represents a compromise between the traditional bureuacratic approach and the autonomous project management approach. A matrix organization has permanently established departments that provide integration for project management. The matrix form is superimposed on the hierarchical structure, resulting in dual authority and responsibilities. Permanent functionality departments allocate resources to be shared among departments and managers. Systems theory views organizational structure as the "established pattern of relationships among the parts of the organization" French, Kast, and Rosenzweig, , p.
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Of particular importance are the patterns in relationships and duties. These include themes of 1 integration the way activities are coordinated , 2 differentiation the way tasks are divided , 3 the structure of the hierarchical relationships authority systems , and 4 the formalized policies, procedures, and controls that guide the organization administrative systems.
The relationship between the environment and organizational structure is especially important. Organizations are open systems and depend on their environment for support. Generally, more complex environments lead to greater differentiation. The trend in organizations is currently away from stable mechanistic structures to more adaptive organic structures. The advantage is that organizations become more dynamic and flexible.
The disadvantage is that integration and coordination of activities require more time and effort. The relationship between an organization and its environment is characterized by a two-way flow of information and energy. Most organizations attempt to influence their environment. Advertising campaigns and lobbying efforts are two examples.
Some theorists believe that ". Organizations select their environments from ranges of alternatives, then they subjectively perceive the environments they inhabit" Starbuck, , p. Strategic decisions regarding product lines and distribution channels contribute to the selection of the organizational structure and the environment. It is a commonly held tenant that people are less satisfied with their work in highly structured organizations. Many research studies have been conducted to examine the relationship between organizational structure and employee behavior e.
However, the results of these studies are contradictory Dalton, et al.
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Structural deficiencies can result in low motivation and morale, decisions lacking in timeliness or quality, lack of coordination and conflict, inefficient use of resources, and an inability to respond effectively to changes in the environment French, Kast, and Rosenzweig, One enduring and controversial debate about organizational structure is whether or not there is a maximum desirable size for an organization, after which there will be declining effectiveness.
Does an organization become increasingly dysfunctional as it exceeds its "ideal" size? Several researchers have hypothesized that organizational growth is beneficial only up to a point Hedberg, Nystrom, and Starbuck, ; Meyer, ; Perrow, Most researchers support a curvilinear growth theory. Pfeffer and Salancik found that profitability increases with size and then tapers off. Warwick reported that the growth in the U. State Department resulted in decreased flexibility and responsiveness, even though specific steps had been taken to abate these problems.
There are several theories to explain these findings.
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The most common explanation is based on the fact that an organization's size is usually positively correlated with age. Older i. Another popular theory is that in larger organizations, workers' jobs become more specialized.
The lack of variety creates a less motivating environment. Other theories have proposed that excessive size creates crippling coordination problems Filley and Aldag, ; Zald and Ash, Clearly, one of the most dominant themes in the literature has been to define organizations from the perspective of their position on a growth curve.
Cameron and Whetten reviewed thirty life-cycle models from the organizational development literature. They summarized the studies into an aggregate model containing four stages. The first stage is "entrepreneurial", characterized by early innovation, niche formation and high creativity.
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This is followed by a stage of "collectivity", where there is high cohesion and commitment among the members. The next stage is one of "formalization and control", where the goals are stability and institutionalization. The last stage is one of "elaboration", characterized by domain expansion and decentralization.
The striking feature of these life-cycle models is that they did not include any notion of organizational decline.