BBA 300 Organization Theory - Copy

COURTESY OF LAURA OKONG’O
0797271275
KENYATTA UNIVERSITY
INSTITUTE OF OPEN DISTANCE & e-LEARNING
IN COLLABORATION WITH
SCHOOL OF BUSINESS
DEPARTMENT OF BUSINESS ADMINSTRATION
BBA 300: ORGANIZATION THEORY
Written by:
Joseph Opondo Mamba
Lecturer in Business Administration
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Copyright ©Kenyatta University, 2009
All Rights Reserved
Published By:
KENYATTA UNIVERSITY PRESS
INTRODUCTION TO COURSE
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Organization theory is one of the cover units taught by the university‟s business
administration department. Until recently, it was taught in most as one of the
functions of management covering both the process of building the structure of
organizations and the study of human behavior in the work place. The two
components have long been separated and they are now taught as separate courses.
The concepts, theories and principles covered under organization theory, are
considered to be important because they provide the basis for the coordination and
control of the organizations work activities. For organizations to function well there
must be order. The activities that form the daily duties of each employee must be well
defined. This helps in arranging the departments, sections and in some cases units of a
firm in an orderly way to avoid interfunctional conflicts and the turnover of workers.
Organization theory has undergone along process of evolution including the

evaluation of the bureaucratic theories, the administrative theories, the scientific
management theories, the human relations theories and finally, the modern or systems
theories.
ADVICE TO STUDENTS
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Organization theory like other university courses requires extensive reading in the
library, internet in official publications, journals, and in the lecture handbook. In
many cases you may find it useful to make some notes from your private reading on
the topics covered in the lectures give in the module.
It is common practice in this course and in most management courses to have some
case studies in some of the examinations, but the exact form that a given examination
will take will be explained during tutorials. It is also common practice for some of the
Continuous Assessment Tests (CATs) to take the form of term papers. Where this is
the case, you will be informed of the designed topics in good time.
J.O.Mamba
COURSE OBJECTIVES:
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By the end of this course the candidate should be able to:
o Explain the nature of formal and informal organizations.
o Explain the levels of organization relations in organization, and

combination of functions in organization.
o Explain the classical theories of organization.
o Explain the neoclassical theories of organization.
o Explain the modern theory of organization.
TABLE OF CONTENTS
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LECTURE 1: RELATIONS IN ORGANIZATION ................................................1
1.1 Introduction ....................................................................................................1
1.2 Lecture Objectives ..........................................................................................2
1.3 The Contributions of Organization Theories....................................................2
1.4 Levels of Organization ....................................................................................5
1.5 Relationships in organization ..........................................................................6
1.6 Functional relations…………………………………………………….......9
LECTURE 2: THE ORGANIZATION STRUCTURE AND PROCESS .............13
2.1 Introduction ..................................................................................................13
2.2 Lecture Objectives ........................................................................................13
2.3 Theories of the structure of Organizations .....................................................14
2.4 Characteristics of bureaucracy according to Marx Weber ..............................14
2.5 The organization process and the theory of cooperation in organization....17
2.6 Formal and informal control………………………………………………18
LECTURE 3: INDIVIDUALS AND ORGANIZATIONS .....................................26
3.0 Introduction ..................................................................................................26
3.3 The exchange relationships ...........................................................................26
3.5 Approaches to need satisfaction………………………………………………30
3.7 Formal organizations and their participants ...................................................31
3.8 Individuals and formation of coalition groups ...............................................33
3.10 Management by objectives ............................................................................36
3.7 Ideology in Organization...............................................................................28
LECTURE 4: FORMAL ORGANIZATION .........................................................40
4.1 Introduction ..................................................................................................40
4.3 Characteristics of formal organizations .........................................................40
4.4 Position description ......................................................................................43
4.5 Permanence of formal organization ...............................................................45
4.6 Structuring organizational relationships…………….................................46
4.7 Power relations in organization...................................................................47
4.8 Authority relations in organizations……………………………………...48
4.9 Status relations……………………………………………………………51
LECTURE 5: DESIGNING ORGANIZATIONAL FORMATS…………………55
5.1 Introduction ..................................................................................................55
5.3 Design by function ........................................................................................55
5.4 Design by production or by product line........................................................56
5.5 The territorial design .....................................................................................57
5.6 The matrix organization design .....................................................................58
5.7 Trends in formal organization design ............................................................60
5.8 Operations under stable environment……………………………………..60
5.10 Variations within the environment………………...……………………...62
5.11 The significance of differentiation………………………………………63
5.12 Structure organization units……………………………………………...63
5.14 Technology and departmentation………………………………………..65
5.15 Pooled interdependence………………………………………………….66
5.16 Sequential interdependence……………………………………………...66
LECTURE 6: INFORMAL ORGANIZATIONS .....................................................75

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6.1 Introduction ...................................................................................................75
6.4 Knowledge of approved behaviour .................................................................76
6.5 Characteristics of informal organizations .......................................................77
6.7 Individuals and groups in organizations .........................................................80
6.8 Human analysis of group formation ...............................................................81
6.9 Sayles on industrial work groups....................................................................82
6.10 Intergroup conflicts and cooperation ..............................................................83
LECTURE 7: THE CLASSICAL THEORIES OF ORGANIZATION .................86
7.1 Introduction ..................................................................................................86
7.3 The prevalence of bureaucracy in organizations ............................................87
7.4 Elements of bureaucracy ...............................................................................88
7.5 The normative quality of bureaucracy ...........................................................90
7.6 Functions of bureaucracy ..............................................................................91
7.7 Dysfunctions of bureaucracy ........................................................................93
LECTURE 8: THE ADMINISTRATIVE AND SCIENTIFIC MANAGEMENT
SCHOOLS OF THOUGHT ........................................................................................99
8.1 Introduction ..................................................................................................99
8.3 The elements of administrative theory…………………………………….100
8.4 The principles of management according to Henri Fayol…………………...100
8.5 Other contributions to administrative theory...……………………………..103
8.6 General staff managers……………………………………………………...104
8.7 The scientific management theory of organization ………………………..105
LECTURE 9: THE NEOCLASSICAL THEORIES OF ORGANIZATION….114
9.1 Introduction to the human relations movement……………………………..114
9.3 Development of the neoclassical theory…………………………………….114
9.4 The hawthorne experiments…………………………………………………115
9.6 Elements of the neoclassical theory………………………………………...117
9.7 The human relations approach to informal organizations…………………..118
9.9 Criticisms of the human relations theory…………………………………...119
LECTURE 10: THE STRUCTURALISTS MOVEMENT……………………..122
10.I Introduction………………………………………………………………...122
10.3 The multi factor approach to organization……………………………..123
10.4 The modern Organization theory………………………………………124
10.5 The parts of the system and their interdependency …………………..124
10.6 The linking processes of a system……………………………………..125
10.8 Development of the modern theory……………………………………128
10.10 Characteristics of the modern theory…………………………………..129
10.11 The modern approach to goals of the firm …………………………….135
10.12 Criticisms of the modern theory………………………………………136
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LECTURE 1: RELATIONS IN ORGANIZATION
1.1 Introduction
The traditional approach to the study of organizations has been by studying
organizing as a managerial function. Organizing was considered to be a subset of a
larger activity of managing. Today students of business administration view
organizations as more than the formal structures that managers create.
Organizations are systems composed of many Sub- systems functioning in the
environment. Management is one of the most important of these Sub-system which
must attempt to integrate other sub-systems so that they are compatible with one
another within the organizations environment and its goals.
Types of Organizations and the Process of Organizing

Organizations may be in the form of companies, armies, governments, churches,
schools, clubs, teams etc. Organizing is the process by which the structure of an
organization is created and maintained. The process of organizing involves the
determination of specific activities that are undertaken to accomplish the objectives of
the organization.
It involves the grouping of these activities according to some logical pattern and
assigning the grouped activities to a responsibility center under a responsible person.
Because the organization activities are carried out by a manager together with other
managerial function such as creating out organization activities, planning, motivating,
communicating and controlling, it is considered to be a function of management.
Many experts from different fields including industrial engineering, industrial
psychology, industrial sociology and Social anthropologists have made contributions
to the theory of organization. They have been interested largely in the structure of
formal organizations and how they operate. They were mainly concerned with
improving operations and understanding their culture.
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1.2 Lecture Objectives
By the end of this lecture you should be able to:
 Explain the nature of organizations, relations in organizations and in nature.
 Explain the various forms of functional relations.
1.3 The Contributions of Organization Theorists

There are many ways in which organization theorists have contributed to
management. They have developed organization design rules intended to speed up the
flow of information and remove inhibitions on the decision making process. Besides
many of their research findings have been of great value in pointing out potential
difficulties and unforeseen consequences of current organization designs and
operating procedures.
The complexity of Organizations

Organizations and their study can be complex. They can have both macro and micro
dimensions. The macro viewpoint considers an organization from an aggregate point
of view. It considers each organization to have components and parts.
The micro or part of an organization can have objectives or characteristics that

are different from those of the macro or the whole system. Consider the
following organization chart.
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Share holders or
Owners
Board of Directors
The President
Functional Departments
Marketing Manufacturing Finance Engineering

Department Department Department Department
29 21 20
Employees Employees Employees
Sections
Quality control Fabrication 120 Assembly 65 Shipping 18

4 Employees Employees Employees Employees
Fig. 1.1 chart demonstrating the complexity of organizations

This organization chart can be used to illustrate the complexity of organization. We
may for example ask, is the manufacturing department a macro or micro organization
or a unit? The answer to this question is that it is both; unlike other departments it has
several sections.
It is a macro-organization with respect to its subordinate units like the quality control
fabrication, assembly and shipping. But compared to the company as a whole it is a
micro-unit because it is one of the units that make up the company.
The differences in perspective in viewing a given unit of an organization as a macro
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unit as compared to viewing it as a macro unit and vice versa can be substantial and
even critical. Failure to understand this difference can lead to fallacies of
composition, which can produce serious descriptive and prescriptive distortions about
the organization.
For example suppose that in a certain firm in the engineering department which has
both micro and macro characteristics one of the leading engineers asks for a 15% pay
rise. He further threatens to quit if the pay increase is not granted.
The company could retain him by granting him a pay increase. However, if this pay
increase causes all other workers to demand similar pay increases, these pay increases
could destroy the company. If the company considered only the micro effects of the
pay increase, it could grant the pay rise and retain him. But when the macro effects
are considered the pay rise may not be granted.It could be decided that the engineer
should not be granted a pay rise because of the dysfunctional effects of the break
down in the overall salary structure of the larger organization.
For another example consider a union of workers to be a micro unit of a larger system
of the economy. If the union negotiates and wins a substantial wage increase for its
members, who may also be considered to be micro units, this increase will benefit its
members. But if all other unions demand and secure similar wage increases, the wage
increases may not have any significant effect if the cost of living in the economy,
which is the macro unit, increases by the same percentage. It is because of this reason
that unions negotiate for automatic cost of living adjustment in salaries and wages.
Lastly in a family, children are micro-units compared to the family as a whole.
Parents may be able to give favours to one of the children but if all other children as
a result ask for the favours the parents may not be able to provide them.
Student activity
Can you think of any other examples of micro and macro conflict in an organization
that can exists? How would they relate to the environment in which the firm
operates?
Many other examples of conflicts between the interests of micro and macro unit can
be given but the main point to bear in mind is that in administration, generalizations,
descriptions, and prescriptions that may be valid at one level may or may not be
valid at another level.
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1.4 Levels of Organization
One of the earliest contributors to the theory of organization was Keneth E.
Boulding who identified ten levels of organization. Because of his background as a
biologist, Boulding gives both the systems level and examples from the environment
as follows:
System level Description or Examples from the

Characteristics Environment
1 Elemental interaction level Fundamental or Basic Thoughts, ideas and
chemical reactions.
Leads to creations
and inventions.
2 Static structure level Use of normative or Road,maps,
descriptive models of Organization charts,
things, events and Sign posts, Notices
concepts. etc.
3 Simple dynamic level Predetermined or Clocks, Standard
necessary motions operating
procedures, rules and
regulations
4 Cybernetic level Has ability to modify Heating Systems
itself or seek or with thermostatic
maintain certain controls.
conditions Management using
monitoring and
standard cost control
systems.
5 Simple open level Simple self Germs, body cells,
maintenance with the processor of a

capacity to reproduce production system
and ability to accept etc
transform the inputs
and produce output
6 Genetic or Societal level Division and Botanical plants,
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specialisation of Department, sections,
labour among cells, and units of an
each part or cell organization
aggregation is
mutually dependent
7 Animal level Posses specialized Dogs, cats, horses,
information receivers cows, snakes etc.
like ears, eyes, noses
mouths, a complex
nervous system and
brains
8 Human level Has intelligence, Self Man
reflectivity has time
reference
adaptability, control
of the environment to
a certain extent, tool
making, language and
cultural heritage
9 Human organization level Organization of two Corporations, Social
or more people clubs, teams, armies,
governments etc.
10 Transcendal level In pursuit of the Religious groups,
ultimate and illusive Philosophical order,
knowledge, truths and Research
aesthetics organizations.
All these levels are used directly or indirectly in the operation of human
organizations. In administration emphasis is put on the human organization level in
the study of organizations.
Illustration
To show how each level is used at all levels of an organization, consider a company
that manufactures livestock pesticides and other agricultural chemical. The first level
of organization is the idea, which is the basis of all things that happen in the basis of
all things that happen in the company. The idea could lead to an invention or to a
formulation of a new product or to a new method of production.
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The company‟s organization chart represents the second level or the static structure
level. It shows how the company is managed. The use of machines in the
manufacturing process represents the third level or the simple dynamic system.
If the company uses a machine that can take automatic measurements of inputs,
makes appropriate changes and produces a final product by itself, then this would
represent the fourth level or the cybernetic level.
The company‟s interest in organization can be seen when it develops and produces
chemicals that can kill fungi, weeds and weevils. The fifth, sixth and seventh levels
all fall in this category. The people working for the company represent the human
level and human organization levels. When one tries to understand the objectives of
the company he is using the transcendental level.
1.5 Relationships in organizations

Organizations of lower forms of nature can be accidental, parasitic, one-way or
mutualistic. To these we add the transcendental relationships to represent human
organizations. Each of these terms is used to explain relationships in both human and
non-human organizations.
Accidental Relationships
An accidental organization or association is one in which no participant deliberately
associates with another person.
From such associations benefits may accrue to one or more of the participants.
Examples of accidental relationships from nature include the following:
1. A bird that builds its nest near wasps or a beehive may protect itself from
many of its enemies.
2. Insects that have been disturbed by a monkey that is moving through tree
branches may provide an accidental meal to birds flying by.
3. A person that is walking through a crime-infested area may travel safely if
he happens to be in the company of a policeman even though his
association with the policeman is purely accidental.
4. Accidental organizations may also occur in business firms. For examples
where a fashion designer overhears a new fashion idea from women
chatting in a social place and uses the idea to produce cloths and sell them,
this would be an example of an accidental relationship.
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Parasitic Relationships
Parasitic relationships occur when one participant gains from an association at the
expense of another participant. For examples, a flea may derive its nourishment at he
expense of the host dog.
Parasitic relationships can also occur at human organization level. An organizational
parasite is one who as a matter of policy receives support or advantage or benefits
from another person without a proper return.
A parasitic person is known as a sycophant. Other words that have been used to
describe such people are favourites, today, lickspits, bootlickers, hangons leeches or
spongers
Industrial organizations exhibit many parasitic relationships. For example, feather
bedding or being paid more than one‟s work is worth is parasitic whether it occurs in
a labour union shop or in an executive suite.
Relationships in which workers are underpaid are parasitic. A parasitic relation can
also occur where a group of competing companies in an industry conspire illegally to
form a monopoly in order to charge unrealistic prices
One Way Relationships

In one-way relationships, one of the parties benefits without harming or helping
others. The party that benefits is tolerated without harming or helping others. Here the
relationship is deliberate on the part of the benefiting party.
For examples the cattle egret- a bird that walks besides grazing cattle feeding on
insects scared by the moving cattle does not provide anything to the cattle in return
and the cattle don not mind its presence.
Similarly, a business firm that allows a research student to observe its operatives is a
good example of a one-way relationship in human organizations. No direct return is
expected form the student but he benefits from his observations in the firm.
Mutualistic Relationship
In a mutualistic relationship the association may be deliberate although it may not be
conscious on the part of all parties. All participants expect to benefit and all of them
mutually contribute to the well being of each other.
An example of this type of relationship is the relationship between the plover bird and
the crocodile. The plover bird gets its food by picking leeches from inside the mouth
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of a cooperating crocodile, which in turn gets rid of the leeches.
Most business relationships are mutualistic. Companies do business with one another
both of them expecting to make profits. Besides the agreement between an employee
and an employer, where the employer and an employee agrees to provide his time and
effort in exchange for a wage is mutualistic.
Transcendental Relationship
Transcendental relationship represents the highest quality of organization. It is
mutualistic but is goes beyond the limited scope of mutualism. Conflicts between the
labour union and the management over the division of the firm‟s earnings are
mutualistic. Each party strives to benefits from heir relationship. The relationship
could be transcendental if both parties were concerned with the higher intrinsic
essence of the firm‟s productivity.
The distinguishing characteristic is that in a strict mutualistic relationship both sides
are interested in what portion each one will get from a cetin sized pie when it is
divided among them. In strictly transcendental relationships, the parties would be
interested in increasing the size of the pie so that they will get bigger sizes when it
shared out among them.
Transcendental relationship shows great concern for higher performance, higher
output, increased productivity, more revenue, and lower costs in exchange for higher
returns. For example, a person who works for the sole purpose of getting promoted
does not follow a transcendental relationship.
At transcendental level one may be more interested in the process of doing work than
he may be interested the product (the external to him) or in results of his work. This
orientation has been described as the seeking of the intrinsic as compared to the
extrinsic rewards. Modern organizational theory holds that extrinsic dimension like
salary, working conditions and fringe benefits are generally, satisfied if one is
intrinsically motivated. In transcendental relationships one benefits himself as well as
the organization with the same acts.
Maslow’s Views on Transcendental Organization

Maslow aw transcendental organizations as going beyond the polarity between,
selfishness and unselfishness, self interest and altruism in which the person who is
being selfish simply benefits others and the person who tries to be beneficial to others
reaps rewards for himself.
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He believed that a transcendental organization is one in which virtue pays. He gave
the example of parent and child relationship in which the parent feels that what is
good for me is also good for my child.
The same principle holds for man-to-man relationships and to man to organization
relationships. Achieving transcendental levels or organization requires high degrees
of personal honesty, responsibility, consciousness and high dimensions of maturity.
1.6 Functional Relations

The valuable resources, abilities or characteristics that persons offer to organizations
provide another dimension. They are combined in functional relationships in
organizations. Organizations benefit from the participants supplementary similarities,
complementary differences or some combination of the two.
From supplementary similarities of members, the organizational effect is the sum of
the homogeneous efforts of members. Members perform the same kind of work but
the amount of work each one performs differs.
For examples, suppose that there is a weight load of 400 kg to be move or lifted in a
factory. Andanje lifts 240 kg while Omolo lifts 160kg. together in their organizational
effort, based on the numerical addition of their homogeneous efforts they lit the load.
Each of them produced the same qualitative units of effect i.e. kilograms of lift. But
Andanje lifted 80 kg of workload more than Omolo.
This difference in lift load raises several important administrative questions about the
appropriate benefits that should accrue to each of the two workers.
For example, should Andanje be paid more money than Omolo? If so, how should
this difference in wages relate to their grades? Job description? Working hours? Etc.
The answer to the main question is that there should no wage differences. However,
there should be a reward system that pays a bonus for extra work done.
From complementary differences of persons organizations require different resources

from members. For examples, in building a house4, the organized complementary
differences of engineers, architects, plumbers and masons may be required.
In music a choir is made up to many different complementary different tones, which
are combined in singing. The objectives of a business organization can only be
achieved successfully by employing the complementary different abilities of persons.
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Engineers, chemists, medical doctors, clerks, Accountants, General Managers etc.
may be employed by the same firm to perform different functions. This principle is
used by modern business organizations in order to accom0plich the effective
coordination of different but complementary skills of different employees.
In some cases both supplementary similarities and complementary differences of

members are used. For example, an assembly line a in a factory may be manned by 20
assemblers producing 100 identical parts in a factory may be manned by 20
assemblers producing 100 identical parts. This would illustrate the organization‟s use
of the principle of supplementary similarities because all the 20 workers are doing a
homogeneous or similar work. Their total effort is merely the arithmetic sum of their
individual production.
But the design of the other parts of the final product like a television, may require the
use of different skills including physicists, engineers electronic technicians etc. Other
talents may be required to sell the Television install it, and maintain it; all which
provide for complementary differences so that the firm must employ the use of both
supplementary similarities and complementary differences.
1.7 Lecture Summary

In this lecture we have gone over some of the earliest contributions to organization
theory. We have seen that some of the contributors were scientists and they gave
examples from both functional and natural environments.
1.8 Activities
1. Explain the differences between supplementary similarities and
complementary differences.
2. Using an example of a manufacturing company, explain the ten levels of
organization as explain by Kenneth Boulding
3. Using examples from the environment and in business explain the
relations that can occur.
1.9 Further Reading

Identify relevant books in the library and read classical contributions on formal
organizations. Make some notes on the characteristics of formal organizations
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1.10 Self Test Questions
Using the hospital as an example, give examples of complementary and
supplementary functional activities.
1.11 Glossary
A cybermetic level of operations, machines are used but they require direction and
control. An operator runs the machines. They are not fully automated to operate by
themselves.
1.12 Answers to self Test Questions

In a hospital the similar activities like cleaning of floors, cloths etc provide examples
of supplementary similar activities. The physicians that attend to patient suffering
from different forms of ailments would provide an example of the use of
complementary differences.
1.13 References
1. Herbert G. Hicks and Ray Gullett, Organization Theory and Behaviour,
Mcgraw- Hill co. Ltd, Pg. 3-15.
2. Albert F. Rubestein and Chadwick J. Heberstoh, Some theories of
organization, Richard D. Irwin and The Derseypress, Homewood, Illinois.
Pg. 1-40
3. Peter Weissenberg, Introduction to organization behaviour, Intext
Educational Publishers Pg. 9-31.
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LECTURE TWO: THE ORGANIZATION STRUCTURE AND PROCESS
2.1 Introduction
To a layman the term “organization structure” brings in mind the organization chart of
a firm. The organization chart and any associated position descriptions provide
important information on organization structure but for a person who wishes to study
organizations more scientifically a more comprehensively meaning of the
organization structure is needed. This is because organization charts may not be
accurate and thy may not provide all the information.
It is however, important to know the nature of organization charts and position
description and how the affect or influence the organizational behavior. They provide
useful information the structure of the organization and the way it is managed.
The organization structure reflects the pattern of beliefs about the organization that
are shared by those individuals who take the coordinated action that constitute its
organization behavior. These beliefs provide long term coherence for the
organization, irrespective of whether they occur in the form of documents, monetary
devices or in perceptions and cognitions of the human perception.
Valuable knowledge about organizations can be attained from studying the specific
institutional structures that they have created. At theoretical level one may look for
characteristic of these institutions that can describe a wide range of similar
organizations. Information obtained from these characteristics can be useful for
purposed of explaining, predicting and controlling the behaviour of an individual
organization.

 Explain the structural characteristics of a formal organization as proposed by
Max Weber.
 Explain Etzion and Blau‟s contributions on the use of power and authority in a
formal organization
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2.3 Theories of the Structure of Organizations
1 Udy in his article, The Administrative rationality, the social setting and
organizational development, gives a summary of some recent research on
modern organizations. He compares specific organizations from various
primitive societies in term of a series of structural elements that progress
towards the rationality that is characteristic of Marx Weber‟s bureaucracy.
Many examples of structured organizations abound in history. The council of
elders in many African countries which colonial administrators effectively
used as a baraza would be a good example of early African administrative
institutions that possess formal structural elements of an organization. Others
include the Inca Empire, the Aztecs, the Roman Empire, the Egyptian empires
and the Mesopotamia Empire.
1. Marx Weber (1864-1920)

Marx Weber in his essay, the Bureaucracy, explains important feature of the
institutional structure of organizations, their interrelations and consequences. He
traced the line of evolution of organization from institutions based on tradition and
centrally concerned with persons and their status over to rationalized institutions
centrally concerned with an impersonal task.
2.4 The Characteristics of Bureaucracy According to Marx Weber.

According to Marx Weber the modern officialdom functions in the following ways:
I. It is based on the principle of fixed and official jurisdictional areas which are
ordered by rules, laws, and administrative regulations. Here the organization:
1. Has regular work activities required for purposes of the bureaucratically governed
structured distributed in an official way as official duties.
2. The authority to give commands that are required for the discharge of these duties
is distributed in a stable way and is strictly delaminated by rules concerning the
coercive means, which may be placed at the disposal of the official.
3. Methodical provision is made for the regular and continuous fulfillment of these
duties execution of rights, and that only persons qualifications are employed. In
public administration these three elements constitute bureaucratic authority. In
private organizations they constitute bureaucratic management,
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II. Officialdom
According to Weber, officialdom may be based on the principle of office hierarchy in
which levels of graded authority mean a firmly ordered system of superiors and
subordinates. The higher-level offices supervise the lower level offices.
The system offers the governed the possibility of appealing the decision of a lower
office to its higher authority. It emphasizes the principle of jurisdictional competency,
through hierarchical subordination. Once established and having fulfilled its tasks, an
office tends to continue in existence and it can be held by another incumbent.
III. The Management of Office

The management of the modern office is based upon written document “the files”,
which are preserved in their original form. There is staff or subaltern officials (junior
army officer) and scribes (clerks). The body of officials actively engaged in “a
public” office along with their respective apparatus of materials implements and files
make up the bureau. In private organizations the bureau is called an office.
The modern organization of the civil service separates the bureau from the private
domicile of the official and in general bureaucracy segregates official duties as
something distinct from private life. Public money and property are divorced from the
private property of the official.
The executive office is separated from the private residence. These principles are
applicable to public as well as private organizations.
IV. Office management presupposes though and expert training.
V. When the office is fully developed, official activity demands the full working
capacity of the official
VI. The management f office follows general rules which are stable exhaustive and
which can be learned.
Weber on the Position of the Official

Marx Weber gave the characteristics of the internal and external postion of the official
as follows:
I. Office Holding
According to Marx Weber office holding is a “vocation”. This is shown by the
prescribed course of training, which demands the entire capacity of work and the
generally prescribed and special examinations, which are pre-requisites for
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employment.
The position of the official is in the form of the duty performed. It determines the
internal structure of his relations both legally and actually. Entrance into office is an
acceptance of a specific obligation of faithful management in return for a secure
existence in the form of security of tenure. It required locality to office.
II. The personal position of the official is patterned as follows:

1. Whether he is in a private office of in a public office, the official usually
enjoys a distinct esteem as compared to the governed or his subordinates.
2. A superior authority appoints the pure type of a bureaucratic official. An
official that is elected by the governed is not to be a purely bureaucratic
officer.
3. The existence of an election does not mean that no appointment hide behind
the lection in the state; especially if the appointment is by part chiefs. It
depends on how he functions.
4. Designation of official by means of an election among the governed modifies
the strictness of hierarchical subordination. Where the demand for
administration by trained expects is considerable and the freely moving
opinion recognizes it, it fall on the party to choose the qualifications of the
official before the election takes places
III. In the original meaning of bureaucracy the position of the official was considered
to be held for life. Tenure for life was presupposed even where a notice or
periodic reappointment occurs
Legal or actual life tenure is not recognized as an officials right to possession of office
in modern organizations although pensionable positions.
Where legal guarantees against arbitrary dismissal or transfer are in force, they merely
serve to guarantee the discharge of duty free from personal considerations. The
official receives the regular pecuniary compensation of affixed salary and old age
security provided by a pension scheme. The official is set for a career within the
hierarchical order of the organization. He moves from the lower, less important and
lower paid positions to higher positions.
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2.5 The Organization Process and the Theory of Cooperation in Organization
The individual human being possesses a limited power of choice. He is a resultance of
and he is limited by the factors of the total situation. He has motives purposes and will
to accomplish them. Among the most limiting of the factors in the situation of an
individual are man‟s own biological factors.The most effective method of overcoming
individual limitations is through cooperation. This requires the adoption of a group or
non-personal purposed.
Cooperation is a social aspect of the total situation and social factors arise from it.
These factors may in turn be the limiting factor in the situation. They arise from:
(a) The process of interaction and

(b) Interaction changes the motives and interest of participants.
The persistence of cooperation depends on its effectiveness and its efficiency.

Effectiveness relates to the accomplishment of the cooperative purpose while
efficiency relates to the satisfaction of individual motives. It can be measured by the
successes of the group in attaining group effort. The survival of cooperation depends
upon two interrelated and interdependent classes of processes:
a) Those, which relate to the system of cooperation as a whole and

b) Those, which relate to the creation or distribution of satisfactions among
individuals.
Instability and failure of cooperation arise from defects in each of these classes of
processes. An organization comes into being when:
1. Participants are able to communicate with each other.

2. They are willing to contribute to action.
3. They are willing to accomplish a common purpose.
An organization, whether simple or complex, is always an impersonal system of

coordinated human effort having a purpose as the coordinating and unifying principle.
2.6 Formal and Informal Control

Etzion, in his book, Modern Organizations 1964, points out that informal control is
not adequate if an organization has to achieve its ends. In order for the for the firm to
24
have formal control mechanisms it must use rewards and sanctions or denials and
distribute them according to good or bad performance. In the process of distributing
reward and sanctions it develops means of its members or its participants.
Etzioni discusses three basic types of organizational controls i.e. physical control,
material control and symbolic control. In physical control, there is some degree of
actual physical constraint applied to an individual. This kind of control is achieved by
means of coercive power, which used force to ensure compliance.
Material control involves the use of benefits of immediate utility to the individual.
These benefits can be increased or reduced depending on the degree of control
required. It is achieved through the used of utilitarian power. In symbolic Control
manipulation of symbols which have no extrinsic value but which are of intrinsic
value to the individual are used. This type of control can be achieved using normative
power or social power.
The type of organization, which uses coercive power, would be the traditional, non-
rehabilitative institutions such as the prisons and the place. Here there may be some
kind of actual force used to enforce compliance Utilitarian power is exercised through
the distribution of rewards. Money is the most effective type of reward under this
power. Most industrial or business organizations rely on utilitarian power.
18
Superiors directly to subordinators apply normative power while normative social
powers are used to make sure that the firm achieves organizational goals and
objectives.
2.7 Power and the Theory of Exchange
Blau, in his book “Exchange and Power in social life”‟ 1964, developed a broadly
theoretical approach to the exercise of control in organizations based on social and
economic exchange theory. His theory is related to Etzion‟s theory because it also
deals with relationships of rewards and sanctions to the developments and application
of power.
Blau believes that power is related to authority process and leadership relationships
within organizations. It is also related to status differences within the organization.
Blau defines power as the ability of persons of groups of people to impose their will
on other despite resistance through deference either in the form of withholding
regularly supplied reward like salaries or in the form of punishments like suspensions,
25
reduction in salaries and sackings.
Punishment can be imposed either by withholding regularly scheduled rewards or by
depriving and individual of a reward he already has in his possession like demotion.
For power to be present in a situation, the ability to apply sanctions must be a
recurrent ability. In other words, the ability to apply sanctions only once does not
have the accompanying power.
Power must be the compelling force in the application of sanctions. There must also
be an element of Voluntary compliance if power is to be present in a situation. Those
individuals exposed to the used of power must have a choice as the whether or not to
comply. This is the distinguishing characteristic between power and coercion or the
use of force.
The person who holds power must maintain the ability to withhold rewards from
subordinates or to administer punishment to them after restraints of the participants
upon the power holder have been taken into account.
According to Blau, the most useful power is that which results form unequal
exchange. The essence of acquisition and maintenance of this form of power is the
accumulation of needed resources that can be supplied to others.
Alternatives to Compliance
Blau lists four alternatives to compliance. Assuming that one person or a group of
persons needs the services or resources to be provided by another person or group of
persons, power will not exists if:
1. The recipient can supply another service or resource in return or
2. The recipient can obtain the resource or service elsewhere or
3. The recipient can coerce the supplier to furnish the resource or service
or
4. The recipient convinces himself that the can really do without the
service or resource to be supplied.
If any of these alternatives to compliance is not present in a situation the person

needing the service must accept the conditions for its provision and must comely with
the demands and wishes of the supplier.
2.8 Authority and Legitimate Power

Power is required to direct and coordinator the complex organization which is
deliberately structure in order to attain certain goals. Power may or may not lead to
26
stable conditions. There may be conflicts resulting from an attempt to open one of the
four alternatives to compliance.
In order to have a stable organization power must be seen to be legitimate. When
authority exists as legitimate power, there is willing compliance without constant
need to resort to the application of sanctions.
Blau points out that a powerful person is expected to make certain demands. If in
comparison to the amount of power available to him the wielder of its power makes
only moderate demands, his use of power is seen to be fair by those exposed to it. In
such cases, the people exposed to the power will grant their social approval to the
power holder. It is this social approval that legitimizes the power as authority.
2.9 Ideology in Organization

The evolving character of the organization as a whole tends to force participants to
ask such questions as; what are we? What shall we become? With whom shall we be
identified? These questions are the special responsibility of statesmen administrators,
and those who look beyond the immediate context of current issues to their wider
implications for the future role and meaning of the group.
Organizations, like individuals, strive for a unified of response. For examples, people
given the same type of training are expected to give similar answers to similar
questions asked by customers. This pattern will define in advance the general attitudes
of personal to specific problems as they arise.
It means that there will be pressure within the organization, from below as well as
above, for unity of outlook. As this unity is reached, the character of the organization
becomes defined. In this way the conditions under which individual may “live
together”‟ in the organization are established and a selective process is developed
which forces out these who cannot identify themselves with the generalized character
of the organization.
It is further reinforced by the selective process, which rejects those members who
cannot fit in the organization and shapes the personal orientation of those who remain
or who are recruited. Such character shaping leads to the possibility of stating a given
line of settled policy of the organization that may be considered to be its ideology.
2.10 Lecture Summary

In this lecture we have relied heavily on the Marx Weber‟s description of the
characteristics of formal organizations. We have also examined Etzion‟s and Blau‟s
contributions to power and authority in formal organizations.
27
2.11 Activities
Explain the methods that are used to encourage compliance with the organization‟s
objectives and discourage non compliance.
2.12 Further Reading

Further readings should be done on the theory of unequal exchange between an
individual member of an organization and the organization.

Give examples of organizations that use symbolic control to encourage compliance
with the organizational objectives.
2.14 Glossary
An informal organization is one which emerges out of a situation. Workers who
initially did not even know each other will establish unofficial links and establish
standards and norms of behaviour to which everyone adheres.
2.15 Answers to Self Test Questions

Examples of the institutions which use symbolic control are:
 The police insignia on uniforms
 School use different uniforms for prefects
 Airlines use of uniforms for pilots
2.16 References.
 Albert F. Rubestein and Chadwick Heberstoh, Some Theories of Organization,
Richard D. Irwin and the Dersey Press, Homewood, Illinois, USA.
 Micheal Beer, Bert Spector, Paul R. Lawrence, D.Quinn Millsand Richard E.
Walton, Human Resource Management, A general managers perspective, The
free press New York, USA.
 David R. Anderson, Lee A.schmidt, and Andrew M. McCosh, Practical
controllership, Richard D.Irwininc., Homewood, Illinois, USA
 Robert Dubin, The world of work, industrial society and Human Relations,
Prentice – Hall inc., Eaglewood, N.J, USA.
 Reinhard Bendix, Marx Weber, An intellectual Potrait, Doubleday &Co., New
York USA.
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LECTURE THREE: INDIVIDUALS AND ORGANIZATIONS
3.1 Introduction
In order to understand the role of individuals in organizations we may start by asking
the following questions:
 Whose interests does an organization serve?
 Why do individuals form or join organization?
 Do individuals join organizations for monetary benefits only? Or for prestige?
Or for a challenging job?
There are many reasons why people join organizations. But the main reason for
organizational affiliation is to satisfy their personal goals and objectives. Individuals
find that organizations allow them to achieve goals that they cannot achieve on their
own. Like other factors of production, organizations give individuals the opportunity
to achieve their objectives and in turn the individuals provide their time, talent, effort
and money to the organization.
State reasons why individuals join organizations
Explain the theory of unequal exchange
Explain the use of management by objectives, its advantages and disadvantages.
3.3 The Exchange Relationships

Individual members tenure in an organization depends on how well his personal
objectives and goals are perceived and satisfied. Individuals expect rewards or gains
from being members of an organization. In essence an exchange relationship exists
between the individual and the organization. The individual member expects his
rewards to exceed demands made against him by the organization. On the other hand,
the organization expects the individual‟s contributions to outweigh the costs of
keeping him as a member of the organization.
The exchange relationships between an individual member and his organization can
be illustrated using a chart as follows:
I. A successful exchange relationship between an organization and one of its
members.
(a) As perceive by the individual member

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Claims on the individual by the organization
(-)
Individual Organization
Rewards to the individual by the organization

(+)
Rewards – claims > 0
(b)As perceived by the organization
Individual contributions to the organization

(+)
Costs of keeping the individual in the organization

(-)
Contributions – Costs > 0
II. The individual member‟s perception of the benefits and costs to him resulting from
his work relationships.
Benefits or Rewards (+)
 Competitive salary
 Pleasant work environment
 Good supervisory and peer relationships
 Challenging and meaningful work
Costs (-)
Time spent in the organization, effort or actual,
Work done, skill usage, professional contributions
Benefits – Costs > 0
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The above charts show that in a successful relationship both the individual and the
organization view the gains form their relationship as outweighing costs. This rule is
the determining factor in a sustained relationship otherwise exchange will not take
place.
3.4 The Goal Oriented Activities and Individual Objectives and Goals
Individual objectives are important to the formation and maintenance of
organizations. Without these objectives organizations cannot be formed. All persons
have needs or wants that they strive to satisfy. Many systems have been suggested for
ranking individual needs and preferences.
These needs are considered to appear in some order of preference. So that the first or
the most pressing need becomes predominant until its satisfied. Then the second need
the third need etc, are satisfied. Although classification of systems differ from one
prosper to another, all of them recognize that biological needs are the most basic and
thus they are ranked first.
The Nature of biological needs

These are the needs that are required in order to sustain life. They include the need for
food, water, air and shelter. Unless these needs are well satisfied, other needs re
relatively less important.
Most organizations are formed to satisfy biological needs. The family unit has as its
main objective to provide for biological needs of its members. Work organizations
provide their employees with money to buy food, clothing and shelter. Organizations
may also produce and distribute products that help customers to satisfy some of their
biological needs.
Social Needs
Social needs tend to emerge after basic needs have been satisfied. They include the
need for affection, love and social acceptance, recognition, and self-fulfillment.
Unlike biological needs, which reach a saturation point, social needs cannot be fully
satisfied. For example, a person gets satisfied after eating a certain among of food or
after drinking a certain amount of water. But an individual can never get enough
status, social acceptance or self-fulfillment.
Needs and Goals

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While needs can be classified into relatively few groupings, goals and objectives are
more diverse. Goals are the ways of satisfying needs. Needs are usually within the
individual while goals are external means of satisfying these need. Goals can be
counted and measure either directly or indirectly. Unsatisfied needs cause a person to
pursue goals to satisfy these needs. Goal directed activities result from the formation
of these goals as follows:
Unsatisfied lead to Goal lead to Goal directed

Needs formation activities
Two or more people can strive for the same goal while trying to satisfy different
needs.
For example, two or more salesmen can strive to earn a sales bonus in order to satisfy
biological needs and social needs. One may be interested in recognition as an
outstanding salesman while the other salesman may need the money to pay some
bills. The external goal is the same.
In some cases the goal-oriented action is the result of more than one need. People do
not just pursue a goal to satisfy one need. For example, most salesmen strive to earn a
bonus commission in order to satisfy both biological and social needs. The extra
money could help the salesman financially while giving him the recognition he needs
as an outstanding salesman and at the same time getting a feeling of achievement.
3.5 Approaches to Need Satisfaction

Different theories of organization utilize difference assumptions about the needs that
persons wish to satisfy through organization. Difference assumptions, in turn, lead to
different approaches to the proper relationships between the individual and the
organization.
The classical theory views workers as economics being. They view them as satisfying
both biological and social needs through the pursuit of economic goals. The scientific
management theory, the theory of bureaucracy and the administrative theory, all
emphasize the economic desires of persons. The scientific management approach
leans towards the production worker and his efficiency. This school of thought
believes that a work can be programmed in the most efficient way in order to
complete a task.
The worker is required to follow the management‟s instruction and his rewards come
32
in the form of economic payment. Those workers who produce higher outputs are
paid more. Because of this, workers are expected to respond rationally to the
opportunity to make more money.
The bureaucratic and administrative schools of thought emphasize the structure and
order of the organization. Each worker is given specific instruction as to what to do
and what not to do. He is rewarded by the security of belong to a stable organization
which provides economic rewards.
The neoclassical theory argues that persons seek more from their organizational
affiliations than economics satisfactions and security. They argue that group
interaction; participation and effective communication have important effects on
morale and productivity. The quality of informal social relationships is seen as critical
to a worker‟s satisfaction or dissatisfaction with his job. The neoclassical school
incorporates these social attributes into the classical theory.
Organizational structure and rationality are seen as being important but they are also
considered to be obstacles to the desires of workers to satisfy their need to interact as
a group. They believe that overemphasis on rationality and formalism could
contribute negatively to employee attitude and lead to reduced productivity.
In the modern theory of organization, the individual is considered not only to be

motivated by economic gains, the safety and the sense of belonging but also as being
influenced by the desire for self esteem, the esteem of other, self actualization and
development. By esteem, we mean that which is based on sound capacity,
achievement, and respect for other. Self-actualization refers to the desire for self-
fulfillment e.g. a musician makes music, an artist paints, a poet writes poems or in
short, a person becomes what he wants to become.
3.6 Formation of coalitions and organization objectives

Organizations form because individuals have objectives that they can accomplish best
through organized activities. As organizations form, they develop personalities of
their own and objectives that are independent of the objectives of the persons who
make up the organizations. The objectives of the organizations and members are
however, complementary.
3.7 Formal Organizations and their Participants

Formal organizations are view in terms of their internal participants who are their
33
manager and employer. Producing organizations are made up of owners, manager and
workers. Charitable organizations consist of membership rolls plus manger and paid
employees.
The modern theory of organization considers formal organization to be a structural
process in which individuals interact freely. These individuals have an impact on the
decision making process within the organization of these groups, managers and
employees form the heart of the organization because without their cooperation the
organization cannot function.
The organization’s Creditors

Organization‟s creditors have traditionally been viewed as outsiders. This is because
they do not work for it nor do they have ownership interest in it. But they have been
known to have considerable influence on the organization‟s objectives. They have a
direct influence of the firm‟s decision making process and plans.
A bank that lends money to a business firm to expand its plant and equipment makes
it possible for the firm to attain its goals. With the expanded productive capacity, the
firm can increase its product line, enter a new sales territory, and increase sales. The
success of the expansion also provides economic returns to the bank in the form of
prompt repayment of principal and interest.
The bank‟s participation in the borrowing firm may include the requirement that the
firm provides the bank with periodic financial statements of income and cash flows.
The bank officials may provide counsel to the borrowing firm on maintaining a sound
financial position. Firms cannot disregard the bank‟s or creditor‟s advice because this
could lead to financial difficulties in obtaining loan in future. If the firm defaults on
the loan, the bank will have a direct claim on the mortgaged plant and equipment.
Organization’s Suppliers
Suppliers provide raw materials used by the firm during production. They may also
extend credit on the goods supplied. The firm‟s success depends on the continued
supply of these raw materials. If the firm fails to pay its bills on due date, the supplies
can be withdrawn.
The firm can also face difficulties if suppliers withdraw the credit facilities, increase
their prices or reduce the quality of their supplier.
Customers
Customers are the main source of revenue to the firm. If the firm increase the price or
reduces the quality of its products or removes credit facilities then the customers can
34
withhold their purchases or buy from different firms.
Customers can also change their preferences without prior notice to the firm. Because
of this, customers have a great influence on the firm.
The Government
Government regulate the activities of the firm in such areas as fair employment
practices, their relations with labour union, and the acceptable level of pollution of the
environment. The firm must also observe the legal requirement enforced by the
government other wise its license may be withdrawn.
Firms also strive through lobby group to secure a favourable tax environment from
the government. Unfavourable tax rates or tax structure have a direct influence on a
firm‟s profits.
The Society
The society has a direct influence on the decision making process in an organization.
The society sets certain acceptable standards of behaviour to be expected from the
organization operating within the community.
The society expects the firm t9o contribute to social program through charitable
contributions, employment of members of the community, production of good quality
products, fair prices and reduced pollution.
3.8 Individuals and Formation of Coalition Groups

A coalition is alliances of person who find it to be in their interest to work on some
agree upon goals. By cooperating, the individuals hope to achieve their own goals.
Coalitions are the basis for the formation of organizations.
Some people may be members of different coalitions in different decision areas with
in the same organization. Owners, managers, employees, suppliers and creditors can
be considered to be examples of coaliti9ons formed in order to make certain
decisions.
The formation of coalition of coalitions for given decision area provides a beginning
point for analyzing ways in which organizations set and modify their goals. For
examples it would appear possible that the decision of an insurance company to write
and sell insurance policies lies with the owners. This goal is general and not well
defined. Once an organization is formed, there are still many decisions to be made.
For example will the insurance company sell the policies by mail or by use of
personal selling? The decision her will have a great impact on the prestige and
35
important of the sales division.
An organization could have a countless number of goals and sub-goals to be decided

on. The formation of the goals results form the bargaining processes that go on within
the organization. This takes place through the process of making policy commitments
by the organization to members of the coalitions that make up the organization.
To obtain the participation of individuals and groups, the organization must make
certain promises as to which problems it will address itself to and how it will solve
them. For example, to obtain the support of the production manager and his
supervisors, the organization may commit itself to the production of standardized
products that do not change frequently in design. This may be done due to pressure
from the production personnel to keep cost within acceptable levels.
Those who hold power within the coalition are the ones who influence decision. In
manufacturing for example the production personnel may be more powerful. The
marketing manager largely determines how much is sold and the price at which it is
sold. He commands considered influence. Budgetary allocations are another way is
which goals are set. The budget is the means by which the actual allocations are made
by dividing resource that such questions as how important is research and
development? How effective is the training programme? How much money should be
allocated to advertising and selling expenses? Are asked.
Budgetary allocations give an indication as to what objectives the firm is pursing and
the relative importance attached to them. The process of making budgetary allocations
involves a bargaining process between the planning coalitions and the effecting or the
implementing units.
The power held y the implementing units determines the amount of resources to be
allocated to each coalition group in the organization. The coalition unit that receives a
high budgetary allocation is considered to be both more powerful and more important
to the authorities.
Organization Objectives in Goal Achievement

Sometime the objectives set by an organization may conflict with one another. Since
the coalition that make up the coalition are interested in their own goals, they may not
be interested in the effect of their own goals on the overall objectives of the
organization for example, consider the twin goals of most manufacturing firms to
produce high quality products and maxing the volume of output.
36
If the product quality standards set by the quality control unit makes it difficult for the
production department to achieve a high volume of output then there will be a conflict
I the goals. Each unit will tend to see its goal as the most important one for the
organization. The quality control unit may not allow any deviations from standards
while the producing units too high and unrealistic. They may emphasize high volume
of output and the ability to meet delivery deadlines.
3.9 Ways of Controlling Inter functional Conflicts

Organizations avoid being bogged down by conflicts between goals by taking actions
to accomplish budgetary targets. Rationalizing objectives that are not complementary
to fit together into the same organization does this.
Another way of overcoming conflicts is to concentrate on limited subsets of total
goals at any point in time. For example, where the high quality goals are conflicting
with the high output goals the firm may insist on high quality output under certain
circumstances or for a certain range of production and maintain a high volume of
output for other ranges depending on market conditions.
Given a set of goals to pursue, organizations will seek to maximize or optimize them.
This view is predominating in the classical theory, which views the firm as seeking to
maximize profits.
Assumptions of the classical economic theory

The classical economic theorists assumed that:
a. Member of the organization are rational and they strive to maximize the
volume of output.
b. It assumes that all possible alternatives are known and some standard exists
against which to compare the alternatives.
c. It assumes that preferences exist and they can be ranked from the best to the
worst preference.
These assumptions seem easy and clear in theory but they can become very difficult
to effect during the implementation stage.
The modern organization theory considers most human decisions to be concerned

with the discovery and selection of satisfactory alternatives. They are rarely
concerned with the discovery and selection of optimum alternatives. They are instead
37
concerned with satisfying alternatives. The reasons for choosing satisfying
alternatives include the following:
1. Limited Search
Because of limited time and resources, it is not possible to consider all alternative.
Managers are required to make quick decisions before they can obtain all the required
data.
2. Minimum Standards against which to compare alternatives

Because they may not have all the information required, managers use subsets of
information in decision-making. These subsets of information may be based on past
experiences. For example, a decision may be based on an expected rte of return on
investment based on last year‟s return. Similarly a percentage increase in sales based
on historical trend line analysis
3. A large number of interacting variables

Besides having only few known alternative, managers may be faced with situations,
which require consideration of a large number of variables, which interest with each
other. The mix of these variables makes the pay off from any alternative hard to
predict. For example, the modern firm must weigh the interests of the owners against
those of the creditors, suppliers, consumers, employees and the government. As a
result, managers must make decisions that balance the competing and sometimes
conflicting interests of all stakeholders.
3.10 Management by Objectives (MBO)

Management by objectives (MBO) techniques utilizes the process of mutual goal
setting between the individual and his superior. After the individual and his superior,
After the individual or the subordinate and his superior have agreed on the goals that
the individual will pursue for the coming period, the superior has to delegate the
required authority together with the necessary resource to enable him to carry out his
duties.
Periodical assessment of progress is made with the final appraisal made at the end of
the period. After this, new goals are set for the next period. The use of MBO requires
that measurable and realistic goals be set. For example, sales goals may call for
increasing next year‟s sales by 10% over last year‟s sale and expansion into three new
sales territories by the end of the year.
38
In some cases, goals may not be quantifiable. For example the personnel manager
may want to improve the managerial skills of employees in the firm. It is difficult to
quantify the amount of improvement in skills to be made. One way of solving this
problem is to specify the kind of skills to be acquired and to specify the period of time
over which they should be acquired. For example the personnel manager could
specify that all line managers will attend a six weeks course covering cost control,
effective communication, trends in organization design and human resource
management.
The use of MBO requires careful planning at all levels of the organization. Those
committing themselves to the accomplishment of certain goals must also consider
whether the goals are realistic in the light of the organizational environment. The
supervisor or the head of department or the manager must look at his assumptions
concerning the goals that his department is supposed to meet to make sure that
individual goals are consistent with both the departmental goals and those of other
persons in the department. The overall departmental goals must be complementary to
these of higher-level organizational goals.
2. Leads to formation of better objectives

When the individual that is supposed to attain the goals participates in the
development of the goals he bring with him a degree of realism because he is the one
who handles the activities on a day-to-day basis.
3. It leads to improved potential for self-control

By setting clear and realistic objectives, the individual is given an improved chance of
controlling his own performance. As he carries out his daily activities he can measure
their usefulness and his success against goals that were set.
4. It may lead to improved performance appraisal

The use of MBO offers an improvement in appraising individual performance. By
measuring results achieved against pre-set objectives, the MBO reduces the
subjectivity inherent in other appraisal techniques such as trait rating.
39
In trait rating, attempts are made to measure such factors as initiate, cooperativeness
and general attitudes towards work. Such traits may or may not be related to work
performance and they are very subjective and difficult to measure. Experimental
laboratory studies that have been carried out on trait rating all indicate that different
rating expects tend to rate the same participants differently.
5). MBO can serve as an aid to development

The appraisal interview systems used under MBO tends to be more effective.
Research on the appraisal interview indicates that employees are generally less
defensive and most likely to correct shortcomings when discussions with their
superiors center around the accomplishment of lack of accomplishment of verifiable
goals.
Potential Shortcomings Of MBO

1. The MBO approach has been criticized for its emphasis on short run goals. If
for example little consideration is placed on long-term goals when reducing
employee-training programs in order to reduce costs, staff development may
be hampered in the long run.
2. It is considered to be time consuming especially during the early stages of its
implementation when clear objectives have to be set at all levels of the
organization. The average time required to have a well organized MBO
system if five years for large and middle size companies.
3. The choice of participants also presents another problem. The MBO system
has worked well where the participant has some discretion in setting and in the
pursuit of objectives. But for most firms, the effective participants are line
managers with little or no representation form non-managerial staff.
4. Where the job is a programmed one, as is common in project management, the
MBO system fails completely. It assumes that people cooperate and honestly
give their objectives during the group discussions. But are the real world
competing interests tend to remain reserved in their associations. A person
who is looking forward to promotion to the same position as aspiring
colleague will not suggest objectives that help the colleague get promoted.

In this lecture we have seen that individuals join organizations because they allow
them to pursue goals that they cannot realize on their own. Both parties feel that the
40
benefits that they derive from their organizational affiliations outweigh the costs that
they incur from maintaining their membership.
3.12 Activities
Explain the ways in which the departmental brainstorming activities would fit in the
use of MBO

During the library visit read on the tools used in formal organizations

Explain the main difference between physiological needs and social needs.
3.15 Glossary
The organizations creditors include all those who provide short term loans to the firm.
It may also include those who sell goods to the firm on credit.

The main difference between physiological and social needs is that while satisfaction
of physiological needs can reach saturation, social needs are never satisfied.
3.17 References
 A.F. Ruberstein and Chadwick J. Heberstoh, Some Theories of Organization,
Richard D. Irwin, USA.
 Robert Dubin, The world of Work, Industrial Safety and Human Relations,
Prentice Hall USA.
 Peter Wessenberg, Introduction to Organization Behaviour, Intext Educational
Publishing Co.
41
LECTURE FOUR: FORMAL ORGANIZATION
4.1 Introduction
For most writers on organization theory and behaviour it is believed that formal
organization starts with a goal. We have seen the reasons why person join
organizations or form them. We have also seen that individual needs lead to formation
of goals and goals directed activities. We have concluded that individuals form groups
to accomplish those goals that they cannot achieve on their own. Formal organization
is the vehicle used for paving the way for this accomplishment.

 Explain the characteristics of formal organizations
 Explain the features of an organization chart and a position description.
4.3 Characteristics of Formal Organizations

Attributes of formal organizations may vary from one firm to another but certain
characteristics are usually present to some extent in all formal organizations. These
characteristics can be summarized as follows:
I. A clearly defined structure of activities

All positions of managers departmental heads, section heads and supervisors are well
defined. For example, the duties of the chief accountant are well spelt out and he is
responsible to finance manager.
Formal organizations describe formal relations using organization charts, position
descriptions, and appointment letters. Organization charts tie positions together
through a network of authority and accountability relations. They describe the formal
communication flows. They show who reports to whom, what activities are performed
and the relative positions of different activities and sub-activities in the organization
An example of an organization chart is given below.
Formal Organization Chart For SMZ &Co. Ltd

Shareholders (owners) elect the Board of Directors who in turn appoint the company
President.
42
PRESIDENT 1. Holds overall authority and responsibility.
2. Executive powers vested in
VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT

INANCE MANUFACTURING PUBLIC REALTIONS MARKETING
GENERAL MANAGER 3. Holds all functional responsibilities
4. Line managers or Branch managers hold limited powers
Branch Branch Production Production Public Relation

Manager Manager Manager Manager Office
Kisumu Mombasa Eldoret Nyeri
Fig. 4.1 An example of on organization chart

The organization of an organization show that the president holds the overall
responsibility for the firm‟s performance. He is supported by Vice Presents for
finance, manufacturing, public relation and Vice President. All vice presidents
report directly to the company president. The general manager holds functional
authority and responsibility over line managers and branch managers.
All line managers whether in branches or at the head office, report to the General
Manager directly who in turn reports to the president. In some cases there may not
be a General Manager. Each line manager reports the Vice President or to a Deputy
Director in charge of his division.
For example the marketing manager would report to the Vice president Marketing
or the other Deputy Director Marketing. The type of organization chart design
adopted depends on the size of the company type of operations in the company like
manufacturing or service provide, Scope of operations like whether centralized or
territorial and the influence of owner.
43
4.4 Position Description
Position descriptions are also called job description but in order to distinguish them
from non-responsibility bearing jobs like clerical jobs, they are generally called
position descriptions. Like organization charts, position descriptions show and explain
formal relationships within an organization.
Position description give details of the actual duties of a position, the supervisory
responsibilities of the job, the required job abilities the required level of formal
education, training and the required years of experience. A typical example of a
position description would be an advertisement for a managerial position that may
appear in a reputable newspaper. The main characteristics of a job or position
description can be summarized using an example as follows:
An Example of a Position Description
Title – Director of Training
Job Summary
Reporting directly to the Managing director, the Director of Training develops
oversees and evaluates all on the job and external employee training programmes.
He/she acts as an advisor to the operations manager, and formulates all manpower
development programmes.
Duties
 Determining employee-training needs.
 To carry out research on most efficient methods of training.
 To develop the training program structure.
 Prepares the training materials.
 Acts as an instructor in employee training courses.
 Develops training evaluation procedures.
Qualifications
 A B. COM, first class or upper Second class honours, Business Administration
option. An MBA (Administration) may be an added advantage.
 A minimum of five years of continuous hands on experience in a similar position
with a reputable firm.
 Demonstrate research abilities
44
 At least two names of academic referees and testimonials from persons in similar
positions.
Salary
 A competitive salary package will be offered to the successful candidate but will
not be less that Ksh. 150,000 per month. Persons currently earning less than Ksh.
75,000 per month need not apply.
Benefits
 Attractive medical and pension schemes car and an executive house will be
provided to the successful candidate.
Address
 All application including a current CV and copies of certificates should be
addressed to. The personnel Manager K W Z Co. Ltd, P.O. Box ---------- Nairobi,
th
so as to reach him before 15 November, 200x
Weaknesses of Organization charts and position descriptions
Both organization charts and job description tend to be static representations of the
dynamic process of the organization‟s life. They must be adjusted from time to time
as the organization structure changes over time. They also fail to explain how external
participants influence and take part in the organization‟s decisions but they shed some
light on the organization structure of the firm.
4.5 Permanence of Formal Organizations

The second feature of formal organizations is that they tend to be fairly permanent.
Most of them are created to last for a long time. Although they may change their
structures, their membership and their objectives over time, their life may continue.
Companies like the Kenya Railways, KPLC and KPT Co. have existed for a long time
Names, personalities or even external participants may change but the organization
will continue to exist.
iii. Organization Elaboration

The third feature of formal organization is that they tend to grow and become very
elaborate. As they grow and establish branches all over the country and in foreign
countries their organization structures become more complex due to increased
specialization of functions.
45
Reasons for the existence of formal organizations
There are many reasons shy there is need for formal organizations. Formal
organizations exist because of the limited cognition of individuals in decision-making.
Limited cognition is caused by:
a. The large volume of data required in decision-making reduces the ability of
individuals to process all the information before making decisions.
b. Too much data can head to information overload to decision makers
c. Limited cognition means that individuals cannot be knowledgeable in a large

number of diverse areas. There is need to specialize. This requires
employment of different experts to handle different duties or functions in the
firm.
The other reason for need of formal organizations is the differences in abilities that
exist among individuals in organizations. The range of talents and abilities possessed
by individuals varies widely. Because of differences in training and backgrounds,
people perform some tasks well while they perform poorly in other. Formal
organizations take advantage of these differences in personal abilities by posting
individuals to those positions in which they are most qualified.
Formal organizations are also required because of time requirement. They allow
differing talents and abilities to complement each other and this increase the potential
for accomplishing goals within specific time frames. Even where individuals are
performing the same task, an increase in the number of people performing the task
normally speeds up the job.
4.6 Structuring Organizational Relationships

The development of structural relationships in formal organizations is achieved
through formal role development organizations elaborate formal roles in human
relations by structuring communication, authority power responsibility and
accountability relationships.
Organization of Formal Human Relationships

Basic human relations refer to the establishment of different human interactions that
are independent of the personalities of the people involved. These are relationship[s
which show a persistent pattern of human relations that related and integrated
46
working positions in an organization. It restricts the organization to relations that
objective modes. It concerns relations that are visible in the actual real consequences
of the action. It draws a line or distinction between human relations and human
behaviour. Human relations are patterned interactions among human being who
occupy established positions with respect to one another.
4.7 Power Relations in Organizations

Power relations emerge from the simple fact that everyone in an organization has
something to do. Each person has an activity that he performs every day when
carrying out his duties in the organization. In this way the individual is considered to
have functions that he performs.
Each function performed by an individual is dependent on the performance of other
functions. Some function or tasks cannot be performed until other functions are
performed or are completed. Some functions can be performed together while other
have to be performed after certain tasks have been completed.
An observation of the sequence in which functions are performed show that there is a
kind of network organizing and interrelating separate interfunctional tasks of a work
organization. A function is the observable consequence of an act or operation in its
environment.
Power relations are relations among members of the organization that correlate their
separate functions according to the necessity of these functions to the organization.
Power is the ability to perform duties. The power holder may posses his power
because of his ability to give or withdraw rewards that are important to members of
the organization.
Power may also cover authority to hire or to fire employees. A manager may have
power to grant or to withdraw pay increases to his subordinates. Power may also stem
from technical competence, seniority and friendships with powerful people. The
senior employee in a group may have no direct or formal authority over his fellow
workers but still hold significant power over them.
They may submit to his will because of his skill in performing his job or due to
personal liking or due to respect for his senior talk of the power of the staff engineer,
the power of the finance manger, the power of the cashier etc. Each of these people
has power but in differing amounts because each one performs a different function.
The staff engineer has specialized knowledge and training as an engineer but he
cannot give commands on matters concerning accounting. The power rests in his
function as an engineer. He gives the last word in matters pertaining to engineering.
47
The Essential Amount of Power
One way of measuring the amount of power held by an individual is to determine how
essential the function to which the power relates is. Highly essential functions carry
more powers than less essential functions. The essentiality of a function depends on:
1. Whether the organization can do without the function being performed
2. Whether the person can continue to be a productive member of the
organization without performing the function.
3. How universally important the function is in one organization as compared to
other organizations. One function may be important. In a given organization
but be relatively less important in other organizations. The power relations
flowing from the same function in two or more organizations may be
different.
4. The other factor that could determine the amount of power held by an
individual is the exclusiveness of the responsibility for performing a given
function. Where one person performs a function, the amount of power flowing
from the function tends to be very high. This power declines as numbers that
can perform the function increases because of the possibility of substitution or
replacement of missing or absent member.
4.8 Authority Relations in Organizations

A broad observation that can be made about work organizations is that they are made
up of people who can give orders and those who execute the orders. Commands and
orders constitute a large fraction of communications in issuing the order and
responding to them.
Every member of an organization knows who his boss is and bosses form a standard
part of his work environment. The boss is the authority and his orders involve other in
an authority relationship with him. An authority enables one person to make decisions
that guide the action of another person.
An authority relation occurs when one person makes and transmits decision expecting
that another person or his subordinate will accept them. The subordinate expects such
decisions and decision made for him.
Authority exists and is present in all formal organizations. It has been viewed as
institutionalized power since the institution of which the individual is a member
sanctions it. It provides the right to issue instructions to other and to see that they are
48
carried out. Some of these actions are authorized by a signatory signature before they
can be implemented. Authority gives the manager the right to issue work assignment
and to evaluate the performance of employees or subordinates. It is present in all
situations where one person supervises the work of others.
Permanency of Authority
There are many situations in which there is a temporary authority relation that
terminates with the decision establishing the choice of action among alternatives
presented. This is common where the activity is not recursive or repetitive.
Permanent authority relations involve continuing expectations. The decision maker
expects to make the choice among alternatives and those carrying it out will accept
that it.
Legitimacy of Authority
Authority is established because of the continuing need for making choices among
alternatives. When choices are possible in getting work done, decisions are necessary
to resolve the choice to be made.
In extreme cases failure to make a deciding choice can half work completely. In less
extreme cases, a random basis for choice or conflicting choices can impair the
efficiency with which work is accomplished. The continuing existence of choices for
action and the need for deciding among them are the main reasons for specializing the
decision-making operation in an authority holder.
There is an implied belief that once an order or commence is issued, it will be obeyed.
This suggests that some form of punishment for those who disobey the order or
command. The work organization can fire the disobedient worker or suspend him
temporarily from work or deny him promotion or some other fringe benefit.
These methods are used to maintain authority. But the use of force is not the only way
to maintain authority. Pressure to conform in authority relations can emanate from the
disapproval of fellow workers. Fellow workers can disapprove of insubordinate if it
crosses their zone of acceptance of the authority.
The authority relations of work organizations can be grounded in some generally

accepted view of legitimacy. This sense of legitimacy may rest on a belief in the need
for order that results from the exercise of authority. This sense of legitimacy may also
rest on the belief that the exercise of authority has some justification that the decision
maker is simply carrying out his legal right in issuing orders. It may also be based on
49
the moral belief that the decision maker has some moral obligation to this employer or
to the shareholder of the company.
Authority relations may also be maintained through shared belief in the purposes of
the wok organization. Where purposes are viewed as being important, members of the
organization are willing to obey commands because they realized that the resulting
coordination would contribute to the realization some situations members may resist
the willingness to take responsibility for decisions leading to acceptance of decisions
made for them by others in authority.
Centralization and Decentralization of Authority

Decentralization of authority takes place when it is widely dispersed throughout in the
organization. Where authority is held in the hands of a few people it is considered to e
centralized or to be concentrated.
Closely related to the degree of concentration of authority is the span of management.
This refers to the number of subordinates that a manager can effectively supervise. A
wide span of management refers to the supervision of a large number of subordinates
while a narrow span indicates the supervision of a relatively small number of
subordinates. The factors the determine the span of management include the
manager‟s personality and knowledge the level of training of his subordinates, the
variety and complexity of work and the clarity of goals and plans.
Also related to authority is the concept of line and staff. The concept of line and staff
is used to describe different kinds of authority in formal organizations. Line authority
is defined as the right of a supervisor to require certain kinds of performance for his
subordinates. Staff authority is the right to advise but not to give orders. An example
of staff authority would be a situation where the personnel manager adviser
supervisors on matters concerning handling of staff grievances.
4.9 Status Relations

Status is a phenomenon of ranking people from high to low on some common basics.
Some workers are respected as high-class craftsmen while others are regarded as
ordinary in their skills and disabilities.
Executives rank higher than ordinary workers union official rank higher than union
members, engineers rank higher than clerks and secretaries rank higher than copy
typists. Each member of a work organization occupies one or more positions or ranks
in the organization. As a result of this ranking, the ways in which workers act towards
each other are determined by their respective ranks. Work status is the ran occupied
50
by a member in a work organization based on some scale of value.
The scale can have a variety of bases. It can be based on competence, education level,
importance, manners, skill, and devotion to duty, religion or even on ethnic
background. They fee at ease in each other‟s company. The subjects that they talk
about represent common experience, shared judgment and evaluations.
In a superior and subordinate status relationship, there is considerable restraint in the
emotional quality of interaction. The superior makes the initiative throughout the
interaction while the subordinate is likely to play a subservient role. The superior has
initiative with regard to the subject matter. He defines the subject of their discussion
will take.
The superior member will tend to guard himself against any expression or behaviour
that is likely to reduce the distance between him and his subordinate. When equals
interact they tend to forge bonds that will further unite them. When unequal interact
they tend to create and maintain barrier that will keep them distinctly a part.
Marks of Status
In work organizations marks of status are titles attached to positions. These titles may
be descriptive of the work done. They may also reflect the status attached to the
occupation. For example a technician II and technician I, do slightly different jobs.
They also have slightly different status with respect to one another.
The other mark of status is the rate of pay. Pay or salary is designed to reflect task
differences among jobs and the different in the quality of performance of work.
Seniority is also an important status conferring aspect of work organization.
A person holding a long experience is ranked materially higher than an equally

competent but less experienced person. The senior employee may enjoy special
privileges that result from his higher status.
Right and privileges conferred to a person are important marks of status at work. For
example, the right to start working and leave work without clocking in or out as
factory workers do is a sign of higher status. Clothing and insignia can also be used as
status symbols. The white-collar worker is marker by his formal dress and his is
readily distinguished from the blue-collar factory workers in their overalls.
Work place location is also a symbol of status. Location of an office next to the boss
may have a higher status than offices that not accessible to the boss. Other symbols of
status include the degree of privacy assigned to an office, the quality and quality of
furnishings.
51
Responsibility
While power givens persons the ability to get work done, responsibility is the
obligation to perform work. Responsibility is a very personal thing because people
may or may not feel and obligation for the actions that they take. Because of this
responsibility cannot be delegated the same way that authority can be delegated.
Individual entrusted with responsibility must feel responsible and be willing to accept
responsibility for whatever actions they take in the firm. An employee has no choice
as to whether to do or not do his job. When he is assigned duties he must successfully
complete them. For example, a clerk who is assigned the duty to open offices at 7.00
am cannot come on duty at 9.00am and give an excuse that he could not come earlier
because he had no transport. When an employee accepts the responsibility to do his
work, he also accepts the obligation to perform the work.
Accountability
Unlike responsibility, accountability is external to the individual and his personal
feeling. Accountability is said to exist in all situations where a manager requires his
subordinates to account for their actions.
When an individual is granted authority to take certain actions, he is also expected to
be held accountable for them. In this respect accountability flows upwards from
subordinates to superiors-throughout a formal organization is accountable to the next
level for the actions that it takes.
For example, with the cost of raw materials, the production manager may be required
to give the reasons for the budget variance.

In this lecture we have seen that formal organizations are described using
organization charts and position descriptions. The use of power and authority is
governed by stable organizational rules and regulations.
4.11 Activities
Explain the reasons why the organization of the Roman catholic church fits into Marx
Weber‟s description of a formal organization.

Read books on organization design methods and the effect of changes in the
environment on the organization format used.
52
Explain one situation under which hybrid form of organization design would be most
suitable.
4.14 Glossary
A hybrid organization format is one which combines two or more designs in
organizing its operations.

An example of a situation where a hybrid form of organization design could be used
is in the territorial format where although the firm has established branches on
regional basis, each branch could further be organized on a functional basis or by
product.
4.16 References
 Herbert G.Hicks and Ray Gullet, Organization Theory and Behaviour,
McGraw Hill Pub. Co., New York.
 Peter M. Blau and W. Richard scott, Formal Organizations,a comparative
Approach, Chandler Pub., San Fransisco, Carlifornia, USA.
 Chandler Morse, D. E. Ashford, F.T.Bent, W.H. Friedland, J.W.Lewis and
D.B. Macklin, Modernization by Design, Cornell University Press; Ithaca
USA.
 William Foote Whyte, Organizational Behaviour, Theory and Application,
Irwin-Dorsey Press, Homewood, Illinois, USA.
54
53
LECTURE FIVE: DESIGNING ORGANIZATIONAL FORMATS
5.1 Introduction
Although all formal organizations are structured in terms of activities,
communications, authority, power, responsibility, status and accountability
they carry many different configurations or formats. Also formal
organizations use rules and regulations to limit the amount of power and
authority held by officials.

 Explain the factors that should be considered in the choice of
organizational formats to be used in formal organization.
 Explain the effects of variations in the environment on the organization format
adopted.
 Explain the forms of interdependence that should be considered during
departmentation.
5.3 Design by Function

The design by function is the most common organizations design used.
Here the main functions of the organization are represented at the top of
the organization functions include finance, Marketing, production, human
resource development and procurement. An example of this type of a
organization design can be given as follows:
54
The Functional Organization Chart
PRESIDENT
INDUSTRIAL VP VP VP
RELATIONS MANUFACTURING MARKETING FINANCE
Sales Manager
Training Manager (KSM) Sales Manager (MSA)
Personnel Manager
PR Officer Sales Manager (NYI)
Fig. 7.1 Functional design chart
In the above organization chart, Vice presidents who report directly to the company
president represent the functions of industrial relations, manufacturing, marketing and
finance. These functions represent the Divisions in which the company is divided.
Each division is in turn divided into departments and section. Where the structural
design is by function, the organization must indicate which function is considered to
merit major attention. This type of design is commonly used in service providing
companies like hotels, banks, insurance companies, hospitals and airlines.
5.4 Design by Production or by Product Line

When the organization structure is designed by product or by product line, the top
executives are positioned to manage each product or product line. The company
produces different products and each production is given a division or department to
produce it. The executives managing divisions or departments report directly to the
company president or to the managing director
55
THE MANAGING DIRECTOR
DEPUTY DEPUTY DEPUTY DEPUTY DEPUTY

DIRECTOR DIRECTOR DIRECTOR DIRECTOR DIRECTOR
ELECTRICALS MOTOR ROAD WATER R&D
VEHICLES QUIPMENT EQUIPMENT
Fig. 5.2 Design by product or product line

The organization chart shows that the company product and sells different products.
Each product line is assigned a deputy director.
5.5 The Territorial Design

Where an organization operates in geographically diverse areas or in dispersed areas,
emphasis may be placed on territorial organization design. The company may divide
its sales territory in sales districts headed by branch managers. Each branch may b
allocated a production facility to produce and provide goods for the branch.
President
Director Corporate Planning Controller
Deputy Director Deputy Director

Deputy Director Western Division Coast Division
Southern Division
Fig. 5.3 – Territorial Design

The chart shows that the Deputy Director for each division reports directly to the
company president who is located at the head office. Notice that some of the units like
56
the corporate planning and control units are located at the headquarters. This may be
because they provide common services to all branches or regions. The regions need
not conform to administrative boundaries of the country. It is also true that the
company can establish branches in foreign countries.
Manufacturing companies, distributors of products, banks, Hospitals and airlines
commonly uses this type or organization design. The regional managers are given
limited powers in decision-making. For example the regional or branch manger of a
bank may be aloe to process and grant loans of up to Ksh. 100,0000 but be required to
seek and get approval before granting loans of more than Ksh. 100,000 from the
headquarters.
5.6 The Matrix Organization Design

This approach to organization design establishes a grid or matrix of authority flows.
Authority within functional department flows vertically while the authority that
crosses departments flows horizontally. Functional managers exercise the vertical
flow of authority while the horizontal flow of authority is vested in the project
manager.
This form of organization design is commonly used in project management. The

project manager is accountable for the success of the project and the project is
affected and processed in part by all other functional department. The project manager
coordinates all activities related to the project as shows below
THE PROJECT 1) Holds overall responsibility

MANAGER and is accountable for the
Success of the project
3) Feedback 2) Feed formal
Functional Departments
Department A Department B
Fig. 7.4 Matrix organization design
57
The above organization chart shows the typical organization design of project work.
Authority flows both vertically and horizontally. The project manager holds the
overall responsibility and he is accountable for the success of the project. He gives
feed forward in the form of instruction on activities that should carried out by the
implementing units and receives feedback from the units in the form of progress
reports.
A team of specialist from functional department in the organization carries out project
work. In some cases where the project work is internalized, specialized personnel
from each department responsible for technical questions perform the actual work on
the project. The project manager ensures that the time, quality and cost standards set
out in the project specifications are met. Although departmental heads may worry
about meeting their own goals, the project manager is concerned about the success of
the project as a whole.
In most cases, project work is sub-contracted to an external firm. Matrix organization

design is widely used in contraction industry where the use of general contractors and
sub-contractors is common. It is also common in the airline industry. It‟s most
appropriate when the following conditions prevail.
a. The work to be performed has a definite starting date and a definite

completion date.
b. Cost constraints are a critical factor.
c. The large number of specialized skills on the project requires
coordination for the completion of the project.
d. The activity to be performed is in some way new or unfamiliar to
participants.
5.7 Trends in Formal Organization Design

Current trend in research on organization design are directed towards the desire to
find out more about what could promote effective organization design. Researchers
are becoming more and more interested in the relationship between the organization
design and the environment in which organization operate. The thrust of these studies
points towards the contingency theory of organization. According to this theory, the
environment in which an organization operates has a significant influence on the
formal structure of the organization.
58
5.8 Operations under Stable Environments
Organizations facing a relatively stable environment find that many aspects of the
environment are slow to change. Customer needs remain relatively unchanged,
government regulations do not change as frequently and competitors do not change
their tactics of competing as frequently.
Banks insurance companies and large manufacturing firms producing standardized
products all face fairly stable environments. Stable environment call for stable
organization designs. Stable or mechanistic designs are characterized by specialized
activities, which are clearly separated from one another and performed by functional
specialists.
Goals tend to be departmental rather than organizational. Managers are not expected
to think in terms of the systems as a whole. Instead they are expected to perform their
specialized functions effectively and efficiently.
5.9 Operations Under Unstable Rapidly Changing Environments

Under an unstable rapidly changing environment technology may change quickly
accompanied by frequent changes in product design and customer needs and
requirement. The pressure of competition mounts leading to increasing research and
development in order to develop new and better products, new methods of production,
advertising and sales promotion.
Under such environment the management may place emphasis on the importance of
lateral and horizontal flows of communication that are necessary to accomplish the
task. The management may shift emphasis to knowledge of the process rather than
formal at6uhority as the main source of organizational influence.
The primary commitment is on system rather than departmental goals. Under these
conditions the matrix organization design is considered to be most appropriate. Team
members are appointed from al relevant department and little emphasis is placed on
formal authority. Communication flows are largely horizontal and lateral rather than
upward and downward. More emphasis is placed on horizontal coordination as
illustrated in the following organization chart.
59
A
Fewer hierarchical division

B
C D E F G H I J K L M
More horizontal dependence and coordination
Fig 5.5 Illustration of coordination under unstable environments

The chart shows that the firms operating under unstable environments tend to have
fewer hierarchical divisions. Fewer decisions are made by the top management
instead most decisions are made at departmental level. The departments are
interdependent for easy exchange of ideas and quick decisions making.
5.10 Variation within the Environment

Sometimes different units within and organization may face different environments.
Different departments such as marketing, Production, purchases, transport etc. May
face different degrees of stability. Where this happens the departments must be
differentiated. Differentiation refers to the structural and attitudinal differences among
departments. This means that the formal structure and process of organization units
must be more diverse for an organization functioning in a diverse environment. To
find out how differentiation among units of an organization takes place lawrence and
Lorsch (1967) investigated successful and unsuccessful firms in three industries, the
plastics industry, the food processing industry and the container industry.
Their studies found most diversity among the environment of three major
departments; the marketing department the research and development department and
the production department. The research and development department was under
great pressure for new ideas and product innovation. The research department was
60
reacting to unstable environment. The production department faced fairly stable and
predictable environments. Their concerns were mainly short term. Questions of
meeting quality and quantity standards of products were of major concern and
regulation for meeting customer order deadlines were strictly adhere to.
Because of these environmental differences there was a great deal of departmental
differentiation. Stable department were found to be differentiated from environment
unstable departments in terms of formality of structure the time perspective and
interpersonal orientations. The research department exhibited a wide span of
management with few hierarchical levels while the production department had
narrower spans of management with a large number of levels in the hierarchy.
The marketing departments, in firms faced with unstable environments due to heavy
competition from their rivals tended to favour a sales force made up of sales
re0presentatives with a higher freedom to make concessions to customers and in
closing deals.
5.11 The Significance of Differentiation

The findings of Lawrence and Losch regarding differentiation are consistent with
earlier findings, which reached the same conclusions that, to be effective and viable
an organization must be responsive to its environment. Their findings however
suggest that this responsiveness should not be construed to occur at a micro-level
only. It can also be external
5.12 Structure Organization Units

The process of departmentation must take into account environment differentiation.
The firm must structure its operations in accordance with variation in different parts
of the environment. Activities facing different environmental and sub-environmental
conditions must be structured to fit in these environments.
For example, where the marketing department is facing a dynamic environment while
the production department is facing a stable environment the firm must design the
marketing department with emphasis on flexibility. Activities that face fairly similar
sub-environment should be grouped together and placed under one department. This
way coordination of their activities is made simpler.
5.13 Technology and its Effects on Organization Groupings

The technology that a firm uses in the production and distribution of its products is an
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important factor to be considered in designing its organization structure. In some
cases a product may be produced largely using automated machines. In other cases,
some combination of machines and people may be necessary. Here the number of
man-machine hours required to produce each units of a final product should be
known.
The second influence on a firm‟s technology is the nature of the product or service
itself. Some products are better produced using the assembly line technology. In other
cases a custom made product is produced on a specialty basis. There may be case
where a continuous production process such as the one used in oil refineries may be
required. In each of these production processes the right form of technology must be
used.
The third factor that determines the kind of technology used is the cost. A given
company may not be able to afford the most modern on state of the art technology on
the market. This means that it may choose to use a cheaper but less efficient
technology. If it chooses a state of the art technology its fixed cost will be high
because this type of technology is more expensive. But because it is more efficient the
unit variable costs will be less. A less modern cheaper technology will less efficient
and it may require the use of more labour leading to higher variable costs but lower
fixed costs because it is cheaper.
Firm must also consider the effects of their objectives and goals on the kind of
technology to be used. The choice of a product market in which to operate eliminates
certain kinds of technology to be adopted.
In some cases the product may require a labour intensive method of production while
in other it may require a capital-intensive method of production. Whatever the reasons
and organization may have for choosing a particular type of technology the
technology will influence the organizations formal structural design.
Joan wood ward, in his book, “Industrial organization, theory and practice” (1965)
has given the results of the studies of 100 English manufacturing firms. He found that
variations in organization design were based on variations in technology, the span of
management, the number of authority levels and the extent of authority delegation and
participation in decision-making.
5.14 Technology and Departmentation

Here the key factor to consider is how a given type of technology will help to
determine the activities to be combined with other activities to form departments.
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Activities may be related by functions or by geographical location or by product
contribution. It is important to remember that if a firm has 10 employees, with each
employee performing a different function, then the number of ways in which they can
be scheduled is ten factorial (10!) as follows:
10! = 10x9x8x7x6x5x4x3x2x1
=3,628,800 way
This would pose a major problem in scheduling work even in a moderately small
company. Departmentation could be based on the coordination criteria. Here an
organization will develop grouping or departments that will minimize coordination costs.
Coordination cost will depend on how the technology employed links persons and groups
of people together. James D. Thompson, in his book, organizations in action, 1967,
identifies three types of interdependent in formal organization. These are listed as pooled
interdependent, sequential interdependence, and reciprocal interdependence.
5.15 Pooled Interdependence

This form of interdependence refers to a situation in which each apart renders a
discrete contribution to the whole organization and each pat is supported by the whole
organization. It is based on the process flow analysis. The parts of the organization
are semi-autonomous units and not directly depended on one another.
An example of pooled interdependence may refer to a situation where a firm operates
product divisions. Although each division contributions to the overall welfare of the
firm the divisions may have quite different production and marketing technologies.
This can be illustrated as follows:
The Firm
Division Separate divisions that Division

1 are independent from one 2
another
Department Department
a b c d e f
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The above chart shows that divisions 1 and 2 do not have any direct impact on one
another although each one contributes to the overall total output of the organization.
5.16 Sequential Interdependence

Sequential interdependence refers to the patterns of organization design where direct
interdependence between departments or section exists. It is required where an
assembly line is used in manufacturing. In this situation department A must do its part
before departments B, C and D can do their parts. Department s B is dependent on the
product of department A, C is dependent on B, and D is dependent on C in that order.
1 2 3 4 5 6
The above chart shows that department 2 is dependent on department 1 department 3

on 2, department 4 on 3 departments 5 on 4 and 6 on 5. Department 1 must complete
its work before departments 2, 3, 4, 5 and 6 can do theirs.
Sequential interdependence is based on matrix organization design. New information
is transmitted as work proceeds between departments. Adjustment takes place as work
proceeds.
5.17 Reciprocal Interdependence

This form of interdependence exists where the output of each sub-unit or department
becomes the input of other departments as production proceeds. Each sub-unit is
affected by the outputs of all other units, resulting into a reciprocal relationship. This
can be illustrated as follows:
4 2
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3
The chart shows that the output of each department or section becomes the inputs of
other departments of sections. Each function affects and is affected by every other
function performed. There is directed interdependence. Teamwork relationships such
as those found in research and developments are common.
Each of these forms of interdependence requires a different type of coordination at

different levels of complexity. Pooled interdependence is considered to be the easiest
type to coordinate. Here coordination by standardization is recommended within
operating units. Rules of operation and standardized procedures are used
Coordination by plan is recommended for sequential interdependence. This involves
the development of schedules so that correct sequencing of work can be implemented.
This system could be complex and costly because it experiences more fluctuation
when task changes result into rescheduling of work.
Reciprocal interdependence requires coordination by mutual adjustment. This
involved the transmission of new information during the process of action.
Adjustments are made as new information is received.
5.18 Development of Organization Units

To reduce coordination costs, organizations usually group together those activities
that have reciprocal relation to one another first. Scattering this activist to various
parts tends to increase coordination costs because of frequent interaction among
personnel and the mutual adjustments required during the performance of work. So
that a team of scientists working on the same project will be put under one
department. This is the first step to be taken during departmentation and it must be
carried out before other departments are formed.
Once all reciprocal groupings have been given their departments, the sequential
relationships are given the second priority. Positions, which are sequentially related,
are grouped into one department. If person Y‟s work is dependent upon the
completion of person X‟s work then coordination would be simpler and less
expensive if these two individual are placed in the same department. Ordinarily
sequential groupings should be done before any other grouping or clustering ins
carried out.
Lastly persons and groups doings similar tasks should be grouped under the same
supervisor. Here standardization of rules and procedures are used to aid in
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coordination. In many cases departmentation is by product. This is common where a
company produces many different products. In other cases companies may base their
department on product division. Here coordination is achieved in two ways:
1. Through standardized rules and procedures
2. Through standardization among divisions to ensure conformity with overall
company goals.
5.19 Divisions, Departments, Positions and Jobs

When work is considered in terms of the actual operations involved in its
performance were consider the horizontal dimension of the organization.
An organization can be viewed as being subdivided into specialized
areas of operation.
The typical broad operating areas of commercial and industrial firm
include the Production Department the Marketing or Sales department,
Purchasing and Supplies Department, Accounting Department,
Maintenance Department, Finance Department and Human Resource
Department. These operations may be organized into separate groups
called Divisions or Department or sections or units depending on the
amount of work and the number of people involved. The chart below can
be use of illustrate the relationships between division, departments,
sections and units
The Firm
1. Divisions Headed by Line Managers
Finance Division Production Division Purchasing

Division
Marketing Division Accounts Division
2. Departments headed by Chairmen of Department
Forging Department Machining Department Assembly Department
3. Sections headed by Section heads
Milling Section Lathe Section
4. Units headed by Supervisors
Transport Units Warehousing Units
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The chart gives a typical picture of the operations of a business firm The
firm is first divided into divisions. Deputy directors or line managers
may head the divisions. Divisions are then divided into departments
headed by chairmen of departments. Department are divided into
sections headed by sections and sections are divided into units headed by
supervisors.
Only the subdivisions for the Production Division are given although each division
should have its own departments, sections and units. This pattern reflects horizontal
division of labour. It is the first one to be noted on entering an organization. Department
whose designation reveals the kind of work carried out in the department classifies
operations.
For example a customer who wants to buy the firms products will go the sales
department. Those who want to sell goods to the firm will go to the purchases
department and those wishing to be employed by the firm will go to the personnel
department. There is no limit to which operations can be specialized in departments.
It is one of the characteristics of large-scale organizations that they exhibit growth by
continued specialization in horizontal division of work. Extension in the horizontal
division of labour takes place in one of two ways:
I (a) A given department may have an operation carried out which over time takes
more and more attention of a growing number of people.
(b) When the operations be comes continues enough, a supervisor is appointed
and the grou0p becomes a separate unit in the department.
II (a) The second pattern of growth in the horizontal division of labour is to start a
new operation within an existing department.
(b) The operation may grow gradually over time and the amount of attention and
time spent on the operation increased. As a result it may be given an
independent unit status as a section or department.
When the growth in horizontal division of work is rapid, it may become the vehicle
for opportunists to seek supervisory positions. This is one way of empire building
when the actual needs of the organization are exceeded.
5.20 Vertical Division and Deferential Specialization of Labour
One of the general organization coordinates is the activity that an individual performs in
the organization. We can distinguish fire general function work:
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a. Actually doing the work of the organization.
b. Directing those who do the work.
c. Coordinating those who do the work
d. Controlling those who do the work and the quantity of the work performed
e. Innovating the organization.
The most general distinction in every work organization is between those do the work
and those who direct it. This is the distinction between the rank and file and those in
authority. The following chart illustrates the two-broad vertical layers of work
organizations i.e. the workers and the management. It should be noted that the
distinction between workers and management cuts across each department.
1) THE PRESIDENT
2) Division - Directors of divisions
DIRECTOR DIRECTOR DIRECTOR Magt

FINANCE PRODUCTION MARKETING
DIVISION DIVISION DIVISION
3). Department - Heads of Departments
Dept. A Dept. B Dept. C Dept. D Dept. E Dept. F
4). Sections – Supervisors
Section A. Section. B
5)
Operatives Operatives WORKERS
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The chart shows that vertical division of labour specializes the activities undertaken
by the firm. Each division and department has its won horizontal division of labour.
Details are only given for the production department. Management covers the levels
covered under numbers 1 to 4, while operatives are shown in number 5 and they
represent workers.
It should also be noted that the diagram gives a primitive two-dimensional set of
reference coordinates for locating every person in the organization in terms of his
position in the horizontal division of labour and in the hierarchy in term of vertical
division of labour. The differential rankings are reflected in the positions occupied at
different levels in the hierarchy. Horizontal differentials appear in the different tasks
performed in each department, section or unit.

In this lecture we have seen that formal organizations could be designed based on the
functional form at, the product or a product line format, the territorial design matrix
design or some combination of the two or more of these designs. We have also seen
that the effects of variations in the environment and the form of technology that the
organization plans to use must be considered in designing departments.
5.22 Activities
Explain the contingencies that a firm expecting rapid growth in its operations should
plan for during departmentation.

In your library readings and internet browsing, make some notes on the effects of the
mobile telephones and the email communication on the stability of the environment
that firms operate in.

Explain why most hospitals must be designed based on the matrix design formats.
5.25 Glossary
The rank and file of an organization involves the people in the organization, normally
workers who fall in the lower categories of laborers, operators, drivers messengers
etc. This group usually expects to be instructed on what to do and how to operate. In
most cases they are union members.
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Hospitals handle emergencies which require quick decisions by doctors. The number
of levels of decision making in the hierarchy must be small, as required in the matrix
design format.
5.27 References
 H. G. Hicks and R Gullet, Organization Theory and Behaviour, MCGraw Hill
Pub. Co.
 Read books called Project Management for more material on project
organization
 R. Dublin, The World of Work, Industrial Society and Human Relations,
Prentice Hall, USA.
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LECTURE SIX: INFORMAL ORGANIZATIONS
6.1 Introduction
An informal organization can be viewed as a shadow organization. It arises within the
formal organization but without the formal character. While the formal organization is
characterized by a formal structure, organizational objectives and the relationships
designed by the management, the informal organization tends to be loosely organized,
flexible and it has not well defined structure.
Membership in a formal organization is difficult to determine. Interactions among
members occur without any specified purpose. Informal organizations consist of
unofficial and unauthorized relationships that occur between individuals and groups
within a formal organization.
Informal relationships develop as people associate with one another. These
relationships are spontaneous and unstructured. Brought together by the formal
organization, employees interact with one another building favourable sentiment
towards one another.
George Strauss and Leonard R. Saules, in their book, “The human problems of
management” 1972, observed that sentiments between workers become the
foundation for a n increased variety of activities. Most of these activities are not
specified in job description. Some of these activities include special lunch
arrangement trading job duties fights with non-members of the group attending the
same sporting events etc.

 The characteristics of informal organizations.
 Advantages and disadvantages of informal organizations
6.3 Reasons for the Development of Informal Organizations

Even though the formal organization satisfies many of the individual participants‟
need and desires, it cannot satisfy al his needs. Formal organizations also lack the
ability to meet certain important human needs. Individuals will seen other sources of
satisfaction for those needs that are not provided by the formal organization.
The main reason for individuals joining informal organizations is the satisfaction of
social needs. The desire for afflation and the need for relations with other people are
the main drives in human being. Workers look for social interactions with other
workers, they want to be socially accepted and consequently, the dominate drive
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behind the worker is companionship.
Where a worker does not companionship he feels isolated ostracized and this may
contribute to the disaffection with his job. Elton mayo, in his article “the human
Problems of and industrial civilization” 1946, noted as one of his research findings
that employees in a textile plant who worked in isolated places were highly
dissatisfied with their work and consistently failed to meet their production standards.
He noted that when the company permitted the isolated employees to take rest periods
as a group both production and satisfaction with their work increased.
6.4 Knowledge of Approved Behaviour

Informal organizations help member sin determining acceptable and unacceptable
behaviour. The average person will not know what standard of behaviour will be
expected of him when joins a new organizations. In most typical business
organizations this will involve such matters as how long to take for lunch, reporting
times for duty, ending times, reactions to the boss and procedures for handling work.
When established rules of operation are used members are required to strictly adhere
to them. As individuals encounter their daily tensions and frustration in their jobs,
they seek companions and compassion from others. Through informal organizations
they are able to find a sympathetic ear and eye. This provides them with a person to
confide their problems in. Individuals are also able to obtain understand and meet the
organizations objectives through group membership.
The individual willingly gives up some of his personal freedom in exchange for
assistance in meeting these objectives. For example a new clerk may not follow all
the instruction form his section head. He may fear doing the assignment wrongly.
However he may seek assistance form his coworkers and still complete the
assignment correctly.
6.5 Characteristics of Informal Organizations

The specific characteristic of informal organization may be summarized as follows:
I. Standards of Behaviour
There are established laws, beliefs, taboos, and codes of conduct used to determine
the correct conduct from the wrong conduct. Because of this, uniform standards of
behaviour and conduct exist. People tend to think and act as a like leading to shared
values and norms.
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Some group standards are designed to protect members from real and imagined
dangers; especially from the management limitation in output through marking time
on the job have been a long anti-management technique. Fredrick w. Taylor devoted
much of his time in fighting systematic soldering. Today regulations governing
individual and group output are very common in industry.
Group work norms are not always negative in nature. They may involve a strive for
higher productivity, good workmanship and high quality. The group could have a self
regulating influence which puts pressure on members to conform to group standards
making the managerial need for disciplinary measures unnecessary.
A typical example would be a case where in a football loving area, a company agrees
to give its workers an afternoon off whenever the home team plays at home.
Employees, them reacting on their own volition without management prompting agree
to come an hour earlier on such days and perform the duties they would have
performed during the game. Employees who are not enthusiastic about this change in
schedule are pressured into conforming. Management gains form extra work time and
all are generally happy.
Informal organizations have effective means of punishing those who do not conform
to group objectives and goals. One such way is by ostracism.
A worker who overworks in order to please the boss may be ostracized by being
isolated. Nobody talks to him. He may be exchanged from social occasions and
members may stop giving him vital assistance when he needs it.
II. Informal Leadership

Appointed leaders informal organizations are obeyed because they have power to
discharge those who do not obey rules and regulations. The informal leader emerges
form the group and guides and leads through persuation and influence. Members
follow him because they need a leader who can serve as their spokesman.
In some cases there are many leaders within the group playing different roles. The
leader arises from a situation. For example, a welfare representative may arise form
his ability to convey group welfare needs during meeting with the management. The
individual remains a leader only so long as those he leads are willing to be led by him.
III Status differences in informal organizations

As soon as a group is formed members begin to identify their status differences.
Status is the differentiation of a social position from those of the associates. It is the
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amount of prestige that an associate holds and it defines the person‟s position in terms
of importance.
The status that a member of a group holds in an organization depends on external and
internal factor to the organization. External factors include sex, education, age,
seniority, and personality. Internal factors are determined by the job. They include the
job title, salary work schedules etc. For example and executive who earns more than
an engineer is ranked higher because of the higher salary. Those workers who are paid
an hour wage normally rank lower than salaried employees.
6.6 The Influence of Informal Organizations on Formal Organizations

Traditionally managers viewed informal organization as detrimental to formal
organizations. They were viewed as an obstacle to achieving the objectives and goals
of the organization.
This viewpoint is not always correct. Informal groups assist formal organizations in
establishing standards of behaviour to which individuals are expected to conform.
They can also improve output quality and provide the firm with additional means of
communication system. The informal communication systems are called the
grapevine communication system.
The Grapevine Communication System

Informal communication systems do not follow any set pattern of content or direction
the idea flow. Informal spreads in all direction and links most of the member in the
organization. The grapevine communication network is rapid and accurate. Since it
arises from social interaction, it is as fickle dynamic and varied as the people
involved.
Because of its stability and personal nature the grapevine system of communication is
much faster than the formal communication system. The main disadvantages of the
grapevine communication system include the following:
1) Source or rumors
This system can be vulnerable for use in spreading distractive information. Rumours
tend to be inaccurate in representing facts emotions, and they tend to be concealed
from the management.
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2) Resistance to change
The informal organization tends to develop cultural values and practices that may be
resistant to change. It tends to favour the perpetuation of status quo. It may oppose
changes in educational requirement, change in technology operational procedures and
seniority considerations.
3) Group conformity
The informal organization builds great pressure on the individual to conform to group
desires. Where such desires and standards are detrimental to the organization‟s
objectives and goals they can be very destructive.
6.7 Individuals and Groups in Organizations

Depending on whether on takes a sociological approach or a psychological approach
to groups in organization, the definition of a group varies significantly. A group is
made up to two or more people. It is any number of people who interact with one
another who are psychologically aware on one another and who perceive themselves
as a group.
This definition limits the possible size of the group to members who can interact with
one another. Generally this kind of group also called the face-to-face group is limited
in size to not more than 20 members. According to Leonard Sayles a group is any
collection of individuals, which acts together in a consistent manner to achieve a
certain objective. He mentions groups, which are as large as 100 members consisting
of a whole department in an organization. He also points out that an interaction every
member with every other member does not always occur in these groups
Groups within an organization arise as a consequence of the organizational process.
Some groups are deliberately created by the organization. Informal groups arise
within the formal organization without planning. They are not deliberately created by
the organization. They arise for many reasons.
They can arise because of technological changes spatial considerations or because of
the societal backgrounds of members. The importance of informal group because
evident from the findings of the Hawthorne studies. It led to the intensive study of the
effects of informal groups on individuals and on the organization. Groups can be
described as horizontal cliques a vertical cliques or mixed cliques.
Horizontal cliques involves members who area at the same level in the organization.
The vertical cliques involve members who are spread at different levels in the
organization. The mixed clique results from a combination of horizontal and vertical
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cliques. This definition may not fit well in organizations, which do not have clearly
defined vertical and horizontal status system or where boundaries between levels are
impermeable.
Groups are also classified as membership group‟s reference group or face-to-face

groups. A membership group is any group in which one maintains a membership.
There is a members‟ roll. A reference group is one in which one wishes to become a
member. The term “reference group” may also apply to membership groups which are
not present in a situation but which will influence the behaviour of the individual.
The primary group is considered to be a group, which has a basic influence on an
individual. It enables him to meet his social needs in society. Generally the term
primary group is applied to the family.
6.8 Homan’s Analysis of Group Formation

According to Homan, group arises and develops within and n response to the
organizational environment and form the concerns of the individuals involved. In his
book “The Human group” 1950 Homans outlines the essential elements of hi8s
approach, which involves consideration of what he called the “givens” or the
background factors, required behaviors and emergent behaviors.
The givens generally include the environmental elements within which the group may
develop. This include the formal structures of the organization, the roles involved, the
norms, relationships between roles, the policies and values of the organization, its
goals, standards and the technological requirement of the organization, physical
conditions management assumptions and practices. It may also involve the leadership
behaviour the system of rewards and punishments and the external social and
economic environments
Homan believes that the givens exist before people come into the organizations. Once
people enter an organization the formation of groups begins based on the reactions to
and interactions with the givens because of the emotions, needs, attitudes, goals, etc
of the individual members
Within the formal organization there exist certain required behaviors. These behaviors
can be defined in terms of activities interactions and sentiments. Which are required
of members if they are to stay in the organization? The givens and the required
elements of behaviour will bring the members together in certain patterns as they
interact with each other, perform common activities and are force to share certain
common sentiments.
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As a result of these interactions, an emergent system of activities interactions and
sentiments will develop. As the system develops it defines the emerging group. This
group will have its won internal norms and roles. They may this group responds to the
external environment depends on a combination of all these elements and the
individuals members involved.
6.9 Sayles on Industrial Work Groups

Sayles develop a typology based on the reactions of groups to their environment that
is the organization. It is a typology, which is essentially applicable to industrial
groups. It is based on behaviour exhibited by the group as a whole. Homan based his
analysis on the behaviour of the group in protecting or advancing its economic
interests in the organization. He believes that this is one of the primary reasons for
group formation and group behaviour in industrial organizations.
Sayles agrees with Homans that the technology used in an organization has great
influence on the kind of groups that will emerge within the organization. He classifies
groups into four categories; apathetic groups, erratic groups, strategic groups and
conservative groups. A pathetic group is a group which shows very little response to
changes in its environment. It displays very little cohesiveness and lacks a leadership
structure.
Erratic groups are unpredictable in their reactions to the environment. They are easily
aroused and when they are aroused they use inconsistent, poorly controlled responses.
Their use of pressure is often inconsistent with the severity of the problem. For
example an erratic group if it‟s faced with the problem of a reduction in wages may
show very little response. But an argument about the ban of smoking on the factory
flow may lead to a walk out.
There is a tendency for erratic groups to change attitude. They may suddenly switch
from exhibiting resistance to management to becoming extremely cooperative for a
period of time. Usually there is a clear highly centralized leadership structure evident
in such groups.
The strategic group is characterized by continuous use of well-moderated pressure
appropriate to the situation it is facing.
The term strategic refers to the group‟s use of strategy in attaining its goals rather than
its location in the organization. The strategic group uses well-planned and consistent
grievance procedures. It shows a high degree of internal unity and sustained
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participation in the union if there is one in the organization.
Conservative groups use restrained pressure to achieve very highly specific
objectives. These groups usually consist of people with high status in the
organization. They are highly skilled and well paid employee. They display a
moderate degree of internal units and a high degree of self-assurance. They tend to
move in cycles of activity and inactivity in union and grievance matters. Generally,
they become very active when a threat presents itself to their positions in the
organization.
6.10 Intergroup Conflicts and Cooperation

The group dynamics movement has led to increase study and understanding of
problems. Traditionally organizations considered increased competition between their
various sub-groups to be useful in increasing efficiency. The managers who believed
in the “rational economic man” approach to motivation assumed that since individual
would compete with each other, groups could be encouraged to improve performance
through competition.
Studies have however shown that such competition can lead to conflicts, which in
turn can harm the organization rather than increase performance. Sharif, 1964, found
that the intensity of conflicts can increase as a result of intergroup competition and
difficulties can be experience in overcoming these conflicts in order to restore order
and stability in their organization.

In this lecture we have seen that informal relationships occur within the formal
organization without plan. They emerge out of work relationships and friendships that
develop as workers freely interact with each other. Although informal organizations
can help new employees in learning and carrying out their job assignments, they can
also be a source of rumors and destructive activities including strikes and go slow
6.12 Activities
Explain the reasons why most institutions do not encourage informal organizations.

Read and make some notes on the classical theories, their similarities and differences.
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Explain the ways that organizations use to discourage destructive informal activities
6.15 Glossary
Informal organizations differ from formal organizations because they do not require
registration by the government, members are not paid and they do not have written
rules and regulations governing their activities.

Ways that organizations use to discourage destructive informal activities:
 Use of legal means like laws and the courts.
 Use company laws, rules and regulations
 Uses rewards and sanctions.
6.17 References
 Hicks and Gullet, Organization Theory and Behaviour, McGraw Hill Pub. Co
 P. Wessenberg, Introduction to Organization Behaviour, Intext Educational
Pub. Co.USA
 H.F.Ruberstein and C.J.Heberstoh, Some Theories of Organization, Richard
D.Irwin, USA
 Robert Dubin, The World of Work, Industrial Society and Human Relations,
Prentice Hall USA.
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LECTURE SEVEN: THE CLASSICAL THEORIES OF ORGANIZATION
7.1 Introduction
The classical theory of organization started to emerge during the 1800s. Organizations
based on the principle of bureaucracy and other components of the classical theory
have been in existence for many years. Many well-developed bureaucracies existed in
ancient Egypt, China and in the Roman Empire long before the classical of thought
came into existence.
The Roman Catholic Church has used elements of the classical theory of bureaucracy
for over 2000 years. The new element that the classical theorists contributed is the
written analysis of organizations beginning from late 1800s. Earlier than this period
no written principles existed. The classical theory developed in three stages:
a. The theory of bureaucracy.

b. The administrative theory of management.
c. The scientific theory of management
The most unique feature about these theories is that they were developed based on
similar assumptions, they are closely related and they can be analyzed together. They
were developed by separated groups of writers writing independently. The theory of
bureaucracy was developed mostly be sociologists. Writers whose main interest was
in improving the practice of management developed the administrative theory and the
scientific management theory. They were not interested in only describing principle
and practices as the sociologist did.
The administrative approach took a more macro approach to organization as
compared to the scientific management approach, which focused on the individual
worker and the foreman in a manufacturing environment. The scientific management
writers took a micro approach with their interest focused on such microelements as
the elemental unit in the work place.
The work that seems to occur most frequently in classical writings is the „structure‟ of
organizations. They consider a formal organization to have a structure, of
relationships, power, objectives, roles activities, communications and other factor that
affect persons working together.
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 Explain the reasons for the prevalence of bureaucracy
 Explain the advantages and disadvantages of using the bureaucratic system
in the organization of firms
7.3 The Prevalence of Bureaucracy in Organizations

Bureaucracies prevail in human organizations because they provide the structure
stability and order in the organization. It enables the organization to overcome the
emergency of chaos and confusion. Bureaucracy refers to an integrated hierarchy of
specialized offices defined by systematic rules and regulations.
It provides an impersonal routinized structure in which legitimized authority rests in
the office and not in the person of the incumbent. It is found in all formal
organizations whether they are religious, businesses, military or educational
organizations.
Although structures with bureaucratic elements have always existed, the interested in
their study appears to have started with Marx Weber‟s description of the ideal
bureaucracy. This interest in the study of bureaucracy could also have been enhanced
by the emergency of large, modern and complex organizations.
During the ancient times, for example one man commanded an entire army. One man
commanded his authority army. His authority extended from the highest to the lowest
ranks of the army. This was because the entire battlefield was within the range of his
voice and vision. This is not possible in the modern armies where combart operations
combine air, narval, and land forces. They require more complex command and
supply hierarchies.
This is also true of business organizations. Many large companies have emerged with
operation that cover the whole country and in some cases extend to foreign countries
without a well-developed bureaucracy, coordination would be extremely difficult.
Bureaucracy is used:
a. To properly allocate authority and responsibility within an organization.
b. To eliminate rigid and impersonal rules and routines.
c. To eliminate blundering officials, slow performance and buck-passing.
d. To reduce conflicting procedures, directives, duplication of effort and
empire building.
e. To reduce the amount of power held in the hands of a single official that
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could cause a waste of resource and inertia.
All these problems will emerge and prevail where the bureaucracy is not well
designed in a formal organization.
7.4 Elements of Bureaucracy
Elements or characteristics of bureaucracy are used in designing the structure of an
organization. Some of these elements can be summarized as follows:
I. Existence of hierarchy
In a bureaucracy broad objectives of the organization are developed and divided into
sub-objectives. Task or work activities designed to accomplish these objectives are
broken down according to areas of specialization to smaller units. Similar activities
are combined according to their specialization and assigned to specific positions or
offices to which a qualified person is appointed.
Power and authority are delegated downwards to each line manager, head of
department and supervisor starting at the top. Each position covers an area for which
it has complete jurisdiction. There is a clear division of work, competence, authority,
power responsibility and accountability. Lower level positions are grouped together
and assigned an office. Each supervisory office is put under the control of a higher
office. Each official is accountable to his superior for his action and his subordinate‟s
job related actions and decisions. All officials are accountable to the highest office at
the top of the pyramidal hierarchy.
The entire operation is organized in an unbroken ordered and clearly defined

hierarchy. Each position is responsible for the activities that it can be perform or
supervise. It does not share jurisdiction with other positions except those above and
below it in the hierarchy. In this way bureaucracy creates the basic classical hierarch
or structure of an organization.
II. The professional characteristics of a bureaucracy.

In order to build an effective bureaucracy, certain professional qualities must be
observed.
a. There must be free selection of personnel based on ability or technical
qualifications. Specialized training and experience.
b. The qualifications are measured by objective tests or examinations.
c. The office holder takes and impersonal formal orientation in dealing with
other in the execution of his official duties.
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d. There is free contractual relationship between the official and the
organization. The individual has a great deal of personal freedom
especially in areas that are not directly related to his work but he is subject
to authority an control in the area of his official duties.
e. The individual must live within the broader regulations of the organization
and he must not damage the organization image during his contacts with
the environment or with the society.
f. Pay is by affixed salary and it depends on the demands placed on him by
his job and not on the official‟s abilities.
g. Each official is appointed to office except the supreme chief who occupies
his position of authority by virtue of appropriation or by election or by
designation to the official seat by succession.
In general in most business organizations, professional manager rather than the owner
of the business carries out decision-making. The professional aspects of employment
in a bureaucracy differ significantly form traditional organizations where the chief is
free to confer grace on the bases of his personal pleasure of displeasure, his likes or
dislikes, on arbitrary basis or in return for gifts given to him. Because of high chances
of abuse in such traditional Systems most people prefer bureaucratic systems of
management.
III. Career aspects of a bureaucracy

The career aspects of a bureaucracy are base on the following principles:
1. Employment is usually the sole and primary occupation of those who are
engaged by the organization.
2. The work is a career with tenure and pensionable rights. Promotion is based
on seniority and achievement decided on and judged by superiors.
3. Dismissal is only for objective causes otherwise bureaucracy maximizes job
security. Because of this reason it has been argued that bureaucracy attracts
persons who value security above all.
IV. Rules Regulations and Procedure

In a bureaucracy decisions are governed by a consistent system of abstract rules,
regulations and procedures. Behaviour is subject to systematic decline and control.
Objective rationality based on impersonal and abstract considerations is required.
It is common to keep records or files which leads to bureaucratic specialiaties that
maintain them. The use of coercion and power is strictly limited by the organizational
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rules and regulations.
V. Legal authority and power

In a bureaucracy authority and power rest in the institution or office of the individual
who occupies it. The power that the office holder exercised is legitimized in his
office. The power does not belong personally to him. Because the office bearer has
been appointed based on his technical ability he exercise his influence because of his
expertise.
7.5 The Normative Quality of Bureaucracy

Bureaucracy is a normative model. It is not a product of nature. It is a man made,
invented, or conceptual model of organization. As a normative model it does not
describe a particular form of existing organization. It emphasizes the description of an
ideal or normative pattern of organization that conforms to an uses certain
assumptions and values is a formal organization.
According to Marx Weber. In its conceptual purity the mental construction of a

bureaucracy cannot the mental construction of a bureaucracy cannot be found
anywhere in reality. It is a utopia or an imaginary state of perfection. From this
observation it is clear that each firm must design its own organization to meet its
functional needs and the expected areas of operation. It must be recalled that the
sociologists who proposed the bureaucratic system of organization focused on
government institutions.
7.6 Functions of Bureaucracy

Bureaucratic functions include specialization structure predictability and stability,
rationality and democracy.
I. Specialization
Bureaucracy enables a firm to increase productivity through specialization of its
operations. Because a person can only be and expert in a few lines of work,
bureaucracy allows him to specialize in those areas in which he is an expert.
In large companies many specialists are required to perform different duties on each
product before it is made ready for sale. Thousands of specialists, for examples are
required to produce a motor vehicle or operate a telephone system. George Bonfanit,
in his unpublished paper, “The Bureaucratic Maze” analyzed the operations of a large
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supermarket in a suburban area and made the following statement.
“There is always certain among of work which can be classified as routine

work in the sense that it occurs on a regular basis. A specialist trained in this
type of routine work can easily and efficiently handle this work. In this sense,
a bureaucratic organization, whether in government, industry, or in education
can be compared to an assembly line an which each member perform his
specialized function is a very predictable manner”
Bureaucracy requires each person handling a given position of authority to be
competent to handle the duties of that position. It allows specialization at the work
level as well as the manager‟s level. It allows the manger to concentrate on a limited
range of values if he is to be held accountable for his decisions.
II. The Structure of a Bureaucracy

Bureaucracy creates the organizational structure of the firm. The duties of each
position are well defined and described. There is a common hierarchy accountable at
every level for the activities of subordinate units.
The structure provides for a logical relationship of activities. It enables the firm to
reduce incompetence by limiting each person‟s scope of work to his pan of
competence care is taken to avoid assigning too many subordinates to one manager.
III. Predictability and Stability

The rules, regulations, structure, professionalism, and other elements of democracy
provide stability and predictability to an organization. It also provides certainty. As
Franz Neumann observed in his book, “The total bureaucratization and the powerless
individual”‟ it brings some order into an otherwise anarchic society and thereby
rationalizes human relations that would otherwise be irrational and accidental.
Many people sow a strong preference for certainty over uncertainty and bureaucracy
helps them to attain predictability and certainty. Such bureaucracy features as
retirement programs, medical schemes, salary scales etc. provide great assurance to
employees. Because of this bureaucracy provides for unlimited life for the firm.
IV. Rationality in a Bureaucracy

Bureaucracy brings rationality to an organization. Decisions are made according to
objectives and the generally accepted or agreed upon criteria. According to Marx
Weber, a rational organization rests on the belief in the legality of patterns of
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normative rules and the right of those elevate to authority under such rules to issue
commands
A rational organization is one, which is free from malice, personal caprice and
favoritism. It is led by those best qualified to do the job. Power in a rational
organization is legal power whose source is the institution rather than strength or
charisma or tradition.
V. Democracy in a bureaucracy
Bureaucracy provides for democracy by placing emphasis on technical competence as
the basis for gaining o holding a job. Patronage, favoritisms, and tradition and other
considerations do not count only one‟s ability to perform counts. Because the
opportunity to train, apply for a job and be selected for it is open to all citizens a
significant degree of democracy exists.
7.7 Dysfunctions of Bureaucracy

Bureaucracy organizations have advantages and disadvantages. Some formal
bureaucratic organizations may have built into their designs forms of bureaucracy that
could lead into many unproductive energy-consuming activities at all levels. This
could result into organizational rigidity, defensiveness inter-group conflicts and
ineffective decision-making. Some of the dysfunctions of bureaucracy include the
following:
I. Bureaucracy rigidity.
Critics of bureaucracy claim that it tends to be rigid static and inflexible. It is
considered to be non adaptive and thus in conflict with the adaptability laws of
nature.
Strict adherence to rules and regulations tends to produce timidity, conservation, and
ritualism. Person can legally avoid responsible for accomplishing organizational
objectives by such odd bureaucratic sabotage techniques as opening within the strict
letter of rules.
Whatever the motives, a bureaucrat (a corporate executive) can avoid responsibility
by hiding behind some regulation. This tendency creates red tape. Some
environmental factors may call for change when faxed with new forces such as the
need for innovation.
Bureaucracy tends to view them as disturbances to an otherwise orderly situation. A
rigid organization fails to see innovation as a necessary life saving element to an
emerging, adaptive system.
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II. Bureaucratic impersonality
Due to its emphasis on order and rationality, bureaucracy is considered to be a sterile
machine model of organization. The implication oh this statement is that bureaucracy
ignores persons who form the basic element in an organization. It tends to see persons
as inert factors of production. It does recognize people as developing complex,
emotional and unique humans.
Relations in a bureaucracy are secondary and contractual rather than being primary
and personal. If this results in lack of personal involvement, them productivity can fall
below the required minimum level.
III. Displacement of objectives in a Bureaucracy

Bureaucrats have a tendency to forget the overall objectives of the organization. By
pursuing individual objectives or the objectives of his department or his section, a
bureaucrat often fails to adequately contribute to the broader objectives of the firm.
Robert a. Gordon, in his book, “The executive and the owner entrepreneur,” observed
that the salaried executives should never disregard the profit criterion. It is required to
keep directors and shareholders passive.
The executive may however not seek the advice of the board of directors in every
decision to increase profits. This is also true of the desire to expand the operations of
the firm or even to achieve more desirable goals with respect to the welfare of
workers, consumers, suppliers etc.
The organizational rational purpose of a subsystem of rules, regulations, routines and
procedure is to contribute to higher-level objectives. Units or persons at lower levels
fail in their organizational purpose if they work for personal objectives of for
objectives of their subunits without paying adequate attention to the overall objectives
of the firm.
IV. Limitations in categorization of departments
To secure the advantages of coordination and specialization, bureaucracy requires
categorization of activities and persons performing them into departments. A person
works only within his department. In some cases it may be better if some of the work
of his department is combined with that of another department.
To illustrate the nature of this problem, consider a case where two departments are
located next to one another. If each of the departments requires the services of one
and a half typists, bureaucracy would make it extremely difficult for each of these
departments to operate with less than two typists. Each department may employ an
extra typist.
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There will be a waste of the services of the equipment of one typist because of the
bureaucracy principle that a person should work only within his department under one
boss and one budge. Another example is where a pipe fitter who has installed a water
pump is prohibited by work rules from making electrical connections required to
make the water pump operational even if he is qualified to do so. An electrician may
have to make a special trip to make the connection thus wasting time. If the
connection is required in order for the machine to work there will be a waste of
output.
V. Empire building and self-perpetuation in a bureaucracy

Once it is fully established a bureaucracy is one of the most difficult structures to
destroy even when it has outlived its usefulness. The individual bureaucrat usually
feels trapped in an unyielding structure of the organization so that if any change has
to be made it must originate from the top or instructions must be received from above.
Power is self-sustaining but self-reinforcing and bureaucratic have the ability to keep
it or increase it. Sometimes a bureaucrat tends to feel that holding an office gives him
a personal ownership of that office and its privileges.
Prestige and pay are often determined by the number of subordinates reporting to the
bureaucrat. Because of this, bureaucrats tend to develop a desire to use their powers
to increase the number of subordinates and resources under their control. Empire
building is reflected as their main aim, which is to increase their span of management
and control. This result in waster and many inefficient operations tend to go on
unabated.
VI. Bureaucratic costs of control

Value is not necessarily created by the many rules regulations and procedures
employed to maintain conformity in bureaucracies. The cost of maintaining them can
even be a disadvantage. Many career specialists spend their time in formulating,
interpreting and enforcing bureaucratic procedures. Sometimes too many of these
rules and procedures can create red tape which can result in frustration due to
excessive restrictions and delays.
VI. Creation of anxiety in bureaucracy

The pressure to conform and to improve status in a bureaucracy can sometimes
produce anxiety. Robert Michaels, in his book, “Political Parties”, 1992, observed that
bureaucracies are the sworn enemies of individual liberty.
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The bureaucratic spirit corrupts character and engenders moral poverty. In every
bureaucracy, we can observe palace hunting a mania for promotion and
obsequiousness towards those upon whom promotion depends. There is arrogance
towards inferiors and servility towards superiors. William H. white in the finding of
studies on middle manager and published in his book, “The organization man” says
that most middle managers reported that their lives were oftenly”rat races or
treadmills” in following the demands of bureaucracy.
The manager is confronted with anxiety from conflicting objectives among members
and between members and the organization. Anxiety is also created when managers
perform poorly. An insecure superior at any point in the hierarchy can generate
pressure, which is then passed on downwards the line causing insecurity and tensions
at all levels. Dependence insecurity and frustration are all prevalent in a bureaucracy
and they can procedure anxiety, which is severe enough to disrupt the whole
organization.
7.8 Lecture Summary

In this lecture we have discussed one of the classical theories of organization dealing
with bureaucracy, its elements and prevalence. We have seen that it does not describe
a real situation in nature, it is a utopia. We have also described the criticisms that have
been made against it and the advantages of using the system.
7.9 Activities
It has been said that certain aspects of bureaucracy, if widely exercised could lead to
corruption. Explain the reasons why you agree or why you disagree with this
statement.
Read books on administrative theory of management and make some notes on it.

Highlight the reasons why bureaucracy emphasizes the separation of functions, power
and authority between the offices of a department.
7.12 Glossary
The traditional meaning of a bureau is that it is an office made up of scribes (clerks)
and the files in which records are maintained or kept.
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Bureaucracy emphasizes the separation of power, functions and authority
because:
 Separation of functions encourages specialization of labor.
 Makes it easier to delegate functions
 Makes it easier for the process of accountability, evaluation and appraisal to
be carried out.
 Can you think of other reasons?
7.14 References
 Peter Blau and W. R. Scott, Formal Organizations, a Comparative Approach,
Chandler Pub.,Co. San Francisco, California, USA.
 Herbert G. Hicks and Ray Gullet, Organization Theory and Behaviour, Mc
Graw Hill Pub. Co., New York.
 Reinhard Bendix, Max Weber, An Intellectual portrait, Doubleday & Co. Inc.,
New York.
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LECTURE EIGHT: THE ADMINISTRATIVE AND SCIENTIFIC
MANAGEMENT SCHOOLS OF THOUGHT
8.1 Introduction
The second component of the classical theories of organization uses the
administrative approach to organization. Like the theory of bureaucracy, the
administrative theory advocates for formal organizations, which take advantage of
specialization of labour. James D. Mooney and Alan C. Reiley, in their pioneering
work, “The principles of organization,” 1939, illustrated the close relationship
between management and bureaucracy by noting that organization ion the formal
sense means order, the organized and orderly procedures.
Both approaches emphasize objectivity rationality, certainty, hierarchy and
professionalism. The administrative theory also shares the same weaknesses of the
theory of bureaucracy as regards rigidity, impersonality, displacement of objectives
limitation of departmental categorization, self-perpetuation and empire building the
cost of controls and anxiety.
Unlike the theory of bureaucracy, which was developed by sociologist, who studied
government institutions the administrative theory, was developed by practising
managers. Their objective was to develop a theory incorporating principles and other
concepts for achieving formal organization.
It is sometimes said that the bureaucratic theorists suggested what a formal
organization should be and the administrative theorists suggested the means of
achieving it. While the bureaucrats emphasize the organization structure the
administrative theorists emphasize management, which is a component of
organization.

 Explain the elements and principles of management according to the
administrative theory of management.
 Explain Fredrick W.Taylor‟s contributions to scientific management theory
 Explain the advantages and the criticisms that were made against the two
schools of thought.
8.3 The Elements of the Administrative Theory

The elements of administrative theory include principles of management concepts of
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line and staff, use of the committee system and function of management. They are
designed to organize work. They tend to be prescriptive in suggesting managerial
actions to achieve the normative bureaucratic formal organization model.
Principles of Management as Propose by the Administrative School of Thought

The administrative theory emphasizes coordination in trying to bring about harmony
in organization Robert a. Gordon, in his book, “Business Leadership in the large
corporation”‟ 1961, explained coordination as decision making involving:
a. The development of broad objectives.
b. Initiating and approving changes in key personnel and in management
organization.
c. Approving decisions on various matters in terms of the approver‟s
interpretation of broad objectives.
d. Approving decisions on specific matters to avoid conflicts with other
decisions.
e. Providing cohesion and maintaining organization.
Coordination is the orderly arrangement of group effort to provide unity of action in
the pursuit of a common purpose. The principle of coordination expresses the
management‟s central task of getting all components of the organization working
together towards generally understood and accepted objectives.
8.4 The Principles of Management According to Henri Fayol
Henri Fayol, in book, “General and Industrial Management‟” 1949, outlined the
central elements in the principles of management according to the administrative
theory as follows:
I. Division of Work
Division of work or specialization of labour leads to higher productivity in the area in
which the employee is comparatively highly skilled. Both technical and managerial
work can be performed more efficiently under specialization.
II. Authority and Responsibility

The administrative theory considers authority as the right to give orders. A member of
an organization has responsibility to accomplish the organizational objectives of his
position. Appropriate sanctions are required to encourage good performance and to
discourage poor performance.
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III. Discipline
There must be respect for and obedience of the rules and objectives of the
organization. This requires:
1. Good supervisors at all levels.
2. Clear and fair agreements
3. Judiciously applied sanctions or penalties.
IV. Unity of Command

Each member of the organization should receive orders from one superior and be
responsible to one superior in order to reduce confusion, conflicts of interest and the
emergence of chaos.
V. Unity of direction
For effective organization members of the organization should work towards the same
objectives. Individual goods and interest should not interfere with organizational
objectives.
VI. Subordination of individual interest to general interest

Interest of an individual employee or those of a group of employees should not
prevail over those of the organization. The general interest should be maintained as
paramount.
VII. Remuneration of personnel

Pay should be fair. There should be no exploitation. Good performance should be
rewarded. A variety of modes of payment such as time or wage rates, piece rates,
bonuses, profit sharing and non-financial rewards were suggested.
VIII. Centralization and decentralization of authority

There should be a balance between centralization and decentralization of power.
Power should not be concentrated in the hands of a few people.
IX. Scalar Chain

There should be a scalar chain or a hierarchy based on the principle of unity of
command linking all members in the organization from the top to the bottom. In some
large organizations, following a scalar chain can take too long. Where person F needs
to work with person P to accomplish a project, a gangplank route was suggested. The
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gangplank can be followed as follows:
P L
C M
D N
E O
F P
G Q
The above diagram shows that if the scalar chain was to be followed then person F
would have to go through person E, D, C, B, A, L, M, N, and O before he can reach
person P. Fayol suggested that person F being on the same level as person P could
contact him directly on a gang plank L a bridge used in crossing two points) if the
procedure is agreeable to higher authorities.
X. Order
There is place for everything and every one, which ought to be so occupied. The
implements of work the work itself and those who perform the work must be arranged
in orderly way to avoid confusion waste of time and equipment hazards.
XI. Equity
Justice and kindliness based on predetermined conventions should prevail in the
organization. This means that managers should fair in handling employee grievances,
appraisal and their share in company earnings. Employees should also be free to join
labour unions.
XII. Stability of tenure for personnel

Time is required for an employee to get used to new work. This is the basis for the
probation period that new employee undergo before they are confirmed and employee
on permanent basis. Also job security should reward good performance. Arbitrary
dismissal should be discouraged.
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XIII. Initiative
Managers should be able to think out formulate and execute plans at all levels. The
manager should also be able to get other execute plans. This means that managers
should encourage useful employee creativeness at work.
XIV. Espirit de corps

This is interpreted to mean that in union there is strength. Good performance comes
form pride, loyalty and a sense of belonging. The organizational team spirit is
encouraged.
8.5 Other Contributions to the Administrative Theory

Apart from Fayol‟s contributions many other contributions have been made to the
administrative theory.
The Concept of Line and Staff

In administration mangers have found assistance from staff to be valuable. The
concept of staff persons who assist the manager with primary authority and line
responsibility has developed because of this need for assistance. Staff members
handle details, technical material and less important matters.
Two definitions of the line and staff concept have evolved. Line officials are seen to
be those who hold general authority and are in the general chain of command over
those members who through their efforts accomplish the objectives of the
organization. All other members of the organization are staff members.
They provide information, advice, and counsel of experts to line managers. Both
general and special personnel are common designations of staff. Some of the titles of
staff members who tend to be personal assistants to line officers include Executive
Assistants, Personal Assistants, special Assistants, Assistant to etc.
8.6 General Staff Managers

General staff managers are in charger of broad functional areas, which are ancillary to
the main objectives of the organization. In the army, the supply, the intelligence and
personnel are usually the primary responsibility of the general staff officers.
Managing the broad activities is a very important function. The chief of personnel, the
engineering personnel, and the accounting personnel in large companies are all
general staff. They are not directly involved in production or proving the services to
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customers.
The special staff has a narrower range of responsibilities than the general staff. They
are employed for their expertise in a particular technology had not because of their
managerial abilities. Examples of special staff people include doctors, the chief
accountant, the civil engineer the chemist etc. Some of the problems that can arise
from the use of line and staff in administration may include the following:
a. Line managers may often find that they are in conflict with staff members who
represent other managers.
b. Line managers‟ often complain that staff members are meddling in their
business.
c. The staff will often complain that line managers do not want to accept expert
advice.
d. Staff members tend to be treated as second class members of the organization
The Use of the Committee System
The basic ideas that led to the evolution of and use of the committee system can be
traced to the administrative theorists. Committee provide for an organizational
structure in addition to line and staff in the organization.
They contribute to creativity, communication, motivation, democracy, coordination,
education, persuasion, advice and to the broad representation of points of view. They
permit consolidation of the otherwise fragmented power and abilities into a functional
unit i.e. the committee. They have been used to avoid action and to take responsibility
when it is not deemed appropriate for an individual to do so.
The main disadvantages of using committees include the following:

1. High costs especially where a sitting allowance has to be paid and a meeting
room or boarding facilities are to be paid for.
2. They can lead to water down decisions because of the attempt to incorporate
all the views of all participants and their individual interests.
3. Because no one wants to take responsibility they can lead to indecision and
split accountability.
4. Where some of the individuals participating are dominant it lead to the
tyranny of minorities.
5. The committee can become self-perpetuating where members have pre-set
interests or objectives and goals.
6. Committees are good for formulating policies but they are poor at providing
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leadership and executing decisions.
The administrative theorists considered the study of management as a set of functions.

Fayol identified planning, organizing, training, commanding and coordination as
important management functions. In 1936, Gulick coined the acronym postcard to
describe management functions. It stands for planning, organization, staffing,
directing, reporting and budgeting. The final version of this theory lists planning,
organizing, staffing, directing, and controlling as the functions of management
8.7 The Scientific Management Theory of Organization

Scientific management has been broadly considered to be the application of the
scientific methods of study analysis and problem solving in organization. Scientific
management focuses its analysis on the physical activities of work. It places emphasis
on man-machine relationships with the objectives of improving performance of
routine, repetitive production tasks.
It advocates an inductive, empirical, detailed study of each job to determine how it
could be done more efficiently. One of the earliest contributors to scientific
management was Boulton and Watt who gave the following outline to be followed in
scientific management.
a. Market research and forecasting should be used as a basis for establishing a

new business.
b. The site should be planned with provisions for adequate communication by
land and sea and for possible extension of buildings.
c. Planned machine layout in terms of workflow requirements.
d. Production planning should be the basis for efficient operation.
e. Product process standards should be established.
f. Machine operating standards should be established.
g. Standardization of product components.
h. Maintaining statistical records.
i. Maintaining cost control records, including cost accounting procedures.
j. Establishment of worker training schemes.
k. Division of labour.
l. Use of work-studies to improve efficiency.
m. Payment for work to be based on the results of work based on the work study.
n. Provision for personnel welfare including sickness benefit schemes
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administered by a committee of workers
o. Provision an executive development scheme.
These were among the earliest contributions of scientific management to be applied in

engineering industries in 1795.
8.8 Frederick W. Taylor and his Contributions

Frederick w. Taylor was a mechanical engineer who worked as a manger in the steel
and metal works industries. He sought low labour costs together with high wages for
workers. He believed that a combination of high wages and low labour costs resulting
from the difference between the enormous amount of work that a first class man can
do under favourable conditions and the work which is actually done by an average
man can result into gains.
In one of the work-studies he carried out, Taylor reported that the application of
scientific management to inspection of ball for ball bearings resulted in 35 people
dong the work formerly performed by 120 people. There was also a 2/3 improvement
in work quality.
8.9 Taylor’s Principles of Scientific Management

Taylor‟s main objective was to reduce random, rule of the thumb and personality
factors in decision-making. He advocated for management by system and standard.
Taylor advocated the following elements of scientific management.
a. Develop a science for each element of a man‟s work, which replaces the old
rule of the thumb method.
b. Scientifically select and then train, teach, and develop the workman unlike in
the past when the worker chose his own work and trained himself as best as he
could.
c. Management should cooperate with workers to insure that all the work is
being done according to the principles of science, which have been developed.
d. There should be equal division of work and responsibility between the
management and workers. The management should take over all the work for
which they are better suited than workers unlike in the past where all the work
and the responsibility for it were thrown on workers.
Taylor believed that the maxim or doctrine of scientific management should be:
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“Science not the rule of the thumb, Harmony not discord, Cooperation not
individualism, Maximum output, not restricted output, The development of
each man to his greatest efficiency and prosperity”.
Taylor has been criticized for his insistence that a manager should be most interested
in exceptional items i.e. those that vary from standards. This implies that the manager
should not be concerned about items that meet standards of operations
8.10 Taylor on Soldiering in the Work Place

On soldiering, Taylor believing that more efficiency could be gained if soldering or
marking time on the job could be reduce. He identified two types of soldering.
Natural soldering is due to men‟s tendency to take easy and not over work himself in
order to reduce fatigue. It springs from the individual personal factors.
Systematic soldiering is more complex. It is motivated by organizational and social

factors, a part from personal factors. It is designed to keep the supervisor ignorant of
how much work could be done so that the expectation of work performance is not
increased.
The worker fears that if the boss knew how much work could be done then he will
increase the amount of work to be done or the standards to be attained by each worker
without increasing the wage. This may require the worker to work harder and faster
for the same old pay.
Workers also fear that if they work harder they will throw themselves or their friends
out of work. Taylor developed this tendency for worker to hide their true capabilities
because it contributed to conflicts between the management and workers.
He also believed tat a worker also soldiers to keep himself from doing more than his
share of work. He believed that the worker‟s view was that “why should do more than
that lazy fellow gets the same pay as I do but he does only half what I do? This
implies that there is a tendency for workers to slow down work tot e slowest possible
pace.
8.11 Taylor’s piece rate system of compensation
Taylor recommended pay by piece rates on the basis of standards set by the motion-
and-time studies. His pay plan was based on the differential piece rate system.
Under the piece rate system, the work is rewarded a base pay up to the required
standard or level of output. Beyond this base pay, workers are paid additional
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amounts according to the additional number of units produced. Under this system,
workers were paid a lower piece rate up to the standard set, which was the level at
which a first class man performed under suitable conditions.
At this standard a large bonus was paid and after this standard of output, a higher
piece rate was paid. This system encouraged high and good performance. Workers
who after training could not perform to the standard or were unwilling to produce to
the standard were to be discharged. Worked who performed above the standard
earned more then the going wage for their skills.
8.12 Taylor on Functional Foremen

Taylor believed that functional specialist should do planning and other managerial
functions that were formerly done by workmen. According to him the management of
work should be separated from its execution. In the case of a production shop or
departments, Taylor suggested 8 functional foremen as follow:
a. The Gang boss

b. The speed boss
c. The inspector
d. The repair boss
e. The order-of-work and route clerk
f. The instruction card clerk
g. The shop disciplinarian
It should be noted that the above classification reelects Taylor‟s training as an
engineer and his interest in production. He believed that each worker should have
eight specialized supervisor. This belief was criticized because it tended to lead to
confusion and poor coordination.
Most modern firms however follow similar pattern in their departmentation with
varying management modification. His idea of functional specialists survives but as
staff specialists and not as line officers as he recommended.
In general, Taylor‟s approach was based upon certain assumptions regarding workers
management and their work.
a. The one best method of doing a particular job can be scientifically determined
i.e. through work-studies.
b. Whenever possible at the work level, complex jobs should be subdivide into
their elementary components. Work will proceed efficiently when each
worker has only a simple and repetitive job to do.
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c. Workers were to be trained so that they could perform each job in a
standardized way established by management.
d. The discretion of workers concerning their work was to be reduced to a
minimum. The planning and control activity was to be carried out at higher
levels of the organization.
e. Workers were viewed as responding as individual to economic incentives.
Payment should therefore be based on the number of units produced by each
individual work.
8.13 Other Contribution to Scientific Management

Many other writers have contributed to the scientific management school of thought.
Among the leading contributor are Henrly L. Gantt, Frank and Lillian Gilbreth,
Harrington Emerson, and Morris L. Cooke who made important contributions.
Henry L. Gantt
Henry Gantt developed the task and bonus system of incentive pay where the worker
was given a bonus when he reached a specified standard of performance or output.
This technique was more widely used than Taylor‟s differential piece rate system.
He placed more emphasis on setting specific tasks with proper rewards for every
member of the organization to work towards. In recent times the techniques such as
management by objectives and management by results have been used to express his
ideas.
He also developed the Gantt charts, which are plotted for planned and actual
performance against time, which have proved to be very useful in planning and
control of operations. They led to the development of the critical Patt Method (CPM)
and the Programme Evaluation and Review Technique (PERT) network systems,
which are widely used in project evaluation and appraisal.
Frank and Lillian Gilbreth

Frank Gilbreth and Lilian Gilbreth were husband and wife. They stressed that
management systems should always be written. They refined the motion and time
studies by developing the formal experimental method of motion and time studies
called therbligs or Gilbreth spelt backwards.
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The Gilbreth emphasized the human factors in management and advocated the study
of human sciences. Their worker fatigue and standardization experiments are some of
their outstanding contributions.
Harrington Emerson
Emerson took a slightly different approach in his analysis of work performance. He
emphasized the “great productivity of correct organization”. He listed his twelve
principles of efficiency as follows.
a. Clearly defined ideals or objectives.

b. Common sense
c. Competent counsel (consultation)
d. Discipline
e. Fair deal
f. Reliable, immediate and adequate records.
g. Dispatching (routing)
h. Standards and schedules
i. Standards conditions
j. Standards operations
k. Written standard practice instructions
l. Efficiency reward.
The other notable contributions came from Morris L. Cooke who applied the principle
and techniques of scientific management to the fields of government and education.

In this lecture we have discussed the 14 principles of management as proposed by
Henri Fayol. We have seen that other contributions to the administrative theory
include the concept of line and staff officers, the use of general managers and the
committee system.
We have also discussed Fredrick W. Taylor‟s contributions to scientific management
including his contributions to soldiering at the work place and the use of piece rates to
encourage increased productivity.
8.15 Activities
Explain the forms of soldiering at work would take place when it involves office
work.
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Read and make some notes on the Human relations school of thought

Highlight the features of scientific management school of thought that make it
distinctly different from other classical schools of thought.
8.18 Glossary
Soldiering at work refers to deliberately slowing down or reducing the speed of work
performance.

Features of scientific management school of thought that distinguish it from other
classical schools of thought include:
 The use of work measurement methods
 Emphasis on standardization of inputs and output
 Scientific methods of measuring machine and worker productivity.
8.20 References
 F. Ruberstein and Chadwick J. heberstoh, Some theories of Organization,
Richard D. Irwin and Dorsey press, Homewood, Illinois, USA.
 Robert Dubin, The world of Work, Industrial society and Human Relations,
Prentice Hall Inc., Eaglewood, N.J. USA.
 Julian L.Simon, Applied Managerial Economics, Prentice Hall Inc.,
Eaglewood cliffs, N.Jersey, USA.
 Herbert G.Hicks and Ray Gullet, Organization Theory and Behaviour,
McGraw Hill Pub., Co. New York USA.
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LECTURE NINE: THE NEOCLASSICAL THEORIES OF
ORGANIZATION
9.1 Introduction to the Human Relations Movement
The neoclassical theory was built on the basis of the classical theory. It modified
added to and in some ways extended the classical theory. The neoclassical theory has
been popularly called the human relations movement.
The human relations school of thought emphasizes the psychological and social
aspects of the worker as an individual and his work group. It believes that an
organization is a group of people with a common objective. It emphasizes social
factors at work.

 Explain the reasons that led to the emergence of the human relations
movement
 Explain the elements of the neoclassical theory
9.3 Development of the Neoclassical Theory

Like the classical theory the neoclassical theory has evolved over many centuries
although the main stream of thought evolved fairly recently during the 1920s and
1930s.
Among the earliest contributors to this school of thought is Hugo Munsterberg who
published his book, “psychology and industrial efficiency” in 1913. He tried to
explain ways of finding the best man possible how to produce the best work possible
and how to secure the best possible effects.
Hugo emphasized that the proven techniques of psychology for measuring individual
differences should be applied to industrial problems. He developed psychological
tests for fitting the right person in the right job.
He also developed psychological tests that could identity accident-prone electric

railway motormen and ship captains who were likely to make the right decision in an
emergency as well as women who are likely to be good telephone operations. He also
studied monotony, fatigue, psychological adjustment and other factors that affect
worker performance a work. He emphasized individual differences in organization.
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9.4 The Hawthorne Experiments
The beginning of the human relations movement, which forms the backbone of the
neoclassical theory, is identified as the Hawthorne experiments, which were
performed from 1924 to 1932. The purpose of the first set of experiments, which took
three years, was to determine the effects of different levels of illumination on a
worker‟s productivity.
Industrial psychologists and researchers who were still following the assumptions
underlying the classical approach designed these studies. The psychologists then still
believed that increased lighting would improve work performance.
One of the studies was designed to determine the optimum working conditions that
would improve employee productivity. In order to study the effect of varying degree
of workplace illumination effect of varying degrees on productivity a group of
assembly workers, girls in this case, was moved from the main working area and
placed in a separate room so that they could be studied under controlled experimental
conditions.
The girls were given the same workplace layout and the same kind of work to do. The
lighting conditions were systematically varied and productivity was recorded under
different conditions. The main hypothesis was that as lighting condition were
improved productivity would increase and as expected production began to rise in the
test group. Productivity continued to increase until maximum intensity was reached.
The most interesting phenomenon was that productivity also increased in the control
grouped, which did not, received increased illumination. Also when the light intensity
was reduced to almost moonlight level in both groups output continued to increase.
The researchers that participated in these studies were puzzled by these results, which
appeared to contradict the generally accepted principles. They thought that they had
made a mistake and decided to continue reducing the light intensity. As they did so
the productivity continued to improve. It was not until the room was lit the intensity
of bright moonlight and the worker could not see well that productivity started falling.
These shocking results made the social scientists involved in the studies to begin to
reexamine the results of the experimental conditions. They concluded that perhaps the
main reasons for the strange results was that the workers had been separated from the
main assembly area and they had been actively involved in the conduct of the
experiment.
The researchers had been discussing the work conditions with the workers and had
shown interest in their comments. The researcher also tried to responds to their
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suggestions during the course of the experiments. The scientist concluded that it is
important to pay some attention to workers in the organization, to treat them as
individuals, and make them feel as a necessary part of the organization.
The researchers began to feel that perhaps workers have needs a part from strictly
economic needs, which they seek to satisfy by being member of the organization.
Because of these confusing results the Western Electric company where the
experiment were carried out decided to do more studies of their own to determine the
mysterious factors responsible for the increase in productivity. The second group of
experiments began in 1927 and it involved a smaller group of six female telephone
relay assemblers. They were put under close observation and control.
Changes were made in lunches served i.e. hot or cold lunch, rest periods, Saturday
morning work, and the hours of the working day were reduced or increased. These
experiments were designed to reflect changes in working conditions.
The results still indicated an increase in productivity causing researchers to conclude
that social or human relations among the operators, researchers and supervisors were
more important in determining productivity than changes in the working condition.
The high morale developed by workers in the experimental group was because of this
special attention placed on them by the researchers leading to increased productivity.
Attention was therefore focused on how to increase worker morale. Morale appeared
to increase as a result of the amount of individual and personal emphatic attention
given to the worker as well as the social structure of the work group.
The Hawthrone researchers concluded that a worker‟s feeling about himself and his
work groups were important. As a result of these experiments, the nondirective
interview technique was developed as a means of exploring an employee‟s feelings
This phase of the experiments was started in 1928, the same year that Elton Mayo
joined the project. It was found that just taking or what was called “ventilation
therapy” to an employee was important. Whether the things that employees
complained about were changed or not was found to be secondary.
To support this conclusion the things that workers complained about were changed
several times but their attitudes did not change. In some cases, nothing was done
about the complaints but after the interview the complaints disappeared. It became
apparent that workers really did not want changes but they just wanted someone to
speak to who would not critics them or advise them about their problems.
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9.5 Causes of the Rise of the Human Relations Movement
The rise of the human relations movement was caused by a combination of political,
economical and social factors. This included the flow of workers from farming in
rural areas to factories in urban areas the excess of factory owners over workers, the
rise of labour union movement, technological changes and professionalism in
management of organizations.
With the advent of the industrial revolution, many workers moved to towns seeking
for factory work resulting into surplus labour in towns. Because of this, wages were
low and working and sanitary conditions were poor. Marxists challenged these poor
conditions at the work place and better ways to organize the society were sought;
many of which emphasized improvement in the conditions of work.
Through the widespread unionism protected by legislation the workingman gradually
gained political power to counter the power of the owners of factories. Increased
technological changed created the need for more highly trained workers and
professional employees.
9.6 Elements of the Neoclassical Theory

Unlike the classical theory, which considers man to be an economic man who is
motivated by economic incentives, only the neoclassical theory considers every man
to be unique. Also unlike the classical theory where the pioneering contributions were
Marx Weber Taylor and Fayuol in the classical school theorists are not easy to
identify. But names such as those of Masnsterberg, Eklton Mayo and Roethlisberg are
closely identified with this school. The contributing fields include personnel
management, human relations industrial psychology and industrial sociology. Their
works concentrate on two main elements of the neoclassical theory i.e. the individual
and the social aspects of work.
9.6.1 The Individual

The students of organization who developed the human relations approach came up
with anew concept of motivation at the work place. As a result of their studies and
experiments they concluded that economic incentives were relatively unimportant and
that the employee wants only a minim economic reward to provide a basic level of
security for himself and his family.
They argued that individual incentives based only on economic rewards, therefore, are
limited usefulness once a certain level is attained. They also concluded that work is
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not basically repugnant to the employee as along as he can derive a certain social
satisfaction from his present at the work place. This satisfaction derived primarily
from fulfillment of his social needs.
This means that the employee will seek to join group and he may be motivated to go
to work merely because he wants to maintain his social relations with fellow members
of his work group. The human relations school also concluded that the worker wants
to take part in decision-making, which affects his job.
The worker wants to participate and he will be encouraged to perform more
effectively by the use of democratic rather than authoritarian leadership style. They
concluded that democratic leadership is the best type of leadership style to use
because if involves members of an industrial organization in decision-making.
9.7 The Human Relations Approach to Informal Organizations

The second principal element in the neoclassical theory is its emphasis on the social
aspects of work groups. The informal or shadow organization that exists within the
structure of the formal organization is emphasized. According to this school the
individual worker wants to know what is going on in the organization so that it is
important to communicate with hum frequently and honestly. He wants attention and
wants to be treated as an individual.
The human relations theorists emphasized a reduction in the concentration of attention
on the structure of the organization and questions of authority and down played other
principles of the classical school. It concentrates on methods of equalizing power in
the organization and on approaches for treating the employee with consideration.
They believe that management should allow workers to participate indecision making,
it should encourage job enrichment to provide more challenge on the job and that
there should be concern for the informal aspects of the organization.
9.8 The Morale of Workers

The other focuses of the human relations movement appears to be on the concept of
morale or happiness of employees with their work. It suggests that a more satisfied
employee is more productive.
More recent studies have however failed to show consistent relationship between
morale and productivity. Productivity is now viewed as dependent on many factors
such as control compatibility of objectives and satisfaction of self-actualization needs.
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9.9 Criticisms of the Human Relations Theory
The human relations theorists have been criticized of contributing to the manipulation
of employees by management. The charge of manipulation is however, not directly
the responsibility of the human relations school. It is a result of the desires of
management to find out ways of improving the organization and increasing
productivity.
Management followed what has been called a “contented Cow” approach because of
the misunderstanding of the findings of this school. For example it had been
discovered that appropriate music, if played in the organization could contribute to the
satisfaction and good feeling of employees and lead to increased productivity. The
playing of music in organizations became popular in all plants and assembly areas
whether or not it was related to job satisfaction or high productivity.
The popularity of human relations training for supervisors increased. They were
taught how to communicate effectively, how to listen appropriately, how to concern
point out that even if we have one happy family, this cannot this cannot reduce the
monotony of certain type of work. We cannot therefore, eliminate the existence of
certain frustrations in the work place.
In the area of communication there was the feeling that if the manager could show
appropriate training films and convince employee that one was telling the truth one
could solve every problem.
Etzion gave an example of a film, which shows the management in a very bad light
because it did not inform the employee on time about new changes in factory that
would actually benefit them. A rumour began among employees that there was going
be a large lay off and most employee arranged to resign until the boss finally them the
truth. This shows that the important of effective communication increased as a result
of the emergence of the human relations school of thought.

In this lecture we have seen that the Human relations Movement emerged as a result
of poor working conditions that were rampant during the industrial revolution.
Workers were poorly paid and both the levels of occupational hazards and sanitary
conditions were poor. This led to close government regulation of the working
environment and the emergence of a strong labor union movement to cater for
workers grievances.
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9.11 Activities
Make a list of the illegal activities that employers were involved in during the
industrial revolution which caused the government of the USA to introduce labor
legislation and allow more labor union activities.

From your library readings and internet browsing, explain the reasons why the
Howthorne experiments were criticized.

Explain the main ways in which the neoclassical theory differed from the classical
theory of organization.
9.14 Glossary
The morale of workers is reflected in the increased level of satisfaction with their
work. If workers morale is increased it can lead to increased productivity.

The neoclassical theory differed from the classical theory which mainly viewed
workers to be influenced by economic rewards. The neoclassical theory considered
workers to be social. They want to be loved, recognized, praised and to be allowed to
form or join groups.
9.16 References
 R. Dubin, The world of Work, Industrial Society and Human Relations,
Prentice Hall, USA.
 R. Wessenberg, Introduction to Organization Behaviour, Intext Educational
Pub., Co., USA.
 Hicks and Gullet, Organization theory and Behaviour, McGraw Hill Pub., Co.
,USA.
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LECTURE TEN: THE STRUCTURALISTS MOVEMENT
10.1 Introduction
The classical school of organization in general and the scientific management
theorists in particular have been described as considering organizations without
people. In contrast the human relations school has been described as considering
people without organizations.
The main objective of the structuralists was to harmonize the conflicting theories of
the classical school and those of the human relations school and incorporate them into
one theory that would address both the economic aspects and human aspects of
workers. It is a synthesis of the two earlier approaches drawing additionally upon the
works of people like Marx Weber, Taylor and Fayol.
The Structuralist School, which is also called the Modern school or the Systems
analysis school of thought, felt that both earlier approaches were incomplete. They
also felt that it was not appropriate to devote the study of organizations only on
industrial organizations as their predecessors did. All types of organizations have
many things in common and that one could benefit from studying all of them.
Where the earlier schools had ignored or looked upon conflicts as something
undesirable the structuralists felt that there is an inevitable conflict between the needs
and aspirations of workers and those of the management. Their concern was with
studying how conflicts could be managed and usefully applied within the framework
of the organization. This led to the study of conflicts, their causes and their resolution.
A variety of games and other simulation models have been used to study how
conflicts develop between individuals and between groups and how they can be
resolved. Questions of interpersonal trust have arisen as it relates to the development
of conflicts. The structuralists stress the consideration of an organization a large
complex social structure, which consists of, interacts between various social
groupings.
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 Explain the structural components of an organization operating as a system in
the environment.
 Explain the main characteristics of the modern systems theory.
 To compare and contrast the modern systems approach with the classical and
neoclassical schools of thought.
10.3 The Multi-Factor Approach to the Study of Organization

The structuralists favored a multi-factor approach to the study and understanding of
organizations. They were concerned with the formal and informal elements of
organizations, and the relationships, which tie them together. George Homans (1950)
for example developed a comprehensive scheme for analyzing the development of
intra-group behaviour and attitudes within the broader system of the organization.
The structures considered the scope of informal groups and the relations existing in
informal groups inside and outside the organization. In addition, they broadened the
emphasis of organizational research. They concentrated not only on the worker but
also on management. They also concerned themselves with the investigation the
higher and lower ranks of the organization looking for differences between these
ranks in needs and motivation.
The structuralists also recognized that there is a need for both social and material
rewards and they examined the interactions between these rewards and their effects
on the individuals. In addition, the structuralists considered the interaction between
the organization and its environment and felt that the organization should not be
studied as an isolated phenomenon.
They also studied differences in organizations caused by different cultures and

broaden their areas of interest to include work and non-work organizations.
10.4 The Modern Organization Theory

The distinctive qualities of modern organization theory are its conceptual analytical
base its reliance on empirical research data and its integrative nature. These qualities
are framed in a philosophy, which accepts the premise, that the only meaningful way
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to study organization is to study it as a system.
The study of a system must rely on a method of analysis involving the simultaneous
variations of mutually depend variables. Systems analysis treats organization as a
system of mutually dependent variables. As a result the modern organization theory,
which is based on systems analysis, shifts the conceptual level of the study of
organization above those of the classical and neoclassical theories. It asks a range of
interrelated equations which are not seriously considered by the earlier theories.
Among these questions are:
a. What are the strategic parts of the system?
b. What is the nature of their mutual dependency?
c. What are the main processes in the system, which link the parts together and
facilitate their adjustment to each other?
d. What are the goals sought by systems?
10.5 The Parts of the System and their Interdependency

The first part of the system is the individual and the personality structure that he
brings to the organization. Basic to the individual‟s personality are motives and
attitudes, which condition the range of expectations that he expects to, satisfy by
participating in the system.
The second part of the system is the formal arrangement of function referred to as the
formal organization. The formal organization is the interrelated pattern of jobs, which
make up the structure of the system. Some writers have commented that there is a
fundamental conflict resulting from the demands made by the system and the system
and the structure of the mature and normal personality.
It is also true that the individual have expectations regarding their jobs and conversely
their jobs make demands on the individuals relating to their performance.
The third component is the informal organization. An interaction pattern exists

between the individual and the informal group. The informal organization has
demands, which it makes on members in terms of anticipated behaviour, and
members have expectations in terms of the satisfaction they hope to derive from
association with people at the work place. Both these demands interact, resulting in
the individual modifying his behavior to be in accord with the demands of the group.
The group in turn modifies what it expects from individual because of the impact of
the individual personality on group norms.
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The fifth part of system analysis is the physical setting in which the job is performed.
In the physical surroundings of work interactions are present in man-machine system.
The human engineering analysis cannot approach the problems posed by such
interrelations in a purely technical engineering fashion. Attention must be centered on
responses demanded from a logically ordered production f, usually with the aim of
minimizing the error in the system.
10.6 The Linking Processes of a System

The parts of a system are interrelated. According to the modern systems theory, the
linking process includes communication, balance and decision-making.
Communication is mentioned in neoclassical theory but the emphasis is on description
of forms of communication such as formal versus informal communications, vertical
versus horizontal communications, and the line and staff communication. But
communication, as a mechanism, which links the segments of the system together, is
over looked.
One aspect of modern communication theory is the study of communication networks
in the system. Communication is viewed as the method by which action is a roused
from the parts of the system. Communication acts not only as stimuli resulting into
action, but also as a control and coordination mechanism linking the decision centres
in the system into a synchronized pattern.
Karl W. Deutsh points out that organization are composed of parts, which
communicate with each other, receive messages from the outside world, and store
information. Taken together, these communication functions of the parts comprise a
configuration representing the total system.
The concept of balance as used as a linking process refers to an equilibrating

mechanism whereby the various parts of the system are maintained in a harmoniously
structured relationship to each other. The necessary for the systems balance arises
from the nature of the systems themselves. An ordered relationship among the parts of
a system requires a stabilizing or an adaptive mechanism that creates a balance
between the parts that form the whole system.
The required systems balance can either be quasi- automatic or innovative. Both
systems of balance act to insure system integrity in the face of changing conditions,
either internal or external to the system. The quasi-automatic balance refers to the
homeostatic properties of systems. This refers to the tendency for systems to exhibit
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built- in propensities to maintain steady states.
Where human organizations are open and self-maintaining systems, then there is need
for control and regulatory process. The problem regards the degree to which
stabilizing processes in systems, when adapting to change, are automatic. A solution
to this problem depends on the type of change that is taking place and the adjustment
required to adapt to change.
Systems have programs of action, which are put into effect when a change is
perceived. If the expected change is relatively minor and if the change comes within
the reach of the established programmes of action, then it can be possible to
confidently predict that the adaptation to be made by the system will be quasi-
automatic.
The role of innovative, creative balancing efforts arises when the need for innovation
emerges when adaptation to change is outside the scope of existing programmes
designed for the purposed of keeping the system in balance. New programs have to be
evolved in order for the system to maintain internal harmony.
New programs can be created by trial and error for feasible action alternative to cope
with a given change. But innovation is subject to the limitations and possibilities
inherent in the quantity and variety of information that the system has at a particular
time the new combinations of alternatives for purposes of innovation depend on:
a. The possible range of output of the system or the capacity of the system to
provide information.
b. The range of available information in the memory of the system.

c. The operating rules (program) governing the analysis and flow of information
within the system.
d. The ability of the system to forget the previously held practices and learned
solution to changing problems.
A system that has a very good memory might narrow its behavioral choices to such an
extent as to stifle innovation. In other words, old programs may be used to
adapting to change, when newly innovated programs are necessary. Proper
communication and balance are necessary in support of the cybernetic model in which
both these processes have vital roles. Cybernetic models use the concept of feedback
and control. The objective of a cybernetic system is to maintain system stability in the
face of change. Cybernetics cannot be studied without considering communicating
networks, information flow, and some kind of a balancing process aimed at
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preserving the integrity of the system.
Cybernetics, as proposed by the modern systems school, directs attention to key
questions regarding the system. These questions relate to how the communication
centers are connected and how the system of feedback is structured, which
information is stored in the organization and at which points.
The cast part of a system concerns decision analysis. Decision analysis could involve
decisions to produce and decisions to participate in the system. Decisions to produce
are largely result from an interaction between individual attitude and the demands
from the organization. Motivation analysis is central to the nature of the study and
results of the interaction.
Individual decisions to participate in the organization reflect on such issues at the
relationship between organizational rewards as compared to the demands made
against the individual by the organization. March and Simon treat decisions as
internal variables in an organization which depend on jobs, individual expectations
and motivations, and organizational structural. Jocal Marschak looks on the decision
process as an independent variable upon which the survival of the organization is
based. In this case the organization is view as having inherent to its structure, the
ability to maximize survival requisites through its established decision processes.
10.7 The Elements of Modern Theory – A Systems Analysis Approach

In this section I will give a summary of the main principles as developed by the
modern school theorists. Modern theorists consider all elements the whole as well as
its components. The organization and environment are considered to be
interdependent and each depends on the other for resources.
Modern theory is multi-disciplinary. It draws its contribution from many different
fields of study. Dynamic interaction of parts with each other, with other organizations
and with the environment is emphasized. The modern theory considers an
organization to be a structural process in which individuals interact for objectives
purposes.
10.8 Development of the Modern Theory

Modern theories of organizations and management have been developed since the
1950s although some contributions were made earlier. One of the earliest contributors
to the modern theory was Alfred Korzybski who emphasized the dynamic process
nature of reality. He called his approach “General Semantics”. He believed that man
lives in three different worlds i.e. the world of events, the world of objects and the
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world of symbols.
Korzybski focused on problems of language and communication. His topics include
abstracting, inference, and language inflexibility, the environment of communication
the nature of words and the importance of perception. The other early contributor to
the system school of thought was Mary Parker Follett. She made her contributions
during the 1920s and 1930s. She made her contributions on the psychological
relationships in business organization that integrated the interests of the individual
and the organization.
Folleth recommended, “working thing out in a cooperative spirit”. She believed that
everybody counts as an individual as a part of a group, and as a part of the society.
Chester I. Bernard published a book in 1931, which gave the first comprehensive
explanation of management and organizations from the modern theory viewpoint. He
described an organization as dynamic social system of cooperative interactions with
the purposes of satisfying individual needs.
Chester considered the individual the organization, suppliers and customers as part of
the environment.
10.9 Nobert Wiener and his contributions to Systems Analysis

Nobert Wiener pioneered in the field of cybernetics, which is a Greek word-meaning
steersman or one who guides by mechanical means. His concepts of systems control
by feedback published in his book in 1948, directly contributed tot eh development of
the electronic computer.
Nobert a scientist by training described an adaptive system (including an
organization) as utterly dependent upon measurements and corrective measures
through information feedback. About ten years before Nobert published his Norks the
administrative theorists had recognized the importance of the managerial function of
controlling. Through control the results of an organizations activities are measure and
compared with plans. Corrections are then made where necessary.
Nobert capitalized on this concept to suggest specific mechanisms of control on
which automated and self-controlling systems could be built. His work gave the firs t
clear view of an organization as a system consisting of inputs, process, outputs
feedback and the environment. He took a multi-disciplinary approach including the
fields of control engineering, communications engineering, astronomy and
meteorology. He did not study human organization perse but his findings have
numerous applications in systems analysis.
117
Closely related to Norbert‟s work is the work of operations researchers. Operations
research uses a team, multi-disciplinary approach to the solution of complex
problems. Models particularly, mathematical models are used. The systems approach
focuses on overall optimization of the system as a whole instead of sub optimization
of the system.
10.10 Characteristics of the Modern Theory

1. The Systems view point
The modern systems theory views an organization as a system consisting of five basic
parts i.e. inputs the processor, outputs, feedback and the environment. The general
systems theory covers all kinds of systems i.e. biological, physical and behavioral.
2. Dynamic process
The emphasis in modern theory is on a dynamic process of interaction that occurs
within the structure of an organization. The relationship between the dynamic process
of interaction of an organization and its structure can be illustrated using a chemical
processing plant.
Consider a fluid blending factory. Its structure consists of the pipes, the pressure
vessels in which chemical reactions occur, storage tanks, and the machinery. Within
this structure, under certain conditions of temperature, pressure, catalysts etc,
chemical reactions occur. But the reactions cannot occur without the physical
structure of the plants.
The chemical reaction process is similar to the interaction of the elements of a human
organization. Also the chemical plant is similar to an organization‟s structure of
authority responsibility, power, accountability etc. In both the chemical plant and the
human organization, the structure determines the character of the reaction and
interaction process.
Also the parts of the chemical plant such as mixers, pumps and catalysts are similar to
managers who motivate organizational members. Like a human organization, the
plant also depends on the environment for resources and its products must be sold to
customers in the environments. Also the control processes of the two systems have
important similarities.
3. Multilevel and Multidimensional levels of organization

The modern theory considers an organization from both a micro and a macro level.
The organization is considered to a micro unit within its industry but it is a macro unit
118
compared to its internal units. A modern theorist recognizes the importance of parts of
an organization and also considers the gestalt or the whole. He also recognizes that
organizations interact at various dimensions at every level.
Modern theory of organization realizes that organization have synergistic effects so
that the pertinent variables for an organization may be quite different from those of its
components. A firm may, for example, have an objective of making a profit of
Ksh.10, 000,000 per year. This profit objective per may have little meaning to the
production department.
The department‟s objective may be better stated as to produce 10 million units of the
product per year at an average cost of Ksh. 0.50 per unit. Modern organization theory
also recognizes the problem of sub optimization. That is a unit within a firm in
seeking to meet its objective may not make maximum contribution to the larger
organization of which it is a part.
4. Multi-Motivation
Like the neoclassical theory, the modern theory recognizes that an act may be
motivated by several desires. The modern theorists consider organizations to exist
because their objectives through them. Modern theory does not assume that all
objectives can be reduced to a single objective such as maximization of profits.
5. Modern theory is probabilistic

Unlike the classical school of thought which believed that when principle of
management are followed, organizational performance will be improved, the modern
theory is probabilistic, it is not certain. It believes that the future cannot be predicted
with certainty.
Statement concerning future performance tends to be qualified with phrases such as
“may be”, “in general”, and “usually” because it recognizes that there are many
variables about which few predictive statements can be made with certainty.
6. The modern is Multi-disciplinary

The modern theory of organization and management is interdisciplinary, drawing
concepts from many fields of study. Some of the fields, which have contributed
significantly to the study of modern management, include industrial sociology,
administrative theory of management, economics and operations management.
119
7. Modern is descriptive
Modern theory seeks to describe the characteristics of organizations and management.
The earlier schools of thought tended to be normative or prescriptive. They suggested
what should or must be or ought to be modern theorists concern themselves with
understanding organizational phenomena and leaves the choice of objectives and
methods to the individual decision maker.
8. The modern organization theory uses a multivariate approach

Modern theory tends to assume that an event is caused by numerous factors that are
themselves interrelated and interdependent. This contrasts with earlier theories, which
assumed static, simple single factor causations.
Modern theory also recognizes the possibility that causal factors may, in turn, be
affected by the things that they caused through feedback. This means that if events a,
b, and c caused event x to take place, event x can cause feedback tot eh sources of
events a, b, and c, that can cause them to be changed. The modern theorists have
developed matrix analysis, which is used to describe and analyze complex events.
9. Modern organizations are adaptive

Modern theory of organization views the organization as an adaptive system. They
believe that if the organization is to continue to exist in its environment, if has to
continually adapt to changing requirement of the environment. The organization and
the environment are seen to be interdependent as shown in the following models.
1) Outputs of the The Organization 2) outputs of the
environment organization
are inputs are inputs

of the to the
organization environment
The Environment
Fig 10.1 Interdependence of an organization and its environment

The above chart is used to show the interdependence of an organization and its
environment under which it operates. The organization depends on the environment
120
for its resources (supplies, utilities labour, credit etc) and in turn its outputs are sold to
the environment.
A viable organization and its environment tend to be in a dynamic equilibrium

rearranging their resources as necessary in face of change. So that modern theorists
view an organization in an ecological sense as an open system which adapts through
the process of negative feedback. The use of negative feedback as an adaptive
mechanism can be illustrated using a simple cybernetic system as shown below.
Actual output to the

environment
The processor
Desired organizational
Input from the Process – Multiply Desired output = 5A
environment A by 5 – (Actual output is 6A)
Negative control
Feedback=-1/6A mechanism
Fig. 10.2 – A simple cybernetic control system

The control system provides the necessary corrective mechanism to the processor to
achieve the desired output. In this simple cybernetic system it is desired that the
processor should convert the inputs (puts in this case) by a multiplication process to
an output of 5A. If the actual output is A due to the process unexpectedly multiplying
by 6, then the difference in output in output would be 6A-5A or a. This difference
would be measured by the control mechanism, which could compute and provide the
necessary corrective action.
In the foregoing example the organizational processor is multiplying by 6 to get an
output of 6a. So that the corrective factor would be minus one sixth or (- 1/6 a) if we
are to reduce output back to the required level of 5A Notice that if we start with the
initial input of A from the environment the new input would be:
1 5
1A – /6 = /6 A
The desired output would be adjusted by a factor of 6 as follows:
121
5
/6 Ax6 =5A
1
The feedback is (- /6A) because the control mechanism must change the algebraic
sign of the output difference between the actual output and the desired output.
10.11 The Modern Approach to the Goals of the Firm

An organization has three goals, which may be interdependent or independent. These
goals include growth, stability, and interaction. The last goal refers to organizations,
which exist primarily to provide a medium for association by its member with others.
A number of researchers and a field of thought and research called general systems
theory has been developed and dedicated to the task of discovering organized
universals have observed these similarities in organization goals. The dream of
general systems theory is to create a science of organization universals or a universal
science using common organizations elements found in all systems as a starting point.
Modern theory is on the periphery of the general systems theory. Both the general
systems theory and the modern organization theory study:
a. Individual parts of the system and the movement of individuals into and out of
the system.
b. The interaction of individuals with the environment surrounding the system.
c. Interactions among individuals in the system.
d. The general growth and disability problems afflicting the system.
Modern organization theory and general systems theory have a similar approach
because all of them look at an organization as an integrated whole. They differ,
however, in terms of their generality. The general systems theory is concerned with
all levels of a system whereas the modern organizational theory focuses primarily on
human organization. A question may be asked what can the science of administration
gain from the study of the general system levels other than human organization?
Before attempting to give an answer tot his question, we should first take not of what
these other non-human system levels are. Kenneth Boulding, a biologist by training
gave the following classification of both human and non-human organization levels.
a. The static level- a level of framework, the emergency of an idea, invention etc,
that could result in the anatomy of a system.
b. The simple dynamic system-the level of clockworks, predetermined necessary
122
motions.
c. The cybernetic system-the level of the thermostat, the system moves to
maintain a given equilibrium through a process of self-regulation.
d. The open system-the level of self-maintaining systems, moves towards and
includes living organisms.
e. The genetic-societal system – the level of cell society, characterized by a
division of labour among cells
f. Animal systems-the level of mobility evidence of goal- directed activities.
g. Human systems-the level of symbol interpretation and idea communication
within the system.
h. The societal system the level of human organization.
i. Transcendental level- the level of the ultimate and absolute truth an
understanding which exhibit systematic structure but are unknown in essence.
This approach to the study of systems by finding the universal elements common at
all levels of organization offers an intriguing possibility for administrative
organization theory. A good deal of light could be thrown on social systems if
structurally similar elements could be found in the simpler lower level systems. For
example, cybernetic systems have characteristics, which seem to be similar to
feedback, regulation and control phenomena in human organizations.
This means that certain aspects f the cybernetic models could be generalized for use
in human organization. These generalizations should be handled with care however.
Superficial similarities between lower level simpler forms and social systems are
common everywhere. For example inferences based on ants and their cooperative
behaviour does not yield particularly instructive lessons for understanding rationally
conceived human organizations. For these analogies to be useful and have any
validity, they exhibit inherent structural similarities or implicitly identical operational
principles.
10.12 Criticisms of the Modern Theory

The critics of modern theory have observed that it seems to be concerned with editing
what other earlier theories suggested. It claims that its operational hypothesis is based
on a macro point of view; that is the study of the organization as a whole. This
mobility of purpose should not obscure certain difficulties face by the modern
theorists, as the school is presently constituted.
123
Modern organization theory raises several questions, which should be explored. First
would it not be more accurate to speak of modern organization theories? Secondly
how modern is modern organization theory?
The answer to the first question is in the affirmative. A part from the notion of the
system, there are few, if any other unifying ideas. Except for several important
exceptions, modern organization theorists tend to pursue their pet point of view,
suggesting they are part of the system theory, but not showing how they arrive at this
conclusion.
The second question suggests an ambiguous answer. Modern organization theory is in
part considered to be a product of past theories systems analysis is not a new idea.
Further more modern organization theory relies for supporting data on microcosmic
research studies generally drawn from the journal of the past. The newness of modern
theory, perhaps, is its effort to synthesize recent research contributions of different
fields into a systems theory characterized by a reorientation to the conception of an
organization.

In this lecture we have seen that the modern systems approach considers an
organization as a whole. It considers an organization as a system of mutually
dependent parts. The parts of a cybernetic system are given as the inputs, the
processor, the feedback, and the environment.
10.14 Activities
Explain the ways in which instability in the environment could affect the functions of
a cybernetic system. How are short term variations corrected?

Read books on system analysis and make some notes on the functions of a system.

Explain the similarities between the contributions of the scientific management school
of thought and the systems school of thought.
10.17 Glossary
Although most systems are based on the computer based factory systems in which the
processor is the component which converts inputs into finished products, this need not
124
be the casein all organizations. In organizations which provide services, the output is
the service provided. The processor will be made up of all the people who provide the
service.
10.18 Answers to Self Test questions

Both the scientific management school of thought and the system school of thought
emphasize the use of scientific measurement of inputs, the use of the processor and
the production of standardized products.
10.19 References
Read books on System Analysis or System Management.
125

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COURTESY OF LAURA OKONG’O

DEPARTMENT OF BUSINESS ADMINSTRATION

BBA 300: ORGANIZATION THEORY

Organization theory has undergone along process of evolution including the

o Explain the nature of formal and informal organizations.

o Explain the levels of organization relations in organization, and

o Explain the classical theories of organization.

o Explain the neoclassical theories of organization.

o Explain the modern theory of organization.

LECTURE 6: INFORMAL ORGANIZATIONS .....................................................75

Types of Organizations and the Process of Organizing

 Explain the nature of organizations, relations in organizations and in nature.

 Explain the various forms of functional relations.

1.3 The Contributions of Organization Theorists

The complexity of Organizations

The micro or part of an organization can have objectives or characteristics that

Marketing Manufacturing Finance Engineering

Quality control Fabrication 120 Assembly 65 Shipping 18

Fig. 1.1 chart demonstrating the complexity of organizations

System level Description or Examples from the

maintenance with the processor of a

1.5 Relationships in organizations

One Way Relationships

Maslow’s Views on Transcendental Organization

1.6 Functional Relations

From complementary differences of persons organizations require different resources

In some cases both supplementary similarities and complementary differences of

1.7 Lecture Summary

1.9 Further Reading

1.12 Answers to self Test Questions

2.2 Lecture Objectives

1. Marx Weber (1864-1920)

2.4 The Characteristics of Bureaucracy According to Marx Weber.

III. The Management of Office

Weber on the Position of the Official

II. The personal position of the official is patterned as follows:

(a) The process of interaction and

The persistence of cooperation depends on its effectiveness and its efficiency.

a) Those, which relate to the system of cooperation as a whole and

1. Participants are able to communicate with each other.

An organization, whether simple or complex, is always an impersonal system of

2.6 Formal and Informal Control

If any of these alternatives to compliance is not present in a situation the person

2.8 Authority and Legitimate Power

2.9 Ideology in Organization

2.10 Lecture Summary

2.12 Further Reading

2.13 Self Test Questions

2.15 Answers to Self Test Questions

3.3 The Exchange Relationships

(a) As perceive by the individual member

Rewards to the individual by the organization

(b)As perceived by the organization

Individual contributions to the organization

Costs of keeping the individual in the organization

Benefits – Costs > 0

The Nature of biological needs

Needs and Goals

Unsatisfied lead to Goal lead to Goal directed

3.5 Approaches to Need Satisfaction