ORGANIZATION &

MANAGEMENT
Course Outline and Lectures
 CLASSICAL THEORIES OF MANAGEMENT

Core Ideas
 Focuses on the productivity, output and efficiency of workers.
 Emphasis is on economic rationality of people and organizations.
 Evolved in response to the shift from handicraft to industrial production.
 Application of science to the practice of management.
 Development of basic management functions.
 Articulation and application of specific principles of management.

AN OVERVIEW OF THE THREE STEMS OF THE CLASSICAL MANAGEMENT

SCIENTIFIC ADMINISTRATIVE BUREAUCRATIC

MANAGEMENT MANAGEMENT MANAGEMENT
Focus  Factory  Organization and  Rational-legal
operations manager structure
 Development of  Management function
one best way of and principles
work
performance
 Financial
incentives
Contribution  Emergence of a clear  Consistency and
(Strengths)  Productivity and organization structure predictability in
efficiency  Professionalization of organizational
management function
Limitations  Over-emphasis on  Rigidity and
 Neglect of
rational behavior of slowness
emotional and
managers
social needs
 Internal focus

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 SCIENTIFIC MANAGEMENT

 Main objective was to scientifically determine the best method of work in order to improve
productivity.
 The systematic study of the relationships between people and tasks for the purpose of redesigning
the work process for higher efficiency.
 Developed by Frederick W. Taylor, Frank and Lillian Gilbreth and Henry L. Gantt.

FREDERICK W. TAYLOR (1856 - 1917)

 Father of Scientific Management
 The development of the principles of scientific management was a result of the experience
of Taylor in three (3) companies – Midvale Steel, Bethlehem Steel Company and Simonds
Rolling Machine Company.

A. Midvale Steel Company

 He started as a laborer and ended up as chief engineer.
 He observed how workers practiced soldiering – the practice of workers to
intentionally restrict their daily production. (workers fear that they would lose their
jobs if they work faster)
 He used time study and broke each task in its component parts and designed the
quickest and best methods of operation for each part of the job.
 To avoid soldiering, he developed the differential rate system – provided for
increased pay to more productive and efficient workers.

B. Bethlehem Steel Company

 Defined his methods and used time and motion studies.
 Set a standard of performance as to the quantity of materials and products that a
worker could handle a day with a corresponding higher pay. (dramatic increase in
productivity and efficiency)

C. Simonds Rolling Machine

 Worked as a consultant.
 Produced improvements in productivity, quality, worker morale and wages.

PRINCIPLES OF SCIENTIFIC MANAGEMENT

1) Management should develop a scientific approach for each element of an individual’s

work to replace rule-of-thumb guidelines to find the “one best way” of doing each task.
2) Scientifically select, train, teach, and develop each worker. (put the right person to the right
job, place workers to the task best suited for him)
3) Cooperate with workers to ensure that the job matches plans and principles.
4) Ensure an equal division of work and responsibility between manager and workers.

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Weaknesses with Taylor’s Scientific Management
1) He assumed people are rational and motivated primarily by the desire for money, hence
disregarding the social needs.
2) Ignores individual differences – the most efficient way of working for one person may be
inefficient for others.
3) Ignores the fact that the economic interests of workers and management are rarely
identical.
4) Underrated the power of trade unions and government in determining working
conditions and worker’s wages.

Application of Scientific Management in the Modern Workplace

1) Assembly Line (Division of Labor)
2) System of Remuneration – payment system according to performance (quotas, commission)
3) Redesign or Re-engineering of organizational processes.
4) Benchmarking
5) Lean Manufacturing – producing at minimal cost

FRANK (1868 – 1924) AND LILLIAN GILBRETH (1878 – 1972)

 Used Time and Motion Study as their principal tool.
 Motion Study today is the study of physical actions required to complete a task in the
most efficient manner possible.
 First to describe human micromotions which they labeled therbligs.

HENRY L. GANTT (1861 – 1919)

 Protégé and associate of Frederick Taylor who focused on shop-floor production
scheduling.
 He designed the Gantt Chart – a graphic illustration that indicates time allocations for
sequential operations and traces progress, routing, scheduling and tasks in time intervals.
 He established gainsharing – a method of bonus compensation based on a formula that
shares profits or productivity gains among investors and employees.

ADAM SMITH
 Advocated for Job Specialization.
 He found that factory method had much higher productivity.

Other proponents:
 Robert Owen – Father of Personnel Management
 Charles Babbage

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 ADMINISTRATIVE MANAGEMENT

 Focuses on the manager and the use of general principles and functions for improving
organizational functions.
 Treats management as a process of getting work done through and with people.

HENRI FAYOL (1841 – 1925)

 Father of Modern Management
 First to identify the specific management functions (planning, organizing, leading and
controlling).
 Written the book “Administration Industrielle et Generale” or General and Industrial
Management.
 Developed fourteen (14) Principles of Management:
1. Division of work – specialization of labor is necessary for organizational success.
2. Authority and Responsibility – the right to give orders must accompany
responsibility.
3. Discipline – obedience and respect help an organization run smoothly.
4. Unity of Command – each employee should receive orders from only one
superior.
5. Unity of Direction – the efforts of everyone in the organization should be
coordinated and focused in the same direction.
6. Subordination of Individual Interest to Genera Interest – the interest of one
employee or group of employees should not prevail over that of the company or
broader organizations.
7. Remuneration – employees should be paid fairly according to their contributions
to maintain loyalty and support.
8. Centralization – like division of work, centralization belongs to the natural order
of things. Appropriate degree of centralization varies from ne organization to
another.
9. Scalar Chain – the chain of superiors ranging from the ultimate authority to the
lowest ranks. Subordinates should observe the formal chain of command.
10. Order – a place for everything and everything in its place.
11. Equity – fairness that results from a combination of kindliness and justice will lead
to devoted and loyal service.
12. Stability of Tenure of Personnel – people need time to learn their jobs.
13. Initiative – involves thinking out a plan and ensuring its success. This gives zeal
and energy to an organization.
14. Esprit de Corps – union is strength, and it comes from harmony among personnel.

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 BUREAUCRATIC MANGEMENT

 A traditional management system that relies on rues, set hierarchy, a clear division of
labor, and formal procedures and that focuses on the overall organizational structure.
 Bureaucratic Management treats an organization to be a rational legal entity.

MAX WEBER (1864 – 1920)

 Father of Sociology and Father of Organization Theory
 Defined Bureaucracy as the ideal pure form of organization; a model of organization based on
defined positions, formal authority, and a regulated environment that includes well-documented
rules, policies and procedures.

SEVEN (7) CHARACTERISTICS OF WEBER’S BUREAUCRACY

1. Rules – are formal guidelines for the behavior of employees while they are on the job;
provides the discipline for organization to achieve its goals.
2. Impersonality – reliance on rules leads to impersonality; Managers and employees are
selected on the basis of their qualifications.
3. Division of Labor – a process of dividing duties and functions into simpler, more
specialized tasks.
4. Hierarchical Structure – ranks job according to the amount of power and authority (right
to decide) given to each manager or employee.
5. Authority Structure – the organizational structure that determines the right to make
decisions of varying importance at different levels within the organization

Weber’s Three (3) Types of Authority

a) Traditional – based on traditions or customs (ex. The divine rights of kings)
b) Charismatic – authority is based on followers’ personal belief and trust in the
leader because of special qualities or abilities they perceive in the leader. (ex. Social,
political and religious movements)
c) Rational – Legal – authority is based on impersonal laws and rules that apply to
all; a superior is obeyed because of the position he/she occupies within the
organization’s hierarchy.

6. Lifelong Career Commitment – it means that job security is guaranteed as long as the
manager or employee is technically qualified, competent, and performs satisfactorily.
7. Rationality – the use of the most efficient possible means to achieve the organization’s
objectives.

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 NEO-CLASSICAL THEORIES OF MANAGEMENT

Core Ideas
 Focus shifted to the human side of organizations.
 People have social and emotional needs, are sensitive towards interpersonal relations and
work environment.
 The need for workers to find intrinsic value in their jobs.
 The positive impact of social relationships on worker productivity.

THE HAWTHRONE STUDIES & HUMAN RELATIONS SCHOOL

GEORGE ELTON MAYO (1880 – 1949)

 Pioneered experimental research on human behavior in work settings together with F. J.
Roethlisberger and W. J. Dickson.
 Conducted studies at the Western Electric Hawthorne Plant – Relay Assembly Test
Room:
 One group was subjected to changes in lighting and different methods of altering
the intensity of illumination; the other group experienced no change in work
conditions.
 However, productivity increased among test groups, especially in the control
group even after all conditions were set back to normal.
 They found out that Test Room employees found working there more enjoyable
during the experiments because they felt they were involved in something
important; they had much better relationship with their supervisors and could
work without fear.
 Researchers concluded that human factors influenced productivity.
 They also conducted studies at the Bank Wiring Room:
 A piece-rate work system was observed in the Bank Wiring Observation Room.
 Researchers found that faster workers were pressured by their peers to slow down
instead of working as hard as they could. (social pressure dominated behavior)
 Researchers drew several conclusions from the Hawthorne Studies:
 First, recognition and attention to individual workers motivated them to work
harder.
 Second, group dynamics influenced work substantially.
 Third, intervention by researchers created a perception by workers, real or not, that they
were doing something of value.
 The act of intervention and its impact is now called The Hawthorne Effect.

Other Proponents:
 Kurt Lewin (1890 – 1947) – examined the effects of different types of leaderships and
wrote extensively on group behavior; 3-step process of change:
 Defreezing
 Introduction of Change
 Refreezing
 Chester I. Barnard (1886 – 1961) – advocated conciliatory management relations that
enhanced cooperation between employees as supervisors.

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  Mary Parker Follet (1868 – 1933) – considered one of the founders the Human Relations
Movements; felt that managers should be trained to work with employees toward the
attainment of common objectives.

THEORY X AND THEORY Y

DOUGLAS MCGREGOR (1906 – 1964)

 Brought fresh perspective to management.
 Challenged leaders to think of subordinates as responsible, capable, and creative.
 Felt that throughout history, leaders have treated subordinates as irresponsible and lazy
(Theory X).
 Identified a second perspective that reverses these assumptions on human nature –
individuals who want the challenge of work, prefer self-control, and are capable of
responsible, independent judgment (Theory Y).

McGregor’s Assumptions on Theory X and Theory Y

Theory X Theory Y
 Best represented the views of scientific  Represented the views of the human
management. relations approach.
 Most human beings dislike work and  Work is natural, and most people prefer
avoid it whenever possible; the physical and mental effort of
 They must be forced, threatened, and working;
directly controlled in order to achieve  Commitment to objectives is also a
organizational goals; natural state for most individuals,
 Most people are lazy, prefer to be particularly when rewards are
directed, shun responsibility, have little associated with achievement;
ambition, and want security; and  Human beings can exercise self-control,
 The average human being avoids prefer self-direction, and have the
leading and wants to be led. capacity for innovation and creativity;
and
 Under most reasonable circumstances,
the majority of people will accept
responsibility, many individuals seek
leadership rather than the security of
being led.

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 HIERARCHY OF NEEDS THEORY

ABRAHAM MASLOW (1908 – 1970)

 Based his theory on the idea that individuals work to satisfy human needs.
 He observed that a fulfilled need did little to motivate an employee.
 Deficit Principle – suggests that an unsatisfied need becomes a focal motivator, while a
satisfied need no longer influences an individual’s behavior.
 He formulated a Progression Principle – a concept that successively higher-order needs
in his hierarchy of needs are not active motivators until lower-order needs are fulfilled.

Maslow’s Hierarchy of Needs

Need for Self-

Actualization

Esteem Needs

Affiliation or Acceptance
Needs

Security or Safety Needs

Physiological Needs

 Physiological Needs – these are the basic needs for sustaining human life itself, such as food,
water, warmth, shelter and sleep. Maslow took the position that until these needs are satisfied
to the degree necessary to maintain life, other needs will not motivate people.
 Security or Safety Needs – these are the needs to be free of physical danger and the fear of
loss of a job, property, food, or shelter.
 Affiliation of Acceptance Needs – Since people are social beings, they need to belong, to be
accepted by others.
 Esteem Needs – once they satisfy their need to belong, they tend to want to be held in esteem
both by themselves and by others. This kind of need produces such satisfaction as power,
prestige, status, and self-confidence.
 Need for Self-Actualization – Maslow regards this as the highest need in his hierarchy. It is
the desire to become what one is capable of becoming to maximize one’s potential and to
accomplish something.

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 TWO-FACTOR THEORY (Motivation-Hygiene Theory)

FREDERICK HERZBERG (1923 – 2000)

 He performed studies to determine which factors in an employee’s work environment
caused satisfaction or dissatisfaction.
 He called the satisfiers “motivators” and the dissatisfiers “hygiene” factors.
 Hygiene Factors – considered maintenance factors that are necessary to avoid
dissatisfaction but that by themselves do not provide satisfaction (i.e. company policy and
administration, supervision, working conditions, interpersonal relations, salary, status, job
security and personal life).
 Motivators – the job content factors; their existence will yield feelings of satisfaction or no
satisfaction, not dissatisfaction (i.e. achievement, recognition, challenging work, advancement,
and growth in the job).

Two-Factor Theory “The Dual Structure Theory”

Motivator Factors Hygiene Factors

 Achievement  Pay and Benefits
 Recognition  Company Policy and Administration
 Work itself  Relationship with Co-Workers
 Responsibility  Supervision
 Promotion  Status
 Growth  Job Security
 Working Conditions
 Personal Life

Integrationist – a theorist who integrates concepts of several schools of management thought to

suggest improved management practices

Central Theme of Integration – understanding human behavior is the key to effective

management, but that management practices must still be based on scientifically sound concepts.

THEORY Z

 Refers to Japanese management practices of consensus decision-making, quality circles,

and employee participation to enhanced productivity.
 Introduced by William Ouchi in 1981 based on comparison of management in Japanese
organizations – called J-type of firms – with management in American Firms – called A-
type enterprises.

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 Contrasts between American and Japanese Organizations

American – Type A Japanese - Type J

Mobile Employees Lifetime Employment
Personal Decision-Making Collective Decision-Making
Individual Responsibility Group Responsibilities
Rapid Advancement Slow and Systematic Advancement
Specialization in Careers General Career Perspective
Explicit Control Mechanisms Implicit Control System
Focused Concern for Employees Holistic Concern for Employees

Comparison between Classical and Neo-Classical Management Approaches

Classical (Traditional) Neo-Classical

 Structure of the organization is
 Organization is a social system
impersonal and mechanical
 Its main focus is on small groups and an
 Its main focus is on work and economic
emotional and human equality of
requirement of workers
employees
 It emphasize on personal security and
 It emphasize on order and rationality social requirement of workers while
obtaining objective of the organization
 Organizational behavior is product of  Behavior is a product of feelings,
rules and regulations sentiments and attitudes
 Democratic practices, involvement of
 Authoritarian practices, elaborate rules employees on decision-making;
and regulations to achieve results identifies the importance of human
dignity and values
 It results work alienation and  It results in happy and satisfied
dissatisfaction employees trying to increase production

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