Historical Development of

Organization Theory: Early Periods

WEEK 3

1-1
• Industrial Revolution: Most systematic study of
organization theory has taken place since 1900,
not surprisingly the industrial revolution started.
– Fast population growth
– Agricultural developments and immigration
– From luxury to middle class consumption
– Increasing wealth of middle class
• With industrial revolution, factory system is
•
emerged and developed


2
 Contrast open-close systems
Organizations are systems
• Open systems-interaction with
environment
• close systems-are almost self-sufficient
entities
Before 1960s, the organization theory tended to
be dominated by closed-system perspective.

3
 Early Management
•Management has been
practiced for thousands
of years.
•Organized projects
were directed by people
responsible for planning,
organizing, leading, and
controlling.

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 Classical Approaches: Scientific
Management

Frederick W. Taylor
described scientific
management as a
method of
scientifically finding
the “one best way
to do a job.”

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Classical Approach (forces of darkness)

1. Focused on the items except human factor.

2. Rationality assumption between machine-
human being relation.
3. Dominance of closed system approach.
4. Prescriptions
 Scientific Management School
F.W.Taylor

• Focused on how to manage the work by

using scientific methodology in the
book named “principles of scientific
management” which was published in
1911.
• How to increase work performance??

1-7
TAYLORISM – An Exercise
• Assume that you are an
entrepreneur who is
trying to enter office
furnitures production
sector.
• You will organize your
production with a certain
amount of capital.
• You decide to produce
chairs.

1-8
 TAYLORISM – An Exercise

You can hire a You can hire an

craftsman for 1000 $ ordinary worker for 100
per week. $ per week.
Craftsman can make all An ordinary worker
parts of the chair by does not know how to
himself. 10 chairs per day. produce a chair.
1-9
 ANSWER: Job Simplification

• It is possible to teach an ordinary worker not the whole

but a piece of the job within a small amount of time.

Screwing Screwing Polishing Controls

Cutting Cutting the legs Polishing
the other the legs the flat the
legs the flat and parts part produced
part flat part chair

1-10
 Principles of F.W. Taylor
• Jop simplification – To divide the job into the pieces.
• Study each part of the job scientifically.
• Finding the most appropriate way to do job by time
and motion studies.
• Standardize the pieces of the work.
• Chose the workers according to the tasks
• Educate the worker.
• Production based payment.

1-11
 Classical Approaches: General
Administrative Theory
– Focused on what
constituted good
management.
– Henri Fayol identified
five management
functions and 14
management principles.

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Fayol’s Fourteen Principles of Management
1. Division of work 8. Centralization
2. Authority 9. Scalar chain
3. Discipline 10. Order
4. Unity of command 11. Equity
5. Unity of direction 12. Stability of tenure
6. Subordination of personnel
individual interests to 13. Initiative
the general interest 14. Esprit de corps
7. Remuneration

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1.Division of Work. This principle is the same as Adam Smith’s
“division of labor.” Specialization increases output by making
employees more efficient.

2. Authority. Managers must be able to give orders.

3. Discipline. Employees must obey and respect the rules that

govern the organization.

4. Unity of Command. Every employee should receive orders

from only one superior.

5. Unity of Direction. Each group of organizational activities that

have the same objective should be directed by one manager
using one plan.

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6. Subordination of Individual Interests to the General Interest.
Organizational interests should come first

7. Remuneration. Workers must be paid a fair wage for their

services.

8. Centralization. Centralization refers to the degree to which

subordinates are involved in decision making.

Whether decision making is centralized (to management) or

decentralized (to subordinates) is a question of proper
proportion.

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9. Scalar Chain. The line of authority from top management to
the lowest ranks. Also called chain of command.

10. Order. People and materials should be in the right place at

the right time.

11. Equity. Managers should be kind and fair to their

subordinates.

12. Stability of Tenure of Personnel. High employee turnover is

inefficient.

13. Initiative. Employees who are allowed to originate and carry

out plans will exert high levels of effort.

14. Esprit de Corps. Promoting team spirit will build harmony

and unity within the organization.
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 Max Weber (Theory of Bureaucracy)
• Laws which govern the bahaviors of the individuals in the
organization.
• Rational form of the authority.
• Existence of an office hierarchy in the organization.
• Written communication.

• Recruitment according to specialization.

• Weber, shown here, is known for his description and

analysis of bureaucracy, which he believed was an ideal
form of organization structure, especially for large
organizations.

1-17
 Neo-Classical Approach
BEHAVIORAL SCHOOL (Hawthorne Studies)

• Social aspect of organizational

life was not a subject of
classical theories of
management.
• Elton Mayo from Harvard
University conducted a
research activity in
Hawthorne Electric Plant in
1924 to research effect of
physical conditions on
productivity.

1-18
 HAWTHORNE STUDIES

• Research activities had been conducted between

1924-1930.
• Researchers tested the effects of;
 Lightning
 Heating
 Job breaks
 Physical arrangements;
 on productivity, But, they could not found any
relation between.

1-19
 HAWTHORNE STUDIES
• It was determined that, social factors have an
important effect on performance.
• Performance levels increased after the interviews
with the managers.
• Hawthorne Effect: People under observation
change their behaviors according to the situation.
 Hawthorne studies were a milestone for
behavioral approaches in management.

1-20
 The Hawthorne Studies
– Provided new insights
into individual and group
behavior at work.
– Concluded that group
pressures can
significantly impact
individual productivity.
Behavioral Approaches 1930s - Today

Human Relations Organizational Behavior

Movement (OB)

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 The Quantitative Approach
– Used quantitative techniques to improve
decision making.
– Evolved from mathematical and statistical
solutions developed for military problems
during World War II.
– W. Edwards Deming and Joseph M. Duran’s
ideas became the basis for total quality
management (TQM).

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Contemporary Approaches: Systems
Approach

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