CLASSICS OF ORGANIZATION THEORY
November 8, 2010
#9 – The Economy of Incentives – Chester I. Barnard (Pg. 93-102)
What is an incentive? Which incentives are most useful and when? Those are some of the questions that Barnard work addresses. In his work, he divided incentives into personal inducements or incentives that could be given to an individual and general incentives or incentives which required a greater more general change. While money is influential and is one of the changes that can be used as an incentive, many individuals do not work for material gain. Prestige, power, pride, desirable physical conditions can motivate an individual to work or to cooperate. An individual can cooperative by being coerced, rationalizing the opportunity or having the motives inculcated (Barnard, 2005).
Reading Notes
– “Regardless of his history or his obligations he must be induced to cooperate, or there can be no cooperation.” – pg 93
– “Given a man of a certain state of mind, of certain attitudes, or governed by certain motives, he can be induced to contribute to an organization by a given combination of these objective incentives, positive or negative.” – pg 94
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I – THE METHODS OF INCENTIVES
– Personal Inducements -> can be given to a person
– General Incentives -> cannot be given to a person (pg 94)
– Personal Inducements
> material inducements: (Money — society increasingly materialistic “ought to want material things” – pg 95) – Many do not work harder for material gains
> personal nonmaterial inducements: (prestige, personal power – sometimes more important than money)
> desirable physical conditions: (can induce cooperation)
> ideal benefactions: (“most powerful and most neglected” – “pride of workmanship, altruistic service.” – pg 96)
– General Incentives
> association attractiveness: (“social compatibility”, “Men often will not work at all, and will rarely work well, under other incentives if the social situation from their point of view is unsatisfactory.” – pg 96)
> adaptation of conditions to habitual methods and attitudes: (“What is not so obvious is that men will frequently not attempt to cooperate if they recognize that such methods or conditions are to be accepted.” – pg 97)
> Opportunity of enlarged participation: (“thus, other things being equal, many men prefer associations with large organizations, organizations which they regard as useful, or organizations they regard as effective, as against those they consider small, useless, ineffective.” – pg 97)
> the condition of communion: (“it is the feeling of personal comfort in social relations that is sometimes called solidarity, social integration, the gregarious instinct, or social security” – pg 97)
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II – THE METHOD OF PERSUATION
A – the creation of coercive conditions – (“I supposed it is generally accepted that no superior permanent or very complex system of cooperation can be supported to a great extent merely by coercion – pg 97”)
B – the rationalization of opportunity – (“in attempting to convince individuals or groups that they “ought,” “it is to their interest,” to perform services or conform to requirements of specific organizations”)
>>> a – industrial organizations – (“if the method of persuasion is rationalization, either in the form of general propaganda or that of specific argument to individual again the overhead costs is usually not negligible” – pg 100)
>>> b – political organizations – (“vital idealism upon which political organizations is based” – pg 100)
>>> c – religious organizations – (“communion of kindred spirits” – pg 100)
C – the inculcation of motives
# 11 – The Proverbs of Administration – Herbert A. Simon – (Pg. 112-124)
In his work, Herbert Simon was interested in the contradictory premises of administration theory. He stated three premises that he compared with contradictory proverbs. As there are proverbs that go in direct contradiction with others by they can be used by orators at a particular instance to defend their view points, he was concerned with contradictions within the common accepted views of administration theory. He argued that specialization, unity of command, and span of control were all useful but contradicted each other and by understanding the contradictions their implementation could be more successful. He then analyzed the contradictions between purpose, process, clientele and place and argued for purpose to be seen as the macro in comparison to a process, and that place and clientele further narrowed the organizational objectives. Apart from these contradictions, he addressed the limitations of the individual and the relationship between the administration man and the economic man. For a greater rate of success an organization should evaluate its proverbs according to their efficiency (Simon, 2005).
Reading Notes
– There are proverbs to justify most actions – go either way
– Criticism of that duality of administrative theory
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SOME ACCEPTED ADMINISTRATIVE PRINCIPLES
– Specialization
> “merely means that different persons are doing different things.” – pg 113
– Unity of Command
> “the real fault that must be found with this principle is that it is incompatible with the principle of specialization.” – pg 114
> “the principle of unity of command is perhaps more defensible if narrowed down to the following: In case two authoritative commands conflict, there should be a single determinate person who the subordinate is expected to obey; and the sanctions of authority should be applied against the subordinate only to enforce his obedience to that one person.” – pg 114)
– Span of Control
> “in direct contradiction with the principle of unity of command and the principle of specialization.” – pg 115
> “the dilemma is this: in a large organization with complex interrelations between members, a restricted span of control inevitably produces excessive red tape, for each contact between organizations members must be carried upward until a common superior is found.” – pg 116
– Organization by Purpose, Process, Clientele, Place.
> “some of these advantages can be regained by organizing on the basis of process within the major departments.” – pg 116
> Purpose – “the objective or end for which an activity is carried on” – pg 117
> “what is considered a single function depends entirely on language and techniques.” – pg 117
> “There is, then, no essential difference between a “purpose” and a “process,” but only a distinction of degree.” ((purpose – macro, process – micro)) – pg 118
> “clientele and place” – part of purpose
– The Impasse of Administrative Theory
> “on the one hand, centralization of decision-making functions is desirable; on the other hand, there are definite advantages in decentralization.” – pg 119
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AN APPROACH TO ADMINISTRATIVE THEORY
– The Description of Administrative Situations
> “administrative description suffers currently from superficiality, oversimplification, lack of realism.” – pg 120
– The Diagnosis of Administrative Situations
> “the “administrative man” takes his place alongside the classical “economic man” ” – pg 212
> triangle of limits of man – physical, knowledge, values.
– Assigning Weights to the Criteria
> “a first step, then, in the overhauling of the proverbs of administration is to develop a vocabulary, along the lines just suggested, for the description of administrative organizations. A second step, which has also been outlined, is to study the limits of rationality in order to develop a complete and comprehensive enumeration of the criteria that must be weighed in evaluating an administrative organization.” – pg 123
> importance of knowing the contradictions between the “proverbs”
> use the principle of efficiency to rank or organize proverbs.
> “how “exact” the principles of administration can be made is one that only experience can answer.” – pg 124
#13 – A Behavioral Theory of Organizational Objectives – Richard Cyert and James March (pg 135-144)
How is an organization’s behavior different from human behavior? How are human coalitions formed and how are they maintained? Organizations regularly have individuals who want to go in opposite directions, what can be done about this? Cyert and March visualize the organization as composed of coalitions and the relationships between external and internal coalitions. Coalitions also have sub-coalitions and they all operate through side payments and side payment bargaining. While some side payments are financial, the greatest number of them are policy commitments. To deal with conflicting objectives, the organization must prioritize and construct a sequence of objectives. Through the management of both inactive and active demands, a more predictive theory can be developed. The use of a modified version of game theory can be applied to choose among potentially viable coalitions (Cyert & March, 2005)
Reading Notes:
– “central nervous system of most organizations appears to be somewhat different from that of the individual system.” – pg 135
– “develop an explicitly empirical theory rather than a normative one.” – pg 135
– “with the advent of the computer and use of simulation, we have a methodology that will permit us to expand considerably the emphasis on actual process without losing the predictive precision essential to testing (Cyert and March, 1959)” – pg 136
((In regards to Moore’s Law, technology has developed at a rapid exponential rate that these theories today could be increasingly more accurate. As such, were can we learn how the best organizations function today. Where can we learn a practical model of this same class. A part two to this class??))
THE ORGANIZATION AS A COALITION
– there are coalitions and sub coalitions
FORMATION OF COALITION OBJECTIVES THROUGH BARGAINING
– Problem of handing side payments – “money, personal treatment, authority, organization policy.. etc” – pg 137
– “all conflict is settled by the side-payment bargaining” – pg 137
– “organizational boundaries between “external” and “internal” members of the coalition” – pg 138
– Side payments – “a significant number of these payments are in the form of policy commitments” – pg 138
> “in fact, and organization that does not use such devices (policy commitments) can exist in only a rather special environment.” – pg 138
– “If I demand of the organization that John Jones be shot and you demand that he be sainted, it will be difficult for us both to stay in the organization.” – pg 139 ((unless making him a martyr makes him a saint!!))
STABILIZATION AND ELABORATION OF OBJECTIVES
– “In most organizations most of the time, however, the elaboration of objectives occurs within much tighter constraints… Whether precedents are formalized in the shape of an official standard-operating procedure or are less formally stored, they remove from conscious consideration many agreements, decisions, and commitments that might well be subject to renegotiation in an organization without a memory (Cyert and March, 1960). – pg 140
– Also, as a consequence –> “the “accidents of organizational genealogy tend to be perpetuated.” – pg 140
CHANGES IN OBJECTIVES THROUGH EXPERIENCE
– Organizational Slack – use of excess resources (fluctuations of profit – need for slack)
– “The notion of attention-focus suggests one reason why organizations are successful in surviving with a large set of unrationalized goals. They rarely see the conflicting objectives simultaneously” – pg 142
– John Jones can be both shot and sainted – just not simultaneously
– need for “sequential attention to goals” <– also has problems (pg 142)
CONSTRUCTING A PREDICTIVE THEORY
– need for coalition members – set of active and inactive demands for each – each has a set of problems (active / inactive)
– Five basic mechanisms
1 – changing the quantitative value of demands over time
2 – transfer of demands between – active set, inactive set, not-considered set
3 – Similar attention-focus mechanism for problems
4 – demand-evaluation procedures that is consistent with the limited capacities of human beings
5 – mechanism for choosing among the potentially viable coalitions – (similar to game theory) – pg 143
– “Require greater empirical clarification of the phenomena involved.” – pg 143
#14 – The Giving of Orders, Mary Parker Follet – (Pg. 152 – 157)
In the Giving of Orders, Mary Follet emphasized the need talking into account the context of particular situations when jointly deciding on what actions to take or what orders to follow. Rather than simply promoting a top down managerial approach were the subordinate listens or pretends to listen to the orders, the management must explain the subordinates why a change is needed. While, managers may be promoting policies which will benefit the organization and its workers, orders will meet resistance when they attempt to modify long held attitudes and behaviors. For orders to be more successful it is important to depersonalize them, at times include the subordinates in the decision making, and modify the orders as the situation changes. If a problem originates, the management would benefit from including its subordinates in fixing the problem. If a subordinate mistake led to the development of the problem, then the management must communicate with him or her in a way in which the worker will learn from the mistake and understand clearly why the problem originated. By promoting subordinates to have a bested interest in the success of the organization, they will be more open to suggestions and welcoming of managerial orders (Follet, 2005).
Detailed Notes
- Issuing orders – many difficulties (152)
- “To demand an unquestioning obedience to orders not approved, not perhaps even understood, is bad business policy” (152)
- “For all our past life, our early training, our later experience, all our emotions, beliefs, prejudices, every desire that we have, have formed certain habits of mind that the psychologists call habit-patterns, action-patterns, motor-sets. Therefore it will do little good merely to get intellectual agreement; unless you change the habit-patterns of people, you have not really changed your people…” (152)
- To change habit-patterns you need to do 3 things:
- Build up certain attitudes
- Provide for the release of those attitudes
- Augment the released response as it is being carried out
- Orders cannot take the place of training (152)
- Ppl do not go contrary to life-long habits just because you order them to.
- Place where orders given, circumstances in which they are given affects the response to a great extent (153)
- “the strength of favourable response to an order is in inverse ratio to the distance the order travels.” (153)
- Giving/receiving orders ought to be matter of integration through circular behavior
- Business admin – how to deal with dissociated paths in individuals/groups?
- Order should seek to unite, to integrate dissociated paths (153)
- Try and prevent internal conflict of individuals/groups
- Manner in which orders are given = very important in avoiding/causing industrial trouble.
- Solution: “My solution is to depersonalize the giving of orders, to unite all concerned in a study of the situation, to discover the law of the situation and obey that” (154)
- “One person should not give orders to another person, but both should agree to take their orders from the situation.” (154)
- Need to exercise authority, but “authority of the situation” (154)
- Depersonalizing or re-personalizing?? (154)
- “We, persons, have relations with each other, but we should find them in and through the whole situation. We cannot have any sound relations with each other as long as we take them out of that setting which gives them meaning and value.” (155)
- Importance of joint study of the problem (155)
- “Such joint study can be made best by the employee and his immediate superior or employee and special expert on that question.” (155)
- Need to try and create the attitude required for cooperative study and decision
- Changing the language of business – need new word for ‘order’ (155)
- People do not like to be ordered even to take a holiday (155)
- Ppl wish to govern their own lives
- Authority and Consent:
- Both ppl under a situation making decisions with one another (156)
- “How can you expect people merely to obey orders and at the same time to take that degree of responsibility which they should take?” (156)
- Blindly following orders leads workers to rid themselves of responsibility
- An order is a symbol (156)
- “I may say to an employee ‘Do so and so,’ but I should say it only because we have both agreed, openly or tacitly, that that which I am ordering done is the best thing to be done.”
- “our obligation is to a unifying, to a process” (156)
- The order must be integral to the situation and recognized as such (156)
- Evolving situations:
- “if the situation is never stationary then the order should never be stationary” (156)
- How do orders keep up with constantly changing situations? By coming from and being based on the situation.
- Need to recognize that “the situation does not change without changing us.” (157)
- Supervision is necessary. Supervision is resented – How do we reconcile this? (157)
- “Don’t blame for the sake of blaming, make what you have to say accomplish something; say it in that form, at that time, under those circumstances, which will make it a real education to your subordinate.” (157)
- In the case of a mistaken order being given then the one who made it should be the one to rectify it: “It is better for all of us not only to acknowledge our mistakes, but to do something about them” (157)
#16 – A Theory of Human Motivation – Abraham H. Maslow – Pg. 167-178
Abraham Maslow theory of human motivation attempted to rank human in an order of relative importance. While he mentions that this order doesn’t mean that the lower variable must be completely satisfied before the individual is worried about his subsequent need, that there is a hierarchical order to human needs and motivations and that most of have deficiencies, many of us are sick, and we are meeting certain needs to only a certain percentage. Some needs such as the last one in the pyramid, self-actualization, is relative to each person and could mean it a variety of things. To him, this particular category would benefit from greater study and research. His rank from lowest to highest is: physiological needs (foods), safety needs, love needs, esteem needs, the need for self actualization. While Maslow’s work has been extensively research and debated it continues to be seen as a way in which to remember that the needs of individuals are diverse and in our desire to survive, in certain scenarios we may act in a completely different manner (such as in starvation) than we would if our physiological needs were being met (Maslow, 2005).
Reading Notes
INTRODUCTION
– “typically an act has more than one motivation” – pg 167
– “the appearance of one need usually rests on the prior satisfaction of another, more pre-potent need” – pg 167
– “motivation theory is not synonymous with behavior theory. The motivations are only one class of determinants of behavior.” – pg 167
THE BASIC NEEDS
– The Physiological Needs: “most prepotent of all needs.” – pg 168
> “for the man who is extremely and dangerously hungry, no other interests exist but food.” – pg 168
((don’t eat for two days and see how you mood changes))
> “at once other (and “higher”) needs emerge” – pg 169
– The Safety Needs: “one reason for the clearer appearance of the threat or danger reaction in infants, is that they do not inhibit this reaction at all, whereas adults in our society have been taught to inhibit it at all costs. Thus even when adults do feel their safety threatened we may not be able to see this on the surface.” – pg 169
> (the child) “he seems to want a predictable, orderly world. For instance, injustice, unfairness, or inconsistency in the parts seems to make a child feel anxious and unsafe.” – pg 170
> “young children seem to thrive better under a system which has at least a skeletal outline of rigidity, in which there is a schedule of a kind, some sort of routine, something that can be counted upon, not only for the present but also far into the future.” – pg 170
> “compulsive obsessives try frantically to order and stabilize the world so that no unmanageable, unexpected or unfamiliar dangers will ever appear.” – pg 171
– The Love Needs: “he will hunger for affectionate relations with people in general, namely, for a place in his group, and he will strive with great intensity to achieve this goal.” – pg 171
> “one thing that must be stressed at this point is that love is not synonymous with Sex. Sex may be studied as a purely physiological need.” – pg 171
– The Esteem Needs:
> “for desire of strength, for achievement…” – pg 171
> “for desire for reputation or prestige” – pg 171
– The Need for Self-Actualization: “A musician must make music, an artist must paint, a poet must write, if he is to be ultimately happy.” – pg 171
> “remains a challenging problem for research” – pg 172
– The Preconditions for the Basic Need Satisfactions
> Freedoms: speak, think, express one’s self, seek answers, defend one’s self, justice, fairness, honesty, orderliness…
FURTHER CHARACTERISTICS OF THE BASIC NEEDS
– The Degree of Fixity of the Hierarchy of Basic Needs
> Hierarchy.. not nearly as rigid as we may have implied.” – pg 172
> some may hold self esteem as more important than love, others may need to be creative despite not meeting basic needs.. etc..
> (Frustration Tolerance) “strong people… can swim against the stream of public opinion and who can stand up for the truth at great personal cost.” – pg 173
– Degrees of Relative Satisfaction
> “this statement might give the false impression that a need must be satisfied 100 percent before the next need emerges. In actual fact, most members of our society who are normal, are partially satisfied in all their basic needs and partially unsatisfied in all their basic needs at the same time.” – pg 174
– Unconscious Character of Needs
> “on the average person, they are more often unconscious rather than conscious…” – pg 174
– Cultural Specificity and Generality of Needs
> satisfaction relative to context (cultures)
– Multiple Motivations of Behavior
> Eating, sex, and other things may satisfy more than one need
> “I may point out that it would be possible (theoretically if not practically) to analyze a single act of an individual and see in it the expression of his physiological needs, his safety needs, his love needs, his esteem needs and self-actualization.” – pg 174
– Multiple Determinants of Behavior
> a stupid man behaves stupidly, not because he wants to, or tries to, or is motivated to, but simply because he is what he is.
– Goals as Centering Principle in Motivation Theory
> focused on the goals of human behavior
– Animal and Human Centering
> no reason why to study humans by studying animals – we are not the same
– Motivation and Theory of Psychopathogenesis
> “a desire for an ice cream cone might actually be an indirect expression of a desire for love.” – pg 175
– The Role of Gratified Needs
> “it is such considerations as these that suggest the bold postulation that a man who is thwarted in any of his basic needs may fairly be envisaged simply as a sick man.” – pg 176
SUMMARY
– “thus man is a perpetually wanting animal. Ordinarily the satisfaction of these wants is not altogether mutually exclusive, but only tends to be.” – pg 176
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Works Cited
Barnard, C. I. (2005). The Economy of Incentives. In J. Sharfritz, S. Ott, & Y. Suk Jang, Classics of Organization Theory (pp. 93-102). Belmont: Thomson Wadsworth.
Simon, H. A. (2005). The Proverbs of Administration. In J. Sharfritz, S. Ott, & Y. Suk Jang, Classics of Organization Theory (pp. 112-124). Belmont: Thomson Wadsworth.
Cyert, R. M., & March, J. G. (2005). A Behavioral Theory of Organizational Objectives. In J. Sharfritz, S. Ott, & Y. Suk Jang, Classics of Organization Theory (pp. 135-144). Belmont: Thomson Wadsworth.
Follet, M. P. (2005). The Giving of Orders. In J. Sharfritz, S. Ott, & Y. Suk Jang, Classics of Organization Theory (pp. 152-157). Belmont: Thomson Wadsworth.
Maslow, A. H. (2005). A Theory of Human Motivation. In J. Sharfritz, S. Ott, & Y. Suk Jang, Classics of Organization Theory (pp. 167-178). Belmont: Thomson Wadsworth.
