1
Theme 1: Organizational Structure
General.................................................................................................................................................. 2
Jex and Britt (Chapter 13) - Organizational Theory and Design..............................2
Jex and Britt (Chapter 14) - Organizational Culture and Climate......................... 10
Organizational Structure................................................................................................................16
Mintzberg - Structure in 5's: A Synthesis of the Research on Organization
Design Author...................................................................................................................... 16
Organizational Strategy................................................................................................................. 28
Barney - Firm Resources and Sustained Competitive Advantage........................ 28
Porter - The 5 Competitive Forces That Shape Strategy.........................................35
Whittington - Emergent Strategy.................................................................................. 35
General
Jex and Britt (Chapter 13) - Organizational Theory and Design
● All parts are important.
● Links with Mintzberg and Snow et al.
, 2
Introduction
● They aim to explore the impact of organizational theory and design on employee
behavior and overall organizational effectiveness.
● Organizational Theory vs. Design: The theory is the ideas about how organizations
work and interact with their outside environment. The design is the product that comes
out of the theories.
● Psychologists avoided working on macro-level issues like theory and design → impacts
the effectiveness of an organization and didn't provide a full picture of the impact of
organizational design.
What is an “Organizational Theory”?
● It is a broad term that describes the ideas and models of the form in which human
activity can be organized.
● Indirect methods of investigation like metaphors are used for theorizing about
organizations → comparing organizations to organisms or machines.
○ Conclusions about organizations from the metaphors → they are in constant
interaction with their environment, ignoring their larger/external environment
can lead to extinction, the subsystems must work together to function optimally,
and the individual components of the organization must be performing properly.
Major Organizational Theories: 3 general types developed.
Classical Organizational Theories: Developed between early 1900 until mid-1940’s. Best
known ones are scientific management, ideal bureaucracy, and administrative management.
Main criticism is that they ignore the “human element” in organizations and underutilize the
creativity of the employees. These stem from the negative view on human nature.
● Scientific Management (Taylor, 1911): 2 fundamental principles ↓ An organization that
follows scientific management has many levels and departments with highly
specialized function. They have many rules and procedures to follow.
a. Those who design the work should be separate from those who perform the
work → hierarchical differences among employees, those who design are higher
status than the performers.
b. Work should be broken down into the smallest and simplest components
possible → employees who do similar tasks are grouped together and
departmental structures are created to manage these groups.
● Ideal Bureaucracy (Weber, 1947): Fundamental principles/characteristics below.
a. Rewards should be based on one’s contributions to the organizations, not to
social or familial connections.
b. Strong reliance on previously developed rules and procedures to guide behavior,
Ideally there should be a rule covering every possible scenario.
, 3
c. Very close supervision of employees, with the supervisor having very narrow
spans of control (each supervisor is responsible for a small group of employees).
d. Unity of command. Each employee has one direct supervisor to increase control
and limit role confusion (trying to meet multiple supervisor’s expectations).
e. Unity of direction. Information flows in one direction, usually from top to bottom.
This increases predictability, stability and controllability as the lower level
employee doesn't have access to information they don’t need to know.
● Administrative Management (Fayol, 1984): Universal set of organizing principles for
managers to use. Fayol presented these with the context of the managerial
activities/behaviors which he called “management functions”. Criticized for missing the
“human element” and being too vague with his suggestions on how to achieve them.
Humanistic Organizational Theories
● McGregor: He makes a distinction between 2 types of managers → Theory X and
Theory Y. They operate under different assumptions of human nature.
○ Theory X: These managers assume that employees have an inherent dislike for
work, they have little ambition and self-direction, they also value their security.
Due to these reasons the manager needs to be very controlling to reach their
goals.
■ An organization that has Theory X managers would look like an
organization that is based on classical organizational design principles.
○ Theory Y: They assume that people view work as a part of regular life and seek
meaning in it (they have self-control, needs to be personally rewarding). They
believe people will take on responsibility and solve problems creatively given
, 4
the chance + under the right conditions. Finally, they believe that most
organizations’ design results in underutilization of employees’ skills and talents.
■ An organization with Theory X managers would be more flexible, less
strict, have wider spans of control, and have rules on important issues.
■ Pros: More humane, potentially more fulfilling, and can help personal
growth compared to Theory X.
■ Cons: Not all employees want personal growth through work or work
with minimal supervision, lines of authority can be less clear → role
confusion and conflict, potential favoritism and manipulation, personal
relationships can be hard to build with new employees.
● Likert: Classifies organizations into 4 types - System 1 to 4.
○ System 1: Exploitive authoritarian type. Little trust towards the employees, little
communication between employees and management, centralized decision
making, control in top-down manner. Dissatisfied employees and low level of
organizational performance.
○ System 2: Benevolent authoritative. Compared to System 1 there is some trust
in employees, management might use their ideas, more communication. Nicer
authoritative. Employees might be moderately satisfied, organizational
performance “fair to good.”
○ System 3: Consultative. Great trust in employees, their ideas are used more
often, more communication. Broad policies are set but specific operational
decisions are made by lower level employees. Employees work on their goals
and they might show resistance to organizational goals → they have control too.
Performance is good but not excellent.
○ System 4: Participative group. Trust in employees, their inputs are valued,
communication is free-flowing in all directions, great reliance on teamwork,
decision making occurs at all levels with high level involvement. Employees
work on goals that with great deal of acceptance, excellent performance.
● Likert and Araki: Developed an addition to 4 systems.
○ System 5: It is identical to System 4, but with 5 the leadership is shared, there
are no bosses, self-managed. It can be very successful, but also problematic at
times when someone needs to take charge.
Contingency Organizational Theories: Contingency theories acknowledge that effective
leadership and organizational design depend on the specific situation, rejecting the idea of
one-size-fits-all solutions. They propose that organizational design should be congruent with
factors like organizations strategy, purpose, and the employees.
Theme 1: Organizational Structure
General.................................................................................................................................................. 2
Jex and Britt (Chapter 13) - Organizational Theory and Design..............................2
Jex and Britt (Chapter 14) - Organizational Culture and Climate......................... 10
Organizational Structure................................................................................................................16
Mintzberg - Structure in 5's: A Synthesis of the Research on Organization
Design Author...................................................................................................................... 16
Organizational Strategy................................................................................................................. 28
Barney - Firm Resources and Sustained Competitive Advantage........................ 28
Porter - The 5 Competitive Forces That Shape Strategy.........................................35
Whittington - Emergent Strategy.................................................................................. 35
General
Jex and Britt (Chapter 13) - Organizational Theory and Design
● All parts are important.
● Links with Mintzberg and Snow et al.
, 2
Introduction
● They aim to explore the impact of organizational theory and design on employee
behavior and overall organizational effectiveness.
● Organizational Theory vs. Design: The theory is the ideas about how organizations
work and interact with their outside environment. The design is the product that comes
out of the theories.
● Psychologists avoided working on macro-level issues like theory and design → impacts
the effectiveness of an organization and didn't provide a full picture of the impact of
organizational design.
What is an “Organizational Theory”?
● It is a broad term that describes the ideas and models of the form in which human
activity can be organized.
● Indirect methods of investigation like metaphors are used for theorizing about
organizations → comparing organizations to organisms or machines.
○ Conclusions about organizations from the metaphors → they are in constant
interaction with their environment, ignoring their larger/external environment
can lead to extinction, the subsystems must work together to function optimally,
and the individual components of the organization must be performing properly.
Major Organizational Theories: 3 general types developed.
Classical Organizational Theories: Developed between early 1900 until mid-1940’s. Best
known ones are scientific management, ideal bureaucracy, and administrative management.
Main criticism is that they ignore the “human element” in organizations and underutilize the
creativity of the employees. These stem from the negative view on human nature.
● Scientific Management (Taylor, 1911): 2 fundamental principles ↓ An organization that
follows scientific management has many levels and departments with highly
specialized function. They have many rules and procedures to follow.
a. Those who design the work should be separate from those who perform the
work → hierarchical differences among employees, those who design are higher
status than the performers.
b. Work should be broken down into the smallest and simplest components
possible → employees who do similar tasks are grouped together and
departmental structures are created to manage these groups.
● Ideal Bureaucracy (Weber, 1947): Fundamental principles/characteristics below.
a. Rewards should be based on one’s contributions to the organizations, not to
social or familial connections.
b. Strong reliance on previously developed rules and procedures to guide behavior,
Ideally there should be a rule covering every possible scenario.
, 3
c. Very close supervision of employees, with the supervisor having very narrow
spans of control (each supervisor is responsible for a small group of employees).
d. Unity of command. Each employee has one direct supervisor to increase control
and limit role confusion (trying to meet multiple supervisor’s expectations).
e. Unity of direction. Information flows in one direction, usually from top to bottom.
This increases predictability, stability and controllability as the lower level
employee doesn't have access to information they don’t need to know.
● Administrative Management (Fayol, 1984): Universal set of organizing principles for
managers to use. Fayol presented these with the context of the managerial
activities/behaviors which he called “management functions”. Criticized for missing the
“human element” and being too vague with his suggestions on how to achieve them.
Humanistic Organizational Theories
● McGregor: He makes a distinction between 2 types of managers → Theory X and
Theory Y. They operate under different assumptions of human nature.
○ Theory X: These managers assume that employees have an inherent dislike for
work, they have little ambition and self-direction, they also value their security.
Due to these reasons the manager needs to be very controlling to reach their
goals.
■ An organization that has Theory X managers would look like an
organization that is based on classical organizational design principles.
○ Theory Y: They assume that people view work as a part of regular life and seek
meaning in it (they have self-control, needs to be personally rewarding). They
believe people will take on responsibility and solve problems creatively given
, 4
the chance + under the right conditions. Finally, they believe that most
organizations’ design results in underutilization of employees’ skills and talents.
■ An organization with Theory X managers would be more flexible, less
strict, have wider spans of control, and have rules on important issues.
■ Pros: More humane, potentially more fulfilling, and can help personal
growth compared to Theory X.
■ Cons: Not all employees want personal growth through work or work
with minimal supervision, lines of authority can be less clear → role
confusion and conflict, potential favoritism and manipulation, personal
relationships can be hard to build with new employees.
● Likert: Classifies organizations into 4 types - System 1 to 4.
○ System 1: Exploitive authoritarian type. Little trust towards the employees, little
communication between employees and management, centralized decision
making, control in top-down manner. Dissatisfied employees and low level of
organizational performance.
○ System 2: Benevolent authoritative. Compared to System 1 there is some trust
in employees, management might use their ideas, more communication. Nicer
authoritative. Employees might be moderately satisfied, organizational
performance “fair to good.”
○ System 3: Consultative. Great trust in employees, their ideas are used more
often, more communication. Broad policies are set but specific operational
decisions are made by lower level employees. Employees work on their goals
and they might show resistance to organizational goals → they have control too.
Performance is good but not excellent.
○ System 4: Participative group. Trust in employees, their inputs are valued,
communication is free-flowing in all directions, great reliance on teamwork,
decision making occurs at all levels with high level involvement. Employees
work on goals that with great deal of acceptance, excellent performance.
● Likert and Araki: Developed an addition to 4 systems.
○ System 5: It is identical to System 4, but with 5 the leadership is shared, there
are no bosses, self-managed. It can be very successful, but also problematic at
times when someone needs to take charge.
Contingency Organizational Theories: Contingency theories acknowledge that effective
leadership and organizational design depend on the specific situation, rejecting the idea of
one-size-fits-all solutions. They propose that organizational design should be congruent with
factors like organizations strategy, purpose, and the employees.
