CHAPTER

".

..

THE SETTING OF ORGANIZATION AND MANAGEMENT

I
OUR ORGANIZATIONAL

We are social animals with a propensity for organizing and managing our affairs. We do so in an increasingly complex and dynamic environment. Many disciplines are contributing to an eclectic body of knowledge----<:>rganizationtheory-which, coupled with experience, is the foundation for management practice. In this chapter the setting of organization and management will be introduced via the following topics: Our Organizational Society Relevant Research and Knowledge Increasing Complexity of Organizations Major Themes and Concepts Systems Appro3ch-Understanding Contingency View-Acting Performance and' Satisfaction Productivity and Quality of Work Life Outline of Beok

SOCIETY

People are social by nature, The tendency to organize and cooperate in interdependent relationships is inherent, The history of the human race could be traced through the development of social organizations, The first were families and small nomadic tribes; then came permanent villages and tribal communities. The feudal system and nation states were further developments. This evolution of organizations has accelerated in recent years, Dramatic changes have
3

r:HAPTER

1:

THE SETTING

OF ORGANIZAT,ON

AN!)

MANAGEMENT

occurred over the past century We have been transformed from a predominantly agrarian socicty'witk.umphasis on the family, informal groups, and small communities to a complex industrial society characterized by the emergence of large, formal organizations: Groups and organizations are a pervasive part of our current existence. Typically, we are born into a family with [he aid of it medical organization, the hospital. We spend a great deal of time in educational institutions. Informal groups develop spontaneously when several peop~ have common interests and agree (often implicitly) to pursue common goals-s-a picnic or a fishing trip. Work organizations account for a large part of OUT time, with formal or informal relationships often carrying over into the leisure- time activities such as bowling or softball teams. It IS easy to see that all of LIS, except for hermits, are involved in a variety of groups and organizations. Oreaniz~tions are not distant, impersonal phenomena; they are inexorably interwoven into our daily lives. They are everywhere and they affect all of us. The informal social or athletic group, Howard Johnson restaurants, the Sierra Club, Toyota M( tor Company, General Electric, the Teamsters, and the United Nations are all organizations. They provide gnods and services that people use. We are all members of an organizational society-people cooperating in groups to accomplish a variety of purposes. Humans are activists. We have created and destroyed civilizations. We have developed vast technological complexes, We have utilized natural resources in ingenious ways and in the process have wreaked havoc with the ecosystem. We have even broken the umbilical cord holding US to mother earth; we have been to the 1I100n and returned. Future generations may see us go 10 the planets and beyond. We arc all ama-ed at (and probably fail to comprehend fully) thc enormity of modern scientific and technological achievements. But a second thought causes us to recognize a major factor undcrlying these achievements-c. our ability to develop social organizations for accomplishing our purposes. The development of these organizations and effective management of them is truly one of our greatest achievements. It is worth reminding ourselves that management does nor. really exist. It is a word an idea. Like science, like government, like engineering, management is an abstraction. nut managers exist. And managers arc not abstractions; ... they are human beings. Particular and special kmds of human beings. Individuals with a special function: to lead aod move and bring out the latent capabilities-c-and drearns-i-of other human beings .. _.. This I believe, and this my whole life's experience has taught me: the n:'anagenal life IS the broadest, the most demanding, by all odds the most cornprehensrve and the most subtle of all human activities. And the most crucial.' T~is book is about organizations and their management. It is an attempt to faclht~te ,underst~ndmg of the man~geri~l .role in a complex and dynamic organizational society. Although conflict within families and clans is evident, the
'David E. Lilienthal. 1967. p. 18. Management: A Humanist An, Columbia University Press, New York,

group provides a means of protection and hence survival. Organized activity today ranges on a continuum from informal, ad hoc groups to formal, highly 'structured organizations, Military and rcligicus activities were among the first to become formally organized. Elaborate systems were developed and by and large have persisted, with modifications, to the present. Business, government, and education are other spheres of activity that have developed formal organizations geared to task accomplishment. We engage in many voluntary organizations in our leisure time-some recreational, some philanthropic, and some of a crusading nature. Many different definitions of organization have been set forth, but they have certain fundamental or essential elements. Organization behavior is directed toward objectives that are more or less understood by members of the group. The organization uses knowledge and techniques in the accomplishment of its tasks. Qrg.Qnization implies structuring and integrating activities, that is, people working or cooperating together in interdependent relationships. The notion of interrelatedness suggests a social system. Therefore we can say that organizations consist of (1) goal-oriented arrangements, people with a purpose; (2) psychosocial systems, people interacting in groups; (3) technological systems, people using knowledge and techniques; and (4) an integration of structured activities, people working together in patterned relationships,
The lrnportance

of Management Management involves the coordination of human anJ material resources toward objective accomplishment. We often speak of individuals managing tneir affairs, but the usual connotation suggests group effort. Four basic elements can be identified: (1) toward objectives, (2) through people, (3) via techniques, and (4) in an organization. Typical definitions suggest that management is a process of planning, organizing, and controlling activities. Some increase the number 01 subprocesses to include assembling resources and motivating; others reduce the scheme to include only planning and implementation. Still others cover the entire process with the concept of decision making, suggesting that decisions are the key output of managers. . Rather than try to provide a simplified, single-sentence definition of management, we prefer to use a more comprehensive description that integrates various views in a systems context. Management is mental (thinking, intuiting, fcJ,eling) work performed by people in an organizational context. Management is the key subsystem in the organizational system. It spans the entire organization and is the vital force that links all other subsystems. Management involves the following: . Coordinating the huruan, material, and financial resources toward accomplishing organiz.ational goals effectively and efficiently Relating the organization to the external environment and responding to societal needs Developing an organizational cliinate where people can accomplish their individ-

1iIiJJJiIJI

__

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PART 1:

CONCEPTUAL

FOUNDAilONS CHAPTER I: TKE SETTING OF ORGAN,ZATION AND MANAGEMENT

ual and collective goals Performing ceflaia.~ef).nable functions such as goal setting, planning, assembling resources, organizing, implementing, and controllino Carrying out various interpersonal', informationa], and decisional roles The study of ma~agement is relatively new in our society, stemming primarily from the growth In SIZC and complexity of business and other largp.-sc'Ile organizations since the industrial revolution.

;'
If

r
f
i

The emergence of management as an essential, a distinct, and a leading institution is a pivotal event in social history. Rarely, if ever, has a new basic institution, a new leading group, emerged as fast as has management since the turn of this century. Rarely 10 human history has a new institution prover. indispensable so quickly; and evep less often has a new institution arrived with so little opposition, so little dist~rbance, so little controversy .... Management, which is the organ of society specifically charged with making resources productive, that is, w.rh the respvnsibility fo~ organized e~onomlc advance, therefore reflect; the basic spiri 1 of the modern age. It IS 10 fact indispensable-c-and this explains why, once begotten, it grew so fast nnd with so little opposition."

remain in a dynamic equilibrium with their environment. Information flow is essential for the decision-making process. It involves knowledge of the past, estimates of the future, and timely feedback concerning current activity . Management's task is implementing this information-decision system to coordinate effort and maintain a dynamic equilibrium. With organization and management as pervasive as they are, we might naturally assume a well-defined body of knowledge that provides a framework for research, reaching, and practice. There is a body of knowledge, but it is not particularly 'veil defined, and currently it appears to be evolving rapidly. A number of conditions have hampered the development of a well-defined body of knowledge-particularly the increasing complexity within organizations and the dynamic nature of their environment. Theories developed to fit organizations in the early 1900s arc not likely to be appropriate for many organizations in the 19805.

RELEVANT

RESEARCH

AND

KNOWLF.:DGE

. Managers convert diverse resources of people: machines, material, money, lime, and space IOtO a useful enterprise. Essentially, mam:.gemcnt is the process whereby these unrelated resources are.integrated into a total system for objective accomplishment. Managers get ;hings done by working with people and physical resources in order to accomplish the objectives of the system. They coordinate and integrate the activities and work of others. A recurring question is the distinction between the terms management and administration. "Administration" often has had the connotation of governmental or other nonpro~t ~'rganizations, whereas "management" has been relegated to business enterprises. However, there is considerable overlap in usage. YMCAs have boards of managers, for example. The military has program managers with overall responsibility for mission accomplishment. On the other hand, many colleges of business administration have management departments. We will use the terms interchangeably and tend toward the use of the term management regardless of whether the specific example involves business organizations, hospitals, philanthropic institutions. or government bureaus. On this basis management is a most pervasive activity. According to Hertz, "the single ubiquitous mind-driven activity of mankind is managemeut. a We are all involved in management-cor ourselves, of our economic and social activities and of society as a whole. ' Individuals and organizations make adaptive decisions continually in order to

'Perer F. Drucker, 1954, pp, 3-4. . 'David B-89.

The Practice of Managemen),

Harper & Row, Publishers.

Inc., New York, -, p.

Scientific disciplines have emerged as sera rate and distinct bodies of knowledge as our search for enlightenment has continued. However, the entire social science field, behavioral science in particular, has been relatively slow in developing.' Anthropology, sociology, and psychology are products of the last 100 years. Economics and political science' emerged somewhat earlier as specific disciplines, Organization theory and/or management practice did not receive concerted attention until the twentieth century. Within this historical context, a well-developed body of knowledge may be too much to ask of this fledgling discipline. Yet significant strides have been made, and a body of knowledge has been developing which in (urn has been useful in managing organizations of diverse characteristics and objectives. We think it is helpful to distinguish organization theory from management in order to provide a useful framework for research, teaching, and practice. We suggest that organization theory is the body of knowledg~, Including h~theses and propositions, stemming from research in a definable field of study which can be termed organization scienceJ.jbe study of organizations is an applied science because the resulting knowledge is relevant' to problem solving or decision making in ongoing enterprises or institutions.~ Because of the pervasiveness of organizations, the related theory and scientific study are extremely broad-based. It is an eclectic theory, a total system comprised of many subsystems of relevant disciplines such as parts of sociology, psychology, anthropology, economics, political science, philosophy, and mathematics (see Figure 1.1). Not all these above-mentioned disciplines are applicable to the same degree; only a small subpart of a particular subject-matter area may be relevant. During the twentieth century, however, society's organizations
'Kenneth E. Boulding, Brunswick, N.J., 1966.

B.

Hertz, "The Unuy of Science and Management" Management '.

Scitnu Apn'Il96S

The Impaa of 'he Social Sciences, Rutgers

University

PleSS, New

PART

1:

CON:EPTUAL

FOUNDATIONS

CHAPTER 1

THE SoTTING OF ORGANIZATION AND MANAGEMENT

have received increasing attention, and the study of organizations has evolved as an important, visible, and definable field. As indicated in Figure 1.1 contributions to organization theory come from many SOUI,;es. Deductive and inductive research in a variety of disciplines provides it theoretical base of propositions that arc useful for understanding organizations and for managing them. Experience gained in management practice is also an important input to organization theory. In short, Figure 1.1 illustrates how the art elf management is based on a body of knowledge generated by practical experience and scientific research concerning organizations. Organization theory itself stems from an applied science that draws on the basic disciplines and their relatively marc abstract theories only as they are relevant to organizations found in society. Management technology stems from organization theory and is even more applied in the sense that it focuses on the practice of management in ongoing organizations. With this view of the relationship between organization theory and management in mind, let us turn to a more specific discussion of the requirements of an organization science.
Foundations of Organization Theory

I I I I

L~

The pervasiveness of organizations and management argues for considerable latitude with regard to the organizations studied and the scientific methods used. Moreover, the value systems of researcher" teachers, and practitioners are quite diverse, and hence the determination of what is relevant and scientific may vary considerably. On the other hand, the concerted effort toward the development of organization theory during the mid-twentieth century has resulted in useful dialogue, cross-fertilization, and mutual understanding among participants .. While no well-defined consensus has yet appeared, there are consistent threads of inquiry and agreement with regard to the general scope of organization theory. Although not exhaustive, Figure 1.1 indicates many of the key concepts and areas of interest. Early management concepts came from practitioners. Texts were often the distillation of experience in ongoing enterprises. Such contributions are important and valuable additions to the body of knowledge comprising organization theory. We need continued observation and conceptualization from astute practicing managers. Meanwhile, scientist-scholars have become more and more involved in research related to organizations but carried on in the context of basic disciplines. Other scholars have been engaged in integrating findings from basic disciplines and translating the results inte meaningful concepts or propositions. Integration of the body of knowledge comes from two directions. Triose primarily engaged in studying organizations and management have looked toward the basic disciplines for new insight. Simultaneously, those engaged in the work of basic disciplines have become increasingly aware of the pervasiveness of organizations in society and have begun to concentrate attention on

CHAPTER

, ~ THE SETTING

OF ORGANIZATION

AND MANAGEMENT

11

10

PART 1:

CONCEPTUAL

FOUNDATIONS

relevant subfields

problems. In(Justriaj- psychology that give evidence of ~his trend.

and

industrial

sociology

are two

An E'T1erging

Di!>cipline

The study of organizations and their management is an intellectually respectable discipline, Organization theory sets forth propositions ..that are testable. It is also conducted as a public enterprise with many contributors. Everyone has theories concerning individl1a: and organizational behavior-at least implicit if not explicit. Research and the resulting literature have increased at an accelerating rate and will continue to do so. Research is conducted by scholars from many disciplines; indeed, the same organization is often studied from several points of view. The results arc compared at separate points in time, for organizations in various cultures, and for different types of institutions within a given culture. All this activity has made the study of organizations one of the most visible and public enterprises in society. Organization science has questions of its own that set it apart as a relatively autonomous discipline. That is, it is concerned with questions that other disciplines are not. Obviously many questions cross discipline boundaries with perhaps some variation in emphasis. Some of the topics of particular interest ..to organization students are as follows: Goals and value systems 2 The use of technology and knowledge in organizations 3 The structuring of organizations 4 Formal and informal relationships 5 Differentiation and integration of activities 6 Motivation of organizational participants 7 Group dynamics in organizations 8 Status and role systems in organizations 9 Organizational politics J 0 Power, authority, and influence in organizations 11 Managerial processes in organizations 12 Organization strategy and tactics 13 Information-decision systems in organizations 14 Stability and innovation in organizations 15 Organizational boundaries and domains 16 Interface between organizations 17 Planned change and improvement 18 Performance and productivity 19 Satisfaction and quality of work life 20 Managerial philosophy and organization culture There is a danger at times that a scientific discipline may begin to exist for its own sake and emphasize esoteric concepts. It is true that there is a gradation from applied to pure research. However, there is no absolutely "pure" research.

In the long run everything is applied; hence, a discipline must keep in touch with the real world. In an evolving body of knowledge such as organization theory, there are many tentative conclusions and propositions. However, the real world cannot wait for the ultimate body of knowledge (there is none!). Practicing managers in business firms, hospitals, and government agencies continue to operate on a day-to-day basis. Therefore, they must use whatever theory is available. Practitioners must be included in the search for new knowledge because they control access 10 an essential ingredienl--organizational data Mutual understanding among managers, teachers, and researchers -vill facilitate the development of a relevant body of knowledge.

INCREASING COMPLEXITY OF ORGANIZATIONS

l
!

Organizations have beccrne increasingly complex with the evolution of organisms, of which human example.

over time. The trend begins beings are the most complex

There is a characteristic trend in this development-the units are bound to become more and more complicated. They lose the simple features they had at the beginning of life's history. Most changes are steps toward higher differentiation, toward change of nucleic acids which produce more proteins with more specialized tasks. Hence from the moment when units exist that can form replicas of themselves. a development toward more and more complicated units is bound to start. Better adaptation to external conditions leads almost always to more complicated units." Haskins describes this phenomenon by saying: "Paleontological research has yielded dramatic evidence that in the evolutionary development cf living matter there has been an unmistakable broad trend from the simple to the complex. Both the variety of life on earth and the intricacy of its organization reflect and emphasize this trend. "6 The essential element in this trend is that of specialization. It allows organisms a means of dividing up the work in performing each subpart more effectively and efficiently. However, specialization requires integration of activities in pursuit of identified goals. It is a process of analysis and . synthesis; that is, breaking up the task into parts according to specialized activities and integrating those activities toward objective accomplishment. The tendency to integrate is a "companion feature" of specialization. These same trends are evident in organizations. More specialization requires increasingly sophisticated methods of coordination and integration. Tendencies toward both cooperation and conflict are evident among organizational participants. The question of individualism versus conformism is relevant and important. In short, many forces are at work in organizations=-some divisive, some cohesive, all somewhat confounding. These factors have led to increasing complexity within organizations and hence have made the job of management more and more difficult.
'Victor F. Weisskopf. Knowledg and Wond." Doubleday & Company, Inc., Garden City, N. Y., 1966, p. 251. 'Caryl P. Haskins, Of Societies and Men, The Viking Press, Inc., New York, 1960, p, 15.

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12

PART

t:

CONCEPTUAL

FOUNDATIONS

C'~APTER

1: THE

SETTING

OF ORGANIZATION

AND MANAGEM~NT

13

Size of Organization

For small face-to-face groups in a rather stable environment, the job of management is relatively straightforward. Once a particular approach is found effective, it can be applied indefinitely with likely success. As groups grow in size, face-to-face relationships become impossible; the number of interrelationships among organizational participants increases dramatically; and managers cannot hope to maintain personal contact throughq,ut tile organization. The trend toward increased organizational size is not likely to taper off. The population continues to grow. Thus sheer numbers of people will provide a complex environment for society and its subunits. The trend from a sparse, rural population to urban concentrations has been in effect for many centuries. Crises of many kinds-housing, crime, transit, air pollution-are evident in large metropolitan areas. What if the earth were one giant megalopolis? However unlikely such a future condition may be, the possibility indicates the accelerating nature of environmental developments that pose organizational and managerial problems.

arc becoming increasingly prevalent in organizations. !ntegration of their efforts toward organizational accomplishment can be difficult. There may be differences in value systems between scientists and managers. The former may be concerned with the effectiveness of a product or process (i.e., striving for perfection), while the manager may be more interested in efficiency (i.e., cost as related to effecti veness).

Other Considerations

Science

and Technology Scientific knowledge and technological developments are also accelerating. Again, we might gain perspective by refer.ing to developments throughout the evolution of humanity. If our time on earth is taken as 240,000 years and if we imagine that those years take p.ace in one hour, we spent fifty-five minutes of that time in Paleolithic (Old Stone Age) culture. F',, minutes ago, he embarked upon the neolithic culture, the cultivation of plants, the domestication of animals. the making of pottery. weaving, and the use (If the bow and arrow; 3'12 minutes ago he began the working of copper; 2'/' minutes ago be began to mold bronze; 2 minutes ago he learned to smelt iron; I;' of a minute ago he learned printing; 5 seconds ago the Industrial Revolution began; 3'1> seconds ago he learned to applv electricity; and the time he has had the automobile is less than the interval between the ticks of a watch, i.e., less than one second.' With the industrial revolution representing only five seconds of an imaginary hourglass, the accelerating nature of technology is apparent. And a concerted effort toward organization theory and principles of management is a postindustrial revolution phenomenon. Think of the development since the automobile was introducect-"less than one second" ago. Television, jet airplane travel, birth control pills, computers, and space exploration are examples of science and technology proceeding at an accelerating pace. One recalls the phrase, "If it works, it is obsolete." Developments in science and technology have magnified treads toward specialization. Scientists, researchers, technicians, and other knowledge workers
'Wilsall D. Wallis, as cited in Charles R. Walker, Modem McGraw-Hili Book Company, New York, 1962, p. 10. TechfID/ogy and Civiiittuion,

Science and technology are only a part of the picture. The general increase in the education, knowledge, and diversity of human participants provides a more sophisticated atmosphere in organizations. People are becoming less tractable and more prone to think for themselves. This trend is also accelerating and provides another confounding variable for management. An increasing governmental role is another consideration. Organizations must keep tuned to governmental pn pcnsities for regulatory action in many areas. The most obvious are economic ind defense matters, but the spectrum of influence widens over time. Trends in all the areas of governmental concernfederal, state, and local-provide meaningful background for managerial decision making in organizations. Coupled with developments in the sciences (natural, social, and behavioral) is progress in the philosophy of management. ln a sense all of us are philosophers because we hold views concerning what is or happens in the world as well as what we ought to do or seck. Some development can proceed prescriptively via common sense, experience, and reflection. It is more likely, however, that a combination of the experiential approach and inputs from scientific research will round out an individual's philosophy of rranagement. The r""mark of management is change-c-swift. incessant, fundamental change. The only thing that is constant is change. The dynamic interplay of forces in the environment of organizations is evident. Similarly, WIthin organizations the situation is becoming much more complex from the point of view of management. Thus it becomes increasingly important to understand the trends and developments taking place. The pace of change is likely. to increase; therefore, managers must better understand the behavior of individuals and organizations in order to be able to predict and ultimately coordinate effort toward objectives. The aim of this book is to contribute to this understanding.

MAJOR THEMES AND CONCEPTS One approach to solving complex problems is to assume away much of the complexity and then solve a much simpler problem. Theoretically, the interim step provides insight into how the more complex problem might be solved, Many introductory texts treat problem solving in this way. However, unless students pursue the subject in later courses, they are left with an oversimplified view of

CHAPTER 1: THE SETTING OF ORGANIZATION AND MANAGEMENT

15

14

PART 1: CONCEPTUAL FOUNDATIONS

the real world, one waich.mav be more dysfunctional than functional. "A little knowledge is a dangerous thi~g." We hope to avoid that in this book. Our general purpose will be to understand the increasingly complex nature of organizations in a dynamic environment and the attendant difficult problemsolving task of managers. We may use abstractions end models from time to time but in all cases hope to link them adequately to the real world. Our primary purpose is to recognize and understand the dynamic complexity rather than to simplify the real world in order to develop straig,htfo~ward cookbook approach-

es.
We arc concerned in this book with a wide variety of organizations or institutions and are interested in those propositions that have broad applicability -in business, governmental, medical, educational, religious, military, philanthropic, voluntary, and other types of organizations. Also of interest is diversity, uot only in type of institution but in size as well, For the most part, organization theory and management principles have been developed within the context of large organizations. Consideration will be given to the applicability of findings to small- and medium-sized organizations as well. We will be interested in management and organization theory as it applies across cultures. Which findings hold true in Japan or Yugoslavia as well as in the United States or Great Britain? Unless otherwise stated, the material presented will refer primarily to developmenrs in the United States; however, O'lT discussions with managers and academicians in numerous countries suggest [hat there arc many common threads in research endeavors, organization theory, and management practice. We arc interested in both dcsrriptivc findings and normative considerations, There is a great need for empirical research concerning organizations and management At times there seems to be a tendency in the behavioral sciences toward conducting experimental research in unrealistic settings as a way of emulating the physical sciences. It might be more useful to emulate the zoologists and biologists, whose observation of what is and happens in the real world has occupied a considerable amount of time and attention. There is a need to understand clearly how individuals and organizations behave in a variety of circumstances. Once we have a more complete understanding of what is, we can begin to consider normative propositions of what managers ought fa do or seek. Such an approach facilitates the development of conceptual schemes that will provide useful frames of reference for managers in organizations. Major changes in all fields of science occur with the development of new conceptual schemes, or paradigms. These paradigms do not just represent a step-by-step advancement in "normal" science (the science generally accepted and practiced) but rather a revolutionary change in the way the scientific field is perceived by the practitioners. New paradigms frequently are rejected by the scientific community. (At first they may seem crude and limited-offering very littie more than older paradigrns.) They frequently lack the apparent sophistication of the older paradigms, which they ultimately replace. They do not display the clarity and certainty of older paradigms that have been refined through years

of research and writing. But a new paradigm does provide for a new start and opens up new directions that were not possible under the old. "We must recognize how very limited in both scope and precision a paradigm can be at the time of its first appearance. Paradigms gain their status because they are more successful than their competitors in solving a few problems that the group of practitioners has come to realize as acute. To be more successful is not, however, to be either completely successful with a single problem or notably successful with any large nurnber.?" . .. Systems theory provides a new paradigm for the study of SOCial orgamzanons and their management. In some ways it may not be much better than older paradigms that have been accepted and used for a long t.ime (such as the management process approach). As in other fields of scientific endeavor, ~he new paradigm must be applied, clarified, elaborated, and made more precise. But it does provide a fundamentally different view of the reality of social organizations and can serve as the basis of progress. .. The systems approach facilitates analysis and synthesis III a complex and dynamic environment. It considers interrelationships among subsystems ~s .vel! as interactions between the system and its suprasystern and also provide s a means of understanding synergistic aspects." This conceptual scheme allows us to cunsider organizations-individuals, small-group dynamics, and large-group phenomena-all within the constraints of an external environmental system.

SYSTEMS APPROACH-Uf~OERSTANOING

The svsterns view of organization' and their management serves as the basic conceptual framework for this book. A system is an organized, unitary whole composed of two or more interdependent parts, components, or subsystems and delineated by identifiable boundaries from its environmental suprasystem. . Systems of various types are all around us. For example, we have rnountam systems, river systems, and the solar system as part of our physical surroundings. The body itself is a complex organism including the skele~al system, t~e circulatory system, and the nervous system. We come into daily contact WIth such phenomena as,transportation systems, communication systems (telephone, telegraph), and economic systems. We obviously c~n't consider all th<:se systems---their study would involve most of the subject ,:,atter of a major university and even more. We will concentrate our attention on a narrower subset of systems--social organizations. . . We need a general definition and a conceptual .model of orgamzatlon~ that will be appropriate for all types: small and large, mfor:n~l. and formal,. Simple and complex, and those engaged in a wide variety of acnvrnes lind functions. In this context, we define an organization as follows:

"Thomas S. Kuhn, The Structure of Scientific Revolutions, University of Chicago Press, Chicago , 1962, p. 23. . . f . "Synergy: the whole is greater than (or at least different [rom) the sum 0 .ts parts.

I I
1'0 PAm 1: CONCEPTUAL FOUNDATIONS CHAPTER 1: THE SETTING OF ORGANIZATION AND MANAGEMENT 17

I.

I A subsystem 'if its broader environment with 2 A goal-oriented arrangement-people with a purpose; including 3 A technical subsystem-s-people using knowledge, techniques, equipment and facilities 4 A structural subsystem-people working together on integrated activities 5 A psychosocial subsystem-people in social relationships; and coordinated by

6 A managerial

subsystem-planning

and controlling

the overall endeavor

I \
\ I

As illustrated by Figure 1.2 a basic premise is that tile organization, as a subsystem of the society, must accomplish its goals within constraints that are an integral part of the environmental suprasysrern. The organization performs a function for society; if it is to be successful in receiving inputs, it must conform to soci~l constraints and requirements. Conversely, the organization influences its environmental s uprasyste m. The internal organization can be viewed as co.nposed of several major subsystems. Organizational goals and values represent one of the more important subsyster is. While the organization takes many of its values from its broader sociocultural environment, it also influences societal values. The technical subsystem refers to the knowledge required for the performance of tasks. By organizational technology we mean the techniques, equipment, processes, and facilities used in the transformation of inputs into outputs. The technical subsystem is determined by the purposes of the organization and will vary according [0 the task requirements. The tecbnology frequently prescribes the type of organization sn ucture and affects the psychosocial system. Every organization has a psychosocial subsystem, which consists of individual behavior and motivation, status and role relationships, group dynamics, and influence networks. This subsystem is, of course, affected by external environmental forces as well as by the technology, tasks, and structure of the internal organization. Intermeshed with the technical and the psychosocial subsystems is the organization structure. Structure is concerned with the ways in which the tasks of the organization are divided (differentiation) and with the coordination of these activities [integration), In a formal sense, structure can be set forth by organization charts, job descriptions, and rules and procedures.Tt is concerned with patterns of authority, communication, and work flow. The manageria! subsystem plays a central role in goal setting, planning, designing organizations, and controlling activities, as well as in relating the organization to its environment. Managerial functions and practices are vital to the integration of activities in all the other subsystems.

----t\.-_
\

\
\

....'y/....

_+-----_
II
I I

/",
'Manageria!

)\,ub'YSIOm X\
I ',// \
<;

---~-I
1
\ \

_/x

--~----1
I
I I

\
Psvcbosccial subsystem

c> o m..
inform

lop.... t-cutput flow of te(ta~s, tnt'rqy. end

:ltion

Figure 1.2

The ocganization system.

body of knowledge and research tasks that focus on interre~ationships among key variables and subsystems in organizations. It also emphasizes the role of the manager as a diagnostician, pragmatist, and artist. In terms of the systems model set forth above, we can say that:

CONTINGENCY VIEW-ACTING Throughout the book we will stress the relationship of organization theory and management practice in specific situations. The contingency view depends on a

The contingency view of organizations and tlieir management' s\lgg~ts th.at an organization is a system composed of subsystems and delil?eaterl by. indentifiable boundaries from its environmental suprasystern. The contingency Vlew seeks to

1a'

PART 1:

CONCE PTUAL FOUNDATIONS

CHAPTER 1

TH E SETTING OF ORGANIZATION AND MANAG EMENT

19

I,
under~ta~d the in~erI;.era~L~nships wir hin and among subsystems as wcll as between the organization and Its environment and to define patterns of relationships or confirurs , nons of variables. It emphasizes the multivariate nature of organizations and attempts to understand how organizations operate under varying conditions and in specific cl[c~mstances. Contingency views are ultimately directed toward suggesting organizational designs and managerial actions most appropriate for specific situations."

The essence of this vi~w is that there is no one beslway and that there is a middle groun~ between "umv~rsal principles" and "it all" depends." This approach rccogruzes the complexity involved in managing' modern organizations but uses the existing body of knowle~ge to relate environment and design, to match structure and technology, to integrate strategy and tactics, or to determine the appropriate ~egree of subordinate participation in decision making, given a specific situation. Success in the art of management depends on a reasonable success-rate for actions taken in a probabilistic environment.

straightforward indicators of performance. However, most organizations have multiple goals, some of which arc not easily measured. Examples might be customer satisfaction, increased managerial skill, or long-run viability. It is important to recognize multiple goals and evaluate organizational performance on a variety of relevant dimensions." It is particularly important to identify substantive functions that spell success or failure in order to give priority to them. Throughout this book we will refer to three basic output dimensions of organizational performance as shown in the following relationship: Performance
=

effectiveness,

efficiency,

and participant

satsifaction

PERFORMANCE

AND

SATISFACTION

Why study organization. and management" We nave indicated that they are a pervasive part of our existence. We are affected by a wide variety of organizations and their mana~ement. It seems obvious that we would be better off with Increased un?crstandmg of anything that affects us. Beyond this, however, there IS an .,mpJiclt notion that increased knowledge will somehow lead to better orgaruzaucn and management. But what do we mean by better? An overall concept IS: Performance
= j (ability,

effort,

opportunity)

Effectiveness is concerned with the accomplishment of explicit Of implicit goals. What is the degree of accomplishment of objectives in key results areas? Efficiency refers to the ratio of output to input, or benefit to cost. It is pus sible to be effective but inefficient-thus squandering human and material resources. Conversely, it is possible to be efficient and ineffective. Organizations sometimes emphasize doing things right a t the expense of doing the Tight things. For us, a basic ingredient of organizational performance is participant satisfaction. In most organizations people have to be satisfied enough to continue their membership. If not, they quit and go elsewhere. An important relationship is that good task perfcrmance typically leads to satisfaction so that we can work on participant satisfaction by being both effective and efficient. Another consideration is improvement in capability. Long-run viability depends on both short-run achievements and the potential to sustain and improve performance in the future. Balanced development of individual and group capability is important for the wen-being of the organization as a whole.

This equation _highlights the basic factors or variables that lead to performance. They are ITIj/uts that, taken together, determine the results of individual and ~~~ur endeavors. The phrase "taken together" is an important idea because no a~lh.ty 0; no effort or no opportunity can negate the other two factors. It is a multiplicative relationship. . Ability is ~ iunati~n of human knowledge and skill and technological capabilities. ~t provides an indication of the range of possible performance. Effort is a functl?~ o~ nee~s, goals, expectations, and rewards. How much latent human capability IS realized depends on the deg~ee to which individuals and/or groups are motivated to expend mental and physical effort. But nothing happens unless managers provide an opportunity for individual ability and effort to be used in ~e~~ingful ways. Organizational performance results from the success of individuals and groups in achieving relevant goals, Measuring and evaluating results is important in determining performance. Output per work-hour, share of the market, and net profits are relatively
J<lFremont E: Kast and James ~. Rosenzweig. Contingency Views of Organization Management, Science Research ASSOCiates, Inc., Palo Alto, Calif., 1973, p. ix.

.PRODUCTIVITY

AND

QUALITY

OF WORK

LIFE

Issues of performance and satisfaction within organizations have counterparts in our total society, Productivity and the quality of work life have become two fundamental concerns. We need organizations that (1) accomplish their goals and are efficient in using resources (productive) and (2) that provide a climate that enhances the well-being of the human participants. The rate of improvement in productivity has declined over the past several decades in the United States. This has had adverse consequences in terms of inflation, low growth of real income, and a deteriorating competitive position in relation to ether countries, Improved productivity stems from two primary sources: (1) technology and (2) human performance. Ourfocus as a society for nearly a century has been on technological advances that make productivity less dependent on human effort, knowledge, and skill. More recently Ne are
"Richard M. Steers, "When Is An Organization 1976, pp. 50--63. Effective?" Organization Dynamics, Autumn,

20

PART 1

CCNCEPTUAL FOUNDATIONS

CKAPTER 1: TKE SETTING OF ORGANIZATION AND MANAGEMENT

21

recognizing that this proc.fss can only go so far and that more attention must be paid to improving productivity through more effective use of human resources There is evidence that the perceived quality of work life has not met the aspirations of many people-they are becoming less satisfied with their work experiences. This is not necessarily because the situation is worse; rather it is because of increasing human aspirations for a better existence in general and for a more rewarding work life, in particular. Recent. studies of ?igh ~erforming organizatjons"suggest that the one thing they have in common IS a high regard for, and continuing close attention to, their human. resources. ~e see these two nati~nal issues of productivity and quality of work life as very Important and highly Interdependent and will focus on them throughout this book. They are not mutually exclusive and managers must always _recognize their importance and interd~pendence. Increasing productivitv means the pursuit of excellence at all levels-the individual, the group, the organization, and the society. A key element is doing every job better->becoming more productive-by working smarter rather than harder. Success is not achieved by j~st doing one thing best; it is dependent on a whole system of actions that contribute to excellence. The primary function of management is to develop congruence among the various subsystems and to create a climate that leads to excellence-effec:tiveness, efficiency, and participant satisfaction. Our study of organization and management will be concerned with better un.derstanding of organiz~tional phenomena so that appropriate managerial acuons C1n be taken. Tne systems approach is a way of thinking about organizational variables and relationships. A continocncv view '"lr;vides a fTalnewo~:( for doing the right thing at [he right time in tl:c right \\:{Jy':dercnding on the situation. Hopefully, better understanding and improved practice result l!l improved organizational performance as measured by a variety of relevant dimensions. '

ca;

OUTLINE OF BOOK Part 1 pres~nts conceptual foundations for studying organization and management In this chapter we have emphasized the pervasiveness of organization and managet_TIe?t, shown the relationship of management practice to organization theory, l~du;~ted th~ newness and evolving nature of organization science, and stressed its .mcreasmgly ~omp[ex and dynamic environment. Chapter 2 is concerned WIth the e~olutto~ ~f value systems over time and with their impact on management thinking. This [5 a key step in the development of later materials because value systems and ideologies underlie organization design and managerial behavior. . Part 2 :races the evolution of organization theory and management practice ~'lth part~cula~ re~erence to the twentieth century. The traditional concepts involved ill scientific mana3e~ent, bureaucracy, a~d administrative manag<:ment ~e set forth. The behavioral and management science contributions are then discussed, and their impact on the evolving theory is evaluated. In Chapter

5 systems concepts and contingency views are elaborated as a framework for modem theory, stressing their usefulness in the study of complex organizations. This provides the rrimary framework for the remainder of the book. Part 3 covers the environmental suprasystem of organizations-both general and specific. The concept of boundaries delineating organizations is important because it helps focus analysis on reasonably well-defined systems. Social responsibility and personal ethics are considered as managerial responscs in the cultural context of society. The subject of organizational goal setting (in an environmental context) is also covered in Part 3. Part 4 looks at the technical and structural subsvstems. The impact of rapidly changing technology on modern organizations is discussed, and the relationship of the technical system to the other subsystems is evaluated. The ways in which organization design establishes a formal structuring of relationships in order to acccrnplish its purposes arc also presented. Part 5 is concerned wah the psychosocial systems within the organization. Attention is given to individual behavior in organizations and to the various influences affecting motivation. Status and role systems are presented as inevitable phenomena in social groups. The discussion thea turns to group dynamics and its role in organization improvement. The concept of an influence system is set forth and related to power and authority. Finally, the impact of leadership styles on the psychosocial system is 'discussed. Part 6 considers the managerial system. It begins with a d.scussion oi the basic task of all managers, re6ardless of the type of organization or specific situation. Descriptions or actual behavior are covered, as well ;)S prescriptions (based 0>1 rheor y) for generating effective behavior. Decision making , an important managerial activity, is considered in detail, with special attention given to information-decision systems. Typical mar.agernent science and other techniques for decision making arc discussed in terms of their usefulness in relatively open or relatively dosed systems. Collaborative problem solving, creativity, and other behavioral aspects of decision making are also covered. Planning (strategic and operational) and control are discussed us means for coordinating organizational activities. In Part 7 we reemphasize systems concepts," highlight contingency views of organization theory and management practice, and set forth a model ior comparative analysis across institutions and cultures. The framework provides the means to analyze a variety of society's basic organizations-hospitals, universities, schools, public agencies, and businesses. It also allows us to look at international management in a systematic way. Part 8 includes a consideration of organization change and challenges, emphasizing the delicate and necessary balance between stability/continuity and adaptation/innovation. Two major organizational issues-productivity and quality of work life-r-are covered, with emphasis on their interrelationship. Organization culture and management style are discussed in terms of their overriding effects in "setting a tone" for designing structures and processes. With the eclectic nature of organization theory in mind, we set forth some notions about

----~

22

PART 1:

CONCEPTUAL FOUNDATIONS

trends future.

and developments.Jn

organizations .

and the role of management

in the

CHAPTE.2
SOCIETY'S VALUES AND MANAGEMENT

QUESTIONS

AND

PROBLEMS

Why arc organizations so pervasive? Do you agree that managcmont is the "single ubiquitous mind-driven activity of humanity"? Why or why not? 3 Illustrate the continuum of organizations ranging frorn small, informal groups to l~rge, complex tnsututrons (such as General Motors. a university, a large hospital, ora city). What common characteristics can you cite? 4 Compare and contrast organization science, organization theory, and management practice. 5 Is management an art or a science? Why G Discuss (a) the eclectic nature of organization theory and (b) the relative newness of some of the relevant underlyiilg disciplines. 7 Screen current periodicals in the behavioral and social sciences (such as American Sociological Review, American Economic Review, Journal of Applied Psychology, Journal oJ Amhropology, and B... havioral SCIence) and list the various articles that relate to organization theory and management practice. 8 Discuss the tentativeness of knowledge about organizations. 9 What basic trends have led to increasing complexity within organizations as well as in their external environment? What impact does this increasing complexity have on orgamzaucn theory and management practice? IU Consider ~ particular organizational type, such as a business corporation, 'lniversitj, hospital, or CIty, and discuss the forces that have led .0 greater internat and environmental complexity for the institution. 11 For the same organizational type (question 10), list and discuss criteria for measuring and evaluating performance.
2 Define management.

Define organization.

The modern manager operates in a dynamic system with rapidly changing technologies and in an increasingly complex environment. The development of organization theory and management practice is strongly influenced by these forces. Concepts and actions are affected by value systems determined not only from within the organization but by the sociocultural norms of the society as well. It is necessary to understand the evolution of values in order to comprehend some of the underlying forces that have affected the development of management thought. This chapter considers the influences of sociocultural values on managerial concepts and practices, beginning with a brief discussion of the historical evolution of the capitalistic ethic and the transformation to modern industrialism. The following topics provide the framework for the chapter. Evolution of soCiocultural Values Historical Evolution of Capitalistic Ethic Transformation of Capitalistic Ethic Current Business Ideologies National Industrial Policy Influence of Changing Values on Management

Concepts

EVOLUTION

OF SOCIOCULTURAL

VALUES

An organization can be thought of as a subsystem of the sociocultural environment in which it operates. "It seemed appropriate to define an organization as a social system which is organized for the attainment of a particular type of goal;
23