3.5C Organizational Psychology - Chapter Notes
Problem 1 – Organizational structure, strategy & culture
(1a)
What is the best way to structure/organize an organization?
What are the determinants of organizational structure?
What is (models/theories of) organizational culture?
What are the effects/consequences of culture for organizations?
How does organizational culture evolve/change over time?
(1b)
What is (models/theories of) organizational strategy?
What are the determinants of organizational strategy?
Can strategy be "planned"?
(combination with vignette 1a) How does organizational structure, culture and strategy
interact with each other?
(1c)
What is a "modern" organization?
How is it different from a "classic" organization?
G.1.1 Jex - Organizational Theory and Design
INTRODUCTION
Primary focus of organizational psychology Individual behavior within organizations
o Factors impacting individual behavior Compensation programs and group
dynamics like cohesion.
Organizational theory Conceptualizes how organizations function and interact with their
environment.
Organizational design Translates theoretical concepts into concrete organizational structures.
AIM: Discuss organizational theory's broad field, its importance in forming organizational
designs, and factors influencing design.
WHAT IS AN “ORGANIZATIONAL THEORY”?
Organizational theory is often misunderstood Encompasses various perspectives such as a
field of study, metaphorical language describing organizational processes, or determining optimal
organizational structure.
Organizational theorists face challenges in studying organizations directly due to their abstract
nature, leading to the use of indirect methods like metaphors
o Common metaphors Likening organizations to biological organisms or machines
Highlights constant interaction with the environment and internal coordination
o Other metaphors Organizations as the brain, families, or political arenas Reflect
the complexity of modern organizations and may offer additional insights into
organizational design and functioning
The design of many organizations today is highly complex Requires the consideration of new
metaphors to understand them effectively.
, 3.5C Organizational Psychology - Chapter Notes
MAJOR ORGANIZATIONAL THEORIES
Organizational theory Field of inquiry focusing on ideas/models of organizing human activity
Over time, three general types of organizational theories have been developed.
Classical Organizational Theories
Scientific management
Scientific management originated in organizational psychology and job design, embodying a
philosophical approach to organizational structure.
Principle 1: It advocates for the separation of work designers from work performers Implies
hierarchical differences among employees
o This approach leads to organizations with multiple hierarchical levels to delineate status
and responsibilities effectively.
Principle 2: Another key principle involves breaking down work into its simplest components,
facilitating task simplification.
o Employees with similar tasks are grouped together, often forming specialized
departments within the organization.
o Consequently Scientifically managed organizations consist of numerous departments,
each dedicated to performing highly specialized functions
Principle 3: Scientific management also entails the proliferation of rules and procedures within
the organization
o Emphasis on identifying the most efficient methods for task execution
o This pursuit of efficiency leads to the belief in a singular optimal approach to every task
Reflected in extensive "policies and procedures" manuals
o These manuals provide scripted instructions for employees to follow in various situations
or contingencies Aligns with the ethos of maximizing efficiency and productivity
Ideal Bureaucracy (Weber, 1947)
Ideal bureaucracy Aiming to organize human activity efficiently.
Proposed as an alternative to prevailing organizational models during the Industrial Revolution.
Traditional family-run businesses were insufficient for handling the large urban workforce needs
Emphasis on rewarding contributions over social or familial connections
Principle 1: Ideal bureaucracy relies heavily on established rules and procedures
Principle 2: Close supervision of employees Narrow spans of control for effective
management
Principle 3: Unity of command Ensures each employee has one direct supervisor
Reducing role conflict
Principle 4: Unity of direction Information flows hierarchically, from top to bottom
Ensuring predictability and control
Effectiveness of ideal bureaucracy depends on implementation and organizational environment
It can be combined with other organizational forms for optimal outcomes
, 3.5C Organizational Psychology - Chapter Notes
Administrative Management (Fayol, 1916)
Fayol aimed to establish universal organizing principles for managers
Fayol outlined five major management functions: planning, organizing, commanding,
coordinating, and controlling
Fayol's 14 organizing principles were designed to assist managers in carrying out these
functions
Many of Fayol's principles align with those of ideal bureaucracy (Division of work, well-
defined authority structure, unity of command, unity of direction, order, and equity)
Unique principles Stability of personnel, encouraging initiative, and fostering cohesion
among employees.
Criticism:
o Overlooks the human element in organizations and treat employees as
interchangeable cogs.
o Too general and lack specific guidance for implementation
Humanistic Organizational Theories
Douglas McGregor and Rensis Likert were prominent figures in this movement.
Human organizational theorists criticized classical theories for dehumanizing the workplace
and underutilizing employees' creativity and initiative.
They argue that classical theories' assumptions about human nature were flawed.
o Classical theories With their emphasis on order and control Assumed that
employees lacked motivation and creativity
Theory X/Y (McGregor)
, 3.5C Organizational Psychology - Chapter Notes
Theory X managers Believe that employees inherently dislike work and require coercion
and close monitoring
o They assume that employees lack ambition, are not self-directed, and prioritize
security over all else.
Theory Y managers Believe that work is a natural part of life and that employees seek
meaning in their work
o They assume that employees are capable of self-control, seek responsibility, and can
creatively solve organizational problems.
McGregor criticized classical organizational designs for underutilizing employees' skills and
talents.
While the Theory X/Y distinction is made at the individual manager level, it has implications
for organizational design
o Theory X organizations Typically have narrow spans of control, strict lines of
authority, and numerous rules and procedures.
o Theory Y organizations Feature wider spans of control, more flexible lines of
authority, and fewer rules and procedures.
Considered more humane and offer potentially more fulfilling jobs for
employees.
Potential downsides of theory Y:
o The assumption that all employees desire personal growth
o The risk of confusion and conflict due to less clear lines of authority.
Human organization (Likert)
Likert classified organizations into four types: System 1 through System 4.
System 1 Exploitive authoritarian Characterized by little trust in employees, centralized
decision-making, and dissatisfied employees.
System 2 Benevolent authoritative Similar to System 1 but with some level of trust in
employees and occasional communication with upper management.
System 3 Consultative Greater trust in employees, more communication, and decision-
making shared between higher and lower levels.
System 4 Participative group Characterized by complete trust in subordinates, free-
flowing communication, decision-making at all levels, and excellent performance potential.
System 5 was proposed later Identical to System 4 but with shared leadership, common
in self-managed academic departments
o While System 4 and 5 organizations are often successful and fulfilling for employees,
they may face challenges such as information overflow or the absence of clear
leadership
The major weakness in Classical and Humanistic organizational theories is the assumption that
there is one most effective way to run an organization Leads to the development of contingency
theories of organization
Contingency Organizational Theories
Problem 1 – Organizational structure, strategy & culture
(1a)
What is the best way to structure/organize an organization?
What are the determinants of organizational structure?
What is (models/theories of) organizational culture?
What are the effects/consequences of culture for organizations?
How does organizational culture evolve/change over time?
(1b)
What is (models/theories of) organizational strategy?
What are the determinants of organizational strategy?
Can strategy be "planned"?
(combination with vignette 1a) How does organizational structure, culture and strategy
interact with each other?
(1c)
What is a "modern" organization?
How is it different from a "classic" organization?
G.1.1 Jex - Organizational Theory and Design
INTRODUCTION
Primary focus of organizational psychology Individual behavior within organizations
o Factors impacting individual behavior Compensation programs and group
dynamics like cohesion.
Organizational theory Conceptualizes how organizations function and interact with their
environment.
Organizational design Translates theoretical concepts into concrete organizational structures.
AIM: Discuss organizational theory's broad field, its importance in forming organizational
designs, and factors influencing design.
WHAT IS AN “ORGANIZATIONAL THEORY”?
Organizational theory is often misunderstood Encompasses various perspectives such as a
field of study, metaphorical language describing organizational processes, or determining optimal
organizational structure.
Organizational theorists face challenges in studying organizations directly due to their abstract
nature, leading to the use of indirect methods like metaphors
o Common metaphors Likening organizations to biological organisms or machines
Highlights constant interaction with the environment and internal coordination
o Other metaphors Organizations as the brain, families, or political arenas Reflect
the complexity of modern organizations and may offer additional insights into
organizational design and functioning
The design of many organizations today is highly complex Requires the consideration of new
metaphors to understand them effectively.
, 3.5C Organizational Psychology - Chapter Notes
MAJOR ORGANIZATIONAL THEORIES
Organizational theory Field of inquiry focusing on ideas/models of organizing human activity
Over time, three general types of organizational theories have been developed.
Classical Organizational Theories
Scientific management
Scientific management originated in organizational psychology and job design, embodying a
philosophical approach to organizational structure.
Principle 1: It advocates for the separation of work designers from work performers Implies
hierarchical differences among employees
o This approach leads to organizations with multiple hierarchical levels to delineate status
and responsibilities effectively.
Principle 2: Another key principle involves breaking down work into its simplest components,
facilitating task simplification.
o Employees with similar tasks are grouped together, often forming specialized
departments within the organization.
o Consequently Scientifically managed organizations consist of numerous departments,
each dedicated to performing highly specialized functions
Principle 3: Scientific management also entails the proliferation of rules and procedures within
the organization
o Emphasis on identifying the most efficient methods for task execution
o This pursuit of efficiency leads to the belief in a singular optimal approach to every task
Reflected in extensive "policies and procedures" manuals
o These manuals provide scripted instructions for employees to follow in various situations
or contingencies Aligns with the ethos of maximizing efficiency and productivity
Ideal Bureaucracy (Weber, 1947)
Ideal bureaucracy Aiming to organize human activity efficiently.
Proposed as an alternative to prevailing organizational models during the Industrial Revolution.
Traditional family-run businesses were insufficient for handling the large urban workforce needs
Emphasis on rewarding contributions over social or familial connections
Principle 1: Ideal bureaucracy relies heavily on established rules and procedures
Principle 2: Close supervision of employees Narrow spans of control for effective
management
Principle 3: Unity of command Ensures each employee has one direct supervisor
Reducing role conflict
Principle 4: Unity of direction Information flows hierarchically, from top to bottom
Ensuring predictability and control
Effectiveness of ideal bureaucracy depends on implementation and organizational environment
It can be combined with other organizational forms for optimal outcomes
, 3.5C Organizational Psychology - Chapter Notes
Administrative Management (Fayol, 1916)
Fayol aimed to establish universal organizing principles for managers
Fayol outlined five major management functions: planning, organizing, commanding,
coordinating, and controlling
Fayol's 14 organizing principles were designed to assist managers in carrying out these
functions
Many of Fayol's principles align with those of ideal bureaucracy (Division of work, well-
defined authority structure, unity of command, unity of direction, order, and equity)
Unique principles Stability of personnel, encouraging initiative, and fostering cohesion
among employees.
Criticism:
o Overlooks the human element in organizations and treat employees as
interchangeable cogs.
o Too general and lack specific guidance for implementation
Humanistic Organizational Theories
Douglas McGregor and Rensis Likert were prominent figures in this movement.
Human organizational theorists criticized classical theories for dehumanizing the workplace
and underutilizing employees' creativity and initiative.
They argue that classical theories' assumptions about human nature were flawed.
o Classical theories With their emphasis on order and control Assumed that
employees lacked motivation and creativity
Theory X/Y (McGregor)
, 3.5C Organizational Psychology - Chapter Notes
Theory X managers Believe that employees inherently dislike work and require coercion
and close monitoring
o They assume that employees lack ambition, are not self-directed, and prioritize
security over all else.
Theory Y managers Believe that work is a natural part of life and that employees seek
meaning in their work
o They assume that employees are capable of self-control, seek responsibility, and can
creatively solve organizational problems.
McGregor criticized classical organizational designs for underutilizing employees' skills and
talents.
While the Theory X/Y distinction is made at the individual manager level, it has implications
for organizational design
o Theory X organizations Typically have narrow spans of control, strict lines of
authority, and numerous rules and procedures.
o Theory Y organizations Feature wider spans of control, more flexible lines of
authority, and fewer rules and procedures.
Considered more humane and offer potentially more fulfilling jobs for
employees.
Potential downsides of theory Y:
o The assumption that all employees desire personal growth
o The risk of confusion and conflict due to less clear lines of authority.
Human organization (Likert)
Likert classified organizations into four types: System 1 through System 4.
System 1 Exploitive authoritarian Characterized by little trust in employees, centralized
decision-making, and dissatisfied employees.
System 2 Benevolent authoritative Similar to System 1 but with some level of trust in
employees and occasional communication with upper management.
System 3 Consultative Greater trust in employees, more communication, and decision-
making shared between higher and lower levels.
System 4 Participative group Characterized by complete trust in subordinates, free-
flowing communication, decision-making at all levels, and excellent performance potential.
System 5 was proposed later Identical to System 4 but with shared leadership, common
in self-managed academic departments
o While System 4 and 5 organizations are often successful and fulfilling for employees,
they may face challenges such as information overflow or the absence of clear
leadership
The major weakness in Classical and Humanistic organizational theories is the assumption that
there is one most effective way to run an organization Leads to the development of contingency
theories of organization
Contingency Organizational Theories
