good

1. Human Relations
Theory
1

2. Human Relations Theory
• 2nd
approach to organizational analysis.
Reflects different period.
• Human relations (HR) research began in
1930s as a reaction to classical assumption
about people in the work environment.
• HR stresses on the Social & Emotional
aspects of the organization i.e Employee
orientation
2

3. Human Relations Theory…
• Says CT ignores Human Element as it treats
people as ‘cog’ in an organization machine.
Dehumanization in Taylor’s SM & Weber’s
Ideal Type.
• Strive to harmonize workplace through
such things as:
– (a) employee counseling program
– (b) group-based wage incentives, and
– (c) leadership training
Stanley BK Kiai - unimas 3

4. Human Relations Theory…
• Focuses on small groups & social norms
within them, and informal & unplanned
pattern of behavior.
• Accepts efficiency & productivity as the
legitimate values of an organization.
• Seeks to maximize efficiency & productivity
through elimination of dysfunctions caused
by:
4

5. Human Relations Theory…
– (a) overspecialization
– (b) alienating hierarchical arrangements, and
– (c) general dehumanization
• Attracts attention from social scientists.
• HR theorists condemns the Evils of
Structure. Relates industrial jobs to mental
illness & accepts participative mgt
• Replaces by organizational behavior in the
1960s.
5

6. Human Relations Theory…
• Discusses 4 HR:
– Abraham Maslow’s Hierarchy of Needs.
– Hawthorne’s Research
– Douglas McGregor’s Theory X and Theory Y
– Frederick Herzberg's Motivation-Hygienic
Theory
6

7. HR – Abraham Maslow’s
Hierarchy of Needs
Self-
Actualization
Esteem
Belongingness
Safety
Physiological
7

8. HR – Abraham Maslow’s
Hierarchy of Needs
• The pyramid illustrates the hierarchy of
needs. After one’s need is met, the
individual will move on to the next need.
• Five basic needs:
(a) Physiological (for food, drink, shelter, sex
and sleep).
(b) Safety (security, stability, freedom from fear).
(c) Belongingness & Love (social –relate to
others; about friendship, love and members
of the community.
8

9. HR – Abraham Maslow’s
Hierarchy of Needs
(d) Esteem/self-respect (achievement,
competence, independence, prestige,
status)
(e) Self-actualization (self-fulfillment, attaining
ultimate goal in life, able to achieve full
potential.
9

10. HR – Abraham Maslow’s
Hierarchy of Needs
• Maslow’s contention – no ‘best way’ to
motivate workers.
• But management must be sensitive to the
fact that workers have variety of needs.
• Implication of the theory:
(a) Needs change so motivation change.
(b) What motivate people may also change.
10

11. HR – Abraham Maslow’s
Hierarchy of Needs
(c) Managers to be aware of the different
needs & recognize the stage the individuals
have reached.
(d) Motivation is a reflection of individual’s
role in the organization. People at the
bottom just want to satisfy their
physiological needs, for instance.
(e) satisfaction of needs does not say any
thing about improved performance.
11

12. HR – Abraham Maslow’s
Hierarchy of Needs
• Critics:
(a) Individual needs may be satisfied outside
the organization (by family & friendship
ties)
(b) People may want to satisfy their needs at
the same time.
(c) Self-actualization is hard to explain. Full
potential may be realized elsewhere like
in sports or hobbies.
12

13. HR
Hawthorne’s Research
• Conducted in the Western Electric
Company in Chicago from 1927-30.
• Headed by Elton Mayo.
• Experiment begins with a premise that the
physical conditions at work directly affects
productivity.
• Hypothesis – increase illumination
increases productivity of the worker
13

14. HR
Hawthorne’s Research
• Experiment proceeded by reducing the
lighting – but productivity remain higher.
• Experiment concludes that workers actually
respond to the experiment itself, i.e.
physical factor.
• Phenomenon called the ‘Hawthorne Effect’
• In the context of the organization – it
stands for the premise that social &
psychological factors determine workers
productivity.
14

15. HR
Hawthorne’s Research
• Departure from the dehumanizing SM as it
sees human factors as key to efficiency.
• Researchers also observe that workers
socialize with one another & form an
informal group.
• Workers respond to changes in the
environment as groups rather than
individuals.
• Important conclusion from Hawthorne’s
Experiment:
15

16. HR
Hawthorne’s Research
(a) Productivity – strongly affected by social
and psychological factors, not simply by
physical ability and stamina.
(b) Non-economic rewards and sanctions
significant in determining workers’
motivation and their level of satisfaction.
(c) Highest degree of specialization not
necessarily the most efficient approach to
dividing labour.
(d) Workers may react to mgt, the
organization, and work itself as members
of the groups rather than as individuals.
16

17. HR
Hawthorne’s Research
• HRT puts emphasis on:
(a) Both the economic and non0economic
needs of the workers.
(b) Designing jobs that make workers socially
and psychologically satisfying.
(c) Work-management communication in
decision-making.
(d) Worker participation in decision-making.
17

18. Douglas McGregor’s Theory X and Theory Y
• In his book ‘Human Side of the Enterprise’
(New York: McGraw-Hill, 1960) McGregor
developed two contrasting approaches to
management: Theory X and Theory Y.
• Theory X represents management’s
assumptions about employees. Assumption
is about human nature.
• The theory leads to establishing a coercive,
authoritarian classical structure.
18

19. Douglas McGregor’s Theory X and Theory Y
• Theory Y focuses on employees’ higher
order needs. This leads to the design of
more human organizations.
• Specialization, close supervision and
bureaucratic controls are replaced by job
enlargement, participative leadership and
self-control.
• Theory X assumes average worker as:
(a) Indolent (i.e. disinclined to work).
Workers dislike works. All rational people
will do as little as possible. Lazy
19

20. HR
Douglas McGregor’s Theory X and Theory Y
(b) So workers need to be cajoled
(persuaded) or threatened in order to
persuade
them to work.
(c) Lack ambition.
(d) Lack creativity.
(e) Largely indifferent to organizational
needs, and
(f) In favor of close and continuous supervision.
20

21. HR
Douglas McGregor’s Theory X and Theory Y
• Theory Y assumes people:
(a) Find work natural (as rest and recreation)
and enjoyable. Work activities are great
sources of satisfaction. No threat needed.
(b) Have high degree of creativity.
(c) Will increase self-control and self-
direction.
(d) Highly motivated.
21

22. HR
Douglas McGregor’s Theory X and Theory Y
(e) Have potential for development.
(f) Have the capacity to assume
responsibility (if given the right
direction).
(g) Have the readiness to direct behavior
towards organizational goals (committed
to organizational objectives.
22

23. HR
Douglas McGregor’s Theory X and Theory Y
• “The human system is made up of interlocking work groups with a
high degree of group loyalty among members and favourable
attitudes and trust between supervisors and subordinates.
Sensitivity to others and relatively high levels of skill in personal
interaction and functioning of groups also are present. These
skills permit active participation in decisions on common problems..
Responsibility for the organisation’s success is felt individually by the
members and each initiates action, when necessary, to assure that
the organisation accomplishes its objectives. Communication is
efficient and effective…The leadership in the organisation has
developed what might be called a highly effective social system for
interaction and mutual influence”
• (Rinsis Likert, “Human Organisational Measurements: Key to Financial Success,” in Natemeyer, ed.,
Classic of Organisational Behaviour, pp. 293-97).
23

24. HR
Douglas McGregor’s Theory X and Theory Y
• Importance of McGregor’s theory is about
perception.
• Critics of organizational humanism approach argue
that:
(a) Many workers fit the assumption of Theory X more
than Theory Y.
(b) Organizational humanism lacks empirical
groundings.
(c) Theory Y is too ideological.
(d) Production-conscious managers think it is too
employee-centered.
(but then both ideologies & technological and scientific
development have the potential to change relationship in
the workplace)
24

25. HR
Frederick Herzberg's Motivation
Theory
• Argued (1966) that we need to take into account:
(a) The environment where the workers work.
(b) Not only the needs and the motivation of the workers
• Developed a theory of 2 sets of factors at work
(a) first with the content of work & amount of job satisfaction that
an individual receives i.e. the motivation factor which includes:
i. The sense of achievement
ii. The sense of responsibility
iii. The sense of recognition
iv. Advancement of work
v. the content of the job itself
25

26. HR
Frederick Herzberg's Motivation Theory
– Called motivation factor because of its highly
positive effect on people’s feeling about their
job
• (b) Second concerns with the context of
work & environment
– Herzberg called this the ‘hygienic’ or
maintenance factor
– Hygienic factors because “they act in a manner
analogous to the principle of medical hygiene
where hygiene operates to remove health
hazard from the environment of man. Not
curative but preventive.
26

27. HR
Frederick Herzberg's Motivation Theory
– Argument: if job environment can be
maintained at an acceptable level then feelings
of dissatisfaction among workers can be
avoided.
– Hygiene factor includes:
• The level of salary
• The quality of supervision
• Working conditions
• Interpersonal relations with supervisors
• Company policy & administration
27

28. HR
Frederick Herzberg's Motivation Theory
• Herzberg's theory concerns with both the content & the
context of
• Hygiene factor relates to the general environment
• Motivation factor is intrinsic to the nature of job
• Job satisfaction achieved through job enrichment through
increase responsibility & more challenging task
• Job satisfaction lead to motivation to work harder
• Poor ‘hygiene factor’ like poor working environment, poor
salary and poor supervision - demonization
28

29. HR
Frederick Herzberg's Motivation Theory
• Weakness:
– Oversimplification
• Satisfies one worker may not satisfy the next worker
• Some individuals not interested in the job content of
their work
• Good job context like good working relations & a
pleasant environment increase morale but
individuals may not be motivated to seek
responsibility
29

30. HR
Frederick Herzberg's Motivation Theory
• Implication
– General work environment pleasant enough to
avoid dissatisfaction
– But major improvements in motivation achieve
through changes in the nature of the job itself
30

31. Herzberg's Motivation-Hygiene Theory
Presence ofPresence of
MotivationMotivation
FactorFactor
Absence ofAbsence of
MotivationMotivation
FactorFactor
Presence ofPresence of
Hygiene FactorHygiene Factor
Situation 1Situation 1
Happy &Happy &
InterestedInterested
Situation 2Situation 2
Happy &Happy &
Not InterestedNot Interested
Absence ofAbsence of
Hygiene FactorHygiene Factor
Situation 3Situation 3
Interested butInterested but
Not HappyNot Happy
Situation 4Situation 4
Not happy & NotNot happy & Not
InterestedInterested
31

32. Contingency Theory
• Developed systematically in 1960s
• Basic Premise – “there is no best way to
organize” but any way of organizing is
not equally effective”
• Contingent on a number of factors
affecting organization
(a) Task environment of the organization
(b) Technology used within the organization
(c) Organization's size
32

33. Contingency Theory…
• “Organisation with highly predictable tasks
perform better with organisation characterized by
the highly formalised procedures and management
hierachies of the classical approach. With highly
uncertain tasks that require more extensive
problem solving, on the other hand, organisations
that less formalised and emphasise self-control and
member participation in decision making are more
effective. In essence, according to these newer
studies, managers must design and develop
organisations so that the organisational
characteristics fit the nature of the tasks to be
done”
(quoted from Kernaghan and Siegel, 1999:80)
33

34. Contingency Theory…
• The task environment of an organization
consists of:
(a) Clients or customers
(b) Competitors
(c) Suppliers
(d) Regulatory agencies
(e) Legislature (in public organization).
Legislature establishes the organization &
provides its funding)
34

35. • ie Contingency theory recognizes
external environment affecting
organizational structure
• Example of things that affect structure:
(a) Market uncertainties
(b) Government regulations
(c) Technical changes
35

36. Contingency Theory…
• Those organizations are flexible & have the
ability to change rapidly in line with
changes in the environment
• Often organizations adapt the environment
• Sometimes organizations want to change
the environment to make it less
troublesome
36

37. Contingency Theory…
• Technology
• Importance of technology to organizational
structure discovered in England
– Different production techniques matched different
structural designs
• Woodward (1965) identifies 3 types of
technology
– Small (tailor, photo shop, hair saloon)
– Big (car factory)
– Continuous production process (oil-refinery &
electricity)
37

38. Contingency Theory…
• The process by which an organization
converts inputs into outputs
• Example – assembly line in production of
finished products
• Assembly line
– Routine & repetitive matter
– Broad span of control as problems not likely to
occur
– Pre-arranged solutions for problems
38

39. Contingency Theory…
• Production process less specified as in a
policy advice unit
• Smaller span of control – new task differs
from previous ones
• Superiors & subordinates need to work
closely together
39

40. Contingency Theory…
• Size of Organization
(a) Impact of size on organization has classical
origins – links primarily with Weber – links
size with structural components.
(b) Small organization
• CEO in daily contact with subordinates –
understand own responsibility, task (what is to be
done)
• Example – small family-owned restaurants
• Less formal
• Use fewer rules
• Retain employees longer
• Depends on top management to make decisions
40

41. Contingency Theory…
• Large Organization
– Hierarchy
– Written job description
– Example – large restaurant chains
• Use formal rules extensively
• Tolerate more employees turnover
• Most decisions programmed or predetermined by
standards operating decisions
• Decision can be delegated to lower-level personnel
41

42. Contingency Theory…
• Studies
– Result mixed
– Morse & Lorsch examined 4 firms: 2 engaged in
predictable manufacturing tasks & 2 in
unpredictable research & development tasks
• Results supported CT. Firm with congruence
between tasks & organisational structure more
effective performer
– Findings of some recent studies not as concrete
as Morse & Lorsch
42

43. Contingency Theory…
• Discrepancies – look more at other
variables or refine measurement techniques
• CT has some value
• Basically CT tries to predict performance &
effectiveness
• Level of effectiveness depends on an
organization's design matching the
contingency like size
• Strength
– Dynamic (manager should realize that there is
no ‘one best way’
43

44. Contingency Theory…
• Weakness
– Overemphasis on differences between
organization – so exclude similarities
– Treat every situation as unique (should strike a
balance between prescriptions & the statement
that all situations are different)
– Some people see CT fares better than classical
school because:
• It defines variables ignored in earlier works
• Set forth testable prepositions about these variables,
and
• Yields an increasing amount of empirical research.
44

45. Contingency Theory…
• Also carries implicit design implications as:
– Directs mgt attention to the contingencies that
must be considered in organization design
– Prescribes a match between designs &
contingencies
– Correct match leads to successful organization
45

46. Contingency Theory…
Contingency
Small Size Large Size
Few rules or Effective Ineffective
Procedures performance performance
Organization
design
Existing rules Ineffective Effective
& procedures performance performance
46

47. Organization Theory
Open Systems Approach
• Proponents (mostly psychologists such as
Robert Merton, Talcott Parsons, Daniel
Katz & Robert Kahn) of this approach
dissatisfy with earlier theories. Emphasize
(too much):
(a) activities of individuals within
organisations.
(b) activities of organisation as a
monolithic body.
47

48. Organization Theory
Open Systems Approach
• Argue that main concerns of those theories
– functioning of the component parts &
their interrelations.
• Regard that kind of thinking as ‘close
system’ approach. Not taking environment
into consideration. Close system theory
focuses on:
(a) ability (equilibrium);
(b) control mechanisms; and
(c) predictable responses
48

49. Organization Theory
Open Systems Approach
• Registration of a motor vehicle is a close
system:
(a) registrant submit the required payment
& document of insurance and inspection
(inputs)
(b) the bureau processes these
(conversion); and
(c) issues the registration (output)
49

50. Organization Theory
Open Systems Approach
• Proponents of Open Systems approach
influence by biological models because:
(a) internal organization of organism; and
(b) how interacts with the environment.
• Explain the approach through ‘inputs-
throughputs-outputs-feedback’ processes:
(a) 1st
, organism receives inputs from its
environment;
(b) then converts them into outputs; and
(c) through feedbacks get more inputs
50

51. Organization Theory
Open Systems Approach
• Human being operates in the same principle:
(a) need nourishment, shelter, and psychic
encouragement;
(b) convert to work effort [sold for cash or traded to
satisfy such needs as food, shelter, and psychic
encouragement
• Proponents think organization could be approach this
way. Organized needs:
(a) inputs like labor power, raw materials, capital etc.
(b) convert to finished product sold for cash &
purchased more inputs
51

52. Organization Theory
Open Systems Approach
• Daniel Katz and Robert Kahn argue
organization must adopt the input-
throughput-output process to reverse the
normal entropy.
• Entropy
Is the process through which organisms are
subject to deteriorating. In complex
physical systems, as the system becomes
larger, the individual parts of the system
become more disorganized until they are
no longer able to sustain the organization
as a whole. At this point, the system
perishes. (Kernaghan and Siegel, 1999: 80)
52

53. Organization Theory
Open Systems Approach
• Organization overcomes this process by
developing Negative Entropy. Defines as
the “process of importing and storing more
energy than it expands” (kernaghan and
Siegel, 1999: 80)
• With negative entropy organization
expands and survives in difficult times.
Reason: it can draw on the stored reserves
[e.g., cash, assets, also trust and goodwill of
important people.
53

54. Organization Theory
Open Systems Approach
• Lessons:
(a) Open system focuses greater attention on
organizational environment.
(b) Organization cooperate with and adapt to its
environment; adjust to pressures
(c) Suitable for public organizations as they are
always required to take new functions.
- In agriculture for example, inputs depend on weather,
pest control, consumer preferences, strength of
national currency against other currencies, & trade
preferences of other nations.
54

55. Organization Theory
Open Systems Approach
(d) Systems Approach suitable for analysis of the
internal working of organizations, esp. that of their
subsystems and their relationship with one
another.
Katz and Kahn for example identify common
subsystems like production subsystems, supportive
subsystems (procurement etc), maintenance
subsystems (personnel mgt), adaptive subsystems
(concerned with organisational change) &
managerial subsystems (controlling the other
subsystems. Subsystems compete with each other
(managerial seeks control while production seeks
autonomy).
55

56. Organization Theory
Open Systems Approach
• In public sector – program and policy areas
maybe regarded as production subsystems
of organizations.
56

57. Theory Z
Japanese Management
• Japan
– No resources
– Firms produce high quality products at
competitive prices
– Able to penetrate any markets
– Success links to high productivity of Japanese
worker
– Lead to interest in Japanese management & see
if it can be exported
57

58. Theory Z
Japanese Management…
• Characteristic of Japanese Management
(a) Lifetime Employment
- one-third of labor force guaranteed lifetime
employment
- recruitment done once a year from the crop of
University graduates
Not recruited to fill specific position but hired
because of having interests and temperament
compatible with the milieu of the firm
- Hired people for long run
- once hired not to be fired or laid off (other than on
criminal offence)
- Good performance important for promotion
58

59. Theory Z
Japanese Management…
(b) Non-specialized Career Paths
- orientation program for new recruits
- involves rotation in different units. No one
specializes in one function.
- firm has workforce that understand
the total operations of the organization
& the problem faced in other operation
units.
- lead to concern for the total company
rather only one portion of it.
59

60. Theory Z
Japanese Management…
(c) Slow Evaluating & Promotion
- after hiring, new employees move through
a number of different assignments
- progress with each new assignment like
given new responsibility
- But not getting formal evaluation or a
promotion until he has been with the firm
for 10 years.
60

61. Theory Z
Japanese Management…
• Consequence of long term evaluation:
– “game playing” where managers play tricks to
make themselves look good in a short term &
win promotion
– Avoid the game if evaluation done in 10 years
– Managers can take risk of being innovative &
experiencing with new ideas (one project fails
doesn’t destroy their career)
– No evaluation doesn’t mean no added
responsibility. Aspiring senior managers given
scope to make decisions even though still in
junior position.
61

62. Theory Z
Japanese Management…
(d) Large Bonuses on Total Company
Performance
- most significant aspect: all employees
receive the same percentage on total
company performance & not personal, or
even divisional performance.
- encourage managers to put the over all
performance of the company above his.
62

63. Theory Z
Japanese Management…
(e) Slow Collective Decision Making
- collective decision but not exactly
participative
- a small team is assigned to prepare a report:
its members must consult widely in the
organisations
- system works in Japanese firm because all
workers are socialise to show greater concern
for the company than for their own unit.
- decision slow
63

64. Theory Z
Japanese Management…
• Off set by the speed of implementation as
every one understands the aim of the decision
& is in agreement with it.
• Quality-circle consists of a small group of
employees (volunteers)
– Increasing output
– Improving work procedure
– Utilising equipment better
– Improving product design
– Discussing ways to improve job satisfaction or
morale
64

65. Difference between Japanese and
American Organisation
Japanese OrganisationJapanese Organisation American OrganisationAmerican Organisation
Long-termLong-term Short-termShort-term
Slow evaluation & promotionSlow evaluation & promotion Fast evaluation & promotionFast evaluation & promotion
No specialisationNo specialisation SpecialisationSpecialisation
Implicit control mechanismImplicit control mechanism Explicit control mechanismExplicit control mechanism
Collective decision makingCollective decision making Individual decision makingIndividual decision making
Collective responsibilityCollective responsibility Individual responsibilityIndividual responsibility
Total focus on theTotal focus on the
organisationorganisation
Focus on the particularFocus on the particular
section of the organisationsection of the organisation
65

66. 66