Theories of Organization

Roots of IO are in the manufacturing plants and factories. Coming out of the 60’s it was time to move beyond the factories and formally embrace the cubicle.

Two theories of organizations

Classical theory

When different activities come to together towards a specific goal.

Four basic components to any organization

A system of differentiated activities

the processes – structural component

Work processes and how they are arranged


social component

Employees as individuals and the pattern of interactions among employees

Cooperation toward a goal

Four major structural principles

Functional principle

How to divide work

Organizations should be divided into units that perform similar functions


coordination of activities


flow of work

Lateral growth

Scalar principle

Deals with supervising work

Unity of command

each subordinate should be accountable to only one superior

There is a clear chain of command that grows with levels added to the organization.

Communication amongst units is achieved through the people in hierarchy

Vertical growth

Line/staff principle

Dividing work into primary and support functions

Primary functions are line functions

Directly responsible for the primary goals of an organization

Staff functions

Support the line in its overall goal (e.g. administrative staff of the IT company)

Span of control principle

the number of subordinates for a given supervisor

large span

flat organization

Smalls spans

tall organizations

The classical theorists were not psychologists

Despite being antiquated, these principles in many companies are still used.

Neoclassical theory

Synthesis of experience and research in actual work environments.

Critique of the four major structural principles of classical theory

Functional principle

Creates depersonalized and routinized work.

Work has no meaning; they never see the end results

Scalar principle

It ignores informal, integral employee interactions. Cuts down on peer to peer interactions.

Line/staff principle

It’s a vague distinction, and provides little value

Span of control principle

It depends on leadership style, ability, and intensity

Goal wasn’t to create a whole new theory. They just wanted to make some corrections on the classical theory.

Applies more psychology and appreciates the people aspect of organizations

Developed from Hawthorne theories

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