Classical Organizational Theory

The classical writers usually start their reasoning by using examples of very primitive organizations. One favorite, for instance, involves a man who wants to move a stone that is too heavy for him. So, of course, he arranges to secure the temporary services of a second or third man by offering a reward. When one pushes while another pulls, we have the beginning of a division of labor. When the first calls out the signal for a big heave, we have a primitive chain of command serving to integrate the differentiated parts of the system. From such simple examples evolves much of the final theory. They provide the rational basis for deducing many of the so-called “principles” that classical theorists have stressed. Urwick describes one of these rules:

The considerations which appeared of greatest importance were that there should be clear lines of authority running from the top into every corner of the undertaking and that the responsibility of subordinates exercising delegated au- thority should be precisely defined.2

We see here a prescription for three particular structural attributes: (1) limited and prescribed communication chan-nels; (2) detailed role descriptions; and (3) authoritative leadership styles. Another structural attribute urged by Urwick is a narrow span of control:

Students of administration have long recognized that, in practice, no human brain should attempt to supervise directly more than five, or at the most, six other individuals whose work is interrelated.

Mooney supports these points explicitly or implicitly in saying:

The type of management which regards the exact defini- tion of every job and every function, in its relation to other jobs and functions, as of first importance, may sometimes appear excessively formalistic, but in its results it is justified by all practical experience. It is in fact a necessary condition of true efficiency in all forms of collective and organized human effort.*

Comments of this kind can be multiplied at length from these and other authors. There is no doubt that these men are saying that, in the terms of our study, a highly formalized structure with a directive or authoritarian leadership style will lead to high performance. Furthermore, as Mooney indicates, these writers see this type of structure as universally applicable. Urwick also makes this point in no uncertain terms:

It is the general thesis of this paper that there are prin- ciples which can be arrived at inductively from the study of human experience of organization, which should govern ar- rangements for human associations of any kind. These prin- ciples can be studied as a technical question, irrespective of the purpose of the enterprise, the personnel composing it, or any constitutional, political or social theory underlying its creation.5

Since these writers saw no need for different kinds of organizations, it follows that they were not concerned with the sort of organizational differentiation that we have studied. To them differentiation was in terms of technical and physical facts per se, such as technical process differences, or product or geographical differences. They tended to assume that the greater the specialization in terms of these differences, the greater the concentration of expertise, and the better the organizational performance. They generally minimized the problems of integrating these different parts since, according to them, the very process of creating the division of labor into highly specified roles also created the chain of command that assured that the role performances would be carried out as specified. Thus the chain of command is the mechanism of integration, and its effectiveness can, by and large, be taken for granted.

How do we reconcile this theory with the findings of the study? It is revealing to note that these writers pick as starting examples organizations designed to perform such simple and obvious tasks as moving stones. The goal of moving a stone is about as clear-cut and certain as one can find. There will be no doubt when the task is completed and a minimum of uncertainty about the choice of methods (presuming, as these theorists did, that no appropriate machinery is immediately available). Given this kind of environment, the conclusion that the highly structured system they recommend will lead to high performance is consistent with the findings of our research. But obviously these men did not learn how to build organizations by rolling stones. We can throw a clearer light on this theory by examining the per- sonal backgrounds of these writers, all of whom had considerable firsthand experience in organizations.

Urwick’s early organizational experience was of two kinds. The first was as a young Oxford graduate in the British Army during World War I. Judging from his frequent references to it, this experience was apparently very important in shaping his ideas about organizations. But let us not jump hastily to stereotypes about military organizations. Not all military tasks are the same, and differences in goals tend to induce different kinds of organizations. Nevertheless, the massive armies arrayed against each other in the trench warfare of World War I were faced with a kind of task that must have generated tremendous pressure toward a highly structured system. The overall job of attacking or holding was clear and simple. The coordination of all details necessitated centralized planning. A very strong chain of command was required to carry out the innumerable details involved in the proper timing of widespread and diverse activities, to say nothing of the problem of maintaining discipline under such inhuman conditions. Urwick’s other firsthand experience was in the production side of a chocolate candy company during the 1920s. Here again we can speculate that a highly structured organization was probably quite relevant in the context of this firm’s environment.

Fayol, the senior writer in the classical school, had an extended career in the top management of a large coal mining company in France. It was in this setting that he developed his ideas about administration. Here again, we can speculate about the nature of his firsthand experience in a large organization designed to cope with an almost uniquely stable technological and market environment.

Similarly, Mooney, a vice president and director of General Motors, seems to have acquired his principal organizational experience in the automotive industry. It was as an officer of General Motors in 1931 that he wrote, with Allan Reiley, his principal contribution to the literature, Onward Industry! 6 While this was at the end of a decade of great growth in the automotive industry, it was nevertheless a relatively stable period in terms of technical change and even in terms of the nature of the consumer’s demand. And, of course, the automobile assembly line has always been cited as the extreme example of a routinized technical process. Is it any wonder that out of this experience Mooney wrote of the advantages of a highly structured organization?

Knowing something of the personal backgrounds of some of the key contributors to classical organization theory helps us to understand why they strongly recommended a particular kind of organization model—a highly structured, authoritarian system. It does not, however, completely explain why these men made such dogmatic statements about the universality of this model and thereby exposed themselves to a lot of subsequent criticism. After all, they had some experiences broader than those we have cited. Fayol became involved in governmental organizations; Urwick, in international organizations; and Mooney, in consulting organi- zations. Again, some historical perspective makes their positions more understandable.

The quotations we have cited were written before the mid- 1930s. At that time very few writers were even suggesting alternative ways of looking at formal organizations. About the only exceptions were Mary Parker Follett and Elton Mayo, in his early work. The general beliefs and mores of the times supported the classical position. The ideas were implicit in the legal definition of the corporation. They were rooted in the traditional concept of the master-servant relationship, which had been carried over to the employer-employee relationship. While the union movement was questioning this basis, the assumptions were still well established. It was in this historical context, which now seems so distant, that these authors felt justified in making such categorical statements about the one best way to run any kind of organization for any kind of purpose. Even today this idea, while publicly denied, persists in the practice of many administrators.

At this point we make special mention of a well-known writer of the classical school who was a notable exception to their “universal” approach. This was Luther Gulick. Many of his generalizations are in sharp contrast to those quoted above. Note the following:

Students of administration have long sought a single prin-ciple of effective departmentalization just as alchemists sought the philosopher’s stone. But they have sought in vain. There is apparently no one most effective system of departmentalism.

. . . organization must conform to the functions per- formed.

In the discussion thus far it has been assumed that the normal method of interdepartmental co-ordination is hier- archical in its operation      In actual practice, there are also other means of interdepartmental co-ordination which must be regarded as part of the organization as such. Among these must be included planning boards and committees, interdepartmental committees, co-ordinators, and officially arranged regional meetings, etc.

These statements certainly convey a tone that is much more in line with the findings of this research. In the light of Gu- lick’s background, this is not so surprising. First of all, he was an academic, with a firsthand knowledge of the collegiate organization of the university. Second, his professional work was focused on governmental organizations, particularly on the myriad forms that appear in a large city government. Most of the examples he cites are drawn from these settings. How could one be a universalist after studying such a mixed bag of organizations, ranging from the police force to the city council?

We do not want our brief discussion of its origins to leave the reader with the impression that classical organizational theory has no current value. We are arguing instead that it presents a special case that can now be subsumed within a more general theoretical framework. The “principles” of the classicists can be treated as one end of a continuum. In fact, without even too much change, their key concepts can be translated into the conceptual framework of this research. As examples, let us discuss the scalar principle, the line-staff dis- tinction, departmentalization, and finally, the related concepts of authority and responsibility.

The “scalar principle,” as used by classical writers, is a complex or compound concept that we must break up into parts to relate to the concepts of this study. First, it concerns the process “by which this [supreme] coordinating authority operates from the top throughout the entire structure of the organized body … In organizations it means the graduation of duties … according to the degrees of authority and corresponding responsibility.” 10 This seems to refer to what we have described as the distribution of influence. The classical writers assumed that theirs was the only conceivable way to allocate authority in an organization—high influence at the top, with less at each descending level, to low or no influence at the bottom. In this study we have made no arbitrary prior assumption about the “right” way to distribute power and have treated influence distribution as a variable. A sec- ond idea buried in the scalar concept is that of coordination. Classicists assume that the superior coordinates the efforts of his subordinates. All conflicts, according to this theory, are referred to the shared superior for resolution. In this study we have seen that this is but one of various methods organizations actually use in settling differences and achieving integration. As we see it, the locus of conflict resolution is also a variable. It does not always reside in the boss, but can be built into a number of roles. Finally, the scalar concept suggests that each role in the hierarchy should be “precisely defined” in order to get clear lines of authority running from the top. This is part of what we have chosen to call degree of formal structure. The classicists tended to see high structure as always contributing to high performance. Once again, we have seen high structure as but one end of a continuum.

The classical writers gave a good deal of attention to the distinction between line and staff roles. In spite of this con- centrated scrutiny, they failed to agree on any single useful definition. They were clear about the nature of the line role: Its occupant was the man in the chain of command who received delegated authority and responsibility from above and, in turn, passed it on to his subordinates and, by this process, coordinated their work. It follows from this definition that staff roles have no authority and are unnecessary to achieve coordination. This is what creates the problem. The factual existence of non-line executives doing coordinating work could not be denied, but the classical definition of the line role makes them all redundant. Classical writers resorted to lengthy circumlocution to avoid this logical fallacy—without much success. In this study no such dilemma arises. The line- staff distinction has no meaning in our terms. We do distinguish between integrating and specialist functions that exercise a mix of both knowledge-based and position-based influence. Since we never assumed that “line” roles do all the integrating or have all the influence, this comes as no shock.

The issue of departmentalization or division of labor was another central concern of the classical writers. They were searching for some central answer to the question of how to group sub-tasks so that the overall task of any organization could best be performed. They were chiefly preoccupied here with the issues of alternative ways of arranging spatial and technical differences among sub-units. Gulick is the only writer who gave significant attention to the differences in orientation that develop among sub- groups and the effects of these differences on the state of integration. Gulick developed some intriguing ideas, but he was not able to test them empirically. Of course the present research started off with this same concern; by tying differentiation to the environmental task and by demonstrating its antagonism to integration, we have made this issue amenable to systematic research. More detail on the practical implications of the findings for organ- izational design will be offered in the final chapter. Suffice it to say here that the usual structural choice between organizing sub-units along functional or product lines presents a trade-off, in our terms, between emphasizing differentiation at the expense of integration (functional sub-units), or vice versa (product sub-units) . Except for Gulick the classical writers generally emphasized the positive effects of more and more specialization (differentiation) and assumed that the chain of command could handle the associated problems of integration. Once again, in the light of this study, we can see that the classical emphasis on the ultimate in specialization is but one end of a spectrum of choices that vary in their relation to performance, depending on the relevant environmental conditions.

The two most central and most elusive concepts in classical theory are those of authority and responsibility. The formal definitions of these terms are hard to find in the literature and are of limited use for our purposes. The concepts are so basic in the theory that their meaning has to be derived from the context in which they are used. Mooney’s writing is of special help in this regard. Mooney finds he cannot discuss the distribution of authority in an organization without first introducing the idea of delegation. He writes: The principle of delegation is the center of all processes in formal organization. Delegation means the conferring of a certain specified authority by a higher authority.” 11 Elsewhere he refers to the “supreme coordinating authority. 12 Thus we see him using the term authority as if it can best be conceived as a finite substance residing initially with the supreme commander, who then parcels it out in specified amounts to others. This idea of authority has much in common with, and probably historically derives from, the legal concept of the rights of property, which include the right to appoint (and remove) agents to act in certain specified ways on the owner s behalf.

When Mooney gets to the very bottom of the command hierarchy, he sees clearly that the workers have authority to act in regard to the material resources of the organization. “Even the foreman of the section gang delegates an authority to his men, an authority to do certain things.”13 But Mooney recognizes that he is getting into deeper water when he extends this notion of authority for things to authority over people:

The answer [to getting the job done] is not found merely in the exercise of his authority; the right of command to tell one person to do this and another to do that. . . . The ex- ercise of leadership presupposes, as its first necessity, the power of understanding. The true leader must know in its entirety what is intended and know it so clearly that he can see the end from the beginning. Such knowledge is a neces- sity of leadership.14

If we remove its pomposity, this statement reduces to the argument that, to be effective, a manager’s actions toward others must be based on the best available knowledge of the situation at hand—a contention with which few would quarrel and which the empirical findings of this study support. We would, however, be missing the important point if we ignored the aspect of Mooney’s statement that strikes us as pompous: that for his kind of organization to work effectively, people need to believe that the boss is a “true leader”—one who clearly sees all things from beginning to end and therefore is a proper person to obey without question. This is the assumption that superior authorities have superior knowledge.

In our study the concept of influence has been important, and we intend it to subsume the classical notion of authority. The classical authority based on delegation of power we call position- based influence. This gives the incumbent of a specified position certain powers to commit organization resources, based on. the delegated legal rights of property, and to influence the behavior of others, based on some control of the rewards and punishments the organization can bestow. We re-ject the classical assumption that knowledge automatically co- incides with position-based influence. Rather, we see knowledge- based influence as a variable that it is important to keep separate. We would define knowledge-based influence as the ability of certain persons as persons to influence the commitment of organization resources and to influence the behavior of others, based on the relevance of the information available to them, the soundness of their reasoning, and their reputation for being right in the past. This is an entirely different foundation for influence from position, and both are important organizational variables.

The classical theory also tended to assume that authority is unitary and homogeneous. You either have authority, or you have not. We see the matter differently. Since a manager can have relatively high influence on one class of organization decisions and relatively low influence on another, it follows that influence on different kinds of issues will be distributed throughout the organization according to different patterns. While we have not systematically tracked down all such issues in the organizations we have studied, we consistently picked the most critical class of issue around which to study the influence pattern. In plastics and food it was innovation, and in containers it was customer service. Many other types of decisions were, of course, being made in these organizations, and we would expect a study of them to reveal varied patterns of distribution for both position-based and knowledge-based influence.

Classical theory also treated authority as a measurable and fixed commodity. The chief executive, by this reasoning, had 100% of the authority and, obviously, could parcel out to his subordinates no more than he initially started with. We see the concept of influence differently. The total amount of influence in an organizational system is not fixed but expansible, in much the same way as credit in a banking system. This can be true because influence is essentially a matter of the perceptions that arise from transactions among people. If these transactions are heavily constricted and limited, the people in toto will see themselves as having very little influence on decisions, and we can accurately say that the system has a comparatively limited total amount of influence. The opposite is true if the transactions are many and meaningful: The members of such an organization will see themselves as having considerable influence on decisions. Thus, in our model the total amount of influence in a system is not fixed but a variable.

One final point of difference must oe made. We have seen that implicit in the classical writing was the need to maintain the belief that people with authority (positional influence) also had the relevant knowledge. If managers were to sanction such a belief, they would either have to believe it themselves, or at least act toward their positional subordinates as if they believed it. This style of managerial behavior is what we have termed as directive or authoritarian. Again we conceive of this not as the only managerial style, but as one point in a continuum of styles.

On one fundamental point the present research and the model that underlies it is in agreement with the classical handling of the authority concept. Mooney implicitly supports our finding that the quality of decision making is improved when positional influence is assigned to people with knowledge-based influence. This can equally well be stated the other way around—that the quality of decisions will improve when people with position-based influence also achieve knowledge-based influence.

The classical concept of responsibility is at least as elusive as the notion of authority. The typical statement is that the delegation of authority carries with it a corresponding re- sponsibilty for doing what is authorized. In that sense the term responsibilty connotes such ideas as commitment, concern with results, and willingness to accept blame or praise for outcomes. It further suggests that when one is given positional influence, one should (if the system is to work well) adopt such an attitude of concern. Of course no one would be likely to argue with the proposition that it is helpful to system performance for those exercising positional influence to care about results. But the rub comes when the classical writers assume that this attitude automatically follows from the assignment of positional influence. In Mooney’s words:

The subordinate is always responsible to his immediate superior for doing his job, the superior remains responsible for getting it done, and this same relationship, based on coordinated responsibility, is reported up to the top leader, whose authority makes him responsible for the whole.

The last phrase—that authority makes him feel responsible— states the assumption most clearly. This, of course, avoids the whole problem of motivation. The history of industrial or- ganizations indicates that managers cannot afford to duck this question.

It is an exaggeration, however, to say, as some do, that the classical writers completely ignored the issue of motivation. They simply dealt with it in a limited way, using other terms. They did not want to seem crass, but every manager knows that buried in the statement, “the subordinate is always responsible to his immediate superior for doing the job,” is the simple promise that while you might get rewarded for doing the job well, you will for sure get punished if you do not. In other words, the classical writers knew all about the rewards and punishments the organization can dispense through its chain of command. In fact, they seem to have relied on them completely to induce the desired sense of responsibility. In so doing they ignored the rewards and punishments from peer groups. They also ignored the other major process by which a sense of responsibility is induced. This is the gradual process whereby the individual slowly comes to so identify his own ego with his job role that he is pushed from inside to care about performance in order to satisfy his need to demonstrate competence and mastery.

The classicists’ inadequate treatment of the entire issue of motivation provides a natural transition into our consideration of the human relations school, since historically it was this lapse in classical theory that stimulated the rise of the newer theory. In retrospect, we see that we have been able to use the concepts and findings of our study to place in a fresh perspective the classical approach to organization theory. The concerns and biases of the writers are understandable on the basis of their own individual experiences, and their “principles” are roughly translatable into the variables of this research. The essential point to emphasize is that their principles have only limited applicability, since they meet only the organizational demands generated by relatively stable and homogeneous environments.

Source: Lawrence Paul R., Lorsch Jay W. (1967), Organization and Environment: Managing Differentiation and Integration, Harvard Business School.

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