CHAPTER 2: THE THEORETICAL CONTEXT
2.2 EVOLUTION OF ORGANISATIONAL THEORY
2.2.3 Neo-Classical Organisational Theory
The Neo-classical approach school of thought is closely linked to behavioural science (Günbayi and Sorm, 2019) and expands from the weaknesses and limitations realised from the COT. Drawing from the human and social foundation for an organisation (Nhema, 2015), this human-oriented approach is concerned with the altruistic behaviour that influences one’s willingness to dedicatedly accept and perform allocated specific tasks (Őnday, 2016b). Similar to the evolution of the Classic Organisational Theory, various scholars, both practitioners and academics, have contributed to the development of Neo-Classical organisational theory (refer to table 6). These contributions have not only theoretically contributed but further mapped out the development of the theory’s applicability.
Table 6: The evolution of Neo-Classic Organisational Theory
Scholars (authors) and year) that influenced Organisational theory
Characteristics / factors contributed
The influence of the Hawthorne experiments on organisation theory:
1927-1932
• Illumination experience: Findings from this experience reject the assumptions and principles of scientific management.
• Relay Assembly Test Room: Human productivity is affected by emotional factors rather than scientific factors, as argued in
Taylorism.
• Bank Wiring Observation Room: This experience detailed that an informal agreement is more persuasive than financial incentives for workers to diverge from previously agreed standards.
28 Chester Bernard – The Economic of
Incentives: 1938
Bernard’s contribution is mainly on the notion that an individual is the fundamental strategic factor in an organisation, and regardless of previous obligations, one must be induced to cooperate. Two different theories were thus emphasised:
• Authoritative: This is when communication is directly from the higher-ranking official of a company's hierarchy.
• Incentivise: This is a form of inducing cooperation and may be achieved by either encouraging positive incentives or reducing negative incentives.
Robert Merton – Bureaucratic Structure and Personality: 1940
Merton reasoned that an organisation’s meaning rests upon the personalities and alliances of those within the bureaucratic structure.
Herbert Simon’s contribution to organisation theory : 1946
Simon (1946) argued that for all organisational principles such as the “span of control” and “unity of command”, there is an equivalent plausible contradictory principle.
Philip Selznick – Foundations of the Theory of Organisation: 1948
Selznick’s argued that organisational threats must be addressed through policy reform. Hence, he perceived organisations as an adaptative system where conflict between the personal and organisation goals must be harmonised for the organisation's good.
Modifications of the pillars of the Classical Organisation Theory: 1961
In line with behavioural science, classical doctrine pillars are considered modified by those within the context of the informal organisation. Listed below is the way these pillars were modified:
• Division of labour- feeling of
namelessness/unworthiness associated with those conducting trivial tasks.
• Scalar and functional processes: overlapping of functions and jurisdictions
• Structure: formal structure represents how things are supposed to exist. The informal organisation and people’s social needs dictate how things are done.
• The span of control is a function of human behaviour and may not be reduced to an exact applicable ratio.
Richard M. Cyert and James G. March – A
An organisation practices decision making in the same
Behavioural Theory of
Organisational
manner which individuals process it. In essence, an Objectives -1963 organisation behaves as if there is a central
coordination and control system proficient in directing the behaviour of the members.
The influence of the Hawthorne experiments on organisation theory is generally to indicate an understanding of aspects that influence individuals’ commitment to effectiveness at the workplace (Günbayi and Sorm, 2019). The fundamental finding from the experiments contributes to the notion that social aspects have a vital role than financial incentives in channeling and influencing human behaviour in the work environment.
Bernard (1938), on the other hand, argues that an essential element of organisations is the willingness of persons to contribute their efforts to the cooperative system. Bernard further submits that cooperation of individuals to organisational goals is unnatural and rather a deliberate, mindful action requiring meaningful input from management. As presented in table 6 ,there are two ways in which cooperation may be induced, either through an authoritative or incentivised form of communication.
Simon’s (1947) contribution to the neo-classical theory is specific to behavioural science. In modifying the classical doctrine, the theory submits that an organisation is generally a social system whereby a formal and informal organisation are influenced reciprocally. Selznick (1948) is however the first to introduce the element of co-optation. In this case, co-optation aims to protect an organisation from threats through policy processes and procedures. The theory is distinct from the classical doctrine. Selznick submitted that the organisation should not be perceived as an independent variable that may affect behavioural change but rather a good fit with shared benefit.
Summarily, Selznick advocated for mutual beneficiation between the organisation and personnel.
Merton’s (1940) contribution to Neo-Classical doctrine is in recognising that there are internal stresses and strains within a bureaucratic structure that personalities, groupings, and alliance may influence. Merton (1940) further acknowledges that the sector (economic, religious) in which the structure exists influences the subjects' behaviour within the system. Furthermore, the system's authority and mandate within a hierarchy depend on official positions rather than individuals holding the position. In essence, Merton argued that without the behavioural science contribution introduced to the classical doctrine, the bureaucracy would have resulted in a dysfunctional personality that could render organisational management difficult (Őnday, 2016).
In modifying the COT, the main contribution is on the influence of the informal organisation on
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objective. Location, occupation, common interest and special issues are possible determinants in the formation of organisations (Scott, 1961). Division of labour, scalar and functional processes, structure, and span of control are pillars that are modified from the Classical theory to include the behavioural and socially influenced approach.
With an assumption that organisations operate with flawless knowledge, Cyert and March (1963) submit that organisations carry out decision-making in the same way individuals do. In a way, an organisation performs as though there is a central coordination and control system capable of manipulating individual and organisational behaviour (Őnday, 2016).
In addition to the above presented scholarly contributions, it is apparent that:
• Both formal and informal organisations are essential.
• The pillars of the classical doctrine were considered to have been modified in the context of informal organisations to include behavioural science factors.
• An organisation is a social system where informal organisations may be observed to exist within formal institutions.
Unlike the classical dogma, the neo-classical doctrine outlines the importance of reconciling the individual goals with the organisational ones. As such, effective work productivity is dependent on communication, coordination, motivation and cooperation of the team. These are also critical contributions of the neo-classical approach to the organisational theory’s body of knowledge (Scott, 1961).