Classical organization theory

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Thomas Edison State College *

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360

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Management

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Apr 3, 2024

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Uploaded by CoachCheetah5120

Classical organization theory is based on the most effective methods for the management of an organization. This theory, which later organizational theories are based on, is relevant today because many organizations make up society. There are four fundamental tenets of classical organizational theory, and despite classical organizational theory receiving criticism for its pro-management bias and vagueness (Subramaniam, 1966), each of these tenets continues to hold relevance today. The first fundamental tenet of classical organizational theory is that “organizations exist to accomplish production-related and economic goals,” (Shafritz et al., 2015), so rather than having individuals complete tasks on their own, multiple individuals join their skills and backgrounds to complete a task. Whether the goal is to create awareness for a rare disease as a non-profit group or produce canned soup as a food manufacturing company, individuals combining their efforts while in an organization makes it easier to reach goals. Henri Fayol, the Father of Modern Management, developed the 12 Principles of Management, part of which concluded that individuals in an organization must subordinate their own interests in favor of the general interest of the group, (Voxted, 2017). Modern organizations develop mission statements to reinforce this principle which motivates members to work together to accomplish their collective goals, (Why Is a Company Mission Statement Important?, 2023) The next fundamental tenet of classical organizational theory is that there is always “one best way” to do something, and this optimal way is determined by scientific experimentation. The “best” way of doing something ‘meant that ‘waste’ of any kind, especially waste of time, must be eliminated, resulting in vastly improved productivity,” (Sidorik, 2022). Philadelphia’s own Frederick Winslow Taylor developed scientific management while working in a steel factory, determining that manufacturers should

standardize the most efficient way of completing a process to reduce time and save an organization money. This fundamental tenet wil always apply to process optimization for organizations, especially manufacturing companies, because they will save labor costs with fewer time-consuming standard operating procedures In the same realm of determining the "one best way" of completing processes, another fundamental tenet of classical organizational theory s, "Production is maximized through specialization and division of labor,” (Shafritz et al., 2015). Division of labor allows a worker to specialize in a portion rather than the entirety of a process, which offers advantages such as saving time from switching between different tasks. Henry Ford of Ford Motor Company instituted a division of labor to increase efficiency of his automobile assembly line in 1913, having employees specialize in a small portion of the vehicle manufacturing process rather than building the entire vehicle themselves. Ford's specialized assembly line drastically improved assembly time for the Model T from 12 hours to 90 minutes, which benefited the company’s finances enough to double the hourly wage and reduce the vehicle price by over 60%, (ZoBell, 2018). This tenet of classical organization theory remains relevant for manufacturing processes as division of labor decreases production times which reduces costs to the company. The final fundamental tenet of classical organizational theory is, “People and organizations act in accordance with rational economic principles,” (Shafiitz et al., 2015), so if an organization provides the incentive for an employee to perform, the employee will make the logical decision on how to proceed by acting in their own personal interest. An example of this tenet would be if a worker receives piece rate pay for their labor, they know they would receive the optimum benefit for their time spent

working by providing the highest potential output. Rational choice theory states, “Individuals driven by self-interest and rationality will make decisions that lead to positive benefits for the whole economy. Through the freedom of production, as well as consumption, the best interests of society are fulflled,” (Ganti, 2023). This tenet is important today because rational economic principles within an organization allow management to understand the motivation of their people, and a better understanding of employee motivation can maximize productivity. Classical organization theory has been providing managers with a roadmap for leading individuals in their organizations. We link the fundamental tenets of the theory to practices during The Industrial Revolution, and they remain relevant for organizations today. Through individuals joining to reach an organizational goal, determining the best way to accomplish a task, dividing labor among individuals and acting under rational theory, classical organization theory reinforces its importance in all organizations today.

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References Ganti, A. (2023). Rational Choice Theory: what it is in economics, with examples Investopedia https //www investopedia com/terms/r/rational-choice-theory asp# ~ text=The%20majorit ¥%200f%20classical%20economic are%20neutral%200r%20harm%20them Shafritz, J. M., Ott, J. S., & Jang, Y. S. (2015). Classics of Organization Theory. Cengage Learning Sidorik, D. (2022). Scientific management. Encyclopedia of Greater Philadelphia. https //philadelphiaencyclopedia org/essays/scientific-management/ Subramaniam, V. (1966). The Classical Organization Theory and its Critics. Public Administration, 44(4), 435-446. https //doi-org fir tesu edu/10 1111/j. 1467-9299 1966 tb01599 x Voxted, S. (2017). 100 years of Henri Fayol. Management Revue, 28(2), 256-274. https://doi-org fir tesu edu/10.5771/0935-9915-2017-2-256 Why Is a Company Mission Statement Important? (2023, February 3). Indeed https:/www.indeed.com/career-advice/career-development/why-mission-statement-is-i mportant

ZoBell, S. (2018, July 16). Forgotten Lessons From The Assembly Line: Rethinking Modern Work For Greater Effectiveness. Forbes https://iwww forbes com/sites/forbestechcouncil/2018/07/16/forgotten-lessons-from-the-a ssembly-line-rethinking-modern-work-for-greater-effectiveness/?sh=292e5d94c34f

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Classical organization theory

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