Classical Theory/Classical Organizational Theory

• Classical Organizational Theory – organizations exists for economic reasons and to accomplish productivity goals
• The basic ingredient of any organization and then addresses how organizations should best structured to accomplish its objectives

  • System of differentiated activities – activities that are linked to each other
  • People – perform tasks and exercise authority
  • Cooperation toward a goal – unity of purpose in pursuit of their common goals
  • Authority – ensures cooperation among people pursuing their goals
• • There is a “right” structure for an organization
  • Assumes there is one best configuration to accomplish goals
  • Scientific Analysis will identify the one best way to organize for production
  • Deal with the formal organization and concepts to increase management efficiency
  • Both people and organizations act in accordance with rational economic principles
  • To be successful in this new economy, industrial and mechanical engineers are needed to organize production systems to keep the machines busy and work flowing
• Functional Principle – concept behind division of labor, that is, organizations should be divided into units that perform similar functions into areas of specialization
• Scalar Principle – deals with the organization’s vertical growth and refers to the chain of command that grows with levels added to the organization

  • Each subordinate should be accountable to only one superior (unity of command)
• Line & Staff Principle

  • Line Functions: have primary responsibilities for meeting the major goals of the organization, like the production department
  • Staff Function: support the line’s activities but are regarded as subsidiary in overall importance to line functions
• Span-Of-Control Principle – refers to the number of subordinates a manager is responsible for supervising

  • Large Span-of-Control produce flat organizations, whilst, smaller Span-of-Control produce taller organizations