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CHAPTER l
lassical Organization Theory
o single date can
be
pinpointed as the beginning of serious thinking
about
how or-
ganizations work and how they
should be structured
and managed. One can trace
writings about management and organizations as far
back
as the known origins of com-
merce. A lot can be learned from the early organizations of the Muslims, Hebrews, Greeks,
and Romans. f we were to take
the
time, we could make
the
case that much of what we
know about organization theory has its origins in ancient and medieval times. After all,
it was Aristotle who first
wrote
of the importance of culture to management systems, ibn
T aymiyyah who used the scientific method
to
outline the principles of administration
within
the
framework of Islam, and Machiavelli who gave
the
world
the
definitive
analysis of the use of power.
In
order
to
provide
an
indication
of
organization
theory's
deep
roots
in
earlie r eras, we
offer two examples of ancient wisdom on
organization management.
The first of our ancient
examples is from the Book of Exodus,
Chapter
18 (see
the
next page), in which Jethro,
Moses' father-in-law, chastises Moses for failing
to
establish an organization through which
he could delegate his responsibility for
the
administration of justice. In Verse 25, Moses ac-
cepts Jethro's advice;
he chose
able
men out of
all Israel,
and made them
heads
over the
people, rulers of thousands, rulers of hundreds, rulers of fifties, and rulers of tens. Moses
continued
to
judge the
hard
cases, but his rulers judged every small
matter
themselves.
Frederick
Winslow
Taylor would
later develop this
concept of management by exception
for modern audiences.
In
the second ancient example
(the
first selection in this
chapter,
Socrates Discov-
ers Generic Management ), Socrates anticipates
the
arguments for generic management
and principles of management as he explains
to
Nicomachides that a leader who knows
what he
needs, and
is
able
to provide
it, [can]
be
a good president, whether he
have
the di-
rection of
a chorus, a family, a city, or an army
(Xenophon,
1869). Socrates lists and dis-
cusses the duties of all good presidents of public and
private institutions and
emphasizes
the similarities.
This is
the first known statement that organizations as
entities
are basically
al ike-and
that
a
manager who could cope
well
with one
would be equally
adept at
coping
with others-even though their purposes and
functions might be
widely disparate.
Although it
is
great
fun
to
delve
into
the
wisdom of the
ancients, most
analysts of the
origins of organization theory view the
beginnings
of the factory system in
Great
Britain
in the eighteenth century as the birthplace of
complex
economic organizations
and,
con-
sequently, of
the
field of organization theory. Classical organization theory,
as
its name im-
plies, was the first theory of its kind,
is
considered
traditional, and continues
to
be the base
upon which
other
schools
of
organization theory have built. Thus,
an
understanding
of
classical organiza tion
theory is
essential not
only
because of its historica l
interest but
also,
more importantly, because
subsequent
analyses and
theories
presume a knowledge of it.
7
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28
lassical
rganization Theory
Exodus Chapter 18
13 And it came to pass on
the
morrow,
that
Moses sat to judge
the
people: and the people
stood by Moses from
the
morning
unto the
evening.
14 And
when
Moses' father-in-law saw all
that
he did to
the
people, he said,
What is
this
thing
that
thou doest to the people? why sittest thou thyself alone, and all the people stand by
thee from morning
unto
even?
15 And Moses said unto his father-in-law, Because the people come unto me to inquire
of
God:
16 When they have a matter, they come
unto
me; and I judge between one and another,
and I do make
them
know the statutes of God, and his laws.
17 And Moses' father-in-law said unto him, The thing
that thou
doest
is not
good.
18
Thou
wilt surely wear away both thou, and this people
that is
with thee: for this thing
is
too heavy for thee:
thou
art
not
able to perform it thyself alone.
19 Hearken now unto my voice, I will give thee counsel, and God shall be with thee: Be
thou
for
the
people to God-ward,
that thou
mayest bring
the
causes
unto
God:
20 And thou shalt teach
them
ordinances and laws, and shalt shew
them the
way wherein
they must walk,
and the
work
that
they must do.
21
Moreover thou shalt provide
out of
all
the
people able men, such as fear God,
men of
truth,
hating
covetousness;
and
place
such
over them,
to
be
rulers
of
thousands, and rulers
of
hundreds, rulers
of
fifties, and rulers
of
tens:
22 And let them judge
the
people at all seasons and it shall be, that every great matter they
shall bring
unto
thee,
but
every small matter they shall judge: so shall
it
be easier for thyself,
and they shall bear the burden with thee.
23 f
hou
shalt do this thing, and
God
command thee so,
then thou
shalt be able to endure,
and all this people shall also go to their place
in
peace.
24 So Moses hearkened to the voice
of
his father-in-law, and did all
that he had
said.
25 And Moses chose able men out of all Israel, and made them heads over the people, rulers
of
thousands, rulers
of
hundreds, rulers
of
fifties, and rulers
of
tens.
26 And they judged
the
people
at
all seasons: the hard cases they brought unto Moses,
but
every small matter they judged themselves.
27
And
Moses let his father-in-law depart; and
he
went his way into his own land.
The classical school dominated organization theory into the 1930s and remains
highly influential today (Merkle, 1980). Over the years, classical organization theory ex-
panded and matured. Its basic tenets and assumptions, however, which were rooted in the
industrial revolution
of
the 1700s and the professions
of
mechanical engineering, indus-
trial engineering, and economics, have never been abandoned. They were only expanded
upon, refined, adapted, and made more sophisticated. These fundamental tenets are:
1.
Organizations exist t o accomplish production-related
and
economic goals.
2.
There is one
best way to organize for production, and
that
way
can
be found through
systematic, scientific inquiry.
3. Production
is
maximized through specialization
and
division
of
labor.
4. People
and
organizations act
in
accordance with rational economic principles.
The
evolution
of
any theory must be viewed
in
context.
The
beliefs
of
early manage-
ment
theorists about how organizations worked or should work were a direct reflection
of
the societal values of their t imes-and
the
times were harsh.
It
was well into the twen-
tieth century before the industria l workers of
the
United States and Europe began to enjoy
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29
even limitJ.S one of the pillars of Smith's inr
visible hand" tnarket mechnni8rtl in which the greutest
W(>uld go
to
those
v,·ho
v,'ete
the 1nost efficient in
tho.:
cornpetitlve marketplace. Tradition;;] pin makers
could
produce
only a {e;v dozen pins a day.
\Xi'hen
org:;i_nizcd in < fact.,ity \Vith each worker pcrfor111ing a
litnite.--l
operation, rhey could produce tens
of
tl1ow;ut\Js a
dfly.
Sn1ith's
()f
rhe Division of
Labour''
is
reprinted here coining as it did at
the
da\Vn of the in
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30
Classical
Organization Theory
operationally defined 1776, the year in which
Wealth
of Nations was published, as the
beginning point of organization theory as an applied science
and
academic discipline.
Besides, 1776 was a good year for
other
events as well.
In 1856, Daniel C McCallum
(1815-1878),
the visionary general superintendent
of
the
New
ork
and Erie Railroad, elucidated general principles of organization that may be
regarded
as
settled and necessary. His principles included division of responsibilities,
power commensurate with responsibilities, and a reporting system that allowed managers
to know promptly if responsibilities were faithfully executed and to identify errors and
delinquent subordinates. McCallum, who is also credited with creating the first
modem
organization chart, had an enormous influence
on
the managerial development of the
American railroad industry.
In systematizing America's first big business before the Civil War, McCallum provided
the model principles
and
procedures of management for the big businesses that would fol-
low after the war. He became so much the authority on running railroads that, as a major
general during the Civil War, he was chosen to
run
the Union's military rail system.
Although
McCallum was highly influential as a practitioner, he was no scholar,
and
the
only coherent statement
of
his general principles comes from
an
annual report
he
wrote for
the
New ork and Erie Railroad. Excerpts from his Superintendent's Report
of
March 25,
1856, are reprinted in this chapter.
During
the
1800s, two practicing managers in
the
United States independently dis-
covered that generally applicable principles of administration could be determined
through systematic, scientific investigation-about thirty years before Frederick Winslow
Taylor's
Principles of Scientific Management
or Henri Fayol's
General
and
Industrial
Manage-
ment
The
first,
Captain
Henry
Metcalfe
(1847-1917)
of the
United
States Army's Frank-
ford Arsenal in Philadelphia, urged managers to record production events and experiences
systematically so that they could use the information to improve production processes. He
published his propositions in The Cost of Manufactures and
the
Administration ofWorkshops
Public
and
Private (1885), which also pioneered in the application of prescientific manage-
ment methods to the problems of managerial control and asserted that there is a science
of administration'' based upon principles discoverable by diligent observation. Although
Metcalfe's work
is
import ant historically, it
is so
similar to that
of
Taylor and others that it
is not
included here
as
a selection.
The
second prescientific management advocate of
the
1880s was Henry R. Towne
(1844-1924),
cofounder and president of
the ale &
Towne Manufactur ing Company.
In
1886 Towne proposed that shop management was of equal importance to engineering
management
and
that the
American
Society
of
Mechanical Engineers (ASME) should
take a leadership role in establishing a multicompany, engineering/management data-
base
on
shop practices or
the
management of works.
The
information could then be
shared among established and new enterprises. Several years later, ASME adopted his pro-
posal.
The
paper he presented to the society, The Engineer
as
Economist, was published
in Transactions o the American
Society
o Mechanical Engineers (1886) and is reprinted here.
Historians have often considered it the first call for scientific management.
Interestingly, Towne had several significant associations with Frederick Winslow
Taylor.
The
two
of them
were fellow draftsmen
at the
Midvale Steel works during
the
1880s.
Towne gave Taylor
one
of his first true opportunities to succeed at applying scientific
management principles at
ale
Towne in 1904. Towne also nominated Taylor for
the
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Classical Organization Theory 3
presidency of ASME in 1906
and
thus provided him with an
international
forum for
advocating scientific managemen t. Upon election, Taylor promptly reorganized
the
ASME
according
to
scientific
management
principles.
While the
ideas
of Adam Smith,
Frederick Winslow Taylor,
and
others are still
dominant
influences on the design and management of organizations, it was Henri Fayal
(1841-1925), a
French
executive engineer, who developed the first comprehensive theory
of management.
While
Taylor was tinkering with the technology employed by the indi-
vidual worker, Fayal was theorizing about all of the elements necessary to organize and
manage a major corporation. Fayol's major work, dministration
Industrielle et
Generale
(published in France in 1916), was almost ignored in
the United
States
until
Constance
Starr's English translation, General and
Industrial Management
was published in 1949.
Since
that
time, Fayol's theoretical
contributions have
been
widely recognized,
and
his
work
is
considered fully
as
significant
as that
of Taylor.
Fayal believed that his concept of management was universally applicable
to
every
type
of
organization.
Whereas he had
six principles-technical (production
of
goods),
commercial (buying, selling, and exchange activities), financial (raising
and
using capital),
security
(protection
of property and people), accounting, and managerial (coordination,
control, organization, planning, and command
of
people)-Fayol's primary interest and
emphasis was on his final principle, managerial. t addressed such variables as division of
work, authority and responsibility, discipline,
unity
of command,
unity
of direction, subor-
dination of individual interest
to
general interest,
remuneration
of personnel, centraliza-
tion, scalar chains, order, equity, stability of
personnel
tenure, initiative,
and
esprit de corps.
Reprinted
here is
Fayol's
General
Principles
of
Management, a
chapter
from his
General
and
Industrial Management.
About 100 years after Adam Smith declared the factory to be the most appropriate
means of mass production, Frederick Winslow Taylor and a group of his followers were
spreading
the
gospel that factory workers could be much more productive if their work
were designed scientifically. Taylor,
the
acknowledged father of
the
scientific
management
movement, pioneered the
development
of time
and
motion studies, originally
under the
name Taylorism, or
the
Taylor system. Taylorism, or its successor, scientific manage-
ment, was
not
a single invention but rather a series
of
methods and organizational
arrangements designed by Taylor and his associates
to
increase the efficiency and speed of
machine-shop production. Premised on the notion that there was one best way for ac-
complishing any given task, Taylor's scientific
management
sought to increase output by
using scientific methods to discover the fastest,
most
efficient, and least fatiguing produc-
tion
methods.
The
job
of the
scientific manager,
once
the
one bes t way was found, was
to
impose
this procedure
on
his or
her
organization. Classical organization theory derives from a
corollary of this proposition.
f
here was
one best
way
to
accomplish any given production
task,
then
correspondingly, there must also be
one
best way
to
accomplish any task
of
social organization-including organizing firms. Such principles
of
social organization were
assumed
to
exist
and to
be waiting
to
be discovered by diligent scientific observation
and
analysis.
Scientific management, as espoused by Taylor, also contained a powerful puritanical
social message. Taylor ( 1911) offered scientific management as the way for firms
to
increase
profits, get rid of unions, increase
the thrift
and virtue of
the
working classes, and raise
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32
Classical Organization Theory
productivity so that the broader society could enter a new era of harmony based
on
higher
consumption of mass-produced goods by members of the laboring classes.
Scientific management emerged as a national movement during a series of events in
1910.
The
railroad companies in
the
eastern states
of the
United States filed for increased
freight rates with
the
Interstate Commerce Commission.
The
railroads
had
been receiving
poor press-they were being blamed for (among many other things) a cost-price squeeze
that was bankrupting farmers-and
the
rate hearings received extensive media coverage.
Louis D. Brandeis, a self-styled populis t lawyer who would later be a distinguished Supreme
Court justice, took the case against the railroads without pay. Brandeis called in Harrington
Emerson, a consultant who had systematized the Santa
Fe
Railroad, to testify that the
railroads did
not
need increased rates: they could save a million dollars a day by using
what
Brandeis initially called scientific management methods (Urwick,
1956).
At
first,
Taylor was relrn;:tant to use the phrase because it sounded too academic. But the ICC hear-
ings meant that the national scientific management boom was underway, and Taylor was
its leader.
Taylor
had
a profound-almost revolutionary-effect on the fields of business and
public administration. He gained credence for the notion that organizational operations
could be planned and controlled systematically by experts using scientific principles. Many
of
Taylor's concepts and precepts are still in use today.
The
legacy of scientific management
is substantial. Taylor's best-known work is his
1911
book
The Principles o Scientific Man-
agement but he also wrote numerous
other
accounts on
the
subject. Reprinted here is an
article, also entitled The Principles of Scientific Management, which was the summary
of an address Taylor gave
on
March 3, 1915, two weeks before his death.
Several of Taylor's associates subsequently built reputations for innovations that uti-
lized principles of scientific management, including Frank Gilbreth
(1868-1924)
and
Lillian Gilbreth (1878-1972), leaders in developing
the
tools and techniques
of
time and
motion study including
the
therblig (Spriegel Myers,
1953 ;
Henry Laurence
Gantt
(1861-1919), who invented
the Gantt
chart for planning work output (Alford, 1932); and
Carl 0. Barth (1860-1939) who, among his other accomplishments, in l908 convinced
the dean of the new Harvard B4siness School to adopt Taylorism as the foundation con-
cept of modern management (Urwick, 1956). Frank and Lillian Gilbreth also achieved
wide public recognition for the book
(1948)
and movie, Cheaper by the Dozen which
described
the
couple's efforts to raise their twelve children using scientific management
principles and practices.
In
contrast with the fervent advocates of scientific management, Max Weber
( 1864-1920) was a brilliant analytical sociologist who happened to study bureaucratic
organizations.
t
is
hardly worth
mentioning
that
bureaucracy has emerged as a
dominant
feature of
the
contemporary world. Virtually everywhere one looks in
both
developed and
developing nations, economic, social, and political life is influenced extensively by
bureaucratic organizations. Bureaucracy refers to a specific set of structural arrangements. t
is also used to refer to specific patterns of behavior-patterns that are
not
restricted to for-
mal bureaucracies. t is widely assumed that the structural characteristics of organizations
properly defined as bureaucratic influence the behavior of individuals, whether clients or
bureaucrats, who interact with them. Contemporary thinking along these lines began with
the work of Max Weber. His analysis of bureaucracy, first published in
1922,
remains the
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->ir
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34
(}rganizathln
Theory
Merkle, J .c\.
(1980). Management
llnd
ideology.-
The
fogOJ:y of tlte i11tertk11fowd scientific man0-_gen1ent
11wve1nent.
Berkeley,
CA: University of California Pre' s,
Metcalfe, H.
\
1885 ).
The
cosr
of
m11iiuf.1ctures arnl the
admlniswatiori of
'l.l.'orkshops.
pulilic and private.
New
Wdey.
Srnith, A. (1776).
Jf
the division oflahour. n n inquiry into the
nature and
causes of he vJealth of UV
tir)l1s (ch1p- 1. PP- 5--15). Printed
for
W. Strahan
and
T. C:adell
in
th
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