Neoclassical organizational theory

This post is the continuation of some inside information from Organizational Behavior and Governance.

According to Shafrits et al. Neoclassical Organization Theory is not totally new, it is modified Classical Organization Theory. Neoclassical Organization Theory became a foundation for further development of other org-n theories. Generally, Classical Organization Theory view organization as machine, while Neoclassical Organization Theory uses human factor, environment as a part of organization. This chapter includes several authors who developed the idea of Neoclassical Organization Theory. For instance, Chester Barnard in his The Function of the Executive writes about importance of cooperation of individuals, effort of individuals in task achievement. It unites org-n, creates right and wrong moral sense of behavior. Moreover the reasons for cooperation of individuals are wide from material inducement to ideal benefaction and it is not stable (Caster I. Barnard as cited in Shafritz et al., p.93). Robert Merton in 1940 wrote that Weber’s bureaucracy negatively affects people in org-ns, because it is not perfectly efficient. Neoclassical Organizational Theory challenged basic tenets of Classical Organization Theory mostly by Herbert A.Simon. He argues that “general principles of management” are not suited to the most administrative situations faced by managers. It means that if we view the organization in rational manner, it will never work in irrational situations.

To sum up previous ideas, Neoclassical theory is a plot for further development of organizational theories. It addressed many of the problems inherent in classical theory. Neoclassical approach introduced an informal organization structure and emphasized the following principles: individuals are not a part of machines, they are human being,  participative management.

After reading those chapters about classical and neoclassical organizational theories I started to think how I will operate as a director of the company. Here I am interesting about your ideas, do you think that machines more important that workers? Profit or human being?

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3 thoughts on “Neoclassical organizational theory

  1. Dear Assel, thank you for your post. It is indeed important to understand the classical theory of organizations as it helps to answer questions as who is responsible for what, and what structural units are there in the organization. However, it is just the first step in understanding the organization. If a leader wants the organization to succeed, more attention needs to be paid to human resources as people are “our most important asset” (Bolman & Deal, 2013, p. 113). Moreover, organizations and people need each other as it was noted by Bolman and Deal (2013). In other words, organizations need “ideas, energy and talent,” whereas people need “careers, salaries and opportunities” (Bolman & Deal, 2013, p. 117). Thus, there should be no doubt that successful interaction between two benefits both, whereas the lack to interact might harm either. That’s why, it is crucial for leaders to “arrange conditions so that people can achieve their own goals best by directing efforts towards organizational rewards” (Bolman & Deal, 2013). Furthermore, as we discussed in our Organization and Governance class, it starts from understating the needs of organization members, as well as interaction between them including group structures.

    Bolman, L. G. and Deal, T. E. (2013). Reframing Organizations: Artistry, Choice, and Leadership (5th ed). San Francisco, CA: Jossey-Bass.

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  2. Dear Assel
    thank you for your post! In our Organization and Governance class we learn a lot of interesting about different theories and frameworks. In the model of Four Framework approach, Bolman and Deal (2013) we learnt about four types of frameworks: Symbolic, Human Resource, Political, or Structural. For me, among them the most effective is human resource model. According to authors, the HR frame places more emphasis on people’s needs. It focuses on giving employees the power and opportunity to perform their job well and at the same addresses their needs for personal growth and job satisfaction. This approach will help organization to prosper and success.

    Bolman, L. G. and Deal, T. E. (2013). Reframing Organizations: Artistry, Choice, and Leadership (5th ed). San Francisco, CA: Jossey-Bass.

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  3. Thank you for the interesting post. Even though our major is quite different and I may lack the knowledge to contribute meaningfully, I think that the classical organisation theory and its rigidness are the factors which impact the red tape processes within any organisation. Envisioning parts of an organisation which are supposed to function perfectly like cogs in a machine, without the consideration of human factor and irrationality is something that is an outlook of the past (for example the Soviet machine-like bureaucratic administration), is giving way to a more holistic outlook of neoliberal organisation theory, which creates an understanding of the real ways in which organisations function.

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