Rational Theory

This paper introduces Rational System Perspectives in relations to four promin ent schools of organization theory; which are Taylor’s scientific management, Fayol’s general principles of management, Weber’s theory of bureaucracy and Simon’s discussion on administrative behavior. Rational System Perspectives There are two key elements characterizing rational systems: 1) Goal Specificity Specific goals support rational behavior in organizations by providing guideli nes on structural design, which leads to specify what tasks are to be performe d and how resources are to be allocated. ) Formalization Formalization is an attempt to make behavior more predictable by standardizing and regulating. Formalization provides stable expectation, which is a precond ition to rationality. Selected schools The author related rational system perspectives to four schools of organizatio nal theories. Taylor’s Scientific Management (1911) Taylor Scientifically analyzed tasks performed by individual workers and disco vered the best procedure that would produce the maximum output with the minimu m input of resources.

His attempts (to rationalize labor at level of the indiv idual worker )led to changes in the entire structure of work arrangement. Ther efore, efficiency improved. His four principles includes: 1) Develop a science for each element of an individual’s work. 2) Scientifically select and train workers. 3) Heartily cooperate with workers to ensure that each work is done as plan. 4) Divide work and responsibilities between management and workers. Taylor also proposed the use of incentive system based on performance as a mot ivation tool.

Arguments: 1) Workers resisted time-study procedures that attempt to standardize every as pect of their performance. 2) Workers rejected incentive system requiring them to perform continuously at a peak level of efficiency. Fayol’s Administrative Theory (1916) Fayol emphasized management functions by proposing broad administrative principles as guidelines to achieve rationalization of organizational activiti es. Fayol’s and other supporters believed in two main types of management activi ties. ) Coordination includes any elements related to collaborations of individuals such as scalar chain, unity of command, p of control and exception princip le. 2) Specialization involves various activities distributed among positions abou t how such positions can most effectively be grouped into work units. For exam ple, departmentalization, line-staff principle. Arguments: Herbert Simon was one of the main opponents of this theory. He commenced that so-called principles are truthful, but not realistic. Thus, they are inapplica ble (details will be discussed).

Weber’s Theory of Bureaucracy (1922) Weber developed a theory of authority structures and describes organizational activity on the basis of authority relations. By building the structure, task responsibilities and decision-making authorities would be clearly defined. He proposed that rational-legal authority (the authority a person possesses be cause of his/her position in an organization, not because of wealth, social st atus or individual’s admirable character) provides the value to develop the u niversal authority structure called “bureaucracy”.

Weber’s ideal bureaucracy principles includes: 1) Division of labor. Jobs are broken down into simple, routine, and well-defi ned tasks. 2) Authority hierarchy. Positions are organized in a hierarchy, each lower one being controlled and supervised by a higher one. 3) Formal selection. Members are selected on the basis of technical qualificat ions (training, education of formal examination). 4) Formal rules and regulations. Managers must depend on formal rules to ensur e uniformity. 5) Impersonality. There is no personal preference of employees. ) Career orientation. Managers do not own the units they manage. They work fo r salary and pursue their careers. Arguments There are self-contradictions in Weber’s principles. 1) Management based on discipline: individuals obey the rules and orders becau se they regard the rules and orders as methods to fulfill organizational goals . Therefore, obedience is a mean to an end. 2) Management based on bureaucracy: individuals obey the rules because rules a re considered as commands, setting aside their judgements. Thus, obedience is an end itself.

Simon’s Theory of Administrative Behavior (1958) Simon proposed a more realistic view related to rational system perspectives b y pointing out the boundaries (limits and constraints) on how rational manager s can be in making decisions. He introduced the term “bounded rationality”. Rather than pursuing all alternatives to identify the best solution that would maximize returns, managers will choose the solution that appears to solve the problem, even though they realized the chosen solution is not the best one, d ue to time/cost constraints and other limitations.

Furthermore, Simon clarified the process by which goal specificity and formali zation contribute to rational behavior in organization. Goal specificity: He introduced “means-ends chains” which establish a hierar chy of goals. According to organizational level, each level of activity is con sidered as an end relative to the levels below it and as a mean relative to th e level above it. Formalization: Simon believed formalized structure supports rational decision making in the sense that formalization simplifies a border of responsibilities among participants and provides participants with guidelines to handle them.

Conceptual Framework (means) (ends) Formalization Goal Specificity Input Output Rational System Conclusion 1. Rationality in this paper can be viewed in two senses as follows: 1. 1) Technical or Functional rationality which can be attained through a serie s of actions (means) which lead to predetermined goals (ends) with maximum eff iciency. In short, Technical or Functional rationality emphasizes instrumental means-ends efficiency. Taylor’s and Fayol’s theories are related to rationa lity in this sense. 1. ) Formal rationality which can be derived through imposing rules an regulations to organization. Weber defined bureaucracy as rational in this sen se. 2. Level of Analysis 1. 1) Social psychological level. Taylor and Simon focus on individual participants as they perform tasks or make decision. 1. 2) Structural level. Fayol and Weber attempt to analyze the characteristics of organizational structures. Direction for my further research According to the paper above, I would like to examine which ideas of the above theories are still applicable to current information technology era.

Furtherm ore, adding to my personal interest in strategic management, I would like to a nalyze how classical theories influence managers on strategic decision-making. Please see the summarized table in the next page. Table: Summarize and compare four organization theories. Taylor Fayol Weber Simon Year introduced 1911 1916 1922 1958 Means l Scientifically analyzed tasks performed by individual workers. l Concer ned with management at the shop levels l Generated broad administration princi ples. l Focused on activities of all managers l Described organizational activi ty on the basis of authority relations. Proposed rational-legal authority as a value to develop bureaucracy. l Proposed “bounded rationality” individuals have limits (boundaries) on how rational they can be. l Introduced means-ends chains. Ends Max. efficiency by using one best way. Max. efficiencyby using management expertise Max. efficiency by using bureaucratic structure Choose a fairly goo d solution, not optimal one. Assumptions Technical & Functional Rationality Technical & Functional Rational ity Formal Rationality Bounded rationality

Level of Analysis Social Psychological Structural Structural SocialPsychologic al Arguments 1) Workers resistedTime-study procedures, attempting to standardize every aspect of performance. 2) Workers rejected incentive system, requiring th em to perform continuously at a peak of efficiency. 1) So-called principles ar e truthful, but not realistic. 2) Simon: Due to limitations & constraints, the se principles are not thoroughly applicable. Self-contradictions 1) Based on d iscipline: Obedience is a mean to an end. 2) Based on bureaucracy: Obedience is an end itself.