3.1.1 Classical and Neoclassical Organization Theories

The theoretical foundations of the construction and functioning of organizations as part of the general science of management were developed at the junction of various branches of knowledge - management, sociology, social psychology, economics, jurisprudence, and others.

Changes in the objective conditions for the functioning of organizations, characteristic of the past century, have made a lot of new developments in the development of views, scientific concepts and management practices. The growth of large organizations, the separation of management from property, the development of the exact sciences and the sciences of man formed the basis for the development of a scientific approach to organizations, principles and methods of managing them. This gave rise to many scientific ideas and schools about the laws governing the construction of organizations, their basic features and incentives of functioning - formal and informal, about human relations, about social systems, about the division of functions and responsibility, about the theory of decision-making, about the mathematical apparatus of management processes. .

Organization theory, which provides the basis for management actions, is not a homogeneous science based on generally accepted principles. Various theories of organizations developed and develop.

However, only three theories of organization have a significant impact on the theory and practice of management. They are arbitrarily named in the foreign literature as classical, neoclassical and modern . Each of them is undoubtedly different from each other, but they are interconnected. In addition, these current theories are actively supported by several schools of control theory. Therefore, the unification of the elements of all three theories is of undoubted interest both in theoretical and in practical terms [].

The classical theory of organization was engaged almost exclusively in the study of the structure of a formal organization.

It is built on four key bases: the division of labor, linear and functional processes, the structure and standards of control (volume of management). Almost all classical organization theory is formed from these main elements.

1. The division of labor is undoubtedly the cornerstone among these four elements. All other elements flow from it as a consequence. For example, linear and functional growth in the number of personnel ^* requires specialization and separation of functions. The structure of the organization naturally depends on the direction in which the activity specializes in the development of the company. And finally, the problems of the norm of controllability follow from a number of specialized functions within the competence of the manager ^* .

2. Linear and functional processes deal respectively with the vertical and horizontal growth of the organization. The linear process is related to the growth of the chain of command (hierarchy levels), delegation of authority and responsibility, team unity and mandatory feedback.

   Dividing an organization into specialized parts and regrouping parts into compatible units are issues related to the functional process. This process focuses on the horizontal development of linear-functional organization.

3. The structure is a logical connection of functions in the organization, aimed at the effective achievement of the goals of the company. Structure implies a system and model. The classical organization theory usually works with two basic structures, linear and functional. However, such activities as the implementation of functions and their interrelations are very easily included in the area of ​​structural considerations. In contrast, structure is a means for representing logical and compatible relationships between the various functions that constitute an organization.

4. The concept of the norm of controllability ^* (volume of management) refers to the number of subordinates with whom the manager can effectively manage and exercise control. The first paper on numerical limits on the number of subordinates that can be controlled by one person is attributed to Greikunas (VA Graicunas). Regardless of the interpretation, the norm of control is important, in particular, for the form of organization that develops in the process of growth. A wide volume (large rate of control) produces a horizontal structure; short volume leads to a vertical structure. In addition, the concept of volume focuses on the complexity of human and functional relationships in an organization.

It would be unfair to say that the classical school is not aware of the daily administrative problems of the organization. Primary among these problems are problems occurring in the field of human interactions. But the interaction of individuals, informal groups, conflicts that arise within the organization, and decision-making processes in the formal structure is largely neglected by the classical theory of organization. Classical theory does not notice the contribution of the behavioral sciences, because it does not include them in its doctrine. In conclusion, we note that the classical organization theory penetrates deeply into the nature of the organization, but the value of this theory is limited to a narrow concentration of attention on the formal study of the structure of the organization.

The neoclassical theory of organization has set itself the task of correcting some of the shortcomings of the classical doctrine. The neoclassical school is usually associated with the movement for human relations. It more sensitively takes into account the human factor ^* . In general, the neoclassical approach takes the postulates of the classical school, considering the key foundations of the organization as given. But these postulates are already regarded as modified by people acting independently or within an informal organization.

One of the main contributions of the neoclassical school is the introduction of behavioral sciences in an integrated form into the theory of organization . With the help of these sciences, theorists of human relations demonstrate how a person’s influence influences the fundamentals of classical doctrine. In addition, the neoclassical approach includes a systematic appeal to the informal organization , showing its influence on the formal structure.

Thus, the neoclassical approach to the theory of organization indicates the adoption of the classical doctrine, but with the introduction of changes in it, resulting from the individual behavior and the influence of the informal group. Hawthorne studies became the basis of the neoclassical school.

It would be useful to briefly review some of the contributions made to neo-classical theory of organization. First, consider the modification of the foundations of the classical doctrine, and secondly, the informal organization.

Consider examples of the neoclassical approach to the basics of the classical theory of organization.

1. The division of labor remains the subject of lengthy discussions in the field of human relations. At the dawn of industrial psychology, the problems of production fatigue and monotony caused by the specialization of work were studied. Later, attention was shifted to studying the behavior of a worker in a state of isolation and his sense of insignificance, which is the result of unimportant work that he performs and which have very little effect on the final product.

   Specialization also affects management performance. As the organization expands, a concomitant need arises for managerial motivation ^* and coordination of the actions of others. Both motivation and coordination, in turn, concern executive management. So, in particular, based on the growth of industrial specialization, the neoclassical school has developed a voluminous theory related to motivation, coordination and leadership. Much of this theory is derived from the social sciences.

2. Two aspects of linear and functional processes that have evolved with a certain degree of intensity to the neoclassical school are the delegation of authority and responsibility and the intersection of functional competences. Classical theory implies a certain perfection of delegation processes. The neoclassical school indicates that human problems are caused by imperfect methods of delegation. For example, too much or insufficient delegation can prevent an executor from acting. Unsuccessful delegation of authority and responsibility can put the performer in a difficult position. The intersection of power often leads to personal clashes. The intersection of powers (violation of the principle of one-person) leads to the fact that the work is not performed, and one party accuses the other of non-performance.

   The neoclassical school argues that linear and functional processes are theoretically fruitful, but in practice they tend to clash between the interests of linear and functional relationships and result in the human factor ^* . In addition, neoclassicists make recommendations, offering a variety of human tools that facilitate the interaction of these processes.

3. The structure offers numerous directions of human behavior, destroying the best plans of the organization and contradicting the logic of human relations embedded in the structure. Neoclassical theory focuses on the frictions that appear among people performing various functions.

   The area of ​​such problems as linear and functional relationships is widely discussed. Many companies have difficulty maintaining the harmony of linear and functional relationships.

   Of course, linear-functional relationships represent only one of the problems of most structural conflicts described by neoclassicals. Very often, neoclassicists offer the means to eliminate conflicts in the structure. Among the most important formulas leading to harmony are considered: the advice of young people, the participation of workers in bottom-up management, the recognition of human dignity and closer communication.

4. The norm of controllability ^* (the volume of control) is a function of the human factor, and reducing this norm to an exact, universally appropriate proportion, according to neoclassicism, is folly. The rate of control is determined by individual differences in managerial abilities, the type of people, and the amount of controlled functions, and the degree of effectiveness of connections.

The involvement of people in the type of emerging structure is related to the question of the norm of controllability. Does this mean that a vertical structure with a short volume or a horizontal structure with a wide volume will contribute more to good human relationships and high morale? The answer to this question depends on the specific situation. A small rate (short volume) leads to tight control; a large rate (wide scope) requires a large proportion of delegation with greater freedom. However, there is a tendency to prefer a freer form of organization due to the fact that vertical structures give rise to despotic leadership, which is often indicated as the reason for low morale.

Look neoclassical informal organization. Nothing but the mere mention of informal organization is not given even in the most recent classic treatises on organization theory. A systematic discussion of this form of organization is left to the neoclassical. Under the informal organization refers to people who are members of group associations at work, but these associations are not registered officially. Informal organization ^* means natural groupings of people in a work situation.

In general terms, an informal organization appears in response to a social need - the need of people to communicate with each other. However, for analytical purposes, this explanation is not quite satisfactory. The study revealed the following more specific factors underlying the emergence of informal organizations.

1. The location factor simply states that in order to form into groups of a longer nature, people must have frequent interpersonal contacts. Thus, the geography of the physical location in an enterprise or office is an important factor in predicting who will be in which group.
2. Occupation is the main criterion determining the emergence and composition of informal groups. People doing similar jobs tend to group together.
3. Interests are another factor for the formation of an informal group. Even if people are in the same place, do similar jobs, the difference in their interests explains why there are several small informal organizations instead of one big one.
4. Certain problems often lead to the formation of informal groups, but this factor is put separately from the three previously mentioned. In this case, people who do not necessarily have similar interests, occupation or place of work, can connect for a common cause. Once the problem is solved, there is a tendency to return to more natural group forms. Thus, special causes give rise to rather inconstant informal associations; Groups based on the other three factors tend to last longer.

When informal organizations ^* arise, they acquire some characteristic features. Since the understanding of these features is important for management practice, we consider them in more detail.

1. Informal organizations act as social control groups . They generate a culture based on certain norms of behavior, which, in turn, require coherence among group members. These standards may conflict with the set of values ​​established by the formal organization. So a person can very easily find himself in a situation of conflicting requirements (conflict of requirements).
2. The form of human relationships in an informal organization requires methods of analysis other than those used to prepare relations between people in a formal organization. The method used to determine the structure of an informal group is called sociometric analysis. Sociometry shows the complex structure of interpersonal relationships, which is based on premises that are significantly different from the logic of formal organization.
3. Informal organizations have status and communication systems that are specific to themselves and not necessarily derived from formal systems. For example, the secret message system (rumor), called the "vine", is the subject of in-depth study of the neoclassical.
4. The survival of an informal organization requires stable long-term relationships between people. Informal organization, as shown by observation, resists change. Therefore, neoclassical significant attention is paid to overcoming the informal resistance to change.
5. The final aspect of the analysis, which should be central to the neoclassical views on informal organization, is the study of the informal leader . The discussion takes place around who the informal leader is, how he assumes this role, what characteristics are essential for him and how he can help the manager to fulfill his goals in a formal organization.

This brief review of some basic aspects of the theory of informal organization has so far neglected one important topic considered by the neoclassical school. This is the way in which formal and informal organizations interact.

The generally accepted view of the interaction of these two organizations is the principle of "Live and let live." The managerial staff must recognize that an informal organization exists, nothing can destroy it, and therefore the manager could work with it just as well. Working with an informal organization means not threatening its existence unnecessarily, listening to the opinions expressed on behalf of the group by its leader, allowing the group to participate in decision-making processes, and managing the work of the "vine" by immediately issuing accurate information.

While this approach is mainly focused on governance, it would be reasonable to expect that the standards and norms of the informal group could affect the policies of the formal organization. A conceived attempt by managers to establish a working relationship with an informal organization could lead to an association, where both formal and informal views would be close to each other. The danger that must be avoided at all costs is that working with an informal organization does not turn into manipulation of the processing of public opinion.

Some neoclassical works on organization theory, especially those originating from the management-oriented segment of this school, create the impression that formal and informal organizations are defined and at the same time are absolutely contradictory elements in the company. The interaction that takes place between them is akin to the interaction between a company and a trade union, or a government agency, or another company.

The concept of a social system is another approach to the atmosphere of interaction. While this concept may well be classified as neoclassical, it borders on modern organization theories. The phrase "social system" means that an organization is a complex of interdependent, but variable factors.

Эти факторы включают характеристики личности и их отношения, мотивы, работу, условия физического труда, формальные и неформальные организации. Эти и многие другие факторы вплетены в общую модель взаимозависимости. С этой точки зрения формальные и неформальные организации теряют их отчетливость, но находят реальное значение в человеческом поведении, в действиях системы в целом. Таким образом, изучение организации отходит от описания её составных частей и вновь фокусируется на системе взаимосвязей между них.

Одним из главных вкладов исследований Хоторна является разработка метода анализа для изучения поведения в человеческих организациях. Эта концепция все еще жизненно важна и сегодня. Но, к сожалению, некоторые работы в области человеческих отношений, предпринятые неоклассиками, упустили или, возможно, проигнорировали значение этой идеи.

Глубокое проникновение в социальную систему, разработанное исследователями Хоторна и примененное к области промышленности, не нашло дальнейшего развития в последующей работе неоклассичекого течения. Действительно, неоклассическая школа после исследований Хоторна в основном, казалось, удовлетворялась тем, что занималась описательными обобщениями или детализированными эмпирическими исследованиями, которые не имели большого значения вне их собственного контекста.

The neoclassical approach provided a valuable contribution to the knowledge of the organization. But, like classical theory, neoclassical doctrine suffers from incompleteness, short-sighted perspective, and lack of integration among the many facets of human behavior that it is studying. Modern organization theory has taken a step towards correcting the shortcomings of existing theoretical knowledge.