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Organizational Theory

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Organizational Theory

  • A set of propositions that explains or predicts how groups and individuals behave in varying organizational structures and circumstances
  • Classical organizational theory
  • Humanistic theory

Classical Theory

  • First type of organizational theory to develop in the 1700s
  • Four basic tenets:
  • Organizations exist for economic reasons (i.e., accomplish productivity goals)
  • Scientific analysis will identify the one best way to organize production
  • Specialization and division of labor maximizes production
  • Both people and organizations act in accordance with rational economic principles
  • View:
  • Two important developments (1800s-1900s)
  • Scientific management (Frederick Tayler)
  • Bureaucracy (Max Weber)

Taylorism Scientific Management

  • Approach: Conduct studies/gather data indicating the most efficient system and then implement that method
  • Four principles:
  • Gather data from the source
  • Scientifically determine how to increase efficiency
  • Train employees on most efficient system
  • Management must get involved with the work to share labor

Max Weber Bureaucracy

  • Major features of bureaucratic organization
  • Division of Labor: divides tasks into specialized jobs and departments
  • Top-down structure: the formal way a company was structured
  • Delegation of authority: system whereby lower level employees report upwards
  • Span of control: # of people reporting to a single person
  • Centralized decision making

Humanistic Theory

  • Mid 1900s, resulted from rigidity of classical system
  • Considers employees’ motives, goals and aspirations
  • Example: McGregor’s Theory X and Theory Y

Theory X and Theory Y

  • Self-fulfilling prophecy:
  • Theory X: (birth of industry to mid 1900s)
  • Traditional view of employees as lazy, selfish, unintelligent
  • Management’s job was to control/direct employees for profit

Self-Fulfilling Theory X Cycle

[pic 1]

Theory X and Theory Y

  • Theory Y – McGregor suggests that organizations emphasize the inherent goodness, capacity and potential of employees, along with their readiness to develop. Management has responsibility for providing employees with opportunities to develop

History of I/O: Early 20th Century

  • Economic change
  • Societal change
  • Darwinism
  • Protestant work ethic

Walter Dill Scott

  • First professor to hold title: applied psychology
  • Applied psychology to advertising and personnel selection
  • Founded the psychological corporation in 1921

Hugo Munsterberg

  • Claimed to be the first I/O psychologist, also first educational and forensic psychologist
  • Book: “Psychology and Industrial Efficiency”

James McKeen Cattell

  • Importance of individual differences
  • Differences were reliable properties that could be used to understand behaviour more fully

History of I/O: WW1

  • World War 1
  • Robert Yerkes
  • President APA & Harvard Professor
  • Army Alpha and Army Beta
  • Post war testing abandoned but value of selection retained
  • Bingham, Thorndike and Scott
  • Also worked on selection tests
  • Pioneered the use of job analysis as a means of understanding job requirements
  • John Watson (Baby Albert)
  • Development of perceptual and motor tests for potential pilots

History of I/O: 1920

  • Moore – 1921
  • “… employees were best differentiated on the basis of items that reflected their interests
  • Strong vocational blank for men
  • More recently… Campbell interest and skill survey

History of I/O: 1914-1939

  • Elton Mayo and Revery Obsession
  • The Hawthorne studies
  • Study 1: turn the lights up brighter to increase production
  • Study 2: turn the lights darker to increase production
  • Study 3&4: told the workers they turned the lights brighter or darker, but didn’t actually and there was an increased production as a result
  • Focus turned to the study of small groups, job attitudes (employee morale) and job-related stress and well-being
  • Lillian Gilbreth: First female PhD in Psychology to specialize in business (1915)
  • Focus on worker’s well-being
  • Reducing fatigue from repetitive movements to improve performance

Early Acceptance of New Science

  • Hollingsworth and Coca Cola
  • Topics of advice:
  • How to interview farmers
  • The hours of a day most effective for advertising
  • The legibility of traffic signs
  • The value of auditory versus visual channels for advertising

History of I/O: WWII

  • National Research Council formed an Emergency Committee in Psychology
  • Purpose was to link the military to organized psychology
  • Assessment center
  • Aviation Psychology Program
  • Critical incident technique
  • Increased specialization
  • Design of training
  • Training techniques
  • Optimal designs of workplace and equipment
  • Post WWII: Stouffer’s work
  • Job satisfaction, motivation, perceived justice, group cohesion
  • Stouffer’s landmark work on PTSD
  • Post WWII:
  • Booming economy and demand for labor led techniques from war to be applied to industry
  • 1945 – APA forms field of I/O psychology
  • 1964 – Civil rights act prohibited discrimination in employment

Baby Boomers: 1960s

  • Baby boomers focused their attention on:
  • Employee morale
  • Motivation
  • Job satisfaction
  • Demand for meaningful work
  • Job stress
  • Work in 1965 led to focus on job pacing and control
  • Government research in 1974 found that stress issues led to health and safety concerns


  • Four major changes:
  1. Sophisticated statistical techniques
  2. Application of cognitive psychology to industry
  3. Effects of work on family and leisure
  4. Renewed interest in employee selection

History of I/O

  • Government inquiries into psychology’s contributions to the war effort
  • Day care
  • Canadian National Research Council created a war committee
  • Pilot selection for the RCAP
  • Development of M test used for selecting infantry/officers
  • Professor Ed Webster (McGill)
  • Studied morale research during war
  • Systematic experiments on how to conduct proper interviews
  • Took an administrative role by establishing standards for graduate training


  • In 1939 fewer than 100 I/O’s in the world
  • Now 8,600 I/O psychologists part of the APA (4% of APA membership)
  • Canadian society for industrial organizational psychology (CSIOP)
  • 1974 Canada’s CPA recognized I/O as a subspecialty (it needed 50 signatures to do so)

Current Trends in I/O

  • Work retention in addition to selection
  • Impact of technology
  • Leadership
  • Enhanced stress
  • Presenteeism
  • Workplace incivility and aggression

Future Trends

  • War defined the geopolical scene of the 20th century but economics will define the 21st century



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