INDUSTRIAL ORGANIZATIONAL PSYCHOLOGY

ORGANIZATIONAL THEORIES

WHAT IS AN ORGANIZATION?
 An Organization cannot work effectively if the members of it operates
on their own.
 Therefore, an organization is considered to be a tool people use to
coordinate their actions to obtain something they desire or value to
achieve a specific goal.
 An Organizational Theory is a set of propositions that explains or
predicts how group and individuals behave in varying organizational
structures and circumstances

ORGANIZATIONAL THEORIES – CLASSICAL

 The Classical Organizational Theory asserts that organizations exists for
economic reasons and to accomplish productivity goals.
 It addresses how organizations should be best structured to accomplish
its objectives. It posits that the basic ingredients of any organizations
are as follows:
 System of differentiated activities – activities that are linked to each
other
 People – perform tasks and exercise authority
 Cooperation toward a goal – unity of purpose in pursuit of their common
goals
 Authority – ensures cooperation among people pursuing their goals
 Functional Principle – concept behind division of labor, that is,
organizations should be divided into units that perform similar
functions into areas of specialization.
 Scalar Principle – deals with the organization’s vertical growth and
refers to the chain of command that grows with levels added to the
organization. Each subordinate should be accountable to only one
superior (unity of command)
 Line Principle – have primary responsibilities for meeting the major
goals, like the production department
 Staff Principle – supports the line’s activities but are regarded as
subsidiary in importance to line functions.
 Span-Of-Control Principle – refers to the number of subordinates a
manager is responsible for supervising

Taylorism/Scientific Management – Frederick Taylor

 Concept: The organization is like a machine, aiming for maximum efficiency.

 Principles:
 o Apply scientific methods to work behavior to boost efficiency and productivity.
o Emphasize planning, standardization, specialization, and simplification of tasks.
o High job specialization and standardization.
o Use scientific selection, data collection, and training to enhance efficiency.

Bureaucracy – Max Weber

 Concept: Efficient organizational structure and operation.

 Principles:
o Division of Labor: Specialized jobs with specific duties.
o Delegation of Authority: Supervisors assign tasks and hold employees
accountable.
o Structure: Formal design including division of labor, delegation of authority, and
span of control.

Administrative Management – Henri Fayol

 Concept: Improve productivity through managerial methods.

 Principles:
o Focus on synchronizing internal processes.
o Enhance managerial performance over individual worker efficiency.
o Create work groups and functional departments.
o Functions of Management: Planning, Organizing, Staffing, Coordinating,
Directing, Reporting, and Budgeting.

Structural Theory – Harry Mintzberg

 Concept: Organizations evolve to fit their environment.

 Principles:

Seven Basic Parts of an Organization

1. Operating Core

What it is: The people who do the basic work of transforming raw materials into finished
products or providing services.
Example: Factory workers assembling products, or customer service agents helping clients.
2. Strategic Apex

What it is: The top executives and leaders who ensure the overall success and direction of the
organization.
Example: CEO, board of directors, and top managers.

3. Middle Line

What it is: Managers who connect the top leadership (strategic apex) with the workers
(operating core). They implement the goals set by the top leaders.
Example: Department managers and supervisors.

4. Technostructure

What it is: Specialists and analysts who provide technical support and advice to improve
efficiency and operations.
Example: Engineers, IT specialists, and quality control analysts.

5. Support Staff

What it is: Employees who provide essential services to keep the organization running
smoothly, but are not directly involved in the core work.
Example: Janitors, security personnel, mailroom workers, and administrative assistants.

6. Ideology

What it is: The shared beliefs, values, and culture that motivate and guide everyone in the
organization.
Example: A company’s mission statement, core values, and organizational culture.

7. Politics

What it is: The use of power and influence within the organization, which can sometimes lead to
conflicts.
Example: Office politics, power struggles, and disagreements over resources or priorities.

Neoclassical Organizational Theories

 Concept: Emphasize human relations and behavior within organizations.

 Principles:
o Focus on individual and group behavior.
o Productivity linked to high morale from personal attention.
 o Introduce informal organization and participative management.
o Key Contributors:
 Chester Barnard: Foster purpose, ethical visions, and communication.
 Herbert Simon: Human relations and behavioral movement.

Systems Theory

 Concept: Organizations as systems adapting to environmental changes.

 Principles:
o Systems Approach: Organizations are complex wholes interacting with their
environment.
o Subsystems: Interrelated parts within the system.
o Open vs. Closed Systems:
 Open Systems: Interact with the environment.
 Closed Systems: No interaction with the environment.
o Key Elements:

1. Components: Individuals, structure, and environment.

2. Linking Processes: Communication, balance, decision analysis.
3. Goals: Growth, stability, interaction.

o Open Systems Theory: Organizations evolve through internal and external

forces, needing continuous environmental interaction to survive.
 Three Elements:
 Inputs: Raw materials, human resources, energy.
 Throughputs: Production processes, services.
 Outputs/Feedback: Products, services, knowledge.

ORGANIZATIONAL STRUCTURES
ORGANIZATIONAL STRUCTURE
 Organizational Structure – arrangement of positions in an organization
and the authority and responsibility relationships among them. This
includes the division of labor as well as patterns of coordination,
communication, workflow, and formal power that direct organizational
activities.
 Division of Labor – the subdivision of work into separate jobs assigned
to different people. This leads to job specialization to increase work
efficiency. It is an organization’s ability to divide work among people
depends on how well those people can coordinate with each other.
COORDINATING MECHANISMS IN ORGANIZATIONS

 Informal Communication – sharing information on mutual tasks; forming

common mental models to synchronize work activities.
 Formal Hierarchy – assigning legitimate power to individual, who then
use this power to direct work processes and allocate resources.
 Standardization – creating routine patterns of behavior or output.
ELEMENTS OF AN ORGANIZATIONAL STRUCTURE

Chain of Command
Span of Control
Mechanistic vs. Organic Structure
Centralization and Decentralization
Formalization
COMPONENTS OF THE STRUCTURE IN AN ORGANIZATION
 Complexity – degree to which activities within org are differentiated

3 Dimensions:

 1. Horizontal: based on the orientation of members, the nature of tasks

they perform and their education and training
 2. Vertical: characterized by the number of hierarchical levels in the
organization
 3. Spatial: location of the org’s offices, facilities, and personnel are
geographically distributed
 Formalization – extent to which jobs within org are specialized
 Centralization – where the decision-making is concentrated

ORGANIZATIONAL STRUCTURE – TYPES

1. Tall/Hierarchical Structure LAYERED

 What it is: A structure with many levels of management where each manager supervises a small
number of employees.
 Pros:
o Clear promotion paths: Employees know how they can advance in their careers.
o Good supervision: Managers can closely monitor and support employees.
 Cons:
o Slow communication: Messages take longer to travel up and down the hierarchy.
o High costs: More managers mean higher administrative expenses.
o Lower employee empowerment: Employees at the bottom have less decision-making
power.

2. Flat/Simple Structure MINI LAYERED

 What it is: Few levels of management with each manager overseeing many employees.
 Pros:
o Fast decision-making: Fewer layers mean quicker responses.
o Lower costs: Fewer managers reduce administrative expenses.
 o Better interaction: Easier communication between top management and employees.
 Cons:
o Limited promotions: Fewer management levels mean fewer advancement
opportunities.
o Potential supervision issues: Managers may have too many employees to effectively
oversee.

3. Functional Structure

 What it is: The organization is divided into departments based on functions or tasks (e.g.,
marketing, finance).
 Pros:
o Skill specialization: Employees develop expertise in specific areas.
o Resource efficiency: Reduces duplication of resources.
 Cons:
o Poor inter-department communication: Different departments may not coordinate well.
o Silos: Departments may focus on their own goals rather than the overall organization’s
goals.

4. Multidimensional/Divisional DIVIDED

 What it is: based on type of products or clients; can easily expand products or services by adding
new division but there is a duplication of areas of expertise.
 Pros:
o Accountability: Each division operates independently, making it easier to track
performance.
o Easy to grow: Can add new divisions without disrupting existing ones.
 Cons:
o Duplicate resources: Each division may have its own resources, leading to inefficiency.
o Potential isolation: Divisions may not communicate or collaborate well with each other.

5. Centralized Structure TOP LEVEL

 What it is: Decision-making power is concentrated at the top level.

 Pros:
o Uniform operations: Ensures consistency across the organization.
o Efficient operations: Quick, unified decisions.
 Cons:
o Less flexibility: Lower levels may lack the authority to adapt to specific situations.
o Slow decision-making: Decisions might take longer as they move up the hierarchy.

6. Decentralized Structure LOWER LEVELS

 What it is: the decision-making power is out of the hands of the top level and is distributed to
lower levels

 Pros:
 o Employee empowerment: Employees feel more involved and responsible.
o Quick decisions: Local managers can respond rapidly to changes.
 Cons:
o Risk of poor decisions: Lower-level managers may make inconsistent or poor choices.
o Inconsistency: Different parts of the organization might not operate uniformly.

7. Mechanistic Structure RIGID STRICT

 What it is: Rigid structure with a lot of rules, procedures, and central control.
 Pros:
o Stability: Clear rules ensure predictable operations.
o Clear communication: Well-defined procedures.
 Cons:
o Lack of flexibility: Hard to adapt to changes.
o Low autonomy: Employees have little decision-making power.

8. Organic Structure Flexible

 What it is: operate with a wide span of control, decentralized decision-making, and little
formalization; Tasks are fluid, adjusting to new situations and organizational needs.

A more flexible and adaptable way of organizing a company. Think of it like a startup where roles
are not very strictly defined, people often collaborate across different areas, and decision-
making is more spread out.

 Pros:
o High communication: Emphasizes information sharing.
o Creativity: Encourages innovative thinking.
 Cons:
o Potentially lower productivity: Flexibility may lead to inefficiency.
o Slow decisions: Decisions might take longer as they involve more people.

9. Matrix Structure Dual Reporting

 What it is: Combines functional and product divisions, employees report to two bosses.
Employees report to two bosses: one for their function (e.g., marketing) and one for their
project (e.g., product launch).
 Pros:
o Flexibility: Adaptable to changing needs.
o Good for complex projects: Balances functional and product expertise.
 Cons:
o Confusing reporting lines: Employees report to multiple managers.
o Conflict among managers: Power struggles between functional and project managers.

10. Project Task Force/Network Temporary Teams

 What it is: Temporary teams from different departments for specific projects.
  Pros:
o Leverages competencies: Uses best skills from across the organization.
o Flexible: Can quickly adapt to project needs.
 Cons:
o Management difficulties: Hard to coordinate temporary teams.
o Confidentiality issues: Shared information might be sensitive.

11. Team Organization Collaborative

 What it is: Workers collaborate in teams, sharing skills and resources.

 Pros:
o High involvement: Everyone contributes to decision-making.
o Flexible: Can adapt quickly to changes.
 Cons:
o Potential for conflict: Differences in opinion may arise.
o High maintenance costs: Requires ongoing training and support.

ORGANIZATIONAL CHANGES
 Organizations change continuously to adapt to their environments.
Some organizations can change slowly and painfully.
 Organizations often resist change, thus it is important to understand
the conditions under which change is likely to occur.
 Some organizations tend to change radically and tumultuously in
response to economic pressures.
 Some changes are brought about to make the organization operate
more efficiently which would equate to a lower cost per unit of
production or service.

Types of Organizational Changes

1. Transformational Change

 What it is: Major shifts in how the organization operates.

 Pros:
o Significant improvements: Can lead to major advancements.
 Cons:
o Disruptive: Can be unsettling for employees.
o Requires commitment: Needs strong leadership and employee buy-in.

2. Incremental Change

 What it is: Small, gradual adjustments.

 Pros:
o Less disruptive: Easier for employees to adapt.
 o Continuous improvement: Steady progress over time.
 Cons:
o Slow impact: Takes time to see results.
o Might not fix deep issues: Minor changes may not address major problems.

3. Developmental Change

 What it is: Enhances existing systems. a type of organizational change that seeks to build on the
existing processes, structures, and capabilities of an organization in order to bring about
meaningful improvements
 This type of organizational change involves introducing new tools and technologies that help
employees become more productive and efficient.

 Pros:
o Enhances current capabilities: Builds on what’s already working.
o Manageable: Easier to implement than radical changes.
 Cons:
o Might not lead to big breakthroughs: Limited to improving existing processes.

4. Remedial Change

 What it is: The type of organizational change that involves making corrections or improvements
to existing systems, processes and structures in order to bring about more efficient and effective
operations. This type of change often involves troubleshooting and problem-solving existing
issues as well as implementing strategies that can help simplify procedures and eliminate areas
of inefficiency.
 remedial change focuses on addressing existing problems in order to make operations more
efficient and effective.

 Pros:
o Directly addresses problems: Focuses on known issues.
o Improves efficiency: Makes operations smoother.
 Cons:
o Focuses on fixing rather than innovating: May miss opportunities for new solutions.

5. Process and System Change

 What it is: Adjusts existing processes for better efficiency and effectiveness. This type of change
often involves the introduction of new technologies, systems, and tools that not only make
operations more efficient but also introduce new ways of working.

 Pros:
o Increases productivity: Streamlines operations.
o Introduces new ways of working: Often involves new technologies.
 Cons:
o Complex implementation: Can be hard to integrate new systems.
o Requires training: Employees need to learn new processes.
6. People and Culture Change

 What it is: Changes in organizational culture, values, and behaviors in order to drive greater
efficiency and effectiveness .
 Pros:
o Boosts engagement: Employees feel more connected and valued.
o Fosters collaboration: Encourages teamwork.
 Cons:
o Hard to change culture: Deep-seated values are tough to alter.
o Needs ongoing effort: Requires continuous reinforcement.

7. Structural Change

 What it is: Alters organizational structure for efficiency This type of change often involves
introducing new policies, procedures, and systems that help to streamline operations and
eliminate areas of waste.
 Pros:
o Streamlines operations: Reduces inefficiencies.
o Aligns goals: Better matches structure with objectives.
 Cons:
o Disruptive: Can unsettle employees.
o Involves role changes: May require shifting responsibilities.

8. Merger and Acquisition Change

 What it is: Combining or acquiring businesses. This type of change often involves combining
resources, personnel, and operations from multiple organizations into one.

 Pros:
o Expands resources: Gains new assets and capabilities.
o Drives growth: Can rapidly scale the business.
 Cons:
o Integration challenges: Merging different cultures and systems.
o Cultural clashes: Differences in company cultures.

9. De-merger Change

 What it is: Splits an organization into separate entities.

 Pros:
o Increases agility: Smaller units can move faster.
o Simplifies operations: Reduces complexity.
 Cons:
o Complex separation: Dividing assets and responsibilities.
o Potential loss of synergies: May lose benefits of combined operations.

10. Downsizing Change

  What it is: Reduces the size of the organization.
 Pros:
o Cuts costs: Saves money by reducing staff and resources.
o Focuses resources: Concentrates efforts on core activities.
 Cons:
o Lowers morale: Can hurt employee motivation.
o Harms long-term capabilities: Loses talent and expertise.

11. Relocation Change

 What it is: Moving the organization or parts of it to a new location (e.g., staff, offices,
operations).
 Pros:
o Cost savings: Can reduce overhead costs and improve efficiency.
o Market access: Opens up new markets and customer bases.
o Competitive advantage: Benefits from local opportunities in different regions or
countries.
 Cons:
o Complexity: Managing the logistics of relocation can be challenging.
o Disruption: Can cause temporary disruption to operations and staff.

12. Rebranding Change

 What it is: Modifying the organization’s brand or public image to create a more
attractive and compelling identity.
 Pros:
o Fresh image: Helps to update and modernize the organization’s image.
o Market alignment: Aligns with changes in the marketplace or customer
preferences.
o Differentiation: Sets the organization apart from competitors.
 Cons:
o Cost: Rebranding can be expensive.
o Risk of alienation: Existing customers might not respond well to the new brand.
o Implementation: Requires a coordinated effort across the organization to be
successful.

THE FILIPINO WORKER I

MOTIVATION THEORIES FROM THE WEST

According to Lockwood (2010), the following theories of motivation are
considered to be some of the most influential in generating understanding on
the concept of motivation within the workplace:

 Maslow’s hierarchy of needs

 Herzberg’s motivation-hygiene theory
  McClelland’s needs for achievement, affiliation, and power

However, Hofstede (1980) suggested that the characteristics of each culture

have an effect on the usefulness of the theories. Western culture tend to be
more individualistic while our culture tends to be more collectivistic.

MOTIVATION FROM COLLECTIVIST CULTURES

 Markus and Kitayama (1991) described collectivist culture as more
interdependent as opposed to individualistic cultures that are more
independent. People in collectivist cultures focus more on social norms
and peer evaluations (Markus & Kitayama, 1991).
 In a research conducted by Pitrik and Lennard (2010), people from a
culture with a high regard for interpersonal relationships would always
work towards performing a specific behavior for the benefit of another
individual.
 Finally, Ebeling and Gustafsson’s (2012) study on the effects of
collectivistic and individualistic cultures on people’s aspirations found
evidence of the role of culture in determining people’s motivations and
outlook on achievement.

MOTIVATION – SIKOLOHIYANG PILIPINO

 One of the most significant aspects of Sikopil is the importance given to

kapwa. Although it has no direct translation in English, it is loosely
translated as concern for the other and/or the person one shares all
things with (PePua & Protacio-Marcelino, 2000).
 The manner in which Filipinos behave is based on a set of core values
that all fall under pakikipagkapwatao. Hiya (shame) is a value that
guides socially acceptable and socially unacceptable behavior. Utang-
na-loob (debt of gratitude) gives value to mutual reciprocity.
Pakikisama (conformity to group) brings about a sense of togetherness
and cohesiveness in a given group similar to that found in a tightly-knit
community (Selmer & De Leon, 2001).

Hechanova, Uy, and Presbitero Jr. (2005) highlighted that the average
Filipino values three important things when it comes to work:

 job security
 good pay
 opportunities for growth

A number of studies suggest that despite the incidence of poverty in the

Philippines, intrinsic factors remain more important than extrinsic factors.
Franco (2008) found that challenge to ability, learning and growth, and
enjoyment, respectively, ranked as the top three most valued intrinsic
outcomes.

MOTIVATION – EMPLOYEE ENGAGEMENT

 Employee engagement is defined as the extent to which employees
commit to something or someone in their organization, how hard they
work, and how long they stay as a result of that commitment.
 It is associated with increased productivity, decreased turnover, and
lower cost of production.
 When the employees are engaged, they tend to perform better.
Organizations also get to hold on to talents that could be useful
overtime especially when it comes to introducing new employees. It
also introduces healthy competition within the ranks which in turn
makes people more interested in improving the way they work.

A STUDY ON FILIPINO MOTIVATION

Ilagan, Hechanova, Co, & Pleyto (2014) mentioned in their study that
Filipinos are primarily motivated by 21 factors namely:

 compensation from job recognition from employer, competition among

workmates, sense of challenge/ novelty/growth, sense of personal
accomplishment, personal comfort, personal enjoyment/preference,
compatibility with workmates, satisfaction received by clients, provide
for familial needs, job fulfillment, responsibility to company,
care/concern for coworkers, leaving a legacy, setting a good example
for the younger generation, promotions/career growth, loyalty to
employer, familiarity of the workplace, provide better future for family,
provide education for family members, and fain/acquire personal
possessions.

Ilagan, Hechanova, Co, & Pleyto (2014) mentioned in their study that
Filipinos are primarily motivated by 21 factors namely:

 compensation from job recognition from employer, competition among

workmates, sense of challenge/ novelty/growth, sense of personal
accomplishment, personal comfort, personal enjoyment/preference,
compatibility with workmates, satisfaction received by clients, provide
for familial needs, job fulfillment, responsibility to company,
care/concern for coworkers, leaving a legacy, setting a good example
for the younger generation, promotions/career growth, loyalty to
employer, familiarity of the workplace, provide better future for family,
provide education for family members, and fain/acquire personal
possessions.
 A STUDY ON FILIPINO WORKER MOTIVATION
 The study validated local studies that found that Filipino workers value
the quality of relationship with co-workers and the sense of belonging
to an organization. Malasakit and its relation to Herzberg’s two-factor
theory.
 Filipino workers’ intangible rewards such as self-satisfaction, autonomy,
and recognition weigh more than tangible rewards. This is related to
Hackman and Oldman’s Job Characteristics model.
 The results validate other local studies that highlight the importance of
challenge to ability, learning and growth, and enjoyment. In relation to
McClelland’s three-needs theory.

A STUDY ON FILIPINO WORKER MOTIVATION - IMPLICATIONS

 Philippine organizations may be designed in a way that can offer more
rewards, delivering value not just for the employee but to their family as
well. Insurance and educational plans as well as family days and work-
life balance that may allow for more family time may appeal more to
Filipino workers than the benefits prescribed by previous theories.
 The study found that job needs are driving factors of engagement
among Filipino workers. This highlights the importance of job fit and job
design in order to motivate the Filipino worker. It would be beneficial for
both the employers and the employees if the workers were given jobs
that complemented their skills and capabilities.
 That organization-related needs are a significant predictor of employee
engagement suggests the importance of HR initiatives such as
socialization, building a sense of community within the workplace, and
enabling good interpersonal relationships. This can be through
programs that reinforce the feeling of camaraderie and attachment such
as onboarding, training, and celebrations and events.