The Rational Model of Organization

Introduction

The rational model of organization is based on the study on human behavior. The heart of a successful administration is efficiency, which is making good decisions with rationality. Individuals are the subjects in decision making. Therefore, the rational model of organization is all about individuals’ rationality. However, people cannot behavior absolutely rationally because of the limits of characters of human beings and the structure and purpose of bureaucracy/organization.

Summaries:

  1. The origin and inevitability of limited rationality:

Rational model of administration develops the study on efficiency, which is regarded as good things that enhance the organization’s capacity to attain its goals. Efficiency (good) is primary aim of administration. Individual human beings are limited in their capacity to respond to the complex problems we face. The rational individual is, and must be, an organized and institutionalized individual. The key to achieving rational behavior is to calculate probabilities and thereby coordinate the right means with a given end. Efficiency is making a good decision on behalf of organization with rationality.

Individual rationality is needed when individuals begin to make choices that are guided by the interests of the organization and conditioned and constrained by the organizational processes.

The organizational influences on administrative man develop his habits of cooperative behavior. Simon thought that the price of achieving organizational rationality is individual autonomy. Therefore, organizational efficiency depends on individual rationality. The study of administrative efficiency is the study of individual behavior.

However, there is no absolute individual rationality. Rationality is obedience to hierarchically superior authorities. Rationality is compliance.

  1. limits of administrative man rationality:

In contrast to economic man, administrative man seeks to satisfice (to find satisfactory solutions) rather than to maximize, in book Theories of Public Organization.

  1. Man can make his choices without first examining all possible behavior alternatives and without ascertaining that these are in fact all the alternatives.
  2. Because he treats the world as rather empty and ignores the interrelatedness of all things (so stupefying to thought and action), administrative man is able to make his decisions with relatively simple rules of thumb that do not make impossible demands upon his capacity for thought.
  3. Administrative man is capable of only bounded rationality, he must seek rational organizational actions
  4. Basic calculus remains the same for administrative man and economic man
  5. Organization will impose its own standards of rationality on the individual

Lindblom

Lindblom raised the concept of incremental method to solve the problem faced in rational model, where rationality is limited by organizational ends. Incremental method provides the approach to settle on a limited objective to be achieved by the policy, outline the few options that were immediately available, and then make a choice that combined into one “the choice among values and the choice among instruments for reaching values”. It helps the policy maker to pursue that pluralist objective of reaching agreement among competing but balanced interests.

Philip Selznick

“Foundations of the theory of organization” posits the view that organization will never completely be able to cope with the nonrational aspects of organizational behavior. Selznick emphasized that the individual within an organization has personal goals that often clash with the organization’s formal goals.

In “Foundations of the Theory of Organization, Philip Selznick states that rational action systems are imbedded in an institutional matrix, in two sense:

  1. The action system-or the formal structure of delegation and control which is its organizational expression-is an aspect of a concrete social structure made up of individuals who may interact as wholes, not simply in terms of their formal roles within the system
  2. The formal system, and the social structure within which it finds concrete existence, are alike subject to the pressure of an institutional environment to which some overall adjustment must be made.

Selznick thought that any concrete organizational system is an economy; it is an adaptive social structure. The theory of organization involves the ideas of 1) the concept of organizations as cooperative systems, adaptive social structures, made up of interacting individuals, subgroups, and informal plus formal relationships; 2) structural-functional analysis, which relates variable aspects of organization to stable needs and self-defensive mechanisms; 3) the concept of recalcitrance as a quality of the tools of social action

Maintenance of the system needs 1) the security of the organization as a whole in relation to social forces in its environment; 2) the stability of the lines of authority and communication; 3) the stability of informal relations within the organization; 4) the continuity of policy and of the sources of its determination; 5) a homogeneity of outlook with respect to the meaning and role of the organization

Co-optation is the process of absorbing new elements into the leadership or policy determining structure of an organization as a means of averting threats to its stability or existence. Co-optation is applied to solve conflict between authority and social concepts. When there exists a hiatus between consent and control, so that the legitimacy of the formal authority is called into question. Cooptation responses to the pressure of specific centers of power; and it reflects a state of tension between formal authority and social power.

Robert K. Merton

In “Bureaucratic Structure and Personality”, Merton illustrated the structure of bureaucracy systematically from 9 points:

  1. According to Max Weber, bureaucracy involves a clear-cut division of integrated activities which are regarded as duties inherent in the office.
  2. A system of differentiated controls and sanctions is stated in the regulations.
  3. The assignment of roles occurs on the basis of technical qualifications which are ascertained through formalized, impersonal procedures.
  4. The pure type of bureaucratic official is appointed, either by a superior or through the exercise of impersonal competition; he is not elected. The election of higher officials is designed to affect the purposes of the organization
  5. Bureaucracy maximizes vocational security
  6. The chief merit of bureaucracy is its technical efficiency, with a premium placed on precision, speed, expert control, continuity, discretion, and optimal returns on input.
  7. The structure is one which approaches the complete elimination of personalized relationships and nonrational considerations.
  8. Bureaucratization entails separation of individuals from the instruments of production.
  9. Bureaucracy avoids public discussion of its techniques.

Bureaucracy involves actions which are related to the purposes of the organization in a formal, rationally organized social structure. In bureaucracy, authority derives from acknowledged status, inheres in the office rather than person. Formality facilitates the interaction of the occupants of offices

An effective bureaucracy demands reliability of response and strict devotion to regulations. However, such devotion to the rules leads to their transformation into absolutes, while reliability and devotion could cause inefficiency.

Furthermore, bureaucracy causes depersonalization of relationships and superordinate feelings of being administrating, which cause inefficiency.

Chester I. Barnard

In “The Economy of Incentives”, Barnard thought that the power of cooperation is dependent upon the willingness of individuals to cooperate and to contribute their efforts to the cooperative system. Therefore, the fundamental problems are finding positive incentives and reducing or eliminating negative incentives or burdens

The method of incentives:

  1. Those that are specific and can be specifically offered to an individual (specific inducements)
  2. Material inducements; b. personal nonmaterial opportunities (are important to secure cooperative effort above the minimum material rewards); c. desirable physical conditions; d. ideal benefactions (capacity of organizations to satisfy personal ideals)
  3. Those that are general, not personal, that cannot be specifically offered (general incentives)
  4. associational attractiveness (social compatibility); f. adaptation of conditions to habitual methods and attitudes (customary working conditions and conformity to habitual practices and attitudes); g. the opportunity of enlarged participation; h. the condition of communion

Different men are moved by different incentives or combinations of incentives, at different times. Organizations are probably never able to offer all the incentives that move men to cooperative effort, and are usually unable to offer adequate incentives. It is the limit of organizational rationality.

The method of persuasion refers to the creation of coercive conditions (employed both to exclude and to secure the contribution of individuals to an organization); the rationalization of opportunity; and the inculcation of motives.

Richard Cyert and James March

In the beginning of “A behavioral theory of organizational objectives”, there are three commitments applied to develop a behavioral theory of organizational decision making: 1) to develop an empirical theory rather than a normative one; 2) to focus on classic problems—pricing, resource allocation, and capital investment; 3) to approximate decision making process.

The objectives of a coalition of organization are determined in three ways: 1) the bargaining process; 2) the internal organizational process (stabilization and elaboration) and 3) the process of adjustment to experience

There are five basic mechanisms to develop a behavioral theory: 1) a mechanism that changes the quantitative value of the demands over time; 2) an attention-focus mechanism for demands; 3) an attention-focus mechanism for problems; 4) a demand-evaluation procedure that is consistent with the limited capacities of human beings; and 5) a mechanism for choosing among the potentially viable coalitions.

Herbert Simon

In “The proverbs of Administration”, Simon discoursed four administrative principles:

  1. Administrative efficiency is increased by a specialization of the task among the group

Two ways of specialization—by place and by function

Nature of specialization means that different persons are doing different things

  1. AE is increased by arranging the members in hierarchy of authority

It is impossible for a man to obey two contradictory commands—unity of command

  1. AE is increased by limiting the span of control

AE is enhanced by keeping at minimum the number of organizational levels through which a matter must pass before it is acted upon.

Broad control leads to stressful administrative work, since 1) there will be too many people reporting to higher authority, and 2) more energy are needed to solve the problem of lacking of specialization.

  1. AE is increased by grouping the workers

Numbers of employees are determined by purpose, process, clientele and place of a work.

There is no difference between a purpose and a process, but only a distinction of degree.

Description of an organization is a description that designates for each person in the organization what decisions that person makes and the influences to which he is subject in making each of these decisions.

In decision-making, rationality is limited by 1) objective factors (the individual is limited by his skills, habits, and reflexes), which limit on his ability to perform; 2) loyalty (the individual is limited by his values, which influence him in making decisions); 3) subjective factors (the individual is limited by the extent of his knowledge of things relevant to his job), which limit on his ability to make correct decisions.

Simon thought that administration and the pursuit of efficiency is not able to be analyzed elaborately as a science or an art, instead, experience and practice develop it better and better.

Conclusion:

The rational model of organization focuses on the central value of administration—efficiency. After the classical school of organization, which studies on division of labor, scientific management and analysis of the nature and structure of bureaucracy as a science, the theorists, Lindblom, Selznick, Merton, Barnard, Simon, Cyert and March, studied on individual rationality as approach to fulfil efficiency.

These theorists agreed on limited individual rationality caused by organization as a whole. Selznick thought that organization is an economy. The nature of an organization is an adaptive social structure. Administration is an adaptive process in an organization, where personal goals always clash with the organizational goals. It limited individual rationality. Co-optation is an approach to change organizational goals and to mediate the conflicts between individual and organization.

Barnard developed this view. Treating organization as an economy, Barnard raised that organization is required to provide incentives to individuals adequately to eliminate the conflicts, while maximize individual rationality. However, Barnard, at the same time, thought that it is impossible to provide all reasonable incentives to individuals.

Merton studied on bureaucratic structure systematically. The dysfunctions of bureaucracy exist because of the nature of bureaucracy. The structure of bureaucracy needs individual reliability and devotion. However, the characteristics of bureaucracy leads to depersonalization of inter-relationships in organization and people’s superordinate feelings, which inevitably cause limited rationality.

Simon maximized individual rationality, studying on administrative principles of specialization, arranging the members in a hierarchy, limiting control and grouping workers. However, the characters of human beings are always changing, without standards, and their knowledge is always limited; rationality is always limited.

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