The big contribution of the late 19th century to organizations was the notion of rationality. The essence of what Weber, Fayol, Taylor and all those other classical theorists were saying was try to organize in a rational manner. Rather than make your brother vice-president of finance, put in somebody who is actually qualified to do the job. Instead of moving pig-iron the traditional way, work out the bio-mechanics of it and develop a work style that maximizes output.
A part of this rationalist perspective (particularly Scientific Management) was a simple motivational theory, based ultimately on Adam Smith and utilitarianism. The idea is that people work best when they are maximizing self interest. Which was interpreted to mean money.
But there is more to formal organizations than purely formal behavior, and more to human motivation than just pay. Human beings are social animals. We need to hang around with others. We like to be liked by others. We don't like to be the person that nobody likes. We also like respect and power and autonomy. So there are other needs that workers need to fill besides the ones that money buys.
Whenever a set of people get together and starts interacting on a long term basis, they start to form an informal group. An informal group is more than just a collection of people. Groups have internal social structure based on dominance and friendship relations. There are social leaders. There are hangers-on.
Organizations contain lots of informal groups. Their existence -- and importance -- really came to light in the 1920's and '30s at the Hawthorne plant of the Western Electric Company in Chicago, studied by Elton Mayo, Roethlisberger and Dickson, from MIT.
They started out studying ways of improving worker productivity, partly in the tradition of Taylor, and partly as a reaction to Taylor because one effect of Taylorization was tremendous morale problems among workers. Their experiments were in 3 phases, called the illumination, relay assembly, and bank wiring room studies respectively.
The first experiments were with illumination - lighting in the factory. It was thought that workers might work better when there was more light, but light was very expensive, so they needed to find the optimum level to satisfy both requirements.
They assigned workers making induction coils to 2 groups: test and control. Both started with same amount of light. Then the Test group was given more light. Productivity went up. But, unfortunately, it also went up in the control group. So then they increased the light in the Test group again. Once again, productivity went up or stayed the same in both groups. Again they raised the light level, and again the same result.
So then they reduced the lighting in the Test group way down, below the level in control group. Productivity soared in the Test group, and continued to go up in the control group. They reduced light some more: same result. They finally got down to a level of light equivalent to a moonlit night, and found that productivity was still the same or higher. This really confused the researchers. As one of the researchers put it at the time, they were "knocked galley-west" by the results.
They finally took two workers and put them in a closet with no light at all -- just the crack under the door. Productivity was just fine.
They had to conclude that light didn't seem to matter in the way they expected. And there was something very strange about why output kept going up relative to the rest of the factory. So they planned a more elaborate experiment.
The second experiment was the relay assembly test room. Six women who assembled telephone relay switches were taken out of the main area and placed in special test room where they could be observed. All immigrants (as were most factory workers).
It was a 5 year experiment. Productivity was measured the whole time by a machine that counted the number of relays that each person assembled as she dropped it down a little chute. They gauged the effects of rest pauses, shorter work days, shorter work weeks, wage incentives and different supervisory practices on output.
The results were just like the results of the lighting experiment. No matter what change they introduced, it always seemed to either have no effect, or it improved productivity, even when the change was just returning the variable to its original state!
As a result of these two studies, the Hawthorne team theorized that there was a key variable that managers had been ignoring, which had to do with workers' relationships, attitudes, feelings, and perceptions. By separating people into groups and then making lots of changes in working conditions, the researchers inadvertently did two things:
So an important conclusion (in spite of the experimental design problem) was that people did not necessarily behave according to models of economic rationality. Social processes within the group that formed were much more important than purely material gains. Also, even material goods or physical events or wages or work hours etc. were perceived differently by different people in different situations and so it's not so much the money or the hours themselves that matter, it's what meaning they hold for people, and meaning is something that is socially mediated. The group affects how the individual interprets things.
An example occurs in the next phase of the experiments, the bank wiring room, where it turned out that workers conferred a lot of meaning on which chair people occupied (front or back of room). The front of the room was higher status. This was not something that management was even aware of. But it affected relationships among people in the room.
To really understand employee grievances, complaints, squabbles requires understanding employee's position in the group social structure. Employee complaints are subjective: they can't be treated as objective facts. Often, they are symptoms of other issues that may have little to do with the complaint itself.
For example, suppose a worker refuses to be moved to another desk, claiming that the light isn't as good and it smells there. But it's really that that area is where the people of the out-group sit, and she's a member of the in-group, and she would rather die than sit with the out-group. If management isn't aware of this, they will simply think she is irrational.
The meaning and value that employee assigns to his or her position depends on the degree to which position permits him to fulfill his social obligations to others in the group. A social organization provides a system of values that provide basis of action and satisfaction.
[Maps pertaining to the Bank Wiring Room study are available here]
The third phase of the experiments was designed to investigate the social structure of employees. How did it form, what did it consist of, how did it affect productivity, and so on.
The room contained 9 wiremen, 3 soldermen, 2 inspectors, and the observer. Each solderman serviced 3 wiremen. wiremen attached wires to panels in a particular order, and soldermen soldered the connections closed. Then the inspectors would test them electrically with some test equipment. Also, among the 9 wiremen, 3 worked only on selectors and the other 6 worked on connectors. The connector stations were located in the front of the room.
A basic question asked was, is the informal social structure based on occupations? The answer was "somewhat".
For example, connector wiremen were all together at front of room. The men said they preferred connectors to selectors. Supposedly they were lighter to carry but they only had to carry two of them each day, so that sounded like an excuse). It also happened that new men were typically added to back of room. New men were slow, and had low hourly rates. People in front were old hands, more proficient, and therefore more status. So people preferred connectors cuz that's what the more prestigious people were doing.
It was found that wiremen had higher prestige than soldermen. New people started as soldermen then became wiremen. Evidence for prestige was in things like who had to get lunch for everyone, some fights over the windows, and bits of conversation.
Another job was trucker: he brought wire and raw materials into the room each day and took away finished terminals. For each terminal who took away, he had to put on an id tag and a stamp. The men called him "goofy" and "gigolo" and would annoy him constantly: spitting on the terminals right where he had to pick them up, jogging his arm just as he was putting on stamp, holding on to the handtruck, tickling him when his hands were full etc.
When a new trucker came on, they behaved the same way towards him. Note that it was not exactly in the company manual that wiremen should harass truckers. It was just something that developed.
The inspectors reported through a different branch of the organization. They were better educated and wore nicer clothes. In the Bank Wiring room, they were higher status for most things, but considered outsiders. They did not have lunch with others and had no control over windows. Again, it was obviously not something management had mandated.
One of main things going on in the room was games: matching coins, lagging coins, shooting craps, card games, bets on combinations of digits in the serial numbers of weekly pay checks, pools on horseracing, baseball, quality records. Also chipped in to buy candy, and they practiced binging (punching each other in the arm), and they did a special kind of arguing that was like a white version of playing the dozens: they would insult each other until somebody got mad. Whoever got mad lost. The games went on basically within two groups: a front-of-room group and a back-of-room group.
Other things going on where conflicts over the windows: should they be shut or open? In-group members could control the windows.
There was also job trading and helping each other out. A guy labeled w3 by the researchers was the most popular guy. He was also one of the fastest workers and didn't really need any help, but everybody wanted to help him. He didn't reciprocate much but that didn't matter.
As in all groups, there were longterm friendships and antagonisms, whose effects come out practically every day. In general, the wiremen were antagonistic to the inspectors and vice-versa. But the men particularly hated I3, and eventually ousted him. In contrast, they liked I1. I1 would point out errors without charging them. The men also hated W5 for squealing on them.
In the end, most of the relationships came down to two cliques, each with a hanger-on, and some isolates. The groups included several different professions. They seemed based more on physical closeness than anything else. These groups were recognized by the men themselves. They developed ideas about each other. In private interviews would say things like "we talk about interesting things, those guys in the back just horse around."
The basic determinants of clique membership:
Clique membership/ostracism acted as a form of social control, forcing people to conform to group desires. If a person would have chosen to "disobey" their group, they would have been alone because the other group wouldn't have taken them in. Membership was also used to manage bosses. The men in a group would all stick together on stories, and would fudge reports so as to achieve uniform results. They also covered for each other.
The groups established norms regarding output, treatment of supervisor, reciprocity and other interpersonal relations. effective controls and sanctions. But the main thing of course was to keep piece-rates from changing. By having group cohesion, they could resist change.
The cliques served as a system for sense-making about organizational events. They developed their own set of beliefs, explaining things to each other like the complicated western electric payment system (which they had completely wrong). Consequently, employee logic didn't always agree with management or rational logic: eg. they restricted their output even though it cost them money.
The investigators found that tests of intelligence, manual dexterity, physical health were unrelated to productivity. This means that social factors like norms of productivity overwhelmed any differences in ability among the workers.
It should be noted that the social organization of the room had elements of the official structure (like relations between soldermen and wiremen), but also had entirely foreign elements.
Overall conclusion: formal organizations are not as formal as they may seem, even if they are bureaucracies. When human beings interact with each other over a long period of time, they develop a social structure that is only partly based on the formal organizational structure.