Perspectives on Individuals and Organisations

Managing Organisations Questions Successful strategy? Aims? Type of Leadership? Budgets? Pay?

Concept

Concepts Economic Psychology Sociology

Economics Concept Looks at exchange of goods/services via markets Economic development of economic entities  Economic theory of the firm Assumes maximization of utility is striven for Work for Money

Human Capital Theory - Gary S. Becker Individuals posses human capital Work for wage Individuals invest in their human capital through education Chose the human capital investment that promises to maximize utility

2 Forms of Human Capital General - used in an number of work contexts e.g. software skills Specific - employer specific or used in limited number of workplaces

Performance IncentivesProblem Orgaizations cannot observe individual's actions Individual could increase utility by shirking  Shirking could diminish utility

Principle Agent Theory - Stiglitz Assumption - principal has contract with agent Solution - design a contract that makes shirking less attractive for maximizing individual utility Example - LEN-Model (Linear- Exponential-Normal)

Psychological Perspective Developed late 19th/early 20th century looks at human behavior, mental illnesses, individual dispositions, learning processes Understands that Human action is a reaction to the environment Assumes individual has needs and strive to fulfill them

Psychological Assumptions assumption - people are driven by needs, they exhibit behavior if they believe so will result in fulfillment basic problem - people can have many needs (what sanctions offer/threaten?) aims - identify typical needs and point out useful positive and negative sanctions 

Maslow's Theory of Motivation founder of humanistic psychology individuals behave in order to feel fulfilled - motivators hierarchy of needs

Intrinsic and Extrinsic Motivation Job satisfaction Extrinsic - external sanctions e.g. money Intrinsic - behavior e.g. enjoying work Increases in pay can increase extrinsic motivation and decrease intrinsic motivation  Crowding out effect - individuals insulted by monetary evaluation of their work 

Job redesign increase intrinsic rewards? Job design - planning of job, defining nature and sequence of tasks, shaping social and informal aspects of the job Job Enlargement - combination of previously separated task, increases variety in job (reduce monotony) Job Enrichment - design tasks into a job that is meaningful and significant, whilst diverse

Sociological Perspective Developed late 19th/early 20th century looks at individuals, groups and societies  actions, perceptions, interpretations, aspirations, beliefs, structures, and social trends Individuals actions are influenced by their perceptions  Perceptions depend on societal environment 

Sociological Perspective Assumptions assumptions - individuals are members of society, they become a member of an organisation and exchanges actions for rewards. basic problem - how can organisations influence action? aims - explain influence of organisational and societal structures on individual action/vice versa

Working in the Voluntary Sectorvoluntary sector - charities, social care, shelters etcEmployment conditions - lower wages then in private sector, unsociable hours, emotionally stressfulIndividuals driven by values, over moneyGratifying work

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