2-1Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 20002The Evolution ofManagementTheory
2-2Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Scientific Management theoryModern management began in the lat...
2-3Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Job specializationAdam Smith, 18th century economist, foundfir...
2-4Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Evolution of Management Theory18901940 2000Figure 2.1Administra...
2-5Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Scientific ManagementDefined by Frederick Taylor, late 1800’s....
2-6Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The 4 PrinciplesFour Principles to increase efficiency:1. Stud...
2-7Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Problems of Scientific ManagementManagers often implemented on...
2-8Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The GilbrethsFrank and Lillian Gilbreth refined Taylor’smethod...
2-9Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Administrative ManagementSeeks to create an organization that ...
2-10Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Bureaucratic PrinciplesA BureaucracyA Bureaucracyshould havesh...
2-11Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Key points of BureaucracyAuthority is the power to hold people...
2-12Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Fayol’s PrinciplesHenri Fayol, developed a set of 14 principl...
2-13Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Fayol’s Principles6. Unity of Direction: One plan of action to...
2-14Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Fayol’s Principles11. Remuneration of Personnel: The payment s...
2-15Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Behavioral ManagementFocuses on the way a manager shouldperso...
2-16Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The Hawthorne StudiesStudy of worker efficiency at theHawthor...
2-17Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Theory X and YDouglas McGregor proposed the twodifferent sets...
2-18Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Theory X v. Theory YFigure 2.3Theory YTheory YEmployee is notE...
2-19Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Theory ZWilliam Ouchi researched the culturaldifferences betw...
2-20Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Management ScienceUses rigorous quantitative techniques tomax...
2-21Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Organization-Environment TheoryConsiders relationships inside...
2-22Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Systems ConsiderationsAn open system interacts with theenviro...
2-23Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The Organization as an Open SystemInputInput StageStageRawRawM...
2-24Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Contingency TheoryAssumes there is no one best way tomanage....
2-25Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000StructuresMechanistic: Authority is centralized at thetop. (T...
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Management Chpt02

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Management Chpt02

  1. 1. 2-1Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 20002The Evolution ofManagementTheory
  2. 2. 2-2Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Scientific Management theoryModern management began in the late19th century. Organizations were seeking ways to bettersatisfy customer needs. Machinery was changing the way goodswere produced. Managers had to increase the efficiency ofthe worker-task mix.
  3. 3. 2-3Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Job specializationAdam Smith, 18th century economist, foundfirms manufactured pins in two ways: Craft -- each worker did all steps. Factory -- each worker specialized in one step.Smith found that the factory method hadmuch higher productivity. Each worker became very skilled at one, specifictask.Breaking down the total job allowed for thedivision of labor.
  4. 4. 2-4Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Evolution of Management Theory18901940 2000Figure 2.1Administrative ManagementBehavioral ManagementScientific ManagementManagement ScienceOrg. Environment
  5. 5. 2-5Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Scientific ManagementDefined by Frederick Taylor, late 1800’s.The systematic study of the relationshipsbetween people and tasks to redesign thework for higher efficiency. Taylor sought to reduce the time a worker spent oneach task by optimizing the way the task was done.
  6. 6. 2-6Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The 4 PrinciplesFour Principles to increase efficiency:1. Study the way the job is performed now &determine new ways to do it.Gather detailed, time and motion information.Try different methods to see which is best.2. Codify the new method into rules.Teach to all workers.3. Select workers whose skills match the rules setin Step 2.4. Establish a fair level of performance and payfor higher performance.Workers should benefit from higher output.
  7. 7. 2-7Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Problems of Scientific ManagementManagers often implemented only theincreased output side of Taylor’s plan. They did not allow workers to share in increasedoutput. Specialized jobs became very boring, dull. Workers ended up distrusting ScientificManagement.Workers could purposely “under-perform”Management responded with increased useof machines.
  8. 8. 2-8Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The GilbrethsFrank and Lillian Gilbreth refined Taylor’smethods. Made many improvements to time and motionstudies.Time and motion studies: 1. Break down each action into components. 2. Find better ways to perform it. 3. Reorganize each action to be more efficient.Gilbreths also studied fatigue problems,lighting, heating and other worker issues.
  9. 9. 2-9Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Administrative ManagementSeeks to create an organization that leads toboth efficiency and effectiveness.Max Weber developed the concept ofbureaucracy. A formal system of organization and administrationto ensure effectiveness and efficiency. Weber developed the Five principles shown inFigure 2.2.
  10. 10. 2-10Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Bureaucratic PrinciplesA BureaucracyA Bureaucracyshould haveshould haveWritten rulesWritten rulesSystem of taskSystem of taskrelationshipsrelationshipsHierarchy ofHierarchy ofauthorityauthorityFair evaluationFair evaluationand rewardand rewardFigure 2.2
  11. 11. 2-11Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Key points of BureaucracyAuthority is the power to hold people accountablefor their actions.Positions in the firm should be held based onperformance not social contacts.Position duties are clearly identified. People shouldknow what is expected of them.Lines of authority should be clearly identified.Workers know who reports to who.Rules, Standard Operating Procedures (SOPs), &Norms used to determine how the firm operates.Sometimes, these lead to “red-tape” and otherproblems.
  12. 12. 2-12Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Fayol’s PrinciplesHenri Fayol, developed a set of 14 principles:1. Division of Labor: allows for job specialization. Fayol noted firms can have too much specialization leading topoor quality and worker involvement.2. Authority and Responsibility: Fayol included both formaland informal authority resulting from special expertise.3. Unity of Command: Employees should have only oneboss.4. Line of Authority: a clear chain from top to bottom of thefirm.5. Centralization: the degree to which authority rests at thevery top.
  13. 13. 2-13Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Fayol’s Principles6. Unity of Direction: One plan of action to guide theorganization.7. Equity: Treat all employees fairly in justice andrespect.8. Order: Each employee is put where they have themost value.9. Initiative: Encourage innovation.10. Discipline: obedient, applied, respectful employeesneeded.
  14. 14. 2-14Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Fayol’s Principles11. Remuneration of Personnel: The payment systemcontributes to success.12. Stability of Tenure: Long-term employment isimportant.13. General interest over individual interest: Theorganization takes precedence over the individual.14. Esprit de corps: Share enthusiasm or devotion to theorganization.
  15. 15. 2-15Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Behavioral ManagementFocuses on the way a manager shouldpersonally manage to motivate employees.Mary Parker Follett: an influential leaderin early managerial theory. Suggested workers help in analyzing their jobsfor improvements. The worker knows the best way to improve thejob. If workers have the knowledge of the task, thenthey should control the task.
  16. 16. 2-16Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The Hawthorne StudiesStudy of worker efficiency at theHawthorne Works of the Western ElectricCo. during 1924-1932. Worker productivity was measured at variouslevels of light illumination. Researchers found that regardless of whetherthe light levels were raised or lowered,productivity rose.Actually, it appears that the workersenjoyed the attention they received as partof the study and were more productive.
  17. 17. 2-17Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Theory X and YDouglas McGregor proposed the twodifferent sets of worker assumptions. Theory X: Assumes the average worker is lazy,dislikes work and will do as little as possible.Managers must closely supervise and control throughreward and punishment. Theory Y: Assumes workers are not lazy, want todo a good job and the job itself will determine ifthe worker likes the work.Managers should allow the worker great latitude, andcreate an organization to stimulate the worker.
  18. 18. 2-18Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Theory X v. Theory YFigure 2.3Theory YTheory YEmployee is notEmployee is notlazylazyMust create workMust create worksetting to buildsetting to buildinitiativeinitiativeProvide authorityProvide authorityto workersto workersTheoryTheory XXEmployee is lazyEmployee is lazyManagers mustManagers mustclosely superviseclosely superviseCreate strict rulesCreate strict rules& defined& definedrewardsrewards
  19. 19. 2-19Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Theory ZWilliam Ouchi researched the culturaldifferences between Japan and USA. USA culture emphasizes the individual, and managerstend to feel workers follow the Theory X model. Japan culture expects worker committed to theorganization first and thus behave differently than USAworkers.Theory Z combines parts of both the USAand Japan structure. Managers stress long-term employment, work-group, andorganizational focus.
  20. 20. 2-20Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Management ScienceUses rigorous quantitative techniques tomaximize resources.Quantitative management: utilizes linearprogramming, modeling, simulation systems.Operations management: techniques to analyze allaspects of the production system.Total Quality Management (TQM): focuses onimproved quality.Management Information Systems (MIS): providesinformation about the organization.
  21. 21. 2-21Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Organization-Environment TheoryConsiders relationships inside and outsidethe organization. The environment consists of forces, conditions, andinfluences outside the organization.Systems theory considers the impact ofstages:Input: acquire external resources.Conversion: inputs are processed into goods andservices.Output: finished goods are released into theenvironment.
  22. 22. 2-22Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Systems ConsiderationsAn open system interacts with theenvironment. A closed system is self-contained. Closed systems often undergo entropy and losethe ability to control itself, and fails.Synergy: performance gains of the wholesurpass the components. Synergy is only possible in a coordinated system.
  23. 23. 2-23Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000The Organization as an Open SystemInputInput StageStageRawRawMaterialsMaterialsConversionConversionStageStageMachinesMachinesHuman skillsHuman skillsOutputOutputStageStageGoodsGoodsServicesServicesSales of outputsSales of outputsFirm can then buy inputsFirm can then buy inputsFigure 2.4
  24. 24. 2-24Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000Contingency TheoryAssumes there is no one best way tomanage. The environment impacts the organization andmanagers must be flexible to react toenvironmental changes. The way the organization is designed, controlsystems selected, depend on the environment.Technological environments change rapidly,so must managers.
  25. 25. 2-25Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000StructuresMechanistic: Authority is centralized at thetop. (Theory X) Employees closely monitored and managed. Very efficient in a stable environment.Organic: Authority is decentralizedthroughout employees. (Theory Y) Much looser control than mechanistic. Managers can react quickly to changingenvironment.
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