Development of Business Thought Unit 1


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Development of Business Thought Unit 1

  1. 1. Development of Management Thought (BBA 306)UNIT - 1 1.1 Evolution of Management Thought EARLY PERSPECTIVES The first known management ideas were recorded in 3000- 4000 B.C. One Pyramid built by Egyptian ruler Cheops required work to be done by 100,000 men for over twenty years in 2900 B.C. It covered 13 acres of land and measured 481 meters in height. The stone slabs had to be moved thousands of kilometres of distance. As folklore goes, even the sound of a hammer was not heard in the villages in the vicinity of the site of these pyramids. Such monumental work could not be completed without adherence to principles of sound management. CLASSICAL MANAGEMENT THEORY Rational economic view, scientific management, administrative principles, and bureaucratic organisation characterise this phase. While the rational economic view assumed that people are motivated by economic gains primarily; scientific management of F.W. Taylor and others emphasised one best way of production etc; administrative theorists personified by Henri Fayol etc looked at the best way to combine jobs and people into an efficient organisation; bureaucratic organisation theorists led by Max Weber looked at ways to eliminate managerial inconsistencies due to abuse of power which contributed to ineffectiveness. This was the era of the industrial revolution and factory system of production. Large scale production would not have been possible without adherence to the principles governing organising production based on division of labour and specialisation, relationship between man and the machine, managing people and so on. NEO CLASSICAL THEORY — HUMAN RELATIONS APPROACH This school of thought developed between 1920s to 1950s felt that employees simply do not respond rationally to rules, chains of authority and economic incentives alone but are also guided by social needs, drives and attitudes. Hawthorne Studies at GEC etc., were conducted then. It was quite natural that in the early phases of the industrial revolution, the emphasis was on development of techniques and technology. The attention to the human factor was the salient aspect of this school of thought. This attention was to serve as a precursor to the development of behavioural sciences. 1
  2. 2. Development of Management Thought (BBA 306)UNIT - 1 MANAGEMENT SCIENCE/OPERATIONAL RESEARCH It emphasises research on operations and use of quantitative techniques to aid managers to take decisions. MODERN MANAGEMENT It sees modern organisations as complex systems and underlies contingency approach and use of modern techniques to solve organisational and human problems. Principles of Management • PLANNING - Management principles Planning bridges the gap from where we are to where we want to go... • ORGANISING - Management principles Organisation is the process of identifying and grouping of the works to be performed... • STAFFING - Management principles Staffing is the function by which managers build an organisation through the recruitment, selection... • DIRECTING - Management principles Directing means giving instructions, guiding, counselling, motivating... • Controlling - Management Principles The managerial function controlling always maximise the use of scarce resources to achieve the purposeful behaviour of employees in an organisation... 1.2 Mechanistic Approach Taylors contribution to management theory Frederick Taylor was among the first people to discuss and record the ideas of management theory. Taylors view on management is a classical and mechanistic one. He believed that workers should be seen as "cogs in a machine" that needed to be told what to do and exactly how to do it. He also believed that management should direct the workers to perform a specific task based on their current skills and physical abilities without any expectation of the workers to be flexible by acquiring new skills. In other words, Taylor did not expect workers to become multiskilled. 2
  3. 3. Development of Management Thought (BBA 306)UNIT - 1 Taylor also discussed issues of cooperation with workers to ensure best method. In general, only one best method was given for everything. In other words, the manager would set a standard and taught people to do things in the best most productive way and he expected everyone to achieve that standard. Car-assembly plants and MacDonalds are two examples of this management style. However, people object to this mechanistic approach to management because workers did not like being told what to do and how things should be done. If they keep being told what to do, they would eventually feel like uncreative robots. Also the profits tended to go to management; and there was little opportunity for workers to see the big picture. 3
  4. 4. Development of Management Thought (BBA 306)UNIT - 1 1.3 Humanistic Approach The Humanistic Approach began in response to concerns by therapists against perceived limitations of Psychodynamic theories, especially psychoanalysis. Individuals like Carl Rogers and Abraham Maslow felt existing (psychodynamic) theories failed to adequately address issues like the meaning of behavior, and the nature of healthy growth. However, the result was not simply new variations on psychodynamic theory, but rather a fundamentally new approach. There are several factors which distinguish the Humanistic Approach from other approaches within psychology, including the emphasis on subjective meaning, a rejection of determinism, and a concern for positive growth rather than pathology. While one might argue that some psychodynamic theories provide a vision of healthy growth (including Jungs concept of individuation), the other characteristics distinguish the Humanistic Approach from every other approach within psychology (and sometimes lead theorists from other approaches to say the Humanistic Approach is not a science at all). Most psychologists believe that behavior can only be understood objectively (by an impartial observer), but the humanists argue that this results in concluding that an individual is incapable of understanding their own behavior--a view which they see as both paradoxical and dangerous to well-being. Instead, humanists like Rogers argue that the meaning of behavior is essentially personal and subjective; they further argue that accepting this idea is not unscientific, because ultimately all individuals are subjective: what makes science reliable is not that scientists are purely objective, but that the nature of observed events can be agreed upon by different observers (a process Rogers calls intersubjective verification). The issues underlying the Humanistic Approach, and its differences from other approaches, are discussed more fully in the text, but the sources below provide useful supplementary information. One 4
  5. 5. Development of Management Thought (BBA 306)UNIT - 1 point worth noting: if you want to fully grasp the nature of the Humanistic Approach, you cannot consider it in abstract terms. Instead, you must consider if and how the ideas connect to your own experience--for that is how the meaning of behavior is derived! 1. Carl Rogers Carl Rogers was not only one of the founders of the Humanistic Approach, but also arguably the most influential therapist in the 20th century: a number of surveys, including several done after his death, found that more therapists cited Rogers as a major influence on their thinking and clinical practice than any other person in psychology (including Freud). To understand this, one must know something about Rogers as a person, as well as his theoretical ideas. In terms of his theory, there are two fundamental ideas which are particularly worth noting. (For a more complete discussion, see the text.) First, Rogers talked about healthy development in terms of how the individual perceived their own being. A healthy individual will tend to see congruence between their sense of who they are (self) and who they feel they should be (ideal self). While no one tends to experience perfect congruence at all times, the relative degree of congruence is an indicator of health. Some researchers have tried to measure congruence by using a self-assessment technique called a Q-Sort. The second fundamental idea is Rogerss concept of the conditions for healthy growth, and the role of a therapist in fostering healthy growth. Through a process Rogers called person-centered therapy, the therapist seeks to provide empathy, openness, and unconditional positive regard. These conditions for growth are discussed further in the text; for information on person-centered therapy, see the links below. 2. Abraham Maslow Like Carl Rogers, Abraham Maslow is widely regarded as one of the founders of the Humanistic Approach. While less influential among therapists than Rogers, Maslow may actually be better known to the general public, because of his interest in applying psychological principles to areas like behavior in business settings. In this regard, his hierarchy of needs has been a basic concept in human resources and organizational behavior for several decades. Maslow coined the term "the Third Force" to describe the Humanistic Approach, to emphasize how it differed from the Psychodynamic and Behaviorist Approaches, which dominated psychology (at least in North America) in the 1950s. His theory emphasizes motivation as the key to understanding human behavior (an emphasis which is somewhat reminiscent of Freuds theory, though the two models focus on very different types of motives). Nonetheless, it becomes the basis of a theory of personality (as discussed in the text, talking about motives implies a person who experiences those motives!), and 5
  6. 6. Development of Management Thought (BBA 306)UNIT - 1 ends up describing the characteristics of healthy growth in ways that are very similar to Rogerss "fully functioning person". One difference between Maslow and Rogers is the emphasis that Maslow gave to peak experiences. Peak experiences are moments in life which take us beyond our ordinary perceptions, thoughts, and feelings. Typically, the individual feels energized, more "alive". In some ways, peak experiences are similar to the Zen concept of satori (literally "enlightenment"), which, like a peak experience, comes unexpectedly, and transforms the individuals understanding of themselves and the world. Because of the "mystical" nature of peak experiences, some psychologists are less comfortable with Maslows theory than with Rogerss, which uses concepts more easily related to "mainstream" psychology. Possibly, this accounts for Maslow being viewed as less influential among therapists. In any case, there is no doubt that Maslows ideas about motivation have become widely known and used, as the links below help to illustrate. 1.4 Contingency Approach The contingency approach to management emerged from the real life experience of managers who found that no single approach worked consistently in every situation. The basic idea of this approach is that number management technique or theory is appropriate in all situations. The main determinants of a contingency are related to the external and internal environment of an organisation. Four important ideas of Contingency Theory are: 1. There is no universal or one best way to manage. 2. The design of an organization and its subsystems must fit with the environment. 3. Effective organizations not only have a proper fit with the environment but also between its subsystems. 4. The needs of an organization are better satisfied when it is properly designed and the management style is appropriate both to the tasks undertaken and the nature of the work group. The process, quantitative, behavioural, and systems approaches to management did not integrate the environment. The often assumed that their concepts and techniques have universal applicability. For example the process theorists often assumes that strategic planning applies to all situations; the quantitative experts generally feel that linear programming can be used under all conditions; the behavioural theorist usually advocates participative goal setting for all superior-subordinate pairs; and the system advocates tend to emphasize the need for computerized information flows in all situations. On the other hand practicing managers find out that a particular concept or technique from the various approached just does not work effectively in various situations. The theorists accuse practitioners of not applying the technique properly, and the practitioners accuse the theorists of being unrealistic. The 6
  7. 7. Development of Management Thought (BBA 306)UNIT - 1 contingency approach does incorporate the environment and attempts to bridge this existing theory- practice gap. Contingency approach advocates that managerial actions and organisational design must be appropriate to the given situation and a particular action is valid only under certain conditions. There is no one best approach to management and it all depends on the situation. In other words, managerial action is contingent upon external environment. There is no one best approach for all situations. What a manager does depends upon a given situation and there is an active inter-relationship between the variables in a situation and the managerial action. Contingency theory attempts to analyse and understand these interrelationships with a view towards taking the specific managerial actions necessary to deal with the issue. This approach is both analytical and situational, with the purpose of developing a practical answer to the question at hand. There are three major elements of the overall conceptual framework for contingency management; the environment, management concepts and techniques and the contingent relationship between them. Features of contingency approach: 1. Management is externally situational: the conditions of the situation will determine which techniques and control system should be designed to fit the particular situation. 2. Management is entirely situational. 3. There is no best way of doing anything. 4. One needs to adapt himself to the circumstances. 5. It is a kind of “if” “then” approach. 6. It is a practically suited. 7. Management policies and procedures should respond to environment. 8. Managers should understand that there is no best way of managing. It dispels the universal validity of principles. Superiority of contingency approach: Clear-cut emergence of contingency approach was noticed after the popularization of systems approach. The contingency theorists accept open adaptive nature of the organisation and the interdependency between various sub-systems of the organisation. But they have pointed out that the systems approach does not adequately spell out the precise relationship between organisation and its environment. It is too abstract and difficult to apply in practice. They have tried to modify and operationalise the system framework. 7
  8. 8. Development of Management Thought (BBA 306)UNIT - 1 1.6 Early Contributors 1.6.1 Charles Babbage Charles Babbage (1792–1871) is known as the patron saint of operations research and management science. Babbages scientific inventions included a mechanical calculator (his "difference engine"), a versatile computer (his "analytical engine"), and a punch-card machine. His projects never became a commercial reality; however, Babbage is considered the originator of the concepts behind the present day computer. Babbages most successful book, On the Economy of Machinery and Manufacturers, described the tools and machinery used in English factories. It discussed the economic principles of manufacturing, and analyzed the operations; the skills used and suggested improved practices. Babbage believed in the benefits of division of labor and was an advocate of profit sharing. He developed a method of observing manufacturing that is the same approach utilized today by operations analysts and consultants analyzing manufacturing operations. 1.6.2 Frank Gilbreth Frank Gilbreth (1868–1924) and Lillian Gilbreth (1878–1972) were a husband and wife team that brought many significant contributions, as well as color, to scientific management. Frank began working at age seventeen as an apprentice bricklayer, and later became a chief superintendent and independent contractor. Franks early work parallels Taylors and, in later years, Frank formed his own management consulting company, which was closely associated with scientific management methods. Frank Gilbreth published a series of books describing the best way of laying bricks, handling materials, training apprentices, and improving methods while lowering costs and paying higher wages. In 1907, Frank Gilbreth met Frederick Taylor and soon became one of Taylors most devoted advocates. Frank turned his attention away from construction, and extended his interest in motion study (similar to Taylors time study) to the general field of management. In order to supplement the human eye, Gilbreth used motion picture cameras, lights, and clocks calibrated in fractions of minutes to create "micromotion" study. Gilbreth also developed a list of 8
  9. 9. Development of Management Thought (BBA 306)UNIT - 1 seventeen basic motions he called "therbligs" (Gilbreth spelled backwards) to help analyze any worker movement. Unfortunately, the partnership of Frank and Lillian came to an end in 1924 when Frank died of a heart attack. Lillian continued their work through motion study seminars and consulting, later becoming a professor of management at Purdue University (1935–1948). 1.6.3 LILLIAN GILBRETH Dr. Lillian Gilbreth, known as the first lady of management, played an important role in Franks research and made many contributions of her own. Lillian pursued a degree in psychology, and in addition to her marriage and family of twelve, she assisted Frank with his work. Lillians thesis-turned- book, The Psychology of Management, is one of the earliest contributions to understanding the human side of management. Lillian faced many incidents of discrimination during her life, including the fact that her book could only be published if her initials were used so readers would not know she was a woman. Dr. Gilbreths work was always more management than psychology. Her work illustrated concern for the worker and attempted to show how scientific management would benefit the individual worker, as well as the organization. Lillian wrote about reduction of worker fatigue, how to retool for disabled veteran workers returning to the workplace, and how to apply principles of scientific management to the home. 1.6.4 HENRY L. GANTT Henry Gantt (1861–1919) worked with Taylor at the Midvale Steel Company and was considered a Taylor disciple. Gantt felt the foreman should teach the workers to be industrious and cooperative which, in turn, would facilitate the acquisition of all other knowledge. Gantt also designed graphic aids for management called Gantt charts using horizontal bars to plan and control work. Similar to Taylor, Gantt called for the scientific study of tasks, movements, working conditions, and worker cooperation. He also focused on the connection between the involvement of management and financial interests. Henry Gantt was a management consultant and engineer. Henry Laurence Gantt devised the Gantt chart in the 1910’s. At that time, Gantt Charts were quite innovative and unheard of. Huge construction projects like like the Hoover Dam and the Eisenhower National Defense Interstate Highway System necessitated a tool such as the Gantt diagram, 9
  10. 10. Development of Management Thought (BBA 306)UNIT - 1 Now, a staple project management tool and buzzword in every leader’s repertoire of modern project administration tools today, Gantt Charts are routinely deployed in the by PM’s, planners, and system developers. Working on projects without them is unthinkable, except in the rare case when the inherent nature of the work does not require them. The Gantt Chart has found universal status, known in French as diagramme de Gantt and Spanish as carta Gantt, graficas de Gantt, and diagrama de Gantt], indeed the whole world speaks this common language of project representation. HL Gantt’s global contribution to the modern project management is honored today through the Henry Laurence Gantt Medal. This medal, established in 1929, is awarded for distinguished achievement in management and service to the community. Practical Application So, how does someone use a project plan? These charts are generally introduced during the planning and scheduling stages of projects. A visual tool, the charts allow us to obtain a bird’s eye view of the project in its totality. From beginning to the end, the charts force us to: 1. Make a realistic assessment of the end-time of the project. 2. Align the effort (or phases) – in sequential order, as well as in parallel. 3. Think in terms of task dependencies – which task is dependent on what. 4. Concentrate on the necessary resources, both when and where, throughout the run of the project. After the project timeline charts are drawn, and project execution begins, we start comparing our actual, ground-level performance against what was planned. This comparison is possible by checking the field reports against the project Gantt charts. Thus, we get to benefit from them in two immediate ways: 1. To observe work in progress. At the minimum, a percentage of completion can be worked out, by taking a snapshot of the progress “right-now”, and comparing it with the chart, for the “right-now” point of time. If there are any slip-ups in terms of time or cost, we are forced to question our optimism (or hope?) that the tasks would get completed earlier then they actually did, at the planning stage. This introspection helps in more realistic planning for a now more matured manager in their future projects. 2. To also consider ways to speed up future tasks, while there is still time, to ensure completion by the total project’s estimated deadline. Perhaps resources (better manpower, more funds, or additional material) need to be allocated far in advance for a task that is going to be initiated 10
  11. 11. Development of Management Thought (BBA 306)UNIT - 1 later down the line? Maybe a task or two can be rescheduled more efficiently, in order to meet some unforeseen contingencies that occurred after project initiation? Figure: An example of Gantt Chart 11