Bus 201 chapter 2 presentation 129632628242500000

Chapter Two The Evolution of Management Thought

The Evolution of Management Theory
The driving force behind the evolution of management theory is to search for better ways to utilize organizational resources.
Advances in management thought occur as managers and researchers find better ways to perform the principal management tasks: planning, organizing, leading and controlling organizational resources.

The Evolution of Management Theory
The evolution of modern management began in the closing decades of the 19th century, after the industrial revolution had swept through Europe and America.
Many major economic, technical and cultural changes were taking place at this time.
There has been a shift from small-scale crafts production to large-scale mechanized manufacturing. Managers began to search for new techniques to manage their organizations.

The Evolution of Management Theory Figure 2.1

Job Specialization and the Division of Labor
Adam Smith (18th century economist)
In a study of factories that m anufactured pins , he observed two different ways of production :
- Craft-style—each worker did all steps.
- Production—each worker specialized in one step.

Job Specialization and the Division of Labor
Job Specialization
process by which a division of labor occurs as different workers specialize in specific tasks over time

F.W. Taylor and Scientific Management
Scientific Management
The systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency.

F.W. Taylor and Scientific Management
Study the way workers perform their tasks, gather all the informal job knowledge that workers possess and experiment with ways of improving how tasks are performed :
Time-and-motion study
Codify the new methods of performing tasks into written rules and standard operating procedures
Carefully select workers who possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures
Establish a fair or acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level

Problems with Scientific Management
Managers frequently implemented only the increased output side of Taylor’s plan.
Workers did not share in the increased output.
Specialized jobs became very boring, dull.
Workers ended up distrusting the Scientific Management method.
Scientific Management brought many workers more hardship than gain and a distrust of managers who did not seem to care about workers’ well-being.

The Gilbreths
Followers of Taylor: Frank & Lillian GILBRETH (1878-1972) They continued with time and motion studies.
Break up and analyze every individual action necessary to perform a particular task into each of its component actions
Find better ways to perform each component action
Reorganize each of the component actions so that the action as a whole could be performed more efficiently-at less cost in time and effort

Administrative Management Theory
Administrative Management
The study of how to create an organizational structure that leads to high efficiency and effectiveness.

Administrative Management Theory
Max Weber
Developed the principles of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness.

Weber’s Principles of Bureaucracy Figure 2.2

Weber’s Principles of Bureaucracy
A manager’s formal authority derives from the position he holds in the organization.
People should occupy positions because of their performance, not because of their social standing or personal contacts.
The extent of each position’s formal authority and task responsibilities and it’s relationship to other positions should be clearly specified.
Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them.
Managers must create a well-defined system of rules, standard operating procedures, and norms so they can effectively control behavior .

Weber’s Principles of Bureaucracy
Bureaucracy: A formal system of organization and administration designed to ensure efficiency and effectiveness.
Authority: The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources.

Rules, SOPs and Norms
Rules
formal written instructions that specify actions to be taken under different circumstances to achieve specific goals
Standard Operating Procedures (SOPs)
specific sets of written instructions about how to perform a certain aspect of a task
Norms
unwritten, informal codes of conduct that prescribe how people should act in particular situations

Fayol’s Principles of Management
Fayol had identified 14 principles that he thought were essential to increase efficiency and effectiveness:
Division of Labor
Allows for job specialization. However; jobs can have too much specialization leading to poor quality and worker dissatisfaction.
Authority and Responsibility
Managers have the right to give orders and the power to exhort subordinates for obedience.
Unity of Command
Employees should only have one boss
Line of Authority
A clear chain of command from top to bottom of the firm.
Centralization
Authority should not be concentrated at the top of the chain of command.

Unity of direction
There should be a single plan to guide the managers and the workers.
Equity
All organizational members are entitled to be treated with justice and respect.
Order
The arrangement of employees where they will be of the most value to the organization and to provide career opportunities.
Initiative
Managers should allow employees to be innovative and creative.
Discipline
Obedient, applied, respectful employees are necessary for the organization to function.

Remuneration of personnel
An equitable uniform payment system that motivates contributes to organizational success.
Stability of Tenure of Personnel
Long-term employment is important for the development of skills that improve the organization’s performance.
Subordination of Individual Interest to the Common Interest
The interest of the organization takes precedence over that of the individual employee.
Esprit de corps
Comradeship, shared enthusiasm foster devotion to the common cause (organization).

Discussion Question?
Which of the following is the most
important aspect of Fayol’s principles of
management?
Division of Labor
Unity of Command
Remuneration of Personnel
Esprit de corps

Behavioral Management Theory
Behavioral Management
The study of how managers should personally behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.

Behavioral Management
Mary Parker Follett
Concerned that Taylor ignored the human side of the organization
Suggested workers help in analyzing their jobs
If workers have relevant knowledge of the task, then they should control the task, they should participate in the work development process
Unlike Fayol, she believed that power is fluid, it should flow to the person who can best help the organization achieve its goals.
Her approach was very radical for her time.

The Hawthorne Studies
Studies of how characteristics of the work setting affected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from 1924-1932.
Worker productivity was measured at various levels of light illumination.

Human Relations Implications
Hawthorne effect — workers’ attitudes toward their managers affect the level of workers’ performance

This finding led many researchers to turn their attention to managerial behavior and leadership.
If supervisors could be trained to behave in ways that would elicit cooperative behavior from their subordinates, then productivity could be increased.
From this view emerged the human relations movement.

Human relations movement
advocates that supervisors be behaviorally trained to manage subordinates in ways that elicit their cooperation and increase their productivity

Implications of the Hawthorne Studies
Behavior of managers and workers in the work setting is as important in explaining the level of performance as the technical aspects of the task
Demonstrated the importance of understanding how the feelings, thoughts, and behavior of work-group members and managers affect performance
Led to the development of an area of management known as “organizational behavior”:
The study of the factors that have an impact on how individuals and groups respond to and act in organizations.

Theory X vs. Theory Y Figure 2.3

Management Science Theory
Contemporary approach to management that focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services.
It is like the contemporary extension of scientific management developed by Taylor

Quantitative management
utilizes mathematical techniques, like linear programming, modeling, simulation and chaos theory
Operations management
provides managers a set of techniques they can use to analyze any aspect of an organization’s production system to increase efficiency

Total quality management
focuses on analyzing an organization’s input, conversion, and output activities to increase product quality
Management information systems
help managers design systems that provide information that is vital for effective decision making

Organizational Environment Theory
Organizational Environment
The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources

The Open-Systems View
Open System
A system that takes resources f r o m its external environment and transforms them into goods and services that are then sent back to that environment where they are bought by customers.

The Organization as an Open System Figure 2.4

The Open-Systems View
Input stage
organization acquires resources such as raw materials, money, and skilled workers to produce goods and services
Conversion stage
inputs are transformed into outputs of finished goods
Output stage
finished goods are released to the external environment

Closed System
Closed system
A self-contained system that is not affected by changes in its external environment.
Likely to experience entropy and lose its ability to control itself
Entropy: The tendency of a closed system to lose its ability to control itself and thus dissolve and disintegrate.

The Organization as an Open System
Synergy
the performance gains that result from the combined actions of individuals and departments
Possible only in an organized system

Contingency Theory
Contingency Theory
The idea that the organizational structures and control systems manager s choose are contingent on characteristics of the external environment in which the organization operates.
“ There is no one best way to organize”

Contingency Theory Figure 2.5

Type of Structure
Mechanistic Structure
Authority is centralized at the top.
Emphasis is on strict discipline and order
Employees are closely monitored and managed.
Can be very efficient in a stable environment.

Type of Structure
Organic Structure
Authority is decentralized throughout the organization.
Departments are encouraged to take a cross-departmental or functional perspective
Works best when environment is unstable and rapidly changing

Type of Structure
Nokia’s organic approach to operating:
Control is much looser and decentralized
Reliance on shared norms and common expectations to guide organizational activities is greater
Organic structure can react more quickly to a changing environment
More expensive due to increasing coordination costs

Bus 201 chapter 2 presentation 129632628242500000

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Bus 201 chapter 2 presentation 129632628242500000 Presentation Transcript