Bus 201 chapter 2 presentation 129632628242500000


Published on

Published in: Business, Technology
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • The introduction of steam power and the development of sophisticated machinery changed the way goods were being produced.
  • Smith was studying the effects of industrial revolution.
  • Workers who specialized became much more skilled at their specific tasks Increasing job specialization increases efficiency and leads to higher organizational performance
  • Workers could purposely “under-perform.” FORDISM: Henry Ford introduced the conveyer belt in his factories. The conveyer belt was pushing the workers to perform at higher pace. As a result of moving to mass production, many people became able to afford cars and Ford earned a lot. However, workers grew to hate the monotony of the conveyer belt. From that point on, to motivate his workforce, Ford reduced the lenght of the workday from 9 to 8 hours, and he doubled the basic wage from $2.50 to $5 per day.
  • Organizational structure – system of task and authority relationships that control how employees use resources to achieve the organization’s goals
  • Equity
  • There is no one best answer. Students should be prepared to discuss consequences of any missing aspect. For example, if there is no unity of command, how will the firm function.
  • Writings of Weber and fayol were not translated to English and they were not published in the US until 1940s. American management theorists began where Taylor had left off. They focused on behavioral management.
  • Probably because of its radical nature, Follett’s work was unappreciated until quite recently. Researchers found that regardless of whether the light levels were raised or lowered, worker productivity increased. They found this result puzzling, so they invited the Harvard Proffessor Elton MAYO.
  • Douglas McGregor proposed the two different sets of assumptions about workers. Theory X assumes the average worker is lazy, dislikes work and will do as little as possible. Workers have little ambition and wish to avoid responsibility Managers must closely supervise and control through reward and punishment. Theory Y assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work. Managers should allow workers greater latitude, and create an organization to stimulate the workers.
  • McDonald’s Restaurants operate with a mechanistic structure. Supervisors make all important decisions, employees are closely supervised and follow well-defined rules and standard operating procedures.
  • Bus 201 chapter 2 presentation 129632628242500000

    1. 1. Chapter Two The Evolution of Management Thought
    2. 2. The Evolution of Management Theory <ul><li>The driving force behind the evolution of management theory is to search for better ways to utilize organizational resources. </li></ul><ul><li>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. </li></ul>
    3. 3. The Evolution of Management Theory <ul><li>The evolution of modern management began in the closing decades of the 19th century, after the industrial revolution had swept through Europe and America. </li></ul><ul><li>Many major economic, technical and cultural changes were taking place at this time. </li></ul><ul><li>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. </li></ul>
    4. 4. The Evolution of Management Theory Figure 2.1
    5. 5. Job Specialization and the Division of Labor <ul><li>Adam Smith (18th century economist) </li></ul><ul><ul><li>In a study of factories that m anufactured pins , he observed two different ways of production : </li></ul></ul><ul><ul><ul><li>- Craft-style—each worker did all steps. </li></ul></ul></ul><ul><ul><ul><li>- Production—each worker specialized in one step. </li></ul></ul></ul>
    6. 6. Job Specialization and the Division of Labor <ul><li>Job Specialization </li></ul><ul><ul><li>process by which a division of labor occurs as different workers specialize in specific tasks over time </li></ul></ul>
    7. 7. F.W. Taylor and Scientific Management <ul><li>Scientific Management </li></ul><ul><ul><li>The systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency. </li></ul></ul>
    8. 8. F.W. Taylor and Scientific Management <ul><ul><li>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 : </li></ul></ul><ul><ul><ul><li>Time-and-motion study </li></ul></ul></ul><ul><ul><li>Codify the new methods of performing tasks into written rules and standard operating procedures </li></ul></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>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 </li></ul></ul>
    9. 9. Problems with Scientific Management <ul><li>Managers frequently implemented only the increased output side of Taylor’s plan. </li></ul><ul><ul><li>Workers did not share in the increased output. </li></ul></ul><ul><li>Specialized jobs became very boring, dull. </li></ul><ul><ul><li>Workers ended up distrusting the Scientific Management method. </li></ul></ul><ul><li>Scientific Management brought many workers more hardship than gain and a distrust of managers who did not seem to care about workers’ well-being. </li></ul>
    10. 10. The Gilbreths <ul><li>Followers of Taylor: Frank & Lillian GILBRETH (1878-1972) They continued with time and motion studies. </li></ul><ul><li>Break up and analyze every individual action necessary to perform a particular task into each of its component actions </li></ul><ul><li>Find better ways to perform each component action </li></ul><ul><li>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 </li></ul>
    11. 11. Administrative Management Theory <ul><li>Administrative Management </li></ul><ul><ul><li>The study of how to create an organizational structure that leads to high efficiency and effectiveness. </li></ul></ul>
    12. 12. Administrative Management Theory <ul><li>Max Weber </li></ul><ul><ul><li>Developed the principles of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness. </li></ul></ul>
    13. 13. Weber’s Principles of Bureaucracy Figure 2.2
    14. 14. Weber’s Principles of Bureaucracy <ul><li>A manager’s formal authority derives from the position he holds in the organization. </li></ul><ul><li>People should occupy positions because of their performance, not because of their social standing or personal contacts. </li></ul><ul><li>The extent of each position’s formal authority and task responsibilities and it’s relationship to other positions should be clearly specified. </li></ul><ul><li>Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them. </li></ul><ul><li>Managers must create a well-defined system of rules, standard operating procedures, and norms so they can effectively control behavior . </li></ul>
    15. 15. Weber’s Principles of Bureaucracy <ul><li>Bureaucracy: A formal system of organization and administration designed to ensure efficiency and effectiveness. </li></ul><ul><li>Authority: The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. </li></ul>
    16. 16. Rules, SOPs and Norms <ul><li>Rules </li></ul><ul><ul><li>formal written instructions that specify actions to be taken under different circumstances to achieve specific goals </li></ul></ul><ul><li>Standard Operating Procedures (SOPs) </li></ul><ul><ul><li>specific sets of written instructions about how to perform a certain aspect of a task </li></ul></ul><ul><li>Norms </li></ul><ul><ul><li>unwritten, informal codes of conduct that prescribe how people should act in particular situations </li></ul></ul>
    17. 17. Fayol’s Principles of Management <ul><li>Fayol had identified 14 principles that he thought were essential to increase efficiency and effectiveness: </li></ul><ul><li>Division of Labor </li></ul><ul><ul><li>Allows for job specialization. However; jobs can have too much specialization leading to poor quality and worker dissatisfaction. </li></ul></ul><ul><li>Authority and Responsibility </li></ul><ul><ul><li>Managers have the right to give orders and the power to exhort subordinates for obedience. </li></ul></ul><ul><li>Unity of Command </li></ul><ul><ul><li>Employees should only have one boss </li></ul></ul><ul><li>Line of Authority </li></ul><ul><ul><li>A clear chain of command from top to bottom of the firm. </li></ul></ul><ul><li>Centralization </li></ul><ul><ul><li>Authority should not be concentrated at the top of the chain of command. </li></ul></ul>
    18. 18. Fayol’s Principles of Management <ul><li>Unity of direction </li></ul><ul><ul><li>There should be a single plan to guide the managers and the workers. </li></ul></ul><ul><li>Equity </li></ul><ul><ul><li>All organizational members are entitled to be treated with justice and respect. </li></ul></ul><ul><li>Order </li></ul><ul><ul><li>The arrangement of employees where they will be of the most value to the organization and to provide career opportunities. </li></ul></ul><ul><li>Initiative </li></ul><ul><ul><li>Managers should allow employees to be innovative and creative. </li></ul></ul><ul><li>Discipline </li></ul><ul><ul><li>Obedient, applied, respectful employees are necessary for the organization to function. </li></ul></ul>
    19. 19. Fayol’s Principles of Management <ul><li>Remuneration of personnel </li></ul><ul><ul><li>An equitable uniform payment system that motivates contributes to organizational success. </li></ul></ul><ul><li>Stability of Tenure of Personnel </li></ul><ul><ul><li>Long-term employment is important for the development of skills that improve the organization’s performance. </li></ul></ul><ul><li>Subordination of Individual Interest to the Common Interest </li></ul><ul><ul><li>The interest of the organization takes precedence over that of the individual employee. </li></ul></ul><ul><li>Esprit de corps </li></ul><ul><ul><li>Comradeship, shared enthusiasm foster devotion to the common cause (organization). </li></ul></ul>
    20. 20. Discussion Question? <ul><li>Which of the following is the most </li></ul><ul><li>important aspect of Fayol’s principles of </li></ul><ul><li>management? </li></ul><ul><li>Division of Labor </li></ul><ul><li>Unity of Command </li></ul><ul><li>Remuneration of Personnel </li></ul><ul><li>Esprit de corps </li></ul>
    21. 21. Behavioral Management Theory <ul><li>Behavioral Management </li></ul><ul><ul><li>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. </li></ul></ul>
    22. 22. Behavioral Management <ul><li>Mary Parker Follett </li></ul><ul><ul><li>Concerned that Taylor ignored the human side of the organization </li></ul></ul><ul><ul><ul><li>Suggested workers help in analyzing their jobs </li></ul></ul></ul><ul><ul><ul><li>If workers have relevant knowledge of the task, then they should control the task, they should participate in the work development process </li></ul></ul></ul><ul><ul><ul><li>Unlike Fayol, she believed that power is fluid, it should flow to the person who can best help the organization achieve its goals. </li></ul></ul></ul><ul><ul><ul><li>Her approach was very radical for her time. </li></ul></ul></ul>
    23. 23. The Hawthorne Studies <ul><li>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. </li></ul><ul><ul><li>Worker productivity was measured at various levels of light illumination. </li></ul></ul>
    24. 24. The Hawthorne Studies <ul><li>Human Relations Implications </li></ul><ul><ul><li>Hawthorne effect — workers’ attitudes toward their managers affect the level of workers’ performance </li></ul></ul>
    25. 25. The Hawthorne Studies <ul><li>This finding led many researchers to turn their attention to managerial behavior and leadership. </li></ul><ul><li>If supervisors could be trained to behave in ways that would elicit cooperative behavior from their subordinates, then productivity could be increased. </li></ul><ul><li>From this view emerged the human relations movement. </li></ul>
    26. 26. The Hawthorne Studies <ul><li>Human relations movement </li></ul><ul><ul><li>advocates that supervisors be behaviorally trained to manage subordinates in ways that elicit their cooperation and increase their productivity </li></ul></ul>
    27. 27. Implications of the Hawthorne Studies <ul><li>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 </li></ul><ul><li>Demonstrated the importance of understanding how the feelings, thoughts, and behavior of work-group members and managers affect performance </li></ul><ul><li>Led to the development of an area of management known as “organizational behavior”: </li></ul><ul><ul><li>The study of the factors that have an impact on how individuals and groups respond to and act in organizations. </li></ul></ul>
    28. 28. Theory X vs. Theory Y Figure 2.3
    29. 29. Management Science Theory <ul><li>Management Science Theory </li></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>It is like the contemporary extension of scientific management developed by Taylor </li></ul></ul>
    30. 30. Management Science Theory <ul><li>Quantitative management </li></ul><ul><ul><li>utilizes mathematical techniques, like linear programming, modeling, simulation and chaos theory </li></ul></ul><ul><li>Operations management </li></ul><ul><ul><li>provides managers a set of techniques they can use to analyze any aspect of an organization’s production system to increase efficiency </li></ul></ul>
    31. 31. Management Science Theory <ul><li>Total quality management </li></ul><ul><ul><li>focuses on analyzing an organization’s input, conversion, and output activities to increase product quality </li></ul></ul><ul><li>Management information systems </li></ul><ul><ul><li>help managers design systems that provide information that is vital for effective decision making </li></ul></ul>
    32. 32. Organizational Environment Theory <ul><li>Organizational Environment </li></ul><ul><ul><li>The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources </li></ul></ul>
    33. 33. The Open-Systems View <ul><li>Open System </li></ul><ul><ul><li>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. </li></ul></ul>
    34. 34. The Organization as an Open System Figure 2.4
    35. 35. The Open-Systems View <ul><li>Input stage </li></ul><ul><ul><li>organization acquires resources such as raw materials, money, and skilled workers to produce goods and services </li></ul></ul><ul><li>Conversion stage </li></ul><ul><ul><li>inputs are transformed into outputs of finished goods </li></ul></ul><ul><li>Output stage </li></ul><ul><ul><li>finished goods are released to the external environment </li></ul></ul>
    36. 36. Closed System <ul><li>Closed system </li></ul><ul><ul><li>A self-contained system that is not affected by changes in its external environment. </li></ul></ul><ul><ul><li>Likely to experience entropy and lose its ability to control itself </li></ul></ul><ul><ul><ul><li>Entropy: The tendency of a closed system to lose its ability to control itself and thus dissolve and disintegrate. </li></ul></ul></ul>
    37. 37. The Organization as an Open System <ul><li>Synergy </li></ul><ul><ul><li>the performance gains that result from the combined actions of individuals and departments </li></ul></ul><ul><ul><li>Possible only in an organized system </li></ul></ul>
    38. 38. Contingency Theory <ul><li>Contingency Theory </li></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>“ There is no one best way to organize” </li></ul></ul>
    39. 39. Contingency Theory Figure 2.5
    40. 40. Type of Structure <ul><li>Mechanistic Structure </li></ul><ul><ul><li>Authority is centralized at the top. </li></ul></ul><ul><ul><li>Emphasis is on strict discipline and order </li></ul></ul><ul><ul><li>Employees are closely monitored and managed. </li></ul></ul><ul><ul><li>Can be very efficient in a stable environment. </li></ul></ul>
    41. 41. Type of Structure <ul><li>Organic Structure </li></ul><ul><ul><li>Authority is decentralized throughout the organization. </li></ul></ul><ul><ul><li>Departments are encouraged to take a cross-departmental or functional perspective </li></ul></ul><ul><ul><li>Works best when environment is unstable and rapidly changing </li></ul></ul>
    42. 42. Type of Structure <ul><li>Nokia’s organic approach to operating: </li></ul><ul><ul><li>Control is much looser and decentralized </li></ul></ul><ul><ul><li>Reliance on shared norms and common expectations to guide organizational activities is greater </li></ul></ul><ul><ul><li>Organic structure can react more quickly to a changing environment </li></ul></ul><ul><ul><li>More expensive due to increasing coordination costs </li></ul></ul>