1. PHILOSOPHIES &APPROACHES TO MANAGEMENT PRACTICES Lav Nigam
2. DEFINITION OF MANAGEMENTDefinition:“ Effective & Efficient integration & coordination of resources to achieve the desired objectives”.Thus, management is a process by which managers create a climate so that employee achieves both personal & organizational growth.This implies: Process by which personal & organizational goals achieved Process implies planning, organizing, staffing, leading & controlling – functions of management Management process influenced by environment – external & internal Managers act as facilitators for achievement of goals. 2
3. EVOLUTION OF MANAGEMENT THOUGHTManagement as a systematic body of knowledge & identifiable discipline is product of 20th century. However, as a practice, it has been in existence for centuries since man combined efforts with other for achievement of common goals.Ancient Indo-Gangetic, Egyptian & Roman civilization would not have attained glory without organization and management of group activities.Egyptian pyramid: It took 100,000 individuals 20 years effort to create the pyramids of Cheops.Greek: Plato in his “Republic” refers to various jobs being done by workmen & excelling in them – principle of division of laborChinese: Sun Tzu, Chinese philosopher, in “The Art Of War”, written 2000 years ago gave guidelines for military leaders – useful today for planning strategy to handle competitors.. Italy: Machiavelli, Italian philosopher & diplomat, in his well known work “ The Prince” gives broad management principles which all managers should subscribe. Four principles of leadership are: Mass Content – leader is a leader only if followers agree Strive for Cohesiveness by rewarding friends & supporters Will to survive under all odds Set an example to the follower
4. EVOLUTION OF MANAGEMENT THOUGHTSome of the modern management principles & techniques owe their origin to military organizations. The pyramid structure of modern organization, principles of authority & responsibility, specialization along functional lines, use of staff device & other organization & management principles & practices were developed & used by Roman Catholic Church & military organizations long before they were used by modern business enterprise.During industrial revolution, trade & commerce was conducted in limited scale. By 1950, factory system was popular in Great Britain. During this period, with development of manufacturing technologies, commerce grew. Organizations started growing in size, increasing need of better management practices.Growth of industrialization attributed to two individuals – James Watt & Adam Smith. In 1781, Watt developed rotary engine making technology more adaptable to factory use. In 1776, Adam Smith popularized principle of division of labor. His example of manufacturing of common pins demonstrates this principle – one man draws wire, another straightens it, third cuts it, fourth points it, fifth grinds it at top for receiving the head etc. This specialization could make 12 pounds of pin per day against only 20 pins per person, when working alone on the total process.
5. MAJOR SCHOOLS OF MANAGEMENTTHE FIVE MAJOR SCHOOLS OF MANAGEMENT:1. CLASSICAL SCHOOL - Managing workers and organizations more efficiently. Scientific Management - 1880s Administrative Management - 1940s Bureaucratic Management - 1920s2. BEHAVIORAL SCHOOL - Understanding human behavior in the organization. Human Relations - 1930s Behavioral Science - 1950s
6. MAJOR SCHOOLS OF MANAGEMENT3. QUANTITATIVE SCHOOL - Increasing quality of managerial decision-making through the application of mathematical and statistical methods. Management Science 1940s Operations Management 1940s Management Information Systems 1950s—1970s4. SYSTEMS SCHOOL 1950s - Understanding the organization as a system that transforms inputs into outputs while in constant interaction with its environment.5. CONTINGENCY SCHOOL 1960s - Applying management principles and processes as dictated by the unique characteristics of each situation.
7. CLASSICAL SCHOOLThe Classical School - Forms the foundation for field of management thought, hence classical. Includes the following theories:1. Scientific Management Theory developed by Fredrick Taylor2. Management Process Theory developed by Henri Fayol3. Theory Of Bureaucratic organization by Max Weber1. Scientific Management Theory: (One best way to do each job. Focus on job level).Fredrick Taylor (1856-1915), known as father of scientific management, based his philosophy on following basic principles:1. Determination of standards of performance – Instead of fixing standards arbitrarily, time & motion study analysis of all operations & motions involved in each job are conducted & timed using a stop watch. Standards of performance are set.2. Functional Foremanship – Instead of workers & supervisors determining the sequence of operations & selection of tools, functional foreman, expert in their area, should be involved in planning. If a job involved, say, 6-7 operations, worker would receive instructions from as many function specialists. Worker was a doer. Thus planning shifted from worker & supervisor to functional experts like industrial engineers, quality control experts, safety experts etc.
8. CLASSICAL SCHOOL3. Responsibility Of Management – Managers should accept responsibility for planning, organizing & directing & to do in a scientific way. They should analyze all operations & develop scientific methods of operations. Should develop a science for each element of work involved in operations to replace rule of thumb. Workers should be scientifically selected & trained Managers should cooperate with workers to ensure that work is done according to scientifically developed methods. Management should take over all work for which it is best suited like, planning, organizing & directing.4. Differential piecework system of wage payment - To ensure that worker gives an optimum production, they should be motivated by being paid more. Ex: if standard production is 50 units / day. Regular piece rate is 30p / piece & differential rate is 40p. Hence, if worker produces < 50, he is paid @ 30 P. If over 50, he is paid@ 40p. Approach is:. Give worker highest grade of work as per his ability & physique. Require each workman to give maximum output . Pay each workman who works at best pace, 30-100% beyond average rate.
9. CLASSICAL SCHOOL5. Mental Revolution – Since the scientific techniques help the worker by way of higher wages & employers in form of high production, it is essential that both should have cooperative attitude. Revolution in attitude of worker towards their work, fellowmen & supervisor. Revolution in attitude of manager towards fellowmen, workers & the ways in which they handle their daily problem.Henry L. Gantt, a contemporary and associate of Taylor, emphasized the psychology of the worker and the importance of morale in production. Gantt devised a wage payment system, which stimulated foremen and workers to strive for improvement in work practices. Each worker who reached daily standard was given 50 c bonus for that day. Every foreman was given a bonus for each worker who reached daily standard, plus extra bonus if all workers reached it. Gantt also developed a charting system for scheduling production, the “Gantt chart” that remains the basis for modern scheduling techniques. PERT & CPM are modern day control techniques.
10. CLASSICAL SCHOOL Frank Gilbreth (1868-1924) & Lillian Gilbreth (1878-1972) Frank and Lillian Gilbreth, the husband-and-wife team made their contribution in motion studies to find out the best sequence & minimum number of motions required to complete the task, thus eliminating unnecessary motions & reducing work fatigue. The Gilbreths catalogued seventeen different basic hand motions such as “grasp”, “hold”, “search”, “select”, position”, etc which they called therbligs (Gilbreth spelled backwards with t & h reversed). The Gilbreths also experimented with the design and use of the proper tools and equipment for optimizing work performance. The Gilbreths were among the first to use motion picture films to study hand- and-body motions of workers as they performed the task.Limitations of Scientific Management: Regarded workers as uninformed and ignored their ideas. Dehumanization of workers. More stress on quantity rather than quality. Did not appreciate the higher needs of workers. Did not acknowledge differences among individuals. More importance to method rather than skill.
11. CLASSICAL SCHOOLManagement Process Theory: - General Administrative Approach - Henri Fayol (1841-1925) – One best way to put an organization together Henri Fayol was a French industrialist who put forward & popularized the concept of ‘universality of management principles’, the idea that all organizations could be .structured and managed according to certain rational principles. According to Fayol, business operations of an organization can be divided into six activities - technical, commercial, accounting, financial, security, and management. Fayol focused on managerial activity and described the practice of management as distinct from the other business activities. Five major functions of management are planning, organizing, commanding, coordinating and controlling. In his most significant work, “General and Industrial Management”, Fayol discussed 14 general principles of management which he felt could be applied in any organizational setting. Several of these principles are part of management philosophy today.
12. CLASSICAL SCHOOLFAYOL’S 14 PRINCIPLES OF MANAGEMENT :1. Division of Labor. Work specialization results in improving efficiency ofoperations. This principle is epitomized by the modern assembly line.2. Authority. Managers must give orders so that they can get things done.While their formal authority gives them the right to command, managers willnot always compel obedience unless they have personal authority (such asrelevant expertise) as well.3. Discipline. Members in an organization need to respect the rules andagreements that govern the organization. To Fayol, discipline results fromgood leadership at all levels of the organization, fair agreements (such asprovisions for rewarding superior performance), and judiciously enforcedpenalties for infractions.4. Unity of Command. Each employee must receive instructions from onlyone person. Fayol believed that when an employee reported to more thanone manager, conflicts in instructions and confusion of authority wouldresult.
13. CLASSICAL SCHOOL5. Unity of Direction. Those operations within the organization that have thesame objective should be directed by only one manager using one plan. Forexample, the personnel department in a company should not have twodirectors, each with a different hiring policy.6. Subordination of Individual Interest to the Common Good. In anyundertaking, the interests of employees should not take precedence over theinterests of the organization as a whole.7. Remuneration. Compensation for work done should be fair to bothemployees and employers.8. Centralization. Decreasing the role of subordinates in decision-making iscentralization; increasing their role is decentralization. Fayol believed thatmanagers should retain final responsibility, but should at the same time givetheir subordinates enough authority to do their jobs properly. The problem isto find the proper degree of centralization in each case.
14. CLASSICAL SCHOOL9. The Hierarchy. The line of authority in an organization – asrepresented to day by boxes and lines of the organization chart – runs inorder of rank from top management to the lowest level of the enterprise.10. Order. Materials and people should be in the right place at the righttime. People, in particular, should be in the jobs or positions they aremost suited to.11. Equity. Managers should be both friendly and fair to theirsubordinates.12. Stability of Staff. A high employee turnover rate undermines theefficient functioning of an organization.13. Initiative. Employees should be encouraged to give suggestions &develop new & better work practices.14. Esprit de Corps. Promoting team spirit will give the organization asense of unity. To Fayol, even small factors should help to develop thespirit. He suggested, for example, the use of verbal communicationinstead of formal, written communication whenever possible.
15. CLASSICAL SCHOOLTheory Of Bureaucratic Organization - Max Weber (1864-1920) –Rational & impersonal organization way. “Bureaucracy” derived fromGerman buro, meaning office. Thus bureaucracy is a highly structured,formalized & impersonal organization.Max Weber, a German sociologist, developed a theory of authoritystructures and described organizational activity on the basis of authorityrelations. He described an ideal type of organization that he called abureaucracy, characterized by division of labor, a clearly definedhierarchy, detailed rules and regulations, and impersonalrelationships. Weber also believed that technical competence should be emphasizedand that performance evaluations should be made entirely on the basis ofmerit.Weber recognized that this ideal bureaucracy did not exist in reality. Heused it as a basis for theorizing about work and the way work could be donein large groups. His theory became the design prototype for many of today’slarge organizations.
16. HAWTHORNE STUDYThe Hawthorne Studies 1924 – 1930):The Hawthorne studies undercut a core pillar of Taylor, that workers weremotivated purely by economic gain. Researchers from Western Electric andHarvard University led by Elton Mayo, conducted a study at the Hawthorne plant ofGeneral Electric to evaluate the attitude and psychological reactions ofworkers in on-job situations. The group of workers was divided into twosubgroups: a test group, which would undergo environmental changes, and acontrol group. The members of the control group would work under normal,constant environment conditions. The researchers began by increasing the lightingof the test group – the productivity of the test group increased, but the productivityof control group also increased. This result was somewhat unexpected, sincelighting at the workstations of control group had not been altered. The researchersthen decreased the lighting at the test group’s workstations. Surprisingly, both thetest group and the control group continued to improve their productivity. Therewere no decreases in productivity until the light was reduced to the point where theworkers could barely see. The researchers concluded that light did not havesignificant impact on the motivation of workers & there were other factorsthat were influencing productivity.
17. HAWTHORNE STUDYThe next experiment utilized a mainstay of scientific management: incentive-based, piecework system. The researchers selected six women, who wereworking in the relay assembly test room, for experiment. During the course ofexperiments, a number of variables were altered - redesign of jobs, changesin the lengths of the workday and workweek, introduction of rest periods, &individual vs group wage plans. The workers received special attention fromresearchers and company officials. Generally, productivity increased over theperiod of study, regardless how the factors were altered.The researchers concluded that employees would work harder if theybelieved management was concerned about their welfare andsupervisors paid special attention to them.This phenomenon was subsequently labeled the Hawthorne effect.Mayo concluded that behavior and sentiments are closely related, that groupinfluences significantly affect individual behavior, that group standardsestablish individual worker output, and that money is less a factor indetermining output than are group standards, group sentiments, andsecurity.These conclusions led to a new emphasis on the human factor in thefunctioning of organizations and the attainment of their goals. The Hawthornestudies stimulated an interest in human factors.
18. BEHAVIORAL SCHOOLBehavioral School: 20th centuryHawthorne studies led to the foundation for a behavioral approach tomanagement. As management research continued in the 20th century,questions began to come up regarding the interactions and motivations of theindividual within organizations. Principles developed in classical period couldnot answer this. Classical theory ignored employee motivation and behavior.As a result, the behavioral school was a natural outgrowth of thisrevolutionary management experiment.The behavioral management theory is often called the human relationsmovement because it addresses the human dimension of work. Behavioraltheorists believed that a better understanding of human behavior at work,such as motivation, conflict, expectations, and group dynamics, improvedproductivity.The theorists who contributed to this school viewed employees as individuals,resources, and assets to be developed and worked with — not as machines,as in the past.
19. BEHAVIORAL SCHOOLThe best-known contributors to the human resources perspective are AbrahamMaslow, Douglas McGregor, and Frederick Herzberg.Abraham Maslow (1908-1970), a practicing psychologist, proposed that thepeople were motivated by a hierarchy of needs. His theory rested on threeassumptions:1.All of us have needs which are never satisfied.2.Through our actions, we try to fulfill our unsatisfied needs.3.Human needs occur in the following hierarchical manner – (i) physiologicalneeds, (ii) safety or security needs, (iii) social needs, (iv) esteem needs, and (v)self-actualization or self-fulfillment needs. In terms of motivation, Maslow arguedthat each step in the hierarchy must be satisfied before the next level can beactivated and that once a need was substantially satisfied, it no longermotivated behavior.
20. Self-Actualization Esteem Social Safety Physiological
21. BEHAVIORAL SCHOOLDouglas McGregor (1906-1964) developed two assumptions about humanbehavior, which he labeled Theory X and Theory Y. According to McGregor,these two theories reflect the two extreme sets of belief that different managershave about their workers.Theory X presents an essentially negative view of workers. It assumes thatworkers are lazy, have little ambition, dislike work, want to avoid responsibility,and need to be closely supervised to work effectively.Theory Y offers a positive view. It presumes that workers can be creative andinnovative, are willing to take responsibility, exercise self-control, and can enjoydoing a job.McGregor believed that the classical approach was based on Theory Xassumptions about workers.
22. BEHAVIORAL SCHOOLFrederick Herzberg suggested that only higher psychological needs forgrowth, challenge, responsibility, and self-fulfillment can positively motivateworkers to improved performance.Work relationships and supervisory style along with pay and conditions reducedissatisfaction. Only the job itself could provide lasting satisfaction, andHerzberg, in particular concentrated on ways of designing jobs for greaterworker satisfaction.The behavioral approaches contributed an important awareness of theinfluence of the human factor at work on organizational performance andthe need to offer job satisfaction to employees..
23. MODERN MANAGEMENT THOUGHTModern Management Approaches:Attempts to integrate various school of thought on assumption that no best way to manage. Two major theories are:1. The Systems Theory: There is only one system – universe.Organization is sub-system composed of 4 inter-dependant components: Inputs (money, material, machine, informational sources required to produce goods and services Transformation processes or throughput s – managerial & technical abilities used to convert inputs into outputs Outputs are products and services, profits and other results produced by organization Feedback refers to information about outcomes and position of the organization relative to the environment it operates.An activity in any part, affects, in varying degree, activity in other part.Key concepts of systems approach are: Synergy: Departments within an organization which interact cooperatively are more productive than if they operate in isolation. Open & Closed System: An open system interacts with the environment where as closed system does not. All org interact with environment, but in varied extent. Ex: advertising agency / jail.
24. MODERN MANAGEMENT THOUGHT System Boundary: Each system has its boundaries which separate it from other systems in environment. Open system, boundary is permeable, in closed system rigid. Flow: Every system has flows of information, materials, & energy. These enter the system as inputs (ex; raw material), undergo transformation within system (ex; production) & exit as output (ex: good). Feedback: Is a mechanism of control to detect any deviation from plans so that corrective action can be taken.The system approach ensures manager must not be pre-occupied with one part but with the other parts of the system. Ex: Marketing manager must consider production numbers, resource availability & competition when committing orders.2. The Contingency Approach: (Situational approach)Widely used in recent years to integrate management theory with complexity of organization. There is no one best way to manage all situations. Based on the notion that proper management technique in a given situation depends on the nature & conditions of that situation. Manager should decide the best course of action..
25. MODERN MANAGEMENT THOUGHT Based on three characteristics: 1. Open System Perspective: Fundamental characteristic. Necessary to understand how organizational sub-systems combine together to interact with environment 2. Research Orientation: Practical research on situational refinements leads to more effective on-the-job management. 3. Multivariate approach: Multivariate analysis is used to determine how several variables interact to produce an outcome. Ex: Changes in productivity due to variation in employee’s personality, nature of task, superior leadership style, incentives etc. Recent Developments: 20th century has seen lot of developments in industry due to globalization of business. Major is Theory Z developed by William Ouchi. Theory Z is an approach to management based upon a combination of American and Japanese management philosophies and characterized by, among other things, long-term job security, consensual decision making, slow evaluation and promotion procedures, and individual responsibility within a group context. Proponents of Theory Z suggest that it leads to improvements in organizational performance.