A structured social system consisting of groups of
individuals working together to meet some agreed-on
•Wrote ‘Causes of Wealth of Nations’
•Proposed ‘Division of Labour’
Adam Smith, 18th century economist, found firms
manufactured pins in two ways:
Craft -- each worker did all steps.
Factory -- each worker specialized in one step.
Smith found that the factory method had much higher
Each worker became very skilled at one, specific task.
Breaking down the total job allowed for the division of labor.
•British Mathematics professor
•Wrote ‘On the Economy of
Machinery and Manufactures’
•Proposed advantages of
division of labour:
•Reduces the time needed for
learning a job
•Reduces waste of material
•Attainment of high skill levels
•Matching skills and abilities
Recognised how factory work
was demeaning to employees
Scientific Management- Frederick Taylor
Develop a science for each element of an
Scientifically select, train, teach and develop
Cooperation with workers
Divide work responsibility equally between
management and workers
Frank and Lillian Gilbreth refined Taylor’s
Made many improvements to time and motion studies.
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.
- Study conducted in Hawthorne plant of General
Electric Company, Chicago
- Mayo, Roethlisberger, Dickson, Whitehead
Illumination experiment (1924-27)
Relay room experiment (1927-28)
Mass interviewing (1928-30)
Bank wiring observation (1931-32)
Social factors in output
French industrialist Henry Fayol
Proposed that a manager plans, organises, directs,
controls and coordinates
14 principles of management including division of
labour, authority, scalar chain, unity of command,
1. Division of work
4. Unity of command
5. Unity of direction
6. Subordination of individual interest to the general
9. Scalar chain
12. Stability and tenure
14. Esprit de corps
Proposed Structural Theory
• Division of labour
• clearly defined hierarchy,
• detailed rules and
• impersonal relationships
Formal rules regulations
Division of labour
Mary Parker Follett
Emphasised on group
Organisations made up
of people who have
Success depends on
Described organisations as a complex network of
Decision process comprises: i) intelligent activity
ii) design activity iii) choice activity
Administrative man : simplification, satisficing
Nature of management as innovative and creative
Manager has to act as administrator, entrepreneur, set
Organisation structure to facilitate effective
Structuring of an organization into departments or
units on the basis of type of work performed
A functional manager is a person who has
management authority over an organizational unit -
such as a department - within a business or company
Highly flexible, temporary organisations formed by a
group of companies to exploit a specific opportunity
Human relations approach
Considers relationships inside and outside the
The environment consists of forces, conditions, and
influences outside the organization.
Systems theory considers the impact of stages:
Input: acquire external resources.
Conversion: inputs are processed into goods and
Output: finished goods are released into the
An open system interacts with the environment. A
closed system is self-contained.
Uses rigorous quantitative techniques to maximize
Quantitative management: utilizes linear
programming, modeling, simulation systems.
Operations management: techniques to analyze all
aspects of the production system.
Total Quality Management (TQM): focuses on
Management Information Systems (MIS): provides
information about the organization.
Assumes there is no one best way to manage
The environment impacts the organization and
managers must be flexible to react to environmental
The way the organization is designed, control
systems selected, depend on the environment.
Technological environments change rapidly, so