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Evolution of management theory



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Evolution of management theory

  1. 1. The Evolution of Management Theory Mala Sarat Chandra Twitter: @malachandra
  2. 2. Learning Objectives Explain what a management theory is. Understand the evolution of management theories and their major contributions. 9/13/2013 Mala Sarat Chandra 2
  3. 3. EVOLUTION OF MANAGEMENT THEORY 9/13/2013 Mala Sarat Chandra 3
  4. 4. Classical Management School Scientific Administrative Bureaucratic Neo-Classical Management School Human Relations Behavioral Modern Management School Systems Contingency Organizational Humanism Management Science Evolution of Management Theory 1920-1950 1880 - 1930 9/13/2013 Mala Sarat Chandra 4
  5. 5. THE CLASSICAL SCHOOL OF MANAGEMENT 1900 - 1930 9/13/2013 Mala Sarat Chandra 5
  6. 6. Core Ideas 1. Application of science to the practice of management. 2. Development of basic management functions. 3. Articulation and application of specific principles of management. Evolved in response to the shift from handicraft to industrial production. Emphasis is on economic rationality of people and organizations; motivated by economic incentives, they make choices that yield the greatest monetary benefits. 9/13/2013 Mala Sarat Chandra 6
  7. 7. Max Webber 1905 “The Theory of Social and Economic Organization” The Bureaucratic School of Management A major contribution is his “bureaucracy” theory, a formalized and idealized view of organizations, comprising 6 major principles. 1. A formal hierarchical structure. 2. Management by rules. 3. Organization by task competency. 4. Impersonal relationships. 5. A focused mission. 6. Employment based on technical qualifications. 9/13/2013 Mala Sarat Chandra 7
  8. 8. Frederick Taylor 1911 “Principles of Scientific Management” The Scientific School of Management Proposed an objective and systematic method to identify “the one best way” to do a job using scientific selection and training methods; co-operation and clear division of responsibility between managers and workers; pay for performance. 9/13/2013 Mala Sarat Chandra 8
  9. 9. Frank & Lillian Gilbreth 1912 - 1924 Time and Motion Studies Disciples of Frederick Taylor, their time and motion studies helped lay the foundations for Scientific Management – the best possible way for a worker to complete a job. The expected results are employee satisfaction, productivity and efficiency. 9/13/2013 Mala Sarat Chandra 9
  10. 10. Henry Gantt 1910 - 1915 Project Scheduling – The Gantt Chart A protégé and associate of Frederick Taylor, he designed a project scheduling model for increasing the efficiency of project execution and completion. 9/13/2013 Mala Sarat Chandra 10
  11. 11. Henri Fayol 1916 Administration Industrielle et Generale The Administrative School of Management Managers need specific roles in order to manage work and workers. He enumerated 6 functions / roles of management. 1. Forecasting 4. Commanding 2. Planning 5. Coordinating 3. Organizing 6. Controlling These roles evolved into 14 principles of management. Division of work, Authority, Discipline, Unity of Command, Unity of Direction, Subordination of Interests, Remuneration, Centralization, Scalar Chain, Equity, Order, Stability of Tenure of Personnel, Initiative, Esprit de Corp. 9/13/2013 Mala Sarat Chandra 11
  12. 12. Ford and Frederick Taylor’s Scientific Management 9/13/2013 Mala Sarat Chandra 12
  13. 13. Summary: The Classical School of Management Scientific Concern for precise work methods Best way for jobs to be done Bureaucratic Impersonal view of organizations Formal structure, legitimate authority and competence of management Administrative Development of managerial principles Best way to organize all jobs in a business 9/13/2013 Mala Sarat Chandra 13
  14. 14. Criticisms of The Classical School of Management No one is entirely driven by economic motivations. People’s choices and behavior are dictated by other factors such as social needs, security and self- esteem. There is no such thing as “the best way” to do a job. Extreme division of labor tends to produce monotony and reduce overall skill levels. People are managed like machines. Introduction of newer machines led to job elimination. 9/13/2013 Mala Sarat Chandra 14
  15. 15. THE NEO-CLASSICAL SCHOOL OF MANAGEMENT 1920 - 1950 9/13/2013 Mala Sarat Chandra 15
  16. 16. Core Concepts Grew in reaction against the Scientific Theory of Management which emphasized standardization of jobs, processes and technologies to maximize economic return. Focus shifted to the human side of organizations. 1. The best way to motivate, structure and support employees. 2. The need for workers to find intrinsic value in their jobs. 3. The positive impact of social relationships on worker productivity. 9/13/2013 Mala Sarat Chandra 16
  17. 17. Mary Parker Follet 1925 The Psychological Foundations of Business Administration Pioneered the notion of participative leadership. Suggests that organizations are communities involving networks of groups. Workers and managers equally share power and responsibility for decision making and therefore, their outcomes. She introduces many contemporary concepts such as leadership, motivation and empowerment. 9/13/2013 Mala Sarat Chandra 17
  18. 18. The Hawthorne Studies 2:49 9/13/2013 Mala Sarat Chandra 18
  19. 19. The Hawthorne Effect Productivity increases when workers believe that they are being observed closely. Employees perform better when managers and co-workers make them feel valued. Financial rewards are not necessarily conducive to increasing worker productivity. Workers care about self-fulfillment, autonomy, empowerment, social status and personal relationships with co-workers. 9/13/2013 Mala Sarat Chandra 19
  20. 20. Human Relations Theory of Management Elton Mayo 1933 “The Human Poblems of an Industrial Civilization” Fritz Roethlisberger 1939 “Management and the Worker” People are social beings, motivated by social needs. A sense of identity is derived from inter-personal relationships. Workers are more receptive to social forces of peer groups than monetary incentives and management controls. Workers respond positively to attention from management, co- workers and customers. The psychological needs of individuals significantly impact group performance. 9/13/2013 Mala Sarat Chandra 20
  21. 21. Chester Barnard 1938 The Functions of the Executive Proposes the acceptance theory of authority, that organizational goals will be achieved and managerial authority will be accepted if workers believe that their individual needs are being met. 9/13/2013 Mala Sarat Chandra 21
  22. 22. Behavioral Theory of Management The fulfillment of emotional needs of workers is important in achieving economic goals. Employee satisfaction and working conditions are important in achieving worker productivity. Workers are intrinsically motivated to work when they feel a sense of belonging and participate in decision making. Workers desire diverse and challenging work. 9/13/2013 Mala Sarat Chandra 22
  23. 23. Abraham Maslow 1954 “Motivation and Personality” Self Actualization Esteem Social Safety Physiological Hierarchy of Needs Theory Working Conditions and Work hours Personal and financial security Collaboration, teamwork, work-life balance Recognition and Rewards Autonomy, Empowerment 9/13/2013 Mala Sarat Chandra 23
  24. 24. Douglas McGregor 1960 “Human side of Enterprise” Theory X Managers Workers must be coerced and controlled to work towards organizational goals. Workers are inherently lazy, lack ambition and prefer to be directed rather than take responsibilities. Workers are self-centered and only care about themselves, not the organization. Workers dislike change and will resist it at all cost. Theory Y Managers Workers encouraged to develop their full potential will work towards achieving organizational goals. With appropriate incentives and support, workers will seek out and fulfill responsibilities on their own. Workers will apply their ingenuity, creativity and hard work to meet organizational goals. Caution: Self-Fulfilling Prophecy Workers behave as expected by managers due to the manager’s own behavior and actions. 9/13/2013 Mala Sarat Chandra 24
  25. 25. Notable Contributors to the Behavioral School of Management (1) Chris Argyris 1957 “Personality and Organization” Fundamental conflicts between Individual and Organizational needs. Frederick Herzberg 1959 “The Motivation to Work”. Two-factor Theory. Kurt Lewin 1944 – 1951 Model of planned change: unfreeze, change, refreeze 9/13/2013 Mala Sarat Chandra 25
  26. 26. Notable Contributors to the Behavioral School of Management (2) Rensis Likert 1967 “The Human Organization” Linking-pin model to bridge human relations and organizational structure George Homans 1950 “The Human Group” Extrapolates from a small group to understanding the social system. Warren Bennis 1961 “The Planning of Change” Foundation for planned organizational change and development. 9/13/2013 Mala Sarat Chandra 26
  27. 27. Summary: Neo-Classical School of Management Behavioral School is a logical extension of the Human Resource School. They are largely concerned with motivation of workers. Workers are diverse in their needs and want challenging work, participative decision-making, self-direction and control. Managers must help workers deal with situational constraints and social aspects of organizational and environmental changes. 9/13/2013 Mala Sarat Chandra 27
  28. 28. THE MODERN SCHOOL OF MANAGEMENT 9/13/2013 Mala Sarat Chandra 28
  29. 29. Core Concepts Dealing with complexity is the core of modern management theory. Organizations, Workers, Environment and the interactions between them. It is a synthesis of several theories. Behavioral science, mathematics, statistics, operations / quantitative research and computing technologies. Management is an exercise in logic applied to situations. Situations can be measured. Computers have an increasing role to play. Application of management knowledge is extended to non- business areas. Education, government, health care and others. 9/13/2013 Mala Sarat Chandra 29
  30. 30. The Quantitative School of Management Combines classical management theory and behavioral science through the use of statistical models and simulations. A major focus is on the process with which decisions are made, to ensure informed results. The quantitative school comprises Scientific Management Managers use of math and statistics for problem solving. Operations Management Managing the process of combining materials, workers and capital to produce goods and services. Management Information Systems Transforming historic, current and projected data from internal and external sources into useful, usable management information. Systems Management Theory Transforming inputs into outputs and receiving feedback. 9/13/2013 Mala Sarat Chandra 30
  31. 31. The Systems School of Management 9/13/2013 Mala Sarat Chandra 31 The Environment in which the system operates. Environmental elements have the potential to affect all or part of the system Throughput The process of converting or transforming resources within the system into a product or service Input Resources from the environment Output The product or service exported to the environment Feedback from the environment used to change & grow Ludwig von Bertalanffy 1937 “Allgemeine Systemlehre” (General Systems Theory)
  32. 32. Types of Systems Closed System Open System 9/13/2013 Mala Sarat Chandra 32 Systems and “wholeness” Guidelines for System Analysis 1. The focus of analysis is the whole, parts receive secondary attention. 2. Integration (interrelatedness of the many parts within the whole) is the key in wholeness analysis. 3. Possible modifications in each part should be weighed in relation to possible effects on every other part. 4. Each part has a role to perform so the whole can accomplish its purpose. 5. The nature of the part and its function is determined by its position in the whole. 6. All analysis starts with the existence of the whole. Parts and their relationships should evolve to best suit the purpose of the whole. Source: Modern Management by Certo & Certo
  33. 33. The Management System It is an open system comprising parts such as organizational resources (capital, raw materials, workers), the production process, information systems, finished goods, that are needed to achieve the organization’s goals. 9/13/2013 Mala Sarat Chandra 33 Input Process Output Customers Government Competitors Suppliers Environment
  34. 34. The Contingency School of Management (1) 9/13/2013 Mala Sarat Chandra 34 Joan Woodward 1965 “Industrial Organziation: Theory and Practice” & P. Lawrence J.W. Lorsch 1967 “Organization & Environment: Managing Differentiation and Integration” Argued that technology and production systems were critical aspects of organizational design; advanced a contingency approach to organizing. Suggested that successful organizations match their structure to the nature of the environment
  35. 35. The Contingency School of Management (2) 9/13/2013 Mala Sarat Chandra 35 Fred Edward Fiedler 1967 “A Theory of Leadership Effectiveness” Daniel Katz Robert Kahn 1966 “The Psychology of Organizations” Present a unified, open systems approach extending organizational theory beyond the boundaries of a single organization. Argued that leadership effectiveness is contingent upon two interacting factors, Leadership style and situational favourableness.
  36. 36. Definition of an Organization An Organization is a social system comprising subsystems of resource variables, interrelated by various management policies, practices and techniques which interact with variables in the environment to achieve a set of goals or objectives. 9/13/2013 Mala Sarat Chandra 36 Source: A General Contingency Theory of Management, Luthans and Stewart (1977) SYSTEM PERFORMANCE Environmental ManagementResource ORGANIZATIONAL PERFORMANCE CRITERIASITUATIONAL Variables and relationships in a Contingency Model of the Organization
  37. 37. Core Concepts What managers do depends on or is contingent on the situation at hand; it emphasizes an “if- then” relationship. If a particular situational variable exists, then managers are likely to take a particular action. Successful managers must consider the realities of the specific organizational circumstances they face when applying management concepts, principles, tools and techniques. Source: Modern Management by Certo & Certo Mala Sarat Chandra 37
  38. 38. Challenges with the Contingency Approach 1. Perceiving organizational situations as they actually exist. 2. Choosing the management tactics best suited to those situations. 3. Competently implementing those tasks. 9/13/2013 Mala Sarat Chandra 38 Source: Modern Management by Certo & Certo
  39. 39. Summary Three distinct Schools of Management Classical Process Neo-Classical People Modern Integrative - People, Process, Environment 9/13/2013 Mala Sarat Chandra 39
  40. 40. Key Concepts: Definition of Management Management is the process of accomplishing an organization’s goals by working with and through people, utilizing all the resources available to it. The Role of Management Mala Sarat Chandra 40
  41. 41. Key Concepts: The Role of Management Planning Doing the right thing at the right time to accomplish organizational goals. Choose the tasks that need to be performed and decide when and how to perform those tasks. Organizing Creating a mechanism to put plans into action. Assign tasks to individuals and teams to accomplish the tasks required to accomplish organizational goals. Influencing Leading, motivating and directing an organization’s members toward accomplishing organizational goals. Increase productivity of members in the accomplishment of organizational goals and to be responsive to changing needs of the organization. Control Establishing and tracking organizational performance standards. Gather and analyze appropriate performance metrics and compare against established standards. Make organizational changes needed to meet established standards. Mala Sarat Chandra 41
  42. 42. Common Mistakes of Management Planning Not establishing goals and objectives for all important organizational areas. Making plans that are too risky. Not exploring enough viable alternatives for reaching goals and objectives. Organizing Not establishing the appropriate organization structure – span of control, inter- departmental coordination, geographic balance. Influencing Not establishing lines of communications, communicating infrequently, managing rather than leading. Controlling Not tracking progress against goals, not establishing performance standards, tracking performance metrics, analyzing trends or using insights to drive improvements. Mala Sarat Chandra 42
  43. 43. Management and Organizational Resources Organizational Resources •People •Money •Raw Materials •Capital Resources Production Process Finished Products •Goods •Services Inputs Outputs Mala Sarat Chandra 43
  44. 44. Goal Achievement: Managerial Efficiency versus Effectiveness Goals not reached. Resources not wasted. Goals reached. Resources not wasted. Goals not reached. Resources wasted. Goals reached. Resources wasted. 9/14/2013 Mala Sarat Chandra 44 Ineffective Effective InefficientEfficient
  45. 45. The Management Framework Planning • Vision and Mission • Strategy • Goals and Objectives Organizing • Organization Design • Culture • Social Networks Leading • Leadership • Decision Making • Communications • Groups and Teams • Motivation Controlling • Systems and Processes • Human Resources Mala Sarat Chandra 459/13/2013
  46. 46. The Future of Management Mala Sarat Chandra 46