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Evolution of management thoughts

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Part of Management Process. How the management process evolved from the early years.
Many experts contributed for this evolution. I compiled the list and little bit history along with the theory developed by each contributor for this process.

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Evolution of management thoughts

  1. 1. MANAGEMENT PROCESS H Ramasubramanian Evolution of Management Thought
  2. 2. Evolution of Management Thoughts Introduction: • History and progress of management thinking; • Classification of approaches: – Classical • Scientific management, • Bureaucratic management, • Administrative management – Behavioural approach • group influences, • Hawthorne studies, • Maslow’s needs theory, • Theory X and Theory Y, • Model I Vs. Model II of Chris Argyris – Quantitative approach • Management science, • operations management, • M.I.S 2Management Thoughts - MANGEMENT PROCESS
  3. 3. Syllabus - UNIT – 2 Evolution of Management Thoughts – modern approaches • systems theory, • contingency theory, • Theory Z, • quality management. Classical approach: • Brief overview; • Scientific management: • Contribution of Taylor (Principles of scientific management, managerial practices after Taylor: piece rate incentive and time and motion study), • Gilbreths’ thoughts, • Gantt’s contribution; • Limitations of Scientific Management; • Administrative theory: Fayol’s contribution: • Various business operations (Technical, commercial, financial, security, accounting, managerial, (14 principles of Fayol; • Bureaucratic management: Weber’s ideal bureaucracy and its characteristics; Limitations of bureaucratic management and administrative theory 3Management Thoughts - MANGEMENT PROCESS
  4. 4. Syllabus - UNIT – 2 Evolution of Management Thoughts • Behavioral approach: – Meaning; – contributors: Follet, Mayo, Maslow, McGregor, and Argyris; – Follet’s group influence ideas; – Mayo’s thinking on human relations • Illumination experiments, • relay assembly test room experiments, • interview phase, • writing observation room experiment and • limitations of this approach; – Maslow’s focus on human needs: • Classification and need hierarchy, • evaluation; – Mc Gregor’s contribution: • Theory X and Theory Y; – Argris and matching of human and organizational development, • Model I and model II organizations 4Management Thoughts - MANGEMENT PROCESS
  5. 5. Syllabus - UNIT – 2 Evolution of Management Thoughts • Quantitative approaches: – Management science approach; – Operations management approach; – MIS • Modern approaches: – System theory (Inputs Transformation process outputs); – Contingency theory; – Theory Z • Comparative view of all the approaches 5Management Thoughts - MANGEMENT PROCESS
  6. 6. Evolution of Management Thoughts - History History and progress of management thinking • Both theory and history are indispensable tools for managing contemporary organizations. • A theory is a conceptual framework for organizing knowledge that provides a blueprint for various courses of action. 6Management Thoughts - MANGEMENT PROCESS Name Period Contribution Robert Owen 1771-1858 Proposed legislative reforms to improve working conditions of labour Charles Babbage 1792-1871 Advocated the concept or ‘division of labour’ Andrew Ure 1778-1857 Advocated the study of management Charles Dupin 1784-1873 Henry R.Towne 1844-1924 Emphasised the need to consider management as separated field of study and the importance of business skills for running a business.
  7. 7. Evolution of Management Thoughts – Classification of approaches: Major Classification of Management approaches 7Management Thoughts - MANGEMENT PROCESS CLASSICAL APPROACH SCIENTIFIC MANAGEMENT BUREAUCRATIC MANAGEMENT ADMINISTRATIVE MANAGEMENT BEHAVIORAL APPROACH HAWTHORNE STUDIES MASLOW’S NEED HIERARCHY THEORY X and THEORY Y QUANTITATIVE APPROACH MANAGEMENT SCIENCE OPERATIONS MANAGEMENT MANAGEMENT INFORMATION SYSTEM MODERN APPROACH THE SYSTEMS THEORY CONTINGENCY THEORY EMERGING APPROACHES
  8. 8. Evolution of Management Thoughts – Classical approach Classical approach: • It professes or claims the body of management thought based on the belief that employees have only economical and physical needs and that the social needs and need for jog satisfaction either does not exist or are unimportant • It is the oldest thought began around 1900 and continued into 1920’s • Mainly considered increasing the efficiency of workers. • It mainly looks for universal principles of operation for economic efficiency. Scientific Management: Early 1900s It is defined as “that kind of management which conducts a business or affairs by standards established, by facts or truths gained through systematic observation, experiment, or reasoning.” Major contributors: Frederick Winslow Taylor:(1856-1915) Father of scientific management • Two major managerial practices: – Piece-rate incentive system – Time-and-motion study 8Management Thoughts - MANGEMENT PROCESS
  9. 9. Evolution of Management Thoughts – Classical approach Frank Gilberth (1868-1924) and Lillian Gilberth: (1878-1972) • Motion study involves finding out the best sequence and minimum number of motions needed to complete a task. • Explore new ways for eliminating unnecessary motions and reducing work fatigue. Henry L.Gantt: 1861-1919 • Well known for Task – and - bonus system – The Gantt chart • If the worker completed the work fast, i.e., – in less than the standard time, he received a bonus. • It is a Simple chart that compares actual and planned performances. Limitations of Scientific Management • Do not focus on the management of an organization from a manager’s point of view. • People were “rational” and were motivated primarily by the desire for material gain. • It also ignored the human desire for job satisfaction. 9Management Thoughts - MANGEMENT PROCESS
  10. 10. Evolution of Management Thoughts – Classical approach Piece-rate incentive system: • This was the first systematic attempt in rationalizing incentive. • It is based on the assumption that the degree of efficiency varies from worker to worker and hence the workers must be paid according to their degree of efficiency. • The main features of the system are: – The system is based on piece rates. – The standard output for unit of time is pre-determined on the basis of time and motion study. – There are two piece rates, one lower and another higher. • Those who reach the standard or exceed it, get wages at higher piece rate (e.g. 120% of piece rate) and • those who fail to reach it, get wages at a lower piece rate (e.g. 80% of piece rate). • Minimum wages for the workers are not guaranteed. 10Management Thoughts - MANGEMENT PROCESS
  11. 11. Evolution of Management Thoughts – Classical approach Disadvantages – It does not guarantee a minimum wage for the workers. – The system is very harsh to the inefficient workers because they gentle wages due to lower rate and lower output. – It penalises a worker who just fails to attain the standard by a narrow margin • It is clear from the above illustration that the workers with lower efficiency less wages and workers with higher efficiency get more wages under Table differential piece rate system as compared to ordinary piece rate system. Time and motion study Method for establishing employee productivity standards in which (1) a complex task is broken into small, simple steps, (2) the sequence of movements taken by the employee in performing those steps is carefully observed to detect and eliminate redundant or wasteful motion, and (3) precise time taken for each correct movement is measured. From these measurements production and delivery times and prices can be computed and incentive schemes can be devised. Generally appropriate only for repetitive tasks 11Management Thoughts - MANGEMENT PROCESS
  12. 12. Evolution of Management Thoughts – Classical approach Taylor’s Principle of Scientific Management Contribution 12Management Thoughts - MANGEMENT PROCESS
  13. 13. Evolution of Management Thoughts – Classical approach 13Management Thoughts - MANGEMENT PROCESS
  14. 14. 14Management Thoughts - MANGEMENT PROCESS Evolution of Management Thoughts – Classical approach
  15. 15. Evolution of Management Thoughts – Classical approach Bureaucratic management • Max Weber (1864-1920): Follower of Fayol • Introduced most of the concepts on Bureaucratic Organisations • Birth of Bureaucracy: – During 1800 European organisation were managed on a personal / family basis. – Employees loyal to single individual – Weber envisioned organisation would be managed on an impersonal, rational basis. – This form of organisation is known as Bureaucracy. • Characteristics – Organisation based on rational authority would be more efficient and adaptable to changes. – Employee selection and advancement is based on competence and technical qualification. – Organisation relies on rules and regulations which are impersonal and applied uniformly to all employees. – Division of labour. – Positions in an organisation are organised in a hierarchy – Managers depends not on personality for successfully giving orders but on legal power invested in managerial position. 15Management Thoughts - MANGEMENT PROCESS
  16. 16. Evolution of Management Thoughts – Classical approach Bureaucratic management • Today, the term Bureaucracy is taken on a negative meaning. • It is associated with endless rules and red tapism. • But still they provide a standard way of dealing with employees • Equal treatment for all employees • This foundation enables many organisations to become extremely efficient. Possible disadvantages: • Excessive paper work / red tape • Slowness in handling problems • Rigidity in the face of shifting needs • Resistance to change 16Management Thoughts - MANGEMENT PROCESS
  17. 17. Evolution of Management Thoughts – Classical approach Administrative management • Concerned with managing the total organisation. • Henry Foyal (1841 – 1925) • French mining engineer • Viewed management as a profession that can be trained and developed. • First man to analyse the functions of management. • Major three contributions – A clear distinction between technical and managerial skills – Identified functions constituting the management process – Developed principles of management. • Grouped the activities • Technical, commercial, financial, security, accounting & managerial 17Management Thoughts - MANGEMENT PROCESS
  18. 18. Evolution of Management Thoughts – Classical approach Administrative management 18Management Thoughts - MANGEMENT PROCESS Technical Processing production & Operation Commercial Buying, selling & exchange Financial Optimum use of capital Security Protection of assest and resources Accounting Ascertaining the financial position Managerial Optimum use of resources for optimum result
  19. 19. Evolution of Management Thoughts – Classical approach Administrative management 19Management Thoughts - MANGEMENT PROCESS Fayol 14 principles 1 Division of labour Allows for job specilisation. Fayol noted firms can have too much specilisation leading to poor quality and worker involvement. 2 Authority and Responsibility Fayol included both formal and informal authority resulting from special expertise. 3 Discipline Obedient, applied, respectful employees needed 4 Line of Authority A clear chain from top to bottom of the firm 5 Centralisation The degree to which authority rests at the very top 6 Unity of Direction One plan of action to guide the organisation 7 Unity of Command Employees should have only one boss
  20. 20. Evolution of Management Thoughts – Classical approach Administrative management 20Management Thoughts - MANGEMENT PROCESS 7 Unity of Command Employees should have only one boss 8 Order Each employee is put where they have the most value 9 Initiative Encourage innovation 10 Equity Treat all employees fairly in justice and respect 11 Remunaration of personnel The payment system contributes to success 12 Stability of Tenure Long-term employment is important 13 General interest over individual interest The organisation takes precedence over the individual 14 Esprit de corps "UNION IS STRENGTH" - refers to harmony & mutual understanding among the members of an organisation.
  21. 21. Evolution of Management Thoughts – Behavioural approach • It bears the existing and newly developed theories and methods of the relevant social sciences upon the study of human behaviour ranging from personality dynamics of individuals to the relations of culture. 21Management Thoughts - MANGEMENT PROCESS Human resource approaches Assumption: People are social and self- actualizing Theory of human needs Abraham Maslow Hawthorne studies Elton Mayo Organizations as communities Mary Parker Follett Theory X and Theory Y Douglas McGregor Personality and organization Chris Argyris
  22. 22. Evolution of Management Thoughts – Behavioural approach Organizations as communities - Mary Parker Follett (1868 – 1933) Groups and human cooperation: – Groups allow individuals to combine their talents for a greater good – Organizations are cooperating “communities” of managers and workers – Manager’s job is to help people, cooperate and achieve an integration of interests • Organizations as communities – Forward-looking management insights: 22Management Thoughts - MANGEMENT PROCESS • precursor of employee ownership, profit sharing, and gain-sharing Making every employee an owner creates a sense of collective responsibility • precursor of systems thinking Business problems involve a variety of inter-related factors • precursor of managerial ethics and social responsibility Private profits relative to public good
  23. 23. Evolution of Management Thoughts – Behavioural approach Elton Mayo’s (1880- 1949) Hawthorne studies • Initial study examined how economic incentives and physical conditions affected worker output • No consistent relationship found • “Psychological factors” influenced results Illumination Experiments: • Hawthorne Works had commissioned a study to see if its workers would become more productive in higher or lower levels of light. • The workers' productivity seemed to improve when changes were made and slumped when the study was concluded. • It was suggested that the productivity gain occurred due to the impact of the motivational effect on the workers as a result of the interest being shown in them. • This effect was observed for minute increases in illumination. • In these lighting studies, light intensity was altered to examine its effect on worker productivity. • Most industrial/occupational psychology and organizational behaviour textbooks refer to the illumination studies. • Only occasionally are the rest of the studies mentioned. 23Management Thoughts - MANGEMENT PROCESS
  24. 24. Evolution of Management Thoughts – Behavioural approach Elton Mayo’s (1880- 1949) Hawthorne studies Although illumination research of workplace lighting formed the basis of the Hawthorne effect, other changes such as maintaining clean work stations, clearing floors of obstacles, and even relocating workstations resulted in increased productivity for short periods. Thus the term is used to identify any type of short-lived increase in productivity. Relay assembly test-room studies • Manipulated physical work conditions to assess impact on output • Designed to minimize the “psychological factors” of previous experiment • Factors that accounted for increased productivity: – Group atmosphere – Participative supervision • Employee attitudes, interpersonal relations and group processes – Some things satisfied some workers but not others – People restricted output to adhere to group norms Lessons from the Hawthorne Studies: – Social and human concerns are keys to productivity – Hawthorne effect — people who are singled out for special attention perform as expected 24Management Thoughts - MANGEMENT PROCESS
  25. 25. Evolution of Management Thoughts – Behavioural approach Interview phase: • Individual workers cannot be treated in isolation, but must be seen as members of a group. • Monetary incentives and good working conditions are less important to the individual than the need to belong to a group. • Informal or unofficial groups formed at work have a strong influence on the behaviour of those workers in a group. • Managers must be aware of these 'social needs' and cater for them to ensure that employees collaborate with the official organization rather than work against it. • Mayo's simple instructions to industrial interviewers set a template and remain influential to this day: The simple rules of interviewing: • Give your full attention to the person interviewed, and make it evident that you are doing so. • Listen - don't talk. • Never argue; never give advice. • Listen to: what he wants to say; what he does not want to say; what he can not say without help. • As you listen, plot out tentatively and for subsequent correction the pattern that is being set before you. To test, summarize what has been said and present for comment. • Always do this with caution - that is, clarify but don't add or twist. 25Management Thoughts - MANGEMENT PROCESS
  26. 26. Evolution of Management Thoughts – Behavioural approach Feedback mechanism • Through out the series of experiments, an observer sat with the girls in the workshop noting all that went on, keeping the girls informed about the experiment, asking for advice or information, and listening to their complaints. • The experiment began by introducing various changes, each of which was continued for a test period of four to twelve weeks. 26Management Thoughts - MANGEMENT PROCESS
  27. 27. Evolution of Management Thoughts – Behavioural approach Abraham Maslow (1908 – 1970) Maslow’s theory of human needs • A need is a physiological or psychological deficiency a person feels compelled to satisfy • Need levels: – Physiological – Safety – Social – Esteem – Self-actualization 27Management Thoughts - MANGEMENT PROCESS Maslow's hierarchy of human needs Self-actualisation needs Highest level: need for self-fulfilment, to grow and use abilities to fullest and most creative extent Esteem needs Need for esteem in eyes of others, need for respect, prestige, recognition and self-esteem, personal sense of competence, mastery Social needs Need for love, affection, sense of belongingness in one's relationships with other people. Safety needs Need for security, protection and stability in the events of day-to-day life Physiological needs Most basic of all human needs: Need for biological maintenance: Food, Water and Physical well-being
  28. 28. Evolution of Management Thoughts – Behavioural approach • Maslow studied what he called exemplary people such as Albert Einstein, Jane Addams, Eleanor Roosevelt, and Frederick Douglass • rather than mentally ill or neurotic people, • writing that "the study of crippled, stunted, immature, and unhealthy specimens can yield only a cripple psychology and a cripple philosophy." • Maslow studied the healthiest 1% of the college student population. Maslow’s theory of human needs • Deficit principle – A satisfied need is not a motivator of behavior • Progression principle – A need becomes a motivator once the preceding lower-level need is satisfied • Both principles cease to operate at self-actualization level 28Management Thoughts - MANGEMENT PROCESS
  29. 29. Evolution of Management Thoughts – Behavioural approach Douglas Murray McGregor (1906 – 1964) Theory X and Y Theory X assumes that workers: – Dislike work – Lack ambition – Are irresponsible – Resist change – Prefer to be led Theory Y assumes that workers are: – Willing to work – Capable of self control – Willing to accept responsibility – Imaginative and creative – Capable of self-direction 29Management Thoughts - MANGEMENT PROCESS
  30. 30. Evolution of Management Thoughts – Behavioural approach Douglas Murray McGregor (1906 – 1964) Theory X • In this theory, which has been proven counter effective in most modern practice Management assumes employees are inherently lazy and will avoid work if they can and that they inherently dislike work. • As a result of this, management believes that workers need to be closely supervised and comprehensive systems of controls developed. • A hierarchical structure is needed with narrow span of control at each and every level. • According to this theory, employees will show little ambition without an enticing incentive program and will avoid responsibility whenever they can. • If the organizational goals are to be met, theory X managers rely heavily on threat and coercion to gain their employees' compliance. • Beliefs of this theory lead to mistrust, highly restrictive supervision, and a punitive atmosphere. • The Theory X manager tends to believe that everything must end in blaming someone. • He or she thinks all prospective employees are only out for themselves. • Usually these managers feel the sole purpose of the employee's interest in the job is money. . 30Management Thoughts - MANGEMENT PROCESS
  31. 31. Evolution of Management Thoughts – Behavioural approach Douglas Murray McGregor (1906 – 1964) Theory X • They will blame the person first in most situations, without questioning whether it may be the system, policy, or lack of training that deserves the blame. • A Theory X manager believes that his or her employees do not really want to work, that they would rather avoid responsibility and that it is the manager's job to structure the work and energize the employee. • One major flaw of this management style is it is much more likely to cause diseconomies of scale in large business. Theory Y • In this theory, management assumes employees may be ambitious and self-motivated and exercise self-control. • It is believed that employees enjoy their mental and physical work duties. • According to them work is as natural as play. • They possess the ability for creative problem solving, but their talents are underused in most organizations. 31Management Thoughts - MANGEMENT PROCESS
  32. 32. Evolution of Management Thoughts – Behavioural approach Douglas Murray McGregor (1906 – 1964) Theory Y • Given the proper conditions, theory Y managers believe that employees will learn to seek out and accept responsibility and to exercise self-control and self-direction in accomplishing objectives to which they are committed. • A Theory Y manager believes that, given the right conditions, most people will want to do well at work. • They believe that the satisfaction of doing a good job is a strong motivation. • Many people interpret Theory Y as a positive set of beliefs about workers. • A close reading of The Human Side of Enterprise reveals that McGregor simply argues for managers to be open to a more positive view of workers and the possibilities that this creates. • He thinks that Theory Y managers are more likely than Theory X managers to develop the climate of trust with employees that is required for human resource development. • It's human resource development that is a crucial aspect of any organization. • This would include managers communicating openly with subordinates, minimizing the difference between superior-subordinate relationships, creating a comfortable environment in which subordinates can develop and use their abilities. • This climate would be sharing of decision making so that subordinates have say in decisions that influence them. 32Management Thoughts - MANGEMENT PROCESS
  33. 33. Evolution of Management Thoughts – Behavioural approach • McGregor identified individuals based on two theories they can possibly have, theory X, or theory Y. • But Sahin shows a different approach through his study of the LMX (leader-member exchange) theory. • He shows how different styles used upon by management can vary from both theories. • When managers apply Theory Y principles, workers receive independence and responsibility for work, they receive opportunities to recognize problems and their job will be to find solutions to them. This results to high-quality relationships • In contrast, theory X managers highlight the close supervision of workers and the chain of command and motivate subordinates using extrinsic rewards. Therefore, workers that are overseen by theory X managers tend not to have the most beneficial relationship with their supervisor. They maintain a distance and impersonal and low-quality exchange relationships. Implications of Theory X and Theory Y: – Managers create self-fulfilling prophecies – Theory X managers create situations where workers become dependent and reluctant – Theory Y managers create situations where workers respond with initiative and high performance • Central to notions of empowerment and self-management 33Management Thoughts - MANGEMENT PROCESS
  34. 34. Evolution of Management Thoughts – Behavioural approach Argyris’s theory of adult personality (1923 • Classical management principles and practices inhibit worker maturation and are inconsistent with the mature adult personality. • Management practices should accommodate the mature personality by: – Increasing task responsibility – Increasing task variety – Using participative decision making • Adult Personality- • Argyris believed that managers who treat people positively and as responsible adults will achieve productivity. • Mature workers want additional responsibilities, variety of tasks, and the ability to participate in decisions. • He also came to the conclusion that problems with employees is the result of mature personalities managed using outdated practices. 34Management Thoughts - MANGEMENT PROCESS
  35. 35. Evolution of Management Thoughts – Quantitative approach • Developed in the military during world war II. • Later many organizations adapted this model into their management approaches. There are basically three Quantitative Management approaches: • Management Science Approach • Operations Management • Management Information Systems Management Science Approach • Also called Operations Research. • George B. Dantzig is the father of Operations Research. • Involves the use of mathematical models and statistical methods in decision making process. • The assumption is that Management can be expressed in terms of mathematical symbols, relationships and measurement data. 35Management Thoughts - MANGEMENT PROCESS
  36. 36. Evolution of Management Thoughts – Quantitative approach • Widely used in the following areas – Capital Budgeting and Cash Flow Management – Production Scheduling – Development of Product Strategies – Planning for Human Resource Development programs – Maintenance of Optimal Inventory Levels – Aircraft Scheduling • Mathematical tools – Waiting line theory or Queueing theory – Linear Programming – Program Evaluation Review Technique – Critical Path Method – Decision Theory – Simulation Theory – Probability Theory – Sampling – Time Series Analysis Criticised for the overemphasis on Mathematical tools 36Management Thoughts - MANGEMENT PROCESS
  37. 37. Evolution of Management Thoughts – Quantitative approach • Criticized for the overemphasis on Mathematical tools. Operations Management • Applied form of Management Science • Effective Production Processes and Timely Delivery of products/services. • Concerned with – Inventory Management – Work Scheduling – Production Planning – Facilities Location and Design – Quality Assurance • Tools – Forecasting – Inventory Analysis – Materials Requirement Planning Systems – Networking Models – Statistical Quality Control Methods – Project Planning and Control Techniques 37Management Thoughts - MANGEMENT PROCESS
  38. 38. Evolution of Management Thoughts – Quantitative approach .Management Information Systems • Computer based information systems • Converts raw data into useful information • Charles Babbage is the pioneer in MIS 38Management Thoughts - MANGEMENT PROCESS
  39. 39. Evolution of Management Thoughts – Modern approach . Modern approaches: • Management is one or the other form has existed in every nook and corner of the world since the dawn of civilization. • Modern Management has grown with the growth of social-economics and scientific institution. • Modern view consists that a worker does not work for only money. • They work for their satisfaction and happiness with good living style. • Here Non- financial award is most important factor. • Modern management theories started after 1950s. • Modern management theory focuses the development of each factor of workers and organization. • Modern management theory refers to emphasising the use of systematic mathematical techniques in the system with analysing and understanding the inter-relationship of management and workers in all aspect. – System theory (Inputs Transformation process outputs); – Contingency theory; – Theory Z 39Management Thoughts - MANGEMENT PROCESS
  40. 40. Evolution of Management Thoughts – Modern approach . System approach: • System approach was developed inlate1960s. • Herbert A. Simon is the father of system theory. • A System is defined as a set of regularly interacting or inter - dependent components that create as a whole unit. • The system concept enables us to see the critical variables and constraints and their interactions with one another. • According to Cleland and King; “ A system is composed of related and dependent elements which when in interaction from a unity whole”. Characteristics of system approach: • A system must have some specific components, units or sub units. • A Change in one system affects the other subsystems. • Every system is influenced by super system. • All systems along their subsystem must have some common objectives. • A system is a goal-oriented. • A system cannot survive in isolation. Major contributors in system theories are- • Daniel Katz, Robert L. Khan, Richard A. Johnson. 40Management Thoughts - MANGEMENT PROCESS
  41. 41. Evolution of Management Thoughts – Modern approach .Organisation as a system receives input, transform it through a process for output It operates in an environment (Economic, regulatory and other factors) Elements: • An organisation is a unified and purposeful system consisting of several interconnected, interaction and interdependent parts. • The parts of a system are called sub-systems. • Each subsystem influences the other sub-systems and the system as a whole. • The position and function of each sub-system can be analysed and understood only in relation to other sub-systems and to organise as a whole. 41Management Thoughts - MANGEMENT PROCESS ENVIRONMENT System Boundary Input Transformation process Output
  42. 42. Evolution of Management Thoughts – Modern approach • Each sub-system derives its strength by its association and interaction with the other sub-systems. • Collective contribution of the organisation is greater than the aggregate of individual contribution of its sub-system. • This is known as synergy • Each system has a boundary that separates it from its environment. • The boundary determines which parts are internal to the organisation and which are external. • Employees – within boundary • Customers – external to boundary • The reaction or response of the environment to the output is known as feed back. • Feedback is always useful to evaluate and improve the system function. • In system approach, organisation operate on the principle that they have several alternative ways of doing the same thing or achieve the same goal. 42Management Thoughts - MANGEMENT PROCESS
  43. 43. Evolution of Management Thoughts – Modern approach 43Management Thoughts - MANGEMENT PROCESS
  44. 44. Evolution of Management Thoughts – Modern approach Open System: • An open system actively interacts with its environment. • By interacting with other systems, it tries to establish exchange relationships. Closed System: • A closed system is self contained and isolated from the environment. • It is a non-adaptive system. • It does not receive inputs often from other systems. • It does not trade with outside world. Ex: Automatic wrist watch. 44Management Thoughts - MANGEMENT PROCESS
  45. 45. Evolution of Management Thoughts – Modern approach Advantages: • It aims at meaningful analysis of organisation and its management. • It facilitates the interaction between organisation and its environment • It guides managers to avoid analysing problems in isolation and develop an integrated approach. Disadvantages: • Over-conceptual • The approach does not recognise the differences in systems. • Systems philosophy does not specify the nature of interaction and inter-dependencies. • Unpractical: It cannot be easily and directly applied to practical problems. 45Management Thoughts - MANGEMENT PROCESS
  46. 46. Evolution of Management Thoughts – Modern approach Contingency theory • Also known as situational approach – key to effective management – 1960s • Organisation is dynamic and complex structure • Organisation is affected by its environment • Environment is composed by physical resources, climate, persons, culture, economic & market conditions. • Concept: There is no ‘one’ universally applicable set of rules by which to manage an organisation. • Contributors: GM Stalker, Joan Woodward, Tom Burns, Paul R Lawrence & LW Lorsch. Features 1. Management is entirely situational 2. Management policies & procedures should respond to environmental conditions 3. Manager should understand that there is no one best way of managing 4. A manager is expected to know all the alternative courses of action before taking action in a situation – it is not always possible 46Management Thoughts - MANGEMENT PROCESS
  47. 47. Evolution of Management Thoughts – Modern approach Theory Z • Theory Z is a name for various theories of human motivation built on Douglas McGregor's Theory X and Theory Y. • Theories X, Y and various versions of Z have been used in human resource management, organisational behaviour, organizational communication and organizational development. • One Theory Z was developed by Abraham H. Maslow in his paper Theory Z and • the other is Dr. William Ouchi's so-called "Japanese Management" style popularized during the Asian economic boom of the 1980s. • For Ouchi, Theory Z focused on – increasing employee loyalty to the company by – providing a job for life with a strong focus on the well-being of the employee, – both on and off the job. – According to Ouchi, Theory Z management tends to promote • stable employment, • high productivity, and • high employee morale and satisfaction. 47Management Thoughts - MANGEMENT PROCESS
  48. 48. Evolution of Management Thoughts – Modern approach • Ironically, "Japanese Management" and Theory Z itself were based on Dr. W. Edwards Deming's famous "14 points". • Deming, an American scholar whose management and motivation theories were more popular outside the United States, • went on to help lay the foundation of Japanese organizational development during their expansion in the world economy in the 1980s. • He was a frequent advisor to Japanese business and government leaders, and eventually became a revered counsellor. Deming was awarded the Second Order of the Sacred Treasures by the former Emperor Hirohito, and American businesses tried to use his "Japanese" approach to improve their competitive position. 48Management Thoughts - MANGEMENT PROCESS
  49. 49. Evolution of Management Thoughts – Modern approach 49Management Thoughts - MANGEMENT PROCESS Management Concept Douglas McGregor (Theory X & Y) William Ouchi (Theory Z) Motivation Tends to categorise people as one type or another: either being unwilling or unmotivated to work, or being self motivated towards work. Threats and disciplinary action are thought to be used more effectively in this situation, although monetary rewards can also be a prime motivator to make Theory X workers produce more. Believes that people are innately self motivated to not only do their work, but also are loyal towards the company, and want to make the company succeed. Leadership Theory X leaders would be more authoritarian, while Theory Y leaders would be more participative. But in both cases it seems that the managers would still retain a great deal of control. Theory Z managers would have to have a great deal of trust that their workers could make sound decisions. Therefore, this type of leader is more likely to act as "coach", and let the workers make most of the decisions.
  50. 50. Evolution of Management Thoughts – Modern approach 50Management Thoughts - MANGEMENT PROCESS Management Concept Douglas McGregor (Theory X & Y) William Ouchi (Theory Z) Power & Authority As mentioned above, McGregor's managers, in both cases, would seem to keep most of the power and authority. In the case of Theory Y, the manager would take suggestions from workers, but would keep the power to implement the decision. The manager's ability to exercise power and authority comes from the worker's trusting management to take care of them, and allow them to do their jobs. The workers have a great deal of input and weight in the decision making process. Conflict This type of manager might be more likely to exercise a great deal of "Power" based conflict resolution style, especially with the Theory X workers. Theory Y workers might be given the opportunity to exert "Negotiating" strategies to solve their own differences. Conflict in the Theory Z arena would involve a great deal of discussion, collaboration, and negotiation. The workers would be the ones solving the conflicts, while the managers would play more of a "third party arbitrator" role.
  51. 51. Evolution of Management Thoughts – Modern approach Quality Management • The term quality management has a specific meaning within many business sectors. • This specific definition, which does not aim to assure 'good quality' by the more general definition, • but rather to ensure that an organization or product is consistent, can be considered to have four main components: – quality planning, – quality control, – quality assurance and – quality improvement. • Quality management is focused not only on product/service quality, but also the means to achieve it. • Quality management therefore uses quality assurance and control of processes as well as products to achieve more consistent quality. 51Management Thoughts - MANGEMENT PROCESS
  52. 52. Evolution of Management Thoughts – Modern approach Quality management evolution • Quality management is a recent phenomenon. • Advanced civilisations that supported the arts and crafts allowed clients to choose goods meeting higher quality standards than normal goods. • In societies where arts and crafts are the responsibility of a master craftsman or artist, they would lead their studio and train and supervise others. • The importance of craftsmen diminished as mass production and repetitive work practices were instituted. • The aim was to produce large numbers of the same goods. • The next step forward was promoted by several people including FW Taylor to improve industrial efficiency. • He laid a further foundation for quality management, including aspects like standardization and adopting improved practices. • Henry Ford was also important in bringing process and quality management practices into operation in his assembly lines. • In Germany, Karl Friedrich Benz, often called the inventor of the motor car, was pursuing similar assembly and production practices, although real mass production was properly initiated in Volkswagen after World War II. From this period onwards, North American companies focused predominantly upon production against lower cost with increased efficiency. 52Management Thoughts - MANGEMENT PROCESS
  53. 53. Evolution of Management Thoughts – Modern approach • Walter A. Shewhart made a major step in the evolution towards quality management by creating a method for quality control for production, using statistical methods, first proposed in 1924. • This became the foundation for his on going work on statistical quality control. W. Edwards Deming later applied statistical process control methods in the United States during World War II, thereby successfully improving quality in the manufacture of munitions and other strategically important products. • The International Standard for Quality management (ISO 9001:2008) adopts a number of management principles that can be used by top management to guide their organizations towards improved performance. • The principles include: – Customer focus, Leadership, Involvement of people – Process approach, System approach to management, – Continual improvement, Factual approach to decision making – Mutually beneficial supplier relationships • These eight principles form the basis for the quality management system standard ISO 9001:2008. 53Management Thoughts - MANGEMENT PROCESS
  54. 54. Evolution of Management Thoughts – Modern approach Quality Management 54Management Thoughts - MANGEMENT PROCESS Evolution of Quality …… Figure depicts the shift in approaches used to ensure product quality as a function of time. ImprovementinProductQuality Inspection Improved DesignsStatistical Process Control 1920 1940 1960 1980 2000 Integrated Design and Manufacturing Evolution of Quality Control Quality Through Design

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