AHBM Management Theory


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AHBM Management Theory

  1. 1. Management Theory Internal Environment
  2. 2. <ul><li>Attempt to develop models which can be used to analyse and understand the process of management within an organisation. </li></ul><ul><li>They cover a range of disciplines which include: </li></ul><ul><ul><li>Statistic s which covers production, marketing </li></ul></ul><ul><ul><li>Sociology which covers individual and group behaviour </li></ul></ul><ul><ul><li>Psychology which covers leadership, motivation </li></ul></ul>What is Management Theory?
  3. 3. Classical Approach of Fayol which is devoid of people Scientific Approach of Taylor which discounts human side Human Relations Approach of Mayo and McGregor whose emphasis is on people Systems Approach which shows how inputs are transformed to outputs within its environment Contingency Approach which depends on creating the best fit between people, the task and the environment. Who are the theorists?
  4. 4. This stressed the advantages of division of labour It emphasised the importance of a formal hierarchical structure Control was achieved through a narrow span of control It reflected an authoritarian style of leadership The Classical School - Henri Fayol What are the disadvantages of adopting this management theory?
  5. 5. Scientific Management – Frederick Taylor <ul><li>Taylor believed that applying scientific principles to management would reduce inefficiency </li></ul><ul><li>Workers should receive a fair day’s pay for a fair day’s work – money motivates employees </li></ul><ul><li>Pay should be linked to productivity through piece rates </li></ul><ul><li>There was a “best way” to do each job which allowed managers to manage and workers to work – this best way being found out by time and motion studies </li></ul>
  6. 6. <ul><li>This emphasises the importance of managers in planning and organising tasks </li></ul><ul><li>The worker is viewed as at best neutral, or at worst opposed, to the idea of work </li></ul><ul><li>To improve productivity managers must : </li></ul><ul><ul><li>Devise how to do the task – time and motion study </li></ul></ul><ul><ul><li>Develop the techniques and resources to do so </li></ul></ul><ul><ul><li>Motivate the workers using low wages and high incentives for exceeding targets – carrot and stick approach </li></ul></ul>
  7. 7. How does Scientific Management apply today?
  8. 8. Application Today <ul><li>Employee motivation not simply driven by money – social and psychological needs </li></ul><ul><li>Many organisations delegate responsibility </li></ul><ul><li>McDonalds use Scientific Management principles </li></ul><ul><li>Organisations that are mechanised may use </li></ul><ul><li>Target setting – a Taylor principle popular in modern organisations </li></ul>
  9. 9. <ul><li>Based on experiments carried out at the Hawthorne plant of General Electric 1927-1932 </li></ul><ul><li>Mayo believed he established a link between productivity and working conditions </li></ul><ul><li>He found that productivity could rise even when working conditions deteriorated </li></ul>Human Relations School – Elton Mayo Read about the Hawthorne Experiments. What working conditions did he alter?
  10. 10. His conclusions which were radically different from Taylor were as follows: <ul><li>People are motivated by social needs </li></ul><ul><li>Division of labour had destroyed inter-personal relationships </li></ul><ul><li>Working in groups had a greater impact on motivation than financial incentives and organisational controls – group ‘norms’ had an impact </li></ul><ul><li>Managers should pay greater attention in meeting workers’ social needs to improve productivity </li></ul>
  11. 11. Application Today <ul><li>Employees group membership is vital </li></ul><ul><li>Human Resource departments used strategically to enhance the working relationship </li></ul>
  12. 12. <ul><li>He suggested that the links between organisational structure, motivation and productivity were more complex than Mayo identified </li></ul><ul><li>He suggested two opposing views of management approaches </li></ul><ul><li>One of these approaches he called Theory X </li></ul><ul><li>The other he called Theory Y </li></ul>Neo-Human Relations School - McGregor
  13. 13. What are the consequences of management following Theory X? Theory X <ul><li>Workers are motivated by money </li></ul><ul><li>Workers are lazy and dislike work </li></ul><ul><li>Workers are selfish, ignore the needs of organisations, avoid responsibility and lack ambition </li></ul><ul><li>Workers need to be controlled and directed by management </li></ul>
  14. 14. <ul><li>This is based on negative assumptions </li></ul><ul><li>Managers distrust subordinates </li></ul><ul><li>It takes the traditional view that workers dislike work and </li></ul><ul><li>will do all in their power to avoid it </li></ul><ul><li>Labour must be controlled and directed to meet the </li></ul><ul><li>organisation objectives </li></ul><ul><li>Output will only increase through productivity incentives </li></ul><ul><li>This approach is more likely to have low productivity levels </li></ul><ul><li>and low morale </li></ul>
  15. 15. What are the consequences of management following Theory Y? Theory Y <ul><li>Workers have many different needs which motivate them </li></ul><ul><li>Workers can enjoy work </li></ul><ul><li>If motivated, workers can organise themselves and take responsibility </li></ul><ul><li>Management should create a situation where workers can show creativity and apply their job knowledge </li></ul>
  16. 16. <ul><li>This is based on positive assumptions </li></ul><ul><li>Employees enjoy their work and want to contribute </li></ul><ul><li>ideas and efforts </li></ul><ul><li>Employees are motivated by being given responsibility </li></ul><ul><li>over how to do their work </li></ul><ul><li>In this approach employees will reach organisational </li></ul><ul><li>goals without the threat of punishment </li></ul><ul><li>This approach is more likely to increase productivity </li></ul><ul><li>and produce a committed workforce eg TQM </li></ul>
  17. 17. <ul><li>Concerned with the way the system transforms inputs into outputs within its environment </li></ul><ul><li>Stresses the importance of taking a holistic view of the organisation </li></ul><ul><li>Views an organisation as a multitude of interdependent parts and processes </li></ul><ul><li>Changes in one subsystem are likely to have consequences on or to impact on other subsystems </li></ul>Systems Theory
  18. 18. <ul><li>It pushes the focus beyond looking at the organisation as a closed system as was the case with scientific and human relations approach </li></ul><ul><li>It covers finding the best fit between technical, social and economic factors </li></ul><ul><li>Encourages flexibility to adapt to changes in external environment (PEST) </li></ul><ul><li>Working in teams enables different activities to be brought together so that connections and links are more apparent </li></ul>
  19. 19. INPUTS TRANSFORMATION PROCESS OUTPUTS <ul><li>Materials from supplier </li></ul><ul><li>Equipment </li></ul><ul><li>Labour </li></ul>Goods/services developed by organisations <ul><li>Finished goods </li></ul><ul><li>Satisfied customers </li></ul>
  20. 20. <ul><li>This is based on the assumption that there is no “ best way ” to manage organisations as some previous theorists advocated </li></ul><ul><li>This believes that structures and methods of operation depend on the circumstances and the situation in which the organisation is currently operating </li></ul><ul><li>It is a very flexible structure which can adapt quickly </li></ul>Contingency Theory
  21. 21. <ul><li>It argues that organisations should try to create the “ best fit” between people, tasks and the environment </li></ul><ul><li>This “ best fit ” will depend on prevailing circumstances – ie the style used is contingent (dependent) on existing conditions </li></ul><ul><li>This allows for different patterns or structures to co-exist simultaneously within the same organisation </li></ul>
  22. 22. An organisation introduces new machinery? Affects on the organisation? Which structure would suit an organisation who provides a customised service to customers? Which structure would suit a department who manufactures products using flow production?