This document provides an overview of the development of major management theories discussed in Chapter 2. It begins with a roadmap that outlines the historical background of management and the development of theories such as scientific management, general administrative theory, and the human relations school. It then discusses each theory in more detail, including their major proponents and implications. The document concludes by examining current trends and issues in management such as globalization, diversity, and quality management.

1. Management Yesterday and
Today
Chapter 2

2. Chapter Road Map
• Historic Background of Management
• Scientific Management
• General Administrative Theory
• Quantitative Approach to management
• Human Relations School ( organization
behavior Theorists)
• The systems approach
• The contingency approach
• Current trends and issues

3. Development Of Major Management
Theories
Historical
Background
Scientific
Management
General
Administrative
Theorists
Quantitative
Approach
Management Theories
Industrial
Revolution
Adam Smith
Early Advocates
Hawthorne Studies
Organizational
Behavior
2-2-33
Early Examples
of Management

4. Historical Background Of Management
• Organizations Have Existed for Thousands of Years
– testifies to the existence of early management practice
• ability to create the Pyramids, Great Wall of China
• Significant Pre-Twentieth-Century Events
– Wealth of Nations - Adam Smith
• division of labor - breakdown of jobs into narrow and
repetitive tasks increased productivity
– Industrial Revolution
• substitution of machine power for human power
• large organizations required formal management
© Prentice Hall, 2002 2-2-44

5. Scientific Management
• Major proponents: Fredrick Taylor, and Frank and
Lillian Gilbertth
• Taylor’s Views On Problems of Productivity
• Matter of ignorance on part of management and
labor
• Both don’t know what constitutes a “ Fair day
work” and “ Fair Pay”
• Both concerned too much with how to divide
profits that arose from productivity and not
enough with increasing productivity

6. The Labor Question
• Soldiering the real cause of low labor
productivity
• Types of Soldiering
1. Natural Soldiering
 Natural Tendency and instinct of men to
take it easy
2. Systematic Soldiering
> Result of inherent relationship with other
men

7. Reasons for Systematic Soldering
• Natural Soldering could be overcome by a manager able to inspire
or force workers to come up to the mark
• Systematic soldering:
1. Work faster would throw large number of workers out of work
2. The defective management systems then in use forced workers to
work slowly to protect their own interests
3. Adherence to rule of thumb work methods
• Taylor placed blame on managers and not workers because it was
management job to design the jobs properly and to offer the
proper incentives to overcome their soldering
• A daily or hourly wage system encouraged soldering because pay
was based on attendance and position not effort
• To work hard brought no rewards and actually encouraged lazy
worker
• Piece rate system practiced at that time was defective because
standards were not set properly

8. Determining Fair Day’s Work and
Fair Day’s Pay
• Fair Days Work
Through Time and Motion Study determine
what workers can do with their equipment
and materials.
Develop a file of elementary movement and
times
• Fair Day’s Pay
Set standards and rates scientifically
Use differential piece rate system

9. Summary of Taylor’s Work
• Develop science for each element of person’s
work
• Scientifically select, train, teach and develop
workers
• Cooperate with workers
• Divide responsibility between management
and workers

10. Scientific Management
• Frank and Lillian Gilbreth
• Studied work to eliminate inefficient hand and body motions
• Experimented with the design and use of proper tools and equipment for
optimizing work performance
• Frank best known for his experiments in bricklaying
• He reduced the number of motions in laying exterior bricks from 18 to 5,
laying interior bricks from 18 to 2.
• Increased the productivity
• use of motion pictures to study hand-and-body movements
• Invented a device called a micrometer that recorded a worker’s motions
and the amount of time spent doing each motion
• Wasted motions missed by naked eye could be identified and eliminated
• Devised a classification scheme to label 17 basic hand motions which they
called therbligs
• This scheme allowed the Gilbreths a more precise way for analyzing a
worker’s exact hand movements

11. Administrative Theorists
• Henri Fayol
• Primary emphasis on establishing broad administrative
principles applicable to higher management level
• Definition of Management
Management is an overall function of conducting an
undertaking towards its objectives by trying to make
best possible use of all resources at its disposal and to
ensure smooth working the five essential elements
1. Planning
2. Organizing
3. Command
4. Coordination
5. Control

12. EXHIBIT 2.3: FAYOL’S 14 PRINCIPLES OF MANAGEMENT

13. General Administrative Theorists
• Max Weber
System Of Administration
• Division of Labor
Authority and responsibility well defined
• Positions organized in Hierarchy of authority
resulting in clear chain of command
• Members selected on basis of technical
competence
• Officials appointed not elected
• System and procedures for dealing with work
situations
• Impersonality in interpersonal relations

14. EXHIBIT 2.4: WEBER’S IDEAL BUREAUCRACY
2-2-1414

15. How do today’s Managers use General
Administrative
• Functional view of a manager’s job can be
attributed to Fayol
• 14 principles serve as a frame of reference
from which many current management
concepts were evolved
• Many characteristics of Weber’s bureaucracy
are evident in large organizations

16. Quantitative Approach To
Management
• Operations Research (Management Science)
– use of quantitative techniques to improve decision
making
• applications of statistics
• optimization models
• computer simulations of management activities
– Linear programming
- improves resource allocation decisions
– Critical-path scheduling analysis
- improves work scheduling

17. Toward Understanding Organizational
Behavior
• Organizational Behavior
– study of the actions of people at work
– early advocates
• late 1800s and early 1900s
• believed that people were the most
important asset of the organization
• ideas provided the basis for a variety of
human resource management programs
–employee selection
–employee motivation

18. EXHIBIT 2.5: EARLY ADVOCATES OF OB

19. Behavioral School
• Hawthorne Experiments (Elton Mayo) 1924- 1927
Phase 1:
1. Illumination experiments
2. Relay room Experiment Small group of six women
Variables studied: shorter working periods, group
incentive pay, and supervision
Results: productivity increased
Reasons: More freedom on job, No boss, Setting their
own work, Small group, the way they were treated

20. Phase 2: Interviewing Program
• Non directive techniques
• Complaints had two levels of content:
a. Manifest or material content
b. Psychological content or “ Pessimistic Reveries”
Conclusion:
New supervisor was to be more people oriented, more
concerned, less aloof and skilled in handling social
problems

21. Phase 3: Bank wiring Room Experiments
• 14 male operatives
• The group job was to wire and solder of equipment
for general connecting services
Conclusions:
Importance of group norms and standards and the
informal group
 Group norms regarding rate of productivity
significantly influenced the level of individual
productivity
 Informal authority of influential group members
often overrode formal authority from the supervisor

22. Implications of Hawthorne Studies
• Identified that organizations are socio-technical
systems
• Demonstrated the importance of psychological or
human factors on worker productivity and morale
• Signaled the criticality of certain variables for worker
satisfaction, autonomy on the job, relative lack of
need for the need for close supervision, the
importance of receiving feedback on the direct
relationship between performance and reward
• Provided data and stimulus for group dynamics,
especially in work context

23. 2 - 23
Systems Theory
• Definition of system:
An integrated, unitary whole composed of two or more
interdependent parts, components, or subsystems and
delineated by its identifiable boundaries from its
environmental suprasystem
Covers a broad spectrum of our physical, biological and social
world
1. Closed System: systems that neither are influenced by, nor
interact with their environment. Physical and Mechanical
systems are considered as closed system.
2. Open system: Dynamic systems that interact with and
respond to their environment. Biological and social systems
are examples of open system.
• The term open and closed system are relative. Neither
systems are completely closed or completely open

24. The Organization as open System
Inputs
Raw Materials
Human resources
Capital
Technology
Information
Transformation
Process
Employees work
activities
Management
activities
Technology &
operations
Outputs
Products and
services
Financial results
Information
Human results
Feedback
Environment
Environment

25. 2 - 25
An Integrated View of Organizations
• An organization is the structuring and integrating of human
activities around various technologies. The technologies
affect the types of inputs into the organization, the nature of
transformation processes, and the outputs from the system.
• The social system determines the effectiveness and efficiency
of the utilization of technology
• The internal organization can be viewed as composed of
several major subsystems:
1. Goals and values: Organization takes many of its values from
the broader socio-cultural environment. The organization
performs function for the society, and if it is to be successful
in receiving inputs, it must conform to social requirements
2. The technical subsystem refers to the knowledge required for
the performance of task, including techniques used in
transformation of inputs into outputs

26. 2 - 26
An integrated view of organizations
3. Psychosocial Subsystem is composed of individuals and
groups in interaction. It consists of individual behavior and
motivation, status, role relationship, group dynamics and
influence systems.
4. Structure involves the ways in which task of the
organization are divided and coordinated. It is also
concerned with patterns of authority, communications and
workflow.
It provides for the formalization of relationships between
the technical and psychosocial subsystem.
5. The managerial Subsystem spans the entire organization by
relating the organization to its environment, setting goals,
developing comprehensive strategic, and operational plans,
designing the structure, and establishing control processes.

27. 2 - 27
Contingency Views of Organization
• Contingency views ( situational approach) recognize
that environment and internal subsystems of each
organization is unique and provide a basis for
designing and managing specific organization.
• There is no one best of way or universal principles
for structuring an organization. It would depend on
contextual variables:
1. Organization Size
2. Type of technology
3. Environment
4. Individual differences

28. Current Trends And Issues
• Globalization
– all organizations are faced with the opportunities and challenges
of operating in a global market
• no longer constrained by national borders
• Workforce Diversity
– heterogeneous workforce in terms of gender, race, ethnicity, and
age
• workforce is getting older
• Asians and Hispanics are an increasingly large percentage of workforce
– “melting pot” approach versus celebration of differences
© Prentice Hall, 2002 2-2-2828

29. Current Trends And Issues (cont.)
• Entrepreneurship
–three important themes
• pursuit of opportunities - capitalizing on
environmental change to create value
• innovation - introducing new approaches to
satisfy unfulfilled market needs
• growth - not content to remain small
–will continue to be important in all societies
–will influence profit and not-for-profit
organizations
© Prentice Hall, 2002 2-2-2929

30. Current Trends And Issues (cont.)
• Managing in an E-Business World
– E-commerce - any form of business exchange or
transaction in which parties interact electronically
– E-business - comprehensive term describing the way an
organization does its work by using electronic (Internet-
based) linkages with key constituencies
• may include e-commerce
• three categories reflect different degrees of involvement in
e-business
– intranet - an internal organizational communication
system that uses Internet technology and is accessible
only by organizational employees
© Prentice Hall, 2002 2-2-3030

31. Types of E-Commerce Transactions
E-Commerce
Business-to-Consumer
(B2C)
Electronic retailing
Government-to-Business
(G2B)
All transactions between
companies and
government agencies
Business-to-Business
(B2B)
All transactions between a
company and its suppliers
Consumer-to-Consumer
(G2C)
Electronic markets formed
by Web-based auctions
© Prentice Hall, 2002 2-2-3131

32. Categories of E-Business Involvement
E-business units
within
traditional
organization
E-business-enhanced
Organization
E-business tools
and applications
used within tradi-
tional organization
E-business-enabled
Organization
Organization’s entire work
processes revolve around
e-business model
© Prentice Hall, 2002 2-2-3232

33. Current Trends And Issues (cont.)
• Need for Innovation and Flexibility
– without a constant flow of new ideas, an organization is doomed
to obsolescence or even worse
– must be flexible to accommodate changing customers’ needs,
appearance of new competitors, and shifting employees from
project to project
• Quality Management
– Total Quality Management (TQM) - philosophy of management
based on continual improvement and responding to customer
needs and expectations
– customer - refers to internal and external entities that interact
with the organization’s product or service
© Prentice Hall, 2002 2-2-3333

34. EXHIBIT 2.8: WHAT IS TQM?
© Prentice Hall, 2002 2-2-3434

35. Current Trends And Issues (cont.)
• Learning Organizations and Knowledge Management
– learning organization - one that has developed the capacity to
continuously learn, adapt, and change
– create learning capabilities throughout the organization
• understanding that knowledge is an important resource
– knowledge management - involves cultivating a learning culture
where organizational members systematically gather knowledge
and share it with others in the organization so as to achieve better
performance
– managers must transform themselves from bosses to team
leaders
• learn to listen, motivate, coach, and nurture
© Prentice Hall, 2002 2-2-3535

36. EXHIBIT 2.9: LEARNING ORGANIZATION VERSUS TRADITIONAL
ORGANIZATION
© Prentice Hall, 2002 2-2-3636

37. Current Trends And Issues (cont.)
• Workplace Spirituality
– “a recognition of an inner life that nourishes and is nourished by
meaningful work that takes place in the context of community”
– growing interest in spirituality at work by workers at all levels and
in all areas of organizations
• employees looking for meaning, purpose, and a sense of
connectedness or community from their work and their
workplace
– uncertainty in business environment contributes to interest in
workplace spirituality
© Prentice Hall, 2002 2-2-3737