The Evolution of Management Theory

Why study management theory? Theories provide a stable focus for understanding what we experience Theories enable us to communicate efficiently and thus move into more and more complex relationships with other people They help us to keep learning about our world (When theories dont match our experiences, Globalizations, Internet)

Early thinking about Management

Chinese philosopher Sun Tzus dictums

1. When the enemy advances, we retreat! 2. When the enemy halts, we harass! 3. When the enemy seeks to avoid battle, we attack! 4. When the enemy retreats, we pursue!

Early thinking about Management

Machiavelli (1531)

An organization is more stable if members have the right to express their differences and solve their conflicts within it While one person can begin an organization, it is lasting when it is left in the care of many and when many desire to maintain it. A weak manager can follow a strong one, but not another weak one and maintain authority. A manager seeking to change an established organization should retain at least a shadow of the ancient customs.

Schools of Management
Scientific Management Need to increase productivity Classical Organization Theory School Need to find guidelines for managing such complex organizations as factories
The Behavioural School

Emerged partly because the classical approach did not achieve sufficient production efficiency and workplace harmony The Management Science School Approaching management problems through the use of mathematical techniques for their modeling, analysis and solution The systems approach View of the organization as a unified, directed system of interrelated parts

Scientific Management
Fredrick Winslow Taylor Was an American mechanical engineer who sought to improve industrial efficiency
The father of scientific management Published Principles of Scientific Management (1911)
The theory of scientific management:
Using scientific methods to define the one best way for a job to be done Putting the right person on the job with the correct tools and equipment Having a standardized method of doing the job Providing an economic incentive to the worker

 Limitations of scientific management theory Workers were treated as machines and not humans) Management stereotyped workers and did not allow them to prove their skills in other areas. Workers were not allowed to form innovative ways to perform their tasks. Workers and unions began to oppose the approach of increasing productivity as they feared that working harder or faster would lead to layoffs. Criticism of speed up conditions that placed undue pressures on employees to perform at faster and faster levels. Emphasis on productivity lead some managers to exploit both workers and customers Lead to pattern of suspicion and mistrust

Contributors to Scientific Management Theory

Henry L. Gantt Industrial Efficiency: Industrial efficiency can only be produced by the application of scientific analysis to all aspects of the work in progress. The industrial management role is to improve the system by eliminating chance and accidents. The Task And Bonus System: He linked the bonus paid to managers to how well they taught their employees to improve performance. The social responsibility of business: He believed that businesses have obligations to the welfare of society that they operate in. Abandoned the differential rate system as having too little motivational impact Every worker who finished a days assigned work load win a 50 cent bones.

Henry L. Gantt (cont)

The supervisor would earn a bonus for each worker who reached the daily standard plus an extra bonus if all the workers reached it. Every workers progress was rated publicly and recorded on individual bar charts Gantt originated a charting system for production scheduling which became the basis for Program (or Project) Evaluation and Review Technique (PERT) and Critical Path Method (CPM)

Contributors to Scientific Management Theory

The Gilberths Frank B. and Lillian M. Gilberth They saw their approach as more concerned with workers' welfare than Taylorism, which workers themselves often perceived as primarily concerned with profit. This difference led to a personal rift between Taylor and the Gilbreths which, after Taylor's death, turned into a feud between the Gilbreths and Taylor's followers. Collaborated on fatigue and motion studies and focused on ways of promoting the individual workers welfare.

Contributors to Scientific Management Theory

The ultimate aim of scientific management was to help workers reach their full potential as human beings Motion and fatigue were intertwined every motion that was eliminated reduced fatigue. Using motion pictures cameras, they tried to find the most economical motions for each task in order to upgrade performance and reduce fatigue They argued that motion study would raise worker morale because of its obvious physical benefit and because it demonstrated managements concern for worker

Classical Organization Theory School

Classical organization theory grew out of the need to find guidelines for managing such complex organizations as factories Max Weber Developed a theory of authority based on an ideal type of organization (bureaucracy) Emphasized rationality, predictability, German political impersonality, technical competence, economist and and authoritarianism. sociologist He stressed on technical competence and performance evaluations to be made entirely on the basis of merit.

14 principles of Henry Fayol

1 Division of work the emphasis was on specialisation for greater efficiency. This has been replaced by high levels of multiskilling. 2 Authority the right to issue commands. This must go along with the responsibility for the consequences. 3 Discipline employees will only obey orders if management provides good leadership.

14 principles of Henry Fayol

4 Unity of command No man can be the slave of two masters. 5 Unity of direction while there is always the risk of rigidity, there must be a unity of purpose and goal congruence. The plan must be agreed and have support at all levels. Communication is very important, both up and down the hierarchy. 6 Subordination of the individual interest to the corporate good. The goals of the firm are always paramount. There can be no room for loose cannons on deck. 7 Remuneration Fayol was a pragmatist. He argued from empirical evidence and ultimately conceded that there is no such thing as a perfect system. Sixty years later, Charles Handy emphasised that money was a precise, uniquely quantifiable motivator.

14 principles of Henry Fayol

8 Centralisation/decentralisation whatever was appropriate. 9 Scalar chain a hierarchy was necessary for communication, but it should not be rigid, nor should it preclude/prevent horizontal communication. 10 Order Fayol advocated both material and social order. It is possible in the former he anticipated the ideas of MRP and JIT, essential to businesses of all sizes. The latter suggests an almost Darwinian approach to recruitment. While the selection of good people is ideal, often a small business may not have the option. It will be unable to sustain passengers. What it will do is make people grow.

14 principles of Henry Fayol

11 Equity This is essential and developed by a combination of justice and understanding. Townsend once wrote Everybody must be judged on his performance, not on his looks, manners, personality or connections. 12 Stability of tenure Success tends to go with more stable managerial structures. There is certainly no place in the small, battling business for the frustrated chess player.

14 principles of Henry Fayol

13 Initiative - Close to this must be freedom to think and the ability to see beyond the existing horizon. 14 Esprit de corps Morale must be fostered and to survive, a small company must have high morale at all times. This means that the talent at the top must have the ideas, as well as the ability to pull people along with him. Successful ideas can fail if the ability to lead people is absent.

 Mary Parker Follett Built on the basis framework of the classical school She introduced many new elements especially in the area of human relations and organizational structure. She believed that no one could become a whole person except as a member of a group Human beings grew through their relationships with others in organizations (Believed in power of groups) She called management the art of getting things done through people. Her holistic model of control took into account not just individuals and groups but the effects of environment factors as politics, economics and biology

 Chester I. Barnard People come together in formal organizations to achieve ends they cannot accomplish working alone. But as they pursue the organization's goals, they must also satisfy their individual needs

Barnard taught that the three top functions of the executive were to (l) establish and maintain an effective communication system, (2) hire and retain effective personnel, and (3) motivate those personnel.

The acceptance of authority depends on four conditions. (1.) Employees must understand what the manager wants them to do. (2.) Employees must be able to comply with the directive. (3.) Employees must think that the directive is in keeping with organizational objectives. (4.) Employees must think that the directive is not contrary to their personal goals. Central thesis: An organization can operate efficiently and survive only when the organizations goals are kept in balance with the aims and needs of the individuals working for it.

 Bernard asked the managers to understand employees zone of indifference i.e. what the employee would do without questioning the managers authority The more activities that fell within an employee's zone of indifference, the smoother and more cooperative an organization would be.

 THE BEHAVIOURAL ORGANIZATION IS PEOPLE

SCHOOL:

THE

This school emerged partly because the classical approach did not achieve sufficient production efficiency and workplace harmony People always do not follow a predicted or expected patterns of behaviour The Human Relations Movement Human relations the ways in which managers interact with their employees The Hawthorne experiments

The Hawthorne Studies

A series of productivity experiments conducted at Western Electric from 1927 to 1932 (Elton Mayo) Relationship between lightning and productivity Experiment 1: Unequal lightning Experiment 2: Small groups in control rooms Higher wages, flexible work schedules and rest hours, shortened work day and week Experimental findings Productivity unexpectedly increased under imposed adverse working conditions. Research conclusion .

The experiment
6 women from an assembly line

Segregated them from the rest of the factory

Put them under the eye of a supervisor (a friendly observer) Made frequent changes to their working conditions Always discussed and explained the changes in advance

The changes
Changed the hours in the working week and in the working day Increased and decreased the number of work breaks and the time of the lunch hour Occasionally he would return the women to their original, harder working conditions

Research conclusion
Work is a group activity. The social world of an adult is primarily patterned by their work activity. The need for recognition, security and belonging is more important than physical conditions of the work environment. A complaint is commonly a symptom manifesting disturbance of an individuals current position. An employee is a person whose attitudes and effectiveness are conditioned by social demands from both outside and inside work environment.

Social norms, group standards and attitudes more strongly influence individual output and work behavior than do monetary incentives

The Management Science School

Originated in Great Britain during war Based on numbers Operations research teams consisting of Mathematicians, Physicians and other scientists) OR procedures were used for civil purposes after the world war II and were called the Management Science School Use of computers and communication devises helped to its popularity Criticism It pays less attention to relationships in the organizations It emphasis only the aspects of organization that can be captured in numbers, missing the importance of people and relationships.

The Systems Approach

What is a System?
A collection of parts that operate interdependently to achieve a common purpose.

This approach views the organization as a unified, purposeful system composed of interrelated parts. It gives managers a way of looking at the organization as a whole and as a part of the larger, external environment It believes that activity of one segment of an organizations affects the other. Manufacturing Vs Marketing Systems managers grasp the importance of webs of business relationships

The Systems Approach

System Defined
A set of interrelated and interdependent parts arranged in a manner that produces a unified whole.

Basic Types of Systems

Closed systems
Are not influenced by and do not interact with their environment (all system input and output is internal)

Open systems
Dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments

Implications of the Systems Approach

Coordination of the organizations parts is essential for proper functioning of the entire organization. Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. Organizations are not self-contained and, therefore, must adapt to changes in their external environment.

The Contingency Approach

Also sometimes called the situational approach. There is no one universally applicable set of management principles (rules) by which to manage organizations.

Organizations are individually different, face different situations (contingency variables), and require different ways of managing.

The Contingency Approach

The situational approach to management that replaces more simplistic systems and integrates much of management theory Four popular contingency variables
Organization size (coordination) Routineness of task technology (task complexity dictates structure) Environmental uncertainty (change management) Individual differences (managerial styles , motivational techniques, and job design)

Lessons from the Contingency Approach

Approach emphasizes situational appropriateness rather than rigid adherence to universal principles. Approach creates the impression that an organization is captive to its environment. Approach has been criticized for creating the impression that an organization is a captive of its environment.

Current Trends and Issues

Globalization Ethics Workforce Diversity E-business Knowledge Management Learning Organizations Quality Management

Current Trends and Issues (contd)

Globalization
Management in international organizations Political and cultural challenges of operating in a global market

Ethics
Increased emphasis on ethics education in college curriculums Increased creation and use of codes of ethics by businesses

Current Trends and Issues (contd)

Workforce Diversity Increasing heterogeneity in the workforce More gender, minority, ethnic, and other forms of diversity in employees Aging workforce Older employees who work longer and not retire Increased demand for products and services related to aging

Current Trends and Issues (contd)

E-Business (Electronic Business)
The work preformed by an organization using electronic linkages to its key constituencies E-commerce: the sales and marketing component of an e-business

Categories of E-Businesses
E-business enhanced organization E-business enabled organization Total e-business organization

Current Trends and Issues (contd)

Knowledge Management The cultivation of a learning culture where organizational members systematically gather and share knowledge with others in order to achieve better performance. Learning Organization An organization that has developed the capacity to continuously learn, adapt, and change.

Current Trends and Issues (contd)

Quality Management A philosophy of management driven by continual improvement in the quality of work processes and responding to customer needs and expectations Inspired by the total quality management (TQM) Ideas of Deming and Juran Quality is not directly related to cost.