Lecture 3 : 06.10.

2012

Human Relations Management Theory

Chandrasen Kumar, Faculty, Institute of Food Security Food Corporation of India

1 11/11/2012

O VERVIEW
Review of discussions from Lecture 2 : 09.09.2012 Overview of todays lecture: Discussion on remaining part of the lecture Experience sharing If time permit we shall discuss Human relations Management Theory which is an important aspecvt of Management theory

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W HAT IS M ANAGEMENT ?
Management is the process of designing and maintaining an environment in which individuals, working together in groups, accomplish efficiently selected aims.
Everybody (all managers) carries out managerial functions of planning, organizing, staffing, staffing and leading Applies to all kind of organizations Applies to managers at all levels All managers aim is to create surplus It is concerned with productivity that implies effectiveness and efficiency
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F UNCTIONS

OF

M ANAGEMENT
Staffing

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T HE D EVELOPMENT OF M ANAGEMENT T HEORY

Up to the 20th century (pre-modern era)

Adam smiths contribution to the field of management Industrial revolutions influence on management practices Scientific management General administrative theory The human resources approach The quantitative approach The process approach The systems approach The contingency approach

In the early 20th century

From the later 20th century to the present

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A DAM S MITH S C ONTRIBUTION TO THE F IELD OF M ANAGEMENT

The general popularity today of job specialization is undoubtedly due to Smiths view about division of labor.
Division of labor is the breakdown of jobs into narrow, repetitive tasks.

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I NDUSTRIAL R EVOLUTION S I NFLUENCE ON M ANAGEMENT P RACTICES

Industrial Revolution has originated in late-18thcentury Great Britain, and crossed the Atlantic to America by the end of the Civil War. Because of the Industrial Revolution, machine power was rapidly substituted for human power, which made it economical to manufacture goods in factories. With the development of big organizations, a formal theory to guide managers running these organizations efficiently and effectively was needed.
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T HE D EVELOPMENT OF M ANAGEMENT T HEORY

Up to the 20th century

Adam smiths contribution to the field of management Industrial revolutions influence on management practices
Scientific management General administrative theory The human resources approach The quantitative approach The process approach The systems approach The contingency approach

In the early 20th century

From the later 20th century to the present

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S CIENTIFIC M ANAGEMENT

Frederick Taylor

Frederick Taylor was called as the father of Scientific management. His book The Principles of Scientific management was published in 1911. Immediately, its contents became widely accepted by managers throughout the world.

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B ACKGROUND T IME

OF

T HAT

There were no clear concepts of responsibilities to workers and managers.

No effective work standards existed. Management decisions were based on hunch and intuition. Workers were placed on jobs with little or no concern for matching their abilities and aptitudes with the tasks required. Managers and workers considered themselves to be in continual conflictany gain by one would be at the expense of the other.
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TAYLOR S F OUR P RINCIPLES OF M ANAGEMENT

Develop a scientific way for each element of an individuals work, which replaces the old rule-ofthumb method. Scientifically select and then train, teach, and develop the worker. Heartily cooperate with the workers so as to ensure that all work is done in accordance with the scientific way that has been developed. Divide work and responsibility almost equally between managers and workers. Managers take over all work for which it is better fitted than the workers.
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T HE D EVELOPMENT OF M ANAGEMENT T HEORY

Up to the 20th century

Adam smiths contribution to the field of management Industrial revolutions influence on management practices Scientific management General administrative theory The human resources approach The quantitative approach

In the early 20th century

From the later 20th century to the present

The process approach The systems approach The contingency approach

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G ENERAL A DMINISTRATIVE T HEORY

Herial Fayols contributions

He argued that management was an activity common to all human undertakings in business, in government, and even in the home. He stated 14 principles of managementfundamental or universal truths.

Max Webers contributions

Weber developed a theory of authority structures and described organizational activity on the basis of authority relations. He described an ideal type of organization that he called a bureaucracy, characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships.
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FAYOL S 14 P RINCIPLES OF M ANAGEMENT

1. Division of Work 2. Authority 3. Discipline 4. Unity of Command 8. Centralization 9. Scalar Chain 10. Order 11. Equity 12. Stability of Tenure of Personnel

5. Unity of Direction

6. Subordination of Individual Interests to the 13. Initiative General Interest 14. Esprit de corps 7. Remuneration

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W EBER S I DEAL B UREAUCRACY

Division of labor Authority hierarchy Formal selection Formal rules and regulations Impersonality

Career orientation

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T HE D EVELOPMENT OF M ANAGEMENT T HEORY

Up to the 20th century (pre-modern era)

Adam smiths contribution to the field of management Industrial revolutions influence on management practices Scientific management General administrative theory The human resources approach The quantitative approach The process approach The systems approach The contingency approach

In the early 20th century

From the later 20th century to the present

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T HE H UMAN R ESOURCES A PPROACH

Hawthorne Studies Human Relations Movement

Dale Carnegie Abraham Maslow

Douglas McGregor

Behavior Science

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H AWTHORNE S TUDIES

Time: 1924the early 1930s Place: Hawthorne plant in the Western Electric Company Designer: Western Electric industrial engineers
Elton Mayo and his associates

Mayos Finding:

Behavior and sentiments are closely related. Group influences significantly affect individual behavior. Group standards establish individual worker output. Money is less a factor in determining output than are group standards, group sentiments, and security.

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T HE D EVELOPMENT OF M ANAGEMENT T HEORY

Up to the 20th century (pre-modern era)

Adam smiths contribution to the field of management Industrial revolutions influence on management practices Scientific management General administrative theory The human resources approach The quantitative approach The process approach The systems approach The contingency approach

In the early 20th century

From the later 20th century to the present

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T HE Q UANTITATIVE A PPROACH
What are quantitative approaches?
The quantitative approach to management, sometimes referred to as operations research (OR) or management science. It includes applications of statistics, optimization models, information models, and computer simulations, linear programming, and so on, which can be used to solve management problems.
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T HE Q UANTITATIVE A PPROACH

How have they contributed to current management practice?

In general, the quantitative approaches have contributed directly to management decision making, particularly to planning and control decisions.

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T HINKING P ROBLEMS

What stimulated the classical approach (scientific management and general administrative theory)?

What stimulated the human resource approach?

What stimulated the quantitative approach?

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T HE D EVELOPMENT OF M ANAGEMENT T HEORY

Up to the 20th century (pre-modern era)

Adam smiths contribution to the field of management Industrial revolutions influence on management practices Scientific management General administrative theory The human resources approach The quantitative approach The process approach The systems approach The contingency approach

In the early 20th century

From the later 20th century to the present

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T HE S YSTEMS A PPROACH

Whats the system approach?

Two basic types of the system: closed and open
Closed systems are not influenced by and do not interact with their environment. In contrast, an open system dynamically interacts with its environment.

An organization is an open system The operating model in organizational systems

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W HAT S THE S YSTEM A PPROACH ?

The system approach defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Societies are systems and so, too, are computers, automobiles, organizations, and animal and human bodies.

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A N O RGANIZATION I S O PEN S YSTEM

AN

An organization is a system that interacts with and depends upon its environment.
Organizations stakeholders:any group that is affected by organizational decisions and policies. The managers job is to coordinate all stakeholders to achieve the organizations goals.

Organizational survival often depends on successful interactions with the external environment.
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T HE O PERATING M ODEL IN O RGANIZATIONAL S YSTEM

Input

Transformation

Output

Feedback

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T HE

SYSTEMS APPROACH

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T HE D EVELOPMENT OF M ANAGEMENT T HEORY

Up to the 20th century (pre-modern era)

Adam smiths contribution to the field of management Industrial revolutions influence on management practices Scientific management General administrative theory The human resources approach The quantitative approach The process approach The systems approach The contingency approach

In the early 20th century

From the later 20th century to the present

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F OUR P OPULAR C ONTINGENCY VARIABLES :

Organization size
Routineness of task technology Environmental uncertainty Individual differences

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P RACTICES

Whats the Taylors four principles of management? Whats the 14-principles of management?

Whats the Mayos Finding?

What are stakeholders? Which critical contingency variables organizations have?

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PREVIEW

Review Classical Theories of Organizations

Taylors Theory of Scientific Management Fayols Administrative Theory Webers Theory of Bureaucracy

Humanistic Theories of Organizations

Human Relations Theory

The Hawthorne Studies Chester Barnard McGregors Theory X and Theory Y Likerts Systems Theory (Four Systems of Management) Blake and Moutons (Blake and McCanse) Managerial Grid

Human Resources Theory

C LASSICAL T HEORIES R EVIEWED

Classical Theories of Organizations (p. 36) Taylors Theory of Scientific Management (tasks) Fayols Administrative Theory (mgmt) Webers Theory of Bureaucracy (org structure) All 3 theories attempt to enhance managements ability to predict and control the behavior of their workers Considered only the task function of communication (ignored relational and maintenance functions of communication) Designed to predict and control behavior in organizations

C LASSICAL VS . H UMANISTIC

Classical theories emphasized coercion, control, and punishment (FOCUS ON TASKS /PRODUCTION).

Maintain predictability and control Decision-making power at top of hierarchy Minimize input from lower-level employees Rely on science and rules to guide behavior Regulate communication to increase predictability and decrease misunderstandings Result:

Workers feel they have no control over their work situation Management does not care about their ideas Feelings and ideas of workers are unimportant

Humanistic theories were developed to promote the CONCERNS of the individual worker in an atmosphere that was too focused on production (FOCUS ON RELATIONAL & MAINTENANCE FUNCTIONS)

P RINCIPLES

OF

H UMAN R ELATIONS

T HEORY

Human relations theory is characterized by a shift in emphasis from TASK to WORKER Go beyond physical contributions to include creative, cognitive, and emotional aspects of workers Based on a more dyadic (two-way) conceptualization of communication. SOCIAL RELATIONSHIPS are at the heart of organizational behavior--effectiveness is contingent on the social well-being of workers Workers communicate opinions, complaints, suggestions, and feelings to increase satisfaction and production Origins (Hawthorne Studies & work of Chester Barnard) Human Relations School of Management - Elton Mayo (Harvard

O RIGINS

OF

H UMAN R ELATIONS T HEORY

The Hawthorne Studies

Hawthorne Works of Western Electric Company 1924 - Chicago Research focus: Relation of quality and quantity of illumination to efficiency in industry Four Important Studies

T HE H AWTHORNE S TUDIES

Illumination Study (November 1924)

Designed to test the effect of lighting intensity on worker productivity Heuristic value: influence of human relations on work behavior

Relay Assembly Test Room Study (1927-1932)

Assembly of telephone relays (35 parts - 4 machine screws) Production and satisfaction increased regardless of IV manipulation

Workers increased production and satisfaction related to supervisory practices

Human interrelationships are important contributing factors to worker productivity Bottom Line: Supervisory practices increase employee morale AND productivity

Interviewing Program (1928-1930)

Investigate connection between supervisory practices and employee morale Employees expressed their ideas and feelings (e.g., likes and dislikes) Process more important than actual results

Bank Wiring Room Observation Study (November 1931 - May 1932)

Social groups can influence production and individual work behavior RQ: How is social control manifested on the shop floor? Informal organization constrains employee behavior within formal organizational structure

H AWTHORNE S TUDIES - I MPLICATIONS

Illumination Study (November 1924)

The mere practice of observing peoples behavior tends to alter their behavior (Hawthorne Effect)

Relay Assembly Test Room Study (1927-1932)

Relationships between workers and their supervisors are powerful Human interrelationships increase the amount and quality of worker participation in decision making

Interviewing Program (1928-1930)

Demonstrated powerful influence of upward communication Workers were asked for opinions, told they mattered, and positive attitudes toward company increased

Bank Wiring Room Observation Study (November 1931 - May 1932)

Led future theorists to account for the existence of informal communication

H AWTHORNE S TUDIES - C RITICISMS

Not conducted with the appropriate scientific rigor necessary Too few subjects (N=5) No control groups Subjects replaced with more cooperative participants

WORTHLESS GROSS ERRORS INCOMPETENCE

T HE E MERGENCE

OF

C OMMUNICATION

Chester Barnard Considered a bridge between classical and human relations theories The Functions of the Executive (1938) Argues for . . . strict lines of communication - classical theory a human-based system of organization The potential of every worker and the centrality of communication to the organizing process Six Issues Relevant to Organizational Communication Formal vs. Informal Organization Cooperation Communication Incentives Authority Zone of Indifference

S IX I SSUES R ELEVANT TO O RGANIZATIONAL C OMMUNICATION

Formal vs. Informal Organization

Formal Organization - a system of consciously coordinated activities or forces of two or more persons. (definite, structured, common purpose)

Persons are able to communicate with one another Willing to contribute action To accomplish a common purpose

Informal Organization - based on myriad interactions that take place throughout an organizations history.

Indefinite
Structure less No definite subdivisions of personnel Results: customs, mores, folklore, institutions, social norms, ideals -- may lead to formal organization

Cooperation

Necessary component of formal organization The expression of the net satisfactions or dissatisfactions experienced or anticipated by each individual in comparison with those experienced or anticipated through alternative opportunities Critical to cooperation The most universal form of human cooperation, and perhaps the most complex, is speech The most likely reason for the success of cooperation and the reason for its failure System of communication: known, formal channels which are as direct (short) as possible, where the complete line of communication is used, the supervisory heads must be competent, the line of communication should not be interrupted, and every communication should be authenticated.

Communication

S IX I SSUES R ELEVANT TO O RGANIZATIONAL C OMMUNICATION

Incentives

Should be available Not discussed in detail Associated with securing cooperation for organizational members The interrelationship among the originator of the communication, the communication itself, and the receiver Authority of position OVER Authority of Leadership (knowledge & ability). Marks the boundaries of what employees will consider doing without question, based on expectations developed on entering the organization.

Authority

Zone of Indifference - orders followed

Barnard drew attention away from formal organizational structures toward communication, cooperation, and the informal organization. His work was integrated by other theorists in the human relations movement.

T HEORY X

AND

T HEORY Y: D OUGLAS M C G REGOR

Douglas McGregor (1906-1964)

Articulated basic principles of human relations theory The Human Side of Enterprise (1960, 1985) To understand human behavior, one must discover the theoretical assumptions upon which behavior is based Especially interested in the behavior of managers toward workers Every managerial act rests on assumptions, generalizations, and hypotheses--that is to say, on theory . . . Theory and practice are inseparable. Two Objectives: Predict and control behavior Tap Unrealized potential
Theory X - Classical Theory

Theory Y - Human Relations Theory

FOCUS: Managers assumptions about HUMAN NATURE

T HEORY X

AND

T HEORY Y: D OUGLAS M C G REGOR

Theory X - Classical Theory

Three Assumptions

The average human being has an inherent dislike of work and will avoid it. Most people must be coerced, controlled, directed, and threatened with punishment The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, wants security.

Neither explains nor describes human nature Assumptions

Theory Y - Human Relations Theory

Physical and mental effort in work is similar to play / rest. External control and the threat of punishment are not the only strategies Commitment to objectives is a function of the rewards associated with their achievement

The average human being learns, under proper conditions, not only to accept but to seek responsibility
The capacity to exercise a high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely distributed in the population Intellectual potentialities of the average human being are underutilized

A more positive perspective of human nature The KEY to control and quality production is commitment to organizational objectives

T HEORY Y P ROTOTYPE : T HE S CANLON P LAN

Participative Management Two Central Features

Cost-reduction sharing for organizational members - sharing the economic gains from improvements in organizational performance Effective participation - a formal means of providing opportunities to every member of the organization to contribute ideas for improving organizational effectiveness.

Must be implemented appropriately Wastes time and undermines managerial power? Magic formula for every organizational problem? CONCERN for RELATIONSHIPS in the organization. As the need to increase commitment grows, so does the need to develop strong, communication-based relationships among organizational members, particularly between supervisor and subordinate.

M ILES H UMAN R ESOURCES T HEORY

Difficult to adopt principles of human relations theory -- misapplications and misunderstandings of both classical theory and human relations theory led to Human Resources Theory The key element to Human Relations Theory, participation, was used only to make workers feel as if they were part of the organizational decision-making processes Key to classical and human relations theory is compliance with managerial authority Workers are told that they are important but were not treated as such Major Distinctions between Human Resources and Human Relations Theory

All people (not just managers) are reservoirs of untapped resources - manager responsibility to tap physical and creative resources Many decisions can be made more effectively and efficiently by workers most directly involved with their consequences

Relationship between employee satisfaction and performance - improved satisfaction and morale contribute back to improved decision making and control

M ILES H UMAN R ESOURCES T HEORY

Increased satisfaction is related to the improved decision making and self-control that occurs due to participation that is genuinely solicited and heard Two prevalent Human Resources Theories

Rensis Liker Blake & Mouton (Blake & McCanse)

Four Systems of Management: Rensis Likert (Figure 3.2, p. 56)

Management is crticial to all organizational activities and outcomes Continuum that ranges from more classically oriented system to one based on human resources theory Of all the tasks of management, managing the human component is the central and most important task High producing departments and organizations tend toward System IV; low producing units favor System I

System I - Exploitative Authoritative System II - Benevolent Authoritative System III - Consultative

System IV - Participative

B LAKE

AND

M OUTON S M ANAGERIAL G RID

Stresses interrelationship between production (task) and people Managements main purpose is to promote a culture in the organization that allows for high production at the same time that employees are fostered in their professional and personal development Managerial Grid - now Leadership Grid (Blake & McCanse) (Figure 3.3, p. 59) FOCUS: Mangers Assumptions about CONCERN for PEOPLE and CONCERN for PRODUCTION Concern for PEOPLE

Degree of personal commitment to ones job Trust-based accountability (vs. obedience-based accountability) Self-esteem for the individual Interpersonal relationships with co-workers Use of people and technology to accomplish organizational tasks Concern for is not about quantity or quality

Concern for PRODUCTION

Assessment instrument does not represent personality traits of the manager -instead, indicate a specific orientation to production and people

B LAKE

AND

M OUTON S M ANAGERIAL G RID

Authority Compliance (9,1) Classical theory Country Club (1,9) Informal grapevine Impoverished (1,1) Laissez-faire Middle-of-the-Road (5,5) Compromise (carrot & stick) Team (9,9) Human Resources Approach Promote the conditions that integrate creativity, high productivity, and high morale through concerted team action

SUMMARY

Humanistic Theories of Organizations

Human Relations Theory

The Hawthorne Studies Chester Barnard McGregors Theory X and Theory Y

Likerts Systems Theory (Four Systems of Management) Blake and Moutons (Blake and McCanse) Managerial Grid

Human Resources Theory

The principles of human resources theory attempt to integrate the concern for production from classical theory with the concern for the worker from human relations theory -- more effective and satisfying!