1. The Evolution of Management Thinking CHAPTER 2

2. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 2 Learning Objectives Understand how historical forces influence the practice of management. Identify and explain major developments in the history of management thought. Describe the major components of the classical and humanistic management perspectives. Discuss the management science perspective and its current use in organizations.

3. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 3 Learning Objectives (contd.) Explain the major components of systems theory, the contingency view, and total quality management. Describe the learning organization and the changes in structure, empowerment, and information sharing that managers make to support it. Discuss the technology-driven workplace and the role of outsourcing, supply chain management, enterprise resource planning, knowledge management systems, and customer relationship management.

4. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 4 Management and Organization Management philosophies and organization forms change over time to meet new needs Some ideas and practices from the past are still relevant and applicable to management today

5. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 5 Historical Perspective Provides a context or environment Develops an understanding of societal impact Achieves strategic thinking Improves conceptual skills Social, political, and economic forces have influenced organizations and the practice of management

6. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 6 Forces Influencing Organizations and Management Social Forces - values, needs, and standards of behavior Political Forces - influence of political and legal institutions on people & organizations Economic Forces - forces that affect the availability, production, & distribution of a society’s resources among competing users

7. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 7 Management Perspectives Over Time Exhibit 2.1

8. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 8 Classical Perspective: 3000 B.C. ● Rational, scientific approach to management – make organizations efficient operating machines ● Scientific Management ● Bureaucratic Organizations ● Administrative Principles

9. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 9 Scientific Management: Taylor 1856-1915 General Approach Developed standard method for performing each job. Selected workers with appropriate abilities for each job. Trained workers in standard method. Supported workers by planning work and eliminating interruptions. Provided wage incentives to workers for increased output.

10. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 10 Scientific Management Contributions Demonstrated the importance of compensation for performance. Initiated the careful study of tasks and jobs. Demonstrated the importance of personnel and their training. Criticisms Did not appreciate social context of work and higher needs of workers. Did not acknowledge variance among individuals. Tended to regard workers as uninformed and ignored their ideas

11. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 11 Bureaucratic Organizations Max Weber 1864-1920 Prior to Bureaucracy Organizations – European employees were loyal to a single individual rather than to the organization or its mission – Resources used to realize individual desires rather than organizational goals Systematic approach –looked at organization as a whole

12. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 12 Characteristics of Weberian Bureaucracy Positions organized in a hierarchy of authority Managers subject to Rules and procedures that will ensure reliable predictable behavior Personnel are selected and promoted based on technical qualifications Administrative acts and decisions recorded in writing Management separate from the ownership of the organization Division of labor with Clear definitions of authority and responsibility Exhibit 2.3

13. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 13 Administrative Principles Contributors: Henri Fayol, Mary Parker Follett, and Chester I. Barnard Focus: – Organization rather than the individual – Delineated the management functions of planning, organizing, commanding, coordinating, and controlling

14. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 14 Henri Fayol 1841-1925 Examples of General Principles of Management Division of work Unity of command Unity of direction Scalar chain

15. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 15 Mary Parker Follett 1868-1933 Importance of common super-ordinate goals for reducing conflict in organizations – Popular with businesspeople of her day – Overlooked by management scholars – Contrast to scientific management – Reemerging as applicable in dealing with rapid change in global environment Leadership – importance of people vs. engineering techniques Ethics - Power - Empowerment

16. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 16 Chester Barnard 1886-1961 Informal Organization – Cliques – Naturally occurring social groupings Acceptance Theory of Authority – Free will – Can choose to follow management orders

17. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 17 Humanistic Perspective Emphasized understanding human behavior, needs, and attitudes in the workplace Human Relations Movement Human Resources Perspective Behavioral Sciences Approach

18. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 18 Human Relations Movement Emphasized satisfaction of employees’ basic needs as the key to increased worker productivity

19. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 19 Started in 1895 Four experimental & three control groups Five different tests Test pointed to factors other than illumination for productivity 1st Relay Assembly Test Room experiment, was controversial, test lasted 6 years Interpretation, money not cause of increased output Factor that increased output, Human Relations Hawthorne Studies

20. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 20 Human Resource Perspective Suggests jobs should be designed to meet higher-level needs by allowing workers to use their full potential

21. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 21 Abraham Maslow 1908-1970 Identified a hierarchy of needs Problems stem from an inability to satisfy one’s needs

22. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 22 Dislike work –will avoid it Must be coerced, controlled, directed, or threatened with punishment Prefer direction, avoid responsibility, little ambition, want security Do not dislike work Self direction and self control Seek responsibility Imagination, creativity widely distributed Intellectual potential only partially utilized Douglas McGregor Theory X & Y 1906-1964 Theory X AssumptionsTheory Y Assumptions

23. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 23 Behavioral Sciences Approach Applies social science in an organizational context Draws from economics, psychology, sociology, anthropology, and other disciplines – Understand employee behavior and interaction in an organizational setting – OD – Organization Development Sub-field of the Humanistic Management Perspective

24. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 24 Management Science Perspective Emerged after WW II Applied mathematics, statistics, and other quantitative techniques to managerial problems  Operations Research – mathematical modeling  Operations Management – specializes in physical production of goods or services  Information Technology – reflected in management information systems

25. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 25 Recent Historical Trends ● Systems Theory ● Contingency View ● Total Quality Management (TQM)

26. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 26 Systems View of Organizations Exhibit 2.5

27. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 27 Contingency View of Management Exhibit 2.6

28. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 28 TQM Focuses on managing the total organization to deliver quality to customers. Four significant elements are – Employee involvement – Focus on the customer – Benchmarking – Continuous improvement

29. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 29 Elements of a Learning Organization Learning Organization Open Information Empowered Employees Team-Based Structure Exhibit 2.7

30. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. 30 Types of E-Commerce Business-to-Consumer B2C Selling Products and Services Online Business-to-Business B2B Transactions Between Organizations Consumer-to-Consumer C2C Electronic Markets Created by Web-Based Intermediaries Exhibit 2.8