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The Importance of Theory and HistoryWhy Theory? Theory: a conceptual framework for organizing knowledge and providing a blueprint for action. Management theories are grounded in reality. Managers develop their own theories about how they should run their organizations. Why History? Understanding historical developments in management aids managers in the development of management practices and in avoiding the mistakes of others. Copyright © Houghton Mifflin Company. All rights reserved.
Theories of ManagementScientific Administrative Behavioral Quantitative Systems Contingency Book Organization Classical - Scientific/Administrative Behavioral - Human Relations/Organizational Behavior Quantitative - Management Science/Operations Management Integrative - Systems/Contingency Copyright © Houghton Mifflin Company. All rights reserved. 4
Scientific ManagementConcerned with improving the performance of individual workers (i.e., efficiency). Grew out of the industrial revolution’s labor shortage at the beginning of the twentieth century. Frederick Taylor (1856–1915) “Father of Scientific Management.” Replaced rule-of-thumb methods with scientifically-based work methods to eliminate “soldiering.” Believed in selecting, training, teaching, and developing workers. Used time studies, standards planning, exception rule, slide-rules, instruction cards, and piece-work pay systems to control and motivate employees. Copyright © Houghton Mifflin Company. All rights reserved. 5
Other Scientific Management PioneersFrank ( )and Lillian ( ) Gilbreth Husband and wife team of industrial engineer Used motion pictures to study movements Reduced the number of movements in bricklaying, resulting in increased output of 200%. Applied their ideas to raising their 12 children-documented their experience in the book and original movie-Cheaper by the Dozen Copyright © Houghton Mifflin Company. All rights reserved. 9
Administrative ManagementFocuses on managing the total organization rather than individuals. Henri Fayol Helped to systematize the practice of management (14 Principles of Management) Was first to identify the specific management functions of planning, organizing, leading, and controlling. Max Weber His theory of bureaucracy is based on a rational set of guidelines for structuring organizations. Copyright © Houghton Mifflin Company. All rights reserved. 12
Fayol’s 14 Principles of ManagementSpecialization of labor Specializing encourages continuous improvement in skills and the development of improvements in methods. Authority The right to give orders and the power to exact obedience. Discipline No slacking, bending of rules. The workers should be obedient and respectful of the organization. Unity of command Each employee has one and only one boss. Unity of direction A single mind generates a single plan and all play their part in that plan. Subordination of When at work, only work things should Individual Interests be pursued or thought about Remuneration Employees receive fair payment for services, not what the company can get away with. Centralization Consolidation of management functions. Decisions are made from the top. Line of Authority Formal chain of command running from top to bottom of the organization, like military Order All materials and personnel have a prescribed place, and they must remain there. Equity Equality of treatment (but not necessarily identical treatment) Personnel Tenure Limited turnover of personnel. Lifetime employment for good workers. Initiative Thinking out a plan and do what it takes to make it happen. Esprit de corps Harmony, cohesion among personnel. Copyright © Houghton Mifflin Company. All rights reserved.
Weber’s Bureaucracy Division of Labor Authority HierarchyJobs broken down into simple, routine, and well-defined tasks Authority Hierarchy Positions organized in a hierarchy with clear chain of command Formal Selection People selected for jobs based on technical qualifications Formal Rules and Regulations System of written rules and standard operating procedures Impersonality Uniform application of rules and controls, not according to personalities Copyright © Houghton Mifflin Company. All rights reserved.
Behavioral ManagementEmphasized individual attitudes and behaviors, and group processes. Recognized the importance of behavioral processes in the workplace. Human Relations Movement - Early Movement, Simplistic - Maslow’s Hierarchy of Needs, McGregor’s Theory X & Y Organizational Behavior Current Movement, Broader Looks at Individual and Group Behavior Goal is to Explain, Predict and Influence Behavior Copyright © Houghton Mifflin Company. All rights reserved. 21
The Hawthorne Studies Conducted by Elton Mayo and associates at Western Electric (1927–1935) Illumination study of changes in workplace lighting unexpectedly affected both the control group and the experimental group of production employees. Group study—the effects of a piecework incentive plan on production workers. Workers established informal levels of acceptable individual output; over-producing workers (“rate busters”) and under-producing workers (“chiselers”). Interview program Confirmed the importance of human behavior in the workplace. Copyright © Houghton Mifflin Company. All rights reserved. 21
Quantitative ManagementFocuses on decision making, economic effectiveness, mathematical models, and the use of computers to solve quantitative problems. Management Science Operations Management Copyright © Houghton Mifflin Company. All rights reserved. 31
Systems Theory Systems Perspective Open system Closed systemA system is an interrelated set of elements functioning as a whole. Open system An organization that interacts with its external environment. Closed system An organization that does not interact with its environment. Subsystems The importance of subsystems is due to their interdependence on each other within the organization. Copyright © Houghton Mifflin Company. All rights reserved. 34
Systems Perspective Synergy EntropySubsystems are more successful working together in a cooperative and coordinated fashion than working alone. The whole system (subsystems working together as one system) is more productive and efficient than the sum of its parts. Entropy A normal process in which an organizational system declines due to failing to adjust to change in its environment Entropy can be avoided and the organization re-energized through organizational change and renewal. Copyright © Houghton Mifflin Company. All rights reserved. 37
The Contingency PerspectiveSuggests that each organization is unique. The appropriate managerial behavior for managing an organization depends (is contingent) on the current situation in the organization. Copyright © Houghton Mifflin Company. All rights reserved.
Contemporary Management Issues and ChallengesContemporary Management Challenges An erratic economy that limits growth Management of an increasingly diverse workforce Employee privacy Technology that promotes telecommuting The role of the Internet in business strategy Operating and competing in diverse global markets Ethics in corporate governance and social responsibility Quality as the basis for competition The shift toward a service economy Copyright © Houghton Mifflin Company. All rights reserved.
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