1. Management: Historical Development

2. The Pre-modern Era Ancient massive construction projects
Egyptian pyramids
Great Wall of China

3. Adam Smith’s Contribution To The Field Of Management
Wrote the Wealth of Nations (1776)
Advocated the economic advantages that organizations and society would reap from the division of labor:
Increased productivity by increasing each worker’s skill and dexterity.
Time saved that is commonly lost in changing tasks.
The creation of labor-saving inventions and machinery.

4. The Industrial Revolution’s Influence On Management Practices
Machine power began to substitute for human power
Lead to mass production of economical goods
Improved and less costly transportation systems became available
Created larger markets for goods.
Larger organizations developed to serve larger markets
Created the need for formalized management practices.

5. Classical Contributions
Classical approach
The term used to describe the hypotheses of the scientific management theorists and the general administrative theorists.
Scientific management theorists
Fredrick W. Taylor and Frank and Lillian Gilbreth,
General administrative theorists
Henri Fayol and Max Weber

6. Management Theory Classical Approaches Behavioral Approaches
Frederick Taylor: Scientific Management (1886)
Frank and Lillian Gilbreth: Time/motion studies (later 1800s)
Henri Fayol: 14 Principles of Management (1880s-1890s)
Max Weber : Bureaucracy (1920s)
Behavioral Approaches
The Hawthorne Experiment (1927)
MacGregor’s Theory X and Theory Y (1960)
Quantitative Approaches
Contemporary Approaches
Ouchi’s Theory Z (1981)
Contingency Management

7. Branches of Classical Theory
Scientific Management
Administrative Theory
Bureaucracy

8. The Evolution of Management Theory

9. Classical Approaches Frederick Taylor: Scientific Management (1886)
Frank and Lillian Gilbreth: Time and motion studies (later 1800s)
Henri Fayol: Fourteen Principles of Management (1880s-1890s)
Max Weber : Bureaucracy (1920s)

10. F.W. Taylor and Scientific Management
Developed Scientific Management
Laid foundation for the study of management
Scientific Management is the systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency.

11. Basics of Scientific Management
The concept of Scientific management implied the application of Science or management
Each task must be scientifically designed so that it can replace the old, rule-of-thumb methods.
Workers must be scientifically selected and trained so that they can be more productive on their job.
Bring the scientifically designed jobs and workers together so that there will be a match between them.
There must be division of labor and cooperation between management and workers.

12. Taylor’s Four Principles of Management
1. Time-and-Motion study:
Study the way workers perform their tasks, gather all the informal job knowledge that workers possess and experiment with ways of improving how tasks are performed.
2. Scientific Task Planning
Scientific task is the amount of work which an average workers can perform during a day under normal working conditions. The ultimate goal is to see that work is done in a logical sequence promoting maximum efficiency.
Standards have to be set in advance for the task, material, work methods, quality, working conditions etc.

13. Taylor’s Four Principles of Management
3. Scientific Selection of Personnel
Put right worker in right job, find limitations, train
Carefully select workers who possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures

14. 4. Differential Piece rate system
Designed to pay based on the actual performance
A system of financial incentives is also needed
In this scheme, a worker who completes the normal work gets wages at high rate per piece than a worker who complete the same within the time limit set by the management.
5. Functional foremanship
In order to achieve better production control, factor is divided into several components, each in charge of a specialist, namely, instruction card clerk, cost & time clerk etc.
These Functional specialist perform the planning function and provide expert advice to workers.
Manager plans, prepares, inspects and Worker does the actual work
Codify the new methods of performing tasks into written rules and standard operating procedures
Division of work between manager and workers

15. Problems with Scientific Management
Managers frequently implemented only the increased output side of Taylor’s plan. (Exploitative device)
Workers did not share in the increased output. (Undemocratic)
Specialized jobs became very boring, dull.
Workers ended up distrusting the Scientific Management method.
Workers could purposely “under-perform.”
Management responded with increased use of machines and conveyors belts.

16. Frank & Lillian Gilbreth
Endorsed piece-work and suggested a higher rate per unit if his directions were followed.
Disagreed with Taylor’s idea that management should choose which workers took which jobs.
Frank and Lillian Gilbreth
Bricklaying efficiency improvements
Time and motion studies (therbligs)

17. Frank & Lillian Gilbreth
Break up and analyze every individual action necessary to perform a particular task into each of its component actions
Find better ways to perform each component action
Reorganize each of the component actions so that the action as a whole could be performed more efficiently-at less cost in time and effort

18. Administrative Management Theory (1. Henri Fayol & 2. Max Weber)
The study of how to create an organizational structure that leads to high efficiency and effectiveness
The theory which explained the process of managing an organization from the top managerial perspective.
An approach that focuses on principles that can be used by managers to coordinate the internal activities of organization.

19. Henri Fayol
Firstly classify business operations into six major activities: Technical, commercial, financial, security, accounting and managerial.
More focused on Management and came up with the five basic functions of management —Planning, Organizing, Commanding, Coordination, and Controlling
First wrote that management is a set of principles which can be learned.
Developed Fourteen Principles of Management

20. Fayol’s Fourteen Principles of Management
Division of work
Authority
Discipline
Unity of command
Unity of direction
Subordination of the individual
Remuneration
Centralization
Scalar chain (Line of Authority)
Order
Equity
Stability of tenure of personnel
Initiative
Esprit de corps

21. HENRI FAYOL’s FOURTEEN PRINCIPLES OF MANAGEMENT

22. 1. Division of Work or Specialization of labor
1. Division of Work or Specialization of labor. Specializing encourages continuous improvement in skills and the development of improvements in methods to improve productivity.
2. Authority & Responsibility. The right to give orders and the power to exact obedience.
3.Discipline. No slacking, bending of rules. Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership.
4. Unity of command. Each employee should have only one boss with no other conflicting lines of command.

23. 5. Unity of direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction. 6. Subordination of Individual Interests. Management must see that the goals of the firms are always paramount. So, when people at work, only work things should be pursued or thought about. 7. Remuneration. Employees receive fair payment for services, not what the company can get away with. 8. Centralization. Consolidation of management functions. Decisions are made from the top. 9. Equity. Equality of treatment (but not necessarily identical treatment)

24. 10. Scalar Chain (line of authority)
10. Scalar Chain (line of authority). Formal chain of command running from top to bottom of the organization, like military
11. Order. All materials and personnel have a prescribed place, and they must remain there.
12. Stability of Tenure of Personnel. Long-term employment is important for the development of skills that improve the organization’s performance. Employees work better if job security and career progress are assured to them.
13. Initiative. Fostering creativity and innovation by encouraging employees to act on their own.
14. Esprit de corps. Harmony, cohesion among personnel.

25. Max Weber’s Principles of Bureaucracy
Coined “bureaucracy”: the perfect office
Developed the principles of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness.
Bureaucracy: Ideal type of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships

26. Weber’s Ideal Bureaucracy
Well defined chain of command
Clear division of work (job descriptions)
Procedures for any situation (Formal Rules & Regulations, formal selection)
Impersonal
Career Orientation
Inflexible
Rigid

27. Weber’s Principles of Bureaucracy

28. Weber’s Principles of Bureaucracy
A manager’s formal authority derives from the position he holds in the organization.
People should occupy positions because of their performance, not because of their social standing or personal contacts.

29. Weber’s Principles of Bureaucracy
The extent of each position’s formal authority and task responsibilities and it’s relationship to other positions should be clearly specified.
Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them.

30. Weber’s Principles of Bureaucracy
Managers must create a well-defined system of rules, standard operating procedures, and norms so they can effectively control behavior .

31. Rules, SOPs and Norms
Rules – formal written instructions that specify actions to be taken under different circumstances to achieve specific goals
Standard Operating Procedures (SOPs) – specific sets of written instructions about how to perform a certain aspect of a task
Norms – unwritten, informal codes of conduct that prescribe how people should act in particular situations

32. Behavioral Management Theory
The study of how managers should personally behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.

33. The Behavioral Approach
The Human Relations Movement
An effort to make managers more sensitive to their employees’ needs
Arose out of the influences of
The threat of unionization
The Hawthorne studies
The philosophy of industrial humanism

34. Behavioral Approaches
Elton Mayo: The Hawthorne Experiment (1927)
McGregor’s Theory X and Theory Y (1960)

35. Behavioral Management Theory
Mary Parker Follett
Recognized that organizations could be viewed from the perspective of individual and group behavior.
Concerned that Taylor ignored the human side of the organization
Suggested workers help in analyzing their jobs
If workers have relevant knowledge of the task, then they should control the task

36. The Hawthorne Studies
Studies of how characteristics of the work setting affected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from
Illumination Study
Group Study

37. Human Relations Movement
Grew out of the Hawthorne studies.
Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics.
Assumed that the manager’s concern for workers would lead to increased worker satisfaction and improved worker performance. 23

38. The Hawthorne Experiment
Research conducted at the Hawthorne plant of the Western Electric Company near Chicago,
Initial study: effects of lighting on worker performance
Worker productivity was measured at various levels of light illumination.
Researchers found that regardless of whether the light levels were raised or lowered, worker productivity increased.

39. Human Relations (Hawthorne) Implications
Hawthorne effect — workers’ attitudes toward their managers affect the level of workers’ performance
Human relations movement – advocates that supervisors be behaviorally trained to manage subordinates in ways that elicit their cooperation and increase their productivity
Behavior of managers and workers in the work setting is as important in explaining the level of performance as the technical aspects of the task

40. The Hawthorne Studies
Demonstrated the importance of understanding how the feelings, thoughts, and behavior of work-group members and managers affect performance

41. Theory X and Theory Y
Douglas McGregor proposed the two different sets of assumptions about workers.
Theory X - classical theory: It assumes that average workers
Are lazy and dislike work and will do as little as possible. They are motivated only by money and do not care about the job.
Workers have little ambition and wish to avoid responsibility and average worker prefers direction
Managers must closely supervise and must be carefully controlled through reward and punishment

42. Theory X and Theory Y Theory Y: Modern Management Theory
Theory Y assumes workers are not lazy, want to do a good job.
People often enjoy their work and will exercise self-control at work.
People are motivated by wanting to do a good job and will do well if the opportunity is presented
People have capacity for imagination, ingenuity, and creativity
People enjoy expending physical and mental effort in work as much as play and rest

43. Theory X vs. Theory Y

44. Contemporary Approaches
Ouchi’s Theory Z (1981)
Contingency Management

45. Ouchi’s Theory Z Theory Z Value of culture in an industrial society
Intimate and cooperative work relationships
Alienated in work environment in which family ties, traditions, and social institutions are minimized
Workers have strong sense of moral obligation, discipline and order

46. Organizational Environment Theory
Organizational Environment – The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources

47. The Open-Systems View Open System
A system that takes resources for its external environment and transforms them into goods and services that are then sent back to that environment where they are bought by customers.

49. The Open-Systems View
Inputs: the acquisition of external resources to produce goods and services
Conversion: transforms the inputs into outputs of finished goods and services.
Output: the release of finished goods and services to its external environment.

50. Closed System
A self-contained system that is not affected by changes in its external environment.
Likely to experience entropy and lose its ability to control itself

51. Contingency Theory “There is no one best way to organize”
The idea that the organizational structures and control systems manager choose depend on—are contingent on— characteristics of the external environment in which the organization operates.

52. Contingency Theory

53. Contingency Management
Managing in Different and Changing Situations
Require managers to use different approaches and techniques
Contingency perspective - different ways of managing are required in different organizations and different circumstances
stresses that there are no simplistic or universal rules
contingency variable
© Prentice Hall, 2002