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Management: Historical Development. The Pre-modern Era Ancient massive construction projects ◦ Egyptian pyramids ◦ Great Wall of China.

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Presentation on theme: "Management: Historical Development. The Pre-modern Era Ancient massive construction projects ◦ Egyptian pyramids ◦ Great Wall of China."— Presentation transcript:

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 Industrial revolution 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. The Industrial Revolution’s Influence On Management Practices

5 1–5 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 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 1. Scientific Management 2. Administrative Theory 3. 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 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 Taylor’s Four Principles of Management

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 1. Break up and analyze every individual action necessary to perform a particular task into each of its component actions 2. Find better ways to perform each component action 3. 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 Frank & Lillian Gilbreth

18 Administrative Management Theory (1. Henri Fayol & 2. Max Weber) Administrative Management ◦ 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. 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). 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 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 Weber’s Ideal Bureaucracy

27 Weber’s Principles of Bureaucracy

28 2- 28 Weber’s Principles of Bureaucracy 1) A manager’s formal authority derives from the position he holds in the organization. 2) People should occupy positions because of their performance, not because of their social standing or personal contacts.

29 2- 29 Weber’s Principles of Bureaucracy 3) The extent of each position’s formal authority and task responsibilities and it’s relationship to other positions should be clearly specified. 4) Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them.

30 2- 30 Weber’s Principles of Bureaucracy 5) 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 2- 32 Behavioral Management Theory Behavioral Management ◦ 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 2- 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.

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 2- 40 The Hawthorne Studies Demonstrated the importance of understanding how the feelings, thoughts, and behavior of work-group members and managers affect performance

41 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 Theory X and Theory Y

42 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 Theory X and Theory Y

43 2- 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 2- 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 2- 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.

48

49 2- 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 2- 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 2- 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 2- 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


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