Principles of Management Week 2 – Management History

Development of Major Management Theories Exhibit 2.1

Historical Background Of Management Two major events “Wealth of Nations” by Adam Smith division of labor - breakdown of jobs into narrow and repetitive tasks increased productivity Hierarchical control and management – managers think and workers work Industrial Revolution substitution of machine power for human power large organizations required formal management 1 Adam Smith the father of Management 2

Scientific Management 1 F.W. Taylor - Principles of Scientific Management Develop a science for each element of an individual’s work, which will replace the old rule-of-thumb 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 effectively and efficiently. Divide work and responsibility almost equally between management and workers. Four assumptions: are they valid? One best way. Managers think and workers work.

General Administrative Theorists 2 Henri Fayol concerned with making the overall organization more effective developed theories of what constituted good management practice proposed a universal set of management functions: Plan, Organize, Control, Lead published principles of management (next slide)

Division of work. Authority. Discipline. Unity of command. Unity of direction. Subordination of individual interest to the interests of the organization. Remuneration. Centralization. Scalar chain. Order. Equity. Stability of tenure of personnel. Initiative. Esprit de corps.

developed a theory of authority structures and relations Max Weber developed a theory of authority structures and relations Bureaucracy - ideal type of organization division of labor clearly defined hierarchy detailed rules and regulations impersonal relationships

2-8

Quantitative Approach 3 Operations Research (Management Science) use of quantitative techniques to improve decision making applications of statistics optimization models computer simulations of management activities

Behavioral School 4 study of the actions of people at work early advocates late 1800s and early 1900s believed that people were the most important asset of the organization ideas provided the basis for a variety of human resource management programs E.g., selection, motivation, turnover

started in 1924 at Western Electric Company Hawthorne Studies started in 1924 at Western Electric Company began with illumination studies intensity of illumination not related to productivity Elton Mayo - studies of job design revealed the importance of social norms as determinants of individual work behavior changed the dominant view that employees were no different from any other machines Hawthorne experiment

Results from the Relay Assembly Test Room 15-min. rests + lunch Same + Sat. a.m. off Standard In general, productivity increased with each change in work conditions 132 124 Same + 4:30 p.m. stop Same + 4 p.m. stop 116 Percentage of Standard Output Two 5-min. rests Two 10-min. rests Six 5-min. rests 15-min. rests + lunch 108 100 Standard work conditions

The Systems Approach 5 System Defined Basic Types of Systems A set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Basic Types of Systems Closed systems Are not influenced by and do not interact with their environment (all system input and output is internal). Open systems Dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments.

The Organization as an Open System Exhibit 2.6

Implications : Coordination of the organization’s parts is essential for proper functioning of the entire organization. The key to performance is to have good process. Organizations are not self-contained and, therefore, must adapt to changes in their external environment. Renewing driving licsence

The Contingency Approach 6 Also sometimes called the situational approach. There is no one universally applicable set of management principles (rules) by which to manage organizations. Organizations are individually different, face different situations (contingency variables), and require different ways of managing.

Popular Contingency Variables Organization size Routineness of task technology Environmental uncertainty Individual differences Labor market conditions Government regulations and laws Recruiting process of HSBC and Citibank Exhibit 2.7

And where do we go from here?

The drivers of change Technology Globalization Leverage capability Changing nature of work and relations Globalization Increase competition Increase choice/combination of resources & customers Culture issue How many workers work in an assembly line in Toyota? Who made the IBM notebook? India write the program. Korean the screen.. Cut the cost CX relocate the IS department, CLP relocate the Accounting department. An challenge for the managers. Keen competition. 100 companies today 98% will die in 10Years.