History of Management Theories MGT 3310

The Case of Egypt First large state Centralized government ◦ Provincial governors (nomarchs) ◦ Bureaucrats (taxation, irrigation) ◦ Based on writing (first Information Revolution) Large scale construction projects ◦ Pyramids, Sphinx, temples ◦ Workforce: thousands of peasants, possibly slaves (prisoners of war) Spring 2007History of Management Thought2

Sun Tzu and The Art of War Dates uncertain – ◦ Some say he lived ca. 544 BC to 496 BC ◦ Others place it closer to 600 BC A renowned Chinese general The Art of War a work on military strategy, but seen in Asia as a guide to management Principles: ◦ Moral cause for battle ◦ Leadership – wise, courageous, benevolent yet strict ◦ Awareness of environmental conditions – events and the playing field ◦ Organization and discipline ◦ Espionage Spring 2007History of Management Thought3

The Industrial Revolution – New Technology Manufacturing ◦ Steam engines ◦ Cotton gin ◦ Mass production through standardization and specialization Transportation ◦ Steam powered ships ◦ Railroads Communications ◦ Telegraph Spring 2007History of Management Thought4

Large Organizations and New Approaches to Management Economic transformation ◦ Previously – family farms, small workshops ◦ After Industrial Revolution – large organizations, requiring management skills New demands on management ◦ Need for professional managers (as opposed to owners) ◦ Need to plan, structure, and schedule activities ◦ Push to efficiency ◦ Need for worker training and socialization to factory work Spring 2007History of Management Thought5

The Fortune 500: When Were They Founded? Spring 2007History of Management Thought6

The Classical Approach Lower-Level Management Analysis ◦ Frederick W.Taylor (1856–1915)  Work at Bethlehem Steel Co. ◦ Frank Gilbreth (1868–1924) and Lillian Gilbreth (1878–1972) Motion study “The Right Way “The Wrong Way” ◦ Henry L. Gantt (1861–1919)  Scheduling Innovation  Rewarding Innovation

F. W. Taylor and Scientific Management Worked at Midvale Steel (beginning as a common laborer, rising to chief engineer, in 6 years) Identified “soldiering” ◦ Workers doing less than they were capable of ◦ Due to lack of training, fear of losing work or rate cuts Began with time study and incentive plans Pig iron study: the right shovel for each job.

Frank and Lillian Gilbreth: The One Best Way Focus on work simplification and efficiency ◦ Reduce time and fatigue (Frank) ◦ Involve workers (Lillian) “The One Best Way” Spring 2007History of Management Thought9

The Classical Approach Comprehensive Analysis of Management (Administrative Management Theory) ◦ Henri Fayol (1841–1925) 1. Division of work 2. Authority 3. Discipline 4. Unity of command 5. Unity of direction 6. Subordination of individual interests to the general interests 7. Remuneration 8. Centralization 9. Scalar chain 10. Order 11. Equity 12. Stability of tenure of personnel 13. Initiative 14. Esprit de corps (common spirit) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 2-10

Henri Fayol French manager (coal mining) Published Industrial and General Administration in 1916 (not translated into English until 1930’s) Elements of management ◦ Planning ◦ Organizing ◦ Command, Coordination, Control Fourteen principles Universality of management Management as a skill can be taught Spring 2007History of Management Thought11

Max Weber and Bureaucracy Bureaucracy = management by the office Bureaucracy ◦ Clearly defined division of labor, authority, responsibility ◦ Offices organized in a hierarchy ◦ Recordkeeping (organizational memory and continuity separate from individuals) ◦ Selection on the basis of qualifications ◦ Officials appointed, not elected ◦ Administrators work for fixed salaries, on a career basis ◦ Administrators are not owners ◦ Administrators subject to impersonal rules, discipline, control

Limitations ◦ Assumed workers were robots without social needs or higher order needs ◦ Assumed all individuals were the same ◦ Ignored worker’s potential to contribute ideas, not just labor ◦ Does not adequately emphasize human variables  Conflict  Communication  Leadership  Motivation Spring 2007History of Management Thought13 * These are Taylor’s ideas; Gilbreths thought differently

The Behavioral Approach The Hawthorne Studies ◦ The Relay Assembly Test Room Experiments ◦ The Bank Wiring Observation Room Experiment Recognizing the Human Variable Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 2-14

The Behavioral Approach The Human Relations Movement Understand: Physiological Safety Social Esteem Self-actualization Topics: Commitment Turnover Motivation Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 2-15

The Management Science Approach The Beginning of the Management Science Approach 1.Observe 2.Construct 3.Deduce 4.Test Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 2-16

The Management Science Approach Management Science Today Characteristics of Management Science Applications 1) Problems studied are complicated 2) Economic implications as guidelines 3) Mathematical models to investigate the decision situation 4) Use of computers Copyright ©2012 Pearson Education, Inc. Publishing as Prentince Hall 2-17

The Contingency Approach Basically, contingency theory asserts that when managers make a decision, they must take into account all aspects of the current situation and act on those aspects that are key to the situation at hand. Basically, it’s the approach that “it depends.” 1. Perceiving organizational situations as they actually exist 2. Choosing the management tactics best suited to those situations 3. Competently implementing those tactics. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 2-18

Maslow’s hierarchy of needs Self-actualization – advancement, challenges, opportunities to use skills Esteem – job title, compliments Belongingness – compatible work groups, friends, parties Safety and security – salary increases, pension plan, medical plans, insurance Physiological – salary, office, co. cafeteria

Motivation and Leadership Early and mid 1960's: contingency models of leadership proposed a need for different styles under different circumstances (Fred Fiedler) 1964: Vroom's VIE theory (valence, instrumentality, expectancy) of motivation proposed Mid 1960's: David McClelland proposed need for achievement theory Late 1960's: Frederick Herzberg proposed his two-factor theory of motivation (motivators and hygiene factors) Late 1960's: Edwin Locke outlined his goal setting approach to motivation

The System Approach A number of interdependent parts functioning as a whole for some purpose. Types of Systems 1.Closed 2.Open Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 2-21

The System Approach Tomas Hopkins’ six guidelines for conducting system analysis: 1. The whole should be the main focus of analysis 2. Integration is the key variable in wholeness analysis 3. Modifications weighed in relation to effects on every other part 4. Each part has some role to perform 5. Part and its function determined by its position in the whole 6. All analysis starts with the existence of the whole Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall 2-22

Dynamic System and Chaos Theory Real-time interaction Determined but not predictable Sensitive to initial condition

Example: Group Decision

Test information Lag effect

Risk and Luck in Chaos System Risk in management ◦ Recognize risk ◦ Estimate loss ◦ Eliminate risk Luck plays an important role in business, but it is hard to be identified and analyzed.

Assignment for Week 01