Chapter (2) Management History

Chapter outcomes: describe the historical background of management. Explain the various theories in the classical approach. Describe the quantitative approach. Discuss the development and uses of the behavioral approach. Explain the various theories in the contemporary approach.

Continued: Two events are especially to management history: First: 1776 Adam smith, his published (the wealth of nations), his main contributions were: the division of labor or job specification: the breakdown of jobs into narrow and repetitive tasks; he concluded that the division of labor increase productivity by increasing each worker’s skill and dexterity, saving time lost in changing task, and creating labor saving inventions and machinery.

Continued: Second: in the late eighteenth century, early 1900 (industrial revolution); when the machine power start and was substituted for human power. The factories needed someone to forecast demand, ensure that enough materials was on hand, assign tasks to people, and direct daily activities. After that start the management theories.

Continued: Exhibit 2-1 page 41 showing the major approaches to management: Classical Approach: two major theories comprise this approach: scientific and general administrative approach.

Exhibit 2-1 Major Approaches to Management In this module, we’ll look at four major approaches to management theory: classical, behavioral, quantitative, and contemporary. (See Exhibit 2-1.) 6

1) Classical Approach: 1) Classical Approach: the first study of management, which emphasizes rationality and making organizations and workers as efficient as possible. two major theories comprise this approach: scientific and general administrative approach. a) Scientific management: Principles of management: the fundamental rules of management that could be applied in all organizational situations and taught in school. Means the use of scientific methods to define the one best way for a job to be done.

1) Classical Approach: Continued: the prominent of this approach: aa-Fredrick Taylor, consider as the father of management, his book (the principles of scientific management): the fundamental rules of management that could be applied in all organizational situations and taught in schools. His main contributions: see exhibit 2-2 page 43. also: -Taylor, believed that worker output was only about one third of what was possible (no work standard existed. also:

Exhibit 2-2 Taylor’s Scientific Management Principles Taylor’s experiences led him to define clear guidelines for improving production efficiency. He argued that these four principles of management (see Exhibit 2-2) would result in prosperity for both workers and managers. 9

1) Classical Approach: continued - he put the right person on the job with the correct tools and equipment - he had the worker follow his instructions exactly - he motivate the worker with an economic incentive of a significantly higher daily wage.

1) Classical Approach: Continued: ab- Frank and Lillian gilbreth, the main contributions: they studied work to eliminate inefficient hand and body motions they reduce the number of motions to perform the job. They invented a device called a microchronometer that recorded a worker’s motions and the amount of time spent doing each motion. They devised a classification scheme to label 17 basic hand motions called (therbligs).

1) Classical Approach: Continued: b) General Administrative Theory: its focused more on what managers do and what constituted good management practice. the prominent of this approach: ba- Henri Fayol, he was concerned with first line managers and the scientific method, he described the practice of management as something distinct (vary) from accounting, finance, production, distribution, and other business functions. His main contributions 14 (principles): exhibit 2-3 page 45

Exhibit 2-3 Fayol’s 14 Principles of Management 13

Exhibit 2-3 Fayol’s 14 Principles of Management (cont.)

1) Classical Approach: Continued: bb- Max Weber, he developed a theory of authority structure and relations called (Bureaucracy): a form of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships. weber recognized that the “ideal bureaucracy didn’t exist in reality”. His main contributions (principles): exhibit 2-4 page 45

Exhibit 2-4 Characteristics of Weber’s Bureaucracy 16

1) Classical Approach: Continued: Bureaucracy like scientific management that both: emphasize rationality, predictability, impersonality, technical competence and authoritarianism. Bureaucracy was an attempt to formulate an ideal prototype for organizations, but many managers feel that a bureaucratic structure hinders individual employee’s creativity and limits an organization’s ability to respond quickly to the dynamic environment.

2) Quantitative Approach: 2) Quantitative Approach: or management science: the use of quantitative techniques to improve decision making. Its evolved from mathematical and statistics solutions developed for military problems during world war 2, then applied to business.

2) Quantitative Approach: continued: The main important contributions: it involves applying statistics, optimization models, information models, computer simulations, linear programming (managers use to improve resource allocation decisions), critical path analysis, the economic order quantity model (to determine the optimum inventory levels), to management activities.

2) Quantitative Approach: continued: a) Total Quality Management (TQM) comprised by: edwards Deming: A philosophy of management that is driven continuous improvement and responsiveness to customer needs and expectations. The main contributions (principles): exhibit 2-5 page 48, also:

Exhibit 2-5 What Is Quality Management? 21

2) Quantitative Approach: continued: continuous improvement require statistics techniques that measure every critical variables in organization’s work process, and this need accurate measurements to compare against standards to identify and correct problems.

2) Quantitative Approach: continued: TQM was departure from earlier management approaches that were based on the belief that keeping costs low was the only way to increase productivity. Quantitative approach contribute directly to management decision making in the area of planning and control, quality control, scheduling.

3) Behavioral Approach: 3) Behavioral Approach: organizational behavior (OB): a field of study that researches the actions (behavior) of people at work. Early Advocate Of Organizational Behavior: believed that people were the most important assets of the organization and should be managed accordingly. exhibit 2-6 page 49. and the contributions for every one.

Exhibit 2-6 Early OB Advocates Exhibit 2- 6 summarizes each individual’s most important ideas. 25

3) Behavioral Approach: continued the prominent of this approach: a) Hawthorne Studies(1924): a series of study designed by engineers to examine the effect of various lighting levels on worker productivity, they set up two group: experimental group: being exposed to various lighting intensities, and control group working under a constant intensity. They found that:

3) Behavioral Approach: continued as the level of light was increased in the experimental group, output for both groups increased. As the light level was decreased in the experimental group, productivity continue to increase in both groups.

3) Behavioral Approach: continued Productivity decrease was observed in the experimental group only when the level of light was reduced to that of a moonlit night. The engineers concluded that lighting intensity was not directly related to group productivity, and that something else must have contributed to the results.

3) Behavioral Approach: continued b) Elton Mayo (1927): experiment designed to evaluate the effect of a group piecework incentives pay system on group productivity, he found that: the incentives plan had less effect on a worker’s than did group pressure, acceptance and security.

3) Behavioral Approach: continued The researchers concluded that the social norms or group standards were the key determinants of individual work behavior. Mayo concluded that people’s behavior and attitudes are closely related.

4) Contemporary Approach: 4) Contemporary Approach: two approach: a) system theory: a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. The two basic types of systems are closed and open:

4) Contemporary Approach: continued - closed system: system that not influenced by and do not interact with their environment. - open system: system that are influence by and interact with their environment. See Exhibit 2-7 page 51

Exhibit 2-7 Organization as an Open System Exhibit 2-7 shows a diagram of an organization from an open systems perspective. 33

4) Contemporary Approach: continued The main contributions by the system theory: the manager coordinate the work activities in the various parts of the organization to ensure that all these parts are working together. Implies that decisions and actions in one organization area will affect other areas. Recognizes that organizations are not self contained, they rely on their environment for essential inputs. No organization can survive for long if it ignores government regulations, supplier relations, and external constituencies on which it depends.

4) Contemporary Approach: continued b) the contingency approach: or situational approach: Management is not and cannot be based on simplistic principles, or universal rules to be applied or follow in all situations, different and changing situations require managers to use different approaches and techniques. Contingency approach: is approach says that organizations are different, face different situations and require different ways of managing. The primary value of the contingency approach is that: there are no simplistic or universal rules for managers to follow.

4) Contemporary Approach: continued Exhibit 2-8 page 53 showing the popular contingency variables: organization size. Routineness of task technology. Environmental uncertainty. Individual differences.

Exhibit 2-8 Popular Contingency Variables Exhibit 2-8 describes four popular contingency variables. Although the list is by no means comprehensive—more than 100 different variables have been identified— it represents those most widely used and gives you an idea of what we mean by the term contingency variable. The primary value of the contingency approach is that it stresses there are no simplistic or universal rules for managers to follow. 37