Principles of Management

To Appreciate our Subject:

To appreciate what Management is today, we need to look back at its past...

Development of Major Management Theories

Exhibit 2.1

Historical Background Of Management

Significant Pre-Twentieth-Century Events

Wealth of Nations - 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

Scientific Management

F.W. Taylor - Principles of Scientific Management

use of scientific methods to define the one best way for a job to be done perspective of improving the productivity and efficiency of manual workers Having a standardized method of doing the job. Providing an economic incentive to the worker. Economic Man

4 Principles of Scientific Management (1911)

Develop a science of work Divide and standardize jobs Train workers & $$$ Support workers by planning their work E.g. assembly-line
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General Administrative Theorists

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
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Fayols 14 Principles of Management

1. Division of work. 2. Authority. 3. Discipline. 4. Unity of command. 7. 8. 9. Remuneration. Centralization. Scalar chain.

10. Order.

5. Unity of direction.
6. Subordination of individual interest to the interests of the organization.

11. Equity.
12. Stability of tenure of personnel.

13. Initiative.
14. Esprit de corps.
Exhibit 2.3

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General Administrative Theorists (cont.)

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

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EXHIBIT 2.4: WEBERS IDEAL BUREAUCRACY

2-12

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Quantitative Approach To Management

Operations Research (Management Science) use of quantitative techniques to improve decision making applications of statistics optimization models computer simulations of management activities Linear programming - improves resource allocation decisions Critical-path scheduling analysis - improves work scheduling

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Behavioral School
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
employee selection employee motivation

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Organizational Behavior (cont.)

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
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Hawthorne Studies

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The Systems Approach

System

Defined

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). Dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments.

Open systems

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ABC Organization

Organizational task 100 marbles (20 are red) Paddle with 50 holes Performance indicator minimum red marbles collected Hire and fire decision based on performance 18

Performance Results
Mary Bruce Mike Sue Tony Me Total

Day1 9
7 12 7 8 9 52

Day2 8
8 12 8 7 10 53

Day3 16
14 7 13 5 6 61

Day4 6
12 5 10 13 6 52

Total 39
41 36 38 33 31 218
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Performance Results
Mary Bruce Mike Sue Tony Me Total

Day1 9
7 12 7 8 9 52

Day2 8
8 12 8 7 10 53

Day3 16
14 7 13 5 6 61

Day4 6
12 5 10 13 6 52

Total 39
41 36 38 33 31 218

Fired Fired Fired

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Organizations Process
Order Entry Credit Checking Inventory Allocation Packing Shipping

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The Organization as an Open System

Exhibit 2.6

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Implications of the Systems Approach

Coordination

of the organizations 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.
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The Contingency Approach

Contingency

Approach Defined

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.
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Popular Contingency Variables

Organization size Routineness of task technology Environmental uncertainty Individual differences
V.S.

Exhibit 2.7

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Total Quality Management

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US Companies World Market Share

100 90 80 70 60 50 40 30 20 10 0 Cameras Copiers VTRs Autos TVs

1970 1985

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Xerox Return of Assets (ROA)

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Business Success Crisis of Survival 3 Operations

Deployment

73

79

84

Years
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Rule 1: Quality, Quality, Quality

Rule 2: System, System, System Rule 3: Improvement, Improvement, Improvement

Rule 4: Right the First Time Rule 5: Taking Full Responsibility

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Management Paradigm Shift

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Hospital Paradigm Shift

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Management Paradigm Shift

From professional standards to meeting customers expectation Individual to systems and processes Department to multi-disciplinary team Reactive to pro-active CQI Experience to clinical protocol Supervisor oriented to empowerment
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And where do we go from here?

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The drivers of change

Technology

Leverage capability Change the nature of work and relations

Increase competition Increase choice/combination of resources & customers Increase customer choice Politicize of business & management

Globalization

Deregulation and democratization

Rights of employees Rights of customers and citizens

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Whatre changed in management practices

Organization structure - flatter, smaller, team and networked Recruitment - Staff recruited for contribution to the company rather than doing a job Development Specialization AND transferable skills AND continuous learning are required Motivation Focus on intrinsic motivation & development of competencies Supervision - Staff as self-monitoring professionals, Boss as coach & resource person Careers - Spiral & boundaryless The success formula = (#) * 2 ($) * 3 (output) ! New mindset for work and management

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How to manage ?

Planning Organizing Leading Controlling

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The Great Debate!

Is Management an Art ?

Is Management a Science?

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