Chapter

Management and Its Evolution

The performance of organizations depends to
a large extent on how their resources are
allocated and their ability to adapt to changing
conditions.
Successful organizations know how to
manage people and resources efficiently to
accomplish organizational goals and to keep
those goals in tune with changes in the
external environment.
Management in the New Millennium

A firm can be efficient by making the

best use of people, money, physical
plant, and technology.

 Itis ineffective if its goals do not provide

a sustained competitive advantage.

A firm with excellent goals would fail if

it hired the wrong people, lost key
contributors, relied on outdated
technology, and made poor investment
decisions.
Levels of management
Strategic Managers

Tactical Managers

Operational Managers
 Strategic Managers
 Thefirm’s senior executives with
overall responsibility for the firm.
 Developing the company’s goals
 Focus on long-term issues
 Emphasize the growth and overall
effectiveness of the organization

 Concerned primarily with the

interaction between the
organization and its external
environment.
 Tactical Managers
Responsible for translating the
general goals and plans
developed by strategic
managers into specific
objectives and activities.
Shortertime horizon
Coordination of resources

These are middle managers

 Operational Managers
 Lower-levelmanagers who supervise the
operations of the organization.

 Directly involved with non-management

employees
 Implementing the specific plans
developed with tactical managers.
 This is a critical role to the organization.
 Operational managers are the link
between management and non-
management staff
 Management Functions

Planning Organizing

Leading Controlling
 Planning
 Themanagement function that
assesses the management
environment to set future objectives
and map out activities necessary to
achieve those objectives.

 To be effective, the objectives of

individuals, teams, and
management should be coordinated
to support the firm’s mission.
 Organizing
 Themanagement function that
determines how the firm’s human,
financial, physical, informational,
and technical resources are
arranged and coordinated to
perform tasks to achieve desired
goals.

 Thedeployment of resources to
achieve strategic goals.
 Leading
 The management function that
energizes people to contribute their
best individually and in cooperation
with other people.
 This involves:
 Clearly communicating organizational goals
 Inspiring and motivating employees
 Providing an example for others to follow
 Guiding others
 Creating conditions that encourage management
of diversity
 Controlling
 The management function that
measures performance, compares it
to objectives, implements necessary
changes, and monitors progress.

 Many of these issues involve

feedback or identifying potential
problems and taking corrective
action.
 Management as a set of roles
 Day-to-day management activities are routine,
orderly, and rational.

 Theseinclude:
Interpersonal roles - communication with superiors,
peers, subordinates, and people from outside the
organization.
Information Roles - obtaining, interpreting, and giving
out information.
Decisional Roles - choosing among competing
alternatives.
 Management as a set of skills
 The four basic management functions require a set
of skills to be carried out properly.

 Because most managerial tasks are unique,

ambiguous, and situation-specific, there is seldom
one best way to approach them.
 Management as a set of skills

 Four
major categories of skills will help you become a good
manager:
 Strategic Skills - the ability to see “the big picture”, focus on
key objectives without getting mired in details, and having a sense
what is happening inside and outside the company.
 Task-Related Skills - the ability to define the best approach to
accomplish personal and organizational objectives. They include
consideration of all resources, including time, organizational
structure, financial resources, and people. They also involve the
ability to prioritize, remain flexible to make necessary changes,
and ensure that value is being created
 Management as a set of skills

 People-Related Skills - getting work done through others and

with others. Include the ability to delegate tasks, share
information, resolve conflicts, be a team player, and work with
people from very different backgrounds
 Self-Awareness Skills - Being aware of your personal
characteristics can help you adapt to others and can help you
understand why you react to them the way you do. These skills
can help you to avoid rushed judgments, appreciate the nuances of
particular situations, size up opportunities, capitalize on your
personal strengths, and avoid situations in which you are likely to
fail.
 Skills for Managerial Success
Strategic Skills
 Environmental assessment
scanning
 Strategy formulation
 Mapping strategic intent and
defining mission
 Strategy implementation
 Human resource congruency
Task Skills
 Setting and prioritizing
objectives
 Developing plan of action and
implementation
 Responding in a flexible
manner
 Creating value
 Working through the
organizational structure
 Allocating human resources
 Managing time efficiently
 Skills for Managerial Success (continued)

People Skills Self-Awareness Skills

 Delegating  Personal adaptability
 Influencing  Understanding personal biases
 Motivating  Internal locus of control
 Handling conflict
 Win-win negotiating
 Networking
 Communicating
 Verbal
 Nonverbal
 Listening
 Cross-cultural management
 Heterogeneous teamwork
 The Evolution of Management Thought

Early Management Classical Perspective

Thought

Contemporary
Management Perspectives Behavioral Perspective
Evolution of Management Theory
 Early Management Thought
 Early ideas about management strategy
 Sun Tzu, The Art of War

 Early ideas about leadership

 Nicolò Machiavelli, The Prince

 Early ideas about the design and organization of work

 Adam Smith, The Wealth of Nations
 division of labor
 The Operational Perspective
 Scientific Management
 Frederick W. Taylor
 Quantitative Management
 Ford W. Harris
 Quality Management
 Walter A. Shewhart
 Bureaucratic Management
 Max Weber
 Administrative Management
 Henri Fayol
 Scientific Management
 “Scientific management is concerned with knowing exactly
what you want men to do and how they do it in the best and
cheapest way.”
 Characterized by a worker-task relationship, with efficiency as
its primary goal
 Associated with the industrial era in Europe and the U.S.
 Defined by Fredrick W. Taylor (1856-1915)
 Taylor’s Theory of Scientific Management
 Elements of Scientific Management
 Separation of planning and doing
 Functional Foremanship

 Job analysis
 Standardisation
 Proper remuneration for fast and high-quality work
 Scientific Selection and training of workers
 Mental Revolution
 Economy
 Underlying Themes
 Managers are intelligent; workers are and should be ignorant
 Provide opportunities for workers to achieve greater financial
rewards
 Workers are motivated almost solely by wages
 Maximum effort = Higher wages
 Manager is responsible for planning, training, and evaluating
 Taylor’s Principles of Scientific Management
 Replacing Rule of Thumb with science: Scientifically study each
part of a task and develop the best method of performing the
task.
 Maximum Output: Carefully select workers and train them to
perform the task by using the scientifically developed method to
increase production.
 Cooperation: Cooperate fully with workers to ensure that they
use the proper method.
 Harmony in Group Action: Divide work and responsibility so
that management is responsible for planning work methods
using scientific principles and workers are responsible for
executing the work accordingly.
 Development of workers: Workers should be developed to the
fullest extent possible for their own and company’s prosperity.
 Followers of Taylor
 Frank (1868-1924) and Lillian (1878-1972) Gilbreth: Refined
Taylor’s work and made many improvements to the methodologies
of time and motion studies.
 Time and motion studies
 Breaking up each job action into its components.
 Finding better ways to perform the action.
 Reorganizing each job action to be more efficient.
 Also studied worker-related fatigue problems caused by lighting,
heating, and the design of tools and machines

 Carl George and Henry Gantt

 Critical Analysis of Scientific
Management
 Theprinciples of scientific management were more concerned with
problems at the operating levels and did not emphasize
management of an organization from the manager’s point of view.

 Tayloris regarded as the ‘father of industrial engineering’ rather

than the ‘father of scientific management’ as the theory is more
relevant to mechanization and automation than the broader
aspects of management.

 Theintroduction of this theory led to the agitation by trade unions,

industrialists and general public.

 Differential piece rate system opposed.

 Fayol’s Administrative Management
 Helooked at the problems of managing the organization
from the top management’s point of view.

 Used
the term ‘administration’ instead of ‘management’
emphasizing that there is unity of science of administration.

 Administrative doctrine was universally applicable.

 Principlesof management are flexible and not absolute and

are usable regardless of changing and special conditions.
 Fayol’s
Fayol’s Principles
Principles of
of Management
Management
1. Division of Labor: allows for job specialization.
• Fayol noted jobs can have too much specialization leading to
poor quality and worker dissatisfaction.
2. Authority and Responsibility
• Fayol included both formal and informal authority resulting
from special expertise.
3. Scalar Chain
• A clear chain of command from top to bottom of the firm.
4. Unity of Direction
• A single plan of action to guide the organization.
5. Unity of Command
• Employees should have only one boss
6. Centralization
 The degree to which authority rests at the top of the
organization.
7. Equity
 The provision of justice and the fair and impartial treatment
of all employees.
8. Order
 The arrangement of employees where they will be of the most
value to the organization and to provide career
opportunities.
9. Initiative
 The fostering of creativity and innovation by encouraging
employees to act on their own.
10. Discipline
• Obedient, applied, respectful employees are necessary for the
organization to function.
11. Remuneration of Personnel
• An equitable uniform payment system that motivates
contributes to organizational success.
12. Stability of Tenure of Personnel
• Long-term employment is important for the development of
skills that improve the organization’s performance.
13. Subordination of Individual Interest to the Common Interest
• The interest of the organization takes precedence over that of
the individual employee.
14. Esprit de corps
• Comradeship, shared enthusiasm foster devotion to the common
cause (organization).
 BUREAUCRACY
 Bureaucracy is an administrative system designed to
accomplish large-scale administrative tasks by
systematically coordinating the work of many individuals.

 Max Weber
Developed the concept of bureaucracy as a formal system of
organization and administration designed to ensure
efficiency and effectiveness.
 Key Characteristics of Weber’s Ideal
Bureaucracy
 Administrative Class
 Well-defined hierarchy
 Division of work
 Official rules

 Impersonal relationships

 Official record
 Weber’s
Principles of
Bureaucracy
 Problems in Bureaucracy
Invalidityof Bureaucratic Assumptions
Goal displacement
Unintended Consequences
Inhuman Organization
Closed-system Perspective
 Behavioral Perspective
 The behavioral perspective acknowledges that
psychological and social processes of human behavior
can result in improvements in productivity and work
satisfaction.
 The Hawthorne effect - when a manager shows concern for
employees, their motivation and productivity levels are likely
to improve.
 Human Relations Approach - the relationship between
employees and a supervisor is a vital aspect of management.
 Employee motivation
 Leadership style
 The Hawthorne Studies: New Direction

The “Hawthorne Experiments” were a series of studies into

worker productivity performed at the Cicero plant
beginning in 1924 and ceasing in 1932, initially conducted
by the National Research Council and later by Western
Electric and Harvard University

Hawthorne experiments were conducted at the Hawthorne

(Illinois) plant of the Western Electric Company to
determined the psychological factors, components of the job
and work satisfaction on the employees. The experiments
identified the factors that will help me to manage the
operating employee of the factory. The Hawthorne
experiments were divided into three phrases and there were
4 experiments conducted within this purpose.
 1st Hawthorne Experiment
 Thefirst phrase was the test room studies where there were
two experiments conducted for this purpose.

 Thefirst experiment was the illumination experiments

(1924-1927) which studied the effects of lighting on output.
Two groups of workers were selected in the company and
one group had no variations in its level of lighting while the
other group were placed under the environment that had
several variations from better to worse. The result was
surprising, as output of both groups were increased.
 2nd Hawthorne Experiment
 The second experiment named Relay Assembly Test
Room ((1927-1929) were conducted to further the
investigation. In this experiment, a group of women were
made to subject of various conditions that include the
effects of changes in working conditions such as rest
periods and meal breaks.
 Again, the result of the experiment shown that regardless
of whether the conditions were improved or worsened, the
productivity always increased. Elton Mayo identified this
situation is due to the fact that the women responded to
the researchers’ attention. And saw themselves as a
special group. This form of behavior is known as
“Hawthorne effect”.
 3rd Hawthorne Experiment
 Mica-Splitting Test group, 1928 – 1930 Relationship
between work conditions and productivity, by maintaining
a piece-rate incentive system and varying work conditions
 Productivity increased by about 15% and researchers
concluded that productivity was affected by non-pay
considerations
 Conclusion: social dynamics were the basis of worker
performance.
 Hawthorne Interviews
 Plant-wide Interview program, 1928-1931
1. Western Electric implemented a plant-wide
survey of employees to record their concerns
and grievances. From 1928 to 1930, 21,000
employees were interviewed.
 2. Data supported the research conclusion
that work improved when supervisors began
to pay attention to employees, that work
takes place in a social context in which work
and non-work considerations are important,
norms and groups matter to workers.
Hawthorne : Final Experiment
 Bank Wiring Observation group, 1931-1932
 The final test studying 14 male workers in the Bank
Wiring factory to study the dynamics of the group when
incentive pay was introduced.
There was no effect. Why?
Work group established a work “norm” – a shared
expectation about how much work should be
performed in a day and stuck to it, regardless of
pay.
 The conclusion: informal groups operate in the work
environment to manage behavior.
 Implications of Hawthorne Experiment

 Socialfactors in output
 Group influence
 Conflict
 Leadership
 Supervision
 Communication
 Criticisms of Hawthorne Experiment

 No sufficient attention given to the attitudes that

people bring with them to the workplace
 Does not recognize the forces such as class
consciousness, the role of unions, and other extra-
plant forces on attitudes of workers.
 The results of Hawthorne plant could not be valid for
others.
 The worker is looked upon as a means to an end and
not an end himself.
 Social System Approach
 Introduced by Vilfredo Pareto, a sociologist and
later developed by Chester Barnard.
 According to this approach, an organization is
essentially a cultural system composed of people
who work in cooperation.
 For achieving organizational goals, a cooperative
system can be developed by understanding the
behavior of people in groups.
Main features of Social system approach
 Organization is a social system, a system of cultural
relationships
 Relationships exist among the external as well as
internal environment of the organization.
 Cooperation among group members is necessary for
the achievement of organizational objectives.
 For effective management, efforts should be made for
establishing harmony between the goals of the
organization and the various groups therein.
 Major contributions of Barnard

 Concept of organization
 Formal and informal organization
 Elements of organization
 Authority
 Functions of the Executive
 Motivation
 Executive Effectiveness
 Organizational Equilibrium
 SOCIAL SYSTEM APPROACH Contd…
•Uses
–Organizational decisions should not be based on
desires of one group alone but should reflect the
interests of all the parties.

•Limitations
–Broader than management & its practice
–Overlooks many management concepts principles &
techniques that are important to practicing managers.
 Management Science Approach
Post World War II – British use of mathematics,
Operations Research, in military operations find
applications in US post war industrial development.

 Quantitative management — use of mathematic

models, linear programming, simulation systems and
chaos theory to solve management problems.

 Operations management —techniques used to

analyze all aspects of the production system.
 Management Science Approach- Cont.
 Total Quality Management (TQM) —analyzing
input, conversion, and output to increase product
quality.
 Management Information Systems (MIS) —
provides information vital for effective decision
making
 HUMAN BEHAVIOUR APPROACH
 Organization as people
a) Interpersonal Behavior Approach -Individual Psychology
b) Group Behavior Approach -Organization Behavior
 Features
–Draws heavily from psychology & sociology.
–Understand human relations.
–Emphasis on greater productivity through motivation &
good human relations
–Motivation, leadership, participative management & group
dynamics are core of this approach.
HUMAN BEHAVIOUR APPROACH Contd..

Uses
–Demonstrates how management can be effective by applying
knowledge of organization behavior.
•Contributors
–Maslow, Herzberg, Vroom, Mc Cleland, Argyris, Likert,
Lewin, Mc Gregor, etc.
•Limitations
–Treating management as equivalent to human behavior.
–Talks about organization & organization behavior in vague
terms.
 DECISION THEORY APPROACH

• Manager –Decision maker

• Organization–Decision making unit.
• Features
–Management is decision making.
–Members of Organization -decision makers and
problem solvers.
–Decision making -control point in management
–Increasing efficiency -the quality of decision
–MIS, process & techniques of decision making are the
subject matter of study.
 DECISION THEORY APPROACH
•Contributors
–Simon, Cyert, Forrester, etc.

•Uses
–Tools for making suitable decisions in
organizations.

•Limitation
–Does not take the total view of management
–Decision making -one aspect of management
 Contemporary Management
Perspectives
 Systems Theory

 Contingency/ Situational Theory

 The Learning Organization Perspective

Systems Approach
 Systems Theory
 Views the organization as a system of interrelated
parts that function in a holistic way to achieve a
common purpose.

 Systems theory concepts that affect management

thinking:
 Open and closed systems
 Subsystems
 Synergy
 Equifinality
The Organization as an Open System
 Other System Considerations
 Closed system
 A system that is self-contained and thus not affected by
changes occurring in its external environment.
 Often undergoes entropy and loses its ability to control
itself, and fails.
 Synergy
 Performance that results when individuals and
departments coordinate their actions
 Performance gains of the whole surpass the sum of
the performance of the individual components.
 Contingency Approach
 Thereis no “one best way.”
 Organizing (and other) decisions that match the
demands of the environment provide adaptation.
 Contingency Theory
 States
that there is no “one best way” to manage an
organization.
 Becausewhat works for one organization may not work
for another

 Situational characteristics (contingencies) differ

 Managers need to understand the key contingencies that

determine the most effective management practices in a
given situation
 The Learning Organization
 Themanagement approach based on an
organization anticipating change faster than its
counterparts to have an advantage in the market
over its competitors.

 There are two ways organizations can learn:

 Experimental learning
 External learning