chapter two

The Evolution of Management Thought

McGraw-Hill/Irwin Contemporary Management, 5/e

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Learning Objectives
Basically, this chapter briefly provides the history of management. More important than the dates and names are knowing how Principles of Management were born and have evolved so that you can understand where they are today and predict where theyll be tomorrow.

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Taylors Principles of Scientific Management (1890s early 1900s)

1. 2. 3. 4. 5. 6.

Scientifically designing the One Best Way to do a job, replacing how its always been done. Ex: Shoveling Selecting the right worker for each job. Studying worker strengths and weaknesses to determine what training is required and what equipment is ideal. Emphasis on maximizing efficiency and minimizing waste (of time and money) Monitoring performance against standards and rewarding employees accordingly Goal was for the company to benefit (cost savings) and the employees to benefit (wage increases)
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Problems with Scientific Management

 Companies

benefited in the short run with increased efficiency, but the workers did not receive increased wages  Specialized jobs became very boring, dull.  Workers ended up distrusting the Scientific Management method.  Workers could purposely under-perform.  Management responded with increased use of machines and conveyors belts no difference in approach today
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Other Scientific Management Pioneers



Frank and Lillian Gilbreth - Used Time & Motion Studies to identify greatest efficiency in movements. Example: Bricklaying Henry L. Gantt Sought efficiency through task scheduling (Gantt chart) and Rewarding Productivity (Bonuses!). Also was the first major advocate for businesses and managers being socially responsible
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Administrative Management Theory

Administrative Management - The study of how to create an organizational structure that leads to high efficiency and effectiveness. Max Weber - Developed the Principles of Bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness.

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Webers Principles of Bureaucracy

1) 2)

3)

4)

5)

A managers formal authority derives from the position he holds in the organization. People should occupy positions because of their performance, not because of their social standing or personal contacts. Each positions formal authority, responsibilities and relationship to other positions should be clearly specified. Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them. Managers must create a well-defined system of rules, standard operating procedures, and norms so they can effectively control behavior.
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Rules, SOPs and Norms

 Rules

formal written instructions that specify actions to be taken under different circumstances to achieve specific goals  Standard Operating Procedures (SOPs) specific sets of written instructions about how to perform a certain aspect of a task  Norms unwritten, informal codes of conduct that prescribe how people should act in particular situations

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Fayols 14 Principles of Management (early 1900s)

1. 2. 3. 4. 5.

6.

7.

Division of work There will be specialists in positions Authority over employees and in making decisions Discipline obedience and respect is required Unity of command 1 supervisor per employee Unity of direction everyone working towards the same goals Subordination of individual interests to general interests the group comes before the individual Remuneration wages depend on numerous factors
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Fayols 14 Principles of Management

8. 9. 10. 11. 12. 13. 14.

Centralization how much power held by specific managers is defined Scalar chain who reports to who is clearly defined for everyone to see and communication must follow Order everything has a specific place Equity everyone will be treated the same Stability personnel planning is necessary Initiative everyone should try their best Esprit de corps harmony and unity within the organization needs to be built
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Fayols 14 Principles of Management (early 1900s)



These Principles are the basic framework for the Management functions of Planning, Organizing, and Controlling

General Themes:  Overall Organizational efficiency  Efficient and Effective Personnel Management  Managers should act appropriately and consistently Q. What is missing in Fayols Principles?
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Lincoln Electric Management Plan (1913)

1. 2. 3. 4. 5. 6. 7. 8. 9.

An advisory board of employees. A piece-rate method of compensation wherever possible. A suggestion system. Employee ownership of stock. Year-end bonuses. Life insurance for all employees. Two weeks of paid vacation. An annuity pension plan. A promotion policy.
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Behavioral Management Theory

Behavioral Management - The study of how managers should personally behave to motivate employees to perform at high levels and be committed to the achievement of organizational goals. Mary Parker Follett - Concerned that Taylor ignored the human side of the organization  Suggested workers help in analyzing their jobs  If workers have relevant knowledge of the task, then they should control the task
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The Hawthorne Studies (1920s)



The Hawthorne Studies were the first to identify human variables (such as attitudes towards managers) impacted productivity: Psychological and Sociological factors might influence performance in the workplace DUH!  Group dynamics  Individual recognition and attention  Participation in decision making  Effective supervision = productivity & morale Catalyst for the Human Relations Movement - studying the interaction of people
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The Professional Manager Emerges (1930s)

The Professional Manager:  Not an owner or investor in the company  Is hired to manage a facet of the company  Are responsible to employees, stockholders, and the public

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Management Science Theory

 Contemporary

approach to management that focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services.

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Management Science Theory

 Quantitative management

utilizes linear and nonlinear programming, modeling, simulation, queuing theory and chaos theory.  Operations management techniques used to analyze any aspect of the organizations production system.  Management Information Systems (MIS) provides information vital for effective decision making.  Total Quality Management (TQM) focuses on analyzing input, conversion, and output activities to increase product quality.
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Contingency Theory
There is no one best way to organize  IT DEPENDS!  The idea that the organizational structures and control systems manager choose depend on characteristics of the external environment in which the organization operates.


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Contingency Theory

Figure 2.5 2-19

Contingency Theory
Mechanistic Structure  Authority is centralized at the top  Emphasis is on strict discipline and order  Employees are closely monitored and managed  Can be very efficient in a stable environment Organic Structure  Authority is decentralized throughout the organization  Departments are encouraged to take a crossdepartmental or functional perspective  Works best when environment is unstable and rapidly changing
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Theory Z Management: Blending the Best of Japanese and American Management Theories (1980s)
Japanese-Type Organization American-Type Organization

Theory Z-Type Organization

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Japanese-Type Organization
     

Lifetime employment Collective decision making Collective responsibility Slow evaluation and promotion Non-specialized career paths True concern for employees as people

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American-Type Organization
     

Short-term employment (relative to the Japanese) Individual decision making Individual responsibility Rapid evaluation and promotion Specialized career path Segmented concern for employee as a person

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Theory Z-Type Organization

     

Long-term employment Consensual, participative decision making Individual responsibility Slow evaluation and promotion Moderately specialized career paths Concern for the employee, including their family

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Major Components and Events of the Management Movement A Chronology

     

U.S. Industrial Revolution (before 1875) Captains of industry (1875-1900) Scientific Management era (1895-1920) Period of Solidification (1920 to early 1930s) Human relations movement (1931 to late 1940s) Management process period (early 1950s to early 1960s)

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Major Components and Events of the Management Movement Continued

       

Management theory jungle (early to late 1960s) Systems approach (late 1960s to early 1970s) Contingency approach (1970s) Theory Z (1980s) Search for excellence (1980s) Emphasis on quality, TQM (1980s-1990s) International movement (1980s-1990s) Management into twenty-first century
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Management TODAY!
Stick around for the next 3 months and find out! In the meanwhile Q. In what ways do you think management is different now than it was in Fayols day (100 years ago!) Q. What do you think are the most important aspects of management today?
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