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Arun Mishra
Evolution of Management
Thoughts
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Definitions of ManagementHarold Koontz & Heiz Weihrich defined
management as the process of designingand maintaining an environment in whichindividuals, working together in groups,
efficiently accomplish selected aims.
Louis E. Boone & David L. Kurtz definesmanagement as the use of people andother resources to accomplish objectives.
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Definitions of ManagementDelton E. McFarland defines management as
a process, by which managers create,direct, maintain, and operate purposiveorganizations through systematic,
coordinated, cooperative human efforts.
Mary Parker Fellot termed management as
the act of getting things done throughpeople.
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Management?Management is a set of activities including
planning and decision making, organizing,leading, and controlling, directed at anorganizations resources (human, financial,
physical, and information) with the aim ofachieving organizational goals in an efficientand effective manner.
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Some practical aspects of Management
All these definition suggest the followingaspects of management: Managers carry out the functions of Planning, organizing,
staffing, leading & controlling.
Management is essential to all kinds of organizations. Management is necessary at all levels hierarchy.
The goal of all managers is to accomplish the objectiveof creating surplus.
The aim of managers is to improve productivity,
efficiency ad effectiveness.
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Evolution of the Management Thought
Evolution dates back to human civilisation
Every human group needs management
Instances - Agricultural revolution5000 BC
Egyptian civilisations, pyramids - 4000 BC Ancient India - Harappa & Mohenjodaro2000 BC
Italian trading houses: Introduction of double entrybook keeping1300 and 1400 AD
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In the 19th century
- Industrial revolution
- Mass production - Huge capital
- Ownership separated from management
20th century
- World war I
- Limited resources available
- Need for solution to use them in an optimum way
- World War II added to the problem
Thus, the issue of managing complex and hugebusiness and growing competition forced us todevelop systematic management concepts andprinciples
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Scientific Management -
Frederick W. Taylor (1856-1915)
A worker and then a supervisor in steel company
Carried experiments to increase efficiency of theworkers
Published many books and papers
Studied M.E (Masters of Engineering)
His experiments are divided into
Elements and tools of scientific management Principles of scientific management
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Elements and tools of scientific management
1. Separation of planning and doing-Supervisor plans,
worker only carries out the task
2. Functional foremanship- 4 types of supervisors for
planning aspect, while 4 for supervision aspect of the
work
3. Job Analysis- best way to do a job
4. Standardisation of process, period and amount of
work, working conditions, tools used etc
5. Scientific selection and training of workers
6. Financial incentives7. Economy- optimum usage of resources an eliminate or
reduce wastages
8. Mental revolution cooperation between workers and
the management
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Principles of scientific management
Replacing rule of thumb with science
Harmony in group actions
Cooperation
Maximum output Development of workers
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Critical Analysis of Scientific Management
Relevant from an engineering point of view ratherthan management point of view
Human aspect of the work was sidelined- workersgot aggressive resulting in unhealthy competition
Increased authoritarian approach in industries-strict supervision
Financial incentives exploited the workers
(Differential piece rate system)
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Administrative ManagementHenry
Fayol (1841-1915)
Henry Fayol- French Industrialist
Used the term- Administration instead ofManagement
Divided industrial organisation into 6 groups-
Technical
Commercial
Financial
Security Accounting
Managerial
Identified qualities of a Manager
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Managerial Qualities and training-according to Fayol
Physical- Health
Mental- ability to learn, judge, think, plan
Moral- loyalty, firmness, tact, dignity
Educational- acquaintance to subjects notrelated to functions performed
Technical- pertaining to the function performed,eg, production
Experience- arising through work
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Fayols 14 principles of Management
1. Division of work
To take advantage of specialisation, every worker/
manager works on a same part/function. Itincreases the accuracy, ability and speed of work.
2. Authority and responsibilityBoth are related. Authority arises out of a
managers position and responsibility, out ofassignment of activity. Acc, to Fayol, there shouldbe parity (equality) between both.
3. Discipline
It can be self imposed, or commanded. Disciple by
command arises through company policies.
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4. Unity in command
A person should get orders from only one superior. This
increases clarity, reduces conflict and builds apersonal responsibility for results
If it is violated, discipline is lost, importance ofauthority decreases and stability is threatened.
5. Unity of direction
Each group of activities with same objective, must
have only one plan and one head.
Unity in command defines the reporting relationship,while unity in direction defines the grouping ofactivities.
It ensures better coordination among activities.
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6. Subordination of individual, to general interest
Interest of the organisation is more important than
the interest of one/few employees, when there is aconflict between the two.
Hence, superiors should be the ideals, superviseemployees continuously and also have a fairagreement with them.
7. Centralisation
An organisation must have a proper balance of
centralisation and decentralisation, depending onits size, activities, objectives, employees etc.
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8. Remuneration
Should be fair to both- employee and employer
In line with cost of living and value of employeeFayol did not advocate profit sharing plan forworkers, but for managers
9. Scalar chainIt is the flow of authority or command, throughwhich every communication, must pass
In special circumstances, this flow can be short-
circuited in situations, when the scalar chain ofcommunication is non feasible. This is done, using agang plank
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10. Order
This refers to arrangement of things and people inan organisation - A place for everything andeverything in place
Similarly, the right person must be placed at theright position. This demands for precise knowledgeof human requirement and resources
11. Equity
combination of justice and kindness
It should be maintained in behaviour andtreatment towards employees
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12. Stability of Tenure
Employee should be given a minimum job securityat least
This ensures that he is given time to adjust to newwork and succeed in it.
13. Initiative
Managers must encourage employees to takeinitiative, within the limits of their authority.
It increases the zeal and energy in the employee
14. Espirit de Corps
Union is strengthManagers must encourage the team spirit amongthe employees
Erring employees must be given oral directions and
not asked for a written explanation
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The human relations approach
Elton Mayo Conducted the famous Hawthorne Experiments carried
out at the Western Electric Company, in the UnitedStates of America that started in the early 1920s.
In the approaches by Taylor and Fayol, the human
element in the organisation was not stressed upon. The elements in these approaches were not giving
evoking positive results.
The Western Electric Company, Chicago had Hawthorne
plant that manufactured telephone bell system The company was progressive, with sickness and pension
benefits
In spite of this, there was a dissatisfaction amongworkers.
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Experiment I: Two group of workers, experimented
with the lighting or illumination and its effect on
productivity, showed no clear correlation between
light level and productivity. Experiment II: A girls group was chosen who worked
in the telephone relay assembly department. 5 types
of changes introduced over a period of time and
productivity measured after every change. Experiment III: 20,000 interviews conducted in two
years to determine employees attitude towards
company, work, supervision, waged, insurance,
incentives etc. Experiment IV: 14 male workers were employed and
hypothesis was that they would produce more in
order to earn more. It was proved wrong due to 4
reasons given by workers for a lesser output.
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Salient Features
Focus on individual, his needs and behavior
Highlight interpersonal relations
Emphasis on motivation morale and job
satisfactionConflict in an organization is always
destructive and should be always avoided.
Based on Hawthorne experiments.
People behavior as a individual may be
different than his behavior in a group.
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Focuses on the
individual workers
productivity
Focuses on the
functions of
management
Focuses on the
overall
organizational
system
Overview of Scientific, Administrative & Bureaucratic Approaches
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The human relations approach
Chester Barnard
He was the president of New Jersey BellTelephone Company.
He saw organizations as social systems that
required human cooperation. He believed that managers major roles were
to communicate and stimulate subordinates
to high levels of effort.
He also introduced the idea that managershave to examine the environment and then
adjust the organization to maintain a state of
equilibrium.
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The human relations approachChester Barnard
He connected Scientific Management with
Human Relations. Felt that executives serve two primary functions:
Must establish and maintain a communicationssystem among employees.
Must establish the objectives of the organizationand motivate employees.
Developed an acceptance theory of authority:
Authority of a manager flows from the ability of
subordinates to accept or reject an order from themanager once they: Comprehend what the order requires of them.
Review the orders consistency with organization goals.
Perceive a personal benefit in obeying the order.
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Modern Approach to management
Quantitative Approach The Systems Approach
The Contingency Approach
The Japanese managementstyle (theory z)
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Quantitative Approach Characterized by its use of mathematics,
statistics, and other quantitative techniques formanagement decision making and problemsolving.
This approach has fourbasic characteristics:
1. A decision-making focus
2. Development of measurable criteria
3. Formulation of a quantitative model
4. The use of computers Decision-Making Focus
The primary focus of the quantitative approach ison problems or situations that require direct action,
or a decision, on the part of management.
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Quantitative Approach Measurable Criteria
The decision-making process requires that thedecision maker select some alternative course ofaction.
The alternatives must be compared on the basis of
measurable criteria.
Quantitative Model
To assess the likely impact of each alternative onthe stated criteria, a quantitative model of the
decision situation must be formulated.
Computers
Computers are quite useful in the problem-solvingprocess.
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Contributions of Quantitative Approach
In Production Management-
Focus is on manufacturing technology and theflow of material in plants.
In Operation Management Focus is on organization such as hospitals,
banks, government & the military.
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Limitations of Quantitative Approach
Despite its potential impact, this approach hascertain limitations:-
Does not deal with the people aspect of an
organization!!! Unfamiliar with advanced quantitative tools!!
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The Systems Approach
System Defined
A set of interrelated and interdependent partsarranged in a manner that produces a unifiedwhole.
An approach to problem solving based on anunderstanding of the basic structure of systems.
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The Systems Approach
Basic Types of SystemsClosed systems
Are not influenced by and do not interact withtheir environment (all system input and output is
internal)Open systems
Dynamically interact to their environments bytaking in inputs and transforming them into
outputs that are distributed into theirenvironments
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The Operating Model in Organizational System
Input Transformation Output
Feedback
Companies use inputs such as labour, funds, equipment, andmaterials to produce goods or to provide services and they designtheir subsystems to attain these goals.
Labour, Finances,
Material, Information
Products/Services,
Profit/Loss
Management & Production
Process
INPUT TRANSFORMATION OUTPUT
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The Contingency Approach
Contingency Approach Defined
Also sometimes called the situational approach.
There is no one universally applicable set ofmanagement principles (rules) by which to manageorganizations.
Organizations are individually different, facedifferent situations (contingency variables), andrequire different ways of managing.
Asserts that managers are responsible fordetermining which managerial approach is likely tobe most effective in a given situation.
This requires managers to identify the key
contingencies in a given situation.
Blending Components into a Contingency Perspective
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Blending Components into a Contingency Perspective
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Assessment of Contingency Approach
Useful because of its diagnostic approach,which clearly departs from one of the best
approach of traditionalist.
It is more flexible, although draw heavily from
other approaches.
Allows managers to apply principles from
those approaches selectively and
appropriately.
Japanese Management Style
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Japanese Management Style
Theory Z
Theory Z is humanistic approach to
management approach by William Ouchi.
Advocates trusting employees and making them
feel like an integral part of the organization.
Based on the assumption that once a trustingrelationship with workers is established, productionwill increase.
Th k f t f J i d t i l i ti
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The key features of Japanese industrial organizations:
Offer lifetime employment (at least for their core workers).
Promote from within.
Insist on mandatory retirement of core workers at age 55.
Employ a large number of temporary employees mostly women.
There is a high degree of mutual trust and loyalty betweenmanagement and employees.
Career paths are non-specialized with life-long job rotation as acentral feature of career development.
Decision making is shared at all levels.
Performance appraisal is long term (ie the first appraisal takesplace 10 years after joining the company).
There is a strong sense of collective responsibility for the success ofthe organization.
And cooperation effort rather than individual achievement isencouraged.
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Management Challenges
Increasing number of global organizations. Building competitive advantage through
superior efficiency, quality, innovation, and
responsiveness.
Increasing performance while remaining
ethical managers.
Managing an increasingly diverse work
force. Using new technologies.
Henry L Gantt
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Henry L. Gantt A colleague of Taylors at Bethlehem Steel
Works Implemented a wage incentive program.
Gantts incentive system provided bonuses for
workers who completed their jobs in less time
than the standard.
Initiated a bonus plan for supervisors.
Developed planning and control techniques
using a simple graphic bar chart , The Gantt
Chart, to display relationships between
planned and completed work on one axis
and elapsed time on the other.
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The Gilbreths (1868-1924)
Frank and Lillian Gilbreth refined Taylorsmethods and made many improvements totime and motion studies, and industrialsefficiency & were early contributors to
personnel management.
Th Gilb th
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The Gilbreths
Frank and Lillian Gilbreth refined Taylors
methods. Made many improvements to time and
motion studies.
Time and motion studies: 1. Break down each action into
components.
2. Find better ways to perform it.
3. Reorganize each action to be moreefficient.
Gilbreths also studied fatigue problems,lighting, heating and other worker issues.
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Behavioral Management
Focuses on the way a manager shouldpersonally manage to motivateemployees.
Mary Parker Follett: an influential
leader in early managerial theory. Suggested workers help in analyzing theirjobs for improvements.
The worker knows the best way toimprove the job.
If workers have the knowledge of thetask, then they should control the task.
Th M Ki h t
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The McKinsey approach to
problem-solving
McKinsey's problem-solving processhas three pillars:
Fact-based
Rigidly structured
Hypothesis driven
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Facts Facts are the foundation of problem solving.
Facts aid in the development of a soundhypothesis, and then provide the evidenceneeded to support or refute it.
Facts compensate for the lack of instinct a
consultant must face since he or she does nothave a lifetime of experience in the industry onwhich to draw.
Facts also bridge the credibility gap, lending
respect to the analysis of newcomers. Hiding from the facts is only a recipe for failure,
because sooner or later, the truth will show itself.
Thus, a successful consultant will find the facts and
use them to his or her advantage.
MECE
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MECE One of the most fundamental tenants of
McKinsey problem solving is the concept ofMECE, mutually exclusive, collectively exhaustive.
MECE can be used when developing and listingissues related to the problem at hand.
First, the associate must ensure that the list ismutually exclusive, or that every item is separateand distinct. Then, he must check that it iscollectively exhaustive, that it includes every
issue relevant to the problem. This approach prevents overlap and confusion.
The Initial Hypothesis
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The Initial Hypothesis
The 3rd pillar of the McKinsey problem-solving
process is the initial hypothesis (IH). The initial hypothesis serves as a roadmap toward
the solution.
It is the solution that seems most probable early in
the engagement, after the group hasbrainstormed using their knowledge of thesituation, but before they have spent a lot of timegathering additional information and analyzing.
The initial hypothesis may or may not provecorrect, but it will provide a starting point fromwhich to work and it will guide the research andearly data analysis.