The Evolution of Management Thought

McGraw-Hill/IrwinContemporary Management, 5/e

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chapter two

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 they’ll be tomorrow.

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Taylor’s Principles of Scientific Management (1890’s – early 1900’s)

1. Scientifically designing the “One Best Way” to do a job, replacing “how its always been done”. Ex: Shoveling

2. Selecting the right worker for each job.3. Studying worker strengths and weaknesses to

determine what training is required and what equipment is ideal.

4. Emphasis on maximizing efficiency and minimizing waste (of time and money)

5. Monitoring performance against standards and rewarding employees accordingly

6. 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

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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Weber’s Principles of Bureaucracy

1) A manager’s formal authority derives from the position he holds in the organization.

2) People should occupy positions because of their performance, not because of their social standing or personal contacts.

3) Each position’s formal authority, responsibilities and relationship to other positions should be clearly specified.

4) Authority can be exercised effectively when positions are arranged hierarchically, so employees know whom to report to and who reports to them.

5) 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 NormsRules – 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

Fayol’s 14 Principles of Management (early 1900’s)1. Division of work – There will be specialists in

positions2. Authority – over employees and in making decisions3. Discipline – obedience and respect is required4. Unity of command – 1 supervisor per employee5. Unity of direction – everyone working towards the

same goals6. Subordination of individual interests to general

interests – the group comes before the individual7. Remuneration – wages depend on numerous factors

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Fayol’s 14 Principles of Management

8. Centralization – how much power held by specific managers is defined

9. Scalar chain – who reports to who is clearly defined for everyone to see and communication must follow

10. Order – everything has a specific place11. Equity – everyone will be treated the same12. Stability – personnel planning is necessary13. Initiative – everyone should try their best14. Esprit de corps – harmony and unity within

the organization needs to be builtMcGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

Fayol’s 14 Principles of Management (early 1900’s)

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 Fayol’s Principles?

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Lincoln Electric Management Plan (1913)

1. An advisory board of employees.

2. A piece-rate method of compensation wherever possible.

3. A suggestion system.

4. Employee ownership of stock.

5. Year-end bonuses.

6. Life insurance for all employees.

7. Two weeks of paid vacation.

8. An annuity pension plan.

9. A promotion policy.McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

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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

The Hawthorne Studies (1920’s)

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 (1930’s)

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 organization’s 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

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Contingency Theory

Mechanistic StructureAuthority is centralized at the topEmphasis is on strict discipline and orderEmployees are closely monitored and managedCan be very efficient in a stable environment

Organic StructureAuthority is decentralized throughout the organization

Departments are encouraged to take a cross-departmental or functional perspective

Works best when environment is unstable and rapidly changing

Theory Z Management: Blending the Best of Japanese and American Management

Theories (1980’s)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 centuryMcGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

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 Fayol’s day (100 years ago!)

Q. What do you think are the most important aspects of management today?

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