Study Unit 1 - The Development of Management Thought

8/6/2019 Study Unit 1 - The Development of Management Thought

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By the end of this Study Unit you should be able to:

` Understand the early developments in management

thought regarding the organisation and its

management` Appreciate the relationships between management

theor y and practice

` Compare and contrast the main contributions to the

development ofmanagement thinking andorganisational behaviour

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With the advent of the Industrial Revolution came:

` The need to increase efficiency and effectivenesshas driven the evolution of management theor y

` Job specialization, the division of labor and the study

of how people do things is central to the pursuit of increased efficiency

` Theories about the best ways to motivate and

control employees have evolved

` The study of the external environment¶s impact onan organization has become a central issue in

management thought

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1A-44

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Systematic

management

Administrative

management

Quantitative

management

Systems

theory

Current and

future revolutions

Scientific

management Human

relationsOrganizational

behavior

Bureaucracy

Classical Approaches Cont emporary Approaches

Contingency

theory



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` The effectiveness of management activities/ functions inpractice is based on appreciating early ideas ± whether accepted or displaced.

` Practical management of people and their behaviour isfounded on ideas of what will work in practice

` Management thought has evolved to cope withenvironmental changes

` Management insight requires combining conceptualframeworks of organizational behaviour, and itsapplication in practice

` They form the foundations of current understanding of organizational behaviour

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A management perspective thatemerged during the 19th and early

20th centuries that emphasized arational, scientific approach to thestudy of management, and sought

to make organizations efficientoperating machines.

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Focuses on theFocuses on theindividualindividualworkersworkers

productivityproductivity

Focuses on theFocuses on the

functions offunctions ofmanagementmanagement

Focuses on theFocuses on the

overalloverallorganizationalorganizational

systemsystem



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1) Understand the purpose of the organization

2) Examine organizational structure

3) Focus on the operations of the organizationundertaken to achieve organizational objectives

4) Sought to prescribe ³one best way´ for

organizations to be structured and managed

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Adam Smith (18th centur y economist)

Observed that firms manufactured pins in one of twodifferent ways:

- Craft-style²each worker did all steps.

- Production²each worker specialized inone step.

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Smith realized that:

Breaking the total job down into steps

allowed workers to become ver y

skilled at specific tasks, thus

increasing productivity

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A subfield of the ClassicalManagement Perspective that

emphasized scientifically-determined changes inmanagement practices as the

solution to improving labour productivity.

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` EFFICIENCY ± by increasing the output per worker and reducing deliberate ³underworking´ (a.k.a.systematic soldiering) by employees

` PR EDICTABILITY ± of job performance, through

standardizing tasks by dividing up tasks into small,closely specified subtasks

` CONT R OL ± by establishing discipline throughhierarchical authority and introducing a system

whereby all management¶s policy decisions could beimplemented

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` A clear division of tasks and responsibilities betweenmanagement and workers

` Use of scientific methods to determine the best way of doing a job

` Scientific selection of the person to do the newly designed job

` Training the selected worker to perform the job in theprescribed way

` Surveillance of workers through the use of hierarchies

of authority and close supervision` The introduction of payment on a piecework basis

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` Studied fatigue caused by lighting,heating, and the design of tools andmachines.

` Time and motion studiesx Breaking up each job action into its components.

x Finding better ways to perform the action.

x Reorganizing each job action to be more efficient.

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` It assumed that securing maximum earnings was thesole motivator of employees

` Neglected personal and interactional aspects of work

` Ignored the psychological needs and capabilities of workers

` Proposed a complex and unwieldy mode of supervision ± ³functional foremanship´

` It failed to appreciate worker reactions to proposed

procedures

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The study of how to create anorganizational structure that leads

to high efficiency

and effectiveness.

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Focuses on managing the whole organization

rather than individuals.

Henri Fayol (1841±1925)

x Was first to identif y the specific managementfunctions of planning, organizing, leading, and

controlling.

Lyndall Urwick (1891±1983)

x Integrated the work of previous managementtheorists.

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A subfield of the Classical ManagementPerspective that focused on the total

organization rather than the individualworker, and delineating the activities/functions of management to create an

organizational structure that leads to highefficiency and effectiveness

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` FO R ECASTING ± predicting future outcomes

` P LANNING ± devising a course of action to meet expected

circumstances in the future

` O R GANIZING ± allocating resources, dividing/ grouping

tasks to achieve objectives

` COMMANDING ± providing direction to employees

` COO R DINATING ± ensuring resources and activities are

working well towards the common goal

` CONT R OLLING ± monitoring progress to ensure that plans

are being carried out properly

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Functional division of work Hierarchical relationships Bureaucratic forms of control Narrow supervisor y spans Closely prescribed roles

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Like Taylor, Fayol prescribed principles which he believed would suit all organizat ions irrespect ive of size, t echnology, environment, employees et c., and was based on t he applicat ion of

cert ain key principles:



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1) Division of Labour

2) Authority

3) Discipline

4) Unity of Command

5) Scalar

principle/chain

6) Unity of direction

7) Interest

subordination

8) Remuneration

9) Centralization

10) Order

11) Equity of treatment12) Stability of

employment

13) Opportunity for initiative

14) Esprit de Corps

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Urwick consolidated Fayol¶s ideas

and, to an extent, synthesizedthem with the Scientific

Management approach to

prescribe 10 principles of organization

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1) Principle of the objective

2) Principle of authority

3) Principle of responsibility

4) Principle of correspondence

5) Principle of continuity

6) Principle of specialization

7) Principle of definition

8) Span of Control

9) Principle of coordination

10) Principle of balance

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` It misleadingly proposed a single, standardized

organizational model as the optimum one

` It promoted a militaristic, mechanistic organization.

` It overlooked the negative consequences of tight control

and narrow task specialization which can de-motivate

and hinder efficiency

` O

ver-emphasized an organization¶s formal structure.

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` It underestimated the complexity of organizations

` Based on personal knowledge, rather than systematic

research

` Lacked concern for social interactions

` Underestimated the effects of conflict

` Misunderstood how people thought, and processed

information

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Weber¶s work stemmed from his

interest in POWER and AUTHORITY

within societies. This concept was

then extended to examine its

relevance and applicability to

organizations.

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`POWER ± is used to refer to the

capacity of individuals to overcomeresistance on the part of others, toexert their will, and to produce resultsconsistent with their interests andobjectives.

`AUTHORITY - is the right to give

orders, enforce rules, make decisionsand exercise power and control over others

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Type Description

Traditional Subordinat e obedience based upon

custom or tradit ion

Charismatic Subordinat e obedience based uponspecial personal qualit ies associat ed

wit h cert ain social reformers, polit ical

leaders, religious leaders, ororganizat ional leaders

Rationallegal Subordinat e obedience based upon

t he posit ion held by superiors

wit hin t he organizat ion



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A form of organization structure underpinned by therational-legal type of authority. Weber used the term todescribe a particular type of organization and was

concerned with how work was divided, coordinated andcontrolled. The bureaucratic organization¶s continuity was related to formal structure and positions, rather thanon particular individuals, based on the themes of IMPERSONALITY and RATIONALITY.

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2-32

Weber¶s

Principles of

Bureaucracy



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` JOB SPECIALIZATION ± jobs are broken down into simple,

routine and well-defined tasks. Clear definitions of authority and

responsibility are legitimated as official rules

` HIERARCHYOF AUTHORITY ± clear chain of command,and workers clearly know to whom they are accountable.

` EMPLOYMENT ± personnel are selected, promoted, paid

etc. on the basis of their technical qualifications and expertise

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` RECORDING ± administrative acts and decisions are

recorded in writing to provide organizational memor y and

continuity over time.` RULES & PROCEDURES ± all individuals are subject to

explicit rules, procedures, guidelines etc. to ensure reliable,

predictable behaviour.

` IMPERSONALITY ± rules and procedures are impersonal

and uniformly applied to all individuals, managerial and non-

managerial alike

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` Emphasized individual attitudes and behaviors, and group

processes, and recognized the importance of behavioral

processes in the workplace` Hugo Munsterber g (1863±1916): A German psychologist,

³the father of industrial psychology´, who advocated applying

psychological concepts to employees selection and motivation

industrial settings.

` Mary Parker Follett (1868±1933): Recognized the

importance of the role of human behavior in the workplace.



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Focused onFocused onrat ional behaviorrat ional behavior

ClassicalClassical

PerspectivePerspective Acknowledged t he Acknowledged t he

import ance of humanimport ance of humanbehaviorbehavior

BehavioralBehavioral

PerspectivePerspective

vs.



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Acknowledged Acknowledged the importance of humanthe importance of human

behavior in shaping managementbehavior in shaping management style,style,

and isand is associatedassociated with the work of:with the work of:

xx Mar y Parker FollettMar y Parker Follett

xx Elton MayoElton Mayo

xx Douglas McGregor Douglas McGregor

xxChester Chester BarnardBarnard



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A system is a set of interrelated

parts that function as a whole to

achieve a common purpose. Any

change in one part of the system

would usually lead to a change in

another part.

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Organisations are comprised of ³interrelated parts´

e.g. departments, functions, people, technology etc.

These parts function as a ³whole´ e.g. planning/

coordination/ control of activities, policies andprocedures etc.

These parts work together for a ³common purpose´

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Closed systems

are those that are

considered to be

isolated from its

environment, and

independent of it

Open systems

are those which

are connectedto, and interacts

with its

environment.



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This approach describesorganizations as open systems

that are characterized by entropy, synergy and sub-system interdependence.

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`Entropy ± The tendency for a systemto run down and die.

`Syner gy ± The concept that the

whole is greater than the sum of itsindividual parts.

`Subsystems ± parts of a system

that depend on one another for their functioning

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`Technical sub-system

`Psycho-social subsystem

`Structural subsystem

`Goals and values subsystem

`Managerial subsystem

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Encapsulates the technology being used

in an organization, as it influences the way

work is done, the organizational form andthe relationships between people. It

includes all aspects of information and

communications technology.

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Focuses on the people within the organization,

as their INDIVIDUAL goals, aspirations, values,

beliefs, motivations etc. will influence the way

work is done, and the nature of relationships. It

recognizes the presence and influence of the

informal organization, while ensuring

adherence to the formal organization.



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Concerned with the ways in which the

transformation process is undertaken (i.e.

inputs to outputs), thus considering the

division of tasks, employee groupings into

departments, their coordination and control

etc. this is ver y reminiscent of the Classical

Approach to Management.

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Focuses on the goals and values of the

ORGANIZATION as a whole, not its individual

members (psycho-social) i.e. the mission/

purpose, supporting sub-goals etc.

These goals and values are subject to change

over time.

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Focuses to the mechanisms of coordinationand control, beyond those of the structuralsubsystem e.g. management style, budgeting,

MBO, quality control etc.This subsystem can exert influence over theother subsystems within the organization to suittheir requirements

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INPUTS OUTPUTS

TR ANSFORMATION PR OCESS

FEED ACK

Technical subsyst em

Psycho-social subsyst em

Structural subsyst em

Goals and values

subsyst em

Managerial subsyst em



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LEVELLEVEL TASK TASK TIMESCALE TIMESCALE APPR OACH APPR OACH

TECHNICALTECHNICAL

SpecificSpecific

operationsoperations

ShortShort--termterm Costing &Costing &

measuringmeasuring

ORGANIZATIONALORGANIZATIONAL

CoordinationCoordination

of specificof specific

operationsoperations

Short/Short/

mediummedium

termterm

Mediation &Mediation &

compromisecompromise

INSTITUTIONALINSTITUTIONALSelection of Selection of operations tooperations to

fitfit

environmentenvironment

LongLong--termtermForecasting &Forecasting &negotiatingnegotiating



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This approach proposes that theThis approach proposes that thesuccessful resolution of organizationalsuccessful resolution of organizationalproblems is dependent onproblems is dependent on managers¶managers¶identification of key variablesidentification of key variables in any givenin any givensituation, andsituation, and address those issues asaddress those issues asthey arisethey arise i.e. there is no ³one best way´ i.e. there is no ³one best way´

structuring or managing an organization.structuring or managing an organization.

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Problem or Situat ionProblem or Situat ion

Solut ion orSolut ion orct ion Bct ion B

Solut ion orSolut ion orct ionct ion

Solut ion orSolut ion or A ct ion C A ct ion C

Import ant Import ant Cont ingenciesCont ingencies



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`̀ Acute labor shortages in high Acute labor shortages in high--technology job sectorstechnology job sectors

and an oversupply of less skilled labor and an oversupply of less skilled labor

`̀ An increasingly diverse and globalized workforce An increasingly diverse and globalized workforce

`̀ The need to create challenging, motivating, andThe need to create challenging, motivating, andflexible work environmentsflexible work environments

`̀ The effects of information technology on how peopleThe effects of information technology on how people

workwork

`̀ The complex array of new ways of structuringThe complex array of new ways of structuring

organizationsorganizations



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Woodward focused on the relationshipbetween manufacturing technology and

organization structure, and categorized firmsalong the lines of manufacturing capabilitiesgiven certain structural characteristics e.g.administrative overhead, span of control,

formalization, centralization etc.



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`̀Unit or Small Batch ProductionUnit or Small Batch Production ± ± involvesinvolves

the production of goods in batches of one or a fewthe production of goods in batches of one or a few

products designed to customer specifications.products designed to customer specifications.`̀Mass or Lar ge Batch ProductionMass or Lar ge Batch Production ± ± thethe

production of a large volume of products with the sameproduction of a large volume of products with the same

specifications.specifications.

`̀Process ProductionProcess Production ± ± the mechanization of thethe mechanization of the

entire workflow, and nonentire workflow, and non--stop productionstop production

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Burns & Stalker focused on the relationshipbetween the organization and its environments,which led them to propose two ³ideal types´ of management organization, which form theextremes on a continuum along which mostorganizations can be placed. They are:

The Mechanistic SystemThe Organic System

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Mechanistic:Mechanistic:Organizations as

machines ± i.e. acollection of moving

parts which act and

interact in defined,

routine and expectedways.

Or ganicOr ganic::Organizations asbiological organisms ±i.e. a growing entity which learns andadapts to itsenvironment over time

to ensure its survival



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`̀ The nature of the environmentThe nature of the environment

`̀ Distribution of tasksDistribution of tasks

`̀ Nature of individual tasksNature of individual tasks

`̀ Who has the power to define/ redefine tasksWho has the power to define/ redefine tasks`̀ Task scopeTask scope

`̀ Structure of control, authority andStructure of control, authority andcommunicationcommunication

`̀ Perceived location of knowledgePerceived location of knowledge



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The idea that the organizational structures andcontrol systems are contingent on characteristics

of the external environment



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Advocated that the main concern of management is the pursuit of excellence ±

striving for, measurement and eventualachievement of high standards of performance. The theor y is based on a totalcommitment to a series of management and

organizational imperatives.



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`̀ Bias for actionBias for action

`̀ Autonomy and entrepreneurship Autonomy and entrepreneurship

`̀ Close to the customer Close to the customer

`̀ Productivity through peopleProductivity through people

`̀ Hands on, value drivenHands on, value driven

`̀ ³Stick to the knitting´³Stick to the knitting´

`̀ Simple form, lean staff Simple form, lean staff

`̀ Simultaneous looseSimultaneous loose--tight propertiestight properties

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A more radical and flexible approach which proposed

that certain functions and activities be withdrawn from

functional departments and be allocated to outside³specialists´ i.e. the concept of outsourcing. The

formal structure of functional departments is to be

replaced by teams. It proposed the creation of an

eventual virtual organization.

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Ouchi developed this approach in an attempt to apply

the lessons of Japanese organization and

management styles and practices to theW

esternorganizations. Its purpose was to develop a

philosophy and value system which fosters

commitment to organizational goals.

N ote:the potential issues which would arise due to cultural

differences.

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` Secure lifetime employment

` Consensual, participative decision-making

` Collective responsibility

` Slow individual development` Implicit, informal control

` Holistic concern for the organization and its

members

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`̀ Individual expression and responsibilityIndividual expression and responsibility

`̀ Lack of company loyaltyLack of company loyalty

`̀ Focus on shortFocus on short--term, personal rewardsterm, personal rewards

`̀ Competition among employeesCompetition among employees`̀ Individualistic, autocratic decisionIndividualistic, autocratic decision--makingmaking

`̀ Formal, explicit structures and controls.Formal, explicit structures and controls.



Can you:

` Explain the nature of the Classical Approaches to

Management, and assess their contribution to the

study of people in organizations

` Understand and explain the Behavioural limitations of

the Classical Approaches

` Explain the nature of Systems Theor y and more

Contemporar y Approaches, and assess their contribution to Management

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Study Unit 1 - The Development of Management Thought

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