MANAGEMENT Evolution of Management

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1 MANAGEMENT Evolution of Management Eszter Daruka Teaching Assistant BUTE Department of Management and Corporate Economics 2014 Fall

2 Outline The Evolution of Management Summary 1. The Classical Management Perspective 2. The Behavioural Management Perspective 3. The Quantitative Management Perspective 4. Integrating the major perspectives 5. Contemporary Management Challenges Case study

3 McGraw-Hill Companies, Inc. Evolution of Management

4 Early Management Concepts And Influences Industrial revolution minor improvements in management tactics produced impressive increases in production quantity and quality economies of scale - reductions in the average cost of a unit of production as the total volume produced increases opportunities for mass production created by the industrial revolution spawned intense and systematic thought about management problems and issues efficiency production processes cost savings

5 Early Management Pioneers Robert Owen ( ) British industrialist who was one of the first managers to recognize the importance of human resources and the welfare of workers. Charles Babbage ( ) English mathematician who focused on creating efficiencies of production through the division of labour, and the application of mathematics to management problems.

6 1. Classical Management Perspective 1.1. Scientific Management Concerned with improving the performance of individual workers (i.e., efficiency). Grew out of the industrial revolution s labour shortage at the beginning of the twentieth century Classical Organization Theory (Administrative Management) A theory that focuses on managing the total organization rather than individuals.

7 1.1. Scientific Management Advocated the application of scientific methods to analyze work and to determine how to complete production tasks efficiently Four principles develop a scientific approach for each element of one s work scientifically select, train, teach and develop each worker cooperate with workers to ensure that jobs match plans and principles ensure appropriate division of labour Personalities: Frederick W. Taylor, Frank and Lillian Gilbreth, Henry Gantt, Harrington Emerson

8 1.1. Scientific Management Frederick Taylor ( ) Replaced old methods of how to do work with scientifically-based work methods. Eliminated soldiering, where employees deliberately worked at a pace slower than their capabilities. Believed in selecting, training, teaching, and developing workers. Used time studies of jobs, standards planning, exception rule of management, slide-rules, instruction cards, and piece-work pay systems to control and motivate employees.

9 Steps in Scientific Management 1. Develop a science for each element of the job to replace old rule-of-thumb methods. 2. Scientifically select employees and then train them to do the job as described in step Supervise employees to make sure they follow the prescribed methods for performing their jobs. 4. Continue to plan the work, but use workers to actually get the work done.

10 1.1. Scientific Management Pioneers Frank and Lillian Gilbreth Both developed techniques and strategies for eliminating inefficiency. Frank reduced the number of movements in bricklaying, resulting in increased output of 200%. Lillian made substantive contributions to the fields of industrial psychology and personnel management.

11 1.1. Scientific Management Henry Gantt Pioneers

12 1.1. Scientific Management Henry Ford Pioneers

13 1.2. Classical Organization Theory Emphasized the perspective of senior managers Five management functions: planning, organizing, commanding, coordinating, controlling Fourteen principles of management Focuses on managing the whole organization rather than individuals. Personalities: Henri Fayol, Max Weber, Lyndall Urwick, Chester Barnard

14 1.2. Classical Organization Theory Henri Fayol ( ) Was first to identify the specific management functions of planning, organizing, leading, and controlling. Max Weber ( ) His theory of bureaucracy is based on a rational set of guidelines for structuring organizations. Lyndall Urwick ( ) Integrated the work of previous management theorists.

15 Fayol s 14 principles of Management division of labour, authority, discipline, unity of command, unity of direction, subordination of individual interests to the general interest, remuneration, centralization, scalar chain, order, equity, stability of tenure of personnel, initiative, and espirit de corps (morale)

16 Max Weber s Bureaucracy Bureaucratic structures can eliminate the variability that results when managers in the same organization have different skills, experiences, and goals Allows large organizations to perform the many routine activities necessary for their survival People should be treated in unbiased manner

17 1. Classical Management Perspective Contributions Laid the foundation for later developments. Identified important management processes, functions, and skills. Focused attention on management as a valid subject of scientific inquiry. Limitations More appropriate approach for use in traditional, stable, simple organizations. Prescribed universal procedures that are not appropriate in some settings. Employees are viewed as tools rather than as resources.

18 2. Behavioural Management Perspective Emphasized individual attitudes and behaviours, and group processes, and recognized the importance of behavioural processes in the workplace. The Hawthorne Studies ( ) Human Relations Movement

19 2. Behavioural Management Perspective Hugo Munsterberg ( ) A German psychologist, the father of industrial psychology, who advocated applying psychological concepts to employees selection and motivation industrial settings. Mary Parker Follett ( ) Recognized the importance of the role of human behaviour in the workplace.

20 2.1. The Hawthorne Studies ( ) Conducted by Elton Mayo and associates at Western Electric Illumination study workplace lighting adjustments affected both the control and the experimental groups of production employees. Group study implementation of piecework incentive plan caused production workers to establish informal levels of acceptable individual output. Over-producing workers were labeled rate busters and underproducing workers were considered chiselers. Interview program confirmed the importance of human behaviour in the workplace.

21 2.2. Human Relations Movement Grew out of the Hawthorne studies - workers perform and react differently when researchers observe them Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics. Assumed that the manager s concern for workers would lead to increased worker satisfaction and improved worker performance. Aimed to understand how psychological and social processes interact with the work situation to influence performance Argued that managers should stress primarily employee welfare, motivation, and communication Personalities: Abraham Maslow, Douglas McGregor

22 2.2. Human Relations Movement Abraham Maslow ( ) Advanced a theory that employees are motivated by a hierarchy of needs that they seek to satisfy. Douglas McGregor ( ) Proposed Theory X and Theory Y concepts of managerial beliefs about people and work.

23 Theory X and Theory Y Theory X Assumptions People do not like work and try to avoid it. People do not like work, so managers have to control, direct, coerce, and threaten employees to get them to work toward organizational goals. People prefer to be directed, to avoid responsibility, and to want security; they have little ambition.

24 Theory X and Theory Y Theory Y Assumptions People do not dislike work; work is a natural part of their lives. People are internally motivated to reach objectives to which they are committed. People are committed to goals to the degree that they receive rewards when they reach their objectives. People seek both seek and accept responsibility under favorable conditions. People can be innovative in solving problems. People are bright, but under most organizational conditions their potentials are underutilized.

25 2. Behavioural Management Perspective Contributions Provided important insights into motivation, group dynamics, and other interpersonal processes. Focused managerial attention on these critical processes. Challenged the view that employees are tools and furthered the belief that employees are valuable resources. Limitations Complexity of individuals makes behaviour difficult to predict. Many concepts not put to use because managers are reluctant to adopt them. Contemporary research findings are not often communicated to practicing managers in an understandable form.

26 3. Quantitative Management Perspective Emerged during World War II to help the Allied forces manage logistical problems. Focuses on decision making, economic effectiveness, mathematical models, and the use of computers to solve quantitative problems. Teams of quantitative experts tackle complex issues facing large organizations Helps management make a decision by developing formal mathematical models of the problem Personalities: military planners in World War II

27 3. Quantitative Management Management Science Perspective Focuses on the development of representative mathematical models to assist with decisions. Operations Management Practical application of management science to efficiently manage the production and distribution of products and services.

28 Scientific Management Management Science

29 3. Quantitative Management Perspective Contributions Developed sophisticated quantitative techniques to assist in decision making. Application of models has increased our awareness and understanding of complex processes and situations. Has been useful in the planning and controlling processes. Limitations Quantitative management cannot fully explain or predict the behaviour of people in organizations. Mathematical sophistication may come at the expense of other managerial skills. Quantitative models may require unrealistic or unfounded assumptions, limiting their general applicability

30 4.1. The Systems Approach 4. Integrating the major perspectives A system is an interrelated set of elements functioning as a whole The Contingency Approach Appropriate managerial behavior in a given situation depends on (or is contingent on) a wide variety of elements.

31 4.1. The Systems Approach

32 4.2. The Contingency Approach Universal Perspective Include the classical, behavioural, and quantitative approaches. An attempt to identify the one best way to manage organizations. The Contingency Perspective Suggests that each organization is unique. The appropriate managerial behaviour for managing an organization depends (is contingent) on the current situation in the organization.

33 5. Contemporary Management Issues and Challenges Acute labour shortages in high-technology job sectors and an oversupply of less skilled labour An increasingly diverse and globalized workforce The need to create challenging, motivating, and flexible work environments The effects of information technology on how people work The complex array of new ways of structuring organizations Increasing globalization of product and service markets The renewed importance of ethics and social responsibility The use of quality as the basis for competition The shift to a predominately service-based economy

34 Summary Scientific Management Key Concepts Used scientific methods to determine the one best way Emphasized study of tasks, selection and training of workers, and cooperation between workers and management Contributions Improved factory productivity and efficiency Introduced scientific analysis to the workplace Piecerate system equated worker rewards and performance Limitations Simplistic motivational assumptions Workers viewed as parts of a machine Potential for exploitation of labour Excluded senior management tasks

35 Summary Classical Organization Theory (Administrative Management) Key Concepts Fayol s five functions and 14 principles of management Executives formulate the organization s purpose, secure employees, and maintain communications Managers must respond to changing developments Contributions Limitations Viewed management as a profession that can be trained and developed Emphasized the broad policy aspects of top-level managers Offered universal managerial prescriptions Universal prescriptions need qualifications for environmental, technological, and personnel factors

36 Summary Bureaucracy Key Concepts Structured network of relationships among specialized positions Rules and regulations standardize behaviour Jobs staffed by trained specialists who follow rules Hierarchy defines the relationship among jobs Contributions Promotes efficient performance of routine operations Eliminates subjective judgment by employees and management Emphasizes position rather than the person Limitations Limited organizational flexibility and slowed decision making Ignores the importance of people and interpersonal relationships Rules may become ends in themselves

37 Summary Human Relations Key Concepts Productivity and employee behaviour are influenced by the informal work group Cohesion, status, and group norms determine output Social needs have precedence over economic needs Contributions Limitations Psychological and social processes influence performance Maslow s hierarchy of need Ignored workers rational side and the formal organization s contributions to productivity Research overturned the simplistic belief that happy workers are more productive

38 Summary Quantitative Management Key Concepts Application of quantitative analysis to management decisions Contributions Limitations Developed specific mathematical methods of problem analysis Helped managers select the best alternative among a set Models neglect nonquantifiable factors Managers not trained in these techniques may not trust or understand the techniques outcomes Not suited for nonroutine or unpredictable management decisions

39 Summary Systems Approach Key Concepts Organization is viewed as a managed system Management must interact with the environment Organizational goals must address effectiveness and efficiency Organizations contain a series of subsystems There are many avenues to the same outcome Synergies enable the whole to be more than the sum of the parts Contributions Limitations Recognized the importance of the relationship between the organization and the environment Does not provide specific guidance on the functions of managers

40 Key Concepts Summary Contingency Approach Situational contingencies influence the strategies, structures, and processes that result in high performance There is more than one way to reach a goal Managers may adapt their organizations to the situation Contributions Limitations Identified major contingencies Argued against universal principles of management Not all important contingencies have been identified Theory may not be applicable to all managerial issues

41 Questions to consider Present the main issues, contributions and limitations of scientific management / classical organization theory / bureaucracy / Human Relations / quantitative management / contingency approach! Explain Taylor s results in scientific management! Discuss the contribution and results of Hawthorne Studies! Present McGregor s XY theory!

42 Thank you for your attention! Sources: Griffin: Management

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