Traditional and Contemporary Issues and Challenges

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1 Lesson 2 Traditional and Contemporary Issues and Challenges Chapter summary This chapter summarizes the history of management and identifies the major challenges facing managers today. First, the historical context of business is discussed, then three traditional management perspectives the classical, behavioral, and quantitative are introduced. Contemporary perspectives, including the systems and contingency approaches, are described. The chapter concludes with a discussion of a variety of contemporary management issues and challenges.

2 English for the Students of Management Traditional and Contemporary Issues and Challenges Learning Objectives After studying this chapter, students should be able to: 1. Justify the importance of history and theory to management and discuss precursors to modern management theory. 2. Summarize and evaluate the classical perspective on management, including scientific and administrative management and note its relevance to contemporary managers. 3. Summarize and evaluate the behavioral perspective on management, including the Hawthorne studies, human relations movement, and organizational behavior and note its relevance to contemporary managers. 4. Summarize and evaluate the quantitative perspective on management, including management science and operations management and note its relevance to contemporary managers. 5. Discuss the systems and contingency approaches to management and explain their potential for integrating the other areas of management. 6. Identify and describe contemporary management issues and challenges. Part one: I. The role of theory and history in management A. The importance of theory and history 1. Why theory? - a theory is a simple conceptual framework for organizing knowledge and providing a blueprint for action to help guide organizations toward their goals. 2

3 Traditional and Contemporary issues and Challenges 2. Why history? - Contribution from past industrialists have molded the American culture, and managers can benefit from an awareness of these contributions. B. Precursors to management theory 1. Management in antiquity - although the practice of management can be traced back to 3000 B.C., it was not given serious attention until the 1800s when large organizations emerged during Industrial Revolution. 2. Early management pioneers Robert Owen was one of the first managers to show respect and dignity to workers in his factory. He implemented better working conditions, raised the minimum age for child labor, reduced hours, and supplied meals. Charles Babbage applied mathematic principles to find ways to make the most efficient use of facilities and materials. He also advocated profitsharing plans. II. The classical Management Perspective A. Scientific management Scientific management focuses on ways to improve the performance of individual workers. Frederick W. Taylor saw workers soldiering, or deliberately working beneath their potential and designed a 4-step method to overcome this problem. It begins with breaking the job into its smallest pieces. The second step is to select the most qualified employees to perform the job and train them to do it. Next, supervisors are used to monitor the employees to be sure 3

4 English for the Students of Management they following the methods prescribed. Finally, continue in this fashion, but only use employees who are getting the work done. The Gilbrerths, a husband and wife team, also helped to find more efficient ways for workers to produce output, Frank Gilbrerth made his most contribution in the field of bricklaying. He changed an 18-step process into a 5-step process and increased productivity by about 200 percent. Henry Gantt introduced the Gantt chart, which is a way to schedule work. This type of chart is still used today. Harrington Emerson was an advocate of specialized management roles in organizations. B. Administrative management organization. Administrative management focuses on managing the total Henri Fayol was the first to identify the four management functions - planning, organizing, leading, and controlling, and he developed guidelines for managers to follow. These guidelines form fourteen principles for effective management. Lyndall Urwick is best known for integrating scientific management with administrative management. Max Weber outlined the concept of bureaucracy based on a rational set of guidelines for structuring organizations in the most efficient manner. His work is the foundation of contemporary organization theory. 4

5 Traditional and Contemporary issues and Challenges Chester Barnard wrote about the acceptance of authority and how managers get employees to do what they ask in a book called the Functions of the Executive. C. The Classical Management Perspective Today 1. Contributions a. Laid the foundation for management theory. b. Identified key processes, functions, and skills of managers that are still important today. C. Made management a valid subject of scientific inquiry. 2. Limitations a. Best used in simple, stable organizations. b. Provided universal procedures that are not appropriate in all settings. c. Most viewed employees as tools rather than resources. III. The Behavioral Management Perspective A. The Hawthorne Studies The Hawthorne studies were held at Western Electric and sponsored by General Electric. Elton Mayo and his colleagues controlled the lighting in one room of workers but not in another. When the illumination was increased in the experimental group, productivity increased in both groups. The increase in productivity was attributed to the fact that the workers were having extra attention paid to them, maybe for the first time. Other studies found that employees will not work as fast as they can when being paid piecework wages. Instead, they will perform to the level informally set by the group in order to be accepted by the group. These two studies, and others, led Mayo to 5

6 English for the Students of Management the conclusion that individual and social processes played a major role in shaping workers attitudes and behavior at work. B. The Human Relations Movement The human relations movement, which stemmed from the Hawthorn studies, is based on the idea that a manager's concern for workers will lead to their increased satisfaction and improved performance. The movement includes the need theories of motivation, such as Maslow s hierarchy of needs and McGregor's Theory X and Theory Y. C. The Emergence of Organizational Behavior The emergence of organizational behavior occurred because of the too simplistic descriptions of work behavior by the human relationists. Organizational behavior takes a holistic view of behavior by addressing individual, group, and organization processes. D. The Behavioral Management Perspective Today 1. Contributions a. Gave insights into interpersonal processes in organizations such as motivation and group dynamics. b. Focused managerial attention on these processes. c. Challenged the view of employees as tools and not resources. 2. Limitations a. The complexity of human behavior makes prediction difficult. b. Managers may be reluctant to adopt some of the behavioral concepts. c. Contributions are often not communicated to the practicing managers in an understandable form. 6

7 Traditional and Contemporary issues and Challenges Part One Exercises T/F Are these sentences true or false? 1. The serious study of management began in the nineteenth century. 2. Early economists tried to develop techniques and procedures that would increase managerial efficiency and effectiveness The main goal of scientific management was to be as efficient as possible Administrative management focuses on the management of the whole organization as opposed to improving output of individual workers. 5. The Hawthorne studies showed that piece-rate pay systems are effective in increasing worker output up to the limit of the workers' physical capacity..... Comprehension Questions Find the choice a, b, c, or d that best completes each statement. 1. Which of the following statements with respect to the early practice of management is correct? a. The practice of management dates back a bout 100 years. b. The scientific study of management as a field of inquiry dates back to the nineteenth century. c. By 1900, Most organizations were large. d. Survival was not an issue in most organizations before

8 English for the Students of Management 2. Motivating workers through attractive wage and benefit packages reflect to which of the following schools? a. Quantitative b. Behavioral c. Classical d. Contingency 3. Scientific management focuses on. a. improving the efficiency of the individual worker. b. managing the overall organization. c. enhancing the social aspects of the workplace. d. creating mathematical models of organization. 4. Which of the following focuses on the management of the entire firm? a. Contingency theory b. Scientific management c. Administrative management d. Theory X 5. A key feature of behavioral management theory is its emphasis on. a. standardizing employees' behavior. b. attitudes, behaviors, and group processes. c. mathematical modeling of organizational processes. d. motivating workers through use of economic incentives. 8

9 Traditional and Contemporary issues and Challenges Matching Questions. 1. Includes Weber's work on bureaucracy. a. human relations 2. Emphasizes such as practices as time and movement motion studies. b. scientific management 3. Assumes human behavior is very complex. c. organizational 4. Focused on managing the total organization. behavior d. administrative management Theory Part two: IV. The Quantitative Management Perspective The quantitative management perspective focuses on decision making, economic effectiveness, mathematical models, and the use of computers in organization. The two branches of the quantitative approach are management science and operations management. A. Management Science Management science focuses specifically on the development of mathematical models. These models help organizations to try out various activities with the use of a computer. Modeling can help managers locate the best way to do things and save money and time. B. Operations Management Operations management is an applied form of management science that helps organizations develop techniques to produce their products and services more efficiently. 9

10 English for the Students of Management C. The Quantitative Management Perspective Today 1. Contributions a. Developed sophisticated quantitative techniques to assist in decision making. b. Models have increased our awareness of complex organizational processes and have aided in the planning and controlling processes. 2. Limitations a. Cannot fully explain or predict behavior of people. b. Mathematical sophistication may come at the expense of other important skills. c. Models may require unrealistic or unfounded assumptions. V. Integrating Perspectives for Managers A. The Systems Perspective A system is an interrelated set of elements functioning as a whole. An organization as a system is composed of four elements: inputs (material or human resources), transformation processes (technological and managerial processes), outputs (products or services), and feedback (reactions from the environment). Open systems are systems that interact with their environment. Subsystems are systems within a broader system. Synergy are units that are more successful working together than working alone. Entropy is the process that leads to decline. 10

11 Traditional and Contemporary issues and Challenges situation. B. The Contingency Perspective Appropriate managerial behavior depends on the elements of the Universal perspectives tried to identify the "one best way" to manage organizations. Contingency perspective argues that universal theories cannot be applied to organizations because each is unique. C. An Integrating Framework Managers need to include the parts from each perspective that are relevant to their situation and apply them using both a systems and contingency approach. The basic premise of the integrative framework is that elements of the classical, behavioral, and quantitative perspectives may all be relevant. However, none is likely to provide a complete explanation. Therefore, managers need to carefully assess situations and then select those from each perspective that can be applied. VI. Contemporary Management Issues and Challenges A. Popular management theory 1. Type Z model organizations attempt to integrate parts of the Japanese model of management (collective decision making, slow evaluation and promotion, and holistic concern), individual responsibility from the U.S. model of management, and variations of other aspects of management models to create a hybrid model of management. 11

12 English for the Students of Management 2. The concern for excellence is an approach used by firms who have a basic set of characteristics that leads them to excel. These characteristics include getting thing done on time, staying close to the customer, using hands-on management, and doing what the company knows best among others. B. Contemporary management challenges 1.Globalization of business is inevitable. Companies can no longer ignore the fact that business is now global. productivity. 2. There is renewed interest on the part of businesses in quality and 3. Downsizing and cutbacks are being used by organizations who are seeking ways to eliminate unnecessary operations and to cut costs. Many have sold off unprofitable businesses and laid off workers. 4. Ownership occurs when large institutional investors and foreign firms take ownership positions in other countries. 5. Ethics and social responsibility is an area in which organizations are taking steps to enhance the ethical standards of their managers and to avoid legal or public sentiment problems. 6. Work-force diversity has been increased through globalization, an aging population, and an influx of workers in new careers and occupations. Managers must be more sensitive to the many different kinds of workers found in the workers now found in the workplace. 12

13 Traditional and Contemporary issues and Challenges Part Two Exercises T/F Put T for true and F for false statements. 1. All organizations are open systems. 2. The approaches to management that try to find the "one best way" to solve a management problem are called contingency approaches. 3. One characteristic of an excellent company is the use of a hands-on approach to managing. 4. According to contingency theory, appropriate managerial behavior can be generalized or extrapolated from other situations. 5. enhancing quality almost always results in increased costs. Choose the best answer from the responses listed. 1. Quantitative management has been most useful in which two managerial functions? a. Planning and organizing b. Organizing and leasing c. Leading and controlling d. Controlling and planning 2. Which of the following help managers integrate and enlarge their understanding of the three principal schools of management thought? a. Systems theory and contingency theory b. Administrative management and scientific management c. The human relations movement and organizational behavior 13

14 English for the Students of Management d. Theory Z and the excellence movement 3. Which of the following reflects the importance of environmental influences on the organization? a. Quantitative management theory b. Open system concept c. Behavioral management theory d. Human relations movement 4. Which management approach holds that universal solutions and principles cannot be applied to organizations? a. Classical b. Contingency c. Behavioral d. Quantitative 5. Which of the following is NOT a concern of Type Z management? a. Speed of evaluation b. Span of control c. Placement of responsibility d. Length of employment Matching questions. 1. focuses specifically on the development of a. entropy mathematical models. 2. Whole is greater than the sum of the individual parts. b. synergy 3. Interact with the environment. c. management science 4. normal process leading to system decline. d. open system 14

15 Traditional and Contemporary issues and Challenges VII. Summary of key points Theories help organize the knowledge we have about the field of management. Understanding the historical perspective can help managers avoid repeating the mistakes made by those who came before. The classical perspective is made up of scientific management, which focused on making the job a series of simple steps to increase productivity, and administrative management, which focused on how to efficiently structure an organization. Neither perspective paid attention to the workers. The behavioral perspective emerged from the Hawthorne studies and was concerned with the individual and group behavior. Contemporary managers are interested in organizational behavior that is an outgrowth of the behavioral perspective. Management science and operations management make up the quantitative perspective of management. These areas apply quantitative techniques to decision-making and problem-solving. Each of these perspectives has something to offer contemporary managers, but the contributions of these perspectives must be viewed with respect to the systems and contingency perspectives. Two contemporary management perspectives include the type Z approach and the concern for excellence. Current issues facing management include globalization, quality and productivity, downsizing and cutbacks, ownership, ethics and social responsibility, and work-force diversity. 15

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