2015

ManagementStefan Markowski

ManagementStefan Markowski

How? When?How? When?

WhatWhat??

0

20

40

60

80

100

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

East

West

North

Seeking competitive advantage

Why?Why?

Where?Where?

WhoWho??

Organisation and its environment

Detailed course schedule

Day no 

Topic Textbook ch.

1 (24 Nov; 2 hrs)

1. The nature and role of organisational management. Roles and tasks of organisational managers

Chs. 1-2

2 (25 Nov; 2 hrs)

2. Organisation and its environment Chs. 3-5

3 (26 Nov; 2 hrs)

3. The process of organisational decision making

Chs. 7, 9-10

4 (27 Nov; 2 hrs)

4. Organisational planning Chs. 7-8

5 (28 Nov; 2 hrs)

5. Organising Chs. 14-16

6 (1 Dec; 2 hrs)

6. Leadership Chs. 17-20

7 (2 Dec; 2 hrs)

7. Monitoring and control Chs. 11-13

8 (3 Dec; 1 hr) 8. Revision  

9 (8 Dec; 2 hrs)

Examination  

The following table provides a list of lecture topics for each day of the course

Topic 2: Organisation and its environment

Topic Contents

2.1 Management theory: antecedents

2.2 From hierarchy to human relations

2.3 Systems approach

2.4 2.4 Contingency focus

2.5 Eclectic (competing values) organisational framework

2.6 Further reading

2.1 Management theory: antecedents

• Combe (2014) defines a theory a theory as a set of principles around which a practice of an activity is based or a group of facts or phenomena

• Here it is a set of refutable and testable assertionsa set of refutable and testable assertions about the world - in this subject about what organisations are, what they strive to do, how, why, when, and so on

• Thus, theories change as assertions/hypotheses are verified and refuted and new ones are proposed instead

• Scientific management Scientific management means that people believe that the essence of organisational existence, development and behaviour can be captured by testing verifiable hypotheses (hence science)

2.1 Management theory: antecedents

• Management theory started to evolve in XIX century with seminal contributions from Henri Fayol, Frederick Taylor and Max Weber

• But some antecedents go back to military writers (command), classic philosophers (the state) and economists (specialisation)

• Since the Enlightment and the Industrial Revolution the emphasis focused on effective allocation of resources and rational principles of efficient production in an industrial firm (division of labour and specialisation – Adam Smith)

2.1 Management theory: antecedents

• Henri Fayol Henri Fayol (1841-1925) was a French mining engineer who developed a theory of top-down business administration

• He divided business activities into:– TechnicalTechnical – production, manufacturing and adaptation

– CommercialCommercial – buying, selling, exchange

– Financial Financial – optimisation of capital use

– SecuritySecurity – protection of people and property

– AccountingAccounting – costing, balance sheet, stocktaking, statistics

– ManagerialManagerial – planning, organising, commanding, coordinating and controlling

2.1 Management theory: antecedents

• Fayol’s 14 principles of good management

1.1. Division of work Division of work – specialisation is efficient

2.2. AuthorityAuthority – right to command and issue orders but must be aligned with responsibility

3.3. DisciplineDiscipline – those issued orders should obey them

4.4. Unity of commandUnity of command – one boss, no conflicting lines of authority

5.5. Unity of direction Unity of direction – all members of the organisation should share the same objective under a single plan

6.6. Subordination of individual interests Subordination of individual interests to group interest: organisational goals take priority over individual ones

7.7. Appropriate remuneration Appropriate remuneration to motivate people

2.1 Management theory: antecedents

8. Degree of centralisation/decentralisation Degree of centralisation/decentralisation – must strike good balance between the two

9. Scalar chain Scalar chain – vertical (hierarchical) authority but good communication at each level in the hierarchy

10. Orderly activity Orderly activity – social order and good management of all resources

11. EquityEquity – fair treatment of all stakeholders

12. Stability of managerial tenure Stability of managerial tenure to keep the management group stable

13. InitiativeInitiative to be exercised by all employees

14. Esprit de corps Esprit de corps – high motivation and loyalty in the team

The essence of Fayol’s administrative management: The essence of Fayol’s administrative management: known principles, authority, discipline, order and fairness

2.1 Management theory: antecedents

• Frederick Taylor Frederick Taylor (1856-1915) became the personification of scientific management scientific management as he pioneered time and motion studies time and motion studies of people at work

• Scientific methods and measurement were to replace adhockery in management. This was to be done through:– The use of scientific methods use of scientific methods to determine the best way of

performing work tasks

– The selection of the best person selection of the best person for each task

– The provision of training and developmenttraining and development for workers to enhance their capabilities

2.1 Management theory: antecedents

– Adequate financial incentives financial incentives to motivate workers and managers

– ResponsibilityResponsibility for planning and organising work tasks vested in management in management not in the workforce

• Taylor’s approach was widely adopted as a means of achieving high labour productivity in assembly line manufacture and heavy industries (e.g., Henry Ford’s assembly line, typing pools)

• But, it was also much criticized, especially by Marxists, for its “inhumanity” and “worker exploitation”

• Nevertheless, it is still used to determine worker productivity as the basis for fair reward

2.1 Management theory: antecedents

• Max Weber Max Weber (1864-1920), German sociologist who pioneered the study of organisations and their structures (The Theory of Social and Economic Organisations)

• He is particularly associated with the theory of theory of organisational bureaucracyorganisational bureaucracy as a rational and efficient organisational hierarchy tightly controlled through the application of strict rules, regulations and procedures

• The Weberian hierarchy Weberian hierarchy has well defined lines of authority and responsibility with well specified positions in the hierarchy allocated on merit to most deserving candidates

2.1 Management theory: antecedents

• The Weberian bureaucracy was the essence of Prussian/German efficiency - an administrative machine that was to parallel the efficient military organisation

• This model was largely adopted by the state civil service organisations such as the British Civil Service (best schools and universities producing the most able caste of “mandarins” to run the state apparatus (Yes Minister’s Sir Humphrey)

• Over time, bureaucracy came to be associated with inflexibility, non-responsiveness, red tape, unwillingness to learn (e.g., the inept Indian Civil Service)

2.2 From hierarchy tohuman relations

• In XX century there was a gradual change of emphasis from the time and motions studies of organisational activity to social processes in the workplace: the human relations approachhuman relations approach

• In the 1920s, Elton Mayo studied worker efficiency at the Hawthorne Works in Chicago. Hawthorne Hawthorne Studies (1924-1932) Studies (1924-1932) concluded that the workplace is an important social environment so that mode of worker engagement impacts morale and motivation and, thus, their productivity

• Wide applicability as physical and social workplace environment is generally regarded as important influence on productivity

2.2 From hierarchy tohuman relations

• More recent evolution of organisational forms into clover leaf-style structures with dispersed, semi-autonomous branches or units and people communicating electronically rather than face-to-face (Charles HandyCharles Handy)

• Focus on organisational trust as the bonding factor in this devolved and physically dispersed environment (Handy’s principles of effective organisational trust)

• In the 1950s, Frederick Herzberg Frederick Herzberg studied motivating and demotivating factors in organisations

2.2 From hierarchy tohuman relations

• In Herzberg’s approach motivators (such as being appreciated by superiors, promotion and colleagues or the nature of work per se) differ from de-motivators (“hygiene factors” such as supervision or poor pay)

• Efficient management in this approach means seeking strong motivators and minimising the influence of de-motivators

• Researchers have also noted that organisations converge in their structure, conduct and performance (organisational isomorphismorganisational isomorphism)

2.2 From hierarchy tohuman relations

• This organisational isomorphism organisational isomorphism occurs because the environment (e.g., the market or the state) forces them to converge, or because they imitate successful organisations, or because people working in organisations share background and education

• But, also a tendency for some knowledge-intensive business organisations to become less hierarchical and more collective in their structures (e.g., Google, Facebook)

2.3 Systems approach• A systemsystem is defined as a complex set of parts that

come together to serve a common purpose … or that provide … a solution to a complex problem

• Its elementselements include all equipment, related facilities, materials, software, data, services and personnel required for the operation and support

• Business firm, other organisations products, or groups of activities can be represented as systems

• System managementSystem management is concerned with system development, adaptability to changing environments, performance optimisation, cost effectiveness, evaluation, modification and termination

2.3 Systems approach

• A distinction is often drawn between

– core or primary mission characteristics of systems -

their objectives, resources or organisational routines

needed to accomplish intended missions (e.g., core

production activities); and

– ancillary or mission support characteristics (additional

resources needed to support the primary part of the system

(e.g., maintenance of core production facilities)

• System Engineering transforms operational needs into system performance parameters and desired configurations

2.3 Systems approach

• Systems DesignSystems Design

– objectives (aims, mission statement)

– performance metrics (criteria of mission achievement, effectiveness measures)

– outputs and outcomes

– inputs (available and required resources)

– technology (converting inputs into outputs: input-output transformation mechanisms)

– architecture (elements, components and their organisation)

– organisational routines and management

– external environment in which systems are embedded

2.3 Systems approach

• In the systemic representation, an organisation is embedded in its environment but the boundary separating the two could be porous

• An organisation that is closed to its environment and does not draw in new “energy” (inputs) from it will become entropic

• Like all living systems an efficient organisation should draw in low entropy inputs and expel high entropy waste

• It is a function of management to make it happen

2.3 Systems approach• Nested hierarchies Nested hierarchies of systems (e.g., a firm, an

industry, a national economy, the world economy)

• Nested systems are often described in terms of their broader, host system (e.g., the German-style firm, the Soviet enterprise, the Chinese agricultural commune, the Italian mafia)

• But the direction of causality could be ambiguous (bottom up or top down?)

• Open system architecture tends to blur systemic boundaries (e.g., open architecture may imply unrestricted membership and no configuration control)

2.3 Systems approach

Source: Asset Performance Management Supported by Reliability Engineering, Reliability Edge, Vol . 11, Issue 1

Example of systemic approach to a manufacturing organisation

2.4 Contingency focus

• In this approach, organisations navigate through endless turbulence with various contingencies requiring unique responses

• Senior managers are largely fire fighters dealing with non-routine circumstances and internal and external contingencies

• The Schumpeterian entrepreneur is also an agent of radical change dealing with or engineering organisational transformation to facilitate radical change in business activity

• Recall Mintzberg’s description of the role of the executive manager (Topic 1)

2.4 Contingency focus

Mintzberg (1989) describes the managerial role managerial role in terms of

Interpersonal attributes – figurehead

– leader

– liaison

Informational attributes – monitor

– analyst

– disseminator

– spokesperson

2.4 Contingency focus

Decisional attributes– entrepreneur

– disturbance handler

– conflict resolver

– resource allocator

– negotiator/go-between

The latter attributes are largely focused on contingency handling and risk management

Focus on ad hoc responses to contingencies and non-routine activity or, otherwise, handling the non-routine becomes the routine

2.5 Eclectic (competing values)organisational framework

Human Flexibility Open systems relations model model (e.g., Hawthorne studies) (e.g., Systems mgt)

Commitment InnovationMorale Adaptation Participation Growth Openness Resource acquisition

Internal External environment environment

Documentation Productivity Information mgt Accomplishment Stability & control Direction

Goal clarity

Internal Rational process model goal model (e.g., Weberian

hierarchy) Control (e.g., Scientific mgt)

Source: Combe (2014):39

2.6 Further reading

Griffin (2013): chs. 3-5

Combe (2014): ch. 2