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22The Evolution ofManagement Thought

The Evolution of

Management Thought


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Copyright 2006 by The McGraw-Hill Companies, Inc. All

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OverviewOverview

The need toincrease efficiency andeffectiveness has driven the evolution of

management theory

Job specialization, the division of laborandthe study of how people do things is central to

the pursuit of increased efficiency


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OverviewOverview

Theories about the best ways to

motivate and control employees

have evolvedThe study of the external

environmentsimpact on an

organization has become a centralissue in management thought


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Evolution of Management TheoryEvolution of Management Theory

1890 1920 1940 1970 2000

*Scientific Management

*Administrative Management*Behavioral Management

*Management Science

*Organizational

Environment


5/40Copyright 2006 by The McGraw-Hill Companies, Inc. All

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Job Specialization and

the Division of Labor



Adam Smith (18th century economist)

Observed that firms manufactured

pins in one of two different ways:

- Craft-styleeach worker did allsteps.

- Productioneach workerspecialized in one step.



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Smith realized that:

Breaking the total job down into steps

allowed workers to become very skilledat specific tasks, increasing

productivity



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F.W. Taylor and Scientific

Management

F.W. Taylor and Scientific

Management

Scientific Management

The systematic study of therelationships between people andtasks in order to redesign the workprocess for higher efficiency.

TAKE THE WATCH APART ANDREASSEMBLE IT DIFFERENTLY TOMAKE IT TICK FASTER.



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Scientific ManagementScientific Management

Defined and popularized by Taylor

in the early 1900s.

Sought to reduce the time a workerspent on each task by optimizing

the way the task was done.

Focused on the process.



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Four Principles of Scientific

Management


Management1) Study the ways jobs are performed

and determine new ways to do them.

Gather detailed time and motion

information.

Try different methods to see which is

best.



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Management


Management2) Codify the new methods into

rules and teach all workers

the new method.



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Management


Management3) Determine whos skills best match the

rules.

4) Establish fair levels of performance; pay

a premium for higher performance. Note: all still done by Toyota today but

improvement process (kaizen) inhands of employees, not managers you will see why this point isimportant



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Problems with Scientific

Management

Problems with Scientific

ManagementSpecialized jobs became boring and dull.Managers frequently did not reward workers for

increased output, so workers purposelyunderperformed.

Management used conveyors belts to force a specificwork pace, making workers depersonalized cogs in amachine.

Unions rose to negotiate work rules.



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Administrative Management TheoryAdministrative Management Theory

Administrative Management

The study of how to create an

organizational structure that leadsto high efficiency

and effectiveness.



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Administrative Management TheoryAdministrative Management Theory

Max Weber

Developed the concept of bureaucracy as a

formal system of organization and

administration designed to ensure

efficiency and effectiveness.



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Webers Principles of BureaucracyWebers Principles of Bureaucracy

1) A managers formal authority derives

from the position he holds in the

organization.2) Position should be based on

performance, not social standing or

personal contacts.



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3) The extent of each positions formalresponsibilities and its relationshipto other positions should be clearlyspecified.

4) Authority can be exercisedeffectively when positions are

arranged hierarchically (the many-layered cake).



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5) Managers must create a well-defined system ofrules, operating procedures, and norms so thatworkers know what is expected and managerscan effectively control behavior.


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Rules, SOPs and NormsRules, SOPs and Norms

Rules formal written instructions thatspecify actions to be taken under differentcircumstances

Standard Operating Procedures (SOPs) specific sets of written instructions about howto perform a certain aspect of a task

Norms unwritten, informal codes ofconduct that prescribe how people shouldact in particular situations IBM dress codein the 70s.


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Fayols Principles of ManagementFayols Principles of Management

Division of Labor: allows for job specialization.

jobs can have too much specialization leading to

poor quality and worker dissatisfaction.

Authority and Responsibility both formal and informal authority resulting from

special expertise.

Unity of Command

Employees should have only one boss. If not,

chaos and confusion.


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Line of Authority

A clear chain of command from top tobottom of the firm.

Centralization The degree to which authority rests at the

top of the organization.

Unity of Direction A single plan of action to guide the

organization.


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Equity - The provision of justice and the fair

and impartial treatment of all employees.

Order- The arrangement of employees in

order to optimize value for the organizationand provide career opportunities.

Initiative - The fostering of creativity and

innovation by encouraging employees to acton their own.


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Copyright 2006 by The McGraw-Hill Companies Inc All

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Discipline

Obedient, applied, respectful employees

are necessary for the organization to

function.Equitable Remuneration of Personnel

An equitable and uniform payment system

that motivates employees to contribute toorganizational success.


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Stability of Personnel Tenure

Long-term employment is important for the

development of skills that improve the

organizations performance (it also makes

employees feel secure, but beware complacency)

Subordination of Individual Interest to the

Common Interest

The interest of the organization takes precedenceover that of the individual employee.


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Esprit de corps

Comradeship and

shared enthusiasm

foster devotion tothe common cause

(the success of the

organization).


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Difference?Difference?

Management theory is evolving.

How did Fayols approach differ from F.

W. Taylors Scientific Management?How did it differ from Max Webers

approach?

B h i l M t ThB h i l M t Th


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Behavioral Management Theory

(The next evolutionary step)

Behavioral Management Theory

(The next evolutionary step)

Behavioral Management

The study of how managers should behave

in order to motivate employees to achieve

organizational goals.


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Behavioral ManagementBehavioral Management

Mary Parker Follett Concerned that Taylor ignored the human side of

the organizationSuggested workers help in analyzing their jobsIf workers have relevant knowledge of the

task, then they should control the taskThis is the heart of the Toyota Production

System (TPS)


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The Hawthorne StudiesThe Hawthorne Studies

Human Relations Implications Hawthorne effect workers responded to

management attention and were more

productive. Gave rise to the field of Organizational

Behavior and the Human RelationsMovement: the study of the factors that

impact how individuals and groups respondand act in organizations.


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Copyright 2006 by The McGraw Hill Companies Inc All

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Theory X and Theory YTheory X and Theory Y

Douglas McGregor proposed two different setsof assumptions about workers.

Theory X assumes the average worker is

lazy, dislikes work and will do as little aspossible (you have all met this person).Managers must closely supervise and

control through reward and punishment

(carrot and stick).Mostly wrong!


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Theory X and Theory YTheory X and Theory Y

Theory Y assumes workers want to do agood job and the job itself will determine if

the worker likes the work.

Managers should allow workers greaterlatitude and create an organization to

stimulate the workers.

Mostly right!


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Management Science TheoryManagement Science Theory

A management approach using rigorousquantitative techniques to maximize

productive use of

organizationalresources.


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Quantitative management utilizeslinear and nonlinear programming,

modeling, simulation systems and

queuing and chaos theory.

Operations management

techniques used to analyze allaspects of the production system.


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Total Quality Management (TQM) focuses on analyzing input,conversion, and output activities to

increase product quality (SPC, PDCA,Deming, Juran, Japan)

Management Information Systems

(MIS) provide information vital foreffective decision making and control


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Organizational Environment TheoryOrganizational Environment Theory

Organizational Environment:

The set of outside forces and conditions

that affect a managers ability to acquire

and use resources efficiently and

effectively THE WORLD IN YOUR

FACE


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Contingency TheoryContingency Theory

There is no one best way to organize

Organizational structures and control

systems a manager chooses are

contingent on characteristics of the

external environment. Organization

needs to be flexible and adaptive.More correct than other theories


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Type of StructureType of Structure

Mechanistic Structure

Authority is centralized at the top.

Employees are closely monitored andmanaged -- Theory X.

Can be very efficient in a stable

environment; GM a decade ago. Not effective in todays environment.


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Type of StructureType of Structure

Organic Structure

Authority is decentralized throughout the

organization; looser control (Theory Y)

Reliance on shared norms and culture is greater Heavy reliance on cross-functional teams

Works best when environment is unstable and

rapidly changing

Toyota to a degree; most silicon valley companies


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QuestionQuestion

How has management theory andpractice evolved over the decades?

From what to what?


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Management EvolutionManagement Evolution

From process to peopleFrom totalitarian to team

From command to consensus

From tall and rigid to flexible and flat

From eyes-in to eyes-out


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The Third Wave of EvolutionThe Third Wave of Evolution

Renewed emphasis on process caused byinflux of Japanese companies andmanagement methods into North Americaover the past 25 years.

Renewed attention to process coupled withemphasis on people housed in flat, agile and

adaptable corporate structures -- a powerfulcompetitive combination.

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