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Principles of Management

Week 2 – Management History

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Exhibit 2.1Exhibit 2.1

Development of Major Management Theories

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Historical Background Of Management

Two major events “Wealth of Nations” by Adam Smith

division of labor - breakdown of jobs into narrow and repetitive tasks increased productivity

Hierarchical control and management – managers think and workers work

Industrial Revolution substitution of machine power for human power large organizations required formal management

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Scientific Management

F.W. Taylor - Principles of Scientific Management

Develop a science for each element of an individual’s work, which will replace the old rule-of-thumb method.

Scientifically select and then train, teach, and develop the worker.

Heartily cooperate with the workers so as to ensure that all work is done effectively and efficiently. Divide work and responsibility almost equally between

management and workers.

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General Administrative Theorists

Henri Fayol concerned with making the overall

organization more effective developed theories of what

constituted good management practice

proposed a universal set of management functions: Plan, Organize, Control, Lead

published principles of management (next slide)

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1. Division of work.

2. Authority.

3. Discipline.

4. Unity of command.

5. Unity of direction.

6. Subordination of individual interest to the interests of the organization.

7. Remuneration.

8. Centralization.

9. Scalar chain.

10. Order.

11. Equity.

12. Stability of tenure of personnel.

13. Initiative.

14. Esprit de corps.

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Max Weber developed a theory of authority

structures and relations Bureaucracy - ideal type of

organization division of labor clearly defined hierarchy detailed rules and regulations impersonal relationships

82-2-88

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Quantitative Approach Operations Research (Management Science)

use of quantitative techniques to improve decision making

applications of statistics optimization models computer simulations of management

activities

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Behavioral School study of the actions of people at work early advocates

late 1800s and early 1900s believed that people were the most

important asset of the organization ideas provided the basis for a variety of

human resource management programs E.g., selection, motivation, turnover

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Hawthorne Studies started in 1924 at Western Electric Company

began with illumination studies intensity of illumination not related to productivity

Elton Mayo - studies of job design revealed the importance of social norms as

determinants of individual work behavior changed the dominant view that employees were no

different from any other machines

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The Systems Approach

System Defined A set of interrelated and interdependent parts

arranged in a manner that produces a unified whole.

Basic Types of Systems Closed systems

Are not influenced by and do not interact with their environment (all system input and output is internal).

Open systems Dynamically interact to their environments by taking in

inputs and transforming them into outputs that are distributed into their environments.

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Exhibit 2.6Exhibit 2.6

The Organization as an Open System

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Implications :

Coordination of the organization’s parts is essential for proper functioning of the entire organization.

The key to performance is to have good process.

Organizations are not self-contained and, therefore, must adapt to changes in their external environment.

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The Contingency Approach

Also sometimes called the situational approach.

There is no one universally applicable set of management principles (rules) by which to manage organizations.

Organizations are individually different, face different situations (contingency variables), and require different ways of managing.

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Exhibit 2.7Exhibit 2.7

Popular Contingency Variables

• Organization size

• Routineness of task technology

• Environmental uncertainty

• Individual differences

• Labor market conditions

• Government regulations and laws

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And where do we go from here?

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The drivers of change Technology

Leverage capability Changing nature of work and relations

Globalization Increase competition Increase choice/combination of resources &

customers Culture issue