MGT 424Senior Seminar in Management Topics

Learning Objectives Explain the emergence of the modern

manager in the U.S. and Frederick Taylor’s work to develop “scientific

management”

Know the European influence of Weber and Fayol on

organization theory in developing administrative

management.

Learning Objectives - ContinueKnow the contribution of Hawthorne

experiments (Mayo) to management; and, know the developments of management into human relations, quantitative approaches, organizational behavior, and the systems and contingency approaches.

Be familiar with the broad perspectives for management’s roles at differing organizational levels for a career and for business competitive advantage.

TimelineHistoricalTimeline

Professionalism of ManagementEducation: Late 19th Century Business taught in high schools/commercial schools = bookkeeping + secretarial skills.Wharton (1881) – accounting, economics and

lawUniversity of Chicago & UC (Berkley), 1889 – undergrad schools of commerceNYU & Dartmouth (Amos Tuck), 1900Harvard (1908) -focus on educating managers

of large firms – commercial law, accounting and general commerce. Electives: Management in transportation, industry, marketing.

First Management Issues of IndustryHow do we efficiently organize people at

work with these new technologies of production

and large markets?How do we hire, pay, and coordinate people

at work to gain productivity?How do we do all of these to create economic wealth (profit)?

The Beginning of Management – Pay?1886 – Henry Towne, Pres. of Yale and Town Manufacturing Co., “The Engineer as Economist:”

How do we relate work to increasing economic development?

Gain sharing” or “Towne Plan” – Link profits to worker’s pay: Wage rate + performance incentive– All savings in costs were shared with workers.

Halsey Plan: Sharing profits does not work. Bosses hide profits. Pay people on basis of a wage +

1/3rd pay incentive for higher productivity.1938 – Fair Labor Standards Act set min. wage at

25¢/hr

Frederick Winslow Taylor“Father of Modern Management”In 1895- proposed a Piece Rate System:

Observe & Analyze – set the “standard” for job

(use Time and Motion studies)Pay workers for meeting/exceeding standardPay individual worker – not everyone, or

group/department, or the “job” = pay according to individual value to business

What Adam Smith had done for markets, Taylor doesfor the firm – place wealth creation squarely on theindividual worker who is managed, rewarded foreffort.

Frederick Taylor – Cont.Biography: Wealthy Philadelphia Quaker family Worked in hydraulics factory as

laborer/foreman/chief engineerAt 25 earned college degree in engineeringAt 35- consultant: introduced functional foreman, production planning, differential pay= cut

costs/increased production)1905 – wrote Shop Management1909-14: Lecturer at HarvardManagement consultant – US Navy and Army1911- Wrote Scientific Management

Frederick Taylor – Cont. “Soldiering” – people don’t

always try/work hard. WHY?If we work hard and complete

the job – no more work next day; fewer workers needed!

SO what is the amount of time needed to do the job?

How should it be performed – “One Best Way”

What is the standard?

Taylor’s 4 Principles of Scientific ManagementTaylor’s four principles of scientific management:Work methods should be based on scientific

observation – not “rules of thumb.”Scientifically select, train, and develop each

workerCooperate with workers to ensure that

scientifically developed methods are being followed.

Managers analyze and plan work; workers actually perform the tasks.

Demise of Scientific ManagementIn hands of business – Scientific Management = tool to exploit labor By 1915 – growing labor against “Taylorism”Union members/100 workers: 1880=1.8;

1900=7.5; 1914=10.5Congress investigates and US Commission on Industrial Relations issues Hoxie Report (1915) declaring Scientific Management as exploitive of

labor.It will influence Management thought – but Scientific Management is dead – until rediscovered in Japan – the 1970/s wave of Quality Management

Frank and Lillian GilbrethFrank Gilbreth – engineer; pioneered Scientific Methods in bricklaying.– Member of Taylor Society (SAM)

Lillian Gilbreth – engineer/industrial psychologist (PhD); stress and fatigue

Together 12 Children – Cheaper by the Dozen

Time and motion studies– Breaking up each job action into its components (Therblig).– Finding better ways to perform the action.– Reorganizing each job action to be more efficient.

Management of the OrganizationWhile in the US “Management” focuses on individual

at workIn Europe early theory (that in 1930’s will become

part of American “management”) focuses on the

“organization” – Administrative Management Theory.Max Weber (German) – focuses on bureaucracy as a formal organization to gain efficiency.Henri Fayol (French) – focuses on 14 principles of Administration as “One Right Way”

Weber’s Principles of Bureaucracy1. Formal authority comes from one’s organizational position (Bureaucracy = rational power)2. Positions should be held based on merit, not

social standing or personal contacts. (Break with

traditional power)

Each position’s responsibilities and relationship to other positions should be clearly specified. (Roles)

Authority in a bureaucracy is hierarchical power.Formalization = well-defined system of rules(SoPs), operating procedures, and norms = control via

“rational” power.

Henri Fayol’s Principles of ManagementDivision of Labor: allows for job specialization.Authority and Responsibility: both formal and

informal authority result from special expertise.Unity of Command: workers have only one boss.Line of Authority: clear chain of command, top to bottom of the firm.Centralization: degree to which authority rests at

the top of the organization.Unity of Direction: single plan of action to guide

the organization.Equity - The provision of justice and the fair and

impartial treatment of all employees.

Fayol - ContinueOrder: place workers where most useful and have

career opportunities.Initiative: encourage employees to act on their

own.Discipline: workers need to obeyRemuneration of Personnel: pay what is fair.Stability of Tenure of Personnel: Long-term

employment is importantSubordination of Individual Interest to the Common Interest: interest of organization

priorityEsprit de corps: Have enthusiasm

Mary Parker FollettMary Parker Follett: The “Humanizing” of

Management and focus on collaboration.Taylor ignored the human side of the work,

Follett argued:Organizations are an interdependence of people.People have own interests but also share

common goals which should be the basis of conflict resolution.

Use of power/coercion creates conflict. People will defer to the facts of a situation for authority.

The Hawthorne Studies: New DirectionThe “Hawthorne Experiments” were a series of

studies into worker productivity performed at the Cicero plant beginning in 1924 and ceasing in 1932, initially conducted by the National Research Council and later by Western Electric and Harvard University

Illumination Studies, 1924 -1927: Does Use of Electric Lights Increase Productivity?

Hypothesis: Increased illumination is correlated with higher productivity.

Finding: No relationship“Hawthorne effect” or "halo effect“ – Researcheraffects outcome (bias)

2nd Hawthorne Experiment Relay Assembly Test Room Experiments, 1927-1929

Harvard research team set up experiment with 5 females from Relay Assembly area to test impact of incentives and work conditions on worker fatigue

There is no conclusive evidence that these affected fatigue or productivity.

Productivity and workersatisfaction increase whenconditions are improvedand made worse.

3rd Hawthorne ExperimentMica-Splitting Test group, 1928 – 1930

Relationship between work conditions and productivity, by maintaining a piece-rate incentive system and varying work conditions

Productivity increased by about 15% and researchers concluded that productivity was affected by non-pay considerations

Conclusion: social dynamics were the basis

of worker performance.

Hawthorne InterviewsPlant-wide Interview program, 1928-1931

1. Western Electric implemented a plant-widesurvey of employees to record their concerns and grievances. From 1928 to 1930, 21,000 employees were interviewed.

2. Data supported the research conclusion that work improved when supervisors began to pay attention to employees, that work takes place in a social context in which work and non-work considerations are important, norms and groups matter to workers.

Hawthorne : Final ExperimentBank Wiring Observation group, 1931-1932

The final test studying 14 male workers in the Bank Wiring factory to study the dynamics of the group when incentive pay was introduced.

There was no effect. Why?Work group established a work “norm” – a sharedexpectation about how much work should beperformed in a day and stuck to it, regardless ofpay.

The conclusion: informal groups operate in the work environment to manage behavior.

Hawthorne Experiments - ImportanceChanged perspective in management from

Taylor’s engineering approach to a social sciences approach, leading to "Human Relations" approach and, later, "Organization Behavior" approach:

Engineering approach subordinated to social sciences

Managers = leaders, motivators, communicatorsAt one time major contributors to Management

theory worked on Hawthorne experiments.Elton Mayo - “Human Relations” approach (to 1950’s). Mayo’s views lead to the construction of manager as a leader.

McGregor: Theory X, Theory YThere are two ways of perceiving people at work:Theory Y:

Work is as natural as play or rest- not disliked..Workers will exercise self-direction and self-controlMeeting goals is satisfying and motivating. .Workers seek responsibility. ...Workers will be creative and are willing to do more.

Theory X:The average human inherently dislikes to workSo, people must be coerced, controlled, directed.Workers prefer this – but want security.The average worker is only partially utilized.

Management Science ApproachPost World War II – British use of

mathematics, Operations Research, in military operations find applications in US post war industrial development.

Quantitative management — use of mathematic models, linear programming, simulation systems and chaos theory to solve management problems.

Operations management —techniques used to analyze all aspects of the production system.

Management Science Approach- Cont. Total Quality Management (TQM) —

analyzing input, conversion, and output to increase product quality.

Management Information Systems (MIS) — provides information vital for effective decision making

Systems Approach

Contingency ApproachThere is no “one best way.”Organizing (and other) decisions that match the demands

of the environment provide adaptation.

So-”What does a manager do?”It depends on where they are in the

organization:

What do Top Managers Do?Myth Fact

Work is reflective and involve systematic planning.

Work is action oriented, stressedimmediate response, and work wasVaried.

No Regular Duties Duties are ritual and ceremonial,negotiations, and processing softinformation

Relies on formal MIS for decision-making

Favor verbal, immediate information – even informal, soft data which is processed into coherent picture

Management is aScience

Source: Mintzberg: The Managers Job

Relies on judgment and intuition toMake decisions

Roles of Top Manager- Mintzberg1. Interpersonal Roles:

Figurehead – represents organization and it’s authority

Leader – has power to make things happenLiaison – makes contacts with peers and

other managers2. Informational Roles:

Gathers and processes informationMonitor – scan environment for relevant

cuesDisseminator – passes selected

information to those who need to knowSpokesperson – informs outsiders

Roles of Top Managers –Cont.3. Decisional Roles:

Entrepreneur – searches for new idea to implement, keeps mental track of their progress

Disturbance handler – tries to keep conflicts in balance and arbitrates conflict

Resource allocator – decides who gets what (resources and power); personal basis of decision-making

4. The Integrated Job of Manager:Implication for new manager – requirement for

networks of informationImplication for Team Managers – requirement

for information sharing

Implications for Effective Managers1. Requires insight and introspection2. Systematic ways to share information –

manager’s monopoly versus periodic debriefing and exchanges

3. Ability to step back and see “big picture” – small emergencies detract; need to develop a “big picture”

4. Use your specialists – and they need to understand the need for urgency over elegance

5. See obligations as an opportunity and take time for introspection (thinking)

Implications for Business Education1. Stress ‘cognitive learning “ – stress

thinking skills over “skills”2. Put students into situations to develop

skills – peer relationships, negotiating, motivating, processing information, decision making under ambiguity