Part I - Ch02 Evolution of Mgt ISBS

7/31/2019 Part I - Ch02 Evolution of Mgt ISBS

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2

The Evolution ofManagement

Theory


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The Evolution of Management Thought

Early classical approaches:Scientific management, Administrative management and

Bureaucracy

Neo classical approaches:

Human relations movement, Behavioural approach,

Social systems approach

Modern approaches:

Management Science/Mathematical or Quantitativeapproach, Systems theory and contingent theory, TQM,

MBO, Self Managed work teams, MBWA, Employee

Empowerment.


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Job Specialization

Adam Smith, 18th century economist, foundfirms manufactured pins in two ways:

Craft -- each worker did all steps.

Factory -- each worker specialized in one step.Smith found that the factory method hadmuch higher productivity.

Each worker became very skilled at one, specifictask.

Breaking down the total job allowed for thedivision of labor.


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Scientific ManagementDefined by Frederick Taylor in the beginning

of the twentieth century.

Focus:

Operational efficiency

The systematic study of the relationships

between people and tasks to redesign the

work for higher efficiency.


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Taylors Contributions

1. Time, Motion and Fatigue studies2. Differential payment and maximize output.

3. Replaced the rule of thumb with Science.

4. Separation of Planning and doing.

5. Functional foremanship

6. Scientific recruitment and training

7. Intimate and friendly cooperation between

management and workers.

8. Bring Standardization to work.


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The Gilbreths

Frank and Lillian Gilbreth refined Taylorsmethods.

Time and motion studies:

1. Broke down each motion or movementsinto separate action.

2. Reorganized each action.


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Henry Gantt

Clarity of financial incentives suggested byTaylor

Gantt chart - a forerunner to PERT, rated

employees publicly.


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Administrative Management

-Henry FayolIntroduced the elements of Management

Focus:

Achieving efficiency at the top level of

management.

Division of activities of a business enterprise into 6

groups: Accounting, Financial, Commercial,

Technical, Administrative/managerial and Security.

Managerial Training and Qualities: Physical,

Mental, Moral, Educational, Technical, Experience.


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Fayols 14 Principles

1. Division of Labor.2. Authority and

Responsibility

3. Unity of Command4. Discipline

5. Unity of Direction

7. Subordination ofindividual interestto general interest

7. Fair Remuneration8. Centralization

9. Scalar chain

10.Order

11.Equity

12.Stability of Tenure

13.Initiative.

14.Esprit de corps

i


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Bureaucratic Management

-Max Weber

A formal system of organization and administrationto ensure effectiveness and efficiency. Its features

are:

Administrative Class

Hierarchy

Division of LaborOfficial rules and records

Impersonal relations not welcome.


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Bureaucratic Principles

A Bureaucracy

should have

Written rules

System of task

relationships

Hierarchy of

authority

Fair evaluation

and reward

Figure 2.1


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Key Points of Bureaucracy

AuthorityPositions based on performance not social

contacts.

Duties of positions are clearly identified.

Lines of authority should be clearlyidentified.

Rules, Standard Operating Procedures(SOPs), & Norms


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The Human Relations Movement

- The Hawthorne Studies (1924-1932)

-Elton MayoIllumination experiments

Relay assembly test room

Mass interviewing program

Bank wiring test room

Eventually, it appeared that the workersenjoyed the attention they received as part ofthe study and were more productive.


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Implications of Human Relations

ApproachEconomic rewards and productivity do not necessarily go

together (Illumination test)

If supervisors are friendly with workers the productivity

would increase (Relay assembly test room)

There exist an informal group within an organization and

it has its own leader who plans for everybody. (Bank

wiring test)

Group influence (Mass interviewing test)Communication is an important aspect of organization in

order to identify peoples attitudes, opinions and methods

of working and taking suitable actions (Mass Interviewing

test)


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Behavioral Management and

Social Systems Approach

-Chester Barnard and Mary Parker FolletOrganization is a social system

Formal and Informal Organization.

Cooperation among members is necessary for achievement

of organizational objectives.

Acceptance theory of authority

Motivation

Leadership

organization equilibrium

Flexible organization structure

Participative and group decision making


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Contributions of Peter DruckerManagement as a discipline and profession

Introduced Innovation as a management function.

Managerial Functions Objective setting, decisionmaking, motivating and organizing.

Organization Structure musti) be performance-based,

ii) Flat structure

iii)Conduct training and testing of future topmanagers

Three analyses : Activity, Decision, Relationsanalysis

Dynamic environment


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Theory Y

Employee is not lazy

Must create worksetting to build

initiative

Provide authority toworkers

Theory X

Employee is lazy

Managers mustclosely supervise

Create strict rules& defined rewards

Theory X vs. Theory Y

-Douglas McGregorFigure 2.2


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Structures

Mechanistic: Authority is centralized at thetop. (Theory X)

Employees closely monitored and managed.

Very efficient in a stable environment.Organic: Authority is decentralizedthroughout employees. (Theory Y)

Much looser control than mechanistic.

Managers can react quickly to changingenvironment.


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Management Science

Uses rigorous quantitative techniques tomaximize resources.

Quantitative management

Operations management

Total Quality Management (TQM

Management Information Systems (MIS


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Organization-environment Theory

Systems Theory

An organization is a set of interdependentparts/subsystems: Task, Structure, People andTechnology.

Concept of holism- each of the interdependentparts cannot be accurately analyzed andunderstood alone unless along with the wholesystem.

A system can be either open or closed.An open system interacts with the environment.

A closed system is self-contained (closed loop).


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The Organization as an Open System

InputStage

RawMaterials

Conversion

Stage

Machines

Human skills

Output

Stage

Goods

Services

Sales of outputs

Firm can then buy inputs

Figure 2.3

Environment

Environment


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Contingency Theory

Assumes there is no one best way tomanage.

Results differ as situations differ.

Managers must be flexible to react toenvironmental changes and developback up plans.


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Other Management Styles

Employee empowerment

Self-managed work team (SMWT)

Management By Walking Around


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Thank You


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Assignment 1

( Submission date26th July 2011).Farm Equipment Limited (FEL) is engaged in manufacturing farm equipment ofdifferent types. It markets its equipment through a network of distributors locatednation-wide. Besides, it also exports its equipment to different countries. Thechairman of the company is quite satisfied with the performance of the company.One day, a meeting of distributors was held at the companys headquarters , inwhich the chairman also participated. After some discussion about some

distribution strategies, almost all distributors urged the chairman to introducesome new models to satisfy the changing demands of the customers. The chairmanwho had engineering background recognized the implications of distributorssuggestions but suggested that introduction of the new models would requireheavy investment in R&D. Further, changes in the highly automated productionline would be very costly. His argument was the company has been quite

successful even with a limited number of models. Therefore, instead ofintroducing new models, it would be more appropriate to cut the cost ofproduction of the existing models and reduce their price. After all, what customerswant is value for their money.. With this argument, the chairman decided not tointroduce new models but insisted to cut the cost and price of the existing models.However, he agreed to seek the opinion of a consultant to test the validity of his

decision.


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Questions1.

It is often said that to be successful, an organizationmust be an open system. What management

implications, does this statement have and how can this

statement be applied in this case?

2. Suppose that you are required to work as a consultantto FEL, what suggestions will you give to the company

and why? What additional information will you require

from the company to make your suggestions?

Part I - Ch02 Evolution of Mgt ISBS

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