2.Evolution of Management

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Principles of Management

In the 19th century

- Industrial revolution

- Mass production

- Huge capital

- Ownership separated from management

20th century

- World war I

- Limited resources available

- Need for solution to use them in an optimum way

- World War II added to the problem

Thus, the issue of managing complex and huge business and growingcompetition forced us to develop systematic management conceptsand principles


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Bureaucratic Approach to Management- Max Weber

Max Weber analyzed functioning of church, government, military andbusiness organisations

He believed that bureaucracy was the most efficient form of a businessstructure for any type of business organisation


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Features of bureaucracy

Administrative Class:

This class exists in a bureaucratic organisation

The employees are full time and look after coordination among activities

Hierarchy:

It is a system of ranking

Strict rules of authority-responsibility

Serves lines of communication and delegation of authority

Division of work:Organisation divided in various departments

Each department will have a specific function

Clear definition of work


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Official Rules:

Administrative process covered by rules

Antithesis to ad hoc

Provides stability and uniformity

Impersonal Relationships

Official relationships free from personal involvement, emotions andsentiments

Decisions are based on rational thinking

Official Record:

Maintenance of official records

Beneficial for future reference

Filing system used extensively


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Taylor and Scientific Management

Introduced by Frederick Taylor in 20th century

A worker and then a supervisor in steel company

Carried experiments to increase efficiency of the workers

Published many books and papers

Studied M.E (Masters of Engineering)

His experiments are divided into

Elements and tools of scientific management

Principles of scientific management


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Elements and tools of scientific management

1. Separation of planning and doing- Supervisor plans, worker only carriesout the task

3. Functional foremanship- 4 types of supervisors for planning aspect,

while 4 for supervision aspect of the work

5. Job Analysis- best way to do a job

7. Standardisation of process, period and amount of work, workingconditions, tools used etc


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5. Scientific selection and training of workers

6. Financial incentives

7. Economy- optimum usage of resources an eliminate or reducewastages

8. Mental revolution cooperation between workers and the management


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Principles of scientific management

Replacing rule of thumb with science

Harmony in group actions

Cooperation

Maximum output

Development of workers


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Critical Analysis of Scientific Management

Relevant from an engineering point of view rather than managementpoint of view

Human aspect of the work was sidelined- workers got aggressiveresulting in unhealthy competition

Increased authoritarian approach in industries- strict supervision

Financial incentives exploited the workers (Differential piece rate system)


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Fayols Administrative Management

Henry Fayol- French Industrialist

Used the term- Administration instead of Management

Divided industrial organisation into 6 groups-

Technical

Commercial

Financial

Security

AccountingManagerial

Identified qualities of a Manager


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Managerial Qualities and training- according to Fayol

Physical- Health, vigour

Mental- ability to learn, judge, think, plan

Moral- loyalty, firmness, tact, dignity

Educational- acquaintance to subjects not related to functions performed

Technical- pertaining to the function performed, eg, production

Experience- arising through work


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Fayols 14 principles of Management

1. Division of work

To take advantage of specialisation, every worker/ manager works on asame part/function. It increases the accuracy, ability and speed of work.

2. Authority and responsibility

Both are related. Authority arises out of a managers position andresponsibility, out of assignment of activity. Acc, to Fayol, there shouldbe parity (equality) between both.

3. Discipline

It can be self imposed, or commanded. Disciple by command arisesthrough company policies.


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4. Unity in command

A person should get orders from only one superior. This increasesclarity, reduces conflict and builds a personal responsibility for results

If it is violated, discipline is lost, importance of authority decreasesand stability is threatened.

5. Unity of direction

Each group of activities with same objective, must have only one plan

and one head.Unity in command defines the reporting relationship, while unity indirection defines the grouping of activities.

It ensures better coordination among activities.


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6. Subordination of individual, to general interest

Interest of the organisation is more important than the interest ofone/few employees, when there is a conflict between the two.

Hence, superiors should be the ideals, supervise employeescontinuously and also have a fair agreement with them.

7. Centralisation

An organisation must have a proper balance of centralisation anddecentralisation, depending on its size, activities, objectives,employees etc.


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8. Remuneration

Should be fair to both- employee and employer

In line with cost of living and value of employee

Fayol did not advocate profit sharing plan for workers, but formanagers

9. Scalar chain

It is the flow of authority or command, through which everycommunication, must pass

In special circumstances, this flow can be short-circuited in situations,when the scalar chain of communication is non feasible. This is done,using a gang plank


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10. Order

This refers to arrangement of things and people in an organisation

- A place for everything and everything in place

Similarly, the right person must be placed at the right position.This demands for precise knowledge of human requirement andresources

11. Equity

- combination of justice and kindness

It should be maintained in behaviour and treatment towards employees


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12. Stability of Tenure

Employee should be given a minimum job security at least

This ensures that he is given time to adjust to new work and succeed in it.

13. Initiative

Managers must encourage employees to take initiative, within the limits oftheir authority.

It increases the zeal and energy in the employee

14. Espirit de Corps

Union is strength

Managers must encourage the team spirit among the employees

Erring employees must be given oral directions and not asked for a writtenexplanation


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Hawthorne Experiments-The human relationsapproach

In the approaches by Taylor and Fayol, the human element in theorganisation was not stressed upon.

The elements in these approaches were not giving evoking positive results.

The General Electric Company, Chicago had Hawthorne plant thatmanufactured telephone bell system

The company was progressive, with sickness and pension benefits

In spite of this, there was a dissatisfaction among workers

Team of psychologist-Elton Mayo, and sociologists-Whitehead andRoethlisberger studied the phenomenon


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Experiment I: Two group of workers, experimented with the lighting orillumination and its effect on productivity.

Experiment II: A girls group was chosen who worked in the telephone

relay assembly department. 5 types of changes introduced over a periodof time and productivity measured after every change.

Experiment III: 20,000 interviews conducted in two years to determineemployees attitude towards company, work, supervision, waged,insurance, incentives etc.

Experiment IV: 14 male workers were employed and hypothesis was thatthey would produce more in order to earn more. It was proved wrongdue to 4 reasons given by workers for a lesser output.


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Modern Theories-Contributions of behavioral scientists

Extension of human relation approach Studies: attitude, behaviour, performance of individuals & groups in an

organisation

Assumptions:

Important to recognise different needs/attitude/perception/values ofindividuals in an organisation

Interpersonal behaviour influenced by various factors

Human needs and organisational needs have to be joined together

Conflicts in an organisation are unavoidable

Contributors include:

Maslow, Mcgregor, Herzberg, Argyris, Lewin, Keith Davis etc.


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Quantitative Approach

It uses mathematical techniques to solve management problems

Helps to increase the number of alternatives available, weigh the risks ofevery alternative, assist faster decision making

Methods used in this approach:

LPP: Allocation of limited resources among competing uses Simulation Queuing theory: Minimise service cost+ Waiting time Inventory modeling: To determine EOQ, EBQ Regression analysis: To determine relationship among two variables

(Inversely/directly proportional etc) Game theory: Anticipate/predict future problems and be ready with a

solution/reaction


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Systems Approach

System= A set of inter related components that operate together

Components according to the approach:

Inputs

Transformation ProcessOutputs

Feedback

Environment

Key concepts in systems approach

Open/closed systemSub-systems

Synergy (Within the sub-systems)

Feedback Mechanism


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Illustration

Transformation ProcessInputs Outputs

Feedback

Environment


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Contingency Approach

Two types of management thinkers- Universalists & Situationalist

Universalists- There is one best approach to management Situationalists- Advocate contingency theory

Contingency theory states- The manager must identify which techniquewill best contribute to the attainment of management goals, in a givensituation

Contingency variables: Size of the firm Environment Resources Technology Group dynamics Individual differences

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2.Evolution of Management