Chapter 1 1 2 2 The Evolution of Management Thought

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Ch

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22The Evolution of

Management ThoughtThe Evolution of

Management Thought

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

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Government’s Approach To Management

Government’s Approach To Management

“If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.”

Ronald Reagan


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OverviewOverview

The need to increase efficiency and effectiveness has driven the evolution of management theory and practice

Division of labor and the 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 evolved

The study of the external environment’s impact on an organization has become central 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


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Phrase of the DayPhrase of the Day

Laissez-nous faire: leave us be


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The 14 Fathers of ManagementThe 14 Fathers of Management

Jean-Baptiste Colbert Max Weber

Adam Smith Elton Mayo

David Ricardo Abraham Maslow

Joseph Schumpeter Douglas McGregor

John Maynard Keynes W. Edwards Deming

Frederick W. Taylor Peter Drucker

Henri Fayol William Ouchi


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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-style—each worker did all steps.

- Production—each worker specialized in one step.


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Smith realized that:• Breaking the total job down into steps

allowed workers to become very skilled at a specific task, increasing

productivity


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F.W. Taylor and Scientific Management

F.W. Taylor and Scientific Management

Scientific ManagementThe systematic study of the relationships between people and tasks in order to redesign the work process for higher efficiency.TAKE THE WATCH APART AND REASSEMBLE IT DIFFERENTLY TO MAKE IT TICK FASTER.


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Scientific ManagementScientific Management

Defined and popularized by Frederick W. Taylor in the early 1900’s.

Sought to reduce the time a worker spent on each task by optimizing the way the task was done.

Focused on process.


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Four Principles of Scientific Management


1) Study the ways jobs are performed.Gather detailed time and motion information.

Try different ways to do the job.Select the best method.


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2) Codify the new method into rules and teach all workers the new method, which

Taylor modestly called “the one best way.”


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3) Determine who’s 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) in hands

employees, not managers – you will see

why this point is important


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Problems with Scientific Management

Problems with Scientific Management

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

for increased output, so workers purposely ‘underperformed.”

Management used conveyors belts to force a specific work pace, treating workers like cogs in a machine.

Unions rose to negotiate work rules to keep workers from being exploited.


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Administrative Management TheoryAdministrative Management Theory

Administrative Management• The study of how to create an

organizational structure that leads to 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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Weber’s Principles of BureaucracyWeber’s Principles of Bureaucracy

1) A manager’s 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 position’s formal responsibilities and it’s relationship to other positions should be clearly specified.

4) Authority can be exercised effectively when positions are arranged hierarchically (the many-layered cake).


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5) Managers must create a well-defined system of rules, operating procedures, and norms so that workers know what is expected and managers can effectively control behavior.


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Rules, SOPs and NormsRules, SOPs and Norms

Rules – formal written instructions that specify actions to be taken under different circumstances

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

Norms – unwritten, informal codes of conduct that prescribe how people should act in particular situations – IBM dress code in the 70s.


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Fayol’s Principles of ManagementFayol’s 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 to

bottom 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 organization and provide career opportunities.

Initiative - The fostering of creativity and innovation by encouraging employees to act on their own.


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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 to organizational success.


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Stability of Personnel Tenure• Long-term employment is important for the

development of skills that improve the organization’s performance (it also makes employees feel secure, but beware complacency)

Subordination of Individual Interest to the Common Interest• The interest of the organization takes precedence

over that of the individual employee.


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Esprit de corps

• Comradeship and shared enthusiasm foster devotion to the common cause (the success of the organization).


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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 Relations Movement: the study of the factors that impact how individuals and groups respond and act in organizations.


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Theory X and Theory YTheory X and Theory Y

Douglas McGregor proposed two different sets of assumptions about workers.• Theory X assumes the average worker is

lazy, dislikes work and will do as little as possible (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 a good job and the job itself will determine if the worker likes the work.Managers should allow workers greater

latitude and create an organization to stimulate the workers.

Mostly right!


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Management Science TheoryManagement Science Theory

• Quantitative management — utilizes linear and nonlinear programming, modeling, simulation systems and queuing and chaos theory.

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


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Management Science TheoryManagement Science Theory

• 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 for effective 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 manager’s 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 organizeOrganizational structures and control

systems a manager chooses are contingent on characteristics of the external environment. Organization needs to be flexible and adaptive.


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Type of StructureType of Structure

Mechanistic Structure

• Authority is centralized at the top.

• Employees are closely monitored and managed -- Theory X.

• Can be very efficient in a stable environment; GM 30 years ago.

• Not effective in today’s 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 and practice evolved over the decades? From what to what?


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Management EvolutionManagement Evolution

From process to peopleFrom totalitarian to teamFrom command to consensusFrom tall and rigid to flexible and flatFrom eyes-in to eyes-out


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The Third Wave of EvolutionThe Third Wave of Evolution

Renewed emphasis on process caused by influx of Japanese companies and management methods into North America over the past 25 years.

Renewed attention to process coupled with emphasis on people housed in flat, adaptable structures -- a powerful competitive combination.

Documents

Chapter 1 1 2 2 The Evolution of Management Thought