Chapter 2_Evolution of Management

( An IACBE Accredited Institution )

Foundation CoursePrinciples of Management

Post Graduate Programme (2008 – 10)

(PGP)

Alliance Business SchoolBangalore

04/08/23 PGP, Alliance Business School

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Evolution of Management

Chapter 2


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Learning Objectives

After reading this chapter, you should

be able to:

o Describe early evidences of management

practice.

o Describe the current trends and issues in

management.

1.1


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Major Classification of Management Approaches

o Pre-Classical Thoughts

o Classical Approach

o Behavioral Approach

o Quantitative Approach

o Modern Approach


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Pre-Classical Contributors

Name Area Contribution

Adam Smith(1723 – 1790)

Political Economist

Advocated the concept of ‘job specialization’ to increase the productivity of workers.

Robert Owen(1771 – 1858)

British Entrepreneur

Proposed legislative reforms to improve working conditions of labor. Recommended the use of a ‘silent monitor’ to openly rate an employee’s work on a daily basis.

Charles Babbage(1792 – 1871)

British Professor of Mathematics

Impressed with the concept of work specialization and advocated the concept of ‘division of labor’. Devised a profit-sharing plan under which bonus were given for useful suggestions contributed by employees and wages were based on the profits generated by the factory.


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Pre-Classical Contributors (Contd.)

Name Area Contribution

Andrew Ure(1778 – 1857)

British Academician Advocated the study of management.

Charles Dupin(1784 – 1873)

French Engineer Advocated the study of management.

Henry R.Towne(1844 – 1924)

American Mechanical Engineer and businessman

Emphasized the need to consider management as a separate field of study and the importance of business skills for running a business.

So, Preclassical theorists tried to find solutions to contemporary managerial problems. The early pioneers, with their technical background, did not regard management as a separate field of study.


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Classical Approach

Approach Rationale Focus

Scientific Management One best way to do each job

Job level

Administrative Principles

One best way to put an organization together Organizational level

Bureaucratic Organization

Rational and impersonal organizational arrangements

Organizational level

Classical theorists formulated principles for setting up and managing organizations. These views are labeled ‘Classical’ because they form the foundation for the field of management thoughts.


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Major Branches in the Classical Approach


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Scientific Management

“One best way” for a job to be done:» Putting the right person on the job with the correct tools and

equipment.

» Having a standardized method of doing the job.

» Providing an economic incentive to the worker.

Fredrick Winslow Taylor- The ‘Father’ of Scientific Management

- Published Principles of Scientific Management (1911)


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Taylor’s Five Principles of Management

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

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

3. Heartily cooperate with the workers so as to ensure that all work is done in accordance with the principles of the science that has been developed.

4. Divide work and responsibility almost equally between management and workers.

5. Management takes over all work for which it is better fitted than the workers.


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Scientific Management (Contd.)

Frank and Lillian Gilbretho Focused on increasing worker productivity through the reduction of

wasted motion.o Developed the microchronometer to time worker motions and

optimize performance.

How Do Today’s Managers Use Scientific Management?

o Use time and motion studies to increase productivity.o Hire the best qualified employees.o Design incentive systems based on output.o Train workers to perform jobs to the best of their abilities.


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Administrative Theory

The Administrative Management Theory focused on principles that could be used by managers to coordinate the internal activities of organization. The most prominent of the administrative theorists was Henri Fayol.

Henri Fayol (1841 – 1925)o Believed that the practice of management was

distinct from other organizational functions. o Developed fourteen principles of management that

applied to all organizational situations.


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Fayol’s 14 Principles of Management

2. AuthorityThe right to issue commands, along with which must go the balanced responsibility for its function.

1. Division of WorkWork specialization results in improving efficiency of operations. Thereby the person can be more productive.

3. DisciplineIt involves obedience to authority, adherence to rules, respect for superiors and dedication to one’s job.

4. Unity of Command

Each worker should have only one boss with no other conflicting lines of command.

5. Unity of Direction

Activities should be organized in such a way that they all come under one plan and are supervised by only one person

6.Subordination of individual interest to general interest

Individual interests should not take precedence over the goal of the organization.

7. RemunerationPayment should be fair & based on factors - business condition, cost of living, productivity of employee & ability of the firm to pay


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Fayol’s 14 Principles of Management (Contd.)

9 Scalar ChainRefers to the chain of authority that extends from the top to the bottom of company. Defines the communication path in company

8 CentralizationDepending on the situation, company should adopt a centralized or decentralized approach to make optimum use of its personnel.

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OrderMaterial order implies everything is kept in right to have smooth coordination & social order implies right person is placed at right job

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EquityAll employees should be treated fairly. A manager should treat all employees in the same manner without prejudice.

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Stability of tenure of Personnel

A high labor turnover should be prevented and managers should motivate their employees to do a better job.

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InitiativeEmployees should be encouraged to give suggestions and develop new and better work practices.

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Espirit de corpsThis means ‘a sense of union’. Management must inculcate a team spirit in its employees.


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Bureaucratic Management

Bureaucratic Management emphasizes the need for organizations to function on a rational basis (It is a formal organization structure with a set of rules and regulations). The most prominent contributor was Max Weber.

Max Weber (1864 – 1920)

Emphasized rationality, predictability, impersonality, technical competence, and authoritarianism.


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Weber’s Ideal Bureaucracy


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Behavioral Approach

The Behavioral Approach to management emphasized individual attitudes and behaviors and group processes, and recognized the significance of behavioral processes in the workplace.

The study of the actions of people at work; people are the most important asset of an organization - Organizational Behavior (OB).


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Contributions of Behavioral Thinkers

2. Elton Mayo(1880 – 1949)

Laid the foundation for the Human Relations Movement; recognized the influence of group and work place culture on jo performance.

1. Mary Parker Follet(1868 – 1933)

Emphasized group influence and advocated the concept of power sharing and integration.

3. Abraham Maslow(1908 – 1970)

Advocated that humans are essentially motivated by a hierarchy of needs.

4. Douglas McGregor(1906 – 1964)

Differentiated employees and managers into Theory X and Theory Y personalities.

5. Chris Argyris(1923 –

Classified organizations based on the employees’ set of values.


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Foundations in the Behavioral Approach


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Mayo's Hawthorne Experiments

A series of productivity experiments conducted at Hawthorne Works of the General Electric Company in Chicago between 1924 and 1927.

Experiment Issues: To find out what effect fatigue and monotony had on job productivity and how to control them.

Variables considered: Rest breaks, work hours, temperature and humidity.

Experiment: Mayo took six women from the assembly line, segregated them from the rest of the factory and put them under the eye of a supervisor who was more a friendly observer than disciplinarian. Mayo made frequent changes in their working conditions, always discussing and explaining the changes in advance.


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Mayo's Hawthorne Experiments (Contd.)

He changed the hours in the working week, the hours in the workday the number of rest breaks, the time of the lunch hour. Occasionally, he would return the women to their original, harder working conditions.

Experimental findings:o Productivity unexpectedly increased under imposed

changed working conditions.o The effect of incentive plans was less than expected.

Research conclusion

Social norms, group standards and attitudes more strongly influence individual output and work behavior than do monetary incentives.


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Maslow’s Hierarchy of Needs


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Mc Gregor’s Theory X and Theory Y

Because of their dislike for work, they avoid it when they can.

Work is a natural activity like play or rest.

Theory X Theory Y

Most people must be coerced and threatened with punishment before they work. They require close direction.

People are capable of self-direction and self-control if they are committed to objectives.

Most people prefer to be directed. They avoid responsibility and have little ambition. They are interested only in security.

People become committed to organizational objectives if they are rewarded in doing so.

Douglas McGregor developed two assumptions about human behavior which he labeled ‘Theory X’ & ‘Theory Y’. These two theories reflect two extreme sets of belief that different managers have about their workers. Theory X presents negative view of people and Theory Y presents positive view.


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Quantitative Approach

Area Focus

Management Science

It stress the use of mathematical models and statistical methods for decision making. Examples – Queuing theory, LPP, Decision theory, Probability theory, etc.

Operations Mgmt.It is an applied form of management science. It is concerned with: (i) inventory mgmt. (ii) work schedule (iii) production planning (iv) facilities location & design (v) quality assurance.

Focuses on achieving organizational effectiveness through the application of mathematical and statistical concepts. The three main branches of this approach are: Management Science, Operations Management and Management Information System.

MIS It focuses on designing and implementing computer based information systems for business organizations.


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Modern Approach

o Systems Approach

o Contingency Approach


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Systems Approach

System Defined – A set of interrelated and interdependent parts arranged in a manner that produces a unified whole.

Basic Types of Systems

(a) Closed systems

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

(b) 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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The Organization as an Open System


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Implications of the Systems Approach

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

o Decisions and actions taken in one area of the organization will have an effect in other areas of the organization.

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


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Contingency Approach

Contingency Approach Defined

o Also sometimes called the situational approach.

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

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

Popular Contingency Variableso Organization sizeo Routineness of task technologyo Environmental uncertaintyo Individual differences


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Contingency Viewpoint Behavioral Viewpoint

How managers influence others:• Informal Group• Cooperation among employees• Employees’ social needs

Systems Viewpoint

How the parts fit together:• Inputs• Transformations• Outputs

Traditional Viewpoint

What managers do:• Plan• Organize• Lead• Control

Contingency Viewpoint Managers’ use of other viewpoints to solve problems involving:

• External environment• Technology• Individuals

2.8


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Current Trends and Issueso Globalizationo Ethicso Workforce Diversityo Entrepreneurshipo E-businesso Knowledge Managemento Learning Organizationso Quality Management


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Current Trends and Issues (Contd.)o Globalization Management in international organizations. Political and cultural challenges of operating in a

global market.

o Ethics Increased emphasis on ethics education in

college curriculums Increased creation and use of codes of ethics by

businesses


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Current Trends and Issues (Contd.)o Workforce Diversity

(a) Increasing heterogeneity in the workforce

- More gender, minority, ethnic and other forms of diversity in employee

(b) Aging workforce

- Older employees who work longer and do not retire

- The increased costs of public and private benefits for older workers

- An increasing demand for products and services related to aging.


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Current Trends and Issues (Contd.)

o Entrepreneurship Defined The process whereby an individual or group of

individuals use organized efforts to create value and grow by fulfilling wants and needs through innovation and uniqueness.

o Entrepreneurship process- Pursuit of opportunities.

- Innovation in products, services, or business methods.

- Desire for continual growth of the organization.


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o E-Business (Electronic Business) – The work preformed by an organization using electronic linkages to its key constituencies.

o E-commerce – The sales and marketing component of an e-business.

o Categories of E-Businesses

1. E-business enhanced organization

2. E-business enabled organization

3. Total e-business organization


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Categories of E-Business Involvement


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o Knowledge Management - The cultivation of a learning culture where organizational members systematically gather and share knowledge with others in order to achieve better performance.

o Learning Organization - An organization that has developed the capacity to continuously learn, adapt, and change.


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Learning Organization vs. Traditional Organization


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o Quality Management- A philosophy of management driven by continual improvement in the quality of work processes and responding to customer needs and expectations.

- Inspired by the total quality management (TQM) ideas of Deming and Juran.

- Quality is not directly related to cost.


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What is Management Quality?

o Intense focus on the customer

o Concern for continual improvement

o Process-focused

o Improvement in the quality of everything

o Accurate measurement

o Empowerment of employees


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Chapter 2_Evolution of Management