Definition & Evolution of Management

7/30/2019 Definition & Evolution of Management

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Arun Mishra

Evolution of Management

Thoughts


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Definitions of ManagementHarold Koontz & Heiz Weihrich defined

management as the process of designingand maintaining an environment in whichindividuals, working together in groups,

efficiently accomplish selected aims.

Louis E. Boone & David L. Kurtz definesmanagement as the use of people andother resources to accomplish objectives.


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Definitions of ManagementDelton E. McFarland defines management as

a process, by which managers create,direct, maintain, and operate purposiveorganizations through systematic,

coordinated, cooperative human efforts.

Mary Parker Fellot termed management as

the act of getting things done throughpeople.


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Management?Management is a set of activities including

planning and decision making, organizing,leading, and controlling, directed at anorganizations resources (human, financial,

physical, and information) with the aim ofachieving organizational goals in an efficientand effective manner.


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Some practical aspects of Management

All these definition suggest the followingaspects of management: Managers carry out the functions of Planning, organizing,

staffing, leading & controlling.

Management is essential to all kinds of organizations. Management is necessary at all levels hierarchy.

The goal of all managers is to accomplish the objectiveof creating surplus.

The aim of managers is to improve productivity,

efficiency ad effectiveness.


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Evolution of the Management Thought

Evolution dates back to human civilisation

Every human group needs management

Instances - Agricultural revolution5000 BC

Egyptian civilisations, pyramids - 4000 BC Ancient India - Harappa & Mohenjodaro2000 BC

Italian trading houses: Introduction of double entrybook keeping1300 and 1400 AD


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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 hugebusiness and growing competition forced us todevelop systematic management concepts andprinciples


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Scientific Management -

Frederick W. Taylor (1856-1915)

A worker and then a supervisor in steel company

Carried experiments to increase efficiency of theworkers

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 carries out the task

2. Functional foremanship- 4 types of supervisors for

planning aspect, while 4 for supervision aspect of the

work

3. Job Analysis- best way to do a job

4. Standardisation of process, period and amount of

work, working conditions, tools used etc

5. Scientific selection and training of workers

6. Financial incentives7. Economy- optimum usage of resources an eliminate or

reduce wastages

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 ratherthan management point of view

Human aspect of the work was sidelined- workersgot aggressive resulting in unhealthy competition

Increased authoritarian approach in industries-strict supervision

Financial incentives exploited the workers

(Differential piece rate system)


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Administrative ManagementHenry

Fayol (1841-1915)

Henry Fayol- French Industrialist

Used the term- Administration instead ofManagement

Divided industrial organisation into 6 groups-

Technical

Commercial

Financial

Security Accounting

Managerial

Identified qualities of a Manager


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Managerial Qualities and training-according to Fayol

Physical- Health

Mental- ability to learn, judge, think, plan

Moral- loyalty, firmness, tact, dignity

Educational- acquaintance to subjects notrelated 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 a same part/function. Itincreases the accuracy, ability and speed of work.

2. Authority and responsibilityBoth are related. Authority arises out of a

managers position and responsibility, out ofassignment of activity. Acc, to Fayol, there shouldbe parity (equality) between both.

3. Discipline

It can be self imposed, or commanded. Disciple by

command arises through company policies.


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4. Unity in command

A person should get orders from only one superior. This

increases clarity, reduces conflict and builds apersonal responsibility for results

If it is violated, discipline is lost, importance ofauthority decreases and 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 in direction defines the grouping ofactivities.

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 of one/few employees, when there is aconflict between the two.

Hence, superiors should be the ideals, superviseemployees continuously and also have a fairagreement with them.

7. Centralisation

An organisation must have a proper balance of

centralisation and decentralisation, depending onits 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 employeeFayol did not advocate profit sharing plan forworkers, but for managers

9. Scalar chainIt is the flow of authority or command, throughwhich every communication, must pass

In special circumstances, this flow can be short-

circuited in situations, when the scalar chain ofcommunication is non feasible. This is done, using agang plank


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10. Order

This refers to arrangement of things and people inan organisation - A place for everything andeverything in place

Similarly, the right person must be placed at theright position. This demands for precise knowledgeof human requirement and resources

11. Equity

combination of justice and kindness

It should be maintained in behaviour andtreatment towards employees


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12. Stability of Tenure

Employee should be given a minimum job securityat least

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

13. Initiative

Managers must encourage employees to takeinitiative, within the limits of their authority.

It increases the zeal and energy in the employee

14. Espirit de Corps

Union is strengthManagers must encourage the team spirit amongthe employees

Erring employees must be given oral directions and

not asked for a written explanation


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The human relations approach

Elton Mayo Conducted the famous Hawthorne Experiments carried

out at the Western Electric Company, in the UnitedStates of America that started in the early 1920s.

In the approaches by Taylor and Fayol, the human

element in the organisation was not stressed upon. The elements in these approaches were not giving

evoking positive results.

The Western Electric Company, Chicago had Hawthorne

plant that manufactured telephone bell system The company was progressive, with sickness and pension

benefits

In spite of this, there was a dissatisfaction amongworkers.


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Experiment I: Two group of workers, experimented

with the lighting or illumination and its effect on

productivity, showed no clear correlation between

light level and productivity. Experiment II: A girls group was chosen who worked

in the telephone relay assembly department. 5 types

of changes introduced over a period of time and

productivity measured after every change. Experiment III: 20,000 interviews conducted in two

years to determine employees attitude towards

company, work, supervision, waged, insurance,

incentives etc. Experiment IV: 14 male workers were employed and

hypothesis was that they would produce more in

order to earn more. It was proved wrong due to 4

reasons given by workers for a lesser output.


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Salient Features

Focus on individual, his needs and behavior

Highlight interpersonal relations

Emphasis on motivation morale and job

satisfactionConflict in an organization is always

destructive and should be always avoided.

Based on Hawthorne experiments.

People behavior as a individual may be

different than his behavior in a group.


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Focuses on the

individual workers

productivity

Focuses on the

functions of

management

Focuses on the

overall

organizational

system

Overview of Scientific, Administrative & Bureaucratic Approaches


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The human relations approach

Chester Barnard

He was the president of New Jersey BellTelephone Company.

He saw organizations as social systems that

required human cooperation. He believed that managers major roles were

to communicate and stimulate subordinates

to high levels of effort.

He also introduced the idea that managershave to examine the environment and then

adjust the organization to maintain a state of

equilibrium.


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The human relations approachChester Barnard

He connected Scientific Management with

Human Relations. Felt that executives serve two primary functions:

Must establish and maintain a communicationssystem among employees.

Must establish the objectives of the organizationand motivate employees.

Developed an acceptance theory of authority:

Authority of a manager flows from the ability of

subordinates to accept or reject an order from themanager once they: Comprehend what the order requires of them.

Review the orders consistency with organization goals.

Perceive a personal benefit in obeying the order.


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Modern Approach to management

Quantitative Approach The Systems Approach

The Contingency Approach

The Japanese managementstyle (theory z)


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Quantitative Approach Characterized by its use of mathematics,

statistics, and other quantitative techniques formanagement decision making and problemsolving.

This approach has fourbasic characteristics:

1. A decision-making focus

2. Development of measurable criteria

3. Formulation of a quantitative model

4. The use of computers Decision-Making Focus

The primary focus of the quantitative approach ison problems or situations that require direct action,

or a decision, on the part of management.


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Quantitative Approach Measurable Criteria

The decision-making process requires that thedecision maker select some alternative course ofaction.

The alternatives must be compared on the basis of

measurable criteria.

Quantitative Model

To assess the likely impact of each alternative onthe stated criteria, a quantitative model of the

decision situation must be formulated.

Computers

Computers are quite useful in the problem-solvingprocess.


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Contributions of Quantitative Approach

In Production Management-

Focus is on manufacturing technology and theflow of material in plants.

In Operation Management Focus is on organization such as hospitals,

banks, government & the military.


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Limitations of Quantitative Approach

Despite its potential impact, this approach hascertain limitations:-

Does not deal with the people aspect of an

organization!!! Unfamiliar with advanced quantitative tools!!


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The Systems Approach

System Defined

A set of interrelated and interdependent partsarranged in a manner that produces a unifiedwhole.

An approach to problem solving based on anunderstanding of the basic structure of systems.


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The Systems Approach

Basic Types of SystemsClosed systems

Are not influenced by and do not interact withtheir environment (all system input and output is

internal)Open systems

Dynamically interact to their environments bytaking in inputs and transforming them into

outputs that are distributed into theirenvironments


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The Operating Model in Organizational System

Input Transformation Output

Feedback

Companies use inputs such as labour, funds, equipment, andmaterials to produce goods or to provide services and they designtheir subsystems to attain these goals.

Labour, Finances,

Material, Information

Products/Services,

Profit/Loss

Management & Production

Process

INPUT TRANSFORMATION OUTPUT


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The Contingency Approach

Contingency Approach Defined

Also sometimes called the situational approach.

There is no one universally applicable set ofmanagement principles (rules) by which to manageorganizations.

Organizations are individually different, facedifferent situations (contingency variables), andrequire different ways of managing.

Asserts that managers are responsible fordetermining which managerial approach is likely tobe most effective in a given situation.

This requires managers to identify the key

contingencies in a given situation.

Blending Components into a Contingency Perspective


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Blending Components into a Contingency Perspective


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Assessment of Contingency Approach

Useful because of its diagnostic approach,which clearly departs from one of the best

approach of traditionalist.

It is more flexible, although draw heavily from

other approaches.

Allows managers to apply principles from

those approaches selectively and

appropriately.

Japanese Management Style


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Japanese Management Style

Theory Z

Theory Z is humanistic approach to

management approach by William Ouchi.

Advocates trusting employees and making them

feel like an integral part of the organization.

Based on the assumption that once a trustingrelationship with workers is established, productionwill increase.

Th k f t f J i d t i l i ti


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The key features of Japanese industrial organizations:

Offer lifetime employment (at least for their core workers).

Promote from within.

Insist on mandatory retirement of core workers at age 55.

Employ a large number of temporary employees mostly women.

There is a high degree of mutual trust and loyalty betweenmanagement and employees.

Career paths are non-specialized with life-long job rotation as acentral feature of career development.

Decision making is shared at all levels.

Performance appraisal is long term (ie the first appraisal takesplace 10 years after joining the company).

There is a strong sense of collective responsibility for the success ofthe organization.

And cooperation effort rather than individual achievement isencouraged.


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Management Challenges

Increasing number of global organizations. Building competitive advantage through

superior efficiency, quality, innovation, and

responsiveness.

Increasing performance while remaining

ethical managers.

Managing an increasingly diverse work

force. Using new technologies.

Henry L Gantt


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Henry L. Gantt A colleague of Taylors at Bethlehem Steel

Works Implemented a wage incentive program.

Gantts incentive system provided bonuses for

workers who completed their jobs in less time

than the standard.

Initiated a bonus plan for supervisors.

Developed planning and control techniques

using a simple graphic bar chart , The Gantt

Chart, to display relationships between

planned and completed work on one axis

and elapsed time on the other.


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The Gilbreths (1868-1924)

Frank and Lillian Gilbreth refined Taylorsmethods and made many improvements totime and motion studies, and industrialsefficiency & were early contributors to

personnel management.

Th Gilb th


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The Gilbreths

Frank and Lillian Gilbreth refined Taylors

methods. Made many improvements to time and

motion studies.

Time and motion studies: 1. Break down each action into

components.

2. Find better ways to perform it.

3. Reorganize each action to be moreefficient.

Gilbreths also studied fatigue problems,lighting, heating and other worker issues.


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Behavioral Management

Focuses on the way a manager shouldpersonally manage to motivateemployees.

Mary Parker Follett: an influential

leader in early managerial theory. Suggested workers help in analyzing theirjobs for improvements.

The worker knows the best way toimprove the job.

If workers have the knowledge of thetask, then they should control the task.

Th M Ki h t


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The McKinsey approach to

problem-solving

McKinsey's problem-solving processhas three pillars:

Fact-based

Rigidly structured

Hypothesis driven


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Facts Facts are the foundation of problem solving.

Facts aid in the development of a soundhypothesis, and then provide the evidenceneeded to support or refute it.

Facts compensate for the lack of instinct a

consultant must face since he or she does nothave a lifetime of experience in the industry onwhich to draw.

Facts also bridge the credibility gap, lending

respect to the analysis of newcomers. Hiding from the facts is only a recipe for failure,

because sooner or later, the truth will show itself.

Thus, a successful consultant will find the facts and

use them to his or her advantage.

MECE


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MECE One of the most fundamental tenants of

McKinsey problem solving is the concept ofMECE, mutually exclusive, collectively exhaustive.

MECE can be used when developing and listingissues related to the problem at hand.

First, the associate must ensure that the list ismutually exclusive, or that every item is separateand distinct. Then, he must check that it iscollectively exhaustive, that it includes every

issue relevant to the problem. This approach prevents overlap and confusion.

The Initial Hypothesis


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The Initial Hypothesis

The 3rd pillar of the McKinsey problem-solving

process is the initial hypothesis (IH). The initial hypothesis serves as a roadmap toward

the solution.

It is the solution that seems most probable early in

the engagement, after the group hasbrainstormed using their knowledge of thesituation, but before they have spent a lot of timegathering additional information and analyzing.

The initial hypothesis may or may not provecorrect, but it will provide a starting point fromwhich to work and it will guide the research andearly data analysis.

Documents

Definition & Evolution of Management