The Evolution of Management Thinking

Why history?

• Management philosophies and organization forms change over time to meet new needs. Knowing the history will– give you a perspective– Provide sense of contect and environment– Enhance strategic thinking

• Some ideas and practices from the past are still relevant and applicable to management today

Management perspectives over time

CLASSICAL PERSPECTIVE

Scientific Management (F. Taylor)“The system rather than man should come first”

Bureaucratic Organizations (M. Weber)Rational way to manage

Administrative Principles( H. Fayol, Follett, C. Barnard)

Organizations are social

Scientific management: Efficiency is everything

Context & challenges

- Industrial revolution, division of labour (A. Smith)- factory system

- US civil war & unification of the country

- Mass transportation and railways between East & West

- Dev’t of national market: larger size

- Opportunity for economies of scale: growth pressure

- Conflicts with the labour force : skilled workers control all.

- Control and management processes inadequate to cope with this growth.

How to increase productivity? How to be more efficient?How to de-skill the labour?

SIMPLIFY THE PRODUCTION PROCESS

Time & Motion studies (Gilbreath) in order to establish standards and precise rules for production, selection of workers, training.

Fordism: Assemly line(process)

Results of Scientific Management

Bureaucratic organizations (Max Weber 1864-1920) : Impersonal entitiesContext and Challenges

European employees were loyal to a single individual rather than to the organization or its mission

Resources used to realize individual desires rather than organizational goals

Features: Rational way to manage

• Clear division of labour with clear definition of authority and responsibility

• Positions organized in a hierarchy of authority

• Formal record keeping

• Separation of ownership and management

• Strict rules and procedure

Administrative principles: A general perspective H. Fayol, Mary. F. Follett; Chester Barnard.

New managerial concepts introduced: • Fayol: the management functions.

– Unity of command- one commander – Division of work- specialisation – Unity of direction – grouping similar activities– Scalar Chain – chain of authority for everyone– Span of control- limit to supervision

• Follett: Ethics-power-empowerment• C. Barnard: Informal organizations- naturally

occuring groups. Organization is social. Mgt should treat employees well.

HUMANISTIC PERSPECTIVE

Human relations Movement

Human Resource Perspective

Humanistic perspective Movement: “Social scientific management”

Context and Challenges:• Classical management increased efficiency and

productivity but ignored social and human context.• 1929 Great Depression in USA. Wagner Act (1935)

about workers rights and unions. • Hawthorne studies, experimental studies : Positive

treatment and motivation links:• Emphasized understanding human behavior, needs, and

attitudes in the workplace

Human Resource management.

Human Relations Movement

Emphasized satisfaction of employees’

basic needs as the key to increased

worker productivity

Highly inspired by the results of Hawthorne

studies

Human relations Movement

Hawthorne studies by Elton Mayo

• Started in 1895• Four experimental & three control groups• Test pointed to factors other than illumination for

productivity

• Factor that increased output, Human Relations– Social norms determine behaviour at work– Group affects individual– Money is less a factor for productivity

Human Resource Perspective

Suggests jobs should be designed to meet higher-level

needs by allowing workers to use their full potential:

Motivation and leadership theories Maslow and hierarchy of needs

McGregor Theory X and Theory YSkinner: Operant conditioning

McClelland: Motivation theoriesHerzberg: Motivation theories

Hackman & Oldham Task/job characteristicsFiedler: leadership theories

Human Resource Perspective

Self-actualisation

Self-esteem

Social

Safety

Psysiological

MASLOW HIERARCHY OF NEEDS

Douglas McGregor Theory X & Y1906-1964

Theory X• Men dislike work –will

avoid it• Must be coerced,

controlled, directed, or threatened with punishment

• Prefer direction, avoid responsibility, little ambition, want security

Theory Y• Men do not dislike work• Self direction and self

control• Seek responsibility• Imagination, creativity

widely distributed• Intellectual potential only

partially utilized

Behavioral Sciences Approach

• Applies social science in an organizational context

• Draws from economics, psychology, sociology, anthropology, and other disciplines– Understand employee behavior and

interaction in an organizational setting– OD – Organization Development

• Socio technical approaches- participative mgt• Structural approach – org design

Post-War management approaches

Managerial Science approach

More recent developments-

Systems Theory

Contingency View

Total Quality Management (TQM)

Management Science Perspective

• Emerged after WW II• Applied mathematics, statistics, and other

quantitative techniques to managerial problemsOperations Research – mathematical

modelingOperations Management – specializes in

physical production of goods or servicesInformation Technology – reflected in

management information systems

Contingency View of Management: Flexible approach

• Management is not universal and each situation is unique.

• No universal principles• Contingencies: Industry –technology- environment-

cultures- size: “Contingency for “goodness of fit” between environment and organization structure.

TQM: Total Quality Management (E. Deming)

• First time applied in Japan• Focuses on managing the total

organization to deliver quality to customers.

• Four significant elements are– Employee involvement– Focus on the customer– Benchmarking– Continuous improvement ( 0% defect)

•

Recent trends: Flexible solutionsInnovative management thinking

Learning organizations

Technology driven workplace

Knowledge management

Learning Organizations

OPEN INFORMATION

EMPOWEREDEMPLOYEES

TEAM BASEDSTRUCTURE

LEARNING ORGANIZATION

No ready remedies- innovative thinking

Everybody engaged in solving problem- empowerment

Continous change- information and transparency

Technology Driven Workplace: Example: E-commerce

Business-to-Consumer B2C Selling Products and

Services Online ( Dell)

Business-to-Business B2B Transactions Between

Organizations(supply chain)

Consumer-to-Consumer C2C Electronic Markets

Created by Web-Based Intermediaries (arabam.com)

Knowledge management

Technology offers and supports information gathering and disseminating. Examples of positive consequences:

- CRM- Customer Relationship Management (Turkcell)

- Outsourcing- Banks and credit cards- i.e. Call centers, leaflets- Other international examples

- Arup- Tetra Pak

The term “Knowledge management” (Peter Drucker)

According to Drucker: • There is NO one right organizational structure• There is NO one right way to manage people• Technical markets are NOT given• Management is NOT internally focused• Management scope is NOT defined legally:• Therefore, the management should seek to get

information and acquire knowledge, manage and use this knowledge in order to survive and succeed. For that to happen, the management should foster a culture of continuous learning and knowledge sharing.

On the overall ..

• All approaches may co-exist• All approaches are still valid in the

workplace• However, trends are towards more flexible

structures and balance between efficiency and effectiveness.

Focus on Efficiency

Focus on Learning

organizations

New organizational paradigms: Flexibility is the rule

Mechanistic

organizationsOrganic organizations

Learning organizations: experiment

risk taking

sharing knowledge

Full participation in problem solving

Less formalization

X-functional hierarchical teams

Iron CageDepartments

Highly formal

Little participation

Limited information network

General Trends in organizationsIndustrial

Labour

Predictable environment

Mass production

Routine technology

Hierarchical structures

Growth-efficiency-control

Centralised decision making

Post industrial

Knowledge

Uncertainty & Speed

Flexibility

Innovation

Networks/Horizontal

Outsourcing

Decentralization

What happened? Why this shift?

What forces organizations and management to change?

ECONOMICFORCES

POLITICAL FORCES

SOCIAL FORCES

MANAGEMENT & ORGANIZATIONS

Values, needs , standards of behavior

influence of political and legal institutions on people & organizations

forces that affect the availability, production, & distribution of a society’s resources among competing users

& TECHNOLOGICAL CHANGES......

External environment change

complexity

InStability/

diversity

Uncertainty curves

•Globalization

•Technology

•Economic /political turbulances

The biggest challenge: Increasing Uncertainty