Evolution of Management Thought

A structured social system consisting of groups of individuals working together to meet some agreed-on objectives

Organization

Early Practices-Adam Smith

•Scottish philosopher•Wrote ‘Causes of Wealth of Nations’•Proposed ‘Division of Labour’

Adam Smith, 18th century economist, found firms manufactured pins in two ways: Craft -- each worker did all steps. Factory -- each worker specialized in one step.

Smith found that the factory method had much higher productivity. Each worker became very skilled at one, specific

task.Breaking down the total job allowed for the

division of labor.

Job specialization

Charles Babbage•British Mathematics professor•Wrote ‘On the Economy of Machinery and Manufactures’•Proposed advantages of division of labour:•Reduces the time needed for learning a job•Reduces waste of material•Attainment of high skill levels•Matching skills and abilities with jobs

Robert OwenWelsh entrepreneurRecognised how factory work was demeaning to employees

Scientific Management- Frederick TaylorDevelop a science for each element of an

individual’s workScientifically select, train, teach and

develop workerCooperation with workersDivide work responsibility equally

between management and workers

The Classical Era

Frank and Lillian Gilbreth refined Taylor’s 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 more efficient.

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

Gilbreths

- Study conducted in Hawthorne plant of General Electric Company, Chicago

- Mayo, Roethlisberger, Dickson, Whitehead

Illumination experiment (1924-27)Relay room experiment (1927-28)Mass interviewing (1928-30)Bank wiring observation (1931-32)

Hawthorne studies

Social factors in outputGroup InfluenceConflictsLeadershipSupervisionCommunication

Implications of Hawthorne Experiment

Administrative TheoryFrench industrialist Henry FayolProposed that a manager plans, organises,

directs, controls and coordinates14 principles of management including

division of labour, authority, scalar chain, unity of command, initiative

Classical Organisation Theory

1. Division of work2. Authority3. Discipline4. Unity of command5. Unity of direction6. Subordination of individual interest to the

general interest7. Remuneration

Fayol’s 14 principles

8. Centralization9. Scalar chain10. Order11. Equity12. Stability and tenure13. Initiative14. Esprit de corps

Fayol’s 14 principles

Max WeberProposed Structural TheoryDescribed bureaucratic structure• Division of labour• clearly defined hierarchy,• detailed rules and regulations and• impersonal relationships

Formal rules regulationsDivision of labourHierarchical structureAuthority structureLifelong commitment

Social Man Theory

Mary Parker FollettEmphasised on group ethicsManager must coordinate group efforts

Chester BarnardSocial Systems TheoryOrganisations made up of people who have interacting social relationshipThey communicateSuccess depends on maintaining good relations

Described organisations as a complex network of decisional process

Decision process comprises: i) intelligent activity ii) design activity iii) choice activity

Bounded rationalityAdministrative man : simplification,

satisficing approachOrgaisational Communication

Herbert Simon

Nature of management as innovative and creative

Manager has to act as administrator, entrepreneur, set objectives etc.

Organisation structure to facilitate effective functioning

MBO

Peter Drucker

Structuring of an organization into departments or units on the basis of type of work performed

A functional manager is a person who has management authority over an organizational unit - such as a department - within a business or company

Functional Management

AuthoritativeParticipativeFree-reinPseudo autocratic

Management Styles

Leaner organisationsOutsourcingContingent workforce

New forms of organisation

Virtual corporationsHighly flexible, temporary organisations formed by a group of companies to exploit a specific opportunity

Socio-technical approachManagement scienceHuman relations approachSystems approachContingency approach

Approach

Considers relationships inside and outside the organization.The environment consists of forces,

conditions, and influences outside the organization.

Systems theory considers the impact of stages:Input: acquire external resources.Conversion: inputs are processed into goods

and services.Output: finished goods are released into the

environment.

Systems approach

An open system interacts with the environment. A closed system is self-contained.

Systems approach

Uses rigorous quantitative techniques to maximize resources.Quantitative management: utilizes linear

programming, modeling, simulation systems.Operations management: techniques to

analyze all aspects of the production system.Total Quality Management (TQM): focuses on

improved quality.Management Information Systems (MIS):

provides information about the organization.

Management Science

Assumes there is no one best way to manage

The environment impacts the organization and managers must be flexible to react to environmental changes.

The way the organization is designed, control systems selected, depend on the environment.

Technological environments change rapidly, so must managers.

Contingency Theory