Evolution of management thought

MBA 1st Christ

No Universally Accepted Theory of Management

• There are several approaches to the theory and practice of management.– The universal process approach

– The operational approach

– The behavioral approach

– The systems approach

– The contingency approach

– The attributes of excellence approach

The Evolution of Management Thought & Patterns of Management Analysis

• Frederick Taylor and Scientific Management

• Fayol, the Father of Modern Operational Management Theory

•

• Elton Mayo and F. Roethlisberger and the Hawthorne Studies

• Recent Contributors to Management Thought, including Peter Drucker

The Universal Process Approach

• Universal Process Approach– Assumes all organizations require the same rational

management process.

– Core management process remains the same regardless of the purpose of the organization.

– The management process can be reduce to a set of separate functions and related principles.

Henri Fayol’s Universal Management Process

• Fayol published Administration Industrielle et Générale in 1916.– Divided the manager’s job into five functions:

– Planning, organizing, command, coordination, and control.

– Developed 14 universal principles of management.

Fayol, the Father of Modern Management Theory

• Authority and responsibility. Authority is a combination of official and personal factors.

• Unity of Command. Employees should receive orders from one superior only.

• Scalar Chain. A "chain of superiors" from the highest to the lowest ranks should be short‑circuited when to follow it scrupulously would be detrimental.

• Esprit de Corps. This is the principle that "in union there is strength.”

Henry Fayol 14 principles.

• Division of work - to derive benefits from the principle of specialization. It helps in greater efficiency & systematic working.

• Authority & responsibility.- authority is he right to give orders, right to command & the power to extract obedience.

responsibility is the obligation to perform work in the desired manner and accept ownership for the results of doing so.

• Discipline – it refers to strict adherence to rules formulated & procedures evolved.

14 principles contd.

• Unity of command an employee should receive orders from one superior only for action.

• Unity of direction everyone should work together to accomplish the objectives.

• Subordination of individual interest to general interest. This is called the principle of cooperation.

• Remuneration.

• Centralization

• Scalar chain a chain of authority extends from the top to the bottom of the orgn’tn & should include every employee.

contd

• Order this refers to arrangements of things & persons.

• Equity - means being fair dealings, accommodative or cooperative attitude of members in an undertaking.

• Stability of tenure of personnel- employees should be assured job security so that they will show keen interest , in the orgn’tn.

• Initiative - means & includes the freedom & capacity to think out original plans & execute them with independent discretion.

• Spirit of cooperation.

Henri Fayol’s Universal Management Process (cont’d)

• Lessons from the Universal Process Approach– The management process can be separated into

interdependent functions.

– Management is a continuous process.

– Management is a largely, though not an entirely, rational process.

– The functional approach is useful because it specifies what managers should do.

The Operational Approach

• Operational Approach– Describes the production-oriented area of

management dedicated to improving efficiency, cutting waste, and improving quality.

– Covers the technical and quantitative approaches to management :

– Management science

– Operations research

– Production management

– Operations management

The Operational Approach (cont’d)

• Frederick W. Taylor’s Scientific Management– Developing performance standards on the basis of

systematic observations and experimentation.

– Standardization of work practices and methods reduce waste and increase productivity

– Time and task study of workers’ efforts to maximize productivity and output.

– Systematic selection and training of workers to increase efficiency and productivity.

– Differential pay incentives based on established work standards.

The Operational Approach (cont’d)

• Lessons from the Operational Approach– A dedication to finding a better way is still important.

– Using scientific management doesn’t dehumanize workers.

– Quality advocates, inspired by the scientific approach, have been right all along about the importance of quality and continuous improvement

– The operational approach fostered the development of operations management.

Taylor’s Followers

• Frank and Lillian Gilbreth– Refined time and motion study methods for use in

work simplification.

• Henry L. Gant– Refined production control and cost control

techniques.

– Developed the Gantt chart for work-scheduling of projects.

– Early advocate of the importance of the human factor and the importance of customer service over profits.

The Quality Advocates

• Walter A. Shewhart– Introduced the concept of statistical quality control.

• Kaoru Ishikawa– Proposed a preventive approach to quality.

– Developed fishbone diagram approach to problem-solving.

• W. Edwards Deming– Based his 14 principles on reformed management

style, employee participation, and striving for continuous improvement.

The Quality Advocates (cont’d)

• Joseph M. Juran– Proposed the concept of internal customers,

teamwork, partnerships with suppliers, and brainstorming.

– Developed Pareto analysis (80/20 rule) as a tool for separating major problems from minor ones.

• Armand V. Feigenbaum– Developed the concept of total quality control.

• Philip B. Crosby– Promoted the idea of zero defects (doing it right the

first time).

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TQM

• Focuses on managing the total organization to deliver quality to customers.

• Four significant elements are– Employee involvement

– Focus on the customer

– Benchmarking

– Continuous improvement

The Behavioral Approach

• The Human Relations Movement– An effort to make managers more sensitive to their

employees’ needs.

– Arose out the influences of

– the threat of unionization.

– the Hawthorne studies.

– the philosophy of industrial humanism.

The Human Relations Movement Pyramid

The Behavioral Approach (cont’d)

• The Threat of Unionization– The Wagner Act of 1935 legalized union-

management collective bargaining, promoting the growth of unions and union avoidance by firms.

• The Hawthorne Studies (1924)– The study’s results that productivity was strongly

affected by workers’ attitudes turned management toward the humanistic and realistic viewpoint of the “social man” model.

• Elton Mayo– Believed emotional factors were more important

determinants of productive efficiency than were physical and logical factors.

• Mary Parker Follett– Advocated that managers become aware of how

complex each employee is and how to motivate employees to cooperate rather than to demand performance from them.

The Philosophy of Industrial Humanism

• Douglas McGregor– Developed Theory X and Theory Y

– Theory X: management’s traditionally negative view of employees as unmotivated and unwilling workers.

– Theory Y: the positive view of employees as energetic, creative, and willing workers.

The Philosophy of Industrial Humanism (cont’d)

TABLE A.2 McGregor’s Theories X and Y

Organizational Behavior

• Organization Behavior– A modern research-oriented approach seeking to

discover the causes of work behavior and to develop better management techniques.

• Lessons from the Behavioral Approach– People are the key to productivity.

– Success depends on motivated and skilled individuals committed to the organization.

– Managerial sensitivity to employees is necessary to foster the cooperation needed for high productivity.

The Systems Approach

• What is a System?– A collection of parts that operate interdependently to

achieve a common purpose.

• Systems Approach– Posits that the performance of the whole is greater

that the sum of the performance of its parts.

– Analytic versus synthetic thinking: outside-in thinking versus inside-out thinking.

– Seeks to identify all parts of an organized activity and how they interact.

The Systems Approach (cont’d)

• Chester I. Barnard’s Early Systems Perspective– Wrote Functions of the Executive.

– Characterized all organizations as cooperative systems.

– Defined principle elements in an organization as

– willingness to serve.

– common purpose.

– communication.

– Strong advocate of business ethics.

General Systems Theory

• General Systems Theory– An area of study based on the assumptions that

everything is part of a larger, interdependent arrangement.

• Levels of systems– Each system is a subsystem of the system above it.

– Identification of systems at various levels helps translate abstract systems theory into more concrete terms.

General Systems Theory (cont’d)

• Closed Versus Open Systems– Closed system

– A self-sufficient entity.

– Open system

– Something that depends on its surrounding environment for survival.

– Systems are classified open (closed) by how much (how little) they interact with their environments.

General Systems Theory (cont’d)

• New Directions in Systems Thinking: Organizational learning and knowledge management

– Organizations are living and thinking open systems that learn from experience and engage in complex mental processes.

– Chaos theory– Every complex system has a life of its own, with its own

rule book.

– Complex adaptive systems– Complex systems are self-organizing.

The Contingency Approach

• Contingency Approach– A research effort to determine which managerial

practices and techniques are appropriate in specific situations.

– Different situations require different managerial responses.

– Can deal with intercultural feelings in which custom and habits cannot be taken for granted.

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Systems View of Organizations

Systems Approach to Management

The Contingency Approach (cont’d)

• Contingency Characteristics– An open-system perspective

– How subsystems combine to interact with outside systems.

– A practical research orientation

– Translating research findings into tools and situational refinements for more effective management.

– A multivariate approach

– Many variables collectively account for variations in performance.

The Contingency Approach (cont’d)

• Lessons from the Contingency Approach– Approach emphasizes situational appropriateness

rather than rigid adherence to universal principles.

– Approach creates the impression that an organization is captive to its environment.

– Approach has been criticized for creating the impression that an organization is a captive of its environment.

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Contingency View of Management

Exhibit 2.6

Attributes of Excellence: A Modern Unconventional Approach

• Peter and Waterman’s Approach– Attacked conventional management theory and

practice as outmoded in almost every dimension.

– Replaced conventional management terminology with new catch phrases.

– Made key points with anecdotes and stories rather than quantifiable objective data and facts.

Attributes of Excellence: A Modern Unconventional Approach (cont’d)

• A Critical Appraisal of the Excellence Approach– Raises more questions than it answers.

– Ignores the contingency approach to management.

– Relies heavily on unsupported generalizations.

– Fails to position management effectiveness as important to sustaining corporate excellence.

• Lessons from the Excellence Approach– Reminded managers to pay close attention to the

basics.

– Reminded managers of the importance of on-the-job experimentation.

Innovative Mgmt thinking

• The learning organisation.- defined as one in which everyone is engaged in identifying & solving problems, enabling the orgn’t to continuously experiment ,change, & improve, thus increasing its capacity to grow, learn & achieve its purpose.-- three characteristics are

• Team - based structure

• employee empowerment. Means unleashing the power & creativity of employees by giving them the freedom, resources, information & the skills to make decisions & perform effectively.

• Open information

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Elements of a Learning Organization

Learning Organization

Open Information

Empowered Employees

Team-Based Structure

Managing technology – driven work place.

• The shifting world of e- business; E- business, E- commerce( a narrower term referring specifically to business exchanges or transactions that occur electronically.) – business –to – consumer, business-to-business, and consumer- to- consumer( web- based intermediaries.).

• Supply chain management – managing the sequence of suppliers & purchasers, covering all stages of processing from obtaining raw material to distributing finished goods.

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Types of E-Commerce

Business-to-Consumer B2C Selling Products and

Services Online

Business-to-Business B2B Transactions Between

Organizations

Consumer-to-Consumer C2C Electronic Markets

Created by Web-Based Intermediaries