Historical Roots of Contemporary Management

PracticesDr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt)

Professor

Historical Roots of Contemporary Management Practices

Up to the 20th century (pre-modern era) Adam smith’s contribution to the field of management

Industrial revolution’s influence on management practices

In the early 20th century Scientific management

General administrative theory

The human resources approach

The quantitative approach

From the later 20th century to the present The process approach

The systems approach

The contingency approach

Adam Smith’s Contribution to the Field of Management

The general popularity today of job specialization is undoubtedly due to Smith’s view about division of labor.

Division of labor is the breakdown of jobs into narrow, repetitive tasks.

Industrial Revolution’s Influence on Management Practices

Industrial Revolution has originated in late-18th-century in Great Britain, and crossed the Atlantic toAmerica by the end of the Civil War.

Because of the Industrial Revolution, machine powerwas rapidly substituted for human power, which made iteconomical to manufacture goods in factories.

With the development of big organizations, a formaltheory to guide managers running these organizationsefficiently and effectively was needed.

Evolution of Management Theory

18902000

Administrative Management

Behavioral Management

Scientific Management

Management Science

Org. Environment

1940

Scientific Management

Frederick Taylor was called as the father of Scientific management.

His book - The Principles of Scientific management was published in 1911.

Immediately, its contents became widely accepted by managers throughout the world.

Background of That Time

There were no clear concepts of responsibilities to workers and managers.

No effective work standards existed.

Management decisions were based on hunch and intuition.

Workers were placed on jobs with little or no concern for matching their abilities and aptitudes with the tasks required.

Managers and workers considered themselves to be in continual conflict - any gain by one would be at the expense of the other.

Taylor’s Four Principles of Management

Develop a scientific way for each element of an individual’swork, which replaces the old rule-of-thumb method.

Scientifically select and then train, teach, and develop theworker.

Heartily cooperate with the workers, so as to ensure that allwork is done in accordance with the scientific way that hasbeen developed.

Divide work and responsibility almost equally betweenmanagers and workers. Managers take over all work forwhich it is better fitted than the workers.

Problems of Scientific Management

Managers often implemented only the increased output side of Taylor’s plan. They did not allow workers to share in

increased output.

Specialized jobs became very boring, dull.

Workers ended up distrusting Scientific Management.

Workers could purposely “under-perform”

Management responded with increased use of machines.

The GilbrethsFrank 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.

General Administrative Theory

Henry Fayol’s contributionsHe argued that management was an activity

common to all human undertakings in business, ingovernment, and even in the home. He stated 14principles of management—fundamental or universaltruths.

Fayol’s 14 Principles of Management

1. Division of Work

2. Authority

3. Discipline

4. Unity of Command

5. Unity of Direction

6. Subordination of

Individual Interests to the

General Interest

7. Remuneration

8. Centralization

9. Scalar Chain

10. Order

11. Equity

12. Stability of Tenure of

Personnel

13. Initiative

14. Esprit de corps - a feeling

of pride and mutual loyalty

shared by the members of a

group.

Administrative Management

Seeks to create an organization that leads to both efficiency and effectiveness.

Max Weber developed the concept of bureaucracy.

A formal system of organization and administration to ensure effectiveness and efficiency.

Weber developed the Five principles shown in the following Figure.

Bureaucratic Principles

A Bureaucracy

should have

Written rules

System of task

relationships

Hierarchy of

authority

Fair evaluation

and reward

Weber’s Ideal Bureaucracy

Division of labor

Authority hierarchy

Formal selection

Formal rules and regulations

Impersonality

Career orientation

Key points of Bureaucracy

Authority is the power to hold people accountable for their actions.

Positions in the firm should be held based on performance, not social contacts.

Position duties are clearly identified; people should know what is expected of them.

Lines of authority should be clearly identified; workers should know who reports to whom.

Rules, Standard Operating Procedures (SOPs) & Norms used to determine how the firm operates. Sometimes, these lead to “red-tape” and other

problems.

The Human Resources Approach

Hawthorne Studies

Human Relations Movement

- Dale Carnegie

- Abraham Maslow

- Douglas McGregor

Behavior Science/Behavioral Management

Behavioral Management

Focuses on the way a manager should personally manage to motivate employees.

Mary Parker Follett, an influential leader in early managerial theory Suggested workers’ help in analyzing their jobs

for improvements. The worker knows the best way to improve the

job. If workers have the knowledge of the task, then

they should control the task.

Hawthorne Studies Time: 1924—the early 1930s

Place: Hawthorne plant in the Western Electric Company

Designer: Western Electric industrial engineers

Elton Mayo and his associates

Mayo’s Finding:

Individuals improve or modify an aspect of their behavior in response to their awareness of being observed. Behavior and sentiments are closely related.

Group influences significantly affect individual behavior.

Group standards establish individual worker output.

Money is less a factor in determining output than are group standards, group sentiments, and security.

Dale Carnegie’s Contribution

One of the core ideas in his books is that it is possible to change other people's behavior by changing one's behavior toward them.

How to Win Friends and Influence People

Maslow’s Hierarchy of Needs

Self-

actualization

Esteem

Belongingness

Security

PhysiologyFood

Achievement

Status

Friendship

Stability

Job

Friends

Pension

Base

NEEDSGeneral Examples Organizational Examples

jobChallenging

title

at work

plan

salary

Theory X and Y Douglas McGregor proposed the two different sets

of worker assumptions.

Theory X: Assumes the average worker is lazy, dislikes work and will do as little as possible.

Managers must closely supervise and control through reward and punishment.

Theory Y: Assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work.

Managers should allow the worker great latitude, and create an organization to stimulate the worker.

Theory X vs Theory Y

Theory Y

Employee is not lazy

Must create work setting to build initiative

Provide authority to workers

Theory X

Employee is lazy

Managers mustclosely supervise

Create strict rules & defined rewards

Theory Z

Emphasizes: Long-term employment

Slow career development

Moderate specialization

Group decision making

Individual responsibility

Informal control over the employee

Concern for workers

Japanese Theory Z:Characteristics of a Theory Z

organisation – Ouchi

Long-term employment, often for a lifetime

Relatively slow process of evaluation and promotion

Development of company-specific skills & moderately specialised career path

Japanese Theory Z:Characteristics of a Theory Z organisation – Ouchi (contd.)

Implicit, informal control mechanisms supported by explicit, formal measures

Participative decision-making but individual ultimate responsibility

Broad concern for the welfare of subordinates & co-workers as a natural part of a working relationship & informal relationships among people

The Quantitative Approach

The quantitative approach to management, sometimes referred to as, operations research (OR) or management science.

It includes applications of statistics, optimization models, information models, and computer simulations, linear programming, and so on, which can be used to solve management problems.

In general, the quantitative approaches have contributed directly to management decision making, particularly to planning and control decisions.

Systems Approach

The system approach defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole.

Societies are systems and so, too, are computers, automobiles, organizations, and animal and human bodies.

An Organization Is an Open System

An organization is a system that interacts with and depends upon its environment.

- Organization’s stakeholders: any group that is affected by organizational decisions and policies.

- The manager’s job is to coordinate all stakeholders to achieve the organization’s goals.

Organizational survival often depends on successful interactions with the external environment.

The Operating Model in Organizational System

Input Transformation Output

Feedback

Contingency Approach

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.

Four Popular Contingency Variables

Organization size

Routineness of task technology

Environmental uncertainty

Individual differences

MCKINSEY’S 7S FRAMEWORK

THE HARD S’sStrategy: the direction and scope of the company

over the long term.

Structure: the basic organization of the company, its departments, reporting lines, areas of expertise and responsibility (and how they inter-relate).

Systems: formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call center systems, online systems, etc).

THE SOFT S’sSkills: the capabilities and competencies that exist

within the company: what it does best.

Shared values: the values and beliefs of the company: ultimately they guide employees towards 'valued' behavior.

Staff: the company's people resources and how they are developed, trained and motivated.

Style: the leadership approach of top management and the company's overall operating approach.