chapter

p two

The Evolution of Management

Thought

McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives
y Describe how the need to increase organizational
efficiency and effectiveness has guided the evolution of
management theory
y Explain the principle of job specialization and division of
labor, and tell why the study of person-task relationships
is central to the pursuit of increased efficiency
y Identify the principles of administration and organization
that underlie effective organizations
g

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 Learning Objectives
z Trace the change in theories about how managers should
behave to motivate and control employees
z Explain the contributions of management science to the
efficient use of organizational resources
z Explain why the study of the external environment and its
impact on an organization has become a central issue in
management thought
h h

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 The Evolution of Management Theory

Figure 2.1
2-4
 A MANAGER’S CHALLENGE: FINDING
BETTER WAYS TO MAKE CARS
y Car production has changed dramatically over the years as managers have
applied different principles of management to organize and control work
activities.
y Prior to 1900, small batch production was used, which was very expensive.
y In 1913, Henry Ford revolutionized the car industry by pioneering the
deve op e t of mass-production
development ass p o uct o manufacturing.
a u actu g.
y .The next change in management thinking occurred in Japan when a Toyota
production engineer pioneered the development of lean manufacturing in the
1960s.
1960
y In the 1990s, global car companies increased the number of robots used on the
production line and began using advanced IT to build and track the quality of
cars being produced.
y In the 2000s,Toyota has continued to pioneer new ways to increase its assembly
line efficiency, and other manufacturers are attempting to catch up.
 Job Specialization and
th Division
the Di i i off LLabor
b

Adam Smith (18th century economist)

y Job
J b SSpecialization
i li ti
y process by which a division of labor occurs as different workers
specialize in specific tasks over time
y Division of Labor
y the separation of a work process into a number of tasks, with each
t k performed
task f d by
b a separate
t person or group off persons.
y Workers who specialized became much more skilled at their
specific
p tasks
y Increasing job specialization increases efficiency and leads to
higher organizational performance

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 F.W. Taylor and Scientific Management
Scientific Management
The systematic study of the relationships between people
and tasks for the purpose of redesigning the work
pprocess to increase efficiency.
ff y

2-7
 Four Principles of Scientific
Management
1 Study the way workers perform their tasks,
1. tasks gather all
the informal job knowledge that workers possess and
experiment withh ways off improving how
h tasks
k are
performed
y Time-and-motion study
2 Codify the new methods of performing tasks into
2.
written rules and standard operating procedures

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 Four Principles of Scientific
Management
3. Carefully select workers who possess skills
and abilities that match the needs of the task,
and train them to perform the task according
to the established rules and procedures
4. Establish a fair or acceptable level of
performance
f for
f a task,
k andd then
h ddevelop
l a
pay system that provides a reward for
performance above the acceptable level

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 The Gilbreths
1. Break up and analyze every individual action necessary to
perform a particular task into each of its component actions
2. Find better ways to perform each component action
3. Reorganize each of the component actions so that the
action as a whole could be performed more efficiently-at
less cost in time and effort

2-10
 Fayol’s Principles of Management
y Division of Labor: allows for job specialization.
y jobs can have too much specialization leading to poor quality and
worker
k dissatisfaction.
di ti f ti
y Authority and Responsibility
y both
b th formal
f l andd informal
i f l authority
th it resulting
lti ffrom special
il
expertise.
y Unity of Command
y Employees should have only one boss.

2-11
 Fayol’s
y Principles
p of Management
g

y Li
Line off AAuthority
h i
y A clear chain of command from top to bottom of the firm.
y Centralization
C li i
y The degree to which authority rests at the top of the
organization.
organization
y Unity of Direction
y A single plan of action to guide the organization.
organization

2-12
 Fayol’ss Principles of Management
Fayol

y Equity
E i - The
Th provision off justice andd the
h fair
f andd
impartial treatment of all employees.
y Order
O d - TheTh arrangement off employees
l where
h theyh willill
be of the most value to the organization and to provide
career opportunities.
opportunities
y Initiative - The fostering of creativity and innovation by
encouraging employees to act on their own.
own

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 Fayol’s
y Principles
p of Management
g

y Discipline
y Obedient, applied, respectful employees are necessary for the
organization to function.
y Remuneration of Personnel
y An equitable uniform payment system that motivates
contributes to organizational success.

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 Fayol’s
y Principles
p of Management
g

y Stability of Tenure of Personnel

y Long-term employment is important for the development of skills
that
h improve
i the
h organization’s
i i ’ performance.
f
y Subordination of Individual Interest to the
Common Interest
y The interest of the organization takes precedence over that of the
i di id l employee.
individual l

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 Fayol’s Principles of Management
Esprit de corps
y Comradeship, shared enthusiasm foster devotion
to the common cause (organization).

2-16
 Administrative Management Theory
y Administrative Management
y The study of how to create an organizational structure
that leads to high efficiency and effectiveness.
effectiveness
y Organizational structure is the system of tasks and
authority
th it relationships
l ti hi th thatt control
t l hhow employees
l use
resources to achieve the organization’s goals.

2-17
 Administrative Management Theory
Max Weber
y Developed the principles of bureaucracy as a formal system of
organization
i i andd administration
d i i i ddesigned
i d to ensure efficiency
ffi i andd
effectiveness.

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 System of written rules
and standard operating
procedures that specify
how employees should
behave

Clearly specified system A bureaucracy Clearly specified

of tasks and role should
h ld have
h hi
hierarchy
h off authority
h i
relationships

Selection and evaluation

system that rewords
employees fairly and
equitably
2-19
 Weber’s Principles of Bureaucracy
1) A manager’s formal authority derives from the position he holds
in the organization.
2) People should occupy positions because of their performance,
not because of their social standing or personal contacts.
3) The extent of each position’s formal authority and task
responsibilities
p and it’s relationshipp to other positions
p should be
clearly specified.
4) Authority can be exercised effectively when positions are
arranged hierarchically, so employees know whom to report to
and who reports to them.
them
5) Managers must create a well-defined system of rules, standard
operating procedures,
and norms so theyy
can effectively
ff l
control behavior .

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 Rules, SOPs and Norms
y Rules
R l – formal
f l written instructions that
h specify
f actions to bbe
taken under different circumstances to achieve specific goals
y Standard
S d dO Operating
i P Procedures
d (SOPs)
(SOP ) – specific
ifi sets off
written instructions about how to perform a certain aspect of
a task
y Norms – unwritten, informal codes of conduct that prescribe
how people should act in particular situations

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 Behavioral Management Theory
Behavioral Management
y The study of how managers should personally behave to motivate
employees
l andd encourage them
h to perform
f at high
hi h levels
l l andd bbe
committed to the achievement of organizational goals.

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 Behavioral Management
M Parker
Mary P k FFollett
ll
1. Mary Parker Follett’s writings about management were a
response to her concern that Ta Taylor
lor was
as ignoring the human
side of the organization.
2
2. She felt that management often overlooked the ways that
employees can contribute, when managers allow them to
participate.
3. In contrast to Taylor, Follett argued that workers know the
most about their jobs and should be involved in analyzing their
jobs. She proposed that if workers have the relevant
knowledge, then workers, rather than managers, should be in
control of the work process
process.
2-23 y
Behavioral Management
Mary Parker Follett
4. She anticipated the current interest in self-managed teams and
p
empowerment. She also advocated “cross-functioning” g in
which members of different departments work together in
cross-departmental teams to accomplish tasks.
5. Follett proposed that knowledge and expertise, and not
managers’ formal authority, should decide who would lead at
any moment. t Sh
She believed
b li d th thatt power should
h ld bbe flfluid
id andd
should flow to the person who can best help achieve
organizational goals. In contrast to Fayol, Follett advocated a
horizontal view of power and authority.
 The Hawthorne Studies
y Studies
d off how
h characteristics
h off the
h workk setting
affected worker fatigue and performance at the
Hawthorne Works of the Western Electric
Company from 1924-1932.
y Worker productivity was measured at various
g illumination.
levels of light
y Researchers found that regardless of whether the
g levels were raised or lowered,, worker
light
productivity increased.

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 The Hawthorne Studies
Human Relations
l Implications
l
y Hawthorne effect — workers’ attitudes toward their managers
affect the level of workers
workers’ performance
y Human relations movement – advocates that supervisors be
behaviorallyy trained to manage
g subordinates in ways
y that elicit
their cooperation and increase their productivity
y Behavior of managers and workers in the work setting is as
important in explaining the level of performance as the technical
aspects of the task
y Demonstrated the importance
p of understandingg how the feelings,
g,
thoughts, and behavior of work-group members and managers
affect performance

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 Theory X and Theory Y
Douglas
l McGregor
G proposedd the
h two ddifferent
ff sets off
assumptions about workers.
y Theory
Th X assumes th
the average worker
k iis llazy, di
dislikes
lik workk andd
will do as little as possible.
y Workers have little ambition and wish to avoid responsibility
p y
y Managers must closely supervise and control through reward and
punishment.

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 Theory X and Theory Y
y Theory
h Y assumes workers
k are not llazy, want to
do a good job and the job itself will determine if
the worker likes the work.
y Managers
g should allow workers ggreater
latitude, and create an organization to
stimulate the workers.

2-28
 Theory X vs. Theory Y

Figure 2.3
2-29
 Management Science Theory
y Contemporary approach to management that focuses on the
use of rigorous quantitative techniques to help managers
make
k maximum
i use off
organizational resources to produce goods and services.
y Quantitative
Q tit ti managementt — utilizes tili lilinear
and nonlinear programming, modeling,
simulation,
i l ti queuing i ththeory andd chaos
h th theory.
y Operations management —techniques used
to analyze any aspect of the organization’s
production system.
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 Management Science Theory
y Total Quality Management (TQM) —
focuses on analyzing
y g input,
p conversion, and
output activities to increase product quality.
y Management Information Systems (MIS)
— provides information vital for effective
d i i making.
decision ki

2-31
 The Open-Systems View
Open System
y A system that takes resources for its external
environment and transforms them into goods
and services that are then sent back to that
environment where they are bought by
customers.
customers

2-32
2-33
 The Open-Systems View
y Inputs: the acquisition of external resources to produce goods
and services
y Conversion:
Con ersion transforms
t f the
th inputs
i t into
i t outputs
t t off fifinished
ih d
goods and services.
y Output: the release of finished goods and services to its
external environment.

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 Closed System
y A self-contained system that is not affected by changes in its
external environment.
y Likely to experience entropy and lose its ability to control
itself

2-35
 Contingency Theory
y “There is no one best way to organize”
y The idea that the organizational structures and control systems
manager choose depend on—are contingent on—
characteristics of the external environment in which the
organization
i i operates.

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