2011.02.cesa sustain 02

REVIEW

Strategic Stretch

Creative Destruction

Groupthink

3 Common Mistakes of Management

1. Too self satisfied2. Lack of Change3. Underestimate Significance of Vision

3 Common Mistakes of Management

WEEK TWO

Prof. K.B Akhilesh,

Dept. of Management Studies, IISc Bangalore

“Unless you build culture, unless you build rituals, unless you build collective mindsets, it is very difficult to sustain the performance of the organization”

Book: Scott’s Three Levels of Analysis

Social Psychological

Structural

Macro

Book: Three Focuses

Performance of tasks

Motivation

Adjustment of

Surroundings

High performance leading organizations are increasingly distinguished by 7 features

Management Development

Management Development

1. Linking management development to plans and strategies.

2. Being boundless, flat, nonhierarchical

3. Using global and cross cultural orientation

4. Individualizing learning focused on organizational learning

5. Applying customized training aligned with corporate culture

6. Employing a career development focus

7. Focusing on the development of core competencies.

Development of Management

Classical approach: 2 perspectives:SCIENTIFIC MANAGEMENT concentrated

on the problems of lower-level managers

CLASSICAL ORGANIZATION

AL theory focused on problems of

top-level managers.

Problem business was

expanding and creating new products and new markets,

labor was in short supply.

Solutions

substitute capital for labor

use labor more efficiently.

“The Father of Scientific Manageme

nt”

Maximize worker

capacity and profits

PROBLEM: GET

EMPLOYEES TO THEIR MAXIMUM CAPACITY

PRIMARY FOCUS: TASKS

Frederick Taylor (1856-1915)

Elements of Scientific Management

Scientific design of every aspect of every task• Time and

Motion Studies

Careful selection

and training of every task

Proper remuneration for fast and high-quality work• Maximize

output - increase pay

Equal division of work and

responsibility between

worker and manager

Underlying Themes

Managers are intelligent; workers are

and should be ignorant

Provide opportunities for workers to

achieve greater financial rewards

Workers are motivated

almost solely by wages

Maximum effort =

Higher wages

Manager is responsible for

planning, training, and evaluating

Application in the Modern Workplace

Assembly Line Plants

as Prototypical Examples

“Prisoners of

Taylorism”

System of Remuneration (quotas

- commissio

n)

Re-Design – Reengineer

ing

Application in the Modern Workplace

Benchmarking

Data are used to refine, improve, change,

modify, and eliminate

organizational processes

Lean Manufacturin

g

Henri Fayol (1841-1925)

General and Industrial

Management

Principles and Elements of

Management - how managers

should accomplish

their managerial

duties

PRIMARY FOCUS:

Management

More Respect for Worker than Taylor• Workers are

motivated by more than money

• Equity in worker treatment

Five Elements of Management -- Managerial Objectives

Planning

Organizing

Command Coordination

Control

Fourteen Principles of Management (Tools for Accomplishing Objectives)

1. Division of work - limited set of tasks2. Authority and Responsibility - right to give orders3. Discipline - agreements and sanctions4. Unity of Command - only one supervisor5. Unity of Direction - one manager per set of activities6. Subordination of Individual Interest to General Interest7. Remuneration of Personnel - fair price for services8. Centralization - reduce importance of subordinate’s role9. Scalar Chain - Fayol’s bridge10. Order - effective and efficient operations11. Equity - kindliness and justice12. Stability of Tenure of Personnel - sufficient time for

familiarity13. Initiative - managers should rely on workers’ initiative14. Esprit de corps - “union is strength” “loyal members”

Fourteen Principles of Management (Tools for Accomplishing Objectives)

Unity of Direction - one manager per set of activities

Subordination of Individual Interest to General Interest

Remuneration of Personnel - fair price for services

Centralization - reduce importance of subordinate’s

role

Scalar Chain - Fayol’s bridge

Order - effective and efficient operations

Fourteen Principles of Management (Tools for Accomplishing Objectives)

Equity - kindliness and justice

Stability of Tenure of

Personnel - sufficient time for

familiarity

Initiative - managers should rely

on workers’ initiative

Esprit de corps -

“union is strength”

“loyal members”

Fayol’s Administrative Theory

Positioned communication as a necessary ingredient to successful management

Application in the Modern Workpla

ce

Fayol’s elements of

management are recognized

as the main objectives of

modern managers

Planning - more

participatory

Organizing - human

relationships and

communication

IMPORTANT TABLE 2.1 Compariso

n of Managerial

Skills (p. 32)

Especially applicable for large

organizations

(military)

Weber’s Theory of Bureaucracy

Max Weber (1864-1920) German Sociologist Theory of Social and Economic Organization

(1947) Principles and Elements of Management -

describe an ideal or pure form of organizational structure (general policy and specific commands

PRIMARY FOCUS: Organizational Structure Worker should respect the “right” of managers

to direct activities dictated by organizational rules and procedures

29

Weber’s Ideal Bureaucracy

Exhibit 2.4

Q: Are bureaucracies alive today?

Weber’s Theory of Bureaucracy

Bureaucracy allows for the optimal form of authority - “rational authority”

Three types of Legitimate Authority Traditional Authority - past customs; personal

loyalty Charismatic Authority - personal trust in

character and skills Rational Authority - rational application of rules

or laws

Tenets of Bureaucracy

Rules

Specified sphere of competency

Hierarchy

Specialized Training

Workers do not own technology

No entitlement to “official position” by incumbent

Everything written down

Maintenance of “ideal type” - bureaucracy

Weber’s Theory of Bureaucracy

Concerned with describing the ideal structure of an organization

Cornerstone: existence of written rules

Weber’s Theory of Bureaucracy

The rational application of written rules ensures the promotion of legitimate authority and the effective and efficient functioning of the organization.

Application in the Modern Workplace

Large organizations guided by countless rules are bureaucracies

Linked with inefficient, slow-moving organizations

Organizations have several characteristics of bureaucracies

35

“Modern Times”Discussion Questions

What evidence did you see of Scientific Management (SM)?

What is the intention of the movie?

What evidence did you see of a bureaucracy?

What are the benefits of SM/bureaucracy?

What are the drawbacks of SM/bureaucracy?

1927-1933 WESTERN ELECTRIC CO.

Cicero, IllinoisHawthorn PlantDr. Elton Mayo

Hawthorne Studies

¨ Conducted in late 1920’s¨ Western Electric Hawthorne plant¨ Showed importance of the

individual in the workplace¨ Showed the presence of a social

system in the workplace

Hawthorne studies defined

• A series of experiments in which the output of the workers was observed to increase as a result of improved treatment by their managers.

• Named for their site, at the Western Electric Company plant in Hawthorne, Illinois.

• Originally intended to examine effects of lighting on productivity– Scientific management proposed that physical

conditions affect productivity

• Result: Productivity increased regardless of lighting level

• Conclusion: Increased productivity was due to workers’ receiving attention

Hawthorne Studies: Workplace Lighting

Illumination Studies

• The first illumination study was made in three departments

• The illumination level in each department was increased at stated intervals

• Puzzling results– Increased production did not correspond with

increased lighting– Reduced production did not correspond with

reduced lighting

Illumination Studies

• The second illumination study utilized a test group and a control group.

• Illumination intensities were varied in the test group and compared to the control group.

• Both groups showed increases in production rates that were not only substantial but also nearly identical.

Illumination Studies

• The third illumination study reduced the lighting for the test group and held the control group constant.

• Efficiency of both groups increased.• Production rates increased in the test

group until the light became so poor that the workers complained.

Illumination Studies

• Conclusions:– Employee output was not necessarily related

to lighting conditions, and– Too many variables had not been controlled

in the experiments.

¨ Examined effects of group piecework pay system on productivity

¨ Workers under piecework system should produce as much as possible¨ Scientific management assumes that people are

motivated only by money

¨ Result: Production less than maximum¨ Conclusion: Social pressure caused workers to

produce at group-norm level

Hawthorne Studies: Piecework Pay

ILLUMINATION STUDYILLUMINATION STUDY

RELAY ROOM STUDYRELAY ROOM STUDY

BANK WIRINGBANK WIRING

Elton Mayo &Fritz Roethlisberger

Elton Mayo &Fritz Roethlisberger

Study Background

• Hawthorne studies were conducted from 1927 to 1932 by HARVARD BUSINESS SCHOOL PROFESSOR ELTON MAYO.

• Purpose of study was to EXAMINE WHAT EFFECT MONOTONY AND FATIGUE had on productivity and how to control them with variables such as rest breaks, work hours, temperature, and humidity.

Normal conditions

• Under normal conditions, the work week was 48 hours, including Saturdays. There were no rest pauses.

Experiment One

• The workers were put on piece-work for eight weeks.

• Output went up.

Experiment Two

• The workers were given two rest pauses, five minutes each, in the morning and afternoon for a period of five weeks.

• Output went up again.

Experiment Three

• The rest pauses were increased to ten minutes each.

• Output went up sharply.

Experiment Four

• The workers were given six five minute breaks.

• Output fell slightly.

• The workers complained that the work rhythm was broken by frequent pauses.

Experiment Five

• The two original rest pauses were put back in place, and the workers were given a free hot meal by the company.

• Output went up.

Experiment Six

• The workers were dismissed at 4:30 p.m. instead of 5:00 p.m.

• Output went up.

Experiment Seven

• The workers were dismissed at 4:00 p.m.

• Output remained the same.

Experiment Eight

• All improvements were taken away and the workers returned to their original working conditions.

• Output was the highest ever recorded!

CONCLUSION

Level of production is set by social norms, not by physical capacities

Non-economic rewards and sanctions affect the behavior of workers

Often workers react as members of a group, not as individuals

Management should recognize group behavior and act accordingly

Hawthorne Studies

Hawthorne Effect:The phenomenon that employees perform better when they feel singled out for attention or feel that management is concerned about their welfare

THE HAWTHORNE STUDIES:SOME PUZZLING RESULTS

100

108

116

124

132

Standard workconditions

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In general, productivityincreased with each change

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Per

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Sta

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Hawthorne Study Results

Test Room/Control Room– Changes to work conditions do not produce linear

responses to productivity.– Workers appear to respond to management’s attempts to

improve work place.

Bank Wiring Room– Workers will scale back productivity to suit group norm.– Organizations are social systems in which human

interactions play a critical role.

Explanation of Findings

• The experimental group had considerable freedom of movement compared to other workers in the plant.

• The group developed an increased sense of responsibility and discipline no longer needed to come from a higher authority, it came from within the group.

Real World Example

• Workers improve their productivity when they believe management is concerned with their welfare and pay particular attention to them.

• Productivity can also be explained by paying attention to the workers’ social environment and informal groupings.

An Exercise

• What kinds of issues affect your productivity?• What can a principal/superintendent do to

increase or decrease your productivity?