Management Chapter 2 - Evolution of Management Theories

MANAGEMENT

CHAPTER 2EVOLUTION OF MANAGEMENT

THEORIES

Arief Samuel Gunawan ST., MIM.

Most of this chapter is taken from the reference book and slides “Management Challenges for Tomorrow’s Leaders” by Pamela S. Lewis et.al chapter 2 (for educational purpose only)

CHRONOLOGICAL DEVELOPMENT OF MANAGEMENT PERSPECTIVES

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Classical Perspective Behavioral Perspective Quantitative

Perspective Systems Perspective Contingency

Perspectives

ENVIRONMENTAL FACTORS INFLUENCING MANAGEMENT THOUGHT

Economic Influences The availability, production, and distribution of resources

within a society. Social Influences

The aspects of a culture that influence interpersonal relationships.

Political Influences The impact of political institutions on individuals and

organizations. Technological Influences

The advances and refinements in any of the devices that are used in conjunction with conducting business.

Global Influences The pressures to improve quality, productivity, and costs as

organizations attempt to compete in the worldwide marketplace.

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SUBFIELDS OF THE CLASSICAL PERSPECTIVE ON MANAGEMENT

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Focuses on the Focuses on the individual worker’s individual worker’s

productivityproductivity

Focuses on the Focuses on the functions of functions of

managementmanagement

Focuses on the Focuses on the overall overall

organizational organizational systemsystem

SCIENTIFIC MANAGEMENT

The need to increase productivity In the beginning of 20th century The lack of skilled human resources the

need to increase human resource efficiency to increase productivity

Taylor, Gilbreth, Gantt

SCIENTIFIC MANAGEMENT: TAYLOR

Frederick W. Taylor (1856-1915) Father of “Scientific Management.

attempted to define “the one best way” to perform every task through systematic study and other scientific methods.

believed that improved management practices lead to improved productivity.

Three areas of focus: Task Performance

Supervision

Motivation

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TASK PERFORMANCE

Scientific management incorporates basic expectations of management, including: Development of work standards

Selection of workers

Training of workers

Support of workers

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SUPERVISION AND MOTIVATION

Taylor felt that a single supervisor could not be an expert at all tasks.

As a result, each first-level supervisor should be responsible only workers who perform a common function familiar to the supervisor.

This became known as “Functional Foremanship.”

Taylor believed money was the way to motivate workers to their fullest capabilities.

He advocated a piecework system in which worker’s pay was tied to their output.

Workers who met a standard level of production were paid a standard wage rate.

Workers whose production exceeded the standard were paid at a higher rate for all of their production output.

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SCIENTIFIC MANAGEMENT: THE GILBRETHS Frank Gilbreth

Specialized in time and motion studies to determine the most efficient way to perform tasks.

Used motion pictures of bricklayers to identified work elements (therbligs) such as lifting and grasping.

Lillian Gilbreth A strong proponent of better working conditions as a

means of improving efficiency and productivity.Favored standard days with scheduled lunch breaks and rest periods for workers.

Strived for removal of unsafe working conditions and the abolition of child labor.

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SCIENTIFIC MANAGEMENT: HENRY GANTT, ROBERT OWEN

Henry L. Gantt (1816 – 1919) Incentive system for workers and supervisors Gantt Chart for production schedule later

developed into CPM and PERT methods Robert Owen (1771-1858)

The improvement of working condition can increase productivity

Human resource is the most important factor in production process

SCIENTIFIC MANAGEMENT: USE AND LIMITATIONS Use of scientific management

Can be implemented in various organization activities

Efficiency techniques The selection and development of workers

scientifically The importance of work design Profesionalism of management

Limitations of scientific management Increase of productivity without increase in

welfare Ignoring the social needs and satisfaction of

workers Distant relationship of workers and management Tendency of worker exploitation

ADMINISTRATIVE MANAGEMENT: FAYOL

Classical organization theory

Henri Fayol (1841–1925) First recognized that successful managers had to

understand the basic managerial functions.

Developed a set of 14 general principles of management.

Fayol’s managerial functions of planning, leading, organizing and controlling are routinely used in modern organizations.

2–12

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FAYOL’S GENERAL PRINCIPLES OF MANAGEMENT©

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1. Division of work2. Authority and

responsibility3. Discipline4. Unity of command5. Unity of direction6. Subordination of

individual interest to the common good

7. Remuneration of personnel

8. Centralization9. Scalar chain10. Order11. Equity12. Stability13. Initiative14. Esprit de corps

Source: Based on Henri Fayol, General and Industrial Management, trans. Constana Storrs (London: Pittman & Sons, 1949).

BUREAUCRATIC MANAGEMENT

Focuses on the overall organizational system. Bureaucratic management is based upon:

Firm rules Policies and procedures A fixed hierarchy A clear division of labor

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BUREAUCRATIC MANAGEMENT: WEBER

Max Weber (1864–1920) A German sociologist and historian who

envisioned a system of management that would be based upon impersonal and rational behavior—the approach to management now referred to as “bureaucracy.” Division of labor Hierarchy of authority Rules and procedures Impersonality Employee selection and promotion

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WEBER’S FORMS OF AUTHORITY

Traditional authority Subordinate obedience based upon custom or

tradition (e.g., kings, queens, chiefs). Charismatic authority

Subordinates voluntarily comply with a leader because of his or her special personal qualities or abilities (e.g., Martin Luther King, Gandhi).

Rational-legal authority Subordinate obedience based upon the position

held by superiors within the organization (e.g., police officers, executives, supervisors).

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BUREAUCRATIC HIERARCHICAL POWER STRUCTURE©



USE AND LIMITATIONS OF ADMINISTRATIVE AND BUREAUCRATIC PERSPECTIVES

Use Can be applied to all activities Basics of effective managerial behaviors Awareness of possible problems that can occur

Limitations Not all relevant for current situation Fit for organizations in stable and predictable

environment Principles are too general for complex problems Not guidance in decision making

BEHAVIORAL PERSPECTIVE Followed the classical perspective in the development of

management thought. Acknowledged the importance of human behavior in

shaping management style

The Human Relations Movement

Understand:Physiological

Safety

Social

Esteem

Self-actualization

People can be: Self-directed, Accept responsibility, Consider work to be as natural as play

Mary Parker Follett, Elton Mayo, Douglas McGregor, Chester Barnard

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MARY PARKER FOLLETT Concluded that a key to effective management was

coordination. Felt that managers needed to coordinate and harmonize group

effort rather than force and coerce people. Believed that management is a continuous, dynamic process. Felt that the best decisions would be made by people who were

closest to the situation. Four principles of coordination to promote effective work

groups:

1. Coordination requires that people be in direct contact with one another.

2. Coordination is essential during the initial stages of any endeavor.

3. Coordination must address all factors and phases of any endeavor.

4. Coordination is a continuous, ongoing process.

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ELTON MAYO

Conducted the famous Hawthorne Experiments. “Hawthorne Effect”

Productivity increased because attention was paid to the workers in the experiment.

Phenomenon whereby individual or group performance is influenced by human behavior factors.

His work represents the transition from scientific management to the early human relations movement.

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DOUGLAS MCGREGOR

Proposed the Theory X and Theory Y styles of management. ©


estern. All rights reserved.Factor Theory X Assumptions Theory Y Assumptions

Employee attitude Employees dislike work and. Employees enjoy work and toward work will avoid it if at all possible. will actively seek it.

Management view Employees must be directed, Employees are self-motivatedof direction coerced, controlled, or threatened and self-directed toward achieving

to get them to put forth adequate effort. organizational goals. Employee view Employees wish to avoid responsibility; Employees seek responsibility; of direction they prefer to be directed and told what they wish to use their creativity, to do and how to do it. imagination, and ingenuity in performing their jobs.

Management style Authoritarian style of management Participatory style of management

CHESTER BARNARD

Felt that executives serve two primary functions: Must establish and maintain a communications

system among employees. Must establish the objectives of the organization

and motivate employees. Developed an acceptance theory of

authority: Authority of a manager flows from the ability of

subordinates to accept or reject an order from the manager once they: Comprehend what the order requires of them. Review the order’s consistency with organization goals. Perceive a personal benefit in obeying the order.

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CLASSICAL VERSUS BEHAVIORAL PERSPECTIVE

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Focused on Focused on rational behavior rational behavior

ClassicalClassicalPerspectivePerspective

Acknowledged theAcknowledged theimportance of human importance of human

behaviorbehavior

Behavioral Behavioral PerspectivePerspective

vs.

THE QUANTITATIVE PERSPECTIVE / MANAGEMENT SCIENCE Characterized by its use of mathematics, statistics,

and other quantitative techniques for management decision making and problem solving.

Problems are complicated and use economic implications as guidelines

This approach has four basic characteristics:1. A decision-making focus2. Development of measurable criteria3. Formulation of a quantitative model4. The use of computers

The Beginning of the Management Science Approach

Observe – Construct – Deduce – Test

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SYSTEMS PERSPECTIVE

An approach to problem solving based on an understanding of the basic structure of systems. Environmental interaction

Open systems must interact with the external environment to survive.

Closed systems do not interact with the environment.

Synergy: when all subsystems work together making the whole greater than the sum of its parts.

Entropy: the tendency for systems to decay over time.

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BASIC STRUCTURE OF SYSTEMS©



Systems and “Wholeness”

1. The whole should be the main focus of analysis

2. Integration is the key variable in wholeness analysis

3. Modifications weighed in relation to effects on every other part

4. Each part has some role to perform

5. Part and its function determined by its position in the whole

6. All analysis starts with the existence of the whole

INFORMATION TECHNOLOGY AND MANAGEMENT STYLE

Information technology can facilitate the use of a particular management style. ©



Facilitated by Facilitated by advanced computersadvanced computers

Quantitative/Quantitative/Systems Systems

PerspectivesPerspectives

Classical Classical PerspectivePerspective

Facilitated by Facilitated by communicationscommunications

equipment equipment

THE CONTINGENCY PERSPECTIVE

A view that proposes that there is no one best approach to management for all situations. Asserts that managers are

responsible for determining which managerial approach is likely to be most effective in a given situation.

This requires managers to identify the key contingencies (all possible things that might occur) in a given situation.

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PRODUCTION TECHNOLOGY EXAMPLES©



Joan Woodward’s ResearchDiscovered that a particular management style is affected by the organization’s technology.Identified and described three different types of technology:

Production Technology Examples

Small-batch Custom fabrication machine shop,technology manufacturer of neon advertising signs,

print shop specializing in personal businesscards, trophy-engraving shop

Mass-production Manufacturer of automobiles, manufacturertechnology of refrigerators, manufacturer of hair dryers,

manufacturer of pencils

Continuous-process Oil refinery, flour mill, soft drink bottler,technology chemical processor

THE SYSTEM APPROACH

MANAGEMENT IN THE 21ST CENTURY

William Ouchi’s Theory Z Japanese-style approach to management

developed by William Ouchi

Advocates trusting employees and making them feel like an integral part of the organization.

Based on the assumption that once a trusting relationship with workers is established, production will increase.

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LEARNING ORGANIZATION:A NEW APPROACH?

1. Systems Thinking

2. Shared Vision

3. Challenging of Mental Models

4. Team Learning

5. Personal Mastery

FUTURE ISSUES: DIVERSITY, GLOBALIZATION, AND QUALITY

Heightened concern for diversity initiatives within the workplace and within management

Adoption of the concept of workers as decision makers, problem solvers, and team players

Creation of a focus on and commitment to the concept of quality.

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FUTURE LEADERS MUST:

Be thoroughly schooled in the different management perspectives.

Understand the various influences that will have a continuing effect on management thinking

Be aware of how key business environment variables relate to their organization.

Know which elements to select from the various management perspectives that are appropriate for their situation.

Be adaptable to change such that future conditions and developments do not quickly render their chosen approaches obsolete.

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Management Chapter 2 - Evolution of Management Theories

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