Modern Theory of Management

8/3/2019 Modern Theory of Management

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Scientific Management Theory Evolution of Modern Management

Began in the industrial revolution in the late 19th century as:

1- Managers of organizations began seeking ways to better satisfy

customer needs.2- Large-scale mechanized manufacturing began to supplanting

small-scale craft production in the ways in which goods were

produced.

3- Social problems developed in the large groups of workersemployed under the factory system.

4- Managers began to focus on increasing the efficiency of the

worker-task mix.


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Evolution of Management Theory


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Job Specialization and the Division of

Labor

Adam Smith (18th century economist)

Observed that firms manufactured pins in one of two different

ways:

Craft-styleeach worker did all steps.

Productioneach worker specialized in one step.

Realized that job specialization resulted in much higher efficiency

and productivity

Breaking down the total job allowed for the division of labor in

which workers became very skilled at their specific tasks.


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Four Principles of Scientific

ManagementPrinciples to increase efficiency:

1.Study the ways jobs are performed now and determine new

ways to do them.

Gather detailed time and motion information.

Try different methods to see which is best.

2.Codify the new methods into rulels.

Teach to all workers the new method.

3.Select workers whose skills match the rules.

4.Establish fair levels of performance and pay a premium for

higher performance.

Workers should benefit from higher output .


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Problems with Scientific Management

Managers frequently implemented only the increased outputside of Taylors plan.

Workers did not share in the increased output.

Specialized jobs became very boring, dull.

Workers ended up distrusting the Scientific Managementmethod.

Workers could purposely under-perform.

Management responded with increased use of machines

and conveyors belts.

Problems with Scientific Management


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The GilbrethsThe Gilbreths

Frank and Lillian Gilbreth refined Taylors 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.


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Administrative ManagementAdministrative 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

Figure below.


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Bureaucratic PrinciplesBureaucratic Principles

ABureaucracyABureaucracy

should haveshould have

Written rulesWritten rules

System of taskSystem of task

relationshipsrelationships

Hierarchy ofHierarchy of

authorityauthority

Fair evaluationFair evaluation

and rewardand reward

Figure ---


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Key points of BureaucracyKey points of Bureaucracy

Authority is the power to hold people accountable fortheir actions.

Positions in the firm should be held based onperformance not social contacts.

Position du

ties are clearly identified. People shouldknow what is expected of them.

Lines of authority should be clearly identified.Workers know who reports to who.

Rules, Standard Operating Proced

ures (SOPs), &Norms used to determine how the firm operates.

Sometimes, these lead to red-tape and otherproblems.


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Fayols PrinciplesFayols Principles

Henri Fayol, developed a set of 14 principles:

1.Division of Labor: allows for job specialization. Fayol noted firms can have too much specialization

leading to poor quality and worker involvement.

2. Authority andResponsibility: Fayol included both

formal and informal authority resulting from specialexpertise.

3. Unity of Command: Employees should have only oneboss.

4.Line ofAuthority: a clear chain from top to bottom ofthe firm.

5. Centralization: the degree to which authority rests atthe very top.


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6. Unity ofDirection: One plan of action to guidethe organization.

7. Equ

ity: Treat all employees fairly in justice andrespect.

8. Order: Each employee is put where they have themost value.

9. Initiative: Encourage innovation.

10.Discipline: obedient, applied, respectfulemployees needed.


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11. Remuneration of Personnel: The payment systemcontributes to success.

12. Stability of Tenure: Long-term employment isimportant.

13. General interest over individual interest: Theorganization takes precedence over the individual.

14. Esprit de corps: Share enthusiasm or devotion to

the organization.


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Behavioral ManagementBehavioral Management

Focuses on the way a manager should personallymanage to motivate employees.

Mary Parker Follett: an influential leader in earlymanagerial theory.

Suggested workers help in analyzing their jobs forimprovements.

The worker knows the best way to improve thejob.

If workers have the knowledge of the task, thenthey should control the task.


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The Hawthorne StudiesThe Hawthorne Studies

Study of worker efficiency at the HawthorneWorks of the Western Electric Co. during 1924-1932.

Worker productivity was measured at various

levels of light illumination. Researchers found that regardless of whether the

light levels were raised or lowered, productivityrose.

Actually, it appears that the workers enjoyed theattention they received as part of the study andwere more productive.


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Theory X and YTheory 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 controlthrough reward and punishment.

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

Managers should allow the worker greatlatitude, and create an organization tostimulate the worker.


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Theory X v. Theory YTheory X v. Theory Y

Theory YTheory Y

Employee is notEmployee is notlazylazy

Must create workMust create worksetting to buildsetting to build

initiativeinitiative

Provide authorityProvide authorityto workersto workers

TheoryTheory XX

Employee is lazyEmployee is lazy

Managers mustManagers mustclosely superviseclosely supervise

Create strict rulesCreate strict rules& defined& definedrewardsrewards


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Theory ZTheory Z

William Ouchi researched the cultural differencesbetween Japan and USA.

USA culture emphasizes the individual, andmanagers tend to feel workers follow the Theory Xmodel.

Japan culture expects worker committed to theorganization first and thus behave differently thanUSAworkers.

Theory Z combines parts of both the USA andJapan structure.

Managers stress long-term employment, work-group, and organizational focus.


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Management ScienceManagement Science

Uses rigorous quantitative techniques to maximizeresources.

Quantitative management: utilizes linearprogramming, modeling, simulation systems.

Operations management: techniques to analyze allaspects of the production system.

TotalQuality Management (TQM): focuses onimproved quality.

Management Information Systems (MIS):providesinformation about the organization.


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Organization-Environment TheoryOrganization-Environment Theory

Considers relationships inside and outside theorganization.

The environment consists of forces, conditions, andinfluences outside the organization.

Systems theory considers the impact of stages:

Input: acquire external resources.

Conversion: inputs are processed into goods andservices.

Output: finished goods are released into theenvironment.


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Systems ConsiderationsSystems Considerations

An open system interacts with the environment.Aclosed system is self-contained.

Closed systems often undergo entropy and lose theability to control itself, and fails.

Synergy: performance gains of the whole surpassthe components.

Synergy is only possible in a coordinated system.


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The Organization as an Open SystemThe Organization as an Open System

InputInput StageStage

RawRaw

MaterialsMaterials

ConversionConversion

StageStage

MachinesMachines

Human skillsHuman skills

OutputOutput

StageStage

GoodsGoods

ServicesServices

Sales of outputsSales of outputs

Firm can then buy inputsFirm can then buy inputs


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Contingency TheoryContingency Theory

Assumes there is no one best way to manage.

The environment impacts the organization andmanagers must be flexible to react toenvironmental changes.

The way the organization is designed, controlsystems selected, depend on the environment.

Technological environments change rapidly, somust managers.


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StructuresStructures

Mechanistic:Authority is centralized at the top.(Theory X)

Employees closely monitored and managed.

Very efficient in a stable environment. Organic:Authority is decentralized throughout

employees. (Theory Y)

Much looser control than mechanistic.

Managers can react quickly to changingenvironment.

Modern Theory of Management

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