Principles of Management 371 Chapter 2

Management and Organization
•Studying management history helps your conceptual skills

•Social Forces
•Political Forces
•Economic Forces

Forces on Organization : Social Forces
• Aspects of a culture that guide and influence relationships among people, their values, needs, and standards for behavior
•What do people need, value, what is known as the standard? – which shape the *Social Contract*

•Social Contract- refers to the uncommon rules and perceptions about relationships among people and between employees and management

Forces on Organization: Political Force
•Influence of political and legal institutes on people and organizations.
•Significant increased role of government in business after the collapse of companies in the financial services sector and Automobiles.
•Some managers expect increasing gov. regulation in the coming years.
•PF also includes basic assumptions underlying the political system, such as the desirability of self-government, property rights, contract right, definition of justice, and the determination of innocence or guilt of a crime.
Forces on Organization: Economic Force
•Pertain to the availability, production, and distribution of resources in a society among competing users.

•Governments, military agencies, churches, schools, and business organizations in every society require resources to achieve their goals and economic forces influence the allocation of scare resources

*Figure 2.1* pg 35
Management Perspectives Over Time

•Management practices and perspectives vary in response to these social, political, and economic forces in the larger society.

•Timeline reflects the dominant time period for each approach, but elements of each are still used in today’s organizations

Classical Perspective
•The classical perspective on management emerged during the 19th and early 20th centuries. Which took a rational scientific approach to management and sought to make organizations efficient operating machines. (the study of management)

•Thus began to evolution of modern management with classical perspective which contains 3 sub-fields: (each different emphasis)
•Scientific Management
•Bureaucratic Organizations
•Administrative Principles

Scientific Management:
•Frederick Winslow Taylor is known as the father of Scientific Management

•Is a subfield of the classical perspective that emphasizes scientifically determined changes in management practices as the solution to improving labor productivity

•Scientific Management is considered one of the most significant innovations influencing modern management

Ex. – Some supermarket chains are using computerized systems based on scientific management principles to schedule employees for maximum effciency

Fredrick Winslow Taylor
*The Father of Scientific Management* – Logical Way
•1856-1915

•In the late 1800’s Taylor proposed workers could be tooled like machines, their physical and mental gears re-calibrated.
•Only wanted the best people working for him
•Made employees a more vital commodity, and a value to the corporation.
• Employees went from moving 25,000 lbs to 90,000 lbs per day
•Employees pay went up from $1.15 to $1.85
•This caused production at Bethlehem steel to shot up overnight

*Figure 2.2* pg 37–Must read
*****Characteristics of Scientific Management******

*General Approach*
•Developed standard method for performing each job
•Selected workers with appropriate abilities for each job
•Trained workers in standard methods
•Supported workers by planning their work and eliminating interruptions
•Provided wage incentives to workers for increased output

*Contributions*
•Demonstrated the importance of compensation for performance
•Initiated the careful study of tasks and jobs
•Demonstrated the importance of personnel selection and training

*Criticisms*
•Did not appreciate the social context of work and higher needs of workers
•Did not acknowledge variance among individuals
•Tended to regard workers as uniformed and ignored their ideas and suggestions

Henry Gant
•Developed the Gantt Chart- which is a BAR GRAPH that measures planned and completed work along each stage of production by time elapsed

•An associate of Fredrick Winslow Taylor

Gantt Chart
•a Bar Graph that measures planned and completed along each stage of production by time elapsed
Frank B. Gilbreth and Lillian M Gilbreth
*Frank Gilbreath*
•1868-1924
•Pioneered “Time and Motion Study”- and arrived at many of his management techniques independently of Taylor
•He stressed efficiency and was known for his quest for the on best way to do work.
•Gilbreth is known for his early work with bricklayers
•His work has great impact on MEDICAL SURGERY by drastically reducing the time patients spend on the operating table.
•Surgeons were able to save countless lives through the application of time and motion study

•Developed PROCEDURES, which helped save lives in the medical field
•Gantt Chart looks at entire process of HOW TO

*Lillian Gilbreth*
•1878-1972
• *First Lady of Management* 12 children
•Continued seminars and consulting, lectured, and eventually became a Professor at Purdue University
•Lillian pioneered in the field of industrial psychology and made substantial contributions to HUMAN RESOURCE MANAGEMENT

•Time and Motion studies, which promoted efficiency
•Son wrote the book Cheaper by the Dozen
•Fathers specialty was medical field

Bureaucratic Organizations
•A subfield of CLASSICAL PERSPECTIVE, which emphasizes management on an impersonal, rational basis through elements such as clearly defined authority and responsibility, formal record-keeping, and separation of management and ownership

•It is important because it provides a standard way of doing things and treats everyone equal, allowing everyone to know what the rules are.

•Max Weber introduces most of the concepts on bureaucratic organizations

•Standard methods 40 tasks
•select works w/ property
•Abilities to do the job right- demonstrates

•How people interact with people

Max Weber
•1864-1930
•*The Father of Bureaucratic Management*
•A German theorist, who introduced most of the concepts on bureaucratic organizations
•Weber envisioned organizations that would be managed ib an impersonal, rational basis. this form of organization was called a bureaucracy.
•Manage organized on an impersonal, rational basis
•Organization depends on rules and records
•Managers use power instead of personality to delegate

**Although, important productivity gains come from this foundation, bureaucracy has taken on a negative tone**

*Figure 2.3* pg 38 ***** Must Know
*Characteristics of Weberian Bureaucracy*
1. Division of labor- which clear definitions of authority and responsibility that are legitimized as official duties

2. Positions organized in a hierarchy of authority

3. Personnel are selected and promoted based on technical qualifications, which are assessed by examination or according to training and experience

4. Administrative acts and decisions are recorded in writing. Record keeping provides organizational memory and continuity over time.

5. Management separate from the ownership of the organization
I own it-> you manage it

6. Managers are subject to rules and procedures that will ensure reliable, predictable behavior. Rules are impersonal and uniformly applied to all employees.

•Administrative recordings and writings is something called *Formalization*
•Formalization- a Guide Book
•Personal selected & promoted based on Technical Qualities

Administrative Principles Approach
•A subfield of the classical management perspective that focused on the total organization rather than the individual worker (Scientific method) and delineates the management functions of planning, organizing, commanding, coordinating, and controlling

•Henri Fayol (1841-1925)

Henri Fayol
•1841-1925
•was a French mining engineer, was a major contributor to the *Administrative Principles Approach*
•*Identified 5 Functions of Management:*
•*Planning
•Organizing
•Commanding
•Coordinating
•Controlling

•His most significant work is known as “General and Industrial Management* (14 General principles of management)

14 General Principles of Management
•founded by Henri Fayol
•Many still used today

*-Unity of Command*- Each Subordinate receives orders from one- and only one superior–CONTROL

*-Division of Work*-Managerial work and technical work are amenable to specialization to produce more and better work with the same amount of time and effort– Breaks the job down into functions, to make it easier to get the job done

*-Unity of Direction*- Similar activities in an organization should be grouped together under one manager–

*-Scalar Chain*- A chain of authority extends from the top to the bottom of the organization and should include every employee– Communication goes up to down

•The overall classical perspective as an approach to management was very powerful and gave companies fundamental new skills for establishing high productivity and effective treatment of employees

Human Perspective
• A management perspective that emerged in the late 19th century
•Emphasized understanding human behavior, needs, and attitudes in the work place as well as social interactions and group processes

•*Three Primary Subfields*
•Human Relations Movement
•Human Resources Perspective
•Behavioral Sciences Approach

•Mary Parker Follett and Chester Barnard were early advocates of a more Humanistic approach to management

•Follett Emphasized worker participation and empowerment, shared goals, and facilitating rather than controlling employees

•Bernard’s contributions include the acceptance theory of authority

•Human behaviors in workplace and the importance of people if they are trained right

****UNION PERSPECTIVE****

Mary Parker Follett
•1868-1933
•She was trained in Philosophy and Political Science at Radcliffe College. She applied herself in many fields, including Social Psychology, and Management.

•She wrote of the importance of *Common Subordinate Goals for Reducing Conflict in Organizations* , her work was popular with business people of her day but was often overlooked by Management Scholars

•Her ideas served as a CONTRAST to SCIENTIFIC MANAGEMENT, and are reemerging as applicable for modern managers dealing with rapid changes in today’s global environment

•Her approach to LEADERSHIP stressed the
* importance of people rather than engineering techniques*

•*Empowerment*- Facilitating instead of Controlling

•Introduced – *Acceptance Theory of Authority*

Chester I. Barnard
•1886-1961
•Studied at Harvard
•Significant Contribution:

•*Informal Organization*- Occurs in all formal organizations, and includes cliques and naturally occurring social groupings – argues that organizations are not machines and stressed the informal relationships are powerful forces that can help the organization is managed properly

•*Acceptance Theory of Authority*- Which states that people have free will and can choose whether to follow low management orders- people usually follow orders because they perceive positive benefit to themselves, but they do have a choice
•Managers should treat employees properly because their acceptance of authority may be critical to organization success in import situations

Human Perspective: Human Relations Movement
•Based on the idea that truly effect control comes from within the individual worker, rather than from strict authoritarian control
•this school of thought recognized and directly responded to social pressures for enlightened treatment of employees

•then a series of studies at a CHI electric company changed all that

•Key contributor in increasing performance

******brought upon the *HAWTHORNE STUDIES*

Hawthorn Studies
•A series of experiments on worker productivity begun in 1924 at the Hawthorne plant of Western Electric Company in Illinois
•Attributed employees increased output to managers better treatment to them during the study

•Key contributor- WE want —

•Important in shaping ideas concerning how Managers should treat employees
•Human relations paid key variable in increasing performance
•*EMPLOYEES PERFORMED BETTER WHEN MANAGERS TREATED THEM POSITIVELY*

•*STRONGLY SHAPED MANAGEMENT PRACTICE AND RESEARCH*

•*Have to show your employees the money* – Hawthorn Studies test
-employees leaving jobs for as little as $500 a year
•First Relay Assembly Test Room (RATR)

•Money was not the increased output of productivity-

•Hawthorne effect- researcher can influence the outcome by being to close with the experiments

**Loyalty comes at a price**

Unemployment 2007 vs present
2007- 5.6
now- 9.9
If we had as many people looking for jobs in 2007, as we do now the average health care would have gone up $2,000 per family

Income in 2007- $56,000
Now- $51,000
Decreased income in 5 years

Humanistic Perspective- Human Resources Perspectives
• Suggests that jobs should be designed to meet peoples higher-level needs by allowing employees to use their full potential
•jobs should be designed so that tasks are not perceived as dehumanizing or demeaning but instead allow worker to use their full potential

•From workers participation to considerate leadership to managing work performance
•Combine motivation with job design

•Best known contributors:
Abraham Maslow (1908-1970) – *MOSLOW’S HIERARCHY*
Douglas McGregor (1906-1964) – *THEORY X AND THEORY Y*
•These mean *EXTENDED AND CHALLENGED CURRENT THEORIES

Maslow’s Hierarchy of Needs
•Abraham Maslow
•Begins with (on the bottom)
*Physiological Needs* -> *Safety, Belongingness, Esteem*
-> *Self Actualization*
Theory X and Theory Y
•Douglas McGregor

•Challenged both Classical Perspective and Early Human Relations assumptions about human behavior
•Influenced by Maslow McGregor MGMT experience and consultant exp.

*Figure 2.4* pg 45
*Assumption of Theory X*
•The average human being has an inherent dislike of work and will avoid it if possible
•Because of human characteristics of dislike for work, most people must be coerced, controlled, directed, or threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives

*Assumption of Theory Y*
•The expenditure of physical and mental effort in work is as natural as play or rest. The average human being does not inherently dislike work
•External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. A person will exercise self-direction and self-control in the service of objectives to which he or she is committed
•The average human being learns, under prompt conditions, not only to accept but to seek responsibility.
•The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely, not narrowly distributed in the population.
•Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized.

•Theory X- based on Classical Perspective-
-assumptions about humans
-modified version of early human relations ideas
•Some companies still use this

•Don’t like work- need directions

•Theory Y- more of a realistic view of workers for guiding management thinking
•Most companies use today
•The point is that organizations can take advantage of the imagination and intellect of employees- Employees will contribute to organizational goals when given the opportunity
•Tap into employees creativity and mind power

•Looks good, do a good job, get noticed, seek responciabilty

•Becoming a Theory Y about Theory X jobs will INCREASE your VALUE

Human Perspective: Behavioral Sciences Approach
•Uses SCIENTIFIC METHOD and Draws from PSYCHOLOGY, SOCIOLOGY, ANTHROPOLOGY, ECONOMICS and OTHER SOCIAL SCIENCES to develop theories about human behavior and interaction in an organizational setting

•Many current management ideas and practices can be traced to the behavioral sciences approach

•*Organization Development*- field that uses behavioral sciences to improve the *ORGANIZATION* health and effectiveness through its ability to cope with change, improve internal relationships, and increase problem-solving capabilities

•Other studies based on Behavioral Studies:
•Matrix Organizations
•Self-Managed Teams
•Corporate Culture
•Management by Wandering Around

Quantitative Perspective/ Management Science (3)
•Also known as *MANAGEMENT SCIENCE*

•The Quantitative Perspective on management became popular based on its successful application in solving military problems during WW2

•Uses mathematics, statistical techniques, and computer technology to facilitate management decision making, particularly for complex problems
-Enhanced by development and growth of the computer

•*3 SUBSETS OF QUANTITATIVE PERSPECTIVE*
•*OPERATIONS RESEARCH
•OPERATIONS MANAGEMENT
•INFORMATION TECHNOLOGY* (IT)

Also Quants–

Quantitative Perspective: Operations Research
•It consists of mathematical model building and other applications of quantitative techniques to managerial problems

•Grew directly out of WW2 military groups called “Operational Research Teams” in Great Britain and “Operations Research Teams” in the US.

Quantitative Perspective: Operations Management
• Refers to the field of management that specializes in the physical production of goods or services
•Use quantitative techniques to solve manufacturing problems
•Commonly used methods
-Forecasting
-Inventory Modeling
-Linear and Non-linear Programming
-Queuing Theory
-Scheduling Simulation
-Break even Analysis
Quantitative Perspective: Information Technology (IT)
•Focuses on technology and software to aid managers
•Reflected in management information systems designed to provide relevant information to managers in a timely and cost-efficient manner.
•intranets, extranets- various software programs that help mangers estimate costs, plan and track production, manage projects, allocate resources and schedule employees
• Most recent subfield
Quants
•Have come to dominate decision making in financial firms, and the Wall Street meltdown in 2007-2008 shows the danger in relying too heavily on a quantitative approach
Recent Trends: Systems Thinking
•The ability to see both the *DISTINCT ELEMENTS OF A SYSTEM OR SITUATION* as well as the *COMPLEXITIES* and changing interaction among those elements

•*Systems Theory* An extension of the *Humanistic Perspective* that describes organizations as open systems that are characterized by *Entropy, Synergy, and Subsystem Interdependence.*

•*Systems*- The relationship among the parts from the whole systems/interrelated parts that function as a whole to achieve a common purpose

•*Subsystems*- are parts of a system that are all interconnected, such as an organization that depend on one another- Changes in one system can affect other parts

•*Synergy*- Means the whole is greater than the SUM of its parts. The organization must be managed as a whole
EX. People get together and compliment each other

•*Open System*- A system that interacts with the external environment

•*Closed System*- A system that does not interact with the external environment

•*Entropy*- The tendency for a system to run down and die

***Managers must understand SUBSYSTEMS Interdependence and SYNERGY ***

*Figure 2.5* pg 48
Systems Thinking and Circles of Causality
Recent Trends: Contingency View
•Every Situation is Unique
•Managers must determine what method will work best
•Managers must identify key Contingencies for the current situation

•*Organizational Structure should depend upon industry and other variables*

•If you don’t have a contingency view you are more likely to FAIL

•recognizes that each situation has a unique variable- but a standard way to solve it

***Smart Managers know you can’t wait for feedback, Managers who take a contingency view- go way up***

*Figure 2.6* pg 49
*Contingency view of Management*

•Case view- “Every situation is unique”
•Universalist View- “There is one best way”

*Contingency View*
•Organizational phenomena exist in logical patterns
•Managers devise and apply similar responses to common types of problems

Recent Trends: Total Quality Management (4)
•Focuses on managing the total organization to deliver better quality to customers, moved to the forefront in helping US Managers deal with global competition.
• This approach infuses high-quality values throughout every activity in a company, with front-line works intimately involved in the process

•*4 Elements of Quality Management*
•Employee Involvement
•Focus on the Customer
•Bench Marking
•Continuous Improvement (referred to as Kaizen)

•**If I am going to be making changes, I must work with employees

•Quality movement is strongly associated with JAPAN
•The US ignored the ideas of W. Edwards Deming
“Father of the Quality Movement”
•Total Quality Management (TQM) became popular in the 1980’s and 90’s
•Integrate high-quality values in every activity

Total Quality Management: Employee Involvement
•Achieving better quality requires company wide participation in Quality Control
Total Quality Management: Focus on the Customer
•All employees focus on the customer by finding out what the customers want and try to meet their needs and expectations
Total Quality Management: Benchmarking
•Processes whereby companies find out how others do something and than they try to imitate and improve on.

•Looking at someone who does it right
•Not benchmarking against someone who does it right
•Look at- not against perfection

•Comparing you/product to compare to you and someone who is doing it WELL but NOT PERFECTLY

Total Quality Management: Continuous Improvement
•The implication of small, incremental improvement in all areas of the organization on an ongoing basis
Innovative Management: Thinking for a Changing World
•Management ideas trace their *ROOTS TO HISTORICAL PERSPECTIVES
•NEW IDEAS* continue to *EMERGE* to meet the changing needs and difficult times
•The shelf life of trends is getting short and *NEW IDEAS PEAK* in fewer than three years
Managing the Technology: Driven Workplace
•Customer Relationship Management (CRM)- Technology used to build relationships with customers-
•Collects and manages large amounts of customer data, that can be used to help employees and managers act on customer insights, make better decisions and provide superior customer service

•Outsourcing- contracting functions or activities to other organizations to cut costs –
•Requires managers to technologically savvy, but learn to manage a complex web of relationships- built between e-links–between:
-a Company
-its employees
-suppliers
-partners
-customers
•Fastest growing trends in recent years

•Supply Chain Management- Managing supplier and purchaser relationship to get goods to consumers Covering all stages from:
-raw materials
-distrubutinh finished goods to consumers

*Figure 2.7* pg 53
Supply Chain for Retail Organization

*Flow of Products*
•Start:
-Suppliers
v
– Manufactures
v
– Distributors
v
-Retailers

Learning Organization (4)
•An organization in which everyone is engaged in identifying and solving problems, enabling the organization to continuously experiment, improve, and increase its capability. ‘

*3 Elements to Learning Organization*
•*Team Bases Structure*- a team made up of employees with different skills that collaborate and communicate across departmental and hierarchical boundaries

•*Empowered Employees*- Unleashing the power and creativity of employees by gibing them the freedom, resources, information, and skills to make decisions and perform effectively

•*Open Information*- the sharing of information with all employees that allows them to identify needs and solve problems

•Leadership? that provides a shared future of the company

*Review of Scientific Method*
•Improve efficiency and labor productivity through Scientific Methods

•*Fredrick Winslow Taylor*- proposed that workers “could be retooled like machines”
•Managers decisions would be based on precise procedures based on study

•*Henry Gantt*- Developed the *Gantt Chat*- to measure and plan work

•*The Gilbreth’s*- pioneered *Time and Motion Studies* to promote effiency

*Review of the Classical Perspective *
•Emerged during the nineteenth and early twentieth centuries
-Rise of the factory system
– issues regarding stracture, training and employees satisfaction

•Large complex organizations required new approaches to coordination and control

*Three Subfields*
*•Scientific Management
•Bureaucratic Organizations
•Administrative Principles*