History, Trends, Globalization, and Ethics

1. History, Trends, Globalization, and Ethics Minder Chen Professor of MIS Martin V. Smith School of Business and Economics CSU Channel Islands Minder.Chen@csuci.edu

2. Learning Objectives • Learn key figures and concepts in management history. • Study emerging trends of contemporary principles of management. • Study key global trends and their impacts on management • Ethics in management.

3. POLC Framework • People perspective • Systems thinking • Process orientation • Resource view

4. Management in Ancient Cultures There was “management” before it was called management. Terracotta Warriors Qin Shi Huang (Chinese: 秦始皇; literally: 'First Emperor of Qin', 18 February 259 BC – 10 September 210 BC) Alexander the Great (21 July 356 BCE – 10 or 11 June 323 BCE) China's Terracotta Warriors (1080p) https://www.youtube.com/watch?v=09GCnZmmk9Q Great Wall

5. Early Management Principles • Henri Fayol – Mining Company - 1917 • Administrative Theory - Fayol’s 14 Principles • Frederick Taylor – 1911 • Scientific Management (Taylorism) • Time-Motion Study • Elton Mayo – 1920s and 1930s • Humanism – Hawthorne’s Studies Classical Theory Behavioral Theory Classical management theories (including Max Weber’s theory - Bureaucracy) and their historical context: ** https://www.youtube.com/watch?v=d1jOwD-CTLI

6. Classical vs. Behavioral Theory Classical Theory Focus on tasks and management functions (e.g., POLC) Behavioral Theory Focus on people Both trying to figure out the best way to manage individuals to get high productivity. Source: Dylan Cooper

7. Fayol’s Principles of Management • Henri Fayol was a French mining engineer. • During the early 1900s, Fayol developed a series of 14 principles of management • These principles still influence management practices today. Watch: https://www.youtube.com/watch?v=90qpziPNRnY

8. 14 Management Principles • Division of Labor: The most people specialize the more effectively they can perform their work (specialization). This principle is epitomized by the modern assembly line. • Authority/Responsibility: Managers must give orders to get things done. While their formal authority (power)gives them the right to command, managers won’t compel obedience unless they have the authority & relevant expertise. Authority comes the responsibility to ensure that the work gets done. • Discipline: Employees respect to the rules and agreements that govern the organization. Reward superior performance and penalize under performers. • Unity of Command: An employee should receive orders only from one boss to avoid conflicting instructions. • Unity of Direction:Each unit or group has only one boss and follows one plan so that work is coordinated. https://edugeneral.org/blog/management/fayols-14-principles-management/

9. 14 Management Principles • Subordination of Individual Interest:The interest of the employees should not take precedence over the interest of the organization as a whole. • Remuneration:Workers must be fairly paid for their services. • Centralization/decentralization: Decreasing the role of a subordinate in decision making is centralization; increasing their role in decentralization. Managers should retain final responsibility, but at the same time given their subordinates enough authority to do their jobs properly. • The Hierarchy (Scalar chain):The line of authority moves from top management down to the lowest ranks. This hierarchy is necessary for unity of command, but communication can also occur laterally if the bosses are kept aware of it. The line should not be overextended or have too many levels. • Order:Orderliness refers both to the environment and materials as well as to the policies and rules. People and materials should be in the right place at the right time. https://edugeneral.org/blog/management/fayols-14-principles-management/

10. 14 Management Principles • Equity:Fairness, dignity, and respect should pervade the organization. Bosses must treat employees well, with a “combination of kindliness and justice.” • Stability of Staff:Organizations do best when tenure is high (i.e., turnover is low). People need time to learn their jobs, and stability promotes loyalty. • Initiative: Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result. • Espirit de Corps:Harmony and team spirit across the organization builds morale and unity. [esprit (“spirit”) + de (“of”) + corps (“body”)]  https://en.wiktionary.org/wiki/esprit_de_corps A shared spirit of comradeship, enthusiasm, and devotion to a cause among the members of a group. https://edugeneral.org/blog/management/fayols-14-principles-management/

11. Fayol’s 5 Functions of Management • Planning • Organizing • Commanding • Coordinating • Controlling Does this look familiar? • Functions of management • Planning • Organizing • Staffing • Directing • Controlling Leading

12. Management Process in 3-D Technical Skills Conceptual Skills People Skills Top Managers Low-level Managers http://www.light-maker.com/harvard_wheel.jpg

13. Frederick Taylor • Fredrick Taylor was an American mechanical engineer and management consultant. • Father of Scientific Management. • Studied how to do work more efficiently. • Published Principles of Scientific Management in 1911. • Time and Motion Study • Frederick Winslow Taylor • Frank Gilbreth and Lillian Moller Gilbreth (source: link)

14. Taylor’s Principles Taylor's scientific management consisted several principles: • Promote job specialization. • Replace rule-of-thumb work methods with methods based on a scientific study of the tasks. • Scientifically select, train, and develop each employee rather than leaving them to train themselves.  Human Resource Management • Provide detailed instruction and tools as well as supervision of each worker. • Managers plan and schedule. Workers perform the tasks. What do you think of these?

15. Taylorism Fragment of an advertisement by Wyoming Shovels from 1913 illustrating the origins of process science. Frederick Taylor empirically determined the optimal size of a shovel and this “scientific knowledge” was used to promote the “Wyoming 21-pound shovel” claiming that it could double or triple the productivity of workers. (link)

16. Chaplin Movie Modern Times - Factory Scene Watch the video below • https://www.youtube.com/watch?v=HPSK4zZtzLI What does the movie try to convey?

17. Limitations of Early Management Theorists • Dehumanized Workers • Manual Labor Force  Shift To Knowledge Workers https://hbr.org/2014/10/what-peter-drucker-knew-about-2020 Hence, there is the saying, “Some labor with their minds, and some labour with their strength (muscles). Those who labor with their minds (managers) govern others; those who labor with their strength (workers) are governed by others. Those who govern are supported by the values created by their workers.” This is a principle universally recognized. - Mencius (385–303 or 302 BC), The Works of Mencius

18. Hawthorne’s studies (Human Relationship) Hawthorne’s studies, originally conducted by Elton Mayo and Fritz Roethlisberger to examine how light impacts work at Western Electric “Hawthorne Works” plant back from 1924 to 1932, lead to the systematic study of how worker interactions with coworkers and managers impact work outcomes in complex ways.  Social-psychological aspects of human behavior in organizations. In 1959, Psychologist Frederick Herzberg argues that a critical difference exists between factors that motivate work, such as recognition, responsibility, and personal growth, and those that keep individuals from simply being unhappy with work, such as salary, benefits, and work conditions. AT&T Archives: The Year They Discovered People Concise version https://www.youtube.com/watch?v=rLVp-CrBnPo ** Long version: https://www.youtube.com/watch?v=D3pDWt7GntI Further reading: https://courses.lumenlearning.com/baycollege-introbusiness/chapter/video-hawthorne-studies-at-att/

19. Updated Study of the Hawthorne Effect https://www.youtube.com/watch?v=FN8R13aVHsw What is the new finding?

20. Contingency Theory (1960s and 1970s) Different types of management or leadership styles are better in different situations. • In stable situations with little change, classical theory management (like Taylorism) works best. • In situations with much change, behavioral theory management works best. Source: Dylan Cooper Contingency factors

21. Peter Drucker’s Management Recommendations • Empower people by involving everyone in decision-making. • Eliminate bureaucratic rules and humiliating conditions. • Celebrate and recognize employees for their contributions. • Develop an inspiring vision. • Lead by example.

22. Management as a Liberal Art • Management is thus what tradition used to call a liberal art: "liberal" because it deals with the fundamentals of knowledge, self knowledge, wisdom and leadership; "art" because it is practice and application. • Managers [should] draw on all the knowledge and insights of the humanities and the social sciences--on psychology and philosophy, on economics and history, on ethics as well as on the physical sciences. But they have to focus this knowledge on effectiveness and results--on healing a sick patient, teaching a student, building a bridge, designing and selling a "user friendly" software program. (Drucker, 2008, p. 25) • Source: Joseph A. Maciariello: Drucker’s Lost Art of Management: Peter Drucker’s Timeless Vision for Building Effective Organizations https://www.drucker.institute/thedx/joes-journal-on-management-as-a-liberal-art/

23. Movie: Drucker in the Dug-out • Based on a novel: “What if the Female Manager of a High-School Baseball Team read Drucker's ‘Management'” • The movie mentioned Drucker’s book “Management: Tasks, Responsibilities, Practices”, published in 1973,  • Watch https://www.youtube.com/watch?v=phArHQMcJlw • It repeat after 2h:26m or so. • What had the main character, Minami Kawashima, learned from Drucker? • What have you learned from this movie regarding management?

24. Learn and Apply I got a call from Andrew Grove, then the chairman of Intel. He had read one of my early papers about disruptive technology, and he asked if I could talk to his direct reports and explain my research and what it implied for Intel. Excited, I flew to Silicon Valley and showed up at the appointed time, only to have Grove say, “Look, stuff has happened. We have only 10 minutes for you. Tell us what your model of disruption means for Intel.” I said that I couldnʼt— that I needed a full 30 minutes to explain the model, because only with it as context would any comments about Intel make sense. Ten minutes into my explanation, Grove interrupted: “Look, Iʼve got your model. Just tell us what it means for Intel.” I insisted that I needed 10 more minutes to describe how the process of disruption had worked its way through a very different industry, steel, so that he and his team could understand how disruption worked. I told the story of how Nucor and other steel minimills had begun by attacking the lowest end of the market—steel reinforcing bars, or rebar—and later moved up toward the high end, undercutting the traditional steel mills. When I finished the minimill story, Grove said, “OK, I get it. What it means for Intel is...,” and then went on to articulate what would become the companyʼs strategy for going to the bottom of the market to launch the Celeron processor. Clayton M. Christensen How Will You Measure Your Life? - Harvard Business Review

25. In Search of Excellence (1982) - Tom Peters & Robert Waterman • A bias for action, active decision making: 'getting on with it'. Facilitate quick decision making & problem solving tends to avoid bureaucratic control. • Close to the customer: learning from the people served by the business. • Autonomy and entrepreneurship: fostering innovation and nurturing 'champions'. • Productivity through people: treating rank and file employees as a source of quality. • Hands-on, value-driven: management philosophy that guides everyday practice - management showing its commitment. • Stick to the knitting: stay with the business that you know. • Simple form, lean staff: some of the best companies have minimal HQ staff. • Simultaneous loose-tight properties: autonomy in shop-floor activities plus centralized values.  Managing ambiguity and paradox http://cyrilsunil76.blogspot.com/2018/10/book-summary-in-search-of-excellence.html https://en.wikipedia.org/wiki/In_Search_of_Excellence

26. Key Trends • Rise of millennials and millennial values • Increasing concern for the environment and sustainability • Greater personalization and customization • Faster pace of innovation • Increasing disparity between income classes • Increased social media connectivity • Rise in global instability/trade wars • Increased mobility • Rise of the creative class • Increasing collaboration

27. Contemporary Management Trends • Learning organizations • Virtual organizations • Global organization • Lean organizations • IT-enabled organizations • Startup organizations

28. Learning Organizations • Learning from past experience • Learning from others • Systematic problem solving • Experimentation • Transferring knowledge Watch https://www.youtube.com/watch?v=8k51XDeIva8 See also: The Importance of Learning in Organizations https://www.youtube.com/watch?v=lUP4WcfNyAA

29. Globalization Learning Objectives • Explain why global trends might influence management

30. Globalization and Cross-Cultural Lessons • Global trades intensify the globalization trend. • the Work environments are more diverse than ever • Cultural and language differences require diverse management approaches Watch https://www.khanacademy.org/test-prep/mcat/society-and-culture/demographics/v/globalization-trade-and-transnational-corporations Source: Shutterstock.com

31. Business Ethics: Values-Based Leadership • Describe the ethical challenges managers are likely to face. • Understand why ethics are relevant to management. • Discover what decision-making framework you can use to help integrate ethics into your own management approach. • Managers face many ethical challenges. • Managers must model ethical behavior and uphold values and standards. Watch https://www.youtube.com/watch?v=vmVu66Fpd9U More resources at https://www.scu.edu/ethics/focus-areas/business-ethics/resources/what-is-business-ethics/

32. Understanding Ethical Lapse • Pressure to meet unrealistic business objectives and deadlines • A desire to further one’s career and/or wealth • A desire to protect one’s job or power

33. Sarbanes-Oxley Act (2002) • In the early 2000s, highly-publicized fraud at prominent firms such as Enron, WorldCom, and Tyco revealed significant ethical issues. • Conflicts of interest by auditors and analysts • Boardroom failures • Inadequate funding of the Security and Exchanges Commission • Senator Paul Sarbanes and Representative Michael Oxley sponsored legislation that contained the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt. Source: https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act https://www.investopedia.com/terms/s/sarbanesoxleyact.asp

34. Sarbanes-Oxley Act • Created a board to oversee auditing activities within accounting firms. • Established standards to determine conflict of interest and assure auditors’ true independence. • Held senior executives responsible for the accuracy of their firms’ financial reports and made them forfeit any benefits arising from non-compliance. • Enhanced reporting standards for off-the-book transactions and required timely reporting of material changes in a firm’s financial condition. • Required securities analysts to disclose any conflicts of interest. • Required CEOs to sign their firm’s tax return to prevent CEOs from claiming that they were unaware of fraud within their firms.

35. Sarbanes-Oxley Act • Expanded the SEC’s authority to censure or bar securities analysts from acting as brokers, advisors, or dealers. • Required that the SEC carefully monitor any consolidation among public accounting firms, the role of credit agencies in securities market operations, securities violations, and enforcement actions. • Created criminal penalties for altering or destroying financial records. • Increased penalties associated with white-collar crime and conspiracy. • Enabled the SEC to temporarily freeze unnaturally large transactions.