Development of Management Theories / Chapter 2 An Overview

1. Development of Management Theories / Chapter 2 An Overview Behavioural Management Perspective Integrating Perspective Pre-classical contributions Classical Management Perspective Quantitative Management Perspective

2. Classical Management Perspective Chapter 2 An Overview Approaches Advocates

3. Behavioural Management Perspective (Summary) Hawthorne Studies 1927-32 Human Relations Movement Theory X Theory Y Organizational Behaviour

4. Theory X and Theory Y • Theory Y Assumptions • 1. People like work. • 2. People are internally motivated to reach objectives. • 3. People seek & accept responsibility • People are innovative • People are bright Theory X Assumptions 1. People dislike work & avoid it. 2. Managers must control, direct, coerce, & threaten employees to get them to work. 3. People prefer to be directed and have little ambition.

5. Quantitative Management Perspective Management Science– focuses on models, equations, & similar representations of reality Operations Management– a form of applied management science

6. Integrating Perspective for Managers Classical Management Perspective Behavioural Management Perspective Quantitative Management Perspective Systems Approach - Recognition of internal interdependencies - Recognition of environmental influences • Contingency Perspective • Recognition of situational nature of management • - Response to particular characteristics of situation Effective & Efficient Management

7. The Classical Approaches to Management • Frederick Taylor and Scientific Management • wrote “Principles of Scientific Management” • there is one best way to do any particular job • it can be ascertained and taught to employees • workers are motivated primarily by money

8. Time and Motion Studies • timing each aspect of a job to determine the actual physical movements that will allow it to be done most efficiently • each job broken down to simple, repetitive tasks

9. Henri Fayol and Classical Organization Theory • focused on the organization, its functions, and how it should be organized for greatest efficiency • six categories • technical (production, manufacturing) • commercial (buying, selling) • financial

10. security (protecting property and persons) • accounting • managerial (planning, organizing, commanding, coordinating and controlling) • 14 principles • experience and sense of proportion should guide the degree of application of any principle in each particular situation

11. Fayol’s 14 Principles of Management • Division of Labor • Authority • Discipline • Unity of Command • Unity of Direction • Subordination of the individual to the common good • Remuneration • Centralization • Hierarchy • Order • Equity • Stability • Initiative • Esprit de Corps

12. Max Weber and Bureaucracy • specialization of labour • hierarchy of authority • specific selection and promotion criteria • adherence to a rigid set of rules • “management as a career”

13. Bureaucracy • Max Weber introduced the notion ofbureaucracy • Weber felt organizations could overcome problems if they were managed on a rational, impersonal basis • Bureaucracy emphasizes rules and regulations clearly defined authority and responsibility, and impersonal decisions • Weber saw bureaucracy as an efficient form of organization • Bureaucracy was designed to maintain equal treatment for customers and employees

14. Contributions and Limitations of the Classical Approaches • management should be practiced according to principles that managers can learn • insights too simplistic for today’s complex organizations but provided a valuable start

15. The Behavioural Approaches to Management • Elton Mayo and the Human Relations Approach • focuses on the interaction of individuals within groups • pays heed to the individuals’ needs, goals, and expectations • group dynamics and motivation • The Hawthorne Effect • tendency of workers to increase productivity when management pays attention to them

16. Mary Parker Follett and Group Dynamics • studies in group dynamics, conflict management, and political processes • Joan Woodward and the Behavioural Science Approach • attempts to incorporate findings of social scientists, recognizing the complexity of individuals and what interests and motivates them

17. no one best way to manage or structure and organization • a pragmatic approach is best • Contributions and Limitations • must understand interpersonal relations and motivate and lead • management must reflect the gatherings and application of reliable and specific information, and also the interactions within the organization

18. The Systems Approaches to Management • based on the assumption that an organization is a collection of parts, and that it is primarily concerned with the interactions of those parts • System • a collection of individual parts that are coordinated to accomplish a common purpose

19. Chester Barnard and the Systems Approaches • wrote “The Functions of the Executive” • essential element for success is people’s willingness to contribute their individual efforts for the benefit of the whole system • Inputs • influence on an organization from various aspects • reactions of suppliers, customers, general public, shareholders, employees; effects of competition; governmental actions; economic factors

20. Transformation • process or change that occurs as an organization processes inputs and changes a product or service • Outputs • products or services produced by an organization • Feedback • received directly (information) or indirectly (observation of customer habits) • managers must be alert to feedback from a multiplicity of sources • then act on the feedback

21. Contributions and Limitations • emphasizing that decisions made in one part of an organization will affect other parts, including externally • managers must think broadly • abstract and not very practical • managers must think, respond, and observe • daily decision making precludes deep systems-like analysis

22. The Contingency Management Approach • Fremont Ksat, James Rosenzweig and Contingency Management • recognizes that the appropriate managerial response to a particular situation is contingent on the specific characteristics of the situation • Universalist Management Approach • presupposes that for every problem there is a best answer • the managers task is to find that answer and apply it universally

23. Contingent Factors • kind and size of the organization • necessity for promptness • seriousness of an error • time • manager’s task is to identify the changes, evaluate their effect, and choose what action to take in the new situation • not all situations are unique • but similar situations warrant similar action

24. Theory Z • Developed in 1981 by William Ouchi • amalgamation of Western and Japanese-style management techniques • not readily adopted by Western organizations • management not ready to sacrifice personal goals for good of the company as a whole

25. Contemporary Management Writers • Michael Porter and Comparative Advantage • four generic strategies • cost leadership • differentiation • cost focus • focused differentiation • Cost leadership means achieving lower costs per unit than can be achieved by competitors, while still making a profit

26. Differentiation - practice of providing superior quality • Cost focus - controlling costs in a restricted market area • Focused differentiation - application of differentiation in a limited area or in a unique product or service • Tom Peters and Excellence • Nine Aspects of Well-Managed Companies • Managing ambiguity and paradox • A bias for action • Close to the customer • Autonomy and entrepreneurship

27. Productivity through people • Hands-on, value-driven • Stick to the knitting • Simple form, lean staff • Loose-tight properties • Peters further suggests a symbiosis with both domestic and foreign customers • some of the companies identified by Peters actually failed financially

28. Peter Drucker and Management for Long-Term Success • search for profit not the major objective of business • management is a specific practice • businesses must change with the times • three key practices • implement improvement in everything • learn to apply and make use of knowledge • innovate constantly

29. W. Edwards Deming, Total Quality Management, and Leadership • emphasizes employee involvement, leadership, and continuous improvement • company role not only to make money, but to stay in business and provide jobs through innovation, constant improvement and maintenance

30. Philip B. Crosby and “Zero Defects” • new emphasis on quality • managers do not have to accept defects as normal • top management must make the commitment for zero defects • other managers will follow with focus on all aspects of quality • if the job is done correctly the first time, the cost of achieving quality is lowest

31. The Workplace of Tomorrow • no absolutes - theories will be discarded and new ones formed • changes will determine direction • even if theories are discarded, they will have some impact • managers who stay informed and thus knowledgeable will be successful

32. Contemporary Management Challenges • Globalization of business • Quality & productivity • Ownership • Ethics & social responsibility • Workforce diversity • Greater change • Empowerment