Chapter 2 – Management Yesterday and Today

1. Chapter 2 – Management Yesterday and Today • Importance of studying management history • Early examples of management practice • Scientific management • General administrative theories • Quantitative approach to management • Organizational Behavior and the Hawthorne studies • The systems approach (closed versus open systems) • The contingency approach

2. Early Examples of Management • 20 years • 100,000 people • Began 221 BC • Over 4,000 miles • 300,000 people Egyptian Pyramids Great Wall of China

3. Adam Smith’s “Wealth of Nations”:Division of Labor • 10 pins per day • 48,000 pins per day 10 people doing all tasks 10 people doing specialized tasks

4. Industrial Revolution – 1700’s 1) Machine power • Steam, coal, fossil fuels, electricity 2) Mass production • Moving assembly line – Ford 3) Efficient transportation • Railroad, steamship • Result: Big Corporations Needed Management!

5. Development of Major Management Theories Exhibit 2.1

6. 92 lbs 38 lbs 34 lbs 21 lbs 16 lbs 12,500 25,000 30,000 48,000 25,000 Taylor’s Pig-Iron Experiment Tonnage Shovel Load Wage increase: $1.15 to $1.85 per day Q: What’s the “one best way”?

7. Theory of Scientific Management • Fredrick Winslow Taylor – the “father” • Using scientific methods to define the “one best way” for a job to be done: • Put the right person on the job with the correct tools and equipment. • Standardize the method of doing the job. • Providing an economic incentive to the worker.

8. Frederick Taylor’s Principles of Scientific Management • Develop a science for each element of work • Select, train, and develop workers • Cooperate with workers to make sure work done as planned • Divide work and responsibility equally between management and workers • Management takes over all work for which better suited

9. Frank and Lillian Gilbreth’sHand and Body Studies • Used motion pictures to study hand and body motions • 17 “Therbligs” • Reduced number of motions from 18 to 2 (interior) Movie and Book - “Cheaper by the Dozen”

10. Is Scientific Management Alive Today? • YES • Time and motion studies are still used • Still hire the best qualified employees • Still design incentive systems based on output • BUT • Rotate workers through various jobs • Make sure jobs are ergonomically correct • Teach front-line employees to use their BRAINS!

11. Scientific Management at Organizational Level - General Administrative Theorists • Q: What “rules” make organizations work like well-organized machines, just like workers? • Henri Fayol • Developed fourteen principles of management that applied to all organizational situations • Max Weber • Ideal organization = bureaucracy • Emphasized rationality, predictability, impersonality, technical competence, and authoritarianism

12. Fayol’s 14 Principles of Management • Remuneration. • Centralization. • Scalar chain. • Order. • Equity. • Stability of tenure of personnel. • Initiative. • Esprit de corps. • Division of work. • Authority. • Discipline. • Unity of command. • Unity of direction. • Subordination of individual interest to the interests of the organization. Exhibit 2.3

13. Weber’s Ideal Bureaucracy Exhibit 2.4 Q: Are bureaucracies alive today?

14. “Modern Times”Discussion Questions • What evidence did you see of Scientific Management? • What evidence did you see of a bureaucracy? • What are the benefits of SM/bureaucracy? • What are the drawbacks of SM/bureaucracy?

15. Quantitative Approach to Management • Also called operations research or management science • Evolved from mathematical and statistical methods developed to solve WWII military logistics and quality control problems • Focuses on improving managerial decision making by applying: • Statistics, optimization models, information models, and computer simulations

16. Organizational Behavior (OB) • The study of the actions of people at work; people are the most important asset of an organization

17. The Hawthorne Studies Control Group Experimental Group

18. Early Advocates of OB Exhibit 2.5

19. The Systems Approach • System Defined • A set of interrelated and interdependent parts arranged in a manner that produces a unified whole. • Basic Types of Systems • Closed systems • Are not influenced by and do not interact with their environment (all system input and output is internal). • Open systems • Dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments.

20. The Organization as an Open System Exhibit 2.6

21. Implications of the Systems Approach • Coordination of the organization’s parts is essential for proper functioning of the entire organization. • Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. • Organizations are not self-contained and, therefore, must adapt to changes in their external environment.

22. The Contingency Approach • Contingency Approach Defined • Also sometimes called the situational approach. • There is no one universally applicable set of management principles (rules) by which to manage organizations. • Organizations are individually different, face different situations (contingency variables), and require different ways of managing.

23. Popular Contingency Variables • Organization size • Routineness of task technology • Environmental uncertainty • Individual differences Exhibit 2.7