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2Chapter

PowerPoint Presentation by Charlie Cook Copyright The McGraw-Hill Companies, Inc., 2003. All rights reserved.

The Evolution ofManagement Theory

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Copyright McGraw-Hill. All rights reserved. 22

Learning Objectives

After studying the chapter, you should be able to:Describe how the need to increase organizational

efficiency and effectiveness has guided theevolution of management theory.

Explain the principle of job specialization anddivision of labor, and tell why the study of person-task relationships is central to the pursuit ofincreased efficiency.

Identify the principles of administration andorganization that underlie effective organizations.

Trace the change in theories about how managersshould behave to motivate and control employees

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Learning Objectives (contd)

Explain the contributions of management science tothe efficient use of organizational resources.

Explain why the study of the external environmentand its impact on an organization has become a

central issue in management thought.

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Chapter Outline

Scientific Management TheoryJob Specialization and the Division of Labor

F. W. Taylor and Scientific Management

The Gilbreths

Administrative Management Theory

The Theory of Bureaucracy

Fayols Principles of Management

Behavioral Management Theory

The Work of Mary Parker Follett

The Hawthorne Studies and Human Relations

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Chapter Outline (contd)

Behavioral Management Theory (contd)Theory X and Theory Y

Management Science Theory

Organizational Environment TheoryThe Open Systems View

Contingency Theory

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Scientific Management Theory

Evolution of Modern ManagementBegan in the industrial revolution in the late 19th

century as:

Managers of organizations began seeking ways to

better satisfy customer needs.

Large-scale mechanized manufacturing began to

supplanting small-scale craft production in the ways

in which goods were produced.

Social problems developed in the large groups ofworkers employed under the factory system.

Managers began to focus on increasing the efficiency

of the worker-task mix.

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The Evolution of Management Theory

Figure 2.1Source:

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Job Specialization andthe Division of Labor

Adam Smith (18th century economist)

Observed that firms manufactured pins in one oftwo different ways:

Craft-styleeach worker did all steps.

Productioneach worker specialized in one step.

Realized that job specialization resulted in muchhigher 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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F.W. Taylor and Scientific Management

Scientific ManagementThe systematic study of the relationships between

people and tasks for the purpose of redesigning thework process for higher efficiency.

Defined by Frederick Taylor in the late 1800s toreplace informal rule of thumb knowledge.

Taylor sought to reduce the time a worker spent on

each task by optimizing the way the task was done.

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Four Principles of Scientific Management

Principles 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 rules.

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 theincreased output side of Taylors plan.

Workers did not share in the increased output.

Specialized jobs became very boring, dull.

Workers ended up distrusting the ScientificManagement method.

Workers could purposely under-perform.

Management responded with increased use ofmachines and conveyors belts.

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Frank and Lillian Gilbreth

Refined Taylors work and made manyimprovements to the methodologies of time

and motion studies.

Time and motion studies

Breaking up each job action into its components.

Finding better ways to perform the action.

Reorganizing each job action to be more efficient.

Also studied worker-related fatigue problemscaused by lighting, heating, and the design of

tools and machines.

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Administrative Management Theory

Administrative ManagementThe study of how to create an organizational

structure that leads to high efficiency andeffectiveness.

Max Weber

Developed the concept of bureaucracy as a formalsystem of organization and administration designedto ensure efficiency and effectiveness.

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WebersPrinciples of

Bureaucracy

Figure 2.2

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Webers Five Principles of Bureaucracy

Authority is the power to hold peopleaccountable for their actions.

Positions in the firm should be held based on

performance, not social contacts. Position duties are clearly identified so that

people know what is expected of them.

Lines of authority should be clearly identified

such that workers know who reports to who.

Rules, standard operating procedures (SOPs),

and norms guide the firms operations.

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Fayols Principles of Management

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

leading to poor quality and worker dissatisfaction.

Authority and Responsibility

Fayol included both formal and informal authorityresulting from special expertise.

Unity of Command

Employees should have only one boss.

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Fayols Principles of Management (contd)

Line of AuthorityA clear chain of command from top to bottom of

the firm.

Centralization

The degree to which authority rests at the top ofthe organization.

Unity of Direction

A single plan of action to guide the organization.

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EquityThe provision of justice and the fair and impartial

treatment of all employees.

Order

The arrangement of employees where they will beof the most value to the organization and toprovide career opportunities.

InitiativeThe fostering of creativity and innovation by

encouraging employees to act on their own.

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DisciplineObedient, applied, respectful employees are

necessary for the organization to function.

Remuneration of Personnel

An equitable uniform payment system thatmotivates contributes to organizational success.

Stability of Tenure of Personnel

Long-term employment is important for thedevelopment of skills that improve theorganizations performance.

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Subordination of Individual Interest to theCommon Interest

The interest of the organization takes precedenceover that of the individual employee.

Esprit de corps

Comradeship, shared enthusiasm foster devotion tothe common cause (organization).

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Behavioral Management Theory

Behavioral ManagementThe study of how managers should behave to

motivate employees and encourage them toperform at high levels and be committed to the

achievement of organizational goals.Focuses on the way a manager should personally

manage to motivate employees.

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Behavioral Management

Mary Parker FollettAn influential leader in early managerial theory

Held a horizontal view of power and authority inorganizations

Suggested workers help in analyzing their jobs for

improvementsthe worker knows the best way to

improve the job.

If workers have relevant knowledge of the task, then

they should control the task.

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The Hawthorne Studies

Studies of how characteristics of the worksetting affected worker fatigue and

performance at the Hawthorne Works of the

Western Electric Company from 1924-1932.

Worker productivity was measured at various levelsof light illumination.

Researchers found that regardless of whether thelight levels were raised or lowered, worker

productivity increased.

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The Hawthorne Studies

Human Relations ImplicationsHawthorne effectworkers responded to the

attention they received and were more productive.

Managers should be behaviorally trained to manage

subordinates to elicit their cooperation and increasetheir productivity.

Groups impose informal performance norms ontheir members (both rate busters and chiselers)

Gave rise to the field of Organizational Behavior

The study of the factors that have an impact on how

individuals and groups respond to and act in

organizations.

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Theory X and Theory Y

Douglas McGregor proposed the two differentsets of assumptions about workers.

Theory X assumes the average worker is lazy,dislikes work and will do as little as possible.

Managers must closely supervise and control throughreward and punishment.

Theory Y assumes workers are not lazy, want to doa good job and the job itself will determine if the

worker likes the work. Managers should allow workers greater latitude, and

create an organization to stimulate the workers.

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Theory X versus Theory Y

Figure 2.3Source:

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Management Science Theory

An approach to management that usesrigorous quantitative techniques to maximize

the use of organizational resources.

Quantitative managementutilizes linear

programming, modeling, simulation systems.

Operations managementtechniques to analyzeall aspects of the production system.

Total Quality Management (TQM)focuses on

improving quality throughout an organization.

Management Information Systems (MIS)provides information about the organization.

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Organizational Environment Theory

Organizational EnvironmentThe set of forces and conditions that operate

beyond an organizations boundaries but affect amanagers ability to acquire and utilize resources.

.

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The Open-Systems View

Open SystemA system that takes resources for its external

environment and converts them into goods andservices that are then sent back to that

environment for purchase by customers.Inputs: the acquisition of external resources.

Conversion: the processing of inputs into goods andservices.

Output: the release of finished goods into theenvironment.

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The Organization as an Open System

Figure 2.4

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Other System Considerations

Closed systemA system that is self-contained and thus not

affected by changes occurring in its externalenvironment.

Often undergoes entropy and loses its ability tocontrol itself, and fails.

Synergy

Performance that results when individuals anddepartments coordinate their actions

Performance gains of the whole surpass the sum of

the performance of the individual components.

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Contingency Theory

Contingency TheoryThe idea that the organizational structures and

control systems manager choose depend onarecontingent oncharacteristics of the external

environment in which the organization operates.Assumes there is no one best way to manage.

The environment impacts the firm and managers

must be flexible to react to environmental changes.

In rapidly changing organizational environments,managers must find ways to coordinate differentdepartments to respond quickly and effectively.

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Contingency Theory of Organizational Design

Figure 2.5Source:

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Mechanistic and Organic Structures

Mechanistic StructureAuthority is centralized at the top. (Theory X)

Employees are closely monitored and managed.

Can be very efficient in a stable environment.

Organic structure

Authority is decentralized throughout theorganization. (Theory Y)

Tasks and roles are left ambiguous to encourageemployees to react quickly to changingenvironment.

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