Management Theories

• Organizations are groups of people collaboratingtoward a common goal
• Organizations transform inputs into outputs of greater value
• Management theory influences the structure and operation of organizations

Major Management Theories:

• Classical
• Scientific Management
• Administrative Management
• Human Relations
• Systems Management
• Contingency

Classical Theories

• Emerged during the Industrial Revolution to address new challenges
• Training employees and reducing dissatisfaction were major concerns for managers
• Emphasized fulfilling employees' physical needs, using income and monetary incentives

Scientific Management Theory

• Established by Frederick Taylor, considered the father of scientific management
• Managers had limited interaction with factory activities
• Foremen had complete authority over production to meet demand
• Workers used available tools and developed methods that led to counterproductivity and dissatisfaction
• Taylor viewed humans as rational, motivated by monetary/material rewards
• Payment systems were developed that linked rewards to worker effort, known as piece-rate systems

Principles of Scientific Management

• Outlined ways for managers to improve productivity using established principles
• Work should be broken into smaller tasks so workers can specialize
• Developed to replace outdated "rule of thumb" methods via rules, laws, and principles
• Scientific worker training replaced random and untrained selection
• Cooperation between workers to ensure accordance with scientific principles
• Equal division of tasks and responsibilities between managers and workers

Elements of Scientific Management

• Separating planning from task performance
• Systematically selecting workers for specific tasks
• Observing and documenting worker processes to improve their function
• Conducting job analysis to identify the most efficient way of completing a task
• Standardising processes based on job analysis
• Assigning foremen to specialize and supervise workers
• Providing an environment that fostered cooperation
• Offering financial incentives for increased worker motivation and performance pay

Successes of Scientific Management

• Implemented factories experienced increased productivity
• Benefited some organizations with increased profits
• Led to industrial engineering personnel and quality control

Drawbacks of Scientific Management

• Identifying the best way to do a job led to monotony and reduced autonomy
• Assessing worker performance via stopwatches was met with opposition
• The view of workers as economic entities motivated solely by money was criticised

Administrative Management - Henri Fayol

• Administrative management developed alongside scientific management, but focused on management rather than workers
• Fayol focused on management from the upper level of administration Six interdependent groups for managers to coordinate:
• Technical: manufacturing/production/adaptation
• Commercial: buying and selling
• Financial: sourcing & utilising capital
• Security: protecting property & individuals
• Accounting: inventory, final accounts and statistics
• Managerial: five functions of management

Fayol's Five Functions of Management:

• Planning: establishing objectives and strategies to achieve them
• Organizing: delegating responsibilities to get the job done
• Commanding: giving workers clear instructions for effective function
• Coordinating: ensuring all groups work towards a common goal
• Controlling: monitoring activities against prescribed rules and procedures

Fayol's 14 Principles of Management

• Division of Labor: dividing work into smaller tasks to promote specialization
• Authority and Responsibility: managers must have the authority to carry out responsibilities
• Unity of Command: subordinates should take orders from one supervisor to avoid confusion
• Discipline: All members should be disciplined to accomplish tasks
• Unity of Direction: Activities of the same nature should have one managerial supervisor
• Subordination of Individual Interest: the interest of an individual or group should not override the enterprise
• Remuneration: workers should receive fair payment for work completed
• Centralization: decision-making power should be based on circumstances
• Scalar Chain: a clear line of authority should exist from the highest to the lowest levels of the organization
• Order: resources and reorganization should be organised to ensure efficiency
• Equity: employees should be treated fairly, justly, honestly and impartially
• Stability of Tenure of Personnel: minimize the labour turnover rate to allow employees to grow
• Initiative: motivate workers to create idea's to benefit the company
• Esprit de Corps: promoting the spirit of cooperation and developing team spirit

Bureaucratic Management – Max Weber

• Addressed the structure of organizations, not management problems like Taylor & Fayol
• Weber believed that bureaucracy was based on legal authority, not traditions or charisma
• Rules and controls compass legal authority that governs the organization
• Managers are given authority, through the office they serve, to enforce the rules

Bureaucratic Management Characteristics

• Division of labor increases efficiency through specification and delegation of responsibility
• Chain of command outlines authority and employees must understand the hierarchy
• Formal selection of employees should be based on their qualifications, education and training
• Career orientation towards professionals instead owners
• Formal rules and controls, they must be adhered to for employees performance and duties
• Rules and controls that are applied impersonally and consistently

Drawbacks of Bureaucratic Management

• Consistent dependence on rules and controls impedes the organization to meet changing conditions
• Delegation of authority can create subdivisions focusing on unit objectives instead of the whole
• Rules and controls may become tedious and lead to inefficiencies

Contributions of Classical Theorists

• Scientific management still sees firms holding money as the only motivator when other incentives could be used
• Promotion of best practices in spheres to achieve objectives
• Many organizations select workers with strict procedures ensure the best person is employed
• Staff appraisal practices adopted today and similar to Taylor's observations and documentation
• Workers are closely supervised in manufacturing/construction sectors
• Companies focus on efficiency and profit maximization
• Fayol's five functions are still used today
• Many organizations practice specialization and scalar chain
• Organizations follow the principle of initiative as workers are given the ability to develop projects

Contributions of Classical Theorists to Bureaucratic Management

• Bureaucracy still followed, particularly in large organizations like banks
• Hierarchical structure of management is still used, managers and subordinates know who to report to
• Rules and regulations monitor activities
• Managers must still acquire necessary qualifications and specialization for positions

Human Relations School of Behavioural Theories

• Focuses on the human aspect of management
• Management needs to prioritize people and technology
• Reactions to performance, schemes, jobs, conditions were studied by Elton Mayo
• Improve productivity, by understanding employees' behaviors

Hawthorne Studies

• Conducted by Elton Mayo, was used to determine the effects of working conditions on productivity
• Determined the relationship of light to employee work production
• Experiment failed initially, so more variables were introduced later
• Focused on women employees that were allowed privileges
• Privileges boosted morale
• Women no longer needed as much as the others
• Output grew and women were more motivated to work

Hawthorne Studies Findings

• Workers are motivated by social and personal factors
• Management should analyse attitudes when trying to find behavior
• Effective supervision maintains morale and production
• A great impact is created, when an emphasis is placed on informal groups, and employee performance.

Human Relations School Theorists:

• Maslow developed the Hierarchy of Needs
• Mc Gregor developed the Theory X and Theory Y
• Herzberg developed the Two Factor Theory

Human Relations School: Motivations and Methods

• Job enlargement: multiple tasks that share the same skill and responsibility level
• Job enrichment: tasks are improved on to be more interesting, responsibility, and recognised
• Job rotation: opportunity to work in different positions with different tasks before the next stage
• Group Working: completing a group with a task

Criticism of Human Relations School

• Human are complex, thus hard to determine how behaviour should be presented
• Some factor other than motivation affect worker performance
• Criticised for playing down the conflicting interest of both the management and employees

System Management Approach

• Modern management system focuses on transforming inputs into outputs
• Purposes accomplished task relation
• Organization that consists of four components or elements:
• Inputs: people materials, money and information
• Transformation: Managerial or technological processes
• Output: goods and services that are produced
• Feedback: actions from the external environment

Key Concepts of the System Management Approach:

• Theorists believe that businesses interaction of its components should be analysed as an interaction
• Leads to improvement performance
• Manage inter communication of each independent action
• Management integrates planning, organizing, staffing, leading, Human Resource Management and controlling
• Organizations depends on other systems for their inputs from consumers

Two System Categories:

• Close System is little to no interaction with an external environment
• Open System that interacts with an external environment

Key Concepts of the System Management Approach:

• Synergy: Total output is greater than the sum of inputs.
• Each subsystem sacrifices the optimization of an overall goal
• Achieve an overall firm goal by working together
• Entropy: System are not fully maintained and begin to decline
• This concept interacts with the lack of the external environment Lack of interactions which mean no inputs or energy, and eventually death.
• Subsystems: interdependents, parts of an entire system - the enterprise
• A change, which effects the whole system.

Contingency Theory - Joan Woodward

• Theorists believed there wasn't one method
• Stipulates effect of different factors within a situation
• Flexible and solves problems in our problem
• Integrates findings for each situation

Main Ideas of the Contingency Theory

• No 'best way' to manage the company.
• Organization should have coordination between design, and subsystems
• The subunits should be syncing for the organization to be effective

Functions of Management

• Management is a process that organizes and allocates resources to achieve desired results
• Important due to the fact employees don't organize themselves, and need structure
• A manager is an individual whose plans use limited resource
• Top level has overall business responsibilities
• Middle levels reports to top level, that has tactical planning over objectives
• Lower level, supervises the worker and oversees daily operations

Functions of Management: Planning:

• Relatable to setting business objectives
• Establishing to achieve the objectives
• Vital function that outlines what the business is taking for the future

Functions of Management: Organizing:

• Utilised to organize the human resources that execute the objectives within a plan
• Group activities and resources in order to allocate objectives and authorization to employees
• Authority should be established and helping communication, improve decision making prevent redundancy

Functions of Management: Directing/Leading

• Directing is involves the motivation, and heading to attain objectives
• Lower level manager should make interaction
• Supervise with assigned Task
• Employees' task is to make manager expect their objective

Functions of Management: Controlling

• Managers evaluate to make that the business attains objectives and is on track
• Measures performance, objectives, takes nessciary steps
• Processes and correct a shortfall

Functions of Management: Staffing

• Staffing should be recruiting, selecting, developing, and rewarding
• Improve workers profeesionslism

The Role of Management: Decisional

• Entrepreneur: Managers should developed product to better the company
• Disturbance Handlers: Manager needs to manage action
• Resource Allocator: Manage budgets and draft budget
• Negotiator: Negotiate and represent the company.

The Role of Management: Informational

• Monitor performance which would also include external and internal effects to companies
• Communication to the employees.
• Voice to the public, responsible for sharing and advertising

The Role of Management: Interpersonal

• Is certain ceremonial and also include legal matters
• Leader duties and actions that hire subordinates