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PRINCIPLES OF BITS MANAGEMENT Pilani Dubai Campus  CHAPTER 2 Learning Objectives: To study evolution of management thought and various approaches of management Scientific Management (Taylor), Bureaucracy (Weber), Process Management (Fayol...

PRINCIPLES OF BITS MANAGEMENT Pilani Dubai Campus  CHAPTER 2 Learning Objectives: To study evolution of management thought and various approaches of management Scientific Management (Taylor), Bureaucracy (Weber), Process Management (Fayol), Systems theory, Behavior theory, Contingency theory BITS Pilani, Dubai Campus “ The only thing which is constant in the world is change”  Industrial Revolution (Late 1700s to Late 1800s) Industry = Work Revolution = Rapid Change Labours involved in farms are moving towards the factories Small Shops to Large Companies  Factors of growth Power (These industries running on power and not by hands) Machinery Innovations (1873 : ELI WITTNEY: Cotton Gin) Transportation  Emerging Issues Large Groups Working Together People working with machinery Increasing pace of Industry Effective Solutions for Companies (Companies were looking for answers)  Major Questions How are we going to organize all of this? How are we going to maximize productivity? How are we going to manage all of these people?  Historical Background of Management Ancient Management Egypt (pyramids) and China (Great Wall) Venetians (floating warship assembly lines) Adam Smith Published The Wealth of Nations in 1776 Advocated the division of labor (job specialization) to increase the productivity of workers Industrial Revolution Substituted machine power for human labor Created large organizations in need of management 2–8  Exhibit 2–1 Major Approaches to Management Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–9  Major Approaches to Management Classical Quantitative Behavioral Contemporary Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–10  Scientific Management Fredrick Winslow Taylor The “father” of scientific management Published Principles of Scientific Management (1911) The theory of scientific management Using scientific methods to define the “one best way” for a job to be done: Putting the right person on the job with the correct tools and equipment Having a standardized method of doing the job Providing an economic incentive to the worker. 2–11  Taylor’s Scientific Management Principles 1. Develop a science for each element of an individual’s work, which will replace the old rule-of-thumb method. 2. Scientifically select and then train, teach, and develop the worker. 3. Heartily cooperate with the workers so as to ensure that all work is done in accordance with the principles of the science that has been developed. 4. Divide work and responsibility almost equally between management and workers. Management takes over all work for which it is better fitted than the workers. 2–12  General Administrative Theory Henri Fayol Believed that the practice of management was distinct from other organizational functions Developed principles of management that applied to all organizational situations Max Weber Developed a theory of authority based on an ideal type of organization (bureaucracy) Emphasized rationality, predictability, impersonality, technical competence, and authoritarianism Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–13  Fayol’s 14 Principles of [ PROCESS ] Management 1. Division of work 7. Remuneration 2. Authority 8. Centralization 3. Discipline 9. Scalar chain 4. Unity of command 10. Order 5. Unity of direction 11. Equity 6. Subordination of 12. Stability of tenure individual interests of personnel to the general 13. Initiative interest Copyright © 2010 Pearson 14. Esprit de corps Education, Inc. Publishing as Prentice Hall 2–14  Weber’s Bureaucracy Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–15  Understanding Organizational Behavior Organizational Behavior (OB) The study of the actions of people at work; people are the most important asset of an organization Early OB Advocates Robert Owen Hugo Munsterberg Mary Parker Follett Chester Barnard Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–16  Exhibit 2–6 Early Advocates of OB Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–17  The Hawthorne Studies A series of productivity experiments conducted at Western Electric from 1924 to 1932. Experimental findings Productivity unexpectedly increased under imposed adverse working conditions. The effect of incentive plans was less than expected. Research conclusion Social norms, group standards and attitudes more strongly influence individual output and work behavior than do monetary incentives. 2–18  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. 2–19  The Organization as an Open System Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–20  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. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–21  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. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2–22  Popular Contingency Variables Organization size As size increases, so do the problems of coordination. Routineness of task technology Routine technologies require organizational structures, leadership styles, and control systems that differ from those required by customized or non-routine technologies. Environmental uncertainty What works best in a stable and predictable environment may be totally inappropriate in a rapidly changing and unpredictable environment. Individual differences Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity, and expectations. 2–23 division of labor (or job Terms to Knowquantitative approach specialization) organizational behavior (OB) Industrial Revolution Hawthorne Studies scientific management system therbligs closed systems general administrative theory open systems principles of management contingency approach bureaucracy 2–24