Management I Lectures 2 & 3 PDF

Management I. Lectures 2 & 3 – Evolution of Management Katalin Pádár, PhD Fall 2024  Learning Objectives You will (be able to): understand & explain how the focus of efforts of organizations and managers changed over time reg...

Management I. Lectures 2 & 3 – Evolution of Management Katalin Pádár, PhD Fall 2024  Learning Objectives You will (be able to): understand & explain how the focus of efforts of organizations and managers changed over time regarding reaching effective and efficient operation learn what findings contributed to modern managerial practices  Outline The Evolution of Management 0. Origins of Management Thought 1. The Classical Management Perspective 2. The Behavioural Management Perspective 3. The Quantitative Management Perspective 4. Integrating of the major perspectives 5. Contemporary Management Challenges The Basic Questions of Management How can organizational How can members of performance, the organization be effectiveness, and motivated to improve efficiency be their performance? increased?  Fields of Management planning, organizing and controlling managing work and organization managing managing Production people and Operation motivation, leadership, group managing PO, decision support behaviour, communication system, quality management, toolkit in POM  Frederick Taylor Perspectives of Management Mary P. Follett Frank and Lillian Gilbreth, Henry Ford Human Relations Elton Mayo Scientific Management Movement Henry Gantt Likert, Mason Harrington Emerson Classical Behavioural Management Management Perspective Perspective Douglas McGregor Henri Fayol Kurt Lewin James Mooney Organizational Behavior Classical Organization Theory Quantitative Chester Barnard Management Max Weber Perspective Herbert Simon Process-based School Operations Management Management Science Evolution of Management An overview Griffin (2017, p. 49)  0. Origins of Management Thought Management in Antiquity Griffin (2017, p. 35)  https://upload.wikimedia. org/wikipedia/c ommons/thumb/4/4d/Robert_Owen_by_William_Henry_Brooke.jpg/800px-Robert_Owen_by_William_Henry_Brooke.jpg 0. Origins of Management Thought Early Management Pioneers (1) Robert Owen (1771–1858) Welsh textile manufacturer; one of the first managers to recognize the importance of human resources and the welfare of workers.  https://upload.wikimedia. org/wikipedia/c ommons/thumb/6/6b/Charles_Babbage_-_1860.jpg/800px-Charles_Babbage_-_1860.jpg 0. Origins of Management Thought Early Management Pioneers (2) Charles Babbage (1792–1871) English mathematician; focused on creating efficiencies of production through the division of labor, and the application of mathematics to management problems.  1. Classical Management Perspective Frederick Taylor Frank and Lillian Aspects: Gilbreth, Henry Ford Scientific Management productivity, performance Henry Gantt organizations Harrington Emerson Classical Management Perspective Henri Fayol James Mooney Classical Organization Theory Max Weber Process-based School  1. Classical Management Perspective 1.1. Scientific Management Concerned with improving the performance of individual workers (i.e., efficiency). Grew out of the industrial revolution’s labour shortage at the beginning of the 20th century. 1.2. Classical Organization Theory (Administrative Management) A theory that focuses on managing the total organization rather than individuals.  1.1. Scientific Management Advocated the application of scientific methods to analyze work and to determine how to complete production tasks efficiently Four principles: develop a scientific approach for each element of one’s work scientifically select, train, teach and develop each worker cooperate with workers to ensure that jobs match plans and principles ensure appropriate division of labor Representatives: Frederick W. Taylor, Frank and Lillian Gilbreth, Henry Gantt, Harrington Emerson, Henry Ford  1.1. Scientific Management Frederick Winslow Taylor (1856–1915) Replaced old methods of how to do work with scientifically- based work methods. Eliminated “soldiering,” where employees deliberately worked at a pace slower than their capabilities. Believed in selecting, training, teaching, and developing workers. Used time studies of jobs, standards planning, exception rule of management, slide-rules, instruction cards, and piece-work pay systems to control and motivate employees. Midvale Steel Company „Testing Engineer at http://www.laborphotos.cornell.edu/popup_image.php?pID=1312 Work." A man, possibly Frederick W. Taylor, sits in a chair observing an engineer at work at Midvale Steel Company, ca, 1885  1.1. Scientific Management—Taylor Steps in Scientific Management Develop a science for Scientifically select Supervise employees Continue to plan the employees and then to make sure they each element of the work, but use workers train them to do the follow the prescribed job to replace old rule- to actually get the job as described in methods for of-thumb methods. work done. step 1. performing their jobs.  1.1. Scientific Management Frank B. Gilbreth (1868-1924) and https://www.pocketbook.co.uk/wp-content/uploads/2017/04/frank-gilbreth-lillian-gilbreth.jpg Lillian M. Gilbreth (1878-1972) Both developed techniques (motion study) and strategies for eliminating inefficiency. Frank reduced the number of movements in bricklaying, resulting in increased output of 200%. After Frank’s death Lillian made substantive contributions to the fields of industrial psychology and personnel management.  Bricklaying— The Quest of the One Best Way* *You might want to give auto- generated subtitles a try. http://bit.ly/Bricklaying_TheGilbreths  1.1. Scientific Management Henry Laurence Gantt (1861-1919) mechanical engineer and management consultant Gantt-chart  1.1. Scientific Management Harrington Emerson (1853-1931) https://upload.wikime dia. org/wikipedia/c ommons/0/00/Harrington_Emerson%2C_1911.jpg „Efficiency ingenieur”, High Priest of Efficiency Nearly 200 companies adopted various features of the Emerson Efficiency system: production routing procedures standardized working conditions and tasks, time and motion studies, and a bonus plan which raised workers' wages in accordance with greater efficiency and productivity Railroads – the promotion efficiency Books: Efficiency (1911); The Twelve Principles of Efficiency (1912) http://www.findingdulcinea.com/docroot/dulcinea/fd_images/news/on-this-day/September-October-08/On-this-Day--The-First-Model-T-Ford-Is-Produced/news/0/image.jpg standards assembly line $5 per day wage mass production five 8-hour days a week Focus: productivity, output, costs 1.1. Scientific Management Henry Ford (1863-1947) https://upload.wikime dia. org/wikipedia/c ommons/thumb/1/18/Henry_ford_1919.jpg/800px-Henry_ford_1919.jpg  Taylor and Ford— Scientific Mgmt* *You might want to give auto- generated subtitles a try. http://bit.ly/Ford_and_Taylor_ScientificMgmt  1.2. Classical Organization Theory Emphasized the perspective of senior managers 5 management functions: planning, organizing, commanding, coordinating, controlling 14 principles of management Focuses on managing the whole organization rather than individuals. Representatives: Henri Fayol, Max Weber  1.2. Classical Organization Theory Henri Fayol (1841–1925) Was first to identify the specific management functions of planning, organizing, leading (commanding & coordinating), and controlling, established 14 principles of Mgmt, distinguished activities of organisations. Max Weber (1864–1920) His theory of bureaucracy is based on a rational set of guidelines for structuring organizations. Lyndall Fownes Urwick (1891–1983) Integrated the work of previous management theorists. James David Mooney (1884-1957) Focussed on organizing and organization, Onward Industry (1931), The Principles of Organization  1.2. Classical Organization Theory Fayol’s 14 principles of Management 1. division of labor, 8. centralization, https://upload.wikimedia. org/wikipedia/commons/1/11/Henry-fayol.jpg 2. authority, 9. scalar chain, 3. discipline, 10.order, 4. unity of command, 11.equity, 5. unity of direction, 12.stability of tenure of personnel, 6. subordination of individual 13.initiative, interests to the general interest, 14.esprit de corps (morale) 7. remuneration  1.2. Classical Organization Theory Fayol’s 14 principles of Management 1. Division of Work: Specialization builds expertise and makes individuals more productive. 2. Authority: The right to issue commands and assume responsibility for their execution. 3. Discipline: Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership. 4. Unity of Command: Each worker should have only one boss with no other conflicting lines of command.  CEO, Board R&D Operations Commerce Finance Procure- Sales ment CEO Production Procudtion Production unit unit unit  1.2. Classical Organization Theory Fayol’s 14 principles of Management 1. Division of Work: Specialization builds expertise and makes individuals more productive. 2. Authority: The right to issue commands and assume responsibility for their execution. 3. Discipline: Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership. 4. Unity of Command: Each worker should have only one boss with no other conflicting lines of command. 5. Unity of Direction: People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flow from it. 6. Subordination of individual interests (to the general interest): Management must ensure that the goals of the organisation take priority over the interest of its individual members.  1.2. Classical Organization Theory Fayol’s 14 principles of Management 7. Remuneration: Payment and rewards are important motivators, although by analysing a number of possibilities, Fayol pointed out that there is no such thing as a perfect system. 8. Centralization (or Decentralization): Managers must decide on the appropriate balance between the two, depending on the state of the organisation and the quality of its personnel. 9. Scalar chain (Line of Authority): A hierarchy of authority is necessary for unity of direction but there must be lateral communication, i.e., communication between people at the same level in the organisation structure, as well. (An organisation consists of superiors and subordinates. The formal lines of authority from highest to lowest ranks are known as scalar chain.) 10.Order: Both social order and material order (orderly purchasing and usage of materials) are necessary. The former is achieved through organization and selection. The latter minimizes lost time and useless handling of materials.  1.2. Classical Organization Theory Fayol’s 14 principles of Management 11.Equity: Fair treatment for all employees to achieve equity. In running a business, a ‘combination of kindliness and justice’ is needed. 12.Stability of Tenure of Personnel: Low turnover, meaning a stable work force with high tenure, benefits an organization by improving performance, lowering costs, and giving employees, especially managers, time to learn their jobs. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely. 13.Initiative: All employees should be encouraged to exercise initiative in some way, which provides source of strength for the organization. Even though it may well involve a sacrifice of ‘personal vanity’ on the part of many managers. 14.Esprit de Corps (Morale): Management must foster the morale (reach high levels of motivation) of its employees. Fayol further suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without arousing possible jealousies and disturbing harmonious relations”.  https://www.biography. com/. image/ar_1:1%2Cc_fill%2Ccs _srgb%2C g_face%2Cq_auto:good%2Cw_300/MTE5NDg0MDU1MTYzOTMwMTI 3/max-weber-9526066-1-402.jpg 1.2. Classical Organization Theory Max Weber’s Bureaucracy Bureaucratic structures can eliminate the variability that results when managers in the same organization have different skills, experiences, and goals Bureaucracy allows large organizations to perform the many routine activities necessary for their survival People should be treated in unbiased manner  https://www.biography. com/. image/ar_1:1%2Cc_fill%2Ccs _srgb%2C g_face%2Cq_auto:good%2Cw_300/MTE5NDg0MDU1MTYzOTMwMTI 3/max-weber-9526066-1-402.jpg 1.2. Classical Organization Theory Max Weber’s Bureaucracy Elements of bureaucratic organizations: Qualification-based hiring Merit-based promotion Chain of command Division of labor Impartial application of rules and procedures Recorded in writing Managers separate from owners  1.2.x Process-based School Concentrating on the process of the management functions.  1.2.x Process-based School Levels of Management Levels vs. 100 Lower level Middle level Top level functions vs. Planning skills Conceptual skills Organising Human Time skills Controlling Technical skills 0 Leading  1. Classical Management Perspective… Contributions Limitations + Laid the foundation for later ‒ More appropriate approach developments. for use in traditional, stable, + Identified important simple organizations. management processes, ‒ Prescribed universal functions, and skills. procedures that are not + Focused attention on appropriate in some settings. management as a valid ‒ Employees are viewed as subject of scientific inquiry. tools rather than as resources.  Frederick Taylor Schools of Management Mary P. Follett Frank and Lillian Gilbreth, Henry Ford Human Relations Elton Mayo Scientific Management Movement Henry Gantt Likert, Mason Harrington Emerson Classical Behavioural Management Management Perspective Perspective Douglas McGregor Henri Fayol Kurt Lewin James Mooney Organizational Behavior Classical Organization Theory Quantitative Chester Barnard Management Max Weber Perspective Herbert Simon Process-based School Operations Management Management Science 2. Behavioural Management Perspective Mary P. Follett Human Relations Elton Mayo Movement Likert, Mason Behavioural Management Perspective Douglas McGregor Kurt Lewin Organizational Behavior Chester Barnard Herbert Simon  2. Behavioural Management Perspective Emphasized individual attitudes and behaviours, and group processes, and recognized the importance of behavioural processes in the workplace. 2.1. Human Relations Movement 2.2. Organizational Behaviour  2. Behavioural Management Perspective Mary Parker Follett (1868–1933) https://www.toolshero.com/wp-content/uploads/2019/07/mary-parker-follett-toolshero.jpg “mother” of Scientific Management Recognized the importance of the role of human behaviour in the workplace Allowing self-managed groups: „not power over, but with workers” Networking, knowledge sharing Book: The New State: Group Organization, The Solution for Popular Government” (1920)  2. Behavioural Management Perspective The Hawthorne Studies (1924/27–1932) Conducted by Elton Mayo (1880–1949) and associates at Western Electric Sourc e: http://www.library.hbs. edu/hc/hawthorne/big/wehe_073.html  The Hawthorne Studies https://bit.ly/HawthorneS  2. Behavioural Management Perspective The Hawthorne Studies (1924/27–1932) Conducted by Elton Mayo (1880–1949) and associates at Western Electric Illumination study—workplace lighting adjustments affected both the control and the experimental groups of production employees. Group study—implementation of piecework incentive plan caused production workers to establish informal levels of acceptable individual output. Over-producing workers were labeled “rate busters” and under-producing workers were considered “chiselers.” Interview program—confirmed the importance of human behaviour in the workplace. Bank Wiring Observation Room Program – 14 workers were formed into a work group and observed for 7 months Hawthorne Effect - workers perform and react differently when researchers observe them  2.1. Human Relations Movement Grew out of the Hawthorne studies – workers perform and react differently when researchers observe them Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics. Assumed that the manager’s concern for workers would lead to increased worker satisfaction and improved worker performance. Aimed to understand how psychological and social processes interact with the work situation to influence performance Argued that managers should stress primarily employee welfare, motivation, and communication Representatives: Elton Mayo, Abraham Maslow  2.1. Human Relations Movement Maslow’s Hierarchy of Needs Abraham Harold Maslow (1908-1970) Advanced a theory that employees are motivated by a hierarchy of needs that they seek to satisfy.  2.2. Organizational Behaviour Studies management activities that promote employee effectiveness investigates the complex nature of individual, group, and organizational processes Representatives: Douglas McGregor, Kurt Lewin, Chester Barnard, Herbert Simon  2.2. Organizational Behaviour Douglas McGregor (1906-1964) Proposed Theory X and Theory Y concepts of managerial beliefs about people and work Theory X: managers assume that workers are lazy, irresponsible, and require constant supervision Theory Y : managers assume employees want to work and control themselves What a manager expects of his subordinates and the way he treats them largely determine their performance and career progress. A unique characteristic of superior managers is their ability to create high performance expectations that subordinates fulfill.  2.2. Organizational Behaviour Douglas McGregor (1906-1964) Theory X manager Theory Y manager thinks that employees: want self-direction & self- dislike work & avoid it control in their work have lack of ambition want to be creative & assume avoid responsibility responsibility prefer job security the most are interested in displaying must be coerced & closely imagination and creativity to supervised to work adequately solve organizational problems  2.2. Organizational Behaviour Kurt Lewin (1890-1947) Leadership styles: authoritarian, democratic, laisses-faire Force field analysis, action research, change process, Lewin's equation, group dynamics Chester Irving Barnard (1886–1961) „The Functions of the Executive” (1938) Communication system, theories of authority and incentives Herbert Alexander Simon (1916–2001) Decision-making Artificial intelligence, psychology, sociology and economics  2. Behavioral Management Perspective… Contributions Limitations + Provided important insights into - Complexity of individuals makes motivation, group dynamics, and behavior difficult to predict. other interpersonal processes. - Many concepts not put to use + Focused managerial attention on because managers are reluctant these critical processes. to adopt them. + Challenged the view that - Contemporary research findings employees are tools and are not often communicated to furthered the belief that practicing managers in an employees are valuable understandable form. resources.  Frederick Taylor Schools of Management Mary P. Follett Frank and Lillian Gilbreth, Henry Ford Human Relations Elton Mayo Scientific Management Movement Henry Gantt Likert, Mason Harrington Emerson Classical Behavioural Management Management Perspective Perspective Douglas McGregor Henri Fayol Kurt Lewin James Mooney Organizational Behavior Classical Organization Theory Quantitative Chester Barnard Management Max Weber Perspective Herbert Simon Process-based School Operations Management Management Science 3. Quantitative Management Perspective Quantitative Management Perspective Operations Management Management Science  3. Quantitative Management Perspective Emerged during World War II to help the Allied forces manage logistical problems. Focuses on decision making, economic effectiveness, mathematical models, and the use of computers to solve quantitative problems. Teams of quantitative experts tackle complex issues that large organizations face. Helps management make a decision by developing formal mathematical models of the problem. Representatives: military planners in World War II  3. Quantitative Management Perspective 3.1. Management Science Focuses on the development of representative mathematical models to assist with decisions. Linear Programming, Game Theory, Sampling Theory, Probability Theory, Simulation, etc. 3.2. Operations Management Practical application of management science to efficiently manage the production and distribution of products and services. Quality Contol, Total Quality Management, Just In Time Technique, Six Sigma, etc.  3. Quantitative Management Perspective… Contributions Limitations + Developed sophisticated - Quantitative management cannot quantitative techniques to assist fully explain or predict the in decision making. behavior of people in + Application of models has organizations. increased our awareness - Mathematical sophistication may and understanding of come at the expense of other complex processes and managerial skills. situations. - Quantitative models may require + Has been useful in the unrealistic or unfounded planning and controlling assumptions, processes. limiting their general applicability Scientific Management ≠ Management Science  Frederick Taylor Schools of Management Mary P. Follett Frank and Lillian Gilbreth, Henry Ford Human Relations Elton Mayo Scientific Management Movement Henry Gantt Likert, Mason Harrington Emerson Classical Behavioural Management Management Perspective Perspective Douglas McGregor Henri Fayol Kurt Lewin James Mooney Organizational Behavior Classical Organization Theory Quantitative Chester Barnard Management Max Weber Perspective Herbert Simon Process-based School Operations Management Management Science  4. Integrating the major perspectives Systems Perspective Contingency Perspective Managers Recognition of internal interdependencies Recognition of the situational nature of management Recognition of environmental influences Response to particular characteristics of situation should include portions of each Classical Behavioral Quantitative perspective Management Management Management Perspectives relevant to Perspectives Perspectives their situation Methods for Insights for Techniques for and apply them enhancing efficiency motivating improving decision using systems and facilitating performance and making, resource and planning, organizing understanding allocation, and and controlling individual behavior, operations contingency groups and teams, approaches. and leadership Effective and efficient management Griffin (2017, p. 48)  4. Integrating the major perspectives 4.1. The Systems Perspective (Open Systems) A system is an interrelated set of elements functioning as a whole. 4.2. The Contingency Perspective Appropriate managerial behaviour in a given situation depends on (or is contingent on) a wide variety of elements.  4.1. The Systems Perspective (Open Systems) Input: acquire external resources people, financial resources, materials (physical), information Transformation: inputs are processed into products and services Technology, operating systems, administrative systems, control systems Outputs: finished products are released in the environment products, services, reputation, stakeholder satisfaction  4.1. The Systems Perspective (Open Systems) http://sk.s agepub.com/images /key-concepts-in-organization-theory/9781847875525-p167-1.jpg Environment ENTROPY System Stakeholders SYNERGY Inputs Transformation process Outputs Government Law Ecology Technology Financial institutions Shareholders Pressure Unions Employees Feedback Local Economy Suppliers Authority groups Competition Health & Climate Customers ethics safety  4.2. The Contingency Perspective (The formerly popular) Universal Perspective Includes the classical, behavioural, and quantitative approaches. An attempt to identify the “one best way” to manage organizations. The Contingency Perspective Suggests that each organization is unique. The appropriate managerial behaviour for managing an organization depends (is contingent) on the current situation in the organization.  5. Contemporary Management Issues and Challenges Acute labour shortages in high-technology job sectors and an oversupply of less skilled labour An increasingly diverse and globalized workforce The need to create challenging, motivating, and flexible work environments The effects of information technology on how people work The complex array of new ways of structuring organizations Increasing globalization of product and service markets The renewed importance of ethics and social responsibility The use of quality as the basis for competition The shift to a predominately service-based economy The consequences of the coronavirus pandemic Thank you for your kind attention!