Module 1 FUND BUS 200 Lecture Notes PDF

College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Unit 1: Management Concept (Part 2) 3. Historical Foundations of Management 4. Management Process (Summary) Learning Ou...

College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Unit 1: Management Concept (Part 2) 3. Historical Foundations of Management 4. Management Process (Summary) Learning Outcomes discuss how historical forces influence the practice of management; and illustrate and explain the management process Historical Foundations of Management Management practices and perspectives vary in response to social, political, and economic forces in the larger society. The timeline reflects the dominant time period for each approach, but elements of each are still used in today’s organizations. Classical Perspective The practice of management can be traced to 3000 b.c., to the first government organizations developed by the Sumerians and Egyptians, but the formal study of management is relatively recent. The early study of management as we know it today began with what is now called the classical perspective. The classical perspective on management emerged during the nineteenth and early twentieth centuries. The factory system that began to appear in the 1800s posed challenges that earlier organizations had not encountered. Problems arose in tooling the plants, organizing managerial structure, training employees (many of them non- English-speaking immigrants), scheduling complex manufacturing operations, and dealing with increased labor dissatisfaction and resulting strikes. This perspective contains three subfields, each with a slightly different emphasis: scientific management, bureaucratic organizations, and administrative principles.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Scientific management Scientific management emphasizes scientifically determined jobs and management practices as the way to improve efficiency and labor productivity. In the late 1800s, a young engineer, Frederick Winslow Taylor (1856–1915), proposed that workers “could be retooled like machines, their physical and mental gears recalibrated for better productivity.” Taylor insisted that improving productivity meant that management itself would have to change and, further, that the manner of change could be determined only by scientific study; hence, the label scientific management emerged. Taylor suggested that decisions based on rules of thumb and tradition be replaced with precise procedures developed after careful study of individual situations. Although known as the father of scientific management, Taylor was not alone in this area. Henry Gantt, an associate of Taylor’s, developed the Gantt chart, a bar graph that measures planned and completed work along each stage of production by time elapsed. Two other important pioneers in this area were the husband-and-wife team of Frank B. and Lillian M. Gilbreth. Frank B. Gilbreth (1868–1924) pioneered time and motion study and arrived at many of his management techniques independent of Taylor. He stressed efficiency and was known for his quest for the one best way to do work. Although Gilbreth is known for his early work with bricklayers, his work had great impact on medical surgery by drastically reducing the time that patients spent on the operating table. Surgeons were able to save countless lives through the application of time and motion study. Lillian M. Gilbreth (1878–1972) was more interested in the human aspect of work. When her husband died at the age of 56, she had 12 children ages 2 to 19. The undaunted “first lady of management” went right on with her work. She presented a paper in place of her late husband, continued their seminars and consulting, lectured, and eventually became a professor at Purdue University. She pioneered in the field of industrial psychology and made substantial contributions to human resource management. Bureaucratic Organizations A systematic approach developed in Europe that looked at the organization as a whole is the bureaucratic organizations approach, a subfield within the classical perspective. Max Weber (1864–1920), a German theorist, introduced most of the concepts on bureaucratic organizations. During the late 1800s, many European organizations were managed on a personal, family-like basis. Employees were loyal to a single individual rather than to the organization or its mission. The dysfunctional consequence of this management practice was that resources were used to realize individual desires rather than organizational goals. Employees in effect owned the organization and used resources for their own gain rather than to serve customers. Weber envisioned organizations that would be managed on an impersonal, rational basis. This form of organization was called a bureaucracy. Administrative Principles Another major subfield within the classical perspective is known as the administrative principles approach. Whereas scientific management focused on the productivity of the individual worker, the administrative principles approach focused on the total organization. The major contributor to this approach was Henri Fayol.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA In his most significant work, General and Industrial Management, Fayol discussed 14 general principles of management, several of which are part of management philosophy today. Division of Work – specialization provides the individual to build up experience, continuous improvement in skills, and thereby be more productive Authority – the right to issue commands, along with which must go to the balanced responsibility for its function Discipline- which is two-sided, for employees only obey orders if management play their part by providing good leadership. Unity of Command – each worker should have only one boss with no other conflicting lines of command Unity of Direction – similar activities in an organization should be grouped together under one manager Subordination of individual interest to general interest – management must see that the goals of the firms are always paramount Remuneration - payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system Centralization or decentralization – this is a matter of degree depending on the structure, nature of the organization’s operations, and culture of its staff Scalar Chain (Line of Authority) – a hierarchy is necessary for unity of direction but lateral communication is also fundamental as long as superiors know that such communication is taking place Order – refers to the material order and social order necessary for proper functioning of organization Equity- all employees must be treated with fairness, kindness and justice Stability of Tenure - essential due to the time and expense involved in training good management Initiative- employees should be given the necessary level freedom to create and carry out plans Esprit De Corps – management must foster the morale of its employees Humanistic Perspective The humanistic perspective on management emphasized the importance of understanding human behaviors, needs, and attitudes in the workplace, as well as social interactions and group processes. There are three primary subfields based on the humanistic perspective: the human relations movement, the human resources perspective, and the behavioral sciences approach. Early Advocates Two early advocates of a more humanistic approach were Mary Parker Follett and Chester I. Barnard. Mary Parker Follett (1868–1933) was trained in philosophy and political science, but she applied herself in many fields, including social psychology and management. She wrote of the importance of common superordinate goals for reducing conflict in organizations. Her work was popular with businesspeople of her day but was often overlooked by management scholars. Follett’s ideas served as a contrast to scientific management and are re-emerging as applicable for modern managers dealing with rapid changes in today’s global environment.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Human Relations Movement The human relations movement was based on the idea that truly effective control comes from within the individual worker rather than from strict, authoritarian control. This school of thought recognized and directly responded to social pressures for enlightened treatment of employees. The early work on industrial psychology and personnel selection received little attention because of the prominence of scientific management. Human Resources Perspective The human relations movement initially espoused a dairy farm view of management—just as contented cows give more milk, satisfied workers will produce more work. Gradually, views with deeper content that elevated the “humanity of production” began to emerge. The human resources perspective maintained an interest in worker participation and considerate leadership but shifted the emphasis to considering the daily tasks that people perform. The human resources perspective combines prescriptions for design of job tasks with theories of motivation.48 In the human resources view, jobs should be designed so that tasks are not perceived as dehumanizing or demeaning but instead allow workers to use their full potential. Two of the best-known contributors to the human resources perspective were Abraham Maslow and Douglas McGregor. Abraham Maslow (1908–1970), a practicing psychologist, observed that his patients’ problems usually stemmed from an inability to satisfy their needs. Thus, he generalized his work and suggested a hierarchy of needs. Maslow’s hierarchy started with physiological needs and progressed to safety, belongingness, esteem, and, finally, self-actualization needs. Douglas McGregor (1906–1964) had become frustrated with the early, simplistic human relations notions while president of Antioch College in Ohio. He challenged both the classical perspective and the early human relations assumptions about human behavior. Based on his experiences as a manager and consultant, his training as a psychologist, and the work of Maslow, McGregor formulated Theory X and Theory Y. Assumptions of Theory X The average human being has an inherent dislike of work and will avoid it if possible. Because of the human characteristic of dislike for work, most people must be coerced, controlled, directed, or threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives. The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, and wants security above all. Assumptions of Theory Y The expenditure of physical and mental effort in work is as natural as play or rest. The average human being does not inherently dislike work. External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. A person will exercise self-  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA direction and self-control in the service of objectives to which he or she is committed. The average human being learns, under proper conditions, not only to accept but to seek responsibility Management Science Perspective World War II caused many management changes. To handle the massive and complicated problems associated with modern global warfare, managerial decision makers needed more sophisticated tools than ever before. Management science, also referred to as the quantitative perspective, provided a way to address those problems. This view is distinguished for its application of mathematics, statistics, and other quantitative techniques to management decision making and problem solving. Let’s look at three subsets of management science. Operations research grew directly out of the World War II military groups (called operational research teams in Great Britain and operations research teams in the United States).55 It consists of mathematical model building and other applications of quantitative techniques to managerial problems. Operations management refers to the field of management that specializes in the physical production of goods or services. Operations management specialists use management science to solve manufacturing problems. Some commonly used methods are forecasting, inventory modeling, linear and nonlinear programming, queuing theory, scheduling, simulation, and break-even analysis. Information technology (IT) is the most recent subfield of management science, which is often reflected in management information systems designed to provide relevant information to managers in a timely and cost-efficient manner. IT has evolved to include intranets and extranets, as well as various software programs that help managers estimate costs, plan and track production, manage projects, allocate resources, or schedule employees. Most of today’s organizations have IT specialists who use quantitative techniques to solve complex organizational problems.  College of Business Administration Lecture Notes in FUND BUS 200 Prepared by Gabriel R. De Guzman, RMP, MBA Management Process The figure above illustrates the process of how managers use resources to attain organizational goals through the functions of planning, organizing, leading, and controlling. Three Aspects of Management Management is a social process concerned with developing relationships among people making/creating interactions between people towards greater productivity and useful for obtaining organizational goals Management is an integral process brings together human, physical, and financial resources so as to achieve organizational purpose Management is a continuous process constantly identifies the problem and solves them by taking adequate steps