Chapter 2 Evolution of Management Theory PDF

Chapter 2 Evolution of management theory ©2022 John Wiley & Sons Australia Ltd  Chapter 2 Learning objectives 2.1 Understand lessons from classical management approaches. 2.2 Identify insights from behavioural management approaches. 2.3 Recognise foundations of modern...

Chapter 2 Evolution of management theory ©2022 John Wiley & Sons Australia Ltd  Chapter 2 Learning objectives 2.1 Understand lessons from classical management approaches. 2.2 Identify insights from behavioural management approaches. 2.3 Recognise foundations of modern management thinking. 2.4 Discuss current issues in management theory.  2.1 Classical management approaches Based on the assumption that people make rational decisions Seek to develop the science and practices of management to achieve efficient production Taylor — scientific management Fayol — administrative principles Weber — bureaucractic organisation Foundations of the classical approaches to management theory 4  2.1 Classical management approaches: Taylor’s scientific management Four core principles of scientific management (Frederick Taylor): 1. Develop a ‘science’ for each job — rules of motion, standard work tools, and proper work conditions. 2. Hire workers with the right abilities for the job. 3. Train and motivate workers to do their jobs according to the science. 4. Support workers by planning and assisting their work according to the science.  2.1 Classical management approaches: Weber’s bureaucratic organisation Bureaucracy A specific approach to staffing and structuring an organisation to achieve efficiency and fairness for members and customers (Max Weber). An ideal, intentionally rational and efficient form of organization. Based on logic, order and legitimate authority People are selected for jobs based on their competency and demonstrated performance. Characteristics of an ideal bureaucracy 7  2.1 Classical management approaches: Weber’s bureaucratic organisation Possible disadvantages of bureaucracy: 1. Excessive paperwork or ‘red tape’ 2. Slowness in handling problems 3. Rigidity in the face of shifting needs 4. Resistance to change 5. Employee apathy  2.1 Classical management approaches: Fayol’s administrative principles An attempt to document and understand the experiences of successful managers (Henri Fayol). Key principles: Scalar chain principle — there should be a clear and unbroken line of communication from the top to the bottom of the organisation. Unity of command principle — each person should receive orders from only one boss.  2.1 Classical management approaches: Fayol’s administrative principles Five ‘rules’ or ‘duties’ of management: 1. Foresight — Complete a plan of action for the future. 2. Organisation — Provide and mobilise resources to implement the plan. 3. Command — Lead, select and evaluate workers. 4. Coordination — Fit diverse efforts together; ensure information is shared and problems are solved. 5. Control — Make sure things happen according to plan; take necessary corrective action.  2.2 Behavioural management approaches Focus on the human side of organisations. Based on the assumption that people are: Social — they seek satisfying relationships and respond to group pressure Self-actualising — they seek personal fulfilment. Behavioural management or human resource approaches 12  2.2 Behavioural management approaches: Spaulding Spaulding proposed ‘eight necessities’ of management: 1. Cooperation and teamwork 2. Authority and responsibility 3. Division of labour 4. Adequate manpower 5. Adequate capital 6. Feasibility analysis 7. Advertising budget 8. Conflict resolution  2.2 Behavioural management approaches: Follett Follett’s visionary leadership: Warned against the dangers of too much hierarchy Advocated social responsibility, respect for workers, and better cooperation throughout organisations Suggested making every employee an owner in the business to create collective responsibility Today, this approach is seen in ‘empowerment’, ‘involvement’, ‘flexibility’, ‘self-management’ and ‘transformational leadership’.  2.2 Behavioural management approaches: The Hawthorne studies Hawthorne studies: Focused attention on the human side of organisations Initially examined how economic incentives and physical conditions affected worker output No consistent relationship was found ‘Psychological factors’ influenced the results  2.2 Behavioural management approaches: The Hawthorne studies Social setting and human relations Experiment manipulated the physical work conditions to assess the impact on output Designed to minimise ‘psychological factors’ of first experiment Conclusion: New ‘social setting’ led workers to do good job Good ‘human relations’ = higher productivity  2.2 Behavioural management approaches: The Hawthorne studies Employee attitudes and group processes Some things satisfied some workers but not others People restricted output to adhere to group norms Social and human concerns are keys to productivity Hawthorne effect — people who are singled out for special attention perform as expected  2.2 Behavioural management approaches: Maslow Maslow’s hierarchy of human needs: A need is a physiological or psychological deficiency a person feels compelled to satisfy. Need levels: Physiological Safety Social Esteem Self-actualisation  2.2 Behavioural management approaches: Maslow Deficit principle A satisfied need is not a motivator of behaviour. Progression principle Needs are satisfied in sequence from lowest to highest A need becomes a motivator once the preceding lower- level need is satisfied. Both principles cease to operate at self-actualisation level The differences between lower order and higher order needs 20  2.2 Behavioural management approaches: McGregor McGregor’s Theory X McGregor’s Theory Y assumes that workers: assumes that workers are: Dislike work Willing to work Lack ambition Capable of self control and self-direction Act irresponsibly Willing to accept Resist change responsibility Prefer to follow rather Imaginative and creative than to lead  2.2 Behavioural management approaches: McGregor Managers create self-fulfilling prophecies Theory X managers create situations where workers become dependent and reluctant Theory Y managers create situations where workers respond with initiative and high performance Central to notions of empowerment and self- management  2.2 Behavioural management approaches: Argyris Agyris contrasted the management practices found in traditional and hierarchical organisations with the needs and capabilities of mature adults. Classical management principles and practices inhibit worker maturation and are inconsistent with the mature adult personality. Psychological success occurs when people define own goals.  2.2 Behavioural management approaches: Using behavioural management theories Management theories are not science. Theories should be constantly reviewed, appraised and evaluated for their usefulness in practice. Managers should use the theories to explore and understand a person’s behaviour from multiple perspectives, rather than rely on just a favourite theory.  2.3 Foundations of modern management thinking Relatively new developments in management thinking include: The use of quantitative analysis and tools Recognition of organisations as complex open systems Contingency thinking Quality management Evidence-based management  2.3 Foundations of modern management thinking: Quantitative analysis and tools Quantitative analysis A structured approach to managerial problem-solving: Problem encountered Problem systematically analysed Appropriate mathematical models and computations applied Optimal solution identified  2.3 Foundations of modern management thinking: Quantitative analysis and tools Analytics The use of large databases and mathematics to solve problems and make informed decisions using systematic analysis. Management science and operations research The use of mathematical techniques to solve management problems.  2.3 Foundations of modern management thinking: Quantitative analysis and tools Operations management The study of how organisations produce goods and services. Includes business process analysis, workflow designs, facilities layouts and locations, work scheduling, project management, production planning, inventory management and quality control.  2.3 Modern management thinking: Organisations as open systems System A collection of interrelated parts that function together to achieve a common purpose. Open system A system that interacts and makes exchanges with its environment. Organisations as open systems 30  2.3 Modern management thinking: Organisations as open systems Subsystem A smaller component of a larger system. Organisations operate as complex networks of subsystems to support the work of the larger system. Organisations as complex networks of subsystems 32  2.3 Modern management thinking: Contingency thinking Contingency thinking Tries to match managerial practices with problems and opportunities unique to different situations No ‘one best way’ to manage Appropriate way to manage depends on the situation 2.3 Modern management thinking: Quality management Quality management Managers and workers in progressive organisations are quality conscious - Quality and competitive advantage are linked Total quality management (T Q M) - Comprehensive approach to continuous improvement for a total organisation  2.3 Modern management thinking: Evidence-based management Evidence-based management Making management decisions on ‘hard facts’ about what really works Using techniques like the scientific method.  2.3 Modern management thinking: Evidence-based management Scientific method A research question or problem is identified. Hypotheses, or possible explanations, are stated. A research design is created to systematically test the hypotheses. Data gathered in the research are analysed and interpreted. Hypotheses are accepted or rejected based on the evidence.  2.4 Current issues in management theory: Global awareness Much of the pressure for performance excellence is created by a competitive global economy. ‘Theory Z’ describes a management framework emphasising: long-term employment slower promotions and lateral job movements attention to career development use of consensus decision-making emphasis on use of teamwork and employee involvement.  2.4 Current issues in management theory: Management theory across cultures Can management theories, mostly developed in the USA and Western Europe, be applied anywhere in the world? Cultures differ substantially on fundamental issues and management theories cannot be universally applied. Different approaches may be required in different countries and in dealing with diverse individuals within a single workplace.  2.4 Current issues in management theory: Learning organisations A learning organisation continuously changes and improves using the lessons of experience. Requires a value-driven organisational culture. A manager must be: a global strategist a master of technology an effective politician an inspiring leader.  Evolution of management theory: Summary 2.1 Understand lessons from classical management approaches. Taylor’s scientific management sought efficiency in job performance. Weber’s bureaucratic organisation is supposed to be efficient and fair. Fayol’s administrative principles describe managerial duties and practices.  Evolution of management theory: Summary 2.2 Identify insights from behavioural management approaches. Spaulding espoused respect for people and belief in community. Follett viewed organisations as communities of cooperative action. The Hawthorne studies focused attention on the human side of organisations. Maslow described how human needs influence motivation.  Evolution of management theory: Summary 2.2 Identify insights from behavioural management approaches. (continued) McGregor believed managerial assumptions create self- fulfilling prophecies. Argyris suggested that workers treated as adults will be more productive.  Evolution of management theory: Summary 2.3 Recognise foundations of modern management thinking. Managers use quantitative analysis and tools to solve complex problems. Organisations are open systems that interact with their environments. Contingency thinking holds that there is no one best way to manage.  Evolution of management theory: Summary 2.3 Recognise foundations of modern management thinking. (continued) Quality management focuses attention on continuous improvement. Evidence-based management seeks hard facts about what really works.  Evolution of management theory: Summary 2.4 Discuss current issues in management theory. The global economy is a key influence on organisations today. Cultural diversity means management theories may not be universally applicable. A learning organisation is an organisation that operates with values and systems that result in continuous change and improvement based on experience.  Evolution of management theory: Summary 2.4 Discuss current issues in management theory. (continued) New managers must accept and excel at leadership responsibilities to perform as global strategists, technology masters, consummate politicians and leader– motivators.