Chapter 2 Evolution of Management PDF

CHAPTER TWO EVOLUTION OF MANAGEMENT CHAPTER OUTLINES  Management in Antiquity and Early Contributors  The Era of Classical Management  Neo-Classical Management Era  The Modern Management Era  Emerging approaches in Management Why study management history?  Management th...

CHAPTER TWO EVOLUTION OF MANAGEMENT CHAPTER OUTLINES  Management in Antiquity and Early Contributors  The Era of Classical Management  Neo-Classical Management Era  The Modern Management Era  Emerging approaches in Management Why study management history?  Management thought refers to the theories that guide management of people in organizations  History of management evolution helps us to understand the metamorphosis to its currents level 2.1 MANAGEMENT IN ANTIQUITY AND EARLY CONTRIBUTORS Management in Ancient Times  Management is as old as human civilization.  Some examples in ancient times where management was effectively utilized 1) Egypt: The construction of the Egyptian pyramid showing how extensively Egyptians used the management functions of planning, organizing, staffing, directing and controlling. CONT… 2) Romans: The famous one is emperor Diocletian's reorganization, levels of management, and delegation of authority in his empire. 3) Roman Catholic church: It made important contributions to early management thought.  Use of job descriptions  Hierarchy of authority  Specialization /division of labor  Use of staff managers - staff service & staff independence CONT… 4) Bible (Exodus). Jethro advised Mosses…  Ordinance and laws. Policies, rules and procedures  Delegation of authority. Leaders be selected and assigned to be rulers of 1000,100, 50 and 10.  Principle of exception 5) Ethiopia  The construction of obelisks of Axum, castle of Gondar and rock hewn churches of Lalibela indicates modern management was practiced in earlier time. Early Management Pioneers (Contributors)  Development of management as field of study is young.  It starts with the industrial revolution(in the early 1800s) 1. Robert Owen (1771-1858)  He was a British industrialist and owner- manager of cotton mills in Scotland.  At that time working and living conditions for employees were very poor as they were treated as tools and machine. CONT…  Robert Owen‟s contributions  Reduced working hrs from 13 to 10 & ½ hrs per day.  Set minimum hiring age 10 years.  Provided meal, housing, and shopping facilities for employees.  Improved working condition in the factory  Owen is called “father of modern personnel management”. CONT… 2. Charles Babbage (1792-1871)  He built the first practical mechanical calculator and a prototype of modern computers.  He is called “the father of modern computing”.  The contributions of Babbage to management  The use of mathematics to efficiently use facilities and materials.  Economies of scale in manufacturing  Profit sharing system  Division of labor  Importance of good relationship between management and workers. CONT… 3. Adam Smith  He contributed to the development of management thought by writing about division of labor in his book “ the wealth of nations”.  He indicated that specialization could increase efficiency by  Minimizing the loss of time  Increasing speed  helping invention of machinery 4. Other pre-scientific management contributors  Andrew Ure & Charles Dupin  Note:Solved specific organizational problems but was not universally accepted theories 2.2 THE ERA OF CLASSICAL MANAGEMENT  Classical management theory emerged during the industrial revolution.  The classical viewpoint is a perspective on management that emphasize finding ways to manage work and organizations more efficiently.  It is made up of three different approaches: 1) Scientific management theory 2) Administrative management theory(Classical organization theory) 3) Bureaucratic management theory 1. SCIENTIFIC MANAGEMENT THEORY  This theory emphasize on the scientific study of work methods in order to improve worker efficiency.  The major contributor of scientific management is Fredric W. Taylor  Other disciples of scientific management : - Frank and Lillian Gilbreth - Henry Gantt FREDERICK W.TAYLOR (1856-1915)  Taylor is also known as “the father of scientific management”  Taylor was a foreman (then chief engineer) in Midvale Steel Company.  He studied the companies problem and found out that  Management had no clear concept of worker- management responsibility.  No effective work standards were applied  No incentive was used to improve labor‟s performance  Managerial decisions were made based on intuition, rule of thumb.  High level of soldiering -fearing turnoff and pay system based on attendance. W.TAYLOR…  Taylorsuggested six elements of scientific management  Separation of planning and doing  Work study –time and motion study  Standardization of tools and equipment  Functional foremanship  Scientific selection and training workers  Financial incentives (introduced “piece rate pay system)  Mental revolution W.TAYLOR…  The principles of scientific management. 1. Science, not rule of thumb 2. Harmony, not discord 3. Cooperation, not individualism 4. Maximum output, rather than restricted output 5. Scientifically select, train and develop workers  FRANK AND LILIAN GILBRETHS  They are contemporaries of Taylor and part of the original scientific management pioneers  Frank Gilbreth(1868–1924): the father of motion study  Lilian Gilbreth(1878–1972) : first lady of management  They work on the elimination of waste and the discovery of „one best way‟ of doing work.  Identified 18 on the job motions and called them therbligs.  He decreases the movements from 18 to 5 (to lay one brick)  At the same time he decrease the production time by 2 and half.  They contributed to improving working conditions(e.g. office furniture design) HENRY L. GANTT(1861–1919)  He developed a graphical method of scheduling work, which helps to increase workers output. The chart is called Gant chart.  The chart helps for planning and controlling work.  He also introduced a task and bonus system of paying wages that paid a fixed for below standard work, a bonus if standards were met, and an additional amount when standards were exceed. CONTRIBUTIONS AND WEAKNESSES OF SCIENTIFIC MANAGEMENT THEORY  Increased productivity o Equated people with  Recognize the machine (time and importance of motion study) & scientifically selecting money as the only and developing motivator workers. o Relevant to solve only  Applicable to a variety the problem of lower of organizational level managers (not activities considered the whole organization) 2. CLASSICAL ORGANIZATION(ADMINISTRATIVE MANAGEMENT) THEORY  Administrative management theory , also called classical organization theory , focused on the management of the entire organization  Henri Fayol , French mining engineer, referred to as the Father of Modern Management, was the first to develop this theory.  Fayol‟s contribution to the management thought was divided into three categories :  Classification of business industry activities  The five functions of management  The 14 basic management principles I. Business/industry activities involves: 1. Technical- Production 2. Commercial - Exchange 3. Security- Protection of property & Persons 4. Financial- Optimum use of capital 5. Accounting- Preparation of accounts 6. Managerial - Functions of management II. Fayol identified the five functions of management:  planning,  organizing,  commanding,  coordinating, and  controlling. III. Fayol‟s 14 principles of management 1. Division of labor- specialization 2. Authority and responsibility 3. Discipline-respect rules and regulations of an organization 4. Unity of command- one superior 5. 5. Unity of direction- one set of objectives 6. Subordination of individual interest to the general interest- give priority for organizational goal 7. Centralization- amount of authority concentrated at the top 8. Remuneration of staff/personnel 9. Scalar chain/chain of command- defines the path of communication. 10. Order- things should exist in the right place at the right time. 11. Equity-managers should be friendly and fair. 12. Stability of tenure of personnel 13. Initiative- managers should not decide every thing. 14. Esprit de corps- In union there is strength. 3. BUREAUCRATIC THEORY  Max Weber (1864–1920) was a German sociologist who developed the bureaucracy concept.  Bureaucracy is a rational and efficient form of organization founded on logic, order and legitimate authority.  Bureaucracy is a complex means of managing life in social institutions that includes rules and regulations, patterns, and procedures that are designed to simplify the functioning of complex organizations.  Weber was concerned for the more fundamental issues of how organizations are designed and structured. CHARACTERISTICS OF BUREAUCRACY 1. Division of labor 2. Hierarchy of authority/scalar chain 3. Formal rules and regulations 4. Impersonality 5. Career base on merit/ separation of management from ownership 2.3 NEO-CLASSICAL MANAGEMENT ERA  Neo-classical theories emerged because the classical approach did not achieve sufficient production efficiency and work place harmony.  Neo-classical theory focuses on human dimensions of organizations  Neo-classical approach consists of two thoughts : I. Human relations movement II. Behavioral science approach 1. HUMAN RELATIONS MOVEMENT  Human relations movement deals with the factors affecting performance (productivity) of workers.  The improvement of working conditions, reduction of working hours, improvement of social relations of workers, besides monetary gains help in increasing productivity.  Elton Mayo pioneered the human relations movement.  Further the contributors Mary Parker Follett, Abraham Maslow and Douglas McGregor helped in with the advance human relations movement. HAWTHORNE STUDY  Mayo headed a group of Harvard researchers in conducting the Hawthorne studies,  a landmark series of studies of human behavior in Western Electric‟s Hawthorne plant (Illinois) from 1924 to 1932.  The Hawthorne studies consist of four major phases: 1) Illumination Experiment 2) The Relay Assembly Test Room Experiment 3) The Massive Interview Program 4) The Bank Wiring Observation Room Experiment 1) Illumination Experiment  Objective: To study the effect of illumination on productivity.  Finding: no strong relationship b/n output and light intensity 2) The Relay Assembly Test Room Experiment  Objective :To study the effect of physical factors (rest period, pay rate, working hours, lunch break, meals, etc.) on productivity  Finding:  Productivity is not affected by physical factors.  Supervisory practices (better treatment and special attention) increase employees moral and productivity.  Hawthorne effect: when people know that they are being watched, they will act differently than when they are not aware of being observed. 3) The Massive Interview Program  Over 20,000 employees were involved in the interview.  Objective: To explore attitudes of workers in depth that affect their productivity.  Finding: peers had an effect on individuals performance (performance, social position, status is determined by a group). 4) The Bank Wiring Observation Room Experiment  Objective: To study the effect of work piece incentives (group incentives) on performance  Finding:  Group incentives are less important in determining out put.  Group norm matters (informal social relations within groups)  Workers were more responsive to social forces of their peer groups than to the incentives of management. IMPLICATIONS OF HAWTHORNE STUDIES  Physical working condition did not affect productivity.  There are other factors that affect productivity: social and psychological nature.  Leadership that can understand individual and group behavior were necessary.  Informal groups were important in organizational work environment. II. BEHAVIORAL SCIENCE  Behavioral science is regarded as a further refinement of human relations movement.  It is a study of observable and verifiable human behavior in organizations by using sophisticated research methods.  It laid emphasis on the application of the methods and findings of general and social psychology, sociology and anthropology for understanding the organizational behavior.  Theimportant aspects of behavioral science approach are :  Motivation of employees  Communication for better understanding  Leadership study of managerial behavior  Employee development: Upgrading of employee and management skills  Organization as a social system Contributions Limitations  Managers realize the  The complexity of importance of people individual behavior as valuable resources. makes the predication of  Found out that the that behavior difficult. satisfaction of social  Contemporary research and psychological findings are not often needs could result in communicated to more performance of practicing managers in workers. an understandable form. I. QUANTITATIVE MANAGEMENT APPROACH  Quantitative management is the result of the research conducted during World War II to solve military problems  Quantitative approach uses mathematical and statistical techniques, mathematical programming, modeling, and computer science to solve complex operational and strategic issues.  It is an applied mathematics, statistics and other quantitative techniques to managerial problems  Quantitative management approach consists of several branches:  Management science (operations research) –mathematical and statistical modeling for managerial decisions  Example: linear programming, queuing , decision theory, probability theory, etc.  Operations management –production of goods and services  Management information system (MIS)– designing and implementing computer based information systems for use by management II. SYSTEMS APPROACH  A system is an interrelated and interdependent set of elements functioning as a whole.  It has subsystems.  Each subsystem has its defined boundaries.  Organizational system has four major components. a) Inputs- resources that help to produce goods or service. b) Transformation processes- ability to convert input to output through technological and managerial activities c) Outputs- products or services. d) Feedback-information about results and organizational status( reactions from environment) FIGURE 1: OPEN SYSTEM  There are two types of systems  Closed system- it is self contained or has no interaction with the environment.  Open system- there is continual interaction with the environment.  Characteristics of open system-constant interaction with the environment can result in…  Synergy- “the whole is greater than the sum of it‟s parts”. (2+2=5)  Negative Entropy- ability to bring a new energy in the form of input and feedback to sustain and grow  Differentiation-the tendency of systems to become complex over time  Steady state- balanced input and output (dynamic equilibrium or adapting to the environment regularly) III. CONTINGENCY /SITUATIONAL APPROACH  It emphasizes that there is no best way to manage.  It is „it all depends‟ approach.  This theory states that, there is no single plan, universal principle, organizational structure, leadership style that will fit all situations.  The approximate management actions and approaches depends on the situation.  It tries to identify the best techniques the will be effective in particular situation at a particular time  Organizations are individually different , face different situations ( contingency variables)and require different ways of managing  Popular contingency variables  Organizational size  Routineness of task technology  Environmental uncertainty  Individual difference