Contemporary Management Chapter 2 PDF

Because learning changes everything. ® Chapter 2 The Evolution of Management Thought © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGr...

Because learning changes everything. ® Chapter 2 The Evolution of Management Thought © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.  Learning Objectives 1 1. Describe how the need to increase organizational efficiency and effectiveness has guided the evolution of management theory. 2. Explain the principle of job specialization and division of labor, and tell why the study of person⎼task relationships is central to the pursuit of increased efficiency. 3. Identify the principles of administration and organization that underlie effective organizations. © McGraw Hill 2  Learning Objectives 2 4. Trace the change in theories about how managers should behave to motivate and control employees. 5. Explain the contributions of management science to the efficient use of organizational resources. 6. Explain why the study of the external environment and its impact on an organization has become a central issue in management thought. © McGraw Hill 3  Figure 2.1 The Evolution of Management Theory Access the text alternative for slide images. © McGraw Hill 4  Job Specialization and the Division of Labor 1 Adam Smith (18th-century economist): Smith found that the performance of the factories in which workers specialized in only one or a few tasks was much greater than the performance of the factory in which each worker performed all 18 pin-making tasks. © McGraw Hill 5  Job Specialization and the Division of Labor 2 Job specialization: Process by which a division of labor occurs as different workers specialize in different tasks over time. Factory lines. © McGraw Hill 6  F.W. Taylor and Scientific Management Scientific management: The systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency. © McGraw Hill 7  Principles of Scientific Management 1 1. Study the way workers perform their tasks, gather all the informal job knowledge that workers possess, and experiment with ways of improving how tasks are performed. 2. Codify the new methods of performing tasks into written rules and standard operating procedures. © McGraw Hill 8  Principles of Scientific Management 2 3. Carefully select workers who possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures. 4. Establish a fair or acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level. © McGraw Hill 9  Problems with Scientific Management Many workers experiencing the reorganized work system found that as their performance increased, managers required that they do more work for the same pay. Scientific management brought many workers more hardship than gain and a distrust of managers who did not seem to care about workers’ well-being. © McGraw Hill 10  The Gilbreths Frank and Lillian Gilbreth, followers of Taylor: 1. Analyze every individual action necessary to perform a particular task and break it into each of its component actions. 2. Find better ways to perform each component action. 3. Reorganize each of the component actions so that the action as a whole could be performed more efficiently at less cost in time and effort. © McGraw Hill 11  Administrative Management Theory 1 Administrative management: The study of how to create an organizational structure and control system that leads to high efficiency and effectiveness. Max Weber. Henri Fayol. © McGraw Hill 12  Administrative Management Theory 2 Max Weber: Developed the principles of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness. © McGraw Hill 13  Administrative Management Theory 3 Authority: The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. Hierarchy in the FBI, CIA. © McGraw Hill 14  Figure 2.2 Weber’s Principles of Bureaucracy Access the text alternative for slide images. © McGraw Hill 15  Administrative Management Theory 4 Rules: Formal written instructions that specify actions to be taken under different circumstances to achieve specific goals. If ”A” happens, then do “B”; at the end of the workday, employees are to leave their machines in good order. Standard operating procedures (SOPs): Specific sets of written instructions about how to perform a certain aspect of a task. Which parts of a machine must be oiled or replaced. © McGraw Hill 16  Administrative Management Theory 5 Norms: Unwritten, informal codes of conduct that prescribe how people should act in particular situations and are considered important by most members of a group or an organization. Restaurant waiters should help each other if time permits. © McGraw Hill 17  Table 2.1 Fayol’s Principles of Management 1 Principle Description Division of labor Job specialization and the division of labor should increase efficiency, especially if managers take steps to lessen workers’ boredom. Authority and responsibility Managers have the right to give orders and the power to exhort employees for obedience. Unity of command An employee should receive orders from only one superior. Line of authority The length of the chain of command that extends from the top to the bottom of an organization should be limited. Centralization Authority should not be concentrated at the top of the chain of command. Unity of direction The organization should have a single plan of action to guide managers and workers. Equity All organizational members are entitled to be treated with justice and respect. Order The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying career opportunities. © McGraw Hill 18  Table 2.1 Fayol’s Principles of Management 2 Principle Description Initiative Managers should allow employees to be innovative and creative. Discipline Managers need to create a workforce that strives to achieve organizational goals. Remuneration of personnel The system that managers use to reward employees should be equitable for both employees and the organization. Stability of tenure of Long-term employees develop skills that can improve personnel organizational efficiency. Subordination of individual Employees should understand how their performance affects interests to the common the performance of the whole organization. interest Esprit de corps Managers should encourage the development of shared feelings of camaraderie, enthusiasm, or devotion to a common cause. Initiative Managers should allow employees to be innovative and creative. Discipline Managers need to create a workforce that strives to achieve organizational goals. © McGraw Hill 19  Behavioral Management Theory 1 Behavioral management: The study of how managers should behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals. © McGraw Hill 20  Behavioral Management Theory 2 Mary Parker Follett: Concerned that Taylor ignored the human side of the organization. Suggested workers help in analyzing their jobs. Suggested if workers have relevant knowledge of the task they should be in control of the work process. © McGraw Hill 21  The Hawthorne Studies and Human Relations 1 The Hawthorne studies looked at how the characteristics of the work setting affected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from 1924 to 1932. Worker productivity was measured at various levels of light illumination. Mayo’s relay assembly test experiments. © McGraw Hill 22  The Hawthorne Studies and Human Relations 2 Hawthorne effect: Workers’ performance affected by their attitudes about their managers. Led to the human relations movement. © McGraw Hill 23  The Hawthorne Studies and Human Relations 3 Human relations movement: A management approach that advocates the idea that supervisors should receive behavioral training to manage employees in ways that elicit their cooperation and increase their productivity. © McGraw Hill 24  The Hawthorne Studies and Human Relations 4 Behavior of managers and workers in the work setting is as important in explaining the level of performance as the technical aspects of the task. Demonstrated the importance of understanding how the feelings, thoughts, and behavior of work-group members and managers affect performance. © McGraw Hill 25  The Hawthorne Studies and Human Relations 5 Informal organization: The system of behavioral rules and norms that emerge in a group. Organizational behavior: The study of the factors that have an impact on how individuals and groups respond to and act in organizations. © McGraw Hill 26  Theory X and Theory Y 1 Douglas McGregor proposed two different sets of assumptions about workers. Theory X: A set of negative assumptions about workers that leads to the conclusion that a manager’s task is to supervise workers closely and control their behavior. Assumes the average worker is lazy, dislikes work, and will try to do as little as possible. © McGraw Hill 27  Theory X and Theory Y 2 Theory Y: A set of positive assumptions about workers that leads to the conclusion that a manager’s task is to create a work setting that encourages commitment to organizational goals and provides opportunities for workers to be imaginative and to exercise initiative and self-direction. Assumes workers are not inherently lazy, do not naturally dislike work, and will do what is good for the organization. © McGraw Hill 28  Figure 2.3: Theory X versus Theory Y THEORY X THEORY Y The average employee is lazy, Employees are not inherently lazy. dislikes work, and will try to do as Given the chance, employees will do little as possible. what is good for the organization. To ensure that employees work To allow employees to work in the hard, managers should closely organization’s interest, managers must supervise employees. create a work setting that provides Managers should create strict work opportunities for workers to exercise rules and implement a well-defined initiative and self-direction. system of rewards and Managers should decentralize authority punishments to control employees. to employees and make sure employees have the resources necessary to achieve organizational goals. © McGraw Hill 29  Example: Southwest Airlines 1 Southwest’s leadership cites their Theory Y culture as a driving force. Inspired by co-founder and former CEO, Herb Kelleher, Southwest Airlines emphasizes a culture of fun, creativity, and camaraderie. Southwest employees note how Kelleher maintained an open-door policy of contact, which enabled him to stay in touch with problems facing the airline and to find solutions faster. © McGraw Hill 30  Example: Southwest Airlines 2 Southwest’s leadership cites their Theory Y culture as a driving force. Inspired by co-founder and former CEO, the late Herb Kelleher, Southwest Airlines emphasizes a culture of fun, creativity, and camaraderie. Southwest employees noted how Kelleher maintained an open-door policy of contact, which enabled him to stay in touch with problems facing the airline and to find solutions faster. © McGraw Hill 31  Management Science Theory 1 Management science theory: Contemporary approach to management that focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services. © McGraw Hill 32  Management Science Theory 2 Quantitative management: Utilizes mathematical techniques, like linear programming, modeling, simulation, and chaos theory. Inventory management practices. New factory locations. Operations management: Gives managers a set of techniques they can use to analyze any aspect of an organization’s production system to increase efficiency. How to acquire raw materials and distribute finished products more efficiently. © McGraw Hill 33  Management Science Theory 3 Management information systems: Give managers information about events occurring inside the organization as well as in its external environment—information that is vital for effective decision making. Toyota Production System (TPS). © McGraw Hill 34  Organizational Environment Theory Organizational environment: The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources. Raw materials to produce goods. © McGraw Hill 35  The Open-Systems View 1 Open system: A system that takes resources for its external environment and transforms them into goods and services that are then sent back to that environment where they are bought by customers. © McGraw Hill 36  The Open-Systems View 2 Figure 2.4 The Organization as an Open System Access the text alternative for slide images. © McGraw Hill 37  The Open-Systems View 3 Input stage: The organization acquires resources such as raw materials, money, and skilled workers to produce goods and services. Conversion stage: Inputs are transformed into outputs of finished goods and services. Output stage: Finished goods are released to the external environment. © McGraw Hill 38  The Open-Systems View 4 Closed system: A self-contained system that is not affected by changes in its external environment. Likely to experience entropy: The tendency to lose its ability to control itself and, thus, dissolve and disintegrate. © McGraw Hill 39  The Open-Systems View 5 Synergy: The performance gains that result from the combined actions of individuals and departments. Possible only in an organized system. Teams composed of people from various departments in decision making. © McGraw Hill 40  Contingency Theory Contingency theory is the idea that the organizational structures and control systems managers choose depend on characteristics of the external environment in which the organization operates. “There is no one best way to organize.” Rapidly changing environments create a greater need for managers to respond quickly and effectively. © McGraw Hill 41  Figure 2.5 Contingency Theory of Organizational Design Access the text alternative for slide images. © McGraw Hill 42  Type of Structure 1 Mechanistic structure: An organizational structure in which authority is centralized, tasks and rules are clearly specified, and employees are closely supervised. Most efficient in a stable environment. McDonald’s Restaurants. © McGraw Hill 43  Type of Structure 2 Organic structure: An organizational structure in which authority is decentralized to middle and first-line managers, and tasks and roles are left ambiguous to encourage employees to cooperate and respond quickly to the unexpected. Most efficient in a rapidly changing environment. Google, Apple, 3M. © McGraw Hill 44  Dynamic Capabilities 1 Organizations have the ability to build, integrate, and reconfigure processes to address rapidly changing internal and external environments. These capabilities are unique to each organization. © McGraw Hill 45  Dynamic Capabilities 2 Sensing: Identifying and assessing opportunities outside the company. Steve Jobs recognizing consumers need for smaller, more attractive mp3 players. Seizing: The action of mobilizing company resources to capture value for the organization. Producing Apple’s iPod, a sleek alternative to competitive products. © McGraw Hill 46  Dynamic Capabilities 3 Transforming: Organization’s ability to continue making changes as needed to maintain success. Organizational shift to expand computer product line to include consumer electronics, digital music streaming. © McGraw Hill 47  End of Main Content Because learning changes everything. ® www.mheducation.com © 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw Hill.