Theories of Managemenet -

MANAGEMENT YESTERDAY AND TODAY

momazic@efzg.hr

Rewards/Challenges of Modern Manager

The purpose of this lecture

• The knowledge of management history will help

you understand contemporary management.

• It shows how the evolution of management

concepts reflect the changing needs of
organizations and society as a whole.
Historical Background of Management
• Ancient Management
¾ Egypt (pyramids) and China (Great Wall)
¾ Venetians (floating warship assembly lines)
• Adam Smith
¾ Published “The Wealth of Nations”
Nations” in 1776
™ Advocated the division of labor (job specialization) to increase
the productivity of workers
• Industrial Revolution
¾ Substituted machine power for human labor
¾ Created large organizations in need of management

Development of Major Management Theories

time

Major Approaches to Management

• Scientific Management
• General Administrative Theory
• Quantitative Management
• Organizational Behavior
• Systems Approach
• Contingency Approach
Classical Management Perspective

Includes both
• Scientific Management (USA) - Concerned with
improving the performance of individual workers (i.e.,
efficiency).

and
• General Administrative Theory (Europe) - A theory
that focuses on managing the organization.

Scientific Management
• Fredrick Winslow Taylor
¾ The “father”
father” of scientific management
¾ Published Principles of Scientific Management (1911)
™ The theory of scientific management
– Believed in selecting, training, teaching and developing
workers.
workers.
– Using scientific methods to define the “one best way”
way” for a
job to be done:
• Putting the right person on the job with the correct tools
and equipment.
• Having a standardized method of doing the job.
• Providing an economic incentive to the worker.

Taylor’
Taylor’s Four Principles of Management

1. Develop a science for each element of an individual’s work,

which will replace the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the
worker.
3. Heartily cooperate with the workers so as to ensure that all
work is done in accordance with the principles of the science
that has been developed.
4. Divide work and responsibility almost equally between
management and workers. Management takes over all work
for which it is better fitted than the workers.
Scientific Management (cont’
(cont’d)
• Frank and Lillian Gilbreth
¾ Focused on increasing worker productivity through
the reduction of wasted motion
¾ Developed the microchronometer to time worker
motions and optimize work performance
¾ Reduced number of movements in bricklaying,
resulting in increased output of 200%

• Henry Gantt
¾ Developed other techniques, including the Gantt
chart, to improve working efficiency through
planning/scheduling

General Administrative Theory

• Henri Fayol
¾ Wrote General and Industrial Management
¾ Believed that the practice of management was distinct
from other organizational functions
¾ Developed fourteen principles of management that
applied to all organizational situations
¾ First to describe management as planning,
organizing, leading, and controlling

Fayol’
Fayol’s 14 Principles of Management

1. Division of work 7. Remuneration

2. Authority 8. Centralization
3. Discipline 9. Scalar chain
4. Unity of command 10. Order
5. Unity of direction 11. Equity
6. Subordination of 12. Stability of tenure
individual interests of personnel
to the general
13. Initiative
interest
14. Esprit de corps
 General Administrative Theory
• Max Weber
¾ Developed a theory of authority based on an ideal
type of organization (bureaucracy) where he
emphasized:
™ division of labor - predictability,
™ reliance on rules and regulations - rationality,
™ impersonality,
™ inflexibility/rigidity
™ employment based on expertise - technical competence,
™ and hierarchy of authority

Weber’
Weber’s Ideal Bureaucracy

Classical Management Perspective…

Perspective…Today

• Contributions
¾ Laid the foundation for later developments
¾ Identified important management processes, functions, skills
¾ Focused attention on management as a valid subject of
scientific inquiry

• Limitations
¾ More appropriate for traditional, stable, simple organizations
¾ Prescribed universal procedures not appropriate in some
settings
¾ In some cases, viewed employees as tools rather than
resources
 Quantitative Approach to Management
• Quantitative Approach
¾ Also called operations research or management
science
¾ Evolved from mathematical and statistical methods
developed to solve WWII military logistics and quality
control problems
¾ Focuses on improving managerial decision making by
applying:
™ Statistics,
optimization models, information models, and
computer simulations

Quantitative Management Perspective…

Perspective…Today
• Contributions
¾ Developed quantitative techniques to assist in decision making.
¾ Application of models has increased awareness and understanding of
complex processes and situations.
¾ Has been useful in the planning and controlling processes.

• Limitations
¾ Cannot fully explain or predict behavior.
¾ Mathematical sophistication may come at the expense of other skills.
skills.
¾ Models may require unrealistic or unfounded assumptions.

Behavioral Management Perspective

• Organizational Behavior (OB)
¾ The study of the actions of people at work; people are
the most important asset of an organization
• Early OB Advocates
¾ Robert Owen
¾ Hugo Munsterberg
¾ Mary Parker Follett
¾ Chester Barnard
 Early Advocates of OB

The Hawthorne Studies

• Experimental findings
¾ Productivity unexpectedly increased under imposed
adverse working conditions.
¾ The effect of incentive plans was less than expected.
¾ Workers established informal levels of acceptable
individual output.
¾ Over-producing workers were labeled “rate busters” and
under-producing workers were considered “chiselers.”

• Research conclusion
¾Social norms, group standards and attitudes more strongly
influence individual output and work behavior than do
monetary incentives.

Behavioral Management Perspective

Human Relations Movement

¾ perspective that workers respond primarily to the social
context of work
• Abraham Maslow
¾ posited a hierarchy of needs
• Douglas McGregor
¾ proposed Theory X and Theory Y concepts of
managerial beliefs
 Hierarchy of needs

Theory X
• People do not like work and
try to avoid it.
• People do not like work, so
managers have to control,
direct, coerce, and threaten
employees to get them to
meet organizational goals.
• People prefer to be directed,
to avoid responsibility, and to
want security; they have little
ambition.
Theory Y
• Work is a natural part of
people’s lives.
• People are internally motivated
by commitment.
• People are committed to goals
to the degree they receive
rewards.
• People will seek and accept
responsibility.
• People have the capacity to be
innovative.
• People are bright, but mostly
under-utilized.

Behavioral Management Perspective…

Perspective…Today

• Contributions
¾ Provided important insights into motivation, group dynamics, and other
interpersonal processes.
¾ Focused managerial attention on these critical processes.
¾ Challenged the view that employees are tools and furthered the belief
belief
that employees are valuable resources.

• Limitations
¾ Complexity of individuals makes behavior difficult to predict.
¾ Many concepts not put to use because managers are reluctant to adopt
adopt
them.
¾ Contemporary research findings are not often communicated to
practicing managers in an understandable form.
The Systems Approach
• System Defined
¾ A set of interrelated and interdependent parts
arranged in a manner that produces a unified whole.
• Basic Types of Systems
¾ Closed systems
™ Are not influenced by and do not interact with their
environment (all system input and output is internal).
¾ Open systems
™ Dynamically interactto their environments by taking in inputs
and transforming them into outputs that are distributed into
their environments.

The Organization as an Open System

Rensis Likert
Exploitive authoritative system (1)
In this type of management system the job of employees/subordinates
employees/subordinates
is to abide by the decisions made by managers and those with a
higher status than them in the organisation. The subordinates do not
participate in the decision making. The organisation is concerned
concerned
simply about completing the work. The organisation will use fear and
threats to make sure employees complete the work set. There is nono
teamwork involved.

Benevolent authoritative system (2)

Just as in an exploitive authoritative system, decisions are made
made by
those at the top of the organisation and management. However
employees are motivated through rewards (for their contribution)
rather than fear and threats. Information may flow from subordinates
subordinates
to managers but it is restricted to “what management want to hear”
hear”.
Rensis Likert
Consultative system (3)
In this type of management system, subordinates are motivated by
rewards and a degree of involvement in the decision making process.
process.
Management will constructively use their subordinates ideas and
opinions. However involvement is incomplete and major decisions are
still made by senior management. There is a greater flow of information
information
(than in a benevolent authoritative system) from subordinates to
management. Although the information from subordinate to manager is
incomplete and euphemistic.

Participative (group) system (4)

Management have complete confidence in their subordinates/employees.
subordinates/employees.
There is lots of communication and subordinates are fully involved
involved in the
decision making process. Subordinates comfortably express opinions
opinions
and there is lots of teamwork. Teams are linked together by people,
people, who
are members of more than one team. Employees throughout the
organisation feel responsible for achieving the organisation’
organisation’s objectives.

Implications of the Systems Approach

• Coordination of the organization’
organization’s parts is
essential for proper functioning of the entire
organization.
• Decisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
• Organizations are not self-
self-contained and,
therefore, must adapt to changes in their
external environment.

The Contingency Approach

• Contingency Approach Defined
¾ Also sometimes called the situational approach.
¾ There is no one universally applicable set of
management principles (rules) by which to manage
organizations.
¾ Organizations are individually different, face different
situations (contingency variables), and require
different ways of managing.
Popular Contingency Variables

• Organization size
As size increases, so do the problems of coordination.
• Routineness of task technology
Routine technologies require organizational structures,
leadership styles, and control systems that differ from
those required by customized or nonroutine technologies.
• Environmental uncertainty
What works best in a stable and predictable environment
may be totally inappropriate in a rapidly changing and
unpredictable environment.
• Individual differences
Individuals differ in terms of their desire for growth,
autonomy, tolerance of ambiguity, and expectations.

Current Trends and Issues

• Globalization
• Ethics
• E-business
• Knowledge Management
• Learning Organizations

Current Trends and Issues (cont’

(cont’d)
• Globalization
¾ Management in international organizations
¾ Political and cultural challenges of operating in a
global market
™ Working
with people from different cultures
™ Coping
with anticapitalist backlash
™ Movement of jobs to countries with low-
low-cost labor
• Ethics
¾ Increased emphasis on ethics education in college
curriculums
¾ Increased creation and use of codes of ethics by
businesses
A Process for Addressing Ethical Dilemmas

Step 1: What is the ethical dilemma?

Step 2: Who are the affected stakeholders?
Step 3: What personal, organizational, and
external factors are important to
my decision?
Step 4: What are possible alternatives?
Step 5: Make a decision and act on it.

Current Trends and Issues (cont’

(cont’d)
• Entrepreneurship Defined
¾ The process of starting new businesses, generally in
response to opportunities.
• Entrepreneurship process
¾ Pursuit of opportunities
¾ Innovation in products, services, or business methods
¾ Desire for continual growth of the organization

Current Trends and Issues (cont’

(cont’d)
• E-Business (Electronic Business)
¾ The work preformed by an organization using
electronic linkages to its key constituencies
¾ E-commerce: the sales and marketing aspect of an e-
e-
business

• Categories of E-
E-Businesses
¾ E-business enhanced organization
¾ E-business enabled organization
¾ Total e-
e-business organization
Categories of E-
E-Business Involvement

Current Trends and Issues (cont’

(cont’d)
• Learning Organization
¾ An organization that has developed the capacity to
continuously learn, adapt, and change.
• Knowledge Management
¾ The cultivation of a learning culture where
organizational members systematically gather and
share knowledge with others in order to achieve
better performance.

Learning Organization versus Traditional Organization

 Terms to Know
• division of labor (or job
specialization)
• scientific management
• general administrative theory
• principles of management
• bureaucracy
• quantitative approach
• organizational behavior (OB)
• Hawthorne Studies
• system
• closed systems
• open systems
• contingency approach
• entrepreneurship
• e-business (electronic
business)
• e-commerce (electronic
commerce)
• intranet
• learning organization
• knowledge management