Management Theory

Internal Environment

* Attempt to develop models which can be used to analyse and understand the process of management within an organisation.

* They cover a range of disciplines which include:

Statistics which covers production, marketing

Sociology which covers individual and group behaviour

Psychology which covers leadership, motivation

What is Management Theory?

Classical Approach of Fayol which is devoid of people

Scientific Approach of Taylor which discounts human side

Human Relations Approach of Mayo and McGregor whose emphasis is on people

Systems Approach which shows how inputs are transformed to outputs within its environment

Contingency Approach which depends on creating the best fit between people, the task and the environment.

Who are the theorists?

This stressed the advantages of division of labour

It emphasised the importance of a formal hierarchical structure

Control was achieved through a narrow span of control

It reflected an authoritarian style of leadership

The Classical School - Henri Fayol

What are the disadvantages of adoptingthis management theory?

Scientific Management – Frederick Taylor

* Taylor believed that applying scientific principles to management would reduce inefficiency

* Workers should receive a fair day’s pay for a fair day’s work – money motivates employees

* Pay should be linked to productivity through piece rates

* There was a “best way” to do each job which allowed managers to manage and workers to work – this best way being found out by time and motion studies

* This emphasises the importance of managers in planning and organising tasks

* The worker is viewed as at best neutral, or at worst opposed, to the idea of work

* To improve productivity managers must:

* Devise how to do the task – time and motion study

* Develop the techniques and resources to do so

* Motivate the workers using low wages and high incentives for exceeding targets – carrot and stick approach

How does Scientific Managementapply today?

Application Today

*Employee motivation not simply driven by money – social and psychological needs

*Many organisations delegate responsibility

*McDonalds use Scientific Management principles

*Organisations that are mechanised may use

*Target setting – a Taylor principle popular in modern organisations

Based on experiments carried out at the Hawthorne plant of General Electric 1927-1932

Mayo believed he established a link between productivity and working conditions

He found that productivity could rise even when working conditions deteriorated

Human Relations School – Elton Mayo

Read about the Hawthorne Experiments.What working conditions did he alter?

His conclusions which were radically different from Taylor were as follows:

People are motivated by social needs

Division of labour had destroyed inter-personal relationships

Working in groups had a greater impact on motivation than financial incentives and organisational controls – group ‘norms’ had an impact

Managers should pay greater attention in meeting workers’ social needs to improve productivity

Application Today

*Employees group membership is vital

*Human Resource departments used strategically to enhance the working relationship

• He suggested that the links between organisational structure, motivation and productivity were more complex than Mayo identified

• He suggested two opposing views of management approaches

• One of these approaches he called Theory X

• The other he called Theory Y

Neo-Human Relations School - McGregor

Theory X Workers are motivated by money Workers are lazy and dislike work Workers are selfish, ignore the needs of

organisations, avoid responsibility and lack ambition

Workers need to be controlled and directed by management

What are the consequences of managementfollowing Theory X?

*This is based on negative assumptions

*Managers distrust subordinates

*It takes the traditional view that workers dislike work and will do all in their power to avoid it

*Labour must be controlled and directed to meet the organisation objectives

*Output will only increase through productivity incentives

*This approach is more likely to have low productivity levels and low morale

Theory Y Workers have many different needs which

motivate them Workers can enjoy work If motivated, workers can organise

themselves and take responsibility Management should create a situation

where workers can show creativity and apply their job knowledge

What are the consequences of managementfollowing Theory Y?

*This is based on positive assumptions

*Employees enjoy their work and want to contribute ideas and efforts

*Employees are motivated by being given responsibility over how to do their work

*In this approach employees will reach organisational goals without the threat of punishment

*This approach is more likely to increase productivity and produce a committed workforce eg TQM

* Concerned with the way the system transforms inputs into outputs within its environment

* Stresses the importance of taking a holistic view of the organisation

* Views an organisation as a multitude of interdependent parts and processes

* Changes in one subsystem are likely to have consequences on or to impact on other subsystems

Systems Theory

*It pushes the focus beyond looking at the organisation as a closed system as was the case with scientific and human relations approach

*It covers finding the best fit between technical, social and economic factors

*Encourages flexibility to adapt to changes in external environment (PEST)

*Working in teams enables different activities to be brought together so that connections and links are more apparent

INPUTSTRANSFORMATION

PROCESS OUTPUTS

Materials from supplier

Equipment

Labour

Goods/services developed by organisations

Finished goods

Satisfied customers

*This is based on the assumption that there is no “best way” to manage organisations as some previous theorists advocated

*This believes that structures and methods of operation depend on the circumstances and the situation in which the organisation is currently operating

*It is a very flexible structure which can adapt quickly

Contingency Theory

*It argues that organisations should try to create the “best fit” between people, tasks and the environment

*This “best fit” will depend on prevailing circumstances – ie the style used is contingent (dependent) on existing conditions

*This allows for different patterns or structures to co-exist simultaneously within the same organisation

An organisation introduces new machinery? Affects on the organisation?

Which structure would suit an organisation who provides a customised service to customers?

Which structure would suit a department who manufactures products using flow production?