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Chapter 2 – Management Yesterday and Today

Importance of studying management history Early examples of management practice Scientific management General administrative theories Quantitative approach to management Organizational Behavior and the Hawthorne

studies The systems approach (closed versus open

systems) The contingency approach

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Early Examples of Management

20 years 100,000 people

Began 221 BC Over 4,000 miles 300,000 people

Egyptian Pyramids

Great Wall of China

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Adam Smith’s “Wealth of Nations”:Division of Labor

10 people doing all tasks

10 people doing specialized tasks

10 pins per day

48,000 pins per day

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Industrial Revolution – 1700’s

1) Machine power Steam, coal, fossil fuels, electricity

2) Mass production Moving assembly line – Ford

3) Efficient transportation Railroad, steamship

Result: Big Corporations Needed Management!

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Exhibit 2.1Exhibit 2.1

Development of Major Management Theories

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Taylor’s Pig-Iron Experiment

• 92 lbs• 38 lbs• 34 lbs• 21 lbs• 16 lbs

• 12,500• 25,000• 30,000• 48,000• 25,000

Shovel Load Tonnage

Wage increase: $1.15 to $1.85 per dayQ: What’s the “one best way”?

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Theory of Scientific Management

Fredrick Winslow Taylor – the “father” Using scientific methods to define the

“one best way” for a job to be done: Put the right person on the job with the

correct tools and equipment. Standardize the method of doing the job. Providing an economic incentive to the

worker.

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Frederick Taylor’s Principles of Scientific Management

1. Develop a science for each element of work

2. Select, train, and develop workers3. Cooperate with workers to make sure

work done as planned4. Divide work and responsibility

equally between management and workers

5. Management takes over all work for which better suited

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Frank and Lillian Gilbreth’sHand and Body Studies

Used motion pictures to study hand and body motions

17 “Therbligs” Reduced number of

motions from 18 to 2 (interior)Movie and Book - “Cheaper by the Dozen”

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Is Scientific Management Alive Today?

YES Time and motion studies are still used Still hire the best qualified employees Still design incentive systems based on output

BUT Rotate workers through various jobs Make sure jobs are ergonomically correct Teach front-line employees to use their

BRAINS!

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Scientific Management at Organizational Level - General Administrative Theorists Q: What “rules” make organizations work

like well-organized machines, just like workers?

Henri Fayol Developed fourteen principles of management

that applied to all organizational situations Max Weber

Ideal organization = bureaucracy Emphasized rationality, predictability, impersonality,

technical competence, and authoritarianism

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Exhibit 2.3Exhibit 2.3

Fayol’s 14 Principles of Management1. Division of work.

2. Authority.

3. Discipline.

4. Unity of command.

5. Unity of direction.

6. Subordination of individual interest to the interests of the organization.

7. Remuneration.

8. Centralization.

9. Scalar chain.

10. Order.

11. Equity.

12. Stability of tenure of personnel.

13. Initiative.

14. Esprit de corps.

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Exhibit 2.4Exhibit 2.4

Weber’s Ideal Bureaucracy

Q: Are bureaucracies alive today?

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“Modern Times”Discussion Questions

What evidence did you see of Scientific Management?

What evidence did you see of a bureaucracy?

What are the benefits of SM/bureaucracy? What are the drawbacks of SM/bureaucracy?

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Quantitative Approach to Management Also called operations research or

management science Evolved from mathematical and

statistical methods developed to solve WWII military logistics and quality control problems

Focuses on improving managerial decision making by applying: Statistics, optimization models, information

models, and computer simulations

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Organizational Behavior (OB) The study of the actions of people

at work; people are the most important asset of an organization

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The Hawthorne Studies

Control Group Experimental Group

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Exhibit 2.5Exhibit 2.5

Early Advocates of OB

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The Systems Approach System Defined

A set of interrelated and interdependent parts arranged in a manner that produces a unified whole.

Basic Types of Systems Closed systems

Are not influenced by and do not interact with their environment (all system input and output is internal).

Open systems Dynamically interact to their environments by taking in

inputs and transforming them into outputs that are distributed into their environments.

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Exhibit 2.6Exhibit 2.6

The Organization as an Open System

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Implications of the Systems Approach Coordination of the 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-contained and, therefore, must adapt to changes in their external environment.

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The Contingency Approach Contingency Approach Defined

Also sometimes called the situational approach.

There is no one universally applicable set of management principles (rules) by which to manage organizations.

Organizations are individually different, face different situations (contingency variables), and require different ways of managing.

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Exhibit 2.7Exhibit 2.7

Popular Contingency Variables

•Organization size

• Routineness of task technology

• Environmental uncertainty

• Individual differences