Chapter 2 Theory of Mgmt

Not understoodNot understood Management as science???Management as science??? Management as art???Management as art???

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““Mgt is the art of getting things done through Mgt is the art of getting things done through others”others”Art:Art:Practical know howPractical know howTechnical skillsTechnical skillsConcrete resultsConcrete resultsCreativityCreativityPersonalized naturePersonalized natureScience:Science:Empirically derived Empirically derived Critically testedCritically testedGeneral principlesGeneral principlesCause and effect relationshipCause and effect relationshipUniversal applicationUniversal application

Management Art or Management Art or ScienceScience


“ “ Management as a science, it provides principles Management as a science, it provides principles and as an art helps in tackling situation”.and as an art helps in tackling situation”.


Evolution of Management Evolution of Management TheoryTheory


Management Ideas and Practice Management Ideas and Practice Throughout HistoryThroughout History

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5000 BC

4000-2000 BC

1800 BC

600 BC

500 BC

400 BC

400 BC

175

284

900

1100

1418

1436

1500

1525

Sumerians

Egyptians Planning, organizing, controlling.

Hammurabi

Nebuchadnezzar

Sun Tzu

Xenophon

Cyrus

Cato

Diocletian

Alfarabi

Ghazali

Barbarigo

Venetians

Sir Thomas More

Machiavelli

Record keeping

Plan, organize, control. Written requests.

Controls and written documentation

Wage incentives, production control

Strategy

Management as a separate art

Human relations and motion study

Job descriptions

Delegation of authority

Listed leadership traits

Listed managerial traits

Different organizational forms/structures

Numbering, standardization, interchangeability

Critical of poor management and leadership

Cohesiveness, power, and [email protected]/26/23

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Scientific ManagementScientific Management General Administrative TheoryGeneral Administrative Theory Quantitative ManagementQuantitative Management Organizational BehaviorOrganizational Behavior Systems ApproachSystems Approach Contingency ApproachContingency Approach

Major Approaches to Major Approaches to ManagementManagement

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The Evolution of Management The Evolution of Management TheoryTheory


Scientific Management Scientific Management TheoryTheory

Evolution of Modern ManagementEvolution of Modern Management Began in the industrial revolution in the Began in the industrial revolution in the

late 19th century as:late 19th century as: Managers of organizations began seeking ways Managers of organizations began seeking ways

to better satisfy customer needs.to better satisfy customer needs. Large-scale mechanized manufacturing began Large-scale mechanized manufacturing began

to supplanting small-scale craft production in to supplanting small-scale craft production in the ways in which goods were produced.the ways in which goods were produced.

Social problems developed in the large groups Social problems developed in the large groups of workers employed under the factory system.of workers employed under the factory system.

Managers began to focus on increasing the Managers began to focus on increasing the efficiency of the worker-task mix.efficiency of the worker-task mix.


Scientific ManagementScientific Management

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Scientific Management

Studies and tests methods to identifythe best, most efficient ways

“Seat-of-the Pants” Management

No standardization of procedures No follow-up on improvements


Frederick W. TaylorFrederick W. Taylor

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Frederick Taylor is known today as the "father of scientific management." One of his many contributions to modern management is the common practice of giving employees rest breaks throughout the day.

Frederick W. Taylor, 1856-1915


Taylor’s Four Management Taylor’s Four Management PrinciplesPrinciples

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Develop a science for each element of a man’s work,which replaces the old rule-of-thumb method.

Scientifically select and then train, teach, and develop the workman.

Cooperate with the men to insure all work is done inaccordance with the principles of the science.

There is almost equal division of the work and theresponsibility between management and workmen.


Job Specialization and Job Specialization and the Division of Laborthe Division of Labor

Adam Smith (18th century economist)Adam Smith (18th century economist) Observed that firms manufactured pins in Observed that firms manufactured pins in

one of two different ways:one of two different ways: Craft-style—each worker did all steps. Craft-style—each worker did all steps. Production—each worker specialized in one Production—each worker specialized in one

step.step. Realized that job specialization resulted in Realized that job specialization resulted in

much higher efficiency and productivitymuch higher efficiency and productivity Breaking down the total job allowed for the Breaking down the total job allowed for the

division of labor in which workers became division of labor in which workers became very skilled at their specific tasks.very skilled at their specific tasks.


F.W. Taylor and Scientific F.W. Taylor and Scientific ManagementManagement

Scientific ManagementScientific Management The systematic study of the The systematic study of the

relationships between people and relationships between people and tasks for the purpose of redesigning tasks for the purpose of redesigning the work process for higher efficiency.the work process for higher efficiency.

Defined by Frederick Taylor in the late Defined by Frederick Taylor in the late 1800’s to replace informal rule of thumb 1800’s to replace informal rule of thumb knowledge.knowledge.

Taylor sought to reduce the time a worker Taylor sought to reduce the time a worker spent on each task by optimizing the way spent on each task by optimizing the way the task was done.the task was done.


Four Principles of Scientific Four Principles of Scientific ManagementManagement

Principles to increase efficiency:Principles to increase efficiency:1.1. Study the ways jobs are performed Study the ways jobs are performed

now and determine new ways to do them.now and determine new ways to do them. Gather detailed time and motion information.Gather detailed time and motion information. Try different methods to see which is best.Try different methods to see which is best.

2.2. Codify the new methods into rules.Codify the new methods into rules. Teach to all workers the new method.Teach to all workers the new method.

3.3. Select workers whose skills match the Select workers whose skills match the rules.rules.

4.4. Establish fair levels of performance Establish fair levels of performance and pay a premium for higher performance.and pay a premium for higher performance. Workers should benefit from higher outputWorkers should benefit from higher output


Problems with Scientific Problems with Scientific ManagementManagement

Managers frequently implemented only Managers frequently implemented only the increased output side of Taylor’s plan.the increased output side of Taylor’s plan. Workers did not share in the increased Workers did not share in the increased

output.output. Specialized jobs became very boring, dull.Specialized jobs became very boring, dull.

Workers ended up distrusting the Scientific Workers ended up distrusting the Scientific Management method.Management method.

Workers could purposely “under-Workers could purposely “under-perform.”perform.” Management responded with increased use of Management responded with increased use of

machines and conveyors belts.machines and conveyors belts.


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Frank and Lillian Gilbreth were prolific researchers and often used their family as guinea pigs. Their work is the subject of Cheaper by the Dozen, written by their son and daughter.

[email protected]

Frank and Lillian Frank and Lillian GilbrethGilbreth

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Frank and Lillian Frank and Lillian GilbrethGilbreth

Refined Taylor’s work and made many Refined Taylor’s work and made many improvements to the methodologies of improvements to the methodologies of time and motion studies.time and motion studies. Time and motion studiesTime and motion studies

Breaking up each job action into its components.Breaking up each job action into its components. Finding better ways to perform the action.Finding better ways to perform the action. Reorganizing each job action to be more Reorganizing each job action to be more

efficient.efficient. Also studied worker-related fatigue Also studied worker-related fatigue

problems caused by lighting, heating, problems caused by lighting, heating, and the design of tools and machines.and the design of tools and machines.


Administrative Administrative Management TheoryManagement Theory

Administrative ManagementAdministrative Management The study of how to create an The study of how to create an

organizational structure that leads to organizational structure that leads to high efficiency and effectiveness.high efficiency and effectiveness.

Max WeberMax Weber Developed the concept of bureaucracy Developed the concept of bureaucracy

as a formal system of organization and as a formal system of organization and administration designed to ensure administration designed to ensure efficiency and effectiveness.efficiency and effectiveness.


Weber’s Weber’s Principles of Principles of BureaucracyBureaucracy


Weber’s Five Principles of Weber’s Five Principles of BureaucracyBureaucracy

Authority is the power to hold people Authority is the power to hold people accountable for their actions.accountable for their actions.

Positions in the firm should be held based Positions in the firm should be held based on performance, not social contacts.on performance, not social contacts.

Position duties are clearly identified so that Position duties are clearly identified so that people know what is expected of them.people know what is expected of them.

Lines of authority should be clearly Lines of authority should be clearly identified such that workers know who identified such that workers know who reports to who.reports to who.

Rules, standard operating procedures Rules, standard operating procedures (SOPs), and norms guide the firm’s (SOPs), and norms guide the firm’s operations.operations.


Fayol’s Principles of Fayol’s Principles of ManagementManagement

Division of Labor:Division of Labor: allows for job allows for job specialization. specialization. Fayol noted jobs can have too much Fayol noted jobs can have too much

specialization leading to poor quality specialization leading to poor quality and worker dissatisfaction.and worker dissatisfaction.

Authority and ResponsibilityAuthority and Responsibility Fayol included both formal and Fayol included both formal and

informal authority resulting from informal authority resulting from special expertise.special expertise.

Unity of CommandUnity of Command Employees should have only one boss.Employees should have only one boss.


Fayol’s Principles of Management Fayol’s Principles of Management (cont’d)(cont’d)

Line of AuthorityLine of Authority A clear chain of command from top to A clear chain of command from top to

bottom of the firm.bottom of the firm. CentralizationCentralization

Manager should retain final Manager should retain final responsibility, but the same time give responsibility, but the same time give their subordinates same authority.their subordinates same authority.

Unity of DirectionUnity of Direction A single plan of action to guide the A single plan of action to guide the



EquityEquity Managers should be both friendly and Managers should be both friendly and

fair to their subordinates.fair to their subordinates. OrderOrder

Materials and people should be in the Materials and people should be in the right place at the right time.right place at the right time.

InitiativeInitiative The fostering of creativity and The fostering of creativity and

innovation by encouraging employees innovation by encouraging employees to act on their own.to act on their own.



DisciplineDiscipline Obedient, applied, respectful employees are Obedient, applied, respectful employees are

necessary for the organization to function.necessary for the organization to function. Remuneration of PersonnelRemuneration of Personnel

An equitable uniform payment system that An equitable uniform payment system that motivates contributes to organizational motivates contributes to organizational success.success.

Stability of Tenure of PersonnelStability of Tenure of Personnel Long-term employment is important for the Long-term employment is important for the

development of skills that improve the development of skills that improve the organization’s performance.organization’s performance.



Subordination of Individual Subordination of Individual Interest to the Common Interest to the Common InterestInterest Management must see that the goals Management must see that the goals

of the firms are always paramount. of the firms are always paramount. Esprit de corpsEsprit de corps

Promoting team spirit will give the Promoting team spirit will give the organization a sense of unity.organization a sense of unity.


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Quantitative ApproachQuantitative Approach Also called Also called operations researchoperations research or or

management sciencemanagement science Evolved from mathematical and statistical Evolved from mathematical and statistical

methods developed to solve military methods developed to solve military logistics and quality control problemslogistics and quality control problems

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

models, and computer simulationsmodels, and computer simulations

Quantitative Approach to Quantitative Approach to ManagementManagement

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Total Quality Total Quality ManagementManagement

Shift from inspection approach to quality Shift from inspection approach to quality control to an approach emphasizing control to an approach emphasizing employee involvement in the prevention of employee involvement in the prevention of quality problems.quality problems.

Managing the total organization to deliver Managing the total organization to deliver quality to customers.quality to customers.

Significant Elements of TQMSignificant Elements of TQM Employee involvementEmployee involvement Focus on the customerFocus on the customer BenchmarkingBenchmarking Continuous improvementContinuous improvement


Dr. W. Edwards Deming Dr. W. Edwards Deming (1900-1993)(1900-1993)

“Father of Quality Movement”“Father of Quality Movement” Developed theory and methods to Developed theory and methods to

improve the quality an dependability improve the quality an dependability of manufactured products.of manufactured products.

Application of his work in Japan Application of his work in Japan sparked the Japanese Industrial sparked the Japanese Industrial Miracle-the transformation of Miracle-the transformation of Japanese business.Japanese business.


Behavioral Management Behavioral Management TheoryTheory

Behavioral ManagementBehavioral Management The study of how managers should The study of how managers should

behave to motivate employees and behave to motivate employees and encourage them to perform at high encourage them to perform at high levels and be committed to the levels and be committed to the achievement of organizational goals.achievement of organizational goals.

Focuses on the way a manager Focuses on the way a manager should personally manage to should personally manage to motivate employees.motivate employees.


Behavioral Behavioral Management Management PerspectivePerspective

Abraham MaslowAbraham Maslow Advanced a theory that employees are Advanced a theory that employees are

motivated by a hierarchy of needs that motivated by a hierarchy of needs that they seek to satisfy.they seek to satisfy.

Douglas McGregorDouglas McGregor Proposed Theory X and Theory Y Proposed Theory X and Theory Y

concepts concepts of managerial beliefs about people of managerial beliefs about people and work.and work.


Maslow’s Hierarchy of Maslow’s Hierarchy of NeedsNeeds

Five levelsFive levels Physiological – hunger, thirst, shelterPhysiological – hunger, thirst, shelter Safety – security and protectionSafety – security and protection Social – affection, interpersonal relationshipsSocial – affection, interpersonal relationships Esteem – self-respect, achievement statusEsteem – self-respect, achievement status Self-actualization(SA) – achieving full Self-actualization(SA) – achieving full

potentialpotential

Usually thought in the form of a pyramidUsually thought in the form of a [email protected]/26/23

Maslow’s Hierarchy of Maslow’s Hierarchy of NeedsNeeds

SA

Esteem Needs

Social Needs

Security Needs

Physiological Needs


Theory X and Theory YTheory X and Theory Y McGregor proposed the two different McGregor proposed the two different

sets of assumptions about workers.sets of assumptions about workers. Theory X assumes the average worker is Theory X assumes the average worker is

lazy, dislikes work and will do as little as lazy, dislikes work and will do as little as possible.possible.

Managers must closely supervise and control Managers must closely supervise and control through reward and punishment.through reward and punishment.

Theory Y assumes workers are not lazy, Theory Y assumes workers are not lazy, want to do a good job and the job itself will want to do a good job and the job itself will determine if the worker likes the work.determine if the worker likes the work.

Managers should allow workers greater Managers should allow workers greater latitude, and create an organization to latitude, and create an organization to stimulate the workers.stimulate the workers.


Theory X versus Theory Theory X versus Theory YY


Management Science Management Science TheoryTheory

An approach to management that uses An approach to management that uses rigorous quantitative techniques to rigorous quantitative techniques to maximize the use of organizational maximize the use of organizational resources.resources. Quantitative managementQuantitative management—utilizes linear —utilizes linear

programming, modeling, simulation systems.programming, modeling, simulation systems. Operations managementOperations management—techniques to —techniques to

analyze all aspects of the production system.analyze all aspects of the production system. Total Quality Management (TQM)Total Quality Management (TQM)—focuses —focuses

on improving quality throughout an on improving quality throughout an organization.organization.

Management Information Systems (MIS)Management Information Systems (MIS)——provides information about the organization.provides information about the organization.


SYSTEM APPROACHSYSTEM APPROACH Systems theory tells us that the activity of any Systems theory tells us that the activity of any

segment of an organization affects ,in varying segment of an organization affects ,in varying degree the activity of every other segment.degree the activity of every other segment.

Production managers in a manufacturing, Production managers in a manufacturing, example: prefer long uninterrupted example: prefer long uninterrupted production runs of standardized products in production runs of standardized products in order to maintain maximum efficiency and low order to maintain maximum efficiency and low costs costs

Marketing managers on the other hand who Marketing managers on the other hand who want to offer customers quick delivery of a want to offer customers quick delivery of a wide range of products would like a flexible wide range of products would like a flexible manufacturing schedule that can fill special manufacturing schedule that can fill special order on short notice.order on short notice. [email protected]/26/23

The Open-Systems ViewThe Open-Systems View Open SystemOpen System

A system that takes resources for its A system that takes resources for its external environment and converts them external environment and converts them into goods and services that are then sent into goods and services that are then sent back to that environment for purchase by back to that environment for purchase by customers.customers.

Inputs: the acquisition of external Inputs: the acquisition of external resources.resources.

Conversion: the processing of inputs into Conversion: the processing of inputs into goods and services.goods and services.

Output: the release of finished goods into Output: the release of finished goods into the environment.the environment.


The Organization as an Open The Organization as an Open SystemSystem


Contingency TheoryContingency Theory Contingency TheoryContingency Theory

The idea that the organizational structures The idea that the organizational structures and control systems manager choose depend and control systems manager choose depend on—are contingent on—characteristics of the on—are contingent on—characteristics of the external environment in which the external environment in which the organization operates.organization operates.

Assumes there is no one best way to manage.Assumes there is no one best way to manage. The environment impacts the firm and managers The environment impacts the firm and managers

must be flexible to react to environmental changes.must be flexible to react to environmental changes. In rapidly changing organizational In rapidly changing organizational

environments, managers must find ways to environments, managers must find ways to coordinate different departments to respond coordinate different departments to respond quickly and effectively.quickly and effectively.


Contingency Theory of Contingency Theory of Organizational DesignOrganizational Design


Mechanistic and Organic Mechanistic and Organic StructuresStructures

Mechanistic StructureMechanistic Structure Authority is centralized at the top. (Theory Authority is centralized at the top. (Theory

X)X) Employees are closely monitored and Employees are closely monitored and

managed.managed. Can be very efficient in a stable Can be very efficient in a stable

environment.environment. Organic structureOrganic structure

Authority is decentralized throughout the Authority is decentralized throughout the organization. (Theory Y)organization. (Theory Y)

Tasks and roles are left ambiguous to Tasks and roles are left ambiguous to encourage employees to react quickly to encourage employees to react quickly to changing environment.changing environment.



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Chapter 2 Theory of Mgmt