CHAPTER I

EVOLUTION OF MANAGEMENT

LEARNING OBJECTIVES

After reading and studying this chapter, the reader should be able to:

1. Define Management

2. Identify the levels of management

3. Determine the skills needed to be an effective manager

4. Identify the different roles of management

5. Describe the basic management functions

6. Explain the important contribution of evolution of management

7. Identify and explain the five (5) M’s of management

WHAT IS MANAGEMENT?

anagement is the process of managing the resources effectively and efficiently. The process represents the continuous or ongoing activities of a manager (Robbins & Coulter, 2004). To be efficient means minimal waste of

resources or inputs in achieving the goal(Bateman & Snell, 2008). It is often referred as doing things right. Effectively refers to accomplishing a tasks or achieving a goal. It is often describe as doing the right things. A manager is responsible for achieving organizations goals and objectives and responsible in utilizing the firms resources (Lussier, 2006). An Organization is a group of people working together towards a common goal.

M

There are the different types of resources that a firm has; these are physical resources (e.g.,equipment, machinery, building), human resources (e.g., managers, employees) financial resources (e.g., cash, accounts receivables) and informational resources (e.g., customers information, survey data results, financial statements.) A firm’s resources can be sources of competitive advantage if it is rare, valuable, and difficult to imitate. Competitive Advantage is an advantage over competitors gained by offering greater customer value(Armstrong & Kotler, 2010 p.223).

LEVELS OF MANAGEMENT

As the organization is evolving the nature of a manager’s task also changes. It also adapts to the demand of different forces of the work environment. There are (3) three levels of management: (1) The top level management also known as the executive level is the highest level of management, people who occupy this level are the senior executives such as the (CEO) Chief Executive Officers, (COO) Chief Operation Officer,

TOP LEVEL MANAGEMENT

MIDDLE LEVEL MANAGEMENT

FRONT LINE MANAGEMENT

(CIO) Chief Information Officer, president and the vice president. Top managers are responsible for the overall direction of the organization. They are often called strategic managers.

The people in the middle level management are the (2) middle managers. They hold positions like Division Manager, Sales Manager and Area Manager. They are often called tactical managers. They are responsible for translating the general goals and plans that are developed by strategic managers into more specific objectives and activities (Bateman & Snell, 2008, p23).

(3) The front line managers are the lower level managers they are also called first line managers or operational managers they are responsible in training and motivating employees. Part of being at the lower level management they supervise and monitor the operational activities of the firms and they report directly to the middle managers. They hold positions like store supervisor, office manager and head waiter.

MANAGEMENT SKILLS

A skill is an ability or capacity that one possesses which may translate knowledge into action that result in desired performance(Schermerhorn, 1999 p.15).

Management skills can be divided into (4) four: First, a technical skill it is an ability which involves expertise performing a specialized task. Architects, engineers and accountants are examples of people that have specialized expertise. Second, an interpersonal skill also known as people skills is an ability to lead, motivate, encourage, inspire, understand and communicate directly with individuals or groups. This skill is important in all levels of management. Third are the conceptual skills. This is the ability which includes identifying, thinking in abstract, conceptualizing analytical situations and solving complex problems with a broader scope. A manager who has a strong conceptual skill is able to see the big picture (Griffin & Moorhead, 2012 p.214). Lastly, are the decisional skills. It involves an ability of making decisions or resolving problems. All managers are expected to possess these skills most especially the top level management.

MANAGEMENT ROLES

A role is a set of behaviors that people are expected to perform because they hold certain positions in an organization (McShane & Glinow, 2008 p.272).

Managers have (3) three different roles:

Managers have (3) three different roles:

Informational roles involve managing information from receiving, collecting and analyzing the information. The three informational roles include a monitor (e.g. observes and gather information), a disseminator (e.g. circulate news and new information) and a spokesperson (e.g. represent .company in media, conferences & convention.)

Interpersonal roles involve interacting within and outside the organization. The three interpersonal roles include being a figurehead (e.g. attend awarding ceremony) a leader (e.g. motivates workers to work hard) and a liaison (e.g. coordinate information and activities with other department or groups)

Decisional role it involve in making use of the information in arriving to a better solution to the problem or opportunity. The four decisional roles include an entrepreneur (e.g. create new ideas), a disturbance handler (e.g. handles conflict and arguments), a resource allocator (e.g. decides distribution of resources), and a negotiator (e.g. deals with labor contracts).

FUNCTIONS OF MANAGEMENT

PLANNING LEADING

ORGANIZING CONTROLLING

PLANNING LEADING

ORGANIZING CONTROLLING

DECISIONAL ROLES

INTERPERSONAL ROLES

INFORMATIONAL ROLES

MANAGERMANAGER

Planning is the process of determining objectives and organizational goals, establishing strategies and integrating coordinated activities in the organization to achieve the goals and objectives. Planning provides a clear direction to the organization, it requires decion making with the purpose of anticipating the future. Top Level Management is often responsible in handling or creating a plan for their company.

Organizing is the process of establishing a structure by assigning tasks, assembling and allocating resources to achieve the organizational goals and objectives. Part of organizing is staffing, this is the process of selecting, training and evaluating employees(Lussier, 2006, p.11).

Leading is the process of influencing people to work in achieving the organizational goal (Weihrich & Koontz, 2004, p.26). Managers must inspire and motivate its employees through constant interaction in order to stimulate their performance.

Controlling is the process of monitoring performance and taking a corrective action when necessary to ensure that the objectives of the organitzation will be achieved.

EVOLUTION OF MANAGEMENT

Management is not a new concept. It already existed even in the early times. The Great Wall of China, The Egyptian Pyramid, and including the Rice Terraces (Philippines) are concrete evidence that people in different parts of the world were already applying the functions of management in building different projects. One of the primary reasons why managers or management students need to learn the history of management is to learn from the past and be able to avoid committing the same mistakes.

CLASSICAL APPROACHES TO MANAGEMENT

The classical approaches focus in developing principles to manage the organization. Known approaches that emerged during the classical period were the Scientific Management, Administrative Management, Bureaucracy and Human Relation Management.

SCIENTIFIC MANAGEMENT

The Scientific Management Era was spearheaded by Frederick Winslow Taylor (1856- 1915) a young engineer who started his working career at Midvale Steel Company. He is also known as the Father of Scientific Management. In the year 1911, he published a book entitled “The Principles of Scientific Management”. He focused on analyzing the work and how to complete a task efficiently. Taylor used

scientific techniques in improving the performance of the people in production , emphasizing in maximizing the output.

Taylor’s ideas and experiences led him to define guidelines in quest for efficiency in production. First, management should develop a precise, scientific approach for each element of one’s work to replace general guidelines. Second, management should scientifically select, train, teach and develop each worker so that the right person has the right job. Third, management should cooperate with workers to ensure that jobs match plans and principles. Lastly, management should ensure an appropriate division of work and responsibility between managers and workers (Bateman & Snell, 2008).

MOTION STUDIES

Frank Gilbreth and his wife Lillian Gilbreth use motion studies to simplify and develop more efficient work procedures. They applied efficiency methods in their home with 12 children. Frank Gilbreth was known as the “Father of Motion Study” while Lillian is commonly referred as First Lady of Management.

Motion study is the reducing or breaking a task to its basic physical motions and eliminating unnecessary or redundant motions. Frederick. W. Taylor emphasized in managing work through efficiency while Frank and Lillian emphasized in managing motion. The Gilbreths also devised a classification scheme to label 17 basic hand motions (such as grasp, hold) which they called therbligs (Gilbreth spelled backward with th transposed) (Robbins & Coulter, 2004).

Henry Gantt (1861-1919) also made an important contribution to scientific management. He recognized the value of non monetary rewards to motivate workers. He also developed a system for scheduling called Gantt Charts (Stevenson & Chuong, 2010). Gantt charts are considered as one of the most important management tool that is widely used by managers to this day. It provides a mechanism in controlling and monitoring work progress of employees or workers.

Henry Ford (1863-1947) is known to be one of the great industrialists who use Scientific Management techniques in his factories .The major contribution of Henry Ford is the introduction of the moving assembly line which had a tremendous impact on production methods in many industries (Stevenson & Chuong, 2010).

Henry Ford also introduced the mass production method. It is a method of production in which large volumes of standardized goods are produced by workers using highly advance equipment. The other concept used by Ford was the Division of Labor. It is the breaking up of jobs into small tasks. The tasks were so narrow that virtually no skill was required.

ADMINISTRATIVE MANAGEMENT

The administrative management approach emphasized the perspective of senior managers within the organization. It also argues that management is a profession and could be taught (Bateman & Snell, 2008).

HENRY FAYOL is a French mining engineer. He also known as the Father of Modern Management. He published a book summarizing his management experiences wherein he identified 5 (five) management functions: planning, organizing, commanding, coordinating and controlling. He also developed 14 principles of management.

FAYOL’s 14 Principles of Management1. DIVISION OF WORK- divide work into specialized tasks and assign

responsibilities to specific individuals2. AUTHORITY- delegate authority along with responsibility3. DISCIPLINE- make expectations clear and punish violations4. UNITY OF COMMAND- each employee should be assigned to only one

supervisor5. UNITY OF DIRECTION- employee’s efforts should be focused on achieving

organizational objectives.6. SUBORDINATION OF INDIVIDUAL- interest to the general interest-the general

interest must predominate.7. REMUNERATION- systematically rewards efforts that support the organization’s

direction8. CENTRALIZATION- determines the relative importance of superior and

subordinates roles.9. SCALAR CHAIN- keep communication within the chain of command10.ORDER- order jobs and material so they support the organization’s direction.11.EQUITY-Fair discipline and order enhance employee commitment.12.STABILITY AND TENURE OF PERSONNEL-Promote employee loyalty and

longevity.

13. INITIATIVE- Encourage employees to act on their own in support of the organization’s direction.

14.ESPIRIT DE CORPS- Promote a unity of interests between employees and management

Source: Bateman & Snell, (2008) Management. McGraw-Hill

BUREAUCRACY

MAX WEBER (1864-1920) is a German sociologist who introduces the idea of a bureaucratic organization. The aim of this concept is to create an organization that has authority structures with a clear procedure of rules and regulations. Bureaucracy can be defined as a rational and efficient form of organization founded on logic, order, and legitimate authority (Schermerhorn, 1999 p.75).

Bureaucracy is characterized with a high degree of division of labor and has principles of rationality and impersonal relationships. Promotions are based on technical competence or qualifications wherein loyalty and commitment is not considered. Bureaucratic management is more suitable in government organizations but not in a business organization where management can be more dynamic and flexible in terms of decision making avoiding delay that may result in a lot of wastage of money, time and effort due to the formal structures.

BEHAVIORAL THEORY

HUMAN RELATIONS MANAGEMENT

Human Relations Management is an approach in management that emphasizes the understanding the importance of human element in a workplace. In today settings this is known as Organizational Behavior which can be defined as the study of human behavior in organizational settings, of the interface between human behavior and the organization and of the organization itself (Griffin & Moorehead, 2012).

ELTON MAYO (1880-1949) is a researcher who conducted studies at Hawthorne Works Plant of Western Electric in Chicago. He led a team who developed a research project known as Hawthorne Studies. It is a series of experiments in which the initial studies failed because the team proposed that better lightning would improve the

performance of the workers but it is reasonable that better lightning will have a positive effect in the increase of production.

The researchers concluded that workers performed well when they know that they are part of the experiment and when they are being observed by the researchers. This effect is known as the “Hawthorne Effect”. The team also concluded that psychological and social factors are more important than physical condition of the workplace and financial incentives in motivating workers.

ABRAHAM MASLOW (1908-1970) is a professor and psychologist who developed a motivational theory in which it is considered to be the best-known theory of motivation. Motivation is the inner desire to satisfy an unsatisfied need (Lussier, 2006, p.428). This theory is known as “Maslow’s Hierarchy of Needs”. It consists of five basic categories of needs. Need refers to the deficiencies that energize or trigger behaviors to satisfy those needs (McShane & Glinow, 2008 p.135).

1. Physiological Needs- It is also known as the basic needs. (food, water, and air)2. Safety Needs- A need which involves need for security and protection from

physical and emotional needs.3. Social Needs- This level is also known as Belongingness needs. It includes

need for love and affection, acceptance and friendship. 4. Esteem Needs- It involves self-respect, recognition and achievement.5. Self-Actualization Needs- The highest level in the hierarchy. It is also known as

self-fulfillment; it involves a person realizing his/her full potential and abilities.

ESTEEM NEEDS

PHYSIOLOGICAL NEEDS

SAFETY NEEDS

SOCIAL NEEDS

SELF-ACTUALIZATION NEEDS

MASLOW HIERARCHY OF NEEDS

Maslow suggests that we must satisfy each level of the hierarchy before we move to the next level because once we satisfied once the need, it will no longer create motivation. He separated the five needs into two; the first four sets of needs at the bottom are called D-needs or Deficiency needs because they must be satisfied to be deactivated. The self-actualization needs are called growth needs because it continues to develop even when satisfied.

FREDERICK HERZBERG (1923-2000) is a psychologist who conducted a research where he started interviewing 200 accountants and engineers in Pittsburgh the result led him to develop the Two-Factor theory or better known as Motivation-Hygiene Theory.

This theory proposes that employees are motivated by intrinsic factors rather than extrinsic factors. Intrinsic or Motivation factors are related to job satisfaction such as achievement and recognition. Extrinsic or Hygiene factors are associated with job dissatisfaction such as working conditions, company policies, pay and job security.

HERZBERG’S TWO FACTOR THEORY

Motivation Factors

Hygiene Factors

DOUGLAS McGREGOR (1906-1964) is a psychologist who developed philosophical view of human behavior with his Theory X and Theory Y; The two sets of assumptions that represented how employees view work.

Theory X represents a negative end or view of people they avoid work responsibility, relatively have little ambition and need to be controlled (reward and punish) and supervised.

Satisfaction No Satisfaction

Dissatisfaction No Dissatisfaction

Theory Y represents a positive end or view of workers they usually accept and seek responsibility. They enjoy the physical and mental aspect of work and more committed to work. They can exercise self-control and self- direction towards organization objectives.

QUANTITATIVE APPROACHES TO MANAGEMENT

MANAGEMENT SCIENCEManagement Science is an approach that emphasizes the use of mathematics or quantitative techniques to analyze and support management decisions and problems. After World War II the efforts to develop several quantitative techniques continues which helps business managers make decisions in terms of solving problems. It includes other areas of finance and operations management particularly in forecasting that will help managers make future projections that are very useful for determining how variables will change the future, Linear programming is used to calculate allocation of scarce resources, It can also be used in inventory management.

Quantitative management allows for developing quantitative approaches such as statistics and computer simulations to arrive at management decision. The two main branches of quantitative management are management science and operations management (Zarate, 2009).

MODERN APPROACHES TO MANAGEMENT

SYSTEM THEORYThe system theory focuses on viewing the organization as a whole and the interrelationships of its parts. During the 1950s management scholars attempted to integrate a holistic view of management process (Lussier, 2006). System is a collection of interrelated elements that function as a whole. Subsystems are small units of a larger system. Organizations are open systems that process resources (inputs) into a product or services (outputs) in which the environment reacts to the output in the form of feedbacks.

EXTERNAL ENVIRONMENT

INPUT OUTPUT

FEEDBACK

RAW MATERIALS

PROCESS PRODUCT OR

SERVICES

CONTINGENCY MANAGEMENT

In modern management it is difficult to identify one best way to manage and organize firms in all circumstances because different factors may vary depends on the situation. Understanding contingencies helps managers determine on how to react to the situation by choosing a proper strategy. Contingency thinking recognizes that what may be a good structure for one organization may not work as well in another organization. It also recognizes that what may work well at one time may not work as well in the future as circumstances change (Schermerhorn, 1999).

FIVE (5) M’s of MANAGEMENT

MAN is the most important “M” of management. It refers to people or human resource. The right people for the right position will contribute to the overall organizational effectiveness and efficiency. Human resource activities involve proper hiring, recruiting, training, selecting, development of skills, compensating and dismissing personnel. Many businesses invest in people because this provides the organization a valuable asset that when it is successfully processed, it can be a source of competitive advantage. If the organization will effectively use this first “M” of management, it will directly affect the entire system which may also create a valuable source of new ideas and innovation.

MATERIALS refers to the main component in producing a product which commonly known as raw materials. Materials can create additional value for their product and can yield a competitive advantage for the firms. The advancement of modern technology increases the variety of materials with the right selection of materials. It can provide the

MANAGEMENT

MANMATERIALS

MONEYMACHINES METHODS

firms cost-effective supply of materials which can generate greater profits or savings for the company.

MONEY is defined as any good or token that functions as a medium of exchange. It is socially and legally accepted in payment for goods and services and in settlement of debts. (Domingo, 2010) In any businesses, money plays a vital role because it serves as the lifeline of the business, it finances the operations and other expenses of the firm. Businesses have different sources of funds like bank loans (short-term and long term), funds from investors and from the sales generated by the operations of the business. This funds will be use to meet its daily requirement and obligations of the firms.

MACHINES is an important tool that helps improve the efficiency and effectiveness in producing a goods or services of a firm. Effective use and procurement of machines for the business operation can generate multiple benefits. It is a proven fact that it can save time and effort. It can also enhance the quality and quantity of the product needed to be produced at a given period. It can also lessen the cost of production because in economies of scale as the volume increases the average cost per unit of output drops or decreases (Chase, Jacobs, & Aquilano, 2005). This may result in the increase of revenue and cost advantage which is favorable to the company.

METHODS is as a series of steps which managers use with the purpose of creating systematic process in achieving the goals and objectives of the firm. Managers use a method as a course of action in solving a problem and in making a decision for the company. An effective manager develops methods to set a direction to the company through company policies, plan and procedures. Example a production managers follow a method in operating machines, handling production process, managing and monitoring workers performance.