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International management
Lecture 14
Ir. ing. Robert De BruynOffice: Room 4.103 – Building: [email protected] October 2008
Planning
Planning consultancy meetings as of this weekSee planning schedule in lecture 13
Classical approaches to organisational analysis – Machine thinking
Classical approaches to organisational analysis – Organic approaches
Exercises
Organizations
Machine or Organism?
Machines
PredictabilityMechanical & electrical partsDepersonalisedPlan or formulaEngineers requiredScienceEmotions, values, desires are
removedSocial aspect of life removed
Key Proponents of Machine Thinking
Frederick Taylor (1856 - 1915) - Scientific Management
Henri Fayol (1841 - 1925) - AdministrationMax Weber (1864 - 1920) - BureaucracyHenry Gantt - Gantt ChartsFrank Gilbreth - Time & Motion StudiesLilian Gilbreth - Systematic Recruitment & Selection
Organisations as Machines
Organisational life is often routinized with the precision demanded by clockwork.
many organisations are designed like machines and employees are expected to behave as if they were parts of the machine.
McDonalds, Tesco & Disneyland are all to some extent examples of organisations using this approach.
Machine type organisations are often called bureaucracies.
Organisation derives from the Greek word oragon, meaning tool or instrument.
Examples
Can you think of an organisation that
might display some of the
characteristics of machine thinking?
Fundamental Principles of Scientific Management
Workers should be set high targets.Daily workloads should be specified after
detailed examination of jobs.Work environments should be carefully
controlled.Repetition of tasks develops speed, skill and
high productivity.Pay should be related to productivity.
Frederick W. Taylor
Taylor advocates five simple
principles
Shift all responsibility for the organisation of work from the worker to the manager.
Use scientific methods to determine the most efficient way of doing work specialisation
Select the best person to perform the job.Train the worker to do the work efficiently.Monitor worker performance constantly.
Frederick Taylor at Bethlehem Steel
Pig IronIf workers were moving 12 1/2 tons of pig iron per day and they could be incentivized to try to move 47 1/2 tons per day, left to their own wits they probably would become exhausted after a few hours and fail to reach their goal. However, by first conducting experiments to determine the amount of resting that was necessary, the worker's manager could determine the optimal timing of lifting and resting so that the worker could move the 47 1/2 tons per day without tiring.
Not all workers were physically capable of moving 47 1/2 tons per day; perhaps only 1/8 of the pig iron handlers were capable of doing so. While these 1/8 were not extraordinary people who were highly prized by society, their physical capabilities were well suited to moving pig iron. This example suggests that workers should be selected according to how well they are suited for a particular job.
Source: http://www.netmba.com/mgmt/scientific/
Frederick Taylor at Bethlehem Steel
The Science of Shovelling
In another study of the "science of shovelling", Taylor ran time studies to determine that the optimal weight that a worker should lift in a shovel was 21 pounds. Since there is a wide range of densities of materials, the shovel should be sized so that it would hold 21 pounds of the substance being shovelled. The firm provided the workers with optimal shovels. The result was a three to four fold increase in productivity and workers were rewarded with pay increases. Prior to scientific management, workers used their own shovels and rarely had the optimal one for the job.
Source: http://www.netmba.com/mgmt/scientific/
Taylor’s Assumptions of Human Nature
In general people are mindless and need to be told what to do
People are principally motivated by money
People can be regarded as objects and “managed” accordingly
Henry Ford: 1913 Assembly lineFord Motor Company’s first moving assembly line was located in Highland Park, Michigan in 1913. Below, the exterior of the Ford building was used for mounting the auto body on the chassis. Ford Motor Company was one of the first manufacturing plants to use assembly lines to mass produce “look alike automobiles.” The process allowed Henry Ford to keep prices down and better control the quality of the automobile.
Frank and Lilian Gilbreth
Husband-and-wife team and like Taylor pioneers in the study and practice of management.
They prompted (Encouraged) what became known as time and motion studies, the forerunner of the current field of ‘industrial engineering.
The Gilbreths ultimately developed a list of seventeen basic motions called therbligs (Gilbreth spelled backwards… almost)
Frank Gilbreth: obsessed with efficiency
To reduce the time it took him to shave in the mornings, Frank used two shaving brushes to lather his face and found that he could reduce shaving time by seventeen seconds.
He tried shaving with two razors and found that he could reduce the total shaving time by forty-four seconds. But he abandoned this scheme because it took him two minutes to apply bandages to cuts.
His children suggested that it was the two lost minutes that bothered him and not the cuts.
Another anecdote
Franks philosophy of sickness was to ignore it. He said, “A sick person drags down the performance of the entire group ... You have been given health and it’s your job to keep it.” Yet, in spite of his admonitions (Warnings), Frank was told that his tonsils needed to be removed.
To enhance efficiency, he decided that as long as he was to have his tonsils out, the entire family would have their tonsils taken out at the same time. Frank even set up motion picture equipment to film the operating efficiency of the surgeon performing the tonsillectomies.
Lilian Gilbreth
Focused on the psychology of management to complement her husband
One of the first working female engineers holding a PhD
She is arguably (proven) the first true industrial & organizational psychologist
Partnered together with Frank in a management consulting firm of Gilbreth, Inc. which performed time and motion studies
Contribution of Scientific Management to Organisation Theory
Led to definition of roles, authority and responsibility in organisations
Provided a rational basis for separating and analysing organisational functions, also in doing vs. thinking
Emphasised the role of target setting
Stimulated interest in design of incentive systems e.g. performance based pay, share schemes
Taylor: "The old fashioned dictator does not exist under Scientific Management. The man at the head of the business under Scientific
Management is governed by rules and laws which have been developed through hundreds of experiments just as much as the workman is, and
the standards developed are equitable (Acceptable)."
Objections to Scientific Management
Ignores the social & psychological needs of employees
Attention focused on operational rather than strategic management
Division of labour creates boredom (Annoyment) and dehumanises work
Can and has led to mass unemploymentDesigned for large manufacturing economies
(Service as well e.g. call centres)Quickest way of performing a job is not always the
best
Fayol’s Principles of Management
Fayol divided management into five activities:
Planning (at the heart of his theory)
Organizing
Commanding
Coordinating
Controlling
Where Taylor focused mainly on the worker level Fayol focused
on the management level
Fayol: 14 basic management principles for achieving good organisation
1 Division of Work. The intent of division of work is to produce more and better work for the same effort. Specialization is the most efficient way to use human effort.
2 Authority and Responsibility. Authority is the right to give orders and obtain obedience, and responsibility is a corollary of authority. The two types of authority are official authority, which is the authority of command, and personal authority, which is the authority of the individual manager.
3 Discipline. Obedience to organizational rules and employment agreement is necessary. The best way to have good superiors and clear and fair rules and agreements is to apply sanctions and penalties judiciously.
4 Unity of Command. There should be one and only one boss for each individual employee.
5 Unity of Direction. All units in the organization should be moving toward the same objectives through coordinated and focused effort.
6 Subordination of Individual Interest to General Interest. The interests of the organization should take priority over the interests of any one individual employee.
Fayol put a tremendous emphasis on logic, rationality, and consistency
7 Remuneration of Employees. The overall pay and compensation for employees should be fair to both employees and the organization.
8 Centralization. There is a need to balance subordinate involvement through decentralization with managers’ retention of final authority through centralization.
9 Scalar Chain. Organizations should have a chain of authority and communication that runs from the top to the bottom and should be followed by managers and subordinates.
10 Order. People and materials must be in suitable places at the appropriate time for maximum efficiency.
11 Equity. Good sense and experience are needed to ensure fairness to all employees, who should be treated as equally as possible.
12 Stability of Personnel. Employee turnover should be minimized to maintain organizational efficiency.
13 Initiative. Workers should be encouraged to develop and carry out their plans for improvements.
14 Esprit de Corps. Management should promote a team spirit of unity and harmony among employees.
Bureaucracy - Max Weber
Basic principles
A division of labor by functional specialization. A well-defined hierarchy of authority. A system of rules covering the rights and
duties of employees. A system of procedures for dealing with work
situations. Impersonal relations between people. Promotion and selection based on technical
competence.
The “ideal type” is the bureaucracy which achieves rationality
Weber on Bureaucracy
Three types of authority:
Rational - legal legality of patterns of normative rule rights of those in authority
Traditional sanctity of tradition legitimacy of those exercising authority under tradition
Charismatic devotion to specific & exceptional sanctity, heroism or exemplary
character of an individual person normative patterns of order stemming from leader
Advantages of bureaucracy
1. Employee behavior is consistent because of set policies, procedures, and rules.
2. Overlapping or conflicting job duties are eliminated because jobs are defined clearly.
3. Behavior is predictable because there is a hierarchy of authority (supervision).
4. Hiring and promotion are based on merit or expertise.
5. Employees develop expertise in their jobs because they specialize in those jobs.
6. There is continuity in the organization because it emphasizes the position rather than the person (that is, when one person leaves a position, another person assumes that same position).
Disadvantages of bureaucracy
1. There is too much red tape and too much paperwork.
2. Employees do not care about the organization.
3. Employees are treated impersonally (according to the rules).
4. Regulations result in conformity in behavior.
5. Relying on rules and policies stifles the growth of employees.
ISO 9000:2000 Modern form of bureaucracy???
Strengths of Machine Metaphor
Much of our experience is machine thinking e.g. Schools
“The one best way makes life easier”Traditional approach in medicine regards our bodies
as machinesMachines work well where:
programmed tasks environment is stable same product or process repeated each time when human “machine” parts are compliant e.g.
MacDonalds
Weakness of Machine Metaphor
Can be difficult to promote changeCan result in mindless and unquestioning
bureaucracy e.g. Nazi Germany Ignores the informal processes and outcomes that
can take precedent over formal goalsDehumanising aspects:
“a cog in a wheel” objectification depersonalisation reification “use value” human resources/capital
CONCEPT SUMMARY: Classical Theories
Approach Rationale Focus
Scientific Management(Taylor, Gilbreth)
One best way to do each job
Job level
Administrative Principles(Fayol)
One best way to put an organization together
Organizational level
Bureaucratic Organization
(Weber)
Rational and impersonal organizational arrangements
Organizational level
Assignment
1. The postal services in many countries are typical examples of bureaucracies. Explain why these companies chose such a perspective?
2. Can you give other examples of bureaucracies?
3. Are there different types of bureaucracies?
Organic Images of Organisation
Brain Garden Island Forest Craft Studio Artists workshop
What others can you
think of?
Organisations as Organisms
Organisations exist in a wider environment: ‘open’ rather than ‘closed’ systems
organisational form varies dependent upon environmental conditions
notion of organisation as an organism rooted in metaphor of biology: adaptation to environment organisational health organisational life-cycles species of organisation ecological considerations
Characteristics of a Biological System
Living
Interacting with the environment (adapting & shaping)
Feeding, nourishing
Constituted by arrangement of internal parts
Requires equilibrium
Assignment
Imagine an organisation as a brocoli
What does this metaphore tell you about an
organisation?
Can you give an example of an actual organisation that
fits this metaphore?
Theoretical Positions
Open Systems Theory
Human Relations
Contingency Theory
organisations like organisms are ‘open’ to their environment
organisations must achieve an appropriate relationship (equilibrium) with their environment
relationships with the ‘task environment’ essential (e.g. customers, competitors, suppliers, unions, government etc..)
organisations are a set of interrelated subsystems that co-exist in a symbiotic relationship (e.g. molecules, cells, organs)
Open Systems Model
Characteristics of Open Systems
Objects – parts or elements (sub-systems)
Attributes – qualities or properties
Relationships – mutual effect & constraint
Environment: affected by surroundings
Systems Model of Business
Remember the Law of requisite variety of Ashby
Source: http://www.accel-team.com/business_process/systems_analysis_01.html
Contrasting Open & Closed Systems
A closed system :
is independent of its environment
determines its own destiny controls its internal
relationships
An open system:
is in continuous contact with its environment
transforms inputs from the environment into outputs returned to the environment
need to adapt to changes in the environment
Elton Mayo (1880 – 1949)
Father of “human relations” movement
“social man” “democratic management”Leader of the “Hawthorne
studies” (plant of Western Electric in Chicago)
Hawthorn studies
Illumination Experiment The initial experiment in the Hawthorne studies was an
illumination experiment. In this experiment, workers performed their jobs under varying light conditions. As the lights were turned up or down, worker productivity rates were charted.
Surprisingly, this study showed that whether lights were turned up or down, employee productivity increased. These researchers thus concluded that some factors other than light were responsible for the increased productivity.
Hawthorn studies
Relay Assembly Test Room Experiments Following the illumination experiment, some workers were placed in the relay assembly test room, and various experiments under different work conditions were conducted. As a result of these experiments, about 20,000 interviews were conducted.
The Hawthorne researchers realized that people were not leaving their feelings, attitudes, and emotions at home. The employees were not at work simply for economic benefit. Other dimensions also affected their performance.
Hawthorn studies
Bank Wiring Room Experiment A final experiment was conducted in the bank wiring room with a small group of employees. In this study researchers discovered that the production quota set by the company (using scientific management techniques) was not the number of units actually produced by the workers.
The researchers discovered that the workers had developed their own idea of the level of output that was fair. This informal standard of behavior, called a norm, was enforced by the work group to the point that output was restricted. Any worker who produced more than that number was pressured by co-workers to comply with the norm.
Social view of the Human relations approach
Individuals are motivated by social needs.
People obtain their sense of identity through interpersonal relationships.
Because of industrial progress and routinization of work, work has become dissatisfying.
Employees are more responsive to the social forces of peer groups than to incentives and controls of management.
Employees respond to provisions for their social needs and acceptance offered by management.
Followers of Mayo
Chris Argyris – Organisational learning
Fred Hertzberg – Motivation-Hygiene theory
Douglas McGregor – Theory X Theory Y
Rensis Likert – Likert Scale
Contingency Theory
No “one best way” of organising or managingAppropriate form of organising or managing depends
on the type of task and the environmentEffective organisation depends on achieving a
balance between: strategy structure technology human need (s) external environment
Strengths of Organism Metaphor
Places emphasis on “relations” within an organisationemphasises the needs/characteristics of different
parts of the organisation recognition of balancing parts of the organisation -
one part cannot dominateby emphasising “strategic choice” it introduces a
range of management optionsemphasis on organic forms for innovation
Weaknesses of the Organism Metaphor
Too much emphasis on the environment as concrete - the economic & political environment is socially constructed thus too much weight given to forces in the environment what about the organisation being an active agent in
constructing its world e.g. technological organisations impact on the way we live and work
Organisations are not functionally unified i.e harmony - as found in biological systems perhaps unity cannot be achieved in organisational life discounts power & politics in organisational life
CONCEPT SUMMARY: Modern Management Theories
Key Notion Rationale
Systems Organizations must be thought of as open systems.
Contingencies Managerial actions must be set up on a contingent basis.
Human Needs Organizations must be designed to consider a variety of individual needs.
Assignment
1. Analyse the organisation McDonalds from the machine metaphore and the organism metaphore (Group 1)
2. Please explain the level of success (and currently failure) of McDonalds globally? (Group 2)
3. To what extend are companies ‘free’ to chose a certain configuration (machine – organism)? (Group 3)
4. Dell can be seen as a virtual organisation. How do virtual organisations deal with the tension between rules and regulations on one side and freedom and entrepreneurship on the other side? (Group 4)
Weblinks
http://www.accel-team.com/scientific/index.htmlhttp://www.accel-team.com/motivation/index.htmlhttp://www.accel-team.com/productivity/approaches_00.
htmlhttp://www.biz.colostate.edu/faculty/dennism/Manageme
nt-Evolution.htmlhttp://www.netmba.com/mgmt/scientific/