historical roots of contemporary management practices

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Historical Roots of Contemporary Management Practices

Historical Roots of Contemporary Management PracticesDr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt)Professor Historical Roots of Contemporary Management PracticesUp to the 20th century (pre-modern era) Adam smiths contribution to the field of managementIndustrial revolutions influence on management practices In the early 20th centuryScientific managementGeneral administrative theoryThe human resources approachThe quantitative approach From the later 20th century to the presentThe process approachThe systems approachThe contingency approach

Adam Smiths Contribution to the Field of ManagementThe general popularity today of job specialization is undoubtedly due to Smiths view about division of labor.Division of labor is the breakdown of jobs into narrow, repetitive tasks. Industrial Revolutions Influence on Management Practices Industrial Revolution has originated in late-18th-century in Great Britain, and crossed the Atlantic to America by the end of the Civil War. Because of the Industrial Revolution, machine power was rapidly substituted for human power, which made it economical to manufacture goods in factories. With the development of big organizations, a formal theory to guide managers running these organizations efficiently and effectively was needed. Evolution of Management Theory18902000Administrative ManagementBehavioral ManagementScientific ManagementManagement ScienceOrg. Environment19405Scientific ManagementFrederick Taylor was called as the father of Scientific management.His book - The Principles of Scientific management was published in 1911.Immediately, its contents became widely accepted by managers throughout the world.

Background of That TimeThere were no clear concepts of responsibilities to workers and managers. No effective work standards existed. Management decisions were based on hunch and intuition.Workers were placed on jobs with little or no concern for matching their abilities and aptitudes with the tasks required. Managers and workers considered themselves to be in continual conflict - any gain by one would be at the expense of the other.

Taylors Four Principles of ManagementDevelop a scientific way for each element of an individuals work, which replaces the old rule-of-thumb method.Scientifically select and then train, teach, and develop the worker. Heartily cooperate with the workers, so as to ensure that all work is done in accordance with the scientific way that has been developed.Divide work and responsibility almost equally between managers and workers. Managers take over all work for which it is better fitted than the workers. Problems of Scientific ManagementManagers often implemented only the increased output side of Taylors plan.They did not allow workers to share in increased output.Specialized jobs became very boring, dull.Workers ended up distrusting Scientific Management.Workers could purposely under-performManagement responded with increased use of machines.9The GilbrethsFrank and Lillian Gilbreth refined Taylors methods.Made many improvements to time and motion studies.Time and motion studies:1. Break down each action into components.2. Find better ways to perform it.3. Reorganize each action to be more efficient.Gilbreths also studied fatigue problems, lighting, heating and other worker issues.10 General Administrative Theory Henry Fayols contributions He argued that management was an activity common to all human undertakings in business, in government, and even in the home. He stated 14 principles of managementfundamental or universal truths.

Administrative ManagementSeeks to create an organization that leads to both efficiency and effectiveness.Max Weber developed the concept of bureaucracy.A formal system of organization and administration to ensure effectiveness and efficiency.Weber developed the Five principles shown in the following Figure.13Bureaucratic PrinciplesA Bureaucracyshould haveWritten rulesSystem of taskrelationshipsHierarchy ofauthorityFair evaluation and reward14Key points of BureaucracyAuthority is the power to hold people accountable for their actions.Positions in the firm should be held based on performance, not social contacts.Position duties are clearly identified; people should know what is expected of them.Lines of authority should be clearly identified; workers should know who reports to whom.Rules, Standard Operating Procedures (SOPs) & Norms used to determine how the firm operates.Sometimes, these lead to red-tape and other problems.16The Human Resources Approach

Hawthorne Studies Human Relations Movement - Dale Carnegie - Abraham Maslow - Douglas McGregor Behavior Science/Behavioral ManagementBehavioral ManagementFocuses on the way a manager should personally manage to motivate employees.Mary Parker Follett, an influential leader in early managerial theorySuggested workers help in analyzing their jobs for improvements.The worker knows the best way to improve the job.If workers have the knowledge of the task, then they should control the task.18

Hawthorne StudiesTime: 1924the early 1930sPlace: Hawthorne plant in the Western Electric CompanyDesigner: Western Electric industrial engineers Elton Mayo and his associatesMayos Finding: Individuals improve or modify an aspect of their behavior in response to their awareness of being observed. Behavior and sentiments are closely related. Group influences significantly affect individual behavior. Group standards establish individual worker output. Money is less a factor in determining output than are group standards, group sentiments, and security. Dale Carnegies ContributionOne of the core ideas in his books is that it is possible to change other people's behavior by changing one's behavior toward them.How to Win Friends and Influence PeopleMaslows Hierarchy of NeedsSelf-actualizationEsteemBelongingnessSecurityPhysiologyFoodAchievementStatusFriendshipStabilityJobFriendsPensionBaseNEEDSGeneral ExamplesOrganizational ExamplesjobChallengingtitleat workplansalary21Theory X and YDouglas McGregor proposed the two different sets of worker assumptions.Theory X: Assumes the average worker is lazy, dislikes work and will do as little as possible.Managers must closely supervise and control through reward and punishment.Theory Y: Assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work.Managers should allow the worker great latitude, and create an organization to stimulate the worker.22Theory X vs Theory YTheory YEmployee is not lazy

Must create work setting to build initiative

Provide authority to workersTheory XEmployee is lazy

Managers must closely supervise

Create strict rules & defined rewards23Theory ZEmphasizes:Long-term employmentSlow career developmentModerate specializationGroup decision makingIndividual responsibilityInformal control over the employeeConcern for workersJapanese Theory Z:Characteristics of a Theory Z organisation OuchiLong-term employment, often for a lifetimeRelatively slow process of evaluation and promotionDevelopment of company-specific skills & moderately specialised career path

Japanese Theory Z:Characteristics of a Theory Z organisation Ouchi (contd.)Implicit, informal control mechanisms supported by explicit, formal measuresParticipative decision-making but individual ultimate responsibilityBroad concern for the welfare of subordinates & co-workers as a natural part of a working relationship & informal relationships among people

26The Quantitative ApproachThe quantitative approach to management, sometimes referred to as, operations research (OR) or management science. It includes applications of statistics, optimization models, information models, and computer simulations, linear programming, and so on, which can be used to solve management problems.In general, the quantitative approaches have contributed directly to management decision making, particularly to planning and control decisions.Systems ApproachThe system approach defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Societies are systems and so, too, are computers, automobiles, organizations, and animal and human bodies.

An Organization Is an Open SystemAn organization is a system that interacts with and depends upon its environment. Organizations stakeholders: any group that is affected by organizational decisions and policies. The managers job is to coordinate all stakeholders to achieve the organizations goals.Organizational survival often depends on successful interactions with the external environment. The Operating Model in Organizational SystemInput

TransformationOutputFeedback30Contingency ApproachAssumes there is no one best way to manage.The environment impacts the organization and managers must be flexible to react to environmental changes.The way the organization is designed & control systems selected, depend on the environment.Technological environments change rapidly, so must managers.

Four Popular Contingency VariablesOrganization sizeRoutineness of task technologyEnvironmental uncertaintyIndividual differences

MCKINSEYS 7S FRAMEWORK

THE HARD SsStrategy: the direction and scope of the company over the long term. Structure: the basic organization of the company, its departments, reporting lines, areas of expertise and responsibility (and how they inter-relate). Systems: formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call center systems, online

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