management & its evolution

7/27/2019 Management & Its Evolution

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CHAPTER 1

MANAGEMENT AND ITS

EVOLUTION


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CHAPTER OVERVIEW Defining Management.

Various Approaches to Management

Business Environment

Business Ethics & Social Responsibility


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BACKGROUNDManaging is one of the imp activities

today.

Imp to ensure coordination of individualefforts.

Thus, task of Managers has been gaining

significance.


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WHAT IS AN ORGANIZATION? A formal and coordinated group of people

who function to achieve particular goals

These goals cannot be achieved by individualsacting alone

An organization has a structure


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MANAGEMENTOrganization

Two or more people who work together in a structuredway to achieve a specific goal or set of goals.

GoalsPurpose that an organization strives to achieve;

organizations often have more than one goals, goals

are fundamental elements of organization.

The Role of Management

To guide the organizations towards goal

accomplishment


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NEED FOR MANAGEMENT We are members of one

or other organizations.

Organizations also have some

plan to achieve these goals.

Organizations also need to acquire

& allocate the resources necessary to

achieve their goals.


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DEFINITION OF MANAGEMENT The process of planning, organizing, leading, and

controlling the work of organization members & of

using all available organizational resources to reach

stated organizational goals.(Stoner, Freeman & Gilbert)

The process of designing & maintaining an

environment in which individuals, working togetherin groups, efficiently accomplish selected aims.


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5 MS OF MANAGEMENT Money

Manpower

Material Machinery

Methods


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SO, MANAGEMENT IS Management is an art of getting things done

through and with the people in formally

organized groups.


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MANAGEMENT AND ORGANIZATIONALRESOURCES


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BASIC MANAGERIAL FUNCTIONS

OrganizingAssign responsibility for tasks

PlanningSelect goals & ways

to attain them

ControllingMonitor activities & make

corrections

LeadingUse influence to motivate


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NATURE OF MANAGEMENTMultidisciplinary

Dynamic nature of Principles

Relative; not absolute principlesManagement: Science or Art

Universality of Management


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IMPORTANCE OF MANAGEMENT Encourages Initiative

Encourages Innovation

Facilitates growth and expansionOptimum Utilization of Resources

Reduces Cost

Establishes Sound Organization

Establishes Equilibrium


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IMPORTANCE OF MANAGEMENT Improves corporate image

Motivates employees

Reduces wastageReduces absenteeism and labour turnover

Increases efficiency

Improves relationsEncourages Team Work


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IMPORTANCE OF MANAGEMENT

Optimum utilisation of resources: Management facilitates optimumutilisation of available human and physical resources, which leads toprogress and prosperity of a business enterprise. Even wastages of alltypes are eliminated or minimized.

Competitive strength: Management develops competitive strength inan enterprise. This enables an enterprise to develop and expand itsassets and profits.

Cordial industrial relation: Management develops cordial industrialrelations, ensures better life and welfare to employees and raises theirmorale through suitable incentives.

Motivation of employees: It motivates employees to take more interestand initiatives in the work assigned and contribute for raising productivityand profitability of the enterprise.


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Introduction of new techniques: Management facilitates theintroduction of new machines and new methods in the conduct ofbusiness activities. It also brings useful technological developments andinnovations in the management of business activities.

Effective management: Society gets the benefits of efficientmanagement in terms of industrial development, justice to differentsocial groups, consumer satisfaction and welfare and proper dischargeof social responsibilities.

Expansion of business: Expansion, growth and diversification of abusiness unit are possible through efficient management

. Brings stability and prosperity: Efficient management brings success,

stability and prosperity to a business enterprise through cooperationamong employees.


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Develops team spirit: Management develops team spirit and raises overall efficiency of

a business enterprise.

Ensures effective use of managers: Management ensures effective use of managers so

that the benefits of their experience, skills and maturity are available to the enterprise.

Ensures smooth functioning: Management ensures smooth, orderly and continues

functioning of an enterprise over a long period. It also raises the efficiency, productivity

and profitability of an enterprise.

Reduces turnover and absenteeism: Efficient management reduces labour turnover andabsenteeism and ensures continuity in the business activities and operations

.

Creates sound organisation: A dynamic and progressive management guarantees

development of sound Organisation, which can face any situation - favorable or

unfavorable with ease and confidence.


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HISTORY.. The systematic study of management began

after 1900.

Industrial Revolution also had a deep impact on

Management practices & Approaches.

Management philosophies and organization

forms change over time to meet new needs.

Some ideas and practices from the past are still

relevant and applicable to management today.


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APPROACHES TO MANAGEMENT


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MANAGEMENT THEORIES

1. ScientificManagement School

4. ModernPerspectives

3. BehavioralApproach

2. Classical Approach


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THE THEORISTS & THE SCHOOLSSCIENTIFIC APPROACH

1) Frederic Taylor

2) Gantt

3) Gilberths

CLASSICAL APPROACHES

1) Henri Fayol

2) Max Weber

3) Mary Parker Follett4) Chester Barnard

BEHAVIOURAL APPROACH

1) Hawthorne Experiments

2) Maslow & McGregor /Organizational Behaviour

MODERN APPROACHES

1) Systems Approach

2) Contingency Approach

Approaches to

Management


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SCIENTIFIC MANAGEMENTFrederick Taylor was called as the

father of Scientific management.

Theory arose in part from the needto increase productivity.

The systematic study of the

relationships between peopleand tasks to redesign the work

for higher efficiency.


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FOUR BASIC PRINCIPLES OF TAYLOR The Development of a true science of management:

Study the way job is performed now & determine new ways to do it. Gather

detailed, time and motion information. Try different methods to see which is best.

The Scientific Selection of workers:

Each worker would be assigned responsibility for the task hes best suited toincrease efficiency & productivity.

The Scientific education & development of theworker:Scientifically select and then train, teach, and develop the worker.

Intimate, friendly cooperation betweenmanagement and labor:Establish a fair or acceptable level of performance for a task, and then develop apay system that provides a reward for performance above the acceptable level


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CONTRIBUTIONS The efficiency techniques have been applied to many

organizations.

LIMITATIONS: Managers 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 could purposely under-perform; as it would

exhaust whatever work was available causing layoffs.

Emphasis on Productivity & Profitability led somemanagers to exploit both workers & customers.

Workers began to distrust Scientific Management


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HENRY GANTT Refined Taylors incentive system.

Originated a charting system for production scheduling

named as Gantt Chart.

Introduced reward systems for both the workers &

supervisors.


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FRANK & LILLIAN GILBRETHS Refined Taylors work and made many improvements to

the methodologies of time and motion studies.

Time and motion studies

Breaking up each job action into its components.

Finding better ways to perform the action.

Reorganizing each job action to be more efficient.

Also studied worker-related fatigue problems caused by

lighting, heating, and the design of tools and machines. They focused on the ways of promoting individual

workers welfare & believed that motion studies would

raise worker morale.


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CLASSICAL APPROACHES HENRI FAYOL Founder of classical management school. His theory is an attempt to identify the

principles & skills that underlie effective

management. Fayol was interested in total organization &

focused on management.

Developed fourteen principles ofmanagement that applied to all

organizational situations


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MAX WEBER - BUREAUCRACY Concept given by German sociologist Max

Weber.

Org required strictly defined hierarchy; governed

by clearly defined regulations & lines ofauthority.

Bureaucracy: Org with a legalized formal &

hierarchical structure; also refers to the formalstructural process within an org.

He emphasized rationality, predictability,

impersonality, technical competence, and

authoritarianism.


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WEBERS PRINCIPLES


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KEY POINTS OF BUREAUCRACY

Authorityis the powerto hold peopleaccountable for their actions.

Positions in the firm should be held based onperformancenot social contacts.

Position duties are clearly identified.Peopleshould know what is expected of them.

Lines of authorityshould be clearly identified.Workers know who reports to who.

Rules, Standard Operating Procedures (SOPs), &

Normsused to determine how the firm operates.Sometimes, these lead to red-tape and other

problems.


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MARY PARKER FOLLETTAn influential leader in early managerial

theory.

Introduced new elements in terms of human

relations & org structure.

Was a great believer in the power of group.

Added org environment to the theory.


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CHESTER BARNARD Introduced elements to the classical theory.

Central thesis: Org goals should be kept in

balance with the aims & needs of the

individuals working for it.

Importance & universality of Informal Org

Employees zone of indifference.


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BEHAVIORAL APPROACHES Emerged with a group of management scholars

who were trained in sociology, psychology &related fields

Focuses on the psychological and sociologicalprocesses (attitude, motivations, groupdynamics) that influence employee performance

Focuses more on the people side of theorganization

Focuses on the way a manager should personallymanage to motivate employees


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THE HUMAN RELATIONS THEORY

Human relations theory is characterized by a shift inemphasis from TASK to WORKER

A more dyadic (two-way) conceptualization of

communication.

SOCIAL RELATIONSHIPS are at the heart of organizationalbehavior.

Workers communicate opinions, complaints, suggestions,and feelings to increase satisfaction and production.


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HUMAN RELATIONS MOVEMENT

The Human Relations Movement Pyramid


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THE HUMAN RELATIONS MOVEMENTAn effort to make managers more sensitive to

their employees needs

Arose out of the influences ofThe threat of unionization

The Hawthorne studies

The philosophy of industrial humanism


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HUMAN RELATIONS MOVEMENT The Threat of Unionization

The Wagner Act of 1935 legalized union-management collective bargaining, promoting

the growth of unions and union avoidance byfirms.

The Philosophy of Industrial Humanism:

Emotional factors were more importantdeterminants of productive efficiency than werephysical and logical factors.


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HOWTHORNE EXPERIMENTS Studies performed at the Western Electric

Company from 1924-1933.

An attempt to investigate the relationship

between the level of lighting in the workplace& worker productivity.

Worker productivity was measured at variouslevels of light illumination.

Social environment / informal work groupsalso had a positive influence on productivity.


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HAWTHORNE EFFECT:

The discovery that paying special attention tothe employees motivates them to put greater

efforts into their jobs. Employees would work

harder if they believed management was

concerned about their welfare & supervisorspaid special attention to them.


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IMPLICATION OF HAWTHORNE STUDIES Behavior of managers and workers in the

work setting is as important in explaining the

level of performance as the technical aspects

of the task Demonstrated the importance of

understanding how the feelings, thoughts,

and behavior of work-group members andmanagers affect performance


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THEORY X & THEORY Y Douglas McGregor proposed the two

different sets of assumptions about workers.


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MASLOWS THEORY


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MANAGEMENT SCIENCE SCHOOLOperations Research:

At the beginning of World War II, the britishers

first formed the Operational Research(OR) teamsto solve problems.

They were able to achieve significanttechnological & tactical breakthroughs.

OR are mathematical techniques for modeling,

analysis & solution of management problems.OR procedures were formalized & are known

as Management Science School.


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MODERN APPROACHES

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SYSTEMS APPROACH It views an org as a unified, purposeful system

composed of interrelated parts.

The org is looked up as a whole and a part of thelarger, external environment.

Activity of any segment of an organization willaffect every other segment.


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KEY CONCEPTS IN SYSTEMS APPROACH.. The parts that make up the

whole of a system.1.

SUBSYSTEMS

Whole is greater than the sum of is parts

Depts. that interact cooperatively aremore productive ; than operated inisolation.

2. SYNERGY

A system which interacts with itsenvironment.

A system that does not interact with itsenvironment.

3. OPEN SYSTEMS

4. CLOSEDSYSTEMS


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KEY CONCEPTS IN SYSTEMS APPROACH.. The boundary that separates each

system from its environment.

Rigid Closed System;

Flexible Open System

5. SYSTEM

BOUNDARY

Components such as information, material &energy ; which are known as inputs.

They get transformed as outputs ( goods &services).

6. FLOW

Key to systems control

The results of actions are returned to theindividual ; allowing work procedures to beanalyzed & corrected.

7. FEEDBACK


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THE ORGANIZATION AS AN OPEN SYSTEM


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SYSTEMS APPROACH IN GIST Looks upon the management as a System as an organized whole

make up of sub-systems integrated into a unity or orderly totality.

Attention should be given to overall effectiveness of the systemrather than effectiveness of any sub-system in isolation.

Emphasizes the inter-relatedness and inter-dependence of allactivities within an organization.

Forces the manager to look upon his business as an open adaptivesystem.

Every system is a part of a super system


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CONTINGENCY THEORY

Also sometimes called the Situational approach. There is no one universally applicable set of

management principles (rules) by which tomanage organizations.

The idea that the organizational structures andcontrol systems manager choose depend onare contingent oncharacteristics of the

external environment in which the organizationoperates.

Portrays each set of organizational relationshipsin its unique circumstances.


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CONTINGENCY THEORY


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POPULAR CONTINGENCY VARIABLES Organization size

As size increases, so do the problems of coordination.

Routineness of task technology

Routine technologies require organizational structures,

leadership styles, and control systems that differ from

those required by customized or non-routine

technologies.

Environmental uncertainty

What works best in a stable and predictable environment

may be totally inappropriate in a rapidly changing and

unpredictable environment.

Individual differences

Individuals differ in terms of their desire for growth,

autonomy, tolerance of ambiguity, and expectations.


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BUSINESS ENVIRONMENT


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BUSINESS

Business may be understood as the organizedefforts of the enterprise to supply consumers withgoods & services for profit.

Society cant do without business & vice versa.

Character ist ics o f 21s tCentu ry Businesses:

+ Trend towards mini organizations

+ Flexible, flat & team based structures

+Businesses are knowledge based.+ Impact of IT

+ Dispersed ownership, transparentenvironment


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BUSINESS ENVIRONMENT DEFINED Refers to the totality of all the relevant forces,

to and beyond the control of an individualbusiness enterprise & its management.

The aggregate of all conditions, events, &influences that surround & affect it.

These exercise a significant & meaningfulinfluence on the life & growth pattern.

Character is t ics of Bus iness Environment :

+ Complex, Dynamic, Multi-faceted & has

far-reaching impact.


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RELEVANCE/ IMPORTANCE Helps to develop broad strategies & long term

policies

Enables t analyze competitors strategies

Will keep organizations dynamic in approach

Forsee impact of socio economic changes atthe national & international level

BUSINESS ENVIRONMENT


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Business

Decision

Internal Environment

Mission / Objectives

Management Structure

Internal Power RelationshipPhysical Assets & facilities

Company image

Human resources

Financial Capabilities

Technological Capabilities

Marketing Capabilities

Financiers

Suppliers

CustomersCompetitors

Public

Mktg Intermediaries

Micro Environment

Economic

Technological

Global

Demographic

Socio-Cultural

Political

Macro Environment


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INTERNAL ENVIRONMENT All factors within the organization which impart

strengths or cause weaknesses of strategic nature.

Control lable factors; wh ich inc lude:

Vision

Mission

Objectives

Management Structure

Human Resources Financial Factors

Company Image and Brand Equity


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EXTERNAL ENVIRONMENT Includes all factors outside the organization

which provide opportunities or pose threats

to the organization.

Uncontrollable factors.

Consists of Micro & Macro Environment


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MICRO ENVIRONMENT Micro Environment consists of factors in the

immediate environment.

Facto rs Inc lude:

SuppliersCustomers

Marketing Intermediaries

Competitors

Publics

Financial Communities


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MACRO ENVIRONMENT Comprises of general trends & forces that

may sooner/ later alter the way organization

operates.

Consists of Economic & Non economicenvironment


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ECONOMIC ENVIRONMENT Economic Systems, Policies & Plans

Budgets

Economic Indices GDP, Per Capita Income,

Consumer Price changes etc.

Investment Criterias & Savings

International Transactions

New Economic Policies


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NON ECONOMIC ENVIRONMENTSOCIO

CULTURAL ENVIRONMENT:

Social Customs& Rituals

Lifestyle patterns

Family structure

Role & position of men, women, aged &

children in society.


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NON ECONOMIC ENVIRONMENTDEMOGRAPHIC ENVIRONMENT:

Growth of population

Age Composition

Life Expectancy

Sex Ratio

FertilityandMortalityrates Inter-state migration


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NON ECONOMIC ENVIRONMENTTECHNOLOGICAL ENVIRONMENT:

Plays pivotal role in creating and changing an

organizations task environment

New technological innovation Technological Advances

Improved access to services (e.g. Banking)


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NON ECONOMIC ENVIRONMENTPOL ITICAL ENVIRONMENT:

The influence exerted by the three politicalinstitutions i.e.. legislature, executive andjudiciary in shaping, directing, developing andcontrolling business activities.

Political parties in power

Foreign Policy

Laws governing business The Judicial System


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NON ECONOMIC ENVIRONMENTGLOBAL ENVIRONMENT:

Growth of world economy

International Institutions ILO, WTO

Economic relations between nations

Global HR skills, mobility

Global Technology & Quality standards Global Demographic patterns

3.3


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ENVIRONMENTALLY-CONSCIOUS BUSINESS PRACTICES

Cut back on environmentally unsafe operations

Compensate for environmentally risky endeavors

Avoid confrontation with state and federal pollution

control agencies Comply early with government regulations

Promote new manufacturing technologies

Recycle wastes

AN ORGANIZATIONS ENVIRONMENT


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Industry SectorCompetitors,

Industry size andCharacteristics, Related

Industries

Raw Materials

Sector

Suppliers,Manufacturers,

Real Estate

HumanResources

SectorLabor Market, Employment

Agencies, Universities, Training

Schools, Employees in Other

Companies, Unionization

Financial Resources Sector

Stock Markets, Banks,

Savings and Loans,

Private Investors

Market

Sector

Customers, Clients,

Potential Users of

Products and Services

Technology

Sector

Techniques of

Production, Science,

Research Centers,

Automation, New

Materials

Economic

Conditions Sector

Recession, UnemploymentRate, Inflation rate, Rate of

Investment, Economics,Growth

Government Sector

City, State, Federal Laws and

Regulations, Taxes, Services,

Court System, Political

Processes

Socio-Cultural sector

Age, Values, Beliefs, Education,

Religion, Work Ethic, Urban vs.

Rural, Birth Rate

ORGANIZATION

DOMAIN

Task Environment

Macro

Environment


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management & its evolution

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