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TRANSCRIPT
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C
hapter
11
C
hapter
22The Evolution ofManagement Thought
The Evolution of
Management Thought
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Copyright 2006 by The McGraw-Hill Companies, Inc. All
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OverviewOverview
The need toincrease efficiency andeffectiveness has driven the evolution of
management theory
Job specialization, the division of laborandthe study of how people do things is central to
the pursuit of increased efficiency
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OverviewOverview
Theories about the best ways to
motivate and control employees
have evolvedThe study of the external
environmentsimpact on an
organization has become a centralissue in management thought
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Evolution of Management TheoryEvolution of Management Theory
1890 1920 1940 1970 2000
*Scientific Management
*Administrative Management*Behavioral Management
*Management Science
*Organizational
Environment
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Job Specialization and
the Division of Labor
Job Specialization and
the Division of Labor
Adam Smith (18th century economist)
Observed that firms manufactured
pins in one of two different ways:
- Craft-styleeach worker did allsteps.
- Productioneach workerspecialized in one step.
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Job Specialization and
the Division of Labor
Job Specialization and
the Division of Labor
Smith realized that:
Breaking the total job down into steps
allowed workers to become very skilledat specific tasks, increasing
productivity
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F.W. Taylor and Scientific
Management
F.W. Taylor and Scientific
Management
Scientific Management
The systematic study of therelationships between people andtasks in order to redesign the workprocess for higher efficiency.
TAKE THE WATCH APART ANDREASSEMBLE IT DIFFERENTLY TOMAKE IT TICK FASTER.
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Scientific ManagementScientific Management
Defined and popularized by Taylor
in the early 1900s.
Sought to reduce the time a workerspent on each task by optimizing
the way the task was done.
Focused on the process.
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Four Principles of Scientific
Management
Four Principles of Scientific
Management1) Study the ways jobs are performed
and determine new ways to do them.
Gather detailed time and motion
information.
Try different methods to see which is
best.
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Four Principles of Scientific
Management
Four Principles of Scientific
Management2) Codify the new methods into
rules and teach all workers
the new method.
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Four Principles of Scientific
Management
Four Principles of Scientific
Management3) Determine whos skills best match the
rules.
4) Establish fair levels of performance; pay
a premium for higher performance. Note: all still done by Toyota today but
improvement process (kaizen) inhands of employees, not managers you will see why this point isimportant
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Problems with Scientific
Management
Problems with Scientific
ManagementSpecialized jobs became boring and dull.Managers frequently did not reward workers for
increased output, so workers purposelyunderperformed.
Management used conveyors belts to force a specificwork pace, making workers depersonalized cogs in amachine.
Unions rose to negotiate work rules.
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Administrative Management TheoryAdministrative Management Theory
Administrative Management
The study of how to create an
organizational structure that leadsto high efficiency
and effectiveness.
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Administrative Management TheoryAdministrative Management Theory
Max Weber
Developed the concept of bureaucracy as a
formal system of organization and
administration designed to ensure
efficiency and effectiveness.
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Webers Principles of BureaucracyWebers Principles of Bureaucracy
1) A managers formal authority derives
from the position he holds in the
organization.2) Position should be based on
performance, not social standing or
personal contacts.
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Webers Principles of BureaucracyWebers Principles of Bureaucracy
3) The extent of each positions formalresponsibilities and its relationshipto other positions should be clearlyspecified.
4) Authority can be exercisedeffectively when positions are
arranged hierarchically (the many-layered cake).
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Webers Principles of BureaucracyWebers Principles of Bureaucracy
5) Managers must create a well-defined system ofrules, operating procedures, and norms so thatworkers know what is expected and managerscan effectively control behavior.
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Rules, SOPs and NormsRules, SOPs and Norms
Rules formal written instructions thatspecify actions to be taken under differentcircumstances
Standard Operating Procedures (SOPs) specific sets of written instructions about howto perform a certain aspect of a task
Norms unwritten, informal codes ofconduct that prescribe how people shouldact in particular situations IBM dress codein the 70s.
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Fayols Principles of ManagementFayols Principles of Management
Division of Labor: allows for job specialization.
jobs can have too much specialization leading to
poor quality and worker dissatisfaction.
Authority and Responsibility both formal and informal authority resulting from
special expertise.
Unity of Command
Employees should have only one boss. If not,
chaos and confusion.
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Fayols Principles of ManagementFayols Principles of Management
Line of Authority
A clear chain of command from top tobottom of the firm.
Centralization The degree to which authority rests at the
top of the organization.
Unity of Direction A single plan of action to guide the
organization.
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Fayols Principles of ManagementFayols Principles of Management
Equity - The provision of justice and the fair
and impartial treatment of all employees.
Order- The arrangement of employees in
order to optimize value for the organizationand provide career opportunities.
Initiative - The fostering of creativity and
innovation by encouraging employees to acton their own.
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Fayols Principles of ManagementFayols Principles of Management
Discipline
Obedient, applied, respectful employees
are necessary for the organization to
function.Equitable Remuneration of Personnel
An equitable and uniform payment system
that motivates employees to contribute toorganizational success.
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Fayols Principles of ManagementFayols Principles of Management
Stability of Personnel Tenure
Long-term employment is important for the
development of skills that improve the
organizations performance (it also makes
employees feel secure, but beware complacency)
Subordination of Individual Interest to the
Common Interest
The interest of the organization takes precedenceover that of the individual employee.
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Fayols Principles of ManagementFayols Principles of Management
Esprit de corps
Comradeship and
shared enthusiasm
foster devotion tothe common cause
(the success of the
organization).
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Difference?Difference?
Management theory is evolving.
How did Fayols approach differ from F.
W. Taylors Scientific Management?How did it differ from Max Webers
approach?
B h i l M t ThB h i l M t Th
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Behavioral Management Theory
(The next evolutionary step)
Behavioral Management Theory
(The next evolutionary step)
Behavioral Management
The study of how managers should behave
in order to motivate employees to achieve
organizational goals.
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Behavioral ManagementBehavioral Management
Mary Parker Follett Concerned that Taylor ignored the human side of
the organizationSuggested workers help in analyzing their jobsIf workers have relevant knowledge of the
task, then they should control the taskThis is the heart of the Toyota Production
System (TPS)
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The Hawthorne StudiesThe Hawthorne Studies
Human Relations Implications Hawthorne effect workers responded to
management attention and were more
productive. Gave rise to the field of Organizational
Behavior and the Human RelationsMovement: the study of the factors that
impact how individuals and groups respondand act in organizations.
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Theory X and Theory YTheory X and Theory Y
Douglas McGregor proposed two different setsof assumptions about workers.
Theory X assumes the average worker is
lazy, dislikes work and will do as little aspossible (you have all met this person).Managers must closely supervise and
control through reward and punishment
(carrot and stick).Mostly wrong!
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Theory X and Theory YTheory X and Theory Y
Theory Y assumes workers want to do agood job and the job itself will determine if
the worker likes the work.
Managers should allow workers greaterlatitude and create an organization to
stimulate the workers.
Mostly right!
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Management Science TheoryManagement Science Theory
A management approach using rigorousquantitative techniques to maximize
productive use of
organizationalresources.
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Management Science TheoryManagement Science Theory
Quantitative management utilizeslinear and nonlinear programming,
modeling, simulation systems and
queuing and chaos theory.
Operations management
techniques used to analyze allaspects of the production system.
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Management Science TheoryManagement Science Theory
Total Quality Management (TQM) focuses on analyzing input,conversion, and output activities to
increase product quality (SPC, PDCA,Deming, Juran, Japan)
Management Information Systems
(MIS) provide information vital foreffective decision making and control
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Organizational Environment TheoryOrganizational Environment Theory
Organizational Environment:
The set of outside forces and conditions
that affect a managers ability to acquire
and use resources efficiently and
effectively THE WORLD IN YOUR
FACE
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Contingency TheoryContingency Theory
There is no one best way to organize
Organizational structures and control
systems a manager chooses are
contingent on characteristics of the
external environment. Organization
needs to be flexible and adaptive.More correct than other theories
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Type of StructureType of Structure
Mechanistic Structure
Authority is centralized at the top.
Employees are closely monitored andmanaged -- Theory X.
Can be very efficient in a stable
environment; GM a decade ago. Not effective in todays environment.
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Type of StructureType of Structure
Organic Structure
Authority is decentralized throughout the
organization; looser control (Theory Y)
Reliance on shared norms and culture is greater Heavy reliance on cross-functional teams
Works best when environment is unstable and
rapidly changing
Toyota to a degree; most silicon valley companies
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QuestionQuestion
How has management theory andpractice evolved over the decades?
From what to what?
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Management EvolutionManagement Evolution
From process to peopleFrom totalitarian to team
From command to consensus
From tall and rigid to flexible and flat
From eyes-in to eyes-out
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The Third Wave of EvolutionThe Third Wave of Evolution
Renewed emphasis on process caused byinflux of Japanese companies andmanagement methods into North Americaover the past 25 years.
Renewed attention to process coupled withemphasis on people housed in flat, agile and
adaptable corporate structures -- a powerfulcompetitive combination.