the evolution of management theories - ca sri lanka of m theories.pdf · the evolution of...
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The Evolution of Management Theories
Semester 2
By:
Michelle Ratnasothy
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Various changes in the environment have
influenced the way we do business.
Hence there is a shift from the Traditional
approach (of management) to a New
Paradigm (Model)
(OLD)
Traditional Organization
(NEW)
Learning Organization
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Factors influencing CHANGE
• Political forces
• Economic forces
• Social forces
• Globalization
• Diversity
• Technology
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Characteristics of a Traditional
Organization
• Centralized decision making
• Controlled through vertical hierarchy
• Division of Labour
Disadvantage: Works only in stable time
Doesn’t work in today’s unstable, ever changing environment
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Intro to learning organization
Company’s to be successful in an ever changing environment they need to learn and respond
quickly
Definition
Learning Organization is an organization where all employees get involved in identifying and finding
solutions to organizational problems
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Characteristics of the learning
organization
• Democratic leadership
• Team based structure
• Employee empowerment
• Open information
• Participative strategy
• Strong adaptive culture
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Difference between traditional and
learning organization
Old Paradigm New Paradigm
Forces on Organization Vertical Organization Learning Organization
Markets Work force Technology
Values
Local domestic Homogenous Mechanical
Stability, efficiency
Global Diverse
Electronic Change
MNG competencies
Focus Leadership Doing work
Relationships
Profits Autocratic
By individuals Conflicts
Customers, employees Dispersed, empowering
By teams collaboration
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The history of Management
The concept of Management
Can be traced backed to 3000BC
However the formal study of Management began
Late in the 19th Century with Industrial Revolution
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Evolution of Management Theory
• Classical Perspective (1870 – 1940)
• Humanistic Perspective (1930 – 1990)
• Management Science Perspective (1940 – 1990)
• System Theory (1950 – 2000)
• Contingency Theory (1970 – 2000)
• Learning Organization (1990 – 2010)
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The main management perspectives
• Classical perspective
• Humanistic perspective
• Management science perspective
• Contemporary theories
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The Classical Perspective
• The classical perspective is the oldest formal theory of
management. Its roots pre-date the 20th century.
• The classical perspective generally concerns ways to
work and organizations more efficiently.
Subfields
Scientific Management
Bureaucratic Management
Administrative Principle
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The Scientific Management Theory
• Developed by – Fredrick Winslow Taylor (1856 – 1915)
• Make organizations more efficient by making
individuals efficient
• Focused on productivity of individual worker
• Can be done through a scientific analysis
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Scientific Management is based on the
following;
• Developing a standard methods for performing each
job
• Selecting workers with appropriate abilities
• Training workers in a standard method
• Supporting workers by planning their work and
eliminated interruptions
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Taylor’s contribution includes
• Demonstrating the importance of compensation for
performance
• Initiating the careful study of tasks and jobs
• Demonstrating the importance of personnel and
training
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Some criticisms
• Did not appreciate the social context of work and
higher needs of workers
• Did not acknowledge variance among workers
• Tended to regard workers as uniformed and ignored
their ideas and suggestions
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Bureaucratic Organizations
• Max Weber, a German theorist, introduced most of
the concepts
• Traditional organizations were more focused on
individuals and wasn’t assigning responsibility and
authority to positions. Hence high labour turnover.
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Main Idea
• For organizations to survive responsibility and
authority to be assigned to a position rather than to
an individual
– Systematic approach
– Equal treatment
– Everyone knows the rules
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Bureaucratic Principles
A Bureaucracy should have
Written rules
System of task relationships
Hierarchy of authority
Fair evaluation and reward
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Administrative Management
• Seeks 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.
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The Humanistic Perspective
Emerged around understanding human behaviour,
needs and attitudes in workplace.
Subfields
Human Relations perspective
Human Resources perspective
Behavioral science approach
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Behavioral Management
• Focuses on the way a manager should personally manage to motivate employees.
• Mary Parker Follett: an influential leader in early managerial theory. – Suggested 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.
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The Hawthorne Studies
• Study of worker efficiency at the Hawthorne Works of the Western Electric Co. during 1924-1932.
– Worker productivity was measured at various levels of light illumination.
– Researchers found that regardless of whether the light levels were raised or lowered, productivity rose.
• Actually, it appears that the workers enjoyed the attention they received as part of the study and were more productive.
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Theory X and Y
• Douglas 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.
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Theory X v. Theory Y
Theory Y
Employee is not lazy Must create work setting to build initiative Provide authority to workers
Theory X
Employee is lazy Managers must closely supervise Create strict rules & defined rewards
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Theory Z
• William Ouchi researched the cultural differences between Japan and USA.
– USA culture emphasizes the individual, and managers tend to feel workers follow the Theory X model.
– Japan culture expects worker committed to the organization first and thus behave differently than USA workers.
• Theory Z combines parts of both the USA and Japan structure.
– Managers stress long-term employment, work-group, and organizational focus.
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Management Science
• Uses rigorous quantitative techniques to maximize resources.
Quantitative management: utilizes linear programming, modeling, simulation systems.
Operations management: techniques to analyze all aspects of the production system.
Total Quality Management (TQM): focuses on improved quality.
Management Information Systems (MIS): provides information about the organization.
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Contemporary Theories
• Considers relationships inside and outside the organization.
– The environment consists of forces, conditions, and influences outside the organization.
• Systems theory considers the impact of stages:
Input: acquire external resources. Conversion: inputs are processed into goods and services. Output: finished goods are released into the environment.
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Systems Considerations
• An open system interacts with the environment. A closed system is self-contained.
– Closed systems often undergo entropy and lose the ability to control itself, and fails.
• Synergy: performance gains of the whole surpass the components.
– Synergy is only possible in a coordinated system.
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The Organization as an Open System
Input Stage
Raw Materials
Conversion Stage
Machines
Human skills
Output Stage
Goods
Services
Sales of outputs Firm can then buy inputs
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Contingency Theory
• Assumes 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.
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Structures
• Mechanistic: Authority is centralized at the top. (Theory X)
– Employees closely monitored and managed.
– Very efficient in a stable environment.
• Organic: Authority is decentralized throughout employees. (Theory Y)
– Much looser control than mechanistic.
– Managers can react quickly to changing environment.
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Q&A