Todays Agenda

Pre-Test
Complete the Puzzle and your Final Draft
Begin your notes on The Evolution of
Management
Prepare your Binder for checking

The Evolution of
Management
Objective
Summarize the characteristics
and distinguish between
different management theories.

HOT Questions
Why is there a need for
management theories?
What are the most popular
management theories?

Beginning:
The Industrial Revolution
Modern day management theory began with
the Industrial Revolution
Began in the United States in 1860
Just before the Civil War

Period during which a country develops an

industrial economy
Before the Industrial Revolution, economy
based on agriculture (farming)
By the late 1800s, economy depended on
industries such as oil, steel, railroads, and
manufactured goods

Causes of the Industrial

Revolution
Many people left their farms to work in
factories
Professional managers supervised their work

Changes in technology, communication,

and transportation
Telegraph and cable lines extended across
the U.S. after the Civil War
Railroad lines, canals, roads, steamships

Captains of Industry
Powerful
businesspeople who
created enormous
business empires
dominated and
shaped the U.S.
economy

J. P. Morgan
(banking)

James B. Duke
(tobacco)

John D. Rockefeller (Oil)

Andrew
Carnegie (steel)

Cornelius Vanderbilt

Cornelius Vanderbilt, also known by the

sobriquet Commodore, was an American
business magnate and philanthropist who
built his wealth in railroads and shipping.

Creation of Monopolies
The captains of industry often pursued
profit and self-interest above all else
Drove competitors out of business
Created giant companies that maintained
monopolies in their industries

Monopoly
Occurs when one party maintains total
control over a type of industry
Trust: giant industrial monopoly
By 1879, Rockefeller controlled >90% of the
countrys refining capacity and pipelines

John D. Rockefeller
John Davison Rockefeller, Sr. was an
American business magnate and
philanthropist. He was a co-founder of
the Standard Oil Company, which
dominated the oil industry and was the
first great U.S. business trust.

The Break-Up of Trusts

People became
worried about the
concentration of
wealth in the hands
of a only a few
In response, the
government began
regulating business
Cornelius Vanderbilt

The Break-Up of Trusts

The Interstate Commerce
Act, 1887
The railroads gave rebates to some
customers but not others
This act forced railroads to publish their rates
and forbade them to change rates without
notifying the public
Established the Interstate Commerce
Commission (ICC) to supervise the railroads

The Break-Up of Trusts

The Sherman Act, 1890
Made it illegal for companies to create
monopolies
Intended to restore competition
Example
Standard Oil Company was broken into smaller
companies so that other oil companies could
compete with the former giant
John D. Rockefeller

New Challenges for

Management
When most Americans worked on farms,
sophisticated management techniques
were not necessary
By the end of the nineteenth century, giant
companies employed thousands of people
and distributed products all over the
country
Workers performed tasks that needed to
be coordinated
These changes demanded new ideas about how
to manage people working in large corporations

You should know

Frederick Taylor & Scientific Management
What was his goal?
He conducted research to find the what?

The Hawthorne Studies

What was Hawthorne and where was it
located?
What is the Hawthorne Effect?

Abraham Maslow
People fulfill which needs first?
List the hierarchy of needs

Frederick W. Taylor
and Scientific
Management
Wanted to find ways to motivate

workers to work harder

To increase efficiency, he tried to
figure one best way to perform a
particular task
Used a stopwatch to determine which
work method was most efficient
These time and motion studies lead to
scientific management principles

Frederick W. Taylor
and Scientific
Management
Scientific management seeks to

increase productivity and make work

easier by carefully studying work
procedures and determining the
best methods for performing
particular tasks

Frederick W. Taylor
and Scientific
Employers should gather, classify, and
Management

tabulate data in order to determine the

one best way of performing a task or
series of tasks.
Employers should study worker strengths
and weaknesses and match workers to
jobs. Employers should also train
employees in order to improve their
performance.
The principles of scientific management
should be explained to workers.
Management and workers should be
interdependent so that they cooperate.

Frederick W. Taylor
and Scientific Management
Companies today continue to use the
principles of scientific management
Marriott Corporation
Customer satisfaction

The Hawthorne Studies of

Productivity
Researchers began to look at the
relationship between working conditions
and productivity
Series of experiments at the Hawthorne
plant of Western Electric in Cicero, IL
Lowered the lighting expecting productivity
to fall
What happened?

The Hawthorne Studies of

Productivity
Baffled by results, a team of
psychologists from Harvard University
were called upon
Over five years, hundreds of experiments
were conducted at the plant
Different wage payments
Rest periods
Work hours

What were the results?

The Hawthorne Studies of

Productivity
Researchers concluded that productivity
rose because workers worked harder
when they received attention
Hawthorne effect
Change of any kind increases productivity

Factors other than the physical

environment affected worker productivity
Psychological and social conditions, effective
supervision

Abraham H. Maslow and

the Hierarchy of Needs
According to Maslow
All people have five basic types of needs
People fulfill lower-level needs before
seeking to fulfill higher-level needs
One set of needs must be met before
another is sought
Hierarchy of needs is his grouping
and ordering of physical, security,
social, status, and self-actualization
needs

Maslows Hierarchy of
Needs

Applying Maslows Theory

to Management
At the lowest level, workers are
motivated by basic needs
Wages or salary, physical conditions

Safety or security needs

Providing insurance, retirement benefits, job
security
Safe from physical, psychological, or financial
harm

Applying Maslows Theory

to Management
Social needs
Provide a work environment in which
colleagues interact
Company lunch rooms, company retreats

Status needs
Provide workers with signs of recognition that
are visible to others
Job titles, private offices, designated parking
spaces, awards, promotions

Applying Maslows Theory

to Management
Self-fulfillment needs
Provide employees with opportunities to be
creative at work
Include employees in decision making

Example
ITTs Ring of Quality Control