Management Yesterday and

Today
Chapter 2
Chapter Road Map
Historic Background of Management
Scientific Management
General Administrative Theory
Quantitative Approach to management
Human Relations School ( organization
behavior Theorists)
The systems approach
The contingency approach
Current trends and issues
Development Of Major Management
Theories
Historical
Background
Scientific
Management
General
Administrative
Theorists
Quantitative
Approach
Management Theories
Industrial
Revolution
Adam Smith
Early Advocates
Hawthorne Studies
Organizational
Behavior
2-3
Early Examples
of Management
Historical Background Of Management
Organizations Have Existed for Thousands of Years
testifies to the existence of early management practice
ability to create the Pyramids, Great Wall of China
Significant Pre-Twentieth-Century Events
Wealth of Nations - Adam Smith
division of labor - breakdown of jobs into narrow and
repetitive tasks increased productivity
Industrial Revolution
substitution of machine power for human power
large organizations required formal management


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Scientific Management
Major proponents: Fredrick Taylor, and Frank and
Lillian Gilbertth
Taylors Views On Problems of Productivity
Matter of ignorance on part of management and
labor
Both dont know what constitutes a Fair day
work and Fair Pay
Both concerned too much with how to divide
profits that arose from productivity and not
enough with increasing productivity
The Labor Question
Soldiering the real cause of low labor
productivity
Types of Soldiering
1. Natural Soldiering
Natural Tendency and instinct of men to
take it easy
2. Systematic Soldiering
> Result of inherent relationship with other
men

Reasons for Systematic Soldering
Natural Soldering could be overcome by a manager able to inspire
or force workers to come up to the mark
Systematic soldering:
1. Work faster would throw large number of workers out of work
2. The defective management systems then in use forced workers to
work slowly to protect their own interests
3. Adherence to rule of thumb work methods
Taylor placed blame on managers and not workers because it was
management job to design the jobs properly and to offer the
proper incentives to overcome their soldering
A daily or hourly wage system encouraged soldering because pay
was based on attendance and position not effort
To work hard brought no rewards and actually encouraged lazy
worker
Piece rate system practiced at that time was defective because
standards were not set properly
Determining Fair Days Work and
Fair Days Pay
Fair Days Work
Through Time and Motion Study determine
what workers can do with their equipment
and materials.
Develop a file of elementary movement and
times
Fair Days Pay
Set standards and rates scientifically
Use differential piece rate system

Summary of Taylors Work
Develop science for each element of persons
work
Scientifically select, train, teach and develop
workers
Cooperate with workers
Divide responsibility between management
and workers
Scientific Management
Frank and Lillian Gilbreth
Studied work to eliminate inefficient hand and body motions
Experimented with the design and use of proper tools and equipment for
optimizing work performance
Frank best known for his experiments in bricklaying
He reduced the number of motions in laying exterior bricks from 18 to 5,
laying interior bricks from 18 to 2.
Increased the productivity
use of motion pictures to study hand-and-body movements
Invented a device called a micrometer that recorded a workers motions
and the amount of time spent doing each motion
Wasted motions missed by naked eye could be identified and eliminated
Devised a classification scheme to label 17 basic hand motions which they
called therbligs
This scheme allowed the Gilbreths a more precise way for analyzing a
workers exact hand movements
Administrative Theorists
Henri Fayol
Primary emphasis on establishing broad administrative
principles applicable to higher management level
Definition of Management
Management is an overall function of conducting an
undertaking towards its objectives by trying to make
best possible use of all resources at its disposal and to
ensure smooth working the five essential elements
1. Planning
2. Organizing
3. Command
4. Coordination
5. Control
EXHIBIT 2.3: FAYOLS 14 PRINCIPLES OF MANAGEMENT
General Administrative Theorists
Max Weber
System Of Administration
Division of Labor
Authority and responsibility well defined
Positions organized in Hierarchy of authority
resulting in clear chain of command
Members selected on basis of technical
competence
Officials appointed not elected
System and procedures for dealing with work
situations
Impersonality in interpersonal relations

EXHIBIT 2.4: WEBERS IDEAL BUREAUCRACY
2-14
How do todays Managers use General
Administrative
Functional view of a managers job can be
attributed to Fayol
14 principles serve as a frame of reference
from which many current management
concepts were evolved
Many characteristics of Webers bureaucracy
are evident in large organizations
Quantitative Approach To
Management
Operations Research (Management Science)
use of quantitative techniques to improve decision
making
applications of statistics
optimization models
computer simulations of management activities
Linear programming
- improves resource allocation decisions
Critical-path scheduling analysis
- improves work scheduling
Toward Understanding Organizational
Behavior
Organizational Behavior
study of the actions of people at work
early advocates
late 1800s and early 1900s
believed that people were the most
important asset of the organization
ideas provided the basis for a variety of
human resource management programs
employee selection
employee motivation
EXHIBIT 2.5: EARLY ADVOCATES OF OB
Behavioral School
Hawthorne Experiments (Elton Mayo) 1924- 1927
Phase 1:
1. Illumination experiments
2. Relay room Experiment Small group of six women
Variables studied: shorter working periods, group
incentive pay, and supervision
Results: productivity increased
Reasons: More freedom on job, No boss, Setting their
own work, Small group, the way they were treated
Phase 2: Interviewing Program
Non directive techniques
Complaints had two levels of content:
a. Manifest or material content
b. Psychological content or Pessimistic Reveries
Conclusion:
New supervisor was to be more people oriented, more
concerned, less aloof and skilled in handling social
problems
Phase 3: Bank wiring Room Experiments
14 male operatives
The group job was to wire and solder of equipment
for general connecting services
Conclusions:
Importance of group norms and standards and the
informal group
Group norms regarding rate of productivity
significantly influenced the level of individual
productivity
Informal authority of influential group members
often overrode formal authority from the supervisor
Implications of Hawthorne Studies
Identified that organizations are socio-technical
systems
Demonstrated the importance of psychological or
human factors on worker productivity and morale
Signaled the criticality of certain variables for worker
satisfaction, autonomy on the job, relative lack of need
for the need for close supervision, the importance of
receiving feedback on the direct relationship between
performance and reward
Provided data and stimulus for group dynamics,
especially in work context
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Systems Theory
Definition of system:
An integrated, unitary whole composed of two or more
interdependent parts, components, or subsystems and
delineated by its identifiable boundaries from its
environmental suprasystem
Covers a broad spectrum of our physical, biological and social
world
1. Closed System: systems that neither are influenced by, nor
interact with their environment. Physical and Mechanical
systems are considered as closed system.
2. Open system: Dynamic systems that interact with and
respond to their environment. Biological and social systems
are examples of open system.
The term open and closed system are relative. Neither
systems are completely closed or completely open

The Organization as open System
Inputs
Raw Materials
Human resources
Capital
Technology
Information
Transformation
Process
Employees work
activities
Management
activities
Technology &
operations
Outputs
Products and
services
Financial results
Information
Human results
Feedback
Environment
Environment
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An Integrated View of Organizations
An organization is the structuring and integrating of human
activities around various technologies. The technologies affect
the types of inputs into the organization, the nature of
transformation processes, and the outputs from the system.
The social system determines the effectiveness and efficiency
of the utilization of technology
The internal organization can be viewed as composed of
several major subsystems:
1. Goals and values: Organization takes many of its values from
the broader socio-cultural environment. The organization
performs function for the society, and if it is to be successful
in receiving inputs, it must conform to social requirements
2. The technical subsystem refers to the knowledge required for
the performance of task, including techniques used in
transformation of inputs into outputs
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An integrated view of organizations
3. Psychosocial Subsystem is composed of individuals and
groups in interaction. It consists of individual behavior and
motivation, status, role relationship, group dynamics and
influence systems.
4. Structure involves the ways in which task of the
organization are divided and coordinated. It is also
concerned with patterns of authority, communications and
workflow.
It provides for the formalization of relationships between
the technical and psychosocial subsystem.
5. The managerial Subsystem spans the entire organization by
relating the organization to its environment, setting goals,
developing comprehensive strategic, and operational plans,
designing the structure, and establishing control processes.

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Contingency Views of Organization
Contingency views ( situational approach) recognize
that environment and internal subsystems of each
organization is unique and provide a basis for
designing and managing specific organization.
There is no one best of way or universal principles for
structuring an organization. It would depend on
contextual variables:
1. Organization Size
2. Type of technology
3. Environment
4. Individual differences
Current Trends And Issues
Globalization
all organizations are faced with the opportunities and challenges
of operating in a global market
no longer constrained by national borders
Workforce Diversity
heterogeneous workforce in terms of gender, race, ethnicity, and
age
workforce is getting older
Asians and Hispanics are an increasingly large percentage of workforce
melting pot approach versus celebration of differences
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Current Trends And Issues (cont.)
Entrepreneurship
three important themes
pursuit of opportunities - capitalizing on
environmental change to create value
innovation - introducing new approaches to
satisfy unfulfilled market needs
growth - not content to remain small
will continue to be important in all societies
will influence profit and not-for-profit
organizations
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Current Trends And Issues (cont.)
Managing in an E-Business World
E-commerce - any form of business exchange or
transaction in which parties interact electronically
E-business - comprehensive term describing the way an
organization does its work by using electronic (Internet-
based) linkages with key constituencies
may include e-commerce
three categories reflect different degrees of involvement in
e-business
intranet - an internal organizational communication
system that uses Internet technology and is accessible
only by organizational employees
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Types of E-Commerce Transactions
E-Commerce
Business-to-Consumer
(B2C)
Electronic retailing
Government-to-Business
(G2B)
All transactions between
companies and
government agencies
Business-to-Business
(B2B)
All transactions between a
company and its suppliers
Consumer-to-Consumer
(G2C)
Electronic markets formed
by Web-based auctions
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Categories of E-Business Involvement
E-business units
within
traditional
organization
E-business-enhanced
Organization
E-business tools
and applications
used within tradi-
tional organization
E-business-enabled
Organization
Organizations entire work
processes revolve around
e-business model
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Current Trends And Issues (cont.)

Need for Innovation and Flexibility
without a constant flow of new ideas, an organization is doomed
to obsolescence or even worse
must be flexible to accommodate changing customers needs,
appearance of new competitors, and shifting employees from
project to project
Quality Management
Total Quality Management (TQM) - philosophy of management
based on continual improvement and responding to customer
needs and expectations
customer - refers to internal and external entities that interact
with the organizations product or service
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EXHIBIT 2.8: WHAT IS TQM?
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Current Trends And Issues (cont.)
Learning Organizations and Knowledge Management
learning organization - one that has developed the capacity to
continuously learn, adapt, and change
create learning capabilities throughout the organization
understanding that knowledge is an important resource
knowledge management - involves cultivating a learning culture
where organizational members systematically gather knowledge
and share it with others in the organization so as to achieve better
performance
managers must transform themselves from bosses to team
leaders
learn to listen, motivate, coach, and nurture
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EXHIBIT 2.9: LEARNING ORGANIZATION VERSUS TRADITIONAL
ORGANIZATION
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Current Trends And Issues (cont.)
Workplace Spirituality
a recognition of an inner life that nourishes and is nourished by
meaningful work that takes place in the context of community
growing interest in spirituality at work by workers at all levels and
in all areas of organizations
employees looking for meaning, purpose, and a sense of
connectedness or community from their work and their
workplace
uncertainty in business environment contributes to interest in
workplace spirituality

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