MANAGMENT THOUGHTS

Development of management thought: 

Development of management thought Chapter – 2

Modern management thought: 

Modern management thought The system approach Dynamic Multi dimensional (top, operating, middle) Multi-motived Multi disciplinary Multi variable Adaptive Probabilistic

Evolution of management thought: 

Evolution of management thought Management Thought Period Early contribution Up to 19 th century Scientific management Classical Approach 1900-1930 Administrative/Operational 1916-1940 Human Relation Management Neo-classical 1930-1950 Social system approach 1940-1950 Human Behavior Approach 1950-1970 Decision theory Approach Quantitative 1945-1965 Management Science Approach 1950-1960 System Approach 1960s onwards Contingency approach 1970s onwards Modern approach

Factors causes Severe Compaction: 

Factors causes Severe Compaction Technological innovations and their dissemination (Spread) in business Growing technological obsolescence Increase in capital investment Freedom at national and international market Increasing buyer’s sovereignty in market

Increase in complexity in management: 

Increase in complexity in management Increase in size of business organisation High degree of level of division on labor and specialization Increase in government regulation and control to make business more socially-oriented Organisation union activities to pressures on management Pressure of various conflicting interest groups to meet their demands from the organisation

Evolution of Management Theory: 

Evolution of Management Theory 1890 1940 2000 Administrative Management Behavioral Management Scientific Management Management Science Org. Environment

Evolution of management thought: 

Evolution of management thought Management Thought Period Early contribution Up to 19 th century Scientific management 1900-1930 Administrative/Operational 1916-1940 Human Relation Management 1930-1950 Social system approach 1940-1950 Decision theory Approach 1945-1965 Management Science Approach 1950-1960 Human Behavior Approach 1950-1970 System Approach 1960s onwards Contingency approach 1970s onwards

Early Influences: 

Early Influences Ancient records in China & Greece indicate the importance of organization & administration , but do not give much insight into the principles of management. Outstanding scholars have referred to management activities in the running of city states & empires. In the period 1400 to 1450, merchants in Venice, Italy, operated various types of business organization, e.g. partnerships, trusts & holding companies. Control emerged in the form of a double-entry book-keeping system & related documentation & records. Also, there was standardization of material & systems of inventory control.

Slide 9: 

Robert Owen-1813 :- Development of mgmt Concepts. Factor which influence the productivity of personnel in plants Staff personnel in church administration Military organisation

The Scientific Management Movement: 

The Scientific Management Movement In the years after 1900 conventional management practices were found to be inadequate to meet demands from the changing economic, social & technological environment . A few pioneers examined causes of inefficiency & experimented to try to find more efficient methods and procedures for control. From these basic experiments a system of management thought developed which came to be known as scientific management .

Slide 11: 

SCIENTIFIC MANAGEMENT ERA Fredrick Winslow Taylor – Industrial Engineers. Acknowledged as the father of scientific management Scientific management is concerned with knowing exactly what you want men to do and then see in that they do it in the best and cheapest way His primary concern was to increase productivity through greater efficiency in production and increased pay for workers Scientific selection of workers and cooperation of labors and management

Taylor’s Five Principles of Scientific Management: 

Taylor’s Five Principles of Scientific Management A clear division of tasks and responsibilities between management and workers. Use of scientific methods to determine the best way of doing a job. Scientific selection of the person to do the newly designed job.

Elements and tools of scientific management: 

Elements and tools of scientific management Separation of planning and doing (supervisor and workers) Functional foremanship Job analysis Standardization Scientific selection and training of workers Financial incentives Economy Mental Revolution

Slide 14: 

Separation of planning and doing (supervisor and workers) Functional foremanship Planning Incharge Route clerk Instruction card clerk Time and cost clerk Discipline clerk Production Incharge Speed boss Inspector Maintenance foreman Gang boss

Slide 15: 

Job Analysis Time Motion Fatigue Standardization Instruments, tools, period of work, amount of work, working condition, cost of production

Slide 16: 

Scientific selection and training of workers Work, Experience, Aptitude, Physical Strength Financial Incentives Differential piece rate Economy Optimum utilization of resources Mental revolution Co-operation between management and workers

The 4 Principles : 

The 4 Principles Four Principles to increase efficiency: 1. Study the way the job is performed now & determine new ways to do it. Gather detailed, time and motion information. Try different methods to see which is best. 2. Codify the new method into rules . Teach to all workers. 3. Select workers whose skills match the rules set in Step 2. 4. Establish a fair level of performance and pay for higher performance. Workers should benefit from higher output.

Principles of scientific Management: 

Principles of scientific Management Replacing rule of thumb (mere bases of estimates) with Science Harmony in group action Co-operation, rather than chaotic individualism Maximum output Development of workers

Pig Iron Shovelling Experiment: 

Pig Iron Shovelling Experiment Select suitable workers. Re-design shovel, shovel load decreases, total amount shovelled per day rises. Calculate work/rest ratio. Instruct workers to do exactly what they are told to do. Give workers a moderate increase in wages.

Comparison of Old and New Plans: 

Comparison of Old and New Plans Old 500 workers Average 16 man-tons per day Average earnings per man per day $1.15 Average cost per ton $0.072 New 140 workers Average 59 man-tons per day Average earnings per man per day $1.88 Average cost per ton $0.033

Consequences of Taylor’s Experiment : 

Consequences of Taylor’s Experiment Management not interested, WHY? labour is cheap profits are good more responsibility for management Workers are interested because more security training higher wages

Critical Analysis of Scientific Management: 

Critical Analysis of Scientific Management Managers often implemented only the increased output side of Taylor’s plan. They did not allow workers to share in increased output. Specialized jobs became very boring, dull. Workers ended up distrusting Scientific Management. Workers could purposely “under-perform” Management responded with increased use of machines. Aggressive attitude towards workers Close strict supervision Unions opposed differential piece rate

Henry Fayol’s Administrative Management: 

Henry Fayol’s Administrative Management Activities of an industrial organisation Technical (relating to Production) Commercial (buying, selling and exchange) Financial (search of capital & Optimum use) Security (Protection of Property and person) Accounting (including Statistic) Managerial (planning, organizing, command, coordination and control)

Approach of studying Management: 

Approach of studying Management Managerial Qualities and Training General Principles of Management Elements of Management

Managerial Qualities and Training: 

Managerial Qualities and Training Physical Mental Moral Educational Technical Experience

Fayol’s Principles: 

Fayol’s Principles Henri Fayol, developed a set of 14 principles: 1. Division of Labor: allows for job specialization. Fayol noted firms can have too much specialization leading to poor quality and worker involvement. 2. Authority and Responsibility: Fayol included both formal and informal authority resulting from special expertise. 3. Unity of Command: Employees should have only one boss. 4. Line of Authority: a clear chain from top to bottom of the firm. 5. Centralization : the degree to which authority rests at the very top.

Fayol’s Principles: 

Fayol’s Principles 6. Unity of Direction : One plan of action to guide the organization. 7. Equity: Treat all employees fairly in justice and respect. 8. Order: Each employee is put where they have the most value. 9. Initiative: Encourage innovation. 10. Discipline: obedient, applied, respectful employees needed.

Fayol’s Principles: 

Fayol’s Principles 11. Remuneration of Personnel: The payment system contributes to success. 12. Stability of Tenure: Long-term employment is important. 13. General interest over individual interest: The organization takes precedence over the individual. 14. Esprit de corps: “union is strength” Share enthusiasm or devotion to the organization.

Elements of Management: 

Elements of Management Planning Organization Commanding Coordination Controlling

Slide 30: 

Basis of Difference Taylor Fayol Perspective Shop Floor Level Higher Mgt level Focus Efficiency through work simplification & standardization By observing certain principles Orientation Production and engineering Managerial function Results Scientific observation & Measurement Personnel Experience translated into universal truth Overall Contribution Basis for accomplishment onn production line Systematic theory of Management

Bureaucracy : 

Bureaucracy Authority is the power to hold people accountable for their actions. Positions in the firm should be held based on performance not social contacts. Position duties are clearly identified. People should know what is expected of them. Lines of authority should be clearly identified. Workers know who reports to who. Rules, Standard Operating Procedures (SOPs), & Norms used to determine how the firm operates. Sometimes, these lead to “red-tape” and other problems

Max Weber’s Ideal Bureaucracy: 

Max Weber’s Ideal Bureaucracy

Bureaucratic Principles: 

Bureaucratic Principles A Bureaucracy should have Written rules System of task relationships Hierarchy of authority Fair evaluation and reward

Features of Bureaucracy: 

Features of Bureaucracy Administrative class People are paid for whole time employees Salary on basis of position Tenure are determine on basis of rule & Regulation No proprietary interest Employment on bases on their competence Hierarchy Division of work Official rules (provides stability, continuty, predictability) Impersonal Relations Official Records (free from personal involvement, emotions, sentiments)

Problems in Bureaucracy (Bureaupathology): 

Problems in Bureaucracy (Bureaupathology ) Invalidity of Bureaucratic Assumptions Inefficient and ideal in practice Over Rules Organisation hierarchy (Superior-subordinate) Impersonal approach Goal displacement By Rule (Expenditure Vs performance ) Unintended consequences Excessive Specialization causes trained incapacity Conflict between profession & Bureaucrats Conflict between individual & Organisation Inhuman Denies human needs, development of personality, conformity, interpersonal difficulties, innovation. Closed system perspective Self contained, no allowances to adaptive to change

Human relation approach (Elton Mayo, Roethlisberger): 

Human relation approach ( Elton Mayo, Roethlisberger ) Organisational situation should be viewed in social terms as well as in economic and technical terms The social process of group behavior can be understood in terms of clinical method Systematic analysis of human factors in organisation

The Hawthorne Studies: 

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.

Slide 38: 

Illumination Experiment Really assembly test room experiments Incentives, rest period, changing working hours Mass interviewing Programme Do you like your supervisor Bank wiring Observation Room Experiments Fear of unemployment Fear of raising the standards Protection of slower workers Satisfaction on the part of management

The Hawthorne Studies: 

The Hawthorne Studies Control Group Experimental Group

Implication of Hawthorne Experiments: 

Implication of Hawthorne Experiments Social Factors in output Group influence Conflicts Leadership Supervision Communication

Criticism of Hawthorne experiments: 

Criticism of Hawthorne experiments Role of Attitude, class consciousness, unions and other forces are avoided Plant was unpleasant place to work, can not valid for others Workers is means to end not end himself

Social System Approach (Chester Barnard): 

Social System Approach (Chester Barnard) Features Organisation is a social system of cultural relationships Relationships exists in external as well as internal environment Cooperation is necessary to accomplish organisation objectives Harmony between organisation and various groups

Contribution of Barnard: 

Contribution of Barnard Concept of organisation Persons able to communicate Willing to contribute Attempt to accomplish a common purpose Formal and informal organisation Coordinated interactions and deliberate and common purpose Social interaction Both are depends on each other Elements of organisation Fictionalization, specialization, departmentalization A system effective and efficient incentives for group action A system of power which will

Slide 44: 

Authority Top to bottom Acceptance theory of authority Bottom-up authority Functions of the executives Maintenance of organisation communication through formal interaction Securing essential services from individual Formulation and definition of organisation purpose Motivation Financial and non financial motivation

Slide 45: 

Executives Effectiveness Responsible leadership Cooperation Organisational Equilibrium Matching individual and organizational efforts

Decision theory approach (Herbert Simon): 

Decision theory approach ( Herbert Simon ) Features Management is essentially decision making Members of the organisation are decision makers and problem solver Organisation is a decision centers Effectiveness is based on the effective decision making All factors affecting decision making are the subject matter for study of management

Contribution of Herbert Simon: 

Contribution of Herbert Simon Concept of organisation Complex network of decisional processes Influences decisions and supply decisions Decision making Intelligent activity Design activity Choice activity Bounded rationality Not on the bases if ends and means or suumptions

Slide 48: 

Administrative man Model of decision making Rather than economic man World is simplified model of real world Decision on the bases of all alternatives Decision by simple rule f thumb, tricks of trade or force of habit Organisational Communication Formal and informal

Management science approach: 

Management science approach Mathematical or quantitative approach Visualizes management as a logical entity Action can be expressed in terms of mathematical symbols, relationships and measurement data Derived form decision making theory

Slide 50: 

Features Management is a problem solving mechanism with help of mathematical tools and techniques Management problems can be described in terms of mathematical symbols and data Every management activity can be quantified It covers decision making, system analysis and some aspects of human behavior Operation research, mathematical tools, simulation, models, etc., are the methodologies to solve managerial problems Sampling, linear programming, time series analysis, game theory,

Management Science: 

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.

Human behavior approach: 

Human behavior approach Interpersonal behavior approach (need) Group behavior approach theory X,Y,Z) Organisation is collectivity of people for certain specified objectives Approach is also known as ‘leadership’ ‘behavioral science’ ‘human resource’ approach Emphasize human resource rather than finance and physical resource

Theory X and Y: 

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.

Theory X v. Theory Y: 

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

Theory Z: 

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.

Structures: 

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.

Behavioral Management: 

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.

System Approach: 

System Approach An organized or complex whole An assemblage or combination of things or parts forming a complete unitary whole

Slide 59: 

Features System is combination of pars and subsystems Parts and sub-parts are related System is not merely the totality of parts and subparts It can be identified because it has a boundary Closed system and open system It transforms inputs into outputs

Open and closed system: 

Open and closed system Interaction with environment Contained and maintained Mechanical/automatic vs. adjusted Close loops vs. negative entropy

Features of management as System: 

Features of management as System Management as a social system Management as open system Adaptive system Dynamics Probabilistic Multilevel and multidimensional Multivariable An integrated approach

Limitations of system approach: 

Limitations of system approach Abstract approach (merely indicates) Lack of universality (not for small org.)

Contingency or situational approach: 

Contingency or situational approach 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

Relation between System and contingency approach: 

Relation between System and contingency approach Model of human being Organisational variables Evolution

Limitations : 

Limitations Inadequate literature Complex Difficult empirical testing Reactive not proactive