Historical foundations of
management
Dr. Bagus Nurcahyo
Program Studi Manajemen Pemasaran
Direktorat Program D3 Bisnis & Kewirausahaan
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Historical foundations of
management
 Study questions
– What can be learned from classical
management thinking?
– What ideas were introduced by the human
resource approaches?
– What is the role of quantitative analysis in
management?
– What is unique about the systems view and
contingency thinking?
– What are continuing management themes of
the 21st century?
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Major schools of
management thought
1.
Classical management approaches
–
2.
Developing universal principles for use in
various management situations.
Behavioural management (or human
resource) approaches
–
Human needs, the work group and social
factors in the workplace.
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Major schools of
management thought
3. Quantitative management approaches
–
Use of mathematical techniques for
management problem solving.
4. Modern approaches
–
Systems and contingency views of
organisations.
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What can be learned from
classical management thinking?
 Classical approaches to management include:
– Scientific management – emphasizes careful selection
& training of workers, & supervisory support
– Administrative principles – based on attempts to
document & understand the experiences of successful
managers
– Bureaucratic organisation – is a rational & efficient
organisation founded on logic, order & legitimate
authority
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What can be learned from
classical management thinking?
 I. Scientific management (Frederick
Taylor) “Father of scientific management”
– Design jobs properly, standardised work
processes and proper working conditions for
every job.
– Carefully select workers with the right abilities
for the job.
– Carefully train workers to do the job and
provide proper incentives.
– Support workers by carefully planning their
work and removing obstacles.
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What can be learned from
classical management thinking?
 Scientific management (the Gilbreths)
Frank & Lillian
– Motion study
• Science of reducing a job or task to its
basic physical motions
• Eliminating wasted motions improves
performance.
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Scientific management
• Henry Gantt’s contributions, which
include:
• (a) an innovative task and bonus
wage scheme in which workers and
supervisors received bonuses for
exceeding standards;
• (b) the Gantt chart which graphically
depicts the scheduling of tasks
required to complete a project.
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What can be learned from
classical management thinking?
 II. Administrative principles (Henri
Fayol)
– Rules of management
• Foresight — to complete plan of action for the
•
•
•
•
future
Organisation — to provide and mobilise resources
to implement the plan
Command — to lead, select and evaluate workers
to get the best work towards the plan
Coordination — to fit diverse efforts together,
ensure information is shared and problems solved
Control — to make sure things happen according to
plan and to take necessary corrective action.
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What can be learned from
classical management thinking?
 Administrative principles (Henri Fayol)
– Key principles of management
• Scalar chain - there should be a clear and
unbroken line of communication from the top to the
bottom of the organisation
• Unity of command - each person should receive
orders from only one boss.
• Unity of direction - one person should be in
charge of all activities that have the same
performance objective
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What can be learned from
classical management thinking?
 Administrative principles (Mary Parker
Follett)
– - Her insights about groups and human
cooperation include the following:
• Groups are mechanisms through which individuals
could combine their talents for a greater good.
• Organisations as cooperating ‘communities’ of
managers and workers
• The manager’s job is to help people in the
organisation cooperate and achieve an integration
of interests.
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What can be learned from
classical management thinking?
 Administrative principles (Mary Parker
Follett)
– Forward-looking management insights
• Employee ownership creates sense of collective
responsibility (precursor of employee ownership,
profit sharing and gain sharing).
• Business problems involve a variety of interrelated
factors (precursor of systems thinking).
• Private profits relative to public good (precursor of
managerial ethics and social responsibility).
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What can be learned from
classical management thinking?
 III. Bureaucratic organisation (Max
Weber)
– Bureaucracy
• An ideal, intentionally rational and very efficient
form of organisation.
• Based on principles of logic, order and legitimate
authority.
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What can be learned from
classical management thinking?
 Characteristics of
bureaucratic
organisations:
– Clear division of labor
– Clear hierarchy of
authority
– Formal rules and
procedures
– Impersonality
– Careers based on
merit.
 Possible
disadvantages of
bureaucracy:
– Excessive paperwork
or ‘red tape’
– Slowness in handling
problems
– Rigidity in the face of
shifting needs
– Resistance to change
– Employee apathy.
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What ideas were introduced by the
human resource approaches?
 Behavioural management (or human
resource) approaches include:
– Hawthorne Studies
– Maslow’s theory of human needs
– McGregor’s Theory X and Theory Y
– Argyris’s theory of adult personality.
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What ideas were introduced by the
human resource approaches?
I. Hawthorne Studies conducted by
Elton Mayo
– Initial study examined how
economic incentives and physical
conditions at workplace affected worker
output
– No consistent relationship found
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What ideas were introduced by the
human resource approaches?
 Hawthorne Studies
– 2. Relay assembly test-room studies
• Manipulated physical work conditions to assess
impact on output
• Designed to minimise the ‘psychological factors’ of
previous experiment
• Group atmosphere and participative supervision
accounted for increased productivity.
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What ideas were introduced by the
human resource approaches?
 Hawthorne Studies
– 3.Employee attitudes, interpersonal
relations and group processes
• Some things satisfied some workers but not others.
• People restricted output to adhere to group norms.
– Lessons of the Hawthorne Studies
• People’s feeling, attitude & relationships with coworkers influence performance
• Hawthorne effect — people who are singled out for
special attention perform as expected.
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What ideas were introduced by the
human resource approaches?
 II. Maslow’s theory of human needs
– A need is a physiological or psychological
deficiency a person feels compelled to satisfy.
– Need levels
•
•
•
•
•
Physiological
Safety
Social
Esteem
Self-actualisation.
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What ideas were introduced by the
human resource approaches?
 Maslow’s theory of human needs
– Deficit principle
• People act to satisfy “deprived” needs CONTRARY
a satisfied need is not a motivator of behaviour.
– Progression principle
• A need becomes a motivator once the preceding
lower-level need is satisfied.
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What ideas were introduced by the
human resource approaches?
III. Douglas McGregor
 McGregor’s Theory X
assumes that
workers:
–
–
–
–
–
dislike work
lack ambition
are irresponsible
resist change
prefer to be led.
 McGregor’s Theory Y
assumes that workers
are:
– willing to work
– capable of self-control
– willing to accept
responsibility
– imaginative and
creative
– capable of
self-direction.
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What ideas were introduced by the
human resource approaches?
 McGregor’s Theory X and Theory Y
– Managers create self-fulfilling
prophecies.(that is, through their
behaviour they create situations where
subordinates act to confirm their
expectations)
– How do managers create positive self –
fulfilling prophecy?
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What ideas were introduced by the
human resource approaches?
 IV. Chris Argyris’s theory of adult personality
– Classical management principles and practices
discourage worker independence and are
inconsistent with the mature adult personality.
– Management should accommodate the mature
personality.
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What ideas were introduced by the
human resource approaches?
 Argyris’s theory of adult personality
– Management practices consistent with the
mature adult personality:
• Increasing task responsibility
• Increasing task variety
• Using participative decision making.
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What is the role of quantitative
analysis in management?
 1.Management science (operations
research) foundations
– Scientific application of mathematical
techniques to management problems
– Techniques and applications include:
• Mathematical forecasting - for making future
projections that are useful in the planning process.
• Inventory modeling - for helping to control
inventories by establishing how much to order and
when
• Linear programming - for determining how to best
allocate scarce resources among competing uses
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What is the role of quantitative
analysis in management?
• Queuing theory - for allocating service
personnel or workstations to minimise
customer waiting time and service cost
• Network models - for breaking large tasks
into smaller components to allow for better
analysis, planning, and control of complex
projects.
• Simulations - for developing models of
problems so different solutions under
various assumptions can be tested.
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What is the role of quantitative
analysis in management?
 Quantitative analysis today
– Use of staff specialists to help managers
apply techniques
– Software and hardware developments have
expanded potential quantitative applications
to managerial problems.
– Good managerial judgement and appreciation
for human factors must accompany use of
quantitative analysis.
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What is unique about the systems
view and contingency thinking?
According to the modern approaches
to management:
- people have multiple and varied
needs and talents that change over time
- therefore organisation & managers
should respond to individual differences
with a wide variety of managerial
strategies and job opportunities
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What is unique about the systems
view and contingency thinking?
 Systems thinking
– System
• Collection of interrelated parts that function together
to achieve a common purpose
– Subsystem
• A smaller component of a larger system
– Open system
• An organisation that interacts with its environments
in the continual process of transforming resource
inputs into outputs.
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What is unique about the systems
view and contingency thinking?
 Contingency thinking
– Tries to match managerial responses with
problems and opportunities unique to different
situations
– No ‘one best way’ to manage, managers
need to understand situational differences &
respond to them in appropriate ways
– Most appropriate way to manage depends on
the situation.
– IF = THEN
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What are continuing management
themes of the 21st century?
 1.Quality and performance excellence
– Managers and workers in progressive
organisations are quality conscious.
– Total quality management (TQM)
• Comprehensive approach to continuous quality
improvement for a total organisation
• Creates context for the value chain (a specific
sequence of activities that transform raw materials
into a finished good or services)
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What are continuing management
themes of the 21st century?
 Eight attributes of performance
excellence:
1. Bias towards action - making timely
decisions and getting things done
2. Closeness to the customer - knowing
customer needs and valuing
customer satisfaction.
3. Autonomy and entrepreneurship supporting innovation, change, and
risk taking.
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4. Productivity through people - valuing human
resources as keys to quality and
performance.
5. Hands-on and value-driven - having a clear
sense of organisational purpose.
6. Sticking to the knitting - focusing resources
and attention on what the organisation does
best.
7. Simple form and lean staff - minimising
levels of management and staff personnel.
8. Simultaneous loose-tight properties allowing flexibility while maintaining control.
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What are continuing management
themes of the 21st century?
 2.Global awareness
– Pressure for quality and performance
excellence is created by a highly competitive
global economy.
– Has fostered increasing interest in new
management concepts:
•
•
•
•
Process reengineering – process redesign
Virtual organisations
Agile factories
Network firms
– Adoption of Theory Z management practices.
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What are continuing management
themes of the 21st century?
• Theory Z – describes a
management framework
emphasising long-term employment
& teamwork, attention to career
planning , employee involvement,
that are found in the Japanese
models.
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What are continuing management
themes of the 21st century?
 3. Learning organisation
 Contemporary businesses must learn to
become learning organisations.
 These are organisations operating with
values and systems that result in continuous
change and improvement based on the
lessons of experience.
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What are continuing management
themes of the 21st century?
 Learning organisation success depends on:
– culture that emphasises information,
teamwork, empowerment, participation and
leadership
– special leadership qualities
 The 21st century manager must be:
– a global strategist
– a master of technology
– an effective politician
– an inspiring leader.
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Chapter 4: Historical Foundations of Management