What you should know so far …
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Define management
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Compare/contrast effectiveness and efficiency.
Compare/contrast functions and roles
Define entrepreneurship
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Compare & contrast it with Management
– Describe characteristics that contribute to an
entrepreneur’s success
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Describe the planning requirements associated with
becoming a successful entrepreneur
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Objectives Today
Understand the 6 main approaches to management
theory
1. universal (Fayol)
2. operational (Taylor)
3. behavioral (Mayo)
4. formal/informal systems (Barnard)
5. open, adaptive systems
6. contingency
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The Practice and Study of
Management
• Information Overload
– Management has not had a systematically recorded
body of knowledge until recently.
– Today, vast amounts of relevant information are
readily available in print and electronic media.
• An Interdisciplinary Field
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psychology
mathematics
economics
sociology
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No Universally Accepted
Theory of Management
• Several perspectives or lenses
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The universal process approach
The operational approach
The behavioral approach
The systems approach
The contingency approach
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The Universal Process
Approach
• Universal Process Approach (Fayol)
– Assumes all organizations can apply same
rational process.
• Core management process remains the same
regardless of the purpose of the organization.
• The process can be reduced to a set of functions and
related principles.
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Fayol’s Universal Process
• Administration Industrielle et Générale 1916
(Translated 1949).
– Coordination (and Specialization)
• Planning, organizing, command, coordination, and
control - but as an integrated whole (military
metaphor)
• Fayol on Taylor "So deep-rooted, however, is the
conviction that the very foundation of management
rests in the military type as represented by the
principle that no workman can work under two
bosses at the same time that … For myself I do not
think that a shop can be well run in flagrant
violation of this" (p. 69).
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Fayol’s Universal Process (cont’d)
• Lessons from Fayol
– The management process can be separated into
interdependent functions (“organs”)
– Line and staff functions are required
– Management is a largely, though not an entirely,
rational process.
– Unity of command
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Pre-Taylor workplace
• Workmen ...
– planned how fast each job should be done and
how much production was allotted to each
machine throughout the shop
– opposed the efforts of any manager to speed up
production because increases in production did
not mean increases in wages
– tended to get fired as (collective) output
increased
– penalized other workers who rate-busted
(soldiered)
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The Operational Approach
• Frederick W. Taylor’s Scientific
Management
– Developing performance standards on the basis
of systematic observations and
experimentation.
• Time & standardize practices and methods to
reduce waste and increase productivity
• Separate task performance from task knowledge
• Systematically select and train workers to increase
efficiency and productivity.
• Differential pay incentives based on established
work standards (this was revolutionary)
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The Operational Approach
(cont’d)
• Lessons from the Operational Approach
– Tasks and incentives can be (re)structured to be
made more efficient and/or effective
– Using scientific management doesn’t
dehumanize workers (e.g. if participatory TQM).
– The operational approach fostered the
development of operations management.
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The Behavioral Approach
• The Human Relations Movement
– Acknowledged that people are complex
• task performance is not totally dependent upon
economic incentives (extrinsic/intrinsic)
– Influenced by
• the threat of unionization.
• the Hawthorne studies
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The Behavioral Approach
(cont’d)
• The Threat of Unionization
– The Wagner Act of 1935 (New Deal)
• legalized union-management collective bargaining
• union avoidance by firms
• The Hawthorne Studies (1924)
– Productivity strongly affected by social
dynamics (Mayo)
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The Behavioral Approach
(cont’d)
• Douglas McGregor
– Theory X and Theory Y
• Theory X: management’s traditionally negative view
of employees as unmotivated and unwilling
workers.
• Theory Y: the positive view of employees as
energetic, creative, and willing workers
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The Systems Approach
• What is a System?
– A collection of parts that operate
interdependently to achieve a common purpose.
• Systems Approach
– Posits that the performance of the whole is
greater that the sum of the performance of its
parts.
– Analytic versus synthetic thinking: outside-in
thinking versus inside-out thinking.
– Seeks to identify all parts of an organized
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The Systems Approach
• Chester I. Barnard’s Early Systems
Perspective
– Wrote Functions of the Executive.
– Characterized all organizations as cooperative
systems (but are they?).
– Principal organizational elements
• willingness to serve.
• common purpose.
• communication.
– Strong advocate of business ethics.
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General Systems Theory
• General Systems Theory
– An area of study based on the assumptions that
everything is part of a larger, interdependent
arrangement.
• Levels of systems
– Each system is a subsystem of the system above
it.
– Identification of systems at various levels helps
translate abstract systems theory into more
concrete terms.
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General Systems Theory (cont’d)
• Closed Versus Open Systems
– Closed system
• A self-sufficient entity.
– Open system
• Something that depends on its surrounding
environment for survival.
– Systems are classified open (closed) by how
much (how little) they interact with their
environments.
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General Systems Theory (cont’d)
• New Directions in Systems Thinking
– Organizational learning and knowledge
management
• Organizations are living and thinking open systems
that learn from experience and engage in complex
mental processes.
– Chaos theory
• Every complex system has a life of its own, with its
own rule book.
– Complex adaptive systems
• Complex systems are self-organizing.
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The Contingency Approach
• Contingency Approach
– Try to determine which managerial practices
are appropriate in specific situations.
• Different situations require different managerial
responses.
• E.g., under which environmental conditions should
you increase/decrease departmentalization in an
organization’s structure?
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The Contingency Approach
(cont’d)
• Lessons from the Contingency Approach
– Approach emphasizes situational
appropriateness rather than rigid adherence to
universal principles.
– Approach creates the impression that an
organization is captive to its environment.
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