Business Leadership: Management Fundamentals
John R. Schermerhorn, Jr ., Barry Wright, and Lorie Guest
© John Wiley & Sons Canada, Ltd.

PLANNING
AHEAD —
CHAPTER 2
LEARNING
GOALS o Understand what can be learned from traditional management thinking o Understand the insights of the behavioural management approaches o Understand the foundations of modern management thinking

• Scientific management
• Administrative principles
• Bureaucratic organization

FIGURE 2.1 MAJOR BRANCHES IN THE
CLASSICAL APPROACH TO
MANAGEMENT
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• “The principal object of management should be to secure maximum prosperity for the employer, coupled with the maximum prosperity for the employee” – F. Taylor
Four guiding principles:
• Develop rules of motion, standardized work implements, and proper working conditions for every job.
• Carefully select workers with the right abilities for the job.
• Carefully train workers and provide proper incentives.
• Support workers by carefully planning their work and removing obstacles.
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• Motion Study:
– Science of reducing a job or task to its basic physical motions
• Eliminating wasted motions improves performance
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Bricklaying ergonomics
(external link)
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• Gilbreth Time and Motion
Study in Bricklaying
(external link)
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How UPS Works
(external link)
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Expansion of Worldport
(external link)
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• Make results-based compensation a performance incentive
• Carefully design jobs with efficient work methods
• Carefully select workers with the abilities to do these jobs
• Train workers to perform jobs to the best of their abilities
• Train supervisors to support workers so they can perform jobs to the best of their abilities
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10.
11.
12.
13.
14.
6.
7.
8.
9.
1.
2.
3.
4.
5.
Division of labour
Authority
Discipline
Unity of command
Unity of direction
Subordination of individual interests
Remuneration
Centralization
Scalar chain
Order
Equity
Personnel tenure
Initiative
Esprit de corps
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(CONT’D)
• Rules of Management:
– Foresight: to complete a plan of action for the future
– Organization: to provide and mobilize resources to implement the plan
– Command: to lead, select, and evaluate workers to get the best work toward the plan
– Coordination: to fit diverse efforts together and 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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(CONT’D)
• Key principles of management:
– Scalar Chain: there should be a clear and unbroken line of communication from the top to the bottom of the organization
– Unity of Command: each person should receive orders from only one boss
– Unity of Direction: one person should be in charge of all activities with the same performance objective
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• Bureaucracy:
– An ideal, intentionally rational, and very efficient form of organization
– Based on principles of logic, order, and legitimate authority
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• Characteristics of bureaucratic organizations:
– Clear division of labour
– 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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• Human Resource approaches include:
– Follett’s notion of organizations as communities
– 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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FIGURE 2.3 FOUNDATIONS IN THE
BEHAVIOURAL OR HUMAN RESOURCES
APPROACH TO MANAGEMENT
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ADMINISTRATIVE PRINCIPLES
(MARY PARKER FOLLETT)
• Groups and human cooperation:
– Groups are mechanisms through which individuals can combine their talents for a greater good.
– Organizations are cooperating “communities” of managers and workers.
– Manager’s job is to help people in the organization cooperate and achieve an integration of interests.
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(CONT’D)
• Forward-looking management insights:
– Making every employee an owner creates a sense of collective responsibility (precursor of employee ownership, profit sharing, and gain-sharing).
– Business problems involve a variety of inter-related factors (precursor of systems thinking).
– Private profits relative to public good (precursor of managerial ethics and social responsibility).
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• Initial study examined how economic incentives and physical conditions affected worker output
• No consistent relationship found
• “Psychological factors” influenced results
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(CONT’D)
• Relay assembly test-room studies
– Manipulated physical work conditions to assess impact on output
– Designed to minimize the “psychological factors” of previous experiment
– Factors that accounted for increased productivity:
• Group atmosphere
• Participative supervision
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(CONT’D)
• Employee attitudes, interpersonal relations and group processes
– Some things satisfied some workers but not others
– People restricted output to adhere to group norms
• Lessons from the Hawthorne Studies:
– Social and human concerns are keys to productivity
– Hawthorne effect — people who are singled out for special attention perform as expected
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Testing the Hawthorne Effect
(external link)
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• A need is a physiological or psychological deficiency a person feels compelled to satisfy.
• Need levels:
– Physiological
– Safety
– Social
– Esteem
– Self-actualization
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FIGURE 2.4
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MASLOW’S THEORY OF HUMAN NEEDS
(CONT’D)
• Deficit principle
– A satisfied need is not a motivator of behaviour.
• Progression principle
– A need becomes a motivator once the preceding lower- level need is satisfied.
• Both principles cease to operate at self-actualization level.
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• What parts of a job satisfy each level of the pyramid?
– Physical?
– Safety?
– Social?
– Esteem?
– Self-Actualization?
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• 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 selfdirection
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• Managers create self-fulfilling prophecies.
• Theory X managers create situations where workers become dependent and reluctant.
• Theory Y managers create situations where workers respond with initiative and high performance.
– This is central to notions of empowerment and self- management.
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ARGYRIS’S THEORY OF ADULT
PERSONALITY
• Traditional management principles and practices inhibit worker maturation and are inconsistent with the mature adult personality.
• Management practices should accommodate the mature personality by:
– Increasing task responsibility
– Increasing task variety
– Using participative decision making
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• Foundations for furthering developments in management:
– Quantitative analysis and tools
– Systems view of organizations
– Contingency thinking
– Commitment to quality
– Learning organizations
– Evidence-based management
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• Management science or operations research:
– The scientific applications of mathematical techniques to management problems
• Mathematical forecasting makes future projections useful for planning
• Network model such as a Gantt chart breaks large tasks into smaller components
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(CONT’D)
•
Management science or operations research (cont’d):
– Inventory analysis controls inventories mathematically determining how much to automatically order and when
– Queuing theory allocates service personnel/workstations to minimize service cost and customer waiting time
– Linear programming calculates how to allocate scarce resources among competing uses
•
Operations management is the study of how organizations produce goods and services
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“Organizations are co-operative systems that achieve great things by integrating the contributions of many individuals to achieve a common purpose” – Chester Barnard
• System
– Collection of interrelated parts that function together to achieve a common purpose.
• Subsystem
– A smaller component of a larger system.
• Open systems
– Organizations that interact with their environments in the continual process of transforming resource inputs into outputs.
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FIGURE 2.7 ORGANIZATIONS AS
COMPLEX NETWORKS OF INTERACTING
SUBSYSTEMS
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• Tries to match managerial responses with problems and opportunities unique to each situations
– Especially in terms of individual or environmental differences
• No “one best way” to manage
• Appropriate way to manage depends on the situation
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• Managers and workers in progressive organizations are quality conscious
– Quality and competitive advantage are linked
• Total quality management (TQM):
– Comprehensive approach to continuous quality improvement for a total organization
– Creates context for the value chain
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(CONT’D)
“80% of the problems are caused by 20% of the operations” - Deming’s 80/20 rule
• ISO certification
– Global quality benchmark
– Refine and upgrade quality to meet ISO standards
• Continuous improvement
– Continual search for new ways to improve quality
– Something always can and should be improved on
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KNOWLEDGE MANAGEMENT AND
ORGANIZATIONAL LEARNING
• Knowledge management is the process of using information technology to achieve performance success
• Portfolio of intellectual assets include patents, intellectual property rights, trade secrets, and accumulated knowledge of the entire workforce.
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• Organizations that are able to continually learn and adapt to new circumstances
• Core ingredients include:
– Mental models
– Personal mastery
– Systems thinking
– Shared vision
– Team learning
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• Organizations that consistently achieve excellence while creating a high quality work environment
• Involves making decisions based on hard facets about what really works
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COMMON CHARACTERISTICS OF HIGH
PERFORMANCE ORGANIZATIONS
• People oriented – value people as human assets
• Team oriented – achieve synergy through teamwork
• Information oriented – mobilizes the latest information technology
• Achievement oriented – focuses on the needs of customers and stakeholders
• Learning oriented – operates with internal culture that respects and facilitates learning
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EVIDENCE-BASED POSITIVE HUMAN
RESOURCE MANAGEMENT PRACTICES
• Employment security
• Selective hiring
• Self-managing teams
• High pay based on merit
• Training and development
• Reduced status distinctions
• Shared information
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ST
• The 21 st Century Manager:
Managers have to excel as never before to meet the expectations held of them and of the organization they lead.
• Attributes of a 21 st Century Manager:
– Global strategist: understanding the interconnections among nations, cultures and economies
– Master of technology : comfortable with information technology
– Inspiring leader: attracting and motivating workers to achieve high-performance culture
– Model of ethical behaviour: acting ethically in all ways
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