Week 3, Unit 3, Lecture 3
Evolution of Management
Thinking – Part 2
By:
Dr . Obi Berko
School of Management
University of Ghana
1) Quantitative Management
Introduction
quantitative perspective of management focuses on the
most efficient and effective ways of utilizing resources. In
adopting this approach there are three main branches.
1. Management science
management science uses statistics and mathematics
to advise managerial decision-making.
this approach uses forecasting models, linear
programming, cost volume profit analysis, standard
costing, marginal costing, and distribution models
amongst other tools as a means of identifying options,
assessing risk and determining the potential outcomes.
Management Science Cont.’
2. Operations management
This branch of quantitative management considers
those areas with primary responsibility for managing
the production and delivery of products and services.
It considers all aspects of the process from inventory
through to distribution and looks for improving both
the efficiency and the effectiveness.
Examples
1) Reorder level
2) Maximum and Minimum re-order level
3) Economic order quantity
Management Science Cont.’
3. Management information systems
This is perhaps the most rapidly-developing
field of management science, largely due to the
speed of technological developments and
innovation. It focuses on the design and
implementation of computer-based information
systems.
1) JIP & Production
2) E-Procurement
2) The systems approach
Attempts to reconcile the classical and human
relations approaches
Attention is focused on:
• the total work of the organisation
• the inter-relationships of structures & behaviour
• the range of variables within the organisation
The organisation is viewed within its total
environment and the importance of multiple
channels in interaction is emphasised
System Approach Assumption
1) The System Approach views the organization as a
unified, purposeful system composed of
interrelated parts.
2) The focus of this system is that the managers
cannot function only within their departments
but they have to communicate and interact with
departments and also with representatives of
other organizations as well.
3) This approach analyzes the entire activities of an
org. in terms of system inputs, processing and
outputs to develop operational efficiency.
Main Features of a system Theory
Managing Systems
– System - a set of interrelated and
interdependent parts arranged in a manner
that produces a unified whole
• provides a more general and broader
picture of what managers do than the
other perspectives provide
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– Closed system - not influenced by and do
not interact with their environment
Main Features of a system Theory
Managing Systems
– Open system - dramatically interact with
their environment
• organizations - take in inputs from their
environments
–transform or process inputs into
outputs
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–outputs are distributed into the
environment
Open systems
Open systems are those systems that interact with the
environment, using inputs from the outside and passing products
and services back into the external environment. In general, the
modern view of organizations is that they should, as far as
possible, be open systems capable of monitoring and adapting
those aspects of their environment that can provide access to
opportunities and eliminate threats.
It is important to remember, the contingency perspective,
whereby there is never one best way for organizations to behave
in all situations.
Open system organizations adopt what Paul Strebel terms either
an anticipator or an initiator role with regards to environmental
change.
Paul Strebel (1990) described what he termed ‘discontinuities’ –
sharp shifts of behaviour and organizations forced on companies
by the environment in which they operate. The key factor is that
the organization must manage any potential discontinuity by
either avoidance tactics, reactive responses or proactive
responses.
The anticipator role is approach in which the organization begins
to convert the status quo into change agents as soon as
environmental change is detected. The initiator role involves
outpacing the opposition and then creating environmental
change by triggering smaller incremental environmental
changes.
Closed systems
Closed systems operate in organizations that place
emphasis on internal efficiency.
Whilst it is almost impossible to do without some
contact with the external environment, closed
systems organizations minimize that contact by
concentrating on establishing tightly-defined systems
within. Moving towards an almost scientific
management approach.
Closed systems organizations tend to use avoidance
of adaptive responses to changes in the external
environment.
Organizational Systems
Organizational systems can be seen from two perspectives,
open systems and closed systems.
Environment
Environment
Organization
Organization
Open system
Closed system
The Organization As An Open System
Environment
System
Inputs
Raw materials
Human resources
Capital
Technology
Information
Transformation
Employee’s work
activities
Management
activities
Technology and
Outputs
Products and services
Financial results
Information
Human results
operations methods
Feedback
Environment
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Inputs
Transformation
Process
Feedback
Output
Inputs
Inputs are the resources required to enable the
transformation process the desired outputs. Inputs
should be considered from three perspectives:
•Physical resources:
People,
Space and time,
Materials
•Technological resources:
Equipment and machinery,
Information
•Cognitive resources:
Knowledge,
Skills and abilities.
Transformation Process
A transformation process is the mechanism that brings
about the conversion of the inputs into the outputs. In
manufacturing terms this is clearly the production of
the product; in service and or management terms, the
transformation process involves the use of managerial
and technical skills and abilities to produce the desired
outcome.
Outputs
Outputs are the end products (or services). They are
the reason for the existence of the entire process. For
any system to continue to work effectively, there
needs to be an integrated mechanism for feeding back
to the input stage and transformation process, the
degree of success, accuracy and conformance to
standards of the ultimate output.
Implications of the Systems Approach
• Coordination of the organization’s parts is
essential for proper functioning of the entire
organization.
• Decisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
• Organizations are not self-contained and,
therefore, must adapt to changes in their
external environment.
3) The Contingency Approach
• Contingency Approach Defined
– Also sometimes called the situational approach.
– There is no one universally applicable set of
management principles (rules) by which to
manage organizations.
– Organizations are individually different, face
different situations (contingency variables), and
require different ways of managing.
Contingency Theory
Developed in the 1960s, the contingency theory moves
away from the idea that there is one best way to manage
organizations. Contingency theory asserts that the best
way to manage in any given situation is dependant on the
characteristics of that situation.
Different situations require different practices which may
or may not contain a few or many of the elements of the
management school of thought we have already
considered.
The contingency approach is based on managers assessing
the situation and deciding which approach is most likely
to achieve the desired goals.
Activity 1
State some of the contingency variables
Hint: Activity 1:
1) Organization size
2) Technology level
3) Environmental uncertainty – physical
factors
4) Individual differences
5) Firm age
6) Firm industry
7) Profit level
8) Location – country/region
Management theory – comparing
Western & Japanese thinking
1960s – Western management lacked curiosity about
competition from Japan, with British and European
managers obsessed by American examples
1970 & 80s - many sought to emulate the characteristics of
Japanese management
Japanese methods have produced:
• high levels of teamwork
• an atmosphere of innovative ideas
• a willingness to continually improve (Kaizen)
More Japanese Approach: Management in Action:
Japanese Management
4) Current Trends and Issues
4.1) Globalization – Universal pressure
4.2) Ethics – Moral management – child labour,
poor wages,
4.3) Knowledge Management – (management
of all skills’ set
4.4) Learning Organizations (learning curves
4.5) Quality Management ( robustness)
Current Trends and Issues (cont’d)
4.1) Globalization
– Management in international organizations
– Political and cultural challenges of operating in a
global market
4.2) Ethics
– Increased creation and use of codes of ethics by
businesses
2–27
A Process for Addressing Ethical Dilemmas
Step 1:
What is the ethical dilemma?
Step 2:
Who are the affected stakeholders?
Step 3:
What personal, organizational, and
external factors are important to
my decision?
Step 4:
What are possible alternatives?
i.e implication of a decision
Step 5:
Make a decision and act on it.
2–28
Current Trends and Issues (cont’d)
4.3) Knowledge Management
– The cultivation of a learning culture where
organizational members systematically gather
and share knowledge with others in order to
achieve better performance.
4.4) Learning Organization
– An organization that has developed the capacity
to continuously learn, adapt, and change.
Current Trends and Issues (cont’d)
4.5) Quality Management
– A philosophy of management driven by continual
improvement in the quality of work processes
and responding to customer needs and
expectations
– Inspired by the total quality management (TQM)
– Quality is not directly related to cost
What is Management Quality?
1) Intense focus on the customer
2) Concern for continual improvement
3) Monitoring idle time
4) Improvement in the quality of
everything
5) Accurate measurement
6) Empowerment of employees
2–31
Advantages of different approaches /
categorisations
• Provides a setting in which to view the field of
management
• Traces the major lines of argument developed by
different writers
• Provides a framework in which principles can be set and
comparisons of management practice made
• Helps in organisational analysis and identification of
problem areas
• Enables managers to select those ideas which best suit
the requirements of their job
Caveats
• The various approaches represent a progression
of ideas and a pattern of complementary studies
• Not all writers can be neatly categorised
• Whilst there may be acceptance of the need for
a framework there is no agreement on its shape
Activity 2
1) Which approach (es) is and/or are
being used in your firm?
2) Which of them have influenced
your thinking?
3) In your own private study compare
and contrast these approaches
Summary of Some approaches
Activity 3:
1) Identify ten situational influences which will
have a direct bearing on the way in which
you manage a particular situation.
2) How do these impact your behaviour and
your approach to people?
Activity 4: Case Study
The ‘Dictator of Detroit’ – Henry Ford (1863 – 1947)
The name Henry Ford is renowned for two reasons, firstly his
approach to management practice and secondly, for his notion
that ‘people could have any colour they wanted as long as it
was black’.
Henry Ford was born to a farming family near Detroit, Michigan.
By the age 28 he had decided against a career in farming and
opted to become a mechanic – some advocates specifically to
ease the workload of farmers. Henry ford loved machines, and
spent the next two years of his life designing and building
modes of transport. In 1893 he created his ‘gasoline buggy’ a
machine which made so much noise that it frightened the
horses.
Seven years later he teamed up with eleven associates and
created the Ford motor Company. In 1908 the model ‘T’ was
launched and, only twelve years later, every other car in the
world was a model ‘T’ Ford. Henry Ford bought out his
partners and had become a millionaire.
Henry Ford’s obsession with machinery became most
apparent when he declared that machinery was the new
‘messiah’.
His factories were built around machines with men having to
adapt to the demands of Ford’s mechanical systems. Ford
himself is quoted as saying:
‘We measure on each job the exact amount of room that a
man needs……. This brings our machines closer together than
any other factory in the world.
To a stranger they may seem piled right on top of one
another, but they are scientifically arranged, not only in
sequence of operations, but to give every man and every
machine every square inch that he requires and if possible,
not a square inch and certainly not a square foot more than
he requires.
Our factory buildings are not intended to be use as car
parks.’
Job designs were based on simplification and fragmentation.
Sadly many of the workers on the assembly line of Ford’s
Detroit plant could not tolerate that type of mundane and
repetitive work. Even the move to use financial rewards (the
$5 a day scheme) only reduced annual labour turnover from
423% in 1913, to 215% in 1919. Ford gain a reputation fro
providing a mind-dulling, physically exhausting means of
employment.
Discipline at work was harsh, and Ford integrated the concept
of a moral code applicable outside the work environment. His
belief that a man who lived ‘alright’ would work ‘alright’
founded the framework, and any employee caught gambling,
drinking alcohol, smoking or engaging in sex outside of
marriage was automatically excluded from the wealth-sharing
scheme ($5 a day). His moral crusade extended to:
‘Making men as well as automobiles.’
To operationalise new ideas, Ford created a sociological
department, which systematically assessed the workforce
against the specifications.
The results of the assessment were that by 1915, 90% of
employees were deemed fit to qualify for the $5 a day. All
staff were aware, however, that this would be withdrawn if
any of the regulation was transgressed.
The ways in which Ford viewed organizational management
are perhaps best emphasized by a quote from his
autobiography. Ford proposed that man is best viewed as a
machine, yet a business should not be viewed as a machine.
It is a collection of people who are brought together to do
work and not to write letters to one another. It is not
necessary for any one department to know what any other
department is doing.
If a man is doing his work he will not have time to take up any
other work. It is the business of those who plan the entire
work to see that all of the departments are working properly
toward the same end. It is not necessary to have meetings to
establish good feelings between individuals or departments.
It is not necessary for people to love each other in order to
work together. Too much fellowship may indeed be a very bad
thing, for it may lead to one man trying to cover up the faults
of another. This is bad for both men.
Factories had no formal organizations, no specific duties
attached to role or status, no succession or assumed
authority, no red tape and no (or as little as possible)
interpersonal contact. All work was pre-planned and all
activities prescribed – nothing happened without the
knowledge and permission of Henry Ford.
As company profitability increased, Henry Ford’s obsessional
and over-zealous approach also increased. His glory in selfaggrandisement, however, had a darker side and his
sensitivity to criticism made him increasingly suspicious. To
remedy this situation he appointed Charles Sorensen as
factory superintendent and Ernest Liebold as his private
secretary. Both men with markedly authoritarian
personalities.
Charles Sorensen, or iron Charlie’ as he became known, was
soon the most feared man in the organization. In 1921,
(under orders from Henry Ford) he increased the speed of
the assembly line by 100%, whilst at the same time reducing
the workforce by 30%. The wages of those remaining were
cut by 25%.
Ford’s managers were not immune. Between 1919 and 1922
the majority of the organization’s leading lawyers, engineers,
designers and managers were either fired or forced to resign
usually for questioning decisions made by Ford ‘s top three.
The maliciousness of these events is legendary. It was once
reported that during a purge on office staff, one group of
clerks returned after lunch to their office to find that all
their desks had been hacked to pieces with an axe. A poster
on the wall told them that they were no longer required.
The sociological department was later replaced by a rigid
service department, which eventually became the world’s
largest private quasi-military organization. The ford private
police force was established and in 1928, harry Bennett was
made Chief.
By 1932 he was head of the service department where he
was given a free hand to make sure the organization runs
efficiently. Following true Ford tradition he hired criminals,
disgraced policemen and even known gangsters. Nobody
was allowed to smile or talk of the factory floor.
The brutality of the servicemen was legendary, with night-time
raids on the homes of employees being commonplace. These raids
increased following new Ford edicts (1930 banning the
consumption of alcohol at home, 1932 compelling all employees
to grow potatoes). Employees, fearing for their own safety, often
informed on one another. Nobody anywhere could be trusted.
Henry Ford condoned the activities of Bennett and his army, doing
nothing to stop their activities.
The Reverend Samuel Marquis, once the head of the disbanded
sociological department is quoted as saying about Henry Ford:
“he has in him the makings of a great man, the parts lying about in
more or less disorder. If only Henry Ford were properly assembled!
If only he would do in himself that which he has done in his
factory.
(adapted from Critical Cases In Organizational Behaviour by J.
Martin Corbett)
Requirement
1) Can Henry Ford be described as being a leader or a
manger? Why?
2) How do leader affect the culture of organizations?
3) How did Ford build the organization to comply with his
own desires for the future?
4) What contingencies or situational factors need to be
taken into consideration when charting the progression
of the Ford Motor Co?
5) What action would any new leader have to take in an
attempt to try and reverse the established culture and
behaviours in the Ford Motor Co?
End of Lecture
Many thanks