Human Resource
Management
The Industrial Revolution
• Began in the United States in 1860
– Just before the Civil War
• Period during which a country develops an
industrial economy
• Before the Industrial Revolution, economy
based on agriculture
• By the late 1800s, economy depended on
industries such as oil, steel, railroads, and
manufactured goods
Causes of the Industrial Revolution
• Many people left their farms to work in
factories
– Professional managers supervised their work
• Changes in technology, communication,
and transportation
– Telegraph and cable lines extended across the
U.S. after the Civil War
– Railroad lines, canals, roads, steamships
Captains of Industry
• Powerful
businesspeople who
created enormous
business empires
dominated and
shaped the U.S.
economy
Cornelius Vanderbilt
B. (banking)
Duke
Andrew
John
J. P.James
D.
Morgan
Carnegie
Rockefeller
(steel)
(Oil)
(steamships
& railroads)
(tobacco)
Creation of Monopolies
• The captains of industry often pursued profit
and self-interest above all else
– Drove competitors out of business
– Created giant companies that maintained monopolies
in their industries
• Monopoly
– Occurs when one party maintains total control over a
type of industry
– Trust: giant industrial monopoly
– By 1879, Rockefeller controlled >90% of the country’s
refining capacity and pipelines
The Break-Up of Trusts
• People became
worried about the
concentration of
wealth in the hands of
a only a few
• In response, the
government began
regulating business
Cornelius Vanderbilt
The Break-Up of Trusts
• The Interstate Commerce Act, 1887
– The railroads gave rebates to some customers
but not others
– This act forced railroads to publish their rates
and forbade them to change rates without
notifying the public
– Established the Interstate Commerce
Commission (ICC) to supervise the railroads
The Break-Up of Trusts
• The Sherman Act, 1890
– Made it illegal for companies to
create monopolies
– Intended to restore competition
– Example
• Standard Oil Company was broken
into smaller companies so that other
oil companies could compete with the
former giant
• John D. Rockefeller
New Challenges for Management
• When most Americans worked on farms,
sophisticated management techniques were not
necessary
• By the end of the nineteenth century, giant
companies employed thousands of people and
distributed products all over the country
– Workers performed tasks that needed to be
coordinated
– These changes demanded new ideas about how to
manage people working in large corporations
Frederick W. Taylor
and Scientific Management
• Wanted to find ways to motivate workers
to work harder
• To increase efficiency, he tried to figure
“one best way” to perform a particular task
– Used a stopwatch to determine which work
method was most efficient
– These time and motion studies lead to
scientific management principles
Frederick W. Taylor
and Scientific Management
• Scientific management seeks to increase
productivity and make work easier by
carefully studying work procedures and
determining the best methods for
performing particular tasks
Frederick W. Taylor
and Scientific Management
1.
Employers should gather, classify, and tabulate data in
order to determine the “one best way” of performing a
task or series of tasks.
2.
Employers should study worker strengths and
weaknesses and match workers to jobs. Employers
should also train employees in order to improve their
performance.
3.
The principles of scientific management should be
explained to workers.
4.
Management and workers should be interdependent so
that they cooperate.
Frederick W. Taylor
and Scientific Management
• Companies today continue to use the
principles of scientific management
– Marriott Corporation
• Customer satisfaction
The Hawthorne Studies of
Productivity
• Researchers began to look at the relationship
between working conditions and productivity
• Series of experiments at the Hawthorne plant
of Western Electric in Cicero, IL
– Raised Workplace Illumination
• Productivity Increase
– Lowered the lighting expecting productivity to fall
– What happened?
• Productivity Increased!
The Hawthorne Studies of
Productivity
• Baffled by results, a team of psychologists
from Harvard University were called upon
• Over five years, hundreds of experiments
were conducted at the plant
– Different wage payments
– Rest periods
– Work hours
• What were the results?
The Hawthorne Studies of
Productivity
• Researchers concluded that productivity
rose because workers worked harder when
they received attention
• Hawthorne effect
– Change of any kind increases productivity
• Factors other than the physical
environment affected worker productivity
– Psychological and social conditions, effective
supervision
Abraham H. Maslow and
the Hierarchy of Needs
• According to Maslow
– All people have five basic types of needs
– People fulfill lower-level needs before seeking
to fulfill higher-level needs
• One set of needs must be met before another is
sought
• “Hierarchy of needs” is his grouping and ordering
of physical, security, social, status, and selfactualization needs
Maslow’s Hierarchy of Needs
Applying Maslow’s Theory
to Management
• At the lowest level, workers are motivated
by basic needs
– Wages or salary, physical conditions
• Safety or security needs
– Providing insurance, retirement benefits, job
security
– Safe from physical, psychological, or financial
harm
Applying Maslow’s Theory
to Management
• Social needs
– Provide a work environment in which
colleagues interact
• Company lunch rooms, company retreats
• Status needs
– Provide workers with signs of recognition that
are visible to others
• Job titles, private offices, designated parking
spaces, awards, promotions
Applying Maslow’s Theory
to Management
• Self-fulfillment needs
– Provide employees with opportunities to be
creative at work
• Include employees in decision making
• Example
– ITT’s Ring of Quality Control
Modern Management
Empowering Employees
• As organizations grew in size and
complexity, new styles and methods of
management began to emerge
• Different philosophies developed on how
best to manage employees
Theory X
• Assumes that people are basically lazy and
will avoid working if they can
• Managers impose strict rules and make
sure that all important decision are make
only by them
Theory Y
• Assumes that people find satisfaction in their
work
• Managers believe that people will work
productively if put in the right environment
• People are creative and will come up with good
ideas if encouraged to do so
• Employees given more freedom and allowed to
make mistakes
Centralization vs.
Decentralization
• Centralization
– The concentration of power among a few key
decision makers
• Decentralization
– Process by which decisions are made by
managers at various levels within an
organization
Total Quality Management
• W. Edwards Deming used mathematics to
help solve problems of quality control
• Studied how companies ensure that the
products they produce are not defective
• Came up with a mathematically based
approach to quality control
– Total quality management (TQM)
Total Quality Management
• TQM is a system of management based on
involving all employees in a constant
process of improving quality and
productivity by improving how the work
• Focuses on totally satisfying both
customers and employees
• Deming’s 14 points Handout
Japanese Management Practices
• Managers . . .
– encouraged more employee participation in
decision making
– showed deeper concern for the personal wellbeing of their employees
– tended to facilitate decision making by teams
of workers
Theory Z
• William Ouchi, management researcher
• Integrates Japanese and American
business practices
– Japanese emphasis on collective decision
making and concern for employees
– American emphasis on individual
responsibility
• Johnsonville Foods
Japanese, American, and
Theory Z Organizations