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CHAPTER 2
Management Learning Past to Present
Great management isn’t new and it isn’t all about technology. People have created
wonderful things for centuries, and management lessons are part of our history.
In his book The Evolution of Management Thought, Daniel Wren traces management
as far back as 5000 BCE, when the ancient Sumerians used written records to
improve government and business activities.1 Management was crucial in the
construction of the Egyptian pyramids, the spread of the Roman Empire across
the globe, and the renowned commercial success of 14th-century Venice. By the
time of the start of the Industrial Revolution in the late 1700s, great social changes
helped stimulate major manufacturing advances in basic products and consumer
goods. Adam Smith’s revolutionary (at the time) concepts of division of labour and
task specialization accelerated industrial development. By the beginning of the
20th century, Henry Ford had made mass production a core aspect of the
emerging economy. Since then, both the science and practice of management
have evolved considerably.2
Today’s managers face challenges from what many call “the new industrial
revolution.”3 This is a time full of technological and social uncertainties and
opportunities. Perhaps more than ever it’s a good time to reach back and
remember the management learning that comes from the past. Many crucial
insights can be taken from the history of management thought. It’s a mistake to
assume that our generation needs to invent best practices in management out of
thin air. Instead, it is important to understand that there is a lot we can learn from
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history that can benefit us as we try to perfect new ideas and approaches to best
match current business realities.
Chapter Quick Start
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Ancestry.com is a hugely popular website. It helps people learn more about their
roots—and by extension, themselves. The history of management thought offers
similar insights. In order to manage successfully today, and into the ever-changing
future, it is critical to understand the insights and lessons of the past. Knowing
where you’re going requires knowledge of where you’ve been. That is our focus in
this chapter.
CHAPTER OUTLINE
LEARNING OBJECTIVES
2.1 Classical Management
Approaches
2.1 Describe the principal insights of classical
management thinking.
2.2 Behavioural Management 2.2 Identify key insights of the behavioural
Approaches
management approaches.
2.3 Modern Management
Foundations
2.3 Explain the core foundations of modern
management theory and practice.
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What to Look for Inside
Management Is Real
2.1 Analysis Make Data Your Friend
When #MeToo Becomes Catch 22
Evaluate Career Situations:
What Would You Do?
Reflect on the SelfAssessment:
Managerial Assumptions
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2.2 Ethics Know Right from Wrong
Skills Make You Valuable
Tracking Technology Monitors Worker
Behaviour
2.3 Wisdom Learn from Role Models
Former Marketing Executive Finds
Fulfillment in the “Greening” of Canada
2.4 Insight Keep Learning about Yourself
Make Your Learning Style Work for
You
2.5 Choices Think before You Act
Thinking about Office Engagement
Contribute to the Class
Exercise:
Evidence-Based
Management Quiz
Manage a Critical Incident:
Theory X versus Theory Y
Collaborate on the Team
Activity:
Management in Popular
Culture
Analyze the Case Study:
Zara International | Fashion
at the Speed of Light
2.1 Classical Management Approaches
LEARNING OBJECTIVE 2.1
Describe the principal insights of classical management thinking.
Learn More About
Scientific management • Administrative principles • Bureaucratic
organization
Our study of management begins with a focus on the three major classical
approaches: (1) scientific management, (2) administrative principles, and (3)
bureaucratic organization.4 Figure 2.1 ties each of these classical approaches to a
prominent historical figure—Taylor, Fayol, or Weber. You can see that the classical
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approaches share a common assumption: People consider their opportunities
rationally and do whatever is necessary to achieve the greatest personal and
monetary gain.5
Scientific Management
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In 1911, Frederick W. Taylor published The Principles of Scientific Management,
where he stated: “The principal object of management should be to secure the
maximum prosperity for the employer, coupled with the maximum prosperity for
each employee.”6 Taylor, often called the “father of scientific management,”
noticed that workers often did their jobs with unnecessary motions and without a
consistent approach. This resulted in inefficiency and low performance. He
believed that this problem could be fixed if workers were taught to do their jobs in
the most efficient way and then were helped and guided by supervisors to always
work this way.
FIGURE 2.1 Major branches in the classical approach to management.
Taylor’s goal was to improve workers’ productivity. He used the concept of “time
study” to analyze the motions and tasks required to do a job, and to develop the
most efficient ways to perform that job. He then linked these job requirements to
both worker training and support from supervisors in the form of precise
direction, work assistance, and monetary incentives. Taylor’s approach, known as
scientific management, includes four guiding principles.
1. Develop a “science” that includes rules of motion, standardized work
implements, and proper working conditions for every job.
2. Carefully select workers with the right abilities for the job.
3. Carefully train workers to do the job and give them incentives to cooperate
with the job “science.”
4. Support workers by carefully planning their tasks and by smoothing the way
as they do their work.
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Although Taylor called his approach “scientific” management, contemporary
scholars have questioned his truthfulness in reporting and the scientific rigour of
his studies.7 But Taylor’s ideas still influence management thinking.8 Some
practical recommendations from scientific management are listed here:
Make results-based compensation a performance incentive.
Carefully design jobs with efficient work methods.
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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 to the best of their
abilities.
A contemporary example of the use of the scientific management approach is the
United Parcel Service (UPS). UPS workers are guided by carefully calibrated
productivity standards. Sorters at regional hubs are timed according to strict task
requirements and are expected to load vans at a set number of packages per
hour. A GPS is used to plot the shortest delivery routes; delivery stops are
registered in onboard computers that are studied to identify wasted time.
Industrial engineers design explicit procedures for drivers—with 340 delivery and
pickup rules, such as: avoid left turns in traffic, unbuckle seat belt with left hand,
and walk at a “brisk” pace. Consistent with scientific management principles,
efficiency is a top priority at UPS; saving a few seconds at each stop adds up to
significant increases in productivity.9
One of the most enduring legacies of scientific management grew from Taylor’s
interest in motion study, the science of reducing a job or a task to its most basic
physical components. Two of his contemporaries, Frank and Lillian Gilbreth,
pioneered the use of motion studies as a management tool.10 In one famous case,
the Gilbreths cut down the number of motions used by bricklayers and tripled
their productivity!
Insights from scientific management have led to advances in job design, work
standards, and incentive wage plans—all of which are techniques organizations
use today. The next time you pass by a Taco Bell, think of the number 164, which
is the average number of seconds from the point of order to taco-in-hand. Taco
Bell measures performance based on both time and accuracy, which are linked to
standardized systems for order taking, money handling, food preparation, and
order delivery. Workers’ actions are carefully designed in assembly-line style,
where each worker learns the script for his or her station and then delivers it over
and over again. The whole process is supported by training, and rewards are given
to employees for doing things the Taco Bell way.11
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Administrative Principles
In 1916, after a career in French industry, Henri Fayol published Administration
Industrielle et Générale12 in which he outlines his views on the management of
organizations and workers. Fayol identifies five “rules” or “duties” of management,
which support the four functions of management—planning, organizing, leading,
and controlling—that we talk about today:
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1. Foresight—to complete a plan of action for the future.
2. Organization—to provide and mobilize resources to implement the plan.
3. Command—to lead, select, and evaluate workers to get the best work toward
the plan.
4. Coordination—to fit diverse efforts together and to ensure information is
shared and problems solved.
5. Control—to make sure things happen according to plan and to take necessary
corrective action.
Fayol believed that management could be taught. He wanted to improve the
quality of management and defined 14 “principles” to help managers. A number of
these principles still guide managers today. They include the scalar chain principle
—there should be a clear and unbroken line of communication from the top to the
bottom of the organization; the unity of command principle—each person should
receive orders from only one boss; and the unity of direction principle—one person
should be in charge of all activities that have the same performance objective.
Bureaucratic Organization
Max Weber was a late-19th-century German political economist who had a major
impact on the fields of management and sociology. His ideas developed after
noticing that organizations often performed poorly. Among other things, Weber
noticed that employees often held positions of authority not because of their
capabilities, but because of their “privileged” social status in German society. At
the heart of Weber’s thinking was an ideal; an intentionally rational and very
efficient form of organization called a bureaucracy.13 It was founded on
principles of logic, order, and legitimate authority. The defining characteristics of
Weber’s bureaucratic organization are:
Clear division of labour: Jobs are well defined, and workers are highly skilled at
performing them.
Clear hierarchy of authority: Authority and responsibility are well defined for
each position, and each position reports to a higher level.
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Formal rules and procedures: Written guidelines direct behaviour and decisions
in jobs, and written files are kept for historical record.
Impersonality: Rules and procedures are impartially and uniformly applied,
with no one receiving preferential treatment.
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Careers based on merit: Workers are selected and promoted on ability,
competency, and performance, and managers are career employees of the
organizations.
The characteristics of Weber’s bureaucracy are also shown in Figure 2.2.
Weber believed that organizations structured as bureaucracies would use
resources more efficiently and treat employees more fairly than other systems. He
wrote:14
The purely bureaucratic type of administrative organization … is, from a
purely technical point of view, capable of attaining the highest degree of
efficiency. … It is superior to any other form in precision, in stability, in
the stringency of its discipline, and in its reliability. It thus makes
possible a particularly high degree of calculability of results for the
heads of the organization and for those acting in relation to it.
FIGURE 2.2 Characteristics of Weber’s bureaucracy.
Today we recognize that bureaucracy works well sometimes, but not all of the
time. In fact, it’s common to hear the terms bureaucracy and bureaucrat used with
negative connotations. We picture bureaucracies as being bogged down in
excessive paperwork or “red tape,” slow to handle problems, rigid in the face of
shifting customer needs, and high in resistance to change and employee apathy.15
These are disadvantages for organizations that have to be flexible and adaptive to
today’s rapidly changing circumstances. A major management challenge is to
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know when bureaucratic features work well and what the best alternatives are
when they don’t. Later in the chapter we’ll call this contingency thinking.
Learning Check
LEARNING OBJECTIVE 2.1
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Describe the principal insights of classical management thinking.
Be Sure You Can
state the underlying assumption of the classical management approaches
list the principles of Taylor’s scientific management
identify three of Fayol’s principles for guiding managerial action
list the key characteristics of bureaucracy and explain why Weber
considered it an ideal form of organization
identify possible disadvantages of bureaucracy in today’s environment
2.2 Behavioural Management Approaches
LEARNING OBJECTIVE 2.2
Identify key insights of the behavioural management approaches.
Learn More About
Follett’s organizations as communities • The Hawthorne studies •
Maslow’s theory of human needs • McGregor’s Theory X and Theory Y •
Argyris’s theory of adult personality
During the 1920s an emphasis on the human side of the workplace began to
influence management thinking. Major branches in the behavioural—or human
resource—approaches to management are shown in Figure 2.3. These include
Follett’s ideas about organizations as communities, the Hawthorne studies,
Maslow’s theory of human needs, and related ideas of Douglas McGregor and
Chris Argyris. The behavioural approaches assume that people enjoy social
relationships, respond to group pressures, and search for personal fulfillment.
These historical foundations set the stage for what is now known as the field of
organizational behaviour, the study of individuals and groups in organizations.
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Follett’s Organizations as Communities
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The work of Mary Parker Follett was part of an important transition from classical
thinking to the new discipline of behavioural management. The book Mary Parker
Follett—Prophet of Management: A Celebration of Writings from the 1920s offers an
important reminder of the wisdom that can come from an understanding of
history. Although Follett wrote a long time ago, her ideas are rich with foresight.
She taught respect for workers’ experience and knowledge, warned against the
dangers of too much hierarchy, and called for visionary leadership. Follett was
eulogized upon her death in 1933 as “one of the most important women America
has yet produced in the fields of civics and sociology.”16
Follett thought of organizations as “communities” where managers and workers
should labour in harmony without one party dominating the other, and with the
freedom to talk through and truly reconcile conflicts and differences. For her,
groups were a way for individuals to combine their talents toward a greater good.
She believed it was the job of managers to help workers cooperate with one
another and to integrate their goals and interests.
Follett’s emphasis on groups and her commitment to human cooperation are
highly relevant themes today.17 She believed that making every employee an
owner in a business would create feelings of collective responsibility. Today, we
address the same issues under such labels as employee ownership, profit sharing,
and gain-sharing plans. She believed that business problems involve a wide variety
of factors that must be considered in relationship to one another. Today, we talk
about “systems” and “contingency thinking.” Follett also believed that businesses
were service organizations and that private profits should always be considered
vis-á-vis the public good. Today, we pursue the same issues using the labels
managerial ethics and corporate social responsibility. (See Management Is Real 2.1.)
Follett was, in many ways, a woman ahead of her time whose insights and
philosophy bear on organizational practice today.
Recent work on organizations as communities by scholars Leon Prieto and Simone
Phipps highlight the insights of Charles Clinton Spaulding, whom they refer to as
the “Father of African American Management.”18 Noting that the contributions of
African Americans to the history of management had been overlooked, they
studied Spaulding’s experience as head of the North Carolina Mutual Life
Insurance Company. What they found was an enlightened executive who started
as a dishwasher and worked his way to the top of the largest African American
business of his time.
Spaulding is described as a committed leader who helped people and
communities, always tried to understand the complexities of management and
organizations, and was generous in sharing his insights to help others become
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successful managers. He summarized his management approach in two articles
published in 1927 in the Pittsburgh Courier setting out what he called the “eight
necessities” of management.19
1. Cooperation and teamwork
2. Authority and responsibility
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3. Division of labour
4. Adequate manpower
5. Adequate capital
6. Feasibility analysis
7. Advertising budget
8. Conflict resolution
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FIGURE 2.3 Foundations in the behavioural or human resource approaches
to management.
Management Is Real 2.1: Analysis
Make Data Your Friend
“It’s not surprising that so few people file formal complaints given
the high cost of complaining.”
When #MeToo Becomes Catch 22
The #MeToo movement is no secret. But do you know the facts?
Consider the following:
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51% of women report being sexually harassed at work; 12% of men do.
51% of women say they’ve seen sexual harassment at work; 38% of men
do.
24% of women say they are uncomfortable reporting sexual harassment;
12% of men say the same.
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43% of women say they believe more media attention will decrease
sexual harassment in the workplace; 29% don’t and 28% are not sure.
When it comes to the women who aren’t reporting sexual harassment at
work, the reasons vary:
52% don’t want to create a “fuss.”
34% don’t believe it would make any difference.
28% are afraid of retribution.
19% feel shame or shared responsibility.
Consider data on sexual harassment claims filed with the Equal Employment
Opportunity Commission. A study of four years’ worth of claims found that
two-thirds of filers experienced retaliation—being transferred to different jobs
or shifts, or being fired. Just 23% of complaints resulted in monetary awards,
with the median compensation about $10,000. One analyst says: “It’s not
surprising that so few people file formal complaints given the high cost of
complaining.”
What Are the Implications?
Where do we go from here? When it comes to progress on sexual
harassment, is the glass half empty or half full? Why are some employers
unable or unwilling to actively embrace policies that create harassmentfree work cultures? Is #MeToo capable of making a real difference in the
everyday experiences of men and women at work? Will things change for
the better as a new generation enters the workforce? What about you?
Where in the #MeToo statistics are you, or will you be?
In addition to covering administrative basics—labour, capital, and budgets,
Spaulding’s eight necessities focus on respect for people and belief in community.
His necessity of cooperation and teamwork recognizes that contributions come
from all levels of organizations and that everyone must work together if they are
to achieve common goals. His necessity of authority and responsibility reminds us
that managers are responsible for what happens and are the ultimate arbiters of
right and wrong. And, his necessity of conflict resolution focuses on a fundamental
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reality—people at work spend a lot of time interacting with one another, but not
always successfully. Managers, therefore, must create a culture of cooperation
“based on mutual goodwill and intelligence.”20
The Hawthorne Studies
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The shift toward behavioural thinking in management gained momentum in 1924
when the Western Electric Company commissioned a research program to study
worker productivity at the Hawthorne Works of the firm’s Chicago plant.21 A team
led by Harvard’s Elton Mayo set out to learn how economic incentives and
workplace conditions affected workers’ output. But they concluded that
unforeseen “psychological factors” somehow interfered with their experiments.
Social Setting and Human Relations
One study focused on worker fatigue and output. Six assembly workers were
isolated for intensive study in a special test room. Their production was measured
as changes were made to the length of rest pauses, workdays, and work weeks.
Results showed that productivity increased regardless of the changes.
Researchers concluded that the new “social setting” in the test room made
workers want to do a good job. They shared pleasant social interactions with one
another and received special attention that made them feel important. They were
given a lot of information and were frequently asked for their opinions. None of
this was the case in their regular jobs. In other words, good “human relations”
seemed to result in higher productivity.
Further studies of employee attitudes, interpersonal relations, and group
dynamics also led to “complex” and “baffling” results. Factors like work conditions
or wages were found to increase satisfaction for some workers and dissatisfaction
for others. Some workers were willing to restrict their output to avoid upsetting
the group, even if it meant sacrificing pay that could otherwise be earned by
increasing output. How workers behave when they think no one is looking is
discussed in Management Is Real 2.2.
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Management Is Real 2.2: Ethics
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Know Right from Wrong
“If our drivers have to veer off, they call and say we are taking a little
personal time. It is changing their behaviour in a positive way.”
Tracking Technology Monitors Worker Behaviour
If you put technology together with scientific management, what do you get?
For many in the trucking industry the answer is GPS tracking technology that
monitors drivers to make sure they follow their engineered routes and aren’t
wasting—or even stealing—company time. How far should this tracking
technology go and what ground rules should be followed?
At a small pest control company the general manager secretly installed GPS
software on company-issued smart phones. This allowed him to track drivers.
After noticing that one was stopping regularly at a single address, the
manager confronted the driver and learned he was seeing a woman. The
driver was fired. That was the first anyone knew the manager was using the
tracking technology. Now, the manager says: “If our drivers have to veer off,
they call and say they are taking a little personal time. It is changing their
behaviour in a positive way.”
At one time, tracking technology cost thousands of dollars. Today it is much,
much cheaper. All a company needs is a smart phone.
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“Privacy issues with employer tracking devices are increasingly coming to the
fore,” says David Graser, partner of McInnes Cooper and a Canadian privacy
law expert.
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Karen Thompson, the co-lead of the McCarthy Tétrault law firm’s national
cyber security, privacy, and data protection group, says “Canada’s privacy laws
afford employers the right to monitor their workforce under certain
circumstances, such as when employees are working in remote areas. Not all
monitoring technologies are malicious or sneaky.” The workers, however,
must be informed that they are being tracked and agree to it. Canadian case
law suggests that it would be difficult to justify tracking employees outside
work hours without a strong business reason.
What Do You Think?
Should the use of tracking technology to monitor employee behaviour be
regulated by law? Or is it a practice that employers have rights to use at
their discretion? Would you be comfortable being monitored when
making outside sales calls, for example, or when using your company
phone for private browsing and conversations? What message does the
use of electronic monitoring communicate to employees? What are the
limits to using technology this way, and does it have implications for
workers’ rights? How would you feel if your phone or computer had a
tracking device on it that informed your parents what sites you’d visited,
or what people you’d called? Would it matter if they were paying for
these devices? Why or why not?
Lessons of the Hawthorne Studies
Scholars now criticize the Hawthorne studies for poor research design and weak
empirical support for the conclusions drawn.22 Yet, despite these problems, the
studies shifted managers’ and researchers’ attention toward social and human
factors as drivers of productivity. They brought visibility to the idea that workers’
feelings, attitudes, and relationships with co-workers affected their work, and that
groups have important influences on individuals. They also identified the
Hawthorne effect—the tendency of workers singled out for special attention to
perform well—or better than anticipated—because of expectations created by the
situation.
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Maslow’s Theory of Human Needs
The work of psychologist Abraham Maslow, in the area of human “needs,” also has
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had a major impact on the behavioural approach to management.23 Maslow
described a need as a physiological or psychological deficiency a person feels
compelled to satisfy. Importantly, needs create tensions that can influence
workers’ attitudes and behaviours. Maslow placed needs into the hierarchy shown
in Figure 2.4. From lowest to highest in what Maslow refers to as “order,” they are
physiological, safety, social, esteem, and self-actualization needs.
Maslow’s theory is based on two underlying principles—the deficit principle and
the progression principle. The deficit principle applies to a satisfied need that
does not motivate behaviour. People try to satisfy “deprived” needs or those for
which there is a “deficit” (e.g., when I’m hungry, I seek to satisfy my hunger by
eating—when I’ve finished eating, hunger doesn’t motivate me anymore). The
progression principle describes how the five levels of needs exist in a hierarchy of
“prepotency.” A need at any level becomes active only when the next-lower-level
need is satisfied (e.g., I’m thirsty and lonely—but I won’t be motivated to chat with
my friends until I’ve had something to drink). Maslow argued that people try to
satisfy these five needs in sequence. They progress, step by step, from the lowest
level in the hierarchy up to the highest. Along the way, a deprived need dominates
attention and determines behaviour until it is satisfied. Then, the next-higher-level
need is activated. At the level of self-actualization, the deficit and progression
principles cease to operate. The more this need is satisfied, the stronger it grows.
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FIGURE 2.4 Maslow’s hierarchy of human needs.
Consistent with human relations thinking, Maslow’s theory implies that managers
who understand and help workers to satisfy their important needs at work will get
more productivity out of their employees. Although scholars now recognize things
are more complicated than this, Maslow’s ideas are still relevant. Consider the
case of volunteer workers at the local Red Cross, animal shelter, or other
community organizations. What can be done to motivate workers who aren’t paid?
Maslow’s ideas suggest that linking volunteer work with opportunities to satisfy
higher-order needs like esteem and self-actualization might be a good strategy.
McGregor’s Theory X and Theory Y
Douglas McGregor was heavily influenced by both the Hawthorne studies and
Abraham Maslow. In his classic book, The Human Side of Enterprise, McGregor
argued that managers should give more attention to workers’ social and selfactualizing needs.24 He called on managers to shift their view of human nature
away from a set of assumptions he called Theory X and toward ones he called
Theory Y. You can check your own managerial assumptions by completing the selfassessment at the end of the chapter.
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According to McGregor, managers with Theory X assumptions believe that
employees generally dislike work, have little ambition, are irresponsible, resist
change, and prefer to be led rather than to lead. In contrast, managers with
Theory Y assumptions believe employees are willing to work hard, accept
responsibility, are capable of self-control and self-direction, and are imaginative
and creative.
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One important point regarding Theory X and Theory Y is that McGregor believed
these assumptions create self-fulfilling prophecies. When managers behave
consistent with the assumptions, he said, they end up encouraging employees to
act in ways that confirm managers’ original expectations.25
Managers with Theory X assumptions tend to act in a very directive, commandand-control, top-down way that gives employees little say over their work. These
behaviours create passive, dependent, reluctant subordinates, who tend to do
only what they are told to do or required to do, reinforcing the original Theory X
viewpoint. In contrast, managers with Theory Y assumptions tend to behave in
ways that engage workers, giving them more job involvement, freedom, and
responsibility. This creates opportunities for employees to satisfy esteem and selfactualization needs, and they respond by performing with initiative and high
performance, creating a positive self-fulfilling prophecy.26
Theory Y thinking is reflected in a lot of the ideas and developments discussed in
this book, such as valuing diversity, employee engagement, self-managing teams,
empowerment, and leadership. You need to ponder your Theory X and Y
assumptions and think through their implications for how you behave as a
manager and team leader. You also must be prepared to meet and work with
others holding different assumptions.
Argyris’s Theory of Adult Personality
The ideas of Maslow and McGregor inspired the well-regarded scholar and
business consultant Chris Argyris. In his book Personality and Organization, Argyris
contrasts management practices found in traditional, bureaucratic organizations
with the needs and capabilities of mature adults.27 Argyris believed that common
problems, such as absenteeism, turnover, apathy, alienation, and low morale, may
be signs of a mismatch. He also argued that managers who treat employees as
responsible adults will achieve the highest productivity. It’s the self-fulfilling
prophecy notion again: If you treat people as grown-ups, that’s the way they’ll
behave.
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Management Is Real 2.3: Wisdom
Learn from Role Models
Nudging Canadians to greener lifestyles.
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Former Marketing Executive Finds Fulfillment in the “Greening” of
Canada
By the time Andreas Souvaliotis was 40 he was the president of Canada’s
largest marketing company; today he is one of the world’s leaders in changing
people’s behaviour as it affects climate change. Yet, at one time this successful
entrepreneur felt like a misfit.
“I have Asperger’s and that made me an unusual kid,” explains Souvaliotis.
“Although I had an extremely bright math and musical brain, I felt lonely and
isolated from others.” Living in Greece at the time, a Christian country, made
him feel twice as isolated when he realized, at a young age, that he was also
gay. When the opportunity came as a teenager to leave Greece, he packed up
and moved to Canada, “where,” he says, “diversity is a national asset.”
When his offer to buy the marketing company he was leading failed in 2007,
he didn’t know what he wanted to do next, until he saw a presentation by the
environmentalist and former Vice President of the United States, Al Gore,
speak to the issues surrounding climate change and the need to change our
behaviour in terms of the things we do and buy that affect our planet.
It struck Souvaliotis that one way to change people’s behaviour was to reward
them for doing the right thing. He and a partner soon formed a little company
that would become the world’s first eco-points program. Within two years, Air
Miles, the largest loyalty rewards company in North America, asked if he could
fuse his company within theirs. Soon the federal government asked if he could
incorporate his incentive programs with its national efforts to get Canadians
to live greener and healthier lives. In under a decade, prominent socially
responsible leaders and organizations from all over the world, including the
Prince of Wales, recognized his innovative work.
Find Inspiration
Can you identify a social problem in your community that might be
addressed using Andreas Souvaliotis’s work as a model? How do you see
yourself fulfilling higher-order needs in your future? Will earning good
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money at work be enough, or will your self-actualization require
something more?
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Consider these examples of how Argyris’s thinking differs from that of earlier
management thinking. In scientific management, the principle of specialization
assumes that people will work more efficiently as tasks become simpler and
better defined. Argyris believed that this principle limits opportunities for selfactualization. In Weber’s bureaucracy, people work in a clear hierarchy of
authority, with people at higher levels directing and controlling those at lower
levels. Argyris worried that this creates dependent, passive workers who feel they
have little control over their work environments. According to Fayol’s
administrative principles, the concept of unity of direction assumes that efficiency
increases when work is planned and directed by supervisors. Argyris argued that
this may create conditions for psychological failure; conversely, psychological
success is more likely when employees are allowed to define their own goals.
Entrepreneurs like Andreas Souvaliotis in Management Is Real 2.3 achieve great
things when they have total control over their work environment.
Learning Check
LEARNING OBJECTIVE 2.2
Identify key insights of the behavioural management approaches.
Be Sure You Can
explain Follett’s concept of organizations as communities
define the Hawthorne effect
explain how the Hawthorne findings influenced the development of
management thought
explain how Maslow’s hierarchy of needs operates in the workplace
distinguish between Theory X and Theory Y assumptions, and explain why
McGregor favored Theory Y
explain Argyris’s criticism that traditional organizational practices are
inconsistent with mature adult personalities
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2.3 Modern Management Foundations
LEARNING OBJECTIVE 2.3
Explain the core foundations of modern management theory and practice.
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Learn More About
Quantitative analysis and tools • Organizations as systems • Contingency
thinking • Quality management • Evidence-based management
The concepts, models, and ideas discussed so far helped set the stage for
continuing developments in management thought. They ushered in modern
management approaches that include the use of quantitative analysis and tools, a
systems view of organizations, contingency thinking, commitment to quality
management, and the importance of evidence-based management.
Quantitative Analysis and Tools
The typical quantitative approach to management works like this: a problem is
encountered, it is systematically analyzed, appropriate mathematical techniques
are applied, and an optimum solution is identified. The following examples show
this in action.
Problem: An oil exploration company is worried about future petroleum
reserves in various parts of the world. Quantitative approach—Mathematical
forecasting makes future projections for reserve sizes and depletion rates that
are used in the planning process and oil prospecting strategies.
Problem: A “big box” retailer is trying to deal with decreasing profit margins by
minimizing inventory costs, but must also avoid being “out of stock” for
customers. Quantitative approach—Inventory analysis helps control inventories
by mathematically determining how much inventory to automatically order
and when to order it.
Problem: A grocery store is getting complaints from customers that wait times
are too long for checkouts during certain times of the day. Quantitative
approach—Queuing theory allocates service personnel and workstations based
on alternative workload demands in a way that minimizes both customer wait
times and personnel costs.
Problem: A manufacturer wants to maximize profits on the production of
three different products on three different machines, each of which can only
be used at distinct periods of times and for runs at different costs.
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Quantitative approach—Linear programming calculates how best to allocate
production across the three machines.
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Problem: A real estate developer wants to control costs and finish building an
apartment complex on schedule. Quantitative approach—Network models
break large tasks into smaller components and diagram them in step-by-step
sequences. This allows project managers to analyze, plan, and control
timetables for the completion of activity subsets.
Although quantitative analysis has always been useful in management, the
availability of inexpensive, convenient, affordable computing is dramatically
expanding its power. With the collection, storage, and analysis of data now easier
than ever before, an area known as analytics is becoming indispensable to
organizations of all types. Think of analytics as the systematic analysis of large
databases—often called “big data”—to solve problems and make informed
decisions.28 Here are two examples.
Problem—Sales were flat and inventories were high at the Schwan Food
Company. Delivery drivers were using six-week-old lists of customers’ prior
orders to decide who to visit and what to offer them. Solution—The situation
improved substantially after Schwan installed a new analytics program. It
churns vast amounts of historical data to predict customer preferences and
sends daily sales recommendations directly to each driver’s tablet.
Problem—Software engineering talent is in short supply for Google and other
high-tech companies. Competition for new hires is intense and retention is
difficult as experienced engineers become poaching targets for rival firms.
Solution—Google has an analytics tool that pools information from
performance reviews, surveys, and pay and promotion histories, and uses a
math formula (algorithm) to identify engineers who might be open to offers
from other firms. Managers use this information to develop plans for
retaining these talented engineers and reduce the likelihood that they will
find competing offers attractive.29
Organizations as Systems
Organizations have long been described as cooperative systems that achieve great
things by focusing resources and the contributions of many individuals toward a
common purpose. In reality cooperation among people and different moving
parts is imperfect and can be improved. That is why it’s critical to understand the
full complexity of organizations as a system of interrelated parts or subsystems
that work together to achieve common goals.30
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Organizations function as open systems that interact with their environment in a
continual process of transforming inputs—people, technology, information,
money, and supplies—into outputs—goods and services. Figure 2.5 shows how
an organization functions as an interacting network of subsystems. The activities
of these subsystems individually and collectively support the larger system to
make things happen. The operations and service management subsystems anchor
the transformation process, while linking with other subsystems such as
purchasing, accounting, and sales. Organizations can only perform well when each
subsystem both performs its tasks well and cooperates with other subsystems.
Contingency Thinking
Successful managers identify and implement practices that best fit with the
unique demands of different situations. This requires contingency thinking that
matches actions with problems and opportunities specific to different people and
settings. From a contingency perspective there is no “one best way” to manage in
all circumstances. The challenge is to understand situational differences and
respond to them in ways that fit with their unique characteristics.31 Can you think
of situations at work or at school where you need to adjust your interpersonal
behaviour, for example, to succeed? What about your “learning style”—do you
know how that will affect your success in the workplace? (See Management Is Real
2.4.)
Contingency thinking is an important theme in this book, and its implications
extend to all of the management functions—from planning and controlling for
diverse environmental conditions, to organizing for different strategies, to leading
in different performance situations. A good illustration