Fundamentals of
MANAGEMENT
Chapter 2
Traditional and Contemporary Issues
The Historical Context of Management
• Management Through the Ages
D Greeks
C Babylonians
G Venetians
B Egyptians
E Romans
A Sumerians
3000 B.C.
2500 B.C.
F Chinese
2000 B.C.
1500 B.C.
1000 B.C.
500 B.C.
A.D.500
A.D.1000
A.D.1500
A Used written rules and regulations for governance
E Used organized structure for communication and control
B Used management practices to construct pyramids
F Used extensive organization structure for government
agencies and the arts
C Used extensive set of laws and policies for governance
D Used different governing systems for cities and state
G Used organization design and planning concepts to
control the seas
1–2
Classical Management Perspective
• Scientific Management
• Administrative Management
• Bureaucracy
1–3
Scientific Management
• Scientific Management
–The systematic study of the relationships between
people and tasks for the purpose of redesigning the
work process for higher efficiency.
• Defined by Frederick Taylor in the late 1800’s to
replace informal rule of thumb knowledge.
• Taylor sought to reduce the time a worker spent on
each task by optimizing the way the task was done.
1–4
Steps/Principles of Scientific Management
1
2
Develop a science
for each element of
the job to replace old
rule-of-thumb methods
Scientifically select
employees and then
train them to do the job
as described in step 1
3
Supervise employees
to make sure they
follow the prescribed
methods for performing
their jobs
4
Continue to plan
the work, but use
workers to get the
work done
1–5
Administrative Management
The study of how to create an organizational structure
that leads to high efficiency and effectiveness.
Henry Fayol is the father of management. He provided
14 principles considered universal for managing any
enterprise.
1–6
Fayol’s Principles of Management
• Division of Labor: allows for job specialization.
–Fayol noted jobs can have too much specialization
leading to poor quality and worker dissatisfaction.
• Authority and Responsibility
–Fayol included both formal and informal authority
resulting from special expertise.
• Unity of Command
–Employees should have only one boss.
1–7
Fayol’s Principles of Management
• Line of Authority
–A clear chain of command from top to bottom of the
firm.
• Centralization
–The degree to which authority rests at the top of the
organization.
• Unity of Direction
–A single plan of action to guide the organization.
1–8
Fayol’s Principles of Management
• Equity
–The provision of justice and the fair and impartial
treatment of all employees.
• Order
–The arrangement of employees where they will be of
the most value to the organization and to provide
career opportunities.
• Initiative
–The fostering of creativity and innovation by
encouraging employees to act on their own.
1–9
Fayol’s Principles of Management
• Discipline
–Obedient, applied, respectful employees are
necessary for the organization to function.
• Remuneration of Personnel
–An equitable uniform payment system that motivates
contributes to organizational success.
• Stability of Tenure of Personnel
–Long-term employment is important for the
development of skills that improve the organization’s
performance
1–10
Fayol’s Principles of Management
• Subordination of Individual Interest to the
Common Interest
–The interest of the organization takes precedence
over that of the individual employee.
• Esprit de corps
–Comradeship, shared enthusiasm foster devotion to
the common cause (organization).
1–11
Bureaucracy
Developed the concept of bureaucracy as a formal
system of organization and administration designed to
ensure efficiency and effectiveness.
Max Weber developed the principles of bureaucracy.
1–12
Principles of Bureaucracy
1–13
Principles of Bureaucracy
• Authority is the power to hold people
accountable for their actions.
• Positions in the firm should be held based on
performance, not social contacts.
• Position duties are clearly identified so that
people know what is expected of them.
• Lines of authority should be clearly identified
such that workers know who reports to who.
• Rules, standard operating procedures (SOPs),
and norms guide the firm’s operations.
1–14
Behavioral Management Perspective
• Hawthorne Studies
• Human Relation Movement
1–15
The Hawthorne Studies (1927–1932)
• Conducted by Elton Mayo and associates at
Western Electric
–Illumination study—workplace lighting adjustments
affected both the control and the experimental groups
of production employees.
–Group study—implementation of piecework incentive
plan caused production workers to establish informal
levels of acceptable individual output.
• Over-producing workers were labeled “rate busters” and
under-producing workers were considered “chiselers.”
–Interview program—confirmed the importance of
human behavior in the workplace.
1–16
Behavioral Management Perspective
(cont’d)
• Human Relations Movement
–Grew out of the Hawthorne studies.
–Proposed that workers respond primarily
to the social context of work, including
social conditioning, group norms,
and interpersonal dynamics.
–Assumed that the manager’s
concern for workers would lead to
increased worker satisfaction and
improved worker performance.
1–17
The Human
Relations View
of Management
Source: Van Fleet, David D., Contemporary
Management, Second Edition. Copyright ©
1991 by Houghton Mifflin Company. Used
with permissions.
1–18
Behavioral Management Perspective…Today
• Contributions
–Provided important insights into motivation, group
dynamics, and other interpersonal processes.
–Focused managerial attention on these critical
processes.
–Challenged the view that employees are tools and
furthered the belief that employees are valuable
resources.
1–19
Quantitative Management Perspective
• Quantitative Management
–Emerged during World War II to help the Allied forces
manage logistical problems.
–Focuses on decision making, economic effectiveness,
mathematical models, and the use of computers to
solve quantitative problems.
1–20
Quantitative Management Perspective
(cont’d)
• Management Science
–Focuses on the development of representative
mathematical models to assist with decisions.
• Operations Management
–Practical application of management
science to efficiently manage the
production and distribution
of products and services.
1–21
Quantitative Management
Perspective…Today
• Contributions
–Developed sophisticated quantitative techniques to
assist in decision making.
–Application of models has
increased our awareness
and understanding of
complex processes and
situations.
–Has been useful in the
planning and controlling
processes.
1–22
The Systems Perspective of Organizations
Inputs from the
environment:
material inputs,
human inputs,
financial inputs, and
information inputs
Transformation
process: technology,
operating systems,
administrative
systems, and
control systems
Outputs into
the environment:
products/services,
profits/losses,
employee behaviors,
and information
outputs
Feedback
Figure 1.4
1–23
Integrating Perspectives for Managers
• Systems Perspective
–A system is an interrelated set of elements functioning
as a whole.
• Open system
–An organizational system that interacts with its
environment.
1–24
Integrating Perspectives for Managers
(cont’d)
• Closed system
–An organizational system that does not interact with its
environment.
• Subsystems
–A system within another system.
Their importance is due to their
interdependence on each other
within the organization.
1–25
The Systems Perspective
• Synergy
–Subsystems are more successful working together in
a cooperative and coordinated fashion than working
alone.
–The whole system (subsystems working together as
one system) is more productive and efficient than the
sum of its parts.
1–26
The Systems Perspective
(cont’d)
• Entropy
–A normal process in which an organizational system
declines due to failing to adjust to change in its
environment
–Entropy can be avoided and
the organization re-energized
through organizational change
and renewal.
1–27
The Contingency Perspective
1–28
Contingency Theory
• Contingency Theory
–The idea that the organizational structures and control
systems manager choose depend on—are contingent
on—characteristics of the external environment in
which the organization operates.
–Assumes there is no one best way to manage.
• The environment impacts the firm and managers must be
flexible to react to environmental changes.
–In rapidly changing organizational environments,
managers must find ways to coordinate different
departments to respond quickly and effectively.
1–29
Contingency Theory of Organizational Design
1–30
Mechanistic and Organic Structures
• Mechanistic Structure
–Authority is centralized at the top. (Theory X)
–Employees are closely monitored and managed.
–Can be very efficient in a stable environment.
• Organic structure
–Authority is decentralized throughout the organization.
(Theory Y)
–Tasks and roles are left ambiguous to encourage
employees to react quickly to changing environment.
1–31