Chapter Two

Chapter Two

The Evolution of

Management Thought

Chapter Objectives

• Identify two key assumptions supporting the universal process approach, and briefly describe Henri Fayol’s contribution.

• Discuss Frederick W. Taylor’s approach to improving the practice of industrial management.

• Identify at least four key quality improvement ideas from

W. Edwards Deming and the other quality advocates.

• Describe the general aim of the human relations movement and explain the circumstances in which it arose.

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Chapter Two | 2

Chapter Objectives (cont’d)

• Explain the significance of applying open-system thinking to management.

• Explain the practical significance of adopting a contingency perspective.

• Describe what “management by best seller” involves and explain what managers can do to avoid it.


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Figure 2.1: Management Is a Global Affair


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The Practice and Study of Management

• The systematic study of management did not begin in earnest until after 1900.

• The practice of management is much older, stretching as far back as the construction of the pyramids.


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The Practice and Study of Management

(cont’d)

• Information Overload

– Management has not had a systematically recorded body of knowledge until recently.

– Today, vast amounts of relevant information are readily available in print and electronic media.

• An Interdisciplinary Field

– The manifold increase in management theory information is due largely to its interdisciplinary nature in drawing from several fields (e.g., psychology, mathematics, economics, history, and engineering).


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No Universally Accepted Theory of

Management

• There are several approaches to the theory and practice of management.

– The universal process approach

– The operational approach

– The behavioral approach

– The systems approach

– The contingency approach

– The attributes of excellence approach


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The Universal Process Approach

• Universal Process Approach

– Assumes all organizations require the same rational management process

• Core management process remains the same regardless of the purpose of the organization.

• The management process can be reduced to a set of separate functions and related principles.


Chapter Two | 8

Henri Fayol’s Universal

Management Process

• Fayol published Administration Industrielle et

Générale in 1916.

– He divided a manager’s job into five functions:

1. Planning

2. Organizing

3. Command

4. Coordination

5. Control

– He developed 14 universal principles of management.


Chapter Two | 9


Chapter Two | 10

Henri Fayol’s Universal

Management Process (cont’d)

• Lessons from the Universal Process Approach

– The management process can be separated into interdependent functions.

– Management is a continuous process.

– Management is a largely, though not an entirely, rational process.

– The functional approach is useful because it specifies what managers should do.


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The Operational Approach

• Frederick W. Taylor’s Scientific Management

– Developing performance standards on the basis of systematic observations and experimentation

• Standardization of work practices and methods to reduce waste and increase productivity

• Time and task study of workers’ efforts to maximize productivity and output

• Systematic selection and training of workers to increase efficiency and productivity

• Differential pay incentives based on established work standards


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Figure 2.2: Taylor’s Differential

Piece-Rate Plan


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Taylor’s Followers

• Frank and Lillian Gilbreth

– Refined time and motion study methods for use in work simplification

• Henry L. Gantt

– Refined production control and cost-control techniques

– Developed the Gantt chart for work scheduling of projects

– Early advocate of the importance of the human factor and the importance of customer service over profits


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The Quality Advocates

• Walter A. Shewhart

– Introduced the concept of statistical quality control

• Kaoru Ishikawa

– Proposed a preventive approach to quality

– Developed fishbone diagram approach to problem solving

• W. Edwards Deming

– Based his 14 principles on reformed management style, employee participation, and striving for continuous improvement


Chapter Two | 15

The Quality Advocates (cont’d)

• Joseph M. Juran

– Proposed the concept of internal customers, teamwork, partnerships with suppliers, and brainstorming

– Developed Pareto analysis (the 80/20 rule) as a tool for separating major problems from minor ones

• Armand V. Feigenbaum

– Developed the concept of total quality control

• Philip B. Crosby

– Promoted the idea of zero defects (doing it right the first time)


Chapter Two | 16

The Operational Approach

• Lessons from the Operational Approach

– A dedication to finding a better way is still important.

– Using scientific management doesn’t dehumanize workers.

– Quality advocates, inspired by the scientific approach, have been right all along about the importance of quality and continuous improvement.

– The operational approach fostered the development of operations management.


Chapter Two | 17

The Behavioral Approach

• The Human Relations Movement

– An effort to make managers more sensitive to their employees’ needs

– Arose out of the influences of

• The threat of unionization

• The Hawthorne studies

• The philosophy of industrial humanism


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Figure 2.3: The Human Relations

Movement Pyramid


Chapter Two | 19

The Behavioral Approach (cont’d)

• The Threat of Unionization

– The Wagner Act of 1935 legalized union-management collective bargaining, promoting the growth of unions and union avoidance by firms.

• The Hawthorne Studies (1924)

– The study’s results that productivity was strongly affected by workers’ attitudes turned management toward the humanistic and realistic viewpoint of the

“social man” model.


Chapter Two | 20

The Philosophy of Industrial Humanism

• Elton Mayo

– Emotional factors were more important determinants of productive efficiency than were physical and logical factors.

• Mary Parker Follett

– Managers should be aware of how complex each employee is and how to motivate employees to cooperate rather than to demand performance from them.


Chapter Two | 21

The Philosophy of Industrial Humanism

(cont’d)

• Douglas McGregor

– Developed Theory X and Theory Y

• Theory X: Management’s traditionally negative view of employees as unmotivated and unwilling workers

• Theory Y: The positive view of employees as energetic, creative, and willing workers


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Chapter Two | 23

Organizational Behavior

• Organizational Behavior

– A modern research-oriented approach seeking to discover the causes of work behavior and to develop better management techniques

• Lessons from the Behavioral Approach

– People are the key to productivity.

– Success depends on motivated and skilled individuals committed to the organization.

– Managerial sensitivity to employees is necessary to foster the cooperation needed for high productivity.


Chapter Two | 24

The Systems Approach

• What Is a System?

– A collection of parts operating interdependently to achieve a common purpose

• Systems Approach

– Posits that the performance of the whole is greater than the sum of the performance of its parts

• Analytic versus synthetic thinking: Outside-in thinking versus inside-out thinking

• Seeks to identify all parts of an organized activity and how they interact


Chapter Two | 25

The Systems Approach

• Chester I. Barnard’s Early Systems Perspective

– Wrote Functions of the Executive

– Characterized all organizations as cooperative systems

– Defined principal elements in an organization as

• Willingness to serve

• Common purpose

• Communication

– Strong advocate of business ethics


Chapter Two | 26

Figure 2.4: Barnard’s Cooperative

System


Chapter Two | 27

General Systems Theory

• General Systems Theory

– An area of study based on the assumptions that everything is part of a larger, interdependent arrangement

• Levels of systems

– Each system is a subsystem of the system above it.

– Identification of systems at various levels helps translate abstract systems theory into more concrete terms.


Chapter Two | 28

Figure 2.5: Levels of Living Systems


Chapter Two | 29

General Systems Theory (cont’d)

• Closed Versus Open Systems

– Closed system: A self-sufficient entity

– Open system: Something that depends on its surrounding environment for survival

• Systems are classified as open (closed) by how much (how little) they interact with their environments.


Chapter Two | 30

General Systems Theory (cont’d)

• New Directions in Systems Thinking

– Organizational learning and knowledge management

• Organizations are living and thinking open systems that learn from experience and engage in complex mental processes.

– Chaos theory

• Every complex system has a life of its own, with its own rule book.

– Complex adaptive systems

• Complex systems are self-organizing.


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Chapter Two | 32

The Contingency Approach

• Contingency Approach

– A research effort to determine which managerial practices and techniques are appropriate in specific situations

• Different situations require different managerial responses.

• It deals with intercultural feelings in which custom and habits cannot be taken for granted.


Chapter Two | 33

Figure 2.6: The Contingency View: A

Compromise


Chapter Two | 34

The Contingency Approach (cont’d)

• Contingency Characteristics

– An open-system perspective

• How subsystems combine to interact with outside systems

– A practical research orientation

• Translating research findings into tools and situational refinements for more effective management

– A multivariate approach

• Many variables collectively account for variations in performance.


Chapter Two | 35

The Contingency Approach (cont’d)

• Lessons from the Contingency Approach

– Approach emphasizes situational appropriateness rather than rigid adherence to universal principles

– Approach creates the impression that an organization is captive to its environment


Chapter Two | 36

The Era of Management by Best Seller:

Proceed with Caution

• Management in the Mainstream

– Gurus and Best Sellers

• Peter Drucker—author and first management guru

• Peters and Waterman’s bestseller In Search of Excellence

• Donald Trump’s hit show “The Apprentice”

– What’s Wrong with Management by Best Seller?

• Academics point to shoddy research and selective inclusion of anecdotal evidence.

• It encourages simplistic thinking: Upper management assumes that there is a one-size-fitsall solution that’s a magic bullet quickfix to solve the organization’s problems.


Chapter Two | 37


Chapter Two | 38

Summary

• Management is an interdisciplinary and international field that has evolved over the years.

• The operational approach has evolved from scientific management to operations management.

• Quality advocates teach the strategic importance of high-quality goods and services.

• Management has turned to the human factor in the human relations movement and organizational behavior approach.


Chapter Two | 39

Summary (cont’d)

• Under the systems approach, modern organizations are viewed as open systems.

• The contingency approach stresses situational appropriateness rather than universal principles.

• A quick-fix is unlikely to solve an organization’s unique problems.


Chapter Two | 40

Terms to Understand

• Universal process approach

• Operational approach

• Scientific approach

• Operations management

• Human relations movement

• Theory Y

• Organizational behavior

• System

• General systems theory

• Closed system

• Open system

• Contingency approach

• Multivariate analysis


Chapter Two | 41

Chapter Two

Chapter Two

Chapter Objectives

Chapter Objectives (cont’d)

Figure 2.1: Management Is a Global Affair

The Practice and Study of Management

The Practice and Study of Management

(cont’d)

No Universally Accepted Theory of

Management

The Universal Process Approach

• Universal Process Approach

Henri Fayol’s Universal

Management Process

Henri Fayol’s Universal

Management Process (cont’d)

The Operational Approach

Figure 2.2: Taylor’s Differential

Piece-Rate Plan

Taylor’s Followers

The Quality Advocates

The Quality Advocates (cont’d)

The Operational Approach

The Behavioral Approach

Figure 2.3: The Human Relations

Movement Pyramid

The Behavioral Approach (cont’d)

The Philosophy of Industrial Humanism

The Philosophy of Industrial Humanism

(cont’d)

• Douglas McGregor

Organizational Behavior

The Systems Approach

The Systems Approach

Figure 2.4: Barnard’s Cooperative

System

General Systems Theory

Figure 2.5: Levels of Living Systems

General Systems Theory (cont’d)

General Systems Theory (cont’d)

The Contingency Approach

Figure 2.6: The Contingency View: A

Compromise

The Contingency Approach (cont’d)

• Contingency Characteristics

The Contingency Approach (cont’d)

• Lessons from the Contingency Approach

The Era of Management by Best Seller:

Proceed with Caution

Summary

Summary (cont’d)

Terms to Understand

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