The Evolution of Management Thinking CHAPTER 2 Learning Objectives 2 Understand how historical forces influence the practice of management. Identify and explain major developments in the history of management thought. Describe the major components of the classical and humanistic management perspectives. Discuss the management science perspective and its current use in organizations. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Learning Objectives (contd.) 3 Explain the major components of systems theory, the contingency view, and total quality management. Describe the learning organization and the changes in structure, empowerment, and information sharing that managers make to support it. Discuss the technology-driven workplace and the role of outsourcing, supply chain management, enterprise resource planning, knowledge management systems, and customer relationship management. Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Management and Organization 4 Management philosophies and organization forms change over time to meet new needs Some ideas and practices from the past are still relevant and applicable to management today Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Historical Perspective 5 Provides a context or environment Develops an understanding of societal impact Achieves strategic thinking Improves conceptual skills Social, political, and economic forces have influenced organizations and the practice of management Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Forces Influencing Organizations and Management Social Forces - values, needs, and standards of behavior Political Forces - influence of political and legal institutions on people & organizations Economic Forces - forces that affect the availability, production, & distribution of a society’s resources among competing users 6 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Management Perspectives Over Time Exhibit 2.1 7 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Classical Perspective: 3000 B.C. ● ● ● ● 8 Rational, scientific approach to management – make organizations efficient operating machines Scientific Management Bureaucratic Organizations Administrative Principles Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Scientific Management: Taylor 1856-1915 General Approach Developed standard method for performing each job. Selected workers with appropriate abilities for each job. Trained workers in standard method. Supported workers by planning work and eliminating interruptions. Provided wage incentives to workers for increased output. 9 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Scientific Management Contributions Demonstrated the importance of compensation for performance. Initiated the careful study of tasks and jobs. Demonstrated the importance of personnel and their training. Criticisms 10 Did not appreciate social context of work and higher needs of workers. Did not acknowledge variance among individuals. Tended to regard workers as uninformed and ignored their ideas Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Bureaucratic Organizations Max Weber 1864-1920 Prior to Bureaucracy Organizations – – 11 European employees were loyal to a single individual rather than to the organization or its mission Resources used to realize individual desires rather than organizational goals Systematic approach –looked at organization as a whole Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Characteristics of Weberian Bureaucracy Division of labor with Clear definitions of authority and responsibility Personnel are selected and promoted based on technical qualifications Positions organized in a hierarchy of authority Managers subject to Rules and procedures that will ensure reliable predictable behavior Administrative acts and decisions recorded in writing Management separate from the ownership of the organization Exhibit 2.3 12 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Administrative Principles Contributors: Henri Fayol, Mary Parker Follett, and Chester I. Barnard Focus: – – 13 Organization rather than the individual Delineated the management functions of planning, organizing, commanding, coordinating, and controlling Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Henri Fayol 1841-1925 Examples of General Principles of Management 14 Division of work Unity of command Unity of direction Scalar chain Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Mary Parker Follett 1868-1933 Importance of common super-ordinate goals for reducing conflict in organizations – – – – Popular with businesspeople of her day Overlooked by management scholars Contrast to scientific management Reemerging as applicable in dealing with rapid change in global environment Leadership – importance of people vs. engineering techniques Ethics - Power - Empowerment 15 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Chester Barnard 1886-1961 Informal Organization – – Acceptance Theory of Authority – – 16 Cliques Naturally occurring social groupings Free will Can choose to follow management orders Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Humanistic Perspective Emphasized understanding human behavior, needs, and attitudes in the workplace Human Relations Movement Human Resources Perspective Behavioral Sciences Approach 17 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Human Relations Movement Emphasized satisfaction of employees’ basic needs as the key to increased worker productivity 18 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Hawthorne Studies 19 Started in 1895 Four experimental & three control groups Five different tests Test pointed to factors other than illumination for productivity 1st Relay Assembly Test Room experiment, was controversial, test lasted 6 years Interpretation, money not cause of increased output Factor that increased output, Human Relations Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Human Resource Perspective Suggests jobs should be designed to meet higher-level needs by allowing workers to use their full potential 20 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Abraham Maslow 1908-1970 21 Identified a hierarchy of needs Problems stem from an inability to satisfy one’s needs Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Douglas McGregor Theory X & Y 1906-1964 Theory X Assumptions 22 Dislike work –will avoid it Must be coerced, controlled, directed, or threatened with punishment Prefer direction, avoid responsibility, little ambition, want security Theory Y Assumptions Do not dislike work Self direction and self control Seek responsibility Imagination, creativity widely distributed Intellectual potential only partially utilized Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Behavioral Sciences Approach Sub-field of the Humanistic Management Perspective Applies social science in an organizational context Draws from economics, psychology, sociology, anthropology, and other disciplines – – 23 Understand employee behavior and interaction in an organizational setting OD – Organization Development Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Management Science Perspective Emerged after WW II Applied mathematics, statistics, and other quantitative techniques to managerial problems 24 Operations Research – mathematical modeling Operations Management – specializes in physical production of goods or services Information Technology – reflected in management information systems Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Recent Historical Trends 25 ● Systems Theory ● Contingency View ● Total Quality Management (TQM) Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Systems View of Organizations Exhibit 2.5 26 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Contingency View of Management Exhibit 2.6 27 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. TQM Focuses on managing the total organization to deliver quality to customers. Four significant elements are – – – – 28 Employee involvement Focus on the customer Benchmarking Continuous improvement Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Elements of a Learning Organization Team-Based Structure Learning Organization Empowered Employees Open Information Exhibit 2.7 29 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved. Types of E-Commerce Business-to-Consumer B2C Selling Products and Services Online Business-to-Business B2B Transactions Between Organizations Consumer-to-Consumer C2C Electronic Markets Created by Web-Based Intermediaries Exhibit 2.8 30 Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved.