Chapter 1
Management
and Its
Evolution
Learning Objectives
After reading this chapter, you should be able to:

Understand the challenges organizations face in the
new millennium.

Specify the functions and roles of successful
managers.

Explain the origins of management as an academic
discipline.

Describe the bureaucratic and administrative
approaches to the study of management.

Explain the behavioral perspective in analyzing
management issues.

Interpret recent approaches to the study of
management.
Why GM and Ford Lost While Toyota
Won

Critical Thinking Questions focus on:



Financial situation of Ford and GM relative to
Toyota
Differences in Management Style
How does Toyota beat Ford and GM on their
own turf
The performance of organizations depends to
a large extent on how their resources are
allocated and their ability to adapt to changing
conditions.
Successful organizations know how to
manage people and resources efficiently and
effectively to accomplish organizational goals
and to keep those goals in tune with changes
in the external environment.
Management in the New
Millennium
A
firm can be efficient by
making the best use of people,
money, physical plant, and
technology.
 It
is ineffective if its goals do
not provide a sustained
competitive advantage.
A
firm with excellent goals would
fail if it hired the wrong people,
lost key contributors, relied on
outdated technology, and made
poor investment decisions.
Levels of Management
Strategic Managers
Tactical Managers
Operational Managers
Strategic Managers
The
firm’s
senior
executives with
overall
responsibility for
the firm.
Tactical Managers
Responsible
for
translating the
general goals and
plans developed by
strategic managers
into specific
objectives and
activities.
Operational Managers
Lower-level
managers who
supervise the
operations of the
organization.
Today’s Organizations
More
decentralization
Employees
have more autonomy to define
their jobs, prioritize tasks, allocate time,
monitor their own work, and set their own
objectives.
Empowerment
allows employees to be less
dependent on superiors to tell them what to
do, and are encouraged to use their own
ideas.
Department
barriers are breaking down by
creating more teams.
Teams
Cross-functional teams
Composed of individuals from different
parts of the organization
Cross-disciplinary
Composed of team members with diverse
background
Define
the problem, set objectives,
establish priorities, proposes new ways of
doing things, and assigns members to
different tasks.
Management
Traditionally taught in terms of its
functions
 Readily observed in terms of roles
managers play

Management Functions
Planning
Leading
Organizing
Controlling
Planning
 The
management function that
assesses the management
environment to set future
objectives and map out
activities necessary to achieve
those objectives.
 To
be effective, the objectives
of individuals, teams, and
management should be
coordinated to support the
firm’s mission.
Organizing
 The
management function that
determines how the firm’s
human, financial, physical,
informational, and technical
resources are arranged and
coordinated to perform tasks to
achieve desired goals.
 The
deployment of resources to
achieve strategic goals.
Leading
 The
management function that
energizes people to contribute
their best individually and in
cooperation with other people.
 This





involves:
Clearly communicating organizational
goals
Inspiring and motivating employees
Providing an example for others to follow
Guiding others
Creating conditions that encourage
management of diversity
Controlling
 The
management function that
measures performance,
compares it to objectives,
implements necessary
changes, and monitors
progress.
 Many
of these issues involve
feedback or identifying
potential problems and taking
corrective action.
Management daily activities
A
typical day for me in a past life could
include the following









Brief discussion between entrance and office
Check voice mail, email, snail mail
Secretary tells me schedule for the day
Approve or otherwise dispose of requests, reports,
etc. that are pending or secretary says important
Attend a meeting
Move from meeting to another (different building?)
Field phone calls, sometimes cell and landline at the
same time
Meet visitor with scheduled appointment
And this is before lunch
Management as a Set of Roles
 As
managers go about their day, perform
activities similar to what I describe, they
take on different roles.
 Roles include:
Interpersonal roles - communication with superiors,
peers, subordinates, and people from outside the
organization.
 Information Roles - obtaining, interpreting, and giving
out information.
 Decisional Roles - choosing among competing
alternatives.

Interpersonal &
Informational Roles
Interpersonal Roles
 Figurehead-visible personality representing an
organization, department, or unit
 Leader-energizes others to get the job done
properly
 Liaison-links together the activities of people both
inside and outside of the organization.
Informational Roles
 Include monitor and disseminator
Decisional Roles
Entrepreneur-introduces
organization
changes in the
Disturbance
handler-takes corrective action,
provide damage control, and responds to
unexpected situations or crisis
Resource
allocator-assigns people and other
resources to best meet organizational needs
Negotiator-reaches
compromises
agreements and makes
The Evolution of
Management Thought
Early Management
Thought
Administrative
Management
Approach
Contemporary
Management
Approach
Behavioral
Perspective
Operational
Perspectives
Bureaucratic
Management
Approach
A few words on “old” management
theories




“Management” as a practice has been around
since before the time of the Greeks and Romans.
Some civilizations which pre-date western
civilization grappled with “management” issues
three thousand years ago.
Some principles have not changed, only how
these are defined, for example, “know the
terrain” is now “competitive analysis.”
Technological and social changes have brought
new ways of thinking.
Early Management Thought
 Early
ideas about management strategy
 Sun
 Early
Tzu, The Art of War
ideas about leadership
 Nicolò
Machiavelli, The Prince
 Early
ideas about the design and organization
of work
 Adam

Smith, The Wealth of Nations
division of labor
The Operational Perspective
Scientific
 Frederick
Management
W. Taylor
Quantitative
 Ford
Management
W. Harris
Quality
 Walter
Management
A. Shewhart
Taylor’s Four Principles of
Scientific Management

Scientifically study each part of a task and
develop the best method of performing the
task.

Carefully select workers and train them to
perform the task by using the scientifically
developed method.

Cooperate fully with workers to ensure that
they use the proper method.

Divide work and responsibility so that
management is responsible for planning work
methods using scientific principles and
workers are responsible for executing the
work accordingly.
Quantitative Management “Tools”
Quantitative tools from specific disciplines
that drive management decisions
 Break-even analysis – financial approach
to determining ideal combination of price
and volume given a set of costs
 Economic Order Quantity – operations
management tool to determine when to
reorder materials, i.e. raw materials or
finished products, given inventory holding
costs and set-up costs

Quantitative Management “Tools”

Materials Requirement Planning (MRP) –
operations management tool to achieve similar
purpose, when to reorder; useful for processes
where products are linked, e.g. demand for TV
drives TV sets and antennas, which in turn drives
demand for tubes, parts, etc.


Push system – once demand is determined, MRP system
determines what to reorder and produce
Kanban system is an alternate – make one
product at a time


Pull system - produce small lots, order parts and
components as lot moves through system
Part of a broader Total Quality Management system
Total Quality Management (TQM)


Manufacturing operations traditionally reliant on
such techniques as EOQ (Economic Order
Quantity) and MRP (Materials Requirement
Planning)
TQM approached based on statistical quality
control methods and the following principles

Outputs vary around a mean




Think Michael Jordan taking foul shots
Output can be measured in terms of variation and mean
Output variation can be reduced by systematic methods
Output can be improved once sources of variation are
minimized.
Bureaucratic Management
Approach
 Max
Weber
Key Characteristics
 Specialization
of labor
 Formal rules and procedures
 Impersonality
 Well-defined hierarchy
 Career advancement based on merit
Administrative Management
Approach
Henry Fayol’s 14 Principles of Management
 Division of work
 Centralization

Authority

Discipline

Unity of command


Scalar chain

Order
Unity of direction

Equity

Subordination of
individual interest to
the general interest

Stability and
tenure

Remuneration

Initiative

Esprit de corps
Behavioral Perspective
 Mary
Parker Follett & the Hawthorne Studies
 Mary
Follett questioned the wisdom of scientific
management because she believed it ignored many
ways in which employees could contribute ideas
and exercise initiative.

 It
She advocated increased employee participation, autonomy, and
organization of teams
acknowledges that psychological and social
processes of human behavior can result in
improvements in productivity and work
satisfaction.
Behavioral Perspective
 The
Hawthorne effect - when a manager
shows concern for employees, their
motivation and productivity levels are
likely to improve.
 Human
Relations Approach - the
relationship between employees and a
supervisor is a vital aspect of
management.
 Employee
motivation
 Leadership style
Maslow’s Hierarchy
of Needs
Self-Actualization
Need for Self Esteem
Need for Social Relations
Need for Security
Physical Needs
McGregor’s Theory X and
Theory Y
 Leaders
and managers who hold Theory X
assumptions believe that employees are
inherently lazy and lack ambition.

A negative perspective on human behavior.
 Leaders
and managers who hold Theory Y
assumptions believe that most employees do not
dislike work and want to make useful
contributions to the organization.

A positive perspective on human behavior.
Examples

Scientific Management



Bureaucratic Management


Model T production
Assembly line operations continue to employ
these principles
Government agencies including US Postal
Service
Behavioral perspective

Newer companies
Contemporary Management
Approach
Systems
Theory
Contingency
The
Theory
Learning Organization Perspective
Systems Theory
 Views
the organization as a system of
interrelated parts that function in a holistic
way to achieve a common purpose.
 Systems
theory concepts that affect
management thinking:
Open and closed systems
 Subsystems
 Synergy
 Equifinality

Contingency Theory
States
that there is no “one
best way” to manage an
organization.
 Because
what works for one organization
may not work for another
 Situational
differ
 Managers
characteristics (contingencies)
need to understand the key
contingencies that determine the most
effective management practices in a given
situation
The Learning Organization
 The
management approach based on an
organization anticipating change faster than
its counterparts to have an advantage in the
market over its competitors.
 Rather
than reacting to change , which is a
normal part of the business landscape,
organizations need to anticipate change so
they are well positioned to satisfy customer
needs.
Emerging Perspectives
and Issues
The Modular Organization
Every function not regarded as crucial is outsourced to an
independent organization.
 “Disaggregated Corporation”

The Intangible Organization
Shifts from tangible (plant and equipment) to intangible
(know-how and product design) investments
 Mangers and employees in today’s companies focus on
opportunities rather than efficiencies

Why GM and Ford Lost While Toyota
Won

Responses to Critical Thinking Questions:

Ford and GM were pioneers in scientific management
techniques




Ford was one of first to install production lines
GM was one of first to install divisional management
structure
Both have failed to adapt to change
Toyota




Customer driven
Manages human resources well
Globalizing operations (more effectively than Ford or GM)
Moved operations to the US and succeeded
Minicase 1.2 (p. 42)
What management aspects are unique to
Google as described in this case?
 To what extent do you think Google’s
management style may be effectively used
by other organizations?
 Comment on management style:




Comfort level of senior management may
dictate what can be effectively used
Will attract some people and turn off others
Need to keep “troops” focused
Video: The entrepreneurial manager



Based on Video, on a sheet of paper, write a
response to the first question (p. 26).
Exchange with your neighbor and discuss
particularly in the context of second part of the
question: How does this relate to Deming . . ?
Comments – first question




Focus on quality, pay attention to details, offer
customers better products
Involve employees
Continuous improvement
Comments – second question


McFarlane was seeking higher order needs
Beyond security or monetary factors