Chapter 2 Management Yesterday and Today

ANNOTATED OUTLINE

1. HISTORICAL BACKGROUND OF MANAGEMENT

Many fascinating examples from history illustrate how management
has been practiced for thousands of years.
A. Organizations and managers have existed for thousands of
years. The Egyptian pyramids and the Great Wall of China
were projects of tremendous scope and magnitude, requiring
the efforts of tens of thousands of people. How was it
possible for these projects to be completed successfully? The
answer is management. Regardless of the titles given to
managers throughout history, someone has always had to
plan what needs to be accomplished, organize people and
materials, lead and direct workers, and impose controls to
ensure that goals were attained as planned.
B. Examples of early management practices can also be seen by
studying the Arsenal of Venice. Assembly lines, accounting
systems, and personnel functions are only a few of the
processes and activities used in business in the fifteenth
century that are common to todays organizations as well.
C. Adam Smith, author of the classical economics doctrine The
Wealth of Nations, argued brilliantly for the economic
advantages that he believed division of labor (the
breakdown of jobs into narrow, repetitive tasks) would bring
to organizations and society.
D. The Industrial Revolution is possibly the most important
pre-twentieth-century influence on management. The
introduction of machine powers combined with the division of
labor made large, efficient factories possible. Planning,
organizing, leading, and controlling became necessary
activities.
E. Exhibit 2-1 and PowerPoint slide 2-7 illustrate the
development of management theories.
2. SCIENTIFIC MANAGEMENT
Scientific management is defined as the use of the scientific
method to determine the one best way for a job to be done.
A. Important Contributions
1. Frederick W. Taylor is known as the father of scientific
management. Taylors work at the Midvale and
Bethlehem Steel companies stimulated his interest in
improving efficiency.
a. Taylor sought to create a mental revolution
among both workers and managers by defining
clear guidelines for improving production
efficiency. He defined four principles of
management (Exhibit 2-2).
b. His pig iron experiment is probably the most
widely cited example of his scientific
management efforts.
c. Using his principles of scientific management,
Taylor was able to define the one best way for
doing each job.
d. Frederick W. Taylor achieved consistent
improvements in productivity in the range of
200 percent. He affirmed the role of managers
to plan and control and the role of workers to
perform as they were instructed.
2. Frank and Lillian Gilbreth were inspired by Taylors
work and proceeded to study and develop their own
methods of scientific management.
a. Frank Gilbreth is probably best known for his
experiments in reducing the number of motions
in bricklaying.
b. The Gilbreths were among the first to use
motion picture films to study hand and body
motions in order to eliminate wasteful motions.
c. They also devised a classification scheme to
label 17 basic hand motions called therbligs
(Gilbreth spelled backward, with the th
transposed).
B. How Do Todays Managers Use Scientific Management?
Guidelines devised by Taylor and others to improve
production efficiency are still used in todays organizations.
However, current management practice is not restricted to
 scientific management practices alone. Elements of scientific
management still used include:
1. Using time and motion studies
2. Hiring best qualified workers
3. Designing incentive systems based on output
3. GENERAL ADMINISTRATIVE THEORISTS
This group of writers, who focused on the entire organization,
developed more general theories of what managers do and what
constitutes good management practice.
A. Henri Fayol and Max Weber were the two most prominent
proponents of the general administrative approach.
1. Henri Fayol, who was a contemporary of Frederick W.
Taylor, was the managing director of a large French
coal-mining firm.
a. Fayol focused on activities common to all
managers.
b. He described the practice of management as
distinct from other typical business functions.
c. He stated 14 principles of management
(fundamental or universal truths of management
that can be taught in schools; see Exhibit 2-3
and PowerPoint slide 2-13).
2. Max Weber (pronounced VAY-ber) was a German
sociologist who wrote in the early twentieth century.
a. Weber developed a theory of authority
structures and described organizational activity
based on authority relations.
b. He described the ideal form of organization as a
bureaucracy marked by division of labor, a
clearly defined hierarchy, detailed rules and
regulations, and impersonal relationships (see
Exhibit 2-4).
B. How Do Todays Managers Use General Administrative
Theories?
Some current management concepts and theories can be
traced to the work of the general administrative theorists.
1. The functional view of a managers job relates to Henri
Fayols concept of management.
 2. Webers bureaucratic characteristics are evident in
many of todays large organizationseven in highly
flexible organizations that employ talented
professionals. Some bureaucratic mechanisms are
necessary in highly innovative organizations to ensure
that resources are used efficiently and effectively.
4. QUANTITATIVE APPROACH TO MANAGEMENT
The quantitative approach to management, sometimes known as
operations research or management science, uses quantitative
techniques to improve decision making. This approach includes
applications of statistics, optimization models, information models,
and computer simulations.
A. Important Contributions.
1. The quantitative approach originated during World War
II as mathematical and statistical solutions to military
problems were developed for wartime use.
2. As often happens after wartime, methods that were
developed during World War II to conduct military
affairs were applied to private industry following the
war. For instance, a group of military officersthe Whiz
Kidsused quantitative methods to improve decision
making at Ford Motor Company in the mid-1940s.
B. How Do Todays Managers Use the Quantitative Approach?
1. The quantitative approach has contributed most
directly to managerial decision making, particularly in
planning and controlling.
2. The availability of sophisticated computer software
programs has made the use of quantitative techniques
more feasible for managers.
5. TOWARD UNDERSTANDING ORGANIZATIONAL BEHAVIOR
The field of study concerned with the actions (behaviors) of people
at work is organizational behavior. Organizational behavior (OB)
research has contributed much of what we know about human
resources management and contemporary views of motivation,
leadership, trust, teamwork, and conflict management.
A. Early Advocates
Four individualsRobert Owen, Hugo Munsterberg, Mary
Parker Follett, and Chester Barnardwere early advocates of
 the OB approach. Their ideas served as the foundation for
employee selection procedures, motivation programs, work
teams, and organization-environment management
techniques. (See Exhibit 2-5 for a summary of the most
important ideas of these early advocates.)
B. The Hawthorne Studies were the most important
contribution to the development of organizational behavior.
1. This series of experiments conducted from 1924 to the
early 1930s at Western Electric Companys Hawthorne
Works in Cicero, Illinois, were initially devised as a
scientific management experiment to assess the
impact of changes in various physical environment
variables on employee productivity.
2. After Harvard professor Elton Mayo and his
associates joined the study as consultants, other
experiments were included to look at redesigning jobs,
make changes in workday and workweek length,
introduce rest periods, and introduce individual versus
group wage plans.
3. The researchers concluded that social norms or
group standards were key determinants of individual
work behavior.
4. Although not without criticism (concerning
procedures, analyses of findings, and the conclusions),
the Hawthorne Studies stimulated interest in human
behavior in organizational settings.
C. How Do Todays Managers Use the Behavioral Approach?
1. The behavioral approach assists managers in designing
jobs that motivate workers, in working with employee
teams, and in facilitating the flow of communication
within organizations.
2. The behavioral approach provides the foundation for
current theories of motivation, leadership, and group
behavior and development.
6. THE SYSTEMS APPROACH
During the 1960s researchers began to analyze organizations from
a systems perspective based on the physical sciences. A system is
a set of interrelated and interdependent parts arranged in a manner
 that produces a unified whole. The two basic types of systems are
open and closed. A closed system is not influenced by and does
not interact with its environment. An open system interacts with
its environment (see Exhibit 2-6).
A. The Systems Approach and Managers
1. Using the systems approach, managers envision an
organization as a body with many interdependent parts,
each of which is important to the well-being of the
organization as a whole.
2. Managers coordinate the work activities of the various
parts of the organization, realizing that decisions and
actions taken in one organizational area will affect other
areas.
3. The systems approach recognizes that organizations are
not self-contained; they rely on and are affected by factors
in their external environment.
7. THE CONTINGENCY APPROACH
The contingency approach recognizes that different organizations
require different ways of managing.
A. The contingency approach to management is a view that
the organization recognizes and responds to situational
variables as they arise.
B. Some popular contingency variables are shown in Exhibit
2-7.
8. CURRENT TRENDS AND ISSUES
After the study of the history and development of management
theories, students can better understand how current concepts and
practices are changing the way managers do their jobs today.
A. Globalization. Organizational operations are no longer
limited by national borders. Managers throughout the world
must deal with new opportunities and challenges inherent in
the globalization of business.
B. Ethics. Cases of corporate lying, misrepresentations, and
financial manipulations have been widespread in recent
years. Managers of firms such as Enron, ImClone, Global
Crossing, and Tyco International have placed their own self-
interest ahead of other stakeholders welfare.
 1. While most managers continue to behave in a highly
ethical manner, abuses suggest a need to upgrade
ethical standards.
2. Ethics education is increasingly emphasized in college
curricula today.
3. Organizations are taking a more active role in creating
and using codes of ethics, ethics training programs,
and ethical hiring procedures.
C. Workforce diversity refers to a workforce that is
heterogeneous in terms of gender, race, ethnicity, age, and
other characteristics that reflect differences.
1. Workforce diversity is a global issue.
2. The assimilation (melting pot) model used before the
early 1980s has been replaced by the recognition and
celebration of differences.
3. Accommodating diverse groups of people by
addressing different lifestyles, family needs, and work
styles is a major challenge for todays managers.
4. Wise managers value diversity as an asset in bringing
a broad range of viewpoints and problem-solving skills
to an organization.
D. Entrepreneurship is the process whereby an individual or
group of individuals use organized efforts to pursue
opportunities to create value and grow by fulfilling wants and
needs through innovation and uniqueness, no matter what
resources the entrepreneur currently has.
1. Three important themes stand out in this definition:
a. The pursuit of opportunities
b. Innovation
c. Growth
2. Entrepreneurship will continue to be important to
societies around the world.
Note: A special entrepreneurship module appears at
the end of each of the six major parts of the
textbook. This feature examines topics
presented in that particular section from an
entrepreneurial perspective.
E. Managing in an E-Business World
 1. E-business (electronic business) is a comprehensive
term describing the way an organization does its work
by using electronic (Internet-based) linkages with its
key constituencies in order to efficiently and effectively
achieve its goals.
2. While critics questioned the viability of Internet-based
companies (dot-coms) after the high-tech implosion in
2000 and 2001, e-business is here to stay.
3. E-commerce (electronic commerce) is the sales and
marketing component of e-business.
4. Categories of e-business involvement (see Exhibit 2-9
and PowerPoint slide 2-30):
a. An e-business enhanced organization uses the
Internet to enhance (expand, not replace) its
traditional ways of doing business. This type of
organization sets up e-business capabilities
(usually e-commerce).
b. An e-business enabled organization uses the
Internet to enable the company to perform its
traditional business functions more efficiently
and effectively, but it does not sell products or
services on the Internet.
c. A total e-business is made possible by, and
revolves around, the Internet.
F. Knowledge Management and Learning Organizations.
1. Change is occurring at an unprecedented rate.
2. To be successful, todays organization must become a
learning organizationone that has developed the
capacity to continuously learn, adapt, and change.
(Exhibit 2-10 and PowerPoint slide 2-32 illustrate
differences between a learning organization and a
traditional organization.)
3. Knowledge management involves cultivating a
learning culture where organizational members
systematically gather knowledge and share it with
others in the organization so as to achieve better
performance.
G. Quality Management.
1. Quality management is a philosophy of management
that is driven by continual improvement and response
to customer needs and expectations (see Exhibit 2-
11).
2. TQM was inspired by a small group of quality experts,
including W. Edwards Deming, who was one of its chief
proponents.
3. TQM represents a counterpoint to earlier management
theorists who believed that low costs were the only
road to increased productivity.
4. The objective of quality management is to create an
organization committed to continuous improvement in work
processes.