PART 1

The Evolution Of Management Theory

What is an organization
Organizations are:

1. Social entities 2. Goal directed 3. Designed as deliberately structured and

coordinated activity systems 4. Linked to the external environment

Organizations perform the following functions

Importance of Organizations

Bring together resources to achieve desired goals and

outcomes Produce goods and services Facilitate innovation Develop & use modern/futuristic technology for production Adapt to and influence a changing environment Create value for owners, customers, and employees Accommodate ongoing challenges of diversity, ethics, career patterns, and the motivation and coordination of employees

Consequences of the Post Industrial Revolution Era Urbanization of work force Labor movement to counter
management practices of the day The development of large non business organizations like labor unions Attempts to apply scientific techniques to study social phenomena

TYPE 1 THEORISTS
The Rational Mechanical Model

Scientific Management
Fredrick W. Taylor (1856 1915 )
Taylors work was strongly influenced by Protestant ethics of the time: Value of hard work: Economic rationality Individualism: Each person had a role to play in society His work was mainly focused on shop floor efficiency

Taylors Views on Problems of Productivity

Matter of ignorance on part of
management and labor Both did not know what constituted a Fair days work and Fair pay Both were overly concerned with how to divide profits that arose from productivity but not bothered enough about how to increase productivity

 Fair Days Work

Determining Fair Days Work and Fair Days Pay

Time and Motion Study determined what workers can

do with their equipment and materials. Developed a file of elementary movement and times He would break a job into its component parts and measure each to the hundredth of a minute. One of his most famous studies involved shovels. He noticed that workers used the same shovel for all materials. He determined that the most effective load was 21 lb, and found or designed shovels that for each material would scoop up that amount

 Fair Days Pay

Set standards and rates scientifically Used differential piece rate system It should be pointed out that Taylor was writing before
the establishment of a "minimum wage" (the minimum wage became federal law in 1938), so the notion of what is "a fair day's work for a fair day's pay" was arbitrary. A day-rate or hourly-rate was a common practice at the turn of the century. Taylor viewed these wage practices as rewarding for attendance, not performance

 Lacked Humanism: The time & motion studies

Criticism of Scientific School

viewed workers as machines, motivated by rational, economic considerations; work standardization and fragmentation reduced workers to impersonal cogs; assumed workers to be without emotions concerned only with wage maximization Piece rate system aroused pressures of speed up and, consequently, unhealthy practices on the part of the workers; generally failed because standards were poorly set, employers cut rates when workers earned "too much", and workers would conceal their real capacity for production to keep standards low. Opposition by managers for substitution of scientific methods for their own judgment; Taylor was fired from his own organization, Bethlehem Steel.

1. 2. 3. 4. 5.

Henri Fayol (1841 1925) was a French mining engineer and director of mines. Primary emphasis on establishing broad administrative principles applicable to higher management level Definition of Management: Management is an overall function of conducting an undertaking towards its objectives by trying to make best possible use of all resources at its disposal and to ensure smooth working of the five essential functions: Planning Organizing Command Coordination Control

Administrative Theorists

Fayols Fourteen Principles

1. 2. 3. 4. 5. 6.
Division of work Authority & Responsibility Discipline Unity of command Unity of direction Subordination of individual interest to general interest 7. Remuneration of personnel 8. Centralization

Fourteen Principles
9. Scalar chain (where he favored short
spans of control) 10.Order 11.Equity 12.Stability of tenure of personnel 13.Initiative 14.Espirit de-corps

 Static Consideration:

Criticism

Does not explain the impact of Dynamic Environmental Factors and its resultant complexities Dehumanization of organizations Criticism of universal principles: Unity of command may not always be possible or feasible Authority and responsibility may not be explicit but implied (position vs personal power) Short spans of control have proved to be inefficient

Max Webers Bureaucratic Model

Maximilian Karl Emil (Max) Weber (1864 1920) was a German sociologist, philosopher, and political economist. System Of Administration Division of Labor Authority and responsibility well defined Positions organized in a Hierarchy resulting in clear

chain of command Members selected on basis of technical competence Officials appointed not elected Systems and procedures for dealing with work situations Impersonality in interpersonal relations

 Functional consequences

Assessment of Bureaucratic Model

Specialization Predictability and stability Rational Dysfunctional Consequences Rigidity Impersonality Displacement of objectives (over-emphasis
on procedures leading to red tape) Cost of control

Major Assumptions of Classical Theorists

There is one best way Human beings are Rational-Economic
entities Organizations are Mechanistic Systems Structuring and controlling human participants is the key to success Management is the primary integrative force and formal hierarchy the mechanism for achieving coordination

TYPE 2 THEORISTS
The Human Relations Model

Behavioral School

Hawthorne Effect The term was coined in 1950 by Henry A. Landsberger who had been commissioned to carry out a study at Hawthorne Works (a Western Electric Co.) Illumination Experiment: Illumination research of workplace lighting formed the basis of the Hawthorne effect, while other changes such as maintaining clean workstations, clearing floors of obstacles, and even relocating workstations resulted in increased productivity for short periods.

Relay Assembly Experiment

In one of the studies, experimenters chose two women
as test subjects and asked them to choose four other workers to join the test group. Together the women worked in a separate room assembling telephone relays. Output was measured mechanically by counting how many finished relays each worker dropped down a chute. This measuring began in secret two weeks before moving the women to an experiment room and continued throughout the study. In the experiment room, they had a supervisor who discussed changes with them and at times used their suggestions.

Result
Increase in Productivity: Researchers
concluded that choosing one's own coworkers, working as a group, being treated as special (as evidenced by working in a separate room), and having a sympathetic supervisor were the reasons for the productivity increase

Wiring Room Experiment

The purpose of the next study was to find out how payment
incentives would affect productivity. The surprising result was that productivity actually decreased. Workers apparently had become suspicious that their productivity may have been boosted to justify firing some of the workers later on. The study was conducted by on a group of fourteen men who put together telephone switching equipment. The researchers found that although the workers were paid according to individual productivity, productivity decreased because the men were afraid that the company would lower the base rate. Detailed observation revealed the existence of informal groups or "cliques" within the formal groups. These cliques developed informal rules of behavior as well as mechanisms to enforce them. The cliques served to control group members and to manage bosses; when bosses asked questions, clique members gave the same responses, even if they were untrue. These results show that workers were more responsive to the social force of their peer groups than to the control and incentives of management.

 Demonstrated the importance of psychological or

human factors on worker productivity and morale Signaled the criticality of certain variables for worker satisfaction, autonomy on the job, relative lack of need for close supervision, the importance of receiving feedback on the direct relationship between performance and reward Provided evidence for a later theory (Herzberg) that there is no direct cause and effect relationship between working conditions and productivity Provided data and stimulus for group dynamics, especially in work context

Implications of Hawthorne Studies

Assumptions of the Human Relations Model

Employee satisfaction is the key to productivity and quality Open supportive communication enhances satisfaction Meeting the individual needs of employees is a key goal of
management Managers need to pay close attention to building good relationships on the job Employees will be motivated to do good work if the work environment permits it. Good Communication - informal networks, few barriers Clear Performance Goals facilitated with feedback, quick and specific Meaningful Rewards linked to performance

TYPE 3 THEORISTS
The Strategic Constituencies Model
OR The Environment Imperative Model

Systems Theory
System as organized, unitary whole
composed of two or more interdependent parts, components, or subsystems and delineated by identifiable boundaries from its environment supra-system Closed system Has rigid , impenetrable boundaries and closes itself to the external environment Open system Imports energy from the environment, processes it and provides its output to the environment.

Systems Theory

Inputs

Processing Technology Systems procedures

Outputs

Feedback

1. Subsystems or components 2. Holism, Synergism, Gestalt: The whole is not just 3. 4. 5. 6.

sum of its parts: the system can only be explained in totality Input transformation output model System boundaries Negative entropy Steady state , dynamic equilibrium and Homeostasis: open system attains a state in which it remains in dynamic equilibrium through continuous inflow of materials, energy and information Feedback

Characteristics of Open Systems

7.

8. Hierarchy: A system is composed of

subsystems of a lower order and is also, in part, a supra-system 9. Internal Elaboration: open systems appear to move in the direction of greater differentiation, elaboration, higher level of organization 10.Multiple goal seeking 11.Equifinality

Characteristics of open system

 Perform five essential functions: 1. Boundary spanning:

Organizational Subsystems

2.
3.

4.
5.

Handle input output transaction Production system Produces product and service outputs Maintenance Smooth operations and upkeep of the organization Adaptation Scan the environment for problems, opportunities, and technological developments Management Directing and coordinating other subsystems. Provide direction, strategy, goals and policies for the entire organization

 1. 2. 3. 4. 5. 6. 7. 8.

Dimensions of Organizational Design

Structural Dimensions: Formalization Specialization Standardization Hierarchy Complexity Centralization Professionalism Span of Control

Contextual Dimensions
Size Organization Technology The Environment Strategy and Goals Culture

Contingency View
There is no best way to manage/ organize There must be a goodness of fit
between organization structure and the conditions in the external environment. What works in one setting may not work in another setting The correct management approach is contingent on organizations situation

TYPE 4 THEORISTS
The Power & Politics Model

Organizations seen as Political Arenas

Proposed by James March & Herbert Simon Extensively refined by Jeffery Pfeffer Proposes that control in organizations becomes an end
rather than merely a means to rational goals such as efficient production or output. Organizations are coalitions composed of varying groups and individuals with different demands. Employees have to perceive themselves as a part of identifiable group or department An organizations design represents the result of the power struggles by these diverse coalitions

 Available force or potential for achieving

Political Processes in Organizations

desired outcome The use of power to influence decisions in order to achieve those outcomes Two approaches to politics: 1.Self serving behavior involves activities not sanctioned by the organization 2. Natural organizational decision process

Organizational Politics
Involves activities to acquire, develop, and use
power and other resources to obtain the preferred outcomes when there is uncertainty or disagreement of choices Political behavior can be either a positive or negative force Uncertainty and conflicts are natural and inevitable, and politics is the mechanism for reaching agreement