The Evolution of Management Thought

Agenda Classical Approach (1880-1920) Behavioural Approach (1930’s) Contemporary Approaches (1950-1980’s) Emerging Practices (1990’s – 2000’s)

Classical Approach - Systematic Management Adam Smith – 1776 – The Wealth of Nations Advocate of systemization Efficiency and Effectiveness Division of Labor – breaking up a task into particular roles to improve/increase productivity. Productivity 10 workers = 48,000 pins … 1 worker = 10 pins (What he observed) Focused on defining duties and responsibilities Led to Scientific Management

Classical Approach - Scientific Management Scientific Management – Study of relationships between people and tasks to increase efficiency: F. W. Taylor. How can management increase the level of worker productivity and motivation? Philosophy: One best way to do task ex: “How much load should I use” Used money as incentive Piece-rate System – Payment for amount of pieces/items produced Benefits: Productivity did improve, increase in efficiency. Problems: Oversimplification of Jobs, more work and same pay.

Classical Approach – Administrative Mgmt. Theory Study of how to create organizational structure that leads to high efficiency and effectiveness Henri Fayol Philosophy Management is a universal process – 14 Principles to ensure this. Fit the person to the job Workers should accept management’s decision without question.

Fayol’s Principles Division of Labor: allows for job specialization to increase efficiency 2. Authority and Responsibility: included both formal and informal authority resulting from special expertise 3. Unity of Command: Employees should have only one boss (Not always the case now) 4. Line of Authority: a clear chain of command from top to bottom of the firm 5. Centralization: the degree to which authority rests at the very top. Decisions should be made by those at the top of the organization. Formal Authority – Manager – Employee relationship. Manager has authority of employee b/c he or she is the employees boss. Informal Authority – Authority over someone else because of particular knowledge you have. (You may still be in the same level at the organization) 6

Fayol’s Principles 6. Unity of Direction: one plan of action to guide organization 7. Equity: treat all employees fairly 8. Order: each employee is placed where they have the most value 9. Initiative: encourage innovation 10. Discipline: obedient, respectful employees needed 7

Fayol’s Principles 11. Remuneration of Personnel: the payment system contributes to success 12. Stability of Tenure: long term employment is important 13. General interest over individual interest: organization over individual. Do what’s best for organization not what’s best for ourselves in given situations. 14. Esprit de corps: share enthusiasm for organization 8

Administration Management Problems Based on observations Concerned primarily with the structure of the organization

The Behavioral Approach 1930’s Philosophy: Change management emphasis from productivity to human element Hawthorne Plant Studies – Elton Mayo Study: Illumination will affect productivity. Results of Hawthorne’s Plant Studies: Higher and Lower Illumination – Productivity improved No matter what was done, productivity increased. Why? Cohesive Work Group Developed Team Spirit – The environment is important Management must create a stimulating work environment.

What is a Stimulating Work Environment? What’s stimulating to one employee might not be stimulating to another.

Maslow’s Hierarchy of Needs P.S: Importance of needs goes from bottom to top.

Theory X and Y Doug McGregor proposed 2 different worker assumptions Theory X: Employees are lazy and they dislike work, so they need to be supervised closely. Managers will get their employees to work through coercion and incentives. Theory Y: Employees are ambitious and their talents are underused in most companies. Managers believe employees want to do well at work.

Contemporary Approaches 1950’s-1980’s Continue to question – should management be an art or science?

Contemporary Approaches The Process Approach Planning, Organizing, Leading, and Controlling The Systems Approach – A set of independent parts working together to achieve a goal. Contingency Management – There’s no one universal way to manage, because organizations and situations vary.

Emerging Management Practices Organizational Culture Team Building Empowerment Total Quality Management