Historical Background of Management Ancient Management Egypt (pyramids) China (Great Wall) Adam Smith Published “The Wealth of Nations” in 1776 Advocated the division of labor (job specialization) to increase the productivity of workers Industrial Revolution Substituted machine power for human labor Created large organizations in need of management Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Major Approaches to Management (i) Scientific Management (ii) General Administrative Theory 2. QUANTITATIVE APPROACH 3. BEHAVIORAL APPROACH (i) Systems Theory (ii) The Contingency Approach 1. CLASSICAL APPROACH 4. CONTEMPORARY APPROACH Copyright © 2005 Prentice Hall, Inc. All rights reserved.

1. Classical approach – (i) Scientific Management Fredrick Winslow Taylor The “father” of scientific management Published Principles of Scientific Management (1911) The theory of scientific management: Using scientific methods to define the “one best way” for a job to be done Putting the right person on the job with the correct tools and equipment Having a standardized method of doing the job Providing an economic incentive to the worker Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Scientific Management (cont’d) Frank and Lillian Gilbreth Focused on increasing worker productivity through the reduction of wasted motion Developed the microchronometer to time worker motions and optimize performance. Copyright © 2005 Prentice Hall, Inc. All rights reserved.

(ii) General Administrative Theorists Henri Fayol Believed that the practice of management was distinct from other organizational functions Developed fourteen principles of management that applied to all organizational situations Max Weber- German sociologist Developed a theory of authority structures and relations based on an ideal type of organization (bureaucracy) Bureaucracy—a form of organization characterized by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships.

Fayol’s 14 Principles Copyright © 2005 Prentice Hall, Inc. All rights reserved.

2. Quantitative Approach to Management Also called operations research or management science Evolved from mathematical and statistical methods developed to solve WWII military logistics and quality control problems Focuses on improving managerial decision making by applying: Statistics, optimization models, information models, and computer simulations The quantitative approach has contributed directly to management decision making in the areas of planning and control. Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Quality Management A quality revolution swept through both the business and public sectors during the 1980s and 1990s. The generic term used to describe this revolution was total quality management, or TQM for short. Inspired by the total quality management (TQM) ideas of Deming and Juran. TQM: A philosophy of management driven by continual improvement in the quality of work processes and responding to customer needs and expectations Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Quality Management (contd..) Continual improvement isn’t possible without accurate measurements, which require statistical techniques that measure every critical variable in the organization’s work processes. Customers include both internal and external, including employees, suppliers and consumers TQM is different from earlier management approaches which believed keeping costs low was the only way to increase productivity and thus compromising on quality. The Japanese demonstrated that it was possible for the highest-quality manufacturers to be among the lowest-cost producers. Quality is not directly related to cost.

3. Behavioral approach Organizational Behavior (OB) The study of the actions of people at work; people are the most important asset of an organization. Much of what currently makes up the field of human resources management and contemporary views on motivation, leadership, trust, teamwork, and conflict management have come out of organizational behavior research. Early OB Advocates Robert Owen Hugo Munsterberg Mary Parker Follett Chester Barnard Copyright © 2005 Prentice Hall, Inc. All rights reserved.

The Hawthorne Studies A series of productivity experiments conducted at Western Electric from 1927 to 1932. Experimental findings Productivity unexpectedly increased under imposed adverse working conditions. The effect of incentive plans was less than expected. Research conclusion The preliminary findings were that behavior is not merely physiological but also psychological. Group factors significantly affect individual behavior, group standards establish individual worker output, and that money is less a factor in determining output than are group standards and group attitudes. Copyright © 2005 Prentice Hall, Inc. All rights reserved.

4. Contemporary approach – (i) The Systems Approach System Defined A set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Basic Types of Systems Closed systems Are not influenced by and do not interact with their environment (all system input and output is internal) Open systems Dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Implications of the Systems Approach Coordination of the organization’s parts is essential for proper functioning of the entire organization. Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. Organizations are not self-contained and, therefore, must adapt to changes in their external environment. Copyright © 2005 Prentice Hall, Inc. All rights reserved.

(ii) The Contingency Approach Contingency Approach Defined Also sometimes called the situational approach. There is no one universally applicable set of management principles (rules) by which to manage organizations. Organizations are individually different, face different situations (contingency variables), and require different ways of managing. Copyright © 2005 Prentice Hall, Inc. All rights reserved.