The Evolution of Management Chapter 2 Lesson 1 The Evolution of Management

What You’ll Learn How the Industrial Revolution Created a New Need for Management How the Captains of Industry of the Last Century Created Huge Empires The Principals of Scientific Management The Results of the Hawthorne Studies on Worker Production Maslow’s Hierarchy of Needs

Initiation What are you motivated by? Money, praise, accomplishment?

The Industrial Revolution Began in the United States in 1860 Just before the Civil War Period during which a country develops an industrial economy Before the Industrial Revolution, economy based on agriculture By the late 1800s, economy depended on industries such as oil, steel, railroads, and manufactured goods

Causes of the Industrial Revolution Many people left their farms to work in factories Professional managers supervised their work Changes in technology, communication, and transportation Telegraph and cable lines extended across the U.S. after the Civil War Railroad lines, canals, roads, steamships

The Industrial Revolution: Causes Advancements in technology, communication, and transportation Technology-improvements in manufacturing processes-steel Communication-telegraph and cable lines were extended across the country Transportation-More railroads and improvements in road and canals Industrial Revolution Video

Starter Activity Captains of Industry Link each Captain of Industry to one of the following markets: Oil, Banking, Transportation (Railroads & Steamships), Tobacco, Steel John Rockefeller = James Duke = Andrew Carnegie = JP Morgan = Cornelius Vanderbilt =

Starter Activity Answers John Rockefeller = Oil James Duke = Tobacco Andrew Carnegie = Steel JP Morgan = Banking Cornelius Vanderbilt = Transportation (Railroads & Steamships)

Group project (5 Max Per Group): Captains of Industry Towards the end of the 1800s powerful businesspeople dominated and shaped the US economy. John Rockefeller, James Duke, Andrew Carnegie, JP Morgan, and Cornelius Vanderbilt Group project (5 Max Per Group): Research your assigned businessperson Provide a brief bio about your businessperson Explain why he is considered a captain of industry. Create a short PowerPoint Presentation

Creation of Monopolies The captains of industry often pursued profit and self-interest above all else Drove competitors out of business Created giant companies that maintained monopolies in their industries Monopoly Occurs when one party maintains total control over a type of industry Trust: Giant industrial monopoly By 1879, Rockefeller controlled >90% of the country’s refining capacity and pipelines

The Interstate Commerce Act, 1887 The railroads gave rebates to some customers but not others This act forced railroads to publish their rates and forbade them to change rates without notifying the public Established the Interstate Commerce Commission (ICC) to supervise the railroads

The Sherman Act, 1890 Made it illegal for companies to create monopolies Intended to restore competition Example Standard Oil Company was broken into smaller companies so that other oil companies could compete with the former giant John D. Rockefeller

New Challenges for Management What did the Industrial Revolution create a need for? Farming No need for managers Giant Companies Need Managers

Frederick W. Taylor and Scientific Management Wanted to find ways to motivate workers to work harder To increase efficiency, he tried to figure “one best way” to perform a particular task Used a stopwatch to determine which work method was most efficient These time and motion studies lead to scientific management principles

Frederick W. Taylor and Scientific Management Scientific management seeks to increase productivity and make work easier by carefully studying work procedures and determining the best methods for performing particular tasks

Frederick W. Taylor and Scientific Management Employers should gather, classify, and tabulate data in order to determine the “one best way” of performing a task or series of tasks. Employers should study worker strengths and weaknesses and match workers to jobs. Employers should also train employees in order to improve their performance. The principles of scientific management should be explained to workers. Management and workers should be interdependent so that they cooperate.

The Hawthorne Studies of Productivity Researchers began to look at the relationship between working conditions and productivity Series of experiments at the Hawthorne plant of Western Electric in Cicero, IL Lowered the lighting expecting productivity to fall What do you think happened?

The Hawthorne Studies of Productivity Over five years, hundreds of experiments were conducted at the plant Different wage payments Rest periods Work hours

The Hawthorne Studies of Productivity Conclusion: productivity rose because workers worked harder when they received attention Hawthorne effect Change of any kind increases productivity Factors other than the physical environment affected worker productivity Psychological and social conditions, effective supervision

Abraham H. Maslow and the Hierarchy of Needs According to Maslow All people have five basic types of needs People fulfill lower-level needs before seeking to fulfill higher-level needs One set of needs must be met before another is sought “Hierarchy of needs” is his grouping and ordering of physical, security, social, status, and self- actualization needs

Maslow’s Hierarchy of Needs

Applying Maslow’s Theory to Management At the lowest level, workers are motivated by basic needs Wages or salary, physical conditions Safety or security needs Providing insurance, retirement benefits, job security Safe from physical, psychological, or financial harm

Applying Maslow’s Theory to Management Social needs Provide a work environment in which colleagues interact Company lunch rooms, company retreats Status needs Provide workers with signs of recognition that are visible to others Job titles, private offices, designated parking spaces, awards, promotions

Applying Maslow’s Theory to Management Self-fulfillment needs Provide employees with opportunities to be creative at work Include employees in decision making