Management and Its Evolution Chapter 1 Management and Its Evolution

Learning Objectives After reading this chapter, you should be able to: Understand the challenges organizations face in the new millennium. Specify the functions and roles of successful managers. Explain the origins of management as an academic discipline. Describe the bureaucratic and administrative approaches to the study of management. Explain the behavioral perspective in analyzing management issues. Interpret recent approaches to the study of management.

The performance of organizations depends to a large extent on how their resources are allocated and their ability to adapt to changing conditions. Successful organizations know how to manage people and resources efficiently and effectively to accomplish organizational goals and to keep those goals in tune with changes in the external environment.

Management in the New Millennium A firm can be efficient by making the best use of people, money, physical plant, and technology. It is ineffective if its goals do not provide a sustained competitive advantage. A firm with excellent goals would fail if it hired the wrong people, lost key contributors, relied on outdated technology, and made poor investment decisions.

Levels of Management Strategic Managers Tactical Managers Operational Managers

Strategic Managers The firm’s senior executives with overall responsibility for the firm.

Tactical Managers Responsible for translating the general goals and plans developed by strategic managers into specific objectives and activities.

Operational Managers Lower-level managers who supervise the operations of the organization.

Today’s Organizations More decentralization Employees have more autonomy to define their jobs, prioritize tasks, allocate time, monitor their own work, and set their own objectives. Empowerment allows employees to be less dependant on superiors to tell them what to do, and are encouraged to use their own ideas. Department barriers are breaking down by creating more teams.

Teams Cross-functional teams Cross-disciplinary Composed of individuals from different parts of the organization Cross-disciplinary Composed of team members with diverse background Define the problem, set objectives, establish priorities, proposes new ways of doing things, and assigns members to different tasks.

Management Functions Planning Organizing Leading Controlling 3

Planning The management function that assesses the management environment to set future objectives and map out activities necessary to achieve those objectives. To be effective, the objectives of individuals, teams, and management should be coordinated to support the firm’s mission.

Organizing The management function that determines how the firm’s human, financial, physical, informational, and technical resources are arranged and coordinated to perform tasks to achieve desired goals. The deployment of resources to achieve strategic goals.

Leading The management function that energizes people to contribute their best individually and in cooperation with other people. This involves: Clearly communicating organizational goals Inspiring and motivating employees Providing an example for others to follow Guiding others Creating conditions that encourage management of diversity

Controlling The management function that measures performance, compares it to objectives, implements necessary changes, and monitors progress. Many of these issues involve feedback or identifying potential problems and taking corrective action.

Management as a Set of Roles Day-to-day management activities are routine, orderly, and rational. These include: Interpersonal roles - communication with superiors, peers, subordinates, and people from outside the organization. Information Roles - obtaining, interpreting, and giving out information. Decisional Roles - choosing among competing alternatives.

Interpersonal & Informational Roles Interpersonal Roles Figurehead-visible personality representing an organization, department, or unit Leader-energizes others to get the job done properly Liaison-links together the activities of people both inside and outside of the organization. Informational Roles Include monitor and disseminator

Decisional Roles Entrepreneur-introduces changes in the organization Disturbance handler-takes corrective action, provide damage control, and responds to unexpected situations or crisis Resource allocator-assigns people and other resources to best meet organizational needs Negotiator-reaches agreements and makes compromises

The Evolution of Management Thought Administrative Management Approach Early Management Thought Contemporary Management Approach Behavioral Perspective Bureaucratic Management Approach Operational Perspectives 3

Early Management Thought Early ideas about management strategy Sun Tzu, The Art of War Early ideas about leadership Nicolò Machiavelli, The Prince Early ideas about the design and organization of work Adam Smith, The Wealth of Nations division of labor

The Operational Perspective Scientific Management Frederick W. Taylor Quantitative Management Ford W. Harris Quality Management Walter A. Shewhart

Taylor’s Four Principles of Scientific Management Scientifically study each part of a task and develop the best method of performing the task. Carefully select workers and train them to perform the task by using the scientifically developed method. Cooperate fully with workers to ensure that they use the proper method. Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly.

Bureaucratic Management Approach Max Weber Key Characteristics Specialization of labor Formal rules and procedures Impersonality Well-defined hierarchy Career advancement based on merit

Administrative Management Approach Henry Fayol’s 14 Principles of Management Division of work Authority Discipline Unity of command Unity of direction Subordination of individual interest to the general interest Remuneration Centralization Scalar chain Order Equity Stability and tenure Initiative Esprit de corps

Behavioral Perspective Mary Parker Follett & the Hawthorne Studies Mary Follett questioned the wisdom of scientific management because she believed it ignored many ways in which employees could contribute ideas and exercise initiative. She advocated increased employee participation, autonomy, and organization of teams It acknowledges that psychological and social processes of human behavior can result in improvements in productivity and work satisfaction. ###

Behavioral Perspective The Hawthorne effect - when a manager shows concern for employees, their motivation and productivity levels are likely to improve. Human Relations Approach - the relationship between employees and a supervisor is a vital aspect of management. Employee motivation Leadership style

Maslow’s Hierarchy of Needs Need for Social Relations Self-Actualization Need for Self Esteem Need for Social Relations Need for Security Physical Needs

McGregor’s Theory X and Theory Y Leaders and managers who hold Theory X assumptions believe that employees are inherently lazy and lack ambition. A negative perspective on human behavior. Leaders and managers who hold Theory Y assumptions believe that most employees do not dislike work and want to make useful contributions to the organization. A positive perspective on human behavior.

Contemporary Management Approach Systems Theory Contingency Theory The Learning Organization Perspective

Systems Theory Views the organization as a system of interrelated parts that function in a holistic way to achieve a common purpose. Systems theory concepts that affect management thinking: Open and closed systems Subsystems Synergy Equifinality

Contingency Theory States that there is no “one best way” to manage an organization. Because what works for one organization may not work for another Situational characteristics (contingencies) differ Managers need to understand the key contingencies that determine the most effective management practices in a given situation

The Learning Organization The management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors. Rather than reacting to change , which is a normal part of the business landscape, organizations need to anticipate change so they are well positioned to satisfy customer needs.

Emerging Perspectives and Issues The Modular Organization Every function not regarded as crucial is outsourced to an independent organization. “Disaggregated Corporation” The Intangible Organization Shifts from tangible (plant and equipment) to intangible (know-how and product design) investments Mangers and employees in today’s companies focus on opportunities rather than efficiencies