© Copyright McGraw-Hill. All rights reserved.2–12–1 Chapter 2 Outline Scientific Management TheoryScientific Management Theory  Job Specialization and the Division of Labor  F. W. Taylor and Scientific Management  The Gilbreths Administrative Management TheoryAdministrative Management Theory  The Theory of Bureaucracy  Fayol’s Principles of Management Behavioral Management TheoryBehavioral Management Theory  The Work of Mary Parker Follett  The Hawthorne Studies and Human Relations

© Copyright McGraw-Hill. All rights reserved.2–22–2 Chapter Outline (cont’d) Behavioral Management Theory (cont’d)Behavioral Management Theory (cont’d)  Theory X and Theory Y Management Science TheoryManagement Science Theory Organizational Environment TheoryOrganizational Environment Theory  The Open Systems View  Contingency Theory

© Copyright McGraw-Hill. All rights reserved.2–32–3 The Evolution of Management Theory Figure 2.1 Source:

© Copyright McGraw-Hill. All rights reserved.2–42–4 Scientific Management Theory Evolution of Modern ManagementEvolution of Modern Management  Began in the industrial revolution in the late 19th century as: Managers of organizations began seeking ways to better satisfy customer needs.Managers of organizations began seeking ways to better satisfy customer needs. Large-scale mechanized manufacturing began to supplanting small-scale craft production in the ways in which goods were produced.Large-scale mechanized manufacturing began to supplanting small-scale craft production in the ways in which goods were produced. Social problems developed in the large groups of workers employed under the factory system.Social problems developed in the large groups of workers employed under the factory system. Managers began to focus on increasing the efficiency of the worker-task mix.Managers began to focus on increasing the efficiency of the worker-task mix.

© Copyright McGraw-Hill. All rights reserved.2–52–5 F.W. Taylor and Scientific Management Scientific ManagementScientific Management  The systematic study of the relationships between people and tasks for the purpose of redesigning the work process for higher efficiency. Defined by Frederick Taylor in the late 1800’s to replace informal rule of thumb knowledge.Defined by Frederick Taylor in the late 1800’s to replace informal rule of thumb knowledge. Taylor sought to reduce the time a worker spent on each task by optimizing the way the task was done.Taylor sought to reduce the time a worker spent on each task by optimizing the way the task was done. Taylor: increase specialization & division of labor to make production process more efficientTaylor: increase specialization & division of labor to make production process more efficient

© Copyright McGraw-Hill. All rights reserved.2–62–6 F.W. Taylor and Scientific Management Scientific Management (Taylor) PrinciplesScientific Management (Taylor) Principles  Gather data about ways workers perform their tasks; experiment with different ways to improve performance  Codify methods into written rules and standards  Select people who have skills/abilities needed in the task and train them on the particular task  Establish acceptable level of performance and reward for performance above that level Organizations chose to select some, rather than all, of these principles.

© Copyright McGraw-Hill. All rights reserved.2–72–7 Henry Ford: A matter of ethics Reduced work day and more pay along with Extreme control

© Copyright McGraw-Hill. All rights reserved.2–82–8 Frank and Lillian Gilbreth Refined Taylor’s work and made many improvements to the methodologies of time and motion studies.Refined Taylor’s work and made many improvements to the methodologies of time and motion studies.  Time and motion studies Break up each job action into its component actions.Break up each job action into its component actions. Find better ways to perform the action.Find better ways to perform the action. Reorganize each job action to be more efficient.Reorganize each job action to be more efficient. Also studied worker-related fatigue problems caused by lighting, heating, and the design of tools and machines.Also studied worker-related fatigue problems caused by lighting, heating, and the design of tools and machines.

© Copyright McGraw-Hill. All rights reserved.2–92–9 Scientific Management Principles: the result … Jobs were more repetitive, boring, monotonous Workers increasingly dissatisfied Workers tried to hide the potential efficiency of the work environment

© Copyright McGraw-Hill. All rights reserved.2–10 Administrative Management Theory Administrative ManagementAdministrative Management  The study of how to create an organizational structure that leads to high efficiency and effectiveness. Max WeberMax Weber  Developed the concept of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness.

© Copyright McGraw-Hill. All rights reserved.2–11 Weber’s Principles of Bureaucracy Figure 2.2

© Copyright McGraw-Hill. All rights reserved.2–12 BureaucracyBureaucracy StrengthsStrengths  Claimed to improve organizational performance  Easier for managers to organize and control  Fair and equitable raises and promotion Improves feeling of securityImproves feeling of security Reduces stressReduces stress Encourage ethical behaviorEncourage ethical behavior WeaknessesWeaknesses  What if poorly managed?  Decisions and changes are slow  Inflexibility

© Copyright McGraw-Hill. All rights reserved.2–13 Fayol’s Principles of Management Division of Labor: allows for job specialization.Division of Labor: allows for job specialization.  Fayol noted jobs can have too much specialization leading to poor quality and worker dissatisfaction. Authority and ResponsibilityAuthority and Responsibility  Fayol included both formal and informal authority resulting from special expertise. Unity of CommandUnity of Command  Employees should have only one boss.

© Copyright McGraw-Hill. All rights reserved.2–14 Fayol’s Principles of Management (cont’d) Line of AuthorityLine of Authority  A clear chain of command from top to bottom of the firm. CentralizationCentralization  The degree to which authority rests at the top of the organization. Unity of DirectionUnity of Direction  Employee should receive orders and report to only one supervisor.

© Copyright McGraw-Hill. All rights reserved.2–15 Fayol’s Principles of Management (cont’d) EquityEquity  The provision of justice and the fair and impartial treatment of all employees. OrderOrder  The arrangement of employees where they will be of the most value to the organization and to provide career opportunities. InitiativeInitiative  The fostering of creativity and innovation by encouraging employees to act on their own.

© Copyright McGraw-Hill. All rights reserved.2–16 Fayol’s Principles of Management (cont’d) DisciplineDiscipline  Obedient, applied, respectful employees are necessary for the organization to function. Remuneration of PersonnelRemuneration of Personnel  An equitable uniform payment system that motivates contributes to organizational success. Stability of Tenure of PersonnelStability of Tenure of Personnel  Long-term employment is important for the development of skills that improve the organization’s performance.

© Copyright McGraw-Hill. All rights reserved.2–17 Fayol’s Principles of Management (cont’d) Subordination of Individual Interest to the Common InterestSubordination of Individual Interest to the Common Interest  The interest of the organization takes precedence over that of the individual employee. Esprit de corpsEsprit de corps  Comradeship, shared enthusiasm foster devotion to the common cause (organization).

© Copyright McGraw-Hill. All rights reserved.2–18 Why do companies perform better than their rivals? (62 companies) Emphasize management autonomy and entrepreneurshipEmphasize management autonomy and entrepreneurship Encourage risk taking and initiativeEncourage risk taking and initiative Top managers closely involved in daily operationsTop managers closely involved in daily operations Unity of command and unity of directionUnity of command and unity of direction Decisions are not made in an isolated towerDecisions are not made in an isolated tower Decentralized authorityDecentralized authority Organizational goals guide everyone’s actionsOrganizational goals guide everyone’s actions Division of work and authority given with individual interests towards the common interestDivision of work and authority given with individual interests towards the common interest

© Copyright McGraw-Hill. All rights reserved.2–19 Behavioral Management Theory Behavioral ManagementBehavioral Management  The study of how managers should behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.  Focuses on the way a manager should personally manage to motivate employees.

© Copyright McGraw-Hill. All rights reserved.2–20 Behavioral Management Mary Parker Follett ( )Mary Parker Follett ( )  An influential leader in early managerial theory  Concerned that Taylor was ignoring the human side of the organization and the number of ways employees can help managers  Held a horizontal view of power and authority “Authority should go with knowledge …”“Authority should go with knowledge …” Managers should be facilitators rather than monitors or supervisorsManagers should be facilitators rather than monitors or supervisors Root of the work in self-managed teams, empowerment, and cross-functioningRoot of the work in self-managed teams, empowerment, and cross-functioning

© Copyright McGraw-Hill. All rights reserved.2–21 The Hawthorne Studies Studies of how characteristics of the work setting affected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from Studies of how characteristics of the work setting affected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from  Worker productivity was measured at various levels of light illumination.  Productivity increased regardless of whether the light levels were raised or lowered. Why? … the presence of the researchersWhy? … the presence of the researchers Implication … human relations movementImplication … human relations movement

© Copyright McGraw-Hill. All rights reserved.2–22 Human Relations Movement Sparked by the Hawthorne StudiesSparked by the Hawthorne Studies  Workers attitude towards their managers affect their work performance Train supervisors to elicit cooperative behavior from subordinates so productivity will increaseTrain supervisors to elicit cooperative behavior from subordinates so productivity will increase Workers making telephone switching equipmentWorkers making telephone switching equipment  The norm of output vs. “ratebusters” vs. “chiselers”  Worker’s influence can be as great as the manager’s Managers must understand the informal organizationManagers must understand the informal organization The beginning of Organizational BehaviorThe beginning of Organizational Behavior

© Copyright McGraw-Hill. All rights reserved.2–23 Theory X versus Theory Y (Douglas McGregor) Figure 2.3 Source:

© Copyright McGraw-Hill. All rights reserved.2–24 Management Science Theory An approach to management that uses rigorous quantitative techniques to maximize the use of organizational resources.An approach to management that uses rigorous quantitative techniques to maximize the use of organizational resources.  Quantitative management—utilizes linear programming, modeling, simulation systems.  Operations management—techniques to analyze all aspects of the production system.  Total Quality Management (TQM)—focuses on improving quality throughout an organization.  Management Information Systems (MIS)— manage information throughout the organization so that it gets to the right people at the right time.

© Copyright McGraw-Hill. All rights reserved.2–25 Organizational Environment Theory Organizational EnvironmentOrganizational Environment  The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources. What “forces” are presently in the “environment” that affect the manager’s ability to acquire and utilize resources?What “forces” are presently in the “environment” that affect the manager’s ability to acquire and utilize resources?

© Copyright McGraw-Hill. All rights reserved.2–26 The Open-Systems View (Katz, Kahn, Thompson, 1960s) Organization takes resources from the external environment and transforms them into goods and services that are sent back out to environmentOrganization takes resources from the external environment and transforms them into goods and services that are sent back out to environment Organization interacts with environment in order to surviveOrganization interacts with environment in order to survive Not a closed system, which is:Not a closed system, which is:  self contained  likely to experience entropy The whole is greater than the sum of its partsThe whole is greater than the sum of its parts Synergy: gains acquired when entities coordinate their effortsSynergy: gains acquired when entities coordinate their efforts

© Copyright McGraw-Hill. All rights reserved.2–27 Contingency Theory (Burns & Stalker, Britain, 1960s) No one best way to organize because the external environment (ability to gain resources) influences the organizational structures and controlsNo one best way to organize because the external environment (ability to gain resources) influences the organizational structures and controls A quickly changing environment works against this … why?A quickly changing environment works against this … why? Mechanic vs. Organic structureMechanic vs. Organic structure

© Copyright McGraw-Hill. All rights reserved.2–28 Summary of Theories Scientific Management TheoryScientific Management Theory  Job specialization and division of labor  Taylor (Scientific Management)  Gilbreths Administrative Management TheoryAdministrative Management Theory  Theory of Bureaucracy  Fayol (14 principles of management)

© Copyright McGraw-Hill. All rights reserved.2–29 Summary of Theories (continued) Behavioral Management TheoryBehavioral Management Theory  Follett  Hawthorne Studies and Human Relations  McGregor (Theory X & Theory Y) Management Science TheoryManagement Science Theory  Quantitative management Organizational Environment TheoryOrganizational Environment Theory  Open-systems View  Contingency Theory