Chapter 2 The Evolution of Management

Movement of the Management Evolution Pre-Industrial Management Movement –Egyptian pyramids were developed from a “labor pyramid” much like in the first chapter.Egyptian pyramids were developed from a “labor pyramid” much like in the first chapter –Nicolli Macavelli writing of the “The Prince” a treaty written by Macavelli which stated “the ends justifies the means” –In today’s corporate world there are strategies of war that are used from the early 1800’s. Sun Tsu – his book “the art of war” –“My enemies enemy is my friend”

Because society was becoming more advanced there was a move away from agriculture and large advances in other areas. Technology Communication –Telegraph reached across the entire U.S. Transportation –The creation of the railway system. –People could travel from one side of the country to the other. Because of these reasons the age of the industrial revolution began.

People who became the large captains of industry for the industrial revolution. John D. Rockefeller (Oil) James Duke (tobacco) Andre Carnegie (steel) J.P. Morgan (banking) Cornelius Vanderbilt (steamships and railroads)

Creation of Monopolies These industry leaders began to combine companies to form monopolies or trusts. The two Acts that helped suppress the creation of monopolies. –Interstate Commerce Act of 1887 This act was created because railroads would give discounts to some people and not others. This act forced railroads to publish their rates and forbade them to change rates without notifying the public.

Sherman Act Which made it illegal for companies to create monopolies. The law was intended to restore competition at a time when monopolies had taken over many industries.

Management Theories Since the beginning of the industrial revolution there have been many different people and different theories that people have used to run their businesses we will spend some time looking at the different theories and the people involved with them.

The Theories Scientific Management Administrative Management Human Relations Approach Behavior Science Approach Modern Day Management Theories

Scientific Management Frederick Taylor –Find the “Best Way” to perform the task 1.Scientific Job Analysis 1.Observe, gather to help determine the best way 2.Replace the “rule of thumb” way of determining things 2.Selection of Personnel 1.Select, train, teach and develop 2.Replace workers teaching themselves 3.Management Cooperation 1.Mangers should cooperate with workers and make sure that the job is up to standards. 4.Functional Supervising 1.Division of work between managers and workers 2.Mangers Plan, Organize, make decisions 3.Workers perform the task.

2. Administrative Management Scientific was based on jobs of individual workers. Administrative concentrates on the management of the entire organization. People involved in Administrative Management – talk about them next class. Fayol Gulick Weber

Henri Fayol  He felt that managers perform 5 basic functions 1.Planning 2.Organizing 3.Commanding 4.Coordinating 5.Controlling

Luther Gulick  Coined the Acronym POSDCoRB –Planning –Organizing –Staffing –Directing –Coordinating –Reporting –Budgeting

Max Weber  Coined the term Buearacracy –Heard of the term Buearacratic “red tape” –A set of rational guidelines in which employees and managers need to follow. –Agreement between Parkway School Board and the PNEA

Human Relations Approach  Started with a series of studies conducted at the Hawthorne Plant of Western Electric.  Elton Mayo – was termed the father of the Hawthorne studies –Relay Assembly Test Room  Two groups in different rooms  Lighting, length of work day, work week and rest period were changed throughout the week to see how productivity would change.  Nothing was proved. In fact the worse the situation got the higher the productivity became from the group.

 Study #2 –Bank Wiring Observation Room  Two groups were paid a piecework incentive pay.  The more produced the higher the pay –Results  The group set an acceptable norm and worked at that pace  Those who were “rate busters” were threatened to conform with the group  Those who were chislers were pressured to work at a quicker speed or quit. –What did they learn from these two studies  Peer pressure is the major influence in production of goods.  People are motivated by social and psychological needs sometimes more than economic incentives.

Behavior Science Approach  Shows the relationship between the individual and the way in which he relates to the organization. –Chester Barnard  Best Know for “cooperative systems”  Everyone must work together to get the goals done. –Believed that an organizations goals and the goals of the individuals working for it are kept in equilibrium.

Abraham Maslow  Hierarchy of Needs –5 needs  Physical –(Food and Water)  Security Needs –Freedom from physical, psychological or financial harm  Social –Need to talk to others, accept others and be accepted  Status needs –Self-Esteem (feel good about your self)  Self-fulfillment –Need to realize ones own potential

 A survey of 10,000 workers was taken, they were asked which would they prefer –Higher Salary –Pleasant working environment –Which did they choose?

Modern Day Management Theories  Douglas McGregor  Fred Herzberg  Centralization  Decentralization  TQM  Chaos  Demings 14 Points  Theory Z

Douglas McGregor  Two Basic type/ assumptions about people –Theory X  Assumes that people are basically lazy and will avoid working if they can.  Theory X managers impose strict rules and make sure that ll important decisions are made only by them. –Theory Y  Assumes that people find satisfaction in their work.  Workers will work well if put in the right environment

Fred Herzberg  Things that cause job dissatisfaction (hygiene factors)  Things that cause job satisfaction (motivation factors)  There are things that motivate workers, pay, benefits, however those things only produce short time satisfaction.

2 of the Most recent theories 1.Management by Objectives  MBO is a process in which a manager and his or her subordinates collaborate in setting goals.  Primary objective of this is to clarify the roles that the subordinates are expected to play in reaching the organizations goals.

TQM  Total Quality Management – the process of checking and rechecking a product or service as it is provided.  Plan  Do  Check  Act

How do we motivate?  #1 Equity Theory- –Is based on people are first motivated to achieve and then to maintain a sense of equity –When you start a job- you determine how you fit in to everyone else. (Input-Output ratio) –We compare how that ratio is for other people we work with. –If ratio is same – you feel the company is treating you fairly –If your ratio is lower, you feel unwanted, and may not work very hard to get better.

Theory of Motivation #2 Expectancy Theory  3 people who are in line for a movement up the company ladder. –Bob – hard worker, most sales for the year. Does not want to move up the company ladder –Sally – wants the job badly, but doesn’t think he will get it, sales performance not very good. –Mike – wants the job as bad as sally, had a great sales year.

Expectancy Theory  We would assume that Bob and Sally are not very motivated, Bob-doesn’t want promotion, Sally sales year not very good.  However, Mike is highly motivated, because both sales and wants the job.

#3 Reinforcement Theory  The best theory to apply to business. –Is based on the premise that when behavior is rewarded and is likely to be repeated. –Positive reinforcement is the best motivator

Centralization  Decisions are made from one person or group. This is the way most large business are.

Decentralization  Comments and questions can flow from one level to another…..

Notes about chapter Discuss Industrial Revolution Who were the captains of industry What Acts were Anti-Trust Acts Who were significant people in the growth of management. Theory X and Y, Deming's