Chapter 2 History of Management Transcontinental railroad Taylorism A question of Management 30 minutes Taylorism 5 minutes Transcontinental rail 10 minutes Transcontinental railroad Taylorism LuluLemon A Question of Management

Copyright © 2015 by Nelson Education Ltd. Explain the origins of management. Explain the history of scientific management. Discuss the history of bureaucratic and administrative management. Explain the history of human relations management. Discuss the history of operations, information systems, and contingency management. Copyright © 2015 by Nelson Education Ltd.

Management Ideas and Practice Throughout History 5000 BC 4000–2000 BC 1800 BC 600 BC 500 BC 400 BC 175 284 900 1100 1418 1436 1500 1525 Sumerians Egyptians Hammurabi Nebuchadnezzar Sun Tzu Xenophon Cyrus Cato Diocletian Alfarabi Ghazali Barbarigo Venetians Sir Thomas More Machiavelli Record keeping Plan, organize, control; written requests Controls and written documentation Wage incentives, production control Strategy Management as a separate art Human relations and motion study Job descriptions Delegation of authority Listed leadership traits Listed managerial traits Different organizational forms/structures Numbering, standardization, interchangeability Critical of poor management and leadership Cohesiveness, power, and leadership One hundred and twenty-five years ago, business ideas/practices were very different compared with today’s widely accepted management ideas. Management wasn’t a field of study, and management jobs/careers did not exist. Chapter 2 presents the origins of management ideas and practice throughout history and the historical changes that produced the need for management. On this slide are some of the management examples that can be found throughout history and how they are related to the management functions in the textbook. 1.1 Copyright © 2015 by Nelson Education Ltd.

“How long have there been managers?” Since the late 1800s. “So if managers have only been around since the late 19th century, does that mean the origin of management dates also to that time? Yes or no?” Transcontinental railroad Copyright © 2015 by Nelson Education Ltd.

Why We Need Managers Today Then Now Work in families Skilled labourers Small, self-organized groups Unique, small batches of production Work in _________ Specialized, unskilled labourers _________ factories Large, standardized _________ production 1.2 Copyright © 2015 by Nelson Education Ltd.

The History of Scientific Management “Seat-of-the pants” management had no standardization of procedures and no follow-up on improvements. _______________management now studies and tests methods to identify the best, most efficient ways. Copyright © 2015 by Nelson Education Ltd.

Frederick W. Taylor (1856–1915) Known as the ‘__________ of scientific management” Contribution to modern management was giving employees rest breaks throughout the day Four principles of scientific management Taylorism

Taylor’s Four Principles of Scientific Management Copyright © 2015 by Nelson Education Ltd.

Frank and Lillian Gilbreth (1886–1924) Time Study Timing how long it takes good workers to complete each part of their jobs. Motion Study Breaking each task into its separate motions and then eliminating those that are necessary or repetitive. A Question of Management 2.2 Copyright © 2015 by Nelson Education Ltd.

Gantt Chart for Starting Construction on a New Headquarters This Gantt chart shows which tasks must be completed at which times in order to complete a project. How? It shows time in various units on the x-axis and the tasks on the y-axis. 2.3 Copyright © 2015 by Nelson Education Ltd.

Class Activity: Gantt Charts Beyond the Book In groups of four, create a Gantt chart for a formal 50th birthday party for one of your parents. Share your results with the class. Copyright © 2015 by Nelson Education Ltd.

The History of Bureaucratic Management When we hear the term bureaucracy, we think of inefficiency and “red tape,” incompetence, and ineffectiveness. Bureaucracy: the exercise of control on the basis of knowledge, expertise, or experience When we hear the term bureaucracy, we think of inefficiency & “red tape,” incompetence, and ineffectiveness. When German sociologist Max Weber first proposed the idea of bureaucratic management, these problems were associated with monarchies. Bureaucracy means “to rule from a desk or office.” In a bureaucracy, people lead by virtue of rational-legal authority—from knowledge, expertise, and experience. 3 Copyright © 2015 by Nelson Education Ltd.

Elements of Bureaucratic Organizations Qualification-based hiring Merit-based promotion Chain of command Division of labour Impartial application of rules and procedures Recorded in writing Managers separate from owners From Exhibit 2.3 (p. 25 of textbook). Source: M. Weber, The Theory of Economic and Social Organization, trans. A. Henderson & T. Parsons (New York: The Free Press, 1947), 329–334. Aim of a bureaucracy: to achieve an organization’s goals in the most efficient way Qualification-based hiring: hired on the basis of technical training or educational background Merit-based promotion: promotion based on experience/achievement Chain of command: each position reports/is accountable to higher position Division of labour: Tasks, responsibilities, and authority are clearly divided/defined Impartial application of rules and procedures: Apply to all members of organization; will be applied in impartial manner, regardless of one’s position/status Recorded in writing: All administrative decisions, acts, rules, procedures recorded in writing Managers separate from owners: organization owner should not manage/supervise organization 3.1 Copyright © 2015 by Nelson Education Ltd.

Administrative Management: Henri Fayol 1. Division of work 2. Authority and responsibility 3. Discipline 4. Unity of command 5. Unity of direction 6. Subordination of individual interests 7. Remuneration 8. Centralization 9. Scalar chain 10. Order 11. Equity 12. Stability of tenure of personnel 13. Initiative 14. Esprit de corps From Exhibit 2.4 (p. 27 of textbook). Sources: H. Fayol, General and Industrial Management (London: Pittman & Sons, 1949); M. Fells, “Fayol Stands the Test of Time,” Journal of Management History 6 (2000): 345–360; C. Rodrigues, “Fayol’s 14 Principles of Management Then and Now: A Framework for Managing Today’s Organizations Effectively,” Management Decision 39 (2001): 880–889. Division of work: Increase production by dividing work so each worker completes smaller tasks/job elements. Authority and responsibility: The manager’s authority equals the “right to give orders” and should be commensurate with the manager’s responsibility. Discipline: Clearly defined rules/procedures are needed at all organizational levels to ensure order/proper behaviour. Unity of command: To avoid confusion/conflict, each employee should report to/receive orders from one boss. Unity of direction: One person and one plan should be used to accomplish each organizational objective. Subordination of individual interests to the general interest: Employees must put organization’s interests/goals before their own. Remuneration: Compensation should be fair/satisfactory to both employees and the organization. Centralization: Avoid too much centralization/decentralization. Scalar chain: Each position is part of a vertical chain of authority in which each worker reports to one boss. Order: Responsibilities should not overlap. Equity: Kind, fair, and just treatment for all will develop devotion/loyalty. Stability of tenure of personnel: Low turnover equals time for employees, especially managers, to learn their jobs. Initiative: Managers should encourage the development of initiative, or the ability to develop and implement a plan, in others. Esprit de corps: Develop a strong sense of morale and unity among workers that encourages coordination of efforts. 3.2 Copyright © 2015 by Nelson Education Ltd.

The History of Human Relations Management Efficiency alone is not enough to produce organizational success. Success also depends on treating workers well. Scientific management focus: improving efficiency of manufacturing facilities and their workers Bureaucratic management focus: using knowledge, fairness, and logical rules to increase an organization’s efficiency Administrative management focus: how/what managers should do in their jobs Human relations approach to management focus: psychological and social aspects. People are valuable organizational resources whose needs are important. 4 Copyright © 2015 by Nelson Education Ltd.

Mary Parker Follett (1868–1933) Known as the “mother of scientific management” Contributions to modern management include the ideas of negotiation, conflict resolution, and power sharing. 4.1 Copyright © 2015 by Nelson Education Ltd.

Constructive Conflict and Coordination: Mary Parker Follett Dealing with Conflict Compromise Domination Integration Follett is known for developing ideas regarding constructive conflict/coordination: “Conflict is the appearance of difference, difference of opinions, of interests.” Follett believed that managers could deal with conflict in three ways, as shown on slide. Domination: victory of one side versus the other Compromise: involves both parties giving up some of what they want in order to reach agreement Integrative conflict resolution: involves both parties indicating preferences and then working together to find and alternative that meets both needs 4.1 Copyright © 2015 by Nelson Education Ltd.

Constructive Conflict and Coordination: Mary Parker Follett Fundamental Principals of Organizations Coordination as reciprocal, relating all the factors in a situation Coordination by direct contact of the responsible people concerned Coordination in the early stages Coordination as a continuing process 4.1 Copyright © 2015 by Nelson Education Ltd.

Hawthorne Studies: Elton Mayo Workers’ feelings and attitudes affected their work. Financial incentives weren’t the most important motivator for workers. Group norms and behaviour play a critical role in behaviour at work. Elton Mayo’s ideas were popular in the twentieth century when labour unrest and protests were widespread in the United States, Europe, and Asia. Mayo's work proved relevant as managers looked for ways to increase productivity and to improve worker satisfaction/working conditions. 4.2 Copyright © 2015 by Nelson Education Ltd.

Cooperation and Acceptance of Authority: Chester Barnard Managers can gain cooperation by: securing essential services from individuals unifying people by clearly formulating an organization’s purpose and objectives providing a system of effective communication Chester Barnard promoted ideas about cooperation, executive functions that promote it, and acceptance of authority. 4.3 Copyright © 2015 by Nelson Education Ltd.

Cooperation and Acceptance of Authority: Chester Barnard People will be indifferent to managerial directives if they … are understood are consistent with the purpose of the organization are compatible with the people’s personal interests can actually be carried out by those people 4.3 Copyright © 2015 by Nelson Education Ltd.

Operations, Information, Systems, and Contingency Management Other significant historical approaches to management: Operations management Systems management Information management Contingency management Operations management: managing the daily production of goods/services Systems management: Rather than viewing one part of an organization as separate from the other parts, a systems approach encourages managers to complicate their thinking by looking for connections between the different parts of the organization. Information management: Organizations pushed for and quickly adopted information management to reduce costs and/or increase speed with which they can acquire, retrieve, and communicate information. Contingency management: The contingency approach to management states that there are no universal management theories and that the most effective management theory or idea depends on the kinds of problems or situations that managers or organizations are facing at a particular time. 5 Copyright © 2015 by Nelson Education Ltd.

Operations Management Tools Quality control Forecasting techniques Capacity planning Productivity measurement and improvement Linear programming Scheduling systems Inventory systems Work measurement techniques Project management Cost-benefit analysis 5.1 Copyright © 2015 by Nelson Education Ltd.

History: Operations Management Tools Guns Standardized, interchangeable parts Eli Whitney Geometry Based on a book by Gaspard Monge Manufacture parts without examining a prototype Fire Oldsmobile Motor Works First just-in-time inventory system Copyright © 2015 by Nelson Education Ltd.

Milestones in Information Management Horses in Italy 1500–1700 Creation of paper and the printing press 1850 Manual typewriter 1860s Vertical file cabinets and the telegraph 1879 Cash registers 1880s Telephone 1890s Time clocks 1980s Personal computer 1990s Internet 5.3 Copyright © 2015 by Nelson Education Ltd.

The Organization as an Open System System: set of interrelated elements/parts that function as whole The systems management approach encourages managers to look for connections between different parts of an organization. Organizational systems are composed of parts or subsystems, which are smaller systems within larger systems. Subsystems and connections matter in systems theory because of the possibility for managers to create synergy. Synergy occurs when two or more subsystems working together can produce more than when working independently. Synergy occurs when 1+1=3. 5.3 Copyright © 2015 by Nelson Education Ltd.

Copyright © 2015 by Nelson Education Ltd. Systems Thinking Beyond the Book Shift in thinking from seeing ourselves as separate to being connected Rather than seeing problems as caused by someone/something else, see how our actions create the problems we experience It is a framework for seeing interrelationships and patterns of change. What does systems thinking from Peter Senge’s The Fifth Discipline (2006) have to do with what we are doing today? Shift from seeing ourselves as being separate from the world to connected to the world. From seeing problems caused by someone/something out there versus how our actions create problems we experience. This is true leadership. Copyright © 2015 by Nelson Education Ltd.

Contingency Management No universal management theories “Usually” “In these situations” “For this to work” “Under these circumstances” Copyright © 2015 by Nelson Education Ltd.