1. Management and Its Evolution
Chapter 1
Management
and Its
Evolution

2. 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.

3. 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.

4. 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A firm with excellent goals would fail if it hired the wrong people, lost key contributors, relied on outdated technology, and made poor investment decisions.

5. Levels of Management Strategic Managers Tactical Managers
Operational Managers

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

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

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

9. 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.

10. 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.

11. Management Functions
Planning
Organizing
Leading
Controlling 3

12. 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.

13. 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.

14. 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

15. 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.

16. 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.

17. 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

18. 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

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

20. 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

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

22. 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.

23. SCIENTIFIC MANAGEMENT
Frederick W. Taylor – early 20th century
Methods engineering/time and motion studies
Basic observations
Great loss through inefficiencies
Remedy in systematic management
Standardization of job performance and uniformity of behavior
Impersonalization and replaceability of workers is key to efficiency
Motivation through monetary incentive systems

24. SCIENTIFIC MANAGEMENT
STUDIES AT BETHLEHEM IRON WORKS IN 1898 REPORTED BY TAYLOR
Picked Schmidt (Nolls) as his subject
Trotted to and from work (over a mile)
Had purchased land and was building a house
Reputation of being “close with a dollar”
Increased from 12 ½ to 47 tons
Pay increased from $1.15 to $1.85
Earlier studies had failed because of social influences

25. SCIENTIFIC MANAGEMENT
Frank and Lillian Gilbreth
Developed tools for scientific management – time and motion studies
Trained industrial engineers
Popular subjects for newsreels in the 1920s
“Cheaper by the Dozen” movie (not the new one)
Economic needs versus other needs

26. Key Characteristics of Weber’s Ideal Bureaucracy
Specialization of labor – functional specialization
Formal rules and procedures – uniformity/stability
Impersonality - fairness for clients and employees
Well-defined hierarchy - decentralization
Career advancement based on merit/seniority
Lifelong career commitment
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© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

27. BUREAUCRATIC MANAGEMENT
COSTS
Rigid rules and red tape
Protection of authority
Slow decision making
Incompatibility with changing technology
Incompatibility with worker values
BENEFITS
Consistency
Jobs clearly defined
Expertise/specialization
Continuity
Efficient under conditions of stability

28. ASSESSING BUREAUCRATIC MANAGEMENT
MOST EFFECTIVE WHEN:
1. Standardized information/production requiring efficiency
2. Needs of customers known and not changing
3. Technology is routine and stable
4. Need to coordinate activities of large numbers of employees

29. ADMINISTRATIVE MANAGEMENT
Henri Fayol –14 principles
1. Division of labor – specialization
2. Authority and responsibility – delegation
3. Discipline – clear rules and consequences for violating
4. Unity of command – one boss for each employee
5. Unity of direction – similar activities under one manager
6. Subordination of individual interests to the common good
7. Remuneration – fair pay
8. Centralization – power and authority at the top

30. ADMINISTRATIVE MANAGEMENT
9. Scalar Chain – from the lowest employee to the top
10. Order – human and materials coordinated
11. Equity – managers should be fair with subordinates
12. Stability and tenure of staff – avoid high turnover
13. Initiative – free to take initiative
14. Esprit de corps – team spirit, sense of unity

31. Hawthorne Effect
The discovery that paying special attention to employees motivates them to put greater effort into their jobs.
(from the Hawthorne management studies, performed from 1924 – 1932 at Western Electric Company’s plant near Chicago)
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© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

32. HAWTHORNE STUDIES Lighting studies by industrial engineers
Productivity continued to increase even when lighting was reduced below starting levels
Motivational factor
Restriction of work through productivity norms
Relay Assembly Test Room Studies
Five workers plus supervisor
Group incentive plan
Mayo (not a researcher in the study) concluded that the results supported his theories concerning work groups replacing family

33. HAWTHORNE STUDIES Five workers not randomly selected
Two workers replaced because not cooperating
Replacements wanted to be in the experiment because of the financial incentives – one of these became the informal leader
Workers formed tightly knit, cohesive work group with high production goals operating under informal, participative leadership plus a strong informal leader within the group
If all of the results are considered, the behavioral approach has consistencies with the original scientific management studies

34. Contemporary Management Approach
Systems Theory
Contingency Theory
The Learning Organization Perspective

35. 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

36. 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

37. 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.

38. 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