1. Chapter 2: The Management Movement
Section 2.1:
The Evolution of Management

2. The Industrial Revolution
Began in the United States in 1860
Just before the Civil War
Period during which a country develops an industrial economy
Before the Industrial Revolution, economy based on agriculture
By the late 1800s, economy depended on industries such as oil, steel, railroads, and manufactured goods

3. Causes of the Industrial Revolution
Many people left their farms to work in factories
Professional managers supervised their work
Changes in technology, communication, and transportation
Telegraph and cable lines extended across the U.S. after the Civil War
Railroad lines, canals, roads, steamships

4. Captains of Industry
Cornelius Vanderbilt (steamships & railroads)
John D. Rockefeller (Oil)
Andrew Carnegie (steel)
James B. Duke (tobacco)
J. P. Morgan (banking)
Powerful businesspeople who created enormous business empires dominated and shaped the U.S. economy

5. Creation of Monopolies
The captains of industry often pursued profit and self-interest above all else
Drove competitors out of business
Created giant companies that maintained monopolies in their industries
Monopoly
Occurs when one party maintains total control over a type of industry
Trust: giant industrial monopoly
By 1879, Rockefeller controlled >90% of the country’s refining capacity and pipelines

6. The Break-Up of Trusts
People became worried about the concentration of wealth in the hands of a only a few
In response, the government began regulating business
Cornelius Vanderbilt

7. The Break-Up of Trusts The Interstate Commerce Act, 1887
The railroads gave rebates to some customers but not others
This act forced railroads to publish their rates and forbade them to change rates without notifying the public
Established the Interstate Commerce Commission (ICC) to supervise the railroads

8. The Break-Up of Trusts The Sherman Act, 1890
Made it illegal for companies to create monopolies
Intended to restore competition
Example
Standard Oil Company was broken into smaller companies so that other oil companies could compete with the former giant
John D. Rockefeller

9. New Challenges for Management
When most Americans worked on farms, sophisticated management techniques were not necessary
By the end of the nineteenth century, giant companies employed thousands of people and distributed products all over the country
Workers performed tasks that needed to be coordinated
These changes demanded new ideas about how to manage people working in large corporations

10. Frederick W. Taylor and Scientific Management
Wanted to find ways to motivate workers to work harder
To increase efficiency, he tried to figure “one best way” to perform a particular task
Used a stopwatch to determine which work method was most efficient
These time and motion studies lead to scientific management principles

11. Frederick W. Taylor and Scientific Management
Scientific management seeks to increase productivity and make work easier by carefully studying work procedures and determining the best methods for performing particular tasks

12. Frederick W. Taylor and Scientific Management
Employers should gather, classify, and tabulate data in order to determine the “one best way” of performing a task or series of tasks.
Employers should study worker strengths and weaknesses and match workers to jobs. Employers should also train employees in order to improve their performance.
The principles of scientific management should be explained to workers.
Management and workers should be interdependent so that they cooperate.

13. Frederick W. Taylor and Scientific Management
Companies today continue to use the principles of scientific management
Marriott Corporation
Customer satisfaction

14. The Hawthorne Studies of Productivity
Researchers began to look at the relationship between working conditions and productivity
Series of experiments at the Hawthorne plant of Western Electric in Cicero, IL
Lowered the lighting expecting productivity to fall
What happened?

15. The Hawthorne Studies of Productivity
Baffled by results, a team of psychologists from Harvard University were called upon
Over five years, hundreds of experiments were conducted at the plant
Different wage payments
Rest periods
Work hours
What were the results?

16. The Hawthorne Studies of Productivity
Researchers concluded that productivity rose because workers worked harder when they received attention
Hawthorne effect
Change of any kind increases productivity
Factors other than the physical environment affected worker productivity
Psychological and social conditions, effective supervision

17. Abraham H. Maslow and the Hierarchy of Needs
According to Maslow
All people have five basic types of needs
People fulfill lower-level needs before seeking to fulfill higher-level needs
One set of needs must be met before another is sought
“Hierarchy of needs” is his grouping and ordering of physical, security, social, status, and self-actualization needs

18. Maslow’s Hierarchy of Needs

19. Applying Maslow’s Theory to Management
At the lowest level, workers are motivated by basic needs
Wages or salary, physical conditions
Safety or security needs
Providing insurance, retirement benefits, job security
Safe from physical, psychological, or financial harm

20. Applying Maslow’s Theory to Management
Social needs
Provide a work environment in which colleagues interact
Company lunch rooms, company retreats
Status needs
Provide workers with signs of recognition that are visible to others
Job titles, private offices, designated parking spaces, awards, promotions

21. Applying Maslow’s Theory to Management
Self-fulfillment needs
Provide employees with opportunities to be creative at work
Include employees in decision making
Example
ITT’s Ring of Quality Control