1. The Evolution of Management Thought

2. Government’s Approach To Management
“If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.”
Ronald Reagan

3. Overview
The need to increase efficiency and effectiveness has driven the evolution of management theory and practice
Division of labor and the study of how people do things is central to the pursuit of increased efficiency

4. Overview
Theories about the best ways to motivate and control employees have evolved
The study of the external environment’s impact on an organization has become central in management thought

5. Evolution of Management Theory
*Scientific Management
*Administrative Management
*Behavioral Management *Management Science
*Organizational Environment

6. Laissez-nous faire: leave us be
Phrase of the Day
Laissez-nous faire: leave us be

7. The 14 Fathers of Management
Jean-Baptiste Colbert Max Weber
Adam Smith Elton Mayo
David Ricardo Abraham Maslow
Joseph Schumpeter Douglas McGregor
John Maynard Keynes W. Edwards Deming
Frederick W. Taylor Peter Drucker
Henri Fayol William Ouchi

8. Job Specialization and the Division of Labor
Adam Smith (18th century economist)
Observed that firms manufactured pins in one of two different ways:
- Craft-style—each worker did all steps.
- Production—each worker specialized in one step.

9. Job Specialization and the Division of Labor
Smith realized that:
Breaking the total job down into steps allowed workers to become very skilled at a specific task, increasing
productivity

10. F.W. Taylor and Scientific Management
The systematic study of the relationships between people and tasks in order to redesign the work process for higher efficiency.
TAKE THE WATCH APART AND REASSEMBLE IT DIFFERENTLY TO MAKE IT TICK FASTER.

11. Scientific Management
Defined and popularized by Frederick W. Taylor in the early 1900’s.
Sought to reduce the time a worker spent on each task by optimizing the way the task was done.
Focused on process.

12. Four Principles of Scientific Management
1) Study the ways jobs are performed.
Gather detailed time and motion information.
Try different ways to do the job.
Select the best method.

13. Four Principles of Scientific Management
2) Codify the new method into
rules and teach all workers the new method, which
Taylor modestly called
“the one best way.”

14. Four Principles of Scientific Management
Determine who’s skills best match the rules.
Establish fair levels of performance; pay a premium for higher performance.
Note: all still done by Toyota today but
improvement process (kaizen) in hands
employees, not managers – you will see
why this point is important

15. Problems with Scientific Management
Specialized jobs became boring and dull.
Managers frequently did not reward workers for increased output, so workers purposely ‘underperformed.”
Management used conveyors belts to force a specific work pace, treating workers like cogs in a machine.
Unions rose to negotiate work rules to keep workers from being exploited.

16. Administrative Management Theory
The study of how to create an organizational structure that leads to high efficiency and effectiveness.

17. Administrative Management Theory
Max Weber
Developed the concept of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness.

18. Weber’s Principles of Bureaucracy
A manager’s formal authority derives from the position he holds in the organization.
Position should be based on performance, not social standing or personal contacts.

19. Weber’s Principles of Bureaucracy
The extent of each position’s formal responsibilities and it’s relationship to other positions should be clearly specified.
Authority can be exercised effectively when positions are arranged hierarchically (the many-layered cake).

20. Weber’s Principles of Bureaucracy
Managers must create a well-defined system of rules, operating procedures, and norms so that workers know what is expected and managers can effectively control behavior.

21. Rules, SOPs and Norms
Rules – formal written instructions that specify actions to be taken under different circumstances
Standard Operating Procedures (SOPs) – specific sets of written instructions about how to perform a certain aspect of a task
Norms – unwritten, informal codes of conduct that prescribe how people should act in particular situations – IBM dress code in the 70s.

22. Fayol’s Principles of Management
Division of Labor: allows for job specialization.
Jobs can have too much specialization leading to poor quality and worker dissatisfaction.
Authority and Responsibility
Both formal and informal authority resulting from special expertise.
Unity of Command
Employees should have only one boss. If not, chaos and confusion.

23. Fayol’s Principles of Management
Line of Authority
A clear chain of command from top to bottom of the firm.
Centralization
The degree to which authority rests at the top of the organization.
Unity of Direction
A single plan of action to guide the organization.

24. Fayol’s Principles of Management
Equity - The provision of justice and the fair and impartial treatment of all employees.
Order - The arrangement of employees in order to optimize value for the organization and provide career opportunities.
Initiative - The fostering of creativity and innovation by encouraging employees to act on their own.

25. Fayol’s Principles of Management
Discipline
Obedient, applied, respectful employees are necessary for the organization to function.
Equitable Remuneration of Personnel
An equitable and uniform payment system that motivates employees to contribute to organizational success.

26. Fayol’s Principles of Management
Stability of Personnel Tenure
Long-term employment is important for the development of skills that improve the organization’s performance (it also makes employees feel secure, but beware complacency)
Subordination of Individual Interest to the Common Interest
The interest of the organization takes precedence over that of the individual employee.

27. Fayol’s Principles of Management
Esprit de corps
Comradeship and shared enthusiasm foster devotion to the common cause (the success of the organization).

28. Behavioral Management Theory (The next evolutionary step)
The study of how managers should behave in order to motivate employees to achieve organizational goals.

29. Behavioral Management
Mary Parker Follett
Concerned that Taylor ignored the human side of the organization
Suggested workers help in analyzing their jobs
If workers have relevant knowledge of the task, then they should control the task
This is the heart of the Toyota Production System (TPS)

30. The Hawthorne Studies Human Relations Implications
Hawthorne effect — workers responded to management attention and were more productive.
Gave rise to the field of Organizational Behavior and the Human Relations Movement: the study of the factors that impact how individuals and groups respond and act in organizations.

31. Theory X and Theory Y
Douglas McGregor proposed two different sets of assumptions about workers.
Theory X assumes the average worker is lazy, dislikes work and will do as little as possible (you have all met this person).
Managers must closely supervise and control through reward and punishment (carrot and stick).
Mostly wrong!

32. Theory X and Theory Y
Theory Y assumes workers want to do a good job and the job itself will determine if the worker likes the work.
Managers should allow workers greater latitude and create an organization to stimulate the workers.
Mostly right!

33. Management Science Theory
Quantitative management — utilizes linear and nonlinear programming, modeling, simulation systems and queuing and chaos theory.
Operations management —techniques used to analyze all aspects of the production system.

34. Management Science Theory
Total Quality Management (TQM) —focuses on analyzing input, conversion, and output activities to increase product quality (SPC, PDCA, Deming, Juran, Japan)
Management Information Systems (MIS) — provide information vital for effective decision making and control

35. Organizational Environment Theory
Organizational Environment: The set of outside forces and conditions that affect a manager’s ability to acquire and use resources efficiently and effectively – THE WORLD IN YOUR FACE

36. Contingency Theory There is no one best way to organize
Organizational structures and control systems a manager chooses are contingent on characteristics of the external environment. Organization needs to be flexible and adaptive.

37. Type of Structure Mechanistic Structure
Authority is centralized at the top.
Employees are closely monitored and managed -- Theory X.
Can be very efficient in a stable environment; GM 30 years ago.
Not effective in today’s environment.

38. Type of Structure Organic Structure
Authority is decentralized throughout the organization; looser control (Theory Y)
Reliance on shared norms and culture is greater
Heavy reliance on cross-functional teams
Works best when environment is unstable and rapidly changing
Toyota to a degree; most silicon valley companies

39. Question
How has management theory and practice evolved over the decades? From what to what?

40. Management Evolution From process to people From totalitarian to team
From command to consensus
From tall and rigid to flexible and flat
From eyes-in to eyes-out

41. The Third Wave of Evolution
Renewed emphasis on process caused by influx of Japanese companies and management methods into North America over the past 25 years.
Renewed attention to process coupled with emphasis on people housed in flat, adaptable structures -- a powerful competitive combination.