1. 2.12.13 Game Plan  Turn in Entrepreneur FB Pages  History of Management Notes  Partner work on exploring modern management

2. We will take notes together AND on our own…I’ll explain! Together = History of Management and Industrial Revolution Breakdown On Your Own = Nine theories of management explored: Scientific Management Hawthorne Studies Maslow’s Hierarchy of Needs Theory X Theory Y Centralization Decentralization TQM Theory Z

3. A little history on modern management… Business Management

4. When did management start? Who’s the BOSS ?  Management has always existed since one human being has tried to direct another  Different times=different challenges  Due to the industrial revolution, these challenges dramatically changed

5. What is the industrial revolution?  Period (late 1800’s) during which the U.S. developed an industrial economy  Caused by: advances in manufacturing, telegraph and cable lines, transportation advances  Example: farmers plowing their fields by hand to…horse drawn plows to…machine run plows

6. Why is this important to managers?  Many people left farms to work in factories where they were managed by professional managers  Entrepreneurs emerged in their companies to become managers James Duke = TOBACCO John Rockefeller = OIL Andrew Carnegie = STEEL J.P. Morgan = BANKING Cornelius = STEAMSHIPS Vanderbilt and RAILROADS Captains of the Industry

7. What happened as a result of the captains of the industries?  Monopolies were created  Monopolies: one party maintains total control over a type of industry  Trusts were created  Trust: giant industrial monopoly  E.g. Rockefeller lowered prices for oil to force competitors out

8. The Break-up of the Trusts!  Worries about the concentration of wealth in the hands of few  Questions about driving competition out of business– bad for the economy  1887 Interstate Commerce Act : forced railroads to publish rates and forbade them to change rates with out notifying the public  1890: Sherman Act: illegal for companies to create monopolies and restored competition

9. Now…how do we manage?  Fredrick W. Taylor did time and motion studies to determine best way to perform a particular task  Match workers to jobs they are best suited for and let workers be independent

10. Is his work really useful?  YES! Marriott Corporation found that customer satisfaction with a hotel depends largely on how well a customer is treated during the first 10 minutes  So…they created a new system to make sure that these efforts are carried out  Every day the company makes a list of arriving guests  Place the names of the guests expected to arrive earliest at the top of the list  Cleaning staff cleans those rooms first (so they don’t have to wait)  Marriott also combined roles of doorperson, bellhop, and desk clerk – combo = guest service agent

11. Hawthorne Studies  1920’s research on working conditions and productivity  Took place at Hawthorn Electric plant in Cicero, IL  He lowered the lighting in the factory (i.e., it was pretty dark!  Expected productivity to fall…did it?  NO! Productivity increased  Harvard psychologist brought in and did 5 years worth of testing

12. What did they test?  Effects of different wage payments  Rest periods  Work hours  Regardless of the variable tested… productivity increased

13. Conclusion of Hawthorn  Productivity rose because workers worked harder when they received attention  “Hawthorne Effect” is when change of any kind increases productivity  Other conclusions: factors other than physical productivity such as social conditions, group pressures, individual recognition effect productivity and employee moral

14. Maslow and the Hierarchy of Needs People fulfill lower needs before seeking higher needs Theory of Motivation

15. Applying Maslow’s Theory to Management  Provide salary (to buy food and housing) Provide heating/AC, lighting, noise level (physical needs)  Clearly communicate the benefits of working for a particular company e.g. security=insurance (security needs)  Work environment where employees interact (social needs)  Employee recognition, job titles, designated parking spaces, awards (ego/status needs)  Opportunities to be creative at work; include in decision making process (self-actualization)

16. Theory X and Y – Established in the 60’s by Douglas McGregor of MIT X  People are lazy and avoid working  Strict rules, decisions made only by managers  Management knows all the answers Y  Workers find satisfaction in their work  People will work productively if put in the right environment  Freedom and ability to make mistakes

17. Theory X and Y together  Most companies combine theories of motivation  Freedom in some aspects, control in others  E.g. flexible work schedule, but formal dress code

18. Centralization vs. Decentralization  Central: concentration of power in a few key decision makers  Popular in early 20 th century  Henry Ford almost destroyed his company because he would not delegate (out of fear)  De-central: decisions are made by managers at various levels within an organization  1920’s example of GM: Alfred Sloan, GM’s chair, broke the company up into five divisions: Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac  Different cars for different people/different goals for each segment

19. Total Quality Management  1950’s push using mathematical models to QUANTIFY management.  In comes W. Edwards Deming  Total quality management (TQM) – system of management based on involving all employees in a constant process of improving quality and productivity by improving how they work.  Adopted widely by American businesses.  Focus is on satisfying both customers and employees.

20. Deming’s Fourteen Points 1. Create consistent purpose to remain competitive 2. Adopt a new philosophy – no more mistakes or defects 3. Stop depending on mass production 4. Consider quality as well as price in awarding business 5. Constantly improve the system of production and service 6. Institute a vigorous program of job training 7. Adopt and implement leadership 8. Drive out fear so that everyone may work effectively 9. Break down barriers between departments to work as a team 10. Eliminate numerical goals, posters, and slogans asking for new levels of production without new methods 11. Eliminate work standards that prescribe numerical quotas 12. Remove barriers that stand between hourly workers and pride of workmanship 13. Encourage education and self- improvement for everyone 14. Create a structure in top management that will work every day to achieve these points!

21. Japanese Management  More employee participation in collective decision making  Concern for personal well-being of employees  Teams vs. individuals

22. Theory Z  Business management theory that integrates Japanese and American business practices  Long term employment  Individual responsibility  Slow evaluation and promotion  Holistic concern

23. Applying Management Theories Activity 1. Visit my website to locate your first subject-based paper for my class.  Outline: Pick 3 people. You must then interview and/or research the management style that each employs. You must back up your “definition” of this person’s style with supporting details/facts. Here is the profile of who must be depicted:  One must be a person that you have worked for or a business leader in the community. (Note: If you have not yet had a job, do some research to look into a prominent local business leader!)  One must be a teacher here in the building.  One must be a worldly figure. (Ghandi, Hillary Clinton, etc.) Please do not use these examples! 2. Due Monday, Feb. 26 th, 2013