1. The Evolution of Management Business Management Chapter 2

2. The Industrial Revolution 18 th century Europe 1860s in the United States Shift from agriculture based economy to production based economy

3. Causes of the Industrial Revolution Improvements in: Technology Communication Transportation

4. Emergence of Captains of Industry Oil – John D. Rockefeller Tobacco – James Duke Steel – Andrew Carnegie Banking – J.P. Morgan Railroads – Cornelius Vanderbilt

5. Creation of Monopolies Relentless pursuit of profit and self-interest Last man standing mentality Prices rise sharply when monopoly achieved Created trusts (smaller companies combining into a giant corporation)

6. Break-up of Trusts The Interstate Commerce Act – required railroads to offer the same rates to all potential customers The Sherman Act – made monopolies illegal

7. Scientific Management 1) Jobs should be designed scientifically (the one best way) 2) Employees sorted according to individual aptitude 3) Employees should understand the scientific management process 4) Management and workers should be interdependent and cooperative

8. Hawthorne Productivity Studies During productivity study, all observation resulting in increased productivity “Hawthorne Effect” – receiving attention of any kind will stimulate workers First study of how factors beyond the physical environment affected workers

9. Maslow’s Hierarchy of Needs Physical Needs – food, water, air, sleep Security Needs – safe from harm Social Needs – human interaction Status Needs – self-esteem, esteem of others Self-fulfillment Needs – realize one’s own potential, bettering oneself

10. Applying Maslow to Management Wages and physical conditions must be met first Security can be met by health insurance options, etc. Social needs depend on work environment Recognition can meet status needs and promote self-fulfillment

11. The Development of Modern Management Chapter 2.2

12. Theory X Assumes people are basically lazy Supports strict rules Important decisions made by managers

13. Theory Y Assumes people find satisfaction in work Proper environment will promote work ethic Creativity a result of encouragement Freedom to make mistakes

14. Centralization vs. Decentralization Centralization – concentrated power among a few key decision makers Often suffer from overload of work Decentralization – system of middle management, delegated decision making

15. Total Quality Management 1950s – mathematics applied to management W. Edwards Deming creates TQM 14 points of high quality

16. 14 Points 1) Consistent purpose for improvement 2) Adopt a new philosophy 3) Stop depending on mass inspection 4) Consider quality as well as price 5) Constantly improve production methods 6) Institute vigorous job training 7) Adopt and implement leadership

17. 14 points continued 8) Drive out fear 9) Break down barriers between depts. 10) Eliminate goals without plan to achieve 11) Eliminate work standards, quotas 12) Remove barriers to pride in work 13) Encourage education 14) Ensure management encourages these points

18. Applying TQM Every employee involved in improvement Regular discussions of production process Improved profits and morale

19. Japanese Management Practices Concern for personal well-being Detailed feedback process Organized by team, rather than individual All employees empowered to make decisions

20. Theory Z Collective decision making Concern for employees Individual responsibility