1. 1 Major Schools of Management Thought  Classical management approaches … Developing universal principles for use in various management situations.  Behavioral management (or human resources) approaches … Human needs, the work group, and social factors in the workplace.

2. 2 Major Schools of Management Thought  Quantitative management approaches … Use of mathematical techniques for management problem solving.  Modern approaches … Systems and contingency views of organizations.

3. 3 Classical Management Theory Classical Management Theory Classical Management Theory A theory that focused on finding the “one best way” to perform and manage tasks

4. 4 Classical Management Theory 2a  Originated during England’s Industrial Revolution  Manufacturers began mass-producing goods in factories  Textile industry was among the first  Allowed production of standardized goods  Depended on a constant flow of labor and materials  Owners needed to plan, organize, lead, control  Focused on finding the “one best way”

5. Management Theory  Pre-Classical  Classical Approaches Frederick Taylor: Scientific Management (1886) Frank and Lillian Gilbreth: Time/motion studies (later 1800s) Henri Fayol: 14 Principles of Management (1880s-1890s) Max Weber : Bureaucracy (1920s)  Behavioral Approaches The Hawthorne Experiment (1927) MacGregor’s Theory X and Theory Y (1960)  Quantitative Approaches  Contemporary Approaches Ouchi’s Theory Z (1981) Contingency Management

6. 6 What can be learned from classical management thinking?  Classical approaches to management include: Scientific management Administrative principles Bureaucratic organization

7. 7 Classical Management Theory 2a Classical Scientific School Focused on the manufacturing environment Classical Administrative School Emphasized the flow of information and how organizations should operate

8. Classical Approaches Frederick Taylor: Scientific Management (1886) Frank and Lillian Gilbreth: Time and motion studies (later 1800s) Henri Fayol: Fourteen Principles of Management (1880s-1890s) Max Weber : Bureaucracy (1920s)

9. Scientific Management Frederick Winslow Taylor—(1856-1915) was the father of Scientific Management. When he was working as an apprentice at the Midvale steel company, he noticed that most workers did not work as hard as they could. To increase efficiency, Taylor tried to figure out the “one best way” to perform a particular task. To do so, he used a stop watch to determine which method was the most efficient. These studies were known as “Time and Motion Studies.”

10. Frederick W. Taylor Developed Scientific Management Laid foundation for the study of management Key ideas: Management as a separate field of study Explicit guidelines for scientific study of management functions Time studies for setting standards Functional specialization of managers’ duties Piece-rate Incentive systems

11. Taylor’s Principles of Management The “one best way.” Management using scientific observation Scientific selection of personnel Put right worker in right job, find limitations, train Financial incentives Putting right worker in right job not enough A system of financial incentives is also needed Functional foremanship Division of labor between manager and workers Manager plans, prepares, inspects Worker does the actual work “Functional foremen”, specialized experts, responsible for specific aspects of the job

12. Henri Fayol First came up with the five basic functions of management—Planning, Organizing, Staffing, Directing, Communicating, and Controlling First wrote that management is a set of principles which can be learned. Developed Fourteen Principles of Management

13. 1. Specialization of labor. Specializing encourages continuous improvement in skills and the development of improvements in methods. 2. Authority. The right to give orders and the power to exact obedience. 3. Discipline. No slacking, bending of rules. 4. Unity of command. Each employee has one and only one boss. 5. Unity of direction. A single mind generates a single plan and all play their part in that plan. 6. Subordination of Individual Interests. When at work, only work things should be pursued or thought about. 7. Remuneration. Employees receive fair payment for services, not what the company can get away with.

14. 8. Centralization. Consolidation of management functions. Decisions are made from the top. 9. Scalar Chain (line of authority). Formal chain of command running from top to bottom of the organization, like military 10. Order. All materials and personnel have a prescribed place, and they must remain there. 11. Equity. Equality of treatment (but not necessarily identical treatment) 12. Personnel Tenure. Limited turnover of personnel. Lifetime employment for good workers. 13. Initiative. Thinking out a plan and do what it takes to make it happen. 14. Esprit de corps. Harmony, cohesion among personnel.

15. Max Weber Coined “bureaucracy”: the perfect office Well defined chain of command Clear division of work (job descriptions) Procedures for any situation Impersonality Employment and promotion based on technical competence.

16. 16 What can be learned from classical management thinking?  Characteristics of bureaucratic organizations: Clear division of labor Clear hierarchy of authority Formal rules and procedures Impersonality Careers based on merit  Possible disadvantages of bureaucracy: Excessive paperwork or “red tape” Slowness in handling problems Rigidity in the face of shifting needs Resistance to change Employee apathy

17. 17 Lessons from Classical Scientific Thinkers 2a Analyze everything Teach effective methods to others Plan responsibly Constantly monitor workers Control the work and the workers

18. 18 What ideas were introduced by the human resource approaches?  Behavioral management (or human resource) approaches include: Hawthorne studies (1927) Maslow’s theory of human needs McGregor’s Theory X and Theory Y (1960) Argyris’s theory of adult personality

19. The Hawthorne Experiment Research conducted at the Hawthorne plant of the Western Electric Company near Chicago, 1927-1937 Initial study: effects of lighting on worker performance But the “Hawthorne Effect” was instead identified The workers values, desires, and needs may be more important than physical conditions. Workers want to have input. Workers want to be respected.

20. The Hawthorne Effect The result of an experiment conducted at the Hawthorne plant of Western Electric in Cicero, Illinois in 1924. They lowered the lighting in the factory, expecting productivity to fall; but instead, to their astonishment, productivity increased. The researchers concluded that productivity rose because workers worked harder when they received attention. This phenomenon, in which change of any kind increases productivity, has been known as the “Hawthorne Effect.”

21. Abraham H. Maslow 1908-1970 Maslow was a psychologist who developed a theory of motivation. His ideas had a significant impact on management. Maslow believed that individuals fulfill lower-level needs before seeking to fulfill higher-level needs. That is, people satisfy their need for food before they seek self-fulfillment. Because one set of needs must be met before another is sought, Maslow referred to this as a hierarchy of needs.

22. Maslow’s Theory

23. Applying Maslow’s Theory to Management At the lowest level, workers are motivated by basic needs, such as the needs for wages or salary. Basic needs also include the physical conditions in which a person works, such as heating, lighting, and noise. Once these basic needs are met, employers can address the next level of needs— safety or security needs. Some of these security needs can be met by providing employees with insurance, retirement benefits, and job security. Employees need to know that in the workplace, they are safe from physical, psychological, or financial harm.

24. Managers meet workers’ social needs by providing work environments in which colleagues interact by providing opportunities for co-workers to socialize with one another by providing lunch rooms or allowing employees to attend company retreats. Status needs can be met by providing employees with signs of recognition that are visible to others, such as job titles, awards, designated parking spaces, and promotions. Managers can meet employees’ need for self- fulfillment by providing them with opportunities to be creative at work or allow them to become involved in decision making.

25. Theories X and Y Conducted in 1960s by Douglas McGregor Theory X: classical theory Most people dislike work and responsibility, they are motivated only by money and do not care about the job. Close supervision is required and people must be carefully controlled and coerced into working Average person prefers direction

26. Theory X Thus Theory X—assumes that people are basically lazy and will avoid working if they can. To make sure that employees work, Theory X managers impose strict rules and make sure that all important decisions are made only by them.

27. 27 Assumptions of the ideas introduced by McGregor’s Theory X and Y  McGregor’s Theory X assumes that workers: Dislike work Lack ambition Are irresponsible Resist change Prefer to be led  McGregor’s Theory Y assumes that workers are: Willing to work Capable of self control Willing to accept responsibility Imaginative and creative Capable of self- direction

28. Theories X and Y Theory Y: Modern Management Theory People often enjoy their work and will exercise self-control at work. People are motivated by wanting to do a good job and will do well if the opportunity is presented People have capacity for imagination, ingenuity, and creativity People enjoy expending physical and mental effort in work as much as play and rest

29. Theory Y Thus Theory Y assumes that people find satisfaction in their work. Theory Y managers believe that people are creative and will come up with good ideas if encouraged to do so. They tend to give their employees much more freedom and let them make mistakes.

30. Contemporary Approaches Ouchi’s Theory Z (1981) Contingency Management

31. Theory Z William Ouchi, a management researcher developed this new theory of management in the 1980s Theory Z is a business management theory that integrates Japanese and American business practices. The Japanese business emphasis is on collective decision making, whereas the American emphasis is on individual responsibility.

32. Ouchi’s Theory Z Theory Z Value of culture in an industrial society Intimate and cooperative work relationships Alienated in work environment in which family ties, traditions, and social institutions are minimized Workers have strong sense of moral obligation, discipline and order

33. Japanese Type Organization 1. Lifetime employment 2. Collective decision making 3. Collective responsibility 4. Slow evaluation and promotion 5. Implicit (understood, implied) control mechanisms 6. Non-specialized career path 7. Holistic concern for employee as a person

34. American Type Organization 1. Short-term employment 2. Individual decision –making 3. Individual responsibility 4. Rapid evaluation and promotion 5. Explicit (clear, precise, unambiguous) control mechanisms 6. Specialized career path 7. Segmented concern for employee as an employee.

35. Summary of Theory Z Type of Organization 1. Long-term employment 2. Consentual, participative decision- making 3. Individual responsibility 4. Slow evaluation and promotion 5. Implicit, informal control with explicit, formalized measures 6. Moderately specialized career path 7. Holistic concern, including family

36. 36 Systems Management Theory Systems School Systems School The theory that an organization comprises various parts that must perform tasks necessary for the survival and proper functioning of the system

37. 37 The Organization as a System 2d

38. 38 What is unique about the systems view?  Systems thinking System Collection of interrelated parts that function together to achieve a common purpose. Subsystem A smaller component of a larger system. Open systems Organizations that interact with their environments in the continual process of transforming resource inputs into outputs.

39. Contingency Management Managing in Different and Changing Situations Require managers to use different approaches and techniques Contingency perspective - different ways of managing are required in different organizations and different circumstances stresses that there are no simplistic or universal rules contingency variable © Prentice Hall, 2002

40. 40 What is unique about the systems view and contingency thinking?  Thus Contingency thinking Tries to match managerial responses with problems and opportunities unique to different situations. Especially individual or environmental differences. No “one best way” to manage. Appropriate way to manage depends on the situation.

41. 41 What is the role of quantitative analysis in management?  Management science (operations research) foundations Scientific application of mathematical techniques to management problems Techniques and applications include: Mathematical forecasting Inventory modeling Linear programming Queuing theory Network models Simulations

42. 42 What is the role of quantitative analysis in management?  Quantitative analysis today Use of staff specialists to help managers apply techniques. Software and hardware developments have expanded potential quantitative applications to managerial problems. Good judgment and appreciation for human factors must accompany use of quantitative analysis.

43. 43 What are continuing management themes of the 21st century?  Quality and performance excellence Managers and workers in progressive organizations are quality conscious. Quality provides competitive advantage. Total quality management (TQM) Comprehensive approach to continuous quality improvement for a total organization. Creates context for the value chain.

44. 44 What are continuing management themes of the 21st century?  Eight attributes of performance excellence: A bias toward action Closeness to the customer Autonomy and entrepreneurship Productivity through people Hands-on and value-driven Sticking to the knitting Simple form and lean staff Simultaneous loose-tight properties

45. 45 What are continuing management themes of the 21st century?  Global awareness Pressure for quality and performance excellence is created by a highly competitive global economy. Has fostered increasing interest in new management concepts. Process engineering Virtual organizations Agile factories Network firms Adoption of Theory Z management practices.

46. 46 What are continuing management themes of the 21st century?  Contemporary businesses must learn to become learning organizations.  Learning organization success depends on: Culture that emphasizes information, teamwork, empowerment, participation, and leadership. Leadership that emphasizes motivation and rewards, communication, conflict and negotiation, teamwork, and change management.

47. 47 What are continuing management themes of the 21st century?  In the 21 st century managers must be: A global strategist A master of technology A consummate politician A leader/motivator