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Chapter 2

Contemporary Management: The Evolution of Management Theory

After studying this chapter, you should be able to:

Chapter Outline

  • Scientific Management Theory
          Job Specialization and the Division of Labor
          F. W. Taylor and Scientific Management
        The Gilbreths
  • Administrative Management Theory
          The Theory of Bureaucracy
          Fayols Principles of Management
  • Behavioral Management Theory
          The Work of Mary Parker Follett
          The Hawthorne Studies and Human Relations
          Theory X and Theory Y
  • Management Science Theory
  • Organizational Environment Theory
           The Open Systems View
           Contingency Theory



Scientific Management Theory


    Evolution of Modern Management


  Began in the industrial revolution in the late 19th century as:
  • Managers of organizations began seeking ways to better satisfy customer needs.
  • Large-scale mechanized manufacturing began to supplanting small-scale craft production in the ways in which goods were produced.
  • Social problems developed in the large groups of workers employed under the factory system.
  • Managers began to focus on increasing the efficiency of the worker-task mix.



The Evolution of Management Theory


F.W. Taylor and Scientific Management


      Scientific Management

       The systematic study of the relationships between people and tasks for the purpose of redesigning the work process for higher efficiency.
  • Defined by Frederick Taylor in the late 1800s to replace informal rule of thumb knowledge.
  • Taylor sought to reduce the time a worker spent on each task by optimizing the way the task was done.



Frank and Lillian Gilbreth

  • Refined Taylors work and made many improvements to the methodologies of time and motion studies.
        Time and motion studies
          Breaking up each job action into its components.
          Finding better ways to perform the action.
          Reorganizing each job action to be more efficient.
  • Also studied worker-related fatigue problems caused by lighting, heating, and the design of tools and machines.



Administrative Management Theory

  • Administrative Management
          The study of how to create an organizational structure that leads to high efficiency and effectiveness.
  • Max Weber
            Developed the concept of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness.



Figure  2-2


Fayols Principles of Management

  • Division of Labor: allows for job specialization.
          Fayol noted jobs can have too much specialization leading to poor quality and worker dissatisfaction.
  • Authority and Responsibility
           Fayol included both formal and informal authority resulting from special expertise.
  • Unity of Command
            Employees should have only one boss.
  • 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.
  • Equity
              The provision of justice and the fair and impartial treatment of all employees.
  • Order
              The arrangement of employees where they will be of the most value to the organization and to provide career opportunities.
  • Initiative
              The fostering of creativity and innovation by encouraging employees to act on their own.
  • Discipline
              Obedient, applied, respectful employees are necessary for the organization to function.
  • Remuneration of Personnel
             An equitable uniform payment system that motivates contributes to organizational success.
  • Stability of Tenure of Personnel
             Long-term employment is important for the development of skills that improve the organizations performance.
  • Subordination of Individual Interest to the Common Interest
            The interest of the organization takes precedence over that of the individual employee.
  • Esprit de corps
            Comradeship, shared enthusiasm foster devotion to the common cause (organization).




Behavioral Management Theory

Behavioral Management
  • The study of how managers should behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.
  • Focuses on the way a manager should personally manage to motivate employees.



Behavioral Management

Mary Parker Follett
     An influential leader in early managerial theory
        Held a horizontal view of power and authority in organizations
  • Suggested workers help in analyzing their jobs for improvementsthe worker knows the best way to improve the job.
  • If workers have relevant knowledge of the task, then they should control the task.



The Hawthorne Studies

  • Studies of how characteristics of the work setting affected worker fatigue and performance at the Hawthorne Works of the Western Electric Company from 1924-1932.
           Worker productivity was measured at various levels of light illumination.
           Researchers found that regardless of whether the light levels were raised or lowered, worker productivity increased.



Theory X versus Theory Y     fig 2-3

Management Science Theory

  • An approach to management that uses rigorous quantitative techniques to maximize the use of organizational resources.
         Quantitative managementutilizes linear programming, modeling, simulation systems.
         Operations managementtechniques to analyze all aspects of the production system.
         Total Quality Management (TQM)focuses on improving quality throughout an organization.
         Management Information Systems (MIS)provides information about the organization.



Organizational Environment Theory

  • Organizational Environment
        The set of forces and conditions that operate beyond an organizations boundaries but affect a managers ability to acquire and utilize resources.



The Organization as an Open System fig 2-4


Contingency Theory of Organizational Design  fig  2-5

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Chapter Outline

  1. Scientific Management Theory
    1. Job Specialization and the Division of Labor - job specialization creates a division of labor by having workers specialize in different tasks.
    2. F.W. Taylor and Scientific Management - F.W. Taylor defined scientific management to redesign tasks to increase efficiency. He defined four principles to increase efficiency:
      1. Study the way workers perform their tasks.
      2. Codify the new methods of performing tasks into written rules and standard operation procedures (SOPs).
      3. Carefully select workers so that they possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures.
      4. Establish a fair and acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level.
    3. The Gilbreths - Frank and Lillian Gilbreth filmed workers performing tasks to try to maximize efficiency to save time and effort.
  2. Administrative Management Theory - the study of how to create an organizational structure (i.e., the system of task and authority relationships that control how workers use resources) that is highly efficient and highly effective.
    1. The Theory of Bureaucracy - Max Weber defined a bureaucratic system based on five principles:
      1. A manager's authority (the power to hold people accountable for their actions) is derived from the position he or she holds in the organization.
      2. People should occupy positions because of their performance ability.
      3. The extent of each person's authority and task responsibilities should be specified.
      4. Positions should be arranged hierarchically so that workers know to whom they report and also who reports to them.
      5. Managers must create a system of rules (formal written instructions that specify what to do and when to do it), standard operating procedures (written instructions specifying how to perform a task), and norms (unwritten, informal codes of conduct that describe how workers should act in specific situations).
    2. Fayol's 14 Principles of Management
      1. Division of labor - job specialization should increase efficiency
      2. Authority and responsibility - managers have the right to give orders and to expect obedience from subordinates
      3. Unity of command - A worker should receive orders from only one superior
      4. Line of authority - the number of people in the "chain of command" from the top to the bottom of the organization should be limited
      5. Centralization - authority should not be concentrated at the top management level
      6. Unity of direction - the organization should have one plan of action to guide workers
      7. Equity - all workers should be treated with justice and respect
      8. Order - positions should be arranged to maximize efficiency and to provide workers with satisfying career opportunities
      9. Initiative - managers should allow workers to be innovative and creative
      10. Discipline - managers should create a workforce that strives to attain organizational goals
      11. Remuneration of personnel - workers should be rewarded equitably
      12. Stability of tenure of personnel - long-term workers develop skills that can improve efficiency
      13. Subordination of individual interests to the common interest - workers should understand how their performance affects the organization
      14. Esprit de corps - managers should encourage comradeship and enthusiasm
  3. Behavioral Management Theory - the study of how managers should behave to motivate workers to perform at high levels.
    1. The Work of Mary Parker Follett - argued that workers should be included in job analysis (the human side of the organization).
    2. The Hawthorne Studies and Human Relations - researchers found that both increased and decreased levels of illumination increased worker productivity and called this phenomenon: "the Hawthorne effect."
    3. Theory X and Theory Y of Douglas McGregor
      1. Theory X assumes that workers are lazy, dislike work, and will try to do as little as possible.
      2. Theory Y assumes that the work setting determines how workers feel about their jobs.
  4. Management Science Theory - uses quantitative techniques (quantitative management, operations management, and total quality management) to maximize resources
  5. Organizational Environment Theory - forces that operate outside of the organization that affect a manager's ability to acquire and use resources.
    1. The Open-systems View - an open system takes resources from the external environment and transforms them into goods that are then sent back to that environment where they are purchased by customers
      1. Input stage - organization acquires resources (raw materials, money, workers)
      2. Conversion stage - workforce transforms inputs into outputs of finished goods
      3. Output staqe - organization releases finished goods to the external environment
    2. Contingency Theory - there is no one best way to organize

Mechanistic and Organic Structures - mechanistic structures (authority is centralized at the top of the organization) make sense when the environment is stable, while organic structures (authority is decentralized to lower-level managers to encourage quick action) make sense when the environment is changing rapidly.

Chapter Summary

SCIENTIFIC MANAGEMENT THEORY The search for efficiency started with the study of how managers could improve person-task relationships to increase efficiency. The concept of job specialization and division of labor remains the basis for the design of work settings in modern organizations. New developments such as lean production and total quality management are often viewed as advances on the early scientific management principles developed by Taylor and the Gilbreths.

ADMINISTRATIVE MANAGEMENT THEORY Max Weber and Henri Fayol outlined principles of bureaucracy and administration that are as relevant to managers today as when they were written at the turn of the twentieth century. Much of modern management research refines these principles to suit contemporary conditions. For example, the increasing interest in the use of cross-departmental teams and the empowerment of workers are issues that managers also faced a century ago.

BEHAVIORAL MANAGEMENT THEORY Researchers have described many different approaches to managerial behavior, including Theories X and Y. Often, the managerial behavior researchers suggest reflects the context of their own historical era and culture. Mary Parker Follett advocated managerial behaviors that did not reflect accepted modes of managerial behavior at the time, but her work was largely ignored until conditions changed.

MANAGEMENT SCIENCE THEORY The various branches of management science theory provide rigorous quantitative techniques that give managers more control over each organization's use of resources to produce goods and services.

ORGANIZATIONAL ENVIRONMENT THEORY The importance of studying the organization's external environment became clear after the development of open-systems theory and contingency theory during the 1960s. A main focus of contemporary management research is to find methods to help managers improve the ways they utilize organizational resources and compete successfully in the global environment. Strategic management and total quality management are two important approaches intended to help managers make better use of organizational resources.

Explore the World Wide...
Search for a website that contains a time line or a short history of a company, detailing the way the organization has developed over time. What are the significant stages in the companys development, and what problems and issues have confronted managers at these stages? (For example, you might investigate the history of Ford Motor Company by utilizing the extensive resources of Fords historical library. Research Fords website [], and locate and read the material on Fords history and evolution over time.)

Business Week Case

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