Chapter 1
Introduction to Organizational theory
Management Theories
Historical Schools of Thought
Origins of Management
1500 - Sir Thomas More - specialization
1700 - 1785 Industrial Revolution
1767 - Sir James Stewart - source of authority
1776 - Adam Smith - work specialization
1800 - James Watt & Matthew Boulton - Standard operating procedure
1810 - Robert Owen - need personnel practices, training of workers
1856 - Daniel McCallum - use of organizational chart
1860’s - US industrial manufacturing / railroads growing in size of organization
Characteristics of Work Place (1800’s)
no clear concept or worker management responsibilities
no effective work standard
workers purposely worked at a slow pace
management decision were made by the "set of the pants"
no overall study of work flow through the various departments
no incentive to improve workers performance
Characteristics con’t
workers were placed on jobs with little concern to match their abilities and aptitude with tasks
management and workers considered themselves in continual conflict
low standard of living
work was labor intensive; labor the limiting resource
Major Schools of management Thought
Classical: Universal Principles; Concerned with efficiency & productivity
Scientific Management - one best way
General Administrative -
what managers do
- Bureaucracy - authority structure
- Humanistic: Focus on human needs; work group; role of social factors
- Human Relations
- Human Resources
- Behaviorist
School’s Con’t
Quantitative or Management Science:
use of mathematical techniques
problem solving
Systems- relationships; environmental factors
Contingency- situational nature
Quality - TQM- continuous improvement
Early Theorist
1881 - Joseph Wharton
established first College department of Business Administration - U of Pa.
second schools 1898 - U of Chicago, U of Ca.
careful division of labor
fully utilized man and equipment
reporting system
analyze reports to improve operations
authority comes from 1 individual
suggested the Science of Management
- 1886 - Henry Towne - Pres. Of Yale
delivered a paper "The Engineer as an Economist". The paper inspired Frederick Taylor
Classical Perspective
- Emphasized a rational, scientific approach to study of management and sought to make organizations efficient operating machines
- Scientific Management
- Bureaucratic Organizations
- Administrative Principles.
Scientific Management Pioneers
- Frederick W. Taylor
- Henry Gantt
- Frank & Lillian Gilbreth
SCIENTIFIC MANAGEMENT
Frederick Taylor
:
One best way
Find the most effective and efficient process of performing work.
Aimed at shop level /foreman
Midvale Steel (Bethlehem Steel)
Soldiering: the practice of looking as if a worker was working fast, when in fact they were deliberately working slow.
Frederick Taylor:
Motion Studies: science of reducing job or task to its basic physical motions.
Search for ways to improve worker performance wished to:
eliminate fatigue and boredom
eliminate unnecessary or inconvenient movements
eliminate wasted time and increase productivity
Taylor Con’t
Goal: establish a practical, relatively precise and reliable standard of output. Provide incentive (pay) to meet standard.
Two Studies:
Pig Iron
Optimum Shovel
Taylor's scientific process:
break each job down to its most basic tasks
discard non-essential movements
examine remaining elements
experiment with ways to change how the task is accomplished
select the quickest, least wasteful method
provide validity by re-testing
set standards to account for unavoidable delays, rest periods, and accidents
train worker in best way method
select the appropriate worker
provide worker with correct tools
Principles of Scientific Management - 1911
Develop a Science of every job, which includes rules of motion, standard work implements, and proper working conditions.
Carefully select workers with the right attributes for the job
Carefully train workers to do the job and give them proper incentives to cooperate with job science
Support workers planning their work, smoothing the way as they go.
HENRY GANTT
Gantt Chart - daily balance chart
FRANK & LILLIAN GILBRETH
Time and motion studies
Microchronometer: time to 1/2000 of a second
Therblings
Cheaper by the Dozen
Gilbreth’s contribution:
management should develop workers by:
- effective training
- effective work methods
- improved environment and tools
- healthy psychological outlook.
- Managers should question feasibility of or applicability of anything and discard for improvement
Contributions of Scientific Management
develop a standard method of performing each job
select appropriate workers
train workers in standard method
plan work to eliminate interruptions
provide incentives for increased output
Bureaucratic Approach:
MAX WEBER - The Theory of Social and Economic Organizations
Bureaucracy: a theory of authority and structure
- Clearly defined authority and responsibility
- Formal record keeping
- Separation of management and ownership
Max Weber - The theory of Social and Economic Organizations
Founded on logic, order, legitimate authority (power)
Six Ideals of Bureaucracy
1. Division of Labor
2. Authority hierarchy
3. Formal Selection
4. Formal Rules and Regulations
5. Impersonality
6. Career orientation
Administrative Management
Looked at the entire organization
administration of all organizations requires the same rational process
Middle and top management
a universal management process can be established through functions and principles
HENRI FAYOL
General & Industrial Management - 1916.
- Functions of management:
- planning
- organizing
- commanding
- coordinating
- controlling
Fayol’s 14 Principles of Management
1. Division of work - specialization belongs the the natural order
2. Authority and responsibility - responsibility is a corollary with authority)
3. Discipline - discipline is what leaders make it
4. Unity of command - men cannot bear dual command
5. Unity of direction - one head and one plan for a group of activities having the same objective
6. Subordination of individual interest to the general interest
7. Remuneration - fair, rewarding of effort, reasonable
8. Centralization - centralization belongs to the natural order
9. Scalar chain - line of authority, gang-plank principle
10. Order - a place for everyone and everyone in his place
11. Equity - results from combination of kindliness and justice
12. Stability of tenure of personnel - prosperous firms are stable
13. Initiative - great source of strength for business
14. Esprit de corps - union is strength; harmony
Contributions of Administrative Management
Many of the principles presented in the theories are the foundation of current approaches.
Behavioral
Human Relations;Group dynamics, Leadership Behavioral Science (Behaviorist
)
Management through people instead of task or function, managing not by controlling but by motivating and empowering.
Focused on the importance of understanding human behavior: needs, attitudes, social interactions, group process, enlightened treatment of workers, power sharing between workers and mangers
Mary Parker Follett
Human needs and relations
- participative decision making (decentralization)
- team, non-confrontational , shared power
- respect for cooperation, respect autonomy
Human Relations -(Hawthorne Studies) - Elton Mayo; Roethlisberger)
1924 - Western Electric - Hawthorne Works Plant
- Emphasized satisfaction of employees’ basic needs as the key to increased worker productivity.
HAWTHORNE STUDIES
1924 - Lighting study
1927 - six Women in Assembly relay work room
- group atmosphere - social relationship
- participative supervision
3rd - Nine men in assembly terminal work room
- group norms
- informal organizations
1928 - Interviewing
- interviewed over 20,000 workers over 2 years
- determine likes and dislike of work environment
Hawthorne studies contribution
to management knowledge
shifted focus from technical, structural concerns to social and human concerns as keys to productivity
workers feelings, attitudes, and co-worker relationship should be important to managers
recognition of the importance of work groups
workers create a culture
workers develop own norms and standards
Human Resources Perspective:
Douglas McGregor - The Human Side of Enterprise
- Theory X - employees dislike work and job responsibilities and will avoid work if possible
- Theory Y - employees are willing to work and prefer more responsibility
added in the 1980’s
- Theory Z - participative management, empowerment
Douglas McGregor’s
Theory X
Dislike work and will avoid it if possible
Must be coerced, controlled, threatened with punishment to get them to work
prefers to be directed
Want to avoid responsibility and have little ambition
Want security above everything
Douglas McGregor’s
Theory Y
work is as natural as play
if committed to a job will be self-directed (i.e. does not need external control)
seeks responsibility
will exercise creativity, imagination to solve problems
intellectual capabilities are not fully utilized; we do not allow employees to develop their fullest potential
Contributions of Humanistic
forced managers to change how they felt about employees
people are key to productivity
no longer think of employees as machines to be used in the production process
managers had to reassess the human factor and work environment
concern with motivation, sensitivity to individual concerns
Goal Approach
Manage by setting goals and striving to accomplish the set goals. The basis for Management by Objectives (MBO).
Effective Goals
Specific
measurable
time specific
achievable but challenging
Decision Theory - Simon, March
Decision process
Limited rationality
Satisfice - "good enough" when making a decision
Quantitative Management / Management Science - Deming, Gordon, Howe, McNamara
- Scientific approach using mathematical techniques to analyze and solve problems
- problem is encountered
- it is systematically analyzed
- appropriate models and computations are applied
- optimum solutions identified
Quality
Processes should be one of "Close to perfection"
quality at each step is based on perception of customer.
Deming (1951) - Statistical quality Control
Demings 14 points
Juran - Total quality control
Deming’s 14 points
1. Create constancy of purpose toward improvement of product and service with the aim of becoming competitive to stay in business and to provide jobs.
2. Adopt the new philosophy: we are in a new economic age, created by Japan; transformation of western style of management is necessary to halt the continued decline of industry.
3. Cease dependence on mass inspection to achieve quality; eliminate the need for inspection on a mass basis by building quality into the product in the first place.
4. End the practice of warding business on the basis of price tag. Purchasing must be combined with design of product, manufacturing with sales, to work with the chosen supplier. The aim is to minimize total cost, not merely initial cost.
5. Improve constantly and forever every activity in the company, to improve quality and productivity and thus constantly decrease costs.
6. Institute training and education on the job, including management.
7. Institute supervision the aim of supervision should be to help people and machines and gadgets do a better job.
8. Drive out fear, so that everyone may work effectively for the company.
9. Break down barriers between departments people in research, design, sales and production must work as a team to foresee problems of production and in use that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, since the bulk of the causes of low productivity lie beyond the power of the work force.
11. Eliminate work standard that prescribe numerical quotas for the day, substitute aids and helpful supervision.
12-A. Remove the barriers that rob the hourly worker of his pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
12-B. Remove the barriers that rob people in management and in engineering of their right to pride of workmanship. This means abolishment of the annual or merit rating and of management by objective.
13. Institute a vigorous program of education and retraining. New skills are required for changes in techniques, materials and services.
14. Put everybody in the company to work in teams to accomplish the transformation.
TQM - Significant elements:
1. Employee involvement
2. Focus on customer
3. Benchmarking
4. Continuous improvement
General Systems Theory
Ludwig von Bertalanffy
"In order to understand an organized whole we must know the parts and the relations between them".
System’s Approach
Systems:
A collection of interrelated parts that function together to achieve a common purpose.
Management is seen as a problem of relationships; structure and interdependencies; synthesis
Systems View
Characteristics of a System
Open Systems - interact and respond with their external environment (depends on its surrounding environment for survival)
Closed Systems - is neither influenced by nor interacts with it’s environment. (self-sufficient entity)
Sub-system: The interrelated parts of the system
Synergy: Whole is greater than the sum of its parts
Entropy - All systems tend to run down and die.
Contributions of System Theory
1. Job of management is to coordinate, they must ensure that all the parts of the organization are coordinated so that the organizational goals can be achieved.
2. That managers be concerned with the total I/P/O coordination
3. Survival depends on adapting to demands of the environment
4. Suggest that the organization must be a Learning organization. A living, thinking open system (learning , adapting and changing)
Recent Trends
Chaos Theory - find order among the seemingly random behavior patterns; "within chaos lies order"
Theory Z
Ouchi & Jaeger (Acad. Of Mgmt Review ‘78)
Summary of Management Approaches
Classical: three goals are:
rational decision making
better job design
improved productivity
Behavior: Key concerns were:
how to better motivate
lead
communicate
achieve cooperation
raise productivity through participative management
Quantitative: the goal was:
to make decision making more logical and analytical
Systems: the major issue was:
to ensure that managerial decisions take into account the environment in terms of inputs, processes, and outputs
Quality;
continuous improvement based on customer perception of quality
Common themes in all approaches:
improving the rationality of decision making
achieving effectiveness and efficiency, especially in job design and rewards
proper use of human resources
the organization’s interaction with it’s environment
extent subordinates should participate in decision making
Management, Theory & Organizational Behavior
An Organization is a systemic collection of people working together to achieve a common purpose.
It is:
- a social entity - two or more people
- goal directed - designed to achieve a particular outcome
- deliberately structured- tasks are divided and responsibilities assigned to the organization’s members
Organizational Theory
The study of how organizations function and how they affect and are affected by the environment in which they operate.
Organizational Structure
The components of the organization and how they fit together
Organization Behavior
The actions and attitudes of people in organization.
Mary Parker Follett
Art of getting things done through people
Peter Drucker
Management - gives direction to the organization by providing leadership and deciding how to use organizational resources.
Management
Management is a process of directing an organizations resources with the aim of achieving organizational goals in an effective and efficient manner through planning, organizing, leading and controlling.
Management Definition implies:
four functions of management
attainment of organizational goals effectively and efficiently
use of three basic organizational resources
physical
informational
human capital
Peter Drucker: "enterprises can decide, act and behave only as its managers do --- by itself the enterprise has no effective existence."
Peter Drucker
Managers - purpose is to bring people each possessing different knowledge together for joint performance
- Tom Peters - Good managers are doers
- Michael Porter - managers are thinkers
- Abraham Zaleznik - managers are leaders
- Henri Fayol - managers are essentially controllers
- Peter Drucker - managers get work done through people
Managers bring to the job.
Set of values
Body of experiences
set of skills and competence's / knowledge
Managers three basic jobs:
- manage a business ( economic function)
- manage managers ( structure)
- mange workers and work
Peter Drucker believed the Goal of a manager is to:
create a whole that is larger than the sum of its parts
harmonize each decision and action to meet immediate requirements and long run objectives
Managers accomplish goals by creating a framework for doing the job, by creating
Purpose: what it is they seek to accomplish with the work unit
To accomplish purpose managers must have
- Perspective - vision
- Position - strategy the "how"
Managers manage by and through
Information
People
Action
Managers Mange through:
Information -
40% time in communication activities
controlling - use information to direct
administrative role - POSDCORB
- develop systems
- design structure
- impose direction
- People -
- concern with people - motivation
- leading - individual, team, unit levels
- networking - contacts and coalitions
- Action -
- The working leader
Managers are: Doers, leaders, controllers, and thinkers
Provide direction
encourage open communication
are coaches and supporters
Basic Functions of Management
Planning
Organizing
Directing or Leading
Controlling
Planning:
mission/ vision
SWOT
set of goals and objectives to reach mission
drawing a future plan of action
sets company direction
Business Portfolio (BCG)
Organizing:
develop structure of organization
arrange tasks into jobs, departments
allocate resources to departments
delegate authority; responsibility
recruit/select correct employee
assure coordination between activities to implement plans
Leading:
Inspiring employees
empowering employees
create commitment of workers
train
employee development
performance appraisals
Controlling:
monitor performance
measure performance against standard
take corrective action if necessary
establish measuring yardsticks
Henry Mintzberg
1971 Managerial Roles
Interpersonal roles pertain to relationships with others
- The figurehead = ceremonial activities
- The leader = motivation, communication, and influence of subordinates.
- The liaison = development of information sources both inside and outside the organization.
Informational roles = maintain & develop information network
- The monitor = seeking current information from many sources.
- The disseminator = transmits information to others both inside and outside the organization.
- The spokesperson = to provide official statements to people outside the organization about company policies, actions, or plans
Decisional roles = make choice requiring conceptual & human skills
.
The entrepreneurial = initiation of change.
The resource allocator = how to allocate resources to achieve outcomes.
The negotiator = negotiating and bargaining for unit of responsibility.
The disturbance handler = resolving conflicts between subordinates or other departments.
Management Skills (Katz)
Conceptual Skills : cognitive ability to see the organization as a whole and the relationship among its parts
Human Skills : ability to work with and through other people and to work effectively as a group member
Technical Skills : understanding of and proficiency in the performance of specific tasks.
Additional skills :
Analytical skills - logic - scientific approaches
Decision - make quality choices- select course of action
Computer skills - information key to power
communication skills - written and verbal
Organizational Performance
Categories of Effectiveness criteria
Productivity: the degree to which the organization achieves a stated goal. It is a measure of task output or goal accomplishment.
Efficiency : the degree an organization achieves it’s stated goal with a minimal use of resources necessary to produce a desired volume of output. It is a measure of resource cost to goal accomplishment, a relationship between inputs and outputs.
Key characteristics to function effectively
Adaptability - respond to consumer demands
Development: training programs
Awareness - state of the art practices
Critical thinking - problem solving
creativity - new ways to do things
Quality - Deming’s idea of quality
satisfaction - employee morale
Examples of Inefficiencies
Nynex - New York based telephone company
Buying 83 brands of personal computers
repaint newly purchased trucks a different shade of white at a cost of $500 per truck, plus labor cost
spent 4.5 million to find and bill only $900,000 in previously unbillable telephone calls
Ten Facts of Managerial Life
long hours
busy - 100’s of brief incidents
fragmented - little time to devote to any single activity, interruptions and discontinuity are the rule
variety of activities
low level managers more time w/in organization, as move up more time outside organization.
primarily verbal communication
use lots of contacts
not reflective planners
spend most of time in obtaining, interpreting and giving information
don’t know how actually spend time over estimate reading, writing, thinking and underestimate meetings and informal communication
Managers lose their right too:
lose their temper
be one of the gang
vent your frustrations
resist change
pass the buck
get even with adversaries
play favorites
ask others to do what you wouldn’t do
expect to be immediately recognized and rewarded for doing a good job
Specific Skills demonstrated by successful Managers
Leadership
Self-objectivity
Analytical Thinking
Behavioral Flexibility
Oral Communication
Organizational
Ability to delegate
Willingness to lead in a new direction
Written Communication
Personal Impact
Resistance to Stress
Tolerance for Uncertainty
Inner Work Standards
Stamina
The Changing Organization
Global Economy
increased level of competition due to reduced trade barriers
need of workers who speak several languages and understand culture of international competition
Diversity in the work place
- Shift to Capital Intensive Technologies
- pool of workers in which talents do not match job skills required
- literacy issues
- speed of change in technological advancements
- Emphasis on Managing Organizational Culture
- Increase demands of constituents (stakeholders)
- increase demand by consumers for quality product result in an emphasis on TQM (continuous improvement)
- increase emphasis on social responsibility and ethical behavior
- increase pressure to develop partnerships
- increase demand for sharing of information
- Participation; worker empowerment
- Change in structure away from hierarchy to emphasize teams and system approach; flatter organization
End of chapter 1 slides