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Introduction to Management

Madhukar Nagare


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What Is Management?

Management

The planning, organizing, leading, and controlling ofhuman and other resources to achieve organizational goalseffectively and efficiently.

Managers The people responsible for supervising the use of an

organizations resources to meet its goals.

Resources are organizational assets

People Skills Knowledge Information

Raw materials Machinery Financial capital


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Management Defined

Management

The process of getting things done, effectively and eff iciently,

through and with other people

Efficiency-Means doing the thing right (method) manner,

requiring minimal resources ; refers to the relationship

between inputs and outputs- seeks to minimize resource costs

Effectiveness-Means doing the right things-selecting a worthyobjective; degree of goal attainment


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14

Organizational Performance

Organizational Performance

A measure of how efficiently and effectively managers are

using organizational resources to satisfy customers and

achieve goals.

Efficiency

A measure of how well or productively resources are used

to achieve a goal.

Effectiveness A measure of the appropriateness of the goals an

organization is pursuing and the degree to which they are

achieved.

To get the rightthings done!

To do the things rightway!


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Efficiency, Effectiveness, and Performance in an Organization

Figure 1.1


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6

EFFECTIVENESS

Definitions

GOAL ( strategic and operative)

EFFECTIVENESS

EFFICIENCY

Ex. Volumen of output, profit, costumer satisfaction, dividends...

The degree to which an organization realises itsgoals.

Meeting outputs schedules.

The capacity to adapt to changing environments.

Quantitative dimension

The ratio of inputs to outputs in a process ororganisation.


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Effectiveness and Efficiency in Management


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Efficiency and Effectiveness


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19

Organizations Manager

Someone who coordinates and oversees the work of other people so thatorganizational goals can be accomplished.

Organization

A deliberate arrangement of people to accomplish some specific purpose(that individuals independently could not accomplish alone).

A systematic arrangement of people brought together to accomplish somespecific purpose; applies to all organizationsfor-profit as well as not-for-profit organizations.

Where managers work (manage)

Common characteristicsof organization Have distinct purpose or goals

Structure

People


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Common Characteristics of Organizations


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People Differences

Operatives

People who work directly on a job or task and have no

responsibility for overseeing the work of others

ManagersIndividuals in an organization who direct the activities of

others and get work done from others.


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Managerial functions

Henri Fayol

First outlined the four managerial functions in his book

General Industrial Management.

Managers at all levels in all organizations perform each ofthe functions of planning, organizing, leading, and

controlling.


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What managers do?Functional Approach

PlanningDefining goals, establishing strategies to achieve goals, developing

plans to integrate and coordinate activities.

Organizing

Arranging and structuring work to accomplish organizational goals.

Leading-Working with and through people to accomplish goals.

Controlling-Monitoring, comparing, and correcting work.


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Four Functions of Management

Figure 1.2


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Management Process

Planning

Includes defining goals, establishing strategy, and developing plans to coordinate

activities

Identifying and selecting appropriate goalsand courses of action for an

organization.

The planning function determines how effective and efficient the organization

is and determines the strategyof the organization. Three Steps in the Planning Process:

Deciding which goals to pursue.

Deciding what courses of action to adopt.

Deciding how to allocate resources.


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Organizing

Structuring working relationshipsin a way that allows organizationalmembers to work together to achieve organizational goals. Includesdetermining what tasks to be done, who is to do them, how the tasks are to

be grouped, who reports to whom, and where decisions are to be made.

Organizational Structure A formalsystem of task and reporting relationships that coordinates

and motivates organizational members.

Creating organizational structure:

Grouping employees into departmentsaccording to the tasks

performed.Laying out lines of authorityand responsibilityfor organizational

members.


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Leading

Leading

Articulating a clear visionto follow, and energizingand enablingorganizational members so they understand the part they playin attaining organizational goals.

Leadership involves using power, influence, vision,persuasion, and communication skills.

The outcome of leadership is highly motivated andcommitted organizational members.

Includes motivating employees, directing the activities ofothers, selecting the most effective communication channel,and resolving conflicts


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Management Process-Controlling

Evaluating how well an organization is achieving its goals andtaking action to maintain or improve performance.

Monitoringindividuals, departments, and the organizationto determine if desired performance standards have been

reached. Taking action to increase performance as required.

The outcome of control is the ability to measureperformance accurately and to regulate the organization forefficiency and effectiveness.

The process of monitoring performance, comparing it withgoals, and correcting any significant deviations


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Management Process Activitiescircular and not linear


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Managers types

First-line managers

Supervisors responsible for directing the day-to-day activities

of operative employees

Middle managersIndividuals at levels of management between the first-line

manager and top management

Top managers

Individuals who are responsible for making decisions aboutthe direction of the organization and establishing policies

that affect all organizational members


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Organizational Levels


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Copyright 2004 McGraw-Hill.All rights reserved .

122

Relative Amount of Time That Managers

Spend on the Four Managerial Functions

Figure 1.4


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Distribution of Time per Activity by Organizational

Level


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Importance of Management

The Value of Studying Management

The universalityof management

Good management is needed in all organizations.

The realityof work

Employees either manage or are managed.

Rewards and challenges of being a manager

Management offers challenging, exciting and creative

opportunities for meaningful and fulfilling work.

Successful managers receive significant monetary rewards for

their efforts.


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Rewards and Challenges of Being A Manager


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The Changing Organization


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27

Why We Need Managers Today

Work in families

Skilled laborers

Small, self-organized

groups

Unique, small batches

of production

Then

Work in factories

Specialized,

unskilled laborers

Large factories

Large standardized

mass production

Now


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What Managers Actually Do -(Mintzberg)

Interaction

with others

with the organization

with the external context of the

organization

Reflection

thoughtful thinking

Action practical doing


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Interpersonal

Informational

Decisional

1. Figurehead2. Leader3. Liaison

4. Monitor5. Disseminator6. Spokesperson

7. Entrepreneur8. Disturbance-handler9. Resource-allocator10.Negotiator

MintzbergsManagerial Roles


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Requisite Skills for a manager

Technical skills

Knowledge and proficiency in a specific field

Human skills

The ability to work well with other peopleConceptual skills

The ability to think and conceptualize about abstract and

complex situations concerning the organization


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Copyright 2004 McGraw-Hill.All rights reserved .

131

Skill Types Needed by Managerial Level


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Skills Needed at Different

Management Levels


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Conceptual Skills

Using information to solve business problems

Identifying of opportunities for innovation

Recognizing problem areas and implementing solutions

Selecting critical information from masses of dataUnderstanding of business uses of technology

Understanding of organizations business model


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Communication Skills

Ability to transform ideas into words and actions

Credibility among colleagues, peers, and subordinates

Listening and asking questions

Presentation skills; spoken format

Presentation skills; written and/or graphic formats

Ability to transform ideas into words and actions

Credibility among colleagues, peers, and subordinates

Listening and asking questionsPresentation skills; spoken format

Presentation skills; written and/or graphic formats


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Interpersonal Skills (contd)

Coaching and mentoring skills

Diversity skills: working with diverse people

and culturesNetworking within the organization

Networking outside the organization

Working in teams; cooperation and

commitment


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Specific Skills for Managers

Behaviors related to a managers effectiveness:

Controlling the organizations environment and its

resources.

Organizing and coordinating.

Handling information.

Providing for growth and development.

Motivating employees and handling conflicts.

Strategic problem solving.


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Effectiveness Skills

Contributing to corporate mission/departmental objectives

Customer focus

Multitasking: working at multiple tasks in parallel

Negotiating skills

Project management Reviewing operations and implementing improvements

Setting and maintaining performance standards internallyand externally

Setting priorities for attention and activity Time management


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Changing Job of a Manager

The Increasing Importance of Customers

Customers (the reason that organizations exist )

Managing customer relationships is the responsibility ofall managers and employees.

Consistent high quality customer service is essential forsurvival.

Innovation

Doing things differently, exploring new territory, and

taking risks Managers should encourage employees to be aware of

and act on opportunities for innovation.


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Changes Impacting the Managers Job


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40

Interpersonal

Informational

Decisional

1. Figurehead2. Leader3. Liaison

4. Monitor5. Disseminator6. Spokesperson

7. Entrepreneur8. Disturbance-handler9. Resource-allocator10.Negotiator

Leadership Managerial Roles


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Represent the organization or department in legal, social,

ceremonial, or symbolic activities

Generally considered a top management function

However, leaders throughout the organization can perform

this role

Includes:

Signing official documents

Entertaining clients and official visitors Speaking engagements (formal and informal)

Presiding at meetings and ceremonies

Interpersonal: Figurehead Role


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42

Pervades all managerial behavior

Influences how leaders perform other roles

Includes:

Hiring and training Giving instructions and coaching

Evaluating performance

Interpersonal: Leader Role


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Interacting with people outside the organizational unit Includes:

Networking

Developing relationships

Gaining information and favors

Serving on committees

Attending professional meetings

Keeping in touch with other people and organizations

Interpersonal: Liaison Role


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Gathers information

Analyzes the information to discover problems and

opportunities

Includes:

Reading memos, reports, and publications

Talking to others

Attending meetings

Observing competitors

Informational: Monitor Role


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Sends information to others

Information passed via:

Oral means

Telephone or voice mail One-on-one discussions

Meetings

Written media

E-mail

Printed documents

Handwritten notes

Informational: Disseminator Role


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Provides information to people outside the organizational unit

Examples:

Meeting with the boss to discuss performance

Meeting with the budget officer to discuss the unit budget Answering letters

Reporting information to the government

Informational: Spokesperson Role


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Innovative

Initiation of improvements

Examples:

Developing new or improved products and services Developing new ways to process products and services

Purchasing new equipment

Decisional: Entrepreneur Role


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Takes corrective action during crisis or conflict situations

Involves reactions to unexpected events

Leaders typically give this role priority

Examples: A union strike

Equipment breakdown

Needed material not arriving on time

Tight schedules

Decisional: Disturbance-Handler Role


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Involves scheduling, requesting authorization, and

performing budgeting activities

Examples:

Deciding what is done now, later, or not at all

Setting priorities and time management

Allocating raises, overtime, and bonuses

Scheduling employee, equipment, and material use

Decisional: Resource-Allocator Role


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Represents their organizational unit in transactions without

set boundaries

Examples:

Setting pay and benefits for a new professional employee

or manager

Reaching agreement on a labor union contract

Contracting with customers or suppliers

Decisional: Negotiator Role


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Importance of Managerial Roles in Small and

Large Businesses


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Copyright 2004 PrenticeHall, Inc. All rights reserved. 152

Management Charter Initiative Competencies for

Middle Managers

1. Initiate and implement change and

improvement in services, products,

and systems

2. Monitor maintain, and improve

service and product delivery

3. Monitor and control the use of

resources

4. Secure effective resource allocation

for activities and projects

5. Recruit and select personnel

6. Develop teams, individuals, and

self to enhance performance

7. Plan, allocate, and evaluate work

carried out by teams, individuals

and self

8. Create, maintain, and enhance

effective working relationships

9. Seek, evaluate, and organize

information for action

10. Exchange information to solveproblems and make decisions

EXHIBIT 1.8


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Is The Managers Job Universal?

Level in the organization

Do managers manage differently based on where they are in the

organization?

Profit versus not-for-profit

Is managing in a commercial enterprise different than managing in anon-commercial organization?

Size of organization

Does the size of an organization affect how managers function in the

organization?

Management concepts and national borders

Is management the same in all economic, cultural, social and political

systems?


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Universal Need for Management


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Why Study Management?

We all have a vested interest in improving the

way organizations are managed. Betterorganizations are, in part, the result of good management.

You will eventually either manage or be managed Gaining an understanding of the management process

provides the foundation for developing management skills

and insight into the behavior of individuals and the

organizations.


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How Does Management Relate To

Other Disciplines?

Anthropology

Economics Philosophy

Political Science Psychology

Sociology

Management

Ch ll f M


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Challenges for Management

in a Global Environment

Increasing Number of Global Organizations.

Building a Competitive Advantage.

Maintaining EthicalStandards. Managing a DiverseWorkforce.

Utilizing ITand E-commerce.


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Building a Competitive Advantage

Increasing Efficiency Reducing the quantity of resources used to produce

goods and services.

Increasing Quality

Introducing Total Quality Management (TQM) toimprove quality.

Increasing Speed, Flexibility, and Innovation

Adapting to bring new products to market faster.

Increasing Responsivenessto Customers

Empowering employees to deal with customers.


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Building Blocks of Competitive Advantage

Figure 1.5


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Maintaining Ethical Standards Factors Influencing Behaviors:

External pressures from stockholders/stakeholders for

increased organizational financial performance.

Internal pressures from top management to lower-level

managers to increase the organizations competitive

performance and profitability.

Societal, cultural, and environment demands on the

organization.

Hurt somebody unintendedly vs. illegally


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Managing a Diverse Workforce

The Increasing Diversity of the Workforce

Non-Discriminatory Employment Practices

Performance-Enhancing Benefits of a Diverse

Workforce

Theopportunitiesforspecialization

Utili i I f ti T h l (IT)


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Copyright 2004 McGraw-Hill.

All rights reserved . 163

Utilizing Information Technology (IT)

and E-commerce

Benefits of IT and E-commerce

Makes more and better information about the

organization available to outsiders

Empowersemployees at all organizational levels Helps managers carry out their roles more

effectively and efficiently

Increases awarenessof competitive opportunities

Makes the organization more responsiveto its

customers


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165

The Pre-modern Era

Ancient massive construction projects

Egyptian pyramids

Great Wall of China

Taj Mahal

Michelangelo the manager


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Adam Smiths Contribution

Adam Smith, 18th century economist, found firms manufactured pins intwo ways:

Craft-- each worker did all steps.

Factory-- each worker specialized in one step.

Smith found that the factory method had much higher productivity.

Each worker became very skilled at one, specific task. Breaking down the total job allowed for the division of labor.

Wrote the Wealth of Nations(1776)

Advocated the economic advantages that organizations and society

would reap from the division of labor:

Increased productivity by increasing each workers skill and

dexterity.

Time saved that is commonly lost in changing tasks.

The creation of labor-saving inventions and machinery.

E l ti Of M t Th ht


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Evolution Of Management Thought

1890 1900 1910 1920 1930 1940 1950 1960 1970 19

Systematic

management

Administrative

management

Quantitative

management

Systems

theory

Current and

future revolutions

Scientific

management

Human

relations

Organizational

behavior

Bureaucracy

Classical Approaches Contemporary Approaches

Contingency

theory


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BnR-Peng.Manajemen-Chap-05 68

The Evolution of Management Theory

Figure 2.1


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Theory

An explanation for how or why something occurs. . .

Question: What is the most efficient and effective means of running an

organization?

Functions of Theory

Describe

Explain

Predict

Control

Classical approaches to organizational management and early organizationaltheories were designed to predict and control behavior in organizations.


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Classical Theories of Organizations

Emerged in early part of the twentieth century. Models were military and the Catholic Church.

Features

Strict CONTROL of workers

Absolute CHAINS of COMMAND

PREDICTABILITY of behavior

UNIDIRECTIONAL downward influence

Relevancy and metaphor

How and Why does studying classical theory help us to understand howmodern organizations function and particularly the role that

communication plays in effective organizing?

What is the metaphor which characterizes the classical approach toorganizations?


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The Metaphor of the Machine

Organizations are viewed as if they are machines.

Managerial principles

Modes of operation

Treatment of workers

Communication in the organization

Properties of Machines

Very predictable

Rarely deviates from the norm

Replace defective parts with other standard parts Specific rules exist regarding repair and specific roles

Organizational Application

Workers behave predictably-management knows what to expect

Workers operating outside expectations are replaced


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Minimizing Misunderstandings

Simple: Promote principles of SPECIALIZATION,STANDARDIZATION, and PREDICTABILITY

STRICT RULES & REGULATIONS regarding . . . how work is accomplished,

who could speak to whom and when, and

managing through fear.

PROBLEMS Creativity and intelligence are underutilized

Increased dissatisfaction

Decreased motivation and commitment to task and organization

Decreased communication effectiveness and satisfaction


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Goals:

Efficiency

Consistency

Administrative

Management

Bureaucratic

Management

ScientificManagement


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The Industrial Revolutions Influence On

Management Practices

Industrial revolution

Machine power began to substitute for human power

Lead to mass production of economical goods

Improved and less costly transportation systems becameavailable

Created larger markets for goods.

Larger organizations developed to serve larger marketsCreated the need for formalized management practices.

Modern management began in the late 19th century. Organizations were seeking ways to better satisfy customer needs.

Machinery was changing the way goods were produced.

Managers had to increase the efficiency of the worker-task mix.

Job speciliztaion


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Classical Contributions

Classical approach

The term used to describe the hypotheses/guidelines offered by scientific

management theorists and general administrative theorists.

Scientific management theorists (micro approach)

Fredrick W. Taylor, Frank and Lillian Gilbreth, and Henry Gantt

General administrative theorists (Macro Approach)

Henri Fayol and Max Weber

The History ofS i tifi M t


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Scientific Management

Scientific Management

Studies and tests methods to identify

the best, most efficient ways

Seat-of-the Pants Management

No standardization of procedures

No follow-up on improvements

i ifi


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Frederick Winslow Taylor

(18561915)

Efficiency Expert

Scientific Management1885- 1920
http://en.wikipedia.org/wiki/File:Frederick_Winslow_Taylor_crop.jpg


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Believed increased productivity depended on finding ways tomake workers more efficient

Used time-and-motion studies to analyze work flows,

supervisory techniques, and worker fatigue

Used functional foremanship, a division of labor that assigned

eight foremen to each work area

Assumed workers motivated by money $$

T l W k


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He was interested in machines --

apprenticeship in industry: Midvale Steel

Shocked by how inefficient his fellow

workers were timed workers with stopwatches

break down job into parts, make parts

efficient

figure out how to hire the right worker forthe job

give the worker appropriate training

Taylors Work

T l W k


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introduced incentive pay plans

(workers were assumed to be motivated

only by money).

Believed would lead to cooperation--management and worker

Studied design of shovelsand introduced

a better design at Bethlehem Steel Works,reducing the number of people shoveling

from 500 to 140

Taylors Work


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Scientific Management Frederick W. TaylorFather of Scientific Management

The systematic study of the relationships betweenpeople and tasks to redesignthe work for higher efficiency. Taylor sought to reduce the time a worker

spent on each task by optimizing the way the task was done.

The Principlesof Scientific Management (1911)

Advocated the use of the scientific method to define the one best wayfor a job to be done

Believed that increased efficiency could be achieved by selecting the

right people for the job and trainingthem to do it precisely in the one

best way.

To motivate workers, he favored monetary incentive wage plans.

Separationof managerial work from operative work.


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Taylors Four Principles of Management

Develop a science for each element of an individuals work, which

replaces the old rule-of-thumb method.

Scientifically select and then train, teach, and develop the worker.

(Previously, workers chose their own work and trained themselves

as best they could.)

Heartily cooperate with the workers so as to ensure that all work is

done in accordance with the principles of the science that has been

developed.

Divide work and responsibility almost equally between managementand workers. Management takes over all work for which it is better

fitted than the workers. (Previously, almost all the work and the

greater part of the responsibility were thrown upon the workers).


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Frank and Lillian Gilbreth

1868 - 1924 1878 - 1972

Motion Studies:

F k & Lilli Gilb h


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84

Frank & Lillian Gilbreth

Time Study

Timing how long it takes good workers

to complete each part of their jobs.

Motion Study

Breaking each task into its separatemotions and then eliminating those that are

unnecessary or repetitive.


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The Gilbreths/Gantt

Frank and Lillian Gilbreth refined Taylors methods. Made many improvements to time and motion studies.Motion study-Analyzing an activity into its smallest possible elements, and

from the results synthesizing a method of performing the activity thatshall be more efficient.

Time and motion studies:

1. Break down each actioninto components. 2. F ind better waysto perform it.

3. Reorganize each actionto be more efficient.

Gilbreths also studied fatigue problems, lighting, heating and otherworker issues.

Henry Gantt

Incentive compensation systems

Gantt chart for scheduling work operations

Charts: Henry Gantt


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Charts: Henry Gantt


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Insights from Scientific Management

Many companies have used scientific management

principles to improve efficiency, employee selection

and training

Scientific management failed to recognize the

social needs of workers and the importance of

working conditions and job satisfaction


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Problems of Scientific Management

Managers often implemented only the increased output side ofTaylorsplan.

They did not allow workers to share benefits of increasedoutput.

Specialized jobs became very boring, dull.

Workers ended up distrusting Scientific Management.

Workers could purposely under-perform

Management responded with increased use of machines.

Ad i i t ti M t


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Administrative Management

General administrative theorists

Writers who developed general theories of what managers do andwhat constitutes good management practice. Provided guidelinesto create an organization that leads to both efficiency andeffectiveness.

Henri Fayol(France)

Fourteen Principles of Management: Fundamental or universalprinciples of management practice

Max Weber (Germany)

A formal system of organization and administration to ensure

effectiveness and efficiency.Bureaucracy: Ideal type of organization characterized by division of

labor, a clearly defined hierarchy, detailed rules and regulations,and impersonal relationships

Administrative Management Theory


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Henry Fayol1841 - 1925

Administrative Management Theory1920 -1950

F l F t P i i l f M t


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FayolsFourteen Principles of Management

Division of work

Authority

Discipline

Unity of command

Unity of direction

Subordination of the

individual

Remuneration

Centralization

Scalar chain

Order

Equity

Stability of tenure of

personnel

Initiative

Esprit de corps


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FayolsPrinciples

1. Division of Labor:allows for job specialization.

Fayol noted firms can have too much specialization leading to poorquality and worker involvement.

2. Authority and Responsibility:Fayol included both formal andinformal authority resulting from special expertise.

3. Unity of Command:Employees should have only one boss.4. Line of Authority:a clear chain from top to bottom of the firm.

5. Centralization:the degree to which authority rests at the verytop.

6.Uni ty of Di rection:One plan of action to guide the organization.

7. Equity:Treat all employees fairly in justice and respect.

F l P i i l


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FayolsPrinciples

8. Order:Each employee is put where they have the most

value.

9. Initiative:Encourage innovation.

10. Discipline:obedient, applied, respectful employees needed

11. Remuneration of Personnel:The payment systemcontributes to success.

12. Stabil i ty of Tenure:Long-term employment is important.

13. General interest over individual interest:The organization

takes precedence over the individual.14. Esprit de corps:Share enthusiasm or devotion to the

organization.

Bureaucratic Management


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Max Weber



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Use of rules, hierarchy, a clear division of labor,and detailed procedures to guide employees

behaviors

Seven characteristics

Rulesformal guidelines for the behavior of

employees on the job

Impersonalityemployees are evaluated

according to rules and objective data Division of Laborsplitting work into

specialized positions

Caliper Technologies Corporation

( d t d f Fi 2 2)


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(adapted from Figure 2.2)

CEO

Director ofQualityControl

ChiefFinancialOfficer

VP ofOperations

VP ofSales &

Marketing

VP ofResearch

VP ofProduct

Development

VP ofCorporate

Development

PlantManager

USA

Controller

PlantManagerGermany

Manager ofChemical

Engineering

Manager ofChip

Manufacturing

Manager ofEngineering& Software

Directorof

Manufacturing

Directorof

Manufacturing

Empl oyees Empl oyees


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Key points of Bureaucracy


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Key points of BureaucracyAuthorityis the powerto hold people accountable for their actions.

Positions in the firm should be held based onperformancenot socialcontacts.

Position duties are clearly identi f ied.People should know what isexpected of them.

L ines of authori tyshould be clearly identified. Workers know who

reports to who. Rulesformal written instructions that specify actions to be taken

under different circumstances

Standard Operating Procedures (SOPs)specific sets of writteninstructions about how to perform a certain aspect of a task

Normsunwritten, informal codes of conduct that prescribe howpeople should act in particular situations

Webers Ideal Bureaucracy


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Weber s Ideal Bureaucracy

Division of Labor

Authority Hierarchy

Formal Selection

Formal Rules and Regulations

Impersonality

Career Orientation

B ti P i i l


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Bureaucratic Principles

A Bureaucracy

should have

Written rules

System of task

relationships

Hierarchy of

authority

Fair evaluation

and reward

Figure 2.2


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Potential Benefits of Bureaucracy

Efficiency

Consistency

Functions best when routine tasks are performed

Performance based on objective criteria

Most effective when-

Large amounts of standard information have to be processed

The needs of the customer are known and are unlikely to change

The technology is routine and stable (e.g., mass production)

The organization has to coordinate the activities of employees in order to

deliver a standardized service/product to the customer


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Potential Costs of Bureaucracy

Rigid rules

and

red tape

Protection of authority Slow decision making

Incompatible with

changing

technology

Incompatible with

21stcentury workers

values for freedom

and participative

management

Behavioral Viewpoint: Overview


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p

Focuses on dealing effectively with thehuman aspects of organizations

Started in the 1930s

Emphasis on working conditions

Workers wanted respect

Workers formed unions to bargain

with management

Behavioral Management Theory


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106

1930 - 1950

Mary Parker Follett

(1868-1933)

Elton Mayo

(18801949)

Mary Parker Folletts Contributions


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Mary Parker Follett s Contributions

Managers need to establish

good working relationships

with employees

Goal:

Improve

Coordination

Behavioral Management


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Behavioral Management

Focuses on the way a manager should personally manage to motivateemployees.

Mary Parker Follett: an influential leader in early managerial theory.

Suggested workers help in analyzing their jobs for improvements.

The workerknows the best way to improve the job.

If workers have the knowledge of the task, then they should controlthe task.

Chester Barnard

Saw organizations as social systems that require human cooperation.

Expressed his views in his book The Functions of the Executive

(1938).

h d l


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Hawthorne Studies: Elton Mayo

Workers feelings andattitudes affected theirwork

Financial incentives

werent the mostimportant motivator forworkers

Group norms and

behavior play a criticalrole in behavior at work

Chester Barnards Contributions


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People should continuously communicate

and cooperate with one another

Acceptance theory of authorityholds that employees

have free wills and, thus, choose whether to follow

managements orders. Employees will follow orders

if they:

Understand what is required

Believe the orders are consistent with

organization goals

See positive benefits to themselves in

carrying out the orders


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Chester Irving Barnard (18861961) president of the new Jersey BellTelephone Company, help advance thinking about organizations when he

published The Functions of the Executive in 1938- an influential 20thcentury management book. His importance lies in creating a new theoryaround organizational structures, focusing on the organization ascommunication system

He looked at organizations as systems of cooperation of human activity, andwas worried about the fact that they are typically rather short-lived. This

happens because organizations do not meet the two criteria necessary forsurvival: effectiveness and efficiency.

Cooperation and Acceptance

of Authority: Chester Barnard


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BnR-Peng.Manajemen-Chap-02112

of Authority: Chester Barnard

Managers can gain cooperation by:

Securing essential services from individuals

Unifying people by clearly formulating an

organizations purpose and objectives

Providing a system of effective communication

Cooperation and Acceptanceof Authority: Chester Barnard


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y

People will be indifferent to managerialdirectives if they

are understood

are consistent with the purpose of the

organization

are compatible with the peoples personal

interests can actually be carried out by those people

Barnards key concepts:


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Importance of an Individual's behavior

Compliance/Acceptance Theory of Authority

authority flows downward but depends on acceptance by the subordinate.depends on 4 conditions:-

i. employees understand the communication.ii. employees must be able to follow any instruction given by a Manager.iii. employees must think that the directive is in keeping withorganizational objectives.iv. employees must think that the directive is not contrary to theirpersonal goals.

CommunicationFocused on importance of communication in informal organization.

The Hawthorne Studies


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The Hawthorne Studies Study of worker efficiency at the Hawthorne Works of the Western

Electric Co. during 1924-1932. Workerproductivity was measuredat various levels of light

illumination.

Researchers found that regardless of whether the light levels wereraised or lowered, productivity rose.

Actually, it appears that the workers enjoyed the attention they receivedas part of the study and were more productive.


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Lecture 2 Evolution of Management Theory 116

ABRAHAM MASLOW

1908-1970

Hierarchy of Needs 1940-50th


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117

Douglas McGregor

(1906- 1964)

Book The Human Side

of Enterprise(1960)

Theory X and Theory Y

Theory X and Y


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Theory X and Y Douglas McGregor proposed the two different

sets of worker assumptions.Theory X:Assumes the average worker is lazy,

dislikes work and will do as little as possible.

Managers must closely supervise and controlthrough reward and punishment.

Theory Y:Assumes workers are not lazy, want todo a good job and the job itself will determine ifthe worker likes the work.

Managers should allow the worker great latitude,and create an organization to stimulate the worker.

Theory X v Theory Y


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Theory X v.Theory YFigure 2.3

Theory Y

Employee is not

lazy

Must create worksetting to build

initiative

Provide authorityto workers

TheoryX

Employee is lazy

Managers mustclosely supervise

Create strict rules& defined rewards

Lessons from the Hawthrone StudiesBehavioral Viewpoint


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Employees are

motivated by social

needs and association

with others

Employees performance

is more a result of peer

pressure than

managements incentivesand rules

Managers need to

involve subordinatesin coordinating their

work to improve

efficiency

Employees want to

participate in decisionsthat affect them

Behavioral Viewpoint


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121

Evolution of Management Theory

Part 2

Contemporary Theories in Management

Operations, Information, Systems,and Contingency Management


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Information Management

Operations Management

Contingency Management

Systems Management

Quantitative Techniques


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Mathematical

models are usedto simulate

changes

Computers are

essential

Primary focus is

on decision

making

Alternatives are

based on

economic criteria

Q q


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Lead to

creation ofblogs

Enables

managers tosimulate

conditions

Emphasis on

objective criteria

for decisionmaking

Focus on

planning

Management Science School

1940


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125

1940 -

An approach to management that uses quantitative techniquesto

maximize the use of organizational resources

A rational, structured approach characterized by the use of

mathematical and computer modelsfor decision making.

Application of quantitative methods to solve managementproblems:statistics, operations research,management

information systems

Management Science


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Management Science

Uses rigorous quantitative techniques tomaximize resources.

Quantitative management:utilizes linearprogramming, modeling, simulation systems.

Operations management:techniques to analyze allaspects of the production system.

Total Quality Management (TQM):focuses onimproved quality.

Management Information Systems (MIS):providesinformation about the organization.

Operations Management Tools


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Quality control

Forecasting techniques

Capacity planning

Productivity measurement and improvement

Linear programming

Scheduling systems

Inventory systems

Work measurement techniques

Project management

Cost-benefit analysis

Basic Systems View of Organizations


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InputsHuman, physical,

financial, andinformation

resources

TransformationProcess

Outputs

Productsand

services

Feedback Loops

y g

Systems Theory

O i ti l E i t


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129

Organizational EnvironmentThe set of forces and conditions that operate beyond an

organizations boundaries but affect a managers ability toacquire and utilize resources

Organizations are open systemsthat constantly interact withthe external environment. Open System

A system that takes resources for its external environmentand converts them into goods and services that are thensent back to that environment for purchase by customers.

Closed systems often undergo entropy and lose theability to control itself, and fails.

Synergy:performance gains of the whole surpass thecomponents. Synergy is only possible in a coordinated system.

Organization-Environment Theory


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Organization Environment Theory

Considers relationships inside and outside theorganization.

The environment consists of forces, conditions,and influences outside the organization.

Systems theory considers the impact of stages:Input:acquire external resources.

Conversion:inputs are processed into goods andservices.

Output:finished goods are released into theenvironment.

The Systems Approach


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Copyright 2004 Prentice

Hall, Inc. All rights reserved.

1131

y pp

Defines a system as a set of interrelated andinterdependent parts arranged in a manner

that produces a unified whole

Closed system :a system that is not influenced byand does not interact with its environment

Open system:a system that dynamically interacts

with its environment

Stakeholders:any group that is affected by

organizational decisions and policies

The Organization and


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its Environment

Contingency Theory


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g y y

is a class of behavioral theory

claims that there is no best wayto organize an

organization

the optimal organization/ leadership/

decision-making style depends on various

internal and external constrains (factors).

Contingency Variables


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External environmentstable or

changing

Technologysimple or complex

Peopleways they are similar anddifferent from each other

Examples of the constrains (factors)


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The size of the organization How the organization adapts itself to its

environment

Differences among resources and operationsactivities

Strategies

Technologies being used

The Contingency Approach


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What managers do in practice depends on a

given set of circumstances a situation.

Contingency Viewpoint: Draws on

Other Viewpoints, As Necessary


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Behavioral Viewpoint

How managers influence others;Informal group

Cooperation among employees

Employees social needs

Systems ViewpointHow the parts fit together.

Inputs

Transformations

Outputs

Traditional Viewpoint

What managers do:

Plan

Organize

Lead

Control

Contingency Viewpoint

Managers use of other viewpointsto solve problems involving:

External environment

Technology

Individuals

Contingency Theory on the Organization


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1. There is no universal way or the best way to manage anorganization.

2. The design of an organization and its subsystems must fit

with the environment.

3. The needs of organization are better satisfied when it isproperly designed and management style is appropriate

both to the tasks and the nature of the group.

Chaos Theory


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events indeed are rarely controlled we live in an uncertain and turbulent

environmentand,

with massive amounts of availableinformation,

it has become increasingly difficult for us to

choose appropriate organizational survivalbehaviors.


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Management practices should be consistent

with the requirements of the external

environment, the technology used to make a

product or provide a service, and capabilities

of the people who work for the organization

Uses concepts of the traditional, behavioral

and system viewpoints

Contingency Theory


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g y y

Assumes there is no one best way to manage. The environment impacts the organization and

managers must be flexible to react toenvironmental changes.

The way the organization is designed, controlsystems selected, depend on the environment.

Technological environments change rapidly,

so must managers.


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Quality: how well a product or service

does what it is supposed to dohow closely

and reliably it satisfies the specifications to

which it is built or provided

Total Quality Management (TQM): a

philosophy that makes quality values the

driving force behind leadership, design,

planning, and improvement initiatives

Quality Control Process


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Inputs or raw materials

Operations

Outputs

Measuring by variable or a products characteristics

Measuring by attribute or a products acceptable/

unacceptable characteristics

Statistical process control

Quality of a process (e.g., sigma)

Learning from the Quality Viewpoint


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Lower Costs

and Higher

Market Share

Decreased

ProductLiability Quality

Positive

Company

Image

Structures


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Mechanistic:Authority is centralized at thetop. (Theory X)

Employees closely monitored and managed.

Very efficient in a stable environment.

Organic:Authority is decentralizedthroughout employees. (Theory Y)

Much looser control than mechanistic.

Managers can react quickly to changingenvironment.

Type of Structure


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BnR-Peng.Manajemen-Chap-05 146

Mechanistic StructureAuthority is centralized at the top. (Theory X)

Employees are closely monitored and

managed.

Can be very efficient in a stable environment.


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Hawthorne Studies


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Hall, Inc. All rights reserved.1148

A series of studies done during the 1920s and1930s that provided new insights into group

norms and behaviors

Hawthorne effect Social norms or standards of the group are the key

determinants of individual work behavior.

Changed the prevalent view of the time that

people were no different than machines.

Human Relations Movement


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Based on a belief in the importance ofemployee satisfactiona satisfied worker was

believed to be a productive worker.

Advocates were concerned with makingmanagement practices more humane.

Dale Carnegie

Abraham Maslow Douglas McGregor

The Quantitative Approach


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Operations research (management science) Evolved out of the development of mathematical

and statistical solutions to military problems

during World War II.

Involves the use of statistics, optimization models,

information models, and computer simulations to

improve management decision making for

planning and control.

Social Events That Shaped

M A h


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Management Approaches Classical approach

Desire for increased efficiency of labor intensiveoperations

Human resources approach The backlash to the overly mechanistic view of

employees held by the classicists.

The Great Depression.

The quantitative approaches World War II

The Process Approach


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Management theory jungle (Harold Koontz) The diversity of approaches to the study of

managementfunctions, quantitative emphasis,

human relations approacheseach offer

something to management theory, but many are

only managerial tools.

Planning, leading, and controlling activities are

circular and continuous functions ofmanagement.

The Contingency Approach


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The situational approach to management thatreplaces more simplistic systems and

integrates much of management theory

Four popular contingency variables Organization size

Routineness of task technology

Environmental uncertaintyIndividual differences

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