HISTORY MODULEHISTORY MODULE

THE HISTORICAL THE HISTORICAL ROOTS OF ROOTS OF

CONTEMPORARY CONTEMPORARY MANAGEMENT MANAGEMENT

PRACTICESPRACTICES

The Purpose of This Module The Purpose of This Module

The knowledge of its history can The knowledge of its history can increase understanding of increase understanding of management theory and practice. management theory and practice.

It is an introduction to the origins of It is an introduction to the origins of many contemporary management many contemporary management concepts.concepts.

It shows the evolution of It shows the evolution of management reflects the changes management reflects the changes in organizations and society. in organizations and society.

THE PRE-MODERN ERATHE PRE-MODERN ERA The Egyptian Pyramids and the Great The Egyptian Pyramids and the Great

Wall of ChinaWall of China The PyramidsThe Pyramids Michelangelo--480 years ago, Michelangelo--480 years ago,

Michelangelo was actually running a Michelangelo was actually running a medium-sized business. medium-sized business.

Organized activities and managers have Organized activities and managers have been with us since before the been with us since before the Renaissance period. Renaissance period.

It has been only in the past several It has been only in the past several hundred years, particularly in the last hundred years, particularly in the last century, that management has century, that management has undergone systematic investigation.undergone systematic investigation.

Adam Smith's Contribution Adam Smith's Contribution to the Field of Management to the Field of Management

Adam Smith's name is typically cited for his Adam Smith's name is typically cited for his contributions to classical economic doctrine.contributions to classical economic doctrine.

He concluded that division of labor He concluded that division of labor increased productivity by increasing increased productivity by increasing workers' skill and dexterity, by saving time workers' skill and dexterity, by saving time lost in changing tasks, and by the use of lost in changing tasks, and by the use of labor-saving machinery. labor-saving machinery.

The wide popularity of job specialization is The wide popularity of job specialization is undoubtedly due to the economic undoubtedly due to the economic advantages cited over 200 years ago by advantages cited over 200 years ago by Adam Smith.Adam Smith.

Influence of Industrial Influence of Industrial Revolution in Management Revolution in Management

Practices Practices Possibly the most important pre-Possibly the most important pre-

twentieth-century influence on twentieth-century influence on management.management.

The advent of machine power, mass The advent of machine power, mass production, the reduced transportation production, the reduced transportation costs, and almost no governmental costs, and almost no governmental regulation also fostered the regulation also fostered the development of big organizations. development of big organizations.

A formal management theory, however, A formal management theory, however, didn’t arrive until the early 1900s.didn’t arrive until the early 1900s.

CLASSICAL CONTRIBUTIONSCLASSICAL CONTRIBUTIONS

Began with a group of practitioners Began with a group of practitioners and writers who sought to create and writers who sought to create rational principles that would make rational principles that would make organizations more efficient. organizations more efficient.

The classical approach breaks into The classical approach breaks into two subcategories.two subcategories. Scientific management theory--how to Scientific management theory--how to

improve the productivity of operative improve the productivity of operative personnel. personnel.

General administrative theorists—General administrative theorists—focused on the overall organization and focused on the overall organization and effectiveness.effectiveness.

Frederick Taylor’s Frederick Taylor’s ContributionContribution

1911 was the year that modem 1911 was the year that modem management theory was born, with management theory was born, with Frederick Winslow Taylor's Frederick Winslow Taylor's Principles of Principles of Scientific ManagementScientific Management..

Frederick Taylor did most of his work at the Frederick Taylor did most of his work at the Midvale and Bethlehem Steel companies in Midvale and Bethlehem Steel companies in Pennsylvania.Pennsylvania.

Taylor sought to create a mental revolution Taylor sought to create a mental revolution by defining clear guidelines for improving by defining clear guidelines for improving production efficiency. production efficiency.

He defined four principles of management He defined four principles of management that would result in the prosperity of both that would result in the prosperity of both management and workers.management and workers.

Frederick Taylor’s Frederick Taylor’s ContributionContribution

The impact of Taylor's work cannot be The impact of Taylor's work cannot be overstated.overstated.

In 1910, the Eastern Railroad requested a rate In 1910, the Eastern Railroad requested a rate increase from the Interstate Commerce increase from the Interstate Commerce Commission. Commission.

By 1914, Taylor's principles had become so By 1914, Taylor's principles had become so popular that an "efficiency exposition" held in popular that an "efficiency exposition" held in New York City, with Taylor as the keynote New York City, with Taylor as the keynote speaker, drew a crowd estimated at 69,000! speaker, drew a crowd estimated at 69,000!

His method gave U.S. companies a His method gave U.S. companies a comparative advantage over foreign firms comparative advantage over foreign firms that made U.S. manufacturing efficiency the that made U.S. manufacturing efficiency the envy of the world--at least for fifty years or so. envy of the world--at least for fifty years or so.

Major Contributors to Scientific Major Contributors to Scientific Management other than FTManagement other than FT

Taylor's most prominent disciples were Taylor's most prominent disciples were Frank and Lillian Gilbreth, and Henry Frank and Lillian Gilbreth, and Henry Gantt.Gantt.

A construction contractor, Frank Gilbreth A construction contractor, Frank Gilbreth gave up his contracting career in 1912 to gave up his contracting career in 1912 to study scientific management after hearing study scientific management after hearing Taylor speak at a professional meeting. Taylor speak at a professional meeting.

An associate of Taylor at Midvale and An associate of Taylor at Midvale and Bethlehem Steel, a young engineer, Henry Bethlehem Steel, a young engineer, Henry L. Gantt. L. Gantt.

Why Did Scientific Why Did Scientific Management Receive So Management Receive So

Much Attention?Much Attention? Many of the guidelines Taylor and others Many of the guidelines Taylor and others

devised appear to be common sense. devised appear to be common sense. To understand the importance of To understand the importance of

scientific management, you have to scientific management, you have to consider the times.consider the times.

The standard of living was low. The standard of living was low. Production was highly labor-intensive. Production was highly labor-intensive. Midvale Steel’s workers who did nothing but load pig Midvale Steel’s workers who did nothing but load pig

iron could be replaced today by one person with a iron could be replaced today by one person with a hydraulic lift truck. hydraulic lift truck.

The breakthroughs Frank Gilbreth achieved in The breakthroughs Frank Gilbreth achieved in bricklaying are meaningful only when you recognize bricklaying are meaningful only when you recognize that most quality buildings were constructed of brick that most quality buildings were constructed of brick and that the major cost of a building was the cost of and that the major cost of a building was the cost of the materials (bricks) and the labor cost to lay them.the materials (bricks) and the labor cost to lay them.

Henri Fayol and Max Webers’ Henri Fayol and Max Webers’ Contribution to Management Contribution to Management

Thought Thought He was mentioned in Chapter 1, He was mentioned in Chapter 1,

having designated a universal set of having designated a universal set of activities. activities.

Fayol wrote during the same time as Fayol wrote during the same time as Taylor. Taylor.

Fayol described management as Fayol described management as something distinct from other typical something distinct from other typical business functions. business functions.

Max Weber was a German sociologist. Max Weber was a German sociologist.

Administrative Theorists' Administrative Theorists' Contributions to Management Contributions to Management

Practice Practice A number of our current ideas and practices in A number of our current ideas and practices in

management can be directly traced to the management can be directly traced to the contributions of the general administrative contributions of the general administrative theorists. theorists. The functional view of the manager's job owes its The functional view of the manager's job owes its

origin to Henri Fayol. origin to Henri Fayol. Weber's bureaucracy was an attempt to formulate Weber's bureaucracy was an attempt to formulate

an ideal model for organizational design. an ideal model for organizational design. It was a response to the abuses that Weber saw It was a response to the abuses that Weber saw

going on within organizations. going on within organizations. Weber believed that his model could remove the Weber believed that his model could remove the

ambiguity, inefficiencies, and patronage that ambiguity, inefficiencies, and patronage that characterized most organizations at that time.characterized most organizations at that time.

HUMAN RESOURCES HUMAN RESOURCES APPROACHAPPROACH

Five individuals stand out as Five individuals stand out as early advocates of the early advocates of the human resources approach; human resources approach; Robert Owen, Hugo Robert Owen, Hugo Munsterberg, Mary Parker Munsterberg, Mary Parker Follett, Chester Barnard, and Follett, Chester Barnard, and Elton Mayo.Elton Mayo.

What Claim to Fame Does What Claim to Fame Does Robert Owen Hold ?Robert Owen Hold ?

A successful Scottish businessman who A successful Scottish businessman who bought his first factory in 1789 when he was bought his first factory in 1789 when he was just eighteen. just eighteen.

Repulsed by the harsh practices in factories Repulsed by the harsh practices in factories across Scotland, Owen became a reformer. across Scotland, Owen became a reformer.

He argued that money spent on improving He argued that money spent on improving labor was one of the best investments that labor was one of the best investments that business executives could make.business executives could make.

Owen proposed a "utopian" workplace; he is Owen proposed a "utopian" workplace; he is remembered for his courage and commitment remembered for his courage and commitment to reducing the suffering of the working class, to reducing the suffering of the working class, not his successes.not his successes.

Hugo Munsterberg Best Known Hugo Munsterberg Best Known as;as;

The creator of the field of industrial The creator of the field of industrial psychology--the scientific study of psychology--the scientific study of individuals at work to maximize individuals at work to maximize their productivity and adjustment. their productivity and adjustment.

His text, His text, Psychology and Industrial Psychology and Industrial EfficiencyEfficiency, published in 1913., published in 1913.

Mary Parker Follett’s Mary Parker Follett’s ContributionsContributions

One of the earliest writers to view One of the earliest writers to view organizations in terms of individual and organizations in terms of individual and group behavior.group behavior.

A transitionalist, Follett was a social A transitionalist, Follett was a social philosopher writing in the time of philosopher writing in the time of scientific management but more people-scientific management but more people-oriented.oriented.

Organizations should be based on a Organizations should be based on a group ethic rather than on individualism. group ethic rather than on individualism.

Individual potential remained only potential Individual potential remained only potential until released through group association.until released through group association.

Contd..Contd..

The manager's job was to harmonize The manager's job was to harmonize and coordinate group efforts. and coordinate group efforts.

Managers and workers should view Managers and workers should view themselves as partners--as part of a themselves as partners--as part of a common group. common group.

Managers should rely more on their Managers should rely more on their expertise and knowledge than on formal expertise and knowledge than on formal authority.authority.

Her humanistic ideas influenced the Her humanistic ideas influenced the way we look at motivation, leadership, way we look at motivation, leadership, power, and authority.power, and authority.

Who Was Chester Barnard? Who Was Chester Barnard?

A transitionalist like Follett.A transitionalist like Follett. Like Fayol, Barnard was a practitioner.Like Fayol, Barnard was a practitioner. He had read Weber.He had read Weber. Organizations were made up of people Organizations were made up of people

who have interacting social who have interacting social relationships. relationships.

The current interest in building The current interest in building cooperative work groups, social cooperative work groups, social responsibility, and matching responsibility, and matching organizational strategies to organizational strategies to opportunities can be traced to Barnard.opportunities can be traced to Barnard.

Hawthorne Studies Hawthorne Studies

The most important contribution to the The most important contribution to the human resources approach.human resources approach.

Originally begun in 1924 but eventually Originally begun in 1924 but eventually expanded and carried through the early expanded and carried through the early 1930s.1930s.

Devised by Western Electric industrial Devised by Western Electric industrial engineers to examine the effect of engineers to examine the effect of various illumination levels on worker various illumination levels on worker productivity. productivity.

Contd..Contd.. In 1927, the Western Electric In 1927, the Western Electric

engineers asked Harvard professor engineers asked Harvard professor Elton Mayo and his associates to Elton Mayo and his associates to join the study as consultants. join the study as consultants.

The Hawthorne studies, under the The Hawthorne studies, under the leadership of Elton Mayo, had a leadership of Elton Mayo, had a dramatic impact on management dramatic impact on management thought. thought.

The Hawthorne studies have been The Hawthorne studies have been criticized. criticized.

Importance of Human Importance of Human Relations Movement to Relations Movement to Management History Management History

Members of this movement uniformly Members of this movement uniformly believed a satisfied worker was believed believed a satisfied worker was believed to be a productive worker. to be a productive worker.

Dale Carnegie is often overlooked, but Dale Carnegie is often overlooked, but his ideas and teachings had an enormous his ideas and teachings had an enormous effect on management practice. effect on management practice.

Abraham Maslow, a humanistic Abraham Maslow, a humanistic psychologist, proposed a theoretical psychologist, proposed a theoretical hierarchy of five needs.hierarchy of five needs.

Douglas McGregor, two sets of Douglas McGregor, two sets of assumptions--Theory X and Theory Y.assumptions--Theory X and Theory Y.

Common Thread That Common Thread That Linked Advocates of the Linked Advocates of the

Human Relations Human Relations MovementMovement

An unshakable optimism about An unshakable optimism about people's capabilities. people's capabilities.

They believed strongly in their They believed strongly in their cause and were inflexible in their cause and were inflexible in their beliefs, even when faced with beliefs, even when faced with contradictory evidence. contradictory evidence.

Behavioral Science Behavioral Science TheoristsTheorists

A group of psychologists and A group of psychologists and sociologists who relied on the sociologists who relied on the scientific method for the study of scientific method for the study of organizational behavior. organizational behavior.

A list of important behavioral A list of important behavioral science theorists would number into science theorists would number into the hundreds. the hundreds.

THE QUANTITATIVE THE QUANTITATIVE APPROACHAPPROACH

This approach to management (operations This approach to management (operations research or management science) evolved research or management science) evolved out of the mathematical and statistical out of the mathematical and statistical solutions to military problems during World solutions to military problems during World War II. War II.

After the war, many of the quantitative After the war, many of the quantitative techniques were moved into the business techniques were moved into the business sector. sector.

One group of military officers, labeled the One group of military officers, labeled the "Whiz Kids," joined Ford Motor Company in "Whiz Kids," joined Ford Motor Company in the mid-1940s and immediately began using the mid-1940s and immediately began using statistical devices to improve decision statistical devices to improve decision making.making.

Quantitative Techniques, and Quantitative Techniques, and Their Contribution to Their Contribution to Current Management Current Management

Practice?Practice? This approach includes applications of This approach includes applications of statistics, optimization models, information statistics, optimization models, information models, and computer simulations. models, and computer simulations.

Linear programming—a technique used to Linear programming—a technique used to improve resource allocation choices. improve resource allocation choices.

Work scheduling can be made more efficient as Work scheduling can be made more efficient as a result of critical-path scheduling analysis.a result of critical-path scheduling analysis.

In general, the quantitative approaches In general, the quantitative approaches have contributed most directly to have contributed most directly to management decision making, particularly management decision making, particularly to planning and control decisions.to planning and control decisions.

ANALYSIS: ANALYSIS: HOW TIMES SHAPE HOW TIMES SHAPE

MANAGEMENT MANAGEMENT APPROACHESAPPROACHES

What Stimulated the What Stimulated the Classical Approach?Classical Approach?

The common thread was increased efficiency The common thread was increased efficiency The world of the late nineteenth and early The world of the late nineteenth and early

twentieth century was one of high twentieth century was one of high inefficiency. inefficiency.

The standardized practices offered by the The standardized practices offered by the classicists lead to increased productivity. classicists lead to increased productivity.

Production was highly labor-intensive. Production was highly labor-intensive. The application of scientific management The application of scientific management

principles contributed to raising the standard principles contributed to raising the standard of living of entire countries.of living of entire countries.

What Stimulated the What Stimulated the Human Resources Human Resources

Approach?Approach? The human resources approach really The human resources approach really

began to roll in the 1930s began to roll in the 1930s Two related forces.Two related forces.

First was a backlash to the overly mechanistic First was a backlash to the overly mechanistic view of employees held by the classicists. view of employees held by the classicists.

Second was the emergence of the Great Second was the emergence of the Great Depression.Depression.

The classical view--organizations and The classical view--organizations and people as machines, managers were the people as machines, managers were the engineers. engineers.

Unfortunately, this kind of thinking created Unfortunately, this kind of thinking created an alienated workforce. an alienated workforce.

Contd..Contd..

The human resources approach offered The human resources approach offered managers solutions for lessening this alienation managers solutions for lessening this alienation and for improving worker productivity.and for improving worker productivity.

The Great Depression swept the globe in the The Great Depression swept the globe in the 1930s and brought forth a dramatic increase in 1930s and brought forth a dramatic increase in the role of government in individual and the role of government in individual and business affairs. business affairs.

Humanizing the workplace had become Humanizing the workplace had become congruent with society's concerns at the time.congruent with society's concerns at the time.

What Stimulated the What Stimulated the Quantitative Quantitative Approaches?Approaches?

major impetus to the quantitative approaches major impetus to the quantitative approaches was World War II. was World War II.

After the war, business executives became After the war, business executives became more open to applying these techniques.more open to applying these techniques.

As these techniques worked in those firms that As these techniques worked in those firms that used them, competitors were forced to adopt them.used them, competitors were forced to adopt them.

New organizations were created to New organizations were created to disseminate information on these quantitative disseminate information on these quantitative techniques techniques

By the late-1960s, course work in By the late-1960s, course work in mathematics, statistics, and operations mathematics, statistics, and operations management had become required management had become required components of most business school curricula. components of most business school curricula.

BUILDING ON HISTORY: BUILDING ON HISTORY: STUDYING STUDYING

MANAGEMENT TODAYMANAGEMENT TODAY

What Is the Process What Is the Process Approach?Approach?

In December 1961, Professor Harold In December 1961, Professor Harold Koontz published an article in which he Koontz published an article in which he concluded that there existed a concluded that there existed a management theory jungle.management theory jungle.

While each of the diverse approaches had While each of the diverse approaches had something to offer management theory, many something to offer management theory, many were only tools to be used by managers. were only tools to be used by managers.

He felt that a process approach could He felt that a process approach could encompass and synthesize the diversity encompass and synthesize the diversity of the day.of the day.

Contd ..Contd .. The process approach, originally The process approach, originally

introduced by Henri Fayol, is based introduced by Henri Fayol, is based on the management activities we on the management activities we discussed in Chapter 1. discussed in Chapter 1.

Refer back to Exhibit 1-4.Refer back to Exhibit 1-4. Although Koontz's article stimulated Although Koontz's article stimulated

considerable debate, most considerable debate, most management teachers and management teachers and practitioners held fast to their own practitioners held fast to their own individual perspectives.individual perspectives.

How Can a Systems Approach How Can a Systems Approach Integrate Management Integrate Management

Concepts?Concepts? The systems approach defines a The systems approach defines a

system as a set of interrelated and system as a set of interrelated and interdependent parts arranged in a interdependent parts arranged in a manner that produces a unified manner that produces a unified whole. whole.

Societies are systems, and so too are Societies are systems, and so too are computers, automobiles, organizations, computers, automobiles, organizations, and animal and human bodies.and animal and human bodies.

Contd ..Contd ..

There are two basic types of systems: There are two basic types of systems: closed systems and open systems. closed systems and open systems.

Closed systems are not influenced by and Closed systems are not influenced by and do not interact with their environment. do not interact with their environment.

An open systems approach recognizes the An open systems approach recognizes the dynamic interaction of the system with its dynamic interaction of the system with its environment.environment.

See Exhibit HM-4.See Exhibit HM-4.

Contd ..Contd ..

An organization (and its management) is a An organization (and its management) is a system that interacts with and depends system that interacts with and depends upon its environment. upon its environment.

We call this relationship dealing with the We call this relationship dealing with the organization's stakeholders. organization's stakeholders.

Stakeholders represent any group that is Stakeholders represent any group that is affected by organizational decisions and affected by organizational decisions and policies. policies.

These can include government agencies, labor These can include government agencies, labor unions, competing organizations, employees, unions, competing organizations, employees, suppliers, customers and clients, public interest suppliers, customers and clients, public interest groups, etc. groups, etc.

The manager's job is to coordinate all these The manager's job is to coordinate all these parts to achieve the organization's goalsparts to achieve the organization's goals

Contd ..Contd ..

The systems approach recognizes that The systems approach recognizes that such relationships exist and that such relationships exist and that management must understand them and management must understand them and the potential constraints that they may the potential constraints that they may impose.impose.

Organizational survival often depends on Organizational survival often depends on successful interactions with the external successful interactions with the external environment.environment.

These include economic conditions, the global These include economic conditions, the global marketplace, political activities, technological marketplace, political activities, technological advancements, and social customs.advancements, and social customs.

Contd ..Contd ..

The systems approach appears to be The systems approach appears to be relevant to the coordinating and relevant to the coordinating and integrating various work activities so that integrating various work activities so that the system of interrelated and the system of interrelated and interdependent parts meets its goals. interdependent parts meets its goals.

Although the systems perspective does Although the systems perspective does not provide specific descriptions of what not provide specific descriptions of what managers do, it does provide a more managers do, it does provide a more general and broader picture than the general and broader picture than the process approach. process approach.

What Is a Contingency What Is a Contingency Approach to the Study of Approach to the Study of

Management?Management? The contingency approach (sometimes called the The contingency approach (sometimes called the

situational approach) has been used in recent situational approach) has been used in recent years to integrate much of management theory.years to integrate much of management theory.

A contingency approach to the study of A contingency approach to the study of management is intuitively logical. management is intuitively logical.

Advocates of the contingency approach--a group Advocates of the contingency approach--a group that includes most management researchers and that includes most management researchers and practitioners--have been trying to identify the practitioners--have been trying to identify the "what" variables. "what" variables.

Exhibit HM-5 describes four popular contingency Exhibit HM-5 describes four popular contingency variables. variables.

This list is not comprehensive--there are at least This list is not comprehensive--there are at least 100 different variables identified--but it 100 different variables identified--but it represents those most widely used.represents those most widely used.

Thank YouThank You