Principles of Management Chapter 2

Principles of Management

Dr. Karim KobeissiIslamic University of Lebanon - 2013

2Chapter

The EvolutionofManagement Theory

Learning Outcomes

• Describe how the need to increase organizational efficiency and effectiveness has guided the evolution of management theory.

• Explain the principle of job specialization and division of labor, and tell why the study of person-task relationships is central to the pursuit of increased efficiency.

Early Management in the Prehistory*

• Management has been practiced for thousands of years.

• Organized projects were directed by people responsible for planning, organizing, leading, and controlling.

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 1-5

Classical Management Approaches (1911–1947)

The classical management approaches that emerged

around the turn of the twentieth century include :

1- The Scientific Management Theory

2- The Administrative Management Theory

The Scientific Management Theory Overview

The evolution of modern management began in the closing

decades of the nineteenth century, after the Industrial

Revolution had swept through Europe, and the United States.

Small workshops run by skilled workers who produced hand-

manufactured products (a system called crafts-style production)

were replaced by large factories. In these factories, hundreds or

even thousands of unskilled or semi-skilled employees

controlled the sophisticated machines that made products.

The Scientific Management TheoryJob Specialization and the Division of Labor

Adam Smith (named the father of the scientific management theory) observed that firms manufactured pins in one of two different ways:

- Craft-style—each worker did all steps (18 tasks).

- Production—each worker specialized in one step.

The Scientific Management TheoryJob Specialization and the Division of Labor

Adam Smith realized that increasing the level

of job- specialization resulted in much higher

efficiency and productivity:

• Breaking down the total job allowed for the division of

labor in which workers became very skilled

at their specific tasks.

The Scientific Management TheoryF. W. Taylor

• Taylor is best known for defining the techniques of scientific management, the systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency.

• Taylor believed that if the amount of time and effort that each worker expends to produce a unit of output (a finished good or service) can be reduced by increasing specialization and the division of labor, the production process will become more efficient.


• According to Taylor, the way to create the most efficient division of

labor could best be determined by scientific management

techniques, rather than intuitive knowledge.

• Based on his experiments and observations as a manufacturing

manager in a variety of settings, he developed four principles to

increase efficiency in the workplace:


Principle 1: Study the ways workers perform their tasks now and determine new methods to do them.

• Gather detailed time and motion

information.

• Try and experiment different methods to determine which is best in order to adopt it.


Principle 2: Codify the new methods of performing tasks into written rules and standard operating procedures.

• Teach the new adopted way to all workers performing the same task.

• These new methods further standardized and simplified jobs—essentially making jobs even more routine. In this way efficiency could be increased throughout an organization.


Principle 3: Carefully select workers

who possess skills and abilities that

match the needs of the task, and

train them to perform the task

according to the established rules

and procedures.


Principle 4: Establish a fair or

acceptable level of performance for

a task, and then develop a pay

system that provides a reward for

performance above the acceptable

level.

The Scientific Management Theory Frank and Lillian Gilbreth

Two famous followers of Taylor were Frank Gilbreth and Lillian Gilbreth, who refined Taylor’s analysis of work movements and made many contributions to time-and-motion study. Their aims were to:

(1) Break up and analyze every individual action necessary to perform a

particular task into each of its component actions.

(2) Find better ways to perform each component action.

(3) Reorganize each of the component actions so that the action as a

whole could be performed more efficiently—at less cost in time and

effort.

The Administrative Management Theory

Side by side with scientific managers studying the person-task mix to increase efficiency, other researchers were focusing on administrative management, the study of how to create an organizational structure that leads to high efficiency and effectiveness.

Two of the most influential views regarding the creation of efficient

systems of organizational administration were developed:

• The Theory of Bureaucracy.

• Fayol’s Model of Management.

The Administrative Management Theory The Theory of Bureaucracy

• Weber developed the principles of bureaucracy—a

formal system of organization and administration

designed to ensure efficiency and effectiveness.

• Weber described bureaucracy as an ideal rational

form of organization structure, especially for large

organizations.


A bureaucratic system of administration is based on five principles:

• Principle 1: In a bureaucracy, a manager’s formal authority derives from

the position he or she holds in the organization.

• Principle 2: In a bureaucracy, people should occupy positions because of

their performance, not because of their social standing or personal

contacts.

• Principle 3: The extent of each position’s formal authority and task

responsibilities, and its relationship to other positions in an organization,

should be clearly specified.


• Principle 4: Authority can be exercised effectively in an organization

when positions are arranged hierarchically, so employees know

whom to report to and who reports to them.

• Principle 5: Managers must create a well-defined system of rules,

standard operating procedures, and norms so that they can

effectively control behavior within an organization.

The Administrative Management Theory Fayol’s Model of Management

Henri Fayol identified five management

functions and 14 management

principles that he believed to be

essential to increasing the efficiency of

the management process.

Behavioral Management Theory

Behavioral Management is the

study of how managers

should behave to motivate

employees and encourage

them to perform at high

levels and be committed to

the achievement of

organizational goals.

Behavioral Management Theory Mary Parker Follett

Follett concerned that Taylor ignored the human side of the organization.

- Suggested workers help in analyzing their jobs.

- If workers have relevant knowledge of the task, then they should control the task.

Behavioral Management Theory The Hawthorne Effect

• Studies conducted at the Hawthorne Works of the Western Electric Company: – Researchers found that regardless

of whether the light levels were raised or lowered (characteristics of the work setting), worker productivity increased.

– Concluded that a manager’s behavior or leadership approach can affect worker’s level of performance (Hawthorne Effect).

Behavioral Management Theory Theory X and Theory Y

Douglas McGregor proposed the two different sets of assumptions about workers.

– Theory X assumes the average worker is lazy, dislikes work and will do as little as possible.• Managers must closely supervise and

control through reward and punishment.

Behavioral Management Theory Theory X and Theory Y

–Theory Y assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work.

• Managers should allow workers greater latitude, and create an organization to stimulate the workers.

Management Science TheoryManagement science theory is a contemporary

approach to management that focuses on the use of rigorous quantitative techniques* to help managers make maximum use of organizational resources to produce goods and services.

• There are four branches of management science:

Management Science Theory1. Quantitative Management utilizes mathematical techniques—

such as linear and nonlinear programming, modeling, simulation, queuing theory, and chaos theory—to help managers decide, for example, how much inventory to hold at different times of the year.

2. Operations Management provides managers with a set of techniques that they can use to analyze any aspect of an organization’s production system to increase efficiency. IT, through the Internet and through growing B2B networks, is transforming the way managers handle the acquisition of inputs and the disposal of finished products.

Management Science Theory

3. Total Quality Management (TQM) focuses on analyzing an

organization’s input, conversion, and output activities to increase

product quality.

4. Management Information Systems (MISs) help managers design

systems that provide information about events occurring inside

the organization as well as in its external environment information

that is vital for effective decision making.

Organizational Environment Theory

An important milestone in the history of management thought

occurred when researchers went beyond the study of how

managers can influence behavior within organizations to

consider how managers control the organization’s relationship

with its external environment, or organizational environment

—the set of forces and conditions that operate beyond an

organization’s boundaries but affect a manager’s ability to

acquire and utilize resources.

Organizational Environment Theory The Open System View

– Organizations are open systems that are influenced by and interact with their environments.

• An open system— is a system that takes in resources from its external environment and converts or transforms them into goods and services that are sent back to that environment, where they are bought by customers.

• A closed system, is a self-contained system that is not affected by changes in its external environment. Organizations that operate as closed systems, that ignore the external environment, and that fail to acquire inputs are likely to experience entropy.

Organizational Environment Theory The Open System View

• Researchers using the open-systems view are also interested in

how the various parts of a system work together to promote

efficiency and effectiveness. Systems theorists like to argue that

the whole is greater than the sum of its parts; they mean that

an organization performs at a higher level when its departments

work together rather than separately. Synergy, the performance

gains that result from the combined actions of individuals and

departments, is possible only in an organized system.

Organizational Environment Theory The Contingency Theory

- The crucial message of the contingency theory is that there is no one best way to organize: The organizational structures and the control systems that managers choose depend on—are contingent on—characteristics of the external environment in which the organization operates.

• According to contingency theory, the characteristics of the environment affect an organization’s ability to obtain resources; and to maximize the likelihood of gaining access to resources, managers must allow an organization’s departments to organize and control their activities in ways most likely to allow them to obtain resources, given the constraints of the particular environment they face.

Organizational Environment Theory The Contingency Theory

- Managers can use a mechanistic structure or an organic structure. A mechanistic structure typically rests on Theory X assumptions, and an organic structure typically rests on Theory Y assumptions.

• Mechanistic Structure- An organizational structure in which authority is centralized, tasks and rules are clearly specified, and employees are closely supervised.

• Organic Structure- An organizational structure in which authority is decentralized to middle and first-line managers and tasks and roles are left ambiguous to encourage employees to cooperate and respond quickly to the unexpected.

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 1-38

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Principles of Management Chapter 2