Why Management History?

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History of Management Thought 1

The History of Management Thought


Why Management History?

•  To add perspective to the present…nothing new under the sun

•  To understand where ideas came from

•  To see the role of social, legal, political, economic, technological factors


Management in the Past

• Management existed, but….. –  Often hereditary (usually

male…) –  One-trial learning –  But, some thought about

management

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•  First large state •  Centralized government

–  Provincial governors (nomarchs) –  Bureaucrats (taxation, irrigation) –  Based on writing (first Information

Revolution)

•  Large scale construction projects –  Pyramids, Sphinx, temples –  Workforce: thousands of peasants,

possibly slaves (prisoners of war)

The Case of Egypt


Sun Tzu and The Art of War •  Dates uncertain –

–  Some say he lived ca. 544 BC to 496 BC –  Others place it closer to 600 BC

•  A renowned Chinese general •  The Art of War a work on military strategy,

but seen in Asia as a guide to management

•  Principles: –  Moral cause for battle –  Leadership – wise, courageous, benevolent

yet strict –  Awareness of environmental conditions –

events and the playing field –  Organization and discipline –  Espionage

Sun Tzu and The Art of War

“Now the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes few calculations before hand. It is by attention to this point that I can see who is likely to win or lose.”

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Farming in Rome

•  Cato the Elder (234 - 149 BC) •  De re rustica or Roman Farm

Management •  Instructions for the

management of a commercial farm –  Absentee landlord –  Based on slave labor –  Wine grapes or olives


Cato’s Advice •  “When the weather is bad and field work

cannot go on, carry the manure out to the manure heap. Clean thoroughly the ox stable, the sheep pen, the yard…”

•  How an olive orchard…should be equipped…a foreman, a foreman’s wife, five laborers, three ox drivers, one ass driver, one swineherd, one shepherd, thirteen persons in all….”

•  “Have the work oxen cared for with the greatest diligence and to some degree flatter the ox drivers so that they will more cheerfully care for the oxen”

•  When the head of the household comes to the farmhouse...he should make the round of the farm; if not on the same day at least on the next.

Planning

Organizing

Leading

Controlling


The Industrial Revolution

•  A long-term process, not a single event –  Protestant Work ethic –  Political changes (American,

French revolutions) –  Invention of steam power

•  Some important figures: –  Adam Smith (1776) –  James Watt, Eli Whitney

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The Industrial Revolution – New Technology

• Manufacturing –  Steam engines –  Cotton gin –  Mass production through

standardization and specialization

•  Transportation –  Steam powered ships –  Railroads

• Communications –  Telegraph


Large Organizations and New Approaches to Management •  Economic transformation

–  Previously – family farms, small workshops

–  After Industrial Revolution – large organizations, requiring management skills

•  New demands on management –  Need for professional managers

(as opposed to owners) –  Need to plan, structure, and

schedule activities –  Push to efficiency –  Need for worker training and

socialization to factory work

First Management Issues of Industry

•  How do we efficiently organize people at work

with these new technologies of production and

large markets? •  How do we hire, pay, and

coordinate people at work to gain productivity? •  How do we do all of these to

create economic wealth (profit)

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The Fortune 500: When Were They Founded?


Classical Management •  Time period: last half of 1800’s, first

part of 1900’s •  Environment:

–  Social / Political: little restraint (Robber Barons)

–  Economic: manufacturing economy, focus on efficiency

–  Technology: most jobs relatively simple

•  Major schools –  Scientific management –  Administrative management theory


Scientific Management

•  Bottom- up approach •  Focus on efficiency,

primarily in industrial settings

•  Today: industrial engineering, production management

•  Key players: –  Frederick W. Taylor –  Frank and Lillian Gilbreth

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General Principles

•  Standard methods for performing jobs

•  Push to efficiency •  Employee selection and

training • Management control over

work processes • Wage incentives for output


F. W. Taylor and Scientific Management •  Worked at Midvale Steel

(beginning as a common laborer, rising to chief engineer, in 6 years)

•  Identified “soldiering” –  Workers doing less than they were

capable of –  Due to lack of training, fear of

losing work or rate cuts

•  Began with time study and incentive plans

•  Pig iron study: the right shovel for each job

Frederick Winslow Taylor “Father of Modern Management” •  In 1895- proposed a Piece Rate

System: –  Observe & Analyze – set the

“standard” for job (use Time and Motion studies)

–  Pay workers for meeting/exceeding standard

–  Pay individual worker – not everyone, or group/department, or the “job” = pay according to individual value to business

What Adam Smith had done for markets, Taylor does for the firm – place wealth creation squarely on the individual worker who is managed, rewarded for effort.

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•  “Soldiering” – people don’t always try/work hard. WHY?

•  If we work hard and complete the job – no more work next day; fewer workers needed!

•  SO what is the amount of time needed to do the job?

•  How should it be performed – “One Best Way”

•  What is the standard?

Taylor’s four principles of scientific management:

•  Work methods should be based on scientific observation – not “rules of thumb.”

•  Scientifically select, train, and develop each worker

•  Cooperate with workers to ensure that scientifically developed methods are being followed.

•  Managers analyze and plan work; workers actually perform the tasks.

Demise of Scientific Management

•  In hands of business – Scientific Management = tool to exploit labor

•  By 1915 – growing labor against “Taylorism”

•  Union members/100 workers: 1880=1.8; 1900=7.5; 1914=10.5

•  Congress investigates and US Commission on Industrial Relations issues Hoxie Report (1915) declaring Scientific Management as exploitive of labor.

•  It will influence Management thought – but Scientific Management is dead – until rediscovered in Japan – the 1970/s wave of Quality Management

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Scientific Management: Recap

•  Contributions: –  Pay for performance –  Careful examination of job tasks –  Importance of training and

selection

•  But……..* –  Assumed workers were robots

without social needs or higher order needs

–  Assumed all individuals were the same

–  Ignored worker’s potential to contribute ideas, not just labor

* These are Taylor’s ideas; Gilbreths thought differently

Management of the Organization

•  While in the US “Management” focuses on individual at work

•  In Europe early theory (that in 1930’s will become part of American “management”) focuses on the “organization” – Administrative Management Theory.

•  Max Weber (German) – focuses on bureaucracy as a formal organization to gain efficiency.

•  Henri Fayol (French) – focuses on 14 principles of Administration as “One Right Way”


Administrative Management Theory

•  Top-down approach •  Focus on rationality, no

matter what the setting •  Today: basis of most

management texts •  Key players:

–  Henri Fayol –  Max Weber

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Henri Fayol •  French manager (coal mining) •  Published Industrial and General

Administration in 1916 (not translated into English until 1930’s)

•  Elements of management –  Planning –  Organizing –  Command, Coordination, Control

•  Fourteen principles •  Universality of management •  Management as a skill can be taught

Fayol’s 14 Principles •  Division of Labor: allows for job

specialization. •  Authority and Responsibility: both

formal and informal authority result from special expertise.

•  Unity of Command: workers have only one boss.

•  Line of Authority: clear chain of command, top to bottom of the firm.

•  Centralization: degree to which authority rests at the top of the organization.

•  Unity of Direction: single plan of action to guide the organization.

•  Equity - The provision of justice and the fair and impartial treatment of all employees.

Fayol’s 14 Principles •  Order: place workers where most

useful and have career opportunities.

•  Initiative: encourage employees to act on their own.

•  Discipline: workers need to obey •  Remuneration of Personnel: pay

what is fair. •  Stability of Tenure of Personnel:

Long-term employment is important

•  Subordination of Individual Interest to the Common Interest: interest of organization priority

•  Esprit de corps: Have enthusiasm

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Max Weber and Authority

•  Traditional –  Inherited - monarchs

• Charismatic –  Based on the individual

•  Rational – Legal –  Based on the position


Max Weber and Bureaucracy •  Bureaucracy = management by the office

(Büro) •  Weber well aware that bureaucracy

could become an end in itself •  Bureaucracy

–  Clearly defined division of labor, authority, responsibility

–  Offices organized in a hierarchy –  Recordkeeping (organizational memory

and continuity separate from individuals) –  Selection on the basis of qualifications –  Officials appointed, not elected –  Administrators work for fixed salaries, on a

career basis –  Administrators are not owners –  Administrators subject to impersonal rules,

discipline, control


Human Relations Movement and Subsequent Developments

• Mary Parker Follett •  Hawthorne Studies • McGregor • Chester Barnard

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Mary Parker Follett

•  The “Humanizing” of Management and focus on collaboration.

•  Taylor ignored the human side of the work, Follett argued: –  Organizations are an interdependence

of people. –  People have own interests but also

share common goals which should be the basis of conflict resolution.

•  Use of power/coercion creates conflict. People will defer to the facts of a situation for authority.


Hawthorne Studies •  Western Electric plant, Hawthorne

Illinois, 1930’s •  Mayo, Roethlisberger and Dickson •  Original idea: effect of lighting on

productivity •  Three phases

–  Relay Assembly Test Room (social nature of work, effect of supervision)

–  Bank Wiring Room (group norms) –  Interview program

•  The “Hawthorne Effect”

The “Hawthorne Experiments” were a series of studies into worker productivity performed at the Cicero plant beginning in 1924 and ceasing in 1932, initially conducted by the National Research Council and later by Western Electric and Harvard University

Illumination Studies, 1924 -1927: Does Use of Electric Lights Increase Productivity?

Hypothesis: Increased illumination is correlated with higher productivity.

Finding: No relationship “Hawthorne effect” or "halo effect“ –

Researcher affects outcome (bias)

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2nd Hawthorne Experiment Relay Assembly Test Room

Experiments, 1927-1929 Harvard research team set up experiment with 5 females from Relay Assembly area to test impact of incentives and work conditions on worker fatigue

There is no conclusive evidence that these affected fatigue or productivity.

Productivity and worker satisfaction increase when conditions are improved and made worse.

3rd Hawthorne Experiment

•  Mica-Splitting Test group, 1928 – 1930 Relationship between work conditions and productivity, by maintaining a piece-rate incentive system and varying work conditions

•  Productivity increased by about 15% and researchers concluded that productivity was affected by non-pay considerations

•  Conclusion: social dynamics were the basis of worker performance.

Hawthorne Interviews

•  Plant-wide Interview program, 1928-1931 1. Western Electric implemented a plant-wide survey of employees to record their concerns and grievances. From 1928 to 1930, 21,000 employees were interviewed.

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Hawthorne Interviews

2. Data supported the research conclusion that work improved when supervisors began to pay attention to employees, that work takes place in a social context in which work and non-work considerations are important, norms and groups matter to workers.

Hawthorne : Final Experiment Bank Wiring Observation group,

1931-1932 –  The final test studying 14 male

workers in the Bank Wiring factory to study the dynamics of the group when incentive pay was introduced.

There was no effect. Why? Work group established a work “norm”

– a shared expectation about how much work should be performed in a day and stuck to it, regardless of pay.

The conclusion: informal groups operate in the work environment to manage behavior.

Hawthorne Experiments - Importance

•  Changed perspective in management from Taylor’s engineering approach to a social sciences approach, leading to "Human Relations" approach and, later, "Organization Behavior" approach:

•  Engineering approach subordinated to social sciences

•  Managers = leaders, motivators, communicators

•  Elton Mayo-“Human Relations” approach (1950’s). Mayo’s views lead to the construction of manager as a leader.

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McGregor: Theory X, Theory Y There are two ways of perceiving people

at work: Theory Y:

–  Work is as natural as play or rest- not disliked..

–  Workers will exercise self-direction and self-control –  Meeting goals is satisfying and

motivating. . –  Workers seek responsibility. ... –  Workers will be creative and are willing to

do more. Theory X:

–  The average human inherently dislikes to work

–  So, people must be coerced, controlled, directed.

–  Workers prefer this – but want security. –  The average worker is only partially

utilized.


The Last Fifty Years

• Management science •  Systems theory • Motivation and leadership • Contingency models


Management Science

• Different from "scientific management”

•  Formative years: 1940's to 1960's

• Operations research •  Uses a quantitative basis

for decision making - mathematical models

•  Emphasis on managing production and operations

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•  Post World War II – British use of mathematics, Operations Research, in military operations find applications in US post war industrial development.

•  Quantitative management — use of mathematic models, linear programming, simulation systems and chaos theory to solve management problems.

•  Operations management —techniques used to analyze all aspects of the production system.

•  Total Quality Management (TQM) —analyzing input, conversion, and output to increase product quality.

• Management Information Systems (MIS) — provides information vital for effective decision making


Systems Approach


•  Views an organization as a group of inter-dependent functions contributing to a single purpose

•  Important contributor: U.S. Department of Defense

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Motivation and Leadership (1950’s and 1960’s)

•  Late 1950's: Douglas McGregor proposed his Theory X and Theory Y assumptions of the relations between

•  Early and mid 1960's: contingency models of leadership proposed a need for different styles under different circumstances (Fred Fiedler)

•  1964: Vroom's VIE theory (valence, instrumentality, expectancy) of motivation proposed

•  Mid 1960's: David McClelland proposed need for achievement theory

•  Late 1960's: Frederick Herzberg proposed his two-factor theory of motivation (motivators and hygiene factors)

•  Late 1960's: Edwin Locke outlined his goal setting approach to motivation


Situational (Contingency)


•  Is there “One Best Way” ???? –  Appropriate practice

depends on the situation

•  Found in: –  Organization design –  Leadership

What do Top Managers Do?

Myth FactWorkisreflectiveandinvolvesystematicplanning.

Workisactionoriented,stressedimmediateresponse,andworkwasVaried.

NoRegularDuties Dutiesareritualandceremonial,negotiations,andprocessingsoftinformation

ReliesonformalMISfordecision‐making

Favorverbal,immediateinformation–eveninformal,softdatawhichisprocessedintocoherentpicture

ManagementisaScience

Source:Mintzberg:TheManagersJob

ReliesonjudgmentandintuitiontoMakedecisions

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Roles of Top Manager- Mintzberg 1. Interpersonal Roles:

–  Figurehead – represents organization and it’s authority

–  Leader – has power to make things happen –  Liaison – makes contacts with peers and other

managers 2. Informational Roles:

–  Gathers and processes information

–  Monitor – scan environment for relevant cues

–  Disseminator – passes selected information to those who need to know

–  Spokesperson – informs outsiders

3. Decisional Roles: –  Entrepreneur – searches for new

idea to implement, keeps mental track of their progress

–  Disturbance handler – tries to keep conflicts in balance and arbitrates conflict

–  Resource allocator – decides who gets what (resources and power); personal basis of decision-making

4. The Integrated Job of Manager: –  Implication for new manager –

requirement for networks of information

–  Implication for Team Managers – requirement for information sharing

Roles of Top Manager- Mintzberg

Implications for Effective Managers

1. Requires insight and introspection 2. Systematic ways to share information –

manager’s monopoly versus periodic debriefing and exchanges

3. Ability to step back and see “big picture” – small emergencies detract; need to develop a “big picture”

4. Use your specialists – and they need to understand the need for urgency over elegance

5. See obligations as an opportunity and take time for introspection (thinking)

Documents

Why Management History?