chapter 1 (addition)

Chapter 1 (Addition)

Management has been practiced a long time. Organizedendeavors directed by people responsible for planning,organizing, leading, and controlling activities have existed forthousands of years.

The Egyptian pyramids and the Great Wall of China are proof thatprojects of tremendous scope, employing tens of thousands ofpeople, were completed in ancient times. It took more than 100,000workers some 20 years to construct a single pyramid.

Who told each worker what to do?

Who ensured there would be enough stones at the site to keepworkers busy?

The answer ismanagers.

Someone had to plan what was to be done, organize people andmaterials to do it, make sure those workers got the work done, andimpose some controls to ensure that everything was done asplanned.

The practice of management can be traced back thousands of years.

▪ The Egyptians used the management functions of planning,organizing, and controlling when they constructed the pyramids.Alexander the Great employed a staff organization to coordinateactivities during his military campaigns.

▪ The Roman Empire developed a well-defined organizationalstructure that greatly facilitated communication and control.

▪ Socrates discussed management practices and concepts in 400BC.,

▪ Plato described job specialization in 350 B.c., and

▪ Alfarabi listed several leadership traits in A.D. 900.

In 1776, Adam Smith published The Wealth of Nations, in which heargued the economic advantages that organizations and societywould gain from the division of labor (or job specialization)—thatis, breaking down jobs into narrow and repetitive tasks. Usingthe pin industry as an example, Smith claimed that 10 individuals,each doing a specialized task, could produce about 48,000 pins a dayamong them.

However, if each person worked alone performing each taskseparately, it would be quite an accomplishment to produce even 10pins a day!

Smith concluded that division of labor increased productivity byincreasing each worker’s skill and dexterity, saving time lost inchanging tasks and creating labor-saving inventions and machinery.

a period during the late eighteenth century when machine powerwas substituted for human power, making it more economical tomanufacture goods in factories than at home.

These large, efficient factories needed someone to forecast demand,ensure that enough material was on hand to make products, assigntasks to people, direct daily activities, and so forth. That “someone”was a manager. These managers would need formal theories to guidethem in running these large organizations. It wasn’t until the early1900s, however, that the first steps toward developing such theorieswere taken.

First studies of management, which emphasized rationality andmaking organizations and workers as efficient as possible.

Two major theories comprise the classical approach: scientificmanagement and general administrative theory. The two mostimportant contributors to scientific management theory wereFrederick W. Taylor and the husband-wife team of Frank andLillian Gilbreth. The two most important contributors to generaladministrative theory were Henri Fayol and Max Weber.

Productivity emerged as a serious business problem during the firstfew years of this century. Business was expanding and capital wasreadily available, but labor was in short supply. Hence, managersbegan to search for ways to use existing labor more efficiently. Inresponse to this need, experts began to focus on ways to improve theperformance of individual workers. Their work led to thedevelopment of scientific management.

scientific management: the use of scientific methods to define the“one best way” for a job to be done. (Frederick Winslow Taylor’sPrinciples of Scientific Management, 1911)

Frederick Winslow Taylor

Father of scientific management

One of Taylor's first jobs was as a foreman at the Midvale Steel Company

in Philadelphia. It was there that he observed what he called

soldiering(employees deliberately working at a pace slower than their

capabilities). Taylor studied and timed each element of the steelworkers'

jobs. He determined what each worker should be producing, and then he

designed the most efficient way of doing each part of the overall task.

Next he implemented a piecework pay system. Rather than paying allemployees the same wage, he began increasing the pay of each workerwho met and exceeded the target level of output set for his or her job


After Taylor left Midvale, he worked as a consultant for severalcompanies, including Simonds Rolling Machine Company andBethlehem Steel.

At Simonds he studied and redesigned jobs, introduced rest periodsto reduce fatigue, and implemented a piecework pay system. Theresults were higher quality and quantity of output, and improvedmorale.

At Bethlehem Steel. Taylor studied efficient ways of loading andunloading rail cars and applied his conclusions with equallyimpressive results. During these experiences, he formulated thebasic ideas that he called "scientific management.


1. Develop a science for each element of an individual’s work toreplace the old rule-of-thumb method.

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

3. Heartily cooperate with the workers to ensure that all work isdone in accordance with the principles of the science that has beendeveloped.

4. Divide work nearly equally between managers and workers, sothat the managers apply scientific management principles toplanning the work and the workers actually perform the tasks.

Frank and Lillian Gilbreth,

Frank and his wife Lillian, a psychologist, studied work to eliminateinefficient hand and body motions. Frank is probably best known for hisbricklaying experiments. By carefully analyzing the bricklayer’s job, hereduced the number of motions in laying exterior brick from 18 to about5, and in laying interior brick from 18 to 2. Using Gilbreth’s techniques, abricklayer was more productive and less fatigued at the end of the day.

The Gilbreths invented a device called a microchronometer that recordeda worker’s hand-and-body motions and the amount of time spent doingeach motion.

Working individually and together, the Gilbreths developed numeroustechniques and strategies for eliminating inefficiency. They applied manyof their ideas to their family and documented their experiences raisingtwelve children in the book and movie Cheaper by the Dozen.

Whereas scientific management deals with the jobs of individualemployees, administrative management focuses on managing thetotal organization. The primary contributors to administrativemanagement were Henri Fayol (1841-1925), Max Weber (1864-1920), and Chester Barnard (1886-1961)

HENRI FAYOL (1841-1925)

"To manage is to forecast and to plan, to organise, to command, tocoordinate and to control“

▪ French mining engineer and a management theorist

▪ Started as an engineer at a mining company and became Director in1888.

▪ Wrote a book in 1916 “Administration Industrielle et Générale.”Translated into English in 1930- General and Industrial Management

▪ Due to his contribution to management theory and principles, HenriFayol is rightly treated as the Father of Modern Management Thought.


Fayol described the practice of management as something distinctfrom accounting, finance, production, distribution, and other typicalbusiness functions. His belief that management was an activitycommon to all business endeavors, government, and even the homeled him to develop 14 principles of management—fundamentalrules of management that could be applied to all organizationalsituations and taught in schools.


Principles of Management:

1. Division of work. Specialization increases output by makingemployees more efficient.

2. Authority. Authority is the right to give orders and the power to exactobedience. Managers must be able to give orders, and authority givesthem this right.

3. Discipline. Employees must obey and respect the rules that govern theorganization.

4. Unity of command. Every employee should receive orders from onlyone superior.

5. Unity of direction. The organization should have a single plan ofaction to guide managers and workers.



6. Subordination of individual interests to the general interest. Theinterests of any one employee or group of employees should not takeprecedence over the interests of the organization as a whole.

7. Remuneration. Workers must be paid a fair wage for their services.

8. Centralization. This term refers to the degree to which subordinatesare involved in decision making.

9. Scalar chain. The line of authority from top management to the lowestranks is the scalar chain.

10. Order. People and materials should be in the right place at the righttime.



11. Equity. Managers should be kind and fair to their subordinates.

12. Stability of tenure of personnel. Management should provideorderly personnel planning and ensure that replacements areavailable to fill vacancies.

13. Initiative. Employees allowed to originate and carry out planswill exert high levels of effort.

14. Esprit de corps. Promoting team spirit will build harmony andunity within the organization.

Max Weber (1864-1920)

A German sociologist who studied organizations. Writing in the early1900s, he developed a theory of authority structures and relationsbased on an ideal type of organization he called a bureaucracy—aform of organization characterized by division of labor, a clearlydefined hierarchy, detailed rules and regulations, and impersonalrelationships.

Max Weber (1864-1920)

Employees do not have any proprietary interest in

the organisation,

▪Division of labor: Makes work easier; leads to specialization.

▪Efficiency: Competency increases; work is efficiently done under thesupervision of immediate managers in the hierarchy.

▪Accountability and answerability: Common citizens can hold governmentofficials and bureaucrats accountable for the actions performed by them inthe course of dispensing their duties. The organization is answerable in casesomething goes wrong.

▪Decision-making: Decisions are generally handed over to the employees bytheir immediate managers, and to the managers by the ones above them inthe hierarchy.

▪Rules and regulations: The set of rules and regulations that are clearly statedin most cases makes obedience to them a prerequisite in the bureaucraticstructure, thereby reducing the scope of non-adherence to the framework ofrules and protocols.

▪Ease of administration: Makes administration easier; the organization is morerationally arranged in a structural hierarchy. In a bureaucratic structure,maintaining control of the management, making necessary adjustments asand when required, and the introduction of a new set of rules as perrequirements from time to time, are easier owing to the large size of theorganization.

▪ 1. This system suffers from too much of red tape and paper work.

▪ 2. The employees do not develop belongingness to the organisation.

▪ 3. The excessive reliance on rules and regulations and adherence to these policiesinhibit initiative and growth of the employees. They are treated like machines andnot like individuals. There is neglect of human factor.

▪ 4. The employees become so used to the system, they resist to any change andintroduction of new techniques of operations.

Unlike the classical management perspective, the behavioralmanagement perspective placed more emphasis on individual attitudesand behaviors and on group processes and recognized the importance ofbehavioral processes in the work place.

As we know, managers get things done by working with people. Thisexplains why some writers have chosen to look at management byfocusing on the organization’s people. The field of study that researchesthe actions (behavior) of people at work is called organizational behavior(OB).

Although a number of individuals in the early twentieth centuryrecognized the importance of people to an organization’s success, fourstand out as early advocates of the OB approach: Robert Owen, HugoMunsterberg, Mary Parker Follett, and Chester Barnard.

The Hawthorne Studies

Hawthorne Studies, a series of studies conducted at the WesternElectric Company Works in Cicero, Illinois. These studies, whichstarted in 1924, were initially designed by Western Electricindustrial engineers as a scientific management experiment. Theywanted to examine the effect of various lighting levels on workerproductivity. Like any good scientific experiment, control andexperimental groups were set up, with the experimental groupexposed to various lighting intensities, and the control groupworking under a constant intensity.


They found that as the level of light was increased in theexperimental group, output for both groups increased. Then, muchto the surprise of the engineers, as the light level was decreased inthe experimental group, productivity continued to increase in bothgroups. In fact, a productivity decrease was observed in theexperimental group only when the level of light was reduced to thatof a moonlit night. What would explain these unexpected results?The engineers weren’t sure, but concluded that lighting intensitywas not directly related to group productivity and that somethingelse must have contributed to the results. They weren’t able topinpoint what that “something else” was, though.


In 1927, the Western Electric engineers asked Harvard professorElton Mayo and his associates to join the study as consultants. Thusbegan a relationship that would last through 1932 and encompassnumerous experiments in the redesign of jobs, changes in workdayand workweek length, introduction of rest periods, and individualversus group wage plans.

The researchers concluded that social norms or group standardswere the key determinants of individual work behavior.


Scholars generally agree that the Hawthorne Studies had a game-changing impact on management beliefs about the role of people inorganizations. Mayo concluded that people’s behavior and attitudesare closely related, that group factors significantly affect individualbehavior, that group standards establish individual worker output,and that money is less a factor in determining output than groupstandards, group attitudes, and security. These conclusions led to anew emphasis on the human behavior factor in the management oforganizations.


Findings of Hawthorne Experiment

The Hawthorne Experiment consists of four parts. Each part has some findings.So the findings are:

Firstly, there is no consistent relationship between output of workers andillumination in the factory. There must some other factor which affectedproductivity.

Secondly, the researchers concluded that socio-psychological factors such asfeeling of being important, recognition, attention, participation, cohesive work-group, and non-directive supervision held key for higher productivity.

Thirdly, the findings confirmed the importance of social factors at work in thetotal work environment.

Finally, he finds that informal groups play an important role in the place of anorganization.

Quantitative approach is the use of quantitative techniques to improvedecision making. This approach also is known as management science.

The quantitative approach evolved from mathematical and statisticalsolutions developed for military problems during World War II. After thewar was over, many of these techniques used for military problems wereapplied to businesses.

What exactly does the quantitative approach do? It involves applyingstatistics, optimization models, information models, computersimulations, and other quantitative techniques to management activities.

Another area where quantitative techniques are used frequently is inTotal Quality Management.- a philosophy of management that is drivenby continuous improvement and responsiveness to customer needs andexpectations

Characteristic

1. Intense focus on the customer. The customer includes outsiders who buy the organization’sproducts or services and internal customers who interact with and serve others in theorganization.

2. Concern for continual improvement. Quality management is a commitment to never beingsatisfied.“Very good” is not good enough. Quality can always be improved.

3. Process focused. Quality management focuses on work processes as the quality of goods andservices is continually improved.

4. Improvement in the quality of everything the organization does. This relates to the finalproduct, how the organization handles deliveries, how rapidly it responds to complaints, howpolitely the phones are answered, and the like.

5. Accurate measurement. Quality management uses statistical techniques to measure everycritical variable in the organization’s operations. These are compared against standards toidentify problems, trace them to their roots, and eliminate their causes.

6. Empowerment of employees. Quality management involves the people on the line in theimprovement process. Teams are widely used in quality management programs asempowerment vehicles for finding and solving problems.

Two contemporary management perspectives—systems andcontingency—are part of this approach. Systems theory is a basictheory in the physical sciences, but had never been applied toorganized human efforts. In 1938, Chester Barnard, a telephonecompany executive, first wrote in his book, The Functions of anExecutive, that an organization functioned as a cooperative system.However, it wasn’t until the 1960s that management researchersbegan to look more carefully at systems theory and how it related toorganizations.

System Approach

A system is a set of interrelated and interdependent parts arrangedin a manner that produces a unified whole. The two basic types ofsystems are closed and open. closed systems are not influenced byand do not interact with their environment. In contrast, opensystems are influenced by and do interact with their environment.Today, when we describe organizations as systems, we mean opensystems.

System Approach

Exhibit shows a diagram of an organization from an open systems perspective. As you can

see, an organization takes in inputs (resources) from the environment and transforms orprocesses these resources into outputs that are distributed into the environment. Theorganization is “open” to and interacts with its environment.

System ApproachThe features of this approach are:a) An organization consists of many subsystems.b) All the sub-systems are mutually related and interdependent

to each other.c) One part affects and be affected by another.d) As a system an organization draws inputs (energy,

information, materials etc.) from its environment. Ittransforms these inputs and returns the output back into theenvironment in the form of goods and services.

e) Organization is an open system and it interacts with itsenvironment. It is also a dynamic system as the equilibrium init is always changing

Contingency Approach

The contingency approach (situational approach) says thatorganizations are different, face different situations (contingencies),and require different ways of managing.

A good way to describe contingency is “if, then.” If this is the way mysituation is, then this is the best way for me to manage in thissituation. It’s intuitively logical because organizations and even unitswithin the same organization differ—in size, goals, work activities,and the like. Management researchers continue working to identifythese situational variables.


Features:

a) It varies from situation to situation.

b) The conditions of the situation will determine which techniques andcontrol system should be designed to fit the particular situation.

c) There is no one best way of doing anything.

d) One needs to adapt himself to the circumstances.

e) It is a kind of “if”, “then” approach.

f) Management policies and procedures should respond to environment

Four popular contingency variables.


◼ Effective and efficient management

Classical ManagementPerspectives:

Methods for enhancing efficiency and

facilitating planning, organizing, and

controlling

Behavioral Management Perspectives:

Insights for motivating performance and

understanding individual behavior, groups and teams, and leadership

QuantitativeManagement Perspective:

Techniques for improving decision making, resource

allocation, and operations

Contingency PerspectiveSystems Approach

Recognition of the situational nature of management. Response to particular

characteristics of situation.

Recognition of internal interdependencies.

Recognition of environmental influences.

While some models of organizational effectiveness go in and out of fashion,one that has persisted is the McKinsey 7-S framework. It was developed in theearly 1980s by Tom Peters and Robert Waterman, two consultants working atthe McKinsey & Company consulting firm. The McKinsey 7-S model involvesseven interdependent factors which are categorized as either "hard" or "soft"elements:You can use the 7-S model in a wide variety of situations where it's

useful to examine how the various parts of your organization work

together.

For example, it can help you to improve the performance of your

organization, or to determine the best way to implement a proposed

strategy.

The framework can be used to examine the likely effects of future

changes in the organization, or to align departments and processes

during a merger or acquisition. You can also apply the McKinsey 7-S

model to elements of a team or a project.

1. Strategy: It is the plan devised to maintain and build competitive advantageover the competition.

2. Structure: It is the way the organization makes and who reports to whom.

3. Systems: System indicates to the daily activities and procedures that staffmembers engage in to get the job done. Such as information systems,manufacturing systems, budgeting, controlling process etc.

4. Shared Values: Shared values are called "super ordinate goals" when themodel was first developed. These are the core values of the company that areevidenced in the corporate culture and the general work ethic.

5. Style: Style means the ways of leadership adopted. It also indicates howmanagement behaves to achieve organizational goal.

6. Staff: It means the employees and their general capabilities.

7. Skills: Skills refer to the actual competencies of the employees working for thecompany.

https://strategicmanagementinsight.com/tools/mckinsey-7s-modelframework.html

https://strategicmanagementinsight.com/tools/mckinsey-7s-model%20framework.html

chapter 1 (addition)

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