HISTORY OF MANAGEMENT

• Assuming you are the manager in charge of a loan processing department. Describe how would you research this issue , using each of the following management approach :

• Scientific theory• general administrative • quantitative approach • Behavioral approach • System theory • Contingency Approach

Development of Major Management Theories

Management Theories

SystemsApproach

ContingencyApproach

EarlyAdvocates

HawthorneStudies

HistoricalBackground

Early Examples of Management

IndustrialRevolution

Adam Smith

QuantitativeApproach

ScientificManagement

• Retail Segment : To reap the business opportunities of fastest growing retail segment, our bank has implemented a unique sale & delivery model known as Retail Loan Factory, which is based on assembly line principle for speedy disposal of retail loan applications. Presently we have 35 Retail loan factories at various locations of the country. We offer following product to our retail segment borrowers :

Fredrick Winslow Taylor

The “father” of scientific management :

1. Develop a science for each element of an individual’s work.

2. Scientifically select and then train, teach, and develop employees.

3. Heartily cooperate with employees to get work done using scientific methods.

4. Divide work and responsibility almost equally between management and workers.

How Do Today’s Managers Use Scientific Management?

– What contribution did fredrick taylor made ----------->

– Use time and motion studies to increase productivity

– Hire the best qualified employees– Design incentive systems based on

output

Administrative Management Theory

• What did Henri Fayol contribute to Management Theory

• Administrative Management–The study of how to create an

organizational structure that leads to high efficiency and effectiveness.

Henri Fayol (1841-1925 )• First complete theory of management• 14 principles of management• Guidelines for effective management• First to talk about the 5 functions of

management (Planning, organizing, command, coordination, control)

Fayol’s Principles of Management

• Division of Labor: allows for job specialization. – Fayol noted jobs can have too much

specialization leading to poor quality and worker dissatisfaction.

• Authority and Responsibility– Fayol included both formal and informal

authority resulting from special expertise.

• •

Fayol’s Principles of Management

• Unity of Command– Employees should have only one boss.

• Line of Authority– A clear chain of command from top to

bottom of the firm.• Centralization

– The degree to which authority rests at the top of the organization.

• Unity of Direction– A single plan of action to guide the

organization.

Fayol’s Principles of Management (contd)

• Equity– The provision of justice and the fair and

impartial treatment of all employees.• Order

– The arrangement of employees where they will be of the most value to the organization and to provide career opportunities.

• Initiative– The fostering of creativity and innovation

by encouraging employees to act on their own.

Fayol’s Principles of Management (cont’d)• Discipline

– Obedient, applied, respectful employees are necessary for the organization to function.

• Remuneration of Personnel– An equitable uniform payment system

that motivates contributes to organizational success.

• Stability of Tenure of Personnel– Long-term employment is important for

the development of skills that improve the organization’s performance.

Fayol’s Principles of Management (cont’d)

• Subordination of Individual Interest to the Common Interest– The interest of the organization takes

precedence over that of the individual employee.

• Esprit de corps– Comradeship, shared enthusiasm foster

devotion to the common cause (organization).

Behavioral Management Theory• Why was Human Relation Movement

Important to Management History• Behavioral Management

– 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.

– Focuses on the way a manager should personally manage to motivate employees.

Management Science Theory• What Stimulated Quantitative Approach

• An approach to management that uses rigorous quantitative techniques to maximize the use of organizational resources.– Quantitative management—utilizes linear

programming, modeling, simulation systems.

Management Science Theory• What Stimulated Quantitative Approach•

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

– Total Quality Management (TQM)—focuses on improving quality throughout an organization.

– Management Information Systems (MIS)—provides information about the organization.

A Manager Dilemma• Milton Kim is the Managing Director of xyz

investment & Securities company in Seoul. He is trying to introduce western style business practices in a country that values consensus and compromise. Concepts such competition, innovation , risk and performance pay incentive are viewed with apprehension and concern. Yet Kim is working to transform South korea growing but traditional rigid securities industry by using these concepts in managing his company.

A Manager Dilemma

• Although he emphasize that any changes are being phased in gradually, he is discovering how hard it can be to adopt global business standards in a society that does not see any need to change.

• How can kim use what we know about system and contingency approaches to Management as he tries to fundamentally change the way he Manages?

Organizational Environment Theory

• 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.

– System Approach- it defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole

• .

The Organization as an Open System

Figure 2.4

Implications of the Systems Approach

• Coordination of the organization’s parts is essential for proper functioning of the entire organization

• Decisions and actions taken in one area of the organization will have an effect on other areas of the organization

• Organizations are not self-contained and, therefore, must adapt to changes in their external environment

Contingency Theory

• Contingency Theory– The idea that the organizational

structures and control systems manager choose depend on—are contingent on—characteristics of the external environment in which the organization operates.

– Assumes there is no one best way to manage.

Contingency Theory

• Contingency Theory :

• The environment impacts the firm and managers must be flexible to react to environmental changes.

– In rapidly changing organizational environments, managers must find ways to coordinate different departments to respond quickly and effectively.

Quiz

• 1 In the ___________approach to management , managerial practicedepends on circumstances

A systemsB Contingency or situational

C. Mc Kinsey's 7-S framework

D. Empirical or case

Quiz• 2 Which of the following theories gives

managers a new way of looking at an organization as a whole and as a part of the larger external environment?

• A Contingency theory• B Theory Z and quality management• C Systems theory• D Theory X and Theory Y ;

Quiz

• 3 Under which system does a worker's wage increase in proportion to the output produced?

• A Time-and-motion study • B Piece-rate incentive system • C Micro motion study • D Gantt Chart

• 4 According to the systems theory planning, organizing, leading controlling and technology come under _________ component of an organizational system.

• a. Inputs• b. Transformation process• c. Outputs ,• d. Feedback from environment

Quiz

• 5 Fayol outlined 14 principles of management. One of them, ________, states that each employee must receive instruction about a particular operation from only one person.

• A Unity of direction• B Discipline• C Unity of command• D Centralization

Quiz

• 6 Decreasing the role of subordinate in decision-making is known

• A Decentralization • B Stabilization • C Centralization • D Organization

7 Which method approach is pure logic and expresses management concepts as mathematical symbols?

A Contingency approach

B Management science approach

C Operational opproach

D System approach

 

8 The __________________refers to the delivery by one individual to another of the right to act, to make decisions, to requisition resources and to perform other tasks in order to fulfill job responsibilities.

 

A Centralization of power

B Delegation of authority

C Centralization of authority

D Delegation of responsibility

 

• 9 Which one of the following is not one of the principles of management?

A Division of work

B Remuneration

C Equity

D Well defined hierarchy

10 Which of the following system consists of sets of interacting elements operating without any exchange with the environment in which it exists?

A Flexible

B Open

C Closed

D Standard