Term paper on “some selected theories and concept of management’’

Course Title: Advanced Management

Submitted to: Md Mosharraf Hossain

Associate professorDepartment of Management studies

Submitted by:Md Muntasir RafyRoll:309-16-053

4/13/2011

Department of Management StudiesUniversity of Dhaka

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LETTER OF TRANSMITTAL

13, April 2011

Md.Mosharraf Hossain

Associate Professor

Department of Management Studies, Faculty of Business Studies, University of Dhaka

Sub: Submission of Term Paper on ‘’ some selected theories and concept of management’’Dear Sir,

We have much pleasure in enclosing our Term Paper on “some selected theories and

concept of management” for the course ‘Advanced Management’, under your kind

supervision and cooperation.

Thank you for your sincere and honest effort to help us get familiar with the different aspects

of Advanced Management.

I, herewith take the opportunity to thank you for your kind coordination and supervision for us

during the course.

Sincerely Yours

Md. MUNTASIR RAFYID # 3-09-16-053

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Acknowledgement

First of all we thank the Almighty Allah for enabling me to complete the task of producing this

term paper. My work on preparing a term paper on “some selected theories and concept of

management “ is a great experience for me in light of the course “Advanced Management”.

I am grateful to our honourable teacher Md.Mosharraf Hossain, Associate Professor,Dept of

Management Studies, University of Dhaka, for his sincere guidance to prepare this report &

gather huge practical and realistic knowledge.

I would like to thank my all who supported me in completing the study successfully.

Table of Contents

S/LTitle

Page Number

1 Theory X 5

2 Theory Y 5-6

3 Theory Z 6

4 Hawthorne’s Study 6-10

5 Organizational Environment Theory 10-11

6 Management by objective 13-15

7 Decision Making Theory 15-16

8 Management Grid Theory 16-19

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Theory X Theory Y

Theory X Theory Y McGregor, Douglas 1960.Douglas McGregor, an American social psychologist, proposed his famous Theory X and Theory Y models in his book 'The Human Side Of Enterprise' (1960).

Theory X

Assumptions

Humans inherently dislike working and will to avoid it if they can. Because people dislike work they have to be coerced or controlled by

management and threatened so they work hard enough. Average employees want to be directed. People don't like responsibility.. Average humans are clear and unambiguous and need security at work.

Application Shop Floor, Mass Manufacturing - Production Workers

Management Style Authoritarian, Hard Management

Theory Y

Assumptions

People view work as being as natural as play and rest. Humans expend the same amount of physical and mental effort in their work as in their private lives.

Provided people are motivated, they will be self-directing to the aims of the organization. Control and punishment are not the only mechanisms to make people work

Job satisfaction is key to engaging employees and ensuring their commitment. People learn to accept and seek responsibility. Average humans, under the

proper conditions, will not only accept but even naturally seek responsibility .People are imaginative and creative. Their ingenuity should be used to solve

problems at work.

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Applications: Professional Services, Knowledge Workers - Managers and Professionals

Management Style Participative, Soft Management

Comments McGregor sees Theory Y as the preferable model and management method, however he felt Theory Y was difficult to use in large-scale operations.

Theory Z

In 1981, William Ouchi came up with a variant that combined American and Japanese management practices together to form Theory Z, having the following characteristics:

long-term employment collective decision making individual responsibility slow evaluation & promotion implicit, informal control with explicit, formalized measures moderately specialized career paths and a holistic concern for the employee, including family.

The Hawthorne Studies

The Hawthorne Studies (or experiments) were conducted from 1927 to 1932 at the Western Electric Hawthorne Works in Chicago, where Harvard Business School Professor Elton Mayo examined productivity and work conditions. The studies grew out of preliminary experiments at the plant from 1924 to 1927 on the effect of light on productivity. Those experiments showed no clear connection between productivity and the amount of illumination but researchers began to wonder what kind of changes would influence output.

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Illumination studies

The Hawthorne Works, located in Cicero, Illinois, and just outside of Chicago, belonged to the Western Electric Company, and the studies were funded by the National Research Council of the National Academy of Sciences at the behest of General Electric, the largest manufacturer of light bulbs in the United States. The purpose was to find the optimum level of lighting for productivity. During two and a half years from 1924 to 1927, a series of illumination level studies were conducted by the industrial engineers of Western Electric Company Works in Cicero; Illinois.

Study 1a: In the first experiment there was no control group. The researchers experimented on three different departments; all showed an increase of productivity, whether illumination increased or decreased.

Study 1b: A control group had no change in lighting, while the experimental group got a sequence of increasing light levels. Both groups substantially increased production, and there was no difference between the groups. This naturally piqued the researchers' curiosity.

Study 1c: The researchers decided to see what would happen if they decreased lighting. The control group got stable illumination; the other got a sequence of decreasing levels. Surprisingly, both groups steadily increased production until finally the light in experimental group got so low that they protested and production fell off.

Study 1d: This was conducted on two women only. Their production stayed constant under widely varying light levels. It was found that if the experimenter said bright was good, they said they preferred the light; the brighter they believed it to be, the more they liked it. The same was true when he said dimmer was good. If they were deceived about a change, they said they preferred it. Researchers concluded that their preference on lighting level was completely subjective - if they were told it was good, they believed it was good and preferred it, and vice versa.

At this point, researchers of Western Electric realized that something else besides lighting was affecting productivity. They suspected that the supervision of the researchers had some effect, so they ended the illumination experiments in 1927. Although in most cases workers generally reduce productivity during time studies in an effort to gain additional time to complete tasks there are cases where workers will increase their activity if rewards are promised. The studies results and conclusions are still in question and under considerable interpretation.

During 1927, a Harvard professor, Elton Mayo, along with his associates, joined the study as consultants. The experiments started again and lasted through to 1932. These

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experiments consisted of redesigning jobs, changing workday and workweek lengths, adding additional rest times and studying the factor of wage changes, which were the first changes measured at the Hawthorne Facility under the expectation that economic factors would have the greatest effect.

Relay assembly experiments

The researchers wanted to identify how other variables could affect productivity. They chose two women as test subjects and asked them to choose four other workers to join the test group. Together the women worked in a separate room over the course of five years (1927-1932) assembling telephone relays. Output was measured mechanically by counting how many finished relays each dropped down a chute. This measuring began in secret two weeks before moving the women to an experiment room and continued throughout the study. In the experiment room, they had a supervisor who discussed changes with them and at times used their suggestions. Then the researchers spent five years measuring how different variables impacted the group's and individuals' productivity. Some of the variables were:

Work Conditions and Productivity Results

Under normal conditions with a forty-eight hour week, including Saturdays, and no rest pauses. The girls produced 2,400 relays a week each.

1. They were then put on piecework for eight weeks. Output increased

2. They were given two five-minute breaks, one in the morning, and one in the afternoon, for a period of five weeks.

Output increased, yet again3. The breaks were each lengthened to ten minutes.

Output rose sharply4. Six five-minute breaks were introduced.

The girls complained that their work rhythm was broken by the frequent pauses

Output fell only slightly5. The original two breaks were reinstated, this time, with a complimentary hot meal

provided during the morning break. Output increased further still

6. The workday was shortened to end at 4.30 p.m. instead of 5.00 p.m. Output increased

7. The workday was shortened to end at 4.00 p.m. Output leveled off

8. Finally, all the improvements were taken away, and the original conditions before the experiment were reinstated. They were monitored in this state for 12 more weeks.

Output was the highest ever recorded - averaging 3000 relays a week

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Elton Mayo's Conclusions on Job Performance

Elton Mayo came to the following conclusions as a result of the study:

The aptitudes of individuals are imperfect predictors of job performance. Although they give some indication of the physical and mental potential of the individual, the amount produced is strongly influenced by social factors.

Informal organization affects productivity. The researchers discovered a group life among the workers. The studies also showed that the relations that supervisors develop with workers tend to influence the manner in which the workers carry out directives.

Work-group norms affect productivity. The Hawthorne researchers were not the first to recognize that work groups tend to arrive at norms of what is "a fair day's work." However, they provided the best systematic description and interpretation of this phenomenon.

The workplace is a social system. The researchers came to view the workplace as a social system made up of interdependent parts. The worker is a person whose attitudes and effectiveness are conditioned by social demands from both inside and outside the work plant. Informal group within the work plant exercise strong social controls over the work habits and attitudes of the individual worker.

The need for recognition, security and sense of belonging is more important in determining workers' morale and productivity than the physical conditions under which he works.

The major finding of the study was that almost regardless of the experimental manipulation, worker production seemed to continually improve. One reasonable conclusion is that the workers were happy to receive attention from the researchers who expressed an interest in them. Originally, the study was expected to last one year, but since the findings were inexplicable when the researchers tried to relate the worker's efficiency to manipulated physical conditions, the project was incrementally extended to five years.

Applying the Hawthorne Effect to Employee Motivation

Suppose you select a management trainee and provide specialized training in management skills not currently possessed. Without saying a word, you've given the trainee the feeling that she is so valuable to the organization that you'll spend time and money to develop her skills. She feels she's on a track to the top, which, in turn, motivates her to work harder and more effectively. This form of employee motivation is independent of any particular skills or knowledge she may have gained from the training session. That's the Hawthorne Effect at work.

In a way, the Hawthorne Effect can be construed as an enemy of the modern manager. Carrying the theory further toward cynicism, it could be said that it doesn't matter how

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you manage, because the Hawthorne Effect will produce the positive outcome you want.

Someone Really Cares About Me? - Benefits of the Hawthorne Effect

Elton Mayo realized that the women, exercising a freedom they didn't have on the factory floor, had formed a social atmosphere that also included the productivity-tracking observer. They talked and joked with one another. They began to meet socially outside of work.

When these women were singled out from the rest of the factory workers, it raised their self-esteem. When they were allowed to have a friendly relationship with their supervisor, they felt happier at work. When he discussed changes in advance with them, and allowed them a form of participation, they felt like part of the team. Elton Mayo had secured the girls cooperation and loyalty. This explains why productivity rose even when he took away their rest breaks.

There's nothing wrong with intentionally using the Hawthorne Effect to reach your goals. In fact, the Hawthorne Effect has also been called the 'Somebody Upstairs Cares' syndrome. When people spend a large portion of their time at work, they require a sense of belonging, of being part of something bigger than themselves. When they do, they are more effective.

This effect has been described as the reward you reap when you pay attention to people. The mere act of showing people that you're concerned about them usually spurs them to better job performance.That's the true Hawthorne Effect.

Organizational Environment Theory :

An important milestone in the history of management thought occurred when researchers went beyond the study of how managers can influence behaviour 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’’. Resources in the organizational environment include the raw materials and skilled people that an organization requires to produce goods and services, as well as the support of groups including customers

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who buy these goods and services and provide the organization with financial resources. One way of determining the relative success of an organization is to consider how effective its managers are at obtaining scarce and valuable resources.The importance of studying the environment became clear after the development of open-systems theory and contingency theory during the 1960s.

The Open-Systems View

One of the most influential views of how an organization is affected by its external environment was developed by Daniel Katz, Robert Kahn, and James Thompson in the 1960s.38 These theorists viewed the organization as an open system— ‘’a system that takes in resources from its external environment and converts or transforms them into goods and services that are then sent back to that environment, where they are bought by customers’’. At the input stage, an organization acquires resources such as raw materials, money, and skilled workers to produce goods and services. Once the organization has gathered the necessary resources, conversion begins. At the conversion stage, the organization’s workforce, using appropriate tools, techniques, and machinery, transforms the inputs into outputs of finished goods and services such as cars, hamburgers, or flights to Hawaii. At the output stage, the organization releases finished goods and services to its external environment, where customers purchase and use them to satisfy their needs. The money the organization obtains from the sales of its outputs allows the organization to acquire more resources so that the cycle can begin again. The system just described is said to be “open” because the organization draws from and interacts with the external environment in order to survive; in other words, the organization is open to its environment.

A closed system, in contrast, is a self-contained system that is not affected by changes that occur 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, the tendency of a system to lose its ability to control itself and thus to dissolve and disintegrate.

Management theorists can model the activities of most organizations by using the open-systems view. Manufacturing companies like Ford and General Electric, for example, buy inputs such as component parts, skilled and semiskilled labour, and robots and

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computer-controlled manufacturing equipment; then, at the conversion stage, they use their manufacturing skills to assemble inputs into outputs of cars and computers. As we discuss in later chapters, competition between organizations for resources is one of several major challenges to managing the organizational environment.

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 parts are more than the sum of the whole”; they mean that an organization performs at a higher level when its departments work together rather than separately. Synergy, the performance gains that result when individuals and departments coordinate their actions, is possible only in an organized system. The recent interest in using teams comprising people from different departments reflects systems theorists’ interest in designing organizational systems to create synergy and thus increase efficiency and effectiveness.

Contingency Theory

Another milestone in management theory was the development of contingency heory in the 1960s by Tom Burns and G.M. Stalker in the United Kingdom and Paul Lawrence and Jay Lorsch in the United States. The crucial message of 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. 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. In other words, how managers design the organizational hierarchy, choose a control system, and lead and motivate their employees is contingent on the characteristics of the organizational environment. An important characteristic of the external environment that affects an organization’s ability to obtain resources is the degree to which the environment is changing.

Changes in the organizational environment include:

changes in technology, which can lead to the creation of new products (such as compact discs) and result in the obsolescence of existing products (eight-track tapes);

the entry of new competitors (such as foreign organizations that compete for available resources); and

unstable economic conditions.

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In general, the more quickly the organizational environment is changing, the greater are the problems associated with gaining access to resources and the greater is the manager’s need to find ways to coordinate the activities of people in different departments in order to respond to the environment quickly and effectively.

The basic idea behind contingency theory—that there is no one best way to design or lead an organization—has been incorporated into other areas of management theory, including leadership theories.

Management by objectives (MBO)

Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources.

It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to reach objectives.

Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book 'The Practice of Management'. In the 90s, Peter Drucker himself decreased the significance of this organization management method, when he said: "It's just another tool. It is not the great cure for management inefficiency... Management by Objectives works if you know the  objectives, 90% of the time you don't."

Main Principle

The principle behind Management by Objectives (MBO) is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims. The complete MBO system is to get managers and empowered employees acting to implement and achieve their plans, which automatically achieve those of the organization

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MBO Process

Starting from the top of a company, the six stages of Management by Objectives (MBO) are:

1. Define corporate objectives at board level 2. Analyze management tasks and devise formal job specifications, which allocate

responsibilities and decisions to individual managers 3. Set performance standards 4. Agree and set specific objectives 5. Align individual targets with corporate objectives 6. Establish a management information system to monitor achievements against

objectives

THE MBO PROCESS

Advantage

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Involvement of all the employees. Employees are motivated and work together. Collective contribution towards goalsIt is an modern method of performance

appraisal. It leads to good Planning. Identify problems. Develop leadership qualities.

Disadvantages:

Failure to give guidelines to goals. Danger of inflexibility. Failure to teach philosophy of MBO.

Organizational decision making

Decision making is choosing among alternatives. It starts with goal setting in the organization, and entails searching for alternatives, analysing alternatives and choosing criteria. Decisions may pertain to

broad policies or plans for the organization, programmes and projects to achieve goals, or operations of programmes and management systems.

The process of decision making involves nine steps (Hicks and Gullet, 1975; Anderson 1988): (i) Setting organizational goals.(ii) Establishing performance criteria.(iii) Classifying and defining the problem.(iv) Developing criteria for a successful solution.(v) Generating alternatives.(vi) Comparing alternatives to criteria.(vii) Choosing an alternative.(viii) Implementing the decision.(ix) Monitoring the decision and getting feedback.

Models of decision making

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There are five major models for decision making in an organization (Gortner, Mahler and Nicholson, 1987). They are:

The economic or rational choice model, as used in bureaucratic organizations. It is based on rational choice among well reasoned and logical alternatives.

Incremental bargaining, commonly used in resolving conflicts through negotiation.

Simon's bounded rationality model, which is used as an aggregative model in administrative practices. This model is suitable as a consultant-assisted method for policy making.

Peters and Waterman's well managed model (also called the garbage can or non-decision making model) aims at formulating a descriptive model of choice which focuses on the expressive character of decision making in the organization. It does not consider rationality and incrementation. This method is based on an empirical perception of how successful organizations are being run.

Quantitative techniques of decision making. Decisions have to be made under varying conditions of certainty or uncertainty, with different degrees of risk (Luthans, 1985).

Certainty decisions are largely made by managers at lower levels under known conditions with known outcomes. For such decisions, nearly complete information is available. Quantitative techniques are not usually required to make certainty decisions. However, calculus and a few mathematical programming techniques can be useful.

Risk decisions are more difficult to make than certainty decisions because of limited information and the possibility of several outcomes for each alternative. Most risk decisions are taken at higher levels. For risk decisions, probability techniques (objective and subjective probability) are widely used.

Decisions under uncertainty are the most intricate. For such decisions, probability techniques are of limited help. However, minimax analysis and Bayes's procedure can be used in refining the decision making process under conditions of uncertainty. Minimax analysis attempts to calculate the worst outcome that can occur for each alternative, whereas Bayes's procedure is based on the concept of expected value and assumes that each possible outcome has an equal chance of occurring.

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The Managerial Grid Theory

The Managerial Grid model by Robert Blake and Jane Mouton is a behavioural leadership model. On the grid, concern for production is represented on a one to nine scale on the horizontal axis (x-axis). Concern for people is represented on a one to nine scale on the vertical axis (y-axis).

Origin of the Managerial Grid. History

While acting as advisors to Exxon, Robert Blake and Jane Mouton concluded that there are many behaviors and motivations in the middle of the X and Y extremes of Douglas McGregor. Blake and Mouton found that a management behavior model with three axes (concern for production, concern for people, motivation) was a more accurate representation of reality.

The concept distinguishes 5 different leadership styles, based on the concern for people and the concern for production: The five resulting leadership styles are as follows

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Impoverished Management (1, 1)Low production/Low people): Managers with this approach are low on both the dimensions and exercise minimum effort to get the work done from subordinates. The leader has low concern for employee satisfaction and work deadlines and as a result disharmony and disorganization prevail within the organization. The leaders are termed ineffective wherein their action is merely aimed at preserving job and seniority.

Task management (9, 1)High production/Low people: Also called dictatorial or perish style. Here leaders are more concerned about production and have less concern for people. The style is based on theory X of McGregor. The employees’ needs are not taken care of and they are simply a means to an end. The leader believes that efficiency can result only through proper organization of work systems and through elimination of people wherever possible. Such a style can definitely increase the output of organization in short run but due to the strict policies and procedures, high labour turnover is inevitable.

Middle-of-the-Road (5, 5)Medium production/Medium people: This is basically a compromising style wherein the leader tries to maintain a balance between goals of company and the needs of people. The leader does not push the boundaries of achievement resulting in average performance for organization. Here neither employee nor production needs are fully met.

Country Club (1, 9)Low production/High people: This is a collegial style characterized by low task and high people orientation where the leader gives thoughtful attention to the needs of people thus providing them with a friendly and comfortable environment. The leader feels that such a treatment with employees will lead to self-motivation and will find people working hard on their own. However, a low focus on tasks can hamper production and lead to questionable results.

Team Management (9, 9)High production/High people: Characterized by high people and task focus, the style is based on the theory Y of McGregor and has been termed as most effective style according to Blake and Mouton. The leader feels that empowerment, commitment, trust, and respect are the key elements in creating a team atmosphere which will automatically result in high employee satisfaction and production.

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Advantages of Blake and Mouton’s Managerial Grid

The Managerial or Leadership Grid is used to help managers analyze their own leadership styles through a technique known as grid training. This is done by administering a questionnaire that helps managers identify how they stand with respect to their concern for production and people. The training is aimed at basically helping leaders reach to the ideal state of 9, 9.

Limitations of Blake and Mouton’s Managerial GridThe model ignores the importance of internal and external limits, matter and scenario. Also, there are some more aspects of leadership that can be covered but are not.

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