Why study management theory?

1. Guides management decision

-Comes out of Practice

Assumption

Relationships

2. Provides a stable focus for understanding what we experience

-We get ideas about organizations and the people

-1908 Henry Ford- Apostle of mass production

- First model took 121/2 hours

- 12 Years later in 1920 - one per minute

-In 1925 Model T was rolling off one every 5 seconds

Henry Ford born in 1863 grew in Michigan when he died in 1945 he was worth $600 million.

3. Theories makes us challenge

- to keep learning

4. Theories area sources of ideas

- Alfred Sloan vs Henry Ford

5. Coherent Group of assumption put forth to explain the relationship between two or more observable facts and to provide a sound basis for predicting future events.

Evolution of management theory

Three established school

Scientific

- Classical

Organizational

- Behavioral

- Management science school

Historically not replaced - layered

- supplemented

Frederick TAYLOR- [1856-1915]

1. Development of a true science of management to identify the best way

2. Scientific selection of workers

3. Scientific education and development

4. Initiate friendly cooperation

between management and workers

Contribution

“ Production” miracle

Use for fast food industry to training of surgeons

Use rational approach to solve

Problem Solving – balanced – no emotions

Limitations

Human being are assumed rational, motivated.

Productivity to profitability

Labour

exploitation

Customers

Henri Fayol[1841-1925]

• Disprove managers were/are born and they are made

• Divide business operations functionally:1. Technical2. Commercial3. Financial4. Security5. Accounting6. Management

14 Principles

1. Division of Labour-Specialise

2. Authority- Right to give orders

3. Discipline

4. Unity of Command

5. Unity of Direction

6. Subordination of individual goal to common

7. Remuneration

8. Centralization:Retain Central Authority

9. Hierarchy- Neat box10. Orderliness: materials

and people at the right place

11.Equity- Fair, firm, friendly

12. Stability of staff13. Initiative- freedom

conceive & carry out14. Esprit-de-corps

Bureaucracy Max Weber (1864-1920)

• A bureaucratic managerial style

• Rationally thought out

• Emphasize technical competence for evaluation

• Good for large organisations, Ford benefited, GM, GE, Xerox trusted it

Main characteristics are

• Rules and regulations

• Impersonality

• Division of labor

• Hierarchical structure

• Life long career

• Rationality

Believes in authority – charisma sound’s legal

• Compliance based

- ideal for governments

- inflexible

inhibits productivity

Behavioural school

Organisation is people

Classical school – ‘people side’ neglected

Use sociology psychology and related fields to purpose more effective ways to manage people.

Hawthorne Experiments

1. Sympathetic supervision reinforced motivation – Employee works harder if they believed that management was concerned about their welfare and special attention was paid

2. The social environment of employees have a positive influence on productivity

• Work is dull

• Coworkers influence

• Shared antagonism

• Peer pressure, group pressure has a stronger influence

From HR to Behavioral Sciences

What motivates people?

Maslow’s Theory:• Physiological Needs• Safety Needs• Social Needs• Esteem Needs• Self-Actualization

Douglas McGregor• Theory X- Work is

distasteful, Motivate by force, money, Power, Praise- Stick

• Theory Y- Public is inherently motivated to do good work - Carrot

Scientific system approach

Organization as a limited purposeful system composed of inter related parts.

Neo Human relations

From a rational man

- motivated by fear

understand they are emotional, intuitive,

creative

We all like to think ourselves as winners

Shared values : Peters & Robert Waterman

Eight attributes of excellence1. A bias for ACTION

2. Close to the customer

3. Autonomy and entrepreneurship

4. Productivity through people

5. Hands on value driven

6. Stick to the knitting

7. Simple form, lean staff

8. Simultaneous loose tight properties

If treated well

- enhanced responsiveness

- respond to opportunities

Not replacement parts like a machine part in a corporate machine.

- continuous retraining – automate increased flexibility

Labors concern for job security

- eg. Lucas TVS

Skills

Strategy

Structure

Systems

Style

Staff

Shared Values

McKINSEY 7-S FRAMEWORK

SYSTEMS APPROACH• Organization considered as unified

purposeful system composed of interrelated parts.

- Activity of one affects the others- meshed – integrated – coordinated made up of subsystem

- those that make up the whole system.

Each subsystem works independently.

SYNERGY

• Whole is greater than the sum of its parts as separate departments cooperate and interact, they become more productivity than if they each were to WORKWORK in ISOLATION.ISOLATION.

Open system Interacts with environment

- automobile plant

CLOSED SYSTEM – Does not

A prison or church

External Environment

INPUT

HUMAN

CAPITAL

LAND Process

BLDG transformation

EQUIPMENT

Technology

Information Feedback

OUTPUT• GOODS• SERVICES• OTHERS

Managers plays dominant role

- in inputs

- in transformation process

- uses feedback continual to improve inputs/ transformation

University system vs fast food joint

High Performance

- Japanese management idea

- TQM

- Re engineering

- Bench marking

- Learning Organisation

Management DefinedProcess of working with and through others to achieve organizational objectives in a changing environment.

Derailed• Problem with interpersonal• Failure to meet business objectives• Failure to build & lead a team.• Inability to change and adapt during a transition

Effectiveness and efficiency

• Do right things• Choose right goals• Concentrate resources

and efforts on them• The job gets done

but…..

• Do things right• Limited Resources

are underutilized or wasted.

Balanced emphasis

The job gets

done and

……….

Limited resources are not

wasted

Achieving organizational objectives

Getting the most of limited resources

Balance effectiveness

efficiency

Working with &through others

Key Aspects

Management Process

- Planning

- decision making

- organising

- staffing

-communicating

- motivating

- leading

-controlling

Managerial Roles: ten roles Figurehead ceremonial. Leader The liason role;

communicating particularly with external, horizontal and vertical

Informational Role (securing information above the operation

The disseminator

- to subordinates The Spokesperson role

- external

Decision role The entrepreneur role The disturbance handler The resource allocator The negotiator

- dealing with others.

HumanCapitalManagerialTechnological

EmployeesConsumersSuppliersGovernmentShareholdersCommunity

Basis of Management Theory

Planning

Organising

Role of managerScientificOrgn. theorySystems theoryBureaucraticContingency

InputsClaimants

-Interpersonal-Informational-Decision

Actuating

Controlling

Outputs

Products

Motivation

Leadership

Communication

Staffing

ServicesProfits

Satisfaction

Goal integration

Management Levels

First line – supervisors

Middle Managers – responsible for other managers operating employees

Top Managers

Overall management

Skills

Technical/procedural

Human skills

Conceptual

Conceptual

Human

Technical

Company’s Mission

the … - specific purpose

1.Clear usually from the start becomes hazy over a period of time

- need clarity when business grows

2. Unclear at the start- emerges as you learn

3.Mission becomes irrelevant

Being aware of opportunityIn light of :

Setting objectives or goals where we want to be And what we want to accomplish and when ?

The market, competitionWhat customers want ?

Our strengthsOur weaknesses

Considering planning premisesIn what environment – internal or external

Will our plans operate?

Identifying Alternatives What are the most promising alternatives to

accomplishing our objectives?

Comparing Alternatives In Light of Goals Sought

which alternatives will give us the best chance of meeting our goals at the lowest cost

and highest profit

Choosing an Alternative

Selecting the course of action we will pursue

Formulating supporting plans to buy equipmentsbuy materials

hire and train workersdevelop a new product

Numberizing plans by making budgets develop such budgets as:

-volume and price of sales -operating expenses

-expenditure for capital equipment

Peter Drucker1. What business are you in?

2. Who is our customer?

3. What value is delivered to the customer?

4. What business are we going to the in?

5. What business ought we be in?

The building blocks

- history of the organisation

values and policies

- current preferences of management-who pilot

e.g.……Nagar – Alcohol- Environment considerations- Resources

- distinctive competence

Mission statement reflects the – corporate philosophy

- identify

- character and

- image

It should feasible

precise –clear

motivating – distinctive

and strategic

ONGC: to stimulate, continue and

accelerate efforts to develop and maximise contribution of the energy sector to the economy of the country

INDAL: to be most innovative, diversified aluminum company.

Bank of Madura: a vibrant bank committed to excellence in performance through customer satisfaction.

BARC – to attain self sufficiency in Atomic energy programme

We are energy business

We are in baby business

We are in the business of cool clean an

ACC: to strive to maintain leadership in the cement industry

Four Steps in Planning

Step 1

Step 2

Step 3

Step 4

Establish a goal or set of goals

Define the present situation how far are we from the present goalsWhat are the resources available for reaching the goals

Identify the aids and barriers to the goals

Develop a plan or set of actions for reaching goals

The Hierarchy of Plans

MISSION STATEMENT

STRATEGIC PLANS

Operational Plans

Commitment principle

- materials

- capital equipment

- recruitment engineering

- new product development

- plant

- production facilities

- financing