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THE EVOLUTION OF THE ORGANIZATION AND MANAGEMENT THEORIES 17-Jul-15 AHAB/EVOLUTION/1102 1 A theory is a 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. Stoner: pg. 28 Why: 1. Guide management decision. 2. Shape our view of organisation. 3. Make us aware of the business environment. 4. A source of new idea. 17-Jul-15 AHAB/EVOLUTION/1102 2 The Neo-Human Relation Movement The Contingency Approach The System Approach THE EMERGENCE OF M & O THEORIES The Quantitative School The Behavioral Sc School Classical Management Theories 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 17-Jul-15 AHAB/EVOLUTION/1102 3 1900s 1940s 1970s TRADITIONAL THEORIES MODIFICATION CONTEMPORARY EVOLUTION OF ORGANISATION AND MANAGEMENT THEORIES 17-Jul-15 AHAB/EVOLUTION/1102 4 Traditional/ Classical Theories Scientific Management Efficient Task Performance Bureaucratic Model Authority & Structure Human Relation Administrative Theory Universal Management 17-Jul-15 Principles AHAB/EVOLUTION/1102 5 Scientific Management Scientific Management F.W. Taylor (1856 – 1917) Using time study, broke job into components, design best and quickest method of performing each component. - Using differential rate system. 17-Jul-15 AHAB/EVOLUTION/1102 6 Scientific Management 4 Basic Principles: (i) The development of true science of management – best method for performing job. (ii) Scientific Selection of workers – skill and task allocation. (iii) Scientific education and development of worker. (iv) Intimate, friendly cooperation between management and labour. 17-Jul-15 AHAB/EVOLUTION/1102 7 Scientific Management CONTRIBUTION OF SCIENTIFIC MANAGEMENT 1. Modern assembly line 2. His efficiency technique being adopted by many organisation. 3. Established job design, scientific selection and development of workers. 4. Fostered a rational approach to solving problems and laid groundwork for the professionalization of management. 17-Jul-15 AHAB/EVOLUTION/1102 8 Scientific Management LIMITATION • Do not take into account the human and social aspects. • Emphasis on Productivity/Profit only. • Treat men like machine 17-Jul-15 AHAB/EVOLUTION/1102 9 Administrative management Theory Administrative management Theory by Henry Fayol (1804 – 1925) 1st to systematize organisation. Using scientific forecasting and proper method of management Macro Concept Focus on formal organisation structure that separate basic process of general management. 17-Jul-15 AHAB/EVOLUTION/1102 10 Administrative management Theory Management Process planning, organising, command, coordination and control. 17-Jul-15 AHAB/EVOLUTION/1102 11 Fayol’s 14 Principles Administrative management Theory 1. Division of work 2. Authority and Responsibility 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of individual interest to general interest. 7. Remuneration of personnel. 8. Centralization. 9. Scalar of Chain : authority. 10. Order : orderly place in organisation. 11. Equity : equity and justice 12. Stability of tenure of personnel : adaptation 13. Initiative 14. Esprit de corps. 17-Jul-15 AHAB/EVOLUTION/1102 12 BUREAUCRATIC MODEL BUREAUCRATIC MODEL Max Weber (1864 – 1920) Stressed the need for a strictly defined hierarchy governed by clearly defined regulations and lines of authority. 17-Jul-15 AHAB/EVOLUTION/1102 13 BUREAUCRATIC MODEL Organisation – take the form of a Bureaucratic structure. BUREAUCRATIC MODEL RATIONAL-LEGAL AUTHORITY The right to exercise authority based on position. - position with power - compensation : fixed salary - hierarchy of authority - technical competence - governed by rules and regulations 17-Jul-15 AHAB/EVOLUTION/1102 14 BUREAUCRATIC MODEL DIMENSIONS OF BUREAUCRACY 1. Division of labour based on functional specialization 2. A well-defined hierarchy of authority; 3. A system of rules covering the rights and duties of position 4. A system of procedures for dealing with work situations; 5. An impersonality in interpersonal relations. 6. A system of promotion and selection for employment based on technical competence. 17-Jul-15 AHAB/EVOLUTION/1102 15 Contribution of Fayol’s and Weber’ Theories Much of their theories have been in use till today e.g. - Concept of management skill - Concept of identifiable principles for effective managerial behaviour - Made managers aware of the basic kinds of problems in any organisation. 17-Jul-15 AHAB/EVOLUTION/1102 16 Limitation - Appropriate for the past where environment was relatively stable and predictable. - Today’s environments are more turbulent and impredictable. - Too general for today’s highly complex organisation and specialization. 17-Jul-15 AHAB/EVOLUTION/1102 17 Human Relations Movement Human Relations Movement Mary Parker Follet - had considered workers as human Chester Bernard - social need - Psychological need Individual & Group Manager and subordinate relation Early attempt to discover the social and psychological factor that would create effective human relation. 17-Jul-15 AHAB/EVOLUTION/1102 18 Traditional/ Classical Theories Scientific Management Efficient Task Performance Modifications Management Science Economic Technical Rationality Bureaucratic Model Human Relation Authority & Structure Administrative Theory Universal Management 17-Jul-15 Principles Behavourial Science Psychology, Sociology, etc. AHAB/EVOLUTION/1102 19 Human Relations Movement THE HAWTHORNE EXPERIMENTS Elton Mayo (1880 – 1949) - Westerm Electric’s Hawthorne Plant - Chicago - To study relationship between level of lighting in the work-place and workers productivity. - ‘Hawthorne effect’ The Hawthorne Effect: The possibility that workers who receive special attention will perform better simply because they received that attention. 17-Jul-15 AHAB/EVOLUTION/1102 20 Human Relations Movement Mayo introduced the concept of “Social man” – motivated by social need, on-the-job relationships, and responding more to work group pressure than to management control – was necessary to compliment the old concept of “rational man” motivated by personal economic needs. 17-Jul-15 AHAB/EVOLUTION/1102 21 Human Relations Movement Contribution of H.R. - Improved classical approach by stressing social needs. - Focus on workers – not on techniques. Emphasized management skill rather than technical skill. - Focus on group dynamics rather than individual. 17-Jul-15 AHAB/EVOLUTION/1102 22 Human Relations Movement Limitation 1. Assumming satisfied worker : to be more productive workers. 2. Social environment – only one of the several factors that influence productivity – e.g. - salary level - culture - structure - interest . 17-Jul-15 AHAB/EVOLUTION/1102 23 The Behavioral Science School The Behavioral Science School HR developed into BS Introduced fields like: Psychology Sociology Anthropology HR: Social man – motivated by desire for form relationships with others. 17-Jul-15 AHAB/EVOLUTION/1102 24 The Behavioral Science School Behavioral Science: Argyris, Maslow, McGragor:Self-actualizing – a more accurate concept to explain Human Motivation. “Complex man” No two people are exactly alike. 17-Jul-15 AHAB/EVOLUTION/1102 25 The Behavioral Science School CONSTRIBUTION OF BEHAVIOURAL SCIENCE - Enormous contributions to understanding of individual motivation, group behaviour interpersonel relationship at work and the importance of work to human beings. - Continue to contribute new insights in important areas as leadership, conflict, power, organizational change and communication. 17-Jul-15 AHAB/EVOLUTION/1102 26 The Behavioral Science School LIMITATIONS - Its potential not fully realized . - managers resist suggestion. - Model, theories and jargon are too complicated and abstract to practicing manager. - Difficult to interpret by practicing managers. 17-Jul-15 AHAB/EVOLUTION/1102 27 MANAGEMENT SCIENCE SCHOOL MANAGEMENT SCIENCE SCHOOL -Quantitative -Operation research -Formed during World War II by British to solve a number of new, complex problem in warfare. -Application of OR in the industry after the war to solve problems related to planning and controlling in Management. 17-Jul-15 AHAB/EVOLUTION/1102 28 MANAGEMENT SCIENCE SCHOOL CONTRIBUTIONS In planning and controlling activities in development of product strategies, human resource development programme, product schedule etc. LIMITATIONS Mathematical basis complicated practicing manager. of management is too for Inadequate in dealing with sociology, psychology at work. 17-Jul-15 AHAB/EVOLUTION/1102 29 Traditional/ Classical Theories Scientific Management Efficient Task Performance Modifications Management Science Contemporary Approaches System Approach Economic Technical Rationality Subsystem & Environment Bureaucratic Model Human Relation Authority & Structure Administrative Theory Universal Management 17-Jul-15 Principles Behavourial Science Psychology, Sociology, etc. AHAB/EVOLUTION/1102 Contingency View No Best Method -Situational Factors. 30 Environment A D B E Sub-systems C System Approach 17-Jul-15 AHAB/EVOLUTION/1102 Environment 31 SYSTEM APPROACH DEFINITION OF SYSTEM “A system is defined as an organised, unitary whole composed of two or more interdependent parts, components, or subsystems and delineated by identifiable boundaries from its environmental suprasystem.” - (Kast + Rosenweig, pg. 103) 17-Jul-15 AHAB/EVOLUTION/1102 32 SYSTEM APPROACH THE SYSTEM APPROACH Concepts:Subsystems Synergy Open and close systems System Boundary Flow Feedback 17-Jul-15 AHAB/EVOLUTION/1102 33 THE CONTINGENCY APPROACH Situational Approach It depends upon what – in what way To identify which technique will, in particular situation, under particular circumstances and at a particular time – best contribute to the attainment of goals. For Examples: Unskilled workers – work simplification Skilled workers – job enrichment might be effective. 17-Jul-15 AHAB/EVOLUTION/1102 34 Traditional/ Classical Theories Scientific Management Efficient Task Performance Modifications Management Science Economic Technical Rationality Contemporary Approaches System Approach Subsystem & Environment Bureaucratic Model Human Relation Authority & Structure Administrative Theory Universal Management 17-Jul-15 Principles Behavourial Science Psychology, Sociology, etc. AHAB/EVOLUTION/1102 Contingency View No Best Method -Situational Factors. 35 IN CONSTRUCTION 17-Jul-15 AHAB/EVOLUTION/1102 36 IN CONSTRUCTION TRADITIONAL PROCUREMENT APPROACH 17-Jul-15 NON TRADITIONAL PROCUREMENT APPROACHES AHAB/EVOLUTION/1102 37 TRADITIONAL APPROACH Client Architect contractor Design team Hand on Method PD Design t 17-Jul-15 Sub-contractors Const. Occup. tender AHAB/EVOLUTION/1102 38 NON TRADITIONAL APPROACHES DESIGN AND BUILT Client Contractor Design team PD D/B O t – t1 17-Jul-15 AHAB/EVOLUTION/1102 39 3. Turnkey Approach PD D/B O t – t2 4. BOOT PD D/B O t 17-Jul-15 AHAB/EVOLUTION/1102 40 Project Management Non-executive Client Design team Contractor PM/Executives (Coordinator) P.M. Executive Client PM Design team 17-Jul-15 AHAB/EVOLUTION/1102 Construction Team 41 Construction Management Client PM Design team Management Contracting SKL Construction/Trade 17-Jul-15 AHAB/EVOLUTION/1102 42 THE END 17-Jul-15 AHAB/EVOLUTION/1102 43 THANK YOU 17-Jul-15 AHAB/EVOLUTION/1102 44