Transcript A History of Management Thought

MGT 424
Senior Seminar in Management Topics
Learning Objectives
 Explain the emergence of the modern manager in the
U.S. and Frederick Taylor’s work to develop “scientific
management”
 Know the European influence of Weber and Fayol on
organization theory in developing administrative
management.
Learning Objectives - Continue
 Know the contribution of Hawthorne experiments
(Mayo) to management; and, know the developments
of management into human relations, quantitative
approaches, organizational behavior, and the systems
and contingency approaches.
 Be familiar with the broad perspectives for
management’s roles at differing organizational levels
for a career and for business competitive advantage.
Historical
Timeline
Timeline
Professionalism of Management
 Education: Late 19th Century Business taught in
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high schools/commercial schools = bookkeeping
+ secretarial skills.
Wharton (1881) – accounting, economics and law
University of Chicago & UC (Berkley), 1889 –
undergrad schools of commerce
NYU & Dartmouth (Amos Tuck), 1900
Harvard (1908) -focus on educating managers of
large firms – commercial law, accounting and
general commerce. Electives: Management in
transportation, industry, marketing.
First Management Issues of
Industry
 How do we efficiently organize people at work
with these new technologies of production and
large markets?
 How do we hire, pay, and coordinate people at
work to gain productivity?
 How do we do all of these to create economic
wealth (profit)?
The Beginning of Management –
Pay?
 1886 – Henry Towne, Pres. of Yale and Town
Manufacturing Co., “The Engineer as Economist:” How do
we relate work to increasing economic development?
 Gain sharing” or “Towne Plan” – Link profits to
worker’s pay: Wage rate + performance incentive– All
savings in costs were shared with workers.
 Halsey Plan: Sharing profits does not work.
Bosses hide profits. Pay people on basis of a wage + 1/3rd
pay incentive for higher productivity.
 1938 – Fair Labor Standards Act set min. wage at 25¢/hr
Frederick Winslow Taylor
“Father of Modern Management”
 In 1895- proposed a Piece Rate System:
 Observe & Analyze – set the “standard” for job
(use Time and Motion studies)
 Pay workers for meeting/exceeding standard
 Pay individual worker – not everyone, or group/department,
or the “job” = pay according to individual value to business
What Adam Smith had done for markets, Taylor does
for the firm – place wealth creation squarely on the
individual worker who is managed, rewarded for
effort.
Frederick Taylor – Cont.
 Biography: Wealthy Philadelphia Quaker family
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Worked in hydraulics factory as laborer/foreman/chief
engineer
At 25 earned college degree in engineering
At 35- consultant: introduced functional foreman,
production planning, differential pay= cut costs/increased
production)
1905 – wrote Shop Management
1909-14: Lecturer at Harvard
Management consultant – US Navy and Army
1911- Wrote Scientific Management
Frederick Taylor – Cont.
 “Soldiering” – people don’t
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always
try/work hard. WHY?
If we work hard and complete the
job – no more work next day; fewer
workers needed!
SO what is the amount of time
needed to do the job?
How should it be performed –
“One Best Way”
What is the standard?
Taylor’s 4 Principles of Scientific
Management
Taylor’s four principles of scientific management:
 Work methods should be based on scientific
observation – not “rules of thumb.”
 Scientifically select, train, and develop each worker
 Cooperate with workers to ensure that scientifically
developed methods are being followed.
 Managers analyze and plan work; workers actually
perform the tasks.
Demise of Scientific Management
 In hands of business –
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Scientific Management = tool to exploit labor
By 1915 – growing labor against “Taylorism”
Union members/100 workers: 1880=1.8; 1900=7.5;
1914=10.5
Congress investigates and US Commission on
Industrial Relations issues Hoxie Report (1915)
declaring Scientific Management as exploitive of labor.
It will influence Management thought – but Scientific
Management is dead – until rediscovered in Japan –
the 1970/s wave of Quality Management
Frank and Lillian Gilbreth
Frank Gilbreth – engineer; pioneered Scientific Methods in
bricklaying.
– Member of Taylor Society (SAM)
Lillian Gilbreth – engineer/industrial psychologist (PhD);
stress and fatigue
Together 12 Children – Cheaper by the Dozen
Time and motion studies
– Breaking up each job action into its components
(Therblig).
– Finding better ways to perform the action.
– Reorganizing each job action to be more efficient.
Management of the Organization
 While in the US “Management” focuses on individual at
work
 In Europe early theory (that in 1930’s will become part of
American “management”) focuses on the “organization” –
Administrative Management Theory.
 Max Weber (German) – focuses on bureaucracy as a
formal organization to gain efficiency.
 Henri Fayol (French) – focuses on 14 principles of
Administration as “One Right Way”
Weber’s Principles of Bureaucracy
1.
Formal authority comes from one’s organizational
position (Bureaucracy = rational power)
2. Positions should be held based on merit, not social
standing or personal contacts. (Break with traditional
power)
 Each position’s responsibilities and relationship to other
positions should be clearly specified. (Roles)
 Authority in a bureaucracy is hierarchical power.
 Formalization = well-defined system of rules
 (SoPs), operating procedures, and norms = control via
“rational” power.
Henri Fayol’s Principles of
Management
 Division of Labor: allows for job specialization.
 Authority and Responsibility: both formal and informal
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authority result from special expertise.
Unity of Command: workers have only one boss.
Line of Authority: clear chain of command, top to
bottom of the firm.
Centralization: degree to which authority rests at the top
of the organization.
Unity of Direction: single plan of action to guide the
organization.
Equity - The provision of justice and the fair and impartial
treatment of all employees.
Fayol - Continue
 Order: place workers where most useful and have
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career opportunities.
Initiative: encourage employees to act on their own.
Discipline: workers need to obey
Remuneration of Personnel: pay what is fair.
Stability of Tenure of Personnel: Long-term
employment is important
Subordination of Individual Interest to the
Common Interest: interest of organization priority
Esprit de corps: Have enthusiasm
Mary Parker Follett
 Mary Parker Follett: The “Humanizing” of
Management and focus on collaboration.
 Taylor ignored the human side of the work, Follett
argued:
 Organizations are an interdependence of people.
 People have own interests but also share common goals
which should be the basis of conflict resolution.
 Use of power/coercion creates conflict. People will
defer to the facts of a situation for authority.
The Hawthorne Studies: New
Direction
The “Hawthorne Experiments” were a series of studies into
worker productivity performed at the Cicero plant
beginning in 1924 and ceasing in 1932, initially conducted
by the National Research Council and later by Western
Electric and Harvard University
Illumination Studies, 1924 -1927: Does Use of Electric Lights
Increase Productivity?
Hypothesis: Increased illumination is correlated with higher
productivity.
Finding: No relationship
“Hawthorne effect” or "halo effect“ – Researcher
affects outcome (bias)
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Hawthorne Experiment
Relay Assembly Test Room Experiments, 1927-1929 Harvard
research team set up experiment with 5 females from Relay
Assembly area to test impact of incentives and work conditions
on worker fatigue
There is no conclusive evidence
that these affected fatigue or
productivity.
Productivity and worker
satisfaction increase when
conditions are improved
and made worse.
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Hawthorne Experiment
 Mica-Splitting Test group, 1928 – 1930 Relationship
between work conditions and productivity, by
maintaining a piece-rate incentive system and varying
work conditions
 Productivity increased by about 15% and researchers
concluded that productivity was affected by non-pay
considerations
 Conclusion: social dynamics were the basis
 of worker performance.
Hawthorne Interviews
 Plant-wide Interview program, 1928-1931
1. Western Electric implemented a plant-wide
survey of employees to record their concerns and
grievances. From 1928 to 1930, 21,000 employees were
interviewed.
 2. Data supported the research conclusion that work
improved when supervisors began to pay attention to
employees, that work takes place in a social context in
which work and non-work considerations are
important, norms and groups matter to workers.
Hawthorne : Final Experiment
 Bank Wiring Observation group, 1931-1932
 The final test studying 14 male workers in the Bank
Wiring factory to study the dynamics of the group when
incentive pay was introduced.
There was no effect. Why?
Work group established a work “norm” – a shared
expectation about how much work should be
performed in a day and stuck to it, regardless of
pay.
 The conclusion: informal groups operate in the
work environment to manage behavior.
Hawthorne Experiments Importance
 Changed perspective in management from Taylor’s
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engineering approach to a social sciences approach,
leading to "Human Relations" approach and, later,
"Organization Behavior" approach:
Engineering approach subordinated to social sciences
Managers = leaders, motivators, communicators
At one time major contributors to Management theory
worked on Hawthorne experiments.
Elton Mayo - “Human Relations”
approach (to 1950’s). Mayo’s views
lead to the construction of manager
as a leader.
McGregor: Theory X, Theory Y
There are two ways of perceiving people at work:
Theory Y:
 Work is as natural as play or rest- not disliked..
 Workers will exercise self-direction and
self-control
 Meeting goals is satisfying and motivating. .
 Workers seek responsibility. ...
 Workers will be creative and are willing to do more.
Theory X:
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The average human inherently dislikes to work
So, people must be coerced, controlled, directed.
Workers prefer this – but want security.
The average worker is only partially utilized.
Management Science Approach
 Post World War II – British use of mathematics,
Operations Research, in military operations find
applications in US post war industrial development.
 Quantitative management — use of mathematic
models, linear programming, simulation systems and
chaos theory to solve management problems.
 Operations management —techniques used to
analyze all aspects of the production system.
Management Science ApproachCont.
 Total Quality Management (TQM) —analyzing
input, conversion, and output to increase product
quality.
 Management Information Systems (MIS) —
provides information vital for effective decision
making
Systems Approach
Contingency Approach
 There is no “one best way.”
 Organizing (and other) decisions that match the demands of the
environment provide adaptation.
So-”What does a manager do?”
It depends on where they are in the organization:
Level
Activities
Top
Direction/goals.
Allocate
resources.
Set standards.
Middle
Integrate
knowledge.
Balance shortterm with Long
term goals.
Develop people.
Frontline
Secure resources and
Opportunities.
Manage performance
and improvements.
Skill
What do Top Managers Do?
Myth
Fact
Work is reflective and involve Work is action oriented, stressed
systematic planning.
immediate response, and work was
Varied.
No Regular Duties
Duties are ritual and ceremonial,
negotiations, and processing soft
information
Relies on formal MIS for
decision-making
Favor verbal, immediate information – even
informal, soft data which is processed into
coherent picture
Management is a
Science
Relies on judgment and intuition to
Make decisions
Source: Mintzberg: The Managers Job
Roles of Top Manager- Mintzberg
1. Interpersonal Roles:
 Figurehead – represents organization and it’s
authority
 Leader – has power to make things happen
 Liaison – makes contacts with peers and other
managers
2. Informational Roles:
 Gathers and processes information
 Monitor – scan environment for relevant cues
 Disseminator – passes selected information to
those who need to know
 Spokesperson – informs outsiders
Roles of Top Managers –Cont.
3. Decisional Roles:
 Entrepreneur – searches for new idea to implement,
keeps mental track of their progress
 Disturbance handler – tries to keep conflicts in balance
and arbitrates conflict
 Resource allocator – decides who gets what (resources
and power); personal basis of decision-making
4. The Integrated Job of Manager:
 Implication for new manager – requirement for
networks of information
 Implication for Team Managers – requirement for
information sharing
Implications for Effective Managers
1. Requires insight and introspection
2. Systematic ways to share information – manager’s
monopoly versus periodic debriefing and exchanges
3. Ability to step back and see “big picture” – small
emergencies detract; need to develop a “big picture”
4. Use your specialists – and they need to understand the
need for urgency over elegance
5. See obligations as an opportunity and take time for
introspection (thinking)
Implications for Business Education
1. Stress ‘cognitive learning “ – stress thinking skills
over “skills”
2. Put students into situations to develop skills –
peer relationships, negotiating, motivating,
processing information, decision making under
ambiguity