Chapter 2

The Evolution of Management Thought

Leanne Powers MHR301

From McGraw-Hill Irwin Contemporary Management

Evolution of Management Theory

Job Specialization

Adam Smith (1723-1790) –Realized that job specialization resulted in much higher efficiency and productivity • Breaking down the total job allowed for the division of labor in which workers became very skilled at their specific tasks.

Scientific Management

• Characterized by a worker-task relationship, with efficiency as its primary goal • Associated with the industrial era in Europe and the U.S.

• Defined by Fredrick W. Taylor (1856-1915)

Taylor’s Principles:

1. Study the way workers perform tasks and experiment with ways of improving them 2. Determine rules and SOPs govern task performance that 3. Select and train (according to the rules) the worker for the task 4. Establish a performance standard, and develop a pay system that rewards above-standard performance

How were these applied? What were some side-effects?

• Managers didn’t always reward increased output • Jobs became dull or stressful • Increased turnover • Workers restricted output (sandbagging)

Followers of Taylor

• Frank (1868-1924) and Lillian (1878-1972) Gilbreth • Time-and-motion study • Also studied job fatigue

Administrative Management Theory

Concerned with how to design the organizational structure for high efficiency and effectiveness

Max Weber (1864-1920): Principles of Bureaucracy

1. Manager’s formal authority derives from his position 2. People should occupy positions because of performance, not social standing 3. Each person’s formal authority and responsibilities should be clearly specified 4. Positions should be arranged hierarchically 5. Managers should create a well defined system of rules, SOPs, and norms

Henri Fayol (1841-1925) Principles of Management

• Division of labor • Authority and responsibility • Unity of command • Line of authority • Centralization • Unity of direction • Equity •Order •Initiative •Discipline •Remuneration of personnel •Stability of tenure of personnel •Subordination of personal interest •Esprit de corps

Behavioral Management Theory

Mary Parker Follett (1868-1933) • “Authority should go with knowledge” • First advocate of empowerment, self-managed teams

Behavioral Management Theory

• Hawthorne studies • Human relations movement • The workings of the informal organization (norms) • Organizational behavior

Theory X and Theory Y

Douglas McGregor (1906-1964) • Theory X/Theory Y • Believed that one or the other assumption tended to drive managerial behavior in a particular organization

What are examples?

Management Science Theory

Generally, a quantitative approach • Quantitative management (modeling, simulation, queuing theory) • Operations management (production) • Total quality management (TQM) • Management Information Systems (MIS)

Organizational Environment Theory (1960s) : Open Systems View

Closed System

• System that operates as though it is self-contained • Likely to experience entropy and disintegrate

Contingency Theory

The idea that the organizational structures and control systems are contingent on characteristics of the external environment

Contingency Theory

Mechanistic structures:

• Central authority • Clear tasks and rules • Close supervision

Organic structures:

• Decentralized • More authority to middle and line managers • More cross-functioning and empowerment