A History of Management Thought Part 1

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A History of Management Thought Part 1

• MGT 424
• Senior Seminar in Management Topics

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Learning Objectives

• Explain the emergence of the modern manager in
  the U.S. and Frederick Taylors work to develop
  scientific
• management
• Know the European influence of Weber and Fayol on
• organization theory in developing
  administrative
• management.

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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
  managements roles at differing organizational
  levels for a career and for business competitive
  advantage.

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Timeline
Historical Timeline
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Professionalism of Management

• Education Late 19th Century Business taught in
• 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.

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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)?

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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
  workers 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

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Frederick Winslow TaylorFather 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.

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Frederick Taylor Cont.

• Biography Wealthy Philadelphia Quaker family
• 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

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Frederick Taylor Cont.

• Soldiering people dont 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?

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Taylors 4 Principles of Scientific Management

• Taylors 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.

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Demise of Scientific Management

• In hands of business
• Scientific Management tool to exploit
  labor
• By 1915 growing labor against Taylorism
• Union members/100 workers 18801.8 19007.5
  191410.5
• 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

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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.
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Management of the Organization

• While in the US Management focuses on
  individual at
• work
• In Europe early theory (that in 1930s 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

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Webers Principles of Bureaucracy

• 1. Formal authority comes from ones
  organizational
• position (Bureaucracy rational power)
• 2. Positions should be held based on merit,
  not social
• standing or personal contacts. (Break with
  traditional
• power)
• Each positions 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.

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Henri Fayols Principles of Management

• Division of Labor allows for job specialization.
• Authority and Responsibility both formal and
  informal 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.

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Fayol - Continue

• Order place workers where most useful and have
  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

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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.

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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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2nd 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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3rd 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.

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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.

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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.

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Hawthorne Experiments - Importance

• Changed perspective in management from Taylors
  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 1950s). Mayos views
• lead to the construction of manager
• as a leader.

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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
• 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.

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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.

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Management Science Approach- Cont.

• Total Quality Management (TQM) analyzing input,
  conversion, and output to increase product
  quality.
• Management Information Systems (MIS) provides
  information vital for effective decision making

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Systems Approach
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Contingency Approach

• There is no one best way.
• Organizing (and other) decisions that match the
  demands of the environment provide adaptation.

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So-What does a manager do?

• It depends on where they are in the organization

Level Activities Skill
Top Direction/goals. Allocate resources. Set standards. Conceptual
Middle Integrate knowledge. Balance short-term with Long term goals. Develop people.
Frontline Secure resources and Opportunities. Manage performance and improvements. Technical
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What do Top Managers Do?
Myth Fact
Work is reflective and involve systematic planning. Work is action oriented, stressed 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 Source Mintzberg The Managers Job Relies on judgment and intuition to Make decisions
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Roles of Top Manager- Mintzberg

• 1. Interpersonal Roles
• Figurehead represents organization and its
  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

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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

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Implications for Effective Managers

• 1. Requires insight and introspection
• 2. Systematic ways to share information
  managers 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)

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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