Chapter 2: The Management Movement

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Chapter 2The Management Movement

• Section 2.1
• The Evolution of Management

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The Industrial Revolution

• Began in the United States in 1860
• Just before the Civil War
• Period during which a country develops an
  industrial economy
• Before the Industrial Revolution, economy based
  on agriculture
• By the late 1800s, economy depended on industries
  such as oil, steel, railroads, and manufactured
  goods

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Causes of the Industrial Revolution

• Many people left their farms to work in factories
• Professional managers supervised their work
• Changes in technology, communication, and
  transportation
• Telegraph and cable lines extended across the
  U.S. after the Civil War
• Railroad lines, canals, roads, steamships

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Captains of Industry

• Powerful businesspeople who created enormous
  business empires dominated and shaped the U.S.
  economy

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Creation of Monopolies

• The captains of industry often pursued profit and
  self-interest above all else
• Drove competitors out of business
• Created giant companies that maintained
  monopolies in their industries
• Monopoly
• Occurs when one party maintains total control
  over a type of industry
• Trust giant industrial monopoly
• By 1879, Rockefeller controlled gt90 of the
  countrys refining capacity and pipelines

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The Break-Up of Trusts

• People became worried about the concentration of
  wealth in the hands of a only a few
• In response, the government began regulating
  business

Cornelius Vanderbilt
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The Break-Up of Trusts

• The Interstate Commerce Act, 1887
• The railroads gave rebates to some customers but
  not others
• This act forced railroads to publish their rates
  and forbade them to change rates without
  notifying the public
• Established the Interstate Commerce Commission
  (ICC) to supervise the railroads

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The Break-Up of Trusts

• The Sherman Act, 1890
• Made it illegal for companies to create
  monopolies
• Intended to restore competition
• Example
• Standard Oil Company was broken into smaller
  companies so that other oil companies could
  compete with the former giant
• John D. Rockefeller

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New Challenges for Management

• When most Americans worked on farms,
  sophisticated management techniques were not
  necessary
• By the end of the nineteenth century, giant
  companies employed thousands of people and
  distributed products all over the country
• Workers performed tasks that needed to be
  coordinated
• These changes demanded new ideas about how to
  manage people working in large corporations

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Frederick W. Taylor and Scientific Management

• Wanted to find ways to motivate workers to work
  harder
• To increase efficiency, he tried to figure one
  best way to perform a particular task
• Used a stopwatch to determine which work method
  was most efficient
• These time and motion studies lead to scientific
  management principles

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Frederick W. Taylor and Scientific Management

• Scientific management seeks to increase
  productivity and make work easier by carefully
  studying work procedures and determining the best
  methods for performing particular tasks

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Frederick W. Taylor and Scientific Management

• Employers should gather, classify, and tabulate
  data in order to determine the one best way of
  performing a task or series of tasks.
• Employers should study worker strengths and
  weaknesses and match workers to jobs. Employers
  should also train employees in order to improve
  their performance.
• The principles of scientific management should be
  explained to workers.
• Management and workers should be interdependent
  so that they cooperate.

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Frederick W. Taylor and Scientific Management

• Companies today continue to use the principles of
  scientific management
• Marriott Corporation
• Customer satisfaction

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The Hawthorne Studies of Productivity

• Researchers began to look at the relationship
  between working conditions and productivity
• Series of experiments at the Hawthorne plant of
  Western Electric in Cicero, IL
• Lowered the lighting expecting productivity to
  fall
• What happened?

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The Hawthorne Studies of Productivity

• Baffled by results, a team of psychologists from
  Harvard University were called upon
• Over five years, hundreds of experiments were
  conducted at the plant
• Different wage payments
• Rest periods
• Work hours
• What were the results?

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The Hawthorne Studies of Productivity

• Researchers concluded that productivity rose
  because workers worked harder when they received
  attention
• Hawthorne effect
• Change of any kind increases productivity
• Factors other than the physical environment
  affected worker productivity
• Psychological and social conditions, effective
  supervision

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Abraham H. Maslow and the Hierarchy of Needs

• According to Maslow
• All people have five basic types of needs
• People fulfill lower-level needs before seeking
  to fulfill higher-level needs
• One set of needs must be met before another is
  sought
• Hierarchy of needs is his grouping and ordering
  of physical, security, social, status, and
  self-actualization needs

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Maslows Hierarchy of Needs
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Applying Maslows Theory to Management

• At the lowest level, workers are motivated by
  basic needs
• Wages or salary, physical conditions
• Safety or security needs
• Providing insurance, retirement benefits, job
  security
• Safe from physical, psychological, or financial
  harm

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Applying Maslows Theory to Management

• Social needs
• Provide a work environment in which colleagues
  interact
• Company lunch rooms, company retreats
• Status needs
• Provide workers with signs of recognition that
  are visible to others
• Job titles, private offices, designated parking
  spaces, awards, promotions

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Applying Maslows Theory to Management

• Self-fulfillment needs
• Provide employees with opportunities to be
  creative at work
• Include employees in decision making
• Example
• ITTs Ring of Quality Control