Chapter 2

1
Chapter 2 Management Yesterday and Today

• Importance of studying management history
• Early examples of management practice
• Scientific management
• General administrative theories
• Quantitative approach to management
• Organizational Behavior and the Hawthorne studies
• The systems approach (closed versus open systems)
• The contingency approach

2
Early Examples of Management
Egyptian Pyramids

• 20 years
• 100,000 people
• Began 221 BC
• Over 4,000 miles
• 300,000 people

Great Wall of China
3
Adam Smiths Wealth of NationsDivision of
Labor
10 people doing all tasks

• 10 pins per day
• 48,000 pins per day

10 people doing specialized tasks
4
Industrial Revolution 1700s

• 1) Machine power
• Steam, coal, fossil fuels, electricity
• 2) Mass production
• Moving assembly line Ford
• 3) Efficient transportation
• Railroad, steamship
• Result Big Corporations Needed Management!

5
Development of Major Management Theories
Exhibit 2.1
6
Taylors Pig-Iron Experiment
Tonnage
Shovel Load

• 92 lbs
• 38 lbs
• 34 lbs
• 21 lbs
• 16 lbs

• 12,500
• 25,000
• 30,000
• 48,000
• 25,000

Wage increase 1.15 to 1.85 per day
Q Whats the one best way?
7
Theory of Scientific Management

• Fredrick Winslow Taylor the father
• Using scientific methods to define the one best
  way for a job to be done
• Put the right person on the job with the correct
  tools and equipment.
• Standardize the method of doing the job.
• Providing an economic incentive to the worker.

8
Frederick Taylors Principles of Scientific
Management

1. Develop a science for each element of work
2. Select, train, and develop workers
3. Cooperate with workers to make sure work done as
   planned
4. Divide work and responsibility equally between
   management and workers
5. Management takes over all work for which better
   suited

9
Frank and Lillian GilbrethsHand and Body Studies

• Used motion pictures to study hand and body
  motions
• 17 Therbligs
• Reduced number of motions from 18 to 2 (interior)

Movie and Book - Cheaper by the Dozen
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Is Scientific Management Alive Today?

• YES
• Time and motion studies are still used
• Still hire the best qualified employees
• Still design incentive systems based on output
• BUT
• Rotate workers through various jobs
• Make sure jobs are ergonomically correct
• Teach front-line employees to use their BRAINS!

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Scientific Management at Organizational Level -
General Administrative Theorists

• Q What rules make organizations work like
  well-organized machines, just like workers?
• Henri Fayol
• Developed fourteen principles of management that
  applied to all organizational situations
• Max Weber
• Ideal organization bureaucracy
• Emphasized rationality, predictability,
  impersonality, technical competence, and
  authoritarianism

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Fayols 14 Principles of Management

1. Remuneration.
2. Centralization.
3. Scalar chain.
4. Order.
5. Equity.
6. Stability of tenure of personnel.
7. Initiative.
8. Esprit de corps.

1. Division of work.
2. Authority.
3. Discipline.
4. Unity of command.
5. Unity of direction.
6. Subordination of individual interest to the
   interests of the organization.

Exhibit 2.3
13
Webers Ideal Bureaucracy
Exhibit 2.4
Q Are bureaucracies alive today?
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Modern TimesDiscussion Questions

• What evidence did you see of Scientific
  Management?
• What evidence did you see of a bureaucracy?
• What are the benefits of SM/bureaucracy?
• What are the drawbacks of SM/bureaucracy?

15
Quantitative Approach to Management

• Also called operations research or management
  science
• Evolved from mathematical and statistical methods
  developed to solve WWII military logistics and
  quality control problems
• Focuses on improving managerial decision making
  by applying
• Statistics, optimization models, information
  models, and computer simulations

16
Organizational Behavior (OB)

• The study of the actions of people at work
  people are the most important asset of an
  organization

17
The Hawthorne Studies
Control Group
Experimental Group
18
Early Advocates of OB
Exhibit 2.5
19
The Systems Approach

• System Defined
• A set of interrelated and interdependent parts
  arranged in a manner that produces a unified
  whole.
• Basic Types of Systems
• Closed systems
• Are not influenced by and do not interact with
  their environment (all system input and output is
  internal).
• Open systems
• Dynamically interact to their environments by
  taking in inputs and transforming them into
  outputs that are distributed into their
  environments.

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The Organization as an Open System
Exhibit 2.6
21
Implications of the Systems Approach

• Coordination of the organizations parts is
  essential for proper functioning of the entire
  organization.
• Decisions and actions taken in one area of the
  organization will have an effect in other areas
  of the organization.
• Organizations are not self-contained and,
  therefore, must adapt to changes in their
  external environment.

22
The Contingency Approach

• Contingency Approach Defined
• Also sometimes called the situational approach.
• There is no one universally applicable set of
  management principles (rules) by which to manage
  organizations.
• Organizations are individually different, face
  different situations (contingency variables), and
  require different ways of managing.

23
Popular Contingency Variables

• Organization size
• Routineness of task technology
• Environmental uncertainty
• Individual differences

Exhibit 2.7