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Chapter Two The Evolution of Management Thought Chapter Objectives • Identify two key assumptions supporting the universal process approach, and briefly describe Henri Fayol’s contribution. • Discuss Frederick W. Taylor’s approach to improving the practice of industrial management. • Identify at least four key quality improvement ideas from W. Edwards Deming and the other quality advocates. • Describe the general aim of the human relations movement and explain the circumstances in which it arose. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 2 Chapter Objectives (cont’d) • Explain the significance of applying open-system thinking to management. • Explain the practical significance of adopting a contingency perspective. • Describe what “management by best seller” involves and explain what managers can do to avoid it. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 3 Figure 2.1: Management Is a Global Affair Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 4 The Practice and Study of Management • The systematic study of management did not begin in earnest until after 1900. • The practice of management is much older, stretching as far back as the construction of the pyramids. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 5 The Practice and Study of Management (cont’d) • Information Overload – Management has not had a systematically recorded body of knowledge until recently. – Today, vast amounts of relevant information are readily available in print and electronic media. • An Interdisciplinary Field – The manifold increase in management theory information is due largely to its interdisciplinary nature in drawing from several fields (e.g., psychology, mathematics, economics, history, and engineering). Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 6 No Universally Accepted Theory of Management • There are several approaches to the theory and practice of management. – – – – – – The universal process approach The operational approach The behavioral approach The systems approach The contingency approach The attributes of excellence approach Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 7 The Universal Process Approach • Universal Process Approach – Assumes all organizations require the same rational management process • Core management process remains the same regardless of the purpose of the organization. • The management process can be reduced to a set of separate functions and related principles. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 8 Henri Fayol’s Universal Management Process • Fayol published Administration Industrielle et Générale in 1916. – He divided a manager’s job into five functions: 1. 2. 3. 4. 5. Planning Organizing Command Coordination Control – He developed 14 universal principles of management. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 9 Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 10 Henri Fayol’s Universal Management Process (cont’d) • Lessons from the Universal Process Approach – The management process can be separated into interdependent functions. – Management is a continuous process. – Management is a largely, though not an entirely, rational process. – The functional approach is useful because it specifies what managers should do. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 11 The Operational Approach • Frederick W. Taylor’s Scientific Management – Developing performance standards on the basis of systematic observations and experimentation • Standardization of work practices and methods to reduce waste and increase productivity • Time and task study of workers’ efforts to maximize productivity and output • Systematic selection and training of workers to increase efficiency and productivity • Differential pay incentives based on established work standards Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 12 Figure 2.2: Taylor’s Differential Piece-Rate Plan Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 13 Taylor’s Followers • Frank and Lillian Gilbreth – Refined time and motion study methods for use in work simplification • Henry L. Gantt – Refined production control and cost-control techniques – Developed the Gantt chart for work scheduling of projects – Early advocate of the importance of the human factor and the importance of customer service over profits Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 14 The Quality Advocates • Walter A. Shewhart – Introduced the concept of statistical quality control • Kaoru Ishikawa – Proposed a preventive approach to quality – Developed fishbone diagram approach to problem solving • W. Edwards Deming – Based his 14 principles on reformed management style, employee participation, and striving for continuous improvement Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 15 The Quality Advocates (cont’d) • Joseph M. Juran – Proposed the concept of internal customers, teamwork, partnerships with suppliers, and brainstorming – Developed Pareto analysis (the 80/20 rule) as a tool for separating major problems from minor ones • Armand V. Feigenbaum – Developed the concept of total quality control • Philip B. Crosby – Promoted the idea of zero defects (doing it right the first time) Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 16 The Operational Approach • Lessons from the Operational Approach – A dedication to finding a better way is still important. – Using scientific management doesn’t dehumanize workers. – Quality advocates, inspired by the scientific approach, have been right all along about the importance of quality and continuous improvement. – The operational approach fostered the development of operations management. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 17 The Behavioral Approach • The Human Relations Movement – An effort to make managers more sensitive to their employees’ needs – Arose out of the influences of • The threat of unionization • The Hawthorne studies • The philosophy of industrial humanism Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 18 Figure 2.3: The Human Relations Movement Pyramid Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 19 The Behavioral Approach (cont’d) • The Threat of Unionization – The Wagner Act of 1935 legalized union-management collective bargaining, promoting the growth of unions and union avoidance by firms. • The Hawthorne Studies (1924) – The study’s results that productivity was strongly affected by workers’ attitudes turned management toward the humanistic and realistic viewpoint of the “social man” model. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 20 The Philosophy of Industrial Humanism • Elton Mayo – Emotional factors were more important determinants of productive efficiency than were physical and logical factors. • Mary Parker Follett – Managers should be aware of how complex each employee is and how to motivate employees to cooperate rather than to demand performance from them. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 21 The Philosophy of Industrial Humanism (cont’d) • Douglas McGregor – Developed Theory X and Theory Y • Theory X: Management’s traditionally negative view of employees as unmotivated and unwilling workers • Theory Y: The positive view of employees as energetic, creative, and willing workers Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 22 Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 23 Organizational Behavior • Organizational Behavior – A modern research-oriented approach seeking to discover the causes of work behavior and to develop better management techniques • Lessons from the Behavioral Approach – People are the key to productivity. – Success depends on motivated and skilled individuals committed to the organization. – Managerial sensitivity to employees is necessary to foster the cooperation needed for high productivity. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 24 The Systems Approach • What Is a System? – A collection of parts operating interdependently to achieve a common purpose • Systems Approach – Posits that the performance of the whole is greater than the sum of the performance of its parts • Analytic versus synthetic thinking: Outside-in thinking versus inside-out thinking • Seeks to identify all parts of an organized activity and how they interact Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 25 The Systems Approach • Chester I. Barnard’s Early Systems Perspective – Wrote Functions of the Executive – Characterized all organizations as cooperative systems – Defined principal elements in an organization as • Willingness to serve • Common purpose • Communication – Strong advocate of business ethics Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 26 Figure 2.4: Barnard’s Cooperative System Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 27 General Systems Theory • General Systems Theory – An area of study based on the assumptions that everything is part of a larger, interdependent arrangement • Levels of systems – Each system is a subsystem of the system above it. – Identification of systems at various levels helps translate abstract systems theory into more concrete terms. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 28 Figure 2.5: Levels of Living Systems Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 29 General Systems Theory (cont’d) • Closed Versus Open Systems – Closed system: A self-sufficient entity – Open system: Something that depends on its surrounding environment for survival • Systems are classified as open (closed) by how much (how little) they interact with their environments. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 30 General Systems Theory (cont’d) • New Directions in Systems Thinking – Organizational learning and knowledge management • Organizations are living and thinking open systems that learn from experience and engage in complex mental processes. – Chaos theory • Every complex system has a life of its own, with its own rule book. – Complex adaptive systems • Complex systems are self-organizing. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 31 Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 32 The Contingency Approach • Contingency Approach – A research effort to determine which managerial practices and techniques are appropriate in specific situations • Different situations require different managerial responses. • It deals with intercultural feelings in which custom and habits cannot be taken for granted. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 33 Figure 2.6: The Contingency View: Compromise Copyright © Houghton Mifflin Company. All rights reserved. A Chapter Two | 34 The Contingency Approach (cont’d) • Contingency Characteristics – An open-system perspective • How subsystems combine to interact with outside systems – A practical research orientation • Translating research findings into tools and situational refinements for more effective management – A multivariate approach • Many variables collectively account for variations in performance. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 35 The Contingency Approach (cont’d) • Lessons from the Contingency Approach – Approach emphasizes situational appropriateness rather than rigid adherence to universal principles – Approach creates the impression that an organization is captive to its environment Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 36 The Era of Management by Best Seller: Proceed with Caution • Management in the Mainstream – Gurus and Best Sellers • Peter Drucker—author and first management guru • Peters and Waterman’s bestseller In Search of Excellence • Donald Trump’s hit show “The Apprentice” – What’s Wrong with Management by Best Seller? • Academics point to shoddy research and selective inclusion of anecdotal evidence. • It encourages simplistic thinking: Upper management assumes that there is a one-size-fits-all solution that’s a magic bullet quick-fix to solve the organization’s problems. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 37 Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 38 Summary • Management is an interdisciplinary and international field that has evolved over the years. • The operational approach has evolved from scientific management to operations management. • Quality advocates teach the strategic importance of high-quality goods and services. • Management has turned to the human factor in the human relations movement and organizational behavior approach. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 39 Summary (cont’d) • Under the systems approach, modern organizations are viewed as open systems. • The contingency approach stresses situational appropriateness rather than universal principles. • A quick-fix is unlikely to solve an organization’s unique problems. Copyright © Houghton Mifflin Company. All rights reserved. Chapter Two | 40 Terms to Understand • Universal process approach • Operational approach • Scientific approach • Operations management • Human relations movement • Theory Y Copyright © Houghton Mifflin Company. All rights reserved. • Organizational behavior • System • General systems theory • Closed system • Open system • Contingency approach • Multivariate analysis Chapter Two | 41