Evolution of management

1. Evolution of management “It is the multipurpose organ that manages business, managers, workers and work”./ Peter Drucker

2. Evolution of Management Theory Org. Environment Management Science Behavioral Management Administrative Management Scientific Management 1940 2000 1890

3. PRODUCTION OPERATIONS BEHAVIOURAL SCIENCE HUMAN RELATIONS Scientific management Classical org. theory MARY PARKER X, Y&Z F.W. TAYLOR HAWTHORNE WEBER FEYOL SYSTEMS APPROACH CONTINGENCY APPROACH

4. SCIENTIFIC MANAGEMENT • Frederick Winslow Taylor known as the father of scientific management. • Born in 1856 at Boston, Massacusetts. • Did his apprenticeship in Enterprise Hydrolic Work in Philadelphia. • Joined as a labourer in Midvale Steel Company. • He rose to the position of Chief Engineer by virtue of his intelligence. • He worked as a General Manager in Manufacturing Investment Company in Philadelphia where he propounded the concept of Scientific Management.

5. Background to the Development of Scientific Management • During the later part of 19th Century. • Industrial Revolution to the maturity stage. • American business and industry substantially expanded. • New managerial class. • Simple day-to-day problems to complicated problems. • Needed comprehensive and integrated approach to manage industry. • Different studies conducted giving rise to different thoughts

6. Scientific management theory • “it is the process of what you want the men to do in the best and cheapest way” • Contributions • Principles • Elements and tools

7. General Principles • Replacing the rule of thumb with science • Harmony in group action • Cooperation of workers and management • Maximum production • Devotion of workers

8. elements • Separation of planning from doing: gong boss (not only supervision but planning and doing) • Functional foremanship: specialization (workshop managers) • Job analysis: how to do job (TIME-MOTION-FATIGUE) • Standardization: type of tools, amount of work, time, wage • Scientific selection: right worker (mental and physical) • Financial incentives: “piece rate system” • Economy: cost estimates, control, usage of waste matter • Mental revolution: change in the mind set (cooperation)

9. The 4 Principles • Four Principles to increase efficiency: 1. Study the way the job is performed now & determine new ways to do it. • Gather detailed, time and motion information. • Try different methods to see which is best. 2. Select workers whose skills match the Specified jobs 3.Codify the new method into rules. • Trained workers in standard method. • Supported workers by planning work and eliminating interruptions. 4. Establish a fair level of performance and pay for higher performance. • Workers should benefit from higher output.

10. Scientific Management Contributions • Demonstrated the importance of compensation for performance. • Initiated the careful study of tasks and jobs. • Demonstrated the importance of personnel and their training. Criticisms • Did not appreciate social context of work and higher needs of workers. • Did not acknowledge variance among individuals. • Tended to regard workers as uninformed and ignored their ideas

11. Henry Fayol’s administrative or operational theory • Introduction • Father of modern operational theory • French industrialist • 1916 : theory came to existence in French • 1949: in English

12. 6 Sets of activities in the organization • Technical: relate to production • Commercial : buying and selling • Financial : sources of funds and utilization • Security: protection of men and goods • Accounting: to keep records of accounts • Managerial: planning and staffing

13. Managerial qualities • Managerial • Mental • Moral • Educational • Technical • experience

14. Fayol’s Principles • Henri Fayol, developed a set of 14 principles: 1. Division of Labor:allows for job specialization. 2. Authority and Responsibility:Fayol included both formal and informal authority resulting from special expertise. (position by virtue of personal qualities) 3. Unity of Command:Employees should have only one boss. 4. Scalar chain:a clear chain from top to bottom of the firm. 5. Centralization:the degree to which authority rests at the very top.

15. Fayol’s Principles 6. Unity of Direction:One plan of action to guide the organization. (one plan one head) 7. Equity:Treat all employees fairly in justice and respect. 8. Order:Each employee is put where they have the most value. 9. Initiative:Encourage innovation. 10. Discipline:obedient, applied, respectful employees needed.

16. Fayol’s Principles 11. Remuneration of Personnel:The payment system contributes to success. 12. Stability of Tenure:Long-term employment is important. 13. General interest over individual interest:The organization takes precedence over the individual. 14. Esprit de corps:Share enthusiasm or devotion to the organization.

17. Comments on Fayol’s approach • Logical thinking and foresight like a list of managerial functions. • First modern administrative thinker. • Theoretic formulation incomplete. • Based on author’s own personal limited experience. • Does not appear to be adequate from the complex nature of organization.

18. Bureaucratic organization • Developed in Europe • Subfield within the classical perspective • Developed by Max Weber(1864-1920), a German theorist. • Organizations in Europe were managed on personal, family-like basis. Employees were loyal to individuals rather than organization or its mission • He envisioned organizations that would be managed on the impersonal, rational basis. Called as bureaucracy. • Organization based on rational authority would function better • Rationality for him means employee selection on competence not on whom you know. • Positions are organized on higherarchy basis

19. Bureaucracy Organizations Division of labor with Clear definitions of authority and responsibility Personnel are selected and promoted based on technical qualifications Positions organized in a hierarchy of authority Managers subject to Rules and procedures that will ensure reliable predictable behavior Administrative acts and decisions recorded in writing Management separate from the ownership of the organization

20. Key points of Bureaucracy Authorityis the powerto hold people accountable for their actions. Positions in the firm should be held based onperformancenot social contacts. Position duties are clearly identified.People should know what is expected of them. Lines of authorityshould be clearly identified. Workers know who reports to who. Rules, Standard Operating Procedures (SOPs), & Normsused to determine how the firm operates. • Sometimes, these lead to “red-tape” and other problems.

21. Bureaucratic Principles Written rules A Bureaucracy should have Hierarchy of authority System of task relationships Fair evaluation and reward

22. Dislike work –will avoid it Must be coerced, controlled, directed, or threatened with punishment Prefer direction, avoid responsibility, little ambition, want security Do not dislike work Self direction and self control Seek responsibility Imagination, creativity widely distributed Intellectual potential only partially utilized Douglas McGregor Theory X & Y 1906-1964 Theory X Assumptions Theory Y Assumptions

23. qualities • Worker • Traditional modern • Pessimistic optimistic • Resistance to change highly initiative • Does not accept responsibility high imagination • Looks for motivation self motivated • Manager • Will insist participative • Packed work transparancy • Controlled unleash the potential of worker • Centralized decentralized • Autocratic leadership democratic leadership • Structured work workers job

24. Theory Z • William Ouchi researched the cultural differences between Japan and USA. • USA culture emphasizes the individual, and managers tend to feel workers follow the Theory X model. • Japan culture expects worker committed to the organization first and thus behave differently than USA workers. • Theory Z combines parts of both the USA and Japan structure. • Managers stress long-term employment, work-group, and organizational focus.

25. theory Z • Trust • Strong bond between the employee and the organization (life time employment) • Employee involvements (participation, and inform monetary benefits) • No formal structure : integrated organization • Co ordination of human being : rule of leader in all

26. Relationship management • Hawthorne experiment:( 1895 ) in western electric company, Elton Mayo, white head and fritz Roethilsberger • Four tests • 1. relay assembly test room (RATR) lasted nearly six years(10th may 1924- 4th may 1933) • Involved 24 experimental periods • Money was not important but human relations. Employees performed better when the managers treated them better. • Illumination • Manipilation of the work environmentBreaks/ regular intervals

27. SERIES OF EXPERIMENTS • Illumination Experiment (24-27)divided the workers in to two groups: controlled and experimental (increase or decreased the light) Production disproportionately increased • Relay Assembly Test giving the breaks of 5, 10, 15 minutes) 6 girls, Relays assembled, Informal friendly, Lacking supervision, Dignity, facilities, production  2800 to 3200 Unit Control room  3400 Unit (Contrast) • 2nd Relay Assemble Test Mica Splitting test • Mass Interviewing Program 20000 interviews at a time: did not give right results. Hypothesis (a) Group Team spirit (b) Workgroup can become social (c) Lacking supervision-Cheesiness • Personal Counseling  Morale, ethics, Group effort • Bank wiring test  set of skilled workers are chosen to perform but did not perform well because they are afraid of co workers loosing the job. Informal group vital factor, conflict, cooperation, coordination, compromise, accommodation acculturisation

28. Mary Parker Follett's concepts • Mary Parker Follett's concepts included the universal goal, the universal principle, and the Law of the Situation. • The universal goal of organizations is an integration of individual effort into a synergistic whole. • The universal principle is a circular or reciprocal response emphasizing feedback to the sender (the concept of two-way communications). • Law of the Situation emphasizes that there is no one best way to do anything, but that it all depends on the situation.

29. Time motion study • Frank and Lillian Gilbreths • This is known as therblig • Aim is to improve for optimal production • Research: brick layer • Observed through micro chronometer which recorded time taken by a motion. • 18 moves: many wasteful body movements. So eliminated four. So less fatigue and more production.

30. Contingency approach • Assumes there is no one best way to manage. • The environment impacts the organization and managers must be flexible to react to environmental changes. • The way the organization is designed, control systems selected, depend on the environment. • Technological environments change rapidly, so must managers. • Successful resolution of organizational problems is thought to depend on managers’ identification of key variations in the situation at hand

31. Systems approach

32. SCHOOLS OF HISTORICAL THOUGHT AND THEIR COMPONENTS BY DECADE

34. LAND MARKS IN MANAGEMENT THOUGHT