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The History of Management Thought

The History of Management Thought. Mike Bejtlich. Based on The History of Management Thought, 5th edition, 2005 by Daniel A. Wren. Part Four. The Modern Era. Chapter Nineteen. Management Theory and Practice. The Modern Era. The Renaissance of General Management

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The History of Management Thought

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  1. The History of Management Thought Mike Bejtlich Based on The History of Management Thought, 5th edition, 2005by Daniel A. Wren

  2. Part Four The Modern Era

  3. Chapter Nineteen Management Theory and Practice

  4. The Modern Era • The Renaissance of General Management • Fayol’s Intellectual Heirs • Management Education • Other Views of Managerial Work • Peter Drucker: The Guru of Management • From Business Policy to Strategic Management • Markets and Hierarchies • Governance and Agency Issues • Management as an Integrating and Innovating Task • Strategy and Views of the Firm • Strategic Leadership and Evolutionary Dynamics

  5. The Renaissance of General Management • Henri Fayol – the first to propose a general theory of management • The elements of management describing what managers did (plan, organize, command, coordinate, and control). • The principles, which were lighthouses, or guides, to how to manage. Henri Fayol

  6. Fayol’s Intellectual Heirs • William Newman (1909-2002) – “the basic objectives of the firm should define its place or niche in the industry, define its social philosophy as a business ‘citizen,’ and serve to establish the general managerial philosophy of the company” (Wren text) • George Terry (1909-1979)– first to call his book Principles of Management • Harold Koontz (1908-1984) and Cyril O’Donnell (1900-1976) – defined management as “the function of getting things done through others” in their popular text.

  7. Management Education • The Gordon and Howell Report 1959: • Asked: What are we teaching in business schools and does this prepare our students for a career in a changing environment? • Cited the need for more courses in: • The humanities and liberal arts. • Mathematics. • The behavioral and social sciences. • Compare a pre-1959 B-school curriculum to your current requirements.

  8. Management Theory Jungle – Harold Koontz (1908-1984) • Six Different Schools – management process, empirical, human behavior, social system, decision theory, mathematical schools. • Each can contribute, but some are “tools.” • Causes of confusion and the “jungle warfare” • “The semantics jungle” • Problems in defining management as a body of knowledge • The misunderstanding of principles through trying to disprove an entire framework of principles when one principle was violated in practice • Inability or unwillingness of management theorists to understand each other.

  9. Other Views of Managerial Work • Henry Mintzberg (1939- observed five executives and concluded mangers perform ten roles within three categories: interpersonal, informational, and decisional. Henry Mintzberg, courtesy of the University of Western Ontario

  10. Other Views of Managerial Work • Rosemary Stewart examined the "demands," "constraints," and "choices“of a managers job. • John Kotter's studies of general managers and his finding of certain "demands" or regularities in all general managers' jobs that resemble traditional management functions. Note, also, the factors that cause these to vary.

  11. Other Views of Managerial Work • Fred Luthans, Richard Hodgetts, and Stuart Rosenkrantz studied 44 managers, recording activities and behaviors. • In Real Managers they note four categories: routine communication, traditional management, networking, and human resource management. Richard M. Hodgetts

  12. The Search for Excellence • Thomas Peters and Robert Waterman identified eight attributes of corporate excellence in their best selling book, In Search of Excellence. • Peters and Waterman relied solely on financial measures in determining success.

  13. Management Education Revisited • Harold Koontz revisited the management theory jungle and expanded it from 6 to 11 approaches. • Called for leading managers to narrow the gap between professional practice and business schools. • Lyman Porter and Lawrence McKibbin surveyed management education for the AACSB. • Called for professors to be more broadly educated and possess relevant work experience.

  14. Peter Drucker (1909 –Guru of Management Practice • Drucker achieved prominence through his writings and consulting. • He asks: • What is our business? • Who I the customer? • What does the customer buy? • What does the customer consider value? • What will our business be? • And what should it be? Peter F. Drucker

  15. Peter Drucker (1909 –Guru of Management Practice • Importance on Innovation • Key areas for setting objectives and evaluating results • Fortune magazine publishes a survey of the most “admired” corporations. The areas that Fortune uses bear a strong resemblance to Drucker’s key areas. • Management by Objectives

  16. Peter Drucker (1909 –Guru of Management Practice • Drucker’s focus on managerial practice asks the lingering question: “Can our academic research have rigor and also be relevant to the practice of management?”

  17. From Business Policy to Strategic Management • Markets and hierarchy • Echoing the work of earlier economists such as Say and Marshall, who saw management as a factor of production and able to provide competitive advantage, Ronald Coase, in a 1937 article, asked why have business firms? • Coase saw the firm as an alternative to the market with certain advantages in allocating resources.

  18. From Business Policy to Strategic Management • Markets and hierarchy • Echoing the work of earlier economists such as Say and Marshall, who saw management as a factor of production and able to provide competitive advantage, Ronald Coase, in a 1937 article, asked why have business firms? • Coase saw the firm as an alternative to the market with certain advantages in allocating resources. Ronald Coase

  19. From Business Policy to Strategic Management • Oliver Williamson (1932-) and the “new institutional economics” saw the hierarchy of the firm being typically more efficient than markets because firms could internalize transaction costs (remember Commons?) and provide monitoring mechanisms to thwart, hopefully, opportunism. Oliver Williamson

  20. From Business Policy to Strategic Management • Governance and Agency Issues • If the firm, through management, is more efficient than the market, then the actions of those who govern the firm becomes more significant. • A number of individuals, such as Michael Jensen, criticize the behavior of those in the managerial hierarchy who serve their own interests rather than those of their shareholders. • The separation of ownership and control is an evergreen issue to catch the conscience that lies within.

  21. From Business Policy to Strategic Management • Agency theory, • assuming it is a theory, creates situations that lead to opportunistic behavior. • Assumes that everyone will engage in opportunistic behavior—leading to contracts and other means of monitoring behavior. • Involves issues of trust, fidelity, and other appropriate behaviors in contrast to the assumptions of agency theory. • How do our assumptions about the behavior of others influence how we manage?

  22. Management as an Integrating and Innovative Task • Henri Fayol was a strategist. (See quote in Wren text.) • Arch Shaw (1876-1962) pioneered the study of business policy as a academic subject at Northwestern University. Henri Fayol

  23. Management as an Integrating and Innovative Task • There is a rich heritage of “strategy” in Barnard, Newman, Drucker, and Chandler. • Strategic management has emerged as the “new” view of business policy and long range planning. Alfred D. Chandler, Courtesy of Harvard Business School

  24. From Business Policy to Strategic Management • Strategy and Views of the Firm • Michael Porter (and others) in industrial/organizational economics made key contributions to strategy. • Porter’s “five forces” framework, value chain and “generic” strategies. Michael E. Porter, Courtesy of Harvard Business School

  25. From Business Policy to Strategic Management • Strategy and Views of the Firm • Edith Penrose (1914-1996)asked why firms differed in performance, providing seminal insights for the resource based and the knowledge based views of the firm. • SWOT— In 1960s HBS policy group began use of the term. • Important developments in “core competencies” and “distinctive competencies” followed through the work of Wernerfelt, Rumelt, Barney, Prahalad, and Hamel.

  26. From Business Policy to Strategic Management • Strategic Leadership and Evolutionary Dynamics • “Evolutionary economics”—how to create and gain competitive advantages through innovation. • Organizational learning to “unbound” rationality and move to new and innovative forms of competitive advantage. • Strategic leadership—the bridge to general management theory.

  27. Summary • General management theory reawakened as organizations grew more complex and needed more broadly educated general managers. • Drucker and others emphasized the need to improve the practice of management. • General management also grew through a resurgence in industrial/organizational economics. • Business policy evolved to strategic management.

  28. Chapter Twenty Organizational Behavior and Theory

  29. Organizational Behavior and Theory • People and Organizations • Organizations and People

  30. Gordon & Howell Report 1959 • Triggered more interest in the behavioral and social sciences • The behavioral/social scientists were trained differently in research methods and drew on a different body of literature. • Human relations thought was modified by these behavioral scientists, providing for a transition from human relations to organizational behavior.

  31. Keith Davis (1918-2002) Mr. Human Relations • Acts as a transition point for human relations and organizational behavior. • Defined human relations as “the integration of people into a work situation in a way that motivates them to work together productively, cooperatively, and with economic, psychological, and social satisfaction.” • Modern Human Relations – Two Facets • Organizational behavior • Human relations

  32. Chris Argyris (1923 - • Influenced by the humanist approach of Abraham Maslow and the socio-technical process of E. Wight Bakke. • Indicated his feelings about how organizations neglected human needs. Chris Argyris courtesy of the University of Western Ontario

  33. Chris Argyris – Personality vs. Organization • Certain organizational practices, such as the division of labor, interfered with the development of health human personalities. • These practices promoted immature, not mature behavior. • In an attempt to self-actualize, individuals ran into the obstacles posed by formal organizations. • The result was defensive behaviors, with management reacting by becoming more autocratic or by turning to sugar-coated human relations.

  34. Chris Argyris

  35. Douglas McGregor (1906-1964) • Taught psychology at MIT. • At Antioch College, McGregor found that his classroom teaching of human relations did not always work in practice. • From these experiences, his ideas evolve and lead him to recognize the influence of assumptions we make about people and our managerial style. Douglas McGregor Courtesy of University of Western Ontario

  36. Theory X • Management is responsible for organizing the elements of productive enterprise – money, materials, equipment, people – in the interest of economic ends. • With respect to people, this is a process of directing their efforts, motivating them, controlling their actions, modifying their behavior to fit the needs of the organization. • Without this active intervention by management, people would be passive – even resistant – to organizational needs. They must, therefore, be persuaded, rewarded, punished, controlled – their activities must be directed. This is management’s task -- in managing subordinate managers or workers. We often sum it up by saying that management consists of getting things done through other people.

  37. Theory X (continued) • Behind this conventional theory there are several additional beliefs – less explicit, but widespread: • The average man is by nature indolent – he works as little as possible. • He lacks ambition, dislikes responsibility, prefers to be led. • He is inherently self-centered, indifferent to organizational needs. • He is by nature resistant to change. • He is gullible, not very bright – the ready dupe of the charlatan and the demagogue.

  38. Theory Y • Management is responsible for organizing the elements of productive enterprise – money, materials, equipment, people – in the interest of economic ends. • People are not by nature passive or resistant to organizational needs. They have become so as a result of experience in organizations. • The motivation, the potential for development, the capacity for assuming responsibility, the readiness to direct behavior toward organizational goals are all present in people. Management does not put them there. It is a responsibility of management to make it possible for people to recognize and develop these human characteristics for themselves. • The essential task of management is to arrange organizational conditions and methods of operation so that people can achieve their own goals best by directing their own efforts toward organizational objectives.

  39. Work is inherently distasteful to most people. Most people are not ambitious, have little desire for responsibility, and prefer to be directed. Most people have little capacity for creativity in solving organizational problems. Motivation occurs only at the physiological and safety levels. Most people must be closely controlled and often coerced to achieve organizational objectives. Work is as natural as play, if the conditions are favorable. Self-control is often indispensable in achieving organizational goals. The capacity for creativity in solving organizational problems is widely distributed in the population. Motivation occurs at the social, esteem, and self-actualization levels, as well as physiological and security levels. People can be self-directed and creative at work if properly motivated. Theory X Theory Y

  40. Personnel/Human Resource Management • Human Resource Management did not always receive the attention it deserved. An example is the Gordon and Howell’s 1959 assessment of personnel management. • John R. commons was the first to use the phrase “human resource.” • E. Wight Bakke appears to be the first person to cast personnel in a human resources framework.

  41. Personnel/Human Resource Management • Wendell French was the first to add human resources to a personnel management text. • The contributions of George Strauss, Leonard Sayles, and Thomas Kochan have enriched human resource management literature by noting it is complementary to industrial relations.

  42. Frederick Herzberg (1923-2000) • His research emphasized job enrichment (depth) rather than job enlargement • Job context (hygiene factors) – needed to be optimal to prevent job dissatisfaction. These factors (according to Herzberg) did not motivate. • Job content (motivators) – factors that did lead to motivation • Money (according to Herzberg) could motivate if it was seen as a reward for accomplishment; but if money was given without regard for merit, then it was a hygiene factor. Frederick Herzberg

  43. Motivation and Hygiene Factors HYGIENE FACTORS ENVIRONMENT MOTIVATORS WHAT THEY DO Achievement Recognition for Accomplishment Challenging Work Increased Responsibility Growth and Development Policies and Administration Supervision Working Conditions Interpersonal Relations Money, Status, Security

  44. Motivation and Hygiene Factors THE JOB SURROUNDINGS AND THE HYGIENE FACTORS SUPERVISION WORKING CONDITIONS RESPONSIBILITY ACHIEVEMENT BENEFITS THE JOB ITSELF AND THE MOTIVATOR FACTORS COMPANY POLICY AND ADMINIS- TRATION INTER- PERSONAL RELATION- SHIPS WORK ITSELF RECOGNITION GROWTH ADVANCEMENT SECURITY STATUS SALARY

  45. Work Design • Richard Hackman, Edward Lawler, and Greg Oldham’s work extended Herzberg’s notions by adding a situational (it depends…) dimension • Key job characteristics • Depending on an individual’s “growth-need strength,” these characteristics could be amplified to make the job more meaningful.

  46. Motivation: Expectancy Theory Victor Vroom • The expectancy theory of Victor Vroom helps explain the choosing process among individuals in terms of the value (valence) of the reward and the expectancy of receiving the reward. Victor Vroom

  47. Expectancy Theory

  48. Expectancy Theory • Lyman Porter and Edward Lawler extended Vroom’s work with their model of expectancy.

  49. Expectancy Theory (Lyman W. Porter – Edward E. Lawler III) 1 Value of Reward 8 Perceived Equitable Rewards 4 Abilities And Traits 7A Intrinsic Rewards Performance (Accomplishments) 3 9 Effort Satisfaction 6 7B Extrinsic Rewards Role Perceptions 5 Perceived Effect-Reward Probability 2 Revised Diagram of the Theoretical Model SOURCE: Managerial Attitudes and Performance, 1968, Richard D. Irwin Inc.

  50. Equity Theory • Equity theory is not a new one but focuses on how individuals perceive their reward or pay compared to what others are receiving. • Issues of social justice and distributive justice are involved in the theories of Stacy Adams and Elliot Jaques. Elliot Jacques

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