Historical roots of contemporary management practices

Historical Roots of Contemporary Management Practices - By Dr. G C Mohanta, Professor

1. Historical Roots of Contemporary Management Practices Dr. G C Mohanta , BE, MSc( Engg ), MBA, PhD(Mgt) Professor

2. Historical Roots of Contemporary Management Practices Up to the 20 th century (pre-modern era) Adam smith’s contribution to the field of management Industrial revolution’s influence on management practices In the early 20 th century Scientific management General administrative theory The human resources approach The quantitative approach From the later 20 th century to the present The process approach The systems approach The contingency approach

3. Adam Smith ’ s Contribution to the Field of Management The general popularity today of job specialization is undoubtedly due to Smith’s view about division of labor . Division of labor is the breakdown of jobs into narrow, repetitive tasks.

4. Industrial Revolution ’ s Influence on Management Practices Industrial Revolution has originated in late-18th-century in Great Britain, and crossed the Atlantic to America by the end of the Civil War. Because of the Industrial Revolution , machine power was rapidly substituted for human power, which made it economical to manufacture goods in factories. With the development of big organizations, a formal theory to guide managers running these organizations efficiently and effectively was needed.

5. Evolution of Management Theory 1890 2000 Administrative Management Behavioral Management Scientific Management Management Science Org. Environment 1 940

6. Scientific Management Frederick Taylor was called as the father of Scientific management. His book - The Principles of Scientific management was published in 1911. Immediately, its contents became widely accepted by managers throughout the world.

7. Background of That Time There were no clear concepts of responsibilities to workers and managers. No effective work standards existed. Management decisions were based on hunch and intuition. Workers were placed on jobs with little or no concern for matching their abilities and aptitudes with the tasks required. Managers and workers considered themselves to be in continual conflict - any gain by one would be at the expense of the other.

8. Taylor ’ s Four Principles of Management Develop a scientific way for each element of an individual’s work, which replaces the old rule-of-thumb method. Scientifically select and then train, teach, and develop the worker. Heartily cooperate with the workers, so as to ensure that all work is done in accordance with the scientific way that has been developed. Divide work and responsibility almost equally between managers and workers. Managers take over all work for which it is better fitted than the workers.

9. Problems of Scientific Management Managers often implemented only the increased output side of Taylor’s plan. They did not allow workers to share in increased output. Specialized jobs became very boring, dull. Workers ended up distrusting Scientific Management. Workers could purposely “under-perform” Management responded with increased use of machines.

10. The Gilbreths Frank and Lillian Gilbreth refined Taylor’s methods. Made many improvements to time and motion studies. Time and motion studies: 1. Break down each action into components. 2. Find better ways to perform it. 3. Reorganize each action to be more efficient. Gilbreths also studied fatigue problems, lighting, heating and other worker issues.

11. General Administrative Theory Henry Fayol’s contributions He argued that management was an activity common to all human undertakings in business, in government, and even in the home. He stated 14 principles of management —fundamental or universal truths.

12. Fayol ’ s 14 Principles of Management Division of Work Authority Discipline Unity of Command Unity of Direction Subordination of Individual Interests to the General Interest Remuneration Centralization 9. Scalar Chain 10. Order 11. Equity 12. Stability of Tenure of Personnel 13. Initiative 14. Esprit de corps - a feeling of pride and mutual loyalty shared by the members of a group.

13. Administrative Management Seeks to create an organization that leads to both efficiency and effectiveness. Max Weber developed the concept of bureaucracy. A formal system of organization and administration to ensure effectiveness and efficiency. Weber developed the Five principles shown in the following Figure.

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

15. Weber ’ s Ideal Bureaucracy Division of labor Authority hierarchy Formal selection Formal rules and regulations Impersonality Career orientation

16. Key points of Bureaucracy Authority is the power to hold people accountable for their actions. Positions in the firm should be held based on performance, not social contacts. Position duties are clearly identified; people should know what is expected of them. Lines of authority should be clearly identified; workers should know who reports to whom. Rules, Standard Operating Procedures (SOPs ) & Norms used to determine how the firm operates. Sometimes, these lead to “red-tape” and other problems.

17. The Human Resources Approach Hawthorne Studies Human Relations Movement - Dale Carnegie - Abraham Maslow - Douglas McGregor Behavior Science/Behavioral Management

18. Behavioral Management Focuses on the way a manager should personally manage to motivate employees. Mary Parker Follett, an influential leader in early managerial theory Suggested workers’ help in analyzing their jobs for improvements. The worker knows the best way to improve the job. If workers have the knowledge of the task, then they should control the task.

19. Hawthorne Studies Time: 1924 — the early 1930s Place: Hawthorne plant in the Western Electric Company Designer: Western Electric industrial engineers Elton Mayo and his associates Mayo’s Finding: Individuals improve or modify an aspect of their behavior in response to their awareness of being observed. Behavior and sentiments are closely related. Group influences significantly affect individual behavior . Group standards establish individual worker output. Money is less a factor in determining output than are group standards, group sentiments, and security.

20. Dale Carnegie’s Contribution One of the core ideas in his books is that it is possible to change other people's behavior by changing one's behavior toward them. How to Win Friends and Influence People

21. Maslow’s Hierarchy of Needs Self- actualization Esteem Belongingness Security Physiology Food Achievement Status Friendship Stability Job Friends Pension Base NEEDS General Examples Organizational Examples job Challenging title at work plan salary

22. Theory X and Y Douglas McGregor proposed the two different sets of worker assumptions. Theory X: Assumes the average worker is lazy, dislikes work and will do as little as possible. Managers must closely supervise and control through reward and punishment. Theory Y: Assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work. Managers should allow the worker great latitude, and create an organization to stimulate the worker.

23. Theory X vs Theory Y Theory Y Employee is not lazy Must create work setting to build initiative Provide authority to workers Theory X Employee is lazy Managers must closely supervise Create strict rules & defined rewards

24. Theory Z Emphasizes : Long-term employment Slow career development Moderate specialization Group decision making Individual responsibility Informal control over the employee Concern for workers

25. Japanese Theory Z: Characteristics of a Theory Z organisation – Ouchi Long-term employment, often for a lifetime Relatively slow process of evaluation and promotion Development of company-specific skills & moderately specialised career path

26. Japanese Theory Z: Characteristics of a Theory Z organisation – Ouchi (contd.) Implicit, informal control mechanisms supported by explicit, formal measures Participative decision-making but individual ultimate responsibility Broad concern for the welfare of subordinates & co-workers as a natural part of a working relationship & informal relationships among people

27. The Quantitative Approach The quantitative approach to management, sometimes referred to as, operations research (OR) or management science. It includes applications of statistics, optimization models, information models, and computer simulations, linear programming, and so on, which can be used to solve management problems. In general, the quantitative approaches have contributed directly to management decision making , particularly to planning and control decisions.

28. Systems Approach The system approach defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Societies are systems and so, too, are computers, automobiles, organizations, and animal and human bodies.

29. An Organization Is an Open System An organization is a system that interacts with and depends upon its environment. Organization’s stakeholders : any group that is affected by organizational decisions and policies. The manager’s job is to coordinate all stakeholders to achieve the organization’s goals. Organizational survival often depends on successful interactions with the external environment.

30.    The Operating Model in Organizational System Input Transformation Output Feedback

31. 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.

32. Four Popular Contingency Variables Organization size Routineness of task technology Environmental uncertainty Individual differences

33. MCKINSEY’S 7S FRAMEWORK

34. THE HARD S’s Strategy: the direction and scope of the company over the long term. Structure: the basic organization of the company, its departments, reporting lines, areas of expertise and responsibility (and how they inter-relate). Systems: formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call center systems, online systems, etc).

35. THE SOFT S’s Skills: the capabilities and competencies that exist within the company: what it does best. Shared values: the values and beliefs of the company: ultimately they guide employees towards 'valued' behavior. Staff: the company's people resources and how they are developed, trained and motivated. Style: the leadership approach of top management and the company's overall operating approach.