Unit 3: Management Theories

• Management theories can be classified into four types: CBMO

  1. Classical management approach

  2. Behavioral management approach

  3. Management science approach

  4. Organizational environment approach
• Classical Management Approach

  • Concerned with increasing the efficiency of the organization by improving the

  performance of workers

  • Focuses in managing the organization

  • The 3 approaches of classical management are: SAW

  1) Scientific management,

  2) Administrative management

  3) Weber’s theory of bureaucracy
• Scientific Management • It is a systematic study of the relationship between workers and their tasks aimed at refining the work process to increase efficiency
• Scientific Management • Frederick W. Taylor found that the time needed to produce a unit of output could be reduced by specialization and division of labor: ¤ He discarded the rule-of-thumb knowledge and introduced scientific techniques ▪︎”Rule of Thumb” - based on experience rather than theory
• Scientific Management ¤ Frederick W. Taylor formulated 4 principles to increase efficiency: SCPR Principle 1: Scientific methods are used to discover the most efficient way to perform a task Principle 2: Clear discussion of responsibilites Principle 3: Performance based paid (paid on how ther perform on work) Principle 4: Rigid high heirarchy and strict surveilance of employees (monitoring of their employees)
• Scientific Management Benefits and Limitations of Taylor’s Approach Benefits: • Taylor’s approach contributed to the way asks were performed in the organization • It created awareness that tools and physical movement associated with a task can be made more productive • Abilities and training were recognized as essential to do a job properly • Managers were encouraged to seek “one best way” to perform a job, thereby developing a rational approach to solving the organization’s problem
• Scientific Management Benefits and Limitations of Taylor’s Approach Limitations: • More tasks were added to the workers as time needed to produce a unit of output decreased • Fewer workers were needed and layoffs were unavoidable due to specialization • Jobs were monotonous and staff turnover increased
• Scientific Management Benefits and Limitations of Taylor’s Approach Limitations: • Taking instructions from several supervisors increased confusion in the workplace • Economic incentives did not always motivate workers • There was no one best way to do a job because individuals vary in the way they work with same care and promptness • Taylor’s focus was on the process rather than on the workers
• Administrative Management • Focuses on creating an organization structure that leads to a more efficient and effective organization • The organization structure defines the task and authority relationships in the organization that control the utilization of resources to achieve its goals
• Administrative Management • Henry Fayol formulated the 14 principles that are essential for the efficient management of the organization • Some of these principles have declined from the management scene: ¤ Administrative management principles focus on the manager of the organization ¤ They define a clear structure and professionalism of managerial roles but they are applicable to the internal activities of the organization and overemphasize the rational behavior of managers of benefit
• Administrative Management ▪︎Rational behaviors of managers: PLS Predictable - declared; can see Logical - clear sound reassuring Sensible - make sense; to be of benefit
• Administrative Management Benefit and Limitations of Fayol’s Approach Benefits: • At that time, his principles were widely accepted among managers and writers and was embodied in the book Onward Industry (which was later revised and renamed to Principles of Organization), written by 2 General Motors executives: James D. Mooney and Alan C. Railey ¤ Colonel L. Urwick later wrote Elements of Administration based on the principles of Taylor, Fayol, Mooney, Railey, and other management theorists
• Administrative Management Benefit and Limitations of Fayol’s Approach Benefits: • Fayol’s work inspired a new school of thought – management process school, which recognized that management is a dynamic process of planning, organizing, staffing, directing, and controlling
• Administrative Management Benefit and Limitations of Fayol’s Approach Limitations: • It created small work groups that work in a disjointed manner without due regard for the wider picture of the organization • There is no provision to use individual abilities • The principles increase specialization, resulting in increased overhead costs • Some of his principles are contradictory (example: unity of command and division of labor cannot be applied in all situations)
• Administrative Management Benefit and Limitations of Fayol’s Approach Limitations: • The principles were not tested empirically • The principles of specialization, chain of command, and unity of direction are not compatible with employees’ social and psychological needs • Organizations are considered closed systems
• Weber’s Theory of Bureaucracy (Bureaucracy: focuses on leadership structure; more on leadership) • Max Weber postulated his theory of bureaucracy at the time of the German industrial revolution
• Weber’s Theory of Bureaucracy • His theory was based on the following: APARS 1. Authority is vested in the manager of the organization 2. The position of a worker is based on his or her performance 3. Authorities and responsibilities of a position should be clearly specified 4. Rules and standard operating procedures are written to enable all activities to be adequately controlled 5. The structure of the organization is based on hierarchy
• Weber’s Theory of Bureaucracy Benefits and Limitations of Weber’s Approach of Bureaucracy Benefit: The concepts have been applied to large organizations that required functional specialized staff to train and control individuals with different backgrounds and to delegate special responsibilities and functions to them
• Weber’s Theory of Bureaucracy Benefits and Limitations of Weber’s Approach of Bureaucracy Limitations: • Employees strictly adhere to rules for fear of penalization • They follow the letter of the law, ignoring the spirit, and are discouraged to make decisions • Often, new goals are substituted instead of the ones for which the organization was created • Resource allocation then is a problem • Client’s queries are categorized into a few broad categories, ignoring the differences between the categories
• Weber’s Theory of Bureaucracy Benefits and Limitations of Weber’s Approach of Bureaucracy Limitations: • Clients of bureaucratic organizations have no right to appeal because supervisors are biased toward the opinion of their subordinates • Organizations have informal groups, and they are ignored in bureaucratic organizations • Rigid structure imposed by bureaucratic organizations is not compatible with the changing economic and social environment
• Weber’s Theory of Bureaucracy

  • Bureaucratic structure ignores the mature employee’s needs, such as independence, initiative self-control, opportunity to use the skills and experience, and information to plan for the future
• Behavioral Management Approach • Focuses on the human relation approach of the organization • Mary Follett recognized the importance of behavior of managers toward the workforce: ¤ The organization can be more effective and efficient if the workers’ efforts are recognized, and if they are allowed to participate in development work ¤ Because the workers have the knowledge and skills required for the job, they should be in control, and not the managers
• Behavioral Management Approach

  ¤ Follet also promoted cross-functional communication (Woking in a large organization; Deliver a common product or objective) • Example: Whole Foods, a supermarket chain that sells natural foods, applied Follet’s ideas that shaped its management practices. Typically each store employs between 60 and 140 employees organized into various teams to promote sense of cooperation. Each team is accountable for their work and meet monthly to discuss problems and resolve issues.
• Hawthorne Studies • Conducted by Elton Mayo and associates in order to increase the efficiency of the organization by improving job specializing and the type of tools used • These studies were conducted at the Hawthorne Institute of Western Electric from 1924 to 1932
• Hawthorne studies

  ▪︎3 types of studies were conducted: IGB 1. Illumination: effect of illumination on work efficiency 2. Group study: how the attitude of employees toward the manager affects the work 3. The importance of human behavior toward work
• Maslow’s Motivation Theory

  • Abraham Maslow classified basic human needs into five categories in a hierarchical order: PSAES physiological, security, affiliation, esteem, and self-accomplishment • His theory was based on the concept that people have well-defined needs ¤ The most basic needs to be satisfied first are physiological needs such as food, water, air, etc.; security such as shelter, comfortable temperature for living; social satisfaction (affiliation)
• McGregor’s Theory X and Theory Y

  • McGregor studied how the assumptions of behavior and attitudes of workers affect the way they behave in the organization • Theory X states that man is inherently lazy, dislikes work, avoids responsibility, and tries to do as little as possible (Negative - explains the importance of supervision) • Theory Y assumes that people are not inherently lazy and do not avoid work and responsibility (Positive - highlights the job satisfaction)
• Management Science Theory

  • It is an approach to management that utilizes a variety of quantitative techniques to help managers make the best use of resources in the organization • Some of the branches of management science: ¤ Quantitative management deals with mathematical techniques that enable managers, for example, to quantify inventory levels, identify new locations of factories, and how best to invest the money ¤ Operations management utilizes various techniques to improve the efficiency of the operations of the organization
• Management Science Theory

  • Some of the branches of management science:

  ¤ Total Quality Management (TQM) is an approach that manages the quality of the resources, processes, and the final product to achieve efficiency and quality of the final product ¤ Management information systems (MIS) help managers design information systems that monitor the internal and external environments that impact the performance of the organization, thereby providing a means to meet future challenges
• Organizational Environment Theory

  • Survival of the organization in a competitive global economy depends upon the ability to acquire and utilize resources • It considers how managers can control the relationship with the external environment • The significance of the external environment became clear when the open systems and contingency theories were developed in the 1960s
• Open and Closed Systems Theories

  • Open System ¤ The organization interacts with the external environment ¤ It acquires resources from the external environment and transforms them into goods and services that are then sold to the customers in the external environment • Closed System ¤ The organization is affected by the external environment and it ignores the influence of the external environment on the organization ¤ The organization fails to acquire the necessary resources and loses control, leading to dissolution of the organization
• Contingency Theory

  • The basis of this theory is that there is no best way to organize • The main assumption of this theory is that the organization’s ability to obtain much needed resources depends on the external environment thus, the structure of the organization and the control methods are contingent on the characteristics of the external environment • As formulated by this theory, there is no best way to model and lead an organization ¤ Theories of management are guidelines that managers can use to create a harmonious work setting compatible with the structure of the organization
• Evolution of Management Theories: SABMO

  ▪︎1890–1940s Scientific management theory: Frederick Taylor (1856–1951) Frank Gilbert (1868–1924) Lilian Gilbert (1878–1972) Henry Gantt (1861–1919) ▪︎1890s–1980s Administrative management theory: Henry Fayol (1841–1925) ▪︎Early 20th Century Behavior management theory: Max Weber (1864–1920) Elton Mayo (1880–1949) ▪︎1940s–1990s Management science theory: Abraham Maslow (1908–1970) Douglas Mcgregor (1906–1964) ▪︎1950–2000 Organizational management theory