Chapter 2 (Orgman)

• Evolution of Management Theory


  The driving force behind the evolution of management theory is the search for better ways to utilize organizational resources
• Evolution of modern management

  • Began in the late nineteenth century, after the industrial revolution
  • Driven by economic, technical and cultural changes
• Mechanization


  Changed systems like crafts production into large scale manufacturing, where semi or unskilled workers operated machineries
• Small-scale crafts production


  Managed by engineers who only had technical orientation
• Problems faced in large-scale mechanized manufacturing


  • How to handle people
  • Social problems relating to working together in large groups
  • How to increase efficiency of the worker-task mix
• Job specialization


  Division of labor
• Crafts-style production


  • Each worker responsible for all tasks
  • Poorer performance
  • Few thousands p/d
  • Cannot be equally skilled in all tasks
• Factory system


  • Each worker performed only 1 or a few tasks to produce
  • Better performance
  • 48,000 pins p/d
  • More skilled at their tasks
• Adam Smith journeyed around England in 1700's studying the effects of industrial revolution
• With insights gained from Adam Smith's observations, other managers and researchers began to investigate how to improve job specialization to increase performance
• They focused on how to organize and control the work process
• Scientific Management


  The systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency
• Taylor's belief


  If the amount of time and effort that each worker expends to produce a unit of output can be reduced by increasing specialization and division of labor, the production process will become more efficient
• Taylor's Principles


  1. Study the way workers perform their tasks, gather all informational job knowledge that workers possess, and experiment with ways of improving how tasks are performed

  2. Codify the new methods of performing tasks into written rules and standard operating procedures

  3. Carefully select workers who possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures

  4. Establish a fair or acceptable level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level
• Scientific management became nationally known, but the selective implementation of the principles created more harm than good
• Problems with selective implementation of scientific management principles


  • Workers felt that as their performance increased, managers required them to do more work for the same pay
  • Increases in performance meant fewer jobs and greater threat of layoffs
  • Monotonous and repetitive
  • Dissatisfaction
• Ford redesigned the work process using the scientific management principles, which increased production from 100 cars a month to 45 cars a day
• Time and Motion Study

  • Break and analyze every individual action necessary to perform a particular task into each of its component actions
  • Find better ways to perform each component action
  • Reorganize each component action so that it is more efficient-less cost of time and effort
• Goal of Time and Motion Study

  Maximize the efficiency with which each individual task was performed
• Study of Fatigue


  • How physical characteristics of the workplace contribute to job stress
  • Effects of lighting
  • Effects of heating
  • Effects of color of walls
  • Design of tools and machines
• Administrative Management Theory


  The study of how to create an organizational structure that leads to high efficiency and effectiveness
• Theory of Bureaucracy


  Developed by Max Weber, a formal system of organization and administration designed to ensure efficiency and effectiveness
• Elements of a bureaucracy

  • System of written rules and SOPs that specify how employees should behave
  • Selection and evaluation system that rewards employees fairly and equitably
  • Clearly specified system of task and role relationships
  • Clearly specified hierarchy of authority
• Principles of bureaucracy


  • A manager's formal authority derives from the position he or she holds in the organization
  • People should occupy positions because of their performance, not because of their social standing or personal contacts
  • The extent of each position's formal authority and task responsibilities and its relationship to other positions in an organization, should be clearly specified
  • Authority can be exercised effectively in an organization when positions are arranged hierarchically, so employees know whom to report to and who reports to them
  • Managers must create a well-defined system of rules, standard operating procedures and norms so that they can effectively control behavior within an organization
• Rules


  Formal written instructions that specify actions to be taken under different circumstances to achieve specific goals
• Standard Operating Procedures


  Specific sets of written instructions about how to perform a certain aspect of a task
• Norms


  Unwritten, informal codes of conduct that prescribe how people should act in particular situations
• Fayol's Principles of Management


  14 principles developed by Henri Fayol to guide management practice
• Fayol's 14 Principles of Management

  • Division of Labour
  • Authority and Responsibility
  • Unity of Command
  • Line of Authority
  • Centralization
  • Unity of Direction
  • Equity
  • Order
  • Initiative
  • Discipline
  • Remuneration of Personnel
  • Stability of tenure of Personnel
  • Subordination of Individual Interests to the Common Interest
  • Esprit de Corps
• Division of Labour


  Job specialization and the division of labour should increase efficiency. Pointed out the downside of too much specialization; so workers should be given more duties to perform.
• Authority and Responsibility


  Managers have the right to give orders and the power to exhort subordinates for obedience.
• Unity of Command


  An employee should receive orders from only one superior.
• Line of Authority


  The length of the chain of command that extends from the top to the bottom of an organization should be limited.
• Centralization


  Authority should not be concentrated at the top of the chain of command.
• Unity of Direction


  Those operations within the organization that have the same objective should be directed by only one manager using one plan.
• Equity


  Managers should be both friendly and fair to their subordinates.
• Order


  Materials and people should be in the right place at the right time. People should be in the jobs that they are most suited to.
• Initiative


  Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result.
• Discipline


  Members in an organization need to respect the rules and agreement that govern the organization. To Fayol, discipline results from good leadership, fair agreements and judiciously enforced penalties for infractions.
• Remuneration of Personnel


  Compensation for work done should be fair to both employees and employers.