Evolution of Management Thoughts

Arun Mishra

Definitions of Management
Harold

Koontz & Heiz Weihrich defined management as the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. Louis E. Boone & David L. Kurtz defines management as the use of people and other resources to accomplish objectives.

Definitions of Management
Delton E. McFarland defines management as

a process, by which managers create, direct, maintain, and operate purposive organizations through systematic, coordinated, cooperative human efforts. Mary Parker Fellot termed management as the act of getting things done through people.

Management?
Management is a set of activities including

planning and decision making, organizing, leading, and controlling, directed at an organizations resources (human, financial, physical, and information) with the aim of achieving organizational goals in an efficient and effective manner.

Some practical aspects of Management

All these definition suggest the

aspects of management:

following

Managers carry out the functions of Planning, organizing,

staffing, leading & controlling. Management is essential to all kinds of organizations. Management is necessary at all levels hierarchy. The goal of all managers is to accomplish the objective of creating surplus. The aim of managers is to improve productivity, efficiency ad effectiveness.

Evolution of the Management Thought

Evolution dates back to human civilisation

Every human group needs management

Instances - Agricultural revolution 5000 BC Egyptian civilisations, pyramids - 4000 BC Ancient India - Harappa & Mohenjodaro 2000 BC Italian trading houses: Introduction of double entry

book keeping 1300 and 1400 AD

 In the 19th century - Industrial revolution - Mass production - Huge capital - Ownership separated from management
20th century - World war I - Limited resources available - Need for solution to use them in an optimum way - World War II added to the problem Thus, the issue of managing complex and huge business and growing competition forced us to develop systematic management concepts and principles

Scientific Management Frederick W. Taylor (1856-1915)

A worker and then a supervisor in steel company Carried experiments to increase efficiency of the

workers Published many books and papers Studied M.E (Masters of Engineering) His experiments are divided into
Principles of scientific management

Elements and tools of scientific management

Elements and tools of scientific management

1. 2.

3.

4.
5. 6.

7.
8.

Separation of planning and doing-Supervisor plans, worker only carries out the task Functional foremanship- 4 types of supervisors for planning aspect, while 4 for supervision aspect of the work Job Analysis- best way to do a job Standardisation of process, period and amount of work, working conditions, tools used etc Scientific selection and training of workers Financial incentives Economy- optimum usage of resources an eliminate or reduce wastages Mental revolution cooperation between workers and the management

Principles of scientific management

Replacing rule of thumb with science

Harmony in group actions

Cooperation Maximum output Development of workers

Critical Analysis of Scientific Management

Relevant from an engineering point of view rather

than management point of view Human aspect of the work was sidelined- workers got aggressive resulting in unhealthy competition Increased authoritarian approach in industriesstrict supervision Financial incentives exploited the workers (Differential piece rate system)

Administrative Management Henry Fayol (1841-1915)

Henry Fayol- French Industrialist

Used

the term- Administration instead Management Divided industrial organisation into 6 groups Technical Commercial Financial Security

of

Accounting
Managerial

Identified qualities of a Manager

Managerial Qualities and trainingaccording to Fayol

Physical- Health

Mental- ability to learn, judge, think, plan

Moral- loyalty, firmness, tact, dignity Educational-

acquaintance to subjects not related to functions performed Technical- pertaining to the function performed, eg, production Experience- arising through work

Fayols 14 principles of Management

1. Division of work

To take advantage of specialisation, every worker/ manager works on a same part/function. It increases the accuracy, ability and speed of work.
2. Authority and responsibility

Both are related. Authority arises out of a managers position and responsibility, out of assignment of activity. Acc, to Fayol, there should be parity (equality) between both.
3. Discipline

It can be self imposed, or commanded. Disciple by command arises through company policies.

4. Unity in command

A person should get orders from only one superior. This increases clarity, reduces conflict and builds a personal responsibility for results If it is violated, discipline is lost, importance of authority decreases and stability is threatened.
5. Unity of direction

Each group of activities with same objective, must have only one plan and one head. Unity in command defines the reporting relationship, while unity in direction defines the grouping of activities. It ensures better coordination among activities.

6. Subordination of individual, to general interest

Interest of the organisation is more important than the interest of one/few employees, when there is a conflict between the two. Hence, superiors should be the ideals, supervise employees continuously and also have a fair agreement with them.
7. Centralisation

An organisation must have a proper balance of centralisation and decentralisation, depending on its size, activities, objectives, employees etc.

8. Remuneration

Should be fair to both- employee and employer In line with cost of living and value of employee Fayol did not advocate profit sharing plan for workers, but for managers
9. Scalar chain

It is the flow of authority or command, through which every communication, must pass In special circumstances, this flow can be shortcircuited in situations, when the scalar chain of communication is non feasible. This is done, using a gang plank

10. Order

This refers to arrangement of things and people in an organisation - A place for everything and everything in place Similarly, the right person must be placed at the right position. This demands for precise knowledge of human requirement and resources
11. Equity

combination of justice and kindness It should be maintained in behaviour treatment towards employees

and

12. Stability of Tenure

Employee should be given a minimum job security at least This ensures that he is given time to adjust to new work and succeed in it.
13. Initiative

Managers must encourage employees to take initiative, within the limits of their authority. It increases the zeal and energy in the employee
14. Espirit de Corps

Union is strength Managers must encourage the team spirit among the employees Erring employees must be given oral directions and not asked for a written explanation

The human relations approach Elton Mayo

Conducted the famous Hawthorne Experiments carried

out at the Western Electric Company, in the United States of America that started in the early 1920s. In the approaches by Taylor and Fayol, the human element in the organisation was not stressed upon. The elements in these approaches were not giving evoking positive results. The Western Electric Company, Chicago had Hawthorne plant that manufactured telephone bell system The company was progressive, with sickness and pension benefits In spite of this, there was a dissatisfaction among workers.

 Experiment I: Two group of workers, experimented

with the lighting or illumination and its effect on productivity, showed no clear correlation between light level and productivity. Experiment II: A girls group was chosen who worked in the telephone relay assembly department. 5 types of changes introduced over a period of time and productivity measured after every change. Experiment III: 20,000 interviews conducted in two years to determine employees attitude towards company, work, supervision, waged, insurance, incentives etc. Experiment IV: 14 male workers were employed and hypothesis was that they would produce more in order to earn more. It was proved wrong due to 4 reasons given by workers for a lesser output.

Salient Features
Focus on individual, his needs and behavior

Highlight interpersonal relations

Emphasis on motivation morale and job

satisfaction Conflict in an organization is always destructive and should be always avoided. Based on Hawthorne experiments. People behavior as a individual may be different than his behavior in a group.

Overview of Scientific, Administrative & Bureaucratic Approaches Focuses on the individual workers productivity

Focuses on the overall organizational system

Focuses on the functions of management

The human relations approach Chester Barnard

He was the president of New Jersey Bell

Telephone Company. He saw organizations as social systems that required human cooperation. He believed that managers major roles were to communicate and stimulate subordinates to high levels of effort. He also introduced the idea that managers have to examine the environment and then adjust the organization to maintain a state of equilibrium.

The human relations approach Chester Barnard

He

connected Scientific Management with Human Relations. Felt that executives serve two primary functions:
Must establish and maintain a communications

system among employees. Must establish the objectives of the organization and motivate employees.
Developed an acceptance theory of authority:

Authority of a manager flows from the ability of

subordinates to accept or reject an order from the manager once they:

Comprehend what the order requires of them. Review the orders consistency with organization goals. Perceive a personal benefit in obeying the order.

Modern Approach to management

Quantitative Approach The Systems Approach The Contingency Approach The Japanese management

style (theory z)

Quantitative Approach
Characterized

by its use of mathematics, statistics, and other quantitative techniques for management decision making and problem solving. This approach has four basic characteristics:
1. A decision-making focus 2. Development of measurable criteria 3. Formulation of a quantitative model 4. The use of computers

Decision-Making Focus
The primary focus of the quantitative approach is

on problems or situations that require direct action, or a decision, on the part of management.

Quantitative Approach
Measurable Criteria
The decision-making process requires that the

decision maker select some alternative course of action. The alternatives must be compared on the basis of measurable criteria.
Quantitative Model

To assess the likely impact of each alternative on

the stated criteria, a quantitative model of the decision situation must be formulated.

Computers
Computers are quite useful in the problem-solving

process.

Contributions of Quantitative Approach

In Production Management-

Focus is on manufacturing technology and the

flow of material in plants. In Operation Management Focus is on organization such as hospitals, banks, government & the military.

Limitations of Quantitative Approach

Despite its potential impact, this approach has

certain limitations: Does not deal with the people aspect of an organization!!! Unfamiliar with advanced quantitative tools!!

The Systems Approach

System Defined
A set of interrelated and interdependent parts

arranged in a manner that produces a unified whole. An approach to problem solving based on an understanding of the basic structure of systems.

The Systems Approach

Basic Types of Systems Closed systems Are not influenced by and do not interact with their environment (all system input and output is internal)

Open systems Dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments

The Operating Model in Organizational System

Input Transformation Output

Feedback
INPUT TRANSFORMATION OUTPUT

Labour, Finances, Material, Information

Management & Production Process

Products/Services, Profit/Loss

Companies use inputs such as labour, funds, equipment, and materials to produce goods or to provide services and they design their subsystems to attain these goals.

The Contingency Approach

Contingency Approach Defined
Also sometimes called the situational approach.

There

is no one universally applicable set of management principles (rules) by which to manage organizations.
are individually different, face different situations (contingency variables), and require different ways of managing. that managers are responsible for determining which managerial approach is likely to be most effective in a given situation. requires managers to identify contingencies in a given situation. the key

Organizations

Asserts

This

Blending Components into a Contingency Perspective

Assessment of Contingency Approach

Useful because of its diagnostic approach,

which clearly departs from one of the approach of traditionalist. It is more flexible, although draw heavily other approaches. Allows managers to apply principles those approaches selectively appropriately.

best

from from and

Japanese Management Style Theory Z

Theory

Z is humanistic approach management approach by William Ouchi.

feel like an integral part of the organization.

to

Advocates trusting employees and making them

Based on the assumption that once a trusting

relationship with workers is established, production will increase.

The key features of Japanese industrial organizations:

Offer lifetime employment (at least for their core workers). Promote from within. Insist on mandatory retirement of core workers at age 55. Employ a large number of temporary employees mostly women. There is a high degree of mutual trust and loyalty between

management and employees. Career paths are non-specialized with life-long job rotation as a central feature of career development. Decision making is shared at all levels. Performance appraisal is long term (ie the first appraisal takes place 10 years after joining the company). There is a strong sense of collective responsibility for the success of the organization. And cooperation effort rather than individual achievement is encouraged.

Management Challenges
Increasing number of global organizations.

Building competitive advantage through

superior efficiency, quality, innovation, and responsiveness. Increasing performance while remaining ethical managers. Managing an increasingly diverse work force. Using new technologies.

Henry L. Gantt
A colleague of Taylors at Bethlehem Steel

Works
Implemented a wage incentive program.
Gantts incentive system provided bonuses for

workers who completed their jobs in less time than the standard.
Initiated a bonus plan for supervisors. Developed planning and control techniques

44

using a simple graphic bar chart , The Gantt Chart, to display relationships between planned and completed work on one axis and elapsed time on the other.

The Gilbreths (1868-1924)

Frank and Lillian Gilbreth refined Taylors methods and made many improvements to time and motion studies, and industrials efficiency & were early contributors to personnel management.

45

The Gilbreths
Frank and Lillian Gilbreth refined Taylors

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.

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.

The McKinsey approach to problem-solving

McKinsey's problem-solving process

has three pillars:

Fact-based

Rigidly structured

Hypothesis driven

Facts
Facts are the foundation of problem solving. Facts

aid in the development of a sound hypothesis, and then provide the evidence needed to support or refute it. Facts compensate for the lack of instinct a consultant must face since he or she does not have a lifetime of experience in the industry on which to draw. Facts also bridge the credibility gap, lending respect to the analysis of newcomers. Hiding from the facts is only a recipe for failure, because sooner or later, the truth will show itself. Thus, a successful consultant will find the facts and use them to his or her advantage.

MECE
One

of the most fundamental tenants of McKinsey problem solving is the concept of MECE, mutually exclusive, collectively exhaustive. MECE can be used when developing and listing issues related to the problem at hand. First, the associate must ensure that the list is mutually exclusive, or that every item is separate and distinct. Then, he must check that it is collectively exhaustive, that it includes every issue relevant to the problem. This approach prevents overlap and confusion.

The Initial Hypothesis

The 3rd pillar of the McKinsey problem-solving

process is the initial hypothesis (IH). The initial hypothesis serves as a roadmap toward the solution. It is the solution that seems most probable early in the engagement, after the group has brainstormed using their knowledge of the situation, but before they have spent a lot of time gathering additional information and analyzing. The initial hypothesis may or may not prove correct, but it will provide a starting point from which to work and it will guide the research and early data analysis.