Chapter

Management
2 Yesterday and Today
LEARNING OUTLINE
Follow this Learning Outline as you read and study this chapter.

•Historical Background of Management

• Explain why studying management history is important.
• Describe some early evidences of management practice.

•Scientific Management
• Describe the important contributions made by Fredrick
W. Taylor and Frank and Lillian Gilbreth.
• Explain how today’s managers use scientific
management.
L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.

•General Administrative Theory

• Discuss Fayol’s contributions to management theory.
• Describe Max Weber’s contribution to management
theory.
• Explain how today’s managers use general administrative
theory.

•Quantitative Approach
• Explain what the quantitative approach has contributed
to the field of management.
• Discuss how today’s managers use the quantitative
approach.
L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.

•Toward Understanding Organizational Behavior

• Describe the contributions of the early advocates of OB.
• Explain the contributions of the Hawthorne Studies to the
field of management.
• Discuss how today’s managers use the behavioral
approach.

•The Systems Approach

• Describe an organization using the systems approach.
• Discuss how the systems approach helps us
management.
L E A R N I N G O U T L I N E (cont’d)
Follow this Learning Outline as you read and study this chapter.

•The Contingency Approach

• Explain how the contingency approach differs from the
early theories of management.
• Discuss how the contingency approach helps us
understand management.

•Current Issues and Trends

• Explain why we need to look at the current trends and
issues facing managers.
• Describe the current trends and issues facing managers.
Historical Background of Management
• Ancient Management
 Egypt (pyramids) and China (Great Wall)
 Venetians (floating warship assembly lines)
• Adam Smith
 Published “The Wealth of Nations” in 1776
 Advocated the division of labor (job specialization) to
increase the productivity of workers
• Industrial Revolution
 Substituted machine power for human labor
 Created large organizations in need of management
Exhibit 2–1 Development of Major Management Theories
Major Approaches to Management
• Scientific Management
• General Administrative Theory
• Quantitative Management
• Organizational Behavior
• Systems Approach
• Contingency Approach
Scientific Management
• Fredrick Winslow Taylor
 The “father” of scientific management
 Published Principles of Scientific Management (1911)
 The theory of scientific management
– Using scientific methods to define the “one best way” for a
job to be done:
• Putting the right person on the job with the correct tools
and equipment.
• Having a standardized method of doing the job.
• Providing an economic incentive to the worker.
Exhibit 2–2 Taylor’s Four Principles of Management

1. Develop a science for each element of an individual’s work, which

will replace the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the worker.
3. Heartily cooperate with the workers so as to ensure that all work is
done in accordance with the principles of the science that has been
developed.
4. Divide work and responsibility almost equally between
management and workers. Management takes over all work for
which it is better fitted than the workers.
Scientific Management (cont’d)
• Frank and Lillian Gilbreth
 Focused on increasing worker productivity through
the reduction of wasted motion
 Developed the microchronometer to time worker
motions and optimize work performance
• How Do Today’s Managers Use Scientific
Management?
 Use time and motion studies to increase productivity
 Hire the best qualified employees
 Design incentive systems based on output
General Administrative Theory
• Henri Fayol
 Believed that the practice of management was distinct
from other organizational functions
 Developed fourteen principles of management that
applied to all organizational situations
• Max Weber
 Developed a theory of authority based on an ideal
type of organization (bureaucracy)
 Emphasized rationality, predictability, impersonality, technical
competence, and authoritarianism
Exhibit 2–3 Fayol’s 14 Principles of Management

1. Division of work. 7. Remuneration.

2. Authority. 8. Centralization.
3. Discipline. 9. Scalar chain.
4. Unity of command. 10. Order.
5. Unity of direction. 11. Equity.
6. Subordination of 12. Stability of tenure
individual interests of personnel.
to the general
13. Initiative.
interest.
14. Esprit de corps.
Exhibit 2–4 Weber’s Ideal Bureaucracy
Quantitative Approach to Management
• Quantitative Approach
 Also called operations research or management
science
 Evolved from mathematical and statistical methods
developed to solve WWII military logistics and quality
control problems
 Focuses on improving managerial decision making by
applying:
 Statistics, optimization models, information models, and
computer simulations
Understanding Organizational Behavior
• Organizational Behavior (OB)
 The study of the actions of people at work; people are
the most important asset of an organization
• Early OB Advocates
 Robert Owen
 Hugo Munsterberg
 Mary Parker Follett
 Chester Barnard
Exhibit 2–5 Early Advocates of OB
The Hawthorne Studies
•A series of productivity experiments conducted
at Western Electric from 1927 to 1932.

•Experimental findings
Productivity unexpectedly increased under imposed
adverse working conditions.
The effect of incentive plans was less than
expected.

•Research conclusion
Social norms, group standards and attitudes more
strongly influence individual output and work behavior
than do monetary incentives.
The Systems Approach
• System Defined
 A set of interrelated and interdependent parts
arranged in a manner that produces a unified whole.
• 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.
Exhibit 2–6 The Organization as an Open System
Implications of the Systems Approach
• Coordination of the organization’s parts is
essential for proper functioning of the entire
organization.
• Decisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
• Organizations are not self-contained and,
therefore, must adapt to changes in their
external environment.
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.
 Organizations are individually different, face different
situations (contingency variables), and require
different ways of managing.
Exhibit 2–7 Popular Contingency Variables

• Organization size
• As size increases, so do the problems of coordination.
• Routineness of task technology
• Routine technologies require organizational structures,
leadership styles, and control systems that differ from
those required by customized or nonroutine technologies .
• Environmental uncertainty
• What works best in a stable and predictable environment
may be totally inappropriate in a rapidly changing and
unpredictable environment.
• Individual differences
• Individuals differ in terms of their desire for growth,
autonomy, tolerance of ambiguity, and expectations.
Current Trends and Issues
• Globalization
• Ethics
• Workforce Diversity
• Entrepreneurship
• E-business
• Knowledge Management
• Learning Organizations
• Quality Management
Current Trends and Issues (cont’d)
• Globalization
 Management in international organizations
 Political and cultural challenges of operating in a
global market
 Working with people from different cultures
 Coping with anticapitalist backlash
 Movement of jobs to countries with low-cost labor

• Ethics
 Increased emphasis on ethics education in college
curriculums
 Increased creation and use of codes of ethics by
businesses
Exhibit 2–8 A Process for Addressing Ethical Dilemmas

Step 1: What is the ethical dilemma?

Step 2: Who are the affected stakeholders?

Step 3: What personal, organizational, and

external factors are important to
my decision?

Step 4: What are possible alternatives?

Step 5: Make a decision and act on it.

Current Trends and Issues (cont’d)
• Workforce Diversity
 Increasing heterogeneity in the workforce
 More gender, minority, ethnic, and other forms of diversity in
employees
 Aging workforce
 Older employees who work longer and do not retire
 The increased costs of public and private benefits for older
workers
 An increasing demand for products and services related to
aging.
Current Trends and Issues (cont’d)
• Entrepreneurship Defined
 The process of starting new businesses, generally in
response to opportunities.
• Entrepreneurship process
 Pursuit of opportunities
 Innovation in products, services, or business methods
 Desire for continual growth of the organization
Current Trends and Issues (cont’d)
• E-Business (Electronic Business)
 The work preformed by an organization using
electronic linkages to its key constituencies
 E-commerce: the sales and marketing aspect of an e-
business
• Categories of E-Businesses
 E-business enhanced organization
 E-business enabled organization
 Total e-business organization
Exhibit 2–9 Categories of E-Business Involvement
Current Trends and Issues (cont’d)
• Learning Organization
 An organization that has developed the capacity to
continuously learn, adapt, and change.
• Knowledge Management
 The cultivation of a learning culture where
organizational members systematically gather and
share knowledge with others in order to achieve
better performance.
Exhibit 2–10 Learning Organization versus Traditional Organization
Current Trends and Issues (cont’d)
• Quality Management
 A philosophy of management driven by continual
improvement in the quality of work processes and
responding to customer needs and expectations
 Inspired by the total quality management (TQM) ideas
of Deming and Juran
 Quality is not directly related to cost
 Poor quality results in lower productivity
Exhibit 2–11 What is Quality Management?

Intense focus on the customer.

Concern for continual improvement
Process-focused.
Improvement in the quality of everything.
Accurate measurement.
Empowerment of employees.
 Terms to Know
• division of labor (or job • closed systems
specialization) • open systems
• Industrial Revolution • contingency approach
• scientific management • workforce diversity
• therbligs • entrepreneurship
• general administrative theory • e-business (electronic
• principles of management business)
• bureaucracy • e-commerce (electronic
• quantitative approach commerce)
• organizational behavior (OB) • intranet
• Hawthorne Studies • learning organization
• system • knowledge management
• quality management