2.evolution Of Management
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Principles of Management
Evolution of Management
Evolution of the Management Thought
Classical Approach to Management 1. 2. 3. 4.
Bureaucratic Approach to Management- Max Weber Taylor and Scientific Management Fayol’s administrative management Hawthorne Experiments-The human relations approach
Modern Theories of Management: 1. 2. 3. 4.
Contributions of behavioral scientists Quantitative Approach Behavioral Approach Contingency Approach
Principles of Management
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
Principles of Management
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
Principles of Management
Bureaucratic Approach to Management- Max Weber
Max Weber analyzed functioning of church, government, military and business organisations
He believed that bureaucracy was the most efficient form of a business structure for any type of business organisation
Principles of Management
Features of bureaucracy
Administrative Class: This class exists in a bureaucratic organisation The employees are full time and look after coordination among activities
Hierarchy: It is a system of ranking Strict rules of authority-responsibility Serves lines of communication and delegation of authority
Division of work: Organisation divided in various departments Each department will have a specific function Clear definition of work
Principles of Management
Official Rules: Administrative process covered by rules Antithesis to ad hoc Provides stability and uniformity
Impersonal Relationships Official relationships free from personal involvement, emotions and sentiments Decisions are based on rational thinking
Official Record: Maintenance of official records Beneficial for future reference Filing system used extensively
Principles of Management
Taylor and Scientific Management
Introduced by Frederick Taylor in 20th century
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 Elements and tools of scientific management Principles of scientific management
Principles of Management
Elements and tools of scientific management 1.
Separation of planning and doing- Supervisor plans, worker only carries out the task
3.
Functional foremanship- 4 types of supervisors for planning aspect, while 4 for supervision aspect of the work
5.
Job Analysis- best way to do a job
7.
Standardisation – of process, period and amount of work, working conditions, tools used etc
Principles of Management
5. Scientific selection and training of workers 6. Financial incentives 7. Economy- optimum usage of resources an eliminate or reduce wastages 8. Mental revolution – cooperation between workers and the management
Principles of Management
Principles of scientific management
Replacing rule of thumb with science
Harmony in group actions
Cooperation
Maximum output
Development of workers
Principles of Management
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 industries- strict supervision
Financial incentives exploited the workers (Differential piece rate system)
Principles of Management
Fayol’s Administrative Management
Henry Fayol- French Industrialist
Used the term- Administration instead of Management
Divided industrial organisation into 6 groupsTechnical Commercial Financial Security Accounting Managerial
Identified qualities of a Manager
Principles of Management
Managerial Qualities and training- according to Fayol
Physical- Health, vigour
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
Principles of Management
Fayol’s 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 manager’s 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.
Principles of Management
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.
Principles of Management
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.
Principles of Management
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 ‘short-circuited’ in situations, when the scalar chain of communication is non feasible. This is done, using a gang plank
Principles of Management
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 and treatment towards employees
Principles of Management
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
Principles of Management
Hawthorne Experiments-The human relations approach 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 General 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
Team of psychologist-Elton Mayo, and sociologists-Whitehead and Roethlisberger studied the phenomenon
Principles of Management
Experiment I: Two group of workers, experimented with the lighting or illumination and its effect on 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 employee’s 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.
Principles of Management
Modern TheoriesContributions of behavioral scientists
Extension of human relation approach Studies: attitude, behaviour, performance of individuals & groups in an organisation
Assumptions: Important to recognise different needs/attitude/perception/values of individuals in an organisation Interpersonal behaviour influenced by various factors Human needs and organisational needs have to be joined together Conflicts in an organisation are unavoidable Contributors include: Maslow, Mcgregor, Herzberg, Argyris, Lewin, Keith Davis etc.
Principles of Management
Quantitative Approach
It uses mathematical techniques to solve management problems
Helps to increase the number of alternatives available, weigh the risks of every alternative, assist faster decision making
Methods used in this approach:
LPP: Allocation of limited resources among competing uses Simulation Queuing theory: Minimise service cost+ Waiting time Inventory modeling: To determine EOQ, EBQ Regression analysis: To determine relationship among two variables (Inversely/directly proportional etc) Game theory: Anticipate/predict future problems and be ready with a solution/reaction
Principles of Management
Systems Approach
System= A set of inter related components that operate together
Components according to the approach: Inputs Transformation Process Outputs Feedback Environment
Key concepts in systems approach Open/closed system Sub-systems Synergy (Within the sub-systems) Feedback Mechanism
Principles of Management
Illustration
Environment Inputs
Transformation Process
Feedback
Outputs
Principles of Management
Contingency Approach
Two types of management thinkers- Universalists & Situationalist
Universalists- There is one best approach to management Situationalists- Advocate contingency theory
Contingency theory states- The manager must identify which technique will best contribute to the attainment of management goals, in a given situation
Contingency variables: Size of the firm Environment Resources Technology Group dynamics Individual differences
Evolution of Management
Evolution of the Management Thought
Classical Approach to Management 1. 2. 3. 4.
Bureaucratic Approach to Management- Max Weber Taylor and Scientific Management Fayol’s administrative management Hawthorne Experiments-The human relations approach
Modern Theories of Management: 1. 2. 3. 4.
Contributions of behavioral scientists Quantitative Approach Behavioral Approach Contingency Approach
Principles of Management
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
Principles of Management
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
Principles of Management
Bureaucratic Approach to Management- Max Weber
Max Weber analyzed functioning of church, government, military and business organisations
He believed that bureaucracy was the most efficient form of a business structure for any type of business organisation
Principles of Management
Features of bureaucracy
Administrative Class: This class exists in a bureaucratic organisation The employees are full time and look after coordination among activities
Hierarchy: It is a system of ranking Strict rules of authority-responsibility Serves lines of communication and delegation of authority
Division of work: Organisation divided in various departments Each department will have a specific function Clear definition of work
Principles of Management
Official Rules: Administrative process covered by rules Antithesis to ad hoc Provides stability and uniformity
Impersonal Relationships Official relationships free from personal involvement, emotions and sentiments Decisions are based on rational thinking
Official Record: Maintenance of official records Beneficial for future reference Filing system used extensively
Principles of Management
Taylor and Scientific Management
Introduced by Frederick Taylor in 20th century
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 Elements and tools of scientific management Principles of scientific management
Principles of Management
Elements and tools of scientific management 1.
Separation of planning and doing- Supervisor plans, worker only carries out the task
3.
Functional foremanship- 4 types of supervisors for planning aspect, while 4 for supervision aspect of the work
5.
Job Analysis- best way to do a job
7.
Standardisation – of process, period and amount of work, working conditions, tools used etc
Principles of Management
5. Scientific selection and training of workers 6. Financial incentives 7. Economy- optimum usage of resources an eliminate or reduce wastages 8. Mental revolution – cooperation between workers and the management
Principles of Management
Principles of scientific management
Replacing rule of thumb with science
Harmony in group actions
Cooperation
Maximum output
Development of workers
Principles of Management
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 industries- strict supervision
Financial incentives exploited the workers (Differential piece rate system)
Principles of Management
Fayol’s Administrative Management
Henry Fayol- French Industrialist
Used the term- Administration instead of Management
Divided industrial organisation into 6 groupsTechnical Commercial Financial Security Accounting Managerial
Identified qualities of a Manager
Principles of Management
Managerial Qualities and training- according to Fayol
Physical- Health, vigour
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
Principles of Management
Fayol’s 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 manager’s 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.
Principles of Management
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.
Principles of Management
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.
Principles of Management
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 ‘short-circuited’ in situations, when the scalar chain of communication is non feasible. This is done, using a gang plank
Principles of Management
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 and treatment towards employees
Principles of Management
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
Principles of Management
Hawthorne Experiments-The human relations approach 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 General 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
Team of psychologist-Elton Mayo, and sociologists-Whitehead and Roethlisberger studied the phenomenon
Principles of Management
Experiment I: Two group of workers, experimented with the lighting or illumination and its effect on 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 employee’s 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.
Principles of Management
Modern TheoriesContributions of behavioral scientists
Extension of human relation approach Studies: attitude, behaviour, performance of individuals & groups in an organisation
Assumptions: Important to recognise different needs/attitude/perception/values of individuals in an organisation Interpersonal behaviour influenced by various factors Human needs and organisational needs have to be joined together Conflicts in an organisation are unavoidable Contributors include: Maslow, Mcgregor, Herzberg, Argyris, Lewin, Keith Davis etc.
Principles of Management
Quantitative Approach
It uses mathematical techniques to solve management problems
Helps to increase the number of alternatives available, weigh the risks of every alternative, assist faster decision making
Methods used in this approach:
LPP: Allocation of limited resources among competing uses Simulation Queuing theory: Minimise service cost+ Waiting time Inventory modeling: To determine EOQ, EBQ Regression analysis: To determine relationship among two variables (Inversely/directly proportional etc) Game theory: Anticipate/predict future problems and be ready with a solution/reaction
Principles of Management
Systems Approach
System= A set of inter related components that operate together
Components according to the approach: Inputs Transformation Process Outputs Feedback Environment
Key concepts in systems approach Open/closed system Sub-systems Synergy (Within the sub-systems) Feedback Mechanism
Principles of Management
Illustration
Environment Inputs
Transformation Process
Feedback
Outputs
Principles of Management
Contingency Approach
Two types of management thinkers- Universalists & Situationalist
Universalists- There is one best approach to management Situationalists- Advocate contingency theory
Contingency theory states- The manager must identify which technique will best contribute to the attainment of management goals, in a given situation
Contingency variables: Size of the firm Environment Resources Technology Group dynamics Individual differences
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