Why Study Mgmt Theory

Why study management theory? 1. Guides management decision -Comes out of Practice Assumption Relationships 2. Provides a stable focus for understanding what we experience -We get ideas about organizations and the people -1908 Henry Ford- Apostle of mass production - First model took 121/2 hours - 12 Years later in 1920 - one per minute -In 1925 Model T was rolling off one every 5 seconds

Henry Ford born in 1863 grew in Michigan when he died in 1945 he was worth $600 million. 3. Theories makes us challenge - to keep learning 4. Theories area sources of ideas - Alfred Sloan vs Henry Ford 5. Coherent Group of assumption put forth to explain the relationship between two or more observable facts and to provide a sound basis for predicting future events.

Evolution of management theory Three established school Scientific - Classical Organizational - Behavioral - Management science school

Historically not replaced

- layered - supplemented

Frederick TAYLOR- [1856-1915] 1. Development of a true science of management to identify the best way 2. Scientific selection of workers 3. Scientific education and development 4. Initiate friendly cooperation between management and workers

Contribution “ Production” miracle Use for fast food industry to training of surgeons Use rational approach to solve Problem Solving – balanced – no emotions Limitations Human being are assumed rational, motivated. Productivity to profitability Labour exploitation Customers

Henri Fayol[1841-1925] • • 3. 4. 5. 6. 7. 8.

Disprove managers were/are born and they are made Divide business operations functionally: Technical Commercial Financial Security Accounting Management

14 Principles 1. Division of LabourSpecialise 2. Authority- Right to give orders 3. Discipline 4. Unity of Command 5. Unity of Direction 6. Subordination of individual goal to common 7. Remuneration

8. Centralization:Retain

Central Authority 9. Hierarchy- Neat box 10. Orderliness: materials and people at the right place 11.Equity- Fair, firm, friendly 12. Stability of staff 13. Initiative- freedom conceive & carry out 14. Esprit-de-corps

Bureaucracy Max Weber (1864-1920) • A bureaucratic managerial style • Rationally thought out • Emphasize technical competence for evaluation • Good for large organisations, Ford benefited, GM, GE, Xerox trusted it

Main characteristics are • • • • • •

Rules and regulations Impersonality Division of labor Hierarchical structure Life long career Rationality

Believes in authority – charisma sound’s legal • Compliance based - ideal for governments - inflexible inhibits productivity

Behavioural school Organisation is people Classical school – ‘people side’ neglected Use sociology psychology and related fields to purpose more effective ways to manage people.

Hawthorne Experiments 1. Sympathetic supervision reinforced motivation – Employee works harder if they believed that management was concerned about their welfare and special attention was paid 2. The social environment of employees have a positive influence on productivity

• • • •

Work is dull Coworkers influence Shared antagonism Peer pressure, group pressure has a stronger influence From HR to Behavioral Sciences What motivates people?

Maslow’s Theory: • Physiological Needs • Safety Needs • Social Needs • Esteem Needs • Self-Actualization

Douglas McGregor • Theory X- Work is distasteful, Motivate by force, money, Power, Praise- Stick • Theory Y- Public is inherently motivated to do good work - Carrot

Scientific system approach Organization as a limited purposeful system composed of inter related parts. Neo Human relations From a rational man - motivated by fear understand they are emotional, intuitive, creative We all like to think ourselves as winners Shared values : Peters & Robert Waterman

Eight attributes of excellence        

A bias for ACTION Close to the customer Autonomy and entrepreneurship Productivity through people Hands on value driven Stick to the knitting Simple form, lean staff Simultaneous loose tight properties

If treated well - enhanced responsiveness - respond to opportunities Not replacement parts like a machine part in a corporate machine. - continuous retraining – automate increased flexibility Labors concern for job security - eg. Lucas TVS

Mc KINSEY 7 -S F RAME WO RK Structure

Strategy

Systems Shared Values

Skills

Style

Staff

SYSTEMS APPROACH • Organization considered as unified purposeful system composed of interrelated parts. - Activity of one affects the others - meshed – integrated – coordinated made up of subsystem - those that make up the whole system. Each subsystem works independently.

SYNERGY • Whole is greater than the sum of its parts as separate departments cooperate and interact, they become more productivity than if they each were to WORK in ISOLATION.

Open system Interacts with environment - automobile plant CLOSED SYSTEM – Does not A prison or church

External Environment INPUT HUMAN CAPITAL LAND BLDG EQUIPMENT Technology Information

Process transformation

Feedback

OUTPUT • GOODS • SERVICES • OTHERS

Managers plays dominant role - in inputs - in transformation process - uses feedback continual to improve inputs/ transformation University system

vs

fast food joint

High Performance - Japanese management idea - TQM - Re engineering - Bench marking - Learning Organisation

Management Defined Process of working with and through others to achieve organizational objectives in a changing environment. Derailed • Problem with interpersonal • Failure to meet business objectives • Failure to build & lead a team. • Inability to change and adapt during a transition

Effectiveness and • Do right things • Choose right goals • Concentrate resources and efforts on them • The job gets done but…..

efficiency • Do things right • Limited Resources are underutilized or wasted.

Balanced emphasis The job gets done and ……….

Limited resources are not wasted

Key Aspects

Working with & through others

Getting the most of limited resources

Achieving organizational objectives

Balance effectiveness efficiency

Management Process - Planning - decision making - organising - staffing -communicating - motivating - leading -controlling

Managerial Roles: ten roles  Figurehead ceremonial.  Leader  The liason role; communicating particularly with external, horizontal and vertical

 Informational Role (securing information above the operation  The disseminator - to subordinates  The Spokesperson role - external

    

Decision role The entrepreneur role The disturbance handler The resource allocator The negotiator - dealing with others.

Claimants

Inputs

Employees Consumers Suppliers Government Shareholders Community

Role of manager

-Interpersonal -Informational -Decision

Human Capital Managerial Technological

Basis of Management Theory Planning Organising

Scientific Orgn. theory Systems theory Bureaucratic Contingency

Staffing

Actuating

Motivation Leadership Communication

Controlling

Products Outputs

Services Profits Satisfaction Goal integration

Management Levels First line – supervisors Middle Managers – responsible for other managers operating employees Top Managers Overall management

Skills Technical/procedural

Conceptual

Human skills

Human

Conceptual

Technical

Company’s Mission the … - specific purpose 1.Clear usually from the start becomes hazy over a period of time - need clarity when business grows 2. Unclear at the start- emerges as you learn

3.Mission becomes irrelevant

Being aware of opportunity In light of : The market, competition What customers want ? Our strengths Our weaknesses

Setting objectives or goals where we want to be And what we want to accomplish and when ?

Considering planning premises In what environment – internal or external Will our plans operate?

Identifying Alternatives What are the most promising alternatives to accomplishing our objectives?

Comparing Alternatives In Light of Goals Sought which alternatives will give us the best chance of meeting our goals at the lowest cost and highest profit

Choosing an Alternative Selecting the course of action we will pursue

Formulating supporting plans to buy equipments buy materials hire and train workers develop a new product

Numberizing plans by making budgets develop such budgets as: -volume and price of sales -operating expenses -expenditure for capital equipment

Peter Drucker 1. What business are you in? 2. Who is our customer? 3. What value is delivered to the customer? 4. What business are we going to the in? 10. What business ought we be in?

The building blocks - history of the organisation values and policies - current preferences of management-who pilot e.g.……Nagar – Alcohol - Environment considerations - Resources - distinctive competence

Mission statement reflects the – corporate philosophy - identify - character and - image It should feasible precise –clear motivating – distinctive and strategic

ONGC: to stimulate, continue and accelerate efforts to develop and maximise contribution of the energy sector to the economy of the country

INDAL: to be most innovative, diversified aluminum company.

Bank of Madura: a vibrant bank committed to excellence in performance through customer satisfaction.

BARC – to attain self sufficiency in Atomic energy programme We are energy business We are in baby business We are in the business of cool clean an ACC: to strive to maintain leadership in the cement industry

Four Steps in Planning Step 1 Establish a goal or set of goals Step 2 Define the present situation how far are we from the present goals What are the resources available for reaching the goals Step 3 Identify the aids and barriers to the goals Step 4 Develop a plan or set of actions for reaching goals

The Hierarchy of Plans MISSION STATEMENT

STRATEGIC PLANS

Operational Plans

Commitment principle - materials - capital equipment - recruitment engineering - new product development - plant - production facilities - financing