Group

3
Contemporary Approaches to Organization & Management
De Leon, Lolita Joaquin, Olivia Ricalde, Myra Grace C.

Management in the New Millennium

A

firm can be efficient by making the best use of people, money, physical plant, and technology. is ineffective if its goals do not provide a sustained competitive advantage. firm with excellent goals would fail if it hired the wrong people, lost key contributors, relied on outdated technology, and made poor investment decisions.
2004 The McGraw-Hill Companies, Inc. All rights reserved.

It

McGraw-Hill

The Evolution of Management Theory

Source:

Figure 2.1

Copyright McGraw-Hill. All rights reserved.

Contemporary Management Perspectives

Contingency Theory
Total Quality Management Learning Organization

The Contingency Approach

The contingency approach (ca 60 s & 70s) to Management is a management approach that emphasizes that what managers do in practice depends on a given set of circumstances--a situation.

Environment ca 1960s
Expansion of markets based on differentiation of products resulting on growing quality consciousness Workforce becoming less blue-collar, more white collar

Environment in ca1970s
Emergence of new companies Apple Emergence of new products, IBM PC

The Contingency Approach

The

Contingency View emphasizes that a managers approach should vary according tothat is, be contingent onthe individual and the environmental situation

Also

sometimes called the situational approach.

Contingency Theory
The

idea that the organizational structures and control systems manager choose depend onare contingent oncharacteristics of the external environment in which the organization operates. The environment impacts the firm and managers must be flexible to react to environmental changes.

McGraw-Hill

2004 The McGraw-Hill Companies, Inc. All rights reserved.

Contingency Theory
States

that there is no one best way to manage an organization.

Because

what works for one organization may not work for

another Situational characteristics (contingencies) differ Organizations are individually different, face different situations (contingency variables), and require different ways of managing. Managers need to understand the key contingencies that determine the most effective management practices in a given situation

The Contingency Approach

Contingency

Characteristics

An open-system perspective How subsystems combine to interact with outside systems.

A

practical research orientation

Translating research findings into tools and situational refinements for more effective management.

multivariate approach
Many variables collectively account for variations in performance.

Four Popular Contingency Variables

Organization

size Routineness of task technology Environmental uncertainty Individual differences

Proponents of the Contingency Approach

Joan Woodward technologies directly determine organizational attributes such as span of control, centralization of authority, and the formalization of rules and procedures. She classified technology as follows: SMALL BATCH and UNIT TECHNOLOGY LARGE BATCH and MASS PRODUCTION CONTINUOUS PROCESS PRODUCTION

Proponents of the Contingency Approach

P.R. Lawrence and J. W. Lorsch

companies

operating in less stable environments operated more effectively, if the organizational structure was less formalized, more decentralized and more reliant on mutual adjustment between various departments in the company companies operating in more stable and certain environments functioned more effectively if the organization was more formalized, centralized in the decision-making and less reliant on mutual adjustment between departments.

2 Organization Types according to Thomans Burns & G.M. Stalker

Mechanistic Organic

Organic vs Mechanistic Structure

MECHANISTIC for tasks which are routine & unchanging
Authority is centralized at the top. Employees are closely monitored & managed. Characterized by tallness, specialization, and formalization Emphasize efficiency and elaborate rules and procedures for maintaining control over behavior can be very efficient in a stable environment.

Organic vs Mechanistic Structure

ORGANIC for tasks which are non-routine & changing emphasize low job specification, creativity rather than efficiency, and freedom for workers to control their own behavior Authority is decentralized throughout the organization. Tasks and roles are left ambiguous to encourage employees to react quickly to changing environment.

Mechanistic vs. Organic Structure

Organic vs Mechanistic Structure

ORGANIC Span of control # of levels Centralization Wide Few MECHANISTIC Narrow Many

Low Low
Narrow

High High Wide

Formalization
Range of compensation

Contingency Theory of Organizational Design

** Technological environments change rapidly, so must managers.

So what should managers do?

It depends on where they are in the organization:
Level Top Activities
Direction/goals. Allocate resources. Set standards.
Integrate knowledge. Balance short-term with Long term goals. Develop people.
Secure resources and Opportunities. Manage performance and improvements.

Skill

Middle

Frontline

Lessons from the Contingency Approach

Approach

emphasizes situational appropriateness rather than rigid adherence to universal principles. Approach creates the impression that an organization is captive to its environment. Approach has been criticized for creating the impression that an organization is a captive of its environment.

APPLICATION:
What would you do if you were the manager of a shoe manufacturing business experiencing decreasing profits?
conduct a study on how to increase the productivity of the workers (Classical Management Theory) involve workers more fully in decisions concerning the methods to use in producing shoes based on the premise that this will motivate the workers to produce more (Behavioral Management Theory) establish a committee which would coordinate the production and distribution of goods under the assumption that large inventories are responsible for the decline in profit (Systems Theory) study the situation carefully to determine the cause of the decreasing profits before deciding on a new procedure or program (Contingency Theory)

TOTAL QUALITY MANAGEMENT

TQM: Creating an Organization Dedicated to Continuous Improvement

Why TQM?

Environment ca 1980s : slow American productivity improvements, rise of Japanese companies Ford Motor Company had operating losses of $3.3 billion between 1980 and 1982. Xerox market share dropped from 93% in 1971 to 40% in 1981. Attention to quality was seen as a way to combat the competition.

Total Quality Management

TQM
Total

- made up of the whole Quality - degree of excellence a product or service provides Management - act, art or manner of planning, organizing, leading, and controlling resources Therefore, TQM is the art of managing the whole to achieve excellence.

Total Quality Management

WHAT IS TQM?

Defination of TQM, According to JOHN GILBERT: A process designed to focus on customer expectations, preventing problems, building commitment to quality in the workforce and promoting open decision-making. Total Quality Management is a comprehensive term not related only to the quality goods and services. TQM is a preventive approach and not corrective one.

It tries to produce best possible product and services through regular innovation by doing right things every time.

 Total

Quality Management reflects the culture of an organization. It indicates consumer-oriented, quality oriented management philosophy. It is a commitment to Quality by all managers and workers. It is a philosophy to achieve consumer satisfaction. TQM encourages formation of Quality circles.

Origin of TQM
The

concept of Quality control as a distinct discipline emerged in the United States in the 1920s. TQM concept developed in Japan in 1960s. The idea of involving all employees not just the quality control staff. The credit of introducing TQM in Japan goes to two American, Dr. W.EDWARDS DEMING and Dr.J.M.JURAN, with this they become heroes in Japan long before America could realize their importance. The Deming prize is the highest TQM award in Japan and is given to most respected and successful corporations.

THE EVOLUTION OF TOTAL QUALITY MANAGEMENT (TQM)

1940s

Quality became more statistical in nature. Statistical sampling techniques were used to evaluate quality, and quality control charts were used to monitor the production process. 1960s With the help of quality gurus, the concept took on a broader meaning. Quality began to be viewed as something that encompassed the entire organization 1970s The meaning of quality for businesses changed dramatically quality was still viewed as something that needed to be inspected and corrected.

Timeline showing the differences between old and new concept of quality

Whats the goal of TQM?

Do the right things right the first time, every time.

Total Quality Management

Objectives of TQM
TQM

stresses on collective effort of all functions activities and people for improving quality of goods and services to bring in higher consumer satisfaction. The aim of TQM is to give maximum satisfaction to consumer by providing goods which are best in quality (i.e. zero defect). TQM aims at educating and training the managers and employees because these are the integral part of TQM as it is rightly said TQM begins with education and end with education.

 TQM

is useful in improving quality as well as productivity the methods used in this programmers' are zero defects production this not only makes ever employee responsible for quality improvement but also results in higher productivity. TQM aims at giving full freedom to express their suggestion for quality improvement, cost reduction and elimination of wastages and those who take active participation should be rewarded.

Another way to put it

At

its simplest, TQM is all managers leading and facilitating all contributors in everyones two main objectives:

(1) total client satisfaction through quality products and services; and (2) continuous improvements to processes, systems, people, suppliers, partners, products, and services.

Total Quality Management

Basic Tenets of TQM

1.

The customer makes the ultimate determination of quality. 2. Top management must provide leadership and support for all quality initiatives. 3. Preventing variability is the key to producing high quality. 4. Quality goals are a moving target, thereby requiring a commitment toward continuous improvement. 5. Improving quality requires the establishment of effective metrics. We must speak with data and facts not just opinions.
Total Quality Management

PRINCIPLES OF TQM
Total

Quality Management encompasses a set of four principles & eight core concepts.

Principles: Delight

the customer Management by fact People-based management Continuous improvement

EIGHT CORE CONCEPTS

Customer

satisfaction Internal customer are real All work is process Measurement Teamwork People make quality Continuous improvement cycle prevention

The three aspects of TQM

Counting Customers Culture
Tools, techniques, and training in their use for analyzing, understanding, and solving quality problems Quality for the customer as a driving force and central concern. Shared values and beliefs, expressed by leaders, that define and support quality.
Total Quality Management

Total Quality Management and Continuous Improvement

TQM

is the management process used to make continuous improvements to all functions. TQM represents an ongoing, continuous commitment to improvement. The foundation of total quality is a management philosophy that supports meeting customer requirements through continuous improvement.

Total Quality Management

Continuous Improvement versus Traditional Approach

Traditional Approach
Market-share Individuals Focus

Continuous Improvement
Customer

focus

on who and why Short-term focus Status quo focus Product focus Innovation Fire fighting

focus Cross-functional teams Focus on what and how Long-term focus Continuous improvement Process improvement focus Incremental improvements Problem solving

Total Quality Management

Quality Throughout
A

Customers impression of quality begins with the initial contact with the company and continues through the life of the product.
Customers

look to the total package - sales, service during the sale, packaging, deliver, and service after the sale. Quality extends to how the receptionist answers the phone, how managers treat subordinates, how courteous sales and repair people are, and how the product is serviced after the sale.
All

departments of the company must strive to improve the quality of their operations.
Total Quality Management

Value-based Approach
Manufacturing Service

Dimensions

Dimensions
Performance Features

Reliability
Responsiveness Assurance

Reliability
Conformance Durability

Empathy
Tangibles

Serviceability
Aesthetics Perceived

quality
Total Quality Management

The TQM System

Objective

Continuous Improvement

Principles

Customer Focus

Process Improvement

Total Involvement

Elements

Leadership Education and Training Communications Measurement

Supportive structure Reward and recognition

Total Quality Management

BENEFITS OF TQM
Customer

satisfaction enhanced. A total change in culture is brought about Increased productivity and efficiency Advanced techniques are incorporated in the organization New products & skills are developed Teamwork is enhanced Improved house-keeping Reduced rework Reduced inventory Increased profitability

LIMITATIONS OF TQM
TQM

is a slow moving process. It requires total change in the outlook of management and employees. It benefits will be available only after a long period of time. The success of TQM largely depends on existence of participative management. TQM need employee who can take a lead,& trade union are interested in their own benefits rather than quality management. TQM implementation is not an easy task, specially in a developing country sue to unfavorable attitude of management and employees.

BENCHMARKING
Another

way companies implement continuous improvement is by studying business practices of companies considered best in class. Purpose: To identify and fill gaps in performance by putting in place best practice, thereby establishing superior performance. When to Use: As a part of total quality process when taking an independent look at performance by comparing it with that of others.

DEMING WHEEL (PDCA)

Act
Check

Plan
Do

Study
P-D-S-A

Demings Cycle (1900-1993)

 Purpose:

A management concept suggested by Deming to satisfy the quality requirements of the customer by using the cycle: plan,do,check and action. When to use: For the development of a new product based on the requirements of the customer. Example: A company implementing the TQM process used the Deming Wheel for achieving continuous improvement of the various business processes in order to develop quality improvement of the whole organisation.

ERROR PROFFING (POKAYOKE)

Purpose:

To design an operation in such a way that specific errors are prevented from causing major problems to the customer. When to use: It can be used when defects occur and require 100% inspection,immediate feedback and action at the: Start of production process. Production points where an error may occur. Source of raw material and components. Example: A large steel press is automatically monitored for wear.If the thickness becomes less than a specified amount,an alarm sounds and action has to be taken to rectify the error.

JUST IN TIME
Purpose:

To deliver the raw materials or components to the production line to arrive just in time when they are needed. When to use: When you want to minimize or eliminate stock in order to prevent the organization from incurring unproductive cost.

KAIZEN

KAIZEN
A Japanese term meaning change for the better, the concept implies a continuous improvement in all company functions at all levels. When to use: The term is so common in Japan that it is used in all aspects of life.
Purpose:

PARETO ANALYSIS

 Purpose:

To separate the most important causes of a problem from the many trivial. Also, to identify the most important problems for a team to work on. Pareto Analysis was first used by Wilfredo Pareto, an Italian economist. When to use: When the team is analyzing data relating to a problem to decide which are the most important factors to be tackled first to have the most impact on the problem. Example:

QUALITY CIRCLES

Purpose: A special type of small group activity which forms a vehicle for the development of individuals. When to use: Quality circles are especially useful in the later stages of a total quality process when individuals in their own work areas begin to tackle their own problems. They lead to self-regulation in work groups. Example: A companies in the Potteries set up quality circles to allow all employees to contribute their own ideas to the benefit of the whole company. In the first year more than 25 circle presentations were made and successfully implemented.

BRAINSTORMING
Purpose:

To generate as many ideas as possible without assessing their value. When to use: In,teams when trying to identify possible root causes or when seeking solutions to a problem.Brainstorming can also be used when deciding what problem or improvement activity to work on,and when planning the steps of a project. Example: An organization was seeking suggestions to reduce absenteesim.They ran a series of brainstorming sessions to generate ideas for tackling the problem.

WHY TQM EFFORTS FAIL

Lack

of a genuine quality culture Lack of top management support and commitment Over- and under-reliance on statistical process control (SPC) methods

Environment in the New Millennium

Highly competitive environment Information and electronic age Information and knowledge is readily available to us all Information speed through Internet Emergence of new work practices such as virtual teams, network organizations The future is going to be dominated by our need to understand systems.

The Learning Organization Approach

The learning organization approach to management is the management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors.

From The Fifth Discipline by Peter Senge, 1990

Why Learning Organization? The C Words

Complexity: Situations that are difficult to understand, have considerable ambiguity and uncertainty, and often have no solutions, only options and tradeoffs Chaos: Seemingly random events that have an underlying pattern (which is difficult to discern) Change: turbulent environments in which the future is difficult to predict or control

The illiterate of the 21st century will not be the individual who cannot read and write, but the one who cannot learn, unlearn, and relearn. -- Futurist Alvin Toffler

The Learning Organization

A Learning Organization is an organization
that actively creates, acquires, and transfers knowledge within itself and is able to modify its behavior to reflect new knowledge
1. 2. 3.

Creating and Acquiring Knowledge Transferring Knowledge Modifying Behavior

60

The Learning Organization

The

management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors. are two ways organizations can learn:
learning

There

Experimental

External learning

McGraw-Hill

2004 The McGraw-Hill Companies, Inc. All rights reserved.

Managers Focus in a Learning Organization:

Build

a commitment to learning Work to generate ideas with impact Work to generalize ideas with impact

62

Managerial Approach to Learning Organization

Managers

must create an environment conducive to learning Managers encourage the exchange or information among organization members Managers promote :

systematic problem solving Experimentation learning from experiences and past history learning from experience of others transferring knowledge rapidly throughout the organization

From The Fifth Discipline by Peter Senge, 1990

Building a Learning Organization

System

Thinking

Every organization member understands his or her own job and how the jobs fit together to provide finals products to the customer

Shared

vision

All organization members have a common view of the purpose of the organization and a sincere commitment to accomplish the purpose

Challenging

of the mental models

Organization members routinely challenge the the way business is done and the thought processes people use to solve organizational problems

From The Fifth Discipline by Peter Senge, 1990

Building a Learning Organization

Team

learning

Organization members work together, develop solution to new problems together, and apply the solutions together. Working as teams rather than than individuals will help the organization gather collective force to achieve organizational goals

Personal

mastery

All organization members are committed to gaining a deep and rich understanding of their work Such an understanding will help organizations to reach important challenges that confront them

From The Fifth Discipline by Peter Senge, 1990

Learning Organization Approach

System thinking
(Systems Approach)

Personal mastery
(Theory Z/Behavioral)

Building a Learning Organization

Shared Vision
(Chaordic Organization)

Team Learning
(Theory Z/Behavioral)

Challenging of Mental models

(Classical/Management science)

Western Management Theories

Is there an Asian Management Theory??

What is business management the Asian way?

Business

tend to be small scale Time has no beginning and end Individualism is less relevant; managerial beliefs shift towards the autocratic end Conformity to socially acceptable behaviors is done through morality (e.g losing face) Oriental managers rely less on interpersonal confrontations Managerial decisions consider effects on othe rpeople Control of performance is less formal Maintaining and developing guanxi (connection and relationship

*From World Executive Digest by Redding & Martyn, 1984

Will Western Management work in Asia?*

Values and attitudes affect but do not invalidate the transfer of American management concepts Consequently, when we wish to transfer an effective device from one culture to another, careful attention should be given to underlying premises? Tools of management remain the same.** Economic and business philosophy are however, different.** Combination of general management, functional management, and communal organization and management..**

Photo from www.aim.edu.ph

*From World Executive Digest by William Newman, 1984 **From World Executive Digest by Sixto Roxas, 1981

Is there a Filipino Management Theory?? Are Western theories applicable in Philippine setting?

Are Western Theories Applicable in Philippine Setting?

The

models and ideal types taught in Western-oriented MBA programs are based on certain assumptions, many of which are invalid in the Philippines. Although organizations here have most of the structures and formal procedures of Western business, actual day-to-day business processes and interactions necessarily proceed within the matrix of Filipino culture and values. Thus, the need for the Westerner to go "the extra mile" to understand what's really going on and adapt a culturally sensitive style of doing business.
- Clarence Henderson, Henderson Consulting International

What is Pinoy Management Theory??

No

one Management Theory or Style. Under the formal organization are:

Informal

organization Battlefield of behavioral styles among managers and employees Unknown cultural ambiance among peoples and systems

From Pinoy Management by Ernesto Franco, 1986

Weaknesses of Pinoy Workers

Walang

bilib sa sarili (No confidence in oneself) Dikdik sa Colonial Mentality (Indoctrinated with Colonial Mentality) Masyadong relaks (Overly relaxed) Ningas-cogon (Not a follow-up people) Holiday mentality Lack of managerial and organizational effectiveness Lack of self-reliant tenacity

From Pinoy Management by Ernesto Franco, 1986

Pinoy Management
Kailangan

may No. 2 (There is a need for No.2) Tsismis machine (Grapevine Machine) Kailangan may Hatchet Man (There is need for a Hatchet Man) Be an expert on timing Lumayo sa madalas matalo (Avoid losers) Gawin mong personal (Make it personal) NBA Style: One-on-one Power play. Laban (Fight) Be situational and contingent Umarte kang parang intelihente. Iyong laging nag-iisip Body language ang importante (Body language is important) Pag sinabing No, dapat No talaga
From Pinoy Management by Ernesto Franco, 1986

Pinoy Management Approaches

Management
He

by Kayod (Realist Manager)

wants quick action Hes an autocrat He is sigurista He has gut feel He knows how to use people
Management
He

by Libro (Idealist Manager)

is a thinker; technocrat; mabusisi; may sistema Matigas and ulo

From Pinoy Management by Ernesto Franco, 1986

Pinoy Management Approaches

Management
He

by Lusot (Opportunist Manager)

is galawgaw Walang konsensiya Mahilig sa lusot (Loves to get by) Mahilig sa ayusan
Ugnayan-Management
Has

(The Hybrid)

balance Contingency management style He is solid Marunong pumili (Chooses well) Pambihira talaga (Exceptionally gifted)
From Pinoy Management by Ernesto Franco, 1986

END