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Modern Theory of Management

Modern Theory of Management


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Published by Amit Nagaich

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Published by: Amit Nagaich on Feb 04, 2012
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Scientific Management Theory
‡ Evolution of Modern Management  Began in the industrial revolution in the late 19th century as: 1- Managers of organizations began seeking ways to better satisfy customer needs. 2- Large-scale mechanized manufacturing began to supplanting small-scale craft production in the ways in which goods were produced. 3- Social problems developed in the large groups of workers employed under the factory system. 4- Managers began to focus on increasing the efficiency of the worker-task mix.

Evolution of Management Theory .

. Production²each worker specialized in one step.Job Specialization and the Division of Labor ‡ Adam Smith (18th century economist) Observed that firms manufactured pins in one of two different ways: Craft-style²each worker did all steps. Realized that job specialization resulted in much higher efficiency and productivity Breaking down the total job allowed for the division of labor in which workers became very skilled at their specific tasks.

Codify the new methods into rulels.Study the ways jobs are performed now and determine new ways to do them. ‡Workers should benefit from higher output . ‡Teach to all workers the new method. 3.Select workers whose skills match the rules. ‡Gather detailed time and motion information. 2. 4.Establish fair levels of performance and pay a premium for higher performance.Four Principles of Scientific Management Principles to increase efficiency: 1. ‡Try different methods to see which is best. .

 Workers did not share in the increased output.  Workers ended up distrusting the Scientific Management method. dull. ‡ Problems with Scientific Management . ‡ Workers could purposely ³under-perform.Problems with Scientific Management ‡ Managers frequently implemented only the increased output side of Taylor¶s plan.  Management responded with increased use of machines and conveyors belts. ‡ Specialized jobs became very boring.

heating and other worker issues. Break down each action into components. lighting.The Gilbreths ‡ Frank and Lillian Gilbreth refined Taylor¶s methods. ‡ Gilbreths also studied fatigue problems. ± Made many improvements to time and motion studies. ‡ Time and motion studies: ± 1. Find better ways to perform it. . Reorganize each action to be more efficient. ± 2. ± 3.

‡ Max Weber developed the concept of bureaucracy. Weber developed the Five principles shown in Figure below. ± A formal system of organization and administration to ensure effectiveness and efficiency. ± .Administrative Management ‡ Seeks to create an organization that leads to both efficiency and effectiveness.

Bureaucratic Principles Figure --- Written rules System of task relationships A Bureaucracy should have Hierarchy of authority Fair evaluation and reward .

People should know what is expected of them. Lines of authority should be clearly identified. Positions in the firm should be held based on performance not social contacts. Workers know who reports to who. Rules. ‡ Sometimes. Position duties are clearly identified. . these lead to ³red-tape´ and other problems.Key points of Bureaucracy Authority is the power to hold people accountable for their actions. Standard Operating Procedures (SOPs). & Norms used to determine how the firm operates.

Line of Authority: a clear chain from top to bottom of the firm. Division of Labor: allows for job specialization. 2. 4. ‡ Fayol noted firms can have too much specialization leading to poor quality and worker involvement. . Unity of Command: Employees should have only one boss.Fayol s Principles ‡ Henri Fayol. Centralization: the degree to which authority rests at the very top. Authority and Responsibility: Fayol included both formal and informal authority resulting from special expertise. 5. 3. developed a set of 14 principles: 1.

applied. Order: Each employee is put where they have the most value. Equity: Treat all employees fairly in justice and respect. 9. 8. respectful employees needed. Discipline: obedient.Fayol s Principles 6. . Initiative: Encourage innovation. 7. 10. Unity of Direction: One plan of action to guide the organization.

General interest over individual interest: The organization takes precedence over the individual. Stability of Tenure: Long-term employment is important. Esprit de corps: Share enthusiasm or devotion to the organization. 12.Fayol s Principles 11. 14. Remuneration of Personnel: The payment system contributes to success. 13. .

± The worker knows the best way to improve the job. then they should control the task.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. ± If workers have the knowledge of the task. .

during 19241932. ‡ Actually. it appears that the workers enjoyed the attention they received as part of the study and were more productive. ± Worker productivity was measured at various levels of light illumination. ± Researchers found that regardless of whether the light levels were raised or lowered. productivity rose. .The Hawthorne Studies ‡ Study of worker efficiency at the Hawthorne Works of the Western Electric Co.

‡ Managers should allow the worker great latitude. ‡ Managers must closely supervise and control through reward and punishment.Theory X and Y ‡ Douglas McGregor proposed the two different sets of worker assumptions. want to do a good job and the job itself will determine if the worker likes the work. workers are not lazy. dislikes work and will do as little as possible.  Theory Y: Assumes . and create an organization to stimulate the worker.  Theory X: Assumes the average worker is lazy.

Theory Y Theory X Employee is lazy Managers must closely supervise Create strict rules & defined rewards Theory Y Employee is not lazy Must create work setting to build initiative Provide authority to workers .Theory X v.

and managers tend to feel workers follow the Theory X model. and organizational focus. . ± Managers stress long-term employment. ‡ Theory Z combines parts of both the USA and Japan structure.Theory Z ‡ William Ouchi researched the cultural differences between Japan and USA. ± Japan culture expects worker committed to the organization first and thus behave differently than USA workers. ± USA culture emphasizes the individual. workgroup.

Quantitative management: utilizes linear programming. simulation systems. Management Information Systems (MIS): provides information about the organization. Total Quality Management (TQM): focuses on improved quality. Operations management: techniques to analyze all aspects of the production system.Management Science ‡ Uses rigorous quantitative techniques to maximize resources. . modeling.

Conversion: inputs are processed into goods and services. Output: finished goods are released into the environment.Organization-Environment Theory ‡ Considers relationships inside and outside the organization. ‡ Systems theory considers the impact of stages: Input: acquire external resources. conditions. ± The environment consists of forces. . and influences outside the organization.

Systems Considerations ‡ An open system interacts with the environment. . ± Synergy is only possible in a coordinated system. ‡ Synergy: performance gains of the whole surpass the components. A closed system is self-contained. and fails. ± Closed systems often undergo entropy and lose the ability to control itself.

The Organization as an Open System Input Stage Raw Materials Conversion Stage Machines Human skills Output Stage Goods Services Sales of outputs Firm can then buy inputs .

± The way the organization is designed. depend on the environment. . ± The environment impacts the organization and managers must be flexible to react to environmental changes. ‡ Technological environments change rapidly. so must managers. control systems selected.Contingency Theory ‡ Assumes there is no one best way to manage.

(Theory Y) ± Much looser control than mechanistic.Structures ‡ Mechanistic: Authority is centralized at the top. ± Very efficient in a stable environment. ‡ Organic: Authority is decentralized throughout employees. . (Theory X) ± Employees closely monitored and managed. ± Managers can react quickly to changing environment.

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