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Lecture 3

ADM1300 - evolution of management thought week 3.docx

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Matthew Archibald

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Evolution of Management Thought September 23, 25 2013 (No chapter reading) Look at four time periods: Agenda - 1. Classical Approach (1880-1920) –initial approach defining mgmt. as a science 2. Behavioural Approach (1930’s) – shift to mgmt. as an art 3. Contemporary Approaches (1950-1980’s) – is mgmt. a science or an art or both? 4. Emerging Practices (1990’s-2000’s) – emerging mgmt. practices Classical Approach (1880-1920) – Systematic Management - Adam Smith – 1776 – The wealth of Nations: o Advocate of systemization  Efficiency and effectiveness  Division of labour (divide the whole task into particular part, and have one individual focus on one part/role to increase efficiency = specialization)  Productivity by creating division of labour, we create more producitivity  10 workers focusing on one aspect of creation of a pin = 48,000 pins/ day … 1 worker = 10pins per day; through specialization, people becoming good and one thing and one thing only as opposed to understanding the entire process o Focused on defining duties and responsibilities – who is responsible for what? o Led to Scientific Mgmt – the biggest thing he contributed is the division of labour. Think of factory workers, assembly lines, subway line. - Scientific Mgmt o Developed by FW Taylor o Study of relationships between ppl and tasks to increase efficiency to achieve goals: FW taylor o Defining responsabilities, creating relationships between people and tasks. o How can mgmt. increase the level of worker productivity and motivation? –  How do we increase productivity & motivation? o Piece-rate system – pay them for what they produce instead of for their time – money as an incentive –  Benefits: o Philosophy:  One best way to do task ex: “how much load should I use” – an experiment that he did of workers in a field lifting different loads. He decided for each material there was an ideal load that they should lift to increase productivity.  Used $ as incentive  General benefit: ppl were increasing in their productivity so they would make more money. o Developed a piece-rate system: people get paid depending on how many items they produce. The more you produce the more you get Benefits Problems Productivity did improve, efficiency That can only last for so long. Oversimplification, management was basically adjusting the requirements to ensure we were providing the same pay but asking more of the individuals. Things can be oversimplified. I can only be motivated by money for so long. Increased work pressures. They focused in on the amount of units they produce. Measurement-time-motion study. – how long it takes from a to b for the normal demographic. How long should it take and what is the optima setup. Pressure is there, and it’s always based on productivity and it ignored the human element: We are not robots. We all act and behave differently. - Administrative Mgmt Theory o Study of how to create organizational structure that leads to high efficiency and effectiveness – what is the best structure an org should have for eff and eff. Built upon Smith and Taylor but now looked at more of the structure – the best place to put each person. The tasks & resp that person has to perform and what resources need to be allocated to that. o Henri Fayol – (also came up with functions of a manager - POLC) o Philosophy  Mgmt. is a universal process  Fit the person to the job  Workers should accept mgmt’s decision without question  We know that org structures differ from org to org, and that is ok. Fayol believed that mgmt. was a universal process, which is saying that no matter the org or the structure, you have to behave the same way for every org. He focused n the managerial functions. Maybe the functions are a universal process, but he goes further to say you fit the person to the job as opposed to the person to the job.  He also decided that managers make all the decisions and workers should accept with no question - we know that for the most part this doesn’t hold today.  Fayol said that every manager has to perform : o Fayol’s Principles – that all managers or orgs should have 1. Division of labour: allows for job specialization to increase efficiency – yes, all orgs should focus on division of labour 2. Authority and responsibility: included both formal and informal authority resulting from special expertise – we should have clear authority & respnsabilities. Formal authority: you are the supervisor of five employees, you have formal authority over those five. Informal authority is if you are in a team, and there is someone from accounting and someone from HR and from marketing, and the decision the team has to make is based on an accounting issue, informal authority tells you the person from accounting is in the best position – that is informal authority over the HR and marketing person in this situation, which is acct based 3. Unity of command: employees should have only one boss – typically you see this in a lot of orgs today, but it is not always the case. You may have a boss, a formal supervisor, you might be a consultant with another boss. 4. Line of authority: a clear chain from top to bottom of the firm – clear line / structure in terms of who reports to who 5. Centralization: the degree to which authority rests at the very top – the authority and decision making should be at the top. All the decisions are made at the top. Employees just do what they are told. Today we have both centralized and decentralized orgs. Where would we think a centralized environment would be in terms of an industry?  Military – Centralized – you accept the supervisor or the commanding officer’s decision without question.  Decentralization  technology is an industry where you would see a lot of this. 6. Unity of direction: one plan of action to guide organization – onr plan of action / course of action / set of ideas about what we will achieve 7. Equity: treat all employees fairly – interesting that they were talking about this back in the early 1900’s and we still believe in that today. 8. Order: each employee is placed where they have the most value – each employee should be where they are the best based on their skill set. 9. Initiative: encourage innovation – encourage initiative / creative thinking. Interesting because orgs that encourage innovation and intiaitve usually allow those people to have some decision-making power – they just wanted ppl to come up with the ideas but be obedient and respectful and not question decisions 10. Discipline: obedient, respectful employees needed - 11. Remuneration of personnel; the payment system contributes to success – money that we pay should be based on the contribution that they provide to the success of the organization. Pay fairly based on the success we have. we do this today as well  you get paid more if you are more successful  now, you would have a base salary plus contribution to success (bonus, commission) 12. Stability of Tenure: long-term employment is important – we will probably have five jobs by the time we hit 30. That was not always the case. In the past you would work in the same job your whole career. Now we change jobs and try to find the best fit. 13. General interest over individual interest: organization over individual – what is in the best interest of the org over myself as an employee within this org. sometimes that becomes difficult. Should I advance my own intersts for my own dept or should I do that is in the best interest of the whole org.  Ie I could cut three or four of my employees, but then my budget will be slashed as well. But I want to have that budget. I don’t want them to think we are not doing anything. But if you don’t need those employees, and you get rid of them and thus save the org money, is that not in the best interest of the org? 14. Esprit de corps: share enthusiasm for org – we share a general enthusiasm for the organization. we want to build up the org, work hard for the org, value working together, value teamwork. - A lot of fayol’s principles are still used today. Some of them we question. Some of them are not fit for ALL orgs. But that is what he was saying – for EVERY org, ALWAYS, Universal, etc. not ALWAYS the case though. o Administrative mgmt. – problems  Based on observation – you have to observer esprit de Coeur, enthusiasm for the org, obedience, respect – it is a challenge to “observe” this – you can’t measure this scientificially – how can you measure this?  Concerned primarily with structure of the organization. – is this structure the only measure of success in an org? Behavioural Approach (1930’s) - 1930’s - Philosophy: change mgmt. emphasis from productivity shift toward the human element - Hawthorne plant studies – Elton mayo o Hawthorne plan in illonois o Studies Conducted by Elton mayo o One was on illumination:  Study focused on the level of illumination and how it effects working productivity.  He selected a group of people to take part in the study.  He put them in a room. He had a control group with the normal level of illumination, he measured how much the control group produced. Then he increased the lighting in the room – productivity improved, measured the new level. Then he increased it again, it improved again.  The he lowered the lights. Productivity improved.. lowered it again, it improved again.  The research said the only time it was questionable was when you basically had moonlight in the room. All the other times productivity improved.  Basically, productivity always improves no matter the light setting. o Result of Hawthorn plant studies:  You always question – was this a wow thing, was there not problems with this/ issues with the study  What you can take from it is:  Why do we think, if we took a group of ppl from an org, put them in a room, watch what they do, saw the dynamic – why do you think productivity always improves regardless of the lighting? o The ppl know they are being looked at…. So they might just always
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