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Chapter 2

Chapter 2- The Evolution of Management Theory.docx

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Dave Swanston

September 20, 2013 Lecture 2 - Chapter 2: The Evolution of Management Theory Classical approaches to management include:  Scientific management  Administrative principles  Bureaucratic organization People are rational and are driven by economic conditions Scientific Management Theory  Matches people and tasks to maximize efficiency Job Specialization and the Division of Labour  Job Specialization- The process by which a division of labour occurs as different employees specialize in different tasks over time  Increases efficiency and leads to high organizational performance F.W. Taylor and Scientific Management  Introduced by Frederick W. Taylor (1856-1915) (father of management thought)  Scientific Management- The systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency  Production process would become more efficient if the amount of time and effort that each employee spent to produce a unit of output (finished g/s) could be reduced  Four principles to increase efficiency in the workplace: 1. Study the way workers perform their tasks, gather all the informal job knowledge that workers possess, and experiment with ways of improving the way tasks are performed 2. Codify the new methods of performing tasks into written rules and standard operating procedures 3. Carefully select workers so that they possess skills and abilities that match the needs of the task, and train them to perform the task according to the established rules and procedures 4. Establish a fair level of performance for a task, and then develop a pay system that provides a reward for performance above the acceptable level  Disadvantages of the four principles (used selectively):  Increased the amount of work that each employee was expected to do rather than share performance gains with employees through bonuses  Increase in performance = layoffs since fewer employees were needed  Specialized jobs were monotonous and repetitive= job dissatisfaction The Gilbreths  Frank Gilbreth (1868-1924) & Lillian Gilbreth (1878-1972) refined Taylor’s analysis and aimed to: 1. Break up a particular task into individual actions and analyze each step needed to perform the task 2. Find better ways to perform each step 3. Reorganize each of the steps so that the action as a whole could be performed more efficiently- at less cost in time and effort  Managers = introduce work practices to increase performance and employees = hide true potential efficiency of work setting in order to protect their own well being (jobs and pay) September 20, 2013 Administrative Management Theory  Identifies the principles that will lead to the creation of the most efficient system of organization and management  Administrative Management- The study of how to create an organizational structure that leads to high efficiency and effectiveness  Organizational Structure- The system of task and authority relationships that control how employees use resources to achieve the organization’s goals The Theory of Bureaucracy  Max Weber (1864-1920) developed principles of bureaucracy that will improve organizational performance  Bureaucracy- A formal system of organization and administration designed to ensure efficiency and effectiveness and includes 5 principles: 1. Manger’s formal authority derives from the position he/she holds in the organization 2. People should occupy positions because of their performance, not because of their social standing or personal contacts 3. The extent of each position’s formal authority and task responsibilities and its relationship to other positions in an organization should be clearly specified o Authority- The power to hold people accountable for their actions and to make decisions concerning the use of organizational resources 4. For authority to be exercised effectively in an organization, positions should be arranged hierarchically to help employees know whom to report to and who reports to them 5. Managers must create a well defined system of rules, standard operating procedures (SOPs) and norms so that they can effectively control behaviour within an organization o Specify the best ways to accomplish organizational tasks o Rules- Formal written instructions that specify actions to be taken under different circumstances to achieve specific goals o Standard Operating Procedures (SOPs)- Specific sets of written instructions about how to perform a certain aspect of a task o Norms- Unwritten rules and informal codes of conduct that prescribe how people should act in particular situations  Advantages:  Easier for managers to organize and control the work of subordinates  Fair selection and promotion systems improve managers’ feelings of security, reduce stress, and encourage organizational members to act ethically  Disadvantages:  Rules “bureaucratic red tape” become so cumbersome that decision making becomes slow and inefficient, preventing organizations to change  Behaviour becomes inflexible Fayol’s Principles of Management  Frenchman Henri Fayol (1841-1925) took formal line of authority and vertical chain of command method and had 14 principles that increase efficiency of management process that are the foundation of modern management theory: 1. Division of Labour- Job specialization and division of labour should increase efficiency, especially if managers lessen employees’ boredom September 20, 2013 2. Authority and Responsibility- Managers have the right to give orders and the power to exhort subordinates for obedience 3. Unity of Command- An employee should receive orders from only one superior 4. Line of Authority- Length of chain of command that extends from the top to the bottom of organization should be limited 5. Centralization- Authority should not be concentrated at the top of chain of command 6. Unity of Direction- Organization should have single plan of action to guide managers and employees 7
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