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Chapter 2
Management Theory
Origins of management thought
- Adam Smith states change from old craft system (one worker does all steps of production) to factory system (where each worker is specialised and does only one step) à management thought born (optimise use of resources)
- Classical school of management à common theme of determining the ‘one best way’ to achieve the stated outcomes
- Competing values model à The rational goal models of management; the internal process model; the human relations school; systems theory and contingency theories
Competing values framework
Rational goal models of management
Scientific management (Frederick Taylor, 1856-‐1915)
à Systematic study of the relationship between people and tasks to redesign the work for higher efficiency Five principles to optimise efficiency:
- Use of scientific methods to determined the ‘one best way’ to complete a task
- Selection of the best person to undertake the task concerning physical and mental capabilities
- Provision of training and development for workers to enable them to follow defined procedures
- Provision of financial rewards
- Shift of responsibility for planning and organising work schedules to managers è Result : work was broke down into small units, which are then controlled by the manager (authority management, high level of control and discipline) Problems with scientific management -‐ Workers do one single activity day after day à monotonous work makes workers bored, depressed etc., which makes them lose connection towards the company its goals, mission and vision ( negative impact on culture of the organisation ) -‐ Lack of human touch à complexity of human condition ignored à demised this theory
Modern example of scientific management
à Used, where traditional production lines operate ( e.g. clothing companies ) Trade-‐off: time, effort, and skill of workers for monetary reward à Modern fast-‐food restaurants ( e.g. McDonalds ); Call-‐centres è Managers have to handle a high level of staff turnover
The Gilbreths (Gilbreth and Gilbreth, 1917)
Basic time and motion study:
- Break down each action into components
- Find better ways to perform it
- Reorganise each action to be more efficient à Workers had to understand why they were doing what to really be able to do their best job
Human relations models Changes in society affect also management ( early 19th^ century, women want right to vote, claim for health care and better working conditions ) à Focus on human condition in working environment Mary Parker Follett (1920) introduces the benefits of little groups working together to achieve a goal, which they are responsible for ( à this is what we also have in today’s business life ) The Hawthorne Studies (1924-‐1932) Workers had to work at different levels of light illumination à productivity increased on every level è Workers enjoyed being part of a study thus they were highly motivated ( Hawthorne effect ) – just a short-‐term effect à Results : Recognition of importance of working place as well as social environment ( just in this case real evidence ) Open systems Considers relationships inside and outside the organisation à impact of three stages:
- Input: acquire external resources ( raw materials, human resources, etc. )
- Transformation: inputs are processed into products and services
- Output: finished products are released into the environment Two key components (Khan, 1978): -‐ Links between interrelated internal parts of a system -‐ Links between the entire system and the external environment Challenge for management: Find out the component parts that comprise the system and all the key elements that comprise the environment à have to be able to react to changes and try to analyse possible results of these ( e.g. global warming ) Information is a key input variable à rely on experience à Many factors can influence an open system à Open system can be seen as the natural extension of human relations approach à Subsystems have to be managed to improve efficiency and quality ( ‘synergy’ ) à High rate of reflection (beginning and result) à positive impact on decision-‐ making, planning, coordination, efficiency and quality
Contingency à Environment too complex to be described by just one model Contingency models see managers need as being able to shape and create the organization based on their understanding of environment à There is no ‘ one best way ’ (like the rational one assumes), but an organization has to be flexible (various systems may be used) to adapt to an always-‐changing environment
