Management History: From Division of Labor to Contingency Approaches, Lecture notes of Business Management and Analysis

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Chapter 2

Management History

Historical background of

management

• (^) Management has been practiced a long time
• (^) The pyramids example (ch2, pg 24)
• (^) Two events are especially significant in management history: 1. Division of Labor (Job specialization) – by Adam Smith 2. Industrial Revolution in the 18th century when the machine power was substituted for human power Read pg 25 •. Division of labor is when jobs are broken down in to simple, routine and well defined tasks

Frederick Winslow Taylor’s theory of

Scientific Management

• (^) The use of scientific methods to define the “one best way” for a job to be done.
• (^) He set out 4 principles of management which would result in prosperity of both workers and managers:

1. Develop a science for each element of an individual’s work.
2. Scientifically select, train, teach and develop the worker.
3. Cooperate with workers to ensure they followed instructions as they are required to do so.
4. Divide work and responsibility almost equally between management and workers. (Read Example Ch2, pg 27)

• (^) Taylor’s most prominent followers were Frank and Lillian Gilbreth
• (^) Frank’s brick laying experiment in which he carefully analyzed the brick layer’s job.
• (^) Gilbreth used the motion pictures to study hand- and-body motions. Invented a device called a microchronometer that recorded a worker’s motions and the amount of time spent doing each motion. Wasted motions could be identified and eliminated which would otherwise have been missed by a naked eye.
• (^) Today’s managers are using scientific management when they hire rightly qualified workers for the job, eliminate wasted motions, design incentive systems based on output etc.

Fayol’s 14 principles

Division of workAuthorityDisciplineUnity of commandUnity of directionInterests of one employee should not take precedence over theRemunerationCentralizationScalar chainOrderEquityOrderly personnel planning and availability of replacementsInitiativeEncourage team spirit to build harmony & unity

• Max Weber based his theory on a form of organization he called a bureaucracy.
• Bureaucracy is a form of organization characterized by:

1. Division of Labor
2. Clearly defined hierarchy
3. Detailed/Formal rules & regulations
4. Impersonal relationships (uniform application of rules and controls, and not according to personalities)
5. People should be selected for jobs based on their technical qualifications
6. Managers be career professionals and not owners of units they manage

QUANTITATIVE APPROACH

• (^) The use of quantitative techniques to improve decision making. (for e.g. using statistics, optimization models, computer simulations etc)
• (^) Example of “reverse pyramid” by America West Airline, saved the boarding time.
• (^) TQM (Total Quality Management)

Total Quality Management

• (^) Continuous improvement and responsiveness to customer needs and expectations.
• (^) Who are they referring to as customers?
• (^) Exhibit 2-5, pg 32
• (^) Continuous improvement is not possible without accurate measurements so every critical variable should be measurable in order to be able to compare against standards to identify and correct the problem.
• (^) Today’s managers use quantitative approach in allocating resources, finding and maintaining optimum inventory levels, and improving quality.

CONTEMPORARY APPROAC

H

• (^) Focuses on what’s happening outside the boundaries of an organization. External environment.
• (^) Two perspectives:

1. Systems Theory
2. The Contingency Approach

Systems Theory

• (^) System: A set of interrelated and interdependent parts arranged in a manner that produces a unified whole.
• (^) Closed Systems: Not influenced by or interact with the external environment.
• (^) Open Systems: Influenced by and interact with the external environment.
• (^) Organizations take inputs (resources) from the environment, transforms them into outputs that are distributed into the environment.
• (^) Different parts of an organization depend on each other. Co-ordination of work activities is required to achieve goals.