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Chapter 2 Management Yesterday and Today



Many fascinating examples from history illustrate how management has been practiced for thousands of years.

A. Organizations and managers have existed for thousands of years. The Egyptian pyramids and the Great Wall of China were projects of tremendous scope and magnitude, requiring the efforts of tens of thousands of people. How was it possible for these projects to be completed successfully? The answer is management. Regardless of the titles given to managers throughout history, someone has always had to plan what needs to be accomplished, organize people and materials, lead and direct workers, and impose controls to ensure that goals were attained as planned.

B. Examples of early management practices can also be seen by studying the Arsenal of Venice. Assembly lines, accounting systems, and personnel functions are only a few of the processes and activities used in business in the fifteenth century that are common to today’s organizations as well.

C. Adam Smith, author of the classical economics doctrine The Wealth of Nations, argued brilliantly for the economic advantages that he believed division of labor (the breakdown of jobs into narrow, repetitive tasks) would bring to organizations and society.

D. The Industrial Revolution is possibly the most important pre-twentieth-century influence on management. The introduction of machine powers combined with the division of labor made large, efficient factories possible. Planning, organizing, leading, and controlling became necessary activities.

E. Exhibit 2-1 and PowerPoint slide 2-7 illustrate the development of management theories.


Scientific management is defined as the use of the scientific method to determine the “one best way” for a job to be done.

A. Important Contributions

1. Frederick W. Taylor is known as the “father” of scientific management. Taylor’s work at the Midvale and Bethlehem Steel companies stimulated his interest in improving efficiency.

a. Taylor sought to create a mental revolution among both workers and managers by defining clear guidelines for improving production efficiency. He defined four principles of management (Exhibit 2-2).

b. His “pig iron” experiment is probably the most widely cited example of his scientific management efforts.

c. Using his principles of scientific management, Taylor was able to define the “one best way” for doing each job.

d. Frederick W. Taylor achieved consistent improvements in productivity in the range of 200 percent. He affirmed the role of managers to plan and control and the role of workers to perform as they were instructed.

2. Frank and Lillian Gilbreth were inspired by Taylor’s work and proceeded to study and develop their own methods of scientific management.

a. Frank Gilbreth is probably best known for his experiments in reducing the number of motions in bricklaying.

b. The Gilbreths were among the first to use motion picture films to study hand and body motions in order to eliminate wasteful motions.

c. They also devised a classification scheme to label 17 basic hand motions called therbligs (Gilbreth spelled backward, with the th transposed).

B. How Do Today’s Managers Use Scientific Management?

Guidelines devised by Taylor and others to improve production efficiency are still used in today’s organizations. However, current management practice is not restricted to scientific management practices alone. Elements of scientific management still used include:

1. Using time and motion studies

2. Hiring best qualified workers

3. Designing incentive systems based on output


This group of writers, who focused on the entire organization, developed more general theories of what managers do and what constitutes good management practice.

A. Henri Fayol and Max Weber were the two most prominent proponents of the general administrative approach.

1. Henri Fayol, who was a contemporary of Frederick W. Taylor, was the managing director of a large French coal-mining firm.

a. Fayol focused on activities common to all managers.

b. He described the practice of management as distinct from other typical business functions.

c. He stated 14 principles of management (fundamental or universal truths of management that can be taught in schools; see Exhibit 2-3 and PowerPoint slide 2-13).

2. Max Weber (pronounced VAY-ber) was a German sociologist who wrote in the early twentieth century.

a. Weber developed a theory of authority structures and described organizational activity based on authority relations.

b. He described the ideal form of organization as a bureaucracy marked by division of labor, a clearly defined hierarchy, detailed rules and regulations, and impersonal relationships (see Exhibit 2-4).

B. How Do Today’s Managers Use General Administrative Theories?

Some current management concepts and theories can be traced to the work of the general administrative theorists.

1. The functional view of a manager’s job relates to Henri Fayol’s concept of management.

2. Weber’s bureaucratic characteristics are evident in many of today’s large organizations—even in highly flexible organizations that employ talented professionals. Some bureaucratic mechanisms are necessary in highly innovative organizations to ensure that resources are used efficiently and effectively.


The quantitative approach to management, sometimes known as operations research or management science, uses quantitative techniques to improve decision making. This approach includes applications of statistics, optimization models, information models, and computer simulations.

A. Important Contributions.

1. The quantitative approach originated during World War II as mathematical and statistical solutions to military problems were developed for wartime use.

2. As often happens after wartime, methods that were developed during World War II to conduct military affairs were applied to private industry following the war. For instance, a group of military officers—the Whiz Kids—used quantitative methods to improve decision making at Ford Motor Company in the mid-1940s.

B. How Do Today’s Managers Use the Quantitative Approach?

1. The quantitative approach has contributed most directly to managerial decision making, particularly in planning and controlling.

2. The availability of sophisticated computer software programs has made the use of quantitative techniques more feasible for managers.


The field of study concerned with the actions (behaviors) of people at work is organizational behavior. Organizational behavior (OB) research has contributed much of what we know about human resources management and contemporary views of motivation, leadership, trust, teamwork, and conflict management.

A. Early Advocates

Four individuals—Robert Owen, Hugo Munsterberg, Mary Parker Follett, and Chester Barnard—were early advocates of the OB approach. Their ideas served as the foundation for employee selection procedures, motivation programs, work teams, and organization-environment management techniques. (See Exhibit 2-5 for a summary of the most important ideas of these early advocates.)

B. The Hawthorne Studies were the most important contribution to the development of organizational behavior.

1. This series of experiments conducted from 1924 to the early 1930s at Western Electric Company’s Hawthorne Works in Cicero, Illinois, were initially devised as a scientific management experiment to assess the impact of changes in various physical environment variables on employee productivity.

      1. After Harvard professor Elton Mayo and his associates joined the study as consultants, other experiments were included to look at redesigning jobs, make changes in workday and workweek length, introduce rest periods, and introduce individual versus group wage plans.

  1. The researchers concluded that social norms or group standards were key determinants of individual work behavior.

  2. Although not without criticism (concerning procedures, analyses of findings, and the conclusions), the Hawthorne Studies stimulated interest in human behavior in organizational settings.

C. How Do Today’s Managers Use the Behavioral Approach?

1. The behavioral approach assists managers in designing jobs that motivate workers, in working with employee teams, and in facilitating the flow of communication within organizations.

2. The behavioral approach provides the foundation for current theories of motivation, leadership, and group behavior and development.


During the 1960s researchers began to analyze organizations from a systems perspective based on the physical sciences. A system is a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. The two basic types of systems are open and closed. A closed system is not influenced by and does not interact with its environment. An open system interacts with its environment (see Exhibit 2-6).

  1. The Systems Approach and Managers

  1. Using the systems approach, managers envision an organization as a body with many interdependent parts, each of which is important to the well-being of the organization as a whole.

  2. Managers coordinate the work activities of the various parts of the organization, realizing that decisions and actions taken in one organizational area will affect other areas.

  3. The systems approach recognizes that organizations are not self-contained; they rely on and are affected by factors in their external environment.


The contingency approach recognizes that different organizations require different ways of managing.

      1. The contingency approach to management is a view that the organization recognizes and responds to situational variables as they arise.

      2. Some popular contingency variables are shown in Exhibit 2-7.


After the study of the history and development of management theories, students can better understand how current concepts and practices are changing the way managers do their jobs today.

A. Globalization. Organizational operations are no longer limited by national borders. Managers throughout the world must deal with new opportunities and challenges inherent in the globalization of business.

  1. Ethics. Cases of corporate lying, misrepresentations, and financial manipulations have been widespread in recent years. Managers of firms such as Enron, ImClone, Global Crossing, and Tyco International have placed their own self-interest ahead of other stakeholders’ welfare.

  1. While most managers continue to behave in a highly ethical manner, abuses suggest a need to “upgrade” ethical standards.

  2. Ethics education is increasingly emphasized in college curricula today.

  3. Organizations are taking a more active role in creating and using codes of ethics, ethics training programs, and ethical hiring procedures.

  1. Workforce diversity refers to a workforce that is heterogeneous in terms of gender, race, ethnicity, age, and other characteristics that reflect differences.

  1. Workforce diversity is a global issue.

  2. The assimilation (“melting pot”) model used before the early 1980s has been replaced by the recognition and celebration of differences.

  3. Accommodating diverse groups of people by addressing different lifestyles, family needs, and work styles is a major challenge for today’s managers.

  4. Wise managers value diversity as an asset in bringing a broad range of viewpoints and problem-solving skills to an organization.

D. Entrepreneurship is the process whereby an individual or group of individuals use organized efforts to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness, no matter what resources the entrepreneur currently has.

1. Three important themes stand out in this definition:

a. The pursuit of opportunities

b. Innovation

c. Growth

2. Entrepreneurship will continue to be important to societies around the world.

Note: A special entrepreneurship module appears at the end of each of the six major parts of the textbook. This feature examines topics presented in that particular section from an entrepreneurial perspective.

E. Managing in an E-Business World

1. E-business (electronic business) is a comprehensive term describing the way an organization does its work by using electronic (Internet-based) linkages with its key constituencies in order to efficiently and effectively achieve its goals.

2. While critics questioned the viability of Internet-based companies (dot-coms) after the high-tech implosion in 2000 and 2001, e-business is here to stay.

3. E-commerce (electronic commerce) is the sales and marketing component of e-business.

4. Categories of e-business involvement (see Exhibit 2-9 and PowerPoint slide 2-30):

a. An e-business enhanced organization uses the Internet to enhance (expand, not replace) its traditional ways of doing business. This type of organization sets up e-business capabilities (usually e-commerce).

b. An e-business enabled organization uses the Internet to enable the company to perform its traditional business functions more efficiently and effectively, but it does not sell products or services on the Internet.

c. A total e-business is made possible by, and revolves around, the Internet.

  1. Knowledge Management and Learning Organizations.

  1. Change is occurring at an unprecedented rate.

  2. To be successful, today’s organization must become a learning organization—one that has developed the capacity to continuously learn, adapt, and change. (Exhibit 2-10 and PowerPoint slide 2-32 illustrate differences between a learning organization and a traditional organization.)

  3. Knowledge management involves cultivating a learning culture where organizational members systematically gather knowledge and share it with others in the organization so as to achieve better performance.

G. Quality Management.

1. Quality management is a philosophy of management that is driven by continual improvement and response to customer needs and expectations (see Exhibit 2-11).

2. TQM was inspired by a small group of quality experts, including W. Edwards Deming, who was one of its chief proponents.

3. TQM represents a counterpoint to earlier management theorists who believed that low costs were the only road to increased productivity.

4. The objective of quality management is to create an organization committed to continuous improvement in work processes.

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