MANAGEMENT THEORIESWhat is a theory?A general body of assumptions and

principles used to describe a particular set of

facts or some observed phenomenon

THEORY An explanation for how or why something occurs. . .

Question: What is the most efficient and effective means of running an organization?

Functions of Theory• Describe• Explain• Predict• Control

• Classical approaches to organizational management and early organizational theories were designed to predict and control behavior in organizations.

Classical Theories of Organizations

Emerged in early part of the twentieth century.

Models were military and the Catholic Church.

FeaturesStrict CONTROL of workersAbsolute CHAINS of COMMANDPREDICTABILITY of behaviorUNIDIRECTIONAL downward influence

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2–5

The Evolution of Management Theory

Figure 2.1Source:

Classical Approach

What are the three primary classical theories

Administrative Management Theory

Scientific Management Theory Bureaucracy Theory

Scientific Management• Frederick Taylor• Lillian Glibreth• Henry Gantt• Managers, not workers,

should determine how work is to be done.

Scientific ManagementFrederick W. Taylor - The One Best Way -Standardize fair day’s work -Substituting research science rules for rules of thumb -Scientifically select, train, teach and develop employees -Provide detailed instructions and -supervision of each worker -Piece-meal pay

Scientific ManagementThe systematic study of the relationships

between people and tasks for the purpose of redesigning the work process for higher efficiency.Defined by Frederick Taylor in the late 1800’s to

replace informal rule of thumb knowledge.Taylor sought to reduce the time a worker spent

on each task by optimizing the way the task was done.

F.W. Taylor and Scientific Management

Taylor’s Theory of Scientific Management

• Elements of Scientific Management– Scientific design of every aspect of every task

• Time and Motion Studies

– Careful selection and training of every task– Proper remuneration for fast and high-quality work

• Maximize output - increase pay

– Equal division of work and responsibility between worker and manager

• Underlying Themes– Managers are intelligent; workers are and should be ignorant– Provide opportunities for workers to achieve greater financial rewards– Workers are motivated almost solely by wages– Maximum effort = Higher wages– Manager is responsible for planning, training, and evaluating

Principles to increase efficiency:1. Study the ways jobs are performed now and

determine new ways to do them.• Gather detailed time and motion information.• Try different methods to see which is best.

2. Codify the new methods into rules.• Teach to all workers the new method.

3. Select workers whose skills match the rules.4. Establish fair levels of performance and pay a

premium for higher performance.• Workers should benefit from higher output

Four Principles of Scientific Management

• Managers frequently implemented only the increased output side of Taylor’s plan.– Workers did not share in the increased output.

• Specialized jobs became very boring, dull.– Workers ended up distrusting the Scientific

Management method.• Workers could purposely “under-perform.”

– Management responded with increased use of machines and conveyors belts.

Problems with Scientific Management

• Refined Taylor’s work and made many improvements to the methodologies of time and motion studies.– Time and motion studies

• Breaking up each job action into its components.• Finding better ways to perform the action.• Reorganizing each job action to be more efficient.

• Also studied worker-related fatigue problems caused by lighting, heating, and the design of tools and machines.

Frank and Lillian Gilbreth

Fayol’s Administrative TheoryHenri Fayol (1841-1925)

General and Industrial ManagementPrinciples and Elements of Management - how

managers should accomplish their managerial dutiesPRIMARY FOCUS: Management (Functions of Administration)More Respect for Worker than Taylor

Workers are motivated by more than moneyEquity in worker treatment

More PRESCRIPTIVE– http://www.lib.uwo.ca/business/fayol.html

Fayol’s Administrative TheoryFive Elements of Management --

Managerial Objectives– Planning– Organizing– Command– Coordination– Control

• Keep machine functioning effectively and efficiently• Replace quickly and efficiently any part or process

that did not contribute to the objectives

Division of Labor: allows for job specialization. – Fayol noted jobs can have too much specialization

leading to poor quality and worker dissatisfaction.Authority and Responsibility

– Fayol included both formal and informal authority resulting from special expertise.

Unity of Command– Employees should have only one boss.

Fayol’s Principles of Management

Line of Authority–A clear chain of command from top to

bottom of the firm.Centralization

– The degree to which authority rests at the top of the organization.

Unity of Direction–A single plan of action to guide the

organization.

Fayol’s Principles of Management (cont’d)

Equity– The provision of justice and the fair and impartial

treatment of all employees.

Order– The arrangement of employees where they will be of

the most value to the organization and to provide career opportunities.

Initiative– The fostering of creativity and innovation by

encouraging employees to act on their own.

Fayol’s Principles of Management (cont’d)

Discipline– Obedient, applied, respectful employees are necessary

for the organization to function.

Remuneration of Personnel– An equitable uniform payment system that motivates

contributes to organizational success.

Stability of Tenure of Personnel– Long-term employment is important for the

development of skills that improve the organization’s performance.

Fayol’s Principles of Management (cont’d)

Fayol’s Principles of Management (cont’d)

Subordination of Individual Interest to the Common Interest– The interest of the organization takes

precedence over that of the individual employee.

Esprit de corps– Comradeship, shared enthusiasm foster

devotion to the common cause (organization).

Fayol’s Administrative TheoryPositioned communication as a necessary

ingredient to successful management

Application in the Modern WorkplaceFayol’s elements of management are recognized

as the main objectives of modern managersPlanning - more participatoryOrganizing - human relationships and

communicationEspecially applicable for large organizations

(military)

Fayol’s Administrative Theory• Fourteen Principles of Management (Tools for Accomplishing Objectives)

– Division of work - limited set of tasks– Authority and Responsibility - right to give orders– Discipline - agreements and sanctions– Unity of Command - only one supervisor– Unity of Direction - one manager per set of activities– Subordination of Individual Interest to General Interest– Remuneration of Personnel - fair price for services– Centralization - reduce importance of subordinate’s role– Scalar Chain - Fayol’s bridge– Order - effective and efficient operations– Equity - kindliness and justice– Stability of Tenure of Personnel - sufficient time for familiarity– Initiative - managers should rely on workers’ initiative– Esprit de corps - “union is strength” “loyal members”

Administrative ManagementThe study of how to create an organizational

structure that leads to high efficiency and effectiveness.

Max WeberDeveloped the concept of bureaucracy as a

formal system of organization and administration designed to ensure efficiency and effectiveness.

Administrative Management Theory

Weber’s Theory of Bureaucracy• Max Weber (1864-1920)

– German Sociologist– Theory of Social and Economic Organization (1947)– Principles and Elements of Management - describe

an ideal or pure form of organizational structure (general policy and specific commands

– PRIMARY FOCUS: Organizational Structure– Worker should respect the “right” of managers to

direct activities dictated by organizational rules and procedures

– More DESCRIPTIVE– http://www2.pfeiffer.edu/~lridener/DSS/Weber/WEBRPER.HTML

Weber’s Theory of Bureaucracy• Bureaucracy allows for the optimal form of

authority - “rational authority”

• Three types of Legitimate Authority– Traditional Authority - past customs; personal

loyalty– Charismatic Authority - personal trust in

character and skills– Rational Authority - rational application of rules

or laws

Weber’s Theory of Bureaucracy• Tenets of Bureaucracy

RulesSpecified sphere of competenceHierarchySpecialized TrainingWorkers do not own technologyNo entitlement to “official position” by

incumbentEverything written downMaintenance of “ideal type” - bureaucracy

Weber’s Theory of Bureaucracy

Concerned with describing the ideal structure of an organizationCornerstone: existence of written rules

The rational application of written rules ensures the promotion of legitimate authority and the effective and efficient functioning of the organization.

Weber’s Principles of Bureaucracy

Authority is the power to hold people accountable for their actions.

Positions in the firm should be held based on performance, not social contacts.

Position duties are clearly identified so that people know what is expected of them.

Lines of authority should be clearly identified such that workers know who reports to who.

Rules, standard operating procedures (SOPs), and norms guide the firm’s operations.

Weber’s Five Principles of Bureaucracy

Weber’s Theory of BureaucracyApplication in the Modern Workplace

Large organizations guided by countless rules are bureaucracies

Linked with inefficient, slow-moving organizations

–Organizations have several characteristics of bureaucracies

Behavioral ManagementThe study of how managers should behave

to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals.

Focuses on the way a manager should personally manage to motivate employees.

Behavioral Management Theory

Behavioral ApproachHawthorne Studies 1930’s Shift of management theory away frompure mechanistic and economic views ofworker motivation and recognition that social relationships could be greater motivator. Work groups influence individual worker output Supervisors attention has significant influence onproductivity (JM) Effort begun to have a “happy” worker Later partly refuted – being productive more likelyto lead to satisfaction then vice-versa

Mary Parker FollettAn influential leader in early managerial

theoryHeld a horizontal view of power and

authority in organizationsSuggested workers help in analyzing their jobs

for improvements—the worker knows the best way to improve the job.

If workers have relevant knowledge of the task, then they should control the task.

Behavioral Management

Management Science Theory

• An approach to management that uses rigorous quantitative techniques to maximize the use of organizational resources.Quantitative management—utilizes linear

programming, modeling, simulation systems.Operations management—techniques to analyze all

aspects of the production system.Total Quality Management (TQM)—focuses on

improving quality throughout an organization.Management Information Systems (MIS)—provides

information about the organization.

Management Science Approach

Focus on mathematical models Arthur D. Little one of the first Dupont developed CPM (1950’s) Critical Path Method Most time-consuming set of activities start to

finish US Navy developed PERT (following year) Program Evaluation and Review Technique Used in engineering, construction, office

workflow, and emergency response evaluation

Organizational Environment–The set of forces and conditions that

operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources.

Organizational Environment Theory

Open SystemA system that takes resources for its external

environment and converts them into goods and services that are then sent back to that environment for purchase by customers.

Inputs: the acquisition of external resources.Conversion: the processing of inputs into goods and

services.Output: the release of finished goods into the

environment.

The Open-Systems View

The Organization as an Open System

• Closed system– A system that is self-contained and thus not affected by

changes occurring in its external environment. – Often undergoes entropy and loses its ability to control

itself, and fails.

• Synergy– Performance that results when individuals and

departments coordinate their actions• Performance gains of the whole surpass the sum of the

performance of the individual components.

Other System Considerations

Contingency Theory of Organizational Design

• Mechanistic StructureAuthority is centralized at the top. (Theory X)Employees are closely monitored and managed.Can be very efficient in a stable environment.

• Organic structure– Authority is decentralized throughout the

organization. (Theory Y)– Tasks and roles are left ambiguous to encourage

employees to react quickly to changing environment.

Mechanistic and Organic Structures

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Managerial roles

Henry Mintzberg’s Managerial Roles

Interpersonal Roles

Figurehead Leader Liaison Informational

Roles Monitor

Disseminator Spokesperson

Decisional Roles

Entrepreneur Disturbance

handler Resource allocator

Negotiator

Top managers spend their time as follows:

59 % on scheduled meetings

22 % at their desks

10 % on unscheduled meetings

6 % on telephone calls

3 % on inspecting facilities

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