What is a Theory?

A theory is a conceptual (idea) framework for organizing knowledge and providing a blueprint (picture design) for action.

What is Management Theory?

Management Theory is used to build organizations and guide them toward their goals.

Most managers develop and refine their own theories of how they should run their organizations and manage the behavior of their employees.

The Classical Management Perspective

Consists of two distinct branches:

Scientific management

Administrative management

The Classical Management Perspective (continued)

1 Scientific Management Concerned with improving the performance of individual workers.

Frederick Taylor was the chief designer of this theory.• Identified the practice of soldiering – employees working

at a pace slower than their capabilities.• He studied and timed each element of the workers’ jobs.• He determined what each worker should be producing

and then determined the most efficient way of doing each part of the job. Introduced rest periods to reduce fatigue.

• Introduced the first ‘piecework’ pay system – workers were paid for each target met and/or exceeded.

See Figure 2.2, page 44.

Figure 2.2 Steps in Scientific Management

The Classical Management Perspective (continued)

Frank and Lillian Gilbreth

• Husband and wife team of industrial engineers.• He was an expert in bricklaying techniques – identified

specific materials and techniques for craft and improved productivity of layers by 200 percent.

• She was responsible for breakthroughs in industrial psychology and personnel management.

• Applied their theories to raising their family of 12 children.

The Classical Management Perspective (continued)

Henry Gantt

• Continued to develop techniques to improve employee output.

• Responsible for the development of the Gantt Chart – a means of scheduling work which may be generated for each worker or for a complex project as a whole.

• He refined and further developed Taylor’s ideas about piecework pay systems.

The Classical Management Perspective (continued)

Harrington Emerson

• He was a managerial consultant who was a strong believer in specialized management roles in organizations.

• Believed that job specialization was as important to managerial work as it was to operating jobs.

The Classical Management Perspective (continued)

2 Administrative ManagementFocuses on managing the total organization.

Henri Fayol

• French industrialist who was this theory’s chief promoter.• First to identify the functions of planning, organizing,

leading and controlling.

Lyndall Urwick

• British officer who integrated the scientific theory with the work of Fayol and other administrative management theorists.

The Classical Management Perspective (continued)

Max Weber

• German sociologist who laid the foundation for contemporary organization theory.

• Developed the concept of bureaucracy which is a rational set of guidelines for structuring organizations in the most efficient manner.

Chester Barnard

• Former president of large US telecommunications company who developed a theory about the acceptance of authority.

• An order is accepted if the subordinate understands it, is able to comply with it and views it as appropriate.

See Table 2.1 page 47.

The Behavioral Management Perspective

This perspective places emphasis on individual attitudes and behaviors and on group processes and recognizes the importance of behavioral process in the workplace.

Hugo Munsterberg [early 1900’s]• Recognized as the ‘father of industrial psychology’.• Believed that psychologists could make valuable

contributions to managers in areas of employee selection and motivation.

Mary Parker Follett [early 1930’s]• Recognized the importance of the human element in

organizations.• She appreciated the need to understand the role of

behavior in organizations.

The Behavioral Management Perspective (continued)

1 The Hawthorne StudiesConducted by Elton Mayo and his associates at the Hawthorne Plant of Western Electric in the US; sponsored by General Electric.

Productivity increased for both the experimental and control groups when lighting was increased. Lighting was not a factor, but the special attention given both groups by their supervisors was a contributing factor.

Piecework incentive pay for producing terminal banks for telephone exchanges did not have members trying to maximize their earnings. The group established an acceptable level. Overproducers and underproducers were not accepted by the group. Acceptance by the group was more important.

The Behavioral Management Perspective (continued)

2 The Human Relations MovementArgues that workers respond primarily to the social context of the workplace.

Believes managers’ concerns for workers would lead to increased satisfaction, which would in turn lead to improved performance.

Abraham Maslow believed that people are motivated by a hierarchy of needs.

Douglas McGregor developed Theory X (the scientific management approach) and Theory Y (the human relations approach)

The Behavioral Management Perspective (continued)

Theory X is a pessimistic and negative view of workers consistent with the views of scientific management.

Theory Y is a positive view of workers; it represents the assumptions that human relations promoters make.

See Table 2.2, page 49.

The Behavioral Management Perspective (continued)

3 The Emergence of Organizational BehaviorBelieves that human behavior in organizations is much more complex than the human relationists realized.Organizational behavior looks at individual, group and organizational processes.Important topics in this field include: job satisfaction, stress, motivation, leadership, group dynamics, organizational politics, interpersonal conflict, multicultural diversity, and the structure and design of organizations.

See Table 2.3, page 51.

The Quantitative Management Perspective

This perspective applies quantitative techniques to management.

It focuses on decision making, economic effectiveness, mathematical models and the use of computers.

Two branches include: Management Science ApproachOperations Management Approach

The Quantitative Management Perspective (continued)

1 Management Science

Focuses specifically on the development of mathematical models.A mathematical model is a simplified representation of a system, process or relationship.Examples include: GM uses a simulation model to determine damage to cars at various speeds, banks use models to determine how many tellers need to be on duty at various times of the day, etc.

The Quantitative Management Perspective (continued)

2 Operations Management

Concerned with helping the organization produce its products or services more efficiently.Examples: inventory management which may include balancing carrying and ordering costs and determining the best order quantity; linear programming used by airlines to plan their flight schedules; breakeven analyses and running simulations.Equally valuable in areas of finance, marketing and HR management.

See Table 2.4, page 53 and Figure 2.3, page 54.

Integrating Perspectives for Managers (continued)

The Systems Perspective

• A system is an interrelated set of elements functioning as a whole.

• An open system is one which interacts with its environment.

• A closed system is one which does not interact with its environment.

Integrating Perspectives for Managers (continued)

A subsystem is a system within another system. ( relationship between production, finance and marketing)

Synergy occurs when two or more subsystems working together produce more than the total of what they might produce working alone. (Durham Athletic Club gym and salon)

Entropy is a normal process leading to system decline. (not keeping pace with the environment – Kmart and Studebaker)

Integrating Perspectives for Managers (continued)

The Contingency Perspective

• The Universal Perspective includes the classical, behavioral and quantitative approaches because they tried to identify the ‘one best way’ to manage organizations.

• The Contingency Perspective suggests that there is no ‘one best way’ for all organizations because each is unique.

• Believes that appropriate managerial behavior in a given situation depends on, or is contingent on, these unique elements in the situation.

The Systems Perspectiveof Organizations

Inputs from theenvironment:

material inputs,human inputs,

financial inputs, andinformation inputs.

TransformationProcess:

technology,operating systems,

administrativesystems, and

control systems

Outputs into the environment:

products/services,profits/losses,

employee behaviors,and information

outputs

Feedback

Integrating Perspectives for Managers (continued)

An Integrated Framework

Before attempting to apply any specific concepts or ideas from the three major perspectives, managers must recognize:

the interdependence of units within the organizationthe effect of environmental influencesthe need to respond to the unique characteristics of each situation.

The ideas of subsystem interdependencies and environmental influences are given to us by systems theory.The situational view of management is derived from a contingency perspective.

See Figure 2.5, page 57.

An Integrative Framework ofManagement Perspectives

Effective and efficient management

Classical ManagementPerspectives:

Methods for enhancing efficiency and

facilitating planning, organizing, and

controlling

Behavioral Management

Perspectives: Insights for motivating

performance and understanding individual

behavior, groups and teams, and leadership

QuantitativeManagement Perspective:

Techniques for improving decision making, resource

allocation, and operations

Contingency PerspectiveSystems Approach

Recognition of the situational nature of management. Response to particular

characteristics of situation.

Recognition of internal interdependencies.

Recognition of environmental influences.

Figure 2.5: The Emergence of Modern Management Perspectives

Contemporary Management Challenges

Managers today face many challenges as they guide and direct their organizations:

Stalled economy that limits growthDiversity [culture, values, beliefs]

Employee privacy issuesTechnologyInternetGlobalizationEthics and social responsibility