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MANAGEMENT CONCEPTS OR APPROACHES

1. SCIENTIFIC MANAGEMENT
Scientific management, also called Taylorism, is a theory of management that
analyzes and synthesizes workflows. Its main objective is improving economic
efficiency, especially labor productivity. It was one of the earliest attempts to apply
science to the engineering of processes and to management. He started the Scientific
Management movement, and he and his associates were the first people to study the
work process scientifically. They studied how work was performed, and they looked
at how this affected worker productivity. Taylor's philosophy focused on the belief
that making people work as hard as they could was not as efficient as optimizing the
way the work was done.
Historical Perspective
In 1909, Taylor published "The Principles of Scientific Management." In this, he
proposed that by optimizing and simplifying jobs, productivity would increase. He
also advanced the idea that workers and managers needed to cooperate with one
another. This was very different from the way work was typically done in businesses
beforehand. A factory manager at that time had very little contact with the workers,
and he left them on their own to produce the necessary product. There was no
standardization, and a worker's main motivation was often continued employment,
so there was no incentive to work as quickly or as efficiently as possible.
Taylor believed that all workers were motivated by money, so he promoted the
idea of "a fair day's pay for a fair day's work." In other words, if a worker didn't
achieve enough in a day, he didn't deserve to be paid as much as another worker who
was highly productive.
With a background in mechanical engineering, Taylor was very interested in
efficiency. While advancing his career at a U.S. steel manufacturer, he designed
workplace experiments to determine optimal performance levels. In one, he
experimented with shovel design until he had a design that would allow workers to
shovel for several hours straight. With bricklayers, he experimented with the various
motions required and developed an efficient way to lay bricks. And he applied the
scientific method to study the optimal way to do any type of workplace task. As
such, he found that by calculating the time needed for the various elements of a task,
he could develop the "best" way to complete that task.
These "time and motion" studies also led Taylor to conclude that certain people
could work more efficiently than others. These were the people whom managers
should seek to hire where possible. Therefore, selecting the right people for the job
was another important part of workplace efficiency. Taking what he learned from
these workplace experiments, Taylor developed four principles of scientific
management. These principles are also known simply as "Taylorism".

Four Principles of Scientific Management


Taylor's four principles are as follows:
1. Replace working by "rule of thumb," or simple habit and common sense, and
instead use the scientific method to study work and determine the most
efficient way to perform specific tasks.
2. Rather than simply assign workers to just any job, match workers to their
jobs based on capability and motivation, and train them to work at maximum
efficiency.
3. Monitor worker performance, and provide instructions and supervision to
ensure that they're using the most efficient ways of working.
4. Allocate the work between managers and workers so that the managers spend
their time planning and training, allowing the workers to perform their tasks
efficiently.

2. ADMINISTRATIVE MANAGEMENT
Administrative theory, classical administrative theory An early form of
organization theory, pioneered mainly by Henri Fayol (18411925), which was
concerned principally with achieving the most rational organization for coordinating
the various tasks specified within a complex division of labor. Fayol was concerned
mainly with business management, although he himself makes it clear that his ideas
about management were intended to apply to all formal organizations, including
political and religious undertakings. Expressing the French administration as
management has also led to the alternative designation of this approach as the
classical school of scientific management.
Background
Henri Fayol was born in Istanbul in 1841. When he was 19, he began working as
an engineer at a large mining company in France. He eventually became the director,
at a time when the mining company employed more than 1,000 people.
Through the years, Fayol began to develop what he considered to be the 14 most
important principles of management. Essentially, these explained how managers
should organize and interact with staff.
In 1916, two years before he stepped down as director, he published his "14
Principles of Management" in the book "Administration Industrielle et Gnrale."
Fayol also created a list of the six primary functions of management, which go hand
in hand with the Principles.
Fayol's "14 Principles" was one of the earliest theories of management to be
created, and remains one of the most comprehensive. He's considered to be among the
most influential contributors to the modern concept of management, even though
people don't refer to "The 14 Principles" often today.
The theory falls under the Administrative Management school of thought (as
opposed to the Scientific Management School, led by Fredrick Taylor.
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Fayol's 14 Principles of Management


1) Division of Work When employees are specialized, output can increase because
they become increasingly skilled and efficient.
2) Authority Managers must have the authority to give orders, but they must also
keep in mind that with authority comes responsibility.
3) Discipline Discipline must be upheld in organizations, but methods for doing so
can vary.
4) Unity of Command Employees should have only one direct supervisor.
5) Unity of Direction Teams with the same objective should be working under the
direction of one manager, using one plan. This will ensure that action is properly
coordinated.
6) Subordination of Individual Interests to the General Interest The interests
of one employee should not be allowed to become more important than those of
the group. This includes managers.
7) Remuneration Employee satisfaction depends on fair remuneration for
everyone. This includes financial and non-financial compensation.
8) Centralization This principle refers to how close employees are to the decisionmaking process. It is important to aim for an appropriate balance.
9) Scalar Chain Employees should be aware of where they stand in the
organization's hierarchy, or chain of command.
10) Order The workplace facilities must be clean, tidy and safe for employees.
Everything should have its place.
11) Equity Managers should be fair to staff at all times, both maintaining discipline
as necessary and acting with kindness where appropriate.
12) Stability of Tenure of Personnel Managers should strive to minimize
employee turnover. Personnel planning should be a priority.
13) Initiative Employees should be given the necessary level of freedom to create
and carry out plans.
14) Esprit de Corps Organizations should strive to promote team spirit and unity.
Fayol's Six Functions of Management
Fayol's six primary functions of management, which go hand in hand with the
Principles, are as follows:
1) Forecasting.
2) Planning. Managers should draft strategies and objectives to determine the
stages of the plan and the technology necessary to implement it.
3) Organizing. Managers must organize and provide the resources necessary to
execute said plan, including raw materials, tools, capital, and human resources.
4) Commanding (delegation). Managers must utilize authority and a thorough
understanding of long-term goals to delegate tasks and make decisions for the
betterment of the organization.

5) Coordinating. High-level managers must work to integrate all activities to


facilitate organizational success. Communication is key to success in this
component.
6) Controlling. Managers must compare the activities of the personnel to the plan of
action; this is the evaluation component of management.

3. BEHAVIORAL APPROACH
Behavioral management theory relies on the notion that managers will better
understand the human aspect to workers and treat employees as important assets to
achieve goals. Management taking a special interest in workers makes them feel like
part of a special group. As time went on, thinking shifted, and management started
looking at employee satisfaction and working conditions as a way to increase
productivity.
The behavioral management theory is often called the human relations movement
because it addresses the human dimension of work. Behavioral theorists believed that
a better understanding of human behavior at work, such as motivation, conflict,
expectations, and group dynamics, improved productivity.
The theorists who contributed to this school viewed employees as individuals,
resources, and assets to be developed and worked with not as machines, as in the
past. Several individuals and experiments contributed to this theory.
Background
Elton Mayo's contributions came as part of the Hawthorne studies, a series of
experiments that rigorously applied classical management theory only to reveal its
shortcomings. The Hawthorne experiments consisted of two studies conducted at the
Hawthorne Works of the Western Electric Company in Chicago from 1924 to 1932.
The first study was conducted by a group of engineers seeking to determine the
relationship of lighting levels to worker productivity. Surprisingly enough, they
discovered that worker productivity increased as the lighting levels decreased that
is, until the employees were unable to see what they were doing, after which
performance naturally declined.
A few years later, a second group of experiments began. Harvard researchers
Mayo and F. J. Roethlisberger supervised a group of five women in a bank wiring
room. They gave the women special privileges, such as the right to leave their
workstations without permission, take rest periods, enjoy free lunches, and have
variations in pay levels and workdays. This experiment also resulted in significantly
increased rates of productivity.
In this case, Mayo and Roethlisberger concluded that the increase in productivity
resulted from the supervisory arrangement rather than the changes in lighting or other
associated worker benefits. Because the experimenters became the primary
supervisors of the employees, the intense interest they displayed for the workers was
the basis for the increased motivation and resulting productivity. Essentially, the
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experimenters became a part of the study and influenced its outcome. This is the
origin of the term Hawthorne effect, which describes the special attention researchers
give to a study's subjects and the impact that attention has on the study's findings.
The general conclusion from the Hawthorne studies was that human relations and
the social needs of workers are crucial aspects of business management. This
principle of human motivation helped revolutionize theories and practices of
management.
Abraham Maslow, a practicing psychologist, developed one of the most widely
recognized need theories, a theory of motivation based upon a consideration of
human needs. His theory of human needs had three assumptions:
1) Human needs are never completely satisfied.
2) Human behavior is purposeful and is motivated by the need for satisfaction.
3) Needs can be classified according to a hierarchical structure of importance,
from the lowest to highest.
Maslow broke down the needs hierarchy into five specific areas:
Physiological needs. Maslow grouped all physical needs necessary for
maintaining basic human wellbeing, such as food and drink, into this category.
After the need is satisfied, however, it is no longer is a motivator.
Safety needs. These needs include the need for basic security, stability,
protection, and freedom from fear. A normal state exists for an individual to have
all these needs generally satisfied. Otherwise, they become primary motivators.
Belonging and love needs. After the physical and safety needs are satisfied and
are no longer motivators, the need for belonging and love emerges as a primary
motivator. The individual strives to establish meaningful relationships with
significant others.
Esteem needs. An individual must develop selfconfidence and wants to achieve
status, reputation, fame, and glory.
Selfactualization needs. Assuming that all the previous needs in the hierarchy
are satisfied, an individual feels a need to find himself.
Maslow's hierarchy of needs theory helped managers visualize employee motivation.

4. QUANTITATIVE APPROACH
The quantitative approach to management involves the use of quantitative
techniques, such as statistics, information models, and computer simulations, to
improve decision making.
Background

During World War II, mathematicians, physicists, and other scientists joined
together to solve military problems. The quantitative school of management is a result
of the research conducted during World War. During the war, managers, government
officials, and scientists came together in England and the United States to help the
military deploy its resources more efficiently and effectively. Decisions regarding
troop, equipment, and submarine deployment were all solved through statistical and
mathematical analysis.
This theory is concerned with applying quantitative management tools focusing
on decision making, economic effectiveness, mathematical models, and the use of
computers.
Today, this view encourages managers to use mathematics, statistics, and other
quantitative techniques to make management decisions. Managers can use computer
models to figure out the best way to do something saving both money and time.
Managers use several science applications. Mathematical forecasting helps make
projections that are useful in the planning process. Inventory modeling helps control
inventories by mathematically establishing how and when to order a product.
Queuing theory helps allocate service personnel or workstations to minimize
customer waiting and service cost.
There are many branches of the quantitative approach and they include:
Management Science, Operations Management and Management Informational
Systems.
(a) Management Science
The term management science appears to be related to scientific
management, the approach developed by Taylor and others early in this century.
But the two have little in common and should not be confused.
Management science focuses specifically on the development of
mathematical and statistical models. A mathematical model is a simplified
representation of a system, process, or relationship.
At its most basic level, management science focuses on models, equations,
and similar representations of reality. In recent years with the advent of the
personal computer, management science techniques have become increasingly
sophisticated.
For example, motor manufacturers such as Toyota use realistic computer
simulations to study collision damage to cars. These simulations give them
precise information and avoid the costs of "crashing" so many test cars.
(b) Operations Management
Operations management is a narrow branch of the quantitative approach to
management. It focuses on managing the process of transforming materials, labor,
and capital into useful goods and/or services. The product outputs can be either
goods or services; effective operations management is a concern for both
manufacturing and service organizations. The resource inputs, or factors of
production, include the wide variety of raw materials, technologies, capital
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information, and people needed to create finished products. The transformation


process, in turn, is the actual set of operations or activities through which various
resources are utilized to produce finished goods or services of value to customers
or clients.
Operations management today pays close attention to the demands of
quality, customer service, and competition. The process begins with attention to
the needs of customers: What do they want? Where do they want it? When do
they want it? Based on the answers to these questions, managers line up resources
and take any action necessary to meet customer expectations.
(c) Management information systems
Management information systems (MIS) is the most recent subfield of the
quantitative school. A management information system organizes past, present,
and projected data from both internal and external sources and processes it into
usable information, which it then makes available to managers at all
organizational levels. The information systems are also able to organize data into
usable and accessible formats. As a result, managers can identify alternatives
quickly, evaluate alternatives by using a spreadsheet program, pose a series of
whatif questions, and finally, select the best alternatives based on the answers
to these questions.

5. SYSTEM APPROACH
The system approach is based on the concept that an organization is a system. A
system is defined as a number of interdependent parts functioning as a whole for
some purpose. Systems approach is based on the generalization that everything is
interrelated and interdependent. A system is composed of related and dependent
element which when in interaction, forms a unitary whole. A system is simply an
assemblage or combination of things or parts forming a complex whole.
Background
In the 1960, an approach to management appeared which try to unify the prior
schools of thought. This approach is commonly known as Systems Approach. Its
early contributors include Ludwing Von Bertalanfty, recognized as the founder of
general system theory, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L.
Kahn, W. Buckley and J.D. Thompson.
They viewed organization as an organic and open system, which is composed of
interacting and interdependent parts, called subsystems. The system approach is top
took upon management as a system or as an organized whole made up of subsystems integrated into a unity or orderly totality.
One its most important characteristic is that it is composed of hierarchy of subsystems. That is the parts forming the major system and so on. For example, the
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world can be considered to be a system in which various national economies are subsystems.
In turn, each national economy is composed of its various industries, each
industry is composed of firms and of course a firm can be considered a system
composed of sub-systems such as production, marketing, finance, accounting and so
on.
Open and Closed Systems
Open System continually interacts with its environment
Closed System has little interaction with its environment; it receives very little
feedback from the outside
The Systems Viewpoint regards the organization as a system of interrelated parts.
By adopting this perspective you can look at your organization in two ways - A
collection of subsystemsparts making up the whole system, a part of the larger
environment
The Four Parts of a System
a. Outputs. The products, services, profits, losses, employee satisfaction or
discontent, and the like that are produced by the organization
b. Inputs. The people, money, information, equipment, and materials required to
produce and organizations goods or services
c. Transformational Processes. The organizations capabilities in management
and technology that are applied to converting inputs to outputs
d. Feedback. Information about the reaction of the environment to the outputs
that affect the inputs
Features of Systems Approach:
A system consists of interacting elements. It is set of inter-related and interdependent parts arranged in a manner that produces a unified whole.
The various sub-systems should be studied in their inter-relationships rather, than
in isolation from each other.
An organizational system has a boundary that determines which parts are internal
and which are external.
A system does not exist in a vacuum. It receives information, material and energy
from other systems as inputs. These inputs undergo a transformation process
within a system and leave the system as output to other systems.
An organization is a dynamic system as it is responsive to its environment. It is
vulnerable to change in its environment.

6. CONTINGENCY APPROACH
Historical Background
Classical management theorists such as Henri Fayol and Frederick Taylor
identified and emphasized management principles that they believed would make
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companies more successful. However, the classicists came under fire in the 1950s and
1960s from management thinkers who believed that their approach was inflexible and
did not consider environmental contingencies. Although the criticisms were largely
invalid (both Fayol and Taylor, for example, recognized that situational factors were
relevant), they spawned what has come to be called the contingency school of
management. Research conducted in the 1960s and 1970s focused on situational
factors that affected the appropriate structure of organizations and the appropriate
leadership styles for different situations. Although the contingency perspective
purports to apply to all aspects of management, and not just organizing and leading,
there has been little development of contingency approaches outside organization
theory and leadership theory. The following sections provide brief overviews of the
contingency perspective as relevant to organization theory and leadership.
The contingency approach to management is based on the idea that there is no
single best way to manage. Contingency refers to the immediate contingent
circumstances. Effective organizations must tailor their planning, organizing, leading,
and controlling to their particular circumstances. In other words, managers should
identify the conditions of a task, the requirements of the management job, and people
involved as parts of a complete management situation. The leaders must then work to
integrate all these facets into a solution that is most appropriate for a specific
circumstance.
The contingency approach to management assumes that there is no universal
answer to many questions because organizations, people, and situations vary and
change over time. Often there is no one right answer when managers ask: What is
the right thing to do? Should we have a mechanistic or an organic structure? A
functional or divisional structure? Wide or narrow spans of management? Tall or flat
organizational structures? Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized? Should we use task or people oriented
leadership styles? What motivational approaches and incentive programs should we
use? Thus, the answer depends on a complex variety of critical environmental and
internal contingencies.
The contingency theory is similar to situation theory in that there is an assumption
that no simple way is always right. Situation theory, however, focuses more on the
behaviors that the leader should use. The contingency theory takes a broader view
that includes contingent factors about leader capability and also includes other
variables within the situation.
Factors that influence the contingency theory are numerous. These include the
following:
The size of the organization
How the firm adapts itself to its environment
Differences among resources and operations activities
Assumption of managers about employees
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Strategies
Technologies being used

7. QUALITY APPROACH
Quality management ensures that an organization, product or service is consistent.
It has four main components: quality planning, quality assurance, quality control and
quality improvement. Quality management is focused not only on product and service
quality, but also on the means to achieve it. Quality management, therefore, uses
quality assurance and control of processes as well as products to achieve more
consistent quality.
Deming's views on quality are believed by many to have laid the foundations for
Total Quality Management (TQM), however, the works of Feigen Baum, Ishikawa
and Imai have also had an impact.
TQM focuses on achieving quality through engraining the philosophy within an
organization, although it does not form a system or a set of tools through which to
achieve this.
Companies adopting a TQM philosophy should see their competitiveness
increase, establish a culture of growth, offer a productive and successful working
environment, cut stress and waste and build teams and partnerships, according to the
Chartered Quality Institute.
The principles of TQM have been laid out in the ISO 9000 family of standards
from the International Organization for Standardization. Adopted by over one million
companies in 176 countries worldwide, the standards lay down the requirements of a
quality management system, but not how these should be met.
Total Quality Management Principles: The 8 Primary Elements of TQM
Total quality management can be summarized as a management system for a
customer-focused organization that involves all employees in continual improvement.
It uses strategy, data, and effective communications to integrate the quality discipline
into the culture and activities of the organization. Many of these concepts are present
in modern Quality Management Systems, the successor to TQM. Here are the 8
principles of total quality management:
1) Customer-focused
The customer ultimately determines the level of quality. No matter what an
organization does to foster quality improvementtraining employees,
integrating quality into the design process, upgrading computers or software,
or buying new measuring toolsthe customer determines whether the efforts
were worthwhile.
2) Total employee involvement
All employees participate in working toward common goals. Total employee
commitment can only be obtained after fear has been driven from the
workplace, when empowerment has occurred, and management has provided
the proper environment. High-performance work systems integrate continuous
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3)

4)

5)

6)

7)

8)

improvement efforts with normal business operations. Self-managed work


teams are one form of empowerment.
Process-centered
A fundamental part of TQM is a focus on process thinking. A process is a
series of steps that take inputs from suppliers (internal or external) and
transforms them into outputs that are delivered to customers (again, either
internal or external). The steps required to carry out the process are defined,
and performance measures are continuously monitored in order to detect
unexpected variation.
Integrated system
Although an organization may consist of many different functional
specialties often organized into vertically structured departments, it is the
horizontal processes interconnecting these functions that are the focus of
TQM.
Micro-processes add up to larger processes, and all processes aggregate
into the business processes required for defining and implementing strategy.
Everyone must understand the vision, mission, and guiding principles as well
as the quality policies, objectives, and critical processes of the organization.
Business performance must be monitored and communicated continuously.
An integrated business system may be modeled after the Baldrige National
Quality Program criteria and/or incorporate the ISO 9000 standards. Every
organization has a unique work culture, and it is virtually impossible to
achieve excellence in its products and services unless a good quality culture
has been fostered. Thus, an integrated system connects business improvement
elements in an attempt to continually improve and exceed the expectations of
customers, employees, and other stakeholders.
Strategic and systematic approach
A critical part of the management of quality is the strategic and systematic
approach to achieving an organizations vision, mission, and goals. This
process, called strategic planning or strategic management, includes the
formulation of a strategic plan that integrates quality as a core component.
Continual improvement
A major thrust of TQM is continual process improvement. Continual
improvement drives an organization to be both analytical and creative in
finding ways to become more competitive and more effective at meeting
stakeholder expectations.
Fact-based decision making
In order to know how well an organization is performing, data on performance
measures are necessary. TQM requires that an organization continually collect
and analyze data in order to improve decision making accuracy, achieve
consensus, and allow prediction based on past history.
Communications
During times of organizational change, as well as part of day-to-day operation,
effective communications plays a large part in maintaining morale and in
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motivating employees at all levels. Communications involve strategies,


method, and timeliness.
These elements are considered so essential to TQM that many
organizations define them, in some format, as a set of core values and principles
on which the organization is to operate. The methods for implementing this
approach come from the teachings of such quality leaders as Philip B. Crosby, W.
Edwards Deming, Armand V. Feigenbaum, Kaoru Ishikawa, and Joseph M. Juran.

8. COMPOSITE APPROACH
A composite is a grouping of equities, indexes or other factors combined in a
standardized way, which provides a useful statistical measure of overall market or
sector performance over time. Investors may also use the term "composite index."
Composites are created for both investment analysis and to make decisions about
economic trends and forecasts.
Composites are the cornerstone of GIPS (Global Investment Performance
Standards) compliance, which is rapidly becoming the de facto standard for verifying
performance numbers used in marketing and promotions. Yet creating and
maintaining composites is arguably the biggest challenge to becoming compliant
and the biggest deterrent to firms that remain non-compliant. The effort, however, is
worth it if you want to reap the competitive advantage that compliance confers.

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