Evolution of management thoughts

1. 1. MANAGEMENT PROCESS H Ramasubramanian Evolution of

Management Thought
2. 2. Evolution of Management Thoughts Introduction: • History and progress
of management thinking; • Classification of approaches: – Classical •
Scientific management, • Bureaucratic management, • Administrative
management – Behavioural approach • group influences, • Hawthorne
studies, • Maslow’s needs theory, • Theory X and Theory Y, • Model I Vs.
Model II of Chris Argyris – Quantitative approach • Management science, •
operations management, • M.I.S 2Management Thoughts - MANGEMENT
PROCESS
3. 3. Syllabus - UNIT – 2 Evolution of Management Thoughts – modern
approaches • systems theory, • contingency theory, • Theory Z, • quality
management. Classical approach: • Brief overview; • Scientific
management: • Contribution of Taylor (Principles of scientific management,
managerial practices after Taylor: piece rate incentive and time and motion
study), • Gilbreths’ thoughts, • Gantt’s contribution; • Limitations of
Scientific Management; • Administrative theory: Fayol’s contribution: •
Various business operations (Technical, commercial, financial, security,
accounting, managerial, (14 principles of Fayol; • Bureaucratic management:
Weber’s ideal bureaucracy and its characteristics; Limitations of
bureaucratic management and administrative theory 3Management Thoughts
- MANGEMENT PROCESS
4. 4. Syllabus - UNIT – 2 Evolution of Management Thoughts • Behavioral
approach: – Meaning; – contributors: Follet, Mayo, Maslow, McGregor, and
Argyris; – Follet’s group influence ideas; – Mayo’s thinking on human
relations • Illumination experiments, • relay assembly test room experiments,
• interview phase, • writing observation room experiment and • limitations of
this approach; – Maslow’s focus on human needs: • Classification and need
hierarchy, • evaluation; – Mc Gregor’s contribution: • Theory X and Theory
Y; – Argris and matching of human and organizational development, •
Model I and model II organizations 4Management Thoughts -
MANGEMENT PROCESS
5. 5. Syllabus - UNIT – 2 Evolution of Management Thoughts • Quantitative
approaches: – Management science approach; – Operations management
approach; – MIS • Modern approaches: – System theory (Inputs
Transformation process outputs); – Contingency theory; – Theory Z •
Comparative view of all the approaches 5Management Thoughts -
MANGEMENT PROCESS
6. 6. Evolution of Management Thoughts - History History and progress of
management thinking • Both theory and history are indispensable tools for
managing contemporary organizations. • A theory is a conceptual framework
for organizing knowledge that provides a blueprint for various courses of
action. 6Management Thoughts - MANGEMENT PROCESS Name Period
Contribution Robert Owen 1771-1858 Proposed legislative reforms to
improve working conditions of labour Charles Babbage 1792-1871
Advocated the concept or ‘division of labour’ Andrew Ure 1778-1857
Advocated the study of management Charles Dupin 1784-1873 Henry
R.Towne 1844-1924 Emphasised the need to consider management as
separated field of study and the importance of business skills for running a
business.
7. 7. Evolution of Management Thoughts – Classification of approaches: Major
Classification of Management approaches 7Management Thoughts -
MANGEMENT PROCESS CLASSICAL APPROACH SCIENTIFIC
MANAGEMENT BUREAUCRATIC MANAGEMENT
ADMINISTRATIVE MANAGEMENT BEHAVIORAL APPROACH
HAWTHORNE STUDIES MASLOW’S NEED HIERARCHY THEORY X
and THEORY Y QUANTITATIVE APPROACH MANAGEMENT
SCIENCE OPERATIONS MANAGEMENT MANAGEMENT
INFORMATION SYSTEM MODERN APPROACH THE SYSTEMS
THEORY CONTINGENCY THEORY EMERGING APPROACHES
8. 8. Evolution of Management Thoughts – Classical approach Classical
approach: • It professes or claims the body of management thought based on
the belief that employees have only economical and physical needs and that
the social needs and need for jog satisfaction either does not exist or are
unimportant • It is the oldest thought began around 1900 and continued into
1920’s • Mainly considered increasing the efficiency of workers. • It mainly
looks for universal principles of operation for economic efficiency.
Scientific Management: Early 1900s It is defined as “that kind of
management which conducts a business or affairs by standards established,
by facts or truths gained through systematic observation, experiment, or
reasoning.” Major contributors: Frederick Winslow Taylor:(1856-1915)
Father of scientific management • Two major managerial practices: – Piece-
rate incentive system – Time-and-motion study 8Management Thoughts -
MANGEMENT PROCESS
9. 9. Evolution of Management Thoughts – Classical approach Frank Gilberth
(1868-1924) and Lillian Gilberth: (1878-1972) • Motion study involves
finding out the best sequence and minimum number of motions needed to
complete a task. • Explore new ways for eliminating unnecessary motions
 and reducing work fatigue. Henry L.Gantt: 1861-1919 • Well known for
Task – and - bonus system – The Gantt chart • If the worker completed the
work fast, i.e., – in less than the standard time, he received a bonus. • It is a
Simple chart that compares actual and planned performances. Limitations of
Scientific Management • Do not focus on the management of an
organization from a manager’s point of view. • People were “rational” and
were motivated primarily by the desire for material gain. • It also ignored the
human desire for job satisfaction. 9Management Thoughts - MANGEMENT
PROCESS
10.10. Evolution of Management Thoughts – Classical approach Piece-rate
incentive system: • This was the first systematic attempt in rationalizing
incentive. • It is based on the assumption that the degree of efficiency varies
from worker to worker and hence the workers must be paid according to
their degree of efficiency. • The main features of the system are: – The
system is based on piece rates. – The standard output for unit of time is pre-
determined on the basis of time and motion study. – There are two piece
rates, one lower and another higher. • Those who reach the standard or
exceed it, get wages at higher piece rate (e.g. 120% of piece rate) and • those
who fail to reach it, get wages at a lower piece rate (e.g. 80% of piece rate). •
Minimum wages for the workers are not guaranteed. 10Management
Thoughts - MANGEMENT PROCESS
11.11. Evolution of Management Thoughts – Classical approach Disadvantages
– It does not guarantee a minimum wage for the workers. – The system is
very harsh to the inefficient workers because they gentle wages due to lower
rate and lower output. – It penalises a worker who just fails to attain the
standard by a narrow margin • It is clear from the above illustration that the
workers with lower efficiency less wages and workers with higher efficiency
get more wages under Table differential piece rate system as compared to
ordinary piece rate system. Time and motion study Method for establishing
employee productivity standards in which (1) a complex task is broken into
small, simple steps, (2) the sequence of movements taken by the employee
in performing those steps is carefully observed to detect and eliminate
redundant or wasteful motion, and (3) precise time taken for each correct
movement is measured. From these measurements production and delivery
times and prices can be computed and incentive schemes can be devised.
Generally appropriate only for repetitive tasks 11Management Thoughts -
MANGEMENT PROCESS
12.12. Evolution of Management Thoughts – Classical approach Taylor’s
Principle of Scientific Management Contribution 12Management Thoughts -
MANGEMENT PROCESS
13.13. Evolution of Management Thoughts – Classical approach
13Management Thoughts - MANGEMENT PROCESS
14.14. 14Management Thoughts - MANGEMENT PROCESS Evolution of
Management Thoughts – Classical approach
15.15. Evolution of Management Thoughts – Classical approach Bureaucratic
management • Max Weber (1864-1920): Follower of Fayol • Introduced
most of the concepts on Bureaucratic Organisations • Birth of Bureaucracy:
– During 1800 European organisation were managed on a personal / family
basis. – Employees loyal to single individual – Weber envisioned
organisation would be managed on an impersonal, rational basis. – This
form of organisation is known as Bureaucracy. • Characteristics –
Organisation based on rational authority would be more efficient and
adaptable to changes. – Employee selection and advancement is based on
competence and technical qualification. – Organisation relies on rules and
regulations which are impersonal and applied uniformly to all employees. –
Division of labour. – Positions in an organisation are organised in a
hierarchy – Managers depends not on personality for successfully giving
orders but on legal power invested in managerial position. 15Management
Thoughts - MANGEMENT PROCESS
16.16. Evolution of Management Thoughts – Classical approach Bureaucratic
management • Today, the term Bureaucracy is taken on a negative meaning.
• It is associated with endless rules and red tapism. • But still they provide a
standard way of dealing with employees • Equal treatment for all employees
• This foundation enables many organisations to become extremely efficient.
Possible disadvantages: • Excessive paper work / red tape • Slowness in
handling problems • Rigidity in the face of shifting needs • Resistance to
change 16Management Thoughts - MANGEMENT PROCESS
17.17. Evolution of Management Thoughts – Classical approach Administrative
management • Concerned with managing the total organisation. • Henry
Foyal (1841 – 1925) • French mining engineer • Viewed management as a
profession that can be trained and developed. • First man to analyse the
functions of management. • Major three contributions – A clear distinction
between technical and managerial skills – Identified functions constituting
the management process – Developed principles of management. • Grouped
the activities • Technical, commercial, financial, security, accounting &
managerial 17Management Thoughts - MANGEMENT PROCESS
18.18. Evolution of Management Thoughts – Classical approach Administrative
management 18Management Thoughts - MANGEMENT PROCESS
Technical Processing production & Operation Commercial Buying, selling
& exchange Financial Optimum use of capital Security Protection of assest
 and resources Accounting Ascertaining the financial position Managerial
Optimum use of resources for optimum result
19.19. Evolution of Management Thoughts – Classical approach Administrative
management 19Management Thoughts - MANGEMENT PROCESS Fayol
14 principles 1 Division of labour Allows for job specilisation. Fayol noted
firms can have too much specilisation leading to poor quality and worker
involvement. 2 Authority and Responsibility Fayol included both formal and
informal authority resulting from special expertise. 3 Discipline Obedient,
applied, respectful employees needed 4 Line of Authority A clear chain from
top to bottom of the firm 5 Centralisation The degree to which authority
rests at the very top 6 Unity of Direction One plan of action to guide the
organisation 7 Unity of Command Employees should have only one boss
20.20. Evolution of Management Thoughts – Classical approach Administrative
management 20Management Thoughts - MANGEMENT PROCESS 7 Unity
of Command Employees should have only one boss 8 Order Each employee
is put where they have the most value 9 Initiative Encourage innovation 10
Equity Treat all employees fairly in justice and respect 11 Remunaration of
personnel The payment system contributes to success 12 Stability of Tenure
Long-term employment is important 13 General interest over individual
interest The organisation takes precedence over the individual 14 Esprit de
corps "UNION IS STRENGTH" - refers to harmony & mutual
understanding among the members of an organisation.
21.21. Evolution of Management Thoughts – Behavioural approach • It bears
the existing and newly developed theories and methods of the relevant social
sciences upon the study of human behaviour ranging from personality
dynamics of individuals to the relations of culture. 21Management Thoughts
- MANGEMENT PROCESS Human resource approaches Assumption:
People are social and self- actualizing Theory of human needs Abraham
Maslow Hawthorne studies Elton Mayo Organizations as communities Mary
Parker Follett Theory X and Theory Y Douglas McGregor Personality and
organization Chris Argyris
22.22. Evolution of Management Thoughts – Behavioural approach
Organizations as communities - Mary Parker Follett (1868 – 1933) Groups
and human cooperation: – Groups allow individuals to combine their talents
for a greater good – Organizations are cooperating “communities” of
managers and workers – Manager’s job is to help people, cooperate and
achieve an integration of interests • Organizations as communities –
Forward-looking management insights: 22Management Thoughts -
MANGEMENT PROCESS • precursor of employee ownership, profit
sharing, and gain-sharing Making every employee an owner creates a sense
 of collective responsibility • precursor of systems thinking Business
problems involve a variety of inter-related factors • precursor of managerial
ethics and social responsibility Private profits relative to public good
23.23. Evolution of Management Thoughts – Behavioural approach Elton
Mayo’s (1880- 1949) Hawthorne studies • Initial study examined how
economic incentives and physical conditions affected worker output • No
consistent relationship found • “Psychological factors” influenced results
Illumination Experiments: • Hawthorne Works had commissioned a study to
see if its workers would become more productive in higher or lower levels of
light. • The workers' productivity seemed to improve when changes were
made and slumped when the study was concluded. • It was suggested that
the productivity gain occurred due to the impact of the motivational effect
on the workers as a result of the interest being shown in them. • This effect
was observed for minute increases in illumination. • In these lighting studies,
light intensity was altered to examine its effect on worker productivity. •
Most industrial/occupational psychology and organizational behaviour
textbooks refer to the illumination studies. • Only occasionally are the rest of
the studies mentioned. 23Management Thoughts - MANGEMENT
PROCESS
24.24. Evolution of Management Thoughts – Behavioural approach Elton
Mayo’s (1880- 1949) Hawthorne studies Although illumination research of
workplace lighting formed the basis of the Hawthorne effect, other changes
such as maintaining clean work stations, clearing floors of obstacles, and
even relocating workstations resulted in increased productivity for short
periods. Thus the term is used to identify any type of short-lived increase in
productivity. Relay assembly test-room studies • Manipulated physical work
conditions to assess impact on output • Designed to minimize the
“psychological factors” of previous experiment • Factors that accounted for
increased productivity: – Group atmosphere – Participative supervision •
Employee attitudes, interpersonal relations and group processes – Some
things satisfied some workers but not others – People restricted output to
adhere to group norms Lessons from the Hawthorne Studies: – Social and
human concerns are keys to productivity – Hawthorne effect — people who
are singled out for special attention perform as expected 24Management
Thoughts - MANGEMENT PROCESS
25.25. Evolution of Management Thoughts – Behavioural approach Interview
phase: • Individual workers cannot be treated in isolation, but must be seen
as members of a group. • Monetary incentives and good working conditions
are less important to the individual than the need to belong to a group. •
Informal or unofficial groups formed at work have a strong influence on the
 behaviour of those workers in a group. • Managers must be aware of these
'social needs' and cater for them to ensure that employees collaborate with
the official organization rather than work against it. • Mayo's simple
instructions to industrial interviewers set a template and remain influential to
this day: The simple rules of interviewing: • Give your full attention to the
person interviewed, and make it evident that you are doing so. • Listen -
don't talk. • Never argue; never give advice. • Listen to: what he wants to
say; what he does not want to say; what he can not say without help. • As
you listen, plot out tentatively and for subsequent correction the pattern that
is being set before you. To test, summarize what has been said and present
for comment. • Always do this with caution - that is, clarify but don't add or
twist. 25Management Thoughts - MANGEMENT PROCESS
26.26. Evolution of Management Thoughts – Behavioural approach Feedback
mechanism • Through out the series of experiments, an observer sat with the
girls in the workshop noting all that went on, keeping the girls informed
about the experiment, asking for advice or information, and listening to their
complaints. • The experiment began by introducing various changes, each of
which was continued for a test period of four to twelve weeks.
26Management Thoughts - MANGEMENT PROCESS
27.27. Evolution of Management Thoughts – Behavioural approach Abraham
Maslow (1908 – 1970) Maslow’s theory of human needs • A need is a
physiological or psychological deficiency a person feels compelled to satisfy
• Need levels: – Physiological – Safety – Social – Esteem – Self-
actualization 27Management Thoughts - MANGEMENT PROCESS
Maslow's hierarchy of human needs Self-actualisation needs Highest level:
need for self-fulfilment, to grow and use abilities to fullest and most creative
extent Esteem needs Need for esteem in eyes of others, need for respect,
prestige, recognition and self-esteem, personal sense of competence, mastery
Social needs Need for love, affection, sense of belongingness in one's
relationships with other people. Safety needs Need for security, protection
and stability in the events of day-to-day life Physiological needs Most basic
of all human needs: Need for biological maintenance: Food, Water and
Physical well-being
28.28. Evolution of Management Thoughts – Behavioural approach • Maslow
studied what he called exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass • rather than mentally
ill or neurotic people, • writing that "the study of crippled, stunted,
immature, and unhealthy specimens can yield only a cripple psychology and
a cripple philosophy." • Maslow studied the healthiest 1% of the college
student population. Maslow’s theory of human needs • Deficit principle – A
 satisfied need is not a motivator of behavior • Progression principle – A need
becomes a motivator once the preceding lower-level need is satisfied • Both
principles cease to operate at self-actualization level 28Management
Thoughts - MANGEMENT PROCESS
29.29. Evolution of Management Thoughts – Behavioural approach Douglas
Murray McGregor (1906 – 1964) Theory X and Y Theory X assumes that
workers: – Dislike work – Lack ambition – Are irresponsible – Resist
change – Prefer to be led Theory Y assumes that workers are: – Willing to
work – Capable of self control – Willing to accept responsibility –
Imaginative and creative – Capable of self-direction 29Management
Thoughts - MANGEMENT PROCESS
30.30. Evolution of Management Thoughts – Behavioural approach Douglas
Murray McGregor (1906 – 1964) Theory X • In this theory, which has been
proven counter effective in most modern practice Management assumes
employees are inherently lazy and will avoid work if they can and that they
inherently dislike work. • As a result of this, management believes that
workers need to be closely supervised and comprehensive systems of
controls developed. • A hierarchical structure is needed with narrow span of
control at each and every level. • According to this theory, employees will
show little ambition without an enticing incentive program and will avoid
responsibility whenever they can. • If the organizational goals are to be met,
theory X managers rely heavily on threat and coercion to gain their
employees' compliance. • Beliefs of this theory lead to mistrust, highly
restrictive supervision, and a punitive atmosphere. • The Theory X manager
tends to believe that everything must end in blaming someone. • He or she
thinks all prospective employees are only out for themselves. • Usually these
managers feel the sole purpose of the employee's interest in the job is
money. . 30Management Thoughts - MANGEMENT PROCESS
31.31. Evolution of Management Thoughts – Behavioural approach Douglas
Murray McGregor (1906 – 1964) Theory X • They will blame the person
first in most situations, without questioning whether it may be the system,
policy, or lack of training that deserves the blame. • A Theory X manager
believes that his or her employees do not really want to work, that they
would rather avoid responsibility and that it is the manager's job to structure
the work and energize the employee. • One major flaw of this management
style is it is much more likely to cause diseconomies of scale in large
business. Theory Y • In this theory, management assumes employees may be
ambitious and self-motivated and exercise self-control. • It is believed that
employees enjoy their mental and physical work duties. • According to them
work is as natural as play. • They possess the ability for creative problem
 solving, but their talents are underused in most organizations.
31Management Thoughts - MANGEMENT PROCESS
32.32. Evolution of Management Thoughts – Behavioural approach Douglas
Murray McGregor (1906 – 1964) Theory Y • Given the proper conditions,
theory Y managers believe that employees will learn to seek out and accept
responsibility and to exercise self-control and self-direction in
accomplishing objectives to which they are committed. • A Theory Y
manager believes that, given the right conditions, most people will want to
do well at work. • They believe that the satisfaction of doing a good job is a
strong motivation. • Many people interpret Theory Y as a positive set of
beliefs about workers. • A close reading of The Human Side of Enterprise
reveals that McGregor simply argues for managers to be open to a more
positive view of workers and the possibilities that this creates. • He thinks
that Theory Y managers are more likely than Theory X managers to develop
the climate of trust with employees that is required for human resource
development. • It's human resource development that is a crucial aspect of
any organization. • This would include managers communicating openly
with subordinates, minimizing the difference between superior-subordinate
relationships, creating a comfortable environment in which subordinates can
develop and use their abilities. • This climate would be sharing of decision
making so that subordinates have say in decisions that influence them.
32Management Thoughts - MANGEMENT PROCESS
33.33. Evolution of Management Thoughts – Behavioural approach • McGregor
identified individuals based on two theories they can possibly have, theory
X, or theory Y. • But Sahin shows a different approach through his study of
the LMX (leader-member exchange) theory. • He shows how different styles
used upon by management can vary from both theories. • When managers
apply Theory Y principles, workers receive independence and responsibility
for work, they receive opportunities to recognize problems and their job will
be to find solutions to them. This results to high-quality relationships • In
contrast, theory X managers highlight the close supervision of workers and
the chain of command and motivate subordinates using extrinsic rewards.
Therefore, workers that are overseen by theory X managers tend not to have
the most beneficial relationship with their supervisor. They maintain a
distance and impersonal and low-quality exchange relationships.
Implications of Theory X and Theory Y: – Managers create self-fulfilling
prophecies – Theory X managers create situations where workers become
dependent and reluctant – Theory Y managers create situations where
workers respond with initiative and high performance • Central to notions of
 empowerment and self-management 33Management Thoughts -
MANGEMENT PROCESS
34.34. Evolution of Management Thoughts – Behavioural approach Argyris’s
theory of adult personality (1923 • Classical management principles and
practices inhibit worker maturation and are inconsistent with the mature
adult personality. • Management practices should accommodate the mature
personality by: – Increasing task responsibility – Increasing task variety –
Using participative decision making • Adult Personality- • Argyris believed
that managers who treat people positively and as responsible adults will
achieve productivity. • Mature workers want additional responsibilities,
variety of tasks, and the ability to participate in decisions. • He also came to
the conclusion that problems with employees is the result of mature
personalities managed using outdated practices. 34Management Thoughts -
MANGEMENT PROCESS
35.35. Evolution of Management Thoughts – Quantitative approach •
Developed in the military during world war II. • Later many organizations
adapted this model into their management approaches. There are basically
three Quantitative Management approaches: • Management Science
Approach • Operations Management • Management Information Systems
Management Science Approach • Also called Operations Research. • George
B. Dantzig is the father of Operations Research. • Involves the use of
mathematical models and statistical methods in decision making process. •
The assumption is that Management can be expressed in terms of
mathematical symbols, relationships and measurement data. 35Management
Thoughts - MANGEMENT PROCESS
36.36. Evolution of Management Thoughts – Quantitative approach • Widely
used in the following areas – Capital Budgeting and Cash Flow Management
– Production Scheduling – Development of Product Strategies – Planning
for Human Resource Development programs – Maintenance of Optimal
Inventory Levels – Aircraft Scheduling • Mathematical tools – Waiting line
theory or Queueing theory – Linear Programming – Program Evaluation
Review Technique – Critical Path Method – Decision Theory – Simulation
Theory – Probability Theory – Sampling – Time Series Analysis Criticised
for the overemphasis on Mathematical tools 36Management Thoughts -
MANGEMENT PROCESS
37.37. Evolution of Management Thoughts – Quantitative approach • Criticized
for the overemphasis on Mathematical tools. Operations Management •
Applied form of Management Science • Effective Production Processes and
Timely Delivery of products/services. • Concerned with – Inventory
Management – Work Scheduling – Production Planning – Facilities
 Location and Design – Quality Assurance • Tools – Forecasting – Inventory
Analysis – Materials Requirement Planning Systems – Networking Models
– Statistical Quality Control Methods – Project Planning and Control
Techniques 37Management Thoughts - MANGEMENT PROCESS
38.38. Evolution of Management Thoughts – Quantitative approach
.Management Information Systems • Computer based information systems •
Converts raw data into useful information • Charles Babbage is the pioneer
in MIS 38Management Thoughts - MANGEMENT PROCESS
39.39. Evolution of Management Thoughts – Modern approach . Modern
approaches: • Management is one or the other form has existed in every
nook and corner of the world since the dawn of civilization. • Modern
Management has grown with the growth of social-economics and scientific
institution. • Modern view consists that a worker does not work for only
money. • They work for their satisfaction and happiness with good living
style. • Here Non- financial award is most important factor. • Modern
management theories started after 1950s. • Modern management theory
focuses the development of each factor of workers and organization. •
Modern management theory refers to emphasising the use of systematic
mathematical techniques in the system with analysing and understanding the
inter-relationship of management and workers in all aspect. – System theory
(Inputs Transformation process outputs); – Contingency theory; – Theory Z
39Management Thoughts - MANGEMENT PROCESS
40.40. Evolution of Management Thoughts – Modern approach . System
approach: • System approach was developed inlate1960s. • Herbert A.
Simon is the father of system theory. • A System is defined as a set of
regularly interacting or inter - dependent components that create as a whole
unit. • The system concept enables us to see the critical variables and
constraints and their interactions with one another. • According to Cleland
and King; “ A system is composed of related and dependent elements which
when in interaction from a unity whole”. Characteristics of system approach:
• A system must have some specific components, units or sub units. • A
Change in one system affects the other subsystems. • Every system is
influenced by super system. • All systems along their subsystem must have
some common objectives. • A system is a goal-oriented. • A system cannot
survive in isolation. Major contributors in system theories are- • Daniel
Katz, Robert L. Khan, Richard A. Johnson. 40Management Thoughts -
MANGEMENT PROCESS
41.41. Evolution of Management Thoughts – Modern approach .Organisation as
a system receives input, transform it through a process for output It operates
in an environment (Economic, regulatory and other factors) Elements: • An
 organisation is a unified and purposeful system consisting of several
interconnected, interaction and interdependent parts. • The parts of a system
are called sub-systems. • Each subsystem influences the other sub-systems
and the system as a whole. • The position and function of each sub-system
can be analysed and understood only in relation to other sub-systems and to
organise as a whole. 41Management Thoughts - MANGEMENT PROCESS
ENVIRONMENT System Boundary Input Transformation process Output
42.42. Evolution of Management Thoughts – Modern approach • Each sub-
system derives its strength by its association and interaction with the other
sub-systems. • Collective contribution of the organisation is greater than the
aggregate of individual contribution of its sub-system. • This is known as
synergy • Each system has a boundary that separates it from its environment.
• The boundary determines which parts are internal to the organisation and
which are external. • Employees – within boundary • Customers – external
to boundary • The reaction or response of the environment to the output is
known as feed back. • Feedback is always useful to evaluate and improve the
system function. • In system approach, organisation operate on the principle
that they have several alternative ways of doing the same thing or achieve
the same goal. 42Management Thoughts - MANGEMENT PROCESS
43.43. Evolution of Management Thoughts – Modern approach 43Management
Thoughts - MANGEMENT PROCESS
44.44. Evolution of Management Thoughts – Modern approach Open System: •
An open system actively interacts with its environment. • By interacting with
other systems, it tries to establish exchange relationships. Closed System: •
A closed system is self contained and isolated from the environment. • It is a
non-adaptive system. • It does not receive inputs often from other systems. •
It does not trade with outside world. Ex: Automatic wrist watch.
44Management Thoughts - MANGEMENT PROCESS
45.45. Evolution of Management Thoughts – Modern approach Advantages: • It
aims at meaningful analysis of organisation and its management. • It
facilitates the interaction between organisation and its environment • It
guides managers to avoid analysing problems in isolation and develop an
integrated approach. Disadvantages: • Over-conceptual • The approach does
not recognise the differences in systems. • Systems philosophy does not
specify the nature of interaction and inter-dependencies. • Unpractical: It
cannot be easily and directly applied to practical problems. 45Management
Thoughts - MANGEMENT PROCESS
46.46. Evolution of Management Thoughts – Modern approach Contingency
theory • Also known as situational approach – key to effective management
– 1960s • Organisation is dynamic and complex structure • Organisation is
 affected by its environment • Environment is composed by physical
resources, climate, persons, culture, economic & market conditions. •
Concept: There is no ‘one’ universally applicable set of rules by which to
manage an organisation. • Contributors: GM Stalker, Joan Woodward, Tom
Burns, Paul R Lawrence & LW Lorsch. Features 1. Management is entirely
situational 2. Management policies & procedures should respond to
environmental conditions 3. Manager should understand that there is no one
best way of managing 4. A manager is expected to know all the alternative
courses of action before taking action in a situation – it is not always
possible 46Management Thoughts - MANGEMENT PROCESS
47.47. Evolution of Management Thoughts – Modern approach Theory Z •
Theory Z is a name for various theories of human motivation built on
Douglas McGregor's Theory X and Theory Y. • Theories X, Y and various
versions of Z have been used in human resource management, organisational
behaviour, organizational communication and organizational development. •
One Theory Z was developed by Abraham H. Maslow in his paper Theory Z
and • the other is Dr. William Ouchi's so-called "Japanese Management"
style popularized during the Asian economic boom of the 1980s. • For
Ouchi, Theory Z focused on – increasing employee loyalty to the company
by – providing a job for life with a strong focus on the well-being of the
employee, – both on and off the job. – According to Ouchi, Theory Z
management tends to promote • stable employment, • high productivity, and
• high employee morale and satisfaction. 47Management Thoughts -
MANGEMENT PROCESS
48.48. Evolution of Management Thoughts – Modern approach • Ironically,
"Japanese Management" and Theory Z itself were based on Dr. W. Edwards
Deming's famous "14 points". • Deming, an American scholar whose
management and motivation theories were more popular outside the United
States, • went on to help lay the foundation of Japanese organizational
development during their expansion in the world economy in the 1980s. • He
was a frequent advisor to Japanese business and government leaders, and
eventually became a revered counsellor. Deming was awarded the Second
Order of the Sacred Treasures by the former Emperor Hirohito, and
American businesses tried to use his "Japanese" approach to improve their
competitive position. 48Management Thoughts - MANGEMENT
PROCESS
49.49. Evolution of Management Thoughts – Modern approach 49Management
Thoughts - MANGEMENT PROCESS Management Concept Douglas
McGregor (Theory X & Y) William Ouchi (Theory Z) Motivation Tends to
categorise people as one type or another: either being unwilling or
 unmotivated to work, or being self motivated towards work. Threats and
disciplinary action are thought to be used more effectively in this situation,
although monetary rewards can also be a prime motivator to make Theory X
workers produce more. Believes that people are innately self motivated to
not only do their work, but also are loyal towards the company, and want to
make the company succeed. Leadership Theory X leaders would be more
authoritarian, while Theory Y leaders would be more participative. But in
both cases it seems that the managers would still retain a great deal of
control. Theory Z managers would have to have a great deal of trust that
their workers could make sound decisions. Therefore, this type of leader is
more likely to act as "coach", and let the workers make most of the
decisions.
50.50. Evolution of Management Thoughts – Modern approach 50Management
Thoughts - MANGEMENT PROCESS Management Concept Douglas
McGregor (Theory X & Y) William Ouchi (Theory Z) Power & Authority
As mentioned above, McGregor's managers, in both cases, would seem to
keep most of the power and authority. In the case of Theory Y, the manager
would take suggestions from workers, but would keep the power to
implement the decision. The manager's ability to exercise power and
authority comes from the worker's trusting management to take care of them,
and allow them to do their jobs. The workers have a great deal of input and
weight in the decision making process. Conflict This type of manager might
be more likely to exercise a great deal of "Power" based conflict resolution
style, especially with the Theory X workers. Theory Y workers might be
given the opportunity to exert "Negotiating" strategies to solve their own
differences. Conflict in the Theory Z arena would involve a great deal of
discussion, collaboration, and negotiation. The workers would be the ones
solving the conflicts, while the managers would play more of a "third party
arbitrator" role.
51.51. Evolution of Management Thoughts – Modern approach Quality
Management • The term quality management has a specific meaning within
many business sectors. • This specific definition, which does not aim to
assure 'good quality' by the more general definition, • but rather to ensure
that an organization or product is consistent, can be considered to have four
main components: – quality planning, – quality control, – quality assurance
and – quality improvement. • Quality management is focused not only on
product/service quality, but also the means to achieve it. • Quality
management therefore uses quality assurance and control of processes as
well as products to achieve more consistent quality. 51Management
Thoughts - MANGEMENT PROCESS
52.52. Evolution of Management Thoughts – Modern approach Quality
management evolution • Quality management is a recent phenomenon. •
Advanced civilisations that supported the arts and crafts allowed clients to
choose goods meeting higher quality standards than normal goods. • In
societies where arts and crafts are the responsibility of a master craftsman or
artist, they would lead their studio and train and supervise others. • The
importance of craftsmen diminished as mass production and repetitive work
practices were instituted. • The aim was to produce large numbers of the
same goods. • The next step forward was promoted by several people
including FW Taylor to improve industrial efficiency. • He laid a further
foundation for quality management, including aspects like standardization
and adopting improved practices. • Henry Ford was also important in
bringing process and quality management practices into operation in his
assembly lines. • In Germany, Karl Friedrich Benz, often called the inventor
of the motor car, was pursuing similar assembly and production practices,
although real mass production was properly initiated in Volkswagen after
World War II. From this period onwards, North American companies
focused predominantly upon production against lower cost with increased
efficiency. 52Management Thoughts - MANGEMENT PROCESS
53.53. Evolution of Management Thoughts – Modern approach • Walter A.
Shewhart made a major step in the evolution towards quality management
by creating a method for quality control for production, using statistical
methods, first proposed in 1924. • This became the foundation for his on
going work on statistical quality control. W. Edwards Deming later applied
statistical process control methods in the United States during World War II,
thereby successfully improving quality in the manufacture of munitions and
other strategically important products. • The International Standard for
Quality management (ISO 9001:2008) adopts a number of management
principles that can be used by top management to guide their organizations
towards improved performance. • The principles include: – Customer focus,
Leadership, Involvement of people – Process approach, System approach to
management, – Continual improvement, Factual approach to decision
making – Mutually beneficial supplier relationships • These eight principles
form the basis for the quality management system standard ISO 9001:2008.
53Management Thoughts - MANGEMENT PROCESS
54.54. Evolution of Management Thoughts – Modern approach Quality
Management 54Management Thoughts - MANGEMENT PROCESS
Evolution of Quality …… Figure depicts the shift in approaches used to
ensure product quality as a function of time. ImprovementinProductQuality
Inspection Improved DesignsStatistical Process Control 1920 1940 1960
1980 2000 Integrated Design and Manufacturing Evolution of Quality
Control Quality Through Design