MGT 424 Senior Seminar in Management Topics

Learning Objectives
Explain the emergence of the modern manager in the

U.S. and Frederick Taylors work to develop scientific management

Know the European influence of Weber and Fayol on

organization theory in developing administrative management.

Learning Objectives - Continue

Know the contribution of Hawthorne experiments

(Mayo) to management; and, know the developments of management into human relations, quantitative approaches, organizational behavior, and the systems and contingency approaches. Be familiar with the broad perspectives for managements roles at differing organizational levels for a career and for business competitive advantage.

Historical Timeline Timeline

Professionalism of Management
Education: Late 19th Century Business taught in

high schools/commercial schools = bookkeeping + secretarial skills. Wharton (1881) accounting, economics and law University of Chicago & UC (Berkley), 1889 undergrad schools of commerce NYU & Dartmouth (Amos Tuck), 1900 Harvard (1908) -focus on educating managers of large firms commercial law, accounting and general commerce. Electives: Management in transportation, industry, marketing.

First Management Issues of Industry

How do we efficiently organize people at work

with these new technologies of production and large markets? How do we hire, pay, and coordinate people at work to gain productivity? How do we do all of these to create economic wealth (profit)?

The Beginning of Management Pay?

1886 Henry Towne, Pres. of Yale and Town

Manufacturing Co., The Engineer as Economist: How do we relate work to increasing economic development? Gain sharing or Towne Plan Link profits to workers pay: Wage rate + performance incentive All savings in costs were shared with workers. Halsey Plan: Sharing profits does not work. Bosses hide profits. Pay people on basis of a wage + 1/3rd pay incentive for higher productivity. 1938 Fair Labor Standards Act set min. wage at 25/hr

Frederick Winslow Taylor Father of Modern Management

In 1895- proposed a Piece Rate System: Observe & Analyze set the standard for job

(use Time and Motion studies)

Pay workers for meeting/exceeding standard

Pay individual worker not everyone, or group/department,

or the job = pay according to individual value to business

What Adam Smith had done for markets, Taylor does for the firm place wealth creation squarely on the individual worker who is managed, rewarded for effort.

Frederick Taylor Cont.

Biography: Wealthy Philadelphia Quaker family

Worked in hydraulics factory as laborer/foreman/chief engineer At 25 earned college degree in engineering At 35- consultant: introduced functional foreman, production planning, differential pay= cut costs/increased production) 1905 wrote Shop Management 1909-14: Lecturer at Harvard Management consultant US Navy and Army 1911- Wrote Scientific Management

Frederick Taylor Cont.

Soldiering people dont

always try/work hard. WHY? If we work hard and complete the job no more work next day; fewer workers needed! SO what is the amount of time needed to do the job? How should it be performed One Best Way What is the standard?

Taylors 4 Principles of Scientific Management

Taylors four principles of scientific management: Work methods should be based on scientific observation not rules of thumb. Scientifically select, train, and develop each worker Cooperate with workers to ensure that scientifically developed methods are being followed. Managers analyze and plan work; workers actually perform the tasks.

Demise of Scientific Management

In hands of business

Scientific Management = tool to exploit labor By 1915 growing labor against Taylorism Union members/100 workers: 1880=1.8; 1900=7.5; 1914=10.5 Congress investigates and US Commission on Industrial Relations issues Hoxie Report (1915) declaring Scientific Management as exploitive of labor. It will influence Management thought but Scientific Management is dead until rediscovered in Japan the 1970/s wave of Quality Management

Frank and Lillian Gilbreth

Frank Gilbreth engineer; pioneered Scientific Methods in bricklaying. Member of Taylor Society (SAM) Lillian Gilbreth engineer/industrial psychologist (PhD); stress and fatigue

Together 12 Children Cheaper by the Dozen

Time and motion studies Breaking up each job action into its components (Therblig). Finding better ways to perform the action. Reorganizing each job action to be more efficient.

Management of the Organization

While in the US Management focuses on individual at

work In Europe early theory (that in 1930s will become part of American management) focuses on the organization Administrative Management Theory. Max Weber (German) focuses on bureaucracy as a formal organization to gain efficiency. Henri Fayol (French) focuses on 14 principles of Administration as One Right Way

Webers Principles of Bureaucracy

1. Formal authority comes from ones organizational position (Bureaucracy = rational power) 2. Positions should be held based on merit, not social standing or personal contacts. (Break with traditional power)
Each positions responsibilities and relationship to other

positions should be clearly specified. (Roles) Authority in a bureaucracy is hierarchical power. Formalization = well-defined system of rules (SoPs), operating procedures, and norms = control via rational power.

Henri Fayols Principles of Management

Division of Labor: allows for job specialization. Authority and Responsibility: both formal and informal

authority result from special expertise. Unity of Command: workers have only one boss. Line of Authority: clear chain of command, top to bottom of the firm. Centralization: degree to which authority rests at the top of the organization. Unity of Direction: single plan of action to guide the organization. Equity - The provision of justice and the fair and impartial treatment of all employees.

Fayol - Continue
Order: place workers where most useful and have

career opportunities. Initiative: encourage employees to act on their own. Discipline: workers need to obey Remuneration of Personnel: pay what is fair. Stability of Tenure of Personnel: Long-term employment is important Subordination of Individual Interest to the Common Interest: interest of organization priority Esprit de corps: Have enthusiasm

Mary Parker Follett

Mary Parker Follett: The Humanizing of

Management and focus on collaboration. Taylor ignored the human side of the work, Follett argued:
Organizations are an interdependence of people.
People have own interests but also share common goals

which should be the basis of conflict resolution.

Use of power/coercion creates conflict. People will

defer to the facts of a situation for authority.

The Hawthorne Studies: New Direction

The Hawthorne Experiments were a series of studies into worker productivity performed at the Cicero plant beginning in 1924 and ceasing in 1932, initially conducted by the National Research Council and later by Western Electric and Harvard University Illumination Studies, 1924 -1927: Does Use of Electric Lights Increase Productivity? Hypothesis: Increased illumination is correlated with higher productivity. Finding: No relationship Hawthorne effect or "halo effect Researcher affects outcome (bias)

nd 2

Hawthorne Experiment

Relay Assembly Test Room Experiments, 1927-1929 Harvard research team set up experiment with 5 females from Relay Assembly area to test impact of incentives and work conditions on worker fatigue There is no conclusive evidence that these affected fatigue or productivity.
Productivity and worker satisfaction increase when conditions are improved and made worse.

rd 3

Hawthorne Experiment

Mica-Splitting Test group, 1928 1930 Relationship

between work conditions and productivity, by maintaining a piece-rate incentive system and varying work conditions Productivity increased by about 15% and researchers concluded that productivity was affected by non-pay considerations Conclusion: social dynamics were the basis of worker performance.

Hawthorne Interviews
Plant-wide Interview program, 1928-1931

1. Western Electric implemented a plant-wide survey of employees to record their concerns and grievances. From 1928 to 1930, 21,000 employees were interviewed. 2. Data supported the research conclusion that work improved when supervisors began to pay attention to employees, that work takes place in a social context in which work and non-work considerations are important, norms and groups matter to workers.

Hawthorne : Final Experiment

Bank Wiring Observation group, 1931-1932 The final test studying 14 male workers in the Bank Wiring factory to study the dynamics of the group when incentive pay was introduced.

There was no effect. Why?

Work group established a work norm a shared expectation about how much work should be performed in a day and stuck to it, regardless of pay.

The conclusion: informal groups operate in the

work environment to manage behavior.

Hawthorne Experiments Importance

Changed perspective in management from Taylors

engineering approach to a social sciences approach, leading to "Human Relations" approach and, later, "Organization Behavior" approach: Engineering approach subordinated to social sciences Managers = leaders, motivators, communicators At one time major contributors to Management theory worked on Hawthorne experiments. Elton Mayo - Human Relations approach (to 1950s). Mayos views lead to the construction of manager as a leader.

McGregor: Theory X, Theory Y

There are two ways of perceiving people at work: Theory Y:
Work is as natural as play or rest- not disliked.. Workers will exercise self-direction and

self-control Meeting goals is satisfying and motivating. . Workers seek responsibility. ... Workers will be creative and are willing to do more.

Theory X:

The average human inherently dislikes to work So, people must be coerced, controlled, directed. Workers prefer this but want security. The average worker is only partially utilized.

Management Science Approach

Post World War II British use of mathematics,

Operations Research, in military operations find applications in US post war industrial development. Quantitative management use of mathematic models, linear programming, simulation systems and chaos theory to solve management problems. Operations management techniques used to analyze all aspects of the production system.

Management Science ApproachCont.

Total Quality Management (TQM) analyzing

input, conversion, and output to increase product quality. Management Information Systems (MIS) provides information vital for effective decision making

Systems Approach

Contingency Approach
There is no one best way. Organizing (and other) decisions that match the demands of the

environment provide adaptation.

So-What does a manager do?

It depends on where they are in the organization:
Level
Top

Activities
Direction/goals. Allocate resources. Set standards.
Integrate knowledge. Balance shortterm with Long term goals. Develop people.
Secure resources and Opportunities. Manage performance and improvements.

Skill

Middle

Frontline

What do Top Managers Do?

Myth Fact
Work is reflective and involve Work is action oriented, stressed systematic planning. immediate response, and work was Varied. No Regular Duties Duties are ritual and ceremonial, negotiations, and processing soft information Favor verbal, immediate information even informal, soft data which is processed into coherent picture Relies on judgment and intuition to Make decisions

Relies on formal MIS for decision-making Management is a Science

Source: Mintzberg: The Managers Job

Roles of Top Manager- Mintzberg

1. Interpersonal Roles:
Figurehead represents organization and its

authority Leader has power to make things happen Liaison makes contacts with peers and other managers

2. Informational Roles:
Gathers and processes information Monitor scan environment for relevant cues Disseminator passes selected information to

those who need to know Spokesperson informs outsiders

Roles of Top Managers Cont.

3. Decisional Roles:
Entrepreneur searches for new idea to implement,

keeps mental track of their progress Disturbance handler tries to keep conflicts in balance and arbitrates conflict Resource allocator decides who gets what (resources and power); personal basis of decision-making

4. The Integrated Job of Manager:

Implication for new manager requirement for

networks of information Implication for Team Managers requirement for information sharing

Implications for Effective Managers

1. Requires insight and introspection 2. Systematic ways to share information managers monopoly versus periodic debriefing and exchanges 3. Ability to step back and see big picture small emergencies detract; need to develop a big picture 4. Use your specialists and they need to understand the need for urgency over elegance 5. See obligations as an opportunity and take time for introspection (thinking)

Implications for Business Education

1. Stress cognitive learning stress thinking skills over skills 2. Put students into situations to develop skills peer relationships, negotiating, motivating, processing information, decision making under ambiguity