Classical management theories

By: Er. Azhar Shaikh

Main idea of classical organizational theory

There is one best way to perform a task

Classical organizational theory espouses two perspectives:

Scientific management focusing on the management of work and workers Administrative management - addressing issues concerning how overall organization should be structured

Organizational Environment Theory

Management Science Theory

Behavioral Management Theory Administrative Management Theory

Scientific Management Theory

Frederick Taylor
Taylor is born in Pennsylvania on March 20, 1856 After studying in Europe, he plans to go to Harvard, but does not pass the entrance exams Instead Taylor works as a pattern maker at a pump manufacturing company in Philadelphia Later, he studies mechanical engineering at Stevens, finishing in just three years.

Midvale Steel Company

Taylor begins working for the Midvale steel Company in 1878. While there he succeeds in doubling the work of his men, is soon promoted to foreman As foreman, he begins studying productivity as a means of measuring of manufacturing. Later he becomes the chief engineer at Midvale.

Ingenuity and Accomplishments

Creates systems to gain maximum efficiency from workers and machines in the factory. Focuses on time and motion studies to learn how to complete a task in the least amount of time. Becomes consulting engineer for many other companies PublishesThe Principles of Scientific Management

Key Points of Scientific Management

1. Scientific Job Analysis observation, data gathering, and careful measurement determine the one best way to perform each job 2. Selection of Personnel scientifically select and then train, teach, and develop workers 3. Management Cooperation managers should cooperate with workers to ensure that all work is done in accordance with the principles of the science that developed the plan 4. Functional Supervising managers assume planning, organizing, and decision-making activities, and workers perform jobs

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

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

Henri Fayol

Engineer and French industrialist In France works as a managing director in coal-mining organization Recognizes to the management principles rather than personal traits While others shared this belief, Fayol was the first to identify management as a continuous process of evaluation.

Fayols 5 Management Functions

Fundamental roles performed by all managers: Planning Organizing Commanding Coordinating Controlling Additionally Fayol recognizes fourteen principles that should guide the management of organizations.

Fayols 14 Principles:
1. Division of Work improves efficiency through a reduction of waste, increased output, and simplification of job training 2. Authority and Responsibilityauthority: the right to give orders and the power to extract obedience responsibility: the obligation to carry out assigned duties 3. Disciplinerespect for the rules that govern the organization

4. Unity of Commandan employee should receive orders from one superior only 5. Unity of Directiongrouping of similar activities that are directed to a single goal under one manager 6. Subordination of Individual Interests to the General Interest interests of individuals and groups should not take precedence over the interests of the organization as a whole. 7. Remuneration of Personnelpayment should be fair and satisfactory for employees and the organization 8. Centralizationmanagers retain final responsibility subordinates maintain enough responsibility to accomplish their tasks

9. Scalar Chain (Line of Authority)the chain of command from the ultimate authority to the lowest 10. Orderpeople and supplies should be in the right place at the right time 11. Equitymanagers should treat employees fairly and equally 12. Stability of Tenure of Personnelmanagerial practices that encourage long-term commitment from employees create a stable workforce and therefore a successful organization 13. Initiativeemployees should be encouraged to develop and carry out improvement plans 14. Esprit de Corpsmanagers should foster and maintain teamwork, team spirit, and a sense of unity among employees

Time and Motion Study

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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.

Time and Motion Study: Defined

A method created to determine the correct time it takes to complete a certain task A method to establish the one best way to perform a task

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Time and Motion Study: Purposes

To end goofing off and to establish what constituted a fair days work To make sure that the job being evaluated does not include any unnecessary motion by the worker

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Time and Motion Study: History

Frederick W. Taylor and his followers developed and refined the Time Study Frank B. Gilbreth and his wife Lillian developed and refined the Motion Study Historically the two studies are discussed individually, today they generally are discussed as one

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Time and Motion Study: In your Organization

Historically: T&M Studies were used in the manufacturing industry to evolve pay scales with the thought that money was the only motivation for work

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Time and Motion Study: Objective

The objective of the Time and Motion Study is to determine a normal or average time for a job, by using observers to record exactly how much time is being devoted to each task. Example for a an effective time & motion study utilization (Unknowingly)
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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.

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)

2nd 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.

3rd 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

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.

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:

What do Top Managers Do?

Myth
Work is reflective and involve systematic planning.

Fact
Work is action oriented, stressed 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

Business Process Reengineering

Outsourcing

Outsourcing

Outsourcing is the act of one company contracting with another company to provide services that might otherwise be performed by in-house employees

Knowledge Management