The Start Of A Management Thought Commerce Essay

Managing is the most important activity of human beings. Ever since man started forming social groups and organizations to attain goals and achievements that could only be accomplished by a combined effort from all the members in the group and for any such effort to achieve success, management and coordination of the individual efforts is necessary. Society has continuously relied on such group efforts and since these organizational groups have become larger in size, the task of mangers has become more important and complex. Due to this, the management theories have become a crucial guideline for these managers to manage the complex organizations.

The start of a management thought

Civilization is the creation of those who preceded us. The change of management thought started in the nineteenth century and developed in the twentieth. The 20th century has seen a change in management theories from classical theory to the management approach of Japan.

The management theory of today has resulted out of the interdisciplinary efforts of many people.

The Founders

The middle of the nineteenth century saw the beginning of modern organizations, due to the rise of the factory system, specifically the textile industry, where automation and mass production were necessary for productivity. Management thought, evolved slowly during the century. There was a need to define what management was also to put it in operation in an organization. This challenge was taken up by two Theorists and they became the “Pre-Classicists of management thought.”

Pre-Classicists

In the nineteenth century, Robert Owen and Charles Babbage contributed towards the growth of management theories. Babbage was a mathematician who had great interest in management and Owen was a social reformer and an industrialist.

Robert Owen (1771-1858)

Robert Owen’s thoughts rooted from his experiences of running a cotton mill in New Lanark, Scotland where he developed a strong interest in the welfare of the child employees. Owen headed a group to limit the age of child employees and reduced the work hours to 10 1/2 hours.

He also worked for improving living conditions of employees through improved housing, sanitation, public works and building schools for the children. Owen is the major contributor of the modern human relations school of management.

Charles Babbage (1792-1871)

Babbage’s main contribution came from the improvement of a modern profit-sharing plan including an employee bonus for suggestions and a share of the company’s profits.

Both Owen and Babbage were both important management theorists, but their pains didn’t have the view of a management theory.

Evolution of management theories

Koontz classified management theory into following six groups:

1- The Management Process School

2- The Empirical School

3- The Human Behavioural School

4- The Social Systems School

5- The Decision Theory School

6- The Mathematical School

Herbert Hicks in his book “The Management of Organization” (1967) Showed another style of manging companies. After this people also classified management theories into three broad groups:

Classical Management Theory

Neoclassical Management Theory

Modern Management Theory

Classical Management Theory (1880s-1990s)

The twentieth century saw a period of great changes. There was a need for development of new management theories. The classical school of management was concerned with developing a theory to improve management in organizations.

However, the classical school theorists went one step ahead. They sought to develop an effective management theory, and to provide the tools a manager requires for coping with organizational obstacles.

The classical era can be classified as below:

Classical Management

Administrative Management

Bureaucratic Management

Scientific Management

Bureaucratic Management

Max Weber (1864-1920): Max Weber, the heir of a well known German politician, was raised in Berlin and was a student of law at the University of Berlin.

He gave a “rational-legal authority” model of an ideal type of bureaucracy. He believed that all bureaucracies have certain characters:

A well defined hierarchy

Division of labor and specialization.

Rules and regulations.

Formal relationship between managers and employees.

Competence. All decisions made in hiring, job assignments, and promotions. should be based on competence

Records. It is necessary for a bureaucracy to keep complete files for everything that it does.

2. Scientific Management

Scientific management is another branch of the classical school of management. Managers should implement principles of scientific management in a specific manner. An impact of scientific management theory is that, the manager is responsible for increasing an organization’s output.

The major contributors are Frank and Lillian Gilbreth and Frederick Winslow Taylor.

Frank (1868-1924) and Lillian (1878-1972) Gilbreth

The Gilbreth’s were strong supporters of scientific management. Frank Gilbreth made his first management studies of bricklayers. He was instrumental in reducing the motions in bricklaying from 18 1/2 to 4. This resulted in an almost 170% increase in the bricklayer’s productivity keeping the effort constant.

Gilbreth wanted to develop best practices for work behavior. His system was later called “speed work” where unneeded motions were removed.

Frank, with his wife, Lillian, later started giving more importance to time and motion studies. They divided seventeen work motions that were then called ‘therblig’ (opposite of Gilbreth). Lillian Gilbreth published, one of the first few books on management called The Psychology of Management. She was also the earliest female pioneer in scientific management.

Two of their children later immortalized them with the book ‘Cheaper by the Dozen’ writing about life under the scientific management method of their parents.

Frederick Winslow Taylor (1856-1915)

Frederick Taylor is known as the “father of scientific management.” Taylor started working at 18 as an apprentice to a pattern-maker, and as a machine operator. He joined the Midvale Steel Company as a laborer and got promoted in eight years as chief engineer. At the steel mill he experimented on worker efficiency and tested the “task system.”

Taylor developed the following beliefs of scientific management:

Managers should be responsible for selecting, training, and developing the employee.

To ensure the proper application of the scientific management method Managers should fully cooperate with employees.

As much involvement as possible by management in the work of their employees.

Scientific management consisted of a system for improving work methods, managing employees, and providing rewards to employees through the piece rate system. Taylor understood there was a need to direct employees, he also looked for the most efficient method of doing a job and to give incentives for bigger output.J:ScientificManagement.JPG

Taylor’s Principles became very popular in America and Europe providing organizational theory a feeling of science. Scientific management led to time and motion studies, efficiency experts and others spreading the theory.

Source: http://uzdrts.pbworks.com/w/page/53958827/Frederick%20Winslow%20Taylor

3. Administrative Management

Henri Fayol (1841-1925): Henri Fayol belongs to the administrative management branch of the classical school. His entire working career was with a mining company, Commentary-Fourchambault Company, he rose from an apprentice to General Manager in 1888 until his retirement in 1918.

As a result of his long management career, Fayol developed fourteen management principles:

Division of work

Authority and responsibility, both go hand in hand and a manager should be aware that the ‘right’ to get things done is different from the respect one earns through his behavior.

Discipline, a good manager has to maintain the authority of the organization to rebuke misconduct.

Unity of command, employees needs to be able to relate to a single boss. More than one authority figure creates confusion.

Unity of direction, Organizational activities must have one central authority and one plan of action.

The ‘good’ of all is more important than individual needs. .

Salaries should be fare and equitable.

Centralization, the best formula for centralization is optimization of performance.

Scalar chain, a chain of authority exists from the highest organizational authority to the lowest ranks.

Order, Organizational order for materials and personnel is essential.

Equity and equality of treatment is important for employees.

Stability, people have to feel secure in a job.

Initiative, thinking out a plan and making it work is a great motivator for good performance.

Esprit de Corps. Teamwork is fundamentally important to an organization.

Neo – Classical Management theories

As management research continued in the twentieth century, questions raised regarding the interactions and motivations of the people in organizations. Management principles developed during the classical period were simply not effective in dealing with many management situations and could not explain the behaviour of individual employees.

Neo – Classical Management theories

The Behavioural Movement

Human Relations Movement

The Behavioural Movement

The classical theorist seemed to have ignored the man behind the machine. Employee motivation and behaviour are a significant aspect of work management and this was then realised and worked upon by the neo-classists. An experiment, the Hawthorne experiment, applied classical management theory only to reveal its drawbacks.

The Hawthorne Experiments

The Hawthorne Experiments consist of two studies conducted at the Hawthorne Works of the Western Electric Company in Chicago from 1924 to 1932. The Hawthorne study was conducted to translate the scientific management principles into operational terms. A major chunk o0f the study was conducted to test the illumination levels and productivity impacts.

The initial study was conducted by a group of engineers in 1924, it was conducted in connection with the National Research Council of the National Academy of Sciences.

The results of the study are extremely interesting, productivity kept on increasing as the lighting levels kept decreasing until the employees were unable to see what they were doing.

In 1927 a second set of experiments started with a group of five women in the bank wiring room. The workers in the experimental group had special rights including the right to leave their workstation without permission, rest periods, free lunch, and changes in pay and workdays. Like the first set of experiments, there was a significant increase in productivity.

In 1928 the Harvard researchers, F. J. Roethlisberger, Professor of Human Relations, and Elton Mayo, a Professor of the Industrial Research Department, were invited to study the reasons for the ‘failure’ of the Hawthorne experiment. In 1939, they conclude that the primary determinant of the increase in productivity is the change in the managerial arrangement more than the changes in lighting or reward systems. The fact that they experimental group was given more attention by the experimenters became the prime motivator for the change in behavior and improved performance of the group.

The experimenters became a part of the study and influenced its result. This is the origin of the term Hawthorne Effect defining the special attention researchers give to a study’s subjects how they themselves land up influencing the results of the experiment.

Human Relations Movement

The Hawthorne experiments and the criticism of the Classical School led to further refinement and changes in the theories of those days, managers, management now played a significant role in the satisfaction of basic human needs, and the human being became more important than the machine. The two major theorists in the human relations movement are Abraham H. Maslow and Douglas McGregor.

Abraham H. Maslow (1908-1970)

A doctor in psychology, Abraham Maslow was the first psychologist to develop a theory of motivation based on human needs or desires. His theory is based on 3 premises.

Human needs can never completely be satisfied.

Human behavior is purposeful and is energized by the satisfaction of some basic needs.

Needs have an hierarchical structure of importance from the lowest to highest.

Maslow believed the needs hierarchy can be classified into five specific groups. Each of these have to be satisfied before the next level of needs get activated.

1. Physiological needs. Maslow groups all physical needs necessary for maintaining basic human well being into this category. Once satisfied they stop motivating an individual to push forward. http://www.businessballs.com/images/maslow_hierarchy_sm.gif

2. Safety needs. A safe and secure environment in which to work in. people do not like uncertainty they need to feel that the next day will have a predictive quality to it. These needs include the need for basic security, stability, protection, and freedom from fear.

3. The belongingness and love needs. A desire to be loved and to feel that one belongs where he works. An individual in the work place has a need to be a part of the place he works in and to be wanted there.

4. The esteem needs. Each individual has a need to be respected and considered as a person of value or esteem in an organization. Once a person is satisfied that he belongs to a group and is loved liked by people in his organization he begins to want more and expects respect. He begins to develop self confidence. This is reflected in his desire for status, reputation, fame and glory.

5. The need for self-actualization. Is the need to discover the self and realize ones full potential so as to fulfill the mission or the dream that we all have for ourselves.

Maslow’s hierarchy of needs theory helps the manager to understand the needs and think of methods and practical solutions to keep people motivated on the job.

Douglas McGregor (1906-1964)

McGregor is the other major theorist related to the Human Relations school of management. McGregor believed there are two basic kinds of managers. One type of manager, Theory X, has a negative view of employees, they are lazy, untrustworthy and incapable of taking responsibility and the other type of Manager, Theory Y, says employees are trustworthy and capable of taking responsibility having high levels of motivation. Mcgregor’s Theory X and Y is pleasing to managers and dramatically demonstrates the difference in management viewpoints toward employees. As such, Theory X and Y has been extremely helpful in promoting management understanding of supervisory styles and employee motivational assumptions.

C. Contemporary Management Thought

In the contemporary era several management theories emerged, these have basically merged the various management schools of thought from the behavioral era. Two major management theorists W. Edwards Deming and Peter Drucker’s contributions are worthy of note.

W. Edwards Deming

Well known in Japan, Deming an American, ignored for years in the U.S. but after being featured on an American TV show discussing the reasons why the Japanese competition was threatening American business, he was taken seriously by his countrymen.

Deming’s 14 Points for Managers

Consistency of work is required to improve product and services, so as to remain competitive, to remain in business, and to give jobs.

Take on a new philosophy created by Japan. We can no longer live with commonly accepted styles of management or accepted levels of delays, mistakes, or defective products.

First time right! Stop the dependence on quality inspections. Remove the need for inspection on a mass basis by including good quality checks of the product at the beginning.

Stop working on the basis of cost of raw material. Instead, minimize total cost.

Continuous improvement of systems, production, and service thus constantly decrease costs.

Institute training on the job.

Institute supervision: supervision aimed towards helping everyone to do a better job.

Eliminate FEAR so that efficiency and effectiveness both may improve.

Break barriers between departments. People in all the departments’ research, design, sales, or production must work as a team and support each other to foresee problems.

Eliminate slogans, exhortations, and targets that ask for zero defects and new levels of productivity. Such exhortations only create adversarial relationships..

Remove or reduce numerical targets and quotas for the day. Substitute this with aids, support and helpful supervision.

The responsibility of supervisors should not be numbers or target achievements but quality. Remove the obstacles that deprive individuals in management and engineering of their satisfaction of work. This means abolish annual rating, or merit rating, and management by objective.

Training and learning are vital for the growth and continuous improvement of an organization.

Involve everyone to accomplish the transformation. Therefore, it is necessary to Institute vigorous programs of education and retraining.

Deming is extremely important for American management. Like Taylor, he emphasized how the management can increase productivity. Moreover, he highlighted the importance of communication between all units of the organization.

Peter Drucker

Drucker named by some sources as the greatest management thinker of the Twentieth Century. He is the father of management by objectives (MBO), and has contributed extensively, towards modern management thoughts. Early in the 1950’s he made this extremely popular management concept where strategic management decisions were made through management and employee interaction cooperation and coordination.

When utilizing MBO, the joint consultation of managers and all else involved , results in an agreement towards areas of responsibility. This helps total involvement of all concerned in setting and reaching goals of the organization. The employee is involved in the larger management issues of the organization and a new level of communication is developed with the management. MBO allows management to involve itself more towards strategic policy development and implementation rather than being distracted with supervisory issues.http://communicationtheory.org/wp-content/uploads/2011/02/mbo-process.jpg

Drucker has been very important in demonstrating the necessity for management to promote organizational innovation in order to remain competitive because of what he feels is the new realities of the international environment of business.

Source: http://communicationtheory.org/management-by-objectives-drucker/

The Contingency Approach

Contingency theory represents another substitute managerial theoretical paradigm. Similar to systems theory, contingency theory does not prescribe the application of certain management principles to any situation. Contingency theory is respect of the extreme importance of individual manager performance in any given situation. It rests on the extent of manager power and control over a situation and the degree of doubt in any situation.

The role of management in the contingency approach is to make an appropriate management solution for any given organizational environment. The contingency approach is without management principles. It is a heuristic management paradigm highly dependent on the experience and judgment of the manager in a given organizational environment. It is principally aimed at the management practitioner seeking to control a certain organizational environment.

Japanese Management

One of the major contributors to management thought in Japan is William Ouchi in his books Theory Z and The M-Form Society.

Japanese management has gained respect because of its ability to increase productivity. This is the Achilles heel of American management. The main culprit for productivity loss is American management methods.

One of the reasons for success of Japanese management is the high level of faith they have in employees. The Japanese employees have a great deal of supervisory power as compared to any employee in the world.

Japanese companies have a balance between teamwork and individual effort. It is a mixture of a large organization where each unit competes with other units in to get budget resources based on revenue. It is a “loose-tight organization” where individual initiative is rewarded while still being controlled through centralized corporate management systems.

Finally, Japanese organizations have what Ouchi terms a social memory. The past efforts of individual employees receive future rewards even though the employee may no longer be as productive. Their past contributions provide a form of organizational gift. This insures their loyalty while acting as role models for present employees. This is similar to Weber’s concept of an organizational “memory”.

The Japanese school of management says that personnel policies provide for an investment in human capital give the organization the resources necessary to achieve increased productivity.

Concluding Comments

The evolution of management thought has followed trends of the nineteenth and twentieth century’s. The nineteenth century works of Charles Babbage and Robert Owen were concerned with the early factory system as well making social progress. The classical school and bureaucratic school of the early twentieth century were the first efforts to generate a theory of management.

Frederick Taylor, the engineer, made a major effort to establish a form of the scientific method of management. Henri Fayol was the father of the administrative management school. He had a great effect on much of administrative theory during the early twentieth century.

The behavioral school made a great influence on management theory. It is a revolutionary period of management theory. It includes the Nobel prize winning critic of the early proverbs of administration, Herbert Simon, as well as the Hawthorne Experiment bringing in the human relations branch of the bureaucratic method. The behavioral school also includes the first female organizational theorist, Mary Parker Follett. A major result of the behavioral school is the demise and denial of the classical school of management.

The human relations school of management is important in dealing with the concept of employee motivation. Herbert Maslow developed the hierarchy of needs theory while Douglas McGregor developed Theory X and Y. The behavioral research school gives much of the needs theory developed by Maslow in actual organizational settings.

The modern management school gets a more interdisciplinary approach to the field of management. The very important writings of W. Edwards Deming in the area of productivity improvement and those of Peter Drucker on MBO and management innovation have a major impact on the way today’s organizations are managed. The methodologies of the systems approach and contingency theory give managers the scope they need to integrate the research of the many management schools.

Finally, the Japanese management school is extremely important in presenting a comparative management model.

 

Part B

In order to successfully manage any organization, some essential steps ought to be followed. The functions of management are as follows:Functions of Management

Planning

Organizing

Staffing

Directing

Controlling

Source – http://www.managementstudyguide.com/management_functions.htm

1. Planning

This is the primary principle of any management. It includes chalking out a future action plan & deciding the best option to achieve some results. According to KOONTZ, “Planning is deciding in advance – what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is future oriented and is an exercise towards problem solving & decision making. Planning is goal directed and thinks forward or ahead of time for actions to be taken and methods to be used for the achievement of that what we desire. Thus, planning is finding out ways and resources for achieving goals. Planning is essential to properly utilize all resources. It helps to avoid doubts, confusion, risks, wastage etc.

2. Organizing

It is the process of gathering financial, physical, and human resources and making a creative bond between them to achieve the goals of an organization. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. Organizing a business involves a process of both shaping and bringing together all the available resources. The organizing process includes:

Activity identification.

Activity classification.

Handing over of duties.

Giving authority and responsibility.

3. Staffing

It is to provide workforce to the organization. Staffing has attained more significance in recent times because of advanced technology, increase in business, etc. The purpose of staffing is to give right person right job. According to Koontz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed un the structure”.

Staffing involves:

Planning of manpower

Recruiting, selecting & placing.

Training.

Giving salaries and incentives.

Appraising performances.

Transfers and promotions.

4. Directing

It contributes to the effectiveness of an organization. It is the life-spark of the organization since it dictates to the people what they are going to do. It directly deals with supervising, motivating and guiding the employees on what to do.

Direction Includes the following elements:

Supervising

Motivating

Leading

Communicating

Supervision is to oversee the work done by juniors. Here the senior is expected to watch over and direct the workers.

Motivation means to encourage. Incentives are of various types and take on various forms depending on the need of the employee. Leadership is the method or process of directing and instructing others towards fulfilment of management goals and targets. It is a broad term that encompasses various functions and methods each one used towards the specific goal of getting the job done.

Communication means passage of knowledge, from one person the next. It is a process through which people transfer their perspective or point of viewing things to others such that it can be a learning experience for the other. Without communication people would be in an island and not share experience, opinion etc with one another.

5. Controlling

Measuring performances, to identify deviations if any, from set norms or standards, for goal attainment. Correction of deviation from norms, so as to ensure that goals of the organization are achieved. The objective of controlling is to see that everything happens within the standards. Controlling helps to predict problems before they happen. According to Koontz & O’Donell, “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”.

Therefore controlling has following steps:

Establishment of standard performance.

Measurement of actual performance.

Comparison of actual performance with the standards and finding out deviation if any.

Corrective action. http://www.mbaknol.com/wp-content/uploads/2010/04/management-functions.jpg

Source: http://www.mbaknol.com/management-principles/most-important-functions-of-management/