America and Its Peoples A Mosaic in the Making, Volume 2, Study Edition, 5E James Kirby Martin Solut

Type:

Soution Manual

Resource:

America and Its Peoples A Mosaic in the Making, Volume 2, Study Edition

Edition:

5th Edition

Author(s):

James Kirby Martin Randy Roberts Steven Mintz Linda McMurry James Jones

Instructor’s Manual and Test Bank To accompany The Evolution of Management Thought

Eighth Edition

.

1

Email: richard@qwconsultancy.com

A. Part One, Early Management Thought ...................... 5 · Synopsis of Chapters 1. A Prologue to the Past......................... 5 2. Management before Industrialization ........... 7 3. The Industrial Revolution: Challenges and Perspective ................................. 12 4. Management Pioneers in the Early Factory .... 14 5. The Industrial Revolution in the United States 18 6. Industrial Growth and Systematic Management .. 22 · Test bank for Part One .............................. 26 D. Part Two, The Scientific Management Era · Synopsis of Chapters

............... 56

7. The Advent of Scientific Management .......... 56 8. Spreading the Gospel of Efficiency ........... 61 9. The Human Factor: Preparing the Way ......... 66 10. The Emergence of the Management Process and Organization Theory....................... 71 11. Scientific Management in Theory and Practice . 76 12. Scientific Management in Retrospect ........ 81 · Test bank for Part Two ............................. 83 E. Part Three, The Social Person Era ..................... 110 · Synopsis of Chapters 13. The Hawthorne Studies........................ 110 14. The Search for Organizational Integration ... 115 15. People and Organizations .................... 120 16. Organizations and People .................... 124 17. Human Relations in Theory and Practice ...... 128 18. The Social Person Era in Retrospect ......... 130 · Test bank for Part Three ........................... 133 F. Part Four, Moving Onward: Toward the Near Present ..... 156 · Synopsis of Chapters 19. Management Theory and Practice..............156 20. Organizational Behavior and Organization Theory ....................................... 162 21. Science and Systems in an Information Age ... 169 22. Obligations and Opportunities ............... 173 · Test bank for Part Four ............................ 177 3

Chapter Synopses Part One Early Management Thought Chapter 1 A Prologue to the Past The purpose of this chapter is to develop a conceptual framework and rationale for the study of management history. Key points to consider: A.

The Study of Management History 1. The practice of management is ancient, arising whenever people formed organizations (economic, social, political, religious, and so on). These organizations needed the activity of management.

2. What is the difference between historical research and historical perspective? How do our experiences such as education, and ethnicity and so forth influence our perspective?

3. The authors suggest history: a. It helps us integrate our knowledge. b. It provides a perspective on the past that can be used for the present. c. History helps us develop alternatives because our knowledge has been broadened and deepened by an understanding of the past.

B. A Cultural Framework 1. Economic environment -- people and the resources used (physical, financial, information,etc.) to achieve goals.

Some attention should be focused on Heilbroner's categories of resource allocation: a. Tradition b. Command c. Market Heilbroner wrote this a half-century ago---do these categories exist currently? Or, are more economies a “mix” of these?

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2. Social environment -- people to people relationships.

Assumptions about other people guide our behavior. Standards of conduct (values, ethics) vary over time, but we always seek to define rights and wrongs.

3. Political environment -- people and their government. What is the purpose of government?

What is its source of authority?

Contrast an elected government with one that rules based upon a central power figure, or group, along the dimensions of individual rights, property, redress of grievances, and contracts.

4. Technological environment—-technology is defined as the art and applied science of making tools and equipment.

Technology advances in spurts—-what factors influence technological advancement? Does technology advance uniformly across national borders? Why or why not?

C.

People, Management, and Organization -- the purpose here is to develop ideas about why organizations are formed and the role of management in organizations.

1. Humans -- individuals are the foundation of organizations and we meet our needs by working with others. Figure 1-1 provides a starting point for discussion.

2. Organizations -- it is rare to find a self-sufficient individual; most of us work together in groups to achieve goals. a. Division (specialization) of labor emerges from our individual differences. b. Hierarchy -- evolves to structure and integrate human efforts.

3. Management is essential to organized endeavors. Persons may be designated to manage; sometimes groups can come to agreements and manage their efforts. In either case, however, the activity of management must be present.

5

Chapter 2 Management before Industrialization This chapter is intended to illustrate the practice of management in various past civilizations and to indicate the changing conditions that led to the Industrial Revolution. In the first part, the student should be looking for managerial practices such as the need for authority, planning, organizing, leading, strategy, controlling, and so forth.

A. Management in Early Civilizations 1. Hammurabi -- declared his authority came from the Sun God (who could argue with that?) Developed a Code of Laws -- see the first mention of accounting and an agency relationship.

2. See the quotes from the Christian New Testament and from the Prophet Mohammed about the importance of work. Ask the students if these statements still apply today.

3. Sun Tzu -- the importance of planning and strategy.

(Students may recall the movie "Wall Street" in which Gordon Gecko, played by Michael Douglas, was fond of quoting Sun Tzu).

4. Confucius -- merit as a basis for personnel selection.

Were the Chinese tests "valid" when selecting leaders based on scholarly virtues? a. Chinese development of an early bureaucracy.

Confucius wanted to develop the moral nature of people (virtue); the "legalists" wanted a system of laws. b. Confucius provided the foundations of ethics in many Eastern nations based on “virtue.” How is virtue achieved? What are other notions of how we should behave? c. In an early Chinese workshop there is evidence of division of labor and departments to group workers.

5. Kautilya -- founder of public administration in ancient India. Note the trait approach to selecting managers; the use 6

of staff advisers; and his assumptions about the ‘fickleminded’ humans.

6.

In Egypt: a. Joseph as vizier, from which the word supervisor is derived. Also Joseph as a planner and forecaster.

b. Span of control, the "rule of ten," appeared in this ancient civilization.

7. The Hebrews: a. Origins of "charisma" b. Discuss Moses and his ideas on organization, span of control, delegation, and the exception principle. c. Other quotes suggest the Hebrews provided advice on planning, listening to advisers, and controlling.

8. Greece: a.

Socrates skills.

and

the

transferability

of

b.

Aristotle on the specialization departmentalization, delegation, leadership, and the scientific method.

managerial of

labor, synergy,

c. Aristotelian ethics---compare with those suggested

by Confucius. How do these ideas shape our modern views of ethics? d. Xenophon and the advantages of specializing labor. e. Plato on individual differences leading to the division of labor.

9. Rome -- the span of control in their military; Roman law became a model for later civilizations.

10. The Catholic Church demonstrates the need to "get organized" if the mission of the church was to be reached.

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Papal authority may reside in a passage found in Matthew 16:18. (This is not in the text but may be of interest.) In that Biblical passage, Jesus says to Peter: "You are Peter, a stone; and upon this rock I will build my church." Since Peter was crucified and buried in Rome, some believe that the church in Rome (St. Peter's) fulfilled this prophecy.

11. Middle Ages -- it might be worthy to note that air and water pollution existed long before the Industrial Revolution. Imagine a street sweepers job in an age of horsedrawn carriages---or of life before sewage systems.

12. Revival of Commerce -- note the travels of Marco Polo to the Far East and the practice of the "rule of ten.” Also: a. Craft guilds controlled who did the various jobs by specifying how labor would be divided. (Ask someone to compare this with a craft union of today.) If the “master” of the craft owned the tools of production, did that make him/her a “capitalist”? b. The domestic, or "putting out", system where work was done in the home. Pay was based on performance since you did not get paid until the work was returned to the merchant. Also note the author’s comment on transaction costs-—was this the beginning of transaction cost economics? c. Luca Pacioli and the description of double entry accounting. d. Saint Thomas Aquinas and his follower, Johannes Nider, on the ethics of business. Note that Aquinas' "just price" was the market price. Nider expanded on this and it might be useful to have the class examine this early code for business ethics. Could Nider's code of ethics be used today? Why? Why not?

B.

The Cultural Rebirth -- traces social, political, and economic changes that preceded the Industrial Revolution in Great Britain.

1.

The Protestant ethic: 8

a. Max Weber developed the idea that Protestants held different attitudes toward work and that this created the spirit of capitalism that led to the Industrial Revolution. This new spirit included: (1) Individual responsibility and self-control (2) Work as a means to salvation (3) Do not waste time or money (4) Do your best in your "calling" (5) Do not consume beyond your basic needs. b. Ask students to read Weber’s distinction between the “impulse to acquisition … the greed for gain” and capitalism as the “rational tempering” of this greed. Agree? Disagree? c. Tawney disagreed with Weber, suggesting that a capitalistic spirit existed before Protestantism. d. David McClelland (and colleagues such as John Atkinson) supported Weber by observing the influence of religion on human attitudes toward work and self-reliance. These differences were capsulized in a need for achievement. Protestants, but Jewish people to a greater extent, were reared as children to have this higher need for achievement. e. In discussing the Protestant ethic, it is important to note that McClelland is saying the need for achievement is not restricted to Protestants, and that there are wide variations among individuals that are influenced by the lessons they learn early in life about work, risk taking, and self-reliance. f. Is there a contemporary “work ethic”?

2. The Liberty ethic is presented more clearly if Locke's notion of representative government is contrasted with the ideas of Thomas Hobbes and Nicolo Machiavelli. Here we see the differing ideas of the assumptions made about the nature of people guiding the choice of leadership style. Hobbes and Machiavelli insist that humans are basically nasty so they must be governed closely. Locke's notion, on the other hand: 9

a. Assumes that people have natural rights to property, contracts, a redress of grievances, and to freely choose those who are to govern. b. Natural rights are to be protected through civil law in order to preserve more perfectly their life, liberty, and property. c.

Are these limited to the “West” while other cultures may not hold individual rights as being important?

3. The Market ethic case can also be studied by contrasting Adam Smith's ideas with mercantilism, that is, the government regulated the economy. Smith suggested that market forces were far more efficient in allocating resources and more "just" in rewarding individuals who produced the wealth. In addition to the market mechanism, Smith also contributed: a. Specialization advantageous.

of

labor

and

why

it

was

more

b. The disadvantage of dividing labor. c. Note Smith’s comments about those who “managed other people’s money.” We will see this idea again in discussing corporate governance.

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Chapter 3 The Industrial Revolution: Challenges and Perspective A.

The Industrial Revolution in Great Britain

A technological development, the steam engine, was the heart of this revolution but the political, social, and economic systems were ready for this historical watershed. Students have rarely seen a steam engine, except as a historical relic in photographs or museums. Ask them how work might have been done before the steam engine? Such as grinding grain, pumping water, and traveling. The answer will be natural sources of power in humans, animals, water, and wind. One illustration you might use (not provided in the text) is that of milling wheat into flour. A human turning a millstone can convert one-half bushel of wheat into flour in one hour; three bushels can be ground in one hour with a horse-driven mill; a steam driven mill can do 10 bushels per hour. Question: What would be the "power" rating of the steam engine in this example?

(Answer: 3 1/3 horse power).

Other points to consider: 1. James Watt "perfected" the steam engine, turning it into a reliable source of power for factories and transportation.

2. With a central source of power, it became more economical to bring people to the work (a factory) rather than taking the work to the people (domestic system). Perhaps a comment on transaction costs would be appropriate here.

3. As these workshops grew, management became more important. See J. B. Say's contribution of management as a fourth factor of production. Also: Note John Stuart Mill’s comment on the “intelligence factor” for managers.

4. With growth in the size of the firm, management faced more problems: a. Recruiting workers b. Training c. Discipline (in modern terms, motivation). Employees were motivated by: 11

(1) The "carrot," wage incentives. Note Adam Smith's comment about the importance of incentives and his caution to employers about possible undesirable effects.

(2) The "stick," punishment or fines.

(3) The "factory ethos," the idea of using religious morals and values to create the proper work attitudes and behaviors. d. Developing managers (1) No body of management knowledge existed.

(2) A belief in leadership traits.

(3) James Montgomery wrote a "text" on how to manage.

B.

The Cultural Consequences of the Industrial Revolution 1. Under mercantilism, the government set maximum wages and some thought that workers would work harder if they were kept at a subsistence level. (Contrast this with Adam Smith's "economic man" notion.)

2. Poverty, female labor, before factories began.

and

child

labor

existed

long

3. There is evidence that wages were rising, as well as real wages, and that people were better off after the Industrial Revolution.

4. The Victorian values of keeping women in the home (not exposing them to the temptations of working out of the home), created the atmosphere for critics such as Charles Dickens.

5. Overall, wages were rising, infant mortality was declining (aided by medical advances in smallpox vaccination), machinery replaced some drudgery, and the Industrial Revolution was the beginning of improving peoples' standard of living.

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Chapter 4 Management Pioneers in the Early Factory This chapter presents the ideas of four individuals who were contributing to the development of management thought. The time period is roughly 1800-1840 so we are dealing with individuals who were seeing the factory system grow and were proposing ways to manage. Robert Owen saw the problems in mostly human terms; Charles Babbage emphasized more systematic management but also included the human element; Andrew Ure defended the factory against its critics and taught classes that enabled persons to get jobs as managers; and Charles Dupin took Ure's ideas to France and, perhaps, influenced the later management theorist, Henri Fayol.

A. Robert Owen 1. Both an entrepreneur and a manager for others, he learned about management by observing and trial and error on the job.

2.

At New Lanark he advocated more labor-intensive agriculture, using a spade rather than a plow. He did not believe industrial progress was adequate to feed the growing population.

3. At New Lanark, he became quite wealthy. (See his return on investment.)

4.

Among his contributions:

a. He sought to reform the factory system by improving the workers' working and living conditions. b. He employed child labor, but tried to get a law passed to regulate hours of work for children. c. He developed the "silent monitor" as moral suasion that would rely more on peer pressure or public knowledge of someone's performance rather than corporal punishment. d. His philosophy was to invest in the "vital machines" (people) as a means of increasing profitability. Note some doubt about whether or not this was due to his labor policy.

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e. He desired a communal society (such as New Harmony) in which: (1) All would share equally, regardless of contribution.

(2) There would be no division of labor.

(3) There would be no wage system; payment was in “labor credits.”

You might ask the class why they feel his communal society of New Harmony did not succeed. What were the incentives? He felt that individuals were not responsible but "creatures of their environment"; does the class agree?

Research on Owen's New Harmony experiment would be a useful research project.

B. Charles Babbage 1. Never a manager, but a keen observer of the factory and a brilliant inventor and scientist.

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a. The difference engine, a calculator. b. The analytical engine, the first computer. c.

Conceived the early 19th century “printer.”

2. Augusta Ada, Countess of Lovelace, a colleague of his, was a programmer and a contributor in describing the operations of the computer.

3.

Babbage's contributions to management thought:

a. Scientific, systematic industrial operations.

approach

in

analyzing

b. Descriptive cost accounting (not standard costing that Emerson developed later). c. Mutual interests between the workers and the managers. d. A bonus for workers to suggest better ways to perform operations. This appears to be the first mention I've seen of a suggestion system with bonuses. e. Profit sharing. It might be useful to indicate that Babbage got this idea from a Parisian house-painting firm, Maison LeClaire.

C. Andrew Ure 1. Ure was well known as a scientist and, since the belief was widespread that managers needed to know about the machines, raw materials, and so forth, his classes attracted individuals who wished to increase their technical knowledge so they could get a managerial job. I suggest to my classes that Ure was the first "teacher" of management.

2. He wrote about the principles and processes (operations) of the factory including: a. Admonishing the workers to accept the introduction of machinery. b. Arranging consisting of the

the

factory

into

an

"organic

system" 15

(1) Mechanical (production) (2) Moral (personnel) (3) Commercial (sales and finance) (It seems Ure had a rather early notion of the task of the general manager -- integrating the parts to contribute to the whole with his "organic system.")

3. He defended the factory, claiming it enabled more benefits to society. Note the results of this 1833 survey about declining hours of work, better wages, and rising real wages, i.e. purchasing power.

4. In Ure’s 1833 survey of cotton mills, note the continuing use of water power; the percentage of female employees vis-avis males; and the percentage of employees age 18 and under and over 18. What does his survey tell us about industrial progress some 50 years after the introduction of the steam engine?

D.

Charles Dupin 1. Dupin observed Ure's work and started teaching similar classes in France. He was a colleague of J. B. Say, who we saw (Chapter 3) suggested management as a fourth factor of production (the other three being the land, labor, and capital of economic theory).

2.

Dupin had some unique insights:

a. The "special study" that involved how to economize the efforts of workers (suggesting that technical/manual work was different from managing others). b. This special study could be taught (rather than gained by experience alone). c. Indicating that technological advancement did not lead to unemployment, but, through education, workers could share in industrial prosperity.

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Chapter 5 The Industrial Revolution in the United States This chapter crosses the Atlantic to describe how the Industrial Revolution influenced economic development in the United States of America. Mercantilism retarded development, but also led the writers of the U.S. Constitution to limit the role of government in economic affairs. Early personnel and management strategies, the "American System," and the railroads make this an interesting chapter.

A.

The U.S.A.'s economy before 1861.

1. British mercantilism kept the U.S. as a colony for over a century and a half. a. Adam Smith influenced the writing of the U.S. Constitution. Benjamin Franklin, considered one of the nation’s founders, read Smith’s work. b. Article I, Section 8, limited the power of central government (A sidelight is that this became known as the "elastic clause" of our Constitution because this section was subjected to wide judicial, executive, and legislative interpretation.)

2.

The earliest factories were textile mills.

a. Samuel Slater and the "Rhode Island System." This was very similar to the practice and personnel policies of those existing in Great Britain. b. Francis Lowell and the "Waltham System." Used water powered looms (rather than hand powered) and a different strategy of integrated production. This system employed primarily adult female labor. c. Charles Dickens, a critic of the British practices, praised Lowell and his Waltham system for their better treatment of the employees. d. U.S. labor law also changed: worker combinations (unions) were (unless their intent was criminal).

in Commonwealth v. Hunt, no longer conspiracies

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3. The "American System of Manufactures." While the British led the Industrial Revolution, manufacture by interchangeable parts became known as the "American System." a. Manufacture by interchangeable parts was not new, and for years had been confined to making muskets and revolvers. b. The Springfield (MA) Armory was an early factory prototype. Even though it had only 250 employees, it was probably the largest factory in the U.S. until after the Civil War. (1) Colonel Roswell Lee organized the arsenal.

(2) Incentive payments were used.

(3) Labor became more specialized.

(4) Uniform standards promoted the interchangeability of parts. c. These ideas spread to the manufacture of numerous other items, e.g., the reaper of Cyrus McCormick. Thus the "American System" got its name at the exposition of 1851 (London). d. Despite this method of manufacture, U.S. factories remained relatively small. The McLane report of 1832 found that firms were mostly: (1) Family owned and managed.

(2) Few corporations, hence sole proprietorships and partnerships.

(3) Little use of steam power; low capital intensity; few employees.

B.

The railroads were the first big business in the U.S. The railroads touched off a transportation revolution and the telegraph started a revolution in communication.

1. The telegraph of Samuel Morse: a.

Enabled communication.

rapid

national

and

international

b. Has been called “the Victorian Internet.” c. Gave Richard Sears the chance to sell his watches— perhaps this was the beginning of e-commerce.

The railroads and the

telegraph

moved U.S.

industry

from 18

local markets to national ones. As railroads developed, they required "system" or some rational basis for managing farflung operations.

2.

Daniel McCallum

a. On the Erie Railroad, McCallum developed a system of managing: (1) Specific job descriptions.

(2) Accurate reporting of performance.

(3) Merit as a basis for pay and promotion.

(4) A hierarchy of authority, with unity of command.

(5) An organizational chart to show lines of authority, responsibility, and communication.

(6) Used the telegraph for dispatching trains and checking on performance. b. Although McCallum lost his job when the locomotive engineers refused to follow his rules, he went on to a successful career building bridges and served as master of the Union's railroads in the Civil War. 3.

Henry V. Poor

a. A journalist, but intrigued by the possibilities of McCallum's system for improving U.S. railroads. b. From McCallum's ideas, Poor developed 3 principles: (1) Organization.

(2) Information.

(3) Communication. c. Poor felt the answer was in better leadership by the top management.

(1) Unity in the organization.

(2) Selecting leaders on merit.

(3) Developing better information.

4. Corporate governance issues a. An early example of executive malfeasance is found in Great Britain and the “Railway King,” George Hudson. b. Discuss Hudson’s practices and compare them with other examples of executive illegal and unethical behavior. c. Compare Britain’s Companies Clauses Consolidated Act of 1845 with the more recent Sarbanes-Oxley Act in the United States.

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5. At this point, refer to Poor’s proposals to make managerial practices more transparent. His comments were made over a century and a half ago.

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Chapter 6 Industrial Growth and Systematic Management The purpose of this chapter is to describe the rapid economic growth of the U.S. following the Civil War until 1900. First, Alfred Chandler's ideas are used to describe this growth with Andrew Carnegie used as an illustration. The chapter's conclusion addresses the issues raised by the growth of big business in the U.S. during this time.

A.

Growth of Enterprise -- facilitated by transportation and communication revolutions as well as manufacture by interchangeable parts.

1. Alfred D. Chandler Jr. developed his ideas from the study of U.S. corporations during this period. He described the late 19th century as the accumulation of resources with growth occurring because of: a. Horizontal combinations of firms in similar fields. b. Vertical integration, forward and backward. c. The result was larger firms and the growth of a hierarchy of managers to coordinate and integrate operations.

2. Andrew Carnegie's influence illustrates this growth.

on

the

steel

industry

a. Carnegie learned McCallum's system of management regarding organization, reporting, accounting, and control on the Pennsylvania RR. b. In the steel industry, Carnegie used the new Bessemer furnace technology to begin vertically and horizontally integrating his firm. c. He used cost accounting to guide his pricing strategy and drive costs down. d. He increased the "throughput" velocity to economies of scale and to fully utilize his resources.

gain

e. The result was a declining price of steel for the consumer.

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B.

Systematic management was needed as firms grew and needed better management.

1. Mechanical engineers, especially Henry R. Towne, became important in improving factory operations. Numerous others began to take an interest in management. The idea that good management was critical in a firm gained credence with engineers and economists.

2.

Economists: a. Edward Atkinson and management made a “difference.”

b. Alfred and Mary Marshall noted that management requires “rarer natural abilities ... and training” and managers must forecast, plan, and organize; gain economies of scale; and internal economies are enabled by more efficient management. Note how insightful the Marshall’s were at the turn of the nineteenth century as a prelude to transaction cost ideas that came later.

3.

With respect to labor:

a. Some Social Gospel proponents felt that workers should join unions, share in profits, and have arbitration instead of strikes. b. Note the mention of workers believing in a “lump of labor” and of group pressures to restrict output mentioned by Schloss. c. Engineers and others felt that better work methods and systems were the answer, including pay for performance incentive systems.

C.

The Changing Environment 1. Business and Society a. Matthew Josephson characterized the business leaders of this time as "Robber Barons."

Their motivation was alleged to be "survival of the fittest," a social version of Charles Darwin's biological ideas. Other historians have not supported this idea of Social Darwinism.

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b. There is evidence that business leaders did engage in some corrupt practices, especially when public officials were bribed to grant franchises, etc. c. Of greater value were the benefactors of these business people. Numerous colleges, libraries, museums and other benefactions are evident even today. d. The legal environment constrained what corporations could do, so philanthropy was by private individuals.

(1) Courts held managers to be the trustees for the stockholders and therefore they could not give away corporate assets.

(2) Corporations also had limited charters within which to operate, further limiting the ability of management to engage in non-business related activities.

(3) But individuals could do with their money as the pleased and Andrew Carnegie's "Gospel of Wealth" maintained that rich individuals were but stewards (caretakers) of that wealth for others.

(4) Individuals (some recent examples are given) as well as corporations continue philanthropic practices today.

2. Business and Labor a. The Commonwealth v. Hunt decision (1842) broke the British tradition of unions as conspiracies in restraint of trade. b. U.S. craft unions and brotherhoods of railroad workers were successful in the late 19th century. c. Efforts unsuccessful.

to

organize

other

workers

were

generally

d. Without unions, and with growing numbers of immigrants, U.S. workers found their wages and real (purchasing power) wages rising during this period.

3.

Inventive and innovative impulses

a. Inventors and economic development.

innovators

as

“prime

b.

Railroads, the telegraph, and contributed to national economic development.

movers”

the

for

telephone 23

c. Numerous inventions such as refrigerated railroad cars, the elevator, the typewriter, etc transformed business practices.

4. Business and Government a. The "elastic clause," the commerce clause, of the U.S. Constitution expanded during this period with regulation of railroads, the Act to Regulate Commerce (better known as the Interstate Commerce Act), and the Sherman Antitrust Act were attempts to regulate business but these laws were generally ineffectual. b. Woodrow Wilson, then a college professor, advocated better management in government. Ask your class how much progress has been made in what President Wilson advocated in the intervening years.

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Part Two The Scientific Management Era The purpose of Part Two is to begin with the work of Frederick W. Taylor and trace developments in management thought in Great Britain, Europe, Japan, and the U.S.A. up to about 1929.

Taylor is the focal point, but we will see his followers as well as developments in personnel management and the social sciences.

Henri Fayol and Max Weber will be discussed, although their main influence came later, and we will conclude with an overview of the influence of scientific management in its environment.

Chapter 7 The Advent of Scientific Management Frederick W. Taylor is one of the more widely recognized names in the management literature. This chapter portrays Taylor’s faults as well as his virtues. Though sometimes inconsistent in what he said and what he practiced, there is little doubt that his contributions were substantial.

A.

Taylor's Early Years 1.His family background provided no indication of what his career would be like. His father had money and property and his mother's family history was deeply rooted in colonial times. Taylor had the advantage of a prep school education, travels to Europe, and a membership in an exclusive social clubs (e.g., Philadelphia Country Club). Yet, due to failing eyesight, he did not go to Harvard University as planned but started as a factory apprentice. His early experiences as a worker would shape his view of management.

2. Taylor at Midvale Steel a. Started as a laborer rose who into management. This would lead to his “shop management” point of view. b. Took a home study course to get his college degree in mechanical engineering. c. As a worker, then a first-line supervisor, he observed numerous industrial practices that led him to his life's work.

25

d.

Taylor classified restriction of output into natural soldiering and systematic soldiering. e.

Taylor thought perhaps as a supervisor he could inspire or force workers to stop natural soldiering. f.

Systematic soldiering resulted from group pressures for individuals to conform to output norms set by their work group. Taylor attributed this to a "lump of labor" theory.

(Have your students define this theory and see if they can cite examples of group pressures to conform -- at work, school, or wherever). g.

Taylor felt he could overcome soldiering and improve shop management if workers knew that the production standards were established by a study of job methods and requirements, rather than by historical data, and if incentives could be provided.

3.

Search for Science in Management (it is important to point out that management is not a science in an academic sense, but Taylor intended to use a scientific fact-finding method to determine improve industrial practices): a.

Time study -- this was prescriptive in that Taylor sought to identify the time a job should take (contrast this with Charles Babbage who measured only the length of a work cycle). b.

Time study was analytical, breaking a job into its components and eliminating useless movements; and constructive, building a file of movements common to other jobs. c.

Also, machines.

Taylor

tried to

improve

tools,

material,

and

d.

In modern terms, his concept of job design was to analyze the job, discard wasted movements, and reconstruct jobs as they should be done. He also sought to find the right tools, the right way to operate machinery and to make jobs more efficient. Today we might call this ergonomics.

4. Incentives 26

a.

Pay for performance (that is, pay largely determined by a person's productivity) is ancient. For example, in the domestic system payment was received based on the quantity and quality of work. b.

Once an output standard was set through time study, rewards could be based on performance as compared to the standard. Taylor called this "rate-fixing." c.

Taylor discouraged profit sharing because it was not tied to individual performance and because it occurred long after the performance. d.

Taylor adopted Charles Brinley’s “differential piecerate” that paid those who did not reach a performance standard on ordinary rate of pay (much like a minimum wage); a higher rate of pay was given for attaining the standard. e. Taylor also recognized non-economic incentives, such as hope for advancement, better working conditions.

5.Unions -- Taylor felt that unions wanted to base payment on class of work, not performance; thus an individual was not paid based on effort.

6."First-Class" worker -- this was Taylor's idea that everyone was best or first class at some type of work.

There should be a match between a person's abilities and their job placement.

7."Functional Foreman" -- Taylor had the idea that knowledge was authority. He called his functional foremen “teachers” emphasizing the need for instructions to workers. Learning was a key element in getting the job done right. However, Taylor’s functional foremen idea was seldom applied---one weakness was it did not provide for coordinating workshop performance.

B.

Taylor after Midvale 1.He became a consultant for various firms, such as Simonds Rolling Company and Bethlehem Steel. Note and discuss “Schmidt” and the pig iron workers. Did Taylor tell a “pigtale”? Was Schmidt the only “first-class” pig-iron handler?

27

How many days were workers on the “day-rate”?

2.What were Taylor’s views on teaching management? Why did he accept the opportunity to lecture at Harvard? He refused to take payment----Cruikshank’s book about the Harvard Business School history reproduces a copy of the check Taylor returned.

3.Eastern Rate Case -- in this case before the U.S. Interstate Commerce Commission, Louis Brandeis, attorney for the shippers (banded together as the Commercial Organizations of the Atlantic Seaboard) who would be affected by the proposed increase, used individuals to testify that the railroads did not need to increase their rates if they would adopt known management improvements. In doing so, he brought about an unusual series of hearings that thrust Taylor’s task-management system into the public eye. Among numerous new findings in this seventh edition, note the influence of Morris Cooke in correspondence with Taylor about using “scientific management” rather that “philosophy of management” in their paper. Brandeis noted this, met with other Taylor followers, and all agreed to the use of the term “scientific management” to designate the emerging efficiency movement. This brought a great deal of attention, such as the Watertown Arsenal and ensuing labor opposition to Taylor’s ideas. Note the authors’ comments about the accuracy of Emerson’s claims and Taylor’s reaction to Emerson’s testimony.

4.Watertown -- Taylor's ideas were to be implemented at the federal arsenals at Watertown (Mass.) and Rock Island (Ill.). Representatives of the machinists' union told the workers to resist and a strike occurred.

5.Congressional investigation -- the strike lasted one week, but Congressional representatives from the Watertown and Rock Island districts asked for an investigation of the Taylor and "other efficiency systems." a.

The testimony provides a sample of how Taylor was treated. (You might have your students "role play" the testimony, especially where Taylor was trying to clarify what he meant by "first-class" worker.)

28

b.

No evidence was found that there were abuses under scientific management and no need for remedial legislation.

6.Mental Revolution -- in his Congressional testimony, Taylor described his philosophy that labor and management had a "mutuality of interests" and needed to work together. This "revolution" emphasized the need of both labor and management to change their attitudes and work together; otherwise, scientific management could not exist. Compare Taylor’s view with a union leader’s view by Nels Alifas. If all followed Alifas’ ideas, what would happen to the mental revolution?

7. Other ideas of Taylor: a.

Human factor -- "systems" were not enough, but there must be a good relationship between managers and workers. b.

Resistance to change -- this is to be expected, but with time and explanations, people would see the benefits.

8.

Summary -- Taylor had his faults, did not always follow his advice to others, and sometimes became an advocate in selling his ideas. Despite these flaws, he came into the industrial scene at a time when better management was needed; he gave credibility to the idea of managing more efficiently while paying workers higher wages; he foresaw the need for planning through setting standards; others would extend his idea of first-class workers into better personnel management; and he made advances in improving jobs, tools, and methods.

29

Chapter 8 Spreading the Gospel of Efficiency In Chapter 7 Fred Taylor was the major figure but it should be made clear that the scientific management movement involved other individuals. Chapter 8 examines Carl Barth, Henry Gantt, Frank and Lillian Gilbreth, Harrington Emerson, and Morris Cooke as other important contributors. It should be noted, however, that not all applied Taylor’s ideas uniformly.

A.

Carl Barth 1.Mathematician who helped Taylor with some metal-cutting experiments. Barth was a very faithful follower of Taylor's ideas (and probably a major influence in writing the "official" biography of Taylor).

2.Consultant -- assisted in installing scientific management in various companies. One was the Franklin Motor Car Company, which is interesting because it preceded Henry Ford's moving assembly line. Cars were made in batches of models, and their assembly was amenable to scientific management.

(Daniel Nelson contends, however, that scientific management was not important to the auto industry once the assembly line was introduced and the belt paced work and individuals were no longer able to influence their output and therefore their reward. An interesting comparison between batch and mass production could be made, e.g. standards, time study, personnel selection, supervision, and incentives.)

B.

Henry L. Gantt 1.Gantt also started his career under Taylor’s guidance. His early work paralleled Taylor's in their beliefs about worker selection, incentives to reward performance, mutuality of interests, and so on.

2.To these basic agreements with Taylor, Gantt added: a.

Task work with a bonus to stimulate performance. When he realized this provided little incentive beyond meeting a set standard, he modified his payment plan. In this sense, 30

he influenced Taylor because Taylor found that Gantt's plan was better. b. Adopted E. P. Earle’s idea of rewards to supervisors when their employees came up to standard; i.e., rewarded for teaching and developing employees. (It is possible that this influenced Taylor’s idea of functional foremen becoming “teachers.”) c. Gantt's emphasis on the importance of morale. d. The Gantt Progress chart -- steadily evolved into a valuable tool for scheduling (planning) and controlling work.

(1) Widely used during World War I (2) Became an international management technique through the work of Wallace Clark.

(3) A forerunner of subsequent planning and controlling techniques such as major milestones and PERT. e.

The New Machine -- a group headed by Gantt to promote the idea that engineers should be industrial leaders. f.

Social responsibility -- Gantt's concern that business should not lose sight of its service role in the economy.

C.

Frank and Lillian Gilbreth 1.Frank -- worked in the construction trades and called his approach to job design "motion study." He was independent of, but influenced by, Taylor. Eventually breaking with Taylor.

2.Lillian -- the "First Lady of Management" for her accomplishments with her husband as well as after Frank's death. Many of these were significantly ahead of other thinking about handicapped workers, older workers, etc.

3. As partners, they made numerous contributions: a.

Frank's study of bricklaying; motion study; a "white list" to identify top workers in an appraisal system; and a bonus to workers for suggestions. b.

Motion and fatigue study -- a joint effort to reduce 31

fatigue and improve productivity. (You might suggest that one or more of your students read “Cheaper by the Dozen” by F. B. Gilbreth, Jr. and Ernestine G. Carey. “Cheaper by the Dozen” has appeared as a movie twice: the first had Clifton Webb play Frank and Myrna Loy portrayed Lillian; a more recent release has Steve Martin as Frank and Bonnie Hunt as Lillian. If class members can find both of these movies, a comparison and evaluation can be made and provide the basis for a lively discussion. c. Other contributions: (1) Therbligs (2) Motion pictures with special lighting to study micromotions.

(3) Process charts to study the flow of work through a workshop.

(4) Promotion planning.

(5)Pioneering work with physically handicapped workers. d.

“Psychology of Management” -- Lillian's original, but not final, Ph.D. dissertation. It was not industrial psychology, per se, but the psychological intent of scientific management. e. Lillian’s efforts to bring Gilbreth’s motion study and Taylor’s time study together are worth mentioning.

D.

Harrington Emerson 1.He worked largely independent of Fred Taylor corresponded and he was aware of Taylor's ideas.

but

they

2. Emerson's ideas focused on: a.

The lack of organization, in Emerson's view, was a major problem. He proposed the line-staff organization as a way of bringing staff knowledge to assist line managers. b.

Emerson's line-staff idea was similar to Taylor's desire to use the knowledge of functional foremen, but an improvement because it did not violate the chain of command. c.

Emerson took Taylor's idea of setting performance standards and applied this to cost accounting. Standards 32

could be established for what costs should be, rather than estimating costs from previous records. d.

Incentives -- Emerson provided 120% wages for 100% performance (the standard) and that increased if a worker produced more. e.

Of Emerson's numerous "principles": clearly defined ideals (objectives), participative decision making, and the proper use of staff stand out as the more unique of his ideas. f. Emerson established a successful consulting practice and sought to improve ethical practices among consultants. g.

Pennsylvania State University has an excellent collection of Emerson’s work.

Also, see the writings of James P. Quigel Jr. about Emerson.

E.

Morris Cooke 1.Cooke worked closely with Taylor and became one of the four individuals Taylor considered his disciples (others were Gantt, Barth, and H. King Hathaway).

2.Cooke's early work developed various consulting assignments:

when

Taylor

sent

him

on

a.

In education, where he felt that college administration was inefficient. b.

In government, where Cooke became Director of Public Works for the City of Philadelphia and attempted to implement scientific management.

3.

Collaborated with Taylor in preparing Principles of Scientific Management and received the book’s royalties for his efforts. At this point, reinforce Chapter 7 and how Cooke and Taylor changed their paper from “philosophy of management” to “principles of scientific management.”

4.In his later work, Cooke became interested in getting the leaders of organized labor to accept scientific management. a.

Suggested

that

management

needed

to

"tap

labor's 33

brains." b.

Worked with labor leaders in gaining a better feeling about union-management cooperation. c.

Served Presidents Franklin Truman in government positions.

D.

Roosevelt

and

Harry

34

Chapter 9 The Human Factor: Preparing the Way This chapter has one purpose but many sub-topics. The common element is the emphasis on the human factor as it appeared in personnel management, psychology/ industrial psychology, sociology/industrial sociology, and employee participation in decision making as manifested in the trade union movement and industrial relations, union-management cooperation, and employee representation plans.

A.

Personnel Management:

A Dual Heritage

1.One part of the beginnings of personnel management may be found in the industrial betterment/welfare movement. a.

This movement found its basis in the Social Gospel and grew out of a concern for improving industrial conditions. b.

A number of companies employed welfare secretaries to advise management. Their duties were many, and in some cases appeared to be paternalistic. c.

Many, though not all, of these secretaries were females, perhaps because of their experience in vocational guidance or social work, or perhaps because some of their duties resembled a role stereotype of what a woman did -e.g., menus, handling illnesses.

2.Scientific management emphasized improved personnel selection, placement, wage plans, and other matters that involved employee welfare. Taylor had described this role, but it was others who advanced personnel management. a.

Mary Gilson would be one example of the scientific management viewpoint. b. Also Jane Williams at Plimpton Press. c.

The Henry Gantt/Elizabeth Briscoe clash at Bancroft Mills relates similarities and differences between the welfare advocates and those of scientific management.

35

d.

Henry Ford and his $5 per day minimum is worth mentioning, as well as his "sociological department." (Ask the class what Ford's "advisers" did -- does this sound like a modern social worker?

Also, why was the sociological department changed?)

B.

Psychology 1.This section begins with a "plutology" quote (1863) that resembles Abraham H. Maslow's (1943) hierarchy of needs theory. The purpose is to show that this early insight came from deduction and introspection, not empirical study.

2.The pseudosciences also reflect this introspection, yet some of these, such as graphology and astrology, are claimed today to have merit. (Students may comment, and accurately so, that at this point in history these were considered scientific and not pretenders to science.

Phrenology is a favorite, especially if you pretend to be an on-campus recruiter.)

3. Industrial Psychology a.

Wilhelm Wundt pioneered scientific psychology.

b.

But more importantly, Hugo Münsterberg applied this scientific approach to industrial problems. c.

Münsterberg sought (1) the best possible worker (2) the best possible work (3) the best possible effect

d. He advocated (1) tests for worker selection (2) research in the learning process in training e.

Others who were early in the field of industrial psychology are mentioned briefly in the text. (They are not emphasized, but you may find a favorite here to assign for your class.)

(1) Charles S. Myers (2) Walter Dill Scott (3) Cecil A. Mace (4) Morris S. Viteles 36

C.

The Social Person

This section involves the antecedents of industrial sociology as well as sociological theory. (Again, different individuals and contributions are open to your choice.)

1.Whiting Williams -- a person whose ideas have been long neglected. a.

A white-collar personnel director who put on the clothes and guise of a worker to study work first hand.

That is, a participant-observer. b.

Emphasized the centrality of work.

c.

Job defines social status as well as a person's place in a work situation. d.

A workplace is a part of a larger social system.

e.

Saw earnings as a matter of social comparison -influencing how a person viewed himself relative to others. f.

Workers' mainspring was to be found in their relations with others (is this or is this not a pre-Hawthorne view of human relations?) g.

The "Eleventh Commandment" -- "Thou shalt not take thy neighbor for granted" -- still good advice. h.

Arguably, industrial sociology began with Williams.

The Social Gospel in all likelihood influenced his thought.

2. Sociological theory a. Emile Durkheim (1) anomie -- "normlessness" (2) mechanical societies were collective consciousness.

(3) organic societies were interdependence and the division of anomie.

(4) Durkheim's thinking influenced relations advocates regarding the solidarity.

dominated

by

a

characterized labor, leading

by to

the views of human need for social 37

b.

Vilfredo Pareto --(Not one of my favorites as I find his ideas on social systems clouded in jargon. We mention him because: (1) The Pareto Circle that influenced the Harvard version of human relations.

(2) Pareto's influence on Chester Barnard and cooperative systems. c.

Social behaviorism -- may be worth mentioning because of the notion of the "social person," the beginning of social psychology, and Charles H. Cooley's "looking glass self," a very interesting way of looking at the formation of self-efficacy, personality development, and a host of other ideas. d.

Gestalt psychology definitely deserves a mention. A number of persons we will encounter later, such as Mary Follett and Kurt Lewin, were Gestaltists and the notion prevails in much of our modern thinking about group dynamics and socio-technical systems.

D.

Employee participation in Decision Making

This section examines two paths to give employees a “voice” in the firm or organization: 1. Through membership in a union that would represent the workers’. a. John R. Commons is a substantial figure here.

Perhaps the first to use the phrase “human resources” and considered the “Father of Industrial Relations.” b. Commons was not anti-scientific management because it worked in some firms, but felt workers needed a say-so in the workplace. c. Other economists were interested in “applied economics” issues such as turnover, job analysis, etc. d. The position of Samuel Gompers and the AF of L was to achieve gains for organized labor through bargaining power, not productivity. Gompers said "more, more, and then more" was what labor wanted.

38

2. Union-management cooperation a. Morris Cooke, Ordway Tead, and Robert Valentine were examples of those who were trying to reformulate what labor felt was an anti-union position of scientific management.

The revised emphasis was to be on consent: b.

Union-management cooperation plans began when union membership was in decline in the early 1920s. Unions agreed to accept scientific management if they were involved by electing representatives and could bargain about wages, hours, working conditions, and so on.

2. Employee Representation Plans a. Offered an alternative to joining a union by forming shop councils and similarly named plans within a company to represent the worker to management. b. These were numerous during the 1920’s and progressive in offering substantial benefits for workers. c. With the passage of the National Labor Relations Act in 1935 and a subsequent court ruling, both unionmanagement cooperation and employee representation plans would be forbidden.

39

Chapter 10 The Emergence of the Management and Organization Theory This chapter discusses the work of two major management theorists, Henri Fayol and Max Weber. Fayol provided the basis for the modern approach to general management theory through the management process. Weber conceptualized bureaucracy to provide a formal approach to organization theory.

A.

Henri Fayol 1.Fayol was an engineer who rose in the management hierarchy to become the Director (CEO) of a large-scale, fully integrated enterprise and formed his conception of management as the general activity of integrating the functions of a firm to use its resources efficiently to attain its objectives. In the opening pages of this chapter, note how he built his general theory of management drawing on his executive experiences. The biography of Fayol by Jean Louis Peaucelle and Cameron Guthrie is based on archival records and provide important new insights into Fayol’s work.

2.Whereas Frederick Taylor was more production Fayol's viewpoint was that of general management.

oriented,

3.Fayol drew certain conclusions from his experiences: a.

Managerial abilities differed from technical ones, and the success of an enterprise depended to a greater degree on good managers than good technicians. b.

Fayol felt that every enterprise required management regardless of whether it was "commercial, industry, politics, religion, war ..." etc. I feel there is much misunderstanding about what Fayol intended. This statement of his suggests the universality of management in that this activity is necessary in all enterprise. It does not mean that managers are universal, that any manager can manage any enterprise. (This point is arguable and merits class discussion.) c.

Managers needed certain qualities, knowledge, and experience. d.

Managerial abilities become more important as a person moves up in the hierarchy; technical abilities are less 40

essential for upper level managers.

(We like to point out to our students that most CEOs still have a fond place in their heart for their technical specialties -- engineering, chemistry, whatever -- even though they must decide for an enterprise as a whole.) e.

Management could be taught in schools and universities but was not because of the absence of management theory. ("Theory" has many meanings for individuals so you might ask your students to give their definition and compare that with Fayol's.)

4.Fayol's Principles of Management (This is one of those areas where controversy can thrive -- some maintain that "management principles" is an oxymoron. One approach is to stress his disclaimer that "there is nothing rigid or absolute" in management and that Fayol's principles were guides, "lighthouses," but not absolutes nor universals.

Because he has 14 principles, we do not try to cover them all but stress those below.) a.

Division of labor -- he appears rather traditional here regarding work design, but note the job enlargement he practiced in the Commentry coal mine. b.

Authority -- the point here is his distinction between formal authority, "the right to give orders and the power to exact obedience", and personal authority which was a compound of "intelligence, experience, moral worth, ability to lead" and so forth. Fayol was aware of the need to combine and complement the authority of position with leadership qualities. c.

Unity of command -- standard, but worth a reminder for the students. d.

Unity of direction -- good advice to a lot of enterprises. e.

Centralization -- note that this does not mean that all decisions are made by top level management but finding where decisions should be made depending on the factors Fayol mentions. f.

The "gangplank," a means for providing lateral communications. (Fayol's French for this was passerelle that translates as a bridge, foot-bridge, or gangway. In brief, providing collaboration across functional silos. g. Subordination of individual interests to the general interest. Put this in a contemporary context by asking students for examples of persons who use their position of authority to serve their self-interest rather than the 41

interests of the enterprise’s employees, shareholders, etc.

5.Fayol's Elements of Management (This is another area that is plagued by terminology. Most introductory management texts use some version of Fayol's description of what managers did, but the labels are different.) a.

Planning -- also could be translated as "foresight," but very basic to Fayol's theory: (1) Plans depended on an enterprise's resources, work in process, and future trends that could not be predetermined.

(Note that Fayol's ideas resemble what would be called a strategic audit.)

(2) Plans needed to have the characteristics of unity, continuity, flexibility, and precision.

(3) Long range planning -- certainly a unique idea for his time but a valuable contribution in the evolution of strategic management. b.

Organizing -- Fayol included both the design of an enterprise and employee staffing in this element (You may wish to tell your students that organizational design is like developing the plot and roles in a drama, whereas staffing is selecting and rehearsing individuals to fill those roles.)

(1) Structure of an enterprise had to be consistent with its objectives and resources.

(2) Functional and scalar growth (these are described, but you may wish to review these concepts so you can explain Fayol's span of control ideas.)

(3) Span of control -- relatively narrow at the top, but greater at lower levels, according to Fayol. In practice, Peaucelle and Guthrie note Fayol had to make allowances for technical specialists.

(4) Staff (advisory personnel, not to be confused, as it often is, with staffing. No wonder our students struggle with the language of management.) On the subject of staff, Fayol disagreed with Taylor; that is, line managers needed staff advice but not through functional foremen advising workers.

(5) Staffing (today we call it personnel or human-resource management) involved selection, evaluation, and training of personnel. c.

Command: Fayol's term for directing, leading, supervising, actuating, or whatever. d.

Coordination: harmonizing the activities of an enterprise.

42

e.

Control: checking on performance to identify and make corrections, if necessary. Peaucelle and Guthrie found “verify” is a more appropriate translation for control.

6. The author concludes that Fayol was a “strategist” before that term became popular. Discuss the pros and cons of Fayol as using strategic management skills.

(Fayol spent relatively little time discussing command, coordination, and control. The point we stress is that planning, organizing [and staffing] set the stage for where we are going and when and how we intend to get there; then these plans, people, and resources are activated, led, motivated, and coordinated; and as our information system brings us performance data, the control element enables management to renew the elements by re-planning, or reorganizing, or whatever has been indicated by our control system. Thus, management is a continuing process, not a neat set of discrete elements/functions that are performed without consideration of the other elements.)

B.

Max Weber and Bureaucracy

(To begin, ask the class what "bureaucracy" means. There is a high probability that this idea will be associated with rules, impersonality, inefficiency, and "catch-22" situations. This opens the door for what Weber intended.)

1.Weber's Germany was characterized by cartels that limited competition; Weber’s interest in the capitalistic spirit (from Chapter 2) led him to ask if a market oriented society could operate large organizations on some rational, systematic basis? Is capitalism and its market system a “rational” way to allocate resources?

2. Bureaucracy as theory a. It was management by the office, not by person. b.

It was an "ideal," the "pure form" of organization but this did not mean that it was the most desirable. c.

Weber is suggested as the "Founder of Organization Theory."

3. Review the advantages of bureaucracy---there are some benefits.

4. Check the disadvantages---how we often see “red tape.”

43

5.Weber argued that bureaucracy was, technically, "capable of attaining the highest degree of efficiency". If so, why do we think of bureaucracy as undesirable?

44

Chapter 11 Scientific Management in Theory and Practice This seventh edition highlights the global nature of management and reflects the changing demographics of our readership in the Academy of Management and other professional associations and institutions interested in the history of management thought.

Substantial efforts have been made to reflect management in other nations and other cultures. In this chapter, scientific management leads to developments in other nations and is shaped and reshaped by context and culture. It is important to emphasize the unique social, political, and economic situations in other nations that shaped how scientific management was accepted.

This is a long, detailed chapter and the instructor will wish to guide students by selecting what is most appropriate for their studies.

In addition to global influences, we will see critical studies of scientific management, the spread of management ideas beyond the workshop level, early organization theory, origins of business policy, and other developments during this period.

A.

The Study and Practice of Scientific Management 1.Education for Industrial Management. The main points are: a.

Early in the 20th century, the teaching of management in colleges focused on production management and was based on Fred Taylor's writings. b.

Note Daniel Nelson's observation that scientific management gave credibility to the study of business.

Business schools were considered by educators of that time (and maybe today) as too vocational.

2.Scientific Management Internationally a.

The "management revolution" spread abroad from the U.S.A. Western and Eastern Europe, in Japan and China, and Australia and numerous nations. More is currently known about the nations mentioned below. b.

In France, industrialists tended to implement 45

scientific management to increase productivity without following Taylor's advice. Taylorisme became a dirty word for French workers. The French were advanced in thinking about higher education for management. c. In Britain, note the differing opinions on scientific management. The British experience is unique and deserves further study. d. In Germany, its strong engineering tradition liked Taylor’s ideas. Applications mixed in results. The RKW was important, but political changes shaped its future. e.

In Poland, Adamiecki's "harmonogram" was similar to PERT. Adamiecki developed his idea independently of H. L. Gantt, but was a substantial influence in European studies of scientific management. f.

In the U.S.S.R. ideology confronts scientific management.

(1) Lenin advocated Taylorism, but little came of this in practice. Note Alexei Gastev and the internal controversy.

(2) Gilbreth's ideas on motion study probably had more influence than Taylor's ideas.

(3) Taylor's idea of a mental revolution ran counter to the Bolshevik distrust of capitalism.

(4) Walter Polakov was successful in getting the U.S.S.R. to use Gantt Charts for their five-year plan. Wallace Clark declined to follow Polakov in Russia due to concern about political decisions being paramount. g.

In Japan, Taylor's ideas gained widespread acceptance.

The Japanese liked the idea of harmony, cooperation, and mutual interest. What modern scholars call Japanese style management had its roots in scientific management. h. In China, very early ideas of Mu Xiangyu.

3. Industrial Practice a.

The Hoxie study highlighted the difference between the notions of scientific management and how well they were implemented. Note, however, that the Hoxie report was a pro-union document and biased toward labor unions. Also, see John Frey’s later doubts about Hoxie himself. Also 46

noteworthy are John R. Commons’ comments about why the Hoxie report was not included in the final report of the Industrial Relations Commission. b.

Studies by C. B. Thompson and Daniel Nelson provide more accurate assessments of scientific management. c.

It is worth emphasizing that Nelson concluded that scientific management had a "strong positive correlation" with industrial efficiency.

In addition, scientific management was "associated with growth not stagnation" in most industries. d.

Scientific management was associated with batch shop production and labor-intensive operations. It was not useful in capital-intensive industries, or automobile assembly lines, however. e. Evidence from the U.S. Bureau of Census disputes the notion that scientific management “de-skilled labor.”

Rather, the number of skilled and unskilled workers was increasing during this period. Scientific management has been criticized for de-skilling jobs and the employment data from this period suggests this has been perpetuated as an untruth.

B.

Emerging General Management 1.Scientific management selection):

and

other

disciplines

(for

your

a. Public administration b. Marketing c. Accounting and standard costing d. The "crossover" chart as a forerunner of "break-even point." e. Flexible budgeting. f.

James O. McKinsey is an unsung pioneer for the business policy/strategy field. His influence on Bill Newman will be discussed later.

47

2.Early organization theory emphasis in your class):

(very

useful

if

this

is

an

a.

A brief summary of some previous notions organization, line-staff, organization charts, etc.

of

b.

Russell Robb is the focal point of this section. His ideas involved: (1) Organizations differed as to goals sought as well as means to those goals.

(2) These organizational differences suggested there was no “one best way” to organize.

3.DuPont and General Motors (We place more emphasis here because of the very innovative things that were happening during that period at DuPont and GM.) a.

Psychological tests for personnel selection.

b.

Donaldson Brown and Return on Investment (ROI) as R = T x P. This became the basis of the DuPont Chart system that was used until digital displays of data became more useful. c.

William C. Durant is an interesting study, but briefly examined here. He was great at building a firm, but not noted as an outstanding manager. d.

Alfred P. Sloan, Jr. is an interesting study in managing a large, multidivisional organization. If students are interested, see Wren’s study in the Business History Review about GM’s overseas operations and how they were organized. e.

The use, by both GM and DuPont, of multidivisional structures. Organized around product divisions, these divisions could be decentralized for operations and performance could be measured by ROI (when we speak of the "M-form" organization, here are its origins).

4. Business Policy and Philosophy (again, numerous ideas to consider): a.

Arch

W.

Shaw

and

the

beginning

of

business

policy 48

courses. b.

The "problem" or case method of instruction borrowed from legal education. c.

Alexander H. Church and his distinction between what we would call policy formulation and implementation. d.

Oliver Sheldon and a philosophy of management built on the efficiency values of scientific management with the ethics of service to the community.

49

Chapter 12 Scientific Management in Retrospect This chapter examines the scientific management era in light of its economic, technological, social, and political environment.

Its purpose is to examine how the ideas of managing shaped and were in-turn shaped by changing environmental factors.

A.

The Economic Environment 1.The U.S.A. was in transition from an agrarian to an industrial nation. In this period of growth, scientific management provided a means whereby a better utilization of resources could occur.

2. The U.S. work force was very diverse with immigrants from many lands. See the data for the Nation and the example of workers at Ford Motor.

3.

Compare Taylor’s “mental gains strategy” of today.

revolution”

with

the

“mutual

4.The U.S. worker prospered, both in wages, real wages (purchasing power), and reduced hours of work. (See the data for 1865-1890 and 1890-1921.)

5.More employees were in management with the addition of staff specialists. This growth in the managerial hierarchy made it more critical to plan, organize, etc.

6.Alfred Chandler's rationalization of resource utilization describes well the needs of industry during this era. The ideas of the scientific management pioneers fitted these needs.

7.Industrial efficiency was increasing, partially due scientific management (see the data on productivity).

to

B. Technology and New Horizons 1. A substantial number of today’s started during this period.

Fortune

500

companies

50

2. New manufacturing processes in steel and metal-working.

3. Transportation advances by automobiles, aircraft, canal and bridge construction.

4. Emerging energy sources in petroleum and electricity.

5. Assembly line developments at Ford Motor.

6. Office work was reshaped by the mimeograph for copying, the typewriter, carbon paper, Hollerith’s punch card, and visual means of data presentation such as Gantt Charts.

C.

The Social Environment 1.Horatio Alger, Jr. characterized the "success" ethic of U.S. enterprise.

2.Scientific management ideas were consonant with the social values of self-directing, high need for achievement, individuals.

3.Change came as the Western frontier closed; Bill Scott called this the "collision effect," which would lead to a transition period of individualism being replaced by a social ethic (coming in Part Three).

4.The Social Gospel -- described briefly here at the risk of repeating previous material.

D.

The Political Environment 1.The political articulation of the Social Gospel was the Populist-Progressive Movement.

2.Scientific management appealed especially Morris Cooke.

to

the

Progressives,

3.An increasing regulation of business during this overcame the inadequacies of the earlier Sherman Act.

time

4.Check the tax rates -- they are a good way to capture a feeling for this era of relatively limited government.

51

Part Three The Social Person Era Chapter 13 The Hawthorne Studies The purpose of this chapter is to describe the studies at the Hawthorne Plant of Western Electric, then a subsidiary of the American Telephone and Telegraph Company. The "social person" was not invented by these studies, but was elevated and brought to wider recognition by those who interpreted the Hawthorne results. The interesting thing about these studies is how they have been publicized, misinterpreted, praised, and criticized over the many years since they ended. Each of us will bring some of our views in when teaching this chapter and it is interesting to find that issues relating to the Hawthorne studies have not been resolved, but continue to generate articles and presentations.

A.

The Studies Begin 1. The original research issue was the effect of workplace illumination on worker productivity. Those who came initially to Hawthorne were electrical engineers from MIT. a.

After establishing performance baselines in three departments, the researchers varied the level of illumination. Their conclusion: illumination appeared to have no influence on output. b.

Another attempt was made with a control group and a variable group, placed in separate buildings. Again: In this case, output went up in both groups. c.

The illumination research was abandoned in 1927, but one of the researchers, Charles E. Snow, concluded there were too many variables and the "psychology of the human individual" could have been the most important one.

2.

The Relay-Assembly Test Room a.

The Hawthorne studies could have been trashed at this point, but Homer Hibarger and George Pennock pushed for continuance. Pennock had an excellent insight: supervision was a better explanation. b. The participants were volunteers, knew the objectives of the study, and were observed for a short period in their regular department prior to going to a separate room with their observer. You may wish to indicate to your students that two of the original participants were replaced about 8 months into this study. This became an issue that is discussed in Chapter 17. c. A number of changes were introduced: (1) The incentive payment plan was changed such that the relay assembly group participants were rewarded on their output rather than on the output of the larger relay assembly department. Note that the 52

participants were told that they could make more money under this arrangement -- this point will come into play later when various interpretations are made of why output increased.

(2) Rest periods were introduced.

(3) After 8 months, two operators quit and two new ones selected.

(4) Work-day and work-week changes.

(5) Mid-morning lunch and refreshments were provided by the company. d.

Over a year after the studies began, all of these "privileges," except the small group payment plan, were removed. Whereas output varied, the overall trend was increased output.

3.

Clair Turner and an early interpretation of the rise in output: a.

The small group resulting in more esprit de corps.

b.

The style of supervision: the participants’ remarks are worth noting. c.

Increased earnings: average wages went from $16 to $28-50 per week while in the test room. d.

The novelty of the study.

e.

The attention given to the operators by others.

4. A second relay-assembly group was formed by Clair Turner in an effort to test the pay for performance effects. Average earnings per week had increased significantly. a.

The second relay group was formed and taken from the large group payment plan to the small group one. Initially, output went up and then leveled off. Note that this study lasted only 9 weeks. Then, this group was returned to the original payment plan, output dropped (and that was the end of the second group). b.

Mica splitters had always been on individual pay incentives and this group was studied for 14 months. In this group, average hourly output went up during this period. c.

Turner concluded that pay incentives were one factor, but not the only one, although it was of "appreciable importance."

(Chapter 17 provides a critique of the studies but we prefer is to present and discuss Chapter 13 without reference to the criticisms. When we get to Chapter 17, we discuss the various interpretations of the studies and tie it all together. Other instructors may choose to tie 13 and 17 together in a single discussion.)

5.

The Interviewing Program 53

a.

Snow and Hibarger started questions about their feelings.

asking

Hawthorne

workers

directed

b.

Elton Mayo made a contribution by changing the interviewing program to a nondirective approach. He felt that supervisors need to listen more. c.

With the nondirective approach the length of the interviews and the information gathered increased: (1) There appeared to be a cathartic effect. After a worker complained, follow-up interviews revealed that the complaint was gone.

The workers felt better even though no change in conditions had occurred.

(2) "Fact" and "sentiment" had to be separated.

(3) Two levels of complaints (a) Manifest, i.e. what the employee said. (b) Latent, the psychological content of the complaint.

(4) Complaints were symptoms to be explored.

(5) "Pessimistic reveries" (Mayo's phrase) could be reduced if supervisors were concerned and listened to their employees. Thus, according to Mayo, pessimistic reveries would be negative attitudes held by employees that could interfere with their performance.

6.

The Bank-Wiring Room a.

Concerned observation, but not intervention, with male workers assembling switches for central office switchboards.

Note the supervisors’ objections before this study began. b.

Restriction of output was a surprising finding even though this practice had been described by others. c.

Workers had established management's standard.

an

output

norm

that

was

lower

than

d.

In the Bank-Wiring Room informal organization, there were two cliques, each having norms about appropriate in-group behavior, such as the practice of "binging." e.

Researchers found that the work groups: (1) Deliberately restricted output (2) Smoothed out production (3) Developed intragroup disciplinary methods.

f. Some workers were isolates, not in a clique, because of various factors. g.

Rules for clique membership: (1) Working too fast, a "rate buster."

(2) Working too slowly, a "rate chiseler."

(3) Do not "squeal" on a member of your group.

54

(4)

Do not act officious or be socially distant.

h. Factory as a social organization; work groups served to protect the workers within their group, and to protect the group from outsiders. The workers viewed: (1) Technologists and managers as following a "logic of efficiency" which interfered with group activities.

(2) Workers were apprehensive of authority and followed a "logic of sentiments" that reflected their feelings and attitudes toward outsiders.

B.

Human Relations, Leadership, and Motivation 1.

The "Hawthorne effect": part of the research and human relations folklore for years. Allegedly, the findings were biased because the researchers became personally involved in the social-work situation. a.

Theresa Layman, one of the participants, rebutted this; so did Don Chipman, one of the relay-assembly room observers; and so did Clair Turner, one of the researchers. b.

The Hawthorne effect is widely explanation of the Hawthorne results.

referenced,

but

is

a

dubious

2.

Mayo felt “pessimistic reveries" were one type of blockage which arose out of personal, social, and industrial problems and became manifest in apprehension of authority, restriction of output, etc.

3.

Anomie, borrowed by Mayo from Emile Durkheim to describe the break-up of traditional society, leaving people without norms.

4.

Leadership, in the view of Mayo and Roethlisberger, needed strengthening by social and human skills for the leader (you may wish to ask if Mayo and F. W. Taylor sought the same goal of collaboration and cooperation but differed in means). a.

Influenced by Chester Barnard, Mayo concluded that authority had to be based on social skills in securing cooperation. b.

Management needed to focus more on building group integrity and solidarity. c.

First-line supervisors worker-manager relations.

were

particularly

important

in

good

5.

Motivation in the human-relations literature evolved and became more Mayo and Roethlisberger's advocacy than based on what happened at the Hawthorne plant. a.

Early reports, such as Clair Turner's report and Mark Putnam's statement to Business Week, placed money as important.

55

b.

The test room participants stated they liked the fact they were able to make more money. c.

Charles Wrege cites a memo to Mayo in which he is told that economic and financial factors were of considerable importance. d.

As time passed, the Mayo-Roethlisberger theme shifted: (1) Example, Roethlisberger's memo that Mayo would be happy because of some evidence physiological, not economic, factors were related to output.

(2) More emphasis in later writings is placed on social belonging needs, being accepted by the group.

(3) A later quote regarding discarding "economic man."

(Some of this discussion overlaps the critique in Chapter 17. You may find it to your liking to combine these differing views of what motivated “the” social person.)

56

Chapter 14 The Search for Organizational Integration This chapter focuses on two individuals, Mary Follett and Chester Barnard, both of whom are very important in the evolution of management thought. Follett was chronologically closer to the scientific management era, but intellectually a forerunner of understanding group processes. Barnard, on the other hand, influenced human-relations thinking and continues to influence our understanding of organizations and management. Joan Tonn’s biography of Follett would be an excellent corollary reading.

A.

Mary Parker Follett 1.

Basis of her philosophy: a.

Johann Fichte, Georg Hegel, and Gestalt psychologists.

b. Early experiences led her to realize the need to rethink our ideas about authority, leadership, and conflict resolution.

2.

Conflict Resolution: a.

She saw 4 ways --

Submission if in a conflict situation.

b. Struggle, and someone wins and the other loses. c.

Compromise, a solution she did not like, especially appeared in labor-management collective bargaining.

as

it

d.

Integration, finding a solution that did not involve compromise, submission, or struggle. Students may be more accustomed to bargaining or battle, and less at ease with trying to find a more creative solution. Follett's illustrations do not help our understanding of integration much either. The topic of conflict resolution does engender a lively class discussion if the students are prompted to think about labor-management relations, dating or marital relationships, or even international conflict.

3.Authority and Power a.

Essential to integration would be rethinking authority and power.

b.

Follett advocated power-with and co-action to replace power-over and coercion. c.

Depersonalize orders and follow the law of the situation. Ask your students if there is a similarity here with management by objectives -- which they may or may not yet be familiar with. d.

Authority is based on knowledge and not the will of one person. I 57

comment here that this sounds like F. W. Taylor and functional foremanship. The class may or may not agree. If not, this opens the door to a discussion of authority and influence. e.

"Power-with" required "circular response," disclosure and open discussion. f.

Follett believed in employee cooperation and shared power.

4.

representation

plans

because

of

Leadership a.

Follett's notion of the role of leaders/managers was an extension of her ideas of integration and authority. b.

Control could not be achieved without integrated efforts, that is, when interests were not reconciled. c.

Control was based on facts, not people; and "correlated," not imposed from above. d.

Coordination facilitated control.

e.

Leadership, then, involved defining an organization’s purpose and skills in coordinating and evoking the law of the situation. f.

These leadership tasks were not based on the power of a leader, but a reciprocating influence of leaders and followers within the context of a situation. We find Follett fun to teach -- her ideas are unique and provoke discussion. She is often dismissed as too idealistic, out of touch in a world of trade-offs, power differences, and need for prompt action. Her ideas are an interesting launching pad for discussing leadership and authority.

B.

Chester Barnard 1.

Cooperative Systems: a.

Formal organizations as the kind "conscious, deliberate, and purposeful."

of

cooperation

b. Formal organizations helped: (1) Maintain an internal equilibrium.

(2) Examine external factors in an “open adjustments must be made.

(3) Analyze the functions of executives.

system”

to

that

is

see

if

c.

Organizations needed to be cooperative systems because people had choices and they could choose to contribute or not to contribute. d.

The executive functions could modify actions and motives through 58

influence and control. e.

Effective-Efficient: individual and organizational goals might differ and Barnard expressed this as: (1) Effective, meet the goals of the organization.

(2) Efficient, meeting individual motives and only individuals could determine whether this was occurring. Students may find Barnard's terms mean something different from previous definitions of effective and efficient. Mayo used logic of efficiency where Barnard meant effective. My advice to the class is to keep these definitions in mind only for Barnard. f.

The only measure of efficiency according to Barnard was the organization's capacity to survive. That is, to provide adequate inducements to satisfy individual motives to secure their cooperation.

At this point, another question occurs: An organization must also be effective or it may not be able to be efficient. Are effective and efficient really co-acting rather than paradoxical?

2. Elements of formal organizations: Barnard defined a formal organization as "a system of consciously coordinated activities or forces of two or more persons."

Lyndall Urwick felt this definition was too broad, and quipped: "under Barnard's definition, a boy kissing a girl is also a formal organization." a.

Willingness to cooperate, and this was to be facilitated by the offerings of objective and subjective incentives. Perhaps somewhat controversial is Barnard's notion that this meant "self-abnegation," "surrender of control of personal conduct," and "depersonalization of personal actions."

Did this mean we lose our individuality?

If so, then why did he stress the need to satisfy individual motives? b.

Purpose, or objectives of an organization.

Although individual and organizational motives were different, individuals could achieve their motives by working toward organizational purposes. This suggests an early idea that antecedes Douglas McGregor's Theory Y (Chapter 20). c.

Communication, for which Barnard developed 3 principles: (1) Channels should be definitely known.

(2) Objective authority (We interpret this to mean formal authority) requires a definite channel of communication.

(3) Keep lines of communication short and direct. d.

Informal organization, where Barnard also saw 3 universal elements: (1) Communication.

(2) Maintenance of cohesiveness.

(3) Maintenance of feelings of personal integrity and selfrespect.

59

3.

Acceptance Theory of Authority a. Barnard's definition of authority included the notion communication must be "accepted" by the organizational member. b. Authority did not reside in member's acceptance of authority. c. met:

persons

of

authority,

that

but

in

a

a

Individuals would consent to authority if four conditions were

(1) They understood the communicated order.

(2) They believed the order was consistent with the organization's purpose.

(3) The order was "compatible with their personal interests as a whole."

(4) They were physically and mentally able to comply with the order. (Depending on how much time you wish to spend on this topic, there are a number of implicit issues here regarding interpersonal communications, the clarity of the organization's purpose, and the morality/ethical possibilities regarding "personal interests.") d. "Zone of indifference," Barnard's phrase for explaining how an organization could function since members could accept or reject authority on almost any occasion.

Individuals could be very "indifferent," leading to a wider possibility of acceptance, or less indifferent. This depended on individuals weighing the "inducements," burdens, and sacrifices. In class, we may say: "As your instructor, let's assume I have some authority in this class. How far can I go?

Would you stand in your class seats if requested...?

Would you... etc.?"

I find a wide acceptance of reasonable requests, but for a promise of better grades, the students become a lot more amenable to my suggestions. In some ways, this is scary. e.

"Authority of leadership," Barnard's way of expressing "potentiality of assent" created when people had respect for confidence in their leaders.

the and

f.

Authority still existed in a managerial hierarchy, in formal authority, but authority in the final analysis still rests with organizational members.

4.

The functions of the executive. Three, according to Barnard: a.

Provide a system of communication.

b.

Promote securing personal efforts.

c.

Formulate and define an organization’s purpose.

d. Decision-making and “strategic factors.” strategic factors from John R. Commons.

Barnard adopted the words 60

e. In “logical” and “non-logical” decision-making, Barnard reveals the importance of intuition (tacit knowledge) to go with logical decision-making processes.

5.

Moral leadership for Barnard involved executives having a high moral code, demonstrating it as an example, and seeking to create this morality in others. For discussion, this can lead you into recent examples of failures as well as successes of executives, financiers, and others in displaying their moral leadership.

61

Chapter 15 People and Organizations Chapter 15 introduces a number of individuals with emphasis on Moreno, Lewin, Maslow, Scanlon, Lincoln, McCormick, Simon, and Whyte as well as leadership studies at Michigan and Ohio State. For our purpose, these summarize research in the developing studies of group dynamics, changing behavior, job design, motivation, employee participation, leadership, decision-making and sociotechnical systems. Choose your readings to fit the goals of your class.

A.

People at Work: The Micro View We approach this as organizational behavior before it acquired that label.

The bases of modern OB were being built during this era.

1.

Eduard Lindeman a.

Early study of group participation, and attitudes. b.

behavior

in

member

interaction,

Origin of phrase "participant-observer."

c.

Lindeman was a contemporary of Mary Follett and they appear to have influenced each other.

2.

Jacob Moreno a.

Sociometry, trying to classify individuals into groups that were capable of harmonious relationships. b.

Sociogram, mapping interpersonal preferences. Note the difference he found when preferences were for social vs. task mates. c.

Psychodrama, a cathartic experience for an individual in a group setting. d.

Sociodrama, the basis of role playing.

e.

Role reversal, taking the role of others and a useful technique for working with culturally diverse groups.

3.

Kurt Lewin a.

Group dynamics and field theory.

Gestalt notions for understanding individuals in groups. Note Moreno’s influence on Lewin. b.

Quasi-stationary equilibrium. Groups never achieved a steady state, but were continuously in a process of mutual adaptation. (This notion has led us to have numerous doubts about the findings of small 62

group research projects.) c.

Leadership, perhaps an inappropriate label for a study of social climate in 10-11 year old boys. Lewin asked his counselors to role play democratic or authoritarian styles and found what he expected in the boy's reactions. One counselor, however, misplayed his role and, rather than throwing the data out, Lewin called this "laissez-faire." It is doubtful that this is “leadership.” d.

Changing behavior, Lewin's finding that group participation facilitated the change process. His three-step model is still a foundation for contemporary “action research” and organizational change and development: "unfreezing" through participation; "moving" to the new level; and freezing (reinforcing) the desired new behavior. e.

Lewin's work became the basis for sensitivity training through his influence on Leland Bradford.

B.

Human and Industrial Relations 1.

National Labor Relations Act of 1935 led to a collective bargaining and labor-management relations.

new

emphasis

on

2. Interdisciplinary research such as the University of Chicago Committee on Human Relations.

3. Beginnings of industrial relations centers at various universities.

4. Increased interest in human relations training.

C.

Changing Assumptions about People at Work 1. Motivation, both Henry Murray and A. H. Maslow and the development of a need theory of motivation. a.

Maslow and the hierarchy of human needs.

b. Maslow’s “humanistic psychology” and the Third Force in psychology. c. Joseph Scanlon, union official and later Douglas McGregor’s colleague at MIT. The Scanlon Plan: (1) A union-management productivity plan whereby groups of workers got bonuses for proposing savings in labor costs.

(2) Group oriented.

(3) Scanlon’s ideas are appropriate for understanding more contemporary ideas such as “mutual gain sharing.” d. James F. Lincoln, rewarding individual efforts based on skill ratings.

(1) Wages and benefits were comparable to the Cleveland area labor market.

63

(2) In addition, bonuses were paid for performance based on quality and quantity of output as well as self-management (or, in contemporary terms, “empowerment”).

(3) When Lincoln Electric expanded into other nations, the bonus plan encountered legal and cultural challenges. Students may wish to examine how individual reward systems are viewed in other nations.

2. Job Enlargement, research in the 1940s by Walker and Guest indicated some possible improvements if jobs were designed to lengthen (broaden) the work cycle (you may want to stress that this concerned combining jobs rather than increasing job depth).

3. Participation, a power-equalization thesis of this period to play down the importance of a managerial hierarchy. a. James Worthy, at Sears, Roebuck argued for flatter structures and decentralization. He also worked with the University of Chicago's Committee on Human Relations to study the impact of structure on employee morale. b.

William B. Given, Jr., a "bottom-up" approach.

c. Charles P. McCormick, a plan for participation that is still operative in multinational tea, spice, and extract firm. Junior boards were created ("multiple management") to improve communications, manager development, and coordination through participation.

4.

Leadership a.

T. W. Adorno and the F (for Fascist) scale.

b. Rensis Likert (pronounced Lick-ert) and the University of Michigan studies of leadership orientations: (1) An employee orientation, stressing interpersonal relations.

(2) A production orientation, focus on producing.

(3) An employee orientation, coupled with more general supervision, led to higher productivity, better morale, lower turnover, greater group cohesiveness, and less employee anxiety. c. The leadership studies at Ohio State University, largely led by Ralph Stogdill and Carroll Shartle, also found a two dimensional orientation.

(1) Initiating structure, acting to further the work objectives.

(2) Consideration, emphasizing followers' needs and interpersonal relations. d. Using different terminology, leadership was viewed by each as a two-by-two matrix of leader behaviors in which being people-oriented was not mutually exclusive of a production orientation.

D.

People at Work:

The Macro View 64

1. William Foote Whyte's study of restaurants. a. Status in the social system ran counter to the workflow and who initiated work for others in the technical system. b.

Whyte's work was key to the idea of socio-technical systems.

c. Whyte is noted for “participatory action research.”

2. Tavistock Institute and the work of Elliott Jacques. Note Jacque’s ideas regarding equity.

3. Pioneering study of Trist and Bamforth on the impact of technology on a social system.

4. Herbert A. Simon, greatly influenced in his early work by Chester Barnard, was interested in how choices (decisions) were made: a.

Limits that “bound the area of rationality" made it difficult to achieve the best possible decision. Note Simon’s later use of the term “bounded rationality.” b.

"Satisficing" or "good enough" decisions were a result of the decision maker's limited rationality. c.

Composite decisions would be better because of the limits on one person's capability to achieve better solutions; participation by different groups would be an improvement. d. With James March, Simon authored the influential book Organizations. They viewed organizations as complex networks of decision processes that influence human choices.

5. George C. Homans was influenced by the writings of Vilfredo Pareto through the seminars of L. J. Henderson. Another study of the relationships created when work and social systems interact. Various dimensions were found in: a.

Activities, formal or informal.

b.

Interactions, prescribed or emergent.

c.

Sentiments, the elusive nature of feelings.

65

Chapter 16 Organizations and People The intent of this chapter is to prepare the foundation for a later discussion of management and organization theory. In contrast with Chapter 15, the focus is on organization structure and design, renewed interest in the job of the manager from shop to top management, issues of ownership and control, and the seminal work on transaction costs and the nature of firms as allocators of resources.

A.

Organizations:

Structure and Design

1. James D. Mooney was a practicing manager and in charge of General Motors’ overseas operations for a substantial period of time. Alfred P. Sloan Jr. applied the “M” form of organization to GM’s corporate organization, but Mooney had to adapt to different markets and competitive circumstances in its global operations. The line-staff organization fit the needs of the overseas operations. With Alan C. Reiley, Mooney searched for some common principles of organization in history: a. Organizations through service." b.

needed

objectives.

For

business

it

was

"profit

Efficiency resided in organized group effort.

c. Formalism, the basis of an efficient organization, involved the "efficient coordination of all relationships." d. Management actuates, plans, and controls an organization’s plans and procedure. e.

Principles: (1) Coordination, which rested on authority.

(2) Authority is in an organization, whereas power is an individual possession.

(3) "Doctrine," objectives.

(4) Scalar principle, which was founded on leadership.

(5) Delegation, conferring authority.

(6) Functional principle, difference in duties performed. Such as line responsibilities and/or staff support.

(7) Staff, represented the authority of ideas.

(8) Line, represented the "authority of man."

Some feel they should have said that line was the authority of the position held in the organization. What do you think?

2.

Texts, Teachers, and Trends 66

a.

Henry Dennison, an industrialist with numerous progressive ideas about employee relations. Dennison was a person of substantial progressive thought. b.

Canby Balderston, an early influence on the Academy of Management. Perhaps better known for his 4 M's of management: "men, money, machines, and material." c.

Charles Jamison and William Mitchell and their role in the formation of the Academy of Management. d.

The original objectives of the Academy. A careful reading will reveal the pre-eminence of Ralph C. Davis's ideas. e.

John Anderson, Merten Mandeville, and A. G. Anderson who suggested a broader view of management than commonly held at that time.

3.

Administrative Theory

a.

Luther Gulick, better known for his work in public administration but whose ideas came from Henri Fayol.

(1) POSDCORB---his view of managerial work.

(2) Departmentalization, and his "principle of homogeneity."

Grouping persons by: (a) Purpose (b) Process (c) Persons or "things" (d) Place (And you thought only marketing had its 4 P's!) b.

Lyndall Urwick, who attempted to synthesize a number of contributors to develop a general theory of organization and management.

(1) Principles of organization, 8 of them.

(2) Along with Gulick, bringing Fayol into the picture long before Fayol was recognized in the U.S. 4. Span of Control: Graicunas's work was very important and perhaps misunderstood by contemporary authors. a.

Influenced by Urwick, among others.

b. Put forth an argument for a narrow span of control due to "span of attention" and the relationships that managers deal with. c. The mathematics of the different types of relationships indicated the geometric growth of relationships with an exponential increase in the number of subordinates. d. Whereas the mathematics would indicate keeping the span of control narrow, Graicunas also includes a qualifier: exceptions could be made if the work was routine, was done independently of others, and where supervisory responsibilities were less complex. Graicunas knew 67

that there were situations where the span of control could widen, especially at lower organizational levels. Those who see these "classicists" as advocating only a narrow span of control do Graicunas an injustice.

B.

Toward a Top Management Viewpoint Renewed interest in managerial work and seminal work in transaction costs and the nature of the firm. This section is important as preparing the way for later developments in strategic management and organization theory.

1. Ralph C. Davis, educated as a mechanical engineer, took an early shop management approach, encountered the Coubrough translation of Fayol, leading him to his top management contributions. a.

Organic functions of management: (1) Planning (2) Organizing (3) Controlling

b.

Management defined as "the function of executive leadership."

c.

Unique insights into controlling with respect to its timing: (1) Preliminary; trying to design in advance what would promote the planned performance.

(2) Concurrent; supervising, comparing, and taking corrective action as needed.

2. Harry Hopf was influenced by F. W. Taylor and applied these ideas in a more general management setting. a.

Interested in office work and executive others had focused on blue-collar workers.

compensation,

whereas

b.

Interested in tying executive compensation to performance. This is still an important issue and one that has not been resolved. You might invite discussion and research into how much executives are paid and whether or not it is aligned with performance. c.

"Form follows function," an architectural notion for organization structure. Is he ahead of A. D. Chandler Jr.'s "structure follows strategy"? d.

"Optimology," Hopf’s view of the firm as a whole. Serve society to maximize profits. Hopf’s view of social responsibility.

3.

Other studies of top management: a.

Holden, Fish, and Smith's 1941 study of 31 blue-chip companies.

Found a need for clearer objectives and plans, etc. Ask your students if we still face the same issues?

68

b.

Jackson Martindell and the management audit. An early search for excellence.

4. Ownership and Control a. It might be useful to begin with asking students to recall what Adam Smith said about those who manage “other peoples’ money.” b. In the 1930s, Adolf Berle and Gardiner Means criticized executives and directors as “economic autocrats” who were removed from serving the interests of shareholders. c. Robert Gordon’s criticism was much the same, seeing top management as a self-perpetuating oligarchy serving its own interests. It might be worthwhile in discussing the issue of ownership and control to ask why this seems to be an evergreen, ever recurring problem.

5. Invisible and Visible Hands a. John R. Commons’ idea of institutional economics and the unit of analysis as transactions. His ideas achieved wider appreciation much later. b. Ronald Coase wrote his seminal work during this time about the nature of the firm. He saw the firm as the “visible hand” and superior, in most cases, to the market in allocating resources. Coase was continuing the tradition of J.B. Say and Alfred Marshall but his work received belated acclaim. Finally, we should note that, although Coase’s theory of the firm is framed as a theory of a single firm, it is meant to be a theory of all firms.

69

Chapter 17 Human Relations in Theory and Practice The purpose of this chapter is to examine the impact of human relations thinking on academia, industry, and organized labor. It also presents a critique of the assumptions, methods, and results of the Hawthorne studies.

(You may wish to teach selected portions of this chapter in conjunction with Chapter 13.)

A.

Impact of Human Relations on Teaching and Practice 1.

Extensions of human relations research: a.

The Committee on Human Relations in Industry (the Chicago group).

b.

The Tavistock Institute (London).

c.

The Harvard group and their influence on Chester Barnard.

d. Center for Group University of Michigan.

2.

Dynamics

of

Kurt

Lewin, later

moved

to the

Organized Labor and Human Relations a. Critics, such as Mary B. Gilson, suggested human relations had an anti-labor bias. b.

The National Labor Relations Act of 1935 was followed by a spurt in union membership. c.

Compare the data regarding causes of work stoppages in the 1920s with the causes following passage of the National Labor Relations Act. d.

Feelings, sentiments, and collaboration became theme, i.e., in contrast to scientific investigation.

B.

the

textbook

Hawthorne Revisited 1. Henry Landsberger's (1958) review of the criticisms and defense of Management and the Worker. Since then there have been other criticisms focusing on premises, research methods, and results.

2.

Premises: a.

Daniel Bell's criticisms that the Mayoists saw themselves as "social engineers" and assumed that happy workers were productive ones, i.e., "cow sociology."

Further, the counseling program, according to Bell, did not address the underlying problems in industry but only intended to make people "feel better" about their situation. Is Bell's story of the priest and the peasant a good illustration of this?

70

b.

William Fox's criticism that human relations would become the goal rather than the means for furthering the attainment of organizational objectives. c.

In brief, those who challenged human relations assumptions followed this reasoning that suggested: (1) workers could be manipulated.

(2) cooperation and collaboration overlooked other, more complex, issues.

(3) means were confused with ends.

3.

Research Methods and Results a.

Sykes’ factor.

criticism

regarding

ignoring

economic

incentives

as

a

b.

Carey also criticized the claim of "friendly supervision."

Output did not increase until two operatives were replaced with more "cooperative" ones. c.

Franke and Kaul concluded that it was neither supervision nor incentives but discipline, the economic hard times, and relief from fatigue that led to increased productivity. Recall that Clair Turner rejected this latter point as a cause. d.

Toelle noted that Franke and Kaul treated the relay assemblers as one group when in fact there was the original group and the change of operatives that created a second group. He agreed with Schlaifer that the "passage of time" explained most of the increased output. e.

The passage of time argument, that is, that it took a while for the group to coalesce and for trust to be built with the observersupervisor, is also supported by the recollections of the participants. f.

The "advocacy" issue is that Mayo selectively perceived the data to fit his social philosophy. This (in our opinion) weighs heavily against Mayo and is one of the reasons the Hawthorne Studies have created so much fuss. Richard Trahair, in an excellent biography, and Richard Gillespie, in a thorough study, also stress Mayo's errors as an advocate and not a scientist. Gillespie claims that Mayo "manufactured" the Hawthorne findings.

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Chapter 18 The Social Person Era in Retrospect This chapter examines the economic, technological, social, and political environment of the social person era. The time period is roughly 1929, the advent of the depression, to 1951. Changes in social values, in the role of government, and the passage of legislation favoring organized labor are the points of emphasis in this chapter.

A.

The Economic Environment 1. The 1920s were a period of prosperity, rising real wages, and low unemployment; e.g. in 1929 the unemployment rate was 3 percent.

2. Although the stock market crashed in late 1929, the impact on unemployment came more slowly and the peak was not reached until 1933. Note the use of “Darby corrected” data to gauge how federal and state unemployment relief programs reduced the reported number of unemployed. a.

President Hoover proposed work sharing rather than lay-offs, and this seemed to work for a brief period. b.

Employee stock ownership plans were double-edged prosperity for the 1920s, but tragedy in the 1930s.

swords;

c.

Attitudes toward women working outside the home changed as two wage earner families became more important. d.

Will Rogers' observation that the automobiles bought during the prosperous 1920s were used to look for work in the 1930s.

3. Keynesian economics ran counter to the Protestant ethic notion of thrift. Note Friedman’s comments for an anti-Keynes analysis of what could have led to an earlier economic recovery.

B. The New Technologies 1. Joseph Schumpeter’s ideas about innovation and economic development are noteworthy.

2. Transportation, communication, and entertainment progress apparent in automobiles, aircraft, radio, television, etc.

3.

Developments in main-frame antibiotics, DNA, etc.

computers,

dry

copying,

polio

vaccine,

4. Public sector projects led to atomic energy; dam, road, and bridge building; the Tennessee Valley Authority, etc.

72

C.

The Social Environment 1. The Lynds' study of "Middletown" found workers of the 1920s were guided by economic motives. This supports, on a limited basis, the pros and cons of incentives during the Hawthorne studies.

2. Social values were in transition, shifting from the Protestant work ethic to a social ethic. a. More collective action and turning to groups for security -consistent with an emphasis in management thought during this time on social needs. b.

McClelland's finding of a decline in the need for achievement and the rise of a need for affiliation. c. David Riesman and the "other-directed" person of this period. d.

Riesman's commentary on the shift from the "invisible hand" (Adam Smith) to the "glad hand" (F.D.R.). e.

Dale Carnegie and his Friends and Influence People.

"getting

along"

solution,

How

to

Win

f.

William G. Scott's use of the fictional literature to show the shift in social values toward more emphasis on the group and the social person.

D.

The Political Environment 1. The New Deal of F. D. Roosevelt promised to reshuffle society's cards to benefit the little people. This brought an abundance of legislation.

Legislation regarding labor-management relations needs emphasizing for this period: a.

Fair Labor Standards Act (1938) a minimum wage of 25 cents per hour and a maximum 44 hour work week, with time and a half pay for hours over that, for certain workers. b.

The Railroad Unemployment Insurance Act (1938)

c.

The Federal Anti-Injunction Act, known more commonly as the Norris-LaGuardia Act (1932), essentially divested federal courts of injunctive powers in labor disputes. d.

The National Labor Relations Act (1935) was probably the most important piece of legislation for labor in U.S. history.

(1) Guaranteed the right to bargain collectively.

(2) Guaranteed the right of self-organization. This would lead to the downfall of employee representation plans.

(3) Specified unfair practices of management.

(4) Established the National Labor Relations Board.

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e.

The Wagner Act, as the National Labor Relations Act came to be called, was a critical turning point for unions: (1) A new union, the CIO, was formed for industrial workers and enjoyed instant success. You may need to explain to your class the difference between craft and industrial unionism.

(2) Work stoppages increased from 1935-1939 and were caused primarily by the desire to organize a union. See the data comparing the period 1935-1939 with prior periods on work stoppages and their causes.

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Chapter Synopses Part Four Moving Onward: The Near Present Part Four brings the history of management thought as close to the present as possible by examining four broad areas of developments: general management theory, studies of management in other nations, and developments in business policy and strategic management; behavioral advances leading to organizational behavior; studies that extended earlier work in organization theory; further developments in production/operations management and information systems; and managing as a part of a larger environmental framework of business ethics, corporate social responsibility, and responsibilities for the physical environment. Our goal is to provide a historical perspective on more recent events and substantial efforts have been made to reflect a global, cross-cultural, perspective.

Depending on the purpose of your course, use these chapters to build toward a greater depth of the literature in the topics selected. Research papers and/or assigned readings serve to extend the students' knowledge of the present by building from the historical perspective.

Chapter 19 Management Theory and Practice This chapter is broadly conceived to reflect the rediscovery of Henri Fayol and what followed in the study of managerial work and Peter Drucker’s influence on the practice of management. Developments in management education are examined as well as Koontz’s management theory jungle and questions about the relevance of management theory. The theory-practice divide is discussed as well as ideas about evidence-based management. Finally, we trace the evolution of business policy into strategic management and global strategic management; ideas about the nature of the firm and markets and hierarchies; management as an integrating and innovating activity; and the role of strategic leadership in providing generalship that promotes continuing competitive advantages.

A.

The Renaissance of General Management 1. Post World War II experiences and the renewed growth of multinational enterprise furthered the need for a general management view of the firm and for broadly educated managers.

2. The 1949 translation of Fayol’s work reawakened interest in general management theory and led to subsequent developments of management "principles" texts to educate prospective managers. Newman, Terry, and Koontz & O’Donnell were among early texts.

75

3. Peter Drucker and the Practice of Management a. Note Schumpeter’s influence on innovative role of management.

Drucker’s

thinking

about

the

b. The need to set objectives and strategic factors. c. Management by Objectives (MBO).

4. Management education:

the focus is on the Gordon and Howell report.

a. Critical of what was taught in the business schools of that time. b. The need (according to Gordon and Howell) for more courses in: (1) The humanities and liberal arts.

(2) Mathematics.

(3) The behavioral and social sciences. c. What has changed since 1959? Find a B-school curriculum from pre-1959 and compare it to your current requirements.

5. The Management Theory Jungle: a. Koontz presented this idea over one-half century ago---you may wish to examine the six schools identified in the “jungle” and the follow-up study of how these expanded into eleven. b. Was Koontz’s “jungle” an early warning about labeled the “theory-practice divide” discussed below?

what

is

6. A later study of management education: the Porter & McKibbin Report. a. Suggest professors should have experience as managers. b. Encouraged international studies. c. Note Pfeffer & Fong’s question about the “lack of relevance” in our teaching.

7. The Theory-Practice Divide a. Differing ideologies and values “divide” those who teach and those who practice. Agree? b. Note study of human resource managers and what they read and apply. c. Do we seek “academic respectability” at a cost of useful knowledge for practitioners? d. Evidence-based management was a frequent subject at the time this 76

was written---is there progress?

Are you hopeful about developing principles “based on best evidence into management practices”? e. Have we experience”?

forgotten

Fayol

who

urged

principles

“tested

by

8. What do Managers Do? This is an opportunity for outside assignments to study how research on managerial work has been conducted and to critique those findings. a. Henry Mintzberg’s informational, roles.

Any critics of this approach?

interpersonal,

and

decisional

b. Rosemary Stewart and "demands," "constraints," and "choices." c. John Kotter's studies of general managers and his finding of certain "demands" or regularities in all general managers' jobs that resemble traditional management functions. Note the factors that cause these to vary.

9. Global Studies of Managerial Work a. The United States business education.

lagged

others

in

developing

international

b. MBA becomes a universal acronym. c. Note Archer, Boyns and Smith and the “turning away” from the writing of Henri Fayol. Why? A feeling he was out of date? Did people know of Fayol or was he lost due to historical negligence? d. Studies by Lubatkin and colleagues and others suggest there are some widely accepted management practices across nations, including non-western, non-Anglo Saxon, and non-industrialized ones where managers face similar challenges and mimic or independently develop similar solutions. Does this suggest “universality”? e. Hafsi and Farashahi found widespread applicability of Western based concepts and organization theory in developing nations. An appropriate class assignment might be to seek other studies comparing management practices/teaching/theories for comparison. f. Mintzberg offers the idea of fundamentally unchanging management practices. Agree? Disagree?

B. The Changing Scene 77

1. From Business Policy to Strategic Management to Global Strategy: this section traces the highlights of changes in terminology and contributors over a substantial period. a. Arch Shaw and the beginning of teaching business policy. b. William Newman—note the influence of J. O. McKinsey. c. Peter Drucker—conceptual framework for strategy as the “most important” decision. d. Alfred D. Chandler, Jr. and connecting strategy and structure (ask you students---how about structure shaping strategy?) e. Harvard Business School and the development of SWOT(ask what does this acronym denote and how can it be used?) f. Gordon and Howell’s recommendation for policy as a capstone. g. Schendel and Hofer’s re-labeling to “strategic management” and terms change over time to “global strategic management.” (Discuss why and does this make any difference, or not?)

2. Markets and Hierarchies a. Briefly review earlier economists, such as Say and Marshall, who saw management as a factor of production and able to provide competitive advantage. These ideas revived, for the most part, by Ronald Coase who asked why have business firms? b. Coase saw the firm as an alternative to the market with certain advantages in allocating resources. c. Oliver Williamson and the “new institutional economics” extended this idea with the hierarchy of the firm being typically more efficient than markets because firms could internalize transaction costs (remember Commons?) and provide monitoring mechanisms to thwart, hopefully, opportunism (remember Barnard? Fayol?).

3.The Resource- and Knowledge-Based Theories of the Firm a. Seminal work of Edith Penrose. b. Wernerfelt coins the phrase “resource-based view.” c. Jay Barney’s observation that goal is to develop resources that are rare, valuable, not easily imitated, and nonsubstitutable. (You might ask how is this possible without patent or copyright protection?) (Or, in a nation with no or very ill defined intellectual property rights, how is this achieved?)

78

4. Governance and Agency issues a. If the firm, through the managerial hierarchy, is typically more efficient than the market, then the actions of those who govern the firm becomes more significant. b. Adam Smith’s “other people’s money” is an early indication, followed by others, who distrust internal control mechanisms to thwart those in the managerial hierarchy who serve their own interests rather than those of their shareholders. c. Agency theory assumes that everyone will engage in opportunistic behavior—leading. This leads to devising means of monitoring behavior. This is a good place for the class to discuss issues of trust, fidelity, and other appropriate behaviors in contrast to the assumptions of agency theory. How do our assumptions about the behavior of others influence how we manage?

4.Multinational Enterprise and Global Strategy a. Note the substantial changes in the competitive landscape within the past century. b. Post-World War II recovery and the proliferation of regional trade agreements. (As this is prepared in 2017, some nations, including the U.S., are questioning their loss of “sovereignty” in economic and political matters suggesting changes that may, or may not, create more nationalistic developments. This would be worthy of review and discussion.) c. An abundant literature on global strategy is available---we offer Lincoln Electric’s decision to extend its global markets as an example of how SWOT analysis can be used for formulating multinational strategy. d. The risks involved in expanding globally are immense and we illustrate one, the rise of state owned enterprises and the use of trade surpluses from sovereign wealth funds. China comes to the mind of most, but there are other examples around the world. e. These state owned enterprises are typically not transparent regarding finances, do not innovate but copy or pilfer, and protect home markets while subsidizing those in other nations. f. Note research of Megginson and others profitability of these state enterprises.

regarding

the

lack

of

5.Management’s Entrepreneurial Role in Developing “Dynamic Capabilities” a.

Teece

and

others

have

illustrated

the

need

to

develop

“dynamic 79

capabilities” by learning to adapt to changing circumstances. b. Note once more Jay Barney’s notions about capabilities that are rare, and so forth. c. Schumpeter is mentioned again regarding “creative destruction.” d. Penrose’s contribution regarding organizational learning adds to the role of management in being open to change, yet with adequate stability to maintain the firm’s objectives. e. There is a paradox here worthy of discussion. How can we learn and adapt to change yet continue current operations?

80

Chapter 20 Organizational Behavior and Organization Theory This chapter can provide only an overview of organizational behavior and organization theory. Conceptually, this chapter picks up where Chapters 15 and 16 left off and extends those micro views on motivation, leadership, job design, and so on to the macro view of organization theory. The purpose is to provide a historical perspective, and, since management history is not a closed study, open avenues of discussion and further exploration with your students.

A.The Human Side of Organizations

1.The Transition from Human Relations to Organizational Behavior a. Chris Argyris, influenced by the humanist approach of Abraham Maslow and the socio-technical process of his erstwhile Yale colleague, E. Wight Bakke, indicated his feelings about how organizations neglected human needs. In his "personality vs. organization" notion, Argyris felt: (1) Certain organizational practices, such as the division of labor, interfered with the development of healthy human personalities.

(2) These practices promoted immature behavior.

(3) In an attempt to self-actualize, individuals ran into the obstacles posed by formal organizations.

(4) The result was various defensive behaviors, with management reacting by becoming more autocratic or by turning to sugar-coated human relations.

(5) Argyris and Donald Schon co-pioneered the ideas of “action science” and “double-loop” learning for organizations. It would be useful to connect this with the work of Edith Penrose and subsequent influence in organizational change and development research. b. Keith Davis, well known for his ideas about human relations, is an example of the transition to organizational behavior. c.

Douglas McGregor: (1) As President of Antioch College, McGregor found his understanding of human relations did not always work in practice and from these experiences, his ideas evolved and led him to recognize the influence of the assumptions we make about people on our managerial style.

(2) Theory X. Have the students identify these assumptions.

(3) Theory Y. Ditto.

(4) How did different assumptions influence managerial style?

(5)"Self-fulfilling prophecy." Was McGregor correct in claiming that what we assumed about people would make them become what we assumed they would?

81

2. Human Resources Management and Industrial Relations: The Changing Scene a.

Gordon and Howell's 1959 assessment of personnel management is worth noting. b. John R. Commons appears to have been the first to use the phrase “human resource.” c.

E. Wight Bakke extended this concept of human resources.

(1) The human resource had to be fitted into the total task of every organization.

(2) Human resources work was the responsibility of all managers.

(3) The central concern, according to Bakke, was not "personal happiness" but "productive work." d. Wendell French was apparently the first to add human resources as a sub-title to a personnel management text. e.

The contributions of George Strauss, Leonard Sayles, and Thomas Kochan have enriched human resource management literature by noting it is complementary to industrial relations. Note the reference to Kochan’s work on the “mutual gains enterprise” and ask your students how this might relate to the ideas of Frederick Taylor and Mary Follett in a ‘mental revolution’ and/or ‘integration.’ f. Numerous legislative acts have heightened the importance of human resource management. g. “Strategic Human Resource Management” and its application to develop high performance workplaces connects human resources and strategy. h. Bruce Kaufman has challenged what is ‘new’ about strategic human resource management. Are these old practices and ideas or are there some useful ideas here?

3. Job Design a.

Briefly, Plato, Adam Smith and others are mentioned in a brief review of changes over time regarding job design. b.

Frederick Herzberg's research emphasized job enrichment (depth) rather than job enlargement.

(1) Job context, or "hygiene", factors needed to be optimal to prevent job dissatisfaction.

These factors, according to Herzberg, did not motivate.

(2) Job content, "motivators", were factors that did lead to motivation.

(3) Money, according to Herzberg, could motivate if it was 82

received as a reward for accomplishment; but if money was given without regard for merit, then it was a hygiene factor. c. Turner and Lawrence were more specific and identified “requisite task attributes” important to job design. d.

Richard Hackman, Edward Lawler, and Greg Oldham's work extended the idea of task attributes of Turner and Lawrence and added a situational ("it depends...") dimension.

(1) Identified key job characteristics.

(2) Depending on an individuals "growth-need strength," these characteristics could be amplified to make the job more meaningful.

4. Work

Motivation

a. The need theories of Maslow, Murray, and McClelland are briefly reviewed as examples “what” motivates.(Note Hofstede’s challenge to these Western based theories.) b. We differentiate between these “need” theories and "how" theories: expectancy, equity, and goal-setting. c. The expectancy theory of Victor Vroom which helps explain the choosing process among individuals in terms of the (valence) of the reward and the expectancy of receiving it.

value

d. J. Stacy Adams’ equity theory is not a new one but focuses on how individuals perceive their reward or pay compared to what others are receiving.

You might wish to review Whiting Williams and his first-hand experiences with equity in the workplace. Equity theory is one of the easiest notions for the class to discuss, especially if it concerns examination results and effort expended studying. e. Goal-setting theory has a long history of supporting research of Ed Locke, Gary Latham, and a host of their associates. Over an expended period goal setting has demonstrated it practical and theoretical value, including as an example of evidence-based management.

(1) Money is a motivator because of its "instrumentality," as an economist would say, money is a medium of exchange for the things we want and need.

(2) Goal-setting is rooted historically in the work of Taylor, the Gilbreths, Drucker, Cecil Mace, and Thomas Ryan.

(3) Individuals need specific rather than general goals.

(4) The goals should be challenging but not exceed the person's ability.

(5) Performance feedback is essential.

(6) Goal-setting by management works best when people are already internally motivated by a need to achieve.

(7) Participative goal setting works best for individuals with a lower need for achievement, and when they are familiar and at 83

ease with participative management techniques.

(8) Goal-setting is related to self-efficacy goals are chosen and how results are fed back.

in

terms

of

how

5. Effective Leadership a. We examine three phases in the development of leadership theories, provide a brief critique, and then consider some contemporary ones. b. The trait phase is characterized by ideas that certain individuals are “natural,” “born” leaders possessing certain personal characteristics.

This notion may persist in the minds of some, but lacks empirical support.

Lillian Gilbreth was among those who challenged this approach to leadership and the class may wish to discuss how gender is an archaic way of thinking about the characteristics of leaders/managers. c. The behavioral phase shifted from traits/personal characteristics of those who would become effective leaders to how leaders should behave.

Ralph Stogdill and Carroll Shartle were pioneers by observing differences between those who emphasized task performance or relationships. d. Rensis Likert and Systems 1-4 stressed supportive group leaders, “link pins,” group decision-making and supervision. Later, with Jane Likert, System 5 was formulated and deserves a nod to Mary Follett’s ideas of how leaders should behave. e. The situational phase developed from Fred Fiedler’s research indicating effective leadership depends, or is contingent on, the situation. The situation is defined by: (1) Leader-member relations.

(2) Task structure.

(3) Position power, meaning formal authority. f. Fiedler concluded task-oriented supervisors performed better in favorable situations when task were well defined and position power high, while relations-oriented leader were better in intermediate situation where interpersonal relationships were paramount. g. Contemporary leadership theories---these abound and one study identified forty-nine different ones. This number is likely to increase and those offered here reflect some currently fashionable ones: (1) Charismatic---tracing back to Weber, the idea that certain individuals possess magnetic/inspirational abilities that followers find attractive. Note this can be to “evil” ends, as well as meaningful ones. Questions to ask: who succeeds (follows) the charismatic leader?

Can this charismatic leader provide continuing inspiration?

(2) Transformational---partly charismatic too, but a leader who can reform and bring about change.

Note particularly the work of Bernard Bass and James McGregor Burns.

(3) Leader-member exchange---as the name implies, relations between leader and followers. Typically leads to “in-group” and “out-group” followers and influences leader behavior. Question: does this raise an issue of fairness and equity and discrimination in interpersonal exchanges?

84

h. Understanding leadership is important and many approaches have developed. Observe Ralph Stogdill’s summary in 1974---then take another look as Gary Yukl did four decades later---what have we learned and where do we go from here?

6. Managing Across Borders a. Geert Hofstede presented an early challenge to Western-based theories of motivation, leadership, and organizational behavior that influenced subsequent research and understanding. b. Hofstede questioned Western-based theories because of their stress on the market, emphasis on the individual, and their focus on managers rather than workers. Across cultures, he identified four basic societallevel work related values (dimensions): (1) Power-distance---reflects societal degree of acceptance of power inequality.

(2) Uncertainty-avoidance---a culture’s tolerance of uncertainty and ambiguity---roughly the degree of risk avoidance.

(3) Individualism-collectivism---societal tendency to act as an individual or member of a group.

(4) Masculinity-felinity---a culture’s preference for social differences between men and women. (Emphasize Hofstede did not conclude these explained all differences since there were differences within nations.)

(5)“Confucian dynamism” was added by Hofstede and Bond to account for differences between Western and Asian (and some non-Asian) nations.

Since this was written, have we learned more? How about the People’s Republic of China?) c. It will be useful to note some studies regarding differences in compensation practices, concern for “justice,” and quality control circles. As time goes by, we will learn more implications of managing across borders.

7. Project GLOBE a. These teams of scholars in different nations have been engaged in extensive research that continues to the present. Your class may wish to extend text materials to understand this continuing research and its implications. b. Project GLOBE extended Hofstede’s research and identified six global leadership dimensions of leadership: (1) Charismatic/Value Based (2) Team-oriented (3) Participative 85

(4) Humane Oriented (5) Autonomous (6) Self-protective c. Certain nations appear to be associated with these, but be careful about generalizations within these. d. Certain “universally desirable” and “universally undesirable” behaviors were identified. Ask your students to provide examples from working experiences they may have had.

B.Organization Theory: A Continuing Venture 1.The influence of European scholars is noted---Weber, Durkheim for example, before the well-known work of March and Simon encouraged further studies that are reviewed and summarized. a. The Aston Studies offered organization size as a moderator to the influence of technology and structure as Woodward reported earlier. b. James D. Thompson’s work mechanisms to link processes.

added

the

importance

of

coordinating

c. Burns and Stalker brought Durkheim’s notion of organic and mechanistic to apply to organizations---organic structures were flexible and mechanistic were more formal with well-defined tasks and responsibilities. d. Lawrence and Lorsch offered the importance of examining a firm’s environment and the difficulty of integration as tasks became more complex and differentiated. e. John Child criticized contingency notions, adding managers had strategic choices to influence the impact of environment on structure. f. Pfeffer and Salancik furthered this idea of strategic choice by actions managers could take to shape a firm’s environment. g.

Population ecology proposed examining firms as a population rather than individually to understand adaptation to change. Hannan and Freeman were writing before the emergence of biotechnological and digital enterprises led to reshaping the structure of industries. An interesting question at this point concerns Schumpeter’s creative destruction and examining firms in a population. Are these new firms in distribution, information, and science displacing prior firms of older technologies, thus supporting population ecology theory?

2. These various theories are largely complementary organizations need to align environment-strategy-structure.

in

concluding

3. Organization theory is a “continuing venture” of different views of critics who see a jungle of theories that have little usefulness, and defenders 86

who see the generation of more theories as proving its viability. You might have your students discuss the direction of organization theory---should we generate new theories for new organizations? Generate some empirical studies that suggest how organizations might function more effectively?

4. Anglo theories abroad: Hofstede states there will be no universal theory of organizations. Whitley’s research notes substantial differences in Asian nations. As counterpoint to the direction of the field (point 3 above), perhaps our attention should focus on factors that shape differences across nations, across industries, and across firms. It seems the more we know, the less we understand, and we seek to know more.

87

Chapter 21 Science and Systems in an Information Age This chapter seeks to extend previous ideas about the use of the scientific method in management and the development of information systems to serve the organization. Operations research, developed during World War II, modified traditional production management, as did the ideas on statistical quality control the U.S. took to Japan. The balance of the chapter examines computers developed from number crunchers to management information systems and aids to managerial decision-making.

A.

The Quest for Science in Management 1. The scientific method is defined, and some of its roots in Aristotle, Descartes, Babbage, and in scientific management are reviewed.

2.

Operations Research, a technique developed in Great Britain during World War II by P.M.S. Blackett and others. a. An attempt to complex problems.

apply

the

scientific

method

and

to

quantify

b. "Blackett's circus" was a team of specialists who could bring a variety of techniques to apply to problems. c. Operations research applications after the war were primarily in the area of production management, leading to courses in “production/operations management.” d. Decision theorists searched for “optimal” decisions. What optimal mean? Is this what Gilbreth meant with his “one best way”? e. The search was for a use of science in management, not a management.

does

science of

f. The Gantt chart concept extended with more advanced techniques for planning and controlling, PERT and CPM. 3.

“If Japan Can . . . Why Can’t We?”

a. Product quality provided Japan with a competitive edge after WW II. b. Statistical quality control—pioneered by Shewhart at Western Electric. c. Deming revived Shewhart’s ideas and took them to Japan and later in the U.S. 88

d. Juran also influenced by Shewhart and by Frederick Taylor. e. The Japanese developed quality circles. Note the work of Ishikawa and others regarding quality control.

4. The Toyota Production System and Lean Manufacturing a. Taiichi Ohno receives credit for developing the notion of “lean manufacturing.” Crucial to this idea is “just-in-time” inventory management, meaning coordinating the arrival of materials/parts at the time they are needed. Reducing inventory “float” decreases inventory carrying costs. Ohno’s idea was in stark contrast to previous ideas about formulas for economic order quantities. b. Ohno credited his idea to the Ford Motor Company practice of timing the arrival of supplies and parts just in time for assembly, the idea of Ernest Kanzler, Henry Ford’s son-in-law.

5. Globalization and the International Organization for Standardization a. Emerging from British attempts to set quality standards across products, industries, and nations. American interest developed later. b.

From these efforts, an International Organization Standardization was formed in 1947 in Geneva, Switzerland.

for

c. ISO 9000 applies to manufacturing and encourages the joint efforts of employees, employers, and customers in seeking continuous product improvement.

6. Seeking World Class Manufacturing a. Firms seek to identify the “best practices” in manufacturing. b. “Benchmarking” is comparing a firm’s performance with other firms considered superior in quality control and product design. c. Hayes and Pisano remind us that following what others do may not yield a competitive advantage. Here is an opportunity to review what Peter Drucker said about the strategic questions to be asked, as well as the work of Jay Barney regarding how to sustain a competitive advantage. The work of David Teece is also useful.

B.

Systems and Information 1. "Systems," an ancient concept, found new meaning in General Systems Theory as formulated by Ludwig von Bertalanffy.

89

2. General Systems Theory proposed: a.

Study the whole organism (such as an organization). b.

Organisms sought equilibrium (it might be useful to also note the paradox of a need for stability, yet being open to change). c.

All systems were open to external influences and must adjust, adding to this paradox of stability and change.

3. Cybernetics, a term adapted by Norbert Wiener, fits into General Systems Theory by providing feedback loops so systems could "learn."

A good place to refresh Edith Penrose’s knowledge based view of the firm.

4. Herbert Simon’s efforts for designing “expert systems” builds on this notion of self-governing devices, programmed to learn by feedback of information. “Virtual reality” is another step in this design.

5.

From the Invisible Hand to the Digital Hand a. It is unlikely that your students have an understanding of the evolution of computers and electronic data processing. See if one of them can find a slide-rule without using Google or another search engine. Or, find a Hollerith card under similar limitations. b. Review the “flat world” of Thomas Friedman and discuss how these changes affected how we gather information, relate to friends, make purchases, and other influences on our lives. c. A brief review of Charles Babbage should be followed by the work of Alan Turing and the specialized machine to break “Enigma,” the German code system for messages during World War II. The movie, The Imitation Game, is recommended if anyone has not seen this story.

d.

Data recording, storage, and reproduction was furthered by the punch card developed by Herman Hollerith, who founded the firm that became IBM. e. Further computer development was Mauchly and Eckert’s ENIAC, a monster mainframe with vacuum tubes. f. John Atanasoff built a digital electronic computer in the 1930s but Mauchly and Eckert plagiarized his ideas. Atanasoff won the patent battle. g.

Early computers were monsters, slow, expensive, and with limited applicability. This was the number crunching, Electronic Data Processing (EDP) stage of computer evolution.

h. Computer technology transistors to

evolved rapidly from microcircuitry.

Note

vacuum tubes to the early term 90

“microcomputers” for “personal computers”. It is also interesting to note that in 1977 three firms dominated the PC industry. Where are they now? i. This “small, smaller world” continues and its history is unfolding with ideas and applications waiting for a future historian.

6. Enabling Global Trade through Information and Communication a. ARPAnet, privatized as the internet, created a world wide web of information avenues for trade across borders, creating opportunities and challenges to firms seeking to compete in local, national and international markets. b. This dot.com age enabled the emergence of new firms to market via the Internet, media for interpersonal sharing, and means to exchange information in a speedy fashion. c. Alfred Chandler’s work is worth reviewing when he observes the need for firms to develop technical, functional, and managerial capabilities appropriate to this “flat” world of the digital age. d. JoAnne Yates research suggests technological advances come not with the invention or advancement but when managers see an application for the new technology. This would merit class discussion of “when” to move to a “new” device or application by comparing its expected benefits with the cost of making the change.

Is the latest upgrade worth its cost?

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Chapter 22 Obligations and Opportunities This chapter begins with a brief introduction to global trade and then examines the obligations and opportunities posed in business ethics, corporate social responsibility, and business in its physical environment. This broad treatment is intended to provide a historical perspective to stimulate further study and discussion. The roots of these subject areas are ancient and ever recurring and students should see today's obligations and opportunities against this historical backdrop.

A. Managing in a Global Arena 1. Trade as a political strategy, such as the policy of mercantilism. Is trade still a political weapon? How might the scarcity of resources, such as oil and water, be a factor in trade relations. a.

Adam Smith advocated a market economy to replace mercantilism and the wars fostered by those policies. b.

David Ricardo was an advocate of free trade with each nation seeking its comparative advantage. c.

Advances in transportation and communication technology enabled a new era for multinational business. d.

The U.S. was an importer of capital until about 1914, i.e., the U.S. was a debtor nation. Are we still a debtor nation? What does balance of trade mean? The U.S. imports more than it exports. What implications does this have for us as consumers, taxpayers, investors, managers, etc.?

2. What is the “Lexus” in Friedman’s The Lexus and the Olive Tree? What is the olive tree? What do these metaphors mean for global business?

B. Individuals, Organizations, and Evolving Expectations 1. Machiavelli reminds us of the difficulty of change our behaviors and this applies to how we adjust in a multinational competitive environment.

2.Ethics a.

"The moral ‘oughts’ that sustain a civilized society." b.

Business ethics is an ancient issue: (1) Aristotelian ethics deserves a review. Also: Confucian values could be reviewed. This would be a good place to connect Aristotle’s “distributive justice” to equity theory.

(2) St. Thomas Aquinas and the "just price" as the market 92

c.

price, but without collusion, fraud, and coercion.

(3) Johannes Nider (Chapter 2) searched for ethical business practices in the early fifteenth century. Example: Caveat venditor, let the seller beware.

(4) Joseph Wharton, founder of the first collegiate school of business, was very specific about ethics in the business school curriculum.

Johnson and Johnson's credo is illustrative of both ethical and social responsibility issues. It is a long-standing statement that served the company well in numerous crises. Could it be a model for other firms? Discuss.

d.

Agency theory, considered new, but an old issue relative to principal-agent relations. As the ownership of firms was separated from its management, the question of who is responsible to whom continues to be important.

e.

John Shad donated 's munificent donation of $23 million to the Harvard GSBA for teaching business ethics. Ask the class to what extent do they agree with Mr. Shad's reasons for the "erosion of ethical attitudes in America." Have things changed?

f. Can business schools make a difference in society by teaching ethics? Why do we expect business schools to do this -- what about the family, the pre-college educational system, our elected public officials, sports heroes, and others? g. Ethical and social issues achieved a greater academic interest with the creation of various journals in the 1970s and 1980s. h. Individual and corporate wrong-doing is typically followed by legislation. Ask your students if this has been successful?

For example, did the Securities Exchange Act of 1934 prevent further incidents of individual/corporate misconduct? i. What are the provisions of the Sarbanes-Oxley Act (2002)).

Why was it passed? What changes in business practices has it caused? j. Your authors are skeptical about the efficacy of laws preventing “human frailties or chicanery.” Do you agree? Disagree?

3. Acting Ethically and Globally

a. Ethical issues, “the moral oughts,” are not limited to business or national boundaries but arise in a variety of settings and endeavors. b. “Hypernorms” are attempts to identify human conduct across nations and situations, such as health and personal safety and individual rights to life, liberty and personal security. This is a 93

good place to discuss what might be added to these ‘rights’ and how realistic it is to expect widespread acceptance of these. c. The U.S. Foreign Corrupt Practices Act was an attempt to prevent payments to foreign government officials, but it has numerous loopholes. d. Hypernorms are a worthy goal, but encounters resistance where tradition or religion or other beliefs do not hold individual rights as being important. This is a question that can be explored across history as well as in modern times.

4.Business and Society a.

The text uses ethics to individual moral conduct, and social responsibility as expectations by others about the conduct of the firm. Is this a fair and useful distinction? Can a business firm be unethical, or are its employees unethical?

.

b. Business leaders are long-standing patrons of the arts, etc Andrew Carnegie's "Gospel of Wealth" is quoted and its implementation is discussed. For the class, a reading and discussion of Carnegie's stewardship of wealth philosophy would be worthwhile. Do we still believe that we are the "trustee and agent for [our] poorer brethren"? c.. Morrell Heald’s quote about business people and philanthropy. d.

Donna Wood's findings concerning the Meat Inspection Act (1906) and the Pure Food and Drug Act (1906) show the positive role of business leaders. e.

Howard Bowen provided one definition of social responsibility and observed that business firms alone could not solve the problems of economic life. f.

Keith Davis suggests an interesting maxim: "If you mess it up, you clean it up." Is this too simplistic as a philosophy? Can it be implemented? Discuss Davis’ pros and cons of social responsibility. g.

"Stakeholder" is a term that has come into use to describe those others who are affected by business decisions. h.

Note Ansoff's distinction between "objectives" and "responsibilities."

Can a firm be socially responsible if it does not meet its economic purpose? i.

Peter Drucker's economic results. j.

Archie Carroll's reviewed by the class.

views

preceded

categories

of

Ansoff's

on

the

primacy

of

responsibilities

should

be 94

(1) (2) (3) (4)

Economic.

Legal.

Ethical.

Discretionary (later labeled philanthropy).

4. Social Entrepreneurship a. Extending the idea of entrepreneurship to encourage business applying its capabilities, discipline, innovation, and determination to social opportunities. b.

Porter and Kramer suggest firms should re-think their practices in a manner that would promote the achievement of both social and economic goals. Earlier in the chapter both Bowen and Davis suggested business should not undertake any venture outside its capabilities.

Apply the familiar SWOT analysis framework to discuss how this might be done.

7.Business and its Environment a. A growing concern and international efforts regarding the physical environment has had an impact on business organizations. b. ISO 14000 in 1992 set forth environmental management standards. c. Later, ISO 26000 responsibility.

established

standards

for

corporate

social

d. Note the same questions regarding “hypernorms.” This notion has more promise in standards that can be more reading measured, that is, the physical environment, than in the social realm.

95