Contemporary management 9th edition jones solutions manual

1 Chapter02–TheEvolutionofManagem entThought

Contemporary Management 9th Edition Jones Solutions Manual Download:http://testbanklive.com/download/contemporary-management-9thedition-jones-solutions-manual/ Contemporary Management 9th Edition Jones Test Bank Download:http://testbanklive.com/download/contemporary-management-9thedition-jones-test-bank/

Cha pter 2 The Ev ol utio n o f M an agement Tho ug ht CHAPTER CONTE NTS Learni ng Ob ject iv es 2 - 2 Key Defi n iti on s/ Terms 2 - 2 Ch ap ter Ov erv iew 2 - 4 Lect ure Out li ne 2 - 5 Lect ure Enh an cers 2 - 24 Man ag emen t in Action 2 - 26 Bu ild ing Man agemen t Ski lls 2 - 33 Man agi ng Eth icall y 2 - 34 S mal l Grou p Br eak ou t Exerci s e 2 - 35 Ex pl o rin g t he Wo rl d Wi d e Web 2 - 36 Be the Man ag er 2 - 37 Cas e i n t he News 2 - 38 Su ppl emen t al Featu res

2 - 40

2 Chapter02–TheEvolutionofManagem entThought

Man ag er’s Hot Seat

In st ru ct o r Po werPo int Sli des LEARNI NG OBJ ECTI VES

2 - 42 2 - 43

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LO 2-1. Describe how th e n eed to i n crease organ izat ion al ef ficiency an d effe cti ven ess h as gu ided th e evolu ti on of m an agem ent t h eory.

LO 2-2. E xplai n th e pri ncipl e of job special izat ion an d divisi on of labor, an d tell w h y th e stu dy of person -tas k relat ion sh ips i s cen t r al t o th e pu rsu it of in creased efficien cy .

LO 2-3. Iden ti fy th e pri ncipl es of adm in istr ati on an d organ ization th at un derli e effe cti ve organ izat ion s.

LO 2-4. Trace th e ch an ges in th eories abou t h ow m an agers sh ou ld behave to m oti vate and con trol em ployees .

LO 2-5. E xplai n th e con tribu ti on of m an agem en t s cience to t h e effi cient u se of organi zati on al resou rces .

LO 2-6. E xplai n w h y th e stu dy of th e external en viron m ent an d its im pact on an organizat ion h as becom e a cen tral issu e in m an agem en t th ough t.

KEY DEFI NI TIONS/ TERM S Admin istrative man age men t: The stud y of ho w to creat e an or ganiz ati onal st ructure and control s ystem t hat l e ads to hi gh ef ficienc y and ef f ecti veness .

Auth ority: The pow er to hold people ac countable for their a cti ons and to m ake de cisi ons concernin g the us e of or ganiz ati onal resources .

B eh avioral man age men t: The stud y of how m an agers should beh ave to m oti vate empl o ye es and encour a ge them to p erform at hi gh lev els and be comm it ted to the achi evement of organiz ati onal goals .

B u reau cracy: A formal s ystem of or ganiz ati on and admi nist rati on design ed to ensure effi ci enc y and eff ecti ven ess .

Cen trali zation : The con centrati on of authorit y at t he top of the mana ge rial hierar ch y.

Closed syste m: A s yste m t hat i s self -contained a nd thus not affected b y c hanges occu rrin g in i ts ex ternal environment .

Contin gen cy theory: Th e idea that the or ganiz ati onal st ructures and contr ol s ystems m ana ge rs

4 Chapter02–TheEvolutionofManagem echoose n t T h odepen u g h td on (a re co nti ngent on ) ch ar acterist

i cs of the ex ternal environ ment in

which the organiz ati on operates .

Discip li n e: Obedience, e ner g y, appli cati on, and ot her outward m arks of r es pect for a superior ’s authorit y.

E n trop y: The tendenc y of a closed s ystem t o lose it s abil it y to control i tself and thus to di ssol ve and dis int egr ate .

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E q u ity: The just ice, im partiali t y, and fairn ess t o which all or ganiz ati onal m embers ar e enti tl ed . E sp rit d e corp s: S hared feeli n gs of comr adeship, enthus iasm, or devoti on to a comm on cause among memb ers of a gro up .

Haw thorn e eff ect: The f indi ng that a man a ger ’s behavior or le adership app roach c an a ffe ct workers’ l evel of p erfor mance .

Hu man relation s move m en t: A man a gement ap proach that advo cates th e idea that supervisors shoul d receive b ehavior a l t raini ng to m ana ge subo rdinates in wa ys that eli ci t t heir cooper ati on and incre ase their p roduc ti vit y.

In f ormal organi zation : The s ystem o f behavior al rules and n orms that em er ge in a group .

In itiative: The abil it y to act on one’s own without directi on from a sup erior .

Job sp ecial ization : The process b y which a divi sion o f labor oc curs as di f f erent work ers specializ e in di fferent t as ks over tim e .

L in e of au thority : The c hain of comm and ex tending f rom the top to t he bott om of an organiz ati on .

Man age men t sci en ce th eory: An approa ch to m a nagement that uses ri gor ous quanti tative techniques to help mana gers make max im um us e of or ganiz ati onal resour ce s .

Mech an istic stru c ture: An or ganiz ati onal st ructure in which authorit y is c entrali z ed, tasks and rules are clea rl y specifie d, and empl o ye es a re closel y supe rvised .

Nor ms: Un writ ten, infor mal codes of condu ct t ha t prescribe ho w people sh ould act i n particular sit uati ons and are consi d ered im portant b y most members of a group or or ganiz ati on .

Op en system: A s ystem that takes in resour ces fr om i ts external environm ent and conve rts them int o goods and se rvices t hat are then s ent back to t hat environment for pu rc hase b y custom ers . Order: The m ethodi cal a rran gem ent of posit ions t o provide the or ganiz ati o n with t he gr eatest benefit and to provide e mpl o yees with car eer op portunit ies .

Organi c stru cture : An organiz ati onal st ructure i n which authorit y is d ece ntrali z ed to m iddl e and firs t -li ne mana gers a nd tasks and roles a re left ambi guous t o encou ra ge empl o ye es to cooperat e and r espond q uickl y to t he unex pected .

Organi zation al b eh avior: The stud y of the facto r s that have an im pact on how indivi duals and groups respond t o and a c t i n orga niz ati ons .

Organi zation al envi ronmen t: The s et of for ces a nd condit ions t hat operat e be yond an organiz ati on’s boundarie s but affect a mana ger’s abil it y to acquir e and uti li z e resources .

6 Chapter02–TheEvolutionofManagem eRul n t Tes: h oFormal u g h t w ritten inst ructi ons t hat specif

y act ions t o be taken un der dif ferent

circumst anc es to achieve spe cific goals .

S cientif ic man age men t : The s yst ematic stud y o f relations hips b etween p e ople and tasks for the purpose of r edesi gnin g the work pro cess t o incr eas e effi cienc y.

S tand ard op eratin g p roced u res (SO Ps): S peci fic sets of writ ten inst ructi ons about how to perform a ce rtain aspe ct of a task .

S yn ergy: P erforman ce gains t hat result when indi viduals and departments coordinate their acti ons .

T h eory X: A set of n e ga ti ve assum pti ons about workers that l ead s to t he c onclusi on that a

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mana ger ’s task i s to s upervise worke rs closel y and control t heir behavior .

T h eory Y: A set of posit ive assum pti ons about workers that l ead s to t he c onclusi on that a mana ger ’s task i s to cre ate a work s ett ing that en c oura ges comm it ment to orga niz ati onal goals and provides opportuni ti es for work ers to be im a ginative and to ex ercise in it iative and self - directi on .

Uni ty of comman d : A r eporting relations hip i n which an empl o ye e re cei ves orders from, and reports to, onl y on e super ior .

Uni ty of d irection : The singleness of pu rpose tha t m akes poss ibl e the cre a ti on of one plan of acti on to guide m ana ge rs and worke rs as the y use organiz ati onal resourc es .

CHAPTER OVERV I EW In thi s ch apter, how man agement thou ght has evo lved in modern ti mes and the central conce rns that have guided on goin g advanc es in m ana gemen t t heor y are ex plored. Fir st, t he classical mana gement theori es tha t emer ged a round the tur n of the t wenti eth centu r y a re ex ami ned. Nex t, behavioral m an a gement t heories dev eloped befo re and afte r W orld W ar II a re ex ami ned, and then mana gement sci enc e theor y, which d evelope d during the s econd W orld W ar. Finall y, th e theories develop ed to hel p ex plain how the ex ternal environment af fects t h e wa y or ganiz ati ons and mana ge rs oper ate a re ex ami ned.

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LECTURE OUTLINE

NOT E ABO UT INST RUCT OR POWE R POINT S L IDES The Instructor P ow erPoi nt S li des include most S tudent P owerPoi nt S li des, along with addit ional material t hat c an be used to ex pand the lecture. Im a ges of th e Instru ctor P owerPoi nt sl ides can be found at t he end of thi s chapter on P a ge 2-43 .

B ASIC POWE R POIN T S L I DE 1 (INS T RUCTO R’S PO WE RPOINT S L IDE 1) Chap ter 2: Th e E volu tion of Man agemen t T h ou gh t

Man ager’s Ch all en ge ( p ages 35-37 of text) S im pli ficati on an d E xcellence at Gen eral E lect ric More than ev er be fore, c ompanies mus t l earn ho w to adapt and r emain co mpetit ive in a chan ging global mark etpl ac e. Gen eral El e ctric is one ex ampl e. It i s a hi ghl y diversif ied global compan y that makes eve r ythi n g f r om l ightbul bs a nd ref rige rators to l oc omot ives and aircr aft en gines. It also has financ e busi ness es, and it runs power pl a nts.

The compan y w as cr eate d in 1892 from t he mer ge r of two companies: t he Edison G ener al Electric C ompan y and th e Thomas -Houst on C ompan y. Th omas Edison an d C harles C offin pioneered the d evelopm e nt of the incandes cent li ghtbul b, which heats a fil a ment wire, using electricit y, unt il it emi ts light. The filam ent is protected f rom ox idation b y a gl ass bulb t hat contained inert gas o r a va cuum. Gen eral Ele ctric w as not the firs t compan y to produce and sell such bulbs and r elated ele ctrical equipm ent. However, Edison and C offin us ed their combi ned ex pertise and patents t o produce pr acti cal, af fordable li ghtbul bs rel ati vel y easil y, which gave them a comp eti ti ve advanta ge.

Origi nall y G ener al El ectr ic produced li ghtbul bs an d related el ectric al equip ment at it s headquart ers in S chene ct ad y, New Yo rk. Ove r the ye ars it has ex panded to

9 Chapter02–TheEvolutionofManagem eserve n t T hcustom o u g h ters in more than 1 60 nati ons wit

h a li neup of mul ti ple businesses and

several hundred products. To do thi s, General Ele ctric dr a ws on the talents of more than 300,000 empl o ye es.

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Gener al El ectric ’s birth a s a mer ger establis hed a patt ern for quick growth b y diversi f yin g it s busi nesses through m er ger and a cquisi ti on of other firms, as well as d evelo ping n ew busin ess portfoli os. In 1911 G E b ought t he N ati onal El ectr ic Lamp Associati on, wh ich stren gthened it s dist ributi on and product portfolio. A few short ye ars later, in 1919, GE for med the R adio C orporati on of Americ a ( R C A). R C A was int ended to operate as a ret ail er f or Gene ral El ect ric’s radios, but grew into a la rge busi ness of it s own. Si nce then Gen eral El e ctri c has di versified int o aircr aft en gines, comput e rs, medical technolo g y, e ntertainment, wind powe r, appli ances, and even petroleum ex tr acti on products. It also m aint a ins financial st akes in ba nking and finance.

One chall en ge inher ent i n thi s growth i s the incr e dibl e compl ex it y of man agin g mul ti ple busi nesses in di ffer ent i ndust ries across the globe. As businesses li ke Gene ral El ectric gr ow in siz e and scope, the y ofte n become cumb ersome t o mana ge. To be consi ste nt across it s operati ons, t hese busi nes ses can be come hi ghl y fo rmali z ed and bureau crati c.

This m ana gement st yl e en ables the comp an y to m aint ain control ove r its operati ons.

Howev er , it can also i mpede the compan y’s abil it y to respond t o chan gin g mar ket d yn ami cs and compet it ive reali ti es. Bec ause G ener al El ectri c competes in m ult ipl e indus tries, it must work hard to sta y flex ibl e in the fac e of mult ipl e competit ors.

La r ge companies also s tr uggle to maintain a competit ive edge with i nnovati on because n ew products or off erin gs mu st be approved b y la ye rs of formal bur eauc rac y, w hich slows down the process. S ince companie s often compete to brin g products t o market first, t he siz e and fo rmal bureauc ra c y of an o r gani z ati on can be a stum bli ng block. For ex ampl e, eve n though a G ene ral Electric en gine er, Edw ar d Hamm er, dev eloped th e spi ral compa ct fluoresc ent l ight (CF L) in t he 1970s, Gener al El ectric ’s mana gement de cided to shelve the proje c t due to cost conce rns.

Toda y incandesc ent bul bs are b eing ph ased out i n favor of CF Ls, and GE h as los t ground to competit ors li ke P hil ips.

One ef fort t o si mpl if y Ge neral El e ctric invol ves re ducing the firm’s ex posure to risk i n economi c markets. GE C api tal is the financial arm of the cor porati on, and it took on risk y bets t hat hurt i ts parent compan y du rin g the rec ent economi c do w nturn. Imm elt and Gene r al El ectric’s man a ge rs are wo rking to di vest i ts financial assets so t hat t h e firm has less ex posure t o economi c risk. Fo r ex ampl e, GE C apit al rec entl y sol d a S wiss s ubsi diar y th at

11 Chapter02–TheEvolutionofManagem ehad ntT ught a hsuo ccessful ini ti al publ ic offering. Normall

y, companies li k e Gene ral El e ctric would

be pursuing th ese start -u p firms, b ut m anagers li ke Imm elt re ali z e that such acquisi ti on s can dist r act t he compan y from i ts core busi nesses.

Gener al El ectric h as also divested other busi nesses , including insuran ce and media. In 2013 C omcast purchased Gene ral El ectric ’s remainin g s take in NBC Unive rsal, a n entertainment productioncompany.Alt hough N BC Univers al i s profit able, Imm elt andGeneralElectric’s managementbeli ev ed tha t t he busi ness di d not reflect t he manuf acturin g co re GE w anted to

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spend it s ener gies and res ources on. Th ese divesti tures have chan ged Gen er al El ectric’s focus t o busi nesses such as air cra ft engin es and r efinin g eq uipm ent, and have help e d the compan y sim p li f y it s mana gement processes.

Time wil l t ell whether these acti ons ch an ge G ener al El ectric’s competit ive positi on, but GE is bett ing on ch an ges in m a nagement to hel p move t he compan y fo rwa rd in the nex t centur y.

I. S cientif ic Man ageme n t Th eory

afts producti on to l ar ge-s cale mechaniz ed manufa cturi ng.

In the 19th centur y’s n ew economi c cli mate,

Moreover, ma n y mana ge rs and

mana gers of all t yp es of organiz ati ons —poli

supervisors in t hes e workshops

ti cal, educati onal, and econom ic —were t r yin

and fa ctories were en ginee rs

g to find bett er wa ys to s ati sf y cus to mers’

who had onl y a te chnical ori

needs.

entation .

Man y majo r economi c, t echnical, and cult

The y wer e unprep ar ed fo r the

ural chan ges w ere t aking pl ac e at t his t im

social problems t hat occur wh en

e.

people work togethe r in lar ge

The int roducti on of stea m power and the

groups in a factor y or shop s ystem.

developm ent of sophis ti cated machine r y and equipm ent chan ged ho w goods w ere p roduced.

S mall workshops run b y skil led w orkers who produced han d -manuf act ured products ( a s ystem call ed craft s production ) were b eing repla ced b y large f actories in whi ch s ophis ti cated machines controll ed b y hund reds o r even thous ands of unski ll ed or semi skil led workers mad e products.

Owners and m ana ge rs of the new fa ctories found themselves unprepa red f or the chall en ges accompan yin g the chan ge from sm all -scal e cr

Mana gers b e gan to s e arc h for new te chniques to

13 Chapter02–TheEvolutionofManagem e n tD T hescr o u gibe h t how th e n eed to in crease organ LO2-1:

izat ion al efficien c y an d effe cti ven ess h as gu ided th e evolu ti on of m an agem en t th eory.

S T UDE NT POWE RPO INT S L IDE 4 (INS T RUCTO R’S PO WE RPOINT S L IDE 4) T h e E volu tion of Man age men t T h eory: Figu re 2 .1

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mana ge their o r ganiz ati ons’ resour ces, and soon t he y began to focus on w a ys t o increas e the ef ficienc y of the worker–t ask m ix .

A. Job S p ecial ization an d the Divi sion of L ab or In a stud y o f fa ctories tha t produced va rious pins or nail s, famous economi st Adam S mi th

between people and tasks for the pu rpose of redesi gnin g the work proc ess t o incre ase efficien c y.

Ta ylo r beli eved th at i f the

identified two differ ent typ es o f manuf acturin

amount of tim e and effort that e

g:

ach wo rker e x pends to

o The first was si mi lar to c rafts -st yl e

produce a

responsi ble for all the 18 tasks invol ved

unit of output (a finished good or s ervic e) c an be reduced b y in cre asing sp

in producin g a pin .

ecializ ati on and the divi sion

producti on, in which ea c h worker w as

o The other had ea ch work er per form in g onl y one or a f ew of th e 18 tas ks .

S mi th found that the p erformance o f the factories in whi ch worke rs specializ ed in onl y one or a f ew tasks w as much great er than the performan ce o f the fa ctor y in which each worke r performed all 18 pin -ma king tasks.

S mi th concluded that i ncreasin g the lev el of job s p ecial ization —the proc ess b y whi ch a divi sion of labor oc curs as di f fer e nt workers spe cializ e in tasks—i mproves effici en c y and leads t o hi ghe r organiz ati onal perform an ce .

B . Fr ed erick. W. T aylor and S cientif ic Man age men t Fred erick W . Ta ylor is b est kno wn for de fining the techniques of sci en tif ic man ag e men t , the s ystemati c stud y of r elati onshi ps

o f labor, the pro ducti on process wil l

15 Chapter02–TheEvolutionofManagem e n t T h Explai o u g h t n th e pri ncipl e of job special izat LO2-2:

ion an d division of labor, andtellw h y th e stu dy of person -task relat ion sh ips is cen tral to th e pu rsu it of in creased effi ciency

(INS T RUCTO R’S PO WE RPOINT S L IDE 5) Job S p ecial ization and the Divi sion of L ab or

S T UDE NT POWE RPO INT S L IDE 6 (INS T RUCTO R’S PO WE RPOINT S L IDE 7) S cientif ic Man agemen t

16 Chapter02–TheEvolutionofManagem entThought

become more effi cient.

sim pl y inc re ased the amo

Based on his ex periments and observati ons as

unt of work that each wo rker

a manufacturin g man a ger i n a var iet y of s

was ex pecte d to do.

ett ings, he developed four princi ples to i ncrease efficien c y in t he workpla ce: o P rincipl e 1 : S tud y the wa y wo rkers p erform their tasks, gather all the informal j ob knowledge that work ers possess, and ex periment wit h wa ys of im proving how tasks are pe rform ed . o P rincipl e 2 : C odif y the n ew methods of performin g tasks int o wri tt en rules and standard oper ati ng p roc e dures . o P rincipl e 3 : C arefull y sel ect worke rs who possess ski ll s and abil it ies that m atch the needs of the task, and trai n them to perform the task acco rdin g to t he establis hed rules and procedu res . o P rincipl e 4 : Establish a f air or a ccept able level of per forman ce fo r a task , and then develop a pa y s ystem t ha t reward s performan ce above the a cceptabl e level.

M ana gers in man y o r gan iz ati ons chose to im plement t he new princ ipl es of scientific mana gement sele cti vel y.

This decisi on ult im atel y result ed in pro blems: o For ex ampl e, som e mana ge rs using scientific mana gem ent obt ained incre ases in performan ce, but r ather t han sharin g performan ce gains wi th worke rs throu gh bonuses as Ta ylor h ad ad vocated, the y

o W orkers also l earn ed tha t performan ce increas es often me ant fe wer jobs anda greater threat o f la yoffs b ecause few er workers w ere n eed ed. o The specializ ed, si mpl ified jobs were o ften monot onous and repeti ti ve, and man y

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T E XT REFE RENCE E T HICS IN ACTIO N McDonal d’s and H um an R igh ts McDonald’s, li ke other global companies, has f aced in c reased s crutin y about t he wa y it s empl o yees ar e tre ated. In response to the inc reas ed scrutin y, the McDonald’s co rporati on recentl y iss ued

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workers b ecame diss ati sfied with t heir jobs.

S cientific mana gement b rought m an y worke rs more hardship than gain and a dist rust of mana gers who did not se em t o care about workers’ well -bein g. o These diss ati sfied work er s resis ted att empt s to use the new scientific mana gement

to perform a p articular t a sk and break it int o each of its compon ent act ions . o Find better w a ys to p erfo rm each component acti on . o R eo rganiz e ea ch of the c omponent acti ons so t hat t he acti on as a wh ole could be

techniques and at t im es e ven withheld

performed mo re e fficient l

their job knowledge from m an agers to

y—at l ess cost i n ti me and

prote ct their jobs and pa y.

effort .

Unable to ins pire work er s to accept t he n ew scientific mana gem ent t e chniques for performin g tasks, som e o rganiz ati ons i ncreased the mechaniz ati on of the work proc ess.

From a p erform ance p ers pecti ve, the combi nati on of the two mana gement pr acti ces — (1) achi eving th e ri ght w orker –task specializ ati on and (2) li nking people and tasks b y the sp eed of the p rodu cti on li ne — produces the huge cost s avin gs and dramatic output increas es that occu r in lar ge o r ganiz ed work sett ings.

C. T h e Gil b reths Frank Gilbreth and Lil li a n Gilbreth refined Ta ylo r’s an al ysis of wor k mo vements and made man y contribut ions to t ime-and-mot ion st ud y.

Their aim s wer e to: o Anal yz e ever y indi vidual acti on nec essar y

The Gilbreths bec ame in creasin gl y int er ested in

19 Chapter02–TheEvolutionofManagem n t T h oon u gthe h t sust ain abil it y and corporat e ae report

responsi bil it y o f its busi nesses. Be cause 80 p er cent o f McDonald’s r estaurants are independentl y owned, th e corpor ati on has onl y indi re ct control over the majorit y of its restau rant s. Yet t he compan y has put in pl ace a number of mana gerial controls desi gned to h elp ensure that all McDon ald ’s empl o ye es are tr eated human el y and fairl y. McDonald’s hopes that t hese poli cies and controls will ensure t hat i ts empl o ye es ar e tre ated we ll , and that an y human rights vi olations wil l be quickl y reported.

(Box in t ex t on pages 40-41)

(INS T RUCTO R’S PO WE RPOINT S L I DE 11) T h e Gil b reths T E XT REFE RENCE MANA GE R AS A PE R S ON Joh n D. Rockefell er J ohn D. Rockefell er was born in 1839 and showed an apti tude f or financ e from an earl y a ge. H e took a j ob as an assi stant bookkeeper with a compan y in C leveland Ohio. B efor e long,

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the stud y of fati gu e.

empl o ye es use resour ces to a

The y studi ed ho w ph ysic al char acte risti cs

chieve t he or ganiz ati on’s go als.

of the workplace contribut e to j ob st ress t hat often leads t o fati gue and thus poor perfo rmanc e .

The y isol at ed fa ctors that result in worker fati gu e, such as li ghti ng, heati ng, th e color of wall s, and the desi gn of t ools and machines.

In workshops and f actori es, the work of th e Gilbreths, Ta ylo r, and m an y oth ers had a major effe ct on t he pra cti ce of mana gement .

In comparison wi th t he o ld crafts s ystem, j obs i n the new s ystem we re mor e repeti ti ve, borin g, and monot onous as a res ult of the appli cati on of scientific mana gem ent pr inciples, and worke rs became in cre asingl y diss ati sfied .

Frequ entl y the m ana gem ent of work sett in gs became a game b etween workers and mana gers: Mana gers tri ed to i nit iate work pra cti ces to increas e per formanc e, an d workers tried to hi de the true potential ef ficien c y o f the work s ett ing to protect t heir own w ell being.

II. ADMINIS T RAT IVE MANA GE ME NT T HE ORY Administrativeman age men t is t he stud y o f howto createanorganiz ati onal st ructure and controlsystem that leads t o high e fficien c y and ef fe cti veness.

Organizat ional str ucture i s the s ystem of task and authorit y r elations hips t hat controls how

A. T h e T h eory of B u reau cracy Max W eber developed th e principl es of b u reau cracy — a formal s ystem of or ganiz ati on and admi nist rati on designed to ensure effici enc y and eff ecti ven ess. A bure aucrati c s ystem o f admi nist rati on is based on the five principl es summ ariz ed in Figur e 2. 2.

21

R

Chapter02–TheEvolutionofManagem e n t T her o u’sg mathemati ht ockefell cal abili t y and conscientious

ness gained him addit ional responsi bil it ies in t he compan y.

At the a ge of 19, R ock ef ell er cr eated a comm odit ies partnership with M aurice C lark. The Ameri can C ivi l W ar began in 1861, and causin g pric es an d demand for comm odit ies to soar. Then i n 1862, R ockefell er enter ed the i nd ustr y fo r which he would be come famous : oi l refinin g.

R ockefell er d evoted a si gnificant amount of ener g y to i nc r easing th e efficien c y of his re finerie s. He soon bought out his p artn ers a nd hired his brother W il li am t o help mana ge the operati on. He s et up his busi ness so that the refine r y incr eased the scope and efficien c y of produ cti on to develop and maintain economi es of sc ale.

In 1870, R ock ef ell er and his associates found the St andard Oil C ompan y o f Ohio. That same ye ar, R ockefell e r began im plementi ng his visi on to uni te the are a’s oil produc ers a nd consol idate the indust r y.

B y 1879, jus t eight ye ars after its creati on, S tanda rd Oil ha d gro wn to mana ging alm ost 90 perc ent of the o il refinin g busi ness. The bu siness would make R ockef ell er amon g the wealt hiest men of his d a y. He gave most of his fortune to cha ritable grou ps before his death.

(Box in t ex t on page 4 2) .

LO2-3: Iden ti fy th e pri n cipl es of adm in ist rati on an d organ izat ion th at u n derli e effecti v e organ izat ion s .

22 Chapter02–TheEvolutionofManagem entThought

o P rincipl e 1: In a bure aucr ac y, a man a

that specif y a cti ons to

ger’s formal authorit y deriv es from t he

be taken under

posi ti on he or she holds in the or ganiz ati

different circumst anc

on.

es t o achieve specific

Auth orit y is t he power t o hold people accountabl e for their acti ons and to make decisi ons con cerni ng the us e of organiz ati onal resourc es. Authorit y gives man a gers the ri ght t o direct and control t heir subordinates ’ behavior to achieve o r ganiz ati onal goals . o P rincipl e 2: In a bure aucr ac y, people should occup y posi ti ons because of their

goals.

S tand ard op eratin g p roced u res (SOPs) a re spe cific sets of written inst ructi ons about how to perform a certain asp ect of a task.

Nor ms a re unwrit ten, inf ormal codes o f conduct t hat pres cribe ho

performan ce, not be caus e of their

w people shoul d act in

social standing or p ersonal cont acts.

parti cular si tuations and

o P rincipl e 3: The ex tent of each posi ti on’s formal authorit y and task responsi bil it ies, and it s relations hip t o other posi ti ons i n an organiz ati on, shoul d be clearl y specifi ed. o P rincipl e 4: Authorit y c a n be ex ercised effe cti vel y in an or ganiz a ti on when posi ti ons are arr an ged hi erar chicall y, so empl o ye es k now whom t o report to and who reports to t hem . o P rincipl e 5: Mana gers m ust create a well defined s ystem of rules, s tandard ope rati n g procedur es, and norms s o the y can effe cti vel y control beh av ior withi n an organiz ati on .

Rul es are fo rmal writt en inst ructi ons

are consi d ered im portant b y most

23 Chapter02–TheEvolutionofManagem entThought

S T UDE NT POWE RPO INT S L IDE 7 (INS T RUCTO R’S PO WE RPOINT S L IDE 1 2) Admin istrative Man age men t Th eory

S T UDE NT POWE RPO INT S L IDE 8 (INS T RUCTO R’S PO WE RPOINT S L IDE 1 4) Web er’s Prin cip les of B u reau cracy: Figu re 2.2

24 Chapter02–TheEvolutionofManagem entThought

members of a group or or ganiz ati on .

W eber beli eved o r ganiz ati ons t hat i mpl ement all five principl es establis h a bureauc rati c s ystem that im proves o rganiz ati onal perform ance . Howeve r, if bure aucr acie s are not m ana ged well man y pro blems can r esul t . o S ometim es manage rs all ow rules and S OPs, “bureau cr ati c red tap e,” t o become so cumbersome that de cisi on making is s low and ineffici ent and or gan iz ati ons can not chan ge. o W hen managers r el y too much on rules to solve problems and not e nough on their o wn skil ls and judgment, their behavior be comes inflex ibl e.

B . Fayol’s Prin cip les of Man age men t Henri F a yol identified 14 principl es (summariz ed in Table 2. 1) that he beli eved essential to i ncreas e the e fficienc y o f the mana gement pro cess.

Divis ion of L ab or Fa yol advo cated that wo r kers be given more job duti es to p erfor m or be encoura ged to assume m ore responsi bil it y for work outcom es .

Auth ority an d Resp on sib il it y Fa yol, went b e yond W eber’s fo rmal

from personal ex pertise,

authorit y, which d erives from a mana

techni cal knowled ge, moral

ger’s posi ti on in t he hierarch y, to reco

worth, and the abil it y to l

gniz e the inf ormal authorit y that d erives

25 Chapter02–TheEvolutionofManagem e n t T h o u g ead h t and to gen erat e co mm it ment

sub ordinates .

fro m (INS T RUCTO R’S PO WE RPOINT S L IDE 1 6) Fayol’s Prin cip le s of Man agemen t

26 Chapter02–TheEvolutionofManagem entThought

An or ganiz ati on without a single guidi n g plan

Uni ty of Comman d

becomes ine fficient and ineff ecti ve .

The principl e of u n ity of co mman d s pecifies that an empl o ye e shoul d rec eive orders f rom, and repo rt to, onl y one superior.

L in e of Auth ority The li ne of au thority is the chain of comm and ex tending fro m t he t op to t he bott om of an organiz ati on .

Fa yol poi nted out that w hen or ganiz ati ons are spl it int o different d e partments or functi ons, each with i ts own hi erar ch y, i t is i mportant t o all ow mi ddle and first li ne mana gers in e ach d epart ment to i nteract with managers at si mi lar levels i n other departments. Thi s int era c ti on helps speed decisi on making.

Cen trali zation Cen trali zation is the co ncentrati on of authorit y at t he top o f the mana gerial hierar ch y.

Uni ty of Direction Un ity of d irection is t he singleness of purpose that makes poss i ble the cre ati on of one plan of acti on to gui de mana gers and worke rs as the y use organiz ati onal resourc es.

E q u ity

27 Chapter02–TheEvolutionofManagem entThought

(INS T RUCTO R’S PO WE RPOINT S L IDE 1 7) Fayol’s Prin cip les of Man agemen t

28 Chapter02–TheEvolutionofManagem entThought

E q u ity —the just ice, im partiali t y, and fairness t o which all orga niz ati onal members ar e enti tl ed —is receivi n g much att enti on toda y; t he desir e to t reat empl o ye es fairl y is a p rimar y conc ern of mana gers.

Order To Fa yol, ord e r meant t he methodical

Fa yol p roposed rew ard s

arran gement of posi ti ons t o provide the

ys tems i ncludi n g bonuses

organiz ati on with t he gr e atest benefit

and profit sharin g plans.

and to provide empl o ye es wit h care er opportuni ti es that satisf y their needs .

In itiative Fa yol believ ed mana gers must also encoura ge empl o ye es to ex ercise in itiative, the abil it y to a ct on t heir own without directi on from a superior. Used properl y, ini ti ati ve can b e a major sour ce of stren gth for an or ganiz ati on because it leads t o cre ati vit y and in novati on .

Discip li n e Discip li n e is t he obedience, en er g y, appli cati on, and other out ward marks o f res pect fo r a supe rior ’s a uthorit y.

Re mu n eration of Pe rso n n el

S tabi li ty of T en u re of Person n el

29 Chapter02–TheEvolutionofManagem entThought

T E XT REFE RENCE MANA GE ME NT INS IGHT Jim C oll in s: Good to Great J im C oll ings, not ed consul tant and busi ness coach sa ys th at several principl es predict a firm’ s success. 1) Lev el 5 Le adership. 2) H aving the right people in place is m or e im portant t han establis hing the valu es a nd st rate g y of the firm. 3) Confrontati o n and conflict and im portant drivers of decisi on success. 4) Th e Hed geho g P rincipl e: companies shoul d st ick to what t he y know. 5) Discipl ine. 6) R ather than chase te chnologi cal fa ds, seek incremental i mprovemen ts i n technolog y th at complemen t core busi nesses.

(Box in t ex t on page 48 .)

30 Chapter02–TheEvolutionofManagem entThought

W hen empl o ye es sta y wi th an organiz ati on for ex tended periods, the y develop sk il ls t hat i mprove the organiz ati on’s abil it y to ut il iz e its resourc es .

S u b ord in ation of Ind ivid u al In terest to Gen e ral In teres t

shoul d behave towa rd w orkers w as a r esponse to her conc ern that T a ylo r was igno ring th e

The int erests of the o r gan iz ati on as a

human side of the or ganiz ati

whole must take pre cede nce over th e

on. S he point ed out that mana

int erests of an y indi vidua l or group i f

gement often ov erlo oks the

the organiz ati on is to survive.

mul ti tude of

E sp ri t de Corp s A ke y element i n a su cce ssful organiz ati on is the developm ent of esp rit d e corp s , a F rench ex pre ssi on that refers to shared fe eli ngs o f com radeship, enthus iasm, or devoti on to a comm on cause amon g memb ers of a group .

III. B E HAVIORAL MANAGE ME NT T HE ORY B eh avioral Man agemen t is t he stud y of how mana gers should beh ave to m oti vate empl o yees a nd encoura ge them to per for m at high levels, and b e comm it ted to the achieve ment of or ganiz ati on al goals.

A. Th e Work of Mary Park er Foll ett Much of Mar y P a rker Fo ll et ’s writing about mana gement and about t he wa y man a gers

31 Chapter02–TheEvolutionofManagem e n Trace t T h o uthg he tch an ges in th eories abou t h ow m LO2-4

an agers shou ld behave to m otivate an d con trol empl oyees

(INS T RUCTO R’S PO WE RPOINT S L IDE 1 8) B eh avioral Man agemen t Th eory

S T UDE NT POWE RPO INT S L IDE 10 (INS T RUCTO R’S POWE RPOINT S L IDE 1 9) Mary Park e r Foll ett

32 Chapter02–TheEvolutionofManagem entThought

wa ys i n which empl o yee s can contribut e to t he organiz ati on .

S he ar gued that be caus e workers know th e most about t heir jobs, t he y sho uld be involved in job anal ysis and mana gers sh ould allow them to participate in t he wo rk de velopm ent process.

Foll et anticipated the cur rent i nterest i n selfmana ged te ams and emp owerment. S he advocated what she c all e d “cross- functi oning”: members of diff erent d ep artments work in g togethe r in cross-d epartm ental teams t o accompl ish t asks.

Foll ett proposed that kno wledge and ex pertise, and not m ana gers ’ forma l authorit y, shoul d decide who will lead at a n y pa rticular mom ent . S he took a horiz ont al vi ew of power and authorit y.

B . T h e Haw tho rn e S tudies and Hu man Relation s P robabl y b ecaus e of its r adical natur e, Foll ett ’s work was unapp re ciated b y man a gers and resea rche rs until quit e re centl y. Most conti nued to foll ow in the footst eps of Ta ylor and the Gilbreths .

To increas e ef ficienc y, th e y studi ed wa ys to im prove various cha ra cte risti cs of the work sett ing, such as job spe ci ali z ati on or t he kinds of tool s workers used. On e series of studi es was conducted f rom 1924 to 1932 at the Hawthorn e W orks of the W estern Electric C ompan y.

33 Chapter02–TheEvolutionofManagem e n t T hThis o u gresear ht ch, now know n as the Hawt horne

studi es , began as an att e mpt to i nvesti gate how chara cterist ics of the w or k sett ing— specifi call y the level of li ghti n g or ill umi nati on —affect worker fati gu e and p erfo rmance . o The stud y p roduced som e unex pected result s. The res ear chers f ound that re gardl ess of wheth er the y r aised or low ered

34 Chapter02–TheEvolutionofManagem entThought

the level of il lum ination, producti vit y increas ed. o The rese ar chers found th ese result s puz z li ng and invi ted a noted Ha rv ard ps ycholo gist , Elton Ma yo, to help the m. Ma yo propos ed another seri es of ex perim ents t o sol ve the m yster y. o These ex periments, k no wn as the relay assembly test exp eriment s , were d esign ed to investi gate the eff ects of other aspe cts of the work contex t on j ob perf ormance, su ch as the eff ect of the numbe r and len gth of rest periods and hours of wor k on fati gu e and monot on y. Durin g a two - ye a r stud y of a small group of female w or kers, the resea rche rs a gain obs erv ed that producti vit y increas ed over tim e, but t he incre ases could not be solel y att ributed to the eff ects of chan ges in t he wo rk sett ing. o The rese ar chers discov er ed that their presenc e was aff ecti n g the result s bec ause the workers enjo yed r ece ivi ng att enti on and being the subje ct of stud y and wer e will ing to cooperate with t he res earch ers to produ ce the result s the y b eli eved t he rese arch ers desired. This particula r e ffect b ecam e known as the Haw thorn e ef f ect . o The signific an t findi n g w as that each mana ger ’s person al beha vior or leade rship approach can aff ect pe rfo rmance .

From thi s view emer ged the h u ma n relation s mov e men t, which advo c ates that supervisors be beh avioral l y trained to mana ge subordinat es in wa ys that eli cit thei r cooperati on and in cre ase their producti vit y.

35 Chapter02–TheEvolutionofManagem e n t T hThe o u gim h tportance o f behav ioral or human

rel ati

ons traini ng be came even cle arer to it s supporters after the ban k w iri ng room experim ents .

Mana gers must unde rsta nd the workin gs of the

36 Chapter02–TheEvolutionofManagem entThought

in f ormal organi zation , the s ystem o f

over workers’ b ehaviors

behavioral rul es and nor ms that emer ge in

and mi nim iz e workers’

a group, when the y tr y to mana ge or chan

control over th e pace of

ge behavior in or ganiz ati ons.

work.

The incre asing int e rest i n the are a of mana gement known as organ ization al b eh avior,

T h eory Y

the stud y of th e facto rs that have an im pact

T h eory Y assum es that

on how indi viduals and groups respond to and

workers are not inherentl

act i n or ganiz ati ons, dates from these earl y

y l az y, do not na turall y

studi es .

C. T h eory X and T h eory Y Douglas M cGr e gor prop osed two sets of assum pti ons about how work att it udes and behaviors not onl y domi nate the wa y m ana ge rs thi nk but als o affect how the y b ehave in organiz ati ons. McGre gor named these two contrasti ng s ets of assum pti ons T heory X and Theory Y (Figure 2.3 ) .

T h eory X Accordin g to t he assum p ti ons of T h eory X, the aver a ge wo rker is laz y, disl ikes work, and will tr y to do a s li t tl e as possi ble. To keep work er ’s perfo rmance at a high lev el, t he mana ger must supervise workers closel y and cont rol their behavior b y me ans of “the car rot a nd st ick” — rewa rds and punis hments .

Mana gers who ac cept t he assum pti ons of Theor y X desi gn and sha p e the work sett ing to m ax im iz e their control

disl ike

37 Chapter02–TheEvolutionofManagem entThought

(INS T RUCTO R’S PO WE RPOINT S L IDE 24) T h eory X

(INS T RUCTO R’S PO WE RPOINT S L IDE 25 T h eory Y

S T UDE NT PO WE RPO INT S L IDE 12 (INS T RUCTO R’S POWE RPOINT S L IDE 2 6) Th eory X vs. Th eory Y: Figu re 2.3

38 Chapter02–TheEvolutionofManagem entThought

work, and if given the op portunit y, will

mana gers decide, fo r ex

do what i s good fo r the or ga niz ati on.

ampl e, how much inventor y

The chara cterist ics of the wor k sett ing

to hold at different t im es of

determi ne wheth er work e rs consi der

th e ye ar, wh er e to locate a n

wo rk to be a sourc e of sati sfa ct ion or

ew fa ctor y, and how best t o

punis hment, and m ana ge rs do not need

invest an organiz ati on’s

to closel y control worke rs’ behavior to m

financial c apit al .

ake them perform at a high l e vel becaus e workers ex ercise self - con trol when the y are comm it ted to or ganiz ati onal go als.

Mana gers who beli eve w orkers a re mot ivated to help the organiz ati on reach it s goals can d ec entrali z e authorit y and give mor e control ove r the job t o workers.

IV. MANA GE ME NT S CIENCE T HE ORY Man age men t sci en ce th eory is a contempo rar y approach to m an a gement that focuses on t he use o f rigorous qu anti tative tech niques to help mana gers make max im um us e of o rganiz ati onal resou rces to produce goods and s ervic es .

There are man y b ran ches of mana gement s cienc e; and information t echnolo g y ( IT), which is h aving a significant i mpa ct on all ki nds of mana gement practi ces, is a ffe cti ng th e tool s manage rs use to m ake decisi ons. Each br anch o f mana gement s cience de als with a specific set o f con cerns: o Quantit ati ve managemen t uses mathematical techniques—such as li ne ar and nonli nea r programm ing, mod eli ng, sim ulation, queuing theor y, and ch aos t heor y—to help

o Operati ons management gives man a gers a set of techniques the y c an use t o anal yz e an y aspe ct of

39 Chapter02–TheEvolutionofManagem entThought

L O2 -5: E xplai n th e con tri bu ti on s of m an agem ent scien ce to t h e efficien t u se of organi zati on al resou rces

S T UDE NT POWE RPO INT S L IDE 13 (INS T RUCTO R’S POWE RPOINT S L IDE 28) Man age men t Scien c e T h eory

(INS T RUCTO R’S PO WE RPOINT S L IDE 29) Qu an titative an d Op eration s man age men t

40 Chapter02–TheEvolutionofManagem entThought

an or ganiz ati on’s product ion s ystem t o incre ase efficien c y.

o Total quali ty management (T QM ) focus es on anal yz in g an or ganiz ati on’s input, conversion, and output acti vit i es to i ncreas e product qu ali t y. o Management i nformat ion systems (MISs ) give mana gers info rmati on ab out events occur ring insi de the organiz at ion as well as in i ts ex ternal environment —informati on that is vit al for effe cti ve de cisi on making.

V. ORGANI ZATIO NA L E NVIRONME NT T HE ORY The organ ization al envi ron men t is the set of fo r ces and condit ions that opera te be yond an or ganiz ati on’s boundaries but af fect a mana ger ’s abil it y to a cquir e and uti li z e resources.

A. T h e Op en -S ystems V iew Theorists li ke Daniel Kat z , R obert Kahn, and J ames Thompson vi ewed the organiz ati on as an op en system— a s ystem t hat takes in resour ces from i ts ex ternal environment and con verts or transforms t hem int o goo ds and services th at are then sent back to t he envi ronment , wher e the y are bou ght b y custom ers (Fi gure 2.4 ). o At the input stage an or ganiz ati on acquires resourc es such as raw ma terials, m one y,

and skil led workers to produc e goods and services . o Once the or ganiz ati on has gathe red the necessa r y resou rces, con version be gins. o At the conversi on st age t he or ganiz ati on’s

41 Chapter02–TheEvolutionofManagem entThought

(INS T RUCTO R’S PO WE RPOINT S L IDE 30) T otal q u ali ty man age men t & Man age men t in f orma ti on systems

LO2-6: Explai n w h y th e stu dy of th e external en vironm en t and it s im pact on an organ ization h as becom e a cen tral iss u e in m an agem ent t hou gh t.

S T UDE NT POWE RPO INT S L IDE 14 (INS T RUCTO R’S POWE RPOINT S L IDE 33) T h e Organi zation as an Op en S ystem: Figu re 2.4

22 Chapter02–TheEvolutionofManagem entThought

workfor ce, usi n g approp r iate tool s, techniques, and ma chiner y, trans forms t he input s int o output s of finished goo ds and services. o At the output stage the organiz ati on rele ases finished goods and servic es to i ts ex ternal environment, wher e cust omers purchas e and use them to s ati sf y their needs .

A closed s yste m, in cont rast, i s a self contained s ystem t hat i s not aff ec te d b y ch an ges in i ts ex ternal environment. Or ganiz ati ons t hat oper ate as closed s ystems, t hat i gnore the ex ternal environment, and that f ail to acquire input s are li kel y to ex perienc e en tr op y , which is t he tendenc y of a closed s yst em t o lose it s abil it y t o control i tself and thus to di ssol ve and disi ntegrat e. o S ystems t heorists li ke to ar gue that the whole is gr eate r than the sum o f its parts; the y me an that an or gani z ati on performs at a higher l evel when it s dep artments work togethe r rath er than sep ar atel y. o S yn ergy , the perfo rmanc e gains t hat result from t he combined acti o ns of indivi duals and departments, i s poss ibl e onl y in an organiz ed s ystem.

B . Contin gen cy T h eory The con tin gen cy theory is an idea that organiz ati onal st ructures and control s ystems mana gers choose a re con ti ngent on t he chara cterist ics of the ex ternal

environment in which the or ganiz ati on operates ( Fi gur e 2.5) .

An important char acterist ic of the ex ternal environment t hat aff ects an or ganiz ati on’s abil it y to obt ain resour ce s is the degree to whi ch the environment i s chan ging. o C hanges in t he o r ganiz ati onal environment

22 Chapter02–TheEvolutionofManagem entThought

workfor ce, usi n g approp r iate tool s,

(INS T RUCTO R’S PO WE RPOINT S L IDE 34) In p u t, Conversion & Ou tpu t stages

S T UDE NT POWE RPO INT S L IDE 15 (INS T RUCTO R’S POWE RPOINT S L IDE 3 8) Contin gen cy T h eory: Fi gu re 2.5

23 Chapter02–TheEvolutionofManagem entThought

include chan ges in t echn olog y, which can lead to t he cr eati on of ne w products and result in t he obsol escenc e of ex ist ing products ; t he entr y of n e w competit ors ; and unst able economi c condit ions .

Mech an istic and Organi c S tru ctures Burns and S talke r propos ed two basic wa ys in whi ch mana gers can or ganiz e and control an or ganiz ati on’s acti vit ies to respond t o cha racte risti cs of its ex ternal environment : o Mech an istic stru c ture —auth orit y is centrali z ed at t he top of t he mana gerial hie rar ch y, an d the vertical hierar ch y of authorit y is t he main means used to control su bordinates’ behavior. This s tructur e provides the most efficient wa y to ope rate in a stable environment. o O rgan ic stru ct u re— authorit y is decentr ali z ed to m iddl e and first li ne mana gers to en coura ge t hem t o take responsi bil it y and a ct qui c kl y to pursue sca rce resour ces.

This structure provides the mo st efficient wa y to operat e in a r apidl y ch an gin g environment.

24 Chapter02–TheEvolutionofManagem entThought

LECTURE ENHAN CERS Lectu re E n h an cer 2.1 MA NAGEME NT IN EAR LY C IVILIZA TIONS Although tex t di scussi on concentr ates on the evolu ti on of manageme nt si nc e the nineteenth centur y, man y man a gem ent practi c es wer e dev eloped much ea rlier. The gr eat civil iz ati ons of S umeria, Bab ylon, E g ypt , Ass yri a, and P ersia h ad ex pert managers, as s een b y a chievem ents such as the Gr eat P yrami ds of Eg ypt and the Han ging Ga rdens of Bab ylon. S umerian builders reli ed on the use of m erit wa ges to b uil d the wall e d cit ies and can als of S umer. The hi ghwa y and li brar y s yst ems of Ass yri a and the gr eat citi es of P ersia requi red or ganiz ati on and mana ge rial genius t o a chieve. Th e C o de of Hamm ur abi i ncluded incenti ve and mi nim um wages as e arl y as 1800 B.C .

Greek achiev ements i n ar chit ecture, li ter ature, and civi l governm ent requir e d the appli cati on of compl ex managem ent knowledge. The cit iz ens of Greek cit y stat es worked under the pi ec ework s ystem on gove rnment c ontracts.

R ome once controll ed th e world from En gland to Asia and is sti ll known for its s ystems of ro ads, const ructi on of publi c bu il dings, and civi l gov ern ment. These we re dev elo ped and maintained b y a mi li tar y s ystem t hat is s ti ll a model for modern a rmies. These a ccompl ishm ents required the appli cati on of highl y d ev eloped mana gement kno wledge. As e arl y as 300 B.C ., R ome used m ini mum wage laws to t r y to compens ate for a sh ortage of labo r.

C hina’s Great W all , com plex road s ystem, and si l k trade r equired ex tensive mana gem ent ex pertise. The principl e o f specializ ati on was used as earl y as 1650 B.C ., an d labor turnover was understood as e arl y as 40 0 B.C .

More than 400 ye ars a go, a dipl omat and civi l serv ant i n the cit y-st ate of Florence n amed Niccolo Machiav ell i wro te a book call ed T he Prin ce. Machi avell i was an e x perienced observ er of the int rigu es of state. His book was a how -to-do-it manual for a ruler. T he Prince fo cused on how to rule: not how to be good o r wise, but how t o rule succ essfull y. M ach iavell i’s beli efs about t he nature o f peopl e wer e il lust rated b y his f amous statement, “W hoe ver desires to found a

25 Chapter02–TheEvolutionofManagem estate n t Tand h o ugive g h t it l aws, mu st s tart wit h the assum ption

that all men are b ad a nd ever r ead y to

displ a y their vicious natu re when ever th e y ma y fin d occasion for it .� He bel ieved that a lead er is just ified in us ing an y lea dership st yle o r tacti c to cope with t hese t ypes of people.

That i s, the end just ifies the means. If a l eader h ad to choose b etw een bein g f ear ed and lov e d, she or he shoul d choose fe ar, sinc e he c an control fea r but not l ove.

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The R oman Cathol ic Church has contribut ed gre a tl y to t he evolut ion of ma nagement thou ght. As C hristi anit y spr ead and d ifferent s ects eme r ged, th e church n eed ed to defin e more cle arl y it s mi ssi on, purpose, objecti ves, pol icies, rules, and o rganiz ati onal hi erar ch y. It developed a stron g centrali z ed authorit y-r es ponsi bil it y r elations hip. Thi s centrali z ati on and the Church’s ex tensive enforc ement o f doct rines and rules was on e of the majo r factors l eadin g to t he R eformation.

Lectu re E n h an cer 2.2 GILBR E TH’S M OTION S T UDIE S Frank Gilbreth be gan his care er as an app renti ce b r ickla ye r. H e watch ed oth er brickla ye rs and saw that som e we re slow and ineffici ent whil e som e were v er y pro ducti ve. He discover ed that each used a diff erent set of moti ons t o la y bricks. From his obs ervati ons, h e isol ated the basic movements necessa r y to do the job and eli mi nated wasted ones. His r evised method reduced unnecessa r y mot ions b y 70 percent and tri pled bri ckla yers’ p roducti vit y.

This was the first “moti on st ud y,” d esign ed to i solate the best pos sibl e met hod of perfo rming a given job. Lat er Gil breth and his wife, Lil li an, st udied job mot ions u sing a mot ion pi cture camer a and spl it -second clock. T he isol ated ind ivi dual m oti ons t he y call ed “therbli gs,” which is “Gilbreth” spell ed b ackw ards wit h the “th” r eve rse d.

One of Gil breth ’s cli ents i n the 1920s was J ames E. Case y, the founde r of UPS . Mr. Case y turned to Gil breth t o dev elop t echniques to m easu re the tim e co nsum ed eac h da y b y ea ch UPS driver. Late r, UP S en gineers cut awa y the sides o f a UPS deli ver y truck an d used Gilbreth’s techniques to st ud y a dri ver at work. T he r esult ing ch an ges in p a cka ge lo a ding incr eased efficien c y b y 30 per cent.

Lectu re E n h an cer 2.3 A TTRIB UTE S OF E X CE LL E NT C OMPANIE S In thei r book In Sear ch o f Excell enc e, Thomas J . P eters and R obert W ater man identi fied the chara cterist ics that di sti nguish t he ex cell ent and in novati ve companies in A merica. Th ese a re: A bias f or acti on : These companies “ got on wit h it .” The y didn’t l et bure au crac y k eep them

27 Chapter02–TheEvolutionofManagem e n t T h from o u g hm t aking d ecisi

ons.

C loseness t o the custome r : The y l ist ened to their c ustom ers and learn ed fro m t he people the y se rved.

Autonomy and entrepren eurshi p : The y h ad “prod uct champi ons” who gen erated n ew products or servi ces. The y en coura ged these p eopl e to m ake sure th e y gene rated “ a reasonabl e number of mi stakes.”

Producti vit y throu gh people : The y t reated th e ran k and file as the sour ce o f quali t y and

28 Chapter02–TheEvolutionofManagem entThought

producti vit y gain s . The y valued their people and r espected the indi vidual.

Hands-on, value-driv en : C ompan y values and phil osoph y w ere mor e im por tant than organiz ati onal st ructure. “ Sti ck to t he knit ti ng” : The y n ever acquir ed a busi ness t he y didn ’t know ho w to run.

L ean st aff , simpl e form : The y h ad si mpl e or ganiz ati onal st ructures and l ea n to plevel st affs.

Simult aneous l oose-ti ght pr operti es : The y wer e bo th centrali z ed (about t he few co re values) and d ecentr ali z ed (product dev elopm ent a nd “product ch ampi ons ”) .

MANAGEMENT IN ACTI ON Notes f or T op ics f or Discu ssi on and Actio n DISCUSS ION 1. C hoose a fas t -f ood restaur ant, a department st ore, or some other organiz ati on w it h w hich you are famil iar , and describe the divisi on of l abor and job special izat ion i t uses to p roduce goods and services. How might thi s di visi on of l abor be improved?

S tudents shoul d cit e inst ances in whi ch empl o ye es specializ e in onl y one o r a few tasks o f a process, r ather than on e in which empl o ye es pe rfo rm all tasks. McDonald’s mana gers d ecided on a basic divi sion o f labor among chefs and food se rvers. M an a gers all ocate d all the tasks i nvolved in actuall y cookin g the fo od to t he job of the chef, and all ocated all of tasks related to givi ng food to custom ers to foo d servers. In addit ion, t he compan y cr eated othe r k inds o f specializ ed jobs, such as deali n g with drive-throu gh custom er s and keepin g the r estaur ant clean. This ki nd of job sp ecializ ati on increas es effici enc y and worke r producti vit y.

Mana gers must conti nual l y an al yz e the ran ge o f ta sks t o be perform ed and t hen cre ate jobs t hat all ow the or ganiz ati on to give custom ers the quali t y of goods and level of s ervice that the y want. In doin g so, how ever, th e y must ce rtain not to ove rsimpl if y tasks, si nce too much specializ ati on can lead to wo rker bo red om and monoton y. This can hav e an adv erse im p act on p roducti vit y and efficien c y.

2. Apply T aylor’s pri ncipl es of scientif ic managem ent t o improve the perfor mance of t he

29 Chapter02–TheEvolutionofManagem eorgani n t T h zati o u gon h t you chose in topi c 1.

McDonald’s has in p la ce an effi cient s yst em for fil li ng orde rs, though som e benefit m a y be gain ed from gath erin g more information on t ask p erforman ce and ex perime nti ng with wa ys of im proving the wa y t asks are pe rform ed to i ncre ase efficien c y (T a ylo r’s P rin cipl e #1.)

30 Chapter02–TheEvolutionofManagem entThought

A reco rd of pro cedur es is kept t hat codifies metho ds of perfo rming tasks in to writ ten work rules and st andard op erati n g pr ocedures. New empl o ye e s are given this re cord w hen the y be gin traini ng, and th ese rules are used to fu rther stand a rdiz e and si mpl if y jobs ( Ta ylo r’s P rincipl e #2.)

Empl o yees are ca refull y selected so that the y poss ess t he ski ll s and abil it ies that m atch the needs of the task and a re tr aine d to perform t he task acc ording to t he rul es and pr ocedures establis hed in P rincipl e 2 (Ta ylo r’s P rincipl e #3.) Empl o ye es r eceive a traini n g manual and be gin wit h sim pli fied jobs , earning a dv ancement to m ore com plex posi tions as the y inc rease th eir performan ce.

Empl o yees are giv en an acc eptable level o f per for mance that the y must me et, t hough their p a y s ystem does not se em t o provide high er r ewa rds f or perfo rmanc e above th e ac ceptable lev el (Ta ylor’s P rincipl e #4.) A pa y s yst em t hat t ies pe rformanc e to bonus es or t im e off mi ght provide workers wit h inc enti ve to sell more food and im pr ove their custom er s ervic e.

3. In what w ays are Web er’s and Fayol’s ideas ab out bur eaucracy and ad minis trat ion simil ar? How do they dif fer?

W eber developed a s yste m of bureau cra c y—a fo r mal s ystem of or ganiz ati on and admi nist rati on designed to ensure effici enc y and eff ecti veness. It is a s ystem bas ed on five principl es. Fa yol identified 14 principles that he beli eved to b e esse nti al t o increasin g the ef f icienc y of the mana gement pro cess.

Both m ana gem ent t heori sts emphasiz ed the foll owing prin cipl es for suc ce ssful m ana gement: Authori ty: Thi s is the power to hold people a ccou ntable for their acti ons an d to m ake deci sions conce rning th e use of or ganiz ati onal res ources. A ccordin g to W e ber, formal authorit y de rives from t h e posi ti on a mana ger hol ds i n the organiz ati on. Fa yo l went b e yond formal authorit y to i nclude the informal authorit y derived from p ersonal ex pertise, technical knowled ge, mo ral worth, and abil it y to l ead and to gen erat e com mi tm ent from subordinates.

L ine and unity of command : W eber ar gued th at t he ex tent of each posi ti on’ s formal authorit y and t ask respon sibi li ti es, and it s relationship t o other posi ti o ns i n an

31 Chapter02–TheEvolutionofManagem e n t T horganiz o u g h tati on, shoul d be clearl y spe cifie d.

Fa yol e choes thi s idea when he spe aks of

unit y of comm and — an empl o ye e shoul d r ecei ve orders from onl y one superior.

Both i de as emp hasiz e specificati on of responsi bil it y and seek to avoid c onfusion and ove rlap o f a uthorit y that ma y d ecr ease effi cienc y and/or eff ecti ven ess.

Authori ty organizat ion : Both W eber and Fa yol su ggest a chain of m ana ge r s in an organiz ati on be arr an ged from t op to bot tom . W hile W eber was mor e adh er ent t o a hierar chical st rate g y, F a yol emphasiz ed also t he im portance of cross -d epar tm ental

32 Chapter02–TheEvolutionofManagem entThought

int egr ati on and teams, an d comm unicati on at t he lower levels of mana gem ent i n an organiz ati on. Fa yol also stressed the im portanc e o f lim it ing the number of l evels i n the hierar ch y to reduc e com muni cati o n problems.

C entral izat ion : W eber an d Fa yol a r gue fo r a stron g con centr ati on of author it y at t he top of the organiz ati onal hi erar c h y. Fa yol was mor e flex ibl e, though, in allowin g f or init iative and innovation at lower level s in an organiz ati on.

Establ ished rules: W eber ar gued fo r a w ell -define d s ystem of rul es, st andar d operati n g procedur es, and norms s o that behavior wit hin an organiz ati on could be eff ecti vel y controll ed. These stand ar ds provide guid eli nes tha t i ncrease p erfo rmanc e b ecause th e y specif y the best w a ys to accompl ish or ganiz ati onal t asks. Fa yol also st ress ed order and discipl ine, which echo th e tenets of W eber ’s princ ipl e, but Fa yol also st ress ed equit y and esprit de corps, p rincipl e s that emphasiz e the need to t reat emplo ye es f airl y and to cre ate a posi ti ve work environme nt.

4. Which of Weber ’s and Fayol’s pri ncipl es seem most relevant t o the creat ion of an ethi cal organi zati on?

Ethi cal behavior in or gan iz ati ons i s crucial for or ganiz ati onal success and e mpl o yee well bein g. W eber’s focus on p erfo r mance and abil it y r ather t han social st atus or we alt h as determi nants of authorit y, a re r elevant t o ethi cal consider ati ons. W eber also emphasiz es specificit y in autho rit y hierar ch y, task requir eme nts, and chains of comm a nd. B y comm unicati n g to empl o ye es the organiz ati on’s ex pectations for responsi ble beh avi or, mana gement acts ethi call y and fai rl y. Th e fairness and equit y o f the selecti on and promot ion s ystems t hat W eber advo cates en coura ges organiz ati onal m embers to act ethicall y and furthe r promot e th e int erests of the organiz ati on as well .

Fa yol’s prin cipl es also e x empl if y ethi c al consider ati ons. B y re co gniz ing the downside of specializ ati on and focusi ng upon ex panded empl oye e duti es and r esponsi bil it ies, Fa yol avoids unethi cal t reatm ent of e mpl o yees . Th e ne ed to t reat emplo yees in a just a nd respectful m ann er is central t o F a yol’s princip le of equit y. Also empha siz ed is t he respect for e mpl o yees ’ sense o f int egrit y, which is c rucial for cr eati n g an ethi c al or ganiz ati on.

A fai r and w e ll -designed p a y s ystem i s also nec essar y, as di scussed in the princi ple of “R emuner ati on of P ersonnel.” Good performan ce shoul d be re warded, and the s ystem n eeds t o be uniforml y appl ied to empl o ye es to ensure equit abl e and ethi cal t reatm ent.

33 Chapter02–TheEvolutionofManagem e5.n How t T h oare u g companies ht us ing man agement scien

ce theory to i mprove their p rocesses ? Is

this theory equall y appli cable for manuf acturi ng and service companies? If so, how ?

The mana gem ent scienc e theor y focuses on t h e us e of ri gorous quanti tative techniques to help

34 Chapter02–TheEvolutionofManagem entThought

mana gers mak e max im um u se of or ganiz ati onal r esources to p rodu ce good s and services. The branches o f mana gement science includ e: quantit a ti ve mana gement, ope rati ons m ana gement, tot al qualit y mana gem ent (TQM), and man a gemen t i nformation s ystems (M IS s).

These appro ach es, combi ne d with s ophis ti cated IT , provide tools for mana gers to im prove the quali t y of their d ecisi on making and in cre ase e ffi cienc y and eff ecti veness. Mana gement sci ence theor y is equall y appli ca ble for manuf acturin g an d service companies, be c ause both i ndust ries can ben efit from r educti o n of waste, improvement in qualit y, and e ffe cti ve work proc esses, ev en if the int ended output s ar e differ ent. Fo r ex ampl e, manufact urin g companie s can use m ana gement s cien ce te ch niques to schedule oper at ions, choose plant locati o n s, control producti on, or to i mpl ement quali t y control. Se rvice or ganiz ati ons such as banks, airlines, and hospi tals can rel y on thes e techniques to ensur e th eir oper ati ons effe cti vel y meet custom er 's needs whil e maintainin g efficien c y. The d ata driv en an d for ec asti ng te chniques associated with the mana gement sci ence perspecti ve enable ma na ge rs to sol ve compl ex problems m ore objecti vel y and ef fecti vel y.

6. What i s conti ngen cy th eory? What kinds of orga nizat ions f amili ar to you have be en succ essf ul or unsuccessf ul i n deali ng w it h conti ngencies from the external en vironme nt?

The im portant messa ge o f conti ngenc y theo r y is t hat t here is no one b est wa y to m ana ge.

If an organiz ati on is to succee d, mana gers must look t o the environment i n whic h the organiz a ti on operates to det ermine the kind of strate g y, structur e, and control s ystems t o im plement. S ince t he abil it y of an o r ganiz ati on to obt ain resources d epe nds on t he nature and cha racte risti cs of the environment , m ana ge rs c annot afford to adher e to an infl ex ibl e managemen t st rateg y. Th e strate g y will need to ad a pt t o changin g char acte risti cs of the environment. Mana gers must reco gniz e the opportuni ti es and li mi tations som etimes im posed b y the environment , and then. organiz e and control a cti vit ies accordin gl y. The ul ti mate goal i s to b e abl e to respond t o a chan gin g environment qu ickl y and eff ecti vel y.

Ex ampl es of organiz ati o ns t hat were un able to de al wit h conti ngen cies fro m t he environment include those that have b ecome obsolete du e to ch anges in t echnolo g y, the entr y o f new competit ors in the enviro nment, and chan ges in ec onomi c condit ions. Intel is s uccessful be cause it developed new comput er technolo g y that surp as sed ex ist ing technolog y. McDonald’s has ex panded their custom er base b y developi n g ne w produ cts t o appeal t o

35 Chapter02–TheEvolutionofManagem ehen taTlthho conscious ught adult s, an incre asingl y popula r

trend in t he fast - food indus tr y. Donn a

Ka ran, a hi gh -end clot hing manufactur er, has b een u nsuccessful i n controll in g costs that it s sales c ann ot sup port. P eople are now spending l ess m one y o n clot hin g than durin g previous dec ades and D onna Kar an was sl ow to respond t o thi s environmental shi ft. America On li ne was unprep ared for t he shi ft to broadband int ernet ac cess and h as b een slow to formul ate a n ew strate g y fo r suc cess i n a n environment i n

36 Chapter02–TheEvolutionofManagem entThought

which functi oning sol el y as an int ernet port al no l onge r provides a competit ive advanta ge .

7. Wh y are m echanis ti c a nd organi c str uctures sui ted to dif ferent org aniza tional environment s ?

There are two b asic wa ys that mana gers can or gan iz e and control an or gani z ati on’s acti vit ies to respond t o the nature o f i ts environment. A mecha nist ic structure is chosen when the environment surroundin g an or ganiz ati on is stable. This would be the case f or an or ganiz ati on that has st ead y suppl y an d demand and is somewh a t i mm une to t he fluctuations of the econom y.

A mechanist ic structur e i s chara cteriz ed b y a “top - down” hiera rch y and th at vertical hi er arch y o f authorit y is t he main mea ns used to control subord inates’ behavior. M ana ge ment closel y supervises subordinates a n d the emphasis i s on st rict di scipl ine and order. A mechanist ic structure all ows input s to b e obtained at t he low est cost, givi n g an or ganiz ati on the most control over its conversion pro ce sses and enabli n g the mo st efficient produ cti on of goods and s ervic e s. In a stable environm ent l ower level empl o ye es do not need to m ake man a ge ment decisi ons in response to ch an ging env ironment char acterist ics.

An or ganic stru cture is c hosen when the environ ment surrounding an or ganiz ati on is changin g rapi dl y, makin g it i s mor e difficult t o obtain acc es s to resources. In thi s ki nd of environment, mana gers n eed to be able to respond qui ckl y to sei z e resources, so i t m ust be fre e from t he difficulti es associated wit h a vertical hi e rar ch y that ex ist s in a mechanist ic structur e. Inst ead of vertical authorit y, authori t y is m ore de centr ali z ed to people lower in the o r ganiz ati on. Departments a re en cour a ged to t ak e a cross -dep art mental or functi onal pe rs pecti ve, which mak es authorit y mor e horiz ontal than vertical. An o r ganic struct ure all ows man a ge rs to react m or e quickl y to a chan gin g en vironment than a mech an ist ic structure. Ther e is l ooser control t han in a mechanist ic structur e, an d the reli anc e is on share d norms, rather than rule s and S OP’s, to guide organiz ati onal acti vit ies. An advanta ge is t hat authorit y r ests with t he people who ar e in t he best posi ti ons t o control and address t he cur rent proble ms t he organiz ati on is facing.

ACT ION 8. Questi on a manager a bout hi s or her views of the relat ive import ance of Fayol’s 14 princi ples of management.

The following is a b rief o verview of Fa yol ’s 14 pri ncipl es of mana gement.

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Divisi on of L abor : W orkers should be speci ali z ed, but s hould also be given more job dut ies to perform or should assu me more responsi bil it y f or work outcomes.

Au thori ty and Responsi bil it y : Be yond formal authorit y, thi s includes infor mal authorit y derived from p ersonal ex pertise, knowled ge, and morals.

Unity of C ommand : A n e mpl o yee shoul d r ec eive orders f rom onl y on e superior, rath er than

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from t wo or more, whi ch sa fe gua rds a gainst inef ficienc y and ov erlap.

L ine of Authori ty: T he li ne of authorit y is t he chain of mana ge rs in an or gani z ati on from the top to t he bott om. The number of lev els s hould be lim it ed to help ensure ti mel y and flex ibl e reacti ons t o prob lems, and to facil it ate co mm unicati on.

C entral izat ion : T his is the de gre e to which autho rit y is l ocated at t he top of the organiz ati onal hi erar ch y.

Unity of dir ecti on : M ana gem ent sho uld have one plan of acti on to guide m ana gers and workers as the y use or ga niz ati ona l resources — a s ingle ove rall guidi ng pla n and organiz ati onal st rate g y.

Equit y: E quit y is a combi nati on of just ice and resp ect t oward empl o ye es. T his i s a primar y concern for man y man a gers who work with di vers e workfo rces.

Order : M ana ge rs achi eve order b y e nsu ring th at e ver y empl o yee finds a po sit ion i n the organiz ati on that provides the organiz ati on with t he great est benefit whil e p roviding empl o ye es with t he gre at est car eer oppo rtunit ies to satisf y their o wn needs. Order also addresses the n eed for or ganiz ati onal cha rts to cla rif y empl o ye e posi ti on a nd promot ion opportuni ti es, and car eer planning Initia ti ve: T his principle involves encoura gin g empl o ye es to b e cr eati ve an d innovative in their work, which le ads t o progress and innovati o n.

Discipl ine: T his i s the need for obedi ence, ener g y, appli cati on, and outward marks of respect fo r a supe rior’s a uthorit y from emplo ye es. Discipl ine result s in resp ectful rel ati ons between or ganiz ati onal m embers and r efle cts t he quali t y of an o r ganiz ati on’s leadership.

Remuner ati on of Person nel : T his refers to the re ward s ystems, which sho uld be equit able for empl o yees and the or ganiz ati on. The s ystem s hould encoura ge producti vit y b y rewa rding well -dire cted effort, and it shoul d be r e sis tant to abuse.

It shou ld be uniforml y appli ed to all emplo ye es.

Stabi li ty of tenure of personnel : T his i s the concep t of long-te rm, but not necessaril y li feti me, empl o yment.

Subordi nati on of i ndividual i nterest t o general i nterest : T he int erests of the organiz ati on as a whole must take pr eced ence ov er the int er ests of an y on e indi vidual or gr oup.

Espri t de corps : A shared feeli n g of comr adeship, enthus iasm, or devoti on to a comm on cause, such as the or ganiz ati on, is im portant for a successful m an a gement e ffort.

39 Chapter02–TheEvolutionofManagem e9.n Visi t T h toat u gl heast t t w o organizat ions in your communit

y, and identif y those that seem to

operate w it h a T heory X or a T heory Y approach to management.

(Note to th e in stru cto r: S tudent answers wil l var y. The following is a b rie f overview o f the Theor y X and Theor y Y approach to m an a gement .)

T heory X approach to m anagement : Ac cordin g to t his t heor y, man a gers b e li eve the ave ra ge

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worker is laz y, disl ikes work, and will tr y to do as li tt le as poss ibl e. These mana gers b eli eve that it is t heir job t o counteract t he natural t end encies of worke rs to avoid work b y closel y supervising and controll ing them. C ontrol i s ex erc ised through a s yst em of rewa rds and punis hments. This theor y asserts t hat m ana gers ne ed to m ax im iz e control and mi nim iz e empl o ye e autonom y over their work and wo rk pa c e. C ooperati on i s neit her ex pected nor desired b y the wo rkfor ce. Man a gers see thei r role as to closel y moni tor work ers to e nsure the y contribut e to t he producti on process and foll ow the rules and standard oper ati ng p roc e dures of the organiz ati on, and do not t hreaten produ ct qualit y.

T ypic al ex ampl es of The or y X or ganiz ati ons i nclude fast food r estaur ants a nd retail st ores. Empl o yee tu rnover tends to be ver y hi gh and empl o ye es ar e mot ivated mos tl y b y the mone y and man y will quit as soon as a short term finan cial ob jecti ve is achiev ed (pa y o ff a tra ffic tick et, bu y books for the semeste r, b u y c ar insuran ce ). R ules, procedur es and st rict m a nagerial ove rsight are often eff ecti ve in t hese or ganiz ati ons.

T heory Y Approach to Management : Ac cordin g to Theor y Y, wo rkers do n ot nat urall y disl ike work; t he work sett in g it self determi nes wh ether o r not work is seen as a so urce of s ati sfacti on or punis hment. Given the c hance or oppo rtunit y, wo rkers wil l do what i s goo d for the or ga niz ati on. It i s the man a ger ’s task t o creat e a wo rk set ti ng th at encour a ges comm it me nt t o organiz ati onal objecti ves. If man a gers b eli eve that work ers a re m oti vated, the y can d ecent rali z e authorit y an d give mor e control ove r the job t o workers. A m ana ge r’s role is no t t o contro l emplo ye es, but to provide support and advi ce.

T ypic al ex ampl es of The or y Y or ganiz ati ons i nclude law offi ces, hospi tals, and schools .

These are or ganiz ati ons t hat emplo ye e highl y ski ll ed, hi ghl y edu cated empl o ye es who are o ften ex perts at what t he y do. The y are mot ivated b y their enjo ym ent of their work, ambi ti on, and the desire to be perc eived as ex cell ent at what t he y do. Mana ge rs most l y just need to poi nt t he wa y and the empl o ye es will take c are of the rest.

AAC S B standards: An alyt ic, Refl ecti ve Thinki n g

BUI LDI NG MANAGEMENT SKI LLS

41 Chapter02–TheEvolutionofManagem eMan n t T agin h o u gghYour t Own Bu sin ess

1. Use the principl es of We ber and Fa yol t o deci de on the system of or ga nizat ion and management t hat you thi nk w il l be most eff ecti ve f or your grow ing or ganizati on. How many levels w il l t he managerial hierarchy of your organ izat ion have? How much auth orit y w il l you

42 Chapter02–TheEvolutionofManagem entThought

decentral ize to your subo rdina tes? How w il l you establ ish t he divisi on of l abor betw een subordi nates? Wil l your subordi nates wor k alone and report to you or w ork in t eams?

(Note to th e in stru cto r: Due to t he nature o f the q uesti on, indi vidu al answers wil l var y. The following point s sho uld be address ed in ea ch ans wer ) W eber developed his fiv e principl es of bur eau cra c y th at ut il iz e a formal s ystem of or ganiz ati on and admi nist rati on to ensure ef ficienc y and e ffe cti veness. The cl ear sp ecifi cati on of posi ti ons withi n the organiz ati on’s hierar ch y and the use o f rules and st anda rd oper ati ng proc edur es (SOP’s) to re gulate how t asks are p erfo rmed make it easier for m ana ge rs to organiz e and control the work of subordinat es. Bure aucr acies t end to ha ve more levels of hi era rc h y than do othe r s ystems. Authorit y deriv es from pos it ion i n the hierar ch y and d ecisi ons are made at t he top and “trickle down” to l ow er l evels i n the or ganiz ati on. S ubordinates tend to work independentl y and are t ypicall y not given m uch authorit y. Labor tend s to b e ver y spe cializ ed and divi ded among man y subordin ates. Problems can a rise withi n a bu reauc rati c s ystem wh en the number of rules and S OP’s make decisi o n making slow and ine ffi cient, and restri ct t he flex ibi li t y of the m ana ge r s to sol ve problems efficie ntl y and e ffe cti vel y.

Fa yol i denti fied fou rteen principl es of mana gemen t t hat he beli eved to be es senti al t o increasin g the effici enc y of the m an agement proc ess. S ever al of these ar e r elevant wh en decidi n g which s ystem of or gani z ati on and mana gement shoul d b e im plemented. Divi sion o f labor was suggested, but Fa yol also advocated th at worke rs should be given mor e r esponsi bil it y and authorit y. Fa yol went b e yo nd fo rmal authorit y to i nclude informal authorit y, such as ex pertise or knowledge, as w ell . He a lso s tressed the im portan ce of lim it ing the number of levels of mana gement, su ggesti n g that subordinates report t o one mana ge r onl y. This reduces comm unicati on problems so t hat an or ganiz ati on c an act qui ckl y and flex ibly. Fa yol also advocated t eams and c ro ss -departmental int e gr ati on, as opposed to indi viduals working alone. Decentr ali z ati on of authorit y is also part of Fa yol ’ s principl es, all owing authorit y to be diffus ed throughout an o r ganiz ati on, rather than centr ali z ed at t he top of the hier arc h y.

2. Which managem ent ap proach (for exampl e, T he ory X or Y ) do you propo se to use to run your organi zati on? In 50 or fewer w ords w rit e a st atement describi ng the manag ement

43 Chapter02–TheEvolutionofManagem eappr n t Toach h o u gyou h t beli eve w il l motivate and coordi nate

your subor dinat e s, and t ell w hy you thi

nk thi s st yle w il l be best.

(Note to th e in stru cto r: S tudent answers wil l var y. The following is an ov erview of Th eor y X and Y.) Mana gement app roa ches are t ypicall y dev eloped f rom eit her Theo r y X or Y. Theor y X man a ge rs closel y sup ervise and co ntrol workers’ b ehavior b y a s ystem o f rew ards an d punis hments. The y

44 Chapter02–TheEvolutionofManagem entThought

max im iz e management c ontrol and mi nim iz e control workers h ave ove r the pace of work.

Mana gement se es it s task as counter acti n g worke r’ s natural t enden cies to av oid work.

Theor y Y mana gers do not ne ed to closel y control worke rs’ behaviors be cause the y b eli eve that work ers, when given the ch anc e, will do what i s good for t he or ganiz ati on. Mana ge ment views it s task as creati n g a work sett in g that encour a ges comm it me nt t o organiz a ti onal goals , with t he assum pti on that workers wil l ex ercis e self -cont rol when the y are comm it ted to these goals. C omm it ment also provides opportunit ies for worke rs to be im a ginative, and to ex ercise ini ti ati ve and self -dir ecti on.

W hil e som e students m ay a r gue pe rsuasivel y fo r a Theor y X t yp e of app ro ach, the natur e of the compan y su ggests a The or y Y appro ach. C omput er gami n g is a hi ghl y co mpetit ive indust r y and the successful games ar e creati ve, compl ex , int ricate and im merse the pla ye r in the im agina r y world. This s uggests that empl o ye es, particul arl y the softwar e develop ers, graphic a rtist s and comput er technici ans wil l be highl y edu cated, hi ghl y cr eati ve and lar gel y s elf -mot ivated. Hi gh levels of bure aucr ac y wil l seriousl y im pede the ch aoti c process o f game cre ati on. This i s somethi ng that the found er should understand w el l, so i t i s li kel y that the fo under wil l be looking for good people who id e nti f y with hi s/her visi on and then he or sh e will let them go to develop the best game the y c an. T here will be natu ral t ende nc y for coo rdinati on, so t he owner ’s best strate g y is t o prevent t he creati on of b arri ers to col laborati on.

AAC S B standards: An alyt ic, Refl ecti ve Thinki n g

MANAGI NG ETHICALLY Notes f or T op ics f or Discu ssi on and Action 1. Use the theories dis cu ssed in the chapter to de bate the ethi cal i ssues involved in t he w ay the We stl and/ Hall mark Mea t C o. busi ness operated.

(Note to th e in stru cto r: S tudent answers wil l var y. ) W estl and/ Hall mark Mea t C o. flagr antl y disr e gard ed establis hed he alt h procedures and also treated anim als i nhuman el y. B y slau ghterin g sick cows and all owin g them to enter the food chain, dra ggin g sick cow s usi ng metal ch ains and forkli fts, shocking them

45 Chapter02–TheEvolutionofManagem ewith n t Telectric h o u g hprods t , and shoot ing w ater in t he ir

noses and fa ces, the co mpan y h as resort

ed to unacc eptable and unethi cal pra cti ces.

Accordin g to t he S cientif ic Mana gement Th eor y, W estl and/Hall mark shoul d have codifiedthe methodforperformingtasksi nvolved in meatpack ing int o writ ten rules andstandardoperating procedures.Mana gement then shou ld have closely watched how empl o ye es were car r yin g out

46 Chapter02–TheEvolutionofManagem entThought

their jobs and if non-com pli ance was obs erved, th ose empl o ye es shoul d ha ve been r eprimand ed and corr ected. This woul d have eli mi nated una cce ptable empl o ye e pr acti c e s , thereb y avoidi n g the untoward sit uati on the developed. Si mi larl y, the fifth principl e of M ax W eber’s Theor y o f Bure aucr ac y stat es that m ana gers must cr eate a well -defined s ystem of r ules, stands, operati n g s ystems, and norms s o th at t he y can eff ecti vel y co ntrol behavior wit hin t he organi z ati on.

2. Also us e the theories to di scuss t he ethi cal i ssues involved in t he w ay th e meat pac king busi ness i s being conducted today.

(Note to th e in stru cto r: S tudent answers wil l var y. ) Factors su ch as prop er h ygien e b y empl o yees, the torture of ani mals t o get the work done quickl y, and all owing sic k cows t o enter the food chain persis t i n the meatp ackin g indus tr y toda y. Be cause m ana ge rs must rel y upon their p ersonal and or ganiz ati onal ethi cs t o guide th eir decisi on making re ga rding e ach of th ese i ssues, et hics traini ng and reinfo rc ement of high ethi cal standards in t his i ndust r y is crit ical .

Accordin g to t he H awtho rne studi es, mana ge rs ca n be trained to beh ave in wa ys that wil l elicit cooperati ve b ehavior fro m t heir subordinates, so t hat producti vit y is po sit ivel y im pa cted. If this is t he case, man a gers wh ose behavior r efle ct hi gh levels of int e grit y and ma ke highl y ethi c al decisi ons can influen ce t heir empl o ye es to d o the same. Also, ac cordin g to Theor y Y, empl o ye es will make decisi ons t hat are in t he best i nter est of the organiz ati on, provide d that mana gement creat es a hi ghl y ethi cal c orporate cult ure and wo r kers ar e all owed to ex er c ise self -ini ti ati ve and self-dire cti on . The y must also be provided with ad equate r esourc es to achie ve or ganiz ati on al goals.

3. Search the web for cha nges occurri ng in t he me atpacking bus iness.

(Note to th e in stru cto r: S tudent answers wil l var y. ) Meat -pa cking busi ness es toda y are la r gel y autom a ted. E x ampl es include hog jaw and snout pull ers, boning tables, cu tt ing floor and h arvest flo or equipm ent and conv e yors, and pack -off conve yors. Th ese machin es provide “sta rt to finis h” pro cessi n g, r educ e inci dences of dise ase transmi ssi on, torture of a nim als, and wasta ge, whi le at t he same tim e incr ea ses effici enc y and th e quali t y of the p roducts.

47 Chapter02–TheEvolutionofManagem eAAC n t T hS oBu standards: ght An alyt ic, Refl ecti ve Thinki

ng

SMALL GRO UP BREAKOUT EXERCI SE

48 Chapter02–TheEvolutionofManagem entThought

Mod eli n g an Op en S yste m T hink of an organi zati on w it h w hich you are all famili ar , such as a l ocal restaur ant, s tore, or bank. After choosi ng an organ izat ion, model i t f rom an open -s yste ms pers pecti ve. Id enti fy its input , conversi on, and output processes; and ident if y forces in t he external environment t hat help or hurt the organizat ion’s abi li ty to obtai n resources and di spose of it s goods and services.

An open s yst em i s one that t akes in resour ces f ro m t he environment, chan ges o r transfo rms them int o goods and se rvices, and sends t hem back int o the environment whe re t he y are bou ght b y custom ers. St udents s hould i denti f y all thre e parts of the open s ystem proc e ss.

The term “open s ys tem” is us ed b ecaus e the or ganiz ati on mus t draw from and int er act wit h the environment t o survive; t herefo re, it must be open to i ts environment.

Input s ta ge: An or ganiz at ion acquires r esourc es fr om t he environment t hat i t needs t o produce goods and s ervic es. T ypicall y thi s includes capit al , empl o ye es, ra w materia ls, and suppli es (such as paper o r comput ers ).

C onversion st age: An or ganiz ati on’s work forc e, using approp riate tools , techniques, and machiner y, tr ansforms t h e input s int o output s of finished go ods and s ervic e s. In the case of a restaurant, t he conve rsion st age t akes food and turns it int o a meal, a bank takes in m one y and earns more mon e y, and a retail st ore displ a ys goo ds i n an att racti ve, invi ti ng w a y so t hat custom ers want t o bu y the goods.

Output s tage: An o r ganiz ati on releas es it s out put of fini shed goods and serv ices to i ts environment wher e the y are pur chased and used b y the or ganiz ati on’s custom ers to sati sf y thei r needs. In a restaur ant, t he output is t he deli ver y of the meal t o the cus tom er (and the subsequ ent cleanin g of the us ed dish es), in a bank the output i s mon e y loan ed or inter e st paid t o custom ers, and in a retail envi ronme nt t he output stage is whe n the custom er walks ou t the door with t heir purchase in a ba g.

Forc es in t he ex ternal en vironment that can a ffe ct t he abil it y of an o r ganiz ati on to obt ain resourc es or dispose of it s goods and s ervices m a y include such fa ctors as n atural di sasters, la ck of avail able labo r, instabili t y o f the e conom y, fluct uati ons i n consum er dem and, and adv ances in technolog y.

49 Chapter02–TheEvolutionofManagem eAAC n t T hS oBu standards: ght An alyt ic, Refl ecti ve Thinki

E XPLORI NG THE WORLD WIDE WEB

ng

50 Chapter02–TheEvolutionofManagem entThought

1. Gener alEl ectric ’sgrowt hst rate g ybasedonme r geranda cquisi ti onis l ikely to hav e precipi tated fo r seve ral o f the following reasons: t o drive growth, to redu ce costs , to di versif y int o ne w busine sses, to acquire custom er s, to im prove profit mar gins, to capit ali z e on compan y stren gths, to eli mi nate competit ors, to bu y lower cos t supp li ers, to im prove ex ist ing products, to ex pand int o new markets , and to m aint ain t he ir innovat ive focus .

2. In the ea rl y d a ys of the E dison General El e ctric C ompan y, acquired S pr a gue Electric R ail wa y & Moto r the s a me ye ar it was in corpor ated, 1889. A competit or e merged —the Thomson -Houston C ompan y. In 1892, the two co mpanies combi ned int o the Gene ral Electric C ompan y. B y co mbi ning their ex perienc e and ex pertise, the new G E was able to do what neither of th e pr evious companies could do on their own — produc e compl ete electric al i nstallati ons, usi ng onl y their own pat ents and technolo gies. GE h as di versifi ed the business t hrough acq uisi ti ons. For ex ampl e, to enter the bro adc asti ng b usiness GE purchased R C A (p arent o f NBC ). Foll owing th e E nron scandals, i n 2002 G E formed GE W ind Energ y a fter acquir ing Enron W ind. R ecentl y, to ex pand their Ene r g y & P ower indu stries, summ er 2014 GE bid t o acquire Alst o m (ex pected compl eti on in 2015) .

3. S ome of the chall en ges t hat GE’s cur rent l ead ersh ip faces includ e: eff ecti v el y man a gin g mul ti ple businesses in di fferent i ndust ries a round t he world, i mpl ementing wa ys to b e cons ist ent across ope rati ons, st a yin g competit ive in m ult ipl e markets, int egr ati ng corporat e cult ures, and k eepin g up -to-dat e with t e chnologic al advan cement s.

AAC S B standards: An alyt ic

BE THE MANAGER 1. How do t he variou s management theories di scu ssed in thi s chapte r of fer clues for organi zing and contro ll ing hot el employees?

Mar y P arke r Foll ett ’s the ories giv e much insi ght c oncernin g the empow erm ent of empl o ye es. In thi s eli te hotel, emplo yee s mus t be all owed to s erv ice custom er n eeds wit ho ut alwa ys ch e cking with a supervisor first.

51 Chapter02–TheEvolutionofManagem e2.n Which t T h o upart g h ts w ould be the most i mportant for

a n eff ecti ve syste m to organi ze and

contro l employe es?

Mar y P arke r Foll ett point ed out t hat m ana gement often overlooks the man y contribut ions t hat empl o ye es can m ake to o rganiz ati ons when mana gers all ow them t o particip ate and ex ercis e

52 Chapter02–TheEvolutionofManagem entThought

ini ti ati ve. S he call s for e mpl o yee invol vem ent i n anal yz in g their r esponsi bil it ies and participating in t he work developm ent process. S he also advo cat es self -man a ged te ams a nd empowerment, i n which worke rs mana ge man y of th eir own a cti vit ies. Her ide as conc ernin g “cross - functi oning, � in which differ ent depa rtments work together in c ross -depa rtmental teams to ensure that a go al, such as ex empl ar y custo mer servic e, i s achiev ed seems relev ant her e.

AAC S B standards: An alyt ic

CASE IN THE NEWS Case S yn op sis : Deu tsche B an k F ou n d In appropriat e C omm un ication betw een S taffer, C en tral B an k S alesperson Was Pl aced on Leave i n March Forei gn ex chan ge rat es, often ref err ed to as fix es, are used to pri ce tril li ons of doll ars a da y worth of investm ents and deals betwe en companie s, inv estors and centr al banks.

Investi gati on int o the potenti al m anipul ati on of the forei gn cu rr enc y has r ec eived att enti on during much o f 2013-2014. It i s su ggest e d tha t i nformation has be en passed betw een tr ader s and banks t o artificiall y raise the v alue of one cur renc y a gainst anothe r. W orldwide inve sti gati on int o the all eged manipulation of t he forei gn ex change mar ket invol ves man y o f biggest banks in cludi ng Deutsche Bank, J P Morgan C hase, U BS , and C it igroup . A directo r of sale s at Deutsche Bank in London w as pl ac ed on le ave aft er D eutsche Bank concluded that she h ad c omm unicated inappropriatel y with t he Monetar y Authorit y of Si ngapo re (M AS). Th e MA S it self is among a gro wing li st of c entral ba nks and re gulators that h as said it is i nvesti gati ng potential manipulation of the forei gn ex change markets.

C omm unicati on between bank empl o ye es and o ffi cials at centr al banks i s c omm on. But wit h the ex pansion of global re gul ator y inv esti gati on int o currenc y tr adin g and fo cu sing in part on inappropriate sha rin g of i nformation , som e banks have started monit orin g a nd even discour a ging thi s t yp e of comm unic ati on.

Qu estion s :

53 Chapter02–TheEvolutionofManagem entThought

1. Under w hat conditi ons i s it acceptabl e for a co mpany to monit or i ts employees’ communications?

(Note to th e in stru cto r: S tudent answers wil l var y. The following is a s am ple response. ) C ompanies ma y choose t o closel y moni tor empl o ye e s when the y deal wit h sensit ive informati on.

54 Chapter02–TheEvolutionofManagem entThought

In indus tries wh er e shari ng inform ati on can hav e a ne gati ve im pact, comp a nies ma y chooseto monitoremployeecommunicati ons. A compan y t hat m onit ors its empl o ye es’ communications shoulddisclosetoempl oye e s what t ypes o f comm unicati ons are consideredunacceptable,and should disclose that communi cati ons m a y be mon it ored at ra ndom.

2. How w ould you feel i f your employer monitor ed your communications?

(Note to th e in stru cto r: S tudent answers wil l var y. ) S ome students m a y not f eel t heir priva c y is i mpac ted becaus e the y view it withi n the rights of the organiz ati on to m onit or organiz ati onal resourc es ( work email, computers, e tc.) . Other students ma y f eel t heir p rivac y rights are viol ated throu gh t he moni toring. S ome students m a y b ring up iss ues related to bl o gs, int ernet use at wo rk, and so cial media.

(The followin g is a samp le response. ) If I kne w that t he compa n y mi ght m onit or m y co mm unicati ons t o protect i tself, I w ould be certain t o comm unicat e e thi call y and p rofessi onall y at all ti mes. If a compa n y r andoml y moni tored m y pe rsonal c omm unicati ons, I would feel t hat m y pri va c y had been viol ated.

3. Are there alt ernat ives to keepin g such a clos e e ye on emplo yees? If so, w hat?

(Note to th e in stru cto r: S tudent answers wil l var y. The following is a s am ple response. ) S ome students m a y sa y t here is no other opti on th an moni t oring closel y. R ather than ke epin g a close e ye, some students ma y brin g up is sues relat ed to t rust. Moni toring sh ows a lack of t rust which ma y redu ce mor ale. Instead, ex pectations shoul d be made cle ar and acc essi ble to empl o ye es. E mpl o ye es s hould be traine d on app r opriate policies, proc edur es, and ex pectations .

AAC S B standards: An alyt ic, Refl ecti ve Thinki n g

55 Chapter02–TheEvolutionofManagem eSnource: t T h o htt u g hp:t // onli ne.wsj.com/ news/articles/

S B10001 424

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SUPPLEMENTAL FEATURES

56 Chapter02–TheEvolutionofManagem entThought

T h e f oll ow in g mate rial is av ail ab le as In teractives through Conn ect.

MANAGER’S HOT SEAT (MHS) Cul tural Diff eren ces: L et’s B reak a D eal (Note: A lso r ecom m en ded w it h ch apter 6 )

I NSTRUCTOR’S POWERPOI NT SLIDES These Instructo r’s P ower P oint sli des can be u sed to s upplement t he lecture material.

INST RUCTO R’S POWE R POINT S L IDE 1 Chap ter T itle

INST RUCTO R’S POWE R POINT S L IDE 2 L earn in g Ob jectives

INST RUCTO R’S POWE R POINT S L IDE 3 L earn in g Ob jectives co n t.

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INST RUCTO R’S POWE R POINT S L IDE 4 T h e E v olu tion of Man age men t T h eory : Figu re 2.1

INST RUCTO R’S POWE R POINT S L IDE 5 Adam S mith

INST RUCTO R’S POWE R POINT S L IDE 6 Job S p ecial ization

58 Chapter02–TheEvolutionofManagem entThought

INST RUCTO R’S POWE R POINT S L IDE 7 S cientif ic Man agemen t

INST RUCTO R’S POWE R POINT S L IDE 10 Prob le ms w i th S cientific Man age men t

INST RUCTO R’S POWE R POINT S L IDE 8 Prin cip les of S cientif ic Man age men t

INST RUCTO R’S POWE R POINT S L IDE 11 T h e Gil b reths

INST RUCTO R’S POWE R POINT S L IDE 9 Prin cip les of S cientif ic Man age men t

59 Chapter02–TheEvolutionofManagem entThought

INST RUCTO R’S INST RUCTO R’S POWE R POI NT S L IDE 12 POWE R POINT S L IDE 1 3 Admin istrative Man age men t Max Web er T h eory

INST RUCTO R’S POWE R POINT S L IDE 1 4 er’s Prin cip les of Web B u reau cracy: Figu re 2.

2

INST RUCTO R’S POWE R POINT S L IDE 1 5 Rul es, S OPs an d Nor ms

INST RUCTO R’S POWE R POINT S L IDE 1 7 Fayol’s Prin cip les of Man age men t: In itiative etc.

INST RUCTO R’S POWE R POINT S L IDE 1 6 Fayol’s Prin cip les of Man age men t: Divis ion of L ab or etc.

60 Chapter02–TheEvolutionofManagem entThought

INST RUCTO R’S POWE R POINT S L IDE 18 B eh avioral Man agemen t

INST RUCTO R’S POWE R POINT S L IDE 19 Mary Park e r Foll ett

INST RUCTO R’S POWE R POINT S L IDE 20 Haw thorn e eff ect

INST RUCTO R’S POWE R POINT S L IDE 21 Hu man relation s move men t: d ef in ition

INST RUCTO R’S POWE R POINT S L IDE 22 B eh avior of man agers

INST RUCTO R’S POWE R POINT S L IDE 23 In f ormal organ ization an d Organi zation al b eh avior

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INST RUCTO R’S POWE R POINT S L IDE 24 T h eory X

INST RUCTO R’S POWE R POINT S L IDE 25 T h eory Y

INST RUCTO R’S POWE R POINT S L IDE 26

INST RUCTO R’S POWE R POINT S L IDE 27 E xamp le —S ou thw est Airlin es

INST RUCTO R’S POWE R POINT S L IDE 28 Man age men t Scien c e T h eory

INST RUCTO R’S POWE R POINT S L IDE 29 Qu an titative an d Op

T h eory X vs. Th eory Y: Figu re 2.3

eration s man age men t

46 Chapter02–TheEvolutionofManagem entThought

INST RUCTO R’S POWE R POINT S L IDE 30 T otal q u ali ty man age men t and Man age men t in f orma ti on syste ms

INST RUCTO R’S POWE R POINT S L IDE 33 T h e Organi zation as an Op en S yste m: Figu re 2.4

INST RUCTO R’S POWE R POINT S L IDE 31 Organi zation al E n vironmen t

INST RUCTO R’S POWE R POINT S L IDE 32 Op en S ystem: def in ition

INST RUCTO R’S POWE R POINT S L IDE 3 4 In p u t, Co n version & Ou

INST RUCTO R’S POWE R POINT S L IDE 35 Closed syste m: def in ition

tpu t stages

47 Chapter02–TheEvolutionofManagem entThought

INST RUCTO R’S POWE R POINT S L IDE 36 S yn ergy

INST RUCTO R’S POWE R POINT S L IDE 37 Contin gen cy T h eory

INST RUCTO R’S POWE R POINT S L IDE 3 8 Contin gen cy T h eory: Fi gu re 2.5

INST RUCTO R’S POWE R POINT S L IDE 39 Mech an istic Stru ctur e

INST RUCTO R’S POWE R POINT S L IDE 40 Organi c S tru cture

INST RUCTO R’S POWE R POINT S L IDE 41 Vid eo Case: Hol lyw ood L ab or Uni on s

48 Chapter02–TheEvolutionofManagem entThought

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