1. PGDBA 101 Strategic Leadership and Management Skills
MODELS AND THEORIES OF
MANAGEMENT
DR DOUGLAS NISBET
2. Learning Objectives
• To explain about the place of models and
theory in Management Education
• To examine the development of management
theory with particular regard to the 4
underlying philosophies:
– Rational Goal Model
– Internal Process Model
– Human Relations Model
– Open Systems Model
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3. I’ve got
intuition!!
What’s the point of
coming to Business
School to learn about
Business Management?
Surely we’d me much
better learning at work?
5. What is a model in Management Education?
• Well, it’s not Kate Moss!
• A model (or theory) is a way of representing a more
complex reality
• By simplifying and focusing on essential elements and
their relationships the model helps us understand the
complexity of the reality of business management and
how change may affect it
• The basic model used in the core text is the input-output
model
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8. Rational Goal Models
• Adam Smith looking back on the Industrial
Revolution
• Frederick Taylor’s Scientific Management.
• Henry Ford's mass production
• Operational Research (OR)
• Still relevant?
9. Internal Process Models
• Bureaucratic Management (Max Weber)
- rules and regulations
- impersonality
- division of labour
- hierarchical structure
- authority structure
- rationality
• Administrative Management (Henri Fayol)
• Still relevant?
14. Conclusion
• Competing values model offers alternative perspectives
on managing
• Each depends on assumptions about the context in which
people are managing and working
• Enables constructive thinking about current practices,
and whether they are the best way to add value
Notas do Editor
Within this presentation I will introduce you to the use of models and theory in management education. We’ll look at how they help us learn and develop our critical thinking.As cited in the textbook, Quinn has grouped the historical development of management thinking into FOUR underlying philosophies: rational goal, internal process, human relations and open systems. We’ll examine some of the thinking behind these philosophies and we can come to a conclusion as to whether we agree with Quinn that they are essentially complementary rather than contradictory
So what’s the point of coming to Business School to learn about Business Management? Surely you’d be much better just learning at work. Well maybe you might be an intuitive manager, some of whom are our most successful entrepreneurs. But can we all rely on intuition? If we’re asked by our boss to justify a decision, are we able to do so? So there’s some benefits to studying at Business School. You are provided with a range of tools and techniques that you can use to systematically analyse what’s going on and come to decisions. Decisions which you can justify and explain to others.
So what do we mean by a model?Have a think yourself. What first comes to mind? A model train perhaps…….OK then lets move on.
Well, it’s not Kate Moss. Or is it? What does Kate do? She models clothes. She represents in a visual form the ideas of the designers. A model train is a representation of the real thing – it may be simplifies a bit with not all the components of a real train. A model then is a way of representing a more complex reality.At the basis of all this, is something which doesn't get a very good press in the world of business – theory! You’ve all said it …..it’s all right in theory, but….. A theory is sometimes called a model, which is maybe a better word. So what’s a model in Management Education? At work we sometimes get so bound up in the complexity of it all that we ‘can’t see the wood for the trees’. A model reduces down the things that we are looking at and thus provides us with something simpler that we can understand. So the ‘bad press’ about theory or models happens because we don’t really understand that they are a simplification. It won’t happen just like that in real life. But is does allow us to consider what might happen and compare the real situation against the model. This way we learn.Throughout the module we shall use and adapt a basic model from the core text – this is called the input-output model.
Here we are developing our Input-Output model to further analyse the Internal Environment (or context) of a Business Organisation. Central to the model is the Transformation Process where we ADD VALUE to our Inputs. Businesses have to have clarity as to their objectives. This is what the business wishes to achieve. To support these objectives we need to have relevant Business Processes and the right People organised within a suitable Structure. The organisation will also have its own culture, power structure and Leadership Styles. It will have made choice of its Technology...small or large scale.....automated or manual. Finally all this will have to be Financed. A flow of cash will come from selling our outputs, but due to credit terms we will require to have some additional finance to pay for our inputs and the transformation process....this is called Working Capital.
Quinn’s Competing Values Framework integrates the four philosophies (or schools) of management thought. It does this by highlighting their underlying values.The vertical axis represents control at the bottom, indicating management approaches that look towards centralisation and integration. The management style of McDonalds fast food might be an example- it’s the McDonald’s way all round the world. At the top of this axis we get flexibility – management approaches that look towards de-centralisation and allowing things to be different rather than standardised – as you might in an independent restaurant where the chef is happy to create a dish to your personal preferences.The horizontal axis to the left represents management approaches that concentrate on internal systems and efficiency, whilst on the right there is management that looks to the external and the organisations’ competitive position in the market place.You can begin to see that the various types of thinking are complimentary and that most organisations will need a balanced perspective. Look also at the different quadrants represented by the schools of thought.Think of your own organisation. Where would you place it on the framework? How does this position affect the way people or tasks are managed?Does your thinking about your own organisation support or contradict the model?
Early thinkers such as Adam Smith examined how in the Industrial Revolution there was a ‘division of labour’ – work was broken down into elements and individuals started to specialise. As manufacturing move onwards Taylor’s ideas of Scientific Management took these ideas forwards. The basis of the thinking was that there was ‘one best way’ to do any task. This led management thinking into areas of Method Study and Work Study and the creation of routine repetitive work. Some of Taylor's early research was based on simple tasks like shovelling coal.The inventor of mass production is generally created to Henry Ford, who enthusiastically embraced Taylor’s ideas in the design of his first automobile assembly plant in 1914.In the 1940s this management thinking gave rise to Operational Research (OR). This brought the use of mathematical modelling. So is this approach to management still relevant today? Have look at the ‘management in practice’ box in the core text about Prêt a Manger. Stability, control, standardisation are many of the bases for Japanese work methods that have been revolutionised production approaches with such ideas as Just in Time (JIT).
This takes us into the area of bureaucratic management as observed by Max Weber. The fundamental characteristic of this thinking harks back to the division of labour and even ideas of span of control right back to the Roman Legions. A clear hierarchy with different levels ranked vertically by authority is the result – the sort of thing you may see in your own company’s organigram even today. Henri Fayol’s ideas of Administrative Management also fall into this school of thought. His ideas include almost militaristic ideas such as ‘unity of command’ (an employee should receive orders from ONE superior only)……’unity of direction’ (one head for one group of activities)…..and discipline and order, where the individual subordinates his interest to the that of the whole. Is it still relevant today? Bureaucracy has many critics who suggest that it stifles creativity, fosters dis-satisfaction and hinders motivation. Having said all that, there are few organisations that don’t have many of the aspects of bureaucracy. Bureaucratic methods are widely used in the Public Sector and this may have given it the reputation where we see ‘bureaucratic’ as being synonymous with slow decision-making or where individuals do no have the authority to give you an answer to your problem. On the other hand many extremely effective organisations are based on centrally controlled procedures and systems – car hire companies, airlines and suchlike. That said, the use of franchising is an admisis9n that it is difficult to maintain enterprising behaviours within a large dispersed bureaucratic organisation. Thus many of our large international hotel groups are made up of more local franchise partners. Many computer software companies such as Microsoft also work with partners in the marketplace.
The Hawthorne Experiment in Western Electric’s plant in Chicago is regarded by most as the turning point from the slavish use of Scientific Management towards a greater understanding of human motivation. The experiment is well documented in the key text. To put it in a nutshell, they established two groups of workers – one they left alone to work in normal conditions and the other disrupted the working environment with such things as reducing the light level. The surprising result was that the productivity of the disrupted workers rose! Why could this be? Surely that’s illogical? After much study and analysis, the conclusion was made that the reason that the disrupted group’s productivity rose was that they were being taken an interest in. The group felt special because it was being studied and their views about the changing conditions being sought. Thus the human relations approach was borne.
The final school of thought takes us towards systems theory. We can have closed systems and open systems. An organisation can thus be thought of as an open system. An open system interacts with its external environment, importing resources from the external environment and exporting its output to that same environment.There is then the possible adjustment of the system due to what we call feedback. This is the basis of a theory called System Dynamics. I illustrate it this way. When we go for a shower we don’t usually jump in and turn on the water. We lean in and turn on the water and then feel how hot or cold it is. Its too hot…..so we adjust the valve….. But we overcompensate and its now too hot….we keep adjusting till we get the desired temperature. This is system dynamics in action and our hand is the feedback mechanism. In modern management the Tesco supply chain works the same way. Feedback form the point of sale reduces store stock and places re0-orders on the distribution centre, the feedback demand is passed on to suppliers who will adjust their production accordingly. The speed of the supply chain provides the safety stock rather than it being held in warehouses. When demand is high the chain runs faster and vice versa.
Contingency thinking is based on the idea that we must continually adapt to a changing environment. Thus one philosophy of management is not enough, we draw from them all and continually adapt.
This table from the core text provides us with a good review of the contrasting approaches to change.
