M.B.A. first semester MTP NOTE

1. Evolution of
Management Thought

2. 2
Evolution of Management
Thought
Effective management played a key
role in the construction of the
pyramids, the use of communication
and control of the Roman Empire, and
the legal framework of commerce in
14th century VENICE.

3. 3
Evolution of Management
Thought
 The most significant historical point
of reference in the evolution of
management was the advent of the
Industrial Revolution.
 By the turn of the 20th century the
science and practices of
management were on a rapid and
continuing path of development.

4. Evolution of management thought can be classified into
two different stages:
TRADITIONAL APPROACH
 Scientific Management Approach
 Administrative Management Approach
 Human Relations Approach
 Bureaucratic Approach
MODERN APPROACH
 Behavioural Approach
 Quantitative Approach
 Systems Approach
 Contingency Approach

5. Traditional Viewpoint
Behavioral Viewpoint
Systems Viewpoint
Contingency Viewpoint
Quantitative Viewpoint
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

6. TRADITIONAL APPROACH
Scientific Management Approach
Bureaucratic Approach
Human Relations Approach
Administrative Management Approach

7. Scientific Management
 Frederick W. Taylor
 The father of Scientific Management
– the 1st Efficiency Expert.
 Joined MIDVALE STEEL as a machinist in 1878 ,
earned degree of Engineering through evening
study and rose to the position of chief engineer.
 His experience as an apprentice, a common
laborer, a foreman, a master mechanic, and then
the chief engineer of the steel company gave
Taylor ample opportunity to know first-hand
problems and attitudes of workers and to see the
greatest possibilities for improving quality of
management.
 A philosophy and set of management
practices that are based on fact and
observation, not on guesswork

8. • He was interested in machines --
apprenticeship in industry: Midvale Steel
• Shocked by how inefficient his fellow
workers were
• timed workers with stopwatches
• break down job into parts, make parts
efficient
• figure out how to hire the right worker for
the job
• give the worker appropriate training
Taylor’s Work?

9. • introduced incentive pay plans
(workers were assumed to be motivated
only by money).
• Believed would lead to cooperation--
management and worker
• Studied design of shovels and introduced
a better design at Bethlehem Steel Works,
reducing the number of people shoveling
from 500 to 140
•Taylor’s famous work Principles of
scientific Scientific management was
published in 1911.
Taylor’s Work? Contd.

10.  Taylor first published his theory on
management in a paper entitled, “A PIECE
RATE SYSTEM” and presented to the
American Society of Mechanical Engineers
in 1985. Further he developed it and
published “SHOP MANAGEMENT” in 1903.

11. The fundamental principles underlying Scientific Management
approach are:
 Replacing rule of thumb with science.
 Obtaining harmony rather than discord in group
action.
 Achieving cooperation of human being, rather than
chaotic individualism.
 Working for maximum output rather than
restricted output.
 Developing all workers to the fullest extent possible
for their own and company highest prosperity.

12. Other Scientific Management Pioneers
 The Gilbreths
 Frank Gilbreth used motion pictures
to analyze workers’ motions
 Lillian Gilbreth championed protecting
workers from unsafe working conditions
 Henry Gantt
 Focused on control systems for
production scheduling (Gantt Chart)

13. Frank and Lillian Gilbreth
 Frank Gilbreth developed motion study as a
primary tool for managers. He maintained that
there was one best way to perform a given job.
Gilbreth proved the truth of his idea by simplifying
the motions used in bricklaying industry.
 Lilian Gilbreth is an industrial psychologist,
focused on the human aspect of work and the
understanding of workers personalities and needs.

14. Henry L. Gantt
 H L Gantt worked with Taylor and made significant contribution to
the study of scientific management.
 Called for scientific selection of workers and harmonious
cooperation between labor and management. Stressed need for
training.
 His famous Gantt Chart has become very popular and it was
forerunner of modern techniques like CPM & PERT.
 Scheduling Innovation
Gantt Chart – scheduling summary of work
 Rewarding Innovation
Bonus in addition to the piece rate if they exceeded their daily
production quota
On time = Bonus, Good Performance = Reward

15. Problems associated with Scientific
Management
 Managers often gave attention only to
increasing output.
 They did not allow workers to share in the
benefits of increased output.
 Specialized jobs became very boring & dull.
 Workers ended up distrusting Scientific
Management.

16. Insights from Scientific Management
Many companies have used scientific management
principles to improve efficiency, employee selection
and training
Scientific management failed to recognize the
social needs of workers and the importance of
working conditions and job satisfaction

17. David Berbauer
CEO, Walgreens
“Walgreens is constantly pushing to drive costs down. It
pioneered the application of satellite communications and
computer technology and linked these to increase store
efficiency. By using tried-and-proven management concepts,
each of its 6,100 stores [is] able to process around 280
prescriptions a day and beat Wal-Mart by 27 cents and CVS
by 94 cents on each prescription.”
Snapshot

18. Bureaucratic Management
 Max Weber

19. Bureaucratic Management
 Use of rules, hierarchy, a clear division of labor,
and detailed procedures to guide employees’
behaviors
 Seven characteristics
 Rules—formal guidelines for the behavior of
employees on the job
 Impersonality—employees are evaluated
according to rules and objective data
 Division of Labor—splitting work into
specialized positions

20. Caliper Technologies Corporation
(adapted from Figure 2.2)
CEO
Director of
Quality
Control
Chief
Financial
Officer
VP of
Operations
VP of
Sales &
Marketing
VP of
Research
VP of
Product
Development
VP of
Corporate
Development
Plant
Manager
USA
Controller
Plant
Manager
Germany
Manager of
Chemical
Engineering
Manager of
Chip
Manufacturing
Manager of
Engineering
& Software
Director
of
Manufacturing
Director
of
Manufacturing
Employees Employees

21.  Hierarchical Structure—ranks jobs according
to the amount of authority in each job
 Authority—who has the right to make
decisions of varying importance at different
organizational levels
 Traditional authority
Charismatic authority
Rational, legal authority
 Lifelong Career Commitment—both the employee
and the organization view themselves committed to
each other over the working life of the employee
 Rationality—the use of the most efficient
means available to accomplish a goal

22. “Each job has a policy manual detailing the rules
that a person needs to follow to ensure efficiency.
Drivers are told to walk to a customer’s door at a
brisk pace of 3 feet per second, carrying the
package in the right hand and clipboard in the
left. They should knock on the door so as not to
lose valuable seconds searching for a doorbell.”
Michael Eskew
Chairman and CEO, UPS
Snapshot

23. LOW MIDRANGE HIGH
DreamWorks Sony IRS
R&D Thinktank 7-11 McDonalds
MP3 PepsiCo State Motor
Vehicle
Registration
Bureaucratic Continuum

24. Potential Benefits of Bureaucracy
 Efficiency
 Consistency
 Functions best when routine tasks are performed
 Performance based on objective criteria
 Most effective when
 Large amounts of standard information have to be processed
 The needs of the customer are known and are unlikely to
change
 The technology is routine and stable (e.g., mass production)
 The organization has to coordinate the activities of employees
in order to deliver a standardized service/product to the
customer

25. Potential Costs of Bureaucracy
Rigid rules
and
red tape
Protection of authority Slow decision making
Incompatible with
changing
technology
Incompatible with
21st century workers’
values for freedom
and participative
management

26. Administrative Management: Overview
 Focuses on the manager and basic managerial
functions of planning, organizing, controlling
and leading
 Unity of Command Principle: an
employee should report to only one
manager
 Authority Principle: managers have the
right to give orders to get things done

27. Fayol’s Principles of Effective Management
 Division of Work: allows for job specialization.
 Work should be divided among individuals and groups.
 Authority and Responsibility
 Authority right to give orders
 Responsibility involves being answerable
Whoever assumes authority assumes responsibility
 Discipline
 Common efforts of workers. Penalties
 Unity of Command
 Employees should have only one boss.

28.  Unity of Direction
 A single plan of action to guide the organization.
 Subordination of individual interests to the general
interests of organization
 Remuneration
 An equitable uniform payment system that motivates
contributes to organizational success.
 Centralization
 The degree to which authority rests at the top of the
organization.
 Scalar Chain
 Chainlike authority scale.
 Most vs. least authority

29.  Order
 The arrangement of employees where they will be of
the most value to the organization and to provide
career opportunities.
 Equity
 The provision of justice and the fair and impartial
treatment of all employees.
 Stability of Tenure of Personnel
 Long-term employment is important for the
development of skills that improve the organization’s
performance. Subordination of Individual Interest to
the Common Interest
 The interest of the organization takes precedence
over that of the individual employee.

30.  Initiative
 The fostering of creativity and innovation by
encouraging employees to act on their own.
 Esprit de corps
 Harmony, general good feeling among employees,
shared enthusiasm, foster devotion to the common
cause (organization).

31. Behavioral Viewpoint: Overview
 Focuses on dealing effectively with the
human aspects of organizations
 Started in the 1930’s
 Emphasis on working conditions
 Workers wanted respect
 Workers formed unions to bargain
with management

32. Mary Parker Follett’s Contributions
 Managers need to establish
good working relationships
with employees
Goal:
Improve
Coordination

33. “Managers need to have a common
touch and to be a team leader and not a
drill sergeant. When their people
shine, they shine.”
Vickie Yoke, Senior Vice President, Alcatel
Snapshot

34. Chester Barnard’s Contributions
 People should continuously communicate
and cooperate with one another
 Acceptance theory of authority holds that employees
have free wills and, thus, choose whether to follow
management’s orders. Employees will follow orders
if they:
 Understand what is required
 Believe the orders are consistent with
organization goals
 See positive benefits to themselves in
carrying out the orders

35. The Hawthorne Studies
 Studies of how characteristics of the work setting
affected worker fatigue and performance at the
Hawthorne Works of the Western Electric
Company from 1924-1932.
 Worker productivity was measured at various
levels of light illumination.
 Researchers found that regardless of whether
the light levels were raised or lowered, worker
productivity increased.

36. The Hawthorne Studies
The Relay Assembly Test Room Experiments
Working conditions and productivity
The Bank Wiring Observation Room Experiment
Analyze the social relationships in a work group
The Hawthorne Studies

37. Employees are
motivated by social
needs and association
with others
Employees’ performance
is more a result of peer
pressure than
management’s incentives
and rules
Managers need to
involve subordinates
in coordinating their
work to improve
efficiency
Employees want to
participate in decisions
that affect them
Lessons from the Hawthrone Studies
Behavioral Viewpoint

38. Snapshot
“Teamwork is one of the most beautiful
experiences in life. Teamwork is our
core value and a primary way that the
Container Store enriches the quality
of employees’ work life.”
Kip Tindell, President, The Container Store

39.  System: an association of interrelated
and interdependent parts
 Systems viewpoint: an approach to solving
problems by diagnosing them within a
framework of transformation processes,
outputs, and feedback
Systems Viewpoint:
Systems Concepts

40. Inputs
Human, physical,
financial, and
information
resources
Transformation
Process
Outputs
Products
and
services
Feedback Loops
Basic Systems View of
Organizations

41.  Closed system: limits its interactions with
the environment (e.g., stamping department
in GM assembly plant)
 Open system: interacts with the external
environment (e.g., marketing department)
System Types

42. Mathematical
models are used
to simulate
changes
Computers are
essential
Primary focus is
on decision
making
Alternatives are
based on
economic criteria
Quantitative Techniques

43. Lead to
creation of
blogs
Enables
managers to
simulate
conditions
Emphasis on
objective criteria
for decision
making
Focus on
planning

44. The Contingency Approach
What managers do in practice depends on a
given set of circumstances – a situation.

45.  Management practices should be consistent
with the requirements of the external
environment, the technology used to make a
product or provide a service, and capabilities
of the people who work for the organization
 Uses concepts of the traditional, behavioral
and system viewpoints

46.  External environment—stable or
changing
 Technology—simple or complex
 People—ways they are similar and
different from each other
Contingency Variables

47. Behavioral Viewpoint
How managers influence others;
 Informal group
 Cooperation among employees
 Employee’s social needs
Systems Viewpoint
How the parts fit together.
 Inputs
 Transformations
 Outputs
Traditional Viewpoint
What managers do:
 Plan
 Organize
 Lead
 Control
Contingency Viewpoint
Managers’ use of other viewpoints
to solve problems involving:
 External environment
 Technology
 Individuals
Contingency Viewpoint: Draws on
Other Viewpoints, As Necessary

48.  Quality: how well a product or service
does what it is supposed to do—how closely
and reliably it satisfies the specifications to
which it is built or provided
 Total Quality Management (TQM): a
philosophy that makes quality values the
driving force behind leadership, design,
planning, and improvement initiatives

49.  Inputs or raw materials
 Operations
 Outputs
 Measuring by variable or a product’s characteristics
 Measuring by attribute or a product’s acceptable/
unacceptable characteristics
 Statistical process control
 Quality of a process (e.g., sigma)
Quality Control Process

50. Lower Costs
and Higher
Market Share
Decreased
Product
Liability Quality
Positive
Company
Image
Learning from the Quality
Viewpoint