Unwritten informal codes of conduct are referred to as

Lecture 2 The Environment of Management, Theories

Dr. Fatin Al Zadjali

Principles of Business Management (MANG001)

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Early Management

Management has been practiced for thousands of years.

Organized projects were directed by people responsible for planning,

organizing, leading, and controlling

The Egyptian pyramids are proof that projects of tremendous scope, employing more than 100,000 workers for some 20 years, were completed in ancient times.

In the 1400s the Venetians used warehouses and inventory systems, as well as human resource management and accounting systems to organize the construction in Venice.

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In the 1800s during the Industrial Revolution, which brought about the birth of the corporation the concept of management became a necessary component of the enterprise.

At the beginning of the twentieth century, the discipline of management began to evolve as a unified body of knowledge.

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The Evolution of Management Theory

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Classical Approaches to Management:

Scientific Approach or Taylorism

General Administrative Theory

Behavioral Approach

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1. Scientific Management

Frederick W. Taylor is the Father of Scientific Management

He described scientific management as a method of scientifically finding the “one best way to do a job.”

Scientific Management is defined as the systematic study of the relationships between people and tasks for the purpose of redesigning the work process to increase efficiency.

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Frederic Taylor saw no difference between men and machine

He believed in full division of labor and specialization

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4 Principles of Scientific Management

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Rules – formal written instructions that specify actions to be taken under different circumstances to achieve specific goals

Standard Operating Procedures (SOPs) – specific sets of written instructions about how to perform a certain aspect of a task

Norms – unwritten, informal codes of conduct that prescribe how people should act in the particular situations.

Rewards – clear rewards for above average performance to motivate

Problems with Scientific Management

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Managers frequently implemented only the increased output side of Taylor’s plan not the reward plans SO workers do not get any additional benefits from increasing output.

Specialized jobs became very boring, dull, systematic, not challenging SO workers ended up distrusting the Scientific Management method.

Workers could purposely “under-perform” not live up to their potential since Management increased use of machines and conveyors belts.

2. General Administrative Management Theory

Theory is focused on what constitutes good management was developed by Henri Fayol and Max Weber.

Administrative Management Theory is the study of how to create an organizational structure that leads to high efficiency and effectiveness.

Fayol identified 14 Principles of Management

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Fayol’s Fourteen Principles of Management

1. Division of work

2. Authority

3. Discipline

4. Unity of command

5. Unity of direction

Subordination of individual interests to the general interest

Remuneration

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8. Centralization

9. Scalar chain

10. Order

11. Equity

12. Stability of tenure personnel

13. Initiative

14. Esprit de corps

Division of Work. This principle is “division of labor” and “specialization”

increases output by making employees more efficient.

Authority. Managers must be able to give orders therefor need authority.

Whenever authority is exercised, responsibility arises.

Discipline. Employees must obey and respect the rules that govern the

organization. Good discipline is the result of effective leadership, a clear understanding between management and workers of organization’s rules

and penalties for violations of the rules.

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4. Unity of Command. Every employee should receive orders from only one superior.

5. Unity of Direction. One Vision, One Mission and same objective all directed by one manager using one plan.

6. Subordination of Individual Interests to the General Interest. The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole.

7. Remuneration. Workers must be paid a fair wage for their services.

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8. Centralization. Centralization refers to the degree to which subordinates are involved in decision making - decision making is centralized to management or decentralized thus have subordinates involvement. Organizations need to find proper proportion and balance.

9. Scalar Chain. The line of authority from top management to the lowest ranks represents the scalar chain. All communications should follow this chain of command or authority. Changes to chain of command can be made is all parties agree.

10. Order. People and materials should be in the right place at the right time.

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11. Equity. Managers should be kind and fair to their subordinates.

12. Stability of Tenure of Personnel. High employee turnover is inefficient. Management should provide proper personnel planning and ensure that replacements are available to fill vacancies.

13. Initiative. Motivated employees who are allowed to be creative and innovative will work harder and better.

14. Esprit de Corps. Team Work - Promoting team spirit will build harmony and unity within the organization.

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3. Behavioral Approach

From the late 1700s to the early 1900s, many management writers recognized the importance of people to an organization’s success.

Some examples are:

Robert Owen concluded that working conditions have great impact on performance.

Hugo Munsterberg suggested that using psychological tests such as placement tests, skill tests, IQ and EQ tests would help place right employees in the right jobs.

Mary Parker Follett concluded that organizations should be based on a group ethic rather than on individualism.

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The Human Relations Movement of Behavioral Management Theory that took place between the 1930s and 1950s

It is important to management history because its supporters never wavered from their commitment to making management practices more humane.

Supporters of this theory believed in the importance of employee satisfaction—so they offered suggestions like employee participation, praise, and being nice to people to increase employee satisfaction.

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Abraham Maslow, a humanistic psychologist, developed Maslow’s hierarchy of five needs.

Maslow’s theory (never fully supported by research) represents the foundation from which contemporary motivation theories were developed.

The field of study called organizational behavior (OB) has resulted in what managers do today when managing people—motivating, leading, building trust, working with a team, managing conflict, and so on.

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Maslow’s hierarchy of needs.