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GENERAL MANAGEMENT: MNG2601
CHAPTER 1: THE EVOLUTION OF THE MANAGEMENT THEORY
UNDERSTANDING THE DIFFERENT MANAGEMENT THEORIES
The environmental forces that shape management thought:
# Environmental Force
1 Social
2 Political
3 Economic
4 Technological
5 International
6 Ecological
Significant developments that have an effect on managers & organisations:
1. Advances in information technology - The internet & other forms of globally connected networks which provide the
ability to share info on a worldwide basis.
- Electronic commerce including EDI (electronic data interchange) enabling
managers to reshape their business processes to improve response time &
efficiency.
- Mobile computing: enables individuals to have access to information technology,
irrespective of their physical location.
2. Globalisation of the marketplace Used to be associated only with large, mature organisations, with the availability of the
internet and the trend toward e-commerce even the smallest business can reach global
marketplace with ease.
3. Increasing predominance of entrepreneurial Entrepreneurs provide opportunities for minorities & others who may face barriers in
firms traditional corporate environments & provides many job opportunities for others.
4. The growing importance of intellectual capitals Many employees will work in knowledge companies, and the value of their knowledge,
as both input & output will determine their value to the organisation.
The key elements of productivity are:
# Element of Productivity
1 The outcome is continuous improvement of performance
2 The improvement must be measurable
3 The key drivers of productivity are:
Effectiveness Doing the right things
Efficiency Doing things the right way
Utilisation Optimum use of human capital and physical resources
Elimination of all forms of waste
4 The benefits of productivity must be:
The environment
The economy
Society
THE CLASSICAL APPROACHES
Scientific Management
Fact Description
Founded by Frederick W. Taylor
What he studied Studied individual workers to see exactly how they performed their tasks
Premise There is 1 best way to perform any task and measure everything that is measurable (time-motion-study)
Problem he addressed How to judge whether an employee had put in a fair day’s work
Limitations Workers cannot be viewed simply as parts of a smoothly running machine
Money is not the only motivator of employees
Creates the potential for exploitation of labour i.e. possible strikes by workers
Can lead to ignorance of the relationship between the organisation and its changing external environment as
the focus remains on internal issues i.e. the workers and their productivity
Belief Money motivates workers
Other researchers who helped establish these principles of efficiency:
- Frank & Lillian Gilbreth who focused on work simplification and
- Henry L Gantt whose main concern was productivity on shop floor level
The fundamental things he taught:
1. Find the best practice wherever it exists – today we call it “benchmarking”
, 2. Decompose the task into its constituent elements – we call it “business process redesign”
3. Get rid of things that don’t add value
The Process or Administrative Approach
Fact Description
Founded by Henri Fayol
What he studied Administrative side of operations
Premise There are 5 basic functions of administration: planning, organising, commanding, coordinating, and controlling
Limitation Postulates that formal authority should be maintained by managers
Belief Management is a skill – something that one can learn once its underlying principles are understood
Focus Focuses on managing the total organisation
14 principles of admin:
1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual interests to general interests
7. Fair remuneration
8. Centralisation of power & authority
9. Scalar chain
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Union in strength
The Bureaucratic Approach
Fact Description
Founded by Max Weber
What he studied The fundamental issue of how organisations are structured
Premise Any goal-oriented organisation comprising thousands of individuals would require the carefully controlled
regulation of its activities
Problem he addressed He developed a theory of bureaucratic management that stressed the need for a strictly defined hierarchy,
governed by clearly defined regulations and authority
Limitations Bureaucratic results in managers being compensated for doing what they are told to do – not for
thinking
Managers are often rewarded for complying with old, outdated rules
Limited organisational flexibility and slow decision-making
Belief Weber’s ideal bureaucracy is based on legal authority
Legal authority stems from rules and other controls that govern an organisation in its pursuit of specific
goals
Managers are given authority to enforce the rules by virtue of their position
Obedience is not owed to an individual person but to a specific position in the hierarchy of the
organisation
BEHAVIOURAL APPROACHES
Human Relations Movement
The studies following the ‘Hawthorne Effect’ concluded that group pressure, rather than management demands,
had the strongest influence on worker productivity.
Fact Description
Founded by Mayo
What he studied Hawthorne Studies (see above)
Premise Management’s concern for the well-being of their subordinates and sympathetic supervision enhances
workers’ performance
Problem he addressed Viewed workers as human beings and not as machines
Limitations The belief that a happy worker is a productive worker is too simplistic
Economic aspects of work remain important to workers
Factors play role in productivity: their values, attitudes, perceptions, learning, motivation
Belief The importance of paying attention to people to improve their productivity.
Human needs and motivation
Theory X: based on a set of assumptions that take a command and control view of management, underpinned by
negative view of human nature
, Theory Y: mixture of assumptions and underlying beliefs based on positive view of human nature, taking an
empowering view of management
QUANTITATIVE MANAGEMENT THEORY
Fact Description
Founded by
What he studied Management science or operations research
Premise Management is primarily about crunching the numbers
Problem he addressed The greatest contribution of the techniques (linear programming, PERT/CPM,
regression analysis) are in planning and control activities
Limitations Many aspects of management decisions cannot be quantified and expressed by means
of mathematical symbols and formulae
Belief
Focus Mathematical models & statistics and their use in management decision-making
THE QUALITY MOVEMENT
Total Quality Management
It was inspired by a small group of quality experts, the most prominent of them being Joseph M Juran.
Total: Quality involves everyone and all activities in the organisation
Quality: Meeting customers’ agreed requirements, formal and informal, at the lowest cost, every time.
Management: Quality must be managed.
TQM encompasses employees and suppliers, as well as customers. The goal is to create an organisation committed
to continuous improvement. TQM emphasizes actions to prevent mistakes; quality control consists of identifying
mistakes that may already have occurred.
THE SYSTEMS APPROACH
Fact Description
Founded by Ludwig von Bertalanffy
What he studied
Premise He noted characteristics common to all sciences:
The study of a whole, or organism
The tendency of a system to strive for a steady state of equilibrium
An organism is affected by and affects its environment and can thus be seen as an
open system
Problem he addressed Viewed an organisation as a group of interrelated parts with a single purpose: to
remain in balance (equilibrium)
Limitations
Belief From a systems point-of-view, management should maintain a balance between the
various parts of the organisation, as well as between the organisation and its
environment
Focus The open system perspective of an organisation is a system that comprises 4 elements:
Input – resources
Transformation processes – managerial processes, systems etc.
Outputs – products or services
Feedback – reaction from the environment
CONTINGENCY APPROACH
Based on the systems approach to management:
Fact Description
Founded by
What he studied Using the right management approach for the situation in which managers find themselves.
Premise The application of management principles depends on the particular situation that management
faces at a given point in time
Emphasises a situational approach (dependent on a specific situation) but not all management
situations are unique, so;
The characteristics of a situation are called ‘contingencies’:
o The organisation’s external environment - its rate of change and degree of complexity
o The organisation’s own capabilities – its strengths and weaknesses
o Managers and workers – their values, goals, skills, and attitudes
o The technology used by the organisation
Problem he addressed Recognises that every organisation, even every department or unit within an organisation is unique
Every organisation exists in a unique environment with unique employees and unique goals
Limitations Not listed in text book
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