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HistoryofManagementThought
TheEvolutionofManagementTheory
Uponcompletingthischapter,youshouldbeableto: Explainthesettinginwhichmanagementtheoryfirstdeveloped. Describethewaysinwhichatheorycanbeuseful. Distinguishthescientificmanagementschool,theclassicalorganizationtheoryschool,the behavioralschool,andthemanagementscienceschoolofmanagementtheory. Understandthehistoricalcontextinwhichthesystemsapproach,thecontingencyapproach,and thedynamicengagementapproachtomanagementtheoryhavedeveloped. THEAPOSTLEOFMASSPRODUC'TION HenryFordandtheModelhavelongbeensymbolsoftheindustrialage.Eventhesubsequentgrowth andsuccessofFordsrival,GeneralMotors,wasdueinlargeparttoGMsneedtofindaninnovative responsetotheModelT.Inlargemeasure,themanagerialapproachofHenryFord,aswellashis preferencesinmanagerialtheory,isaparadigmofmuchthatwasconstructiveandmuchthatwas imperfectinearlyapproachestomanagement ThesonofapoorIrishimmigrant,HenryFordwasbornin1863andgrewuponafarminrural Michigan.Hewasfascinatedbymachineryandwasquiteskilledinrepairingandimprovingalmost anymachine.HestartedtheFordMotorCompanyin1903,andby1908,theModelTwasbuilt. Inthepartofthecenturywhenautomobileswereintroduced,theywereasymbolofstatusand wealth,thenearexclusiveprovinceoftherich.Fordintendedtochangethat:theModelTwastobe forthemassesacarthatvirtuallyanyonecouldafford.Heunderstoodthattheonlywaytomake suchacarwastoproduceitathighvolumeandlowcost.Fordfocusedhisfactoryeffortson efficiency,mechanizingwhereverpossible,andbreakingdowntasksintotheirsmallestcomponents. Oneworkerwouldperformthesametaskoverandover,producingnotafinishedpart,butoneofthe operationsnecessaryfortheproductionofthewhole;theincompletepartwouldthenbepassedon toanotherworker,whowouldcontributeasuccessiveoperation.Fordwasabletoachieve remarkableefficiencies:AlthoughthefirstModelTtookover12hourstoproduce,only12years later,in1920,FordwasproducingoneModelTeveryminute.By1925,atthepeakofthecars popularity,aModelTwasrollingoffFordsassemblylinesattherateofoneevery5seconds. However,mechanizationoftheplanthadsomeadverseeffects.ThefasterFordpushedhisworkers, themoredisgruntledtheybecame.In1913,turnoverwas380percent,andFordhadtohiretentimes moreworkersthanheneededjusttokeepthelinemoving.Inanactionthatatthetimewas unprecedented,Fordsimplydecidedtodoublewagesinordertogetthebestpeopleandmotivate

themtoworkevenharder.Inthedaysfollowingtheannouncementthatwageswerebeingdoubled, thousandsandthousandsofmencametotheFordplantinsearchofwork.Policehadtobecalledin tocontrolthecrowds. Whenhediedin1945,Fordwasworthover$600million.HeleftanindeliblemarkonbothAmerican industryandsociety.Hisnameissynonymouswithmassproductionandthedevelopmentofmodern managementtheory. MostpeopleassociateHenryFordwiththeModelT,theaffordablemassproducedautomobilethat changedsociety.ButFordisalsoimportantasamanagementthinkerbecausehedevelopedideas abouthoworganizationsfunction.Moreover,Fordhiredtheorists,suchasFrederickWinslowTaylor, andgavethemthechancetodeveloptheirmanagementtheories.Inthischapterwewillseehow differentmanagementtheoriesdevelopedandcontinuetoevolve.Butfirstwelllookatsomeearly ideasabouthowtorunorganizationseffectively. EARLYTHINKINGABOUTMANAGEMENT Peoplehavebeenshapingandreshapingorganizationsformanycenturies.Lookingbackthrough worldhistory,wecantracethestoriesofpeopleworkingtogetherinformalorganizationssuchasthe GreekandRomanarmies,theRomanCatholicChurch,theEastIndiaCompany,andtheHudsonBay Company.Peoplehavealsolongbeenwritingabouthowtomakeorganizationsefficientand effectivesincelongbeforetermssuchas"management"cameintocommonusage.Twoprominent andinstructiveexamplesarethewritingsleftforusbyNiccoloMachiavelliandSunTzu. MACHIAVELLIANDSUNTZU: EARLYSTRATEGISTS Althoughtheadjective'Machiavellian'isoftenusedtodescribecunningandmanipulative opportunistsMachiavelliwasagreatbelieverinthevirtuesofarepublic.ThisisevidentinDiscourses, abookMachiavelliwrotein1531whilehelivedintheearlyItalianrepublicofFlorence.Theprinciples hesetforthcanbeadaptedtoapplytothemanagementoforganizationstoday. Anorganizationismorestableifmembershavetherighttoexpresstheirdifferencesandsolve theirconflictswithinit Whileonepersoncanbeginanorganization,"itislastingwhenitisleftinthecareofmanyand whenmanydesiretomaintainit." Aweakmanagercanfollowastrongone,butnotanotherweakone,andmaintainauthority. Amanagerseekingtochangeanestablishedorganization"shouldretainatleastashadowofthe ancientcustoms." AnotherclassicworkthatoffersinsightstomodemmanagersisTheArtofWar,writtenbythe ChinesephilosopherSunTzumorethan2,000yearsago.ItwasmodifiedandusedbyMaoZedong, whofoundedthePeople'sRepublicofChinainl949.AmongSunTzu'sdicturarethefollowing: Whentheenemyadvances.weretreat! whentheenemyhaltsweharass!

Whentheenemyseekstoavoidbattle,weattack! Whentheenemyretreats,wepursue! Althoughtheserulesweremeanttoguidemilitarystrategy,theyhavebeenusedwhenplanninga strategytoengagebusinesscompetitors.KeepSunTzuinmindasyoustudythechapterabout strategyandplanning. AlthoughneitherMachiavellinorSunTzuwastryingtodevelopatheoryofmanagementperse,their insightsteachusanimportantlessonabouthistory.Managementisnotsomethingthatoriginatedin theUnitedStatesinthiscentury.Wemustbecarefulnottoputonhistoricalandculturalblinders when,fromtheperspectiveofthisparticulartimeandplace,wethinkaboutthemanagementof organizations. Beforegoingontoourdiscussionofthemajormanagementtheories,let'stakeamomenttolookat thereasonsstudyingmanagementtheorywillhelpyouunderstandmanagementandtodays complexorganizations. WHYSTUDYMANAGEMENTTHEORY? Theoriesareperspectiveswithwhichpeoplemakesenseoftheirworldexperiences.Formally,a theoryisacoherentgroupofassumptionsputforthtoexplaintherelationshipbetweentwoormore observablefacts.JohnClancycallssuchperspectives"invisiblepowers"toemphasizeseveralcrucial usesoftheories,the"unseen"waysinwhichweapproachourworld. First,theoriesprovideastablefocusforunderstandingwhatweexperience.Atheoryprovides criteriafordeterminingwhatisrelevant.ToHenryFord,alargeandcompliantworkforcewasone relevantfactorashetheorizedabouthisbusiness.Inotherwords,histheoryofmanagement included,amongotherthings,thisassumptionaboutthesupplyoflabor. Second,theoriesenableustocommunicateefficientlyandthusmoveintomoreandmorecomplex relationshipswithotherpeople.Imaginethefrustrationyouwouldencounterif,indealingwithother people,youalwayshadtodefineeventhemostbasicassumptionsyoumakeabouttheworldm whichyoulive!BecauseFordandhismanagersfullyunderstoodFord'stheoryaboutmanufacturing automobiles,theycouldinteracteasilyastheyfaceddaytodaychallenges. Third,theoriesmakeitpossibleindeed,challengeustokeeplearningaboutourworld.By definition,theorieshaveboundaries;thereisonlysomuchthatcanbecoveredbyanyonetheory. Onceweareawareofthis,wearebetterabletoaskourselvesiftherearealternativewaysoflooking attheworld(especiallywhenourtheoriesnolongerseemto"fit"ourexperience)andtoconsider theconsequencesofadoptingalternativebeliefs.Twocasesareinstructive. Oneexampleinvolvesworldpolitics.Foryears,whatmightbecalledatheoryoftheColdWar dominateddiplomaticactivitybetweentheUnitedStatesandtheSovietUnion.Duringthoseyears, mostdiplomatsandmilitaryofficialsdidnotconsiderwhattheworldwouldbelikeiftheColdWar ended.Now,however,the"ColdWar"theorynolongerfitsourexperience,andgovernmentand militaryofficials,aswellasmanagersoforganizations;arescramblingtodevelopnewtheoriesfor dealingwithformerenemiesonamorecooperativebasis.Forexample,thebreakupoftheSoviet

UnionandRussia'sstrugglestowardfinancialstabilityhaveleftsomeoftheworld'stopscientists unemployed,strugglingwithpoorequipment,andwillingtoworkforlittlepay.InthisbreachU.S. firmssuchasCorning,AmericanTelephoneandTelegraph,andUnitedTechnologieshavecapitalized ontheopportunitythispresentsbyfundingresearchfacilitiesinRussia. TheothercasetakesusbacktoHenryFord.Fordhasbeencriticizedfornotusinghisapproachasa waytolearnaboutbetterwaystorunhiscompany.WhileFordwasgivinghiscustomersnochoice aboutanythingotherthanprice(whichwasattractive!)AlfredSloanwastransformingGeneral Motors.Beginninginthe1920s,SloanrejectedpartofFord'stheoryaboutrunningabusinessinfavor ofalternativewaystodesignautomobilesandorganizemanufacturinganddistribution.GMs marketingstrategyhadalwaysbeentomarketnationwidewithcarsofinteresttodifferentsegments ofthepublic.Sloansetupseparatedivisions,withcentraldirectionfromheadquarters,tomarketthe Buick,Oldsmobile,Pontiac,Cadillac,andChevroletlines.IncontrasttoFord,eachtypeofcarhasits owndistinctionandpricedifferentials. Inthischapter,wewillfocusonfourwellestablishedschoolsofmanagementthought:thescientific managementschool,theclassicalorganizationtheoryschool,thebehavioralschool,andthe managementscienceschool.Althoughtheseschools,ortheoreticalapproaches,developedhistorical sequence,laterideashavenotreplacedearlierones.Instead,eachnewschoolhastendedto complementorcoexistwithpreviousones.Atthesametime,eachschoolhascontinuedtoevolve, andsomehaveevenmergedwithothers.Thistakesustothreerecentintegrativeapproaches:the systemsapproach,thecontingencyapproach,andwhatwecallthedynamicengagementapproachto management.Figure21showstheapproximatedatewheneachofthesetheoreticalperspectives emerged,aswellaskeyhistoricaleventsthatsignaledtheemergenceofeachwayofthinkingabout organizationsandmanagement. THEEVOLUTIONOFMANAGEMENTTHEORY Managementandorganizationsareproductsoftheirhistoricalandsocialtimesandplaces.Thus,we canunderstandtheevolutionofmanagementtheoryintermsofhowpeoplehavewrestledwith mattersofrelationshipsatparticulartimesinhistory.Oneofthecentrallessonsofthischapter,and ofthisbookasawholeisthatwecanlearnfromthetrialsandtribulationsofthosewhohave precededusinsteeringthefortunesofformalorganizations.Asyoustudymanagementtheoryyou willlearnthatalthoughtheparticularconcernsofHenryFordandAlfredSloanareverydifferentfrom thosefacingmanagersinthemid1990s,wecanstillseeourselvescontinuingthetraditionsthat theseindividualsbeganlongbeforeourtime.Bykeepinginmindaframeworkofrelationshipsand time,wecanputourselvesintheirshoesasstudentsofmanagement. ImaginethatyouareamanageratanAmericansteelmill,textilefactory,oroneofFord'splantsin theearlytwentiethcentury.Yourfactoryemploysthousandsofworkers.Thisisascaleofenterprise unprecedentedinWesternhistory.Manyofyouremployeeswereraisedinagriculturalcommunities. Industrialroutinesarenewtothem.Manyofyouremployees,aswell,areimmigrantsfromother lands.TheydonotspeakEnglishwell,ifatall.Asamanagerunderthesecircumstances,youwill probablybeverycuriousabouthowyoucandevelopworkingrelationshipswiththesepeople.Your managerialeffectivenessdependsonhowwellyouunderstandwhatitisthatisimportanttothese

people.Currentdaychallengesparallelsomeofthosefacedintheearlytwentiethcentury.Inthe 1980s8.7millionforeignnationalsenteredtheU.S.andjoinedthelabormarket.Theyoftenhave distinctneedsforskillsandlanguageproficiency,muchasthosebeforethemattheadventofthe industrialage. Earlymanagementtheoryconsistedofnumerousattemptsatgettingtoknowthesenewcomersto industriallifeattheendofthenineteenthcenturyandbeginningofthetwentiethcenturyinEurope andtheUnitedStates.Inthissection,wewillsurveyanumberofthebetterknownapproachesto earlymanagementtheory.Theseincludescientificmanagement,classicalorganizationtheory,the behavioralschool,andmanagementscience.Asyoustudytheseapproaches,keeponeimportantfact inmind:themanagersandtheoristwhodevelopedtheseassumptionsabouthumanrelationships weredoingsowithlittleprecedent.Largescaleindustrialenterprisewasverynew.Someofthe assumptionsthattheymademightthereforeseemsimpleorunimportanttoyou,buttheywere crucialtoFordandhiscontemporaries. THESCIENTIFICMANAGEMENTSCHOOL ScientificManagementtheoryaroseinpartfromtheneedtoincreaseproductivity.IntheUnited Statesespecially,skilledlaborwasinshortsupplyatthebeginningofthetwentiethcentury.Theonly waytoexpandproductivitywastoraisetheefficiencyofworkers.Therefore,FrederickW.Taylor, HenryL.Gantt,andFrankandLillianGilbrethdevisedthebodyofprinciplesknownasscientific managementtheory. FREDERICKW.TAYLOR FrederickW.Taylor(18561915)restedhisphilosophyonfourbasicprinciples: Thedevelopmentofatruescienceofmanagement,sothatthebestmethodforperformingeach taskcouldbedetermined. Thescientificselectionofworkers,sothateachworkerwouldbegivenresponsibilityforthetask forwhichheorshewasbestsuited. Thescientificeducationanddevelopmentoftheworker. Intimate,friendlycooperationbetweenmanagementandlabor. Taylorcontendedthatthesuccessoftheseprinciplesrequired"acompletementalrevolution"on thepartofmanagementandlabor.Ratherthanquarreloverprofits,bothsidesshouldtrytoincrease production;bysodoing,hebelieved,profitswouldrisetosuchanextentthatlaborandmanagement wouldnolongerhavetofightoverthem.Inshort,Taylorbelievedthatmanagementandlaborhada commoninterestinincreasingproductivity. Taylorbasedhismanagementsystemonproductionlinetimestudies.Insteadofrelyingon traditionalworkmethods,heanalyzedandtimedsteelworkers'movementsonaseriesofjobs.Using timestudyashisbase,hebrokeeachjobdownintoitscomponentsanddesignedthequickestand bestmethodsofperformingeachcomponent.Inthiswayheestablishedhowmuchworkersshould beabletodowiththeequipmentandmaterialsathand.Healsoencouragedemployerstopaymore

productiveworkersatahigherratethanothers,usinga"scientificallycorrect"ratethatwould benefitbothcompanyandworker.Thus,workerswereurgedtosurpasstheirpreviousperformance standardstoearnmorepayTaylorcalledhisplanthedifferentialratesystem. CONTRIBUTIONSOFSCIENTIFICMANAGEMENTTHEORY ThemodemassemblylinepoursoutfinishedproductsfasterthanTaylorcouldeverhaveimagined. Thisproduction"miracle"isjustonelegacyofscientificmanagement.Inaddition,itsefficiency techniqueshavebeenappliedtomanytasksinnonindustrialorganizations,rangingfromfastfood servicetothetrainingofsurgeons. LIMITATIONSOFSCIENTIFICMANAGEMENTTHEORY AlthoughTaylor'smethodledtodramaticincreasesinproductivityandtohigherpayinanumberof instances,workersandunionsbegantoopposehisapproachbecausetheyfearedthatworking harderorfasterwouldexhaustwhateverworkwasavailable,causinglayoffs. Moreover,Taylor'ssystemclearlymeantthattimewasoftheessence.Hiscriticsobjectedtothe "speedup"conditionsthatplacedunduepressuresonemployeestoperformatfasterandfaster levels.Theemphasisonproductivityand,byextension,profitabilityledsomemanagerstoexploit bothworkersandcustomers.Asaresult,moreworkersjoinedunionsandthusreinforcedapattern ofsuspicionandmistrustthatshadedlabormanagementrelationsfordecades. HENRYL.GANTT HenryL.Gantt(18611919)workedwithTayloronseveralprojects.Butwhenhewentoutonhisown asaconsultingindustrialengineer,GanttbegantoreconsiderTaylor'sincentivesystem. Abandoningthedifferentialratesystemashavingtoolittlemotivationalimpact,Ganttcameupwith anewidea.Everyworkerwhofinishedaday'sassignedworkloadwouldwina50centbonus.Then headdedasecondmotivation.Thesupervisorwouldearnabonusforeachworkerwhoreachedthe dailystandard,plusanextrabonusifalltheworkersreachedit.This,Ganttreasoned,wouldspur supervisorstotraintheirworkerstodoabetterjob. Everyworker'sprogresswasratedpubliclyandrecordedonindividualbarcharts,inblackondays theworkermadethestandard,inredwhenheorshefellbelowit.Goingbeyondthis,Gantt originatedachartingsystemforproductionscheduling;the"Ganttchart"isstillinusetoday.Infact, theGanttChartwastranslatedintoeightlanguagesandusedthroughouttheworld.Startinginthe 1920s,itwasinuseinJapan,Spain,andtheSovietUnion.Italsoformedthebasisfortwocharting deviceswhichweredevelopedtoassistinplanning,managing,andcontrollingcomplexorganizations: theCriticalPathMethod(CPM),originatedbyDuPont,andProgramEvaluationandReview Technique(PERT),developedbytheNavy.Lotus123isacreativeapplicationoftheGanttChart.

THEGILBRETHS FrankB.andLillianM.Gilbreth(18681924and18781972)madetheircontributiontothescientific managementmovementasahusbandandwifeteam.LillianandFrankcollaboratedonfatigueand motionstudiesandfocusedonwaysofpromotingtheindividualworker'swelfare.Tothem,the ultimateaimofscientificmanagementwastohelpworkersreachtheirfullpotentialashuman beings. Intheirconception,motionandfatiguewereintertwinedeverymotionthatwaseliminatedreduced fatigue.Usingmotionpicturecameras,theytriedtofindthemosteconomicalmotionsforeachtask inordertoupgradeperformanceandreducefatigue.TheGilbrethsarguedthatmotionstudywould raiseworkermoralebecauseofitsobviousphysicalbenefitsandbecauseitdemonstrated management'sconcernfortheworker. CLASSICALORGANIZATIONTHEORYSCHOOL Scientificmanagementwasconcernedwithincreasingtheproductivityoftheshopandtheindividual worker.Classicalorganizationtheorygrewoutoftheneedtofindguidelinesformanagingsuch complexorganizationsasfactories. HENRIFAYOL HenriFayol(18411925)isgenerallyhailedasthefounderoftheclassicalmanagementschoolnot becausehewasthefirsttoinvestigatemanagerialbehavior,butbecausehewasthefirstto systematizeit.Fayolbelievedthatsoundmanagementpracticefallsintocertainpattersthatcanbe identifiedandanalyzed.Fromthisbasicinsight,hedrewupablueprintforacohesivedoctrineof managersonethatretainsmuchofitsforcetothisday. Withhisfaithinscientificmethods,FayolwaslikeTaylor,hiscontemporary.WhileTaylorwas basicallyconcernedwithorganizationalfunctions,howeverFayolwasinterestedinthetotal organizationandfocusedonmanagement,whichhefelthadbeenthemostneglectedofbusiness operations.Exhibit21liststhe14principlesofmanagementFayol"mostfrequentlyhadtoapply." BeforeFayol,itwasgenerallybelievedthat"managersareborn,notmade."Fayolinsisted,however, thatmanagementwasaskilllikeanyotheronethatcouldbetaughtonceitsunderlyingprinciples wereunderstood. Fayols14Principlesofmanagement DivisionofLabor.Themorepeoplespecialize,themoreefficientlytheycanperformtheirwork. Thisprincipleisepitomizedbythemodernassemblyline. Authority.Managersmustgiveorderssothattheycangetthingsdone.Whiletheirformal authoritygivesthemtherighttocommand,managerswillnotalwayscompelobedience unlesstheyhavepersonalauthority(suchasrelevantexpertise)aswell. Discipline.Membersinanorganizationneedtorespecttherulesandagreementsthatgovernthe organization.ToFayol,disciplineresultsfromgoodleadershipatalllevelsoftheorganization,

fairagreements(suchasprovisionsforrewardingsuperiorperformance),andjudiciously enforcedpenaltiesforinfractions. UnityofCommand.Eachemployeemustreceiveinstructionsfromonlyoneperson.Fayolbelieved thatwhenanemployeereportedtomorethanonemanager,conflictsininstructionsand confusionofauthoritywouldresult. UnityofDirection.Thoseoperationswithintheorganizationthathavethesameobjectiveshould bedirectedbyonlyonemanagerusingoneplan.Forexample,thepersonneldepartmentina companyshouldnothavetwodirectors,eachwithadifferenthiringpolicy. SubordinationofIndividualInteresttotheCommonGood.Inanyundertaking,theinterestsof employeesshouldnottakeprecedenceovertheinterestsoftheorganizationasawhole. Remuneration.Compensationforworkdoneshouldbefairtobothemployeesandemployers. Centralization.Decreasingtheroleofsubordinatesindecisionmakingiscentralization;increasing theirroleindecentralization.Fayolbelievedthatmanagersshouldretainfinalresponsibility, butshouldatthesametimegivetheirsubordinatesenoughauthoritytodotheirjobs properly.Theproblemistofindtheproperdegreeofcentralizationineachcase. TheHierarchy.Thelineofauthorityinanorganizationoftenrepresentedtodaybytheneatboxes andlinesoftheorganizationchartrunsinorderofrankfromtopmanagementtothelowest leveloftheenterprise. Order.Materialsandpeopleshouldbeintherightplaceattherighttime.People,inparticular, shouldbeinthejobsorpositionstheyaremostsuitedto. Equity.Managersshouldbebothfriendlyandfairtosubordinates. StabilityofStaff.Ahighemployeeturnoverrateunderminestheefficientfunctioningofan organization. Initiative.Subordinatesshouldbegiventhefreedomtoconceiveandcarryouttheirplans,even thoughsomemistakesmayresult. EspiritdeCorps.Promotingteamspiritwillgivetheorganizationasenseofunity.ToFayol,even smallfactorsshouldhelptodevelopthespirit.Hesuggested,forexample,theuseofverbal communicationsinsteadofformal,writtencommunicationwheneverpossible. Source:HenriRayolIndustrialandGeneralAdministration,J.A.Caubrough,trans.(Geneva InternationalManagementInstitute,1930) MAXWEBER Reasoningthatanygoalorientedorganizationconsistingofthousandsofindividualswouldrequire thecarefullycontrolledregulationofitsactivities,theGermansociologistMaxWeber(18641920) developedatheoryofbureaucraticmanagementthatstressedtheneedforastrictlydefined hierarchygovernedbyclearlydefinedregulationsandlinesofauthority.Heconsideredtheideal organizationtobeabureaucracywhoseactivitiesandobjectiveswererationallythoughtoutand whosedivisionsoflaborwereexplicitlyspelledout.Weberalsobelievedthattechnicalcompetence shouldbeemphasizedandthatperformanceevaluationsshouldbemadeentirelyonthebasisof merit. Todayweoftenthinkofbureaucraciesasvast,impersonalorganizationsthatputimpersonal efficiencyaheadofhumanneeds.Weshouldbecareful,though,nottoapplyournegative connotationsofthewordbureaucracytothetermasWeberuseit.Likethescientificmanagement theorists,Webersoughttoimprovetheperformanceofsociallyimportantorganizationsbymaking

theiroperationspredictableandproductive.Althoughwenowvalueinnovationandflexibilityas muchasefficiencyandpredictability,Weber'smodelofbureaucraticmanagementclearlyadvanced theformationofhugecorporationssuchasFord.Bureaucracywasaparticularpatternof relationshipsforwhichWebersawgreatpromise. Althoughbureaucracyhasbeensuccessfulformanycompanies,inthecompetitiveglobalmarketof the1990sorganizationssuchasGeneralElectricandXeroxhavebecome"bureaucracybusters," throwingawaytheorganizationchartandreplacingitwitheverchangingconstellationsofteams, projects,andallianceswiththegoalofunleashingemployeecreativity. MARYPARKERFOLLETT MaryParkerFollett(18681933)wasamongthosewhobuiltonclassicframeworkoftheclassical school.However,sheintroducedmanynewelementsespeciallyintheareaofhumanrelationsand organizationalstructure.Inthis,sheinitiatedtrendsthatwouldbefurtherdevelopedbythe emergingbehavioralandmanagementscienceschools. Follettwasconvincedthatnoonecouldbecomeawholepersonexceptasamemberofagroup; humanbeingsgrewthroughtheirrelationshipswithothersinorganizations.Infact,shecalled management"theartofgettingthingsdonethroughpeople."ShetookforgrantedTaylor'sassertion thatlaborandmanagementsharedacommonpurposeasmembersofthesameorganization,but shebelievedthattheartificialdistinctionbetweenmanagers(ordergivers)andsubordinates(order takers)obscuredthisnaturalpartnership.Shewasagreatbelieverinthepowerofthegroup,where individualscouldcombinetheirdiversetalentsintosomethingbigger.Moreover,Follett's"holistic" modelofcontroltookintoaccountnotjustindividualsandgroups,buttheeffectsofsuch environmentalfactorsaspolitics,economics,andbiology. Follettsmodelwasanimportantforerunneroftheideathatmanagementmeantmorethanjust whatwashappeninginsideaparticularorganization.Byexplicitlyaddingtheorganizational environmenttohertheory,Follettpavedthewayformanagementtheorytoincludeabroadersetof relationships,someinsidetheorganizationandsomeacrosstheorganization'sborders.Adiverseset ofmodelmanagementtheoriespayshomagetoFollettonthispoint. CHESTERI.BARNARD ChesterBarnard(18861961),likeFollett,introducedelementstoclassicaltheorythatwouldbe furtherdevelopedinlaterschools.Barnard,whobecamepresidentofNewJerseyBellin1927,used hisworkexperienceandhisextensivereadinginsociologyandphilosophytoformulatetheories aboutorganizations.AccordingtoBarnard,peoplecometogetherinformalorganizationstoachieve endstheycannotaccomplishworkingalone.Butastheypursuetheorganization'sgoals,theymust alsosatisfytheirindividualneeds.AndsoBarnardarrivedathiscentralthesis:Anenterprisecan operateefficientlyandsurviveonlywhentheorganizationsgoalsarekeptinbalancewiththeaims andneedsoftheindividualsworkingforit.WhatBarnardwasdoingwasspecifyingaprincipleby whichpeoplecanworkinstableandmutuallybeneficialrelationshipsovertime.

Forexample,tomeettheirpersonalgoalswithintheconfinesoftheformalorganization,people cometogetherininformalgroupssuchascliques.Toensureitssurvival,thefirmmustusethese informalgroupseffectively,eveniftheysometimesworkatpurposesthatruncounterto managementsobjectives.Barnard'srecognitionoftheimportanceanduniversalityofthis"informal organization"wasamajorcontributiontomanagementthought. Barnardbelievedthatindividualandorganizationspurposescouldbekeptinbalanceifmanagers understoodanemployee'szoneofindifferencethatis,whattheemployeewoulddowithout questioningthemanager'sauthority.Obviously,themoreactivitiesthatfellwithinanemployee's zoneofindifference(whattheemployeewouldaccept),thesmootherandmorecooperativean organizationwouldbe.Barnardalsobelievedthatexecutiveshadadutytoinstillasenseofmoral purposeintheiremployees.Todothis,theywouldhavetolearntothinkbeyondtheirnarrowself interestandmakeanethicalcommitmenttosociety.AlthoughBarnardstressedtheworkof executivemanagers,healsofocusedconsiderableattentionontheroleoftheindividualworkeras "thebasicstrategicfactorinorganization."Whenhewentfurthertoemphasizetheorganizationas thecooperativeenterpriseofindividuals,workingtogetherasgroups,hesetthestageforthe developmentofagreatdealofcurrentthinking. Forexample,companiesareincreasinglyusingteams.Infact,someadvocateusingteams,asthe buildingblocksoftheorganization.Becauseteamsaregenerallyareselfmanaging,supervisoryroles arelimited.Managementprovidesdirectionbygivingeachteamacommonpurposeandholdsthe teamsaccountableformeasurableperformancegoals.CompaniessuchasMotorola,DuPont,AT&T, andGeneralElectricaremovinginthisdirectionsWewilldiscussteamsmorefullyinChapter18. EFFICIENCYANDTHEFACTORY TakingtheadviceofefficiencyexpertWalterFlandersin1908,]FordboughtgroundsinHighland Park,whereheintendedtoemploythemostmodernideasaboutproduction,particularlythoseof FrederickWinslowTaylor.Thosewouldbring,asTayloraprophesied,anabsoluterationalitytothe industrialprocess.Theideawastobreakeachfunctiondownintomuchsmallerunitssothateach couldbemechanizedandspeededupandeventuallyflowintoastraightlineproductionoflittle piecesbecomingsteadilylarger.Theprocessbegantochangeinthespringof1913.Thefirstpieceon themodernassemblylinewasthemagnetocoilassembly.Inthepast,aworkerandhehadtobea skilledworkerhadmadeflywheelmagnetofromstarttofinish.Agoodemployeecouldmake34or 40aday.Now,however,therewasanassemblylineformagnetos;dividedinto29different operationsperformedby29differentmen.Intheoldsystemittook20minutestomakeamagneto; nowittook13. Fordandhismensoonmovedtobringthesamerationalitytotherestofthefactory.Quickly,they imposedacomparablesystemfortheassemblyofmotorsandtransmissions.Then,inthesummerof 1913,theytookonthefinalassembly,whichastherestoftheprocesshadspeededup,hadbecome thegreatbottleneck.Theworkers[nowmaneuvered]asquicklyastheycouldaroundastationary metalobject,thecartheywereputtingtogether.Ifthemencouldremainstationaryasthesemi finishedcarmovedthelinethroughthem,lessoftheworkerstimeFordstimewouldbewasted.

CharlesSorensen,whohadbecomeoneofFordstopproductionpeople[initiatedtheassemblyline bypulling]aModelTchassisslowlybyawindlassacross250feetoffactoryfloor,timingtheprocess allthewhile.Behindhimwalkedsixworkers,pickinguppartsfromcarefullyspacedpilesonthefloor andfittingthemtothechassis[soon,]thebreakthroughscameevenmorerapidly..[Byinstallingan automaticconveyorbelt,]Fordcouldeventuallyassemblyacarin[93minutes]justafewyears before,inthedaysofstationarychassisassembly,thebestrecordforputtingacartogetherhadbeen 728hoursofonemanswork.FordstopexecutivescelebratedtheirvictorywithadinneratDetroits PontchartrainHotel.Fittingly,theyriggedasimpleconveyorbelttoafivehorsepowerenginewitha bicyclechainandusedtheconveyortoservethefoodaroundthetable.Ittypifiedthespirit, camaraderie,andconfidenceoftheearlydays. Nineteenyearsandmorethanfifteenmillioncarslater,whenFordreluctantlycametotheconclusion thathehadtostopmakingtheT,thecompanybalancewas$673million.Andthiswasnotmerelya companyssuccess;itwasthebeginningofasocialrevolution.Fordhimself[believed]hehad achievedabreakthroughforthecommonman."Massproduction,"hewrotelater,"precedesmass consumption,andmakesitpossiblebyreducingcostsandthuspermittingbothgreateruse convenienceandpriceconvenience." [Notsurprisingly,]thepriceoftheModelTcontinuedtocomedown,from$780inthefiscalyear 191011to$690thefollowingyear,thento$600,to$550,and,ontheeveofWorldWarI,to$360. Atthatprice,Fordsold730,041cars,outproducingeveryoneelseintheworld. HenryFood,immigrantssonandonetimemachinistsapprentice,hadindeedbecomeaveryrich man.Obviously,hehadbecomesobybeingaventuresomeandsuccessfultheoristofindustrial management.Butbothhispracticesandhispersonalitydrewfirefromthosewhowerecriticalofhis implicitattitudetowardthose"masses"forwhomhehadoriginallyperfectedandprizedtheModelT. Forexample,hiswidelypublicizeddoublingofwagesforemployeesin1914wasseenbysomeasa trailblazingmaneuverinmanagementlaborrelations,byothersasaschemetosolidifyFords paternalisticpoweroverthosewhodependeduponhimforaliving.Inaddition,Fordstubbornly resistedtheunionizationofhisemployeeslongafterhismajorcompetitorshadmadeagreements withunionorganizations.Repressiononthepartofcompanypoliceagainstunion"agitatorswas commonthecompanysgroundsuntil,finally,havinglostanelectionconductedbytheNational LaborRelationsBoard[agovernmentagencyestablishedin1935toaffirmlaborsrighttobargain collectively],FordcontractedwiththeUnitedAutoWorkersin1941. THEBEHAVIORALSCHOOL: THEORGANIZATIONISPEOPLE Thebehavioralschoolemergedpartlybecausetheclassicalapproachdidnotachievesufficient productionefficiencyandworkplaceharmony.Tomanagersfrustration,peopledidnotalwaysfollow predictedorexpectedpatternsofbehavior.Thustherewasincreasedinterestinhelpingmanagers dealmoreeffectivelywiththe"peopleside"oftheirorganizations.Severaltheoriststriedto strengthenclassicalorganizationtheorywiththeinsightsofsociologyandpsychology.

THEHUMANRELATIONSMOVEMENT Humanrelationsisfrequentlyusedasageneraltermtodescribethewaysinwhichmanagersinteract withtheiremployees.When"employeemanagement"stimulatesmoreandbetterwork,the organizationhaseffectivehumanrelations;whenmoraleandefficiencydeteriorate,itshuman relationsaresaidtobeineffective.Thehumanrelationsmovementarosefromearlyattemptsto systematicallydiscoverthesocialandpsychologicalfactorsthatwouldcreateeffectivehuman relations. THEHAWTHORNEEXPERIMENTS.Thehumanrelationsmovementgrewoutofafamousseriesof studiesconductedattheWesternElectricCompanyfrom1924to1933.Theseeventuallybecame knownasthe"HawthorneStudies"becausemanyofthemwereperformedatWesternElectric's HawthorneplantnearChicago.TheHawthorneStudiesbeganasanattempttoinvestigatethe relationshipbetweentheleveloflightingintheworkplaceandworkerproductivitythetypeof questionFrederickTaylorandhiscolleaguesmightwellhaveaddressed. Insomeoftheearlystudies,theWesternElectricresearchersdividedtheemployeesintotestgroups, whoweresubjectedtodeliberatechangesinlighting,andcontrolgroups,whoselightingremained constantthroughouttheexperiments.Theresultsoftheexperimentswereambiguous.Whenthe testgroup'slightingwasimproved,productivitytendedtoincrease,althougherratically.Butwhen lightingconditionsweremadeworse,therewasalsoatendencyforproductivitytoincreaseinthe testgroup.Tocompoundthemystery,thecontrolgroup'soutputalsoroseoverthecourseofthe studies,eventhoughitexperiencednochangesinillumination.Obviously,somethingbesideslighting wasinfluencingtheworkers'performance. Inanewsetofexperiments,asmallgroupofworkerswasplacedinaseparateroomandanumberof variableswerealtered:Wageswereincreased;restperiodsofvaryinglengthwereintroduced;the workdayandworkweekwereshortened.Theresearchers,whonowactedassupervisors,also allowedthegroupstochoosetheirownrestperiodsandtohaveasayinothersuggestedchanges. Again,theresultswereambiguous.Performancetendedtoincreaseovertime,butitalsoroseand fellerratically.Partwaythroughthissetofexperiments,EltonMayo(18801949)andsomeassociates fromHarvard,includingFritzJ.RoethhsbergerandWilliamJ.Dickson,becameinvolved. Intheseandsubsequentexperiments,Mayoandhisassociatesdecidedthatacomplexchainof attitudeshadtouchedofftheproductivityincreases.Becausetheyhadbeensingledoutforspecial attention,boththetestandthecontrolgroupshaddevelopedagrouppridethatmotivatedthemto improvetheirworkperformance.Sympatheticsupervisionhadfurtherreinforcedtheirmotivation. Theresearchersconcludedthatemployeeswouldworkharderiftheybelievedmanagementwas concernedabouttheirwelfareandsupervisorspaidspecialattentiontothem.Thisphenomenonwas subsequentlylabeledtheHawthorneEffect,sincethecontrolgroupreceivednospecialsupervisory treatmentorenhancementofworkingconditionsbutstillimproveditsperformance,somepeople (includingMayohimself)speculatedthatthecontrolgroup'sproductivitygainsresultedfromthe specialattentionoftheresearchersthemselves.

Theresearchersalsoconcludedthatinformalworkgroupsthesocialenvironmentofemployees haveapositiveinfluenceonproductivity.ManyofWesternElectricsemployeesfoundtheirworkdull andmeaningless,buttheirassociationsandfriendshipswithcoworkers,sometimesinfluencedbya sharedantagonismtowardthe"bosses,"impartedsomemeaningtotheirworkinglivesandprovided someprotectionfrommanagement.Forthesereasons,grouppressurewasfrequentlyastronger influenceonworkerproductivitythanmanagementdemands. ToMayo,then,theconceptof"socialman"motivatedbysocialneeds,wantingrewardingonthe jobrelationships,andrespondingmoretoworkgrouppressuresthantomanagementcontrolvas necessarytocomplementtheoldconceptof"rationalman"motivatedbypersonaleconomicneeds. Allthesefindingsmightunremarkabletoday.ButcomparewhatMayoandhisassociatesconsidered relevantwithwhatFordandWeberfoundrelevant,andyouseewhatachangetheseideasbrought tomanagementtheory. APPLYINGQUALITYCONCEPTSTOHUMANRELATIONSTHEORIES Theapplicationofthesehumanrelationstheoriescanbeseenintoday'scompetitiveenvironment. Forexample,withtherestructuringoftoday'scompetitiveglobaleconomy,manycompanieshave madethedecisionto"downsize"orreducethenumbersofmanagersandworkers.However,some companies,wellawareofthedynamicspointedoutbytheHawthornestudies,haveapproached employeereductionswithgreatcare.AtSkyChiefs,a$450millionairlineinflightservices corporation,theproblemsexperiencedbytheairlinesindustrysuchaspricewars,briskcompetition fromforeignairlines,agingfleets,andtheincreasingcostofnewplanes,weredirectlyaffectingthe company.Forcedtoreducestaff,managementrealizedthatifitmanagedtheprocesspoorlyand didn'ttakeintoconsiderationtheneedsofemployees,thosewhoremainedafterthedownsizing wouldbelessloyalandcohesiveasagroup. Tominimizepotentialproblemsafterthedownsizing,themanagementadopted"totalquality leadership"toprovidethecompanywithaframeworkforimplementingtherestructuring.Itspent thousandsofhoursanddollarstofundtrainingandimprovementprocessesrelatedtototalquality leadership.Thekeytothesuccessoftherestructuringwasthatinsteadofmanagementdictating whatwouldhappenandtowhom,employees,seenasthebackboneofthecompany,were empoweredtofacilitatetheprocess.Forexample,priortotherestructuringprocess,employees participatedinevaluatingallheadquartersfunctions.Anemployeemanagedrestructuringcommittee wasselectedbymanagementtoassemble,interpret,andevaluatethedata.Thensmalleraction teamswerecreatedtoaddressthedownsizing.Tohelpthosewhoweretobeletgo,extensive counselingandoutplacementserviceswereprovided,includinggroupworkshopsonnetworking, interviewingtechniques,andhiring,andemployeeswerevideotapedtohelpwithfutureinterviews. Now,aftertherestructuring,productivityandoperatingprofitsareincreasing.Theremaining employeeshaveacceptedtheirnewrolesandresponsibilities,andmoralecontinuestoimprove. FROMHUMANRELATIONSTOTHEBEHAVIORALSCIENCEAPPROACH Mayoandhiscolleaguespioneeredtheuseofthescientificmethodintheirstudiesofpeopleinthe

workenvironment.Laterresearchers,morerigorouslytrainedinthesocialsciences(psychology, sociology,andanthropology),usedmoresophisticatedresearchmethodsandbecameknownas "behavioralscientists"ratherthan"humanrelationstheorists." Thebehavioralscientistsbroughttwonewdimensionstothestudyofmanagementand organizations.First,theyadvancedanevenmoresophisticatedviewofhumanbeingsandtheirdrives thandidMayoandhiscontemporaries.AbrahamMaslowandDouglasMcGregoramongothers, wroteabout"selfactualizing"people.Theirworkspawnednewthinkingabouthowrelationshipscan bebeneficiallyarrangedinorganizations.Theyalsodeterminedthatpeoplewantedmorethan "instantaneous"pleasureorrewards.Ifpeoplewerethiscomplexinthewaytheyledtheirlives,then theirorganizationalrelationshipsneededtosupportthatcomplexity. Second,behavioralscientistsappliedthemethodsofscientificinvestigationtothestudyofhow peoplebehavedinorganizationsaswholeentities.TheclassicexampleistheworkofJamesMarch andHerbertSimonmthelate1950s.MarchandSimondevelopedhundredsofpropositionsfor scientificinvestigation,aboutpatternsofbehavior,particularlywithregardtocommunication,in organizations.Theirinfluenceinthedevelopmentofsubsequentmanagementtheoryhasbeen significantandongoing. AccordingtoMaslow,theneedsthatpeoplearemotivatedtosatisfyfallintoahierarchy.Physicaland safetyneedsareatthebottomofthehierarchy,andatthetopareegoneeds(theneedforrespect, forexample)andselfactualizingneeds(suchastheneedformeaningandpersonalgrowth).In general,Maslowsaidlowerlevelneedsmustbesatisfiedbeforehigherlevelneedscanbemet.Since manylowerlevelneedsareroutinelysatisfiedincontemporarysociety,mostpeoplearemotivated morebythehigherlevelegoandselfactualizingneeds. Somelaterbehavioralscientistsfeelthateventhismodelcannotexplainallthefactorsthatmay motivatepeopleintheworkplace.Theyarguethatnoteveryonegoespredictablyfromonelevelof needtothenext.Forsomepeople,workisonlyameansformeetinglowerlevelneeds.Othersare satisfiedwithnothinglessthanthefulfillmentoftheirhighestlevelneeds;theymayevenchooseto workinjobsthatthreatentheirsafetyifbydoingsotheycanattainelypersonalgoals.Themore realisticmodelofhumanmotivation,thesebehavioralscientistsargueis"complexperson."Usingthis model,theeffectivemanagerisawarethatnotwopeopleareexactlyalikeandtailorsmotivational approachesaccordingtoindividualneeds. AsAmericancorporationsincreasinglydobusinesswithothercultures,itisimportanttoremember thattheoriescanbeculturallybounded.Forexample,Maslow'shierarchyofneedsisnota descriptionofauniversalmotivationalprocess.Inothernationstheorderofthehierarchymightbe quitedifferentdependingonthevaluesofthecountry.InSweden,qualityoflifeisrankedmost important,whileinJapanandGermany,securityisrankedhighest. McGregorprovidedanotherangleonthis"complexperson"idea.Hedistinguishedtwoalternative basicassumptionsaboutpeopleandtheirapproachtowork.Thesetwoassumptions,whichhecalled TheoryXandTheoryY,takeoppositeviewsofpeople'scommitmenttoworkinorganizations.Theory Xmanagers,McGregorproposed,assumethatpeoplemustbeconstantlycoaxedintoputtingforth

effortintheirjobs.TheoryYmanagers,ontheotherhand,assumethatpeoplerelishworkand eagerlyapproachtheirworkasanopportunitytodeveloptheircreativecapacities.TheoryYwasan exampleofa"complexperson"perspective.TheoryYmanagement,McGregorclaimed,wasstymied bytheprevalenceofTheoryXpracticesintheorganizationsofthe1950s.Asyouarealreadyableto see,therootsofTheoryXcanbetracedtothedaysofscientificmanagementandthefactoriesbased ontheseprinciples.InaccordancewithMcGregor'sthinking,GeneralElectricCEOJackWelchargues thatpeoplemustforgettheoldideaof"boss"andreplaceitwiththeideathatmanagershavethe newdutiesofcounselinggroups,providingresourcesforthemandhelpingpeoplethinkfor themselves."We'regoingtowinonourideas,"hesays,"notbywhipsandchains." THEMANAGEMENTSCIENCESCHOOL AtthebeginningofWorldWarII,GreatBritaindesperatelyneededtosolveanumberofnew, complexproblemsinWarfare.Withtheirsurvivalatstake,Britishformedthefirstoperational research(OR)teams.Bypoolingtheexpertiseofmathematicians,physicists,andotherscientistsin ORteams,theBritishwereabletoachievesignificanttechnologicalandtacticalbreakthroughs.When theAmericansenteredthewar,theyformedwhattheycalledoperationsresearchteams,basedon thesuccessfulBritishmodel,tosolvesimilarproblems.Theteamsusedearlycomputerstoperform thethousandsofcalculationsinvolvedinmathematicalmodeling. Whenthewarwasover,theapplicabilityofoperationsresearchtoproblemsinindustrygradually becameapparent.Newindustrialtechnologieswerebeingputintouseandtransportationand communicationwerebecomingmorecomplicated.Thesedevelopmentsbroughtwiththemahostof problemsthatcouldnotbesolvedeasilybyconventionalmeans.Increasingly,ORspecialistswere calledontohelpmanagerscomeupwithanswerstothesenewproblems.Overtheyears,OR procedureswereformalizedintowhatisnowmoregenerallycalledthemanagementscienceschool. Themanagementscienceschoolgainedpopularitythroughtwopostwarphenomena.First,the developmentofhighspeedcomputersandofcommunicationsamongcomputersprovidedthe meansfortacklingcomplexandlargescaleorganizationalproblems.Second,RobertMcNamara implementedamanagementscienceapproachatFordMotorCompanyinthe1950sand1960s. (Later,hebroughtthesameapproachtohisassignmentasSecretaryofDefenseintheJohnson Administration.)AsMcNamara'ssocalled"WhizKids"protegesmovedtomanagementpositionsat FordandacrossAmericanindustry,themanagementscienceschoolflourished.Ifyoufindyourself workingmanorganizationwhere"crunchingthenumbers"isthecentralwaythatmanagement decisionsarereachedandjustified,youcanthankMcNamaraandhisgeneration. Todaythemanagementscienceapproachtosolvingaproblembeginswhenamixedteamof specialistsfromrelevantdisciplinesiscalledintoanalyzetheproblemandproposeacourseofaction tomanagement.Theteamconstructsamathematicalmodelthatshows,insymbolicterms,all relevantfactorsbearingontheproblemandhowtheyareinterrelated.Bychangingthevaluesofthe variablesinthemodel(suchasincreasingthecostofrawmaterials)andanalyzingthedifferent equationsofthemodelwithacomputer,theteamcandeterminetheeffectsofeachchange. Eventually,themanagementscienceteampresentsmanagementwithanobjectivebasisformakinga decision.

Managementscienceofferedawholenewwaytothinkabouttime.Withsophisticatedmathematical models,andcomputerstocrunchthenumbers,forecastingthefuturebasedonthepastandpresent becameapopularactivity.Managerscannowplaywiththe"whatifthefuturelookslikethis?" questionsthatpreviousmanagementtheoriescouldnothandle.Atthesametime,themanagement scienceschoolpayslessattentiontorelationshipsperseinorganizations.Mathematicalmodeling tendstoignorerelationshipsasdata,emphasizingnumericaldatathatcanberelativelyeasily collectedorestimated.Thecriticismisthusthatmanagementsciencepromotesanemphasisononly theaspectsoftheorganizationthatcanbecapturedinnumbers,missingtheimportanceofpeople andrelationships. RECENTDEVELOPMENTSINMANAGEMENTTHEORY Theoriesarepowerfulinfluences.Thelongerweuseagiventheory,themorecomfortablewe becomewithitandthemorewetendtonotseekoutalternativetheoriesunlesseventsforceusto change.This.helpsexplainwhy"modern"managementtheoryisreallyarichmosaicofmany theoriesthathaveenduredoveratleastthepastcentury.Onebenefitofunderstandingthis concurrentpopularityofmanypointsofviewaboutorganizationsisthatitpreparesyouforyourown organizationalexperiences.Ifthischapterhasnotalreadybroughttominddifferentmanagerial stylestowhichyouhavebeenexposed,itwillprepareyouforthedaywhen,forexample,youwork fora"managementscience"managerwhointurnworksforamanagerwhopracticesbyoneofthe theoriestofollowinthenextsection!Orifyouhavealreadyexperiencedsuchmanagers,itwillhelp youunderstandtheirperspectivesbetter. Whileitisimpossibletopredictwhatfuturegenerationswillbestudying,atthispointwecanidentify atleastthreeadditionalperspectivesonmanagementtheorythatcangrowinimportance:the systemsapproach,thecontingencyapproach,andwhatwecallthedynamicengagementapproach. THESYSTEMSAPPROACH Ratherthandealingseparatelywiththevarioussegmentsofanorganization,thesystemsapproach tomanagementviewstheorganizationasaunified,purposefulsystemcomposedofinterrelated parts.Thisapproachgivesmanagersawayoflookingattheorganizationasawholeandasapartof thelarger,externalenvironment(seeChapter3).Systems.theorytellsusthattheactivityofany segmentofanorganizationaffects,invaryingdegrees,theactivityofeveryothersegment. Productionmanagersinamanufacturingplant,forexample,preferlonguninterruptedproduction runsofstandardizedproductsinordertomaintainmaximumefficiencyandlowcosts.Marketing managers,ontheotherhand,whowanttooffercustomersquickdeliveryofawiderangeof products,wouldlikeaflexiblemanufacturingschedulethatcanfillspecialordersonshortnotice. Systemsorientedproductionmanagersmakeschedulingdecisionsonlyaftertheyhaveidentifiedthe impactofthesedecisionsonotherdepartmentsandontheentireorganization.Thepointofthe systemsapproachisthatmanagerscannotfunctionwhollywithintheconfinesofthetraditional organizationchart.Theymustmeshtheirdepartmentwiththewholeenterprise.Todothat,they havetocommunicatenotonlywithotheremployeesanddepartments,butfrequentlywith representativesofotherorganizationsaswell.Clearly,systemsmanagersgrasptheimportanceof

websofbusinessrelationshipstotheirefforts. SOMEKEYCONCEPTS Manyoftheconceptsofgeneralsystemstheoryarefindingtheirwayintothelanguageof management.Managersneedtobefamiliarwiththesystemsvocabularysotheycankeeppacewith currentdevelopments. SUBSYSTEMS.Thepartsthatmakeupthewholeofasystemarecalledsubsystems.Andeachsystem inturnmaybeasubsystemofastilllargerwhole.Thusadepartmentisasubsystemofaplant,which maybeasubsystemofacompany,whichmaybeasubsystemofaconglomerateoranindustry, whichisasubsystemofthenationaleconomy,whichisasubsystemoftheworldsystem. SYNERGY.Synergymeansthatthewholeisgreaterthanthesumofitsparts.Inorganizationalterms, synergymeansthatasseparatedepartmentswithinanorganizationcooperateandinteract,they becomemoreproductivethanifeachweretoactinisolation.Forexample,inasmallfirm,itismore efficientforeachdepartmenttodealwithonefinancedepartmentthanforeachdepartmenttohave aseparatefinancedepartmentofitsown. OPENANDCLOSEDSYSTEMS.Asystemisconsideredanopensystemifitinteractswithits environment;itisconsideredaclosedsystemifitdoesnot.Allorganizationsinteractwiththeir environment,buttheextenttowhichtheydosovaries.Anautomobileplant,forexample,isafar moreopensystemthanamonasteryoraprison. SYSTEMBOUNDARY.Eachsystemhasaboundarythatseparatesitfromitsenvironment.Inaclosed system,thesystemboundaryisrigid;inanopensystem,theboundaryismoreflexible.Thesystem boundariesofmanyorganizationshavebecomeincreasinglyflexibleinrecentyears.Forexample, managersatoilcompanieswishingtoengageinoffshoredrillingnowmustconsiderpublicconcern fortheenvironmentAtrendisthatAmericancommunitiesaredemandingmoreandmore environmentalresponsibilityfromcompanies.Forexample,SantaRosa,California,acityof125,000, treatsenvironmentalviolationssuchas"offgassing"awasteproduct,thatis,allowingittoevaporate intotheatmosphere,asapotentialcriminaloffense. FLOW.Asystemhasflowsofinformation,materials,andenergy(includinghumanenergy).These enterthesystemfromtheenvironmentasinputs(rawmaterials,forexample),undergo transformationprocesseswithinthesystem(operationsthatalterthem),andexitthesystemas outputs(goodsandservices). FEEDBACK.Feedbackisthekeytosystemcontrols.Asoperationsofthesystemproceed,information isfedbacktotheappropriatepeople,andperhapstoacomputer,sothattheworkcanbeassessed and,ifnecessary,corrected.Forexample,whenAluminumCompanyofAmericabeganfeeding productiondatabacktothefactoryfloor,workersintheAddy,Washington,magnesiumplantquickly observedwaystoimproveoperations,boostingproductivityby72percent.Figure22(notshown) showstheflowsofinformation,materials,energy,andfeedbackinanopensystem.

Systemtheorycallsattentiontothedynamicandinterrelatednatureoforganizationsandthe managementtask.Thus,itprovidesaframeworkwithinwhichwecanplanactionsandanticipate bothimmediateandfarreachingconsequenceswhileallowingustounderstandunanticipated consequencesastheydevelop.Withasystemsperspective,generalmanagerscanmoreeasily maintainabalancebetweentheneedsofthevariouspartsoftheenterpriseandtheneedsandgoals thewholefirm. THECONTINGENCYAPPR0ACH ThewellknowninternationaleconomistCharlesKmdlebergerwasfondoftellinghisstudentsatMIT thattheanswertoanyreallyengrossingquestionineconomicsis::Itdepends."Thetaskofthe economist,Kindlebergerwouldcontinue,istospecifyuponwhatitdepends,andinwhatways. "Itdepends"isanappropriateresponsetotheimportantquestionsinmanagementaswell. Managementtheoryattemptstodeterminethepredictablerelationshipsbetweensituations, actions,andoutcomes.Soitisnotsurprisingthatarecentapproachseekstointegratethevarious schoolsofmanagementthoughtbyfocusingontheinterdependenceofthemanyfactorsinvolvedin themanagerialsituation. Thecontingencyapproach(sometimescalledthesituationalapproach)wasdevelopedbymanagers, consultants,andresearcherswhotriedtoapplytheconceptsofthemajorschoolstoreallife situations.Whenmethodshighlyeffectiveinonesituationfailedtoworkinothersituations,they soughtanexplanation.Why,forexample,didanorganizationaldevelopmentprogramworkbrilliantly inonesituationandfailmiserablyinanother.Advocatesofthecontingencyapproachhadalogical answertoallsuchquestions:Resultsdifferbecausesituationsdiffer;atechniquethatworksinone casewillnotnecessarilyworkinallcases. Accordingtothecontingencyapproachthemanager'staskistoIdentifywhichtechniquewill,ina particularsituation,underparticularcircumstances,andatparticulartime,bestcontributetothe attainmentofmanagementgoals.Whereworkersneedtobeencouragedtoincreaseproductivity, forexample,theclassicaltheoristmayprescribeanewworksimplificationscheme.Thebehavioral scientistmayinsteadseektocreateapsychologicallymotivatingclimateandrecommendsome approachlikejobenrichmentthecombinationoftasksthataredifferentinscopeandresponsibility andallowtheworkergreaterautonomyinmakingdecisions.Butthemanagertrainedinthe contingencyapproachwillask,"Whichmethodwillworkbesthere?"Iftheworkersareunskilledand trainingopportunitiesandresourcesarelimited,worksimplificationwouldbethebestsolution. However,withskilledworkersdrivenbyprideintheirabilities,ajobenrichmentprogrammightbe moreeffective.Thecontingencyapproachrepresentsanimportantturninmodernmanagement theory,becauseitportrayseachsetoforganizationalrelationshipsinitsuniquecircumstances. Forexample,whenmanagersatTacoBelladdressedthequestionofwhatwouldworkbestforits restaurants,theyredefinedbusinessbasedonthesimplepremisethatcustomersvaluefood,service, andthephysicalappearanceoftherestaurant.Toimplementthenewcustomerfocusedgoals,the companyrecruitednewmanagerswhowerecommittedtocreatingordeliveringgoodsthat customersvalueandwhocouldcoachandsupportstaffinthenewdirection.Toconcentrateon

customers,TacoBelloutsourcedmuchoftheassemblylinefoodpreparation,suchasshredding lettuce,allowingemployeestofocusoncustomers.Asaresult,ithasenjoyeda60percentgrowthin salesatcompanyownedstores.0therfastfoodrestaurantsmightbasetheirbusinessondifferent situationalfactors,bythecontingencyview. ENTERINGANERAOFDYNAMICENGAGEMENT Alloftheprecedingtheorieshavecomedowntousinthelatetwentiethcenturyworldof organizationsandmanagement.Heretheyarepracticedagainstabackdropofrapidchangeand profoundrethinkingabouthowmanagementandorganizationswillevolveinthenextcentury.Atthe heartofthisrethinking,whichisreallyoccurringinnumerouswaysatthesametime,arenewwaysof thinkingaboutrelationshipsandtime. Asboundariesbetweenculturesandnationsareblurredandnewcommunicationstechnologymakes itpossibletothinkoftheworldasa"globalvillage,"thescopeofinternationalandintercultural relationshipsisrapidlyexpanding.Thepaceoforganizationalactivitypicksupdramatically.These trendsindicateaheightenedlevelofintensityinorganizationsandmanagementtoday. Toemphasizetheintensityofmodernorganizationalrelationshipsandtheintensityoftimepressures thatgoverntheserelationships,wecallthisflurryofnewmanagementtheorythedynamic engagementapproach."Dynamicengagement"isourterm.Intimeswhentheoriesarechanging,itis oftentruethatthelastthingthathappensisthatsomeoneassignsanametothenewtheory.Weuse dynamicengagementtoconveythemoodofcurrentthinkinganddebateaboutmanagementand organizations.Itisquitelikelythattwentyyearsfromnow,wellintoyourorganizationallives,youwill lookbackandcallthisperiodofmovementbysomeothername. Dynamicoppositeofstaticimpliescontinuouschange,growth,andactivity;engagementthe oppositeofdetachmentimpliesintenseinvolvementwithothers.Wethereforethinktheterm dynamicengagementbestexpressesthevigorouswaytoday'smostsuccessfulmanagersfocuson humanrelationshipsandquicklyadjusttochangingconditionsovertime. Sixdifferentthemesaboutmanagementtheoryareemergingundertheumbrellathatwecall dynamicengagement.Toemphasizetheirimportancetoyourunderstandingofmanagementinthe 1990sandbeyond,andtohighlightthedifferencesbetweenthem,wedevoteachapterinPartTwo toeachofthem. NEWORGANIZATIONALENVIRONMENTS(Chapter3) Thedynamicengagementapproachrecognizesthatanorganization'senvironmentisnotsomesetof fixed,impersonalforces.Rather,itisacomplex,dynamicwebofpeopleinteractingwitheachother. Asaresult,managersmustnotonlypayattentiontotheirownconcerns,butalsounderstandwhatis importanttoothermanagersbothwithintheirorganizationsandatotherorganizations.They interactwiththeseothermanagerstocreatejointlytheconditionsunderwhichtheirorganizations willprosperorstruggle.Thetheoryofcompetitivestrategy,developedbyMichaelPorter,focuseson howmanagerscaninfluenceconditionsinanindustrywhentheyinteractasrivals,buyers,suppliers,

andsoon.Anothervariationonthedynamicengagementapproach,mostnotablyarguedbyEdward andJeanGernerSteadinManagementforaSmallPlanet,placesecologicalconcernsatthecenterof managementtheory. ETHICSANDSOCIALRESPONSIBILITY(Chapter4) Managersusingadynamicengagementapproachpaycloseattentiontothevaluesthatguidepeople intheirorganizations,thecorporateculturethatembodiesthosevalues,andthevaluesheldby peopleoutsidetheorganization.Thisideacameintoprominencewiththepublicationin1982ofIn SearchofExcellencebyThomasPetersandRobertWaterman.Fromtheirstudyof"excellent" companies,PetersandWatermanconcludedthat"thetopperformerscreateabroad,uplifting sharedculture,acoherentframeworkwithinwhichchargeduppeoplesearchappropriate adaptations. RobertSolomonhastakenthisideaastepfurther,arguingthatmanagersmustexercisemoral couragebyplacingthevalueofexcellenceatthetopoftheiragendas.Indynamicengagement,itis notenoughformanagerstodothingsthewaytheyalwayshave,ortobecontentwithmatchingtheir competitors.Continuallystrivingtowardexcellencehasbecomeanorganizationalthemeofthe 1990s.Becausevalues,includingexcellence,areethicalconcepts,thedynamicengagementapproach movesethicsfromthefringeofmanagementtheorytotheheartofit. GLOBALIZATIONANDMANAGEMENT(Chapter5) Thedynamicengagementapproachrecognizesthattheworldisatthemanager'sdoorstepinthe 1990s.Withworldfinancialmarketsrunning24hoursaday,andeventheremotestcornersofthe planetonlyatelephonecallaway,managersfacingthetwentyfirstcenturymustthinkofthemselves asglobalcitizens.KenichiOhmaemakesthispointashedescribesa"borderless"worldwhere managerstreatallcustomersas"equidistant"fromtheirorganizations. Asimplecomparisonillustrateshowthingshavechanged.IfyouweretolookthroughAlfredSloans autobiographyabouthislongcareerasGeneralMotorschairmanthroughthe1940s,youwouldfind verylittleaboutinternationalfactorswithgoodreasonmthattimeandplace.Today,however,if youtimeintoaCNNbroadcastyouwillnoticethatthereportersdonotusetheword"foreign"atall. Or,considertheposteronthewallofHondadealerships,whichsaystheideaofan"Americancar" doesn'tmakeanysenseinanerawhenasinglecarcontainspartsmadebypeoplefromalloverthe globe. INVENTINGANDREINVENTINGORGANIZATIONS(Chapter6) Managerswhopracticedynamicengagementcontinuallysearchforwaystounleashthecreative potentialoftheiremployeesandthemselves.Agrowingchorusoftheoristsareurgingmanagersto rethinkthestandardorganizationstructurestowhichtheyhavebecomeaccustomed.Petersisonce againattheforefront.Hisconceptof"liberationmanagement"challengesthekindsofrigid organizationstructuresthatinhibitpeople'screativity.Peters'heroessucceedinspiteofthose structures.MichaelHammerandJamesChampyhavemadetheirconceptofreengineeringthe

corporation"intoabestseller.HammerandChampyurgemanagerstorethinktheveryprocessesby whichorganizationsfunctionandtobecourageousaboutreplacingprocessesthatgetinthewayof organizationalefficiency. CULTURESANDMULTICULTURALISM(Chapter7) Managerswhoembracethedynamicengagementapproachrecognizethatthevariousperspectives andvaluesthatpeopleofdifferentculturalbackgroundsbringtotheirorganizationsarenotonlya factoflifebutasignificantsourceofcontributions. JoanneMartinhaspioneeredtheculturalanalysisoforganizations.Sheexplainshowdifferences createunprecedentedchallengesformodemmanagers.CharlesTaylorisaprominentproponentof thesocalled"communitarian"movement.Taylorclaimsthatpeoplecanpreservetheirsenseof uniquenesstheirauthenticityonlybyvaluingwhattheyholdincommonandseekingtoextend whattheyholdincommonintheorganizationsandcommunitiesinwhichtheylive.CornelWest grabsourattentiontodifferentcultureswiththeverytitleofhisbook,RaceMatters.Martin,Taylor, andWestallwantustoseethebenefitsthatcomefromwelcomingandunderstandingdifferences amongpeople.Still,noneofthemsaythatacceptanceofdifferentcultureswillbeeasy. Multiculturalismisamovingtargetasmoreandmorepeoplebecomeconsciousoftheirparticular culturaltraditionsandties.Hereiswhereboth"dynamic"and"engagement"clearlycometogether asweenvisiontheorganizationsofthetwentyfirstcentury. QUALITY(Chapter8) Bythedynamicengagementapproach,TotalQualityManagement(TQM)shouldbeinevery manager'svocabulary.Allmanagersshouldbethinkingabouthoweveryorganizationalprocesscan beconductedtoprovideproductsandservicesthatareresponsibletotougherandtoughercustomer andcompetitivestandards.Strongandlastingrelationshipscanbefruitfulbyproductsofa"quality" frameofmindandaction,bythisview.TotalQualityManagementaddsonemoredynamic dimensiontomanagement,becausequality,too,isalwaysamovingtarget. Dynamicengagementisanexampleofthechangingfaceofmanagementtheory.Noteveryonewe havementionedinthisoverviewofthedynamicengagementapproachcallshimselforherselfa managementtheorist.Somearephilosophersandsomearepoliticalscientists.Aswebringthis chaptertoaclose,wewanttopointoutanimportantlessoninthislineupofdynamicengagement theorists.Thedynamicengagementapproachchallengesustoseeorganizationsandmanagementas integralpartsofmodemglobalsociety.Thiswasnotalwaysatenetofmanagementtheory.Oncethe doorisopenedbetweenorganizationsandthelargerworld,however,manynewinfluencescancome tobearonquestionsaboutmanagementtheoryandrelationships. REMEMBERTOCHANGEWITHTHETIMES Wehavediscussedtwobasicthingsinthischapter.First,theorists,whatevertheirfieldsofendeavor, tendtobepeopleandproductsoftheirtimes.Second,managementtheories,liketheoriesinall fields,tendtoevolvetoreflecteverydayrealitiesandchangingcircumstances.Bythesametoken,

managersmustbesensitivetochangingcircumstancesandequallywillingtochange.Iftheydonot, theymustbesurpassedbymoreflexiblecompetitors. BothoftheseideasapplytoHenryFord,themanwhoboldlybracedtheideasofscientific management,revolutionizingtheautoindustryandsocietyintheprocess. YetmanyofFordsmanagerialpracticeswereconservativeorunresponsivetochangingtimes,and hisholdontheautomotivemarketwaseventuallywrestedfromhimbycompaniesmorefarsighted intheirmanagerialtheoriesandpractices.Hostiletothebankingcommunity,forexample,Ford refusedoutsideinvestmentsinhiscompanythroughouthislifetime,borrowingcapitalonlywhen absolutelynecessaryandpreferringtofinancecorporateactivitiessolelythroughthecompanysown income.Hewasalsoinclinedtoignorethedynamicsoftheindustrythathehadlargelyfounded. AlthoughheopenedupbranchfactoriestocatertoagrowingEuropeanmarket,helongfailedto followmanagerialadvicetoretoolforboththehydraulicbrakeandsixoreightcylinderengine;he alsoresistedmanagementcounselregardingtheadvancesingearshiftandtransmissiontechnology andevenputoffintroducingcolorvarietyintohisproductline(Fordpreferredhiscarstobeblack). Hisdisinterestinconsumerdemandsforcomfortandstyleultimatelycosthimhisindustrys leadership,whichpassedtoGeneralMotors,aconglomerateassembledfromover20diversfirmsby founderWilliamDurantandasecondgenerationofAmericanindustrialorganizers.