Chapter 4 Historical foundations of management

Presentation prepared by

Lucy Miller Macquarie University

Classical approaches to management

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CLASSICAL APPROACH TO MANAGEMENT:

There are three major branches within the classical approach to management: scientific management, administrative principles and bureaucratic organisation. The figure shows that the branches all share a common assumption: people at work act in a rational manner that is driven mainly by economic concerns. Workers are expected to rationally consider opportunities made available to them and do whatever is necessary to achieve the greatest personal and monetary gain. scientific management focuses on the productivity of the individual worker administrative management focuses on the managers and functions they perform bureaucratic management focuses on the overall organizational system
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SCIENTIFIC MANAGEMENT- TAYLORS ACHIEVEMENTS (1)

OBSERVATION STAGE
While employed at the Midvale Steel Company in Philadelphia, Pennsylvania, Taylor began experimenting with management procedures, practices, and methods that focused on worker/machine relationships in manufacturing plants. He contended that management would have to change, and that the manner of change should be determined by scientific study.

MEASUREMENT STAGE
Taylor was convinced that there was an ideal way to perform each separate work task, and he attempted to define those optimal procedures through systematic study. "science of shoveling" refers to his observations and experiments on the best way for workers to perform this manual task during the manufacture of pig ron. Taylor experimented with different shovel sizes and designs to find the one that was most comfortable. He varied the size of the load scooped up onto the shovel to find the least fatiguing amount. He experimented with different combinations of work time and rest intervals in an attempt to improve the worker recovery rate. Ranges of physical motion on the pan of the workers were also examined. Based upon Taylor's suggestions, Midvale was able to reduce the number of workers needed from 600 to 140, while at the same time more than tripling the average daily worker output.

Above are 2 stages of an example of time and motion studies

Time and motion studies identify and measure a worker's physical movements while the worker performs a task, then analyze the results to determine the best way of performing that task. Tasks are reduced to its basic physical motions
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SCIENTIFIC MANAGEMENT- TAYLORS ACHIEVEMENTS (2)

Taylors scientific management contributions went well beyond determining the best way of performing a task. He also maintained rather strong convictions about supervision and motivation In the area of supervision, Taylor felt that a single supervisor could not be an expert at all tasks. This was because most supervisors were promoted to their positions after demonstrating high levels of skill in performing a particular function within the organization. Consequently, each first-level supervisor should be responsible only for workers who perform a common function familiar to the supervisor, such as machine operator, material handler, or inspector. Each supervisor's area of expertise would become an area of authority. Since in Taylor's era these supervisors were referred to as foremen, Taylor called this concept functional foremanship. Several foremen would be assigned to each work area, with each having a separate responsbility for such duties as planning, production scheduling, time and motion studies, material handling, and so forth. In the area of motivation, Taylor felt that money was the way to motivate workers to their fullest capabilities. He advocated a piecework system, in which workers' pay was tied to their output. Workers who met a standard level of production were paid at a standard wage cite. Workers whose production exceeded the standard were paid at a higher rate for all of their production output. Taylor felt that such financial incentives would induce workers to produce more so that they might earn more money. He also felt that management should use financial incentives judiciously. If the increased employee earnings were not accompanied by higher profits generated by the productivity increases, then the incentives should not be used.
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SCIENTIFIC MANAGEMENT- GILBRETHS ACHIEVEMENTS

While Frederick Taylor is generally acknowledged to be the father of scientific management, the husband-and-wife team of Frank and Lillian Gilbreth also made some pioneering contributions to the field. Frank Gilbreth specialized in time and motion studies to determine the most efficient way to perform tasks. He identified seventeen work elements (such as lilting, grasping, positioning, etc.) and called them herbless (a loose reverse spelling of his last name). In one of his more notable studies, Gilbreth used the new medium of motion pictures to examine the work of bricklayers. He was able to change that task's structure in a way that reduced the number of motions from eighteen to five, resulting in a productivity increase of more than 20 percent. Contemporary industrial engineers still use Frank Gillireth's methods to design jobs for the greatest efficiency. Lillian Gilhreth concentrated her efforts on the human aspects of industrial engineering. She was a strong proponent of better working conditions as a means of improving efficiency and productivity. She favored standard days with scheduled lunch breaks and rest periods for workers. She also worked for the removal of unsafe working conditions and the abolition of child labor.

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SCIENTIFIC MANAGEMENT SUMMARY

Scientific management emphasizes careful selection and training of workers and supervisory support The four guiding action principles are:
1. Develop for every job a science that includes standardised work processes and conditions 2. Carefully select workers with the right abilities for the job 3. Carefully train and incentivise workers (tie result based compesation to performance) 4. Support workers with carefully planned work.

Practical lessons from scientific management:

Make results-based compensation a performance incentive. Carefully design jobs with efficient work methods. Train workers to perform jobs at their best. Train supervisors to support workers so they can perform jobs to the best of their abilities.
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ADMINISTRATIVE PRINCIPLES- FAYOLS ACHIEVEMENT

Henri Fayol made his mark when he revitalized a floundering mining company and turned it into a financial success. He later attributed his success as a manager to the methods he employed rather than to his personal attributes. Fayol was the first to recognize that successful managers had to understand the basic managerial functions. He identified these functions as:
Foresighting: complete a plan of action for the future Organizing: provide and mobilize resources to implement the plan Commanding: lead, select and evaluate workers Coordinating: fit diverse efforts together Controlling: make sure things happen according to plan and to take necessary corrective action

Fayol believed that management could be taught. He set forth a number of principles to guide managers doing managerial functions:

The scalar chain principle (there should be a clear and unbroken line of communication from the top to the bottom in the organisation), The unity of command principle (each person should receive orders from only one boss) The unity of direction principle (one person should be in charge of all activities that have the same performance objective).

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ADMINISTRATIVE PRINCIPLES as compared to scientific management and contemporary management

Many of Fayol's principles are quite compatible with the views of scientific management.
For example, the object of Fayol's principle on the division of work is to produce more and better work with the same amount of effort. Taylor was attempting the same thing with his shoveling experiments. Fayol's principle stating that everything and everyone should be in their proper place is consistent with the orderly objective of time and motion studies.

Some of Fayol's classical theories and principles may not seem compatible with contemporary management.
For example, his principle of centralization of power and authority at upper levels of the organization is contrary to the contemporary management view of allowing front line workers more autonomy and authority for making and carrying out decisions. Furthermore, contemporary managers rarely demand that the goals of the overall organization take precedence over the interests of individual employees. Contemporary management thinking views employees as a valuable resource whose interests must be considered. Therefore, considerable importance is placed on satisfying the wants, needs, and desires of individual workers. Despite the apparent incompatibility between some of Fayol's principles and the philosophies of contemporary management, several of his principles continue to be embraced by today's managers. His managerial functions of planning, organizing, leading, and controlling are closely resemble the four functions of management that we talk about today. In addition, Fayol's principles on subordinate initiative, harmony, and team spirit are particularly applicable to the modern trend toward encouraging creativity and teamwork in the workplace.
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ADMINISTRATIVE PRINCIPLES- FOLLETS ACHIEVEMENTS

Mary Parker Follet, another contributor to administrative principles. Her management insights are highly relevant to comtemporary management. She believed that:
Groups were mechanisms through which diverse individuals could combine their talents for a greater good. Organizations should be communities in which managers and workers should labour in harmony, without one party dominating the other and with the freedom to talk over and truly reconcile conflicts and differences It was the managers job to help people in organizations cooperate with one another and achieve an integration of interests. Making every employee an owner in the business creates feelings of collective responsibility. Today, we discuss the same issues under such label as employee ownership, profit sharing and gain-sharing plans Business problems involve a wide variety of factors that must be considered in relationship to one another. Today, we talk about system when describing the same phenomenon. Businesses were services and private profits should always be considered vis--vis the public good. Today, we pursue the same issues under the labels of managerial ethics and corporate social responsibility.
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BUREAUCRATIC ORGANIZATION- WEBERS ACHIEVEMENTS (1)

Max Weber, a German sociologist and historian, had observed that many 19th century European organizations were managed on a very personal basis. Employees often displayed more loyalty to individuals, who were in position of authority not because of their job- related capacities, but because of their social privileged status, than to the mission of the organization. As a consequence, resources were often used to satisfy individual desires rather than the organizations goals -> organizations lack of performance efficiencies ~ fail to reach their performance potential. To correct this problem, Weber envisioned a system of management that would be based upon impersonal and rational behavior.

Bureaucracy (b my hnh chnh): A ideal, intentionally rational and very

efficient form of organisation founded on logic, order and legitimate authority. Weber believed that organisations would perform well as bureaucracies. They would have be more efficient in using resources, more adaptable to changes and provide fairness or equity in the treatment of employees and clients.
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BUREAUCRATIC ORGANIZATION- WEBERS ACHIEVEMENTS (2)

Defining characteristics of Webers bureaucratic organizaition are as follow: Clear division of labor. All duties are divided into simpler, more specialized tasks (well-defined) so that the organization can use personnel and resources more efficiently Clear hierarchy of authority. The organization has a pyramid-shaped hierarchical structure that ranks job positions according to the amount of power and authority each possesses. Power and authority increase at each higher level, and each lower level position is under the direct control of one higher-level position Formal rules and procedures. A comprehensive set of rules and procedures that provides the guidelines for performing all organizational duties is clearly written. Employees must strictly adhere to these formal rules. Written files are kept for historical record. Impersonality. Rules and procedures are impartially and uniformly applied to all employees with no one receiving preferential treatment. Employee selection and promotion. All employees are selected on the basis of technical competence/ ability, and are promoted based upon their job-related performance.
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BUREAUCRATIC ORGANIZATION- WEBERS ACHIEVEMENTS (3)

Weber believed there were three different types of authority:
Traditional authority is based upon custom or tradition (royalty-kings, queens) Charismatic authority occurs when subordinates voluntarily comply with a leader because of her special personal qualities or abilities (Bill Gates (Microsoft), Martin Luther King) Rational-legal authority is based upon a set of impersonal rules and regulations that apply to all employees. Superiors are obeyed because of the positions they hold within the organization (police officiers, organizational excecutives, managers, supervisors)

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BUREAUCRACY AND BUREAUCRAT ARE NOW OFTEN USED WITH NEGATIVE CONNOTATIONS.
An inflexible and unyielding imposition of the rules and regulations causes possible disadvantages of bureaucracy:
Excessive paperwork or red tape -> Slowness in handling problems When General Motors wanted to construct a truck assembly plant in Egypt, the proposal had to pass through many ministries and required a multitude of signatures to gain approval, As a result of this sea of red tape, more than three years elapsed before final approval was granted. Rigidity in the face of rapidly changing customer needs Resistance to change and employee apathy (organization operates base on the formal rules, structure, and written records in the past)

These disadvantages are most likely to cause problems for oraganizations that must be flexible and quick in adapting to changing circumstances. We noted that future managers will typically display a greater reliance on work teams that are empowered to use their creativity, self-motivation, and initiative to make decisions and solve problems as they work toward achieving the organization's goals.
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BUREAUCRATIC MANAGEMENT STILL BE EFFECTIVE IN SOME CASES

Even though the trend is toward less bureaucracy, we should not be too quick to bury its basic tenets. Despite its associated rules and "red tape," it can still provide some effective control devices in organizations where many routine tasks must be performed. Low-level employees should be able to accomplish such work by simply following the rules. UPS has become quite successful and efficient in its package delivery service. In fact, UPS can deliver packages more efficiently and cheaply than the U.S. Postal Service. Despite its recent problems, the early success of UPS was due in part to its bureaucratic structure. Rules, regulations, policies, and procedures at DPS maintained a well-defined hierarchy of workers and a well-defined division of labor.
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What can be learned from classical managerial thinking?

Frederick Taylors four principles of scientific management focused on the need to carefully select, train and support workers for individual task performance. Henri Fayol suggested that managers should learn what are now known as the management functions of planning, organising, leading and controlling. Max Weber described bureaucracy with its clear hierarchy, formal rules and well-defined jobs as an ideal form of organisation.
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During the first few decades of the twentieth century, the industrialized nations of the world were experiencing many social and cultural changes:

Standards of living were rising, working conditions were improving. the length of the average work week was declining. the formation of powerful labor unions =>workers able to influence managerial decisions. managers were increasingly finding that workers did not always exhibit behaviors that were consistent with what classical theorists had called rational behavior. Managers were being presented with more and more evidence that human behavior has a significant impact upon the actions of workers. =>Observations and evidence such as this gave rise to the behavioral perspective of management, which recognizes the importance of human behavior patterns in shaping managerial style. The next sections describe the observation and research findings of several of the major contributors to this behavioral perspective
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Behavioural approaches to management

People at work are assumed to seek satisfying social relationships, respond to group pressures and search for personal fulfilment.

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HAWTHORNE STUDIES
In 1924, the Western Electric Company commissioned a research program to study individual productivity at its Hawthorne Works in Chicago. The Hawthorne Studies had a scientific management perspective and sought to determine how economic incentives and physical conditions of the workplace affected the output of workers. One of these experiments was designed to demonstrate that increased levels of lighting could improve productivity. Test groups and control groups were formed. The test group was subjected to a variety of lighting conditions while the control group operated under constant lighting conditions. The results demonstrated that when illumination levels were increased, the productivity of the test group improved, as was expected. The experimenters were surprised, however, to find a similar increase in productivity when the test group's level of illumination was dramatically decreased. Equally puzzling was the fact that the control group's productivity also increased, even though its lighting conditions remained constant. After falling to find relationship, the researchers concluded that unforeseen psychological factors somehow interfere with their illumination experiments.
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ELTON MAYOS ACHIEVEMENTS

In 1927, Elton Mayo (an Australian psychologist) began more research to examine the effect of worker fatigue on output. Care was taken to design a scientific test that would be free of the psycological effects thought to have confounded the earlier illumination studies. Once again, researchers failed to find any direct relationship between changes in physical working conditions and output. He concluded that productivity increased regardless of the physical changes made. He explained that productivity increases were caused by a new social setting created for workers in the test room. 2 factors were singled out as having special importance: Group atmosphere. The workers shared pleasant social relations with each other. Participative supervision. Test-room workers were made to feel important, perceived that special attention was being paid to them, causing them to develop a group pride, which in turn motivated them to improve their performance. It has been said that the Hawthorne studies "represent the transition from scientific management to the early human relations movement. In short, the Hawthorne studies added the human element to management thinking, an element that had been missing in the classical approaches to managerial thought.
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HAWTHORNE STUDY centered on role of the work group

Groups can have strong positive, as well as negative influences on individual productivity. People would restrict their output in order to avoid the displeasure of the group, even if it meant sacrificing pay that could otherwise earn by increasing output.

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SIGNIFICANCE OF THE HAWTHORNE STUDIES

The Hawthorne studies helped shift attention of managers and management researchers away from the technical and structural concerns of the classical approach and towards social and human concerns, as keys to productivity. The Hawthorne studies showed that peoples feeling and relationships with co-workers, and the work group, should be important to management. Hawthorne effect were also identified by the studies as the tendency of people who are singled out for special attention to perform as expected merely because of expectations created by the situation. The Hawthorne Studies contributed to the emergence of the human relations movement- a viewpoint that managers who used good human relations in the workplace would achieve productivity. Furthermore, the insights of the human relations movement set the stage for what has now evolved as the field of organisational behaviour, the study of individuals and groups in organisations.
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ABRAHAM MASLOWS ACHIEVEMENTS

His study of human needs is key foundation for the human relations movements. Needs are physiological and psychological deficiencies which a person feels the compulsion to satisfy. Needs create tensions that can influence a persons work attitudes and behaviors.

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Maslows theory of human needs

Maslows theory is based on two principles: The deficit principle: a satisfied need is not a motivator of behaviour. People act to satisfy deprived needs, those for which a satisfaction deficit exists. Deficiency motivation occurs when we lack something and try to meet that lack. We seek the reduction of tension and restoration of equilibrium. The progression principle: The five needs exist in a hierarchy of prepotency. A need at any level only becomes activated once the next-lower-level need has been satisfied.
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Maslows theory of human needs (cont)

According to Maslow, people try to satisfy the five needs in sequence. They progress step by step from the lowest level in the hierarchy to the highest. Along the way, a deprived need dominates individual attention and determines behaviour until it is satisfied. Then the next higher level need is activated =>the progression up the hierarchy occurs. At the level of self-actualization , the deficit and progression principles cease to operate. Maslows theory implies that managers who can help people satisfy their important needs at work will achieve productivity. This theory is still relevant to every management. Consider the case of dealing with volunteer workers who do not receive any monetary compensation.
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NEEDS IN THE HIERARCHY INCLUDE

Nhu cu v t th hin bn thn
The full use of all our qualities and capacities, the full development of our abilities.

Cn s knh mn qu trng trong mt ngi khc

ESTEEM AND SELF-ESTEEM NEEDS ARE UNIVERSAL. Everyone prefers to feel important, needed, useful, successful, proud, respected, rather than unimportant, interchangeable, autonomous, wasted, unused, expendable, disrespected.

+ freedom from fear and anxiety

+ Air, sleep, sex

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McGregors Theory X and Theory Y

McGregor was heavily influenced by the early contributions of Hawthorne studies and Maslow to behavioral perspective. He advances the thesis that managers should give more attention to the social and self-actualizing needs of people at work. He formulate his Theory X and Theory Y, which pose two contrasting sets of assumptions with which managers might view their subordinates: Theory X managers perceive that their subordinates have an inherent dislike of work (they will avoid it if all possible), lack ambition, wish to avoid responsibility, resist to change and prefer to be led rather than to lead. In contrast, Theory Y managers believe their subordinates enjoy working, are self-motivated, self- controling, self-directed toward achieving the organization's goall, willing to accept responsibility, display ambition, and use their imagination, creativity, and ingenuity (tnh cht kho lo) when working toward the fulfillment of organizational goals.
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McGregors Theory X and Theory Y (cont)

McGregor believes that managers who hold either set of assumptions can create selffulfilling prophecies- that is, through their perceiption and behavior they create situation where subordiates act in ways that confirm the original expectations. Managers with theory X assumptions act in a very directive command and control fashion (an authoritarian style, telling people what to do and how to do it) that gives people little personal say over their work. Supervisory behavior -> passive, dependent and reluctant subordinates who tend to do only what they are told or required to do -> reinforcing the original theory X viewpoint. Managers with theory Y assumptions act in participative ways (consulting with subordinates (tham kho kin cp di), soliciting their opinions (ly kin ca h), and encouraging them to take part in decision making) Participative behavior -> subordinates have opportunities to satisfy their esteem and self-actualization needs -> they work with high performance and initiative Theory Y thinking is very consistent with developments in the new workplace: valuing workforce diversity, employee participation, involvement, empowerment and self management.
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What ideas were introduced by the human resource approaches?

The human resource approaches shifted attention towards the human factor as a key element in organisational performance. The historic Hawthorne Studies suggested that work behaviour is influenced by social and psychological forces and that work performance may be improved by better human relations. Abraham Maslows hierarchy of human needs introduced the concept of self-actualisation and the potential for people to experience self-fulfilment in their work. Douglas McGregor urged managers to shift away from Theory X and towards Theory Y thinking, which views people as independent, responsible and capable of selfdirection in their work.
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Quantitative approaches to management

About the same time that some scholars were developing human resource approaches to management, other were investigating how quantitative techniques could improve managerial decision making. The quantitative perspective had its roots in the scientific management approaches, and its foundation is the assumption that mathematical techniques can be used to improve managerial decision making and problem solving. Today these applications are increasingly driven by computer technology and software programs The use of mathematical models and quantitative techniques to analyze and solve managerial problems is often referred to as operations research. This approach is also referred to as management science in some circles problem is encounter > it is systematically analyzed -> appropriate math models and calculations are applied to identify the most appropriate solution. John Wiley and Sons Australia

quantitative decision-making tools that are common used in the above process:
Mathematical forecasting: Helps make future projections that are useful in the planning process. Inventory modelling Helps control the inventories by mathematically establishing how much to order and when. Linear programming Used to calculate how best to allocate scare resources among competing uses. Queuing theory Helps allocate service personnel or workstations to minimize customer waiting time and service cost. Network models Break large tasks into smaller components to allow for better analysis, planning and control of complex projects. Simulation Makes model of problem, so that different solutions under various assumptions can be tested.
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4 basic characteristics of Quantitative approaches to management

Regardless of the specific technique used, the essence of the quantitative management approach includes these characteristics: 1. Decision-making focus. There is a focus on decision making that has clear implications for management action. 2. Measurable criteria. The decision-making process requires that the decision maker select some alternative course of action. To make a rational selection among the alternatives, he must compare them on the basis of some measurable criterion, or objective, such as profit, cost, return on investment 3. Mathematical model. To assess the likely impact of each alternative on the stated criteria, a quantitative model of the decision situation must be formulated. Quantitative models make use of mathematical symbols, equations, and formulas to represent properties and relationships of the decision situation. 4. Computers. Although many quantitative models can be solved manually, such a process is often time-consuming and costly. Consequently, computers are quite useful in the problem-solving process (and often necessary for extremely complex quantitative formulations).
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What is the role of quantitative analysis in management?

The availability of high-powered desktop computing provides new opportunities for mathematical methods to be used for problem solving. Many organisations employ staff specialists in quantitative management science and operations research to solve problems. Quantitative techniques in common use include various approaches to forecasting, linear programming and simulation, among others.
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Modern approaches to management

Modern approaches recognise that: No one model or theory applies universally in all situations or to the exclusion of the others. People are complex and variable. They have many different needs that can change over time. They possess a range of talents and capabilities that can be developed. Managers should respond to individual differences.

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Systems thinking
Systems thinking:

A system is a collection of interrelated parts working together for a purpose.

Chester Barnard defined organisations as cooperative systems in which individual contributions are integrated for a common purpose. A subsystem is a smaller component of a larger system. Open systems transform resource inputs from the environment into product outputs.
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Organisations as complex networks of interacting subsystems

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Contingency thinking
Contingency thinking Tries to match managerial responses with the problems and opportunities specific to different settings, particularly those posed by individual and environmental differences. Recognises that what is a good structure for one organisation may not work well for another, and what works well at one time may not work as well in the future as circumstances change.

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Quality and performance excellence

Value chain The sequence of activities transforming materials into finished products. Managers and workers in truly progressive organisations are quality conscious. Every effort is made in total quality management (TQM) to build quality into all aspects of operations from initial acquisition of resources, through the transformation processes and work systems, all the way to ultimate product delivery to customers or clients.
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The value chain

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Quality and performance excellence

Eight attributes of performance excellence: Bias towards action Closeness to the customers Autonomy and entrepreneurship Productivity through people Hands-on and value-driven Sticking to the knitting Simple form and lean staff Simultaneous loosetight properties
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Global awareness
Much of the pressure for performance excellence is created by a competitive global economy. Theory Z describes a management framework emphasising: long-term employment slower promotions and lateral job movements attention to career development use of consensus decision making emphasis on use of teamwork and employee involvement.
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Learning organisations
A learning organisation continuously changes and improves using the lessons of experience. Require a value-driven organisational culture. The 21st century manager must be: A global strategist A master of technology An effective politician An inspiring leader.

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Chapter 4 Historical foundations of management

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