UNIT 02

SCHOOLS OF MANAGEMENT THEORY

Ng Qu Nhm, MBA Email: quynham@gmail.com

NGO QUY NHAM, MBA

Lecture outline
Early management ideas Classical theorists Behavioural theorists Quantitative approach Contemporary ideas Innovation & management theory

NGO QUY NHAM, MBA

Development of Major Management Theories

Management Theories Organisational behaviour (1930-1950) Organisational behaviour (1930-1950)

General administrative theorists (1910s)

Quantitative approach (1940s)

Early examples of management Adam Smith Industrial revolution

Early advocate Hawthorne studies Behaviouralscience theorists Human relations

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Contemporary views

Historical background

Scientific management (1900s)

HISTORICAL BACKGROUND
Early examples of management
The Egyptian pyramids The Great Wall of China

Adam Smith:
Organisations and society would gain from the division of labour, the breakdown of jobs into narrow and repetitive tasks

Industrial Revolution
The advent of machine power, mass production and efficient transportation
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Early management ideas

Robert Owen
(17711858)

Identified the importance of working and social conditions for employees.

Charles Babbage

(17921871)

Ideas on work specialisation, production efficiency, incentive and profit-sharing plans.

Henry R. Towne (18441924)

Called for a management science that would establish principles of management.

NGO QUY NHAM, MBA

Early management ideas

Assessing the early contributions:
Uncoordinated efforts. Contributions tended to relate to specific problems. Did not see management as a separate field or skill (until Towne).

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SCIENTIFIC MANAGEMENT
the use of the scientific method to determine the one best way for a job to be done. It emphasises the scientific study of work methods to improve worker efficiency. Important contributions were made by
F. W. Taylor, F. & L. Gilbreth, H. Gantt

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Scientific management
Frederick W. Taylor: Four principles of scientific management: 1. Determine the most efficient work methods. 2. Select & train the best. 3. Co-operate with workers to ensure best method is used. 4. Divide work/responsibility between workers & managers.

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Scientific management
Frank & Lillian Gilbreth
Time & motion studies Human implications of Scientific Management

Henry Gantt
Pay incentives Gantt chart

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GENERAL ADMINISTRATIVE THEORISTS

Writers who developed general theories of what managers do and what constitutes good management practice Henri Fayol Management is a set of functions:
o o o o o planning, organising, commanding, coordinating and controlling

14 principles used by managers to co-ordinate the organisations internal activities

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Henri Fayols Principles of management

Division of work Authority Discipline Unity of command/direction Primacy of general interest Remuneration Esprit de corps Centralisation Scalar chain Order Equity Low turnover Initiative

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Administrative management
Contributions
Viewed management as a profession that can be trained and developed Emphasised the broad policy aspects of toplevel management

Limitations
Universal prescriptions need qualifications for environmental, technological, and personnel factors

NGO QUY NHAM, MBA

Bureaucratic theorists
Max Weber: the ideal type of organisation (bureaucracy) the division of labour,
Division of labour Formal selection Clearly defined hierarchy, Detailed rules and regulations, and Impersonal relationships.

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Bureaucratic management
Contributions Promote efficient performance of routine organisational activities Eliminate subjective judgement by employees and management Emphasises position rather than the person

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Bureaucratic management
Limitations Limited organisational flexibility and slow decision making Ignore the importance of people and interpersonal relationships Accumulation of power can lead to authoritarian management Rules may become ends in themselves Difficult to get rid of the system once established

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QUANTITATIVE MANAGEMENT
the use of quantitative techniques to improve decision making and organisational effectiveness.

Management science
...use

of sophisticated mathematical models & statistical methods.

Operations management
responsible

for managing production & delivery of an organisations products and services.

Management information systems

focused

on designing & implementing computer-based information systems for use by management.

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Quantitative management
Contributions
Developed specific mathematical methods of problem analysis Helped managers select the best alternative among a set

Limitations
Models neglect non-quantifiable factors Managers not trained in these techniques and may not trust or understand the techniques outcomes Not suited for non-routine or unpredictable management decisions

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BEHAVIOURAL THEORISTS

Perspective on management emphasising the importance of attempting to understand various factors affecting human behaviour in organisations.

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Behavioural theorists
Early theorists:
Hugo Munsterberg
Creating optimal psychological conditions, behaviour shaping

Mary Parker Follett

Importance of group functioning

Hawthorne studies
Importance of supervisory style

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Human Relations
Contributors
Abraham Maslow: Hierarchy of Needs Douglas McGregor: Theory X & Y

Key concepts Promotes employees effectiveness through understanding of individual, group, and organisational processes. Stresses relationships among employees, managers, and the work they perform for the organisation. Assumes employees want to work and can control themselves (Theory Y)
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Human Relations
Contributions Increased participation, greater autonomy, individual challenge and initiative, and enriched job may increase performance Recognised the importance of developing human resources Limitations

Some approaches ignored situational factors such as the environment and the organisations technology
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Organisationl Behaviour
Key concepts Productivity and employee behaviour are influenced by the informal work group Cohesion, status, and group norms determine output. Managers should stress employee welfare, motivation, and communication Social needs have precedence over economic needs.

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Organisationl Behaviour
Contributions

Psychological and social processes influence performance Maslows hierarchy of needs Limitations
Ignored workers rational side and the formal organisations contribution to productivity Research findings later overturned the simplistic belief that happy worker are always more productive

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CONTEMPORARY VIEWPOINTS
Systems theory
Approach based on the idea that organisations can be viewed as systems.

Contingency theory
Viewpoint arguing that appropriate managerial action depends on the particular parameters of the situation.

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Systems theory
Key concepts Organisation is viewed as a open system Management must interact with the environment to gather inputs and return the outputs of its production Organisational objectives must encompass both efficiency and effectiveness Organisations contain a series of subsystems There are many roads to the same outcome Synergies exist where the whole > the sum of the parts

NGO QUY NHAM, MBA

Systems theory
Contributions Recognised the importance of the organisations relationship with the external environment Limitations Does not provide specific guidance on the functions and duties of managers

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Contingency Perspective
Key concepts Situation contingencies influence the strategies, structures, and processes that result in high performance There is more than one way to reach a goal Managers may adapt their orgs to the situation Contributions Identified major contingencies Argued against universal principles of management Limitations Not all important contingencies have been identified. May not be applicable to all managerial issues
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Contemporary viewpoints
Theory Z
Concept combining positive aspects of American and Japanese management into a modified approach aimed at increasing managerial effectiveness while remaining compatible with the norms and values of American society and culture.

Total Quality approach

Approach highlighting collective responsibility for product and service quality, and encouraging individuals to work together to improve quality.
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Promoting innovation
Each management viewpoint provides a contribution to managing innovation: Classical Behavioural Quantitative Contemporary

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Lecture summary

Early management ideas

Generation of ideas leading to identification of management as a significant field of inquiry.

Classical theorists
Emphasised finding ways to more efficiently manage work and organisations.

Behavioural theorists
Emphasised the importance of trying to understand factors affecting human behaviour in organisations.
NGO QUY NHAM, MBA

Lecture summary
Quantitative approach
Focuses on mathematics, statistics and information aids supporting managerial decision making and effectiveness.

Contemporary ideas
Views of organisations as systems, importance of contingency factors & amalgamating Japanese & American management practices.

Innovation & management theory

Each approach provides insights, knowledge & practice regarding the management of innovation in organisations.
NGO QUY NHAM, MBA