ch 1 management & its evolution

8/10/2019 Ch 1 Management & Its Evolution

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CHAPTER 1

MANAGEMENT AND ITSEVOLUTION


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CHAPTER OVERVIEW

Defining Management.

Various Approaches to Management

Business Environment

Business Ethics & Social Responsibility


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BACKGROUND

Managing is one of the imp activitiestoday.

Imp to ensure coordination of individualefforts.Thus, task of Managers has been gainingsignificance.


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WHAT IS AN ORGANIZATION?

A formal and coordinated group of peoplewho function to achieve particular goals

These goals cannot be achieved by individualsacting alone

An organization has a structure


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MANAGEMENT

Organization

Two or more people who work together in a structuredway to achieve a specific goal or set of goals.

GoalsPurpose that an organization strives to achieve;organizations often have more than one goals, goalsare fundamental elements of organization.

The Role of Management

To guide the organizations towards goal

accomplishment


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NEED FOR MANAGEMENT

We are members of oneor other organizations.

Organizations also have someplan to achieve these goals.

Organizations also need to acquire& allocate the resources necessary toachieve their goals.


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DEFINITION OF MANAGEMENT

The process of planning, organizing, leading, andcontrolling the work of organization members & ofusing all available organizational resources to reach

stated organizational goals.(Stoner, Freeman & Gilbert)

The process of designing & maintaining an

environment in which individuals, working togetherin groups, efficiently accomplish selected aims.


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MANAGEMENT AND ORGANIZATIONALRESOURCES


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BASIC MANAGERIAL FUNCTIONS

OrganizingAssign responsibility for tasks

PlanningSelect goals & ways

to attain them

ControllingMonitor activities & make

corrections

LeadingUse influence to motivate


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NATURE OF MANAGEMENT

MultidisciplinaryDynamic nature of Principles

Relative; not absolute principlesManagement: Science or ArtUniversality of Management


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IMPORTANCE OF MANAGEMENT

Encourages Initiative Encourages Innovation

Facilitates growth and expansionOptimum Utilization of ResourcesReduces CostEstablishes Sound OrganizationEstablishes Equilibrium


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IMPORTANCE OF MANAGEMENT

Improves corporate imageMotivates employees

Reduces wastageReduces absenteeism and labour turnoverIncreases efficiency

Improves relationsEncourages Team Work


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IMPORT NCE OF M N GEMENT

Optimum utilisation of resources : Management facilitates optimumutilisation of available human and physical resources, which leads toprogress and prosperity of a business enterprise. Even wastages of alltypes are eliminated or minimized.

Competitive strength : Management develops competitive strength inan enterprise. This enables an enterprise to develop and expand itsassets and profits.

Cordial industrial relation : Management develops cordial industrialrelations, ensures better life and welfare to employees and raises theirmorale through suitable incentives.

Motivation of employees : It motivates employees to take more interestand initiatives in the work assigned and contribute for raising productivityand profitability of the enterprise.


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Develops team spirit : Management develops team spirit and raises overall efficiency ofa business enterprise.

Ensures effective use of managers: Management ensures effective use of managers sothat the benefits of their experience, skills and maturity are available to the enterprise.

Ensures smooth functioning : Management ensures smooth, orderly and continuesfunctioning of an enterprise over a long period. It also raises the efficiency, productivityand profitability of an enterprise.

Reduces turnover and absenteeism : Efficient management reduces labour turnover andabsenteeism and ensures continuity in the business activities and operations.Creates sound organisation : A dynamic and progressive management guaranteesdevelopment of sound Organisation, which can face any situation - favorable orunfavorable with ease and confidence.


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HISTORY..

The systematic study of management beganafter 1900.Industrial Revolution also had a deep impact onManagement practices & Approaches.Management philosophies and organizationforms change over time to meet new needs.Some ideas and practices from the past are stillrelevant and applicable to management today.


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APPROACHES TO MANAGEMENT


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MANAGEMENT THEORIES

1. ScientificManagement School

4. ModernPerspectives

3. Behavioral Approach

2. Classical Approach


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THE THEORISTS THE SCHOOLS

SCIENTIFIC A PPROA CH1) Frederic Taylor

2) Gantt

3) Gilberths

CLA SSICAL A PPROA CHES1) Henri Fayol

2) Max Weber

3) Mary Parker Follett4) Chester Barnard

B EHAVIOURAL A PPROA CH1) Hawthorne Experiments

2) Maslow & McGregor /Organizational Behaviour

MODERN A PPROACHES1) Systems Approach

2) Contingency Approach

Approaches toManagement


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FOUR BASIC PRINCIPLES OF TAYLORThe Development of a true science of management:Study the way job is performed now & determine new ways to do it. Gather

detailed, time and motion information. Try different methods to see which is best .The Scientific Selection of workers:Each worker would be assigned responsibility for the task hes best suited to

increase efficiency & productivity.

The Scientific education & development of theworker:Scientifically select and then train, teach, and develop the worker.

Intimate, friendly cooperation betweenmanagement and labor:Establish a fair or acceptable level of performance for a task, and then develop apay system that provides a reward for performance above the acceptable level


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CONTRIBUTIONSThe efficiency techniques have been applied to manyorganizations.

LIMITATIONS: Managers often implemented only the increased outputside of Taylors plan.

They did not allow workers to share in increased output.Specialized jobs became very boring, dull.

Workers could purposely under -perform; as it wouldexhaust whatever work was available causing layoffs.Emphasis on Productivity & Profitability led somemanagers to exploit both workers & customers .Workers began to distrust Scientific Management


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HENRY GANTT

Refined Taylors incentive system.

Originated a charting system for production schedulingnamed as Gantt Chart.

Introduced reward systems for both the workers &

supervisors.


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FRANK LILLIAN GILBRETHSRefined Taylors work and made many improvements tothe methodologies of time and motion studies.

Time and motion studiesBreaking up each job action into its components.

Finding better ways to perform the action.Reorganizing each job action to be more efficient.

Also studied worker-related fatigue problems caused by

lighting, heating, and the design of tools and machines.They focused on the ways of promoting individualworkers welfare & believed that motion studies wouldraise worker morale.


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CLASSICAL APPROACHES HENRI FAYOL

Founder of classical management school.His theory is an attempt to identify theprinciples & skills that underlie effective

management.Fayol was interested in total organization &focused on management.

Developed fourteen principles ofmanagement that applied to allorganizational situations


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MAX WEBER - BUREAUCRACY

Concept given by German sociologist MaxWeber.Org required strictly defined hierarchy; governedby clearly defined regulations & lines ofauthority.Bureaucracy: Org with a legalized formal &

hierarchical structure; also refers to the formalstructural process within an org.He emphasized rationality, predictability,impersonality, technical competence, andauthoritarianism .


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WEBERS PRINCIPLES


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KEY POINTS OF BUREAUCRACY

Authority is the power to hold peopleaccountable for their actions.Positions in the firm should be held based on

performance not social contacts. Position duties are clearly identified. Peopleshould know what is expected of them.Lines of authority should be clearly identified.Workers know who reports to who.Rules, Standard Operating Procedures (SOPs), &Norms used to determine how the firm operates.

Sometimes, these lead to red -tape and otherproblems.


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MARY PARKER FOLLETT

An influential leader in early managerialtheory.Introduced new elements in terms of humanrelations & org structure.Was a great believer in the power of group.

Added org environment to the theory.


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CHESTER BARNARD

Introduced elements to the classical theory.Central thesis: Org goals should be kept inbalance with the aims & needs of theindividuals working for it.Importance & universality of Informal Org Employees zone of indifference.


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BEHAVIORAL APPROACHES

Emerged with a group of management scholarswho were trained in sociology, psychology &related fields

Focuses on the psychological and sociologicalprocesses ( attitude, motivations, groupdynamics ) that influence employee performanceFocuses more on the people side of theorganizationFocuses on the way a manager should personallymanage to motivate employees


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THE HUMAN RELATIONS THEORY

Human relations theory is characterized by a shift inemphasis from TASK to WORKER

A more dyadic (two-way) conceptualization of

communication.

SOCIAL RELATIONSHIPSare at the heart of organizationalbehavior.

Workers communicate opinions, complaints, suggestions,and feelings to increase satisfaction and production.


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HUMAN RELATIONS MOVEMENT

The Human Relations Movement Pyramid


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THE HUMAN RELATIONS MOVEMENT

An effort to make managers more sensitive totheir employees needs

Arose out of the influences ofThe threat of unionizationThe Hawthorne studies

The philosophy of industrial humanism


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HUMAN RELATIONS MOVEMENT

The Threat of UnionizationThe Wagner Act of 1935 legalized union-management collective bargaining, promoting

the growth of unions and union avoidance byfirms.The Philosophy of Industrial Humanism:

Emotional factors were more importantdeterminants of productive efficiency than werephysical and logical factors.


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HOWTHORNE EXPERIMENTS

Studies performed at the Western ElectricCompany from 1924-1933.

An attempt to investigate the relationship

between the level of lighting in the workplace& worker productivity.Worker productivity was measured at variouslevels of light illumination.Social environment / informal work groupsalso had a positive influence on productivity.


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HAWTHORNE EFFECT:

The discovery that paying special attention tothe employees motivates them to put greaterefforts into their jobs. Employees would workharder if they believed management was

concerned about their welfare & supervisors paid special attention to them.


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IMPLICATION OF HAWTHORNE STUDIES

Behavior of managers and workers in thework setting is as important in explaining thelevel of performance as the technical aspects

of the taskDemonstrated the importance ofunderstanding how the feelings, thoughts,

and behavior of work-group members andmanagers affect performance


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THEORY X THEORY Y

Douglas McGregor proposed the twodifferent sets of assumptions about workers.


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MASLOWS THEORY


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MANAGEMENT SCIENCE SCHOOLOperations Research:

At the beginning of World War II, the britishersfirst formed the Operational Research(OR) teamsto solve problems.They were able to achieve significanttechnological & tactical breakthroughs.OR are mathematical techniques for modeling,analysis & solution of management problems .OR procedures were formalized & are knownas Management Science School.


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MODERN APPROACHES

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SYSTEMS APPROACH

It views an org as a unified, purposeful systemcomposed of interrelated parts.

The org is looked up as a whole and a part of thelarger, external environment.

Activity of any segment of an organization willaffect every other segment.


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KEY CONCEPTS IN SYSTEMS APPROACH ..

The parts that make up thewhole of a system.

1.SUBSYSTEMS

Whole is greater than the sum of is parts Depts. that interact cooperatively are

more productive ; than operated inisolation.

2. SYNERGY

A system which interacts with itsenvironment.

A system that does not interact with itsenvironment.

3. OPEN SYSTEMS

4. CL OSEDSYSTEMS


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KEY CONCEPTS IN SYSTEMS APPROACH ..

The boundary that separates eachsystem from its environment.

Rigid Closed System; Flexible Open System

5. SYSTEM

BOUNDARY

Components such as information, material &energy ; which are known as inputs.

They get transformed as outputs ( goods &services).

6. FLO W

Key to systems control The results of actions are returned to the

individual ; allowing work procedures to beanalyzed & corrected.

7. FEEDB A CK

THE ORGANIZATION AS AN OPEN SYSTEM


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THE ORGANIZATION AS AN OPEN SYSTEM


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SYSTEMS APPROACH IN GISTLooks upon the management as a System as an organized wholemake up of sub-systems integrated into a unity or orderly totality.

Attention should be given to overall effectiveness of the systemrather than effectiveness of any sub-system in isolation.

Emphasizes the inter-relatedness and inter-dependence of allactivities within an organization.

Forces the manager to look upon his business as an open adaptivesystem.

Every system is a part of a super system


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CONTINGENCY THEORY

Also sometimes called the Situational approach.There is no one universally applicable set ofmanagement principles (rules) by which tomanage organizations.The idea that the organizational structures andcontrol systems manager choose depend on are contingent on characteristics of the

external environment in which the organizationoperates.Portrays each set of organizational relationshipsin its unique circumstances.


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POPULAR CONTINGENCY VARIABLES

Organization size

As size increases, so do the problems of coordination. Routineness of task technology

Routine technologies require organizational structures,leadership styles, and control systems that differ fromthose required by customized or non-routinetechnologies .

Environmental uncertainty What works best in a stable and predictable environment

may be totally inappropriate in a rapidly changing andunpredictable environment.

Individual differences Individuals differ in terms of their desire for growth,

autonomy, tolerance of ambiguity, and expectations.


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BUSINESS ENVIRONMENT


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BUSINESS

Business may be understood as the organizedefforts of the enterprise to supply consumers withgoods & services for profit.Society cant do without business & vice versa. Character is t ics o f 21 s t Cen tu ry B us inesses :

+ Trend towards mini organizations+ Flexible, flat & team based structures

+Businesses are knowledge based.+ Impact of IT+ Dispersed ownership, transparent

environment


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BUSINESS ENVIRONMENT DEFINED

Refers to the totality of all the relevant forces,to and beyond the control of an individualbusiness enterprise & its management.

The aggregate of all conditions, events, &influences that surround & affect it. These exercise a significant & meaningfulinfluence on the life & growth pattern.Charac ter i s t ics o f B us iness Envi ronm ent :+ Complex, Dynamic, Multi-faceted & has

far-reaching impact.


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RELEVANCE/ IMPORTANCE

Helps to develop broad strategies & long termpolicies

Enables t analyze competitors strategies

Will keep organizations dynamic in approach

Forsee impact of socio economic changes atthe national & international level

BUSINESS ENVIRONMENT


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BusinessDecision

Internal Environment

Mission / ObjectivesManagement Structure

Internal Power RelationshipPhysical Assets & facilities

Company imageHuman resourcesFinancial CapabilitiesTechnological CapabilitiesMarketing Capabilities

FinanciersSuppliers

CustomersCompetitorsPublicMktg Intermediaries

Micro Environment

EconomicTechnologicalGlobalDemographicSocio-CulturalPolitical

Macro Environment


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INTERNAL ENVIRONMENT

All factors within the organization which impartstrengths or cause weaknesses of strategic nature.Cont ro l lab le fac tors ; wh ich inc lude :VisionMissionObjectivesManagement Structure

Human ResourcesFinancial FactorsCompany Image and Brand Equity


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EXTERNAL ENVIRONMENT

Includes all factors outside the organizationwhich provide opportunities or pose threatsto the organization.

Uncontrollable factors.Consists of Micro & Macro Environment


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MICRO ENVIRONMENT

Micro Environment consists of factors in theimmediate environment.Facto rs Inc lud e:

SuppliersCustomersMarketing IntermediariesCompetitorsPublicsFinancial Communities


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MACRO ENVIRONMENT

Comprises of general trends & forces thatmay sooner/ later alter the way organizationoperates.

Consists of Economic & Non economicenvironment


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NON ECONOMIC ENVIRONMENT

SOCIO CULTURA L ENVIRONMENT:Social Customs& RitualsLifestyle patternsFamily structureRole & position of men, women, aged &children in society.


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DEMOGRA PHIC ENVIRONMENT:

Growth of population Age CompositionLife ExpectancySex Ratio

FertilityandMortalityratesInter-state migration


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TECHNOL OGICAL ENVIRONMENT:Plays pivotal role in creating and changing anorganizations task environment

New technological innovationTechnological AdvancesImproved access to services (e.g. Banking)


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GL OB A L ENVIRONMENT:Growth of world economyInternational Institutions ILO, WTOEconomic relations between nationsGlobal HR skills, mobility

Global Technology & Quality standardsGlobal Demographic patterns

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ENVIRONMENTALLY-CONSCIOUS BUSINESS PRACTICES

n Cut back on environmentally unsafe operationsn Compensate for environmentally risky endeavorsn Avoid confrontation with state and federal pollution

control agenciesn Comply early with government regulationsn Promote new manufacturing technologiesn Recycle wastes

AN ORGANIZATIONS ENVIRONMENT


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Industry SectorCompetitors ,

Industry size andCharacteristics, RelatedIndustries

Raw MaterialsSector

Suppliers,Manufacturers,Real Estate

HumanResourcesSector

Labor Market, EmploymentAgencies, Universities, TrainingSchools, Employees in OtherCompanies, Unionization

Financial Resources Sector

Stock Markets, Banks,

Savings and Loans,Private Investors

MarketSector

Customers, Clients,Potential Users ofProducts and Services

TechnologySector

Techniques ofProduction, Science,Research Centers,Automation, NewMaterials

EconomicConditions Sector

Recession, UnemploymentRate, Inflation rate, Rate of

Investment, Economics,Growth

Government Sector

City, State, Federal Laws andRegulations, Taxes, Services,Court System, PoliticalProcesses

Socio-Cultural sector

Age, Values, Beliefs, Education,Religion, Work Ethic, Urban vs.Rural, Birth Rate

ORGANIZATION

DOMAIN

Task Environment

MacroEnvironment


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ch 1 management & its evolution

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