The Management Movement

The Evolution of ManagementThe Development of Modern

Management

Bellringer

Write a few sentences explaining what you know about the industrial revolution.

Learning Objectives

• Explain how the U.S. economy changed during the nineteenth and early twentieth century.

• Identify various theories of management.• Explain the effects of Japanese business

practices on management in the United States.

Let’s Get Started!

• What comes to mind when you hear the terms monopoly and industrial revolution?

• What do the words mean and/or what do they imply?

The Industrial Revolution

• Refers to the period during which a country develops an industrial economy.

• Europe’s, 18th century• U.S.’s, about 1860, just before the Civil war• Before, U.S. economy was based on agriculture.• Professional managers weren’t needed.• By late 1800s, industries (oil, steel, railroads,

manufactured goods) required supervisors

Causes of the Industrial Revolution• Changes in technology,

communication, and transportation

• Advances in manufacturing processes allowed new products to be created. (Ex. Steel)

• Growing use of steam power permitted more factories to operate (huge demand for coal)

• Telegraph and cable lines made it coast-to-coast communication possible

• Telephone made communication more accessible in 1876.

• By 1870, U.S. constructed 52,900 miles of railroad lines

• Construction of canals and roads, improvements in steam ships made it easier to send/receive products and supplies.

Group Task (10 minutes)

Research how one aspect of technology, communication, or transportation, such as the steam engine or telegraph changed the Industrial Revolution.

Captains of Industry

• John D. Rockefeller (oil)• James B. Duke (tobacco)• Andrew Carnegie (steel)• J.P. Morgan (banking)• Cornelius Vanderbilt

(steamships and railroads)

Captains of Industry

Bethlehem Steel• 1863, began producing the

1st iron railroad rails• One of world’s largest

shipbuilders• By 1899, selling almost $1

trillion worth of iron and steel products a year

Captains of Industry

Andrew Carnegie• From Scotland, worked in

cotton factory• At 29, entered iron

business, eventually creating one of the largest industrial

Captains of Industry

Cornelius Vanderbilt• Began his empire at 16• Purchased a small vessel that

sailed between Staten Island and New York

• Became leading steamboat owner in the U.S.

• The Commodore, as he was publicly nicknamed, gained a reputation for being fiercely competitive and ruthless.

• In the 1860s, he shifted his focus to the railroad industry.

Creation of Monopolies

• Occurs when one party maintains total control over a type of industry

• Rockefeller lowered prices for oil to force competitors to sell out or join forces

• Combined dozens of companies he owned into a single trust, or giant industrial monopoly.

• Controlled more than 90% of country’s refining capacity and almost as large a share of its pipeloines

The Break-Up of the Trusts

• About 1870, people became worried about the concentration of wealth in the hands a few . . .

• Legislators and public began to voice how monopolies hurt consumers

• Government decided to regulate business.

The Interstate Commerce Act

• Passed 1887• 1st major piece of regulatory legislation• Forced railroads to publish their rates and

forbade them to change rates without notifying the public

• Also established the Interstate Commerce Commission (ICC) to supervise the railroads

The Sherman Act

• Passed 1890• Made it illegal for companies to create

monopolies• Intended to restore competition• Under Presidents Roosevelt, Taft, and Wilson;

government broke up many large trusts• Standard Oil, for example.

New Challenges for Management

• By end of 19th century, thousands of workers, distributing products all over the country.

• Workers performed specialized tasks that needed to be coordinated.

• Changes demanded new ideas about how to manage people working in large corporations.

Jigsaw Activity

1. Frederick W. Taylor and Scientific Management

2. The Hawthorne Studies of Productivity

3. Abraham H. Maslow and the Hierarchy of Needs

Speaking Skills

• Do you agree or disagree with Frederick W. Taylor’s four scientific management principles? Give your reasons.

Discussion

Do you think there is “one best way” to perform any given task? If so why, and if not, why not?

Critical Thinking

• How would the “Hawthorne Effect” influence the way a manager manages?

Application Activity

• Imagine that you own a small business with one employee.

• Write a one-page employee policy manual describing how that employee would be treated if the policy were based on Maslow’s hierarchy of needs.

Case Analysis

In recent years, All-Steel, a manufacturer of metal fences, has had a serious problem retaining employees. Two years ago, in an effort to combat the problem, the company’s president, Mark Esposito, raised wages by 10 percent. The move had almost no effect on turnover: last year almost 25 percent of the workforce quit. Mark’s company pays higher wages than its competitors but they are still unable to retain a higher percentage of the workforce.

What factors explain the turnover rate at All-Steel? Explain your answer.