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The Evolution of Management Theory. Learning Objectives. To understand how management theories develop To understand the impact of the environment to management thinking To gain insights into new management approach. Early Management Thought. Early ideas about management strategy
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Learning Objectives • To understand how management theories develop • To understand the impact of the environment to management thinking • To gain insights into new management approach
Early Management Thought • Early ideas about management strategy • Sun Tzu (770-476 B.C.), The Art of War • Early ideas about leadership • Nicolò Machiavelli (1469-1527), The Prince • Early ideas about the design and organization of work • Adam Smith, The Wealth of Nations • division of labor
Sun Tzu, Art of War “Shang Chang Ru Zhan Chang” “The marketplace is a battlefield” Sun Tzu, 4th century BC
Management and Machiavelli • New science of management lies in the the old art of government • "to be a great pretender and dissembler." • “cunning and intrigue, the triumph of force over reason.” • "a prince" ought to have no other aim or thought, nor select anything else for his study, than war and its rules and discipline."
The Evolution of Management Theory Contingency Approach Systems Theory (Comprehensive Analysis of Management)
Management Approachesand the Environment GENERAL ENVIRONMENT ECONOMIC SOCIAL OPERATING ENVIRONMENT NEW ENTRANTS SUPPLIER INTERNAL ENVIRONMENT PRODUCTION TECHNOLOGY STRUCTURE INPUTS SUBSTITUTES POLITICAL COMPETITION TECHNOLOGY CUSTOMER LEGAL
Environmentin ca1890 • Industrial revolution • Autocratic management was the norm • “Science" as a solution to the inefficiencies • and injustices of the period • Idea of interchangeable parts The Classical Approach The classical approach (ca1890) to management is a management approach that emphasizes organizational efficiency to increase organizational success.
The Classical Approach • Scientific Management • Frederick W. Taylor • Frank and Lillian Gilbreth • Henry Gantt • Bureaucratic Management • Max Weber • Administrative Management • Henri Fayol
Taylor’s Four Principles of Scientific Management • Scientifically study each part of a task and develop the best method of performing the task. • Carefully select workers and train them to perform the task by using the scientifically developed method. • Cooperate fully with workers to ensure that they use the proper method. • Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly.
“Now one of the first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his mental makeup the ox than any other type”- Frederick Taylor
Key Characteristics of Weber’s Ideal Bureaucracy • Specialization of labor • Formal rules and procedures • Impersonality • Well-defined hierarchy • Career advancement based on merit
Division of work Authority Discipline Unity of command Unity of direction Subordination of individual interest to the general interest Remuneration Centralization Scalar chain Order Equity Stability and tenure Initiative Esprit de corps Fayol’s 14 Principles of Administrative Management Planning, Organizing, Commanding, Coordinating, Controlling
Environmentin ca1910 • The Newtonian science that supported "the one best way" of doing things was being strongly challenged by the "new physics" results of Rutherford and Einstein • In the work place there were strong pressures for shorter hours and employee stock ownership. • As the effects of the 1929 stock market crash and following depression were felt, employee unions started to form The Behavioral Approach The behavioral approach (ca 1910) to management is a management approach that emphasizes increasing organizational success by focusing on human variables within the organization.
Behavioral Perspective • The Hawthorne Studies • Human Relations Approach • Employee motivation • Abraham Maslow • Leadership style • Douglas McGregor
Hawthorne Effect: The discovery that paying special attention to employees motivates them to put greater effort into their jobs. (from the Hawthorne management studies, performed from 1924 – 1932 at Western Electric Company’s plant near Chicago)
Maslow’s Hierarchy of Needs Self-Actualization Need for Self Esteem Need for Social Relations Need for Security Physical Needs
McGregor’s Theory X and Theory Y • Leaders and managers who hold Theory X assumptions believe that employees are inherently lazy and lack ambition. • A negative perspective on human behavior. • Leaders and managers who hold Theory Y assumptions believe that most employees do not dislike work and want to make useful contributions to the organization. • A positive perspective on human behavior.
Environmentin ca1940 • Application of OR in solving complex problems in warfare (WWII) • Significant technological and tactical breakthroughs • Interest in manufacturing and selling after WWII The Management Science Approach The management science approach (ca1940) is a management approach that emphasizes the use of the scientific method and quantitative techniques to increase organizational success.
Environmentin ca1950’s to 60’s” • Growing quality consciousness • Total Quality Management The System Approach The system approach (ca 50’s-60’s) to management is a management approach based on general system theory--the theory that to understand fully the operation of an entity, the entity must be viewed as a system. This requires understanding the interdependence of its parts.
GENERAL ENVIRONMENT ECONOMIC SOCIAL OPERATING ENVIRONMENT NEW ENTRANTS SUPPLIER PLANNING, ORGANIZING, INFLUENCING, CONTROLLING INPUT PROCESS OUTPUT SUBSTITUTES POLITICAL COMPETITION TECHNOLOGY CUSTOMER LEGAL The Open Management System
Environmentin ca1970’s” • Emergence of new companies “Apple” • Emergence of new products, “IBM PC” The Contingency Approach The contingency approach (ca 70’s) to Management is a management approach that Emphasizes that what managers do in practice depends on a given set of circumstances--a situation.
Triangular Management Triangular management is a management approach that emphasizes using information from the classical, behavioral, and manage- ment science schools of thought to manage the open management system.
Triangular Management Model MANAGEMENT SCIENCE-BASED INFORMATION CLASSICALLY BASED INFORMATION BEHAVIORALLY BASED INFORMATION
Environmentin ca1980’s • Slow American productivity improvement • Rise of Japanese companies • Japanese management may offer solutions to this problem Type Z Organization (Theory Z by Ouchi 1981) Theory Z (ca 80’s) suggests that involved workers are the key to an increase in productivity and it offers offers ways to manage (collective decision making, slow evaluation and promotion, and holistic concern for people) so that they can work together more effectively.
Theory Z • “Involved workers are the key to an increase in productivity.” From “Theory Z” by William Ouchi, 1981
Environmentin ca1990’s • Start of Internet age • Highly competitive environment • Emergence of communications technologies • Emergence of new work practices (virtual teams, network organizations) Chaordic Organization (Chaos Theory)(Hock, Dee,1999) Chaos theory (ca 90’s) in management recognizes that events indeed are rarely controlled. Blending chaos with order
Chaordic Organizations Purpose • Clarity of purpose and shared values • Operate through network of equals, not hierarchies Principles, People, and Concept Structure and Practice From “Birth of the Chaordic Age” by Hock, D. 1999
Environmentin the millenium • Information and electronic age • Information and knowledge is going to be readily available to us all • Information speed through Internet • The future is going to be dominated by our need to understand systems. Environment In the New Millennium
The Learning Organization Approach The learning organization approach to managementis the management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors. From “The Fifth Discipline” by Peter Senge, 1990
Managerial Approach to Learning Organization • Managers must create an environment conducive to learning • Managers encourage the exchange or information among organization members • Managers promote • systematic problem solving • Experimentation • learning from experiences and past history • learning from experience of others • transferring knowledge rapidly throughout the organization From “The Fifth Discipline” by Peter Senge, 1990
Building a Learning Organization • System Thinking • Every organization member understands his or her own job and how the jobs fit together to provide finals products to the customer • Shared vision • All organization members have a common view of the purpose of the organization and a sincere commitment to accomplish the purpose • Challenging of the mental models • Organization members routinely challenge the the way business is done and the thought processes people use to solve organizational problems From “The Fifth Discipline” by Peter Senge, 1990
Building a Learning Organization • Team learning • Organization members work together, develop solution to new problems together, and apply the solutions together. • Working as teams rather than than individuals will help the organization gather collective force to achieve organizational goals • Personal mastery • All organization members are committed to gaining a deep and rich understanding of their work • Such an understanding will help organizations to reach important challenges that confront them From “The Fifth Discipline” by Peter Senge, 1990
Learning Organization Approach System thinking (Systems Approach) Building a Learning Organization Personal mastery Shared Vision (Theory Z/Behavioral) (Chaordic Organization) Challenging of Mental models Team Learning (Theory Z/Behavioral) (Classical/Management science)
This is actually a slow advance in process management: • Record Management • Workflow - 1970 • Business Process Re-engineering (BPR) - 1990 • Business Process Management (BPR) - 2000 The business process management approach to management is a method of efficiently aligning an organization with the wants and needs of clients. It is a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology. As organizations strive for attainment of their objectives, BPM attempts to continuously improve processes - the process to define, measure and improve your processes – a ‘process optimization' process. Business Process Management Approach
Western Management Theories Is there an Asian Management Theory??
What is business management the Asian way? • Business tend to be small scale • Time has no beginning and end • Individualism is less relevant; managerial beliefs shift towards the autocratic end • Conformity to socially acceptable behaviors is done through morality (e.g losing face) • Oriental managers rely less on interpersonal confrontations • Managerial decisions consider effects on othe rpeople • Control of performance is less formal • Maintaining and developing guanxi (connection and relationship *From World Executive Digest by Redding & Martyn, 1984
“Will Western Management work in Asia?”* • “Values and attitudes affect but do not invalidate the transfer of American management concepts… Consequently, when we wish to transfer an effective device from one culture to another, careful attention should be given to underlying premises…? • “Tools of management remain the same.”** • “Economic and business philosophy are however, different.”** • Combination of general management, functional management, and communal organization and management..** Photo from www.aim.edu.ph *From World Executive Digest by William Newman, 1984 **From World Executive Digest by Sixto Roxas, 1981
Is there a Filipino Management Theory??Are Western theories applicable in Philippine setting?
Are Western Theories Applicable in Philippine Setting? • “The models and ideal types taught in Western-oriented MBA programs are based on certain assumptions, many of which are invalid in the Philippines. • Although organizations here have most of the structures and formal procedures of Western business, actual day-to-day business processes and interactions necessarily proceed within the matrix of Filipino culture and values. • Thus, the need for the Westerner to go "the extra mile" to understand what's really going on and adapt a culturally sensitive style of doing business.” - Clarence Henderson, Henderson Consulting International
What is Pinoy Management Theory?? • “No one Management Theory or Style.” • Under the formal organization are: • “Informal organization” • “Battlefield of behavioral styles among managers and employees” • “Unknown cultural ambiance among peoples and systems” From “Pinoy Management” by Ernesto Franco, 1986
Weaknesses of Pinoy Workers • Walang bilib sa sarili (No confidence in oneself) • Dikdik sa Colonial Mentality (Indoctrinated with Colonial Mentality) • Masyadong relaks (Overly relaxed) • Ningas-cogon (Not a follow-up people) • Holiday mentality • Lack of managerial and organizational effectiveness • Lack of self-reliant tenacity From “Pinoy Management” by Ernesto Franco, 1986
Pinoy Management • Kailangan may No. 2 (There is a need for No.2) • Tsismis machine (Grapevine Machine) • Kailangan may Hatchet Man (There is need for a Hatchet Man) • Be an expert on timing • Lumayo sa madalas matalo (Avoid losers) • Gawin mong personal (Make it personal) • NBA Style: One-on-one • Power play. Laban (Fight) • Be situational and contingent • Umarte kang parang intelihente. Iyong laging nag-iisip • Body language ang importante (Body language is important) • Pag sinabing “No”, dapat “No” talaga From “Pinoy Management” by Ernesto Franco, 1986
Pinoy Management Approaches • Management by “Kayod” (Realist Manager) • He wants quick action • He’s an autocrat • He is sigurista • He has gut feel • He knows how to use people • Management by “Libro” (Idealist Manager) • He is a thinker; technocrat; mabusisi; may sistema • Matigas and ulo From “Pinoy Management” by Ernesto Franco, 1986
Pinoy Management Approaches • Management by “Lusot” (Opportunist Manager) • He is galawgaw • Walang konsensiya • Mahilig sa lusot (Loves to get by) • Mahilig sa ayusan • Ugnayan-Management (The Hybrid) • Has balance • Contingency management style • He is solid • Marunong pumili (Chooses well) • Pambihira talaga (Exceptionally gifted) From “Pinoy Management” by Ernesto Franco, 1986