BA 210: Evolution of Management

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BA 210 Evolution of Management
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Class Information

• New? Please read the syllabus for admin
  information
• Syllabus, assignments and more on course website
• www.cba.uiuc.edu/ba210
• Lecture Notes packet at T.I.S. or on website
• Textbook at the usual places (need bundled CD ROM
  too)
• Attempting to enroll?
• Enrollment for non CBA students opens Jan 27
• Even if class is full, as people drops slots open
• See course website for info

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BA 210 TAs

• Teaching Assistants
• A-E Steve Harper srharper_at_uiuc.edu
• F-K Naina Gupta ngupta5_at_uiuc.edu
• L-Q Yuri Mishina ymishina_at_uiuc.edu
• R-Z Ece Tuncel etuncel_at_uiuc.edu
• TAs are your first point of contact for
  questions, concerns, issues with the course
• See website for phone, office hour etc. info

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Todays Objective and Roadmap

• Objective To understand several of the major
  perspectives on management and organizations.
• Management and Organizations
• Scientific Management Theory
• Administrative Management Theory
• Behavioral Management Field of Organizational
  Behavior
• Open Systems Theories of Organizations
• Contingency Theories of Organizations
• Each theory conceptualizes organizations and the
  central problem differently.

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Managers, Management and Organizations

• Manager Someone who works with and through other
  people by coordinating their work activities, in
  order to accomplish organizational goals.
• Some managers also do real work
• Management The process of coordinating work
  activities so that they are completed efficiently
  and effectively with and through other people.
• Organization A deliberate arrangement
  (structure) of people to accomplish some specific
  purpose

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Key Managerial Functions
This is how the text is organized and is the one
we use. Useful, but rarely is reality this clean
and sequential
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Efficiency vs. Effectiveness
Key, central distinction
Low Waste
High Achievement
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Example Efficiency or Effectiveness

• In the 1840s, Acme Buggy Whip holds a leading
  position in its market. Managers at ABW forecast
  a stable, slowly growing market for their
  products.
• Should managers focus on efficiency or
  effectiveness?
• In the early 1900s, Acme Buggy Whip Inc., is
  facing declining profits as railroads and
  automobiles cut into its market.
• Should managers focus on efficiency or
  effectiveness?
• Has Apple Computer been known as the most
  efficient producer of personal computers?

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Organizational Levels
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Managers use different skills at different levels
1-10
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Historical background of management and
organizations

• Organizations and management are old news
• Military organizations, The Pyramids, Great Wall
  of China
• A revolution started with Adam Smith
• The division of labor Breakdown of jobs into
  narrow, repetitive tasks increased productivity
• The Industrial Revolution
• Substitution of machine power for human power
• Large organizations required formal management
• Ford and the assembly line

Theme Huge efficiency increases huge social
changes too
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F.W. Taylor and Scientific Management

• Scientific Management The systematic study of
  relationships between people and tasks to
  redesign the work process for higher efficiency.
• Pioneered by Frederick Taylor in the late 1800s
  scientific methods to replace informal, rule of
  thumb, methods.
• Taylor optimized and standardized work processes
• Large industrial firms made huge gains
• The Pig Iron experiment 12.5 tons/day to 48
  tons/day
• The Franklin Motor Company used Taylors methods
  to raise production from 5 to 45 cars a day.
• Others added to Taylors work, and the principles
  of scientific management are still in use today.

Awesome efficiency gains
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How did scientific management work?

• Optimize Standardize Staff Incentivize
• Optimize Find one best method by detailed
  study (e.g., time and motion analysis) and
  experimentation with new methods
• Staff Select workers whose skills match the
  task.
• Incentivize Identify appropriate high
  performance levels, and pay a premium for high
  performance.
• Example Bricklaying
• You come in to a construction site and see chaos.
  Each mason has his own technique. A lot of
  people seem to be sitting around. There must be
  a better way!

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Problems with Scientific Management

• Changes frequently did not benefit the workers
• Managers did not production gains with workers.
• Specialized jobs became monotonous, stressful.
• Managerial control over work increased
• Procedures were standardized and production
  targets increased
• Work was increasingly paced by (fast-moving)
  machines
• Workers ended up distrusting Scientific
  Management.
• Workers could purposely under-perform
• These issues remain with us today, in U.S. and
  elsewhere

Restructuing work had dramatic, negative
unintended consequences
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Total Quality Management Note the links to
scientific management
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Is this any way to run a railroad?

• Imagine a railroad in Webers Germany in the late
  1800s
• The owner knows a count who could help secure
  rights of way. The count inherited his position.
  He likes to tinker with trains. In return for
  his political help, the count asks he be
  installed as superintendent of the Munich
  division, and so he is.
• The count occasionally takes a hand at being
  engineer for fast passenger trains he ignores
  all signals and procedures.
• The count sets up his own system of signals that
  are quite different from those on the rest of the
  railroad.
• On a visit to the railroads locomotive factory,
  the count tells workers to ignore the chief
  engineers design for a new locomotive, instead
  proudly producing his own blueprints.
• Want to take a fast ride through the counts
  territory?

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Administrative Management Theory Max Weber

• Administrative Management Focusing on the
  organization as a whole, instead of individual
  workers or groups
• How to make the organization a smoothly running
  machine?
• Max Webers Bureaucracy A form of organization
  characterized by division of labor, a clear
  hierarchy, detailed rules and regulations, and
  impersonal relationships.
• Achieving efficiency and reliability was a key
  goal when Weber wrote in the early 1900s.
• Bureaucracy was more effective (particularly
  reliable) and more efficient than more informal,
  less reliable organizations.
• More recently bureaucracy red tape as
  managers let rules become overly restrictive
  whereas the goal is responsive, innovative
  organization

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Webers Ideal Bureaucracy Exh 2.4

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Behavioral Management Theories Organizational
Behavior

• Behavioral management How should managers
  personally behave to
• Motivate employees to perform at high levels
• Gain employee commitment to organizational goals.
• Fundamentally departed from machine views.
• Created field of organizational behavior
• Has led to study of leadership, teamwork, etc.

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Mary Parker Follett

• Influential Early Theorist
• Held a horizontal view of power and authority in
  organizations
• Suggested workers help analyze their jobs for
  improvementsworkers know the best way to improve
  the job.
• If workers have relevant knowledge of the task,
  they should control the task.

Against scientific management where experts plan
workers do
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The Hawthorne Studies

• Western Electric Company, 1924
• Changes not the level of - illumination
  increased productivity!
• Why? Hawthorne effect workers responded to the
  attention.
• So why do we care about lights?
• Because it suggested managers behavior not
  technical work conditions might be studied to
  reveal sources of motivation
• Later bank wiring room studies found workers
  had deliberately set a norm to restrict output to
  fair levels, to protect their jobs.
• Ratebusters and Chiselers were both
  sanctioned
• Work groups influence on output was as important
  as managers influence or influence of
  incentives.
• Challenged dominant machine view of workers.

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Total Quality Management Note the link to
behavioral management
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Key Avoids narrow and/or internal focus that was
common in earlier theories.
An Open System Model Of Organizations Exh 1.7
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Total Quality Management Note the open systems
perspective
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Contingency Theories of Organizations

• Takes open systems perspective seriously.
• The environment impacts the firm and managers
  must be flexible to react to environmental
  changes.
• Managers must find ways to coordinate different
  departments to respond effectively.
• Optimal organizational structures and control
  systems are contingent (depend) on
  characteristics of the firm and of the
  environment (marketplace) of the organization.

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Contingency examples

• Organizational Size larger size requires more
  formal procedures and more layers of management.
• Complexity of product line Organizations with
  many different products should be organized into
  divisions (lighting, aircraft engines, etc.)
  rather than by functions (finance, marketing,
  etc.).
• Environmental (marketplace) turbulence
  Organizations facing rapidly changing markets and
  technologies have to be flexible and responsive,
  so they should be less bureaucratic.

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The Changing Organization
Behavioral model expertise becomes as
important as machine model expertise
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Major Points

• Efficiency v. Effectiveness.
• Functions of management a useful lens.
• Scientific Management huge increases in
  productivity, but unintended consequences
• Administrative theory The smoothly-running
  bureaucracy
• Machine vs. behavioral perspectives on
  organizations strengths of each. Is an
  organization a machine?
• Open systems perspective avoid a narrow,
  internal focus, understand interactions in the
  system.
• Contingency Theory No one best way to manage.

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Next Time

• Foundations of Behavior Chapter 14 of textbook
• Testing 123 Skip 1-2, 8, 10-11. Defer 16 18
  (motivation).
• Mastering Management Individual Behavior
  Causal Attributions Module
• Complete the introduction, concepts, exercises
  and resolution sections of the Individual
  Behavior Causal Attributions module (4th one
  down in table of contents screen).
• Case and discussion sections are not (ever)
  required.