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LessonOneEvolution of ManagementText Evolution of ManagementExercisesFurther ReadingCaseStudyofBoeingCompanyTermsSynergyDelphianalysisProfileHenriFayolReferencesHistory of Management The classical period The contemporary approaches to management Three key directions for management theoryThe End HistoryofManagementAround1100B.C.Between350and400B.CTheRomansDuringthemedievaltimesTrial-and-errorAsaformaldisciplineEconomiesofscaleMassproductionThe classical periodAdamSmithSystematicmanagementScientificmanagementAdministrativemanagementHumanrelationsBureaucracyThecontemporaryapproachestomanagementTheclassicalapproachesdisadvantageQuantitativemanagementOrganizationalbehaviorSystemtheoryThecontingencyperspectiveAround1100B.C.TheChinesepracticedthefourmanagementfunctionsplanning,organizingandstaffing,leading,andcontrolling.The Shang Dynasty(1523-1027 BC)WasChinasfirsthistoricaldynasty.TheShangcivilizationleftChinasearliest-knownwrittenrecords,intheformofinscriptionsetchedinobjectsofboneandbronze.TheinscriptionsdocumentthedynasticsuccessionoftheShangkings,aswellasmanyfeaturesoftheBronzeAgecultureoftheShang.TheShangstatewascenteredintheYellowRiverValleyoftheNorthChinaPlain.Between350and400B.C.TheGreeksrecognizedmanagementasaseparateartandadvocatedascientificapproachtowork.Ancient GreeceCivilizationthatthrivedaroundtheMediterraneanSeafromthe3rdmillenniumtothe1stcenturyB.C.,knownforadvancesinphilosophy,architecture,drama,government,andscience.ThemostfamousperiodofancientGreekcivilizationiscalledtheClassicalAge,whichlastedfromabout480to323B.C.Thecity-statesfelltoRomanconquerorsin146bc.TheByzantineEmpirefelltotheOttomansin1453.TheRomansDecentralizedthemanagementoftheirvastempirebothbeforeandafterthebirthofChrist.Roman EmpireTheempireincludedlandsthroughouttheMediterraneanworld.TheempirelasteduntilGermanicinvasions,economicdecline,andinternalunrestinthe4thand5thcenturiesadendedRomesabilitytodominatesuchahugeterritory.In44bcGaiusJuliusCaesar,theRomanleaderwhoruledtheRomanRepublicasadictator,wasassassinated.TheRomanRepublic,whichhadlastednearly500years,wasdead,nevertoberevived.Theempirewouldendureforanother500yearsuntilad476.DuringthemedievaltimesTheVenetiansstandardizedproductionthroughtheuseofanassemblyline,buildingwarehousesandusinganinventorysystemtomonitorthecontents.Arowofworkersandmachinesalongwhichworkispasseduntilthefinalproductismade.Trial-and-errorThroughouthistorymostmanagersoperatedstrictlyonatrial-and-errorbasis.Thechallengesoftheindustrialrevolutionchangedthat.As a formal disciplineManagementemergedasaformaldisciplineattheturnofthecentury.EconomiesofscaleTheemergenceofeconomiesofscalereductionsintheaveragecostofaunitofproductionasthetotalvolumeproducedincreasesdrovemanagerstostriveforfurthergrowth.MassproductionTheopportunitiesformassproductioncreatedbytheindustrialrevolutionspawnedintenseandsystematicthoughtaboutmanagementproblemsandissuesparticularlyefficiency,productionprocessesandcostsavings.Themakingofgoodsinlargequantities,especiallybymachineryandwithdivisionoflabor.The Systematic Management Itattemptedtobuildspecificproceduresandprocessesintooperationstoensurecoordinationofeffort.ItsgoalsachievedwaysItsemphasisItsshortcomingIts goals were achieved through:1.Carefuldefinitionofdutiesandresponsibilities2.Standardizedtechniquesforperformingtheseduties3.Specificmeansofgathering,handling,transmitting,andanalyzinginformation.4.Costaccounting,wage,andproductioncontrolsystemstofacilitateinternalcoordinationandcommunications.Amethodofaccountingforthecostsofoperatingabusinessbyallocatingthesecoststothegoodsacompanyproducesortheservicesitrenders.Systematic Management s emphasisInternaloperationsManagerswerefreetofocusoninternalissuesofefficiency.Manymanagerswereorientedmoretowardthingsthantowardpeople.Systematic Management s shortcomingItfailedtoleadtowidespreadproductionefficiency.FrederickTaylorFrederickTaylorHisdiscoveriesTaylor Frederick WinslowTaylor Frederick Winslow(1856-1915)Americanindustrialengineer,whooriginatedscientificmanagementinbusiness.WasborninGermantown,Pennsylvania.BeganworkingattheMidvaleSteelCompanyin1878.Developeddetailedsystemsintendedtogainmaximumefficiencyfrombothworkersandmachinesinthefactory.BecamejointdiscovereroftheTaylor-Whiteprocess,amethodoftemperingsteelin1898.HismanagementmethodswerepublishedinThe Principles of Scientific Management(1911).OnehomepageonTaylorTaylor discoveriesProductionandpaywerepoor,inefficiencyandwastewereprevalent.Managementdecisionswereunsystematicandnoresearchtodeterminethebestmeansofproductionexisted.Scientific ManagementAdvocatedtheapplicationofscientificmethodstoanalyzeworkandtodeterminethe“onebestway”tocompleteproductiontasksefficiently.FourprinciplesAdvantageDisadvantagesFour principles of scientific management1.Developascientificapproachforeachelementofanindividualsworktoreplacerule-of-thumbguidelines.2.Scientificallyselect,train,teach,anddevelopeachworkersothattherightpersonhastherightjob.3.Cooperatewithworkerstoensurethatthejobmatchesplansandprinciples.4.Ensureanequaldivisionofworkandresponsibilitybetweenmanagersandworker.Time-and-Motion studiesTime-and-Motion studiesAtaskwasdividedintoitsbasicmovements,anddifferentmotionsweretimedtodeterminethemostefficientwaytocompletethetask.Afterthe“onebestway”toperformthejobwasidentified.Taylors Scientific Management advantageProductivityandefficiencyinmanufacturingimproveddramaticallyTheconceptsofscientificmethodsandresearchwereintroducedtomanufacturingEmphasizedtheneedforcooperationbetweenmanagementandworkersTheconceptofamanagementspecialistgainedprominenceDisadvantagesIgnoredmanyjob-relatedsocialandpsychologicalfactorsbyemphasizingonlymoneyasaworkerincentive.Productiontaskswerereducedtoasetofroutine,machine-likeproceduresthatledtoboredom,apathy,qualitycontrolproblems.Abusetheirpowertosetthestandardsandthepiecerates,thusexploitingworkersanddiminishingtheirimportance.Didnothelpmanagersdealwithbroadexternalissues.Apaymentplaninwhichemployeesarepaidafixedamountofmoneyforeachunitofoutputproduced.The Administrative ManagementEmphasizedtheperspectiveofseniormanagerswithintheorganization.Andarguedthatmanagementwasaprofessionandcouldbetaught.HenriFayol5functionsofmanagementThe14principles5 functions of managementPlanningOrganizingCommandingCoordinatingControlling.The 14 principlesDivisionofworkAuthorityDisciplineUnityofcommandUnityofdirectionSubordinationofindividualinteresttothegeneralinterestRemunerationCentralizationScalarchainOrderEquityStabilityandtenureofpersonnelInitiativeEspritdecorpsHuman RelationsEmphasizeinformalworkrelationshipsandworkersatisfaction.Stressprimarilyemployeewelfare,andcommunication.Socialneedshadprecedenceovereconomicneedsandtheinformalgroupexertedcontroloverthebehaviorofemployees.Gainthecooperationofthegroupandpromotejobsatisfactionandnormsconsistentwiththegoalsoftheorganization.BureaucracyMax WeberFunctionThe contemporary approaches to managementMaxWeberHebelievedbureaucraticstructurecouldeliminatethevariabilitythatresultswhenmanagersinthesameorganizationhavedifferentskills,experiences,andgoals.Headvocatedthattherolesthemselvesbestandardizedsothatpersonnelchangeswouldnotdisrupttheorganization.Emphasizedastructured,formalnetworkofrelationshipsamongspecializedpositionsinanorganization.Rulesandregulationsstandardizebehavior,andauthorityresidesinpositionsratherthaninindividuals.Theorganizationneednotrelyonaparticularindividual;butitwillrealizeefficiencyandsuccessbyfollowingtherulesinaroutineandunbiasedmanner.Bureaucracy functionBureaucraciesareespeciallyimportantBureaucraticpositionsfosterspecializedskills,eliminatingmanysubjectivejudgmentsbymanagers.Iftherulesandcontrolsareestablishedproperly,bureaucraciesshouldbeunbiasedintheirtreatmentofpeople,bothcustomersandemployees.Quantitative managementHelpsamanagermakeadecisionbydevelopingformalmathematicalmodelsoftheproblem.Computershavefacilitatedthedevelopmentofspecificquantitativemethods.break-evenanalysis.Organizationsapplythesetechniquesinmanyareas,includingproduction,qualitycontrol,marketing,humanresources,finance,distribution,planning,andresearchanddevelopment.Organizational behaviorStudiesandidentifiesmanagementactivitiesthatpromoteemployeeeffectivenessthroughanunderstandingofthecomplexnatureofindividual,group,andorganizationalprocesses.Organizationalbehaviordrawsfromavarietyofdisciplines,includingpsychologyandsociology,toexplainthebehaviorofpeopleonthejob.Theory X and Theory YDouglasMcGregorMarkedthetransitionfromhumanrelationsTheory XManagersassumeworkersarelazyandirresponsibleandrequireconstantsupervisionandexternalmotivationtoachieveorganizationalgoals.Theory YManagersassumeemployeeswanttoworkandcandirectandcontrolthemselves.Managerswhoencourageparticipationandallowopportunitiesforindividualchallengeandinitiativewouldachievesuperiorperformance.The classical approaches disadvantageIgnoredtherelationshipbetweentheorganizationanditsexternalenvironmentandusuallystressedoneaspectoftheorganizationoritsemployeesattheexpenseofotherconsiderations.Systems TheoryProvidesawaytointerpretorganizations.Takesaholisticviewoftheentireorganizationalsystemandstressesprocess.Includeopenversusclosedsystems,efficiencyandeffectiveness,subsystems,equifinality,andsynergyThisconceptstatesthattherearemanyavenuestothesameoutcome,i.e.manydifferentcombinationsofsubsystems,ideas,andmethodscanleadtothesamegoal.The contingency perspectiveAvarietyoffactors,bothinternalandexternaltothefirm,mayaffecttheorganizationsperformance.Thereisno“onebestway”tomanageandorganize,becausecircumstancesvary.Three key directions for management theoryGlobalinterdependenceThesearchforexcellenceThequalityrevolutionMiddle AgesLastedfromaboutad350toabout1450.Atthebeginning,thewesternhalfoftheRomanEmpirebegantofragmentintosmaller,weakerkingdoms.Duringthistime,theprecursorsofmanymoderninstitutions.InventedbypeopleduringtheRenaissance,aperiodofculturalandliterarychangeinthe14th,15th,and16thcenturies.TheadjectivemedievalcomesfromtheLatinwordsforthisterm,medium(middle)andaevum(age).InventoryAdetailed,itemizedlist,report,orrecordofthingsinonespossession,especiallyaperiodicsurveyofallgoodsandmaterialsinstock.Stocksofgoodsormaterialsoftenarelocatedatpointswherethereisachangeintherateandunitofmovement.Inventoriesrepresentaninvestmentthattheownerhopestosell.Costsassociatedwithholdinginventories,includinginterestonthemoneyinvestedintheinventory,storagecosts,andrisksofdeterioration,obsolescence,andshrinkage.ShrinkageInventory“shrinkage”isthetermthatacknowledgesandmeasuresthefactthatmostinventoryrecordsshowmoregoodshaveenteredaninventorythancanbefound.Trial and ErrorAmethodofreachingacorrectsolutionorsatisfactoryresultbytryingoutvariousmeansortheoriesuntilerrorissufficientlyreducedoreliminated.Problem-solvingactivity:emphasizessimpletrialanderrorrequiressomedegreeofinsightTheindividualproceedsmainlybyexploringandmanipulatingelementsoftheproblemsituationinanefforttosortoutpossibilitiesandtorunacrossstepsthatmightcarryhimclosertothegoal.NotnecessarilyovertEconomies of scaleTheloweringofcoststhroughtheproductionoflargervolume.What Are Economies Of Scale?The Stages Of Industry GrowthDoes Size Really Matter?Adam Smith(1723-1790)An Inquiry into the Nature and Causes of the Wealth of Nations(国民财富的性质和原因的研究)Theory of Moral Sentiments道德情操论(1759).BorninKirkcaldy,ScotlandEducatedattheuniversitiesofGlasgowandOxford.From1748to1751Gavelecturesonrhetoricandbelles-lettresinEdinburgh.ContributedmuchtothedevelopmentofSmithsethicalandeconomictheories.SeealsoThematicEssay:BritishPoliticalandSocialThought.Wealth of NationsRepresentsthefirstseriousattemptinthehistoryofeconomicthoughttodivorcethestudyofpoliticaleconomyfromtherelatedfieldsofpoliticalscience,ethics,andjurisprudence.Itembodiesapenetratinganalysisoftheprocesseswherebyeconomicwealthisproducedanddistributedanddemonstratesthatthefundamentalsourcesofallincome.ThecentralthesisIntroduction:Adam Smiths Life:The Spirit of the Age:The Wealth of Nations:Quotes.Dates&Events During Smiths Life.The central thesisIsbestemployedfortheproductionanddistributionofwealthunderconditionsofgovernmentalnoninterference,orlaissez-faire,andfreetrade.Theproductionandexchangeofgoodscanbestimulated,andaconsequentriseinthegeneralstandardoflivingattained,onlythroughtheefficientoperationsofprivateindustrialandcommercialentrepreneursactingwithaminimumofregulationandcontrolbygovernments.DetailedsystemsThesesystemsreliedontimeandmotionstudies,whichhelpdeterminethebestmethodsforperformingataskintheleastamountoftime.Henri Fayol(1841-1925)AFrenchengineeranddirectorofmines,waslittleknownoutsideFranceMovedintoresearchgeologyandin1888joined,ComambaultasDirector.OnretirementhepublishedA comprehensive theory of administration.Earlycontributortoaclassicaloradministrativemanagementschoolofthought.Esprit de corpsGroupspiritSenseofunionandofcommoninterestsandresponsibilitiesinsomegroup.ComradeshipWeber Max(1864-1920)Germaneconomistandsocialhistorian,knownforhissystematicapproachtoworldhistoryandthedevelopmentofWesterncivilization.WasbornApril21,1864,inErfurt,andeducatedattheuniversitiesofHeidelberg,Berlin,andGttingen.HeldprofessorshipsineconomicsattheuniversitiesofFreiburg(1894),Heidelberg(1897),andMunich(1919).HewaseditoroftheArchivfrSozialwissenschaftundSozialpolitik,theGermansociologicaljournal,forsomeyears.Weber MaxChallengedbytheMarxisttheoryofeconomicdeterminism.Hisbest-knownworks-The Protestant Ethic and the Spirit of CapitalismThe Religions of the East series,inwhichhepostulatedthattheprevailingreligiousandphilosophicalideasintheEasternworldpreventedthedevelopmentofcapitalisminancientsocieties.Bureaucracy1)Administrationofagovernmentchieflythroughbureausordepartmentsstaffedwithnon-electedofficials.2)Managementoradministrationmarkedbydiffusionofauthorityamongnumerousofficesandadherencetoinflexiblerulesofoperation.3)Aprofessionalcorpsofofficialsorganizedinapyramidalhierarchyandfunctioningunderimpersonal,uniformrulesandprocedures.Mathematical modelEitheroftwodecidedlydifferentkindsofmathematicalrepresentation.Physicalmathematicalmodelsincludereproductionsofplaneandsolidgeometricfiguresmadeofcardboard,wood,plastic,orothersubstances.Modelsofconicsections,curvesinspace,orthree-dimensionalsurfacesofvariouskindsmadeofwire,plaster,orthreadstrungfromframes.Modelsofsurfacesofhigherorderthatmakeitpossibletovisualizeabstractmathematicalconcepts.Mathematical modelAnyrealsituationinthephysicalandbiologicalworld,issubjecttoanalysisbymodelingifitcanbedescribedintermsofmathematicalequations.Optimizationandcontroltheorymaybeusedtomodelindustrialprocesses,trafficpatterns,sedimenttransportinstreams,andothersituations.Mathematical modelInformationandcommunicationtheorymaybeusedtomodelmessagetransmission,linguisticcharacteristics,andthelike.Dimensionalanalysisandcomputersimulationmaybeusedtomodelatmosphericcirculationpatterns,stressdistributioninengineeringstructures,thegrowthanddevelopmentoflandforms,andahostofotherprocessesinscienceandengineering.Break-even analysisIsatechniquewidelyusedbyproductionmanagementandmanagementaccountants.ItisbasedoncategorisingproductioncostsbetweenthosewhicharevariableandthosethatarefixedThe Break-Even ChartFixed CostsArenotdirectlyrelatedtothelevelofproductionoroutput.Inthelongtermfixedcostscanalter-perhapsasaresultofinvestmentinproductioncapacityorthroughthegrowthinoverheadsrequiredtosupportalarger,morecomplexbusiness.Examples of fixed costs:-Rentandrates-Depreciation-Researchanddevelopment-Marketingcosts-AdministrationcostsVariable CostsWhichvarydirectlywiththelevelofoutput.Theyrepresentpaymentoutput-relatedinputssuchasrawmaterials,directlabour,fuelandrevenue-relatedcostssuchascommission.AdistinctionisoftenmadebetweenDirectvariablecostsandIndirect variablecosts.Semi-Variable CostsWhilstthedistinctionbetweenfixedandvariablecostsisaconvenientwayofcategorisingbusinesscosts,inrealitytherearesomecostswhicharefixedinnaturebutwhichincreasewhenoutputreachescertainlevels.Asthescaleofthebusinessgrowsthenmoreresourcesarerequired.Ifproductionrisessuddenlythensomeshort-termincreaseinwarehousingand/ortransportmayberequired.Inthesecircumstances,wesaythatpartofthecostisvariableandpartfixed.DirectVariablecostsarethosewhichcanbedirectlyattributabletotheproductionofaparticularproductorserviceandallocatedtoaparticularcostcentre.Rawmaterialsandthewagesthoseworkingontheproductionlinearegoodexamples.IndirectVariablecostscannotbedirectlyattributabletoproductionbuttheydovarywithoutput.Theseincludedepreciation(whereitiscalculatedrelatedtooutput-e.g.machinehours),maintenanceandcertainlabourcosts.McGregor Douglas(1906 1964)AnAmericansocialpsychologistbestknownforTheoryXandTheoryYOpposingassumptionsabouthumanbehaviourbehindeverymanagementdecisionoraction.Wasapioneeringfigureinthefieldofindustrialrelations.HewasthefirstfulltimepsychologistonthefacultyofMIT,andhelpedtofounditsIndustrialRelationsSection.Hedefinedassumptionsthathefeltunderpinnedthepracticesandstancesofmanagersinrelationtoemployees.HisTheoryYwasinterpretedandpromotedasaone-best-wayi.e.Yisthebest!ManagersoraspectsoftheirbehaviorbecamelabeledasTheoryX,thebadstereotypeandTheoryY-thegood.McGregor DouglasHesaidthatmanagementstyleanddecision-makingdependsonwhichtheorymanagementbelievesappliestotheirstaff.TheoryXwasadoptedbytraditionalTayloristmanagement,andTheoryYbymoremodernmanagementthinkers,followingEltonMayoshumanrelationsapproach.
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