Management Approaches

Transcription

1 Management Approaches LESSON 2 The Human Resources Approach Managers get things done by working with people. That s why so many thinkers focus on an organization s people its human resources. Many people in the nineteenth and early twentieth century saw the importance of the human factor to an organization s success. Five important early advocates of the human resources approach to management were Robert Owen, Hugo Munsterberg, Mary Parker Follett, Chester Barnard, and Elton Mayo. Robert Owen s Claim to Fame Robert Owen was a successful Scottish businessman. He was only 18 when he bought his first factory, in But in the early years of the Industrial Revolution, working conditions were very harsh. Owen saw things that repulsed him. He saw small children working in factories. Workdays often lasted 13 hours. Factory owners paid big money for the best machines. But they were unwilling to pay employees a living wage. Owen chided business owners for treating their machines better than their people. He argued that spending money to improve labor conditions was one of the best investments a businessman could make. Concern for employees was highly profitable for management, he maintained. And it would relieve human misery. Owen s vision was impossibly idealistic. People remember him not so much for his successes as for his courage and his commitment to reducing workers suffering. Contributions of Hugo Munsterberg Hugo Munsterberg was the founder of industrial psychology. That s the scientific study of individuals to help them do more and fit in better at work. In his book Psychology and Industrial Efficiency (1913), he argued for the study of human behavior to spot both general patterns and individual differences. Quick Write Do you have an optimistic or pessimistic view of human nature? How does this view affect your thinking about organizations? Learn About... B the human resources approach the quantitative approach management approaches today LESSON 2 Management Approaches 37

2 Vocabulary B Hawthorne studies hierarchy optimization integrative frameworks process approach systems approach closed system Munsterberg called for psychological tests to better match people with jobs. He thought that scientific theories about learning would help develop training programs. He also wanted to find out how best to motivate workers. Munsterberg saw a connection between his own work and that of scientific management experts like Taylor and the Gilbreths. Both strove for more efficiency through scientific analysis of work. They also wanted to see better alignment of people s skills and the jobs to be filled. Much of what people know today about choosing employees, training them, designing their jobs, and motivating them to do the work is built on Munsterberg s ideas. open system Contributions of Mary Parker Follett stakeholders Mary Parker Follett was one of the contingency first to consider organizations in approach terms of individual and group behavior. She lived and wrote about the same time as Taylor, the Gilbreths, and Gantt. But her ideas were more people oriented. She was a philosopher, and her ideas had implications for management practice. Individuals could best reach their full potential in groups, she believed. The manager s job was to coordinate group efforts. She stressed the manager s power with employees, rather than power over them. Managers should be part of the group, Follett believed. They should lead with their expertise and knowledge not just their position as boss. Her ideas about motivation, leadership, power, and authority remain current today. Chester Barnard s Contributions Chester Barnard, like Follett, came between the scientific management experts and the human resources experts. Like Fayol, Barnard wasn t just a theorist. He was a manager himself as the president of the New Jersey Bell Telephone Company. Mary Parker Follett focused on individual and group behavior. She believed that individuals would reach their full potential only in groups. Courtesy of B>Quest, Richards College of Business, University of West Georgia He was familiar with Max Weber s ideal bureaucracy. But Barnard saw organizations differently. Weber favored an impersonal organization. Barnard, on the other hand, saw organizations as social systems that needed human cooperation to work. He wrote about his ideas in The Functions of the Executive (1938). A company, in Barnard s view, was a set of people with interacting social relationships. The manager s job was to communicate and to get them to put out top effort. An 38 CHAPTER 2 The Historical Roots of Contemporary Management Practice

3 organization s success, as Barnard saw it, depended on employees cooperation and acceptance of authority. Barnard also saw the importance of a company s outside stakeholders. He realized that a successful business has to win and keep the support of investors, suppliers, customers, and others. He thought managers should pay attention to what s going on in the world outside the company. For instance, in this way they can fine-tune the company as needed to make sure its supply chain is intact and its products relevant. Barnard saw that even with superb internal management, a company could still fail if it couldn t find new markets or ensure its supply of raw materials. Barnard s influence continues today. Many businesses try to set up cooperative work groups. Social responsibility is another hot topic in the business world. For instance, employees and outsiders such as shareholder activists both want to see corporations adopt green technologies and build more-diverse workforces. And careful study of external factors energy costs, labor markets, technology is standard practice for most firms today. Each of these developments has origins in the work of Chester Barnard and Mary Parker Follett. The Hawthorne Studies No contribution to the human resources approach to management in the early twentieth century had more impact than the Hawthorne studies. These were a series of studies during the 1920s and 30s that provided new insights into group norms and behaviors. At the beginning, industrial engineers at the Western Electric Company s Hawthorne Works in Cicero, Illinois, tried to see how lighting affected worker productivity. Employees assigned to an experimental group worked under light that varied in intensity. Those in a control group worked under constant light. The engineers expected individual workers to be more productive under brighter light. But they found that as they increased the light for the experimental group, output from both groups rose. When they dropped the light level in the experimental group, productivity in both groups continued to rise. They had to drop the experimental group s lighting to the level of moonlight before these workers output dropped. The engineers weren t sure just what to make of this. But at least they figured that intensity of light wasn t directly related to group productivity. In 1927 the engineers asked Harvard Professor Elton Mayo and his associates to join the study as consultants. Mayo worked with Western Electric through His team s experiments covered such things as job redesign. They also changed the length of the workday and workweek. Other studies looked at the value of rest periods and the effects of a piecework incentive pay system. The pay study produced an interesting finding: Peer pressure from colleagues to hold to certain standards turned out to make a difference in workers productivity. Workers were also more productive when they felt security and acceptance from the group. LESSON 2 Management Approaches 39

4 The Hawthorne studies under Elton Mayo s leadership had a big impact on the field of management. Mayo concluded that behavior is closely tied to feelings. He also found that: group influences affect people s behavior group standards determine individual output money matters less to workers than security and acceptance by a group. All these points together are known as the Hawthorne Effect. The Mayo group s findings brought renewed attention to human factors. They also led to increased managerial paternalism a tendency to treat workers like children to be provided for. The Hawthorne studies had their critics. But they helped business owners get away from the idea that workers were just like machines. The Human Relations Movement and Management History The human relations movement was a smaller group within the human resources approach to management. The leaders of this movement were committed to more humane management. Employee satisfaction was the main thing, they felt: A satisfied worker would be a productive worker. The three people leading this approach Dale Carnegie, Abraham Maslow, and Douglas McGregor held views rooted more in their personal philosophies than in objective research. Management historians often overlook Dale Carnegie. But he has had enormous influence. After all, he literally wrote the book on How to Win Friends and Influence People. During the 1930s, 40s, and 50s, millions of people read this book. And thousands of people attended his lectures and seminars during that period as well. Carnegie s system boiled down to a few simple points: Make others feel important by sincerely appreciating their efforts Make a good first impression Win people over to your way of thinking by letting them do the talking, being sympathetic, and never telling a man that he is wrong Change people by praising their good traits and letting offenders save face. Abraham Maslow, a psychologist, proposed a hierarchy of needs: physiological, safety, social, esteem, and self-actualization. (A hierarchy is a series of graded or ranked persons or elements.) He thought a person must satisfy each need before advancing to the next level. Someone worried about safety, for instance, can t focus on social needs. And on the other hand, once a need has been met, it no longer serves to motivate a person. Once a person s need for esteem is met, the prospect of more esteem won t motivate him or her. 40 CHAPTER 2 The Historical Roots of Contemporary Management Practice

5 Maslow s idea of a needs hierarchy may be the best-known theory of general motivation today. Books on such topics as management, organizational behavior, and marketing refer to it often. It s not a concept supported by research, however. Douglas McGregor is best known for positing two ideas about human nature. He called them Theory X and Theory Y. Theory X was a negative view. It assumes people have little ambition, dislike work, shun responsibility, and need close supervision to get anything done. Theory Y, on the other hand, assumes human beings like to work. It also assumes people can accept responsibility and direct themselves. McGregor himself believed in Theory Y. He thought this sunnier view should guide managers. McGregor preached this gospel for a dozen years at the Massachusetts Institute of Technology (MIT). He then went off to Antioch College to serve as its president for six years. At the end of his time there, however, McGregor had doubts about how effective his ideas were. I believed, he wrote, that a leader could operate successfully as a kind of advisor to his organization. I thought I could avoid being a boss....i finally began to realize that a leader cannot avoid the exercise of authority any more than he can avoid responsibility for what happens to his organization. Ironically, he returned to MIT to preach his original ideas again. He kept on until he died. His beliefs, like Maslow s, have influenced management theorists and practitioners more than the objective research behind them would justify. McGregor, Maslow, and Carnegie were all bullish on human nature. They were unshakably optimistic about what people could and would achieve despite all the evidence of human failure. And their views have been influential in their field. The Behavioral Science Theorists The final group of human resources thinkers was the behavioral science theorists. They used the scientific method to study organizational behavior. They conducted objective research and tried to keep their personal beliefs out of their work. Attempting to build a real science of organizational behavior, they tried to do research others could duplicate. The Application of the Human Resources Approach Today The human resources approach to the study of management is alive and well today. Or maybe approaches would be a better word. There really are hundreds of different approaches. Since World War II, Dale Carnegie was the author of How to Win Friends and Influence People, one of the twentieth century s most influential management books. Carnegie s ideas are still popular today. AP Wide World Photos LESSON 2 Management Approaches 41

6 researchers have generated a wealth of studies that fairly accurately predict behavior in organizations. Scholars from the human resources school of thought have made great contributions. Their work affects the current understanding of issues such as leadership, motivation, job design, organizational culture, and performance appraisal. The Quantitative Approach The quantitative approach to management is management by the numbers. It began during World War II with efforts to find mathematical and statistical solutions to military problems. The British had to get the most out of their limited air power against the Germans massive forces. And so they asked their mathematicians to help them figure out where to send their pilots. Similarly, the US antisubmarine warfare team used these quantitative approaches (sometimes called operations research or OR) to improve the odds for Allied convoys crossing the North Atlantic. They also used them to select the best depth-charge patterns for attacking German U-boats. After the war, businesses began to use these number-crunching techniques on their own problems. A group of military officers known as the Whiz Kids joined Ford Motor Company. They began using statistical methods to improve decision making there. Two of the most famous were Robert McNamara and Charles Tex Thornton. McNamara became president of Ford and later US Secretary of Defense. In the latter post, he used cost-benefit analyses to decide how to allocate military resources. He ended up as head of the World Bank. Tex Thornton s civilian career included founding Litton Industries, a billion-dollar conglomerate. While running Litton, he used OR techniques to decide which companies to buy. Dozens of other military operations researchers later went into business as consultants in the civilian economy. And by the 1950s, many firms had established their own OR groups. You may be wondering, what are quantitative techniques anyway? What do they let managers do? The quantitative approach includes such things as: Computer simulations: What will the company s payroll look like in 10 years if it gives everyone a 10 percent raise every year? Optimization models: What s the best price the company can charge for its new product, to maximize profit but not scare away potential customers? (Optimization means to make a system or design as effective as possible.) Critical-path analysis: How long will it really take to get the new product to market, with separate teams working on different parts of the project all at the same time? Techniques such as these are now standard practice in management, especially in making planning and control decisions. 42 CHAPTER 2 The Historical Roots of Contemporary Management Practice

7 The quantitative approach to management began in World War II. For instance, US warfare teams figured the odds of a ship s making it safely across the North Atlantic. Corbis/Bettmann Analysis: How Social Events Shape Management Approaches Management approaches change in response to changes in society. What goes on in the larger society affects what management theorists write and what managers focus on. Each of the management theories you ve studied so far was a product of its times. What Stimulated the Classical Approach Efficiency was the common goal of Taylor, the Gilbreths, Fayol, and Weber. The Industrial Revolution had taken place.workers no longer did everything by hand; they had machines. But their work wasn t very efficient. It was poorly planned, or not planned at all. People weren t sure what they were actually supposed to do. If a shop even had someone called a manager, he often wasn t sure what he was supposed to be doing, either. Such chaos created a crying need for ideas to improve productivity. This shop-floor chaos was reflected in the economy at large. In the early twentieth century, the standard of living was low. Wages were modest. LESSON 2 Management Approaches 43

8 Few workers owned their own homes. Production was highly labor intensive. Factories were filled with armies of people doing the same repetitive tasks day in, day out. Under such circumstances, Frederick Taylor could justify taking months to study a single job and develop a standard one best way to do it. This led to gains in efficiencies that could be passed along in lower prices. That expanded markets and created more jobs. It helped working families afford products like stoves and refrigerators. Likewise, Frank Gilbreth s work to improve the efficiency of bricklayers led to lower costs for putting up buildings. This, in turn, meant that more buildings were built and that they cost less to buy. And that, in turn, meant more people could afford to buy a house. The bottom line in all this? Scientific management raised the entire country s standard of living. What Stimulated the Human Resources Approach The human resources approach came into its own in the 1930s. It grew out of two related factors: a backlash against the classicists view of workers as machines, and the Great Depression. As you have just read, efficiency on the shop floor could raise a country s standard of living. But a point comes where enough is enough. A worker is not a machine. The classical approach, though, saw all problems as engineering problems. If the employee wasn t producing enough, he or she needed to be adjusted by an incentive pay plan or a job redesign. The human resources approach was a welcome alternative to this thinking, especially during the tough times of the Depression. Followers of this approach treated people like people, not machines. But it still offered managers ways to increase productivity. What Stimulated the Quantitative Approaches The force behind the quantitative approaches was World War II. During the war, the federal government funded efforts to develop mathematical and statistical tools to apply to military problems. The tools that came out of these efforts scored some impressive successes. No wonder they soon found applications in civilian life. Knowledge of these quantitative techniques spread throughout the economy. In the early 1950s, for instance, the Institute of Management Science began publishing its journal, Management Science. The Operations Research Society launched its journal, Operations Research. And by the late 1960s, mathematics, statistics, and operations management were required courses at most business schools. 44 CHAPTER 2 The Historical Roots of Contemporary Management Practice

9 Management Approaches Today In the previous lesson you read about the classical approach to management. In this lesson, you have read about the human resources and quantitative approaches. Each developed at a different point in history. Each developed in response to the social climate of its time. And each developed separately from the others. Consider Dale Carnegie, for instance, with his ideas about making a good first impression and letting others save face. He was a world apart from Robert McNamara s quantitative analyses at Ford Motor Company. But more recently, theorists have come up with three integrative frameworks tools for organizing and understanding management ideas. The three are the process, systems, and contingency approaches. The Process Approach In the early 1960s, Harold Koontz looked at the business world around him and called it a management-theory jungle. He published an article in December 1961 that concluded many of the theories had something to offer. But many others weren t really complete systems. They were just managerial tools. He felt what was needed was a management approach that pulled everything together. And he thought the process approach might be that something. In this, he was building on the work of Henri Fayol. The process approach considers the performance of planning, organizing, leading, and controlling as circular and continuous. The cycle gets repeated again and again, in other words. Although Koontz s article sparked considerable debate, most people in the field scholars and managers stuck with their own ideas. Still, Koontz had made a mark. Look at a current management book today and you ll see the influence of the process approach. It remains a viable framework. How a Systems Approach Can Integrate Management Concepts Starting in the mid-1960s, managers began to think about organizations as systems. The systems approach defines a system as a set of related and interdependent parts arranged in a manner that produces a unified whole. A society is a system, for instance. So is your body. Your computer and your car are both systems, too. The two basic types of systems are closed and open. Closed systems are those that are not influenced by or do not interact with their environment. An open system is one that interacts with its environment. (See Figure 2.1.) Today people take for granted the idea that a system interacts with its environment. For instance, advertising in magazines and on the Internet (the media environment) will affect fashions at your school (the system). So when people speak of organizations as systems, they mean open systems. LESSON 2 Management Approaches 45

10 So an organization, with its management, is a system that interacts with and depends on its environment. In management terms, this means dealing with an organization s stakeholders. Stakeholders are any group affected by the organization s decisions and policies. Government agencies can be stakeholders, for instance. So can labor unions, competing companies, employees, and suppliers. Customers and clients, local community leaders, and public interest groups can be stakeholders, too. Economic Government Technological Public Pressure Groups Competitors Labor Unions Suppliers Customers The manager s job is to F IGURE 2.1 coordinate all these parts to achieve the organization s goals. The Organization and Its Environment Most people within an organization appreciate the importance of the customer as a stakeholder. If the company s products don t please the customer, it may suffer from less revenue, a falling stock price, and a shrinking labor force. Failure to meet customer needs can kill a company. The systems approach encourages managers to pay attention to customers and others. They consider stockholders, the press, government regulators, and community leaders, as well. Stockholders need assurance of the company s soundness. Bad reviews can kill a product. Regulators may be planning new environmental standards. Citizen opposition may block the company s plant expansion. Management has to engage all these stakeholders. In the global economy, environment has a broader meaning than ever. It includes broad labor-market trends: for example, Asian workers getting more education and competing against Americans. The environment includes new technologies, as well as changes in energy and oil prices. It includes political developments such as a new freetrade agreement or a civil war. The management of an organization must pay attention to all of this. The systems approach doesn t tell a manager just what to do. But it provides a broader picture than the process approach does. And managers who see their job as linking their organization to its environment help make the organization more responsive to its stakeholders. Global The Organization Social Political 46 CHAPTER 2 The Historical Roots of Contemporary Management Practice

11 The case of Andrew Fastow is a reminder of how an open system of management works. Fastow, shown here on his way into court in Houston, was an executive at the failed energy firm Enron. He pleaded guilty to conspiracy to commit fraud and went to prison. The failings of highprofile executives like him helped renew public interest in managerial ethics. This interest has led, in turn, to new accounting laws for public companies. AP Wide World Photos A Contingency Approach to the Study of Management The contingency approach replaces simpler principles of management and integrates much of management theory. A contingency, in the everyday sense of the word, is a possibility. It s something that might happen depending on something else. It probably won t happen, but you should probably prepare for it. A thundershower is a contingency you prepare for by keeping an umbrella in your backpack, for instance. In management theory, contingency means something like variable. Managers have to pay attention to the size of an organization as a contingency variable, for instance. They must manage bigger companies differently from smaller ones. Bigger companies need more formal personnel procedures, for example. They may need to provide employee benefits that smaller companies don t have to offer. Smaller companies, on the other hand, may have to demand that each employee fill a number of roles. LESSON 2 Management Approaches 47

12 For more examples of contingency variables, see Figure 2.2. The four in the chart are only four out of at least 100 that could be listed. But they will give you an idea what the term contingency variables means. Has this ever happened to you? You try to get an answer from someone to a tough question, and the response is, It all depends. And then you have to ask, Depends on what? The contingency approach to management tries to determine that what it tries to spot the factors that really matter to a company s success. Organization Size. The number of people in an organization is a major influence on what managers do. As size increases, so do the problems of coordination. For instance, the type of organization structure appropriate for an organization of 50,000 employees is likely to be inefficient for an organization of 50 employees. Routineness of Task Technology. In order for an organization to achieve its purpose, it uses technology; that is, it engages in the process of transforming inputs into outputs. Routine technologies require organizational structures, leadership styles, and control systems that differ from those required by customized or nonroutine technologies. Environmental Uncertainty. The degree of uncertainty caused by political, technological, sociocultural, and economic changes influences the management process. What works best in a stable and predictable environment may be totally inappropriate in a rapidly changing and unpredictable environment. Individual Differences. Individuals differ in terms of their desire for growth, autonomy, tolerance for ambiguity, and expectations. These and other individual differences are particularly important when managers select motivational techniques, leadership styles, and job designs. F IGURE 2.2 Four Popular Contingency Variables 48 CHAPTER 2 The Historical Roots of Contemporary Management Practice

13 CHECKPOINTS Lesson 2 Review Using complete sentences, answer the following questions on a sheet of paper. 1. What was Robert Owen s claim to fame as a manager? 2. What was Hugo Munsterberg s contribution to the field of management? 3. What are the five needs in Abraham Maslow s hierarchy? 4. What findings were known as the Hawthorne Effect? 5. What major world event spurred development of quantitative approaches to management? 6. Why did it make sense for Frederick Taylor to spend six months studying the one best way to do a particular job? Applying Your Learning 7. Does it matter that the work of theorists like Carnegie, Maslow, and McGregor has little basis in objective research? Why or why not? LESSON 2 Management Approaches 49