A Short History of Management Theory and Practice

Transcription

1 CHAPTER TWO A Short History of Management Theory and Practice INTRODUCTION This chapter provides a historical overview of the field of management, including important scholars and theories in management. The Multistream perspective is explained as evolving out of the traditional Mainstream approach to management. HOW TO PRESENT THE ROADMAP Management and organizations are not static unchanging entities. Rather, their meaning is created and recreated over time by people. This meaning is influenced by the values and events of the time and place. For example, events such as the Industrial Revolution, the Great Depression, World War II, and the civil rights movement have all shaped the way management is understood. This chapter follows the historical progression of the field of management from the early 1500s to contemporary times. DETAILED LECTURE OUTLINE I. Management as a socially constructed concept A. The understanding of management has changed over time and is culture-dependent B. Management is not a completely objective field of study; the way we define and understand management is inherently influenced by our values Discussion Point Opening Activity (10 minutes) On slips of paper, write down Please keep this to yourself and one of these roles: #1 - Thief, #2 - Fire fighter, and #3 - Fashion adviser to dress for success. Give each student one slip of paper as they walk into the room. Open the class by asking students to see the room and think about managing the place from the position of the role that is identified on their slip of paper. Ask each of the students with role #1 to give one observation to describe the room; then rotate to role #2 students and to role #3 students. See the template at end of this chapter. Ask students to guess what the roles were based on the observations that each group made. Discuss why and how the three roles saw the room so differently. Social construction of management evolved over time depending on the environmental context of how managers see the world. II. Historical development of the field of management A. The emphasis on individualism and materialism 1. Management scholar Max Weber suggested that Mainstream management is characterized by materialism and individualism a) These values originated about 500 years ago with religious teaching that God calls individuals to their work and rewards individuals who work hard and succeed in their jobs

2 16 Chapter 2: A Short History of Management Theory and Practice b) Individualism was further legitimized by Adam Smith s 1776 The Wealth of Nations, which suggests the operation of an invisible hand, whereby individuals working in their own self-interest achieve the collective good 2. Alternative emphases in previous times and cultures a) Reciprocity = neighborly give and take, trading b) Redistribution = ensuring that everyone s needs are met c) Householding = being a good steward or caretaker of family and community 3. Weber described the iron cage, or the strong force by which materialism and individualism overpower the importance of all other forms of well-being Discussion Point What common sayings illustrate individualism and materialism? Examples: Looking out for number 1 ; Greed is good. What common sayings illustrate reciprocity, redistribution, and householding? Examples: You scratch my back, I ll scratch yours; doing unto others as we wish to have done unto ourselves ; being a pillar of the community. B. The increasing dominance and size of corporations 1. Historically, businesses were small and family-based a) Few large organizations existed (the Roman Catholic Church was and still is the largest organization in the world) b) Businesses were seen as an extension of a household 2. Modern organizations developed due to social, technological, and legal changes a) Industrial Revolution led to specialization and work in large factories rather than from home businesses b) Change in legal status of organization (1) Corporations were now allowed to act as legal citizens so long as they acted in such a way as to advance the common good (2) Limited liability = organizational owners are not personally responsible for financial debts that exceed the amount they invested in the organization (3) Initially, charters were difficult to obtain unless the corporation was clearly in the public interest and for the common good (a) Citizens viewed corporations skeptically and were wary of the power they might gain (b) Corporations began lobbying government, gained more power and became more prevalent (c) Change in Fourteenth Amendment to provide power of a natural person to corporations Discussion Point What major social, technological, and legal changes have taken place to enable the growth of large business organizations over the last 100 years? III. Five eras of management thought A. An emphasis on organizing: The classical era ( ) 1. Two schools of thought a) Micro focus: Scientific Management (1) Frederick Taylor (known as the father of scientific management ) increased productivity by scientifically analyzing jobs to find the one best way to complete the work

3 Chapter 2: A Short History of Management Theory and Practice 17 (2) Gantt Chart = bar graph used to schedule and allocate resources for a production job (developed by Henry Gantt) (3) Frank and Lillian Gilbreth found one best way to organize work through their time and motion studies b) Macro focus: Bureaucracy (Max Weber) (1) Weber noted that organizations were becoming more formally rational and efficient, with manager s relying more on positional authority and on rules and regulations to manage organizations (2) Henry Ford s mass production of automobiles demonstrates bureaucracy (3) Henry Fayol s principles of management (a) Unity of command = each employee reports to only one superior (b) Unity of direction = workers should be guided by a single plan of (c) action Scalar chain = organizations should have a chain of authority extending from the top to the bottom and including all workers B. An emphasis on leading: The human era ( ) 1. Mary Parker Follett emphasized human rather than technical side of management, arguing that managers should facilitate rather than control the work of subordinates 2. Lillian Gilbreth studied ways to reduce job stress and argued for child-labor laws and standard workday hours 3. Chester Barnard believed that organizations were not machines and could not be managed in impersonal ways of scientific management. a) Developed notion of zone of difference, which refers to activities that employees will not rebel against doing 4. The Hawthorne Effect a) Famous studies conducted by Elton Mayo and Fritz Roethlisberger and sponsored by General Electric b) Studied whether increased lighting would increase productivity and found productivity increased in experimental and control groups c) The Hawthorne effect is the name now used to indicate the tendency for workers productivity to increase whenever managers treat them with respect d) Related phenomenon of self-fulfilling prophecy occurs when people are more productive because their managers have high expectations of them C. The human relations movement 1. Focus on increasing employee satisfaction in order to improve productivity 2. Douglas McGregor s research on Theory X and Theory Y managers a) Theory X managers assume that people are inherently lazy and will avoid work unless forced to do it b) Theory Y managers assume that people are inherently motivated to work and feel unfulfilled if they do not have the opportunity to contribute to society D. An emphasis on planning: The calculating era ( ) 1. World War II need to improve industrial productivity led to the development of systems analysis, which was used to analyze complex problems 2. Three fields emerged out of war-related efforts a) Management science aids in managerial planning by providing sophisticated quantitative techniques for decision making (1) Two subfields include operations research, which emphasizes mathematical model building, and operations management, which uses quantitative techniques to help improve efficiency. Includes methods of:

4 18 Chapter 2: A Short History of Management Theory and Practice (a) Break-even analysis = determine the sales volume and prices required to earn a profit, decide which product lines to keep and which to drop, set prices for products and services (b) Forecasting = projections that help to plan for production targets, whether and when to expand production facilities (c) Inventory modeling = helps managers decide on the timing and quantity for ordering supplies and how much end-product inventory to keep on hand (d) Linear programming = how to allocate scarce resources among competing uses (e) Simulations = mathematical models that test the outcomes associated with making different decisions b) Systems theory highlights managers unique responsibilities and vantage points in overseeing the entire organization (1) Leading scholars = James D. Thompson, Daniel Katz, and Robert L. Kahn (2) Closed system view = looking at managing the organization as though it were a self-contained entity (a) Entropy: The natural tendency for a closed system to fail because it is unable to acquire the inputs and energy it needs to survive (3) Open system view = emphasizes the organization s larger environment (a) Synergy: an open system view is more likely to lead to synergy, in which two or more systems work jointly together better than if they would if they were working independently c) Contingency theory suggests that there is a fit between organizational structures and systems, technology, and the larger environment; therefore managers need to weigh many different concerns (1) Herbert Simon won the Nobel Prize for his research in this area (2) Bounded rationality = idea that even the best management decision-making process is limited by a lack of complete information and limited cognitive ability (3) Tom Burns and G.M. Stalker s contingency argument that there is no one best way to manage (a) (b) Example: mechanistic structures (characterized by many formal rules and centralized authority) are best in stable environments Example: organic structures (characterized by flexible rules and decentralized authority) are best in less stable environments (4) John Child s strategic choice theory says that the dominant coalition (managers) make three key strategic decisions based on their values and beliefs (a) What constitutes effective management? (b) What is the organization s domain (including industry, suppliers, etc)? (c) What should the organization s internal structure be? E. An emphasis on controlling: The values and beliefs era ( ) 1. Social era of questioning the status quo and the role of values and beliefs in organizations a) Institutionalization = certain practices or rules becoming valued in and of themselves, even though they may no longer be useful for the organization 2. Control and the social construction of reality a) Many of what we accept as objective natural facts of life actually are socially constructed moral facts of life

5 Chapter 2: A Short History of Management Theory and Practice 19 b) Increased attention to organizational culture and the symbolic role of management in creating meaning for organizational members Discussion Point Many of the management practices of previous eras are still with us today. How do management practices manifest themselves in today s organizations? What management practices are still being applied for managing organizations? What changes to these management practices need to be made. Why? What are some of today s driving forces for change in management practices? F. The call for Multistream management: The reconsidering era (1990 to present) 1. A growing discontent with Mainstream status quo has led people to look at a number of important issues in management a) Ecological sustainability: Increasing scientific evidence shows that our current lifestyle is harming the environment b) Social justice: Income inequality is growing within organizations and countries, and across countries c) Physical well-being: Research indicates that focus on materialism and individualism is associated with physical and emotional costs d) Aesthetic costs: Do massive organizations and highly specialized jobs contribute to meaningful work and communities that are pleasing to the senses? e) Spiritual interest: Movement toward increased spirituality and religion and away from materialism and individualism SUGGESTED ANSWERS TO CLOSING CASE QUESTIONS Management and a Short History of Chocolate 1. The socially constructed meaning of chocolate has changed over the centuries. Describe how managers may have had an effect on these changes. Can you think of ways that these changes have in turn influenced the way that the four management functions are put into practice? People have viewed and used chocolate as a symbol of worship, as money, medicine, and food. Managers have utilized technology to make chocolate affordable and have advertised it to increase interest (e.g., by promoting it as an alternative to alcoholic beverages, promoting it as a luxury or treat, promoting it as a romance item, or as a health item that can prevent cancer). The mass production of chocolate has led to a change in the way the industry faces the organizing, planning, leading, and controlling functions of management. Chocolate is now used as a means to gain financial profits, and due to globalization and concentration, it has become dominated by a few large organizations. Some organizations capitalize on cheap labor overseas to get their cocoa beans, whereas Fair Trade companies offer a fair wage and benefits to workers. Such companies (which are increasingly in demand by consumers) lead in a more Multistream fashion than traditional chocolate companies. 2. Both Wedgwood and Cadbury were innovators of the field of management how were they similar and different? Both men were innovative and proactive in changing the status quo of the times. For example, Wedgwood lobbied the government to pay for transportation infrastructure so that he could transport his company s pottery, and Cadbury developed the Bournville Village Trust for revenues devoted to housing. Also, both men were interested in religious convictions and in discouraging laziness, alcoholism, and other such qualities that they deemed wrong. However,

6 20 Chapter 2: A Short History of Management Theory and Practice while Wedgwood kept the vast majority of his profits and asked ever more of workers, Cadbury was interested in improving the lives of workers (by implementing Saturday half-day holiday, encouraging education, offering medical and dental services, and providing affordable housing options). 3. What different forms of well-being has the chocolate industry been concerned with? Contrast and compare the forms of well-being that are the concern of Mainstream versus Multistream managers. Mainstream managers in the chocolate industry have primarily been interested in the bottom-line profitability of chocolate. They might also have been interested in chocolate as a medicinal or pleasure product insofar as it increased consumer demand and profits. Multistream managers in the chocolate industry have been interested in profits but also in balancing profits with social justice and providing fair wages and working conditions for the people who farm the chocolate. Also, Multistream managers have been concerned with the industry s impact on the environment and have explored organic options. SUGGESTED ANSWERS TO QUESTIONS FOR DISCUSSION AND REFLECTION 1. Identify several specific actions that Josiah Wedgwood took in developing his company and indicate how those actions were consistent with ideas or schools of thought that are discussed in the chapter. Wedgwood s system of rewards, punishments, and rules is highly indicative of the bureaucratic management approach of the classical school of thought. Work was highly specialized, and the focus was on producing a high volume of goods cheaply and quickly. 2. Make a list of the pros and cons associated with a materialist-individualist perspective to contrast and compare with your classmates views. Pros: (1) Competition might encourage everyone to work harder so not to be beat by others; (2) Survival-of-the-fittest mentality where only the best companies and individuals are thrive and survive should ultimately benefit everyone; (3) People do not have to depend on or trust others to ensure their own success. Cons: (1) Competition may breed distrust and conflict among people and organizations; (2) Research shows that humans are social animals and thrive when in groups, not in isolation; (3) Research shows that materialistic focus is associated with lower physical and mental well-being. 3. Describe the key ideas or insights in this chapter that provided you with a better understanding of contemporary management theory and practice. Answers will vary. 4. Do you agree with the argument that our understanding of management has been socially constructed? Do you think it should be socially re-constructed differently? Explain. Answers will vary. Some students may be surprised to read that management is not an objective notion, believing that business is business, it s not personal. However, even this belief is socially constructed. Treating business as something that is not personal or value-laden is itself a value-laden approach. Students operating from a Multistream approach likely will argue for a social construction of management as being more than simply about maximizing profits for owners.

7 Chapter 2: A Short History of Management Theory and Practice Is there one best way to manage still waiting to be discovered? Probably not, unless the one best way is to recognize that the best way of managing in one specific situation is dependent on a number of contextual factors. Different organizations operate in different situations and with different goals, and therefore, the most effective approach to management often depends on the situation. 6. As you reflect on how our thinking about management theory and practice got to the place where it is today, which of the people and ideas presented in this chapter have had the greatest influence on the present situation (positive or negative)? Answers will vary. Students may discuss Wedgwood, Frederick Taylor, the Gilbreths, Weber, Mary Parker Follett, Chester Barnard, Mayo and Roethlisberger, Douglas McGregor, Katz and Kahn, John Child, Herbert Simon, Philip Selznick, Harold Garfinkel, or Cadbury. 7. Think about the future and how you would like it to look like in thirty years, when the next generation of management students is taking this course. What sorts of key events and examples would you like them to be reading about that will have taken place during your career? More importantly, what will your contribution be to socially creating the reality that you desire for the future? Answers will vary. Mainstream students may wish to see little change. They may aspire to leadership roles in traditional organizations. Multistream students may wish for changes such as (1) environmental sustainability, including reduced pollution and energy consumption; (2) increased social justice and reversal of the trend of growing income inequality; (3) increased community building and decreased isolation and individualism; (4) increased well-being that focuses on relationships and intrinsic motivation rather than on materialism. 8. What sort of workplace would you like your manager to construct for you? What sort of organizational reality will you socially construct for others when you are a manager? Is it a social reality that emphasizes Mainstream views like meeting financial targets and quarterly financial statements? Answers will vary. Mainstream managers will focus on centralization, standardization, rules, and instrumental skills for maximizing the financial bottom line. Multistream managers will focus on participation, growth, and development of individual and community well-being.

8 22 Chapter 2: A Short History of Management Theory and Practice TALKING POINTS FOR HANDS-ON ACTIVITIES How Much Emphasis People Place on Various Forms of Well-Being Given 100 points, previous students have ranked the various forms of wealth as follows: How much emphasis do YOU place on each of the following forms of well-being? (N = 145) Physical: health, safety Emotional: stress, positive feelings, work-life balance Material: productivity, efficiency, profitability Social: nurture community, social justice, help disadvantaged Intellectual: coherent ideas, clear rationale, sound theory/logic * 6.31 Aesthetic: beauty, elegant products/services, appealing workplace* Ecological: natural environment, sustainability, minimize pollution 9.22 Individual: self-interested self and stakeholders (B) 6.93 Spiritual: meditation, guided by spiritual truths/forces, How much emphasis do you think OTHER PEOPLE place on each of the following forms of wellbeing? (N = 145) Physical: health, safety Emotional: stress, positive feelings, work-life balance Material: productivity, efficiency, profitability 8.54 Social: nurture community, social justice, help disadvantaged 9.44 Intellectual: coherent ideas, clear rationale, sound theory/logic * 9.10 Aesthetic: beauty, elegant products/services, appealing workplace* 8.38 Ecological: natural environment, sustainability, minimize pollution Individual: self-interested self and stakeholders (B) 6.05 Spiritual: meditation, guided by spiritual truths/forces, We did not include the same question for YOUR PARENTS, AN EFFECTIVE MANAGER or PEOPLE LIVING 500 YEARS AGO.

9 Chapter 2: A Short History of Management Theory and Practice 23 EXPERIENTIAL EXERCISE 2.1: THE HISTORICAL SCROLL OF MANAGEMENT Purpose: To describe the historical context for the five eras of management Materials: Rolls of paper 12 to 15 inches high and about 5 feet wide Instructions: a. Divide class into four groups and assign each group to gather historical information related to technology, economics, politics, or social values/pop culture. To help stimulate ideas for what information students should collect, briefly brainstorm ideas by asking for examples from an in-class discussion: (1) What were some significant technological breakthroughs from 1900 to 2000? (automobile, telephone, compute chip, assembly line, laser calibration, genetic modification, etc.) (2) What were major economic issues/events/trends from 1900 to 2000? (1930s depression, shift from the gold standard, free trade, 1970s oil crisis, etc.) (3) What were significant political developments from 1900 to 2000? (World Wars I and II, rise and fall of communism, establishment of Israel, increase of sovereign countries, U.S. women s right to vote, civil rights movement, EEOC, etc.) (4) What were major sociocultural shifts from 1900 to 2000? (growth of consumerism, increase environmentalism, valuing of diversity, rise of dual income households, etc.) b. Pre- Or Post-Class: students bring in historical information covering related to one of the different segments of the managerial environment to build a timeline. c. In-Class: students work in groups to construct a timeline with the five eras of management and select a segment of the environment to identify major historical developments in each of several eras (technology, economics, politics, social values/pop culture, etc.) from the five eras of management. d. Have each group present their timeline and discuss how the historical developments from their segment influenced the management era. e. Debrief: How did historical events shape the development of the five eras of management?

10 24 Chapter 2: A Short History of Management Theory and Practice EXPERIENTIAL EXERCISE 2.2: RE-IMAGINING THE FOUR EARLIER ERAS OF MANAGEMENT Purpose: To reflect on how the five eras of management could have been different Materials: paper and pen for scribing notes; see Exercise 2.2 Handout #1 Classical Era, Handout #2 Human Era, Handout #3 Calculating Era, and Handout #4 Values and Beliefs Era Instructions: a. Divide class into four groups. b. Assign one of the four earlier eras of management to each group. c. Each group needs to review and summarize the basics of the era. What were the basic management ideas from the era? List descriptive characteristics in the left-hand column. d. Each group discusses: Using your imagination, what would the era be like from a Multistream perspective that accounts for ecological sustainability, social justice, physical well-being, aesthetic values, and spiritual interests? List descriptive characteristics in the right-hand column of the handout. e. Report out to the class for discussion. f. Debrief: What are your reflections about the five eras of management from a Multistream management perspective? How can you use these ideas to move forward as future leaders and managers of organizations?

11 Chapter 2: A Short History of Management Theory and Practice 25 EXERCISE 2.2 HANDOUT #1 CLASSICAL ERA Imagine a Multistream Perspective on the Classical Era In the left-hand column, list the time period and characteristics of the classical era. In the right-hand column, list characteristics of the classical era from a Multistream perspective. From To Characteristics: Mainstream Multistream Ecological Sustainability Social Justice Physical Well-Being Aesthetic Values Spiritual Interests

12 26 Chapter 2: A Short History of Management Theory and Practice EXERCISE 2.2 HANDOUT #2 HUMAN ERA Imagine a Multistream Perspective on the Human Era In the left-hand column list the time period and characteristics of the human era. In the right-hand column, list characteristics of human era from a Multistream perspective. From To Characteristics: Mainstream Multistream Ecological Sustainability Social Justice Physical Well-Being Aesthetic Values Spiritual Interests

13 Chapter 2: A Short History of Management Theory and Practice 27 EXERCISE 2.2 HANDOUT #3 CALCULATING ERA Imagine a Multistream Perspective of the Calculating Era In the left-hand column, list the time period and characteristics of the calculating era. In the right-hand column, list characteristics of the calculating era from a Multistream perspective. From To Characteristics: Mainstream Multistream Ecological Sustainability Social Justice Physical Well-Being Aesthetic Values Spiritual Interests

14 28 Chapter 2: A Short History of Management Theory and Practice EXERCISE 2.2 HANDOUT #4 VALUES AND BELIEFS ERA Imagine a Multistream Perspective on the Values and Beliefs Era In left-hand column, list the time period and characteristics of the values and beliefs Era. In the right-hand column, list the characteristics of the values and beliefs era from a Multistream perspective. From To Characteristics: Mainstream Multistream Ecological Sustainability Social Justice Physical Well-Being Aesthetic Values Spiritual Interests