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Theories of Management


Theories of Management The Evolution of Management What You ll Learn How the Industrial Revolution created a new need for management. How the captains of industry ... – PowerPoint PPT presentation

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Title: Theories of Management

Theories of Management
  • The Evolution of Management

What Youll Learn
  • How the Industrial Revolution created a new need
    for management.
  • How the captains of industry of the last century
    created huge empires.
  • The principles of Scientific Management.
  • The results of the Howthorne studies on worker
  • Maslows Hierarchy of Needs

What Youll Learn contd
  • The difference between Theory X, Y, and Z
  • What TQM stands for and Demings 14 pts
  • Centralization and Decentralization
  • Japanese management concepts and American
    management practices
  • Becoming familiar with modern management
    principles will help you understand how
    businesses function in todays environment.

The Industrial Revolution
  • Refers to the period during which a country
    develops an industrial economy. In Europe the
    Industrial Revolution began in the eighteenth
    century in the United States, it began around
    1860, just before the Civil War.
  • Before the Industrial Revolution, the US economy
    was based on agriculture. Most people worked on
    small farms, using only simple technology, such
    as horse-drawn plows. Professional managers were
    not needed because most people worked for

Captains of Industry
  • Toward the end of the nineteenth century,
    powerful business people who created enormous
    business empires dominated and shaped the US
    economy. These captains of industry included
    John D. Rockefeller (oil), JP Morgan (banking),
    Andrew Carnegie (steel) and Cornelius Vanderbilt
    (steamships and railroads).
  • During this period entrepreneurs founded
    companies that later became industrial giants.
    One of these companies was Bethlehem Steel. In
    1863, the company began producing the first iron
    railroad rails by 1899, it was selling almost 1
    trillion worth of iron and steel products in a

Management History
  • By the late 1800s, the US economy depended
    largely on industries such as oil, steel,
    railroads, and manufactured goods.
  • Many people left their farms to take jobs in
    factories, where professional managers supervised
    their work.
  • The new industrial enterprises that emerged in
    the nineteenth century demanded management skills
    that had not been necessary earlier.

Scientific Management
  • Frederick Winslow Taylor(1856-1915) was the
    father of Scientific Management. When he was
    working as an apprentice at the Midvale steel
    company, he noticed that most workers did not
    work as hard as they could. To increase
    efficiency, Taylor tried to figure out the one
    best way to perform a particular task. To do
    so, he used a stop watch to determine which
    method was the most efficient. These studies
    were known as Time and Motion Studies.

Taylors scientific management was based on four
main ideas
  • Jobs should be designed according to scientific
    rules rather than rule-of-thumb methods.
    Employers should gather, classify, and tabulate
    data in order to determine the one best way of
    performing a task or series of tasks.

  • 2. Employees should be selected and trained
    according to scientific methods. Employers
    should also train employees in order to improve
    their performance.
  • 3. The principles of scientific management should
    be explained to workers.
  • 4. Management and workers should be
    interdependent so that they cooperate.

Abraham H. Maslow 1908-1970
  • Maslow was a psychologist who developed a theory
    of motivation. His ideas had a significant
    impact on management. Maslow believed that
    individuals fulfill lower-level needs before
    seeking to fulfill higher-level needs. That is,
    people satisfy their need for food before they
    seek self-fulfillment. Because one set of needs
    must be met before another is sought, Maslow
    referred to this as a hierarchy of needs.

Maslows Theory

Self Actualization
Ego or Status Needs
Love or Social Needs
Safety Needs
Physiological Needs
Applying Maslows Theory to Management
  • At the lowest level, workers are motivated by
    basic needs, such as the needs for wages or
    salary. Basic needs also include the physical
    conditions in which a person works, such as
    heating, lighting, and noise.
  • Once these basic needs are met, employers can
    address the next level of needssafety or
    security needs. Some of these security needs can
    be met by providing employees with insurance,
    retirement benefits, and job security. Employees
    need to know that in the workplace, they are safe
    from physical, psychological, or financial harm.

  • Managers meet workers social needs by providing
    work environments in which colleagues interact by
    providing opportunities for co-workers to
    socialize with one another by providing lunch
    rooms or allowing employees to attend company
  • Status needs can be met by providing employees
    with signs of recognition that are visible to
    others, such as job titles, awards, designated
    parking spaces, and promotions.
  • Managers can meet employees need for
    self-fulfillment by providing them with
    opportunities to be creative at work or allow
    them to become involved in decision making.

Theory X
  • MIT Professor Douglas McGregor
  • Theory Xassumes that people are basically lazy
    and will avoid working if they can. To make sure
    that employees work, Theory X managers impose
    strict rules and make sure that all important
    decisions are made only by them.

Theory Y
  • Theory Y assumes that people find satisfaction in
    their work. Theory Y managers believe that
    people are creative and will come up with good
    ideas if encouraged to do so. They tend to give
    their employees much more freedom and let them
    make mistakes.

Theory Z
  • William Ouchi, a management researcher developed
    this new theory of management in the 1980s
  • Theory Z is a business management theory that
    integrates Japanese and American business
    practices. The Japanese business emphasis is on
    collective decision making, whereas the American
    emphasis is on individual responsibility.

Japanese Type Organization
  1. Lifetime employment
  2. Collective decision making
  3. Collective responsibility
  4. Slow evaluation and promotion
  5. Implicit (understood, implied) control mechanisms
  6. Non-specialized career path
  7. Holistic concern for employee as a person

American Type Organization
  1. Short-term employment
  2. Individual decision making
  3. Individual responsibility
  4. Rapid evaluation and promotion
  5. Explicit (clear, precise, unambiguous) control
  6. Specialized career path
  7. Segmented concern for employee as an employee.

Theory Z Type Organization
  1. Long-term employment
  2. Consentual, participative decision-making
  3. Individual responsibility
  4. Slow evaluation and promotion
  5. Implicit, informal control with explicit,
    formalized measures
  6. Moderately specialized career path
  7. Holistic concern, including family

The Hawthorne Effect
  • The result of an experiment conducted at the
    Hawthorne plant of Western Electric in Cicero,
    Illinois in 1924. They lowered the lighting in
    the factory, expecting productivity to fall but
    instead, to their astonishment, productivity
  • The researchers concluded that productivity rose
    because workers worked harder when they received
    attention. This phenomenon, in which change of
    any kind increases productivity, has been known
    as the Hawthorne Effect.

TQMTotal Quality Management
  • Result of study conducted in the 1950s by W.
    Edwards Deming who began studying how companies
    ensure that the products they produce are not
    defective. He came up with a mathematically
    based approach to quality control that became
    known as Total Quality Management, which is a
    system of management based on involving all
    employees in a constant process of improving
    quality and productivity by improving how they
    work. This approach focuses on totally
    satisfying both customers and employees.

TQM Demings Fourteen Points
  1. Create consistent purpose for improving products
    and services in order to remain competitive.
  2. Adopt a new philosophy. We are now living in a
    new economic age.
  3. Stop depending on mass inspection. Require
    instead that quality is built in.
  4. Consider quality as well as price in awarding
  5. Constantly improve the system of production and
  6. Institute a vigorous program of job training.

Demings 14 points contd
  1. Adopt and implement leadership. Focus on
    quality, not productivity.
  2. Drive out fear so that everyone may work
  3. Break down barriers between departments.
  4. Eliminate numerical goals, posters, slogans, for
    the work force that ask for new levels of
    productivity without providing new methods.
  5. Eliminate work standards that prescribe numerical

Demings 14 points contd
  • 12. Remove barriers that stand between the hourly
    worker and his or her right to pride of
  • Encourage education and self-improvement for
  • Create a structure in top management that will
    work every day to achieve the above 13 points.
  • Most companies that have adopted TQM found that
    the performance of their companies improved.

International Management
  • Thailand
  • The social culture of Thailand has given rise to
    highly centralized corporations with strict lines
    of authority. Self-managed teams would not be a
    viable management style because workers are used
    to taking direction from leaders whose authority
    is absolute and based on status.

Japanese Management Practices
  • Japanese managers encourage more employee
    participation in decision making.
  • Japanese managers show deeper concern for the
    personal well-being of their employees.
  • Rather than present their workers with demands,
    Japanese managers tend to facilitate decision
    making by teams of workers.

Japanese Business Practices contd
  • Japanese business practices have been
    successfully exported to the United States at
    Hondas plant in Marysville, Ohio. Unlike most
    American plants, where there is a clear
    distinction between workers and managers, all
    Honda employees are empowered to make decisions.
    As a result, Honda employees are energetic and
    committed to producing high-quality products.
    They turn out one Honda Accord per minute. This
    high level of productivity is attributed to
    several innovative (new, original,
    groundbreaking) management practices, where
    workers are organized by teams rather than by

HERZBERGS Motivation-Hygiene Theory
  • Psychologist Frederick Herzberg believed that
  • Intrinsicnatural, realfactors are related to
    job satisfaction
  • Extrinsic factors are related to job

Herzbergs Theory contd
  • On the other hand, when employees were
    dissatisfied, they tended to cite extrinsic
    factors such as company policy and
    administration, supervision, interpersonal
    relationships, and working conditions.
  • Herzberg suggested emphasizing motivatorsthose
    factors that increase job satisfaction, such as
    recognition and growth.

Hygiene Factors
  • Herzbergs term for factors such as
  • Working conditions and Salarywhen these factors
    are adequate, people will not be dissatisfied,
    but neither will they be satisfied.
  • These factors may eliminate job dissatisfaction
    but do not necessarily increase job satisfaction.
  • Herzberg proposed that his findings indicate that
    the opposite of satisfaction is no
    satisfaction and the opposite of
    dissatisfaction is no dissatisfaction.

Herzbergs Theory
  • He believed that an individuals attitude toward
    his or her work can very well determine success
    or failure
  • Intrinsic factors such as achievement,
    recognition, and responsibility were related to
    job satisfaction
  • When people felt good about their work, they
    tended to attribute these characteristics to

David McClellands Three-Needs Theory
  • The three needs are the major motives in work
  • The need for Achievement (nAch) The drive to
    excel, to achieve in relation to a set of
    standards, and to strive to succeed.
  • The need for Power (nPow) The need to make
    others behave in a way that they would not have
    behaved otherwise.
  • The need for Affiliation (nAff) The desire for
    friendly and close personal relationships.

Findings of McClellands Theory
  • McClelland found that some people have a
    compelling drive to succeed for personal
    achievement rather than for the rewards of
  • High achievers perform best when they perceive
    that they have a 50-50 chance of success.
  • They dislike gambling when the odds are high
    because they get no satisfaction from
    happenstance (fluke or accidental) success
  • They also dislike low odds (high probability of
    success) because then there is no challenge to
    their skills.
  • They like to set goals that stretch themselves a

J. Stacey Adams Equity Theory
  • Adams theory that employees perceive what they
    get from a job (outcomes) in relation to what
    they put into it (inputs) and then compare their
    input-outcome ratio with the input-outcome ratios
    of relevant others.
  • If workers compare themselves, a state of equity
  • They believe that their situation is fairthat
    justice prevails.