Chapter 2: The Management Movement

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Chapter 2The Management Movement

• Section 2.1
• The Evolution of Management

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The Industrial Revolution

• Began in the United States in 1860
• Just before the Civil War
• Period during which a country develops an
  industrial economy
• Before the Industrial Revolution, economy based
  on agriculture
• By the late 1800s, economy depended on industries
  such as oil, steel, railroads, and manufactured
  goods

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Causes of the Industrial Revolution

• Many people left their farms to work in factories
• Professional managers supervised their work
• Changes in technology, communication, and
  transportation
• Telegraph and cable lines extended across the
  U.S. after the Civil War
• Railroad lines, canals, roads, steamships

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Captains of Industry

• Powerful businesspeople who created enormous
  business empires dominated and shaped the U.S.
  economy

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Creation of Monopolies

• The captains of industry often pursued profit and
  self-interest above all else
• Drove competitors out of business
• Created giant companies that maintained
  monopolies in their industries
• Monopoly
• Occurs when one party maintains total control
  over a type of industry
• Trust giant industrial monopoly
• By 1879, Rockefeller controlled gt90 of the
  countrys refining capacity and pipelines

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The Break-Up of Trusts

• People became worried about the concentration of
  wealth in the hands of a only a few
• In response, the government began regulating
  business

Cornelius Vanderbilt
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The Break-Up of Trusts

• The Interstate Commerce Act, 1887
• The railroads gave rebates to some customers but
  not others
• This act forced railroads to publish their rates
  and forbade them to change rates without
  notifying the public
• Established the Interstate Commerce Commission
  (ICC) to supervise the railroads

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The Break-Up of Trusts

• The Sherman Act, 1890
• Made it illegal for companies to create
  monopolies
• Intended to restore competition
• Example
• Standard Oil Company was broken into smaller
  companies so that other oil companies could
  compete with the former giant
• John D. Rockefeller

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New Challenges for Management

• When most Americans worked on farms,
  sophisticated management techniques were not
  necessary
• By the end of the nineteenth century, giant
  companies employed thousands of people and
  distributed products all over the country
• Workers performed tasks that needed to be
  coordinated
• These changes demanded new ideas about how to
  manage people working in large corporations

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Frederick W. Taylor and Scientific Management

• Wanted to find ways to motivate workers to work
  harder
• To increase efficiency, he tried to figure one
  best way to perform a particular task
• Used a stopwatch to determine which work method
  was most efficient
• These time and motion studies lead to scientific
  management principles

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Frederick W. Taylor and Scientific Management

• Scientific management seeks to increase
  productivity and make work easier by carefully
  studying work procedures and determining the best
  methods for performing particular tasks

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Frederick W. Taylor and Scientific Management

1. Employers should gather, classify, and tabulate
   data in order to determine the one best way of
   performing a task or series of tasks.
2. Employers should study worker strengths and
   weaknesses and match workers to jobs. 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.

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Frederick W. Taylor and Scientific Management

• Companies today continue to use the principles of
  scientific management
• Marriott Corporation
• Customer satisfaction

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The Hawthorne Studies of Productivity

• Researchers began to look at the relationship
  between working conditions and productivity
• Series of experiments at the Hawthorne plant of
  Western Electric in Cicero, IL
• Lowered the lighting expecting productivity to
  fall
• What happened?

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The Hawthorne Studies of Productivity

• Baffled by results, a team of psychologists from
  Harvard University were called upon
• Over five years, hundreds of experiments were
  conducted at the plant
• Different wage payments
• Rest periods
• Work hours
• What were the results?

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The Hawthorne Studies of Productivity

• Researchers concluded that productivity rose
  because workers worked harder when they received
  attention
• Hawthorne effect
• Change of any kind increases productivity
• Factors other than the physical environment
  affected worker productivity
• Psychological and social conditions, effective
  supervision

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Abraham H. Maslow and the Hierarchy of Needs

• According to Maslow
• All people have five basic types of needs
• People fulfill lower-level needs before seeking
  to fulfill higher-level needs
• One set of needs must be met before another is
  sought
• Hierarchy of needs is his grouping and ordering
  of physical, security, social, status, and
  self-actualization needs

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Maslows Hierarchy of Needs
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Applying Maslows Theory to Management

• At the lowest level, workers are motivated by
  basic needs
• Wages or salary, physical conditions
• Safety or security needs
• Providing insurance, retirement benefits, job
  security
• Safe from physical, psychological, or financial
  harm

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Applying Maslows Theory to Management

• Social needs
• Provide a work environment in which colleagues
  interact
• Company lunch rooms, company retreats
• Status needs
• Provide workers with signs of recognition that
  are visible to others
• Job titles, private offices, designated parking
  spaces, awards, promotions

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Applying Maslows Theory to Management

• Self-fulfillment needs
• Provide employees with opportunities to be
  creative at work
• Include employees in decision making
• Example
• ITTs Ring of Quality Control