Management’s Ethical and Management’s Ethical and Social Responsibilities Social Responsibilities

++ History of Management History of Management

Chapter # 2

References:Management (W. Griffin)Internet

Resource person: Furqan-ul-haq Siddiqui

Individual Ethics in Organizations EthicsEthics:: An individual’s personal

beliefs about whether a behavior, action, or decision is right or wrong.

Ethical Behavior:Ethical Behavior: Conforms to generally accepted social norms

Unethical Behavior:Unethical Behavior: Does not conform to generally accepted social norms.

Managerial Ethics Standards of behavior that guide individual

managers in their work. Three Basic Areas of Concern:

Managers need to approach the following from an ethical and moral perspective:

1. Relationships of the firm to the employees. (How an organization treats its employees)

2. The employees to the firm.(How employees treat organization)

3. The firm to other economic agents.(How employees & organization treat other economic

agents)

1. How an Organization Treats Its Employees Important areas of managerial ethics & legal

concern Hiring &Firing- Should be solely based upon

persons ability to perform job. A manager, who discriminate against Muslim-non Muslim bases is unethical and illegal behavior.

Hiring friends & relatives mite be legal but unethical

Wages- Paying less than employee deserves Working conditions- Safe working

environment Employee privacy- Leaking personal

information, spreading rumors against employee, propaganda

Employee respect-

2. How Employees Treat the Organization Especially in regard to:

Conflicts of interest- A conflict between a person's private interests and organizational obligations.

Security & Confidentiality- Divulging company secrets to others

Honesty- working in best interest of company, not utilizing company’s resources for personal use.

Most companies have policies that guard against violation of these ethical issues.

3. How Employees and Organization Treat Other Economic Agents

Ethics play a part in the relationship between the firm and its employees with other economic agents.

Behaviors between the organization and these agents that may be subject to ethical ambiguity include: Advertising Promotions Financial disclosures Purchasing Shipping Solicitation Bargaining Negotiation, and other business relationships.

Managerial Ethics

Ethics in an Organizational Context Actions of peer managers and top managers, as well as

the organization’s culture, all contribute to the ethical context of the organization.

Organizational practice may strongly influence the ethical standards of employees.

Top management establishes the organization’s culture and defines what will and will not be acceptable behavior.

Code of Ethics: a formal written statement of the values and ethical standards that guide a firm’s actions.

Social Responsibility

The set of obligations an organization has to protect and enhance the society in which it functions.

Areas of social responsibility:Stakeholders.The natural environment.Toward general social welfare.(see Figure next slide)

Organizational Stakeholders

How Business and the Government Influence Each Other

History of ManagementWhy Theory? A theory is a conceptual framework for organizing knowledge

and providing a blueprint for action. Management theories, used to build organizations, are grounded

in reality. Most managers develop their own theories about how they should run their organizations.

Why History? History is the study of the past, with special attention to the

written record of the activities of human beings over time An awareness and understanding of important historical developments in management are important to contemporary managers in furthering the development of management practices and in avoiding the mistakes of others in the past.

The Practice of Management Can Be Traced Back Thousands of Years

Stonehenge (3000 BC) is located in the UK. Its construction heavily relied on management functions. Their stones are cutover 300 miles a way.

The Egyptians used management functions of planning, organizing, and controlling when they constructed the Pyramids. (1400 AD)

The Great Wall of China (6,400 km /4,000 miles) was built, rebuilt, and maintained between the 5th century BC and the 16th century to protect the northern borders of the Chinese Empire from Xiongnu.

Management in Antiquity

Early Management Pioneers Adam Smith (1723 –1790)- He gave concept of “Division of

Labor” (breaking down jobs into narrow and repetitive tasks to increase productivity)

Robert Owen (1771–1858)- British industrialist who was one of the first managers to recognize the importance of human resources. Implemented better working conditions, set a minimum age for child labor, provided meals, and reduced work hours.

Charles Babbage (1792–1871)- Noted English mathematician who focused on creating efficiencies of production through the division of labor, cooperation between management and labor, and the application of mathematics to management problems.

• In many ways, Babbage was an originator of modern In many ways, Babbage was an originator of modern management theory & practice.management theory & practice.

The Industrial Revolution The Industrial Revolution was a period in the 18th and early

19th centuries (The First Industrial Revolution, which began in the 18th century, merged into the Second Industrial Revolution around 1850) when major changes in agriculture, manufacturing, mining, and transportation had a profound effect on the socioeconomic and cultural conditions in Britain. The changes subsequently spread throughout Europe, North America, and eventually the world.

Starting in the latter part of the 18th century there began a transition in parts of Great Britain's previously manual labor and draft animal–based economy towards machine-based manufacturing. It started with the mechanization of the textile industries, the development of iron-making techniques and the increased use of refined coal. Trade expansion was enabled by the introduction of canals, improved roads and railways.

The Industrial Revolution started in England around 1733 with the first cotton mill. A more modern world had begun. As new inventions were being created, factories followed soon thereafter. England wanted to keep its industrialization a secret, so they prohibited anyone who had worked in a factory to leave the country. Meanwhile, Americans offered a significant reward to anyone who could build a cotton-spinning machine in the United States. Samuel Slater, who had been an apprentice in an English cotton factory, disguised himself and came to America. Once here, he reconstructed a cotton-spinning machine from memory. He then proceeded to build a factory of his own. The Industrial Revolution had arrived in the United States.

The Industrial Revolution brought severe consequences to society. Factory owners, needing cheap, unskilled labor, profited greatly by using children and women to run the machines. By the age of 6, many children were already working 14 hours a day in factories! These kids had no free time to do anything else and earned low wages. Some got sick and died because of the toxic fumes, while others were severely injured and sometimes killed working at the dangerous machines in factories. Obviously, the Industrial Revolution had both good and bad sides.

World GDP (consumption + gross investment + government spending + (exports − imports)) per capita (in 1990 international dollars) changed very little for most of human history before the industrial revolution. (Note the empty areas mean no data, not very low levels. There are data for the years 1, 1000, 1500, 1600, 1700, 1820, 1900, and 2003.)

Early Management IdeasPre-Classical Perspective

Assessing the early contributions:1. Uncoordinated efforts.

2. Contributions tended to relate to specific problems.

3. Did not see ‘Management’ as a separate field or skill.

1. The Classical Management Perspective: This perspective actually includes two different viewpoints:

scientific management and administrative management.

a. Scientific Management (Taylorism/Taylor system) During 1st few years of 19th century, businesses were

expending and capital was available but labor was in short supply. Hence, managers began to search ways to use existing labor efficiently. Their work led to the development of SM which is Concerned with improving the performance of individual workers (i.e., efficiency). SM is a theory of management that analyzes and synthesizes workflows, with the objective of improving labor productivity to increase efficiency.

Frederick Taylor (1856–1915)- Considered the “Father of Scientific Management.”

Taylor believed that decisions based upon tradition and rules of thumb should be replaced by precise procedures developed after careful study of an individual at work

Scientific Management was concerned with efficiency.  There were two aspects to this, Taylor realized.  The workers must have the correct tools, work plan, and environment to support their working as efficiently as possible; and the workers must want to work as efficiently as possible.

Taylor claimed to have conducted experiments in varying conditions.  For example, if the job was shoveling, a larger shovel blade could move more material in a single stroke, but it would also tire the men more.  Taylor gave the men shovels with smaller and smaller blades each day until the amount shoveled in a day began to fall.  Thus he determined the most efficient size of the tool for each task.8  Through studies such as these, Taylor was able to reduce the number of shovelers at the Bethlehem Steel Works, where he was then employed, from 500 to 140.

Taylor encouraged the workers to be more productive through the use of monetary incentives.  At the time, much of manufacturing work was piecework, i.e., the worker would be paid per unit produced.  It was common for employers to actually reduce the rate of pay per piece when the employees began to make too much money.  In response, the workers would “soldier,” purposely lowering their output to keep the piecework rate high.  Naturally, this led to enmity between the workers and the employers

“Used time studies of jobs, standards planning, instruction cards, and piece-work pay systems to control and motivate employees.

Soldiering” where employees deliberately worked at a pace slower than their capabilities.

Steps in Scientific Management

Develop a science

for each element of

the job to replace old

rule-of-thumb methods

Scientifically select

employees and then

train them to do the job

as described in step 1

Supervise employees

to make sure they

follow the prescribed

methods for performing

their jobs

Continue to plan

the work, but use

workers to get the

work done

21 43

Frederick Winslow Taylor (March 20, 1856–March 21, 1915), widely known as F. W. Taylor, was an American mechanical engineer who sought to improve industrial efficiency. He is regarded as the father of scientific management and was one of the first management consultants

The Principles of Scientific Management is a monograph published by Frederick Winslow Taylor in 1911.

Which included severe labor/management conflict,

apathy, boredom, and wasted human resources

General approach Develop a standard method for performing each job Select workers with appropriate abilities for each job Train workers in the standard method previously

developed Support workers by planning their work and

eliminating interruptions. Provide wage incentives to workers for increased

output

Other Scientific Management Pioneers Frank Gilbreth & Lillian Gilbreth (1868-1924/1878-

1972)Reduced the number of movements in bricklaying,

resulting in increased output of 200%. Henry Gantt (1861-1919)

Was an early associate of Fredrick Taylor.Developed other techniques, including the Gantt chart, to

improve working efficiency through planning/scheduling.

Harrington Emerson (1853-1931)Advocated job specialization in both managerial and

operating jobs.

Other Scientific Management Pioneers Frank Gilbreth & Lillian Gilbreth (1868-1924/1878-

1972)Reduced the number of movements in bricklaying,

resulting in increased output of 200%. Henry Gantt (1861-1919)

Was an early associate of Fredrick Taylor.Developed other techniques, including the Gantt chart, to

improve working efficiency through planning/scheduling.

Harrington Emerson (1853-1931)Advocated job specialization in both managerial and

operating jobs.

b. Administrative Management Theory Scientific management deals with the jobs of individual

employees, administrative management focuses on managing the total organization.

AM laid the foundation for later development in management theory.

It is more appropriate for stable and simple organizations than for today’s dynamic and complex organizations.

Henri Fayol Wrote “General and Industrial Management.” Helped to systematize the practice of management. Was first to identify the specific management functions of

planning, organizing, leading, and controlling.

Henri Fayol (Istanbul, 29 July 1841–Paris, 19 November 1925) was a French mining engineer, director of mines, and management theorist, who developed independent of the theory of Scientific Management, a general theory of business administration also known as Fayolism. He was one of the most influential contributors to modern concepts of management.

He has proposed that there are six primary functions of management and 14 principles of management.

1. forecasting 2. planning 3. organizing 4. commanding 5. coordinating 6. controlling

Fayol’s Administrative TheoryFayol’s Administrative Theory Management Principles developed by Henri Fayol: 

1. DIVISION OF WORK: Work should be divided among individuals and groups to ensure  that effort and attention are focused on special portions of the task.              

2. AUTHORITY: The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority.                                      

3. DISCIPLINE: A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.      

4. UNITY OF COMMAND: Workers should receive orders from only one manager.                                                               

5. UNITY OF DIRECTION: The entire organization should be moving towards a common objective in a common direction.                                                                                              

6. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS: The interests of one person should not take priority over the interests of the organization as a whole.

7. REMUNERATION: Many variables, such as cost of living, supply of qualified personnel, general business conditions, and success of the business, should be considered pay fixation                                                                                                

8. CENTRALIZATION: Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization.                                                                                        

9. SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale. Each manager, from the first line supervisor to the president, possess certain amounts of authority. The President possesses the most authority; the first line supervisor the least. Lower level managers should always keep upper level managers informed of their work activities.

10. ORDER: There is a place for everything and everything in its place. Proper scheduling of work and timetables to complete work is important                                                                        

11. EQUITY: Fairness, justice & impartiality in every aspect of management.                                                                                         

12. STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers.                                                                                                 

13. INITIATIVE: Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction.                                                    

14. ESPIRIT DE CORPS: Management should encourage harmony and general good feelings among employees, promoting team work “union is strength”.

Lyndall Urwick (1891-1983) Integrated the work of previous management theorists.

Max Weber(1864-1920) His theory of bureaucracy is based on a rational set of fixed

rules & regulations & guidelines for structuring organizations.

Chester Barnard (1886-1961) Wrote “The Functions of the Executive.” Proposed a theory of the acceptance of authority (by

subordinates) as the source of power and influence for managers.

The theory suggests that sub ordinates weigh the legitimacy of a supervisors directives & then decide whether to accept them or not. An order is accepted if the subordinate understands it.

Lyndall Urwick (1891-1983) Integrated the work of previous management theorists.

Max Weber(1864-1920) His theory of bureaucracy is based on a rational set of fixed

rules & regulations & guidelines for structuring organizations.

Chester Barnard (1886-1961) Wrote “The Functions of the Executive.” Proposed a theory of the acceptance of authority (by

subordinates) as the source of power and influence for managers.

The theory suggests that sub ordinates weigh the legitimacy of a supervisors directives & then decide whether to accept them or not. An order is accepted if the subordinate understands it.

Classical Management Perspective…Today Contributions

Laid the foundation for later developments. Identified important management processes, functions, and skills. Focused attention on management as a valid subject of scientific

inquiry. Job specialization techniques & scientific methods of job design

Limitations More appropriate approach for use in traditional, stable, simple

organizations. Prescribed universal procedures that are not appropriate in some

settings. In some cases, employees are viewed as tools rather than as

resources.

2. The Behavioral Management Perspective

Unlike the classical management perspective, the behavioral management perspective placed more emphasis on individual attitudes and behaviors and on group processes and recognized the importance of behavioral processes in the work place.

Proposed that workers respond primarily to the social context of the workplace, including social conditioning, group norms, and interpersonal dynamics.

Hugo Munsterberg (1863–1916) A German psychologist, considered the father of industrial

psychology, wrote “ Psychology and Industrial Efficiency,” a pioneering work in the practice of applying psychological concepts to industrial settings.

He suggested that psychologists could make valuable contributions to managers in the area of employee selection & motivation

a. The Hawthorne Studies

Hawthorne Works of the Western Electric Company; 1924-1935

The Hawthorne Studies refers to a series of studies conducted from 1924 to 1932 at the Hawthorne Works of the Western Electric Company. The study was initiated to investigate how the level of lighting would affect employee fatigue and performance. The researchers conducted an experiment in which they systematically measured employee productivity at various levels of illumination. However, no matter whether the lighting was raised or lowered, productivity increased. The researchers were puzzled and invited Elton Mayo to assist them. Eventually, they found that the employees were responding to the increased attention from the researchers.

A few years later, a second group of experiments began. Harvard researchers Mayo and F. J. Roethlisberger supervised a group of five women in a bank wiring room. They gave the women special privileges, such as the right to leave their workstations without permission, take rest periods, enjoy free lunches, and have variations in pay levels and workdays. This experiment also resulted in significantly increased rates of productivity.

In this case, Mayo and Roethlisberger concluded that the increase in productivity resulted from the supervisory arrangement rather than the changes in lighting or other associated worker benefits. This is the origin of the term Hawthorne effect, which describes the special attention researchers give to a study's subjects and the impact that attention has on the study's findings.

The Hawthorne Effect suggested that the attitude of employees toward their managers affects the employees’ performance.

b. The Human Relations Movement Grew out of the Hawthorne studies. Assumed that the manager’s concern for

workers would lead to increased worker satisfaction and improved worker performance.

Abraham MaslowAdvanced a theory that employees are motivated by

a hierarchy of needs that they seek to satisfy. Douglas McGregor

Proposed Theory X and Theory Y concepts of managerial beliefs about people and work.

Maslow’s Hierarchy of Needs

Self-actualization

Esteem

Belongingness

Security

PhysiologyFood

Achievement

Status

Friendship

Stability

Job

Friends

Pension

Base

NEEDS

General Examples Organizational Examples

jobChallenging

title

at work

plan

salary

c. Organizational Behavior A contemporary field focusing on behavioral

perspectives on management.Draws on psychology, sociology, anthropology,

economics, and medicine.

Behavioral Management Perspective…Today

Contributions Provided important insights into motivation, group dynamics,

and other interpersonal processes. Focused managerial attention on these critical processes. Challenged the view that employees are tools and furthered

the belief that employees are valuable resources.Limitations

Complexity of individuals makes behavior difficult to predict. Many concepts not put to use because managers are

reluctant to adopt them. Contemporary research findings are not often communicated

to practicing managers in an understandable form.

3. Quantitative Management Perspective • Applies quantitative techniques to management• Emerged during World War II to help the Allied forces

manage logistical problems.• Focuses on decision making, economic effectiveness,

mathematical models, and the use of computers to solve quantitative problems.

a. Management Science Focuses on the development of representative

mathematical models to assist with decisions.

b. Operations Management Practical application of management science to

efficiently manage the production and distribution of products and services.

Quantitative Management Perspective…Today Contributions

Developed sophisticated quantitative techniques to assist in decision making.

Application of models has increased our awareness and understanding of complex processes and situations.

Has been useful in the planning and controlling processes. Limitations

Quantitative management cannot fully explain or predict the behavior of people in organizations.

Mathematical sophistication may come at the expense of other managerial skills.

Quantitative models may require unrealistic or unfounded assumptions, limiting their general applicability.

The Contingency Approach The idea that the organizational structures and

control systems manager choose depend on—are contingent on—characteristics of the external environment in which the organization operates.Assumes there is no one best way to manage.

The environment impacts the firm and managers must be flexible to react to environmental changes.

In rapidly changing organizational environments, managers must find ways to coordinate different departments to respond quickly and effectively.

An Integrative Framework ofManagement Perspectives

Effective and efficient management

Classical ManagementPerspectives:

Methods for enhancing efficiency and

facilitating planning, organizing, and

controlling

Behavioral Management

Perspectives: Insights for motivating

performance and understanding individual

behavior, groups and teams, and leadership

QuantitativeManagement Perspective:

Techniques for improving decision making, resource

allocation, and operations

Contingency ApproachRecognition of the situational nature of management. Response to

particular characteristics of situation.