chapter 1 management theories

7/29/2019 Chapter 1 Management Theories

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EE2063

Chapter 1


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Companies need leaders who understand technology

and business

Modern-day Economy

Customer needs are

changing rapidly

Intense Global

competition

Very Fast advancement intechnology

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Engineers with proper management

training have great opportunities tomake valuable and lasting

contributions. (Babcock 1996)

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Managers

Employees entrusted with:

Taking decisive actions

Utilizing resources

Controlling internal teams

Guiding external businesspartners

Company

Goals

Planning, Organizing, Leading and

Controlling

Main Areas

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The driving force behind the

evolution of managementtheory is the search for

better ways to utilizeorganisational resources.

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Evolution of Management Theory

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Scientific ManagementTheory

Administrative Management Theory

Behavioural Management Theory

Management Science Theory

Organisational

Environment Theory

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Ancient Management Thoughts

2500BC

Pyramids- 100 000 men

from 20 ~30 years to

complete one pyramid.

Based on trial and error .

No systematic

documentation of the

management strategy and

practices

Chinese emperors

applied principles of

organizing ,

planning, directing

and controlling

Mayan

temples

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An industry where the creation of products and services

is home-based, rather than factory-based. Whileproducts and services created by cottage industry are

often unique and distinctive given the fact that they are

usually not mass-produced, producers in this sector

often face numerous disadvantages when trying tocompete with much larger factory-based companies.

Cottage industry

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Industrial Revolution ( 18 century)

Industrial engineering started in England during the industrial

revolution in mid 18th century ( 1750 1850)

Mainly due to developments in technological innovations that

helped mechanise many traditional manual tasks

Most important invention Steam engine by James Watt

Three basic innovation that brought about the Industrial Revolution

1. Replacement of hand tools with power tools and machines

2. Introduction ofnew power source

3. Operation offactories as a new form of organising forproduction of goods

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Accomplishments / Effects

Factories are formed involving equipment and workers

Destroyed the cottage industry in England

Created problem related to child labour

Poor living conditions for workers, crime, and brutality

This induced the creation of factory layout, inventory control,

production planning, work-flow analysis and cost analysis.

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Small-scale

Crafts Production

Large-scale

Mechanised Manufacturing

Managed by engineers who only

had Technical orientation

Problems faced:

How to handle people

Social problems relating to working togetherin large groups

How to increase efficiency of the worker-task mix

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Famous economist,

Adam Smith,

journeyed aroundEngland in 1700s

studying the effects

of industrialrevolution.

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Each worker

responsible forAll tasks

Each worker performed

only 1 or a few tasks toproduce

Crafts-style Factory System

Poorer performance Few thousands per/day

Cannot be equallySkilled in alltasks

Better performance48,000 pins per day

More skilled at theirtasks

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Job Specialisation Division of Labour

Increased EfficiencyBetter Organisational

performance

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With insights gained from Adam Smithsobservations, other managers and

researchers began to investigate how to

improve job specialisation to increase

performance.

They focused on how to organise and control

the work process.

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Industrial Development in US- 19th Century

Emigrants from England set up textile mills, railroads, steel mills

Charles Babbage ( 1792-1871)

Published a study of that describes the use of machinery and

the organisation of human resources for production purpose.

He advanced the idea of division of labour, factory sizedetermination, profit-sharing, schemes, methods of observing

manufacturing and time-study methods.

Formation of several association to promote exchange of best

practices in engineering and management.

1893 American Society of Engineering Education

1880 - American Society of Mechanical Engineers

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F.W. Taylor (1856-1915)

Scientific Management

He decomposed a job of mechanical

nature into set of elementary motions,discarded unnecessary motions, and

examined the remaining motions

(stopwatch studies) to find the most

efficient method and sequence ofmotion element.

1911studied work methods and shop management

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Taylor believed that if the amount of time and effort that each

worker expends to produce a unit of output can be reduced by

increasing specialisation and division of labor, the productionprocess will become more efficient.

He put forward the idea that workers are motivated mainly by pay.

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His Theory of Scientific Management argued the following:

Workers do not naturally enjoy work and so need closesupervision and control

Therefore managers should break down production into a

series of small tasks

Workers should then be given appropriate training and toolsso they can work as efficiently as possible on one set task.

Workers are then paid according to the number of items they

produce in a set period of time, i.e. piece-rate pay.

As a result, workers are encouraged to work hard and maximizetheir productivity.

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Taylors Principles

1. Study the way workers

perform their tasks, gather all

informational job knowledgethat workers possess, and

experiment with ways of

improving how tasks are

performed

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2. Codify the new methods of performing tasks into

written rules and standard operating procedures.

3. Carefully select workers who possess skills and

abilities that match the needs of the task, and train

them to perform the task according to theestablished rules and procedures.

4. Establish a fair or acceptable level of performance

for a task, and then develop a pay system that

provides a reward for performance above the

acceptable level.

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Taylor focused on production aspects without paying

attention the workers. According to Taylor, work is divided

into planning/training (a management responsibility) androte execution (by the uneducated worker of the day).

Taylor

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This scientific management became nationally known,

but the selective implementation of the principles

created more harm than good

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Workers felt that as their performance increased,

managers required them to do more work for the

same pay.

Increases in performance meant fewer jobs and

greater threat of layoffs

Monotonous and repetitive

Dissatisfaction


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This led to an increase in strikes and other forms of

industrial action by dissatisfied workers.

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Fordused Taylors principle

Achieving the right mix of worker-task specialisation

Linking people and tasks by the speed of the

production line

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Taylors methods were widely adopted

as businesses saw the benefits of

increased productivity levels and lower

unit costs. The most notable advocate

was Henry Ford who used them to

design the first ever production line,

making Ford cars. This was the start of

the era of mass production.


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Franklin Motor Company

Redesigned the work process using the scientificmanagement principles.

Production increased from 100 cars a month to 45 cars

a day.


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The Gilbreths Study of Human Factors

Frank Gilbreth (1868-1924) He was a bricklayer, a building contractor, and a management

engineer. He was a member of the ASME, the Taylor Society (precursor

to the SAM), and a lecturer at Purdue University.

Lilian Gilbreth (1878-1972)

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Time and Motion Study

1. Break and analyse every individual actionnecessary to perform a particular task intoeach of its component actions

2. Find better ways to perform each

component action3. Reorganise each component action so that it

is more efficient: less cost of time and effort

Their goal was to maximise the efficiency withwhich each individual task performed.

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Study of Fatigue

How physical characteristics of the workplace

contribute to job stress

Effects of lighting

Effects of heating

Effects of color of walls

Design of tools and machines

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Administrative Management Theory

Henri Fayol- Principles of Management

Divided the industrial undertakings to six groups:technical, commercial, financial, security, accounting andadministrative.

Developed 14 general principles of administration

Administrative Management

The study of how to create an organisationalstructure that leads to high efficiency (least

effort) & effectiveness (creates value).


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14 Principles of Management

1. Division of Labour

2. Authority & Responsibility

3. Unity of Command

4. Line of Authority

5. Centralisation6. Unity of Direction

7. Equity

8. Order

9. Initiative

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10. Discipline

11.Remuneration of

Personnel

12.Stability of tenure of

Personnel13.Subordination of

Individual Interests to

the Common Interest

14.Esprit de Corps


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1. Division of Labour

Job specialisation and the division of labour

should increase efficiency.

Pointed out the downside of too much

specialisation; so workers should be given

more duties to perform.

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2. Authority and ResponsibilityManagers have the right to give orders and the

power to exhort subordinates for obedience.


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3. Unity of Command

An employee should receive orders from only

one superior.

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4. Line of AuthorityThe length of the chain of command that

extends from the top to the bottom of an

organisation should be limited.


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5. Centralisation

Authority should not be concentrated at the top

of the chain of command.

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6. Unity of DirectionThose operations within the organisation that

have the same objective should be directed by

only one manager using one plan. E.g. personnel

department in a company should not have twodirectors each with a different hiring policy.


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7. Equity

Managers should be both friendly and fair to

their subordinates.

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8. OrderMaterials and people should be in the right

place at the right time. People should be in

the jobs that they are most suited to.


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9. Initiative

Subordinates should be given the freedom to

conceive and carry out their plans, even

though some mistakes may result.

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10. DisciplineMembers in an organisation need to respect the

rules and agreement that govern the

organisation. To Fayol, discipline results from good leadership, fair

agreements and judiciously enforced penalties for

infractions.


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11. Remuneration of Personnel

Compensation for work done should be fair to

both employees and employers.

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12. Stability of Tenure of Personnel

A high employee turnover rate undermines the

efficient functioning of an organisation.


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13. Subordination of Individual

Interests to the Common Interest

Interests of employees should not take

precedence over the interests of the

organisation as a whole.

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14. Esprit de CorpsPromoting team spirit gives the organisation a

sense of unity.

To Fayol, even small factors help develop thespirit. E.g. use verbal communication instead offormal, written communication wheneverpossible.


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Theory of Bureaucracy

Max Weber (1864-1920)

Developed the principles ofbureaucracy-a formal system of

organisation and administration

designed to ensure efficiency

and effectiveness.

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S f i l d


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System of written rules and

SOPs that specify how

Employees should

behave

Selection and evaluation

System that rewardsEmployees fairly and

Equitably.

Clearly specified

System of task and

Role relationships

Clearly specified

Hierarchy of

authority

A bureaucracy

Should have

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Five Principles:

1. A Managers formal authority derives from

the position he or she holds in the

organisation

2. People should occupy positions because of

their performance, not because of their

social standing or personal contacts.

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3. The extent of each positions formal authority

and task responsibilities and its relationshipto other positions in an organisation, should

be clearly specified.

4. Authority can be exercised effectively in an

organisation when positions are arranged

hierarchically, so employees know whom to

report to and who reports to them.

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5. Managers must create a well-defined system

ofrules, standard operating procedures and

norms so that they can effectively control

behaviour within an organisation.

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Rules

Formal written instructions that specify actions

to be taken under different circumstances to

achieve specific goals.

Rule: At the end of the day employees are to

leave their machines in good order.

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Standard Operating Procedures

(SOP)

Specific sets of written instructions about how

to perform a certain aspect of a task.

SOP:

Specifies exactly how they should do so, which

machine parts should be oiled or replaced.

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Norms

Norms are unwritten, informal codes of conduct

that prescribe how people should act in

particular situations.

E.g.: An organisational norm in a restaurant

might be that waiters should help each other

if time permits.

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Behavioral Management Theory

The Work of Mary Parker Follet

The Hawthorn Studies and Human Relations

Theory X and Y

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Human Factors


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Behavioral Management

The study of how managers should behave to

motivate employees and encouragethem to

perform at high levels and be committed to

the achievement of organisational goals.

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Mary Parker Follet

Mary Parker Follett advocated for a

human relations emphasis.

Her work contrasted with the

"scientific management" ofFrederick W. Taylor.

Mary Parker Follett stressed the

interactions of management and

workers.

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Follett was one of the first to integrate the

idea of organisational conflict intomanagement theory, and is sometimes

considered the "mother of conflict

resolution.

She coined the words "power-over" and

"power-with" to differentiate coercive power

from participative decision-making.

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She was of the view that authority should go


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She was of the view that authority should gowith knowledge.

Advocatedinvolvement of workers in jobanalysis and work development process.

Managers of different departments shouldcommunicate with each other directly.

Cross-functioning

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Th H h S di


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The Hawthorne Studies

Study effect of illumination on productivity

Found the increased production was due to

management interest

Hawthorne effect is the finding that a

managers behaviour or leadership approach

can affect workers level of performance.

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Theory X and Theory Y

Douglas McGregor proposed that two sets of

assumptions about how work attitudes and

behaviors not only dominate the way

managers think but also affect how theybehave in organisations.

He named these two assumptions:

Theory X and Theory Y.

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Theory X

Assumptions:

Average worker is lazy

Dislikes work

Will try to do as little as possible

Have little ambition and avoid responsibility

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Managers Who Accept Theory X

To keep performance high, workers must be

supervised closely and their behaviors be

controlled by means of the carrot and stick-

rewards and punishments.

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Design and shape work setting to maximisecontrol over workers behaviors.

Minimise the workers control over the paceof work.

Focus is on development of rules, SOPs and a

well-defined system of reward andpunishment to control behavior.

Managers see little point in giving autonomy

to solve their own problems. Managers see their role as closely monitoring

workers.

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Theory Y

Assumptions:

Workers are not inherently lazy

Do not naturally dislike work

If given the opportunity, will do what is good

for the organisation.

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Characteristics of the work setting determine


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Characteristics of the work setting determinewhether workers consider work to be a source ofsatisfaction or punishment.

Managers do not need to closely control workersbehavior.

They exercise self-control

Decentralise authority

Accountable for their jobs

Managers role is not to control but to provide

support and advice and to evaluate them on their

ability

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Skills for Managers/Leaders

LeadershipSkills

Administrative

Skills

Technical Skills

What it takes for engineers to be selected as managers?Do all engineers want to be managers?

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Work of an Engineer As Technical Contributor

Understandobjectives of tasks specified

Develop action plan for implementation

Define standards (performance metrics)

Selectmethodology/techniques

Implementtask with proper effort

Generate results and secure value Reportfindings (impact, lessons)

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Tips for Engineers

Demonstrate Technical Competence & Innovativecapabilities

Brush Up Communications skills (ask, listen, writeand talk)

Showunfailing reliability to induce trust andconfidence

Be Proactive in seeking challenging tasks

Exhibitreadiness for assuming larger responsibilities(take courses, practice skills, gain experience)

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Typical Engineering Activities

Design/development of products/processes Project engineering/management

Value engineering and analysis

Technology development and R&D(laboratory, field)

Production/manufacturing and construction

Customer service

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Engineering Managers

Four Dimensional WorkWork with boss

EngineeringManager

Work withsubordinates

With self(Manage own

time)

Peers,Staff people

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Engineering Management Functions

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Engineering Management Functions

Planning(forecasting, setting objectives, action

planning, administering policies, establishing

procedure)

Organising (selecting organisational structure,delegating, establishing working relationship)

Leading (deciding, communicating, motivating,

selecting/developing people)

Controlling (setting performance standards,evaluating/documenting/correcting performance)

chapter 1 management theories

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