Historical foundations of management Dr Bagus Nurcahyo Program

Historical foundations of management Dr. Bagus Nurcahyo Program Studi Manajemen Pemasaran Direktorat Program D 3 Bisnis & Kewirausahaan Bn. R-Peng. Manajemen-Chap-4 1

Historical foundations of management Ø Study questions – What can be learned from classical – – management thinking? What ideas were introduced by the human resource approaches? What is the role of quantitative analysis in management? What is unique about the systems view and contingency thinking? What are continuing management themes of the 21 st century? Bn. R-Peng. Manajemen-Chap-4 2

Major schools of management thought 1. Classical management approaches – 2. Developing universal principles for use in various management situations. Behavioural management (or human resource) approaches – Human needs, the work group and social factors in the workplace. Bn. R-Peng. Manajemen-Chap-4 3

Major schools of management thought 3. Quantitative management approaches – Use of mathematical techniques for management problem solving. 4. Modern approaches – Systems and contingency views of organisations. Bn. R-Peng. Manajemen-Chap-4 4

What can be learned from classical management thinking? Ø Classical approaches to management include: – Scientific management – emphasizes careful selection & training of workers, & supervisory support – Administrative principles – based on attempts to document & understand the experiences of successful managers – Bureaucratic organisation – is a rational & efficient organisation founded on logic, order & legitimate authority Bn. R-Peng. Manajemen-Chap-4 5

What can be learned from classical management thinking? Ø I. Scientific management (Frederick Taylor) “Father of scientific management” – Design jobs properly, standardised work processes and proper working conditions for every job. – Carefully select workers with the right abilities for the job. – Carefully train workers to do the job and provide proper incentives. – Support workers by carefully planning their work and removing obstacles. Bn. R-Peng. Manajemen-Chap-4 6

What can be learned from classical management thinking? Ø Scientific management (the Gilbreths) Frank & Lillian – Motion study • Science of reducing a job or task to its basic physical motions • Eliminating wasted motions improves performance. Bn. R-Peng. Manajemen-Chap-4 7

Scientific management • Henry Gantt’s contributions, which include: • (a) an innovative task and bonus wage scheme in which workers and supervisors received bonuses for exceeding standards; • (b) the Gantt chart which graphically depicts the scheduling of tasks required to complete a project. Bn. R-Peng. Manajemen-Chap-4 8

What can be learned from classical management thinking? Ø II. Administrative principles (Henri Fayol) – Rules of management • Foresight — to complete plan of action for the future • Organisation — to provide and mobilise resources to implement the plan • Command — to lead, select and evaluate workers to get the best work towards the plan • Coordination — to fit diverse efforts together, ensure information is shared and problems solved • Control — to make sure things happen according to plan and to take necessary corrective action. Bn. R-Peng. Manajemen-Chap-4 9

What can be learned from classical management thinking? Ø Administrative principles (Henri Fayol) – Key principles of management • Scalar chain - there should be a clear and unbroken line of communication from the top to the bottom of the organisation • Unity of command - each person should receive orders from only one boss. • Unity of direction - one person should be in charge of all activities that have the same performance objective Bn. R-Peng. Manajemen-Chap-4 10

What can be learned from classical management thinking? Ø Administrative principles (Mary Parker Follett) – - Her insights about groups and human cooperation include the following: • Groups are mechanisms through which individuals could combine their talents for a greater good. • Organisations as cooperating ‘communities’ of managers and workers • The manager’s job is to help people in the organisation cooperate and achieve an integration of interests. Bn. R-Peng. Manajemen-Chap-4 11

What can be learned from classical management thinking? Ø Administrative principles (Mary Parker Follett) – Forward-looking management insights • Employee ownership creates sense of collective responsibility (precursor of employee ownership, profit sharing and gain sharing). • Business problems involve a variety of interrelated factors (precursor of systems thinking). • Private profits relative to public good (precursor of managerial ethics and social responsibility). Bn. R-Peng. Manajemen-Chap-4 12

What can be learned from classical management thinking? Ø III. Bureaucratic organisation (Max Weber) – Bureaucracy • An ideal, intentionally rational and very efficient form of organisation. • Based on principles of logic, order and legitimate authority. Bn. R-Peng. Manajemen-Chap-4 13

What can be learned from classical management thinking? Ø Characteristics of bureaucratic organisations: – Clear division of labor – Clear hierarchy of authority – Formal rules and procedures – Impersonality – Careers based on merit. Ø Possible disadvantages of bureaucracy: – Excessive paperwork or ‘red tape’ – Slowness in handling problems – Rigidity in the face of shifting needs – Resistance to change – Employee apathy. Bn. R-Peng. Manajemen-Chap-4 14

What ideas were introduced by the human resource approaches? Ø Behavioural management (or human resource) approaches include: – Hawthorne Studies – Maslow’s theory of human needs – Mc. Gregor’s Theory X and Theory Y – Argyris’s theory of adult personality. Bn. R-Peng. Manajemen-Chap-4 15

What ideas were introduced by the human resource approaches? Ø I. Hawthorne Studies conducted by Elton Mayo – Initial study examined how economic incentives and physical conditions at workplace affected worker output – No consistent relationship found Bn. R-Peng. Manajemen-Chap-4 16

What ideas were introduced by the human resource approaches? Ø Hawthorne Studies – 2. Relay assembly test-room studies • Manipulated physical work conditions to assess impact on output • Designed to minimise the ‘psychological factors’ of previous experiment • Group atmosphere and participative supervision accounted for increased productivity. Bn. R-Peng. Manajemen-Chap-4 17

What ideas were introduced by the human resource approaches? Ø Hawthorne Studies – 3. Employee attitudes, interpersonal relations and group processes • Some things satisfied some workers but not others. • People restricted output to adhere to group norms. – Lessons of the Hawthorne Studies • People’s feeling, attitude & relationships with coworkers influence performance • Hawthorne effect — people who are singled out for special attention perform as expected. Bn. R-Peng. Manajemen-Chap-4 18

What ideas were introduced by the human resource approaches? Ø II. Maslow’s theory of human needs – A need is a physiological or psychological deficiency a person feels compelled to satisfy. – Need levels • • • Physiological Safety Social Esteem Self-actualisation. Bn. R-Peng. Manajemen-Chap-4 19

What ideas were introduced by the human resource approaches? Ø Maslow’s theory of human needs – Deficit principle • People act to satisfy “deprived” needs CONTRARY a satisfied need is not a motivator of behaviour. – Progression principle • A need becomes a motivator once the preceding lower-level need is satisfied. Bn. R-Peng. Manajemen-Chap-4 20

What ideas were introduced by the human resource approaches? III. Douglas Mc. Gregor Ø Mc. Gregor’s Theory X assumes that workers: – – – dislike work lack ambition are irresponsible resist change prefer to be led. Ø Mc. Gregor’s Theory Y assumes that workers are: – willing to work – capable of self-control – willing to accept responsibility – imaginative and creative – capable of self-direction. Bn. R-Peng. Manajemen-Chap-4 21

What ideas were introduced by the human resource approaches? Ø Mc. Gregor’s Theory X and Theory Y – Managers create self-fulfilling prophecies. (that is, through their behaviour they create situations where subordinates act to confirm their expectations) – How do managers create positive self – fulfilling prophecy? Bn. R-Peng. Manajemen-Chap-4 22

What ideas were introduced by the human resource approaches? Ø IV. Chris Argyris’s theory of adult personality – Classical management principles and practices discourage worker independence and are inconsistent with the mature adult personality. – Management should accommodate the mature personality. Bn. R-Peng. Manajemen-Chap-4 23

What ideas were introduced by the human resource approaches? Ø Argyris’s theory of adult personality – Management practices consistent with the mature adult personality: • Increasing task responsibility • Increasing task variety • Using participative decision making. Bn. R-Peng. Manajemen-Chap-4 24

What is the role of quantitative analysis in management? Ø 1. Management science (operations research) foundations – Scientific application of mathematical techniques to management problems – Techniques and applications include: • Mathematical forecasting - for making future projections that are useful in the planning process. • Inventory modeling - for helping to control inventories by establishing how much to order and when • Linear programming - for determining how to best allocate scarce resources among competing uses Bn. R-Peng. Manajemen-Chap-4 25

What is the role of quantitative analysis in management? • Queuing theory - for allocating service personnel or workstations to minimise customer waiting time and service cost • Network models - for breaking large tasks into smaller components to allow for better analysis, planning, and control of complex projects. • Simulations - for developing models of problems so different solutions under various assumptions can be tested. Bn. R-Peng. Manajemen-Chap-4 26

What is the role of quantitative analysis in management? Ø Quantitative analysis today – Use of staff specialists to help managers apply techniques – Software and hardware developments have expanded potential quantitative applications to managerial problems. – Good managerial judgement and appreciation for human factors must accompany use of quantitative analysis. Bn. R-Peng. Manajemen-Chap-4 27

What is unique about the systems view and contingency thinking? According to the modern approaches to management: - people have multiple and varied needs and talents that change over time - therefore organisation & managers should respond to individual differences with a wide variety of managerial strategies and job opportunities Bn. R-Peng. Manajemen-Chap-4 28

What is unique about the systems view and contingency thinking? Ø Systems thinking – System • Collection of interrelated parts that function together to achieve a common purpose – Subsystem • A smaller component of a larger system – Open system • An organisation that interacts with its environments in the continual process of transforming resource inputs into outputs. Bn. R-Peng. Manajemen-Chap-4 29

What is unique about the systems view and contingency thinking? Ø Contingency thinking – Tries to match managerial responses with problems and opportunities unique to different situations – No ‘one best way’ to manage, managers need to understand situational differences & respond to them in appropriate ways – Most appropriate way to manage depends on the situation. – IF = THEN Bn. R-Peng. Manajemen-Chap-4 30

What are continuing management themes of the 21 st century? Ø 1. Quality and performance excellence – Managers and workers in progressive organisations are quality conscious. – Total quality management (TQM) • Comprehensive approach to continuous quality improvement for a total organisation • Creates context for the value chain (a specific sequence of activities that transform raw materials into a finished good or services) Bn. R-Peng. Manajemen-Chap-4 31

What are continuing management themes of the 21 st century? Ø Eight attributes of performance excellence: 1. Bias towards action - making timely decisions and getting things done 2. Closeness to the customer - knowing customer needs and valuing customer satisfaction. 3. Autonomy and entrepreneurship supporting innovation, change, and risk taking. Bn. R-Peng. Manajemen-Chap-4 32

4. Productivity through people - valuing human resources as keys to quality and performance. 5. Hands-on and value-driven - having a clear sense of organisational purpose. 6. Sticking to the knitting - focusing resources and attention on what the organisation does best. 7. Simple form and lean staff - minimising levels of management and staff personnel. 8. Simultaneous loose-tight properties allowing flexibility while maintaining control. Bn. R-Peng. Manajemen-Chap-4 33

What are continuing management themes of the 21 st century? Ø 2. Global awareness – Pressure for quality and performance excellence is created by a highly competitive global economy. – Has fostered increasing interest in new management concepts: • • Process reengineering – process redesign Virtual organisations Agile factories Network firms – Adoption of Theory Z management practices. Bn. R-Peng. Manajemen-Chap-4 34

What are continuing management themes of the 21 st century? • Theory Z – describes a management framework emphasising long-term employment & teamwork, attention to career planning , employee involvement, that are found in the Japanese models. Bn. R-Peng. Manajemen-Chap-4 35

What are continuing management themes of the 21 st century? Ø 3. Learning organisation Ø Contemporary businesses must learn to become learning organisations. Ø These are organisations operating with values and systems that result in continuous change and improvement based on the lessons of experience. Bn. R-Peng. Manajemen-Chap-4 36

What are continuing management themes of the 21 st century? Ø Learning organisation success depends on: – culture that emphasises information, teamwork, empowerment, participation and leadership – special leadership qualities Ø The 21 st century manager must be: – a global strategist – a master of technology – an effective politician – an inspiring leader. Bn. R-Peng. Manajemen-Chap-4 37