Evolution of Management Essay Example for Free

Evolution of Management Essay As long as there have been human endeavors, there have been people willing to take charge—people willing to plan, organize, staff, and control the work. One might say that nature abhors a vacuum and thus someone will always step forward to fill a leadership void. Probably the natural emergence of leadership grew out of our instinct for survival. In the hostile world of early humankind, food, shelter, and safety needs usually required cooperative efforts, and cooperative efforts required some form of leadership. Certainly leadership was vested in the heads of early families via the patriarchal system. The oldest member of the family was the most experienced and was presumed to be the wisest member of the family and thus was the natural leader. As families grew into tribes and tribes evolved into nations, more complex forms of leadership were required and did evolve. Division of labor and supervision practices is recorded on the earliest written record, the clay tablets of the Sumerians. In Sumerian society, as in many others since, the wisest and best leaders were thought to be the priests and other religious leaders. Likewise, the ancient Babylonian cities developed very strict codes, such as the code of Hammurabi. King Nebuchadnezzar used color codes to control production of the hanging gardens, and there were weekly and annual reports, norms for productivity, and rewards for piecework. The Egyptians organized their people and their slaves to build their cities and pyramids. Construction of one pyramid, around 5000 BC. , required the labor of 100,000 people working for approximately 20 years. Planning, organizing, and controlling were essential elements of that and other feats, many of them long term. The ancient Egyptian Pharaohs had long-term planners and advisors, as did their contemporaries in China. China perfected military organization based on line and staff principles and used these same principles in the early Chinese dynasties. Confucius wrote parables that offered practical suggestions for public administration. In the Old Testament, Moses led a group of Jewish slaves out of Egypt and then organized them into a nation. Exodus, Chapter 18, describes how Moses â€Å"chose able men out of all Israel and made them heads over the people, and differentiated between rulers of thousands, rulers of hundreds, rulers of fifties and rulers of tens. A system of judges also evolved, with only the hard cases coming to Moses. The city-states of Greece were commonwealths, with councils, courts, administrative officials, and boards of generals. Socrates talked about management as a skill separate from technical knowledge and experience. Plato wrote about specialization and proposed notions of a healthy republic. The Roman Empire is thought by many to have been so successful because of the Romans’ great ability to organize the military and conquer new lands. Those sent to govern the far-flung parts of the empire were effective administrators and were able to maintain relationships with leaders from other provinces and across the empire as a whole. There are numerous other ancient leaders who were skillful organizers, at least as indicated by their accomplishments, such as Hannibal, who shepherded an army across the Alps, and the first emperor of China, who built the Great Wall. Many of the practices employed today in leading, managing, and administering modern organizations have their origins in antiquity. Many concepts of authority developed in a religious context. One example is the Roman Catholic Church with its efficient formal organization and management techniques. The chain of command or path of authority, including the concept of specialization, was a most important contribution to management theory. Machiavelli also wrote about authority, stressing that it comes from the consent of the masses. However, the ideas Machiavelli expressed in The Prince are more often viewed as mainly concerned with leadership and communication. Much management theory has military origins, probably because efficiency and effectiveness are essential for success in warfare. The concepts of unity of command, line of command, staff advisors, and division of work all can be traced back at least to Alexander the Great, or even earlier, to Lao Tzu. The Industrial Revolution created a need for new thinking and the refinement of old thinking. Time and motion studies intensified the division of work, as did centralized production and research and development. Modern management theory prevails afterwards. The preceding historical review indicates that thinking about management and leadership is in large part situational and that practices evolved to deal with new situations that arose. It also indicates that yesterday’s principles and theories are surprisingly contemporary and surprisingly sophisticated. Some overlap occurs, of course, and some gaps. Today’s theorists have attempted to fill in the gaps and adapt the theories to current situations. Yet, like in other areas of thought, not much is of recent origin in the field of management theory. The Evolution of Management Changes in management practices occur as managers, theorists, researchers, and consultants seek new ways to increase organizational efficiency and effectiveness. The driving force behind the evolution of management theory is the search for better ways to utilize organizational resources. Advances in management theory typically occur as managers and researchers find better ways to perform the principal management tasks: planning, organizing, leading, and controlling human and other organizational resources. In this paper, we will try to examine how management theory concerning appropriate management practices has evolved in modern times, and look at the central concerns that have guided its development. First, we look into the so-called classical management theories that emerged around the turn of the twentieth century. These include scientific management, which focuses on matching people and tasks to maximize efficiency; and administrative management, which focuses on identifying the principles that will lead to the creation of the most efficient system of organization and management. Next, we consider behavioral management theories, developed both before and after the Second World War, which focus on how managers should lead and control their workforces to increase performance. Then we discuss management science theory, which developed during the Second World War and which has become increasingly important as researchers have developed rigorous analytical and quantitative techniques to help managers measure and control organizational performance. Finally, we discuss business in the 1960s and 1970s and focus on the theories that were developed to help explain how the external environment affects the way organizations and managers operate. At the end of this paper, one will understand the ways in which management theory has evolved over time. One will also understand how economic, political, and cultural forces have affected the development of these theories and the ways in which managers and their organizations behave. Figure 1. 1 summarizes the chronology of the management theories that are discussed in this paper. Scientific Management Theory The evolution of modern management began in the closing decades of the nineteenth century, after the industrial revolution had swept through Europe, Canada, and the United States. In the new economic climate, managers of all types of organizations—political, educational, and economic—were increasingly trying to find better ways to satisfy customers’ needs. Many major economic, technical, and cultural changes were taking place at this time. The introduction of steam power and the development of sophisticated machinery and equipment changed the way in which goods were produced, particularly in the weaving and clothing industries. Small workshops run by skilled workers who produced hand-manufactured products (a system called crafts production) were being replaced by large factories in which sophisticated machines controlled by hundreds or even thousands of unskilled or semiskilled workers made products. Owners and managers of the new factories found themselves unprepared for the challenges accompanying the change from small-scale crafts production to large-scale mechanized manufacturing. Many of the managers and supervisors had only a technical orientation, and were unprepared for the social problems that occur when people work together in large groups (as in a factory or shop system). Managers began to search for new techniques to manage their organizations’ resources, and soon they began to focus on ways to increase the efficiency of the worker–task mix. Job specialization and division of labor The famous economist Adam Smith was one of the first to look at the effects of different manufacturing systems. 7 He compared the relative performance of two different manufacturing methods. The first was similar to crafts-style production, in which each worker was responsible for all of the 18 tasks involved in producing a pin. The other had each worker performing only 1 or a few of the 18 tasks that go into making a completed pin. Smith found that factories in which workers specialized in only 1 or a few tasks had greater performance than factories in which each worker performed all 18 pin-making tasks. In fact, Smith found that 10 workers specializing in a particular task could, between them, make 48 000 pins a day, whereas those workers who performed all the tasks could make only a few thousand at most. Smith reasoned that this difference in performance was due to the fact that the workers who specialized became much more skilled at their specific tasks, and, as a group, were thus able to produce a product faster than the group of workers who each had to perform many tasks. Smith concluded that increasing the level of job specialization— the process by which a division of labour occurs as different workers specialize in different tasks over time—increases efficiency and leads to higher organizational performance. Based on Adam Smith’s observations, early management practitioners and theorists focused on how managers should organize and control the work process to maximize the advantages of job specialization and the division of labour. F. W. Taylor and Scientific Management Frederick W. Taylor (1856–1915) is best known for defining the techniques of scientific management, the systematic study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency. Taylor believed that if the amount of time and effort that each worker expended to produce a unit of output (a finished good or service) could be reduced by increasing specialization and the division of labour, then the production process would become more efficient. Taylor believed that the way to create the most efficient division of labour could best be determined by means of scientific management techniques, rather than intuitive or informal rule-of-thumb knowledge. This decision ultimately resulted in problems. For example, some managers using scientific management obtained increases in performance, but rather than sharing performance gains with workers through bonuses as Taylor had advocated, they simply increased the amount of work that each worker was expected to do. Many workers experiencing the reorganized work system found that as their performance increased, managers required them to do more work for the same pay. Workers also learned that increases in performance often meant fewer jobs and a greater threat of layoffs, because fewer workers were needed. In addition, the specialized, simplified jobs were often monotonous and repetitive, and many workers became dissatisfied with their jobs. Scientific management brought many workers more hardship than gain, and left them with a distrust of managers who did not seem to care about their wellbeing. These dissatisfied workers resisted attempts to use the new scientific management techniques and at times even withheld their job knowledge from managers to protect their jobs and pay. Unable to inspire workers to accept the new scientific management techniques for performing tasks, some organizations increased the mechanization of the work process. For example, one reason for Henry Ford’s introduction of moving conveyor belts in his factory was the realization that when a conveyor belt controls the pace of work (instead of workers setting their own pace), workers can be pushed to perform at higher levels—levels that they may have thought were beyond their reach. Charlie Chaplin captured this aspect of mass production in one of the opening scenes of his famous movie, Modern Times (1936). In the film, Chaplin caricatured a new factory employee fighting to work at the machine imposed pace but losing the battle to the machine. Henry Ford also used the principles of scientific management to identify the tasks that each worker should perform on the production line and thus to determine the most effective way to create a division of labour to suit the needs of a mechanized production system. From a performance perspective, the combination of the two management practices— (1) achieving the right mix of worker–task specialization and (2) linking people and tasks by the speed of the production line—makes sense. It produces the huge savings in cost and huge increases in output that occur in large, organized work settings. For example, in 1908, managers at the Franklin Motor Company redesigned the work process using scientific management principles, and the output of cars increased from 100 cars a month to 45 cars a day; workers’ wages increased by only 90 percent, however. From other perspectives, though, scientific management practices raise many concerns. The definition of the workers’ rights not by the workers themselves but by the owners or managers as a result of the introduction of the new management practices raises an ethical issue, which we examine in this â€Å"Ethics in Action. † Fordism in Practice From 1908 to 1914, through trial and error, Henry Ford’s talented team of production managers pioneered the development of the moving conveyor belt and thus changed manufacturing practices forever. Although the technical aspects of the move to mass production were a dramatic financial success for Ford and for the millions of Americans who could now afford cars, for the workers who actually produced the cars, many human and social problems resulted. With simplification of the work process, workers grew to hate the monotony of the moving conveyor belt. By 1914, Ford’s car plants were experiencing huge employee turnover—often reaching levels as high as 300 or 400 percent per year as workers left because they could not handle the work-induced stress. 15 Henry Ford recognized these problems and made an announcement: From that point on, to motivate his workforce, he would reduce the length of the workday from nine hours to eight hours, and the company would double the basic wage from US$2. 50 to US$5. 00 per day. This was a dramatic increase, similar to an announcement today of an overnight doubling of the minimum wage. Ford became an internationally famous figure, and the word â€Å"Fordism† was coined for his new approach. Ford’s apparent generosity was matched, however, by an intense effort to control the resources—both human and material—with which his empire was built. He employed hundreds of inspectors to check up on employees, both inside and outside his factories. In the factory, supervision was close and confining. Employees were not allowed to leave their places at the production line, and they were not permitted to talk to one another. Their job was to concentrate fully on the task at hand. Few employees could adapt to this system, and they developed ways of talking out of the sides of their mouths, like ventriloquists, and invented a form of speech that became known as the â€Å"Ford Lisp. † Ford’s obsession with control brought him into greater and greater conflict with managers, who were often fired when they disagreed with him. As a result, many talented people left Ford to join his growing rivals. Outside the workplace, Ford went so far as to establish what he called the â€Å"Sociological Department† to check up on how his employees lived and the ways in which they spent their time. Inspectors from this department visited the homes of employees and investigated their habits and problems. Employees who exhibited behaviours contrary to Ford’s standards (for instance, if they drank too much or were always in debt) were likely to be fired. Clearly, Ford’s effort to control his employees led him and his managers to behave in ways that today would be considered unacceptable and unethical, and in the long run would impair an organization’s ability to prosper. Despite the problems of worker turnover, absenteeism, and discontent at Ford Motor Company, managers of the other car companies watched Ford reap huge gains in efficiency from the application of the new management principles. They believed that their companies would have to imitate Ford if they were to survive. They followed Taylor and used many of his followers as consultants to teach them how to adopt the techniques of scientific management. In addition, Taylor elaborated his principles in several books, including Shop Management (1903) and The detail how to apply the principles of scientific management to reorganize the work system. Taylor’s work has had an enduring effect on the management of production systems. Managers in every organization, whether it produces goods or services, now carefully analyze the basic tasks that must be performed and try to devise the work systems that will allow their organizations to operate most efficiently. The Gilbreths Two prominent followers of Taylor were Frank Gilbreth (1868–1924) and Lillian Gilbreth (1878–1972), who refined Taylor’s analysis of work movements and made many contributions to time-and-motion study. Their aims were to (1) break up into each of its component actions and analyze every individual action necessary to perform a particular task, (2) find better ways to perform each component action, and (3) reorganize each of the component actions so that the action as a whole could be performed more efficiently—at less cost of time and effort. The Gilbreths often filmed a worker performing a particular task and then separated the task actions, frame by frame, into their component movements. Their goal was to maximize the efficiency with which each individual task was performed so that gains across tasks would add up to enormous savings of time and effort. Their attempts to develop improved management principles were captured—at times quite humorously—in the movie Cheaper by the Dozen, which depicts how the Gilbreths (with their 12 children) tried to live their own lives according to these efficiency principles and apply them to daily actions such as shaving, cooking, and even raising a family. Eventually, the Gilbreths became increasingly interested in the study of fatigue. They studied how the physical characteristics of the workplace contribute to job stress that often leads to fatigue and thus poor performance. They isolated factors— such as lighting, heating, the colour of walls, and the design of tools and machines—that result in worker fatigue. Their pioneering studies paved the way for new advances in management theory. In workshops and factories, the work of the Gilbreths, Taylor, and many others had a major effect on the practice of management. In comparison with the old crafts system, jobs in the new system were more repetitive, boring, and monotonous as a result of the application of scientific management principles, and workers became increasingly dissatisfied. Frequently, the management of work settings became a game between workers and managers: Managers tried to initiate work practices to increase performance, and workers tried to hide the true potential efficiency of the work setting in order to protect their own well-being. Administrative management theory Side by side with scientific managers studying the person–task mix to increase efficiency, other researchers were focusing on administrative management, the study of how to create an organizational structure that leads to high efficiency and effectiveness. Organizational structure is the system of task and authority relationships that control how employees use resources to achieve the organization’s goals. Two of the most influential views regarding the creation of efficient systems of organizational administration were developed in Europe. Max Weber, a German professor of sociology, developed one theory. Henri Fayol, the French manager who developed a model of management introduced earlier, developed the other. The Theory of Bureaucracy Max Weber (1864–1920) wrote at the turn of the twentieth century, when Germany was undergoing its industrial revolution. To help Germany manage its growing industrial enterprises at a time when it was striving to become a world power, Weber developed the principles of bureaucracy—a formal system of organization and administration designed to ensure efficiency and effectiveness. A bureaucratic system of administration is based on five principles (summarized in Figure 1. 2). †¢ Principle 1: In a bureaucracy, a manager’s formal authority derives from the position he or she holds in the organization. Authority is the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. Authority gives managers the right to direct and control their subordinates’ behaviour to achieve organizational goals. In a bureaucratic system of administration, obedience is owed to a manager, not because of any personal qualities that he or she might possess— such as personality, wealth, or social status—but because the manager occupies a position that is associated with a certain level of authority and responsibility. †¢ Principle 2: In a bureaucracy, people should occupy positions because of their performance, not because of their social standing or personal contacts. This principle was not always followed in Weber’s time and is often ignored today. Some organizations and industries are still affected by social networks in which personal contacts and relations, not job-related skills, influence hiring and promotional decisions. †¢ Principle 3: The extent of each position’s formal authority and task responsibilities, and its relationship to other positions in an organization, should be clearly specified. When the tasks and authority associated with various positions in the organization are clearly specified, managers and workers know what is expected of them and what to expect from each other. Moreover, an organization can hold all its employees strictly accountable for their actions when each person is completely familiar with his or her responsibilities. †¢ Principle 4: So that authority can be exercised effectively in an organization, positions should be arranged hierarchically, so employees know whom to report to and who reports to them. Managers must create an organizational hierarchy of authority that makes it clear who reports to whom and to whom managers and workers should go if conflicts or problems arise. This principle is especially important in the armed forces, CSIS, RCMP, and other organizations that deal with sensitive issues involving possible major repercussions. It is vital that managers at high levels of the hierarchy be able to hold subordinates accountable for their actions. †¢ Principle 5: Managers must create a well-defined system of rules, standard operating procedures, and norms so that they can effectively control behaviour within an organization. Rules are formal written instructions that specify actions to be taken under different circumstances to achieve specific goals (for example, if A happens, do B). Standard operating procedures (SOPs) are specific sets of written instructions about how to perform a certain aspect of a task. A rule might state that at the end of the workday employees are to leave their machines in good order, and a set of SOPs then specifies exactly how they should do so, itemizing which machine parts must be oiled or replaced. Norms are unwritten, informal codes of conduct that prescribe how people should act in particular situations. For example, an organizational norm in a restaurant might be that waiters should help each other if time permits. Rules, SOPs, and norms provide behavioural guidelines that improve the performance of a bureaucratic system because they specify the best ways to accomplish organizational tasks. Companies such as McDonald’s and Wal-Mart have developed extensive rules and procedures to specify the types of behaviours that are required of their employees, such as, â€Å"Always greet the customer with a smile. † Weber believed that organizations that implement all five principles will establish a bureaucratic system that will improve organizational performance. The specification of positions and the use of rules and SOPs to regulate how tasks are performed make it easier for managers to organize and control the work of subordinates. Similarly, fair and equitable selection and promotion systems improve managers’ feelings of security, reduce stress, and encourage organizational members to act ethically and further promote the interests of the organization. If bureaucracies are not managed well, however, many problems can result. Sometimes, managers allow rules and SOPs—â€Å"bureaucratic red tape†Ã¢â‚¬â€to become so cumbersome that decision making becomes slow and inefficient and organizations are unable to change. When managers rely too much on rules to solve problems and not enough on their own skills and judgment, their behaviour becomes inflexible. A key challenge for managers is to use bureaucratic principles to benefit, rather than harm, an organization. Fayol’s Principles of Management Working at the same time as Weber but independently of him, Henri Fayol (1841–1925), the CEO of Comambault Mining, identified 14 principles (summarized in Table 2. ) that he believed to be essential to increasing the efficiency of the management process. Some of the principles that Fayol outlined have faded from contemporary management practices, but most have endured. The principles that Fayol and Weber set forth still provide a clear and appropriate set of guidelines that managers can use to create a work setting that makes efficient and effective use of organizational resources. These principles remain the bedrock of modern management theory; recent researchers have refined or developed them to suit modern conditions. For example, Weber’s and Fayol’s concerns for equity and for establishing appropriate links between performance and reward are central themes in contemporary theories of motivation and leadership. Behavioural Management Theory The behavioural management theorists writing in the first half of the twentieth century all espoused a theme that focused on how managers should personally behave in order to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals. The â€Å"Management Insight† indicates how employees can become demoralized when managers do not treat their employees properly. Management Insight How to Discourage Employees Catherine Robertson, owner of Vancouver-based Robertson Telecom Inc. , made headlines in February 2001 for her management policies. Robertson is a government contractor whose company operates Enquiry BC, which gives British Columbians toll-free telephone information and referral services about all provincial government programs. Female telephone operators at Robertson Telecom must wear skirts or dresses even though they never come in contact with the public. Not even dress pants are allowed. As Gillian Savage, a former employee, notes, â€Å"This isn’t a suggested thing, it’s an order: No pants. † Brad Roy, another former employee, claims a female Indo-Canadian employee was sent home to change when she arrived at work wearing a Punjabi suit (a long shirt over pants). The no-pants rule is not the only concern of current and former employees. Roy also said, â€Å"I saw some people being reprimanded for going to the washroom. While Robertson denied Roy’s allegation regarding washrooms, she did confirm that company policy included the no-pants rule, that employees were not allowed to bring their purses or other personal items to their desks, and that they were not allowed to drink coffee or bottled water at their desks. The company does not provide garbage cans for the employees. A g roup of current and former employees recently expressed concern with the number of rules Robertson has in place, and claimed that the rules have led to high turnover and poor morale. A current employee claims that many workers do not care whether they give out the right government phone numbers. Robertson said that she knew of no employees who were discontent, and was shocked that the policies had caused distress among employees. She defended the dress code as appropriate business attire. Robertson may have to make some adjustments in her management style. The cabinet minister responsible for Enquiry BC, Catherine MacGregor, ordered an investigation of the contractor after being contacted by The Vancouver Sun about the allegations. She noted that the skirts-only rule for women is not appropriate, and that, â€Å"All of our contractors are expected to fully comply with the Employment Standards Act, Workers Compensation rules and human rights legislation. † Additionally, Mary-Woo Sims, head of the BC Human Rights Commission, said dress codes can’t be based on gender. Thus, an employer can’t tell men they must wear pants (as Robertson does), but tell women they can’t. â€Å"On the face of it, it would appear to be gender discriminatory,† Sims said. The Work of Mary Parker Follett If F. W. Taylor is considered to be the father of management thought, Mary Parker Follett (1868–1933) serves as its mother. 28 Much of her writing about management and about the way managers should behave toward workers was a response to her concern that Taylor was ignoring the human side of the organization. She pointed out that management often overlooks the multitude of ways in which employees can contribute to the organization when managers allow them to participate and exercise initiative in their everyday work lives. Taylor, for example, relied on time-and-motion experts to analyze workers’ jobs for them. Follett, in contrast, argued that because workers know the most about their jobs, they should be involved in job analysis and managers should allow them to participate in the work development process. Follett proposed that, â€Å"Authority should go with knowledge whether it is up the line or down. † In other words, if workers have the relevant knowledge, then workers, rather than managers, should be in control of the work process itself, and managers should behave as coaches and facilitators—not as monitors and supervisors. In making this statement, Follett anticipated the current interest in self-managed teams and empowerment. She also recognized the importance of having managers in different departments communicate directly with each other to speed decision making. She advocated what she called â€Å"cross-functioning†: members of different departments working together in cross-departmental teams to accomplish projects—an approach that is increasingly utilized today. Fayol also mentioned expertise and knowledge as important sources of managers’ authority, but Follett went further. She proposed that knowledge and expertise, and not managers’ formal authority deriving from their position in the hierarchy, should decide who would lead at any particular moment. She believed, as do many management theorists today, that power is fluid and should flow to the person who can best help the organization achieve its goals. Follett took a horizontal view of power and authority, in contrast to Fayol, who saw the formal line of authority and vertical chain of command as being most essential to effective management. Follett’s behavioural approach to management was very radical for its time. The Hawthorne Studies and Human Relations Probably because of its radical nature, Follett’s work was unappreciated by managers and researchers until quite recently. Instead, researchers continued to follow in the footsteps of Taylor and the Gilbreths. One focus was on how efficiency might be increased through improving various characteristics of the work setting, such as job specialization or the kinds of tools workers used. One series of studies was conducted from 1924 to 1932 at the Hawthorne Works of the Western Electric Company. This research, now known as the Hawthorne studies, began as an attempt to investigate how characteristics of the work setting—specifically the level of lighting or illumination—affect worker fatigue and performance. The researchers conducted an experiment in which they systematically measured worker productivity at various levels of illumination. The experiment produced some unexpected results. The researchers found that regardless of whether they raised or lowered the level of illumination, productivity increased. In fact, productivity began to fall only when the level of illumination dropped to the level of moonlight, a level at which presumably workers could no longer see well enough to do their work efficiently. The researchers found these results puzzling and invited a noted Harvard psychologist, Elton Mayo, to help them. Subsequently, it was found that many other factors also influence worker behaviour, and it was not clear what was actually influencing the Hawthorne workers’ behaviour. However, this particular effect— which became known as the Hawthorne effect—seemed to suggest that workers’ attitudes toward their managers affect the level of workers’ performance. In particular, the significant finding was that a manager’s behaviour or leadership approach can affect performance. This finding led many researchers to turn their attention to managerial behaviour and leadership. If supervisors could be trained to behave in ways that would elicit cooperative behaviour from their subordinates, then productivity could be increased. From this view emerged the human relations movement, which advocates that supervisors be behaviourally trained to manage subordinates in ways that elicit their cooperation and increase their productivity. The importance of behavioural or human relations training became even clearer to its supporters after another series of experiments—the bank wiring room experiments. In a study of workers making telephone switching equipment, researchers Elton Mayo and F. J. Roethlisberger discovered that the workers, as a group, had deliberately adopted a norm of output restriction to protect their jobs. Workers who violated this informal production norm were subjected to sanctions by other group members. Those who violated group performance norms and performed above the norm were called â€Å"ratebusters†; those who performed below the norm were called â€Å"chiselers. † The experimenters concluded that both types of workers threatened the group as a whole. Ratebusters threatened group members because they revealed to managers how fast the work could be done. Chiselers were looked down on because they were not doing their share of the work. Work-group members disciplined both ratebusters and chiselers in order to create a pace of work that the workers (not the managers) thought was fair. Thus, a work group’s influence over output can be as great as the supervisors’ influence. Since the work group can influence the behavior of its members, some management theorists argue that supervisors should be trained to behave in ways that gain the goodwill and cooperation of workers so that supervisors, not workers, control the level of work-group performance. One of the main implications of the Hawthorne studies was that the behavior of managers and workers in the work setting is as important in explaining the level of performance as the technical aspects of the task. Managers must understand the workings of the informal organization, the system of behavioural rules and norms that emerge in a group, when they try to manage or change behaviour in organizations. Many studies have found that, as time passes, groups often develop elaborate procedures and norms that bond members together, allowing unified action either to cooperate with management in order to raise performance or to restrict output and thwart the attainment of organizational goals. The Hawthorne studies demonstrated the importance of understanding how the feelings, thoughts, and behaviour of work-group members and managers affect performance. It was becoming increasingly clear to researchers that understanding behaviour in organizations is a complex process that is critical to increasing performance. Indeed, the increasing interest in the area of management known as organizational behaviour, the study of the factors that have an impact on how individuals and groups respond to and act in organizations, dates from these early studies. Theory X and Theory Y Several studies after the Second World War revealed how assumptions about workers’ attitudes and behaviour affect managers’ behaviour. Perhaps the most influential approach was developed by Douglas McGregor. He proposed that two different sets of assumptions about work attitudes and behaviours dominate the way managers think and affect how they behave in organizations. McGregor named these two contrasting sets of assumptions Theory X and Theory Y (see Figure 1. 3). THEORY X According to the assumptions of Theory X, the average worker is lazy, dislikes work, and will try to do as little as possible. Moreover, workers have little ambition and wish to avoid responsibility. Thus, the manager’s task is to counteract workers’ natural tendencies to avoid work. To keep workers’ performance at a high level, the manager must supervise them closely and control their behaviour by means of â€Å"the carrot and stick†Ã¢â‚¬â€rewards and punishments. Managers who accept the assumptions of Theory X design and shape the work setting to maximize their control over workers’ behaviours and minimize workers’ control over the pace of work. These managers believe that workers must be made to do what is necessary for the success of the organization, and they focus on developing rules, SOPs, and a well-defined system of rewards and punishments to control behaviour. They see little point in giving workers autonomy to solve their own problems because they think that the workforce neither expects nor desires cooperation. Theory X managers see their role as to closely monitor workers to ensure that they contribute to the production process and do not threaten product quality. Henry Ford, who closely supervised and managed his workforce, fits McGregor’s description of a manager who holds Theory X assumptions. THEORY Y In contrast, Theory Y assumes that workers are not inherently lazy, do not naturally dislike work, and, if given the opportunity, will do what is good for the organization. According to Theory Y, the characteristics of the work setting determine whether workers consider work to be a source of satisfaction or punishment; and managers do not need to control workers’ behaviour closely in order to make them perform at a high level, because workers will exercise selfcontrol when they are committed to organizational goals. The implication of Theory Y, according to McGregor, is that â€Å"the limits of collaboration in the organizational setting are not limits of human nature but of management’s ingenuity in discovering how to realize the potential represented by its human resources. It is the manager’s task to create a work setting that encourages commitment to organizational goals and provides opportunities for workers to be imaginative and to exercise initiative and self-direction. When managers design the organizational setting to reflect the assumptions about attitudes and behaviour suggested by Theory Y, the characteristics of the o rganization are quite different from those of an organizational setting based on Theory X. Managers who believe that workers are motivated to help the organization reach its goals can decentralize authority and give more control over the job to workers, both as individuals and in groups. In this setting, individuals and groups are still accountable for their activities, but the manager’s role is not to control employees but to provide support and advice, to make sure employees have the resources they need to perform their jobs, and to evaluate them on their ability to help the organization meet its goals. Henri Fayol’s approach to administration more closely reflects the assumptions of Theory Y, rather than Theory X. Management Science Theory This theory focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services. In essence, management science theory is a contemporary extension of scientific management, which, as developed by Taylor, also took a quantitative approach to measuring the worker–task mix in order to raise efficiency. There are many branches of management science; each of them deals with a specific set of concerns: Quantitative management utilizes mathematical techniques—such as linear and nonlinear programming, modelling, simulation, queuing theory, and chaos theory—to help managers decide, for example, how much inventory to hold at different times of the year, where to locate a new factory, and how best to invest an organization’s financial capital. Resources in the organizational environment include the raw materials and skilled people that an organization requires to produce goods and services, as well as the support of groups including customers who buy these goods and services and provide the organization with financial resources. One way of determining the relative success of an organization is to consider how effective its managers are at obtaining scarce and valuable resources. The importance of studying the environment became clear after the development of open-systems theory and contingency theory during the 1960s. The Open-Systems View One of the most influential views of how an organization is affected by its external environment was developed by Daniel Katz, Robert Kahn, and James Thompson in the 1960s. 38 These theorists viewed the organization as an open system— a system that takes in resources from its external environment and converts or transforms them into goods and services that are then sent back to that environment, where they are bought by customers (see Figure 1. 4). At the input stage, an organization acquires resources such as raw materials, money, and skilled workers to produce goods and services. Once the organization has gathered the necessary resources, conversion begins. At the conversion stage, the organization’s workforce, using appropriate tools, techniques, and machinery, transforms the inputs into outputs of finished goods and services such as cars, hamburgers, or flights to Hawaii. At the output stage, the organization releases finished goods and services to its external environment, where customers purchase and use them to satisfy their needs. The money the organization obtains from the sales of its outputs allows the organization to acquire more resources so that the cycle can begin again. The system just described is said to be â€Å"open† because the organization draws from and interacts with the external environment in order to survive; in other words, the organization is open to its environment. A closed system, in contrast, is a self-contained system that is not affected by changes that occur in its external environment. Organizations that operate as closed ystems, that ignore the external environment and that fail to acquire inputs, are likely to experience entropy, the tendency of a system to lose its ability to control itself and thus to dissolve and disintegrate. Management theorists can model the activities of most organizations by using the open-systems view. Manufacturing companies like Ford and General Electric, for example, buy inputs such as component parts, skilled and semiskilled labour, and robots and computer-controlled manufacturing equipment; then, at the conversion stage, they use their manufacturing skills to assemble inputs into outputs of cars and computers. As we discuss in later chapters, competition between organizations for resources is one of several major challenges to managing the organizational environment. Researchers using the open-systems view are also interested in how the various parts of a system work together to promote efficiency and effectiveness. Systems theorists like to argue that â€Å"the parts are more than the sum of the whole†; they mean that an organization performs at a higher level when its departments work together rather than separately. Synergy, the performance gains that result when individuals and departments coordinate their actions, is possible only in an organized system. The recent interest in using teams comprising people from different departments reflects systems theorists’ interest in designing organizational systems to create synergy and thus increase efficiency and effectiveness.