OLC EUROPE HND IN BUSINESS UNIT 3: ORGANISATIONS AND BEHAVIOUR APPROACHES TO MANAGEMENT THEORY

1. OLC EUROPE HND IN BUSINESS UNIT 3: ORGANISATIONS AND BEHAVIOUR APPROACHES TO MANAGEMENT THEORY

2. Aims and objectives Aim • To examine different approaches to management and theories of organisations Objectives • When you have completed this lesson you should be able to: • explore the various definitions of management. • describe the development of management theories • examine the functions of management,

3. Introduction • Organisations face a dilemma in the course of producing the goods and services that individuals and society either need or want. • The dilemma is – how do they reconcile the potential inconsistency between the needs and aspirations of individuals within an organisation on the one hand, and the collective purpose of the organisation on the other? • To reconcile these apparent differences requires ‘management’, the managing of resources in an organisation to ensure the achievement of the goals that the organisation has set itself.

4. CLASS ACTIVITY 1 • What do you understand by the term management? • Write your own definition of what management means to you.

5. Defining Management • There are numerous definitions of management, • Consider the definitions given here: ‘To manage is to forecast and plan, to organise, to command, to co-ordinate and to control.’ Henri Fayol (1916)

6. Henri Fayol (born 1841 in Istanbul; died 1925 in Paris) was a French management theorist • to forecast and plan –examine the future and draw up plans of action • to organise -build up the structure, material and human of the undertaking • to command-maintain activity among the personnel • to co-ordinate- bind together, unify and harmonise activity and effort • to control -see that everything occurs in conformity with policy and practise

7. Social Process • Management is a social process…the process consists of…planning, control, co-ordination and motivation.’ E.F.L. Brech (1957).

8. MANAGEMENT MODEL

9. Operational Process • ‘Managing is an operational process initially best dissected by analysing the managerial functions.’ • ‘The five essential managerial functions (are): planning, organising, directing and leading, and controlling.’ Koontz and O’Donnell (1976).

10. Scope of Management Functions

11. CLASS ACTIVITY 2 • In activity 1 you were asked to offer your own definition of management. Compare your definition to those given above. • Make notes to highlight the differences and the similarities between your definition and those of the early management ‘thinkers’.

12. CLASS ACTIVITY 3 • Looking at the definitions above, are there any elements of management that you feel are missing? You may well have already highlighted this in your comparison made between your definition and the others anyway. • To help your thought processes, consider whether these early management theorists were more focused on achieving the tasks of the organisation, or more focused on the needs of people in the organisation? Debate this with others in your group. We will return to this theme later, so use the space to record any notes.

13. ACTIVITY FEEDBACK • Earlier definitions of management concentrated on the achievement of the tasks of the organisation. • As you will see from Brech’s definition above, management thinking did start to consider the ‘human’ element of organisations from the second half of the twentieth century. • In bringing in the motivation element, Brech – with others – began the management movement that started to include a focus on the significance of individual people within organisations.

14. The Development of Management Thought Different approaches to management or management theories have evolved over time. The management theories examined in this section are: • Scientific management • The classical approach • Bureaucracy • The human relations approach • The systems approach • The contingency approach

15. Scientific Management Scientific Management – ‘is a systematic method of determining the best way to do a job and specifying the skills needed to perform it’. The development of management as a science is generally attributable to one particular nineteenth century man- F. W. Taylor . This ‘father’ of Scientific Management developed much of the science of management, which is still prevalent in some aspects of management thinking today Frederick Winslow Taylor (1856 -1917) An American Inventor and Engineer

16. Taylor’s science was built around minute observation of the best way that a task could be undertaken and completed. • Once the best way had been established, Taylor believed that workers could then be made to follow this best way in a completely prescribed manner.

17. ‘Taylorism was based on the notion that there was a single ‘best way’ to fulfil a particular job; and that then it was a matter of matching people to the task and supervising, rewarding and punishing them according to their performance. The job of management was to plan and control the work.’ Crainer (1996)

18. In effect, Taylor was seeking to dehumanise work, and in doing so he paved the way for the emergence of mass production techniques of work. • Such approaches became synonymous with companies like Ford and General Motors after Taylor’s death.

19. ACTIVITY 4 • What do you think of the Taylor rule that there was ‘one right way’? • identify six reasons why this principle wouldn’t be satisfactory in the business world today. • identify six advantages of the ‘one right way’ principle.

20. ACTIVITY FEEDBACK As you complete the remainder of this module keep in mind this ‘one right way’ principle. Return to this activity frequently and add to both of they lists you have made. You will find – as the module progresses – that there are arguments both for and against this Taylor principle

21. Taylor’s five principles of Scientific Management (Taylor 1913) 1. A clear division of tasks and responsibilities between management and workers. 2. Use of scientific methods to determine the best way of doing a job. 3. Scientific selection of the person to do the newly designed job. 4. The training of the selected worker to perform the job in the way specified. 5. Enthusiastic co-operation of the workers to ensure that the work was performed in accordance with scientific management principles and this was secured by the use of economic incentives.

22. Later writers in the development of the ‘Taylorism’ scientific management Lillian and Frank Gilbreth- • refined and developed the techniques for measuring work to a higher level of precision. • Introduced a comprehensive system of noting actions Henry Gantt- • he humanised the methodology in order to make it more acceptable proposal for fair dealings with workers. • modified the piece rate system of payment with a day rate plus performance bonus system. • developed the Gantt chart – a visual display to show the sequencing of activities over time. Henry Ford- applied the scientific management theory in his business

23. Classical Administration method ofManagement • It concerns how to structure an organisation • The proponents are practising managers. • This movement sought to create a management structure that most efficiently achieves management goals. • The theory is called classical, said Baker (1972) because it attempted to offer simple principles that claimed a general application • Henri Fayol is the leading contributor to this classical management school of thought

24. Henri Fayol (1841 – 1925) the Frenchman Henri Fayol was a leading exponent of the scientific management movement.

25. Henri Fayol’s 14 Principles of Management • Division of work • Authority and responsibility • Discipline – • Unity of command • Unity of direction • Subordination of individual interest to general interest – • Remuneration of personnel • Centralisation • Line of authority –. • Order • Equity – • Stability of tenure of personnel • Initiative • Esprit de corps –

26. Although developed some eighty years ago, Fayol’s list of managerial activities remains broadly intact in today’s businesses. • Only minor modifications have been used to those management elements that he identified earlier in the twentieth century

27. ACTIVITY • Discuss with a colleague and compare and contrast the approaches to scientific management as advocated by Taylor and by Fayol. • In what ways do their thoughts mirror each other? • In what ways do their thoughts actually conflict?

28. Bureaucracy • Bureaucracy is a form of organisational design and hence management method that stresses the definition of roles and the relationships between one another. • this method of organisation and management has largely dominated modern organisations, • Bureaucracy literally means ‘rule by office or by officials’. • Max Weber is considered to be the main exponent of the concept, from the studies he carried out into power and authority in organisations.

29. KEY POINT • Power – the ability to get things done at work by threats or through force. • Authority – managing to get things done because others saw one’s orders as just or legitimate

30. Weber’s ‘ideal Type’ bureaucracy • The bureaucratic form of organisation has the following characteristics: 1. Job specialisation. 2. Authority hierarchy. 3. Formal rules and regulations. 4. Impersonality. 5. Formal selection. 6. Career orientation

31. The Human Relations Approach • this school of thought paid attention to the social factors at work and to the motivation and behaviour of workers. • The human relations approach also focuses on the social relations in the organisation. • Elton Mayo Hawthorne Studies • human behaviour emphasises • human relations approach Professor Elton Mayo- Harvard university

32. Conclusions of Hawthorne Studies • The conclusions that can be drawn from the Hawthorne Studies and from other similar experiments that were carried out at this time are many: • The importance of developing human potential is a fundamental part of work in organisations • Individuals need to be given the opportunity to influence their work environment • Individuals need to be provided with interest and challenges in their work • Each individual has unique and complex needs

33. The Systems Approach • This approach encourages managers to view the organisation both as a whole, and also as part of the larger business environment. • The systems approach looks beyond the organisation just as a closed internally focused system. • The organisation interacts with other systems in the environment and this will affect the way that it works, and in turn, performs. • For example, a business interacts with its customers, suppliers, national and local governments, and pressure groups. In turn the organisation is affected by social, economic, political and other changes.

34. The systems Approach • To function effectively, the organisation must always take account of the environment in which they are operating and change continuously to match up to this environment. • This influence of the environment was first recognised by the systems theorists.

35. Below highlights how organisations – based on the systems approach – are made up of many inputs, processes and outputs Inputs process Output

36. The Contingency Approach • It can be argued that Fayol and Taylor treated organisations as if they were devoid of people. • The human relations school of thinking moved the emphasis to that of people in the organisation. • The systems approach looked at the way in which the organisation ‘system’ transforms inputs into outputs within the business environment being faced.

37. The Contingency Approach • The contingency theorists based their views on studies of a number of organisations to show that structures and methods of operating should depend on the circumstances and situation in which the organisation is operating. • They propsosed the best- fit -approach

38. The best-fit approach, shown below matches the three elements of a business together and suggests that concentration or emphasis for each of the elements will be determined by the existing conditions faced by the organisation

39. The Functions of Management • Management can be further defined as ‘the facility for getting things done through people who are working in co-operation with each other.’ • The role of management – it can be argued – is to give a lead and to provide direction and purpose