Theories of Management

Scientific Management

- Frederick Winston Taylor father of “Taylorism”

o Taylorism is one of the oldest theories of management and most successful
management theories
o Taylorism involved the study of work habits of labourers
o Taylors Four Principles
 1. Develop a science for each element of work, includes rules of
motion, standardised work processes and proper working conditions
 Motion – used to describe tasks,
 2. Carefully select workers with the right abilities for the job
 3. Carefully train workers to do the job and give proper incentives to
cooperate
 4. Support workers by planning their work and by smoothing their
way as the go about their job
o Time Study
 Observation of the amount of time required for ‘good’ employees to
complete a task
- Frank and Lilian Gilbreths
o Using the principles of ‘Taylorism’, the Gilbreths could increase productivity
in employees by eliminating unnecessary motions
o Motion Study
 The observation of motion of employees when completing tasks. This
includes body language and method used to complete task
- Henry Gantt
o Taylor’s prodigy and associate
o Introduced scheduled work and producing time charts and planning activities
o Providing managers with detailed planning information
o Rewarding performing employees with incentives resulted in doubling
productivity
o Rewarding training
(Examinable?)
Bureaucratic Management

- Managing power based on person’s knowledge, expertise or experience

- Hiring based on individual’s qualification
- Promotions (merit) are based on employees actual performance rather than
relationships with managers/owners
- Impartial rules and procedures
- Max Weber
o Introduced bureaucratic management to counter the promotions and
leadership that were achieved through virtue of bitch rather than
performance

Administrative Management

- Clear division of labour

- Delegation of power and authority to administrators to their areas of responsibility
- Hierarchy approach to management
- Henri Fayol
o Developed 14 principles of management from his position as managing
director of mining firm
Behavioural Management

- Marry Parker Follet

o Developed an understanding of groups in the workplace
o Created understanding that manager’s job is help the cooperation of
employees to improve productivity
o Follet developed 3 responses to conflict, leading to the creation of
constructive conflict
 1. Dominance – conflict with one ‘winner’, works in short term but
leads to long term unproductivity
 2. Compromise – each side sacrifices something to reduce the conflict
between parties. Not ideal, leaves parties feeling unsatisfied due to
giving up something of value
 3. Integration – Neither party sacrificing something of value but rather
both desires are satisfied. Most ideal, creates unity and improves
worker productivity
- Elton Mayo
o Contributed to Hawthorne Studies
 Hawthorne studies researched how physical characteristics of work
settings affect worker fatigue and performance
 Discovered the “Hawthorne effect” which led to the human relations
movement
 Illumination Study
o Experiment that observed people’s behaviour towards
altering the environment (lighting)
 Test Room study
o Observation of the relationships between employees
and supervisors leading to increased quality and
participation of workers
 Interviewing Program
o Influence of people with power on lower employees
o Workers were told their opinions mattered, leading to
the increase of positive attitude towards the company
o Hawthorne studies showed the importance of people’s feelings, relationships
with co-workers and work groups
- Theory X
o Workers are lazy and must be supervised
- Theory y
o Workers are self-controlled and are committed to their goals
o Managers role is to support employees rather than control employees
Modern Theories to Management

- Modern management believes that no one model or theory can be applicable

universally, but rather integrations of all theories and models
- Modern management sees people as complex and unique, and managers should
engage and respond differently to differences of employees, rather than generic
approaches.
- Two approaches to modern management:
o Systems approach
 The organisation is a set of interrelated and interdependent parts
 Treats the organisation/business as a system.
 The system can be closed or open (majority are open)
 Open systems are those affected and interact with the
environment by inputs and outputs
o Feedback loops are important in opens systems as they
provide information by connecting the inputs and
outputs
 Closed systems are not affected by the environment
o Contingency approach
 Management effectiveness is contingent upon the application of
management behaviours and situations.
 Managerial responses should vary on environments and situations,
rather than following one structure
 One structure may work for one organisation, but may not work for
another, as well as its effectiveness in the future.
Managing in and beyond Corporations

Environment

- The environment impacts businesses performance through changes such as taxes,

customer demands and costs relating the business
- General Environment
o Consists of all background conditions in the external environment of an
organisation and forms the general context for managerial decision making
o Comprises of cultural, economic, legal-political and educational conditions

-
Specific
Environment
o The people and groups with whom the organisation interact with and is
impacted by the performance of the organisation
o Often in terms of stakeholders
 Stakeholders – a person/group/institution who takes interest and is
affected by the performance of an organisation
 - Environmental Uncertainty
o Lack of complete information about the environment
o High uncertainty requires:
 Management needs to direct more attention towards external
environment
 Needs greater flexibility and adaptability within the organisation

Competitive Advantage

- A competitive advantage allows an organisation to deal with the environment better

than its competitors
- Conditions or changes in the environment that puts a business in a favourable
position
- Companies need capabilities to compete and thrive
o Strategic capabilities – those that are difficult to replicate, are valuable to
customers, and are better than those possessed by the majority of
competitors
o Dynamic capabilities – physical (e.g. location, equipment), organisational
(e.g. high performance team) and human (e.g. knowledge and expertise in a
specialised field)

Stakeholder vs Shareholder perspective

- Shareholder Theory
o Businesses only have one social responsibility that is to use available
resources to engage in activities to increase its profits, as long as it engages in
open and free competitions without deception or fraud
- Stakeholder Theory
o Business have social responsibilities, but managers should balance the
financial interests of shareholders with employees, customers and the local
community, even if this reduces shareholder returns
Power in Management

- Power is the degree to influence other who are in a state of dependence

Sources of Power
o Legitimate
 Power obtained from certain roles and can request behaviours of
others
 Job descriptions and mutual agreement from those expected to abide
by this authority
 Legitimate power range
o Reward
 Ability of a person to control the allocation of rewards/incentives and
to remove negative sanctions
 E.g. incentives include salary increments, appraisals and
promotions
o Coercive
 Power derived from a persons’ ability to punish, threaten or sanction
others.
 E.g. peer pressure
 Can occur both upward as well as downward
o Expert
 Power derived from possessing knowledge or expertise in a particular
field.
 Highly valued by businesses
 Expert power usually leads to legitimate power
o Referent
 Power derived from the interpersonal relationship that person
cultivates with others
 Associated with charismatic leadership

- The most effective base of power is expert power

o Provides the strongest relationships for job performance and satisfaction
o Transfers skills and knowledge within the organisation
o Employees learn from these leaders as they are considered ‘experts’
o E.g. Teachers, lecturers
Symbols of Power

- Kanter’s Symbols of Power

o Ability to intervene for someone who is in trouble
o Ability to get placements for favoured employees
o Exceeding budget limits
o Obtaining above-average raises for employees
o Getting items on the agenda at meetings
o Early access to information
o Top managers seek their opinion
- Kanter’s Symbols of Powerlessness

- Korda’s Symbols of Power

o More people inconvenience themselves on your behalf than you
inconvenience yourself on their behalf
o Tangible symbols of power
 Furniture (physically useful, conveys powers), locked file
cabinets/safes (important/confidential information), rectangular table
with the most important figure at head of table
 Time power - both tangible (watches, clocks) as well as intangible
(schedules, limited time meetings)
 Watches that more basic indicates the more powerful the
individual is.
 Limited time
 Standing by – people can be reached at any time of your discretion,
imposing your schedule on other people
- Difference between Korda and Kanter
o Kanter focuses on the ability to help people
o Korda focuses on a persons’ status and prestige
- Zone of Indifference – the range of which requests of people are perceived as
legitimate and will be acted without a great deal of thought

Dark Side of Power

- Power does not corrupt, but is rather the psychological experience with power and
moral identity that corrupt.
o Those with moral awareness increase their awareness with power
o Those with weak moral identity decrease moral awareness
 o Thus, moral awareness affects how they behave in relation to power
Planning, Organising, Leading and Controlling
Managing Information and Decision-making

Big Data
- Large influx of data around the world and its economical relevance to businesses
have increased over the years
- 5 ways to leverage Big Data
o 1. Unlocking significant value and efficiency by making information
transparent
o 2. Creation and storage of transactional data can expose variability and boost
performance
o 3. Narrower segmentation of customers
o 4. Improved decision making process, minimising risks, and unearthing
insights
o 5. Using data to develop next-gen products and servicing
- Big data help businesses analyse and understand how to organise the business based
on data obtained from other businesses. This can reduce costs as well as set-up
times for many businesses

Knowledge Management

- The process of using intellectual capital for competitive advantage

o Intellectual capital includes patents, intellectual property, trade secrets,
business processes
- Explicit knowledge is knowledge that is shared with the public through dialogue,
demonstration or media

Learning Organisation

- A learning organisation is one that continuously changes and improves using the
lessons of experience
- Key factors
o Mental models
o Personal mastery
o Systems thinking
o Share vision
o Team learning

Organisational Ambidexterity

- Exploitation: using and maximising current resources and capabilities efficiently

- Exploration: searching for, acquiring, and developing new resources and capabilities
for the organisation
- Ambidextrous organisations balance both exploration and exploitation to meet
demands and adapt to changes within the environment
Decision Making

- The process of specifying the nature of a problem or opportunity and selecting

between options to solve the problem or capture the opportunity
- Types of managerial problems

- Types of decisions
o Programmed decisions
 Structured or recurring
 Personal – daily routines
 Organisational – standard operating procedure
 Apply solutions from experience to a routine problem
o Non-programmed decisions
 Unstructured and occur less often
 Person – job choice
 Organisational – crisis management
 Apply specific solutions crafted for a unique problem

- Decision making conditions

o Certain environment – offers complete information on possible action
alternatives and their consequences
o Risk environment – lacks complete information but offers probabilities of the
likely outcomes for possible action alternatives
o Uncertain environment – lacks so much information it is difficult to assign
probabilities to the likely outcome of alternatives

- Approaching Decisions
o Problem avoiders – ignore information, are inactive and do not want to make
decisions and deal with problems
o Problem solvers – willing to make decisions and solve problems, but they are
reactive
 o Problem seekers – actively process information and constantly look for
problems to solve or opportunities to explore. True problem seekers are
proactive
o Managers differ their approach to decision making depending on whether to
use systematic thinking or intuitive thinking
 Systematic thinking – approaches problems with rational and
analytical fashion
 Intuitive thinking – approaches problems in flexible and spontaneous
fashion
- Rational decision-making process

- Behavioural influences
- Individual and group decision-making
o Group pressure for consensus overwhelm the rational evaluations of options
o Characteristics of group think
 Illusions of invulnerability
 Negative stereotyping of others
 Pressure on deviant members
 Illusions of group morality
 Self-censorship