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HISTORY OF
MANAGEMENT
“Those who cannot learn from history are doomed to repeat it.”
—George Santayana
26
CH A P T ER
1 Explain the role of the Industrial Revolution in the development
of managerial thought and identify the captains of industry and
their role in management’s evolution.
2
3 Identify and explain the human relations movement.
the financial targets that he needed to; otherwise he manager now, and he wondered what kind of manager
wouldn’t have kept his job, thought Tony, but Jerry was he should be.
always taking the time to work with his staff. He was
hardly ever in his office—not that you could call the QUESTIONS
broom closet in the back of the kitchen an office. Jerry 1. Why should Tony be concerned about establish-
was always out in the kitchen working with the chefs ing his own style of management in the Taco
or in the dining room, working with the servers before Barn?
opening and checking on customers once the restau- 2. Which management style do you like better—
rant was open. Jerry’s or Dawn’s? Why?
Tony suddenly realized that he would have to 3. Do you think Tony will choose Jerry’s style or
establish his own style of management now that he Dawn’s? Why?
would be in charge of the restaurant. He had filled in 4. If you are currently in a management role, how
for Jerry when he was on vacation a couple of times, would you describe your style? If you are working
but then he was really just minding the store until Jerry toward a management position, do you think you
came back. This time was different—Tony was the would be more like Dawn or Jerry? Why?
27
CAPTAINS OF INDUSTRY
Once industrialization began, it continued at a rapid pace. By the end of
the nineteenth century, the economy had shifted from being mainly ag-
ricultural to being heavily involved with manufactured goods and in-
dustrial markets.2
figure 2.1 • First female member of the Society of Industrial Engineers (1921).
LILLIAN M. GILBRETH: • First female member of the American Society of Mechanical Engineers.
FIRST LADY OF • First female selected to attend the National Academy of Engineering.
MANAGEMENT • First woman to receive the degree of Honorary Master of Engineering
Source: From Daniel A. Wren, (University of Michigan).
Evolution of Management
Thought, 4/e, 1994, p. 143. • First female professor of management at an engineering school (Purdue
Reprinted with permission of University, 1935).
John Wiley & Sons, Inc.
• First female professor of management at Newark College of Engineering.
• First and only female recipient of the Gilbreth Medal (1931).
• First female awarded the Gantt Gold Medal.
• First and only recipient of the CIOS Gold Medal.
• Received over 20 honorary degrees and served fi ve U.S. presidents as an
adviser.
Fayol developed his list of principles from the practices he had used
most often in his own work. He used them as general guidelines for ef-
fective management but stressed flexibility in their application to allow
for different and changing circumstances.
Fayol’s real contribution, however, was not the 14 principles them- functions of
selves but his formal recognition and combination of these principles. management
In presenting his principles of management, Fayol was probably the Fayol’s summary of the
fi rst to outline what today are called the functions of management . key responsibilities of a
In essence, he identified planning, organizing, commanding, coordi- manager - planning,
nating, and controlling as elements of management. He most heavily organizing, commanding,
coordinating, and controlling.
emphasized planning and organizing because he viewed these ele-
ments as essential to the other functions. Recent translations and in-
terpretations of some of Fayol’s very early papers have further
reinforced the fact that Fayol was ahead of his time in recognizing the
role of administration (management) in determining the success of an
organization.10
The works of Taylor and Fayol are essentially complementary. Both
believed proper management of personnel and other resources is the key
to organizational success. Both used a scientific approach to manage-
ment. The major difference is in their orientation. Taylor stressed the
management of work, whereas Fayol emphasized the management of
organization.
35
Railway Labor Act of 1926 Gave railway workers the right to form unions and figure 2.2
engage in collective bargaining; established a
SIGNIFICANT PRO-UNION
corresponding obligation for employers to recognize
LEGISLATION DURING THE
and collectively bargain with the union.
1920S AND 1930S
Norris–La Guardia Act of 1932 Severely restricted the use of injunctions to limit
union activity.
National Labor Relations Act of Resulted in full, enforceable rights of employees
1935 (Wagner Act) to join unions and to engage in collective bargaining
with their employer, who was legally obligated to
do so.
Fair Labor Standards Act of 1938 Established minimum wages and required that
time-and-a-half be paid for hours worked over 40 in
one week.
Mayo. Over the next five years, hundreds of experiments were run in-
volving thousands of employees. In these experiments, the researchers
altered such variable elements as wage payments, rest periods, and
length of workday. The results were similar to those obtained in the
lighting experiments: Production increased, but with no obvious rela-
tionship to the environment. After much analysis, the researchers con-
cluded that other factors besides the physical environment affected
worker productivity. They found that employees reacted to the psycho-
logical and social conditions at work, such as informal group pres-
sures, individual recognition, and participation in decision making.
The researchers also discovered that the employees responded posi- Hawthorne effect
tively to the attention paid to them by the researchers. This phenomenon The positive behavior
has since become known as the Hawthorne effect. Yet another finding change demonstrated by
was the significance of effective supervision to both productivity and employee when managers
employee morale. While the methods used and the conclusions reached pay attention to them.
by the Hawthorne researchers have been questioned, they did generate
great interest in the human problems in the workplace and focused at-
tention on the human factor.12
38
In the late 1930s, the professional manager emerged. The professional system
manager is a career person who does not necessarily have a controlling in- A system is an assemblage
terest in the enterprise for which he or she works. Professional managers or combination of things or
realize their responsibility to three groups: employees, stockholders, and parts forming a complex or
the public. With expanded technology and more complex organizations, unitary whole.
the professional manager became more and more widespread.
open system
Under the systems
THE SYSTEMS APPROACH approach to management,
the organization is seen as
The fragmentation period of the late 1950s and early 1960s was followed an open system that is
influenced by its internal
by an era of attempted integration. Many management theorists sought and external environmental
to use a systems approach to integrate the various management schools. factors. The organization
A system is a set of connected elements that function as a whole. then, in turn, influences
The systems approach to management was viewed as “a way of think- these same internal and
ing about the job of managing . . . [which] provides a framework for vi- external environmental
factors; as a result, a
sualizing internal and external environmental factors as an integrated
dynamic relationship is
whole.”15 Under this approach, the organization can be seen as either an created.
open system where it interacts with its external environment or a closed
system where it has no interaction with its external environment. Most closed system
organizations are run as open systems, but even then they can make the By contrast closed systems
mistake of ignoring their environment and acting as though they can do not interact with their
operate independently of the world around them. external environments.
Theory X
THEORY X AND THEORY Y Argues there is a simple
division of management
In his 1960 book The Human Side of Enterprise, American social styles that capture what
psychologist Douglas McGregor proposed a simple division of manage- are fundamentally different
ways of managing people.
ment styles that captured what he argued were fundamentally different
Theory X managers
ways of managing people:16 manage in a very
controlling and
Theory X . The controlling/authoritative manager believes that authoritative manner.
most employees don’t like to work and will only work at the
required level of productivity if they are forced to do so under Theory Y
the threat of punishment. Managers believe
Theory Y. The democratic/participative manager believes that employees can be trusted
employees can be trusted to meet production targets without to meet production targets
without being threatened,
being threatened and that they will often seek additional respon-
and that they will often
sibilities because they enjoy the satisfaction of being creative and seek additional
increasing their own skills. responsibilities because
they enjoy the satisfaction
Theory X and Theory Y managers have now become featured players of being creative and
in many management-training videos as the direct opposition of these increasing their own skills.
management styles is reviewed. However, as managerial research pro- As a result they manage in
gressed in the twentieth century, this division of styles was considered to a democratic and
participative manner.
be too simplistic, and a broader approach to management was proposed.
creative thinking, the need to place the customer first, and the need to
treat employees as human beings.
However, as soon as two years after In Search of Excellence was
published, at least 14 of the “excellent” companies highlighted by Peters
and Waterman had lost some of their luster. Of the 14 companies that
stumbled, 12 were unable to adapt to fundamental changes in their
markets. Some maintain that being overly devoted to Peters and
Waterman’s eight characteristics, which do not emphasize reacting to
broad economic and business trends, may have contributed to their
problems. Others, including Peters and Waterman, argue that these
companies ran into trouble because they strayed from the principles
that had been key to their earlier successes. By the early 1990s, some of
the stars of Peters and Waterman’s original list, such as IBM, were also
having difficulties. One company, Delta Air Lines, fi led for bankruptcy
protection in 2005. Some critics have also questioned the standards
originally used by Peters and Waterman (continuous innovation, large
size, and sustained financial performance over the 20-year period from
1961 to 1980) for selecting their “excellent” companies. Critics have also
questioned whether the so-called excellent fi rms provided exceptional
returns to stockholders in either the short run or the long run.
At least two lessons can be drawn from the experiences of these
companies: (1) The excellent companies of today will not necessarily be
the excellent companies of tomorrow and (2) good management requires
much more than following any one set of rules.
ETHICAL MANAGEMENT
The XYZ Corporation has been growing rapidly over the position to John. John considers the offer for several days,
past three years. To help manage this growth, the CEO but decides to turn it down.
decides to create a new director level position. The posi- The vice president then meets with Mary and offers
tion requires extensive business expertise, an understand- her the position. Upon hearing the offer, Mary pauses.
ing of the XYZ Corporation’s industry, and exemplary She looks the VP straight in the eye and asks, “Was the job
strong people skills. offered to John first?” How should the vice president
Two candidates remain after the final interviews: John, an respond?
external candidate with a strong business background, and
Source: Adapted from “The Second Choice Asks a Hard Question,”
Mary, a candidate from within the company, who also has the Institute for Global Ethics, www.globalethics.org.
required skills. After two rounds of interviews, the vice
president for human resources decides to offer the
CONCLUSION
This chapter summarized some of the major events that affected man-
agement discipline from the nineteenth century to the present. But the
discipline did not develop and mature at the same rate in all parts of the
45
key terms
closed system 39 Industrial Revolution 28 soldiering 31
contingency approach time and motion study 33 system 39
to management 40 open system 39 Theory X 39
functions of professional Theory Y 39
management 35 manager 38 Theory Z 40
Hawthorne effect 37 scientific
hedgehog concept 44 management 31
review questions
1. What are the benefits of understanding how management theory
and practice has changed over the past 100 years? How could you
use this information as a manager?
2. Why do you think many people have interpreted Taylor’s scientific
management principles as being inhumane?
3. What are the key differences between the principles of scientific
management and the key elements of human relations
management?
4. Would you describe your management style as that of a scientific
principles manager or a human relations one? Why?
internet exercise
Visit the Web site of the National Academies (comprised of four organi-
zations: the National Academy of Sciences, the National Academy of
Engineering, the Institute of Medicine, and the National Research
Council) at www.nationalacademies.org.
1. Describe the history of the National Academy of Sciences and its
expansion into the National Academies.
team exercise
FINDING THE ONE BEST WAY
Suppose you have been assigned the simple task of stuffing 1,000 two-
page flyers (8½ × 11 inches) into a normal size envelope (4 × 9½ inches).
The envelopes come in boxes of 250, and the flyer pages are in stacks of
1,000 each. The flyers must be stapled together, folded, and then placed
into the envelopes.
a. Get a stapler, a few envelopes, and several 8½ × 11 inch sheets of
paper, and determine how you might accomplish this task. Identify
where each component will be positioned and exactly how you will
perform the task.
b. After you have tried your fi rst method, see if you can determine any
ways in which it might be improved.
c. Compare your method with others in your class.
d. Vote as a group on the “one best way” to perform the task.
Questions
1. Were you able to improve your fi rst method in step b?
2. Did you pick up further improvements from others in your class
(step c)?
3. Were you able to agree on one best way (step d)?
4. How different was your original method from the final one best way?
48
It’s as though managers say to themselves: workplace stress is doing to Americans, and to
“Now that Fran is in charge of the product the cost of health care.
launch, the plan should be in great shape. Fran Two, it reinforces the obviously disturbed
has a terrific track record and excellent rela- notion that face time is what counts, even more
tionships in the industry. Our weekly one-on- than business results. It strengthens the absurd
one will keep me up to date on her progress. idea that more hours in the office will make the
She’s also great about copying me on corre- business run better.
spondence with our partners. But hey—if I can Three, an unholy alliance of face-time-
see her in the office every day from 6 a.m. to obsessed managers and face-time-addicted
8:30 p.m., I’ll feel even better about how her employees will create an environment where
project is going.” any balanced person will feel hated.
You think I’m exaggerating? In the boom-
ing 1990s, I worked for a fast-growing technol-
A WOMAN’S PLACE
ogy company, where a macho work ethic reigned
See? There’s very little logic behind face-time supreme. The lengths to which workers would
addiction. For instance, who knows what go to prove their loyalty struck me as almost
you’re really up to when your ear is glued to sad.
your phone? You could be tracking stock
prices or talking to your bookie or wedding EXTREME FACE TIME
caterer. You could be doing any number of
One evening, I watched a young man meet
things. But, by gum, if your face is visible and
the Chinese restaurant delivery person at the
your butt is in the chair, whatever you’re doing
side entrance. He returned to his office,
must be work.
opened the container, stuck a fork in the
Face time for managers has turned into a
chicken chow mein, turned up his desk radio,
crutch. It has less to do with managing people
and arranged his jacket over the back of his
well than with making the boss feel better. Even
chair. Then, leaving his light on, the dinner
when managers know that people are burned
on his desk, and his office door ajar, he went
out, sick of one another’s company, and griev-
to his car.
ously in need of a walk around the block—yo,
A carton of food wasted! Well, not in his
they still insist on that face time.
mind: He had bought himself an extra hour
or two of face time, because if a higher-up
ABSURDITY PREVAILS walked by that open door, he’d be likely to
Employees buy into the face-time addiction, think the employee was still working (just at
too. I remember saying to my boyfriend before the copier or in the men’s room). I wanted to
we were married: “Pick me up at my office write BUSTED on the plastic fork, but that
around 1:30.” I meant 1:30 a.m. We lived in would have been cruel, and this person was
Chicago, so there were plenty of places to eat at already in a bad way: When an organization’s
that hour. I loved my job, for sure. But I also culture goes gaga over face time, everyone
loved being an obsessed worker bee and suffers.
essential to the company’s success. Having kids Am I anti-face time, then? No way. I think
knocked that fi xation out of me right quick. But teamwork is essential, and time together as a
many people aren’t so lucky. They go on working group makes for a wonderful way to move
ungodly hours right up until retirement. And ideas forward quickly. I just don’t think it’s
this is unfortunate, for three reasons: an everyday essential, like vitamin C or cal-
One, it’s unhealthy. Open the wellness cium. Many companies balance face-time re-
section of any newspaper to read about what quirements and human requirements with
something called core hours. They’ll say: “We 2. What kind of “face time” does your boss ex-
all have obligations outside of work, but we pect at your current job (or a job you have
also need to see one another for some period held in the past)?
every day. So let’s all agree to be in the office 3. Have you ever felt pressure to put in more
from 10 to 3 Monday through Friday, while face time to keep up with your co-workers?
putting in a full week and getting lots of great How did you handle that pressure?
stuff done.”
4. Is there a solution to the pressure of face
time? How could you reassure your boss that
CUT THE CORD
you are being productive even when he can’t
Core hours are the ticket—as long as you don’t see you every minute of the working day?
establish them and then start quizzing people
about where they were off to at 4:15 last Source: Adapted from Liz Ryan, “Employment
Thursday. Trends,” BusinessWeek Online, April 22, 2005.
Questions
1. What are the three reasons why “working
ungodly hours” can work against you?
51
For a long time, 3M had allowed research- nessWeek/BCG list). It dropped to No. 2 in 2005,
ers to spend years testing products. Consider, to No. 3 in 2006, and down to No. 7 this year.
for example, the Post-it note. Its inventor, Art To help get the creative juices flowing, Buck-
Fry, a 3M scientist who’s now retired, and oth- ley is opening the money spout—raising spending
ers fiddled with the idea for several years before on R&D, acquisitions, and capital expenditures.
the product went into full production in 1980. The overall R&D budget will grow 20 percent
Defenders of Six Sigma at 3M claim that a more this year, to $1.5 billion. Even more significant
systematic new-product introduction process than the increase in money is Buckley’s reallo-
allows innovations to get to market faster. But cation of those funds. He’s funneling cash into
Fry, the Post-it note inventor, disagrees. In fact, what he calls “core” areas of 3M technology, 45
he places the blame for 3M’s recent lack of in- in all, from abrasives to nanotechnology to flex-
novative sizzle squarely on Six Sigma’s applica- ible electronics. Quietly, the McNerney heritage
tion in 3M’s research labs. Innovation, he says, is being revised at 3M. While there is no doubt
is “a numbers game. You have to go through the former CEO brought some positive change
5,000 to 6,000 raw ideas to find one successful to the company, many workers say they are re-
business.” Six Sigma would ask, why not elimi- invigorated now that the corporate emphasis
nate all that waste and just come up with the has shifted from profitability and process disci-
right idea the fi rst time? That way of thinking, pline to growth and innovation.
says Fry, can have serious side effects.
Questions
REINVIGORATED WORKFORCE 1. Explain how the management styles of James
Buckley, a PhD chemical engineer by training, McInerney and George Buckley compare to
seems to recognize the cultural consequences of scientific management and human relations
a process-focused program on an organization management.
whose fate and history is so bound up in invent- 2. Why would the use of “exact statistical anal-
ing new stuff. “You cannot create in that atmo- ysis” reduce creativity?
sphere of imprisonment or sameness,” Buckley 3. Why would an organization “deliberately
says. “Perhaps one of the mistakes that we made encourage risk”?
as a company—it’s one of the dangers of Six
Sigma—is that when you value sameness more 4. Do you think Buckley’s plan will work? Why
than you value creativity, I think you potentially or why not?
undermine the heart and soul of a company like Source: Adapted from Brian Hindo, “Inside Innova-
3M.” In recent years, the company’s reputation tion,” BusinessWeek Online, June 11, 2007.
as an innovator has been sliding. In 2004, 3M
was ranked No. 1 on Boston Consulting Group’s
Most Innovative Companies list (now the Busi-