INFOLINK COLLEGE

DEPARTMENT OF MANAGEMENT
HAWASSA CAMPUS

SINTAYEHU ASSEFA (PhD Candidate)

HAWASSA, ETHIOPIA

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 Management Thought
and Emerging Trends

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 CHAPTER ONE
1.1 Evolution of Management and Its Emerging Trends

 An understanding of the history of any discipline is necessary

to understand where it is and where it is going.
 Management as a theory, it is the result of the 20th century but
management as a practice, it is as old as the human
civilization.
 Understanding their historical evolution helps for today’s
managers develop a feel for why the managerial approaches
that worked in earlier times do not necessarily work today.
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 Cont’d......
 The development of management thought and concepts is an

example of people responding to the needs of their

environment.
1.2 Early Milestones in Management
 Since human beings started to live together, management has
been practiced by even ordinary people.
 Now let us consider the chronological development of
management thought
a) Early civilization
 The great civilizations such as Babylon, Egypt, Assyria and
Persia had expert managers.
 For example: Sumerians:- Temple priests collected and
4 managed large amounts of goods and estates.
 Cont’d
Egyptians:- Recognized planning, organizing and controlling.
 Built pyramids of 13 arcs, 2,300,000 stone blocks, 100,000
laborers in 20 years by using managerial principles
 Used centralization and decentralization in governance

Babylonians:- Hammurabi used code of laws of governing trade,

family, labor, loans etc.

Chinese:- Constitution of chow dynasty clearly specified the

techniques of controlling and also used concepts of efficiency,
specialization and standards. The constitution was directory of
all civil servants.
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 Cont’d....
Greece
 Plato used specialization
 Socrates declared principles of universality
 Xenophon recognized management as art and Greeks,
generally, used scientific methods

Rome
 Personnel selection and placement

b) Medieval period
 The first management book describing the rule of double
entry appeared
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 Cont’d....
c) The Renaissance Period
 It was during the renaissance that science, reason, exploration and
discovery were emphasized
 And the systematic development of management theories, principles
and practices began to occur.

d) The Industrial Revolution

 During the industrial revolution, machine and factory production
replaced hand production. This revolution began in Europe shortly
after 1700 and continued for over 150 years
 Prior to the industrial revolution, the feudal system was primarily
found in rural areas while the guild system hired in urban areas.
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 Cont’d...
 Both of the systems later merged into the cottage system of

production, which in turn were supplemented by the factory

system.

1. The feudal system

 The feudal system reached its peak of development in Europe

during the middle ages. Serfs, the lowest order for workers
performed all the work on manors.

 They were neither slaves nor hired laborers.

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 Cont’d...
Economically serfs, were bound to the land and could not leave it,
but they did have certain privileges that generally corresponded
to their responsibilities.

For example, they could not be sold, and they received part of

their produce as compensations.

The lord of the manor was responsible for protecting serfs from

bandits, hostile lords and other dangers.

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 Cont’d...
In doing this the lord had to use such management duties as
planning, organizing and controlling.

The Guild system

 The development of manufacturing brought laborers to the

cities and led to the use of the guild system.

 Within the guild system itself were clear cut differences among

the master, craftsman, journeymen and apprentices.

 The master craftsman was typically the owner of the shop, who

employed the travelling journeyman to work for him.

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 Cont’d...
• The apprentice was a young learner who usually worked for his
lodging and a small allowance.
 The guild system involved selecting, training and developing workers
as well as wage and salary administration, and the forerunner of
modern human resource management.
 Vestiges of the guild system can be found in today’s labor unions,
especially construction trade unions.
The cottage system
 During the 17th century, the cottage system was the most common
form of production system. Work was performed in the homes of
workers in rural and semi rural areas.
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 Cont’d...
 An independent merchant capitalist would pay the master

craftsman for his products on a piecework basis, and he in

turn would pay the worker who did the actual production in
their simple cottages.

 The merchant capitalist and the master craftsman had few

management problems, since the place and conditions of work

were not their concern.

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 Cont’d...
A. New Production System
 The industrial revolution was precipitated by a new
production system made possible by the invention and use of
new tools, processes and machines for manufacturing cotton
and woolen products.

 A new energy source the coal driven steam engine powered

the machines.

 period of vigorous intellectual activity following the

renaissance.
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 Cont’d...
New Economic Doctrine
 The new production system was based on the French concept of
laissez-faire, laissez-passer that is “let manufacturers be free to
make what they please, and let them be free to trade when they
please.”

 Adam smith, a Scottish professor of moral philosophy and the

world’s first economist –used the term in his book
 “THE WEALTH OF NATIONS” to stress that the government
should not interfere with economic affairs , either domestic or
foreign.
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 Cont’d...

 Supporting the factories were new fuel and water powered

machines that supplemented the effort and energy of

human and animal power.

 Master craftsman and merchants became employees of the

emerging group of capitalists.

 Many of the jobs requiring human skills could now be

performed by redesigned and newly invented tools and

machines.

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 Cont’d...
 These were the early developments in management. But these

developments could not be that much significant because of:-

 First, from the days of the Greek philosophers through the middle

ages and into the early modern period, business was not considered a
respectable occupation.

 Second, early economists and political scientists did not concern

themselves with managerial, or entrepreneurial aspects of business.

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 Cont’d...

 Third, business people did not aid the development of management,

since they considered their profession an art rather than a science.

 Fourth, until the last third of the 19th century, businesses were

operated principally on a small, person basis as sole

proprietorships or partnerships.

 Thus, there was little real incentive to develop management theory

into the dynamic field it is today.

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 Cont’d...
In the 20th century the importance of management rose due to the
following complexities that have emerged. These are

 The increasing size of organizations

 High degree of division of labor and specialization

 Increase in government regulations and controls

 The development of capitalism and emergence of industries

 The wide spread scope of business

 Emergence of organized trade unions

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 Cont’d...

Such improvements and increasing concern for management

were vital for the development of the following parent
management theories which were raised from the earlier of the
20th century.

 Classical management theory

 Neo-classical management theory

 Modern theories

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 THANK YOU!!!

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 Chapter Two
Forerunners To Scientific Management
2.1 Early Contributors To Scientific Management

 At the turn of the 20th century, business was expanding

while creating new products and new markets,

 But labor was short of supply. To overcome this shortage,

two solutions were available .

a. Substituting capital for labor

b. Use of labor efficiently

Scientific management concentrated on the second solution

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 Cont’d...
 Therefore, Frederick Taylor, Henry Gantt, and Frank and
Lillian Gilbert devised the body of principles known as
scientific management theory.
2.2 Early works and contributions
Charles Babbage
 Became convinced that application of scientific principles
to work process would both increase productivity and lower
expenses.
 Was the early advocator of division of labor

 Had a strong understanding of the importance of human

resources related to efficiency
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 Cont’d...
 Advocated profit sharing plan and bonus system as ways

to achieve better relations between management and labor.

Robert Owen

 Recognized that human resources were valuable as

financial and material resources to the production of

goods.

 Believed that factory workers would be more productive if

they were motivated through rewards rather than

punishment.
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 Cont’d...
 Reduced the length of working hours

 Improved working conditions in his factory

Other influential early thinkers and practitioners in
management
 Adam Smith (1776) Adam smith in his book ”The Wealth of
Nations” advocated the concept of specialization.
 James Watt and Bolton- in the early development of
management they contributed a lot.
 They developed many management techniques which still are
applied in the profession of management. These include the
following
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 Cont’d...
 They were interested in market research, costing, planned

machine layout in terms Of work flow;

 Attempted production planning

 Developed methods for calculation of cost and profits

 Training and development of workers and managers

 Study payment and payment by result; and

 Welfare programs

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 THANK YOU!!!

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 CHAPTER THREE
3.1 The era of Classical Management
Assumptions
 People, most of the time, rationally consider opportunities made
available to them and do whatever is necessary to achieve the
greatest economic gain.
 Serious attention to management began in the early of 20th
century.
 Particularly, how to increase the efficiency and productivity of
the work force. The effort of improving these issues was labeled
as classical approach. Which is understood from two
perspectives.
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 Cont’d...
A. Improving the productivity of workforce. This perspective
is known as “scientific management.”

B. Managing the entire organization which is known as

“classical organizational theory.”

3.1.1 Classical Theory Development

It was developed in three streams

 Scientific management theory
 Administrative theory
 Bureaucracy theory

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 Cont’d...
3.1.1.1. Scientific Management Theory (F.W.TAYLOR)

At the turn of the 20th century, business was expanding and

creating new products and markets, but labor was in short supply.
Two solutions; Substitute capital for labor or Use labor more
efficiently

Frederick Winslow Taylor, an American engineer, was the founder

of the scientific management school of thought.

 He developed what is known today as scientific management, an

approach that advocates increasing production while improving

employees’ working conditions and increasing earnings.

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 Cont’d...
Taylor’s Objectives
Taylor, based on his managerial system on production-line time
studies.
 He broke each job down into its components “elements” and
designed the quickest and best method of operation for each part of
the job.
 He also encouraged employers to pay more productive workers
at higher rates than others.
Thus, workers were encouraged to surpass their previous
performance standards and earn more pay.
Taylor called this plan the differential rate system.
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 Cont’d...
Taylor’s system embodied two new concepts.

1. Separation of planning and doing

 It was customary for each man to plan one’s own work,

generally following a pattern he had learned by watching

others.
 The orders, in which the operations performed were
entirely up to the employee; so was the selection of the
tools.
 The foreman or supervisor simply told the worker what
jobs to perform, not how to do them except in the case of
new jobs.
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 Cont’d...
2. Functional foremanship
 Taylor’s plan also supplemented the boss with a number of
functional foreman, each of whom was a specialist in one type of
work.
 The specialist gave orders to the workmen on their area of
specialty.
The overall outlook of scientific management can be put as
follows:
“ If workmen were paid attractive amounts for producing more and
were shown how to do so, they would cease their slowdowns. Since
management would be enjoying the fruits of increased
productivity, it would be happy to pay the higher wages.”
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 Cont’d...
 Principles of scientific management
Taylor’s philosophy rested on four basic principles
a. Develop a science for each element of a man’s work, which
replaces the old method.
b. Scientifically select and train, teach and develop the workman
whereas in the past he chose his own work and trained himself as
best he could.
c. Management should heartily cooperate with the men so as to
ensure all the work being done in accordance with the principles
of the science which has been developed.
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 Cont’d...
d. There should be an almost equal division of the work and
responsibility between the management and the workforce.
 The management should take over all work for which they are
better fitted than the workman,
 While in the past all of the work and the greater part of the
responsibility were thrown on the workmen.

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 Cont’d...
Followers of Taylor
Henry L.Gantt(1861-1919)

 Henry Gantt worked with Taylor and was responsible for

introducing “Task and bonus plan” which was aimed at

providing extra wages for work in addition a guaranteed
minimum wage.

 Bonuses were also awarded to supervisors who were

successful in getting their workers to meet the output goal.

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 Cont’d….
 Cont’d….Gantt is perhaps best known for his development of

graphic methods of describing plans and making possible better

managerial control.

This led eventually to famous Gantt Chart a chart used for

planning and following up work progress against time.

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 Cont’d...
The Gilberts

 Frank Gilbert (1868-1924) and Lillian Gilbert (1878-1972) as

husband and wife team contributed extensively towards the

concept of scientific management

 And were primarily responsible for analysis of time and motion

study of workers, thus improving its elements by eliminating

unnecessary motions.

They reduced the number of movements in the studies they

were involved.
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 Cont’d...
Frank emphasized the need of developing one best way of

doing a given task

Whereas Lillian concerned herself with the human aspect of

management.
Importance of scientific management
Taylor made major contributions to techniques in the area
of motion time study, specialization, standardizing, planning,
work instructions and wage system.

3
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 Cont’d...
He designed better work methods to enable workers to produce

more (particularly, lowest operating level).

Limitations and criticisms of scientific management

 The emphasis Taylor and his followers gave little attention to

middle and top managements, and therefore, resulted in little

improvement in these levels in large organizations.

 Although Taylor’s method led to dramatic increases in

productivity and higher pay, workers and unions began to

oppose his approach.

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 Cont’d...
 They feared that working harder or faster would exhaust

whatever work was available and bring layoffs.

 Classical Organizational Theories and Henry Fayol

 While scientific management theories were being studied,

praised and criticized in the U.S,

 Henry Fayol (1841-1925) was revolutionizing management

thinking in France and developed principles which could be

applied to all levels and types of organizations.

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 Cont’d...
This body of ideas developed at the same time as scientific

management is called classical organizational theory.

Henri Fayol (1841-1925)

 The works of Fayol and Taylor are complementary. They both

realized that the problem of human resources and their

management at all levels is the key to business success.

 Both applied scientific method to this problem; Taylor worked

primarily on the operative level,

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 Cont’d...
 From the bottom of the hierarchy to upward whereas Fayol

worked on the managing director and worked downward.

Fayol’s Two Main Concepts

A. The universality of basic management principles applicable to

all forms of organized human endeavor.

B. His second major concept was that there is a body of knowledge

related to the functions of management that can and should be
taught.

Fayol was perhaps the first individual to discuss management as a

process with specific functions that all managers must perform.

 Cont’d...
He proposed planning, organizing, commanding and controlling

as the four management function.

 Fayol found that activities of an industrial undertaking could be

divided into six groups. These are Technical (production),

Commercial, Financial, Security, Accounting, and Management

 Fayol developed 14 managerial principles for which he became

known.

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 Cont’d….
They are Division of labor, Authority and responsibility,

 Discipline, Unity of command, Unity of direction,

 Subordination of individual to general interest,

 Remuneration, Centralization, Scalar chain (line of authority),

 Order, Equity, Stability of tenure of personnel, Initiative, and

Esprit de corps.

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 Cont’d...
Evaluation of Fayol’s Contributions
Positive
 Fayol’s ideas and concepts continue to have great influence today.

 The concept of management as a process with universal functions

that are carried out by managers in different environments is a
central theme of many management texts and disciplines.
Negative
The one area Fayol’s contributions have been challenged is the
rigid application of his principles without due consideration of the
environment in which they are being applied.

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 Cont’d...
 Bureaucratic Management Theory, Max Weber (1846-1920)

The advocates of the bureaucratic theory contributed yet a third

widely divergent stream of thought a concern for how the overall

structure of an organization influences managerial effectiveness.

 Max Weber described what he believed was the ideal or pure

form of organization.

Weber’s “pure form” of organization is characterized by

rationality and impersonality

 Rationality implies goal directions

 Impersonality implies objectivity in interpersonal relations.

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 Cont’d...
Bureaucracy is characterized by:

 Hierarchy

 Impersonality

 Written rules of conduct

 Specialized division of labor

 Efficiency

 Promotion based on achievement

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 Cont’d...
 Human resource decisions in bureaucracies were to be

strictly impartial based on qualifications and work demands

rather than on a caste system or the personal preferences of
decision makers.

 To Weber, the rational structuring of organizations was a

reaction against the unwarranted influence of political

control and power of charismatic personalities of royalty.

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 Cont’d...
a) The major advantages of bureaucracy is that:

 Precision

 Speed

 Un-ambiguity

 Knowledge of the files

 Continuity

 Discretion, unity, strict subordination

 Reduction of friction, and of material and personal

costs are raised to the optimum point.
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 Cont’d….
b) Its major disadvantages
 Lie in the red-tap (excessive procedure),
 rigidity and neglect of human factor.

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 Cont’d...
Total appraisal of the classical theory
 The greatest contribution of the classical approach was
that it identified management as an important element of
organized society.
 Management has increased in importance.
 Advocates of classical approach believed that
management like:
 Law, medicine, and other occupations, it should be
practiced according to principles managers can learn.

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 Cont’d....
 The identification of management functions such as
planning, organizing and controlling provided the basis for
training new managers.

 Many management techniques used today are direct

outgrowth of the classical approach.

 For example, work simplification, incentive wage system,

production scheduling

 And budgeting are all techniques derived from the classical

approach.

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 Cont’d...
Limitations
 Majority of its insights are too simplistic for today’s complex

organizations.

 More appropriate for the past, when the environment of most

organizations were very stable and predictable. The other

limitations are:

Reliance on experience,

Untested assumptions,

Failure to consider informal organizations, and Human

5 Machinery.
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 THANK YOU!!!

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 Chapter Four
The Human Relations Movement
 Neo, became very popular in the 1940s and 1950s and still

receives a great deal of attention today.

 Classical theory is built on the basis of classical approach.

 It was modified, improved, extended and classified in to

two branches.

 The first branch, the human relations approach

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 Cont’d...
The human relations approach (Elton Mayo)

 The term human relations refers to the manner in which

managers interact with subordinates.

 To develop good relationship, followers of this approach

believed, managers must know why their subordinates

behave as they do,

 And what psychological and social factors influence them.

 In general, human relations concentrated on the social

environment while scientific management concentrated on

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6 the physical environment of the job,
 Cont’d...
 Behavioral Science Approach

 Believed that man is much more complex than the

“economic man” descriptions of the scientific management

approach and social man descriptions of the human
relations approach.

 The emphasis of the behavioral science approach

concentrates more on the nature of the work itself,

 And the degree to which it can fulfill the human need to use

skills and abilities.

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 Cont’d...
 Behavioral scientists believe that an individual is

motivated to work for many reasons in addition to

making money and forming social relationships.

 They also focused on communication, motivation and

leadership areas.

Major Contributors:
 Elton Mayo
 Douglas Mc. Gregory
 Abraham Maslow

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 Cont’d...
Forerunners of behavioral approaches

The behavioral approaches, also called the organic or

humanistic approaches

Emphasized favorable treatment of employees instead of

focusing solely on their output or performance.

Although it is still quite prevalent and will continue to be for

some time,

the behavioral approach is gradually being augmented by

new approaches.

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 Cont’d...
 Basic model under the behavioral approach,

Managers tend to be more concerned with building morale

And maintaining social interactions than with improving

performance.

The model for this approach was as follows:

High morale->job satisfaction->increased performance

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 Cont’d...
The behavioral approach assumes that two insights are
needed

i. First, managers must regard the organization as an

operating system designed to produce and distribute a
good or service efficiently and effectively and

ii. The organization is to be viewed as a social system

through which individuals try to find expression for their
hopes and aspirations as well as satisfy their economic
needs.

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 Cont’d...
 The employee can also be motivated by social and
psychological wants and not solely by economic incentives.

 Democratic rather than authoritarian leadership is essential

in order to honor psycho-social demands.

Management must learn to develop co-operative attitudes

and not rely merely on command.

Effective Two Way Communication Network is essential to

establish common flow of understanding in any
organization.

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2
 Cont’d….

Hence, participation becomes an important instrument in

human relations movement.
The Hawthorne Studies
The Hawthorne Studies made one of the early important
contributions to the human-relations approach.
These were studies conducted at the Hawthorne plant of
the western Electric Company in Chicago, USA, between
1927-1932, in a number of different stages. These stages are:

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 Cont’d...
Stage One (1924-1927)
This was conducted by the company’s own staff
under the direction of Messrs Pennock and
Dickson.
This stage was concerned with the effects of
lighting on output.
Two groups of comparable performance were
isolated from the rest and located in separate part
of the plant.

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 Cont’d...

G1 (experimental group) G2 (Control group )

-Change in lighting
-Increased productivity
-Wage and rest period increment
-NO change
-Increased productivity
- Light is constant
-Increased productivity
- No change
-Increased productivity

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 Cont’d...
Stage Two (1927-1929)
This stage became known as the Rely Assembly Test Room.
Six women workers in the Rely Assembly section were
segregated from the rest in the room of their own.
Changes in rest periods and lunch times were made by
discussing with the women.
Productivity increased whether the conditions were made
better or worse.

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 Cont’d...
The women’s reaction to the changes, i.e. increased output
regardless of the conditions has came to be known as “The
Hawthorne Effect”
That is to say the women were responding not so much to the
changes as to the fact that they were the center of attention a
special group.
Stage three (1928-1930)
Before the rely, assembly test had come to an end, the
company had decided to implement an interview program
designed to ascertain employee attitudes towards working
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conditions,
 Cont’d...
Stage four (1932)
This was known as the Bank Observation Room. In this
stage, 14 men on Band wiring were removed to a separate
observation room
Where apart from a few differences, their principal working
conditions were the same as those in the main wiring area.
The group was soon developing its own norms, protected its
own sectional interest against those of the organization, run in
such a way that it was able to protect itself from outside
influences while controlling its internal life too.
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 Final Stage
Cont’d...
This final stage was based on lessons learned from the earlier
studies. its focus was firmly on employee relations and look the
form of personnel counseling.
The counselors encouraged employees to discuss their
problem at work, the result led to improvements in personal
adjustment, employee–supervisor relations and employee-
management relations.
The main conclusions to be drawn from these studies are:
Individual workers can not be treated in isolation, but must
be seen as members of a group
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 Cont’d...
The need to belong to a group and have status within it is
more important than monetary incentives or good physical
working conditions.
Informal (unofficial) groups at work exercise a strong
influence over the behavior of workers.
Supervisors and managers need to be aware of the social
needs and cater for them if workers are to collaborate with the
official organization rather than work against it.

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 Cont’d...
Pros and cons of the Behavioral school of thought
Contributions (Pros)
The human relations movement has contributed a wealth of
important ideas and research results on the people managing
aspect of the discipline of management
The basic rationale is:
Since management must get work done through others,
Management is really applied behavioral science because a
manager must
Motivate, lead, and understand interpersonal relations.
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 Cont’d...
Limitations (Cons)
The basic assumption that managers must know how to
deal with people appears valid but management is more than
applied behavioral science.
For the behavioral approach to be useful for managers it
must make them better practitioners of the process of
management.
Even in some situations, one behavioral scientist may have
a different suggestion than another. This is what makes the
theory incomplete.

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 • Enough for
Today. . .

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 Chapter Five
5.1 The Modern Era
5.1.1 Modern Theories
 Modern management theories indicate further refinement
,extension ,and synthesis of all the classical and neo-classical
approaches to management.
 Modern management must have the twin primary objective of :
 Productivity (classical approach) and
 Satisfaction (Neo-classical theory)
 The most popular contemporary approaches of management are
as follows
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 Cont’d...
5.1.2 The systems approach
 The basic notion of a system is simply that it is a set of
interrelated parts.
 A firm’s components might include such interrelated areas as
production, marketing, and finance. Coordination of these
subsystems terms allows the business to achieve its objectives.
 A system may be defined as an “organized group of parts
,components or subsystems linked together according to a plan
to achieve specific objectives.”

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 Cont’d...
System components –the components of a system include the
following
Input –are human and other resources –energy ,machinery ,raw
materials ,component parts descending
And information that are necessary to operate and maintain the
system or subsystem.

Inputs maybe divided in to two general categories

Production inputs are those inputs that undergo transformation
and become a part of the system’s output.
Crude oil is a production input for a petroleum refinery.
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 Cont’d...
Maintenance input-are those inputs that facilitate the
functioning of the system but do not directly become a part of
the system output.
A steel manufacturing facility has complex mechanisms for
converting iron ore, coke and lime stone into finished steel.
Output-are the products of the system. Two forms of output exist
Direct output- are those in which the system was originally
established. Example General Motors produces automobiles
Indirect output- organizations occupy a place in their physical,
economic, and social environments ; and their activities affect
these environments.
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 Cont’d...
 Example –gulf oil ,in the process of producing petroleum products
 Employs thousands of people,provides financial seek to avoid
polluting the environment.
There are two kinds of system based on the nature of their
boundaries.
Closed system thinking
 Is the older approach and dates to the renaissance and research in
the physical sciences.
 Closed systems are sets of interacting elements operating without
any exchange with the environment in which they exist.

78
 Cont’d...
 Truly closed systems possess two defining characteristics
 No exchange occurs between the system and environmental
across the system’s boundaries.
 Such a system becomes perfectly deterministic or predictable .
Open system approaches
 Are of most recent origin and emphasize the interdependence of
the system with its environment.
 Such systems are based upon the knowledge that no system is
totally deterministic.

79
 Cont’d...
Characteristics of system
 Subsystem-a set of related parts that work together to achieve
an objective as one component of a larger system.
 Example –the human body’s circulatory system, nervous
system, respiratory system etc… are subsystems of the human
body.
Open and closed system
Open systems interact freely with their environments, closed
systems interact much less.
A large publicly held, internally flexible organization would be a
relatively open system, as demonstrated by its money interactions
80
with stakeholders, governments, customers and others.
 Cont’d...
Input transformation output model
 An open system receives input from its environment (money,
material, personnel and technology) which it transforms into
output (goods and services) in interaction with environmental
variables (market conditions ,world affairs and so forth)
 System boundary–in closed systems the boundaries (lines of
demarcation) between an organization and its environment are
difficult to penetrate (for example, the boundaries of a secretive,
bureaucratically structured, closely held corporation.)

81
 Cont’d...
 Steady state-a steady state is the dynamic equilibrium, or
balance an organization maintains (with suppliers and customers
for example) to maintain health and prosperity.
 System Goals- the supreme goal of an organization is survival.
 All other goals depend on the achievement of this one goal.
 Another goal ,which is intimately correlated with survival goal,
is the goal of adaptation and integration with environment.
 Feedback every business system has an inherent feedback
mechanism that provides various types of useful information to
management.
82
 Cont’d...
 Management makes use of this information in controlling the
performance at different stages of work.
Psycho-social system-a business organization is a psycho-social
system in the sense that people working in a firm develop social
relationships and they constantly interact with one another.
Creativity- business system is creative in the sense that it fruitfully
converts the available resources in to useful products.

83
 Cont’d...
Interdependence-various subsystems of a business system are
interdependent and interacting.
 Different departments are linked together in one way or
another to achieve specified goals.
 An organization, according to the system view, is a subsystem
of its broader environment
Goal oriented: people with a purpose of maximum of profits
and shareholders’ wealth, survival of organization unit, supply of
goods and services to the consuming public, meeting the
society’s expectation etc.

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 Cont’d...
A technical subsystem using knowledge, techniques equipment
and facilities and
A structured subsystem, people working on interrelated
activities.
5.1.3 Quantitative /management science approach
 It uses decision-making techniques involving mathematical
models and computer technology.
 It originated during WWII in the form of operations research
which is a method of pooling the knowledge of research specialists
 In order to develop quantitative models that behave similarly to
the real world situations confronting decision makers.
85
 Cont’d....
 The management scientists led by operations researchers and
systems analysts see management as” a system of mathematical
models and processes”.
 This will lend exactness to management process and substitute
certainty for guesswork, knowledge for judgment, hard facts for
experience.
The quantitative approach contributed lots of mathematical tools
for solving problems of management in areas like quality control,
inventory control, production scheduling ,warehouse operations
and resource allocation.
86
 Cont’d....
5.1.4 The contingency approach
Contingency approach has been developed mainly in the 1970s .
It is built on the major premises of the system theory that
organizations are organic and open systems, a relationship of
interdependence between an organization
and its environment as well as within and between its
subsystems.
The contingency theorists aim at integrating theory with practice
in a systems framework.

87
 Cont’d...
A contingency is an approach where the behavior of one subunit is
dependent on its environmental relationships to other units or,
Sub-units that have some control over the consequences desired
by the sub-unit
If a manager wants to change the behavior of any part of the
organization, he or she must attempt to change that part of its
environment that is influencing it.
Contingency approach emphasizes that there is no one best way
to design organizations and manage them

88
 Cont’d...
 Management is situational, and managers should design
organizations, define objectives, and formulate strategies,
policies and plans in accordance with the prevailing
environmental conditions.
 Thus, contingency theory provides a method of analysis as well
as a way of integrating organizations with its environment.
 The contingency view has become more relevant and prominent
because of the following factors :
 Increased globalization of enterprise and the need for more
government business alliance to compete internationally

89
 Cont’d....
 Demands for ethical and socially responsive leadership
 Changing demographics and skill requirements of the
workforce
 The emergence of new organizational structures that emphasize
speed in reacting to environmental changes and
 Changing needs, preferences and desires of employees for job
security, participation, ownership, and fulfillment.

90
 • Enough for
Today. . .

91
91
 Chapter 6
6.1 Expectancy and Equity Theories
6.1.1 Expectancy Theory
 The expectancy approach to motivation was developed by Victor
H. Vroom.
 It is based on the idea that employee beliefs about the
relationship among effort, performance,
 And outcomes as a result of performance and the value
employees place on the outcomes determine their level of
motivation.

92
 Cont’d...
 The expectancy approach postulates that an employee’s level of
motivation depends on three basic beliefs:
 Expectancy: refers to the employee’s belief that his or her
effort will lead to the desired level of performance.
 Instrumentality: refers to the employee’s belief that attaining
the desired level of performance will lead to certain outcomes.
 Valence: refers to the employees’ belief about the value of the
outcomes.

93
 Cont’d...
External factors are beyond the employee’s control and often
negatively influence expectancies and instrumentalities
Because they introduce uncertainty into the relationship.
Company policies and efficiency of the equipment being used
are examples of external factors.
The following example is intended to illustrate the expectancy
approach.
Assume Mr. Tefera is an insurance salesman for the ABC life
insurance company.

94
 Cont’d...
Tefera has learned over the years that he completes one sale for
approximately every six calls he makes
Tefera has a high expectancy about the relationship between his
effort and performance.
Since Tefera is on a straight commission, he also sees a direct
relationship between performance and reward.
Thus, his expectation that increased effort will lead to increased
rewards is relatively high.

95
 Cont’d...
Further, suppose that Tefera’s income is currently in a high tax
bracket such that he gets to keep after taxes only 60%of his
commission.
This being the case, he may not look on the additional money he
gets to keep (the outcome) as being very attractive.
The end result is that Tefera’s belief about the value of the
additional money (valence) may be relatively low.
Thus, even when the expectation of receiving the additional
money is high, his motivation to do additional work may be
relatively low.

96
 Cont’d...
6.1.2 Equity Theory
Proposed by J.Stacey Adams, equity theory is based on the
idea that people want to be treated fairly in relationship to others.
Inequity exists when a person perceives his /her job inputs and
outcomes lesser manner; however, this not necessarily the actual
input and outcomes.

97
 Cont’d...
Furthermore, the other person in the comparison can be an
employee in the person’s work group or in another part of the
organization.
Inputs are what an employee perceives his/her contributions to
the organization (education, intelligence, experience, training,
skills and the effort exerted on the job.
Outcomes are the reward received by the employee (pay,
reward, seniority benefits and status)

98
 Cont’d...
Equity theory also postulated that the presence of inequality in a
person creates tension in a person that is proportional to the
magnitude of the inequity.
Furthermore, the tension will motivate the person to achieve
equity or reduce inequity.
The strength of the motivation varies directly with the amount of
inequity.

99
 Cont’d...
A person might take several actions to reduce inequity increase
inputs on the job if his/her inputs are low relative to the other person.
For example, a person might work harder to increase his or her
inputs on the job.
Reduce inputs if they are high relative to the other person’s input
and to his/her own outcomes.
Quit the job
Request a pay increase

100
 Cont’d...
6.1.3 Goal Setting Theory
 In 1960’s, Edwin Locke put forward the Goal-setting theory
of motivation.
 This theory states that goal setting is essentially linked to task
performance.
 It states that specific and challenging goals along with
appropriate feedback contribute to higher and better task
performance.

101
 Cont’d
In simple words, goals indicate and give direction to an employee
about what needs to be done and how much efforts are required
to be put in.
Five Principles of Goal Setting
To motivate employees, the set of goals must have:
 Clarity
 Challenge
 Commitment
 Feedback
 Task complexity
102
 Cont’d...
Let's look at each of these in detail
1. Clarity
Clear goals are measurable and unambiguous
When a goal is clear and specific with a definite time set for
completion, there is less misunderstanding about what behaviors
will be rewarded.
You know what's expected, and you can use the specific result as
a source of motivation.
When a goal is vague – or when it's expressed as a general
instruction, like "Take initiative" it has limited motivational value.
103
 Cont’d...
To improve your team's performance, set clear goals that use
specific and measurable standards.
"Reduce job turnover by 15%" or "Respond to employee
suggestions within 48 hours" are examples of clear goals.
When you use the SMART acronym to help you set goals,
Means you ensure that the clarity of the goal
By making it Specific, Measurable, Attainable, Realistic and
Time-bound.

104
 Cont’d...
2. Challenge
One of the most important characteristics of goals is the level of
challenge.
People are often motivated by achievement, and they'll judge a
goal based on the significance of the anticipated accomplishment.
When you know that what you do will be well received, there's a
natural motivation to do a good job.
Rewards typically increase for more difficult goals.
If you believe you'll be well compensated or; otherwise,
rewarded for achieving a challenging goal that will boost your
enthusiasm and your drive to get it done.
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 Cont’d...
Setting SMART goals that are Relevant links them closely to the
rewards given for achieving challenging goals.
Relevant goals will further the aims of your organization, and
these are the kinds of goals that most employers will be happy to
reward.
When setting goals, make each goal a challenge.
 If an assignment is easy and not viewed as very important
And if you or your employee doesn't expect the accomplishment
to be significant then the effort may not be impressive.

106
 Cont’d...
Note:
It's important to strike an appropriate balance between a
challenging goal and a realistic goal.
Setting a goal that you'll fail to achieve is possibly more de-
motivating than setting a goal that's too easy.
The need for success and achievement is strong, therefore
people are best motivated by challenging, but realistic, goals.
Ensuring that goals are Achievable or Attainable is one of the
elements of SMART.

107
 Cont’d...
3. Commitment
Goals must be understood and agreed upon if they are to be
effective.
Employees are more likely to "buy into" a goal if they feel they
were part of creating that goal.
The notion of participative management rests on this idea of
involving employees in setting goals and making decisions.
One version of SMART for use when you are working with
someone else to set their goals:
Has A and R stand for agreed and,
Realistic instead of Attainable and Relevant. Agreed goals lead
108
to commitment.
 Cont’d...
This doesn't mean that every goal has to be negotiated with and
approved by employees.
It does mean that goals should be consistent and in line with
previous expectations and organizational concerns.
As long as the employee believes that the goal is consistent with
the goals of the company,
And believes the person assigning the goal is credible, then the
commitment should be there.

109
 Cont’d...
Interestingly, goal commitment and difficulty often work
together. The harder the goal, the more commitment is required.
If you have an easy goal, you don't need a lot of motivation to
get it done.
When you're working on a difficult assignment, you will likely
encounter challenges that require a deeper source of inspiration
and incentive.

110
 Cont’d...
As you use goal setting in your workplace, make an appropriate
effort to include people in their own goal setting.
Encourage employees to develop their own goals, and keep them
informed about what's happening elsewhere in the organization.
This way, they can be sure that their goals are consistent with the
overall vision and purpose that the company seeks.
4. Feedback
In addition to selecting the right type of goal, an effective goal
program must also include feedback.

111
 Cont’d...
Feedback provides opportunities to clarify expectations, adjust
goal difficulty, and gain recognition.
It's important to provide benchmark opportunities or targets, so
individuals can determine for themselves how they're doing.
These regular progress reports, which measure specific success
along the way, are particularly important where it's going to take a
long time to reach a goal.
In these cases, break down the goals into smaller chunks, and
link feedback to these intermediate milestones.

112
 Cont’d...
 With all your goal setting efforts, make sure that you build in
time for providing formal feedback.
 Certainly, informal check-ins are important, and they provide a
means of giving regular encouragement and recognition.
 However, taking the time to sit down and discuss goal
performance is a necessary factor in long-term performance
improvement.
 See our article on Delegation for more on this.
5. Task Complexity
The last factor in goal setting theory introduces two more
requirements for success.
113
 Cont’d...
For goals or assignments that are highly complex, take special
care to ensure that the work doesn't become too overwhelming.
People who work in complicated and demanding roles probably
have a high level of motivation already.
However, they can often push themselves too hard if measures
aren't built into the goal expectations to account for the complexity
of the task.
 It's therefore important to do the following:
Give the person sufficient time to meet the goal or improve
performance.

114
 Cont’d...
Goal setting leads to better performance by increasing
motivation and efforts,
 But also through increasing and improving the feedback
quality.
Limitations of Goal Setting Theory
At times, the organizational goals are in conflict with the
managerial goals.
 Goal conflict has a detrimental effect on the performance if
it motivates incompatible action drift.

115
 Cont’d...
 Provide enough time for the person to practice or learn what is
expected and required for success.
The whole point of goal setting is to facilitate success.
Therefore, you want to make sure that the conditions surrounding
the goals don't frustrate or inhibit people from accomplishing their
objectives.
This reinforces the "Attainable" part of SMART.

116
 Cont’d...
Advantages of Goal Setting Theory Goal setting theory is a
technique used to raise incentives for employees to complete work
quickly and effectively.
Very difficult and complex goals stimulate risky behavior.
If the employee lacks skills and competencies to perform
actions essential for goal, then the goal-setting can fail and lead to
undermining of performance.
There is no evidence to prove that goal-setting improves job
satisfaction.

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 THANK YOU!!!

118
 Chapter 7
The Emerging Trends in Management
 7.1 Total Quality Management
 Organizations of the 2000s are more quality conscious than ever
before.
 Customer demands and intense competition have created quality
awareness in large and small organizations in both private and
public sectors.
 Total quality management refers to an organization’s
commitment to quality and continuing improvement in all areas
of its operations including processes as well as goods and
119 services.
 Cont’d...
 Quality focus involved strengthening customer relationships,
improving inventory and inspection systems, training
employees, and creating a team approach to overall company
effectiveness.
 As trade barriers are removed among many nations because of
globalization, quality standards have become crucial.
 In response to this need, the International Standards
Organization established the ISO 9000 standards as framework
for product quality assurance

120
 Cont’d...
 Among countries doing business within the community of
European nations over 50 nations have endorsed the ISO 9000
 Yet this is viewed as only the beginning of a worldwide move
towards global quality standards
 ISO 9000 certification requires rigorous assessment of an
organization’s quality practices,
 Including design, manufacturing, inspection and testing, training
and service
 Seeking, finding, and maintaining quality standards pose special
challenges to managers at all levels in the organization.

121
 Cont’d...
7.2 Business Process Reengineering ( BPR)
Business process Reengineering can be defined as a radical
scrutiny, questioning, redefining and redesigning of business
process with the aim of eliminating all activities not central to
the process goals,
And automating all activities not requiring human judgmental
input , or facilitating that judgment at reduced cost.
BPR demands lateral thinking that extends beyond
boundaries in order to achieve a more effective organization.

122
 Cont’d...
BPR has been criticized in the literature. One criticism is that it
focused on the implementation of new technology rather than
the improvement of business processes.
BPR has also been criticized as being associated with
downsizing and cost-cutting, with little regard for quality or
long-term business objectives.
Although the radicalness of BPR can create many challenges ,
It also appears to be able to offer many advantages when it is
implemented successfully.

123
 Cont’d...
Further more, research shows that around eighty (80%)of
organizations that implement BPR are satisfied with the
results.
An organization that has embraced BPR and developed an
original idea is likely to be the leader in their industry rather
than the follower.
This can led to a competitive advantage and can drastically
affect organizational performance.

124
 Cont’d...
For the employees ,the work is often more challenging and
difficult yet, at the same time more rewarding.
Staffs are required to perform many different tasks
And they must have an understanding of the entire business.
They may enjoy more autonomy and more empowerment, but are
also more accountable for their actions.

125
 Cont’d...
In summary, re-engineering is about rethinking and redesigning
organizational process in order to achieve dramatic improvements
in performance, including cost, quality, service and speed.
However, this can be impeded if those implementing BPR feel
that they are restricted by the existing framework within which
the organization is operating.
7.3 Theory Z As an approach to Management
Theory Z represents a humanistic approach to management.
Theory Z breaks away from McGregor’s Theory Y.

126
 Cont’d...
Theory Y is largely psychological perspective focusing on
individual days of employer-employee relationships
While Theory Z changes the level of analysis to the entire
organization.
According to Professor Ouchi , Theory Z organizations exhibit a
strong, homogeneous set of cultural values that are similar to clan
cultures.

127
 Cont’d...
The clan culture is characterized by homogeneity of values,
beliefs and objectives.
Clan cultures emphasize complete socialization of members to
achieve congruence of individual and group goals.
Although Theory Z organizations exhibit characteristics of clan
cultures
They retain some elements of bureaucratic hierarchies,
Such as formal authority relationships, performance evaluation
and some work specialization.

128
 Cont’d...
Proponents of Theory Z suggest that the common cultural values
should promote greater organizational commitment among
employees.
The primary features of Theory Z are summarized in the
paragraphs that follow.
Long term employment
Traditional U.S. organizations are plagued with short-term
commitments by employees,

129
 Cont’d...
 But employers using more traditional management perspective
may inadvertently encourage this by treating employees simply as
replaceable cog s in the profit–making machinery.
Individual responsibility
Type A organizations emphasize individual accountability and
performance appraisal.
Traditionally, performance measures in Type J companies have
been oriented to the group.

130
 Cont’d....
 Thus, Type Z organizations retain the emphasis on individual

contributions that are characteristics of most American firms by

recognizing individual contributions by recognizing individual’s
achievements.

 Slow evaluation and promotion

 The type A organization has generally been characterized by

short-term evaluation of performance and rapid promotion of

high achievers.

131
 Cont’d...
The type J organizations, conversely, adopts the Japanese model of
slow evaluation and promotion.
Informal control with formalized measures
 The Type Z organization relies on informal methods of control,
but does measure performance through formal mechanisms.
 This is an attempt to combine elements of both the Type A and
Type J organizations.

132
 Cont’d...
Moderately Specialized Career path
 Type A organizations have generally had quite specialized career
paths, with employees avoiding jumps from functional area to
another.
 Conversely , the type J organization has generally had quite non-
specialized career paths. The Type Z organization adopts a
middle of the road posture, with career paths that are less
specialized than the traditional U.S model but more specialized
than the traditional Japanese model.

133
 Cont’d....
Holistic concern
 The Type Z organization is characterized by concern for
employees that goes beyond the workplace.
 This philosophy is more consistent with the Japanese model
than the U.S model.
Evaluation of theory Z
 Both in terms of employee satisfaction, motivation and
commitment as well as in terms of financial performance.
 Other studies conclude that Type Z organizations do not
outperform other organizations.

134
 Cont’d...
 As a result , Theory Z has also received considerable criticism.
 It is unclear whether Theory Z will have a lasting impact on
management practices in the U.S and around the world into the
twenty–first century,
 But by positioning target research at the organizational level
rather than the individual level,
 Ouchi will surely leave his mark on management practice for
years to come.

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 THANK YOU!!!

THE END

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