CHAPTER 2

Organizational Theories and Human Resources

Classical Scientific School of Management

The scientific school of management focused on the 'science' of creating

specialized work processes and workforce skills to complete production
tasks efficiently. This lesson will discuss the development of scientific
management and how it is applied by management as illustrated by the
classic example of Henry Ford's Model T production line.

Scientific Management

The scientific school of management is one of the schools that make up

classical management theory. Still very much concerned with increasing
productivity and efficiency in organizations by finding the best way to do
something, the scientific school of management is focused on the
'science' of creating specialized work processes and workforce skills to
complete production tasks efficiently.

Classical scientific theorists such as Frederick Taylor, Henry Gantt, and

Frank and Lillian Gilbreth spent their time researching how a specific job
was done, what steps were taken by an employee to complete the work,
the amount of time it took a worker to complete a task using different
methods, and then used this information to determine which way was
most effective.

The result of this research led to the development of four principles of

scientific management:

1. Management should provide workers with a precise, scientific

approach for how to complete individualized tasks.
2. Management should carefully choose and train each employee on
one specific task.
3. Management should communicate with employees to ensure the
method used to complete the task is, in fact, the most productive
and efficient.
4. Management should create the appropriate division of labor.
Application of Scientific Management

Application of these scientific management principles is quite simplistic

once up and running, but it requires a great deal of analysis up front. A
manager must first consider the nature of the work that needs to be
completed and then decide the best possible way to go about it. A
division of labor allows the manager to take complex tasks and break
them down into smaller, more precise tasks that the individual workers
can complete. Each employee is trained explicitly on how to best perform
their task. A manager will check with their worker to ensure that the
suggested method for completing the work is efficient and make
adjustments when necessary. If all goes as planned, a manager will watch
as a product efficiently moves from worker to worker down the
production line. As the individual parts come together, the sum is
essentially created. Think of an assembly line where each individual
employee completes one repetitive step in the product development
process. The product is finished and ready to be sold after each employee
completes his or her respective tasks in the product development process.
To see classical scientific management, division of labor, and the
assembly line in action, we can turn to Henry Ford of Ford Motor
Company.

Henry Ford's Model T Production Line

Turns out that right around the same time Taylor, Gantt, and the Gilbreths
were developing the principles of scientific management, Henry Ford was
looking for an effective way to produce his Model T. At that time, a car
was really considered a luxury item that was handcrafted by one
individual on a factory floor, and Ford sought to change this. By
combining the idea of scientific management's best possible way to
accomplish a task through the division of labor and Ford's engineering
background, the true assembly line was born.

Ford spent a good amount of time researching the best possible way to
assemble the Model T. First, he rationalized the most effective way to
build the Model T based on the size of parts. From there, he determined
the best order to assemble similarly sized parts. Workers were then
assigned and trained on individualized tasks. Production began, but there
were a few hiccups along the way.
Henry Ford wanted an effective way to produce his Model T.

Fredrick Taylor & Management: Maximizing Productivity &

Efficiency

Known as the father of scientific management, Frederick Taylor

revolutionized management practices. This lesson will discuss the
contributions Taylor made to the field of management, most of which are
still used today to maximize productivity and efficiency.

What Would Taylor Do?

Ask yourself this question: would you be motivated to work harder for
your employer if you were not given the proper training or tools to do
your job and you were paid the same amount regardless of the level of
effort you put forth? I assume most of you answered 'no' to this question,
and Frederick Taylor agreed!

Taylor studied ways of maximizing productivity and efficiency.

The Observations of Frederick Taylor

As a young engineer working for Midvale Steel Company in the late

1800s, Frederick Taylor began to recognize the shortcomings of
systematic management practices. He observed how the gross, almost
deliberate, inefficiencies of workers led to low levels of productivity. As
Taylor investigated further, he discovered that employees were
underpaid, their potential was unused, and there was a great deal of waste
and inefficiency of workers and work processes. He attributed these
issues to three things:

 First, employees believed that if they were more productive, fewer

jobs would be needed, and thus their job might be in jeopardy.
 Second, employees did not have an incentive to go above and
beyond; if they were paid the same amount for low productivity as
they would be for high productivity, there was no reason for them
to strive for higher levels.
 Third, workers wasted much of their time using less-than-optimal
methods for completing work instead of the best possible way.

Taylor soon realized that these unsystematic decisions being made by

management were without empirical evidence or research that
demonstrated a significant rationale for what the best means of
production were. Essentially, managers were blindly making decisions on
how to lead their workers, almost like the blind leading the blind.

The Father of Scientific Management

Taylor's solution was to create a second approach to management that

accounted for all those issues he was seeing at Midvale Steel Company.
What is now known as scientific management, this new approach
advocated the use of scientific methods to scrutinize individualized tasks
of production work to find the most effective method. The specifics of
scientific management are detailed in another lesson of this course, but to
help you understand how Taylor arrived at this new approach, we will
discuss the steps he took to get there.

Using his engineering background, Taylor studied tasks and incentives to

develop fixed procedures to maximize productivity and efficiency. He
used time and motion studies to determine how long it should take a
person to complete a task when the correct movements were made. He
also looked for ways to standardize tools so that each worker had the
right tool for the job. Finally, he believed that an employee's effort
towards reaching higher levels of productivity should be directly tied to
their pay. For example, Taylor studied workers at the Bethlehem Steel
plant who were responsible for unloading iron from rail cars. He found
that when the correct tools, movements, and procedures were used by
workers, they could average 47.5 tons per day instead of the typical 12.5
tons per day. This only required 140 workers to complete the work each
day as opposed to the usual 500. Once the work process was clearly
defined according to the best possible way, he added an incentive system
that would compensate those employees who were able to meet the new
standard set by Taylor. The result of this change was unsurpassed as the
productivity at the Bethlehem Steel plant drastically increased overnight.

Taylor's Four Principles of Scientific Management

Frederick Taylor conducted many experiments over the duration of his

career and had several associates, which you can learn about in other
lessons of this course. After his work was completed, he was then able to,
finally, provide managers with a set of systematic guiding principles so
that they no longer had to make uninformed decisions. Taylor's approach
to management can be summed up into his four principles of scientific
management.

1. Management should get rid of general guidelines for how to

complete a task; instead, they should be replaced with a precise,
scientific approach for each task of a worker's job.
2. Management should use those same principles of scientific
methodology to carefully recruit, select, train, and develop each
worker according to the job they will hold for the company.
3. There should be a level of cooperation between staff and
management to be sure that jobs match plans and principle of the
developed methods.
4. Managers should also provide the appropriate division of labor and
responsibility between managers and workers; that is, the managers
were responsible for planning the work, and the employees were
responsible for following that plan as they completed the work.

Fayol's Theories on Staff Management and Worker Satisfaction

In this lesson, we'll discuss how Henri Fayol's final seven principles play
out in the workplace. Using a professional restaurant kitchen as an
example, you'll learn about the importance of worker satisfaction and
other elements of effective management.

14 Principles of Management

In a previous lesson, we learned that Fayol, while working in mines in

France, discovered that managers did not have the right tools to manage
workers in an effective way. As a result, Fayol developed 14 principles
that addressed the organization as a whole including both the work and
the worker.

1. Division of Work
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interests to the General Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10.Order
11.Equity
12.Stability of Tenure of Personnel
13.Initiative
14.Esprit de Corps

Review of Principles 1-7

To review, Fayol believed by dividing the work into specialized and

specific jobs, workers are able to work more efficiently. Small
management units who oversee functional areas of the organization are
now able to assign work and hold workers accountable for their
production. This makes it easier to measure productivity. Once a system
of accountability is in place and productivity can be monitored, it is easier
to determine who is performing and who is not performing. Managers are
able to selectively and individually discipline workers who fall short of
goals quickly and in the correct measure. Having just one manager
assigned to a team takes away any task confusion. Workers have only one
supervisor directing them. With only one supervisor directing work, it is
easy to motivate employees to buy into one plan. This minimizes self-
interest. With only one manager managing the work of one team who
share one vision, compensating the team can be done fairly.

Principles 8-14

The following 7 principles focus on the decision-making process,

hierarchy, hygiene, employee satisfaction, motivation, and team spirit.
We will focus on how a professional kitchen might apply these 7
principles.
Centralization

This principle refers to how close employees are to the decision-making

process. It is important to aim for an appropriate balance.

A chef generally leads a professional kitchen. A kitchen staff or brigade

performs the work. There are decisions that need to be made as a team
and others that need to be made by the leader. Chef Fayol strikes a
balance by allowing the brigade to decide the day-to-day operations, like
which vegetables to cook, evening specials and plate design. However,
Chef Fayol makes all of the decisions about the restaurant image, menu
design, and vision because he is the owner of Bistro Fayol.

Scalar Chain

Scalar chain: a term that refers to a direct chain of command in the

military, ranking staff from the highest to the lowest level. Employees
should be aware of where they stand in the organization's hierarchy or
chain of command.

In scalar chain, Fayol knows that for centralization to even be possible,

there needs to be a chain of command, and each member must be aware
of their place in the hierarchy of the kitchen. Chef Fayol explains this to
the brigade using an organizational chart.

Order

The workplace facilities must be clean, tidy and safe for employees.
Everything should be in its place.

Nobody knows better than Chef Fayol that the work area must always be
clean, neat, and safe. Watch what happens when one of the brigade leaves
vegetable peels on the floor near his station. Fayol explains to the brigade
the dangers involved in leaving food on the floor. The brigade appreciates
his guidance and work much more productively when everything is in its
place.

Equity

Managers should be fair to staff at all times, both maintaining discipline

when necessary and acting with kindness where appropriate.

Chef Fayol levies discipline when needed, like when the member of the
brigade left the peels on the floor. However, Chef Fayol also
compliments the brigade when the restaurant receives rave reviews. A
food critic reviewed Bistro Fayol. One of the cooks was mentioned as the
most talented young chef in town. Chef Fayol gave the cook a plaque to
hang on his wall. In all fairness, Chef Fayol also gave the other members
smaller plaques for assisting in the effort.

Stability of Tenure of Personnel

Managers should strive to minimize employee turnover. Personnel

planning should be a priority.

Henri Fayol's Management Principles: Managing Departmental Task

Organization

Prior to Henri Fayol's development of an administrative theory of

management, managers took a scientific approach to work, attempting to
maximize productivity by treating their workers like machines. Fayol's 14
Principles of Management focus on the entire organization rather than
just the work. This lesson covers the first seven of these principles.

From Scientific to Administrative

Back around 1860, Henri Fayol, a then-young engineer, began working at

a coal mine in France. While working at the mines, he noticed that
managing the miners was not an easy job. Managing was not as effective
as it could be. Managers had few resources and tools to better manage
people.

At the time, Frederick Winslow Taylor, founder of the school of scientific

management, was making strides in maximizing productivity by focusing
on the work and worker relationship. In other words, Taylor believed that
there was a science to work. If workers worked more like machines, there
would be increased productivity.

Unlike Taylor's scientific management theory, Fayol believed that it was

more than just work and workers. Managers needed specific roles in order
to manage work and workers. This became known as the administrative
school of management and was founded on the six functions, or roles, of
management:

1. Forecasting
2. Planning
3. Organizing
 4. Commanding
5. Coordinating
6. Controlling

Principles 1-7

These roles, used as a process, focused on the entire organization rather

than just the work. Once broken down into smaller parts, the six functions
evolved into Fayol's 14 Principles of Management. In this lesson, we
will focus on the first seven principles:

1. Division of Work
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interests to the General Interest
7. Remuneration

While Fayol's 14 Principles of Management are not as widely used as

they once were, it is important to understand how the foundation of
administrative management theory was developed to address the needs of
the times. This macro approach was the first of its time. Let's not forget,
Taylor did not focus on the human element.

His scientific approach to work focused on building a better, stronger,

faster and more productive team through physical elements. Fayol didn't
see it that way. Fayol saw workers as humans possessing elements that
required a more general approach to getting the work done. He saw it as a
whole organizational effort.

Principles Explained

Let's take each principle and use examples to better understand how these
principles work together to create an administrative management mindset.
Let's use Fayol and the Principles, a rock band, to help us better
understand the first seven of the 14 Principles of Management.

1. Division of Work: When employees are specialized, output can

increase because they become increasingly skilled and efficient.

Fayol and the Principles is made up of four members, including Fayol.

Each band member specializes in a specific instrument or talent. Fayol is
the lead singer, while the other members play instruments. The band is
able to produce quality music because each performs the job in the band
that he or she is most specialized in.

If we were to mix it up a bit and put Fayol on bass guitar and another
member on singing - neither of whom possesses the skill to perform the
job - the sound would be much different.

2. Authority: Managers must have the authority to give orders, but they
must also keep in mind that with authority comes responsibility.

Fayol and the Principles understand that they should specialize in their
specific areas; however, there needs to be a leader. Fayol assumes the role
as leader and gives everyone orders. He says 'Play this. Do that.' But with
that comes responsibility. He knows that, whatever task he delegates to
the band, he must make sure that the task is completed, that the task is
done in a productive way and that it yields results.

3. Discipline: Discipline must be upheld in organizations, but methods

for doing so can vary.

From time to time, the band members do not perform to Fayol's standard.
Even though Fayol looks at the organization as a whole organizational
effort, he also knows that he must administer discipline for
ineffectiveness. Two of Fayol's band members decided to take a break
from practice to play a competitive game of Pin the Tail on the Donkey.
He must administer swift discipline in line with the offense. He also
knows that there is no one discipline that can be levied against the band
members. It must be done on a case-by-case basis. In this case, the two
band members were penalized pay for the time spent playing a game
when they should have been practicing for their show.

4. Unity of Command: Employees should have only one direct

supervisor.

Multiple people sometimes give orders. In the case of the rock band,
Fayol is in charge. This is expressed by the name of the band and implied
by the orderly way in which work is delegated. Fayol is the only person
to give direction.

5. Unity of Direction: Teams with the same objective should be working

under the direction of one manager and using one plan. This will ensure
that action is properly coordinated.
The Human Relations Movement: Definition and Significance to
Organizational Behavior

The human relations movement in organizational behavior focuses on the

person as an individual and not as just another part of the mechanics of
production. The implementation of this theory decreases turnover,
absenteeism and poor job commitment.

Human Relations Movement

Have you ever felt as if you were insignificant to your company? Did
your work seem more concerned about profits and sales than your own
job motivation, interests and attitudes? For many years, companies
ignored an employee's own personal development. This, in turn, led to
negative attitudes, high turnover, high absenteeism and poor job
commitment.

When companies focus only on the production and profits of their

business, they ignore the human behavioral issues of people. The human
relations movement in organizational behavior focuses instead on the
person as an individual and analyzes what motivates and cultivates their
achievement in a work setting. Employee attitudes towards work became
important to a successful company. Let's take a jaunt back in time to see
how the movement became a significant part of organizational behavior
(OB).

Early Framework

In the early 1900s, the framework for the human relations movement was
being built. Companies realized that a monetary incentive was not the
only factor to increasing production. Elton Mayo, an organizational
psychologist, was the father of the human relations movement. He was
the first to realize that worker output and satisfaction were linked to
social factors, such as the way employees were treated on the job.

The 1927 Hawthorne experiment further proved the relationship

between the understanding of worker psychology and output. In this
experiment, psychologists developed a theory that additional lighting
would have a positive effect on worker factory output. They increased the
lighting and they were correct, as production soared. In addition, the
scientists lowered the lighting to a dismal amount assuming that
production would fall.
Surprisingly, production increased even more, and this led to the
discovery that the factory workers were over performing because they
knew they were being watched as part of the study. This result became
known as the Hawthorne effect. The attention from the study made them
feel important and resulted in better output. This solidified the acceptance
of the human relations movement.

Current Application to OB

Messy Chocolates has been in operation for over 10 years. They

manufacture giant milk and dark chocolate bars nation-wide. Their
factory consists of 200 workers who produce the bars in three different
shifts. The company pays a solid rate of $15 an hour. The company
leaders have noticed that although their employees are well paid, the
overall production is on a yearly decline. The human resources
department has suggested that the company adopt a human relations
philosophy with their employees. They have completed an internal audit
and will adopt three key elements of the theory, which are:

 Key work groups/teams

 Excellent upward communication
 Superior leadership

Theory X & Theory Y: Two Types of Managers

Have you ever thought your boss despises you and all your co-workers?
Or maybe you've lucked out and your superiors really encourage you to
be yourself. This lesson describes the two types of managers you might
have, Theory X and Theory Y. Find out how the idea of self-fulfilling
prophecies affects employees actions according to Douglas McGregor.

The Assumptions of Douglas McGregor

Much like a bomb, assumptions are a dangerous thing to make - just the
slightest little mistake and you can end up blowing yourself up! However,
one person who seemed to be unafraid of self-inflicted explosions was
Douglas McGregor, a behavior management theorist who was heavily
influenced by both Abraham Maslow and the Hawthorne Studies.
McGregor proposed that there were two types of managers: ones who
assumed a negative view of their employees, also known as the Theory
Xmanagers, and others who assumed a positive view of workers, or the
Theory Y managers. So grab your bomb repellent while we explore these
two different types of managers by discussing the assumptions of each.
Theory X

Xavier is a Theory X manager. When I say X, I don't mean the type that
marks a treasure - in fact, quite the opposite is true. As a Theory X
manager, Xavier believes that his workers:

 Hate the idea of having to go to work and do so only to earn a

paycheck and the security that it offers.
 Are inherently lazy, lack ambition and prefer to be directed on
what to do rather than assume responsibility on their own.
 Are self-centered and care only about themselves and not the
organization (or its goals), making it necessary for the manager to
coerce, control, direct or threaten with punishment in order to get
them to work towards organizational goals.
 They also dislike change and tend to resist it at all costs.

Xavier assumes that his employees show up for work for their paycheck
and the security that a regular, paying job offers. As soon as that need is
satisfied, the employees have no additional motivation for coming to
work. Therefore, Xavier believes his role as a manager is to coerce and
control his employees to work towards organizational goals.

Theory Y

Yoko is a Theory Y manager, and when I say Y here, think 'why not.'
Why not assume the best in people? As a Theory Y manager, Yoko
believes her employees:

 Accept work as a normal part of their day, and it's right next to
recreation and rest.
 They are not lazy at all. In fact, when the proper motivations and
rewards are in place, employees are not only willing but purposely
driven to seek out responsibility and challenges on their own.
 They're full of potential, and it's through their own creativity,
ingenuity and imagination that organizational goals are met.

Yoko assumes that her employees are full of potential and that it is her
role as a manager to help develop that potential so that the employee can
work towards a common organizational goal. Yoko must also try to
harness the motivational energy of her employees through things such as
giving them more autonomy, responsibility, power, -trust and feedback
and involving them in the decision-making process.
The Self-Fulfilling Prophecies

As the old saying goes, 'be careful what you wish for, because you just
might get it.' McGregor cautioned both types of managers against what he
called self-fulfilling prophecies, whereby an employee will act just as
the manager assumed he or she would due to the manager's own actions
and behaviors. Essentially, if you hold people to a certain expectation -
whether that's good or bad - your own actions as a manager will influence
those employees to act accordingly. A manager's behavior and
expectations are as contagious as the plague. As such, McGregor
acknowledged both types of managers as being a legitimate means of
motivating employees, but he felt that you would get much better results
through the use of Theory Y rather than Theory X.