The Evolution of - Cengage Learning

1 2 ChapterThe Evolution ofManagement ThinkingAfter studying this chapter , you should be able how historical forces influencethe practice of Identify and explain major developments inthe history of management the major components of the classi-cal and humanistic management the management science perspectiveand its current use in the major concepts of systems the-ory, the contingency view, and total the Learning organization and thechanges in structure, empowerment, andinformation sharing managers make to sup-port the technology-driven workplace andthe role of enterprise resource planning andknowledge management andOrganizationClassical PerspectiveScientific ManagementBureaucratic OrganizationsAdministrative PrinciplesHumanistic PerspectiveThe Human RelationsMovementThe Human ResourcesPerspectiveThe Behavioral SciencesApproachManagement SciencePerspectiveRecent Historical TrendsSystems TheoryContingency ViewTotal Quality ManagementNew Management Thinkingfor Turbulent TimesThe Learning OrganizationManaging the Technology-Driven WorkplaceCHAPTER OUTLINELEARNING OBJECTIVES40 Thomson Learning TMManager s ChallengeIf you were a manager at Cemex.

2 What changes would you implementto help the organization thrive in the face of constant chaos? Whatadvice would you give managers concerning their managementapproach and the kind of company they might create?Take A MomentCementos Mexicanos (Cemex), based in Monterrey, Mexico, hasbeen making and delivering concrete for nearly a century. The com-pany specializes in delivering concrete in developing areas of theworld, places where anything can, and usually does, go wrong. Evenin Monterrey, for example, Cemex copes with unpredictable weatherand traffic conditions, spontaneous labor disruptions, building per-mit snafus, and arbitrary government inspections of constructionsites. In addition, more than half of all orders are changed or canceledby customers, usually at the last minute.

3 Considering that a load ofconcrete is never more than 90 minutes from spoiling, these chaoticconditions mean high costs, complex scheduling, and frustration foremployees, managers, and customers. As competition in the industryincreased, Cemex managers began looking for ways to stand out fromthe crowd. One idea was a guaranteed delivery time, but despite theefforts of employees, the best Cemex could do was promise deliverywithin a three-hour window. To make matters worse, the constructionbusiness itself was becoming increasingly complex and competitive,leading to even more disruptions and cancellations. Builders weresometimes lucky to get their orders delivered on the right day, letalong at the right hour. Cemex managers began to consider that thecompany needed a whole new approach to doing business one thataccepted rather than resisted the natural chaos of the would mean massive changes in operations, as well as findingways to get dispatchers and drivers (who had an average of six yearsof formal education) to think like Learning TM42 PART 1 Introduction to ManagementCemex is faced with a situation similar to many companies.

4 The methods and pat-terns that kept the organization successful in the past no longer seem enough tokeep it thriving in today s turbulent environment. Unexpected market forces orother changes in the environment can devastate a company. Major airlines in theUnited States are being hammered by new low-cost carriers like JetBlue andAirTran. As of September 2003, cut-rate airlines had grabbed 22 percent of share, up from 16 percent two years earlier. Consider that while the bigcarriers lost customers and money in 2002, JetBlue s passenger trafficincreased dramatically and the start-up had profits of $55 million on revenues of$635 another example, widespread financial and ethical scandals inthe early 2000s have affected even the most unlikely of companies.

5 LutheranHealth Network, which runs six hospitals in and around Fort Wayne, Indiana,now spends around $250,000 more per year to make sure the organization hasdocumentation that they are complying with health care regulators and otheroversight by ever-shifting conditions, managers have to makecontinual changes in their organizations, and sometimes create a new kind of com-pany, as at Cemex, one with which they have little experience or we discussed in chapter 1, we are currently shifting to a new kind of work-place and a new approach to management. Managers today face the ultimate para-dox: (1) Keep everything running efficiently and profitably, while, at the same time,(2) change is no longer enough just to learn how to measure andcontrol things.

6 Success accrues to those who learn how to be leaders, to initiatechange, and to participate in and even create organizations with fewer managers andless hierarchy that can change philosophies and organizational forms change over time to meetnew needs. The workplace of today is very different from what it was 50 years ago indeed, from what it was even 10 years ago. Yet there are ideas and practices fromthe past that are still highly relevant and applicable to management today. Many stu-dents wonder why history matters to managers. A historical perspective provides abroader way of thinking, a way of searching for patterns and determining whetherthey recur across time periods. For example, certain management techniques thatseem modern, such as employee stock-ownership programs, have repeatedly gainedand lost popularity since the early twentieth century because of historical Cooper Procter, grandson of the co-founder of Procter & Gamble, intro-duced a profit-sharing plan in 1887, and expanded it by tying it to stock ownershipa few years later.

7 Sam Walton opened Wal-Mart s financial records, including salaries,to all employees in the 1960s, long before business magazines were touting the valueof open-book study of the past contributes to understanding both the present and thefuture. It is a way of Learning from others mistakes so as not to repeat them; Learning from others successes so as to repeat them in the appropriate situation;and most of all, Learning to understand why things happen to improve our organ-izations in the future. This chapter provides an overview of the ideas, theories,and management philosophies that have contributed to making the workplacewhat it is today. We will examine several management approaches that have beenpopular and successful throughout the twentieth century.

8 The final section of thechapter will look at recent trends and current approaches that build on this foun-dation of management understanding. This foundation illustrates that the valueof studying management lies not in Learning current facts and research but indeveloping a perspective that will facilitate the broad, long-term view needed formanagement Learning TM43 chapter 2 The Evolution of Management ThinkingManagement and OrganizationA historical perspective on management provides a context or environment in whichto interpret current opportunities and problems. However, studying history does notmean merely arranging events in chronological order; it means developing an under-standing of the impact of societal forces on organizations.

9 Studying history is a wayto achieve strategic thinking, see the big picture, and improve conceptual skills. Wewill start by examining how social, political, and economic forces have influencedorganizations and the practice of forcesrefer to those aspects of a culture that guide and influence relation-ships among people. What do people value? What do people need? What are thestandards of behavior among people? These forces shape what is known as the socialcontract, which refers to the unwritten, common rules and perceptions about rela-tionships among people and between employees and significant social force today is the changing attitudes, ideas, and values ofGeneration X and Generation Y employees.

10 Generation X workers, those now intheir thirties, have had a profound impact on the workplace, and Generation Y mayhave an even greater one. These young workers, the most educated generation inthe history of the United States, grew up technologically adept and globally con-scious. Some trends sparked by Generation X and Y workers are completely reshap-ing the social life cycles are getting shorter, with workers typicallychanging jobs every few years and changing careers several times during their life-time. Some consultants predict that the traditional 20-year career-building cyclewill transform into a 20-month skills-building workers also expectto have access to cutting-edge technology, opportunities to learn and further theircareers and personal goals, and the power to make substantive decisions andchanges in the workplace.