The Development of Management Theory - Essay Example

The Development of Management Theory Introduction The growth of management as a separate field of study from an assortment of other overlapping fields such as economics, sociology and even psychology started with the ideas given by Fredrick Winslow Taylor. Known as the father of scientific management, he had affluent parents who could meet the expense of giving him a good education that allowed his innate abilities to develop with time. He obtained a degree in engineering, held different jobs and while he was working at a steel company, he pieced together a system to make the company’s operations run smoother and with less wastage (Kanigel, 1997). This was the creation of the first theory of management rather than a theory of economics or social development and since then, further studies have been carried out in the same field by those who saw value in Taylor’s words. The Father of Scientific Management As one of the leading lights of the industrial age, Taylor’s theory of scientific management recognized that the people responsible for the management of a company have to cooperate with and consider the problems faced by the labour force (Boddy, 2002). Taylor made it clear that without efficient planning or recognizing the problems of the workers, no management system could increase profitability. According to the system devised by Taylor, productivity could be improved if the right person was found for doing the right job and that the person was to be given increasing rewards for increased performance. His systems and thoughts got popular enough in his own lifetime that he became the first recognized management consultant. He helped several businesses increase productivity while reducing labour costs to the extent that work which was previously done by hundreds of workers could be done with a few dozen (Nelson, 1980). His most famous work, The Principles of Scientific Management was written to describe a system which could be easily applied to many different companies at the time. Its usefulness is still accepted today since his ideas about improving both the lives of the workers and the performance of a company continue to remain important considerations for management personnel. The modern fields of organizational psychology, organizational behaviour and the scientific analysis of management techniques owe a lot to Taylor (Nelson, 1980). The industrial Revolution Of course the development of management theory is based on the advances made in other fields since the presence of computers and widespread application of information technology today has created fields within management such as information management. However, it must be noted that developing times and new tools have always been used by theorists to create new concepts and extend their ideas. Theorists such as Adam Smith, J.S. Mill and Malthus all gave their ideas about how the economic systems of the world should and can work but credit must be paid to those individuals who actually managed companies during the industrial revolution and afterwards when organisations and capitalist groups became the dominant economic force rather than land owning gentry. While things such as the Glorious Revolution, the French Revolution and the American Revolution are important to historians, The Industrial Revolution is one of more important to sociologists and economists since it was a major factor in the development of management studies and considerable cultural changes in the 18th and 19th centuries. It started in Britain and depending on the speed of knowledge transfer in that age and time, it soon spread throughout the world in some shape or the other. Within a few decades, the socioeconomic system that was based on manual labour was to be replaced by a culture which was dominated by industry and manufactured goods (Hobsbawm, 1999). Hobsbawm (1999) further suggests that the revolution started with the changes to the textile industries which were the first to start using machines. The creation of the machines themselves was based on the refinements in how iron was produced that allowed the creation of new tools and equipment. At the same time, other elements required for improved communications, delivery of goods and transport were more or less in place which helped to expand the trade between cities as well as countries. Waterways, improved conditions of roads and the presence of railways all helped in making sure that goods as well as people could move from one location to another without significant investments of time and money. Additionally, Mr. Watt had understood the genie contained in steam power and had unleashed it by 1760. Although earlier designs also existed he is credited with creating the first working steam engine which allowed machines to work much faster, better and at an untiring pace as compared to human effort. Steam power was also added to boats, ships and other means of transport but the effect it had on the workshops and industrial plants was the greatest in terms of how it would change the fabric of society Hobsbawm (1999). The Management Era The coming of The Enlightenment provided an established system which accepted the real business related applications of the growing body of scientific knowledge that had been accumulated by Britain. In fact, the development and perfection of the steam engine can be considered only a small part of it since the process of the Industrial Revolution was guided by scientific analysis and the development new political as well as socioeconomic systems (Hobsbawm, 1999). Many of the new thinkers and writers of the era were not a part of the landed gentry or even the nobility who had time and money to conduct scientific experiments or leisure time to think about their economic systems. In fact, they were workers or a part of the middle class who found time to improve their as well as other people’s lives. Undeniably, the revolution can find its original causes in the way people and especially the thinkers of the era were working. For example, the ideas of the age of enlightenment and the scientific revolution certainly influenced the industrial revolution. It was correct to think that machines could be used to replace labour and that production as well as output could be increased while quality could be maintained at an acceptable level. The enlightenment of the era and the massive increases in productivity owes a lot to the idea of scientific management of a factory or a plant. The idea of a factory as an environment which need to be managed came into being as the factory could be seen as the first end to end modernised production system. Different raw materials and products came in from different areas and after useful work had been done on those materials, finished goods could emerge form the other side. Those goods were then sold at a profit and as long as the factories were well managed, the owners of those factories would get richer and richer on a daily basis (Hobsbawm, 1999). Of course, the factory system also created a huge demand for skilled professionals and semiskilled workers and as a migration from rural to urban areas started in earnest. The modern city also came into being which brought the concept of management to city government. The mills and other industries of Manchester stand as a testament to that since it can be considered as the first city to experience the boom which comes with industrialisation. The owners of these factories and those who benefited from working within the factories became the middle class which was composed of professionals such as doctors, lawyers and business managers (Hobsbawm, 1999). The development of this type of manager in the late 19th and early 20th centuries focused on ideas such as standardisation of production output, control quality for reducing wastage and planning workflows to allow the maximum utilisation of the employees’ time. As a system for governing organisations and as an educational discipline, the first educational courses on the topic of management were offered in 1881. Other than Fredrick Winslow who has been mentioned earlier, other writers thinkers such as Henry Gantt produced their own theories and systems for managers to follow. Theses theories were combined and collected into more comprehensive ideas when the Harvard Business School started offering the MBA degree in 1921. Ideas based in psychology were brought into business to start the foundations of human resource management by writers such as Ordway Tead and Walter Scott. From a sociological perspective, we had thinkers such as Chester Barnard, Max Weber and Rensis Likert giving their theories about how to best manage an organisation for collective advantage. The modern multinational enterprise is quite simply an expansion of the same idea of a factory but it is not bound by location which adds to its complexity. There may be hundreds of elements which make up a company which is spread across the globe (Segal-Horn & Faulkner, 1999). The basic reason for the increased complication is the growth in the concept of globalisation and the operations of business without boundaries. While it might have been possible in the past to create and operate a giant company which has all inputs as well as outputs located in one country, it is certainly not the case for many businesses today (Edwards & Kuruvilla, 2005). Even in those times, a company could have its head office in London, the main production facility in China, while their product would be most highly sought after in Australia. The individuals working for the company in different locations were very likely to come from different cultures and different systems that they had been used to therefore a unifying culture was often imposed on other locations where the company operated (Hollinshead and Leat, 1995). While it may seem complicated, even today, such issues are just some of the basic concerns of a modern MNE (Johnson et. al., 2005). The Modern Company Porter’s Diamond Model is certainly applicable to the way modern multinational companies are structured and this model helps in explaining why Asia in general and China in particular has long been attractive to some of the world’s best companies. The last decade of the last century has shown us a broad flowering of entrepreneurship throughout Asia in the face of different challenges. Factors attributed to this trend include a huge wave of private equity and venture capital funding, but more importantly, regulatory laws for financing and capital acquisition were eased and the less stringent rules governing the listing of young companies at the various stock markets helped in many companies getting the money they need for business (Robinson, 2005). This has meant a huge influx of capital for countries which are ideally located for being the production houses of the world. Companies such as Apple, BMW and GE have used Chinese manufacturers or have established manufacturing bases in china to get a better position in the market by lowering their production costs. Since the overall cost of production in China is much cheaper than it would be in other countries, products are designed, developed and heavily marketed in the regions where they are to be consumed while they are assembled and produced in locations where the cost of production would be the lowest (Robinson, 2005). Clearly, in this case at least government policy and the system of capitalism which is being used in certain countries have a tremendous impact on the management theories and systems that can be used by the same country. There are industries such as automobile manufacturing where barriers to entry are so huge to begin with that the development of a global firm may be more or less impossible. In fact, a smaller, more agile company working with a high level of technology might find it easier to enter the global markets as exemplified by the online wine seller Oriel wines was the subject of the study done by Chozich (2005) who showed that a producer and supplier of wine could used the internet to give their clients an image of a global company which seems to be much larger than it actually is with a supply chain that runs from California to Germany and as far as Japan. In reality, the company is simple in structure, but the organisation of such an effort depends on several very complicated technologies which work together to make the modern global possible (Dicken, 2007). Chozich (2005) tells us that Oriel Wines which sells more than twenty varieties of wines from around the world with offices in Europe and in America. In reality, they employ only a staff of six people. What they use to get the advantage of size is the creative use of technology which gives them better footing overall. Therefore, while the company may be small in size, the operations of the company can certainly be on a global setting which can mean that the theories of management that had been written for global companies of tremendous size would have to be rewritten in modern times for smaller companies behaving like big companies. At the same time, we have recommendations from the business gurus of today such as Jack Welch who recommend that all companies should behave like small companies (Welch, 2005). In his opinion, keeping the culture and the organisational advantage of being a small business will help a company even though it may employ hundreds of people and have a huge budget to deal with. In effect, as suggested by MoreBusiness.com (2006) it is the complicated process of business thinking which needs to be changed to be more inline with the concept of the modern MNE rather than to seek changes with the company itself. GE as a global company pushes the idea of thinking globally while acting like a small company which is able to move with the times (Welch, 2005). Conclusion Moving with the times seems to be the overall mantra of management theory and the people who are associated with the idea of management as a discipline. Of course, there have been variations in terms of how and what the importance of management has been and entire dictionaries have been written in the explanation of buzzwords and fads which have come and gone but it does seem that the two most important changes which brought about fundamental shifts in the idea of management have been the industrial revolution and the coming of the information age. As time goes on, I feel that we shall no doubt see further development in management theories as well as practice. There may be buzzwords which some companies think are the cure for all their problems and others dismiss as fads and still others see as something that they have been doing for ages, but there will never be a proper substitute for good management or good managers who can really apply and work with established management theories. Works Cited Boddy, D. 2002, Management: An Introduction. Pearson. Chozich, A. 2005, ‘Managing Technology; Appearances Are Deceiving’, Wall Street Journal. 19 Sep, p. R7. Dicken, P, 2007, Global shift, Sage. Edwards, T. and Kuruvilla, S. 2005, ‘International HRM: national business systems, organizational politics and the international division of labour in MNCs’, International Journal of Human Resource Management, vol. 16, no. 1, p. 1-21. Hobsbawm, E. 1999, Industry and Empire: From 1750 to the Present Day, Norton. Hollinshead, G and Leat, M. 1995, Human Resource Management: An international and comparative perspective, FT Pitman Publishing. Johnson, G. et. al. 2005, Exploring Corporate Strategy, Prentice Hall Kanigel, R. 1997, The One Best Way. Viking. MoreBusiness. 2006, ‘Management Advantages of Small Companies’, MoreBusiness.com, [Online] Available at: http://www.morebusiness.com/running_your_business/management/d925763929.brc Nelson, D. 1980, Frederick W. Taylor and the Rise of Scientific Management. University of Wisconsin Press. Robinson, W. 2005, ‘Global Capitalism: The New Transnationalism and the Folly of Conventional Thinking.’ Science & Society, vol. 69 no. 3, pp316-328. Segal-Horn, S. and Faulkner, D. 1999, The dynamics of international Strategy, Thomson. Welch, J. 2005, Winning, HarperCollins. Read More