Principles Of Management Flashcards
Meaning of rule by thumb and what was its limitation and what was its solution
Who found the solution and what was the solution founded . Define scientific management? Does this really work if yes then why
In the earlier days of the Industrial Revolution, in the absence of an established theory of factory organisation, factory owners or managers relied on personal judgment in attending to the problems they confronted in the course of managing their work. This is what is referred to as ‘rule of thumb’.
Managing factories by rule of thumb enabled them to handle the situations as they arose but suffered from the limitation of a trial and error approach.
For their experiences to be emulated, it was important to know what works and whydoesitwork.Forthis,therewas a need to follow an approach that was based on the method of science- defining a problem, developing alternative solutions, anticipating consequences, measuring progress and drawing conclusions.
In this scenario, Taylor emerged as the ‘Father of Scientific Management’. He proposed scientific management as opposed to rule of thumb. He broke up human activity into small parts and found out how it could be done effectively, in less time and with increased productivity.
It implies conducting business activities according to standardised tools, methods and trained personnel in order to increase the output, improve its quality and reduce costs and wastes.
In the words of Taylor, “Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way. The Bethlehem Steel company where Taylor himself worked achieved three-fold increase in productivity by application of scientific management principles.
Principles of scientific management
i) Science not Rule of Thumb: Taylor pioneered the introduction of the method of scientific inquiry into the domain of management practice. We have already referred to the limitations of the rule of thumb approach of management. As different managers would follow their
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indigenous rules of thumb, it is but a statement of the obvious that all would not be equally effective. Taylor believed that there was only one best method to maximise efficiency. This method can be developed through study and analysis. The method so developed should substitute ‘Rule of Thumb’ throughout the organisation. Scientific method involved investigation of traditional methods through work-study, unifying the best practices and developing a standard method, which would be followed throughout the organisation. According to Taylor, even a small production activity like loading pigs of iron into boxcars can be scientifically planned and managed. This can result in tremendous saving of human energy as well as wastage of time and materials. The more sophisticated the processes, greater would be the savings.
In the present context, the use of Internet has brought about dramatic improvements in internal efficiencies and customer satisfaction.
(ii) Harmony, Not Discord: Factory system of production implied that managers served as a link between the owners and the workers. Since as managers they had the mandate to ‘get work done’ from the workers, it should not be difficult for you to appreciate that there always existed the possibility of a kind of class-conflict, the mangers versus workers. Taylor recognised that this conflict helped none, the workers, the managers or the factory owners. He emphasised that there should be complete harmony between the management and workers. Both should realise that each one is important. To achieve this
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state, Taylor called for complete mental revolution on the part of both management and workers. It means that management and workers should transform their thinking. In such a situation even trade unions will not think of going on strike etc.
Management should share the gains of the company, if any, with the workers. At the same time workers should work hard and be willing to embrace change for the good of the company. Both should be part of the family. According to Taylor, ‘Scientific management has for its foundation the firm conviction that the true interests of the two are one and the same; that prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa’.
Japanese work culture is a classic example of such a situation. In Japanese companies, paternalistic style of management is in practice. There is complete openness between the manage- ment and workers. If at all workers go to strike they wear a black badge but work more than normal working hours to gain the sympathy of the management.
(iii) Cooperation, Not Individualism: There should be complete cooperation between the labour and the management instead of individualism. This principle is an extension of principle of ‘Harmony not discord’. Competition should be replaced by cooperation. Both should realise that they need each other.
For this, management should not close its ears to any constructive suggestions made by the employees. They should be rewarded for their suggestions which results in substantial reduction in costs. They should be part of management and, if any important decisions are taken, workers should be taken into confidence.
At the same time workers should desist from going on strike and making unreasonable demands on the management. In fact when there will be open communication system and goodwill there will be no need for even a trade union. Paternalistic style of management, whereby the employer takes care of the needs of employees, would prevail as in the case of Japanese companies.
According to Taylor, there should be an almost equal division of work and responsibility between workers and management. All the day long the management should work almost side by side with the workers helping, encouraging and smoothing the way for them.
4:Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity: Industrial efficiency depends to a large extent on personnel competencies. As such, scientific management also stood for worker development. Worker training was essential also to learn the ‘best method’ developed as a consequence of the scientific approach. Taylor was of the view that the concern for efficiency could be built in right from the process of employee selection. Each person should be scientifically selected. Then work assigned should suit her/his physical, mental and intellectual capabilities. To increase efficiency, they should be given the required training. Efficient employees would produce more and earn more. This will ensure their greatest efficiency and prosperity for both company and workers.
Different taylors scientific management techniques
functional foreManshiP
In the factory system, the foreman represents the managerial figure with whom the workers are in face-to-face contact on a daily basis. In the first chapter of the book, you have seen thattheforemanisthelowestranking manager and the highest ranking worker. He is the pivot around whom revolves the entire production
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planning, implementation and control. Thus, Taylor concentrated onimprovingtheperformanceofthis role in the factory set-up. In fact, he identified a list of qualities of a good foreman/supervisor and found that no singlepersoncouldfitthemall.This prompted him to suggest functional foremanship through eight persons.
Taylor advocated separation of planning and execution functions. This concept was extended to the lowest level of the shop floor. It was known as functional foremanship. Under the factory manager there was a planning incharge and a production incharge. Under planning incharge four personnel namely instruction card clerk, route clerk, time and cost clerk and a disciplinarian worked. These four personnel would draft instructions for the workers, specify the route of production, prepare time and cost sheet and ensure discipline respectively.
Under Production incharge, personnel who would work were speed boss, gang boss, repair boss, and inspector. These respectively were responsible for timely and accurate completion of job, keeping machines and tools etc., ready for operation by workers, ensure proper working condition of machines and tools and check the quality of work.
Functional foremanship is an extension of the principle of division of work and specialisation to the shop floor. Each worker will have to take orders from these eight foremen in the related process or function of production. Foremen should have intelligence, education, tact, grit, judgment, special knowledge, manual dexterity, and energy, honesty and good health. Since all these qualities could not be found in a single person so Taylor proposed eight specialists. Each specialist is to be assigned work according to her/his qualities. For example, those with technical mastery, intelligence and grit may be given planning work. Those with energy and good health may be assigned execution work.
standardisation and siMPlification of Work
Taylor was an ardent supporter of standardisation. According to him scientific method should be used to analyse methods of production
prevalent under the rule of thumb. The best practices can be kept and further refined to develop a standard which should be followed throughout the organisation. This can be done through work-study techniques which include time study, motion study, fatigue study and method study, and which are discussed further in this chapter. It may be pointed out that even the contemporary techniques of business process including reengineering, kaizen (continuous improvement) and benchmarking are aimed at standardising the work.
Standardisation refers to the process of setting standards for every business activity; it can be standardisation of process, raw material, time, product, machinery, methods or working conditions. These standards are the benchmarks, which must be adhered toduringproduction.Theobjectivesof standardisationare: (i) To reduce a given line or product to fixed types, sizes and characteristics.
(ii) To establish interchange ability of manufactured parts and products.
(iii) To establish standards of exce llence and quality in materials.
(iv) To establish standards of perfor mance of men and machines.
Simplification aims at eliminating superfluous varieties, sizes and dim ensionswhilestandardisationimplies devising new varieties instead of the existing ones. Simplification aims at eliminating unnecessary diversity of products.Itresultsinsavingsofcostof labour, machines and tools. It implies reduced inventories, fuller utilisation of equipment and increasing turnover.
Most large companies like Nokia, Toyota and Microsoft, etc. have successfully implemented standardi sation and simplification. This is evident from their large share in their respective markets.
Method Study
The objective of method study is to find out one best way of doing the job. There are various methods of doing the job. To determine the best way there are several parameters. Right from procurement of raw materials till the final product is delivered to the customer every activity is part of method study. Taylor devised the concept of assembly line by using method study. Ford Motor
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Company used this concept very successfully. Even now auto companies are using it.
The objective of the whole exercise is tominimisethecostofproductionand maximise the quality and satisfaction of the customer. For this purpose many techniques like process charts and operations research etc are used.
For designing a car, the assembly line production would entail deciding the sequence of operations, place for men, machines and raw materials etc. All this is part of method study.
Motion Study
Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions, etc., which are undertaken while doing a typical job. Unnecessary movements are sought to be eliminated so that it takes less time to complete the job efficiently. For example, Taylor and his associate Frank Gailberth were able to reduce motions in brick layering from 18 to just 5. Taylor demonstrated that productivity increased to about four times by this process.
On close examination of body motions, for example, it is possible to find out:
(i) Motions which are productive (ii) Motions which are incidental
(e.g., going to stores)
(iii) Motions which are unproductive.
Taylor used stopwatches and various symbols and colours to identify different motions. Through motion studies, Taylor was able to design suitable equipment and tools to educate workers on their use. The results achieved by him were truly remarkable.
tiMe study
Itdeterminesthestandardtimetaken to perform a well-defined job. Time measuring devices are used for each element of task. The standard time is fixed for the whole of the task by taking several readings. The method of time study will depend upon volume and frequency of the task, the cycle time of the operation and time measurement costs. The objective of time study is to determine the number of workers to be employed; frame suitable incentive schemes and determine labour costs.
For example, on the basis of several observations it is determined that standard time taken by the worker to make one cardboard box is 20 minutes. So in one hour she/he will make 3 boxes. Assuming that a workerhastoputin8hoursofwork inashiftanddeductingonehourfor rest and lunch, it is determined that in 7 hours a worker makes 21 boxes @ 3 boxes per hour. Now this is the standard task a worker has to do. Wages can be decided accordingly.
fatigue study
A person is bound to feel tired physically and mentally if she/he does not rest while working. The
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rest intervals will help one to regain stamina and work again with the same capacity. This will result in increased productivity. Fatigue study seeks to determine the amount and frequency of rest intervals in completing a task. For example, normally in a plant, work takes place in three shifts of eight hours each. Even in a single shift a worker has to be given some rest interval to take her/his lunch etc. If the work involves heavy manual labour then small pauses have to be frequently given to the worker so that she/he can recharge her/his energy level for optimum contribution.
There can be many causes for fatigue like long working hours, doing unsuitable work, having uncordial relations with the boss or bad working conditions etc. Such hindrances in good performance should be removed.
differential Piece Wage systeM
Taylor was a strong advocate of piece wage system. He wanted to differentiate between efficient and inefficient workers. The standard time and other parameters should be determined on the basis of the work- study discussed above. The workers can then be classified as efficient or inefficient on the basis of these standards. He wanted to reward efficient workers. So he introduced different rate of wage payment for those who performed above standard and for those who performed below standard. For example, it is determined that standard output per worker per day is 10 units and those who made standard or more than standard will get Rs. 50 per unit and those below will get Rs. 40 per unit. Now an efficient worker making 11 units will get 11�50= Rs. 550 per day whereas a worker who makes 9 units will get 9××�40 = Rs. 360 per day.
According to Taylor, the difference of Rs. 190 should be enough for the inefficient worker to be motivated to perform better. From his own experience, Taylor gives the example of a worker named Schmidt who was able to earn 60% more wages from $1.15 to $1.85 on increasing pig iron loading from 12.5 tons per man per day to 47 tons per man per day in box cars at Bethlehem Steel works by following scientific management techniques.
It is important to have a relook at the techniques of scientific management as comprising a unified whole of Taylor’s prescription of efficiency. Search for efficiency requires the search for one best method and the chosen method must lead to the determination of a fair day’s work. There must be a compensation system that differentiates those who are able to accomplish/exceed the fair day’s work. This differential system must be based on the premise that efficiency is the result of the joint efforts of the managers and the workers. Thus,
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rather than quarrelling over the shareintheresultantsurplus,the workers and managers should work in harmony for maximising the output rather than restricting it. Clearly the sum and substance of Taylor’s ideas lies not in the disjointed description of principles and techniques of scientific management, but in the change of the mindset, which he referred to as mental revolution. Mental revolution involves a change in the attitude of workers and management towards one another from competition to cooperation. Both should realise that they require one another. Both should aim to increase the size of surplus. This would eliminate the need for any agitation. Management should share a part of surplus with workers. Workers should also contribute their might so that the company makes profits. This attitude will be good for both of them and also for the company. In the long run only worker’s well-being will ensure prosperity of the business.
Now, having studied the elements, principles and techniques of scientific management we can consider the practical applications of the same at the time of F.W. Taylor and in the present.
We can also examine the present status of scientific management. Today, many new techniques have been developed as a sequel to scientific management. Operations research was developed in the second World War to optimise the deployment of war material. Similarly assembly line was also discovered by F.W. Taylor, which was used very successfully by Ford motor company for manufacturing ‘Model T’ car for the masses. This concept is much used now. The latest development in scientific management is ‘LEAN MANUFACTURING’. Now a days robotics and computers are being used in production and other business activities. This is part of scientific management of these activities. It has increased productivity levels. The techniques of operation research have also been developed and are being used as a result of scientific management. The box below gives meanings of some terms used in modern manufacturing.
Who is henry fayol and explainFayols principle of management’s
Henry fayol is the father of general management
Fayol’s Principles of Management 1.Division of Work
Step 1 - The work of business can be divided into small/specialised jobs/tasks.
Step 2 – Each task will be performed by a specialist or trained employees.
Step 3 – Division of work leads to specialisation. Which results in effective and efficient output.
Principle of division of work is applied to all kinds of work – managerial and technical.
2.Unity of Command
The principle of Unity of Command states that each participant in the formal organisation should receive orders from and be responsible to only one superior.
Dual subordination should be avoided to prevent confusion regarding task to be done.
If this principle is violated:
Authority is undermined, discipline is in jeopardy, order disturbed and stability threatened
3.Unity of Direction
An organisation is divided into units.
All units work towards achievement of organisational goals in a focused and coordinated manner.
Each group of activities having the same objective must have one head and one plan.
This ensures unity of action and coordination.
This avoids overlapping of actions
- Authority and Responsibility
AUTHORITY (meaning)
• it is the right to give orders and obtain obedience.
• Authority is of two types: (i) Official authority - Right
to Command.
(ii) Personal authority – Authority of indvidual manager.
• Authority is both formal and informal.
RESPONSIBILITY (meaning)
Responsibility is Corollary (something that results from something else) of authority.
AspertheprincipleofAuthorityandresponsibility there should be a balance between authority and responsibility.
• It must be ensured that
(i) Authority is not misused
(ii) And manager should have necessary authority to carry out his responsibility.
• Amanagershouldhavetherighttopunishthe subordinate for willfully not obeying a legitimate order but only after giving sufficient opportunity to subordinate to present his case.
- Centralisation and decentralisation
• Concentration of decision making authority is called centralisation.
• Dispersal of decision making power among more than one person is known as decentralisation
• Degree of decentralisation depends upon size and nature of organisation.
• According to Fayol there is a need to balance subordinate’s involvement through decentralisation with manager’s retention of final authority through centralisation
vi) Subordination of Individual Interest to General Interest: The interests of an organisation should take priority over the interests of any one individual employee according to Fayol. Every worker has some individual interest for working in a company. The company has got
its own objectives. For example, the company would want to get maximum output from its employees at a competitive cost (salary). On the other hand, an employee may want to get maximum salary while working the least. In another situation an individual employee may demand some concession, which is not admissible to any other employee like working for less time.
In all the situations the interests of the group/company will supersede the interest of any one individual. This is so because larger interests of the workers and stakeholders are more important than the interest of any one person.
7.Stability of Personnel
• Employee turnover (number of employees leaving the organisation in a year) should be minimised to improve efficiency.
• Personnel should be selected and appointed after a rigorous procedure.
• But once selected they should be kept at their post/position for a fixed tenure. They should have stability of tenure.
• This will help in saving recruitment selection and training cost.
- Remuneration of employees
• The remuneration of employees should be just and equitable i.e it must be fair to both employees and organisation.
• Employees should be paid fair wages it should provide them at least with reasonable standard of living.
• At the same time it should be within paying capacity of company.
9.Initiative
• Initiative means taking the first step with self motivation. It is thinking out and executing the plan. It is a trait of an intelligent person.
• Initiatives should be encouraged. (eg. Suggestion box)
• It does not mean going against established practices of business for the sake of being different.
In a good company employees should be rewarded for good suggestions.
- Equity
• Workers should be treated with fairness. Managers should be kind and just while dealing with workers.
• Lazy employees should be treated in a stern manner.
• There should be no discrimination on the basis of cast, gender, religion, nationality etc. - Esprit de corps
• Management should promote a team spirit of unity and harmony among employees.
• Manager should replace “I” with ‘We’ in ll his conversation with workers.
• This will help in:
(i) Bringing coordination
(ii) Develop spirit of mutual trust and belongingness.
(iii)Reduced use of penalties. (iv)Realising goals. - Discipline
• Discipline means obedience to organisational rules and employment agreement.
• Discipline requires good superior at all level, clear and fair agreements and judicious application of penalties.
• Both workers and management should honour their commitments. If management has promised something they should fulfill that. - Order
• A place for everything(everyone) and everything (everyone) should be at its place.
• People and material must be at suitable places at appropriate time.
• Effects:
(i) There will be no hindrance in activities of
factory/ business.
(ii) It will lead to increased productivity and efficiency. - Scalar Chain
• Organisation consists of superiors and subordinates. The formal lines of authority from highest to lowest ranks are known as Scalar Chain.
•
Organisations should have a chain of authority and communication that runs from top to bottom and should be followed by managers and subordinates.
However in an emergency it can be possible that a worker can contact CEO directly.
