CHAPTER 2
Traditional and Contemporary Issues
and Challenges
CHAPTER SUMMARY
Chapter 2 summarizes the history of management and identifies the major challenges facing managers
today. First, the historical context of business is discussed, then three traditional management
perspectives—the classical, behavioral, and quantitative—are introduced. Contemporary perspectives,
including the systems and contingency approaches, are described. The chapter concludes with a
discussion of a variety of contemporary management issues and challenges.
LEARNING OBJECTIVES
After covering this chapter, students should be able to:
1. Justify the importance of history and theory to management, and discuss precursors to modern
management theory.
4. Summarize and evaluate the quantitative perspective on management, including management
science and operations management, and note its relevance to contemporary managers.
The case describes the operations process at Steinway, the piano maker. It details the meticulous
attention to craftsmanship – the company needs 12 months, 12,000 parts, 450 craftspeople, and countless
hours of skilled labor to produce a grand piano – that makes Steinway’s products epitomes of quality.
Discussion Starter: To what extent should managers stick to what they and their firm does best, and to
LECTURE OUTLINE
I. THE ROLE OF THEORY AND HISTORY IN MANAGEMENT
A. The Importance of Theory and History
1. Why theory?—A theory is simply a conceptual framework for organizing knowledge and
providing a blueprint for action.
Teaching Tip: Many students seem to react negatively to the concept of a “theory.” Ask for student
Management Update: Andrew Grove, former CEO of Intel, continued to espouse his theory of
organizations until his retirement in 1990. He gave the theory credit for Intel’s continued success in the
2. Why history?—Contributions from past industrialists have molded the American culture,
and managers can benefit from an awareness of these contributions.
Discussion Question: Ask students if they have read any books about history that may help them be
better managers.
B. Precursors to Management Theory
1. Management in antiquity—Although the practice of management can be traced back to
Global Connection: Use Figure 2.1 as a framework to underscore the fact that management history has
its roots in many different cultures, countries, and eras.
Global Connection: Many Japanese executives today give some of the credit for their success to a
2. Early management pioneers
Robert Owen was one of the first managers to show respect and dignity to workers in his
factory. He implemented better working conditions, raised the minimum age for child
labor, reduced hours, and supplied meals.
Chapter 2: Traditional and Contemporary Issues and Challenges
Extra Example: Note that the very first introductory management textbook (Principles of
Management, by George Terry) was published in 1953, over 40 years ago.
II. THE CLASSICAL MANAGEMENT PERSPECTIVE
A. Scientific Management
Scientific management focuses on ways to improve the performance of individual workers.
Frederick W. Taylor saw workers soldiering, or deliberately working beneath their potential.
Extra Example: Frederick Taylor applied many of the concepts of scientific management to his
favorite sports, lawn tennis and croquet.
Extra Example: Another area in which Frank and Lillian Gilbreth made substantial contributions was
in assisting the handicapped. In particular, they helped develop vocational training methods for
Extra Example: Other businesses today that rely heavily on scientific management concepts include
poultry processing plants and recycling centers that sort glasses, plastics, and papers into different
categories.
Chapter 2: Traditional and Contemporary Issues and Challenges
B. Administrative Management
Administrative management focuses on managing the total organization.
Henri Fayol was the first to identify the four management functions—planning, organizing,
Cross-Reference: In addition to Fayol, many other writers over the years have attempted to develop
so-called principles, rules, or guidelines for management. However, these principles have never been
widely applicable. The reasons for this are discussed later in the chapter.
Lyndall Urwick is best known for integrating scientific management with administrative
Global Connection: Again, note the influence of foreign scholars. For example, Fayol was French,
Urwick was British, and Weber was German.
C. The Classical Management Perspective Today
Teaching Tip: Table 2.1 summarizes the contributions and limitations of the classical management
perspective.
Contributions:
(1)
Laid the foundation for management theory
managers that are still important today
inquiry
Limitations:
(1)
Best used in simple, stable organizations
appropriate in all settings
resources
III. THE BEHAVIORAL MANAGEMENT PERSPECTIVE
Hugo Munsterberg applied psychological concepts to industrial settings, founding the field of
industrial psychology around 1900.
Global Connection: Again, note the international influence on management as evidenced by Hugo
Chapter 2: Traditional and Contemporary Issues and Challenges
A. The Hawthorne Studies
The Hawthorne studies were held at Western Electric and sponsored by General Electric. Elton
Mayo and his colleagues controlled the lighting in one room of workers but not in another.
Discussion Starter: Recent evidence suggests that important details about the Hawthorne studies were
not reported properly. For example, all the workers in the illumination study were paid extra for
participating. What, if any, implications might be drawn from this?
B. The Human Relations Movement
The human relations movement, which stemmed from the Hawthorne studies, is based on the
Cross-Reference: Maslow’s theory is discussed in more detail in Chapter 16.
C. The Emergence of Organizational Behavior
D. The Behavioral Management Perspective Today
Teaching Tip: Table 2.3 summarizes the contributions and limitations of the behavioral management
perspective.
Contributions:
(1)
Gave insights into interpersonal processes such as motivation and group
dynamics in organizations
(3)
Challenged the view of employees as tools and not resources
Limitations:
(1)
Prediction was difficult due to the complexity of human behavior
Chapter 2: Traditional and Contemporary Issues and Challenges
IV. THE QUANTITATIVE MANAGEMENT PERSPECTIVE
The quantitative management perspective focuses on decision making, economic effectiveness,
mathematical models, and the use of computers. The two branches of the quantitative approach are
management science and operations management.
A. Management Science
Management science focuses specifically on the development of mathematical models. These
Extra Example: Many business programs today have separate courses in management science and/or
operations management. If your school has either or both courses, identify them by number and title for
your students and briefly review their topical coverage (i.e., their course descriptions).
C. The Quantitative Management Perspective Today
Teaching Tip: Table 2.4 summarizes the contributions and limitations of the quantitative management
perspective.
Contributions:
(1)
Developed sophisticated quantitative techniques to assist in decision
making
Limitations:
(1)
Cannot fully explain or predict behavior of people
(2)
Mathematical sophistication may come at the expense of other
important skills
V. INTEGRATING PERSPECTIVES FOR MANAGERS
Integrating perspectives, including the systems and contingency perspectives, bring together aspects
of classical, behavioral, and quantitative approaches.
A. The Systems Perspective
A system is an interrelated set of elements functioning as a whole.
Cross-Reference: Remind your students that we introduced the concept of a system in Chapter 1 and
Group Exercise: Break students up into small groups. Have them select an organization and diagram
its inputs, transformation processes, outputs, and feedback mechanisms.
Chapter 2: Traditional and Contemporary Issues and Challenges
Teaching Tip: Note the subtle but important distinction between entropy and poor management.
B. The Contingency Perspective
Appropriate managerial behavior depends on the elements of the situation.
because each is unique.
C. An Integrating Framework
Managers need to include the parts from each perspective that are relevant to their situation
Group Exercise: Form small groups of students. Have them identify a problem or opportunity facing a
business or other organization. Then have them identify elements and ideas from the classical,
behavioral, and quantitative perspectives that might be relevant. In addition, have them discuss how
systems and contingency perspectives might affect the situation.
VI. CONTEMPORARY MANAGEMENT ISSUES AND CHALLENGES
Teaching Tip: Figure 2.5 is a useful mechanism for illustrating the time frames across which different
management perspectives have evolved.
A. Contemporary Applied Perspectives
Discussion Starter: Ask students if they have read—or even heard of—Theory Z. Since most will not,
use this fact to discuss the faddish nature of many new approaches and ideas.
B. Contemporary Management Challenges
1. Sluggish economy
Cross-Reference: Many of the contemporary management challenges are covered in detail in other
parts of this book. For example, globalization is covered in detail in Chapter 5.
Chapter 2: Traditional and Contemporary Issues and Challenges
END OF CHAPTER QUESTIONS
Questions for Review
1. Briefly describe the principles of scientific management and administrative management. What
assumptions are made about workers?
Scientific management uses techniques such as time-and-motion studies and piecework pay systems
2. What are the differences between the contingency and the universal perspectives on management?
How is the contingency perspective useful in the practice of management today?
Contingency perspectives prescribe different approaches for different situations, while universal
3. Describe the systems perspective. Why is a business organization considered an open system?
The systems perspective tells us that organizations are systems composed of various elements that
4. For each of the contemporary management challenges, give at least one example other than the
examples found in the text.
An acute labor shortage is manifested in the health care industry today, where nurse and technician
shortages are driving up labor costs. How to handle an aging workforce is one issue in the
management of diversity. The current generation of workers is showing an increased interest in
Chapter 2: Traditional and Contemporary Issues and Challenges
Questions for Analysis
5. Young, innovative, or high-tech firms often adopt the strategy of ignoring history or attempting to
do something radically new. In what ways might this strategy help them? In what ways might this
strategy hinder them?
This strategy can be useful because it completely jettisons older systems, eliminating some of the
6. Can a manager use tools and techniques from several different perspectives at the same time? For
example, can a manager use both classical and behavioral perspectives? Give an example of a time
when a manager did this, and explain how it enabled him or her to be effective.
As noted in the text, any given management problem may be addressed by using elements and ideas
7. Visit the website of Amazon.com. Select the tab that reads “See All 32 Product Categories,” and then
choose the link for “Books.” Next select the link for “Bestsellers,” and click on “Business & Investing”
from the categories listed down the left side of the screen. Look at Amazon’s list of best-selling
business books. What ideas or themes do you see in the list? Which business leaders do you see?
A current bestseller at the time of publication of this Instructor’s Manual was Good to Great by Jim
Questions for Application
8. Go to the library or go online and locate material about Confucius. Outline his major ideas. Which
seem to be applicable to management in the United States today?
Students should emphasize the strong ethical base of Confucius’s teachings. Specific teachings
include personal virtue, devotion to family, and the pursuit of justice. Some students may look at the
Chapter 2: Traditional and Contemporary Issues and Challenges
9. Find a company that has laid off a significant number of workers in the last year. (Hint: Use the
word layoff as a search term on the Internet.) Investigate that company. Why did the firm make the
layoffs? In your opinion, is the company likely to accomplish its intended goal by laying off so
many workers? Why or why not?
Many companies are currently in the process of laying off workers, so examples will be easy to find.
10. Read about management pioneer Frederick Taylor at www.cftech.com/BrainBank/TRIVIABITS/
FredWTaylor.html or another source. Describe Taylor’s background and experience. How does an
understanding of Taylor’s early career help you to better understand his ideas about scientific
management?
Taylor was born into an affluent family, who didn’t understand his interest in applying scientific
principles to the study of manual labor. He worked as a factory worker, which was very unusual for
END OF CHAPTER EXERCISES
Building Effective Decision-Making Skills
I. Purpose
This exercise is designed to help students develop their decision-making skills, emphasizing the
importance of system interdependencies in organizations.
II. Format
This exercise is designed so that it can be effective when done individually or in small groups.
Answers could be written or presented to the class for evaluation. It should take less than a half
hour.
III. Follow-up
A. Carefully examine each of your three options. In what ways might each option affect other
parts of the organization?
The option to buy lower-grade materials will require changes in purchasing, but it will also
B. Which is the most costly option in terms of impact on other parts of the organization, not in
terms of absolute dollars? Which is the least costly?
Both lay-offs and inferior materials will be very costly for the organization. The use of inferior
Chapter 2: Traditional and Contemporary Issues and Challenges
C. What are the primary obstacles that you might face in trying to implement each of your three
options?
The option to use inferior materials may cause dissatisfaction from the workers, and will
CEO or other financial personnel, based on the increase in up-front costs.
D. Can you think of other options for accomplishing your goal of reducing costs?
Students may suggest cost-cutting ideas, such as better inventory control or improved use of
Building Effective Interpersonal Skills
I. Purpose
II. Format
This in-class exercise involves looking at 8 items that consists of two related statements and
MANAGEMENT AT WORK
HOW GE MANAGES TO DO IT
The case details the singular role played by General Electric (GE) in the development of modern
management practices. Ideas developed at GE permeate the fields of operations management, human
Management Update: When Jack Welch stepped down as CEO of GE, Jeffrey Immelt stepped into
Welch’s position. Bob Nardelli was one of the top executives at GE and when he was bypassed in favor
of Immelt, Home Depot immediately snatched him up to be their CEO. In 2009, Nardelli stepped down
as the CEO of Chrysler.
1. Case Question 1: Does the pattern of management developments at GE over the last century seem
to reflect the pattern suggested by management theory? Explain your answer.
In some ways, GE’s management contributions mirrored the development trends in management
2. Case Question 2: Which of GE’s management innovations seem to draw on a classical–
management perspective? Which seem to draw on a behavioral-management perspective? How does
the contingency perspective explain the management changes that GE has made over the years?
Explain each of your responses.
Administrative management is a subset of the classical management perspective. GE’s “Blue
Books” that detail managers’ every move is an example of a management practice that would fall
3. Case Question 3: Why, in your opinion, has GE been so successful in integrating the management
science approach with less quantitative approaches to management?
In 2008, GE Research was awarded the INFORMS prize, given annually to a firm that uses the
4. Case Question 4: In what ways does the change in GE’s approach to leadership reflect the same
conditions as those that influence its current approach to management?
Customer focus is the key driving force at GE. Its new approach to leadership includes emphasis on