2. the Concept of Management

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s . . . . . . . . . . CHAPTER 2 The Concept of Management Concern with management in business organizations began with the advent of the industrial revolution that spanned the eighteenth and nineteenth centuries. Management theory arose as a tool to help administer the large and complex organizations that suddenly emerged as a result of the technological changes of that period. Now, effective management is considered the main resource of developed countries and probably the most need
  s CHAPTER 2 The Concept of Management Concern with management in business organizations began with the advent of the indus- trial revolution that spanned the eighteenth and nineteenth centuries. Management the- ry arose as a tool to help administer the large and complex organizations that suddenly emerged as a result of the technological changes of that period. Now, effective manage- ment is considered the main resource of developed countries and probably the most needed resource of developing ones. To be precise about the meaning of the term “management” and to circumscribe it within the scope of this study, this chapter first deals with its definition, as well as with some semantic problems. It then outlines the evolution of modern management, and fin- ishes by addressing the structure of the proposed integration between management and mining. DEFINITION OF MANAGEMENT The word management is often used loosely and with a variety of meanings. It can denote a subject, a rank, or even activity, producing confusion. As a subject, manage- ment is defined as a cumulative body of knowledge that provides insights to make the available knowledge productive. Peter Drucker 1993) regards management as the act of “supplying knowledge to find out how existing knowledge can be best applied to pro- duce results.” However, “the management” is also used to designate those people who occupy positions of authority or manage organizations. As an activity, management is usually defined as “a process of getting things done by people who operate in organized groups” Koontz 1962). Drucker’s meaning will mainly be used in the course of this study. Nonetheless, an understanding of the various uses and definitions of the term should certainly help to eliminate miscommunication during management-related discussions. When mining is related to management as a subject, it can be argued that today there is a great deal of knowledge about the economics of and techniques for exploiting mineral resources. However, this knowledge is not productive because it has failed to provide results. This leads to the conclusion that what the mining industry may need is not more technical knowledge about how to extract metals at lower costs, but just sound management that makes the existing knowledge productive. THE EVOLUTION OF MODERN MANAGEMENT Although it would be readily agreed that management problems have existed since the dawn of organized life, most would also agree that the first attempts to elaborate a for- mal body of theory took place at the turn of the twentieth century, with the pioneering works of Frederick W. Taylor 1911) in the United States and Henri Fayol 1916) in France. Both identified productivity problems and personnel management as keys to industrial success and applied rigorous analysis to solve the two problems. 7    Management of Mineral Resources Scientific Management and the Classical Approach Taylor’s definitive studies were made at the Bethlehem Steel Company in Pittsburgh, Pennsylvania. His primary goal was to increase worker efficiency by applying what he called the four essential elements of scientific management: 1 The replacement of rules of thumb with a scientific design of the job 2. The careful selection and subsequent training of the workforce 3. The integration of job design and people by a suitable reward scheme 4 The equal division of work and responsibility between workers and management. Even though the methods of scientific management associated with Taylor were supposed to apply to all aspects of the organization, they worked primarily on the shop floor, from the bottom of the organization up. Unlike Taylor, Fayol focused on the high level of the organization’s hierarchy and worked down throughout its whole structure. His insights are very useful for the purpose of this study, as he was educated as a mining engineer and nurtured his ideas about man- agement during an outstanding career in the mining industry. It started in France, in 1860, when he was appointed junior engineer of Commentry pits, a coal opera- tion owned by one of Europe’s largest but totally disorganized firms-the Commentry-Fourchambault Company. Six years later, he became manager and in 1872, general manager. After that, in 1888, when the whole enterprise was on the verge of bankruptcy, he took the helm of the parent company and succeeded in turning it around to reach a solid financial position by the time he retired in 1918. He remained a director of the company until his death in 1925. Fayol postulated that all industrial undertakings give rise to activities that can be split into technical, commercial, financial, security, accounting, and managerial. He con- ceived of management as a special activity concerned with forecasting and drawing up the business plan, assembling personnel, and coordinating and harmonizing the firm’s resources to achieve this plan. This definition is the basis for Fayol’s functions of manage- ment-planning, organizing, commanding, coordinating, and controlling. These func- tions are still considered a worthwhile division under which to study, analyze, and implement the whole management process. Over the years, this classical approach to management has been expanded, modified, and criticized by subsequent schools of thought. However, it is almost always possible to identify Fayol’s ideas in these other management theories that have tried to build up a discipline of administration based on this tradition. The main criticism of the classical school of management, particularly of the scien- tific management approach, has been that the human variable in the organization was not adequately integrated into the theory. In effect, in Taylor’s scientific approach, analy- sis focused on the individual worker, seen as an isolated unit whose activities must be rationalized in the interest of maximum productivity. Moreover, in the “Taylorian” spirit, the individual is viewed as a mere instrument of production that can be handled as easily as any other production factor. Human Relations and Decision Making Schools With the introduction of the behavioral sciences into the industrial scene, the managerial line of thought moved away from its previous formalism and took a more empirical and sociopsychological approach. The human relations movement, led by Elton Mayo 1933) and Abraham Maslow 1943), and the decision-making approach to organizations, pio- neered by Herbert Simon 1976), Richard M. Cyert, and James G. March 19921,  The Concept of Management 9 focused their attention on the impact of the organization’s structure on various aspects of individual behavior. From the perspective of the human relations school, the individual is seen as an agent with feelings and self-interested goals that often conflict with organizational goals. The worker is no longer perceived as an isolated psychological being but as a group member whose behavior is greatly controlled by group norms and values. Despite the humanistic flavor of this approach, its main concern is the study of how people behave in organizations, and its objective is their productivity. In this context, insights about work- ing conditions and the informal aspects of the organizational structure are often seen as additional factors to consider when shaping managerial policies. The same can be said about decision-making theory. The goal of this theory can be seen as an attempt to fill the gap between the rational elements of economists and man- agement theorists and the nonrational aspects brought to light by the human relations approach. Eventually, the theory reemphasizes the rational aspects of the organization and furnishes a general framework that can account for both rational and nonrational aspects of behavior. In addition, this framework can achieve an integration of the human relations approach and the classical school, albeit at an individual level. The framework assumes that, when one looks at the organization as a whole, what holds true for the individual decision maker remains true for all decision makers. Both these developments emphasize the social psychology of organizational behav- ior and focus on the individual level, consequently neglecting the whole organization and its environment. With this still-narrow perspective, the problems of social power and conflict, which arise when the organization is viewed from a broader perspective as a social system, are overlooked. The Systems School The systems theory of management, then, is an attempt to explain and predict the behav- ior of the organization-its people, structure, environment, and technology-not just by a single aspect of it as in the previous movements), but as a collection of interacting parts that must be viewed as a whole. The major contributor to this way of thinking is probably Talcott Parsons 1956), who described the organization as a social system, composed of various subsystems such as divisions and departments, embedded in a wider social system like a community or the society itself. Parsons identified four basic requirements for survival of this system: adaptation, goal achievement, integration, and latency. Adaptation refers to procuring all the resources necessary to achieve organizational goals, resources that then, in turn, must be mobilized to reach goal achievement. Integration deals with the relationships among subsystems, and latency refers to the inner conditions within subsystems and their rele- vance to the larger system. In this integrative view of the organization, Parsons viewed the dilemma of power as the problem of resource mobilization and the difficulty in making decisions for goal attainment. In contrast, Melville Dalton 1959), a more radical proponent of the system approach, saw the organization itself in terms of power and conflict among the groups or subgroups. Based on his experience as a participant-observer in six firms, he painted a revealing portrait of the organizational structure in terms of conflicting cliques and their endless struggles to gain more power and ensure a greater share of organizational rewards. His study brought the daily political activity of the organization to the surface. This activity is completely hidden from the outsider or even from naive theorists who base their findings only on interviews and questionnaires. This analysis shows, in a strik- ing way, to what extent organizational members and groups may be primarily interested  10 Management of Mineral Resources in the rational pursuit of their narrow interests and the consolidation of their own power positions, even at the expense of wider organizational interests. It also shows how this intense political activity is scrupulously and skillfully camouflaged so that the resulting policies appear to harmonize with the official ideology and the organizational code book Mouzelis 1968). Thirty years later, Robert Jackal1 1989) confirmed this particular view of the orga- nization in another reflective study intended to grasp the ethical behavior in several U.S. corporations. In a vivid and somewhat shocking manner, Jackall’s analysis revealed the hidden part of corporate America and capitalism, and conducted a clinical autopsy on the crude practice of management. In conclusion, it can be said that the systems approach has contributed to the devel- opment of management thinking in three major ways. First, it has shown that manage- ment must consider all the variables in the organization as a cohesive whole and not as separate items. Second, it has drawn attention to the importance of planning, as it has shown that formal organizations need a purpose, making it vital for managers to plan. And third, it has demonstrated that achieving the plan depends on monitoring actual results against planned results to correct any deviations. The Contingency Approach The contingency approach to management further illuminates the complex nature of the organization already emphasized by the systems approach, although in a more condi- tional context. Using this perspective, the study of organizations shifts from the search for the one ideal organization to the one that fits the task. By following this concept, the management style and organizational structure should reflect and evolve as the circum- stances and environment of the organization change. Put another way, managers should use whatever method is best for the organization according to the circumstances at that particular time. Advocates of this line of thinking are Henry Mintzberg and colleagues 1995), who reject the rationalistic approach to management because, in their view, it tries to explain how organizations should work rather than to understand how they ctu lly work. Mintzberg contends that there is no one best way in management and that no prescrip- tion works for all organizations. He points out that “even when a prescription seems effective in some context, it requires a sophisticated understanding of exactly what that context is and how it functions.” In other words, one cannot decide reliably what should be done in a system as complicated as a contemporary organization without a genuine understanding of how that organization really works. On the other hand, Mintzberg criticizes the assumption that a strategy is first formu- lated and then executed, with organizational structures and control systems following obediently behind strategy. He believes that formulation and implementation are inter- twined as complex interactive processes in which politics, values, organizational culture, and management styles determine or constrain particular strategic decisions. In fact, he compares strategists to potters, in the sense that managers are craftsmen and strategy is their clay. Unlike the prescriptive or normative models, which stress that a coherent strategy requires everything to be thought through in advance, Mintzberg asserts that people may act and get ideas from their actions. Like potters when displaying a retrospective of their work, they sit between a past of corporate capabilities) and a future of market opportunities).
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