History of Management Thought Revision Essay Example

History of Management Thought Revision Paper Part Two The Scientific Management Era The purpose of Part Two is to begin with the work of Frederick W. Taylor and trace developments in management thought in Great Britain, Europe, Japan, and the U. S. A. up to about 1929. Taylor is the focal point, but we will see his followers as well as developments in personnel management and the behavioral sciences. Henri Fayol and Max Weber will be discussed, although their main influence came later, and we will conclude with an overview of the influence of scientific management in its environment. Chapter 7 The Advent of Scientific Management Frederick W. Taylor is one of the more widely recognized names in the management literature. Far more rare, however, is an accurate account of him and his ideas. This chapter intends to portray Taylor with his faults as well as his virtues. Though sometimes inconsistent in what he said and what he practiced, there is little doubt that his contributions for his era were substantial. A. Taylors Early Years 1. His family background provided no indication of what his career would be like. His father had money and property and his mothers family history was deeply rooted in colonial times. Taylor had the advantage of a fine prep school, travels to Europe, and a membership in an exclusive social club. Yet, due to failing eyesight, he did not go to Harvard as planned but started as a factory apprentice. His early experiences as a worker would shape his view of management. 2. Taylor at Midvale Steel a. Started as a laborer, rose into management. This would lead to his â€Å"shop management† point of view. b. Took a home study course to get his college degree in mechanical engineering. c. We will write a custom essay sample on History of Management Thought Revision specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on History of Management Thought Revision specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on History of Management Thought Revision specifically for you FOR ONLY $16.38 $13.9/page Hire Writer As a worker, then a first line supervisor, he observed numerous industrial practices that led him to his lifes work. d. Restriction of output which Taylor classified into natural soldiering and systematic soldiering. e. Taylor thought maybe a supervisor could inspire or force workers to stop natural soldiering. f. Systematic soldiering resulted from group pressures for individuals to conform to output norms set by the work group. Taylor attributed this to a lump of labor theory. (Have your students define this theory and see if they can cite examples of group pressures at work, school, or wherever). g. Taylor felt he could overcome soldiering and improve the situation if workers knew that the production standards were established by a study of the job, rather than by historical data, and if incentives could be provided. 3. Search for Science in Management (it is important to point out that management is not a science in an academic sense, but Taylor intended to use a scientific fact-finding method to determine a better way): a. Time study this was prescriptive in that Taylor sought to identify the time a job should take (contrast this with Charles Babbage who measured only the length of a work cycle). b. Time study was analytical, breaking the job into its components and eliminating useless movements; and constructive, building a file of movements that were common to other jobs. c. Also, Taylor tried to improve tools, material, and machines. d. In modern terms, his concept of job design was to analyze the job, discard wasted movements, and reconstruct the job as it should be done. He also sought to find the right tools, the right way to operate the machinery and to make the job more efficient. Today we might call this ergonomics. 4. Incentives a. Pay for performance, that is, pay largely determined by a persons productivity, is ancient. For example, in the domestic system payment was received based on the quantity and quality of work. b. Once a standard was set through time study, rewards could be based on that. Taylor called that rate-fixing. c. Taylor discouraged profit sharing because it did not reward the individual and because it occurred long after the performance. d. Taylor adopted Charles Brinley’s â€Å"differential piece-rate† that paid those who did not reach the performance standard on ordinary rate of pay (much like a minimum wage); a higher rate of pay was given for attaining the standard. Taylor also recognized non-economic incentives, such as hope for advancement, better working conditions, etc. 5. Unions Taylor felt that unions wanted to base payment on class of work, not performance; thus an individual was not paid based on effort. 6. First-Class worker this was Taylors idea that everyone was best or first class at some type of work. There should be a match between a persons abilities and their job placement. 7. Functional Foreman Taylor had the idea that knowledge was authority. Supervisors could not know everything about the planning and performance of the work; therefore functional specialists would provide assistance to the workers. In retrospect, Taylor had recognized the need for staff advice and assistance from people who had special abilities or knowledge. B. Taylor after Midvale 1. He became a consultant for various firms, such as Simonds Rolling Company and Bethlehem Steel. Note and discuss â€Å"Schmidt† and the pig iron workers. Did Taylor tell a â€Å"pig-tale†? 2. What were Taylor’s views on teaching management? 3. Eastern Rate Case in this case before the U. S. Interstate Commerce Commission, Louis Brandeis, attorney for the shippers, used individuals to testify that the railroads did not need to increase their rates if they would adopt known management improvements. Brandeis coined the phrase scientific management to describe Taylors ideas. This brought a great deal of attention, some unwanted, to Taylor and his colleagues. Note the author’s comments about the accuracy of Emerson’s claims and Taylor’s reaction to Emerson’s testimony. 4. Watertown Taylors ideas were to be implemented at the federal arsenals at Watertown (Mass. ) and Rock Island (Ill. ). Representatives of the machinists union told the workers to resist and a strike occurred. 5. Congressional investigation the strike lasted one week, but Congressional representatives from the Watertown and Rock Island districts asked for an investigation of the Taylor and other efficiency systems. a. The testimony provides a sample of how Taylor was treated. (You might have your students role play the testimony, especially where Taylor was trying to clarify what he meant by first-class worker. ) b. No evidence was found that there were abuses under scientific management and no need for remedial legislation. Mental Revolution in his Congressional testimony, Taylor described his philosophy that labor and management had a mutuality of interests and needed to work together. This revolution emphasized the need of both labor and management to change their attitudes and work together, otherwise scientific management could not exist. Compare Taylor’s view with a union leader’s view by Nels Alifas. If all followed Alifas’ ideas, what would happen to the mental revolution? 7. Other ideas of Taylor: a. Human factor systems were not enough, but there must be a good relationship between managers and workers. b. Resistance to change this is to be expected, but with time and explanations, people would see the benefits. 8. Summary Taylor had his faults, did not always follow his advice to others, and sometimes became an advocate in selling his ideas. Despite these flaws, he came into the industrial scene at a time when better management was needed; he gave credibility to the idea of managing more efficiently while paying workers higher wages; he foresaw the need for planning through setting standards; others would extend his idea of first-class workers into better personnel management; and he made advances in improving jobs, tools, and methods. Chapter 8 Spreading the Gospel of Efficiency In Chapter 7 Frederick Taylor was the major figure but it should be made clear that the scientific management movement involved other individuals. Chapter 8 examines Carl Barth, Henry Gantt, Frank and Lillian Gilbreth, Harrington Emerson, and Morris Cooke as other important contributors to what Taylor was doing. A. Carl Barth 1. Mathematician who helped Taylor with some metal-cutting experiments. A very faithful follower of Taylors ideas (and probably a major influence in writing the official biography of Taylor). 2. Consultant assisted in installing scientific management in various companies. One was the Franklin Motor Car Company, which is interesting because it preceded Henry Fords moving assembly line. Cars were made in batches of models, and was amenable to scientific management. (I agree with Daniel Nelson, however, that scientific management was not important to the auto industry once the assembly line came in. Work was paced by the belt and individuals were no longer able to influence their output and therefore their reward. An interesting comparison between batch and mass production could be made, e. g. tandards, time study, personnel selection, supervision, and incentives. ) B. Henry L. Gantt 1. Gantt also started his career under the guidance of Taylor. Gantts early work paralleled Taylors in their beliefs about worker selection, incentives to reward performance, mutuality of interests, and so on. 2. To these basic agreements with Taylor Gantt added: a. Task work with a bonus to stimulate performance; but when he realized that provided little incentive beyond meeting the standard, he modified his payment plan. In this sense, he influenced Taylor because Taylor found that Gantts plan was better. b. Adopted E. P. Earle’s idea ofrewards to supervisors when their employees came up to standard; i. e. , rewarded for teaching and developing your employees. c. Gantts emphasis on the importance of morale. d. The Gantt Chart steadily evolved into a valuable tool for scheduling (planning) and controlling work. (1)Widely used during World War I (2)Became an international management technique. (3)A forerunner of subsequent planning and controlling techniques such as major milestones, PERT, CPM. e. The New Machine a group headed by Gantt to promote the idea that engineers should be industrial leaders. Social responsibility Gantts concern that business should not lose sight of its service role in the economy. C. Frank and Lillian Gilbreth 1. Frank worked in the construction trades and called his job design motion study. Independent of, but influenced by, Taylor. 2. Lillian our First Lady of Management for her accomplishments with her husband as well as after Franks death. 3. As partners, they made numerous contributions: a. Franks study of bricklaying; motion study; a white list to identify top workers in an appraisal system; and a bonus to employees for suggestions. b. Motion and fatigue study a joint effort to reduce fatigue and improve productivity. (You might suggest that one or more of your students read â€Å"Cheaper by the Dozen† by F. B. Gilbreth, Jr. and Ernestine G. Carey. â€Å"Cheaper by the Dozen† has appeared as a movie twice: the first had Clifton Webb play Frank and Myrna Loy portrayed Lillian; a more recent release has Steve Martin as Frank and Bonnie Hunt as Lillian. If class members can find both of these movies, a comparison and evaluation can be made—and a lively discussion. c. Other contributions: (1)Therbligs (2)Motion pictures with special lighting to study micromotions. Note that Frank offered this technique to Taylor. (3)Process charts to study the flow of work through the shop. (4)Promotion planning. (5) Pioneering work with handicapped employees. d. Psychology of Management Lillians original, but not final, Ph. D. dissertation. It was not industrial psychology, per se, but the psychological intent of scientific management. e. Lillian’s efforts to bring Gilbreth’s motion study and Taylor’s time study are worth mentioning. D. Harrington Emerson 1. He worked largely independent of Frederick Taylor but they corresponded and he was aware of Taylors ideas. . Emersons ideas focused on: a. The lack of organization, in Emersons view, was a major problem. He proposed the line-staff organization as a way of bringing staff knowledge to assist the line managers. b. Emersons line-staff idea was similar to Taylors desire to use the knowledge of functional foreman, but an improvement since it did not split the chain of command. c. Emerson t ook Taylors idea of setting performance standards and applied this to cost accounting. Standards could be established for what the costs should be, rather than estimating costs from previous records. d. Incentives Emerson provided 120% wages for 100% performance (the standard) and that increased if the worker produced more. e. Of Emersons numerous principles: clearly defined ideals (objectives), participative decision making, and the proper use of staff stand out as the more unique of his ideas. f. Emerson established a successful consulting practice and sought to improve ethical practices among consultants. E. Morris Cooke 1. Cooke worked closely with Taylor and became one of the four individuals Taylor considered his disciples (others were Gantt, Barth, and H. King Hathaway). 2. Cookes early work developed when Taylor sent him on various consulting assignments: a. In education, where he felt that college administration was inefficient. b. In government, where Cooke became Director of Public Works for the City of Philadelphia and successfully implemented scientific management. 3. Collaborated with Taylor in preparing Principles of Scientific Management and received the royalties for his efforts. 4. In his later work, Cooke became interested in getting the leaders of organized labor to work within scientific management ideas. a. Suggested that management needed to tap labors brains. b. Worked with labor leaders in gaining a better feeling about union-management cooperation. c. Served Presidents F. D. Roosevelt and Harry Truman in government positions. Chapter 9 The Human Factor: Preparing the Way This chapter has one purpose but many sub-topics. The common element is the emphasis on the human factor as it appeared in personnel management, psychology/ industria l psychology, sociology/industrial sociology, and employee participation in decision making as manifested in the trade union movement and industrial relations, union-management cooperation, and employee representation plans. A. Personnel Management: A Dual Heritage 1. One part of the beginnings of personnel management may be found in the industrial betterment/welfare movement. a. This movement found its basis in the Social Gospel and grew out of a concern for improving industrial conditions. b. A number of companies employed a welfare secretary to advise management. Their duties were many, and in some cases appeared to be paternalistic. c. Many, though not all, of these secretaries were females, perhaps because of their experience in vocational guidance or social work, or perhaps because some of their duties resembled a role stereotype of what a woman did i. e. menus, handling illnesses, etc. 2. Scientific management emphasized improved personnel selection, placement, wage plans, and other matters that involved employee welfare. Taylor had described this role but it was others who advanced personnel management. a. Mary Gilson would be one example of the scientific management viewpoint. b. Also Jane William s at Plimpton Press. c. The Henry Gantt/Elizabeth Briscoe clash at Bancroft Mills relates similarities and differences between the welfarists and those of scientific management. d. Henry Ford and his $5 per day minimum is worth mentioning, as well as his sociological department. (Ask the class what Fords advisers did does this sound like a modern social worker? Also, why was the sociological department changed? ) B. Psychology 1. This section begins with a plutology quote (1863) which resembles A. H. Maslows (1943) hierarchy of needs theory. The purpose is to show that this early insight came from deduction and introspection, not empirical study. 2. The pseudosciences also reflect this introspection, yet some of these, such as graphology and astrology, are claimed today to have merit. Students may comment, and accurately so, that at this point in history these were considered scientific and not pretenders to science. Phrenology is my favorite, especially if you pretend to be an on campus recruiter. ) 3. Industrial Psychology a. Wilhelm Wundt pioneered scientific psychology. b. But more importantly, Hugo Munsterberg applied this scientific approach to industrial problems. c. Munsterberg sought (1)the best possible worker (2)the best possible work (3)the best possible effect d. He advocated (1)tests for worker selection 2)research in the learning process in training (to me, this sounds like an early concept of what we would call transfer of learning theory). e. Others who were early in the field of industrial psychology are mentioned briefly in the text. (They are not emphasized, but you may find a favorite here to assign for your class. ) (1)Charles S. Myers (2)Walter Dill Scott (3)Cecil A. Mace (4)Morris S. Viteles C. The Social Person This section involves the antecedents of industrial sociology as well as sociological theory. (Again, different individuals and contributions are open to your choice. 1. Whiting Williams obviously a favorite of mine, and a person whose ideas have been long neglected. a. A white-collar personnel director who put on the clothes and guise of a worker to study work first hand. That is, a participant-observer. b. Emphasized the centrality of work (before the work of Bob Dubin and George W. England). c. Job defines social status as well as a persons place in the work situation. d. The workplace is a part of a larger social system. e. Saw earnings as a matter of social comparison influencing how a person viewed himself relative to others. My feeling is that Williams should be seen as the originator of equity theory. ) f. Workers mainspring was to be found in their relations with others (is this or is this not a pre-Hawthorne view of human relations? ) g. The Eleventh Commandment Thou shalt not take thy neighbor for granted still good advice. h. My conclusion is that industrial sociology began with Williams, and that the Social Gospel influenced his thought. 2. Sociological theory a. Emile Durkheim (1)anomie normlessness (2)mechanical societies were dominated by a collective consciousness. 3)organic societies were characterized by interdependence and the division of labor, leading to anomie. (Note that some modern writers use other definitions for mechanical and organic. ) (4)Durkheims thinking influenced the human relationists view of the need for social solidarity. b. Vilfredo Pareto (Not one of my favorites as I find his ideas on social systems clouded in jargon. I mention him, however, for : (1) The Pareto Circle that influenced the Harvard version of human relations. (2)Paretos influence on Chester Barnard and cooperative systems. . Social behaviorism may be worth mentioning because of the notion of the social person, the beginning of social psychology, and C. H. Cooleys looking glass self, a very interesting way of looking at the formation of self-efficacy, personality development, and a host of other ideas. d. Gestalt psychology definitely deserves a mention. A number of persons who we will encounter later, such as Mary Follett and Kurt Lewin, were gestaltists and the notion prevails in much of our modern thinking about group dynamics and sociotechnical systems. D. Employee participation in Decision Making This section examines three paths to give employees a â€Å"voice† in the firm or organization: 1. Through membership in a union that would represent the workers’. a. John R. Commons is a substantial figure here. Perhaps the first to use the phrase â€Å"human resources† and considered the â€Å"Father of Industrial Relations. b. Commons was not anti-scientific management because it worked in some firms, but felt workers needed a say-so in the workplace. c. Other economists were interested in â€Å"applied economics† issues such as turnover, job analysis, etc. . The position of Samuel Gompers and the AF of L was to achieve gains for organized labor through bargaining power, not productivity. Gompers said more, more, and then more was what labor wanted. 2. Union-management cooperation a. Morris Cooke, Ordway Tead, and Robert Valentine were examples of those who were trying to reformulate what labor felt was the uny ielding, no union, position of scientific management. The revised emphasis was to be on consent: b. Union-management cooperation plans began when union membership was in decline in the early 1920s. Unions agreed to accept scientific management if they were involved by electing representatives and could bargain about wages, hours, working conditions, and so on. 3. Employee representation plans a. These did not involve unions but the workers elected representatives and participated through shop councils and committees. Unions did not like these plans (no membership dues, perhaps). b. Commons studied 30 of these â€Å"industrial government† or industrial democracy plans. c. Henry Dennison’s plan is noteworthy for its progressiveness. d. The Sage Foundation study indicated most employee representation plans were progressive and improved labor-management relations. (In Part Three we will see the demise of union-management cooperation and employee representation plans with the passage of the National Labor Relations Act. ) Chapter 10 The Emergence of Management and Organization Theory This chapter discusses the work of two major management theorists, Henri Fayol and Max Weber. Fayol provided the basis for the modern approach to general management theory through the management process. Weber conceptualized bureaucracy to provide a formal approach to organization theory. A. Henri Fayol 1. Fayol was an engineer who rose in the management hierarchy to become the Director (CEO) of a large-scale, fully integrated enterprise formed his conception of management as the general activity of integrating the functions of the firm in order to intelligently use resources to attain the objectives of the firm. In the opening pages, note how he built his theory from his experiences. 2. While Frederick Taylor was more production oriented, Fayols viewpoint was that of general management. . Fayol drew certain conclusions from his experiences: a. Managerial abilities differed from technical ones, and the success of the firm depended to a greater degree on good managers than good technicians. b. Fayol felt that every organization required management regardless of whether it was commercial, industry, politics, religion, war etc. I feel there is much misunderstanding about what Fayol intended. This statement of his suggests the universality of management in that this activity is necessary in all organizations. It does not mean, at least to me, that managers are universal, that any manager can manage any organization. (This point is arguable and merits class discussion. ) c. Managers needed certain qualities, knowledge, and experience. d. Managerial abilities become more important as a person moves up in the hierarchy; technical abilities are less essential for upper level managers. (I like to point out to my students that most CEOs still have a fond place in their heart for their technical specialties engineering, chemistry, whatever even though they must decide for the firm as a whole. e. Management could be taught in schools and universities but was not because of the absence of management theory. (Theory has many meanings for individuals so you might ask your students to give their definition and compare that with Fayols. ) 4. Fayols Principles of Management (This is one of those areas where controversy can thrive some maintain that management principles is an oxymoron. My approach is to stress his disclaimer that there is nothing rigid or absolute in management and that Fayols principles were guides, lighthouses, but not absolutes nor universals. Since he has 14 principles, I do not try to cover them all but stress those below. ) a. Division of labor he appears rather traditional here regarding work design, but note the job enlargement he practiced in the Commentry coal mine. b. Authority the point here is his distinction between formal authority, the right to give orders and the power to exact obedience, and personal authority which was a compound of intelligence, experience, moral worth, ability to lead and so forth. Fayol was aware of the need to combine and complement the authority of position with leadership qualities. c. Unity of command standard, but worth a reminder for the students. d. Unity of direction good advice to a lot of organizations. e. Centralization note that this does not mean that all decisions are made by top level management but finding where decisions should be made depending on the factors Fayol mentions. f. The gangplank, a means for providing lateral communications. Fayols French for this was passerelle which translates as a bridge, foot-bridge, or gangway. Gangplank was Constance Storrs translation for passerelle but I am often reminded that gangplank is also what the pirates made you walk if you were behaving badly! ) g. Subordination of individual interests to the general interest. Put this in a contemporary context by asking students for examples of persons who use their position of authority to serve their self-interest rather than the interests of the firmâ€⠄¢s employees, shareholders, etc. 5. Fayols Elements of Management (This is another area that is plagued by terminology. Most introductory management texts use some version of Fayols description of what managers did, but the labels are different. ) a. Planning also could be translated as foresight, but very basic to Fayols theory: (1)Plans depended on the firms resources, work in process, and future trends that could not be predetermined. (Note that Fayols ideas resemble what would be called a strategic audit. ) (2)Plans needed to have the characteristics of unity, continuity, flexibility, and precision. 3)Long range planning certainly a unique idea for his time but a valuable contribution in the evolution of strategic management. b. Organizing Fayol included both the design of the organization and the staffing job of the manager in this element (I tell my class that organizational design is like developing the plot and roles in a drama, while staffing is selecting and rehearsing individuals to fill those roles. Try it, and let me know if it works for you. ) (1)Structure of the organization had to be consistent with the objectives, resources, and requirements of the firm. 2)Functional and scalar growth (these are described, but you may wish to review these concepts so you can explain Fayols span of control ideas. ) (3)Span of control relatively narrow at the top, but greater at lower levels, according to Fayol. (4)Staff (advisory personnel, not to be confused, as it often is, with staffing. No wonder our students struggle with the language of management. ) On the subject of staff, Fayol disagreed with Taylor; that is, line managers needed staff advice but not through functional foremen advising workers. 5)Staffing (today we call it personnel or human resource management) involved selection, evaluation, and training of personnel. c. Command: Fayols term for directing, leading, supervising, actuating, or whatever. d. Coordination: harmonizing the activities of the organization. e. Control: checking on performance to identify and make corrections, if necessary. 6. The author concludes that Fayol was a â€Å"strategist† before that term became popular. Discuss the pros and cons of Fayol as using strategic management skills. (Fayol spent relatively little time discussing command, coordination, and control. The point I stress is that planning, organizing [and staffing] set the stage for where we are going and when and how we intend to get there; then these plans, people, and resources are activated, led, motivated, and coordinated; and as our information system brings us performance data, the control element enables management to renew the elements by replanning, or reorganizing, or whatever has been indicated by our control system. Thus, management is a continuing process, not a neat set of discrete elements/functions that are performed without consideration of the other elements. ) B. Max Weber and Bureaucracy (To begin, ask the class what bureaucracy means. There is a high probability that this idea will be associated with rules, impersonality, inefficiency, and catch-22 situations. This opens the door for what Weber intended. ) 1. Webers Germany was characterized by cartels which limited competition; his interest in the capitalistic spirit (from Chapter 2) led him to ask if a market oriented society could operate large organizations on some rational, systematic basis? A good discussion point might be the quote from Weber about â€Å"rational capitalism† versus â€Å"greed. Is capitalism and its market system a â€Å"rational† way to allocate resources? 2. Bureaucracy as theory a. It was management by the office, not by person. b. It was an ideal, the pure form of organization but this did not mean that it was the most desirable. c. Weber is suggested as the founder of Organization Theory. 3. Authority Weber had three pure types: a. Rational legal b. Traditional c. Charismatic (Have your students describe each type. Then, ask if organizations can operate best on the rational-legal basis, as Weber argued. Why? Or, why not? ) 4. Elements of Bureaucracy Ask the students to review these and apply them to a university, business, or other organization. 5. Weber argued that bureaucracy was, technically, capable of attaining the highest degree of efficiency. If so, why do we think of bureaucracy as undesirable? Chapter 11 Scientific Management in Theory and Practice Our purpose in this chapter is to examine the impact of scientific management on management education, on international management, and on other disciplines. Second, we see the spread of management ideas beyond the factory and the emergence of general management. The chapter is replete with names so suggestions will be made below where different emphases might be placed. ) A. The Study and Practice of Scientific Management 1. Education for Industrial Management (This is one area you may wish to summarize. The main points are: a. Early in the 20th century, the teaching of management in colleges focused on production management and was based on Frederick Taylors writings. b. Daniel Nelsons observation that scientific management gave credibility to the study of business. Business schools were considered by educators of that time (and maybe today) as too vocational. . Scientific Management Internationally a. The management revolution spread abroad as a product of the U. S. A. b. In France, industrialists tended to implement scientific management to increase productivity without following Taylors advice. Taylorisme became a dirty word for French workers. c. In Britain, note the differing opinions on scientific management. d. In Poland, Adamieckis harmonogram was similar to PERT. e. In the U. S. S. R. (which at the time was the Soviet Union rather than as it stands now): (1)Lenin advocated Taylorism, but little came of this in practice. 2)Gilbreths ideas on motion study probably had more influence than Taylors ideas. (3)Taylors idea of a mental revolution ran counter to the Bolshevik distrust of capitalism. (4)Walter Polakov was successful in getting the U. S. S. R. to use Gantt Charts for their five year plans. f. In Japan, Taylors ideas gained widespread acceptance. The Japanese liked the idea of harmony, cooperation, and mutual interest. What modern scholars call Japanese style management had its roots in the work of Taylor. 3. Industrial Practice (Beau coup names here so select as you see fit. Briefly: a. The Hoxie study highlighted the difference between the notions of scientific management and how well they were implemented. Note, however, that the Hoxie report was a pro-union document and biased toward labor unions. Also, see John Frey’s later doubts about Hoxie himself. Also noteworthy are John R. Commons’ comments about why the Hoxie report was not included in the final report of the Industrial Relations Commission. b. Studies by C. B. Thompson and Daniel Nelson provide more accurate assessments of scientific management. c. It is worth emphasizing that Nelson concluded that scientific management had a strong positive correlation with industrial efficiency. Also, scientific management was associated with growth not stagnation in most industries. d. Scientific management was associated with batch shop production and labor intensive operations. But in capital intensive industries, or automobile assembly lines, scientific management was less useful. e. Evidence from the U. S. Bureau of Census disputes the notion that scientific management â€Å"de-skilled labor. † Rather, the number of skilled and unskilled workers was increasing during this period. Scientific management has been criticized for de-skilling jobs and your author and the employment data from this period suggests this has been perpetuated as an untruth. B. Emerging General Management 1. Scientific management and other disciplines (for your selection): a. Public administration b. Marketing c. Accounting and standard costing d. The crossover chart as a forerunner of break-even point. e. Flexible budgeting. f. J. O. McKinsey is an unsung pioneer for the business policy/strategy field. His influence on Bill Newman will be discussed later. 2. Early organization theory (very useful if this is an emphasis in your class): A brief summary of some previous notions of organization, line-staff, organization charts, etc. b. Russell Robb is the focal point of this section. His ideas involved: (1)Organizations differed as to goals sought as well as means to those goals. (2)These organizational differences suggested there was no one best way to organize. 3. DuPont and General Motors (I place more emphasis here because of the very innovative things that were happening during that period at DuPont and G. M. ) a. Psychological tests for personnel selection. b. Donaldson Brown and Return on Investment (ROI) as R = T x P. This became the basis of the DuPont Chart system that is still in use. c. William C. Durant is an interesting study, but briefly examined here. He was great at building a firm, but not noted as an outstanding manager. d. Alfred P. Sloan, Jr. and the creation of centralized policy, control, and review while decentralizing administration and operations. e. The use, by both G. M. and DuPont, of the multidivisional structure. Organized around product divisions, these divisions could be decentralized for operations and performance could be measured by ROI (when we speak of the M-form organization, here are its origins). 4. Business Policy and Philosophy (again, numerous ideas to consider): a. Arch W. Shaw and the beginning of a business policy course. b. The problem or case method of instruction borrowed from legal education. c. A. H. Church and his distinction between what we would call policy formulation and implementation. d. Oliver Sheldon and a philosophy of management built on the efficiency values of scientific management with the ethics of service to the community. Chapter 12 Scientific Management in Retrospect This chapter examines the scientific management era in light of its economic, technological, social, and political environment. The student should see how the ideas of managing shaped and were shaped by changing environmental factors. A. The Economic Environment 1. The U. S. A. was in transition from an agrarian to an industrial nation. In this period of growth, scientific management provided a means whereby a better utilization of resources could occur. 2. The U. S. work force was very diverse with immigrants from many lands. See the data for the Nation and the example of workers at Ford Motor. 3. Compare Taylor’s â€Å"mental revolution† with the â€Å"mutual gains strategy† of today. 4. The U. S. orker prospered, both in wages, real wages (purchasing power), and reduced hours of work. (See the data for 1865-1890 and 1890-1921. ) 5. More employees were in management with the addition of staff specialists. This growth in the managerial hierarchy made it more critical to plan, organize, etc. 6. Alfred Chandlers rationalization of resource utilization describes well the needs of industry during this era. The ideas of the scientific management pioneers fitted these needs. 7. Industrial efficiency was increasing, partially due to scientific management (see the data on productivity). B. Technology and New Horizons . A substantial number of today’s Fortune 500 companies started during this period. 2. New manufacturing processes in steel and metal-working. 3. Transportation advances by automobiles, aircraft, canal and bridge construction. 4. Emerging energy sources in petroleum and electricity. 5. Assembly line developments at Ford Motor. 6. Office work was reshaped by the mimeograph for copying, the typewriter, carbon paper, Hollerith’s punch card, and visual means of data presentation such as Gantt Charts. C. The Social Environment 1. Horatio Alger, Jr. characterized the success ethic of U. S. enterprise. 2. Scientific management ideas were consonant with the social values of self-directing, high need for achievement, individuals. 3. Change came as the Western frontier closed; Bill Scott called this the collision effect, which would lead to a transition period of individualism being replaced by a social ethic (coming in Part Three). 4. The Social Gospel described briefly here at the risk of repeating previous material. C. The Political Environment 1. The political articulation of the Social Gospel was the Populist-Progressive Movement. 2. Scientific management appealed to the Progressives, especially Morris Cooke. An increasing regulation of business during this time overcame the inadequacies of the earlier Sherman Act. 4. Check the tax rates they are a good way to capture a feeling for this era of relatively limited government. Part Three The Social Person Era Chapter 13 The Hawthorne Studies The purpose of this chapter is to describe the studies at the Hawthorne Plant of Western Electric, then a subsidiary of the American Telephone and Telegraph Company. The social person was not invented by these studies, but was elevated and brought to wider recognition by those who interpreted the results. The interesting thing about these studies is how they have been publicized, misinterpreted, praised, and criticized over these many years since the event. Each of us will bring some of our views in when teaching this chapter and it is interesting to find that the issues of Hawthorne have not been resolved but continue to generate articles and presentations. I have used the microfilm records of these studies and I am indebted to Chuck Wrege, Ron Greenwood, and Al Bolton for their seminal work. A. The Studies Begin 1. The original research issue was the effect of workplace illumination on worker productivity. Those who came initially to Hawthorne were electrical engineers from MIT. a. After establishing performance baselines in three departments, the researchers varied the level of illumination. Their conclusion: illumination appeared to have no influence on output. b. Another attempt was made with a control group and a variable group, placed in separate buildings. Again: in this case output went up in both groups. c. The illumination research was abandoned in 1927, but one of the researchers, Charles E. Snow, concluded there were too many variables and the psychology of the human individual could have been the most important one. The Relay Assembly Test Room a. The studies could have been trashed at this point, but Homer Hibarger and George Pennock pushed for further study. Pennock had an excellent insight: supervision was a better explanation. b. The participants were volunteers, knew the objectives of the study, and were observed for a short period in their regular department prior to going to a separate room with their observer. You may wish to indicate to your students that two of the original participants were replaced about 8 months into the experiment. This became an issue which is discussed in Chapter 17. A number of changes were introduced: (1)The incentive payment plan was changed such that the relay assembly group was rewarded on their output rather than on the output of the larger relay assembly department. Note that the participants were told that they could make more money under this arrangement this point will come into play later when various interpretations are made of why output increased. (2)Rest periods were introduced. (3)After 8 months, two operators quit and two new ones selected. (4)Work-day and work-week changes. (5)Lunch and refreshments were provided by the company. . Over a year after the studies began, all of these privileges, except the small group payment plan, were removed. While output varied, the overall trend was increased output. 3. Clair Turner and an early interpretation of the rise in output: a. The small group resulting in more esprit de corps. b. The style of supervision: the participants’ remarks are worth noting. c. Increased earnings: average wages went from $16 to $28-50 per week while in the test room. d. The novelty of the experiment. c. The attention given to the operators by others. 4. A second relay assembly group was formed by Clair Turner in an effort to test the pay for performance effects. Average earnings per week had increased significantly. a. The second relay group was formed and taken from the large group payment plan to the small group one. Initially, output went up and then leveled off. Note that this study lasted only 9 weeks. Then, this group was returned to the original payment plan, output dropped (and that was the end of the second group). b. Mica splitters had always been on individual pay incentives and this group was studied for 14 months. In this group, average hourly output went up during this period. Turner concluded that pay incentives were one factor, but not the only one, although it was of appreciable importance. (Chapter 17 provides a critique of the studies but my preference is to present and discuss Chapter 13 without reference to the criticisms. When we get to Chapter 17, we discuss the various interpretations of the studies and tie it all together. Other instructors may choose to tie 13 and 17 together in the discussion. The outcome should be the same. ) 5. The Interviewing Program a. Snow and Hibarger started asking the workers directed questions about their feelings. b. Elton Mayo made a contribution by changing the interviewing program to a nondirective approach. He felt that supervisors need to listen more. c. With the nondirective approach the length of the interviews and the information gathered increased: (1)There appeared to be a cathartic effect. After a worker complained, follow-up interviews revealed that the complaint was gone. The workers felt better even though no change in conditions had occurred. (2)Fact and sentiment had to be separated. (3)Two levels of complaints (a)Manifest, i. e. what the employee said. (b)Latent, the psychological content of the complaint. 4)Complaints were symptoms to be explored. (5)Pessimistic reveries (Mayos phrase) could be reduced if supervisors were concerned and listened to their employees. Thus, according to Mayo, pessimistic reveries would be negative attitudes held by employees that could interfere with their performance. 6. The Bank Wiring Room a. Concerned observation, but not intervention, with male workers assembling switches for central office switchboards. Note the supervisors’ objections before the study began. b. Restriction of output was a surprising finding even though this practice had been described by others. c. Workers had established an output norm that was lower than managements standard or the bogey. d. In the informal organization, there were two cliques, each having norms about appropriate in-group behavior, such as the practice of binging. e. Researchers found that the work groups: (1)Deliberately restricted output (2)Smoothed out production (3)Developed intragroup disciplinary methods. f. Some workers were isolates, not in a clique, because of various factors. g. Rules for clique membership: (1)Working too fast, a rate buster. (2)Working too slowly, a rate chiseler. (3)Do not squeal on a member of your group. 4)Do not act officious or be socially distant. h. Factory as a social organization; work groups served to protect the workers within their group, and to protect the group from outsiders. The workers viewed: (1)Technologists and managers as following a logic of efficiency which interfered with group activities. (2)Workers were apprehensive of authority and followed a logic of sentiments which reflected their feelings and attitudes toward outsiders. B. Human Relations, Leadership, and Motivation 1. The Hawthorne effect: part of the research and human relations folklore for years. Allegedly, the findings were biased because the experimenters became personally involved in the social-work situation. a. Theresa Layman, one of the participants, rebutted this; so did Don Chipman, one of the observer experimenters; and so did Clair Turner, one of the experimenters. b. The Hawthorne effect is widely referenced, but is a dubious explanation of the Hawthorne results. 2. Mayo felt â€Å"pessimistic reveries were one type of blockage which arose out of personal, social, and industrial problems and became manifest in apprehension of authority, restriction of output, etc. . Anomie, borrowed by Mayo from Emile Durkheim to describe the break-up of traditional society, leaving people without norms. 4. Leadership, in the view of Mayo and Roethlisberger, needed strengthening by social and human skills for the leader (note my feeling that Mayo and F. W. Taylor sought the same goal of collaboration and cooperation but differed in means). a. Influenced by Chester Barnard, Mayo co ncluded that authority had to be based on social skills in securing cooperation. b. Management needed to focus more on building group integrity and solidarity. c. First line supervisors were particularly important in good worker-manager relations. 5. Motivation in the human relations literature evolved and became more Mayo and Roethlisbergers advocacy than based on what happened at the Hawthorne plant. a. Early reports, such as Clair Turners report and Mark Putnams statement to Business Week, placed money as important. b. The test room participants stated they liked the fact they were able to make more money. c. Chuck Wrege cites a memo to Mayo in which he is told that economic and financial factors were of considerable importance. . As time passed, the Mayo-Roethlisberger theme shifted: (1)Example, Roethlisbergers memo that Mayo would be happy because of some evidence that physiological, not economic, factors were related to output. (2)More emphasis in later writings is placed on social belonging needs, being accepted by the group. (3)A later quote regarding discarding economic man. (Some of this discussion overlaps the critique in Chapter 1 7. You may find it to your liking to combine these differing views of what motivated the social person. ) Chapter 14 The Search for Organizational Integration This chapter focuses on two individuals, Mary Follett and Chester Barnard, both of whom are very important in the evolution of management thought. Follett was chronologically closer to the scientific management era, but intellectually a forerunner of understanding group processes. Barnard, on the other hand, influenced human relations thinking and continues to influence our understanding of organizations and management. A. Mary Parker Follett 1. Basis of her philosophy: a. Johann Fichte, Georg Hegel, and Gestalt psychologists. b. Early experiences led her to realize the need to rethink our ideas bout authority, leadership, and conflict resolution. 2. Conflict Resolution: She saw 4 ways a. Submission if in a conflict situation. b. Struggle, and someone wins and the other loses. c. Compromise, a solution she did not like, especially as it appeared in labor-management collective bargaining. d. Integration, finding a solution that did not involve compromise, submission, or struggle. My students are much more accustomed to bargaining or battle, and less at ease with trying to find a more creative solution. Folletts illustrations do not help our understanding of integration much either. The topic of conflict resolution does engender a lively class discussion if the students are prompted to think about labor-management relations, dating or marital relationships, or even international conflict. 3. Authority and Power a. Essential to integration would be rethinking authority and power. b. She advocated power-with and co-action to replace power-over and coercion. c. Depersonalize orders and follow the law of the situation. Ask your students if there is a similarity here with management by objectives which they may or may not yet be familiar with. d. Authority is based on knowledge and not the will of one person. I comment here that this sounds like F. W. Taylor and the functional foreman. The class may or may not agree. If not, this opens the door to a discussion of authority and influence. e. Power-with required circular response, disclosure and open discussion. f. Follett believed in employee representation plans (Chapter 9) because of cooperation and shared power. 4. Leadership a. Folletts notion of the role of the leader/manager was an extension of her ideas of integration and authority. b. Control could not be achieved without integrated efforts, that is, when interests were not reconciled. c. Control was based on facts, not people; and correlated, not imposed from above. d. Coordination facilitated control. e. Leadership, then, involved defining the purpose of the organi-zation and skills in coordinating and evoking the law of the situation. f. These leadership tasks were not based on the power of the leader, but a reciprocating influence of leaders and followers within the context of the situation. I find Follett fun to teach her ideas are unique and provoke discussion. She is often dismissed as too idealistic, out of touch in a tough world where decisions have to be made without time to implement her techniques. But, in a tough world can we make better decisions because people are involved and co-acting to achieve a common purpose? B. Chester Barnard 1. Cooperative Systems: a. Formal organizations as the kind of cooperation that is conscious, deliberate, and purposeful. b. Formal organizations helped: (1)Maintain an internal equilibrium. (2)Examine external forces to see if adjustments must be made. An open systems viewpoint. (3)Analyze the functions of executives. c. Organizations needed to be cooperative systems because people had choices and they could choose to contribute or not to contribute. d. The executive functions could modify actions and motives through influence and control. e. Effective-Efficient: individual and organizational goals might differ and Barnard expressed this as: (1)Effective, meet the goals of the organization. (2)Efficient, meeting individual motives, and only the individual could determine whether or not this was occurring. Students may find Barnards terms mean something different from previous definitions of effective and efficient. Mayo used logic of efficiency where Barnard meant effective. My advice to the class is to keep these definitions in mind only for Barnard. . The only measure of efficiency according to Barnard was the organizations capacity to survive. That is, to provide adequate inducements to satisfy individual motives to secure their cooperation. At this point, another question occurs: an organization must also be effective or it may not be able to be efficient. Rather than being dichotomous, are effective and efficient really co-acti ng? 2. Elements of formal organizations: Barnard defined a formal organization as a system of consciously coordinated activities or forces of two or more persons. The late Lyndall Urwick felt this definition was too broad, and quipped: under Barnards definition, a boy kissing a girl is also a formal organization. a. Willingness to cooperate, and this was to be facilitated by the offerings of objective and subjective incentives. Perhaps somewhat controversial is Barnards notion that this meant self-abnegation, surrender of control of personal conduct, and depersonalization of personal actions. Did this mean we lose our individuality? If so, then why did he stress the need to satisfy individual motives? b. Purpose, or objectives of the organization. Although individual and organizational motives were different, individuals could achieve their motives by working toward organizational purposes. This reminds me of Douglas McGregors Theory Y, which will be presented in Chapter 20. c. Communication, for which Barnard developed 3 principles: (1)Channels should be definitely known. (2)Objective authority (I interpret this to mean formal authority) requires a definite channel of communication. (3)Keep the line of communication short and direct. d. Informal organization, where Barnard also saw 3 universal elements: 1)Communication. (2)Maintenance of cohesiveness. (3)Maintenance of feelings of personal integrity and self-respect. It might be worthwhile to ask the class how Barnards notion of the informal organization compares with F. W. Taylors systematic soldiering and Elton Mayos illogical logic of sentiments. 3. Acceptance Theory of Authority a. Barnards definition of authority included the notion that a communication must be accepted by the organizational member. b. Authority did not reside in persons of authority, but in a members acceptance of authority. c. Individuals would consent to authority if four conditions were met: (1)They understood the communicated order. (2)They believed the order was consistent with the organizations purpose. (3)The order was compatible with their personal interests as a whole. (4)They were physically and mentally able to comply with the order. Depending on how much time you wish to spend on this topic, there are a number of implicit issues here regarding interpersonal communications, the clarity of the organizations purpose, and the morality/ethical possibil- ities regarding personal interests. d. Zone of indifference, Barnards phrase for explaining how an organization could function since members could accept or reject authority on almost any occasion. Individuals could be very indifferent, leading to a wider possibility of acceptance, or less indifferent. This depended on the individuals weighing the inducements, burdens, and sacrifices. In class, I may say: as your instructor, lets assume I have some a uthority in this class. How far can I go? Would you stand in your class seats if requested? Would you etc.? I find a fairly wide acceptance of reasonable requests, but for a promise of better grades the students become a lot more amenable to my suggestions. In some ways, this is scary. e. Authority of leadership, Barnards way of expressing the potentiality of assent created when people had respect for and confidence in their leaders. f. Authority still existed in the organizational hierarchy, in formal authority, but authority in the final analysis still rested with the organizational member. 4. The Functions of the Executive. Three, according to Barnard: a. Provide a system of communication. b. Promote securing personal efforts. c. Formulate and define organizational purpose. d. Decision making and â€Å"strategic factors. † Strategic factors was an idea that Barnard took from John R. Commons. e. In â€Å"logical† and â€Å"non-logical† decision making, Barnard reveals the importance of intuition, tacit knowledge, to go with logical decision making processes. 5. Moral leadership for Barnard involved executives having a high moral code, demonstrating it as an example, and seeking to create this morality in others. For discussion, this can lead you into recent examples of failures as well as successes of executives, financiers, and others in displaying their moral leadership. Chapter 15 People and Organizations My students refer to Chapters 15 and 16 as telephone book chapters, lots of names and some intellectual addresses where contributions were made. These are accurate assessments so I suggest that you tailor your assignments to fit your course objectives. In Chapter 15, I focus on Moreno, Lewin, Maslow, Scanlon, Lincoln, McCormick, Simon, and Whyte as well as the leadership studies at Michigan and Ohio State. For my purpose, these capsulize the research in group dynamics, changing behavior, job design, motivation, participation, leadership, decision making and socio-technical systems. A. People at Work: The Micro View I approach this as organizational behavior before it acquired that label. The bases of modern OB were being built during this era. 1. Eduard Lindeman a. Early study of group behavior in member interaction, participation, and attitudes. b. Origin of phrase participant-observer. c. Lindeman was a cohort of Mary Follett and they appear to have influenced each other. . Jacob Moreno a. Sociometry, trying to classify individuals into groups that were capable of harmonious relationships. b. Sociogram, mapping interpersonal preferences. Note the difference he found when preferences were for social vs. task mates. c. Psychodrama, a cathartic experience for an individual in a group setting. d. Sociodrama, the basis of role playing. e. Role reversal, taking the role of others and a us eful technique for working with culturally diverse groups. 3. Kurt Lewin a. Group dynamics and field theory. Gestalt notions for understanding individuals in groups. Note Moreno’s influence on Lewin. b. Quasi-stationary equilibrium. Groups never achieved a steady state but were continuously in a process of mutual adaptation. (This notion has led me to have numerous doubts about the findings of small group research projects. ) c. Leadership, perhaps an inappropriate label for a study of social climate in 10-11 year old boys. Lewin asked his counselors to role play democratic or authoritarian styles and found what he expected in the boys reactions. One counselor, however, misplayed his role and, rather than throwing the data out, Lewin called this laissez-faire. This style has persisted in the literature despite its inaccuracy. d. Changing behavior, Lewins finding that group participation facilitated the change process. His three step model is still a foundation for contemporary â€Å"action research† and organizational change: unfreezing through participation; moving to the new level; and freezing (reinforcing) the desired new behavi or. e. Lewins work became the basis for sensitivity training through his influence on Leland Bradford. B. Human and Industrial Relations 1. National Labor Relations Act of 1935 led to a new emphasis on collective bargaining and labor-management relations. 2. Interdisciplinary research such as the University of Chicago Committee on Human Relations. 3. Beginnings of industrial relations centers at various universities. 4. Increased interest in human relations training. C. Changing Assumptions about People at Work 1. Motivation, both Henry Murray and A. H. Maslow and the development of a need theory of motivation. a. Maslow and the hierarchy of human needs. b. Maslow’s â€Å"humanistic psychology† and the Third Force in psychology. . Joseph Scanlon, union official and later a colleague of Douglas McGregor at MIT. The Scanlon Plan: (1)A union-management productivity plan whereby groups of workers got bonuses for proposing savings in labor costs. (2)Group oriented. (3)Not profit sharing. d. James F. Lincoln, rewarding individual efforts based on skill ratings. (1)Wages and benefits were comparable to the Clevela nd area labor market. (2)In addition, bonuses were paid for performance based on quality and quantity of output as well as self-management (or, in contemporary terms, â€Å"empowerment†). 3)Bonuses were typically substantial until recent years. Have a class member check Lincoln Electric’s web site and/or Cleveland area newspapers for the latest on employee bonuses. 2. Job Enlargement, research in the 1940s by Walker and Guest indicated some possible improvements if jobs were designed to lengthen (broaden) the work cycle (you may want to stress that this concerned combining jobs rather than increasing job depth). 3. Participation, a power-equalization thesis of this period to play down the importance of the organizational hierarchy. 1)James Worthy, at Sears, Roebuck argued for flatter structures and decentralization. He also worked with the University of Chicagos Committee on Human Relations to study the impact of structure on employee morale. (2)William B. Given, Jr. , a bottom-up approach. (3)Charles P. McCormick, a plan for participation which is still operative in this tea, spice, and extract firm. Junior boards were created (multiple management) to improve communications, manager development, and coordination through participation. 4. Leadership a. T. W. Adorno and the F (for Fascist) scale. b. Rensis Likert and the University of Michigan studies of leadership orientations: (1)An employee orientation, stressing interpersonal relations. (2)A production orientation, focus on producing. (3)An employee orientation, coupled with more general supervision, led to higher productivity, better morale, lower turnover, greater group cohesiveness, and less employee anxiety. c. The leadership studies at Ohio State University, largely led by Ralph Stogdill and Carroll Shartle, also found a two dimensional orientation. (1)Initiating structure, acting to further the work objectives. 2)Consideration, emphasizing followers needs and interpersonal relations. d. Despite differing terminology, leadership was viewed by each as a two-by-two matrix of leader behaviors in which being people-oriented was not mutually exclusive of a production orientation. D. People at Work: The Macro View 1. William Foote Whytes study of restaurants. a. Status in the social system ran counter to the work flow and who initiated work for others in the technical system. b. Whytes work was key to the idea of socio-technical systems. c. Whyte is noted for â€Å"participatory action research. † 2. E. Edward] Wight Bakke, the interactions of the formal and informal systems; the bonds of organization; and the fusion process involving organizational position and personal views of standing or status. 3. Tavistock Institute and the work of Elliott Jacques. 4. Pioneering study of Trist and Bamforth on the impact of technology on The social system. 5. Herbert A. Simon, greatly influenced in his early work by Chester Barnard, was interested in how choices (decisions) were made: a. Limits that â€Å"bound the area of rationality made it difficult to achieve the best possible decision. Note Simon’s later use of the term â€Å"bounded rationality. b. Satisficing or good enough decisions were a result of the decision makers limited rationality. c. Composite decisions would be better because of th e limits on one persons capability to achieve better solutions; participation by different groups would be an improvement. d. With James March, Simon authored the influential book Organizations. They viewed organizations as complex networks of decision processes that influence human choices. 6. George C. Homans was influenced by the writings of Vilfredo Pareto through the seminars of L. J. Henderson. Another study of the relationships created when work and social systems interact. Various dimensions were found in: a. Activities, formal or informal. b. Interactions, prescribed or emergent. c. Sentiments, the elusive nature of feelings. Chapter 16 Organizations and People Again, one of those chapters with numerous names. The broad intent of the chapter is to prepare the foundation for a later discussion of management and organization theory. In contrast with Chapter 15, the focus is on formal organization, re

The eNotes Blog What the $$$$ Just Happened to My StudentLoans!!

What the $$$$ Just Happened to My StudentLoans!! Paying for college is tough enough, but have you heard about the recent hikes in interest rates for student loans? Read on to find out how this affects you as either a current student or someone in repayment, plus how government officials plan to resolve the issue of crippling student debt. As of yesterday, Stafford Loan interest rates doubled from 3.4% to 6.8%. Congress did not pass an alternative measure before the July 4th break, which will end at 2:00pm on Monday, July 8th. However, it still has the option to pass a measure that will retroactively affect the rise in interest rates, altering the Stafford Loan rates for this year’s students and perhaps others. This article will outline a few of the options Congress faces, what changes may be made, and how those changes might affect students with Stafford Loans. Protestors advocate against increased interest rates. What is a Stafford Loan and how does it work? Stafford Loans are the most common kind of federal student loans available. They are available to students at accredited institutions in the United States, a category to which most colleges and universities in the United States pertain. Stafford Loans can be either subsidized or unsubsidized. Of these, subsidized loans tend to have lower interest rates, and the federal government pays the interest that the loans accrue. Contrastingly, the interest that accumulates on unsubsidized Stafford Loans is capitalized, meaning that it is added to the part of the loan on which interest is paid. Subsidized Stafford Loans are available to those who demonstrate financial need via the Free Application for Federal Student Aid (FAFSA) form, which must be renewed each year a student wishes to apply. Unsubsidized Stafford Loans are available to all students who meet the Stafford Loan requirements, which can be found here. In addition to Stafford Loans, the government gives out PLUS Loans, which are unsubsidized loans and in the past have had higher interest rates than Stafford Loans. PLUS Loans are available to graduate students and parents of students. The Option Proposed by President Obama: President Obama proposed an option, named Pay As You Earn, which would tie the interest rates of student loans to those of the market, using ten-year Treasury Note interest rates as a benchmark. Subsidized Stafford Loans would have interest rates 0.93% above those of Treasury Notes, while unsubsidized loans and loans given to graduate students and parents would have rates 2.93% and 3.93% higher, respectively. The president’s proposed option would also cap monthly student payments at ten percent of their monthly income, and it would retire any student debt after it has been held for twenty years. While this option could be beneficial to many, it also carries with it a serious downfall: according to the New York Times, Treasury Note rates have been known to go as high as 8 or 9 percent, and if this were to happen again, it could lead to incredibly high student interest rates. Moreover, Obama’s plan would only apply to Stafford Loans taken during or after 2011. Finally, the plan’s use of fixed interest rates could leave students paying very high rates if they attend school during times of economic success. Senator Elizabeth Warren’s Plan: Student debt represents a serious economic issue. Senator Elizabeth Warren, a Democrat from Massachusetts, proposed a plan that would provide students with the same interest rates as those given to large banks when borrowing from the Federal Reserve (currently 0.75 percent). Warren voiced that the federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks the same banks that destroyed millions of jobs and nearly broke this economy (US News). But while Warren’s case may make sense at face value, it does not account for an important fact: banks are only given such low interest rates on very short-term loans, which are often paid back overnight. US News notes, â€Å"Even the U.S. government, the epitome of a trustworthy borrower, is paying around 1.8 percent in interest on its 10-year loans now, and nearly 3 percent on its 30-year loans.† Clearly, it doesn’t make economic sense to provide such drastically low interest rates to students when federal student loan default rates for borrowers are as high as they currently are (read more here). However, while Warren’s plan would cost the government a sizable amount of money, it is only a year long, with its intended purpose being to provide Congress with more time to find an alternative solution to raising student interest rates. Allow Interest Rates to Increase as Planned: Consumer advocate Stef Gray explains the effects of increased interest rates for students: â€Å"Ultimately what this is going to mean for students is that they’re going to pay – given a typical ten year repayment plan – four thousand dollars more. That’s an increase of a thousand dollars per year in college, and I think the average student could use an extra thousand dollars in his or her pocket.† She also highlights the fact that â€Å"the federal government currently makes thirty-six cents on every dollar that students borrow,† relating this to last years $51 billion ‘profit,’ which she points out is larger than the profits of any Fortune 500 company. But the federal government, says Dylan Matthews of the Washington Post, does not actually profit from student loans. In fact, â€Å"they actually lose money.† According to Matthews, this is because the government places â€Å"student loans below the market rate.† Why does this happen? Because the Congressional Budget Office, which is in charge of determining the cost of government loans, is required by law to use a method that â€Å"discounts all government loans using the returns on Treasuries of similar maturity.† Which is economist talk for having too much faith in students’ ability to pay back their loans, since Treasuries are far more reliable than student loans. Why does it look like the government is making money off of students? The method accounts for the higher returns that student loans give the government, but it does not factor in the default rates. In other words, it misses a key piece of information: the number of people that probably will n ot pay the government back. Ultimately, the argument cannot be made that the government is trying to make money off of students by raising interest rates on Stafford Loans because the government’s methods make this impossible. It can be argued, however, that increasing interest rates will also increase the default rates on student loans. What does this all boil down to? According to CBS News Analyst Mellody Hobson, certain social effects that carry deep economic implications have historically accompanied increases in student debt. To name a few, people start families later, home ownership goes down, and investment in new businesses drops, all of which lead to a slower economy. Because of this, the money that the government loses when lowering interest rates could be seen as an investment in the economy. This could be particularly important for congressional officers to keep in mind given the competition between domestic and foreign workers for job positions. If the government does not lower interest rates, students might be caught in a trap: On the one hand, students who pursue more education would be more qualified for jobs but subject to long-term debt that stifles their ability to participate in the economy. On the other hand, students who chose not to pursue higher education would not be subject to massive student debt, but they would be much less competitive in the job market. It would seem that lowering interest rates is not only in the students’ best interest, but also in that of the country. : Ellis, Blake. â€Å"Student Loan Default Rates Jump.† Money.CNN.com. http://money.cnn.com/2012/09/28/pf/college/student-loan-defaults/index.html. (accessed July 1, 2013). Gray, Stef. â€Å"Congress inaction to double student loan rates.† Youtube video, 6:35, posted by â€Å"RTAmerica,† June 21, 2013, youtube.com/watch?v=XfVp3RoD5F4. Kurtzleben, Danielle. â€Å"What Elizabeth Warren Gets Wrong (And Right) About Student Loans.† USNews.com. usnews.com/news/articles/2013/05/09/what-elizabeth-warren-gets-wrong-and-right-about-student-loans. (accessed July 1, 2013). Matthews, Dylan. â€Å"No the Federal Government Does Not Profit Off Student Loans (In Some Years – See Update).† WashingtonPost.com. washingtonpost.com/blogs/wonkblog/wp/2013/05/20/no-the-federal-government-does-not-profit-off-student-loans/. (accessed July 1, 2013). StaffordLoan.com. â€Å"Am I Eligible for a Stafford Loan?† StaffordLoan.com. staffordloan.com/stafford-loan-info/faq/am-i-eligible-for-a-stafford-loan.php. (accessed July 1, 2013). StaffordLoan.com. â€Å"Stafford Loan Frequently Asked Questions.† StaffordLoan.com. staffordloan.com/stafford-loan-info/faq/. (accessed July 1, 2013). Watson, Bruce. â€Å"Obama’s Proposed Student Loan Debt Remedy Carries A Hidden Trap.† DailyFinance.com. www.dailyfinance.com/on/obama-student-loan-debt-remedy-interest-rate-trap/. (accessed July 1, 2013). Weissmann, Jordan. â€Å"Here’s How Expensive Student Loans Could Be Under Obama’s New Plan.† TheAtlantic.com. theatlantic.com/business/archive/2013/04/heres-how-expensive-student-loans-could-be-under-obamas-new-plan/274879/. (accessed July 1, 2013). Wikipedia, s.v. â€Å"Stafford Loan,† accessed July 1, 2013. http://en.wikipedia.org/wiki/Stafford_Loan#Interest_rates.

Certification and accreditation Research Paper Example | Topics and Well Written Essays - 500 words

Certification and accreditation - Research Paper Example However, the information system must meet the approved safeguards or protection in the two domains i.e. technical and managerial. The duration of a typical certification and accreditation process should be executed in sixteen to eighteen months. However the duration will vary due to the complexity level of the networked environment. (Stark, 1994) The dissimilarity between a Certified and an information system auditor is a compliment of both these roles. The certifier will review the systems for compliance with the stated requirements from the regulations, law or the board (Langsley & American Board of, 1983). In contrast, the auditor will validate the results submitted by the certifier for meeting the requirements. However, it is not necessary that an auditor may be a part of the same organization (Stark, 1994). Likewise, information system auditor is responsible for carrying out an independent review or audit of examination of records and activities for accessing the appropriateness of system controls for assuring compliance with policies and procedures. Similarly, a certifier is associated with conducting technical decisions of complying systems with organizational requirements, conducting risk assessment focused on system operation, certification actions and combining or integrating the finalized certification along with accredited packages. The post of this individual is known as Information System Security Manager. Furthermore, the contribution of a reviewer is associated with internal organizational role that falls under the role of a certifier (Stark, 1994). The phase 5 of the Certification and Accreditation process called as Disposal is not addressed. For instance, there is always a disposal phase of any process, system, applications etc. likewise, the process of system disposal, few factors need consideration. These factors are mentioned below: Disposal of Storage devices: if an

Key Ideas of Liberalism Essay Example | Topics and Well Written Essays - 750 words

Key Ideas of Liberalism - Essay Example Political liberalism Liberalism supports constitutional democracy. Liberalism advocates for the protection of human and individual civil rights as well as their freedoms. Under political liberalism, every human being should be fairly and equally treated under the rule of law. Political liberalism seeks at preventing tyranny by supporting constitutional forms of democracy where power becomes vested upon individuals elected by people being governed (Hobhouse 2009, p.19). Liberalism advocates that representative democracy is the best form of government as there is balance between the rule and rights of minority. Liberalism ideally stipulates that power of government should be limited through decentralization. Liberalism vests the power of the government in the ability of people to choose their leaders through free and fair voting systems. Through constitutional democracy, liberalists postulate that the rule of law should be limited. People should be able to govern themselves by voting in their preferred lea ders. The church and government should be separated and treated differently. Political liberalism advocates for competitive politics through multi-party politics (Hobhouse 2009, p.19). Individuals become allowed to freely choose political parties that represent their ideologies. Governments’ sole aim becomes to protect the rights of its citizens by following a constitution designed by its citizens. The government should be distinguished from society according to political liberalism.... Trade should be designed to be free, fair and open within a state or between states. Liberalists argue that free, open and fair trade allow for economic expansion and promotes international peace. Economic liberalism also argues for economic freedom where individuals take part in economic forms they desire. Liberalists also stipulate that the state should provide equal economic opportunity for all. All human beings should be provided with economic freedom such as to trade. Social liberalism Social liberalism concerns itself with protection and expansion of human rights as well as civil liberty (Hobhouse 2009, p.14). Liberalism stipulates that governments should protect the rights of its individuals. Liberalist ideals argue for human rights such as those to speech, religion and association. Human rights and freedom should be accorded to everyone without the use of force. The freedom of speech allows for individuals to express their ideas freely without force or violence. Freedom of re ligion states that an individual has the freedom to worship whoever he or she desires. Under liberalism, individuals have the right to assembly or association. This allows for individuals to gather and associate with whoever they please. Social liberalism advocates for freedom and strength in a civil society. Social liberalism stipulates that individuals should be allowed their freedom unless it infringes on the rights of others under which they can become curtailed. Everybody is allowed the same equal rights not limited to their gender, race, ethnicity, religion, nationality or sexual orientation. Social liberalism ideals also allow for social inclusion and tolerance of different lifestyles unless they infringe on the rights of others.

Globalization; International Manufacturing, Outsourcing and Logistics Essay

Globalization; International Manufacturing, Outsourcing and Logistics - Essay Example Domestic manufacturing companies are facing numerous confrontations; they are finding it hard to survive in the existing market and are seeking manufacturing strategies for competing in the global market. (International Manufacturing strategy) International Marketing Strategy Survey (IMSS) set up in 1992 is a cooperative network of more than 600 manufacturing companies and 20 business schools that provides a database for the study of management strategies, direct information on trends on manufacturing market and practices on a global scale. IMSS aims at identifying the manufacturing management strategies and collectively achieve the strategic objective. (WheelWright & Hayes,1975) This also helps the companies to make a comparative analysis using the international benchmarks. IMSS encourages communication and interaction between different companies and management schools which helps in sharing best practices. (What is the IMSS?) Every country and state has different manufacturing regulations, economic factors, historical position, market size, product manufactured and strategies are tailored accordingly. (Per & Christopher, 1998) Before creating a strategy, understanding the practice and performance of the manufacturing company is essential. Managers need to make decisions on the investments, organization form, system to be used, technological factors, location and product factors. In order to understand and study the various issues in the manufacturing industry and help companies in making good decisions a research study was conducted by London Business School which aimed at investigating the industry’s practices, manufacturing strategies around the world which would help in making the best decisions.(Per & Christopher,1998) Manufacturing strategy refers to exploiting some properties and using them as a competitive weapon. There are different factors that are critical for deciding the strategy of a manufacturing company. A

LOreal one of the leading cosmetic companies

LOreal one of the leading cosmetic companies Introduction It is era of globalization where competition are increasing day by day, due to competition, it is hard for company to keep hold policy , old method of production . Companies need change to stay in the market. LOreal is a one of leading cosmetic company who is producing world famous brands , company regular making changes , like acquisition policy , building new research centres in most of developed countries. Using technology, and making stakeholder collaboration through using this technology. Organization structure and culture of the organization can play key role in the process of change . Change is not just changing the method of production but can be any type of change , either recruiting polices , making fair laws , adopting new laws which are implementing etc. Company background LOreal is known as the worlds leading cosmetics organization which has a portfolio that consists of many worlds dominant beauty products. Company sales almost 80% doing from outside the France, with action in every key region . It is only Cosmetics Company which has distribution, almost 140 countries. In year 1907 a young French chemist Eugene Schuler, developed a creative hair-colour formula. The named this new, completely safe hair dye Aureole. The history of LOreal began; Eugene Schueller invented and manufactured their own products. LOreal started their production with hair-colour business, but the company quickly pronged out in to other beauty products. Company marketing more than 5 hundreds brand and which have thousands of special products in all division of the beauty business. Styling aids, Hair colour, permanents, body and skin care, cleansers and fragrances. They are found in all distribution channels, from hair salons and perfumeries to hyper the supermarkets, health and beauty outlets, pharmacies and direct mail. DIFFERENT BRANDS AT LOREAL LOreal strives to make a reality within the reach of every woman and every man. CONSUMER PRODUCTS Ggarnier LOreal Paris Le club des createurs Maybelline ny Soft sheen Carson PROFESSIONAL PRODUCTS Loreal professional Kerastase Redken Matrix Mizani LUXURY PRODUCTS Lancom Biotherm Helena rubinstein Kiehls Shu uemura Giorgio armani Ralph lauren Cacharel Viktor rolf Diesel ACTIVE COSTEMETICS Vichy La roche-posay Ineov Skin ceuticals ENVIRONMENTAL ANALYSIS Kotler .P. (1996) Planning start with complete analysis of companys situation, company do analyse environmental to find the opportunities and to escape threats of environment. For change and its implementation environmental analyse is play dominant role. SWOT ANALYSIS Needham Dave Dransfield Rob( 2000) SWOT analysis is known as strategic planning tool which used to assess strengths , weaknesses , opportunities and threats STRENGTH LOreal is considered the biggest seller of hair care and beauty product in the whole world, spotlighting on 19 global brands. Numbers of these products are expanded through price and some by culture image. LOreal is building the attraction of various cultures through its products. Consequently, LOreal is reaching out more people across a bigger range of incomes and cultures. The 2nd strength is that LOreal offering a huge significance and spending lots on research and improvement uses and expands leading-edge technology and effectively introduces new product. Company has about 16 research centres across the world and 13 evaluation centres. Its opened recently opened new research and development centre in, Shanghai China . LOreal strategy of diversity and training of its workforce is one of the assets. Company employing group of people from different backgrounds which leads to improve creativity and innovation. Development and preparation can play vital part of life at LOreal each year approximately 100 employees attend industry-specific and leadership development training and conferences at LOreal management development centres in Tokyo, Paris and New York. LOreals acquisition strategy- aspirant on integrating recognized and well-known brands. Examples of unbeaten acquisitions are Carson Inc which measured as the 3rd largest provider of adult womens hair relaxer in America. The acquisition of body shop the British natural based cosmetics retailer with bout 2,290 stores through out worldwide. Company making more attractive to the green consumer those strives no doubt after look both their environment and body , there is no doubt. Company strength stated as strong sales diagonally all geographical area with rising posting market the faster like for like growth rate for the phase. Its took advantages of economies of scale in packaging and advertising result as a LOreal operation profitability which has been increased through cost cutting efforts. WEAKNESSES Organizational decentralized structure which makes control more tricky. Global market functioning , the problems increase due to coordination and control of performances and image. Companys geographical power is currently determined on western European over trust on full grown Western European market ,which gives maturity offers few predictions for growth. During 90s LOreal was hit by claims over past links to racial discrimination, anti-Semitism which are giving of jobs to Nazi co-workers after the World War two. They went some way to satisfy there critics with a boardroom change and other measures. Liliane Bettencourt, LOreals main shareholder, is known as the wealthiest lady in France. Two years ago LOreals slogan was reduced from Because Im worth it to Because youre worth it after fears in France that the original emerged too money-oriented. During July 2007, the Garnier division and an external employment agency were fined à ¢Ã¢â‚¬Å¡Ã‚ ¬30,000 for employment practices that disqualified non-white women from sponsoring its shampoo, Fructis Style. LOreal is report as proverb the decision was incomprehensible, and will challenge the measure in court. During May 2007, LOreal was one of number cosmetic manufacturers ordered by the Therapeutic Goods Administration in Australia (The TGA is responsible for conducting assessment and monitoring activities to ensure that therapeutic goods accessible in Australia are of an acceptable standard and that access to therapeutic advances is in a timely manner) to withdraw advertising regarding the wrinkle elimination capabilities of their products. One experienced candidate said she realize it was not eligible because she was of mixed race. In July 2007, the British Advertising Standards Authority knocked LOreal for a television commercial on its Telescopic mascara, featuring Penà ©lope Cruz, stating it will make you eyelashes 60% longer. In reality, it only made the lashes look 60% bigger, with thickening and separating the roots and by thickening the tips of the lashes. They also failed to state that the model was wearing false eyelashes, a common trick of the trade. Rumours of LOreals failing in US have been seriously inflated as The groups North American division is yet the smallest contributor to sales, accounting for approximately 25% of the total in the first nine months of 2007 and contributing barely 13.5% of sales growth in that period. Different emission gases causing harm to environment Great disaster for the environment storage of different fuels and chemicals underground. Different flammable and gases toxic mainly fire used for different chemical reactions is consider major risk for environment. It is first French organization which is convicted for racial bias cosmetic giant fined for its recruitment campaign. July, 7 2009 The Guardian an article regarding worlds biggest beauty firm Part of the cosmetics giant LOreal was found guilty of racial discrimination after it sought to exclude non-white women from promoting its shampoo. It is a landmark case, the Garnier division of the beauty empire, along with a recruitment agency it employed, were fined à ¢Ã¢â‚¬Å¡Ã‚ ¬30,000 ( £20,300) each after they recruited women on the basis of race. The historic ruling the first time a major company has been found guilty of systematic race discrimination in France saw a senior figure at the agency given a three-month suspended prison sentence.(The Guardian, July, 7, 2009). OPPORTUNITIES Company has chance to develop rising presence in promising markets their activities in rising areas such as Eastern Europe, Africa and Middle East where growth in cosmetics and toiletries sales is normally to precede that of global sales. It has a three largest potential market to expand which are Russia, Brazil and china. LOreals acquisition of already recognized brands offered opportunities to enter new areas at lower costs Diversity by promise. Training at school levels Adopted measures to combat discrimination and support diversity and equal opportunity for all by signing charter for Corporate Commitment to Equal Opportunities in France. Worldwide profit sharing scheme Increase in proportion of Female manager up to 54% and 34% in management committees LOreal set up 22 Observatories on diversity in France. LOreal helped the Disadvantaged finding jobs about 657,429 applications received of which 63,691 were interviewed and 2,333 managers were recruited which is 15% higher than 2005. Follow Up and Integration Track FIT is a project started by LOreal for optimum integration of new employees. LOreal since 2001 started Worldwide Profit Sharing Plan implanted in all the countries. Opportunities for suppliers with a commitment of long term partnership based on mutual respect, sharing of information, transparency and strong communication and high standards. Share their expertise with suppliers to overcome challenges in the outer world with regular business reviews, logistics, and development, packaging and innovation meetings. SHE (Safety, Health and Environment) to identify strategic business opportunities. Signing up of letter for Ethical Commitment by suppliers available in 11 languages. Opening of 89 new stores in Western Europe 15, North America 8 and rest of the world 66. LOreal market share with Body Shop in 2006 is 15.6% THREATS Rivalry from private labels, LOreal is facing threats from growing shocks of private label products. Several of private label cosmetics and toiletries are getting better in quality and attracting customers. The bigger problem for global brands like LOreal is that the retailers are turning over more and more shelf space to their own labels. Brand Copying risk Dubai Perfume Company Bellure sold low-value scents that it stated smelled same as perfumes. It marketed the products on this basis, using wrapping that winked at the related company designs, and published assessment charts that named exacting company perfumes. LOreal sued for infringement of its trademarks and passing off, declaring that Bellures marketing materials took excessive advantage of the quality and repute of LOreals perfume brands. Company won the first round in the High Court, but in 2007 the case came to the Court of Appeal. It is now in limbo, pending a ruling from the ECJ, but a swing the other way looks likely. The Court of Appeals view was that the public are not stupid. It was unconvinced there was any likelihood that a low-value smell-alike product would be confused with the original and took the view that, even if Bellure gained an advantage through comparing its products to LOreals, it did not follow that it was an unfair advantage. (I marketi ng journal)  (Nov 28, 2007): PORTERS FIVE FORCES Porter (1980) in an industry the state of competition depends on five basic competitive forces. The combined strength of these forces establishes the final profit possible in the industry, where profit potential is prà ©cised in term of long run return on invested capital. Not all industries have the similar potential. They differ fundamentally in their ultimate profit potential as the collective strength of the forces differs; the forces range from intense industries. Bargaining Power of Buyers: Buyers power is high as there is a large range of products and every company is competing to attract the customers. Nevertheless LOreals sole products put it in the top of competition. Bargaining Power of Suppliers: Bargaining power of traders is low because of LOreals acquisitions of several brands and also due to its huge market share which gives it the potential for monopoly. Additionally, LOreals strategy is to create strong and long term relationship with their traders. Competitive Rivalry: Aggressive rivalry in the cosmetic industry is high. There are many of existing cosmetic companies challenging in the market and the major competitors of LOreal are Unilever and Proctor Gamble. LOreal decreases the competition by acquiring many well known brands in the market and also, it succeeded to stay ahead of the competition because of its strong portfolio of global brands. Threats of new entrants: The threat of new candidate is low and it is hard for new companies to enter this market. Barriers to entering this market contain: The extensive time and expense essential to build a brand status to overcome existing costumers likings. The extensive costs for promotional and commercial activity to protect the distribution and situation of a new entrants products in retail outlets. The incapability of a new candidate to recover rapidly its huge investment in promoting its brand. The difficulty of securing shelf-space in retail outlets. Threat of Substitutes: Products alternative are not presented in the market. LOreal products are distinguished from other products because of its strong assurance to research and development. It functions 12 research and development centres around the world. All of its products are based-on intensive scientific research and on gradually more targeted advance to enhance the quality. It employs 3,000 scientists who work in state-of-the-art research centres around the world. This allows it to justify price differences as compared with low priced products and retailer brands. (Loreal websit) Information Technology and LOreal Koontz H and Weihrich H( 1999) IT can play vital role affecting the scale ,nature of business for instance ,IT used in connection to sales based ordering (SBO) or efficient consumer response (ECR) ,provide help to organisation to reduce the cost and remove the time barriers . John Dawson (1996) IT provide knowledge based investment , alliance based investment and productivity based investment ,which provide opportunity for new entrants in the market .For LOreal success IT is a key factor , it can further help to reduce the cost and making the right decision at right time , at right cost , at right place. LOreal operating in many countries, IT provides the connectivity with all stakeholder and first hand interaction. Diversification of business Zook and Allen (2001) It suggest that most sustainable growth Pattern is that of the strong or leading core business that remuneration from continual reinvestment, constant adaptation to circumstances or business environment, and persistent leveraging of the competitive advantage formed by these strengths into new markets or geographies, applications, or channels. Further suggest that management teams constantly meet with opportunities for concentric diversification and that taking advantage of these opportunities is at times absolutely necessary in order to strengthen the core. Leavitt, H.J. (1965), Diversification helps to manage the change , like company build their operation in many countries and reduce the cost. CHANGE MANAGEMENT Czarniawska, B. (1999), Change management (or change control) is the process during which the changes of a system are implemented in a controlled manner by following a pre-defined system with, to some extent, reasonable changes. Change management is a structured approach to transitioning individuals, teams, and organizations from a present state to a desired state. The current definition of Change Management includes both organizational change management framework and individual change management models, which together are used to manage the people change management. Individual change management A number of techniques are available for understanding the transitioning of individuals through the phases of change management and strengthening organizational development initiative in both government and corporate sectors. Unfreeze-Change-Refreeze Leftwich, R.L. (1979), An early model of change developed by Kurt Lewin described change as a three stage procedure. The first stage he called unfreezing. It involved overcoming inertia and dismantling the existing ideas. In the second stage the change occurs. This is typically a period of confusion and transition with a little tinge of chaos. The old picture is being replaced by a new one.. The third and final stage he called freezing (often called refreezing by others). The new ideas are being accepted and ones comfort level is returning to previous levels not completely though. Rosch (2002) argues that this often quoted three-stage version of Lewins approach is an oversimplification and that his theory was actually more complex and owed more to physics than behavioural science. Different theorists give different versions according to their research and experiences respectively. . Although elaborating the process to five stages, Judson (1991) still proposes a linear, staged model o f implementing a change: (a) analysing and planning the change; (b) communicating the change; (c) gaining acceptance of new behaviours; (d) changing from the status quo to a changed state, and (e) consolidating and institutionalising the new states. ADKAR The ADKAR model for individual and organizational change management was developed by Prosci with participation from more than 1000 organizations from 59 countries. This model describes five required stages for change to be realized successfully on an individual level. The building blocks of the ADKAR Model include: Awareness of why the change is needed Desire to support and give input in the change Knowledge of how to change Ability to implement new skills and behaviors Reinforcement to sustain the change Organizational change management Fill C (2002), Organizational change management includes techniques and tools for managing the people side of the change at an organizational level. These tools are used by the leaders of the organization and include a structured approach that combined with an understanding of individual change management, provide a model for managing the people side of change. Organizational change management processes include techniques for creating a change management strategy (readiness assessments), engaging senior managers as change leaders (sponsorship), building awareness of the need for change (communications), developing skills and knowledge to support the change(education and training), helping employees move through the transition (coaching by managers and supervisors), and methods to sustain the change (measurement systems, rewards and reinforcement) The role of the management Leftwich, R.L. (1979), Managements responsibility and particularly that of administration is to detect trends in the macro environment as well as in the micro environment so as to be able to identify changes and initiate programs and determine the economic scenario . It is also important to estimate what impact a change will likely have on employee behavior patterns, work processes, technological requirements, motivation and availability of resources. Management must assess what employee reactions will be and craft a change management program that will provide support as workers go through the process of accepting and adopting the change. The program must then be implemented, communicated effectively throughout the organization, monitored for effectiveness, and adjustments be made where necessary. Organizations exist within a dynamic environment that is subject to change due to the impact of various factors both external and internal . To continue to operate effectively within this e nvironmental roller coaster, organizations must be able to change themselves in response to internally and externally initiated change in minimum span of time and be adaptable to change,hence flexible enough . However, change will also impact upon the individuals within the organization. Effective change management requires an understanding of the possible effects of change upon people, and how to manage potential sources of resistance to that change. For instance people react within the organization by forming anti groups and retaliate and oppose the change. Mostly technological changes trigger this point and when new systems are replaced by old systems then conventions take a stand and people react and oppose this transition. Change can be said to occur where there is an imbalance between the current state and the environment on the whole. Decision Downloading Czarniawska, B. (1999)Often changes are initiated at a very senior level of management in the organization without any participation from others. For example, mergers, layoffs, and company acquisitions rarely involve input from employees at any level but the most senior. In fact, most employees are kept in the dark. These situations require special types of change management practices. As the decisions get unfolded to the rest of the organization there is a high probability that misunderstandings, angwish, and resilliance will surface. Researchers have determined that employee buy-in can be hastened by assertively unfolding the decision. Executives who use an assertive style of downloading or announcing the decision include the following points in their message: a) how the decision was made b)reasons why it was made c) what alternatives were considered d) how it fits in with the organizational mission and aims e) how it impacts the organization f) how it impacts employees. Executives who use this more vigorous approach to communicating double the rate of acceptance when compared to more impoverished methods. Change Management on the level of society Mats Larsson, in the book Global Energy Transformation (2009), suggests that change management will become necessary on the level of society in order to transform energy systems on a large scale globally|. Conversion of global systems of transportation, energy supply and industrial processes from grass root level is an undertaking that will require massive investments, change in individual behavior and company routines on a large scale and during a short span of time. This effort will also require the co-operation of many companies, public organizations and individuals. In order to achieve this on the scale of nations and regions, huge government expenditure will be required . Larsson mentions how the management principles and tools of change management could be applied in large scale national programs of mass transformation. Larsson uses as examples previous large scale change and development programs in the United States, in which many models that are now used in corporate change management projects have been developed and used. These programs are the transformation of US industry to war production during The Second World War, The Marshall Plan and The Apollo Program. Each of these programs have different focuses and management models, but they are examples of successful large scale change management efforts on the level of society. John P Kotters eight steps to successful change John Kotters highly recommended books Leading Change (1995) and the follow-up The Heart of Change (2002) describe a helpful formula for understanding and managing change. Each stage acknowledges a key principle identified by Kotter relating to peoples response and approach to change, in which people see, feel and observe followed by the Kotters eight step change model that can be summarised as : Increase urgency,motivate people to move, make objectives real and relevant. Build the right team get the right people in place with the right emotional commitment, and the right combination of skills and expertise. Get the vision right get the team to establish a simple vision and strategy, focus on emotional and creative aspects necessary to drive service and efficiency with essential ingredient of commitment. Communicate for buy-in Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to peoples needs and listen to the peoples needs. Harmonize their needs with the organizational goals on the whole. De-clutter communications make technology work for you rather than against for instance its a global village internet, media has advanced so much , so unfold the information down the organization as quickly as you can to penetrate deep into the minds of people for their fast adaptability to the new situation. Implement the change Remove barriers, enable potential feedback and lots of support from leaders reward and recognise progress and achievements after implementation of change. Create short-term wins Set aims that are easy to achieve in bite-size chunks. Manageable numbers of initiatives. Finish current stages before starting new ones. Dont let up Foster and encourage determination and persistence ongoing change encourage ongoing progress reporting highlight achieved and future milestones. Make change stay Reinforce the value of successful change via new recruitment, promotional rewards, new change leaders. Blend change into culture. Cultural change Culture are known as norms , values , policies , strategy , and policies of the organization . Cultures represent the company way of doing the business. It is a era of globalization where though competition between the firms , cultural change play dominant role for the success of the organization . Organization structure represent the organization culture , if the organization have centralize organization structure , then decision make mostly central level , decentralize structure , increase power sharing between organization . Specially in case of LOreal it is big question how organization culture keep same in the world because, organization acquisition policy , create question mark for organization culture . Like Morrison took the Safe ways, but later the sold number of store because they cant adopt them according to their own culture. People who like a change tend to go through three stages unrealistic optimism , reality shock , and constructive direction . When someone fears or dislikes a change , a more complex process involving five tends to occur getting off on the wrong track , laughing it off , experiencing growing self doubt , buying in and moving in a constructive direction . Managers are challenged to help employees deal effectively with reality shock and self doubts. LOreal STRATEGY Koontz H and Weihrich H( 1999) Strategy term is a general programs of action and deployment of resources to attain comprehensive objectives. According to some authors mentioned strategy means guideline, or long term plans. Hardy Cynthia (1994) global strategy is Setting a a matter of adjusting as much as possible the business functions-manufacturing , procurement, marketing , distribution, and RD -within the constraint of trade and investment barrier in a way which provide the best possible product/market fits. In a few cases, the best fit is a standardized product; in others a customized product fits best. Making a global strategy often involves subsequent a zig-zag line between standardization and flexibility, trading off the costs and benefits of one against those of the other. Cateora R.Philip (1997) formative a firms global strategy and shaping the organization to achieve goals and objectives are the two middle tasks of global marketing management that describe the level of international integration of the company. Companies must contract with multitude of strategic issues including the extent of the internationalisation of operations. Company tends to develop multi-culture in their underlying brands. This strategy proves to be very successful in reality and even played a dominant role in LOreals success. The most representative example is Maybelline New York. LOreal developed Maybellines brand culture instead of upsetting it after its acquisition of Maybelline. The sales figure dramatically rose after the acquisition and Maybelline product enter into more than 90 countries. Maybelline became a stylish global brand for all women all around the world from a merely regional brand. LOreal to create the advantages is to spread around strategic investment by sharing the production of innovation between different product divisions. LOreal relied on distribution channel to carry out its strategy of brand structure. There are four product departments in LOreals structure. Every department has several brands and each brand has many names Strategic position of the company in relation to market Mabey (1994) Company is boosting their brands architecture through acquiring different brands and increasing its operation in the world market. Its acquired Maybelline brand in 1996 for their strategic policy, Mini nurse in China, In Japan Luxury brand Shu Uemura , through acquisition strategy. Future expansion the most fast growing markets like China market , effective and cost efficient strategy , Company is leading in cosmetic industry , and won number of certificate and hold major market shares as shown in below figure. Above diagram ,clearly shows the market share of the company ,which hold 45% share , it is leading position inmarket. Information system Strategy Cameron Kim ( 1993) Information technology can play a dominant role in this competitive world , information is data endowed with relevance and purpose. Data such as names numbers , and places need to be organized and interpreted in a timely manner if they are to be useful in decision making . Information should have a surprise effect, meaning that it should shed light on the unknown. Information that does not surprise or elignten the individual is probably irrelevant or redundant . Because information is the lifeblood of organization endeavor and strategic tool of increasing importance , manager need to ,view information as a resource , understand the cost of information , know how to organize and comprehend information and be familiar with the basics of information processing . Information technology includes all mechanical and electronic devices capable of producing , manipulating , transmitting and storing words , numbers , pictures and sound. The knowledge to operate these devices also qualifies as information technology .