LDRS302-Unit2ScientificManagement2020-06-051.pptx

LDRs 302 Historical concepts & theories

Unit 2 – SCIENTIFIC management
Trinity Western University
LDRS 302
Instructor: Stephen Liang

© 2020

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Who is Frederick taylor (1856-1915)

By the end of this session, you will be able to:
Become familiar with Frederick Winslow Taylor;
Identify the philosophical assumptions of Taylor’s Scientific Management;
Evaluate the principles of Taylor’s Scientific Management.

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Who is Frederick taylor (1856-1915)

An American manufacturing manager, mechanical engineer, and then a management consultant in his later years.
The Father of Scientific Management.
His approach to management is often referred to as Taylor’s Principles or Taylorism.

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Taylor’s diagnosis of the greatest problem

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National Inefficiency

Employees

The whole people

Employers

Maximum prosperity
For the company or owner – not only large dividends but development of every branch of business to its highest state of excellence, so that the prosperity may be permanent.
For the employee – not only higher wages than are usually received by men of his class, but, of more importance still, it also means the development of each man to his maximum efficiency, so that he may do, generally speaking, the highest grade of work for which his natural abilities fit him, and it means giving him, when possible, this class of work to do.
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(Taylor, 2010, p. 15)
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“Rule of thumb” method
It refers to an easily learned and easily applied procedure or standard, based on practical experience rather than theory.
can be traced back to a rumoured, but untrue, seventeenth century Sir Francis Buller’s “Rule of Thumb”, that a man may beat his wife with a stick no wider than his thumb.
a modern folk etymology holds that the phrase derives from the maximum width of a stick allowed for wife-beating under English law.
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(Taylor, 2010, p. 15)
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“Rule of thumb”
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(https://www.investopedia.com/university/economics/economics3.asp)
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Philosophical assumptions of taylor’s scientific management
The fundamental interests of employers and employees are one and the same: the maximum prosperity.
The maximum prosperity can exist only as the result of maximum productivity.
Maximum productivity can be achieved by applying science to management.
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(Taylor, 2010, p. 15)
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4 Principles of scientific management
The development of a science for each element of a man’s work to replace the old rule-of-thumb methods.
The scientific selection of the workman, training and development of workers instead of allowing them to choose their own tasks and train themselves as best they could.
The development of a spirit of hearty cooperation between workers and management to ensure that work would be carried out in accordance with scientifically devised procedures.
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(Taylor, 2010, p. 15)
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4 Principles of scientific management
The division of work between workers and management in almost equal shares, each group taking over the work for which it is best fitted instead of the former condition in which responsibility largely rested with the workers.
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(Taylor, 2010, p. 15)
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Fallacies (people not turning out maximum work or not efficient)
Soldiering – underworking, deliberately working slowly so as to avoid doing a full day’s work.
Increase in the output  throw men out of work.
Defective system of management  the worker work slowly in to protect his/her interest.
Inefficient rule of thumb method. (It is a general principle that gives practical instructions for accomplishing or approaching a certain task. Typically, rules of thumb develop as a result of practice and experience).
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(Taylor, 2010, p. 3-4)
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Fallacies (people not turning out maximum work or not efficient
Soldiering (con’t)
Natural soldiering – natural instinct and tendency for men to take it easy e.g. uniform rate of pay (sucker effect?).
System soldiering – caused by relationship with other men (deliberate object of keeping employers ignorant of how fast work can be done).
“The younger and less experienced men are taught this by their elders, and all possible persuasion and social pressure is brought to bear upon the greedy and selfish men to keep them from making new records which result in temporary increasing their wage, while all those who come after them are made to work harder under the same old pay”
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(Taylor, 2010, p. 6-8)
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Soldiering vs. other contribution reductions
Social Loafing – reduction of individual contributions when people work in groups (not true teams) rather than alone.
Free riders – people perform little in a team because they do not believe their individual efforts are important, and they know they will receive their share of the team’s reward regardless of their efforts.
Sucker effect – when good performers slack off in teams because they do not want others to take advantage of them.
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(Levi, 2017, p. 64-65)
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Companies studied in scientific management
pig iron (Bethlehem Steel Corporation sold to International Steel Group, not merge with or into).
shovels.
bricklaying (Frank B. Gilbreth’s time and motion study).
bicycle ball bearings.
slide-rules.
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(Levi, 2017, p. 12-76)
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Arguments against scientific management
Taylor believed that scientific management  no conflict between management and worker. Others argue otherwise. Scientific management would incite conflict.
Intense standardization of process and system is responsible for conflict.
improved tools, techniques and improved working methods presents conflict between goal of business and interest of workers.
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(p. 3-5)
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Arguments against scientific management
Viewed as “exploiting employees as much as possible to gain maximum benefits for employers.
Workplace accidents due to dehumanization. E.g. Foxconn in 2010.
Workers treated as tools or machines – physical efficiencies rather than human factor.
Motivates very narrowly, productivity insured by only monetary incentives  social well-being and development opportunity neglected.
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(p. 5)
(https://www.slideshare.net/mpeash1/criticism-on-scientific-management-literature-review-based-article)
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Arguments against scientific management
Maslow’s Hierarchy of Needs – esteem needs, and self actualization not attained.
No training beyond routine job through job rotation and job enrichment.
No teamwork.
Customers not taken into account.
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(p. 6 & 11)

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Demand and supply
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(https://www.investopedia.com/university/economics/economics3.asp)
(https://www.investopedia.com/terms/l/law-of-supply-demand.asp)

Law of Supply and Demand
by Jim Chappelow Updated Sep 29, 2019

What Is the Law of Supply and Demand?

The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the ers for that resource. The theory defines what effect the relationship between the availability of a particular product and the desire (or demand) for that product has on its price. Generally, low supply and high demand increase price and vice versa. Perfect examples of supply and demand in action include PayPal.

KEY TAKEAWAYS

The law of demand says that at higher prices, ers will demand less of an economic good.
The law of supply says that at higher prices, sellers will supply more of an economic good.
These two laws interact to determine the actual market prices and volume of goods that are traded on a market.
Several independent factors can affect the shape of market supply and demand, influencing both the prices and quantities that we observe in markets.

Understanding the Law of Supply and Demand

The law of supply and demand, one of the most basic economic laws, ties into almost all economic principles in some way. In practice, supply and demand pull against each other until the market finds an equilibrium price. However, multiple factors can affect both supply and demand, causing them to increase or decrease in various ways. It was extensively studied by Murray N. Rothbard.

Law of Demand vs. Law of Supply

The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded. The amount of a good that ers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of ing that good. As a result, people will naturally avoid ing a product that will force them to forgo the consumption of something else they value more. The chart below shows that the curve is a downward slope.

Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.

Unlike the demand relationship, however, the supply relationship is a factor of time. Time is important to supply because suppliers must, but cannot always, react quickly to a change in demand or price. So it is important to try and determine whether a price change that is caused by demand will be temporary or permanent.

Let’s say there’s a sudden increase in the demand and price for umbrellas in an unexpected rainy season; suppliers may simply accommodate demand by using their production equipment more intensively. If, however, there is a climate change, and the population will need umbrellas year-round, the change in demand and price will be expected to be long term; suppliers will have to change their equipment and production facilities in to meet the long-term levels of demand.

Shifts vs. Movement

For economics, the “movements” and “shifts” in relation to the supply and demand curves represent very different market phenomena.

A movement refers to a change along a curve. On the demand curve, a movement denotes a change in both price and quantity demanded from one point to another on the curve. The movement implies that the demand relationship remains consistent. Therefore, a movement along the demand curve will occur when the price of the good changes and the quantity demanded changes in accordance to the original demand relationship. In other words, a movement occurs when a change in the quantity demanded is caused only by a change in price, and vice versa.

Like a movement along the demand curve, a movement along the supply curve means that the supply relationship remains consistent. Therefore, a movement along the supply curve will occur when the price of the good changes and the quantity supplied changes in accordance to the original supply relationship. In other words, a movement occurs when a change in quantity supplied is caused only by a change in price, and vice versa.

Meanwhile, a shift in a demand or supply curve occurs when a good’s quantity demanded or supplied changes even though price remains the same. For instance, if the price for a bottle of beer was $2 and the quantity of beer demanded increased from Q1 to Q2, then there would be a shift in the demand for beer. Shifts in the demand curve imply that the original demand relationship has changed, meaning that quantity demand is affected by a factor other than price. A shift in the demand relationship would occur if, for instance, beer suddenly became the only type of alcohol available for consumption.

Conversely, if the price for a bottle of beer was $2 and the quantity supplied decreased from Q1 to Q2, then there would be a shift in the supply of beer. Like a shift in the demand curve, a shift in the supply curve implies that the original supply curve has changed, meaning that the quantity supplied is effected by a factor other than price. A shift in the supply curve would occur if, for instance, a natural disaster caused a mass shortage of hops; beer manufacturers would be forced to supply less beer for the same price.

How Do Supply and Demand Create an Equilibrium Price?

Also called a market-clearing price, the equilibrium price is the price at which the producer can sell all the units he wants to produce and the er can all the units he wants.

At any given point in time, the supply of a good brought to market is fixed. In other words the supply curve in this case is a vertical line, while the demand curve is always downward sloping due to the law of diminishing marginal utility. Sellers can charge no more than the market will bear based on consumer demand at that point in time. Over time however, suppliers can increase or decrease the quantity they supply to the market based on the price they expect to be able to charge. So over time the supply curve slopes upward; the more suppliers expect to be able to charge, the more they will be willing to produce and bring to market.

With an upward sloping supply curve and a downward sloping demand curve it is easy to visualize that at some point the two will intersect. At this point, the market price is sufficient to induce suppliers to bring to market that same quantity of goods that consumers will be willing to pay for at that price. Supply and demand are balanced, or in equilibrium. The precise price and quantity where this occurs depends on the shape and position of the respective supply and demand curves, each of which can be influenced by a number of factors.

Factors Affecting Supply
Production capacity, production costs such as labor and materials, and the number of competitors directly affect how much supply businesses can create. Ancillary factors such as material availability, weather, and the reliability of supply chains also can affect supply.

Factors Affecting Demand
The number of available substitutes, consumer preferences, and the shifts in the price of complementary products affect demand. For example, if the price of video game consoles drops, the demand for games for that console may increase as more people the console and want games for it.
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Demand Increase: price increases, quantity increases.
Demand Decrease: price decreases, quantity decreases.
Supply Increase: price decreases, quantity increases (diagram).
Supply Decrease: price increases, quantity decreases.

Shifts in demand and supply
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(https://www.google.ca/search?q=shift+of+supply+curve&tbm=isch&source=iu&ictx=1&fir=wDW4O6dbY0G9FM%253A%252CLbTmG V26%252C_&usg=__ WDTPIMuTQ8UeRULYU3tlWhwAW7DPIN0hA%3D&sa=X&ved=0ahUKEwjErPe_7c3bAhUC-lQKHWQ_BqEQ9QEIhwEwDg#imgrc=_)

You can find more videos on the demand and supply curves in YouTube.
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(Demand and Supply Explained, 2014)
Shifts in demand and supply

(https://www.youtube.com/watch?v=zPQyInnqvrI)
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Reference
dmateer. (2011, 09 10). Supply and Demand Equilibrium. Retrieved from https://www.youtube.com/watch?v=zPQyInnqvrI
Levi, D. (2017). Group Dynamics for Teams (5th ed.). (L. Parra, N. Davidson, V. Stapleton Hooper, & J. Ford, Eds.) Thousand Oaks, CA: SAGE Publications, Inc. p. 12-76.
Taylor, F. W. (2010). The Principles of Scientific Management. New York, NY: Cosimo, Inc.
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