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HistoryofManagementThought
TheEvolutionofManagementTheory

Uponcompletingthischapter,youshouldbeableto:
Explainthesettinginwhichmanagementtheoryfirstdeveloped.
Describethewaysinwhichatheorycanbeuseful.
Distinguishthescientificmanagementschool,theclassicalorganizationtheoryschool,the
behavioralschool,andthemanagementscienceschoolofmanagementtheory.
Understandthehistoricalcontextinwhichthesystemsapproach,thecontingencyapproach,and
thedynamicengagementapproachtomanagementtheoryhavedeveloped.
THEAPOSTLEOFMASSPRODUC'TION
HenryFordandtheModelhavelongbeensymbolsoftheindustrialage.Eventhesubsequentgrowth
andsuccessofFordsrival,GeneralMotors,wasdueinlargeparttoGMsneedtofindaninnovative
responsetotheModelT.Inlargemeasure,themanagerialapproachofHenryFord,aswellashis
preferencesinmanagerialtheory,isaparadigmofmuchthatwasconstructiveandmuchthatwas
imperfectinearlyapproachestomanagement
ThesonofapoorIrishimmigrant,HenryFordwasbornin1863andgrewuponafarminrural
Michigan.Hewasfascinatedbymachineryandwasquiteskilledinrepairingandimprovingalmost
anymachine.HestartedtheFordMotorCompanyin1903,andby1908,theModelTwasbuilt.
Inthepartofthecenturywhenautomobileswereintroduced,theywereasymbolofstatusand
wealth,thenearexclusiveprovinceoftherich.Fordintendedtochangethat:theModelTwastobe
forthemassesacarthatvirtuallyanyonecouldafford.Heunderstoodthattheonlywaytomake
suchacarwastoproduceitathighvolumeandlowcost.Fordfocusedhisfactoryeffortson
efficiency,mechanizingwhereverpossible,andbreakingdowntasksintotheirsmallestcomponents.
Oneworkerwouldperformthesametaskoverandover,producingnotafinishedpart,butoneofthe
operationsnecessaryfortheproductionofthewhole;theincompletepartwouldthenbepassedon
toanotherworker,whowouldcontributeasuccessiveoperation.Fordwasabletoachieve
remarkableefficiencies:AlthoughthefirstModelTtookover12hourstoproduce,only12years
later,in1920,FordwasproducingoneModelTeveryminute.By1925,atthepeakofthecars
popularity,aModelTwasrollingoffFordsassemblylinesattherateofoneevery5seconds.
However,mechanizationoftheplanthadsomeadverseeffects.ThefasterFordpushedhisworkers,
themoredisgruntledtheybecame.In1913,turnoverwas380percent,andFordhadtohiretentimes
moreworkersthanheneededjusttokeepthelinemoving.Inanactionthatatthetimewas
unprecedented,Fordsimplydecidedtodoublewagesinordertogetthebestpeopleandmotivate

themtoworkevenharder.Inthedaysfollowingtheannouncementthatwageswerebeingdoubled,
thousandsandthousandsofmencametotheFordplantinsearchofwork.Policehadtobecalledin
tocontrolthecrowds.
Whenhediedin1945,Fordwasworthover$600million.HeleftanindeliblemarkonbothAmerican
industryandsociety.Hisnameissynonymouswithmassproductionandthedevelopmentofmodern
managementtheory.
MostpeopleassociateHenryFordwiththeModelT,theaffordablemassproducedautomobilethat
changedsociety.ButFordisalsoimportantasamanagementthinkerbecausehedevelopedideas
abouthoworganizationsfunction.Moreover,Fordhiredtheorists,suchasFrederickWinslowTaylor,
andgavethemthechancetodeveloptheirmanagementtheories.Inthischapterwewillseehow
differentmanagementtheoriesdevelopedandcontinuetoevolve.Butfirstwelllookatsomeearly
ideasabouthowtorunorganizationseffectively.
EARLYTHINKINGABOUTMANAGEMENT
Peoplehavebeenshapingandreshapingorganizationsformanycenturies.Lookingbackthrough
worldhistory,wecantracethestoriesofpeopleworkingtogetherinformalorganizationssuchasthe
GreekandRomanarmies,theRomanCatholicChurch,theEastIndiaCompany,andtheHudsonBay
Company.Peoplehavealsolongbeenwritingabouthowtomakeorganizationsefficientand
effectivesincelongbeforetermssuchas"management"cameintocommonusage.Twoprominent
andinstructiveexamplesarethewritingsleftforusbyNiccoloMachiavelliandSunTzu.
MACHIAVELLIANDSUNTZU:
EARLYSTRATEGISTS
Althoughtheadjective'Machiavellian'isoftenusedtodescribecunningandmanipulative
opportunistsMachiavelliwasagreatbelieverinthevirtuesofarepublic.ThisisevidentinDiscourses,
abookMachiavelliwrotein1531whilehelivedintheearlyItalianrepublicofFlorence.Theprinciples
hesetforthcanbeadaptedtoapplytothemanagementoforganizationstoday.
Anorganizationismorestableifmembershavetherighttoexpresstheirdifferencesandsolve
theirconflictswithinit
Whileonepersoncanbeginanorganization,"itislastingwhenitisleftinthecareofmanyand
whenmanydesiretomaintainit."
Aweakmanagercanfollowastrongone,butnotanotherweakone,andmaintainauthority.
Amanagerseekingtochangeanestablishedorganization"shouldretainatleastashadowofthe
ancientcustoms."
AnotherclassicworkthatoffersinsightstomodemmanagersisTheArtofWar,writtenbythe
ChinesephilosopherSunTzumorethan2,000yearsago.ItwasmodifiedandusedbyMaoZedong,
whofoundedthePeople'sRepublicofChinainl949.AmongSunTzu'sdicturarethefollowing:
Whentheenemyadvances.weretreat!
whentheenemyhaltsweharass!

Whentheenemyseekstoavoidbattle,weattack!
Whentheenemyretreats,wepursue!
Althoughtheserulesweremeanttoguidemilitarystrategy,theyhavebeenusedwhenplanninga
strategytoengagebusinesscompetitors.KeepSunTzuinmindasyoustudythechapterabout
strategyandplanning.
AlthoughneitherMachiavellinorSunTzuwastryingtodevelopatheoryofmanagementperse,their
insightsteachusanimportantlessonabouthistory.Managementisnotsomethingthatoriginatedin
theUnitedStatesinthiscentury.Wemustbecarefulnottoputonhistoricalandculturalblinders
when,fromtheperspectiveofthisparticulartimeandplace,wethinkaboutthemanagementof
organizations.
Beforegoingontoourdiscussionofthemajormanagementtheories,let'stakeamomenttolookat
thereasonsstudyingmanagementtheorywillhelpyouunderstandmanagementandtodays
complexorganizations.

WHYSTUDYMANAGEMENTTHEORY?
Theoriesareperspectiveswithwhichpeoplemakesenseoftheirworldexperiences.Formally,a
theoryisacoherentgroupofassumptionsputforthtoexplaintherelationshipbetweentwoormore
observablefacts.JohnClancycallssuchperspectives"invisiblepowers"toemphasizeseveralcrucial
usesoftheories,the"unseen"waysinwhichweapproachourworld.
First,theoriesprovideastablefocusforunderstandingwhatweexperience.Atheoryprovides
criteriafordeterminingwhatisrelevant.ToHenryFord,alargeandcompliantworkforcewasone
relevantfactorashetheorizedabouthisbusiness.Inotherwords,histheoryofmanagement
included,amongotherthings,thisassumptionaboutthesupplyoflabor.
Second,theoriesenableustocommunicateefficientlyandthusmoveintomoreandmorecomplex
relationshipswithotherpeople.Imaginethefrustrationyouwouldencounterif,indealingwithother
people,youalwayshadtodefineeventhemostbasicassumptionsyoumakeabouttheworldm
whichyoulive!BecauseFordandhismanagersfullyunderstoodFord'stheoryaboutmanufacturing
automobiles,theycouldinteracteasilyastheyfaceddaytodaychallenges.
Third,theoriesmakeitpossibleindeed,challengeustokeeplearningaboutourworld.By
definition,theorieshaveboundaries;thereisonlysomuchthatcanbecoveredbyanyonetheory.
Onceweareawareofthis,wearebetterabletoaskourselvesiftherearealternativewaysoflooking
attheworld(especiallywhenourtheoriesnolongerseemto"fit"ourexperience)andtoconsider
theconsequencesofadoptingalternativebeliefs.Twocasesareinstructive.
Oneexampleinvolvesworldpolitics.Foryears,whatmightbecalledatheoryoftheColdWar
dominateddiplomaticactivitybetweentheUnitedStatesandtheSovietUnion.Duringthoseyears,
mostdiplomatsandmilitaryofficialsdidnotconsiderwhattheworldwouldbelikeiftheColdWar
ended.Now,however,the"ColdWar"theorynolongerfitsourexperience,andgovernmentand
militaryofficials,aswellasmanagersoforganizations;arescramblingtodevelopnewtheoriesfor
dealingwithformerenemiesonamorecooperativebasis.Forexample,thebreakupoftheSoviet

UnionandRussia'sstrugglestowardfinancialstabilityhaveleftsomeoftheworld'stopscientists
unemployed,strugglingwithpoorequipment,andwillingtoworkforlittlepay.InthisbreachU.S.
firmssuchasCorning,AmericanTelephoneandTelegraph,andUnitedTechnologieshavecapitalized
ontheopportunitythispresentsbyfundingresearchfacilitiesinRussia.
TheothercasetakesusbacktoHenryFord.Fordhasbeencriticizedfornotusinghisapproachasa
waytolearnaboutbetterwaystorunhiscompany.WhileFordwasgivinghiscustomersnochoice
aboutanythingotherthanprice(whichwasattractive!)AlfredSloanwastransformingGeneral
Motors.Beginninginthe1920s,SloanrejectedpartofFord'stheoryaboutrunningabusinessinfavor
ofalternativewaystodesignautomobilesandorganizemanufacturinganddistribution.GMs
marketingstrategyhadalwaysbeentomarketnationwidewithcarsofinteresttodifferentsegments
ofthepublic.Sloansetupseparatedivisions,withcentraldirectionfromheadquarters,tomarketthe
Buick,Oldsmobile,Pontiac,Cadillac,andChevroletlines.IncontrasttoFord,eachtypeofcarhasits
owndistinctionandpricedifferentials.
Inthischapter,wewillfocusonfourwellestablishedschoolsofmanagementthought:thescientific
managementschool,theclassicalorganizationtheoryschool,thebehavioralschool,andthe
managementscienceschool.Althoughtheseschools,ortheoreticalapproaches,developedhistorical
sequence,laterideashavenotreplacedearlierones.Instead,eachnewschoolhastendedto
complementorcoexistwithpreviousones.Atthesametime,eachschoolhascontinuedtoevolve,
andsomehaveevenmergedwithothers.Thistakesustothreerecentintegrativeapproaches:the
systemsapproach,thecontingencyapproach,andwhatwecallthedynamicengagementapproachto
management.Figure21showstheapproximatedatewheneachofthesetheoreticalperspectives
emerged,aswellaskeyhistoricaleventsthatsignaledtheemergenceofeachwayofthinkingabout
organizationsandmanagement.
THEEVOLUTIONOFMANAGEMENTTHEORY
Managementandorganizationsareproductsoftheirhistoricalandsocialtimesandplaces.Thus,we
canunderstandtheevolutionofmanagementtheoryintermsofhowpeoplehavewrestledwith
mattersofrelationshipsatparticulartimesinhistory.Oneofthecentrallessonsofthischapter,and
ofthisbookasawholeisthatwecanlearnfromthetrialsandtribulationsofthosewhohave
precededusinsteeringthefortunesofformalorganizations.Asyoustudymanagementtheoryyou
willlearnthatalthoughtheparticularconcernsofHenryFordandAlfredSloanareverydifferentfrom
thosefacingmanagersinthemid1990s,wecanstillseeourselvescontinuingthetraditionsthat
theseindividualsbeganlongbeforeourtime.Bykeepinginmindaframeworkofrelationshipsand
time,wecanputourselvesintheirshoesasstudentsofmanagement.
ImaginethatyouareamanageratanAmericansteelmill,textilefactory,oroneofFord'splantsin
theearlytwentiethcentury.Yourfactoryemploysthousandsofworkers.Thisisascaleofenterprise
unprecedentedinWesternhistory.Manyofyouremployeeswereraisedinagriculturalcommunities.
Industrialroutinesarenewtothem.Manyofyouremployees,aswell,areimmigrantsfromother
lands.TheydonotspeakEnglishwell,ifatall.Asamanagerunderthesecircumstances,youwill
probablybeverycuriousabouthowyoucandevelopworkingrelationshipswiththesepeople.Your
managerialeffectivenessdependsonhowwellyouunderstandwhatitisthatisimportanttothese

people.Currentdaychallengesparallelsomeofthosefacedintheearlytwentiethcentury.Inthe
1980s8.7millionforeignnationalsenteredtheU.S.andjoinedthelabormarket.Theyoftenhave
distinctneedsforskillsandlanguageproficiency,muchasthosebeforethemattheadventofthe
industrialage.
Earlymanagementtheoryconsistedofnumerousattemptsatgettingtoknowthesenewcomersto
industriallifeattheendofthenineteenthcenturyandbeginningofthetwentiethcenturyinEurope
andtheUnitedStates.Inthissection,wewillsurveyanumberofthebetterknownapproachesto
earlymanagementtheory.Theseincludescientificmanagement,classicalorganizationtheory,the
behavioralschool,andmanagementscience.Asyoustudytheseapproaches,keeponeimportantfact
inmind:themanagersandtheoristwhodevelopedtheseassumptionsabouthumanrelationships
weredoingsowithlittleprecedent.Largescaleindustrialenterprisewasverynew.Someofthe
assumptionsthattheymademightthereforeseemsimpleorunimportanttoyou,buttheywere
crucialtoFordandhiscontemporaries.
THESCIENTIFICMANAGEMENTSCHOOL
ScientificManagementtheoryaroseinpartfromtheneedtoincreaseproductivity.IntheUnited
Statesespecially,skilledlaborwasinshortsupplyatthebeginningofthetwentiethcentury.Theonly
waytoexpandproductivitywastoraisetheefficiencyofworkers.Therefore,FrederickW.Taylor,
HenryL.Gantt,andFrankandLillianGilbrethdevisedthebodyofprinciplesknownasscientific
managementtheory.
FREDERICKW.TAYLOR
FrederickW.Taylor(18561915)restedhisphilosophyonfourbasicprinciples:
Thedevelopmentofatruescienceofmanagement,sothatthebestmethodforperformingeach
taskcouldbedetermined.
Thescientificselectionofworkers,sothateachworkerwouldbegivenresponsibilityforthetask
forwhichheorshewasbestsuited.
Thescientificeducationanddevelopmentoftheworker.
Intimate,friendlycooperationbetweenmanagementandlabor.

Taylorcontendedthatthesuccessoftheseprinciplesrequired"acompletementalrevolution"on
thepartofmanagementandlabor.Ratherthanquarreloverprofits,bothsidesshouldtrytoincrease
production;bysodoing,hebelieved,profitswouldrisetosuchanextentthatlaborandmanagement
wouldnolongerhavetofightoverthem.Inshort,Taylorbelievedthatmanagementandlaborhada
commoninterestinincreasingproductivity.
Taylorbasedhismanagementsystemonproductionlinetimestudies.Insteadofrelyingon
traditionalworkmethods,heanalyzedandtimedsteelworkers'movementsonaseriesofjobs.Using
timestudyashisbase,hebrokeeachjobdownintoitscomponentsanddesignedthequickestand
bestmethodsofperformingeachcomponent.Inthiswayheestablishedhowmuchworkersshould
beabletodowiththeequipmentandmaterialsathand.Healsoencouragedemployerstopaymore

productiveworkersatahigherratethanothers,usinga"scientificallycorrect"ratethatwould
benefitbothcompanyandworker.Thus,workerswereurgedtosurpasstheirpreviousperformance
standardstoearnmorepayTaylorcalledhisplanthedifferentialratesystem.
CONTRIBUTIONSOFSCIENTIFICMANAGEMENTTHEORY
ThemodemassemblylinepoursoutfinishedproductsfasterthanTaylorcouldeverhaveimagined.
Thisproduction"miracle"isjustonelegacyofscientificmanagement.Inaddition,itsefficiency
techniqueshavebeenappliedtomanytasksinnonindustrialorganizations,rangingfromfastfood
servicetothetrainingofsurgeons.
LIMITATIONSOFSCIENTIFICMANAGEMENTTHEORY
AlthoughTaylor'smethodledtodramaticincreasesinproductivityandtohigherpayinanumberof
instances,workersandunionsbegantoopposehisapproachbecausetheyfearedthatworking
harderorfasterwouldexhaustwhateverworkwasavailable,causinglayoffs.
Moreover,Taylor'ssystemclearlymeantthattimewasoftheessence.Hiscriticsobjectedtothe
"speedup"conditionsthatplacedunduepressuresonemployeestoperformatfasterandfaster
levels.Theemphasisonproductivityand,byextension,profitabilityledsomemanagerstoexploit
bothworkersandcustomers.Asaresult,moreworkersjoinedunionsandthusreinforcedapattern
ofsuspicionandmistrustthatshadedlabormanagementrelationsfordecades.
HENRYL.GANTT
HenryL.Gantt(18611919)workedwithTayloronseveralprojects.Butwhenhewentoutonhisown
asaconsultingindustrialengineer,GanttbegantoreconsiderTaylor'sincentivesystem.
Abandoningthedifferentialratesystemashavingtoolittlemotivationalimpact,Ganttcameupwith
anewidea.Everyworkerwhofinishedaday'sassignedworkloadwouldwina50centbonus.Then
headdedasecondmotivation.Thesupervisorwouldearnabonusforeachworkerwhoreachedthe
dailystandard,plusanextrabonusifalltheworkersreachedit.This,Ganttreasoned,wouldspur
supervisorstotraintheirworkerstodoabetterjob.
Everyworker'sprogresswasratedpubliclyandrecordedonindividualbarcharts,inblackondays
theworkermadethestandard,inredwhenheorshefellbelowit.Goingbeyondthis,Gantt
originatedachartingsystemforproductionscheduling;the"Ganttchart"isstillinusetoday.Infact,
theGanttChartwastranslatedintoeightlanguagesandusedthroughouttheworld.Startinginthe
1920s,itwasinuseinJapan,Spain,andtheSovietUnion.Italsoformedthebasisfortwocharting
deviceswhichweredevelopedtoassistinplanning,managing,andcontrollingcomplexorganizations:
theCriticalPathMethod(CPM),originatedbyDuPont,andProgramEvaluationandReview
Technique(PERT),developedbytheNavy.Lotus123isacreativeapplicationoftheGanttChart.

THEGILBRETHS
FrankB.andLillianM.Gilbreth(18681924and18781972)madetheircontributiontothescientific
managementmovementasahusbandandwifeteam.LillianandFrankcollaboratedonfatigueand
motionstudiesandfocusedonwaysofpromotingtheindividualworker'swelfare.Tothem,the
ultimateaimofscientificmanagementwastohelpworkersreachtheirfullpotentialashuman
beings.
Intheirconception,motionandfatiguewereintertwinedeverymotionthatwaseliminatedreduced
fatigue.Usingmotionpicturecameras,theytriedtofindthemosteconomicalmotionsforeachtask
inordertoupgradeperformanceandreducefatigue.TheGilbrethsarguedthatmotionstudywould
raiseworkermoralebecauseofitsobviousphysicalbenefitsandbecauseitdemonstrated
management'sconcernfortheworker.
CLASSICALORGANIZATIONTHEORYSCHOOL
Scientificmanagementwasconcernedwithincreasingtheproductivityoftheshopandtheindividual
worker.Classicalorganizationtheorygrewoutoftheneedtofindguidelinesformanagingsuch
complexorganizationsasfactories.
HENRIFAYOL
HenriFayol(18411925)isgenerallyhailedasthefounderoftheclassicalmanagementschoolnot
becausehewasthefirsttoinvestigatemanagerialbehavior,butbecausehewasthefirstto
systematizeit.Fayolbelievedthatsoundmanagementpracticefallsintocertainpattersthatcanbe
identifiedandanalyzed.Fromthisbasicinsight,hedrewupablueprintforacohesivedoctrineof
managersonethatretainsmuchofitsforcetothisday.
Withhisfaithinscientificmethods,FayolwaslikeTaylor,hiscontemporary.WhileTaylorwas
basicallyconcernedwithorganizationalfunctions,howeverFayolwasinterestedinthetotal
organizationandfocusedonmanagement,whichhefelthadbeenthemostneglectedofbusiness
operations.Exhibit21liststhe14principlesofmanagementFayol"mostfrequentlyhadtoapply."
BeforeFayol,itwasgenerallybelievedthat"managersareborn,notmade."Fayolinsisted,however,
thatmanagementwasaskilllikeanyotheronethatcouldbetaughtonceitsunderlyingprinciples
wereunderstood.
Fayols14Principlesofmanagement
DivisionofLabor.Themorepeoplespecialize,themoreefficientlytheycanperformtheirwork.
Thisprincipleisepitomizedbythemodernassemblyline.
Authority.Managersmustgiveorderssothattheycangetthingsdone.Whiletheirformal
authoritygivesthemtherighttocommand,managerswillnotalwayscompelobedience
unlesstheyhavepersonalauthority(suchasrelevantexpertise)aswell.
Discipline.Membersinanorganizationneedtorespecttherulesandagreementsthatgovernthe
organization.ToFayol,disciplineresultsfromgoodleadershipatalllevelsoftheorganization,

fairagreements(suchasprovisionsforrewardingsuperiorperformance),andjudiciously
enforcedpenaltiesforinfractions.
UnityofCommand.Eachemployeemustreceiveinstructionsfromonlyoneperson.Fayolbelieved
thatwhenanemployeereportedtomorethanonemanager,conflictsininstructionsand
confusionofauthoritywouldresult.
UnityofDirection.Thoseoperationswithintheorganizationthathavethesameobjectiveshould
bedirectedbyonlyonemanagerusingoneplan.Forexample,thepersonneldepartmentina
companyshouldnothavetwodirectors,eachwithadifferenthiringpolicy.
SubordinationofIndividualInteresttotheCommonGood.Inanyundertaking,theinterestsof
employeesshouldnottakeprecedenceovertheinterestsoftheorganizationasawhole.
Remuneration.Compensationforworkdoneshouldbefairtobothemployeesandemployers.
Centralization.Decreasingtheroleofsubordinatesindecisionmakingiscentralization;increasing
theirroleindecentralization.Fayolbelievedthatmanagersshouldretainfinalresponsibility,
butshouldatthesametimegivetheirsubordinatesenoughauthoritytodotheirjobs
properly.Theproblemistofindtheproperdegreeofcentralizationineachcase.
TheHierarchy.Thelineofauthorityinanorganizationoftenrepresentedtodaybytheneatboxes
andlinesoftheorganizationchartrunsinorderofrankfromtopmanagementtothelowest
leveloftheenterprise.
Order.Materialsandpeopleshouldbeintherightplaceattherighttime.People,inparticular,
shouldbeinthejobsorpositionstheyaremostsuitedto.
Equity.Managersshouldbebothfriendlyandfairtosubordinates.
StabilityofStaff.Ahighemployeeturnoverrateunderminestheefficientfunctioningofan
organization.
Initiative.Subordinatesshouldbegiventhefreedomtoconceiveandcarryouttheirplans,even
thoughsomemistakesmayresult.
EspiritdeCorps.Promotingteamspiritwillgivetheorganizationasenseofunity.ToFayol,even
smallfactorsshouldhelptodevelopthespirit.Hesuggested,forexample,theuseofverbal
communicationsinsteadofformal,writtencommunicationwheneverpossible.
Source:HenriRayolIndustrialandGeneralAdministration,J.A.Caubrough,trans.(Geneva
InternationalManagementInstitute,1930)

MAXWEBER
Reasoningthatanygoalorientedorganizationconsistingofthousandsofindividualswouldrequire
thecarefullycontrolledregulationofitsactivities,theGermansociologistMaxWeber(18641920)
developedatheoryofbureaucraticmanagementthatstressedtheneedforastrictlydefined
hierarchygovernedbyclearlydefinedregulationsandlinesofauthority.Heconsideredtheideal
organizationtobeabureaucracywhoseactivitiesandobjectiveswererationallythoughtoutand
whosedivisionsoflaborwereexplicitlyspelledout.Weberalsobelievedthattechnicalcompetence
shouldbeemphasizedandthatperformanceevaluationsshouldbemadeentirelyonthebasisof
merit.
Todayweoftenthinkofbureaucraciesasvast,impersonalorganizationsthatputimpersonal
efficiencyaheadofhumanneeds.Weshouldbecareful,though,nottoapplyournegative
connotationsofthewordbureaucracytothetermasWeberuseit.Likethescientificmanagement
theorists,Webersoughttoimprovetheperformanceofsociallyimportantorganizationsbymaking

theiroperationspredictableandproductive.Althoughwenowvalueinnovationandflexibilityas
muchasefficiencyandpredictability,Weber'smodelofbureaucraticmanagementclearlyadvanced
theformationofhugecorporationssuchasFord.Bureaucracywasaparticularpatternof
relationshipsforwhichWebersawgreatpromise.
Althoughbureaucracyhasbeensuccessfulformanycompanies,inthecompetitiveglobalmarketof
the1990sorganizationssuchasGeneralElectricandXeroxhavebecome"bureaucracybusters,"
throwingawaytheorganizationchartandreplacingitwitheverchangingconstellationsofteams,
projects,andallianceswiththegoalofunleashingemployeecreativity.
MARYPARKERFOLLETT
MaryParkerFollett(18681933)wasamongthosewhobuiltonclassicframeworkoftheclassical
school.However,sheintroducedmanynewelementsespeciallyintheareaofhumanrelationsand
organizationalstructure.Inthis,sheinitiatedtrendsthatwouldbefurtherdevelopedbythe
emergingbehavioralandmanagementscienceschools.
Follettwasconvincedthatnoonecouldbecomeawholepersonexceptasamemberofagroup;
humanbeingsgrewthroughtheirrelationshipswithothersinorganizations.Infact,shecalled
management"theartofgettingthingsdonethroughpeople."ShetookforgrantedTaylor'sassertion
thatlaborandmanagementsharedacommonpurposeasmembersofthesameorganization,but
shebelievedthattheartificialdistinctionbetweenmanagers(ordergivers)andsubordinates(order
takers)obscuredthisnaturalpartnership.Shewasagreatbelieverinthepowerofthegroup,where
individualscouldcombinetheirdiversetalentsintosomethingbigger.Moreover,Follett's"holistic"
modelofcontroltookintoaccountnotjustindividualsandgroups,buttheeffectsofsuch
environmentalfactorsaspolitics,economics,andbiology.
Follettsmodelwasanimportantforerunneroftheideathatmanagementmeantmorethanjust
whatwashappeninginsideaparticularorganization.Byexplicitlyaddingtheorganizational
environmenttohertheory,Follettpavedthewayformanagementtheorytoincludeabroadersetof
relationships,someinsidetheorganizationandsomeacrosstheorganization'sborders.Adiverseset
ofmodelmanagementtheoriespayshomagetoFollettonthispoint.
CHESTERI.BARNARD
ChesterBarnard(18861961),likeFollett,introducedelementstoclassicaltheorythatwouldbe
furtherdevelopedinlaterschools.Barnard,whobecamepresidentofNewJerseyBellin1927,used
hisworkexperienceandhisextensivereadinginsociologyandphilosophytoformulatetheories
aboutorganizations.AccordingtoBarnard,peoplecometogetherinformalorganizationstoachieve
endstheycannotaccomplishworkingalone.Butastheypursuetheorganization'sgoals,theymust
alsosatisfytheirindividualneeds.AndsoBarnardarrivedathiscentralthesis:Anenterprisecan
operateefficientlyandsurviveonlywhentheorganizationsgoalsarekeptinbalancewiththeaims
andneedsoftheindividualsworkingforit.WhatBarnardwasdoingwasspecifyingaprincipleby
whichpeoplecanworkinstableandmutuallybeneficialrelationshipsovertime.

Forexample,tomeettheirpersonalgoalswithintheconfinesoftheformalorganization,people
cometogetherininformalgroupssuchascliques.Toensureitssurvival,thefirmmustusethese
informalgroupseffectively,eveniftheysometimesworkatpurposesthatruncounterto
managementsobjectives.Barnard'srecognitionoftheimportanceanduniversalityofthis"informal
organization"wasamajorcontributiontomanagementthought.
Barnardbelievedthatindividualandorganizationspurposescouldbekeptinbalanceifmanagers
understoodanemployee'szoneofindifferencethatis,whattheemployeewoulddowithout
questioningthemanager'sauthority.Obviously,themoreactivitiesthatfellwithinanemployee's
zoneofindifference(whattheemployeewouldaccept),thesmootherandmorecooperativean
organizationwouldbe.Barnardalsobelievedthatexecutiveshadadutytoinstillasenseofmoral
purposeintheiremployees.Todothis,theywouldhavetolearntothinkbeyondtheirnarrowself
interestandmakeanethicalcommitmenttosociety.AlthoughBarnardstressedtheworkof
executivemanagers,healsofocusedconsiderableattentionontheroleoftheindividualworkeras
"thebasicstrategicfactorinorganization."Whenhewentfurthertoemphasizetheorganizationas
thecooperativeenterpriseofindividuals,workingtogetherasgroups,hesetthestageforthe
developmentofagreatdealofcurrentthinking.
Forexample,companiesareincreasinglyusingteams.Infact,someadvocateusingteams,asthe
buildingblocksoftheorganization.Becauseteamsaregenerallyareselfmanaging,supervisoryroles
arelimited.Managementprovidesdirectionbygivingeachteamacommonpurposeandholdsthe
teamsaccountableformeasurableperformancegoals.CompaniessuchasMotorola,DuPont,AT&T,
andGeneralElectricaremovinginthisdirectionsWewilldiscussteamsmorefullyinChapter18.
EFFICIENCYANDTHEFACTORY
TakingtheadviceofefficiencyexpertWalterFlandersin1908,]FordboughtgroundsinHighland
Park,whereheintendedtoemploythemostmodernideasaboutproduction,particularlythoseof
FrederickWinslowTaylor.Thosewouldbring,asTayloraprophesied,anabsoluterationalitytothe
industrialprocess.Theideawastobreakeachfunctiondownintomuchsmallerunitssothateach
couldbemechanizedandspeededupandeventuallyflowintoastraightlineproductionoflittle
piecesbecomingsteadilylarger.Theprocessbegantochangeinthespringof1913.Thefirstpieceon
themodernassemblylinewasthemagnetocoilassembly.Inthepast,aworkerandhehadtobea
skilledworkerhadmadeflywheelmagnetofromstarttofinish.Agoodemployeecouldmake34or
40aday.Now,however,therewasanassemblylineformagnetos;dividedinto29different
operationsperformedby29differentmen.Intheoldsystemittook20minutestomakeamagneto;
nowittook13.
Fordandhismensoonmovedtobringthesamerationalitytotherestofthefactory.Quickly,they
imposedacomparablesystemfortheassemblyofmotorsandtransmissions.Then,inthesummerof
1913,theytookonthefinalassembly,whichastherestoftheprocesshadspeededup,hadbecome
thegreatbottleneck.Theworkers[nowmaneuvered]asquicklyastheycouldaroundastationary
metalobject,thecartheywereputtingtogether.Ifthemencouldremainstationaryasthesemi
finishedcarmovedthelinethroughthem,lessoftheworkerstimeFordstimewouldbewasted.

CharlesSorensen,whohadbecomeoneofFordstopproductionpeople[initiatedtheassemblyline
bypulling]aModelTchassisslowlybyawindlassacross250feetoffactoryfloor,timingtheprocess
allthewhile.Behindhimwalkedsixworkers,pickinguppartsfromcarefullyspacedpilesonthefloor
andfittingthemtothechassis[soon,]thebreakthroughscameevenmorerapidly..[Byinstallingan
automaticconveyorbelt,]Fordcouldeventuallyassemblyacarin[93minutes]justafewyears
before,inthedaysofstationarychassisassembly,thebestrecordforputtingacartogetherhadbeen
728hoursofonemanswork.FordstopexecutivescelebratedtheirvictorywithadinneratDetroits
PontchartrainHotel.Fittingly,theyriggedasimpleconveyorbelttoafivehorsepowerenginewitha
bicyclechainandusedtheconveyortoservethefoodaroundthetable.Ittypifiedthespirit,
camaraderie,andconfidenceoftheearlydays.
Nineteenyearsandmorethanfifteenmillioncarslater,whenFordreluctantlycametotheconclusion
thathehadtostopmakingtheT,thecompanybalancewas$673million.Andthiswasnotmerelya
companyssuccess;itwasthebeginningofasocialrevolution.Fordhimself[believed]hehad
achievedabreakthroughforthecommonman."Massproduction,"hewrotelater,"precedesmass
consumption,andmakesitpossiblebyreducingcostsandthuspermittingbothgreateruse
convenienceandpriceconvenience."
[Notsurprisingly,]thepriceoftheModelTcontinuedtocomedown,from$780inthefiscalyear
191011to$690thefollowingyear,thento$600,to$550,and,ontheeveofWorldWarI,to$360.
Atthatprice,Fordsold730,041cars,outproducingeveryoneelseintheworld.
HenryFood,immigrantssonandonetimemachinistsapprentice,hadindeedbecomeaveryrich
man.Obviously,hehadbecomesobybeingaventuresomeandsuccessfultheoristofindustrial
management.Butbothhispracticesandhispersonalitydrewfirefromthosewhowerecriticalofhis
implicitattitudetowardthose"masses"forwhomhehadoriginallyperfectedandprizedtheModelT.
Forexample,hiswidelypublicizeddoublingofwagesforemployeesin1914wasseenbysomeasa
trailblazingmaneuverinmanagementlaborrelations,byothersasaschemetosolidifyFords
paternalisticpoweroverthosewhodependeduponhimforaliving.Inaddition,Fordstubbornly
resistedtheunionizationofhisemployeeslongafterhismajorcompetitorshadmadeagreements
withunionorganizations.Repressiononthepartofcompanypoliceagainstunion"agitatorswas
commonthecompanysgroundsuntil,finally,havinglostanelectionconductedbytheNational
LaborRelationsBoard[agovernmentagencyestablishedin1935toaffirmlaborsrighttobargain
collectively],FordcontractedwiththeUnitedAutoWorkersin1941.
THEBEHAVIORALSCHOOL:
THEORGANIZATIONISPEOPLE
Thebehavioralschoolemergedpartlybecausetheclassicalapproachdidnotachievesufficient
productionefficiencyandworkplaceharmony.Tomanagersfrustration,peopledidnotalwaysfollow
predictedorexpectedpatternsofbehavior.Thustherewasincreasedinterestinhelpingmanagers
dealmoreeffectivelywiththe"peopleside"oftheirorganizations.Severaltheoriststriedto
strengthenclassicalorganizationtheorywiththeinsightsofsociologyandpsychology.

THEHUMANRELATIONSMOVEMENT
Humanrelationsisfrequentlyusedasageneraltermtodescribethewaysinwhichmanagersinteract
withtheiremployees.When"employeemanagement"stimulatesmoreandbetterwork,the
organizationhaseffectivehumanrelations;whenmoraleandefficiencydeteriorate,itshuman
relationsaresaidtobeineffective.Thehumanrelationsmovementarosefromearlyattemptsto
systematicallydiscoverthesocialandpsychologicalfactorsthatwouldcreateeffectivehuman
relations.
THEHAWTHORNEEXPERIMENTS.Thehumanrelationsmovementgrewoutofafamousseriesof
studiesconductedattheWesternElectricCompanyfrom1924to1933.Theseeventuallybecame
knownasthe"HawthorneStudies"becausemanyofthemwereperformedatWesternElectric's
HawthorneplantnearChicago.TheHawthorneStudiesbeganasanattempttoinvestigatethe
relationshipbetweentheleveloflightingintheworkplaceandworkerproductivitythetypeof
questionFrederickTaylorandhiscolleaguesmightwellhaveaddressed.
Insomeoftheearlystudies,theWesternElectricresearchersdividedtheemployeesintotestgroups,
whoweresubjectedtodeliberatechangesinlighting,andcontrolgroups,whoselightingremained
constantthroughouttheexperiments.Theresultsoftheexperimentswereambiguous.Whenthe
testgroup'slightingwasimproved,productivitytendedtoincrease,althougherratically.Butwhen
lightingconditionsweremadeworse,therewasalsoatendencyforproductivitytoincreaseinthe
testgroup.Tocompoundthemystery,thecontrolgroup'soutputalsoroseoverthecourseofthe
studies,eventhoughitexperiencednochangesinillumination.Obviously,somethingbesideslighting
wasinfluencingtheworkers'performance.
Inanewsetofexperiments,asmallgroupofworkerswasplacedinaseparateroomandanumberof
variableswerealtered:Wageswereincreased;restperiodsofvaryinglengthwereintroduced;the
workdayandworkweekwereshortened.Theresearchers,whonowactedassupervisors,also
allowedthegroupstochoosetheirownrestperiodsandtohaveasayinothersuggestedchanges.
Again,theresultswereambiguous.Performancetendedtoincreaseovertime,butitalsoroseand
fellerratically.Partwaythroughthissetofexperiments,EltonMayo(18801949)andsomeassociates
fromHarvard,includingFritzJ.RoethhsbergerandWilliamJ.Dickson,becameinvolved.
Intheseandsubsequentexperiments,Mayoandhisassociatesdecidedthatacomplexchainof
attitudeshadtouchedofftheproductivityincreases.Becausetheyhadbeensingledoutforspecial
attention,boththetestandthecontrolgroupshaddevelopedagrouppridethatmotivatedthemto
improvetheirworkperformance.Sympatheticsupervisionhadfurtherreinforcedtheirmotivation.
Theresearchersconcludedthatemployeeswouldworkharderiftheybelievedmanagementwas
concernedabouttheirwelfareandsupervisorspaidspecialattentiontothem.Thisphenomenonwas
subsequentlylabeledtheHawthorneEffect,sincethecontrolgroupreceivednospecialsupervisory
treatmentorenhancementofworkingconditionsbutstillimproveditsperformance,somepeople
(includingMayohimself)speculatedthatthecontrolgroup'sproductivitygainsresultedfromthe
specialattentionoftheresearchersthemselves.

Theresearchersalsoconcludedthatinformalworkgroupsthesocialenvironmentofemployees
haveapositiveinfluenceonproductivity.ManyofWesternElectricsemployeesfoundtheirworkdull
andmeaningless,buttheirassociationsandfriendshipswithcoworkers,sometimesinfluencedbya
sharedantagonismtowardthe"bosses,"impartedsomemeaningtotheirworkinglivesandprovided
someprotectionfrommanagement.Forthesereasons,grouppressurewasfrequentlyastronger
influenceonworkerproductivitythanmanagementdemands.
ToMayo,then,theconceptof"socialman"motivatedbysocialneeds,wantingrewardingonthe
jobrelationships,andrespondingmoretoworkgrouppressuresthantomanagementcontrolvas
necessarytocomplementtheoldconceptof"rationalman"motivatedbypersonaleconomicneeds.
Allthesefindingsmightunremarkabletoday.ButcomparewhatMayoandhisassociatesconsidered
relevantwithwhatFordandWeberfoundrelevant,andyouseewhatachangetheseideasbrought
tomanagementtheory.
APPLYINGQUALITYCONCEPTSTOHUMANRELATIONSTHEORIES
Theapplicationofthesehumanrelationstheoriescanbeseenintoday'scompetitiveenvironment.
Forexample,withtherestructuringoftoday'scompetitiveglobaleconomy,manycompanieshave
madethedecisionto"downsize"orreducethenumbersofmanagersandworkers.However,some
companies,wellawareofthedynamicspointedoutbytheHawthornestudies,haveapproached
employeereductionswithgreatcare.AtSkyChiefs,a$450millionairlineinflightservices
corporation,theproblemsexperiencedbytheairlinesindustrysuchaspricewars,briskcompetition
fromforeignairlines,agingfleets,andtheincreasingcostofnewplanes,weredirectlyaffectingthe
company.Forcedtoreducestaff,managementrealizedthatifitmanagedtheprocesspoorlyand
didn'ttakeintoconsiderationtheneedsofemployees,thosewhoremainedafterthedownsizing
wouldbelessloyalandcohesiveasagroup.
Tominimizepotentialproblemsafterthedownsizing,themanagementadopted"totalquality
leadership"toprovidethecompanywithaframeworkforimplementingtherestructuring.Itspent
thousandsofhoursanddollarstofundtrainingandimprovementprocessesrelatedtototalquality
leadership.Thekeytothesuccessoftherestructuringwasthatinsteadofmanagementdictating
whatwouldhappenandtowhom,employees,seenasthebackboneofthecompany,were
empoweredtofacilitatetheprocess.Forexample,priortotherestructuringprocess,employees
participatedinevaluatingallheadquartersfunctions.Anemployeemanagedrestructuringcommittee
wasselectedbymanagementtoassemble,interpret,andevaluatethedata.Thensmalleraction
teamswerecreatedtoaddressthedownsizing.Tohelpthosewhoweretobeletgo,extensive
counselingandoutplacementserviceswereprovided,includinggroupworkshopsonnetworking,
interviewingtechniques,andhiring,andemployeeswerevideotapedtohelpwithfutureinterviews.
Now,aftertherestructuring,productivityandoperatingprofitsareincreasing.Theremaining
employeeshaveacceptedtheirnewrolesandresponsibilities,andmoralecontinuestoimprove.
FROMHUMANRELATIONSTOTHEBEHAVIORALSCIENCEAPPROACH
Mayoandhiscolleaguespioneeredtheuseofthescientificmethodintheirstudiesofpeopleinthe

workenvironment.Laterresearchers,morerigorouslytrainedinthesocialsciences(psychology,
sociology,andanthropology),usedmoresophisticatedresearchmethodsandbecameknownas
"behavioralscientists"ratherthan"humanrelationstheorists."
Thebehavioralscientistsbroughttwonewdimensionstothestudyofmanagementand
organizations.First,theyadvancedanevenmoresophisticatedviewofhumanbeingsandtheirdrives
thandidMayoandhiscontemporaries.AbrahamMaslowandDouglasMcGregoramongothers,
wroteabout"selfactualizing"people.Theirworkspawnednewthinkingabouthowrelationshipscan
bebeneficiallyarrangedinorganizations.Theyalsodeterminedthatpeoplewantedmorethan
"instantaneous"pleasureorrewards.Ifpeoplewerethiscomplexinthewaytheyledtheirlives,then
theirorganizationalrelationshipsneededtosupportthatcomplexity.
Second,behavioralscientistsappliedthemethodsofscientificinvestigationtothestudyofhow
peoplebehavedinorganizationsaswholeentities.TheclassicexampleistheworkofJamesMarch
andHerbertSimonmthelate1950s.MarchandSimondevelopedhundredsofpropositionsfor
scientificinvestigation,aboutpatternsofbehavior,particularlywithregardtocommunication,in
organizations.Theirinfluenceinthedevelopmentofsubsequentmanagementtheoryhasbeen
significantandongoing.
AccordingtoMaslow,theneedsthatpeoplearemotivatedtosatisfyfallintoahierarchy.Physicaland
safetyneedsareatthebottomofthehierarchy,andatthetopareegoneeds(theneedforrespect,
forexample)andselfactualizingneeds(suchastheneedformeaningandpersonalgrowth).In
general,Maslowsaidlowerlevelneedsmustbesatisfiedbeforehigherlevelneedscanbemet.Since
manylowerlevelneedsareroutinelysatisfiedincontemporarysociety,mostpeoplearemotivated
morebythehigherlevelegoandselfactualizingneeds.
Somelaterbehavioralscientistsfeelthateventhismodelcannotexplainallthefactorsthatmay
motivatepeopleintheworkplace.Theyarguethatnoteveryonegoespredictablyfromonelevelof
needtothenext.Forsomepeople,workisonlyameansformeetinglowerlevelneeds.Othersare
satisfiedwithnothinglessthanthefulfillmentoftheirhighestlevelneeds;theymayevenchooseto
workinjobsthatthreatentheirsafetyifbydoingsotheycanattainelypersonalgoals.Themore
realisticmodelofhumanmotivation,thesebehavioralscientistsargueis"complexperson."Usingthis
model,theeffectivemanagerisawarethatnotwopeopleareexactlyalikeandtailorsmotivational
approachesaccordingtoindividualneeds.
AsAmericancorporationsincreasinglydobusinesswithothercultures,itisimportanttoremember
thattheoriescanbeculturallybounded.Forexample,Maslow'shierarchyofneedsisnota
descriptionofauniversalmotivationalprocess.Inothernationstheorderofthehierarchymightbe
quitedifferentdependingonthevaluesofthecountry.InSweden,qualityoflifeisrankedmost
important,whileinJapanandGermany,securityisrankedhighest.
McGregorprovidedanotherangleonthis"complexperson"idea.Hedistinguishedtwoalternative
basicassumptionsaboutpeopleandtheirapproachtowork.Thesetwoassumptions,whichhecalled
TheoryXandTheoryY,takeoppositeviewsofpeople'scommitmenttoworkinorganizations.Theory
Xmanagers,McGregorproposed,assumethatpeoplemustbeconstantlycoaxedintoputtingforth

effortintheirjobs.TheoryYmanagers,ontheotherhand,assumethatpeoplerelishworkand
eagerlyapproachtheirworkasanopportunitytodeveloptheircreativecapacities.TheoryYwasan
exampleofa"complexperson"perspective.TheoryYmanagement,McGregorclaimed,wasstymied
bytheprevalenceofTheoryXpracticesintheorganizationsofthe1950s.Asyouarealreadyableto
see,therootsofTheoryXcanbetracedtothedaysofscientificmanagementandthefactoriesbased
ontheseprinciples.InaccordancewithMcGregor'sthinking,GeneralElectricCEOJackWelchargues
thatpeoplemustforgettheoldideaof"boss"andreplaceitwiththeideathatmanagershavethe
newdutiesofcounselinggroups,providingresourcesforthemandhelpingpeoplethinkfor
themselves."We'regoingtowinonourideas,"hesays,"notbywhipsandchains."
THEMANAGEMENTSCIENCESCHOOL
AtthebeginningofWorldWarII,GreatBritaindesperatelyneededtosolveanumberofnew,
complexproblemsinWarfare.Withtheirsurvivalatstake,Britishformedthefirstoperational
research(OR)teams.Bypoolingtheexpertiseofmathematicians,physicists,andotherscientistsin
ORteams,theBritishwereabletoachievesignificanttechnologicalandtacticalbreakthroughs.When
theAmericansenteredthewar,theyformedwhattheycalledoperationsresearchteams,basedon
thesuccessfulBritishmodel,tosolvesimilarproblems.Theteamsusedearlycomputerstoperform
thethousandsofcalculationsinvolvedinmathematicalmodeling.
Whenthewarwasover,theapplicabilityofoperationsresearchtoproblemsinindustrygradually
becameapparent.Newindustrialtechnologieswerebeingputintouseandtransportationand
communicationwerebecomingmorecomplicated.Thesedevelopmentsbroughtwiththemahostof
problemsthatcouldnotbesolvedeasilybyconventionalmeans.Increasingly,ORspecialistswere
calledontohelpmanagerscomeupwithanswerstothesenewproblems.Overtheyears,OR
procedureswereformalizedintowhatisnowmoregenerallycalledthemanagementscienceschool.
Themanagementscienceschoolgainedpopularitythroughtwopostwarphenomena.First,the
developmentofhighspeedcomputersandofcommunicationsamongcomputersprovidedthe
meansfortacklingcomplexandlargescaleorganizationalproblems.Second,RobertMcNamara
implementedamanagementscienceapproachatFordMotorCompanyinthe1950sand1960s.
(Later,hebroughtthesameapproachtohisassignmentasSecretaryofDefenseintheJohnson
Administration.)AsMcNamara'ssocalled"WhizKids"protegesmovedtomanagementpositionsat
FordandacrossAmericanindustry,themanagementscienceschoolflourished.Ifyoufindyourself
workingmanorganizationwhere"crunchingthenumbers"isthecentralwaythatmanagement
decisionsarereachedandjustified,youcanthankMcNamaraandhisgeneration.
Todaythemanagementscienceapproachtosolvingaproblembeginswhenamixedteamof
specialistsfromrelevantdisciplinesiscalledintoanalyzetheproblemandproposeacourseofaction
tomanagement.Theteamconstructsamathematicalmodelthatshows,insymbolicterms,all
relevantfactorsbearingontheproblemandhowtheyareinterrelated.Bychangingthevaluesofthe
variablesinthemodel(suchasincreasingthecostofrawmaterials)andanalyzingthedifferent
equationsofthemodelwithacomputer,theteamcandeterminetheeffectsofeachchange.
Eventually,themanagementscienceteampresentsmanagementwithanobjectivebasisformakinga
decision.

Managementscienceofferedawholenewwaytothinkabouttime.Withsophisticatedmathematical
models,andcomputerstocrunchthenumbers,forecastingthefuturebasedonthepastandpresent
becameapopularactivity.Managerscannowplaywiththe"whatifthefuturelookslikethis?"
questionsthatpreviousmanagementtheoriescouldnothandle.Atthesametime,themanagement
scienceschoolpayslessattentiontorelationshipsperseinorganizations.Mathematicalmodeling
tendstoignorerelationshipsasdata,emphasizingnumericaldatathatcanberelativelyeasily
collectedorestimated.Thecriticismisthusthatmanagementsciencepromotesanemphasisononly
theaspectsoftheorganizationthatcanbecapturedinnumbers,missingtheimportanceofpeople
andrelationships.
RECENTDEVELOPMENTSINMANAGEMENTTHEORY
Theoriesarepowerfulinfluences.Thelongerweuseagiventheory,themorecomfortablewe
becomewithitandthemorewetendtonotseekoutalternativetheoriesunlesseventsforceusto
change.This.helpsexplainwhy"modern"managementtheoryisreallyarichmosaicofmany
theoriesthathaveenduredoveratleastthepastcentury.Onebenefitofunderstandingthis
concurrentpopularityofmanypointsofviewaboutorganizationsisthatitpreparesyouforyourown
organizationalexperiences.Ifthischapterhasnotalreadybroughttominddifferentmanagerial
stylestowhichyouhavebeenexposed,itwillprepareyouforthedaywhen,forexample,youwork
fora"managementscience"managerwhointurnworksforamanagerwhopracticesbyoneofthe
theoriestofollowinthenextsection!Orifyouhavealreadyexperiencedsuchmanagers,itwillhelp
youunderstandtheirperspectivesbetter.
Whileitisimpossibletopredictwhatfuturegenerationswillbestudying,atthispointwecanidentify
atleastthreeadditionalperspectivesonmanagementtheorythatcangrowinimportance:the
systemsapproach,thecontingencyapproach,andwhatwecallthedynamicengagementapproach.
THESYSTEMSAPPROACH
Ratherthandealingseparatelywiththevarioussegmentsofanorganization,thesystemsapproach
tomanagementviewstheorganizationasaunified,purposefulsystemcomposedofinterrelated
parts.Thisapproachgivesmanagersawayoflookingattheorganizationasawholeandasapartof
thelarger,externalenvironment(seeChapter3).Systems.theorytellsusthattheactivityofany
segmentofanorganizationaffects,invaryingdegrees,theactivityofeveryothersegment.
Productionmanagersinamanufacturingplant,forexample,preferlonguninterruptedproduction
runsofstandardizedproductsinordertomaintainmaximumefficiencyandlowcosts.Marketing
managers,ontheotherhand,whowanttooffercustomersquickdeliveryofawiderangeof
products,wouldlikeaflexiblemanufacturingschedulethatcanfillspecialordersonshortnotice.
Systemsorientedproductionmanagersmakeschedulingdecisionsonlyaftertheyhaveidentifiedthe
impactofthesedecisionsonotherdepartmentsandontheentireorganization.Thepointofthe
systemsapproachisthatmanagerscannotfunctionwhollywithintheconfinesofthetraditional
organizationchart.Theymustmeshtheirdepartmentwiththewholeenterprise.Todothat,they
havetocommunicatenotonlywithotheremployeesanddepartments,butfrequentlywith
representativesofotherorganizationsaswell.Clearly,systemsmanagersgrasptheimportanceof

websofbusinessrelationshipstotheirefforts.
SOMEKEYCONCEPTS
Manyoftheconceptsofgeneralsystemstheoryarefindingtheirwayintothelanguageof
management.Managersneedtobefamiliarwiththesystemsvocabularysotheycankeeppacewith
currentdevelopments.
SUBSYSTEMS.Thepartsthatmakeupthewholeofasystemarecalledsubsystems.Andeachsystem
inturnmaybeasubsystemofastilllargerwhole.Thusadepartmentisasubsystemofaplant,which
maybeasubsystemofacompany,whichmaybeasubsystemofaconglomerateoranindustry,
whichisasubsystemofthenationaleconomy,whichisasubsystemoftheworldsystem.
SYNERGY.Synergymeansthatthewholeisgreaterthanthesumofitsparts.Inorganizationalterms,
synergymeansthatasseparatedepartmentswithinanorganizationcooperateandinteract,they
becomemoreproductivethanifeachweretoactinisolation.Forexample,inasmallfirm,itismore
efficientforeachdepartmenttodealwithonefinancedepartmentthanforeachdepartmenttohave
aseparatefinancedepartmentofitsown.
OPENANDCLOSEDSYSTEMS.Asystemisconsideredanopensystemifitinteractswithits
environment;itisconsideredaclosedsystemifitdoesnot.Allorganizationsinteractwiththeir
environment,buttheextenttowhichtheydosovaries.Anautomobileplant,forexample,isafar
moreopensystemthanamonasteryoraprison.
SYSTEMBOUNDARY.Eachsystemhasaboundarythatseparatesitfromitsenvironment.Inaclosed
system,thesystemboundaryisrigid;inanopensystem,theboundaryismoreflexible.Thesystem
boundariesofmanyorganizationshavebecomeincreasinglyflexibleinrecentyears.Forexample,
managersatoilcompanieswishingtoengageinoffshoredrillingnowmustconsiderpublicconcern
fortheenvironmentAtrendisthatAmericancommunitiesaredemandingmoreandmore
environmentalresponsibilityfromcompanies.Forexample,SantaRosa,California,acityof125,000,
treatsenvironmentalviolationssuchas"offgassing"awasteproduct,thatis,allowingittoevaporate
intotheatmosphere,asapotentialcriminaloffense.
FLOW.Asystemhasflowsofinformation,materials,andenergy(includinghumanenergy).These
enterthesystemfromtheenvironmentasinputs(rawmaterials,forexample),undergo
transformationprocesseswithinthesystem(operationsthatalterthem),andexitthesystemas
outputs(goodsandservices).
FEEDBACK.Feedbackisthekeytosystemcontrols.Asoperationsofthesystemproceed,information
isfedbacktotheappropriatepeople,andperhapstoacomputer,sothattheworkcanbeassessed
and,ifnecessary,corrected.Forexample,whenAluminumCompanyofAmericabeganfeeding
productiondatabacktothefactoryfloor,workersintheAddy,Washington,magnesiumplantquickly
observedwaystoimproveoperations,boostingproductivityby72percent.Figure22(notshown)
showstheflowsofinformation,materials,energy,andfeedbackinanopensystem.

Systemtheorycallsattentiontothedynamicandinterrelatednatureoforganizationsandthe
managementtask.Thus,itprovidesaframeworkwithinwhichwecanplanactionsandanticipate
bothimmediateandfarreachingconsequenceswhileallowingustounderstandunanticipated
consequencesastheydevelop.Withasystemsperspective,generalmanagerscanmoreeasily
maintainabalancebetweentheneedsofthevariouspartsoftheenterpriseandtheneedsandgoals
thewholefirm.
THECONTINGENCYAPPR0ACH
ThewellknowninternationaleconomistCharlesKmdlebergerwasfondoftellinghisstudentsatMIT
thattheanswertoanyreallyengrossingquestionineconomicsis::Itdepends."Thetaskofthe
economist,Kindlebergerwouldcontinue,istospecifyuponwhatitdepends,andinwhatways.
"Itdepends"isanappropriateresponsetotheimportantquestionsinmanagementaswell.
Managementtheoryattemptstodeterminethepredictablerelationshipsbetweensituations,
actions,andoutcomes.Soitisnotsurprisingthatarecentapproachseekstointegratethevarious
schoolsofmanagementthoughtbyfocusingontheinterdependenceofthemanyfactorsinvolvedin
themanagerialsituation.
Thecontingencyapproach(sometimescalledthesituationalapproach)wasdevelopedbymanagers,
consultants,andresearcherswhotriedtoapplytheconceptsofthemajorschoolstoreallife
situations.Whenmethodshighlyeffectiveinonesituationfailedtoworkinothersituations,they
soughtanexplanation.Why,forexample,didanorganizationaldevelopmentprogramworkbrilliantly
inonesituationandfailmiserablyinanother.Advocatesofthecontingencyapproachhadalogical
answertoallsuchquestions:Resultsdifferbecausesituationsdiffer;atechniquethatworksinone
casewillnotnecessarilyworkinallcases.
Accordingtothecontingencyapproachthemanager'staskistoIdentifywhichtechniquewill,ina
particularsituation,underparticularcircumstances,andatparticulartime,bestcontributetothe
attainmentofmanagementgoals.Whereworkersneedtobeencouragedtoincreaseproductivity,
forexample,theclassicaltheoristmayprescribeanewworksimplificationscheme.Thebehavioral
scientistmayinsteadseektocreateapsychologicallymotivatingclimateandrecommendsome
approachlikejobenrichmentthecombinationoftasksthataredifferentinscopeandresponsibility
andallowtheworkergreaterautonomyinmakingdecisions.Butthemanagertrainedinthe
contingencyapproachwillask,"Whichmethodwillworkbesthere?"Iftheworkersareunskilledand
trainingopportunitiesandresourcesarelimited,worksimplificationwouldbethebestsolution.
However,withskilledworkersdrivenbyprideintheirabilities,ajobenrichmentprogrammightbe
moreeffective.Thecontingencyapproachrepresentsanimportantturninmodernmanagement
theory,becauseitportrayseachsetoforganizationalrelationshipsinitsuniquecircumstances.
Forexample,whenmanagersatTacoBelladdressedthequestionofwhatwouldworkbestforits
restaurants,theyredefinedbusinessbasedonthesimplepremisethatcustomersvaluefood,service,
andthephysicalappearanceoftherestaurant.Toimplementthenewcustomerfocusedgoals,the
companyrecruitednewmanagerswhowerecommittedtocreatingordeliveringgoodsthat
customersvalueandwhocouldcoachandsupportstaffinthenewdirection.Toconcentrateon

customers,TacoBelloutsourcedmuchoftheassemblylinefoodpreparation,suchasshredding
lettuce,allowingemployeestofocusoncustomers.Asaresult,ithasenjoyeda60percentgrowthin
salesatcompanyownedstores.0therfastfoodrestaurantsmightbasetheirbusinessondifferent
situationalfactors,bythecontingencyview.
ENTERINGANERAOFDYNAMICENGAGEMENT
Alloftheprecedingtheorieshavecomedowntousinthelatetwentiethcenturyworldof
organizationsandmanagement.Heretheyarepracticedagainstabackdropofrapidchangeand
profoundrethinkingabouthowmanagementandorganizationswillevolveinthenextcentury.Atthe
heartofthisrethinking,whichisreallyoccurringinnumerouswaysatthesametime,arenewwaysof
thinkingaboutrelationshipsandtime.
Asboundariesbetweenculturesandnationsareblurredandnewcommunicationstechnologymakes
itpossibletothinkoftheworldasa"globalvillage,"thescopeofinternationalandintercultural
relationshipsisrapidlyexpanding.Thepaceoforganizationalactivitypicksupdramatically.These
trendsindicateaheightenedlevelofintensityinorganizationsandmanagementtoday.
Toemphasizetheintensityofmodernorganizationalrelationshipsandtheintensityoftimepressures
thatgoverntheserelationships,wecallthisflurryofnewmanagementtheorythedynamic
engagementapproach."Dynamicengagement"isourterm.Intimeswhentheoriesarechanging,itis
oftentruethatthelastthingthathappensisthatsomeoneassignsanametothenewtheory.Weuse
dynamicengagementtoconveythemoodofcurrentthinkinganddebateaboutmanagementand
organizations.Itisquitelikelythattwentyyearsfromnow,wellintoyourorganizationallives,youwill
lookbackandcallthisperiodofmovementbysomeothername.
Dynamicoppositeofstaticimpliescontinuouschange,growth,andactivity;engagementthe
oppositeofdetachmentimpliesintenseinvolvementwithothers.Wethereforethinktheterm
dynamicengagementbestexpressesthevigorouswaytoday'smostsuccessfulmanagersfocuson
humanrelationshipsandquicklyadjusttochangingconditionsovertime.
Sixdifferentthemesaboutmanagementtheoryareemergingundertheumbrellathatwecall
dynamicengagement.Toemphasizetheirimportancetoyourunderstandingofmanagementinthe
1990sandbeyond,andtohighlightthedifferencesbetweenthem,wedevoteachapterinPartTwo
toeachofthem.
NEWORGANIZATIONALENVIRONMENTS(Chapter3)
Thedynamicengagementapproachrecognizesthatanorganization'senvironmentisnotsomesetof
fixed,impersonalforces.Rather,itisacomplex,dynamicwebofpeopleinteractingwitheachother.
Asaresult,managersmustnotonlypayattentiontotheirownconcerns,butalsounderstandwhatis
importanttoothermanagersbothwithintheirorganizationsandatotherorganizations.They
interactwiththeseothermanagerstocreatejointlytheconditionsunderwhichtheirorganizations
willprosperorstruggle.Thetheoryofcompetitivestrategy,developedbyMichaelPorter,focuseson
howmanagerscaninfluenceconditionsinanindustrywhentheyinteractasrivals,buyers,suppliers,

andsoon.Anothervariationonthedynamicengagementapproach,mostnotablyarguedbyEdward
andJeanGernerSteadinManagementforaSmallPlanet,placesecologicalconcernsatthecenterof
managementtheory.
ETHICSANDSOCIALRESPONSIBILITY(Chapter4)
Managersusingadynamicengagementapproachpaycloseattentiontothevaluesthatguidepeople
intheirorganizations,thecorporateculturethatembodiesthosevalues,andthevaluesheldby
peopleoutsidetheorganization.Thisideacameintoprominencewiththepublicationin1982ofIn
SearchofExcellencebyThomasPetersandRobertWaterman.Fromtheirstudyof"excellent"
companies,PetersandWatermanconcludedthat"thetopperformerscreateabroad,uplifting
sharedculture,acoherentframeworkwithinwhichchargeduppeoplesearchappropriate
adaptations.
RobertSolomonhastakenthisideaastepfurther,arguingthatmanagersmustexercisemoral
couragebyplacingthevalueofexcellenceatthetopoftheiragendas.Indynamicengagement,itis
notenoughformanagerstodothingsthewaytheyalwayshave,ortobecontentwithmatchingtheir
competitors.Continuallystrivingtowardexcellencehasbecomeanorganizationalthemeofthe
1990s.Becausevalues,includingexcellence,areethicalconcepts,thedynamicengagementapproach
movesethicsfromthefringeofmanagementtheorytotheheartofit.
GLOBALIZATIONANDMANAGEMENT(Chapter5)
Thedynamicengagementapproachrecognizesthattheworldisatthemanager'sdoorstepinthe
1990s.Withworldfinancialmarketsrunning24hoursaday,andeventheremotestcornersofthe
planetonlyatelephonecallaway,managersfacingthetwentyfirstcenturymustthinkofthemselves
asglobalcitizens.KenichiOhmaemakesthispointashedescribesa"borderless"worldwhere
managerstreatallcustomersas"equidistant"fromtheirorganizations.
Asimplecomparisonillustrateshowthingshavechanged.IfyouweretolookthroughAlfredSloans
autobiographyabouthislongcareerasGeneralMotorschairmanthroughthe1940s,youwouldfind
verylittleaboutinternationalfactorswithgoodreasonmthattimeandplace.Today,however,if
youtimeintoaCNNbroadcastyouwillnoticethatthereportersdonotusetheword"foreign"atall.
Or,considertheposteronthewallofHondadealerships,whichsaystheideaofan"Americancar"
doesn'tmakeanysenseinanerawhenasinglecarcontainspartsmadebypeoplefromalloverthe
globe.
INVENTINGANDREINVENTINGORGANIZATIONS(Chapter6)
Managerswhopracticedynamicengagementcontinuallysearchforwaystounleashthecreative
potentialoftheiremployeesandthemselves.Agrowingchorusoftheoristsareurgingmanagersto
rethinkthestandardorganizationstructurestowhichtheyhavebecomeaccustomed.Petersisonce
againattheforefront.Hisconceptof"liberationmanagement"challengesthekindsofrigid
organizationstructuresthatinhibitpeople'screativity.Peters'heroessucceedinspiteofthose
structures.MichaelHammerandJamesChampyhavemadetheirconceptofreengineeringthe

corporation"intoabestseller.HammerandChampyurgemanagerstorethinktheveryprocessesby
whichorganizationsfunctionandtobecourageousaboutreplacingprocessesthatgetinthewayof
organizationalefficiency.
CULTURESANDMULTICULTURALISM(Chapter7)
Managerswhoembracethedynamicengagementapproachrecognizethatthevariousperspectives
andvaluesthatpeopleofdifferentculturalbackgroundsbringtotheirorganizationsarenotonlya
factoflifebutasignificantsourceofcontributions.
JoanneMartinhaspioneeredtheculturalanalysisoforganizations.Sheexplainshowdifferences
createunprecedentedchallengesformodemmanagers.CharlesTaylorisaprominentproponentof
thesocalled"communitarian"movement.Taylorclaimsthatpeoplecanpreservetheirsenseof
uniquenesstheirauthenticityonlybyvaluingwhattheyholdincommonandseekingtoextend
whattheyholdincommonintheorganizationsandcommunitiesinwhichtheylive.CornelWest
grabsourattentiontodifferentcultureswiththeverytitleofhisbook,RaceMatters.Martin,Taylor,
andWestallwantustoseethebenefitsthatcomefromwelcomingandunderstandingdifferences
amongpeople.Still,noneofthemsaythatacceptanceofdifferentcultureswillbeeasy.
Multiculturalismisamovingtargetasmoreandmorepeoplebecomeconsciousoftheirparticular
culturaltraditionsandties.Hereiswhereboth"dynamic"and"engagement"clearlycometogether
asweenvisiontheorganizationsofthetwentyfirstcentury.
QUALITY(Chapter8)
Bythedynamicengagementapproach,TotalQualityManagement(TQM)shouldbeinevery
manager'svocabulary.Allmanagersshouldbethinkingabouthoweveryorganizationalprocesscan
beconductedtoprovideproductsandservicesthatareresponsibletotougherandtoughercustomer
andcompetitivestandards.Strongandlastingrelationshipscanbefruitfulbyproductsofa"quality"
frameofmindandaction,bythisview.TotalQualityManagementaddsonemoredynamic
dimensiontomanagement,becausequality,too,isalwaysamovingtarget.
Dynamicengagementisanexampleofthechangingfaceofmanagementtheory.Noteveryonewe
havementionedinthisoverviewofthedynamicengagementapproachcallshimselforherselfa
managementtheorist.Somearephilosophersandsomearepoliticalscientists.Aswebringthis
chaptertoaclose,wewanttopointoutanimportantlessoninthislineupofdynamicengagement
theorists.Thedynamicengagementapproachchallengesustoseeorganizationsandmanagementas
integralpartsofmodemglobalsociety.Thiswasnotalwaysatenetofmanagementtheory.Oncethe
doorisopenedbetweenorganizationsandthelargerworld,however,manynewinfluencescancome
tobearonquestionsaboutmanagementtheoryandrelationships.
REMEMBERTOCHANGEWITHTHETIMES
Wehavediscussedtwobasicthingsinthischapter.First,theorists,whatevertheirfieldsofendeavor,
tendtobepeopleandproductsoftheirtimes.Second,managementtheories,liketheoriesinall
fields,tendtoevolvetoreflecteverydayrealitiesandchangingcircumstances.Bythesametoken,

managersmustbesensitivetochangingcircumstancesandequallywillingtochange.Iftheydonot,
theymustbesurpassedbymoreflexiblecompetitors.
BothoftheseideasapplytoHenryFord,themanwhoboldlybracedtheideasofscientific
management,revolutionizingtheautoindustryandsocietyintheprocess.
YetmanyofFordsmanagerialpracticeswereconservativeorunresponsivetochangingtimes,and
hisholdontheautomotivemarketwaseventuallywrestedfromhimbycompaniesmorefarsighted
intheirmanagerialtheoriesandpractices.Hostiletothebankingcommunity,forexample,Ford
refusedoutsideinvestmentsinhiscompanythroughouthislifetime,borrowingcapitalonlywhen
absolutelynecessaryandpreferringtofinancecorporateactivitiessolelythroughthecompanysown
income.Hewasalsoinclinedtoignorethedynamicsoftheindustrythathehadlargelyfounded.
AlthoughheopenedupbranchfactoriestocatertoagrowingEuropeanmarket,helongfailedto
followmanagerialadvicetoretoolforboththehydraulicbrakeandsixoreightcylinderengine;he
alsoresistedmanagementcounselregardingtheadvancesingearshiftandtransmissiontechnology
andevenputoffintroducingcolorvarietyintohisproductline(Fordpreferredhiscarstobeblack).
Hisdisinterestinconsumerdemandsforcomfortandstyleultimatelycosthimhisindustrys
leadership,whichpassedtoGeneralMotors,aconglomerateassembledfromover20diversfirmsby
founderWilliamDurantandasecondgenerationofAmericanindustrialorganizers.