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Chapter 2. EVOLUTION OF MANAGEMENT THOUGHT EVOLUTION OF MANAGEMENT THOUGHT
Management as a subject is relatively young. It evolved in various phases.
CLASSICAL THEORIES OF MANAGEMENT Fredrick, W Taylor and Scientific Management : Taylor gave up college in 1875 and joined Midvale Steel Works as a machinist in 1878.
He became the Chief Engineer (after doing an Engineering course). He is called the "Father of Scientific Management". He had first hand knowledge about problems existing at various levels of management. Taylor 's major concern was Increasing efficiency in production not only to lower costs and raise profits but also to make possible increased pay for workers through higher productivity. He said productivity suffered mainly due to ignorance and the tension of how to split profits but not how to increase profits. Taylor undertook Time and Motion studies.
Taylor's - Principles of Scientific Management -1911 1. Replacing rule of thumb with science (Organized Knowledge) 2. Obtaining harmony in group action rather than discord 3. Achieving cooperation of humans not chaotic individuals
4. Working maximum output, not restricted output 5. Developing all workers to the fullest extent, possible for their own and the companies higher prosperity
Henri Fayol - Process Management theory: Fayol wrote a book called "General and Industrial Management". He stated that all operational
activities in a business organization can be classified under six headings:
• • • • • •
Financial (search for and optimum use of capital) Accounting (including statistics) Commercial (buying, selling, exchange) Managerial (planning, organization, command, co-ordination, control)
Security (protection of property and persons)
Fayol stressed on managerial aspects and he regarded elements of management as its functions - planing, organizing, commanding, coordinating and controlling. His observations are still valid after 7 -8 decades. Throughout his study he stressed on the universality of the principles. He repeatedly pointed out that the principles apply not only to business but also to political, religious, philanthropic, military and other undertakings. Fayol is also called the real father of modern management theory; he also gave 14 general principles of management. These principles are flexible not absolute.
1. 2. 3. 4. 5. 6. 7. 8. 9.
Division of work - Fayol applies this principle to all kinds of work, managerial as well as technical. Authority and responsibility - Fayol found these are related, with the latter arising from the former. Discipline - Fayol said discipline requires good superiors at all levels. Unity of command - Single superior should give orders. Unity of Direction - Each group of activities with the same objective must have one head and one plan. Subordination of individual to general interest . Remuneration - Must be fair giving maximum possible satisfaction to employees and employer. Centralisation - Fayol says individual circumstances will determine the degree to which authority is concentrated or dispersed. Scalar chain - Payol believed that "chain of superiors" from highest to lowest ranks should not be departed from needlessly but can
be short-circuited when the need be.
10. Order - "A place for everything and everyone" 11. Equity - Loyalty can be elicited from personnel by combination of kindliness and justice. 12. Stability of tenure - Unnecessary turnover can have high danger and costs. 13. Initiative - Managers must sacrifice personal vanity to permit subordinates to exercise initiative. 14. Espirit-De-Corps -" In union there is strength" emphasising the need for teamwork "and importance of communication in obtaining it
Fayol concluded by saying that his list was not exhaustive but some kind of codification of principles appeared to be indispensable in every undertaking. Taylor & Fayol's work is complementary to a large extent.
Max Weber -Principle of Bureaucracy: He laid down three principles 1. 2. 3. Hierarchy of authority: Hierarchy of positions should provide for supervision of each office by a higher authority. Continuing body of rules: All organizations work in accordance with these rules.. All administrative acts, actions and decisions
should be recorded in writing so as to provide for future scrutiny and permanent record.
Clear-cut division of work: Specific areas of competence should be determined on the basis of division of labour. Appointments
and promotions on the basis of universalistic criterion of demonstrated competence.
NEO CLASSICAL TIHEORIES OF MANAGEMENT Emergence of behavioral sciences: During Taylor and Fayol's time, many scholars were thinking about experimenting with and writing on
Industrial Psychology and Social Theory. Father of Industrial Psychology Hugo Muntserber in his book "Psychology and Industrial Efficiency"
• • •
How to find people whose mental qualities best fit them for the work they are to do. Under what psychological conditions the greatest and most satisfactory output can be obtained from every person. How a business can influence workers to obtain the best possible results from them.
He was interested in reducing working time, increasing wages and raising the "level of life"
The Hawthorne studies : Elton Mayo and F J Roethlisberger undertook experiments at the Hawthorne plant of Western Electric Company
between 1927 to 1932. Before this from 1924 to 1927, National Research Council with Western Electric Co. was studying the effect of illumination on productivity. They found that whether illumination was increased or decreased the productivity went on increasing. They were going to declare the study a failure when Mayo and Roethlisberger continued the research. Mayo found changing illumination, modifying rest periods, shortening workdays and varying incentive pay-systems did not seem to explain changes in productivity. Mayo concluded that improvement in productivity was due to social factors as morale and sense of belonging. This phenomenon of people being noticed came to be known as Hawthorne Effect. After this study greater and deeper understanding of social and behavioural aspects of management was seen.
Abraham Maslow -Need Hierarchy Theory: He said every human being has five needs:
• • • • •
Physiological Security Affiliation Esteem Self-Actualization
According to him these needs were seen in hierarchical order i.e., only after one was fulfilledl the other showed its appearance.
McGregor - Theory and Theory Y
Theory X - The manager considers subordinates to be lazy. Theory Y - The manager considers subordinates like to work if they are given work.
Elements of Neo Classical Theories
• • •
The Individual - Classical theorists ignored the differences among the individuals. Neo classical theorists stressed on individual
differences. They said each person is unique. Work Groups (Informal Organizations) - An individual in a group develops social wants that is the need to belong Participative Management - Taylor opposed this he wanted specialists to give training, Neo- classical and Modern Management welcomes this.
The Neo Classical Theories of management led to the emergence of a new subject called Organizational Behavior. This subject mainly dealt with the role of people in organizations and how to understand, predict and control the human behaviour. OB was based on certain
• • • • • • •
Organizations are not just techno-economic system but a social system. People are not only motivated by economic incentives but their social and psychological wants also have to be fulfilled. Democratic rather then authoritarian leadership is the key to effective leadership. Effective two-way communication is essential for managerial success. Management must take greater interest in employee development and workers satisfaction. Informal organizations and groups should be recognized and considered to be a reality because they are bound to exist. Management must develop social skills in addition to technical skills.
MODERN MANAGEMENT THEORIES
Modern management theories have twin objectives:
Productivity (Classical Approach) Satisfaction (Neo-Classical Approach)
Quantitative Approach to Management - Operations Research -Linear Programming, Game Theory, Queuing Theory, Simulation
etc. But these are limited in their application as the final decision is always the managers.
Systems Approach - Since 1950, a period of refinement, extension and synthesis of management thought and practice. It stresses
on the inter-relatedness and interdependence of all activities within an organization. It includes Operations Research, Behavioral Science, Social - technical System, Management Information Systems and Industrial Dynamics. System Approach to Management is a popular approach used widely. This approach uses the following basic inputs, processes and outputs. In a system all subsystems of the organization along with the supra-system of environment are interconnected and interrelated.
Contingency Approach - Situational Approach - According to this approach every firm is unique and so is every situation, so
there can not be tailor made solutions to any problem. Every problem will have a unique solution.
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