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Historical

Foundations
of
Management

Chapter Two

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Evolution Of Management Thought

Classical Approaches Contemporary Approaches


1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Systematic Administrative Quantitative Systems Contingency Current and


management management management theory theory future revolutions

Scientific Human Organizational


management relations behavior

Bureaucracy
Early Management Concepts And
Influences
 Industrial revolution
 minor improvements in management tactics produced
impressive increases in production quantity and quality
 economies of scale - reductions in the average cost of a unit
of production as the total volume produced increases
 opportunities for mass production created by the industrial
revolution spawned intense and systematic thought about
management problems and issues
 efficiency
 production processes
 cost savings
Classical Perspective
Three Sub-Fields

 Scientific

 Bureaucratic Organizations
 Administrative Principles
Scientific Management

• Personalities
– Frederick W. Taylor
General Approach
• Developed standard method for performing each job.
• Selected workers with appropriate abilities for each job.
• Trained workers in standard method.
• Supported workers by planning work and eliminating
interruptions.
• Provided wage incentives to workers for increased
output.
Scientific Management (cont.)

Contributions
Improved factory productivity and efficiency
Introduced scientific analysis to the workplace
Piecerate system equated worker rewards and
performance
Limitations

Simplistic motivational assumptions


Workers viewed as parts of a machine
Potential for exploitation of labor
Excluded senior management tasks
Bureaucracy Organizations

 Personalities
 Max Weber
 Labor is divided with clear definitions of authority and
responsibility.
 Positions are in hierarchy of authority.

 Personnel are selected and promoted based on qualifications

 Management is separate from the ownership.

 Rules and procedures ensure reliable, & predictable behavior

 Rules are impersonal and uniformly applied.


Bureaucracy Organizations

Contributions
Promotes efficient performance of routine operations
Eliminates subjective judgment by employees and management
Emphasizes position rather than the person

Limitations

Limited organizational flexibility and slowed decision


making
Ignores the importance of people and interpersonal
relationships
Rules may become ends in themselves
Administrative Management

• Five management functions


– planning
– organizing
– commanding
– coordinating
– controlling
• Fourteen principles of management
• Personalities
– Henri Fayol
– Chester Barnard
– Mary Parker Follet
Henri Fayol’s 14 Points

 Division of labor  Centralization


 Authority  Scalar chain
 Discipline  Order
 Unity of command  Equity
 Unity of direction  Stability and tenure of
 Subordination of staff
individual interest  Initiative
 Remuneration  Esprit de corps
Henri Fayol’s 14 Points

11
Mary Parker Follet
 emphasized worker participation and
shared goals among managers.
Concepts:
 Empowerment
 Facilitating rather than controlling
employees
 Allowing employees to act according to
the situation
Chester I. Bernard
 Concepts:-
 Informal Organisation
 Organisation not machines and
informal relationships are powerful
forces that can help the organisation if
properly managed.
Acceptance theory of authority
 Employees can choose/ free will.
Administrative Management (cont.)

Contributions

Viewed management as a profession that can be trained


and developed
Emphasized the broad policy aspects of top-level
managers
Offered universal managerial prescriptions
Limitations

Universal prescriptions need qualifications for environmental,


technological, and personnel factors
Human Relations

• Aimed to understand how psychological and social processes


interact with the work situation to influence performance
• Hawthorne Studies
– Hawthorne Effect - workers perform and react differently when
researchers observe them
• Argued that managers should stress primarily employee welfare,
motivation, and communication
• Personalities
– Abraham Maslow
Human Relations (cont.)

Key concepts
Productivity and employee behavior are influenced by the informal
work group
Cohesion, status, and group norms determine output
Social needs have precedence over economic needs

Contributions
Psychological and social processes influence performance
Maslow’s hierarchy of need
Limitations
Ignored workers’ rational side and the formal organization’s
contributions to productivity
Research overturned the simplistic belief that happy workers are more
productive
Organizational Behavior

• Studies management activities that promote employee


effectiveness
– investigates the complex nature of individual, group, and
organizational processes
– Theory X
• managers assume that workers are lazy, irresponsible, and
require constant supervision
– Theory Y
• managers assume employees want to work and control
themselves
• Personalities
– Douglas McGregor
Douglas McGregor
Theory X & Y

Theory X Theory Y
 People are lazy  People are energetic
 People lack ambition  People want to make
 Dislike responsibility contributions
 People are self-centered  People do have ambition
 People don’t like change  People will seek responsibility
Three Contemporary Trends

Systems Theory
Contingency View
Systems View
Systems Theory

Key concepts
Organization is viewed as a managed system
Management must interact with the environment
Organizational goals must address effectiveness and efficiency
Organizations contain a series of subsystems
Synergies enable the whole to be more than the sum of the parts

Contributions
Recognized the importance of the relationship between the
organization and the environment

Limitations
Does not provide specific guidance on the functions of managers
Contingency Perspective

Key concepts
Situational contingencies influence the strategies, structures, and
processes that result in high performance
There is more than one way to reach a goal
Managers may adapt their organizations to the situation

Contributions
Identified major contingencies
Argued against universal principles of management

Limitations
Not all important contingencies have been identified
Theory may not be applicable to all managerial issues