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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

Early Management Concepts And
 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
• Provided wage incentives to workers for increased
Scientific Management (cont.)

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

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
 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

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


Limited organizational flexibility and slowed decision

Ignores the importance of people and interpersonal
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

Mary Parker Follet
 emphasized worker participation and
shared goals among managers.
 Empowerment
 Facilitating rather than controlling
 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.)


Viewed management as a profession that can be trained

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

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

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

• Studies management activities that promote employee

– 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
• 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

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

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

Identified major contingencies
Argued against universal principles of management

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