THE EVOLUTION

OF MANAGEMENT
THOUGHT

CHAPTER 2
 2

Introduction
• Definition of the theory
▫ Theory is the analysis of a set of facts and their relation
to one another
▫ An idea that is starting point for making a case or
conducting an investigation
• Definition of the evolution
▫ Refer to the act or process of going from being simple
or basic to being complex or advanced.
The Evolution of Management
Theory

Figure 2.1
BnR-Peng.Manajemen-Chap-05 4
 Scientific Management theory

• Modern management began in the

late 19th century.
– Organizations were seeking ways to
better satisfy customer needs.
– Machinery was changing the way
goods were produced.
 Job specialization

• Adam Smith, 18th century economist,

found firms manufactured pins in two
ways:
– Craft -- each worker did all steps.
– Factory -- each worker specialized in one
step.
• Smith found that the FACTORY method
had much higher productivity.
• Breaking down the total job allowed for the division of labor in
which workers became very skilled
at their specific tasks.
 F.W. Taylor and Scientific
Management
Scientific Management
The systematic study of the
relationships between people and
tasks for the purpose of redesigning
the work process for higher efficiency.

8
Taylor made several important contributions
under Scientific Management.
1. Time and Motion Studies
• Under Time and Motion Studies, which every motion of
task was timed using a stopwatch and shorter and fewer
motions were to be developed. Thus the best way of doing
a job was found.

2. Differential Pay
• Under this plan a worker received a low piece rate if he
produced the standard number of pieces and a higher rate
if he surpassed the standard. This was believed to
motivate workers.
3. Drastic Reorganisation of Supervision
• Work should be planned by the foremen but done
by the worker in his own way.

4. Scientific Recruitment and Training

• Management should develop and train every
worker to bring out the best to do a higher, more
interesting and more profitable work than what was
done in the past.
 FAYOL’S 14 PRINCIPLES

1. Division of Work
• Increased specialisation in individuals’ jobs leads to
greater efficiency.

2. Authority and Responsibility

• Managers have the right to give orders and the
powers to assure compliance with their orders. This
commensurate with the manager’s responsibility,
for authority and responsibility go hand-in-hand.
3. Discipline
• Employees should respect regulations and
procedures to ensure order and proper behaviour.

4. Unity of Command
• For any job task, an employee should receive orders
from one plan and director to avoid confusion and
conflict.
5. Unity of Direction
• Each work group or department should operate
under one plan and director.

6. Subordination of Individual Interests to the General

Interests.
• Employees must put the organisation interests and
goals before their own.
7. Remuneration
• Workers should be paid wages that are fair and
acceptable to both employee and company.

8. Centralisation.
• Increasing subordinates’ roles in the decision-making
process is decentralisation, whilst decreasing their roles is
centralisation. The challenge to managers is to balance the
correct amount of centralisation or decentralisation
depending on the circumstances and employees in each
case.
9. Scalar Chain (Line of Authority).
• Definite lines make authority relationships from top to bottom
clearly throughout the organisation. Organisational
communication should follow this chain.

10. Order.
• Everything has a place and it should be in its place. This is to
avoid conflict and confusion. Placement of employees should
be based on qualification, allowing each person to have the
job for which he or she is best suited.
11. Equity.
• Managers should supervise with kindliness, just
and fair.

12. Stability of Tenure of Personnel.

• High turnover rates are inefficient. Low turnover
means stable work force. By respecting seniority,
managers create a sense of security, retain well-
trained employees and reduce turnover.
13. Initiative.
• Subordinates who are given the opportunities to design
and carry out plans will work harder. Managers
encourage initiatives, develop and implement plans.

14. ‘Esprit De Corps’.

• Promoting team spirit builds harmony, encourages
coordination efforts and creates organisational unity.
 HAWTHORNE STUDIES.

In 1927, a group of researchers led by Elton Mayo and

Fritz Roethlisberger of the Harvard Business School
were invited to join in the studies at the Hawthorne
Works of Western Electric Company, Chicago. The
experiment lasted up to 1932.
• The Hawthorne experiment consists of four parts:
 Illumination

Relay
Bank wiring Experim
Assembly Test
Test Room ents
Room

Interviewing
programme
Illumination Experiment (1924-27) :

• This experiment was conducted to establish relationship

between output and illumination.
• When the intensity of light was increased, the output
also increased. The output showed an upward trend
even when the illumination was gradually brought down
to the normal level.
• It was concluded that there is no consistent relationship
between output of workers and illumination in the
factory. There must be some other factor which affected
productivity.
Relay Assembly Test Room Study (1927-1929):

• Under these test two small groups of 6 female telephone relay

assemblers were selected.
• Each group was kept in separate rooms. From time to time,
changes were made in working hours, rest periods, lunch
breaks, etc.
• They were allowed to choose their own rest periods and to
give suggestions.
• Output increased in both the control rooms.
• It was concluded that social relationship among workers,
participation in decision-making, etc. had a greater effect on
productivity than working conditions.
Mass Interviewing Programme (1928-1930)

• 21,000 employees were interviewed over a period of three

years to find out reasons for increased productivity.
• It was concluded that productivity can be increased if workers
are allowed to talk freely about matters that are important to
them.
Bank Wiring Observation Room Experiment (1932)

• A group of 14 male workers in the bank wiring room were

placed under observation for six months.
• A worker's pay depend on the performance of the group as a
whole.
• The researchers thought that the efficient workers would put
pressure on the less efficient workers to complete the work.
• However, it was found that the group established its own
standards of output, and social pressure was used to achieve
the standards of output.
 SOMETHING TO PONDER

WHY WOULD A CUSTOMER COME TO

YOU IF YOUR COMPETITOR IS ALSO
OFFERING THE SAME
PRODUCT?????

The difference has to be there in quality.

Your brand needs to be superior for it
to stand apart from the rest.
 29

Recent Historical Trends :

Total Quality Management (TQM)
• A concept that focuses
on managing the total
organization to deliver
quality to the
customers.
• Total Quality
management is defined
as a continuous effort by
the management as well
as employees of a
particular organization
to ensure long term
customer loyalty and
customer satisfaction.
 TQM TRADITIONAL MANAGEMENT

CUSTOMER FIRST MANAGEMENT FOCUS

QUALITY FIRST PROFITS FIRST

MULTIPLE QUALITY SINGLE QUALITY

DIMENSION DIMENSION

MANAGEMENT &
NO WORKER
WORKER INVOLVEMENT
INVOLVEMENT

PROCESS ORIENTED
RESULT ORIENTED
 31

Employee
involvement

Continuous ELEMENTS Customer

improvement OF TQM Focus

Benchmarking