Part One

OVERVIEW

MODULE 1

Contemporary Concepts of Management

Learning Objectives

The student after reading this module is expected to:

1. Know the concept of management.

2. Perceive the nuances of various definitions of management
3. Be able to identify the various elements of management and appreciate their operational
implications.

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1. Management is the process by which human efforts are coordinated and combined with other
resources to accomplished organizational goals and objectives.

Mary Parker Folett defines management as “the art of getting things done through people.”

Management requires an understanding of the economic principle of the division of labor, which
breaks down into subtasks, and the coordination of effort, which recognize the subtasks into an efficient and
effective whole.

2. Management is making the most effective use of available resources, whether in form of machines,
money or people (men/women). The process of organizing, using, and controlling human activities
and other resources toward specific ends.

2.1 Management as concept and process should not be confused with the term “management”
commonly used in labor-management relations. Management in this case refers to the people
responsible for the management of an organization, i.e., for directing, planning and running
of its operations, for the implementation of its policies and the attainment of its objectives.
Management refers to the group of persons responsible for running an organization or
directing human activity toward specific ends.

3. Management is the process of coordinating human, informational, physical and financial resources
into accomplish organizational goals

4. Management is the process of coordinating the resources of an organization so as to achieve the

primary goals of the organization.

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5. Management is the process of planning, organizing, leading and controlling a business’s financial,
physical, human, and information resources in order to achieve its goals

6. Management involves

 Coordinating the human, material and financial resources toward accomplishing

organizational goals effectively and efficiently.
 Relating the organization to the external environment and responding to societal needs.
 Developing an organizational climate where people can accomplish their individual and
collective goals.
 Performing certain definable function such as goal setting, planning, assembling resources,
organizing, implementing, and controlling.
 Carrying out various interpersonal, informational, and decisional roles

7. Management is the process of reaching organizational goals by working with and through people and
other organizational resources.

8. Management is the process by which a cooperative group directs actions of others toward common
goals. (Massie and Douglas.)

9. Management is the process of working with and trough others to effectively achieve organizational
objectives by efficiently using limited resources in a changing environment. (Kreitner.)

10. Management is the coordination of all resources through the process of planning, directing and
controlling in order to attain stated objectives. (Sisk)

11. Management is establishing an effective environment for people operating in formal organizational
groups. (Koontz and O’Donnell.)

12. Management entails activities undertaken by one or more persons in order to coordinate the activities
or others in the pursuit of ends that cannot be achieved by any one person (Donnelley, Gibson &
Evancevich.)

13. Management is a process imbedded in a system of patterned relationships.

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Checkpoints

1. From the various definitions of management, what are the elements of management?

2. Explain Management as a process. Can it consist of a single act? Or is it a series of acts? Can the
process be linear with a beginning and an ending? Or it is cyclical? And repetitive?

3. Fashion your own definition of management.

4. Does your concept or definition of management apply to your own company or organization or one
you know vicariously or by observation? Elaborate.

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 MODULE 2

Management Throughout Recorded History

Learning Objectives:

After reading and reflecting on the historical data on management presented in this module, the
student is expected to:

1. Appreciate the fact that human beings from the dawn of history knew and practiced what are
now called concepts, principles, and practices of management.
2. Recognized the fact that the creation, construction and development of cultures and
civilization throughout the ages could not be possible without the knowledge of the concepts,
principles and practices of management.

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1. Introduction

1.1 Managers should be concerned with historical perspectives. They need to know the facts
about what has happened in a similar situation and to relate them to other experiences and
other knowledge. Only when they understand the problem environment and how it developed
can they fully understand the problem they are trying to solve. Managers search for patterns
in the problems they face, and they tend to use learned solutions when those patters recur.
Experienced managers have more experiences to draw on than less experienced managers,
but all managers can benefit from the history discussed in management books or cases. No
manager has enough personal experience to deal with every problem he or she faces.

1.2 As the rate of change in our society continues to accelerate, more and more new situations
will occur that are likely to resemble others that occurred in the past. This allows effective
solutions to be repeated and ineffective solutions to be avoided across all of the
organization’s economic functions: marketing, finance, operations, human resources
management, and information management. A successful manager needs to know what
worked before, what didn’t, and why.

1.3 You will benefit from knowing the history of management because, as a practicing manager,
you don’t have to make the same mistakes that your predecessors made. You will be able to
consult the appropriate sources to discover what worked and what didn’t. You can then
decide the best ways of managing yourself.

1.4 Understanding history gives you basis for acting with your future coworkers and with
others who are practicing and studying management now, or who will be in the future.

1.5 History helps you recognize when to act and when not to.

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 1.6 Knowing history helps you identify the common themes that seem to recur. By knowing
how issues have been handled in the past, you should also know better how to act now.

2. Precursors of Modern Management Theory

2.1. Historian Daniel A. Wren observed that “management is as old as man.” But, as he also
points out, only recently has there been scientific interest in the process. This is probably
because we have only recently realized that how we manage our resources affects what we
get from them and because large business organizations have only existed since the early
nineteenth century.

2.2. However, early civilizations did practice management – and in a way not very different from
it was done until the late nineteenth and early twentieth centuries. The Chronology that
follows lists the major contributions to the practice of management from approximately 5000
B.C. to the late 20th century. To 1776, when Adam Smith described the benefits of the
division of labor in The Wealth of Nations, did mass production, which is the foundation of
our current economic success, become recognized as possible and desirable.

2.3. Until the 1800s, there really was no systematic development of management theory, and
perhaps only in the mid-1990s did it become useful to the average manager.

3. Management Reflects Society

3.1. Management philosophy and its related practices reflect the society within which they exist –
its culture, its values, its needs the technological, social, political, and economic forces at
work in society change, and therefore management has changed and must continue to change.

3.2. Before the twentieth century, for example, the practice of management was largely
authorization and was based on hierarchical organizational structures similar to those
developed by the early military forces of the Egyptians, Romans and other ancient societies.

3.3. The decentralized organizational structure of the Roman Catholic Church slightly modified
these structures.

3.4. As Western society became less agriculturally and more industrially based, its leaders and
scholars began to realize that traditional management approaches were unsatisfactory.

3.5. Entering the twentieth century, some 150 years after the beginning of the industrial revolution
and some 35 years after the U.S. economy became industrially based (1865), managers began
to ponder all the factors that should be considered in managing and in alternative ways of
managing. It is from this point that we pursuer the history of management in detail.

4. Chronology of Organization Theory and Management Practices

Approximate Individual or Major Managerial

Year Ethnic Group Contribution

5000 B.C. Sumerians Established written records for both

government and commercial use

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4000-2000 B.C. Egyptians Recognized need for forecasting, planning
organizing, and controlling. Employed
inventory practices, sales ledgers, taxes,
developed bureaucracy for agriculture and
construction, i.e. pyramids; employed full-
time administrators.

4000 B.C. Hebrews Exception principle, departmentation; Ten

Commandments; long-range planning,
span of control

2000-1700 B.C. Babylonians Enforced law for conducting business,

(Hammurabi) including standards for wages and
obligations of contractors; Use of
witnesses and writing for control;
establishment of standards of wages;
recognition that responsibility cannot be
shifted.

1600 Egyptians Centralization in Organization.

1491 Hebrews During Exodus from Egypt, Jethro, father-

in-law of Moses, urges Moses to delegate
authority over the tribes of Israel along
hierarchical lines. Concepts of
organization, scalar principle, exception
principle

1100 Chinese Recognized need for organization,

planning, directing, and controlling

600 Nebuchadnezzar Production control and wage incentives

500 Mencius Recognized need for systems and

standards
Chinese Principle of Specialization recognized

Sun Tzu Recognized need for planning, directing,

and organizing. Sun Tzu’s
Art of War recognizes the need for
hierarchical organization,
interorganization communications, and
staff planning.

500 Greeks Developed the work ethics. Began

scientific method for problem solving

400 Socrates Enunciation of universality of

management.

400 Xenophon Recognized management as a separate art.

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 Records the first known description of the
advantages of the division of labor when
he describes an ancient Greek shoe
factory.

Cyrus Recognized need for human relations. Use

of motion study, layout, and materials
handling

360 Aristotle In The Politics asserts that the specific

nature of executive powers and functions
cannot be the same for all states
(organizations), but must reflect their
specific cultural environment

350 Greeks Scientific method applied. Use of work

methods and tempo
Plato Principle of specialization enunciated.

325 Alexander the Great Use of staff

200 Romans Developed of factory system for

manufacturing armaments, pottery, and
textiles; built roads for distribution;
organized joint stock companies; used
specialized labor, formed guilds;
employed an authoritarian organizational
structure based on function.

175 Cato Used of job descriptions.

50 Varro Use of job specifications

A.D. 20 Jesus Christ Unity of Command Golden rule. Human

relations.

284 Diocletian Delegation of authority.

A.D. 300 20th Romans Catholic Church Decentralized hierarchical structure with
Century centralized strategic control and policies

770 Abu Yusuf An important pioneering Muslim scholar,

explores the administration of essential
Islamic government functions, including
public financial policy, taxation, and
criminal justice, in Kitab al-Kharaj (The
Book of Land Taxes). (Year is
approximate)

900 Alfarabi Listed traits of a leader.

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1058 Al-Ahkam As-Sultaniyyah (The Governmental Rules), by al-
Mawardi, examines Islamic constitutional
law, theoretical and practical aspects of
Muslim political thought and behavior,
and the behavior of politicians and
administrators in Islamic states.

1093-1100 Ghazali Listed traits of a manager. Emphasizes the

role of Islamic creed and teachings for the
improvement of administrative and
bureaucratic organization in Muslim
states, particularly the qualifications and
secretaries, in Ihya ‘Ulum ad-Din (The
Revival of the Religious Sciences) and
Nasihat al-Muluk (Counsel for Kings).
(Year is approximate.)

1300 Venetians Established legal framework for trade &

commerce

1300 As-Siyasah (The Principles of Religious Government),

Ash-Shariyyah ibn Taymiyyah, “the father of Islamic
administration,” uses the scientific method
to out line the principles of administration
within the framework of Islam, including
the right man for the right job, patronage
and the spoils system. (Year is
approximate.)

1340 Luca Pacioli (Genoese) Developed double-entry book keeping.

1377 Muqaddimah An Introduction to History, by Muslim

scholar Ibn Khaldun, argues that methods
for organizational improvement can be
developed through the study of the
science of culture. Ibn Khaldun
specifically introduces conceptions of
formal and informal organization,
organizations as natural as organism with
limits beyond which they cannot grow,
and spirit de corps.

1395 Francisco Di Marco Cost accounting practiced.

1410 Soranzo Brothers Use of journal entries and ledger.

1418 Barbarigo Forms of business organization; work in

process accounting used.

1436 Arsenal of Venice, Venetians Cost of accounting; checks and balances

for control; numbering of inventoried

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 parts; inter-changed ability of parts; use of
personnel management; standardization of
parts; inventory control cost control.

1500 Sir Thomas More Called for specialization; decried sins of

poor management and leadership

1513-1525 Niccolo Machiavelli Principle of unity of command. Reliance

on mass consent principle; recognized
need for cohesiveness in organization;
enunciated leadership qualities.

1532 Machiavelli’s The Prince Book of advice to all would be leaders,

The Prince, is published five years after
its author’s death; it will become the
progenitor of all “how to succeed’ books
that advocate practical rather than moral
actions.

1767 Sir James Stewart Source of authority theory; impact of

automation.

1776 Adam Smith Focused on division of labor & mass

production as key to prosperity.
Developed capitalism as frame work of
economic activity to replace feudalism.
Application of principle of specialization
of manufacturing; workers control
concepts; pay back computations.

In The Wealth of Nations, discusses the

optimal organization of a pin factory; this
becomes the most famous & influential
statement of the economic rationale of the
factory system and the division of labor.

1785 Thomas Jefferson Called attention to concept of interchange

parts.

1799 Eli Whitney Scientific method; use of cost accounting

and quality control; applied
interchangeable parts concept; recognized
span of management.

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1800 James Watt Standard operating procedures;
Matthew Boulton specifications; work methods; planning,
Soho, England incentive wages, standard times; standard
data; employee Christmas parties bonuses
announced at Christmas; mutual
employees insurance society; use of
audits.

1810 Robert Owen Need for personnel practices recognized

New Lanark, Scotland and applied; assumed responsibility for
training worker; built clean row homes for
workers.

One of the first to recognized importance

of human resources; improved working
conditions; reduced hours of work; raised
minimum age of work for children.

1813 Robert Owen “Address to the Superintendents of

Manufactories,” puts forth the
revolutionary idea that managers should
pay as much attention to their “vital
machines” (employees) as to their
“inanimate machines.”

1820 James Stuart Mill Analyzing and synchronizing human

motions.

1832 Charles Babbage Improved efficiencies of production using

mathematical problem-solving techniques;
stressed human resources; used Scientific
approach, specialization, division or labor,
motion and time study, cost accounting,
effect of various colors on employee
efficiency.

On the Economy of Machinery and

Manufactures anticipates many of the
motions of the scientific management
movement, including “basic principles of
management” such as the division of
labor.

1835 Marshall, Laughin, et. al. Recognition and discussion of the relative
importance of the functions of
management.

1850 Mill, et al. Span of control; unity of command;

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 control of labor and materials;
specialization division of labor; wage
incentives

1855 Henry Poor Principles of organization, communication

and information applied to railway.

1855 Daniel C. McCallum Use of organization chart to show

management structure. Application of
systematic management to railways. In his
annual report as superintendent of the
New York and Erie Railroad Company,
states his six basic principles of
administration; the first was to use
internally generated data for managerial
purposes.

1871 W. S. Jevons Made motions study of spade use; studied

effect of different tools of worker; fatigue
study.

1881 Joseph Wharton Established first college course in

business management.

1885 Henry C. Metcalfe The manager of an army arsenal,

published The Cost of Manufactures and
the Administration of Workshops, Public
and Private, which asserts that there is a
“science of administration” that is based
upon principles discoverable by diligent
observation.

Art of management; science of

administration

1886 Henry R. Towne “The Engineer as an Economist,” read to

the American Society of Mechanical
Engineers, encourages the scientific
management movement
Science of management.

1891 Frederick Halsey Premium plan of wage payment.

1900 Frederick w. Taylor Scientific management; The science of

work and functional management cost
system; methods study; time study;

Frank B. Gilbert Scientific of time and motion study;

Lillian Gilbert therbligs – micromotions.

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1901 Henry L. Gantt Task and bonus system; humanistic
approach to labor; Gantt charts;
management’s responsibility for training
workers.

1902 Vilfredo Pareto Becomes the “father” of the concept of

“social systems”; his societal notions
would later be applied by Elton Mayo and
the human relationists in an organizational
context.

1903 Frederick W. Taylor Publishes Shop Management

1904 Frank B. and Produced many of the pioneering works

Lillian Gilbreth on time and motion study; scientific
management, applied psychology, and
twelve children. (“Cheaper by the
Dozen”)

1910 Louis D. Brandeis Coins and popularizes the term scientific

Frederick .W. Taylor management in his Eastern Rate Case
testimony before the interstate Commerce
Commission by arguing that railroad rate
increases should be denied because the
railroads could save “a million dollars a
day” by applying scientific management
methods. An associate of F .W. Taylor,
then US Supreme Court Justice.

1910-1913 Hugo Munsterberg Application of psychology to

management, industry, and workers.

Psychology and Industrial Efficiency calls

for the application of psychology to
industry.

Harrington Emerson Efficiency engineering; principles of

efficiency.

1911 Frederick W. Taylor Publishes The Principles of Scientific

Management

1911 J.C. Duncan First college text in management

1912 Harrington Emerson Publishes The Twelve Principles of

Efficiency, which puts forth an
interdependent but coordinated
management system.

1914 Robert Michels In his analysis of the working of political

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 parties and labor unions, Political Parties,
formulates his iron law of oligarchy:
“Who says organization, says oligarchy.”

1915 H. B. Drury Criticism of scientific management;

reaffirmed initial ideas.

R. F. Hoxie Criticism of scientific management;

reaffirmed initial ideas.

F. W. Harris Economic lot size model.

Thomas A. Edison Devised war game to evade and destroy

submarines

1916 Henri Fayol France Five foundation stones of modern

management. First complete theory of
management; functions of management;
principles of management; recognized
need for management to be taught in
schools.

Publishes his General and Industrial

Management, the first complete theory of
management.

Alexander H. Church Functional concept of management first

American to explain the totality of
managerial concepts and relative each
component to the whole.

A.D. Erlang Anticipated waiting-line theory.

1917 W. H. Leffingwell Applied scientific management to office.

1918 C. C. Parsons Recognized need for applying scientific

management office

Ordway Tead Application of psychology to industry.

1919 Morris L. Cooke Diverse application of scientific

Management.

1920 Max Weber Germany Study of bureaucracy

1921 Walter D. Scott Brought psychology to advertising and

personnel management.

1922 Max Weber Structural definition of bureaucracy is

published posthumously; it uses an “ideal-

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 type” approach to extrapolate from the
real world the central core of features that
characterizes the most fully develop form
of bureaucratic organization.

1923 Oliver Sheldon Developed a philosophy of management.

1924 H. F. Dodge Use of Statistical inference and

H. G. Romig probability theory in sampling inspection
and in quality control by statistical means.

Walter A. Shewhart Pioneer of controlled and uncontrolled

variables and the statistical control of
processes.

1924 Hawthorne Studies Began at the Hawthorne Works of the

Western Electric Company in Chicago;
they last until 1932 and led to new
thinking about the relationships among
work environment, human motivation,
and productivity.

1925 Ronald A. Fisher Various modern statistical methods

including chi-square test, Bayesian
statistics, sampling theory and design of
experiments.

1926 Mary Parker Follett In calling for “power with” as opposed to

“power over,” anticipates the movement
toward more participatory management
styles.

1927 Elton Mayo Founder of industrial sociology Human

relations in industry and respect for
individuals.

1928 T. C. Fry Statistical foundations of queuing theory.

1930 Mary P. Follett Managerial Philosophy based on

individual motivations. Group process
approach to solving managerial problems.

1931 James D. Mooney In Onward Industry (republished in 1939

as The Principles of Organization), show
how the newly discovered “principles of
organization” have really been known
since ancient times.

1933 Elton Mayo The Human Problems of an Industrial

Civilization is the first major report on the
Hawthorne studies, the first significant

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 call for a human relations movement.

1937 Luther Gulick’s “Notes on the Theory of Organization”

draws attention to the functional elements
of the work of an executive with his
mnemonic device POSDCORB.

1938 Chester Barnard Theory of organization; sociological

aspects of management; need for
communication.
The Functions of the Executive Managing
the Values of the Organization.

1938 P. M. S. Blackett, et al Operations research.

1938 Chester I. Barnard The Functions of the Executive, his

sociological analysis of organizations
encourages and foreshadows the post war
revolution in thinking about
organizational behavior.

1939 Roethlisberger & Dickson Publish Management and the Worker, the
definitive account of the Hawthorne
studies.

1940 Robert K. Merton Article “Bureaucratic Structure and

Personality” proclaims that Max Weber’s
“ideal-type” bureaucracy has inhibiting
dysfunctions leading to inefficiency and
worse.

1941 James Burnham In The Managerial Revolution, asserts that

as the control of large organizations
passes from the hands of the owners into
the hands of professional administrators,
the society’s new governing class will be
the possessors not of wealth but of
technical expertise.

1943 Lyndall Urwick Collection consolidation, and correlation

of principles of management.

1943 Abraham Maslow “Needs hierarchy” first appears in his

Psychological Review article “A Theory
of Human Motivation”

1946 Herbert A. Simon “The Proverbs of Administration” attacks

the principles approach to management
for being inconsistent and often

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 inapplicable.

1947 Rensis Likert Placed emphasis on psychology, social

Chris Argyris psychology and research in theory;
incorporation of an open system theory of
organization.

1947 NTL National Training Laboratories for Group

Development (now called the NTL
Institute for Applied Behavioral Science)
is established to the research on group
dynamics and later, sensitivity training.

Herbert A. Simon Administrative Behavior urges that a true

scientific method be used in the study of
administrative phenomena, that the
perspective of logical positivism should
be used in dealing with questions of
policy making, and that decision making
is the true heart of administration.

1948 Dwight Waldo Publishes The Administrative State, which

attacks the “gospel of efficiency” that
dominated administrative thinking prior to
World War II.

Lester Coch and John R. P. Note that employees resist change less
French, Jr., when the need for it is effectively
communicated to them and when the
workers are involved in planning the
changes.

Norbert Wiener Coins the term cybernetics in his book

with the same title, which becomes a
critical foundation concept for the systems
school of organizational theory.

1949 Norbert Wiener Emphasized systems analysis and Claude

Shannon information theory in
management.

Philip Selznick In TVA and the Grass Roots, discovers

“co-optation” which he examines how the
Tennessee Valley Authority subsumed
new external elements into its policy-
making process in order to prevent those
elements from becoming a threat to the
organization.

Norton E. Long In his Public Administration Review

article “Power and Administration,” finds

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 that power is the lifeblood of
administration, and that managers had
more than just apply the scientific method
to problems -- they had to attain, maintain,
and increase their power or risk failing in
their mission.

Rufus E. Miles, Jr., The Bureau of the Budget first states

Miles’ Law “Where you stand depends on
where you sit.”

Edsel Murphy Air Force Captain first states Murphy’s

Law: “If anything can go wring, it will.”

1950 W. Edwards Deming Founding father of quality movement.

They key quality; reducing variation

1950 George C. Homans Publishes The Human Group, the first

major application of “systems” to
organizational analysis.

1951 Joseph M. Juran Company-wide quality cannot be

delegated.

1951 Frank Abrahams Reinstroduced managerial statesmanship

Benjamin M. Seleckman in managerial thinking.

1951 Elliot Jaques Psychological and social factors in group

behavior.

1951 Kurt Lewin Proposes a general model of change

consisting of three phases, “unfreezing,
change, refreezing,” in his Field Theory in
Social Science; this model becomes the
conceptual frame for organization
development.

Ludwig von Bertalanffy Article “General Systems Theory: A New

Approach to the Unity of Science” is
published in Human Biology; his concepts
will become the intellectual basis for the
systems approach to organizational
thinking.

1954 Peter Drucker The Practice of Management, popularizes

the concept of management by objectives.

Alvin Gouldner Patterns of Industrial Bureaucracy

describes three possible responses to a
formal bureaucratic structure: ‘mock,”
where the formal rules are ignored by both

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 management and labor; “punishment
centered,” where management seeks to
enforce rules that workers resist; and
“representative,” where rules are both
enforced and obeyed.

1955 Herbert Simon Harold J. Levitt Placed emphasis on human behavior in

Robert Schlaifer decision making, viewed as an
identifiable, observable, and measurable
process; increased attention given to
managerial psychology.

1956 William H. Merton First profiles The Organization Man, an

individual with an organization who
accepts its values and finds harmony in
conforming to its policies.

Talcott Parsons In the premier issue of Administrative

Science Quarterly, article “Suggestions
for a Sociological Approach to the Theory
of Organizations’ defines an organization
as a social system that focuses on the
attainment of specific goals and
contributes, in turn, to the
accomplishment of goals of the larger
organization or society itself.

Kenneth Boulding Management Science article, “General

Systems Theory -- The Skeleton of
Science, “integrates Wiener’s concept of
cybernetics with von Bertalanffy’s general
systems theory; this will become the most
quoted introduction to the systems
concept of organization.

1957 C. Northcote Parkinson Discovers his law that “work expands so

as to fill the time available for its
completion.”

Chris Argyris Asserts in his first major book,

Personality and Organization, that there
is an inherent conflict between the
personality of a mature adult and the
needs of modern organizations.

Douglas M. McGregor Article ‘The Human Side of Enterprise”

distills the contending traditional
(authoritarian) and humanistic managerial
philosophies into Theory X and Theory Y;
applies the concept of “self-fulfilling
prophesies’ to organizational behavior.

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 Philip Selznick Leadership in Administration anticipates
many of the 1980s notions of the
“transformational leadership” when he
asserts that the function of an institutional
leader is to help shape the environment in
which the institution operates and to
define new institutional directions through
recruitment, training, and bargaining.

Alvin W. Gouldner “Cosmopolitan and Locals,” identifies two

latent social roles that tend to manifest
themselves in organizations:
“cosmopolitans,” who have small loyalty
to the employing organization, high
commitment to specialized skills, and an
outer-reference group orientation; and
‘low commitment to specialized skills,
and an inner-reference group orientation.

1958 March & Simon Organizations, seek to inventory and

classify all that is worth knowing about
the behavioral revolution in organization
theory.

Leon Festinger The father of cognitive dissonance theory,

writes “the Motivating Effect of Cognitive
Dissonance,” which becomes the
theoretical foundation for the ‘inequity
theories of motivation.”

Robert Tannenbaum Harvard Business Review article “How to

& Warren H. Schmidt Choose a Leadership Pattern” describes
“democratic management’ and devises a
leadership continuum ranging from
authoritarian to democratic.

1959 Frederick Herzberg “Motivations” and “Maintenance” factors

in job satisfaction. (with B. Mausner and
B.B. Simpleman.)

Charles A. Lindblom “The Science of ‘Mudding Through”

rejects the rational model of decision
making in favor of incrementalism.

Herzberg, Mausner, & The Motivation to Work puts forth them

Snyderman motivation-hygiene theory of worker
motivation.

Cyert and March Postulate that power and politics impact

on the formation of organizational goals;

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 their “A Behavioral Theory of
Organizational Objectives” is an early
precursor of the power and politics school.

John R. P. French & Identify five bases of power (expert,

Bertram Raven referent, reward, legitimate, and coercive)
in their article “The Bases of Social
Power.” They argue that managers should
not rely on coercive and expert power
bases, as they are least effective.

1960 Douglas McGregor Theory X and Theory Y

Theodore Levitt The first management theorist to stress

marketing as key to successful business
management.

Richard Neustadt Presidential Power asserts that the

president’s (or any executive’) essential
power is that of persuasion.

Herbert Kaufman The Forest Ranger shows how

organizational and professional
socialization can develop the will and
capacity to conform in employees.

1961 Rensis Likert Participative Management and

T. Burns & Mechanistic and Organic Management
G.M. Stalker styles. LIKERT - new patterns of
management.

Victor A. Thompson Modern Organization finds that there is

“an imbalance between ability and
authority” causing bureaucratic
dysfunctions all over the place.

Harold Koontz “The management Theory Jungle”

describes thinking about management as a
“semantics jungle.”

Burns and Stalker The Management of Innovation articulates

the need for different types of
management systems (organic and
mechanistic) under differing
circumstances.

Rensis Likert New Patterns of Management offers an

empirically based defense of participatory
management and organization
development techniques.

19
 William G. Scott
Amatai Etzioni
1962 Alfred D. Chandler
Robert Presthus
Blau and Scott
David Mechanic
1963 Alfred P. Sloan
Strauss, Schatzman, Bucher, Describe the maintenance of order in a
Erlich, & Sabshin
Academy of Management Journal Article,
“Organization Theory: An overview and
an Appraisal, “articulates the relationship
between systems theory and organizations
theory and the distinction between micro
and macro perspectives in the
development of theory.
A Comparative Analysis of Complex
Organizations, argues that organizational
effectiveness is affected by the match between
an organization's goal structure and its
compliance structure.
Structure follows Strategy in
Organizations.
The Organizational Society presents his
threefold classification of patterns of
organizational accommodation: “upward-
mobiles,” who identify and accept the
values and find personal satisfaction off
the job; and “ambivalents,” who want the
rewards of organizational life but can’t
cope with the demands.
Formal Organizations: A Comparative
Approach, assert that all organizations
include both formal and informal element,
and that it is impossible to know and
understand the true structure of a formal
organization without a similar
understanding of its parallel informal
organization.
Administrative Science Quarterly article
“Sources of Power of Lower Participants
in Complex Organizations” anticipates the
power and politics perspective of
organization theory.
Developed key principle of
decentralization for big corporations.
hospital as a dynamic process operating
within a framework of negotiated
“contracts” among people and groups with
different expectations and interests, in
“The Hospital and Its Negotiated Order.”
20
 Cyert and March A Behavioral Theory of the Firm,
demonstrate that corporations tend to
“satisfice” rather than engage in
economically rational profit-maximizing
behavior.

R. Cyert Behavioral analysis of decision making.

J. March

1964 Blake & Mouton The Managerial Grid uses a graphic

gridiron to explain management styles and
their potential impacts on organization
development.

Michel Crozier The Bureaucratic Phenomenon defines a

bureaucracy as “an organization which
cannot correct its behavior by learning
from its errors.”

Bertram M. Gross Publishes his two-volume The Managing

of Organizations, a historical analysis of
thinking about organizations from ancient
times to the present.

1965 H. Igor Ansoff Corporate Planning

The Theory and Practice of Strategic
Planning and Strategic Management.

Don K. Price Publishes The Scientific Estate, in which

he posits that decisional authority flows
inexorably from the executive suite to the
technical office.

Robert L. Kahn Organizational Stress is the first major

study of the mental health consequences
of organizational role conflict and
ambiguity.

James G. March Edits the huge Handbook of

Organizations, which sought to
summarize all existing knowledge on
organization theory and behavior.

1966 Reg Evans Managers educating each other thru

“Action Learning”.

Katz and Kahn The Social Psychology of Organizations,

seek to unify the findings of behavioral
through open systems theory.

21
 David C. McClelland “That Urge to Achieve.” In which he
identifies two groups of people: the
majority of whom are not concerned about
achieving, and the minority who are
challenged by the opportunity to achieve.
This notion becomes a premise for future
motivation studies.

Warren Bennis Changing Organizations, sounds the death

knell for bureaucratic institutions because
they are inadequate for a future that will
demand rapid organizational change,
participatory management, and the growth
of a more professionalized work force.

1967 P. Lawrence Contingency Theory of Organization.

J. Lorsch Organization as function of environment

J. Thompson and technology.

James D. Thompson Organizations in Action seeks to close the

gap between open and closed systems
theory by suggesting that organizations
deal with the uncertainty of their
environments by creating specific
elements designed to cope with the
outside world while other elements are
able to focus on the rational nature of
technical operations.

Anthony Down Inside Bureaucracy seek to develop laws

and propositions that would aid in
predicting the behavior of bureaus and
bureaucrats.

John Kenneth Galbraith The New Industrial State asserts that the
control of modern corporations has passed
to the techno-structure and that this
techno-structure is more concerned with
stability than profits.

Antonym Jay Management and Machiavelli, applies

Machiavelli’s political principles (from
The Prince) to modern organizational
management.

1968 Warren Bennis Leadership: Managers do things right.

Leaders do the right thing.

Harold Wilensky Organizational Intelligence presents the

pioneering study of the flow and

22
 perception of information in
organizations.

Dorwin Cartwright Propose that the systematic study of group

& Alvin Zander dynamics would advance knowledge of
the nature of groups; how they are
organized; and relationships among
individuals, other groups, and larger
institutions.

John P. Campbell “Effectiveness of T-Group Experiences in

M. D. Dunnette Managerial Training and Development,”
appearing in Psychological Bulletin,
provides a critical review of T-group
literature. They conclude that “an
individual’s positive feelings about his T-
group experiences” cannot be
scientifically measured, nor should they
be based entirely on “existential grounds.”

Walker & Lorsch Grapple with the perennial structural issue

of whether to design organizations by
product or function in their Harvard
Business Review article, “Organizational
Choice: Product vs. Function.”

Frederick Herzberg Harvard Business Review article “One

More Time, How Do You Motivate
Employees?” catapults motivators or
satisfiers and hygiene factors into the
forefront of organizational motivation
theory.

1969 Aston Group Organizational structure, size and

technology.

Laurence J. Peter Promulgates his principles that “in a

hierarchy every employee tends to rise to
his level of incompetence.”

Lawrence & Lorsch Organization and Environment, call for a

contingency theory that can deal with the
appropriateness of different theories under
differing circumstances; they state that
organizations must solve the problem of
simultaneous differentiation and
integration.

Paul Hersey & “Life Cycle Theory of Leadership,”

Kenneth R. Blanchard appearing in Training and Development
Journal, asserts that the appropriate

23
 leadership style for a given situation
depends upon the employee’s education
and experience levels, achievement
motivation, and willingness to accept
responsibility by the subordinates.

1970 Abraham Maslow Hierarchy of Needs in Motivation.

Burton Clark The Distinctive College identifies ways

that three colleges created and maintained
their distinctiveness through the
management of symbols.

John P. Campbell, Articulate the expectancy theories of

Marvin D. Dunnette, motivation. People are motivated by
Edward E. lawler III, calculating how much they want
& Karl E. Weick, Jr. something, how much of it they think they
will get, how likely it is their actions will
cause them to get it, and how much others
in similar circumstances have received.

Chris Argyris Writes Intervention Theories and

Methods, which becomes one of the most
widely cited and enduring works on
organizational consulting for change that
is written from the organizational
behavior/organization development
perspective.

1971 Chris Argyris & Organizational Learning

Donald A. Schon

John W. Humble Developed Drucker’s MBO as practical

methodology

Edward de Bono Lateral Thinking.

Graham T. Allison Essence of Decision demonstrates the

inadequacies of the view that the
decisions of a government are made by a
“single calculating decision maker” who
has control over the organizations and
officials within his government.

Irving Janis “Groupthink,” first published in

psychology Today, proposes that group
cohesion can lead to the deterioration of
effective group decision-making efforts.

1972 General Motors Lordstown Ohio, automobile assembly plant calls

national attention to the dysfunctions of

24
 dehumanized and monotonous work.

Harlan Cleveland The Future Executive, asserts that

decision making in the future will call for
“continuous improvisation on a general
sense of direction.”

Charles Perrow Complex Organization is a major defense

of bureaucratic forms of organization and
an attack on those writers who think that
bureaucracy can be easily, fairly, or
inexpensively replaced.

Kast & Rosenweig Academy of Management Journal article

“General Systems Theory: Applications
for Organization and Management,”
assess the level of successful application
of general systems theory in organizations
and advocate a contingency theory as a
less abstract and more applicable
theoretical approach.

1973 Henry Mintzberg How strategy is made & how managers

use their time; mental process-right
brain/left-brain

E. F. Schumacher “Small is Beautiful:” The human scale vs.

corporate giantism.

Jay Galbraith Designing Complex Organizations,

articulates the systems/contingency view
that the amount of information an
organization needs is a function of the
levels of its uncertainty, inter-dependence
of units and functions, and adaptation
mechanisms.

1974 Michael Cohen Introduce the phrase organized an archies

& James March to communicate why colleges and
universities are distinctive organizational
forms with uniquely difficult leadership
needs and problems. The report was
published as the book, Leadership and
Ambiguity: The American College
President.

Robert J. House & Journal of Contemporary Business article

Terrance R. Mitchell “Path-Goal Theory of Leadership” offers
path-goal theory as a useful tool for
explaining the effectiveness of certain
leadership styles in given situations.

25
 Victor H. Vroom
Steven Kerr
1975 Oliver E. Williamson
Lyman Porter, Edward Lawler
III, & Richard Hackman
1976 Michael Maccoby
Jensen & Meekling
Eric Trist
Organizational Dynamics article “A New
Look at Managerial Decision-Making”
develops a useful model whereby leaders
can perform a diagnosis of a situation to
determine which leadership style is most
appropriate.
Academy of Management journal article
“On the Folly of Rewarding A, While
Hoping for B” substantiates that many
organizational reward systems are “fouled
up” -- they pay off for behaviors other
than those they are seeking.
Analyzes organizational decisions to
produce products and services internally
using economic market models, and
assess the implications of such decisions
on, for example, organizational authority,
in Markets and Hierarchies: Analysis and
Antitrust Implications.
Behavior in Organizations, examines how
individual -- organizational relationships
emerge and grow, including how groups
can exert influence on individuals in
organizations and how such social
influences relate to work effectiveness.
Psychoanalytically interviews 250
corporate managers and discovers “The
Gamesman,” a manager whose main
interest lies in “competitive activity where
he can prove himself a winner.”
Describe an organization as simply an
extension of and a means for satisfying
the interests of the multiple individuals
and groups that affect and are affected by
it, in “Agency Costs and the Theory of the
Firm.”
In “A Concept of Organizational
Ecology,” proposes a concept of
organizational population ecology based
on the field that is created by a number of
organizations whose interrelations
comprise a system. The system is the field
as a whole, not its component
organizations.
26
1977 Hannan & Freeman Article “The Population Ecology of
Organizations” proposes a new unit of
analysis for understanding organizations:
the “population of organizations.”

Salancik & Pfeffer Article “Who Gets Power -- and How

They Hold on to It” explains how power
and politics help organizations adapt to
their environment by reallocating critical
resources to subunits that are performing
tasks most vital to organizational survival.

Davis & Lawrence In Matrix Caution against using a matrix

form of organization unless there exist
specific organizational conditions that are
conductive to its success.

Rosabeth Moss Kanter Men and Women of the Corporation,

describes the unique problems women
encounter with power and politics in
organizations.

1978 Edgar H. |Schein The “psychological contract” between

employer and employed; career anchor”;
organizational culture.

Thomas J. Peters Organizational Dynamics article

“Symbols, Patterns, and Settings: An
Optimistic Case for Getting Things Done”
is the first major analysis of symbolic
management in organizations to gain
significant attention in the “mainstream”
literature of organization theory.

1979 Rosabeth Moss Kanter Harvard Business Review article “Power

Failure in Management Circuits”
identifies organizational positions that
tend to have power problems – then
argues that powerlessness Is often more of
a problem than power for organizations.

Henry Mintzberg Structuring Organizations is published,

the first book in integrative series on “The
Theory of Management Policy.”

1980 Michael Porter Corporate Strategy;

Strategies for competitive advantage, both
national and international.

Connoly, Conlon, & Deutsch Argue that evaluations of organizational

27
 effectiveness should employ multiple
criteria that reflect the diverse interests of
the various constituencies that are
involved with organizations, in
“Organizational Effectiveness: A
Multiple-Constituency Approach.”

Meryl Reis Louis Administrative Science Quarterly article,

“Surprise and Sense Making: What
Newcomers Experience in Entering
Unfamiliar Organizational Settings,”
proposes that sense-making by
newcomers usually must rely on
inadequate sources of information which
can lead them astray.

1981 Anthony Cobb & In “Organization Development: A

Newton Margulies Political Perspective,” argue that
organization development (OD) has
developed more political sensitivity and
sophistication than most critics realize,
but that political activity by OD
practitioners is fraught with serious
utilitarian and values problems.

Jeffrey Pfeffer Power in Organizations integrates the

tenets and applications of the power and
politics school; of organization theory.

Thomas Ouchi Theory Z and Pascale and Athos’ The Art

Pascal & Athos of Japanese Management popularize by
the Japanese management “movement.”

1982 Tom Peters & The “Excellence” cult & prescriptions for
Robert H. Waterman, Jr. managing chaotic change. In Search of
Excellence

Deal and Kennedy Corporate Culture, and Business Week’s

cover story on “Corporate Culture.”

1983 Rosabeth Moss Kanter Empowerment of individuals as force for

change; the “post-entrepreneurial”
corporation.

John Adair ‘Action-Centered Leadership’. How Task,

Tam and Individual Overlap.

Henry Mintzberg Power in and Around Organizations

molds the power and politics school of
organizational theory into an integrative
theory of management policy.

28
 Rosabeth Moss Kanter In The Change Masters, defines change
masters as architects of organizational
change; they are the right people in the
right places at the right time.

Meryls R. Louis Article “Organizations as Cultural-

Bearing Milieux” becomes the first
readable, integrative statement of the
organizational cultural school’s
assumptions and positions

Michael Keeley “Values in Organizational Theory and

Management Education,” proposes that
organizations exist by virtue of agreement
on joint activities to achieve separate
purposes of important constituencies, not
to achieve organizational goals or
purposes.

Ian Mitroff Stakeholders of the Organizational Mind

explains how the perceptions of internal
and external organizational stakeholders
influence organizational behavior --
particularly, decision making about
complex problems of organizational
policy and design.

Pondy, Frost, Morgan & Edit the first definitive volume on

Dandridge symbolic management, Organizational
Symbolism.

Linda Smircich Article “Organizations as Shared

Meanings” examines how systems of
commonly shared meanings develop and
are sustained in organizations through
symbolic communications processes, and
also how these shared meanings provide
members of an organizational culture with
a sense of commonality and a distinctive
character.

1984 Charles Handy The future of work and organizations.

Sergiovanni & Corbally Edit the first notable collection of papers

on the organizational culture perspective,
Leadership and Organizational Culture.
Sergiovanni’s opening chapter “Cultural
and Competing Perspectives in
Administrative Theory and Practice”
clearly articulates the fundamental

29
 underlying assumptions of the
organizational culture and symbolic
management perspective.

Siehl and Martin Report the findings of the first major

quantitative and qualitative empirical
study of organizational culture in their
“The Role of Symbolic Management:
How Can Managers Effectively Transmit
Organizational Culture?”

1985 Edgar Schein Writes the most comprehensive and

integrative statement of the organizational
culture school in his Organizational
Culture and Leadership.

Nils Brunsson In The Irrational Organization, postulates

that rationality may lead to good
decisions, but it decreases the probability
of organization action and change.

Muhammad A. Al-Buraey The Administrative Development,

combines Western methodology and
technique with Islamic substance, values,
and ethics, to demonstrate how the Islamic
perspective (as a system and a way of life)
is an important moving force in the
process and realization of administrative
development world-wide.

1986 Desmond Graves Corporate Culture: Diagnosis and

Change, presents the first serious
methodological treatise on “diagnosing”
organizational culture.

Michael Harmon & Write a comprehensive test that applies

Richard Mayer organization theory in the public sector,
Organization Theory for Public
Administration.

Gareth MOrggan Images of Organization develops the art

of reading and understanding
organizations and starting from the
premise that our theories of organization
are based on distinctive but partial mental
mages or metaphors.

1988 Michael Keeley Combines and extends his previous essays

on multiple constituencies, organizational
purposes, systems of justice, values, and
organizational worth into the first

30
 comprehensive statement of A Social-
Contract Theory of Organizations.

Quinn and Cameron Compile Paradox and Transformation, an

important collection of essays on the
necessity for managing with paradoxes in
complex organizations, rather than
necessarily trying to eliminate them.

American Journal of Sociology Publishes a heated debate between the

leading proponents and detractors of
population ecology of organization theory.

Shoshana Zuboff In The Age of the Smart Machine,

examines the effects of information
technology change on authority and
hierarchy -- on people and organizations.

1989 Rosabeth Moss Kanter Book When Giants Learn to Dance

examines how organizations can gain the
advantages of smallness (flexibility) and
size (staying power) at the same time.

Alan Wilkins Developing Corporate Character,

explains how it is difficult but possible to
change elements of an organizational
culture without destroying the positive
aspects of the culture that already exist.

1990 Richard Pascale The creative use of conflict in

organizations.

Kenichi Ohmae The Borderless World (1982 – The Mind

of the Strategist)

Richard J. Schonberger Each function in a business should be a

“customer” of the next in the chain.

Sally Helgesen Creates diary studies that explore how

women leaders make decisions and gather
and disperse information in organizations.
Helgesen suggest that “women may be the
new Japanese” of management, in The
Female Advantage.

Elliott Jaques “In Praise of Hierarchy,” argues that

critics of hierarchy are misguided. Instead
of needing new organizational forms, we
need to learn how to manage hierarchies
better.

31
James F. Short, Jr., and In Organizations, Uncertainties and Risk,
Lee Clarke describe how organizational behavior is
impacted by decision making under risk
and uncertainty, and how, in turn, risk and
uncertainty in the general society affect
the decision making of organizations.

Paul S. Goodman & Describe how organizational behavior is

Lee S. Sproull affected by new technologies. They argue
that the impacts of technology are so
profound that organizations must find new
ways of conducting enterprise in order to
survive the new techno/business climate;
in Technology and Organizations.

Allan R. Cohen & Influence Without Authority discusses an

David L. Bradford alternative method of work achievement
based on the law of reciprocity that leads
to organizational self-empowerment and
the mutual advantage of participants.

Pasquale Gagliardi Symbols and Artifacts: Views of the

Corporate Landscape, focuses on
corporate artifacts: buildings, objects,
images, and forms that go into the making
of corporate cultures. Gagliardi presents
social constructivist, phenomenological,
and interpretive views of reality.

Peter Senge Highly influential book, The Fifth

Discipline, describes organizations with
“learning disabilities” and how “learning
organizations” defy the odds to overcome
them.

David Ulrich & Develop a theory of inside competition

Dale Lake that emphasizes organizational capability.
Their book, Organizational Capability:
Compelling from the Inside Out, explains
what “capability” is and how to develop
competitiveness based on management
action.

Lex Donaldson Academy of Management Review article,

“The Ethereal Hand: Organizational
Economics and Management Theory,”
demonstrates the potentialities and pitfalls
of organizational economics.

Karl Weick “Technology as Equivoque: Sense-making

in New Technologies,” examines

32

1991 Robert G. Lord &
Karen J. Maher
Kathleen D. Ryan &
Daniel K. Oestreich
Manfred Kets de Vries
1992 Emmanuel T. Santos
(I/AME at Wharton)
Thierry C. Pauchant &
Ian I. Mitroff
Jeffrey Pfeffer
Barbara Czarniawska-Joerges
cognitive process that people use in their
struggle to adapt to work in environments
where important events are unpredictable
and chaotic; in Goodman and Sproull’s
book, Technology and Organizations.
Frame leadership in terms of how
organizational “commandants” process
information -- rational, limited capacity,
expert, and cybernetic -- and relate this to
how other participants in the leader’s
environment process information about
him or her; in, Information Processing:
Linking Perceptions and Performance.
Driving Fear Out of the Workplace: How
to Overcome the Invisible Barriers to
Quality, Productivity, and Innovation,
explains the relationship between fear and
workplace productivity. Management
should take responsibility for fear in the
workplace, starting with themselves, and
then enlist the efforts of all organizational
participants.
Demonstrates how individuals’s rational
and irrational behavior patterns influence
organizations; in Organizations on the
Couch.
Apocalyptic liberation as highest
fulfillment of needs.
Explore crisis-prone organizations and the
psychological and emotional factors that
enable managers to ignore the possibility
of pending crises, in Transforming The
Crisis-Prone Organization.
Managing With Power, describes how to
consolidate power and use it for
constructive organizational goals. The
book teaches managers how to use power
for advantage, to stop fearing it, and to
realize that if they do not use power,
someone else will.
Explains sense-making in organizational
life -- even when organizational behavior
does not make sense. Her ideas as
proposed in Exploring Complex
33
 Organizations: A Cultural Perspective
constitute a cross-cultural and cross-
contextual analysis of sense-making in
large organizations.

David Nadler, Uses architecture as a metaphor to

Marc Gerstein, & identify evolving forms and features of
Robert Shaw effective organizations of the future,
including: autonomous work teams, high-
performance work systems, spinouts,
networks, self-designed organizations, and
fuzzy boundaries.

Charles Hampden-Turner Creating Corporate Culture: From

Discord to Harmony, studies
organizations facing challenges from
evolving cultures, using the perspective of
“core dilemmas.” Dilemmas are two
“lemmas” or propositions located on an
axis with the organization located in
between.

Joan Acker “Gendering Organization Theory,” asserts

that ordinary activities in organizations
are not gender-neutral. They perpetuate
the “gendered substructure within the
organization itself and within the wider
society” -- as well as in organization
theory; in A. J. Mills and P. Pancred,
Gendering Organizational Analysis.

David Osborne & Best-selling book, Reinventing gov-

Ted Gaebler ernment: How the entrepreneurial spirit
is transforming the public sector, claims
that public agencies are designed to
protect against politicians and bureaucrats
gaining too mush power or misusing
public money. Instead, we need
“entrepreneurial government.”

Ralph D. Stacy Managing the Unknowable: Strategic

Boundaries Between Order and Chaos,
challenges the view that organizational
success stems from stability, harmony,
predictability and stable equilibrium.
Managers should embrace “unbounded
instability,” because disorder, chance, and
irregularity can be beneficial.

Richard Beckhard & Changing the Essence discusses

Wendy Pritchard leadership behaviors that are necessary for

34
 initiating and managing fundamental
organizational change.

1993 William Bergquist The Postmodern Organization, looks

comparatively at premodern, modern, and
postmodern notions of five dimensions of
organizational life: size and complexity,
mission and boundaries, leadership,
communication, and capital and worker
values.

Taylor Cox, Jr., Cultural Diversity in Organizations,

examines the potential benefits and the
difficulties that may accrue to an
organization from cultural diversity.

Ian I. Mitroff & Examine four ways of knowing, or inquiry

Harold A. Linstone systems designed to assist decision
making, in The Unbounded, Mind:
Breaking the Chains of Traditional
Business Thinking.

Michael Hammer & Reengineering the Corporation, Describe

James Champy how to radically redesign a company’s
processes, organization, and culture to
achieve a quantum leap in performance.

James D. Woods & The Corporate Culture, explore what it is

Jay H. Lucas like to be gay in the corporate world and
how to manage sexual identity in the
workplace. They encourage openness in
corporate practices, such as listing sexual
preference, as well as with gender and
ethnicity in training, recruiting, and
retention programs.

L. Douglas Kiel Public Administration Review article,

“Nonlinear Dynamical Analysis:
Assessing Systems Concepts in a
Government Agency,” suggests that
nonlinear dynamics, or chaos theory, can
be applied to public agencies because
human organizations are nonlinear
systems.

Harrison M. Trice Write the most comprehensive treatise on

organizational culture, The Cultures of
Work Organizations.

1994 L. Douglas Kiel Managing Chaos and Complexity in

Government, applies chaos theory to self-

35
 organization in public management. Kiel
shows how the deep structures and
processes of agency dynamics can foster
learning and coping with risk and
uncertainty.



Checkpoints

1 What functions or processes of management were already known before the Birth of Christ (B. C.)?

2 What principles of management were practiced before the Birth of Christ (B. C.)?

3 What practices in management were contributed by the following civilizations before the Birth of
Christ (B. C.)?

3.1 Middle East

3.2 Egyptians
3.3 Hebrew
3.4 Chinese
3.5 Greek
3.6 Roman

4 After the Death of Christ (A. D.) up to the 19 th century, what practices in management wre
contributed by the following civilizations:

4.1 Arabic
4.2 Italian
4.3 Anglo-Saxon (British)

5 Classify the practices, concepts, and principles of management in the 20 th century (1900-1999
according to the “schools of management theory.”

36
 MODULE 3

Industrial Revolution and the Development of

Modern Management
Learning Objectives:

1. To present the historical, technological, economic, social and cultural

perspectives and context out of which modern management sprang and operated.
2. To gain insights relevant to management from an in-depth study of the Industrial
Revolution.
3. To discover how the Industrial Revolution by its nature and scope gave birth to
modern Management.
4. To develop profound and broader perspectives necessary for leadership in
analyzing the historical and empirical relations between the Industrial Revolution
and modern Management.



1. The Nature and Scope of

Industrial Revolution

1.1 A revolution is a profound and radical change in the economic, social, or

political structure. It is a process of transformation in the economy, society,
and political systems.

While it may appear sudden or spontaneous, the process of revolution actually

covers a period of time. Suddeness of change is more associated with coup d’ etat-- the
sudden seizure of political power by the military.

1.2 The Industrial Revolution is the process of change from an agrarian, handicraft
or feudal economy to one dominated by industry.

1.3 The Industrial Revolution cannot be treated as a definite period of time in

history. Although the Industrial Revolution started in England and first spread to
Belgium and the France, it cannot be asserted that it is over with the passage of
the 18th and 19th centuries. It is still on-going as a process in our time and will
continue to go on with Technological Revolution.

It was the result of gradual succession of change over a long period of time.
Some of its elements can be traced back from the medieval period.

1.4 With the hindsight of contemporary history, we can even sat its embryonic roots
can be traced from what Alfin Toffler calls the First Wave of Civilization --
Agricultural Revolution which supplanted the Hunting Stage.

1.5 Agriculture was revolutionary because:

37
 * The acquisition, possession, enjoyment and ownership of land gave rise to
wealth. And with wealth came power -- economic and political.
* Agricultural improvements made possible excess production over subsistence
level, thus making possible provision of food for larger non-agricultural
population.
* This enabled non-agricultural workers to engage in crafts and production of
goods and services.
* It enabled the creative and innovative to produce arts, literature, and culture.
* It gave rise to trade and commerce.

2. First Situs of
Industrial Revolution

2.1. England is the birthplace of Industrial Revolution. Why England?

2.2. Because scientific, technological, political, legal economic, social and cultural
environment in England was favorable to industrialization:

* At the end of 18th century, continental Europe was for ahead in pure research in
the physical and chemical sciences.
However, the English excelled in the application of scientific knowledge to
practical affairs, particularly in industries.

* Technological revolution accompanied the Industrial Revolution as traditional

methods of production -- the domestic handicraft system of manufacturing --
could not provide adequate response to market conditions as primary cause of
industrialization. It led to factory-based mechanization.

* Political liberty and individual rights were guaranteed. The right to life, liberty
and property, the right to due process and freedom from illegal persecution were
protected and recognized.

* The sanctity of property rights and sanctity of contracts were held in high regard.

* A patent law protected the intangible rights of inventors and the creative.

* The Agrarian Revolution in England centered on land use which increased

production more than what improved technology could do so. The Enclosure
Movement of the 18th century increased the efficiency of farm lands as common
pastures and fields were replaced by more compact and easily farmed private
holdings.
Farmers were motivated to experiment with new forms of husbandry -- notably
root crop rotation and convertibility between cultivated and pasture land -- that
increased productivity.

* England had the domestic capital or wealth saved and accumulated from land and
international trade. Banking and insurance services were available.

38
 * Every inventor who needed an entrepreneur with capital and vision to exploit an
innovation could easily find such financial backer.

* England was richly endowed with coal and iron ore. It had wool. Its colonies had
iron, cotton, dyewoods, lumber and naval stores.

* It had adequate transport system. Roads and canals were built. Railroads
extended transportation network. These in addition to traditional British merchant
marine which was the largest in the world at the time.

* Social mobility, as a result of economic changes in social relations in the means

of production, was common and open. This became an incentive to savings and
accumulation of wealth and capital.

* The Demographic Revolution -- Britain’s population in the 1700’s doubled again

by 1850 -- provided stimulus to increased demand for food.

Population growth in developing countries today tends to retard economic

development. But Britain in the 18th century was a wealthy country with a standard of
living well above subsistence. Thus the population explosion from 1750 enlarged the
effective demand for consumption. Since the population generally had the purchasing
power, the population explosion had a beneficial effect on economic development.

* The shippers and traders and most of all the merchants saw the market
opportunities. Hence, the increasing demand for improvements in the process of
manufacturing or the production of goods.

* The Protestant Ethic, as Max Weber calls them, of hard work, saving, sacrifice
(forego today’s comfort for tomorrow’s security), honesty, trust, - values
conducive to economic progress - were widely lived up to and practiced outside
the confines of churches and even after religious services.

3. Main Features of
Industrial Revolution

The main features of the Industrial Revolution were Technological, economic, social, and
cultural.

3.1. Technological features:

* The use of new basic materials -- iron and steel.

* The use of new energy sources -- both fuels and motive power -- such as coal,
steam engine, electricity, petroleum, and internal combustion engine.
* The invention of new machines -- spinning jenny and the power loom that
permitted increased production with smaller expenditure of human energy.
* The new organization of work -- the Factory System -- which entailed increased
division of work and specialization of function. (Note that F. W. Taylor’s School
of Scientific Management is based on the study of work in the Factory System.)

39
 * Developments in transportation and communications -- steam locomotive,
steamship, automobile, airplane, telegraph, and radio.
* The increasing application of science to industry.

These technological breakthroughs made possible massive use of natural

resources and mass production of manufactured goods.

3.2. Socio-economic and Cultural Features of Industrial Revolution

* Agricultural revolution produced surplus production for consumption of

industrial, commercial and other non-agricultural population.
* Economic shift from land to industry resulted in broader distribution of wealth,
especially among the bourgeoisie, the new middle class.
* Political changes reflected shift of economic power. Hence, new laws and state
policies reflected the economic interests of new power holders.
* Sweeping social changes -- growth of cities, development of working class
movements, and emergence of new patterns of authority.
* Cultural transformations of broader order. The worker acquired new and
distinctive skills and relation to task shifted. Instead of craftsman with hands
tools, he became a machine operator, subject to factory discipline.
* Psychological change -- man’s confidence in his ability to use resources and to
master nature was heightened.

4. Great Britain and France:

A Case Study on Industrial Development

4.1. France in the 18th century was the wealthiest and most powerful nation in
continental Europe, in spite of calamitous wars, loss of its colonies, and
impending royal bankruptcy.

But the Industrial Revolution started first in Great Britain because of its favorable
environment. (Belgium was second to industrialize because the pre-requisites of
industrialization were present there. However, its small size prevented it from becoming
the leading industrial power in Europe.

4.2. Capital investment in mechanical devices provided the basis for technological
change. But for this purpose the capital must be mobile; i.e., available for
industrial investment. While France had much capital, it was diverted to
unproductive uses -- forced loans to the state, upkeep of a wasteful royal court
and bureaucracy, and war expenditures. And it was dissipated by government
bankruptcy.

Great Britain’s capital was rapidly increasing through agricultural improvements and
commercial expansion. And the British monetary system was far sounder than that of
France. Lowering by the British of interest rate in the first half of the 18 th century made
cheap capital available for industrial investment.

40
4.3. Mobility and adaptability in the labour supply are also essential for industrial
development. In case respects, Britain surpassed France. Serfdom and the guild
system had almost disappeared in Britain by the beginning of the 18 th century.
They were not completely destroyed in France until the French Revolution.

4.4. Markets are also necessary for industrial growth. A large demand stimulates
technological improvement. Mass production must have large market to consume
its finished goods.

Given the mercantilism practices of the 18 th century, which entailed strict limitations on
imports, both Great Britain and France had their home markets at their command. The
population of France was larger than that of Britain but France lost most of its colonies in
the 18th century.

Britain meanwhile monopolized the trade with its growing colonies. Though it lost its 13
American colonies, Britain was able during the 1790s to extend its empire and its
carrying trade. Thus British markets were expanding at a greater rate after 1763 than
were the French.

Britain’s advantage was further increased because the French specialized in expensive,
handmade articles while the British made coarse goods capable of being produces by
machines and sold to a mass market at low process.

4.5. The British outstripped the French with a great merchant marine for overseas
trade and an extensive canal and road system for inland transportation. James
Brindley’s pioneer efforts ushered in a canal-building era that gave England a
network twice as large as that of France by 1800. Similarly, road building in
18thcentury England flourished with the new methods of the great Scottish
roadbuilders Thomas Telford and John McAdam.

4.6. Business opportunities were slightly greater for the British entrepreneur than for
his French counterpart, for the English political system and scale of social values
were more propitious for industrial and commercial activities. While the Bourbon
monarchy constantly frustrated the French trading classes, the British parliament,
controlled by commercial magnates and landed aristocrats since the English
revolution of 1688, was consistently devoted to the expansion of commerce and
the prosperity of agriculture.

4.7. Both France and Britain possessed raw materials and other natural resources, but
the British resources were more readily available than the French. Most
important was coal. The production of every ton of iron required from seven to
ten tons of coal. It was Britain’s good fortune to have this coal located near
seaports, making the shipment of ore to coal an inexpensive process. Since the
crucial early stage of the Industrial Revolution coincided with the French
Revolution, Britain’s naval supremacy allowed it to maintain a free flow of raw
materials, especially cotton, and to cut France off from colonial products.

4.8. New inventions and new techniques of manufacturing were an inherent part of
the Industrial Revolution. Neither Britain nor France had a monopoly of
inventive genius. The names of J. M. Jacquard and Jacques de Vaucanson (1709-

41
 82), both of whom contributed to the improvement of weaving machinery, testify
to French mechanical ingenuity. But the factors mentioned above combined to
give greater opportunity for English mechanical genius, which explains why
most of the early inventors were British.

5. The Textile Industry:

A Case Study of Initiating Industrialization

5.1. The textile industry was the first to undergo industrialization. England’s moist
climate, which prevented cotton threads from becoming brittle and breaking,
made easier the application of machinery to the spinning and weaving processes
in Lancashire, but other factors probably account for the fact that textiles took the
lead in industrialization.

5.2. For one thing, faster and cheaper methods of production were necessary to meet
the growing demand for textiles, especially the cottons and calicos that had been
introduced from India. In addition, techniques for making cloth had already
reached a high point of development; only minor changes were necessary to
convert the processes from manual operations to semiautomatic or automatic
operations propelled by mechanical power.

5.3. Finally, a large number of persons were engaged in spinning and weaving as a
part-time home task under the domestic or “putting-out” system. Under this
system, entrepreneurs “putout” the raw materials to farm workers, who usually
included the women and children of the household, and paid them at piece rates.
The problems connected with the spinning ad weaving processes, already
specialized and carried on in separate households, stirred the imagination of
many inventors, and the piece-rat payments stimulated thought about techniques
for increasing the rate of production.

5.4. The rapidity with which changes were introduced in the textile industry
illustrates the role of one invention in producing another in a related field.

* The first of the great inventions was John Kay’s flying shuttle (1733), a
mechanical device for throwing the weaving shuttle more quickly than could be
done by hand. Kay’s device upset the usual ratio of four spinners to one weaver:
either there had to be many more spinners or else spinning had to be similarly
quickened by application of machinery.

* James Hargreaves developed (1764-69) the spinning jenny, which mechanically

reproduced the actions of the hand spinner.

* Richard Arkwright in 1769 patented the water frame, which produced a strong,
well-twisted yarn suited for the warp of cotton goods and so named because it
used water power.

* Samuel Crompton’s “mule” (1779), a cross between the water frame and the
jenny, marked the next improvement in spinning devices.

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* In the meantime the Rev. Edmund Cartwright set about mechanizing the weaving
operation to take advantage of the then abundant yarn produced by Arkwright’s
and Crompton’s machines. The result was the power loom (1785), a major step in
applying mechanical power to weaving. Increased production of finished cotton
goods in turn created a growing demand for raw cotton, but the supply lagged
because of the labour involved in picking the seeds from the cotton bolls.

* In the United States, Eli Whitney solved the problem with his cotton gin (1973),
which more than trebled the amount of cotton that a man could pick free of seeds
per day and which caused the cotton crop to increase from 1,500,000 lb. in 1790
to 85,000,000 lb. in 1810. The cotton gin also stimulated the extension of the
plantation system and Negro slavery in the South; it was indirectly responsible
for producing the regional differences that eventually contributed to brining on
the American Civil War. Meanwhile Samuel Slater and others introduced British
machinery into the United States.

5.5. In addition to leading in mechanical innovations, the textile industry was also the
first to develop the new organization of production: the factory system. This was
not the first time that workers had been concentrated under one roof under the
close control of their employers. The royal manufactories in France, such as the
Gobelin works, had come into existence almost a century before. And there had
been factories in woolen industry in 16 th-century England. There were other
isolated examples as far back as some pottery works in ancient Athens.

But the factory as the characteristics form for the organization of work grew out of the
textile industry at the end of the 18th century. The factory gathered workers together and
submitted them to the discipline of the machine. Within the factory there was division of
labour, the workers performing specialized tasks.

5.6. Power-driven machinery in the factory resulted in the production of goods in

quantities greater than were demanded by the immediate local market, or even
the national market, and made world-wide commerce necessary. British raw
cotton imports provided an index of the rapid advance in production. These
imports quadrupled from 1765 to 1785, almost quadrupled again from 1785 to
1805, tripled during the succeeding two decades, more than tripled in the years
between 1825 and 1845, and doubled again in the next 20 years.

5.7. By 1800 the chief inventions in the textile industry had been devised and the
factory system established, the motive power being supplied chiefly by water.
Although the steam engine is sometimes mistakenly credited with “causing” the
Industrial Revolution, the industrial transformation had already begun before the
steam engine came into widespread use. Water mills actually surpassed steam
engines in aggregate power generated during the entire first century of the
Industrial Revolution. Thus the Industrial Revolution might have taken place
without James Watt. This is no to minimize Watt’s role, for his steam engine
hastened the revolution and helped establish the industrial pattern of the future,
but it did not create it.

5.8. James Watt arrived on the scene when the mining and metallurgical industries
were rapidly expanding and when there was need for a machine of greater

43
 efficiency than those currently used to pump water from the mines. Had this
invention come earlier the techniques and machines to produce the metal shapes
basic to his engine would not yet have existed; there might not have been
sufficient capital available to manufacture it on a commercial scale; and there
probably would have been little demand for it.

5.9. However, the need for Watt’s invention and the opportunity for its adoption were
provided by a series of prior and contemporaneous developments. The shortage
of wood, necessitating a substitute fuel for charcoal in smelting, had given rise to
successful attempts by Abraham Darby and his son early in the 1700s to reduce
coal into coke by burning off the coal gas in an oven. Henry Cort’s invention
(1784) of “puddling” (stirring molten pig iron in a reverberatory furnace to burn
off impurities) and of a rolling mill with grooved rollers (1783) simplified and
cheapened the production of wrought iron. The boring mill developed 1755 by
John Wilkinson made it possible to bore cylinders to the fine limits of accuracy
required by Watt’s engine.

5.10. Equally important was a reservoir of knowledge and experience in working with
the power of steam for pumping purposes: Edward Somerset’s “atmospheric
engine” (c.1663); Thomas Savery’s first practical steam pump (1698), which
raised water through the combination of a vacuum created by the condensation of
steam and through steam pressure itself; Dennis Papin’s demonstration (1690) of
the principle that steam could move a piston in a cylinder; the atmospheric
engine of Thomas Newcomen, who first (1712) established the steam engine as a
practical and reliable machine; and John Smeaton’s application of engineering
principles to raise the efficiency of the atmospheric steam engine about as high
as could be done with that type of engine.

5.11. By the middle of the 18th century, Newcomen’s “fire-engine,” as it was then
called, was widely used to pump water out of the Cornish tine mines. While
engaged in repairing a model of the Newcomen engine at the University of
Glasgow in 1764-65 Watt came upon his great idea. He took out his first patent
in 1769. Watt’s engine might never have come into wide use had it not been for
Matthew Boulton, a Birmingham industrialist, who provided capital and
commercial acumen. By 1786 the firm of Boulton and Watt was prospering and
by 1800 more than 500 of their engines had been built and set up both in England
and abroad. For the first time mechanical power was independent of the
movement of the wind or the location of water; it could be used wherever needed.
The steam engine was eventually to become the symbol of the Industrial
Revolution.

5.12. Manufacturers producing goods in large quantities needed faster and more
economical means of transporting raw materials to their factories and sending
their products to market. Canals and roads were improved and expanded.

5.13. But the most significant transportation development of the Industrial Revolution
was steam locomotion. Parallel rails of a given gauge, suitably laid on a prepared
roadbed, had been there were already “railways” long before Richard
Trevithick’s high-pressure engine made possible the commercial steam railway
and George Stephenson demonstrated the speed and efficiency of steam

44
 locomotion. The Stockton and Darlington railway (1825), designed to carry coal
from the mines to waterways, proved immediately successful, and within a few
years England was covered with a railroad network. Other countries in Western
Europe and in western hemisphere also began to build railways.

5.14. At the same time, steam was also being applied to water transportation. In 1807
Robert Fulton’s steamboat appeared on the Hudson river and water commercially
successful, but many yeas passed before the steamship replaced the sailing ship.

Britain’s leadership in the Industrial Revolution was brilliantly displayed in 1851 at the
Great exhibition in London, which focused the attention of the world on British scientific
and technological progress.

5.15. The second half of the 19th century marked a new phase of industrialization,
evidenced among other things by the growing specialization of production, the
beginnings of the direct application of science to industry, and the further
development of mass-production techniques. Old industries expanded, new
industries were founded, and machinery was applied to agriculture.

5.16. At the same time new forms of business organization arose to meet new
industrial needs, and the Industrial Revolution spread to countries hitherto
unaffected. These elements continued to characterize industrialization during the
20th century, so that some historians view developments since 1760 as a
continuous revolution, while others find second or even third Industrial
Revolutions occurring in the latter part of the 19th and during the 20th centuries.

5.17. As invention proceeded and as industrial machinery became more complex there
was need for greater technical knowledge. Most of the early inventors had been
tinkerers, but the demands of industry soon gave rise to a new and important
professional group known as engineers. As industrial change continued,
specialization arose among engineers; mechanical engineers, mining engineers
and other varieties began to appear to meet the more intricate needs of an
industrial age.

5.18. Education in science and technology assumed added importance with the
increasing dependence of technological advance on scientific achievements. Here
Germany took the lead, building up a great chemical industry on the basis of
discoveries in university and industrial laboratories. By the 20th century
discoveries in theoretical science were applied so rapidly by industry that the
distinction between fundamental, or pure science and applied science tended to
disappear.

5.19. One of the technological triumphs during this later period of the Industrial
Revolution was the perfection and increased use or precision tools. Earlier, John
Wilkinson’s boring mill (1774) had permitted the boring of accurate cylinders
essential for the success of the steam engine. Henry Maudlay’s slide-rest (1794)
working on an all-metal lathe, facilitated the accurate cutting of metals and the
screw-making machine possible. Constant improvement in the basic machine
tools allowed for continually greater precision, which led to the manufacture of
interchangeable parts, an essential feature of mass production.

45
 5.20. Most frequently credited with the introduction of mass production is Eli Whitney,
best known for his invention of the cotton gin but also noteworthy for his
manufacture of firearms. Although he was not solely responsible for the
development of interchangeable parts, Whitney’s assembling of muskets at his
factory in New Haven, Conn., foreshadowed the mass-production techniques that
later brought industrial pre-eminence to the United States. And that came to be
known in Britain as the “American system.”

6. Steel Industry

6.1. The period after 1830 brought a tremendous expansion of other industries. The
production of coat and iron, for example, was stimulated by increased use of
steel through the development of new steel-making methods: the Bessemet
process (1856), which burned off carbon and other impurities in the molten pig
iron by a powerful blast of air; the Siemens-Martin process (1866), whereby a
mixture of gas and air burned off the carbon in a shallow “open heart”; and the
Thomas-Gilchrist method (1878) for smelting iron ores with a high phosphorous
content in a furnace lined with magnesium limestone, which absorbed the
phosphorous. In addition, the textile industry further expanded. The manufacture
of linens and silks was mechanized and the needle trades were revolutionized by
the invention of the sewing machine and the knitting machine (1863).

6.2. Railway systems of most western European states were extended to all major
cities. And in the United States the east and west coasts were linked by rail.
Steamboats were also further developed, and the day of the sailing ship was
almost over.

6.3. Some older industries were mechanized for the first time in the second half of the
19th century and developed large-scales operations. Among these was the
manufacture of shoes, formerly done completely by hand but now made
automatic by the invention of a number of remarkable machines. Flour milling
and brewing were similarly mechanized. Completely new industries were born:
electrical, photographic, food canning, gas lighting, rubber and petroleum

7. Agriculture Developments

7.1. Change in agriculture were an integral part of the Industrial Revolution.

Agricultural production had been increased by the use of fertilizers and the
rotation of crops, by more careful and scientific cultivation of fields, and by an
improvement in the quality of livestock through selective breeding. A tendency
toward larger holdings which could be farmed more profitably was evident in
Great Britain and in the Americas and Australia. More spectacular was the
application of machinery to farming processes, and there the United States took
the lead, the steel-blade plow-share and the reaper being invented there in the
1830s. Farming also developed a division of labour, certain areas concentrating
on specific products, such as the Danish specialization in dairy products. Farmers
concentrated on growing cash crops for an unknown or distant market rather than
for their own consumption.

46
 7.2. The Industrial Revolution also brought transformations in the capitalist economy.
Capitalism had originated long before the Industrial Revolution, and investment
capital had been one of the prerequisites for industrialization. Despite the
important role played by capitalism in the Industrial Revolution it would be
wrong to equate the two: there have been forms of capitalism at other times
without any industrial change. And the U. S. S. R. and China were to undergo
Industrial Revolutions in the 20th century under an avowedly anti-capitalist
system.

8. Repercussions of Agricultural and Industrial Developments

8.1. The Industrial Revolution changed the chief source of capital accumulation from
land, commerce and banking to industrial production, and also changed the area
and forms of capital investment. Industry had long outgrown the domestic stage,
for power-driven machinery was too cumbersome, too complicated and too
expensive to be owned by peasants and artisans and operated by them in their
own homes without superintendents. It soon out-grew the small, one-owner
factory as the need increased for capital investment in more complex machinery
and more far-reaching enterprises. Because these enterprises required more
capital than any one man possessed, ownership passed from individuals or
partnerships to joint stock companies, or corporations. The growth of
corporations was further stimulated by the legalization of the principle of
limited liability through legislation passed in England and France during the
1850s and 1860s. Extension of corporative ownership meant that wealth was no
longer invested primarily in land but in industrial securities.

8.2. Corporate ownership also changed the relationship between owners and
employees. Early industrial capitalists were likely to know personally all the
employees of their small factories. But when the enterprise became a large
corporation with many absentee owners there was little direct contact between
owners and employees. The owners were usually represented by a managerial
group that did not necessarily own a share of the business. This managerial
function assumed increased importance in industrial enterprise in the 20 th
century. At the same time, the “depersonalization” of the industrial enterprise
made the workers feel alienated from the owners and contributed to their
grievances.

8.3. Commerce and banking were also enlarged by the Industrial Revolution and
became truly world-wide in scope. To keep the factories running smoothly and
steadily there had to be a regular flow of raw material as well as permanent
channels for the sale of merchandise to the consumer.

8.4. In addition, consumer demand grew because of the greater specialization of

production. Formerly the rural toiler had produced most of what he consumed;
now the factory worker was forced to buy nearly everything he needed.
Commerce was further stimulated by the fact that increasing population meant
that there were more consumers. The task of supplying the growing population
with the elementary needs of food, clothing and shelter provided a stimulus both
to industrialization and to agricultural production.

47
 8.5. Not only were there more people, but the European peoples in some places
improved their standards of living, demanding more in the way of productions.

8.6. The expanded needs of trade and industry also led to the growth of banking
enterprises for accumulating capital and savings, for transferring funds and for
providing manifold exchange activities.

9. Political and Economic Freedom

9.1. In addition to its effect on the economy, the Industrial Revolution contributed to
the efforts of liberal theorists to liberate man from political institutions and legal
restrictions that hampered his freedom. Adam Smith in his Wealth of Nations
(1776) had sounded the call for economic freedom. Industrial growth demanded
the removal of customs barriers inherited from the preceding mercantilistic age.
Competition was regarded as the life of trade, and no restrictions were to be
placed upon it except in the case of the worst abuses. In Great Britain the
concepts of laissez faire became public policy when the Liberal party achieved
political power in 1830 and governed in the interests of the business clases, with
but few interruptions, for the remainder of the 19 th century. Bourgeois liberalism
also became an important political movement in some of the other countries that
followed in the wake of Britain in the Industrial Revolution. The liberal tendency
was reversed when international economic competition ushered in a wave of neo-
mercantilism near the close of the 19th century and when the working class
pressures, manifested through trade unions and socialist movements, forced the
state to intervene in business and curb the unrestricted exploitation of the
workers.

10. British Monopoly

In the period 1760 to 1830 the Industrial Revolution had been largely confined to Britain.
Aware of their headstart, the British forbade the export of machinery, skilled workers,
and manufacturing techniques. The British monopoly could not last forever, especially
since some Britons saw profitable industrial opportunities abroad, while continental
businessman sought to lure British “know-how” top their countries.

11. Belgium

Two Englishmen, William and John Cockerill, brought the Industrial Revolution to
Belgium by developing machine chops at Liege (c. 1807), and Belgium became the first
country on the continent to be transformed economically. Like its English progenitor, the
Belgian Industrial Revolution centered in iron, coal and textiles.

12. France

France was more slowly and less thoroughly industrialized than either Britain or
Belgium. While Britain was establishing its industrial leadership France was immersed in
its revolution, and the uncertain political situation discouraged large investments in
industrial innovations. By 1848 France had become an industrial power, but despite great
growth under the second empire, it remained behind England. In order to protect their

48
 infant industries from British competitors, French Industrialists obtained government aid,
usually in the form of high tariffs.

13. Other Europeans

13.1. Countries lagged far behind. Their bourgeoisie, the class primarily responsible
for the growth of industrialism, lacked the wealth, power and opportunities of
their British, French and Belgian counterparts. Political conditions in the other
nations also hindered industrial expansion.

13.2. Germany, for example, despite vast resources of coal and iron, did not begin its
industrial expansion until after national unity was achieved in 1870. Once begun,
Germany’s industrial production grew so rapidly that by turn of the century that
nation was outproducing Britain steel and had become the world leader in the
chemical industries
.
13.3. The eastern Europeans countries were behind. It was not until the five-year plans
that the Soviet Union became a major industrial power, telescoping into a few
decades the industrialization that had taken a century and a half in Britain. The
mid-20th century witnessed the spread of the Industrial Revolution into hitherto
non-industrialized areas such as China and India.

14. Socio-Cultural Aspects

14.1. The socio-cultural accompaniments of the Industrial Revolution are closely

interrelated to its technological and economic aspects. Not only did the Industrial
Revolution enable am to produce more, travel faster, and communicate more
rapidly, but it also provided him with more material conveniences.

14.2. In its early stages, however, the Industrial Revolution seemed to have deepened
man’s poverty and misery. In the domestic system of manufacture, the labourer
usually had a garden to provide him with food, even when there was no work to
be done. With his removal to the city, the worker became entirely dependent
upon the functioning of the machine for his subsistence. This, coupled with the
fact that the specialization of labour forced the worker to perform the same task
continually, gave rise to the charge that the Industrial Revolution reduced man to
a machine and made the machine the master, rather than the tool, of man.

14.3. Workers laboured long hours for miserable wages and lived in ugly, unsanitary
tenements. The working day was 13 hours or longer. The workers seldom saw
daylight, for gas illumination enabled them to work from before daybreak until
after dark. Above all, the workers were insecure. The presence of a large pool of
labourers, caused partly by the employment of women and children, partly by the
influx of workers from overpopulated rural areas, meant that industrialized
society was faced with a new social phenomenon: chronic mass unemployment.

14.4. In addition to those who were unable to find work were others who were thrown
out of work by temporary shutdowns, depressions or business failures. Some
were unable to work because of old age or impaired efficiency. Still others lost
their jobs because of technological improvements that enabled one machine to do

49
 the work of many men. In the early years of the Industrial Revolution, some
workers had sought to wreck the machines that were putting them out of work. In
1779, for example, many textile mills were destroyed during serious riots in
Lancashire. Despite the possibilities of economic advancement in a society
where competition and economic freedom were stressed, the average
workingman had little chance to escape poverty.

14.5. The harsh exploitation of workers was not lost upon some of the humanitarian
spirits of Victorian England. The famous Sadler report of 1832 exposed the
brutality practised within factories and stimulated the movement for reform and
the passage of Factory Acts that removed some of the worst abuses.

14.6. Much of the writing on the Industrial Revolution has been affected by this picture
of the appalling conditions of the factory workers. Socialist theorist claimed the
exploitation of the workers was inevitable under capitalist competition. Others,
including romantic writers with nostalgic medievalism, condemned both
capitalism and industrialism.

14.7. In the 20th century this “pessimistic” interpretation achieved a scholarly

foundation in the works of J. L. and Barbara Hammond, who viewed the early
days of industrialization as the “bleak age,” and in the writing of Lewis Mumford,
who claimed that the Industrial Revolution produced a “new barbarism” wherein
civilizations shifted from an interest in human values to measuring life in
material and pecuniary terms.

14.8. Some economic historians, notably T. S. Ashton, attempted to “rehabilitate” the

Industrial Revolution, claiming that many of the economic and social evils
usually blamed on it antedated the mid-18th century and that industrialization
raised real wages in certain areas of the economy. The transition from
countryside and cottage to city and factory was bound to create social stress.
Besides, many of the social strains were actually the result of wars or other
dislocations and would have occurred even had manufacturing remained
undeveloped. Finally, Ashton points out that had the population increased
without an Industrial Revolution the European countries could not have provided
minimum living standards for the great mass of the population. Instead, Europe
would have been subject to the same miserable conditions prevailing in Asian
countries that suffer from overpopulation and under – developed
industrialization.

14.9. There is some validity in these varying evaluations of the Industrial Revolution,
depending upon whether one adopts a short-range or long-range point of view,
and upon the yardstick used for comparison. Conditions under the early factory
system appear dismal when compared with an idyllic medieval agrarian system
with the early modern domestic system at its best, or with an idea situation. On
the other hand, these conditions seem an improvement when compared with the
seamy reality of medieval life, the domestic system at its worst, or the living
conditions or the masses in certain Asia countries. Furthermore, it is increasingly
evident that not all the workers suffered under the factory system, and that in
some cases their conditions were improved.

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 14.10. Nevertheless, there can be no doubt that in the early phases of the Industrial
Revolution human gains were small in comparison with the great strides made in
technology. Viewed in the larger perspective of the development of western
civilization, however, it may well be that the sufferings of the early 19 th century
factory workers are outweighted by the possibilities of greater material goods and
the conquest of man’s physical environment that have grown out of
industrialization.

15. Continuing Revolution

15.1. Perhaps sufficient historical perspective is lacking to make a final judgment of

the Industrial Revolution. For one thing, the Industrial Revolution as a process is
still continuing, some of the Asia countries undergoing its first stages in the
1960s. At the same time, this continued process ushered in what some authorities
consider a “new” Industrial Revolution in the western countries already
industrialized.

15.2. Despite considerable overlapping with the “old,” there is mounting evidence for a
“new” Industrial Revolution in the mid 20 th century. In terms of basic materials,
man has begun to explore many natural resources not hitherto utilized. The rare
earth and lighter metals are increasingly employed. At the same time man has
created new alloys and synthetic products in the laboratory; e.g., plastics, which
augment the basic materials provided by nature. Similarly nuclear and solar
energy promise a revolutionary transformation in power sources. Combined with
these are developments in machines and tools which have given rise to the
automatic factory. Although some segments of industry were almost completely
mechanized in the 19th century, automatic operation, as distinct from the
assembly line, first achieved major significance in the 1950s.

15.3. Ownership of the means of production also underwent changes. The oligarchical
ownership of the means of production that characterized the Industrial
Revolution in the 19th century gave way to a wider distribution of ownership
through purchase of common stocks by individuals and by institutions such as
insurance companies. Many countries of Western Europe socialized basic sector
of their economies. There was also a change in political theories instead of the
laissez-faire ideas that dominated the economic and social thought of the
classical Industrial Revolution. Governments generally moved into the social and
economic realm to meet the needs of their more complex industrial societies.

16. America’s Industrial Revolution

16.1. “With a stride that astonished statisticians, the conquering hosts of business
enterprise swept over the continent; 25 years after the death of Lincoln, America
had become… [the foremost] manufacturing nation of the world. What England
had accomplished in a hundred years, the United States had achieved in half the
time.” So wrote historians Charles and Mary Beard in the 1920s about America’s
amazing industrialization.

Change came at a dizzying pace. Steel production, which provided the structural
underpinnings for industrial growth, soared from 19,000 tons in 1867 to 11.4 million tons

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 in 1900. By the 1880s, the steel produced for nails alone amounted to twice the total steel
output of the 1870s. Only 36,000 patents had been issued in the United States prior to
1860; from 1860 to 1890, 440,000 were granted. The new inventions included the
telephone, the light bulb, the typewriter, the phonograph, barbed wire, the adding
machine, and the cash register.

As railroads crisscrossed the country, national markets tying remote rural areas to
seaports and to the world economy emerged. In addition, railroads, the first large
corporations, demonstrated the usefulness of managerial skills and bureaucratic
organizations. For instance, to meet their needs for efficiency and predictability the
railroads set up time zones, which the government soon adopted.

Yet America’s industrial “revolution” was not without its victims. The familial
atmosphere of crafts-people’s shops slipped away as emerging corporations drove smaller
businesses into bankruptcy. Workers had little bargaining power as industrialists
increasingly exploited the 25 million immigrants who poured into America’s burgeoning
cities between 1865 and 1915. Young children often worked 12-hour days 6 days a week.
Moreover, America’s accident rate was higher than that of any other industrialized
nation. In 1913, 25,000 factory workers were injured so severely that they required at
least four weeks’ disability. Attempts by states to regulate child labor, hazardous work
conditions, and business practices were blocked by the Supreme Court, Congress, and a
federal system devoted to laissez-faire economics.

Scholars appropriately refer to the changes wrought by rapid industrialization as a

“revolution.” Patterns and traditions in every day life were affected by the massive
outpouring of goods. Labor businesses became the norm rather than the exception. Along
with these trends, the need for more and better-skilled management became apparent to
everyone.



Checkpoints

1. Why did England emerge as the birthplace of Industrial Revolution?

2. How important really is the technological, political, economic, social & cultural
environment to business and industry? Are the technological, political, legal, economic,
social and cultural environment in the Philippines today favorable to “pole-vaulting” to
the 21st century as a “Tiger Economy”? Elaborate.

3. Discuss the relations between Agrarian Reform and Industrial Revolution in 18 th century
England?

4. Does Agrarian Reform push industrialization in the Philippines? Reasons.

5. Could the Industrial Revolution in England have succeeded without their inventors?
Discuss.

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6. Could the British inventors have succeeded without the British entrepreneurs and
financiers? Elaborate.

7. Does the Philippines need inventors to truly industrialize?

8. Could not the Philippines just buy, license or franchise technology to “pole-vault” to
cutting-edge industrialization?

9. From the comparative industrial development of Britain and France, what insights and
“lessons” relevant to the Philippines do you derive? Elaborate.

10. What insights and approaches do you derive from the emergence of textile industry as the
avant garde in the Industrial Revolution of England? Does it show us any approach or
techniques in industrializing the country? Explain.

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 Part Two

MODULE 4

The Classical Approaches

Learning Objectives:

After reading this module, the student is:

1. Expected to know the what, how, and why of Systematic Management, Scientific
Management, Bureaucratic Management and Administrative Management.
2. Identify the leading gurus and exponents of each management approach and
know their principal contributions or ideas, concepts and principles of
management.



1. Pre-Classical Period:
The Systematic Approach

1.1 In pre-industrial society, work was done by craftsmen. There was no employer-
employee relationship as known today Relationship was a long personal, familial
lines. It was basically feudal.

1.2 It was only upon the advent of the Industrial Revolution with the “Factory
System” as centerpiece that modern management practice came about. In U.S.,
1886 marked the origins of the study of modern management thought and
practice. It was in this year, that Sear, Roebuck and Company was founded by a
railroad station agent, Richard W. Sears; the first Coca-Cola was served in
Atlanta; Avon Products, Cosmopolitan Magazine, Johnson & Johnson,
Westinghouse, Munsingwear, and UpJohn were founded.

1.3 Henry R. Towne (1844-1924), co-founder of Yale Lock Co., presented a paper
titled “The Engineer as an Economist” to the American Society of Mechanical
Engineers (ASME). Towne proposed the creation of an Economic Section in
ASME to act as forum and clearing house for “shop management” which would
deal with subjects of organization, “executive management”, responsibility and
reports. He also proposed “shop accounting” which would treat the nuts and bolts
of time and wage systems, cost determination and allocation, bookkeeping
methods, and manufacturing accounting. The society would develop a body of
literature, record members ’experiences, and provide a forum for exchanging
managers ideas.

The proposal triggered the turning point in the formal study of management. F. W. Taylor
was in the audience.

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 And the study focused on manufacturing or shop floor of the factory. The approach was
called Systematic Management. At the time, the work practices, were chaotic as observed
by Adam Smith. Poor coordinations among subordinates and different levels of
management caused frequent problems and breakdowns in the manufacturing process.

1.4 The goals of systematic management approach aimed to:

build specific procedures and processes into operations to ensure coordination;

achieve economy in operations;
provide adequate staffing;
maintain inventories to meet consumer demand;
setup organizational controls.

1.5 These goals of systematic management were achieved through:

Definition of duties and responsibilities.

Standardized techniques and methods of performing these duties.
Specific means of gathering, handling, transmitting and analyzing information.
Cost accounting
Wage
Production control systems to facilitate coordination and communications.

1.6 Systematic management focused on internal operations because:

problems and concerns were in the manufacturing processes.

managers were under pressure to meet explosive growth in demand.
managers were free to focus on internal issues of efficiency, partly because the
government did not constrain business practices significantly.
labor was poorly organized at this stage of industrial development. As a result,
managers were oriented toward things and machineries, rather than people.

Systematic Management
At a Glance

Key Concepts

1. Systematized manufacturing organizations.

2. Coordination of procedures and processes built into internal operations.
3. Emphasis on economical operations, inventory management, and cost control.

Contributions

4. Beginning of formal management in U.S.

5. Promotions of efficient, uninterrupted production

Limitations

6. Ignored relationship between an organization and its environment.

7. Ignored differences in manager’s and workers’ view.

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2. Scientific Management

2.1. Systematic management failed to lead to widespread production efficiency.

Hence, the emergence of a new approach -- the classical.

The classical approach breaks into two distinct areas – the lower – level management and
higher level management analyses.

2.2. Scientific management comes out of the body of knowledge developed by

Frederick W. Taylor, Frank and Lillian Gilbreth, and Henry L. Gantt. They
studied mainly the jobs of workers at lower levels of organization or shop floor
level.

2.3. The second area makes a comprehensive higher level analysis of the whole
organization. It concentrates on the functions and processes of management of
the entire organization. It gave birth to the Administrative Approach and its guru
is Henri Fayol of France.

2.4. The scientific management approach --

is a philosophy about the relationship between people and work -- not a technique or
efficiency device.
seeks to increase productivity and maximize efficiency.
seeks to find the “one best way” to do a task.
studies work methods, how a task can be constructed too bring out the highest
productivity from works, and set optimal performance standards.
requires rational selection of workers and training for job development.

2.5. The Four Principles of Scientific Management

F. W. Taylor came out with four principles of scientific management based on his
experience, observation, and practices on the shop floor of the factory:

1. The true science of management and scientific methods of designing jobs should
be developed. This is necessary to find the “one best way” of doing each task. In
other words, management should develop a scientific approach for each element
of an individual’s work to replace rule-of-thumb guidelines.

2. Management should scientifically select, train, teach and develop each worker.
The objective is to put the right person to the right job, or to place workers to the
task best suited for him.

3. Management should be cooperative with workers to ensure that the job matches
plans and principles.

4. Management should ensure an equal division of work and responsibility between

managers and workers. There should be cooperation and interdependence
between managers and workers.

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Frederick W. Taylor (1856-1917)
Father of Scientific Management

F. W. Taylor was an American industrial engineer who created a mental revolution about
how to get things done in organizations. By unceasingly searching through observation and
studies of actual work practices for “one best way” to do a task, he ended up as “the founder/father
of scientific management.

Peter Drucker, the guru of management gurus, recognized Taylor as “the first man in
history who did not take work for granted, but looked at it and studied it.” In short, he was the first
guy who asked the question: What is work? In the process, be revolutionized industrial processes
by making a systematic study of work and scientifically developing methods of production.

Robert Waterman, co-author of In Search of Excellence and the author of The Renewal
Factor, observes that many managers of the ‘90’s unconsciously practice Taylorism without
realizing it.

The development of the principles of scientific management was a result of the experience
of Taylor in three companies -- Midvale Steel, Bethlehem Steel Company, and Simonds Rolling
Machine Company.

At Midvale Steel, Taylor started as laborer and ended as chief engineer. From his
experience, he came up with his managerial system based on his studies of production line. He
observed how workers practiced soldiering -- that is -- the practice of workers to intentionally
restrict their daily production. Here he analyzed and timed the movements of workers as they did
their series of task activities. Using time study, Taylor broke each task into its component parts
and designed the quickest and best methods of operations for each part of the job. He thus
established how much workers would be able to accomplish with the equipment and materials at
hand. In short, he was able to determine optimal standards of performance. Thus began scientific
management approach.

To discourage soldiering by workers who feared they would lose their jobs if they worked
faster, Taylor developed the differential rate system which provided for increased pay to more
productive and efficient workers.

At Bethlehem Steel Company, Taylor refined his methods of work study to improve the
efficiency of the company yard gang. The yard gang had to unload raw materials from incoming
rail cars and then load the finished products on outgoing rail cars. Through time and motion study,
Taylor was able to set a standard of performance as to the quantity of materials and products that a
worker could handle a day with a corresponding higher pay. Consequently, the workers got
willing to work faster for higher differential pay. The result was a dramatic increase in
productivity and efficiency.

Taylor’s consulting years at Simonds Rolling Machine Company saw him produce
impressive improvements in productivity, quality, worker morale and wages.

In sum, F. W. Taylor’s contributions to management are:

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 - Job analysis
- Time-and-motions studies
- Standardization of processes
- Efficiency techniques
- Productivity measurements to systematically track labor costs
- Worker rest periods
- Training and development for both workers and managers
- Piece-rate method -- an approach to compensation whereby workers are paid for each
unit of work completed
- Setting of standards of performance
- Motivation by monetary considerations

Taylor, by “re-engineering” the work methods in factory or manufacturing system, put an

end to the weaknesses of traditional management and systematic management such as haphazard
job assignments, unrelenting long hours of work and soldiering.

Frank (1868-1924) and Lillian Gilbreth (1878-1972)

The Gilbreths – working as husband-and-wife team -- searched for the “one best way” in
their study of work. They used time and motion study as their principal tool. The painstaking
studies of work motions of various types of employees and the analysis of the time it took to
perform those motions led to increased employee productivity. He also considered the study of the
work environment and behavioral variables in addition to motion itself.

Motion study today is the study of physical actions required to complete a task in the
most efficient manner possible.

The motion study reduces a job to its basic movements. The motion analysis is used to
establish job performance standards and to eliminate unnecessary or wasted movement.

At the time, Frank used a revolutionary new tool -- motion pictures -- to study the
structure of tasks. For instance, his study of bricklaying, based on his experience as bricklayer, his
first job, is a classic example of time and motion study. He observed that bricklayers used three
different sets of motions: (1) for teaching apprentices; (2) for working fast; (3) for deliberately
holding down the pace of work.

Frank Gilbreth identified 18 individual motions that a bricklayer uses to lay bricks. By
changing the structure of the task, he was able to reduce the 18 motions to 5. This resulted in more
than 200% increase in worker’s overall productivity and greater efficiency.

The Gilbreths were the first to describe elementary human micromotions which they
labeled therbligs (Gilbreth spelled backward, with the th transposed.

After the death of Frank, Lillian shifted her focus of study on psychology of management.
She studied work efficiency, the effects on the worker of efficiency efforts, and fatigue. She
studied individuals and their performances at work under stressful conditions. She devoted herself
to improving employee working conditions, scheduled breaks, normal lunch periods, and standard

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work days. Her work influenced Congress to establish child labor laws and develop legislation to
protect workers from harsh and unsafe conditions.

Henry L. Gantt (1861-1919)

Henry L. Gantt, perhaps Taylor’s leading systems for shop-floor production scheduling.
His main tools is known as Gantt Charts – a graphic illustration (usually a bar graph or diagram)
that indicates time allocations for sequential operations and traces progress, routing, scheduling,
and tasks in time intervals. It is a graphic means of coordinating the flow of work; a progress
report in visual form that identifies stages of work and operational deadlines.

It is commonly used today in PERT-CPM and adapted for computerized scheduling

applications.

Gantt established quota systems and bonuses systems for workers and managers who met or
exceeded their quota standards. These evolved into gainsharing concept currently acclaimed as the
newest method of motivating employee performance.

Gainsharing is a method of bonus compensation based on a formula that shares profits or

productivity gains among investors and employees. Gainsharing uses control techniques to
monitor performance, compare results with established work standards, and pay employees
bonuses in addition to base wages when results exceed standards.

Gantt was one of the first managers to be concerned with social responsibility of business.
“The business system must accept its social responsibility and devote itself primarily to service or
the community will ultimately make the attempt to take it over in order to operate it at its own
interest.”

2.6. Scientific Management and the Model-T

At the turn of the century, automobiles were a luxury that only the wealthy could afford.
They were assembled by craftspeople who put an entire car together at one spot on the
factory floor. These workers were not specialized, and Henry Ford believed they wasted
time and energy bringing the needed parts to the car. Ford took a revolutionary approach
to automobile manufacturing by using scientific management principles.

After much study, machines and workers in Ford’s new factory were placed in sequence
so that an automobile could be assembled without interruption along a moving production
line. Mechanical energy and a conveyor belt were used to take the work to the workers.
The manufacturer of parts likewise was revolutionized. For example, formerly it took one
worker 20 minutes to assemble a flywheel magneto. By splitting the job into 29 different
operations, putting the product on a mechanical conveyor, and changing the height of the
conveyor, Ford cut production time to five minutes.

By 1914 chassis assembly time was trimmed from almost 13 hours to 1 ½ hours. The new
methods of production required complete standardization, new machines, and an

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 adaptable labor force. However, costs dropped significantly, the Model-T became the first
car accessible to the majority of Americans, and Ford dominated the industry for many
years.

Systematic Management
At a Glance

Key Concepts

* Analyzed work using scientific methods to determine the one best way to complete
production tasks.
* Emphasized study of tasks, selection and training of workers, and cooperation between
workers and management

Contributions

* Improved factory productivity and efficiency

* Introduced scientific analysis to workplace
* Piece-rate system equated worker reward and performance
* Instilled cooperation between management and workers

Limitations

* Simplistic motivational assumptions.

* Workers viewed as part of a machine
* Potential for exploitation of labor
* Excluded senior (top) management tasks.
* Ignored relationship between the organization and its environment

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Case Study

McDonald’s Recipe for Success

“Wow, we just had a customer walk out on us!” Jim Delligatti drops his Big Mac in
midbite and bolts from the booth, rushing past four rows of customers who make up the noonday
rush at Warrendale McDonald’s. Taking a command position behind the counter that stretches he
width of the restaurant, Jim Delligatti, by his mere presence, spurs his twelve workers to hustle
even faster.

It’s not enough that Delligatti has opened forty-seven of the famous hamburger outlets
over the past twenty-six years and has become a millionaire in the process. He hates to see anyone
leave one his “stores” unhappy, and his white-suited crews in their white “McNugget Mania”
painter’s caps know it.

“Production -- twelve burgers, six Macs,” barks the fresh-faced assistant manager posted
behind the warming bin, where wrapped burgers can remain no more than ten minutes before
being discarded. “Coming up,” says a high school boy, who slaps a handful of frozen patties on
the hot, stainless steel grill. Behind him, a young woman takes buns from a toaster and “dresses”
them with quick squirts of mustard and ketchup from a silver dispenser. She puts the pickles on by
hand, taking care not to spread them out so the customer will not get everything in one gulp. At
the french-fry station, another young woman shakes salt onto a hot batch of golden-brown
potatoes and then scoops the fries into red paper containers. With today’s crowd, none will remain
in the warming bin over the seven-minute maximum.

The lunchtime whirl all comes together to meet one goal: to serve the customer within
sixty seconds of the order’s being placed.

As huge as it is, the McDonald’s empire really is built around individual stores, each
striving to conform to the company motto of “quality, service, cleanliness, and value.” These
standards are hammered into new franchisees at McDonald’s Hamburger “U” training center in
Oak Brook, Illinois. The way the firm sees it, customers should get the same McDonald’s quality
whether they buy their hamburgers at a McDonald’s in Brooklyn, Singapore, or Warrendale, a
small community twenty miles north of Pittsburg. Jim Delligatti, the owner/manager of forty-
seven McDonald’s outlets could use a classical approach to management to stress organizational
efficiency -- the “one best way” to perform jobs at McDonald’s -- to increase productivity. As a
simplified example, Delligatti might want to check whether the silver dispenser used to apply
mustard and ketchup is of the appropriate size to require only one squirt or whether more than one
squirt is necessary to adequately cover the hamburger bun.

Delligatti also could use motion studies to eliminate unnecessary or wasted motions by his
employees. For example, are hamburgers, french fries, and drinks located for easy insertion into
customer bags, or must employee walk unnecessary steps during the sales process? Also, would
certain McDonald’s employees be more efficient over an entire working day if they sat, rather
than stood, while working?

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 The classical approach to management might also guide Delligatti in scheduling more
efficiently. By ensuring that an appropriate number of people with the appropriate skills are
scheduled to work during peak hours and that fewer such individuals are scheduled to work during
slower hours, Delligatti would maximize the return on his labor costs.

Delligatti also might want to consider offering his employees some sort of bonus if they
reach certain goals. But he should make sure that the goals that he sets are realistic, since
unreasonable or impossible goals tend to make workers resentful and unproductive. For example,
Delligatti might ask that certain employees reduce errors in filling orders by 50 percent during the
next month. If and when these employees reached the goal, Delligatti could give them a free lunch
as a bonus. Comprehensive analysis of management implies that Jim Delligatti might be able to
improve his McDonald’s restaurants by evaluating the entire range of his managerial performance
-- especially with regard to organizational efficiency, the handling of people, and appropriate
management action. For example, Delligatti should check with his employees to make sure they
are receiving orders from only one source -- that a manager isn’t instructing an employee to man
french fry station while moments later an assistant manager tells the same employee to tend to the
grill. Along the same lines, Delligatti might want to verify that all of his employees are being
treated equitably -- that fry cooks, for example, don’t get longer work breaks than order takers.

The behavioral approach to management suggests that Delligatti should consider the
people working for him and evaluate the impact of their feelings and relationships on the
productivity of his restaurants. He could, for example. Try to make the work more enjoyable,
perhaps by allowing his employees to work more enjoyable, perhaps by allowing his employees to
work at different stations (grill, beverage, french fry, cash register, etc.) each day. He might also
consider creating opportunities for employees to become more friendly with one another, perhaps
through company sponsored softball teams. In essence, the behavioral approach to management
stresses that Delligatti should recognize the human variable in his restaurants and strive to
maximize its positive effects. Jim Delligatti could use the management science approach to solve
any operational problems that arose. According to the scientific method, Delligatti would first
spend some time observing, what takes place in one of his restaurants. Next, he would use these
observations to outline exactly how the restaurant operates as a whole. Third, he would apply this
understanding of restaurant operations by predicting how various changes might help or hinder the
restaurant as a whole. Before implementing possible changes, he would test them on a small scale
to see if they actually affected the restaurant as desired.

If Delligatti were to accept the contingency approach to management, his actions as a

manager would depend on the situation. For example, if some customers hadn’t been served
within sixty seconds because the deep-fat fryer had unexpectedly broken down, then Delligatti
probably would not hold his employees responsible. But if he knew that the fryer had broken
down because of employee mistreatment or neglect, then his reaction to the situation would likely
be very different.

Delligatti could also apply the system approach and view each of his restaurants as a
system, or a number of interdependent parts that function as a whole to reach restaurant
objectives. Naturally, each restaurant would be seen as an open system -- a system that exists in
and is influenced by its environment. Major factors within the environment of a McDonald’s
restaurant would include customers, suppliers, competitors, and the government. For example, if
one of McDonald’s fast-food competitors were to significantly lower its price for hamburgers to a
point well below what McDonald’s was asking for a hamburger, Delligatti might be forced to
consider modifying different parts of his restaurants system in order to meet or beat that price.

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“McDonald’s Recipe for Success” were written to help you better understand the management
concepts contained in this module. Answer the following discussions questions about this
introductory case to further enrich your understanding of the module content:

1. What problems do you think an individual like Delligatti faces in managing a McDonald’s
restaurant?
2. What action(s) do you think a manager like Delligatti would have to take to solve these
problems?
3. From what you know about McDonald’s restaurants, how easy would it be to hold
Delligatti’s job? Why?

3. Administrative Management

Henri Fayol (1841-1925)

Henri Fayol is considered the father of modern management. His contributions represent
an important transportation transformation in management thought. They now dominate the study
of management.

Fayol’s contributions are the functions of management -- planning, organizing,

commanding, coordinating, and controlling -- and the 14 principles of management.

Commanding and coordinating are now subsumed under leadership. Thus, the present
four functions of management -- planning, organizing, leading, and controlling -- come from
Fayol. They are now the essentials of textbooks on management.

Administrative management is the second area of classical management which deals with
the functions and structure of the whole organization. It stresses management principles from a
functional perspective -- an approach that explains managers’ responsibilities and activities
according to general principles of management for planning, organizing, leading, and controlling.

Fayol is generally regarded as the first to ask: “What is management?” To obtain the
answer, he had to analyze the nature of managerial activity and to formulate a comprehensive
theory of management based on his personal experience in running the French iron and coal
combine of Commentry-Fourchamboult-Decazeville as managing director. His answer is written
in his classic work Administration Industrielle et Generale or General and Industrial
Management. It was originally published in French in 1916. But it was only in 1949 that it was
translated into English and widely circulated. For years, Fayol’s ideas were overshadowed by
Taylor’s scientific management because the industrialists were more preoccupied with production
issues to rapidly expanding economy which was production – led.

Fayol’s 14 Principles of Management

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1. Division of Work. Specialization belongs to the natural order of things. The object of
division of work is to produce more and better output with the same effort. This is
accomplished by reducing the number of objects to which attention and effort must be
directed.

2. Authority and Responsibility. Authority is the right to give orders and responsibility is its
essential counterpart. Wherever authority is exerted, responsibility arises.

3. Discipline. Discipline implies obedience and respect for the agreements between the firm
and its employees. Establishing agreements binding a firm and its employees should be
one of the chief preoccupations of industrial heads. Disciplinary formalities emanate from
these agreements, and may involve sanctions judiciously applied.

4. Unity of Command. An employee should receive orders from one superior only.

5. Unity of Direction. Each group of activities having one objective should be unified under
one plan and one head

6. Subordination of Individual Interest to General Interest. The interest of one employee or

group of employees should not prevail over that of the company or broader organization.

7. Remuneration of Personnel. To maintain their loyalty and support, workers must be

given a fair wage for services rendered.

8. Centralization. Like division of work, centralization belongs to the natural order of

things. However, the appropriate degree of centralization varies from one organization to
another. The problem is to find the measure that will give the best overall yield.

9. Scalar Chain. The scalar chain is the chain of superiors ranging from the ultimate
authority to the lowest ranks. It is an error to depart needlessly from the line of authority,
but is an even greater one to adhere to it the detriment of the business.

10. Order. A place for everything and everything in its place.

11. Equity. Equity is a combination of kindliness and justice.

12. Stability of Tenure of Personnel. High turnover breeds inefficiency. A mediocre manager
who stays is infinitely preferable to an outstanding manager who comes and goes.

13. Initiative. Initiative involves thinking out a plan and ensuring its success. This gives zeal
energy to an organization.

14. Esprit de Corps. Union is strength, and it comes from harmony among the personnel.

4. The Bureaucratic Management Approach

Jesus Christ once said that the poor has been with us and will always be with us. We can
say the same thing with bureaucracy.

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 Bureaucracy has been with us and will always be with us even if the organizational
structure becomes flatter, leaner and meaner. Bureaucracy was set up by the Chinese, Egyptians,
Persians, Babylonians, Greeks, and the Romans in the administration of their empires. The
Roman Catholic Church has the most enduring bureaucracy over the last 2000 years.

However, it is only in the early decades of the 20 th century that bureaucracy has been studied and
a body of knowledge created to make it a distinct management approach.

Max Weber (1864-1920)

A German sociologist, social historian and philosopher, Max Weber is considered the
guru of bureaucracy because of his work on studies of German’s government bureaucracy. He is
said to be the “father of organization theory.”

Weber defined bureaucracy as “the ideal pure form of organization”.

Bureaucracy is a model of organization based on defined positions, formal authority, and

a regulated environment that includes well-documented rules, policies, and procedures.

Bureaucratic management is a traditional management system that relies on rules, set

hierarchy, a clear division of labor, and formal procedures and that focuses on the overall
organizational structure.

The strengths of bureaucratic management are consistency and predictability. The

objectives of Weber’s studies were to improve organizational structures used in large
organizations and to design a blueprint of a structure that would help organizations achieve its
objectives. Weber’s concept of bureaucracy is conceptually close to Fayol’s view of structure.

With the growth in size and complexity of organizations in the 1940’s and 1950’s, leaders
took a fresh interest in Weber’s “ideal bureaucracy” as model to improve the structures of their
organizations. His formalized structures then led to the examination of informal organizations,
human relations, organizational behavior, and other factors that influence the formal blueprint of
an organization.

In seeking to define an ideal system and develop a bureaucratic model as a rational

method of structuring complex organizations, Weber identified seven characteristics of
bureaucracy.

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Seven Characteristics of Weber’s Bureaucracy

1. Rules -- Rules are formal guidelines for the behavior of employees while they are
on the job. Rules can provide the discipline for the organization to achieve its
goals. Adherence to rules ensures uniformity of procedures and operations and
helps maintain organizational stability, regardless of personal desires, whims and
caprices of managers and employees.

Efficiency and success will result by following the rules in a routine and unbiased
manner.

2. Impersonality -- Reliance on rules leads to impersonality. Managers and

employees are selected on the basis of their qualifications, either by examination
or on the basis of their education or training. All employees are evaluated
according to rules and objective data. An impersonal superior does not allow
subjective personal or emotional considerations to color his evaluations of
subordinates.

The organization need not rely on one particular individual.

3. Division of Labor -- The division of labor is a process of dividing duties and

functions into simpler, more specialized tasks. Managers and employees are
assigned and perform duties based on specialization and personal expertise.

Bureaucratic structures eliminates variability that results when managers and

employees in the same organization have different skills, experiences and goals.

4. Hierarchical Structure -- A hierarchical structure ranks jobs according to the

amount of power and authority (right to decide) given to each manager or
employee. Authority and responsibility are clearly defined and legitimized.
Typically, power and authority increase at each higher-level, up to the top of the
hierarchy. Each lower-level position is under the control and direction of a higher-
level position. According to Weber, a well-defined bureaucracy helps control the
behavior of employees by making clear to each exactly where he/she stands in
relation to every other employee. Roles are standardized. Formal network of
relationships among specialized positions in the organization are structured.

5. Authority Structure -- An authority structure is the organizational structure

that determines the right to make decisions of varying importance at different
levels within the organization.

Weber identifies three types of authority structures – traditional, charismatic, and

rational – legal.

Weber’s Three Types of Authority

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 1. Traditional is based on tradition or custom. Example: The divine right of
kings like Louis XIV of France

2. Charismatic authority is based on followers personal belief and trust in

the leader because of special qualities or abilities they perceive in the
leader. Examples: Social, political and religious movements are often
headed by charismatic leaders – Jesus, Joan of Arc, Andres Bonifacio,
Martin Luther King. In business – Steven Jobs and Walt Disney.

3. Rational-legal authority is based on impersonal laws and rules that apply

to all. A superior is obeyed because of the position he/she occupies within
the organization’s hierarchy. This authority depends on employees
acceptance of rules.

6. Lifelong Career Commitment – In bureaucratic management system,

employment is viewed as a lifelong career commitment. In general, it means that
job security is guaranteed as long as the manager or employee is technically
qualified, competent, and performs satisfactorily. Entrance requirements are based
on technical qualifications, rather than patronage. The organization uses job
security, tenure, step-by-step salary increases, and pensions to ensure that
employees satisfactorily do their assigned duties. Promotion is granted when an
employee demonstrates technical competence required to handle the demands of
the next higher position. It is assumed that organizational level corresponds
closely with expertise.

Bureaucratic organization, such as the civil service, often rely on the results of written and
oral exams, amount of education, and previous work experience to determine management rank.

7. Rationality -- is the use of the most efficient possible means to achieve the
organization’s objectives. Rationality requires general organization’s goals or
purpose to be broken down into more specific objectives for each part of the
organization.

At Xerox, for example, the overall corporate goals are to provide customers with copying
machines and services of superior quality at a fair price and to earn enough profit to maintain the
company’s growth.

An objective of its R & D (Research and Development) department is to pursue new

xerographic technology and to transform technological breakthrough into high-quality products
and services.

If all departments achieve their individual objectives, the corporation reaches its overall
goals.

Bureaucratic Management

Key Concepts

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 * Weber’s Seven Characteristics of bureaucracy
* Structured, formal network of relationships among specialized positions in an
organization.
* Rules & regulations standardize behavior.
* Hierarchy defines the relationship among jobs.
* Jobs staffed by trained specialists who follow rules.

Contributions

* Provides rational model for restructuring complex, mega organizations.

* Minimizes subjective personal factors that affect decision-making
* Consistency
* Predictability
* Reliability
* Stability
* Continuity
* Emphasizes the position, rather than the person, as the source of authority
* Promotes efficient performance of routine activities

Limitations

* Inefficiency due to rigid rules. Rules become an end in itself

* Red tape
* Inflexibility. Hinders timely decision-making
* Coldness
* Dehumanization. Ignores importance of people and interpersonal relationship
* Throttles creativity & innovativeness
* Slow decision-making
* Incompatibility with changing technology
* Self-perpetuating. Difficult to dismantle once established.
* Ignores the importance of people and interpersonal relationships
* Accumulation of power can lead to authoritarian management

United Parcel Service --

A Working Bureaucracy

United Parcel Service (UPS) can deliver a small package anywhere in the United States
for $2 to $3. The company views its prices as competitive with those of the U.S. Postal Service,
Federal Express, and Purolator Courier. Unlike the Postal Service, however, UPS must pay taxes
on real estate, income, and fuel. It can’t subsidize package delivery with revenue from first-class
letters. Nevertheless, UPS makes an excellent profit on its revenues from first-class letters. UPS
makes an excellent profit on its revenues of more than $12.4 billion.

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 Why has UPS been so successful in its ground operations? Two important reasons are
automation and bureaucracy. Automation is evident in its 100 mechanized centers that sort at
least 40,000 packages an hour. Employees who operate sorting machines handle 1124 packages
an hour and are allowed no more than one mistake per 2500 packages. The more than 152,000
employees at UPS handle millions of packages a day. Yet the organization is so efficient that it
can send a truck to pick up a package from a customer’s home or business and deliver packages
door to door -- and still make money.

The bureaucratic organization at UPS results in efficiency. Each manager is given several
bound policy books about company rules and is expected to refer to them regularly. For example,
drivers are instructed to walk to a customer’s door at a brisk pace of three feet per second. They
should knock so as not to lose valuable seconds searching for the doorbell. Jobs at UPS centers
are broken down in a clearly defined division of labor. Employees perform the specialized duties
of drivers, loaders, clerks, washers, sorters, and property maintenance personnel. The hierarchy of
authority is clearly defined: Eight levels extend from the washer at a local center up to the
company president.

Technical qualifications are UPS’s criteria for hiring and promotion. Company policy
says, “A leader does not have to remind others of authority by use of a title. Knowledge,
performance, and capacity should be adequate evidence of position and leadership.” Special
favors are forbidden. Each employee sets performance targets and has an equal opportunity to
succeed. Promotions and salary increments are based on objective performance criteria, not on
background or position in the organization.

Finally, UPS relies on extensive written records and has installed a computer system to
help with record keeping. Recorded operating costs and production figures are compared to those
of competitors. Daily worksheets specifying performance quotas are kept on every employee and
department. Employees’ daily achievements are accumulated on a weekly and monthly basis.

UPS pays its drivers $15 an hour, and, with overtime, many of them earn between
$35,000 and $40,000 a year. In return for this salary UPS expects maximum performance, and it
monitors employees accordingly. For example, one UPS manager watching a driver make
deliveries and seeing any waste of seconds will point out the inefficiency at once. According too
the manager, a mere thirty seconds wasted at each stop can snowball into a big delays by day’s
end. UPS drivers, with nicknames like Ace, Hammer, Slick, and Rocket Shoes, take pride in
meeting rules established by the company: “We used to joke that a good driver could get to his
stop and back to the truck before the seatbelt stopped swaying.”



Checkpoints

1. What are the goals of systematic management?

2. What are the key concepts and contributions of:

a. Systematic Management
b. Scientific Management
c. Administrative Management
d. Bureaucratic Management

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70
 MODULE 5

Behavioral Approach to Management

Learning Objectives:

After reading this module, you are expected:

1. To know the contributions of the 3 eras of behavioral approach.

2. To appreciate the implications to management Theory X & Y.
3. To know the application of the hierarchy of needs.
4. To know the hygiene approach to motivation.
5. To imagine the concept of apocalyptic liberation.



1. Backdrop and Context of Developments in Management Approaches

During the 1920’s and 1930’s, the U.S. and other industrialized nations experienced
radical social and cultural changes. Mass production triggered a Second Industrial Revolution in
U.S. Assembly lines were releasing a flood of inexpensive goods -- cars, appliances, and clothing
- into an increasingly consumer society.

The overall standard of living in U.S. rose. Working conditions in many industries
improved. As productivity increased dramatically, the average work week declined from seventy
hours to less than fifty. Factories were hard-pressed to satisfy consumer demand. Thus, factories
eagerly tried to attract workers from he farms to the cities by making industrial employment more
appealing than it was during Taylor’s tenure at Midvale Steel.

During the Great Depression, the Federal government began to play a more influential
role in people’s lives. By the time Franklin Delano Roosevelt (FDR) took office in 1933, the
national economy was hovering on the brink of collapse. To provide employment, the
government undertook temporary public work projects – constructing dams, roads, public
buildings, and laying out national parks. It also created government agencies such as Social
Security Administration, to assist the aged, the unemployed, and the disabled.

In one of the era’s most dramatic changes, unskilled workers increased their ability to
influence management decisions by forming powerful unions. During the 1930’s, Congress
passed laws increasing union powers by deterring management from restricting union activities,
legalized collective bargaining, and required management to bargain with unions. As a result, the
American Federation of Labor (AFL) and Congress of Industrial Organizations (CIO) were
formed.

In 1937, the autoworkers and steelworkers won their first big contracts. Eventually,
professionals and skilled workers, as well as unskilled workers, united for better pay, increased
benefits, and improved working conditions.

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 Following the Depression and World War II, a new wave of optimism swept the
American economy, organized labor enjoyed its greatest success from the 1950’s through the
1970’s.

Against this backdrop of change and reform, managers were forced to recognize the
human aspect of their task. They were now leading workers who did not appear to exhibit what
traditional management theorists had thought was rational behavior. That is, workers weren’t
always performing up to their physiological capabilities, as Taylor had predicted rational people
would do.

Nor were effective managers consistently following Fayol’s fourteen principles. By

exploring these consistencies, those who favored behavioral viewpoint of management gained
recognition.

2. Three Eras of Behavioral Approach

The First Era --1920’s when Hawthorne research inspired what we now call
Human Relations Movement.

The Second Era -- post-World War II period when theorists focused on human
needs and motivation.

The Third Era -- occurring now, as we search for integrative concepts that
satisfy the dual necessities of meeting employee needs and
improving productivity.

3. The First Era – Human Relations Movement

The human relations movement (HRM) focused on individuals working in group

environment. Managers and employees were studied in terms of group dynamics.

Early contributors to HRM concluded that by improving workers’ satisfaction with their
jobs, companies could improve their performance. Thus, managers were encouraged to be more
cooperative with workers, to upgrade the social environment at work, and to reinforce the self-
images of the individual employees.

The management theorists of the human relations movement are:

1. Kurt Lewin (1890-1947) He examined the effects of different types of leaderships and
wrote extensively on group behavior. He is remembered more for his 3-step process of
change -- Defreezing, Introduction of change, Refreezing.

2. Chester I. Barnard (1886-1961) He advocated conciliatory management relations that

enhanced cooperation between employees and supervisors.

3. Mary Parker Follett (1868-1933) She is considered one of the founders of the human
relations movements. She felt that managers were responsible for motivating employees
to pursue organizational goals enthusiastically, not simply to obey orders. She rejected
the notion that managers should be groomed to give orders. Instead, managers should be
trained to work with employees toward the attainment of common objectives.

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 Follett laid the ground work for studies in group dynamics, conflict management, and
political process in organizations.

Later theorists would build on her work to contribute to advancements in industrial

psychology and sociology.

4. George Elton Mayo (1880-1949) In association with F. J. Roethlisberger and W. J.

Dickson, Elton Mayo pioneered experimental research on human behavior in work
settings.

Mayo and a Harvard University research team conducted a series of experiments at the
Hawthorne plant of Western Electric Company in Illinois. Begun in 1924 to determine the effects
of illumination on employee productivity, the experiment spanned several years.

In this fieldwork, Mayo was initially concerned with scientific management, but his
results showed that human relations and behavior were far more crucial considerations for
management.

The Hawthorne Studies have become famous for enduring contributions to management
thought.

Elton Mayo & Hawthorne Studies

The Relay Assembly Test Room. The first significant experiment by Elton Mayo and his
team at the Western Electric Hawthorne plant concerned employees, all women, in the Relay
Assembly test Room. One group was subjected to changes in lighting and different methods of
altering the intensity of the illumination. The other group experienced no change in work
conditions. Researchers monitored other environmental factors and then followed work results
closely. Mayo hypothesized that changes in illumination would yield one lighting condition that
created the best productivity. His experiments clearly reflected the scientific management idea of
finding the “one best method” of controlling the work environment.

However, no matter what the researchers did, productivity increased among the test
groups. Even more startling, it increased in the control group. Even when all conditions were set
back to normal, productivity increased. Mayo considered is research a failure until he interviewed
workers. His findings centered on effects of research intervention and on human relations.

Test Room employees found working there more enjoyable during the experiments
because they felt they were involved in something important. Management had changed during
tests. Allowing more freedom, and employees found they had a much better relationship with
their supervisors and could work without fear. They also became closer as a work group because
of the enhanced social contact. The researchers concluded that human factors influenced
productivity, and over several years, they conducted more research in other areas of the
Hawthorne plant.

The Bank Wiring Room. A piece-rate work system was observed in the Bank Wiring
Observation Room. Once again, control and study groups were formed and observations were
made about human relations. Researchers found that faster workers were pressured by their peers
to slow down instead of working as hard as they could. In effect, the work group set the pace and

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enforced standards rather than management or individuals, who had the legal right to work as hard
as they wanted to. Social pressure dominated behavior.

The researchers drew several conclusions from the Hawthorne Studies. First, recognition
and attention to individual workers motivated them to work harder. Second, group dynamics
influenced work substantially. Third, and perhaps most important, intervention by researchers
created a perception by workers, real or not, that they were doing something of value. The act of
intervention and its impact is now called the Hawthorne Effect.

The implications of Mayo’s work are far reaching. After the Hawthorne Studies,
organizations were viewed as social systems with both formal and informal patterns of
authority and communications.

Mayo was the first to suggest that managers needed interpersonal skills for counseling
employees, diagnosing personal and group needs, balancing, technical needs for productivity with
human needs for job satisfaction.

These conclusions seem perfectly reasonable today. But in the context of industrial
society, at the time, many thought that the research findings of Mayo, Roethlisberger, Dickson,
and other colleagues were irrational. Those were the days when collective bargaining and safety
regulations were not yet recognized, when standard workday was more than 10 hours and
children worked alongside with adults. Factories were dimmed and cavernous. Employees were
considered little more than productive units like machines. But machines were treated better
because they were expensive.

4. The Second Era – Human Needs and Motivation

The second era was dominated by a professor (McGregor) and his student (Maslow). But
it is the latter who immortalized his mentor. Both have emerged as management gurus.

Their behavioral research emphasized motivation -- the concept of behavioral change or

result of influence that alters an individual’s performance.

The research focused on personal needs of employees and how they influenced
performance. Contributions to motivation theory immediately after World War II inspired greater
efforts to understand individual behavior in work environments. This focus led to a field of
study called Organizational Behavior.

4.1. Douglas McGregor (1906-1964) brought fresh perspective to management. He

challenged leaders to think of subordinates as responsible, capable, and creative.

McGregor felt throughout history leaders have treated subordinates as

irresponsible and lazy. He called this approach to management as Theory X.

Theory X managers tend to be autocratic control-oriented, and distrustful. Theory

X assumptions lead managers to view human nature pessimistically.

In contrast, McGregor identified a second perspective -- Theory X -- that

reverses these assumptions on human nature. Theory X managers view subordinates

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 optimistically as individuals who want the challenge of work, prefer self-control, and are
capable of responsible, independent judgment.

McGregor’s Assumptions on Theory X and Theory Y

Theory X

* Most human beings dislike work and avoid it when ever possible;
* They must be forced, threatened, and directly controlled in order to achieve
organizational goals.
* Most people are lazy, prefer to be directed, shun responsibility, have little
ambition, and want security.
* Th3e average human being avoids leading and wants to be led.

Theory Y

* Work is natural, and most people prefer the physical and mental effort of
working.
* Commitment to objective is also a natural state for most individuals, particularly
when rewards are associated with achievement.
* Human beings can exercise self-control, prefer self-direction, and have the
capacity for innovation and creativity.
* Under most reasonable circumstances, the majority of people will accept
responsibility, many individuals seek leadership rather than the security of being
led.

In other words, Theory X is based on a set of assumptions that employees are

lazy, unambitious, and must be coerced to work; hence, a managerial approach based on
fear tactics.

Theory Y, on the other hand, is based on a set of assumptions that employees are
generally responsible, want to have meaningful work, and are cap[able of self-direction;
hence, a managerial approach based on conciliatory, consultative, participative approach.

4.2. Abraham Maslow (1908-1970) based his theory of human behavior on the idea
that individuals work to satisfy human needs, including simple physiological
needs, such as food, and complex psychological needs such as self-esteem.

Maslow observed that a fulfilled need did little to motivate an employee. For
example, a person who has sufficient food to eat cannot be easily enticed to do something
for a reward of food. In contrast, a person with an unfulfilled need could be persuaded to
work to satisfy that need. Thus, a hungry person might work hard for food. Maslow
called this the deficit principle.

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 The deficit principle is a crucial aspect of Maslow’s theory of motivation based
on human needs that suggests an unsatisfied needs becomes a focal motivator, while a
satisfied need no longer influences an individual’s behavior.

Maslow suggested that managers be alert for unmet needs and then create
rewards to satisfy them.

Maslow formulated a progression principle -- a concept that successively

higher-order needs in his hierarchy of needs are not active motivators until lower-order
needs are fulfilled. In other words, successively higher-level needs are activated once
lower-level needs are met.

In Maslow’s view lover-level needs that go unfulfilled tend to take the

precedence in an employee’s mind over higher-level needs.

For example, for someone who is hungry, the need for food will far outweigh the
need for self-respect. This particular aspect of Maslow’s work is controversial because
many people ignore lower-level needs such as safety and security to satisfy higher-order
needs such as the social need for love.

McGregor’s Assumptions on Theory X and Theory Y

The basic human needs placed by Maslow in an ascending order of importance and
shown in Figure are these:

1. Physiological needs. These are the basic needs for sustaining human life itself,
such as food, water, warmth, shelter, and sleep. Maslow took the position that
until these needs are satisfied to the degree necessary to maintain life, other needs
will not motivate people.

2. Security, or safety, needs. These are the needs to be free of physical danger and
the fear of loss of a job, property, food, or shelter.

3. Affiliation, or acceptance, needs. Since people are social beings, they need to
belong, to be accepted by others.

4. Esteem needs. According to Maslow, once people begin to satisfy their need to
belong, they tend to want to be held in esteem both by themselves and by others.
This kind of need produces such satisfaction as power, prestige, status, and self-
confidence.

5. Need for self-actualization. Maslow regards this as the highest need in his
hierarchy. It is the desire to become the highests need in his hierarchy. It is the
desire to become what one is capable of becoming to maximize one’s potential
and to accomplish something.

The Motivation-Hygiene Approach to Motivation

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 Maslow’s need approach has been considerably modified by Frederick Herzberg and his
associates. Their research purports to find a two-factory theory of motivation. In one group of
needs are such things as company policy and administration, supervision, working conditions,
interpersonal relations, salary, status, job security, and personal life. These were found by
Herzberg and his associates to be only dissatisfiers and not motivators. In other words, if they
exist in a work environment in high quantity and quality, they yield no dissatisfaction. Their
existence does not motivate in the sense of yielding satisfaction; their lack of existence would,
however result in dissatisfaction. They were consequently referred to as “hygiene” factors.

In the second group, Herzberg listed certain satisfiers -- and therefore motivators -- all
related to job content. They included achievement, recognition, challenging work, advancement,
and growth in the job. Their existence will yield feelings of satisfaction or no satisfaction (not
dissatisfaction). As we can see from figure, the factors identified by Herzberg are similar to those
suggested by Maslow.

Maslow’s Hierarchy of Needs.

Need for self-actualization

The first group of factors Herzberg called maintenance or hygiene factors. Their
Need for self-actualization

presence will not motivate people in an organization; yet they must be present, or dissatisfaction
will arise. The second group, or the job content factors, he found to be the real motivators
Esteem
because they have the potential; of yielding
Esteema needs
senseneedsof satisfaction. Clearly, if this theory of
motivation is sound, managers must give considerable attention to upgrading job content.

Affiliations or or
Affiliations acceptance needs
acceptance needs
Comparison of Maslow’s and Herzberg’s Theories of Motivation

Security or or
Security safety needs
safety needs
Source: Koontz,

Physiological needs
Physiological needs

Weihrich, Essentials of Management, p. 324

4.3. Apocalyptic liberation is that state of life beyond the level of self-fulfillment. It
is that stage in life when a person in “unbound” from the demands of work
whether as business owner or professional manager. His goals are service to, or
betterment of society, humanity, the environment, or other “causes,” or simply
inner peace and happiness. (Emmanuel T. Santos, Wharton, 1992.)

5. Third Era – integrative Concepts of Organizational Behavior

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 To begin with, an integrationist is a theorist who integrates concepts of several schools
of management thought to suggest improved management practices.

Early human relations research was value-laden and more philosophical than practical.
Classical theories, though practical, went to the opposite extreme and ignored the human side of
enterprise.

Behavioral scientists who followed McGregor and Maslow expanded their ideas and
attempted to integrate human behavior concepts with the practical necessities of managing
organization. These are the integrationists – Victor Vroom, Lyman Porter, Edward Lawler,
etc. They took McGregor’s ideas, applied Maslow’s need concepts, and studied how
organizations can use scientific techniques to achieve results.

They have proposed methods of instituting, systematic change in organizations, resolving

conflict, achieving objectives through motivated individuals, and improving group dynamics for
greater productivity.

The central theme of integration is that understanding human behavior is the key to
effective management, but that management practices must still be based on scientifically sound
concepts.

More recently, integrative approaches have focused on national trends in productivity and
how organizations can improve their performance.

5.1. Theory Z

McGregor’s use of “X” and “Y” as identifiers for management style has been
expanded to include Theory Z, which has become a convenient label for Japanese
management philosophy. Theory Z refers to Japanese management practices of
consensus decision-making, quality circles, and employee participation to enhance
productivity. Theory Z captures the essence of Japanese management techniques as
practiced by excellent firms in U.S.

William Ouchi introduced Theory Z in 1981 to describe American adaptation of

Japanese organizational behavior. His theory is based on a comparison of management in
Japanese organizations -- called J – type firms -- with management in American firms --
called A – type enterprises.

Contrasts Between American and Japanese Organizations

American -- Type A

Mobile employees. Employees seek opportunities, advancement, and career changes by

moving between employers and organizations.

Personal Decision Making. Americans tend to rely on individual judgment and prefer to
make decisions unilaterally, either as managers or as individuals controlling their own destiny.

Individual Responsibility. Americans prefer taking personal initiatives and shouldering

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responsibilities as individuals rather than in groups.

Rapid Advancement. Employees gain economically and socially from rapid advancement,
with a premium on success as measured by promotions.

Specialization in Careers. American organizations are founded on specialization of skills

and labor; employees create intensity in career choices and follow specialized career paths.

Explicit Control Mechanisms. Western nations emphasize explicit standards and controls
for work and evaluation; employees expect explicit control mechanism and guidelines.

Focused Concern for Employees. American firms tend to view employees in their roles at
work, paying less attention to the “complete” profile of the individual: family, social issues,
personal health, and general well-being.

Japanese -- Type J

Lifetime Employment. Japanese workers tend to make a lifetime commitment to their

organizations and, in turn, organizations assume responsibility for lifetime employees.

Collective Decision Making. Employees and managers seek consensus on decisions and
endorse collective decision-making processes.

Group Responsibilities. Japanese prefer group processes and accept group responsibilities
through conciliatory communications; group rewards are not uncommon.

Slow and Systematic Advancement. Employees rise slowly through established ranks;
when opportunities arise for promotion, loyalty and harmonious behavior are considered.

General Career Perspective. Japanese organizations do not emphasize specialization but

prefer flexibility and internal training so they can reassign personnel and develop skills among
those who are members of the organization. Careers are linked to organizations, not professions.

Implicit Control System. Japanese organizations emphasize quality control and process
control methods, often with trained engineers in operational, but standards and work criteria are
replaced by major objectives; control is let implicitly to shop-floor decisions.

Holistic Concern for Employees. Japanese organizations take account of employees

beyond the work environment and often aid in providing housing, day-care services, and mental
and physical health counseling, among other things; employees are considered integral members
of the total organizations.

Ouchi recognized that cultural differences between the two nations prevent
American managers from adopting Japanese techniques without modifications. For
example: Americans are highly mobile; often seek opportunities, jobs, and career
advancement by changing employers. Japanese workers contrast, tend to make a lifetime
commitment to their organization.

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 Still Ouchi discovered similarities between practices in America’s leading firms
and Japanese organizational behavior. For example: in Hewlett-Packard and IBM, long-
term employment has been the norm, even though it falls short of lifetime commitment.

Typical A-type firms rely on individual management decision-making and J-type

firms rely on collective decision-making. But a number of excellent U.S. firms endorse a
“collaborative” decision-making process closely approximating J-type behavior.

Perhaps the most important element in Theory Z is its combination of human

relations concepts and scientific management techniques.

The Z-type company endorses collective responsibility, a pervasive concern for

employees, and a commitment to participative decision-making. These organizations
recognize individual and group needs, but simultaneously develop exceptional quality
control techniques and scientific work methods. Theory Z incorporates classical
principles, behavioral tenets, and human relations concepts to emphasize quality and
productivity.

Z-Type Organizations: The American Adaptation

Commitment
to Employees Long-term employment

Decision
Making Improved benefits

Cross-skills training
Specialization
and development

Holistic Human
Relation Concern for employees
and their families

Employees involvement
Responsibility in group efforts and
team decision making

Individuality stressed
Career Stability
for quality performance

Control and Innovation, implicit

Evaluation controls with formal
evaluation

The Motivation-Hygiene Approach to Motivation

Key Concepts

* Behavioral approach explains how managers influence others to achieve organizational

objectives through human relations and motivation.

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* Productivity and employee behavior are influenced by the informal work group.
* Cohesion, status, and group norms determine output and productivity.
* Managers stress employee welfare, motivation & communication.
* Social needs have precedence over economic needs.

Contributions

* Psychological and social processes influence performance.

* Productivity trough people.
* McGregor’s Theory X and Theory Y
* Ouchi’s Theory Z
* Maslow’s Hierarchy of Needs
* Apocalyptic liberation

Limitations

* Ignored workers’ rational side and the formal organizations contribution to productivity.
Research findings have overturned the prescription that happy workers are more productive.

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Checkpoints

1. What is the significance of the Hawthorne studies?

2. What are the contributions to management theory if.

1. Mary Parker Follett

2. Elton Mayo
3. Douglas McGregor
4. Abraham Maslow
5. Frederick Herzberg

3. Explain Apocalyptic liberation

4. What is Theory Z?
5. What are the key concepts and contributions of the behavioral approach?

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 MODULE 6

Contemporary Approaches
Learning Objectives:

After reading this module you are expected.

1. To know concept of management science.

2. To appreciate the systems contingency and situational approaches.

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1. Quantitative/Management – Science Approach

The Quantitative Approach to management is an approach based on decision theory,

use of statistical techniques for problem solving, and application of mathematical models to
organizational processes.

Churchman, Ackoff, and Arnoff define Management Science, or Operations Research

(OR) approach as:

1. an application for the scientific method to problems arising in the operation of a

system and;

2. the solving of these problems by the solving of mathematical equations representing

the system.

The scientific method involves:

1. Observing – systematically observe the system whose behavior must be

explained to solve the problem.

2. Constructing a model – use these specific observations to construct a

generalized framework (model) to be predicted.

3. Deducing – use the model to deduce how the system will behave under
conditions that have not been observed but could be observed if the changes were
made.

4. Testing the model – by performing an experiment on the actual system to see if

the effects of changes predicted using the model actually occur when the changes
are made.

Management Science is an approach to management that relies on models ad

mathematical analysis to improve decision making. It uses mathematical models for qualified
decision making models.

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 For example: a company will use consumer survey which will, in turn, trigger decisions
about hiring employees, opening sales office, contracting with suppliers for materials, and so on.

Management science should no t be confused with F. W.

Taylor’s Scientific Management.

Management Science (MS) can be traced to World War II when physicists and other
“hard” scientists were organized into teams that eventually became known as Operations
Research (OR) groups. The OR’s were used to apply mathematical techniques to defense and
logistic problems. Using statistical models, supplied by Operations Research (OR) military
experts were able to locate German submarines with high probability. One OR grouped was
asked to determine which gunsights would best stop German attacks on British mainland. OR’s
were used to plan strategic troop movements and deploy new weapons systems effectively.

After the war, private corporations began assembling teams of quantitative experts to
tackle complex issues and to apply quantitative analysis to management problems and decisions.

Computers have facilitated the development of specific quantitative methods. These

include such techniques as statistical decision theory, linear programming, queuing theory,
simulation, forecasting, inventory modeling, network modeling, and break-even analysis.

Organizations apply these techniques in many areas of management -- production, quality

control, marketing, human resources, finance, and distribution, planning, research and
development.

MS is applied to Operations Management (OM) which is concerned with using

quantitative methods for production and operations control. These methods are not necessarily
mathematically complex. Most of them use simple statistics and are easily understood.

In this area of applied management, some techniques are inventory control models,
materials-handling procedure, purchasing systems, production scheduling systems, and cost-
control processes.

The applications of Operations Management (OM) are in production operations and

service operations. For example, banks have used the new techniques for customer service
systems.

1.1. Characteristics of MS Application

1.1.1. Large number of variables.

1.1.2. Use of economic implications as guidelines for particular decision-
making.
1.1.3. Use of mathematical models to investigate the decision situation. Models
are constructed to represent reality and then used to determine how the
real world situation might be improved.
1.1.4. Use of computer. The great complexity of the problems and the
sophisticated mathematical analysis required of problem-related
information are two factors that make computers valuable to MS analyst.

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Quantitative/MS Approach

Key Concept

* Application of quantitative analysis to management decisions.

Contributions

* Developed specific mathematical methods of problem analysis.

* Helped managers select the best alternative among a set

Limitations

* Models neglect non-quantifiable factors.

* Managers not trained in these techniques and may not trust or understand the outcomes of
techniques.
* Not suited to non-routine or unpredictable management decisions.

2. The System Approach

The system approach to management is based on general system theory. Ludwig von
Bertalanffy is recognized as the founder of general system theory. He was a scientist who
worked mainly in the areas of physics and biology.

Kenneth Boulding built directly on Bertalanffy and Boulding developed their ideas in
1930’s.

The system approach takes a holistic view of the entire organization system and stresses
processes.

2.1. Systems Theory

Was proposed in the 1940’s by the biologist Ludwig von Bertalanffy (Anthology:
General Systems Theory, 1968), and furthered by Ross Ashby (Introduction to Cybernetics,
1956). Von Bertalanffy was both reacting against Reductionism and attempting to revive the
Unit of Science. He emphasized that real systems are open to, and interact with, their
environments, and that they can acquire qualitatively new properties through emergence,
resulting in continual evolution. Rather than reducing an entity (e.g. the human body) to the
properties of its parts or elements (e.g. organs or cells), systems theory focuses on the
arrangement of and relations between the parts which connect them into a whole (cf. holism).
This particular organization determines a system, which is independent of the concrete
substance of the elements (e.g. particles, cells, transistors, people, etc). Thus, the same concepts
and principles of organization underlie the different disciplines (physics, biology, technology,
sociology, etc.), providing a basis for their unification.

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 The main premise of the theory is that to understand fully the operation of an entity, the
entity must be viewed as a system. To understand the system as a whole requir4es understanding
the interdependence of the parts.

A system is a number of interdependent parts functioning as a whole for some purpose.

General system theory integrates the knowledge of various specialized fields so that the
system as a whole can be better understood.

Management developed systems theory in 1960’s & 1970’s. Kast and Rosenweig
extended systems perspective to functioning of organizations.

A system is collective association of inter-related and interdependent parts. Just as the

human body is a system with organs, muscles, bones, a nervous system, and a consciousness that
links all parts together, an organization is a system with many departments that are linked by
people working together. It is the relationships among human beings that define the system, not
the machines and facilities.

A system-oriented manager makes decisions only after identifying other managers or

departments that might be affected by the decision. The systems approach provides a frame of
reference for managers who make decisions in a changing environment.

The systems approach is an approach in solving problems by diagnosing them within a

framework of what are called the system’s inputs, transformation process, and outputs in the light
of feedback.
ENVIRONMENT

INPUTS
Human, physical, OUTPUTS
financial, and TRANSFORMATION Products
information re- PROCESS and services
sources

Feedback Loops

Input are the human, physical, material, financial, and information resources that enter
the transformation process and leave it as outputs. At a university, for example, the inputs include
students, faculty, money, buildings, and audio-visuals.

Transformation processes are the technologies used to convert inputs into outputs. In a
university, the transformation processes are such technologies as lectures, reading assignments,
lab experiments, term papers, and tests.

Outputs are the original inputs now in a changes condition. Outputs in a university
include the graduating students.

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 Feedback is any form of information about a system’s status and performance. One form
of feedback in a university is the graduates’ ability to get jobs. In an organization, feedback may
take the form of marketing surveys, financial, reports, production records, performance
appraisals, etc.

Management’s role in the systems approach is to ease the transformation process by

planning, organizing, leading, and controlling the system.

The main parts of the management system are organizational input (organizational
resources), organizational process (the production process), and organizational output (finished
goods/services). The parts represent a combination that exists to achieve organizational
objectives.

General systems theory has important I placations foe management. research shows that
effective communication is crucial for managing large organizations.

The emergence of systems concepts during the late 1940’s created new fields such as
management information systems (MIS). The systems theory also led to scholarly research about
the general principles of management.

2.2. MIS

The Management Information Systems (MIS) integrated networks of information that

support decision making. Usually, the information is computerized, but also includes the human
aspect of integrating information and data throughout the organization.

MIS is a natural extension of systems theory, in which interrelated components of

organizations must be orchestrated. It includes the vertical integration of management functions
from top-level executives to first-line supervisors. It includes horizontal integration of activities
among functional areas such as production, marketing, personal, and finance.

One main role of MIS is to recognize information as a resource. Then use that resource
to better achieve organizational objectives.

Using information resources effectively requires MIS managers to consider how best to
collect, store, process, and transmit data. Information is like other resources such as labor, capital,
and materials except that it is usually internally generated rather than acquired.

An MIS system includes people, hardware, software, data, and processes.

The ultimate aim of generating management information systems is not to overwhelm

managers with information, but to create systems that provide sufficient and accurate information
in a timely fashion.

The field of MIS evolved alongside computer technology. Using computers, however, is
not the same as having an MIS.

Systems theory provides a way to interpret organizations. It takes “a holistic” view of the
entire organizational system and processes.

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 2.3. Systems and Wholeness

The concept of “wholeness” is important in general system analysis. The system must be
viewed as a whole and modified only through changes in its parts. A thorough knowledge of how
each part functions and the inter-relationship among the parts must be present before
modifications of the parts can be made for the overall body of the system.

L. Thomas Hopkins suggested six guidelines for system wholeness for use during
system analysis:

1. The whole should be the main focus; the parts to receive secondary attention;

2. Integration is the key variable in wholeness analysis. It means inter-relatedness of

parts within the whole;

3. Possible modifications of each part should be weighed against possible effects on

every other part.

4. Each part has some role to perform so that the whole can accomplish its purpose.

5. The nature of the part and its function is determined by its position in the whole.

6. All analysis starts with the existence of the whole. The parts and their inter-
relationships should then evolve to best suit the purpose of the whole.

2.4. Types of Systems

According to Bertalanffy, there are two types of systems – closed and open.

Closed systems are those that are not influenced by and do not interact with its
environment. They are mostly mechanical and have necessary predetermined motions or activities
that must be performed regardless of the environment. Examples: a clock’s wheels, gears, etc
must function in a predetermined way if the clock as a whole is to exist and serve its purpose.
Most production departments operate as closed systems -- they produce standardized products in
an uninterrupted process.

Open system interacts with the external environment. Managers in a marketing

department, for example, constantly try to respond to changes in customer’s desires. They
monitor what competitors are doing, then develop ways in which their organizations can deliver
better quality and service at a lower price.

The external environment includes the social, political, legal, technological, and
economic forces that affect the system.

A subsystem is one of possibly many lower levels within a larger system. Subsystems in
Panasonic include its marketing, human resources, production, accounting, and finance
departments.

Panasonic is a subsystem of its parent corporation – Matsushita. Matsushita is a

subsystem of Japan’s overall economic subsystem, which is part of the world’s economic system.

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 2.5. Federal Express -- An Open System

Federal Express Corporation was founded in 1971 by Frederick Smith and started
operations in 1972. Smith realized that ours is an information society in which time is of the
essence. Over half of all working Americans earn their living by processing information.
Business has become increasingly more urgent. Logistical systems to support this fast-paced
economy have become integral parts of it.

Smith anticipated that growing service and computer industries that relied on rapid
information delivery would support a small-package express business. He developed a system to
provide overnight door-to-door delivery service for high-priority packages and documents.
Service is provided Monday through Saturday, with packages and documents routed through 145
airports in the United States and certain points in Canada, Puerto Rico, Europe, and the Far East
[open system]. Local offices are maintained at or near airports in more than 300 cities and employ
customer service agents, handlers, loaders, and a staff of couriers who pick up and deliver
packages [outputs]. The company now handles more than 850,000 packages per day and has an
annual sales volume [outputs] of more than $4 billion.

Federal’s innovative use of a computer system for tracking packages from their origin to
their destination is critical to its success. This sophisticated computer system also allows
messages [inputs] to be left for the courier even when the delivery vehicle isn’t occupied. In
addition, this system enables Federal to locate a customer’s shipment anytime it passes through
six electronic gates during transit [transformation] and to accurately bill the customer. Automatic
sorting system based on computer and optical character recognition are used to provide efficient
customer service.

Federal owns and operates more than 175 aircraft [transformation]. The company also
operates more than 17,000 computer- and radio- dispatched vans that pick up and deliver
shipments. These aircraft and vehicles are important subsystems of the company’s air-ground
transportation system. The company’s aircraft operate in a hub-and-spoke pattern, with Memphis
as the hub. Each weekday evening aircraft carry packages [inputs] for delivery from cities
throughout the United States to Memphis, where they are sorted [transformation] between
midnight and 2:00 a.m. and reloaded onto aircraft. They are then flown to cities by early morning,
and delivered to customers [outputs] by the company’s couriers by 10:30 a.m.

Global Management Challenge

Daimler-Benz Automaker!
Conglomerate?

Many companies choose to stick with what they know. Daimler-Benz, the extraordinarily
successful German automaker, has historically found “sticking to the knitting” quite to its liking.
But, uncharacteristically, in 1985 it chose to diversify significantly. It acquired three firms --
Dornier (aerospace), MTU (engine manufacturing), and AEG (diversified consumer products) --
which added substantially to the company’s revenues but virtually nothing to its bottom line.
These companies al had a strong technological base, and the company’s chairman, Werner
Breitschwerdt, felt compelled to bring that technology to Germany’s second largest corporation.
Breitschwerdt believed that this market’s consumers will demand ever more sophisticated
automobiles, the kind that only technological supremacy can deliver. He felt that cars had to be
intelligent, be able to “see” through fog and be able to “talk” to each other. He also felt that
increased levels of competition in Daimler-Benz’s luxury auto markets dictated diversification.

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He also believed that the new subsidiaries will provide ways for getting the costs of auto
production down, to better enable the company t prosper in the future.

Note how similar Daimler-Benz’s strategies are to those of General Motors. Did Werner
Breitschwerdt make the right decisions? Should he have gone against the company’s history?
Only time will tell.

2.6. Information for Management System Analysis

The general system theory allows for the use of information from many specialized
discipline. Information from any discipline can increase the understanding of management
systems operations and thereby enhance the success of the system.

Certo prefers the system approach which uses three sources of information to analyze the
management system --

1. the classical approach to management,

2. the behavioral approach, and the
3. management science approach

2.7. Other Concepts from Systems Theory

Aside from Open System versus Closed System, the other concepts from systems theory
are:

1. Efficiency -- the ratio of outputs to inputs.

2. Effectiveness -- the degree to which the organization’s outputs

correspond to the needs and wants of the external
environment.

3. Equifinality -- there are many avenues to the same outcome. Systems

theory suggests that many different combinations of
subsystems, ideas, and methods can lead to the same
goal.

This is in contrast with the one best way “concept of scientific management”.

4. Synergy -- the whole is greater than the sum of its parts.

For example: 3M has applied its core technology of adhesives to many products -- from
industrial sealers to Post-it TM notes. 3M did not have to start from scratch for each product: its
adhesive expertise provide synergies across products.

Systems Theory

Key Concepts

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* Organization is viewed as an open system
* Management must interact with its environment to gather inputs and return the outputs of
its production.
* Organizational objectives must encompass both efficiency and effectiveness
* Organizations contain a series of subsystems.
* There are many avenues to the same outcome
* Synergies exist where the whole is greater than its parts.

Contributions

* Recognized the importance of the organization’s relationship wit the external environment
* Systems analysis is helping computer experts develop hardware as well as software with
human-like intelligence; capable of processing languages and reasoning.
* Major impact on manufacturing through the use of computer-aided design (CAD) and
computer-aided manufacturing (CAM)

Limitations

* Does not provide specific guidance on the functions and duties of managers.
* Still have to develop techniques to effectively deal with the human aspects of management
because systems analysis has been used primarily in the management of production
processes and in the technical planning and decision-making areas of management

3. Contingency Approach

Contingency Management is an approach to management that suggests leadership

behavior should be adapted to accommodate different situations, or alternatively, leaders should
be assigned to situations that best fit their leadership styles.

Rather than suggest “the best one way” to manage, contingency approach implies that
there are many effective ways to behave as managers, each depending on circumstances of the
work environment.

Research showed that management methods used in one circumstance seldom work the
same way in other circumstances.”

In simple terms, contingency approach suggests that what managers do in practice

depends on, or is contingent on, a given set of circumstances -- a situation. In essence, this
approach stresses the “if-then” relationships. “If” this situational variable exists, “then” this is the
action a manager probably would take.

In general, the contingency approach attempts to outline the conditions or situations in

which the various management methods have the best chance to succeed. This approach is based
on the premise that although there is probably no one best way to solve a management problem
in all organizations, there probably is one best way to solve any given management problem
in any one organization.

Perhaps the main challengers of using the contingency approach are:

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 1. Accurately perceiving organizational situations as they actually exist.
2. Choosing the management tactics best suited to those situations.
3. Competently implementing those tactics.

The general consensus of contingency writers is that if managers are to apply

management concepts, principles and techniques successfully, they must consider the realities of
the specific organizational circumstances they face. ”These include factors internal and external
to the organization.

The contingency theory is a problem-solving approach. It dictates that managers should

consider the major elements in a situation before making a decision, determining what
management style to use, determining how to structure an organization, or determining a plan or a
budget.

As one manager puts it the contingency viewpoint really means “it all depends.”

It means different situations require different practices and allows the use of the other
viewpoints or approaches separately or in combination to deal with various problems.

Applying the contingency approach requires the development of conceptual skills.

Managers must be able to diagnose and understand a given situation thoroughly -- to determine
which approach is most likely to be successful -- before making a decision.

The manager’s interpersonal and communications skills are essential for actually
implementing the decision.”

Hellriegel and Slocum identify three key contingencies variables -- people, environment,
and technology.

3.1. Management Challenge

Procter & Gamble Alters
Historically Ingrained
Management Practices

Procter & Gamble had a rich, historically founded organizational culture. There was the
P&G way, and that was it. Well, that was it. Now there is the new P&G way. P&G, and more
importantly its employees, lived by the rules. Among them was the one that said that brand
managers have offices that are exactly 12 ceiling tiles by 12 ceiling tiles. Walls were move to
make certain that offices were the right size. When P&G built its new headquarters building, it
did away with ceiling tiles, just one signal among many that the culture was changing. P&G
discovered in the early 1980s that its traditional way of proceeding, its long-established
discipline, and its rules were impeding the company in its market situations.

So it changed the rules. The company that did not lay off a single worker in the
Depression has asked the employees to retire early and has even laid off some. It has been
adamant about cutting costs. It cut the work force by 4 percent overall in a matter of months by
requesting early retirement, by reduced hiring, and by firing people. Perhaps of most symbolic
importance, the traditional one-page memo, which could spell success or failure for the new
manager, is declining in importance. These one-page memos were used for almost everything, but
especially to move ideas upward for a decision. P&G became a bureaucracy in the worst sense of

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the word. When it came to choose the color of the cap for a Folger’s coffee can, the options were
green or gold. The decision went all the way to CEO John Smale. He chose gold. Now there are
even interdivisional projects teams making decisions about issues that once were made secretly
by only those with the primary responsibility for the product or project. The company has added a
new “super” brand manager, the category manager, taking power from the traditionally focal
brand manager. Finally, CEO John Smale, having overseen years of gut-wrenching change, in
late 1989, turned over the reins to Edwin Artzt. This move signaled a new global focus for P&G.
Artzt was responsible for turning around fortunes of the firm’s international division, and
promises to make the company more global.

History is what you make of it.

3.2. Common Contingencies

Many organizations share key situational characteristics or contingencies that can be

grouped together:

Growth markets
Uncertain environments
Corporate strategies
The rate of change and degree of complexity in the organization’s external
environment.
The internal strengths and weaknesses of the organization
The values, goals, skills, and attitudes of managers and workers in the
organization
The types of tasks, resources, and technologies the organization uses.

Depending on those contingencies, a manager may categorize the situation and use the
proper competitive strategy, organization structure, or management process for the circumstances.

The relative importance of each contingency variables depends on managerial problem

being considered.

3.3. Trends in Contingency Approach

Fred E. Fiedler undertook the first major research on contingency theory in 1967 in
connection with his studies on style of leadership that a manager should use in a given situation.
Leadership styles were characterized as either production-oriented or people-oriented. Fielder
found that managers exhibit varying degrees of concern for production and for people.

Paul Hersey and Kenneth H. Blanchard, management researchers and authors,

identified different factors on which a manager’s leadership style depends. They believe that the
maturity level of subordinate work group is the key factor. Therefore, leadership style should
change depending on whether subordinates have low, medium, or high levels of maturity.

In this context, maturity means a combination of job skills and psychological maturity.

Spurred by research in leadership, contingency theory followed strategic planning,

personnel, and marketing.

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 In the 1970’s, virtually all management functions became contingent on the elements of a
situation.

Examples of various contingency models:

In strategic planning, recommended actions are often based on the particular

stage of the product or industry life cycle.
The design of the organization structure must match growth, size, environment,
technological conditions, the requirements of strategy and the philosophy/vision
of top management.
In choosing leadership style, managers should first determine the condition of
several key factors, such as personality, dynamics of subordinate’s work group,
nature of subordinates job organizational structure and culture, etc.
In controlling performance, the manager must recognize the who, what, when,
where, how, and why of the situation

Contingency Approach

Key Concepts

* Situational contingencies influence the strategies, structures, and processes that result in
high performance.
* There is no more than one way to reach a goal.
* Managers may adapt their organizations to the situation

Contributions

* Identified major contingencies

* Argued against universal application of principles of management.

Limitations

* Not all critical contingencies have been identified

* Theory may not be applicable to all managerial issues
* Cannot apply where quantity or number of combinations of variables are supernumerary.

4. Situational Management

While true contingency theory would attempt to define the factors and prescribe behavior
for a specified set of these factors and their conditions, this becomes virtually impossible when
the number of ht potential combination of variables in any given situation is considered.

Charles Hofer, researcher of management strategy, for example, has determined hat some
186,000,000 combinations of the 50+ key strategic planning variables exist.

Hence, contingency theory for most managers has evolved into situational management.

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 Situational management suggests that managers should consider the major elements or
variables in a situation before making a decision, and then determine what action to take based on
past experience and knowledge.

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Checkpoints

1. What are the key concepts and contributions of:

1. Quantitative/Management Science approach?

2. Systems approach
3. Contingency approach
4. Situational approach

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 Part Three

MODULE 7

Planning Concepts and Practices

Expectations:

After reading this module, the student is expected:

1. To familiar with the concept, nature, and process of, and approaches to, planning.
2. To be knowledgeable with the hierarchy, types, and characteristics of objectives
3. To know planning hierarchy and planning time horizon and the corresponding
levels of management.
4. To learn about the planning types and models.
5. To know the different kinds of plans.

Developing Creative Thinking

Embracing New Ideas

People – and – organization – form habits of thinking just they form other habits. Many
organizations that reject new thinking outright do so because they view change as risk. There are,
however, ways to defeat this negativity and encourage an acceptance of the new. For example, in
any type of ideas meeting, forbid the use of the response “yes, but …” – a classic idea-killer –
until a predetermined number of new ideas have been explores and discussed.

Thinking Positively

If your are by nature, your are not very likely to think adventurously, but if you are
highly creative, you may be impatient with skeptics who see only the objections in a discussion.
Do not allow colleagues to get locked into these or any other mind-sets that prevent them from
listening to other points of view with an open mind. If you think that a debate is becoming too
negative, say so and ask everybody to try and make positive, creative contribution. This will help
you avoid sterile debates in which everyone defends their own fixed position and attacks all
other.

Always encourage new, unexplored ways of thinking.

If using a multistage approach, work through the stages one at a time.

Deciding on Action

The object of generating new ideas is to find the best one and act on it. Expert Mark
Brown uses a five-stage model (given the acronym AGISA) for the group thinking process. It
starts with Analysis, in which you seek to uncover the issues affecting the decision. That enables

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you to set Goals – either “opportunities” (code White) or “problems” “conventional, midly
original” (Soft Blue

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