Theories of Management

Introduction
The management thought as theory in the currency economic situation can best
be understood in the light of its historical growth particularly since 1900. Management
science develops a theory base from many disciplines such as business, psychology,
sociology and anthropology.

Evolution of management theories:

During the last 100 years, management has become a more scientific discipline
with certain standardized principles and practices. The evolution of management
thought during this period can be studied in three parts as under:
1) The classical theory of management comprising three streams
i) Scientific management
ii) Bureaucracy
iii) Process management theory/ Administrative management theory
This is also known as structural theory of management.

Structural theory

Scientific management Bureaucracy Administrative management

(F.W. Jaylor) (Maxlveber) (Henrifayal)

2) The Neo-classical theory:- Covered two streams dealing with human factor
i) Human relations and
ii) Behavioural sciences approach
iii) Mc Gregor – Theory X and Theory Y

3) Modern management theories again comprised three stream of thought.

i) Technical and quantitative sciences offering quantitative decision making
through operations research and with the help of computes and
information system.
ii) Systems approach to organization and management and
iii) Contingency approach to organization and management.

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1. The Classical Theory of Management
i) Scientific management (F.W. Taylor 1856-1915)
Scientific management was championed by F.W. Taylor (1856-1915) who
eventually became acclaimed as “The father of Scientific Management”. The basic
theme of Tylor was that managers should study work scientifically in order to identify
‘one best way’ to get job done. During his career spanning a period of 26 years, he
conducted a series of experiments in three companies, Midvale steel, Simonds rolling
machine, Bethlehem steel, while serving for Midvale steel company Taylor made
several important contribution which is classified under scientific management.
Objectives of scientific management
The following are the objectives of scientific management
a) To make provision fro the use of knowledge and skill of production.
b) To standardize materials and working conditions so as to rise the level of
production
c) To reduce the possibility of slackness in production accidents.
d) To help in proper guidance and leadership, regular and adequate direction on
proper lines, and fruitful co-operation.
e) To conduct surveys and organize researchers so as to make the management a
living and result yielding science.
f) To help the labour in overcoming his difficulties and solve their organizational as
well as domestic problems in a manner in which he feels satisfied and prepares
himself for hard and selfless but rewarding work.
g) To help all round mental, physical and technical development of the workers.
h) To help increase in the levels of wage, profit and consumers service of the
highest degree.
i) To effect new and scientific technique in production.
Elements of Scientific management:
The important elements of scientific management are as follows.
a) Scientific Task – setting – Scientific management determines the task for every
worker through careful scientific investigation. The standard task is the quality of
work which an average worker working under ideal standardized conditions will
be able to do in a day.
b) Planning – Planning as Taylor says “Is the heart of scientific management”, this
planning was concerned with four things; what work has to be done, how it is to

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 be done, where the work shall be done, when it will be done. In planning
department four persons were to work;
- Programme clerk
- Instruction clerk
- Time and cost clerk and
- A disciplinarian
c) Working study: - It may define as the systematic, objective and critical
examination of all the factors governing the operational efficiency of any specific
activity.
d) Scientific selection and training of workers: - Taylor stressed on the
systematization of selection according to the nature of requirement of job.
Having selected the workers the management will assign tasks to hem. Every
job must be entrusted to the best available man in the factory. The scientific
management requires the prior training of workers before allotting them certain
task in the plant.
e) Standardization: - Taylor suggested the standardization of not only production
but tools. Equipments and of working conditions also, he insisted upon the use
and store of standard tools and equipments in order to get the best production.
f) Differential piece-rate system of wages: - Taylor believes that financial incentive
is the most appropriate incentive because man works for money. To ensure the
efficient and speed of works he suggested the system of differential piece-rate
wages. It was believed that each worker will try to raise his efficiency in order to
get the wages of higher rates.
g) Functional organization and functional foremanship: - Under this scheme four
foremen will look after the planning work and other four will supervise the work in
the shop. Taylor contemplated eight functional foremanship. The following chart
will illustrate.
h) Mental Revolution: - This involves the change of attitude on both sides. Taylor
has written that knowledge must be accepted by both the parties without any
reservation on their part.
Taylor has suggested that “The success of scientific management rests primarily
on a fundamental charge in the attitude of management and workers both, also their
duty to co-operative in producing the largest possible surplus and as to the necessity of
substituting exact scientific knowledge for opinions.

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 Works Manager

Asst. Work Manager Asst. Work Manger

(Planning) (Production)

The route The The Time The shop The Gang The speed The Repair The
clerk instruction and Cost disciplinarian Bose Boss Boss inspector
Clerk Clerk

WORKERS

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 Critics of scientific management
Scientific management is severely criticized under the following grounds:
 Taylor belief that economic incentives are strong enough to motivate
workers for increased production proved wrong. No men his entirely an
“economic men”, that is a men’s behavior is not always dictated by his
financial needs. He has many other needs also such as security, social
needs, which motivate him far more potentially than his desire for money,
at least after he has risen above the starvation level
 Taylors time and motion study is not accepted as entirely scientific this is
because two times study is done by two separate individuals may time the
same job entirely differently. There is no such things as “ one best way”
so far as the component motions are concerned, because no two
individuals can be expected to work in the asame way at the same
rhythm, with the same attention and same learning speed
 Suppression planning and doing and the greater specialization inherent in
the system tended to reduce the need for skill and produce greater
monotony of work. Having a men take orders from seven to eight differen
boses resulted in confusion, besides increasing the overhead cost
 Advances in methods and better toolls and machines eliminated some
workers, who found it difficult to get other jobs. This caused resentment
among them.
ii) Bureaucracy (Max Weber – 1864-1920)
The first pillar in the classical organization and management theory was
systematically provided by Maxweber (1864-1920) a German sociologist. He is also
known as “father of bureaucracy”. His primary contribution to management is his theory
of authority structure and his description of organization based on the nature of
authority relations with in them.
Essential elements of bureaucracy
The elements of bureaucracy are vital parts of modern business governmental
educational and other complex organizations. The elements are:
a) Hierarchy of Authority: - It involves superior-sub-ordinate relationship and chain
of command.
b) Division of work: - Clear cut division of work based on competence and
functional specialization.

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 c) A system of rules, regulations and procedures a bureaucracy seeks rationality,
routine, objectivity and consistency for his organization.
d) Impersonality of interpersonal (or) mutual relations. Interpersonal relations are
based on positions and not on personalities.
e) Standardization of methods: - A system of work procedure involving
standardization of methods.
f) Selection and promotion of employees: - Selection and promotion of employees
based upon managerial and technical competence.
g) Only legal power and authority: - Authority and power rest in the office.
Bureaucracy recognizes only legal power and authority given to each office (or)
position in the organization.

Basic characteristics of bureaucratic organization

a) A division of labour by functional specialization.
b) A well defined hierarchy of authority
c) A system of procedure for dealing with work situations
d) A system of rules covering the duties and rights of employment.
e) Impersonal relations between people
f) Selection and promotion based upon technical competence and excellence.

Critics of Bureaucracy
During the past few years, bureaucracy has come in far a lot of criticism. The
important dysfunctional consequences of bureaucracy are as follows:-
a) Overconformity of rules: - In a bureaucracy organization employees observe
“stick to the rule” policy because they fear being penalized for the violations of
these rules. Therefore they follow only the letter of the law without going into its
spirit.
b) Buck passing: - In bureaucracy organization the employee’s initiative is stifled. In
situation where there are no rules employees are afraid to take decision
independently because they may be punished for wrong decision. Therefore they
either shift decision to other or postpone them.
c) Categorization of queries: - On receiving a every from outside the employees job
is simply to determine it’s category and tick the reply applicable to that category.
d) No real right of appeal : - The clients of this organization generally feel
dissatisfied because they have no real right to appeal.

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 e) Neglect of informal groups: - This organization often ignores the existence of
informal groups which usually carry out a big chunk of any organizational work.
f) Rigid structure: - Precise description of roles and overconformity to rules make
bureaucratic structure rigid. Though they work well in stable environment, do not
cop well with today’s changing environment.
g) Inability to satisfy the needs of mature individual : - A mature Individual wants
independence, initiative, self control, opportunity to use all his skills and
information to plan his future but the hierarchy and control features of an
bureaucratic organization work against these needs.

iii) Process Management Theory / Administrative management theory

– (H. Fayol 1841-1925), and others around 1910)
Henri Fayol was born at Constantinople in France in 1841. He was a mining
engineer. His whole life was spent in a single institution unlike great Taylor who worked
with some eight different companies. Fayol retired from his working life as a general
manager in 1918 and then worked as director of the same company till his death in
1925.
He worked from the top on the industrial hierarchy downwards and tried to give
scientific shape to the experience he gained in the highest control of a large scale
undertaking.

Management qualities and Training:

Fayol has enumerated certain managerial qualities. According to him every
manager should possess the qualities enumerated by him for better performance and
good results. He has divided the qualities into the following four major categories.
a) Physical qualities
b) Mental qualities
c) Moral qualities
d) General knowledge and experience.
a) Physical qualities
A manger as per the enumeration of Fayol, should possess the following
physical qualities.
- A good physique
- A sound health
- Smart, active and energetic

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 - Good external personality
b) Mental qualities
A manger should have the following mental qualities in him
- Must be intelligent
- Must be wise and
- Quick
Mental qualities make the manager assertive and extracting work without
hurting the feelings of his workers. He quickly wins over his subordinates as well
as his opponents. He proves a better leader and command respects both from
his subordinates as well as from his colleagues.
c) Moral Qualities
A manager should possess the following moral qualities in him. They are
- Initiative
- Honest
- Man of determination
- Responsible
- Worker of integrity
These qualities bring the manager respect and his decisions and easy
acceptability.
d) General knowledge and experience
An experienced manager having rich general knowledge is an asset to
any organization. A manager should know all about his organization and the
enterprise. This ensures better co-ordination and smooth running of the
enterprise.
Henri Fayol was not satisfied with what he described as managerial
qualities. Training for the acquisition of these qualities, for Fayols is a necessity.
Key for success in managerial job is training and experience in this respect,
Fayol is considered not only the father of management but also was responsible
for the introduction of training as an important concept in modern management
theory and practice.

Critics of the administrative

Fayol’s principles of specialization produce the follows dysfunctional consequences
 Each individual in small work group does not come to know how his job fits into
the entire picture.

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  It results in dissatisfaction of the workers because it does not provide them the
opportunity to use all their capabilities.
 It result in an increase in the overhead goal
 This principles are often stated as unconditional statements of what ought to be
done in all circumstances when what is needed out conditional principles of
management. This principles result in formulation of mechanistic organization
structure which are insensitive to employee’s social and psychological needs.
 His principles are not based on assumption that organizations are close system.
Organizations are open system. Hence the rigid structures which these
principles tend to made do not work well under unstable conditions.

2. Neo-Classical Theory
Neo-Classical theory is called human relations and behavioral science approach.
It is built on the base of classical theory. It modified improved and extended the
classical theory. The Neo-classical theory has been divided under three heads.
a) Human relations perspective
b) Behavioral science perspective
c) Mc Gregor – Theory X and Theory Y

a) Human relations perspective (Mayo 1880-1949)

The Hawthorne studies, though criticized for poor research methods, stimulated
considerable interest in human problems on the job. The study investigated the effects
of changes illumination on productivity. The researchers general conclusion was that
non-logical behaviour among the workers must be considered along with economic and
logical factors as influencing the workgroup. It can emphasized that the Hawthrone
studies revealed the importance of social and psychological factors in determining
workers productivity and satisfaction.

Critics of human relations movement

 It is a swing in the opposite direction and is as much incomplete as the scientific
management and administrative management approaches
 The implicit belief of this approach that an organization can be turned into one
big happy family were it is always possible to find a solution which satisfies

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 everybody is not correct. Now amount of “human relations” can sugar coat reality
indefinitely. Management can only put off its decision for sometime.
 This approach overemphasizes the importance of symbolic rewards and
underplays the rule of material rewards.
 This approach provides an unrealistic picture about informal groups by
describing them as a major source of satisfactions for industrial workers.
 Many organizational researcher have shown that the workers don not come to
the factory to seek affection and affiliation and that the forming of informal group
among them is not very common.
 This approach is infect production oriented and not employee oriented.
 The leisurely process of decision making of this approach can’t work during an
emergency.
 This approach makes an unrealistic demand on the superior.
 This approach is based on a wrong assumption that satisfied workers are more
productive workers.

b) Behavioral science perspective

Abraham Maslow initiated the human behavioral school in 1943 with his
development of a hierarchy of needs theory. He outlined a hierarchical structure for
human needs into five (1. Physiological, 2. Safely, 3. Love, 3. Self - esteem and 5.
Self – actualization) needs are more complex. Sample people may get recognition for
the quantity of work, others may get more attention through negative behaviour such as
inferior work and tardiness. Although most of us eat if we are hungry, some people fast
to achieve higher – level needs. Maslow’s work embarked the beginning of behavioral
science. Much subsequent work has been based on his theory.

c) Mc Gregor – Theory X and Theory Y

Douglas Mc Gregor developed the managerial implications of Maslow’s theory.
He put forward two managerial styles Viz:
- Theory X :- Representing classical views of management and organization
- Theory Y :- Representing Neo-Classical (or) Modern views of management and
organization.
According to Theory X most people want to be directed and to avoid
responsibility because they have little ambition. Managers who accept the assumptions
of Theory X will do the thinking, and planning with little input from staff associates. They

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will delegate little, supervise closely and motivate workers through fear and threats,
failing to make use of their potentials.
In Theory Y, emphasis is on the goal of the individual. It is the manager’s
assumption that people do not inherently dislike work and that work can be a source of
satisfaction. Theory Y managers assume that workers have self - direction and self 0
control necessary for meeting their objectives and will respond to rewards for the
accomplishment of those goals. Managers who believe the assumptions of Theory Y
will allow participation. They will delegate, give general rather than close supervision,
support job enlargement and use positive incentives such as praise and reorganization.
Mc. Gregor believes that both approaches are ineffective and recommends that
the work situation be structured so that workers can meet their personal goals while
working toward the goals of the organization.

Elements of Neo-classical Theory

There are three elements of neo-classical theory.
- The Individual
- Work Groups
- Participative management

- The individual
The Neo-classical theory emphasized that individual differences must be
recognized. An individual has feelings, emotions perception and attitudes he has ever
changing psychology. Each individual has certain meaning of his job, his supervision,
working condition, has group etc. Thus inter-personal relations at work determine the
rise (or) fall in productivity.
- Work Groups of Informal organizations
Workers are not isolated, they are social beings and should be treated as such,
by management. They existence of informal organization is natural, it cannot be denied.
Management must recognize its importance and it must be integrated with formal
organization.
- Participative management
Allowing labour to participate in decision-making primarily to increase
productivity was a new form of supervision. Modern management now welcomes
workers participation in planning fob contents and fob operations.

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 Behavioral scientists have clearly pointed out that job conditions and the fob
itself are the motivators that can satisfy the needs of both employees and the
organization.

3. Modern Management Theories

Modern management theories indicate extension and synthesis of the Classical
and Neo-classical approaches to management.

a) Quantitative approach to management

Quantitative approach to management developed after 1950 and it offers
systematic analysis and the solutions to many complex problems faced by
management in this world. The quantitative approach uses a mathematical approach
for finding solutions to the problems that were previously unsolved.

b) Systems approach to management

The systems approach to management and organization is a new stream of
management thought under modern theory of management. The systems theory looks
at the organization as a whole examining all relevant organizational variables
simultaneously.
The word system is derived from Greek word meaning “To bring together (or) to
combine”. A system is “An established arrangement of components which leads to the
accomplishment of particulars objectives as per plan”.
This definition has three important parts
- Every system is goal: - Oriented and it must have a purpose (or) objective to be
attained. The objective provides the basis for evaluate functions performed
within the system.
- In designing the system we must establish the necessary arrangement of
components. This is nothing but organizing function of management.
- Inputs of information, material and energy are allocated for processing as per
plan, so that the outputs can achieve the objective of the system.

Plans Inputs Process Outputs

1. Objec 1. Informa 1. Convers 1. Informa
tives tion ion of Inputs tion Energy
2. Polici 2. Energy into outputs 2. Materia
es 3. Materia Men- ls
3. Proce ls (or) Goods Machine
dures System
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The design of basic system
There are 3 basis inputs that enter the processor of the system viz. information,
energy, and materials to be transformed into goods. If the output is service, materials
are not included in the inputs. The system in inside the boundary the environment is
outside the boundary. The father of the general systems theory is considered to be
Ludwig Von Bertalanffy who propagated the idea via his publication “General systems
theory” in 1969. According to him – “In order to understand an organized whole we
must know the parts as well as the relations between them.

Classification of kinds of systems

There are two types of systems –
- A closed system
- An open system

- A closed system: - A system is a set of interacting elements without any interaction

with the outside environment. Ex. – a battery operated digital watch can be
considered as a relatively closed system because once the battery is inserted in ti, it
does not require any element fro outside to operate.

- An open system – On the other hand, open system is the one that is dependent on
the outside environment for survival.
All organizational systems are open systems, as they always depend on the
outside environment for feed back and resources and for disposal of the finished
product. All organizations transform inputs from outputs.
The basic foundation of the system theory is that a manager cannot emphasis
only one aspect of the organizational management while ignoring other aspects,
whether internal (or) parts of the outside environment.
Systems theory is important to management because it provides a world-view
more consistent with the reality of organizational life. As it is oriented towards the
accomplishment of the objectives, systems theory helps to generate co-ordinater
efforts towards accomplishing goals.

c) Contingency approach to management

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 Contingency approach to management enables us to evolve practical answers to
the problems demanding solutions. Organization design and managerial actions most
appropriate to specific situations will have to be adopted in order to achieve best
possible result under the given situation.
In this approach to management, the environment serves as an independent
variable and the management variables i.e., process, quantitative, behavioural and
system tools are dependent. Every manger has to apply the various approaches to
management according to the demands of the situation. The contingency approach
seems to hold a great deal of promise for the future development of management
theory and practice.
There are three major parts of the overall conceptual framework for contingency
management – 1. Environment, 2. Management concepts, principles and techniques
and 3. Contingent relationship between the first two.

Summary:-
Theory and practice are inseparable and mutually reinforcing. Our managers are
ignoring the former at their own peril. So long we do not have Indian managers
articulating their managerial expressions into theory management techniques cannot be
modified.

Bibliography:-
 Sharma P. (2000), “Management Thought and Thinkers”, 1 st ed., Research
publications, New Delhi, India, Pp. – 147, 243.
 Prasad M., (2003), “Management Concepts and practices”, 3 rd ed., Himalaya
publishing house, Bangalore, India, Pp. – 63-90.
 Tomey A., (1996), “Guide to Nursing Management and Leadership”, Mosby
publishers, U.S.A., Pp. – 283-87

Importance of theories in management

 Management theories used to build organizations and guide them toward their
goals and are grounded in reality.
 A theory is a conceptual framework for organizing knowledge
 It provides blueprint for action
 It helps in planning, organizing, staffing, directing and controlling of the
organization

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 It helps in scientific validation
 It is useful to nursing leaders in creating their own management style.

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