Evolution of Management Thought

Development Of Major Management Theories

Management Theories

Historical
Scientific General Quantitative Organizational
Background
Management Administrative Approach Behavior
Theorists

Early Examples Early Advocates

of Management

Hawthorne Studies
Adam Smith

Industrial
Revolution
 The Pre-modern Era

 Ancient massive construction projects

 Egyptianpyramids
 Great Wall of China
 Michelangelo the manager
 Adam Smith’s Contribution To
The Field Of Management
• Wrote the Wealth of Nations (1776)
– Advocated the economic advantages that
organizations and society would reap
from the division of labor:
• Increased productivity by increasing each
worker’s skill and dexterity.
• Time saved that is commonly lost in
changing tasks.
• The creation of labor-saving inventions and
machinery.
 The Industrial Revolution’s
Influence On Management Practices
• Industrial revolution
– Machine power began to substitute for human
power
• Lead to mass production of economical goods
– Improved and less costly transportation
systems became available
• Created larger markets for goods.
– Larger organizations developed to serve larger
markets
• Created the need for formalized management
practices.
 Classical Contributions
• Classical approach
– The term used to describe the hypotheses of
the scientific management theorists and the
general administrative theorists.
• Scientific management theorists:
– Focuses on the productivity of the individual
worker
– Fredrick W. Taylor, Frank and Lillian Gilbreth,
and Henry Gantt
• General administrative theorists
– Focuses on the functions of management
– Henri Fayol and Max Weber
 Evolution Of Management
Thought

Classical Approaches Contemporary Approaches

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

Systematic Administrative Quantitative Systems Contingency Current and

management management management theory theory future revolutions

Scientific Human Organizational

management relations behavior

Bureaucracy
 Classical Perspective

Scientific Administrative Bureaucratic

Management Management Management

Focuses on the Focuses on the Focuses on the

productivity of functions of overall
the individual management organizational
worker system
SCIENTIFIC MANAGEMENT
• Frederick W. Taylor – early 20th century
• Methods engineering/ time and motion
studies
• Basic observations
– Great loss through inefficiencies
– Remedy in systematic management
– Best management is a true science
– Standardization of job performance and
uniformity of behavior
– Impersonalization and replaceability of
workers is key to efficiency
– Motivation through monetary incentive
systems
 SCIENTIFIC MANAGEMENT
• STUDIES AT BETHLEHEM IRON
WORKS IN 1898 REPORTED BY
TAYLOR
• Picked Schmidt (Nolls) as his subject
• Trotted to and from work (over a mile)
• Had reputation of being “close with a dollar”
• Increased from 12 ½ to 47 tons
• Pay increased from $1.15 to $1.85
• Earlier studies had failed because of social
influences
 Scientific Management (SM)
Frederick W. Taylor (1856-1915) : Father of
SM - 4 principles:
1. Develop a scientific approach for each one’s
work.
2. The right person has the right job thru selecting,
training, teaching, and developing each worker.
3. Cooperate with others to ensure that the
objectives are met.
4. Ensure an equal division of work and
responsibility between managers and workers.
Still Useful:
At a KFC Franchise lowered profits
determined to be due to drop-off in drive-
through business
Found to be slower than other drive-throughs
Reduced movements and distance covered by
employees filling drive-through orders
 Steps in Scientific Management

1 2 3 4

Develop a science Scientifically select Supervise employees Continue to plan

for each element of employees and then to make sure they the work, but use

the job to replace old train them to do the job follow the prescribed workers to get the

rule-of-thumb methods as described in step 1 methods for performing work done

their jobs
 Scientific Management
Key concepts:
- Used scientific methods to determine
the “one best way’
- 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 the workplace

-Piece rate system equated worker rewards and

performance
Limitations:

-Simplistic motivational assumptions

-Workers viewed as parts of a machine

-Potential for exploitation of labor

-Excluded senior management tasks

 ADMINISTRATIVE
MANAGEMENT
Henry Fayol

Analyzed organization from top down

Contrasted with Taylor who analyzed the

organization from the bottom  up
 ADMINISTRATIVE
MANAGEMENT
Henri Fayol
• Made a clear distinction between
technical and managerial skill
• Activities of the manager
– Planning, Organizing
– Commanding, Coordinating, Controlling.
• Developed Principles of Management -
Flexible not absolute
Henri Fayol’s Original 14 Principles
• Division of labor
• Authority
• Discipline
• Unity of command
• Unity of direction
• Subordination of individual interest for
common good
• Remuneration
Henri Fayol’s Original 14 Principles
cont……
• Centralization
• Scalar chain
• Order
• Equity
• Stability and tenure of staff
• Initiative
• Esprit de corps
 CONTRIBUTIONS OF
ADMINSTRATIVE MANAGEMENT:
• Clarified what managers do
(plan - organize - direct/ lead - control)
• Provided guidance to practicing managers
(principles of management useful)
• Emphasized authority and responsibility in
organized relationships (reduces ambiguity)
• Emphasized efficiency in organizational
activities (works well with Sci. Mgmt.)
 LIMITATIONS OF
ADMINSTRATIVE MANAGEMENT:
• Principles were often mere truism based
on incomplete assumptions (no research)
• Principles were often vague and
contradictory
• Like scientific management, tended to
believe in “one best way” to manage
• Overemphasized authority and structure
in the road to efficiency
 Classical vs. Behavioral
Perspective
Classical Perspective Behavioral Perspective

Focused on rational Acknowledged the

behavior vs. importance of
human behavior
 Sociological and Psychological
Approaches to Management

 Simulation of industrial psychology and

social theory by scientific management
movement.
 The emergence of industrial psychology,
the growth of personnel management, the
development of sociological approach to
human relations and management, and
Chester Barnard‟s social systems approach.
 The Emergence of Industrial Psychology

 Hugo Munsterberg- the father of industrial

psychology.
 Joined Harvard in 1892 as incharge of
psychological laboratory and professor of
experimental psychology.
 1910-Book Psychology and
entitled
Industrial Efficiency.
 Objectives:
-Mental qualities and work fit
-Psychological conditions for efficient
work.
-Influence of business on workers for
best possible result.
 Lillian Gilbreth

 Psychology of Management, 1914

 To apply psychological concepts to the

practice of scientific management.
 Development of the Sociological
Approach to Management

 “Social man” approach to

management
 Max Weber, Emile
Durkheim and Vilfredo
Pareto generally regarded
as “Fathers of organization
theory and social systems
theory”.
 Max Weber

 Hierarchy, authority, and

bureaucracy lie at the
foundation of all social
organization
 Emile Durkheim: Groups by
establishing their values and
norms, control human conduct
in any social organization.

 Vilfredo Pareto: society as an

intricate cluster of
interdependent units, or
elements i.e. social systems with
many subsystems.
 THE HAWTHORNE
STUDIES
 A series of studies done during the 1920s and
1930s that provided new insights into group
norms and behaviors
 Hawthorne effect
 Social norms or standards of the group are the key
determinants of individual work behavior.
 Changed the prevalent view of the time that
people were no different than machines.
 THE HAWTHORNE
STUDIES

 Elton Mayo, F. J.
Roethlisberger and others
 Hawthorne Plant of Western Electric
Company between 1927 and 1932.
 National Research Council in
collaboration with Western Electric.
 Were about to declare whole experiment
as failure.
 THE HAWTHORNE
STUDIES

 Changing illumination, modifying test group,

etc. didn‟t explain changes in productivity.
 “Sense of belongingness” and Effective
management.

 Hawthorne effect.
 Human factors.
 SOCIAL SYSTEMS THEORY

 Chester Barnard, The Functions

of the Executive, 1938
 Barnard looked for major tasks in the

system where executives operate.

 To maintain a system of cooperative
effort in a formal organization.
RECENT CONTRIBUTIONS TO
MANAGEMENT THOUGHT

 The empirical approaches,

 Inter-person behaviour approach,
 Group behaviour approach,
 Decision theory approach, and
 Contingency or structural approach.
 Empirical or Case Approach

CHARACTERISTICS/ CONTRIBUTIONS

 Studies experience through cases

 Identifies success and failure

 Case situation

Failure Success

Why?

Empirical or Case Approach

 LIMITATIONS

 All situations are different

 No attempt to identify principles

 Limited value for developing management

theory
 INTERPERSONAL BEHAVIOUR
APPROACH

 Focus on interpersonal behaviour, human

relations, leadership, and motivation.

 Based on individual psychology

 Focus of the study

INTERPERSONAL BEHAVIOUR
APPROACH
 LIMITATIONS

 Ignores planning, organizing and controlling

 Psychological training is not enough to

become an effective manager.

 Group Behaviour
Approach
 Emphasis on behavior of people in
groups.
 Based on sociology and social
psychology.
 Primarily study in group behaviour
patterns.
 The study of large groups is called
„organization behaviour‟.
Study of a group Study of groups interacting
with each other

Group Behaviour Approach

 Limitations
 Too broad a field for the study of
management.

 Overlooks many managerial

concepts, principles and
techniques.
Decision Theory Approach
 Focus on making decisions,
persons or groups making
decisions, and the decision-
making process.
 Some theorists use decision
making as a springboard to study
all enterprise activities.
 The boundaries of study no
longer clearly defined.
Process of
Individual
decision
decision
making
making

Entire area DECISION Values of

of business THEORY decision
activity makers

Nature of
Information Group decision
organization
for making
structure
decision
 Limitations
 There is more to managing than
to making decisions.

 The focus is at the same time too

narrow and too wide.
Contingency or Situational Approach
Behavioral Viewpoint
How managers influence others:
 Informal Group
 Cooperation among employees
 Employees‟ social needs

Systems Viewpoint Traditional Viewpoint

How the parts fit together: What managers do:
 Inputs  Plan
 Transformations  Organize
 Outputs  Lead
 Control

Contingency Viewpoint
Managers’ use of other viewpoints
to solve problems involving:
 External environment
 Technology
 Individuals
Contingency or Situational Approach
• The Situational Approach
– advocates using various approaches
(administrative, behavioral, or systems)
at various times
• Technology
– the method used to
transform organizational inputs into outputs
– the knowledge, tools, techniques, and actions
applied to change raw materials into finished
goods and services
 Cause Effect

Depends on

Contingency Situation

Contingency or Situational Approach

Contingency Theory: Woodward's Studies
Industrial Organization: Theory and Practice

• identified three types of technology

small-batch or custom-made

mass-production

continuous process
Contingency Theory: Woodward's Studies
• found a consistent relationship between
organizational characteristics and type of
technology
effective firms using mass production
technology
 adopted a bureaucratic form of management
effective firms using small-batch and
continuous process technologies
• did not adopt a bureaucratic style
 Importance of Quality
Lower
Costs &
Positive Higher
Company Market
Image Share
QUALITY

Decreased
Product
Liability
 2.11

Integration of Management Viewpoints and

Competencies
Managerial Management Viewpoint
Competency Traditional Behavioral Systems Contingency Quality

 Communication
 Planning and
administration
 Strategic thinking
and action
 Self-management
 Global Awareness
 Teamwork
X X X X
X X
X X
X
X X
X X X

X = relatively high importance

 The Learning Organization
 The management approach based on an
organization anticipating change faster than
its counterparts to have an advantage in the
market over its competitors.

 There are two ways organizations can learn:

 Experimental learning
 External learning
 Creating a Learning Organization
Learning Organization
Characteristics:
An organization that has
developed the continuous 1. Holds a shared vision
capacity to adapt and 2. Discards old ways of
change. thinking.
3. Views organization as
system of relationships.
4. Communicates openly.
5. Works together to achieve
shared vision.

Source: Based on P. M. Senge, The Fifth Discipline (New York: Doubleday, 1990).
 Creating a Learning Organization

Single-Loop Learning
Errors are corrected using past
routines and present policies.

Double-Loop Learning
Errors are corrected by
modifying the organization’s
objectives, policies, and
standard routines.
Creating a Learning Organization

Fundamental Problems in Traditional

Organizations:
• Fragmentation based on specialization.
• Overemphasis on competition.
• Reactiveness that misdirects attention to
problem-solving rather than creation.
Managing a Learning Organization

Establish
a strategy

Redesign the
Managing organization’s
Learning structure

Reshape the
organization’s culture