Unit1: Princip

Principles of Management & OB

POM & OB notes by Rahul Sir’s MBA/BBA Classes

Different Management Theories like Scientific & Behavioral

Scientific Management Theory

Began in the closing decades of the 19th century after the Industrial Revolution. Small workshops were
replaced with 100+ person factories.

Managers were unprepared for this rapid change due to social problems that occur when people work
together in large groups. They focused on how to increase efficiency of employee
employee-task
task mix.

Job Specialization
ialization & Division of Labour (Adam Smith)

Adam Smith,, the father of economics, compared two different methods of manufacturing. In one, 1
employee dealt with all the tasks associated with producing a product (he used the example of a pin). In
the other, employees performed only 1 or a few of the multiple tasks. He found that employees who were
specialized in a task or two were far more efficient. This is due to the fact that job specialization (process
by which a division of labour occurs as different em
employees
ployees specialize in separate tasks over time) allows
employees to practice & develop on one skill.

Scientific Management (F.W. Taylor; Father of Management Though)

Frederick W. Taylor defined the techniques of scientific management (the study of relationships
relation between
people and tasks, to redesign the work process to increase efficiency). He developed 4 principles to
increase efficiency:

1. Study workers doing tasks, gather informal job knowledge from workers & experiment with ways
of improving the way tasks are performed.
2. Codify the new methods of doing tasks into written rules & standard operating procedures.

Rahul Sir’s MBA/BBA Classes Page 1

 Unit1: Princip
Principles of Management & OB
POM & OB notes by Rahul Sir’s MBA/BBA Classes

3. Carefully select workers that possess skills & abilities that match the needs of the task, and train
them to perform the task according to the establis
established rules & procedures.
4. Establish a standard level of performance for a task & reward performance above that level.

Followers of Taylor, Frank & Lillian Gilbreth refined Taylor’s analysis of work movements. They
contributed to the idea of time-and
and-motion study (the study of time and motion when going through a
task). They would:

1. Break up tasks into individual actions.

2. Find better ways to perform each step.
3. Reorganize each step so that it could be done with less effort and in less time.

Scientific Management brought employees hardships hardships:: lack of reward for increased productivity,
dissatisfaction with work due to repetitiveness caused by job specialization, and increased chance of
layoffs as less employees were needed. This caused employees to often retaliate bby
y purposefully reducing
their efficiency to sabotage a manager’s efforts.

Administrative Management Theories (2)

Administrative Management;; the study of how to structure an organization’s administration for

maximum efficiency. Organization structures are ssystems
ystems of tasks & authority relationships that control
how employees use resources to achieve an organization’s goals.

The Theory of Bureaucracy (Max Weber)

5 Principles of Bureaucracy (formal system of administration designed to ensure efficiency):

1. A manager’s
ger’s formal authority comes from the position they hold, not from their traits.
2. People should occupy positions because of performance, not social standing or personal contacts.
3. Each position’s responsibilities & authority (power to hold other accountable & allocate
organization’s resources) should be clearly defined.
4. Arrange a management hierarchy (employees know whom to report to & who reports to them).
5. Create a well-defined
defined system of rules (written instructions & restrictions), standard operating
procedures
res (SOPs; written instructions on how perform each aspect of a task), & norms
(unwritten rules & SOPs) to control behaviour.

Sometimes bureaucracy can become too cumbersome that it makes the organization inefficient.

Rahul Sir’s MBA/BBA Classes Page 2

 Unit1: Princip
Principles of Management & OB
POM & OB notes by Rahul Sir’s MBA/BBA Classes

Henri Fayol’s 14 Principles of Management

Behavioral Management Theory

Behavioural Management: study of how managers should behave in order to motivate employees to
perform efficiently & be committed to the organization’s goals.

The Work of Mary Parker Follett (Mother of Management Thought)

Believed that Taylor was ignoring the human side of organization. Also believed that power should come
from knowledge & expertise, and not formal authority.

The Hawthorne Studies & Human Relations

The Hawthorne Studies demonstrated the importance of understanding that feelings, thoughts &
behaviour of workplace members & managers affect performance. This is because as time goes on, an
informal organization (system of rules & norms that emerge in a group’s behaviour) is developed.

Rahul Sir’s MBA/BBA Classes Page 3

 Unit1: Princip
Principles of Management & OB
POM & OB notes by Rahul Sir’s MBA/BBA Classes

In the Hawthorne Studies, the researchers found making any chance in light levels increased
efficiency. This is because, every time the lights changed, employees were reminded that they were
being observed & felt incentivized to increase their productivity.

They also conducted interviews where employees were allowed to give their feedback about their
jobs. They found that after the interviews, productivity increased. This is because the employees felt
like they were important & had a say in the organization’s future.

Theory X & Theory Y (Douglas McGregor)

Douglas McGregor proposed that managers had 2 dominant ways of thinking:

Theory X - Employee is lazy, dislikes work, will try to do as little as possible, have little ambition, & will
avoid responsibility. In this way of thinking, managers must supervise closely & control behaviour via
rewards/punishments.

Theory Y - Employees are not inherently lazy, do not naturally dislike work, will do what is good for
organization. According to this thinking, work setting determines whether employees are satisfied or not.
Managers do not need to control employees’ behaviour closely, managers must create a work setting that
encourages commitment to organization’s goals & provide employees opportunities to be imaginative,
excursive initiative & self-direction.
direction.

Management Science Theory

Management Science Theory uses rigorous quantitative techniques to help managers make full use of
organizational resources. An extension of scientific management. Branches:

 Quantitative Management uses math techniques to help managers make decisions

 Operations management (or operations research) provides managers with analytical tools to
analyze any aspect of an organization’s production system to increase efficiency.
 Total quality management (T (TQM) focuses on analyzing input conversion & output activities to
increase product quality.
 Management information systems (MIS) help managers present information that is vital for
effective decision making technologically.

Organizational Environment Theory

Organization Environment Research looks at an organization’s relationship with its external

environment. Organizational environment is anything that operates beyond an organization but still
affects a manager’s decision making, and acquiring & using resourcing.

The Open-Systems View

Daniel Katz, Robert Kahn, & James Thompson viewed organizations as open systems (a system that is
open to the environment; takes in resources from the external environment & converts them into
goods/services which are
re sent back to the customer).

Organization’s that operate as closed systems experience entropy & fail due to lack of control.

Rahul Sir’s MBA/BBA Classes Page 4

 Unit1: Princip
Principles of Management & OB
POM & OB notes by Rahul Sir’s MBA/BBA Classes

Researchers studying this are interested in synergy (performance gains that result when individuals &
departments coordinate their actions to maximize efficiency).

Contingency Theory

Tom Burns, G.M. Stalker, Paul Lawrence & Jay Lorsch developed the contingency theory;
theory the idea that
managers’ choice of organizational structures & control systems is conting
contingent
ent on (depend on)
characteristics in which the organization operates.

Simply put, this theory states that there is no one best way to design or lead an organization
because each choice is contingent on its external environments & contexts.

Rahul Sir’s MBA/BBA Classes Page 5