The evolution of management thought

® Managers found better techniques to manage large factories

Background
This study unit explores how management thought has evolved since the
industrial revolution and the central concerns that have precipitated and
guided ongoing advancements in management theory. The constant search for
better ways to utilise organisational resources to make products and services
is the driving force behind the evolution of management theory.
efficiently and effectively 

1.2 Job specialisation and the division of labour
® Adam Smith, a classical theorist, was one of the early writers to
interrogate the benefits associated with job specialisation and the
division of labour in factories.

® Division of labour = process by which each part of production is

split down into sectors in which an employee undertakes a specific
task
® Adam Smith – Book ‘Wealth of Nations’ 1776

® Proved that specialisation and division of labour in factories that
produced pins and nails resulted in higher productivity
® During industrial revolution, manufacturing a pin involved 18
interrelated tasks. Smith’s exploration revealed that the
performance of the factories in which workers specialised in only
one or a few tasks involved in producing a pin was much greater than
1. Scientific management theory the performance of the factories in which each worker performed all
1.1 Industrial revolution the 18 tasks
® Performance difference due to workers becoming more skilled at a
® Agricultural societies became industrialised 

particular task if they specialise - reducing lead-time compared to
® Advancements in transcontinental railroad networks, steam workers who performed all the 18 tasks
engines, 
electricity and other manufacturing inventions ® Example: During the industrial revolution era, manufacturing a pin involved
transformed society 
 18 interrelated tasks. Smith’s exploration revealed that the performance of
® Altered management theory 
 the factories in which workers specialised in only one or a few tasks
® Small backyard workshops replaced by larger factories with very involved in producing a pin was much greater than the performance of the
sophisticated steam and electricity powered machines 
 factories in which each worker performed all the 18 tasks. Adam smith
® Cognitive demand on unprepared managers of the new argued that the performance difference can be attributed to the fact that
factories 
 workers generally become more skilled at a particular task if they specialise
thus drastically reducing the lead-time compared to workers who
® Managers were engineers who only had a technical orientation and
performed all the 18 tasks.

little or no social orientation to deal with people
1.3 F.W. Taylor, the father of scientific management
® Use scientific methods to improve work processes to
increase efficiency and productivity
® 4 principles to create the most efficient division of labour
and specialisation
® For repetitive work, worker gains skills, knowledge over
time
® After numerous experiments and observations, Taylor expounded
four (4) principles to create the most efficient division of labour
and specialisation, which in turn, increases productivity.
Taylors 4 principles:
• Principle 1: Study the way workers perform their tasks,
gather all the informal job knowledge that workers
possess and experiment with ways of improving how tasks
are performed.
• Principle 2: Codify the new methods of performing tasks
into written rules and standard operating procedures.
• Principle 3: Carefully select workers who possess skills and
ability that match the needs of the task and train them to
perform the task according to the established rules and
procedures.
• Principle 4: Establish a fair and acceptable level of
performance for a task, and then develop a pay system
that rewards performance above the acceptable level.
1.4 The Gilbreath’s
® Frank and Lilian Gilbreth took F.W. Taylor’s seminal work a
notch higher by refining the time and motion study.
® Refining the time and motion study of Taylor
® Gilbreths broke down individual tasks into sub-parts to
allow managers to evaluate and reorganise each sub-
part/component so that the job as a whole can be performed
more efficiently and effectively
® Concept of fatigue in the workplace
o Linkage between job stress and physical attributes of
the workplace
o How it leads to fatigue and poor performance
2. Administrative management theory
® A blend of control systems and organisational structure
can lead to efficiency and effectiveness
® Deviation from scientific school of thought = person-technology
mix
® Organisational structure = a hierarchical system that allocates
and coordinates tasks and authority relationships that dictates how
workers utilise resources to realise organisational goals
® Creation of organisational administrative efficiency
2.1 The theory of bureaucracy by Max Weber:
® Bureaucracy can be defined as a formal system of organisation
and administration designed to ensure efficiency and effectiveness
(Jones, 2011).
® Weber, in an attempt to manage the rapid expansion of business
organisations during the industrial revolution, posited the

5 principles of bureaucry:
• Principle 1: In a bureaucracy, a managers’ formal authority
derives from the position he or she holds in an organisation.
• Principle 2: In a bureaucracy, people should occupy
positions based on meritocracy not because of their social
status and social capital.
• Principle 3: The extent of each position’s formal authority
and task responsibilities, and its relationship to other
positions in an organisation should be clearly specified.
• Principle 4: Authority can be exercised effectively in an
organisation when positions are arranged hierarchically, so
employees know who to report to and who reports to them.
• Principle 5: Managers must create a well-defined system of
rules, standard operating procedures and norms so they can
effectively control behaviour in an organisation.
2.2 Fayol principles of management:
® Formal vs Informal authority (Weber vs Fayol)
® Informal authority comes from personal attributes
® Technical knowhow and expertise ➢Moral standing
® Fayol’s 14 principles of management (a century ago) = the basis
on which contemporary management principles are founded
Fayol’s 14 principles of management are as follows:
• Division of labour: There is a positive correlation between job
specialisation efficiency.
• Authority and responsibility: Managers have the right to
delegate and the power to exhort followers for obedience.
• Unity of command: An employee should report to only one
manager.
• Line of authority: The length on the chain of command that
extends from the top to the bottom of an organisation should be
limited.
• Centralisation: Authority should not be concentrated at the apex
of the chain of command.
• Unity of direction: There should be a single plan of action to
guide everyone in the organisation.
• Equity: Everyone in the organisation should be treated respect
and justice
• Order: Organisational positions should be optimally arranged to
increase efficiency and effectiveness.
• Initiative: The organisational culture should promote creativity
and innovation.
• Discipline: Managers should create a conducive environment
that fosters self-control and restraint.
• Remuneration of personnel: Remuneration must be based on
meritocracy.
• Stability of tenure of personnel: Low employee turnover allows
employees to develop skills and competences.
• Subordination of individual interests to the common interest:
An appreciation of how one’s performance can affect the
performance of the whole department or organisation.
• Esprit de corps: Managers should encourage the development of
shared feelings of comradeship and devotion to a common cause
(Jones, 2011)
3. Behavioural management theory
Behavioural management is the study of how managers behaviour affects
employee’s motivation
3.1 Mary Parker Follet’s contribution
® Follet’s work = direct response to concern that Taylor (Scientific
Management Theory) did not pay attention to human dynamics
of the business organisation 
 experiment
® Employees could contribute when managers allowed
them to participate in the time and motion studies of their work
development
® Authority should go with knowhow... whether it is up the
line or down 
 ® Changed the trajectory of management theory and gave birth to the
o Example: if shop-floor workers had the relevant knowledge, then
workers rather than supervisors, should be in charge of designing the
work process itself 
 that bring about teamwork & increased efficiency
® Cross-functional communication between departments to
speed up decision making
Different from Administrative management theory
• Power is fluid and should flow in any direction and to the person
who has the knowledge and technical expertise to take the
organisation to the next level
• Lateral view of authority and power in contrast to Fayol and
Weber who mostly focused on the vertical view of power (chain of
command)
3.2 The Hawthorne studies and human relations
® The Hawthorne studies explore the linkage between the
level of illumination (lighting in factories) and worker
fatigue and performance 

® Worker productivity measured at various levels of lighting 

o Result: no correlation between worker productivity and illumination
® Harvard psychologist, Elton Mayo, advocated more
experimentation - popularly known as the relay assembly
tests 

® Researchers came to the realisation that their physical presence
skewed the results and that they had become part of the


® Employees under observation enjoyed the attention they
received from the researchers 

® This effect – became known as the Hawthorne Effect 

human relations movement
® Managers trained behaviourally to manage employees in ways
 4. Management science theory
® Extension of Taylor’s scientific management theory of Time & Motion
® Organisations whose managers do not implement the dual relationship
® Organisation is an open system = it takes in resources from its
external environment and transforms them into finished
products that are sent back to the external environment
where they are consumed 

between the organisation and the environment will experience
entropy
o = the predisposition of a closed system to lose its capability to
regulate itself and therefore disintegrate

5. Contingency theory
® What is it?
o Organisational structures and control systems managers make
use of are dependent on characteristics of the external
environment in which the organisation operates

® There is no one best way to organise

® Contingency approach suggests the most appropriate style of
management is dependent on the context of the situation ® Systems approach = the idea that all organisations are made up of
and that adopting a single, rigid style is inefficient in the long term interdependent parts that can only be understood by looking at the
whole
6. Organisational environment theory ® Any system consists of three components:
® Scholars went beyond the study of how managers can influence o Resources
behaviour within organisations to consider how managers o Transformation
control the organisational relationship with the external o Product
environment
® Contingency and open systems theory 

® Open systems theory = how the organisation, as an open system,
is affected by forces in the external environment 

 7. Strategic management theory Conclusion
® The art of strategic management came from warfare ® Correctly explain how the need to increase effectiveness and
philosophy efficiency has guided the evolution of management theory
® Strategic management = how organisations achieve congruence ® Logically explain the evolution of management thought
with the environment, through continuous formulation and ® Discuss in detail the principles of organisation and
implementation of strategies administration that underpins effective organisations
® Matters of strategy are contextual - events in the business ® Correctly explain the contribution of management science to
environment shape and alter organisations’ strategic options and the efficient use of organisational resources
choices ® Explain why the examination of the external environment and
its influence on a business organisation has become a pivotal
8. Towards a dynamic capabilities perspective issue in the evolution of management thought
® Dynamic capabilities = an organisation’s capacity to sense and
shape opportunities, seize opportunities, and maintain competitiveness
through enhancing, combining, protecting and, when necessary,
reconfiguring the business enterprise’s intangible and tangible assets
® About strategic change 

® Dynamic capabilities perspective gives managers means by which
continual institutional transitions can be understood and
managed in the face of hypercompetitive markets.
o Can organisations transform as well as produce innovations in
the face of their operational routines? 

® Ever-evolving business environment compels organisations to
adapt
® Managers must focus their attention on designing flexible and
dynamic organisations to keep in step with the changing business
environment 

Managers and managing
Economic principle = Ensure the highest possible output with least
1. Introduction possible input
& Organisation = consists of people and resources and business goals
that must be realised 2. What is management?
® Predetermined goals = the vision and mission of an organisation Definition of Management:
® Organisations don’t realise these goals automatically 
 & Simply: The process followed by management to accomplish
® Managers play a critical role in directing people, physical business goals and objectives.
resources, financial resources, knowledge and activities
effectively to achieve set goals 
 & More precisely: Management is a process of activities that are
® Managing is an unpredictable process & complicated 
 carried out to enable a business to accomplish its goals by
® Effective managers possess conceptual, interpersonal and employing human, financial and physical resources for that
technical skills purpose.


The role of management 2.2 Basic functions of management
® If management is absent: • As an Institution, management = the people responsible for
• Resources of a business not channelled towards goals managing
• Profit objectives will not be met • Functionally, management = the practice of managing
• Purpose will not be maintained - Planning
- Organising
® Balance maintained between: - Leading
• Goals of the business - Controlling
• Resources it needs to achieve objectives
• Personal goals of employees
• Interest of the owners

® Basic resources found in business:

• Human resources
• Financial resources
• Physical resources
• Information/knowledge resources
 3. Who is a manager? 3.2 Managers and other employees need to work
together to:
• Develop plans
• Structure tasks in a sensible way
• Act in organised structures

• Motivate each other
• Develop and act according to set performance standards


3.3 Effectiveness of a manager lies the ability to:

3.1 A manager is:
• Person appointed in a leadership position in an organisation
• Responsible for achieving specified work-related activities
• Through effective & efficient use of human and other resources
• Maintain a favourable work environment
• Create opportunities for all employees
• Act as a leader & follower
• Communicate continuously
• Acknowledge and reward good performance


® Appointed & assigned duties, responsibilities and has

authority to make decisions in the running of an organisation
® Provide leadership
® Activate and guide the organisation towards the achievement of its
objectives
® Responsible for different departments
® Work at different levels
® Deal with different challenges
® Management is a continuous process that obtains, organises and
utilises resources to reach goals
 4. Management levels 6. Top 5 competencies:
• Communication (written & spoken)

• Self-management (self-
control/confidence/motivation/discipline) & resilience

• Organisational ability (org awareness, delegation, control,
structure)
• Influence (leadership, motivation, networking, negotiation)
• Teamwork (leader & follower)

7. Management roles

5. Management skills:
• Conceptual skills: mental capacity to view the business and its
parts in a holistic manner. Involves thinking and planning skills 

• Interpersonal skills: human relations skills. Ability to work with
people. Help managers to understand and with people. Lead,
motivate and develop team spirit 

• Technical skills: use the knowledge or techniques of a discipline.
Use job-specific knowledge and techniques to perform an
organisational role. These skills reflect a manager’s understanding of
the business’s methods. 

 8. Recent changes in management practices
§ Advancement in information communication technology
(ICT)
§ Globalisation (global supply networks) 

§ Intense competition for resources has put pressure on all
managers to improve efficiency and effectiveness 

§ Middle & first-line managers need to look beyond the goals of
their functional areas and take a cross-functional view
of the organisation to find better ways to improve efficiency 

§ Fourth industrial revolution has given managers access to
timely and better-quality information - improves their ability to
carry out management tasks 


8.1 To keep up with changes, most companies have

turned to restructuring and outsourcing

& Restructuring = shrinking a business by eliminating tasks and

jobs that are not adding value to the organisation

• COVID-19 induced recession has forced many businesses to

find ways to reduce costs
• Companies have restructured by eliminating management layers
• Shrinking functional areas

• Encouraging employees to work virtually and remotely - cutting

Disadvantages of restructuring
§ Reducing the morale of remaining employees
§ If downsizing not done optimally, remaining employees may be
overworked to the point of burnout
 & Outsourcing = contracting with another company, to have it perform
tasks and activities the organisation previously performed itself

• Outsourcing if done correctly, may lead to increased efficiency &

effectiveness
• Outsourcing lowers costs by freeing up resources which can be used
in more effective ways

Disadvantages of outsourcing
§ Outsourcing of jobs to other countries/companies means that they
gain those jobs
§ Many South African call centres have moved to countries like India to
reduce operating costs

∆ Most organisations are altering how they operate by restructuring and

outsourcing to reduce operational costs
∆ Organisations are empowering their employees and using self-managed
teams to increase productivity