EnM211 Management Theory

Republic of the Philippines
NUEVA ECIJA UNIVERSITY OF SCIENCE AND TECHNOLOGY

Office of the Graduate School
Cabanatuan City
Program : Masters of Engineering Management

Subject : Org. Com and Rec Mngt (EnM 211)
Researcher: JOEFIL C. JOCSON, CE
Professor: DR. ROLANDO F. PASCUAL
MANAGEMENT THEORY
Expectations:
 Know the why, what, when and how of the Systematic

Management and classical approaches to management – the
Scientific, Administrative, and Bureaucratic.
 Describe how the need to increase organizational efficiency
and effectiveness has guided the evolution of management
theory.
 Explain the principle of job specialization and division of
labour, and tell why the study of person–task relationships
is central to the pursuit of increased efficiency.
 Explain why the study of the external environment and its
impact on an organization has become a central issue in
management thought.
Introduction
Down thru the ages, most “managers” operated on a trial and error
experimental basis. The demands of industrial revolution changed
this traditional practice. Management emerged as a formal
discipline at the turn of 19th century and up to now will
Masters in Engineering Management – EnM 211, joefil27@gmail.com

continually evolve up to the next generation as a means of
Management philosophy and principles.
What is Management?
�Mary Parker Follett, described management as "the art of

getting things done through people."
�Peter Drucker's viewpoint, managers give direction to their

organizations, provide leadership, and decide how to use
organizational resources to accomplish goals.
�Richard L. Daft: "Management is the attainment of

organizational goals in an effective and efficient manner through
planning, organizing, leading, and controlling organizational
resources“
THE SYSTEMATIC MANAGEMENT – PRE CLASSICAL PERIOD
It was during the 19th century, growth in business and industry

in the U.S., Great Britain, France and Belgium centered on
Manufacturing. Early managers and writers like Adam smith
believed the management of these firms was chaotic, and they
strove to systematize it. Most organizational tasks were
subdivided and performed by specialized labor. However poor
coordination among subordinates and different levels of
management caused frequent problems breakdowns of manufacturing
process.
The Goals of Systematic Management Approach:

 To build specific procedures and processes into
operations to ensure coordination;
 To achieve economy in operations;
 To provide adequate staffing;
 To maintain inventories to meet consumer demand;
 To set-up organizational controls.
These goals of systematic management were achieved through:
 Definitions of duties and responsibilities (or

systematize manufacturing organizations)
 Standardized techniques for performing these duties (or
coordination of procedure and processes built into
internal operations)
 Specific means of gathering, handling, transmitting and
analyzing information
 Cost accounting, wage and product control systems to
facilitate coordination and communication (or emphasis on
economical operation, inventory management, and cost
control
Systematic Management focused on internal operations because:
 Problems and concerns were in the manufacturing process

 Managers were under pressure to meet explosive growth in
demand
 Managers were free to focus on internal issues of
efficiency, party 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.
Contributions to Management Practice:
 Beginning of formal management in the US and the rest of

the world
 Promotions of efficient, uninterrupted production
Limitations of the Systematic Approach:
 Ignored relationship between an organization and it’s

environment
 Ignored differences in managers and worker’s view
Some Theorists of the Pre-Classical Period
ROBERT OWEN (1771-1858) – A British entrepreneur with social

conscience, he was ahead of his time in recognizing the
importance of human resources at a time when capitalists were
focused on “machines” because they were more expensive.
Considered radical in his time, a kind of socialist for his
concern for the welfare of his workers, today his views and
practices are take for granted as a given. His ideas on human
resources laid the groundwork for Human Relations Movement.
CHARLES BABBAGE (1792-1871) – He is an English mathematician,

known as the “father of the computer”. His inventions turned out
to the world’s first mechanical calculator and analytical engine
that had the basic elements of a modern-day computer. While in

the process of producing his inventions, he came up with ideas
that made direct contributions to management theory. One is work
specialization that is, dividing the work into various jobs. He
came to know specialization applies not only to physical but to
mental work as well. To motivate his employees, he came out with
a profit-sharing plan consisting of two parts: a bonus for useful
suggestions and a portion of wages based on factory profits.
HENRY R. TOWNE (1844-1924) – A mechanical engineer and president

of Yale and Towne Manufacturing Company, Towne championed to
treat management as a separate field of systematic study at par
with engineering. He presented his ideas in a landmark paper
entitled “The Engineer as an Economist” which he read in 1886
before the American Society of Mechanical Engineers in Chicago. H
proposed the establishment of the science of management and the
development of principles that could be applied across situations
in management.
The Evolution of Management Theory
1890 1900 1910 1920

1930 1940

Systematic Management Bureaucratic Management Human Relations
Scientific Management Administrative Management Quantitative Management
CLASSICAL APPROACHES
The Classical School, emphasized the importance of structure, and

in particular attempted to find general principles that apply to
many, if not all, organizations. Considerable emphasis was placed
on the importance of establishing common purposes that would
provide a means of ‘coordinating employees’ efforts.
Many of the classical principles are related to the hierarchical

structure. For example the principle of authority emphasizes that
there should be a clear line of authority to every individual in
the organization. The principle of span of control emphasizes the
need to restrict the number of subordinates that any person
supervises. The principle of correspondence emphasizes that in
every position in the organization there should be a
correspondence between authority and responsibility.
These approaches have helped establish an emphasis on people and

structure, two key pillars at the start of the 20th century
understanding of organizations. And whilst contemporary analysis
considers a wider range of variables, uses more sophisticated
methodology and tends to avoid the prescriptions of these
approaches, they do provide an important starting point for
understanding what organizational thinking can provide for the
practicing manager.

THE SCIENTIFIC MANAGEMENT
Systematic management failed to achieve widespread production

efficiency, hence, the emergence of the new approach-the
Classical. The classical approach breaks into distinct areas: the
lower – level management (supervisory) which became the domain of
Scientific Management; the higher level that is, the middle and
top management level, which became the domain of the
Administrative and Bureaucratic Management.
Scientific Management comes out of the body of knowledge

developed by Frederick Taylor (1856-1915), Frank and Lillian
Gilbert and Henry L. Gantt. They studied mainly the job of
workers at lower level of the organizations. It stresses
significantly determined changes in management practices as the
solution to improving labor productivity. Scientific Management
introduced “time and motion study” to find the “one best way” to
perform a task; that is, it studies how a task can be structured
to increase labor productivity.
“The Principles of Scientific Management”.
 Do everything in a scientific method

 A fair day’s pay for a fair day’s work
Viewed that all work processes can be systematically analyzed and

broken down into a series of discrete tasks, and that one best
way can be determined to undertake each task.
What are the elements of Scientific Management?

1. Analysis of all processes and tasks within the organization
to identify each component.
2. Review all routines and working methods – to find the best
way to get the job done (Work Study).
3. Everything should be standardized including working
methods, equipment and procedures and allocation of
machinery.
4. Scientifically select and train the workers to perform
better in their jobs.
5. Payment was paid depending on how many pieces the workers
produced.
6. There were penalties if the workers have not produced the
required level of output.
What are the benefits of Scientific Management according to

Taylor?
 Higher output, Higher Profits & Higher Pay to the workers.

 Improved labor productivity and efficiency through time and
motion study
 Demonstrated the importance of personnel selection and
training
 Demonstrated equity and economic justice through
compensation based on performance and productivity
 Instilled cooperation between management and workers
What are the problems and limitation of Scientific Management of

Taylor?
 It looks at workers as cogs in a wheel (machine)

 It only looks at the productivity

 Though it analyses all processes and tasks within the
organization to identify each component it doesn’t offer
great deal in terms of how to actually manage understanding
of those tasks.
 It takes the perspective that people are only motivated by
money
 There was continuous resistance to change
 Excluded senior (top) management tasks
 Ignored relationships between organization and its
environment
Theorist of Scientific Management
FREDERICK WINSLOW TAYLOR (1856-1915) – An American Quaker

industrial engineer, FW Taylor developed the theory and labor
productivity can be improved by scientifically determined
management practices. This earned the status as “ father of
scientific management”. He called for revolution of the mind and
attitudes to get things done in an organization or for the
successful application of his Four Principles of Management. He
pioneered what is now called time and motion study. His basic
premise was that there is one best way to do a job and that
should be discovered and put into practice.
LILLIAN MOLLER GILBRETH (1878-1972) – The Gilbreths focused on

study of fatigue, motion studies, and ways of promoting worker’s
welfare. They believed the ultimate aim of scientific management
is to help workers reach their full potential as human beings.
HENRY L. GANTT (1861-1919) – focused on “control” systems for

shop floor productions scheduling. He created the “Gantt Chart” –

a graphic illustration, usually a bar graph or diagram, that
indicates. It became the basis for two charting devices developed
to assist in planning, managing, and controlling complex
organizations – the Critical Path Method originated by Du Pont
and the Program Evaluation and Review Technique by the Navy.
ADMINISTRATIVE MANAGEMENT
While scientific management focused on what is now called

production and operations management, the administrative
management approach focuses on principles that Managers can use
in the general management of the functional departments and
divisions of the hole organizations.
Henri Fayol is considered the “father of modern management” for

his contributions in identifying the functions of management –
planning, organizing and staffing, commanding, coordinating and
controlling.
Henri Fayol – General and Industrial Management 1916.
 Activities of work were divided into groups.

1. Technical -
2. Financial
3. Accounting
4. Security
5. Management
6. Commercial
14 Principles of Management of Fayol

Division of work – work was divided
Authority – The right to give orders
Discipline – work hours, no lunch while working etc.
Unity of Command – Decisions are taken-up by the top management.
Unity of direction – One person has one plan for several

activities
Subordination – of individual interests to the organization’s

objective
Remuneration – fair payments
Centralization – One person gives a decision so that others can

carryout the work
Scalar Chain – line of authority from top to bottom
Order – everything should have an order
Equity – combination of kindness and justice
Stability of tenure of personnel – giving enough time to

employees to get settled in their jobs
Initiative – be creative and find new methods
Esprit de corps – harmony and team spirit
Management Definition of Fayol
“To manage is to forecast & Plan, to organize, to command, to co-

ordinate and to control.”
 His central idea was about the scalar chain or hierarchy,

the establishment of “line of authority”

 Unity of Command – One boss from which all decisions and
plans are originated.
 Span of Control – A superior should only have 4 -5
subordinates if the supervision is to be effective and
practicable.
 He saw the human potential and supported that people should
feel involved in the business rather than just working as
machines.
 He suggested a fair working practices and remuneration and
also encouraged that employees should find new methods to
improve work. (Creativity was encouraged)
 He believed that training managers for the future is very
important and management should be taught in all
institutions.
 He also believed that continuous improvement and training
are vital to the betterment of the organization. (management
development)
Theorists of Administrative Management
HENRI FAYOL (1841-1925)
Henri Fayol is generally regarded as the first to ask: “What

is Management?” He searched for answers on the basis of his
experience as top-level manager, chief executive and managing
director of a coal-and-iron combine of Commentary-Fourchamboult-
Decazeville which survives today as part of LeCreusot-Loire in
Central France. He systematized managerial behavior and came up
with the functions of management and the 14 principles of
management. He wrote them in his classic work Administration
Industrielle et Generale published in 1916 and published in

English in 1949 as General and Industrial Management. Fayol was
ahead of his time in linking strategy and organizational theory
and stressing the need for management development and leadership
qualities. 15
OLIVER SHELDON (1923)
Oliver Sheldon was an English chocolate factory (York)

administrator who hired sociologists to help him initiate some
participative management practices, such as company canteens,
company housing, recreation, health and education benefits.
Influenced by Fayol, he started a short-lived, but recurring,
movement in business world called “social responsibility”
management, which believes that the abolition of poverty is the
only rational, worthwhile end of business.16
LEONARD WHITE (1926)
White was University of Chicago professor who helped establish

Personnel Departments in government agencies. He also wrote some
of the first texts in Public Administration.17
JAMES MOONEY (1931)
Mooney was a vice president at a General Motors and ambassador to

Germany who preached the good of organizations having a common
“doctrine” and understanding of common purpose, and reasserted
the importance of vertical communication and the staff principle
in organizations.19
LUTHER GULICK & LYNDALL URWICK (1937)

Gulick and Urwick was a pair of prolific writers who founded the
academic journal Administrative Science Quarterly, invented the
POSDCORB acronym for remembering the management functions and
together, they synthesized much of the literature at the time via
the following:
1. Principle of the Objective: Organizations must have a

common purpose
2. Principle of Correspondence: Organizations must have fairly
coequal systems of authority and responsibility
3. Principle of Responsibility: Supervisors must be
responsible for the work of their subordinates.
4. Scalar Principle: Organizations must have a pyramidal-
shaped organizational structure, or hierarchy.
5. Span of Control: The best span of control for most
organization should be about 5 or 6.
6. Principle of Specialization: Work should be limited to one
function only for most workers.
7. Principle of Coordination: Administrators should always
look for ways to creatively realign the organization
8. Principle of Definition: There should be clear job
descriptions.20
CHESTER BARNARD (1938)
Barnard was a forerunner for the human Relations School, and

preached that managers need to know more about human behavior,
especially in the informal groups of organization, which may
contain outsiders. He stressed short, direct lines of
communication; vertical communication that was persuasive and
overcame differences workers might have with management. He is
probably best known for his concept of “Zones of Indifference”

which is the idea of good leaders should try to take middle-of-
the-road, or neutral, positions on issues as much as possible
because each person’s attitude usually has such a middle-ground
area where they will believe or obey without question.21
THE BUREAUCRATIC MANAGEMENT
“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.
Bureaucracy has been with us and will always be with us even if
the organizational structure becomes flatter, leaner and meaner.
The Chinese, Egyptians, Persians, Babylonians, Greek, and the
Romans in the administration of their empires set up bureaucracy.
The Roman Catholic Church has the most enduring bureaucracy over
the last 2000 years.
However, it is only in the early decades of the 20th century that

bureaucracy has been studied and a body of knowledge created to
make it a distinct management approach.
MAX WEBER (1864-1920)22
A German Sociologist, social historian and philosopher, Max Weber

is considered the guru of bureaucracy because of his work or
studies of Germany’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.
Bureaucracy is a traditional management system that relies on

rules, set hierarchy, a clear division of labor, and formal
procedures and focus on the overall organizational structure.
The strengths of bureaucratic management are consistency and

predictability. The objective of Weber’s studies was 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 and 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.
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 eliminate 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 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 the 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
organization.
Weber’s Three Types of Authority
1. Traditional authority. It is based on tradition or

custom. Example: The divine right of kings like Louis
XIV of France.
2. Charismatic authority. It is based on follower’s

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, Martin Luther King; Andres
Bonifacio, Manuel Quezon, Ninoy Aquino, Corazon C.
Aquino. In business – Steven Jobs and Walt Disney.
3. Rational authority – It is legal authority based on

impersonal laws and rules that apply to all. A superior
is obeyed because of the position he/she occupies in
the organizations hierarchy. This authority depends on
employee’s 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 manger or employee is technically
qualified, competent, and performs satisfactorily. Entrance
requirements are based on technical qualification, 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

relies 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 organizations 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 breakthroughs into high-quality
products and service.
If all departments achieve their individual objectives, the

corporation reaches its overall goals.22
Bureaucratic Management
Key Concepts23
 Weber’s Seven Characteristics of Bureaucracy.

 Structured, formal network of relationships among
specialized positions in an organization.
 Rules and 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.
The Human Relations School – Elton Mayo – Hawthorne Effect
The Human Relations School grew out of a series of studies in the

1920s/1930s, particularly the Hawthorne Studies in the USA. In a
period when organisation theory was dominated by an emphasis on
structure, these studies pointed to the importance of social
factors at work and the importance of understanding employee
behaviour. Of particular importance was the “relay assembly test
room experiment” during which researchers developed a friendly
relationship with an experimental group during a period in which
various aspects of working conditions (hours, rest periods etc.)
were varied. Failing to find a clear relationship between these
changes and the general improvements in output,
the researchers concluded that it was the relationship with the

group (friendly, open) which was the vital factor. This
contributed to a major interest in the effect of different
management and supervisory styles on workplace behaviour.
A subsequent interview programme led the research team to realise

that it was important to listen to workers’ feelings and ideas

and that this could be embedded within an overall approach to
management. Other observational studies illustrated the fact that
individuals at work were often influenced by their work groups in
profound ways.
This series of studies provided the foundations for much of the

subsequent work aimed at understanding human behaviour at work.
Systems Theory
Systems theory attempts to identify factors that are common to

systems in general, whether they be mechanical systems,
biological or ecological systems or human systems. One objective
of the Systems approach is to identify how our understanding of
one kind of system can help us understand other systems. The
Systems approach to organisational analysis takes these insights
and applies them to achieve a greater understanding of how
organisations operate, how they respond to their environments and
how they might be improved. Fundamentally the Systems approach
represents a way of looking at and thinking about organisations
in order to provide different sorts of understandings.
One key insight is to think of organisations as transformation

systems, taking inputs of various sorts and transforming them
into outputs, some of which may be in demand in the environment
of the organisation (e.g. products and services), and some of
which may not (such as pollutants). Understanding how the
organisation interacts with its environment(s), how it acquires
resources, and how it manages its outputs are therefore crucial
issues for understanding the organisation. Every system is
composed of sub-systems.

The human body system has a respiratory sub-system, digestive
sub-system and so on, which must interact with each other in
order for bodily health to be maintained. Similarly
organisations, when understood as systems, also have sub-systems
that must interact effectively if the organisation is to survive
and prosper. So for example the functioning of an organisation is
affected not just by the health of the sub-systems but also by
the way in which they interact. However well managed the HRM
department is, for example, it is unlikely to be effective if it
has poor working relationships with the rest of the organisation
for whom it should be providing a service.
The Systems approach is also concerned with understanding links

between the organisation and its environments. For example the
idea of ‘feedback’ is crucial to a systems perspective. Feedback
information is information about the results of an activity which
is used to maintain the system ‘on track’ i.e. on target to meet
its objectives. Systems thinking would therefore highlight the
importance of building in feedback mechanisms to ensure that the
organisation remained in touch with the impact that it was making
on its environment (e.g the success of its products in the
market, the amount of local support it receives as an employer
and so on).
Inputs Transformation Outputs

Raw materials, Processes Products, Services,
Labour, money, Production, Waste, emissions.
machinery Marketing, HR Pollution
Feedback
Views of Public
Environment in which the organization operates
Marketing HR Dept
Dept
Interaction or the interdependence of the

Production
sub- systems
Dept Finance Dept
Contingency Theory – “There is no one correct way of designing an

organization”
In contrast to the classical scholars, most theorists today

believe that there is no one best way to organize. What is
important is that there be a fit between the organization's
structure, its size, its technology, and the requirements of its
environment. This perspective is known as "contingency theory"
and contrasts with the perspective of classical theorists like
Weber, Taylor, Fayol, etc. who thought that there probably was
one way to run organizations that was the best.
 This shows that there is no hard and fast rule to organize

the processes and activities in an organization.
 This theory clearly shows that the type of organization
which should be done is based on certain variables such as,

size of the organization, management will and specially the
unique or different situations which organizations are in
and depending on the demands of the people interested in the
organization.
Burns & Stalker - Electronics firms
 They concluded that firms which respond quickly to

innovation were successful.
 They found that organizations which had formal methods and
long procedures were very slow in responding to change of
technology.
 They found out that these were not profitable as the
organizations which had flexible and informal working
methods.
Size
This refers to capacity, number of personnel, outputs (customers,

sales), resources (wealth).
Blau's studies show that differentiation (# of levels,

departments, job titles) increases with size, but at a decreasing
rate. In contrast, the % of the organization that is involved in
administrative overhead declines with size, leading to economies
of scale.
Increasing size is also related to increased structuring of

organizations activities but decreased concentration of power.
Managerial practices, such as flexibility in personnel

assignments, extent of delegation of authority, and emphasis on

results rather than procedures, are related to the size of the
unit managed.
Technology/Task
Consider check processing at a bank. This activity is usually

performed by a business unit that is highly formalized, has a
great deal of specialization and division of labor, and high
centralization of decision-making. In contrast, the creative
section of an ad agency is usually not formalized at all, the
division of labor is often blurry, and it is highly
decentralized.
It appears that certain activities naturally "go with" certain

structures. Joan Woodward found that by knowing an organization's
primary system of production, you could predict their structure:
Unit production/small batch. Companies that make one-of-a-kind

custom products, or small quantities of products (e.g., ship
building, aircraft manufacture, furniture maker, tailors,
printers of engraved wedding invitation, surgical teams).
 In these companies, typically, people's skills and knowledge

is more important than the machines used.
 Relatively expensive to operate: work process is
unpredictable, hard to pre-program or automate.
 Flat organization (few levels of hierarchy).
 CEO has low span of control (direct reports).
 Relatively low percentage of managers
 Organic structure
Mass production/large batch. Companies that sell huge volumes of

identical products (e.g., cars, razor blades, aluminum cans,

toasters). Make heavy use of automation and assembly lines.
Typically,
 bigger than small batch

 Taller hierarchies
 bottom level is huge (supervisor span of control is 48)
 Relatively greater number of managers (because hierarchy is
so tall)
 Mechanistic, bureaucratic structure
 Relatively cheap to operate
Continuous Production. Primarily companies that refine liquids

and powders (e.g., chemical companies, oil refineries, bakeries,
dairies, distilleries/breweries, electric power plants). Machines
do everything, humans just monitor the machines and plan
changes.
 These organizations are tall and thin or even inverted

pyramid: almost nobody at the bottom
 At the very top there is an organic structure
 Lower levels more mechanistic, but because machines do
everything, there is not much paper work, low level
supervision, etc.
Therefore they identified two systems:
Mechanistic
 High degree of specialization.

 A clear hierarchy

 Rigid systems which are most appropriate to stable
conditions.
Organic
 Fluid forms of organizations

 Flexible structure – anytime it’s possible to redefine
individual tasks.
 Interaction and communication occurs at all levels of the
organizations.
Contemporary (modern) Management
Explain what practical relevance an understanding of each of

these approaches has for contemporary management.
Each of these “Schools of Thought” reflects a different stage in

the development of our understanding of organisations. However
they also help to understand contemporary thinking about
organisations. Individual managers will tend to reflect varying
emphasis on structure and employee behaviour.
The Classical School placed the emphasis in organisational

analysis on the formal organisation, the part of the organisation
that reflects managerial intentions and designs. In contrast, the
Human Relations School emphasizes the informal organisation that
is far less influenced by managerial actions and is affected more
by individual and group behaviour.

In practice, the contemporary manager needs a grasp of each.
Neither of the approaches provides a completely satisfactory
understanding of organisational performance. The Classical
principles are rather simplistic and over-generalised and fail to
give a complete understanding of structure. A more relativistic,
contingencies approach is more likely to be seen as appropriate
in current circumstances. Similarly the Human Relations approach
has evolved more sophisticated analyses. The work of Argyris,
Herzberg and later motivation theorists has introduced a wider
range of variables that we need to embrace if we wish to
understand organizational behaviour.
Listening to people and more people-orientated supervisory

approaches only provides a limited insight into effective people
management. Similarly the approach became associated with a
rather simplistic approach (happy employees will be productive),
which empirically is difficult to sustain in such a simple way.
Theory Z
In THEORY Z, Ouchi describes the art of Japanese management and

shows how it can be adapted to American companies. He takes
readers behind the scenes at several U.S. corporations making the
Theory Z change and shows step-by-step how the transition works.
Ouchi also examines the corporate philosophies that have become
blueprints for Theory Z success, and looks at the evolving
culture of “Z” people in society.
Professor Ouchi's new theory of management promises to change the

way managers and employees alike think about their jobs, their

companies, and their working lives. Theory Z, according to the
best management minds in America, will soon take its rightful
place in everyone's business vocabulary.
Theory Z as an approach to management
Theory Z represents a humanistic approach to management. Although

it is based on Japanese management principles, it is not a pure
form of Japanese management. Instead, Theory Z is a hybrid
management approach combining Japanese management philosophies
with U.S. culture. In addition, Theory Z breaks away from
McGregor's Theory Y. Theory Y is a largely psychological
perspective focusing on individual dyads of employer-employee
relationships while Theory Z changes the level of analysis to the
entire organization.
According to Professor Ouchi, Theory Z organizations exhibit a

strong, homogeneous set of cultural values that are similar to
clan cultures. The clan culture is characterized by homogeneity
of values, beliefs, and objectives. Clan cultures emphasize
complete socialization of members to achieve congruence of
individual and group goals. Although Theory Z organizations
exhibit characteristics of clan cultures, they retain some
elements of bureaucratic hierarchies, such as formal authority
relationships, performance evaluation, and some work
specialization. Proponents of Theory Z suggest that the common
cultural values should promote greater organizational commitment
among employees. The primary features of Theory Z are summarized
in the paragraphs that follow.
Long-term employment

Traditional U.S. organizations are plagued with short-term
commitments by employees, but employers using more traditional
management perspective may inadvertently encourage this by
treating employees simply as replaceable cogs in the profit-
making machinery. In the United States, employment at will, which
essentially means the employer or the employee can terminate the
employment relationship at any time, has been among the dominant
forms of employment relationships. Conversely, Type J
organizations generally make life-long commitments to their
employees and expect loyalty in return, but Type J organizations
set the conditions to encourage this. This promotes stability in
the organization and job security among employees.
Consensual decision making
The Type Z organization emphasizes communication, collaboration,

and consensus in decision making. This marks a contrast from the
traditional Type A organization that emphasizes individual
decision-making.
Individual responsibility
Type A organizations emphasize individual accountability and

performance appraisal. Traditionally, performance measures in
Type J companies have been oriented to the group. Thus, Type Z
organizations retain the emphasis on individual contributions
that are characteristic of most American firms by recognizing
individual achievements, albeit within the context of the wider
group.
Slow evaluation and promotion

The Type A organization has generally been characterized by
short-term evaluations of performance and rapid promotion of high
achievers. The Type J organization, conversely, adopts the
Japanese model of slow evaluation and promotion.
Informal control with formalized measures
The Type Z organization relies on informal methods of control,

but does measure performance through formal mechanisms. This is
an attempt to combine elements of both the Type A and Type J
organizations.
Moderately specialized career path
Type A organizations have generally had quite specialized career

paths, with employees avoiding jumps from functional area to
another. Conversely, the Type J organization has generally had
quite non-specialized career paths. The Type Z organization
adopts a middle-of-the-road posture, with career paths that are
less specialized than the traditional U.S. model but more
specialized than the traditional Japanese model.
Holistic concern
The Type Z organization is characterized by concern for employees

that goes beyond the workplace. This philosophy is more
consistent with the Japanese model than the U.S. model.
Evaluation of theory z
Research into whether Theory Z organizations outperform others

has yielded mixed results. Some studies suggest that Type Z
organizations achieve benefits both in terms of employee
satisfaction, motivation, and commitment as well as in terms of

financial performance. Other studies conclude that Type Z
organizations do not outperform other organizations.
Difficulties in the Japanese economy in the 1990s led some

researchers to suggest that the widespread admiration of Japanese
management practices in the 1970s and 1980s might have been
misplaced. As a result, Theory Z has also received considerable
criticism. It is unclear whether Theory Z will have a lasting
impact on management practices in the U. S. and around the world
into the twenty-first century, but by positioning target research
at the organizational level rather than the individual level,
Ouchi will surely leave his mark on management practice for years
to come.
Thank you!
Sources:
Wikipedia
Theories of Organisation & Management www.nishanw.org

nishan@consultant.com Last Updated 13/02/2009

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Republic of the Philippines

NUEVA ECIJA UNIVERSITY OF SCIENCE AND TECHNOLOGY

Program : Masters of Engineering Management

 Know the why, what, when and how of the Systematic

Masters in Engineering Management – EnM 211, joefil27@gmail.com

�Mary Parker Follett, described management as "the art of

�Peter Drucker's viewpoint, managers give direction to their

�Richard L. Daft: "Management is the attainment of

THE SYSTEMATIC MANAGEMENT – PRE CLASSICAL PERIOD

It was during the 19th century, growth in business and industry

The Goals of Systematic Management Approach:

Masters in Engineering Management – EnM 211, joefil27@gmail.com

These goals of systematic management were achieved through:

 Definitions of duties and responsibilities (or

Systematic Management focused on internal operations because:

 Problems and concerns were in the manufacturing process

Masters in Engineering Management – EnM 211, joefil27@gmail.com

Contributions to Management Practice:

 Beginning of formal management in the US and the rest of

Limitations of the Systematic Approach:

 Ignored relationship between an organization and it’s

Some Theorists of the Pre-Classical Period

ROBERT OWEN (1771-1858) – A British entrepreneur with social

CHARLES BABBAGE (1792-1871) – He is an English mathematician,

Masters in Engineering Management – EnM 211, joefil27@gmail.com

HENRY R. TOWNE (1844-1924) – A mechanical engineer and president

The Evolution of Management Theory

1890 1900 1910 1920

Masters in Engineering Management – EnM 211, joefil27@gmail.com

Scientific Management Administrative Management Quantitative Management

The Classical School, emphasized the importance of structure, and

Many of the classical principles are related to the hierarchical

These approaches have helped establish an emphasis on people and

Masters in Engineering Management – EnM 211, joefil27@gmail.com

Systematic management failed to achieve widespread production

Scientific Management comes out of the body of knowledge

“The Principles of Scientific Management”.

 Do everything in a scientific method

Viewed that all work processes can be systematically analyzed and

What are the elements of Scientific Management?

Masters in Engineering Management – EnM 211, joefil27@gmail.com

What are the benefits of Scientific Management according to

 Higher output, Higher Profits & Higher Pay to the workers.

What are the problems and limitation of Scientific Management of

 It looks at workers as cogs in a wheel (machine)

Masters in Engineering Management – EnM 211, joefil27@gmail.com

Theorist of Scientific Management

FREDERICK WINSLOW TAYLOR (1856-1915) – An American Quaker

LILLIAN MOLLER GILBRETH (1878-1972) – The Gilbreths focused on

HENRY L. GANTT (1861-1919) – focused on “control” systems for

Masters in Engineering Management – EnM 211, joefil27@gmail.com

While scientific management focused on what is now called

Henri Fayol is considered the “father of modern management” for

Henri Fayol – General and Industrial Management 1916.

 Activities of work were divided into groups.

14 Principles of Management of Fayol

Masters in Engineering Management – EnM 211, joefil27@gmail.com

Authority – The right to give orders

Discipline – work hours, no lunch while working etc.

Unity of Command – Decisions are taken-up by the top management.

Unity of direction – One person has one plan for several

Subordination – of individual interests to the organization’s

Remuneration – fair payments

Centralization – One person gives a decision so that others can