BASIC MANAGEMENT THEORY

Objectives

After studying this chapter, you will be able to:

1. Understand what can be learned from classical management thinking

2. Identify insights of the behavioral management approaches
3. Discuss what are the foundations of modern (contingency) management thinking

• Management theories are concepts surrounding recommended management

strategies, which may include tools such as frameworks and guidelines that
can be implemented in modern organizations.

• Generally, professionals will not rely solely on one management theory alone,
but instead, introduce several concepts from different management theories
that best suit their workforce and company culture.

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 Introduction

Until the day that machines are able to think, talk, and experience emotions, humans will remain
the most complicated beings to manage. Humans can never achieve the kind of error-free
performance that machines provide. On the upside, there are tons of things that machines aren’t
capable of doing, making humans indispensable assets. For such reason, proper management is
one of the most crucial things for an organization.
Behavioral Management
Approaches Modern Management
• Follett’s organizations as Foundations
Classical Management
communities • Quantitative analysis and tools
Approaches
• The Hawthorne studies • Organization as systems
• Maslow’s theory of human • Contingency thinking
• Scientific management
needs • Quality management
• Administrative principles
• McGregor’s Theory X and • Knowledge management and
• Bureaucratic organization
Theory Y organizational learning
• Argyris’s theory of adult • Evidence-based management
personality

For a long time, theorists have been researching the most suitable forms of management for
different work settings. This is where management theories come into play. Although some of these
theories were developed centuries ago, they still provide stable frameworks for running businesses.

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Major Branches In The Classical Approach To Management

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Classical Management Approaches

Four guiding principles of scientific management (Frederick

Taylor)

• Develop for every job a “science” that includes rules of

motion, standardized work implements, and proper working
conditions.
• Carefully select workers with the right abilities for the job.
• Carefully train workers to do the job and give them the proper
incentives to cooperate with the job “science.”
• Support workers by carefully planning their work and by
smoothing the way as they go about their jobs.

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Classical Management Approaches

• Scientific management (the Gilbreths)

– Motion study
• Science of reducing a job or task to its basic physical motions
– Eliminating wasted motions improves performance

• Practical lessons from scientific management

– Make results-based compensation a performance incentive
– Carefully design jobs with efficient work methods
– Carefully select workers with the abilities to do these jobs
– Train workers to perform jobs to the best of their abilities
– Train supervisors to support workers so they can perform jobs to the
best of their abilities

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Classical Management Approaches

Administrative principles (Henri Fayol) — rules/duties of management:

Foresight Organization Command Coordination Control

to fit diverse to make

to lead, efforts sure things
to provide select, and together and happen
to complete
and mobilize evaluate ensure according to
a plan of
resources to workers to information plan and to
action for
implement get the best is shared take
the future
the plan work toward and necessary
the plan problems corrective
solved action

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Classical Management Approaches

Administrative principles (Henri Fayol)

• Scalar chain: there should be a clear and unbroken line of
communication from the top to the bottom of the organization

• Unity of command: each person should receive orders from only

one boss

• Unity of direction: one person should be in charge of all activities

with the same performance objective

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Classical Management Approaches

Bureaucratic organization (Max Weber)

Bureaucracy:

• An ideal, intentionally rational, and very efficient form of organization

• Based on principles of logic, order, and legitimate authority

Characteristics of bureaucratic Possible disadvantages of

organizations: bureaucracy:

• Clear division of labor • Excessive paperwork or “red tape”

• Clear hierarchy of authority • Slowness in handling problems
• Formal rules and procedures • Rigidity in the face of shifting needs
• Impersonality • Resistance to change
• Careers based on merit • Employee apathy

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Foundations In The Behavioral Or Human Resource Approaches To
Management

Organizations
as
communities
Mary Parker
Follett Theory X and
Hawthorne
Theory Y
studies
Douglas
Elton Mayo
McGregor

Human
resource
Theory of Personality
approaches
human needs and
Assumption:
Abraham organization
People are
Maslow Chris Argyris
social and self-
actualizing

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Behavioural Management Approaches

Organizations as communities

– Mary Parker Follett

– Groups and human cooperation:
• Groups allow individuals to combine their talents for a greater good
• Organizations are cooperating “communities” of managers and workers
• Manager’s job is to help people cooperate and achieve an integration of interests

Making every
employee an owner • precursor of employee ownership,
creates a sense of profit sharing, and gain-sharing
collective responsibility

Business problems
involve a variety of • precursor of systems thinking
inter-related factors

Private profits relative • precursor of managerial ethics

to public good and social responsibility

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Behavioural Management Approaches

• Hawthorne studies

– Initial study examined how economic incentives and physical conditions affected worker
output
– No consistent relationship found
– “Psychological factors” influenced results
– Social setting and human relations
• Manipulated physical work conditions to assess impact on output
• Designed to minimize the “psychological factors” of previous experiment
• Mayo and colleagues concluded:
– New “social setting” led workers to do good job
– Good “human relations” = higher productivity
– Employee attitudes and group processes
• Some things satisfied some workers but not others
• People restricted output to adhere to group norms

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Behavioural Management Approaches

• Maslow’s theory of human needs Maslow’s theory of human needs

– A need is a physiological or • Deficit principle: A satisfied need is

psychological deficiency a not a motivator of behavior
person feels compelled to
satisfy • Progression principle: A need
– Need levels: becomes a motivator once the
• Physiological preceding lower-level need is
• Safety satisfied
• Social
• Esteem • Both principles cease to operate at
• Self-actualization self-actualization level

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Behavioural Management Approaches

Maslow’s hierarchy of human needs

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Behavioural Management Approaches

McGregor’s Theory X assumes that workers:

• Dislike work
• Lack ambition
• Are irresponsible
• Resist change
• Prefer to be led

McGregor’s Theory Y assumes that workers are:

• Willing to work
• Capable of self control
• Willing to accept responsibility
• Imaginative and creative
• Capable of self-direction
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 Behavioural Management Approaches

Argyris’s theory of adult personality

• Classical management principles and practices inhibit worker maturation and are
inconsistent with the mature adult personality

• Psychological success occurs when people define own goals

• Management practices should accommodate the mature personality by:

✓ Increasing task responsibility

✓ Increasing task variety
✓ Using participative decision making

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Modern Management Foundations

Foundations for continuing developments in management

Quantitative analysis and tools

Systems view of organizations

Contingency thinking

Commitment to quality and performance

Knowledge management and learning organizations

Evidence-based management

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Modern Management Foundations

Management science or operations research

Quality
control
Inventory Queuing
management theory

Supply chain Linear

management programming

The scientific
applications of
mathematical
Value chain techniques to Network
analysis management models

problems

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 Modern Management Foundations
Quantitative Analysis and Tools
Organizations as Systems
• Analytics – the use of large
data bases and mathematics to
solve problems and make
informed decisions using
systematic analysis
• Typical quantitative approach
to managerial problem-solving
• Problem encountered, it is
systematically analyzed,
appropriate mathematical
models and computations
applied, optimal solution
identified
System
• Collection of interrelated parts that
function together to achieve a
common purpose
Subsystem
• A smaller component of a larger
system
Open systems
• Organizations that interact with
their environments in the continual
process of transforming resource
inputs into outputs
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 Modern Management Foundations
Contingency thinking
• Tries to match managerial
responses with problems and
opportunities unique to
different situations
• No “one best way” to manage
• Appropriate way to manage
depends on the situation
Quality management
• Managers and workers in
progressive organizations are
quality conscious. Quality and
competitive advantage are linked
Total quality management (TQM)
• Comprehensive approach to
continuous quality improvement for
a total organization. Creates context
for the value chain
Continuous improvement
• Continual search for new
ways to improve quality
• Something always can and
should be improved
ISO certification
• Global quality benchmark
• Refine and upgrade quality to
meet ISO standards
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 Modern Management Foundations

Knowledge Management and Organizational Learning

• Knowledge management is the process of using intellectual capital for competitive advantage

• Portfolio of intellectual assets include patents, intellectual property rights, trade secrets, and accumulated
knowledge of the entire workforce

Learning organizations

• Organizations that are able to continually learn and adapt to new circumstances
• Core ingredients include:

Encourage Information
Teamwork Empowerment Participation
learning sharing

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Modern Management Foundations

Evidence-Based Management

• Making management decisions on “hard facts” about

what really works

Evidence-Based Positive Human Resource

Management Practices

• Employment security
• Selective hiring
• Self-managing teams
• High pay based on merit
• Training and development
• Reduced status distinctions
• Shared information
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Summary

1. Throughout history, companies have been putting different management theories

into practice.

2. Not only have they helped to increase productivity but they have also improved the
quality of services. Although these management theories were developed ages
ago, they help in creating interconnected work environments where employees
and employers work hand-in-hand.

3. Some of the most popular management theories that are applied nowadays are
systems theory, contingency theory, Theory X and Theory Y, and the scientific
management theory.

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THANK YOU

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