Evolution of management theory

INTRODUCTION

We cannot deal with practical management issues without some reference to theory. Hence we now
deal with a fundamental concept - management theory. The problem with this subject is that
management theory is continuously developing, so we do not have one set theory to deal with but a
number of theories which have been developed throughout the 21st Century. One of the problems
which faces all managers, and you are included in this, is to synthesize these theories into a form of
coherent whole which you can use in your future everyday work. The theories are such that they don't
give an exact or optimal solution; the principle of ‘equifinality’ operates whereby a number of paths may
be taken to the same or a similar solution. You, as a manager, have to make decisions as to which route
is best for you and your company or team. What follows is a very brief overview in chronological order.

FREDERICK TAYLOR - SCIENTIFIC MANAGEMENT

The basic approach of Taylor and his followers was to break all work down into a series of operations
which could be analysed and rearranged in order to produce more efficient production, hence the term
Scientific Management. Taylor's analyses were helped along by people such as the Gilbreths who
produced Therbligs; diagrammatic representations of production processes. Taylor showed by practical
example that by choosing the right people (in terms of physical characteristics) and organising their
work in an appropriate manner productivity could be greatly improved. He went as far as redesigning
the shovels which workmen used to shovel coke into blast furnaces. His work undoubtedly has some
merit and is a basis for productivity improvement but his ideas and methods were seen as de-
humanizing and so, despite their initial popularity at the early part of the century, they have been
heavily criticized.

** Now read pp 102-106 of Writers On Organizations

To think about: would this be accepted by workers in a Hong Kong factory? How about a Swedish
factory?

HENRI FAYOL - 14 PRINCIPLES OF MANAGEMENT

Henri Fayol, a mining engineer, produced his treatise on General and Industrial Management in 1916.
This was probably the first serious attempt to properly define management as a discipline and listed
below are Fayol's fourteen principles preceded by his definition of the five functions of management.

5 Functions:

1. to forecast & plan

2. to organise

3. to command

4. to coordinate

5. to control

14 Principles:

1. Division of labour

2. Authority - right of management

3. Discipline - responsibility of workers

4. Unity of command

5. Unity of direction

6. Subordination of individual interest

7. Remuneration

8. Centralisation & decentralisation

9. Scalar chain of command

10. Order

11. Equity

12. Stability of Tenure

13. Initiative

14. Esprit de corps

** Now read pp 97-101 of Writers On Organizations

To think about: Do Fayol's principles still hold? Have you come across them in any organisation you
have worked in?

BUREAUCRACY

Surprising as it may seem to you, particularly those who have had dealings with the Civil Service,
Bureaucracy (as originally defined by Weber) is the most efficient method of organising large
organisations and was also designed to be fair to all employees (in terms of conditions of service and
promotion). Weber identified three types of authority in an organisation:

Charismatic; based on the personal qualities of the leader

Traditional; based on past precedent

Rational-legal or bureaucratic; where the clear hierarchy and standardised procedures allow the
impersonal exercise of authority and leads to efficient operation.

** Now read pp 5-9 of Writers On Organizations

HUMAN RELATIONS SCHOOL

Partly as a reaction to Taylorism, and partly by chance, researchers began to investigate the social and
psychological aspects of work. Foremost in the field was Elton Mayo who conducted the famous
Hawthome experiments. These aimed to look at the effect that changes in working environment had on
worker productivity but the results that were achieved were confounded by the social interactions of
the groups being studied. This finding stimulated further research into this field based on the premise
that workers' performance improves when management shows an interest in them. Mayo concluded
that:

 man is motivated by social needs and satisfies those needs through social interaction at rather
than with work itself;

 the work group has a greater influence on the individual than incentive schemes or managerial
actions.

These findings are in some ways a preview of the work of Maslow (and, later, Herzberg) and were
taken a step further by Douglas MacGregor in his Theory X and Theory Y.
** Now read pp 157-160, and 172-176 of Writers On Organizations

To think about:

1. What are the main ideas of the Human Relations school;

2. What would be the major criticisms of the Human Relations school as applied to modern-day
management.

THE SYSTEMS APPROACH

In the late 50's and 60's the Tavistock Institute took up the task of analysing the organisation as a socio-
technical system. Systems theory views the organisation as a whole which is a set of interacting sub-
systems with a boundary through which inputs to and outputs from the system pass. This relationship
between system and environment is a crucial element in systems. Tavistock took the view that all
previous research was both of merit and, at the same time, too restrictive. The technological view, the
organisational view and the human relations (or psycho-social view) all were concerned with what were
essentially sub-systems of a larger system which interacted with its environment.

Or to put it slightly differently the classical approach emphasised the technical requirements of the
organisation and its needs – ‘organisations without people’; the human relations approach emphasised
the psychological and social aspects, and considerations of human needs – ‘people without
organisations’.

Higgin and Jessop (1965:88) saw the building process as starting with "a clients need to build" and
ending with the "satisfaction of this client need". A feature of the building process was the socio-
technical system within which it operated: that is, technical resources of materials and equipment were
transformed into the finished building through the resource controllers whose task was to form
relationships between interdependent, autonomous organisations by patterns of communications which
had more or less social content. In fact three main functions were distinguished in the building process:
design, construction and co-ordination (1965:57)

This process then is seen as a series of interdependent parts which operates within a system comprising
of people who manage and supervise it and have their own goals. The process is thus controlled by
formal and informal procedures.

** Now read pp 177-184 of Writers On Organizations

Johnson, Kast & Rosenweig (in "The Theory and Management of Systems". 3rd Ed.) provide the
following diagram to illustrate the organisational system and this view has been adapted many times
over since its publication.

They explain the concept as follows:

The internal organisation can be viewed as composed of several major subsystems. The organisational
goals and values are one of the more important of these subsystems. The organisation takes many of its
values from the broader sociocultural environment. A basic premise is that the creation as a subsystem
of the society must accomplish certain goals which are determined by the broader system. The
organisation performs a function for the society and if it is to be successful in receiving inputs, it must
conform to social requirements.

The technical system refers to the knowledge required for the performance of tasks, including the
techniques used in the transformation of inputs into outputs. The technical system is determined by the
task requirements of the organisation and obviously will vary depending upon the particular activities.
The technology frequently prescribes the type of organisational structure and psychosocial system.

Every organisation has a psychosocial system which consists of individual behaviour and motivation,
status and role relationships, group dynamics, and influence systems. Obviously, this psychosocial
system is affected by external environmental forces as well as by the tasks, technology, and structure of
the internal organisation.

The organisation structure can be considered as a third major subsystem intermeshed between the
technical and the psychosocial subsystem. Structure is concerned with the ways in which the tasks of the
organisation are divided (differentiation) and with the coordination of these activities (integration). In
the formal sense, structure is set forth by the organisation charts, by position and job descriptions, and
by rules and procedures. It is also concerned with the pattern of authority, communication, and work
flow. The organisation's structure provides for formalisation of relationships between the technical and
psychosocial subsystems. However, it should be emphasized that this linkage is by no means complete
and that many interactions and relationships occur between the technical and the psychosocial
subsystems which bypass the formal structure.

The managerial system spans the entire organisation by relating the organisation to its environment,
setting the goals, and planning, organising, and controlling the necessary activities.

CONTINGENCY THEORY

The adoption of a systems view of Organisations inevitably leads to a reappraisal of the role of
management theories; each theory or school of thought can be no longer viewed as an independent
approach. What is required is a search for patterns of relationships between the various subsystems.
Lawrence and Lorsch summed this up in 1970:

During the past few years there has been evident a new trend in the study of organisational
phenomena. Underlying this new approach is the idea that the internal functioning of organisations
must be consistent with the demands of the organisation task, technology, or external environment, and
the needs of its members if the organisation is to be effective. Rather than searching for the panacea of
the one best way to organise under all conditions, investigators have more and more tended to examine
the functioning of organisations in relation to the needs of their particular members and the external
pressures facing then Basically, this approach seems to be leading to the development of a
"contingency" theory of organisation with the appropriate internal states and processes of the
organisation contingent upon external requirements and member needs.

So, where has this approach been applied to organisations you may well ask? Well, the work of Bums
and Stalker is a good example of this approach. They defined two types of organisation:

Mechanistic - characterised by a rigidly prescribed organisation structure and well-defined tasks,

methods and duties assigned to each functional role. Communications follow the vertical hierarchy.
Organic - characterised by a flexible structure where individual tasks are constantly adjusted and
redefined and where lateral rather than vertical communications are emphasized.

Lawrence and Lorsch found that:

The mechanistic organisational form is most appropriate for routine activities where productivity is the
major objective, where technology is relatively uniform and stable, where decision making is
programmable, and where environmental forces are relatively stable and certain.

The organic (or adaptive) organisational form is most appropriate for nonroutine activities where
creativity and innovation are important, where heuristic decision-making processes are necessary, and
where the environment is relatively uncertain and turbulent.

One must be consistent in applying contingency theory: the impact of organisational forms and norms
on individual employees is an important factor, some of us, dependent on our background, education
and culture, are more comfortable in one form of organisation rather than another. We will return to
this point when we deal with recruitment and selection.

You may now find it interesting to refer to the paper by Peter Lansley on Building Services
Subcontractors where he makes use of Burns & Stalker's findings in his own research into the
construction industry.

** Now read pp 53-63 of Writers On Organizations

Finally read the following sections of Writers On Organizations: pp. 3-4, 51-52, 95-96, 131-132, 155-
156, 185-186

References

D. S. Pugh & D.J. Hickson (1996), "Writers on Organizations " 5th Edition, Penguin Books Ltd.

Higgin, G. and Jessop, N., 1965, Communications in the Building Industry - The Report of a Pilot Study.
Tavistock Publications, London.

(Adapted from the course material of Prof. Steve Rowlinson)