MANAGEMET THEORIES

• The evolution of management thought can be

studied in 3 parts:
• Early classical approaches
• Neo-classical approaches
• Modern approaches
 Early classical approaches
• Scientific Management
• Administrative Management
• Universalist Approach
• Bureaucracy
 Scientific Management
• Frederick Winslow Taylor is considered to be
the Father of Scientific Management.
• He conducted a series of experiments in 3
companies: Midvale Steel, Simonds Rolling
Machine and Bethlehem Steel.
 Contributions
 Time and Motion Study
• Each motion of the job was timed with the help of a stop
watch and developed shorter and fewer motions.
• Thus best way of doing a job was found. This replaced the
old rule of thumb knowledge of the workman.
 Differential Payment
• Taylor linked incentives with production.
• A worker receives a low piece rate if he produce the
standard number of pieces and high rate if exceeds the
production.
• The idea is that high piece rate would motivate workers to
increase production.
 Drastic Reorganization of Supervision
• Taylor suggested two new concepts:
• separation of planning and doing
• Functional foremanship

• The workers used to select himself the tools and decide the
order in which the operations have to be performed.
• The foremen simply told the workers what jobs to perform
but not how to perform.
• Taylor suggested that work should be planned by foreman
but not the worker.
• Also suggested that there should be many foremen as there
are special functions involved in doing a job.
 Scientific Recruitment and Training
• Taylor emphasized the need for scientific
selection and development of the worker.
• Then the worker can do a higher, more
interesting and more profitable class of work
than he has done in the past.
 Cooperation between the Management and
Workers
• Taylor believed that management and worker
should have a common interest in increasing
productivity.
• Taylor’s principles and concepts were refined and
enlarged by his followers, Henry L.Gantt and
Gilbreth.
• Gantt suggested that willingness to use correct
methods and willingness to use skills in
performing a task was equally important along
with knowing the method of doing and having
skills.
• Thus the importance of human element in
productivity was identified.
• Gantt introduced two new features in the Taylor’s incentive
scheme.
• Every worker who finished a day’s workload was given a
50% bonus for that day.
• Foremen also earn a bonus for each worker who finishes
the daily workload and an extra bonus if all the workers
reached the target.
• Gantt’s idea is that foremen also get motivated to train his
workers to do a better job.
• Every worker’s progress was recorded on individual bar
charts. (black –days when task was completed; red- days
when not completed)
• Thus a charting system for production control originated
called the “Gantt chart”.
• Frank and L.Gilbreth made motion and fatigue
study.
• Using motion cameras, they found the most
economical motions for bricklaying.
• According to Gilbreth, motion and fatigue
studies raised workers’ morale. (physical
benefits & feeling of management’s concern
for the workers)e
 Contributions
• Time and motion study created awareness that the
tools and physical movements involved in a task can be
made more efficient.
• Scientific selection of workers recognise that without
ability and training, a person cannot be expected to do
his job properly.
• Encourage the concept of identifying one best way of
doing a job. Specialised and standardised jobs evolved.
• This approach evolved into job engineering: concerned
with product, process, tool design, plant layout, SOPs,
work measurement etc.
 Limitations of Scientific Management
• Emphasis only on muscular tasks at the floor level and
neglected the areas of problem solving and decision
making.
• Taylor believed that incentives are enough to motivate
workers, which is not always correct. He is also
motivated by other needs like security, social needs
etc.
• Separation of planning and doing is like swallowing
food and digesting it carried on two separate bodies.
• A worker taking orders from 7 to 8 different bosses
leads to confusion.
 Bureaucracy
• Max Weber, a German sociologist is known as the
Father of Bureaucracy.
• Weber distinguished administration into 3 basic types.
 Leader oriented
• No delegation of management functions.
• All employees are loyal to the leader.
 Tradition oriented
• Managerial positions are handed down from one
generation to generation.
 Bureaucratic: Positions are filled based on the person’s
ability to hold it.
• Insist on following standard rules
• There is systematic division of work
• Principle of hierarchy is followed
• It is necessary for the individual to have
knowledge and training in the application of
rules.
• Administrative acts, decisions and rules are
recorded in writing.
• There is rational personnel administration.
 Limitations
 Over conformity to rules
 Buck passing: In situations where there are no rules,
employees are afraid of taking decisions
independently. Initiative is stifled.
 Trained incapacity: Repeated training in specialised
area only. Incapable to respond to new situations. This
limits the employee’s contribution to the organisation.
 Unresponsive to changes in the environment
 No real right of appeal: Feel dissatisfied as the
employees have no real right of appeal.
 Displacement of goals
 Neo Classical Approach
• These approaches are called neo-classical
because they do not reject the classical
concepts but only try to refine and improve
them.
• Human Relations Approach
• Behavioural Approach
 Human Relations Approach
• The inspiration for this approach came from the
Hawthorne experiments conducted by Elton
Mayo.
• The following are the experiments conducted at
Western Electric Company.
• Illumination experiments
• Relay Assembly Test Room
• Interviewing Program
• Bank Wiring Test Room
 Illumination Experiments
• In the first phase, the belief is that productivity is
correlated with illumination.
• The illumination was changed to various levels and the
productivity was measured for a group of workers.
• Later two groups were chosen. One group(control
group) worked under constant level of illumination.
• Second group (test group) worked under changing
levels of illumination.
• It was found that illumination affected production only
marginally.
 Relay Assembly Test Room
• Objective:
• To know the impact of illumination, length of working day, rest
pauses, (frequency, duration) and other physical conditions on
production.
• Group of 6 women workers who were friendly were chosen.
• They were told about the experiment and were asked to work in a
separate room with a researcher.
• During the study several variations were made in the working
conditions.
• The results have shown no relation with working conditions.
• They were not supervised, not offered extra reward. But something
else was happening in the test room which is responsible for not
impacting production.
• Feeling of importance, opportunity for
participation.
• Tension free interpersonal and social relations
as there is no strict supervision.
• High group cohesion
 Interviewing Program
• Objective: To know the basic factors
responsible for human behaviour at work.
• More than 20,000 workers were interviewed.
• Directive and non directive type of
interviewing helped to get free talk from the
workers.
• The study revealed that social relations inside
the organization had a great influence on the
attitudes and behaviours of workers.
 Bank Wiring Observation Room
• In depth observation of 14 men
• Making terminal banks of telephone wiring
assemblies.
• Objective: To determine the effect of informal
group norms and formal economic incentives on
productivity.
• Findings: It was found that group evolved its own
production norms for each individual worker
(much less than that set by management).
• Workers would not produce more that that set
by the group.
• This artificial restriction protected weaker and
slower worker from being thrown out of job.
• Those workers who tried to produce more
than the group norm were isolated, harassed
in several ways.
• Those who were too slow were nick named
chisellers.
 Contributions of Human Relations
Approach
• A business organization is a social system where it
is important to provide social satisfaction to the
workers.
• There is no correlation between improved
working conditions and high production.
• A worker does not work for only money.
• Employee centred, democratic and participative
style of supervisory leadership is more effective
than task-centred leadership.
• The informal group is the dominant unit of
analysis in organizations.
 Behavioural Approach
• Douglas McGregor, Chris Argyris, Abraham
Maslow, Kurt Lewin – behavioural scientists.
• Human motivation is an important variable in the
design of organization.
• More flexible organizational structures.
• Participative and group decision making.
• Self direction and control
• Leadership styles
• Organizational conflict, change management
• Organizational Development
 Modern Approaches
Quantitative Approach
• Operations Research was the only quantitative
method of analysis in the beginning (during
the World War II).
• Statistical methods for decision making
Systems Approach
• This approach provides an integrated
approach to management problems.
 Systems Approach
• A system is a set of interdependent parts
• Interdependence
• No part of the system can be accurately
perceived without understanding all its parts.
• System can be either open or closed.
• Every system has a permeable boundary.
• Social Responsibility
• Social Responsibility of business towards
• The consumers
• The employees
• The share holders
• The state
Project: Social Performance of Business in INDIA
 SOCIAL AUDIT
• It is a systematic study and evaluation of the
organization’s social performance as
distinguished from its economic performance.
• Social performance- any organizational activity
that effects the general welfare of society.
• Tata Iron and Steel Company is the first industrial
organization in India to conduct social audit of its
performance in 1979.
• Regarding social and moral responsibilities to the
consumers, employees, share holders, society.
 Business Ethics
• Application of moral principles to business
problems.
• Gender discrimination
• Pay discrimination
• Employees’ right to privacy
• Lack of promotions to women etc.
• Corporate Governance
• Whistle Blowing