Evolution of

Management and
Organizational Theory
Agrarian
Prescientific
Classical
Industrial
Neoclassical
Modern
Post Industrial

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 Pre-Industrial Societies
• Biased against management
– Ruling class perceived work,
commerce, and trade as
undignified
– Work was done by slaves
Individuals were bound to their
stations for life
• Rules were not questions
• Profit making was not favorably
viewed by the ruling class
• Money should be made by
conquering

2
 Management Theory
during Pre-Industrial
Societies
• Sporadic(occurring at irregular
intervals), Widely scattered

• Span of Control discussed by

Egyptians

• Socrates discussed leadership

• Plato described work

specialization

3
 Agrarian

• Farm/home was the focus of the

work
• Followed in the footsteps of
parent
• Craftwork was prevalent
• Land meant wealth

4
 Classical Management

• Needed due to Industrial

Revolution
– Two stages of industrialization
• Development of an industrial
infrastructure
– Nationwide Transportation System
– Source of cheap power
– Technological innovations
– Modern Communications
– Networked Financial Institutions
– Educated Labor Force
• Creation of capital goods sector

5
 Administrative Theory
• Henri Fayol (Five Functions of
Management):
– Division of Work
– Authority and Responsibility
– Unity of Command
– Renumeration
– Espirit de Corps: The principle
states that an organization must
make every effort to maintain
group cohesion in the
organization
• Much of knowledge of
organizational structure came
from this theory
6
 Scientific Management
• Four basic tenets (Frederick
Taylor):
– Develop one best way to do each
job
– Select the best individual for the
position
– Ensure the work is carried out in
prescribed fashion (training and
increased wages as the carrot).
– Divide work among employees so
that activities such as planning,
organizing, and controlling are the
prime responsibilities of
managers
7
 Structuralist School

• Ideal Organization (Max

Weber), the Bureaucracy:
– Rules and procedures control
organizational function
– High degree of differentiation
exists between function
– Hierarchy used for reporting
– Rules and norms regulate
behavior
– Ownership and administration are
separate
– Administrative acts are recorded
in writing 8
 Neoclassical Theory
• Pointed out harmful effects of
trying to standardize people
• Studies showed the impact co-
workers (rather than economic
incentives) could have on
productivity
• Social considerations began
receiving attention
• Management must help satisfy
needs and desires

– Two sources - Sociologists (Human

Relations) and psychologists
(Behavioral) 9
Human Relations School

• Hawthorne Experiments
– Regardless what the researchers
did, productivity went up
– High morale was noticed
– Informal organization important

• First work that put the human

factor at the center of their work

10
Hawthorne Experiment

• In 1927, a group of researchers

led by Elton Mayo and Fritz
Roethlisberger of the Harvard
Business School were invited to
join in the studies at the
Hawthorne Works of Western
Electric Company, Chicago.
The experiment lasted up to
1932.

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 Hawthorne

• The Hawthorne Experiments

brought out that the productivity
of the employees is not the
function of only physical
conditions of work and money
wages paid to them.
Productivity of employees
depends heavily upon the
satisfaction of the employees in
their work situation.

12
• Mayo's idea was that logical
factors were far less important
than emotional factors in
determining productivity
efficiency. Furthermore, of all
the human factors influencing
employee behaviour, the most
powerful were those emanating
from the worker's participation
in social groups.

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• Thus, Mayo concluded that
work arrangements in addition
to meeting the objective
requirements of production
must at the same time satisfy
the employee's subjective
requirement of social
satisfaction at his work place.

14
 Behavioral School

• Bases for education today

• Human behavior based on

orientation to personal growth,
accomplishment, and inner
development

• Jobs must provide the

opportunity to develop
themselves

15
 Post-Industrial Society
• Characterized by:
– Basic shift in orientation from goods-
producing to sevices-rendering /
information-processing
– Gradual and steady rise in the influence
of professional and technical
occupations
– Growing influence and centrality of
theoretical knowledge as source of
innovation and policy formation for
society
– Increased need for planning and control
of technology and its growth
– Emergence of integrated computer
systems to create new intellectual
technology
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Post-Industrial Pressures

• Growing Global Competition

• Increased Governmental
Regulations dealing with Social
Controversies
• Resource Scarcity
• Increased labor-force diversity
• Changing cultural norms
• Supply-demand pressures

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 Recent Development in
Managerial Theory
• Emergence of Management
Science and Operations
Research in decision making
• Development of Systems
Theory (total environment)
• Contingency Theory
• Growing influence of
Organizational Behavior

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 Management Science

• Applying quantitative
techniques to management and
organizational problems

• Started with logistical problems

associated with WWII

• New technologies continue to

demonstrate the need to
consider social and
organizational aspects
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 Systems Theory

• Subsystems include:
– Task/Technological subsystem
• Basic work of organization
– Administrative/Structural
Subsystem
• Formal organization
– Subsystem of Individuals
• Their knowledge, skills, attitudes,
values, expectations, perceptions
– Emergent Subsystem
• Implicit arrangements, group
norming

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 System

• Meaning of "System": The

word system is derived from the
Greek word meaning to bring
together or to combine. A
system is a set of interconnected
and inter-related elements or
component parts to achieve
certain goals.

21
• The Systems Approach: An
organization as a system has
five basic parts;
– Input
– Process
– Output
– Feedback and
– Environment

22
 Contingency School

• Universal Principle:
– No universal principles of management
can be applied in all situations
• Open Systems Planning:
– Each organization has its own unique
set of technical, human, and market
inputs
• Formal Design of Organizations
– Routine industries need hierarchy,
Complex industries need matrices
• Leadership Style
– Has to be situational

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• It is the basic function of
managers to analyse and
understand the environments in
which they function before
adopting their techniques,
processes and practices.
• The application of management
principles and practices should
therefore be continent upon the
existing circumstances.

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