e r T w o :

C h a pt m e n t o f
D e v el o p
n c e a n d h t
E m e r g e t T h o u g
a g e m e n
M a n

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 Major points from the past lesson
Types of management
Managerial functions
Roles of Managers
Management skills

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LEARNING OBJECTIVES
• After studying this chapter, you should be able to:
1. Discuss why knowledge of the evolution of
management theories is important to managers
2. Explain the contributions of the following:
a. Classical schools of management thought
b. Behavioral school of management thought
c. Quantitative school of management thought
d. Systems school of management thought
e. Contingency school of management thought
f. Quality school of management thought
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Overview
How Traditional Organizations Work at ancient
time ?
• Management is as old as human civilization.
• The practice of management existed since the
beginning of organized human activity
- That is since the day when people first attempted
to accomplish goals by working together in a
group.
- Management thought has been shaped over a
period of centuries by three major factors;
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 Cont’d
i. Social-
• refers to those aspects of a culture that guide and influence relationship
among people.
ii. Economical-
• pertain to the availability, production and distribution of resources in a
society.
iii. Political
• refers to the influence of legal and political institution on people and
organization.
• From the examples that show management was effectively used in
ancient time;
– The first government organization (Sumerians 3000BC)
– Egyptian Pyramid built around 2800 BC by 100000 men working for over 20 years
– The Roman Empire (200 BC- 400 AD)
– Obelisk of Axum built around 2BC
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Early Management Pioneers (Contributors)
• Even though the management practice go back several
thousand years, development of management as field of
knowledge is recent.
• Management theories began to flourish since 1800 C; (it
starts with the industrial revolution)

PRE-CLASICAL CONTRIBUTORS
1. Robert Owen (1771-1858)
• He was a British industrialist and owner-manager of cotton
mills in Scotland.
• At that time working and living conditions for employees
were very poor.
• Workers were treated as tools and machine.
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Cont…
• From the changes that he made
 Reduced working hrs from 13 to 10 and
half day.
 Set minimum hiring age 10 years.
 Provided meal, housing, and shopping
facilities for employees.
 Improved working condition in the factory
• For his contribution Robert Owen called
“father of modern personnel”.

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Cont’d…

2. Charles Babbage (1792-1871)

• He built the first practical mechanical

calculator and a prototype of modern
computers.
• Because of this he is called “The father of
modern computing”.
• Some of his contributions are discussed
as follows.
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Cont’d…
• From the contributions of Babbage to
management;
 The use of mathematics to efficiently use
facilities and materials.
 Profit sharing system (bonus for suggestion and
part of wage that depends on the company profit)
 Division of labor (improve the skill of workers and
reduce training costs)
 Importance of good relationship between
management and workers.
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Cont’d…
3. Adam Smith
• He contributed to the development of
management by writing about division of labor
in his book “The Wealth of Nation”.
Adam Smith (1776) developed the first theory of organizational
management
 based on division of labor and
 work specialization
• He indicated that specialization could increase efficiency by
- Minimizing the loss of time
- Increasing speed
- helping invention of machinery
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 Development of Management Theories
TDWP

Learning
org.

TQM
Contingency View
m an
Hu tion,
a
rel RP, l System theory P
H iora
Scientific,
e hav nce Mgmt. science P.
Bureaucratic and B ie
sc
Administrative
1870 1880 1890 1900 1910 1920 1930 Human
19401950 Perspectives
1960 1970 1980 1990 2000 2010

Classical Perspectives

Dr. Bogale A. 11
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 A. Classical Management Theory
• The first study of management called the
classical approach.
• Classical management theory emerged during
the industrial revolution.
• The classical viewpoint is a perspective on
management that emphasize finding ways to
manage work and organizations more
efficiently.

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 Cont’d…
• It is made up of three different
approaches:

1. Scientific Management
2. Administrative Management (classical
organization theory) and
3. Bureaucratic Management.

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 1. Scientific Management Theory
• Scientific management thoroughly studying and
testing different work methods to identify the best,
most efficient way to complete a job.
• This theory emphasize on the scientific study of
work methods in order to improve worker efficiency.
• The major contributor of scientific management is
Fredric W. Taylor: father of scientific management.
• Additional contributors:
- Frank and Lillian Gilbreth
- Henry Gantt
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 Frederick W.Taylor (1856-1915)
• Taylor is also known as “the father of scientific
management”
• Taylor was a foreman in Midvale steel company.
• He studied the companies problem and found out that;
 Management had no clear concept of worker-
management responsibility.
 No effective work standards were applied
 No incentive was used to improve labor’s performance
 Managerial decisions were made based on intuition,
rule of thumb.
 High level of soldiering (delay in performance) fearing
turnoff and wrong pay system.
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Cont’d…
• To solve the above mentioned problems
Taylor put as a solution
1. Timed each element of the work and
standardized how much each worker has to
produce given the required resource per day
or per month.
2. Introduced “piece rate pay system”
(differential rate system)

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Cont’d…
• From the studies, Taylor conducted
1. Time and Motion Study
- The objective of this study was to standardize
activities (to determine full days work)
The steps - divide the task in to motions
- eliminate unnecessary motion
- select the best way to do the job
- timing each motion (with out allowance
for delay)
- understand how many unit to produce per
day.
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2. Uniform method for routine task
Objective: to adjust work with worker
- Intended to make uniform the conditions under
which the standards could be set and met.
3. Functional Foremanship study
Objective: To scientifically select the best worker
for a given job based on his skill and potential
for learning.

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4. Individual Incentive
Objective: to determine the appropriate wage
or salary
• This study helped him to find a solution for
the problem of soldiering.

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 Cont…
• After conducting the above study he wrote a book called “
principle of scientific management”. The four principles
included are
1. Study each element of work to determine the “one best
way” to do it
2. Scientifically select, train, teach, and develop workers to
reach their full potential
3. Cooperate with employees to ensure implementation of
the scientific principles
4. Divide the work and the responsibility equally between
management and workers.

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 Weaknesses of scientific management

1. He misread the human element

 He equated people with machine
 He saw no other motivator other than money
 He fail to understand the complex nature of
human behavior
2.It was relevant to solve only the problem of
lower level managers.
3.Its application was not smooth

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 Frank and Lilian Gilbreths
• Frank Gilbreth (father of motion study)
• Lilian Gilbreths (first lady of management)
• They are contemporaries of Taylor and part of the
original scientific management pioneers
• They work on the elimination of waste and the
discovery of ‘one best way’ of doing work.
• Identified 18 on the job motions and called them
therbligs.
• He decreases the movements from 18 to 5 at the same
time he decrease the production time by 2 and half.
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 Henry L. Gantt
• Gantt is best known for the Gantt chart (a bar chart for
planning and controlling work).
• But he also made significant contributions to management
with respect to;
 pay-for-performance plans and
 the training and development of workers.
• Develop a system called ‘task and bonus wage plan’.
• Workers who produced more received a daily bonus,
but those who didn’t simply received their standard
daily pay.
• Here no penalty for not meeting standards.
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 2. administrative management (Classical organization ) theory

• This theory focused on the management of the entire organization unlike the
scientific management theory which focuses on production (shop level efficiency).
• Henri Fayol was the first to develop this theory.
• He is the one who identify ;
1. All activities that occur in the industry or business organizations could be divided
into six main groups.
• Technical (production, manufacturing);
• Commercial (buying, selling, exchange);
• Financial (obtaining and using capital);
• Security (protection of property and persons);
• Accounting (balance sheet, stocktaking, statistics, costing);
• Managerial (planning, organizing, commanding, coordinating, controlling).
2. Management as a separate field of study
3. General management principles
4. Basic functions of management

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 Fayol’s 14 principles of management
1. Division of labor : work must be subdivided to facilitate
specialization
2. Authority and responsibility : Authority creates responsibility
and, hence authority and responsibility should go hand in hand;
3. Discipline: Clearly defined rules and procedures are needed at
all organizational levels to ensure order and proper behavior.
4. Unity of command ----one employee from one boss
5. Unity of direction : all operations with the same objective must
have one manager and one plan;
6. Subordination of individual interest to the general
interest:Employees must put the organization’s interests and
goals before their own.
7. Centralization: Strike a balance depending on the circumstances
and employees involved.
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Cont’d…
8. Remuneration of staff/personnel ---compensation should benefit
both parties
9. Scalar chain/chain of command---- a clear line of authority or chain
of command should extend from the highest to the lowest level of an
enterprise. So that clear flow of information and communication will
exist.
10. Order ---- there is a place for everything and everything in its place.
Proper scheduling of work and timetables to complete work is
important
11. Equity-Kind, fair, and just treatment for all will develop devotion and
loyalty.
12. Stability of tenure of personnel ---- low turnover
13. Initiative : workers should feel like an active part of the organization
14. Esprit de corps : harmony and union help to build the strength of an
enterprise
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 Contributions of classical organization
theory
• The position Fayol took in distinguishing
management as a discipline is worth studying
• The 14 basic management principles are
developed
• The five element of administration, which with
minor modification today are called functions
of management.

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 Limitations of classical organization theory

• Some of the principles are rigid.

Example
• Chain of command
• Unity of command
• The 14 principles are applicable in a relatively
stable and predictable environment hence they
have less applicability in the today’s turbulent
environment.
• The principles are too general for today's
complex organization.
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 Discussion
1. What are the similarities and differences
between scientific and classical organization
theory?

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 3. Bureaucratic theory
• Max Weber (1864–1920) introduces most of the concepts in this
theory.
• Taylor and Fayol: concerned for solving practical managerial
problems.
• Max Weber: concerned for the more fundamental issues of how
organizations are designed and structured.
• Bureaucracy comes from the French word bureaucratie.
• Since bureau means desk or office and cratie or cracy means to
rule, bureaucracy literally means to rule from a desk or office.
• According to Weber, however, bureaucracy is “the exercise of
control on the basis of knowledge.
• A bureaucratic system of administration is based on six principles.

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 Benefits of bureaucracy
• Specialization
• Overlapping duties can easily be avoided
• Hiring and promotion are based on merits and
excellence
• Organization continues despite the manager
• Consistent employee behavior
• Involvement with personalities is avoided.

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 Weakness of bureaucracy
• There is too much paper work and red tapes.
• Employees do not care about the organization due to
impersonality
• It inhibits initiative and growth of workers
• Resistance to new ideas and change
• Disregards the informal organization or the social
environment
• Over-rigidity / inflexibility
• Don’t easily adopt to change environment
• Top down communication
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B. Behavioral management theory
• It is a study of observable and verifiable human
behavior in organizations by using scientific
methods.
• Abraham Maslow, Douglas Macgregor & Elton
Mayo were the well known contributors of this
theory.
• Of these, Elton Mayo was the most prominent one.
• Focus on human dimensions of organization.
• Objective: to identify factors that affect
productivity of employees.
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 Hawthorne study
• The study had four phases:
Phase one: Illumination experiment
 To study the effect of illumination on out
put
 Finding: no strong relationship b/n output and light
Phase two: the relay assembly test room experiment
 To study the effect of physical change on productivity
 Finding: Productivity is not affected by physical
change.
 Conditions such as rest breaks and workday length,
physical health, amount of sleep, and diet have no
effect on productivity
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 Cont’d
Phase three: the massive interview program
 To identify factors that affect employees productivity.
 Over 20,000 employees were involved
 Finding: informal groups in an organization remained
significant factor that affected the workers
Phase four: the Bank wiring observation room study
 To study the effect of piece work incentives(economic
incentives) on performance
 The workers' actions were affected by factors like-
individuals with whom they were given job or to whom
they offered assistance.
 Finding: incentives are less important in determining out
put.
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 Findings of Hawthorne experiment
• Physical working condition did not affect
productivity
• There are other factors that affect productivity. thus
are social and psychological nature
• Informal groups were important in organizational
work environment.
• Leadership that can understand individual and
group behavior were necessary.

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 Contributions of Behavioral management
theory
 Change the management thinking: managers
realize the importance of people and
workers as valuable resources.
 Found out that the satisfaction of social and
psychological needs could result in more
performance of workers.

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 Limitations of behavioral management
theory
• The complexity of individual behavior makes
the predication of that behavior difficult.
• There style was unethical as they used human
being as experimental units in laboratory.

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 3. Modern Approach
This approach is the last approach and it consists:
A. The systems approach
B. The contingency approach
C. The management science approach
A. Systems Theory
• The systems theory approach is based on the notion that
organizations can be visualized as systems.
• A System is a set of interrelated parts that operate as a
whole to pursuit of common goals.
• The systems approach to management views organizations
and the environment as sets of interrelated parts to be
managed as a whole in order to achieve a common goal.
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• According to the systems approach, organization
system has four major components. 
a. Inputs- are the various human, financial, equipment
and informational resources required to produce goods
and services.
b. Transformation process - are the organization's
managerial and technological abilities that are applied
to convert inputs in to outputs.
c. Outputs - are the products, services and other
outcomes produced by the organization
d. Feedback- is information about results and
organizational status relative to the environment, it is a
key to system control.
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 System Theory…

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Characteristics of systems
• A system has several distinguishing features
– A system can be open or closed
– System has boundary
– System has subsystems
– Failure in one subsystem can be considered as
failure of the entire system

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• In organization context, by this theory,
organizational elements will be more productive
if they work together (synergy) rather than
working separately (or individually).

• According to system theory, Responsibility of

management is to keep a balanced relationship
between different parts of relationship and make
its organization have smooth relationship with
the environment.     
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B. Contingency theory
• In the mid-1960s, the contingency view of
management or situational approach emerged.
• This view emphasizes the fit between
organization processes and the characteristics
of the situation.
• The contingency approach assumes that
managerial behavior is dependent on a wide
variety of elements. Thus, it provides a
framework for integrating the knowledge of
management thought.
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• According to contingency theory, since organization is an
open system, it interacts with several external
environment factors.
• Since these factors in environment changes rapidly, it is
not right to insist on only one way of managing an
organization.
• Therefore it rejected the idea of one best way of
managing. Instead, it supported situational management
style.
• Generally, it is more flexible, and needs management to
identify different techniques to be applied in different
circumstances, at different time.
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 C. Management Science
• It uses quantitative techniques to maximize
resources.
• Quantitative management: utilizes linear
programming, modeling, simulation systems to
solve managerial problems.
• Operations management: techniques to analyze
all aspects of the production system.
• Total Quality Management (TQM): focuses on
improving quality.
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 4. The Learning Organization (LO)
LO can be defined as one in which everyone is
engaged in identifying and solving problems,
enabling the organization to continuously
experiment, change, and improve
The essential idea is problem solving, in contrast
to the traditional organization designed for
efficiency; in LO all employees look for
problems, such as understanding special
customer needs to meet the purpose

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 The Learning Organization (LO)…
To develop a learning organization, managers
make changes in all the subsystems of the
organization.
To promote continuous learning make a shift
to Team based
team-based structure, structure

empowering employees
sharing information

Empowered Open
employee information
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 The Learning Organization (LO)…
Team-based structure
An important value in a LO is collaboration and
communication across departmental and
hierarchical boundaries.
Self-directed teams are the basic building
block of the structure.

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 The Learning Organization (LO)…
Team-based structure

These teams are made up of employees with different

skills who share or rotate jobs to produce an entire
product or service

People on the team are given the skills, information,

tools, motivation, and authority to make decisions central
to the team’s performance and to respond creatively and
flexibly to new challenges or opportunities that arise.

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The Learning Organization (LO)…
Employee Empowerment
Empowerment means unleashing the power
and creativity of employees by giving them
the freedom, resources, information, and
skills to make decisions and perform
effectively.
In LOs, people are a manager’s primary source
of strength, not a cost to be minimized.

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 The Learning Organization (LO)…
• Employee Empowerment

• Companies that adopt this perspective believe

in treating employees well by providing
competitive wages and good working
conditions, as well as by investing time and
money in training programs and opportunities
for personal and professional development

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 The Learning Organization (LO)…
Open Information
People have to be aware of what’s going on
They must understand the whole organization as
well as their part in it
Formal data about budgets, profits, and
departmental expenses are available to
everyone
Managers encourage people throughout the
organization to share information
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 5. The Technology Driven Workplace
The shift to e-Business

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 The Technology Driven Workplace
Ideas, information, and relationships are
becoming more important than production
machinery, physical products and structured
jobs
TDWP shifted to e-business
Managers and employees focus on
opportunities rather than efficiency

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 Questions
• A college professor told her students, “The purpose
of a management course is to teach students about
management, not to teach them to be managers.”
Do you agree or disagree with this statement?
Discuss.
• As organizations become more technology-driven,
which do you think will become more important—
the management of the human element of the
organization or the management of technology?
Discuss
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 The End!

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