MANAGEMENT THEORY AND PRACTICE

CHAPTER TWO

MANAGEMENT YESTERDAY AND TODAY

Facilitator
Chala Dechassa ( PhD candidate)

10/19/22 RVU-Bishoftu 1
 EVEDENCES
• The organization and practice of management can be dated
back to thousands of years ago.
• The Egyptian civilization was known for planning,
organizing, and controlling during the construction of
pyramids
• The Great Wall of China were projects of tremendous scope
and magnitude, and required good management.
• Early Greeks were known for their management concepts
such as specialization
• The ancient Rome used to emphasis on personnel, selection
and placement.
• The existence of strong military forces in early human
activities
 Evidences

• Regardless of the titles given to managers, some one always

– Had to plan what needs to be accomplished,
– organize people and materials,
– lead and direct workers, and
– impose controls to ensure that goals were attained as planned.
• Management as a systematic body of knowledge and distinct
discipline is the product of 20th C
 Two historical events for study of management

1. work of Adam Smith, in his book,’ The Wealth of Nations’, in

which he argued brilliantly for the economic advantages of
division of labor (the breakdown of jobs into narrow,
repetitive tasks).

2. The Industrial Revolution: The introduction of machine

powers combined with the division of labor made large,
efficient factories possible. Planning, organizing, leading,
and controlling became necessary activities.
 Schools of Management

• Classical Management Theory

scientific management theory( F. Taylor)
Classical organization theory (H. Fayol)
Bureaucratic theory (M. Weber)
• Neo Classical Theory
Behavioral or Human Relation Movement theory
(E. Mayo & Hawthorne study)
• Modern Approaches
System approach
Contingency Approach
Management Science
 1. Classical Management Theory

• The classical school is the oldest formal school of

management thought.
• Its roots pre-date the twentieth century.
• It is a theory that focused on finding the 'one best way' to
operate (perform) and manage tasks.
• Efficiency and productivity became a critical concern of the
Managers at the turn of the 20th century.
 1.1. Scientific Management Theory (F.W. Taylor)

• In the late 19th century, management decisions were often

arbitrary and workers often worked at an intentionally slow
pace
• Scientific management is defined as the use of the scientific
method to determine the “one best way” for a job to be
done( Frederick W. Taylor ((1856-1915) who is known as the
“father”)
• It was introduced in an attempt to create a mental revolution
in the workplace
• It defined as the systematic study of work methods in order to
improve efficiency
 Cont’d

Frank and Lillian Gilbreth were inspired by Taylor’s

work and proceeded to study and develop their
own methods of scientific management.
• They devised a classification scheme to label 17
basic hand motions called there bligs in order to
eliminate wasteful motions.
F. W. Taylor’s Contribution to the Development of Management
Thought / Science

• Guidelines devised by Taylor and others to improve production efficiency

are still used in today’s organizations. However, current management
practice is not restricted to scientific management practices alone.
Elements of scientific management still used include:
1. Using time and motion studies
 Timing indicates how long it takes good workers to complete each part of
their jobs.
 Motion Study is breaking each task or job into its separate motions and
then eliminating those that are unnecessary or repetitive
2. Hiring best qualified workers
personnel policies for the creation of efficient and satisfied labor force.
the need of personnel department and its importance.

3. Designing incentive systems based on output

– He favored incentive wage payment to workers
 Other contributions…what is expected from
Mgers
1. Emphasis on rational thinking:- He suggested rational
thinking on the part of management for raising efficiency
and productivity.

2. He wanted managements to replace old methods and

techniques by Modern methods which will raise
productivity and offer benefits to all concerned parties.

3. Introduction of better methods and techniques of production

 He suggested new methods after systematic study and research
 Work-study techniques
 F. W. Taylor’s Contribution

4. Emphasis on planning and control of production:

• He suggested the importance of:-
 production planning and control for high production,
 superior quality production and also for low cost production.

5. Industrial fatigue and rest pauses:

the introduction of suitable rest pause for removing such
fatigue of workers.
reduce the burden of work on workers through the use of
scientific methods
 F. W. Taylor’s Contribution
.The positive view of scientific management was
described by Taylor as “
Science, not rule of thumb
Harmony, not discord ( conflict or disagreement)
Co-operation, not individualism
maximum output in place of restricted output.
 Principles of Scientific Management

• According to Taylor there are four important underlying principles of

management.
1. The development of 'One best way" of doing a job.
The standards are decided scientifically for Jobs and incentive wages
for all production above standard.
job analysis and standardization of tools, equipment, machinery, etc.
are required.
2. Scientific selection of workers and their development through proper
training.
3. Scientific approach by management.
The management has to develop a true science in all fields of work
activity through scientific investigation and experiments
4. Close co-operation of managers and workers
 Importance of Scientific Management

1. Application and use of scientific methods.

2. Wide scope for specialization and accurate planning.
3. Minimum wastages of materials, time and money.
4. Cordial relations between workers and management.
5. Benefits to workers (higher wages and less burden of
work), management (cost reduction, better quality
productions) and consumers (superior goods at lower
prices)
 Limitations and Criticism of Scientific
Management
• Scientific management has wider economic and social
significance
• In spite of several benefits, Taylor's scientific management
concept has widely been criticized by employers, workers, trade
unions and also by theorists.
• Criticism from Employers
• Huge investment required:-for reorganization of preliminary
standardization of tools, machines and equipment and conduct
of time and motion
• Sudden change may disturb existing working arrangements:
loss due to reorganization, if scientific management is to be
introduced.
 Criticism from Employers
• Unsuitable to small units: due to financial and other
difficulties
• Benefits after a long period: The benefit of scientific
management will be available only after a long period and
financial and other difficulties during the process of
introduction of new changes
• Huge overhead expenses required: this may erode
profitability
Criticism from Workers and Trade Unions
Heavy burden on workers: Workers feel that they will have to
share more burden of work as a result of introduction of
scientific management
• Workers and their unions feel that it will lead to their
exploitation
Reduces initiative among workers: Workers and trade unions
argue that scientific management ill destroy their initiative
Worker will be converted into machines in the production
process with no freedom, initiative and choice.
over-specialization will lead to monotony and mental fatigue.
 Criticism from Workers and Trade Unions

• Possibility of unemployment: They believed workers will be

removed due to the use of labour-saving devices
• Exploitation of workers: worker and trade unions believed
worker will have to share more burden of work without
corresponding increase in the wage rate.
• Possible adverse effects on workers unity: Workers will be
divided into efficient and inefficient categories.
• different piece rate plans will be introduced in place of
uniform wage rate
• As a result, workers will be divided
 Criticism from Workers and Trade Unions

• Trade unions strongly criticize scientific management as it

breaks solidarity of workers.

• The criticism of scientific management by employers and

workers/trade unions is not based on sound reasoning
 1.2. Classical Organizational Theories( Henry Fayol)

• was aiming at administration of entire organization.

• focuses on the management process and principles of
management
• administrative management provides a more general theory
of management.
• The great contributors to these theory were :- Henry fayol,
marry parkers Follet and James D. Mooney
 Henry Fayol (1841-1925)
• He rightly treated as the father of modern theory of general
and industrial management.
• He developed his management principles and general
management theory
• He recognized as the founder of modern management theory
• suggested important qualities of managers and stressed the
need for raising such qualities.
• He developed fourteen principles of management out of his
practical experience.
• first management thinker who provided the conceptual
framework of the functions of management
• These basic functions of management process and are
universally accepted.
 Cont…
• The functions of management according to Fayol are,
• Planning
• Organizing
• Staffing
• Commanding
• Coordinating
• Controlling
 Cont…
• Fayol divided general and industrial management into
following six groups:-
• Technical activities (production, manufacture, adaptation).
• Commercial activities (buying, selling and exchange).
• Financial activities (search for and optimum use of capital).
• Security activities (protection of property and persons).
• Accounting activities (stock taking, balance sheet, cost, and
statistics).
• Managerial activities (planning, organizing, command,
coordination and control).
 Fayol's 14 principles of management
• Division of work: produces increased and improved
performance with the same effect
• Various functions of management cannot be performed
efficiently by a single proprietor or by a group of directors.
• Authority and responsibility: A manager may exercise formal
authority and personal power.
• Responsibility is closely related to authority and it arises
wherever authority is implemented.
• Discipline: obedience to authority, adherence to the rules of
service and norms
• It is necessary for the smooth functioning of a business
 Cont…
• Unity of command: Every employee should receive orders
from only one superior. There should be a clear-cut chain of
command
• Unity of direction: congruency between individual and
organizational goals on the one hand and between
departmental and organizational goals on the other.
• Subordination of individual interest to general interest: calls
for reconciliation of objective of individuals with those of the
organization
• Organizational interests are more important than those of the
individuals.
 Cont…
• Remuneration: the remuneration paid to the employees of the
firm should be fair.
• It should be based on general business conditions, cost of
living, productivity and efficiency of the concerned
employees and the capacity of the firm to pay
• Centralization: the management must decide the degree of
centralization or decentralization of authority based on the
nature of the circumstances, size of the undertaking, the
category of activities and the characteristic of the
organizational structure.
• The objective should be the optimum utilization of all
faculties of the personnel.
 Cont…
• Scalar chain: As per this principle, the orders or communications should
pass through proper channels of authority along the scalar chain.

• Order: to put things in an order takes effort

• The management should observe the principle of 'right place for

everything and for every man’

• Equity: Equity results from a mixture of kindness and justice

• It requires managers to be free from all prejudices, personal likes or

dislikes.
 Cont…
• Stability of tenure of personnel: In order to motivate workers
to perform additional and improved quality and quantity of
work, it is necessary that they be assured of the security of
their job by the management.
• Initiative: Initiative is to think and implement a plan.
• Employees should have a positive attitude and make
suggestions freely.
• Esprit de Corps: This means team strength
• Harmony and solidarity among the staff is a great source of
strength for the undertaking.
 3.2.3 Contributions administrative Theory.

• Demonstrated the importance of different skills at different

levels of management for managers.
• Systematically identified functions of management,
• Developed several important principles of management.
 3. Bureaucracy Management theory  

• Max Weber analyzed bureaucracy as the most logical and

rational structure for large organizations.
• Bureaucracies are founded:-
• on legal or rational authority
• Positional authority
• Charismatic authority
• Efficiency in bureaucracies comes from:
• (1.) clearly defined and specialized functions;
• (2.) use of legal authority;
• (3.) hierarchical form;
 Cont…
(4.) written rules and procedures
(5.) technically trained bureaucrats
(6.) appointment to positions based on technical expertise
(7.) promotions based on competence
(8.) clearly defined career paths.
 Bureaucratic Principles
Written rules

System of task A Bureaucracy Hierarchy of

relationships should have authority

Fair evaluation
and reward
 Neo Classical Theory(Reading Assignment)

 Behavioral or Human Relation movement theory

(E. Mayo & Hawthorne study)
• Many of the findings of Classical Management theories
focused attention on the mechanical and physiological
variables
• In response, Elton Mayo and his associates from 1924 to
1932 come up with behavioral/human relation approach of
management
• Mayo conducted his experiment in four phases.
Phase I. Illumination Experiments
• control group and exponential group
• The purpose of this phase was to study the effect of varying
degrees of light on workers productivity in experimental
group
• control group was kept constant
• The productivity in experimental group increased each time
the intensity of light increased.
• Surprisingly, productivity also increased in control group
which was kept under constant light
 Con’d
• To a more surprise, productivity in experimental
group also increased even when level of illumination
in work area was reduced to that of moonlight
• Researchers concluded that illumination did not
have any effect on productivity and it is the human
factor which is determining it.
• But which aspect affects it was not sure. Therefore
phase II was conducted.
 Phase II: Relay Assembly Test Room Experiments

• The purpose of this phase was to determine the effect of changes in job
conditions on group productivity.

• Two groups of six females each in experimental and control group were
chosen.

• In experiments group initially, two girls were chosen whose work relate
to assembly of telephone relays and the girls have to assemble number of
parts into finished product.

• These two girls were asked to choose four more girls as their co-workers
and becomes part of the experimental group under one male supervisor
whose job was to record the work and create friendly atmosphere. .
 Cont’d
• Over a period of two years many changes were introduced after
consultation with girls, especially with respect to rest periods, like

• (i) Two five minutes, then two ten minutes, then six five minutes rest
pause were tested.
• (ii) Hot lunches were served in rest pause.
• (iii) Work day and work week were shortened.
• (iv) Financial incentives for increased production were introduced.
• (v) Liberty was given to choose the ones own rest period etc.

• With the making of such changes, absenteeism decreased, moral

increased, less supervision was required and the out put went up
tremendously.
 Cont’d
• At this time researchers decided to revert back to original
situation i.e. no benefits and no rest pauses

• But the productivity continued to increase.

• Conclusion :productivity increased not because of positive

changes in physical environment but because of change of
girls‟ attitude towards work and their work group. Freedom
at work led to self discipline & sense of responsibility.

• But surprisingly, the output also went up in control group

which was kept under stable normal conditions & payments
 Phase III. Mass Interviewing Programme
• Mayo conducted interviews of 21000 employees to find out the reason for
increased productivity and their attitude towards company, supervision,
insurance plans, promotions, compensation

• Direct and indirect questions raised which made employees to air their
feelings

• Then, It brought some valuable insights about human behavior. People made
complaints and most of them were found to be baseless

• Finding : The experiment found that complaint is a symptom of personal

disturbances; objects, persons and events are carriers of social meanings,
people derive satisfaction from value system of organization

• It was for the first time importance of informal workgroups was recognized
 Phase IV. Bank Wiring Observation Room
Experiment( to see group impact)

• A group of 14 male workers of bank wiring room was

formed. They were paid in a regular way plus, bonus based
on average group effort

• It was expected that high efficient workers would bring

pressure to bear on less efficient workers to receive group
incentive plan (bonus).
• But the results didn‟t come as expected

• The researcher found that group has established their own

standard of output, neither too high nor too low.
 Cont’d
• They decided not to be too official or tell supervisor anything
that would harm an associate.

• They restricted their output because they thought that their

standard of output will be increased by the management if
they want to have bonus.

• So the group decided to maintain their own standard of

output which was called as “Group Norm
Conclusion: This experiment indicated that man is not only
economic being but also social and psychological being
 THE MODERN ERA

Characteristics of Modern Approaches to Management

• a systems viewpoint
 a dynamic process of interaction
 multilevelled and multidimensional
 multimotivated
 multidisciplinary
 Multivariable, and adaptive.
• Modern understandings of the organization can be
broadly classified into
– A contingency or situational approach.
– The systems approach
– Quantitative approach to management (science )
 The contingency or situational approach

• The contingency approach to management is a view that the

organization recognizes and responds to situational variables as they
arise.
• is based on the belief that there cannot be universal guidelines which
are suitable for all situations.
• suggests that different environments require different organizational
relationships for optimum effectiveness, taking into consideration
various social, legal, political, technical and economic factors.
• Focuses on applying management principles and processes as
dictated by the unique characteristics of each situation
• It emphasizes that “there is no one best way to manage” and that it
depends on various situational factors
 The systems approach(1960)

• a way of thinking about managing techniques that would

allow managers to relate different specialties and parts of the
company to one another, as well as to external environmental
factors.
• focuses on the organization as a whole, its interaction with
the environment, and its need to achieve equilibrium

• A system is defined as a sum total of individuals, but inter-

related parts (sub-systems), and is put together according to a
specific scheme or plan, to achieve the pre-stated objectives.
 Cont’d
Components: There are five basic, interdependent parts of the
organizing system, namely:
 The individual
 The formal and informal organization
 Patterns of behavior emerging from role demands of the
organization,
 Role comprehension of the individual, and
 The physical environment in which individuals work.
 The systems approach
(ii) Linking processes: components of an organization are required
to operate in an organized and correlated manner.
• linking processes consist of communication, balance and decision
making.
• Communication: is a means for eliciting action, exerting control
and effecting coordination to link decision centre in the system in
a composite form.
• Balance :is the equilibrium between different parts of the system
to keep a harmoniously structured relationship with one another.
• Decision analysis: is considered to be a linking process in the
systems approach.
Systems Approach( open and closed)

Process Output
Input

Corrective Action Control Feedback

Figure .1 A closed system

 Systems Approach
• - Macro-environment: political, economical, social, technological, legal etc .

Task environment: Competitors, union

Regulatory, Customers

Structure

Inputs: Outputs:
Material Capital Task Technology Product
Human Service
People

Organizational boundary

Figure 2 the components of organization system and its interaction with the environment
The Quantitative Approach(after World War
II)
• school focuses on improving decision making via the
application of quantitative techniques
• Its roots can be traced back to scientific management
• emphasizes the use of mathematical and statistical techniques
to finding right answers to managerial problems, which are
solved through decision making.
• The critical exigency of War necessitating the building of
optimal solutions to militant and logistics problems, was
sought to be solved through mathematical model building by
inter-disciplinary scientists.
 The Quantitative Approach

• The theory stresses the importance of diverse decision

situations and the means of perfecting them
• It recommends the process of optimal decision-making
assembling accurate and reliable data with quantitative
precision and perfection.
 CURRENT TRENDS AND ISSUES

• The current concepts and practices are changing the way

managers do their jobs today.
• Globalization: Organizational operations are no longer
limited by national borders( must deal with new
opportunities and challenges
• Ethics: Cases of corporate lying, misrepresentations, and
financial manipulations have been widespread in recent
years.(own self-interest ahead of other stakeholders’ welfare
vis- vis behave in a highly ethical manner, abuses suggest a
need to “upgrade” ethical standards)
 Cont’d

Workforce diversity:
• It refers to a workforce that is
heterogeneous in terms of gender, race,
ethnicity, age, and other characteristics that
reflect differences.
• Accommodating diverse groups of people by
addressing different lifestyles, family needs,
and work styles is a major challenge for
today’s managers.
 Entrepreneurship:

• organized efforts to pursue opportunities to create value

and grow by fulfilling wants and needs through
innovation and uniqueness, no matter what resources
the entrepreneur currently has.
Three important themes stand out in this definition:
a. The pursuit of opportunities
b. Innovation
c. Growth
Entrepreneurship will continue to be important to
societies around the world.
 CONT’D
Managing in an E-Business World: E-business (electronic business) is a
comprehensive term describing the way an organization does its work by
using electronic (Internet-based) linkages with its key constituencies in
order to efficiently and effectively achieve its goals.
• Knowledge Management and Learning Organizations: Change is
occurring at an unprecedented rate. To be successful, today’s
organization must become a learning organization—one that has
developed the capacity to continuously learn, adapt, and change.
• Knowledge management involves cultivating a learning culture where
organizational members systematically gather knowledge and share it
with others in the organization so as to achieve better performance
 Cont’d

• Quality Management: Quality management is a

philosophy of management that is driven by
continual improvement and response to customer
needs and expectations.

• The objective of quality management is to create an

organization committed to continuous improvement
in work
 The End

THANK
YOU!

10/19/22 RVU-Bishoftu 56