Introduction To Management Chap 1B

Introduction to Management
Chapter One
Fundamental Concepts about Management

Part B
03/09/2023 Chapt1B@UU by Yohannes A 1

Evolution of Management Thought
1.Brief History of Management
2.Classical Management School of Thought
A) Scientific Management School of Thought
B) Classical Organization Theory (Administrative Management Theory)
C) Bureaucracy
3. Neo-Classical School of Management Thought
A) The Human Relation Movement
B) Behavioral Science Approach
4. Modern Management Theories
A)Quantitative Approach to Management
B)Systems Approach to Management
C)Contingency Approach to Management


Brief History of Management
• Industrial revolution in 18th century in Great Britain.
• Machinery was changing the way goods were
produced.
• Managers had no increase the efficiency of the
worker task mix.
• Organizations were seeking ways to better satisfy
customer needs.
• Division of labor.
• “The wealth of nation”(1776)/ book by Adam Smith

Brief History of Management cont’d
• Adam Smith, 18th century economist found firms

manufactured pins into two ways.
• Craft -each worker did all steps.
• Factory-each worker specialized in one step
• Smith found that the factory method had much
higher productivity.
Primary sparks (ingredients of industrial
revolution) were:-
1. Power
Eg. Steam power and hydro power .
 The machine used to manufacture in these factories
were run and powered not by hands. Eg. Bicycle and
Motor bicycle. This helps factories grow very quickly.
2. Machinery
Innovations in these factories.
Eg. Cotton Gin. Gin separates cotton from its seed.

Examples

Examples con’d

Examples cont’d

3. Transportation –
was booming at that time. Railroads connected most
cities in the United States of America. Steam boats
were another invention.
Roads were improved in general. These rapidly
changing context created a great in need of power,
machinery and transportation came together to
spark the industrial revolutions
Evolution of Management Thought
Evolution of Management
Historical Background
Organizational Management
Management Science
Behavioral Management
Administrative Management
Scientific Management
1890 1940 2000

Industrial revolution in 18th century in Great Britain
• Machinery was changing the way goods were

produced
• Managers had no increase the efficiency of the
worker task mix
• Organizations were seeking ways to better satisfy
customer needs.
• Division of labor

The Early Management Pioneers
• In the 18th century, some pioneer contributions have

been made to the advancement of management by
individuals and scientists. These are:-
1. Adam Smith/1723-1790/
 Was from Scotland
 Known as the father of political economy
 Had deep insight into the management functions
 Wrote a book entitled “an Inquiry into the Nature
and Causes of the Wealth of Nations” in 1776
 The book reflects division of labor ,productivity and
free market.
The Early Management Pioneers cont’d
2. Robert Owen/1771-1858/
 Was an English industrialist utopian socialist
 Improved the working conditions of workers by:-
 Reducing the length of the working day
 Providing meals for them
 Raising the minimum age for children
employees.
 Referred employees as “vital machines” and
preached that the human element is central to
management function

The Early Management Pioneers cont’d
3. Charles Babbage /1792-1871/

 Was an English polymath. A mathematician,
philosopher, inventor and mechanical engineer.
 Contributed to management theory by evolving the
principles of cost accounting and the nature of the
relationship between various disciplines.
 Invented a calculating machine/ called a difference
machine/
 Advocated workers should receive a fixed pay
depending the nature of their work and should get
bonus for any improvement in increasing productivity
A. Classical Management Theory/
classical School of Thought
• This was a new philosophy and attitude toward

the use of human effort.
• It emphasized maximum output with minimum
effort through the elimination of waste and
inefficiency at the operative level.

Classical Management Theory/ classical School of Thought
It is primarily based upon the economic rationality of all

employees. Its concepts are summarized as below:
a. People are motivated by economic gains
b. Because organizations control economic incentives, an
individual is primarily a passive resource to be manipulated,
controlled, and motivated by the organization.
c. Irrational emotions must be kept from interfering with
economic rationality.
d. Organizations can be designed in ways to control irrational
emotions and thus unpredictable, dysfunctional behaviors
of employees.
Classical Management Theory/ Classical
School of Thought cont’d
• The Classical Management School of thought
has three branches which feed on the same
underlying principles.
These branches are:
1. Scientific Management School of Thought
2. Administrative Theory of Management
3. Bureaucratic Organization

Scientific Management School of Thought
• This was a new philosophy and attitude toward

the use of human effort.
• It emphasized maximum output with minimum
effort through the elimination of waste and
inefficiency at the operative level.
• Scientific management arose in part from the
need to increase productivity.

Scientific Management School of Thought cont’d
• The scientific management is based on the

criticisms of the traditional management
presented as follows:-
a. Subjective or intuitive evaluation
b. Jobs were performed by rule of thumb, rather than
standard times and methods
c. The prevalent practices were assumed to be correct
and no efforts were made to introduce new and
novel techniques of management.

Scientific Management School of Thought cont’d
• Training at least, was under an apprentice system

and no formal techniques of skill and
professional development existed.
• Management was considered as a group of
overall supervisors rather than a group
performing unique duties.

Scientific Management School of Thought
cont’d
• Some of the most proponents of this thought
were the following:
1. Fredrick Winslow Taylor (1856-1915)
 Was an American acknowledged as “the father of
scientific management”
 Published a book entitled “The principles of Scientific
Management” in 1911.

Fredrick Winslow Taylor (1856-1915) cont’d
• Fredrick Winsol Taylor based his managerial

system on production- line time studies. Instead
of relying on traditional work methods, Taylor
implements scientific management and
developed the following principles.
The development of a true science of management.
The scientific selection of the workers
The scientific education and development of the
worker.
Division of responsibility between management and
workers
Fredrick Winslow Taylor (1856-1915) cont’d
 Intimate, friendly cooperation between management

and labor.
 Breaks down each job into its components and designed
the quickest and best methods of operation for each part
of the job.
 Considering workers as rational or economic beings, he
introduced an economic incentive method known as
“differential rate system”.
 His major concern was increasing efficiency in
production: to lower costs, to rise profits, to increase pay
for workers through their higher productivity.
2.Henry L Gantt (1861-1919)
• Henry L Gantt (1861-1919) :
 An American who did much consulting work on the
scientific selection of workers
 Had worked with Taylor on several projects
 Gantt reconsidered Taylor’s incentive system and
introduce the following: Task plus bonus system and
Gantt Chart

Frank B. Gilbreth (1868-1924) and Lillian M.
Gilbreth (1878-1972)
• Known as the Gilberths, they made their
contribution to the scientific management
movement as a husband and wife team.
• They undertake contribute the following:
 fatigue and motion studies,
 process charts,
 flow diagrams and
 merit rating systems for employees.

Contributions of Scientific Management Theory
 Scientific management advocates the

importance of management as a means of
increasing productivity through division of
work and expertise.
 The efficiency techniques of scientific
management increase the awareness as to the
efficient and rational movement of tools and
physical materials to accomplish tasks.

Contributions of Scientific Management Theory
• Scientific selection and development of workers has

created recognition as to the importance of both ability
and training in increasing worker effectiveness.
• The importance given to work design encouraged
managers to seek the ‘one best way” of getting a job done.
• It provides a rational approach to solve organizational
problems and pointed the way to the professionalization of
management.
• The advent of automation and the use of robots to do a
variety of jobs ranging from welding machine pistons to
dusting crops.

Limitations of Scientific Management Theory
• Increases in productivity led to layoffs or change in

piece rate that left workers producing more output
for the same income.
• It emphasizes employees as a rational and economic
being therefore act in a manner best suited to satisfy
their economic and physical needs.
• They overlooked the human desire for job
satisfaction.
• They overlook the importance of working conditions
as a means of encouraging employees towards higher
productivity.
Scientific management is criticized by other scholars as follows.
Lack of people orientation.

Depersonalized industrial atmosphere.
Exploitation.
Useless Prefabricated technique.
Shop management technique.
A bag of Unoriginal Ideas.

B. Classical Organization Theory/Administrative Management Theory
• Classical organization theory is an early attempt,

pioneered by Henri Fayol, to identify principles and skills
that underlie effective management.
• It grew out of the need to find guidelines for managing
complex organizations as factories.
• Classical organization theory is reclassified in to two
management theories:
 Administrative Management theory and
 The theory of Bureaucracy.
Administrative Management Theory
• Administrative Management Theory is founded by
Henri Fayol (1841-1925).
• He is known as the founder of classical management
school not because he was the first to investigate
managerial behavior but because he was the first to
systematize it.
• Fayol was a contemporary of Taylor
• Taylor was basically concerned with organizational
functions, Fayol was interested in the total organization-
problems faced by top managers of large organizations.

Administrative Management Theory cont’d
• Fayol divide business operations into six activities, all of
which were closely dependent on one another in
developing a science of management. These activities
were:
1. Technical,
2. Commercial,
3. Financial,
4. Security,
5. Accounting and
6. Managerial.

Administrative Management Theory cont’d
Fayol’s primary focus was on this last activity-
managerial. Because he felt managerial skills had been
the most neglected aspect of business operations.
Fayol has developed management principles which we
take for granted today in management practices. They
are: Division of Labor/work, Authority, Discipline, Unity
of Command, Unity of Direction, Subordination of
individual interest to the Common Goal, Remuneration,
Centralization, The Hierarchy/Scalar chain, Order,
Equity, Stability of Staff/tenure, Initiative and Esprit de
Corps.
The Theory of Bureaucracy
Bureaucracy is contributed by the German sociologist

Max Weber (1864-1920).
It stressed the need for a strictly defined hierarchy
governed by clearly defined regulations and lines of
authority. Bureaucracy was characterized by:
 Division of labor/work,
 well defined hierarchy of authority,

 Formal selection procedures,
Bureaucracy Cont’d
 detailed rules and regulations,
 Impersonal relationships between people,

 Career track for employees and
 Distinct separation of Members’
organizational and personal lives.

Contributions of Classical Organization Theory
The concepts that management skills apply to all

types of group activity have, increased in
importance today- in schools government and
other organizations.
Principles underlie effective managerial behavior
and that these principles can be thought also
continues to be valid.
Limitations Classical Organization Theory
• It was appropriate for the past than the present
when it is relatively stable and predictable
environment.
• Principles are to general for today’s complex
organizations

B. The Neo-Classical School of Management
Thoughts
• This part is going to discuss the theories of
Human Relations theory and the Behavioral
Science theories of management.
• “Human relations” is frequently used as a general
term to describe the ways in which managers
interact with their subordinates.

The Hawthorne Studies
• From 1927-1932 a research project was

conducted at the Hawthorne Plant of the
Western Electric Company in Cicero, Illinois.
• This project demonstrated how individual
behaviors may be altered when they know they
are being studied.
• This series of research was first led by Harvard
Business School professor Elton Mayo along with
associates F.J. Roethlisberger and William J.
Dickson.
The Hawthorne Studies Cont’d
• 1st. by examining the physical and environmental

influences of the Work place which included
brightness of lights and humidity.
• later moved into the psychological aspects involving
breaks, group pressure, working hours, and
managerial leadership.
• "The major finding of the study:-
 The production of the workers seemed to improve.
 One reasonable conclusion is that the workers were
pleased to receive attention from the researchers .

Douglas McGregor: Theory X and Theory Y
• Douglas McGregor (1906 –1964) from

Burma/Myanmar was a famous management
professor in the field of personal development
and motivational theory. He is best known for his
development of the Theory X and Theory Y.
• "Douglas McGregor in his book, "The Human Side
of Enterprise" published in 1960 has examined
theories on behavior of individuals at work, and
he has formulated two models which he calls
Theory X and Theory Y.
Douglas McGregor: Theory X and Theory Y
cont’d
• Theory X assumes that the average human being has an
inherent dislike of work and will avoid it if he can." It also
assumes that people work only for money and security.
• Theory Y is difficult to put into practice on the shop floor
in large mass production operations, but it can be used
initially in the managing of managers and professionals."
Theory Y is the opposite of theory X and states that some
people, if they are committed to the objectives, see work
as natural and will be self-directing.
• The manager's role with these people is to help them
achieve their potential.

Abraham Maslow/1908-1970/
• Abraham Maslow was an American psychologist who
developed a hierarchy of needs to explain human
motivation.
• His theory suggested that people have a number of
basic needs that must be met before people move up
the hierarchy to pursue more social, emotional, and
self-actualizing needs.
Abraham Maslow/1908-1970/ cont’d
He was a humanistic psychologist, proposed a

hierarchy of five needs:
1. Physiological,
2. Safety,
3. Social,
4. Esteem and
5. Self-actualization.

• He proposed that man was a wanting animal

whose behavior was calculated to serve his
most pressing needs. A need can be described
as a physiological or psychological deficiency
that a person is motivated to satisfy.
• Maslow proposed that man’s need could be
placed in a hierarchy of needs.

• The study shows that a man has various needs

and their order can be determined. The
moment the first need of man is satisfied he
starts thinking of the second need, and then
follows his worry about the third need and the
sequence continues till all the needs are
satisfied.

Fig: Maslow’s hierarchy of needs.

Maslow’s theory
• Maslow’s theory is operationalized through two
principles.
• The deficit principle holds that a relatively well-
satisfied need is not a strong motivator of
behavior.
• The progression principle holds that, once a
need is fairly-well satisfied, behavior is
dominated by the next level in the need
hierarchy

Contributions of the Human Relations
Approach
 It stresses the importance of social needs to increase
productivity, rather than assuming productivity almost
exclusively as an engineering problem.
 It is concerned with workers – the vital machine, like
Robert Owen’s teaching.
 It spotlights the importance of a manager’s style.
 More attention is given to teaching people
management skills, as opposed to technical skills.
 It leads to a new interest – group processes and group
rewards the individual treatments and reward.

Limitations of the Human Relations Approach
• The concept of ‘social man” does not describe
completely individual in the workplace.
• The social environment is taken as a major determinant
of workers productivity; however, it is only one of the
several interacting factors that influence productivity.
• The correspondence between satisfaction and
absenteeism and job turnover seem lower than
expected.
• The correlation between dissatisfied workers and those
who quit is smaller than one might assume.

Contributions of the Behavioral Science School
Behavioral scientists have made enormous

contributions to our understanding of individual
motivation, group behavior, interpersonal relations at
work and the importance of work to human beings.
Their findings have enabled mangers to become
much more sensitive and sophisticated in dealing
efficiently with subordinates.
They offer new insight in such important areas as
leadership, conflict resolution, the acquisition and use
of power, organizational change, and communication.
Limitations of the Behavioral Science School
The models and theories proposed by behavioral
scientists are seen by many mangers as too
complicated or abstract to be useful or relevant
to their specific problems.
Because human behavior is so complex,
behavioral scientists often differ in their
recommendations for a particular problem,
making it difficult for managers to decide whose
advice to follow.

C. Modern Management Theories
• Three approaches. They are:

1. Quantitative approach to management
2. Systems approach to management and

3. Contingency approach to management

Modern Management Theories
1. The quantitative school of management =
operations research = management science.
• New mathematical and statistical tools are now
applied in the field of management, particularly in
decision making on complex problems.
• More commonly used four techniques are linear
programming, game theory, queuing (waiting
lines theory), simulation and probability.
• Together, these quantitative decision making tools
are called operations research science.
2. The systems approach to management
• The systems approach to management and organization
indicates a new stream of management thought under modern
theory of management.
• A system is a set of inter-connected and interrelated elements or
component parts to achieve certain goals
• The systems approach to management attempts to view the
organization as a unified, purposeful system composed of
interrelated parts.
• The following are some of the basic concepts of systems
approach: Subsystems, Synergy, Open and closed systems,
System Boundary, Flow/transformation, Feedback, and
Environment.
System Approach characteristics
• Importation of Energy
• The through-put
• The Out put
• System as a cycle of events
• Negative Entropy
• Inputs of information
• Steady State
• Differentiation
• Integration and coordination, and
• Equifinality.
3.Contingency Approach to Management
• Contingency Approach to Management was found that
behavioral approaches worked in some situation , but not in
all.
• Many management experts now believe that systems-based
theory could solve the quantitative/behavior dilemma.
• Open and adaptable systems approach is called Contingency
Approach.
• Contingency or Situational approach seems better suited to
lead management out of the present management theory
jungle.
• No one best solution for all problems or the same problem
at different situations
Chapter 1
Fundamental Concepts about Management
The End!

Introduction To Management Chap 1B

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Introduction to Management

Fundamental Concepts about Management

03/09/2023 Chapt1B@UU by Yohannes A 1

03/09/2023 Chapt1B@UU by Yohannes A 2

03/09/2023 Chapt1B@UU by Yohannes A 3

• Adam Smith, 18th century economist found firms

03/09/2023 Chapt1B@UU by Yohannes A 5

03/09/2023 Chapt1B@UU by Yohannes A 6

03/09/2023 Chapt1B@UU by Yohannes A 7

03/09/2023 Chapt1B@UU by Yohannes A 8

1890 1940 2000

• Machinery was changing the way goods were

03/09/2023 Chapt1B@UU by Yohannes A 11

• In the 18th century, some pioneer contributions have

03/09/2023 Chapt1B@UU by Yohannes A 13

3. Charles Babbage /1792-1871/

• This was a new philosophy and attitude toward

03/09/2023 Chapt1B@UU by Yohannes A 15

It is primarily based upon the economic rationality of all

03/09/2023 Chapt1B@UU by Yohannes A 17

• This was a new philosophy and attitude toward

03/09/2023 Chapt1B@UU by Yohannes A 18

• The scientific management is based on the

03/09/2023 Chapt1B@UU by Yohannes A 19

• Training at least, was under an apprentice system

03/09/2023 Chapt1B@UU by Yohannes A 20

03/09/2023 Chapt1B@UU by Yohannes A 21

• Fredrick Winsol Taylor based his managerial

 Intimate, friendly cooperation between management

03/09/2023 Chapt1B@UU by Yohannes A 24

03/09/2023 Chapt1B@UU by Yohannes A 25

 Scientific management advocates the

03/09/2023 Chapt1B@UU by Yohannes A 26

• Scientific selection and development of workers has

03/09/2023 Chapt1B@UU by Yohannes A 27

• Increases in productivity led to layoffs or change in

Lack of people orientation.

03/09/2023 Chapt1B@UU by Yohannes A 29

• Classical organization theory is an early attempt,

03/09/2023 Chapt1B@UU by Yohannes A 31

03/09/2023 Chapt1B@UU by Yohannes A 32

Bureaucracy is contributed by the German sociologist

 well defined hierarchy of authority,

 detailed rules and regulations,

 Impersonal relationships between people,

03/09/2023 Chapt1B@UU by Yohannes A 35

The concepts that management skills apply to all

03/09/2023 Chapt1B@UU by Yohannes A 37

03/09/2023 Chapt1B@UU by Yohannes A 38

• From 1927-1932 a research project was

• 1st. by examining the physical and environmental

03/09/2023 Chapt1B@UU by Yohannes A 40

• Douglas McGregor (1906 –1964) from

03/09/2023 Chapt1B@UU by Yohannes A 42

He was a humanistic psychologist, proposed a

03/09/2023 Chapt1B@UU by Yohannes A 44

• He proposed that man was a wanting animal

03/09/2023 Chapt1B@UU by Yohannes A 45

• The study shows that a man has various needs

03/09/2023 Chapt1B@UU by Yohannes A 46

03/09/2023 Chapt1B@UU by Yohannes A 47

03/09/2023 Chapt1B@UU by Yohannes A 48