Chapter 2

Management Theories
 Objective of the chapter:

• As present and future information are

important for planning and decision
making, information from the past also
plays an important role.
• Today managers have recognized that
the lessons of the past are important
ingredients of future success.
Historical context of management?

• Thoughts has been shaped over a

periods by three major sets of
environmental forces. They are social,
economical and political.
 School of management:

• It is based on different assumption on

human beings and the organization.
• The schools of management thoughts
are divided into following categories.
 Development of Management Theories

Behavioural Integrating
Pre-classical Management
contributions Perspective
Perspective

Classical Management Quantitative Management

Perspective Perspective

Management 2-5
 How to increase productivity?
Find ways to increase Find ways to understand
the efficiency of the individuals behavior,
individual workers and groups and teams, to
the whole orgnisation motivate them and
effectively lead them
Find ways to improve the
operation, decision
making and resource
allocation
 Management Perspective

Classical Behavioral Quantitative

Management Management Management
Perspectives Perspectives Perspectives

Universal Mgt Perspective: One best way

 Systems Approach Contingency Perspective
An Integrative
• Recognition of internal • Recognition of the situational
Framework of interdependencies nature of management
Management • Recognition of • Response to particular
Perspectives environmental influences characteristics of situation

Classical Behavioral Quantitative

Management Management Management
Perspectives Perspectives Perspectives
Methods for Insights for moti- Techniques for
Universal enhancing vating performance improving decision
Management efficiency and and understanding making, resource
facilitating planning, individual behavior, allocation, and
Perspectives organizing, and groups and teams, operations
controlling and leadership

Effective and efficient management

 Classical Management Branches
• Scientific
Management
Increasing the
efficiency of the
individual worker

• Administrative
Management
Focuses on managing
the total organization
 Scientific Management

Concerned with improving the performance

of individual workers
Concentrated on the problems of shop- floor
management and efficiency of production.
Propounded by F.W Taylor
Addition made by Gilberths and Henry Gantt.
Productivity and efficiency are the foundation
of scientific management theory.
Scientific Management Perspective

Fredrick Taylor Frank and Lillian Gilbreth

Henry Gantt Harrington Emerson

 F.W.Taylor:
• Midvale Steel company
• Simonds rolling Machine company
• Bethlehem steel.
• Design the most efficient way of doing each
work.
• Piece work pay system
 Fredrick Taylor
• Soldiering Employees deliberately working at a slow
pace

To increase the efficiency of the individual worker

– Redesigned Jobs: Observe, Select, Train , Implement PPS

– Piecework pay system – Any work that is produced

above the target level of output will be paid by the
piece

– Rest periods
• The main principles of Taylors scientific
management are
– Standardization
– Time and task study
– Systematic selection and training.
– Pay incentives
– Management and labor harmony.
 Figure 2.2: Steps in Scientific
Management

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 Frank and Lillian Gilbreth

(Husband and Wife) Industrial engineers

 
Frank Bricklaying
Standardization of Materials
Procedures to perform the job
Result- Increase output by 200%
 
Lillian Industrial psychology + Personnel mgt

Both “Cheaper by the Dozen”

 Frank and Lillian Gilbreth :

• Analyzed and studied bricklaying.

• Focus “ Economy of movements”
• Use of technique and methods to help
workers in developing to their full potential
through : training, tools, environment, and
standardized work method.
• Contribution:
– Work simplification through motion studies.
– Used ‘flow chart’ to record process and
work flow.
– Study of worker fatigue affecting health and
productivity which reduce efficiency.
 Henry Gantt

Developed other
techniques,
including the Gantt
chart, to improve
working efficiency
through
planning/schedulin
g
 Henry Gantt – A scheduling Devise

Completed Week 1 Week 2 Week 3 Week 4

Planned 1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26

1. Design

2. Purchase Parts

3. Fabricate Bodies

4. Fabricate Frames

5. Build Drive Trains

6. Assemble Carts

7. Test Carts
 Administrative Management

• Focuses on managing the total organization

Henry Fayol,
Max Weber
Chester Barnard
Lyndall Urwick
Administrative Management Perspective

Henry Fayol Max Weber

Chester Bernard Lyndal Urwick

 Henri Fayol

•French industrialist
•Systematize the practice
of management     
•Identified managerial
functions
•Develop 14 principles of
management.
Henri Fayol's 14 Principles of Management are:
 
• 1. The full work of the organization should be divided
among individuals and departments.
Division of Work

• 2. Respect for the rules and regulation of the organization.

Discipline

• 3. Balance between Power and Duties

Authority and responsibility

• 4. The individual interest should be given less importance,

while the general interest should be given most
importance.
Subordination of Individual Interest to General Interest:
• 5. Price for services received.
Remuneration

• 6. the authority is concentrated only in few hands and the

authority is distributed to all the levels of management.
Centralization and decentralization

• 7. "a place for everything and everything in its place“ and "right
man in the right place".
Order

• 8. combination of kindness, fairness and justice.

Equity:

• 9. Encourage employees.
Initiative:
• 10. "Team Spirit".
  Esprit De Corps

• 11. The employees should have job security.

  Stability of Tenure

• 12. All activities which have the same objective must be

directed by one manager
Unity of Direction

• 13. A line of authority.

Scalar Chain

• 14. a subordinate (employee) must have only one

superior (boss or manager).
Unity of Command
 Max Weber

• German Sociologist
• Bureaucratic
Structure
– guidelines for
structuring the
organization in the
most efficient way
 Max Weber
• Develop ‘principles of bureaucracy” a formal
system design to increase efficiency and
effectiveness.
• The system is characterized by :
– division of labor,
– clearly defined hierarchy,
– rules and regulations and
– impersonal relationship.
 Chester Barnard
• ‘The Functions of the
Executive’- book

• Argues that people join

organization to satisfy their
personnel objective

• Subordinates Acceptance
of Authority
= f (understands it;
able to comply with it;
views it as appropriate)
Contributions Limitations

 Foundations - Is it appropriate now

 Identified - Is it universal
processes, skills,
functions

- Is it right to treat
 mgt valid subject of employees as tools
scientific inquiry
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 The Behavioral perspective:

• Focused on the human side of an

organization.
• Emphasizes individual attitude and behavior
and group processes.
• This school of management studied workers
efficiency, happiness, and productivity.
• There are two findings in this perspective;
– Human relations approach
– Behavioral science approach
Human Relation approach:
 Elton Mayo: the Hawthorne studies

– The Hawthorne studies were carried out by

the Western Electric company at their
Hawthorne plant Between 1927 and 1932.
Initially, the study focused on lighting.
 Hawthorn Studies
• Years 1927-1932
• Founder
Elton Mayo & Colleagues
• Place Western Electric
• Lighting Experiment
• Interview program
• Piecework Incentive Pay
 Illumination experiment
• Focused to measure the effects of lighting on
the productivity.
• Illumination was manipulated for one group of
worker and held constant for another group
• In both the condition productivity increased.
• Illumination affected production only
marginally.
 The Relay Assembly Test Room.

• Workers were motivated not with the degree of

lighting but rather by their feelings of
importance.
• Work hours, wage, incentives did not have
independent effect on employee efficiency.
• Change in attitude of employee had significant
effects on productivity than working condition.
• Team feeling or belongingness led to increase in
productivity.
 The interviewing Program
• Social groups were formed informally at
workplace.
• The groups have strong control over the
behavior of their individual members.
• Social relations inside the organization
had an unmistakable influence on
employees attitudes and behavior
Bank wiring Observation Room

• Experiment established a piecework

incentive pay plan.
• The purpose of study is to observe the
influence of the informal groups on
employees’ performance.
• Over a period of time the informal groups
develop their codes of behavior, hierarchy of
members, and standard of output.
• Social system was found to be emerging in
workplace.
Behavioral science approach
 Abraham Maslow
• Develop a theory of motivation that was
based on three assumptions about human
nature.
Assumption:
• Human beings have needs that are never completely
satisfied.
• Human behavior is aimed at satisfying the needs that
are yet unsatisfied at a given point of time.
• Needs fit into a somewhat predictable hierarchy
ranging from basic, lower level needs to higher level
needs:
– Physiological
– Safety
– Belongingness or social
– Esteem
– Self- actualization
An interpretation of Maslow's hierarchy of needs, represented as a pyramid with the more basic needs at the bottom
 Dauglas McGregor
• Developed the Theory X and Theory Y concept
about the assumptions managers make about
workers attitudes and how these assumptions
affect behavior.
Theory x ('authoritarian management'
– The average personstyle
dislikes work and will avoid it
he/she can.
– Therefore most people must be forced with the
threat of punishment to work towards
organizational objectives.
– The average person prefers to be directed; to
avoid responsibility; is relatively un -ambitious,
and wants security above all else.
Theory y ('participative management' style
– Effort in work is as natural as work and play.
– People will apply self-control and self-direction in the
pursuit of organizational objectives, without external
control or the threat of punishment.
– Commitment to objectives is a function of rewards
associated with their achievement.
– People usually accept and often seek responsibility.
– The capacity to use a high degree of imagination,
ingenuity and creativity in solving organizational
problems is widely, not narrowly, distributed in the
population.
 Frederick Herzberg:
• It (also known as Herzberg's motivation-
hygiene theory and Dual-Factor Theory) states
that :
• There are certain factors in the workplace that
cause job satisfaction, while a separate set of
factors cause dissatisfaction.
• He discovered two kinds of factors:
 The hygiene factor

– e.g. status, job security, salary, fringe

benefits, work conditions) that do not give
positive satisfaction, though dissatisfaction
results from their absence. These are
extrinsic to the work itself, and include
aspects such as company policies,
supervisory practices, or wages/salary)
 The motivator factor
– e.g., challenging work, recognition,
responsibility) that give positive satisfaction,
arising from intrinsic conditions of the job
itself, such as recognition, achievement, or
personal growth
Two-Factor Theory (Frederick Herzberg)
(Motivation Hygiene Theory)
• Hygiene factor : These do not lead to positive
satisfaction for long-term. But if these factors are
absent / if these factors are non-existant at workplace,
then they lead to dissatisfaction.

• Motivation factor : Which are job centered ,which

leads to high levels of motivation and job satisfaction
and absence will not lead to high dissatisfaction.
Contributions Limitations

+ Challenged - Prediction of
thinking human behavior

+ Insights into
- motivation - Adaptation
- group dynamics
- interpersonal - Communication
processes in
 Behavioral Management Perspective…Today

• Contributions
– Provided important insights into motivation, group dynamics,
and other interpersonal processes.
– Focused managerial attention on these critical processes.
– Challenged the view that employees are tools and furthered the
belief that employees are valuable resources.
• Limitations
– Complexity of individuals makes behavior difficult to predict.
– Many concepts not put to use because managers are reluctant
to adopt them.
– Contemporary research findings are not often communicated to
practicing managers in an understandable form.

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 The Quantitative Management
Perspective
• The approach uses mathematical and quantitative
models to solve complex business problems
• The model is used to study, analyze, and predict the
future events and recommends strategy to be used by
organization.
• During World War II, mathematicians, physicists, and
other scientists joined together to solve military
problems using this model.
• The quantitative approach to management involves
the use of quantitative techniques, such as statistics,
information models, and computer simulations, to
improve decision making.
 Quantitative Management Perspective

• Quantitative Management
– Emerged during World War II to help the Allied
forces manage logistical problems.
– Focuses on decision making, economic
effectiveness, mathematical models, and the use
of computers to solve quantitative problems.
– Quantitative management: It focus on development
of mathematical techniques to management, e.g.,
SPSS, modeling, queuing theory etc.

– Operations management: Provides manager with set

of techniques which they can utilize in an
organization’s production system to increase
efficiency. e,g inventory management, linear
programming, breakeven analysis, and simulation

– Management information system: Helps

management to design information system that
provide information about events occurring within
and outside an organization.
Contributions Limitations

• Techniques to assist in - Not fully able to

decision making
predict human
•  Awareness of behavior
complex
organizational
processes - Costs vs. other
skills
• Planning and
controlling
- Assumptions
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 The Quantitative Management
Perspective
Management Science vs. Quantitative
Management:
– Management Science focuses specifically on the
development of mathematical models.
– Quantitative Management applies quantitative
techniques to management.
– (see Table 2.4)

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Integrating Perspectives for Managers
• A complete understanding of management requires an
appreciation of, classical, behavioral, and quantitative
approaches.

– The systems perspectives and

– Contingency perspectives
 An Integrative Framework of
Management Perspectives
Systems Approach Contingency Perspective
• Recognition of internal • Recognition of the situational
interdependencies nature of management
• Recognition of • Response to particular
environmental influences characteristics of situation

Classical Behavioral Quantitative

Management Management Management
Perspectives Perspectives Perspectives
Methods for Insights for moti- Techniques for
enhancing vating performance improving decision
efficiency and and understanding making, resource
facilitating planning, individual behavior, allocation, and
organizing, and groups and teams, operations
controlling and leadership

Effective and efficient management

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2 - 61
 The Systems Perspective
of Organizations
Transform
Inputs from the ation Outputs into
Process: the environment:
environment:
technology, products/services,
material inputs,
operating profits/losses,
human inputs, systems, employee behaviors,
financial inputs, and administrative and information
information inputs. systems, and outputs
control systems

Feedback
 System Approach:

• Developed by Ludwig von Bertalanffy (1901-1972It

studies management by putting all interrelated parts
of an organization to accomplish a goal.
• The system approach identify four basic elements:
input, transformation process, outputs, and
feedback.
• The various parts of a system have functional as well
as structural relationships between each other.
• The parts that make up a system show some degree
of integration – “compatible”
 The important elements or concepts
of system are:
• Goal oriented:
• Sub- system
• Open and Closed system
• Synergy
• System boundary
• Flow of information
• Feedback
 The System Perspective - Concepts

• Open system
• Closed systems
• Subsystem
• Synergy
• Entropy

2 - 65
 Contingency theory
• The classical, behavioral, and quantitative approaches
are considered universal perspectives because they try
to identify the “ One best way” to mange organization.
• Developed by Tom Burns, G.M. Stalker, P. Lawrence, J.
Lorsch. “ Particularist approach to management”
• “There is no one best way to organize”, the concepts,
tools, and techniques which are highly effective in one
situation, are not at all effective in another situation.
• Thus managerial behavior in a given situation depends
on, or is contingent on , a wide variety of elements.
• Each organization and situation is unique, thus no
single principle or theory can e applicable in all
situations.
 Contingency vs. Universals
• Universal perspective:
tempting to identify one
best way.

• Contingency perspective:
depending on elements
in that situation.
 Integrating perspectives for mangers

– The classical, behavioral and quantitative

approaches to management are complement to
each others.
– A complete understanding of management
requires an appreciation of all three perspectives.
– The systems and contingency perspectives helps
to integrate the earlier approaches and enlarge
our understanding of all three.
 Contemporary Mgmt Perspective
• Outsourcing
• Learning organization
• Knowledge Management
• Time management
• Business Process Reengineering
• Conflict Management
• Stress Management
• Participative Management
• Green Management
 
 Theory Z model
• William Ouchi
• Researched on US firms (type A) and Japanese
firm(type J) on seven important dimensions.
– Length of employment
– Mode of decisions making
– Individual responsibility
– Seed of evaluation and promotion
– Mechanisms of control
– Specialization of career path
– Nature of concern of the employee
End