MANAGEMENT THEORIES IN

INDUSTRY

Prepared by:
Dr. Nur Hazirah Noh@Seth
 ACTIVITY

1. Systems Theory
2. Principles of Administrative Management
3. Bureaucratic Management
4. Scientific Management
5. Theories X and Y
6. Human relations theory
7. Classical Management
 The Industrial Revolution
• This refer the period during which a country
develops an industrial economy.
• In Europe it began in the 18th century, while in the
United States, it began around 1860.
• Before the Industrial Revolution:
– US economy was based on agriculture
– Most people worked on small farms–
using simple technology e.g. horse for
plowing
– No professional managers needed---
everybody worked for themselves
 Leaders of Industry

• End of 19th century a number of business

people created enormous business empires
which dominated and shaped US economy
e.g. John D. Rockfeller (oil), JP Morgan
(banking), Andrew Carnegie (steel) and
Cornelius Vanderbilt (steamships and rail
roads)
 Management History

• By the late 1800s, the US economy depended

largely on industries such as oil, steel, railroads, and
manufactured goods.
• Many people left their farms to take jobs in factories,
where professional managers supervised their
work.
• The new industrial enterprises that
emerged in the nineteenth century
demanded management skills that had
not been necessary earlier
Management Perspectives Over Time

2000
The Technology-Driven Workplace
1990 2010
The Learning Organization
1980 2010
Total Quality Management
2000
1970
Contingency Views
1950 2000
Systems Theory
1940 2000
Management Science Perspective
1930 1990
Humanistic Perspective
1890 1990
Classical
1940 2010
1870
 Classical Perspective: 3000 B.C.

● Rational, scientific approach to

management – make organizations
efficient operating machines
● Scientific Management
● Bureaucratic Organizations
● Administrative Principles

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 Scientific Management
General Approach
• Developed standard method for performing each job.
• Selected workers with appropriate abilities for each
job.
• Trained workers in standard method.
• Supported workers by planning work and
eliminating interruptions.
• Provided wage incentives to workers for
increased output.

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 Scientific Management
Contributions
• Demonstrated the importance of compensation for
performance.
• Initiated the careful study of tasks and jobs.
• Demonstrated the importance of personnel and their
training.

Criticisms
• Did not appreciate social context of work
and higher needs of workers.
• Did not acknowledge variance among
individuals.
• Tended to regard workers as uninformed
and ignored their ideas
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 Taylor’s scientific management
Principles
1. Jobs should be designed according
to scientific rules rather than rule-of-
thumb methods. Employers should
gather, classify, and tabulate data in
order to determine the “one best
way” of performing a task or series
of tasks.
 Taylor’s scientific management
Principles
2. Employees should be selected and trained
according to scientific methods. Employers
should also train employees in order to improve
their performance.
3. The principles of scientific management
should be explained to workers.
4. Management and workers should be
interdependent so that they cooperate.
 Bureaucracy Organizations

Max Weber 1864-1920

Prior to Bureaucracy Organizations
European employees were loyal to a
single individual rather than to the
organization or its mission Resources
used to realize individual
desires rather than organizational goals
Systematic approach –
looked at organization as
a whole
 Bureaucracy Organizations

• Division of labour with clear definitions of authority

and responsibility
• Positions organised in a hierarchy authority
• Managers subject to rules and procedures that will
ensure reliable predictable behaviour
• Management separate from the ownership of the
organization
• Administrative acts and decisions
recorded in writing
• Personnel are selected and promoted
based on technical qualifications
 Administrative Principles

• Important figures: Henri Fayol, Mary Parker, and

Chester I Barnard
• This principles focus on:
– Organisation rather than the individual
– Highlight the management functions of planning,
organising, commanding, coordinating, and controlling

Henry Fayol
 Humanistic Perspective

Emphasized understanding human

behavior, needs, and attitudes in the
workplace
●Human Relations Movement
●Human Resources Perspective
●Behavioral Sciences Approach
 Human Relations Movement

• Emphasized satisfaction of
employees’ basic needs as the key
to increased worker productivity
 Hawthorne Studies
• Ten year study
• Four experimental & three control
groups
• Five different tests
• Test pointed to factors other than
illumination for productivity
• 1st Relay Assembly Test Room
experiment, was controversial,
test lasted 6 years
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 Hawthorne Effect
• The result of an experiment conducted at the
Hawthorne plant of Western Electric in Cicero,
Illinois in 1924. They lowered the lighting in the
factory, expecting productivity to fall; but instead, to
their astonishment, productivity increased.
• Interpretation, money not cause of increased
output
• Factor that increased output, Human Relations
• The researchers concluded that productivity rose
because workers worked harder when they
received attention. This phenomenon, in which
change of any kind increases productivity, has
been known as the “Hawthorne Effect.”
 Human Resource Perspective

• Suggests jobs should be designed to

meet higher-level needs by allowing
workers to use their full potential
 Abraham Maslow’s Hierarchy Needs

• Abraham H. Maslow
1908-1970
• Maslow was a psychologist who developed a theory
of motivation. His ideas had a significant impact on
management. Maslow believed that individuals
fulfill lower-level needs before seeking to fulfill
higher- level needs.
• That is, people satisfy their need for
food before they seek self-fulfillment.
Because one set of needs must be met
before another is sought, Maslow
referred to this as a hierarchy of needs.
 Abraham Maslow’s Hierarchy of
Needs

1908-1970

Self-

actualization
Esteem Chapter 16 – Maslow in more detail

Belongingness
Safety
Physiological
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Based on needs satisfaction

 Maslow’s Theory in Management

• At the lowest level, workers are motivated by basic

needs, such as the needs for wages or salary.
Basic needs also include the physical conditions in
which a person works, such as heating, lighting, and
noise.
• Once these basic needs are met, employers
can address the next level of needs—safety or
security needs. Some of
these security needs can be met by providing
employees with insurance, retirement benefits,
and job security. Employees need to know that
in the workplace, they are safe from physical,
psychological, or financial harm.
 Maslow’s Theory in Management

Managers meet workers’ social needs by providing

work environments in which colleagues interact by
providing opportunities for co-workers to socialize
with one another by providing lunch rooms or
allowing employees to attend company retreats.
Status needs can be met by providing employees with
signs of recognition that are visible to others, such
as job titles, awards, designated parking spaces,
and promotions.
Managers can meet employees’ need for self-
fulfillment by providing them with opportunities to
be creative at work or allow them to become
involved in decision making.
 Professor Douglas McGregor:
Theory X and Y
Theory X—assumes that people are basically
lazy and will avoid working if they can.To
make sure that employees work, Theory X
managers impose strict rules and make sure
that all important decisions are made only
by them.
 Theory X and Y

• Theory Y assumes that people find satisfaction in

their work. Theory Y managers believe that
people are creative and will come up with good
ideas if encouraged to do so. They tend to give
their employees much more freedom and let them
make mistakes.
 Theory X and Y
Theory X Theory Y
Assumptions Assumptions
• Dislike work –will • Do not dislike
avoid it work
• Must be coerced, • Self direction and self
controlled, directed, or control
threatened with • Seek responsibility
punishment • Imagination,
• Prefer direction, avoid creativity widely
responsibility, little distributed
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ambition, want security • Intellectual potential
 Theory X & Y

• Few companies today still use

Theory X

• Many are trying Theory Y

techniques

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 Behavioral Sciences Approach
• Applies social science in an organizational
context
• Draws from economics, psychology,
sociology, anthropology, and other
disciplines
– Understand employee behavior and
interaction
in an organizational setting
– OD – Organization Development

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 Management Science Perspective
• Emerged after WW II
• Applied mathematics, statistics, and other
quantitative techniques to managerial
problems
 Operations Research – mathematical modeling
 Operations Management – specializes in physical
production of goods or services
 Information Technology – reflected in
management
information systems

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 Critical Path Method (CPM)

• Developed by Dupont around 1950s

• Identifying the most time consuming set of activities
from start to finish
 Program Evaluation and Review
Technique (PERT)
• Developed by US Navy
• Used in engineering, construction, office workflow
and emergency response evaluation.