CHAPTER 2:

A short history of
management
theory and
practice
 History is important
The idea of management has been socially constructed (and will
continue to be socially reconstructed) over time

The social construction of reality occurs when something is

perceived to be an objective reality, and people allow it to
shape their thinking and actions, even though its meaning has
been subjectively created by humans and must be constantly
recreated by humans in order to continue to exist

Every way of seeing management is also a way of not seeing

management
 Five eras of pre-contemporary management
1. Pre-humankind (13.7 billion BCE)
Humankind is 7 minutes old on cosmic calendar (Earth doesn’t need us)
Sun, carbon and phytoplankton are key to our existence
 Five eras of pre-contemporary management
2. Hunting and gathering (40,000 BCE)
For vast majority of our existence, we were a nomadic people (with little
understanding of/opportunity for individualism and materialism)
 Five eras of pre-contemporary management
3. First agricultural revolution (10,000 BCE)
Domesticating plants and animals stopped nomadic lifestyle, created need for
social institutions like management

4. Advent of money (1500 BCE)

Money can be used to:
a) facilitate transfer of goods and services (“natural”) or
b) make more money (“unnatural”) (dysfunctional for SET mgmt)

5. Capitalism and Industrial Revolution

Capitalism refers to an economic system based on rewarding entrepreneurs for
profitably combining resources in ways that create valued goods and services
(capitalism replaced alternative economic systems, e.g., based on reciprocity,
redistribution, or householding)
Helped to usher in emphasis on materialism and individualism
Contributed to increasing size and power of corporations
 Five eras of pre-contemporary mgmt (cont’d)
Taken together, by 1910 these eras had resulted in socially
constructing the following principles:
1) Natural resources are subservient to humankind (e.g., the idea of private
property) … unlike the first 99.9999999999999999% of the history of the
cosmos

2) It is praiseworthy to use money to make money … unlike the first 98% of

human history

3) It is natural for humans to be materialistic and individualistic … unlike

first 99.8% of human history

4) Capitalism is the best way to organize economic activity … unlike first

99.8% of human history

5) Powerful corporations who make the most money and make the most stuff
are good for society … unlike first 99.9% of human history
 Six eras of contemporary mgmt thought
Although it is an over-simplification, it is helpful to think about
management thought as moving through a series of six eras since
1910, as follows:
 Six eras of contemporary mgmt thought
1. Organizing era (1910-1930): Exemplary contributions

Scientific management focuses on determining the best way to perform

specific jobs via designing the best ways to perform a job, selecting people
with the required abilities, training them to improve their efficiency, and
developing reward systems that will optimize productivity.
e.g., Taylor’s right-sized shovels, Gilbreth’s time-and-motion studies

Bureaucratic organizing emphasizes the design and management of

organizations on an impersonal rational basis via methods like clearly defined
lines of authority and responsibility, keeping formal records, and rule-based
decision-making.
e.g., Weber’s formal rationality, Fayol’s management principles
 Six eras of contemporary mgmt thought
2. Leading era (1930-1950): Exemplary contributions
Mary Follett argued that authority should not always belong to the person who formally
holds the position of manager, but rather that power should be fluid and flow to workers
whose knowledge and experience makes them best suited for a particular task or situation.

Lillian Gilbreth (1878-1972) studied ways to reduce job stress, championed the idea that
workers should have standard workdays, promoted child-labor laws and protection from
unsafe work conditions.

Hawthorne effect suggests that giving workers special treatment increases their
productivity (Elton Mayo and Fritz Roethlisberger)

Theory X managers assume that people are inherently lazy, dislike work, will avoid
working hard unless forced to do so, and prefer to be directed rather than accept
responsibility for getting their work done.

In contrast, Theory Y managers assume that work is as natural as play, that people are
inherently motivated to work, and that people will feel unfulfilled if they do not have the
opportunity to work and thereby make a contribution to society. (Douglas McGregor).
 Six eras of contemporary mgmt thought
3. Planning era (1950-1970): Exemplary contributions
Management science uses the tools of mathematics, statistics, and other
quantitative techniques to inform management planning, decision-making, and
problem solving (e.g., break-even analysis; forecasting projections, inventory-
modeling, linear programming)
The (open and/or closed) systems approach recognizes that the elements that
comprise and affect organizations are inter-related in complex ways—where
each element may be both a determinant and a consequence of different
elements—and offers conceptual tools to understand and address complex
problems that cannot be solved by intuition, straightforward mathematics, or
simple experience
Bounded rationality refers to the tendency for managers to make sub-optimal
decisions because they lack complete information and have limited cognitive
ability to process information
Contingency theory suggests that the best way to manage a specific
organization depends on, and is determined by, identifying the optimal fit
between its structure, culture, environment, technology, and strategy
 Six eras of contemporary mgmt thought
3. Planning era (1950-1970) (continued)
Strategic choice theory suggests that, based on their values and beliefs,
members of an organization’s dominant coalition make three complementary
strategic decisions regarding the organization’s: performance standards,
domain, and structure.
 Six eras of contemporary mgmt thought
4. Controlling era (1970-1990): Exemplary contributions
Scripts are learned guidelines or procedures that help people interpret and
respond to what is happening around them

Institutionalization is evident when certain practices or rules have become

“valued” in and of themselves (even though they may no longer optimize
financial well-being for the organization or for society)

Self-fulfilling prophecies shape and control people’s actions by channeling

behavior in a scripted direction rather than in alternative (possibly more
positive) directions

This era emphasized on the symbolic role of management and how the essence
of leadership was to create the “meaning” that guides, inspires and motivates
organizational members and engages their values
 Six eras of contemporary mgmt thought
5. Triple bottom line era (1990-2010)
TBL refers to win-win-win for profits-planet-people

Two key triggers helped usher in the TBL era:

1) an urgent science-based call for change (IPCC on climate change),
2) a vision for what change looks like (WCED on sustainable development).

Natural Resource Based View describes how profits can be enhanced by

reducing costs associated with negative social and ecological externalities

Stakeholder theory points to importance of looking beyond shareholders

Corporate social responsibility refers to managers’ obligations to act in ways

that enhance societal well-being even if there are no direct benefits to the firm’s
financial well-being by doing so

Creating “shared valued” can increase competitive advantage/profits

 Six eras of contemporary mgmt thought
6. Social and ecological thought era (2010-????)
Three events helped to usher in the SET era:
1) 2008 global financial crisis (showed problems of profit-maximization)
2) growing recognition of impact of humankind on planet (e.g., description of
the Anthropocene)
3) Widening gap between rich (1%) and poor (99%) (Occupy Wall St)

Prompted management research and theory in areas like:

- place-based organizing
- sustainable intra- and entrepreneurship
- the ancient wisdom of Indigenous peoples and from spiritual traditions
- insights from quantum physics
- compassion and the ethic of care
QUESTIONS FOR REFLECTION AND DISCUSSION
1. According to the cosmic calendar, humankind has been around for
about 7 minutes. How much longer do you expect we will be around?
Explain.
2. Can you think of any unintended negative consequences that come
from thinking that humankind can “own” natural resources like land, or
that it can patent the DNA of different plants? Explain.
3. Philosophers like Aristotle argue that using money to make money is
problematic because: (a) people have an insatiable appetite for money
(so they can never get enough money or own enough resources); and
(b) this leads to a widening of income disparity and creates negative
externalities. Provide three pros and cons associated with using money
to make money.
QUESTIONS FOR REFLECTION AND DISCUSSION
4. Do you think it is part of the natural human condition to be
greedy, materialistic, and individualistic? For most of the history of
humankind, self-interested wealth maximization was dysfunctional
(e.g., imagine a nomadic hunter carrying the most spears and the
biggest tent of anyone in the clan) and was seen as a moral vice.
What would management theory and practice look like if we
assumed people were naturally generous and recognized that their
own well-being was enhanced by making sure that everyone had
enough?
5. We take ideas like corporations for granted today, and we forget
that not too long ago many people were concerned about the power
of corporations, and worried that corporations would have a
negative effect on society. If you could, would you make any
changes to the power of corporations, or set constraints on what a
corporation must do to maintain its charter?
QUESTIONS FOR REFLECTION AND DISCUSSION
6. Do you agree with the argument that our understanding of
management has been socially constructed? Can you think of any
dysfunctional management principles that have been institutionalized?
How might they best be challenged? Explain.
7. Is the “one best way” to manage still waiting to be discovered?
Explain.
8. What sort of workplace would you like your manager to construct
for you? What sort of organizational “reality” will you socially
construct for others when you are a manager? Is it a social reality that
exemplifies FBL, TBL or SET management principles?
QUESTIONS FOR REFLECTION AND DISCUSSION
9. The rest of the book will look more closely at the planning,
organizing, leading and controlling functions of management. Which
functions are you most and least interested in learning more about?
Why?
10. What do you want students thirty years from now to be learning
about management? What sorts of key events or entrepreneurial events
would you like them to be reading about that might have taken place
during your career? And, more importantly, what will be your
contribution to socially create the reality that you wish for the future?