Awash Valley College

DEPARTMENT OF MANAGEMENT

By :Yusuf Abebe Hubena

Feb.2022
 CHAPTER –ONE

Evolution of Management Thought

 Rationale of studying management thought

• To provide a constant (stable) focus for understanding what we

experience. A theory provides criteria for determining what is
relevant.
• To communicate efficiently; it enable us to move in to more and
more complex relationships with other people
• To keep learning about our world;
• To understand the basic process of management;
 Practices in management

Sumerians (5000 B.C.)

Used written rules and regulations for governance
Egyptians (4000-1600 B.C.)
The Egyptians used the management functions of planning, organizing, and controlling when
they constructed the great pyramids.
Babylonians (1800 B.C)
Used extensive sets of laws and policies for governance
Hebrews (1941 B.C)
Moses Exodus indicates some management concepts.
Chinese (1100 – 500 B.C)
Used extensive organization structure for governance and the arts
• Greece (400 B.C)
Used different governing systems for cities and states
India (321 B.C)
Kavtilya addresses organization & management of trade &
commerce; law & court; social customs; marriage; taxation; etc.
Romans (284 B.C)
o The Roman Catholic Church is an organization with a formal
structure and hierarchy that existed long before the
term<<management>> comes in to common usage.
 The Evolvement of Management
What is theory?
 It is a coherent group of assumptions put forth to explain the
relation between two or more observable facts.
 It is a principle or set of principles that explains the relationship
between two or more observable facts or events.
 It is a conceptual frame work that explains existing observations
and predicts new ones.
 It is a conceptual frame work for organizing knowledge and
providing a blue print for action.
• Management as a field of study was 19th C development, in response to
industrial revolution in Europe and America. Until the mid of 18th C,
management practices remained stable, but with the introduction of industrial
revolution, there were a series of inventions & innovations which resulted in
change in economic system, and management would be expected on progress.
• In the early stages, management study was not developed as expected
because of:
Low esteems given to business in society (existence of undermining).
Different approaches of economists, political scientists, sociologists. & others
towards business organizations
• Treatment of management as an art, not as a science
 Attitudes (mind sets) of successful managers are born not made,
i.e. management can not be transferred to others through training.
• Therefore, the study of management (how managers achieve their
results) is predominantly a 20th C phenomenon.
In the 20th C, situations changed that requires systematic study of management
due to:
The development of capitalism & emergence of industries
forced organizations/industries to be efficient.
The complexity of organizations, i.e. society became complex due to:
Increasing size of organizations
High degree of division of labor & specialization
Increase in government regulations & controls
Scarcity of resources
Saturation of markets
Organization of workers (trade unions)
Pressure of various conflicting interest groups in society
Technological inventions & innovations, etc.
These complexities had increased the demand for efficient
management, and have resulted in the divorce of ownership &
management.
And these forces have been vital for the development of
systematic management principles, concepts etc.
 CHAPTER -TWO

FORERUNNNERS TO SCIENTIFIC MANAGEMENT

Early Contributors to Scientific Management
2.1.1 Times of Robert Owen and the Management era
Robert Owen (1771-1858), a British industrialist and reformer, was one of
the first managers to recognize the importance of an organization‘s human
recourse. Until his era, factory workers were generally viewed in much the
same way that machinery and equipment were.
• Owen believed that workers deserved respect and dignity. He implemented better working conditions, higher
minimum working age for children, meals for employees, and reduced work hours. He assumed that giving
more attention to workers would payoff in increased output.

2.1.2 Early Works and contribution of Charles Babbage

Charles Babbage (1792-1871), an English mathematician, focused his attention
on efficiencies of production. He placed great faith in the division of labor and
advocated the application of mathematics to problems such as the efficient
use of facilities and materials.
In a sense, his work was a forerunner to both the classical and quantitative
management perspectives.
Babbage overlook the human element. He understood that a
harmonious relationship between management and labor could
serve to benefit both, and he favored such devices as profit-sharing
plans. In many ways, Babbage was an originator of modern
management theory and practice. Owen was primary interested in
employee welfare, where as Charles Babbage focused his attention
on efficiencies of production.
 Other influential early thinkers and practitioners in Management

Carl Barth
He was the one who was known as the most orthodox of Taylor‘s followers.
Barth did not alter or add to scientific management to any significant degree; rather, rather he worked to
popularize the idea of Taylor.

Morris Cooke
Morris Cooke worked directly with Taylor on several occasions. Cooke‘s major contribution was the
application of scientific management to educational and municipal organizations.
Cooke worked hard to bring management and labor together through scientific management.
He believed that increasing productivity would increase the position of the manager as well as that
of worker‘s.
Thus, Cooke broadened the scope of scientific management and helped gain the support of
organized labor.
 Chapter Three
THE ERA OF CLASSICAL MANAGEMENT

(Commonly Termed as Scientific Management Theory)

 THE ERA OF CLASSICAL MANAGEMENT

• The classical approach to management resulted from the first significant,

concentrated effort to develop a body of management thought.
• The classical approach to management was originally propounded by the
gentle thinkers and pioneers of management practitioners.
• Basically, the classical approach to management recommends that managers
continually strive to increase organizational efficiency which was purposely
aimed at increasing productivity.
• The classical approach to management can be seen from two basically
similar but logically different perspectives.
 • The first persp
ective emphasized
on studying and an
lower level mana alyzing the practic
gement, which w e of
as commonly term
management appro ed as “scientific
ach” (developed by
Fredrick W. Taylor.
• During this
era (scientific ma
nagement) the m
organizations was ain intention of
inclined towards fi t he
nding ways throug
the maximum poss h which to obtain
ible productivity.
• The concept of scientific management consists primarily the
work of Fredrick W. Taylor, Frank an Lillian Gil berth and
Henry L. Gantt.

• These individuals studied mainly the work (jobs) of workers at

lower level of the organization (at the operation at level) of the
organizations.
• The 2nd perspective concerned with a comprehensive
investigation and analysis of management concentrated more
on the management of the organization i.e., the management
of the organization or functions of management as a whole this
approach was primarily advocated by Henry Fayol (1841-
1925 )
 Scientific Management Theory

• At the turn of the 20th C, business was expanding and

creating deluxe products and new markets, but labor was in
short supply (there was no sufficient skill man power, which
could support and sustain the dramatically advanced human
needs in a remarkably turbulent business environment mostly
after industrial revolution of the western world.
 Scientific Management Theory
• As a possible remedy to overcome these problems, two solutions were available: in
one case either to substitute capital for labor or else the use of man power sufficiently
as another option.

• For surprise , due to the costly nature and other constraints, scientific management
kept attention and concentrated on the second solution, that is the use or deployment
of human power in a proper manner to achieve efficiency and productivity which
were a hot debate of that time.
 Scientific Management Theory
• Lower level management was the main focus of analysis,
primarily as special target through which to find one best way to
perform a task; that means it assesses how task situations can be
structured to get the highest productivity from workers.

• The process of finding this “one best way” has become known
as the scientific method of management (in short, scientific
management).
 Scientific Management Theory
• Although the techniques of scientific management could
conceivably be applicable to all levels of management, the study
of scientific management was firmly confined at lower level
organization.
• The development of specialized tasks and the departments within
organizations had come with the rapid change in industrial growth
and the creation of big business.
• Thus, one person no longer performed every task but specialized
in performing only a few tasks
 PRINCIPLES OF SCIENTIFIC MANAGEMENT

• Frederick Winslow Taylor (1856 – 1915)

• Under Taylor's management system, factories are managed

through scientific methods rather than by use of the
empirical "rule of thumb" so widely prevalent in the days
of the late nineteenth century when F. W. Taylor devised his
system and published "Scientific Management" in 1911.
• The main elements of the Scientific Management are: "Time
studies Functional or specialized supervision
Standardization of tools and implements Standardization of
work methods Separate Planning function Management by
exception principle . "
• The use of "slide-rules and similar time-saving devices", Instruction cards
for workmen, Task allocation and large bonus for successful performance,
The use of the 'differential rate, Mnemonic systems for classifying products
and implements A routing system, A modern costing system etc. "

• Taylor called these elements "merely the elements or details of the

mechanisms of management."
• Perhaps the key idea of scientific management and
the one which has drawn the most criticism was the
concept of task allocation.
• Task allocation is the concept that breaking task
into smaller and smaller tasks allows the
determination of the optimum solution to the task.
• "The man in the planning room, whose specialty is planning
ahead, invariably finds that the work can be done more
economically by subdivision of the labor; each act of each
mechanic, for example, should be preceded by various
preparatory acts done by other men."
• The main argument against Taylor is this reductionist approach
to work, dehumanizes the worker.

• The allocation of work "specifying not only what is to be done

but how it is to be done and the exact time allowed for doing it"
is seen as leaving no scope for the individual worker to excel or
think.
•This argument is mainly due to later writing rather than Taylor's
work as Taylor stated

•"The task is always so regulated that the man who is well suited to
his job will thrive while working at this rate during a long term of
years and grow happier and more prosperous, instead of being
overworked."
• Taylor's concept of motivation left something to be desired when
compared to later ideas.

• His methods of motivation started and finished at monetary incentives.

• While critical of the then prevailing distinction of "us "and "them"

between the workforce and employers he tried to find a common ground
between the working and managing classes.
• Frederick Winslow Taylor, an American engineer, was the
founder of the scientific management school of thought.

• He spent the greater part of his life working on the problems of

achieving greater efficiency on the shop-floor worker himself
and later as a manager.

• His career began as an apprentice in engineering.

• He later moved to the Midvale Steel Company and the course
of 11 years he rose from labor to shop superintendent.

• In 1889 he left Midvale to join the Bethlehem Steel Company,

where he consolidated his ideas and conducted some of his most
famous experiments in improving labor productivity
• As stated earlier, at the beginning of the 20 th century skilled labor
was in short supply, especially in the U.S.

• To expand productivity, ways had to be found to increase the

efficiency of workers.

• In an effort to address these problems, Taylor build the body of

principles that know constitute the essence of scientific
management.
• The real trouble, Taylor decided on reflection, was that no one knew how
much work it was reasonable to expect a man to do.

• Either employers gauged a “fair day’s work” by a general impression

gained from observation or, as in his case, by actually working on some of
the jobs themselves – or they had a record of the shortest time in which
certain jobs had ever been performed.

• And there was plenty of room for argument about either standard.
• Taylor based his managerial system on production-line time studies.
• Instead of relying on traditional work methods, Taylor analyzed and
timed steel workers’ movements on a series of jobs.
• With time study as his base, Taylor broke each job down into its
components (“elements”) and designed the quickest and best
methods of operation for each part of the job.
• He thereby established how much workers should be able to do
with the equipment and materials at hand.
• Taylor also encouraged employers to pay more productive
workers at higher rates than others.
• The increased rate was carefully calculated and based on
the greater profit that would result from increased
production.
• Thus, workers were encouraged to surpass their previous
performance standards and earn more pay.
• Taylor called his plan the differential rate system.
• Under this system, a man received on piece rate if he
produced the standard number of pieces and another rate if
he surpassed the standard, and in the latter case, the higher
rate would be applied to all the pieces he produced, not
merely to those over the standard.
• Management, Taylor said, could well afford to pay the higher rates
because of the economies achieved through better methods and the
elimination of slowdowns.
• Taylor also called for a drastic reorganization of supervision.
• His system embodied two new concepts: (1) separation of planning
and doing and (2) functional foremanship
• When Taylor first entered industry, it was customary for each
man to plan his own work, generally following a pattern he had
learned by watching others when he was an apprentice.
• The order in which the operations were performed, for example, was
entirely up to the man insofar as it was not dictated by the nature of the
job; so was the selection of the tools.

• The foreman or gang boss simply told the worker what jobs to perform,
not how to do them-except, possibly, in the case of new work.
• Taylor’s plan also supplemented the gang boss with a number of
functional foremen, each of whom was a specialist in one type of work –
for example, in the use of a lathe or a grinder.

• The specialists occupied a “planning room,” and each gave orders to the
workmen on his specialty.

• Thus, if the gang boss assigned a worker to a job that called for several
different operations, the man would be told how to proceed by seven or
eight other bosses.
• But the essence of scientific management, Taylor believed, lay
in none other than what he called “mental revolution”.

• If workmen were paid handsome amounts for producing more

and were shown how to do so, they would cease their
slowdowns.

• Since management would be enjoying the fruits of increased

productivity, it would be happy to pay the higher wages.
• Interests of management and labor would be identical, and there would be
no reason for strife between them.

• Neither side would be interested in getting the larger percentage of the pie
because both would profit so much more by working together to increase
its size.

• This would automatically mean bigger slices for both, and relative shares
would be unimportant.
• He believed that workers, who met the higher standards, need not fear of
layoffs because their companies benefited from the increase in productivity.
• The higher payments would continue because they were “scientifically
correct” rates set at a level that was best for the company and for the
worker.
• At the same time, no one would be hurt by the differential system. Workers
who fell below the standard in productivity would find other work “in a day
or two,” as he put it, because of the existing labor shortage.
• By 1893, Taylor decided he could best put his ideas into effect as a private consulting
management engineer.

• He was soon able to report impressive improvements in productivity, quality, worker

morale, and sages while working with one client Simonds Rolling Machine Company.

• In one operation, Simonde employed 120 women workers to inspect bicycle ball
bearings.

• The work was tedious, the hours were long, and there seemed little reason to believe
improvements could be made. Taylor proved otherwise.
• First, he studied and timed the movements of the best workers.
• Then he trained the rest in the methods of their more effective
co-workers and transferred or laid off the poorest performers.
• He also introduced rest periods during the workday, along with
his differential pay rate system and other improvements.
• The results were impressive: expenses went down while
productivity, quality, earnings, and worker morale went up.
• Although Taylor’s methods led to dramatic increases in
productivity and to higher pay in a number of instances,
workers and unions began to oppose his approach.

• Like the workers at Midvale, they feared that working harder or

faster would exhaust whatever work was available and bring
about layoffs.
• The fact that workers had been laid off at Simonds and in other

organizations using Taylor’s methods encouraged this fear.

• As Taylor’s ideas spread, opposition to them continued to grow.

• Increasing numbers of workers became convinced that they would

lose their jobs if Taylor’s methods were adopted.

• By 1912, resistance to Taylorism had caused a strike at the
Watertown Arsenal in USA, and hostile members of the US
congress called on Taylor to explain his ideas and techniques.

• Both in his testimony and in his two books, Shop Management

and The Principle of Scientific Management, Taylor outlined
his philosophy.

• It rested, he said, on four basic principles:

1. The development of a true science of management, so that the
best method for performing each task could be determined.
2. The scientific selection of the workers, so that each worker
would be given responsibility for the task for which he or she is
best suited.
3. The scientific education and development of the worker.
4. Intimate, friendly co-operation between management and labor.
 Importance of scientific Management
• It used to solve the problem of wasted human effort.
• promote efficiency in the workplace, becomes important to
offer the greatest amount of service to the organization in the
least amount of time while expending the least amount of
resources
• identifies the importance of performance evaluation in that it
brings about the discovery of the most productive methods of
personnel operation
• It showed supporting the study of motions, positions, and task
for classification to expedite the process of production.
• The study has reported the importance training individuals to
perform efficiently as opposed to searching for individuals who
are already experienced.
• Depicted as increasing positive relationships between management and
subordinate personnel, which implies that it sets the foundation for Total
Quality Management.
• Shows the importance of educating personnel and paying them well to
encourage efficiency and increasing retention.
Feature of Scientific Management
• Separation of planning and doing.
• There were no separate teams for planning and executing the
work.
• Work divided into two parts namely planning and doing.
• It was the responsibility of supervisors to plan the work that an
individual worker is required to do and ensure that the tools
required by them are made available to them.
 Functional foremanship.
• Led to introduction of functional foremanship though it went
against the principle of unity of command. The entire work was
divided into two parts i.e. planning and doing. Supervisors
headed these departments.
• Each of the departments was further divided in to four
functional parts. Planning department therefore consisted of
route clerk, instrument card clerk, time and cost clerk and
disciplinarian. Supervisor “doing” department had under him
speed boss, inspector, maintenance foreman and gang boss.
 Functional foremanship
Workshop manager

Supervisor I/C planning

Supervisor I/C doing

Route clerk Instrument Time and Disciplinarian Speed Inspector Maintenance

card clerk cost clerk foreman
Boss
Gang boss

Worker
 Job analysis
• carried out intensive studies on time and motion about each job
and incorporated such layout in the operations that involved
least movement to the workers, minimum operation time and
therefore less cost of production.

• studied pertaining to fatigue and incorporated rest periods so

that efficiency of the worker is increased.
 Standardization
• he standardized tools, instruments, period of work,
amount of work each worker has to undertake,
working conditions and cost of production.
• improved work culture and working conditions
brought revolution in the production units.
 Scientific selection and training of workers
• Workers selection should be carried out on
scientific basis.

• Suggested that workers should be given adequate

training and work allotted based on their physical
and technical attitude.
 Financial incentives
• Balanced organizational responsibilities and worker’s
responsibilities towards the organization.
• Introduced various methods to motivate workers by introducing
differential piece-rate of payment system.
• Anybody who worked beyond the laid down target were paid
higher rate of wages
• Introduced various incentive systems in the organization so that
higher productivity was achieved.
 Economies
• Internal economy must be ensured by each worker
ensuring that there was no wastage in time and material
while carrying out the job.
• Adequate care must be taken at all levels that the work
was carried out as per the planning done by the
supervisors.
• Organizations must ensure adequate profitability, which
was necessary for survival, he maintained.
 Mental revolution
• there must be sound relations between the management and the workers.
• All disputes should be resolved by mutual discussion within the
organization.
• Close supervision therefore was a part of supervisors job.
• Gang boss was responsible for the smooth flow of the work.
• Workers were provided necessary tools, instructions pertaining to the
job, perfect work environment and advise when necessary.
 Limitations and criticism of scientific Management

• Unemployment
• Exploitation
• Monotony
• Weakening of Trade Union
• Over speeding
• Expensive
• Time Consuming
 Chapter Four
Classical Organizational Theory
 Classical Organizational Theory
• Focused on the problems faced by top managers of
large corporations.

• Focused on the management of organizations while

scientific management focused on the management of
work, it was labeled classical organization theory.
• (1) develop basic principles that could guide the design, creation, and
maintenance of large corporations

• (2) identify the basic functions of managing organizations.

• Practicing executives were the major contributors to classical

organization theory.

• many contributors to the classical organization theory.

• Henri Fayol is singled out for discussion,

Henri Fayol (1841 – 1925)

• The celebrated French industrialist and theorist, began

his working life as a young mining engineer at the age of
19.

• Spent his entire working life with the same company,

rising to Managing Director at the age of 47 and only
retiring after his 77th birthday
• Under his leadership the company prospered despite its near-
bankrupt state when he took over.
• He published a book entitled Administration Industrielleet
Generale in 1916 and that brought to light the distillation of his
lifetime’s experience of managerial work.
• The works of Taylor and Fayol are essentially complementary.
• Both realized that the problem of human resources and their
management at all levels is the key to business success.
• Both applied scientific method to this problem.
• Fayol was perhaps the first individual to discuss management
as a process with specific functions that all managers must
perform.
• He proposed planning, organizing, commanding and
controlling as the four management functions.
• Fayol found that activities of an industrial undertaking could be
divided into six groups: (1) technical (production).
• (2) Commercial (buying, selling, and exchanging),
• (3) financial (search for, and optimum use of, capital),
• (4) security (protection of property and persons),
• (5) accounting (including statistics), and
• (6) managerial (planning, organization, command,
coordination, and control).
 Fayol’s 14 General Principles of Management
i. Division of Work. specialization that economists consider necessary for efficiency in
the use of labor. applies the principle to all kinds of work, managerial as well as
technical.
ii. Authority and responsibility. Fayol finds authority and responsibility to be related,
with the latter arising from the former. When authority is exercised, responsibility
arises. He sees authority as a combination of official factors, driven from the
manager’s position, and personal factors, “compounded of intelligence, experience,
morale worth, past service, etc.”
 Principles of Management
i) Discipline. “Seeing discipline as respect for agreements which are
directed at achieving obedience, application, energy, and the
outward marks of respect” Fayol declares that discipline requires
good superiors at all levels. Is absolutely essential for the smooth
running of business and without discipline no enterprise could
prosper.
ii)Unity of Command. employees should receive orders from one
superior only.
 Principles of Management
i) Unity of Direction. each group of activities with the same
objective must have one head and one plan. As distinguished
from the fourth principle, it relates to the organization of the
“body corporate” rather than to personnel.
ii)Subordination of Individual to General Interest. This is self-
explanatory; when the two are found to differ, management must
reconcile them.
 Principles of Management
i) Remuneration. Remuneration and methods of payment should
be fair and afford the maximum possible satisfaction to
employees and employer.
ii)Centralization. Without using the term ‘centralization of
authority,’ Fayol refers to the extent to which authority is
concentrated or dispersed. Individual circumstances will
determine the degree that will “give the best overall yield.”
 Principles of Management
i) Scalar Chain (line of authority). is the chain of command
ranging from the highest to the lowest ranks. Adhering to the
chain of command help implement unity of direction, but
sometimes the chain is too long, and better communication and
better decisions can result from two or more department heads
solving problem directly rather than referring them up the chain
until a common superior is reached.
 Principles of Management
i) Order. Both equipment and people must be well chosen, well
placed, and well organized fro a smooth-running of
organization. For material things; “a place for every thin and
everything in its place.” For people “a place for everybody and
everybody in his place.
 Principles of Management

i) Equity. Kindness and justice will encourage employees to

work well and be loyal.
ii)Stability of Tenure of Personnel. Changes in employee
assignments will be necessary, but if they occur too frequently,
they can damage morale and efficiency.
 Principles of Management
i) Initiative. Thinking out a plan and carrying it out successfully can be
deeply satisfying. Managers should encourage employees to do this as
much as possible.
ii)Esprit de corps. This is the principle that “in union there is strength,” as
well as an extension of the principle of Unity of command, emphasizing
the need for teamwork and the importance of communication in
obtaining it.
 Chapter Five
Bureaucratic Management Theory
• Advocates of the bureaucratic theory contributed yet a third,
widely divergent stream of thought

• Concerned for how the overall structure of an organization

influences managerial effectiveness.

• Chief advocate of the bureaucratic organization was Max

Weber (1846 – 1920).
• A wealthy German intellectual, Max Weber described what
he believed was the ideal or pure form of organization.
• Weber’s “pure form” of organization is characterized by
rationality and impersonality.
• The part of rationally structured organizations are designed
and coordinated to achieve specific ends.
• Rationality implies goal directedness.

• impersonality implies objectivity in interpersonal relations.

• Human resource decisions in bureaucracies were to be strictly

impartial – based on qualifications and work demands rather
than on a caste system or the personal preferences of decision
makers.
 Bureaucracy is characterized
• Hierarchy,

 Impersonality,
 Written rules of conduct,
 Promotion based on achievement,
 Specialized division of labor, and
 Efficiency
• According to Weber, bureaucracies are goal-oriented
organizations designed according to rational principles in order
to efficiently attain their goals.

• Offices are ranked in a hierarchical order, with information

flowing up the chain of command, directives flowing down.
• Operations of the organizations are characterized by impersonal rules
that explicitly state duties, responsibilities, standardized procedures
and conduct of, office holders. Offices are highly specialized.

• Appointments to these offices are made according to specialized

qualifications rather than ascribed criteria.

• All of these ideal characteristics have one goal, to promote the

efficient attainment of the organization’s goals
 Advantage of bureaucracy
• Precision, speed, unambiguity, knowledge of
the files, continuity, discretion, unity, strict
subordination, reduction of friction, and of
material and personal costs is raised to the
optimum point.
 Disadvantage of bureaucracy

• lie in red-tape (excessive procedure),

rigidity, and neglect of human factor
 Chapter Six
THE HUMAN-RELATION MOVEMENT
 THE HUMAN-RELATION MOVEMENT

• Refers to the manner in which managers interact with

subordinates.
• To develop good relations, followers of this approach believed,
managers must know why their subordinates behave as they do
and what psychological and social factors influence.
• Human relations concentrated on the social environment.
• Significant contribution by professor Elton Mayo, an Australian by birth
and a Psychologist by training.

• Founder of the human-relations movement, whose advocates have

stressed the need for managerial strategies to ensure that concern of
people at work is given the highest priority.

• Appropriately, the title of Mayo’s first work was “The First Inquiry.”
 The First Inquiry
• Mayo and his associates were asked to solve production and
employee turnover problem in Textile Mill (in USA).

• The turnover rate was nearly 250 percent annually, compared to

5 or 6 percent in other departments.

• Efficiency engineers had previously tried to solve the problem

by establishing a financial incentive plan, but not once did the
workers produce enough to earn a bonus under the plan.
• introduction of rest periods, after extensive discussions with the
employees, immediately brought positive results in both turnover and
productivity.

• ten-minute rest periods a day were established with the employees

deciding when they would be taken.

• combined with employee participation in decision making, turned the

tide, production climbed well within acceptable limits – to above 85
percent efficiency from a low of 70 percent.
 Behavioral school
• Others who were university trained in social sciences such as
psychology, sociology, and anthropology began to study people at
work.

• had advanced training in applying the scientific approach to the study

of human behavior.

• These individuals have become known as behavioral scientists and

their approach is considered to be distinct from the human relations
approach.
•The individuals in the behavioral science branch of the
behavioral approach believe that man is much more complex than
the “economic man” descriptions of the classical approach and
the “social man” description of the human relations approach.
• Concentrates more on the nature of the work itself, and the degree to which
it can fulfill the human need to use skills and abilities.

• Behavioral scientists believe that an individual is motivated to work for

many reasons in addition to making money and forming social
relationships.

• Focused on communication, motivation leadership areas.

 Pros and Cones of the Behavioral schools

• Neo-classical approach has contributed a wealth of important

ideas and research results on the people-managing aspect of
the discipline of management.

• Management must get work done through others, management

is really applied behavioral science, because a manager must
motivate, lead, and understand interpersonal relations.
• Managers must know how to deal with people appears valid.

• But management is more than applied behavioral science.

• Make them better practitioners of the process of management.

• Help them in problem solving situations.

• One behavioral scientist may have a different suggestion than
another for the same management problem.

• Human behavior is complex and is studied from a variety of

viewpoints.

• This complicates the problem for a manager trying to use

insights from the behavioral sciences.
 The Hawthorne Study
• Made one of the early important contributions to the human-
relations approach.

• Conducted at the Hawthorne plant of the Western Electric

Company in Chicago, USA, between 1927 and 1932, in a
number of different stages.
 First stage (1924 – 1927):-

• Conducted by the company’s own staff under the

direction of Messrs Pennock and Dickson.
• Concerned with the effects of lighting on output.

• Two groups of comparable performance were isolated

from the rest and located in separate parts of the plant.
• One group, the control group, had a consistent level of lighting; the other group, the
experimental group, had its lighting varied.

• To the surprise of the researchers, the output of both groups increased.

• Even when lighting for the experimental group was reduced to a very low level, they
still produced more!

• At this point pennock sought the help of Mayo and his Harvard University
colleagues.
 Stage Two (1927 – 1929):-

• Known as the Relay Assembly Test Room.

• study of the effects of differing physical conditions on productivity.

• there was no deliberate intention to analyze social relationships and employees

attitudes.

• Six women workers in the relay Assembly section were segregated from the rest
in a room of their own.

• By discussing with the women, changes in rest periods, and lunch times were
made in timing and length.

• Productivity increased whether the conditions were made better or worse.

• Later studies concluded that altered the working week.

• Once again output increased regardless of the changes.

• By the end of stage two the researchers realized they had not
just been studying the relationship between physical working
conditions, fatigue, monotony and output, but had been entering
into a study of employee attitudes and values.
• The women’s reaction to the changes, i.e., increased output
regardless of whether conditions improved or worsened, has
come to be known as “the Hawthorne Effect’.

• That is to say the women were responding not so much to the

changes as to the fact they were the center of attention – a
special group.
 Stage Three (1928 – 1930):-
• Before the relay assembly test had come to an end, the
company had decided to implement an interview program
designed to ascertain employee attitudes towards working
conditions, their supervision and their jobs.

• Conducted by selected supervisors, first on structured bases

and later on unstructured bases.
• Before the program was suspended, about 20,000 employee were
interviewed, and the pool of material amassed was used to improve
several aspects of working conditions and supervision.

• Become clear from the responses that relationships with people were an
important factor in the attitudes of employees.
 Stage four (1932):-
• Known as the Bank Wiring Observation Room.

• Fourteen men on Bank Wiring were removed to a separate

observation room, where, a part from a few differences, their
principal working conditions was the same as those in the main
wiring area.

• To observe a group working under more or less normal

conditions over a period of six months or so.
 Final Stage (1936):-
• Based on lessons learned from the earlier studies.

• Focus firmly on employee relations and took the form of

personnel counseling.

• The counselors encouraged employees to discuss their problems

at work, and the results led to improvements in personal
adjustment, employee-supervisor relations and employee
management relations.
 The main conclusions to be drawn from these studies
are:-
• Individual workers cannot be rated in isolation, but must be seen as members of a
group;
• The need to belong to a group and have status within it is more important than
monetary incentives or good physical working conditions;
• Informal (unofficial) groups at work exercise a strong influence over the behavior of
workers;
• Supervisors and managers need to be aware of these social needs and cater for them
if workers are to collaborate with the official organization rather than work against it.
• Humans are social-that business operations are a matter not merely of
machinery and methods but also of gearing these with the social system
to develop a complete socio technical system.

• Led to the recognition that managers operate in a social system.

• Recognize the importance of the human factor, or that management

theorists overlook it

• Underscore the need for a greater and deeper understanding of the social
and behavioral aspects of management.
• The classical period the primary motives of the organizations were
fulfilled, however, the issue of workers security and satisfaction
were the two over looked concepts .

• It is at this time that another logic which state ;man is social animal
thus, more than monetary incentive, workers motivation to perform
their task at desired standard, is influenced by several factors
including group norms in experienced in the job environment .
Chapter Seven
THE MODERN ERA
 The quantitative approach

• The management scientists, led by operations researchers and

systems analysts, see management as “a system of mathematical
models and processes”.

• They hold that since managing is a logical and rational process, it can
be expressed in terms of mathematical relationships and models, this
will lend exactness to management process and substitute certainty
for guesswork, knowledge for judgment, hard facts for experience.
• The management scientists contributed lots of mathematical
tools for solving problems of management in areas like quality
control, inventory control, production scheduling, machine
loading, warehouse operations and resource allocation.

• Management scientists have not made any contribution to the

theory of management.
• They only made mathematical tools available to
practitioners of management.

• Moreover, while it is used in many problem areas,

management science does not deal with the people
aspect of an organization.
 The Contingency Approach
• Contingency theory has been developed mainly in the 1970s.

• it builds on the major premises of the systems theory that organizations are
organic and open systems, and there is a relationship of interdependence
between an organization and its environment, as well as within and
between its subsystems.

• The contingency theorists aim at integrating theory with practice in a

systems framework.
• When an organization behaves in response to forces in its environment, its
behavior is said to be contingent on the forces.
• Hence, a ‘contingency’ approach is an approach where the behavior of one
sub-unit is dependent on its environmental relationship to other units or sub
units that have some control over the consequences desired by the sub-unit.
• Thus, behavior within an organization is contingent on situations, and if a
manager wants to change the behavior of any part of the organization, he or
she must attempt to change that part of its environment that is influencing it.
• Contingency approach emphasizes that there is no one
best way to design organizations and manage them.
• Management is situational, and managers should design
organizations, define objectives, and formulate
strategies, policies, and plans in accordance with the
prevailing environmental conditions.
• Secondly, managerial policies and practices, to be effective must
respond to changes in the environment.

• Thirdly, since management’s success significantly depends on its

ability to cope with its environment, it should sharpen its
diagnostic skill so as to anticipate and comprehend environmental
changes
• Forth, managers should have adequate human relations
skills to accommodate change, and abilities to manage
transition, as well as stabilize change.
• Finally, it should use the contingency model in designing the organization,
developing its information and communication system, adopting its
effective leadership styles and formulating suitable objectives, strategies,
policies and practices.

• Thus, contingency theory provides a method of analysis as well as a way

of integrating organization with its environment.
• Contingency theory of management is an extension of system approach to
management. There cannot be a suitable management solutions for all
situations.

• External and internal factors keep changing.

• Since systems approach cannot appropriately suggest relationship

between organization and environment, the gap so created has been
fulfilled by contingency approach.
 The theory suggests:
1. What a manager should do in a particular situation based on the examination of
the facts relating to each situation?
2. Contingency theory suggests active inter-relationship between various
variables in a situation and managerial action devised.

• It not only suggests solution to the given situation but also examines various
influences of the situation on behavior pattern of the individual and groups in
the organization.
• The contingency view of organization may be explained in the
words of Kast and Rosenzweing as follows: “The contingency
view seeks to understand the inter-relationship within and
among sub-systems as well as between the organization and its
environment and to define patterns of relationship and
configuration of variables.
• It emphasizes the multivariate nature of organizations and attempts to
understand how organizations operate under varying conditions and in
specific circumstances.

• Contingency views are ultimately directed towards suggesting

organizational designs and managerial actions most appropriate for
specific situation (Ref. Kast, F.E. And J.E. Rosenweing).
• Tosi and Hammer states that when a sub-system in an organization
behaves in response to another system or sub-system, we say response is
contingent on environment.

• Hence a contingency approach is an approach where the behavior of one

sub-units is dependent on its environment relationship to other units or
sub-units that have control over the consequences desired by that sub-
unit.
 Features of the Contingency Theory
1. Management action is contingent on certain actions outside the
system or the sub system.
2. Organizational action should be based on the behavior of action
outside the system so that organization can be integrated with the
environment.
3. Because of the specific organization – environment relationship,
no action can be universal. It various from situation to situation.
4. Internal functions of the organization are generally consistent with the technology,
demand place on the organization by the society, external environment and needs of the
members of the organization.
5. Contingency approach suggests suitable alternatives for those managerial actions,
which are influenced by external and internal environment like organizational design,
strategy formulation, decision systems, leadership styles and organization improvement.
6. Organizational systems are not absolute.

They have to adjust or modify considering social, political, technical and economic
situations.
 Implications
• Contingency approach to management is an important addition
to the management theory.

• It is a very sophisticated approach because it takes in to

consideration increasing complexity of organization.

• The approach emphasizes multivariate nature of organization

and suggests organizational designs and managerial actions to
specific situations.
• The theory is contingent on environmental factors like politics, technology
and economic situation prevailing from time to time.

• Sharma (1997) explains that contingency views tend to be more concrete and
to emphasize more specific characteristics and pattern of inter-relationship
among sub-systems.
• The view recognizes that the environment and internal sub-systems of each organization
are somewhat unique and provide a basis for designing and managing specific
organizations.

• Contingency view recognizes the complexity involved in running modern organizations

and uses pattern of relationship and/or configurations of sub-systems in order to search a
way out.

• However there are certain drawbacks in this approach.

• It is not considered as unified theory of management because there is inadequate

literature.
• It does not suggest any action in a contingency.

• Management actions depends upon situation is not adequate.

• The theory is difficult for empirical testing.

• It is complex because there are large number of variables and large

number of managerial actions involved.

• The theory is not proactive, it is reactive.

Thanks All of you!
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