MANAGEMENT CONCEPT AND PRACTICE

CHAPTER TWO
EVOLUTIONS OF MANAGEMENT THEORIES
 EVOLUTION OF MANAGEMENT THOUGHTS

How management concepts are evolved?

 The principle of management can be traced back many
centuries: prehistoric times-hunting, food preparation, etc. in
primitive society
 Egypt- The Egyptians organized their people and their slaves to
build their cities and pyramids – need for effective management
 Roman- The Roman Empire is thought by many to have been so
successful because of the Romans‘ great ability to organize the
military and conquer new lands. Emperor Diocletian’s (A.D.
284)
• 4 geographical areas; 13 dioceses;
• 100 provinces – effective mgmt through delegation of authority

2
 Cont’d…

 Roman Catholic Church - with its efficient formal

organization and management techniques. The most
important contributions:
 Hierarchy of authority: there was a hierarchical
structure from pop-bishop- priest – laity
 Specialization of activities: there was a training to be a
pop, bishop, priest & laity
 Bible (exodus 18: 13-16)- Jethro, Moses’ father in-law,
observed Moses spending an entire day listening to the
complaints & problems of this people

3
 Cont’d…
Then, Jethro advised Moses to relief him of his burden:
 Ordinance & laws should be taught to the people – policies, rules &
procedures
 Leader should be selected & assigned to be rulers of thousands,
hundreds, fifties & tens – delegation of authority
 The rulers should administer all routine matters & should bring to
Moses the important questions – the principle of exception
 China- the great wall of china – the importance of organizational
effectiveness
 Ethiopia- the magnificent obelisk of Axum, rock hewn churches of
Lalibela- the need for effective organization
 Various ancient civilization of Greek, Mesopotamia, India etc.
contributed to the early management thought
 All these are good examples that indicate how modern mgmt was
practiced in ancient times 4
 Cont’d…
 Although management practices go back several
thousands years, the development of management as a
field of knowledge is much recent.
 Much of the impetus for the development of management
theories & principles grew out the industrial revolution
of the early 1800s
 It was manifested by the:
• Revolution of factories & large organization
• Substitution of human labor by machine power
• Need for the coordination of the efforts of large numbers of
people
 Thus, attempts to develop theories & principles of
management as a discipline evolved almost 200 years ago
5
PRE- CLASSICAL MANAGEMENT THEORY
1. Robert Own-(1771-1858)
 A British industrial & an owner –manager of several
successful cotton mills in Scotland
 Concerned about the poor working and living conditions
of workers
 Recognized the importance of human resources in an
organization
 Improved working conditions of employees in the factory
 Argued, improving the condition of employees would
inevitability lead to increased production & profits
 Was considered as father of modern personnel
management spirit of cooperation b/n workers &mgt. 6
 Cont’d…
2. Charles Babbage-(1792-1871)
 A British mathematician who built the first practical
mechanical calculator
 Emphasized the idea work specialization
 Not only physical work but also mental work could be
specialized.
 He was an early advocator of division of labor principle-
specialization:
• To improve skills of workers
• To reduce learning time & other expenses
 His management ideas also anticipated the concept of
incentive pay & profit sharing to improve productivity.
7
 Cont’d…

3. Henry Robinson Towne (1844-1924)

 Towne was a founder and manager of Yale and
Towne manufacturing company.
 He has succeeded in motivating the engineers to
study management.
 According to him, a manager should be:
• an administrator;
• an engineer; and
• a thorough statistician
8
 Cont’d…
4. Adam Smith-(1776)
 A British economist – the wealth of Nations
 Made an important contribution to the development of management
thought division of labor (the breakdown of jobs into narrow,
repetitive tasks) would bring to organizations and society.
 His conclusion was specialization could to increased efficiency. This
is because:
 The dexterity of an employee increases in every particular work
 The time lost in passing from one type of work to another will be saved
 Leads to the invention of great number of machines, which enables to
perform more
 Thus, the focus was mainly on the mechanical side of the job- division
of labor, coordination of activities, & control of operations
9
 Approaches to Management Thought

 Broadly, there are different approach to management: pre-

classical, classical, Neo-classical & modern. They are presented
as follows:
Approaches to management thoughts

Classical theory Neo-classical Modern theory

 Bureaucracy theory theory  Quantitative
 Scientific  Human relations Theory
management Theory theory  Decision Theory
 Administrative  Behavioral  Contingency
theory science theory Theory
 System Approach10
 1. Classical Management Approach
Evolved in an effort to develop techniques that would solve
problems of organizational efficiency in the production of goods
and services
Three perspectives: based on the issues and problems that they
address
Scientific management; Focused on in the management of
work and workers (lower level managers).
Administrative theory: Focused on the problem of top
managers in managing the entire organization
Bureaucracy theory, Concentrate on structure and design of
organization characterized by a hierarchy of authority,
formalized rules and regulations that serve to guide the
coordinated functioning of an organization.

11
 1.1 Scientific Management
 Arose because of the need to increase productivity and efficiency.
A. Frederick W. Taylor (1856–1915)
 A pioneer who advocated scientific principles of management as the
result of his keen research in different industrial activities
 Started work as an apprentice pattern making in a small workshop
in Midvale steel company
 Within 8 years, he progressed from ordinary laborer to chief
engineer (time keeper, machinists, gang boss, foreman, assistant
engineer)
 He worked in Bethlehem steel company till 1901, acquired a
technical excellence in the field of engineering
 Published principle of scientific management (1911).Thus, he is
considered as the father of scientific management
12
 Cont’d…
Taylor’s Four Principles of Management
1. Develop a science for each element of an individual’s work,
which will replace the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the
worker.
3. Heartily cooperate with the workers so as to ensure that all
work is done in accordance with the principles of the science
that has been developed.
4. Divide work and responsibility almost equally between
management and workers. Management takes over all work for
which it is better fitted than the workers.

13
 Cont’d…
 Taylor Major conclusions
 Great gain in productivity from this technique of management came
not form greater exertion by workers but from elimination of
wastages
 Worker’s time & machine time, caused by:
o Delays of misapplied efforts
o Failure on coordination of quantities, etc.
 Thus, scientific management involves a complete mental revolution
on the part of workers & those of management – the main objectives
were:
o The elimination of waste effort
o Emphasis on fitting workers to particular tasks
o Greater care in training workers to the specific requirements of their jobs
o Greater specialization of work activities
o The establishment of standards for performance
14
 Cont’d…
The main ideas articulated by Taylor
 Standardization & simplification of work
 Time and motion studies
 The right person with the right job
 The right person with the correct tools & equipment
 Production planning & control
 Piece- wage system of payment on differential basis
 Ultimately, the main aim of scientific management
was to maximize the efficiency of workers-
maximizing their potentials

15
 Cont’d…
Criticism of Taylor Theories
Taylor's Philosophy though gained immense popularity,
was also widely criticized on three grounds.
1. Scientific management ignored human side of
organization. Taylor viewed on average worker as a
machine that could be motivated to work hard through
economic incentives
2. Taylor's theory is narrow in scope having direct
application to factory jobs at the Shop Floor Level.
"Efficiency Experts"
3. Excessive division of labour had disastrous consequences
in the form repetitive and monotonous jobs and discontent
among workers.
16
 Cont’d…
B. Henry L. Gantt
 Henry L. Gantt (1861–1919) worked with Taylor on several
projects.
 Gantt began to reconsider Taylors incentive system. Gantt came
up with a new idea.
 Every worker who finished a day‘s assigned work load would win
a 50 cent bonus. Then he added a second motivation.
 The supervisor would earn a bonus for each worker who reached
the daily standard, plus an extra bonus if all the workers reached
it.
 Every workers progress was rated publicly and recorded on
individual bar charts
 in black on days the worker made the standard,
 in red when he or she fell below it.
 Going beyond this, Gantt originated a charting system 17for
 Cont’d…
C. The Gilbreths
 Frank B. and Lillian M. Gilbreth (1868– 1924) and (1878–
1972) made their contribution to the scientific management
movement as a husband and wife team.
 Lillian and Frank collaborated on fatigue and motion
studies and focused on ways of promoting the individual
workers welfare.
 The ultimate aim of scientific management was to help
workers reach their full potential as human being.
 In their conception, motion and fatigue were intertwined-
every motion that was eliminated reduced fatigue.
 Using motion picture cameras, they tried to find the most
economical motions for each task in order to upgrade
performance and reduce fatigue.
18
 Cont’d…

How Do Today’s Managers Use Scientific

Management?
 Use time and motion studies to increase
productivity
 Hire the best qualified employees
 Design incentive systems based on output

19
1.2. Administrative Management Theory
 Administrative theory focuses on the total
organization and attempts to develop principles that
will direct managers to more efficient activities.
 It had two major purpose:
Develop basic principles that could guide the
design, creation & maintenance of large
corporations
Identify the basic functions of managing
organization

20
 Cont’d…
A. Henri Fayol (1841-1925)
Henri Fayol was a French mining engineer who
spent many of his later years as an executive for a
French coal and iron combine
Henri Fayol is the one who identified:
 The major types of activities
 Management as a separate field of study
 General management principles
Believed that the practice of management was
distinct from other organizational functions
Developed fourteen principles of management that
applied to all organizational situations 21
 Cont’d…
Fayol’s Fourteen principles of Management
1. Division of labour : Division of work leads to specialization
resulting in higher output.
2. Authority : Managers must have the authority to issue orders
and instructions to the subordinates.
3. Discipline : Discipline means respect for rules and agreements.
4. Unity of command : There should be one boss for one
subordinate.
5. Unity of direction : All operations in an organization need to
be directed towards one objective.
6. Subordination of individual interest to general interest : If
there is a conflict between the individual goals and
organizational goals, preference should be given to
organizational goals,
22
 Cont’d…
7. Remuneration : There should be a fair system of remuneration
that ensures equal pay for equal work.
8. Centralization : It refers to declining role of subordinates in the
decision making.
9. Scalar Chain (Hierarchy) : This the line of authority running
from top level to lower level of management.
10. Order : People and material should be in the right place at the
right time.
11. Equity : Managers should be fair to their subordinates.
12. Stability of staff : Employee turnover should be less to ensure
efficiency of an organization.
13. Initiative : Subordinates should have the freedom to conceive
new ideas and do their task, even though they commit mistakes.
14. Esprit de corps : ‘ Unity is strength’. People should work as a
team to enjoy the benefits of synergy. 23
 Cont’d…
Positive attributes of Fayol’s theory :
 Fayol pioneered in distinguishing management functions from
other functions/activities of a business.
 He was first to highlight the universality of management
principles.
 His contribution to management theory provided foundation to
development of management thought.
Major limitation
 Some of the principles are rigid (chain of command, unit of
command)
 The principles are applicable in a relatively stable & predictable
environments
 Prescription of universal principles that are not really
appropriate in some settings (decentralization, matrix structure )
24
1.3 Bureaucracy Theory of Management
 Is merely a type of organizational structure developed by the
Germen sociologist Max Weber.

What is Bureaucracy?
 Bureaucracy is associated with negative connotation
among the general population
 Thus, most people attribute several prejudices to
Bureaucracy:
 Rigid application of rules
 Paper shuffling
 Redundancy of error
 Lethargic attitude toward change, etc.

25
 Cont’d…
1. Max Weber (1864-1920)
 Weber developed the principles of bureaucracy—a
formal system of organization and administration designed
to ensure efficiency and effectiveness.
 In a bureaucracy, a manager’s formal authority
derives from the position he or she holds in the
organization.
 A well-defined hierarchy.
 Division of labor and specialization..
 Rules and regulations.
 Impersonal relationships between managers and
employees.
 Record Keeping
 Efficiency 26
 Cont’d…
2. Chester Barnard (1886-1961)
 Barnard's, viewed the organization as a "cooperative system" of
individuals embodying three essential elements:
(1)willingness to cooperate,
(2) a common purpose, and
(3)communication.'
 The source of authority did not reside in the person who gave the orders;
rather, authority resided in the subordinates
 Subordinates would assent to authority when four conditions were
satisfied:
(1)they could and did understand the communicated directive;
(2)they believed that the directive was consistent with the purpose of the
organization;
(3)they believed that the directive was compatible with their own personal
interests; and
(4)they were mentally and physically able to comply with the directive.' This
27
view of authority has become known as acceptance theory.
 Cont’d…
Criticism of bureaucracy
 Reduces flexibility –leads to bureaucratic
behavior
 Specialization conflicts & minimum
performance level
 Inappropriate application of rules & regulations
 Difficulty of responding to changing conditions
 Feeling of being irrelevant-routine activities can
be easily learned
 Enormous degree of power in the hands of a
very few 28
 Contributions of the Classical
Management Approach
The greatest contribution of the classical approach was that, it
identified management as an important element of
organized society.
Management has increased in importance.
The identification of management functions such as planning
organizing and controlling provided the basis for training new
managers.
Moreover, many management techniques used today are
direct outgrowth of the classical approach.
For instance, time and motion analysis, work simplification,
incentive wage systems, production scheduling, personnel
testing, and budgeting are all techniques derived from the
classical approach.
29
 2. Neo-Classical Management Theory
 Emphasized human relations, the importance of individual as
well as group relationship and social aspects.
 Since the classical management theory:
 Couldn’t achieve total efficiency & work place harmony
 Viewed organization from the mechanistic viewpoint &
considered workers as devices & only ration beings
 Focused on controlling & standardizing the individual behavior
 Practicing managers got problems in managing organizations
because subordinates weren’t behaving as expected
 It appeared essential to fined a means that could help managers
become effective in dealing with people & thereby increasing
worker’s productivity
 Then, behavioral management theory emerged emphasizing on
human relation
 Exercise: is that simple to standardize individual human behavior?
30
 2.1. Behavioral Management Theory
 Is the study of the actions of people at work. People are the
most important asset of an organization.
A. Human relations approach :
 It refer to the interaction of managers with their subordinates
based on:
o Social environment of work, individual & group behavior,
and interpersonal relationships.
 HRs: used concepts from psychology, sociology & anthropology
to assist managers understand human behavior in the work place
 Focused on motivation, communication, work group formation &
leadership
 Thus, the behavioral school of management had its origins in
industrial phycology & sociology emphasis on the interactions of
people in an organization
31
 Cont’d…
THE HAWTHRONE EXPERIMENTS
 Series of studies conducted at the Western Electric Company
from 1924 to 1933.
 Elton Mayo : He is recognized as the father of human relations
approach.
 Mayo and his associates were conducted experiments in four phases.
 (1)Illumination experiment, (2)Relay assembly test room
experiments
 (3)Interview phase (4) Bank wiring observation room experiment.
 Scholars generally agree that the Hawthorne studies, had a dramatic
impact on the direction of management thought.
 Mayo concluded that group influences significantly affects individual
behavior
 Social norms, group standards & attitudes more strongly influence
individuals output & work behavior than do monetary incentives
32
 Cont’d…
 These experiment signified new approach to the problem of
productivity
 b/c scientific management theorists believed that physical
factors are determinants of workers productivity
 Illumination experiments :
 The intension of this experiment was to learn if there was
any correlation b/n intensity of light & productivity
 Accordingly, two group of women were taken for the
experiment:
 The experiment group- one subjected to variety in the
intensity of light
 A controlled group –which was exposed to constant
illumination intensity
33
 Cont’d…
 After their experiment, the researchers were puzzled by
their experiment:
 Productivity constantly increased in both the
experimental & controlled groups
 Surprisingly, productivity kept on ascending even if
they:
 Increased the intensity of illumination in the
experimental room
 Diminished the light so that it was barely enough to
see in the control room
 After seeing this puzzle, researchers concluded that
illumination has little or no effect on productivity.
34
 Cont’d…
 Relay assembly test room experiment :
 This set of experiments was conducted under the guidance of
Elton Mayo.
 The researchers selected six women employees of the relay
assembly test room, and were put in a separate room.
 In the test room, a number of variables were altered, like
increased wages and rest period, shortened workday and
workweek etc.
 Productivity increased during the study period.
 Such results led the researcher to believe that better treatment
of subordinates made them more productive.
 They highlighted the significance of social relations. This
condition was later labeled as the Hawthorne effect.
35
 Cont’d…
 Interview Phase :
Large number people were interviewed. The purpose of
the interviews was to explore the attitude of workers in
depth. The conclusions that emerged were.
 All objects, persons, and events carry some social meaning.
They relate to employee’s satisfaction or dissatisfaction.
 Workers assign meaning to their status in the organization and
give value to events, objects, and specific features of their
environment
 Workers derive satisfaction or dissatisfaction from the social
status of an organization. This means that they also look for
social rewards, associating them with an organization.
 Workers’ social demands are influenced by social experiences
in groups, both inside and outside the workplace 36
 Cont’d…
 Bank Wiring Observation Room Experiment
 In this experiment there were fourteen participants including
wiremen, solder men and inspectors.
 There was no change in the physical working conditions.
 Sample workers were paid based on an incentive pay plan, relating
their pay to output. They had the opportunity to earn more by
increasing the output.
 However, it was observed that the output was constant at a certain
level.
 Analysis of the results showed that the group encourages neither
too much nor too little work.
 They enforce ‘a fair day’s work’ on their own. Group norms,
therefore more important to the worker than money.
 This study, thus provided, some insight into informal social
relations within groups 37
 Cont’d…
 Finding & Implications of Hawthorne Studies
 Hawthorne Studies constituted the single most important foundation for the
behavioral approach to management. The conclusions drawn from them were:
 Physical working conditions did not seem to explain the changes that were
related in productivity
 There are other factors other than physical factors & monetary incentives,
which affect productivity
 Theses factors are social & psychological in nature
 Social environment
 Ability to talk to each other
 The right to choose their rest periods
 The right to leave the workstation without permission
 The right to have a say in suggested changes
 Psychological conditions:
 Being a member of the study group they felt social acceptance & recognition
 Thus, human beings are social beings not only rational, economic being (i.e.,
motivated not only by the body needs but also by social & psychological needs)
38
 Cont’d…
B. Human behavioral approach
From Human Relations To The Behavioral Science Approach
 Later researchers, more rigorously trained in the social sciences
psychology, sociology, and anthropology used more sophisticated
research methods and became known as behavioral scientists.
 The behavioral scientists brought two new dimensions
 First, they advanced an even more sophisticated view of human
beings and their drives than did Mayo and his contemporaries.
 Abraham Maslow and Douglas McGregor, wrote about self
actualizing people.
 They also determined that people wanted more than instantaneous
pleasure or rewards.
 If people were this complex in the way they led their lives, then
their organizational relationships needed to support that
complexity. 39
 Cont’d…

 Second, behavioral scientists applied the methods

of scientific investigation to the study of how
people behaved in organizations as whole entities.
 The classic example is the work of James March and
Herbert Simon in the late 1950s.
 March and Simon developed hundreds of
propositions for scientific investigation, about
patterns of behavior,
 particularly with regard to communication, in
organizations.

40
 Cont’d…
Behavioral Scientist: Maslow
 According to Maslow, - that people are motivated by five distinct
types of needs which are arranged in a hierarchy in order of their
power to motivate human behavior:
1.Physical or physiological needs
2.Safety or security needs
3.Social needs
4.Ego or status needs
5.Self-actualization, self realization, self-fulfillment needs.
 Physiological and safety needs are at the bottom of the hierarchy,
and at the top are ego needs the need for respect, for example and
self actualizing need such as the need for meaning and personal
growth.
 In general Maslow said lower-level needs must be satisfied before
higher level needs can be met. 41
 Cont’d…
Behavioral Scientist: McGregor
 McGregor provided another angle on this complex person idea.
 He distinguished two alternative basic assumptions about people
and their approach to work.
 Theory X managers believe that
 their subordinates basically try to avoid responsibility and
work assignments.
 So they can not be inspired or motivated.
 Thus theory X takes a relatively pessimistic and negative
view of workers.
 Theory Y managers
 hold progressive outlook and are dynamic in nature.
 They view work as rewarding if given the chance by
superiors.
42
 3. Modern Management Theory
 With increasing complexities of organizations, the
modern management theories(thoughts) are developed.
 Management is responsive to environmental changes.
 Business firms have multiple objectives.
 Management is multi-disciplinary in nature.
 Management is future oriented.
 Modern Management theory include:
1. Quantitative/Management Science Approach
2. Decision Theory Approach
3. Systems approach, and
4. Contingency approach

43
 3.1. Quantitative/Management
Science Approach
 The management science school emerged to treat the problems
associated with global warfare.
 Today, this view encourages managers to use quantitative
techniques; such as mathematics, statistics, and other quantitative
techniques to make management decisions.
 Managers can use computer models to figure out the best way to
do something — saving both money and time.
 Managers use several science applications:
 Mathematical forecasting helps make projections that are
useful in the planning process.
 Inventory modeling helps control inventories by
mathematically establishing how and when to order a product.
 Queuing theory helps allocate service personnel or
workstations to minimize customer waiting and service cost
44
 3.2. Decision Theory
The decision theory approach looks upon the management
process as a decision making process.
According to the decision theorists, the entire field of
management can be studied from the study of the decision-
making process, since the performance of various management
functions involves decision-making.
It is true that every task of the manager involves decision-
making.
The totality of management is however, something more than
decision making.
The core tasks of the modern manager are innovating, integrating
the organization with its external environment, and creation of an
organizational climate which is conducive to the optimum
performance of its members.
45
 3.3. System Approach
 System defined as a set of interrelated and interdependent
parts arranged in a manner that produces a unified whole.
 E.g. computers, automobiles, organizations, and animal and
human bodies.
 This approach consider the organization as a whole because
of the interdependent nature of activities, requiring the
organization to interact with external environmental factors.
 Two basic types of systems:
 Closed systems are not influenced by and do not interact with
their environment.
 Open system approach recognizes the dynamic interaction of
the system with the environments by taking in inputs &
transforming them into outputs that are distributed into their
environments.
46
 Cont’d…
Social Variables
Technological Variables

Customer Competitors

Financial Employee Suppliers

Institute
The
Organization
Labor
Union Shareholders & Board of Govt
Directors
The Media Special Interest
group

Economic Variables Political Variables

Internal External Indirect Action Elements

Stakeholders Stakeholders (PEST) 47
 Cont’d…
Some key concepts:
 Subsystems: The parts that make up the whole of a system are
called subsystems.
 Synergy: Synergy means that the whole is greater than the sum
of its parts. synergy means that as separate departments within
an organization cooperate and interact, they become more
productive than if each were to act in isolation.
 System Boundary: Each system has a boundary that separates it
from its environment.
 Psychosocial system: A business organization is a psychosocial
system in the sense that people working in a firm develop social
relationship and they constantly interact with one another.

48
 Cont’d…
Some key concepts:
 Input – Transformation – Output Model: An open system receives
inputs such as money, material, personnel, and technology from
its environment and transforms them into outputs such as goods
and services, interacting with environmental variables.
 System Goals: – Organizations have a variety of goals. The
major goal of an organization is survival. All other goals depend
on the achievement of this one goal
 Feedback: Feedback is the key to system controls. As operations
of the system proceed, information is fed back to the appropriate
people,
 Creativity: Business is creative in that it fruitfully converts the
available resources into useful products.
49
 Cont’d…
Implications of the systems approach
Synchronization- coordination of the organization’s
parts is essential for proper functioning of the entire
organization
Mutual influence- decisions & actions taken in one
area of the organization will have an effect in other
areas of the organization
Dependency- organizations are not self reliant &
therefore there exists mutual dependence among them
selves
Generally, the key implication is that organizations
must adapt to changes in their external environment
50
3.4. Contingency/Situational Approach
The contingency approach was developed by managers,
consultants and researchers who tried to apply the
concepts of the major schools to real life situations.
When methods highly effective in one situation failed
to work in other situations.
Why for example, did an organizational development
program work brilliantly in one situation and fail
miserably in another.
Results differ because situations differ. A technique that
works in one case will not necessarily work in all cases.
There is no universally applicable set of management
principles (rules) by which to manage organizations
51
 Cont’d…
 Organizations are individually different, face different
situations & require different ways of managing
 Therefore, managerial decisions must be specific for
specific situations by recognizing the uniqueness of the
environment
 According to the contingency approach:
 the managers‘ task is to identify which technique will in a
particular situation, under particular circumstances, and at
a particular time, best contribute to the attainment of
management goals.
 The contingency approach represents an important turn in
modern management theory, because it portrays each set of
organizational relationships in its unique circumstances.
52
 Any Questions