NATURE AND

CONCEPT OF
MANAGEMENT
MANAGEMENT -
coordinating and
overseeing the work
performance of individuals
in an organization
MANAGER – An
individual involved in
managing people.
MANAGERIAL LEVELS
1.TOP MANAGERS
2.MIDDLE MANAGERS
3.FIRST-LINE MANAGERS
MANAGERIAL SKILLS
1.Conceptual skills,
2.Human skills and
3.Technical skills.
 5 FUNCTIONS OF MANAGEMENT
1. Planning
2. Organizing
3. Staffing
4. Directing/Leading
5. Controlling
EVOLUTION OF
MANAGEMENT
THEORIES
MANAGEMENT THEORIES
What is a theory?
A general body of assumptions
and principles used to describe a
particular set of facts or some
observed phenomenon.
Background Information for Learners:
Management theories help improve the
management process

Each theory has some limitations and the field of

management theory is in the process of evolving. The
management theories were summarized below.
 Classical Theories of
Organizations
Emerged in early part of the twentieth century.
Models were military and the Catholic Church.
Features
Strict CONTROL of workers
Absolute CHAINS of COMMAND
PREDICTABILITY of behavior
UNIDIRECTIONAL downward influence
 Classical Approach
What are the three primary
classical theories
 Administrative Management
Theory
 Scientific Management Theory
 Bureaucracy Theory
 SCIENTIFIC
MANAGEMENT
THEORY

FREDERICK W.
TAYLOR
ORGANIZATION AND MANAGEMENT
Scientific Management
Frederick W. Taylor
• Taylorism
• The One Best Way
• Standardize fair day’s work
• Substituting research science rules for rules of thumb
• Scientifically select, train, teach and develop
employees
• Provide detailed instructions and supervision of each
worker
 Taylor’s Theory of Scientific
Management
Elements of Scientific Management
Scientific design of every aspect of every task
Time and Motion Studies
Careful selection and training of every task
Proper remuneration for fast and high-quality work
Maximize output - increase pay
Equal division of work and responsibility between
worker and manager
 Taylor’s Theory of Scientific
Management
Underlying Themes
Managers are intelligent; workers are and should be
ignorant
Provide opportunities for workers to achieve greater
financial rewards
Workers are motivated almost solely by wages
Maximum effort = Higher wages
Manager is responsible for planning, training, and
evaluating
 Four Principles of Scientific
Management
Principles to increase efficiency:
1.Study the ways jobs are performed now and
determine new ways to do them.
Gather detailed time and motion information.
Try different methods to see which is best.
2.Codify the new methods into rules.
Teach to all workers the new method.
 Four Principles of Scientific
Management
Principles to increase efficiency:
1. Select workers whose skills match the
rules.
2. Establish fair levels of performance and
pay a premium for higher performance.
Workers should benefit from higher output
BUREAUCRATIC
MANAGEMENT
THEORY

MAX WEBER
ORGANIZATION AND MANAGEMENT
 Administrative Management Theory
Administrative Management
The study of how to create an organizational
structure that leads to high efficiency and
effectiveness.
Max Weber
Developed the concept of bureaucracy as a
formal system of organization and administration
designed to ensure efficiency and effectiveness.
 Weber’s Theory of Bureaucracy
Max Weber (1864-1920)
Principles and Elements of Management - describe
an ideal or pure form of organizational structure
(general policy and specific commands
PRIMARY FOCUS: Organizational Structure
Worker should respect the “right” of managers to
direct activities dictated by organizational rules and
procedures
 Weber’s Theory of Bureaucracy
Bureaucracy allows for the optimal form of authority
- “rational authority”
Three types of Legitimate Authority
Traditional Authority - past customs; personal
loyalty
Charismatic Authority - personal trust in character
and skills
Rational Authority - rational application of rules or
laws
 Weber’s Theory of Bureaucracy
Tenets of Bureaucracy
Rules
Specified sphere of competence
Hierarchy
Specialized Training
Workers do not own technology
No entitlement to “official position” by incumbent
Everything written down
Maintenance of “ideal type” - bureaucracy
 Weber’s Theory of Bureaucracy
Authority is the power to hold people accountable for
their actions.
Positions in the firm should be held based on performance,
not social contacts.
Position duties are clearly identified so that people know what
is expected of them.
Lines of authority should be clearly identified such that
workers know who reports to who.
Rules, standard operating procedures (SOPs), and norms guide
the firm’s operations.
ADMINISTRATIVE
MANAGEMENT
THEORY

HENRY FAYOL
 Fayol’s Administrative Theory
Henri Fayol (1841-1925)
Principles and Elements of Management - how
managers should accomplish their managerial
duties
PRIMARY FOCUS: Management
 (Functions of Administration)
More Respect for Worker than Taylor
Workers are motivated by more than money
Equity in worker treatment
 Fayol’s Administrative Theory
Five Elements of Management -- Managerial
Objectives
• Planning
• Organizing
• Command
• Coordination
• Control
• Keep machine functioning effectively and efficiently
• Replace quickly and efficiently any part or process that did not contribute to
the objectives
Henry Fayol’s 14 Principles of Management
1. Division of work 8. Centralization
2. Authority
9. Scalar chain
3. Discipline
10. Order
4. Unity of command
11. Equity
5. Unity of direction
6. Subordination of individual 12. Stability and tenure
interest to the general 13. Initiative
interest
14. Esprit de corps
7. Remuneration
Fayol’s Principles of Management
• Division of Labor: allows for job specialization.
– jobs can have too much specialization leading to
poor quality and worker dissatisfaction.
• Authority and Responsibility
– both formal and informal authority resulting from special
expertise.
• Unity of Command
– Employees should have only one boss.
Fayol’s Principles of Management

• Line of Authority
– A clear chain of command from top to bottom of the
firm.
• Centralization
– The degree to which authority rests at the top of the
organization.
• Unity of Direction
– A single plan of action to guide the organization.
Fayol’s Principles of Management
• Equity - The provision of justice and the fair
and impartial treatment of all employees.

• Order - The arrangement of employees where

they will be of the most value to the organization
and to provide career opportunities.

• Initiative - The fostering of creativity and

innovation by encouraging employees to act on
their own.
 Fayol’s Principles of Management
• Discipline
– Obedient, applied, respectful employees are
necessary for the organization to function.

• Remuneration of Personnel
– An equitable uniform payment system that
motivates contributes to organizational success.
 Fayol’s Principles of Management
• Stability of Tenure of Personnel
– Long-term employment is important for the
development of skills that improve the organization’s
performance.

• Subordination of Individual Interest to the Common

Interest
– The interest of the organization takes priority over
that of the individual employee.
Fayol’s Principles of Management

Esprit de corps
– Comradeship, shared
enthusiasm foster devotion to
the common cause
(organization).
 NEO-
CLASSICAL
THEORY

ORGANIZATION AND MANAGEMENT

 NEO-CLASSICAL THEORY
• gave greater emphasis to individual and group
relationship in the workplace.

• pointed out the role of psychology and sociology in

the understanding of individual and group
Behaviour in an organization.
 Behavioral Management Theory
Behavioral Management
The study of how managers should behave to
motivate employees and encourage them to
perform at high levels and be committed to the
achievement of organizational goals.
Focuses on the way a manager should personally
manage to motivate employees.
 Behavioral Approach
Hawthorne Studies 1930’s
 Shiftof management theory away from
pure mechanistic and economic views of
worker motivation and recognition that social relationships could
be greater motivator.
 Work groups influence individual worker output. Supervisors attention has
significant influence on productivity (JM)
Effort begun to have a “happy” worker
Later partly refuted – being productive more likely to lead to satisfaction
then vice-versa
 The Hawthorne Studies
Hawthorne Experiment: The Hawthorne Experiments
brought out that the productivity of the employees is
not the function of only physical conditions of work
and money wages paid to them. Productivity of
employees depends heavily upon the satisfaction of
the employees in their work situation.
 The Hawthorne Studies

Human Relations Implications

– Hawthorne effect — workers’
attitudes toward their
managers affect the level of
workers’ performance
Modern Theories
 I. Management Science Theory
• An approach to management that uses rigorous
quantitative techniques to maximize the use of
organizational resources.
Quantitative management—utilizes linear programming,
modeling, simulation systems.
Operations management—techniques to analyze all
aspects of the production system.
Total Quality Management (TQM)—focuses on improving
quality throughout an organization.
Management Information Systems (MIS)—provides
information about the organization.
 Management Science Approach

 Focus on mathematical models

 Arthur D. Little one of the first
 Dupont developed CPM (1950’s)
Critical Path Method
 Most time-consuming set of activities start to finish
 US Navy developed PERT (following year)
 Program Evaluation and Review Technique
 Used in engineering, construction, office workflow, and
emergency response evaluation
 II. Organizational Environment Theory

Organizational Environment
• The set of forces and conditions that operate
beyond an organization’s boundaries but affect
a manager’s ability to acquire and utilize
resources.
 III. The Open-Systems View
Open System
A system that takes resources for its external environment
and converts them into goods and services that are then
sent back to that environment for purchase by customers.
Inputs: the acquisition of external resources.
Conversion: the processing of inputs into goods and
services.
Output: the release of finished goods into the environment.
The Organization as an Open System
IV. Contingency Theory of Organizational Design
 Mechanistic and Organic Structures
•Mechanistic Structure
Authority is centralized at the top. (Theory X)
Employees are closely monitored and managed.
Can be very efficient in a stable environment.
•Organic structure
• Authority is decentralized throughout the organization.
(Theory Y)
• Tasks and roles are left ambiguous to encourage employees
to react quickly to changing environment.