MODULE 2 MANAGEMENT HISTORY

Ancient management includes

 Chanakya’s lesson of management
 The management used in great wall of china and construction of Egypt pyramids
 Venetians assembly of the warship
1. Chanakya’s lessons of Management

- Setting Vision & Strategic Planning: Chanakya had very clear vision of “Akhand Bharat”.
During that time when Alexander was on conquering spree, he knew that “Akhand Bharat”
concept could save the country from foreign invasion. To achieve his vision, he used
following strategy:

1. To establish strong center: As per this strategy, there should be strong

administrative center which could have its writ all over India. He established strong
mauryan empire and expanded it particularly to the west.
2. To establish rules of law: Chanakya brought system of rules of Law. Most of the
laws were in writing. There was clear principle that justice should be given to all
citizens irrespective of caste, creed etc.
3. To have people Welfare state: He was the great economist of his time. He developed
the country economically. Even in modern age, his economic principles are not only
admired but also followed. The major decisions were taken keeping concept of
welfare state in mind.

So setting up vision for a venture is very important. It allows one to formulate working
strategies. In my article “Developing Business strategy”, I have laid emphasis on defining
vision to make a venture successful.

Viability & Acceptability: It is very clear that leader can do only those things which are in
the thoughts (i.e. active or remote) of his people. A leader should have the ability to work on
the good predominant thoughts of his people. Thus before setting his vision, Chanakya
studied logically its acceptability. He knew that Indian people wanted to unite in order to save
themselves from foreign invasion. He also studied long term benefits of his vision. We, as a
strong country, are surviving because of his vision otherwise the contemporary civilisations
of that times are no more.

Similarly in business, logic has its upper hand. It is very essential to study the viability of the
project. I have dealt in details on Viability topic in my article “Project Planning,
implementation & Funds Management”. Unless the project is viable, no vision works. Thus
vision should commensurate with viability study.

Viability of the business is studied considering near real parameters. It is very responsible
task and should be undertaken by the experienced professionals. The matters like raw
material consumption, electricity consumption, labour expenses etc do not vary much but
sales estimates are difficult to make. Viability study also helps in planning marketing strategy
to achieve sales target. In my article “Developing Business Strategy”, I have provided the
information relating to business strategy in detail.
Communication: To achieve his vision, first and foremost important work was to defeat
Nanda King. With meticulous planning, he was able to garner the support of people of
Nanda’s dynasty and made Nanda to resign and handing over power to Chandragupt Maurya.
Thus he used the tool of communication to bring the corrupt practices of Nanada King in the
knowledge of people.

Similarly we can use communication in our favour. Employees can be motivated and put on
high morale. Informal grapevine is the structure which can also be used to meet corporate
objectives. But only an experienced leader can do so.

Hawk Eye & control: Chanakya’s had hawk eye on the persons who wanted to destroy
Mauryan’s empire. He always put his or empire’s enemies at ease, calm without giving them
any knowledge that he had any doubt on their working. He always tried to reach the real
culprit behind all this.

When his spies gave him the information about the revolt planned by Ujjain King, lady
Helena and her father, he immediately correlated & verified it with their discussions with
Samrat Bindusara, their construction site proposal, construction material etc.

In this way he had extraordinary ways to control the whole Maurayan’s empire and its
borders.

In the business, we should have full control on all its activities. There should be hawk eye on
competitors, their activities etc. Internal and external enemies should always be under your
control. You should always have the strategy to deal with them. However it is always
difficult to deal with internal enemies and collusion of external enemies with internal
enemies. For doing this, CEO should have a team of reliable and trustworthy associates who
have only interest of the business in their mind.

Leadership: On establishment of Mauryan empire, he did not have any problem in choosing
leader. Chandragupt Maurya was made “Samrat”. As Chandragupt Maurya was part of his
team during the struggle period, he knew what was expected of him and how he could
manage and regulate the country. Moreover Chanakya nurtured these qualities in him.

However for Chandragupt Maurya’s successor, there were clear rules which a person
required to comply for becoming “Samrat”.

Similarly in present time, leadership position is very important. Leader has the responsibility
of choosing good team and motivating them. With the presence of good leader who is ready
to take full responsibility on him, productivity of staff automatically gets increased.

Encouragement of petty politics by promoters / investors destroys the line hierarchy. There is
no doubt that investors/promoters do have their own rights but these rights should be enjoyed
by putting systems, written manuals, financial control, audit etc in place instead of hidden
interference.

Team Building: Chanakya had unique capability to build team from the scarce resources. He
recognised the good leadership qualities in Chandragupt Maurya when he was child. He had
the largest team of spies who were ready to sacrifice their lives for their goals. One
interesting thing is that he established goals of each department in tandem with the main
objective. In addition to working culture and ethos, human aspects were also taken care of.

In present era, team building has become difficult. The reason is that this role has been
delegated to human resource department who does it professionally only keeping the
requirement on papers in mind. Instead team building roles should be on leader. The leader
should be able to make judgement about the traits of employee in the appointment process.
So just hiring the employees from the competitors without studying their inner behaviour
cannot be good team building.

Threats to opportunities: Veer Khurasan was the Chief of Army Staff during Bindusara’s
rule. There was doubt on him that he was working to meet his objectives instead of
kingdom’s objectives. He was made exposed and put in to jail.

But before doing this, Chanakya ensured that there should not be any revolt within Army. He
appointed capable person who could succeed Veer Khurasan at appropriate time. He exposed
Veer Khurasan deeds before Army. Thus takeover was without risk and peaceful.

In our business, we should always remain vigil that no such person can enter service who has
priority of his personal interest instead of Business Interest. Internal politics of the office
should be under the boss control so that integrity check always remains present. In case there
is some threat, we should know how to convert them into opportunities.

Trust in God: Chanakya had immense faith in God. But he did not leave any execution
matter on God to perform. He had very clear concept i.e. do the karmas with your intelligence
and after covering all the material aspects and then leave the matter to God. Thus this was the
method of attracting supreme positive energy in your favour. This is known as surrender to
God. But it does not mean that one should not do planning and execution matter. It only
means that after performing all requisites, one should surrender the result of action to God.
On achieving result, whatever it may be, one can plan subsequent strategies.

 the process of building great wall of china, taj mahal, pyramids etc all indicate that the
projects which required thousands of people to be managed and supervised were
successfully executed since ancient times

 Venetian war ship assembly lines

 - the venetian warships used assembly lines where the warships were floated along the
canals and at each stop the materials were added to the warships, it is similar to todays
car floating assembly line. The venetians also used inventory and warehousing
facilities

 - they also used human resource management function to keep track of labour force
and also used an accounting system.

ADAM SMITH- WEALTH OF NATIONS

 He argued the economic benefits of division of labour

  Division of labour- the breakdown of jobs into narrow and repetitive tasks it was also
called job specialisation

 He used the pin industry examples : 10 indviduals each doing specialised tasks could
make 48000 pins per day but if a person worked alone he could only make 10 pins per
day.

 He said that division of labour improved productivity of the person, increasing the
workers skill and dexterity

 DOL also saves the time spent in changing tasks

 This job specialisation is also performed in today’s time in the bakery or cooking
places, the hospital surgeries, factories and even in positions played by the football
team.

INDUSTRIAL REVOLUTION

 Started in the late 18th centuries

 Machine power substituted for human power

 Due to this change and addition of machinery in the working the factories needed
someone to forecast the public demand, ensure that there was enough material and
direct daily activities. This need was filled by managers

 This need for managers lead to the need of various management theories

MANAGEMENT THEORIES

 The management theories are like the story of blind man and the elephant all of them
focused on one main animal( management) but interpreting it in different ways just
like how these management approaches reflect various backgrounds and interests.

 The four approached contribute to the overall understanding of management but all
have their limitations as well.

Major approaches to Management

 1. CLASSICAL APPROACH

- these are the first studies of management

- they emphasized on rationality and making workers as efficient as possible

- main aim was efficiency

SCIENTIFIC THEORY OF MANAGEMENT

Major contributions

- Taylor- efficiency, one best way, scientific methods and worker harmony

- Frank and Lillian Gilbreth- time and motion studies, understanding worker
compatibility and capabilities

- Henry gantt- harmonious cooperation between labour and management , Gantt

studies

 It originated in 1911 with the publication of Winfield Taylor’s “ Principles of

Scientific Management”

At the heart of the scientific management theory, there are four governing principles.

 Look at the jobs scientifically to discover the one “most excellent” way to do the
job. This was a significant deviation from the “rule of thumb” approach when
workers produced their task methods.
  Hire skilled workers for each job, then train them to operate at maximum
productivity.

 Evaluate every worker’s performance and provide training opportunities where

necessary.

 Division of labor was split between the management and workers. While the
management plans and executes, the workers perform a task

 WINFIELD TAYLOR AND HIS SCIENTIFIC THEORIES

 Father of scientific management

 He was an efficiency expert in a us steel company

 Designed stop watch time system and piece rate system

 Inventing new tools and handling methods

 Employees used vastly different techniques to do the same job

 Taylor believed that the output that was generated was 1/3 of the possible outputs

 Workers were placed with little or no regard to their capabilities and skills

 Taylor thus developed the one best way method

 The pig iron experiment by Taylor: he analysed the workers put pigs of iron onto rail
cars and their daily average output was 12.5 tons, he analysed this working and then
said that by applying the one best way policy he could increase the output to 47-48
tons a day

 Principles of Taylor scientific approach

 Using scientific methods to determine the one best way

 Putting the right person at the right job with required skills and tools

 Having a standardised method to do the work

 Providing economic incentive to the worker

 Time studies and piece rate system

Time rate system - Under this system, the amount of remuneration or the total wages
outstanding to the workers depends on the time for which he is employed. This is a simple
and common method of wage payment. In this method, the workman is paid an hourly, daily,
monthly or yearly rate of wages.Thus, the worker is paid on the basis of time but not on
his/her performance or unit of output. A number of wages payable to a workman under this
method is to be calculated as follows:

Total wages = Total hours worked x Wages rate per hour.

Piece rate system- In this method, wages are paid to the employees after completion of
work. Under it, a worker is paid on the basis of output not the time taken by him. This is one
of the simplest and most commonly used systems of wage payment. In this system, the wage
rate is expressed in terms of per unit of output, per job or per work-order. A number of wages
payable to a workman under this method is to be calculated as follows:

Total wages = Total output x Rate per Unit of Output.

Benefits of the time and piece rate systems

- Studied most efficient worker

- Use stop watch timing to measure each step of production

- Eliminated unnecessary movements

- Designed standardised instruction cards for the workers

- Employees paid for meeting the established output in time

 FRANK AND LILLIAN GILBRETH

- Analysed each motion of work for wasted efforts in an attempt to reduce each task to
the smallest amount of expended time and energy

- Frank is best known for his bricklaying experiment which analysed the brick laying
process and reduced the number of motion from 18 to 2

- They were the first researchers to study the motion theory using motion pictures to
study hand and body motions

- They developed a machine which tracked the workers motion and the amount of time
spent in doing a task, the wasted motions missed by the naked eye could be identified
and eliminated

 SCIENTIFIC MANAGEMENT IN TODAY’S TIME

- Use time and motion studies

 - Higher the best qualified people

- Provide work related incentives

- Can give Mcdonalds example

GENERAL ADMINISTRATIVE THEORY

 HENRI FAYOL

- He believed that management was an activity that was common to all business
endeavours, governments and even at home

- this lead him to the 14 principles of management

the fourteen principles of management

WOE SSUICIDE CRA

1. Division of work:

It refers to dividing the work into different individuals. Fayol recommended

that work of all kinds must be divided and allocated as per competence,
qualification, and experience of individuals. According to Fayol, “Division of
work intends to produce more and better work for the same effort.
Specialization is the most efficient way to use human effort.”
For example, a bank has several operations, like collection and payment of
cash, issue of cheque books, etc. All those activities are divided and
allocated to a different person in the bank. This method of doing work also
improves their efficiency and makes them experts in their field.
2. Authority and Responsibility:

According to this principle, there should be a proper balance between

authority and responsibility. Authority is the duty, which a subordinate is
expected to perform. Authority and responsibility go hand in hand. Authority
without responsibility leads to irresponsible behavior, while responsibility
without authority will make a person ineffective. According to Fayol,
“Authority is the right to give orders and obtain obedience, and responsibility
is the corollary of authority. The two types of authority are official authority,
which is the authority to command, and personal authority, which is the
authority of the individual manager.”
For example, if a foreman is given the responsibility to produce 50 units per
day, then he must be given the required authority to achieve this target. If he
is not given authority to draw raw material from the stores, then he cannot be
blamed.
3. Discipline:

Discipline refers to the obedience to the rules and regulations of the

organization. Discipline requires good supervision at all levels of
management. According to Fayol, good supervision at all levels, clear and
fair rules, and a built-in system of penalties will help to maintain discipline. It
is a must for all levels of management.
For example, employees must be disciplined to work effectively and
efficiently to meet their promises of bonuses, increments, and promotions. Its
smoothness systemizes the functioning of an organization by providing
better relations between management and employees.
4. Unity of Command:

According to this principle, each subordinate should receive orders and be

accountable to only the superior. No person can serve several masters at the
same time. If an employee gets orders from two superiors at the same time,
then the principle of unity of command is violated, and he will find it very
difficult to decide who he has to obey first. So, to avoid confusion, employees
should receive an order from one superior.
For example, there is a salesperson who is asked to clinch a deal with a
buyer and he is allowed to give a 12% discount
by the marketing manager. But the finance department tells him not to offer
more than a 6% discount. In this case, there is no unity of command, which
will lead to confusion and delay.
5. Unity of Direction:

It implies that there should be one head and one person for proof of activities
having the same objectives. According to this principle, all the activities
should be carried under the direction of one head, and there should be
effective coordination in all the activities. This principle ensures unity of
action and avoids unnecessary duplication of work.
For example, if an organization has four departments for different activities,
then each department must be directed by one superior, and its employees
should give their whole efforts to achieving the plan of the organization. Each
division should
have its in charge, plans, and execution resources. There should not be an
unnecessary duplication of efforts and a waste of resources.
6. Subordination of Individual Interests to General Interests:

According to this principle, the interest of the organization as a whole must

prevail over the interest of the individual. It must be the interest of the
organization that should be placed above the interest of employees. It is the
duty of the manager to reconcile them. If reconciliation is impossible, then
general interest must supersede individual interest. A manager must sacrifice
his interest. Manager can achieve their objectives when the organization
recovers from financial crises.
For example, there is a company that wants maximum output from its
employees by providing less salaries. There are employees on the other
hand who want to get the maximum salary while working the least. In both
situations, the interests of the company will supersede the interest of any
one individual. As the interests of the workers and stakeholders are more
important than the interests of any one person.
7. Remuneration of Employees:

According to this principle, remuneration should be fair and satisfactory to

both employees and the organization. This principle leads to harmonious
relations in the organization. Fair remuneration should be determined based
on government rules related to wages, financial position of the organization,
nature of work, and cost of living. Employees should be paid reasonable
wages for their service, which should provide them with a moderate standard
of living.
For example, if an organisation earns higher profits, then it should share
some of its part with the employees in the form of bonus.
8. Centralization and Decentralization:

Centralization refers to the concentration of authority at the top level, and

decentralization means distribution at all levels of management. According to
this principle, there should be a proper balance between centralization and
decentralization. The degree of centralization and decentralization depends
on various factors, such as experience of the employees, ability of
subordinates, size of the organization, etc. Too much centralization lead to
loss of control of top management. Therefore an optimum balance should be
maintained according to the need of the organization.
For example, Authority to take vital decisions must be given to the top
management, whereas authority related to operational activities must be
given to the middle and lower level.
9. Scalar chain:
According to this principle, there is a scalar chain of authority and
communication that moves in a straight line from the superior to the lowest
subordinate. Henri Fayol permitted a shortcut of chain in case of urgency
known as gang plank. Gang plank allows direct communication between two
employees of the same level.

For example, E wants to communicate with I for some important work. The
message should orderly move from E to D, then to C, B, A, and then down
from A to F then to G, H and finally to I. This will take lots of time so to avoid
this delay in work, Fayol suggested this concept of Gang Plank. In this
concept ‘E’ can communicate directly with ‘I’ on an urgent matter, the gang
plank allows two employees of the same level to communicate directly with
each but each must enforce to its superior.
10. Order:

According to this principle, there should be a proper place for everything and
everyone. Henri Fayol emphasized on two types of order: material
order and social order. In material order, there must be a plan for
everything. It ensures fix a place for various material tools. Whereas in social
order, there must be an appointed place for every employee, which ensures
a proper and fixed place/cabin for each employee.
For example, there should be specific place for foremen in a factory so that
the work can be done easily.
11. Equity:

According to this principle, there should not be any discrimination amongst

the employees based on religion, caste, language, or nationality. Equity
ensures coordinated relations between superior and subordinate. It leads to
the smooth and successful working of the enterprise. It improves satisfaction
and motivation of the employee, creating relation between manager and
employees.
For example, workers doing similar jobs in the same organization should be
paid same wages irrespective of their sex, caste, religion and language.
12. Stability of personnel:

According to this principle, there should be proper effort to achieve stability

and continuity of employment. Fayol said that employees should be kept in
their position for a reasonable time to show result stability creates a sense of
belonging, and workers are encouraged to improve their quality of work.
This will increase the efficiency of employees, and it will also increase the
reputation of the organization. Unnecessary labor turnover creates an
atmosphere of disbelief. Continuous changes in employees disturb the
working environment.
For example, new employees must be given ample time to adapt to new
culture and environment of the workplace.
13. Initiative:

According to this principle, workers should encourage and should be given

an opportunity to take initiative in making and executing the plan. Henri Fayol
suggested that employees at all levels should be encouraged to take
initiative in work. It motivates employees to work better and to take more
interest in the organization. The initiative is a powerful motivator of human
behavior and a source of strength for the organization. This increase the
mental growth and feeling of belongingness in employees. It increases the
commitment of employees toward the organization. Lack of initiatives may
create an atmosphere of non-cooperation.
For example, organizations must have an employee suggestion system so
that they have feeling of belongingness.
14. Esprit De Corps:

According to this principle, management should take reasonable steps to

develop a sense of belongingness and a feeling of team spirit amongst
employees. In order to achieve the best possible result, individual and group
efforts need to be integrated. Production is a teamwork and it requires the
full support of all members. For this purpose, a manager should replace ‘I’
with ‘We’ in his conversations to bring a team spirit among the employees.
This will develop an atmosphere of mutual trust. It will help in achieving
group goals, leading to cordial relations between management and workers.
For example, authority and responsibility meant empowering managers, but
now it means empowerment of employees because of flat organizational
structures that are gaining ground.

W- DIVISION OF WORK

O- ORDER

E- ESPIRIT DE CORPS

S- STABILITY OF PERSONNEL

S- SCALAR CHAIN

U- UNITY OF DIRECTION
I- INITIATIVE

C- UNITY OF COMMAND

I- INDIVIDUAL INTEREST TO BE SUBORDINATED

D- DISCIPLINE

E- EQUITY

C- UNITY OF COMMAND

R- REMUNARATION

A- AUTHORITY

MAX WEBER

Theory of authority based on idea type of orgnisation (bureaucracy)

Emphasized on

■ Rationality ■ Predictability, ■ Impersonality, ■ Technical competence

■ Authoritarianism
 QUANTITATIVE APPROACH OF MANAGEMENT

- using statistics, computer simulations and mathematics to increase the productivity

- the passengers bumping into each other made a lot of chaos and lead to inefficiency
the America west airlines introduced the reverse pyramid boarding sytem which has
saved atleast 2 mins. (eg of quantitative approach)

- WAYS OF QUANTITATIVE APPROACH

- Linear programming - improves resource allocation decisions

- Critical path scheduling- improves work scheduling

- Decision tree model

THE BEHAVIOURAL MANAGEMENT THEORY

The field of study that researches the actions of and behaviour of the people of the
organisation is called organisation behaviour.

Better understanding of human behavior at work, such as motivation, conflict, expectations,

and group dynamics, improved productivity.

Employees looked at people that need to be worked with rather than looking at them as
machines

Variables to behavior- motivation, emotions, relationship with peers, ethics, attitude,

perception, stress management, experience and skills, personality, personal life and
organisational culture

 Major propagators of the Organisational theory

ELTON MAYO- HAWTHORNE STUDIES

- These were a series of test conducted at the Western Electric company in Cicero,
Illinois
 - The experiment was initially started by checking the productivity of workers under
various light settings

- They concluded when the intensity of light was increases the productivity of the
groups went up, but surprisingly even when light level was decreased productivity
continued to increase. They concluded that it was not the light levels that affected the
productivity but something else

- Elton mayo was then asked to join this experiment at the Western electric company

- He joined the study and numerous experiments and test were conducted which led to
the result that group standards have a major effect on the individual output

Through analysis and a number of follow-on experiments, the researchers weighed various
factors that might be driving productivity. Physical conditions and work methods were
quickly ruled out as major drivers, as were wage incentives. Researchers considered the
possibility that practices in the test room had relieved worker fatigue or monotony and
thereby improved productivity, but again they found only weak evidence. Gradually, the
researchers came to focus on the impact of social relationships in the test room.
In short, group dynamics and supervisory techniques—and, perhaps most importantly, simply
showing an interest in the workers—seemed to have the greatest influence on worker
productivity.

3rd test the interviewing program to add the rest of notes for howthorne studies

SYSTEMS APPROACH

It is a basic theory in physical sciences but never been applied to organised human efforts

A system is a set of interrelated and interdependent parts arranged in a manner to produce a

whole

Closed systems

- Do no interact with environment

- Not affected by environment

Open systems

- Influenced by environment and interact with it

Todays organisations are open systems, since they take inputs from the environment and then
provides complete output for the environment.

IN MANAGEMENT

- Managers coordinate work of various divisions and they ensure that all these parts are
working so that org. goals can be achieved eg: the production and the marketing
department need to work hand in hand since the marketing department is better aware
of the changes and perceptions of the customers.

- It states that the decisions of one of the areas will affect the other areas eg: the
purchasing sector does not get the right amount of raw materials then production
sector will suffer

- Organisations are not self contained and they rely on the environment. Eg: no org can
survive if it ignores governemtn regulations.

CONTINGENCY APPROACH

- Also called the situation approach

- Org are different, they face different situations and require different ways of
managing them.
- If then approach

- Different variables and how managers can deal with them

- Stresses that there is no simplistic or universal rules that the managers can follow.