UNIT- I (Principles of Management: An Introduction)

Chapter 1
Nature and Functions of management
•Definition & Importance
•Management functions, levels, roles and skills

Chapter 2.
Evolution of Management Thoughts
•Early Classical Approach
•Neoclassical Approach
•Modern Approach
 Session Plan:

Session Topics to be covered Chapter Resource

covered Person
1 Nature and Functions of management: Chapter 1 Dr. Manav
Definition & Importance
2 Management nature & functions, Chapter 1 Dr. Manav
3 Levels, roles and skills of managers Chapter 1
4 Evolution of Management Thoughts: Chapter 2 Dr. Manav
Early Classical Approach
5 Evolution of Management Thoughts: Chapter 2 Dr. Manav
Neoclassical Approach
6 Evolution of Management Thoughts: Chapter 2 Dr. Manav
Neoclassical Approach
7 Evolution of Management Thoughts: Chapter 2 Dr. Manav
Neoclassical Approach
8 Evolution of Management Thoughts: Chapter 2 Dr. Manav
Modern Approach
 Session
Chapter 1 1 Definition and Importance

Definitions Nature Objectives Scope

Art of Getting Things Management is the art of getting things done through others
Done
Mary Parker Follett
Management as a Management is the art of getting things done through and with people
Process in formally organized groups Harold Koontz
Management as a Management is the art of directing and inspiring people
Discipline A. C. Railey

Art and Science of

Decision-Making
An Art of Increasing This view point suffers from the following deficiencies:
Productivity
(i) This concept does not specify what type of functions is required
Integration of Efforts
to be performed for getting things done from others.
Management as a (ii) Management is treated as an art. These days management has
Group of Managers also acquired the status of science.
(iii) The workers are treated as means of getting results. The needs
and aspirations of workers are not taken into account.
 Session
Chapter 1 1 Definition and Importance

Definitions Nature Objectives Scope

Art of Getting Things To manage is to forecast and plan, to organize, to command, to co-
Done ordinate, and to control.” Henry Fayol
Management as a Fayol described management as a process of five functions such as
Process planning, organizing, commanding, coordinating and controlling
Management as a Management is a distinct process consisting of activities of planning,
Discipline organizing, actuating and controlling, performed to determine and
Art and Science of accomplish stated objectives with the use of human beings and other
Decision-Making resources. George R. Terry

An Art of Increasing
Productivity Above definitions associate management with the functions undertaken
for running a business.
Integration of Efforts

Management as a There may be a difference as to what functions are required to be taken

Group of Managers up by the management but functions such as planning, organizing,
staffing, directing and controlling form the process of management
 Session
Chapter 1 1 Definition and Importance

Definitions Nature Objectives Scope

Art of Getting Things
Done Sometimes the term ‘management’ is used to connote
neither the activity nor the personnel who performs it, but as
Management as a
Process a body of knowledge, a practice and a discipline. In this
sense, management refers to the principles and practices of
Management as a management as a subject of study.
Discipline
Art and Science of Management is taught as a specialized branch of knowledge
Decision-Making
in educational institutions.
An Art of Increasing
Productivity It has drawn heavily from Psychology, Sociology, and
Integration of Efforts Anthropology etc.
Management as a A person acquiring degree or diploma in management can try
Group of Managers
for a managerial job
 Session
Chapter 1 1 Definition and Importance

Definitions Nature Objectives Scope

Art of Getting Things
Done Management is the art and science of decision-
Management as a
making and leadership Donald J. Clough:

Process
Management is the art and science of preparing,
Management as a
Discipline organizing and directing human efforts applied to
Art and Science of
control the forces and utilize the materials of nature
Decision-Making for the benefit of man AMA

An Art of Increasing
Productivity
The above mentioned definitions describe management as a
Integration of Efforts
science and art of decision making and controlling the activities
Management as a of employees for obtaining enterprise objectives.
Group of Managers
 Session
Chapter 1 1 Definition and Importance

Definitions Nature Objectives Scope

Art of Getting Things Management may be defined as the art of securing maximum
Done
prosperity with a minimum of effort so as to secure maximum
Management as a prosperity and happiness for both employees and employer and
Process
give public the best possible service Mary Parker Follett
Management as a
Discipline
Art and Science of Management is the art of knowing what you want to do in the
Decision-Making best and cheapest way F W Taylor

An Art of Increasing
Productivity Management is the art of securing maximum productivity at
Integration of Efforts the minimum of cost so that it helps employers, employees and
public in general.
Management as a
Group of Managers
Public is also a stake holder in business, it should also benefit
from good performance of business.
 Session
Chapter 1 1 Definition and Importance

Definitions Nature Objectives Scope

Art of Getting Things Management is the force that factors integrates men and
Done
physical plant into an effective operating unit Keith
Management as a
Process
Management entails the co­ordination of human and material
Management as a
Discipline resources towards the achievement of organizational objectives
as well as the organization of the productive functions essential
Art and Science of
Decision-Making for achieving stated or accepted economic goals Barry M. Richman

An Art of Increasing
Productivity
Integration of Efforts Management alms to co-ordinate and integrate various resources in
the organization for achieving enterprise objectives. The thrust of
Management as a above mentioned definitions is that integration and co-ordination of
Group of Managers various factors of production is essential for running a business
properly and this function is undertaken by management.
 Session
Chapter 1 1 Definition and Importance

Definitions Nature Objectives Scope

Art of Getting Things The term management is frequently used to denote a
Done Refers to managerial group of managerial personnel.
Management as a
Process When one says that personnel management of such and
such company is efficient, he refers to the group of persons
Management as a who are looking after the working of the enterprise.
Discipline
Art and Science of These persons individually are called managers.
Decision-Making “Management is the body or group of people which
performs certain managerial functions for the
An Art of Increasing
Productivity accomplishment of pre-determined goals.”

Integration of Efforts All managers perform managerial functions of planning, organizing, staffing,
directing and controlling. These persons collectively arc called ‘body of
Management as a managerial personnel.’
Group of Managers In actual practice the term ‘management’ is used to denote top management
of the organization. Top management is mainly concerned with
determination of objectives, strategic planning, policy formulation and overall
control of the organization.
 Session
Chapter 1 1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals Arranges the factors of production, assembles
and organizes the resources, integrates the
Optimum Utilization of Resources resources in effective manner to achieve goals.
It directs group efforts towards achievement of
Reduces Costs  pre-determined goals.

Establishes Sound Organization By defining objective of organization clearly

there would be no wastage of time, money and
effort.
Establishes Equilibrium
Management converts disorganized resources
Essentials for Prosperity of Society of men, machines, money etc. into useful
enterprise.
Management improves efficiency
These resources are coordinated, directed and
Management creates a dynamic organization controlled in such a manner that enterprise
work towards attainment of goals.
 Session
Chapter 1 1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals
Management utilizes all the physical & human
resources productively. This leads to efficacy in
Optimum Utilization of Resources management.

Reduces Costs  Management provides maximum utilization of

scarce resources by selecting its best possible
Establishes Sound Organization alternate use in industry from out of various
uses.
Establishes Equilibrium
It makes use of experts, professional and these
Essentials for Prosperity of Society services leads to use of their skills, knowledge,
and proper utilization and avoids wastage.
Management improves efficiency
If employees and machines are producing its
maximum there is no under employment of
Management creates a dynamic organization any resources.
 Session
1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals

Optimum Utilization of Resources

Reduces Costs  It gets maximum results through minimum

input by proper planning and by using
Establishes Sound Organization minimum input & getting maximum output.

Establishes Equilibrium Management uses physical, human and

financial resources in such a manner which
results in best combination.
Essentials for Prosperity of Society
This helps in cost reduction
Management improves efficiency

Management creates a dynamic organization

 Session
1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals
No overlapping of efforts (smooth and
coordinated functions).
Optimum Utilization of Resources
To establish sound organizational structure is
Reduces Costs  one of the objective of management which is
in tune with objective of organization and for
Establishes Sound Organization fulfillment of this, it establishes effective
authority & responsibility relationship i.e. who
Establishes Equilibrium is accountable to whom, who can give
instructions to whom, who are superiors &
Essentials for Prosperity of Society who are subordinates.

Management fills up various positions with

Management improves efficiency
right persons, having right skills, training and
qualification. All jobs should be cleared to
Management creates a dynamic organization everyone.
 Session
Chapter 1 1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals

Optimum Utilization of Resources

It enables the organization to survive in
changing environment.
Reduces Costs 
It keeps in touch with the changing
Establishes Sound Organization environment.

Establishes Equilibrium With the change is external environment, the

initial co-ordination of organization must be
Essentials for Prosperity of Society changed.

Management improves efficiency So it adapts organization to changing demand

of market / changing needs of societies. It is
responsible for growth and survival of
Management creates a dynamic organization organization.
 Session
Chapter 1 1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals

Optimum Utilization of Resources Efficient management leads to better

economical production which helps in turn to
increase the welfare of people.
Reduces Costs 
Good management makes a difficult task easier
Establishes Sound Organization by avoiding wastage of scarce resource. It
improves standard of living.
Establishes Equilibrium
It increases the profit which is beneficial to
Essentials for Prosperity of Society business and society will get maximum output
at minimum cost by creating employment
Management improves efficiency opportunities which generate income in hands.

Organization comes with new products and

Management creates a dynamic organization
researches beneficial for society.
 Session
Chapter 1 1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals

Optimum Utilization of Resources

Reduces Costs 
Managers try to reduce the cost and improve
Establishes Sound Organization productivity with minimum wastage of
resources.
Establishes Equilibrium
Management insists on efficiency and
effectiveness in the work through planning,
Essentials for Prosperity of Society organising, staffing, directing and controlling.

Management improves efficiency

Management creates a dynamic organization

 Session
Chapter 1 1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals

Optimum Utilization of Resources

Organisations have to survive in dynamic
environment so managers keep making
Reduces Costs  changes in the organisation to match the
environmental changes.
Establishes Sound Organization
The employees in the organisation are
Establishes Equilibrium generally resistant to change.

Essentials for Prosperity of Society Efficient management motivates employees to

adopt changes willingly by convincing them
Management improves efficiency that change is not only beneficial for
organisation but it improves the employee’s
work also in the competitive world.
Management creates a dynamic organization
 Session
Chapter 1 1 Definition and Importance

Importance of Management
It helps in Achieving Group Goals

Optimum Utilization of Resources

Reduces Costs 

Establishes Sound Organization

Establishes Equilibrium

Essentials for Prosperity of Society

Management improves efficiency

Management creates a dynamic organization

 Session
Chapter 1 2 Nature and Functions of management:

Definitions Nature Objectives Scope

Art of Getting Things
Done

Management as a
Process

Management as a
Discipline

Art and Science of

Decision-Making

An Art of Increasing
Productivity
Integration of Efforts

Management as a
Group of Managers
 Session
Chapter 1 2 Nature and Functions of management:

Definitions Nature Objectives Scope

1. Proper Utilization of Resources:

2. Improving Performance:

3. Mobilizing Best Talent:

4. Planning for Future:

 Session
Chapter 1 2 Nature and Functions of management:

Definitions Nature Objectives Scope

Production Management
Marketing Management
Financial Management
Personnel Management
Office Management
Others
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Newman & Summer Planning, Organizing, Leading and Controlling

Henry Fayol Planning, Organizing, Commanding,

Coordinating and Controlling
Koontz & O’ Donnell Planning, Organizing, Staffing, Directing and
Controlling
Warren & Joseph Decision Making, Staffing, Planning,
controlling, Communicating, and Directing
Luther Gulick Planning, Organizing, Staffing, Directing,
Coordinating, Reporting, Budgeting (POSDCORB)
Ernest Dale Planning, Organising, Motivating &
Representing
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning

Organizing

Directing

Controlling

Innovating

Representing
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning Planning is a bridge taking us from where we are to where we
want to reach.
Organizing It is the process of determining in advance what should be
accomplished and how to do it.
Organizing In other words, it is an analytical process of
establishing goals, objectives and targets,
Directing assessing the future,
premising,
Controlling generating and evaluating alternatives,
selecting programs, projects or courses,
estimating resources,
Innovating preparing the plan document with derivative plans and
implementing the plan
Representing
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning Organizing is the process of prescribing formal relationships
among people and resources (i.e.5 Ms) to accomplish the
Organizing goals.

Organizing Organizing involves:

• analyzing the entire activities of an organisation into
Directing homogeneous types of works and jobs;
• sorting and grouping the resulting works and jobs into a
logical structure;
Controlling • assigning these activities to specific positions and persons;
and
Innovating • providing a means for coordinating the efforts of individuals
and groups.
Representing
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning Staffing is the formal process of ensuring that the organisation has
qualified workers available at all levels to meet its short and long
term objectives.
Organizing
This function includes
(i) Human resource planning
Staffing (ii) Recruitment and selection
(iii) Training and development
Directing (iv) Rewards and compensations
(v) Health and safety
(vi) Career planning and management
Controlling (vii) Employee assistance, coaching and orientation
(viii) Performance appraisal.
Innovating
Some important basic concepts of staffing are job analysis, job
Representing description, job specification, job enlargement and job
enrichment
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning In other words, directing is the managerial function that enables
managers to get things done through persons, both individually and
collectively.
Organizing
Directing is closely related to the communicating function and
motivating; actuating and leading are sub-functions of directing
Staffing
It is necessary to note some important principles of directing.
The more effective the directing process, the greater will be the
Directing contribution of subordinates to organizational goals (the principle
of directing objective) and the more individuals perceive that their
Controlling personal goals are in harmony with enterprise objectives (the
principle of Harmony of Objectives).
Innovating The more completely an individual has a reporting relationship to a
single superior, the less the problem of conflict in instructions and
the greater the feeling of personal responsibility for results (the
Representing principle of Unity of Command
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning In simple terms, controlling can be defined as the process of
comparing actual performance with standards and taking any
necessary corrective action.
Organizing
Hence, the control process consists of
(i) establishment of standards
Organizing (ii) measurement of performance, and
(iii) correction of deviations
Directing Some of the common traditional control measures are budgets,
statistical data, special reports, breakeven point analysis, internal
Controlling audit and personal observation.
Other control measures include time-event network analysis like
Innovating milestone budgeting, program evaluation and review techniques
(PERT/CPM), programme budgeting, profit and loss control, return
Representing on investment (ROI) and general key result areas like profitability,
market position, productivity, public responsibility, etc.
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning
Organizing

Organizing As every organisation has to constantly grow bigger and

better, innovation becomes an important function of a
Directing manager.
Innovation means creating new ideas which may either
Controlling result in the development of new products or finding the
new user for the old ones.
Innovating
Representing
 Session
Chapter 1 2 Nature and Functions of management:

Managerial Functions
Planning Today’s manager is required to spend a part of his time
representing his organisation before various outside groups
Organizing (stake holders) like Government officials, labour unions,
financial institutions, suppliers, customers, etc.
Organizing

Directing Lastly it is neither desirable nor feasible to list and explain all
other managerial functions.
Controlling

Innovating Many of them are closely related to and even overlapping

with the functions discussed so far.
Representing
 Session
Chapter 1 3 Levels, Skills and Roles of Managers
TOP MIDDLE LOWER
It is the highest level in the managerial hierarchy and the ultimate source of authority in the
organization is associated with it.

Top level managers are accountable to owners and all stakeholders of the organization and
responsible for overall management of the organization.

Major functions of the top level management are:

To make corporate plans for the entire organization
To decide upon matters which are vital for survival like profitability and growth
To allocate resources for various projects and departments
To set goals
To design structure of the organization
To frame policies
To provide leadership
To exercise control
To direct middle and lower levels of management

Example: Managing Director, Board of Directors, President, V.P, CEO, CFO, COO etc.
 Session
Chapter 1 3 Levels, Skills and Roles of Managers
TOP MIDDLE LOWER
Some of the managerial positions are created at the middle level of management in order to fill
the gap which exists between functional and operational level.

They are also a link between the top and the lower level managers.

They are responsible for achieving departmental goals.

They are also responsible for setting objectives consistent with top management’s goals and for
planning and implementing subunit strategies for achieving those objectives.

The important functions of middle level managers are:

To prepare departmental plans within framework of corporate plans given by the top level
To establish departmental goals
To decide about means of achieving these goals
To monitor level managers by coordinating their activities

Example: Departmental Managers (HR, Marketing, Prod, OP, Fin), Admin Officers.
 Session
Chapter 1 3 Levels, Skills and Roles of Managers
TOP MIDDLE LOWER

The lowest point in the hierarchy is represented by lower level management.

They are in touch with core group of workers such as operators.
They issue orders and instructions to them, educate and train them and supervise their
activities.
Supervisors are known as the backbone of the organization as they are responsible for getting
work accomplished at operational level.

The important functions of lower level management are:

To get things done by core group of workers at operational level
To prepare plans for their activities
To issue orders and instructions
To guide and assist workers
To motivate workers

Example: Supervisors, Instructors, Section Officers, first line Managers etc.

 Session
Chapter 1 3 Levels, Skills and Roles of Managers
TOP MIDDLE LOWER
 Session
Chapter 1 3 Levels, Skills and Roles of Managers

Conceptual Skills Human Skills Technical Skills

Conceptual skills include the ability to view the organization as a whole, understand
how the various parts are interdependent, and assess how the organization relates to
its external environment.

Ability to visualize the enterprise as a whole, to envision all the functions involved
in a given situation or circumstance, to understand how its parts depend on one
another, and anticipate how a change in any of its parts will affect the whole.

These skills allow managers to evaluate situations and develop alternative courses of
action. Good conceptual skills are especially necessary for managers at the top of the
management pyramid, where strategic planning takes place.
 Session
Chapter 1 3 Levels, Skills and Roles of Managers

Conceptual Skills Human Skills Technical Skills

Human relations skills are the interpersonal skills managers use to accomplish goals
through the use of human resources.

This set of skills includes the ability to understand human behavior, to communicate
effectively with others, and to motivate individuals to accomplish their objectives

Giving positive feedback to employees, being sensitive to their individual needs, and
showing a willingness to empower subordinates are all examples of good human
relations skills.

Identifying and promoting managers with human relations skills are important for
companies.

A manager with little or no people skills can end up using an authoritarian leadership
style and alienating employees.
 Session
Chapter 1 3 Levels, Skills and Roles of Managers

Conceptual Skills Human Skills Technical Skills

Specialized areas of knowledge and expertise and the ability to apply that
knowledge make up a manager’s technical skills.
Preparing a financial statement,
programming a computer,
designing an office building, and
analyzing market research
Above are all examples of technical skills

These types of skills are especially important for supervisory managers because they
work closely with employees who are producing the goods and/or services of the
firm.
 Session
Chapter 1 3 Levels, Skills and Roles of Managers
TOP LEVEL MIDDLE LEVEL LOWER LEVEL
Conceptual Human Technical
 Session
Chapter 1 3 Levels, Skills and Roles of Managers
TOP LEVEL MIDDLE LEVEL LOWER LEVEL
Conceptual Human Technical
 Session
Chapter 1 3 Levels, Skills and Roles of Managers
TOP LEVEL MIDDLE LEVEL LOWER LEVEL
Conceptual Human Technical
 Session
Chapter 1 3 Levels, Skills and Roles of Managers

Henry Mintzberg, a Canadian management expert and author, came up with the idea of
interweaving practical experience with business theory. In his 1990 book Mintzberg on
Management: Inside our Strange World of Organizations, he listed clearly-defined roles for
managers to become effective team leaders. 

The Mintzberg managerial roles are categorized under three sections

Interpersonal (3 Roles)
Informational (3 Roles)
Decisional (4 Roles)
These three categories comprise 10 roles of a manager.

Interpersonal roles relating to a manager’s authority in an organization

Informational roles involving communicating important information and data
Decisional roles concerning decision-making, negotiations, and implementation
 Session
3 Levels, Skills and Roles of Managers

Interpersonal, Informational, Decisional

1. Figurehead
As the Figurehead, a manager is responsible for official and social duties that reflect their
status and authority in the organization. It’s about building a strong relationship with peers
and subordinates.
. You can become a good role model by being empathetic and
compassionate.  

2. Leader
The Leader inspires, encourages, and builds morale. Managers build lasting relationships
with team members by monitoring their performance and coaching them when
needed. Emotional intelligence can help you develop a trust-based relationship with your
team. 

3. Liaison
A manager has to exchange information with various departments and teams as well as
with external stakeholders. Liaising with other organizations, competitors, and government
representatives is equally important for professional development.
 Session
3 Levels, Skills and Roles of Managers

Interpersonal, Informational, Decisional

1. Monitor
The Monitor is responsible for gathering intel for sustained competitive advantage. To do that,
a manager has to assess the market for changes and collect relevant data that could impact
.
the organization. These are stages in the process of strategic management that helps an
organization to survive the competition.

2. Disseminator
The Disseminator communicates useful and relevant information to team members and
subordinates. It’s important to invite feedback, ideas, and views from each employee to keep
an open channel of communication.

3. Spokesperson
Convey important information about the organization to external stakeholders. This could be
for PR purposes, addressing government policies, or dealing with suppliers. You must have a
clear idea of your company’s brand image to become a successful spokesperson.
 Session
3 Levels, Skills and Roles of Managers

Interpersonal, Informational, Decisional

1. Entrepreneur
Be prepared to take initiative as part of your managerial duties. Initiate projects and address
concerns with effective problem-solving skills. Icebreakers and team-building activities will help
you connect
. with your team.
2. Disturbance Handler
The Disturbance Handler ensures that everything runs smoothly. Key responsibilities include
resolving conflicts with mentoring sessions, identifying areas for improvement, and addressing
gaps in teamwork.
3. Resource Allocator
The Resource Allocator is concerned with fund allocation, cutting costs, and distributing
resources across the organization. You have to apportion available resources such as funding,
human resources, and materials where needed.
4. Negotiator
A successful negotiation leads to a win-win outcome. A manager has to participate in
negotiations with team members and other stakeholders to reach a favorable outcome for both
parties. This role distinguishes you from other managers because you have to consider your
team’s best interests.
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Chapter 2 4 Evolution of Management Thoughts

1700-1850 1850-1920 1920-1950 1950- Pres

 Session
Chapter 2 4 Evolution of Management Thoughts

A number of individuals in the pre-classical period of the middle and late

1800s offered ideas that laid the groundwork for subsequent, broader
inquiries into the nature of management.
Pre Scientific / Pre

Among the principal pre-classical contributors are Robert Owen, Charles

Babbage, Henry R Towne, Adam Smith and James Watt.
Classical

These theories were primarily related to the organisational environments.

They focused on specific organisational problems in specific ways.

As each manager had his own way of viewing the organisation, some
emphasised on production and others on human relations.

There was no single universally accepted management theory that could apply
to all organisations at all times.
 Session
Chapter 2 4 Evolution of Management Thoughts

Features of Early Classical Management Principles

1. It includes some of the early works on management which provide
foundation to the modern management theory.:
2. It attempts to find methods that increase output of workers.
3. Employees have strong economic needs which can be satisfied through
Early Classical

financial incentives.
4. It stresses on formal structure of jobs and work schedules to satisfy
individual and organisational needs.
5. It views organisations as closed systems which do not interact with the
external environment.
6. It develops a set of ‘management principles’ which universally apply to
all organisations : business and non-business.
Three main theories that developed in the classical school of thought are:

a. Taylor’s Scientific Management Theory,

b. Fayol’s Classical Organisation Theory
c. Weber’s Bureaucracy Theory
 Session
Chapter 2 4 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Objective: how to increase labour efficiency to increase productivity ?

This arose because of the need to increase productivity and efficiency.

Early Classical

The emphasis was on trying to find the best way to get the most work done by
examining how the work process was actually accomplished and by scrutinizing
the skills of the workforce.

The classical scientific school owes its roots to several major contributors,
including

Frederick W. Taylor,
Henry Gantt
Frank and Lillian Gilbreth.
 Session
Chapter 2 4 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Frederick W. Taylor (1856-1915) introduced scientific management theory.

Taylor is also known as the father of Scientific Management.
It was called scientific management because Taylor focused on solving managerial
problems in a scientific way.
Early Classical

It developed because of the need to increase productivity.

To compensate for short supply of skilled labour at that time, this theory developed
to increase efficiency of the workers.

Taylor found that work was not being done scientifically in many organisations
which led to wastage of human and non-human resources.
Time and work studies were not followed so that ‘how much work should be done
in a day and how much should be paid for each day’s work’ was not scientifically
planned.

He felt that workers produced much less than what they could as they followed
traditional methods of production. ‘Hit and trial’ approach was used for
combinations of work schedules.
Scientific ways (or the best way) of work were not adopted.
 Session
Chapter 2 4 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

In this regard, Taylor was confronted with many questions:

1. Could the existing work schedule be reorganised by adding or

deleting some of the operations?
Early Classical

2. Could the sequence of existing operations be changed?

3. Was there ‘one best-way’ of doing the work?

Taylor worked on these lines and provided scientific ways of doing the work.
He conducted various experiments and developed the theory of scientific
management.

Taylor’s theory is based on experience in three companies:

i. Midvale Steel,
ii. Simonds Rolling Machine Company and
iii. Bethlehem Steel.
 Session
Chapter 2 4 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Taylor's Scientific Management: 

Started as an apprentice machinist in Philadelphia, USA. He rose to be the chief
engineer at the Midvale Engineering Works and later on served with the Bethlehem
Works where he experimented with his ideas and made the contribution to the
Early Classical

management theory for which he is so well known.

He tried to diagnose the causes of low efficiency in industry and came to the
conclusion that much of waste and inefficiency is due to the lack of order and
system in the methods of management.

He found that the management was usually ignorant of the amount of work that
could be done by a worker in a day as also the best method of doing the job. As a
result, it remained largely at the mercy of the workers who deliberately shirked
work.
He therefore, suggested that those responsible for management should adopt a
scientific approach in their work, and make use of "scientific method" for achieving
higher efficiency. The scientific method consists essentially of
A.Observation
B.Measurement
C.Experimentation and
D.Inference.
 Session
Chapter 2 4 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Principles of Scientific Management

He summed up his approach in these words:

Early Classical

A.Science, not rule of thumb

B.Harmony, not discord
C.Co-operation, not individualism-
D.Maximum output, in place of restricted output
E.The development of each man to his greatest efficiency and prosperity.
 Session
Chapter 2 4 Evolution of Management Thoughts
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Elements of Scientific Management:

 The techniques which Taylor regarded as its essential elements or features may be
classified as under:
Early Classical

1. Separation of planning and doing

2. Functional Foremanship
3. Job Analysis
4. Standardization
5. Scientific Selection and training of workers
6. Financial Incentives
7. Economy
8. Mental Revolution
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Major Contributions
Scientific task Taylor observed that the management does not know
setting exactly
Early Classical

the works – pieces of work- volume of works-

Differential
payment system which are to be performed by the workers during a
fixed period of time- which is called working day.
Reorganization of
supervision
In a working day how much work is to be done by a
Scientific recruiting worker but be fixed by a manager and the task should
and training be set every day.
Economy of
production
The process of task setting requires scientific
technique.
Mental revolution
To make a worker do a quantity of work in a working
day is called scientific task setting
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Major Contributions
Scientific task
setting
Early Classical

Differential under this system, a worker received the piece rate

payment system benefit which will attract the workers to work more
for more amount of wages and more incentives would
Reorganization of
supervision be created to raise the standardization of output to
promote the workers to produce more and perform
Scientific recruiting more task than before and utilize waste time to earn
and training more wages.
Economy of
production

Mental revolution
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Major Contributions
Scientific task concepts of separation of planning and doing and
setting functional foremanship were developed.
Early Classical

Differential Taylor opines that the workers should only emphasize

payment system
in planning or in doing.
Reorganization of
supervision There should be 8 foreman in which 4 are for planning
and 4for doing.
Scientific recruiting
and training
For planning they were route clerk, instruction cord
Economy of clerk, time and cost clerk and disciplinarian.
production
And for doing they were speed boss, gang boss, repair
Mental revolution boss and inspector.
 Session
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Major Contributions
Scientific task
setting
Early Classical

Differential staffs and workers should be selected and

payment system
employed on scientific basis.
Reorganization of
supervision
Management should develop and train every
Scientific recruiting worker by providing proper knowledge and
and training
training to increase their skills and make
Economy of them effective
production

Mental revolution
 Session
Chapter 2 4 Evolution of Management Thoughts
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Major Contributions
Scientific task
setting
Early Classical

Differential
payment system
efficient cost accounting system should be
Reorganization of followed to control cost which can minimize
supervision
the wastages and thoroughly reduced and
Scientific recruiting thus eliminated
and training

Economy of
production

Mental revolution
 Session
Chapter 2 Evolution of Management Thoughts
4
Scientific Management Administrative Management Bureaucracy

Major Contributions
Scientific task
setting
Early Classical

Differential Taylor argued that both management and

payment system
workers should try to understand each other
Reorganization of instead of quarrelling for profits and benefits
supervision
which would increase production, profit and
Scientific recruiting benefits.
and training

Economy of
production

Mental revolution
 Session
Chapter 2 4 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Major Contributions

Scientific task setting

Early Classical

Differential payment system

Reorganization of supervision

Scientific recruiting and training

Economy of production

Mental revolution
Chapter 2 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Criticisms
Early Classical

Did not appreciate the social context of work and higher

needs of workers.

Did not acknowledge variance among individuals.

Tended to regard workers as uninformed and ignored their

ideas and suggestions
 Session
Chapter 2 5 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Henri Fayol (29 July 1841 – 19 November 1925) was a French mining
engineer, mining executive, author and director of mines who developed
general theory of business administration that is often called Fayolism.
Early Classical

He is regarded as father of Administrative Management

Based largely on his own management experience, he developed his concept of
administration. In 1916 he published these experience in the book
Administration Industrielle et Générale,(General and Industrial Management’)
at about the same time as Frederick Winslow Taylor published his Principles of
Scientific Management.
Henry Fayol’s Contribution to Management Henri Fayol Contributed in
following areas of Management
1. Classification of business functions
2. classification of managerial functions
3. Qualities required in managers
4. General principles of management
 Session
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1. Classification of business functions:

(i) Technical activities (relating to production and manufacturing)
(ii) Commercial activities (relating to buying, selling or exchange).
Early Classical

(iii) Financial activities (relating to search for and optimum use of capital i.e. finances)
(iv) Security activities (relating to protection of the properties and personnel of the
enterprise)
(v) Accounting activities (relating to a systematic recording of business transactions,
including statistics also).
(vi) Managerial activities (relating to functions of planning, organising, commanding,
coordinating, controlling etc.).
 Session
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Classification of managerial functions:

In the following excerpt from General and Industrial Management, Fayol identifies five
functions of management
Early Classical

‘To manage is to forecast and plan, to organize, to command, to coordinate, and to

control.

To foresee and provide means examining the future and drawing up the plan of action.
To organize means building up the dual structure, material and human, of the
undertaking.
To command means maintaining activity among the personnel.
To coordinate means binding together, unifying, and harmonizing all activity and effort.
To control means seeing that everything occurs in conformity with established rule and
expressed command.’
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Qualities required in managers

Fayol was the first person to identify the qualities required in a manager. According to
Early Classical

him, there are six types of qualities that a manager requires.

These are as follows:

1. Physical – Health and vigour,
2. Mental – Ability to analyse, interpret and arrive at conclusions,
3. Moral – Willingness to accept responsibility, loyalty and dignity,
4. General education – Knowledge of overall affairs of the organisation,
5. Special knowledge – Knowledge of a specific activity; technical, commercial
6. Experience – Knowledge gained over a period of time while working in the specific
functional area.
 Session
Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
14 Management Principles by Henri Fayol

2 Authority and Responsibility

3 Discipline
Early Classical

4 Unity of Command Dividing the full work of the organization

Subordination of Individual among individuals and creating departments
5 Interests to the General Interest
is called the division of work.
6 Equity
7 Esprit De Corps Division of work leads to specialization, and
8 Unity of Direction specialization helps to increases efficiency
and efficiency which results in improvements
9 Scalar Chain
in the productivity and profitability of the
10 Stability of Tenure of Personnel organization
11 Remuneration
12 Order
13 Initiative
14 Centralization
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Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
14 Management Principles by Henri Fayol

2 Authority and Responsibility Authority must be equal to Responsibility.

3 Discipline According to Henri Fayol, there should be a
Early Classical

balance between Authority (Power) and

4 Unity of Command
Responsibility (Duties).
Subordination of Individual
5 Interests to the General Interest
The right to give orders should not be
6 Equity
considered without reference to
7 Esprit De Corps responsibility. I
8 Unity of Direction
9 Scalar Chain f the authority is more than responsibility
then chances are that a manager may
10 Stability of Tenure of Personnel
misuse it.
11 Remuneration
12 Order If responsibility is more than authority then
13 Initiative he may feel frustrated.
14 Centralization
 Session
Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
Outward mark of respect in accordance
with formal or informal agreements
14 Management Principles by Henri Fayol

2 Authority and Responsibility between a firm and its employees.

3 Discipline
Early Classical

4 Unity of Command Discipline means respect for the rules and

Subordination of Individual regulations of the organization.
5 Interests to the General Interest
6 Equity Discipline may be Self-discipline, or it may
be Enforced discipline.
7 Esprit De Corps
8 Unity of Direction No slacking or bending of rules, not
9 Scalar Chain allowed in any organization.
10 Stability of Tenure of Personnel
The works must respect the rules that run
11 Remuneration
the organization.
12 Order
13 Initiative To establish discipline, good supervision
14 Centralization and impartial judgment are needed.
 Session
Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
14 Management Principles by Henri Fayol

2 Authority and Responsibility

3 Discipline According to this principle, a subordinate
Early Classical

4 Unity of Command (employee) must have and receive orders

from only one superior (boss or manager).
Subordination of Individual
5 Interests to the General Interest
6 Equity
To put it another way, a subordinate must
report to only one superior.
7 Esprit De Corps
8 Unity of Direction It helps in preventing dual subordination.
9 Scalar Chain
10 Stability of Tenure of Personnel
This decreases the possibilities of “Dual
subordination” which creates a problem is a
11 Remuneration function of managers.
12 Order
13 Initiative
14 Centralization
 Session
Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
14 Management Principles by Henri Fayol

2 Authority and Responsibility

3 Discipline The interest of one individual or one group
Early Classical

4 Unity of Command should not prevail over the general good.

Subordination of Individual
5 Interests to the General Interest The individual interest should be given less
6 Equity
importance, while the general interest
should be given the most importance.
7 Esprit De Corps
8 Unity of Direction If not, the organization will collapse.
9 Scalar Chain
10 Stability of Tenure of Personnel
The interest of the organizational goal
should not be sabotaged by the interest of
11 Remuneration an individual or on the group.
12 Order
13 Initiative
14 Centralization
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Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
14 Management Principles by Henri Fayol

2 Authority and Responsibility

While dealing with the employees a
3 Discipline manager should use kindliness and justice
Early Classical

4 Unity of Command towards employees equally.

Subordination of Individual
5 Interests to the General Interest Equity is a combination of kindness and
6 Equity justice. It creates loyalty and devotion in
7 Esprit De Corps the employees toward the organization.
8 Unity of Direction
The equity principle suggests that the
9 Scalar Chain managers must be kind as well as equally
10 Stability of Tenure of Personnel fair to the subordinates.
11 Remuneration
12 Order
13 Initiative
14 Centralization
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Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
14 Management Principles by Henri Fayol

2 Authority and Responsibility

Esprit de Corps means “Team Spirit”.
3 Discipline
Early Classical

4 Unity of Command Therefore, the management should create

Subordination of Individual unity, co-operation, and team-spirit among
5 Interests to the General Interest the employees.
6 Equity
7 Esprit De Corps They should avoid dividing and rule
policy.Harmony, cohesion among personnel.
8 Unity of Direction
9 Scalar Chain It’s a great source of strength in the
10 Stability of Tenure of Personnel organization.
11 Remuneration
It is a quality in every successful business.
12 Order
13 Initiative
14 Centralization
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Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
One head and one plan for a group of
14 Management Principles by Henri Fayol

2 Authority and Responsibility activities with the same objective.

3 Discipline
Early Classical

4 Unity of Command All activities which have the same

Subordination of Individual
objective must be directed by one
5 Interests to the General Interest manager, and he must use one plan.
6 Equity
This is called the Unity of Direction.
7 Esprit De Corps
8 Unity of Direction He must use only one plan for all the
9 Scalar Chain marketing activities.
10 Stability of Tenure of Personnel
Unity of direction means activities aimed
11 Remuneration
at the same objective should be organized
12 Order so that there are one plan and one person
13 Initiative in charge
14 Centralization
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Chapter 2 5 Evolution of Management Thoughts
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The chain of command, sometimes called the scalar

1 Division of Work
chain, is the formal line of authority, communication,
14 Management Principles by Henri Fayol

2 Authority and Responsibility and responsibility within an organization.

3 Discipline
Early Classical

The chain of command is usually depicted on an

4 Unity of Command organizational chart, which identifies the superior
Subordination of Individual and subordinate relationships in the organizational
5 Interests to the General Interest structure.
6 Equity
Or it is the line of authority from top to bottom of
7 Esprit De Corps the organization.
8 Unity of Direction
This chain implements the unity-of-command
9 Scalar Chain
principle and allows the orderly flow of information.
10 Stability of Tenure of Personnel
11 Remuneration Under the unity of command principle, the
instructions flow downward along the chain of
12 Order command and accountability flows upward.
13 Initiative More clear-cut the chain of command, the more
effective the decision-making process and the
14 Centralization
greater the efficiency.
 Session
Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
14 Management Principles by Henri Fayol

2 Authority and Responsibility

3 Discipline Although it could take a lot of time,
Early Classical

4 Unity of Command Employees need to be given fair enough

time to settle into their jobs.
Subordination of Individual
5 Interests to the General Interest
6 Equity
An employee needs time to learn his job
and to become efficient.
7 Esprit De Corps
8 Unity of Direction The employees should have job security
9 Scalar Chain because instability leads to inefficiency.
10 Stability of Tenure of Personnel
Successful firms usually had a stable group
11 Remuneration of employees.
12 Order
13 Initiative
14 Centralization
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Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work Remuneration is the price for services

14 Management Principles by Henri Fayol

2 Authority and Responsibility received. Pay should be fair to both the

employee and the firm.
3 Discipline
Early Classical

4 Unity of Command If an organization wants efficient employees

Subordination of Individual and best performance, then it should have
5 Interests to the General Interest
a good remuneration policy.
6 Equity
7 Esprit De Corps This policy should give maximum
8 Unity of Direction satisfaction to both employers and
employees.
9 Scalar Chain
10 Stability of Tenure of Personnel It should include both financial and non-
11 Remuneration financial incentives.
12 Order
Compensation should be based on a
13 Initiative
systematic attempt to reward good
14 Centralization performance
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Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work A place for everything and everything in its

14 Management Principles by Henri Fayol

2 Authority and Responsibility place’ the right man in the right place.
3 Discipline There should be an Order for material/things
Early Classical

and people in the organization.

4 Unity of Command
Order for things is called Material Order and
Subordination of Individual order for people is called ‘Social Order’.
5 Interests to the General Interest
Material Order refers to “a place for
6 Equity everything and everything in its place.”Social
7 Esprit De Corps Order refers to the selection of the “right man
8 Unity of Direction in the right place”.
9 Scalar Chain
There must be an orderly placement of the
resources such as Men and Women, Money,
10 Stability of Tenure of Personnel Materials, etc.
11 Remuneration Human and material resources must be in the
12 Order right place at the right time.
13 Initiative
Misplacement will lead to misuse and
disorder.
14 Centralization
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Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work
Without limits of authority and discipline, all
14 Management Principles by Henri Fayol

2 Authority and Responsibility levels of staff should be encouraged to show

3 Discipline initiative.
Early Classical

4 Unity of Command
Subordination of Individual
Management should encourage initiative.
5 Interests to the General Interest
6 Equity That is, they should encourage the
employees to make their own plans and to
7 Esprit De Corps
execute these plans.
8 Unity of Direction
9 Scalar Chain This is because an initiative gives satisfaction
10 Stability of Tenure of Personnel to the employees and brings success to the
organization.
11 Remuneration
12 Order It allows the subordinates to think out a plan
13 Initiative and do what it takes to make it happen.
14 Centralization
 Session
Chapter 2 5 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

1 Division of Work It is always present to a greater or lesser extent,

14 Management Principles by Henri Fayol

depending on the size of the company and the

2 Authority and Responsibility quality of its managers. hands.
3 Discipline However, in decentralization, the authority is
Early Classical

distributed to all the levels of management. No

4 Unity of Command
organization can be completely centralized or
Subordination of Individual decentralized.
5 Interests to the General Interest
If there is complete centralization, then the
6 Equity subordinates will have no authority (power) to carry
7 Esprit De Corps out their responsibility (duties).
Similarly, if there is complete decentralization, then
8 Unity of Direction the superior will have no authority to control the
9 Scalar Chain organization.
Therefore, there should be a balance between
10 Stability of Tenure of Personnel
centralization and decentralization.
11 Remuneration The degree to which centralization or
12 Order decentralization should be adopted depends on the
specific organization, but managers should retain
13 Initiative final responsibility but should give subordinates
14 Centralization enough authority to do the tasks successfully.
 Session
Chapter 2 5 Evolution of Management Thoughts
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1 Division of Work D
14 Management Principles by Henri Fayol

2 Authority and Responsibility A

3 Discipline D
Early Classical

4 Unity of Command U
5 Subordination of Individual Interests to the General Interest S
6 Equity E
7 Esprit De Corps E
8 Unity of Direction U
9 Scalar Chain S
10 Stability of Tenure of Personnel S
11 Remuneration R
12 Order O
13 Initiative I
14 Centralization C
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Chapter 2 5 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Benefits:
1. Fayol pioneered in distinguishing management functions from other functions/
activities of a business.
Early Classical

2. He was the first to highlight the universality of management principles.

3. His contribution to management theory is the foundation to development of
management thought. His functions of management provide systematic understanding
to the process of management. His theory is also known as management process
approach.
Criticism:
The contribution of Henry Fayol in the field of management thought is very important.
He was the first person who pointed out the functions of management separately.
However, in spite of such importance, his theory of management is not beyond criticism.
1. Higher Level Management
2. Less Emphasis on Human Aspect
3. Negligence of Joint Management
4. Controversial Universality of Management
5. Ineffective in Culture-bound Management
6. Historical value
 Session
Chapter 2 6 Evolution of Management Thoughts
Scientific Management VS. Administrative Management

Points of differences:
While Taylor focused on efficiency of operating workers, Fayol aimed at improving
efficiency of the organisation as a whole. Fayol’s theory, therefore, has wider
Early Classical

applicability.

The theories differ from each other on the following grounds:

1. Taylor is known as the father of scientific management while Fayol is known as the
father of modern management. He introduced the Administrative Management
Theory.
2. Taylor emphasised on increasing productivity at the workers’ level while
Fayol emphasised on managing the organisation as a whole.
3. Fayol’s principles of functional management focus on the entire enterprise while
Taylor’s principles of scientific management focus on a segment of the enterprise —
operating level.
4. Taylor emphasised on organisational productivity through increase in worker’s
efficiency while Fayol emphasised on overall administration of the organisation.
 Session
Chapter 2 6 Evolution of Management Thoughts
Scientific Management VS. Administrative Management

Points of similarities:
Taylor’s and Fayol’s theories are similar to each other with respect to the following:
Early Classical

1. Both the theories represent pioneering work in the study of management. They are
the foundation to the study of management.
2. Both Taylor and Fayol found ways to increase the output.
3. They emphasise on financial needs which can be satisfied through financial
incentives.
4. They focus on formal jobs and work schedules to satisfy individual and organisational
needs.
5. They view organisations as independent units with little or no interaction with the
external environment.
6. They develop a set of management principles important for industrial progress.
7. Both the theories are developed on practical experience in their respective
companies.
8. Both emphasise that managerial qualities can be acquired. Therefore, organisations
should attempt to develop these qualities.
 Session
Chapter 2 6 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Max Webber who propounded the bureaucratic theory of organization and

management. He is termed as the father of Bureaucratic Management
A German sociologist (a teacher at Berlin University and contemporary of
Early Classical

Taylor and Fayol) Webber developed the bureaucratic model of organization

which is the most rational means of carrying out imperative control over
human beings.

Bureaucracy refers to “certain characteristics of organizational design”. He

thought bureaucracy as “the most efficient form that could be used most
effectively for complex organizations-business, example- arising out of the
needs of modern society.”

Bureaucratic organisation in Webber’s views is the most efficient form of

organisation. He names it as rational-legal. It is rational because specific
objectives of the organisation are laid down and organisation is designed to
achieve them and it is legal because authority flows from a clearly defined
set of rules, procedures and roles.
 Session
Chapter 2 6 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Characteristics of Bureaucratic management

(1) Administration through well-defined rules.

Early Classical

(2) A hierarchy of authority and chain of command throughout the organization, with a
regulated system of appeal.
(3) Assignment of activities to individuals as fixed duties.
(4) Decision making on rational and objective criteria so that all decisions are
impersonal
(5) Employment and promotion based on demonstrated competence; protection
against arbitrary dismissal, and training of officials.
(6) Office holding as a career within the hierarchical order.
 Session
Chapter 2 6 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Benefits of Bureaucracy
The following are the advantages of bureaucracy:
Early Classical

1. The rules and procedures are decided for every work, it leads to consistency in
employee behaviour. Since employees are bound to follow the rules etc., the
management process becomes easy.
2. The duties and responsibilities of each job are clearly defined; there is no
question of overlapping or conflicting job duties.
3. The selection process and promotion procedures are based on merit and
expertise. It assists in putting right persons on right jobs. There is optimum
utilisation of human resources.
4. The division of labour assists workers in becoming experts in their jobs. The
performance of employees improves considerably.
5. The enterprise does not suffer when some persons leave it. If one person
leaves then some other occupies that place and the work does not suffer.
 Session
Chapter 2 6 Evolution of Management Thoughts
Scientific Management Administrative Management Bureaucracy

Disadvantages of Bureaucracy
The following are the disadvantages of bureaucracy:
Early Classical

1. This system suffers from too much of red tape and paper work.
2. The employees do not develop belongingness to the organisation.
3. The excessive reliance on rules and regulations and adherence to these policies
inhibit initiative and growth of the employees.
4. The employees become so used to the system, they resist to any change and
introduction of new techniques of operations.
5. They are treated like machines and not like individuals.
6. There is neglect of human factor.
 Session
Chapter 2 7 Evolution of Management Thoughts
Human Relation Approach Behavioral Approach

The human relations approach is also known as New Classical approach.

Elton Mayo termed it Clinical approach.
It attempts to explain the informal relations among employers and employees are
concerned with moral and psychological rather than legal aspects of an organization.
Neo- Classical

The approach considers worker not only one of the means of production system but as a
“man”.
Emergence of Human Relations Approach
As a result of the Scientific Management approach whole human culture was
influenced by material and mechanical environment. In industries emphasis was on
increasing production. Resultantly, labor became a commodity and human being cog
in the wheel.
Main problems before workers were low wages, more hours of work, unhealthy
working conditions and labors‘ exploitation.
Managers were ignoring psychological needs of labors and social aspects of work. All
these factors made workers apathetic towards their work
Further, the class conflict and Trade Union movement in U.S.A. coupled with Communist
Revolution in Soviet Union became the catalyst factors for the emergence and evolution
of the Human Relations approach.
 Session
Chapter 2 7 Evolution of Management Thoughts
Human Relation Approach Behavioral Approach

Hawthorne Experiments
The historical perspective of human relations approach, making for the beginning of this
approach, could be traced to the famous ‘Hawthorne Experiments’ conducted at the
Hawthorne plant of the Western Electric Company U.S.A. during 1924-32.
Neo- Classical

The experiments were conducted by an eminent team of researchers from the Harvard
Business School, under the leadership of Elton Mayo; who is called the father of human
relations school.
The basic purpose motivating these experiments was whether physical facilities, like –
raw- materials, machinery, technology etc. were the only factors responsible for human
efficiency at work; or were there certain other factors more important than physical
factors, which were more responsible for human efficiency at work.

These experiments did not provide researchers with any solid conclusions in this regard;
but provided them with a notion that certain socio-psychological factors presumably
were responsible in producing ‘changed behaviour’ of people at work, who were
experimented with.
 Session
Chapter 2 7 Evolution of Management Thoughts
Human Relation Approach Behavioral Approach
Illumination Relay Assembly Mass Interviewing Bank Wiring
Experiments Test Room Programme Observation
Neo- Classical

Some of the major phases of Hawthorne experiments are as follows:

1. Illumination Experiments (1924-27)

2. Relay Assembly Test Room Experiments (1927-28)

3. Mass Interviewing Programme (1928-31)

4. Bank Wiring Observation Room Experiment (1931-32)

 Session
Chapter 2 7 Evolution of Management Thoughts
Human Relation Approach Behavioral Approach
Illumination Relay Assembly Mass Interviewing Bank Wiring
Experiments Test Room Programme Observation
In these experiments, two groups of each 6 female workers were selected – one control
group, in which lighting was constant; and the other experimental group, in which
Neo- Classical

lighting was varied.

Even when lighting was decreased, production in the experimental group did not
decrease; rather it increased.

Production in the experimental group decreased only when lighting was reduced to
‘moon-light’ level; in which workers could not see properly.

Researchers could not come to any conclusion as to the effect on lighting on production;
but realized that certain human factors were at work, in causing increased production
despite reduced lighting.

They were motivated to conduct further experiments.

 Session
Chapter 2 7 Evolution of Management Thoughts
Human Relation Approach Behavioral Approach
Illumination Relay Assembly Mass Interviewing Bank Wiring
Experiments Test Room Programme Observation

Relay assembly test room experiments were designed to determine the effect of changes
in various job conditions on group productivity
Neo- Classical

For this purpose, the researchers set up a relay assembly test room two girls were
chosen. These girls were asked to choose for more girls as co-workers. The work related
to the assembly of telephone relays. 
The changes were introduced in consultation with workers; they were free to express
their opinions and concerns to the supervisor and in some cases they were allowed
to take decisions on matters concerning themselves.

What surprised the researchers was that the productivity increased; even when
these changes were withdrawn.
Therefore, researchers concluded that these change were not responsible for
increased efficiency; but certain other factors like attitude towards work, sense of
belongingness, friendly supervision etc. were responsible for increased
productivity.
 Session
Chapter 2 7 Evolution of Management Thoughts
Human Relation Approach Behavioral Approach
Illumination Relay Assembly Mass Interviewing Bank Wiring
Experiments Test Room Programme Observation
Following were the changes and resultant outcomes:
1. The incentive system was changed so that each girl’s extra pay was based on the other five rather
Neo- Classical

than output of larger group, say, 100 workers or so. The productivity increase as compared to
before.
2. Two five- minute rests one in the morning session and other in evening session were introduced
which were increased to ten minutes. The productivity increased.
3. The rest period was reduced to five minutes but frequency was increased. The productivity
decreased slightly and the girls complained that frequent rest intervals affected the rhythm of the
work.
4. The number of rest was reduced to two of ten minutes of each, but in the morning, coffee or soup
was served along with the sandwich and in the evening, snack was provided. The productivity
increased.
5. Changes in working hours and workday were introduced, such as cutting an hour off the end of
the day and eliminating Saturday work. The girls were allowed to leave at 4.30 p.m. instead of usual
5.00 p.m. and later at 4.00 p.m. productivity increased.
 Session
Chapter 2 7 Evolution of Management Thoughts
Human Relation Approach Behavioral Approach
Illumination Relay Assembly Mass Interviewing Bank Wiring
Experiments Test Room Programme Observation

During the course of this programme, about 20,000 interviews were conducted to
determine workers’ opinions and attitudes towards – company, supervision, promotion,
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wages and insurance plans. Initially, the interviews were conducted by asking direct
questions like; “Do you like the supervisor?” etc.
But subsequently, the pattern of interviewing was changed to ‘non-directed type’, in
which interviewers did not put question; but just listened to what workers had to say in
regard to these matters.
It was observed that an opportunity to talk a freely about things that are important to
workers had a positive impact on their work behaviour.

During the course of interviews, it was discovered that workers’ behaviour was being
influenced by group behaviour. However, this conclusion was not very satisfactory and,
therefore, researches decided to conduct another series of experiments. As such, the
detailed study of a shop situation was started to find out the behaviour of workers in
small groups.
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Experiments Test Room Programme Observation
Some of the major findings of the programme were as follows:
1. A complaint is not necessarily an objective recital of facts; it is a symptom of personal disturbance
Neo- Classical

the cause of which may be deep seated.

2. Objects, persons or events are carriers of social meanings. They become related to employee
satisfaction or dissatisfaction only as the employee comes to view them from his personal situation.
3. The personal situation of the worker is a configuration, composed of a personal preference
involving sentiments, desires and interests of the person and the social reference constituting the
person’s social past and his present interpersonal relations.
4. The position or status of worker in the company is a reference from which the worker assigns
meaning and value to the events, objects and features of his environment such as hours of work,
wages, etc.
5. The social organisation of the company represents a system of values from which the worker
derives satisfaction or dissatisfaction according to the perception of his social status and the
expected social rewards.
6. The social demands of the worker are influenced by social experience in groups both inside and
outside the work plant.
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Illumination Relay Assembly Mass Interviewing Bank Wiring
Experiments Test Room Programme Observation
These experiments were conducted to find out the impact of small groups on the
individuals. In this experiment, a group of 14 male workers were formed into a small
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work group. The men were engaged in the assembly of terminal banks for the use in
telephone exchanges.
Hourly wage for each worker was fixed on the basis of average output of each worker.
Bonus as also payable on the basis of group effort.
It was expected that highly efficient workers would bring pressure on less efficient
workers to increase output and take advantage of group incentive plan.
However, the strategy did not work and workers established their own standard of
output and this was enforced vigorously by various methods of social pressure.
The workers cited various reasons for this behaviour viz. fear of unemployment, fear of
increase in output, desire to protect slow workers etc.
The Hawthorne experiments clearly showed that a man at work is motivated by more than the
satisfaction of economic needs.
Management should recognise that people are essentially social beings and not merely economic
beings. As a social being, they are members of a group and the management should try to
understand group attitudes and group psychology.
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Experiments Test Room Programme Observation
Conclusions drawn by Prof. Mayo on the basis of Hawthorne studies:
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1. Social Unit:
2. Group Influence:
3. Group Behaviour:
4. Motivation:
5. Supervision:
6. Working Conditions:
7. Employee Morale:
8. Communication:
9. Balanced Approach:
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Contributions of Hawthorne Experiments 
(i) An organization is a social system; with a culture of its own.
(ii) Informal groups have a serious impact on workers’ productivity.
Neo- Classical

(iii) There are conflicts between the organisation and the individuals.
(iv) Friendly supervision has a favourable influence on human efficiency at work.
(v) Free flow of communication, in the organisation makes for good human relations
Limitations of Human Relations Approach:
(i) Hawthorne Experiments were based on a sample of workers taken from the U.S.A.;
(ii) Conclusions of Hawthrone Experiments are not much valid; because Hawthrone
plant was not a typical plant. It was a thoroughly unpleasant place to work.
(iii) Hawthrone Experiments were not conducted in a scientific manner.
(iv) The serious most limitation of Hawthrone Experiments is that these were vitiated by
what is known as the ‘Hawthrone-effect’.
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Behavioral theorists believed that a better understanding of human behavior at work,

such as motivation, conflict, expectations, and group dynamics, improved productivity.
The theorists who contributed to this school viewed employees as individuals,
resources, and assets to be developed and worked with — not as machines, as in the
Neo- Classical

past. Several individuals and experiments contributed to this theory.

The group which has the greatest influence in the growth and development of this new
field, consisted of followings
Contributors Contribution
Douglas Mc Gregor Theory X &Y

Abraham Maslow Need Hierarchy

Kurt Lewin Three step change theory
Stacy Adam Equity Theory
Mary Parker Follet Group influences
Rensis Likert Likert Scale
Chris Argyris Human and organizational development – Model I and Model I
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After, 1960 management thought has been turning somewhat away from the extreme human
relations ideas particularly regarding the direct relation between morale and productivity.
Present management thinking wishes equal emphasis on man and machine.

The modern business ideologists have recognized the social responsibilities of business activities and
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thinking on similar lines.

During the period, the principles of management reached a stage of refinement and perfection.

The formation of big companies resulted in the separation of ownership and management.
This change in ownership pattern inevitably brought in ‘salaried and professional managers’ in place
of ‘owner managers’.

The giving of control to the hired management resulted in the wider use of scientific methods of
management.

But at the same time the professional management has become socially responsible to various
sections of society such as customers, shareholders, suppliers, employees, trade unions and other
Government agencies.

Under modern management thought three streams of thinking have beers noticed since 1960:
(i) Quantitative or Mathematical Approach
(ii) Systems Approach.
(iii) Contingency Approach.
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The quantitative approach applies statistics, optimization models, information models,

computer simulations, and other quantitative techniques to the management process. 
Central to the quantitative approach is the principle that organizations are decision-
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making units.

These decision-making units can be made more efficiently using mathematical models
that place relevant factors into numerical terms. 
The primary branches of quantitative management include:

Management Science

Operations Management

Management Information Systems

Total Quality Management

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Quantitative Management Techniques

Some of the primary techniques applicable to Quantitative Management include:

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Theory of Probability,
Sampling Analysis,
Correlation / Regression Analysis,
Time Series Analysis,
Ratio Analysis,
Variance Analysis,
Statistical Quality Control,
Linear Programming,
Game Theory,
Network Analysis,
Break-Even Analysis,
Waiting Line or Queuing Theory,
Cash-Benefit Analysis, etc.
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What is Management Science?

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This branch of management theory focuses on the development of

mathematical and statistical models as a simplified representation of a system,
process, or relationship as models, formula, and equations.

These techniques help managers make maximum use of organizational resources

to produce goods and services.

This field of management has grown significantly with the development of

computer systems and computational abilities. 
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What is Operations Management?

Operations management is a field of management focusing on efficiency, effectiveness,
and producing or organizational systems, process, and functions used in the manufacture
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of goods or provision of services.

It focuses on the operation and control of the production process (such as the use of
resources) that transform resources into finished goods and services. It also looks at the
extent to which the functional processes satisfy the needs and wants of the consumer.
Operations management is a derivative of the mathematical models in which specified
measurement systems are applied to operational scenarios.
These methods are used to achieve a higher level of efficiency in operational tasks, such
as plant layout, plant location, inventory control, and product distribution.
Major areas of study within operations management include a product or process design,
capacity planning, facilities location, facilities layout, materials requirement planning, and
handling, scheduling, purchasing and inventory control, quality control, maintenance
management, computer integrated manufacturing, just-in-time inventory systems, and
flexible manufacturing systems.
Types of operations management techniques include queuing theory, breakeven
analysis, and simulation. These techniques are routinely applied to areas outside of
operations. 
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What is Total Quality Management?

Total Quality Management (TQM) is a management theory developed following WWII
during the reconstruction of Japan. Perhaps the best-known proponent of this school of
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management was W. Edwards Deming. Total quality management (TQM) is a

management approach that focuses on the following elements of operations:
Customer Focus
Value Improvement
Employee Empowerment
Synergy of Teams
Final Product Quality
Preventing rather than detecting defects
Universal quality responsibility
Continuous Improvement
Statistical measurement
Process Focused
Constant refinement and learning
Training and Learning
Accurate Measurement
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There are four phases of total quality management:

Planning Phase: Employees discover the problems in regular operations and their root-
causes. Employees conduct comprehensive research and collect relevant data. The
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objective is to identify potential solutions to their problems.

Doing Phase: Employees develop and execute strategies and plan to address identified
problems.
Checking Phase: Data is collected to analyze performance to validate the effectiveness
of the processes and measuring the outcome.
Acting Phase: Outcomes are documents and employees begin addressing resulting
challenges.
What is Management Information Systems? 
Information systems allow for more efficient creation, management, and
communication of information across the organization as well as in the outside
environment. The information allows for more efficient management decision making
by providing information in a more timely manner and in a more useful format.
Notably, Decision Support Systems (DSS) integrate decision models and data to this
end. 
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Benefits include:
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It establishes relationships amongst quantifiable variables of decision-making

situations and facilitates disciplined thinking.
Mathematical models help to derive precise and accurate results by analyzing
complex statistical data.
It is useful in areas of planning and control where data is available in quantitative
terms. Decisions are based on data and logic rather than intuition and judgment.
Computer-based Statistical packages are available which facilitate analysis of
qualitative data also (dummy variables are used to analyze the non-quantifiable
data).
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Negatives include:
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Mathematical models cannot fully account for individual behaviors and attitudes.
The time needed to develop competence in quantitative techniques may delay the
development of other managerial skills.
Mathematical models typically require a set of assumptions that may not be realistic
in an industrial setting.
Among the different functions of management, its use is limited in organizing, staffing
and directing. It applies more in planning and control functions.
It does not eliminate risk but only attempts to reduce it.
It assumes that all the variables affecting the problem can be quantified in numerical
terms which is not always true.
Decisions are often based on the availability of limited information.
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Quantitative System Approach Contingency

In the 1960, an approach to management appeared which tried to unify

the prior schools of thought. This approach is commonly known as
‘Systems Approach’. Its early contributors include Ludwing Von
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Bertalanffy, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L.

Kahn, W. Buckley and J.D. Thompson.

They viewed organization as an organic and open system, which is

composed of interacting and interdependent parts, called subsystems.
The system approach is to look upon management as a system or as “an
organised whole” made up of sub­systems integrated into a unity or
orderly totality.
System approach is based on the generalization that everything is inter-
related and inter-dependent. A system is composed of related and
dependent element which, when in interaction, forms a unitary whole. A
system is simply an assemblage or combination of things or parts
forming a complex whole.
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The basic features of systems approach are as under:

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(i) A system consists of interacting elements. It is set of inter related and

inter­dependent parts arranged in a manner that produces a unified whole.
(ii) The various sub-systems should be studied in their inter- relationships
rather, than in isolation from each other.
(iii) An organisational system has a boundary that determines which parts
are internal and which are external.
(iv) A system does not exist in a vaccum. It receives information, material
and energy from other systems as inputs. These inputs undergo a
transformation process within the system and leave the system as output
to other systems.
(v) An organisation is a dynamic system as it is responsive to its
environment. It is vulnerable to change in its environment.
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The contingency approach is the latest approach to the existing management

approaches. During the 1970’s, contingency theory was developed by J.W. Lorsch
and P.R. Lawrence, who were critical of other approaches presupposing one best
Modern Approach

way to manage. Management problems are different under different situations

and require to be tackled as per the demand of the situation.
One best way of doing may be useful for repetitive things but not for managerial
problems.
The contingency theory aims at integrating theory with practice in systems
framework. The behaviour of an organisation is said to be contingent on forces of
environment. “Hence, a contingency approach is an approach, where behaviour
of one sub-unit is dependent on its environment and relationship to other units
or sub-units that have some control over the sequences desired by that sub-
unit.”
Thus behaviour within an organisation is contingent on environment, and if a
manager wants to change the behaviour of any part of the organization, he must
try to change the situation influencing it. Tosi and Hammer tell that organization
system is not a matter of managerial choice, but contingent upon its external
environment.
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Features of Contingency Approach:

Firstly, the contingency approach does not accept the universality of management
Modern Approach

theory. It stresses that there is no one best way of doing things. Management is
situation, and managers should explain objectives, design organisations and prepare
strategies, policies and plans according to prevailing circumstances.

Secondly, managerial policies and practices to be effective, must adjust to changes in

environment.

Thirdly, it should improve diagnostic skills so as to anticipate and ready for environmental
changes. Fourthly, managers should have sufficient human relations skill to
accommodate and stabilise change.

Finally, it should apply the contingency model in designing the organization, developing
its information and communication system, following proper leadership styles and
preparing suitable objectives, policies, strategies, programmes and practices. Thus,
contingency approach looks to hold a great deal of promise for the future development
of management theory and practice.