EVOLUTION OF MANAGEMENT

THEORY
EVOLUTION OF MANAGEMENT THEORY
Org. Environment

Management Science

Behavioral Management

Administrative Management
1890

Scientific Management

1940 2000
 During 1875-1900: Classical Perspective given emphasis
on managing workers and organisations more efficiently
 During 1900-1925: Behavioural Perspective Given
emphasis on understanding human behaviour in the
organisations
 During 1925-1950: Quantitative perspective given thrust
on increasing quality of managerial decision making
through the application of mathematical and statistical
methods
 During 1950-1975: System Perspective given thrust on
understanding the organisation as a system that transforms
inputs into outputs while in constant interaction with its
environment.
 During 1975-2000: Contingency perspective given thrust on
applying management principles and processes as dictated by
the unique characteristics of each situation.
 During 2000-onwards: Contemporary perspective given
thrust to the study of management continued to be advance.
Two contemporary approaches like total quality management
and learning organisation which have given additional
insights into the management thoughts.
CLASSICAL APPROACH:
 Relates to scientific, administrative and bureaucratic
management. Details include
 In the scientific management approach (developed by F. W.
Taylor, H. Emerson, H. Gantt, etc.) focus is given on
individual worker’s productivity
 In the administrative approach (developed by H. Fayol,
Lyndall, Urwick, etc.) focus is given on the function of
management
 In the bureaucratic approach (developed Max Webber) focus
is given on the overall organisational system
SCIENTIFIC MANAGEMENT THEORY
Modern management began in the
late 19th century.
Organizations were seeking ways to
better satisfy customer needs.
Machinery was changing the way
goods were produced.
Managers had to increase the
efficiency of the worker-task mix.
 JOB SPECIALIZATION
 Adam Smith, 18th century economist,
found firms manufactured pins in two
ways:
Craft-- each worker did all steps.
Factory -- each worker specialized in one step.
 Smith
found that the factory method had
much higher productivity.
Each worker became very skilled at one,
specific task.
 Breaking down the total job allowed for
the division of labor.
 THE 4 PRINCIPLES
 Four Principles to increase efficiency:
1. Study the way the job is performed now &
determine new ways to do it.
Gather detailed, time and motion information.
Try different methods to see which is best.

2. Codify the new method into rules.

Teach to all workers.
3. Select workers whose skills match the rules
set in Step 2.
4. Establish a fair level of performance and
pay for higher performance.
Workers should benefit from higher output.
PROBLEMS OF SCIENTIFIC MANAGEMENT
 Managers often implemented only the
increased output side of Taylor’s plan.
They did not allow workers to share in increased
output.
Specialized jobs became very boring, dull.
Workers ended up distrusting Scientific
Management.
 Workers could purposely “under-perform”
 Management responded with increased use
of machines.
 THE GILBRETHS
 Frank
and Lillian Gilbreth refined Taylor’s
methods.
Made many improvements to time and motion
studies.
 Time and motion studies:
1. Break down each action into components.
2. Find better ways to perform it.
3. Reorganize each action to be more efficient.
 Gilbreths also studied fatigue problems,
lighting, heating and other worker issues.
ADMINISTRATIVE MANAGEMENT

 Seeksto create an organization that leads to

both efficiency and effectiveness.
 MaxWeber developed the concept of
bureaucracy.
A formal system of organization and
administration to ensure effectiveness and
efficiency.
Weber developed the Five principles of
Bureaucracy
 BUREAUCRATIC PRINCIPLES

Written rules

System of task A Bureaucracy Hierarchy of

relationships should have authority

Fair evaluation
and reward
KEY POINTS OF BUREAUCRACY
Authority is the power to hold people accountable
for their actions.
Positions in the firm should be held based on
performance not social contacts.
Position duties are clearly identified. People
should know what is expected of them.
Lines of authority should be clearly identified.
Workers know who reports to who.
Rules, Standard Operating Procedures (SOPs),
& Norms used to determine how the firm
operates.
Sometimes, these lead to “red-tape” and other
problems.
 FAYOL’S PRINCIPLES
 Henry Fayol, developed a set of 14 principles:
1. Division of Labor: allows for job specialization.
 Fayol noted firms can have too much specialization leading to poor quality and
worker involvement.
2. Authority and Responsibility: Fayol included both
formal and informal authority resulting from special
expertise.
3. Unity of Command: Employees should have only one
boss.
4. Line of Authority: a clear chain from top to bottom of
the firm.
5. Centralization: the degree to which authority rests at the
very top.
 FAYOL’S PRINCIPLES
6. Unity of Direction: One plan of action to guide
the organization.
7. Equity: Treat all employees fairly in justice and
respect.
8. Order: Each employee is put where they have
the most value.
9. Initiative: Encourage innovation.
10. Discipline: obedient, applied, respectful
employees needed.
FAYOL’S PRINCIPLES

11. Remuneration of Personnel: The payment

system contributes to success.
12. Stability of Tenure: Long-term employment is
important.
13. General interest over individual interest: The
organization takes precedence over the
individual.
14. Esprit de corps: Share enthusiasm or devotion to
the organization.
 BEHAVIORAL MANAGEMENT
 Focuses on the way a manager should
personally manage to motivate employees.
 Mary Parker Follett: an influential leader
in early managerial theory.
Suggested workers help in analyzing their jobs
for improvements.
The worker knows the best way to improve the
job.
If workers have the knowledge of the task, then
they should control the task.
 THE HAWTHORNE STUDIES
 Study of worker efficiency at the
Hawthorne Works of the Western Electric
Co. during 1924-1932.
Worker productivity was measured at various
levels of light illumination.
Researchers found that regardless of whether
the light levels were raised or lowered,
productivity rose.
 Actually,it appears that the workers
enjoyed the attention they received as part
of the study and were more productive.
THEORY X AND Y
 Douglas McGregor proposed the two
different sets of worker assumptions.
g Theory X: Assumes the average worker is lazy,
dislikes work and will do as little as possible.
Managers must closely supervise and control
through reward and punishment.
g Theory Y: Assumes workers are not lazy, want
to do a good job and the job itself will
determine if the worker likes the work.
Managers should allow the worker great latitude,
and create an organization to stimulate the worker.
 THEORY X V. THEORY Y

Theory X Theory Y
Employee is not lazy
Employee is lazy
Must create work setting
Managers must
to build initiative
closely supervise
Provide authority to
Create strict rules &
workers
defined rewards
 THEORY Z

 William Ouchi researched the cultural

differences between Japan and USA.
 USA culture emphasizes the individual, and
managers tend to feel workers follow the Theory X
model.
 Japan culture expects worker committed to the
organization first and thus behave differently than
USA workers.
 TheoryZ combines parts of both the USA
and Japan structure.
 Managers stress long-term employment, work-
group, and organizational focus.
MODERN APPROACH:
 It relates to system, contingencies and quality
management. The details are as follows-
 System: It is focused on system that organisation makes a
whole unit when they put together with the application of
a particular system. All the departments are the sub
systems
 Contingencies: It is believed that there is no one system to
manage and organisation in a particular situation
 Quality management: It is a philosophical approach
focuses on managing the entire organisations to deliver
quality goods and services to
 MANAGEMENT SCIENCE
 Uses
rigorous quantitative techniques to
maximize resources.
Quantitative management: utilizes linear
programming, modeling, simulation systems.
Operations management: techniques to analyze
all aspects of the production system.
Total Quality Management (TQM): focuses on
improved quality.
Management Information Systems (MIS):
provides information about the organization.
ORGANIZATION-ENVIRONMENT THEORY
 Considersrelationships inside and outside
the organization.
The environment consists of forces, conditions,
and influences outside the organization.
 Systems theory considers the impact of
stages:
Input: acquire external resources.
Conversion: inputs are processed into goods and
services.
Output: finished goods are released into the
environment.
 SYSTEMS CONSIDERATIONS
 Anopen system interacts with the
environment. A closed system is self-
contained.
Closed systems often undergo entropy and
lose the ability to control itself, and fails.
 Synergy:performance gains of the whole
surpass the components.
Synergy is only possible in a coordinated
system.
THE ORGANIZATION AS AN OPEN SYSTEM

Input Conversion Output

Stage Stage Stage
Raw
Material Machines Goods
Human skills Services

Sales of outputs
Firm can then buy inputs
 CONTINGENCY THEORY

 Assumes there is no one best way to manage.

The environment impacts the organization and
managers must be flexible to react to
environmental changes.
The way the organization is designed, control
systems selected, depend on the environment.
 Technological
environments change rapidly,
so must managers.