CHAPTER - 2

THE EVOLUTION OF MANAGEMENT THEORY

Why Study Management Theory

Theory: Coherent group of assumptions put forth to explain the relationship between two or more observable facts & to provide a sound basis for predicting future events. Theories provide a stable focus for understanding what we experience. A theory provides criteria for determining what is relevant. Theories unable us to communicate efficiently & thus move into more & more complex relationships with other people. Theories make it possible indeed, challenge us to keep learning about our world.

 The Scientific Management Theory

Classical Organization Theory

The Behavioural Theory The Management Science Theory Recent Developments in Management Theory The Systems Approach The Contingency Approach

The Scientific Management Theory

Frederick W. Taylor
Henry L. Gantt The Gilbreths

The Scientific Management Theory

A management Approach, formulated by

Frederick W. Taylor & others between 1890 & 1930, that sought to determine scientifically the best methods for performing any task,& for selecting, training, & motivating workers .

Frederick W. Taylor
Frederick W. Taylor (1856-1915) rested his philosophy on four basic principles. 1) The development of a true science of management, so that the best method for performing each task could be determined. 2) The scientific selection of workers, so that each worker would be given responsibility for the task for which he or she was best suited. 3) The scientific education & development of the worker. 4) Intimate, friendly cooperation between management & labor.

 Taylor believed that management & labor had a

common interest in increasing productivity. Taylor based his management system on production-line time studies. Differential Rate System Plan given by Taylor in which he encouraged employers to pay more productive workers at a higher rate than others, using a scientifically correct rate that would benefit both company & worker.

 Contributions of Scientific Management Theory

Limitations of Scientific Management Theory

Workers & Unions feared that working harder

or faster would exhaust whatever work was available, causing layoffs. His critics objected to the speed up conditions that placed undue pressures on employees to perform at faster & faster levels. The emphasis on productivity - &, by extension, profitability led some managers to exploit both workers & customers. As a result more workers joined unions.

Henry L. Gantt
Henry L. Gantt (1861-1919) abandoned Taylors

Differential Rate system as having too little motivational impact, came up with a new idea. Every worker who finished a days assigned work load would win a 50-cent bonus. The Supervisor would earn a bonus for each worker who reached the daily standard, plus an extra bonus if all the workers reached it. Every workers progress was rated & recorded on individual bar charts in black & red

The Gilbreths
Frank B. (1868-1924) & Lillian M. Gilbreth (1878-

1972) conducted fatigue & motion studies. To them, the ultimate aim of scientific management was to help workers reach their full potential as human beings. According to them, motion & fatigue were intetwined every motion that was eliminated reduced fatigue. Studied work to eliminate inefficient hand & body motions. Also experimented with the design & use of the proper tools & equipment for optimizing work performance.

Classical Organization Theory

Henry Fayol
Max Weber Mary Parker Follett Chester I. Barnard

Classical Organization Theory

An early attempt, pioneered by Henri Fayol, to

identify the principles & skills that underlie effective management.

This theory grew out of the need to find

guidelines for managing such complex organizations as factories.

Henri Fayol
Henri Fayol (1841-1925) is generally hailed as the

founder of the classical management school. He believed that sound management practice falls into certain patterns that can be identified & analyzed drew up 14 principles of Management. Before Fayol, it was generally believed that managers are born, not made.

Fayols 14 Principles of Management

1. Division of labour. 2. Authority. 3. Discipline. 4. Unity of command.

7. 8. 9.

Remuneration. Centralization. The Hierarchy.

10. Order.

5. Unity of direction.
6. Subordination of individual interests to the general interest.

11. Equity.
12. Stability of staff. 13. Initiative.

14. Esprit de corps.

Max Weber
German Sociologist Max Weber (1864-1920)

developed a theory of bureaucratic management. The theory stressed the need for a strictly defined hierarchy governed by clearly defined regulations & lines of authority. He considered the ideal organization to be a bureaucracy whose activities & objectives were rationally thought out & whose divisions of labour were explicitly spelled out. Weber also believed that technical competence should be emphasized & that performance evaluations should be made entirely on the basis of merit.

Mary Parker Follett

Follett (1868-1933) was convinced that no one

could become a whole person except as a member of a group. Human beings grew through their relationships with others in organization. She was a great believer of the power of the group where individuals could combine their diverse talent into something bigger. She called management as the art of getting things done through people. She took for granted Taylors assertion that labor & management shared a common purpose as

 Other than individuals & groups, effects of

environmental factors such as politics & economics were also considered. She gave the idea that management meant more than just what was happening inside a particular organization. Her theory included a broader set of relationships, some inside the organization & some across the organizations border by adding organizational environment to her theory.

Chester I. Barnard
Bernard (1886-1961) arrived at the central thesis

An enterprise can operate efficiently & survive only when organizations goals are kept in balance with the aims & needs of the individuals working for it. To ensure its survival, the firm must use the informal groups (cliques) effectively even if they sometimes work at purposes that run counter to managements objectives. Bernard believed that individual & organizational purposes could be kept in balance if managers understood an employees zone of indifference (what the employee would accept).

 Barnard also believed that executives had a duty

to instill a sense of moral purpose in their employees. Although Bernard stressed the work of executive managers, he also focused on the role of the individual worker as the basic strategic factor in organization. By focusing on Groups, he set the stage for the development of a great deal of current management thinking.

The Behavioral Theory

1) The Human Relations Movement
2) The Behavioral Science Approach

The Human Relations Movement

The Human Relations movement arose from early

attempts to systematically discover the social & psychological factors that would create HR. The Hawthorne Experiments The Hawthorne studies began as an attempt to investigate the relationship between the level of lighting in the workplace & worker productivity. Elton Mayo (1880-1949) & some associates from Harvard became involved with these experiments. They decided that a complex chain of attitudes had touched off the productivity increases.

 Because they had been singled out for special

attention, both the test & the control groups had developed a group pride that motivated them to improve their work performance. Sympathetic supervision had further reinforced their motivation. The researchers concluded that employees would work harder if they believed management was concerned about their welfare & supervisors paid special attention to them. This phenomenon is known as the Hawthorne effect.

 The research also concluded that informal work

group the social environment of employees have a positive influence on productivity. For these reasons, group pressure was frequently a stronger influence on worker productivity than management demands.

Behavioral Science Approach

The Behavioral Scientists brought 2 new

dimensions to the study of management & organization. They advanced an even more sophisticated view of human beings & their drives than did Mayo & his contemporaries. Behavioral Scientists applied the methods of scientific investigation to the study of how people behaved in organization as whole entities. Maslows hierarchy of needs Physical, Safety, ego, self-actualization needs. Maslow said, lower-level needs are routinely

 Even this model could not explain all the factors

that may motivate people in the workplace. The more realistic model of human motivation, these behavioral scientists argue is complex person. Using this model, the effective manager is aware that no 2 people are exactly alike & tailors motivational approaches according to the individuals needs. McGregor Distinguished 2 alternative basic assumptions about people & their approach to work.

 Theory Y manager assume that people relish

work & eagerly approach their work as an opportunity to develop their creative capacities. Theory Y was an e.g. of a complex person perspective. Theory X can be traced to the days of scientific management.

The Management Science School

Operations Research Mathematical

techniques for the modeling, analysis, & solution of management problems. Also called Management Science. Management Science School Approaching management problems through the use of mathematical techniques for their modeling, analysis, & solution. Operations research can be used for forecasting the future based on the past & the present. The criticism management science promotes an emphasis on only the aspects of the organization that can be captured in numbers, missing the

Recent Developments in Management Theory

The Systems Approach
The Contingency Approach The Dynamic Environment Approach

The Systems Approach

Rather than dealing separately with the various

segments of an organization, the systems approach to management views the organization as a unified, purposeful system composed of interrelated parts. Systems theory tells us that the activity of any segment of an organization affects, in varying degrees, the activity of every other segment. The point of the systems approach is that managers cannot function wholly within the confines of the traditional organizational chart. They must mesh their department with the whole enterprise. To do that they have to communicate not only

Some Key Concepts

Subsystems: Those parts making up the whole

system. And each system in turn may be a subsystem of a still larger whole. Synergy: The situation in which the whole is greater than its parts. In organizational terms, synergy means that departments that interact cooperatively are more productive than they would be if they operated in isolation. Open & Closed Systems: A system is considered an open system if it interacts with its environment; it is considered a closed system if it does not.

 System Boundary: The boundary that separates

each system from its environment. It is rigid in a closed system, flexible in an open system. Flow: Components such as information, materials & energy (including human energy) that enter & leave a system. Feedback: The part of system control in which the results of actions are returned to the individual, allowing work procedures to be analyzed & corrected.

The Flows & Feedback in an Open System

External Environment

Input (Resources) Land Equipment Building Technology Information

Transformation or Conversion Process

Output Goods Services Other

Feedback

The Contingency Approach

The view that the management technique that

best contributes to the attainment of organizational goals might vary in different types of situations or circumstances; also called the situational approach. According to the contingency approach, the managers task is to identify which technique will, in a particular situation, under particular circumstances, & at a particular time, best contribute to the attainment of management goals.

Dynamic Engagement Theory

The view that time & human relationships are

forcing management to rethink traditional approaches in the face of constant, rapid change. As boundaries between cultures & nations are blurred & new communications technology makes it possible to think of the world as a global village, the scope of international & intercultural relationships is rapidly expanding.