EVOLUTION OF MANAGEMENT

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The driving force behind the evolution of
management theory is the search for
better ways to utilize organizational
resources.

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 The Evolution of Management
Theory

Organizational Environment Theory

Management Science Theory

Behavioral Management Theory

Administrative Management Theory

Scientific Management Theory

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
 Modern
Management
1920-1950
School
Neo-Classical
Management Systems
1880 - 1930
School Contingency
Classical
Organizational
Management Human Relations
Humanism
School Behavioral
Management
Scientific Science
Administrative
Bureaucratic 4
Evolution of modern management began in the late
nineteenth century, after the industrial revolution.

Economic, technical and cultural changes

Mechanization changed systems like crafts production

into large scale manufacturing, where semi or
unskilled workers operated machineries.

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 Small-scale Large-scale
Crafts Production Mechanized Manufacturing

Managed by engineers who only had

Technical orientation

Problems faced:

•How to handle people

•Social problems relating to working together
in large groups
•How to increase efficiency of the worker-task mix
 Job specialization and the
Division of Labor
• Famous economist, Adam Smith, journeyed around England in
1700’s studying the effects of industrial revolution.

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 With insights gained from Adam Smith’s
observations, other managers and researchers
began to investigate how to improve job
specialization to increase performance.
They focused on how to organize and control the
work process.

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F.W. Taylor (1856-1915)
Scientific Management
The systematic study of relationships
between people and tasks for the purpose
of redesigning the work process to
increase efficiency.

Taylor believed that if the amount of time and effort that

each worker expends to produce a unit of output can
be reduced by increasing specialization and division of
labor, the production process will become more
efficient.
 Taylor’s Principles

1. Study the way workers perform their tasks, gather all informational job
knowledge that workers possess, and experiment with ways of
improving how tasks are performed
2. Codify the new methods of performing tasks into written rules and
standard operating procedures.
3. Carefully select workers who possess skills and abilities that match the
needs of the task, and train them to perform the task according to the
established rules and procedures.
4. Establish a fair or acceptable level of performance for a task, and then
develop a pay system that provides a reward for performance above the
acceptable level.
 This scientific management became nationally
known, but the selective implementation of the
principles created more harm than good.
• Workers felt that as their performance increased,
managers required them to do more work for the same
pay.

• Increases in performance meant fewer jobs and greater

threat of layoffs

• Monotonous and repetitive

• Dissatisfaction
 The Gilbreths
**Frank Gilbreth (1868-1924) &Lilian Gilbreth (1878-1972)

Time and Motion Study

1. Break and analyze every individual action necessary
to perform a particular task into each of its component
actions
2. Find better ways to perform each component action
3. Reorganize each component action so that it is more
efficient-less cost of time and effort

Their goal was to maximize the efficiency with which each

individual task was performed.
 Study of Fatigue

• How physical characteristics of the workplace contribute to job

stress
• Effects of lighting
• Effects of heating
• Effects of color of walls
• Design of tools and machines
 Administrative Management Theory

• Theory of Bureaucracy

• Fayol’s Principles of Management

 Administrative Management

The study of how to create an

organizational structure that leads to
high efficiency and effectiveness.
 Theory of Bureaucracy

Max Weber (1864-1920)

Developed the principles of bureaucracy-a formal system of
organization and administration designed to ensure efficiency and
effectiveness.
 System of written rules and
SOPs that specify how
Employees should
behave

Clearly specified Clearly specified

System of task and A bureaucracy Hierarchy of
Role relationships Should have authority

Selection and evaluation

System that rewards
Employees fairly and
Equitably.
 5 Principles:
• A Manager’s formal authority derives from the position he or she holds in
the organization

• People should occupy positions because of their performance, not because of

their social standing or personal contacts.

• The extent of each position’s formal authority and task responsibilities and
its relationship to other positions in an organization, should be clearly
specified.

• Authority can be exercised effectively in an organization when positions are

arranged hierarchically, so employees know whom to report to and who
reports to them.

• Managers must create a well-defined system of rules, standard operating

procedures and norms so that they can effectively control behavior within an
organization.
 Rules

Formal written instructions that specify actions to be taken under

different circumstances to achieve specific goals.

Rule: At the end of the day employees are to leave their machines in
good order.
 Standard Operating Procedures

Specific sets of written instructions about how to perform a certain

aspect of a task.

SOP: Specifies exactly how they should do so, which machine parts
should be oiled or replaced.
 Norms

Norms are unwritten, informal codes of conduct that prescribe how

people should act in particular situations.

E.g.: An organizational norm in a restaurant might be that waiters

should help each other if time permits.
Fayol’s Principles of
Management

Henri Fayol (1841-1925)

 14 Principles of Management:

1.Division of Labour 9. Initiative

2.Authority and 10. Discipline
Responsibility 11. Remuneration of
3.Unity of Command Personnel
4.Line of Authority 12. Stability of tenure of
5.Centralization Personnel
6.Unity of Direction 13. Subordination of
7.Equity Individual Interests to the
Common Interest
8.Order
14.Esprit de Corps
 1. Division of Labour

Job specialization and the division of labour should increase

efficiency. Pointed out the downside of too much specialization; so
workers should be given more duties to perform.

Managers have the right to give orders and the power to exhort
subordinates for obedience.
 3. Unity of Command

An employee should receive orders from only one superior.

The length of the chain of command that extends from the top to the
bottom of an organization should be limited.

Authority should not be concentrated at the top of the chain of

command.
 6. Unity of Direction

Those operations within the organization that have the same objective
should be directed by only one manager using one plan. For
example the personnel department in a company should not have
two directors each with a different hiring policy.

Managers should be both friendly and fair to their subordinates.

Materials and people should be in the right place at the right time.
People should be in the jobs that they are most suited to.
 9. Initiative
Subordinates should be given the freedom to conceive and carry out
their plans, even though some mistakes may result.

Members in an organization need to respect the rules and agreement

that govern the organization.

To Fayol, discipline results from good leadership, fair agreements and

judiciously enforced penalties for infractions.

Compensation for work done should be fair to both employees and

employers.
 12. Stability of Tenure of
Personnel
A high employee turnover rate undermines the efficient functioning of
an organization.

Interests of employees should not take precedence over the interests of

the organization as a whole.

Promoting team spirit will give the organization a sense of unity.

To Fayol, even a small factors should help to develop the spirit. He

suggested, for example, the use of verbal communication instead of
formal, written communication whenever possible.
Summary: The Classical School of
Management

Scientific Bureaucratic Administrative

Concern for Development of

Impersonal view
precise work managerial
of organizations
methods principles

Formal structure,
legitimate Best way to
Best way for jobs
authority and organize all jobs in
to be done
competence of a business
management

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 Criticisms of The Classical School of
Management

• No one is entirely driven by economic motivations. People’s choices

and behavior are dictated by other factors such as social needs,
security and self-esteem.

• There is no such thing as “the best way” to do a job. Extreme

division of labor tends to produce monotony and reduce overall skill
levels.

• People are managed like machines. Introduction of newer machines

led to job elimination.

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 Behavioral Management
Theory
• The Work of Mary Parker Follet

• The Hawthorn Studies and Human Relations

• Theory X and Y
 Behavioral Management

The study of how managers should behave to motivate employees and

encourage them to perform at high levels and be committed to the
achievement of organizational goals.
 Mary Parker Follet
• Mary Parker Follett advocated for a human relations emphasis.
• Her work contrasted with the "scientific management" of Frederick
W. Taylor.
• Mary Parker Follett stressed the interactions of management and
workers.
• Follett was one of the first to integrate the idea of organizational
conflict into management theory, and is sometimes considered the
"mother of conflict resolution.“
• She coined the words "power-over" and "power-with" to
differentiate coercive power from participative decision-making
• She was of the view that authority should go with knowledge.
• Advocated involvement of workers in job analysis and work
development process.
• Managers of different departments should communicate with each
other directly.
 The Hawthorne Studies

Hawthorn effect is the finding that a manager’s behavior or leadership

approach can affect worker’s level of performance.
 Human Relations Movement

Advocates of the idea that supervisors receive behavioral training to

manage subordinates in ways that elicit their cooperation and
increase their productivity.
 Informal Organization

The system of behavioral rules and norms that emerge in a group.

 Organization Behavior

The study of the factors that have an impact on how individuals and
groups respond to and act in organizations.
 Theory X and Theory Y

Douglas McGregor proposed that two sets of assumptions about how

work attitudes and behaviors not only dominate the way managers
think but also affect how they behave in organizations. He named
these two assumptions Theory X and Theory Y.
 Theory X

Assumptions:
• Average worker is lazy
• Dislikes work
• Will try to do as little as possible
• Have little ambition and avoid responsibility
 Managers Who Accept Theory X

To keep performance high, workers must be supervised closely and

their behaviors be controlled by means of “the carrot and stick”-
rewards and punishments.
• Design and shape work setting to maximize control over workers’
behaviors.
• Minimize the workers’ control over the pace of work.
• Focus is on development of rules, SOPs and a well-defined system of
reward and punishment to control behavior.
• Managers see little point in giving autonomy to solve their own
problems.
• Managers see their role as closely monitoring workers.
 Theory Y

Assumptions:
• Workers are not inherently lazy
• Do not naturally dislike work
• If given the opportunity, will do what is good for the organization.
• Characteristics of the work setting determine whether workers consider
work to be a source of satisfaction or punishment.
• Managers do not need to closely control workers’ behavior.
• They exercise self-control
“The limits of collaboration in the organization are not limits of human
nature but of management’s ingenuity in discovering how to realize the
potential represented by its human resources.”
• Decentralize authority
• More control of workers over their jobs
• Accountable for their jobs
• Managers’ role is not to control but to provide support and advice
and to evaluate them on their ability
 Summary: Neo-Classical School of
Management

• Behavioral School is a logical extension of the Human Resource

School.

• They are largely concerned with motivation of workers.

• Workers are diverse in their needs and want challenging work,

participative decision-making, self-direction and control.

• Managers must help workers deal with situational constraints and

social aspects of organizational and environmental changes.

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 Core Concepts
of Modern School of Management
• Dealing with complexity is the core of modern management theory.
• Organizations, Workers, Environment and the interactions between them.
• It is a synthesis of several theories.
• Behavioral science, mathematics, statistics, operations / quantitative
research and computing technologies.
• Management is an exercise in logic applied to situations.
• Situations can be measured.
• Computers have an increasing role to play.
• Application of management knowledge is extended to non- business
areas.
• Education, government, health care and others.

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 Management Science Theory

An approach to management that uses rigorous quantitative techniques

to help managers make maximum use of organizational resources.
• Quantitative Techniques

• Operations Management

• Total Quality Management

• Management Information Systems

 Organizational Environment
Theory
The set of forces and conditions that operate beyond an organization’s
boundaries but affect a managers ability to acquire and utilize
resources.