The Evolution of Management
Theories
Semester 2
By:
Michelle Ratnasothy
Various changes in the environment have
influenced the way we do business.
Hence there is a shift from the Traditional
approach (of management) to a New
Paradigm (Model)
(OLD) (NEW)
Traditional Learning
Organization Organization
Factors influencing CHANGE
• Political forces
• Economic forces
• Social forces
• Globalization
• Diversity
• Technology
Characteristics of a Traditional
Organization
• Centralized decision making
• Controlled through vertical hierarchy
• Division of Labour
Disadvantage:
Works only in stable time
Doesn’t work in today’s unstable, ever changing
environment
Intro to learning organization
Company’s to be successful in an ever changing
environment they need to learn and respond
quickly
Definition
Learning Organization is an organization where all
employees get involved in identifying and finding
solutions to organizational problems
Characteristics of the learning
organization
• Democratic leadership
• Team based structure
• Employee empowerment
• Open information
• Participative strategy
• Strong adaptive culture
Difference between traditional and
learning organization
Old Paradigm New Paradigm
Forces on Organization Vertical Organization Learning Organization
Markets Local domestic Global
Work force Homogenous Diverse
Technology Mechanical Electronic
Values Stability, efficiency Change
MNG competencies
Focus Profits Customers, employees
Leadership Autocratic Dispersed, empowering
Doing work By individuals By teams
Relationships Conflicts collaboration
The history of Management
The concept of Management
Can be traced backed to 3000BC
However the formal study of Management
began
Late in the 19th Century with Industrial
Revolution
Evolution of Management Theory
• Classical Perspective (1870 – 1940)
• Humanistic Perspective (1930 – 1990)
• Management Science Perspective (1940 – 1990)
• System Theory (1950 – 2000)
• Contingency Theory (1970 – 2000)
• Learning Organization (1990 – 2010)
The main management perspectives
• Classical perspective
• Humanistic perspective
• Management science perspective
• Contemporary theories
The Classical Perspective
• The classical perspective is the oldest formal theory of
management. Its roots pre-date the 20th century.
• The classical perspective generally concerns ways to
work and organizations more efficiently.
Subfields
Scientific Bureaucratic Administrative
Management Management Principle
The Scientific Management Theory
• Developed by – Fredrick Winslow Taylor (1856 – 1915)
• Make organizations more efficient by making
individuals efficient
• Focused on productivity of individual worker
• Can be done through a scientific analysis
Scientific Management is based on the
following;
• Developing a standard methods for performing each
job
• Selecting workers with appropriate abilities
• Training workers in a standard method
• Supporting workers by planning their work and
eliminated interruptions
Taylor’s contribution includes
• Demonstrating the importance of compensation for
performance
• Initiating the careful study of tasks and jobs
• Demonstrating the importance of personnel and
training
Some criticisms
• Did not appreciate the social context of work and
higher needs of workers
• Did not acknowledge variance among workers
• Tended to regard workers as uniformed and ignored
their ideas and suggestions
Bureaucratic Organizations
• Max Weber, a German theorist, introduced most of
the concepts
• Traditional organizations were more focused on
individuals and wasn’t assigning responsibility and
authority to positions. Hence high labour turnover.
Main Idea
• For organizations to survive responsibility and
authority to be assigned to a position rather than to
an individual
– Systematic approach
– Equal treatment
– Everyone knows the rules
Bureaucratic Principles
Written rules
System of task A Bureaucracy Hierarchy of
relationships should have authority
Fair evaluation
and reward
Administrative Management
• Seeks to create an organization that leads to both
efficiency and effectiveness.
• Max Weber developed the concept of bureaucracy.
– A formal system of organization and administration
to ensure effectiveness and efficiency.
The Humanistic Perspective
Emerged around understanding human behaviour,
needs and attitudes in workplace.
Subfields
Human Relations Human Resources Behavioral
perspective perspective science approach
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.
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.
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 lazy Employee is not
lazy
Managers must
closely supervise Must create work
setting to build
Create strict rules initiative
& defined
rewards Provide authority
to workers
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.
• Theory Z combines parts of both the USA and Japan
structure.
– Managers stress long-term employment, work-
group, and organizational focus.
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.
Contemporary Theories
• Considers relationships 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
• An open 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 Stage Conversion Output
Stage Stage
Raw
Materials 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.
Structures
• Mechanistic: Authority is centralized at the top.
(Theory X)
– Employees closely monitored and managed.
– Very efficient in a stable environment.
• Organic: Authority is decentralized throughout
employees. (Theory Y)
– Much looser control than mechanistic.
– Managers can react quickly to changing
environment.
Q&A
