Chapter Two

The Development of Management Thought

Chapter Objective:
To give general understanding to students about the contribution of early
influences, classical and behavioral theorists to the modern management theories.

To provide them the limitations of each management theory.

To summarize the significance of modern theories and how they are useful in
solving management problems.

2.1 Early Influences

This stage of management covers the time between the beginning of man's co-
operative effort to the start of his attempt to approach the study of management
scientifically about 1880. Management functions have existed for thousands of
years since people began to work in group/organized endeavor was recognized
important for the achievement of organizational goals. Though the principles of
management, as we know them today, are no where to be found in the ancient
literature, there are enough indications to show that the importance of management
and organization was well recognized even those days.

The earliest Egyptian and Chinese literature, for instance, contain

references to the need for efficient and effective administration of public
affairs.

Ancient Greek literature pours to the existence of administrative apparatus

like councils, courts and boards of military personnel to manage the
affairs of the state.
 Socrates, a famous philosopher, was among the first to look up on
management as something different from mere technical knowledge and
skills.

Generally, had there not been considerable skill in the various management
functions, those monumental accomplishments such as the pyramid of Egypt, the
Great wall of China & Babylon, the monument in Axum & the temple in Lalibela,
and the castle of Gondar would not have been possible. During that period the
contribution given by religious and military groups to management thought were
significant & undeniable. For example:

The bible /Exodus 18 = 13-26/- This is the advice which was given by
Jethro, the father-in-law of Mosses, to Mosses. It includes the following.

(i) "Ordinances & Laws" should be taught to the people. In modern terms,
organizations need to have a statement of policies, rules, & procedures.

(ii) "Leaders be selected & assigned to be the rulers thousand's, hundred's,

fifty's, and rulers of ten's. In modern terms it is the base for delegation of
authority (Span of management)

(iii) "These rulers should administer all routine maters, & should bring
only the important questions." In modern terms it is related to the
exception principle.

Roman Catholic Church was one of the most effective formal organizations in the
history of western civilization. The church had a set of well-defined objectives and
effective and efficient organizational set up to achieve them. It introduces
hierarchy of authority and staff concept
Military organizations also contributed in their own simplistic way to the
development of managerial practices though there was little use of theory in it.
Even so, their techniques of authority-relationships between individuals and
groups, direction, motivation, and communication underwent considerable
improvement over the years.

Until about the middle of the 18th century, the people of Western Europe used
basically the same methods and implements of production that had been used for
centuries. Management practice in business, government, and the church remained
quite stable through the centuries. It was carried through trial and error basis. Then
within a few decades a series of inventions were discovered and the whole picture
of industrial activity was enormously attained. That new period, commonly
referred to as the industrial revolution, was the landmark in human history. It
brought massive technological changes. It revolutionized the economic system,
initiated mass production and the factory system of production brought the need of
huge collection of capital.

Those changes of production methods reduced the crafts, which were the main
factors in production into wage earner (employees) in the factory. Introduction of
mass production, large-scale industry, the use of expensive machines, extended
markets, etc made things very complex. In addition, maintaining harmonious
relationship between the employer & the employees was a problem. These factors
brought the need of more thoughtful, resourceful and dynamic management.
Management on traditional lines became useless. Rule of thumb could no longer
exist. It had to be replaced by logical and rational principles, scientific approach
and psychological handling.

Despite the long history of management, it walked as a tortoise. Because of

low esteem to business in society

indifferent approaches of economists, political scientists psychologists,

sociologists, etc towards business organizations.

treatment of management as an art not as a science and

the attitudes that successful managers are born but not made.

These factors made management not develop and studied systematically and
scientifically. In the twentieth century, the situation had changed rapidly, some of
the factors that contributed to the need of a systematic management are:

The development of capitalism and the emergence of industries, mass production,

the concentration of workmen and organization of trade unions, the growing
competition for markets, technological innovations, the increase in capital
investment, increasing obsolescence of instruments of production etc. forced
organizations to be efficient or to find out ways for efficiency.

The complexities of organizations, society became more complex. These

complexities of society were generated by:

- The increasing size of organizations.

- High degree of division of labour & specialization

 - Increase in government regulations & controls.

- Organized trade-union activities &

- Pressure of various conflicting interest groups in society.

A few of the contributor of early influences are:

Robert Owen (1771-1858):

He was a successful textile mill manager in Scotland from 1800-1828. During

that time he carried out most of his experiments in the area of management. He
recognized that human resources were as valuable as financial & material
resources to the production of goods. He believed that factory workers would be
more productive if they were motivated through rewards rather than
punishments.

He experienced with several motivating techniques. Some of them were:

He improved working conditions with in the factory, i.e., providing

meals, bath facilities,

Housing & marketing facilities.

Reducing the workday to 10 ½ hrs. with no night work for children.

Refused to hire children under the age of 10.

Because of his emphasis on the workers, he is regarded as the father of modern

personnel management.
2. Charles Babbage /1792/1871/

He a British professor of mathematics, Charles Babbage become convinced that

the application of scientific principles to work processes would both increase
productivity and lower expenses. He was an early advocator of division of labor,
believing that each factory operation should be analyzed so that the various skills
involved in the operation could be isolated. He had also a strong understanding of
the importance of human resources as related to efficiency. He advocated profit-
sharing plans & bonus systems as ways to achieve better relations between
management & labor.

Despite the suggestions given by the early theorists, owners & managers did not
begin to raise the concern of the problem of material & human efficiency. They
raised the issue when markets were becoming saturated, demands for greater
profits and when competition was becoming keen. This emphasis on cutting costs
and increasing efficiency led to the emergency of the classical school of
management theory.

2.2 Classical Management Theory

Assumptions:

People are most responsive to economic incentives, i.e, they will rationally
consider opportunities made available to teem & do whatever is necessary to
achieve the greatest economic gain.

Classical management consists primarily of three streams of thought.

Scientific management of Frederic W.Taylor-concerned with productivity and the
management of work & workers.

Classical administrative management-concerned with administration-with

discussing universally applicable principles of management and the nature
and management of the total organization (the organization as a whole). It is
identified with the Frenchman Henery Fayol.

Bureaucratic theory – concerned with the bureaucratic organization and is

identified with a German author, Max Weber. He believed in one best
organizational structure – a highly formal and goal-oriented structure in
which human emotions, personal bias, and charismatic leadership are
subordinated to rational thinking and impersonal decision making.