Evolution of Management Thought

Session 3 & 4
 History of Management
• Management thought developed in the mid-
late 1800’s
• Ran parallel with the industrial revolution
– Prior to that time organizations were small
– Agrarian society moved to a mass production
society
 History of Management Thought
Quality Viewpoint

Contingency Viewpoint

Systems Viewpoint

Behavioral Viewpoint

Traditional Viewpoint

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Five Viewpoints of Management
• Classical- late 1800’s
– Bureaucratic, Scientific, Administrative
• Behavioral- 1930’s, 40’s, 50’s
• Systems-50’s, 60’s, 70’s
• Contingency-60’s, 70’s, 80’s
• Quality-80’s, 90’s
 Job Specialization and
the Division of Labor
Adam Smith (18th century economist)
–Observed that firms manufactured pins in
one of two different ways:
- Craft-style—each worker did all steps.
- Production—each worker specialized in
one step.
 Job Specialization &
the Division of Labor
Adam Smith (18th century economist)

– Realized that job specialization resulted in

much higher efficiency and productivity

– Breaking down the total job allowed for the

division of labor in which workers became
very skilled at their specific tasks.
• https://youtu.be/DfGs2Y5WJ14
 Frederick W Taylor: Scientific Management
(1856 – 1915)
• Father of ‘scientific management’ (Principles of Scientific Mgt-1911)
• He emphasized scientific approach
• Raise productivity through greater
efficiency
• He advocated:
– Replacing rule of thumb with science
– Obtaining harmony, rather than discord,
in group action
– Cooperation and not chaotic individualism
– Work for maximum output
– Develop workers to their potential
• https://www.mentimeter.com/s/2cdb5cbee79
817fa90266f86326f93a2/76ea11c462cb
 Frank and Lillian Gilbreth(1900)
• Frank is known for time and motion studies
• Lillian focused on the human aspects of work and the
understanding of workers personalities & needs.
• Studied fatigue caused by lighting, heating, and the
design of tools and machines.
• Time and motion studies
• Breaking up each job action into its components.
• Finding better ways to perform the action.
• Reorganizing each job action to be more efficient.
 Henry Fayol - Father of Modern
Management Theory
14- Principles of Management
• Division of Labor/ work: allows for job
specialization. Specialization increases
efficiency, efficiency improves productivity
and profitability in the organisation.
• Authority and Responsibility
– both formal and informal authority
resulting from special expertise.
• Unity of Command
– Employees should have only one boss.
 Fayol’s Principles of Management
• Line of Authority
–A clear chain of command from top to bottom of
the firm.
• Centralization
–The degree to which authority rests at the top of
the organization.
• Unity of Direction
–A single plan of action to guide the organization.
 Fayol’s Principles of Management
• Equity - The provision of justice and the fair and
impartial treatment of all employees.
• Order - The arrangement of employees where they
will be of the most value to the organization and to
provide career opportunities.
• Initiative - The fostering of creativity and innovation
by encouraging employees to act on their own.
 Fayol’s Principles of Management

• Discipline
–Obedient, applied, respectful employees are
necessary for the organization to function.
• Remuneration of Personnel
–An equitable uniform payment system that
motivates contributes to organizational success.
 Fayol’s Principles of Management
• Stability of Tenure of Personnel
–Long-term employment is
important for the development of
skills that improve the
organization’s performance.
• Subordination of Individual Interest
to the Common Interest
–The interest of the organization
takes precedence over that of the
individual employee.
Fayol’s Principles of Management
Esprit de corps
–Comradeship, shared enthusiasm foster devotion to
the common cause (organization).
• https://www.youtube.com/watch?v=D6LUg-
siJVs
 Behavioral Management Theory
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.
–Focuses on the way a manager should personally
manage to motivate employees.
 The Hawthorne Studies
Studies of how characteristics of the work
setting affected worker fatigue and
performance at the Hawthorne Works of the
Western Electric Company from 1924-1932.
1. Illumination Experiments(1924-1927)
-How varying levels of illumination (amount of light at the
workplace, a physical factor) affected the productivity.
2. Relay Assembly Test Room Experiments (1927-28)
-were designed to determine the effect of changes in various
job conditions on group productivity as the illumination
experiments could not establish relationship between
intensity of illumination and production.
3.Mass Interviewing Programme(1928-30)
-about 20,000 interviews were conducted
-to determine employees’ attitudes towards company,
supervision, insurance plans, promotion and wages.
4. Bank Wiring Observation Room Experiment(1931-
1932)
• To find out the impact of small groups on individuals.
• 14 male workers formed a group.
• Hourly wage was fixed on the basis of average output of
each worker.
• Group incentive plan
• Social pressure
 Conclusion
• Social Unit
• Group influence
• Group Behaviour
• Motivation
• Supervision
• Working condition
• Employee morale
• Communication
 Administrative Management
Theory
Administrative Management
– The study of how to create an organizational structure
that leads to high efficiency and effectiveness.
Max Weber
–Developed the concept of
bureaucracy as a formal system
of organization and
administration designed to
ensure efficiency and
effectiveness.
–Highly structured , formalized and
impersonal organisation.
 Weber’s
Principles of
Bureaucracy
 Rules, SOPs and Norms
• Rules – formal written instructions that specify
actions to be taken under different circumstances
• Standard Operating Procedures (SOPs) – specific
sets of written instructions about how to perform
a certain aspect of a task
• Norms – unwritten, informal codes of conduct
that prescribe how people should act in particular
situations
 Principles/Aspects of Bureaucracy
• Formal Rules for uniformity
• Impersonality in hiring, evaluation, etc. rather
than social status, or personality
• Division of labor into specialized areas
• Hierarchy
• Set Decision/Power Structure
 Negative View of Bureacracy
• Bureaucracies “strip all relations of content
but that which is strictly applicable to the
attainment of organizational ends” (Lincoln,
1982: 21)
• How we view bureaucracy?
– School
– Taxes
– Government
 Positive and Negative Aspects
• Positive aspects
– efficiency
– consistency
– set lines of communication
• Costs
– follows rigid rules for the sake of rules
– slow or change
– can’t respond to a dynamic environment
 Systems Approach
• Closed- limited interaction with the
environment, only at input and output portals.
• Open-systems- all parts of the organization
interact with the environment.
• Subsystems- parts within the organization
– groups (formal and informal), individuals,
departments, and divisions
 The Open-Systems View
Open System
–A system that takes resources for its external
environment and converts them into goods
and services that are then sent back to that
environment for purchase by customers.
INPUT-OUTPUT MODEL
Systems Approach to Management •Inputs
•Human, Capital, Managerial,
External Environment Technological & Others

Managerial
Knowledge, goals of Goal inputs of
Claimants & use of Claimants:
inputs •Employees
•Consumers, suppliers
Planning Facilitated •Stockholders
by communi •Governments
organizing •Community
-cation
Re-ener- •others
that also
-gising staffing links the org-
the
-nisation External environment
system
Leading with the • Opportunities
external • constraints
environment
Controlling Outputs:
-Products, services,
To produce Outputs Profits, satisfaction,
Goal integration
others
 Contingency Theory
• “There is no one best way to organize”
• The idea that the organizational structures and
control systems manager choose depend on—are
contingent on—characteristics of the external
environment in which the organization operates.
 Quality and Edward Deming
• Society has passed the point of concern with
quantity of production, because for the most
part quantity has been maxed-out
• Quality is now the issue when performance is
discussed
• Deming pioneered the quality movement, and
was ignored in the US
 Demming’s Story
• Developed the quality idea
• Was rejected by US companies
• Sold his ideas in Japan
• Japan excelled in automobile, and
technological quality
• US companies had to play catch-up in the
1980’s
 Demming’s Principles
• Quality at the beginning will lead to lower
costs and greater productivity in the long-run
• use of statistical methods to assess quality
• all employees are responsible for quality
checks
• leads to company image, lower costs, less
product liability
 Deming’s 14 Points
• Create constancy of purpose for improving products
and services.
• Adopt the new philosophy.
• Cease dependence on inspection to achieve quality.
• End the practice of awarding business on price alone;
instead, minimize total cost by working with a single
supplier.
• Improve constantly and forever every process for
planning, production and service.
• Institute training on the job.
 Deming’s 14 Points
• Adopt and institute leadership.
• Drive out fear.
• Break down barriers between staff areas.
• Eliminate slogans, exhortations and targets for the
workforce.
• Eliminate numerical quotas for the workforce and
numerical goals for management.
• Remove barriers that rob people of pride of
workmanship, and eliminate the annual rating or merit
system.
• Institute a vigorous program of education and self-
improvement for everyone.
• Put everybody in the company to work accomplishing
the transformation.
 Importance of Quality
Lower
Costs &
Positive Higher
Company Market
Image Share
QUALITY

Decreased
Product
Liability