THE EVOLUTION OF MANAGEMENT THEORY

 Management theory concerning appropriate management practices has evolved in modern

times. The so- called classical management theories emerged around the start of the
twentieth century. This include scientific management, which focuses on matching people
and task to maximize efficiency, and administrative management, which focuses on
identifying the principles that will lead to the creation of the most efficient system of
organization and management. Behavioral management theories, developed both before
and after the Second World War, focus on how managers should lead and control their
workforces to increase performance. Management science theory, developed during the
Second World War, has become more important as researchers have developed rigorous
analytical and quantitative techniques to help managers measure and control organizational
performance. Finally, theories were developed during the 1960s and 1970s to help explain
how the external environment affects the way organizations and managers operate.
 SCIENTIFIC MANAGEMENT THEORY
 Objectives:
-Is to improve economic efficiency especially labor productivity.
 Scientific Management
- Is the systematic study of relationship between people and task for
the purpose of redesigning the work process to increase efficiency.
 Job Specialization
- Is the process by which a division of labor occurs as different
employees specialized in different tasks over time.
 Division of Labor
- Is the separation of task in any economic system so that participants may
specialize.
 PRINCIPLES OF SCIENTIFIC
MANAGEMENT
Frederick Winslow Taylor (1856-1915)
 is best known for defining the techniques of Scientific Management.
 He believed that the production process would become more efficient if the amount of
time and effort that each employee spent to produce a unit of output (a finished good or
service) could be reduced.
 He noted that increased specialization and the division of labor could increase efficiency.
 He believed that the way to create the most efficient division of labor could best be
determined by means of scientific management techniques rather than intuitive or
informal rule-of thumb knowledge.
 Basis of his experiments and observations as manufacturing manager in a variety of
settings, he developed for principles to increase efficiency in the workplace.
 PRINCIPLES OF SCIENTIFIC
MANAGEMENT
 Principle 1. Study the way workers perform their task, gather all the informal job
knowledge that workers possess, and experiment with ways of improving the way tasks are
performed.
 Principle 2. Codify the new methods of performing tasks into written rules and standard
operating procedures.
 Principle 3. Carefully select workers so that they possess skills and abilities that match the
needs of the task, and train them to perform the task according to the established rules and
procedure.
 Principle 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.
 SCIENTIFIC MANAGEMENT
 THEORY
By 1910, Taylors system of scientific management had become known and, in many
instances, faithfully and fully practiced. However, managers in many organizations chose
to use the new principles of scientific management selectively. This decision ultimately
resulted in problems. For example, some managers using scientific management saw
increases in performance, but rather than sharing performance gains with employees
through bonuses as Taylor had advocate, they simply increased the amount of work that
each employee was expected to do. Thus employee found they were required to do more
work for the same pay. Employees also learned that increases in performance often
resulted in layoffs because fewer employees were needed. In addition, the specialized,
simplified jobs were often monotonous and repetitive and many employees became
dissatisfied with their jobs.
 SCIENTIFIC MANAGEMENT THEORY
 Scientific management brought many employees more hardship than gain and left them
with a distrust of managers who did not seem to care about their well-being. These
dissatisfied employees resisted attempts to use the new scientific management techniques
and at times even withheld their job knowledge from managers to protect their jobs and
pay.
 Taylor works has had an enduring effect on the management of production systems.
Managers in every organization, whether it produces goods or services, now carefully
analyze the basic tasks that must be performed and try to create work system that will
allow their organizations to operate most efficiently.
 ADMINISTRATIVE MANAGEMENT
THEORY

 Administrative Management
- the study of creating an organizational structure that leads to high
efficiency and effectiveness.

 Organizational Structure
- is the system of task and authority relationship that control how
employees use resources to achieve the organizations goals
 ADMINISTRATIVE MANAGEMENT
THEORY
 Max Weber, a German professor of sociology and Henri Fayol, French manager, developed an
efficient system of organizational administration.
 Max Weber (1864-1920) wrote his work at the start of twentieth century, when Germany was
undergoing its Industrial Revolution. To help Germany manage its growing industrial enterprises
at a time when it was striving to become a world power, Weber developed the principles of
bureaucracy.
 Bureaucracy
- A formal system of organization and administration designed to ensure
efficiency and effectiveness.
 Authority
- The power to hold people accountable for their actions and to make
decisions concerning the use of organizational resources.
 PRINCIPLES OF BUREAUCRACY
 Principle 1. In bureaucracy, a manager’s formal authority derives from the position he or she holds
in the organization.
In bureaucratic system of administration, obedience is owned to a manager, not
because of any personal qualities that he or she might possess – such as personality,
wealth, or social status – but because the manager occupies a position that is associated
with a certain level of authority and responsibility.
 Principle 2. In bureaucracy, people should occupy positions because of their performance, not
because of their social standing or personal contacts.
This principle was not always followed in Weber’s time and is often ignored today.
Some organizations and industries are still affected by social networks in which personal
contacts and relations, not job- related skills, influence hiring and promotional decisions.
 PRINCIPLES OF BUREAUCRACY
 Principle 3. The extent of each position’s formal authority and task responsibilities, and its
relationship to other positions in an organization, should be clearly specified.
When tasks and authority associated with various positions in an organization are clearly specified,
managers and employees know what is expected of them and what to expect from each other. Moreover, an
organization can hold all its employees strictly accountable for their actions when each person is
completely familiar with his or her responsibilities.
 Principle 4. For authority to be exercised effectively in an organization, positions should be arranged
hierarchically. This helps employees know whom to report to and who reports to them.
Managers must create an organizational hierarchy of authority that makes it clear (a) who
reports to whom and (b) to whom managers and employees should go if conflicts or problems arise.
 PRINCIPLES OF BUREAUCRACY
 Principle 5. Managers must create a well –defined system of rules, standard operating procedures
(SOPs) and norms so that they can effectively control behavior within an organization.
Rules, SOPs and norms provide behavioral guidelines that improve the performance of
a bureaucratic system because they specify the best ways to accomplish organizational
tasks. Rules are formal written instructions that specify actions to be taken under different
situations to achieve specific goals. SOPs are specific sets of written instructions on how
to perform a certain aspect of task. Norms are unwritten rules and informal codes of
conduct on how to act in particular situations.
Companies such as McDonalds and Wal-Mart have developed extensive rules and procedures to specify
the types of behaviors that are required of their employees, such as “Always greet the customer with a
smile”.
 PRINCIPLES OF BUREAUCRACY
 Weber believed that organizations that implement all five principles will establish a
bureaucratic system that will improve organizational performance. The specifications of
positions and the use of rules and SOPs to regulate how tasks are performed make it easier
for managers to organize and control the work of subordinates. Similarly, fair and equitable
selection and promotion system improve manager’s feelings of security, reduce stress, and
encourage organizational members to act ethically and further promote the interest of the
organization.
 If bureaucracies are not managed well, however, many problems can result. Sometimes,
managers allow rules and SOPs –”bureaucratic red tape”-to become so cumbersome that
decision making becomes slow and inefficient and organizations are unable to change When
managers rely too much on rules to solve problems and not enough on their own skills and
judgment, their behavior becomes inflexible. A key challenge for managers is to use
bureaucratic principles to benefit, rather than harm, an organization.
 FAYOL’S 14 PRINCIPLES OF
MANAGEMENT
 Henri Fayol (1841-1925) Frenchman and CEO of Comambault Mining
-He identified 14 principles that he believed to be essential to increasing the
efficiency of the management process
-The principles that Fayol and Weber set forth still provide a clear and
appropriate set of guidelines that managers can use to create a work setting that makes
efficient and effective use of organizational resources.
-These principles remain the foundation of modern management theory;
researchers have refined or develop them to suit modern conditions.
 FAYOL’S 14 PRINCIPLES OF
MANAGEMENT
1. Division of Labor – Job specialization and the division of labor should
increase efficiency, especially if managers take steps to
lessen employees boredom.
2. Authority and Responsibility – 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.
4. Line of Authority – The length of the chain of command that extends from
the top to the bottom of an organization should be limited.
5. Centralization – Authority should not be concentrated at the top of the
chain of command.
 FAYOL’S 14 PRINCIPLES OF
MANAGEMENT
6. Unity of Direction – The organization should have a single plan of action to
guide managers and employees.
7. Equity – All organizational members are entitled to be treated with justice
and respect.
8. Order- The arrangement of organizational positions should maximize
organizational efficiency and provide employees with satisfying career
opportunities.
9. Initiative – Managers should allow employees to be innovative and creative.
10. Discipline – Managers need to create a workforce that strives to achieve
organizational goals.
 FAYOL’S 14 PRINCIPLES OF
MANAGEMENT
11. Remuneration of Personnel - The system that managers use to reward
employees should be equitable for both
employees and the organization.
12. Stability of tenure of personnel- Long term employees develop skills that
can improve organizational efficiency.
13. Subordination of Individual Interest to the Common Interest – Employees
should understand how their performance affects the
performance of the whole organization.
14. Esprit de Corps – Managers should encourage the development of shared
feeling of comradeship, enthusiasm, or devotion to a
common cause.
 BEHAVIORAL MANAGEMENT
 Behavioral Management Theory
- is often called the human relations movement because it addresses the human dimension
of work.
 Behavioral Management
- the study of how managers should behave in order to motivate employees and
encourage them to perform at high levels and be committed to achieving organizational goals.
 Organizational Behavior
- the study of the factors that have an impact on how individuals and groups respond to
and act in organization.
 MASLOW’S HIERARCHY OF NEEDS
 Physiological needs. Physical needs necessary for maintaining basic human
well- being, such as food and drink.
 Safety needs. Needs include the need for basic security, stability,
protection, and freedom from fear.
 Belonging and love needs. The need for belonging and love emerges as a
primary motivator. The individual strives to establish
meaningful relationships with significant others
 Esteem needs. An individual must develop self confidence and wants to
achieve status reputation, fame and glory.
 Self actualization needs- Assuming that all the previous needs in the
hierarchy are satisfied an individual feels a need to find himself.
 Behavioral Management Theory
Theory Y
-positive assumptions about employees that lead to the conclusions that a manager’s
task is to create a work setting that encourages commitment to organizational goals and
provides opportunities for imagination, initiative and self direction.

Theory X
- negative assumptions about employees that lead to the conclusions that managers
task is to supervise them closely and control their behavior.
 Theory X, Theory Y
Theory X Theory Y
 Attitude  Attitude
People need to work and want to take an interest in it. Under right
People dislike work conditions.
 Direction  Direction

People would rather be directed. People will direct themselves towards target that they accept.
 Responsibility
 Responsibility
People will seek and accept responsibility under the right condition.
People would rather be directed
 Motivation
 Motivation Under the right conditions people are motivated by the desire to
realized their own potential.
People are motivated mainly by money
 Creativity
 Creativity
Creativity and ingenuity are widely distributed and grossly
Most people have little creativity underused.
 MANAGEMENT SCIENCE THEORY
 Is a contemporary approach to management that focuses on the use of rigorous quantitative
techniques to help managers make full use of organizational resources to produce goods
and services.
In essence, management science theory is a contemporary extension of scientific
management.
There are many branches of management science, each of which deals with a specific
set of concerns:
• Quantitative management uses mathematical techniques-such as linear and non- linear
programming, modelling, simulation, queuing theory, and chaos theory-to help managers
decide, for example how much inventory to hold at different times of the year, where to
build a new factory, and how best to invest an organizations financial capital.
 MANAGEMENT SCIENCE THEORY
 Operations management (or operations research) provides managers with a set of
techniques that they can use to analyze any aspect of an organization’s production system
to increase efficiency.
 Total Quality Management (TQM) –focuses on analyzing an organization’s input,
conversion, and output activities to increase product quality.
 Management Information System (MIS) – help managers design information systems
that provide information about events occurring inside the organization as well as in its
external environment – information that is vital for effective decision making.
All these subfields of management science provide tools and techniques that managers can use
to help improve the quality of their decision making and increase efficiency and effectiveness.
 ORGANIZATION AND ENVIRONMENT
THEORY

 Organizational Environment
- the set forces and conditions that operate beyond an organizations
boundaries but affect a manager’s ability to acquire and use resources.

Resources in the organizational environment include the raw materials and skilled people
that an organization needs to produce goods and services, as well as the support of groups-such
as customers who buy these goods and services-that provide the organization with financial
resources. The importance of studying the environment became clear after the development of
open-systems theory and contingency theory during the 1960s.
 The Open System View

 A system that takes in resources from its external environment and converts or
transform them into goods and services that are then sent back to that
environment, where they are bought by customers.
The system is said to be “open” because the organization draws from the
interacts with the external environment in order to survive; in other words, the
organization is open to its environment.
 A Closed System View

 In contrast, is a self- contained system that is not affected by changes that occur in its
external environment. Organizations that operate a closed system, that ignore the external
environment, and that fail to acquire inputs are likely to experience entropy, the tendency
of a system to dissolve and disintegrate because it loses the ability to control itself.

Researchers using the open systems view are interested in how the various parts of a
system work together to promote efficiency and effectiveness. Systems theorist like to argue
that “the parts are more than the sum of the whole”; they mean than an organization performs
at a higher level when its department work together rather than separately.
 CONTINGENCY THEORY
 The idea that manager’s choice of organizational structures and control system depends on-
and is contingent on- the characteristics of the external environment in which the
organization operates.
It was develop in the 1960’s by Tom Burns and G.M. Stalker in the United Kingdom and
Paul Lawrence and Jay Lorsch in the United States. Recognizing that organizations need to
acquire valuable resources, the crucial message of contingency theory is that there is no one
best way to organize: The organizational structures and the control systems that managers
choose depend on- and are contingent on- the characteristics of the external environment in
which the organization operates.
 CONTINGENCY THEORY
An important characteristics of the external environment that affects an organization’s ability to
obtain resources is the degree to which the environment is changing.
Changes in the organizational environment include: changes in technology, which can lead to the
creation of new products(such as compact discs) and results in the disappearance of existing
products (such as eight –track tapes); the entry of new competitors (such as foreign organizations
that compete for available resources); and unstable economic conditions. In general, the more
quickly the organizational environment is changing, the greater are the problems associated with
gaining access to resources and the greater is the manager’s need to find ways to coordinate the
activities of people in different departments in order to respond to the environment quickly and
effectively.
The basic idea behind contingency theory-that there is no one best way to design or lead an
organization-has been incorporated into other areas of management theory, including leadership
theories.