UNIT TWO

Management Theories
 Concept
Classical management theory (Scientific
management theory, Administrative management
theory and Bureaucratic theory)
Human Relation Approach
Behavioral management theory
Management science theory
System approach
Contingency approach
Contemporary perspective on
Scientific Management Theory
A theory that discards the traditional method of hit
and miss, rule of thumb and trail and error of
managing work and workers through the
application of scientific problem solving approach

The use of scientific method to determine the one

best way for a job to be done
 Scientific Management Theory
Cont’
Scientific management was developed to solve
two major problems

i. How to the of the average

output
increase worker?

ii. How to improve the efficiency of management?

 Principles of Scientific
Management
Science, not rule of thumb
Harmony, not conflict
Cooperation, not individualism
Scientific selection, training and development
of workers
Close co-operation between management
and workers
Equal division of work and responsibility
between
management and workers
 Contribution of Scientific
Management
Separation of planning function from its
execution
Differential wage plan
Necessity of training and development of
workers
Standardization of tools and equipments
Managers to plan in advance to the
work
 Limitations
Less humane and ignored social needs
Workers not allowed to take initiative
Economic man concept and undermine
informal relation
Exploitation to increase productivity
Administrative Management Theory
Henry Fayol, a French Industrialist and
mining engineer developed the theory
Scientific management focused on job
design and payment of workers
Administrative theory is focused on the
entire range of managerial performance
Henry Fayol’s 14 Principles
1. Division of Work: Specialization
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
interests to
the general interest
 Continue…
7. Remuneration: Salary
8. Centralization: Depends on capability of manager
9. Scalar chain (line of authority)
10. Order: Material order and social order
11. Equity: Equal treatment
12. Stability & tenure of personnel:
Retaining productive employees
13. Initiative: Encouraging employees to do assigned
task in better way
14. Esprit de corps
 Contribution of Administrative
Theory
1. Administrative management laid heavy emphasis
on universal principles of management.
2. This theory laid the foundation for the study of
management functions of planning, organizing,
staffing, directing and controlling.
3. Provide conceptual framework for analyzing the
management process
4. Isolated and analyzed management as a separate
discipline
 Limitations of Administrative
Theory
1. This theory has not paid proper
attention to human behavioral aspects in an
organization.

2. It has not considered the situational factors.

3. This principle is based on personal

experience and little observation.
 Difference between Scientific and
Administrative Theory
Bases of Differences Taylor Fayol
Human Aspect Disregards human aspect Pays due regards to
human elements. E.g:
Principle of
initiative, Espirit De’
Corps
Status Father of scientific Father of modern
management management
Efficiency and Stressed on efficiency Stressed on general
administration administration
Approach Micro approach as it Macro approach as it
focuses on factory only discusses general
principles of
management
Scope of principles Restricted to production Applicable in all
 Bureaucratic Theory
Max Weber a German Sociologist
developed it
A theory of authority structure and relations
Bureaucracy is a form of organization
characterized by division of labor, a clearly
defined hierarchy, detailed rules and
regulations and impersonal relations
Content of Weber’s Theory of
Bureaucracy
Job specialization: Jobs are broken down into
simple and routine tasks
Authority Hierarchy
Formal selection
Formal rules and regulations
Impersonality: Rules are applied uniformly
Career orientation
 The Bureaucracy
Strengths Weaknesses
Minimum duplication Obsessive concern
of personnel and with rules and
equipment regulations
Centralized decision Neglects informal
making relation
Selection and Slow in
placement based on communication
technical competence
System of rules and
regulations
 HUMANS RELATION AND
BEHAVIOURAL SCIENCE SCHOOL
Classical theory: Human being as means of
production and productivity
The classical organization theory failed to
recognize the significance of human element
Assumption of human relation and behavioral
science school : Workers should not be treated as
mere factors of production but should be
considered as human beings.
 HUMANS RELATION AND
BEHAVIOURAL SCIENCE SCHOOL
 Successful management largely depends on a
manager’ s ability to understand and work with
and through people who differ in culture,
perceptions, needs and aspirations
 These theories can be studied through
Human relation approach which studies the
importance of individuals within the
organizations.
Behavioral science approach which studies
about the interpersonal relations and behavioral
patterns of each worker.
 Human Relation Approach
The human relations approach was stimulated by
a group of researchers from Harvard University
who conducted a series of studies among several
groups of workers at the Hawthorne plant of the
Western Electric Company in Chicago.
 Human Relation Approach..cont’
 HAWTHORNE EXPERIMENT
Elton Mayo was the leader of this
experimental team
 These researchers undertook four
experiments at different time periods.
They are
i. Illumination experiment.
ii.The relay assembly test room experiment.
iii.Mass interviewing program.
iv. Bank wiring observation room experiment.
 Illumination experiment.
Held in 1924 at Hawthorne plant and continued
for three years
Study was conducted to measure the effects of
lightning on the productivity of workers in
different departments of organization
Illumination constant for one group where as
varied for another group
Productivity increases not only due to
working
conditions, also because of better human
The Relay Assembly Test Room Experiment

Two groups of six female telephone relay

assemblers
Changes in one group: working hour, lunch,
etc where as constant working condition in
another group
Socio-psychological factors such as feeling
of importance, recognition, participation
and non-directive supervision are the key
for high worker productivity
 Mass Interviewing Program
20,000 workers were interviewed to elicit
information on their perceptions on the
working life
Importance of informal relations, social and
psychological needs influence the workers’
behavior and their productivity
 Bank Wiring Observation Room
Experiment
14 male workers were intensively observed for
seven months in the bank wiring room
Employee would labor hard if they believe that the
management was concerned about their welfare
and supervisors paid special attention and care to
them
Guided by group production norms
Productivity can be improved by social factors
such as moral and satisfactory relationships
between management and workers
 Contribution of Human Relation Theory

Employees are not motivated solely by money.

Personal and social factors are important to motivate
employee’ s attitudes toward their work.
Informal leaders play an important role in setting and
enforcing group norms.
The importance of recognizing the concept of “social
man” became unavoidable.
Management must understand and
recognize
interpersonal and group relations on the job.
 Limitations of Human Relation
Theory
Human relation theory lacks adequate focus on work.
It lays all emphasis of interpersonal relations and
informal groups.
The human relation movement is anti individualist.
The discipline of the boss is simply replaced by the
discipline of the group.
Human relations tend to neglect the economic
dimension of work satisfaction.
 Behavior Science Approach
 Behavioral scientists have made notable
contribution to the management theory and
practice. They are
 Abraham Maslow Need Hierarchy Theory.

 Douglas McGregor Theory X & Theory Y.

 Frederick Herzberg Two Factor Theory.

 Hierarchy of Needs Theory
(Maslow)
Hierarchy of Needs Theory
There is a hierarchy of five needs—physiological,
safety, social, esteem, and self-actualization; as
each need is substantially satisfied, the next
need becomes dominant.
 Cont’
Developed by Abraham Maslow.
Lower-order and higher-order needs affect
workplace behavior and attitudes.
Lower-order needs:
Physiological, safety, and social needs.
Desires for physical and social well being.
Higher-order needs:
Esteem and self-actualization needs.
Desire for psychological growth and
development.
 Cont’
Hierarchy of needs theory
Deficit principle
A satisfied need is not a motivator of
behavior.
Progression principle
A need at one level does not become
activated until the next lower-level need is
satisfied.
Maslow Hierarchy of Need
Diagram
 Douglas McGregor Theory X and
Theory Y
Assumptions of Theory X
i.Employee dislike work and whenever possible,
will attempt to avoid it.
ii.Since employees dislike work, they must be
corrected, controlled or threatened with
punishment to achieve desired goals.
iii.Most workers place securities above all other
factors associated with work and will display
little ambition.
 Cont’
Assumptions of Theory Y
i.Work is natural activity like, like play or rest.
ii. People are capable of self-direction and self-
control if they are committed to objectives.
iii.People will become committed to
organizational objectives if they are rewarded for
doing so.
iv. Many people in general population have
imagination, ingenuity and creativity.
Herzberg’s Two Factor Theory or Dual
Factor Theory or Hygiene Theory of
Motivation
Two-factor theory
Developed by Frederick Herzberg.
The two factors are extrinsic (hygiene/
maintenance) and intrinsic
(motivators/satisfiers)
Hygiene factors:
Sources of job dissatisfaction.
Zero level motivation if maintained
properly
Hertzberg Two Factor Theory
Cont’
External to job
Money is the most important hygiene factor
Satisfier factors:
Elements of the job content- the job
itself Sources of job satisfaction and
motivation
 Contrasting Views of Satisfaction-
Dissatisfaction

Traditional View
Satisfaction Dissatisfaction

Herzberg’s View
Motivators Hygienes
Satisfaction No Satisfaction No Dissatisfaction Dissatisfaction
Herzberg’s Two-factor theory.
Contribution of Behavioral Science
School/Theory
This theory has identified the role of human
elements in organization.
It helps to identify all the needs of staff for
the success of management.
It has emphasized on non-
financial rewards.
It has also identified the
motivational
factors of employee.
 Limitations of Behavioral Science
School/Theory
 Neglected the economic dimension of job

satisfaction
 Lacks scientific validity

 It has not considered the situational

variables.
 Management Science Theory
Management science theory emphasizes on
application of mathematics and statistics for
taking decisions and for solving management
problems.
Linear Programming, game theory, sampling
theory, probability theory, simulation etc. are the
techniques that managers apply to solve resource
allocation problems.
 Continue…
Computers programs are used to
analyze the problems.
There are three main branches of
management science
i. Quantitative Management.
ii. Operations Management.
iii. Management Information system.
 Contributions of Management
Science Theory
i. It has provided managers with
plenty of decision – making tools and
techniques.

ii. It hascontributed in the areas

of production and operations
management.
 Limitations of Management
Science Theory
i. It ignores the of people,
importance relationship etc.

ii. It emphasizes on only the aspect of the

organization that can be computed in

numbers.
 SYSTEM APPROACH/THEORY
Studies management by putting all parts of an
organization together.

Is the unified view of management

Five scholars have contributed to the

development of this theory. They are: Ludwig
Bertalanffy, Kenneth Boulding, Norbert Weinus,
Herbert Simon, and Chester Barnard.
 SYSTEM APPROACH/THEORY

A system is defined as “a group of interrelated

parts acting together to accomplish a goal”.

All systems are composed of three basic

elements – inputs into the system, process of the
input, and generation of the output of the
system.

An organization involves input-conversion-

output process.
SYSTEM APPROACH/THEORY
 SYSTEM APPROACH/THEORY

Elements of a system theory are as follows:

i. Goal-orientation.
ii. Sub-systems.
iii. Open and Closed system.
iv. Synergy.
v. System Boundary.
vi. Flow of information.
vii. Feedback.
 Contributions of System Theory
Provides a conceptual framework for a

meaningful analysis of management and

organization.
 Highlights the importance of
environment.
Conceptualizes the interactions of various

parts of organization
Feedback can be used to bring about required
 Limitations of System Theory
Theory is criticized for being just an abstract
thinking.

Does not provide specific guidance on the

functions and duties of managers.
 Contingency / Situational/ Practical
Approach
Developed by Tom Burns, G.M. stalker, Paul
Lawrence and Jay Lorsch.
The best way to lead, plan, organize and
conduct managerial activities varies with the
situation
The concepts, tools, and techniques which are
highly effective in one situation, are not at all
effective in another situation.
The crucial message of contingency theory
is
that there is no one best way to manage.
 Contingency / Situational/ Practical
Approach
Some major contingency variables are:
i. Size of the organization.
ii. Task technology.
iii. Environmental uncertainty.
iv. Individual differences.
v. The geographical spread of the organization.
 Contributions of Contingency
Theory
i. Managers get help in innovating new and
better approaches to meet complex situations.

ii. It gives them the capability to think in

analytical, critical and multidimensional ways.

iii. Managers are given more freedom.

 CONTINGENCY APPROACH

Limitations of Contingency Theory

i. It fails to identify all the important

contingencies.

ii. It ignores human behavior aspects.

iii. It didn’t focus which tools should be used in

what situation.
Contemporary Perspectives on
Management
Workforce diversity Business process
Outsourcing reengineering
Knowledge Conflict management
management Stress management
Learning organization Participative
Time management management
Green management