Chapter : 2

Management History

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 Learning Outcomes
Historical Background Of Management.
• Explain why studying management history is important.
• Describe some early evidences of management practice.
• Describe two important historical events that are significant to the
study of management.
Classical Approach.
• Describe the important contributions made by Frederick W.
Taylor and Frank and Lillian Gilbreth.
• Discuss Fayol’s and Weber’s contributions to management
theory.
• Explain how today’s managers use scientific management and
general administrative theory.
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 Learning Outcomes
Quantitative Approach.
• Explain what the quantitative approach has contributed to the field
of management.
• Describe total quality management.
• Discuss how today’s managers use the quantitative approach.
Behavioral approach.
• Describe the contributions of the early advocates of OB.
• Explain the contributions of the Hawthorne Studies to the field of
management.
• Discuss how today’s managers use the behavioral approach.
Contemporary Approach
• Describe an organization using the systems approach
• Discuss how the systems approach helps us understand
management.
• Explain how the contingency approach is appropriate for studying
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management.
management
 Historical Background of Management
• Studying history of management can help you
understand today's management theories and
practices
• Management has been practiced a long time
• Organized endeavors directed by people
responsible for planning, organizing, leading, and
controlling activities have existed for thousands of
years.
• The Egyptian pyramids, the Great Wall of China,
the Qutub Minar, and the Taj Mahal, for instance,
are tangible evidence that projects of tremendous
scope, employing tens of thousands of people,
were completed in ancient times
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 Historical Background of Management
• The pyramids are a particularly remarkable
example.
• The construction of a single pyramid occupied
more than 100,000 workers for 20 years.
• Who told each worker what to do? Who ensured
that there would be enough stones at the site to
keep workers busy?
• The answer is managers
• Regardless of what these individuals were called,
someone had to plan what was to be done,
organize people and materials to do it, lead and
direct the workers, and impose some controls to
ensure that everything was done as planned.
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 Historical Background of Management
• Two events are especially significant to
management history.
• First, Adam Smith published The Wealth of Nations
in 1776
• He argued the economic advantages that
organizations and society would gain from the
division of labor
• Smith concluded that division of labor increased
productivity by increasing each worker's skill and
dexterity, saving time lost in changing tasks, and
creating labor-saving inventions and machinery.

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 Historical Background of Management
• The second important event is the industrial
revolution.
• Starting in the late eighteenth century when
machine power was substituted for human power, it
became more economical to manufacture goods in
factories than at home.
• These large, efficient factories needed someone to
forecast demand, ensure that enough material was
on hand to make products, assign tasks to people,
direct daily activities, and so forth.
• That "someone" was managers, and these
managers would need formal theories to guide
them in running these large organizations.
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 Major Approaches to Management
In this chapter, we'll look at four major approaches to
management theory (See Exhibit 2-1):
1. Classical (Scientific management & general
administrative)
2. Quantitative
3. Behavioral (Early advocates, Hawthorne studies, &
organizational behavior)
4. Contemporary (Systems approach & contingency
approach)
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Exhibit 2–1 Major Approaches to Management

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 Classical Approach
• The first studies of management emphasized
rationality and making organizations and workers as
efficient as possible.
• These studies described as the classical approach.
• Two major theories comprise the classical approach:
- scientific management
- general administrative theory

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 Scientific Management
• Fredrick Winslow Taylor
- the “father” of scientific management
- Published Principles of Scientific Management (1911)
- This book described the theory of scientific management
i.e., the use of scientific methods to define the “one best
way” for a job to be done
- Taylor worked at the Midvale and Bethlehem Steel
Companies in Pennsylvania.
- Taylor's experiences at Midvale led him to define clear
guidelines for improving production efficiency
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 Scientific Management
- After scientifically applying different combinations of
procedures, techniques, and tools, Taylor succeeded in
getting that level of productivity
- He
- put the right person on the job with the correct
tools and equipment
- use a standardized method of doing the job
- Provide an economic incentive to the worker
- He developed four principles of scientific management (see
Exhibit 2-2) and argued that these principles would result in
prosperity for both workers and managers 12
 Exhibit 2–2 Taylor’s Scientific Management Principles
1. Develop a science for each element of an individual’s work,
which will replace the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the worker.
3. Heartily cooperate with the workers so as to ensure that all work
is done in accordance with the principles of the science that has
been developed.
4. Divide work and responsibility almost equally between
management and workers. Management takes over all work for
which it is better fitted than the workers
His ideas spread in the United States and to other countries
and inspired others to study and develop methods of
scientific management
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 Scientific Management
• Frank and Lillian Gilbreth
- Frank and his wife, Lillian, a psychologist, studied work to
eliminate inefficient hand-and-body motions.
- The Gilbreths also experimented with the design and use of
the proper tools and equipment for optimizing work
performance
- The Gilbreths were among the first researchers to use
motion pictures to study hand-and-body motions.
- They invented a device called a microchronometer that
recorded a worker's motions and the amount of time spent
doing each motion
- Wasted motions missed by the naked eye could be
identified and eliminated by this device 14
 Scientific Management
- The Gilbreths also devised a classification scheme to label
17 basic hand motions (such as search, grasp, hold), which
they called therbligs.

• How Do Today’s Managers Use Scientific Management?

– Use time and motion studies to increase productivity

– Hire the best qualified employees
– Design incentive systems based on output

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 General Administrative Theory

• General administrative theory focused more on

what managers do and what constituted good
management practice.
• The two most prominent individuals behind general
administrative theory were -
- Henri Fayol
- Max Weber.

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 General Administrative Theory
• Henri Fayol
- Fayol's attention was directed at the activities of all
managers
- He wrote from personal experience as he was the
managing director of a large coal-mining firm.
• Fayol described the practice of management as
something distinct from accounting, finance,
production, and other typical business functions
• He believed that management is an activity
common to all business endeavors, government,
and he developed 14 principles of management.
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(Exhibit 2-3)
General Administrative Theory

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 General Administrative Theory
• Max Weber
– German sociologist
– Developed a theory of authority based on an ideal type
of organization (bureaucracy)
– Bureaucracy is a form of organization characterized by
division of labor, a clearly defined hierarchy, detailed
rules and regulations, and impersonal relationships
– Ideal bureaucracy didn’t exist in reality
• Emphasized rationality, predictability, impersonality,
technical competence, and authoritarianism

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Exhibit 2–4 Weber’s Bureaucracy

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 General Administrative Theory
• How Today's Managers Use General Administrative
Theories:
- the functional view of the manager's job can be attributed
to Fayol
- Fayol’s 14 principles serve as a frame of reference from
which many current management concepts—such as
managerial authority, centralized decision making, and so
forth—have evolved.
- Weber's bureaucracy was an attempt to formulate an ideal
prototype for organizations
- Although his model isn't as popular today but in flexible
organizations of creative professionals—such as Infosys,
use some bureaucratic mechanisms to ensure that
resources are used efficiently and effectively. 21
 Quantitative Approach
• Quantitative Approach
– Also called operations research or management
science
– Evolved from mathematical and statistical
methods developed to solve WWII military
logistics and quality control problems
– Focuses on improving managerial decision
making by applying:
• Statistics
• optimization models
• information models
• computer simulations
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• Other quantitative Techniques
 Quantitative Approach
- Following are some examples of quantitative
techniques being applied to improve managerial
decision making -
• Linear programming is a technique that managers
use to improve resource allocation decisions
• Work scheduling can be more efficient as a result of
critical-path scheduling analysis.
• The economic order quantity model (EOQ) helps
managers determine optimum inventory levels.

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 Quantitative Approach
• Total Quality Management (TQM)
– Another area where quantitative techniques are being
used is known as total quality management
– TQM was inspired by W. Edwards Deming and Joseph
M. Juran in the 1950s
– It had few supporters in the US but were enthusiastically
embraced by Japanese organizations as Japanese
manufacturers began beating US competitors in quality
– TQM is a philosophy of management driven by continual
improvement in the quality of work processes and
responding to customer needs and expectations (See
Exhibit 2-5) 24
Quantitative Approach

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 Quantitative Approach

• How Do Today’s Managers Use Quantitative Approach?

- The quantitative approach contributes directly to

management decision making in the areas of planning and
control
- When managers make budgeting, queuing, scheduling,
quality control, and similar decisions, they typically rely on
quantitative techniques
- Specialized software has made the use of these
techniques less intimidating for managers, although many
still feel anxious about using them
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 Behavioral Approach
• Organizational Behavior (OB)
– The field of study that researches the actions
(behavior) of people at work is called
organizational behavior (OB).
– Much of what managers do today when managing
people—motivating, leading, building trust,
working with a team, managing conflict, and so
forth—has come out of OB

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 Behavioral Approach
• Early Advocates of OB
- Although a number of individuals in the early
twentieth century recognized the importance of
people to an organization's success, four stand out
as early advocates of the OB approach:
– Robert Owen
– Hugo Munsterberg
– Mary Parker Follett
– Chester Barnard
- Exhibit 2-6 summarizes their most important ideas.
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Exhibit 2–6 3.1. Early Advocates of OB

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 Behavioral Approach
The Hawthorne Studies:
• This is a series of studies conducted by the engineers at the
Western Electric Company Works in Cicero, Illinois in 1924.
• They wanted to examine the effect of various lighting levels
on worker productivity.
• Control and experimental groups were set up, with the
experimental group being exposed to various lighting
intensities, and the control group working under a constant
intensity.
• They found that
- As the level of light was increased in the experimental group, output
for both groups increased
- As the level of light was decreased in the experimental group, output
for both groups increased 30
 Behavioral Approach
• They concluded that lighting intensity was not directly
related to group productivity and that “something else” have
contributed to the results.
• In 1927 the engineers asked Harvard professor Elton Mayo
and his associates to join the study as consultants
• They did numerous experiments in the redesign of jobs,
changes in workday and workweek length, introduction of
rest periods and so on.
• Finally, they concluded that social norms or group
standards were the key determinants of individual work
behavior.

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 Behavioral Approach
Hawthorne Studies Contribution to Management:
• Scholars generally agree that the Hawthorne Studies had a
dramatic impact on management beliefs about the role of
people in organizations.
• Mayo concluded that people's behavior and attitudes are
closely related
– that group factors significantly affect individual behavior
– that group standards establish individual worker output
– that money is less a factor in determining output than are group
standards, group attitudes, and security.
• These conclusions led to a new emphasis on the human
behavior factor in the management of organizations.
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 Behavioral Approach
How Do Today’s Managers Use Behavioral Approach:

• The behavioral approach has shaped how today’s

organizations are managed
• From the way that managers design jobs to the way that
they work with employee teams to the way that they
communicate, we see elements of the behavioral approach
• Hawthorne Studies have provided the foundation for our
current theories of motivation, leadership, group behavior &
development, and numerous other behavioral approaches

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 Contemporary Approach
• Most of the early approaches focused on managers'
concerns inside the organization
• In the 1960s, management researchers began to
look at what was happening in the external
environment outside the boundaries of the
organization.
• Two contemporary management perspectives
- systems theory
- contingency approach

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 Systems Theory
• It wasn't until the 1960s that management researchers
began to look at systems theory and how it related to
organizations.
• System Defined as -
– A set of interrelated and interdependent parts arranged in
a manner that produces a unified whole.
• Basic Types of Systems
– Closed systems
• Are not influenced by and do not interact with their
environment (all system input and output is internal).

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 Systems Theory
– Open systems
• interact to their environments by taking in inputs and
transforming them into outputs that are distributed into
their environments

• Today, when we describe organizations as systems, we

mean open systems.
• Exhibit 2-7 shows a diagram of an organization from an
open systems perspective.

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Exhibit 2–7 The Organization as an Open System

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 Systems Theory
• The Systems Approach and Managers:
• How does the systems approach contribute to our
understanding of management?
- The System Approach –
- implies that coordination of work activities in the various
parts of the organization ensure that all these parts are
working together so that the organization's goals can be
achieved
- implies that decisions and actions in one organizational
area will affect other areas
- recognizes that organizations are not self-contained.
They rely on their environment for essential inputs and as
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outlets to absorb their outputs
 The Contingency Approach
• Contingency Approach Defined
– Also sometimes called the situational approach.
– There is no one universally applicable set of
management principles (rules) by which to manage
organizations.
– Organizations are individually different, face different
situations (contingency variables), and require different
ways of managing.

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 The Contingency Approach
• This approach is intuitively logical because
organizations and even units within the same
organization differ - in terms of size, goals, work
activities, and the like
• The way to manage "depends on the situation“
• Management researchers continue working to
identify these situational variables.
• Exhibit 2-8 describes four popular contingency
variables.
• The primary value of the contingency approach is
that it stresses that there are no simplistic or 40
universal rules for managers to follow.
 Exhibit 2–8 Popular Contingency Variables

• Organization size
• As size increases, so do the problems of coordination. For Example,
structure appropriate for an organization of 50,000 employees is likely to be
inefficient for an organization of 50 employees
• Routineness of task technology
• Routine technologies require organizational structures, leadership
styles, and control systems that differ from those required by
customized or non-routine technologies.
• Environmental uncertainty
• What works best in a stable and predictable environment may be totally
inappropriate in a rapidly changing and unpredictable environment.
• Individual differences
• Individuals differ in terms of their desire for growth, autonomy, tolerance
of ambiguity, and expectations.

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 Current Trends and Issues

• Globalization
• Ethics
• Workforce Diversity
• Entrepreneurship
• E-business
• Knowledge Management
• Learning Organizations

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 Current Trends and Issues (cont’d)
• Globalization
– Management in international organizations
– Political and cultural challenges of operating in a global
market
• Working with people from different cultures
• Coping with anticapitalist backlash
• Movement of jobs to countries with low-cost labor
• Ethics
– Increased emphasis on ethics education in college
curriculums
– Increased creation and use of codes of ethics by
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businesses
 Current Trends and Issues (cont’d)

• Workforce Diversity
– Increasing heterogeneity in the workforce
• More gender, minority, ethnic, and other forms of
diversity in employees
– Aging workforce
• Older employees who work longer and do not retire
• The increased costs of public and private benefits for
older workers
• An increasing demand for products and services related
to aging.
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 Current Trends and Issues (cont’d)
• Entrepreneurship Defined
– The process of starting new businesses, generally
in response to opportunities.
• Entrepreneurship process
– Pursuit of opportunities
– Innovation in products, services, or business
methods
– Desire for continual growth of the organization
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 Current Trends and Issues (cont’d)
• E-Business (Electronic Business)
– The work preformed by an organization using
electronic linkages to its key constituencies
– E-commerce: the sales and marketing aspect of an
e-business
• Categories of E-Businesses
– E-business enhanced organization
– E-business enabled organization
– Total e-business organization
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Exhibit 2–9 Categories of E-Business
Involvement

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 Current Trends and Issues (cont’d)

• Learning Organization
– An organization that has developed the capacity to
continuously learn, adapt, and change.
• Knowledge Management
– The cultivation of a learning culture where
organizational members systematically gather and
share knowledge with others in order to achieve
better performance.

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Exhibit 2–10 Learning Organization versus Traditional Organization

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 Terms to Know
• division of labor (or job • closed systems
specialization) • open systems
• Industrial Revolution • contingency approach
• scientific management • workforce diversity
• therbligs • entrepreneurship
• general administrative theory • e-business (electronic
• principles of management business)
• bureaucracy • e-commerce (electronic
• quantitative approach commerce)
• organizational behavior (OB) • learning organization
• Hawthorne Studies • knowledge management
• system 50