Module-II

History of Management
Classical Approach
• Classical approach: first studies of management, which emphasized
rationality and making organizations and workers as efficient as
possible

• Scientific Management: Taylorism & Neo Taylorism

• General Administrative Theory: Administrative & Bureaucratic
Management
Scientific Management: F.W.Taylor
• Scientific management: an approach that involves using the scientific
method to find the “one best way” for a job to be done
Taylor’s Scientific Management Principles
1. Develop a science for each element of an individual’s work to replace
the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop the worker.
3. Heartily cooperate with the workers 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 does all work for which it is better suited
than the workers.
Neo Taylorism / Digital Taylorism
• New Taylorism is based on maximizing efficiency by
standardizing and routinizing the tools and techniques for
completing each task involved with a given job. It involves
management's use of technology to monitor workers and make
sure they are employing these tools and techniques at a
satisfactory level.
• It also involves the use of technology to monitor workers,
process, efficiency, productivity in order to ensure desired level
of outcome.
Scientific Management Criticism
1. Time and motion studies are not entirely scientific and there is no
“one best way” as two individuals can’t be expected to work in the
same way
2. Emphasis on floor level management and ignores problem solving and
decision making
3. Belief that economic incentive is strong enough to motivate workers –
man’s behaviour is not dictated only by financial needs
4. Emphasis on greater specialization tend to result in monotony of work
5. Taylor’s scientific theories & other scientific theories couldn’t develop
rapidly because they were criticized for their alleged treatment of
human beings as automations without attention to their needs
• General administrative theory: an approach to management that
focuses on describing what managers do and what constitutes good
management practice

• Principles of management: fundamental rules of management that

could be applied in all organizational situations and taught in schools
Fayol’s 14 Principles of Management
1. Division of work. Specialization increases output by making employees more
efficient.
2. Authority. Managers must be able to give orders, and authority gives them this
right.
3. Discipline. Employees must obey and respect the rules that govern the
organization.
4. Unity of command. Every employee should receive orders from only one superior.
5. Unity of direction. The organization should have a single plan of action to guide
managers and workers.
6. Subordination of individual interests to the general interest. The interests of any
one employee or group of employees should not take precedence over the
interests of the organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
Fayol’s 14 Principles of Management
8. Centralization. This term refers to the degree to which subordinates are
involved in decision making.
9. Scalar chain. The line of authority from top management to the lowest ranks is
the scalar chain.
10.Order. People and materials should be in the right place at the right time.
11.Equity. Managers should be kind and fair to their subordinates.
12.Stability of tenure of personnel. Management should provide orderly
personnel planning and ensure that replacements are available to fill vacancies.
13.Initiative. Employees allowed to originate and carry out plans will exert high
levels of effort.
14.Esprit de corps. Promoting team spirit will build harmony and unity within the
organization.
Bureaucratic Management: Characteristics of Weber’s Bureaucracy
Behavioural Approach
• The series of experiment
conducted between 1927-32 by
Elton Mayo and his associates at
Western Electrics Hawthorne
Plant:
➢Illumination Experiment ➢Relay
Assembly Test Room
➢Interviewing Process
➢Bank Wiring Observation Room
Contributions of the Behavioural Approach
• A business organization is not merely a techno-economic system but is also a
social system. Hence it is as important for it to provide social satisfaction to
the workers as to produce goods.
• There is no correlation between improved working conditions and high
production.
• The informal group and not the individual is the dominant unit of analysis in
organizations.
• Financial incentives alone can not increase the performance. Social and
psychological needs must also be satisfied in order to increase productivity.
• Employee-centred, democratic and participative style of leadership is more
effective then task-centred leadership.
Limitations of the Behavioural Approach
• Based on a wrong assumption that satisfied workers produce more.
• The theory saw only human behaviour as critical and ignored other
variables.
• Underplays the role of material rewards.
• Makes an unrealistic demand on the supervisor.
QUANTITATIVE APPROACH
• The use of quantitative techniques and statistic to solve complex
problems and improve decision making.

• The three main branches of the quantitative approach

are:
• Management Science,
• Operations Management
• Management Information System
Contd..
• MANAGEMENT SCIENCE:The management science approach
stresses the use of mathematical models and statistical methods for
decision-making.
• OPERATIONS MANAGEMENT:Operations management is an
applied form of management science. It deals with the effective
management of the production process –Inventory management, quality
assurance, work scheduling.
• MANAGEMENT INFORMATION SYSTEMS (MIS):A
management information system (MIS) is an information system used
for decision-making, and for the coordination, control, analysis, and
visualization of information in an organization
Contemporary approach
• Contemporary management is a modern approach to
overseeing a business and involves activities like planning,
decision-making and monitoring. This practice attempts to
establish goals that align with the interests of stakeholders
ranging from traditional investors to employees and customers.
Systems Approach
• Common pitfall of the older theories stress one aspect of
management at the expense of others
• Classical approaches emphasis “task” and “structure”
• Behavioral approaches emphasis “people”
• Quantitative approach emphasizes “mathematical decision making”
• Systems approach provides an integrated approach to management
problems. Its early contributors include Lawrence J. Henderson,
W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D.
Thompson.

• Helps in diagnosis of a problem and decide what tools or combination

of tools will do the job best 18
Key concepts of systems theory
• Inputs enter the system from the environment and leave the system as an output. The transformation process between
input and output is called throughput. Transformation processes can be classified into: Physical, Location, Exchange, Storage,
Physiological, Informational
• A system is a set of interdependent parts that together form a unitary whole that performs some function
• Input, Output and Processes are all dependent and interdependent on each others
• All the sub-systems are also dependent and interdependent on each other

• Central to this approach is the concept of holism

• Each part bears an interdepence on others and no part of the system can be analysed accurately and understood apart
from the system
• A system can be either open or closed
• Synergy: Output is a result of combined output of all its parts
• The whole system (subsystems working together as one system) is more productive and efficient than the sum of
its parts.
• Every system has a permeable boundary

19
Components of an Organizational System

• Inputs - Raw Materials, Human Resources, Capital,

Information, Technology
• A Transformational Process - Employee Work Activities,
Management Activities, Operations Methods
• Outputs - Products or Services, Financial Results, Information,
Human Results
• Feedback - Results from outputs influence inputs.
• The Environment - These components make up internal and
external factors that affect the system.
CONTINGENCY APPROACH

The contingency theory of leadership was proposed by the Austrian

psychologist Fred Edward Fiedler in his landmark 1964 article, "A
Contingency Model of Leadership Effectiveness.“
Contingency refers to the immediate contingent circumstances.
Effective organizations must tailor their planning, organizing,
leading, and controlling to their particular circumstances.
A contingency approach to management is based on the theory
that management effectiveness is contingent, or dependent, upon
the interplay between the application of management behaviors
and specific situations. In other words, the way you manage should
change depending on the circumstances.
EVOLUTION OF MANAGEMENT THOUGHTS
• The evaluation of management can be categorized in to different parts:
• Pre-Scientific Management Era (before 1880),
• Classical management Era (1880-1930),
• Neo-classical Management Era (1930-1950),
• Modern Management era (1950-on word).
Classical Management includes Scientific Management School(Taylorism
and New Taylorism), Administration Management School, and
Bureaucracy Management. Neo- classical Management includes Human
relation school and Behavioural Management School. Modern
Management includes Social system school, Decision theory school,
Quantitative Management School, System Management School, and
Contingency Management School.
Peter Drucker Management Theory

Peter Drucker is an influential Austrian-American author, mentor and

consultant who is considered the father of modern business
management.
The pillars of Drucker’s theory of management are decentralization,
prioritization of knowledge work, management by objectives,
and SMART goals.
Using his extensive experience as a consultant at the companies like
IBM, General Motors, and Procter & Gamble, Drucker wrote in
1954’s The Practice of Management, where he presented a holistic
approach to operating an organization and introduced a discipline of
business management
Management by Objective(MBO) –Peter
Drucker
Peter Drucker in his book Practice of Management (1954) , coined the term
MBO. Management by objectives (MBO) is a process in which a manager
and an employee agree on specific performance goals and then develop a
plan to reach them.
It is designed to align objectives throughout an organization and boost
employee participation and commitment. It is a management system in
which the manager and employees work together to develop areas of
responsibility for employees. The standards set forth are used as metrics to
determine an employees performance.
MBO was developed based upon the belief that employees perform better
when they understand what is expected of them. It allows the employee to
associate their individual efforts to the objectives of the organization.
Process of MBO
• Define Goals of an organizational
• Define the objectives of employees
• Continuously monitoring the progress and performance
• Performance evaluation
• Providing Feedback
• Appraisal of performance
BOUNDED RATIONALITY MODEL

•Bounded rationality is a concept proposed by Herbert A. Simon, an American political

scientist, in his 1957 book “Models of Man.” It states that humans base their decisions on
their limited knowledge and cognitive capacity.

•It goes against the common belief in economic models that people are fully rational and
capable of making logical decisions.

•Bounded rationality differs from the actual concept of rationality, which assumes humans
have complete knowledge of their alternatives and consequences.

•The bounded rationality decision-making model states that individuals choose satisfactory
results instead of the best.
 Bounded Rationality - a
Bounded Rationality theory that suggests that
Model there are limits upon how
rational a decision maker
can actually be

1. Managers suggest the first satisfactory alternative

Satisfice – to select the first alternative that is “good

enough,” because the costs in time and effort are too
great to optimize
 Bounded Rationality - a
Bounded Rationality theory that suggests that
Model there are limits upon how
rational a decision maker
can actually be
1. Managers suggest the first satisfactory alternative
2. Managers recognize that their conception of the
world is simple
3. Managers are comfortable making decisions without
determining all the alternatives
4. Managers make decisions by rules of thumb or heuristics
Heuristics – shortcuts in decision
making that save mental activity
Peter Senge (learning organization)
Peter Senge is the founding member of the Society for Organizational
Learning , a global community of corporations, researchers, and consultants
dedicated to the “interdependent development of people and their
institutions.”
He is the author of the widely acclaimed book “Review of 'the fifth discipline:
the art and practice of the learning organization 'published in the year 1990.
The 'Learning Organization' is a concept first described by Peter Senge as
“an organization where people continuously learn and enhance their
capabilities to create”.
It consists of five main disciplines: team learning, shared vision, mental
models, personal mastery and systems thinking.
The five disciplines of learning organizations
by peter senge are as follows

1.Building a Shared vision

2.Systems Thinking
3.Mental Models
4.Team Learning
5.Personal Mastery
Contd..
1. Building a Shared vision
• In learning organizations, the vision should be created
through interaction with the employees in the enterprise.
Many leaders have personal visions that lack transferring
them to a shared vision.
2. Systems Thinking
• Instead of focusing on individual issues, systems thinking
reflects the observational process of an entire system.
Managers have to understand that every action and
consequence is correlated with another. Senge encourages
managers to look at problems from a holistic perspective
Contd..
3. Mental Models-According to Peter Senge, the employees
must identify the values of the company and what the
business is all about.A correct understanding of who we are
will enable us to visualize where to go and how to develop
further. The organization has to be flexible in accepting
changes to new mental models and a new image of the
company.
4. Team Learning-To accomplish excellent functional team
dynamics, team-learning is a primary importance. It is the
discipline by which personal mastery and shared vision are
brought together.It is crucial for the workforce to consider its
colleagues as team members instead of rivals.
contd..
• 5. Personal Mastery-Personal mastery occurs when
an individual has a clear vision of a goal, combined with
an accurate perception of reality. The gap between the
vision and reality drives the employee to practice all
necessary related activities to realize the vision.
• This creative tension depends on a clear understanding
of current reality. For this reason, for personal mastery
and the related discipline of a shared vision, looking at,
and sharing the truth is a crucial fundamental.