The Evolution of Management Theory

Learning Objectives
To understand how management theories develop To understand the impact of the environment to management thinking To gain insights into new management approach

Early Management Thought

Early ideas about management strategy
Sun Tzu (770-476 B.C.), The Art of War

Early ideas about leadership

Nicol Machiavelli (1469-1527), The Prince

Early ideas about the design and organization of work

Adam Smith, The Wealth of Nations
division of labor

Sun Tzu, Art of War

Shang Chang Ru Zhan Chang The marketplace is a battlefield

Sun Tzu, 4th century BC

Management and Machiavelli

New science of management lies in the the old art of government "to be a great pretender and dissembler." cunning and intrigue, the triumph of force over reason. "a prince" ought to have no other aim or thought, nor select anything else for his study, than war and its rules and discipline."

The Evolution of Management Theory

Contingency Approach Systems Theory

(Comprehensive Analysis of Management)

Management Approaches and the Environment

GENERAL ENVIRONMENT ECONOMIC SOCIAL OPERATING ENVIRONMENT

NEW ENTRANTS INTERNAL ENVIRONMENT PRODUCTION TECHNOLOGY STRUCTURE INPUTS SUPPLIER

SUBSTITUTES POLITICAL

COMPETITION TECHNOLOGY

CUSTOMER

LEGAL

The Classical Approach

The classical approach (ca1890) to management is a management approach that emphasizes organizational efficiency to increase organizational success. Environment in ca1890 Industrial revolution Autocratic management was the norm Science" as a solution to the inefficiencies and injustices of the period Idea of interchangeable parts

The Classical Approach

Scientific Management
Frederick W. Taylor Frank and Lillian Gilbreth Henry Gantt

Bureaucratic Management
Max Weber

Administrative Management
Henri Fayol

Taylors Four Principles of Scientific Management

1.

2.

3. 4.

Scientifically study each part of a task and develop the best method of performing the task. Carefully select workers and train them to perform the task by using the scientifically developed method. Cooperate fully with workers to ensure that they use the proper method. Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly.

Now one of the first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his mental makeup the ox than any other type
- Frederick Taylor

Key Characteristics of Webers Ideal Bureaucracy

Specialization of labor Formal rules and procedures Impersonality Well-defined hierarchy Career advancement based on merit

Fayols 14 Principles of Administrative Management

1. 2. 3. 4.

Division of work Authority Discipline Unity of command

8. 9.

Centralization Scalar chain

10. Order 11. Equity 12. Stability and

5.
6.

Unity of direction
Subordination of individual interest to the general interest Remuneration

tenure
13. Initiative

7.

14. Esprit de corps

Planning, Organizing, Commanding, Coordinating, Controlling

What are the limitations of the Classical Approach??

The Behavioral Approach

The behavioral approach (ca 1910) to management is a management approach that emphasizes increasing organizational success by focusing on human variables within the organization. Environment in ca1910
The Newtonian science that supported "the one best way" of doing things was being strongly challenged by the "new physics" results of Rutherford and Einstein In the work place there were strong pressures for shorter hours and employee stock ownership. As the effects of the 1929 stock market crash and following depression were felt, employee unions started to form

Behavioral Perspective

The Hawthorne Studies Human Relations Approach

Employee motivation
Abraham Maslow

Leadership style
Douglas McGregor

Hawthorne Effect:

The discovery that paying special attention to employees motivates them to put greater effort into their jobs.
(from the Hawthorne management studies, performed from 1924 1932 at Western Electric Companys plant near Chicago)

Maslows Hierarchy of Needs

Self-Actualization

Need for Self Esteem

Need for Social Relations Need for Security Physical Needs

McGregors Theory X and Theory Y Leaders and managers who hold Theory X assumptions believe that employees are inherently lazy and lack ambition.
A negative perspective on human behavior.

Leaders and managers who hold Theory Y assumptions believe that most employees do not dislike work and want to make useful contributions to the organization.
A positive perspective on human behavior.

What are the limitations of the behavioral approach?

The Management Science Approach

The management science approach (ca1940) is a management approach that emphasizes the use of the scientific method and quantitative techniques to increase organizational success. Environment in ca1940
Application of OR in solving complex problems in warfare (WWII) Significant technological and tactical breakthroughs Interest in manufacturing and selling after WWII

The System Approach

The system approach (ca 50s-60s) to management is a management approach based on general system theory--the theory that to understand fully the operation of an entity, the entity must be viewed as a system. This requires understanding the interdependence of its parts.

Environment in ca1950s to 60s Growing quality consciousness Total Quality Management

The Open Management System

GENERAL ENVIRONMENT ECONOMIC

SOCIAL

OPERATING ENVIRONMENT

NEW ENTRANTS SUPPLIER

PLANNING, ORGANIZING, INFLUENCING, CONTROLLING INPUT PROCESS OUTPUT SUBSTITUTES POLITICAL COMPETITION TECHNOLOGY CUSTOMER

LEGAL

The Contingency Approach

The contingency approach (ca 70s) to Management is a management approach that Emphasizes that what managers do in practice depends on a given set of circumstances--a situation. Environment in ca1970s
Emergence of new companies Apple Emergence of new products, IBM PC

Triangular Management

Triangular management is a management approach that emphasizes using information from the classical, behavioral, and management science schools of thought to manage the open management system.

Triangular Management Model

GENERAL ENVIRONMENT ECONOMIC

SOCIAL

OPERATING ENVIRONMENT

NEW ENTRANTS SUPPLIER

PLANNING, ORGANIZING, INFLUENCING, CONTROLLING INPUT PROCESS OUTPUT SUBSTITUTES POLITICAL COMPETITION TECHNOLOGY CUSTOMER

LEGAL

BEHAVIORALLY BASED INFORMATION

Type Z Organization (Theory Z by Ouchi 1981)

Theory Z (ca 80s) suggests that involved workers are the key to an increase in productivity and it offers offers ways to manage (collective decision making, slow evaluation and promotion, and holistic concern for people) so that they can work together more effectively.

Environment in ca1980s
Slow American productivity improvement Rise of Japanese companies Japanese management may offer solutions to this problem

Theory Z

Involved workers are the key to an increase in productivity.

From Theory Z by William Ouchi, 1981

Chaordic Organization (Chaos Theory) (Hock, Dee,1999)

Chaos theory (ca 90s) in management recognizes that events indeed are rarely controlled. Blending chaos with order Environment in ca1990s
Start of Internet age Highly competitive environment Emergence of communications technologies Emergence of new work practices (virtual teams, network organizations)

Chaordic Organizations
Purpose
Clarity

Principles, People, and Concept

of purpose and shared values Operate through network of equals, not hierarchies

Structure and Practice

From Birth of the Chaordic Age by Hock, D. 1999

How about Modern Management Approach?

Environment In the New Millennium

Environment in the millenium

Information and electronic age Information and knowledge is going to be readily available to us all Information speed through Internet The future is going to be dominated by our need to understand systems.

The Learning Organization Approach

The learning organization approach to management is the management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors.

From The Fifth Discipline by Peter Senge, 1990

Managerial Approach to Learning Organization

Managers must create an environment conducive to learning Managers encourage the exchange or information among organization members Managers promote
systematic problem solving Experimentation learning from experiences and past history learning from experience of others transferring knowledge rapidly throughout the organization
From The Fifth Discipline by Peter Senge, 1990

Building a Learning Organization

System Thinking
Every organization member understands his or her own job and how the jobs fit together to provide finals products to the customer

Shared vision
All organization members have a common view of the purpose of the organization and a sincere commitment to accomplish the purpose

Challenging of the mental models

Organization members routinely challenge the the way business is done and the thought processes people use to solve organizational problems
From The Fifth Discipline by Peter Senge, 1990

Building a Learning Organization

Team learning
Organization members work together, develop solution to new problems together, and apply the solutions together. Working as teams rather than than individuals will help the organization gather collective force to achieve organizational goals

Personal mastery
All organization members are committed to gaining a deep and rich understanding of their work Such an understanding will help organizations to reach important challenges that confront them
From The Fifth Discipline by Peter Senge, 1990

Learning Organization Approach

System thinking
(Systems Approach)

Personal mastery
(Theory Z/Behavioral)

Building a Learning Organization

Shared Vision
(Chaordic Organization)

Team Learning
(Theory Z/Behavioral)

Challenging of Mental models

(Classical/Management science)

Business Process Management Approach

The business process management approach to management is a method of efficiently aligning an organization with the wants and needs of clients. It is a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility and integration with technology. As organizations strive for attainment of their objectives, BPM attempts to continuously improve processes the process to define, measure and improve your processes a process optimization' process. This is actually a slow advance in process management: Record Management Workflow - 1970 Business Process Re-engineering (BPR) - 1990 Business Process Management (BPR) - 2000

Western Management Theories

Is there an Asian Management Theory??

What is business management the Asian way?

Business tend to be small scale Time has no beginning and end Individualism is less relevant; managerial beliefs shift towards the autocratic end Conformity to socially acceptable behaviors is done through morality (e.g losing face) Oriental managers rely less on interpersonal confrontations Managerial decisions consider effects on othe rpeople Control of performance is less formal Maintaining and developing guanxi (connection and relationship
*From World Executive Digest by Redding & Martyn, 1984

Will Western Management work in Asia?*

Values and attitudes affect but do not invalidate the transfer of American management concepts Consequently, when we wish to transfer an effective device from one culture to another, careful attention should be given to underlying premises? Tools of management remain the same.** Economic and business philosophy are however, different.** Combination of general management, functional management, and communal organization and management..**
Photo from www.aim.edu.ph

*From World Executive Digest by William Newman, 1984 **From World Executive Digest by Sixto Roxas, 1981

Is there a Filipino Management Theory?? Are Western theories applicable in Philippine setting?

Are Western Theories Applicable in Philippine Setting?

The models and ideal types taught in Western-oriented MBA programs are based on certain assumptions, many of which are invalid in the Philippines. Although organizations here have most of the structures and formal procedures of Western business, actual dayto-day business processes and interactions necessarily proceed within the matrix of Filipino culture and values. Thus, the need for the Westerner to go "the extra mile" to understand what's really going on and adapt a culturally sensitive style of doing business.
- Clarence Henderson, Henderson Consulting International

What is Pinoy Management Theory??

No one Management Theory or Style. Under the formal organization are:
Informal organization Battlefield of behavioral styles among managers and employees Unknown cultural ambiance among peoples and systems

From Pinoy Management by Ernesto Franco, 1986

Weaknesses of Pinoy Workers

Walang bilib sa sarili (No confidence in oneself) Dikdik sa Colonial Mentality (Indoctrinated with Colonial Mentality) Masyadong relaks (Overly relaxed) Ningas-cogon (Not a follow-up people) Holiday mentality Lack of managerial and organizational effectiveness Lack of self-reliant tenacity
From Pinoy Management by Ernesto Franco, 1986

Pinoy Management
Kailangan may No. 2 (There is a need for No.2) Tsismis machine (Grapevine Machine) Kailangan may Hatchet Man (There is need for a Hatchet Man) Be an expert on timing Lumayo sa madalas matalo (Avoid losers) Gawin mong personal (Make it personal) NBA Style: One-on-one Power play. Laban (Fight) Be situational and contingent Umarte kang parang intelihente. Iyong laging nag-iisip Body language ang importante (Body language is important) Pag sinabing No, dapat No talaga
From Pinoy Management by Ernesto Franco, 1986

Pinoy Management Approaches

Management by Kayod (Realist Manager)
He wants quick action Hes an autocrat He is sigurista He has gut feel He knows how to use people

Management by Libro (Idealist Manager)

He is a thinker; technocrat; mabusisi; may sistema Matigas and ulo
From Pinoy Management by Ernesto Franco, 1986

Pinoy Management Approaches

Management by Lusot (Opportunist Manager)
He is galawgaw Walang konsensiya Mahilig sa lusot (Loves to get by) Mahilig sa ayusan

Ugnayan-Management (The Hybrid)

Has balance Contingency management style He is solid Marunong pumili (Chooses well) Pambihira talaga (Exceptionally gifted)
From Pinoy Management by Ernesto Franco, 1986

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