Evolution of Management Thought

Know how THEORY

Why Theory? Provides a conceptual framework for organizing knowledge and providing a blueprint for action. Management theories, used to build organizations, are grounded in reality. Most managers develop their own theories about how they should run their organizations.

Why History? An awareness and understanding of historical developments in management are important. Furthers the development of management practices. Avoiding the mistakes of others in the past.

Overview - On Theory

Mid 1700s was the starting point for the development of management concepts and theories.

The rapid growth in the number of factories during this period and the need to contribute the efforts of large number of people in the production process necessaited the development of management theories and principles.
The need to increase efficiency and effectiveness has driven the evolution of management theory Job specialization, the division of labor and the study of how people do things is central to the pursuit of increased efficiency Theories about the best ways to motivate and control employees, have evolved

The study of the external environments impact on an organization has become a central issue in management thought

Environmental factors Influencing Management Thought

Economic Influences : The availability, production, and distribution of resources within a society

Social Influences : The aspects of a culture that influence interpersonal relationships.

Political Influences : The impact of political institutions on individuals and organizations.

Technological Influences: The advances and refinements in any of the devices that are used in conjunction with conducting business

Global Influences :The pressures to improve quality, productivity, and costs as organizations attempt to compete in the worldwide marketplace.

Chronological Development of Management Perspective

Early Management Pioneers

Robert Owen (17711858) British industrialist who was one of the first managers to recognize the importance of human resources and the welfare of workers. Proposed Legislative Reforms to improve working conditions of labor He believed that workers performance was influenced by environment In his own factory he introduced standard working day of 10/2 Hrs and refused to employ children under the age of 10. He improved basic conditions of his employees by ensuring basic amenities like better streets, houses, sanitation and setting up an educational establishment Recommended the use of Silent Monitor to openly rate an employees work Blocks of wood were painted in 4 different colors, each color signifying the compliment a certain level of accomplishment. Depending on productivity each color were attached to each machine. Believed that these open ratings instilled pride and encouraged healthy competition He expected other managers to improve workers and working living conditions. Managers best investment was in the workers. He was considered as the forerunner of the behavioral school because of his concern for human welfare.

Charles Babbage (17921871) English mathematician who focused on efficiencies of production through the division of labor, and the application of mathematics to management problems. He was an advocate in division of labor" Impressed by the idea of work specification. Believed, in each factory that operation should be thoroughly understood so that necessary skill involved in each operation is isolated. So that each worker can be trained in that particular skill and can make him responsible only for that particular production.

Work Specialization will help to improve physical strength but also mental strength also reduces the training time and improves the skill of efficiency of workers.
Further devised (profit sharing) plan under which bonuses were given for suggestions contributed by employees and wages were based on the profits generated by the factory. Modern day SCANLON PLAN under which workers offer suggestions to improve productivity and then share the resulting profits, based on Babbage idea

Andrew Ure and Charles dupin (17841873)

Advocated to the study of Management Ure British Academician. Dupin French Engineer. Ure Explained the principles and concepts of manufacturing. Dupin concentrated on Management Principles.

Henry Robinson Towne (18441924) Realized that good business skills are essential for running a Business Management should be separate field for Study.

Major classification of Management Approaches Classical Approach Scientific Management

Major contributors Fredrick W.Taylor, Frank and Lillian Gill berth and Henry Giant

Bureaucratic Management
Administrative Management Behavioral Approach Group Influence Hawthorne studies Maslows Need Theory

Max Weber
Henri Fayol Mary Parker Follet Elton Mayo Abraham Maslow

Theory X and Theory Y

Model 1 versus Model II Quantitative Approach Management Science Operations Management Management Information systems Modern Approaches The Systems Theory Contingency Theory Emerging Approaches : Theory Z and Quality Management

Douglas Mc Gregor.
Chris Argyris

William Ouchi

Sub fields on the classical Perspective of Management

Focuses on the individual workers productivity Focuses on the overall organizational system

Focuses on the functions of management

Classical Approach

Classical Management thought can be divided in to three separate schools. Scientific management administrative Management bureaucratic Management. Classical theories formulated principles for setting up and managing organizations. These views are labeled Classical because they form foundation for the field for management

Brief View of Classical Theories Approach

Scientific Management Administrative Management Bureaucratic Management

Rationale
One Best Way to do each job One best way to put an Organization together Rational and Impersonal Organizational arrangements

Focus
Job Level Organizational Level Organizational Level

Scientific Management
Got Popular in 1900s it is defined as a kind of Management which conducts a business or affairs by standards established, by facts, or truths gained through systematic observation,Experiment,reasoning. Emphasizes the Scientific study of work methods to improve the efficiency of workers

TAYLOR
Considered as Father of Scientific Management". Employed at Midvale Steel co" rise from Laborer Chief Engineer 6Years Experienced Person. Facing by a Grave issue Soldering Problems". Soldiering refers to the practice of employees deliberately working at a pace Slower than the capabilities

3 Main reasons
Workers faced that if they increased productivity, other workers would loose there jobs.
Faulty wage system employed by the organization encouraged them to work at a slow pace Outdated methods of working handed down from generation to generation led to a great deal of wasted efforts

4 Steps in Scientific Management

Develop a science to each element of the job to replace old rule of thumb methods Scientifically select employees and then train them to do the job.

Supervise the Employees to make sure they follow the prescribed methods for preparing the jobs
Continue to plan the work, but use workers to actually get the work done.

Scientific Management Emphasizes on

Need for developing a scientific way of performing each job.
Training and preparing workers to perform that particular job. Establish harmonious relations between management and workers so that the job is performed in a desired way

Two Major Managerial practices that emerged from Taylors Approach 1)Piece Rate System 2)Time and Motion Study Piece Rate Incentive System:
Wage system was one of the major reasons for soldering,toresolve the above he invented PRS Aimed at Rewarding the worker who produced the maximum output

Worker who met the established standards of performance would earn the basic wage rate set by management
If the workers output exceeded the set target his wages would increase proportionately This system motivate workers to produce more and thus help the organization to perform better

Time and Motion study Best way to perform each job. Here jobs are broken down in to small tasks or motions and unnecessary motions are removed to find out the best way for doing job. Each part of the job is studied to find the expected amount of goods that can be produced each day. Objective is to ascertain simpler,easier,better way of performing a work.

Three areas of focus:

Task Performance Supervision Motivation

Scientific management incorporates basic expectations of management, including:

Development of work standards Selection of workers Training of workers Support of workers

Taylor felt that a single supervisor could not be an expert at all tasks. As a result, each first-level supervisor should be responsible only workers who perform a common function familiar to the supervisor.

This became known as Functional Foremanship.

Taylor believed money was the way to motivate workers to their fullest capabilities. He advocated a piecework system in which workers pay was tied to their output. Workers who met a standard level of production were paid a standard wage rate. Workers whose production exceeded the standard were paid at a higher rate for all of their production output.

Frank and Lillian Gilberth (1868 1924) (1878 1972)

They were considered as Father of Motion Study which involves finding out the best Sequence and minimum number of motions needed to complete a task. Mainly involved in exploring new ways for eliminating unnecessary motions and reducing fatigue. He has devised 17 basic hand motions select,position,hold etc are called therbligs which allowed them to analyze the exact elements of a workers hand movements. He developed Micro Motion study where he experimented and analyzed carefully the brick layers job Job he reduced the motions from Brick laying from 181/2 to 4 by this Approach workers increased the number of bricks laid per day from 1000 to 2700 Lillian focused her attention on designing methods for improving the efficiency of workers. A strong proponent of better working conditions as a means of improving efficiency and productivity. Focused standard days with schedule lunch breaks and rest periods for workers. Strived for removal of unsafe working conditions and the abolition of child laborer

HENRY LAURENCE GANTT

His major workings were on Task bonus system and GANTT Chart.

Under this incentive plan if a worker completed the work fast i.e less than the standard time, he received a bonus.
Also introduced an incentive plan for foreman, who would be paid a bonus for each worker who reached there daily standard.

If all the workers under the foreman reached the daily standard, he would receive an extra bonus.
This helps to motivate foreman to train workers to perform their tasks efficiently. GANTT CHART : Compares actual and planned performance. Simple device to maintain production control It indicates the progress of production inn terms of time rather than on Qty.

Sm - Analysis It focuses primarily on the work to be done. The scientific Management is the organized Study of work, the analysis of work in to simplest elements. It is the systematic philosophy of worker and work. Scientific Management has two blind spots.. Engineering Philosophical Since work has to be divided into the simplest constituent motions, it should also Be arranged as a series of individual motions which should be carried by an individual Worker. For the Human resources to be used productively, the individual operations must Be analyzed, studied and improved and jobs be formed out of these operations which utilizes A workers specific talents. Second- Divorce of Planning from doing". Work becomes more effective and productive If it involves good amount planning. It would be absurd to say that the planner and doer Should be two different people. No work can be performed better until and unless it Includes both these elements." Advocating the divorce of the two is like demanding that Swallowing food and digesting it be carried out in two separate bodies.

Administrative Theory
The study of how to create an organizational structure that leads to high efficiency and effectiveness. Administrative management theory focused on principles that could be used by managers to coordinate the internal activities of Organsations.The most prominent of the administrative theorists was Henry Fayol French Industraislist.He is an prominent European management.Fayol believed that with scientific forecasting and proper methods of management, Scientific results were inevitable. According to Fayol,the business operations of an organization could be divided in to Six activities

Business Operations

Technical Activities

Commercial Activities

Financial Activities

Security Activities

Accounting Activities

Managerial Activities

Limitations of Scientific Management

It did not focus on the management of an Organization from an managers point of view. It focuses on the solutions of problems from an engineer point of view. Proponents of scientific management were of the opinion that people were rational and were motivated primarily by the desire for material gain. He overlooked the social needs of workers and overemphasized their economic and physical needs This theory also ignored the human desire for job satisfaction. As employees will look more for working conditions and job content rather than salary, principles of scientific management, which were based on the rational worker" model became increasingly ineffective.

 Technical : Producing and Manufacturing Products.

Commercial : Buying, Selling and Exchange

Financial: Search for and optimal use of Capital Accounting : Recording and taking stock of costs, profits and liabilities, maintaining balance sheets and compiling statistics. Managerial : Planning,Organising,Comanding,Cordinating and Controlling

Fayol outlined 14 Principles of Management

Equity - The provision of justice and the fair and impartial treatment of all employees.
Order - The arrangement of employees in order to optimize value for the organization and provide career opportunities. Initiative - The fostering of creativity and innovation by encouraging employees to act on their own. Discipline : Obedient, applied, respectful employees are necessary for the organization to function.

Equitable Remuneration of Personnel :An equitable and uniform payment system that motivates employees to contribute to organizational success.
Stability of Personnel Tenure: Long-term employment is important for the development of skills that improve the organizations performance (it also makes employees feel secure, but beware complacency) Subordination of Individual Interest to the Common Interest: The interest of the organization takes precedence over that of the individual employee. Esprit de corps : Comradeship and shared enthusiasm foster devotion to the common cause (the success of the organization).

Bureaucratic Management
School of Scientific Management.(1864 1920) major contributor to School of thought. Emphasizes the need for originations to function on rationale basis. Derived from GERMAN Bureau meaning office referred to org that organsied on rationale basis,highy structured and formalized and impersonal org. He observed that nepotism Hiring relatives regarding their competencies was prevalent in a managers formal authority derives from the position he holds in the organization. Position should be based on performance, not social standing or personal contacts

Weber felt that nepotism was grossly unjust and hindered the progress of individuals
The extent of each positions formal responsibilities and its relationship to other positions should be clearly specified. Authority can be exercised effectively when positions are arranged hierarchically (the many- layered cake). Managers must create a well-defined system of rules, operating procedures, and norms so that workers know what is expected and managers can effectively control behavior.

Rules formal written instructions that specify actions to be taken under different circumstances Standard Operating Procedures (SOPs) specific sets of written instructions about how to perform a certain aspect of a task Norms unwritten, informal codes of conduct that prescribe how people should act in particular situations IBM dress code in the 70s.

Bureaucratic Management
Focuses on the overall organizational system. Bureaucratic management is based upon: Firm rules Policies and procedures

A fixed hierarchy
A clear division of labor Max Weber (18641920).A German sociologist and historian who envisioned a system of management that would be based upon impersonal and rational behaviorthe approach to management now referred to as bureaucracy. Division of labor Hierarchy of authority

Rules and procedures

Impersonality Employee selection and promotion

Weber's form of Authority

Traditional authority : Subordinate obedience based upon custom or tradition (e.g., kings, queens, chiefs).

Charismatic authority :Subordinates voluntarily comply with a leader because of his or her special personal qualities or abilities (e.g., Martin Luther King, Gandhi).
Rational-legal authority :Subordinate obedience based upon the position held by superiors within the organization (e.g., police officers, executives, supervisors).

Figure Bureaucratic Hierarchical Power Structure

The study of how managers should behave in order to motivate employees to achieve organizational goals. Emphasized individual attitudes and behaviors, and group processes, and recognized the importance of behavioral processes in the workplace. Acknowledged the importance of human behavior in shaping management style.

Is associated with:
Mary Parker Follett (1863 1933) Emphasized group influences and advocated the concept of Power sharing and Integration Elton Mayo : (1880 1949) Laid the Foundation for the human relations movement Recognized the influence of group and workplace culture on job performance Abraham Maslow(1908 11970) Advocated that humans motivated by a hierarchy of needs. Douglas McGregor : ( 1906 1964) Differentiated employees and managers in to Theory X and Theory Y Personalities. Chris Argyris : Classified Organizations based on employee set of values

Mary Parker Follet. Focusing on Group influences Drawn conclusions that a key to effective management was co ordination. Felt that managers need to co ordinate and harmonize group efforts rather than force and coerce people.

Believed that mgmt is continuous and Dynamic Process

Felt that best decision would be made by people who were closest to the situation and Suggested that org should function on the principle of Power with" rather than power over Power according to Follet was the ability to influence and bring about a change. Also argued that power should not be based on the hierarchy, rather than based on co operation and should involve both superiors and sub ordinates. POWER SHARING. Mgrs should responsible fro keeping group together and ensuring tat org objectives are achieved through group interaction.

Four principles of Co ordination to promote effective work groups.

Co ordination requires that people in direct contact with one another. Co ordination is essential during the initial steps of any endeavor. Co ordination must address all factors and phases of any endeavor.

ELTON MAYO

Focusing on Human relations Approach. Conducted experiments in Western Electric Hawthorne plant to evaluate the attitudes And psychological reactions of workers in, on the job situations conducted experiments to examine the impact of illumination levels on workers productivity Illumination Experiment :Change in the Illuminations of Lighting under two groups Experimental Group And test group. Results were ambiguous, Productivity remained stable for both. Relay Assembly Test room Experiments: working conditions of 6 women. They were supervised. in turn increase in productivity regardless how the factors of under consideration were manipulated. This recognized the importance of social relations among participants. Participants experienced more freedom feeling importance because they were consulted on proposed changes. Concluded that employees would work better if mgmt were concerned about their welfare and and a supervisors paid a special attention on them. Interview Phase : 2100 people were interviewed. Where it explore the human behavior at work.3 years Bank Wiring Observation Room Experiment (1931 -32) : 14 participants asked to assemble telephone wiring to produce terminal banks. No change in physical working conditions. Workers were paid on the basis of an incentive plan. pay increased as the output increased. Output stayed fairly constant level which was contrary to their expectations group acceptance appeared to be more important to the workers than money

Abraham Maslow
Focusing on human needs . People were motivated by a hierarchy of needs, which Are never completely fulfilled Physiological, safety belongingness or social needs ,esteem or status needs, self actualization
Physiological Needs

Food Air Water Clothing Basic Human Needs

Safety and Security Needs

Protection
Stability Pain Avoidance Routine/Order

Social Needs

Affection
Love and Belonging Acceptance Inclusion

Esteem Needs Self-Respect Self-Esteem

Respected by Others

SelfActualization Needs
Achieve full potential Fulfillment

As each of these needs becomes substantially satisfied. the next need becomes dominant, The below diagram depicts that individual moves up the hierarchy. Maslows theory say that, although no need is ever fully gratified, a substantially satisfied need no longer motivates Maslow's separated the five needs in to higher and lower orders Psychological and safety needs were described as lower order, Social, esteem and self actualization were categorized as higher order needs Maslow's need theory has received wide recognition, particularly among practicing managers.

Theory X Assumes that employees dislike work, lack ambition, avoid responsibility, and must be directed and coerced to perform.

Theory Y
Assumes that employees like work, seek responsibility, are capable of making decisions, and exercise self-direction and self-control when committed to a goal.

Douglas McGregor : challenging Traditional Assumptions about employees Developed Two assumptions on Human behavior Theory X and Theory Y The to theories reflect the two extreme sets of belief that different managers have About their workers. Theory X presents an essentially negative view of people. Theory X mangers assumes that That workers are lazy have little ambition ,dislike work want ot avoid responsibly and need to be closely directed to make them work efficiently The American psychologist, Douglas McGregor, studied leadership styles. McGregor argued that managers operate from their personal view of how employees function. He separated managers into two groups based on Maslow's Hierarchy of Needs. He related Theory X managers to lower order needs in the hierarchy and Theory Y managers to higher order needs. Theory X managers assume that people are intrinsically lazy, take no responsibility, are incapable of self-discipline and only want security. People must be controlled and threatened before they will work. The autocratic leadership style is the only one that works. Theory Y managers assume that people like their work, are intrinsically motivated, have self-control and do seek responsibility. Employees can be consulted since individuals are emotionally mature, positively motivated towards their work; and see their own position in the management hierarchy. Managers will find that the participative approach to problem solving and decision making leads to far better results than authoritarian orders from above. McGregor saw the two theories as separate entities. Theory Y is difficult to implement on the work floor of a large mass production operation, but can be used by managing professionals. He suggested that management could use either theories to motivate employees in most other cases, but would gain better results using Theory Y rather than Theory X, because X appeals to higher level needs.

 Chris Argyris: Matching human and organizational development Maturity Immaturity Theory Integration of Individuals and organizational goals. Model I and Model II Points out the inherent conflict between