The Evolution of The Evolution of Management TheoryManagement Theory

Chapter 2Chapter 2

The driving force behind the The driving force behind the evolution of management theory evolution of management theory is the search for better ways to is the search for better ways to utilize organizational resources.utilize organizational resources.

The Evolution of Management The Evolution of Management TheoryTheory

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2000

Scientific Management Theory

Administrative Management Theory

Behavioral Management Theory

Management Science Theory

Organizational Environment Theory

The Pre-scientific Era (1000-The Pre-scientific Era (1000-1880)1880) Economy- AgrarianEconomy- Agrarian Level of workers- IlliterateLevel of workers- Illiterate Worker’s expectation- To take care of Worker’s expectation- To take care of

the familythe family Management tools & techniques- CrudeManagement tools & techniques- Crude Managerial role – No formal Managerial role – No formal

managementmanagement

Evolution of modern Evolution of modern management began management began in the late in the late nineteenth century, nineteenth century, after the industrial after the industrial revolution.revolution.

Economic, technical Economic, technical and cultural changesand cultural changes

Mechanization Mechanization changed systems changed systems

like crafts production like crafts production into large scale into large scale manufacturing, manufacturing, where semi or where semi or

unskilled workers unskilled workers operated operated

machineries. machineries.

Small-scale

Crafts ProductionLarge-scale

Mechanized Manufacturing

Managed by engineers who only had Technical orientation

Problems faced:

•How to handle people•Social problems relating to working together in large groups•How to increase efficiency of the worker-task mix

Job specialization and the Job specialization and the Division of LaborDivision of Labor

Famous economist, Famous economist, Adam SmithAdam Smith, , journeyed around journeyed around England in 1700’s England in 1700’s studying the studying the effects of effects of industrial industrial revolution.revolution.

Each worker responsible for All tasks

Each worker performed only 1 or a few tasks to

produce

Crafts-style Factory System

•Poorer performance•Few thousands p/d•Cannot be equally

Skilled in alltasks

•Better performance•48,000 pins p/d

•More skilled at theirtasks

Job Specialization Division of Labor

Increased EfficiencyBetter Organizational

performance

With insights gained from Adam With insights gained from Adam Smith’s observations, other Smith’s observations, other

managers and researchers began to managers and researchers began to investigate how to improve job investigate how to improve job

specialization to increase specialization to increase performance.performance.

They focused on how to They focused on how to organize and organize and control the work process. control the work process.

F.W. Taylor (1856-1915)F.W. Taylor (1856-1915) Scientific Management Scientific Management

The systematic study of The systematic study of relationships between relationships between people and taskspeople and tasks for for

the purpose of the purpose of redesigning the redesigning the work work processprocess to increase to increase

efficiency.efficiency.

Taylor believed that if the amount of Taylor believed that if the amount of time and effort that each worker time and effort that each worker

expends to produce a unit of output expends to produce a unit of output can be reduced by increasing can be reduced by increasing

specialization and division of labor, specialization and division of labor, the production process will become the production process will become

more efficient. more efficient.

Taylor’s PrinciplesTaylor’s Principles

1. Study the way 1. Study the way workers perform their workers perform their tasks, gather all tasks, gather all informational job informational job knowledge that knowledge that workers possess, and workers possess, and experiment with ways experiment with ways of improving how of improving how tasks are performedtasks are performed

2. Codify the new methods of 2. Codify the new methods of performing tasks into written rules performing tasks into written rules and standard operating procedures.and standard operating procedures.

3. Carefully select workers who 3. Carefully select workers who possess skills and abilities that possess skills and abilities that match the needs of the task, and match the needs of the task, and train them to perform the task train them to perform the task according to the established rules according to the established rules and procedures.and procedures.

4. Establish a fair or acceptable level 4. Establish a fair or acceptable level of performance for a task, and then of performance for a task, and then develop a pay system that provides develop a pay system that provides a reward for performance above the a reward for performance above the acceptable level.acceptable level.

This scientific management became This scientific management became nationally known, but the selective nationally known, but the selective implementation of the principles implementation of the principles created more harm than good.created more harm than good.

Workers felt that as their Workers felt that as their performance increased, managers performance increased, managers required them to do more work for required them to do more work for the same pay.the same pay.

Increases in performance meant Increases in performance meant fewer jobs and greater threat of fewer jobs and greater threat of layoffslayoffs

Monotonous and repetitiveMonotonous and repetitive Dissatisfaction Dissatisfaction

Ford Ford

Achieving the right mix of worker-Achieving the right mix of worker-task specializationtask specialization

Linking people and tasks by the Linking people and tasks by the speed of the production linespeed of the production line

Franklin Motor CompanyFranklin Motor Company

Redesigned the work process using Redesigned the work process using the scientific management the scientific management principles.principles.

Production increased from 100 cars a Production increased from 100 cars a month to 45 cars a day.month to 45 cars a day.

The GilbrethsThe Gilbreths

Frank Gilbreth (1868-1924)Frank Gilbreth (1868-1924)

Lilian Gilbreth (1878-1972) Lilian Gilbreth (1878-1972)

Time and Motion StudyTime and Motion Study

1.1. Break and analyze every individual Break and analyze every individual action necessary to perform a action necessary to perform a particular task into each of its particular task into each of its component actionscomponent actions

2.2. Find better ways to perform each Find better ways to perform each component actioncomponent action

3.3. Reorganize each component action Reorganize each component action so that it is more efficient-less cost so that it is more efficient-less cost of time and effortof time and effort

Their goal was to maximize the Their goal was to maximize the efficiency with which each individual efficiency with which each individual

task was performed.task was performed.

Study of FatigueStudy of Fatigue

How physical characteristics of the How physical characteristics of the workplace contribute to job stressworkplace contribute to job stress

Effects of lightingEffects of lighting Effects of heatingEffects of heating Effects of color of wallsEffects of color of walls Design of tools and machinesDesign of tools and machines

Present application of Present application of scientific managementscientific management

Managers analyse the basic work Managers analyse the basic work task to eliminate wasted motiontask to eliminate wasted motion

Hire the best qualified workers for a Hire the best qualified workers for a job.job.

Design incentive systems based on Design incentive systems based on out put.out put.

Provide proper work environment.Provide proper work environment.

Administrative Management Administrative Management TheoryTheory

Theory of BureaucracyTheory of Bureaucracy

Fayol’s Principles of ManagementFayol’s Principles of Management

Administrative ManagementAdministrative Management

The study of how to create an The study of how to create an organizational structureorganizational structure that that leads to high efficiency and leads to high efficiency and

effectiveness.effectiveness.

Theory of Bureaucracy Theory of Bureaucracy

Max Weber (1864-1920)Max Weber (1864-1920)

Developed the principles of Developed the principles of bureaucracy-a formal system of bureaucracy-a formal system of organization and administration organization and administration designed to ensure efficiency and designed to ensure efficiency and effectiveness. effectiveness.

System of written rules andSOPs that specify how

Employees should behave

Selection and evaluation System that rewardsEmployees fairly and

Equitably.

Clearly specifiedSystem of task andRole relationships

Clearly specified Hierarchy of

authorityA bureaucracy

Should have

5 Principles:5 Principles:

A Manager’s A Manager’s formal authorityformal authority derives derives from the from the positionposition he or she holds in he or she holds in the organizationthe organization

People should People should occupy positionsoccupy positions because of their because of their performanceperformance, not , not because of their social standing or because of their social standing or personal contacts.personal contacts.

The extent of each position’s formal The extent of each position’s formal authority and task responsibilitiesauthority and task responsibilities and and its relationship to other positions in an its relationship to other positions in an organization, should be organization, should be clearly clearly specifiedspecified..

AuthorityAuthority can be exercised effectively can be exercised effectively in an organization when positions are in an organization when positions are arranged arranged hierarchicallyhierarchically, so employees , so employees know whom to report to and who know whom to report to and who reports to them.reports to them.

Managers must create a well-defined Managers must create a well-defined system of system of rulesrules, , standard operating standard operating proceduresprocedures and and normsnorms so that they so that they can effectively control behavior can effectively control behavior within an organization.within an organization.

Rules Rules

Formal written instructions that specify Formal written instructions that specify actions to be taken under different actions to be taken under different circumstances to achieve specific circumstances to achieve specific

goals.goals.

Rule: At the end of the day employees Rule: At the end of the day employees are to leave their machines in good are to leave their machines in good order.order.

Standard Operating Standard Operating ProceduresProcedures

Specific sets of written instructions Specific sets of written instructions about how to perform a certain about how to perform a certain

aspect of a task.aspect of a task.

SOP: Specifies exactly how they should SOP: Specifies exactly how they should do so, which machine parts should do so, which machine parts should be oiled or replaced.be oiled or replaced.

Norms Norms

Norms are unwritten, informal codes of Norms are unwritten, informal codes of conduct that prescribe how people conduct that prescribe how people should act in particular situations.should act in particular situations.

E.g.: An organizational norm in a E.g.: An organizational norm in a restaurant might be that waiters restaurant might be that waiters should help each other if time should help each other if time permits.permits.

Fayol’s Principles of Fayol’s Principles of ManagementManagement

Henri Fayol (1841-1925)Henri Fayol (1841-1925)

14 Principles of 14 Principles of Management:Management:

1.1. Division of LabourDivision of Labour

2.2. AuthorityAuthority

3.3. DisciplineDiscipline

4.4. Unity of CommandUnity of Command

5.5. Unity of DirectionUnity of Direction

6.6. Subordination of individual interest to Subordination of individual interest to general interestgeneral interest

7.7. RemunerationRemuneration

1.1. CentralizationCentralization

2.2. Scalar chainScalar chain

3.3. OrderOrder

4.4. Equity (Friendly & fair to Equity (Friendly & fair to subordinates )subordinates )

5.5. Stability of tenure of PersonnelStability of tenure of Personnel

6.6. InitiativeInitiative

7.7. Esprit de Corps Esprit de Corps

1. Division of Labour1. Division of Labour

Job specialization and the division of Job specialization and the division of labour should increase efficiency. labour should increase efficiency. Pointed out the downside of too Pointed out the downside of too much specialization; so workers much specialization; so workers should be given more duties to should be given more duties to

perform.perform.

2. Authority 2. Authority

Managers have the right to give orders Managers have the right to give orders and the power to exhort and the power to exhort

subordinates for obedience.subordinates for obedience.

3. Unity of Command3. Unity of Command

An employee should receive orders An employee should receive orders from only one superior.from only one superior.

4. Centralization4. Centralization

Authority should not be concentrated Authority should not be concentrated at the top of the chain of command.at the top of the chain of command.

5. Unity of Direction 5. Unity of Direction

Those operations within the Those operations within the organization that have the same organization that have the same objective should be directed by only objective should be directed by only one manager using one plan. For one manager using one plan. For example the personnel department example the personnel department in a company should not have two in a company should not have two directors each with a different hiring directors each with a different hiring policy.policy.

6. Equity 6. Equity

Managers should be both friendly and Managers should be both friendly and fair to their subordinates.fair to their subordinates.

7. Order7. Order

Materials and people should be in the Materials and people should be in the right place at the right time. People right place at the right time. People should be in the jobs that they are should be in the jobs that they are

most suited to.most suited to.

8. Initiative 8. Initiative

Subordinates should be given the Subordinates should be given the freedom to conceive and carry out freedom to conceive and carry out

their plans, even though some their plans, even though some mistakes may result.mistakes may result.

9. Discipline 9. Discipline

Members in an organization need to Members in an organization need to respect the rules and agreement that respect the rules and agreement that govern the organization. govern the organization.

To Fayol, discipline results from good To Fayol, discipline results from good leadership, fair agreements and leadership, fair agreements and judiciously enforced penalties for judiciously enforced penalties for infractions.infractions.

10. Remuneration of 10. Remuneration of Personnel Personnel

Compensation for work done should be Compensation for work done should be fair to both employees and fair to both employees and

employers.employers.

11. Stability of Tenure of 11. Stability of Tenure of Personnel Personnel

A high employee turnover rate A high employee turnover rate undermines the efficient functioning undermines the efficient functioning

of an organization.of an organization.

12. Scalar Chain12. Scalar Chain

The line of authority from top The line of authority from top management to the lowest rankmanagement to the lowest rank

13. Subordination of Individual 13. Subordination of Individual Interests to the Common Interests to the Common

Interest Interest

Interests of employees should not take Interests of employees should not take precedence over the interests of the precedence over the interests of the

organization as a whole.organization as a whole.

14. Esprit de Corps 14. Esprit de Corps

Promoting team spirit will give the Promoting team spirit will give the organization a sense of unity. organization a sense of unity.

To Fayol, even a small factors should To Fayol, even a small factors should help to develop the spirit. He help to develop the spirit. He suggested, for example, the use of suggested, for example, the use of verbal communication instead of verbal communication instead of formal, written communication formal, written communication whenever possible.whenever possible.

Behavioral ManagementBehavioral ManagementTheoryTheory

The Work of Mary Parker FolletThe Work of Mary Parker Follet

The Hawthorn Studies and Human The Hawthorn Studies and Human RelationsRelations

Theory X and YTheory X and Y

Behavioral ManagementBehavioral Management

The study of how managers should The study of how managers should behave to behave to motivate employeesmotivate employees and and encourage encourage them to perform at high them to perform at high

levels and be committed to the levels and be committed to the achievement of organizational goals.achievement of organizational goals.

Mary Parker FolletMary Parker Follet

Mary Parker Follett advocated for a Mary Parker Follett advocated for a human relations emphasis.human relations emphasis.

Her work contrasted with the Her work contrasted with the "scientific management" of Frederick "scientific management" of Frederick W. Taylor.W. Taylor.

Mary Parker Follett stressed the Mary Parker Follett stressed the interactions of management and interactions of management and workers. workers.

Follett was one of the first to Follett was one of the first to integrate the idea of organizational integrate the idea of organizational conflict into management theory, conflict into management theory, and is sometimes considered the and is sometimes considered the "mother of conflict resolution.“"mother of conflict resolution.“

She coined the words "power-over" She coined the words "power-over" and "power-with" to differentiate and "power-with" to differentiate coercive power from participative coercive power from participative decision-making.decision-making.

She was of the view that She was of the view that authorityauthority should go with should go with knowledge.knowledge.

AdvocatedAdvocated involvement of workers in involvement of workers in job analysis and work development job analysis and work development process.process.

Managers of different departments Managers of different departments should communicate with each other should communicate with each other directly.directly.

Cross-functioningCross-functioning

The Hawthorne StudiesThe Hawthorne Studies

Hawthorn effect is the finding that a Hawthorn effect is the finding that a manager’s behavior or leadership manager’s behavior or leadership

approach can affect worker’s level of approach can affect worker’s level of performance.performance.

Human Relations MovementHuman Relations Movement

Advocates of the idea that supervisors Advocates of the idea that supervisors receive behavioral training to receive behavioral training to

manage subordinates in ways that manage subordinates in ways that elicit their cooperation and increase elicit their cooperation and increase

their productivity.their productivity.

Informal OrganizationInformal Organization

The system of behavioral rules and The system of behavioral rules and norms that emerge in a group.norms that emerge in a group.

Organization BehaviorOrganization Behavior

The study of the factors that have an The study of the factors that have an impact on how individuals and impact on how individuals and groups respond to and act in groups respond to and act in

organizations.organizations.

Theory X and Theory YTheory X and Theory Y

Douglas McGregor proposed that two Douglas McGregor proposed that two sets of assumptions about how work sets of assumptions about how work attitudes and behaviors not only attitudes and behaviors not only dominate the way managers think dominate the way managers think but also affect how they behave in but also affect how they behave in organizations. He named these two organizations. He named these two assumptions Theory X and Theory Y.assumptions Theory X and Theory Y.

Theory XTheory X

Assumptions:Assumptions: Average worker is lazyAverage worker is lazy Dislikes workDislikes work Will try to do as little as possibleWill try to do as little as possible Have little ambition and avoid Have little ambition and avoid

responsibilityresponsibility

Managers Who Accept Managers Who Accept Theory XTheory X

To keep performance high, workers To keep performance high, workers must be supervised closely and their must be supervised closely and their behaviors be controlled by means of behaviors be controlled by means of “the carrot and stick”-rewards and “the carrot and stick”-rewards and

punishments.punishments.

Design and shape work setting to Design and shape work setting to maximize control over workers’ maximize control over workers’ behaviors.behaviors.

Minimize the workers’ control over the Minimize the workers’ control over the pace of work.pace of work.

Focus is on development of rules, SOPs Focus is on development of rules, SOPs and a well-defined system of reward and and a well-defined system of reward and punishment to control behavior.punishment to control behavior.

Managers see little point in giving Managers see little point in giving autonomy to solve their own problems.autonomy to solve their own problems.

Managers see their role as closely Managers see their role as closely monitoring workers.monitoring workers.

Theory YTheory Y

Assumptions:Assumptions: Workers are not inherently lazyWorkers are not inherently lazy Do not naturally dislike workDo not naturally dislike work If given the opportunity, will do what If given the opportunity, will do what

is good for the organization.is good for the organization.

Characteristics of the work setting Characteristics of the work setting determine whether workers consider determine whether workers consider work to be a source of satisfaction or work to be a source of satisfaction or punishment.punishment.

Managers do not need to closely Managers do not need to closely control workers’ behavior.control workers’ behavior.

They exercise self-controlThey exercise self-control

““The limits of collaboration in the The limits of collaboration in the organization are not limits of human organization are not limits of human

nature but of management’s nature but of management’s ingenuity in discovering how to ingenuity in discovering how to

realize the potential represented by realize the potential represented by its human resources.” its human resources.”

Decentralize authorityDecentralize authority More control of workers over their More control of workers over their

jobsjobs Accountable for their jobs Accountable for their jobs Managers’ role is not to control but Managers’ role is not to control but

to provide support and advice and to to provide support and advice and to evaluate them on their abilityevaluate them on their ability

Management Science Management Science TheoryTheory

An approach to management that uses An approach to management that uses rigorous quantitative techniques to rigorous quantitative techniques to help managers make maximum use help managers make maximum use

of organizational resources.of organizational resources.

Quantitative TechniquesQuantitative Techniques

Operations ManagementOperations Management

Total Quality ManagementTotal Quality Management

Management Information SystemsManagement Information Systems

Organizational EnvironmentOrganizational EnvironmentTheoryTheory

The set of forces and conditions that The set of forces and conditions that operate beyond an organization’s operate beyond an organization’s boundaries but affect a managers boundaries but affect a managers

ability to acquire and utilize ability to acquire and utilize resources.resources.