THE EVOLUTION OF MANAGEMENT

THEORY

How Old is Management?

Why did different Theories Emerge? Better Utilization of Resources New Insights New Technologies New Social Trends ………

Theory Setting Purpose Focus

Scientific New

Industrialization Increase

Productivity People & Task

Administrative Large Firms System EfficiencySystem

Behavioral New Social Set up

Motivation of EmployeesPeople

The Evolution of Management Theory

1890 1940 1980 2000

Scientific Management

Scientific Management

Behavioral Management

Management Science

Organization Element

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Administrative

Behavioral

Taylor (Scientific Management)

Gilberths (Motion Studies)

Max Weber (Theory of Bureaucracy)

Fayol (Principles of Management)

Maslow (Human Needs)

Parker Follett (Org as Communities)

Douglas McGregor( Theory X and Y)

Chris (Personality & Organization)

Elton Mayo (Hawthorne Studies )

Scientific Management Theory

F. W. Taylor

1. Study and improve the way task are performed

2. Codify & Standardize the method

3. Match the Person with Task

4. Establish a fair level of performance and reward those who surpass it

The Gilberths

1. Break down each task into individual actions

2. Find better way to perform each action

3. Reorganize each action to be more efficient

Practical Lessons Learnt From Scientific Management

1. Make results-based compensation a performance incentive

2. Carefully design jobs with efficient work methods

3. Carefully select workers with the abilities to do these jobs

4. Train workers to perform jobs to the best of their abilities

5. Train supervisors to support workers so they can perform jobs to the best of their abilities

Application of Scientific Management

Franklin Motor Company used the scientific management process to increase its productivity.Previously it was producing 100 cars a month.After applying Scientific Management Processes, it managed to produce 1350 cars a month.

Administrative Management Theory

Fayol (Principles of Management) Max Weber (Theory of Bureaucracy)

1. Clear division of labor2. Clear hierarchy of

authority3. Formal rules and

procedures4. Impersonality5. Careers based on

merit

1. Division of labor2. Authority &

Responsibility3. Unity of Command4. Line of Authority5. Centralization6. Unity of Direction7. Equity 8. Order9. Initiative10. Discipline

11. Remuneration & Personnel

12. Stability of Tenure of Personnel

13. Subordination of individual interests to the common interest

14. Camaraderie

Exhibit 2–3 Fayol’s 14 Principles of Management

1. Division of work.2. Authority.3. Discipline.4. Unity of command.5. Unity of direction.6. Subordination of

individual interests to the general interest.

7. Remuneration.8. Centralization.9. Scalar chain.10. Order.11. Equity.12. Stability of tenure

of personnel.13. Initiative.14. Esprit de corps.

Fayol’s 14 Principles of Management published in 1949

1. Division of Work Specialization increases output by making

employees more efficient, i.e specialized work should be divided.

2. Authority Managers must be able to give order.

Authority gives them this right. Along with authority, however, goes responsibility.

3. Discipline Employees must obey and respect the

rules that govern the organization.

4. Unity of Command An employee should receive orders from one

superior only.

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.

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 mgt to the lowest

ranks is scalar chain.

Fayol’s 14 Principles of Management

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.

Fayol’s 14 Principles of Management

13. Initiative Employees who are 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.

Potential Benefits of Bureaucracy Efficiency Consistency Functions best when routine tasks are performed Performance based on objective criteria Most effective when

Large amounts of standard information have to be processed The needs of the customer are known and are unlikely to

change The technology is routine and stable (e.g., mass production) The organization has to coordinate the activities of employees

in order to deliver a standardized service/product to the customer

Potential Costs of Bureaucracy

Rigid rulesand

red tape

Protection of authority Slow decision making

Incompatible withchanging

technology

Incompatible with21st century workers’ values for freedom and participative

management

Human resource

approachesAssumption:People are

social and self-actualizing

Theory of human needs

Abraham Maslow

Hawthorne studies

Elton Mayo

Organizations as

communitiesMary Parker

Follett Theory X and Theory YDouglas

McGregor

Personality and

organizationChris Argyris

Organizations as communities – Mary Parker Follett

Groups and human cooperation:

Groups allow individuals to combine their talents for a greater good

Organizations are cooperating “communities” of managers and workers

Manager’s job is to help people cooperate and achieve an integration of interests

Bureaucracy of Max Weber○ An ideal, intentionally rational, and very

efficient form of organization ○ Based on principles of logic,

order, and legitimate authority

Organizations as communitiesForward-looking management insights:

• precursor of employee ownership, profit sharing, and gain-sharing

Making every employee an owner creates a sense of

collective responsibility

• precursor of systems thinkingBusiness problems involve a variety of

inter-related factors

• precursor of managerial ethics and social responsibility

Private profits relative to public

good

Basis of Distinction Theory X Theory Y

View of Humans

Creativity & Change

Direction

Linking of Work

Responsibility

Focus on Needs

Style of Leadership

Role of Incentives

Applicability

Negative Positive

Dislike Like

Need Direction Direct Themselves

Avoid Accept

Lack / Resist

Lower Level

Autocratic

Financial Incentives

Poor / Unskilled

Possess / Accept

Higher Level

Democratic

Non-financial Incentives

Rich / Skilled

Implication of Theory X and Theory Y

Theory X managers create situations where workers become dependent and reluctant

Theory Y managers create situations where workers respond with initiative and high performance central to notions of empowerment and self-management

Argyris’s theory of adult personalityManagement practices should accommodate the mature personality by:

1. Increasing task responsibility2. Increasing task variety3. Using participative decision making