EVOLUTION of Management THOUGHT Classical vs Neo-Classical Thoughts. Handout

EVOLUTION OFMANAGEMENT THOUGHT

Joemar T. Simon

EVOLUTION OF MANAGEMENT THOUGHT

STRUCTURE:

I. Learning Objectives

II. Historical Background

III. Classification of Management Theories

A. Classical Management Theory

a. Scientific Management

b. Administrative Management

c. Bureaucratic Organization

d. Limitations and Criticisms

B. Neo-Classical Management Theory

a. Human-Relations School

b. Behavioural Schools

c. Limitations and Criticisms


Learning Objectives:

to have a historical insight on the development of management thought

to outline the classical and neo-classical management theories

to identify the limitations or criticisms of the different theories

to check if such ideas are still applicable and evident nowadays


Historical Background



the concept and practice of management is manifested as early as 5000BC – military; church; etc.




management is characterized as authoritative (fear of punishment; fear of God; merit system)





Acknowledgement of human worth and individual knowledge, ability and skill during the Enlightenment and Renaissance periods





Acknowledgement of human worth and individual knowledge, ability and skill during the Enlightenment and Renaissance periods

Maximization of production (industrial revolution)


CLASSIFICATION OF

MANAGEMENT

THEORIES


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Classical Management


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Neo-Classical Management



1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Modern ManagementNeo-Classical Management



1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010



Scientific Management


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010




Administrative Management


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010





Bureaucratic Organization


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010






Human Relations School


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010







Behavioural School


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010







Behavioural School

Quantitative Approach


1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010







Behavioural School

Systems Approach



1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010







Behavioural School

Contingency Approach

Systems Approach



CLASSICAL MANAGEMENT THEORY

formative period: 1880 ‘s– 1930’s traditional management thought evolved as a result of the Industrial Revolution emphasis on the economic rationality of management and

organization includes 3 well-established theories:





Scientific Management Administrative Management





Scientific Management Administrative Management Bureaucratic Organization






primary contributions:






primary contributions: Application of science to the practice of management






primary contributions: Application of science to the practice of management Development of basic management functions






primary contributions: Application of science to the practice of management Development of basic management functions Articulation and application of specific management principles


SCIENTIFIC MANAGEMENT



founded by Frederick Winslow Taylor (other contributors/supporters: Henry Gantt; Frank and Lillian Gilbreth




based on the concept of planning of work to achieve efficiency, standardization, specialization, and simplification (“one best way”)





time-motion study





time-motion study “soldiering” – phenomenon of workers’

purposely doing their job below their capacity


BASIC PRINCIPLES OF SCIENTIFIC MANAGEMENT:

1. Development of a true science of management rather than following the “rule of thumb”

2. Scientific selection and training of workers

3. Proper remuneration for fast and high-quality work

4. Equal division of work and responsibility between manager and worker


LIMITATIONS AND CRITICISMS OF SCIENTIFIC MANAGEMENT:

1. ignoring human aspects of employment

2. working harder and faster would exhaust whatever work was available, causing lay-offs

3. With the “speed up” condition, constant undue pressures are on


ADMINISTRATIVE MANAGEMENT:



founded by Henry Fayol




concept based on several principles of management




concept based on several principles of management

emphasis on the role of administrative management


ACTIVITIES OF A BUSINESS ORGANIZATION:

1. Technical (production; manufacturing)

2. Commercial (buying; selling; exchange)

3. Financial (obtaining and using capital)

4. Security (protection of property and persons)

5. Accounting (balance sheet; stocktaking; statistics; controlling)

6. Managerial (planning; organizing; commanding; coordinating; controlling)


FAYOL’S 14 PRINCIPLES OF MANAGEMENT:

1. Division of Labor. The more people specialize, the more efficiently they can perform their work. This principle is epitomized by the modern assembly line.

2. Authority. Managers must give orders so that they can get things done. While their formal authority gives them the right to command, managers will not always compel obedience unless they have personal authority (such as relevant expertise) as well.

3. Discipline. Members in an organization need to respect the rules and agreements that govern the organization. To Fayol, discipline results from good leadership at all levels of the organization, fair agreements (such as provisions for rewarding superior performance), and judiciously enforced penalties for infractions.

4. Unity of Command. Each employee must receive instructions from only one person. Fayol believed that when an employee reported to more than one manager, conflicts in instructions and confusion of authority would result.



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

6. Subordination of Individual Interest to the Common Good. In any undertaking, the interests of employees should not take precedence over the interests of the organization as a whole.

7. Remuneration. Compensation for work done should be fair to both employees and employers.

8. Centralization. Decreasing the role of subordinates in decision making is centralization; increasing their role in decentralization. Fayol believed that managers should retain final responsibility, but should at the same time give their subordinates enough authority to do their jobs properly. The problem is to find the proper degree of centralization in each case.



9. The Hierarchy. The line of authority in an organization—often represented today by the neat boxes and lines of the organization chart—runs in order of rank from top management to the lowest level of the enterprise.

10. Order. Materials and people should be in the right place at the right time. People, in particular, should be in the jobs or positions they are most suited to.

11. Equity. Managers should be both friendly and fair to subordinates.

12. Stability of Staff. A high employee turnover rate undermines the efficient functioning of an organization.

13. Initiative. Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result.

14. Espirit de Corps. Promoting team spirit will give the organization a sense of unity. To Fayol, even small factors should help to develop the spirit. He suggested, for example, the use of verbal communications instead of formal, written communication whenever possible.


LIMITATIONS AND CRITICISMS OF ADMINISTRATIVE MANAGEMENT:

• some of the principles are contradictory (ex. unity of command vs. division of labor; limited span of control vs. Number of organizational levels should be kept at minimum)

• Fayol’s principles are not empirically tested• Fayol’s principles may result to the formation

of mechanistic organization structures, thus being insensitive to employees’ social and psychological needs


BUREAUCRATIC ORGANIZATION:

most influential contributor: Max Weber

this is based on the concept that the structure and design of an organization is characterized by a hierarchy of authority, and formalized rules and regulations that serve to guide the coordinated functioning of an organization

devoted to the principle of efficiency: maximizing output whilst minimizing inputs


BASIC PRINCIPLES OF BUREAUCRATIC ORGANIZATION:

1. Structure

2. Specialization

3. Predictability and stability

4. Rationality

5. Democracy


LIMITATIONS AND CRITICISMS OF BUREAUCRATIC ORGANIZATION:

1. Hierarchical relationships becomes important (senior level loose the power to govern) since decisions are pre-determined

2. due to impersonal nature of decision making (problems might not be given a concrete and applicable solution since an “outside party” is the one handling

3. Elimination of opportunity for bargaining and negotiations, thus people are pressured or required to follow to the norms regardless of individual differences

4. creation of parallel power structure


NEO-CLASSICAL MANAGEMENT THEORY

formative period: 1930 ‘s– 1960’s evolved as a reaction to Classical

Management Theory human oriented approach (with emphasis on

time needs, drives, behaviours and individuals’ attitudes

give birth to the concept of industrial psychology:






give birth to the concept of industrial psychology:Human Relations School






give birth to the concept of industrial psychology:Human Relations SchoolBehavioural School


BASIC PRINCIPLES OF NEO-CLASSICAL MANAGEMENT:

1. the individual as a distinct “social being”

2. the work group as an “informal organization”

3. The management as a “participative management”


Human Relations School:

founded by Elton Mayo (supported by F.J. Roethlisberger and William J. Dickson)

later became as “Organizational Behaviour” believed that there is an interrelationships

among members of an organization (conflict-free as possible)

satisfaction of members’ psychological needs should be the primary concern of the management

working environment has a significant effect with workers’ productivity


The Hawthorne Experiment

conducted to determine the relationship between working conditions and productivity

conclude that there is an existence of a strong informal groups

also conclude that employees’ behaviour at work is affected by non-economic factors

emergence of a “social person”


The “SOCIAL PERSON”

i. individuals are motivated by social needs

ii. individual’s sense of identity is obtained through interpersonal relationships

iii. work has become dissatisfying due to industrial progress and routinization

iv. individuals are more responsive to social forces of peer groups than management controls and incentives

v. individuals respond to provisions with regards to their social needs and acceptance offered by management


LIMITATIONS AND CRITICISMS OF HUMAN RELATIONS SCHOOL:

1. the weight of emphasis is directed to human variables as the only critical and ignoring other variables

2. undermines material rewards over symbolic rewards

3. formation of informal groups is unrealistic and not very common

4. still gearing towards production-oriented approach and not as employee-oriented


Behavioural School:

contributors: A. Maslow; R. Likert; C. Barnard; K. Lewin; D. McGregor; M.P. Follett; W. Bennis; G. Homans; C. Argyris; F. Herzberg

modern evolvement of “human relations approach” gives emphasis to psychological variables while

treating fulfilment of emotional needs as a way of achieving other primary economic goals

suggesting a more flexible organization structures with jobs match with the capabilities and aptitudes of average employees

concerned with “motivation”


LIMITATIONS AND CRITICISMS OF BEHAVIOURAL SCHOOL:

1. they are pushing that the design of work must keep pace with employee’s capabilities and aptitudes at the same time believed that employee desires diverse and challenging work

2. they preferred participative and group decision-making, process of self-direction and control instead of imposed control


END

EVOLUTION of Management THOUGHT Classical vs Neo-Classical Thoughts. Handout

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