Evolution of Management Thought

History of Management theoriesClassical SchoolBehavioral schoolIntegration and Contingency school of Management Other Contemporary/ Modern theories of Management

Management is Predominantly a Twentieth century Phenomenon

In the earlier years management could never get attention of researchers

The field of Business in which Management concepts were applied were held extremely low & unworthy of study

Indifferent attitude of other social scientists

Background

Post World War I & II - created a situation where people started of solution to problems – where limited resources could be applied in a better way

Problems/ Issues – Growing Competition, Complexity of handling large Business Organizations

Hence the need for Systematic Principles & concepts was felt

Increasing Competition - Technological Innovations & their dissemination

in Businesses Growing Technological Obsolescence Increase in Capital investment Freedom at national & international markets Increasing buyers

Recent Developments – Worldwide rivalry for Markets, Power & Progress…

Complexity of Managing Business –

Increasing size of Business organizations High degree of division of labour &

specialization Increased government regulations & control to

make businesses more socially-oriented Organized labour union activities to put

pressure on the management Pressure of various other conflicting interest

groups

Both growing Competition & complexity in Managing Business have demanded efficiency in the Management Process

Emergence of a variety of Approaches & orientations in management -

1. Classical Approach – Scientific/ Administrative /Operational Management

2. Neo Classical Approach – Human relations/ Social Systems Approach/ Decision Theory Approach/ Management Science Approach/ Human Behaviour Approach

3. Modern Approach – Systems Approach/ Contingency Approach

Classification of Management Thought…

Scientific Management Process Management

F.W Taylor Henri

Fayol

Bureaucracy

Max Weber

Classical Theory of Management

Frederick Winslow Taylor was an American mechanical engineer who sought to improve industrial efficiency

Taylor was one of the first management consultants. He was one of the first to have immense impact on the early development of Management

Frederick Taylor - ‘Father of Scientific Management’

Rising from the lowest to a high rank

gave him a number of opportunities to understand the problems and attitudes of workers and see the great possibilities for improving the quality of Management

Famous Work – ‘The Principles of Scientific Management’.

(apprentice/trainee common labourer Foreman Master Mechanic Chief Engineer of a Steel Company)

His primary concern was to increase productivity through greater efficiency in production and increased pay for workers

He emphasized on using science, creating group harmony and cooperation, achieving the maximum output and training workers

Essence of his theory…

1. Replacing the decisions based upon tradition and old rule-of-thumb with Science and organized procedures developed after careful study of an individual at work

2. Obtaining harmony in group action and develop a standard method for performing each job

3. Selection is based upon technical competence and experience

4. Training and development of workers to the fullest extent possible for their own and the company’s highest prosperity

Key objectives of the Theory –

5. Labour is defined and authority/responsibility is legitimized

6. Sprit of immense cooperation between workers and management to ensure that tasks are carried out in accordance with the scientifically devised procedures. Support workers by planning their work and eliminating interruptions

7. Actions and decisions are recorded to allow continuity and memory.

8. Managers follow rules/procedures to enable reliable/predictable behavior.

9. Management is different from ownership of the organization. Positions placed in hierarchy and under authority of higher level

10. Provide wage incentives to workers for increased output

Henri Fayol, a French management theorist is referred to as "the father of modern operational management theory".

He was one of the most influential contributors to modern concepts of management.

Fayol's work has stood the test of time and has been shown to be relevant and appropriate to contemporary management.

Henri Fayol - Modern Operational-Management Theory

Based largely on his own management experience, he developed his concept of administration

He derived 14 principles of management that were discussed in detail in his book - General and Industrial Management, widely considered a foundational work in classical management theory

1. Authority & Responsibility - The right to give orders/ issue commands and the power to extract obedience. There should be a balanced responsibility for this function

2. Specialization or Division of labour – Specialization allows individuals to build up experience and the continuous improvement in skills. It gives way to higher productivity and efficiency

3. Discipline - The workers should be obedient and respectful of the organization. The management should provide good leadership. There should be no slacking, bending of rules

Henry Fayol’s 14 Principles of Management

4. Unity of command - Employees should receive orders from one superior. There should not be any conflicting lines of command

5. Unity of direction – People engaged in the same kind of activities must have the same objectives in a single Plan. This is essential to ensure unity and coordination in the enterprise

6. Subordination of Individual Interests - When at work, only things related to work should be pursued or thought about

7. Remuneration - Employees receive fair payment for services, not what the company can get away with

8. Centralization - Consolidation of management functions. Decisions are made from the top

9. Chain of Superiors (line of authority) - A hierarchy is necessary for the unity of direction. It refers to the formal chain of command running from top to bottom of the organization. But it should not be over-stretched or consist of too many levels

10. Order – Social as well as material order is necessary. Both should stand at their prescribed places

11. Equity – In a running business a combination of kindliness and justice is needed. Treating employees well is important to achieve equity

12. Personnel Tenure – Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely

13. Initiative – Allowing all personal to show their initiative in some way is a source of strength for the organization

14. Esprit de corps – There should be harmony and cohesion/ consistency/commonality among personnel

It's a great source of strength in the organization. Fayol stated that for promoting esprit de corps, the

principle of unity of command should be observed along with teamwork, avoiding the dangers of divide and rule

Some of these ideas may seem self-evident today, but can be seen as being revolutionary in Fayol's time

Until today, his principles remain important as they continue to have a significant impact on current managerial thinking

Fayol's main contribution was the idea that management was not a talent related to genetic hereditary, but a skill that could be taught. (doesn’t flow down from generations but can be learned)

He created a system of ideas that could be applied to many areas of management and laid down basic rules for managing large organizations

Relevance in Today’s context

One of the most profoundly influential thinkers of the twentieth century

Born in Germany, became a lawyer, politician, scholar, political economist & sociologist

He founded/ co-founded a number of academic disciplines - public administration, organizational theory, modern study of

sociology He is often regarded as one of the 'founding fathers' of

sociology 

Theory of Bureaucracy -Max Weber

Max Weber disliked that many European organizations were managed on a “personal” family-like basis

Employees were loyal to individual supervisors rather than to the organization

Background…

Rationalization in sociology of religion, government, organizational theory/ behavior

Analysis of bureaucracy in Economy & Society is still central to the modern study of organizations

His most well-known contributions are often referred to as the 'Weber Thesis'.

Major works & Analysis

Organizations should be managed impersonally and that authority should not be based on someone’s personality

Important to have a formal organizational structure, where specific rules were followed

Should be something that was part of a person's job and passed from individual to individual as one person left and another took over (formal handover)

His Beliefs…

This non-personal, objective form of organization was called a bureaucracy

1. Large organizations & government

2. Represented by Rule-Following

3. Application

Bureaucracy

Structure & set of regulations in place to control activity

Standardized procedure that dictates the execution of most or all processes within the body, formal division of powers, hierarchy, and relationships

In practice the interpretation & execution of policy can lead to informal influence

Bureaucratic structure is the most efficient form of organizational structure for all types of organizations

Most Rational means of carrying out imperative control over human beings

Why Bureaucracy?? …..Positives

Features – Specialization, Hierarchy, Authority Rules, Impersonality & Trained Personnel,

Competence

1. Administrative Class Coordination Whole-time employees Payment of salaries based on the positions/levels Tenure is determined by the rules & regulations of the

organization Selection of employees based on their competence

2. Official Rules & regulations Standard operating procedures govern all

organizational activities to provide certainty, uniformity & facilitate coordination

Features of Bureaucracy

3. A well defined Hierarchy Positions structured - Permits the higher positions to

supervise & control the lower positions Serves as lines of communication & Delegation of

Authority Clear chain of command facilitates control & order

throughout the organization Offices with same amount of authority, with different

kinds of functions, operating in different areas of competence

Eg. Government organizations

Hierarchy is the system of ranking various positions in descending scale from top to bottom of the organization

4. Division of work & Specialization All responsibilities in an organization are specialized

so that each employee has the necessary expertise to do a particular task

Sphere of obligation to perform functions Ensures that no work is left uncovered

5. Impersonal relationships between managers and employees Managers should maintain an impersonal relationship

with employees so that favoritism & personal prejudice do not influence decisions

Decisions governed by rational factors

6. Official Record A bureaucracy needs to maintain complete files

regarding all its activities

7. Competence Not “who you know,” should be the basis for all

decisions made in hiring, job assignments, & promotions in order to foster ability and merit as the primary characteristics of a bureaucratic organization

consistent patterns of recruitment and stable linear careers

formal and informal networks that connecting employees

flows of information and cooperation

1. Hit by inefficiency & Overspecialization

2. Too many guidelines & rules led to their misuse/ contradiction

3. Decision-making became very slow

4. Closed System/Dogmatic - Delay in change, evolution and adaptation of old procedures to new circumstances. Not aware of its own mistakes & limitations

Criticisms

5. Inhuman – Bureaucratic Structure works like a machine. Human behiavour is neglected. No room for flexibility & innovation

6. Superior-subordinate relationships turned against congenial organizational climate. Hierarchy interfered with communication

7. Not allowing people to use common sense, as everything must be as is written by the law

Examples of everyday bureaucracies•Governments, •Armed forces, •corporations, •non-governmental organizations (NGOs), hospitals, •courts, •Ministries•Schools & Colleges

Human Relations – Organizational situation should

be viewed in all social, economic & technical terms

Analysis of the human factor in organizations

Behavioural Sciences Approach

Neo-Classical Theory of Management

Elton Mayo (psychologist) Roethlisberger (sociologist)

McGragor Maslow

A group of researchers undertook a series of experiments at the Hawthorne Plant for the General Electric Company in the 1920s. They set out to study the relationship between productivity & physical working

The experiments were conducted on factory workers to study the effects of lighting/ illumination on worker productivity Intensive & systematic Analysis of the Human factor

through experiments

Hawthorne Experiments – Background

It was found that productivity almost always increased initially after a change in illumination, but later returned to normal levels. Over a period of time changes in illumination had no measurable effect

The experiment was about to be declared as a failure when a second set of experiments began supervised by Harvard University professors, Fritz Roethlisberger & Elton Mayo

They experimented on other types of changes in the working environment like – Morale satisfactory interrelationships between members of

a work group a sense of belongingness

The researchers reported that they had accidentally found a way to increase productivity

The effect was an important milestone in industrial and organizational psychology & organizational behavior

It was found that Physical conditions or financial incentives had little motivational value

Results to the set of investigations to improve productivity

Work satisfaction depended to a large extent on the informal social pattern of the work group

The norms of cooperation and higher output were established due to a feeling of importance

They concluded that people's work performance is dependent on both social issues & job content

A tension/rift between –

could lead to conflict within organizations

Workers‘ - 'logic of sentiment'

& Managers‘ - 'logic of cost & efficiency'

Effective Management – Managing with the ability to understand human behavior, group behavior and interpersonal skills – motivating, counseling, leading and communicating

The phenomenon arising from the fact that ‘people are noticed’ has been known as the ‘Hawthorne Effect’

Hawthorne Effect’

1. Social factors in Output Organization is influenced by social norms Social characteristics determine the output &

efficiency Work groups provide mutual support and

effective resistance to management schemes to increase output

2. Group Influence - Formation of informal groups.

Workers are social beings – norms & behaviours

Groups formed to overcome shortcomings of formal relationships

Implications of Hawthorne Experiments

4. Conflicts – Between organization & groups, due to

incompatible objectives Maladjustment of workers Adjust of the individual in the

organizational structure

5. Communication Better understanding between

management & workers

6. Leadership & Supervision Means to direct a group behaviour Determining efficiency & output

These studies greatly added to our knowledge of human behavior in organizations and created pressure for management to change the traditional ways of managing human resources

The Human Relations Movement pushed managers toward gaining participative support of lower levels of the organization in solving organization problems

The Movement also fostered a more open and trusting environment and a greater emphasis on groups rather than just individuals (the value of teams)

1. The Hawthorne researchers did not give much attention to attitudes of people at workplace. They did not recognize forces like Class consciousness, role of unions, etc.

2. Looked upon the worker as a means to an end and not an end in himself. They assume acceptance of the management’s goals & look on the worker as the one to be manipulated by the management

Criticisms

1. Motivated by many needs 2. Logical thinking not possible always3. Interdependent - our behavior is often shaped by

the social context 4. Informal work group is a major factor in

determining attitudes & performance of individual workers

5. Management is only one factor affecting behavior; the informal group often has a stronger impact

6. Job roles are more complex than job descriptions. People act in many different ways not covered by job descriptions

Relevance in today’s context – Internal Communications/ HR

7. There is no automatic correlation between individual & organizational needs

8. Communication channels cover both logical/economic aspects of an organization and feelings of people

9. Teamwork is essential for cooperation and sound technical decisions

10. Leadership should be modified to include concepts of human relations

11. Job satisfaction will lead to higher job productivity

12. Management requires effective social skills, not just technical skills