Evolutin of Managemnt Thought

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Evolution of Management Thought


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Why Theory?

Provides a conceptual framework for organizing knowledge and providing ablueprint 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 managementare important.

Furthers the development of management practices. Avoiding the mistakes of others in the past.

Know how THEORY


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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 theefforts of large number of people in the production process necessaited the development ofmanagement theories and principles.

The need to increase efficiency and effectiveness has driven the evolution of managementtheory

Job specialization, the division of labor and the study of how people do things is central to thepursuit 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 issuein management thought


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Environmental factors Influencing Management Thought

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

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 organizationsattempt to compete in the worldwide marketplace.

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


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Chronological Development of Management Perspective


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Early Management Pioneers Robert Owen (17711858)

British industrialist who was one of the first managers to recognize theimportance 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 thecompliment 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.


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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 thatnecessary skill involved in each operation is isolated. So that each worker can be trainedin 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 alsoreduces the training time and improves the skill of efficiency of workers.

Further devised (profit sharing) plan under which bonuses were given for suggestionscontributed by employees and wages were based on the profits generated by thefactory. Modern day SCANLON PLAN under which workers offer suggestions to improveproductivity and then share the resulting profits, based on Babbage idea


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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.


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Major classification of Management Approaches Major contributors

Classical Approach Scientific Management Fredrick W.Taylor, Frank and Lillian Gillberth and Henry Giant

Bureaucratic Management Max Weber

Administrative Management Henri Fayol

Behavioral Approach Group Influence Mary Parker Follet

Hawthorne studies Elton Mayo

Maslows Need Theory Abraham Maslow

Theory X and Theory Y Douglas Mc Gregor.

Model 1 versus Model II Chris Argyris

Quantitative Approach Management Science

Operations Management

Management Information systems

Modern Approaches The Systems Theory

Contingency Theory

Emerging Approaches : Theory Zand Quality Management

William Ouchi


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Focuses on theindividual workers

productivity

Focuses on thefunctions ofmanagement

Focuses on the

overallorganizational

system

Sub fields on the classical Perspective of Management


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Classical Approach

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

Brief View of Classical Theories

Approach Rationale

Scientific Management One Best Way to do each job Job Level

Administrative Management One best way to put an Organization together Organizational Level

Bureaucratic Management Rational and Impersonal Organizational arrangements Organizational Level


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Scientific ManagementGot Popular in 1900s it is defined as a kind of Management which conducts a business oraffairs by standards established, by facts, or truths gained through systematicobservation,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 issueSolderingProblems". Soldiering refers to the practice of employees deliberately working at a pace Slowerthan 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 dealof wasted efforts


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4 Steps in Scientific ManagementDevelop 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 thejobs

Continue to plan the work, but use workers to actually get the work done.

Scientific Management Emphasizes onNeed 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 performedin a desired way


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Two Major Managerial practices that emerged from Taylors Approach1)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 setby 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 andunnecessary 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 producedeach day.

Objective is to ascertain simpler,easier,better way of performing a work.


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Three areas of focus:

Task PerformanceSupervisionMotivation

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 performa 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 forall of their production output.


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

They were considered as Father of Motion Study which involves finding out the best Sequenceand 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 whichallowed 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 workersincreased 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 andproductivity.

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


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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, hereceived a bonus.

Also introduced an incentive plan for foreman, who would be paid a bonus for each worker whoreached 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.


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Sm - Analysis

It focuses primarily on the work to be done. The scientific Management is the organizedStudy 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..

EngineeringPhilosophical

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 individualWorker. For the Human resources to be used productively, the individual operations mustBe analyzed, studied and improved and jobs be formed out of these operations which utilizesA 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 doerShould be two different people. No work can be performed better until and unless itIncludes both these elements." Advocating the divorce of the two is like demanding thatSwallowing food and digesting it be carried out in two separate bodies.


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Administrative TheoryThe study of how to create an organizational structure that leads to high efficiency and

effectiveness. Administrative management theory focused on principles that could beused by managers to coordinate the internal activities of Organsations.The mostprominent of the administrative theorists was Henry Fayol

French Industraislist.He is an prominent European management.Fayol believed that withscientific 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


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Limitations of Scientific Management

It did not focus on the management of an Organization from an managers point of view. Itfocuses on the solutions of problems from an engineer point of view.

Proponents of scientific management were of the opinion that people were rational andwere motivated primarily by the desire for material gain.

He overlooked the social needs of workers and overemphasized their economic and physicalneeds

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" modelbecame increasingly ineffective.


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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 balancesheets and compiling statistics.

Managerial : Planning,Organising,Comanding,Cordinating and Controlling

Fayol outlined 14 Principles of Management

-


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.

Order - The arrangement of employees in order to optimize value for the organizationand 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 organizationto 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 thedevelopment of skills that improve the organizations performance (it also makesemployees feel secure, but beware complacency)

Subordination of Individual Interest to the Common Interest: The interest of theorganization takes precedence over that of the individual employee.

Esprit de corps : Comradeship and shared enthusiasm foster devotion to the commoncause (the success of the organization).


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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 GERMANBureau meaning office referred to org that organsied on rationale basis,highy structured andformalized and impersonal org.

He observed that nepotism Hiring relatives regarding their competencies was prevalent ina 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 positionsshould be clearly specified.

Authority can be exercised effectively when positions are arranged hierarchically (themany- layered cake).

Managers must create a well-defined system of rules, operating procedures, and norms sothat workers know what is expected and managers can effectively control behavior.


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Rules formal written instructions that specify actions to be taken underdifferent circumstances

Standard Operating Procedures (SOPs) specific sets of writteninstructions about how to perform a certain aspect of a task

Norms unwritten, informal codes of conduct that prescribe how peopleshould act in particular situations IBM dress code in the 70s.


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Bureaucratic ManagementFocuses 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 ofmanagement that would be based upon impersonal and rational behaviorthe approach tomanagement now referred to as bureaucracy.

Division of labor

Hierarchy of authority

Rules and procedures

Impersonality

Employee selection and promotion


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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 herspecial personal qualities or abilities (e.g., Martin Luther King, Gandhi).

Rational-legal authority :Subordinate obedience based upon the position held by superiorswithin the organization (e.g., police officers, executives, supervisors).


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Figure Bureaucratic Hierarchical Power Structure


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The study of how managers should behave in order to motivate employees to achieveorganizational goals. Emphasized individual attitudes and behaviors, and group processes,

and recognized the importance of behavioral processes in the workplace. Acknowledged theimportance of human behavior in shaping management style.

Is associated with:

Mary Parker Follett (1863 1933) Emphasized group influences and advocated theconcept of Power sharing and Integration

Elton Mayo : (1880 1949) Laid the Foundation for the human relations movementRecognized the influence of group and workplace culture on job performance

Abraham Maslow(1908 11970) Advocated that humans motivated by a hierarchy ofneeds.

Douglas McGregor : ( 1906 1964) Differentiated employees and managers in toTheory X and Theory Y Personalities.

Chris Argyris : Classified Organizations based on employee set of values

Mary Parker Follet


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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 forceand 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 andSuggested 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 arguedthat power should not be based on the hierarchy, rather than based on co operationand should involve both superiors and subordinates. 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. Coordination is essential during the initial steps of any endeavor. Coordination must address all factors and phases of any endeavor.

ELTON MAYO


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ELTON MAYO

Focusing on Human relations Approach. Conducted experiments in Western Electric Hawthorne plant toevaluate the attitudes And psychological reactions of workers in, on the job situations conductedexperiments to examine the impact of illumination levels on workers productivity

Illumination Experiment :Change in the Illuminations of Lighting under two groups Experimental GroupAnd test group. Results were ambiguous, Productivity remained stable for both.

Relay Assembly Test room Experiments: working conditions of 6 women. They were supervised. in turnincrease in productivity regardless how the factors of under consideration were manipulated. Thisrecognized the importance of social relations among participants. Participants experienced more freedomfeeling importance because they were consulted on proposed changes. Concluded that employees wouldwork better if mgmt were concerned about their welfare and and a supervisors paid a special attention onthem.

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 telephonewiring to produce terminal banks. No change in physical working conditions. Workers were paid on thebasis of an incentive plan. pay increased as the output increased. Output stayed fairly constant level whichwas contrary to their expectations group acceptance appeared to be more important to the workersthan money

Ab h M l


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Abraham Maslow

Focusing on human needs . People were motivated by a hierarchy of needs, whichAre never completely fulfilled Physiological, safety belongingness or social needs ,esteem or statusneeds, self actualization

Physiological Needs

Food

Air

Water

Clothing

Basic Human Needs

Protection

Stability

Pain Avoidance

Routine/Order

Safety and Security Needs


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Social Needs Affection

Love and Belonging

Acceptance

Inclusion

Self-Respect

Self-Esteem Respected by Others

Esteem Needs


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Self-

Actualization

Needs

Achieve full potential

Fulfillment


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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 nolonger 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 higherorder needs

Maslow's need theory has received wide recognition, particularly among practicing managers.


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Theory XAssumes that employees dislike work,

lack ambition, avoid responsibility, and

must be directed and coerced to

perform.

Theory YAssumes that employees like work, seek

responsibility, are capable of making

decisions, and exercise self-direction and

self-control when committed to a goal.


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Douglas McGregor : challenging Traditional Assumptions about employees Developed Two assumptionson Human behavior Theory X and Theory Y The to theories reflect the two extreme sets of belief thatdifferent managers have About their workers. Theory X presents an essentially negative view ofpeople. Theory X mangers assumes that That workers are lazy have little ambition ,dislike work wantot avoid responsibly and need to be closely directed to make them work efficiently

The American psychologist, Douglas McGregor, studied leadership styles. McGregor argued thatmanagers operate from their personal view of how employees function. He separated managersinto two groups based on Maslow's Hierarchy of Needs. He related Theory X managers to lowerorder 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 incapableof 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-controland 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 tofar better results than authoritarian orders from above.

McGregor saw the two theories as separate entities. Theory Y is difficult to implement on the workfloor of a large mass production operation, but can be used by managing professionals. Hesuggested 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 higherlevel needs.


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Chris Argyris:

Matching human and organizationaldevelopment

Maturity Immaturity Theory

Integration of Individuals andorganizational goals.

Model I and Model II

P i t t th i h t fli t b t

Evolutin of Managemnt Thought

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