cjfs4870.weebly.comcjfs4870.weebly.com/.../2/6/0/0/26008916/history_of_management_t… · web...

The Leading Edge Forum Rethinking Management and Employee Engagement

A Brief H i story of Man a gem e nt Th e ory

Page | 1

Management, as a practical, everyday activity, originated as far back as man in his hunter-gatherer phase, organizing effective ways of achieving collective goals in a highly coordinated manner.

The linguistic origins of the word “management” lie in the Latin word for “hand”. In the sixteenth century, management had come to mean the act of controlling (“bringing to hand”) a horse or a wild animal. Ever since, the word has had strong connotations of control.

Management, as a theoretical discipline, dates back only to the end of the nineteenth century, when the first large industrial companies were founded, and the pressing problems of coordinating and controlling large numbers of people in the pursuit of a common set of goals first became apparent.

At about the same time, the first business schools were established in the United States to develop a normative theory of organizational administration.

A theory of management was felt to be necessary if the workplace were to be efficient and effective. Good theories, by linking causes to effects to yield a predictive model, can dramatically enhance the efficacy of practice. Management will be worthy of being called a profession only if it is based on a reliable and well-validated theory; and a field of study will be deemed theoretical only it yields law-like generalizations that relate particular forms of practice to calibrated levels of performance.

The ideal model is either engineering or medicine. Management theorists have attempted to create a set of organizational principles that would stand to management practice much as physics relates to engineering or biology to medicine.

Over the last century or so, many theoretical approaches have been adopted to make sense of organizational behavior, particularly the manner in which they are effectively administered. We shall divide these approaches into five

First Draft -20 August 2009 goh a r g od d ard @ a o l.com


“schools of management”: the classical, human relations, open systems, social action and contingency schools.

Page | 2 I. The C lassical Sc h o o l

The classical school, including writers such as Frederick W Taylor in America, Henri Fayol in France and Lyndall Urwick in England, chose to analyze the corporate organization in terms of its purpose and structure. Theirs was a normative theory, seeking to improve the efficiency of the organization by formulating rational rules of conduct.

Taylor, born in 1856, thought of himself as a scientist, bringing principles of rational and logical behavior into the design of the workplace. As the founder of what he chose to call “scientific management”, he placed particular emphasis on the technical specification of each person’s job and on the power of monetary rewards to motivate each job holder. He believed that there was “one right way” to perform any given task and that it was the prime responsibility of management to discover and specify the optimal method and then to ensure that it was followed to the letter. He advocated breaking a job down into its elemental parts, timing each part, and then reconfiguring the elements in a way that minimized time and maximized efficiency.

In a famous experiment during his time spent as a consultant to Bethlehem Steel, Taylor showed how careful redesign of the job of handling pig iron could increase productivity fourfold, justifying an increase in men’s wages by 60%.

Taylor believed that the rational re-engineering of the workplace would dramatically enrich the world, including the workers whose energies were now being applied in a far more efficient and purposeful manner. In this way, work would become more rewarding, both financially and emotionally.

“Taylorism”, as it has become known, has, since its inception, received strong criticism. It was said to drain work of its interest, to de-skill labour, to deny people pride in the work they did, to treat working men as mindless automata complying with the instructions given by others, and to place far too much power in the hands of a small cadre of managers. Studies showed that men who worked in these conditions felt demeaned and became resentful.



Above all, “Taylorism” emphasised the importance of management to productive working methods and effective organization. It gave huge power to managers in their relations with workers. It subjugated labor to capital, in thesense that working people were treated merely as factors of production to be Page | 3 exploited (or “optimized”) in the interests of shareholder value. Taylor waskeen to deny labor discretionary choice as to how they work was done. He was suspicious that they would put their interests above those of capital. For example, he observed the practice of “systematic soldiering” whereby workers conspired to keep managers in the dark as to how productive they could be if they chose to be. As a result, he granted to managers the right (and indeed the duty) to design every element of the workplace, every stage of every job, and to take full responsibility for the ensuing performance of the company as a whole.

The notion that human beings are “resources” descends directly from Taylor’s concept of how management could be made “scientific”. The modern practice of applying standard procedures, emulating best practice, demanding compliance with company-wide processes, adopting world-class practices is, for good or ill, a child of Taylorism. Management remains to this day imbued with an instrumental view of the workplace, treating people as rational, economic agents motivated by monetary gain linked to personal output. Each person is a unit of production to be managed rather like a machine. Indeed, scientific management is sometimes called the “machine theory model”.

Peter Drucker defended many elements of the Taylor model. Indeed, he believed that, unknowingly, most managers today are heirs of many of his core ideas. Widespread practices in the modern world, such as assembly line working, time and motion studies, work design, organization and methods, performance standard manuals, performance-related pay, financial incentives and bonus payments, management by exception, and production control are all descendants of Taylor’s pioneering experiments and ideas. Drucker felt that Taylor was motivated by good and wise intentions: in particular, the desire to dramatically raise the wages of working people in line with increased productivity, to make work less stressful and harmful by doing it the right way, to train workers to higher levels of proficiency and greater levels of aspiration,



and to eliminate the arbitrary decisions of a boss class in favor of a more rational and defendable approach to working practices.

Drucker himself was highly influenced by Henri Fayol, one of the first writers totry and describe management in terms of a fundamental set of activities or Page | 4

“elements” which he defined as: “to forecast and plan, to organize, tocommand, to co-ordinate and to control”. Like Taylor, this betrays an intrinsically autocratic view of the role of management. Many writers since, such as Henry Mintzberg, have shown empirically that the actual day-to-day activities of real managers do not accord at all with these theoretical descriptions.

Working at the same time as Taylor but before Fayol, Max Weber, a German sociologist, was interested in power and authority, and in particular, how “bureaucratic structures”, as he chose to call them, placed constraints on the arbitrary or unskilled exercise of power. He admired bureaucracy because of its purely technical superiority over any other form of organization. By defining tasks and responsibilities within a clear, hierarchical structure of management, work could be made rational, systematic and well-ordered.

For Weber, bureaucracy rested on four main pillars: specialization, by which work is divided into tasks that are typically more permanent than the succession of persons who hold them; hierarchy, by which levels of authority are stratified and defined, particularly as between management and workers; rules, by which the operations of the organization are defined and controlled, leading to a stable, efficient and fair system; and perhaps most important of all, impersonality, by which power and privilege are exercised, not arbitrarily or at the whim of those in authority, but in accordance with an explicit, rationally derived, published set of rules and procedures.

Weber’s advocacy of bureaucracy was rooted in his belief that administration was best when it was grounded in expertise (rule of experts) and founded upon discipline (rule of officials). In this way, decisions and actions were more likely to be rational, transparent, uniform and aligned. Other systems, whether aristocratic or feudal or paternalistic, tended to have less respect for expertise or technical qualification and to rely instead upon “unearned” privilege, such as accident of birth or social custom.



Although working in very different traditions, and in different continents, the ideas of Taylor and Weber have much in common. They spring from the rational tradition by which everyday activities can be made more effective andefficient through the application of logic, observation and argument. They are Page | 5 founded upon expertise, professionalism and objectivity. They are hostile tosentiment, tradition and privilege.

Bureaucratic solutions to organizational design have their critics. The main line of attack is that bureaucracies tend to inflexible, rule-bound and conservative; and that bureaucrats themselves can be officious, status-conscious and unresponsive. Because rules and procedures cannot, by definition, cover every eventuality, they tend to stifle initiative and inhibit change. Sometimes, the rules and procedures become ends in themselves, and a culture of “red tape” takes over.

Critics of Weber argue that he neglected the informal organization and the ways in which individuals and groups pursue their own goals, invent their own methods, and find ingenious ways of subverting the formal system. Others, such as Chris Argyris, have argued that bureaucracies are antithetical to the psychological development of the individual. They draw upon only a small part of human potential. They crowd out creativity, autonomous choice, a sense of responsibility, commitment, self-control and innate ambition. Working in a bureaucracy can all too often become a dehumanizing experience. Simon Caulkin has suggested that organizing around the task rather than the person has the effect of reducing each person’s horizon to the confines of his own small plot, at the expense of the larger purpose of the enterprise. Robert Merton has noticed the development of a “bureaucratic personality” for which a fixation on rules leads to dysfunctional rituals such as “goal displacement”, the habit of sacrificing overall purpose to short-term compliance.

II. The Hu m an Relations S ch ool

The classical school, with its bias towards the rational, quasi-scientific design of organizational structure, job content and working methods, tended to ignore the psychological dimension of those working in these environments and adhering to these principles. The truth is that people are not machines,



subject solely to the will of the designer. They like to feel in control of their own behavior. They take positive enjoyment in variety and they relish exercising their own imagination and ingenuity. They are happy to adoptchallenging assignments and to take responsibility for the result. Setting to Page | 6 one side people’s feelings, preferences and aspirations in the cause ofsimplicity, efficiency and perfection can all too often be self-defeating.

In the 1920s, many observers of organizational behavior noticed just how important these personal, human attributes were to work efficiency and group performance. The Great Depression had brought home to many people the critical importance of the social dimension of work and the role of human relations in the workplace. The Hawthorne experiments, conducted for the most part at the Western Electric Company between 1924 and 1932, led by Elton Mayo, are some of the most important empirical investigations ever to have been conducted into the nature of the working environment and the causes of high performance. These researchers became known as the Human Relations School of Management.

From these experiments, it became clear that the quality and integrity of social relationships at work were critical to performance. Neglecting the fundamental significance of work groups, styles of leadership, quality of communication, sources of personal motivation, and inter-personal relations was, it was argued, to omit the most critical performance variables of all. Whereas the classical writers had taken the perspective of management, looking at organizational effectiveness through the eyes of those in authority, the human relations school adopted the perspective of those whose jobs were subject to the design decisions of managers, that is, the vantage point of the workers on whom the performance of the whole enterprise ultimately depended. In contrast to the classical school’s emphasis on raising organizational performance by rationalizing the workplace, the human relations schools stressed the imperative of humanizing it.

It did this by recognizing the informal organization as the true living heart of the enterprise. Employees, they believed, are the true architects of the organization that actually gets work done. They set the rules and values by which they do their work. They form the groups in which collaborative work is performed. They combine forces in the ways they want. They set the



performance standards and regulate the pace of work. They discover the best ways of accommodating the requirements of managers and the formal structures of the organization. They choose their own level of commitment tothe corporation. Loyalty tends to be directed to colleagues and fellow workers Page | 7 rather than to the boss or to the company. People prefer to work for eachother rather than for the goals set by those ostensibly in power. Even the lowliest person has his own dignity and takes pride in owning his own decisions and judgments.

Human Relations theorists showed that the reasons people go to work and the rewards of doing so are diverse. For most employees, earning a living is only part of the package. Work meets social and emotional as well as financial and physiological needs. Freud notes that work is an effective mechanism for keeping us sane. People go to work to socialize, to find a common cause to serve, to belong to a group, to serve as a member of team, to gain respect and social esteem, to make friends, to feel useful, to keep out of harm’s way, to be occupied and to keep busy. Denis Pym once observed that “work is a front for living”.

In the 1940s the humanistic approach was given a boost by the work of Abraham Maslow. He was interested in individual development and personal motivation. He put forward a hierarchical model of human needs. Only when the “lower needs” were satisfied do individuals progress to the fulfilment of their “higher needs”. He suggested five levels of need, from basic physiological requirements at the lowest level, through needs for safety, love, esteem and, at the highest level, self-actualization. Organizational theorists adopted Maslow’s model enthusiastically, seeing in it a normative model of effective management and a blueprint for the idealized organization. A high performing company would be one, they suggested, that brought the maximum number of its employees up to the top rungs of the hierarchy of needs.

F. Herzberg, working in the 1960s, extended and applied Maslow’s model explicitly to the work environment. He defined two sets of variables influencing job satisfaction and fulfilment at work. One set of variables were what he called “hygiene” or “maintenance” factors that, if absent, led to dissatisfaction at work and a sense of alienation. They related essentially to the organizational context of the job, such as salary, job security, working



conditions, level and quality of supervision, HR policies and interpersonal relations. Another set of variables, that he termed “motivators” or “growth” factors, were essential if work was to deliver satisfaction and fulfilment. Theyrelated mainly to the work content of the job, such as sense of achievement, Page | 8 recognition, responsibility, nature of the work, and opportunities for personalgrowth and development.

Like Herzberg, Douglas McGregor built on Maslow’s ideas as they apply to the world of work. He identified and described two broad styles of management, that he termed Theory X and Theory Y. Each took a different (and admittedly extreme) view of human nature. Each view had dramatically different implications for how management should be practiced. McGregor himself believed that Theory Y came much closer to the truth of human nature.

Theory X makes the assumption that people are basically lazy and therefore shirk work if they can. They actively resist taking responsibility for anything if they can, and would much prefer to take instructions from others. They lack ambition and crave security above anything else. They are motivated only by the lower levels of Maslow’s hierarchy: the need for pay and job security. For these people, the appropriate management style is directive, coercive, and controlling – a “carrot and stick” approach.

Theory Y takes the opposite line. It sees in people a natural desire to work and to excel. People enjoy bringing their energy and ambition to work in the service of a shared set of organizational goals to which they are happy to subscribe if fairly remunerated for their efforts and achievements. They are comfortable taking responsibility for themselves and directing their own lives. Like everyone else, they can be creative, committed and conscientious in the right conditions. They are motivated primarily by the higher levels of Maslow’s hierarchy: by the need for affiliation, esteem and self-actualization. For these people, the right management style is the creation of those conditions in which all employees serve the organization’s goals by serving their own higher-level needs.

The legacy of the human relations school is profound and can be found in any successful firm. It includes a concern for job satisfaction and job enrichment, empowerment strategies, learning and development activities, the promotion



of self-management, climate surveys, internal communications and active participation, group dynamics, and coaching styles of leadership.

Page | 9 III. The Op en Syste m s S ch ool

If the Classical bias was to study “organizations without people” and if the Human Relations bias was to study “people without organizations”, then the Open Systems School of Management chose to try and reconcile these differences and produce a more coherent, more balanced model of effective management.

Thinking of the organization as a system allowed this school of writers and researchers to treat the technical demands of a company alongside the psychological and social needs of its employees. The systems approach enables managers to think of the organization as containing sub-systems, such as departments and functions, as well as itself being part of a much larger system, including the environment from which it drew its resources and to which it offered its products and services. The idea is that each part of the total system interacts with all the other parts and that the performance of the whole can only be understood in terms of the interactions of the parts. The Classical and Human Relations schools had tended to deal only with the internal workings of the organization itself.

In 1951, Ludwig von Bertalanffy, a celebrated biologist, had introduced the notion of an “open system” as part of his General Systems Theory to analyze the relationship of organisms to their environment. His idea was borrowed by management scientists, such as Stafford Beer and Kenneth Boulding, to try and make more sense of the business organization as an open system interacting with the environment, to which it was either well or poorly fitted. The firm was analyzed as a “mapping” of the market it strove to serve. It was modelled as a socio-technical system, reconciling the commercial and human demands being placed on it by customers and employees, respectively. The evolutionary notion of “fitness” was sometimes used to explain the performance of the firm in its marketplace.



For example, working in the 1940’s at the Tavistock Institute of Human Relations, E.L. Trist studied how changing technologies in the coal-mining industry in Britain – in particular, the development of the “longwall” method ofextracting coal – had disrupted working relationships amongst the miners and Page | 10 had led to an increase in absenteeism, stress and scapegoating. Only bychanging the technology in a way that restored team-working and with it, multi-skilled roles was it possible to make the investment in technology financially lucrative.

Other writers have focused on the intimate links between technology and the social patterns of work. C.R. Walker and R.H. Guest looked at how assembly line methods influenced the behavior of employees; L.R. Sayles looked at the relationship between technology and the nature of work groups; and R. Blauner diagnosed problems of alienation in relation to various production technologies.

In short, the Systems School emphasizes the importance of the connections and interdependencies between the component parts of the socio-technical system that makes up the modern corporation. Not surprisingly, they often compare the biological organism and the commercial organization as systemically alike. They believe that the latter has much more to learn from the former than vice versa – a form of “biogenic learning”.

IV. The Social A c tion Sc h o o l

In the 1960s, some behavioral scientists, particularly Goldthorpe, Fox and Bowey, criticized organizational and managerial theory for failing to explain individual behavior in the workplace. By treating the organization as the unit of analysis, with its own ostensive goals, programs and agenda, the Human Relations School, quite as much as Taylorism, had failed to create the methodological platform for predicting the behavior of individual members of these organizations. To the extent that these theories had tried to accommodate the individual it was invariably as an “average” or “typical” employee. Human nature was typically treated as a universal set of traits.



The sociologists working within the Social Action school sought to analyze the company from the perspective of the individual employee (the “actor”), each with their perceptions of their own interests and opportunities. It is thesubjectivity of each person’s interpretation of their situation and their role Page | 11 that determines their behavior. All experiences are mediated by meanings –and these meaning are wholly personal to the individual whose actions and behavior are being modelled. Hence the importance of building a theory of how people attach meanings to their work, to the organization they work for, and to the goals of the organization itself. Social action theorists place the individual’s own definitions of their situation and its possibilities at the heart of their research.

Social Action theory tends to see the organization, not as a unified group with shared goals, common values and a single leader, but as competing factions, each fighting their own corner and each loyal to different leaders and varied objectives. The distinction that is drawn is between unitary and pluralistic approaches to organization. For social action theorists, the natural state of most organizations is political and conflictual.

Bowey’s theory of social action is based on three core principles: 1) that the explanation of individual behavior requires the concept of “meaningful action”; 2) that the actions that an individual takes are best understood from the perspective of these meanings; and 3) that actions serve either to reinforce or to modify these meanings.

The legacy of the Social Action school is its individualistic and eclectic perspective on the organization and the limited power that managers, who are, of course, individuals themselves with their own agendas, can exercise in a setting where people naturally form coalitions and interest groups that are often at variance with the “officially” espoused aims and methods of the formal organization.

V. The C onti n g enc y Sc h o o l

Modern theorists of management have learned the hard way to be particularly skeptical of anything that puts itself forward as a normative theory of businesssuccess, whether prescribing policy, structure, process, system or practice. They point out that business is, in essence, a sophisticated game in which, by definition, there cannot be such a thing as a winning strategy. Any theoryclaiming to offer universal advice or formulae for success condemns itself as Page | 12 fraudulent science. The contingency approach to management finds a whiff ofthis “quack medicine” in many theories of management, classical or otherwise.

Every business situation, like any game at any stage of play, is unique. The next move in the game will always be a question of judgment, and never simply adherence to a rule. Managers cannot escape from the fact that there are no substitutes for first-hand thinking, or surrogates for subjective judgment, or ready-made solutions. There can be no equivalent of “painting-by-numbers” in the management of a company. The best decision will find its rationale in the specificity of the prevailing situation. Business success is inherently a singularity, and never simply a data point in a theory of how to win.

Theorists who treat business management as more like cooking than chess – in other words, capable of being turned into recipes – are committing a category mistake. Over the last 20 years, particularly with a resurgence of interest in strategic innovation, business school scholars have challenged the notion that there can be such a thing as a science, or indeed a theory, of management at all.

The contingency approach is a development of the systems approach, but it goes a stage further by enumerating the countless environmental and situational factors that have a bearing upon organizational design and performance. The emphasis is upon flexibility.

The De m ise of Ma n ag em e n t?

In the last few years, several writers have articulated a vehemently anti-managerial stance, arguing that companies and government departments are massively over-managed, or at least managed in a crude and heavy-handed manner. Sumantra Ghoshal, in a sequence of articles for the Harvard Business Review at the turn of the millennium, suggested that the bias towards

management as strategy, structure and system needed to be radically overhauled and replaced by an approach to management as purpose, process and people. He has defined leadership as the art of creating in people a senseof purpose, of identity, and of belonging. Richard Koch, in “Managing without Page | 13 Management”, argued that the modern world was characterized by six trends,all of which are eroding the need for managers in large organizations. Peter Drucker, just before he died, wrote an article, entitled “Managing Oneself”, that sought to decentralize and devolve much more responsibility for decisions and actions to the individual and away from the power structure. Jeffrey Pfeffer, in “What Were They Thinking?” mocks the illusions and conceits of modern managerial man. In “The Hopeless, Helpless, Hapless Manager”, Adrian Furnham questions the psychological assumptions underpinning the concept of management as it is currently practiced. In a sequence of articles in The Observer over many years, Simon Caulkin has written a brilliant series of anti-management polemics. Last year, Gary Hamel wrote his authoritative critique of modern-day management in “The Future of Management”.

J ul es G o d da r d

August 2009


cjfs4870.weebly.comcjfs4870.weebly.com/.../2/6/0/0/26008916/history_of_management_t… · web...

Documents