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The Evolution of ManagementTheory and Practice

Why study Management History ?

Management is the most used tool today in any enterprise. History of its evolution helps us to understand its metamorphosis to its current level.

Looking backOrganized endeavors directing people for planning, organizing, executing, leading, monitoring and controlling activities have existed since the beginning of the civilization. (Pyramids, Monuments, Mythology) It has been only during the last century that this subject has undergone systematic investigation, acquired a common body of knowledge and has become a formal discipline. It has been the fastest growing discipline both in content and application over the last 50 years

The run up to the formal theory. Literature reviewSun Tzu the Chinese General (6tn century BC) in his The art of War recommends that the success can be achieved by being aware of utilizing the organizations strength to exploit the weakness of rival the enemy. (Coordinated group effort) Chanakyas Arthashastra (3rd century BC) It lays down the principles that should be taken into consideration by the leader while formulating policies Machiavelli (Discourses 1513) written for the leadership of Florence, recommended that the ends justifies means and that a leader should use fear, not hatred, to maintain control.

The run up to the formal theory. Literature reviewAdam Smith (The wealth of nations -1776). Economic advantages organizations would gain by division of labor. The Industrial Revolution and the mechanization of the process (large volume outturn) Coordination of tasks (Forecasting, supply chain, quality control, monitoring, marketing) contributed by Eli Whitney, James Watt and Mathew Boulton. Rapid expansion of the railroads brought down the costs. The modern management discipline evolved as an offshoot of economics. John Stuart Mill, Leon Walras, Alfred Marshall took forward the theory towards a more comprehensive theoretical background. No government control supported the development of large corporations (J. Rockefeller- oil, Andrew Carnegie steel).

The run up to the formal theory. Literature reviewThis demanded formal managers and formalized management practices. In 1881, Joseph Wharton took the profession one step forward by becoming the first management scholar to offer a tertiary level course in management Harvard became one of the first American Universities to offer a graduate degree in business management in 1908. The first textbook on management was written by J Duncan in 1911. Around World War II, H. Dodge, Ronald Fisher and Thornton C. Fry introduced mathematical and statistical techniques to give it a scientific basis. Peter Drucker published Concept of the Corporation in 1946 describing different facets of business organization. He also developed the concept of MBO in 1950 as a comprehensive system based approach to accomplish the organizational objectives

Why Study Management Theory?Theories are perspectives with which people make sense of their world experiences Theories provide a stable focus for understanding what we experience (Henry Ford large and compliant work force; Alfred Sloan of GM on market strategy) Theories enable us to communicate effectively and thus move into more complex relationships with other people (Ford / Sloan) Theories make it possible to keep learning about our world. Theories have boundaries. Triggers to look beyond. (Cold war, Model T and GM)

Development of Management Theories Recent years Analytical and Integrative approach

Pre classical theories Adam Smith and Wealth of Nations

Classical theories

Behavioral School

Scientific Management F.W.Taylor, Gilbreths,

Human relations Robert Owen Hugo Munsteberg Mary Parker Follett Christian Barnard

Operations Research (Mgmt Science) Charles Thornton Robert McNamara

Admin. Management Henry Fayol Hawthrone Studies Elton Mayo Bureaucratic Management. Max Weber Processes

Human resources Dale Carnegie Abraham Maslow Douglas McGregor

Systems

Contingency

The Classical TheoriesThe classical management focused on attainment of efficiency and productivity in an organizational setting. The predominant characteristics are: 1. Emphasis was placed on economic rationality of the individual employee. Advocated the provision of monetary incentives to encourage to work hard to realize their true potential. 2. They are based on the negative views about human nature with respect to performance of role & responsibility in an organizational setting. 3. They recognized that humans have emotions, but felt the emotions could be controlled by logical and rational structuring of jobs

Scientific Management - Frederick TaylorHe published Principles of Scientific Management (1911) one best way, appropriate selection of workers, training, deployment and environment. Breakdown the work into elements and develop science for each (re-look into the conventional mode) Scientific job analysis Select, train and deploy appropriate worker (workers will not choose where they would work) Division of work and responsibilities.- Functional supervision and standardization Establish synergic relationship with workers. Management cooperation and financial incentives (experiments with loading iron blocks and shovel sizes, financial incentives).

Scientific Management- Frank and Lillian GilbrethFrank and Lillian Gilbreth (used camera and microchronometer to analyze the motions of brick laying; fatigue and motion studies). They defined time and motion studies as the science of eliminating wastefulness resulting from unnecessary, ill directed and inefficient motion. Gilbreths one best way was that required comfortable position. Materials and working areas were kept at levels that eliminated excessive stooping, bending over, walking back and forth and time out waiting for materials. Gilbreths system came to be known as speed work not from hurrying but from reduction of work through elimination of unnecessary motions

Scientific Management Henry L GnattBetter known for charts for planning and monitoring, and the concept of group incentives. Formed the basis of CPM, PERT (project evaluation and review technique) and Gantt Charts. He focused on the importance of motivational schemes by laying emphasis on rewards for good work rather than penalties for poor work. Devised task and bonus plan and is the foundation of many incentive plans of today. The basis is the daily task load for standard hours of work. If someone completed additional works, he is rewarded but the penalties for not doing the stipulated quota still earns the full days wages

Scientific Management Era In PerspectiveThe era was characterized by low standard of living, labor intensive working pattern, and financially cheap environment Scientific management attempted to raise the standard of living by way of making workers more efficient and productive and consequently adding to their income. Taylor system failed to produce the mental revolution as he had envisaged as (a) the concept of economic man was not universal, separation of planning and execution tended to produce monotony and it also did not provide satisfactory answer to the argument that men would be displaced by the system and lead to unemployment. Gilbreths demonstrated that it was possible to raise productivity by ensuring work place ease and comfort. Gnatt demonstrated that it was possible to identify and reward good workers

The General Administrative ManagementGrew out of need to find guidelines for managing complex organizations to prescribe the interventions in Management. The two most prominent contributors were Fayol and Weber: Henry Fayol (MD of a French Coal Company) described management as the designated set of functions (planning, organizing, controlling, and directing), and unlike Taylor, concentrated on the managerial level. Fayol was the first thinker to outline the desirable qualities of a manager. They are physical qualities, mental qualities, moral qualities, proper education qualities, specialized knowledge about some function and experiential knowledge from past work. They are flexible, not absolute, and must be usable regardless of changing conditions.

Fayols 14 Principles of Management- busted the myth that Managers are Born and not made. He insisted that management is a skill which can be taught Division of work (training) Authority / responsibility Discipline (obey rules) Unity of Command Unity of Direction (one plan) Individuals interest subordinate to organizations interest. Fair Remuneration

Centralization Hierarchy Orderliness (right peopleand right material at right place)

Equity (principle of hotstove)

Stability of Tenure Initiative Esprit de corps

Bureaucratic ManagementMax Weber (German Sociologist) described goal oriented large organization as bureaucracy -- defined as an administrative system which is deliberately designed for accomplishment of large scale tasks through coordination of individual efforts in a rule bound, fair and efficient manner. It is characterized by clear division of labor, well trained personnel appointed on the basis of their competence, hierarchy (clear career path), rules and regulations, rational power (traditional / charismatic) and impersonal relationships. Although the term bureaucracy has been popularized for referring to government organizations, it is being practiced in virtually every large and formal organization Webers concepts (bureaucracy) are a lot similar to Taylors (scientific management). Both emphasize rationality, predictability, impersonality, technical competence and authoritarianism.

General Admin Theory In PerspectiveFayols theory can be benchmarked as the starting point of the many current management ideas. He was the first to