l2 evolution of management theories

7/31/2019 L2 Evolution of Management Theories

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The Evolution of

Management

A Historical Odessy


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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.


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Looking back

Organized endeavors directing people forplanning, 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 hasbecome a formal discipline.

It has been the fastest growing discipline both in

content and application over the last 50 years


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The run up to the formal theory. Literature review

Sun Tzu the Chinese General (6tn century BC) in

his The art of War recommends that the successcan be achieved by being aware of utilizing theorganizations strength to exploit the weakness ofrival the enemy. (Coordinated group effort)

Chanakyas Arthashastra (3rd century BC) It laysdown the principles that should be taken intoconsideration by the leader while formulatingpolicies

Machiavelli (Discourses 1513) written for theleadership of Florence, recommended that theends justifies means and that a leader should usefear, not hatred, to maintain control.


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Adam Smith (The wealth of nations -1776). Economic

advantages organizations would gain by division of labor.The Industrial Revolution and the mechanization of theprocess (large volume outturn)

Coordination of tasks (Forecasting, supply chain, qualitycontrol, monitoring, marketing)contributed by EliWhitney, James Watt and Mathew Boulton.

The modern management discipline evolved as an offshootof economics. John Stuart Mill, Leon Walras, AlfredMarshall took forward the theory towards a more

comprehensive theoretical background.Rapid expansion of the railroads brought down the costs.

No government control supported the development of largecorporations (J. Rockefeller- oil, Andrew Carnegie steel).


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This demanded formal managers and formalized managementpractices.

In 1881, Joseph Wharton took the profession one step forwardby becoming the first management scholar to offer a tertiarylevel course in management

Harvard became one of the first American Universities to offera graduate degree in business management in 1908. The firsttextbook on management was written by J Duncan in 1911.

Around World War II, H. Dodge, Ronald Fisher and ThorntonC. Fry introduced mathematical and statistical techniques togive it a scientific basis.

Peter Drucker published Concept of the Corporation in 1946describing different facets of business organization. He alsodeveloped the concept of MBO in 1950 as a comprehensivesystem based approach to accomplish the organizationalobjectives


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Why Study Management Theory?

Theories are perspectives with which people makesense of their world experiences

Theories provide a stable focus for understandingwhat we experience (Henry Fordlarge andcompliant work force; Alfred Sloan of GM onmarket strategy)

Theories enable us to communicate effectively andthus move into more complex relationships withother people (Ford / Sloan)

Theories make it possible to keep learning aboutour world. Theories have boundaries. Triggers tolook beyond. (Cold war, Model T and GM)


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Theories (guided by the perceptions of the researcher)

Preclassical contributions(Adam Smith,

The wealth of Nations, 1776)

General administrative theories(Henri Fayol)(Max Weber)

Scientific Management(Frederic Taylor)

(Frank and Lilian Gilbert)(Henry L Gnatt)

The classical theorists

Behavioral science theorist(Fred Fiedler, Victor Vroom,

Edwin Locke etc)

Human relations movement(Dale Carnegie, Abraham Maslow,

Douglas McGregor)

Hawthrone studies(Elton Mayo)

Early advocates(Robert Owen, Hugo Munsterberg,

Mary Parker Follett,Chester Barnard)

Behavioral School(Human Resources Approach)

Operations research orManagement Science

Charles 'Tex' Thornton)Robert McNamara

Qualitative approach

Contingency

Systems

Processes(Harold Koontz)

Recent years -Integrative approach

Development of Management theories


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The Classical TheoriesThe classical management focused on attainment ofefficiency and productivity in an organizational setting.

The predominant characteristics are:1. Emphasis was placed on economic rationality of the

individual employee. Advocated the provision ofmonetary incentives to encourage to work hard torealize their true potential.

2. They are based on the negative views about humannature 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 rationalstructuring of jobs

Can be classified in three main branches: Scientific,Administrative and Bureaucratic Management


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Four pillars of Scientific Management

Breakdown the work into elements and developscience for each (re-look into the conventionalmode)Scientific job analysis

Select, train and deploy appropriate worker

(workers will not choose where they would work)Division of work and responsibilities.- Functionalsupervision and standardization

Establish synergic relationship with workers.

Management cooperation and financial incentivesScientific Management arose from the need toincrease productivity.


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Major Contributorscontd.

Frank and Lillian Gilbreth (used camera and micro-

chronometer to analyze the motions of brick laying; fatigueand motion studies). They defined time and motion studiesas the science of eliminating wastefulness resulting fromunnecessary, ill directed and inefficient motion

Henry L Gantt (charts for planning and monitoring, and

the concept of group incentives) Formed the basis of CPM,PERT (project evaluation and review technique) and GanttCharts. He focused on the importance of motivationalschemes by laying emphasis on rewards for good work

rather than penalties for poor work. He advocated thatprovisions of rewards is relatively more effective thanthreat of penalties


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Scientific Management EraIn Perspective

The era was characterized by low standard of

living, labor intensive working pattern, and

financially cheap environment

Scientific management attempted to raise thestandard of living by way of making workers more

efficient and productive and consequently adding

to their income.


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The General Administrative Management

Grew out of need to find guidelines for managing complexorganizations to prescribe the interventions in

Management. The two most prominent contributor was:

Henry Fayol (MD of a French Coal Company) described

management as the designated set of functions, and unlikeTaylor, 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.


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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 interestsubordinate to

organizations interest.

Fair Remuneration

Centralization

Hierarchy

Orderliness (right peopleand right material at right

place)

Equity (principle of hotstove)

Stability of TenureInitiative

Esprit de corps


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Bureaucratic Management

Max Weber (German Sociologist) described goal

oriented large organization as bureaucracy -- defined asan administrative system which is deliberately designedfor accomplishment of large scale tasks throughcoordination of individual efforts in a rule bound, fairand efficient manner. It is characterized by clear division

of labor, well trained personnel appointed on the basis oftheir competence, hierarchy (clear career path), rules andregulations, rational power (traditional / charismatic) andimpersonal relationships.

Although the term bureaucracy has been popularized forreferring to government organizations, it is beingpracticed in virtually every large and formal organization


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Webers ideal Bureaucracy

Division of laborAuthority / Hierarchy

Formal Selection

Formal rules and regulations

Impersonality

Career Orientation

Webers concepts (bureaucracy) are a lot similarto Taylors (scientific management). Bothemphasize rationality, predictability,impersonality, technical competence andauthoritarianism.


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General Admin TheoryIn Perspective

Fayols theory can be benchmarked as the startingpoint of the many current management ideas. He

was the first to systemize managerial

interventions.

Webers idea of bureaucracy was the model

prototype of large organizations, bereft of

inefficiencies, ambiguity and patronage.

Though Bureaucracy is not a very fancied termtoday, it still provides the steel frame to most large

organizations


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Human Relations School: Why?

This school of thought emerged in 1920 in reaction to

the limitations of the classical theories that ignored the

human aspects in organizations. The main

characteristics are:

1. Employees are social beings and hence could not

respond to purely rational rules, chain of authority and

economic incentives.

2. Employees bring their social needs along with them to

the organization; consequently, effective management

required a more human oriented approach.

3. Emphasis is required on the social needs, drives and

attitudes of individuals to motivate them to perform to

their true potential


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Outcome of Human Relations Movement

Following fundamentals of human behavior highlighted:

1. Individuals desire to continuously associate with hisfellow workers significantly affects performance

2. Scientific management in its original form not accepted.Social understanding and social skills are equallyimportant.

3. The working group informally determines the output level(dependent upon fair days work) that an individual workerwould produce in a given timeframe.

4. Fair and transparent management can foster collaborative

and cooperative atmosphere.5. Rather than just adding to the overall compensation

through production linked incentives, management needsto improve the overall quality of life of the workers


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Major contributors to the approach

The proponents recognized the importance of humanfactor in success of organizations. Four individuals standout:

1. Robert Owen: Scottish businessman, committed toreleasing the suffering of the working class; banned

child labor, regulated work hours and improved workingconditions; showing concern for labor welfare was aprofitable management initiative.

2. Hugo Munsterberg: Created the discipline of industrialpsychology; substantially contributed to our current

knowledge ofselection technique, training, job designand motivation.


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Major contributors contd.

3. Mary Parker Follett: Propounded that no one could

become a whole person except as a member of a group.Defined Management as the art of getting things

done. Her holistic model took into account not onlyindividuals and groups but also politics, economics andbiology. It was forerunner of the idea that management

was not internally focused and is affected by externalenvironment.

4. Chester Barnard:President of New Jersey BellTelephone Co. viewed organizations as social systemsthat require nurturing. People come to join theorganization toachieve the objectives they can not

accomplish alone. There needs to be sync between theorganization and individual goals. Adjustments need tobe made to attain equilibrium; managers need tounderstand employees zone of indifference.


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Hawthorne Studies.(Western Electric Co. 192433)

Elton Mayo established relationship between social

environment (redesign of job, changes in work day andwork week length, rest periods, individual versus group

pay etc) and work output through a series of experimentsknown asHawthorne Studies (Illumination experiment,Relay assembly test room study, Bank wiring room study

etc). He concluded that behavior and sentiments wereclosely related, that group influences significantly affectedindividual behavior, group standards established individualworker output and money was less a factor in determiningoutput than were group standards, group sentiments andsecurity. These studies established that employees weredifferent from the machines and would need to betreated differently and deferentially.


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HR Approach - Human Relations Movement

The members had unshakable optimism about peoples

capabilities and strongly believed that a satisfied workerwas more productive. Three stalwarts of this group are:

1. Dale Carnegie :Believed that way to success was

through winning the cooperation of the people.

2. Abraham Maslow : Propounded the theory of needhierarchy (physiological, safety, social, esteem, and self

actualization; lower level needs must be satisfied first).

3. Douglas McGregor:Best known for his two sets of

assumptions about human nature. (Theory X - motivatedby external stimuli, Theory Yinherently motivated;

manager replacing the boss)


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HR Approach - Behavioral Science Theorists

A group of psychologists and sociologists (Fred

Fiedler, Victor Vroom, Richard Hackman etc),

carefully attempted to keep their personal beliefs

out of their work and relied on the scientificmethods for the study of organizational behavior.

They have made significant contributions to our

current understanding of leadership, employee

motivation, job design etc.


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Human Resource Approach -In Perspective

The classical theorists viewed employees as

machines and managers as engineers. Any failure

of the employees to generate desired output was

viewed as an engineering problem. Contributors to

the human resource approach forced managers to

reassess this simplistic model view.

However, this approach takes a myopic view of

the discipline of management. It ignores

managerial concepts. In any case, psychologicaltraining alone is not enough to become an

effective manager.


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The Quantitative ApproachTheManagement Science School (OR Procedures)

During the World War II, the British brought in theconcept of Operational Research.

Post World War II, management included applications of

Statistics, Optimization Models, Information Models andComputer, Simulations Linear Programming etc. Theyhave been useful tools to decision making in planning andcontrol.

Use of such tools have added to the confidence limits to

the management planning and projections.Important contributors were Robert McNamara (FordMotors) and Charles Tex Thornton


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Management Science SchoolIn Perspective:

Management science school offered a whole newway to think about time. With computer modelsimulations, forecasting has become dependable.At the same time, management science school paysless attention to relationships in the organizations.

The emphasis is only on numbers, missing theimportance of people and relationships. It fails toprovide solution for all facets of management,especially the areas with high level of human

element, like leadership, motivation etc.management in not pure science and hence cannotbe modeled for all types of situations


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Recent YearsTowards Integration

Theories are powerful influences. The longer weuse a given theory, the more comfortable we

become with it and more we tend not to seek out

newer pastures unless forced. The days were

changing fast and regular efforts were made tosynthesize to customize requirements. This

explains why modern management theory is

really a rich mosaic of many theories that have

endured over the past century. Concern with

developing a unifying framework of management

began in right earnest in early 60s.

R Y A h I i


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Recent Years: Approaches to Integration

Process or Operational approach:

Harold Koontz in his article management theory jungleadvocated that each approach had something to offer tothe management theory and the actual practice shouldsynthesize various view points. The approach recognizesthat there is a central core of knowledge about

management that is pertinent only to the field ofmanagement. The process approach, originallyintroduced by Fayol, is based on the managementfunctions. The performance of these functions planning,organizing, controlling and leading should be seen as a

seamless activity of management. In addition thisapproach draws and absorbs knowledge from other

fields.


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The interactive nature of Management process

Planning

Use logic &methods to think through

goals & actions

ControllingMake sure the

organization is moving

towards its objectives

OrganizingAllocate work,

authority & resources

to achieve organizational

goals

LeadingDirect, influence & motivate

employees to perform

essential tasks


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Recent Years: Systems approachAn organized enterprise does not exist in vacuum and is

dependent on external environment. Open systemsrecognize that no organization is self contained; they would

sink if they ignore external environment, goal inputs of

claimants (supplier relation, govt regulations).

Two basic types of systems are closed and open. FredericTaylors machine view of the organization refers to closed

while Christian Barnard proposed open system where it is

in constant interaction with its environment.

The job of the manager is to ensure that all parts of the

organization are internally coordinated. In addition open

system recognizes that organizations are not self contained

and can not survive if they ignore external environment

I tSystems approach to management


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Managerial knowledge,

Goals of claimants

& use of inputs

Reenergizingthe

system Planning

Organizing

Staffing

Leading

Controlling

To produce outputs

External environment

Outputs:

Products, Services,

Profits, Satisfaction,

Goal integration & others

External variables &

Opportunities

Constraints

Others

ExternalEnvironment

External environment

Inputs:

Human, Capital

Managerial, Technological

others

Goal inputs of claimants:

Employees, consumers, suppliers,Stockholders, governments,

Communities and others

Systems approach to management


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Businessorganization

Internal

Labor

Equipments

Money

Materials

External (macro-beyond influence of the org)

Global

Global Global

Competition

Ecosystem Economic

Socio -Cultural

Demographic Political /Legal

Technological

External (micro) customers, suppliers, creditors, distributors dealers; though outside theInfluence of the 0organization, can be influenced by them

Constituents of Business Environment


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Recent Years: Contingency Approach

Early management contributors gave us principles of

management and organization that they generally assumedto be universally acceptable. Later research have foundexceptions.

Management, like life itself, is not based on simplisticprinciples. Contingency approach is a product of theintegration of various management theories modulated bythe situational variables. Since organizations are diverse,one size does not fit all. Four important variables are,Organization size, Routine-ness of Task Technology,Environmental Uncertainty and individual differences.

A contingency approach to management is intuitivelylogical.


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Current Issues:

Workforce Diversity

Ethics

Stimulating Innovation and change

Total Quality Management

Re-engineering

Empowerment and teams

Bimodal Workforce

Downsizing

Contingent Workers


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Conclusions:

In view of the discussions so far, management hasstarted to become less based on the

conceptualization of classical theory of

management and the typical military command

and control, and more on facilitation and supportof collaborative activity. Now management deals

with the complexities of human interaction to

achieve organizational or group goals in an

effective and efficient manner.


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Suggested Reading

Management: P Stoner, Freeman and

Gilbert, Jr.Management: Stephen P. Robbins and Mary

Coulter.

ManagementA Global Perspective: HeinzWeihrich and Harold Koontz

l2 evolution of management theories

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