2-1

The Evolution of
Management
Theory
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Development of Management Thought

 Modern management began in the late 19th century.
 Organizations were seeking ways to better satisfy customer needs.
 Machinery was changing the way goods were produced.
 Managers had to increase the efficiency of the worker-task mix.

Organisation Theory -A study of structure, functioning and

performance of organisations and the behaviour of groups and
individuals within them.
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Henry Ford & Model T

 Henry Ford and the Model T have long been symbols of the
Industrial age

 In large measure, the managerial approach of Henry Ford, as well

as his preferences in managerial theory, is a paradigm of much that was
constructive and much that was imperfect- in early approaches to
management

 The son of a poor Irish immigrant, Henry Ford was born in 1863 and
grew up on a farm in rural Michigan

 He was fascinated by machinery and was quite skilled in repairing and

improving almost any machine. He started the Ford Motor Company
in 1903, and by 1908, the Model T was built
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 Automobiles were a symbol of status and wealth, the near

exclusive province of the rich

 Ford intended to change that: the Model T was to be for the masses
- a car that virtually anyone could afford

 He understood that the only way to make such a car was to produce
it at high volume and low cost

 Ford focused his factory efforts on efficiency, mechanizing

wherever possible, and breaking down tasks into their smallest
components
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 One worker would perform the same task over and over, producing not a
finished part, but one of the operations necessary for the production of the whole;
the incomplete part would then be passed on to another worker, who would
contribute a successive operation

 Ford was able to achieve remarkable efficiencies: Although the first Model T took
over 12 ½ hours to produce, only 12 years later, in 1920, Ford was producing
one Model T every minute

 By 1925, at the peak of the car’s popularity, a Model T was rolling off Ford’s
assembly lines at the rate of one every 5 seconds

 However, mechanization of the plant had some adverse effects. The faster Ford
pushed his workers, the more disgruntled they became. In 1913, turnover was 380
percent, and Ford had to hire ten times more workers than he needed just to keep
the line moving
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 Ford simply decided to double wages in order to get the best people and motivate
them to work even harder

 In the days following the announcement that wages were being doubled, thousands
and thousands of men came to the Ford plant in search of work

 When he died in 1945, Ford was worth over $600 million. He left an indelible mark on
both American industry and society. His name is synonymous with mass production
and the development of modern management theory

 Most people associate Henry Ford with the Model T, the affordable mass-produced
automobile that changed society

 But Ford is also important as a management thinker because he developed ideas

about how organizations function
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Evolution Of Management Thought

Classical Approaches Contemporary Approaches

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Systematic Administrative Quantitative Systems Contingency Current and

management management management theory theory future revolutions

Scientific Human Organizational

management relations behavior

Bureaucracy
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Evolution of Management Theory

ORGANISATION THEORY

EARLY
CLASSICAL APPROACHES

NEO-CLASSICAL APPROACHES

MODERN APPROACHES
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The Classical Approach

 The Classical school is the oldest formal school of management
thought which began around 1900 and continued into 1920s

 The effort to understand work, and how workers could be made

productive and efficient, marked the beginning of the study of
modern management

 Thisearly research produced theories,concepts,and practices that have

come to be labeled as the Classical Approach

 It
includes Bureaucratic, Scientific and Administrative
management
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Early Classical Approaches

Bureaucratic Management

Administrative Management

Scientific Management

1940 2000
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
Scientific Management
The concept of Scientific Management was developed by Frederick W. Taylor in late 18 th

century.

 Scientific Management is the systematic study of the relationships between people and
tasks to redesign the work for higher efficiency.

 Taylor sought to reduce the time a worker spent on each task by optimizing the way the
task was done.

 The practice introduced by Frederick W.Taylor to accomplish the management job was to
use of scientific procedures to find the “one best way” to do a job

 FW Taylor is know as “Father Of Scientific Management “

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 Taylor joined the American Society Of Mechanical Engineers in 1886 and used this organization to develop
and test the ideas he formulated while working in various steel firms

 In one of these firms, Midvale Steel Company ,he observed workers producing far less than their capacities.
Taylor believed that this waste was due to ignorance of what constituted a fair day’s work

 At that time, no studies had been conducted to determine expected daily output per worker and the
relationship between work standard and the wage system

 He is most remembered for developing the “Time and Motion study”. He would break a job into its
component parts and measure each to the hundredth of a minute

 Taylor believed that management could be formulated as an academic discipline, and that the best results
would come from the partnership between a trained and qualified management and a cooperative and
innovative workforce
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Taylor’s Contribution
Five Principles to increase efficiency:

1. Time and Motion Study: Each step involved in a job was timed and observed. Several
alternatives were developed and the best way of doing a job was adopted.

2. Differential Payment: Taylor felt workers should benefit from higher output.
Incentives were linked with production to motivate workers and increase their
productivity.

3. Drastic Reorganization of Supervision: Separation of planning and doing. Functional

Foremanship.

4. Scientific Recruitment and Training: Quality selection and training. Focus on core
competence of workers to increase productivity.

5. Co-operation between the Management and Workers: Management and labor should
understand that they have a common goal i.e., increasing productivity.
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Problems of Scientific Management

Man’s behaviour is not always dictated by his
financial needs.
The concept of ‘one best way ’ does not hold good
as no two individuals can work in the same way.
 Managers often implemented only the increased
output side of Taylor’s plan.
 They did not allow workers to share in increased output.
 Specialized jobs became very boring, dull.

 Management responded with increased use of

machines.
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Administrative Management
 Scientific management, which deals largely with jobs and work at the individual level, administrative
management provides a more general theory of management

 Henri Fayol (1841-1925) is considered as the Father of Administrative Management theory also “the
Father of modern operational management theory”

 Fayol ’ s perspective extended beyond the shop level and the physical production processes and was
of a macro nature covering the general administrative and managerial functions and processes at
the organizational level.

 Seeks to create an organization that leads to both efficiency and effectiveness.

 Fayol's approach was more in sync with his idea of Authority which stated that the right to give orders
should not be considered without the acceptance and understanding of responsibility
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Fayol has proposed that there are 5 primary functions

of management and 14 principles of management

 Planning
 Organizing
 Commanding
 Coordinating
 Controlling
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Fayol’s Principles
Henri Fayol, developed a set of 14 principles:
1. Division of Labour: allows for job specialization. Fayol
noted firms can produce more and better work with the same
effort.
2. Authority and Responsibility: A manager may exercise
formal authority and personal power.Responsibilty is closely
related to authority and it arises wherever authority is
exercised.
3. Unity of Command: Employees should have only one boss.
4. Scalar Chain: a hierarchy chain from top to bottom of the
firm for the purpose of communication.
5. Centralization: is the degree to which authority rests at the
very top. If subordinates are given more role and importance
it is decentralization.
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Fayol’s Principles
6. Unity of Direction: One plan of action to guide the
organization.
7. Equity: Treat all employees fairly in justice and
respect.
8. Order: Each employee is put where they have the most
value i.e right place for everything and every man.
9. Initiative: Encourage innovation.
10. Discipline: obedience to authority, observance of the
rules and norms, sincere efforts for completing the given
job, respect for superiors etc.
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Fayol’s Principles
11. Remuneration of Personnel: The payment system
contributes to success i.e. fair remuneration.
12. Stability of Tenure: Turnover is disruptive; shared
experience is important .Long-term employment is
important.
13. General interest over individual interest: The
organization takes precedence over the individual.
14. Esprit de corps: There is a need for harmony and
unity within the organization .Share enthusiasm or
devotion to the organization.
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Administrative Management
Theory
Max Weber

 He is known as the father of Modern sociology

 Developed the principles of bureaucracy as a formal system

of organization and administration designed to ensure
efficiency and effectiveness.
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Weber’s
Principles of
Bureaucracy
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Weber’s Principles of Bureaucracy

1) A manager’s formal authority derives from the

position he holds in the organization

2) People should occupy positions because of their

performance, not because of their social standing or
personal contacts.
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Weber’s Principles of Bureaucracy

3) The extent of each position’s formal authority and task

responsibilities and it’s relationship to other positions
should be clearly specified.

4) Authority can be exercised effectively when positions are

arranged hierarchically, so employees know whom to
report to and who reports to them.
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Weber’s Principles of Bureaucracy

5) Managers must create a well-defined system of
rules, standard operating procedures,
and norms so they
can effectively
control behavior .
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Rules, SOPs and Norms

 Rules – formal written instructions that specify actions to be taken

under different circumstances to achieve specific goals

 Standard Operating Procedures (SOPs) – specific sets of written

instructions about how to perform a certain aspect of a task

 Norms – unwritten, informal codes of conduct that prescribe how

people should act in particular situations
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Neo-Classical Approaches

Hawthorne Experiments

Behavioral Management

1890 1940 2000

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Behavioral Management Theory

Behavioral Management

 The study of how managers should personally behave to

motivate employees and encourage them to perform at
high levels and be committed to the achievement of
organizational goals.
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Behavioral Management
Mary Parker Follett
 Concerned that Taylor ignored the human side of
the organization

Suggested workers help in analyzing their jobs

If workers have relevant knowledge of the task,
then they should control the task.
The worker knows the best way to improve the
job.
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George Elton Mayo

(26 December 1880 - 7 September 1949)

 Mayo is known as the founder of the Human Relations Movement, and is

known for his research including the Hawthorne Studies

 The Hawthorne Studies (also known as the Hawthorne Experiments) were

conducted from 1927 to 1932 at the Western Electric Hawthorne Works
in Cicero, Illinois (a suburb of Chicago)

 This is where professor Elton Mayo examined the impact of work

conditions in employee productivity

 Elton Mayo started these experiments by examining the physical and

environmental influences of the workplace (e.g. brightness of lights,
humidity) and later, moved into the psychological aspects (e.g. breaks,
group pressure, working hours, managerial leadership) and their impact on
employee motivation as it applies to productivity
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The Hawthorne Studies

 Study of worker efficiency at the Hawthorne Works of the
Western Electric Co.

 Worker productivity was measured at various levels of light

illumination.

 Researchers found that regardless of whether the light levels were

raised or lowered, productivity rose

 Actually, it appears that the workers enjoyed the attention they

received as part of the study and were more productive.
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The Hawthorne Studies

 Human relations movement – advocates that supervisors
be behaviorally trained to manage subordinates in ways
that elicit their cooperation and increase their
productivity
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The Hawthorne Studies

Implications
 Behavior of managers and workers in the work setting is
as important in explaining the level of performance as the
technical aspects of the task
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Modern Approaches

Quantitative Approach

Systems Approach

Contingency Approach
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Quantitative Approach
Uses
rigorous quantitative techniques to
maximize resources.
Quantitative management: utilizes linear
programming, modeling, simulation systems.
Operations management: techniques to analyze all
aspects of the organization’s production system.
Total Quality Management (TQM): focuses on
improved product quality.
Management Information Systems (MIS): provides
information vital for effective decision making.
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Organizational Environment Theory

Organizational Environment –

The set of forces and conditions that operate beyond an

organization’s boundaries but affect a manager’s ability
to acquire and utilize resources
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The Open-Systems View

Open System
 A system that takes resources from its external
environment and transforms them into goods and
services that are then sent back to that
environment where they are bought by customers.
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Figure 2.4
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Systems Approach
Considersrelationships inside and outside the
organization.
 The environment consists of forces, conditions, and
influences outside the organization.
Systems theory considers the impact of
stages:
Input: acquire external resources.
Conversion: inputs are processed into goods and
services.
Output: finished goods are released into the
environment.
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Closed System
 A self-contained system that is not affected by changes in
its external environment.
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Systems Considerations
Anopen system interacts with the
environment. A closed system is self-
contained.
 Closed systems often undergo entropy and lose
the ability to control itself, and fails.
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Systems
 Synergy – the performance gains that result from the
combined actions of individuals and departments
 Possible only in
an organized system
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Contingency Theory
Assumes there is no one best way to manage.
 The environment impacts the organization and
managers must be flexible to react to
environmental changes.
 The way the organization is designed, control
systems selected, depend on the environment.
Technological
environments change rapidly,
so must managers.
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Type of Structure
Mechanistic Structure
 Authority is centralized at the top.
 Emphasis is on strict discipline and order

 Employees are closely monitored and managed.

 Can be very efficient in a stable environment.

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Type of Structure
Organic Structure
 Authority is decentralized throughout the
organization.
 Departments are encouraged to take a cross-
departmental or functional perspective
 Works best when environment is unstable and
rapidly changing
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Thank You