Arjun Nigam

Chapter 2 – The Evolution of Management Theory

- Evolution of modern management began in closing decades of 19 th century, after Industrial

Revolution (Europe, Canada, USA)
o Small workshops run by skilled workers replaced by large factories
o Large factories had hundreds/thousands of unskilled employees to control machines
- Many managers were technically skilled but unprepared for social problems that occur between
people

Job Specialization and Division of Labour

- Adam Smith compared relative performance of 2 manufacturing methods
o First; similar to crafts-style production, each employee responsible for all 18 tasks involved
in making a pin
o Second; each employee performed one or few tasks in 18 pin making tasks
o Found that 10 employees specializing in task could make 48000 pins/day
o Employees that did everything made only few thousands
- Job Specialization; the process by which a division of labour occurs as different employees specialize
in different tasks over time (increases efficiency and leads to higher organizational performance)

F.W. Taylor and Scientific Management

- Frederick W. Taylor known for defining
- Scientific management; the systematic study of relationships between people and tasks for purpose
of redesigning the work process to increase efficiency
- Believed production process is more efficient if amount of time and effort each employee spent to
produce unit of output could be reduced
- Noted increased specialization and division of labour could increase efficiency
- Developed 4 principles to increase efficiency in the workplace
o Study way workers perform tasks, gather all informal job knowledge workers possess and
experiment ways of improving way tasks are performed
o Codify new methods of performing tasks into written rules and standard operating
procedures
o Carefully select workers so they possess skills and abilities that match needs of task, train
them to perform task according to established rules and procedures
o Establish fair or acceptable level of performance for a task, then develop a pay system that
provides reward for performance above acceptable level

The Gilbreths
- Followers of Taylor (Frank Gilbreth & Lillian Gilbreth)
- Made contributions to time-and-motion study
- Aims were to
o Break up a particular task into individual actions, and analyze each step needed to perform
the task
o Find better ways to perform each step
o Reorganize each step so that action as whole could be performed more efficiently- at less
cost in time and effort
- Often filmed employee performing task then separated task actions, speculated frame by frame,
many small differences add up to enormous savings of time and effort
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- Jobs became boring, repetitive, employees dissatisfied

- Managers tried to introduce work practices to increase performance, employees tried to hide true
potential efficiency of work setting in order to protect own well-being

Administrative Management Theory

- Administrative Management; study of how to create an organizational structure that leads to high
efficiency and effectiveness
- Organizational structure is system of task and authority relationships that control how employees
use resources to achieve organization’s goals
- Two most influential views regarding creation of efficient systems of organizational administration
developed in Europe
- Max Weber, German prof of SOC developed one
- Henri Fayol, French manager developed another

The Theory of Bureaucracy

- Max Weber wrote at start of 20th century, when Germany undergoing Industrial Revolution
- Bureaucracy; formal system of organization and administration designed to ensure efficiency and
effectiveness
o First; in bureaucracy, manager’s formal authority derives from position he/she holds in
organization
 Obedience is owed to manager, because manager occupies position that is
associated with certain level of authority and responsibility
o Second; in bureaucracy, people should occupy positions because of their performance,
not because of social standing or personal contacts
 Not always followed in Weber’s time, often ignored today
o Third; extent of each position’s formal authority and task responsibilities, and its
relationship to other positions in organization, should be specified
 When tasks are specified, managers and employees know what is expected of
them and each other
 Authority; power to hold people accountable for their actions and to make
decisions concerning use of organizational resources
o Fourth; for authority to be exercised effectively in organization, positions should be
arranged hierarchically, helps employees know whom to report and vice versa
 Managers must create organizational hierarchy of authority that makes clear;
 Who reports to whom
 To whom managers and employees should go if conflicts or problems
arise (Armed Forces, CSIS, RCMP)
o Fifth; managers must create well-defined system of rules, standard operating
procedures (SOPs) and norms so they can effectively control behavior within
organization
 Rules, SOPs, and norms provide behavioral guidelines, improve performance of
bureaucratic system
 Rules; formal written instructions that specify actions to be taken under
different circumstances to achieve specific goals
 SOP; specific set of written instructions about how to perform certain aspect or
task
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 Norm; unwritten rules and informal codes of conduct that prescribe how people
should act in situations
- Weber believed, if all 5 implemented, establish bureaucratic system that will improve organizational
performance
- When managers rely too much on rules to solve problems and not their own skills and judgment,
behavior becomes inflexible

Fayol’s Principles of Management

- Same time as Weber, CEO of Comambault Mining
- Identified 14 principles to be essential to increasing efficiency of management process, some faded,
most endured

Behavioral Management Theory

- Behavioral Management; study of how managers should behave in order to motivate employees
and encourage them to perform at high levels and be committed to achieving organizational goals

Mary Parker Follet

- Considered mother of Management
- Her writing was response to her concern that Taylor was ignoring human side of organization
- Said manager’s knowledge and expertise should decide who would lead
- Power is fluid and should flow to person who can best help organization achieve goals

Hawthorne Studies and Human Relations

- Conducted from 1924 – 1932 at Hawthorne Works of the Western Electric Company
- Attempt to investigate how characteristics of work setting (specifically lighting) affect employee
fatigue and performance
o Measured employee productivity at various levels of illumination
- Informal Organization; system of behavioral rules and norms that emerge in a group
- Over time, groups develop procedures and norms that bond members together, allowing unified
action
- Importance of feelings, thoughts, and behavior of work-group members and managers affect
performance
- Organizational Behavior; study of factors that have an impact on how individuals and groups
respond to and act in organizations

Theory X and Theory Y

- Theory X; negative assumptions about employees that lead to conclusion that a manager’s task is to
supervise them closely and control their behavior
o Average employee is lazy, dislikes work, avoid responsibility
- Theory Y; positive assumptions about employees that lead to conclusion that manger’s task is to
create work setting that encourages commitment to organizational goals and provides
opportunities.
o Average employee is not lazy, enjoys work, and will do what is good for organization

Management Science Theory

- Management Science Theory; approach to management that uses rigorous quantitative techniques
to help managers make full use of organizational resources
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- Quantitative Management
o Uses mathematical techniques – linear and nonlinear programming, modeling,
simulation, queuing theory, and chaos theory – to help managers decide, ex. how much
inventory to hold at different times of the year, where to build new factory
- Operations Management/operations research
o Provides managers with set of techniques they can use to analyze aspect of
organization’s production system to increase efficiency
- Total Quality Management (TQM)
o Focuses on analyzing organization’s input, conversion, and output activities to increase
product quality
- Management Information System (MIS)
o Help managers design information systems that provide information about events
occurring inside organization as well as in external environment – information that is
vital for effective decision making

Organizational Environment Theory

- Considered how managers control organization’s relationship with external environment
- Organizational Environment; setoff forces and conditions that operate beyond organization’s
boundaries but affect manager’s ability to acquire and use resources
o Resources include; raw materials, skilled people, support of groups, customers provide
financial resources

Open-Systems View (Daniel Kratz, Robert Kahn, James Thompson in 1960s)

- Open System; system that takes in resources from external environment and converts them into
goods/services that are sent back to environment for purchase by customers
o Interacts with environment to survive
- Close System; system that is self-contained and not affected by changes in environment
o Experience Entropy; tendency of system to dissolve and disintegrate because it loses
ability to control itself
- Synergy; performance gains that result when individuals and departments coordinate actions

Contingency Theory Tom Burns and G.M. Stalker (UK) & Paul Lawrence and Jay Lorsch (USA) (1960s)
- Contingency Theory; idea that managers’ choice of organizational structures and control systems
depends on – is contingent on – characteristics of external environment in which organization
operates
- Basic idea; no one best way to lead organization