TOPIC TWO

THEORIES AND HISTORY OF MANAGEMENT

2.0 Introduction and Overview

This topic presents the history of management and the theories of management. In this topic various
theories are discuss and the relevancy the same in modern management.

2.1 Learning Outcomes

At the end of this topic the learner is expected to:

1. Explain the various theories of management

2. Apply the concept of the various theories of management

3. Analyze the various principles suggested in the theories of management

4. Demonstrate the understanding of the various theories and their applicability in today’s‟ management
practices

2.2 Definition of Theory

A theory is a systematic grouping of independent concepts and principles that gives a framework and ties
together a significant area of knowledge. It’s relevant in the field of management because it provides a
means of classifying significant and pertinent management knowledge.

When identifying an effective organization structure, there are a number of principles applied and which
are inter-related. These principles have a predictive value to managers e.g. certain principles guide
managers when delegating authority in an organization. Theories and history of management are
important to managers for various reasons; History assists managers in understanding the current
developments and avoids mistakes of the past.

History and theory foster an understanding and appreciation of the current situations and development;
also facilitate the prediction of future conditions. Theory helps managers organize information and
therefore are able to approach the problems systematically. Without theory all managers would have ideas
or creations which would not be useful in today’s complex and dynamic organizations. However, there is
no universally accepted and agreed theory of management that managers can apply in all situations.

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2.3 Ancient Management

Some of the earliest written documents in the world found in the Sumerian civilization of 5000 years ago
are evidences of managerial control practices. The Sumerian temple priests through their fast tax system
collected and managed tremendous amount of goods including revenues and estates. These priests were
required to give an account of their stewardship to the Chief priest which is a clear managerial control
practice. Due to the fact that the memory couldn’t be trusted, the Sumerian priests developed a system of
writing or recording data to account for all the transactions entered into by the various priests.

The application of management goes back to thousands of years into the ancient civilization and its
recorded that there was application of management during the construction of Egyptian Pyramids. It’s
believed that one of the greatest pyramids constructions took a labour force of over 100,000 men for
duration of 20 years. This undertaking required planning, organizing and controlling which is part of the
managerial concepts and techniques applicable today. It’s also recorded that the Chinese used management
in the government around 1500 BC The Greeks also applied management at around 1000 BC The
Babylonians also used management in the government around 2700 BC.

The management of the great Roman Empire could not have succeeded without the application of
management. It is also recorded that from around 800 B.C the Romans were practicing organizing
principles which is a concept of management. The works of great philosophers like the Socrates (400 BC)
and the Plato (350 BC) all indicate some elements of management. One of the great Hebrews was Mosses
a leader and a manager whose ability in the Govt. in law making and human relations makes him worthy
of some note. His planning, organizing and execution of the exodus of the Israelites/Hebrews from the
land of bondage was a tremendous managerial process. Through the advice of his father in law Jethro, he
did a magnificent job of; personnel selection, training and Organization.

However, despite this widespread practice of management there was little interest in management as a
scientific discipline until a century ago. It was not until the late 19th century that large organizations
requiring systematic administration started to emerge. Before this century, government and military
organizations were not interested in the profits and hence they paid very little attention to efficiency and
effectiveness which are part of management. This led to the evolution of the schools of management
theories.

2.4 Schools of Management Theories

2.4.1 Classical School of Management

It emerged around the turn of the 20th century. It’s divided into scientific management theory which
focuses on the work of individuals and Administrative management theory which is concerned with how
organizations should be put together.

2.4.2 Scientific Management

It is closely associated with the work of Frederick W. Taylor, Frank and Lilian Gilbreth and Henry l.
Gantt. They believed that by using observation, measurements, logics and analysis, the manual tasks could
be redesigned to make their execution more efficient. The main objective of this initially was to determine
how jobs could be designed in order to maximize the output per employee or to improve efficiency (F.W
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Taylor is the father of scientific management). Scientific management is the name given to the principles
and practices that emerged out of F. Taylor’s work. He was interested in analyzing the job and
determining its basic concepts.

In order to do this, he conducted a wide variety of experiments with an intention to:

1. Know how long it should take a worker or a machine to perform a given task.

2. Develop uniform standards for work.

3. Find a method of maintaining the workers within the jobs.

4. Learn better ways of supervising and motivating the personnel.

In his study, he developed four major principles which are referred to as the elements of scientific
management. Scientific selection of the workers so that each worker would be given responsibility for the
task for which he/she is best suited. The workers must be scientifically selected and trained so that they
can be more productive in their jobs. Encourage friendly interactions between management and employees
but with a clear separation of their duties. There must be division of labour and co-operation between
managers and workers.

Henry Gantt, Frank and Lilian Gilbreth as well contributed to scientific management by dedicating
themselves to the idea of finding the one best way of doing every job. Henry Gantt developed graphic
methods of describing plus making possible better managerial control. He emphasized the importance of
time and cost in planning and controlling managerial works. As a result of his experiments, he developed
the Gantt Chart which is a graphical method used by managers in scheduling, planning and controlling
organizational activities.

2.4.3 Contributions of Scientific Management

Scientific management did not ignore the human element and has contributed to the systematic use of
financial incentives which motivates people to produce as much as possible.

Enables management to set standards of performance that are attainable and to give extra pay to those who
exceed the minimum i.e. those who produce more or exceed the production output should be rewarded
more. Pay should always be pegged to performance and productivity. Based on the conclusion made by
the scientific managers, modern managers should realize the importance of proper employees selection
and those who are best suited for the job and henceforth training and development. Encourages the
promotion of efficiency and combating waste and dedication to finding a better way of doing a job.

In conclusion and according to scientific management, managers today can’t simply assume that
employees are only interested on higher salaries/wages or that dividing jobs into their simplest tasks
ensures a quality product, high morale and organizational effectiveness.

3.1.10 2.4.4 Administrative Management

Henry Fayol is recognized as the father of classical organization theory/father of modern

management/administration management. He started as an Engineer and later became a very successful

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administrator in a large Fresh mining company. He believed that managers would be successful if they
understood and applied the basic principles and functions of management. He believed that a manager’s
job could be divided into 5 functions/processes of managerial responsibilities;

a. Planning - Choosing a course of action that will help the organization achieve its goals. Consists of
activities a manager engages in to determine in advance what he and the subordinates would attempt to
accomplish and how they will go about it.

b. Organizing- meaning mobilizing of resources to put plans into action. It’s the work a manager
undertakes to allocate and to arrange the work to be done to ensure its efficient and effective performance.

c. Directing- providing direction to employees and getting them to do their work. It’s a managerial
function that enables managers to get things done through people, individuals and groups or teams. It
constitutes motivation, leadership, communication and co-ordination which is a process of binding
together, unifying and harmonizing all the activities and efforts within an organization setting.

d. Controlling- monitoring the plans to ensure that they are being followed, identifying deviations and
establishing a corrective/remedial action.

e. Staffing: Ensuring that the organization has the right and qualified number of staff at any given time
which constitutes recruitment and selection. Fayol developed 14 principles of management which he felt
that they should be applied by managers at operational levels. His model of management is still applicable
in our modern society today. He stressed that in describing the various managerial functions, the key
responsibility and focus of a/any manager’s efforts has to be kept in mind very clearly, that is, that a/any
manager achieves results by utilizing human and material resources efficiently and effectively.

2.4.5 Henry Fayol’s Fourteen Principles

Division of labour - Work must be divided among workers. It is based on the fact that specialization
belongs to the natural order of things. The more people specialize, the more efficiently they can perform
their work. Aims at producing more and better results with the same effort.

Authority and responsibility (right to command and have obligation) i.e. managers need authority to carry
out responsibility. Authority is the right to command or the right to give order. Responsibility is an
obligation and an essential counterpart of authority. Discipline - Workers should respect rules and
regulations of the organization. It implies obedience and respect for the agreements between an
organization and employees. Unity of command - An employee should receive commands from only one
supervisor. Each employee should have one immediate Boss who gives instructions and the employee is
accountable to. If this is violated, it undermines authority; discipline is also in jeopardy; order is disturbed
and stability is threatened.

a. Unity of direction - One manager should have one plan for each of the organizational objectives. The
efforts of everyone in the organization should be co-ordinated and focused in the same direction.” One
manager, one plan, one set of objectives.

Individual subordination - the interest of the organization should always come before the individual
interest. Where the interests differ, managers should always reconcile.
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b. Remuneration - The pay should be fair and good and performance should always be rewarded.

c. Centralization - There should be one point in the organization that exercises overall control. It is
decreasing the role of the subordinates in decision making and facilitates communication and consultation
between organizational units. Decentralization is its opposite and it‟s the concept of offering more
participation in decisions making.

d. Scalar chain of command - authority should flow downwards from the top to the bottom through the
chain of command.

e. Order - people and materials should be at the right place at the right time.

f. Equity - Managers should be fair in dealing with employees.

Stability of tenure - Efficiency can only be achieved by a stable labour force. A high staff turnover is not
healthy for an efficient functioning of an organization.

g. Initiative - Employees should be given freedom to act and be innovative. And participate in decision
making.

h. Espirit de corps – This means in union there is strength- teamwork should always be encouraged.

Management universality argues that those with general knowledge of management functions and
principles can manage any type of an organization. It says that these principles and functions can be
learned by anybody who is interested and especially through formal training.

2.4.6 Marx Weber and Bureaucracy

Marx Weber (1864 - 1920) was a German sociologist who was sensitive to the abuse of power by people
in managerial positions. In order to reduce the arbitrary use of power he recommended an organizational
system that would be run by rules and regulations and he referred this organization to as a Bureaucracy.
Under a bureaucratic organization there is a hierarchical structure based on the formal authority and where
people are guided by rational rules and regulations.

According to Weber, the basic principles of bureaucratic organizations are:

1. Division of labour by functional specialization.

2. A well defined hierarchy of authority.

3. A cadre of professional employees.

4. A system of rules and procedures.

5. Autonomous decisions by office holders.

6. Merit based employee selection and tenure.

7. Maintenance of written records, communications and rules.

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2.4.7 Evaluation of the Classical Organizational Theories

Although the classical theories contributed greatly to the understanding and practice of management, it
has been criticized on a number of grounds. These theories assumed that all organizations can be managed
by the same set of rules and regulations. They failed to appreciate the difference between various
organizations. e.g. public enterprise and private enterprises.

The classical approach can be effective under a stable environment but with the frequent changes in
modern management, it proves ineffective as conditions require modifications of management principles
and bureaucratic rules. Following outdated rules and principles can be counterproductive. The classical
theories undervalued the human element in organizations. It considered people as passive and capable of
reacting only to organizational rules and economic incentives. It ignored qualities such as; attitudes,
emotions, creativity and initiative and it failed to accommodate the fact that people are capable of going
against rules.

Note: The classical organizational theories of Henry Fayol and Marx Weber have had a lot of impact on
management even today. Many current textbooks in management are organized on the basis of the
principles and theories put forward by the two people. The principles are still valid in modern
management and many complex organizations today are managed through the use of bureaucratic rules
put forward by Marx Weber.

In order to address the short comings of the classical theories the human relations movements (HRM) and
the behavioral science approached were developed.

2.4.8 Behavioral School of Management Theory

This theory was developed because others had neglected the human element in the workplace. It is
considered to be a more people oriented theory. Among the contributors include; Chester l.Bernard (1886
- 1961), Mary Parker Follet (1868-1933), Hugo Munsterberg (1863-1916), and Prof. Elton Mayo (1880-
1949) who is associated with the Human relation movement (HRM).

Mary Parker recognized the potential importance of the individual but advocated that no one could
become a whole person except as a member of a group. She strongly believed that management and the
labour force must become part of one group.

Chester Bernard said that people come together in formal organizations to achieve things they can’t
achieve when working alone. As they pursue the goals of the organization, they must also

satisfy their individual needs. He believed that for an organization to function effectively there is need to
maintain a balance between the organizational goals and the goals of individuals.

Hugo Munsterberg is the father of industrial psychology and he suggested that productivity could be
increased through finding the best possible person meaning the worker whose mental ability is the best for
the job. He also suggested that productivity can be increased by use of the psychological influence
meaning identifying the best possible effects to motivate the employees. He stressed on finding the best
possible work or the ideal psychological conditions for maximizing productivity. He was interested in the
mutuality of interests between managers and employees. He developed psychological tests for fitting the

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right person to the right job which is similar to Fredrick Taylor’s principle of the scientific selection of
workers.

2.4.9 Human Relations Movement to Management

Management can be defined as a set of activities directed at the efficient and effective utilization of
resources in order to achieve organizational objectives. Management focuses on the entire organization
from both a short and a long-term perspective. Management is the managerial process of forming a
strategic vision, setting objectives, crafting a strategy and then implementing and executing the strategy.
Management goes beyond the organization’s internal operations to include the industry and the general
environment. The key emphasis is on issues related to environmental scanning and industry analysis,
appraisal of current and future competitors, assessment of core competencies, strategic control and the
effective allocation of organizational resources (HRM).

It started in the 1920‟s and 1950‟s and concerns itself with the treatment of psychological satisfaction as
the primary management concern. Elton Mayol is referred to as the father of HRM. HR refers to how
people interact within an organization i.e. the way managers interact with their subordinates. When the
management of people leads to better performance, then there are good human relations. When the morale
and efficiency deteriorate in an organization HR is bad. Managers need to know why employees behave
the way they do, what psychological factors motivate them if they are to create good human relations.
Good human relations exist when people interact with mutual respect and treat each other with
understanding. Managers should try to respect their subordinates while the employees should also
reciprocate.

2.4.10 Human Relations Originated from the Hawthorne Studies

Hawthorne studies attempted to improve efficiency and morale at the work place by understanding the
underlying factors behind human motivation at the work place i.e. by understanding those factors that
motivate man to work. These experiments were conducted by Professor Elton Mayol and his colleagues
and they based their experiments at the Hawthorne plant of western electric company in Chicago (USA)
between 1927-z932. The experiments aimed at investigating the relationship between certain physical
factors (lighting-illumination, heating and ventilation) and workers productivity.

Workers were subdivided into several experimental workgroups and each group was subjected to
deliberate changes in the physical factors i.e. deliberate changes in lighting, heating and ventilation. A
control group was also used whose physical factors remained constant throughout the experiment. The
observation was that the productivity of both groups increased with increased lighting, ventilation, heating
and other physical factors. This remained even when the physical factors were increased to the extreme.

It also continued to increase when the physical factors were reduced to the minimum. The mystery was
that the increase in productivity was noted in the control group whose factors remained the same. This
made it difficult to arrive at an accurate conclusion which prompted further studies by Prof. Elton Mayol
from Harvard University. Elton Mayol introduced new variables to the groups e.g. higher wages,
introduction of the rest period (breaks) of varying durations. He also shortened the work day and the work
week and the workers were also allowed to choose their own rest periods and given greater say in major

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decisions in the experiments. He observed that financial incentives in form of higher pay had no influence
in productivity.

Productivity even with the introduction of new variables tended to rise and fall erratically. He concluded
that money and other materials may affect productivity in one way or another but they could not motivate
the workers towards better performance. He also concluded that increased concern about the workers
welfare and a more sympathetic supervision on the part of management were the strongest motivators. The
social groups or promotion of the associations among the workers have a positive and negative effect on
performance. Since workers had been chosen for the experiment and given special attention, they had
developed some pride that motivated them to work hard to improve their productivity. There existed an
informal agreement among all workers involved in the experiment which enabled them to work harder and
hence improve productivity. The sympathetic supervision was also noted to have some impact on the level
of productivity. The existence of an informal work group within the formal organization led to the
establishment of standards of performance by the members of the group. This group constituted the social
work environment which had both positive and negative effects on performance. According to Mayol, the
workers found their jobs boring and meaningless but through their association with their colleagues and
friends, it imparted some meaning and interest to their jobs. It also provided them with a means of
protection from harsh management. This group identification was considered to have a strong influence on
the employees or worker’s behavior. Management should strengthen and not suppress informal groups in
formal organizations.

2.4.11 Human Relations Model (Douglas MCGregor)

Douglas McGregor was a behavioral scholar who criticized HRM as a mere sophistication to the approach
of manipulating the workers. He agreed with (Abraham Maslow), an American psychologist who
developed the needs hierarchy theory of motivation that employees require more than money to be
motivated. They require satisfaction and have a need to achieve.

They also require meaningful work/job. Man has an inherent motivation to work and he doesn’t hate or see
work as undesirable. He believed that employees should be given more responsibility for making
decisions at the workplace. He put forward two models of human behavior regarded to as theory X and
theory Y respectively.

2.4.12 Theory X

This theory presents a very pessimistic view of man. It held that; Man inherently hates work and only
work when necessary i.e. when conditions and circumstances compel him to work. He works as a last
result and he will avoid work whenever possible and especially when his basic needs have been met.

Man is naturally lazy and he can’t be relied upon to work to the expected standards without being directed.
Even when he is willing to work, he lacks the natural capacity or energy to work hard. Man hates
responsibility and will do everything to avoid it. People are only willing to work under others on whom
they can heap blame and they will always look for scapegoats instead of accepting responsibility for their
mistakes.

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People must be coerced, controlled and directed in order to work. They can’t work willingly without
supervision. They must be made to work towards organizational goals.

Punishments/threats of punishments are the best ways of directing people towards organizational goals.

2.4.13 Theory Y

This theory presents a more optimistic view of man and work. It supports the behavioral concepts of man
as expressed by human relations movement and other behavioral and modern theories for motivation.
Man’s expenditure of physical energy is as natural to man as when he is resting or at play. Man naturally
likes to work and that’s why he goes out looking for work and not the employer going out to look for the
workers. When people are rewarded on the basis of good performance, they are willing to direct
themselves to achieving the goals of the organization with determination. Man therefore does not need to
be directed. External controls and punishments and threats of punishments are not necessary towards
directing people in achieving the organization goals.

Conclusion

It is the responsibility of management to create an environment which is conducive enough for employees
to contribute positively towards organizational goals. Employees are creative and innovative and hence
should be given an opportunity to exploit their potential.

2.4.14 Management Theory Z

It was developed in the early 1980s by William Ouchi. It suggests that a flexible managerial approach
with elements of both structured and relaxed organization leads to success. His studies focused on the
success of Japanese and American companies and the differences between the Japanese and American
management systems. Theory Z is an integration of the Japanese and Americans theory. Ouchi studied
successful American companies in order to establish why they continued to succeed while others were
failing. He found out that most American companies followed a set of business practices which he
referred to as (Type A for America and Type J for Japan).Theory Z is based on certain factors; the ability
to guarantee workers longer employment period such as in employee participation in decision making and
policy implementation criteria. Individual responsibility which should be spelt out clearly.

2.4.15 Management Excellence

This theory was developed by Thomas Peters and Robert Waterman in the mid 80s. This theory is also
based on a series of studies of various Americans companies which made them to conclude that successful
managers are characterized by eight (8) attributes:

1. A bias for action (action oriented)

2. Staying close to the customer.

3. Autonomy and entrepreneurship.

4. Productivity through people.

5. Hands on value driven management.

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6. Remaining with the business.

7. A climate to dedication to the central values.

8. Simple form and lean staff.

Summary of the Topic

In this topic we have been able to learn the various theories of management, characteristics of the specific
theories. In the topic we covered classical theories Fredrick tylor human relations Elton mayo among
others theory X and Y by Douglas McGregor and Ouchi theory Z. In this lesson we also learn the
applicability of the theory in the management of organization.

Personal Reflection

1. Critically explain the major features of 2”schools of “management” under the Classical Theory.

2. Discuss how Henri Fayol’s general principles of management are applied today in an organization with
which you are familiar.

3. Identify major components of contemporary management

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