The Evolution of Management

Theory

Chapter 2
The driving force behind the evolution of
management theory is the search for
better ways to utilize organizational
resources.
 The Evolution of Management
Theory

Organizational Environment Theory

Management Science Theory

Behavioral Management Theory

Administrative Management Theory

Scientific Management Theory

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
Evolution of modern
management began
in the late nineteenth
century, after the
industrial revolution.

Economic, technical and

cultural changes
Mechanization changed
systems like crafts
production into large
scale manufacturing,
where semi or
unskilled workers
operated machineries.
 Small-scale Large-scale
Crafts Production Mechanized Manufacturing

Managed by engineers who only had

Technical orientation

Problems faced:

•How to handle people

•Social problems relating to working together
in large groups
•How to increase efficiency of the worker-task mix
 Job specialization and the Division
of Labor

Famous economist,
Adam Smith,
journeyed around
England in 1700’s
studying the
effects of industrial
revolution.
 Crafts-style Factory System

Each worker performed

Each worker responsible for
only 1 or a few tasks to
All tasks
produce

•Poorer performance •Better performance

•Few thousands p/d •48,000 pins p/d
•Cannot be equally •More skilled at their
Skilled in all tasks
tasks
 Job Specialization Division of Labor

Better Organizational
Increased Efficiency
performance
With insights gained from Adam Smith’s
observations, other managers and
researchers began to investigate how to
improve job specialization to increase
performance.
They focused on how to organize and
control the work process.
F.W. Taylor (1856-1915)
Scientific Management

The systematic study of

relationships between
people and tasks for the
purpose of redesigning
the work process to
increase efficiency.
Taylor believed that if the amount of time
and effort that each worker expends to
produce a unit of output can be reduced
by increasing specialization and division of
labor, the production process will become
more efficient.
 Taylor’s Principles

1. Study the way workers

perform their tasks,
gather all informational
job knowledge that
workers possess, and
experiment with ways
of improving how tasks
are performed
2. Codify the new methods of performing
tasks into written rules and standard
operating procedures.
3. Carefully select workers who possess
skills and abilities that match the needs
of the task, and train them to perform
the task according to the established
rules and procedures.
4. Establish a fair or acceptable level of
performance for a task, and then
develop a pay system that provides a
reward for performance above the
acceptable level.
 This scientific management became
nationally known, but the selective
implementation of the principles created
more harm than good.
 Workers felt that as their performance
increased, managers required them to do
more work for the same pay.
 Increases in performance meant fewer
jobs and greater threat of layoffs
 Monotonous and repetitive
 Dissatisfaction
 Ford
 Achieving the right mix of worker-task
specialization

 Linking people and tasks by the speed of

the production line
 Franklin Motor Company

Redesigned the work process using the

scientific management principles.

Production increased from 100 cars a

month to 45 cars a day.
 The Gilbreths

 Frank Gilbreth (1868-1924)

 Lilian Gilbreth (1878-1972)

 Time and Motion Study
1. Break and analyze every individual action
necessary to perform a particular task
into each of its component actions
2. Find better ways to perform each
component action
3. Reorganize each component action so
that it is more efficient-less cost of time
and effort
Their goal was to maximize the efficiency
with which each individual task was
performed.
 Study of Fatigue
 How physical characteristics of the
workplace contribute to job stress
 Effects of lighting
 Effects of heating
 Effects of color of walls
 Design of tools and machines
 Administrative Management
Theory
 Theory of Bureaucracy

 Fayol’s Principles of Management

Administrative Management

The study of how to create an

organizational structure that leads to
high efficiency and effectiveness.
 Theory of Bureaucracy

Max Weber (1864-1920)

Developed the principles of bureaucracy-a

formal system of organization and
administration designed to ensure
efficiency and effectiveness.
 System of written rules and
SOPs that specify how
Employees should
behave

Clearly specified Clearly specified

System of task and A bureaucracy Hierarchy of
Role relationships Should have authority

Selection and evaluation

System that rewards
Employees fairly and
Equitably.
 5 Principles:
 A Manager’s formal authority derives from
the position he or she holds in the
organization

 People should occupy positions because of

their performance, not because of their
social standing or personal contacts.
 The extent of each position’s formal
authority and task responsibilities and its
relationship to other positions in an
organization, should be clearly specified.

 Authority can be exercised effectively in

an organization when positions are
arranged hierarchically, so employees
know whom to report to and who reports
to them.
 Managers must create a well-defined
system of rules, standard operating
procedures and norms so that they can
effectively control behavior within an
organization.
 Rules

Formal written instructions that specify

actions to be taken under different
circumstances to achieve specific goals.

Rule: At the end of the day employees are

to leave their machines in good order.
Standard Operating Procedures

Specific sets of written instructions about

how to perform a certain aspect of a task.

SOP: Specifies exactly how they should do

so, which machine parts should be oiled or
replaced.
 Norms

Norms are unwritten, informal codes of

conduct that prescribe how people should
act in particular situations.

E.g.: An organizational norm in a restaurant

might be that waiters should help each
other if time permits.
Fayol’s Principles of
Management

Henri Fayol (1841-1925)

 14 Principles of Management:

1. Division of Labour
2. Authority and Responsibility

3. Unity of Command

4. Line of Authority

5. Centralization

6. Unity of Direction

7. Equity
1. Order
2. Initiative
3. Discipline
4. Remuneration of Personnel
5. Stability of tenure of Personnel
6. Subordination of Individual Interests to
the Common Interest
7. Esprit de Corps
 1. Division of Labour

Job specialization and the division of labour

should increase efficiency. Pointed out the
downside of too much specialization; so
workers should be given more duties to
perform.
2. Authority and Responsibility

Managers have the right to give orders and

the power to exhort subordinates for
obedience.
 3. Unity of Command

An employee should receive orders from

only one superior.
 4. Line of Authority

The length of the chain of command that

extends from the top to the bottom of an
organization should be limited.
 5. Centralization

Authority should not be concentrated at the

top of the chain of command.
 6. Unity of Direction

Those operations within the organization

that have the same objective should be
directed by only one manager using one
plan. For example the personnel
department in a company should not have
two directors each with a different hiring
policy.
 7. Equity

Managers should be both friendly and fair to

their subordinates.
 8. Order

Materials and people should be in the right

place at the right time. People should be
in the jobs that they are most suited to.
 9. Initiative

Subordinates should be given the freedom

to conceive and carry out their plans, even
though some mistakes may result.
 10. Discipline

Members in an organization need to respect

the rules and agreement that govern the
organization.

To Fayol, discipline results from good

leadership, fair agreements and judiciously
enforced penalties for infractions.
11. Remuneration of Personnel

Compensation for work done should be fair

to both employees and employers.
12. Stability of Tenure of Personnel

A high employee turnover rate undermines

the efficient functioning of an
organization.
 13. Subordination of Individual
Interests to the Common Interest

Interests of employees should not take

precedence over the interests of the
organization as a whole.
 14. Esprit de Corps
Promoting team spirit will give the
organization a sense of unity.

To Fayol, even a small factors should help to

develop the spirit. He suggested, for
example, the use of verbal communication
instead of formal, written communication
whenever possible.
 Behavioral Management
Theory
 The Work of Mary Parker Follet

 The Hawthorn Studies and Human

Relations

 Theory X and Y
 Behavioral Management

The study of how managers should behave

to motivate employees and encourage
them to perform at high levels and be
committed to the achievement of
organizational goals.
 Mary Parker Follet
 Mary Parker Follett advocated for a human
relations emphasis.
 Her work contrasted with the "scientific
management" of Frederick W. Taylor.
 Mary Parker Follett stressed the
interactions of management and workers.
 Follett was one of the first to integrate the
idea of organizational conflict into
management theory, and is sometimes
considered the "mother of conflict
resolution.“
 She coined the words "power-over" and
"power-with" to differentiate coercive
power from participative decision-making.
 She was of the view that authority should
go with knowledge.
 Advocated involvement of workers in job
analysis and work development process.
 Managers of different departments should
communicate with each other directly.
 Cross-functioning
 The Hawthorne Studies

Hawthorn effect is the finding that a

manager’s behavior or leadership
approach can affect worker’s level of
performance.
Human Relations Movement

Advocates of the idea that supervisors

receive behavioral training to manage
subordinates in ways that elicit their
cooperation and increase their
productivity.
 Informal Organization

The system of behavioral rules and norms

that emerge in a group.
 Organization Behavior

The study of the factors that have an impact

on how individuals and groups respond to
and act in organizations.
 Theory X and Theory Y

Douglas McGregor proposed that two sets of

assumptions about how work attitudes
and behaviors not only dominate the way
managers think but also affect how they
behave in organizations. He named these
two assumptions Theory X and Theory Y.
 Theory X

Assumptions:
 Average worker is lazy

 Dislikes work

 Will try to do as little as possible

 Have little ambition and avoid

responsibility
Managers Who Accept Theory X

To keep performance high, workers must be

supervised closely and their behaviors be
controlled by means of “the carrot and
stick”-rewards and punishments.
 Design and shape work setting to
maximize control over workers’ behaviors.
 Minimize the workers’ control over the
pace of work.
 Focus is on development of rules, SOPs
and a well-defined system of reward and
punishment to control behavior.
 Managers see little point in giving
autonomy to solve their own problems.
 Managers see their role as closely
monitoring workers.
 Theory Y

Assumptions:
 Workers are not inherently lazy

 Do not naturally dislike work

 If given the opportunity, will do what is

good for the organization.

 Characteristics of the work setting
determine whether workers consider work
to be a source of satisfaction or
punishment.
 Managers do not need to closely control
workers’ behavior.
 They exercise self-control
 “The limits of collaboration in the
organization are not limits of human
nature but of management’s ingenuity in
discovering how to realize the potential
represented by its human resources.”
 Decentralize authority
 More control of workers over their jobs
 Accountable for their jobs
 Managers’ role is not to control but to
provide support and advice and to
evaluate them on their ability
Management Science Theory

An approach to management that uses

rigorous quantitative techniques to help
managers make maximum use of
organizational resources.
 Quantitative Techniques

 Operations Management

 Total Quality Management

 Management Information Systems

 Organizational Environment
Theory

The set of forces and conditions that

operate beyond an organization’s
boundaries but affect a managers ability
to acquire and utilize resources.