Unity University

MBA program

Ch2.1:
The Evolution of
Organizational
Behaviour

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 Content

 Historical origin of management

 Evolution of management
 What do today's managers learn from each
one of the theories?
 Current trends and issues

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 Learning objectives

The participants will be able to:

 Identify the origin and evolution of management
thought
 Distinguish the basic contributions of each school of
thought
 Describe how to use the contributions of each
theories in today's situation.
 Identify current issues and trends in management.

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 Historical background of Management

 Organized endeavours directed by people

responsible for planning, organizing, leading
and controlling activities have existed for
thousands of years.
 The art of management has been there
behind civilization of humanity.
 The science of management is a product of
20th century.
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 The Pre-modern Era

 Ancient Massive Construction Projects

– Egyptian pyramids
– Great Wall of China
•The art of management
has been there since
people have started
working and living in
group..
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 Adam Smith’s Contribution
To The Field Of Management

 Wrote the Wealth of Nations (1776)

– Advocated the economic advantages that organizations
and society would reap from the division of labor:
 Increased productivity by increasing each worker’s
skill and dexterity.
 Time saved that is commonly lost in changing tasks.
 The creation of labor-saving inventions and
machinery.

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 The Industrial Revolution’s
Influence On Management Practices

 Industrial Revolution
– Machine power began to substitute for human power
 Lead to mass production of economical goods
– Improved and less costly transportation systems
became available
 Created larger markets for goods.
– Larger organizations developed to serve larger
markets
 Created the need for formalized management practices.

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 Evolution of Modern Management

 Began in the industrial revolution in the late 19th

century as:
– Managers of organizations began seeking ways to better
satisfy customer needs.
– Large-scale mechanized manufacturing began to
supplanting small-scale craft production in the ways in
which goods were produced.
– Social problems developed in the large groups of workers
employed under the factory system.
– Managers began to focus on increasing the efficiency of the
worker-task mix.

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 The Evolution of Management Theory

9 Source:
05/19/20 Figure 2.1
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 Classical Contributions

 Classical Approach
– The term used to describe the hypotheses of
the scientific management theorists and the
general administrative theorists.
 Scientific management theorists
– Fredrick W. Taylor, Frank and Lillian Gilbreth,
and Henry Gantt
 General administrative theorists
– Henri Fayol and Max Weber

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 Job Specialization and
the Division of Labor

 Adam Smith (18th century economist)

– Observed that firms manufactured pins in one of two
different ways:
 Craft-style—each worker did all steps.
 Production—each worker specialized in one step.
– Realized that job specialization resulted in much
higher efficiency and productivity
 Breaking down the total job allowed for the division of labor
in which workers became very skilled at their specific tasks.

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 F.W. Taylor and Scientific
Management

 Scientific Management
– The systematic study of the relationships between
people and tasks for the purpose of redesigning
the work process for higher efficiency.
 Defined by Frederick Taylor in the late 1800’s to replace
informal rule of thumb knowledge.
 Taylor sought to reduce the time a worker spent on
each task by optimizing the way the task was done.

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 Four Principles of Scientific
Management
Principles to increase efficiency:
1. Study the ways jobs are performed now and determine new
ways to do them.
 Gather detailed time and motion information.
 Try different methods to see which is best.
2. Codify the new methods into rules.
 Teach to all workers the new method.
3. Select workers whose skills match the rules.
4. Establish fair levels of performance and pay a premium for
higher performance.
 Workers should benefit from higher output

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 Problems with Scientific
Management

 Managers frequently implemented only the

increased output side of Taylor’s plan.
– Workers did not share in the increased output.
 Specialized jobs became very boring, dull.
– Workers ended up distrusting the Scientific
Management method.
 Workers could purposely “under-perform.”
– Management responded with increased use of
machines and conveyors belts.

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 Frank and Lillian Gilbreth

 Refined Taylor’s work and made many improvements

to the methodologies of time and motion studies.
– Time and motion studies
 Breaking up each job action into its components.
 Finding better ways to perform the action.
 Reorganizing each job action to be more efficient.
 Also studied worker-related fatigue problems caused
by lighting, heating, and the design of tools and
machines.

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 General Administrative Theory

 General Administrative Theorists

– Developed general theories of what managers do and
what constitutes good management practice
– Henri Fayol (France)
 Fourteen Principles of Management: Fundamental or universal
principles of management practice
– Max Weber (Germany)
 Bureaucracy: Ideal type of organization characterized by
division of labor, a clearly defined hierarchy, detailed rules and
regulations, and impersonal relationships

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 Administrative Management
Theory

 Administrative Management
– The study of how to create an organizational
structure that leads to high efficiency and
effectiveness.
 Max Weber
– Developed the concept of bureaucracy as a
formal system of organization and administration
designed to ensure efficiency and effectiveness.

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 EXHIBIT HM–3 Weber’s Ideal Bureaucracy

1. Division of Labor
2. Authority Hierarchy
3. Formal Selection
4. Formal Rules and Regulations
5. Impersonality
6. Career Orientation

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 Weber’s
Principles of
Bureaucracy

19 05/19/20 Figure 2.2

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 Weber’s Five Principles of
Bureaucracy

1. Authority is the power to hold people accountable

for their actions.
2. Positions in the firm should be held based on
performance, not social contacts.
3. Position duties are clearly identified so that people
know what is expected of them.
4. Lines of authority should be clearly identified such
that workers know who reports to who.
5. Rules, standard operating procedures (SOPs), and
norms guide the firm’s operations.

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 EXHIBIT HM–2 Fayol’s Fourteen Principles of Management

1. Division of Work 8. Centralization

2. Authority 9. Scalar Chain
3. Discipline 10. Order
4. Unity of Command 11. Equity
5. Unity of Direction 12. Stability of Tenure
of Personnel
6. Subordination of
Individual Interests to 13. Initiative
the General Interest
14. Esprit de Corps
7. Remuneration

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 Fayol’s Principles of Management

 Division of Labor: allows for job specialization.

– Fayol noted jobs can have too much specialization leading
to poor quality and worker dissatisfaction.
 Authority and Responsibility
– Fayol included both formal and informal authority resulting
from special expertise.
 Unity of Command
– Employees should have only one boss.

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 Fayol’s Principles of Management
(cont’d)

 Line of Authority
– A clear chain of command from top to bottom of
the firm.
 Centralization
– The degree to which authority rests at the top of
the organization.
 Unity of Direction
– A single plan of action to guide the organization.

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 Fayol’s Principles of Management
(cont’d)

 Equity
– The provision of justice and the fair and impartial treatment of all
employees.
 Order
– The arrangement of employees where they will be of the most
value to the organization and to provide career opportunities.
 Initiative
– The fostering of creativity and innovation by encouraging
employees to act on their own.

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 Fayol’s Principles of Management
(cont’d)

 Discipline
– Obedient, applied, respectful employees are necessary
for the organization to function.
 Remuneration of Personnel
– An equitable uniform payment system that motivates
contributes to organizational success.
 Stability of Tenure of Personnel
– Long-term employment is important for the development
of skills that improve the organization’s performance.

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 Fayol’s Principles of Management
(cont’d)

 Subordination of Individual Interest to the

Common Interest
– The interest of the organization takes precedence
over that of the individual employee.
 Esprit de corps
– Comradeship, shared enthusiasm foster devotion
to the common cause (organization).

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 Behavioral Management Theory

 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.
– Focuses on the way a manager should personally
manage to motivate employees.

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 Hawthorne Studies

 A series of studies done during the 1920s

and 1930s that provided new insights into
group norms and behaviors
– Hawthorne effect
 Social norms or standards of the group are the
key determinants of individual work behavior.
 Changed the prevalent view of the time that
people were no different than machines.

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 Behavioral Management

 Mary Parker Follett

– An influential leader in early managerial theory
– Held a horizontal view of power and authority in
organizations
 Suggested workers help in analyzing their jobs for
improvements—the worker knows the best way to
improve the job.
 If workers have relevant knowledge of the task, then
they should control the task.

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 Theory X and Theory Y

 Douglas McGregor proposed the two different sets of

assumptions about workers.
– Theory X assumes the average worker is lazy, dislikes
work and will do as little as possible.
 Managers must closely supervise and control through reward and
punishment.
– Theory Y assumes workers are not lazy, want to do a good
job and the job itself will determine if the worker likes the
work.
 Managers should allow workers greater latitude, and create an
organization to stimulate the workers.

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 Theory X versus Theory Y

31 Source:
05/19/20 Figure 2.3
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 Management Science Theory

 An approach to management that uses rigorous

quantitative techniques to maximize the use of
organizational resources.
– Quantitative management—utilizes linear programming,
modeling, simulation systems.
– Operations management—techniques to analyze all aspects
of the production system.
– Total Quality Management (TQM)—focuses on improving
quality throughout an organization.
– Management Information Systems (MIS)—provides
information about the organization.

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 Social Events That Shaped
Management Approaches

 Classical Approach
– The desire for increased efficiency of labor intensive
operations
 Human Resources Approach
– The backlash to the overly mechanistic view of employees
held by the classicists.
– The Great Depression.
 The Quantitative Approaches
– World War II armament production
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 The Systems Approach

 Defines a system as a set of interrelated and

interdependent parts arranged in a manner that
produces a unified whole
– Closed system : a system that is not influenced by
and does not interact with its environment
– Open system: a system that dynamically interacts
with its environment
– Stakeholders: any group that is affected by
organizational decisions and policies

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 The Open-Systems View

 Open System
– A system that takes resources for its external
environment and converts them into goods and services
that are then sent back to that environment for purchase
by customers.
– Inputs: the acquisition of external resources.
– Conversion: the processing of inputs into goods and
services.
– Output: the release of finished goods into the
environment.

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 The Organization as an Open System

36 05/19/20 Figure 2.4

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 Other System Considerations

 Closed system
– A system that is self-contained and thus not affected by
changes occurring in its external environment.
– Often undergoes entropy and loses its ability to control
itself, and fails.
 Synergy
– Performance that results when individuals and
departments coordinate their actions
 Performance gains of the whole surpass the sum of the
performance of the individual components.
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 Contingency Theory

 Contingency Theory
– The idea that the organizational structures and control
systems manager choose depend on—are contingent on—
characteristics of the external environment in which the
organization operates.
– Assumes there is no one best way to manage.
 The environment impacts the firm and managers must be flexible to
react to environmental changes.
– In rapidly changing organizational environments, managers
must find ways to coordinate different departments to
respond quickly and effectively.

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 The Contingency Approach

 The Contingency Approach

– Replaces more simplistic systems and integrates much of
management theory.
 Four Contingency Variables
– Organization size (coordination)
– Routineness of task technology (task complexity dictates
structure)
– Environmental uncertainty (change management)
– Individual differences (managerial styles motivational
techniques, and job design)
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 How do today's managers use
scientific management

 The guidelines that Taylor and others derived

for improving production efficiency are still
used in organizations today.
 Use of time and motion study
 Design of incentive systems

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 How do today’s managers use General
Administrative theories?

 Some of our current management ideas and

practices can be directly traced to them.
 Functional view of managers job- Fayol
 14 principles of Fayol serves as a frame of reference
from which many contemporary management
concepts
 Weber’s principle of division of labour and
adherence to rules and regulations was criticised for
not allowing flexibility, creativity, etc

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 How do today's managers use the
quantitative approach?

 Contributes directly to management decision

making in the areas of planning and control.
– Budgeting
– Scheduling
– Quality control and similar decisions.

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 How do today's managers use the
behavioural approach

 Has largely shaped today’s organizations.

 How to design motivating jobs
 Team work
 How to use open communication
 Formed the foundation for our current
theories of motivation, leadership, group
behaviour and development,

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 The systems approach and managers

 Envisioned an organization as bieng made

up of an interdependent factors, including
individuals, groups, attitudes, motives, formal
structure, interactions, goals, status, and
authority.
 Decisions and actions taken in one area
affects the other.
 No organization is self-contained, it relies on
the environment.
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 The contingency approach and
managers

 It stresses that there are no simplistic or

universal rules for managers to follow.
 Organizations are diverse- in size, goals,
work, etc

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 Current trends and issues

 Globalization
 Ethics
 Workforce diversity
 Entrepreneurship
 Managing in an E-Business World
 Knowledge management and learning
organization

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 Conclusions

 Some old ideas are still relevant

 Use and/or type of thinking: learn from each
one of them
 Continuously emerging useful concepts and
approaches
 Try to critically approach to your
organizational reality.

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