Develoment of

Management Thoughts
Theory and Practice
UNIT-1
Why study Management History ?

Management is the most used tool today in any

enterprise. History of its evolution helps us to
understand its metamorphosis to its current level.
Why Study Management Theory?
Theories are perspectives with which people make
sense of their world experiences
Theories provide a stable focus for understanding
what we experience
Theories enable us to communicate effectively and
thus move into more complex relationships with
other people
Theories make it possible to keep learning about
our world. Theories have boundaries. Triggers to
look beyond.
 Classification of Management
Approaches
1. Classical Management Approaches
-Bureaucratic organization
-Scientific management
-Administrative principles
2. Neo-Classical Theory/Human Relations Theory
and Behavioral Management Approaches
-The Hawthorne studies
-Maslow’s theory of human needs
-McGregor’s Theory X and Theory Y
-Argyris’s theory of adult personality
-Follett’s organizations as communities
 Classification of Management
Approaches conti..
3. Modern Management Foundations
– Quantitative analysis and tools
– Organization as systems
– Contingency thinking
– Quality management
– Knowledge management and organizational learning
– Evidence-based management
1-The Classical Approach/Theory
It emphasises organizational efficiency to
increase organizational success.
Elements of classical theory:
 Inter-related functions
 Guiding principles (to aid executive
thinking and action based on practical
experience)
 Bureaucratic structure
 Reward-punishment nexus (“Follow the
rules, obey the orders, show the results and
get the rewards”)
 Major Branches in the Classical Approach to
Management
12

10

Column 1
6
Column 2
Column 3

0
Row 1 Row 2 Row 3 Row 4
 A-Bureaucratic Organization/
Bureaucracy
Max Weber-German Sociologist(1864-1920)
A structure with highly routine operating tasks achieved
through specialization, very formalised rules and
regulations, tasks that are grouped into functional
departments, centralised authority, narrow spans of control
and decision-making that follows the chain of command.
Max Weber described goal oriented large organization as
bureaucracy -- defined as an administrative system which
is deliberately designed for accomplishment of large scale
tasks through coordination of individual efforts in a rule
bound, fair and efficient manner.
Although the term bureaucracy has been popularized for
referring to government organizations, it is being practiced
in virtually every large and formal organization
 Bureaucratic Organization conti..
An ideal, intentionally
rational, and very efficient
form of organization
Based on principles of
logic,
order, and legitimate
authority
Bureaucratic Organization conti..
Elements of Bureaucracy: Weber has
provided a number of features of
bureaucratic structure.
1. Hierarchy
2. Division of work
3. Rules, regulations and procedures
4. Records
5. Impersonal relationships (No room for personal
involvement, emotions and setiments)
6.Administrative class
Bureaucratic Organization conti..
Advantages: Disadvantages:
 Rigidity
 Specialization
 Impersonality
 Rationality (An organization without
 Predictability persons)
 Displacement of objectives
Example-Fresh students,
New Employee  Compartmentalisation of
activities
 Democracy  Empire-building
(No favouritism) (Adding more people)
 Red-tape
(Bureaucracies are paper mills)
 B-Scientific Management
Frederick W.Taylor (1890-1930)
(The Father of Scientific Management)
An approach that emphasises the scientific study of
work in order to improve worker efficiency.
Basics of Scientific Management:
 Each task must be scientifically designed so that it can
replaced the old, rule-of-thumb methods.
 Workers must be scientifically selected and trained so
that they can be more productive on their jobs.
 Bring the scientifically designed jobs and workers
together so that there will be a match between them.
 There must be division of labour and cooperation
between management and workers.
 Scientific Management conti..
Key Concepts:
1.Scientific task planning (a fair day’s work)
2.Time and motion studies
 Minimum time required to do a job
 Best sequence of motions to do a job
3.Standardisation
4.Differential piece rate system
5.Functional foremanship
 Scientific Management conti..
Limitations:
 Exploitative device
 Depersonalised work
 Unpsychological
 Undemocratic
 Anti-social
 Unorigional
 Unrealistic
 Contribution of Scientific Management Approach
 Workers and managers must work according to
scientific principles rather than working haphazardly when
carrying out organizational activities.
 Organizational activities must be performed in a coordinated and
consistent way, not in an inconsistent and incoherent way.
 Organizations and their methods, rather than submitting low
unproductiveness, must reject this and must try to provide
the highest productivity.
 Specialization in every part of a defined labor must be
provided.
 Each labor must be parted to sub-factors forming it. When
defining activities which workers must carry out, not only
intuition and experience but also scientific methods must be used
as well.
 People whose mental and physical skills are sufficient for
works being standardized must be chosen that’s to say, the
most suitable staff member must be chosen.
 C-Administrative Theory
Henry Fayol(1841-1925)
An approach that focuses on principles that
can be used by managers to coordinate the
internal activites of organizations.
Administrative Theory Conti..
Fayol’s Six: Fayol began by classifying
business operations into six major
activities;
 Technical (production)
 Commercial (buying and selling)
 Financial (use of capital)
 Security (protection of property)
 Accounting (keeping financial records)
 Managerial
Administrative Theory Conti..
(Management Functions)
Fayol’s 14 Principles of Management- busted the myth that
‘Managers are Born and not made. He insisted that
management is a skill which can be taught
Division of work  Centralization
(training)
Authority and  Scalar chain
responsibility  Order (right people and right
material at right place)
Discipline (obey rules)
Unity of Command  Equity (principle of hot
stove)
Unity of Direction (one
manager one plan)  Stability of Tenure
Subordination of  Initiative
individual interest to the  Esprit de corps (union
common good.
is strength)
Remuneration of personnel
 Managerial Skills
According to Fayol, there is nothing mystical about managerial skills
and knowledge. He listed following qualities of a manager:
 Physical (health and vigour)
 Mental (ability to understand, learn; apply judgement and adapt to
different situations)
 Moral (energy, initiative, firmness, loyalty, tact and diginity)
 Educational (acquaintance with matters not related to the function
performed)
 Technical (specilised knowledge relating to one’s area of
specialization, especially about machine, work processes, etc)
 Experience (relating to the work carried out)
 Limitations of Administrative Theory

 Lack of empirical evidence

 Neglect of human factors
 False assumptions
 Pro-management bias
 Historical significance
 Contribution of Fayol
to Management
Fayol proposed that all operations in a business can be classified
into 6 major heads where management is the most important one;
He listed planning, organizing, commanding, coordinating and
controlling as the main elements of management; and
He proposed 14 principles of management which could be apply
universally.
He has done a signal service to the propagation of management
concept.
He always believed that managerial liability could be applied to
the home, the church, the military, the school, politics as well as
industry.
 Taylor Vs. Fayol
Basis of Similarities:
Comparision:  Both believe that proper
1.Perspective management of resources is
a key to success
2.Focus
 Both applied scientific
3.Attention methods
4.Techniques used  Both had developed their
5.Personality ideas through practical
training and experience
6.Major-contribution
 2-Foundations in the Neo-Classical/ Human
Relations Approach and Behavioral Management
Approach (1920s-1940s)
A-Neo-Classical Theory/Human Relations Approach
Human relations theory is a movement in management
thinking and practise that emphasised satisfaction of
employee’s basic needs as the key to increased worker
productivity.
This theory gained popularity after the famous studies of
human behaviour in work situations conducted at the
Western Electric Company from 1924 to 1933.
These studies known as the ‘Hawthorne Studies’ because
many of them were conducted at Western Electric’s
Hawthorne plant near Chicago.
 Hawthorne Studies/Experiments
A group of studies conducted at the
Hawthorne plant of the Western Electric
company during the late 1920s and early
1930s whose results ultimately led to the
human relations view of management.
-Illumination experiments
 Test group
 Control group
 Hawthorne Effect
The possibility that individuals singled out
for a study may improve their performance
simply because of the added attention they
receive from the researchers, rather than
because of any specific factors being tested.
-Interviewing Programme
– (3 years long interview covering more
than 21,000 employees.
-Bank Wiring Room Experiment
– (14 male workers were examined)
Pros of Hawthorne Experiments

 Men is not motivated by money alone.

 If treated well, human beings can expand
their energies.
 Groups have more influence on workers
than organization rules.
 Friendly supervision ensures good results,
better morale and healthy interpersonal
relations.
Cons of Hawthorne Experiments
 Mayo drew conclusions on the strength of
observations about a small sample of employees.
 The experiments lacked a scientific basis.
 The conclusions of Hawthorne experiments were
open to doubt.
 Mayo exhibited pro-management bias by thinking
that management knows what is best for workers.
 Mayo wanted to humanise the workplace by
keeping workers in good humour always.
Human Relations: Key Concepts
 The individual (each person is unique)
 The work group (Work is social experience)
 The work environment
Positive work environments are those where:
- The goals are clearly defined
- Incentives are properly used to improve performance
- Decisions are timely and participative
- Conflict is confronted openly and squarely, and
- The work is interesting and growth-oriented
 The leader
 Human Relations: Criticisms

 Philosophy (cow psychology)

 Scientific validity
 Short-sighted (short sightedness of
research)
 Over concern with happiness
 Anti-individualist
 Human Relations: Contributions
 This approach has introduced the idea of the
organization as an open system in which the
technical and human elements are closely
interrelated.
 This approach has emphasised the importance of
employee attitudes in an era when wage incentives
and physical work conditions were often viewed
as the only requirements for high productivity.
 This approach has spotlighted the importance of
manager’s style and thereby revolutionised
management training.
 Human Relations: Contributions conti..
 By stressing social needs, human
relationists improved on the classical
theory.
 More and more attention was focused on
teaching people management skills as
opposed to technical skills.
Comparision B/W Human Relations and
Scientific Management
Refinements in Neo-classical Theory
 B-Behavioural Sciences Approach
It emphasises scientific research (into various
disciplines such as psychology, sociology,
anthropology, economics) as the basis for
developing theories about human behaviour
in organizations that can be used to develop
practical guidelines for managers.
A number of behavioural scientists have
contributed to the development of this
approach; Abraham Maslow, Douglas
McGregor, Chris Argyris and Mary Parker
Follett.
 a-Maslow’s Theory of Human Needs
(Proposed by Abraham Maslow)

 A need is a physiological or psychological

deficiency a person feels compelled to satisfy.
 Need levels:
 Physiological
 Safety
 Social
 Esteem
 Self-actualization
Maslow’s Hierarchy of Human Needs
 Maslow’s Theory of Human Needs conti..

 Deficit principle
– A satisfied need is not a motivator of behavior
 Progression principle
– A need becomes a motivator once the preceding
lower-level need is satisfied
 Both principles cease to operate at self-
actualization level
 b-Theory X and Theory Y
(Proposed by Douglas McGregor)
 McGregor’s Theory X assumes that
workers:
– Dislike work
– Lack ambition
– Are irresponsible
– Resist change
– Prefer to be led
 Theory X and Theory Y conti..
 McGregor’s Theory Y assumes that workers
are:
– Willing to work
– Capable of self control
– Willing to accept responsibility
– Imaginative and creative
– Capable of self-direction
 Theory X and Theory Y conti..
Implications of Theory X and Theory Y:
 Managers create self-fulfilling prophecies.
 Theory X managers create situations where workers
become dependent and reluctant.
 Theory Y managers create situations where workers
respond with initiative and high performance.
-Central to notions of empowerment and self-
management
 C-Argyris’s Theory of Adult Personality
(Presented by Chris Argyris)

According to this theory, a persons’ development is processed
along a continuous break of an immaturity situation to a maturity
situation.

Agryis believed that managers who treat people positively, and are
responsible adults, will achieve the highest productivity.

He thought that common problems of employee avoiding work, lack of
interest, alienation and low morale may be signs of mismatch between
management practice and mature adult personality.
 Argyris’s Theory of Adult Personality conti..
Seven Changes

1. Individuals move from a passive state as infants to a state of

increasing activity as adults
2. Individuals develop from a state of dependency upon others
as infants to a state of relative independence as adults
3. Individuals in only few ways as infants, but as adults they
are capable of behaving in many ways
4. Individuals have erratic, casual, and shallow interests as
infants but develop deeper and stringer interests as adults
 Argyris’s Theory of Adult Personality conti..
Seven Changes

5. The time perspective of children is very short, involving only the

present, but as they mature, their time perspective increases to
include past and future
6. Individuals as infants are subordinate to everyone, but they move to
equal or superior positions with others as adults
7. As children, individuals lack an awareness of a “self”, but as adults
not only they are aware of, but they are able to control “self”
 Argyris’s Theory of Adult Personality conti..
 Classical management principles and practices
inhibit worker maturation and are inconsistent with
the mature adult personality
 Psychological success occurs when people define
own goals
 Management practices should accommodate the
mature personality by:
– Increasing task responsibility
– Increasing task variety
– Using participative decision making
 d-Follett’s Organizations as Communities
(Proposed by Mary Parker Follett)

Mary Parker Follett, or the "Mother of Modern Management,"
believed that management was "the art of getting things done
through people."

Follett practiced these principles of coordination that helped
develop her theory of management:

Direct contact

Early stages

Reciprocal relationship

Continuous process
Follett’s Organizations as Communities conti..
 Follett created a management theory that is still in
favor today. Its main principals include:
 Integration
 Power with
 Group power
 Groups and Human cooperation:
– Groups allow individuals to combine their talents for a
greater good
– Organizations are cooperating “communities” of managers
and workers
– Manager’s job is to help people cooperate and achieve an
integration of interests
Follett’s Organizations as Communities
conti..
Forward-looking Management Insights:
 Contributions to Behavioural Science
Approach
 It has made significant contributions to our
understanding of individual motivation,
group behaviour, inter-personal
relationships at work.
 The concept of job enrichment,
magagement by objectives and positive
reinforcement were results of this approach.
 Limitations to Behavioural Science
Approach
 Self-actualising view assumes that all employees
will seek self-actualization at work.
 The behavioural scientists assume a great deal of
compatibility between individual and organization
goals.
 This approach discounted the non-human aspects
of an organization such as task, technology and
manufacturing.
 The behavioural approach fell into the same trap
as earlier approaches that searched for the one best
way of managing.
 3-Modern Management Foundations
Foundations for Continuing Developments in
Management
 A-Quantitative Approach
 Offers quantitative aids to decision-making; develops
quantitative tools to assist in providing products and
services.
 The primary focus is on decision-making.
 Managerial choices in any situation depends on criteria
such as costs, revenues, ROI, impact on other areas etc.
 Heavy emphasis is put on computers and their processing
capabilities.
 Final solutions to problems are reduced to mathematical
formulae and these are subjected to further analysis and
processing to find viable alternatives.
 Quantitative Approach conti..
Three main branches have evolved over the
years:
1. Management science
2. Operations management
3. Management information system
 a- Management Science
 This approach aims at increasing
effectiveness through the use of advanced
mathematical models and statistical
methods.
 Approach focuses on solving technical
rather than human behaviour problems.
 The computer has been of great help to this
approach because it has enabled analyses of
problems that would otherwise be too
complex.
 b-Operations Management
 It is the function that is responsible for
managing the production and delivery of an
organization’s products and services.
 It includes fields such as inventory
management, production planning, design
and location, work scheduling and quality
assurance.
Operations Management conti..
c- Management Information System

 It focuses on designing and implementing

computer-based information system for use
by management.
 Assets & Liabilities of Quantitative Theory

Assets: Liabilities:
 Easy to define the • It is overly concerned
problems with decisions
 Promotes disciplined • Decision quality
thinking depends on the data
 Eliminate subjective • It is difficult to
elements in decision establish functional
making relationship b/w
identified variables
 B- System Approach
 It tries to solve problems by diagnosing them within a
framework of inputs, transformation processes, outputs
and feedback.
 System Vocabulary:
 System
 Sub-system
1. Goal sub system
2. Technical sub system
3. Structural subsystem
4. Managerial sub system
5. Psychological sub system
 System Approach conti..
Organizations as Complex Networks of
Interacting Subsystems
System Approach conti..
(System Vocabulary)
 Synergy
 Open and closed system
 System boundary
 Flow
 Feedback
System Approach conti..
 Systems approach to management Inputs:
Human, Capital
External environment Managerial, Technological
others
Goal inputs of claimants:
Managerial knowledge, Employees, consumers, suppliers,
Goals of claimants Stockholders, governments,
& use of inputs Communities and others

Facilitated by communication
Linking the organization with
Planning

External Environment
Reenergizing the system

External environment
Organizing
External variables &
Opportunities
Staffing Constraints
Others
Leading

Controlling

Outputs:
Products, Services,
To produce outputs Profits, Satisfaction,
Goal integration & others
External environment
 Relevance of System Theory

• It makes organization theorists search for

integrative models.
• It uses a way of thinking that highlights
underlying relationships.
• The practical implications of systems
theory for managers are enormous.
 Limitations of System Theory

• It does not attempt to identify situational

differences and factors.
• It tends to overemphasise ‘oneness’,
coordination and harmony.
• It is objective and is not influenced by
catch pharases like, ‘one best way’.
 C- Contingency Approach
• It argues that appropriate managerial action
depends on the particular parameters of the
situation.
• It says that effective management varies with the
organization and its environment.
• This approach is both analytical and situational.
 Contingency Approach conti..
Elements of Contingency Theory:
1. Managerial actions are contingent on certain
actions outside the system or sub-system as the
case may be.
2. Organizational efforts should be based on the
behaviour of actions outside the system.
3. Managerial actions and organizational design
must be appropriate to the given situation.
 Implications of Contingency Approach
• As per this theory, there are no plans, organization
structures, leadership styles, or controls that will fit all
situations.
• Managers must find different ways that fit different
situations.
• Applying a contingency/situational approach requires that
managers diagnose a given situation and adapt to meet
the conditions present.
• Management is entirely situational; managerial actions
are contingent on internal and external factors;
managerial actions must be consistent with the
requirements of internal as well as external factors.
 Criticism to Contingency Approach

1. Paucity of literature
2. Complex
3. Defies empirical testing
4. Reactive not proactive
5. Incomplete
System Vs Contingency Theory
 D- Quality Management

• Managers and workers in progressive

organizations are quality conscious
– Quality and competitive advantage are linked
• Total quality management (TQM)
– Comprehensive approach to continuous quality
improvement for a total organization
– Creates context for the value chain
 Quality Management conti..

 Continuous improvement
– Continual search for new ways to improve quality
– Something always can and should be improved
 ISO certification
– Global quality benchmark
– Refine and upgrade quality to meet ISO standards
 E- Knowledge Management and
Organizational Learning

 Knowledge management is the process of using

intellectual capital for competitive advantage
Portfolio of intellectual assets include patents,
intellectual property rights, trade secrets, and
accumulated knowledge of the entire workforce
Knowledge Management and Organizational
Learning conti..

 Learning organizations
-Organizations that are able to continually
learn and adapt to new circumstances
-Core ingredients include:
 F- Evidence-Based Management

 Making management decisions on “hard facts”

about what really works
 Evidence-Based Management conti..
 Evidence-Based Positive Human Resource
Management Practices:
 Employment security
 Selective hiring
 Self-managing teams
 High pay based on merit
 Training and development
 Reduced status distinctions
 Shared information
Conclusions:

In view of the discussions so far, management has

started to become less based on the
conceptualization of classical theory of
management and the typical military command
and control, and more on facilitation and support
of collaborative activity. Now management deals
with the complexities of human interaction to
achieve organizational or group goals in an
effective and efficient manner.