The Evolution of Management Theory

Learning Objectives

To understand how management theories

develop
To understand the impact of the environment to
management thinking
To gain insights into new management approach
 Early Management Thought

Early ideas about management strategy

Sun Tzu (770-476 B.C.), The Art of War
Early ideas about leadership
Nicolò Machiavelli (1469-1527), The Prince
Early ideas about the design and organization
of work
Adam Smith, The Wealth of Nations
• division of labor
 Sun Tzu, Art of War
“Shang Chang Ru Zhan Chang”
“The marketplace is a battlefield”

Sun Tzu, 4th century BC

 Management and Machiavelli
New science of management
lies in the the old art of
government

 
"to be a great pretender and
dissembler."
“cunning and intrigue, the             
triumph of force over reason.”
"a prince" ought to have no
other aim or thought, nor select
anything else for his study,
than war and its rules and
discipline."
The Evolution of Management Theory
Contingency Approach

Systems Theory

(Comprehensive Analysis of Management)

 Management Approaches
and the Environment
GENERAL
ENVIRONMENT

ECONOMIC
SOCIAL OPERATING
ENVIRONMENT
NEW ENTRANTS
SUPPLIER
INTERNAL
ENVIRONMENT

PRODUCTION
TECHNOLOGY
SUBSTITUTES STRUCTURE
POLITICAL INPUTS
COMPETITION
TECHNOLOGY

CUSTOMER

LEGAL
 The Classical Approach
The classical approach (ca1890) to
management is a management approach that
emphasizes organizational efficiency to
increase organizational success.

Environment in ca1890
•Industrial revolution
•Autocratic management was the norm
•“Science" as a solution to the inefficiencies
and injustices of the period
•Idea of interchangeable parts
 The Classical Approach

Scientific Management
Frederick W. Taylor
Frank and Lillian Gilbreth
Henry Gantt
Bureaucratic Management
Max Weber
Administrative Management
Henri Fayol
 Taylor’s Four Principles of Scientific Management

1. Scientifically study each part of a task and

develop the best method of performing the
task.
2. Carefully select workers and train them to
perform the task by using the scientifically
developed method.
3. Cooperate fully with workers to ensure that
they use the proper method.
4. Divide work and responsibility so that
management is responsible for planning
work methods using scientific principles and
workers are responsible for executing the
work accordingly.
“Now one of the first requirements for
a man who is fit to handle pig iron as a
regular occupation is that he shall be
so stupid and so phlegmatic that he
more nearly resembles in his mental
makeup the ox than any other type”
- Frederick Taylor
Key Characteristics of Weber’s Ideal Bureaucracy

Specialization of labor
Formal rules and procedures
Impersonality
Well-defined hierarchy
Career advancement based on merit
 Fayol’s 14 Principles of
Administrative 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 and
6. Subordination of tenure
individual interest to
13. Initiative
the general interest
14. Esprit de corps
7. Remuneration

Planning, Organizing, Commanding, Coordinating, Controlling

What are the limitations of the
Classical Approach??
 The Behavioral Approach
The behavioral approach (ca 1910) to
management is a management approach that
emphasizes increasing organizational
success by focusing on human variables
within the organization.

Environment in ca1910
•The Newtonian science that supported "the one best way" of
doing things was being strongly challenged by the "new
physics" results of Rutherford and Einstein
•In the work place there were strong pressures for shorter
hours and employee stock ownership.
•As the effects of the 1929 stock market crash and following
depression were felt, employee unions started to form
 Behavioral Perspective

The Hawthorne Studies

Human Relations
Approach
Employee motivation
• Abraham Maslow
Leadership style
• Douglas McGregor
 Hawthorne Effect:

The discovery that paying special

attention to employees motivates them
to put greater effort into their jobs.
(from the Hawthorne management studies,
performed from 1924 – 1932 at Western Electric
Company’s plant near Chicago)
 Maslow’s Hierarchy of
Needs
Self-Actualization

Need for Self Esteem

Need for Social Relations

Need for Security

Physical Needs
 McGregor’s Theory X and Theory Y

Leaders and managers who hold Theory X assumptions

believe that employees are inherently lazy and lack
ambition.
A negative perspective on human behavior.
Leaders and managers who hold Theory Y assumptions
believe that most employees do not dislike work and
want to make useful contributions to the organization.
A positive perspective on human behavior.
What are the limitations of the
behavioral approach?
 The Management Science Approach
The management science approach (ca1940)
is a management approach that emphasizes
the use of the scientific method and
quantitative techniques to increase
organizational success.

Environment in ca1940
•Application of OR in solving complex problems in
warfare (WWII)
•Significant technological and tactical
breakthroughs
•Interest in manufacturing and selling after WWII
 The System Approach
The system approach (ca 50’s-60’s) to
management is a management approach
based on general system theory--the theory
that to understand fully the operation of an
entity, the entity must be viewed as a system.
This requires understanding the
interdependence of its parts.

Environment in ca1950’s to 60’s”

•Growing quality consciousness
•Total Quality Management
The Open Management System
GENERAL
ENVIRONMENT

ECONOMIC
SOCIAL OPERATING
ENVIRONMENT
NEW ENTRANTS
SUPPLIER

PLANNING, ORGANIZING,
INFLUENCING, CONTROLLING
INPUT  PROCESS OUTPUT
SUBSTITUTES
POLITICAL
COMPETITION
TECHNOLOGY

CUSTOMER

LEGAL
 The Contingency Approach

The contingency approach (ca 70’s) to

Management is a management approach that
Emphasizes that what managers do in
practice depends on a given set of
circumstances--a situation.
Environment in ca1970’s”
•Emergence of new companies “Apple”
•Emergence of new products, “IBM PC”
 Triangular Management

Triangular management is a management

approach that emphasizes using information
from the classical, behavioral, and manage-
ment science schools of thought to manage
the open management system.
 Triangular

MA
Management Model

N AG
N
O

EM
TI

E
MA

NT
GENERAL

OR
ENVIRONMENT

SC
F

I
IN

EN
ECONOMIC
SOCIAL OPERATING
ENVIRONMENT
D

C
SE

NEW ENTRANTS

E-
SUPPLIER

BA
BA

SE
Y

PLANNING, ORGANIZING,
LL

INFLUENCING, CONTROLLING

D
INPUT  PROCESS OUTPUT
CA

IN
SUBSTITUTES
POLITICAL

F
COMPETITION
SI

OR
TECHNOLOGY
AS

MA
CL

CUSTOMER

TI
O
LEGAL

N
BEHAVIORALLY BASED INFORMATION
 Type Z Organization
(Theory Z by Ouchi 1981)
Theory Z (ca 80’s) suggests that involved workers
are the key to an increase in productivity and it
offers offers ways to manage (collective decision
making, slow evaluation and promotion, and
holistic concern for people) so that they can work
together more effectively.

Environment in ca1980’s
•Slow American productivity improvement
•Rise of Japanese companies
•Japanese management may offer solutions to this
problem
 Theory Z

“Involved workers are the key to an increase in

productivity.”

From “Theory Z” by William Ouchi, 1981

Chaordic Organization (Chaos Theory)
(Hock, Dee,1999)
Chaos theory (ca 90’s) in management
recognizes that events indeed are rarely
controlled. Blending chaos with order

Environment in ca1990’s
•Start of Internet age
•Highly competitive environment
•Emergence of communications technologies
•Emergence of new work practices (virtual teams,
network organizations)
 Chaordic Organizations

Purpose

• Clarity
of purpose and
shared values
Principles, People, and Concept •Operate through
network of equals, not
hierarchies

Structure and Practice

From “Birth of the Chaordic Age” by Hock, D. 1999

How about Modern Management
Approach?
 Environment In the New Millennium

Environment in the millenium

•Information and electronic age
•Information and knowledge is going to be readily
available to us all
•Information speed through Internet
•The future is going to be dominated by our need to
understand systems.
 The Learning Organization Approach

The learning organization approach to

management is the management approach
based on an organization anticipating
change faster than its counterparts to have
an advantage in the market over its
competitors.

From “The Fifth Discipline” by Peter Senge, 1990

 Managerial Approach to Learning
Organization
Managers must create an environment conducive to
learning
Managers encourage the exchange or information
among organization members
Managers promote
systematic problem solving
Experimentation
learning from experiences and past history
learning from experience of others
transferring knowledge rapidly throughout the organization

From “The Fifth Discipline” by Peter Senge, 1990

 Building a Learning Organization

System Thinking
Every organization member understands his or her own job and
how the jobs fit together to provide finals products to the
customer
Shared vision
All organization members have a common view of the purpose
of the organization and a sincere commitment to accomplish the
purpose
Challenging of the mental models
Organization members routinely challenge the the way business
is done and the thought processes people use to solve
organizational problems
From “The Fifth Discipline” by Peter Senge, 1990
 Building a Learning Organization

Team learning
Organization members work together, develop solution to new
problems together, and apply the solutions together.
Working as teams rather than than individuals will help the
organization gather collective force to achieve organizational
goals
Personal mastery
All organization members are committed to gaining a deep and
rich understanding of their work
Such an understanding will help organizations to reach important
challenges that confront them

From “The Fifth Discipline” by Peter Senge, 1990

 Learning Organization Approach

System thinking
(Systems Approach)

Personal mastery Shared Vision

(Theory Z/Behavioral)
Building a
Learning (Chaordic Organization)

Organization

Team Learning Challenging of

Mental models
(Theory Z/Behavioral) (Classical/Management
science)
Business Process Management Approach
The business process management approach to management
is a method of efficiently aligning an organization with the
wants and needs of clients. It is a holistic management
approach that promotes business effectiveness and efficiency
while striving for innovation, flexibility and integration with
technology. As organizations strive for attainment of their
objectives, BPM attempts to continuously improve processes -
the process to define, measure and improve your processes –
a ‘process optimization' process.

This is actually a slow advance in process management:

•Record Management

•Workflow - 1970

•Business Process Re-engineering (BPR) - 1990

•Business Process Management (BPR) - 2000

 Western Management Theories

Is there an Asian Management Theory??

 What is business management
the Asian way?
Business tend to be small scale
Time has no beginning and end
Individualism is less relevant; managerial beliefs shift
towards the autocratic end
Conformity to socially acceptable behaviors is done
through morality (e.g losing face)
Oriental managers rely less on interpersonal
confrontations
Managerial decisions consider effects on othe rpeople
Control of performance is less formal
Maintaining and developing guanxi (connection and
relationship

*From World Executive Digest by Redding & Martyn, 1984

 “Will Western Management
work in Asia?”*
“Values and attitudes affect but do not invalidate the
transfer of American management concepts…
Consequently, when we wish to transfer an effective
device from one culture to another, careful attention
should be given to underlying premises…?
“Tools of management remain the same.”**
“Economic and business philosophy are however,
different.”**
Combination of general management, functional
management, and communal organization and
management..**
Photo from www.aim.edu.ph

*From World Executive Digest by William Newman, 1984

**From World Executive Digest by Sixto Roxas, 1981
 Is there a Filipino Management
Theory??
Are Western theories applicable in
Philippine setting?
 Are Western Theories Applicable in
Philippine Setting?
“The models and ideal types taught in Western-oriented
MBA programs are based on certain assumptions, many
of which are invalid in the Philippines.
Although organizations here have most of the structures
and formal procedures of Western business, actual day-
to-day business processes and interactions necessarily
proceed within the matrix of Filipino culture and values.
Thus, the need for the Westerner to go "the extra mile"
to understand what's really going on and adapt a
culturally sensitive style of doing business.”
- Clarence Henderson,
Henderson Consulting International
What is Pinoy Management Theory??

“No one Management Theory or Style.”

Under the formal organization are:
“Informal organization”
“Battlefield of behavioral styles among managers and
employees”
“Unknown cultural ambiance among peoples and
systems”

From “Pinoy Management” by Ernesto Franco, 1986

 Weaknesses of Pinoy Workers

Walang bilib sa sarili (No confidence in oneself)

Dikdik sa Colonial Mentality (Indoctrinated with
Colonial Mentality)
Masyadong relaks (Overly relaxed)
Ningas-cogon (Not a follow-up people)
Holiday mentality
Lack of managerial and organizational
effectiveness
Lack of self-reliant tenacity
From “Pinoy Management” by Ernesto Franco, 1986
 Pinoy Management
Kailangan may No. 2 (There is a need for No.2)
Tsismis machine (Grapevine Machine)
Kailangan may Hatchet Man (There is need for a Hatchet Man)
Be an expert on timing
Lumayo sa madalas matalo (Avoid losers)
Gawin mong personal (Make it personal)
NBA Style: One-on-one
Power play. Laban (Fight)
Be situational and contingent
Umarte kang parang intelihente. Iyong laging nag-iisip
Body language ang importante (Body language is important)
Pag sinabing “No”, dapat “No” talaga

From “Pinoy Management” by Ernesto Franco, 1986

 Pinoy Management Approaches

Management by “Kayod” (Realist Manager)

He wants quick action
He’s an autocrat
He is sigurista
He has gut feel
He knows how to use people
Management by “Libro” (Idealist Manager)
He is a thinker; technocrat; mabusisi; may sistema
Matigas and ulo

From “Pinoy Management” by Ernesto Franco, 1986

 Pinoy Management Approaches

Management by “Lusot” (Opportunist Manager)

He is galawgaw
Walang konsensiya
Mahilig sa lusot (Loves to get by)
Mahilig sa ayusan
Ugnayan-Management (The Hybrid)
Has balance
Contingency management style
He is solid
Marunong pumili (Chooses well)
Pambihira talaga (Exceptionally gifted)
From “Pinoy Management” by Ernesto Franco, 1986
END