EVOLUTION OF MGT

The Evolution of

Management Theory
 EVOLUTION OF MGT
Why study management History?
 Better understand current mgt theories &
practices by understanding their foundations
 To determine past fallacies in mgt in order to
avoid same mistakes in future.
 Modern managers use many of the practices,
principles, and techniques developed from
earlier concepts and experiences.

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 Scientific Management Theory
 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.
 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

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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 = Father of 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
1.Study the ways jobs are performed now
and determine new ways to do them.
 Gather time and motion information.
 Try different methods to see which is best.

2.Codify the new methods into rules.

3.Select workers whose skills match the rules.
4.Establish fair levels of performance and
pay a premium for higher performance.

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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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 CLASSICAL MANAGEMENT
THEORY
 CMT based on the belief that workers only have
physical and economic needs.
 It does not take into account social needs or job
satisfaction, but instead advocates a specialization
of labor, centralized leadership and decision-
making, and profit maximization.

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 CLASSICAL MANAGEMENT
THEORY
Administrative Management
The study of how to create an organizational structure
that leads to high efficiency and effectiveness.
Max Weber (Father of Modern Mgt)
Developed the concept of bureaucracy as a formal system
of organization and administration designed to ensure
efficiency and effectiveness.

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Weber’s Principles of Bureaucracy

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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, and norms
guide the firm’s operations. 13
 Administrative Management
Henri Fayol
Contributions
 Identified 5 managerial functions (planning,
organizing, commanding, coordinating, and
controlling).
 Developed the 14 principles: Division of work

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 Fayol’s Principles of
Management
1. Division of Labor: allows for job specialization .
 Jobs can have too much specialization leading
to poor quality and worker dissatisfaction.
2. Authority and Responsibility
 Both formal and informal authority resulting
from special expertise.
3. Unity of Command
 Employees should have only one boss.

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 Fayol’s Principles of
Management (cont’d)
4. Line of Authority
 A clear chain of command from top to bottom of
the firm.
5. Centralization
 The degree to which authority rests at the top of
the organization.
6. Unity of Direction
 A single plan of action to guide the organization
(focused).
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 Fayol’s Principles of
Management (cont’d)
7. Equity
 The provision of justice and fair and impartial
treatment of all employees.
8. Order
 The arrangement of employees where they will be of
the most value to the organization and to provide
career opportunities.
9. 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)
10. Discipline
 Obedient, applied, respectful employees are necessary
for the organization to function.
11. Remuneration of Personnel
 An equitable uniform payment system that motivates
contributes to organizational success.
12. 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)
13. Subordination of Individual Interest to the
Common Interest
 The interest of the organization takes
precedence over that of the individual
employee.
14. 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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 Behavioral Approaches
Human Relations Approach
 This school of thought rejected the idea that an
organization’s primary goal was efficiency and
began to seriously attend to the social nature of
organizations.
 Represented by

 Mary Parker Follett

 Elton Mayo – Hawthone Experiments

 Abraham Maslow – Pyramid of needs

 Douglas McGregor – Theory X & Theory Y

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 Operations Management
MARY FOLLETT PARKER (1863 – 1933)
 Put stress on people rather than engineering
technique. Wrote about important theories.
Groups vs. Individuals
- Synergy – the full potential of individuals can be
realized from group principles. Individuals bring
their varied skills & expertise to the team towards
solving a problem e.g DOCTORS,
PROGRAMMERS...

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 Synergy

Synergy: Mary Parker

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MARY FOLLETT PARKER
 Leadership

 Cfr. Follett leadership is a dual

relationship between leaders & followers.
 Reciprocal leadership implies that the
leader has a role to lead & follow at
times.
 The follower has a role to follow &
contribute his/her thoughts & opinions

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Management: Power is a common term to define the
role of a manager.
 In organizations individuals hoard information
because information is power.
Conflict & Resolution: Conflict is natural. The ideal
way to resolve conflicts is not by confrontation,
compromising, or dominating a situation but
through integration.
Comment
 Follett’s thinking is easy to preach but difficult to
practice.
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 Discussion
What is the relationship between job
satisfaction and productivity?

Job satisfaction =Higher productivity

Higher productivity =Job satisfaction

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 Assumption : A satisfied worker is a
productive worker.
 This assumption led organizational
psychologists to study motivation in a
much broader way.
 Factors such as job conditions,
recognition, and work relationships were
examined.

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 The fundamental assumption of the
Human Relations school (A satisfied
worker is a productive worker)
was not supported by later research.
Why?

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 Elton Mayo &The Hawthorne Studies

 Conducted by Elton Mayo in Chicago’s Electric

plant
 Goal – to discover the optimal physical
surroundings (amt of light) to maximize
productivity.
 Mayo & co. expected that productivity would be
highest under a certain wattage of light bulbs.

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 Results baffled investigators because productivity
increased every time the lighting changed!!!

 There must be another reason!!!!!

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 Hawthorne effect
 Refer to changes in workers’ behaviour by
virtue of being watched, studied, or paid
attention to.
 Why? By being observed, the employees felt
important.
 Hence, social needs (not just economic) are key
factors in explaining work behaviour. In
conclusion therefore, there are various things
that motivate people.
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Motivation

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 WHAT IS MOTIVATION?

 The driving (inner) force making

people to do things in a certain way
rather than in a different one.

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 INTRINSIC MOTIVATION
 The set of self-generated factors influencing
people to behave in a particular way or to move
in a particular direction:
 Responsibility - Head

 Commitment to reliability and quality - Artist

 Commitment to deliver a service

 Freedom to act.

 Scope to use and develop skills and abilities.

 Interesting and challenging work - Maths

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 EXTRINSIC MOTIVATION
 What is done by others to motivate
people:
 Praise -
 Recognition – Best employee of month
 Promotion – Senior …
 Increased pay
 Disciplinary actions: Suspe., cain,
demotion
Carrot & stick
 Criticism
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 Abraham Maslow’s Pyramid of needs
1. PHYSIOLOGICAL NEEDS: food, water, shelter,
clothes
2. SOCIAL/SECURITY NEEDS: being free from
physical danger or threat
3. BELONGING / ACCEPTANCE NEEDS: To be
loved, to be accepted by others, to belong to a group
4. ESTEEM NEEDS: To be held in esteem by
themselves and by others: respect and recognition.
5. SELF ACHIEVEMENT / ACTUALISATION: The
need for self-fulfilment, for continuous improvement,
the need to maximise one’s potential, to become what
we can become. 36
Abraham Maslow’s Hierarchy
Organizational
General
Examples
Examples

Self-fulfillment Self- Challenging Job

actualization

Status
Job Title
Esteem
Friendship Friends
Belonging
Stability
Safety Retirement Plan

Shelter
Physiological Wages

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Based on needs satisfaction
 Maslow’s latest additions …
 Later on Maslow added two elements to
his “pyramid”:

 Truth
 Beauty

 What about spiritual advancement?

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 Lessons from the Behavioral Approach
 People are the key to productivity, thus
PPF.

 Success depends on motivated and skilled

individuals committed to the organization.

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 Theory X and Theory Y
 Douglas McGregor proposed theory X and Y.
 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 Theory Y
 People are lazy  People are
 People lack ambition energetic
 Dislike responsibility  People want to

 People are self-

make contributions
 People do have
centered
 People don’t like
ambition
 People will seek
change
responsibility
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 Theory Z
 The Theory Z was invented by the American
economist and management professor William
Ouchi in 1980s
 The assumption that employees want to enter
into partnerships with their employer and
colleagues.
 Employees have a strong desire for
connection.

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 Theory Z
 This requires support from the manager and the
organisation in the form of a safe working
environment and the right facilities.
 The possibility for development and training can also
be included on this list.
 Employees expect reciprocity and support from their
organisation.
 Employees find a work-life balance important and
want to maintain this.
 Family, culture and traditions are therefore just as
important as working conditions. 43
 CONTRIBUTIONS OF HUMAN
RELATIONS APPROACH
• The Human Relations approach considered  and gave
attention to social factors at work i.e. the behaviour
of employees.

• The Hawthorne Experiments emphasized the

importance of groups, leadership, and the informal
organizations for production.
• The results laid the foundation for further research
into communication, work groups, leadership and
motivation. 44
Limitations of Human Relations
Assumed employees are passive (does
not apply to today’s highly educated /
careerist workforce).
Satisfaction/productivity relationship was
not supported by research.

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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. (QM)
 Operations management—techniques to analyze all
aspects of the production system. (POM)
 Total Quality Management (TQM)—focuses on
improving quality throughout an organization.
 Management Information Systems (MIS) —provides
information about the organization.

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 Organizational Environment
Theory
 Organizational Environment
 The set of forces and conditions that
operate beyond an organization’s
boundaries but affect a manager’s ability
to acquire and utilize resources.

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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

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 Other System Considerations
 Closed system
 A system self-contained that is not affected by
changes occurring in its external environment.
 Synergy
 Performance that results when individuals and
departments coordinate their actions
 A combined effort 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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Contingency Theory of
Organizational Design

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 Mechanistic and Organic
Structures
 Mechanistic Structure
Mechanistic Structure
 Authority is centralized at the top. (Theory X)
 Employees are closely monitored and managed.
 Can be very efficient in a stable environment.

 Organic structure
 Authority is decentralized throughout the
organization. (Theory Y)
 Tasks and roles are left ambiguous to encourage
employees to react quickly to changing
environment.
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 SOME QUESTIONS
Discussion Question
1. Discuss the system’s concept of synergy.
How does it apply to organizations today?
2. Describe the Hawthorne effect and how it
changed managerial thinking
3. Briefly describe the main focus of scientific
management
4. Identify and briefly describe the basic
managerial functions identified by Fayol
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END OF EVOLUTION OF MGT

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