Chapter 2

Management History
Learning Objectives
1. Describe some early management examples.
2. Explain the various theories in the classical approach.
3. Discuss the development and uses of the behavioral
approach.
4. Describe the quantitative approach.
5. Explain the various theories in the contemporary
approach.
 MH1: Early Management (3000BC-1776)

 Management has been practiced a long time. Organized activities

directed by people responsible for
 Planning
 Organizing
 Leading
 and controlling activities have existed for thousands of years. Let’s
look at some of the most interesting examples
 MH1

Ancient massive construction projects were

completed in ancient times.

• Egyptian pyramids
• Great Wall of China

are proof that projects of remarkable scope,

i. employing tens of thousands of people,
ii. It took more than 100,000 workers
iii. 20 years to construct
 Question Arises ???
 Q1: Who told each worker what to do?
 Q2:Who ensured there would be enough stones at the site to keep
workers busy?
 Q3: who told how much material is needed?
 The answer is
“ Managers”

 Someone had to plan what was to be done.

 Organize people and materials to do it.
 Make sure those workers got the work done.
 Impose some controls to ensure that everything was done as planned
Adam Smith’s Contribution To The Field Of
Management
 Wrote the Book “Wealth of Nations” (1776)
 Advocated the economic advantages that organizations and
society would obtain from the division of labor/ Job
Specification.
 Division of labor (job specialization) The breakdown of jobs into
narrow and repetitive tasks.
 Increased productivity by increasing each worker’s skill and
ability.
 Time saved that is commonly lost in changing tasks.
 The Industrial Revolution’s Influence

 Industrial revolution
 A period during the late eighteenth century .
 when machine power was substituted for human power a point in history
known as the industrial revolution.
 It become more economical to manufacture goods in factories than at home.
 These large, efficient factories needed someone to forecast demand, ensure
that enough material was on hand to make products, assign tasks to people,
direct daily activities, and so forth. That someone was a manager.
 Management History
 Managers would need formal theories to guide them in running these large organizations.
 we’ll look at four major approaches to management theory: classical, behavioral,
quantitative, and contemporary.
 Each of the four approaches contributes to our overall understanding of management, but
each is also a limited view of what it is and how to best practice it.
MH2: Classical Contributions
 Classical approach: First studies of management, which
emphasized rationality and making organizations and workers as
efficient as possible.
 Scientific management theorists
 Fredrick W. Taylor
 General administrative theorists
 Henri Fayol and Max Weber
 Scientific management
 An approach that involves using the scientific method to find the “one best way”
for a job to be done.
 Taylor known as the “father” of scientific management.
 Scientific management, the systematic study of relationships between people and
tasks for the purpose of redesigning the work process to increase efficiency.
 Frederick W. Taylor’s Scientific Management Principles (1911).
1. Principle 1: Study the way workers perform their tasks, gather all the informal
job knowledge that workers possess, and experiment with ways of improving the
way tasks are performed.
Develop a science for each element of an individual’s work to replace the old
rule-of-thumb method.
Frederick W. Taylor’s Scientific Management Principles
Principle 2: Codify the new methods of performing tasks into written rules and standard
operating procedures.

Principle 3: Carefully select workers so that they 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.

Principle 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 .
How today’s managers use scientific management

1. Many of the guidelines and techniques Taylor devised for

improving production efficiency are still used in organizations
today.
2. For hire the best-qualified workers for a job, or design incentive
systems based on output, they’re using the principles of scientific
management.
 General Administrative Theory
 An approach to management that focuses on describing what
managers do and what constitutes good management practice.
 Max Weber was a German sociologist who studied organizations.
 Bureaucracy:
A form of organization characterized by division of labor, a clearly
defined hierarchy, detailed rules and regulations, and impersonal
relationships.
 A bureaucratic system of administration is based on five principles

 Principle 1: In a bureaucracy, a manager’s formal authority derives from the position he or

she holds in the organization.
 Authority
The power to hold people accountable for their actions and to allocate organizational resources.
 Principle 2: In a bureaucracy, people should occupy positions because of their
performance, not because of their social standing or personal contacts.
 Principle 3: The extent of each position’s formal authority and their responsibilities, and
their relationship to other positions in an organization, should be clearly specified.
 Principle 4: 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.
 Principle 5: Managers must create a well-defined system of rules, standard operating
procedures, and norms so that they can effectively control behavior within an organization.
 Contd.
 Rules:
Formal written instructions that specify actions to be taken under different
circumstances to achieve specific goals.
 Standard operating procedures (SOPs)
Specific sets of written instructions about how to perform a particular task.
 Norms
Unwritten informal codes of conduct that prescribe how people should act
in particular situations and are considered important by most members of
a group or organization
 Question??

 Do Weber’s Ideal Bureaucracy exist in reality?

 Principles of management
Fundamental rules of management that could be applied in all organizational situations
and taught in schools.

Fayol’s Fourteen Principles of Management

1. Division of work. Specialization increases output by making employees more

efficient.
2. Authority. Managers must be able to give orders, and authority gives them this right.
3. Discipline. Employees must obey and respect the rules that govern the organization.
4. Unity of command. Every employee should receive orders from only one superior.
5. Unity of direction. The organization should have a single plan of action to guide
managers and workers.
6. Subordination of individual interests to the general interest. The interests
of any one employee or group of employees should not take precedence over the
interests of the organization as a whole.

7. Remuneration. Workers must be paid a fair wage for their services.

8. Centralization. The concentration of control of an activity or organization under

a single authority.

9. Scalar chain. The line of authority from top management to the lowest ranks
is the scalar chain.

10. Order. People and materials should be in the right place at the right time.
 Fayol’s Fourteen Principles of Management

11. Equity. Managers should be kind and fair to their subordinates.

12. Stability of tenure of personnel. Management should provide orderly
personnel planning and ensure that replacements are available to fill vacancies.
13. Initiative. Employees allowed to originate and carry out plans will exert high
levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within the
organization.
How today’s managers use general administrative
theory
 Several of our current management ideas and practices can be
directly traced to the contributions of general administrative theory.
 In addition, his 14 principles serve as a frame of reference from
which many current management concepts such as managerial
authority, centralized decision making and reporting to only one
boss.
MH3: Behavioral Approach
 Management by focusing on the organization’s people.
 Organizational Behavior (OB)
 The study of the actions (behavior) of people at work.
 Much of what managers do today when managing people motivating,
leading, building trust, working with a team, managing conflict, and so forth
has come out of OB research.
 Early twentieth century recognized the importance of people to an organization’s
success, four stand out as early advocates of the OB approach: Robert Owen, Hugo
Munsterberg, Mary Parker Follett, and Chester Barnard.
 Their contributions were varied and distinct, yet all believed that people were the most
important asset of the organization and should be managed accordingly.
MH3: Behavioral Approach
 The most important contribution to the OB field came out of the
Hawthorne Studies
 A series of studies during the 1920s and 1930s that provided new
insights into individual and group behavior.
 The Hawthorne studies were conducted on workers at the
Hawthorne plant of the Western Electric Company by Elton Mayo
and Fritz in the 1920s.
 They wanted to examine the effect of various lighting levels on
worker productivity.
 The Hawthorne effect is a type of reactivity in which individuals
modify an aspect of their behavior in response to their awareness of
being observed.
 Conclusion
 Hawthorne Studies had a game-changing impact on management
beliefs about the role of people in organizations.

 Mayo concluded that people’s behavior and attitudes are closely

related, that group factors significantly affect individual behavior.

 These conclusions led to a new emphasis on the human behavior

factor in the management of organizations
 How today’s managers use the behavioral
approach
 The behavioral approach has largely shaped how today’s organizations are
managed. The conclusions from the Hawthorne studies have provided the
foundation for our current theories of motivation, leadership, group
behavior and development, and numerous other behavioral approaches.
MH4: Quantitative Approach
 Quantitative approach:
The use of quantitative techniques to improve decision making. This
approach also is known as management science.
 Total quality management (TQM)
A philosophy of management that is driven by continuous
improvement and responsiveness to customer needs and expectations.
Total quality management, or TQM,

1. Intense focus on the customer. The customer includes outsiders who

buy the organization’s products or services and internal customers who
interact with and serve others in the organization.
2. Concern for continual improvement. Quality management is a
commitment to never being satisfied. “Very good” is not good enough.
Quality can always be improved.
3. Process focused.Quality management focuses on work processes as the
quality of goods and services is continually improved.
 Contd.
4. Improvement in the quality of everything the organization does. This relates
to the final product, how the organization handles deliveries, how rapidly it
responds to complaints, how politely the phones are answered, and the like.

5. Accurate measurement. Quality management uses statistical techniques to

measure every critical variable in the organization’s operations. These are
compared against standards to identify problems, trace them to their roots, and
eliminate their causes.

6. Empowerment of employees. Quality management involves the people on the

line in the improvement process. Teams are widely used in quality management
programs as empowerment vehicles for finding and solving problems.
How today’s managers use the quantitative
approach
 The quantitative approach contributes directly to management
decision making in the areas of planning and control.
 For instance, when managers make budgeting, scheduling, quality
control, and similar decisions, they typically rely on quantitative
techniques.
MH5:Contemporary Approaches (1960s-present )
 Many elements of the earlier approaches to management theory
continue to influence how managers manage.
 Most of these earlier approaches focused on managers’ concerns
inside the organization.
 Starting in the 1960s, management researchers began to look at
what was happening in the external environment outside the
boundaries of the organization.
 Two contemporary management Perspectives
i. Systems
ii. contingency
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.
 The Contingency Approach
 Sometimes called the (situational approach) says that organizations
are different, face different situations (contingencies), and require
different ways of managing.
 The contingency approach says that organizations are different, face
different situations and require different ways of managing.
 A good way to describe contingency is “if, then.”
 If this is the way my situation is, then this is the best way for me to
manage in this situation.
Four popular contingency variables
• Organization size
• Routineness of task technology
• Environmental uncertainty
• Individual differences
 Organization Size.
As size increases, so do the problems of coordination.
 For instance, the type of organization structure appropriate for an organization of
50,000 employees is likely to be inefficient for an organization of 50 employees.
 Routineness of Task Technology.
 To achieve its purpose, an organization uses technology. Routine technologies
require organizational structures, leadership styles, and control systems.
 Environmental Uncertainty.
 The degree of uncertainty caused by environmental changes influences the
management process.
 Individual Differences.
 Individuals differ in terms of their desire for growth, autonomy and expectations.
 MH1 MH2 MH3 MH4 MH5
EM CA BA QA CA

Early
Examples of Scientific
Management Management System
Hawthorne
• Taylor's Studies TQM approach
principles
Adam Smith

GAT
Industrial
• Max Weber Contingency
Revolution
• 14 Fayol’s Approach
Principles