THEORIES OF MANAGEMENT

•Classical Theories
•Neo-classical Theories
•Modern Theories
Theory – is a systematic grouping of interdependent concepts and principles
which give a framework to, or ties together, significant knowledge.

Concepts – are ideas of anything formed by generalizations from particulars.

Principles- in management, are fundamental truths explaining relationships

between two or more sets of variables, usually an independent variable and a
dependent variable.

Knowledge – body of information, principles, truths, etc. acquired by man.

Science – is organized knowledge obtained/developed through the application

of the scientific method.
How is organization theory developed?

1. Experiential way:

a. Experiencing organizational phenomena by working in an organization.

b. Reflecting on these experiences
c. Making some systematic sense out of these reflections, which involves
drawing inferences from the experiences and conceptualizing them into a
coherent framework.

2. Scientific research;

a. Exploratory- its purpose is to generate hypotheses or to discover what kind

of relationships exist in ongoing organizations.
b. Explanatory – its purpose is to test hypotheses.
How is organization theory useful?

It enables one to:

1. describe
2. understand
3. predict, and
4. control
organizational phenomena.
 Management Reflects Society
Management philosophy and its related
practices reflect the society within
which they exist – its culture, its
values, its needs. The technological
and economic forces at work in
society change and therefore
management has changed and must
continue to change (Higgins, 1991).
CLASSICAL MANAGEMENT
THEORIES
•Scientific Management
•Administrative Principles
•Bureaucratic Model
 THE SCIENTIFIC
MANAGEMENT THEORY

This report on the Scientific Management

Theory is focused on the work of Frederick
Winslow Taylor
 The Challenge of the time
• A desperate need to increase productivity

• And the only way to expand productivity was

to raise the efficiency of workers
 Why inefficiency over productivity?
1. False belief of the workmen - “a material
increase in the output of each man or each
machine in the trade would result in the end in
throwing a large number of men out of work”
• How? - collective increase in output would
result to oversupply. Such oversupply would
tend other factories to close thus putting other
workmen out of work.
2. The defective systems of
management which are in common
use, and which make it necessary
for each workman to soldier, or
work slowly, in order that he may
protect his own best interests.”
Why defective system of management?
• “because of the ignorance of employers as to
the proper time in which work of various kinds
should be done, makes it for the interest of the
workman to "soldier”. Because the employer
does not really know the correct time and
input to get a task done, the workmen will take
advantage of this ignorance by convincing his
employer that he is going at a good pace.”
• No job is done faster than it has been in the
past. The younger and less experienced men
are taught this by their elders, and all possible
persuasion and social pressure is brought to
bear upon the greedy and selfish men to keep
them from making new records which result in
temporarily increasing their wages, ….”
 Loafing or Soldiering is …
– The deliberate slow down of work so as
to avoid doing a full day’s work which is
the result of the “antagonistic” positions
that employers and employees have
towards each other.
• Natural soldiering - the natural instinct
and tendency of men to take it easy.
• Systematic soldiering comes from more
intricate second thought and reasoning caused
by their relations with other men.
– “When a naturally energetic man works for a
few days beside a lazy one, the logic of the
situation is unanswerable. 'Why should I
work hard when that lazy fellow gets the
same pay that I do and does only half as
much work’?
3. “The inefficient rule-of-thumb methods,
which are still almost universal in all
trades, waste a large part of their effort
because these methods are inefficient”

• The prevailing idea has been well

expressed in the saying that "Captains
of industry are born, not made"
• If one could get the right man, methods
could be safely left to him.”
• The best of the ordinary management – is no
more than a set of methods which in a “broad
sense be said to be an evolution of the ideas
which have been developed since the starting
of each trade….Instead of having only one
way which is generally accepted as standard,
there are in daily use say fifty or a hundred
different ways of doing each element of
work…
Practically in no instance have these
means and methods been codified or
systematically analyzed or described…
This mass of rule-of-thumb or traditional
knowledge may be said to be the
principal asset or possession of every
tradesman under the old system….
• Initiative and incentive – A workman
is willing to show initiative only
when there is incentive. Conversely
no incentive no initiative.
 SCIENCETIFIC
MANAGEMENT
• In 1911 Frederick W. Taylor published “The
Principles of Scientific Management.” Taylor,
often called the “father of scientific
management,” noticed that many workers did
their jobs their own way and without clear
uniform specifications. He believed that this
caused them to lose efficiency and perform
below their true capacities. He also believed that
this problem could be corrected if workers were
taught and then helped by supervisors to always
perform their jobs in the right way
(Schermerhorn, 2006).
Scientific Management: Guiding Action Principles
(Schermerhorn, 2006)
• Develop for every job a “science” that includes
rules of motion, standardized work implements,
and proper working conditions.
• Carefully select workers with the right abilities for
the job.
• Carefully train workers to do the job and give
them the proper incentives to cooperate with the
job “science.”
• Support workers by carefully planning their work
and by smoothing the way as they go about their
jobs.
Taylor’s associates and ideas

• Henry L. Gannt (1861-1919) created the Gannt

Chart, a visual plan and progress report that
identifies work stages, completion deadline &
project accomplishments; developed a pay
incentive system.
• Frank & Lilian B. Gilbreth (1868-1924) pioneered
“time and motion study” –the science of reducing
a job or tasks to its basic physical motion which
led to the “one best way to do work”- required
the fewest motions performed in an accessible
area and in the most comfortable position.
Henry Laurence Gantt
• Introduced “Task and
Bonus” System of
wage payment.
– Fair day’s work pay for
standard tasks
– Bonus for increased
productivity

• Introduced the
Gantt Chart
Taylor”s Goal:

• Taylor’s goal was to improve the

productivity of people at work. He used the
concept of “time study” to analyze the
motions and tasks required in any job and
to develop the most efficient ways to
perform them. He then linked these job
requirements with both training for the
worker and support from the supervisors in
the form of proper direction, work
assistance, and monetary incentives.
 Contributions of Scientific Management

• Initiated the careful study of tasks and jobs.The

efficiency techniques of scientific management
such as time and motion studies have made us
aware that the tools and physical movements
involved in a task could be made more efficient
and rational.
• The emphasis it placed on scientific selection of
workers has made us recognize that without
ability and training a person cannot be expected
to do his or her job properly.
Contributions of Scientific Management

• The importance that scientific

management gave to work design (study
of tasks & jobs) encourage managers to
seek the one best way of doing a job.
• Demonstrated the importance of
compensation for performance, personnel
selection and training. (Daft, 2005)
Criticisms:

• Did not appreciate the social context of

work and higher needs of workers.
• Did not acknowledge variance among
individuals.
• Tended to regard workers as uninformed
and ignored their ideas and suggestions.
(Daft, 2005)
ADMINISTRATIVE PRINCIPLES
A subfield of the classical management
perspective, the Administrative Principles
approach focused on the total organization
rather than the individual worker,
delineating the management functions of
planning, organizing, commanding,
coordinating, and controlling (Daft, 2005).
Major contributors: Henri Fayol (1841-1925)

• In 1916, H. Fayol published “General and

Industrial Management” and discussed 14
principles of management and functions or
elements of management: foresight
(planning), organization, command,
coordination, and control. He felt that
these principles and functions of
management can be applied in any
organizational setting (Daft, 2005).
14 Principles of Management:

1. Division of Labor. It means dividing the

work into specific tasks and assigning a
set of workers for each specific task. The
more people specialize, the more
efficiently they can perform their work.
2. Authority. Manager’s formal authority
gives them the right to command so that
they can get things done.
14 Management Principles

3. Discipline. Members in an organization need to

respect the rules and agreements that govern
the organization.
4. Unity of Command. Each employee must
receive his/her instructions about a particular
operation from only one person.
5. Unity of Direction. Those operations within the
organization that have the same objective
should be directed by only one person using one
plan to avoid conflict in instructions.
14 Management Principles

6. Subordination of Individual Interest to the

Common Good. In any undertaking, the
interests of employees should not take
precedence over the interest of the
organization as a whole.
7. Remuneration. Compensation for work
done should be fair to both employees and
employers.
14 Management Principles

8. Centralization. Decreasing the role of

subordinates in decision making is
centralization; increasing their role is
decentralization. Managers should retain final
responsibility but also need to give their
subordinates enough authority to do their jobs.
9. Hierarchy. The line of authority that runs in order
or rank from top management to the lowest level
of the organization.
14 Management Principles

10.Order. Materials and people should be in

the right place at the right time. Workers
should be in the jobs that would best suit
their skills and abilities.
11. Equity. Managers should be kind and fair
to all their subordinates.
12. Stability of Tenure. A high employee
turnover rate is not good for the efficient
functioning of an organization.
14 Management Principles

13. Initiative. Employees should be given the

freedom to conceive and carry out their
plans, even when some mistakes result.
14. Esprit de Corps. Promoting team spirit
will build harmony and unity within the
organization. One way to achieve this
spirit is to use verbal communications
instead of formal written communications
whenever possible.
Contributor: Mary Parker Follett (1868-1933)

• Making every employee an owner in the

business would create feelings of collective
responsibility. Today, we address the same
issues under such labels as “employee
ownership,” “profit sharing,” and “gain sharing
plans.”
• Businesses were services and that private
profits should always be considered vis-à-vis the
public good. Today, we pursue the same issues
under the labels of “managerial ethics,” and
“corporate social responsibility.”(Schermerhorn, 2006)
Contributor: Chester L. Barnard (1886-1961)

• Informal organizations occur in all formal

organizations & includes cliques and naturally
occurring social groupings. Informal
relationships are powerful forces that can help
the organization if properly managed.
• Acceptance theory of authority, which states
people have free will and can choose whether to
follow management orders.
(Daft, 2005)
Acceptance Theory of Authority

1. Employees must understand what the

manager wants them to do.
2. Employees must be able to comply with
the directive.
3. Employees must think that the directive
is in keeping with organizational
objectives.
4. Employees must think that the directive
is not contrary to their personal goals.
Zone of Indifference

Chester Barnard believed that each person

has a “zone of indifference” or a range
within each individual in which he/she
would willingly accept orders without
consciously questioning authority. It was
up to the organization to provide sufficient
inducements to broaden each employee’s
zone of indifference so that manager’s
orders would be obeyed.
Critique:

• On one hand, it contributed a number of

“principles” to guide managerial action and
started the identification of functions of
management.
• On the other hand, the writers developed their
ideas on the basis of their experiences as
managers to only a few firms with stable
environment. Assumptions that were made were
based not on scientific tests but on value
judgments that expressed what they believe to
be proper life-styles, moral codes and pursuit of
success.
 BUREAUCRATIC MODEL
A sub field of the classical management
perspective that emphasized management on an
impersonal, rational basis through such
elements as clearly defined authority and
responsibility, formal record keeping, and
separation of management and ownership
(Daft, 2005).
A bureaucracy is a rational and efficient form of
organization founded on logic, order, and
legitimate authority (Schermerhorn, 2006).
Background:

Max Weber (1864-1920) observed during the late

1800s that many European organizations were
managed on a personal, family like basis. Public
administrators rely on subjective judgment,
emotion, fear tactics, and nepotism rather than
on sound management practices. The
dysfunctional consequence of this management
practice was that resources were used to realize
individual desires rather than organizational
goals. To correct such problem, Weber invented
– bureaucracy (Daft, 2005).
Characteristics of Weber’s Bureaucracy:

• Clear division of labor: Jobs are well defined,

and workers become highly skilled at performing
them.
• Clear hierarchy of authority: Authority and
responsibility are well defined for each position,
and each position reports to a higher-level one.
• Formal rules and procedures: Written guidelines
direct behavior and decisions in jobs, and written
files are kept for historical record.
Bureaucracy:

• Impersonality: Rules and procedures are

impartially and uniformly applied with no
one receiving preferential treatment.
• Careers based on merit: Workers are
selected and promoted on ability and
performance, and managers are career
employees of the organization
(Schermerhorn, 2006).
Critique:

• The ideal bureaucracy would have the

advantages of 1) efficiency in utilizing resources
and 2) of fairness or equity in the treatment of
employees and clients.
• Disadvantages include: excessive paper work
or “red tape,” slowness in handling problems,
rigidity in the face of shifting customer needs,
resistance to change, and employee apathy
(Schermerhorn, 2006).
 Summary
• Frederick Taylor’s principles of scientific
management focused on “job science”, the
need to carefully select, train, and support
workers for individual task performance.
• Henri Fayol suggested that managers
should learn what are now known as the
management functions of planning,
organizing, leading and controlling as well
as the general principles of management.
• Max Weber described bureaucracy with its
clear hierarchy, formal rules, and well-
defined jobs as an ideal form of
organization.
 Contributions/Limitations
Contributions
• Increased Productivity and
Efficiency
– Thru division of labor
• Instilled the spirit of
cooperation bet. Managers
and workers
– Piece-rate/Task & Bonus
system
• Introduced Scientific Analysis
in workplace.
• Introduced the concept of
Automation
• Introduced the concept of
management
specialists/industrial engineers
Limitations
• Authoritarian leadership
approach
• Simplistic motivational
assumption
– As if “Money is everything”
– Resulted in job stress and
fatigue for workers
• Workers viewed as parts of
machine
– Underestimated the capacity
of workers
– Did not encourage workers to
improve their
intellectual/conceptual skills
• Sacrificed Quantity vs. Quality
 Some observation/insight:
• The classical management approaches
share a common assumption: People at
work act in a rational manner that is
primarily driven by economic concern.
Workers are expected to rationally
consider opportunities made available to
them and do whatever is necessary to
achieve the greatest personal and
monetary gain.
• Frederick Taylor wrote that management’s
role was to ensure that workers’ tasks
were well defined, measured, and
controlled. With the objective of making
people consistent, reliable, and efficient as
the machines they supported, managers
came to regard their subordinates as little
more than another factor of production.
• In that context, managers designed
systems, procedures, and policies that
would ensure that all employees
conformed to the company way. The goal
was to make the middle managers’ and
workers’ activities more predictable and
thus more controllable.
• The system that insured control and
conformity also inhibited creativity and
initiative. At best, the resulting
organizational culture grew passive; with
amused resignation, employees
implemented corporate-led initiatives that
they knew would fail.
• At worst, the tightly controlled
environment, caused job stress and
fatigue, triggered antagonism and even
subversion; people deep in the
organization found ways to undermine the
system that constrained them.
• The classical perspective failed to tap into the
great diversity that existed in organizations.
Employee with beliefs, values and customs
different their managers were told to suppress
them and conform to the organization’s beliefs,
values and customs. Leadership was expected
at the top but suppressed everywhere else;
management’s primary concern was to meet the
organization’s needs.
“A person unaware of mistakes made by
others is likely to repeat them. The wise
person studies the past to avoid its pitfalls
and benefit from its achievements.”

by Warren Plunkett
 List of References
• Daft, R. (2005). Management. USA:
South-Western.
• Schermerhorn, J. (2006). Management.
USA: John Wiley & Sons, Inc.