Evolution of

Management Theories

Alemayo E (BSC, MPH)

Department of public Health, RVU 2022

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 Learning Objectives:

• Define theory

• Understand the historical context how the

different management theories evolved.

• Distinguish the different management theory.

• Discuss the applicability of management

theories in health care.

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 Management theories
• Theory is a coherent group of assumptions
put forth to explain the relation ships
between two or more observable facts

• Help us to Understanding how people have

struggled with matters of relationships and
services/product at particular times in
history
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 Management Theory

• Theories provide perspectives with which people

make coherent assumptions to explain relationships
between two or more observable facts.

• Theories provide a stable focus for systematic

understanding of our experience.

• They provide criteria for determining what is

relevant.
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 Management Theory

Theories make it possible and challenge us to keep us

learning about our world (learning organization).
HOWEVER,

theories have boundaries with limited focus. But the

interaction within and between organizations and
their environment is enormous/vast.

And a single theory may not be able to explain

everything.
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 Management Theory
There is a need for alternative theories and
consideration of the consequences of adopting
alternative beliefs.

We live in an environment where there is continuous

change and improvement (for example, technological
environment is very dynamic).

There is no universally accepted theory of management

and the evaluation of management supports this.

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The Evolution of Management Theory

• It developed over the years and many people

contributed to the theory and practice.

• Management as an academic subject is

relatively new. Before the 1900 there were
only a few universities (all in USA).

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 Evolution….
• Management is inter-disciplinary: related to
different fields such as:
– history,
– geography,
– psychology,
– health,
– education,
– religion, etc.
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 Evolution…
• Each discipline and professionals, interpreted,
reformulated and used management according to
their own perspective.

• As a result of these, each new perspective came

up with
– new questions and assumptions,
– new research techniques,
– different technical jargons and
– new conceptual frameworks.
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 Evolution…

Knowing the evolution of management theories help

us to know

– how it was in the past,

– how it is in the present, and
– where it is heading in the future.

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 Evolution…
Despite the emerging new assumptions, new
approaches did not replace earlier ones.

Each new school of thought has tended to

complement or coexist with previous ones
leading to continued evolvement.

In this course, we will discuss a few

fundamental theories of management.
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 Management Theories
I. The early management theories
1. The Scientific Management Theory (The
operational Approach)
2. The Classical Organizational Theory (the
Universal Process Approach)
3. The Behavioral School
4. The Management Science
II. Contemporary/modern theories
5. The Systems Approach
6. The Contingency Approach
7.
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The dynamic engagement approach 12
 The Early Management
Theories
⸙ The Scientific Management Theory (the Operational
Approach)
⸙ The Classical Organizational Theory (the Universal
Process Approach)
⸙ The Behavioral school
⸙ The Management Science School
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 1. Scientific Management Theory (the
Operational Approach)
• Frederick W. Taylor (1856-1915) is the father of the
scientific management school

• Production-oriented field of management

dedicated to improving efficiency and
minimizing waste.

• Focuses on ways to improve the performance

of individual workers by scientifically
designing jobs.
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 Operational…
• Taylor based his management system on
production-line time studies.

• Using time study as his base, he analyzed and

timed steel workers' movements on a series of
jobs.

• Broke each job down into its components (tasks)

and designed the quickest and best methods of
performing each component.
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 Operational…

• Established how much workers should be able to

do with the equipment and materials at hand.

• Encouraged employers to pay more productive

workers at a higher rate than others - Differential
rate system.

• Workers were urged to surpass/outshine their

previous performance standards to earn more pay.
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 Summary of Taylor’s Approach

• Developed a scientific approach to management.

• Introduced a scientific analysis of work and

selection of workers.
• Implemented training & development of workers.

• Believed in friendly cooperation between

manager and labor for more productivity.
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 Limitations of Taylor’s approach
• He focused on labor and productivity and less
human relationships and behaviors.
• Believed that payment was central to motivate
workers.
• Workers contribution in management was
undermined.

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 Other contributors to the Scientific
management theory
Henry L. Gantt (1861-1919)

• Gantt worked with Taylor.

• Convinced that the differential rate system has
little motivational impact.
• He revised Taylor's incentive system and
introduced a bonus system.
Every worker who finished a day's assigned
work load would win a 50-cent bonus.
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 Cont’
• Every worker's progress was rated publicly
and recorded on individual bar charts.

• A supervisor would earn a bonus for each

worker who reached the daily standard, plus
an extra bonus if all the workers reached it.

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 Gantt originated the "Gantt chart“

Which is a way to schedule work or a

charting system for production scheduling.

Gantt chart is still widely used.

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 2.Classical Organization Theory (the Universal
Process Approach)

Founded by Henri Fayol (1841-1925)

• Scientific management was concerned with

increasing the productivity (organizational
functions).

• Classical organization theory on the other hand

focused on managing the entire organization
(total organization).
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 Cont’
• Believed that sound management practice falls
into certain patterns that can be identified and
analyzed.

• From this basic insight, he drew up a blueprint

for a cohesive doctrine of managers.

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 Cont’
Generally Henry Fayol's approach assumes
• all organizations, regardless of purpose or size,
require the same management process.

• this rational process can be reduced to separate

functions and principles of management.

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 Cont’
• The first to identify the four management
functions: planning, organizing, leading, and
controlling.

• He developed guidelines for managers to follow.

• These guidelines form fourteen principles for

effective management.
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 Fayol’s 14 Principles of management

P1. Division of Labor /work

• Effort and attention are focused on special

portion of the task.
• Work specialization is the best way to use
human resource.
• This principle is observed by the modern
assembly line.
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P2. Authority

• Managers must give orders so that they can get

things done.

• Authority and responsibility should be closely

related.

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P3. Discipline
• Members in an organization need to respect the
rules and agreements that govern the organization.

• Discipline results from good leadership at all

levels of the organization, judiciously enforced
penalties for the sake of promoting common
efforts.

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P4. Unity of Command
• Each employee must receive instructions from
only one person.
• Reporting to more than one manager, conflicts
in instructions and confusion of authority
P5. Unity of Direction
• The entire organization should be moving
toward a common objective ,in a common
direction.
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P6. Subordination of Individual Interest to
the Common Good
In any undertaking, the interests of employees
should not take precedence over the interests of
the organization as a whole.

P7. Remuneration
Consideration of variables such as cost of
living, success of the organization etc. to
determine rate of payment.
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P8. Centralization
• Decreasing the role of subordinates in decision
making is centralization
• Fayol believed that managers should retain
final responsibility
• but should at the same time give their
subordinates enough authority to do their jobs
properly
• The problem is to find the proper degree of
centralization in each case
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P9 The Hierarchy
• Lower line managers should always inform upper
level managers.
P10. Order
• To increase efficiency and coordination materials
and people should be in the right place at the right
time.

• People should be in the jobs or positions they are

most suited to.
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P11. Equity
• All employees should be treated equally.

P12. Stability of Staff

• Retaining productive employees should
always be a high priority of management.
A high employee turnover rate undermines the
efficient functioning of an organization.

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P13. Initiative
• Subordinates should be given the freedom to
conceive and carry out their plans.
Encourage employees to do through self direction.
P14. Espirit de Corps
• Promoting harmony and team spirit among
members to give the organization a sense of unity.

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 Other contributors to the classical
management theory (reading)
• Max Weber (1864-1920) - a German
sociologist : worked on Bureaucracy

• Mary parker Follet (1868- 1933): Considered

the external environment

• Chester I. Barnard (1886 – 1961): worked on

informal organizations
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 3. The Behavioral School

• The behavioral school emerged from the human relations

movement.
• An effort to make managers more sensitive to the needs of
their employees.

• The classical approach did not achieve the needed

efficiency and workplace harmony.

• People did not always follow predicted or expected

patterns of behavior.
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 Behavioral…

The Hawthorne studies/experiments

• The human relations movement grew out of a famous
series of studies conducted at the Western Electric
Company from 1924 to 1933 near Chicago.

• The influence of different working conditions

(temperature, working hours, etc) on productivity.

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 Behavioral…
• The Hawthorne Studies began as an attempt to
investigate the relationship between the level of
lighting in the workplace and worker productivity.

• When the test group's lighting was improved or

lighting conditions were made worse - productivity
tended to increase.

• The control group's output also rose even though it

experienced no changes in illumination.

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 Behavioral…

Explanations:
• Subjects enjoy working in the test room.
• The new supervisory relationship during the
study allowed the workers to be free during
work without fear.
• Sympathetic supervision had further reinforced
their motivation.
• They know they are part of an important
undertaking and subjects become friendly.
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 Behavioral…

• Because they had been singled out for special

attention, both the test and the control groups
had developed a group pride that motivated
them to improve their work performance.

• Special relationship with the controls increased

the productivity irrespective of the level of
illumination.

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 Behavioral…

Conclusion
• The researchers concluded that employees
would work harder if they believed
management was concerned about their
welfare and supervisors paid special attention
to them.

• This phenomenon was subsequently labeled

the Hawthorne Effect.

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 4. The Management Science School

Management science focuses specifically on using

scientific methods and mathematical techniques to
the development of mathematical models.

These models help organizations to try out

various activities with the use of a computer.

Modeling can help managers locate the best way

to do things.
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 The Management Science School
The theory bases its strategy on quality
improvement.

Though it started in factories, it was able to

bought by business organizations, non-profit
organizations and government agencies.

Several people have contributed in the

development of the Management Science School.
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 Contributors of Management Science
and Quality (reading)
Walter A. Shewart – an American Statistician
contributed in statistical quality
W. Edward Deming – Influenced quality control in
America and Japan
encouraging employee participation
Kaoru Ishikawa – Japanese
preventive approach to quality; Ishikawa’s fishbone diagram
Joseph M. Juran (American born in Romania) -
Influenced Japanese managers
team work, partnership, brain storming
Philip B.Crosby
promoted zero defect; “quality is free”
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 Relevance of the approach
Management science forecasts the future based on
the past and present
Managers can deal with the
"what if the future looks like this?“

These questions could not be handled by previous

management theories

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 Limitations of the Management
Science School

• Mathematical modeling tends to ignore

human relationships

• Emphasis on only the aspects of the

organization that can be captured in
numbers, missing the importance of people
and relationships.

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 Summary of main contributions of
earlier theories
• Management functions
• Division of work
• Authority and responsibility
• Departmentalization
• Span of control
• Coordination
• Team work
• Application of scientific methods

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 Contemporary Theories

⸙ The Systems Approach

⸙ The Contingency Approach (the Situational
Approach)
⸙ Dynamic Engagement Approach

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 1. The Systems Approach
• A system consists of a number of interdependent
parts functioning together.

• Modification of a segment of an organization

affects the activity other segments.

• Each part has a role that helps the whole to

function well.
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• A system may be a subsystem of a larger whole.

• For example a department is a subsystem of a

plant, which in turn may be a subsystem of a
company, or an industry, which in turn is a
subsystem of the national economy, and this in
turn is a subsystem of the world system.

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• Systems approach views the organization as a
unified, purposeful system composed of
interrelated parts.

• Systems oriented managers make decisions only

after they have identified the impact of these
decisions on other departments and on the entire
organization.
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 Types of system

Open System: constantly interacting with

the environment.

Closed system: not influenced and not

interacting with the environment.

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 Systems have boundaries

• Each system has a boundary that separates it

from its environment.

• In a closed system, the system boundary is

rigid;

• In an open system, the boundary is more

flexible.
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 Systems have flow
• A system has flow of resources in an
organization.

• Resources enter the system from the

environment as inputs and are transformed.
• Then exit the system as outputs (products or
services).

• Followed by feedback: reactions from the

environment.
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 Systems’ managers
• cannot function confined to organization chart.

• must mesh/connect their department with the

whole organization /employees and departments.

• have to communicate also with other

organizations as well.

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 Summary
• Systems theory emphasizes the dynamic and
interrelated nature of organizations/ tasks.

• Provides a framework to plan actions and

anticipate both immediate and far reaching
consequences.
• Allows to understand an unanticipated
consequences as they develop.
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 Open-system model of a business

Technical
Inputs Outputs
subsystem

Capital Managerial Goods

Labor subsystem
Services
Raw materials Boundary Profits
Market spanning
subsystem Waste materials
information

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2. The Contingency Approach
(Situational approach)
• The answer to any really engrossing question in
economics is: It depends

• The task of the economist, is to specify upon

what it depends, and in what ways.

• In the contingency approach the same applies.

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• Why do methods highly effective in one situation
fail to work in other situations?

• This is because the situations different; and,

• A technique that works in one case may not

necessarily work in all cases.

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The contingency approach emphasizes

• What managers do in practice depends (is

contingent) upon a given set of circumstances
situation or set of assumptions.

• It means if this situational variable exist, this is

what the manager will do.

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• There may be no one best way to solve a
management problem in any one organization.
HOWEVER,
• There would one best way to solve any given
management problem in any one organization at
a given time.
• The Contingency Approach allows the use of
management practices using traditional,
behavioural, and systems viewpoints
independently or in combination to deal with
various circumstances.
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 3. Dynamic engagement
Approach
• The dynamic engagement approach recognizes
an organization's environment is changing fast.
– Dynamic
• the opposite of static,
• continuous change, growth, and activity.
– Engagement
• the opposite of detachment,
• intense involvement with others.

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Why dynamism (Need for new ways of thinking)?:

Boundaries between cultures and nations are

blurred.

The world is becoming a "global village“.

The scope of international and intercultural

relationships is rapidly expanding.

The pace of organizational activity picks up fast.

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Dynamic engagement has Six themes

• New organizational environments

• Ethics and social responsibility
• Globalization and management
• Inventing and reinventing organizations
• Cultures and multiculturalism
• Quality

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 1. New Organizational
Environments

• an organization's environment is not

composed of a set of fixed, impersonal
forces.

• is a complex, dynamic web of people

interacting with each other.

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 2. Ethics and Social Responsibility

– Focus on values and excellence

values that guide people in their organizations,

the organization culture that embodies those
values, and
the values held by people outside the
organization.

• Managers must exercise moral courage by

placing the value of excellence at the top of
their agendas.
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 3. Globalization and management

• Easy connection even to the remotest corners of

the world.
• a "borderless" world where managers treat all
customers as "equidistant" from their
organizations.

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 4. Inventing and Reinventing
Organizations

• Search for ways to unleash the creative

potential of employees and themselves
• Issues for managers to rethink about the
traditional standard organization structures
• "liberation management" challenges the kinds
of rigid organization structures that inhibit
people's creativity.
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 5. Cultures and Multiculturalism

Various perspectives and values that people of different

cultural backgrounds bring could be transformed into a
significant source of resources.

Applicable in countries with diverse background and

cultures.

USA is a good example of multiculturalism.

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 6. Quality

• Total Quality Management (TQM)

• To provide products and services that are responsible

to strong customer and competitive standards.

• TQM emphasizes achieving customer satisfaction by

providing high quality goods and services.

• Reengineering the organization redesigns the

processes that are crucial to customer satisfaction.

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 Exercise

• How much are the theories applicable in the

health system? Provide some examples.

• What are the barriers in applying the theories

in our health system?

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 • Thanks!

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