Development of management thoughtManagement thought refers to the theories

that guide management of people in the organisations

Initially, these theories developed out of practical experience of managers in the industrial enterprises. Later on, they borrowed ideas from other fields of study like science, anthropology, sociology etc.

Management theories Pre-scientific theories

Classical theoriesa. Taylor’s scientific management theoryb. Fayol’s administrative theoryc. Weber’s bureaucracy theory

Behavioral theoriesa. Human relations theoryb. Behavioral science theory

Modern management theoriesa. Quantitative theoryb. Systems theoryc. Contingency theoryd. Operational theory

Pre-scientific Management TheoriesImportant contributions are made by - Charles Babbage- James Montgomery- Robert Owen- Andrew Ure- Charles Dupin - Henry Robinson Towne- James Watt and Mathew Robinson Boulton Watt- Captain Henry MetcafeThese theories solved specific organizational

problems but these are not universally accepted theories that can be applied to all organisations

Classical theoriesThey represent early works on management

and focus on increasing industrial output by providing financial incentives to employees. The classical approach was developed through three main streams: Scientific management, Administrative theory and Bureaucracy

Taylor’s scientific theoryTaylor developed his theory on the basis of

his work experience in three companies: Midvale Steel works, Simond Rolling mills and Bethlehem Steel company. He is regarded as Father of Scientific Management.

He focused on finding the best way to do the job by eliminating wastage of men and material. He developed time and motion studies to find optimum time and nature of operations for successful completion of tasks.

He also introduced differential wage rate system to pay more to productive workers.

Principles of Taylor’s theoryRule of thumb should be replaced with

scienceThere should be harmony, not discord in

group actions.Cooperation, not individualismMaximum output, not restricted outputDevelopment of workers to their fullest

capacity.

Techniques of scientific management given by TaylorTime studyMotion studyScientific task planningStandardization and simplificationDifferential piece rate systemFunctional foremanshipHigh speed steel

Evaluation of Taylor’s theory

Better management through scientific methodsDiscovered true capacity of workers Scientific selection of workers Mental revolution on the part of employers and

employees.In addition to Taylor, several other persons like Henry L

Gantt, Harington Emerson, Frank Gilbreth and Lillian Gilbreth also supported and contributed in scientific management movement.

LimitationsUnrealistic assumptionsMechanistic approachExploitation of labourImpracticableNarrow view

Fayol’s Administrative theoryFayol focused on managing the organisation as a

whole rather than lower levels of organisation onlyHis theory revolves around-Activities of a business: Technical, commercial,

financial, security, accounting and managerial-Functions of a manager : Planning / organizing /

commanding /coordinating/ controlling.- Abilities of managers: Physical, Mental, Moral,

General education, special knowledge and Experience

- Principles of management

Principles of managementDivision of workAuthority and responsibilityUnity of commandUnity of directionDisciplineSubordination of individual interest to general interestRemunerationCentralizationScaler chainOrderEquityStability of tenure of personnel Initiative Espirit-de-corps

Evaluation of Fayol’s TheoryHis principles are widely accepted in

business and non-business world.He pioneered in highlighting the principles of

managementCriticismToo formalVagueInconsistencyPro-management biasHistorical value

Taylor and Fayol – A comparisonBasis of comparison Taylor Fayol

Aim To increase production at the shop level

To increase overall production of the organization

Focus On improving workers’ output through work simplification and standardization

On improving overall administration through general principles

Management View From bottom to top From top to bottom

Results Scientific observation and measurement

Universal truths developed from personal experiences

Personality Scientist Practitioner

Major contribution Science of industrial management

A systematic theory of management

Perspective Narrow Wider

Aspects studied Micro aspect-management of jobs

Macro aspect-management of total organaization

Max Weber’s Bureaucracy theoryMax Weber(1864-1920), a German sociologist

introduced the rational-legal authority system/model to manage the business organizations. His model is characterized by

- Division of work- Rules and regulations- Hierarchy of authority- Technical competence- Record keeping- Impersonal relations

Evaluation of Weber’s theory Advantages of specialization Rationality leads to efficiency Leads to optimum utilization of resources Depersonalization leads to equal treatment of all the workers Facilitates growth of large scale organizationsLimitations Ignores the sentiments of human beings Hampers human creativity and innovativeness Ignores the role of informal organizations Strict rules make the organizations procedure- oriented rather

than goal- oriented Written rules and regulations deny the benefits of open

communication Views organizations as closed systems with little or no interaction

with the environment.

Behavioural theoriesThese theories focus on organisational goals

along with satisfaction of human needs.Shift in focus from workplace conditions to

human side of the organisationPeople- oriented approach substituted the

production- oriented approachTwo important theories: - Human relations theory - Behavioural science theory

Human relations theoryElton Mayo, the father of Human relation

approach focuses on increasing organizational productivity by increasing the morale of workers

Results were obtained through experiments: - Test room studies (a) Illumination experiment (b) Relay assembly room experiment - Interviewing studies - Observation studies

Results of the experimentInformal groups are important complements

to formal groupsSocial groups are more important than

financial incentives to motivate the workersWorker is a social man rather than rational

man motivated by financial incentivesWork is considered as a group activity and

not as operations performed by individuals.Social and psychological factors influence

employee behaviour and productivity more than physical work conditios

Evaluation of the theoryFocus on organizational efficiency through

satisfaction of social and psychological needs of the workers

Participative management is better than authoritarian management.

Design of the theory: social needs are secondary to physiological needs

Analysis of the theory: group dynamics may not be as important as emphasized upon.

Interpretation of the theory: cordial relations are over emphasized . Conflict of opinion also generates new ideas

Human relations philosophy: informal relations are as important as formal motivation, communication and leadership styles

Behavioural science theoryIt applies scientific vision to human relations

theoryConcepts from Psychology, Sociology and

Anthropology are applied to study human behaviour

Psychology – Study of individual behaviourSociology – Study of human behaviour in groupsAnthropology - Study of human behaviour as

individuals and members of groupsConcepts from various disciplines are tested before

applying them in business organisations.

Continued……………..Several sociologists and psychologists like

Abraham Maslow, Federick Herzberg, MC Gregor, Douglas, Rensis Likert, Kurt Lewin, Keith davis, Charles Angris,George Homans and others have made significant contribution to the development of this approach.

This approach is an extension and improvement of human relations movement. As this approach suggested that individuals differ in their attitudes, perceptions, their needs and goals also differ from organisation’s needs and goals. So the need is to achieve fusion between organisation’s goals and human needs.

Human relations Behavioural Approach

1. Focus on individual behaviour and needs.

Focus on groups and group behaviour

2. Emphasizes on interpersonal relationships.

Emphasizes on group relationships.

3. Views worker as ‘social man’ Views worker as ‘self actualising man’

4. Always views group conflict as a negative force.

Views group conflict as a source of new ideas and innovations.

5. Views organisation as a social system

Views organisation as a socio-technical system

6.Emphasis on motivation, morale, and job satisfaction

6.Emphasis on group dynamics and informal organisation structure

6. Narrow scope as based on Hawthrone experiment

Wide scope as based on Human relations movement.

Human relations theory and Behavioural science theory- A comparison

Modern management theories These theories are responsive to environment changes They view organisations as dynamic open systems

having multiple objectives Management is multi-disciplinary and draws knowledge

from various fields to solve complex business problems They forecast environment changes through scientific

techniques and discount them to the present business situations

These theories include: - Quantitative theory - Systems theory - Contingency theory - Operational theory

Quantitative theoryIt uses the services of quantitative specialists to

apply inter-disciplinary techniques to solve business problems

It includes: - Management science: it uses mathematical

models like PERT, CPM, Simulation etc. to solve business problems.

- Operations management: It applies quantitative techniques of inventory management, statistical quality control etc. to manage the production and delivery of goods and services

Continued……… -Management information system: It uses

computer based information to make business decisions

Evaluation of Quantitative theoryIt uses quantifiable data to frame mathematical

models and handles complex decision- making problems

It uses comprehensive information through computers which could not otherwise have been available

Limitations

- It cannot be applied to study human behaviour as it cannot be predicted through mathematical equations

- The models may be used more for analysing the results than used for making decisions

Continued………….- All the variables affecting the business

decisions cannot be quantified in numeric terms

- It may land up making satisfying decisions rather than optimum decisions because of constraints of time and cost to collect the relevant data.

Systems ApproachAs per this approach organisation is viewed from a

systems point of view.The main elements of systems approach are as

follows: Organisation as a purposeful system consisting of

several interconnected and interdependent parts. The parts or components of a system are called sub-

systems. The position and function of each subsystem can be

analyzed and understood only in relation to the other sub-systems and to the organisation as a whole.

Synergy effect. Every system has a boundary that separates it from

its environment. Systems are of two types: open and closed.

Feedback is useful in evaluating and improving the functioning of the system.