evolution of management & organization theory

The Evolution of The Evolution of Management and Management and

Organization TheoryOrganization Theory

The Origins of Public The Origins of Public ManagementManagement

• The key to the city – harks back to an era when the only way into a city was through a locked gate.

• The profession of management began and developed as the profession of arms.– War is not possible without an effective system

of public administration.– Military officers were the first public

administrators.

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• The profession of management began and developed as the profession of arms.– First armies were mobs with managers.– Gradually developed hierarchy, line and staff

personnel, logistics and communications.• The continuing influence of ancient Rome.

– The transfer of managerial control from those of wealth and power to those with professional expertise first happened in the Roman army.

– The power of technical expertise would not be seen again until Napoleon.

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• The continuing influence of ancient Rome.– Origins of merit system.– Origins of civil service (to regulate pay).– The core features of modern public administration

were first found in the Roman Empire.– Depersonalization, separation of public and

private funds, hierarchy, functional specialization.– The virtue of military service (as training in

administration).

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• The military heritage of public administration.– The history of the world can be viewed as the

rise and fall of public administrative institutions.– Rome was effective because the army’s

organizational doctrine made it superior to its competitors and because it was backed up by a sophisticated administrative system of supply backed by taxes.

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• The military heritage of public administration.– The Roman empire only fell when its

legions degenerated into corps of mercenaries and when its supply and tax bases were corrupted.

– Both victorious soldiers and successful managers tend to be inordinately admired and rewarded as risk takers.

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The Significance of The Significance of Administrative DoctrineAdministrative Doctrine

• All organizations are guided by a doctrine of management that reflects basic values.

• The first administrative doctrine (military): Do this or die!

• Modern example (Henry Ford): All that we ask of men is that they do the work which is set before them. (Implication: or be fired! Better than being shot.)

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• More sophisticated doctrines are needed when meaningful and fulfilling work for its employees is the central goal of an organization.

• These doctrines are generally more conducive to long-term organizational effectiveness and productivity.

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• Doctrine and attitudes affect morale and performance and more importantly organizational culture.

• Organizational culture affects the overall competence or incompetence of the organization.

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• Each organization’s doctrine remains in place until technological and situational changes make the organization’s adaptations less useful and render the organization incompetent.

• Every major political revolution can be said to be caused by the same thing – poor public administration.

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• The evolution of management principles.– Authoritarian or traditional management is the

classical model of military governance applied to civilian purposes.

– Managers under an authoritarian doctrine value order, precision, consistency, and obedience.

– This authoritarian model has been gradually been replaced with less centralized, more participatory models.

– Why? Because they work better with sophisticated workers.

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• Comparing military and civilian principles.– No royal road to administrative wisdom. No

hard and fast principles. But:– Nine principles of war (U.S. Army).

• Objective: Direct every, military operation toward a clearly defined, decisive and attainable objective.

• Offensive: Seize, retain, and exploit the initiative.• Mass: Concentrate combat power at the decisive

place and time.

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• Comparing military and civilian principles (contd.)– Nine principles of war (contd.)

• Economy of force: Allocate minimum essential combat power to secondary efforts.

• Maneuver: Place the enemy in a position of disadvantage through the flexible application of combat power.

• Unity of command: For every objective, insure unity of effort under one responsible commander.

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• Comparing military and civilian principles (contd.)– Nine principles of war (contd.)

• Security: Never permit the enemy to acquire an advantage.

• Surprise: Strike the enemy at a time and/ or place and in a manner for which he is unprepared.

• Simplicity: Prepare clear, uncomplicated plans and clear, concise orders to ensure thorough understanding.

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• Comparing military and civilian principles (contd.)– Catheryn Seckler-Hudson’s 12 principles

of management.• Policy should be defined and imparted to

those who are responsible for its achievement.• Work should be subdivided, systematically

planned, and programmed.• Tasks and responsibilities should be

specifically assigned and understood.

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• Comparing military and civilian principles (contd.)– Catheryn Seckler-Hudson’s 12 principles of

management.• Appropriate methods and procedures should be developed

and utilized by those responsible for policy achievement.• Appropriate resources in terms of availability and priority

should be equitably allocated.• Authority commensurate with responsibility should be

delegated and located as close as possible to the point where operations occur and decisions need to be made.

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management.• Adequate structural relationships through which to

operate should be established.• Effective and qualified leadership should head each

organization and each subdivision of the organization.• Unity of command and purpose should permeate the

organization.

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management.• Continuous accountability for utilization of resources

and for the production of results should be required.• Effective coordination of all individual and group efforts

within the organization should be achieved.• Continuous reconsideration of all matters pertaining to

the organization should be a part of regular operations.

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• Comparing military and civilian principles (contd.)– The military list is more policy

oriented, more leadership directed, than the civilian list.

– The military approach underlies the reinventing government movement.

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What Is Organization What Is Organization Theory?Theory?

• A proposition or set of propositions that attempts to explain or predict how groups and individuals behave in differing organizational arrangements.

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• Classic organizational theory.– Organizations exist to accomplish

production-related and economic goals.– There is one best way to organize for

production, and that way can be found through systematic, scientific inquiry.

– Production is maximized through specialization and division of labor.

– People and organizations act in accordance with rational economic principles.

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• Theory derived from organizational structures and procedures during the industrial revolution.– Economic rationale for the factory

system.– All formal organizations are force

multipliers.

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Main ideaMain ideaof classical organizational of classical organizational

theorytheory

• There is “one best way” to perform a task

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Classical organizational theory Classical organizational theory espouses two perspectives:espouses two perspectives:

• Scientific management – focusing on the management of work and workers

• Administrative management - addressing issues concerning how overall organization should be structured

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Major contributors to the Major contributors to the Classical Organizational Theory:Classical Organizational Theory:

Scientific Management:»Frederick Taylor

Administrative Management:»Henri Fayol »Luther Halsey Gulick»Max Weber

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Frederick TaylorFrederick Taylor

• Taylor is born in Pennsylvania on March 20, 1856

• After studying in Europe, he plans to go to Harvard, but does not pass the entrance exams

• Instead Taylor works as a pattern maker at a pump manufacturing company in Philadelphia

• Later, he studies mechanical engineering at Stevens, finishing in just three years. 26

Taylor identifies two people as having influenced him:

• John Griffith teaches Taylor how to be an appreciative, respectful, and admirable working mechanic

• Lucian Sharpe impresses Taylor with his focus, concentration, and task commitment

Frederick TaylorFrederick Taylor

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Midvale Steel Midvale Steel CompanyCompany

• Taylor begins working for the Midvale steel Company in 1878.

• While there he succeeds in doubling the work of his men, is soon promoted to foreman

• As foreman, he begins studying productivity as a means of measuring of manufacturing.

• Later he becomes the chief engineer at Midvale.

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Ingenuity and Ingenuity and AccomplishmentsAccomplishments

• Creates systems to gain maximum efficiency from workers and machines in the factory.

• Focuses on time and motion studies to learn how to complete a task in the least amount of time.

• Becomes consulting engineer for many other companies

• Publishes—The Principles of Scientific Management

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Key Points of Key Points of Scientific Management Scientific Management

1. Scientific Job Analysis – observation, data gathering, and careful measurement determine “the one best way” to perform each job

2. Selection of Personnel – scientifically select and then train, teach, and develop workers

3. Management Cooperation – managers should cooperate with workers to ensure that all work is done in accordance with the principles of the science that developed the plan

4. Functional Supervising – managers assume planning, organizing, and decision-making activities, and workers perform jobs

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Limitation• Do not take into account the

human and social aspects. • Emphasis on Productivity/Profit

only.• Treat men like machine

Scientific Management Scientific Management

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Henri FayolHenri Fayol• Engineer and French industrialist• In France works as a managing director

in coal-mining organization• Recognizes the management principles

rather than personal traits• While others shared this belief, Fayol

was the first to identify management as a continuous process of evaluation.

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Fayol’s 5 Management Fayol’s 5 Management FunctionsFunctions

Fundamental roles performed by all managers: Planning Organizing Commanding Coordinating ControllingAdditionally Fayol recognizes fourteen principles that

should guide the management of organizations.

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Fayol’s 14 Principles:Fayol’s 14 Principles:1. Division of Work —improves efficiency through a

reduction of waste, increased output, and simplification of job training

2. Authority and Responsibility—authority: the right to give orders and the power to extract obedience – responsibility: the obligation to carry out assigned duties

3. Discipline—respect for the rules that govern the organization

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4. Unity of Command—an employee should receive orders from one superior only

5. Unity of Direction—grouping of similar activities that are directed to a single goal under one manager

6. Subordination of Individual Interests to the General Interest—interests of individuals and groups should not take precedence over the interests of the organization as a whole.

7. Remuneration of Personnel—payment should be fair and satisfactory for employees and the organization

8. Centralization—managers retain final responsibility – subordinates maintain enough responsibility to accomplish their tasks

Fayol’s 14 Principles:Fayol’s 14 Principles:

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9. Scalar Chain (Line of Authority)—the chain of command from the ultimate authority to the lowest

10. Order—people and supplies should be in the right place at the right time

11. Equity—managers should treat employees fairly and equally12. Stability of Tenure of Personnel—managerial practices that

encourage long-term commitment from employees create a stable workforce and therefore a successful organization

13. Initiative—employees should be encouraged to develop and carry out improvement plans

14. Esprit de Corps—managers should foster and maintain teamwork, team spirit, and a sense of unity among employees

Fayol’s 14 Principles:Fayol’s 14 Principles:

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Luther Halsey GulickLuther Halsey Gulick(1892-1992)(1892-1992)

• A specialist in municipal finance and administration

• Gulick works with the Institute of Public Administration, professor of municipal science and administration at Columbia, and serves on Franklin D. Roosevelt’s Committee of Government Administration

• Expands Fayol’s five management functions into seven functions:

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1. Planning - developing an outline of the things that must be accomplished and the methods for accomplishing them

2. Organizing - establishes the formal structure of authority through which work subdivisions are arranged, defined, and coordinated to implement the plan

3. Staffing - selecting, training, and developing the staff and maintaining favorable working conditions

4. Directing - the continuous task of making decisions, communicating and implementing decisions, and evaluating subordinates properly

Luther Halsey GulickLuther Halsey Gulick

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5. Coordinating - all activities and efforts needed to bind together the organization in order to achieve a common goal

6. Reporting - verifies progress through records, research, and inspection; ensures that things happen according to plan; takes any corrective action when necessary; and keeps those to whom the chief executive is responsible informed

7. Budgeting - all activities that accompany budgeting, including fiscal planning, accounting, and control

Luther Halsey GulickLuther Halsey Gulick

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Max Weber (1864-1920)Max Weber (1864-1920)• German sociologist• Weber first describes the concept of

bureaucracy – an ideal form of organizational structure

• He defines bureaucratic administration as the exercise of control on the basis of knowledge

• Weber states, “Power is principally exemplified within organizations by the process of control”

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Weber uses and defines the terms authority and power as:

• Power: any relationship within which one person could impose his will, regardless of any resistance from the other.

• Authority: existed when there was a belief in the legitimacy of that power.

Max Weber (1864-1920)Max Weber (1864-1920)

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Weber classifies organizations according to the legitimacy of their power and uses three basic classifications:

Charismatic Authority: based on the sacred or outstanding characteristic of the individual.

Traditional Authority: essentially a respect for customs.

Rational Legal Authority: based on a code or set of rules.


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Weber recognizes that rational legal authority is used in the most efficient form of organization because:

• A legal code can be established which can claim obedience from members of the organization

• The law is a system of abstract rules which are applied to particular cases; and administration looks after the interests of the organization within the limits of that law.


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• The manager or the authority additionally follows the impersonal order

• Membership is key to law obedience• Obedience is derived not from the

person administering the law, but rather to the impersonal order that installed the person’s authority


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Weber outlined his ideal bureaucracy as defined by the following parameters:• A continuous system of authorized jobs

maintained by regulations• Specialization: encompasses a defined

“sphere of competence,” based on its divisions of labor

• A stated chain of command of offices: a consistent organization of supervision based on distinctive levels of authority


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• Rules: an all encompassing system of directives which govern behavior: rules may require training to comprehend and manage

• Impersonality: no partiality, either for or against, clients, workers, or administrators

• Free selection of appointed officials: equal opportunity based on education and professional qualification


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• Full-time paid officials only: or major employment; paid on the basis of position

• Career officials: promotion based on seniority and merit; designated by supervisors

• Private/Public split: separates business and private life

• The finances and interests of the two should be kept firmly apart: the resources of the organization are quite distinct from those of the members as private individuals.


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(a) A tendency to a leveling of social classes by allowing a wide range of recruits with technical competence to be taken by any organization

(b) Elite status because of the time required to achieve the necessary technical training

(c) Greater degree of social equality due to the dominance of the spirit of impersonality or objectivity


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Limitation- Appropriate for the past where environment was relatively stable and predictable.- Today’s environments are more turbulent and unpredictable.- Too general for today’s highly complex organization and specialization.


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Common Criticisms of Common Criticisms of Classical Organizational Classical Organizational

TheoryTheoryClassical principles of formal organization may

lead to a work environment in which:• Employees have minimal power over their jobs and

working conditions• Subordination, passivity and dependence are

expected • work to a short term perspective• Employees are lead to mediocrity • Working conditions produce psychological failure as a

result of the belief that they are lower class employees performing menial tasks

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Neoclassical Organization Neoclassical Organization TheoryTheory

• The neoclassical theorists gained their reputation by attacking the classical theories.– Important source of the power and politics,

organizational culture, and systems theory.• Herbert Simon.

– Bounded rationality and satisficing.– Programmed and unprogrammed decision-making.– Management information systems.

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Neoclassical Organization Neoclassical Organization TheoryTheory

• The impact of sociology.– Philip Selznick – Organizations are

made up of individuals whose goals and aspirations may not coincide with the organization’s.

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Behavioral ApproachBehavioral Approach• Developed because – (a) classical

approach didn’t achieve total efficiency and workplace harmony and (b) managers still encountered problems because workers didn’t always behave as they were supposed to

• Two branches:– Human Relations Approach– Behavioral Sciences Approach

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Human Relations Human Relations ApproachApproach

• Focus on the social environment of a job• Refers to the manner in which managers

interact with subordinates• Managers must know why subordinates

behave as they do• Importance of individuals in success or

failure of an organization

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Human Relations ApproachHuman Relations Approach—(cont.)—(cont.)

• Management should recognize employees’ need for recognition and social acceptance

• Management should look on work group as a positive force

• Managers should be trained in human relations skills as well as in technical skills

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Behavioral Sciences Behavioral Sciences ApproachApproach

• Focus is on the nature of work itself• Individuals are motivated to work for

reasons other than money and social relationships— recognition, societal contributions, personal fulfillment.

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Mary Parker Follet - had considered workers as humanChester Bernard - social need - Psychological need •Individual & Group•Manager and subordinate relation•Early attempt to discover the social and psychologicalfactor that would create effective human relation.

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Behavioral Sciences Behavioral Sciences Approach—ContributorsApproach—Contributors

Behavioral Sciences Behavioral Sciences Approach—ContributorsApproach—Contributors

• Mary Parker Follett viewed organizations from the perspective of individual or group behavior, i.e., people-centered view. Managers’ job is to harmonize and coordinate group efforts

• Hawthorne Studies varied lighting levels at the Western Electric Company; productivity increased regardless of the illumination level

• Elton Mayo replicated Hawthorne Studies and the results; workers enjoyed the attention and produced the results they believed researchers wanted

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Elton Mayo (1880 – 1949) - Westerm Electric’s Hawthorne Plant - Chicago- To study relationship between level of lighting in the work-place and workers productivity.- ‘Hawthorne effect’The Hawthorne Effect:The possibility that workers who receive special attention will perform better simply because they received that attention.

The Hawthorne The Hawthorne ExperimentsExperiments

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Mayo introduced the concept of “Social man” – motivated by social need, on-the-job relationships, and responding more to work group pressure than to management control – was necessary to compliment the old concept of “rational man” motivated by personal economic needs.


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Contribution of H.R. -Improved classical approach by stressing social needs.-Focus on workers – not on techniques. -Emphasized management skill rather than technical skill.-Focus on group dynamics rather than individual.


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Behavioral Sciences Behavioral Sciences Approach—Pros & ConsApproach—Pros & Cons

Contributions• Contribute to people—

managing aspect of management

• Use of teams• Focus on training &

development• Use of reward &

incentive systems

Limitations• Doesn’t always help

managers in problem situations

• Difficulty in translating technical findings into useful tools and policies

• Variety of viewpoints complicates the problem

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Limitation1.Assumming satisfied worker : to be more productive workers. 2.Social environment – only one of the several factors that influence productivity – e.g. - salary level - culture - structure - interest


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The Behavioral Science SchoolHR developed into BSIntroduced fields like: Psychology Sociology AnthropologyHR: Social man – motivated by desire for form relationships with others.


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Behavioral Science: Argyris, Maslow, McGragor:- Self-actualizing – a more accurate concept to explain Human Motivation. “Complex man” No two people are exactly alike.


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Contribution Of Behavioural Science•Enormous contributions to understanding of individual motivation, group behaviour interpersonel relationship at work and the importance of work to human beings.•Continue to contribute new insights in important areas as leadership, conflict, power, organizational change and communication.


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Limitations•Its potential not fully realized .•Managers resist suggestion.•Model, theories and jargon are too complicated and abstract to practicing manager.•Difficult to interpret by practicing managers.


Management Science Management Science ApproachApproach

• Developed to solve complex military problems in World War II, American business firms began to use a similar approach to deal with operating issues

• Formerly called operations research, this approach uses mathematics and statistics to aid in resolving production and operations problems

• Solve technical rather than human behavior problems; analyze the problem and often develop a mathematical representation of it

• Provide management with quantitative bases for decisions

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Management Science Management Science Approach—Pros & ConsApproach—Pros & Cons

Contributions• Techniques that help

with production management—scheduling, budgeting, inventory

• Techniques that help with operations management— development programs, aircraft scheduling

Limitations• Not a substitute for

management• Doesn’t deal with the

people aspect of a organization

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Modern Structural Modern Structural Organization TheoryOrganization Theory

• Basic assumptions– Organizations are rational institutions whose primary

purpose is to accomplish established objectives through control and coordination.

– There is a “best” structure for any organization in light of objectives, environment, products or services, and the technology of the production process.

– Specialization and division of labor increase the quality and quantity of production.

– Most problems result from structural flaws.

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Modern Structural Modern Structural Organization TheoryOrganization Theory

• Mechanistic and organization systems.– Mechanistic – traditional bureaucracy,

best in stable conditions.– Organic – less rigidity, more

participation, and more reliance on workers, best in dynamic conditions.

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Systems TheorySystems Theory• Systems theory views an

organization as a complex set of dynamically intertwined and interconnected elements, including inputs, processes, outputs, feedback loops, and the environment. Any change in one element causes changes in other elements.

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Systems ApproachSystems Approach

• Views an organization as interrelated parts with a unified purpose: surviving and ideally thriving in its environment

• Management should focus on efficiency and effectiveness in each part of the organization

• Elements of an organization are interconnected• Organization is linked to its environment• Open Systems vs. Closed Systems

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Systems TheorySystems Theory

• Cybernetics – Norbert Wiener (1948).

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Systems TheorySystems Theory• The learning organization.

– Built on the doctrines of participation– Maslow’s hierarchy of needs.– New component technologies (the five

disciplines).• Personal mastery.• Mental models.• Building shared vision.• Team learning.• Systems thinking.

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Contingency ApproachContingency Approach• Helps in better understanding the interactions of an

organization’s components. • Views an organization as interrelated parts with a

unified purpose: surviving and ideally thriving in its environment

• Workplace situations are too complex to analyze and control; thus, instead of focusing on trying to find the one best way to arrange workplace variables, managers focus on adapting their behavior to match the demands of the situation

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice•Drucker achieved prominence through his writings and consulting.•He asks:

– What is our business?– Who Is the customer?– What does the customer buy?– What does the customer consider value?– What will our business be?– And what should it be?

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice•Importance on Innovation•Key areas for setting objectives and evaluating results

– Fortune magazine publishes a survey of the most “admired” corporations. The areas that Fortune uses bear a strong resemblance to Drucker’s key areas.

•Management by Objectives

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice•Drucker’s focus on managerial practice asks the lingering question: “Can our academic research have rigor and also be relevant to the practice of management?”

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•Decentralization and simplification. •Drucker discounted the command and control model and asserted that companies work best when they are decentralized. •According to Drucker, corporations tend to produce too many products, hire employees they don't need (when a better solution would be outsourcing), and expand into economic sectors that they should avoid.

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Guru of ManagementGuru of Management

Peter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•The concept of "Knowledge Worker" in his 1959 book "The Landmarks of Tomorrow". •Since then, knowledge-based work has become increasingly important in businesses worldwide.•The prediction of the death of the "Blue Collar" worker. •A blue collar worker is a typical high school dropout who was paid middle class wages with all benefits for assembling cars in Detroit. •The changing face of the US Auto Industry is a testimony to this prediction.

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•The concept of what eventually came to be known as "outsourcing." •He used the example of front room and a back room of each business: A company should be engaged in only the front room activities that are core to supporting its business. •Back room activities should be handed over to other companies, for whom these are the front room activities.

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•The importance of the non-profit sector, which he calls the third sector (private sector and the Government sector being the first two.) •Non-Government Organizations (NGOs) play crucial roles in countries around the world.•A profound skepticism of macroeconomic theory. Drucker contended that economists of all schools fail to explain significant aspects of modern economies.

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•Respect of the worker. •Drucker believed that employees are assets and not liabilities. •He taught that knowledgeable workers are the essential ingredients of the modern economy. •Central to this philosophy is the view that people are an organization's most valuable resource, and that a manager's job is both to prepare people to perform and give them freedom to do so.

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•A belief in what he called "the sickness of government." •Drucker made nonpartisan claims that government is often unable or unwilling to provide new services that people need or want, though he believed that this condition is not inherent to the form of government. •The chapter "The Sickness of Government" in his book The Age of Discontinuity formed the basis of New Public Management, a theory of public administration that dominated the discipline in the 1980s and 1990s. 85

Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•The need for "planned abandonment." •Businesses and governments have a natural human tendency to cling to "yesterday's successes" rather than seeing when they are no longer useful.•A belief that taking action without thinking is the cause of every failure.

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•The need for community. Early in his career, Drucker predicted the "end of economic man" and advocated the creation of a "plant community" where an individual's social needs could be met. •He later acknowledged that the plant community never materialized, and by the 1980s, suggested that volunteering in the non profit sector was the key to fostering a healthy society where people found a sense of belonging and civic pride.

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•The need to manage business by balancing a variety of needs and goals, rather than subordinating an institution to a single value.•This concept of management by objectives forms the keynote of his 1954 landmark The Practice of Management.

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Guru of ManagementGuru of ManagementPeter Drucker (1909 – 2005) Guru of Management Practice - Key ideas•A company's primary responsibility is to serve its customers. •Profit is not the primary goal, but rather an essential condition for the company's continued existence.•An organization should have a proper way of executing all its business processes.•A belief in the notion that great companies could stand among humankind's noblest inventions.

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evolution of management & organization theory

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