l2 evolution of management theories
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The Evolution of
Management
A Historical Odessy
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Why study Management History ?
Management is the most used tool today in any
enterprise. History of its evolution helps us to
understand its metamorphosis to its current level.
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Looking back
Organized endeavors directing people forplanning, organizing, executing, leading,
monitoring and controlling activities have existed
since the beginning of the civilization. (Pyramids,
Monuments, Mythology)
It has been only during the last century that this
subject has undergone systematic investigation,
acquired a common body of knowledge and hasbecome a formal discipline.
It has been the fastest growing discipline both in
content and application over the last 50 years
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The run up to the formal theory. Literature review
Sun Tzu the Chinese General (6tn century BC) in
his The art of War recommends that the successcan be achieved by being aware of utilizing theorganizations strength to exploit the weakness ofrival the enemy. (Coordinated group effort)
Chanakyas Arthashastra (3rd century BC) It laysdown the principles that should be taken intoconsideration by the leader while formulatingpolicies
Machiavelli (Discourses 1513) written for theleadership of Florence, recommended that theends justifies means and that a leader should usefear, not hatred, to maintain control.
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The run up to the formal theory. Literature review
Adam Smith (The wealth of nations -1776). Economic
advantages organizations would gain by division of labor.The Industrial Revolution and the mechanization of theprocess (large volume outturn)
Coordination of tasks (Forecasting, supply chain, qualitycontrol, monitoring, marketing)contributed by EliWhitney, James Watt and Mathew Boulton.
The modern management discipline evolved as an offshootof economics. John Stuart Mill, Leon Walras, AlfredMarshall took forward the theory towards a more
comprehensive theoretical background.Rapid expansion of the railroads brought down the costs.
No government control supported the development of largecorporations (J. Rockefeller- oil, Andrew Carnegie steel).
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The run up to the formal theory. Literature review
This demanded formal managers and formalized managementpractices.
In 1881, Joseph Wharton took the profession one step forwardby becoming the first management scholar to offer a tertiarylevel course in management
Harvard became one of the first American Universities to offera graduate degree in business management in 1908. The firsttextbook on management was written by J Duncan in 1911.
Around World War II, H. Dodge, Ronald Fisher and ThorntonC. Fry introduced mathematical and statistical techniques togive it a scientific basis.
Peter Drucker published Concept of the Corporation in 1946describing different facets of business organization. He alsodeveloped the concept of MBO in 1950 as a comprehensivesystem based approach to accomplish the organizationalobjectives
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Why Study Management Theory?
Theories are perspectives with which people makesense of their world experiences
Theories provide a stable focus for understandingwhat we experience (Henry Fordlarge andcompliant work force; Alfred Sloan of GM onmarket strategy)
Theories enable us to communicate effectively andthus move into more complex relationships withother people (Ford / Sloan)
Theories make it possible to keep learning aboutour world. Theories have boundaries. Triggers tolook beyond. (Cold war, Model T and GM)
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Theories (guided by the perceptions of the researcher)
Preclassical contributions(Adam Smith,
The wealth of Nations, 1776)
General administrative theories(Henri Fayol)(Max Weber)
Scientific Management(Frederic Taylor)
(Frank and Lilian Gilbert)(Henry L Gnatt)
The classical theorists
Behavioral science theorist(Fred Fiedler, Victor Vroom,
Edwin Locke etc)
Human relations movement(Dale Carnegie, Abraham Maslow,
Douglas McGregor)
Hawthrone studies(Elton Mayo)
Early advocates(Robert Owen, Hugo Munsterberg,
Mary Parker Follett,Chester Barnard)
Behavioral School(Human Resources Approach)
Operations research orManagement Science
Charles 'Tex' Thornton)Robert McNamara
Qualitative approach
Contingency
Systems
Processes(Harold Koontz)
Recent years -Integrative approach
Development of Management theories
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The Classical TheoriesThe classical management focused on attainment ofefficiency and productivity in an organizational setting.
The predominant characteristics are:1. Emphasis was placed on economic rationality of the
individual employee. Advocated the provision ofmonetary incentives to encourage to work hard torealize their true potential.
2. They are based on the negative views about humannature with respect to performance of role &responsibility in an organizational setting.
3. They recognized that humans have emotions, but felt the
emotions could be controlled by logical and rationalstructuring of jobs
Can be classified in three main branches: Scientific,Administrative and Bureaucratic Management
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Four pillars of Scientific Management
Breakdown the work into elements and developscience for each (re-look into the conventionalmode)Scientific job analysis
Select, train and deploy appropriate worker
(workers will not choose where they would work)Division of work and responsibilities.- Functionalsupervision and standardization
Establish synergic relationship with workers.
Management cooperation and financial incentivesScientific Management arose from the need toincrease productivity.
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Major Contributorscontd.
Frank and Lillian Gilbreth (used camera and micro-
chronometer to analyze the motions of brick laying; fatigueand motion studies). They defined time and motion studiesas the science of eliminating wastefulness resulting fromunnecessary, ill directed and inefficient motion
Henry L Gantt (charts for planning and monitoring, and
the concept of group incentives) Formed the basis of CPM,PERT (project evaluation and review technique) and GanttCharts. He focused on the importance of motivationalschemes by laying emphasis on rewards for good work
rather than penalties for poor work. He advocated thatprovisions of rewards is relatively more effective thanthreat of penalties
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Scientific Management EraIn Perspective
The era was characterized by low standard of
living, labor intensive working pattern, and
financially cheap environment
Scientific management attempted to raise thestandard of living by way of making workers more
efficient and productive and consequently adding
to their income.
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The General Administrative Management
Grew out of need to find guidelines for managing complexorganizations to prescribe the interventions in
Management. The two most prominent contributor was:
Henry Fayol (MD of a French Coal Company) described
management as the designated set of functions, and unlikeTaylor, concentrated on the managerial level. Fayol was
the first thinker to outline the desirable qualities of a
manager. They are physical qualities, mental qualities,
moral qualities, proper education qualities, specialized
knowledge about some function and experiential
knowledge from past work. They are flexible, not
absolute, and must be usable regardless of changing
conditions.
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Fayols 14 Principles of Management- busted the myth that
Managers are Born and not made. He insisted that
management is a skill which can be taught
Division of work
(training)
Authority / responsibility
Discipline (obey rules)Unity of Command
Unity of Direction (one
plan)
Individuals interestsubordinate to
organizations interest.
Fair Remuneration
Centralization
Hierarchy
Orderliness (right peopleand right material at right
place)
Equity (principle of hotstove)
Stability of TenureInitiative
Esprit de corps
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Bureaucratic Management
Max Weber (German Sociologist) described goal
oriented large organization as bureaucracy -- defined asan administrative system which is deliberately designedfor accomplishment of large scale tasks throughcoordination of individual efforts in a rule bound, fairand efficient manner. It is characterized by clear division
of labor, well trained personnel appointed on the basis oftheir competence, hierarchy (clear career path), rules andregulations, rational power (traditional / charismatic) andimpersonal relationships.
Although the term bureaucracy has been popularized forreferring to government organizations, it is beingpracticed in virtually every large and formal organization
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Webers ideal Bureaucracy
Division of laborAuthority / Hierarchy
Formal Selection
Formal rules and regulations
Impersonality
Career Orientation
Webers concepts (bureaucracy) are a lot similarto Taylors (scientific management). Bothemphasize rationality, predictability,impersonality, technical competence andauthoritarianism.
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General Admin TheoryIn Perspective
Fayols theory can be benchmarked as the startingpoint of the many current management ideas. He
was the first to systemize managerial
interventions.
Webers idea of bureaucracy was the model
prototype of large organizations, bereft of
inefficiencies, ambiguity and patronage.
Though Bureaucracy is not a very fancied termtoday, it still provides the steel frame to most large
organizations
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Human Relations School: Why?
This school of thought emerged in 1920 in reaction to
the limitations of the classical theories that ignored the
human aspects in organizations. The main
characteristics are:
1. Employees are social beings and hence could not
respond to purely rational rules, chain of authority and
economic incentives.
2. Employees bring their social needs along with them to
the organization; consequently, effective management
required a more human oriented approach.
3. Emphasis is required on the social needs, drives and
attitudes of individuals to motivate them to perform to
their true potential
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Outcome of Human Relations Movement
Following fundamentals of human behavior highlighted:
1. Individuals desire to continuously associate with hisfellow workers significantly affects performance
2. Scientific management in its original form not accepted.Social understanding and social skills are equallyimportant.
3. The working group informally determines the output level(dependent upon fair days work) that an individual workerwould produce in a given timeframe.
4. Fair and transparent management can foster collaborative
and cooperative atmosphere.5. Rather than just adding to the overall compensation
through production linked incentives, management needsto improve the overall quality of life of the workers
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Major contributors to the approach
The proponents recognized the importance of humanfactor in success of organizations. Four individuals standout:
1. Robert Owen: Scottish businessman, committed toreleasing the suffering of the working class; banned
child labor, regulated work hours and improved workingconditions; showing concern for labor welfare was aprofitable management initiative.
2. Hugo Munsterberg: Created the discipline of industrialpsychology; substantially contributed to our current
knowledge ofselection technique, training, job designand motivation.
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Major contributors contd.
3. Mary Parker Follett: Propounded that no one could
become a whole person except as a member of a group.Defined Management as the art of getting things
done. Her holistic model took into account not onlyindividuals and groups but also politics, economics andbiology. It was forerunner of the idea that management
was not internally focused and is affected by externalenvironment.
4. Chester Barnard:President of New Jersey BellTelephone Co. viewed organizations as social systemsthat require nurturing. People come to join theorganization toachieve the objectives they can not
accomplish alone. There needs to be sync between theorganization and individual goals. Adjustments need tobe made to attain equilibrium; managers need tounderstand employees zone of indifference.
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Hawthorne Studies.(Western Electric Co. 192433)
Elton Mayo established relationship between social
environment (redesign of job, changes in work day andwork week length, rest periods, individual versus group
pay etc) and work output through a series of experimentsknown asHawthorne Studies (Illumination experiment,Relay assembly test room study, Bank wiring room study
etc). He concluded that behavior and sentiments wereclosely related, that group influences significantly affectedindividual behavior, group standards established individualworker output and money was less a factor in determiningoutput than were group standards, group sentiments andsecurity. These studies established that employees weredifferent from the machines and would need to betreated differently and deferentially.
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HR Approach - Human Relations Movement
The members had unshakable optimism about peoples
capabilities and strongly believed that a satisfied workerwas more productive. Three stalwarts of this group are:
1. Dale Carnegie :Believed that way to success was
through winning the cooperation of the people.
2. Abraham Maslow : Propounded the theory of needhierarchy (physiological, safety, social, esteem, and self
actualization; lower level needs must be satisfied first).
3. Douglas McGregor:Best known for his two sets of
assumptions about human nature. (Theory X - motivatedby external stimuli, Theory Yinherently motivated;
manager replacing the boss)
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HR Approach - Behavioral Science Theorists
A group of psychologists and sociologists (Fred
Fiedler, Victor Vroom, Richard Hackman etc),
carefully attempted to keep their personal beliefs
out of their work and relied on the scientificmethods for the study of organizational behavior.
They have made significant contributions to our
current understanding of leadership, employee
motivation, job design etc.
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Human Resource Approach -In Perspective
The classical theorists viewed employees as
machines and managers as engineers. Any failure
of the employees to generate desired output was
viewed as an engineering problem. Contributors to
the human resource approach forced managers to
reassess this simplistic model view.
However, this approach takes a myopic view of
the discipline of management. It ignores
managerial concepts. In any case, psychologicaltraining alone is not enough to become an
effective manager.
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The Quantitative ApproachTheManagement Science School (OR Procedures)
During the World War II, the British brought in theconcept of Operational Research.
Post World War II, management included applications of
Statistics, Optimization Models, Information Models andComputer, Simulations Linear Programming etc. Theyhave been useful tools to decision making in planning andcontrol.
Use of such tools have added to the confidence limits to
the management planning and projections.Important contributors were Robert McNamara (FordMotors) and Charles Tex Thornton
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Management Science SchoolIn Perspective:
Management science school offered a whole newway to think about time. With computer modelsimulations, forecasting has become dependable.At the same time, management science school paysless attention to relationships in the organizations.
The emphasis is only on numbers, missing theimportance of people and relationships. It fails toprovide solution for all facets of management,especially the areas with high level of human
element, like leadership, motivation etc.management in not pure science and hence cannotbe modeled for all types of situations
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Recent YearsTowards Integration
Theories are powerful influences. The longer weuse a given theory, the more comfortable we
become with it and more we tend not to seek out
newer pastures unless forced. The days were
changing fast and regular efforts were made tosynthesize to customize requirements. This
explains why modern management theory is
really a rich mosaic of many theories that have
endured over the past century. Concern with
developing a unifying framework of management
began in right earnest in early 60s.
R Y A h I i
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Recent Years: Approaches to Integration
Process or Operational approach:
Harold Koontz in his article management theory jungleadvocated that each approach had something to offer tothe management theory and the actual practice shouldsynthesize various view points. The approach recognizesthat there is a central core of knowledge about
management that is pertinent only to the field ofmanagement. The process approach, originallyintroduced by Fayol, is based on the managementfunctions. The performance of these functions planning,organizing, controlling and leading should be seen as a
seamless activity of management. In addition thisapproach draws and absorbs knowledge from other
fields.
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The interactive nature of Management process
Planning
Use logic &methods to think through
goals & actions
ControllingMake sure the
organization is moving
towards its objectives
OrganizingAllocate work,
authority & resources
to achieve organizational
goals
LeadingDirect, influence & motivate
employees to perform
essential tasks
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Recent Years: Systems approachAn organized enterprise does not exist in vacuum and is
dependent on external environment. Open systemsrecognize that no organization is self contained; they would
sink if they ignore external environment, goal inputs of
claimants (supplier relation, govt regulations).
Two basic types of systems are closed and open. FredericTaylors machine view of the organization refers to closed
while Christian Barnard proposed open system where it is
in constant interaction with its environment.
The job of the manager is to ensure that all parts of the
organization are internally coordinated. In addition open
system recognizes that organizations are not self contained
and can not survive if they ignore external environment
I tSystems approach to management
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Managerial knowledge,
Goals of claimants
& use of inputs
Reenergizingthe
system Planning
Organizing
Staffing
Leading
Controlling
To produce outputs
External environment
Outputs:
Products, Services,
Profits, Satisfaction,
Goal integration & others
External variables &
Opportunities
Constraints
Others
ExternalEnvironment
External environment
Inputs:
Human, Capital
Managerial, Technological
others
Goal inputs of claimants:
Employees, consumers, suppliers,Stockholders, governments,
Communities and others
Systems approach to management
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Businessorganization
Internal
Labor
Equipments
Money
Materials
External (macro-beyond influence of the org)
Global
Global Global
Competition
Ecosystem Economic
Socio -Cultural
Demographic Political /Legal
Technological
External (micro) customers, suppliers, creditors, distributors dealers; though outside theInfluence of the 0organization, can be influenced by them
Constituents of Business Environment
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Recent Years: Contingency Approach
Early management contributors gave us principles of
management and organization that they generally assumedto be universally acceptable. Later research have foundexceptions.
Management, like life itself, is not based on simplisticprinciples. Contingency approach is a product of theintegration of various management theories modulated bythe situational variables. Since organizations are diverse,one size does not fit all. Four important variables are,Organization size, Routine-ness of Task Technology,Environmental Uncertainty and individual differences.
A contingency approach to management is intuitivelylogical.
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Current Issues:
Workforce Diversity
Ethics
Stimulating Innovation and change
Total Quality Management
Re-engineering
Empowerment and teams
Bimodal Workforce
Downsizing
Contingent Workers
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Conclusions:
In view of the discussions so far, management hasstarted to become less based on the
conceptualization of classical theory of
management and the typical military command
and control, and more on facilitation and supportof collaborative activity. Now management deals
with the complexities of human interaction to
achieve organizational or group goals in an
effective and efficient manner.
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Suggested Reading
Management: P Stoner, Freeman and
Gilbert, Jr.Management: Stephen P. Robbins and Mary
Coulter.
ManagementA Global Perspective: HeinzWeihrich and Harold Koontz