The Evolution The Evolution of of

Management Management TheoryTheory

The Evolution of Management TheoryThe Evolution of Management Theory

The Evolution of Management can be divided into 3 The Evolution of Management can be divided into 3 parts:parts:

1.1. Early Classical Approaches: Scientific Early Classical Approaches: Scientific Management ,Administrative management ,and Management ,Administrative management ,and Bureaucracy.Bureaucracy.

2.2. Neo- classical Approaches: Human Relations Neo- classical Approaches: Human Relations Management and Behavioral Management.Management and Behavioral Management.

3.3. Modern Approaches: Management approaches, Modern Approaches: Management approaches, system approaches and contingency approachessystem approaches and contingency approaches

Evolution of Management TheoryEvolution of Management TheoryEvolution of Management TheoryEvolution of Management Theory

1940 2000

Administrative Management

Behavioral Management

Scientific Management

Management Science

Org. Environment

1890

Scientific Management TheoryScientific Management Theory

The term “ Scientific management” was The term “ Scientific management” was coined by Louis Brandies”(1910)coined by Louis Brandies”(1910)

It was Frederick W. Taylor who used the term It was Frederick W. Taylor who used the term to give a complete and systematic explanation to give a complete and systematic explanation of scientific methods and techniques for of scientific methods and techniques for promoting the organizational efficiency and promoting the organizational efficiency and economy. Hence, he came to be known as economy. Hence, he came to be known as the “ the “ Father of Scientific Management”. Father of Scientific Management”.

Scientific management is also known as “ Scientific management is also known as “ Taylorism”.Taylorism”.

Books by Taylor:Books by Taylor:

1.1. A Piece Rate System (1895)A Piece Rate System (1895)

2.2. Shop Management (1903)Shop Management (1903)

3.3. Art of cutting Metals(1906)Art of cutting Metals(1906)

4.4. Principles of Scientific Management(1911)Principles of Scientific Management(1911)

Other Scientific management thinkers were Other Scientific management thinkers were Frank and Lillian Gilbreth, Henry Gantt etc. Frank and Lillian Gilbreth, Henry Gantt etc.

Taylor's ContributionTaylor's Contribution

Taylor based his theory of Scientific Taylor based his theory of Scientific management based on three assumptions:management based on three assumptions:

1.1. The organizational functioning can be The organizational functioning can be improved with the application of scientific improved with the application of scientific methods.methods.

2.2. A good worker is one who does not initiate A good worker is one who does not initiate action, but accepts the order of the action, but accepts the order of the management.management.

3.3. Every worker is an ‘ economic man', that is, Every worker is an ‘ economic man', that is, he is motivated by monetary factors.he is motivated by monetary factors.

Principles of Scientific ManagementPrinciples of Scientific Management

1.1. Develop a science for each element of a man’s Develop a science for each element of a man’s work, which replaces the old “rule-of-thumb method. work, which replaces the old “rule-of-thumb method. By this ‘one best way ‘ of doing a thing can be By this ‘one best way ‘ of doing a thing can be decided and the standard output can be determined.decided and the standard output can be determined.

2.2. Scientifically select and then train ,teach and Scientifically select and then train ,teach and develop workmendevelop workmen

3.3. Management should fully cooperate with workers, Management should fully cooperate with workers, so as to ensure that the work is done in accordance so as to ensure that the work is done in accordance with the scientific principles developed for this with the scientific principles developed for this purpose.purpose.

4.4. There must be equal division of work and There must be equal division of work and responsibility between management and workmen .responsibility between management and workmen .

TechniquesTechniques

1.1. Functional ForemanshipFunctional Foremanship

2.2. Motion studyMotion study

3.3. Time studyTime study

4.4. Differential piece rate planDifferential piece rate plan

5.5. Exception PrincipleException Principle

Taylor’s FollowersTaylor’s Followers

Henry L. Gantt: Henry L. Gantt: Gantt Chart: He designed a chart on which Gantt Chart: He designed a chart on which

progress of work could be plotted continuously progress of work could be plotted continuously against time. It serves as a planning and against time. It serves as a planning and controlling device.controlling device.

Habits of IndustryHabits of Industry Minimum wage based incentive system.Minimum wage based incentive system.

A GANTT chart is a type of bar chart that A GANTT chart is a type of bar chart that illustrates a project schedule. illustrates a project schedule.

GANTT charts have become a common GANTT charts have become a common technique for representing the phases and technique for representing the phases and activities of a activities of a project work breakdown project work breakdown structure.structure.

It was introduced by Henry Gantt around 1910 It was introduced by Henry Gantt around 1910 – 1915.– 1915.

Frank and Lillian GilbrethFrank and Lillian Gilbreth

They laid the foundation of modern motion and They laid the foundation of modern motion and time study techniques. They invented time study techniques. They invented ‘Therbligs’,as the elemental units of work.‘Therbligs’,as the elemental units of work.

They invented the’ Flow Process chart’ to help They invented the’ Flow Process chart’ to help in the elimination of unnecessary steps in an in the elimination of unnecessary steps in an operation. Hence, their system was called as ‘ operation. Hence, their system was called as ‘ speed work’.speed work’.

Criticism of Scientific Management TheoryCriticism of Scientific Management Theory

Administrative ManagementAdministrative Management

The major exponents of this theory are Henry The major exponents of this theory are Henry Fayol, Luther Gulick , Lyndall Urwick , Mary Fayol, Luther Gulick , Lyndall Urwick , Mary Follet and many more.Follet and many more.

This theory reached its zenith in 1937 when the This theory reached its zenith in 1937 when the

Papers on the Science of administration, by Papers on the Science of administration, by Gulick and Urwick was Published.Gulick and Urwick was Published.

Fayol’s PrinciplesFayol’s PrinciplesFayol’s PrinciplesFayol’s Principles

Henri Fayol, developed a set of 14 principles:Henri Fayol, developed a set of 14 principles:1. 1. Division of Labor:Division of Labor: allows for job specialization. allows for job specialization.

Fayol noted firms can have too much specialization Fayol noted firms can have too much specialization leading to poor quality and worker involvement.leading to poor quality and worker involvement.

2. 2. Authority and Responsibility:Authority and Responsibility: Fayol included both Fayol included both formal and informal authority resulting from special formal and informal authority resulting from special expertise.expertise.

3. 3. Unity of Command:Unity of Command: Employees should have only one Employees should have only one boss.boss.

4. 4. Line of Authority:Line of Authority: a clear chain from top to bottom of the a clear chain from top to bottom of the firm.firm.

5. 5. Centralization:Centralization: the degree to which authority rests at the the degree to which authority rests at the very top.very top.

Fayol’s PrinciplesFayol’s PrinciplesFayol’s PrinciplesFayol’s Principles

6. 6. Unity of Direction:Unity of Direction: One plan of action to One plan of action to guide the organization.guide the organization.

7. 7. Equity:Equity: Treat all employees fairly in justice Treat all employees fairly in justice and respect.and respect.

8. 8. Order:Order: Each employee is put where they Each employee is put where they have the most value.have the most value.

9. 9. Initiative:Initiative: Encourage innovation.Encourage innovation.

10. 10. Discipline:Discipline: obedient, applied, respectful obedient, applied, respectful employees needed.employees needed.

Fayol’s PrinciplesFayol’s PrinciplesFayol’s PrinciplesFayol’s Principles

11. 11. Remuneration of Personnel:Remuneration of Personnel: The payment The payment system contributes to success.system contributes to success.

12. 12. Stability of Tenure:Stability of Tenure: Long-term employment Long-term employment is important.is important.

13. 13. General interest over individual interest:General interest over individual interest: The organization takes precedence over the The organization takes precedence over the individual.individual.

14. 14. Esprit de corps:Esprit de corps: Share enthusiasm or Share enthusiasm or devotion to the organization.devotion to the organization.

Bureaucratic ManagementBureaucratic Management

Administrative ManagementAdministrative ManagementAdministrative ManagementAdministrative Management

Seeks to create an organization that leads to Seeks to create an organization that leads to both efficiency and effectiveness.both efficiency and effectiveness.

Max Weber developed the concept of Max Weber developed the concept of bureaucracy.bureaucracy. A formal system of organization and A formal system of organization and

administration to ensure effectiveness and administration to ensure effectiveness and efficiency.efficiency.

Bureaucratic PrinciplesBureaucratic PrinciplesBureaucratic PrinciplesBureaucratic Principles

A BureaucracyA Bureaucracyshould haveshould have

Written rulesWritten rules

System of taskSystem of taskrelationshipsrelationships

Hierarchy ofHierarchy ofauthorityauthority

Fair evaluationFair evaluation and rewardand reward

Key points of BureaucracyKey points of BureaucracyKey points of BureaucracyKey points of Bureaucracy

AuthorityAuthority is the poweris the power to hold people to hold people accountable for their actions.accountable for their actions.

Positions in the firm should be held based onPositions in the firm should be held based on performanceperformance not social contacts.not social contacts.

Position duties are clearly identified.Position duties are clearly identified. People People should know what is expected of them.should know what is expected of them.

Lines of authorityLines of authority should be clearly identified. should be clearly identified. Workers know who reports to who.Workers know who reports to who.

Rules, Standard Operating Procedures Rules, Standard Operating Procedures (SOPs), & Norms(SOPs), & Norms used to determine how the used to determine how the firm operates.firm operates. Sometimes, these lead to “red-tape” and Sometimes, these lead to “red-tape” and

other problems.other problems.

Behavioral ManagementBehavioral Management

The Human Relations MovementThe Human Relations Movement

The Hawthorne studies ( The Hawthorne studies ( 1924-1932)1924-1932) formed the basis for the rise of Human formed the basis for the rise of Human Relations theory. These theories shook the Relations theory. These theories shook the foundations of classical approach, that is, foundations of classical approach, that is, the concept of economic man and the role the concept of economic man and the role of structure of formal organization.of structure of formal organization.

These studies were conducted in the These studies were conducted in the Western Electric companyWestern Electric company at Hawthorne at Hawthorne ( near Chicago- USA) by HBS under the ( near Chicago- USA) by HBS under the guidance of Prof. guidance of Prof. Elton Mayo.Elton Mayo.

Contd..Contd..

The studies were conducted in the following The studies were conducted in the following four stages:four stages:

1.1. Illumination Experiment(1924-27)Illumination Experiment(1924-27)

2.2. Relay Assembly test room Relay Assembly test room experiment( 1927)experiment( 1927)

3.3. Mass Interviewing Programme(1928-31)Mass Interviewing Programme(1928-31)

4.4. Bank Wiring Experiment(1931-32)Bank Wiring Experiment(1931-32)

Management ScienceManagement Science

Management ScienceManagement ScienceManagement ScienceManagement Science

Uses rigorous quantitative techniques to Uses rigorous quantitative techniques to maximize resources.maximize resources.Quantitative management:Quantitative management: utilizes linear utilizes linear

programming, modeling, simulation systems.programming, modeling, simulation systems.Operations management:Operations management: techniques to techniques to

analyze all aspects of the production system.analyze all aspects of the production system.Total Quality Management (TQM):Total Quality Management (TQM): focuses on focuses on

improved quality.improved quality.

Management Information Systems (MIS):Management Information Systems (MIS): provides information about theprovides information about the organization. organization.

Organization-Environment TheoryOrganization-Environment TheoryOrganization-Environment TheoryOrganization-Environment Theory

Considers relationships inside and outside the Considers relationships inside and outside the organization.organization. The environment consists of forces, conditions, The environment consists of forces, conditions,

and influences outside the organization.and influences outside the organization. Systems theory considers the impact of Systems theory considers the impact of

stages:stages:Input:Input: acquire external resources.acquire external resources.Conversion:Conversion: inputs are processed into goods inputs are processed into goods

and services.and services.Output:Output: finished goods are released into the finished goods are released into the

environment.environment.

Systems ConsiderationsSystems ConsiderationsSystems ConsiderationsSystems Considerations

An open system interacts with the An open system interacts with the environment. A closed system is self-environment. A closed system is self-contained.contained. Closed systems often undergo entropy Closed systems often undergo entropy

and lose the ability to control itself, and and lose the ability to control itself, and fails.fails.

Synergy:Synergy: performance gains of the performance gains of the whole surpass the components.whole surpass the components. Synergy is only possible in a coordinated Synergy is only possible in a coordinated

system.system.

The Organization as an The Organization as an Open SystemOpen SystemThe Organization as an The Organization as an Open SystemOpen System

InputInput StageStage

RawRawMaterialsMaterials

ConversionConversionStageStage

MachinesMachinesHuman skillsHuman skills

OutputOutputStageStage

GoodsGoodsServicesServices

Sales of outputsSales of outputsFirm can then buy inputsFirm can then buy inputs

Figure 2.4

Contingency TheoryContingency TheoryContingency TheoryContingency Theory

Assumes there is no one best way to Assumes there is no one best way to manage.manage. The environment impacts the The environment impacts the

organization and managers must be organization and managers must be flexible to react to environmental flexible to react to environmental changes.changes.

The way the organization is designed, The way the organization is designed, control systems selected, depend on the control systems selected, depend on the environment.environment.

Technological environments change Technological environments change rapidly, so must managers.rapidly, so must managers.