THE EVOLUTION OF MANAGEMENT THEORIES Historical Background of Management • Management’s origin is not clearly traced in history. However, it would not be wrong to say that it is as old as the origin of human beings. • Modern management began in the late 19th century. • Organizations were seeking ways to better satisfy customer needs. • Machinery was changing the way goods were produced. • Managers had to increase the efficiency of the worker-task mix. Early Management Theories • Early Theories of Organizations emerged mainly from military and Catholic Church.

The metaphor/symbol of the machine was dominant, where organizations are viewed as machines. Therefore, the organizational application was, since workers behave predictably (as machines do rarely deviate from the norm), management knows what to expect, and workers operating outside expectations are replaced. Modern management is the collaboration of people and machines to create value. In the early days of industrialization the innovators of machines and the innovators of organization and management were engineers.

Engineers, after all, were the ones closest to the machines, and this fact placed them at the interaction of workers and machines. This certainly helps explain Frederick Taylor and his invention of “Scientific Management”. CLASSICAL MANAGEMENT THEORIES • Emerged in the early part of the twentieth century. • Models were military and the Catholic Church. • Features ? Strict CONTROL of workers ? Absolute CHAINS of COMMAND ? PREDICTABILITY of behavior ? UNIDIRECTIONAL downward influence There are three well-established theories of classical management: ?

Taylor’s Theory of Scientific Management, Fayol’s Administrative Theory, Weber’s Theory of Bureaucracy. Although these schools, or theories, developed historical sequence, later ideas have not replaced earlier ones. Instead, each new school has tended to complement or coexist with previous ones. 1. SCIENTIFIC MANAGEMENT Frederick Taylor (1856-1915)? The Father of Scientific Management? • Scientific Management theory arose from the need to increase productivity in the U. S. A. especially, where skilled labour was in short supply at the beginning of the twentieth century.

The only way to expand productivity was to raise the efficiency of workers. • Taylor sought to reduce the time a worker spent on each task by optimizing the way the task was done. Four Principles to increase efficiency: 1. Study the way the job is performed now & determine new ways to do it. ? Gather detailed, time and motion information. ? Try different methods to see which is best. 2. Codify the new method into rules. ? Teach to all workers. 3. Select workers whose skills match the rules set in Step 2. 4. Establish a fair level of performance and pay for higher performance. Workers should benefit from higher output. Taylor devised four principles for scientific management theory, which were: 1. The development of a true science of management, 2. The scientific selection and training of workers, 3. Proper remuneration for fast and high-quality work 4. Equal division of labour. The main features of Taylor’s theory were: 1. Management is a true science. The solution to the problem of determining fair work standards and practices could be discovered by experimentation and observation. From this, it follows, that there is “one right way” for work to be performed. . The selection of workers is a science. Taylor’s “first class worker” was someone suitable for the job. It was management’s role to determine the kind of work for which an employee was most suited, and to hire and assign workers accordingly. 3. Workers are to be developed and trained. It is management’s task to not only engineer a job that can be performed efficiently, but management is responsible for training the worker as to how the work is to be performed and for updating practices as better ones are developed. This standardizes how the work is performed in the best way. . Scientific management is a collaboration of workers and managers. Managers are not responsible for execution of work, but they are responsible for how the work is done. Planning, scheduling, methods, and training are functions of the manager. Problems of Scientific Management • Managers often implemented only the increased output side of Taylor’s plan. ¦ They did not allow workers to share in increased output. ¦ Specialized jobs became very boring, dull. ¦ Workers ended up distrusting Scientific Management. • Workers could purposely “under-perform” Management responded with increased use of machines. Conclusions • While scientific management principles improved productivity and had a substantial impact on industry, they also increased the monotony of work. The core job dimensions of skill variety, task identity, task significance, autonomy, and feedback all were missing from the picture of scientific management. • While in many cases the new ways of working were accepted by the workers, in some cases they were not. The use of stopwatches often was a protested issue and led to a strike at one factory where “Taylorism” was being tested.

Complaints that Taylorism was dehumanizing led to an investigation by the United States Congress. Despite its controversy, scientific management changed the way that work was done, and forms of it continue to be used today. 2. ADMINISTRATIVE MANAGEMENT THEORY Administrative management basically focuses on how a business should be organized and the practices an effective manager should follow. While pioneers of scientific management tried to determine the best way to perform a job, those in the administrative management explored the possibilities of an ideal way (rule of thumb) to put all jobs together and operate an organization.

Thus the main focus of administrative school or general management theory is on finding “the best way” to run organizations. Administrative management school is also called “traditional principles of management. Henry Fayol, a French industrialist, is the chief architect and the father of the administrative management theory. Other prominent exponenets include Chester I. Barnard, amid Colnel Lyndal Urwick. Some people think Max Weber had influenced this school as well. According to them the two major contributors to administrative management school of thought were Henri Fayol (1930) and Max Weber (1922).

The administrative theory “emphasized management functions and attempted to generate broad administrative principles that would serve as guidelines for the rationalization of organizational activities” (Scott p. 36). Henry Fayol  played a main role in the turn-of-the-century Classical School of management theory. Fayol  believed that techniques of effective management could be defined and taught and that managerial organization hold as much importance as management as workers organization. He was the first to identify functions of management. According to Fayol the five functions of managers were: • Plan • Organize • Command Coordinate • Control. [pic] Functions of Managers (According to Henry Fayol) BUREAUCRATIC MANAGEMENT Max Weber is best known as one of the leading scholars and founders of modern sociology, but Weber also accomplished much economic work in the style of the “youngest” German Historical School. Max Weber embellished the scientific management theory with his bureaucratic management theory which is mainly focused on dividing organizations into hierarchies, establishing strong lines of authority and control. Weber suggested organizations develop comprehensive and detailed standard operating procedures for all routinized tasks.

Max Weber was a historian that wrote about the emergence of bureaucracy (or bureaucratic management) from more traditional organizational forms (like feudalism) and it’s rising pre-eminance in modern society. Max Weber developed the concept of bureaucracy. ¦ A formal system of organization and administration to ensure effectiveness and efficiency. ¦ Weber developed the five principles shown in Figure 1. [pic] Key points of Bureaucracy Authority is the power to hold people accountable for their actions. Positions in the firm should be held based on performance not social contacts.

Position duties are clearly identified. People should know what is expected of them. Lines of authority should be clearly identified. Workers know who reports to who. Rules, Standard Operating Procedures (SOPs), & Norms used to determine how the firm operates. FAYOL’S UNIVERSAL PRINCIPLES Henri Fayol: He listed a number of principles of management based on his vast/enormous and rich experience. He stated that he followed them with success in his long career as the chief executive of a French mining combine. Let us briefly study Fayol’s principles of management as given below: 1.

Division of work: In any organized situation, work should be divided into compact jobs to be assigned to individuals. This applies to managerial work and non-managerial work. Division of labour facilitates specialisation and improves efficiency, if it is done within reasonable limits. 2. Authority and responsibility: The authority of a manager, i. e. , his official right to manage people and things, should go hand in hand with the responsibility for effective results. In other words, there should be a parity or balance between authority and responsibility vested in a managerial position. 3.

Discipline: Discipline, defined as observance of diligence/carefulness and respect, should be enforced throughout the organization by managers as leaders of their work groups. Fayol declares that discipline requires good superiors at all levels. Fayol emphasised the need for discipline among the personnel for the smooth running of organizations and advocated penalities to prevent its violation. 4. Unity of command: This principle clarifies that a subordinate in an organization should be under the direct supervision of a single superior from whom he gets instructions and to whom he is accountable.

In other words, every employee should have only one boss; otherwise, conflict and confusion in authority and instructions would result. 5. Unity of direction: According to this principle, a set of activities with the same objectives should be under the direction of a single manager. Similarly, there should be only one plan of action for such a set of activities. This principle promotes smooth coordination of activities, effort and resources. 6. Subordination of individual interest to central interest: The collective good and common interests of the organization should prevail over the narrow sectional and self-interest of its members.

Individual interests of the members of an organization must be compromised with the overall interests of the organization. It means the selfish attitude of an individual should be surrendered if it affects the interests of the enterprise. This is essential for the welfare of the organization and its members. 7. Remuneration of personnel: Remuneration and the methods of payment in an organization should be fair. It should bring about high productivity for the organization and satisfaction for the personnel. 8.

Centralization: Centralisation of authority refers to relative concentration of much authority in a manager at any managerial level but especially at the top managerial level. Decentralisation of authority refers to the relative dispersal or distribution of authority among the various managerial levels and especially among the lower managerial levels to facilitate operational decision–making. There should be a proper combination and balance between centralisation and decentralisation in an organization based on a consideration of several internal and external factors. 9.

Hierarchy or scalar chain of command: The Scalar chain refers to authority relationships from the top to the lowest echelons or levels of organization. Authority relationships are said to be scalar when subordinates report to their immediate superiors and their superiors report directly, as subordinates, to their superiors (i. e. in scales). In other words, the chain of command that runs from the top of an organization to its lowest ranks is called the scalar chain of command. 10. Order: Order refers to a systematic arrangement of materials and placement of people in the organization.

In ‘material order’ every thing should be in its proper place and there should be a place for every thing. For ‘social order‘ there should be a place assigned to each employee, and each employee should be in the assigned place. 11. Equity: Equity in this context refers to fair treatment of all workers in an organization. Fair treatment involves kindness and justice on the part of superiors which motivates the workers to perform their duties. On the other hand, it promotes a friendly atmosphere between superiors and subordinates. 12.

Stability of tenure of personnel: Organizations should make efforts to achieve relative stability and continuity of tenure of their personnel. This could be achieved by attractive remuneration and honourable treatment of personnel. Stability and continuity of personnel boost teamwork, loyalty and economy. 13. Initiative: An organization should encourage desire initiative among its managers and employees by extending opportunities and freedom to contribute their best geared towards its development. 14. Esprit de corps: This is the principle that ‘in union there is strength’, or ‘team spirit’.

The principle stresses the need for team spirit, cordial or pleasant relations and cooperation among the personnel. LIMITATIONS OF MANAGEMENT PRINCIPLES A big number of modern management theorists and practitioners hold the view that management principles suffer from several limitations. An extremist section among them totally rejects the principles of management and the ‘principles approach’ by branding them as totally useless, misleading and harmful. Limitations of principles of management, which are generally highlighted in the management literature. 1.

Doubt the relevance and validity of early management: Most of the principles evolved during the early decades of the twentieth century when organizations were relatively simple and operated under relatively stable conditions. Over time, organizations and their environments have become enormously complex, due to rapid changes in technology, and economic, social, cultural and other conditions. Serious doubts are raised on the relevance and validity of such management principles to complex modern organizations operating in the present changing environment.

Some modern theorists favour suitable modification of principles of management to suit the present conditions while others advocate for their total replacement by more appropriate principles. 2. Ignored the open system of organization: An examination of classical management principles gives the impression that the organizations are closed systems, do not interact with the outside environment, and are not affected by the events and changes. Classical authors made such assumptions to simplify their task of formulation of principles of management.

In reality, organizations are relatively open systems; they are creatures of their environment and are significantly influenced by it. This was much true during the classical management era as it is now. To the extent that the classical management principles ignored the open systems nature of organizations, they are open to the charge of being unrealistic. 3. Little scientific base and empirical evidence: Management principles have little scientific base or empirical support.

The early management thinkers and practitioners were not researchers. They did not adopt scientific research methods of investigation, experimentation, testing and validation of propositions for framing up the principles of management out of them. 4. Lack of logical framework: Except perhaps Urwick, the other early management writers did not try to form a logical network so as to permit an understanding of their inter-relations. Management principles remained largely disjointed/incoherent, devoid of a coherent framework. . Belief in machine model of organizations and management: The early management writers who evolved the classical management principles believed in the machine model of organizations and management. Their world view in this regard may be summarised as follows: organizations and their management were or should be precise, perfect, flawless or faultless, rational, orderly and disciplined. Their management principles reflected this normative and idealistic world-view, far removed from the harsh realities of the world.

When idealistic principles are applied to real-world organizations, distortions/misrepresentations are bound to emerge. The applied principles get overly or excessively diluted. Their precision and perfection turn out to be artificial, superficial and deceptive/misleading. 6. Very biased in favour of elite groups: The classical management principles were overly biased in favour of the values and orientations of the elite ownership and management groups in charge of organizations. Management principles were designed basically to promote the goals and interests of the above mentioned groups.

The common theme that ran through all management principles was: organizational efficiency, high productivity, coordination and control. All these were to be ensured by division of labour, hierarchical authority, unilaterally or independently set standards of performance and rules of behaviour, strict personal accountability for results and so on. The interests, values and goals of other groups, especially employees and workers, did not find much place in management principles. 7.

Formulated under certain assumptions: It is also argued that management principles seldom take into account the complex nature of human behaviour in organizations. The behaviour of people, managers, employees and workers in organizations, is a vital factor which influences organizational performance and behaviour. Human behaviour in organizations cannot be taken for granted. People have multiple needs, perceptions and orientations. They are also changeable and their attitudes towards their jobs and the organization are influenced by several factors within and outside the organization.

But the classical management principles were formulated under certain assumptions as for example, that cooperation in achieving organizational goals can be elicited or drawn from all employees through a combination of economic incentives and penalties; that the interest and needs of all employees could not be different from those of the organization; that all employees could be easily fitted into predesigned jobs; and that they can be subjugated or conquered by exercise of managerial authority. For these and other assumptions of classical management, modern behavioural scientists question the principles of management thus; 8.

Misguiding people: You will note that some of the management principles have a prescriptive flavour: they prescribe the best ways of doing things. They give an impression of being ‘ultimate’ or ‘definitive’ and ‘absolute’. People tend to be misguided by the notion/idea that an uncritical acceptance and adoption of management principles is the only guarantee of success in management. 9. Too many principles chase too few real ideas: Some management principles sound like precepts/teachings, proverbs and platitudes of truism; other principles are pompous/pretentious declarations, pious/sincere wishes and self-righteous sermons.

Too many management principles chase too few real ideas. Principles are also regarded as just personal opinions and biases of those who formulated them. In a sense, all these descriptions of management principles may also be regarded as their limitations. BEHAVIOURAL MANAGEMENT THEORIES The human relations school of management has been around for quite some time, enjoying fairly wide acceptance. And while, even today not every company or manager embraces this management model, there’s little doubt that it has changed overall management practice for the better.

Often referred to as motivational theory, human relations management theory views the employee differently than the more autocratic management theories of the past. It focuses on the way a manager should personally manage to motivate employees. Theory X and Y The eminent psychologist Douglas McGregor has given his theory of motivation called Theory X and Theory Y. He first presented his theory in a classic article titled ‘The Human Side of Enterprise’. He treated traditional approach to management as ‘Theory X’ and the professional approach to management as ‘Theory Y’.

His theory refers to two sets of employees based on the perception of human nature. Here, theory X and theory Y are two sets of assumptions about the nature of employees. His theory is based on human behaviour. 2. Theory X. Theory X is based on traditional assumptions about people (employees). Here, the conventional approach of management is used as a base. It suggests the following features of an average human being/employee (assumptions about human nature): 2. 1 Assumptions of Theory X. • The average human being is inherently lazy by nature and desires to work as little as possible. He dislikes the work and will like to avoid it, if he can. He avoids accepting responsibility and prefers to be led or directed by some other. • He is self-centered and indifferent to organizational needs. • He has little ambition, dislikes responsibility, prefers to be led but wants security. • He is not very intelligent and lacks creativity in solving organizational problems. • He by nature resists to change of any type. In the case of such employees, self-motivation is just not possible. They will work only when there is constant supervision on them. A manager has to persuade, punish or reward such workers in order to achieve organizational goals. 3. Theory Y.

Theory Y is based on modern or progressive or professional approach. Here, the assumptions about people i. e. employees are quite different. 3. 1 Assumptions of Theory Y. • Work is as natural as play, provided the work environment is favorable. Work may act as a source of satisfaction or punishment. An average man is not really against doing work. • People can be self-directed and creative at work if they are motivated properly. • Self-control on the part of people is useful for achieving organizational goal. External control and threats of punishment alone do not bring out efforts towards organizational objectives. People have capacity to exercise imagination and creativity. • People are not by nature passive or resistant to organizational needs. They have become so as a result of experience in organisations. • An average human being learns under proper conditions. He is also willing to accept responsibility. • The intellectual capacity of an average human being is utilised partially under the conditions of modern industrial life. Abraham Maslow’s Hierarchy of Needs Abraham Maslow carried out his investigations into human behavior between 1939 and 1943. Maslow suggested that there are five sets of goals which may be called basic needs.

These are: • Physiological, (basic life needs e. g. food, shelter, sex) • Safety, (e. g. protection, security order, law, stability) • Belongingness and love, (e. g. family, affection, relationships) • Esteem, (e. g. achievement, status, reputation, responsibility), and • Self-actualization or self-fulfillment. He arranged these into a series of different levels or the order of importance of these basic needs. Man’s basic needs are physiological, for example, hunger, thirst, sleep, etc. When these are satisfied they are replaced by safety needs reflecting his desire for protection against danger or deprivation.

These in turn, when satisfied, are replaced by the need for love or belonging to, which are functions of man’s gregariousness and his desire to belong to a group, to give and receive friendship and to associate happily with people. When these needs have been satisfied, there are the esteem needs, i. e. the desire for self-esteem and self-respect, which are affected by a person’s standing reputation, and his need for recognition and appreciation. Finally, individuals have a need for self actualization or a desire for self-fulfillment, which is an urge by individuals for self-development, creativity and job satisfaction.

Figure 2: Maslow’s Hierarchy of Needs |Self-Actualization | |[pic] | |Esteem Needs | |[pic] | |Social Needs | |[pic] | |Safety Needs | |[pic] | Physiological Needs | |[pic] | Conclusion According to human relations management theory, some positive management actions that lead to employee motivation and improved performance are: 1. Treating employees as if work is as natural as play or rest, just as motivational theory states 2. Sharing the big-picture objectives toward which their work is aimed 3. Empowering them to innovate and make as many independent decisions as they can handle 4.

Training and developing them, increasing freedom and responsibility as their capabilities grow 5. Providing appropriate recognition and rewards when they achieve company goals 6. Using any other helpful theories of human relations that will keep them motivated toward excellence. THE SYSTEMS AND CONTINGENCY APPROACHES • Systems theory considers the impact of stages: Input: acquire external resources. Conversion: inputs are processed into goods and services. Output: finished goods are released into the environment. Systems Considerations • An open system interacts with the environment.

A closed system is self-contained. ¦ Closed systems often undergo entropy and lose the ability to control itself, and fails. • Synergy: performance gains of the whole surpass the components. ¦ Synergy is only possible in a coordinated system. [pic] Contingency theory Contingency theory is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. Several contingency approaches ere developed concurrently in the late 1960s. They suggested that previous theories such as Weber’s bureaucracy and Taylor’s scientific management had failed because they neglected that management style and organizational structure were influenced by various aspects of the environment: the contingency factors. There could not be “one best way” for leadership or organization. Historically, contingency theory has sought to formulate broad generalizations about the formal structures that are typically associated with or best fit the use of different technologies.

The perspective originated with the work of Joan Woodward (1958), who argued that technologies directly determine differences in such organizational attributes as span of control, centralization of authority, and the formalization of rules and procedures. Gareth Morgan in his book, Images of Organization describes the main ideas underlying contingency in a nutshell: • Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances • There is no one best way of organizing.

The appropriate form depends on the kind of task or environment with which one is dealing • Management must be concerned, above all else, with achieving alignments and good fits • Different types or species of organizations are needed in different types of environments Fred Fiedler’s contingency model focused on individual leadership. William Richard Scott describes contingency theory in the following manner: “The best way to organize depends on the nature of the environment to which the organization must relate”.

Other researchers including Paul Lawrence, Jay Lorsch, and James D. Thompson were complementing to this statement and were more interested in the impact of contingency factors on organizational structure. Their structural contingency theory was the dominant paradigm of organizational structural theories for most of the 1970s. A major empirical test was furnished by Johannes M Pennings who examined the interaction between environmental uncertainty, organization structure and various aspects of performance. ———————- Fair evaluation and reward Hierarchy of authority System of task relationships Written rules A Bureaucracy should have Figure 1: Bureaucratic Principles Sales of outputs Firm can then buy inputs Output Stage Goods Services Conversion Stage Machines Human skills Input Stage Raw Materials Figure 3: The Organization as an Open System