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Lecture Notes on Management Theories
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MANAGEMENT THEORIES
Over the last century, many theorists and practitioners have been attempting to put a
meaning to the word organizational management and also to what managers do. This
effort has resulted into an evolution of what is now called management theories with
various contributions from various people. These theories help us to understand the
challenges of management and how to deal with them. They are a product of
experiences in management of organizations.
A. TRADITIONAL MANAGEMENT THEORIES
1. Scientific Management Theory
Frederic W. Taylor (1846 – 1917) is commonly known as ‘the father of scientific
management’. Taylor observed that managers picked their skills through trial and error
or the ‘rule of thumb’ i.e. without definite principles. Taylor’s contribution came at a time
when there was a shortage of skilled labour in the U.S and there was a great need to
increase productivity. He wanted to find out if there was one best way of doing a job and
in answering this and other questions, he came up with a set of principles that constitute
the essence of scientific management.
He analyzed and timed workers movements on a series of jobs. With time study as his
base, he broke down jobs into their components and designed the quickest and best
way of doing each job. This study led workers into doing their jobs faster but at the same
time made them fear that they would earn less. As a result of this, Taylor introduced the
differential Rate system of rewarding workers where workers who surpassed their
previous performance standards were paid more using the differential rate system.
Taylor took these ideas to other organizations where he worked as a consultant. In the
organizations where he was engaged as a consultant, production was seen to go up.
Taylor’s philosophy is based on four principles.
(i) The application of scientific methods to management by determining the best
method for performing a task.
(ii) The scientific selection of a worker so that each worker could be given that
responsibility for which he is best sited.
(iii) The scientific education and development of the worker.
(iv) Intimate friendly co-operation between management and labour.
2. Theory of Bureaucratic Management
Max Weber (1864 – 1920) was a German Sociologist who developed the theory of
bureaucratic management. The theory stressed the need for a strictly defined hierarchy
governed by clearly defined regulations and lines of authority. He considered the ideal
organization to be a bureaucracy whose activities and objectives were rationally thought
out and whose divisions of labour were explicitly spelt out. Weber also believed that
technical competence should be emphasized and that performance evaluations should
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be made entirely on the basis of merit. He identified that in all organization there are
three types of authority;
(i)
(ii)
(iii)
The traditional authority; based on customs, traditions, Kinship etc.
Charismatic authority; based on ones personality especially political leaders,
religious leaders.
Rational legal authority; based on one’s official position. It is authority bound
by rules, regulations procedures, skills and knowledge. According to Max
Weber, for an ideal kind of bureaucracy, rational legal authority is the most
appropriate.
Basic features of a bureaucratic organization
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
It is bound by rules and regulations.
There should be specialization of roles hence narrow goals.
There should be hierarchy in terms of structure and power.
Appointment should be based on competence in terms of skills.
Impersonality – it doesn’t consider personal characteristics or needs
Routinisation of activities. There is a tendency of repeating activities, doing
things the way they are done.
Separation of officials from ownership of organizations i.e. owners should not
manage business.
3. Hierarchy of Needs Theory - Abraham Maslow
Abraham Maslow was a psychologist who proposed a hierarchy of needs. According to
him, the needs that people are motivated to satisfy fall into a hierarchy. Physiological
and safety needs are at the bottom of the hierarchy and at the top are ego and self
actualization needs as seen in the diagram below:
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Hierarchy of Needs Theory
Self Actualization
Personal growth and development
Esteem Needs
Achievement, status, responsibility, reputation
Belongingness and Love Needs
Family, affection, relationships, workgroup, etc
Safety Needs
Protection, security, order, law, limits, stability, etc
Biological and Physiological Needs
Basic life needs – air, food, drink, shelter, warmth, sleep, etc
Generally, Maslow said that lower level needs must be satisfied before higher level
needs can be met. Since many lower level needs are routinely satisfied in contemporary
society, most people are motivated more by the higher level needs. A manager should
be on the lookout to see at what level an employee is then try to help the employee
achieve the next higher level as a way of motivating him/her.
MODERN/EMERGING THEORIES IN MANAGEMENT
1. Systems Theory (Sytems Approach)
Rather than dealing separately with the various segments of an organization, the
systems approach to management views the organization as a unified, purposeful
systems composed of interrelated parts. This approach gives managers a way of looking
at the organization as a whole and as a part of the larger external environment. Systems
theory tells us that the activity of any segment of an organization affects the activity of
every other segment in varying degrees. Therefore all departments should collaborate
with the others. For instance systems oriented production managers make production
schedules only after identifying the impact of these decisions on other departments and
on the entire organization.
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Key concepts in Systems Theory
(a) System: It is a series of functions or activities within organizations that work
together for a give aim or to attain a given goal.
(b) Subsystems: These are the parts that make up the whole system. Each system
in turn may be a subsystem of a larger system.
(c) Synergy: This is the situation in which the whole is greater than the sum of its
parts. In organizational terms, synergy means that departments which interact
cooperatively are more productive than they would be if they operated in isolation.
(d) Open and Closed Systems: A system is considered an open system if it
interacts with its environment and it is considered a closed system if it does not.
All organizations interact with their environment but the extent to which they do so
varies.
(e) System Boundary: Each system has a boundary that separates it from its
environment. In a closed system, the system boundary is rigid while in an open
system, the boundary is more flexible. The system boundaries on many
organizations have become increasingly flexible in recent year especially with the
advent of social responsibility.
(f) Flows: These are components such as information, materials, and energy
(including human energy) that enter and leave a system. These enter the systems
as inputs (raw material for example), undergo transformation processes within the
system (operations that alter them) and exit the system as outputs (goods or
services).
(g) Feedback: It is that part of system control in which the results of actions are
returned to the individual, allowing work procedures to be assessed, analyzed
and corrected.
Systems theory calls attention to the dynamic and interrelated nature of organizations
and the management task. Thus, it provides a framework within which we can plan
actions and anticipate both immediate and far-reaching consequences while allowing us
to understand unanticipated consequences as they develop. With a systems
perspective, general managers can more easily maintain a balance between the needs
of the various parts of the enterprise and the needs and goals of the whole firm or
organization.
2. Total Quality Management (T.Q.M)
T.Q.M is an organizational cultural commitment to satisfying customers through the use
of an integrated system of tools, techniques and training. T.Q.M involves the continuous
improvement of organizational processes resulting in high quality products and services.
This is a new approach to management. Under this approach, all managers should be
thinking about how every organizational process can be conducted to provide products
and services that are responsive to tougher and tougher customer and competitive
standards.
T.Q.M believes in;
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a.
b.
c.
d.
e.
Zero defects.
Get it right the first time and every time.
100% perfection; there is no room for error.
Working in a system where all departments work together.
It involves bench making, which means comparing your own products and
processes with the very best in the world.
f. TQM also focuses on customers should be the starting pt because they need high
quality products that are fit for use.
g. TQM needs participation for all the management team and employees they all
must devote time to get the possible cause for failure.
3. Re- Engineering Theory
This theory by Michael Hammer and James Champy is about a fundamental rethinking
and radical redesign of organizations. They suggested that organizations should
organize around processes. Re- engineering requires managers to forget anything they
know about their operations and start afresh, since whatever they were doing is wrong.
Re-engineering is not about repairs but replacement. It does not believe in any
adjustment. It believes that mangers should start on clean sheets of paper as a way of
re-engineering the organization into a best seller.
Hammer and Champy urge managers to rethink the very processes by which
organizations function and to be courageous about replacing processes that get in the
way of organizational efficiency. According to Hammer, reengineering means radically
rethinking and redesigning those processes by which we create value for customers and
do work. He lists speed, quality of service, and overhead costs as today’s important
competitive issues that reengineering can address. He further argues that the basis of a
really successful company is its willingness to abandon what has been successful in the
past for something more efficient. There is no such thing as a permanently winning
formula.
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