Management:
Historical Development
The Pre-modern Era

Ancient massive construction projects
◦ Egyptian pyramids
◦ Great Wall of China
Adam Smith’s Contribution To
The Field Of Management

Wrote the Wealth of Nations (1776)
◦ Advocated the economic advantages that
organizations and society would reap from
the division of labor:
 Increased productivity by increasing each worker’s
skill and dexterity.
 Time saved that is commonly lost in changing tasks.
 The creation of labor-saving inventions and
machinery.
The Industrial Revolution’s Influence On
Management Practices


Industrial revolution
Machine power began to substitute for human
power
 Lead to mass production of economical goods

Improved and less costly transportation systems
became available
 Created larger markets for goods.

Larger organizations developed to serve larger
markets
 Created the need for formalized management
practices.
Classical Contributions

Classical approach
◦ The term used to describe the hypotheses of
the scientific management theorists and the
general administrative theorists.

Scientific management theorists
 Fredrick W. Taylor and Frank and Lillian Gilbreth,

General administrative theorists
 Henri Fayol and Max Weber
1–5
Management Theory

Classical Approaches
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
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
Behavioral Approaches
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Frederick Taylor: Scientific Management (1886)
Frank and Lillian Gilbreth: Time/motion studies (later 1800s)
Henri Fayol: 14 Principles of Management (1880s-1890s)
Max Weber : Bureaucracy (1920s)
The Hawthorne Experiment (1927)
MacGregor’s Theory X and Theory Y (1960)
Quantitative Approaches
Contemporary Approaches


Ouchi’s Theory Z (1981)
Contingency Management
Branches of Classical Theory
1.
2.
3.
Scientific Management
Administrative Theory
Bureaucracy
The Evolution of Management Theory
Classical Approaches




Frederick Taylor: Scientific Management
(1886)
Frank and Lillian Gilbreth: Time and
motion studies (later 1800s)
Henri Fayol: Fourteen Principles of
Management (1880s-1890s)
Max Weber : Bureaucracy (1920s)
F.W. Taylor and Scientific
Management
Developed Scientific Management
 Laid foundation for the study of
management
 Scientific Management is the systematic
study of the relationships between people
and tasks for the purpose of redesigning the
work process to increase efficiency.

Basics of Scientific Management

The concept of Scientific management
implied the application of Science or
management




Each task must be scientifically designed so that it
can replace the old, rule-of-thumb methods.
Workers must be scientifically selected and
trained so that they can be more productive on
their job.
Bring the scientifically designed jobs and workers
together so that there will be a match between
them.
There must be division of labor and cooperation
between management and workers.
Taylor’s Four Principles of Management
1. Time-and-Motion study:

Study the way workers perform their tasks, gather all the
informal job knowledge that workers possess and
experiment with ways of improving how tasks are
performed.
2. Scientific Task Planning


Scientific task is the amount of work which an average
workers can perform during a day under normal working
conditions. The ultimate goal is to see that work is done
in a logical sequence promoting maximum efficiency.
Standards have to be set in advance for the task,
material, work methods, quality, working conditions etc.
Taylor’s Four Principles of Management
3. Scientific Selection of Personnel
 Put
right worker in right job, find
limitations, train
 Carefully select workers who possess
skills and abilities that match the needs of
the task, and train them to perform the task
according to the established rules and
procedures
4. Differential Piece rate system



Designed to pay based on the actual performance
A system of financial incentives is also needed
In this scheme, a worker who completes the normal work gets
wages at high rate per piece than a worker who complete the
same within the time limit set by the management.
5. Functional foremanship




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In order to achieve better production control, factor is divided
into several components, each in charge of a specialist, namely,
instruction card clerk, cost & time clerk etc.
These Functional specialist perform the planning function and
provide expert advice to workers.
Manager plans, prepares, inspects and Worker does the actual
work
Codify the new methods of performing tasks into written rules
and standard operating procedures
Division of work between manager and workers
Problems with Scientific Management
Managers frequently implemented only the
increased output side of Taylor’s plan.
(Exploitative device)
◦ Workers did not share in the increased output.
(Undemocratic)
 Specialized jobs became very boring, dull.
◦ Workers ended up distrusting the Scientific
Management method.
 Workers could purposely “under-perform.”
◦ Management responded with increased use of
machines and conveyors belts.

Frank & Lillian Gilbreth



Endorsed piece-work and suggested a higher
rate per unit if his directions were followed.
Disagreed with Taylor’s idea that
management should choose which workers
took which jobs.
Frank and Lillian Gilbreth

Bricklaying efficiency improvements

Time and motion studies (therbligs)
Frank & Lillian Gilbreth
1.
2.
3.
Break up and analyze every individual
action necessary to perform a particular
task into each of its component actions
Find better ways to perform each
component action
Reorganize each of the component
actions so that the action as a whole
could be performed more efficiently-at
less cost in time and effort
Administrative Management Theory
(1. Henri Fayol & 2. Max Weber)

Administrative Management
◦ The study of how to create an organizational
structure that leads to high efficiency and
effectiveness
◦ The theory which explained the process of
managing an organization from the top
managerial perspective.
◦ An approach that focuses on principles that
can be used by managers to coordinate the
internal activities of organization.
Henri Fayol




Firstly classify business operations into six major
activities: Technical, commercial, financial,
security, accounting and managerial.
More focused on Management and came up with
the five basic functions of management —Planning,
Organizing, Commanding, Coordination, and
Controlling
First wrote that management is a set of principles
which can be learned.
Developed Fourteen Principles of Management
Fayol’s Fourteen Principles of Management

Division of work

Centralization

Authority


Discipline
Scalar chain (Line of
Authority)
Order

Unity of command


Unity of direction

Equity

Subordination of the
individual

Stability of tenure of
personnel

Remuneration

Initiative

Esprit de corps
HENRI FAYOL’s
FOURTEEN PRINCIPLES OF
MANAGEMENT
1. Division of Work or Specialization of labor.
Specializing encourages continuous improvement in
skills and the development of improvements in
methods to improve productivity.
2. Authority & Responsibility. The right to give
orders and the power to exact obedience.
3.Discipline. No slacking, bending of rules.
Employees must obey, but this is two-sided:
employees will only obey orders if management play
their part by providing good leadership.
4. Unity of command. Each employee should have
only one boss with no other conflicting lines of
command.
5. Unity of direction. People engaged in the same
kind of activities must have the same objectives in a
single plan. This is essential to ensure unity and
coordination in the enterprise. Unity of command
does not exist without unity of direction.
6.
Subordination
of
Individual
Interests.
Management must see that the goals of the firms are
always paramount. So, when people at work, only
work things should be pursued or thought about.
7. Remuneration. Employees receive fair payment for
services, not what the company can get away with.
8. Centralization. Consolidation of management
functions. Decisions are made from the top.
9. Equity. Equality of treatment (but not necessarily
identical treatment)
10. Scalar Chain (line of authority). Formal chain of
command running from top to bottom of the
organization, like military
11. Order. All materials and personnel have a
prescribed place, and they must remain there.
12. Stability of Tenure of Personnel. Long-term
employment is important for the development of skills
that improve the organization’s performance.
Employees work better if job security and career
progress are assured to them.
13. Initiative. Fostering creativity and innovation by
encouraging employees to act on their own.
14. Esprit de corps. Harmony, cohesion among
personnel.
Max Weber’s Principles of Bureaucracy



Coined “bureaucracy”: the perfect office
Developed the principles of bureaucracy as a
formal
system
of
organization
and
administration designed to ensure efficiency and
effectiveness.
Bureaucracy: Ideal type of organization
characterized by division of labor, a clearly
defined hierarchy, detailed rules and regulations,
and impersonal relationships
Weber’s Ideal Bureaucracy

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Well defined chain of command
Clear division of work (job descriptions)
Procedures for any situation (Formal Rules &
Regulations, formal selection)
Impersonal
Career Orientation
Inflexible
Rigid
Weber’s Principles
of Bureaucracy
Weber’s Principles of
Bureaucracy
1)
2)
A manager’s formal authority derives
from the position he holds in the
organization.
People should occupy positions because
of their performance, not because of
their social standing or personal
contacts.
228
Weber’s Principles of
Bureaucracy
3)
4)
The extent of each position’s formal
authority and task responsibilities and it’s
relationship to other positions should be
clearly specified.
Authority can be exercised effectively
when positions are arranged
hierarchically, so employees know whom
to report to and who reports to them.
229
Weber’s Principles of Bureaucracy
5)
Managers must create a well-defined
system of rules, standard operating
procedures,
and norms so they
can effectively
control behavior .
230
Rules, SOPs and Norms
Rules – formal written instructions that specify
actions to be taken under different circumstances
to achieve specific goals
 Standard Operating Procedures (SOPs) –
specific sets of written instructions about how to
perform a certain aspect of a task
 Norms – unwritten, informal codes of conduct
that prescribe how people should act in particular
situations

Behavioral Management Theory
Behavioral Management
◦ The study of how managers should personally
behave to motivate employees and encourage
them to perform at high levels and be
committed
to
the
achievement
of
organizational goals.
232
The Behavioral Approach

The Human Relations Movement
◦ An effort to make managers more sensitive to
their employees’ needs
◦ Arose out of the influences of
 The threat of unionization
 The Hawthorne studies
 The philosophy of industrial humanism
Behavioral Approaches

Elton Mayo: The Hawthorne
Experiment (1927)

McGregor’s Theory X and Theory Y
(1960)
Behavioral Management Theory
Mary Parker Follett
◦ Recognized that organizations could be viewed
from the perspective of individual and group
behavior.
◦ Concerned that Taylor ignored the human side
of the organization
 Suggested workers help in analyzing their jobs
 If workers have relevant knowledge of the task,
then they should control the task
The Hawthorne Studies

Studies of how characteristics of the
work setting affected worker fatigue and
performance at the Hawthorne Works of
the Western Electric Company from
1924-1932.
◦ Illumination Study
◦ Group Study
236
Human Relations Movement
◦ Grew out of the Hawthorne studies.
◦ Proposed that workers respond primarily
to the social context of work, including
social conditioning, group norms,
and interpersonal dynamics.
◦ Assumed that the manager’s
concern for workers would lead to
increased worker satisfaction and
improved worker performance.
The Hawthorne Experiment




Research conducted at the Hawthorne plant
of the Western Electric Company near
Chicago, 1927-1937
Initial study: effects of lighting on worker
performance
Worker productivity was measured at various
levels of light illumination.
Researchers found that regardless of
whether the light levels were raised or
lowered, worker productivity increased.
Human Relations (Hawthorne)
Implications
Hawthorne effect — workers’ attitudes toward
their managers affect the level of workers’
performance
 Human relations movement – advocates that
supervisors be behaviorally trained to manage
subordinates in ways that elicit their cooperation
and increase their productivity
 Behavior of managers and workers in the work
setting is as important in explaining the level of
performance as the technical aspects of the task

The Hawthorne Studies

Demonstrated the importance of
understanding how the feelings, thoughts,
and behavior of work-group members
and managers affect performance
240
Theory X and Theory Y


Douglas McGregor proposed the two different sets of
assumptions about workers.
Theory X - classical theory: It assumes that average
workers
 Are lazy and dislike work and will do as little as
possible. They are motivated only by money and
do not care about the job.
 Workers have little ambition and wish to avoid
responsibility and average worker prefers direction
 Managers must closely supervise and must be
carefully controlled through reward and
punishment
Theory X and Theory Y

Theory Y: Modern Management Theory





Theory Y assumes workers are not lazy, want to do a
good job.
People often enjoy their work and will exercise selfcontrol at work.
People are motivated by wanting to do a good job and
will do well if the opportunity is presented
People have capacity for imagination, ingenuity, and
creativity
People enjoy expending physical and mental effort in
work as much as play and rest
Theory X vs.Theory Y
243
Contemporary Approaches


Ouchi’s Theory Z (1981)
Contingency Management
Ouchi’s Theory Z

Theory Z




Value of culture in an industrial society
Intimate and cooperative work
relationships
Alienated in work environment in which
family ties, traditions, and social
institutions are minimized
Workers have strong sense of moral
obligation, discipline and order
Organizational Environment Theory
Organizational
Environment
–
The set of forces and conditions that
operate
beyond
an
organization’s
boundaries but affect a manager’s ability
to acquire and utilize resources
246
The Open-Systems View
Open System
◦ A system that takes resources for its
external environment and transforms
them into goods and services that are
then sent back to that environment
where they are bought by customers.
247
The Open-Systems View
◦ Inputs: the acquisition of external resources to
produce goods and services
◦ Conversion: transforms the inputs into outputs
of finished goods and services.
◦ Output: the release of finished goods and
services to its external environment.
249
Closed System
A self-contained system that is not
affected by changes in its external
environment.
 Likely to experience entropy and lose its
ability to control itself

250
Contingency Theory
“There is no one best way to organize”
 The idea that the organizational structures
and control systems manager choose
depend on—are contingent on—
characteristics of the external environment
in which the organization operates.

251
Contingency Theory
252
Contingency Management



Managing
in
Different
Changing Situations
Require
managers
to
approaches and techniques
use
and
different
Contingency perspective - different ways
of managing are required in different
organizations and different circumstances
 stresses that there are no simplistic or
universal rules

contingency variable
© Prentice Hall, 2002