LESSON
2
Management
Approaches
The Human Resources Approach
Quick Write
Managers get things done by working with people. That’s
why so many thinkers focus on an organization’s people—
its human resources. Many people in the nineteenth and
early twentieth century saw the importance of the human
factor to an organization’s success. Five important early
advocates of the human resources approach to management
were Robert Owen, Hugo Munsterberg, Mary Parker Follett,
Chester Barnard, and Elton Mayo.
Robert Owen’s Claim to Fame
Do you have an optimistic
or pessimistic view of
human nature? How does
this view affect your
thinking about
organizations?
Robert Owen was a successful Scottish businessman. He was
only 18 when he bought his first factory, in 1789. But in the
early years of the Industrial Revolution, working conditions
were very harsh. Owen saw things that repulsed him. He saw
small children working in factories. Workdays often lasted
13 hours. Factory owners paid big money for the best machines.
But they were unwilling to pay employees a living wage.
Owen chided business owners for treating their machines
better than their people. He argued that spending money to
improve labor conditions was one of the best investments a
businessman could make. Concern for employees was highly
profitable for management, he maintained. And it would
relieve human misery.
Owen’s vision was impossibly idealistic. People remember
him not so much for his successes as for his courage and his
commitment to reducing workers’ suffering.
B
Learn About . . .
• the human resources
approach
• the quantitative
approach
Contributions of Hugo Munsterberg
Hugo Munsterberg was the founder of industrial psychology.
That’s the scientific study of individuals to help them do more
and fit in better at work. In his book Psychology and Industrial
Efficiency (1913), he argued for the study of human behavior to
spot both general patterns and individual differences.
• management
approaches today
LESSON 2 | Management Approaches
37
Vocabulary
•
•
•
•
•
•
•
•
•
•
B
Hawthorne studies
hierarchy
optimization
integrative
frameworks
process approach
systems approach
closed system
open system
stakeholders
contingency
approach
Munsterberg called for psychological tests to better match people
with jobs. He thought that scientific theories about learning
would help develop training programs. He also wanted to find out
how best to motivate workers.
Munsterberg saw a connection between his own work and that of
scientific management experts like Taylor and the Gilbreths. Both
strove for more efficiency through scientific analysis of work.
They also wanted to see better alignment of people’s skills and
the jobs to be filled. Much of what people know today about
choosing employees, training them, designing their jobs, and
motivating them to do the work is built on Munsterberg’s ideas.
Contributions of Mary Parker Follett
Mary Parker Follett was one of the
first to consider organizations in
terms of individual and group
behavior. She lived and wrote about
the same time as Taylor, the
Gilbreths, and Gantt. But her ideas
were more people oriented. She was a philosopher, and her
ideas had implications for management practice.
Individuals could best reach their full potential in groups,
she believed. The manager’s job was to coordinate group
efforts. She stressed the manager’s “power with” employees,
rather than “power over” them.
Managers should be part of the group, Follett believed. They
should lead with their expertise and knowledge—not just
their position as boss. Her ideas about motivation, leadership,
power, and authority remain current today.
Chester Barnard’s Contributions
Mary Parker Follett focused
on individual and group
behavior. She believed that
individuals would reach their
full potential only in groups.
Courtesy of B>Quest, Richards
Chester Barnard, like Follett, came between the scientific
College of Business, University of
management experts and the human resources experts. Like
West Georgia
Fayol, Barnard wasn’t just a theorist. He was a manager
himself as the president of the New Jersey Bell Telephone Company.
He was familiar with Max Weber’s “ideal bureaucracy.” But Barnard saw organizations
differently. Weber favored an “impersonal” organization. Barnard, on the other hand,
saw organizations as social systems that needed human cooperation to work. He wrote
about his ideas in The Functions of the Executive (1938).
A company, in Barnard’s view, was a set of people with interacting social relationships.
The manager’s job was to communicate and to get them to put out top effort. An
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CHAPTER 2 | The Historical Roots of Contemporary Management Practice
organization’s success, as Barnard saw it, depended on employees’ cooperation and
“acceptance of authority.”
Barnard also saw the importance of a company’s outside stakeholders. He realized that
a successful business has to win and keep the support of investors, suppliers,
customers, and others. He thought managers should pay attention to what’s going on
in the world outside the company. For instance, in this way they can fine-tune the
company as needed to make sure its supply chain is intact and its products relevant.
Barnard saw that even with superb internal management, a company could still fail if
it couldn’t find new markets or ensure its supply of raw materials.
Barnard’s influence continues today. Many businesses try to set up cooperative work
groups. Social responsibility is another hot topic in the business world. For instance,
employees and outsiders such as shareholder activists both want to see corporations
adopt green technologies and build more-diverse workforces.
And careful study of external factors—energy costs, labor markets, technology—is
standard practice for most firms today. Each of these developments has origins in the
work of Chester Barnard and Mary Parker Follett.
The Hawthorne Studies
No contribution to the human resources approach to management in the early
twentieth century had more impact than the Hawthorne studies. These were a series of
studies during the 1920s and ‘30s that provided new insights into group norms and behaviors.
At the beginning, industrial engineers at the Western Electric Company’s Hawthorne
Works in Cicero, Illinois, tried to see how lighting affected worker productivity.
Employees assigned to an experimental group worked under light that varied in
intensity. Those in a control group worked under constant light.
The engineers expected individual workers to be more productive under brighter light.
But they found that as they increased the light for the experimental group, output
from both groups rose. When they dropped the light level in the experimental group,
productivity in both groups continued to rise. They had to drop the experimental
group’s lighting to the level of moonlight before these workers’ output dropped.
The engineers weren’t sure just what to make of this. But at least they figured that
intensity of light wasn’t directly related to group productivity.
In 1927 the engineers asked Harvard Professor Elton Mayo and his associates to join
the study as consultants. Mayo worked with Western Electric through 1932. His team’s
experiments covered such things as job redesign. They also changed the length of the
workday and workweek. Other studies looked at the value of rest periods and the
effects of a piecework incentive pay system. The pay study produced an interesting
finding: Peer pressure from colleagues to hold to certain standards turned out to make
a difference in workers’ productivity. Workers were also more productive when they
felt security and acceptance from the group.
LESSON 2 | Management Approaches
39
The Hawthorne studies under Elton Mayo’s leadership had a big impact on the field
of management. Mayo concluded that behavior is closely tied to feelings. He also
found that:
• group influences affect people’s behavior
• group standards determine individual output
• money matters less to workers than security and acceptance by a group.
All these points together are known as the Hawthorne Effect.
The Mayo group’s findings brought renewed attention to human factors. They also led
to increased managerial paternalism—a tendency to treat workers like children to be
provided for.
The Hawthorne studies had their critics. But they helped business owners get away
from the idea that workers were just like machines.
The Human Relations Movement and Management History
The human relations movement was a smaller group within the human resources
approach to management. The leaders of this movement were committed to more
humane management. Employee satisfaction was the main thing, they felt: A satisfied
worker would be a productive worker.
The three people leading this approach—Dale Carnegie, Abraham Maslow, and
Douglas McGregor—held views rooted more in their personal philosophies than in
objective research.
Management historians often overlook Dale Carnegie. But he has had enormous
influence. After all, he literally “wrote the book” on How to Win Friends and Influence
People. During the 1930s, ‘40s, and ‘50s, millions of people read this book. And
thousands of people attended his lectures and seminars during that period as well.
Carnegie’s system boiled down to a few simple points:
• Make others feel important by sincerely appreciating their efforts
• Make a good first impression
• Win people over to your way of thinking by letting them do the talking, being
sympathetic, and “never telling a man that he is wrong”
• Change people by praising their good traits and letting offenders save face.
Abraham Maslow, a psychologist, proposed a hierarchy of needs: physiological, safety,
social, esteem, and self-actualization. (A hierarchy is a series of graded or ranked persons
or elements.) He thought a person must satisfy each need before advancing to the next
level. Someone worried about safety, for instance, can’t focus on social needs. And on
the other hand, once a need has been met, it no longer serves to motivate a person.
Once a person’s need for esteem is met, the prospect of more esteem won’t motivate
him or her.
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CHAPTER 2 | The Historical Roots of Contemporary Management Practice
Maslow’s idea of a needs hierarchy may be the best-known theory of general
motivation today. Books on such topics as management, organizational behavior, and
marketing refer to it often. It’s not a concept supported by research, however.
Douglas McGregor is best known for positing two ideas about human nature. He called
them Theory X and Theory Y.
Theory X was a negative view. It assumes people have little ambition, dislike work,
shun responsibility, and need close supervision to get anything done. Theory Y, on the
other hand, assumes human beings like to work. It also assumes people can accept
responsibility and direct themselves. McGregor himself believed in Theory Y. He
thought this sunnier view should guide managers.
McGregor preached this gospel for a dozen years at the Massachusetts Institute of
Technology (MIT). He then went off to Antioch College to serve as its president for
six years.
At the end of his time there, however, McGregor had doubts about how effective his
ideas were. “I believed,” he wrote, “that a leader could operate successfully as a kind of
advisor to his organization. I thought I could avoid being a ‘boss.’ ...I finally began to
realize that a leader cannot avoid the exercise of authority any more than he can
avoid responsibility for what happens to his organization.”
Ironically, he returned to MIT to preach his original ideas again. He kept on until he
died. His beliefs, like Maslow’s, have influenced management theorists and
practitioners more than the objective research behind them would justify.
McGregor, Maslow, and Carnegie were all bullish on
human nature. They were unshakably optimistic about
what people could and would achieve—despite all the
evidence of human failure. And their views have been
influential in their field.
The Behavioral Science Theorists
The final group of human resources thinkers was the
behavioral science theorists. They used the scientific
method to study organizational behavior. They
conducted objective research and tried to keep their
personal beliefs out of their work. Attempting to build
a real science of organizational behavior, they tried to
do research others could duplicate.
The Application of the Human Resources
Approach Today
The human resources approach to the study of
management is alive and well today. Or maybe
“approaches” would be a better word. There really are
hundreds of different approaches. Since World War II,
Dale Carnegie was the author of How to
Win Friends and Influence People, one of
the twentieth century’s most influential
management books. Carnegie’s ideas are
still popular today.
AP Wide World Photos
LESSON 2 | Management Approaches
41
researchers have generated a wealth of studies that fairly accurately predict behavior in
organizations. Scholars from the human resources school of thought have made great
contributions. Their work affects the current understanding of issues such as
leadership, motivation, job design, organizational culture, and performance appraisal.
The Quantitative Approach
The quantitative approach to management is “management by the numbers.” It began
during World War II with efforts to find mathematical and statistical solutions to
military problems. The British had to get the most out of their limited air power
against the Germans’ massive forces. And so they asked their mathematicians to help
them figure out where to send their pilots.
Similarly, the US antisubmarine warfare team used these quantitative approaches
(sometimes called operations research or OR) to improve the odds for Allied convoys
crossing the North Atlantic. They also used them to select the best depth-charge
patterns for attacking German U-boats.
After the war, businesses began to use these number-crunching techniques on their
own problems. A group of military officers known as the “Whiz Kids” joined Ford
Motor Company. They began using statistical methods to improve decision making
there. Two of the most famous were Robert McNamara and Charles “Tex” Thornton.
McNamara became president of Ford and later US Secretary of Defense. In the latter
post, he used cost-benefit analyses to decide how to allocate military resources. He
ended up as head of the World Bank.
Tex Thornton’s civilian career included founding Litton Industries, a billion-dollar
conglomerate. While running Litton, he used OR techniques to decide which
companies to buy.
Dozens of other military operations researchers later went into business as consultants
in the civilian economy. And by the 1950s, many firms had established their own OR
groups.
You may be wondering, what are quantitative techniques anyway? What do they let
managers do? The quantitative approach includes such things as:
• Computer simulations: What will the company’s payroll look like in 10 years if it
gives everyone a 10 percent raise every year?
• Optimization models: What’s the best price the company can charge for its new
product, to maximize profit but not scare away potential customers?
(Optimization means to make a system or design as effective as possible.)
• Critical-path analysis: How long will it really take to get the new product to
market, with separate teams working on different parts of the project all at the
same time?
Techniques such as these are now standard practice in management, especially in
making planning and control decisions.
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CHAPTER 2 | The Historical Roots of Contemporary Management Practice
The quantitative approach to management began in World War II. For instance, US
warfare teams figured the odds of a ship’s making it safely across the North Atlantic.
Corbis/Bettmann
Analysis: How Social Events Shape
Management Approaches
Management approaches change in response to changes in society.
What goes on in the larger society affects what management theorists
write and what managers focus on. Each of the management theories
you’ve studied so far was a product of its times.
What Stimulated the Classical Approach
Efficiency was the common goal of Taylor, the Gilbreths, Fayol, and
Weber. The Industrial Revolution had taken place.Workers no longer did
everything by hand; they had machines. But their work wasn’t very
efficient. It was poorly planned, or not planned at all. People weren’t
sure what they were actually supposed to do. If a shop even had
someone called a manager, he often wasn’t sure what he was supposed
to be doing, either. Such chaos created a crying need for ideas to
improve productivity.
This shop-floor chaos was reflected in the economy at large. In the early
twentieth century, the standard of living was low. Wages were modest.
LESSON 2 | Management Approaches
43
Few workers owned their own homes. Production was highly labor
intensive. Factories were filled with armies of people doing the same
repetitive tasks day in, day out. Under such circumstances, Frederick
Taylor could justify taking months to study a single job and develop a
standard “one best way” to do it.
This led to gains in efficiencies that could be passed along in lower
prices. That expanded markets and created more jobs. It helped working
families afford products like stoves and refrigerators.
Likewise, Frank Gilbreth’s work to improve the efficiency of bricklayers
led to lower costs for putting up buildings. This, in turn, meant that more
buildings were built and that they cost less to buy. And that, in turn,
meant more people could afford to buy a house.
The bottom line in all this? Scientific management raised the entire
country’s standard of living.
What Stimulated the Human Resources Approach
The human resources approach came into its own in the 1930s. It grew
out of two related factors: a backlash against the classicists’ view of
workers as machines, and the Great Depression.
As you have just read, efficiency on the shop floor could raise a country’s
standard of living. But a point comes where enough is enough. A worker is
not a machine. The classical approach, though, saw all problems as
engineering problems. If the employee wasn’t producing enough, he or
she needed to be “adjusted” by an incentive pay plan or a job redesign.
The human resources approach was a welcome alternative to this
thinking, especially during the tough times of the Depression. Followers
of this approach treated people like people, not machines. But it still
offered managers ways to increase productivity.
What Stimulated the Quantitative Approaches
The force behind the quantitative approaches was World War II. During
the war, the federal government funded efforts to develop mathematical
and statistical tools to apply to military problems. The tools that came
out of these efforts scored some impressive successes. No wonder they
soon found applications in civilian life.
Knowledge of these quantitative techniques spread throughout the
economy. In the early 1950s, for instance, the Institute of Management
Science began publishing its journal, Management Science. The
Operations Research Society launched its journal, Operations Research.
And by the late 1960s, mathematics, statistics, and operations
management were required courses at most business schools.
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CHAPTER 2 | The Historical Roots of Contemporary Management Practice
Management Approaches Today
In the previous lesson you read about the classical approach to management. In this
lesson, you have read about the human resources and quantitative approaches. Each
developed at a different point in history. Each developed in response to the social
climate of its time. And each developed separately from the others. Consider Dale
Carnegie, for instance, with his ideas about making a good first impression and letting
others save face. He was a world apart from Robert McNamara’s quantitative analyses
at Ford Motor Company.
But more recently, theorists have come up with three integrative frameworks—tools
for organizing and understanding management ideas. The three are the process, systems,
and contingency approaches.
The Process Approach
In the early 1960s, Harold Koontz looked at the business world around him and called
it a “management-theory jungle.” He published an article in December 1961 that
concluded many of the theories had something to offer. But many others weren’t really
complete systems. They were just managerial tools. He felt what was needed was a
management approach that pulled everything together. And he thought the process
approach might be that something. In this, he was building on the work of Henri Fayol.
The process approach considers the performance of planning, organizing, leading, and
controlling as circular and continuous. The cycle gets repeated again and again, in other
words.
Although Koontz’s article sparked considerable debate, most people in the field—
scholars and managers—stuck with their own ideas. Still, Koontz had made a mark.
Look at a current management book today and you’ll see the influence of the process
approach. It remains a viable framework.
How a Systems Approach Can Integrate Management Concepts
Starting in the mid-1960s, managers began to think about organizations as systems.
The systems approach defines a system as a set of related and interdependent parts
arranged in a manner that produces a unified whole. A society is a system, for instance. So
is your body. Your computer and your car are both systems, too.
The two basic types of systems are closed and open. Closed systems are those that are
not influenced by or do not interact with their environment. An open system is one that
interacts with its environment. (See Figure 2.1.)
Today people take for granted the idea that a system interacts with its environment.
For instance, advertising in magazines and on the Internet (the media environment)
will affect fashions at your school (the system). So when people speak of organizations
as systems, they mean open systems.
LESSON 2 | Management Approaches
45
Suppliers
Econo
mic
Public
Pressure
Groups
Government
The
Organization
Competitors
Customers
Labor
Unions
c
Te
Government agencies can be
stakeholders, for instance. So
can labor unions, competing
companies, employees, and
suppliers. Customers and
clients, local community
leaders, and public interest
groups can be stakeholders,
too.
Global
Political
So an organization, with its
management, is a system that
interacts with and depends on
its environment. In
management terms, this
means dealing with an
organization’s stakeholders.
Stakeholders are any group
affected by the organization’s
decisions and policies.
hn
o
log
ic
al
ial
Soc
The manager’s job is to
F I G U R E 2.1
coordinate all these parts to
achieve the organization’s goals. The Organization and Its Environment
Most people within an
organization appreciate the importance of the customer as a stakeholder. If the
company’s products don’t please the customer, it may suffer from less revenue, a
falling stock price, and a shrinking labor force. Failure to meet customer needs can kill
a company.
The systems approach encourages managers to pay attention to customers and others.
They consider stockholders, the press, government regulators, and community leaders,
as well. Stockholders need assurance of the company’s soundness. Bad reviews can kill
a product. Regulators may be planning new environmental standards. Citizen
opposition may block the company’s plant expansion. Management has to engage all
these stakeholders.
In the global economy, “environment” has a broader meaning than ever. It includes
broad labor-market trends: for example, Asian workers getting more education and
competing against Americans. The environment includes new technologies, as well as
changes in energy and oil prices. It includes political developments such as a new freetrade agreement or a civil war. The management of an organization must pay
attention to all of this.
The systems approach doesn’t tell a manager just what to do. But it provides a broader
picture than the process approach does. And managers who see their job as linking
their organization to its environment help make the organization more responsive to
its stakeholders.
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CHAPTER 2 | The Historical Roots of Contemporary Management Practice
The case of Andrew Fastow is a reminder of how an open
system of management works. Fastow, shown here on his
way into court in Houston, was an executive at the failed
energy firm Enron. He pleaded guilty to conspiracy to
commit fraud and went to prison. The failings of highprofile executives like him helped renew public interest in
managerial ethics. This interest has led, in turn, to new
accounting laws for public companies.
AP Wide World Photos
A Contingency Approach to the Study of Management
The contingency approach replaces simpler principles of management and integrates much
of management theory. A contingency, in the everyday sense of the word, is a possibility.
It’s something that might happen—depending on something else. It probably won’t
happen, but you should probably prepare for it. A thundershower is a contingency
you prepare for by keeping an umbrella in your backpack, for instance.
In management theory, contingency means something like “variable.” Managers have
to pay attention to the size of an organization as a contingency variable, for instance.
They must manage bigger companies differently from smaller ones. Bigger companies
need more formal personnel procedures, for example. They may need to provide
employee benefits that smaller companies don’t have to offer. Smaller companies, on
the other hand, may have to demand that each employee fill a number of roles.
LESSON 2 | Management Approaches
47
For more examples of contingency variables, see Figure 2.2. The four in the chart are
only four out of at least 100 that could be listed. But they will give you an idea what
the term contingency variables means.
Has this ever happened to you? You try to get an answer from someone to a tough
question, and the response is, “It all depends.” And then you have to ask, “Depends
on what?” The contingency approach to management tries to determine that
“what”—it tries to spot the factors that really matter to a company’s success.
Organization Size. The num
ber of people in an organi
zation is a major influence
agers do. As size increases
on what man, so do the problems of coo
rdin
ation. For instance, the typ
tion structure appropriate
e of organizafor an organization of 50,
000 employees is likely to
organization of 50 emplo
be inefficient for an
yees.
Routineness of Task Tec
hnology. In order for an
organization to achieve its
nology; that is, it engages
purpose, it uses techin the process of transformi
ng inputs into outputs. Rou
require organizational stru
tine technologies
ctures, leadership styles,
and control systems that
required by customized or
diff
er
from those
nonroutine technologies.
Environmental Uncertain
ty. The degree of uncerta
inty caused by political, tec
tural, and economic change
hnological, socioculs influences the managem
ent process. What works
and predictable environme
best in a stable
nt may be totally inappropr
iate in a rapidly changing
environment.
and unpredictable
Individual Differences. Ind
ividuals differ in terms of
their desire for growth, aut
for ambiguity, and expect
onomy, tolerance
ations. These and other ind
ivid
ual differences are particu
when managers select mo
larly important
tivational techniques, lea
dership styles, and job des
igns.
F I G U R E 2.2
Four Popular Contingency Variables
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CHAPTER 2 | The Historical Roots of Contemporary Management Practice
CHECKPOINTS
Lesson 2 Re vie w
Using complete sentences, answer the following questions on a sheet
of paper.
1. What was Robert Owen’s claim to fame as a manager?
2. What was Hugo Munsterberg’s contribution to the field of
management?
3. What are the five needs in Abraham Maslow’s hierarchy?
4. What findings were known as the Hawthorne Effect?
5. What major world event spurred development of quantitative
approaches to management?
6. Why did it make sense for Frederick Taylor to spend six months
studying the “one best way” to do a particular job?
Applying Your Learning
7. Does it matter that the work of theorists like Carnegie, Maslow, and
McGregor has little basis in objective research? Why or why not?
LESSON 2 | Management Approaches
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