THE EVOLUTION OF
MANAGEMENT
THOUGHT, 6TH EDITION
Electronic Resource by:
Regina Greenwood and Julia Teahen
Chapter Sixteen
Organizations and People
Organizations and People

Organizations – Structure and Design
 James
D. Mooney (1869-1947) and Alan C. Reiley
(1884-1957)
 Administrative Theory
 Span of Control

Toward a Top Management Viewpoint
 Ralph
C. Davis (1894-1986)
 Harry A. Hopf (1882-1949)
 Ronald H. Coase (1910-
James Mooney and Alan Reiley
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They searched for principles of
organization both in historical
examples and in large-scale
enterprise
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Objectives – “profit through
service”
Efficiency resided in organized
group effort
Formalism, the basis of an
efficient organization, involved
the “efficient coordination of all
relationships”
Management actuates, plans,
and controls the plans and
procedure of the organization.
James Mooney and Alan Reiley –
Onward Industry
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Coordination – rested on authority
Authority was in the organization, while power was an
individual possession
“Doctrine” – Objectives
Scalar principle, which was founded in leadership
Delegation – conferring authority
Functional principle – difference in duties performed (such
as line-staff)
Staff – represented the authority of ideas
Line – represented the “authority of man.”
Administrative Theory
Luther Gulick (1892-1993)
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Luther Gulick is better known
for his work in public
administration
POSDCORB – his view of the
functions of the manager
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Planning, organizing, staffing,
directing, co-ordination,
reporting, and budgeting
Departmentation and
“principles of homogeneity”
– grouping persons by:

Purpose, process, persons or
“things” and place
Administrative Theory
Lyndall Urwick (1891-1984)
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Lt. Col. Urwick
attempted to synthesize
a number of contributors
to develop a general
theory of organization
and management.
8 Principles of
organization
Along with Gulick,
brought Fayol into the
picture long before
Fayol was recognized in
the U.S.
Span of Control –
V. A. Graicunas
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Influenced by Urwick and the
British general Sir Ian Hamilton.
Put forth an argument for a
narrow span of control due to
“span of attention” and the
relationships that managers
must deal with.
The mathematics of the
different types of relationships
indicated a geometric growth
of relationships with an
arithmetic increase in the
number of subordinates
Span of Control – Graicunas

While the mathematics would indicate keeping the
span of control narrow, Graicunas also includes a
qualifier:
 Exceptions
could be made if the work was routine, was
done independently of others, and where supervisory
responsibilities were less complex.

See Bedeian, A.G. “Vytautas Andrius Graicunas: A
Biographical Note,” Academy of Management
Journal 17, no. 2 (June 1974) for fascinating
account of Graicunas’ unusual life.
V. A. Graicunas
Papers on the Science of Administration by Urwick and Gulick.
Pay special
attention to
the authors
Toward a Top Management Viewpoint
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Ralph C. Davis (18941986) was educated as a
mechanical engineer, took
an early shop
management approach,
encountered the
Coubrough translation of
Fayol, leading him to his
top management
contributions.
Organic functions of
management: planning,
organizing, and
controlling.
Toward a Top Management Viewpoint
Renewed interest in managerial work and seminal work in transaction costs and
the nature of the firm is discussed here. This section is important as preparing the
way for later developments in strategic management and organization theory.
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Ralph C. Davis
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Management defined as “the function of executive
leadership.”
Unique insights into controlling with respect to its
timing:
 Preliminary
– trying to design in advance what would
promote the planned performance.
 Concurrent – supervising, comparing, and taking
corrective action as needed.
Toward a Top Management Viewpoint
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Harry Hopf (1882-1949) was influenced by
Taylor and applied these ideas in a more general
management setting.
Interested in office worker and executive
compensation, while others had focused on bluecollar workers.
Interested in tying executive compensation to
performance (still an important issue today).
Harry Hopf – Form Follows Function & Optimology
Was Harry Hopf ahead of A. D. Chandler Jr.’s “structure follows strategy?”
Optimology is a view of the firm as a whole…serve society to maximize profits.
How could this idea be used in strategy formulation?
Holden, Fish, and Smith’s 1941 Study
The study found the need for clearer objectives and plans.
Do we still face the same issues?
Other Studies of Top Management
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Sune Carlson found communications occupied a
major portion of a manager's time (1951).
Jackson Martindell created a management audit
a
search for excellence before Tom Peters and Bob
Waterman.
What did Adam Smith say about those who manage “other
peoples’ money?”
Ownership and Control

Adolph Berle and
Gardiner Means
criticized executives
and directors as
“economic autocrats”
who were removed
from serving the
interests of the
shareholders. (1930s)
Ownership and Control
Robert Gordon’s criticism was much the same, seeing top management as a selfperpetuating oligarchy serving their own interests. Why is ownership and control
an ever recurring problem?
Visible and Invisible Hands
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John R. Commons (18681945), labor economist and
founder of institutional
economics, noted that the
transactions were smallest
unit of analysis.
His ideas achieved wider
appreciation later.
John R. Commons,
courtesy of the Wisconsin Electronic
Reader
Visible and Invisible Hands
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Ronald H. Coase (1910-) wrote
his seminal work during this time
about the nature of the firm.
He saw the firm as the “visible
hand” and superior, in most
cases, to the market in allocating
resources.
Coase was continuing the
tradition of J.B. Say and Alfred
Marshall but his work received
belated acclaim.
Coase, from the University of
Chicago, won the Nobel Prize in
economics in 1991.
http://www.lindau-nobel.de.axprod.net/LaureateDetails.AxCMS?UserID=6783
Summary

Contributors in this chapter were concerned with structuring
activities and relationships for productivity and satisfaction
at work:
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Mooney and Reiley presented rules of organization from history.
Dennison’s work built on compatible work groups.
Gulick, Urwick, and Graicunas focused on formalizing relationships.
Davis focused on top management.
Hopf applied the scientific approach to examining the whole firm.
Coase and Commons introduced transaction cost economics.