Evolution of Management Thought

Chapter highlights

The concept of modern management, F. W. Taylor, scientific management, Administrative and functional management,(classical theory), Max Weber and bureaucracy, Chester Bernard, Neo classical theory, Contingency theory

The concept of modern management

The modern concept of Management:  Management is that field of human behavior in which managers plan, organize, direct, and control human, financial, and other resources in an organized group. it is done to achieve desired individual and group objectives with optimum utilization of resources.

In the past management was not considered as an important part of development. With the industrial revolution during the 17th and 18th centuries, several economists expressed their ‘concepts and function of management’.

Only in the 19th century, management become a separate field of study because business organizations faced various problems regarding labor efficiency and wage payment systems. In search of solutions of these problems, people began to recognize management as a separate field of study whether they are going according to progress or not and taking actions as per their needs.  

So in modern management, there are three basic activities: planning, implementing and controlling.  Planning means the functions of deciding goals and fixing the achieving procedures of goals in advance. Implementing means doing what was decided. Thus implementing activities include arranging men, materials, and money; leading and instructing men about doing work. Controlling refers to the process of evaluating the works of the people and group.

Figure 1: Gives information about the management process and each process is subdivided in Table 1.

Planning	Organizing	Leading	Controlling
* Vision and mission * Goals and objectives * Strategizing	* Organization design * Social network * Culture	* Leadership * Decision making * Communications * Groups and teams * Motivations	* System/process * Strategic human resources

Trends in Management

1. The Classical theory

 – Bureaucratic Theory

– Scientific Management Theory

 –Administrative Management Theory

2. The Neoclassical Theory

– Human Relations

 – Behavior Science

3. Contingency Theory

Classical contributions

The roots of modern management lie within a group of practitioners and writers who gave their contributions to management, which we call the classical approach. We can divide it into three subcategories: scientific management theorists, general administrative theorists and bureaucratic theorists.

F. W. Taylor, scientific management theory:

Fredrick Winslow Taylor (F.W Taylor), American engineer, was born in USA in 1856. He joined Midvale Steel Company where he worked as a machine shop worker for two years as gang boss for some years and as chief engineer at the age of 28.he also joined Bethlehem Steel Company, where he served for a long time. Later he devoted his time to develop the concept of scientific management.

When a rule of thumb (no single prescribed rule to manage) is replaced by logical, scientific knowledge-based principles to manage then it is called scientific management. It is the F. W. Taylor, who propounded scientific management principles, which became successful in increasing productivity in the factories. Management becomes of the subject of learning in formal and informal ways by anybody who wishes to manage the enterprise.  At that time, this thought gave certain formulae to run the factories efficiently.

The formulae were:

1. Finding the best methods of doing work in the factory. Tailor assigned this job to management.
2. Selecting employees based on merit and ability related to the nature of work.
3. Training the worker about the best methods  
4. Providing working conditions and rewards to motivate them.

This formula worked everywhere. From 1910 to 20, this theory had peak period of use.

Principles of scientific management theory:

1. Development of a science for each element of an individual’s work:

This principle suggests that: – Work assigned to each employee should be observed and analyzed in order to replace the old rule to thumb approach. – Decision should be made on the basis of facts rather than beliefs and rule of thumb Principles of Scientific Management

2. Scientific selection, training and development of workers:

 This principle suggests that: – Worker should be selected and trained in accordance with the job requirement. – Management has to design systematic training to improve their skills and efficiency.

3.Close co-operation between management and workers:

This principle suggests that: – There should be close harmonized relationship between workers and management. – Worker should understand that they cannot perform their work without the existence of management and vice versa.

4. Equal division of work and responsibility between management and workers:

 This principle suggests that: – The task and responsibility should be clearly divided among management and workers – Each group should be assigned work, which it can perform more effectively

5.  Maximum output in place of restricted output:

This principle suggests that: – This principle is necessary for workers prosperity, owners and to society. – Maximum production ensure more wages to worker (Piece rate system) – It also ensure maximum profit to owners (decrease in per unit cost) – Help to society as it upgrade the living standard of people.

Administrative and functional management

Each organization should follow certain principles if it has to run smoothly and progress well. Henri Fayol developed this principle. Fayol was born in 1841 in a suburb of Istanbul, Ottoman Empire. He was French mining engineer and when he became nineteen-year old then he started at the mining company “Compagnie de Commentry-Fourchambeau-Decazeville” in Commentry. Fayol became managing director in 1888, when the mine company employed over 10,000 people, and held that position over 30 years until 1918. By 1900 the company was one of the largest producers of iron and steel in France and was regarded as a vital industry. Based largely on his own management experience, he developed his concept of administration. In 1916 he published these experience in the book “Administration Industrielle et Générale”, at about the same time as Frederick Winslow Taylor published his Principles of Scientific Management.

He proposed 6 primary functions of management and 14 principles of management.

Functions of management

1. to forecast and plan
2. to organize
3. to command or direct
4. to coordinate
5. to develop output
6. to control (French: controller: in the sense that a manager must receive feedback about a process in order to make necessary adjustments and must analyze the deviations)

Now many writers have reduced this function to five: (1) planning; (2) organizing; (3) leading; (4) controlling (5) Forecasting (Draft, 1983)

Principles of Administrative Management Theory;

1. Division of work. Work should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization.
2. Authority. Managers must be able to give orders. Authority gives them this right. Note that responsibility arises wherever authority is exercised.
3. Discipline. Employees must obey and respect the rules that govern the organization. Good discipline is the result of effective leadership, a clear understanding between management and workers regarding the organization’s rules, and the judicious use of penalties for infractions of the rules.
4. Unity of command. Every employee should receive orders from only one superior.
5. Unity of direction. Each group of organisational activities that have the same objective should be directed by one manager using one plan.
6. Subordination of individual interests to the general interest. The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralization. Centralisation refers to the degree to which subordinates are involved in decision making. Whether decision making is centralized (to management) or decentralized (to subordinates) is a question of proper proportion. The task is to find the optimum degree of centralisation for each situation.
9. Scalar chain. The line of authority from top management to the lowest ranks represents the scalar chain. Communications should follow this chain. However, if following the chain creates delays, cross-communications can be allowed if agreed to by all parties and superiors are kept informed.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. High employee turnover is inefficient. Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will exert high levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within the organization.

Max Weber and bureaucracy theory:

Max Weber was the German sociologist born in 1864, in Prussia. He prescribed many ideal-typical forms of public administration, government and business in his 1922 work ‘Economy and Society’. A bureaucracy is “a body of non-elective government officials” and/or “an administrative policy-making group.

According to Waver bureaucracy refers to the management of large organizations characterized by hierarchy, fixed rules, impersonal relationships, rigid adherence to procedures, and a highly specialized division of labor.

 Principles of bureaucratic theory.

1. Formal rules and procedures: (there must have effective system, all the members of organization from top to lower level must follow rules and regulation in every stage)

 2. Functional specialization: (work should be divided on the basis of their specialization. Placement of right person to the right job)

 3. Well defined hierarchy of authority: (authority should flow form highest level to lowest level) 4. Supervision by higher authority🙁 higher level of management delegates authority and responsibility)

5. Technical competence for employment and promotion: (recruitment and selection, promotion of employees should be on the basis of the technical competence)

 6. All decision should be recorded: (all the act, action and decisions performed by management in various situation should be recorded for future reference)

 7. Interpersonal relation: (interpersonal relation among employees should be maintain for effective communication and to increase efficiency)

Chester Bernard

He was born in 1886.  He worked as Chief Executive Officer of New Jersey Bell Telephone.
He is authoring ‘Functions of the Executive’, an influential 20^th century management book, in which Barnard presented a theory of organization and the functions of executives in organizations. He has developed 2 concepts in Management Theory.

First concept is strategic planning:  it is the formulation of major plan or strategies to pursuit of major objectives. And he prescribed three top functions of management. They are: (i) establish and maintain an effective communication system, (2) hire the experienced and suitable personnel, (3) motivate those personnel.

The second concept is acceptance theory of authority: Managers have more authority than employees. It suggested that authority flows downward but depends on acceptance by the subordinate. It depends on 4 conditions: (1) employees can and do understand the communication (2) employees must be able to follow any instruction given by a Manager,  (3) employees must think that the directive is in keeping with organizational objectives, (4) employees must think that the directive is not contrary to their personal goals. Chester Bernard argued that organization that do not care efficiency and effectiveness have short life. He further assessed that except churches there are very few organizations that lived more than a century. 

Neo classical theories

Neo classical management theory emerged due to the limitations of classical management theory to understand people aspect of the organizations. There are two theories under this: Human Relation theory and Behavioral Science Theory.

1. Human Relations theory:

Elton Mayo, Harvard University, psychologist is the -Founder of Human Relations. This theory argues that production efficiency in the organization depends upon emotional factors involved in the workers with the managers. This experience was conducted on Hawthorne plant of western electric company. The relations between managers and workers determine the extent happiness in employee and only the happy and satisfied employee will try to give productions.

Conducted series of experiments in 1924 -1932 at Hawthrone plant of Western Electric Company Chicago. The study was conducted in four phases: 1. Illumination experiment 2. Relay assembly test room experiment 3. Mass interviewing program 4. Bank wiring observation room experiment

ILLUMINATION EXPERIMENT

• Experiment started in 1924 in Hawthrone plant for 3 years. • Experiment to measure effect of lighting on worker’s productivity. • One group of worker illumination was manipulated and constant for other group. • In both condition productivity increased. Conclusion Improved productivity could be gained not only by improved working condition but by promoting social relationships among workers.

Relay assembly test room experiment

• Two group of 6 female telephone assemblers were put in separate rooms. • Frequent changes were made in their working condition (hrs of work, hot lunches, rest periods, wage incentive) in one and no change was made in other room. • In spite of frequent changes being made in working conditions over a period of several years, productivity tended to increase; even though it rose and fell irrationally. • Even when improvement in physical working conditions were withdrawn, the productivity remained same. Conclusion: socio-psychological factors (feelings of importance, recognition, participation are key for high productivity)

Mass interviewing program

• Group of 20,000 workers were interviewed to gather information on their perceptions on the working life. • Interview mainly focused on human relations rather than on physical working conditions. Conclusion Informal relations, social and psychological needs influence the worker’s behavior and their productivity

Bank wiring observation room experiment

• 14 male workers were formed into small group and observed for 7 months in bank wiring room. • Purpose of this research was to make more detailed analysis of social relationship in work group. Conclusion Employee would labor hard if they believe that management was concerned about their welfare and supervisors paid attention and care them. Productivity increases with the relationship between management and workers.

2. Behavioral Science Approach theory:

Maslow, F.Herzberg & D.McGregor are the main contributors of this theory. They emphasized on psychology, sociology & anthropology as the main contributing discipline of management. The thesis behind this theory is organization is basically a social system and not just techno economical system; Individuals may behave differently under different situations. Attempts should be made to connect organizational goals & human needs. Management must develop social skills in addition to technical skill to handle the people. Man to man relationship, team spirit & group harmony should be given top preference by management.

Behavioural Science Approach Theories: some of the influencing  behavioral theory are:

• Abraham Maslow: Need Hierarchy Theory

• McGregor: Theory of X and Y

 • Hertzberg: Two Factor Theory

Note: All these three theories is clearly explained in chapter three: motivation and leadership

3.Contingency theory

Main contributors of these theories are Joan Woodward, Fiedler, Lorsch & Lawrence. This theory has put forward the view that management is situational and main objective of management is to identify the important variables in the situations. The three major parts of overall conceptual frame work for contingency management are: (1) Environment, (2) Management concepts, principles and techniques and (3) the Contingent relationship between the mentioned factors [(1) and (2)].

Some important contingencies for companies are (1) Technology, (2) Suppliers and distributors, (3) Consumer interest groups (4) Customers and competitors (5) Government and (6) Unions

John Woodward: Woodward was a leading academic and commentator in the field of Organization Theory, particularly Contingency Theory. Studied a large number of firms (100) in the South Essex area of England in the 1950s. he found that organizational form varied, and correlated with production technology. He concluded that there was not”one best way” to organize. The nature of the production process would determine which form that would be most suitable. His suggestion of organizations structure is like given below.

Structural Characteristic	Unit based	Mass based	Continuous based
Number of management levels	Low	Medium	High
Supervisory span of control	Low	High	Low
Ratio of managers to total workforce	Low	Medium	High
Skill level of workers	High	Low	High
Overall structure	Organic	Mechanistic	Organic

To Fiedler, stress is a key determinant of leader effectiveness (Fiedler and Garcia 1987; Fiedler et al. 1994)[i] Fiedler’s situational contingency theory holds that group effectiveness depends on an appropriate match between a leader’s style (essentially a trait measure) and the demands of the situation. Fiedler considers situational control the extent to which a leader can determine what their group is going to do to be the primary contingency factor in determining the effectiveness of leader behavior.

Gareth Morgan in his book Images of Organization describes the main ideas underlying contingency in a nutshell:

3. Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances
4. There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with.
5. Management must be concerned, above all else, with achieving alignments and good fits
6. Different types or species of organizations are needed in different types of environments

Fred Fiedler‘s contingency model focused on a contingency model of leadership in organizations. This model contains the relationship between leadership style and the favorableness of the situation. Situational favorableness was described by Fiedler in terms of three empirically derived dimensions

1. The leader-member relationship, which is the most important variable in determining the situation’s favorableness
2. The degree of task structure, which is the second most important input into the favorableness of the situation
3. The leader’s position power obtained through formal authority, which is the third most important dimension of the situation

Situations are favorable to the leader if all three of these dimensions are high. That is, if the leader is generally accepted and respected by followers (first dimension), if the task is very structured (second dimension), and if a great deal of authority and power are formally attributed to the leader’s position (third dimension), then the situation is favorable.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”.[1] The work of other researchers including Paul Lawrence, Jay Lorsch, and James D. Thompson complements this statement. They are 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.

REFERENCES:

http://www.suntzupoker.com/

http://www.egs.edu/library/niccolo-machiavelli/biography/

http://economics.about.com/od/famouseconomists/a/adamsmith.htm

Daft, Richard L (1983), Organization theory and design, The West series in management., West Pub. Co., cop, ISBN 978-0-314-69645-8

Fiedler, F. E. and Garcia, J. E. (1987) New Approaches to Leadership, Cognitive Resources and Organizational Performance, New York: John Wiley and Sons.