Evolution of managementEvolution of management

“It is the multipurpose organ that manages business, managers, workers and work”./

Peter Drucker

Evolution of Management TheoryEvolution of Management Theory

1890 1940 2000

Administrative Management

Behavioral Management

Scientific Management

Management Science

Org. Environment

Scientific

management

Classical org. theory

F.W. TAYLOR

WEBER

FEYOL

HUMAN RELATI

ONS

BEHAVIOURAL SCIENC

E

HAWTHORNE

X, Y&Z

MARY

PARKER

PRODUCTIO

N

OPERATION

S

SYSTEMS APPROACH

CONTINGENCY APPROACH

SCIENTIFIC MANAGEMENTFrederick Winslow Taylor known as the father

of scientific management.Born in 1856 at Boston, Massacusetts.Did his apprenticeship in Enterprise Hydrolic

Work in Philadelphia.Joined as a labourer in Midvale Steel Company.He rose to the position of Chief Engineer by

virtue of his intelligence.He worked as a General Manager in

Manufacturing Investment Company in Philadelphia where he propounded the concept of Scientific Management.

Background to the Development of Scientific ManagementDuring the later part of 19th Century.Industrial Revolution to the maturity stage.American business and industry substantially

expanded.New managerial class.Simple day-to-day problems to complicated

problems.Needed comprehensive and integrated approach

to manage industry.Different studies conducted giving rise to

different thoughts

Scientific management theory “it is the process of what you want the men to

do in the best and cheapest way”Contributions

Principles Elements and tools

General PrinciplesReplacing the rule of thumb with scienceHarmony in group actionCooperation of workers and managementMaximum productionDevotion of workers

elementsSeparation of planning from doing: gong boss (not only

supervision but planning and doing)Functional foremanship: specialization (workshop

managers)Job analysis: how to do job (TIME-MOTION-FATIGUE)Standardization: type of tools, amount of work, time, wageScientific selection: right worker (mental and physical)Financial incentives: “piece rate system”Economy: cost estimates, control, usage of waste matterMental revolution: change in the mind set (cooperation)

The 4 Principles The 4 Principles Four Principles to increase

efficiency:1. Study the way the job is performed

now & determine new ways to do it. Gather detailed, time and motion information. Try different methods to see which is best.

2. Select workers whose skills match the Specified jobs

3.Codify the new method into rules. Trained workers in standard method. Supported workers by planning work and eliminating

interruptions.

4. Establish a fair level of performance and pay for higher performance. Workers should benefit from higher output.

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Scientific ManagementContributionsDemonstrated the importance of compensation for

performance. Initiated the careful study of tasks and jobs.Demonstrated the importance of personnel and their

training.

CriticismsDid not appreciate social context of work and higher

needs of workers.Did not acknowledge variance among individuals.Tended to regard workers as uninformed and ignored

their ideas

Henry Fayol’s administrative or operational theoryIntroductionFather of modern operational theoryFrench industrialist1916 : theory came to existence in French1949: in English

6 Sets of activities in the organizationTechnical: relate to productionCommercial : buying and sellingFinancial : sources of funds and utilizationSecurity: protection of men and goodsAccounting: to keep records of accountsManagerial: planning and staffing

Managerial qualitiesManagerialMentalMoralEducationalTechnicalexperience

Fayol’s PrinciplesFayol’s PrinciplesHenri Fayol, developed a set of 14 principles:1. Division of Labor: allows for job specialization. 2. Authority and Responsibility: Fayol included

both formal and informal authority resulting from special expertise. (position by virtue of personal qualities)

3. Unity of Command: Employees should have only one boss.

4. Scalar chain: a clear chain from top to bottom of the firm.

5. Centralization: the degree to which authority rests at the very top.

Fayol’s PrinciplesFayol’s Principles 6. Unity of Direction: One plan of action

to guide the organization. (one plan one head)

7. Equity: Treat all employees fairly in justice and respect.

8. Order: Each employee is put where they have the most value.

9. Initiative: Encourage innovation.

10. Discipline: obedient, applied, respectful employees needed.

Fayol’s PrinciplesFayol’s Principles11. Remuneration of Personnel: The

payment system contributes to success.

12. Stability of Tenure: Long-term employment is important.

13. General interest over individual interest: The organization takes precedence over the individual.

14. Esprit de corps: Share enthusiasm or devotion to the organization.

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Comments on Fayol’s approachLogical thinking and foresight like a list

of managerial functions.First modern administrative thinker.Theoretic formulation incomplete.Based on author’s own personal limited

experience.Does not appear to be adequate from

the complex nature of organization.

Bureaucratic organization Developed in EuropeSubfield within the classical perspectiveDeveloped by Max Weber(1864-1920), a German

theorist.Organizations in Europe were managed on personal,

family-like basis. Employees were loyal to individuals rather than organization or its mission

He envisioned organizations that would be managed on the impersonal, rational basis. Called as bureaucracy.

Organization based on rational authority would function better

Rationality for him means employee selection on competence not on whom you know.

Positions are organized on higherarchy basis

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Bureaucracy Organizations

Positions organized in a hierarchy of authority

Managers subject to Rules and procedures

that will ensure reliable predictable behavior

Personnel are selected and promoted based

on technical qualifications

Administrative acts and decisions recorded

in writing

Management separate from the ownership of the organization

Division of labor with Clear definitions of

authority and responsibility

Key points of BureaucracyKey points of BureaucracyAuthority is the power to hold people

accountable for their actions.Positions in the firm should be held based on performance not social contacts.

Position duties are clearly identified. People should know what is expected of them.

Lines of authority should be clearly identified. Workers know who reports to who.

Rules, Standard Operating Procedures (SOPs), & Norms used to determine how the firm operates.Sometimes, these lead to “red-tape” and

other problems.

Bureaucratic PrinciplesBureaucratic Principles

A BureaucracyA Bureaucracyshould haveshould have

Written rulesWritten rules

System of taskSystem of taskrelationshipsrelationships

Hierarchy ofHierarchy ofauthorityauthority

Fair evaluationFair evaluation and rewardand reward

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Dislike work –will avoid itMust be coerced,

controlled, directed, or threatened with punishment

Prefer direction, avoid responsibility, little ambition, want security

Do not dislike workSelf direction and self

controlSeek responsibility Imagination, creativity

widely distributed Intellectual potential

only partially utilized

Douglas McGregor Theory X & Y

Theory X Assumptions

Theory Y Assumptions

1906-1964

qualitiesWorkerTraditional modernPessimistic optimisticResistance to change highly initiativeDoes not accept responsibility high imaginationLooks for motivation self motivated

ManagerWill insist participativePacked work transparancyControlled unleash the potential of

workerCentralized decentralizedAutocratic leadership democratic

leadershipStructured work workers job

Theory ZTheory ZWilliam Ouchi researched the cultural differences between Japan and USA. USA culture emphasizes the individual, and

managers tend to feel workers follow the Theory X model.

Japan culture expects worker committed to the organization first and thus behave differently than USA workers.

Theory Z combines parts of both the USA and Japan structure. Managers stress long-term employment,

work-group, and organizational focus.

theory ZTrustStrong bond between the employee and the

organization (life time employment)Employee involvements (participation, and

inform monetary benefits)No formal structure : integrated organizationCo ordination of human being : rule of leader

in all

Relationship managementHawthorne experiment:( 1895 ) in western electric

company, Elton Mayo, white head and fritz Roethilsberger

Four tests1. relay assembly test room (RATR) lasted nearly six

years(10th may 1924- 4th may 1933)Involved 24 experimental periods Money was not important but human relations.

Employees performed better when the managers treated them better.

IlluminationManipilation of the work environmentBreaks/ regular

intervals

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SERIES OF EXPERIMENTSI. Illumination Experiment (24-27) divided the workers in to

two groups: controlled and experimental (increase or decreased the light) Production disproportionately increased

II. Relay Assembly Test giving the breaks of 5, 10, 15 minutes) 6 girls, Relays assembled, Informal friendly, Lacking supervision, Dignity, facilities, production 2800 to 3200 UnitControl room 3400 Unit (Contrast)

I. 2nd Relay Assemble Test Mica Splitting test

III. Mass Interviewing Program 20000 interviews at a time: did not give right results. Hypothesis (a) Group Team spirit (b) Workgroup can become social (c) Lacking supervision-Cheesiness

I. Personal Counseling Morale, ethics, Group effortIV. Bank wiring test set of skilled workers are chosen to perform

but did not perform well because they are afraid of co workers loosing the job. Informal group vital factor, conflict, cooperation, coordination, compromise, accommodation acculturisation

Mary Parker Follett's conceptsMary Parker Follett's concepts included the

universal goal, the universal principle, and the Law of the Situation.

The universal goal of organizations is an integration of individual effort into a synergistic whole.

The universal principle is a circular or reciprocal response emphasizing feedback to the sender (the concept of two-way communications).

Law of the Situation emphasizes that there is no one best way to do anything, but that it all depends on the situation.

Time motion studyFrank and Lillian GilbrethsThis is known as therbligAim is to improve for optimal productionResearch: brick layer

Observed through micro chronometer which recorded time taken by a motion.

18 moves: many wasteful body movements. So eliminated four. So less fatigue and more production.

Contingency approach Assumes there is no one best way to manage.

The environment impacts the organization and managers must be flexible to react to environmental changes.

The way the organization is designed, control systems selected, depend on the environment.

Technological environments change rapidly, so must managers.

Successful resolution of organizational problems is thought to depend on managers’ identification of key variations in the situation at hand

Systems approach

SCHOOLS OF HISTORICAL THOUGHT AND THEIR COMPONENTS BY DECADE

Org. theory prior to 1900

Emphasized the division of labor and the importance of machinery to facilitate labor

Scientific management(1910s-)

Described management as a science with employers having specific but different responsibilities; encouraged the scientific selection, training, and development of workers and the equal division of work between workers and management

Classical school(1910s- ) Listed the duties of a manager as planning, organizing, commanding employees, coordinating activities, and controlling performance; basic principles called for specialization of work, unity of command, scalar chain of command, and coordination of activities

Human relations(1920s-)

Focused on the importance of the attitudes and feelings of workers; informal roles and norms influenced performance

Group dynamics(1940s) Encouraged individual participation in decision-making; noted the impact of work group on performance

Bureaucracy--(1940s) Emphasized order, system, rationality, uniformity, and consistency in management; lead to equitable treatment for all employees by management

Leadership(1950s) Stressed the importance of groups having both social task leaders; differentiated between Theory X and Y management

Decision theory(1960s)

Suggested that individuals "satisfies" when they make decisions

Socio technical school(1960s)

Called for considering technology and work groups when understanding a work system

Envir. and tech. system(1960s)

Described the existence of mechanistic and organic structures and stated their effectiveness with specific types of environmental conditions and technological types

Systems theory-(1970s)

Represented organizations as open systems with inputs, transformations, outputs, and feedback; systems strive for equilibrium and experience equi finality

Contingency theory(1980s)

Emphasized the fit between organization processes and characteristics of the situation; called for fitting the organization's structure to various contingencies

LAND MARKS IN MANAGEMENT THOUGHT1835 Babbage, "On the Economy of Machinery and Manufacturers

1835 Ure: The Philosophy of Manufacturers

1886: Towne "The Engineer as Economist"

1895: Taylor: "A Piece Rate Systems"

1900-1915: Scientific Management Writings of Taylor, Gantt, Emerson, Cooke, Gilbreths

1920's: Industrial Psychology Movement, start of Hawthorne studies

1930: Mayo, "Human Problems of an Industrial Civilization"

1930's Roethlisberger and Dickson, "Management and the Worker"

1930's Mooney and Reiley, "Onward Industry

1940's Barnard, "Functions of an Executive"