The History of Management Thought

MGT 336, Management History and Theory

Michael Bejtlich, Instructor

Based on The History of Management Thought, 5th edition, 2005 by Daniel A. Wren

Part One:

Early Management Thought

Chapter One

A Prologue to the Past

Purpose of this Study

To trace the significant periods in the evolution of management thought from its earliest days to the present.

What can we learn from reviewing the history of management?

• It helps us to integrate our knowledge of leadership.• It provides a perspective on the past to apply to the

present.• History helps us develop alternatives because our

knowledge has been broadened and deepened by an understanding of the past.

• “What happened?” is a starting point for developing new ideas without “reinventing the wheel.”

A Cultural Framework

• The economic facet – relationship of people to resources

• The social facet – relationship of people to other people

• The political facet – relation of the individual to the state

• The technological facet – related to the art and applied science of making tools and equip

People, Management, and Organizations

• The human being is then fundamental unit of analysis for the study of mankind, management, and organizations.

• Human basic needs and social needs led to the formation of family and groups, a primitive hierarchy of organization.

• People found advantages in participating and cooperating with others to achieve goals.

Figure 1-1

Early Organizations

• First, there has to be a goal.• Second, people must be attracted to the

purpose in order to participate.• Third, organizational members need

resources.• Fourth, activities must be structured.• Fifth, results were better achieved through

the activity of management.

Definition

Management is the art of

arranging physical and human

resources toward purposeful

ends.

Chapter Two

Management before Industrialization

Management in Early Civilizations

• Hammurabi – Code of Law• Sun Tzu – Planning and Strategy• Confucius – Personnel selection by merit, early

bureaucracy, and division of labor• The Egyptians – massive projects, Rule of 10• Kautilya – Public administration, trait approach for

selecting leaders, use of staff for advising, and job descriptions

• Joseph – best known for vizier - from which the word supervisor is derived

Management in Early Civilizations

• Moses – organization, span of control, delegation, and the exception principle

• Socrates – transferability of managerial skills• Aristotle – specialization of labor, departmentation,

delegation, synergy, leadership and scientific method• Xenophon – advantages of specializing labor• Rome – span of control as well as a model for later

civilizations

The Catholic Church

• Oldest living organization

• Conflict between centralized and decentralized authority still exists today –characterized as the need for unanimity of purpose yet discretion for local problems and conditions.

Courtesy of Pics4Learning. http://pics.tech4learning.com

Feudalism and the Middle Ages

• Caused by the development of free people as tenant farmers, growth of large estates, political disorder, economic, social, and political chaos.

• Tied people to the land, fixed rigid class systems, established landed aristocracy, stopped education, caused poverty and ignorance, and stifled human progress until the Age of reformation.

Commerce

• Marco Polo travels to the Far East – sees the “Rule of Ten” in the Tatar tribes.

• Craft Guilds – makers of goods; regulated job access.

• Merchant Guilds – buyer & sellers of goods.• Pay based on performance – did not get paid

until work was returned to the merchant.

Growing Trade

• Luca Pacioli’s system of double-entry accounting – the first management information system (cash & inventory position and a check on cash flow) developed in 15th century.

Fra Luca Pacioli

Early Ethical Considerations

• “Just Price” = market price; advocated by Saint Thomas Aquinas in 13th century.

• Trade rules (Code of Ethical Conduct) proposed by Friar Johannes Nider in 1468:• Goods should be “lawful, honorable, and useful.• Price should be just.• Seller should beware.• Speculation was a sin.

Protestant Ethic

• Max Weber advocated the belief that Protestants held different attitudes toward work. This spirit of capitalism led to the Industrial Revolution:• Individual responsibility and

self-control• Work as a means of salvation• Do not waste time or money• Do your best in your “calling”• Do not consume beyond your

basic need Max Weber

Criticism of Weber

• R.H. Tawney’s opinions:

• Capitalism existed before the Protestant Ethic.

• Capitalism was the cause and justification of the Protestant Ethic, not the effect.

• Economic motivation pressured to change Church dogma to sanction economic efforts.

Modern Support for Weber

• David C. McClelland• Support for Weber in his observations of the influence of

religion on human attitudes toward work and self-reliance.

• He found that children of Protestants had higher n achievement than children of Catholics, and children of Jews had still higher n achievement.

• McClelland said the need for achievement is not restricted to Protestants and there are wide variations among individuals which are influenced by the lessons they learn early in life about work, risk-taking, and self-reliance.

The Liberty Ethic• Differing ideas of the

assumptions made about the nature of people guiding the choice of leadership style

• Nicolo Machiavelli – The Prince • “…all men are bad and ever

ready to display their vicious nature…” (1513)

• Thomas Hobbes’s – Leviathan• Some great power must exist

to bring order from chaos. (1651)

Nicolo Machiavelli

The Liberty Ethic• John Locke’s

Concerning Civil Government (1690)• People have natural rights to

property, contracts, a redress of grievances, and to freely choose those who are to govern

• Natural rights are to be protected through civil law in order to preserve more perfectly their life, liberty, and property

• His work set the stage for the Declaration of Independence

John Locke Wren, History of Management Thought

The Market Ethic

• Adam Smith – Wealth of Nations (1776)• Market forces were far

more efficient in allocating resources and more “just” in rewarding individuals who produced the wealth than Mercantilism (government regulated the economy).

Adam Smith

The Market Ethic

• Specialization of labor• Increase performance

• Loss of mental exertion – “…dexterity at his own particular trade seems…to be acquired at the expense of his intellectual, social, and martial virtues”

Summary

• Early management thought was dominated by cultural values that were antibusiness

• Three forces, or ethics, interacted to provide for a new age of industrialization

• Protestant Ethic• Liberty Ethic• Market Ethic