The Evolution of Management Theory

Mala Sarat Chandra

Twitter: @malachandra

Learning Objectives

Explain what a management theory is.

Understand the evolution of management theories and their major contributions.

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EVOLUTION OF MANAGEMENT THEORY

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Classical Management School

Scientific

Administrative

Bureaucratic

Neo-Classical Management School

Human Relations

Behavioral

Modern Management School

Systems

Contingency

Organizational Humanism

Management Science

Evolution of Management Theory

1920-1950

1880 - 1930

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THE CLASSICAL SCHOOL OF MANAGEMENT

1900 - 1930

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Core Ideas

1. Application of science to the practice of management.

2. Development of basic management functions. 3. Articulation and application of specific principles

of management. Evolved in response to the shift from handicraft to industrial production. Emphasis is on economic rationality of people and organizations; motivated by economic incentives, they make choices that yield the greatest monetary benefits.

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Max Webber 1905

“The Theory of Social and Economic Organization”

The Bureaucratic School of Management

A major contribution is his “bureaucracy” theory, a formalized and idealized view of organizations, comprising 6 major principles. 1. A formal hierarchical structure. 2. Management by rules. 3. Organization by task competency. 4. Impersonal relationships. 5. A focused mission. 6. Employment based on technical qualifications.

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Frederick Taylor 1911

“Principles of Scientific Management”

The Scientific School of Management

Proposed an objective and systematic method to identify “the one best way” to do a job using scientific selection and training methods; co-operation and clear division of responsibility between managers and workers; pay for performance.

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Frank & Lillian Gilbreth 1912 - 1924

Time and Motion Studies

Disciples of Frederick Taylor, their time and motion studies helped lay the foundations for Scientific Management – the best possible way for a worker to complete a job. The expected results are employee satisfaction, productivity and efficiency.

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Henry Gantt 1910 - 1915

Project Scheduling – The Gantt Chart

A protégé and associate of Frederick Taylor, he designed a project scheduling model for increasing the efficiency of project execution and completion.

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Henri Fayol 1916

Administration Industrielle et Generale

The Administrative School of Management

Managers need specific roles in order to manage work and workers. He enumerated 6 functions / roles of management. 1. Forecasting 4. Commanding 2. Planning 5. Coordinating 3. Organizing 6. Controlling

These roles evolved into 14 principles of management. Division of work, Authority, Discipline, Unity of Command, Unity of Direction, Subordination of Interests, Remuneration, Centralization, Scalar Chain, Equity, Order, Stability of Tenure of Personnel, Initiative, Esprit de Corp.

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Ford and Frederick Taylor’s Scientific Management

http://www.youtube.com/watch?v=8PdmNbqtDdI

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Summary: The Classical School of Management

Scientific

Concern for precise work

methods

Best way for jobs to be done

Bureaucratic

Impersonal view of organizations

Formal structure, legitimate

authority and competence of management

Administrative

Development of managerial principles

Best way to organize all jobs in

a business

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Criticisms of The Classical School of Management

No one is entirely driven by economic motivations.

People’s choices and behavior are dictated by other factors such as social needs, security and self-esteem.

There is no such thing as “the best way” to do a job.

Extreme division of labor tends to produce monotony and reduce overall skill levels.

People are managed like machines. Introduction of newer machines led to job elimination.

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THE NEO-CLASSICAL SCHOOL OF MANAGEMENT

1920 - 1950

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Core Concepts

Grew in reaction against the Scientific Theory of Management which emphasized standardization of jobs, processes and technologies to maximize economic return. Focus shifted to the human side of organizations. 1. The best way to motivate, structure and support

employees. 2. The need for workers to find intrinsic value in

their jobs. 3. The positive impact of social relationships on

worker productivity.

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Mary Parker Follet 1925

The Psychological Foundations of Business Administration

Pioneered the notion of participative leadership. Suggests that organizations are communities involving networks of groups. Workers and managers equally share power and responsibility for decision making and therefore, their outcomes. She introduces many contemporary concepts such as leadership, motivation and empowerment.

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The Hawthorne Studies

http://www.youtube.com/watch?v=W7RHjwmVGhs

2:49

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The Hawthorne Effect

Productivity increases when workers believe that they are being observed closely.

Employees perform better when managers and co-workers make them feel valued.

Financial rewards are not necessarily conducive to increasing worker productivity.

Workers care about self-fulfillment, autonomy, empowerment, social status and personal relationships with co-workers.

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Human Relations Theory of Management

Elton Mayo 1933

“The Human Poblems of an Industrial Civilization”

Fritz Roethlisberger 1939

“Management and the Worker”

People are social beings, motivated by social needs. A sense of identity is derived from inter-personal relationships. Workers are more receptive to social forces of peer groups than monetary incentives and management controls. Workers respond positively to attention from management, co-workers and customers. The psychological needs of individuals significantly impact group performance.

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Chester Barnard 1938

The Functions of the Executive

Proposes the acceptance theory of authority, that organizational goals will be achieved and managerial authority will be accepted if workers believe that their individual needs are being met.

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Behavioral Theory of Management

The fulfillment of emotional needs of workers is important in achieving economic goals. Employee satisfaction and working conditions are important in achieving worker productivity. Workers are intrinsically motivated to work when they feel a sense of belonging and participate in decision making. Workers desire diverse and challenging work.

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Abraham Maslow 1954

“Motivation and Personality”

Self Actualization

Esteem

Social

Safety

Physiological

Hierarchy of Needs Theory

Working Conditions and Work hours

Personal and financial security

Collaboration, teamwork, work-life balance

Recognition and Rewards

Autonomy, Empowerment

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Douglas McGregor 1960

“Human side of Enterprise”

Theory X Managers Workers must be coerced and controlled to work towards organizational goals. Workers are inherently lazy, lack ambition and prefer to be directed rather than take responsibilities. Workers are self-centered and only care about themselves, not the organization. Workers dislike change and will resist it at all cost.

Theory Y Managers Workers encouraged to develop their full potential will work towards achieving organizational goals. With appropriate incentives and support, workers will seek out and fulfill responsibilities on their own. Workers will apply their ingenuity, creativity and hard work to meet organizational goals.

Caution: Self-Fulfilling Prophecy Workers behave as expected by managers due to the manager’s own behavior and actions.

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Notable Contributors to the Behavioral School of Management (1)

Chris Argyris

1957

“Personality and Organization”

Fundamental conflicts between

Individual and Organizational needs.

Frederick Herzberg

1959

“The Motivation to Work”.

Two-factor Theory.

Kurt Lewin

1944 – 1951

Model of planned change:

unfreeze, change, refreeze

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Notable Contributors to the Behavioral School of Management (2)

Rensis Likert 1967

“The Human Organization”

Linking-pin model to bridge human relations and organizational

structure

George Homans

1950

“The Human Group”

Extrapolates from a small group to

understanding the social system.

Warren Bennis

1961

“The Planning of Change”

Foundation for planned

organizational change and development.

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Summary: Neo-Classical School of Management

Behavioral School is a logical extension of the Human Resource School.

They are largely concerned with motivation of workers.

Workers are diverse in their needs and want challenging work, participative decision-making, self-direction and control.

Managers must help workers deal with situational constraints and social aspects of organizational and environmental changes.

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THE MODERN SCHOOL OF MANAGEMENT

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Core Concepts

Dealing with complexity is the core of modern management theory. Organizations, Workers, Environment and the interactions between them.

It is a synthesis of several theories. Behavioral science, mathematics, statistics, operations / quantitative research and computing technologies.

Management is an exercise in logic applied to situations. Situations can be measured.

Computers have an increasing role to play.

Application of management knowledge is extended to non-business areas. Education, government, health care and others.

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The Quantitative School of Management

Combines classical management theory and behavioral science through the use of statistical models and simulations. A major focus is on the process with which decisions are made, to ensure informed results. The quantitative school comprises Scientific Management Managers use of math and statistics for problem solving.

Operations Management Managing the process of combining materials, workers and capital to produce goods and services.

Management Information Systems Transforming historic, current and projected data from internal and external sources into useful, usable management information.

Systems Management Theory Transforming inputs into outputs and receiving feedback.

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The Systems School of Management

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The Environment in which the system operates. Environmental elements have the potential to affect all or part of the system

Throughput The process of converting or transforming

resources within the system into a product

or service

Input Resources from the

environment

Output The product or

service exported to the environment

Feedback from the environment used to change & grow

Ludwig von Bertalanffy 1937

“Allgemeine Systemlehre” (General Systems Theory)

Types of Systems

Closed System

Open System

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Systems and “wholeness” Guidelines for System Analysis

1. The focus of analysis is the whole, parts receive secondary attention.

2. Integration (interrelatedness of the many parts within the whole) is the key in wholeness analysis.

3. Possible modifications in each part should be weighed in relation to possible effects on every other part.

4. Each part has a role to perform so the whole can accomplish its purpose.

5. The nature of the part and its function is determined by its position in the whole.

6. All analysis starts with the existence of the whole. Parts and their relationships should evolve to best suit the purpose of the whole. Source: Modern Management by Certo & Certo

The Management System

It is an open system comprising parts such as organizational resources (capital, raw materials, workers), the production process, information systems, finished goods, that are needed to achieve the organization’s goals.

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Input

Process

Output

Customers Government Competitors Suppliers

Environment

The Contingency School of Management (1)

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Joan Woodward 1965

“Industrial Organziation: Theory and Practice”

&

P. Lawrence J.W. Lorsch 1967

“Organization & Environment: Managing Differentiation and Integration”

Argued that technology and production systems were critical aspects of organizational design; advanced a contingency approach to organizing.

Suggested that successful organizations match their structure to the nature of the environment

The Contingency School of Management (2)

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Fred Edward Fiedler 1967

“A Theory of Leadership Effectiveness”

Daniel Katz Robert Kahn 1966

“The Psychology of Organizations”

Present a unified, open systems approach extending organizational theory beyond the boundaries of a single organization. Argued that leadership effectiveness is contingent upon two interacting factors, Leadership style and situational favourableness.

Definition of an Organization

An Organization is a social system comprising subsystems of resource variables, interrelated by various management policies, practices and techniques which interact with variables in the environment to achieve a set of goals or objectives.

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Source: A General Contingency Theory of Management, Luthans and Stewart (1977)

SYSTEM PERFORMANCE

Environmental

Management Resource ORGANIZATIONAL

PERFORMANCE CRITERIA SITUATIONAL

Variables and relationships in a Contingency Model of the Organization

Core Concepts

What managers do depends on or is contingent on the situation at hand; it emphasizes an “if-then” relationship.

If a particular situational variable exists, then managers are likely to take a particular action.

Successful managers must consider the realities of the specific organizational circumstances they face when applying management concepts, principles, tools and techniques. Source: Modern Management by Certo & Certo

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Challenges with the Contingency Approach

1. Perceiving organizational situations as they actually exist.

2. Choosing the management tactics best suited to those situations.

3. Competently implementing those tasks.

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Source: Modern Management by Certo & Certo

Summary

Three distinct Schools of Management

Classical Process

Neo-Classical People

Modern Integrative - People, Process, Environment

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Key Concepts: Definition of Management

Management is the process of accomplishing an organization’s goals by working with and through people, utilizing all the resources available to it.

The Role of Management

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Key Concepts: The Role of Management

Planning Doing the right thing at the right time to accomplish organizational goals. Choose the tasks that need to be performed and decide when and how to perform those tasks.

Organizing Creating a mechanism to put plans into action. Assign tasks to individuals and teams to accomplish the tasks required to accomplish organizational goals.

Influencing Leading, motivating and directing an organization’s members toward accomplishing organizational goals. Increase productivity of members in the accomplishment of organizational goals and to be responsive to changing needs of the organization.

Control Establishing and tracking organizational performance standards. Gather and analyze appropriate performance metrics and compare against established standards. Make organizational changes needed to meet established standards.

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Common Mistakes of Management

Planning Not establishing goals and objectives for all important organizational areas.

Making plans that are too risky.

Not exploring enough viable alternatives for reaching goals and objectives.

Organizing Not establishing the appropriate organization structure – span of control, inter-

departmental coordination, geographic balance.

Influencing Not establishing lines of communications, communicating infrequently, managing rather than leading.

Controlling Not tracking progress against goals, not establishing performance standards, tracking performance metrics, analyzing trends or using insights to drive improvements.

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Management and Organizational Resources

Organizational Resources

• People

• Money

• Raw Materials

• Capital Resources

Production Process

Finished Products

• Goods

• Services

Inputs Outputs

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Goal Achievement: Managerial Efficiency versus Effectiveness

Goals not reached.

Resources not wasted.

Goals reached.

Resources not wasted.

Goals not reached.

Resources wasted.

Goals reached.

Resources wasted.

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Ineffective Effective

Inef

fici

ent

Effi

cien

t

The Management Framework

Planning

• Vision and Mission

• Strategy

• Goals and Objectives

Organizing

• Organization Design

• Culture

• Social Networks

Leading

• Leadership

• Decision Making

• Communications

• Groups and Teams

• Motivation

Controlling

• Systems and Processes

• Human Resources

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The Future of Management

http://www.youtube.com/watch?v=K3-_IY66tpI

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