Management theory

The Evolution ofThe Evolution of
Management TheoryManagement Theory

Scientific Management TheoryScientific Management TheoryScientific Management TheoryScientific Management Theory
• Evolution of Modern ManagementEvolution of Modern Management
Began in the industrial revolution in the late 19thBegan in the industrial revolution in the late 19th
century as:century as:
• Managers of organizations began seeking waysManagers of organizations began seeking ways
to better satisfy customer needs.to better satisfy customer needs.
• Large-scale mechanized manufacturing began toLarge-scale mechanized manufacturing began to
supplanting small-scale craft production in thesupplanting small-scale craft production in the
ways in which goods were produced.ways in which goods were produced.
• Social problems developed in the large groups ofSocial problems developed in the large groups of
workers employed under the factory system.workers employed under the factory system.
• Managers began to focus on increasing theManagers began to focus on increasing the
efficiency of the worker-task mix.efficiency of the worker-task mix.

Evolution of Management Theory

Job Specialization and the Division ofJob Specialization and the Division of
LaborLabor
Job Specialization and the Division ofJob Specialization and the Division of
LaborLabor
• Adam Smith (18th century economist)Adam Smith (18th century economist)
Observed that firms manufactured pins in one ofObserved that firms manufactured pins in one of
two different ways:two different ways:
• Craft-style—each worker did all steps.Craft-style—each worker did all steps.
• Production—each worker specialized in oneProduction—each worker specialized in one
step.step.
Realized that job specialization resulted in muchRealized that job specialization resulted in much
higher efficiency and productivityhigher efficiency and productivity
• Breaking down the total job allowed for theBreaking down the total job allowed for the
division of labor in which workers becamedivision of labor in which workers became
very skilled at their specific tasks.very skilled at their specific tasks.

This presentation would be showcasing the evolution in ManagementThis presentation would be showcasing the evolution in Management
practices within an organization.practices within an organization.
This presentation would be showcasing the evolution in ManagementThis presentation would be showcasing the evolution in Management
practices within an organization.practices within an organization.
The theories and approaches discussed wouldThe theories and approaches discussed would
be as follows:be as follows:
The Classical approachThe Classical approach
Human Resource ApproachHuman Resource Approach
Modern ApproachModern Approach

The Classical approachThe Classical approachThe Classical approachThe Classical approach
The Classical perspective to managementThe Classical perspective to management
emerged during the nineteenth century andemerged during the nineteenth century and
continued into the twentieth century.continued into the twentieth century.
Due to the new challenges thatDue to the new challenges that
organizations faced, management soughtorganizations faced, management sought
methods of efficiency which included amethods of efficiency which included a
rational and scientific approach.rational and scientific approach.

The Classical approachThe Classical approach
includes the following three theories and theirincludes the following three theories and their
contributorscontributors
The Classical approachThe Classical approach
includes the following three theories and theirincludes the following three theories and their
contributorscontributors
Scientific Management by Frederick TaylorScientific Management by Frederick Taylor
Administrative Principle by Henry FayolAdministrative Principle by Henry Fayol
Bureaucratic Organization by Max WeberBureaucratic Organization by Max Weber

F.W. Taylor and Scientific ManagementF.W. Taylor and Scientific ManagementF.W. Taylor and Scientific ManagementF.W. Taylor and Scientific Management
• Scientific ManagementScientific Management
The systematic study of the relationshipsThe systematic study of the relationships
between people and tasks for the purpose ofbetween people and tasks for the purpose of
redesigning the work process for higherredesigning the work process for higher
efficiency.efficiency.
• Defined by Frederick Taylor in the late 1800’sDefined by Frederick Taylor in the late 1800’s
to replace informal rule of thumb knowledge.to replace informal rule of thumb knowledge.
• Taylor sought to reduce the time a workerTaylor sought to reduce the time a worker
spent on each task by optimizing the way thespent on each task by optimizing the way the
task was done.task was done.

Four Principles of Scientific ManagementFour Principles of Scientific ManagementFour Principles of Scientific ManagementFour Principles of Scientific Management
• Principles to increase efficiency:Principles to increase efficiency:
1.1. Study the ways jobs are performed now andStudy the ways jobs are performed now and
determine new ways to do them.determine new ways to do them.
• Gather detailed time and motion information.Gather detailed time and motion information.
• Try different methods to see which is best.Try different methods to see which is best.
2.2. Codify the new methods into rules.Codify the new methods into rules.
• Teach to all workers the new method.Teach to all workers the new method.
3.3. Select workers whose skills match the rules.Select workers whose skills match the rules.
4.4. Establish fair levels of performance and pay aEstablish fair levels of performance and pay a
premium for higher performance.premium for higher performance.
• Workers should benefit from higher outputWorkers should benefit from higher output

Problems with Scientific ManagementProblems with Scientific ManagementProblems with Scientific ManagementProblems with Scientific Management
• Managers frequently implemented only theManagers frequently implemented only the
increased output side of Taylor’s plan.increased output side of Taylor’s plan.
Workers did not share in the increased output.Workers did not share in the increased output.
• Specialized jobs became very boring, dull.Specialized jobs became very boring, dull.
Workers ended up distrusting the ScientificWorkers ended up distrusting the Scientific
Management method.Management method.
• Workers could purposely “under-perform.”Workers could purposely “under-perform.”
Management responded with increased use ofManagement responded with increased use of
machines and conveyors belts.machines and conveyors belts.

Frank and Lillian GilbrethFrank and Lillian GilbrethFrank and Lillian GilbrethFrank and Lillian Gilbreth
• Refined Taylor’s work and made manyRefined Taylor’s work and made many
improvements to the methodologies of time andimprovements to the methodologies of time and
motion studies.motion studies.
Time and motion studiesTime and motion studies
• Breaking up each job action into itsBreaking up each job action into its
components.components.
• Finding better ways to perform the action.Finding better ways to perform the action.
• Reorganizing each job action to be moreReorganizing each job action to be more
efficient.efficient.
• Also studied worker-related fatigue problemsAlso studied worker-related fatigue problems
caused by lighting, heating, and the design of toolscaused by lighting, heating, and the design of tools
and machines.and machines.

Administrative Management TheoryAdministrative Management TheoryAdministrative Management TheoryAdministrative Management Theory
• Administrative ManagementAdministrative Management
The study of how to create an organizationalThe study of how to create an organizational
structure that leads to high efficiency andstructure that leads to high efficiency and
effectiveness.effectiveness.
• Max WeberMax Weber
Developed the concept of bureaucracy as aDeveloped the concept of bureaucracy as a
formal system of organization and administrationformal system of organization and administration
designed to ensure efficiency and effectiveness.designed to ensure efficiency and effectiveness.

Weber’sWeber’s
Principles ofPrinciples of
BureaucracyBureaucracy
Weber’sWeber’s
Principles ofPrinciples of
BureaucracyBureaucracy

Weber’s Five Principles of BureaucracyWeber’s Five Principles of BureaucracyWeber’s Five Principles of BureaucracyWeber’s Five Principles of Bureaucracy
• Authority is the power to hold people accountableAuthority is the power to hold people accountable
for their actions.for their actions.
• Positions in the firm should be held based onPositions in the firm should be held based on
performance, not social contacts.performance, not social contacts.
• Position duties are clearly identified so that peoplePosition duties are clearly identified so that people
know what is expected of them.know what is expected of them.
• Lines of authority should be clearly identified suchLines of authority should be clearly identified such
that workers know who reports to who.that workers know who reports to who.
• Rules, standard operating procedures (SOPs), andRules, standard operating procedures (SOPs), and
norms guide the firm’s operations.norms guide the firm’s operations.

Fayol’s Principles of ManagementFayol’s Principles of ManagementFayol’s Principles of ManagementFayol’s Principles of Management
• Division of Labor: allows for job specialization.Division of Labor: allows for job specialization.
Fayol noted jobs can have too muchFayol noted jobs can have too much
specialization leading to poor quality and workerspecialization leading to poor quality and worker
dissatisfaction.dissatisfaction.
• Authority and ResponsibilityAuthority and Responsibility
Fayol included both formal and informalFayol included both formal and informal
authority resulting from special expertise.authority resulting from special expertise.
• Unity of CommandUnity of Command
Employees should have only one boss.Employees should have only one boss.

Fayol’s Principles of Management (cont’d)Fayol’s Principles of Management (cont’d)Fayol’s Principles of Management (cont’d)Fayol’s Principles of Management (cont’d)
• Line of AuthorityLine of Authority
A clear chain of command from top to bottom ofA clear chain of command from top to bottom of
the firm.the firm.
• CentralizationCentralization
The degree to which authority rests at the top ofThe degree to which authority rests at the top of
the organization.the organization.
• Unity of DirectionUnity of Direction
A single plan of action to guide the organization.A single plan of action to guide the organization.

• EquityEquity
The provision of justice and the fair andThe provision of justice and the fair and
impartial treatment of all employees.impartial treatment of all employees.
• OrderOrder
The arrangement of employees where they willThe arrangement of employees where they will
be of the most value to the organization and tobe of the most value to the organization and to
provide career opportunities.provide career opportunities.
• InitiativeInitiative
The fostering of creativity and innovation byThe fostering of creativity and innovation by
encouraging employees to act on their own.encouraging employees to act on their own.

• DisciplineDiscipline
Obedient, applied, respectful employees areObedient, applied, respectful employees are
necessary for the organization to function.necessary for the organization to function.
• Remuneration of PersonnelRemuneration of Personnel
An equitable uniform payment system thatAn equitable uniform payment system that
motivates contributes to organizational success.motivates contributes to organizational success.
• Stability of Tenure of PersonnelStability of Tenure of Personnel
Long-term employment is important for theLong-term employment is important for the
development of skills that improve thedevelopment of skills that improve the
organization’s performance.organization’s performance.

• Subordination of Individual Interest to theSubordination of Individual Interest to the
Common InterestCommon Interest
The interest of the organization takes precedenceThe interest of the organization takes precedence
over that of the individual employee.over that of the individual employee.
• Esprit de corpsEsprit de corps
Comradeship, shared enthusiasm foster devotionComradeship, shared enthusiasm foster devotion
to the common cause (organization).to the common cause (organization).

Human Resource approachHuman Resource approachHuman Resource approachHuman Resource approach
The Human Resource perspective toThe Human Resource perspective to
management suggested that jobs shouldmanagement suggested that jobs should
be designed to meet higher levels needs bybe designed to meet higher levels needs by
allowing workers to use their full potential.allowing workers to use their full potential.

Behavioral Management TheoryBehavioral Management TheoryBehavioral Management TheoryBehavioral Management Theory
• Behavioral ManagementBehavioral Management
The study of how managers should behave toThe study of how managers should behave to
motivate employees and encourage them tomotivate employees and encourage them to
perform at high levels and be committed to theperform at high levels and be committed to the
achievement of organizational goals.achievement of organizational goals.
Focuses on the way a manager should personallyFocuses on the way a manager should personally
manage to motivate employees.manage to motivate employees.

Behavioral ManagementBehavioral ManagementBehavioral ManagementBehavioral Management
• Mary Parker FollettMary Parker Follett
An influential leader in early managerial theoryAn influential leader in early managerial theory
Held a horizontal view of power and authority inHeld a horizontal view of power and authority in
organizationsorganizations
• Suggested workers help in analyzing their jobsSuggested workers help in analyzing their jobs
for improvementsfor improvements—t—the worker knows the besthe worker knows the best
way to improve the job.way to improve the job.
• If workers have relevant knowledge of theIf workers have relevant knowledge of the
task, then they should control the task.task, then they should control the task.

Management Science TheoryManagement Science TheoryManagement Science TheoryManagement Science Theory
• An approach to management that uses rigorousAn approach to management that uses rigorous
quantitative techniques to maximize the use ofquantitative techniques to maximize the use of
organizational resources.organizational resources.
Quantitative managementQuantitative management—utilizes linear—utilizes linear
programming, modeling, simulation systems.programming, modeling, simulation systems.
Operations managementOperations management—techniques to—techniques to
analyze all aspects of the production system.analyze all aspects of the production system.
Total Quality Management (TQM)Total Quality Management (TQM)—focuses—focuses
on improving quality throughout anon improving quality throughout an
organization.organization.
Management Information Systems (MIS)Management Information Systems (MIS)——
provides information about the organization.provides information about the organization.

Organizational Environment TheoryOrganizational Environment TheoryOrganizational Environment TheoryOrganizational Environment Theory
• Organizational EnvironmentOrganizational Environment
The set of forces and conditions that operateThe set of forces and conditions that operate
beyond an organization’s boundaries but affect abeyond an organization’s boundaries but affect a
manager’s ability to acquire and utilizemanager’s ability to acquire and utilize
resources.resources.

Modern Approach includes the following threeModern Approach includes the following three
theories and their contributorstheories and their contributors ::
Modern Approach includes the following threeModern Approach includes the following three
theories and their contributorstheories and their contributors ::
Open SystemsOpen Systems
Contingency ThinkingContingency Thinking
Lessons from the Japanese managementLessons from the Japanese management
style (theory z)style (theory z)

The Open-Systems ViewThe Open-Systems ViewThe Open-Systems ViewThe Open-Systems View
• Open SystemOpen System
A system that takes resources for its externalA system that takes resources for its external
environment and converts them into goods andenvironment and converts them into goods and
services that are then sent back to thatservices that are then sent back to that
environment for purchase by customers.environment for purchase by customers.
Inputs: the acquisition of external resources.Inputs: the acquisition of external resources.
Conversion: the processing of inputs into goodsConversion: the processing of inputs into goods
and services.and services.
Output: the release of finished goods into theOutput: the release of finished goods into the
environment.environment.

The Organization as an Open SystemThe Organization as an Open SystemThe Organization as an Open SystemThe Organization as an Open System

Other System ConsiderationsOther System ConsiderationsOther System ConsiderationsOther System Considerations
• Closed systemClosed system
A system that is self-contained and thus notA system that is self-contained and thus not
affected by changes occurring in its externalaffected by changes occurring in its external
Often undergoes entropy and loses its ability toOften undergoes entropy and loses its ability to
control itself, and fails.control itself, and fails.
• SynergySynergy
Performance that results when individuals andPerformance that results when individuals and
departments coordinate their actionsdepartments coordinate their actions
• Performance gains of the whole surpass thePerformance gains of the whole surpass the
sum of the performance of the individualsum of the performance of the individual
components.components.

Contingency TheoryContingency TheoryContingency TheoryContingency Theory
• Contingency TheoryContingency Theory
The idea that the organizational structures andThe idea that the organizational structures and
control systems manager choose depend on—arecontrol systems manager choose depend on—are
contingent on—characteristics of the externalcontingent on—characteristics of the external
environment in which the organization operates.environment in which the organization operates.
Assumes there is no one best way to manage.Assumes there is no one best way to manage.
• The environment impacts the firm and managersThe environment impacts the firm and managers
must be flexible to react to environmentalmust be flexible to react to environmental
changes.changes.
In rapidly changing organizational environments,In rapidly changing organizational environments,
managers must find ways to coordinate differentmanagers must find ways to coordinate different
departments to respond quickly and effectively.departments to respond quickly and effectively.

Contingency Theory of OrganizationalContingency Theory of Organizational
DesignDesign
Contingency Theory of OrganizationalContingency Theory of Organizational
DesignDesign

Mechanistic and Organic StructuresMechanistic and Organic StructuresMechanistic and Organic StructuresMechanistic and Organic Structures
• Mechanistic StructureMechanistic Structure
Authority is centralized at the top. (Theory X)Authority is centralized at the top. (Theory X)
Employees are closely monitored and managed.Employees are closely monitored and managed.
Can be very efficient in a stable environment.Can be very efficient in a stable environment.
• Organic structureOrganic structure
Authority is decentralized throughout theAuthority is decentralized throughout the
organization. (Theory Y)organization. (Theory Y)
Tasks and roles are left ambiguous to encourageTasks and roles are left ambiguous to encourage
employees to react quickly to changingemployees to react quickly to changing

Japanese Management StyleJapanese Management Style
Theory ZTheory Z
Japanese Management StyleJapanese Management Style
Theory ZTheory Z
McGregor, identified a negative set of assumptions about humanMcGregor, identified a negative set of assumptions about human
nature, which he called Theory X. He asserted that thesenature, which he called Theory X. He asserted that these
assumptions limited the potential for growth of many employees.assumptions limited the potential for growth of many employees.
McGregor presented an alternative set of assumptions that he calledMcGregor presented an alternative set of assumptions that he called
Theory Y and were more positive about human nature as it relates toTheory Y and were more positive about human nature as it relates to
employees. In McGregor's view, managers who adopted Theory Yemployees. In McGregor's view, managers who adopted Theory Y
beliefs would exhibit different, more humanistic, and ultimately morebeliefs would exhibit different, more humanistic, and ultimately more
effective management styles and Theory Y became a well-knowneffective management styles and Theory Y became a well-known
prescription for improving management practices.prescription for improving management practices.
Concerns about the competitiveness of U. S. companies led some toConcerns about the competitiveness of U. S. companies led some to
examine Japanese management practices for clues to the successexamine Japanese management practices for clues to the success
enjoyed by many of their industries. This led to many articles andenjoyed by many of their industries. This led to many articles and
books purporting to explain the success of Japanese companies. Itbooks purporting to explain the success of Japanese companies. It
was in this atmosphere that Theory Z was introduced into thewas in this atmosphere that Theory Z was introduced into the
management lexicon.management lexicon.

Theory Z is humanistic approach to management approach byTheory Z is humanistic approach to management approach by
William Ouchi.William Ouchi.
The key features of Japanese industrial organizations, according toThe key features of Japanese industrial organizations, according to
Ouchi are as follows:Ouchi are as follows:
• Offer lifetime employment (at least for their core workers).Offer lifetime employment (at least for their core workers).
• Promote from within.Promote from within.
• Insist on mandatory retirement of core workers at age 55.Insist on mandatory retirement of core workers at age 55.
• Employ a large number of temporary employees mostly women.Employ a large number of temporary employees mostly women.
• There is a high degree of mutual trust and loyalty betweenThere is a high degree of mutual trust and loyalty between
management and employees.management and employees.

The key features of Japanese industrial organizations:The key features of Japanese industrial organizations:The key features of Japanese industrial organizations:The key features of Japanese industrial organizations:
• Career paths are non-specialized with life-long job rotationCareer paths are non-specialized with life-long job rotation
as a central feature of career development.as a central feature of career development.
• Decision making is shared at all levels.Decision making is shared at all levels.
• Performance appraisal is long term (ie the first appraisalPerformance appraisal is long term (ie the first appraisal
takes place 10 years after joining the company).takes place 10 years after joining the company).
• There is a strong sense of collective responsibility for theThere is a strong sense of collective responsibility for the
success of the organization.success of the organization.
• And cooperation effort rather than individual achievement isAnd cooperation effort rather than individual achievement is
encouragedencouraged..

• Although Ouchi recognizes that many of the features of Japanese managementAlthough Ouchi recognizes that many of the features of Japanese management
could not be translated into Western industrial society, he believes that certaincould not be translated into Western industrial society, he believes that certain
features could be applied in a Western context. The move from the presentfeatures could be applied in a Western context. The move from the present
hierarchical type of organization to a Theory Z type organization is a processhierarchical type of organization to a Theory Z type organization is a process
which, says Ouchi:which, says Ouchi:
“Has the objective of developing the ability of the organization to coordinate“Has the objective of developing the ability of the organization to coordinate
people, not technology to achieve productivity.”people, not technology to achieve productivity.”

In his view, this requires a new philosophy ofIn his view, this requires a new philosophy of
managing people based on a combination ofmanaging people based on a combination of
the following features of Japanesethe following features of Japanese
management:management:
• Lifelong employment prospectsLifelong employment prospects
• Shared forms of decision-makingShared forms of decision-making
• Relationship between boss and subordinateRelationship between boss and subordinate
based onbased on mutual respectmutual respect

According to Ouchi the introduction of Theory Z approaches intoAccording to Ouchi the introduction of Theory Z approaches into
Western firms requires the following strategy:Western firms requires the following strategy:
• Adoption of a “Top down” approach, based on definitionAdoption of a “Top down” approach, based on definition
of the new philosophy agreed and supported by theof the new philosophy agreed and supported by the
organization’s top management.organization’s top management.
• Implementation of the new approach should be carriedImplementation of the new approach should be carried
through on the basis of consultation and communicationthrough on the basis of consultation and communication
with the workforce and with full training support towith the workforce and with full training support to developdevelop
relevant skills for managers, supervisors andrelevant skills for managers, supervisors and their teams.their teams.

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