The evolution of management theor

1. A Short History of
Management Theory and Practice
Professor Rey Lugtu
www.reylugtu.com

2. Learning Objectives
 To understand how management theories develop
 To understand the impact of the environment to management
thinking
 To gain insights into new management approach

3. Early Management Thought
 Early ideas about management strategy
 Sun Tzu (770-476 B.C.), The Art of War
 Early ideas about leadership
 Nicolò Machiavelli (1469-1527), The Prince
 Early ideas about the design and organization of work
 Adam Smith, The Wealth of Nations
 division of labor

4. Sun Tzu, Art of War
“Shang Chang Ru Zhan Chang”
“The marketplace is a battlefield”
Sun Tzu, 4th century BC

5. Management and Machiavelli
 New science of management lies in
the the old art of government
 "to be a great pretender and
dissembler."
 “cunning and intrigue, the triumph
of force over reason.”
 "a prince" ought to have no other
aim or thought, nor select anything
else for his study, than war and its
rules and discipline."

6. The Emphasis on
Individualism and Materialism
 Principles of Early Economic Systems
 Reciprocity
 Neighborliness, trading with one another
 Redistribution
 Ensuring that everyone has enough
 Householding
 Being a good steward of resources for the sake of the family or larger community

7. The Emphasis on
Individualism and Materialism (cont’d)
 Individualism
 God calls individuals to specific work.
 Materialism
 Religion produces industry and frugality that lead to the accumulation wealth,
which is no longer a vice.
 Pursuit of self-interested material wealth locks people into an iron cage and
deprives them of their humanity.

8. The Evolution of Management Theory
(Comprehensive Analysis of Management)
Systems Theory
Contingency Approach
ORGANIZING:
BEST STRUCTURES
LEADING:
ROLES &
STYLES
PLANNING:
HIGHER
PRODUCTIVITY
CONTROLLING
ORDERLY
WORKPLACE
PARADIGM
SHIFT

9. Management Approaches
and the Environment
GENERAL
ENVIRONMENT
OPERATING
ENVIRONMENT
INTERNAL
ENVIRONMENT
SOCIAL
ECONOMIC
POLITICAL
LEGAL
TECHNOLOGY
NEW ENTRANTS
SUPPLIER
SUBSTITUTES
CUSTOMER
COMPETITION
PRODUCTION
TECHNOLOGY
STRUCTURE
INPUTS

10. Emphasis on organizing
The Classical Approach
Environment in ca1890
•Industrial revolution
•Autocratic management was the norm
•“Science" as a solution to the inefficiencies
and injustices of the period
•Idea of interchangeable parts
The classical approach (ca1890) to
management is a management approach that
emphasizes organizational efficiency to
increase organizational success.

11. The Classical Approach
 Scientific Management
 Frederick W. Taylor
 Frank and Lillian Gilbreth
 Henry Gantt
 Bureaucratic Management
 Max Weber
 Administrative Management
 Henri Fayol

12. An Emphasis on Organizing:
The “Classical” Era (1910 to 1930)
 Scientific Management (Micro Approach)
 Focused on defining and maximizing the productivity of individual jobs.
 Frederick W. Taylor (systematic work)
 Henry Gantt (Gantt chart)
 Frank B. Gilbreth (time and motion studies)

13. Taylor’s Four Principles of Scientific Management
1. Scientifically study each part of a task and
develop the best method of performing the task.
2. Carefully select workers and train them to
perform the task by using the scientifically
developed method.
3. Cooperate fully with workers to ensure that they
use the proper method.
4. Divide work and responsibility so that
management is responsible for planning work
methods using scientific principles and workers
are responsible for executing the work
accordingly.

14. An Emphasis on Organizing:
The “Classical” Era (cont’d)
 Bureaucracy (Macro Approach)
 Focused on the structure and functions of management in order to maximize
productivity of the overall organization.
 Max Weber’s view of maturing organizations
 Relies on:
 Employee competences
 Positional authority within a formal structure
 Rules and procedures for efficient and productive structures

15. Key Characteristics of Weber’s Ideal Bureaucracy
Specialization of labor
Formal rules and procedures
Impersonality
Well-defined hierarchy
Career advancement based on merit

16. An Emphasis on Organizing:
The “Classical” Era (cont’d)
 Henri Fayol (1841-1925)
 Posited the four functions of management and other principles:
 Unity of command
 Each employee reports to only one superior.
 Unity of direction
 Managers and employees are guided by a single plan of action.
 Scalar chain
 A chain of authority extends from the top to the bottom of the organization hierarchy that
includes every employee.

17. Fayol’s 14 Principles of
Administrative Management
1. Division of work
2. Authority
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
interest to the general
interest
7. Remuneration
8. Centralization
9. Scalar chain
10. Order
11. Equity
12. Stability and tenure
13. Initiative
14. Esprit de corps
Planning, Organizing, Commanding, Coordinating, Controlling

18. What are the limitations of the
Classical Approach??

19. Emphasis on Leading:
The Behavioral Approach
The behavioral approach (ca 1910) to
management is a management approach that
emphasizes increasing organizational
success by focusing on human variables
within the organization.
Environment in ca1910
•The Newtonian science that supported "the one best way" of
doing things was being strongly challenged by the "new
physics" results of Rutherford and Einstein
•In the work place there were strong pressures for shorter
hours and employee stock ownership.
•As the effects of the 1929 stock market crash and following
depression were felt, employee unions started to form

20. Behavioral Perspective
The Hawthorne Studies
Human Relations Approach
Employee motivation
Leadership style

21. Hawthorne Effect:
The discovery that paying special
attention to employees motivates them
to put greater effort into their jobs.
(from the Hawthorne management studies,
performed from 1924 – 1932 at Western Electric
Company’s plant near Chicago)

22. Physical Needs
Need for Security
Need for Social Relations
Need for Self Esteem
Self-Actualization
Maslow’s Hierarchy of
Needs

23. An Emphasis on Leading:
The “Human” Era (1930-1950)
 Mary Parker Follett (1868-1933)
 The “mother” of the leading era
 Emphasized the human (behavioral) side of management.
 Authority should go to the worker whose knowledge and experience makes them best able to
serve the company.
 Managers should facilitate the work of subordinates rather than control them.
 Drew from sociology and psychology to help managers see people as a collection of beliefs
and emotions.

24. An Emphasis on Leading:
The “Human” Era (cont’d)
 Lillian Gilbreth (1878-1972)
 Focused on human resource management.
 Studied ways to reduce job stress.
 Advocated:
 Standard work days
 Child-labor laws
 Protection of workers from unsafe working conditions.

25. An Emphasis on Leading:
The “Human” Era (cont’d)
 Chester Bernard (1886-1961)
 Focused on leadership and the informal organization:
 Social groups and cliques form alongside the organization’s formal structures.
 Organizations should not be managed impersonally.
 Employees have a “zone of indifference”—those activities that they will not rebel against
doing.

26. The Human Relations Movement
 Human Relations Movement
 Focused on managerial actions that would increase employee satisfaction in
order to improve productivity.
 Movement emphasized:
 Managers using social skills to motivate employees.
 Designing jobs that are more humane and less fatiguing.

27. Human Relations Movement
McGregor’s Theory X and Theory Y
 Leaders and managers who hold Theory X assumptions
believe that employees are inherently lazy and lack
ambition.
 A negative perspective on human behavior.
 Leaders and managers who hold Theory Y assumptions
believe that most employees do not dislike work and want to
make useful contributions to the organization.
 A positive perspective on human behavior.

28. What are the limitations of the
behavioral approach?

29. Emphasis on Planning:
The Management Science Approach
The management science approach (ca1940)
is a management approach that emphasizes
the use of the scientific method and
quantitative techniques to increase
organizational success.
Environment in ca1940
•Application of OR in solving complex problems in
warfare (WWII)
•Significant technological and tactical
breakthroughs
•Interest in manufacturing and selling after WWII

30. An Emphasis on Planning:
The “Calculating” Era (cont’d)
 Management Science
 Operations research
 Emphasizes mathematical model building.
 Operations management
 Uses quantitative techniques to make decisions to produce goods and services more
efficiently:
 Break-even analysis
 Forecasting
 Inventory modeling
 Linear programming

31. The System Approach
The system approach (ca 50’s-60’s) to
management is a management approach
based on general system theory--the theory
that to understand fully the operation of an
entity, the entity must be viewed as a system.
This requires understanding the
interdependence of its parts.
Environment in ca1950’s to 60’s”
•Growing quality consciousness
•Total Quality Management

32. The Open Management System
GENERAL
ENVIRONMENT
OPERATING
ENVIRONMENT
SOCIAL
ECONOMIC
POLITICAL
LEGAL
TECHNOLOGY
NEW ENTRANTS
SUPPLIER
SUBSTITUTES
CUSTOMER
COMPETITION
PLANNING, ORGANIZING,
INFLUENCING, CONTROLLING
INPUT  PROCESS OUTPUT

33. The Contingency Approach
The contingency approach (ca 70’s) to
Management is a management approach that
Emphasizes that what managers do in
practice depends on a given set of
circumstances--a situation.
Environment in ca1970’s”
•Emergence of new companies “Apple”
•Emergence of new products, “IBM PC”

34. Triangular Management
Triangular management is a management
approach that emphasizes using information
from the classical, behavioral, and manage-
ment science schools of thought to manage
the open management system.

35. Triangular Management
Model
BEHAVIORALLY BASED INFORMATION
GENERAL
ENVIRONMENT
OPERATING
ENVIRONMENT
SOCIAL
ECONOMIC
POLITICAL
LEGAL
TECHNOLOGY
NEW ENTRANTS
SUPPLIER
SUBSTITUTES
CUSTOMER
COMPETITION
PLANNING, ORGANIZING,
INFLUENCING, CONTROLLING
INPUT  PROCESS OUTPUT
GENERAL
ENVIRONMENT
OPERATING
ENVIRONMENT
SOCIAL
ECONOMIC
POLITICAL
LEGAL
TECHNOLOGY
NEW ENTRANTS
SUPPLIER
SUBSTITUTES
CUSTOMER
COMPETITION
PLANNING, ORGANIZING,
INFLUENCING, CONTROLLING
INPUT  PROCESS OUTPUT

36. Type Z Organization
(Theory Z by Ouchi 1981)
Theory Z (ca 80’s) suggests that involved workers
are the key to an increase in productivity and it
offers offers ways to manage (collective decision
making, slow evaluation and promotion, and
holistic concern for people) so that they can work
together more effectively.
Environment in ca1980’s
•Slow American productivity improvement
•Rise of Japanese companies
•Japanese management may offer solutions to this
problem

37. Theory Z
 “Involved workers are the key to an increase in productivity.”
From “Theory Z” by William Ouchi, 1981

38. An American rowing team
challenged a Japanese team to a
10-mile race
The Japanese wins by
more than a mile.
A management consultant is
called in to help the Americans.

39. He finds that the Japanese
boat had two people
overseeing six rowers,
while the Americans had
seven managers and
one rower.
The consultant suggests a
radical reengineering program,
then calls for a rematch.

40. This time the Japanese
team defeats the Americans
by two miles.
More consultants are called in.

41. They find that the Japanese
team were now using one
manager and seven rowers,
while the U.S. team employed
six management consultants,
one senior manager
and one rower.

42. The U.S. team immediately fires the rower
and calls for another restructuring.

43. Chaordic Organization (Chaos Theory)
(Hock, Dee,1999)
Chaos theory (ca 90’s) in management
recognizes that events indeed are rarely
controlled. Blending chaos with order
Environment in ca1990’s
•Start of Internet age
•Highly competitive environment
•Emergence of communications technologies
•Emergence of new work practices (virtual teams,
network organizations)

44. Chaordic Organizations
Purpose
Principles, People, and Concept
Structure and Practice
• Clarity of purpose and
shared values
•Operate through
network of equals, not
hierarchies
From “Birth of the Chaordic Age” by Hock, D. 1999

45. An Emphasis on Controlling:
The “Values and Beliefs” Era (1970 - 1990)
 Institutionalization
 Occurs when practices or rules have become “valued” in and of themselves,
even though they may no longer be useful.
 Why it happens:
 Dysfunctional social or cultural “scripts”
 Irrational social norms
 Peer pressure
 Simple inertia

46. An Emphasis on Controlling:
The “Values and Beliefs” Era (1970 - 1990)
 The Social Construction Of Reality
 What we experience as “real” has actually been socially-constructed.
 Once acted upon, socially-constructed facts of life become true for ourselves
and others.
 “Symbolic” management roles and leadership create “meaning” for others.

47. Figure 2.2: Simplified Overview of Relative Emphases in
Management Research

48. Environment In the New Millennium
Environment in the millenium
•Information and electronic age
•Information and knowledge is going to be readily
available to us all
•Information speed through Internet
•The future is going to be dominated by our need to
understand systems.

49. The Learning Organization Approach
The learning organization approach to
management is the management approach
based on an organization anticipating
change faster than its counterparts to have
an advantage in the market over its
competitors.
From “The Fifth Discipline” by Peter Senge, 1990

50. Managerial Approach to Learning
Organization
 Managers must create an environment conducive to learning
 Managers encourage the exchange or information among
organization members
 Managers promote
 systematic problem solving
 Experimentation
 learning from experiences and past history
 learning from experience of others
 transferring knowledge rapidly throughout the organization
From “The Fifth Discipline” by Peter Senge, 1990

51. Building a Learning Organization
 System Thinking
 Every organization member understands his or her own job and how
the jobs fit together to provide finals products to the customer
 Shared vision
 All organization members have a common view of the purpose of the
organization and a sincere commitment to accomplish the purpose
 Challenging of the mental models
 Organization members routinely challenge the the way business is
done and the thought processes people use to solve organizational
problems
From “The Fifth Discipline” by Peter Senge, 1990

52. Building a Learning Organization
 Team learning
 Organization members work together, develop solution to new
problems together, and apply the solutions together.
 Working as teams rather than than individuals will help the
organization gather collective force to achieve organizational goals
 Personal mastery
 All organization members are committed to gaining a deep and rich
understanding of their work
 Such an understanding will help organizations to reach important
challenges that confront them
From “The Fifth Discipline” by Peter Senge, 1990

53. Building a
Learning
Organization
System thinking
Personal mastery
Team Learning
Learning Organization Approach
Shared Vision
Challenging of
Mental models
(Systems Approach)
(Chaordic Organization)
(Classical/Management
science)
(Theory Z/Behavioral)
(Theory Z/Behavioral)

54. Western Management Theories
Is there an Asian Management Theory??

55. What is business management
the Asian way?
 Business tend to be small scale
 Time has no beginning and end
 Individualism is less relevant; managerial beliefs shift
towards the autocratic end
 Conformity to socially acceptable behaviors is done through
morality (e.g losing face)
 Oriental managers rely less on interpersonal confrontations
 Managerial decisions consider effects on othe rpeople
 Control of performance is less formal
 Maintaining and developing guanxi (connection and
relationship
*From World Executive Digest by Redding & Martyn, 1984

56. “Will Western Management
work in Asia?”*
 “Values and attitudes affect but do not invalidate the transfer
of American management concepts… Consequently, when we
wish to transfer an effective device from one culture to
another, careful attention should be given to underlying
premises…?
 “Tools of management remain the same.”**
 “Economic and business philosophy are however, different.”**
 Combination of general management, functional management,
and communal organization and management..**
*From World Executive Digest by William Newman, 1984
**From World Executive Digest by Sixto Roxas, 1981
Photo from www.aim.edu.ph

57. Is there a Filipino Management
Theory??
Are Western theories applicable in
Philippine setting?

58. Are Western Theories Applicable in Philippine
Setting?
 “The models and ideal types taught in Western-oriented
MBA programs are based on certain assumptions, many of
which are invalid in the Philippines.
 Although organizations here have most of the structures and
formal procedures of Western business, actual day-to-day
business processes and interactions necessarily proceed
within the matrix of Filipino culture and values.
 Thus, the need for the Westerner to go "the extra mile" to
understand what's really going on and adapt a culturally
sensitive style of doing business.”
- Clarence Henderson,
Henderson Consulting International

59. What is Pinoy Management Theory??
 “No one Management Theory or Style.”
 Under the formal organization are:
 “Informal organization”
 “Battlefield of behavioral styles among managers and employees”
 “Unknown cultural ambiance among peoples and systems”
From “Pinoy Management” by Ernesto Franco, 1986

60. Weaknesses of Pinoy Workers
 Walang bilib sa sarili (No confidence in oneself)
 Dikdik sa Colonial Mentality (Indoctrinated with Colonial Mentality)
 Masyadong relaks (Overly relaxed)
 Ningas-cogon (Not a follow-up people)
 Holiday mentality
 Lack of managerial and organizational effectiveness
 Lack of self-reliant tenacity
From “Pinoy Management” by Ernesto Franco, 1986

61. Pinoy Management
 Kailangan may No. 2 (There is a need for No.2)
 Tsismis machine (Grapevine Machine)
 Kailangan may Hatchet Man (There is need for a Hatchet Man)
 Be an expert on timing
 Lumayo sa madalas matalo (Avoid losers)
 Gawin mong personal (Make it personal)
 NBA Style: One-on-one
 Power play. Laban (Fight)
 Be situational and contingent
 Umarte kang parang intelihente. Iyong laging nag-iisip
 Body language ang importante (Body language is important)
 Pag sinabing “No”, dapat “No” talaga
From “Pinoy Management” by Ernesto Franco, 1986

62. Pinoy Management Approaches
 Management by “Kayod” (Realist Manager)
 He wants quick action
 He’s an autocrat
 He is sigurista
 He has gut feel
 He knows how to use people
 Management by “Libro” (Idealist Manager)
 He is a thinker; technocrat; mabusisi; may sistema
 Matigas and ulo
From “Pinoy Management” by Ernesto Franco, 1986

63. Pinoy Management Approaches
 Management by “Lusot” (Opportunist Manager)
 He is galawgaw
 Walang konsensiya
 Mahilig sa lusot (Loves to get by)
 Mahilig sa ayusan
 Ugnayan-Management (The Hybrid)
 Has balance
 Contingency management style
 He is solid
 Marunong pumili (Chooses well)
 Pambihira talaga (Exceptionally gifted)
From “Pinoy Management” by Ernesto Franco, 1986

64. END