Maryland International College

Chapter 2
The Evolution Management
 Contents of the Chapter

EARLY CLASSICAL NEOCLASSICA QUANTITATI MODERN

CONTRIBUTION THEORY L THEORY VE THEORIES THEORIES

1) Robert 1) Scientific Mgt. 1) Early 1) Operation 1) Systems

Owen
2) Administrative Behaviorist Research theory
2) Charles
Babbage Mgt. 2) Behavioral 2) Operation 2) Conting
3) Robert 3) Beaucratic school Mgt. ency
Towne
Mgt. 3) Mgt. IS theory
 Development of Mgt thought
Despite long history of management, In 20th century, the situation changed
it walked as a tortoise. Because of : rapidly, some of the factors contributing to
systematic management are:
Low esteem to The need to be efficient-
business in society 1 1 due to development of
capitalism and emergence of
Indifferent industries, mass production,
trade unions,
approaches of
various disciplines 2 competition for markets,
technological innovations,
towards business the increase in capital
organizations. investment, etc.
Treatment of
management as an 3 Complexities of
art not as a science 2 organizations &
society- due to division
The attitudes that of labor, increased gov’t
successful managers
are born, not made
4 regulations, organized
trade unions, etc.
 Early Influencers
Robert Owen
(1771-1858)
Improved working
He was a successful conditions with in the
textile mill manager factory (Reducing the
in Scotland workday to 10 ½ hrs. )

Believed that factory He is regarded as the

workers would be more father of modern
productive if motivated
rather than punishments.
personal management.

He experienced with
several motivating Among early contributors
techniques.
 Early Influencers…
1 3
Advocated profit-sharing
He was a British plans & bonus systems
professor of
mathematics.
Charles Babbage
/1792-1871/
2
4
Convinced that
application of scientific Emphasis on cutting costs
principles to work and increasing efficiency
processes would
increase productivity led to the emergency of
and lower expenses the classical school
 Scientific Management
The systematic study of the relationships between people and
tasks for the purpose of redesigning the work process for
higher efficiency.
1) F.W. Taylor
He replace informal rule of thumb by scientific knowledge.

He sought to reduce the time a worker spent on each task by

optimizing the way the task was done.

He increased specialization & division of labor to make

production process more efficient

He assumed money is the prime motivator

 Scientific Management…Cont’d
2) Frank and Lilian Gilbreth
Refined Taylor’s work and made many improvements to the
methodologies of time and motion studies.

Time and motion studies

Break up each job into its components.

Find better ways to perform the action.

Reorganize each job to be more efficient.

Also studied worker-related fatigue problems caused by
lighting, heating, and the design of tools and machines.
 Scientific Management…Cont’d
Principles of Scientific Management (Taylor)
 Gather data about ways workers perform their tasks;

experiment with different ways to improve performance

Codify methods into written rules and standards

Select people who have skills/abilities needed in the task and

train them on the particular task

Establish acceptable level of performance and reward for

performance above that level
 Administrative Theory
• Henri Fayol (1841-1925)
General and Industrial Management

Principles and Elements of Management - how managers

should accomplish their managerial duties

PRIMARY FOCUS: Management (Functions of Administration)

More Respect for Worker than Taylor
• Workers are motivated by more than money
• Equity in worker treatment
More PRESCRIPTIVE
 Fayol’s Administrative Theory

• Five Elements of Management -- Managerial Objectives

Planning
Organizing
Command
Coordination
Controlling
• Keep machine functioning effectively and efficiently
• Replace quickly and efficiently any part or process that did
not contribute to the objectives
 Fayol’s Principles

• Henri Fayol, developed a set of 14 principles:

1. Division of Labor: allows for job specialization.

 Fayol noted firms can have too much specialization

leading to good quality and worker involvement.
2. Authority and Responsibility: Fayol included both formal and
informal authority resulting from special expertise.

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

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

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

 Fayol’s Principles …Cont’d

6. Unity of Direction: One plan of action to guide

the organization.
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 Principles…Cont’d

11. Remuneration of Personnel: The payment

system contributes to success.

12. Stability of Tenure: Long-term employment is

important than employees turnover.

13. General interest over individual interest:

The organization takes precedence over the
individual benefits.

14. Esprit de corps: Share enthusiasm or devotion

to the organization.
 Bureaucratic Management Theory
The study of how to create an organizational structure
that leads to high efficiency and effectiveness.

• Max Weber
Developed the concept of bureaucracy as a formal
system of organization and administration designed to
ensure efficiency and effectiveness.
Weber’s Principles of Bureaucracy

Figure 2.2
 Key points of Bureaucracy
Authority 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.
 Bureaucracy
Strengths
Claimed to improve organizational performance
Easier for managers to organize and control
Fair and equitable raises and promotion
Improves feeling of security
Reduces stress
Encourage ethical behavior

Weaknesses
What if poorly managed?
Decisions and changes are slow
Inflexibility
 Behavioral Management Theory

The study of how managers should behave to motivate

employees and encourage them to perform at high

levels and be committed to the achievement of goals.

Focuses on the way a manager should personally

manage to motivate employees.

 Behavioral Management…Cont’d
Mary Parker Follett (1868-1933)

An influential leader in early managerial theory

Concerned that Taylor was ignoring the human side of
the organization and the number of ways employees can
help managers
Held a horizontal view of power and authority
“Authority should go with knowledge …”
Managers should be facilitators rather than monitors or
supervisors
Root of the work in self-managed teams, empowerment,
and cross-functioning
 The Hawthorne Studies

Studies of how characteristics of the work setting

affected worker fatigue and performance at Hawthorne
Works of Western Electric Company from 1924-1932.

Worker productivity was measured at various levels of

light illumination.

Productivity increased regardless of whether the light

levels were raised or lowered.
Why? … the presence of the researchers
Implication … human relations movement
 Hawthorn Studies by George Elton Mayo
 was known of conducting an  The relay assembly test room helped

experiment at the Hawthorn plant at them to conclude that the most likely cause

was that changes in the social conditions

the Western Electric Co. in U. S. A.
and in the method of supervision
 The illumination experiment was
brought improved attitude and output.
designed to prove the effect/impact of
 Based on the responses, They realized that
physical surroundings such as the individuals work performance,
noise, light, tonicity on productivity. position and status in the organization

 The result of the experiment was that were determined not only by the person

himself but by the group members as well.

little relationship/physical
 His peers had an effect on his
surroundings did not have an impact.
performance.
 Human Relations Movement

Sparked by the Hawthorne Studies

 Workers attitude towards their managers affect their performance

Train supervisors to elicit cooperative behavior from

subordinates so productivity will increase

Workers making telephone switching equipment

 The norm of output vs. “ratebusters” vs. “chiselers”

 Worker’s influence can be as great as the manager’s

Managers must understand the informal organization

The beginning of Organizational Behavior

 Theory X versus Theory Y
(Douglas McGregor)

Source: Figure 2.3

 Theory Z
• William 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.
 Management Science Theory
• An approach to management that uses rigorous
quantitative techniques to maximize the use of
organizational resources.
Quantitative management—utilizes linear
programming, modeling, simulation systems.

Operations management—techniques to analyze all

aspects of the production system.

Total Quality Management (TQM)—focuses on

improving quality throughout an organization.
 Organizational Environment Theory

Organizational Environment
The set of forces and conditions that operate
beyond an organization’s boundaries but affect a
manager’s ability to acquire and utilize resources.

What “forces” are presently in the

“environment” that affect the manager’s ability
to acquire and utilize resources?
 The Open-Systems View
(Katz, Kahn, Thompson, 1960s)

Organization takes resources from the external

environment and transforms them into goods and services

Organization interacts with environment in order to survive

Not a closed system, which is:

 self contained

 likely to experience entropy

Synergy: gains acquired when entities coordinate their

efforts
The whole is greater than the sum of its parts
 The Organization as an Open System

Input Stage Conversion Output

Stage Stage
Raw
Materials Machines Goods
Human skills Services

Sales of outputs
Firm can then buy inputs
 Contingency Theory

Assumes there is no one best way to manage.

 The environment impacts the organization and

managers must be flexible to react to its changes.

 The way the organization is designed, control

systems selected, depend on the environment.

Technological environments change rapidly, so

must managers.
 Contingency Theory
(Burns & Stalker, Britain, 1960s)

No one best way to organize because the external

environment (ability to gain resources) influences
the organizational structures and controls

A quickly changing environment works against

this … why?

Mechanic vs. Organic structure

 Structures
• Mechanistic: authority is centralized at the top.
(Theory X)

 Employees closely monitored and managed.

 Very efficient in a stable environment.

• Organic: authority is decentralized throughout

employees. (Theory Y)

 Much looser control than mechanistic.

 Managers can react quickly to changing

 Summary of Theories
1) Scientific Management Theory
Job specialization and division of labor

Taylor

Gilbreths

2) Administrative Management Theory

Fayol (14 principles of management)

3) Theory of Bureaucracy
 Max Weber
 Summary of Theories … Cont’d

4) Behavioral Management Theory

Follett
Hawthorne Studies and Human Relations
McGregor (Theory X & Theory Y)

5) Quantitative Management Theory

Operations research, operations management and MIS

6) Organizational Environment (Modern Mgt) Theory

Open-systems View
Contingency Theory
Summary of Theories … Cont’d
 End of
Chapter 2