Business Management

Jaseel.P.H, M.Com, Net-JRF

Research Fellow, Research Department of Commerce,
MES Asmabi College, Kodungallur
 Evolution of Management Thoughts
1. Pre Scientific Management
2. Classical Theory of Management:-Scientific Management,
Administrative Management, Bureaucratic Management
3. Behavioural School of Management or Neo-classical
Management- Hawthrone Studies
4. Systems Approach
 Pre Scientific Management

 During the mid-18th century, important thinkers emerged because of the

Industrial Revolution.

 The Industrial Revolution brought about changes in the resources needed

for production (factors of production).

 After the period of industrial revolution , certain pioneers tried to

challenge traditional management system
 Robert Owens

He is known as the father of personnel management.

He emphasized that employee welfare is crucial, including
things like working hours, housing, training etc.

He worked as a Promoter of Cooperative and trade union

movement in Britain
 James Watt junior and Mathew Robinson
Boulton
Production Planning: A production plan describes in detail how a company's
products and services will be manufactured.
Standardization of Components: making all the parts or components of a
product in the same way, so they are identical and can be easily used
interchangeably.
Planned Machine layout: This means arranging the machines and equipment
in a factory in an organized and efficient manner.
Employee Welfare: ensuring safety, health, and happiness of employee in the
workplace
 Charles Babbage
Father of Computer
Charles Babbage was a math professor at the University of
Cambridge.
He believed in using math and measurements to make decisions.
Back then, most organizations relied on guesswork.
Babbage suggested using math to divide labour hour, and
determine costs.
 Classical School of Management
Developed during middle of 19th centaury.
Closely connected with industrial revolution and large-scale
production
F W Taylor, H L Gantt, Frank and Lilian Gilberth,Henry
Fayol Max weber were the main scholars in this school of
management thought.
Only importance to machine, No importance to Men
 Major advancement in management
Administrative management- Fayol
Scientific management- Taylor
Bureaucratic management- Max Webber
 FW Tylor- 1856-1915
 Father of scientific management
 Born in Pennsylvania, America
 Shop management
 He found that the major cause of lack of efficiency is lack of order and system in
the management.
 Management was unaware of how much work can be done by an employee.
 So he proposed Principles of Scientific Management
 A Piece-rate System: : Being a Step Toward Partial Solution of the Labor Problem
Taylor discovered that many organizations didn't pay
attention to how much work a worker could do in a day or the
most efficient way to do the work.
So, he came up with scientific management ideas to manage
labor effectively.
These ideas involve observing, measuring, experimenting, and
drawing conclusions to improve productivity.
Taylor applied the method of science such as Observation, measurement,
standardization and specialization to management.

His theory is based on his work experience in three companies Midvale

Street, Simonds Rolling Machine Company, and Bethlehem Steel Company.

He contributed the principle of finding the one best way of doing any job and
then training the workers to do the work always using the best way
• Principles of Scientific Management
1. Replace the rule of thumb with science: Taylor has
emphasized that in scientific management, organized
knowledge should be applied which will replace rule of
thumb. Don't use trial and error approach for decision
making and follow scientific methods
2. Harmony not discord: Promote team work and solve the
conflicts by mutual discussions. He has emphasized that
attempts should be made to obtain harmony in group action
rather than discord.

3. co operation not individualism- It simply means the

subordination of individual interest with group interest. co
operation between management and workers can be
developed through mutual understanding and a change in
4. Maximum output- Scientific management focusing on
more production instead of restricted production.
5. Fuller capacity utilization- Development of workers
through formal education, training and motivation.
Training should be provided at work place.
6. Scientific selection and training of workers.
 Techniques of Scientific management
I. Work study-It is the critical examination of the various factors
affecting work. It consists of
• Method study- It is concerned with careful analysis of job to realize
the best way of doing a job. It simplifies the use of tools and equipment.
• Time study-Time taken for different jobs by employees are notified and
the time taken by an average employee is standardized.
• Motion study- This is analysed to eliminate unnecessary motions of
employees. It helps to reduce wastages and promotes efficiency.
• Fatigue study - Study on the workers level of stress, tiredness etc.to
know the frequency of rest needed
II Standardization
The line of product is restricted to predetermined type, form,
design, size, weight, quality. Etc
There is manufacture of identical parts and components.
Quality & standards have been maintained.
Standard of performance are established for workers at all
levels.
III Functional foremanship (administrative recognition):
 It means appoint expert and specialized staff for specific job
 Taylor classified specialists foremen in to two
 Planning department and production department
 Planning department consist of
1. Route clerck: Determine the process of production and decide through
which the raw materials will pass from Go-down to production centre
2. Instruction Card Clerk- Prepare the instruction regarding
a work.
3. Time and cost clerk- setting a time table for doing a job &
specifying the material and labor cost involved in it.
4. Shop Disciplinarians: Making rules and regulations to
ensure discipline in the organization.
• Production Department consists of
1. Gang boss: makes the arrangement of workers, machines, tools, etc.
2. Speed boss: maintaining the speed and to remove delays in the
production process.
3. Repair boss: maintenance of machine, tools and equipment.
4. Inspector: concerned with maintaining the quality of product.
IV Differential piece wage system:
 Higher wage for those workers who are completing the work as per the
scheduled time and lower wage for those who are not.
V Standardisation:
 Working, by using standardised materials, methods, machines, working
conditions
VI Simplification
 erasing unnecessary types, sizes and dimensions
 eliminating a redundant variety of products
 Criticism
Worker's Criticism
 Only a device to speed up the workers without much regard for their
health and well-being
 Reduces workers to automatic machine by taking away from them the
function of thinking.
 By separating the function of planning and thinking from that of doing.
Scientific Management reduces work to mere routine.
 Weakening of Trade Unions: Under Scientific Management, the important
issues of wages and working conditions are decided by the management
through scientific investigation and the trade unions may have little say in
the matter.
• Employer's Criticism
Heavy Investment: It requires too heavy an investment. The employer
has to meet the extra cost of the planning department though the foreman
in this department do not work in the workshop and directly contribute
towards higher production.
Loss due to re-organization: The introduction of Scientific Management
requires a virtual reorganization of the whole set-up of the industrial
unit. Work may have to be suspended to complete such re-organization.
Unsuitable for small scale firms: various measures like the establishment
of a separate personnel department and the conducting of time and
motion studies are too expensive for a small or modest size industrial
unit.
Taylor was the pioneer in introducing scientific reasoning to
the discipline of management. Many of the objections raised
were later remedied by the other contributors to scientific
management like Henry L Gantt, Frank and Lillian Gilbreth
and Harrington Emerson.
 Frank and Lillian Gilbreth
Husband and wife (Frank Bunker Gilbreth - Lillian Moller Gilbreth)
Father of motion study
Books- Field system, Psychology of management
Strongly supported Tailor’s theory
They interested in wasted motions in work.
After meeting Taylor, they combined their ideas with Taylor's to put
scientific management into effect.
They made pioneering effort in the field of motion study and laid the
entire foundation of modern applications of job simplification,
meaningful work standards and incentive wage plans.
• Their main contributions are:
The one best way of doing a job is the way which involves the fewest
motions performed in an accessible area and in the most comfortable
position. The best way can be found out by the elimination of inefficient
and wasteful motions involved in the work.
training should be given to workers from the very beginning so that they
may achieve competence as early as possible.
Each worker should be considered to occupy three positions –
(i) the job he held before promotion to his present position
(ii) his present position, and
(iii) the next higher position.
The part of a worker's time should be spent in teaching the man below
him and learning from the man above him. This would help him qualify
for promotion and help to provide a successor to his current job.
Gilbreth also devised methods for avoiding wasteful and unproductive
movements
He laid down how workers should stand, how his hands should move and
so on.
Therbligs: 18 kind of elemental motions used in the study of motion in the
work place
 Henry Lawrence Gantt
H.L Gant was born in 1861. He graduated from John Hopkins College.
For some time, he worked as a draftsman in an iron foundry.
In 1884, he qualified as a mechanical engineer at Stevens Institute.
In 1887, he joined the Midvale Steel Company. Soon, he became an
assistant to F.W Taylor. He worked with Taylor from 1887 - 1919 at
Midvale Steel Company.
Gantt made important contributions to the concepts of management:
1. Gantt chart to compare actual to planned performance
2. Task-and-bonus plan for remunerating workers indicating a more
humanitarian approach. This plan was aimed at providing extra
wages for extra work besides guarantee of minimum wages.
3. Gantt laid great emphasis on leadership. He considered management
as leadership function.
 Harrington Emerson
 American Engineer.
 Books: Principles of Efficiency, Efficiency as the basis for operation and
wages
 Gave more importance to efficiency
 He was the first to use the term 'efficiency engineering' to describe his
brand of consulting.
 He called his philosophy "The Gospel of Efficiency".
 According to him, "efficiency means that the right thing is done in the
right manner, by the right man, at the right place, in the right time".
Emerson laid down the following principles of efficiency to be observed
by management:-

Ideals Dispatching
Common Sense standards and Schedules
Competent Counsel Standard Conditions
Standardized Operation
Discipline
Standard practice instructions
Fair Dealings
Efficiency Reward.
Proper Records
Clearly defined ideals: Establishing clear and specific objectives for
the organization and its members.
Common sense - Efficiency Sense - Productivity Sense: Applying
rational and logical thinking to improve efficiency and productivity.
Competent counsel: Seeking and utilizing knowledgeable advice and
guidance.
Discipline: Implementing consistent and structured approaches to
work and decision-making.
The fair deal: Ensuring fairness in treatment, compensation, and
opportunities for all employees.
Reliable, immediate and adequate records: Maintaining accurate and
timely records to facilitate informed decision-making.
Despatching: Efficiently assigning tasks and resources to achieve
optimal results.
Standards and schedules: Establishing benchmarks and timelines to
guide work processes.
Standardized conditions: Creating consistent and conducive work
environments.
 Standardized operations: Developing uniform and efficient work methods.
 Written standard-practice instructions: Documenting best practices and
procedures for consistent execution.

 Efficiency-reward: Providing incentives and recognition for efficient and

productive work.
 Henry Fayol
Born in 29 July 1841, İstanbul, Turkiye
Industrialist in France
He graduated as a mining engineer in 1860 from the National
School of Mining.
After his graduation, he joined a French coal mining company
named Commentary-Fourchambault as an Engineer.
After a couple of years, he was promoted as manager.
He was appointed as General Manager of his company in 1888.
At that time, the company suffered heavy losses and was nearly
bankrupt.
Henry Fayol succeeded in converting his company from near
bankruptcy to a strong financial position and a record of profits
and dividends over a long period.
Father of Modern Management Theory
 14 principles- General and industrial Management-1916
 His approach to the study of management is known as the process or
Functional Approach.
 The contributions of Henry Fayol can be studied under four heads
 Activities of Business
 Functions of manager
 Abilities of manager
 Principles of management
• Activities of Business
1. Technical- Production and manufacturing of goods
2. Commercial -Buying and selling
3. Financial- Acquisition and optimum use of resources
4. Security-Protection of human and non human resources
5. Accounting-Keeping accounts
6. Managerial- Functions performed by managers (POCCC)
The first five activities are called operating activities
Functions of a Manager
1. Planning
2. Organizing
3. Commanding
4. Co-ordinating
5. Controlling
• Managerial Qualities
1. Physical-health, vigour,
2. Mental - ability to understand and learn, judgement,
mental vigour, and capability
3. Moral-energy, firmness, initiative, loyalty, tact, and
dignity
4. Education - general acquaintance
5. Technical - peculiar to the function being performed
 Principles of Management
• 1. Division of work
work of all kinds must be divided & subdivided and allotted to
various persons according to their expertise in a particular area.
Subdivision of work makes it simpler and results in efficiency.
It also helps the individual in acquiring speed, accuracy and
specialisation in his performance.
Specialization leads to efficiency & economy in business
• 2. Authority and Responsibility:
Authority is Right to give orders whereas Responsibility is
the accountability for performing a job.
A person who have the authority should be responsible too
Both should be go to gather
• 3. Discipline
According to Fayol, "Discipline means sincerity, obedience,
respect of authority & observance of rules and regulations of
the enterprise".
subordinate should respect their superiors and obey their order.
Discipline is not only required on part of subordinates but also
on the part of management.
• 4. Unity of command-
one boss for one subordinate
• 5. Unity of Direction
Fayol advocates one head one plan which means that there should be
one plan for a group of activities having similar objectives.
Related activities should be grouped together and should be should be
under the charge of a particular manager.
• 6. Subordination of individual interest:
The organization's interests should come before individual interests.
Individual interest should be sacrificed for organization goal in case of
conflict.
Employees should be sincere towards the organizational goals
7. Remuneration of employees
Fair, and reasonable remuneration should be provided for satisfactory
performance
wage needs to be fixed on the basis of living cost, quantity of work
assigned, organizations financial position and prevailing wage in the
labour market
Related with equity theory of Adams
• 8. Order
A place for everything and everything in its place
• Material order: secure, appropriate and specific place for a material
machinery tools etc.
Social order: appointment of suitable employee for a suitable job.
• 9. Equity
Combination of fairness, kindness and justice
Fair treatment to employees who are in similar position
ensure justice and equal opportunity for all employees,
Impartial in dealing with employee issues
should not discriminate based on religion race, caste gender, etc.
• 10. Stability of tenure
Employees should not be transferred frequently from one job to
another
The period of service in a job should be fixed
Otherwise effort and money spent on training and development go
waste.
• 11. Centralisation and decentralisation
Centralization is a situation in which top management retains most of the
decision making authority.
Decentralization means allocation of decision making authority to
different levels.
There must be a proper balance between Centralization and
Decentralization.
The intensity of centralization and decentralization is depending on
number of factors such as the size of the business experience of superiors
and subordinates etc.
Fayol suggested that absolute centralization or decentralization is not
feasible. An organization should strike to achieve a balance between the
two.
12. Scalar chain
Formal line of authority which moves from highest to the lowest rank.
Every orders, instructions, messages, requests, explanation etc. has to
pass through Scalar chain
Gang plank: exception to this rule in case of emergency.
13. Initiative
Workers should be encouraged to take initiative in the work assigned to
them.
It means eagerness to initiate actions without being asked to do so.
Fayol advised that management should provide opportunity to its
employees to suggest ideas, experiences & new method of work.
It helps in developing an atmosphere of trust and understanding.
• 14. Esprit De Corps (Union is strength)
It refers to team spirit i.e. harmony in the work groups and mutual
understanding among the members.
Espirit De' Corps inspires workers to work harder.
Fayol cautioned the managers against dividing the employees into
competing groups because it might damage the moral of the workers and
interest of the undertaking in the long run.
To inculcate Espirit De' Corps following steps should be undertaken-.
There should be proper co-ordination of work at all levels
Subordinates should be encouraged to develop informal relations
among themselves.
Efforts should be made to create enthusiasm and keenness among
subordinates so that they can work to the maximum ability.

Efficient employees should be rewarded and those who are not up

to the mark should be given a chance to prove their performance.
 Max Weber
Born in Erfurt, Germany on April 21, 1864
German Sociologist
Economy and Society, the Protestant Ethic and the Spirit of
Capitalism, - book
• Weber’s Bureaucracy theory
 According to the bureaucratic theory of Max Weber, bureaucracy is the basis for
the systematic formation of any organisation and is designed to ensure efficiency
and economic effectiveness.
 He pointed that the authority flows from top to bottom and obedience flow from
bottom to top.
 Everything will be documented, File will talk
 Highly suitable for government organizations.
 Suitable for organizations were there is a narrow scope for changes.
His model of bureaucracy includes (principles of bureaucracy)
 Hierarchy of authority: In a bureaucratic organization, each level controls the
level below it. Also, the level above it controls it. A formal hierarchy is the basis of
central planning and centralized decision-making.
 Division of labour based on functional specialisation: Specialists do the work.
Also, the organization divides employees into units based on the type of work they
do or the skills they possess.
 Formal Rules and norms: The organization uses rules to exert control. Therefore,
the lower levels seamlessly execute the decisions made at higher levels.
Denial of Interpersonal Relationships: Bureaucratic organizations
treat all employees equally. They also treat all customers equally and
do not allow individual differences to influence them.
Employee placement based on technical competence only: Selection as
well as the promotion of employees is based on technical
qualifications and skills.
Career Orientation: The last principle from the six principles of
bureaucratic theory is the career orientation principle which focuses
on providing employees with growth opportunities and improving
their living standards.
 Types of authority by max weber
• 1. Tradditional Authority
Power legitimized by respect for long-established cultural patterns.
It comes from unwritten rules that are maintained over time.
Leaders in traditional authority are people who depend on an
established order or tradition.
Hereditary monarchies, Roman Catholic Church, Tibetan Buddhism,
etc.
• 2. charismatic authority
Power legitimized by exceptional, unusual, and extraordinary
personal abilities which inspire devotion and obedience.
Weber identified this extraordinary attribute as ‘Charisma’ whereas
Robert Bierstadt called it leadership and not an authority at all.
Jesus Christ, Mahatma Gandhi, Napoleon, Hitler, Mao, Julius
Caesar, Alexander the Great, Winston Churchill, and many more.
• 3. Legal authority
 Legal authority means having the right to control things in a formal
way because of rules and laws that have been officially made.

 This kind of authority is based on clear laws and rules that explain
what people are supposed to do and what they have the right to do.

(The theory of Social and Economic organisation 1947)

 Behavioural School of Management or
 Person centredNeo-classical
approach
Management-
 Neo-classical Theory is built on the base of classical theory.
 Classical theory concentrated on job content and management of physical
resources whereas, neoclassical theory gave greater emphasis to individual and
group relationship in the workplace.

 The neo- classical theory pointed out the role of psychology and sociology in the
understanding of individual and group behaviour in an organization.

 Two approaches- Human relation approach and behavioural science approach

 Elton Mayo (Father of human relation
 born in Australia approach)
 He was educated in Logic and Philosophy at St. Peter's College, Adelaide. He led
a team of researchers from Harvard University, which carried out investigation
in human problems at the Hawthorne Plant of Western Electrical Company at
Chicago in 1927.
 His main hypothesis is that relations between employers and employees should
be humanistic, not mechanistic
 They conducted some experiments (known as Hawthorne Experiments) and
investigated informal groupings, informal relationships, patterns of
communication, patterns of informal leadership etc.
 The experiment lasted up from 1924 to 1932.
• Stages of Hawthorne Experiments
• 1. Illumination Experiments (1924-1927)
These experiments aimed to examine the effects of different levels of
lighting on workers' productivity.
Researchers manipulated the lighting conditions in the work environment
and observed changes in output.
Surprisingly, regardless of whether the lighting was increased or
decreased, workers' productivity improved.
Hence it is proved that other than changes in the lightning conditions
something else affects the productivity.
• 2. Relay Assembly test room experiment:
 In this experiment, a small group of six girls was asked to work in a test
room.
 Changes in working conditions were tried on them as, less working hours,
improved working conditions, better wages, rest, interactions among
group members etc.
 All these factor increased productivity but, surprisingly, once again when
those conditions were withdrawn, the productivity did not go down.
 Mayo concludes that something other than these factors are important.
 These are social acceptance, recognition, participation in decision
making, freedom to work, interrelationships etc.
• 3. Mass Interviewing Program (1928-1930s):
 Researchers conducted extensive interviews with employees to understand
their attitudes, feelings, and opinions about their work and workplace.

 These interviews revealed that employees valued social interactions and

felt a sense of belonging and purpose when working in groups.

 This finding emphasized the importance of social factors and the informal
organization in influencing employee behaviour and satisfaction.
• 4. Bank Wiring Observation Room Experiment:
 These experiments were conducted to find out the impact of small groups
on the individuals. In this experiment, a group of 14 male workers were
formed into a small work group.
 The men were engaged in the assembly of terminal banks for the use in
telephone exchanges.
 The work involved attaching wire with switches for certain equipment
used in telephone exchanges.
 Hourly wage for each worker was fixed on the basis of average output of
each worker. Bonus as also payable on the basis of group effort.
 It was expected that highly efficient workers would bring pressure on less
efficient workers to increase output and take advantage of group incentive
plan.
 However, the strategy did not work and workers established their own
standard of output and this was enforced vigorously by various methods of
social pressure.
 The workers cited various reasons for this behaviour viz. fear of
unemployment, fear of increase in output, desire to protect slow workers etc.
 The Hawthorne experiments clearly showed that a man at work is motivated
by more than the satisfaction of economic needs.
 Management should recognise that people are essentially social beings and
not merely economic beings.
 As a social being, they are members of a group and the management should
try to understand group attitudes and group psychology.
 The following were the main conclusions drawn by
Prof.
1. Social Mayo on the basis of Hawthorne studies:
Unit: A factory is not just a place for work and money; it's also a
group of people who interact socially. People are naturally social, and
this social aspect at work plays a big role in motivating them. The Relay
Room's output increased because the people there worked well together
in a social group and had a good relationship with their supervisors.
2. Group Influence: When workers form a group, they create a shared
emotional connection that makes them act like a team even outside the
formal organization. These groups affect how they behave. Often, the
pressure from a group has a stronger effect on how hard workers work
than what their bosses tell them to do.
3. Group Behaviour: Management must understand that a typical group
behaviour can dominate or even supersede individual propensities.
4. Motivation: Human and social motivation can play even a greater role than
mere monitory incentives in moving or motivating and managing employee
group.
5. Supervision: The style of supervision affects worker’s attitude to work and
his productivity. A supervisor who is friendly with his workers and takes
interest in their social problems can get co-operation and better results from
the subordinates.
6. Working Conditions: Productivity increases as a result of improved
working conditions in the organisation.
7. Employee Morale: Mayo pointed out that workers were not simply
cogs, in the machinery, instead the employee morale (both individual
and in groups) can have profound effects on productivity.
8. Communication: Experiments have shown that the output increases
when workers are explained the logic behind various decisions and
their participation in decision making brings better results.
9. Balanced Approach: The problems of workers could not be solved by
taking one factor i.e. management could not achieve the results by
emphasizing one aspect. All the things should be discussed and
decision be taken for improving the whole situation. A balanced
approach to the whole situation can show better results.
• To be a socially accepted member of the group, a worker
had to avoid being
1. a “rate buster”, who turns out too much work;
2. a “chiseler”, who turns out too little; or
3. a “squealer”, who says something to a supervisor that
could be detrimental to another worker
Born in 1968
Mary Parker Follet
Management is the art of getting things done through others.
American social worker.
Mother of Modern management
Books: Democracy, Human relation, Organisational behaviours, Creative
Experience
Her work contrasted with the “scientific management” of FW Taylor
Some of the focus areas of the Mary Parker Follett Contribution to
Management are conflicts, authority, and leadership.
• Conflict Resolution
 Much of the Mary Parker Follett Contribution to Management is about
conflicts.
 In Mary Parker Follett’s Theory, she determined that there are three
ways in which conflicts are generally resolved.
 Dominance: Dominance is one party beating another party in a conflict.
This is the easiest way to resolve a conflict. However, it’s not a very
successful solution in the long term. It also makes other people in the
team uncomfortable, and the oppressed will always rebel against the
dominance, leading to a loss of focus. Because there has been no
compromise, both sides stick to their viewpoints, which means the conflict
can easily arise again.
 Compromise: A compromise is a conflict resolution that involves both parties giving in a
little, so the activity that was interrupted by the conflict can resume. Although a
compromise is a widely accepted way to resolve a conflict, few people are actually willing
to compromise. That’s because they have to give something up.

 Integration: The focus of conflict resolution in the Mary Parker Follett Contribution to
Management lies in the integration of two problems. In this solution, neither of the
parties has to give anything up and both their interests are served. Integration leads to
something new being started, something that can lead to innovation and to which new
values can be added. Integration and collaboration lead to better techniques and a higher
level of business intelligence.
 Types of leadership
1. Positional leadership: Positional leadership refers to the manager taking on
an authoritarian attitude that is expected of his position.
2. Personality leadership: Personality leadership refers to a person becoming
a leader as a result of it being in his nature, a powerful personality.
Compared to positional leaders, born leaders find it even easier to lead.
3. Functional leadership: Functional leadership is a form of leadership in
modern organisations. It has to do with the fact that in certain situations,
different people can take the lead. The one who is best qualified for a
specific action, or the one who has the right knowledge will take the lead in
that case.
 Principles of coordination
 Principle of early stage: Coordination should be started in the early
stages of planning and policy making. Heads of departments should
frame the policies with consulting other persons concerned.
Therefore, achieving coordination in the initial stages of planning and
policy making is necessary.
 Principle of continuity: coordination is a continuous process. It is a
never ending process which must go on all the time in the
organization. So management should make constant efforts to achieve
co-ordination.
 Principle of direct contact: Different departments should be
communicate with each other directly (Cross functioning) rather than
 Principle of reciprocal relations: No department can work in isolation from the
other departments. That is, when purchase department works with sales
department, which in turn works with finance department and personnel
department, each of the four departments finds itself influenced by the other
department in the total situation. Similarly, in a group every person influences all
others and is in turn influenced by others. When reciprocal relationships are
maintained cordially, adequate coordination can be secured in an enterprise.
 Chester Bernad
 Chester Barnard published his famous book ‘The Functions of the Executive in
1938. The book provided a base for the formation and development of various
management theories.
 In his book, Chester explains a comprehensive theory of behavior in formal
organizations that pivots around cooperation.
 He underlines that people in executive roles must foster a sense of purpose,
moral codes, ethical visions and create formal and informal communication
systems.
 According to Chester, people should cooperate. There is no place for conflicts
among workers
 He divided organisation into formal and informal
 Social system Approach
• Bernad’s Acceptance Theory of Authority
• The acceptance theory of authority states that a manager's authority
over his/her subordinates depends on the willingness of the
subordinates to accept his/her right to give orders and comply with
them.
 Herbert Simon
 Herbert Simon found out that classical organizational theories are
inapplicable to several administrative situations facing managers.
 Herbert tried to apply classical theories to current situations of his time, but
they didn’t fit. He also contradicted Henri Fayol’s work in management,
proving them to be mere proverbs of administrations rather than principles.
• Contributions
 Organization Concept: According to him organization is a complex network of
decision process. He viewed organizations as the decision making structures.
 Decision Making: He viewed that management itself is decision making.
According to him decision making consists of three stages:
1. Intelligence Phase-Searching
2. Design Phase-Inventing, developing and analyzing possible course of
action
3. Choice Phase-Actual selection
• Bounded Rationality
 He has advocated the principle of bounded rationality.
 According to him, managers are in search of optimal solutions but are
satisfied with good enough solutions.
 Managers are not able to maximize on account of various types of
Administrative man:
 It is a model of decision making.
 Administrative man adopts sacrificing approach rather than maximizing
approach of economic man.
 They do not have the full information about the problem They do not have
knowledge of all the possible alternative solutions to the problem and their
outcomes
 They do not have abilities to process competitive environment and technical
information.
 Administrative man fall under bounded rationality
 Some other thinkers in Neo-Classical
Management
1. Maslow- Need Hierarchy theory
2. Federick HerzBerg- Two factor Theory (Based on Job enrichment)
3. Douglus Macgregor
 Theory X and Theory Y
 Book: The human side of Enterprise
4. Renis Likert

 Books: New Pattern of Management, The human Organisation

 Extencive studies in the field of Leadership
 Leadership styles by Renis Likert
 Exploitative authoritative - Highly autocratic
 Benevolent authoritative - Master servant relationships
 Consultative - Considers the managers/subordinates view
 Participative – Democratic
• 5. Chris Argyris
 Personality and Organisation: Conflict between the System and the Individual (1957)
 Understanding Organisational Behaviour (1960)
 Contributions
 T-groups: T-group training is a phrase used to describe a number of similar training
methods whose purpose is to increase the trainee's skills in working with other people
 Espoused Theories: What the people profess to believe
 Theories in use: the theory they actually use when they take actions in the real world.
 Single loop and Double loop: refer the way people respond to changes in their
environment. A staunch supporter of job enrichment
• The concepts of "espoused theories" and "theories-in-use" were
developed by Chris Argyris and Donald Schön as part of their work on
organizational learning and human behavior.
• Espoused Theories: These are the ideas, beliefs, and plans that people or
groups openly talk about and say they believe in. It's like how they want
to act or what they think is the right way to do things. It's what they tell
others they believe or how they plan to behave.
• Theories-in-Use: On the flip side, theories-in-use are the real ways people
act, even though they might not talk about them. These are the hidden
ideas and ways of doing things that guide how someone or a group really
behaves. It's how they actually make choices and act, influenced by what
they've done before, their habits, and the situation they're in. These real
actions might be quite different from what they say they believe or how
they want to act.
• Single Loop Learning: In simple terms, single loop learning is about
fixing problems without questioning the underlying assumptions or
beliefs that led to those problems. It's like adjusting a process to make it
work better, but without changing the way you think about the process
itself. You're addressing the symptoms, not the root cause.
• Double Loop Learning: Double loop learning goes deeper. It involves not
only fixing the problem but also examining and challenging the
underlying assumptions, values, and ways of thinking that caused the
problem in the first place. It's like stepping back and asking, "Why are
we doing things this way? Is there a better way to approach the
situation?" It's a more reflective and transformative kind of learning that
can lead to real change and improvement.
 Human
The human Relation
relations movement approach
emerged in the late 1930s as an
outgrowth of scientific management.
This movement came from number of sources: psychologists, sociologists
and anthropologists who were critical of the narrow and limited concept
of organisation held by the scholars who contributed to the classical
theory.
They were mainly against the de-humanisation of organisation and
against treating human beings as cogs in the machine.
Importantly it is emerged from Elton Mayo
According to them social and psychological factors are important in
determining worker productivity and satisfaction. The movement shows
that efficient leaders are employee-centric, democratic and follow a
 Behavioural school
 Several psychologists and sociologists began the study of group
dynamics, Maslow, Douglas McGregor, Argyris, F. Herzberg, Rensis
Likert, J.G. Likert, Kurt Lewin, Keith Davis and others developed
the field of organizational behavior.
 It involves the study of attitudes, behaviour and performance of
individuals and groups in organizational settings.
 This approach came to be known as behavioral approach.
 It is a more mature version of human relation theory. The theory
proposes ideas about how managers should behave to motivate the
employees.
• Elements Of Neoclassical Theory
1. The Individual: The Neoclassical Theory Of Organization Emphasized
Individual Differences Ignored Earlier In The Classical Theory. Every
Individual Has Emotions, Feelings, Hopes, Aspirations, And
Expectations. They Have Got Their Own Merit.
2. Work Groups: Workers Are Not Isolated But Part Of Certain Groups,
Which Are Informal Organizations. Management Must Integrate These
Informal Organizations With The Formal Ones.
3. Participative Management: The Neoclassical Approach Of Management
Suggests The Participation Of Workers In Management. As The
Neoclassical Theory Is Employee-Oriented, Workers’ Participation In
Planning Job Contents And Operations Will Improve Productivity.
 Modern Management
1. Quantitative approach
 Management science
 Operational research
2. System approach
3. Contingency Approach
 The Quantitative
Approach(
 Main contributors-Taylor, Mathematical)
Gantt, Newman & Joel Dean, Gilbreths
 The quantitative approach aimed at improving the process of decision making
through the use of quantitative techniques. It is evolved from the principles of
scientific management.
 The quantitative approach to management uses statistics and mathematical
techniques to solve complex problems.
 Experts used taylor and gantt’s mathematical and statistical approaches from
various fields to solve these logistical issues.
 Thus, the quantitative theory of management was developed.
 This approach can help managers make decisions based on data and facts, rather than
personal opinions or feelings, that support the business.

 In this modern theory of organization, managerial decision-making is aided by the use

of statistical methods.

 However, this concept of modern management isn’t sufficient to run an organization.

A humanistic approach and an understanding of human motivation are also needed to
make the best use of the workforce.
• Management Science (Operations Research):
 It utilized mathematical and statistical approaches to resolve
management issues.
 It was developed during World War II as strategists attempted to apply
scientific knowledge and methods to the solve troubles of war.
 Industry started to apply management science after the war.
 The introduction of the computer technology made many management
science tools and concepts more practical for industry
• Production and Operations Management:
 Operations management is an applied form of management science.
 It deals with the effective management of the production process and the
timely delivery of an organization's products and services.

 Operations managers make use of tools like forecasting, inventory analysis,

materials requirement, planning systems, networking models, statistical
quality control methods, and project planning and control techniques.
 System Approach
 Main contributors - Johnson, Church man, Kenneth, Boulding & Rosen Zweig
 They viewed organisation as an organic and open system, which is composed of
interacting and interdependent parts, called subsystems ie. departments.

 Imagine a company as a big machine with many gears. If one gear stops
working well, it can affect the whole machine. Similarly, if one part of a
company isn't functioning properly, it can impact the entire organization's
success.
 With the systems approach, managers try to understand how changes in one area
can ripple through the whole organization. They also consider how different parts
of the organization depend on each other. This helps them make better decisions
and solve problems in a way that benefits the entire company.

 The systems approach to management is about seeing the bigger picture,

understanding how everything is connected, and making decisions that keep the
whole organization running smoothly.
 Inputs: Inputs represent the factors that are needed to create goods and
services. For example, inputs may include raw materials, capital, technology
or information.
 Transformational process: Transformational processes represent the activities
or abilities that convert the organization's inputs into outputs. For example,
these processes may include employees' work tasks or operational activities.
 Outputs: Outputs represent the results produced by an organization. These
outputs may include products, services and financial results, such as profits.
 Feedback: Feedback represents information related to the organization's
outcomes or outputs. Leaders can use this information to influence or make
decisions related to the organization's inputs.
 Contingency Approach
 John Woodward, Fiedler, Lorsch & Lawrence
 The contingency theory of management says that no single management
strategy works for every organization.

 Instead, many internal and external factors have an impact on the management
strategy that’s ultimately chosen.

 Leaders who utilize this theory do not adopt a single management style and
instead must identify and use different styles for different situations.
 As a result, these leaders also develop additional traits and skills that ensure
they can employ various management approaches effectively.

 The use of diverse styles can help make these leaders more flexible and
adaptable in the workplace.

 This modern theory of organization believes that there are three things at play
when figuring out A management strategy: the size of an organization, the
technology it uses and the leadership style.
 Schools of Management Thought
 Schools of management thought are theoretical frameworks for the study of
management that are based on different assumptions about human beings and
the organizations for which they work

 As the concept of management evolved, various schools of management thought

emerged.

 Different researchers and scholars have a different perspective regarding the

concept of management. These are known as Schools of Management Thought.

 Harold Koontz describes six schools of management theory as follows.

The management Process School
 Henry Fayol is the founder
 According to this school, management can be studied in terms of process
that it involves
 The process including -planning, organizing, staffing, directing and
controlling
 The main defect of the school is that it fails to address the current problems
of management that arise in a dynamic environment
The Empirical School
 The main contributors of empirical school of thoughts are Earnest Dale, Harvard
Business School, management association of many countries
 According to this school of management is the study of the experience of managers
in the past
 It is in a way, a "look past policy" for solving current problems
 The main technique suggested by this school is the case study method
 Theories of management can be developed by studying large number of experience
because some sort of generalisation can be possible
Human Behaviour School
 The main contributors of the school are Elton Mayo, Abraham Maslow, and
Mc Gregor
 According to this school, management is the study of the behaviour of the
people at work
 The main focus is on inter personal relations
 Motivation, leadership, communication,... are the essential elements of this
school
 The main limitation of the school is too much emphasis on the people
• Social System School
 Chester Bernard is the father of the school
 Other contributors of this school of thoughts are Herbert Simon and Rensis
Likert
 According to this school, organisation is a social system consisting various group
of people
 Informal organisation was emphasized by this school
 The main task of management is harmonizing and integrating the
organisational goals and group goals
 Cooperative system of management can be developed by understanding the
behaviour of people in groups
Decision theory school
 The decision theory school of management concentrates on the rational
approach to decisions where alternative ideas or courses of action are analyzed.
 The decision is the central focus.
 This approach looks at the basic problem of management around decision
making-selection of suitable course of action out of the given alternatives
 Also This school emphasizes the decision making role of the manager
 A manager is essentially a decision maker
 According to Peter Drucker whatever a manager does, does through making
decisions
 The success of manager is judged by his ability to take the right decisions at the
right time
 The mathematical school
 The main contributors of the school are Joel Dean, Newmann and Hicks and others
 According to this school mathematical tools are used for solving managerial problems
 The dictum that what cannot be measured, cannot be managed
 Operation research, linear programming, Queuing theory, gaming theory simulation
and modal building are some mathematical tools for solving managerial problems
 The main limitation of the school is that it has been found to be a complicated
 Other schools
1. The System Management School: This approach is based on the generalization that an
organization is a system and its components are inter-related and inter-dependent. The
effectiveness of system mainly depends upon the interdependency and inter-relations of the
various sub-systems

2. Contingency/Situational School: The basic essence of this approach is that organizations

have to cope with different situations in different ways. So, managers should develop
various methods, tools and action plans as per the required situations. Managers should
understand that there is no one best way to manage.