Chapter two

The Development of Management Thought

Objectives of the Chapter
 To Understand
 Early Approaches to management
 Classical theories
 Behavioral theories
 Modern theories to management

1
 2.1 Early Influences
A theory is a conceptual framework for
organizing knowledge that provides a
blueprint for various courses of action.
This stage of management covers the
time between:
 the beginnings of man's co-operative effort
to the start of his attempt to
approach the study of management
scientifically about 1880.

2
 Con……t
• Management has been practiced a long time.
• Organized endeavors directed by people
responsible for planning, organizing,
leading, and controlling activities have
existed for thousands of years.
• . Let’s look at some of the most interesting
examples

3
4
 Con…t
 The Egyptian pyramids,
 the Great Wall of China,
 the monument in Axum,
 the temple in Lalibela, and
 the castle of Gonder
 are proof that projects of tremendous scope,
employing tens of thousands of people, were
completed in ancient times.
It took more than 100,000 workers some 20
years to construct a single pyramid.
5
 Con…………t
Who told each worker what to do?
Who ensured that there would be enough stones at
the site to keep workers busy?
The answer is managers.
 Someone had to plan what was to be done,
organize people and materials to do it,
make sure those workers got the work done,
and impose some controls to ensure that
everything was done as planned

6
 Con……..t
During that period the contribution given by
religious and military groups to management
thought were significant & undeniable. E.g
 Roman Catholic Church was one of the most
effective formal organizations in the history
of western civilization.
 Military organizations also contributed in
their own simplistic way to the development
of managerial practices though there was
little use of theory in it

7
 Con…t
Starting in the late eighteenth century when
machine power was substituted for human power,
a point in history known as the industrial
revolution,

It revolutionized the economic system, initiated

mass production and the factory system of
production brought the need of huge collection of
capital.
 These large efficient factories needed someone:
 to forecast demand,
 ensure that enough material was on hand to make
products, 8
 Con..t
 assign tasks to people,
 direct daily activities, and so forth.
That “someone” was a manager:
 These factors brought the need of more thoughtful,
resourceful, and dynamic management.
 Management on traditional lines became useless.
 Rule of thumb could no longer exist.
 It had to be replaced by logical and rational
principles, scientific approach, and psychological
handling.

9
 Cont….
• Despite the long history of management, it walked as
a tortoise. Because of
 low esteem to business in society
 Indifferent approaches of economists, political
scientists’ psychologists, sociologists, etc towards
business organizations.
 Treatment of management as an art not as a science
and
 The attitudes that successful managers are born but
not made
These factors made management not develop and
studied systematically and scientifically
10
 Cont…
• In the 20 century, the situation had changed rapidly, some of the
factors that contributed to the need of a systematic management
are:
1. The development of capitalism and the emergence of industries,
mass production, the concentration of workers and organization
of trade unions, the growing competition for markets,
technological innovations, the increase in capital investment,
increasing obsolescence of instruments of production etc.
 forced organizations to be efficient or to find out ways for
efficiency.
2. The complexities of organizations, society became more complex.
These complexities of society were generated by:
 The increasing size of organizations
 High degree of division of labor & specialization
 Increase in government regulations & controls
 Organized trade-union activities &
 Pressure of various conflicting interest groups in society 11
 A few of the contributor of early influences are:

1. Robert Owen (1771-1858):

 He recognized that human resources were as valuable as
financial & material resources to the production of goods.
 He believed that factory workers would be more productive
if they were motivated through rewards rather than
punishments.
 He experienced with several motivating techniques. Some of
them were:
 He improved working conditions within the factory, i.e., providing
meals, bath facilities,
 Housing & marketing facilities
 Reducing the workday to 10 ½ hours with no night work for
children
 Refused to hire children under the age of 10
 Because of his emphasis on the workers, he is regarded as the
father of modern personnel management. 12
 2. Charles Babbage /1792/1871/
• He a British professor of mathematics, Charles
Babbage become convinced that the application
of scientific principles to work processes would
both increase productivity and lower expenses.
• He was an early advocator of division of labor
• He had also a strong understanding of the
importance of human resources as related to
efficiency
• He advocated profit-sharing plans & bonus
systems as ways to achieve better relations
between management & labor.
13
• Despite the suggestions given by the early
theorists, owners & managers did not begin
to raise the concern of the problem of
material & human efficiency.
• They raised the issue when markets were
becoming saturated, demands for greater
profits and when competition was becoming
keen.
• This emphasis on cutting costs and increasing
efficiency led to the emergence of the classical
school of management theory.
14
 2.2 Classical Management Theory

 Classical approach is the oldest formal school of

thought which began around 1900 and continued into
the 1920s.
 Its mainly concerned with the increasing the
efficiency of workers and organizations based on
management practices, which were an outcome of
careful observation.
 Classical approach mainly looks for the universal
principles of operation in the striving for economic
efficiency.

15
 Major theories

1. Scientific management focuses on the

“one best way” to do a job.
2. Administrative management focuses on
the manager & basic managerial functions.
3. Bureaucratic management focuses on
the guidelines for structuring with
formalization of rules, procedures and a
clear division of labor.
16
• Henri Fayol
(1841-1925)

• Max Weber
(1864-1920)

17
• Frederick Winslow Taylor
(1856-1915)

• Frank Gilberth (1868-1924) & Lillian Gilberth(1878-

1972)

18
1. Scientific management

19
Fedrick Winslow Taylor(1856-1915)
Father of Scientific Management

“one best way for doing a job”

20
In 1898, Taylor joined Bethlehem Steel.

Taylor was a mechanical engineer who wanted to

improve industrial efficiency.

Scientific management was a theory of

management that analyzed workflows, with the
objective of improving labor productivity
21
management of a business, industry, or
economy, according to principles of
efficiency derived from experiments in
methods of work and production,
especially from time-and-motion studies

Working in the steel industry, Taylor had

observed the phenomenon of workers'
purposely operating well below their
capacity, that is, soldiering. He attributed
soldiering to three causes:
22
The almost universally held belief among workers that if
they became more productive, fewer of them would be
needed and jobs would be eliminated.

Employees take great care never to work at a good pace for

fear that this faster pace would become the new standard.
If employees are paid by the quantity they produce, they fear
that management will decrease their per-unit pay.

Workers waste much of their effort by relying on rule-of-

thumb methods rather than on optimal work methods that
can be determined by scientific study of the task.
23
Taylor insisted that management itself
would have to change and further, that the
manner of change could be determined only
by scientific study.

Hence, term ‘Scientific Management’

evolved.

Taylor suggested that decisions based on

rules of thumb and tradition be replaced
with precise procedures developed after
careful study of individual situations

24
 Time Studies
To scientifically determine the optimal
way to perform a job, Taylor performed
experiments that he called time studies,
(also known as time and motion studies).

He use stop watches to measure the

workers efficiency

25
 Taylor's 4
Principles of
Scientific
Management

26
1. Develop a science for each element of an individual’s work to
replace rule-of-thumb work methods.

2. Scientifically select, train, and develop each worker .

3. heartily cooperate with the workers to ensure that the

scientifically developed methods are being followed.

4. Divide work nearly equally between managers and workers, so

that the managers apply scientific management principles to
planning the work and the workers actually perform the tasks.
27
Contributions

Initiated the careful

study of tasks and
jobs

Demonstrated the
importance of
personal selection
and training
28
 Criticism
Did not appreciate the social
context of work and higher needs
of workers.

Did not acknowledge variance

among individuals.

Tended to regard workers as

uninformed and ignored their
ideas for suggestions

29
FRANK B GILBRETH & LILLIAN M GILBRETH

Followers of Taylor

30
 Experiments

The husband and wife

Gilbreth team used motion
picture technology to study
the motions of the workers
in some of their
experiments.
31
Frank B Gilbreth (1868-1924) pioneered time and motion study
and arrived at many of his management techniques
independently of Taylor .

He stressed efficiency and was known for his

quest for “one best way” to do work.

His work had great impact on medical surgery

by drastically reducing the time patients
spent on operating table.

He invented a device – ‘MICRO CHRONOMETER’

in order to record workers movement and the
amount of time spend to done a job
32
 Henry Gantt (1861-1919)

• He was a contemporary of Frederick Taylor.

• Gantt is best known for his graphic system of
planning and control system that is still used today.
• His charts know as "Gantt Chart" enables managers
to visualize the completion stage of various
projects, such as procurement, of materials,
manufacturing and shipping.
• By these means managers coordinate related
activities, avoid delays, and otherwise make sure
that deadlines are met
33
 o Henri Fayol(1841-1925)
General administrative Theory

Father of
modern operational
management theory

34
Fayol:

-French mining engineer and a management

theorist.
-Started as an engineer at a mining company and
became Director in 1888.

- Viewed management as a profession that can be

trained and developed.

-First one to analyze the functions of management.

35
 Contd.
Made three major contributions to the
theory of Management:
A. A clear distinction b/n technical &
managerial skills.
B. Identified functions constituting the
management process.
C. Developed principles of management.

36
(A) According to,

-Activities
of an industrial enterprise can be
grouped in to six categories: technical,
commercial, financial, security, accounting &
managerial.
37
(1)Technical Processing production &
operation
(2)Commercial Buying, selling &
exchange
(3)Financial Optimum use of capital
(4)Security Protection of asset and
resources
(5)Accounting Ascertaining the
financial position
(6)Managerial Optimum use of
resources for optimum result
38
B. Fayol described management as a scientific process
built up of five elements:
1. Planning –process of activities required to meet
a goal.
2. Organizing–making orderly determination &
arrangement of a task.
3. Commanding(Directing) – involves guiding,
supervising, motivating & leading people for
attainment of the time-oriented tasks.
4. Coordinating- bringing together the
elements
5. Controlling- having control over all of the
aspects that contribute to meeting the
goal. 39
 C. Fayol’s Principles
• Henri Fayol, developed a set of 14 principles:
1. Division of Labour: allows for job specialization. Fayol
noted firms can have too much specialization leading to poor
quality and worker involvement.
2. Authority and Responsibility: Fayol included both
formal and informal authority resulting from special
expertise.
3. Discipline: obedient, applied, respectful employees
needed
4. Scalar Chain/The hierarchy) - The line of authority
runs in order of rank from top management to the
lowest level of the enterprise.
5. Centralization: the degree to which authority rests at
the very top. 40
 Fayol’s Principles
6. Unity of Direction: One plan of action to
guide the organization.
7. Unity of Command: Employees should
have only one boss.
8. Order: Each employee is put where they
have the most value.
9. Initiative: Encourage innovation.
10. Equity: Treat all employees fairly in
justice and respect.
41
 Fayol’s Principles
11. Remuneration of Personnel: The
payment system contributes to success.
12. Stability of Tenure: Long-term
employment is important.
13. General interest over individual
interest: The organization takes
precedence over the individual.
14. Esprit de corps: ‘promoting team spirit
will build harmony and unity within the
organization.
42
MAX WEBER(1864-1920)

43
German theorist and sociologist.

Follower of General Administrative

Theory proposed by Henry Fayol.
44
 Birth of Bureaucracy
During 1800’s, European Org. were managed
on a personal, family-like basis.

Employees loyal towards a single individual.

Resources used to realize individual desires.

Weber envisioned Org. would be managed
on an impersonal, rational basis. This form
of Org. is known as Bureaucracy.
45
 Characteristics

Org. based on rational authority would be more

efficient and adaptable to changes.

Employee selection and advancement is based on

competence and technical qualification.

Org. relies on rules and regulations which are

impersonal and applied uniformly to all employees.

46
 Division of labor

Managers subject Management &

to rules & ownership is
procedures separate

The Ideal
Bureaucracy

Positions Decisions
organized in recorded in
hierarchy writing

Selection based on
technical
qualification

47
Features of Weber's ideal bureaucracy:

Division of labor: - Jobs are broken down into simple, routine,

and well-defined tasks.
Authority Hierarchy : Positions in an Org. are organized in a
hierarchy.

Formal selection /technical competence:

Formal Rules & Regulations: - To ensure uniformity and to
regulate the action of employees there is a heavy dependence on
formal organizational rules.
Impersonality: - Rules & controls are applied uniformly
avoiding involvement with personalities and personal
preference of employees
Career Orientation /Separation from ownership
48
Limitation and contribution of bureaucracy
Today, the term Bureaucracy is taken on a negative
meaning.
Its associated with endless rules.
But still they provide a standard way of dealing with
employees.
Equal treatment for all employees.
This foundation enables many Org. to become
extremely efficient.

49
 2.3 Behavioral Management Theory/ Neoclassical
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
organizational goals.
50
 Theory X and Theory Y
Developed by Douglas McGregor(1906-1964)

Theory X Assumptions

People do not like work and try to avoid it.

People do not like work, so managers have to control,

direct, coerce, and threaten employees to get them to
work toward organizational goals.
People prefer to be directed, to avoid responsibility,
and to want security; they have
little ambition.
09/19/2024 51
 Theory X and Theory Y (cont’d)
Theory Y Assumptions
People do not dislike work; work is a natural part of
their lives.
People are internally motivated to reach objectives to
which they are committed.
People are committed to goals to the degree that they
receive rewards when they reach their objectives.
People seek both seek responsibility and accept
responsibility under favorable conditions.
People can be innovative in solving problems.
09/19/2024 52
 Human Relations Movement

Elton Mayo conducted a research activity in Hawthorne

Electric Plant in 1924 to research effect of physical
conditions on productivity called as Hawthorne Studies.

Research activities had been conducted between 1924-

1932

Researchers tested the effects of:

• Lightning
• Job breaks
• Physical arrangements; on productivity
The experiment was divided in to four:
• Illumination Experiment
• Really assembly test room experiments
• Incentives, rest period, changing working
hours
• Mass interviewing Programme
• Do you like your supervisor
• Bank wiring Observation Room Experiments
• Observer placed in back of room for several
months
• Took notes on all events, all interactions,
 The Hawthorne Studies

Control Group Experimental Group

 Abraham Maslow (1908-1970)
Need Hierarchy Theory

• Unlimited needs – when one need is

fulfilled, another arises
• Unfulfilled needs creates anxiety which
leads to motivation
• Needs arise in order

09/19/2024 56
 Classification of Needs:
Desire to become what one is
Self
Actualization capable of
Needs

Self respect, autonomy, etc.

Esteem
Needs
Social Affection, acceptance,
friendship
Needs
Security Physical, financial,
psychological
Needs
Physiological Food, shelter, clothing,
maternal need, sex.
Needs
09/19/2024 57
 Modern Management Theories

Quantitative Approach
• This theory of management can also be called management
science or mathematical operations research approach
• It tries to offer systematic analysis and solutions to many
complex problems faced by management.
• New mathematical models and statistical tools are applied
in the field of management, particularly in decision making
on complex problems. Some of the quantitative models
suggested are:
• Linear Programming – Technique managers use for
resource allocation choices.
• Critical path method – Technique used by manager for
work scheduling.
58
 Cont…
• Economic Order-Quantity Model – Technique
used to determine the optimum inventory
levels a firm should maintain.
• Queuing (waiting) live theory)
• Probability Theory
• Quantitative approach helps to solve many
managerial problems: such as
• Production /work scheduling
• Inventory control
• etc.
59
 The Systems Approach
• A SYSTEM is essentially a set or assemblage of
things interconnected, interdependent, (so as to
form a complex unit with a purpose:) things that
form a complex unity.
- a system can be open or closed.
• Open system:- a system interacting with the
environment
• Closed system:-a system that does not interact with
the environment.
• A system is a set of inter-related and inter-
dependent parts, arranged in such a way that
produces a unified whole. 60
 Systems Theory
Inputs Transformation process Outputs
Resources
Managerial and
Technological
 Goods
 Labor  Services
Abilities
 Materials  Profits and
 Planning
 Capital losses
 Organizing
 Machinery  Employee
 Staffing
 Information  satisfaction
 Leading
 Controlling
 Technology

Feedback
 The Contingency Approach

The basic idea of the contingency approach is that

there is no one best way of managing planning,
organizing, staffing, leading and controlling)

Rather, manages must find different ways to fit

different situations, method highly effective in one
situation may not work in other situations.

The contingency approach seeks to match different

situations with different management methods.

62
The end

63