Items Description of Module

Subject Name Human Resource Management

Paper Name Development of Management Thoughts, Principles and Types

Module Title Evolution of Management Thought

Module Id Module No. -2

Pre- Requisites Understanding of Management concept

Objectives To understand the evolution of concept of management

Keywords Management, Classical Approach, Modern Approach, Henry Fayol’s Principles

 QUADRANT-I

Module 2: Evolution of Management Thought

2.1 Learning Objective
2.2 Introduction
2.3 Early Management Thoughts
2.4 Classical Approach
2.5 Modern Management Approach
2.6 Quantitative Approach
2.7 System Approach
2.8 Summary

Learning Objective

After completing this module, you will be able to:

1. To understand the evolution of management thoughts

2. To know the impact of management thoughts
3. To analyze the prevailing procedure of management thoughts in industries

Introduction

Management is studied in business academics since earlier times, and it is considered as an

integral part to understanding business operations. People have been changing and redesigning
organizations for centuries. Though the 20th century is noticeable in history as an 'Era of
scientific management', still it does not indicate that management tactics were not used in yester
years. Many studies indicated that Management theory evolved with "scientific" and
"bureaucratic" management that used measurement, procedures and routines as the basis for
operations. Firms developed hierarchies to apply standardized rules to the place of work and
penalized labour for violating rules. With the "human relations" movement, companies
emphasized individual workers. Modern management theories, including system theory,
contingency theory and chaos theory, focus on the whole organization, with employees as a key
part of the system.

The evaluation of management can be categorized into different parts:

 Pre-Scientific Management Era (before 1880),

 Classical management Era (1880-1930),
 Neo-classical Management Era (1930-1950),
 Modern Management era (1950-on word).

Classical Management includes Scientific Management School, Administration Management

School, and Bureaucracy Management. Neoclassical Management includes Human relation
school and Behavioural Management School. Modern Management includes Social system
school, Decision theory school, Quantitative Management School, System Management School,
and Contingency Management School.

Pre-Scientific
Management Classical
Management
Era (before Era (1880-1930),
1880),

Neo-classical Modern
Management
Management Era (1950-on
Era (1930-1950), word).

EVOLUTION OF MANAGEMENT THOUGHTS

Early Management Thought

The period of 1700 to 1800 emphasizes the industrial revolution and the factory system
highlights the industrial revolution and the importance of direction as a managerial purpose.
Thus, the development of management theory can be recognized as the way people have
struggled with relationships at particular times in olden periods. Many economic theorists during
this period described the notion of management. Adam Smith and James Watt have been
recognized as two theorists who launched the world toward industrialization. Adam Smith
brought about the revolution in financial thought, and James Watt's steam engine provided
cheaper power that revolutionized English commerce and industry. Both provided the base for
modern concepts of business management theory and practice. Adam Smith explicated the
concept of division of labour, and Jacques Turgot described the importance of direction and
control. Smith stated that market and competition should be the controllers of economic activity
and that tax policies were destructive. The specialization of labour was the basis of Smith's
market system. According to Smith, a division of labour provided managers with the maximum
opportunity for improved output. From 1771 to1858, Robert Owens studied for concern for the
workers. He was repulsed by the working conditions and poor treatment of the workers in the
factories across Scotland. Owen became a reformer. He reduced the use of child labour and used
ethical influence rather than physical punishment in his factories. He reproached his fellow
factory owners for treating their equipment better than they treated their workers.

In the quantitative approach of early management thought, Charles Babbage (1792–1871) is

recognized as the supporter of operations research and management science. Babbage's scientific
innovations are a mechanical calculator, a versatile computer, and a punch-card machine. His
projects never became a commercial reality. However, Babbage is considered the creator of the
concepts behind the present day computer. The most popular book of Babbage, On the Economy
of Machinery and Manufacturers, described the tools and machinery used in English factories. It
discussed the economic principles of manufacturing and analysed the operations and the skills
used and suggested improved practices. Babbage considered in the benefits of division of labour
and was a supporter of profit sharing. He developed a method of observing manufacturing that is
the same approach utilized today by operations analysts and consultants analysing manufacturing
operations. Other theorists who contributed to the quantitative approach to early management
thought were Robert Owen, Andrew Ure and Charles Dupin, Henry Robinson Towne.

The Classical Approach

The classical approach is the earliest thought of management.The classical approach was
associated with the ways to manage work and organizations more efficiently. The classical
approach is categorized into three groups namely, scientific management, administrative
management, and bureaucratic management.
 CLASSICAL
APPROACH

Scientific
Adminsitrative Bureaucratic
Management
Management Management

I. Scientific Management: Scientific management which is also referred to Taylorism or the

Taylor system is a theory of management that evaluates and synthesizes workflows, with the aim
of improving labour productivity. In other words, conventional rules of thumb are substituted by
accurate procedures developed after careful study of an individual at work. Universal approaches
to Scientific management are developed for Efficiency of workers, Standardization of job
roles/activities and Discipline - the role of managers and the business hierarchy. The scientific
management theory had an enormous impact on the business industry at the beginning of the
20th century. Many big and victorious organizations, such as McDonald's hamburger chain or
call centres, utilised a modern version of scientific management. Among famous theorist,
Taylor's contribution in the area of scientific management is invaluable. The components of
scientific management are a determination of the task, planning, proper selection and training of
workers improvement in methods, modification of organization and mental revolution such as
'job specialization'. As a result, it became more concerned with physical things than towards the
people even though increased the output. Scientific Management focuses on worker and machine
relationships. Organizational productivity can be increased by enhancing the competence of
production processes.

Taylor's Scientific Management: Academic records indicated that F.W. Taylor and his
colleagues developed the first systematic study in management. He initiated an innovative
movement in 1910 which is identified as scientific management. Frederick Taylor is known as
the father of Scientific Management, and he published Principals of Scientific Management in
which he proposed work methods designed to boost worker productivity. Taylor asserted that to
succeed in these principles, it is necessary to transform the part of management and labour
completely. His philosophy was based on some basic principles. The first principle is a
separation of planning and doing. In the pre-Taylor era, an employee himself used to choose or
plan how he had to do his work and what machines and equipment would be necessary to
perform the work. But Taylor divided the two functions of planning and doing; he stressed that
planning should be delegated to specialists. The second principle of Taylor's management
approach is functional foremanship. Taylor launched functional foremanship for administration
and direction. Under eight-boss-scheme of functional foremanship, four persons like route clerk,
instruction card clerk, time and cost clerk and disciplinarian are associated with planning
function, and the remaining four-speed boss, inspector, maintenance foreman, and gang boss are
concerned with operating function. The third principle is elements of scientific management. The
main constituents of scientific management are work-study involving work important and work
measurement using method and time study, standardization of tools and equipment for workers
and improving working conditions, scientific Selection, placement and training of workers by a
centralized personal department. The fourth principle is a bilateral mental revolution. Scientific
management involves a complete mental change of employees towards their work, toward their
fellow-men and their employers. Mental revolution is also necessary on the part of management's
side, the foreman, the superintendent, the owners and board of directions. The fifth principle is
financial incentives. To encourage workers to give better performance, Taylor introduced the
differential piece-rate system.

(ii) Administrative Management: Administrative Management emphasizes the manager and

the functions of management. The main objective of Administrative management is to describe
the management process and philosophy of management. In contradiction of scientific
management, which deals mainly with jobs and works at the individual level of scrutiny,
administrative management gives a universal theory of management.

Henry Fayol's Administrative Management (1841–1925): Henri fayol is known as the father
of Modern Management. He was a popular industrialist and victorious manager. Fayol
considered that good management practice falls into certain patterns that can be recognized and
analysed. From this basic perspective, he devised a blueprint for a consistent policy of managers
one that retains much of its force to this day. His five function of managers was the plan,
organize, command, co-ordinate, and control. The principal of administrative management:
1.Division of labour, 2.Authority & responsibility, 3.Discipline, 4.Unity of command, 5.Unity of
direction, 6.Subordination of individual interests to the general interest, 7.Remuneration of
personnel, 8.Centralization, 9.Scalar chain, 10.Order, 11.Equity, 12.Stability of tenure,
13.Initiative and14 .Esprit de corps (union of strength). These 14 principles of management serve
as general guidelines to the management process and management practice. His principles of
management are described below.

1. Division of work: This is the principle of specialization which is detailed by economists

as an important to efficiency in the utilization of labour. Fayol goes beyond shop labour
to apply the principle to all kinds of work, managerial as well as technical.
2. Authority and responsibility: In this principle, Fayol discovers authority and
responsibility to be linked with the letter, the consequence of the former and arising from
the latter.
 3. Discipline: This discipline denotes "respect for agreements which are directed at
achieving obedience, application, energy and the outward marks of respect". Fayol
declares that discipline requires good superiors at all levels, clear and fair agreement, and
judicious application of penalties.
4. Unity of command: This is the principle that an employee should receive orders from one
superior only.
5. Unity of direction: Fayol asserted that unity of direction is the principle that each group
of activities having the same objective must have one head and one plan. As
distinguished from the principle of unity of command, Fayol observes unity of direction
as related to the functioning of personnel.
6. Subordination of individual interest to general interest: In any group, the interest of the
group should supersede that of the individual. When these are found to differ, it is the
function of management to reconcile them.
7. Remuneration of personnel: Fayol recognizes that salary and methods of payment should
be fair and give the utmost satisfaction to worker and boss.
8. Centralization: Fayol principle of centralization refers to the extent to which authority is
concentrated or dispersed in an enterprise. Individual circumstances will determine the
degree of centralization that will give the best overall yield.
9. Scalar chair: Fayol believe of the scalar chair as a line of authority, a 'Chain of Superiors"
from the highest to the lowest ranks and held that, while it is an error of subordinate to
depart 'needlessly' from lines of authority, the chain should be short-circuited when
scrupulous following of it would be detrimental.
10. Order: Breaking this principle into 'Material order' and 'Social Order', Fayol thinks of it
as the simple edge of "a place for everything (everyone), and everything (everyone) in its
(his) place". This is a principle of organization in the arrangement of things and persons.
11. Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from
personnel by a combination of kindliness and justice in managers dealing with
subordinates.
12. Stability of tenure of personnel: Finding that such instability is both the cause and effect
of bad management, Fayol indicated the dangers and costs of unnecessary turnover.
13. Initiative: Initiative is envisaged as the thinking out and execution of a plan. Since it is
one of the "Keenest satisfactions for an intelligent man to experience", Fayol exhorts
managers to "Sacrifice Personal Vanity" to permit subordinates to exercise it.
14. Esprit de corps: This is the principle that 'union is strength' an extension of the principle
of unity of command. Fayol here emphasizes the need for teamwork and the importance
of communication in obtaining it.

(iii) Bureaucratic Management:

Bureaucratic management denotes to the perfect type of organization. The principal of

Bureaucracy include defined and specialized functions, use of legal authority, hierarchical form,
written rules and procedures, technically trained bureaucrats, appointment to positions based on
technical expertise, promotions based on competence and defined career paths. The German
sociologist, Max Weber recognized as the father of modern Sociology who appraised
bureaucracy as the most logical and structure for the big organization. With this observation in
the business world, Weber summarized that earlier business firms were unproductively managed,
with decisions based on personal relationships and faithfulness. He proposed that a form of
organization, called a bureaucracy, characterized by division of labour, hierarchy, formalized
rules, impersonality, and the selection and promotion of employees based on ability, would lead
to more well-organised management. Weber also argued that authoritative position of managers
in an organization should be based not on tradition or personality but the position held by
managers in the organizational hierarchy.

Max Weber (1864-1920) devised a theory of bureaucratic management that emphasized the need
for a firmly defined hierarchy governed by clearly defined regulations and lines of authority. He
considered the perfect organization to be a bureaucracy whose activities and objectives were
reasonably thought out and whose divisions of labour were defined. Weber also believed that
technical capability should be emphasized and that performance evaluations should be made
completely by merit. Presently, it is considered that bureaucracies are huge, impersonal
organizations that put impersonal competence ahead of human needs. Like the scientific
management theorists, Weber sought to advance the performance of socially important
organizations by making their operations predictable and productive. Although we now value
innovation and flexibility as much as efficiency and predictability, Weber's model of
bureaucratic management evidently advanced the development of vast corporations such as Ford.
The bureaucracy was a particular pattern of relationships for which Weber saw great promise.
Although bureaucracy has been successful for many companies, in the competitive global market
of the 1990s organizations such as General Electric and Xerox, have adopted bureaucracy,
throwing away the organization chart and replacing it with ever-changing constellations of
teams, projects, and alliances with the goal of unleashing employee creativeness.

Modern Management Approaches

Behavioural Approach: Numerous theorists developed the behavioural approach of

management thought as they observed weaknesses in the assumptions of the classical approach.
The classical approach emphasized efficiency, process, and principles. Some management
scholars considered that this thought ignored important aspects of organizational life, particularly
as it related to human behaviour. Therefore the behavioural approach concentrated on the
understanding of the factors that affect human behaviour at work. This is an improved and more
matured description of human relations approach. The various theorists who have great
contribution in developing principles of management in this are Douglas Mc Gregor, Abraham
Maslow, Curt Levin, Mary Porker Follelt, Rensis Likert. Behavioural Scientists hold the classical
approach as highly mechanistic, which finds to degrade the human spirit. They choose more
flexible organization structures and jobs built around the capabilities and talent of average
employees. The behavioural approach has based the numerous principles.

1. Decision-making is done in a sub-optimal manner, because of practical and situational

constraints on the human rationality of decision-making. The behaviourists attach great
weight age on participative and group decision-making.
2. Behavioural Scientists promote self-direction and control instead of imposed control.
3. Behavioural Scientists believe the organization as a group of individuals with certain
goals.
 4. Behavioural scientists perceive that the democratic-participative styles of leadership are
enviable, the autocratic, task-oriented styles may also be appropriate in the certain
situation.
5. Behavioural scientists propose that different people react differently to the same situation.
No two people are exactly similar, and manager should tailor his attempts to influence his
people according to their needs.
6. Behavioural scientists identify that organizational variance and change are predictable.

The approach of Mary parker follett: Mary Parker Follett (1868-1933) developed the classic
structure of the classical school. However, she initiated many new elements particularly in the
area of human relations and organizational structure. In this, she introduced trends that would be
further developed by the talented behavioural and management science schools. Follett was
persuaded that no one could become a whole person except as a member of a group. Human
beings grew through their relationships with others in organizations. In fact, she explained
management as "the art of getting things done through people." She took for granted Taylor's
statement that labour and management shared a common purpose as members of the same
organization, but she considered that the artificial difference between managers and subordinates
is vague in this natural partnership. She believed in the power of the group, where individuals
could combine their diverse talents into something bigger. Moreover, Follett's "holistic" model of
control took into account not just individuals and groups, but the effects of such environmental
factors as politics, economics, and biology. Follett's model was a significant precursor of the idea
that management meant more than just what was happening inside a particular organization.

Douglas McGregor theory of management suggested that there is need to motivate employees
through authoritative direction and employee self-control and he introduced the concept of
Theory X and Y. Theory X is a management theory focused more on classical management
theory and assumed that workforce needs a high amount of supervision because they are
inherently lazy. It presupposes that managers need to motivate through coercion and punishment.
Theory Y is a management theory that assumes employees are determined, self-motivated,
exercise self-control, and enjoy mental and physical work duties. Theory Y is in line with
behavioural management theories. Theory X and Theory Y relates to Maslow's hierarchy of
needs in how human behaviour and motivation is the main priority in the workplace to maximize
output. Theory X: The theory that employees are inherently lazy and irresponsible and will tend
to avoid works unless closely supervised and given incentives, contrasted with Theory Y. Theory
Y: The theory that employees are capable of being ambitious and self-motivated under suitable
conditions, contrasted with Theory X.

Human Relations Approach: The human rationalists which also denote to neo-classicists,
focused as human aspect of the business. These theorists emphasize that organization is a social
system and the human factor is the most vital element within it.

There are numerous basic principles of the human relations approach that are mentioned below:

1. Decentralization: The concept of hierarchy employed by classical management theorists

is replaced with the idea that individual workers and functional areas (i.e., departments)
should be given greater autonomy and decision-making power. This needs greater
 emphasis on lateral communication so that coordination of efforts and resources can
occur. This communication occurs via informal communication channels rather than the
formal, hierarchical ones.
2. Participatory Decision-Making: Decision-making is participatory in the sense that those
making decisions on a day-to-day basis include line workers not normally considered to
be "management." The greater sovereignty afforded individual employees and the
subsequent reduction in "height" and increased in the span of control of the
organizational structure requires that they have the knowledge and ability to make their
own decisions and the communication skills to coordinate their efforts with others
without a nearby supervisor.
3. Concern for Developing Self-Motivated Employees: The importance of a system of
decentralized and autonomous decision-making by members of the organization
necessitates that those members be extremely "self-motivated". The goal of managers in
such an organization is to design and implement organizational structures that reward
such self-motivation and autonomy. Another is to negotiate working relationships with
subordinates that foster effective communication in both directions.

Elton Mayo and others conducted experiments that were known as Hawthorne experiments and
explored informal groupings, informal relationships, patterns of communication, and patterns of
internal leadership. Elton Mayo is usually popular as the father of Human Relations School. The
human relationists advocate the several factors after conducting Hawthorne experiments which
are mentioned below.

Hawthorne experiments

Social System
Social Informal Group Informal Neo Economic
Environment organizations Dynamics Leader Reward
 1. Social system: The organization, in general, is a social system consists of numerous
interacting parts. The social system established individual roles and established norms
that may differ from those of formal organization.
2. Social environment: The social climate of the job affects the workers and is also affected.
3. Informal organization: The informal organization does also exist within the framework of
the formal organization, and it affects and is affected by the formal organization.
4. Group dynamics: At the place of work, the workers often do not act or react as
individuals but as members of the group. The group plays an important role in
determining the attitudes and performance of individual workers.
5. Informal leader: There is an appearance of informal leadership as against formal
leadership and the informal leader sets and enforces group norms.
6. Non-economic reward: Money is an encouraging element but not the only motivator of
human behaviour. Man is diversely motivated and socio-psychological factors act as
important motivators.

Behavioural Science: Behavioural science and the study of organizational behaviour emanated
during 1950s and1960s. The behavioural science approach was a natural development of the
human relations movement. It concentrated on applying conceptual and analytical tools to the
problem of understanding and foresees behaviour in the place of work. The behavioural science
approach has contributed to the study of management through its elements of personality,
attitudes, values, motivation, group behaviour, leadership, communication, and conflict, among
other issues.

Contingency Approach: This approach of management thought focuses on management

principles and concepts that have no general and universal application under all conditions. Joan
Woodward in the 1950s has contributed to developing this approach in management.
Contingency school states that management is situational and the study of management
recognize the important variables in the situation. It distinguishes that all the subsystem of the
environment is interconnected and interrelated. By studying their interrelationship, the
management can find a resolution to the specific situation. Theorists stated that there is no
effective way of doing things under all business conditions. Methods and techniques which are
extremely effective in one situation may not give the same results in another situation.

The Quantitative Approach Of Management Thought

The quantitative approach aimed at enhancing the process of decision-making through the use of
quantitative techniques. It is evolved from the principles of scientific management.

1. Management Science (Operations Research): Management science which is also

known as operations research 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 intricate troubles of war. The 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
2. Production and Operations Management: W. Edwards Deming exercised a great
influence in developing contemporary ideas to improve productivity and quality. Major
areas of study within operations management include capacity planning, facilities
location, facilities layout, materials requirement planning, scheduling, purchasing and
inventory control, quality control, the computer integrated manufacturing, just-in-time
inventory systems, and flexible manufacturing systems.

Systems Approach Of Management Thought

The systems approach deals with the thoroughly understanding the organization as an open
system that converts inputs into outputs. The systems approach has a great impact on
management thought in the 1960s. During this period, thinking about managing practices
allowed managers to relate different specialities and parts of the company to one another, as well
as to external environmental factors. The system approach focuses on the organization as a
whole, its communication with the environment, and its need to achieve equilibrium.

System approach

Summary
To summarize, there are important theories of Management and each theory has a distinct role to
the knowledge of what managers do. Management is an interdisciplinary and global field that has
been developed in parts over the years. Numerous approaches to management theory developed
that include the universal process approach, the operational approach, the behavioural approach,
the systems approach, the contingency approach and others. F W Taylor, Adam Smith, Henry
Fayol, Elton Mayo and others have contributed to the development of Management concept. The
classical management approach had three major categories that include scientific management,
administrative theory and bureaucratic management. Scientific management highlighted the
scientific study of work methods to improve worker efficiency.