Evolution of Management

Theories
Lecture 2

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 What is a theory?
• a system of ideas intended to explain something, especially one based
on general principles independent of the thing to be explained.
• a set of principles on which the practice of an activity is based
• a plausible or scientifically acceptable general principle or body of
principles offered to explain phenomena

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 Stages in the evolution of management thought
• Management started in the early days of man when man saw the
need to live in groups
• People were organized into groups according to their strength, mental
capacities, and intelligence.
• The industrial revolution brought drastic change in management
• Four different stages
1. Pre-scientific management period – Charles Babbage
2. Classical theory – Taylor
3. Neo-classical theory or behavior approach – Fayol, and Mayo
4. Bureaucratic Model of Max Weber

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 Pre-scientific management period

• Utilization of mathematics and science to be more

accurate and productive instead of relying on
guesswork and suggestions by Prof. Charles Babbage
• Personnel management
• Focus was on employee welfare
• Introduction of cooperation and trade unions
• Training for employees, education of their children, etc.

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 The scientific management theory
• Also regarded as the classical management theory
• Developed and published by Frederick Winslow Taylor in 1909
• It focused on:
• job content
• Standardization
• division of labor, and
• a scientific approach towards the organization.
• Managers used to give orders to their workers with no guidance on how to
accomplish them.
• Managers and employees rarely, if ever, had interaction with one another.
Taylor believed this was an inefficient way to operate a business and
recommended some key changes.

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 Administrative Management Theory
• Also called the neo-classical management theory
• Administrative management theory was developed by Henri
Fayol in the early 1900s and is considered to be highly
relevant even today.
• Thought to be an improvement of the classical theory.
• it modified and improved upon the classical theory.
• Classical theory focused more on the area of job content,
including the management of physical resources, while the neo-
classical theory gave more profound emphasis on employee
relationships in the work environment.

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 Henri Fayol’s 14 principles of management
1. Division of work
Segregating work in the workforce among workers enhance the quality of work,
improves productivity, efficiency, accuracy and speed of the workers
2. Authority and responsibility
Authority facilitates managers to work efficiently, and responsibility makes
them responsible for the work done under their guidance or leadership.
3. Discipline
4. Unity of command
This means an employee should have only one boss and follow his command. If
an employee has to follow more than one boss, there begins a conflict of
interest and can create confusion.

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Henri Fayol’s 14 principles of management …
5. Unity of direction
all the people working in a company should have one goal and motive which
will make the work easier and achieve the set goal easily
6. Subordination of individual interest
work unitedly towards the interest of a company rather than personal interest.
Be subordinate to the purposes of an organization.
7. Remuneration
Remuneration can be monetary or non-monetary. However, it should be
according to an individual’s efforts they have made

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 Henri Fayol’s 14 principles of management …
8. Centralization
the management or any authority responsible for the decision-making process
should be neutral
9. Scalar chain
hierarchy steps should be from the top to the lowest. This is necessary so that
every employee knows their immediate senior also they should be able to
contact any, if needed.
10. Order
A company should maintain a well-defined work order to have a favorable work
culture. The positive atmosphere in the workplace will boost more positive
productivity.
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 Henri Fayol’s 14 principles of management …
11. Equity
All employees should be treated equally and respectfully. It’s the responsibility of a
manager that no employees face discrimination
12. Stability
An employee delivers the best if they feel secure in their job. It is the duty of the
management to offer job security to their employees.
13. Initiative
Management should support and encourage the employees to take initiatives in an
organization. It will help them to increase their interest and make then worth.
14. Esprit de Corps
It is the responsibility of the management to motivate their employees and be
supportive of each other regularly. Developing trust and mutual understanding will
lead to a positive outcome and work environment.

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 Elton Mayo’s relation theory
• Mayo introduced the Human Relations School of thought, which
focused on managers taking more of an interest in the workers,
treating them as people who have worthwhile opinions and realizing
that workers enjoy interacting together.
• Mayo concluded that workers are best motivated by:
• Better communication between managers and workers
• Greater manager involvement in employees working lives
• Working in groups or teams

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 Elton Mayo’s relation theory …

• Hawthorne experiments (West Electric’s Hawthorne plant located in

Chicago)
• The experiment focused on the relationship between the efficiency of
employees and workplace lighting. The study was carried out in the
year 1924.
• One of the groups was regarded as the control while the other was
the main group.
• And in the main group, the lighting condition was increased so know if
worker’s productivity will increase, and it did.

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 Elton Mayo’s relation theory …

• However, in addition to the experiment done using

lighting, other incentives were introduced to have
more comprehensive research and result.
• They include rest pauses and payment incentives,
which were also manipulated at various intervals to
have varied output.

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 Elton Mayo’s relation theory …
• Something strange took place.
• When the light became low in the control group, the team also figured out that
productivity also improved to some degree. In other words, employee satisfaction
improved.
• No factual conclusion could be reached even with all the results at their
disposal.
• Mayo, who had not been part of the experience all along was invited to
contribute. And his findings were contrary to what every other person
believed or had in mind.
• Mayo was quick to point out the fact that workers are not machines and
should not be treated as such. In short, how they are treated and the
environment they find themselves is equally as important as anything else.
They recognized that employees do have a sense of belonging and long for
recognition too.
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 Bureaucratic Model of Max Weber
• Max Weber, a German scientist, defines bureaucracy as a highly
structured, formalized, and also an impersonal organization.
• He also instituted the belief that an organization must have a defined
hierarchical structure and clear rules, regulations, and lines of
authority which govern it.

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Major principles of Weber’s bureaucratic form
1. A formal hierarchical structure – 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.
2. Rules-based Management – The organization uses rules to exert
control. Therefore, the lower levels seamlessly execute the
decisions made at higher levels.
3. Functional Specialty organization – Specialists do the work. Also,
the organization divides employees into units based on the type of
work they do or the skills they possess.

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Major principles of Weber’s bureaucratic form …
4. Up-focused or In-focused Mission – If the mission of the
organization is to serve the stockholders, board, or any other
agency that empowered it, then it is up-focused. On the other
hand, if the mission is to serve the organization itself and those
within it (like generating profits, etc.), then it is in-focused.
5. Impersonal – Bureaucratic organizations treat all employees
equally. They also treat all customers equally and do not allow
individual differences to influence them.
6. Employment-based on Technical Qualifications – Selection as well
as the promotion of employees is based on technical qualifications
and skills.

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Characteristics of Weber bureaucracy theory
• Weber bureaucracy ideally has the following characteristics:
• Specialization of labor
• A formal set of rules and regulations
• Well-defined hierarchy within the organization
• Impersonality in the application of rules

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 Criticism against Weber bureaucratic theory
• The rules are inflexible and rigid. Further, there is too much
emphasis on these rules and regulations.
• Informal groups do not receive any importance. In current
times, informal groups play a huge role in most business
organizations.
• Typically, bureaucracy involves a lot of paperwork which
leads to a waste of time, money, and also effort.
• The rules and formalities lead to an unnecessary delay in the
decision-making process.
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Criticism against Weber bureaucratic theory …
• While Government organizations can benefit from a bureaucratic
structure, private business organizations need quick decision-making
and flexibility in procedures. Therefore, it is not suitable for the latter.
• While the technical qualification of the employee is an important
aspect of his promotion, a bureaucratic organization does not
consider the employee’s commitment and dedication.
• There is limited scope for Human Resource management.
• Coordinating and communicating is difficult.

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• NOTE
• Douglas McGregor’s Theory X and Theory Y are not part of the
evolution of management theories
 Douglas McGregor’s Theory X and Theory Y
• What motivated you to come to class/ lectures this morning?

• What do you think motivates people to go to work each day?

• Do you think people get great satisfaction from their work and take
pride in doing the best possible job? Or do you think that they see it
as a burden, and simply work for the money?

• These assumptions about your team members can have a significant

influence on how you manage them.

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Theory X and Theory Y by Douglas McGregor’
• Douglas McGregor developed two contrasting theories that
explained how managers' beliefs about what motivates their
people can affect their management style.
• Theory X and Theory Y.
• These theories continue to be important even today.
• They refer to two styles of management
• – authoritarian (Theory X) and
• participative (Theory Y).

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 Assumptions under Theory X
• An average employee intrinsically does not like work and tries to
escape it whenever possible.
• Since the employee does not want to work, he must be persuaded,
compelled, or warned with punishment so as to achieve
organizational goals. A close supervision is required on part of
managers. The managers adopt a more dictatorial style.
• Many employees rank job security on top, and they have little or no
aspiration/ ambition.

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 Implications of Theory X
• According to McGregor, organizations with a Theory X approach tend
to have several tiers of managers and supervisors to oversee and
direct workers. Authority is rarely delegated, and control remains
firmly centralized. Managers are more authoritarian and actively
intervene to get things done.
• Although Theory X management has largely fallen out of fashion in
recent times, big organizations may find that adopting it is
unavoidable due to the sheer number of people that they employ and
the tight deadlines that they have to meet.

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 Assumptions under Theory Y
• Employees can perceive their job as relaxing and normal. They exercise
their physical and mental efforts in an inherent manner in their jobs.
• Employees may not require only threat, external control and coercion to
work, but they can use self-direction and self-control if they are dedicated
and sincere to achieve the organizational objectives.
• If the job is rewarding and satisfying, then it will result in employees’
loyalty and commitment to organization.
• An average employee can learn to admit and recognize the responsibility.
In fact, he can even learn to obtain responsibility.
• The employees have skills and capabilities. Their logical capabilities should
be fully utilized. In other words, the creativity, resourcefulness and
innovative potentiality of the employees can be utilized to solve
organizational problems.

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 Implications of Theory Y
• Theory Y managers have an optimistic, positive opinion of
their people, and they use a decentralized, participative
management style. This encourages a more collaborative,
trust-based relationship between managers and their team
members.
• People have greater responsibility, and managers encourage
them to develop their skills and suggest improvements.
Appraisals are regular but, unlike in Theory X organizations,
they are used to encourage open communication rather than
control staff.
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Theory X and Theory Y by Douglas McGregor’
• Theory Y has become more popular among organizations. This
reflects workers' increasing desire for more meaningful careers that
provide them with more than just money.
• It's also viewed by McGregor as superior to Theory X, which, he says,
reduces workers to "cogs in a machine," and likely demotivates
people in the long term.

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 Theory X and Theory Y in the Workplace
• Most managers will likely use a mixture of Theory X and
Theory Y. You may, however, find that you naturally favor one
over the other. You might, for instance, have a tendency to
micromanage or, conversely, you may prefer to take a more
hands-off approach.
• Although both styles of management can motivate people,
the success of each will largely depend on your team's needs
and wants and your organizational objectives.

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 Theory X and Theory Y in the Workplace …

• You may use a Theory X style of management for new

starters who will likely need a lot of guidance, or in a
situation that requires you to take control such as a crisis
• But you wouldn't use Theory X when managing a team of
experts who are used to working under their own initiative,
and need little direction. If you did, it would likely have a
demotivating effect and may even damage your relationship
with them.

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 Challenges in Theory X and Theory Y

• The restrictive nature of Theory X, for instance, could cause

people to become demotivated and non-cooperative if your
approach is too strict. This may lead to high staff turnover
and could damage your reputation in the long term.
• Conversely, if you adopt a Theory Y approach that gives
people too much freedom, it may allow them to stray from
their key objectives or lose focus. Less-motivated individuals
may also take advantage of this more relaxed working
environment by shirking their work.
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