2-1

2
The Evolution of
Management
Theory

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-2

The Importance of Theory and History

 Why Theory?
 A theory is a conceptual framework for organizing knowledge and
providing a blueprint for action.
 Management theories, used to build organizations, are grounded in
reality. Most managers develop their own theories about how they
should run their organizations.
 Why History?
 An awareness and understanding of important historical developments
in management are also important to contemporary managers in
furthering the development of management practices and in
avoiding the mistakes of others in the past.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-3

Precursors of Management Theory

D Greeks

C Babylonians G Venetians

B Egyptians E Romans

A Sumerians F Chinese

3000 B.C. 2500 B.C. 2000 B.C. 1500 B.C. 1000 B.C. 500 B.C. A.D.500 A.D.1000 A.D.1500

A Used written rules and regulations for governance E Used organized structure for communication and control

B Used management practices to construct pyramids F Used extensive organization structure for government
agencies and the arts
C Used extensive set of laws and policies for governance
G Used organization design and planning concepts to
D Used different governing systems for cities and state
control the seas

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-4

Evolution of Management Theory

Figure 2.1 Org. Environment

Quantitative Management

Behavioral Management
1890

Administrative Management

Scientific Management

Irwin/McGraw-Hill
1940 2000
©The McGraw-Hill Companies, Inc., 2000
 2-5

Classical Management Perspective

Consists of two different viewpoints:

 Scientific Management
 Concerned with improving the performance of individual
workers (i.e., efficiency).
 Grew out of the industrial revolution’s labor shortage at the
beginning of the twentieth century.
 Administrative Management
 A theory that focuses on managing
the total organization.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-6

Scientific Management
Frederick Taylor (1856–1915)
 Considered the “Father of Scientific Management.”
 Replaced old rule-of-thumb methods of how to do work
with scientifically-based work methods to eliminate
“soldiering” where employees deliberately worked at a
pace slower than their capabilities.
 Believed in selecting, training, teaching, and developing
workers.
 Used time studies of jobs, motion study, standards
planning, exception rule of management, instruction cards,
and piece-work pay systems to control and motivate
employees.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-7

Other Scientific Management Pioneers

 Frank and Lillian Gilbreth
 Reduced the number of movements in bricklaying, resulting
in increased output of 200%.
 Henry Gantt
 Was an early associate of Fredrick Taylor.
 Developed other techniques, including the Gantt chart, to
improve working efficiency through planning/scheduling.
 Harrington Emerson
 Advocated job specialization in both managerial and
operating jobs.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-8

Steps in Scientific Management

1 2 3 4
Supervise employees
Develop a science Scientifically select Continue to plan
to make sure they
for each element of employees and then the work, but use
follow the prescribed
the job to replace old train them to do the job workers to get the
methods for performing
rule-of-thumb methods as described in step 1 work done
their jobs

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-9

Principles of Scientific Management

 Develop science for each element of an individual’s
work, which replaces the old rules of thumb method
 Scientifically select and then train, teach & develop the

worker
 Cooperate with the workers so as to ensure that all work

is done in accordance with the principles of the science

that has been developed.
 Divide work & responsibility almost equally between

management & workers.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-10

Problems of Scientific Management

Managers often implemented only the
increased output side of Taylor’s plan.
 They did not allow workers to share in increased
output.
 Specialized jobs became very boring, dull.
 Workers ended up distrusting Scientific
Management.
Workers could purposely “under-perform
Workers are considered as machine

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-11

Classical Management Perspective (cont’d)

Administrative Management Theory
 Focuses on managing the whole organization rather than
individuals.
Henri Fayol, (1841-1025) French Industrialist
 Wrote “General and Industrial Management.”
 Helped to systematize the practice of management.

 Was first to identify the specific management functions of

planning, organizing, leading, and controlling.

 Improve Managerial Effectiveness

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-12

Fayol’s Principles
Henri Fayol, developed a set of 14 principles:
1. Division of Labor: allows for job specialization.
 Fayol noted firms can have too much specialization leading to
poor quality and worker involvement.
2. Authority and Responsibility: Fayol included both formal
and informal authority resulting from special expertise.
3. Unity of Command: Employees should have only one
boss.
4. Scalar Chain: a clear chain from top to bottom of the firm.
5. Centralization: the degree to which authority rests at the
very top.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-13

Fayol’s Principles
6. Unity of Direction: One plan of action to guide the
organization.
7. Equity: Treat all employees fairly in justice and
respect.
8. Order: Each employee is put where they have the
most value.
9. Initiative: Encourage innovation.
10. Discipline: obedient, applied, respectful employees
needed.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-14

Fayol’s Principles
11. Remuneration of Personnel: The payment system
contributes to success. Compensation should be fair
both to employee and to the organization.
12. Stability of Tenure: Long-term employment is
important.
13. General interest over individual interest: The
organization takes priority over the individual.
14. Esprit de corps: team sprit, teamwork an a sense of
unity and togetherness should be fostered and
maintained.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-15

Administrative Management
Max Weber, (1864-1920) German sociologist.

He developed the concept of bureaucracy.

 A formal system of organization and administration to
ensure effectiveness and efficiency.
 Weber developed the six principles on Bureaucracy

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-16
Principles of Bureaucracy
 Division of labor: jobs are broken down into simple, routine and
will defined task
 Authority Hierarchy: Offices or positions are organized in a
hierarchy, each lower one being controlled & supervised by a higher
one.
 Formal Selection: All organization members are to be selected on
the basis of technical qualification demonstrated by training,
education or formal examination
 Formal rules & regulations: To ensure uniformity to regulate the
action of the employees.
 Impersonality: Rules and controls are applied uniformly, avoiding
involvement with personalities & personal preference of employees
 Career Oriented: managers are professional officials rather than
owners of the units they manage. They worked for fixed salaries and
pursue their careers within the organization.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-17

Behavioral Management
 Focuses on the way a manager should personally
manage to motivate employees.
 Mary Parker Follett & Hugo Munsterberg are
the influential leaders in early managerial
theory.
Emphasizes individual attitudes and Behaviors and
group processes in the Organization.
 Suggested workers help in analyzing their jobs for
improvements.
 The worker knows the best way to improve the job.
 If workers have the knowledge of the task, then they
should control the task.
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 2-18
The Hawthorne Studies
 Study of worker efficiency at the Hawthorne Works of the
Western Electric Co. during 1924-1932.
Illumination Test:
 Worker productivity was measured at various
levels of light illumination.
 Researchers found that regardless of whether the
light levels were raised or lowered, productivity
same
 Relay assembly experiments
 Informal interpersonal Relationship of the
workers in the organization affects in production
 Actually, it appears that the workers enjoyed the attention
they received as part of the study and were more productive.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-19

Theory X and Y
Douglas McGregor proposed the two different
sets of worker assumptions.
 Theory X: Assumes the average worker is lazy,
dislikes work and will do as little as possible.
 Managers must closely supervise and control through
reward and punishment.
 Theory Y: Assumes workers are not lazy, want to
do a good job and the job itself will determine if the
worker likes the work.
 Managers should allow the worker great latitude, and
create an organization to stimulate the worker.
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 2-20

Theory X v. Theory Y
Figure 2.3

Theory X Theory Y
Employee is lazy Employee is not
lazy
Managers must
closely supervise Must create work
setting to build
Create strict rules initiative
& defined
rewards Provide authority
to workers
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 2-21

Theory Z
William Ouchi researched the cultural
differences between Japan and USA.
 USA culture emphasizes the individual, and managers
tend to feel workers follow the Theory X model.
 Japan culture expects worker committed to the
organization first and thus behave differently than USA
workers.
Theory Z combines parts of both the USA
and Japan structure.
 Managers stress long-term employment, work-group, and
organizational focus.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-22

Japanese Management American Management

Decision making collectively Single decision making
Joint responsibility and Single responsibility and
accountability accountability
Designation changes slowly Designation changes fast
Informal and Democratic Formal and Autocratic leadership
leadership
Job life and personal life Job life and personal life considered
considered as single separately
Get reword for long term work Get reword for short term work
Group reword Individual reword
Lifetime job certainty Short job tenure

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-23
Quantitative management
 Applying Quantitative Techniques in Management
 Uses rigorous quantitative techniques to maximize
resources.
Management Science: Focuses Specifically on the
development of mathematical models. It utilizes linear
programming, modeling, simulation systems.
Operations management: Concerned with Helping the
organization more Efficiently Produce Its Products or
Service
Total Quality Management (TQM): focuses on improved
quality.
Management Information Systems (MIS): provides Internal
& External information about the organization.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-24

Organization-Environment Theory
 Considers relationships inside and outside the
organization.
The environment consists of forces, conditions, and
influences outside the organization.

SYSTEM PERSPECTIVE
 Systems theory considers the impact of stages:
Input: acquire external resources.
Conversion: inputs are processed into goods and services.
Output: finished goods are released into the environment.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-25

The Systems Perspective of Organizations

Outputs into
Inputs from the Transformation
the environment:
environment: process: technology,
products/services,
material inputs, operating systems,
profits/losses,
human inputs, administrative
employee behaviors,
financial inputs, and systems, and
and information
information inputs control systems
outputs

Feedback

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-26
Systems Considerations
System An Interrelated Set of Elements Functioning
As a Whole
An open system Is An Organizational System that
interacts with the environment.
A closed system is self-contained That Doesn’t
Interact With the Environment.
 Closed systems often undergo entropy and lose the ability
to control itself, and fails.
Synergy: Two or more Subsystems Working together
to Produce more than the Total of What might Produce
Working Along.
Entropy: A normal Process Leading to System Decline
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 2-27

Contingency Theory
Assumes there is no one best way to manage.
 The environment impacts the organization and
managers must be flexible to react to
environmental changes.
 The way the organization is designed, control
systems selected, depend on the environment.
Technological environments change rapidly,
so must managers.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 2-28

Types Of Organizational Structures

Mechanistic: Authority is centralized at the
top. (Theory X)
 Employees closely monitored and managed.
 Very efficient in a stable environment.
Organic: Authority is decentralized
throughout employees. (Theory Y)
 Much looser control than mechanistic.
 Managers can react quickly to changing
environment.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000