The Evolution of Management

Theory
Learning Objectives
 Explain what a management theory is.
Understand the evolution of management theories
and their major contributions.
Evolution of Management Theory
The driving force behind the evolution of
management theory is the search for better ways to
utilize organizational resources.
Evolution of Management Theory
Organizational Environment Theory

Management Science Theory

Behavioral Management Theory

Administrative Management Theory

Scientific Management Theory

1900 - 1930
THE CLASSICAL SCHOOL OF MANAGEMENT
Core Ideas
Application of science to the practice of management.
Development of basic management functions.
Articulation and application of specific principles of
management.
Evolved in response to the shift from handicraft to
industrial production.
Emphasis is on economic rationality of people and
organizations; motivated by economic incentives, they
make choices that yield the greatest monetary benefits.
Evolution of modern management began in the
late nineteenth century, after the industrial
revolution.

Economic, technical and cultural changes

Mechanization changed systems like crafts

production into large scale manufacturing, where
semi or unskilled workers operated machineries.
 Small-scale Large-scale
Crafts Production Mechanized Manufacturing

Managed by engineers who only had

Technical orientation

Problems faced:

•How to handle people

•Social problems relating to working together
in large groups
•How to increase efficiency of the worker-task mix
Job specialization and the Division of Labor
Famous economist, Adam Smith, journeyed around
England in 1700’s studying the effects of industrial
revolution.
 Crafts-style Factory System

Each worker performed

Each worker responsible for
only 1 or a few tasks to
All tasks
produce

•Poorer performance • Better performance

• Few thousands p/d • 48,000 pins p/d
• Cannot be equally •More skilled at their
Skilled in all tasks
tasks
Job Specialization Division of Labor

Better Organizational
Increased Efficiency
performance
 With insights gained from Adam Smith’s
observations, other managers and researchers began
to investigate how to improve job specialization to
increase performance.
They focused on how to organize and control the work
process.
F.W. Taylor (1856-1915)
Scientific Management
The systematic study of relationships between people
and tasks for the purpose of redesigning the work
process to increase efficiency.

Proposed an objective and systematic method to

identify “the one best way” to do a job using scientific
selection and training methods; co-operation and
clear division of responsibility between managers and
workers; pay for performance.
Taylor’s Principles
Study the way workers perform their tasks, gather all
informational job knowledge that workers possess,
and experiment with ways of improving how tasks are
performed
Codify the new methods of performing tasks into
written rules and standard operating procedures.
Carefully select workers who possess skills and
abilities that match the needs of the task, and train
them to perform the task according to the established
rules and procedures.
Establish a fair or acceptable level of performance for a
task, and then develop a pay system that provides a
reward for performance above the acceptable level.
This scientific management became nationally known,
but the selective implementation of the principles
created more harm than good.
Workers felt that as their performance increased,
managers required them to do more work for the same
pay.
Increases in performance meant fewer jobs and
greater threat of layoffs
Monotonous and repetitive
Dissatisfaction
Frank & Lillian Gilbreth 1912 - 1924
Time and Motion Studies
Break and analyze every individual action necessary to
perform a particular task into each of its component
actions
Find better ways to perform each component action
Reorganize each component action so that it is more
efficient-less cost of time and effort

Their goal was to maximize the efficiency with which

each individual task was performed.
Administrative Management Theory
Theory of Bureaucracy

Fayol’s Principles of Management

Administrative Management
The study of how to create an organizational
structure that leads to high efficiency and
effectiveness.
Max Webber 1905
 “The Theory of Social and Economic Organization”
The Bureaucratic School of Management A major contribution
is his “bureaucracy” theory, a formalized and idealized view of
organizations, comprising 6 major principles.
A formal hierarchical structure.
Management by rules.
Organization by task competency.
Impersonal relationships.
A focused mission.
Employment based on technical qualifications.
Principles:
A Manager’s formal authority derives from the
position he or she holds in the organization
People should occupy positions because of their
performance, not because of their social standing or
personal contacts.
The extent of each position’s formal authority and task
responsibilities and its relationship to other positions
in an organization, should be clearly specified.
Authority can be exercised effectively in an
organization when positions are arranged
hierarchically, so employees know whom to report to
and who reports to them.

Managers must create a well-defined system of rules,

standard operating procedures and norms so that they
can effectively control behavior within an
organization.
Rules
Formal written instructions that specify actions to be
taken under different circumstances to achieve specific
goals.

Rule: At the end of the day employees are to leave their

machines in good order.
Standard Operating Procedures
Specific sets of written instructions about how to
perform a certain aspect of a task.

SOP: Specifies exactly how they should do so, which

machine parts should be oiled or replaced.
Norms
Norms are unwritten, informal codes of conduct that
prescribe how people should act in particular
situations.

E.g.: An organizational norm in a restaurant might be

that waiters should help each other if time permits.
Summary: The Classical School of Management
Scientific Bureaucratic Administrative

Concern for precise work Impersonal view of Development of

methods organizations managerial principles

Best way for jobs to be Formal structure, Best way to organize all
done legitimate authority and jobs in a business
competence of
management
Criticisms of The Classical School of Management
No one is entirely driven by economic motivations.
People’s choices and behavior are dictated by other
factors such as social needs, security and self-esteem.
There is no such thing as “the best way” to do a job.
Extreme division of labor tends to produce monotony
and reduce overall skill levels.
People are managed like machines. Introduction of
newer machines led to job elimination.
1920 - 1950
THE NEO-CLASSICAL SCHOOL OF
MANAGEMENT
Core Concepts
Grew in reaction against the Scientific Theory of
Management which emphasized standardization of jobs,
processes and technologies to maximize economic
return.
Focus shifted to the human side of organizations.
1.The best way to motivate, structure and support
employees.
2.The need for workers to find intrinsic value in their jobs.
3.The positive impact of social relationships on worker
productivity.
Behavioral Management
Theory
The Work of Mary Parker Follet

The Hawthorn Studies and Human Relations

Theory X and Y
Behavioral Management
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.
Mary Parker Follet
Mary Parker Follett advocated for a human relations
emphasis.
Her work contrasted with the "scientific management" of
Frederick W. Taylor.
Mary Parker Follett stressed the interactions of
management and workers.
Follett was one of the first to integrate the idea of
organizational conflict into management theory, and is
sometimes considered the "mother of conflict resolution.“
She coined the words "power-over" and "power-with"
to differentiate coercive power from participative
decision-making.
She was of the view that authority should go with
knowledge.
Advocated involvement of workers in job analysis and
work development process.
Managers of different departments should
communicate with each other directly.
Cross-functioning
The Hawthorne Studies
The effect was first described in the 1950s by researcher Henry A.
Landsberger during his analysis of experiments conducted during
the 1920s and 1930s. The phenomenon is named after the location
where the experiments took place, Western Electric’s Hawthorne
Works electric company just outside of Hawthorne, Illinois.
The electric company had commissioned research to determine if
there was a relationship between productivity and work
environment.
The focus of the original studies was to determine if increasing or
decreasing the amount of light that workers received would have an
effect on worker productivity. Employee productivity seemed to
increase due to the changes but then decreased at after the
experiment was over.
The Hawthorne Studies
Hawthorn effect is the finding that a manager’s
behavior or leadership approach can affect worker’s
level of performance.
Researchers suggested that productivity increased due
to attention from the research team and not because
of changes in the experimental variables. Lansdberger
defined the Hawthorne effect as a short-term
improvement in performance caused by observing
workers.
Human Relations Movement
Advocates of the idea that supervisors receive
behavioral training to manage subordinates in ways
that elicit their cooperation and increase their
productivity.
Informal Organization
The system of behavioral rules and norms that emerge
in a group.
Organization Behavior
The study of the factors that have an impact on how
individuals and groups respond to and act in
organizations.
Abraham Maslow 1954
Maslows’ Need Hierarchy of Motivation
What is Motivation?
The processes that account for an individual’s
intensity, direction, and persistence of effort toward
attaining a goal.

Key Elements
1. Intensity: how hard a person tries
2. Direction: toward beneficial goal
3. Persistence: how long a person tries
Theory of Human Motivation
The basis of Maslow's theory is that human beings are
motivated by unsatisfied needs, and that certain lower
needs need to be satisfied before higher needs can be
satisfied. According to Maslow, there are general types
of needs (physiological, safety, love, and esteem) that
must be satisfied before a person can act unselfishly. He
called these needs "deficiency needs." As long as we are
motivated to satisfy these cravings, we are moving
towards growth, toward self-actualization. Satisfying
needs is healthy, while preventing gratification makes
us sick or act evilly.
Maslow’s Need Hierarchy
Maslow’s theory assumes that a person attempts to
satisfy the more basic needs before directing behavior
toward satisfying upper-level needs.
Lower-order needs must be satisfied before a higher-
order need begins to control a person’s behavior.
A satisfied need ceases to motivate.
Maslow’s Need Hierarchy
Hierarchy of Needs
Physiological Motivation: Provide ample breaks for
lunch , pay salaries that allow workers to buy life's essentials.
Safety Needs: Provide a working environment which
is safe, relative job security, and freedom from threats.
Social Needs: Generate a feeling of acceptance, belonging
by reinforcing team dynamics.
Esteem Motivators: Recognize achievements, assign
important projects, and provide status to make employees
feel valued and appreciated.
Self-Actualization: Offer challenging and meaningful work
assignments which enable innovation, creativity, and
progress according to long-term goals.
Limitations and Criticism
Maslow’s hierarchy makes sense but little evidence
supports its strict hierarchy. Research has challenged
the order imposed by Maslow’s pyramid. As an
example, in some cultures, social needs are regarded
higher than any others.

Little evidence suggests that people satisfy exclusively

one motivating need at a time.
Summary: Neo-Classical School of Management
Behavioral School is a logical extension of the Human
Resource School.
They are largely concerned with motivation of
workers.
Workers are diverse in their needs and want
challenging work, participative decision-making, self-
direction and control.
Managers must help workers deal with situational
constraints and social aspects of organizational and
environmental changes.
THE MODERN SCHOOL OF MANAGEMENT
Core Concepts
Dealing with complexity is the core of modern management theory.
Organizations, Workers, Environment and the interactions between
them.
It is a synthesis of several theories.
Behavioral science, mathematics, statistics, operations / quantitative
research and computing technologies.
Management is an exercise in logic applied to situations.
Situations can be measured.
Computers have an increasing role to play.
Application of management knowledge is extended to non-business
areas.
Education, government, health care and others.
Management Science Theory
An approach to management that uses
rigorous quantitative techniques to help
managers make maximum use of
organizational resources.
Quantitative Techniques

Operations Management

Total Quality Management

Management Information Systems

The Quantitative School of Management
Combines classical management theory and behavioral
science through the use of statistical models and
simulations.
A major focus is on the process with which decisions are
made, to ensure informed results.
The quantitative school comprises
Scientific Management
Managers use of maths and statistics for problem solving.
Operations Management
Managing the process of combining materials, workers and
capital to produce goods and services.
Organizational Environment
Theory
The set of forces and conditions that
operate beyond an organization’s
boundaries but affect a managers ability to
acquire and utilize resources.
The environment includes: competitors,
resources, technology, and economic
conditions that influence the organization
Summary

Three distinct Schools of Management

Classical: Process
Neo-Classical: People
Modern: Integrative- People,
Process, Environment