Principles of Management and

Organizations
Unit II:-Evolution of Management Thought
Course Code:-BCA 104
Semester:-BCA 1st Semester
Faculty Name:- Ms. Anubha

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 Syllabus
Evolution of Management thought:
 Classical Theory of Management;
Bureaucracy –Introduced by Max Weber;
Scientific Management-F.W. Taylor and his
followers;
Neoclassical Theory of Management;
Human Relations –E. Mayo and
Roethlisberger;
Behavioral Science Approach-By D.
McGregor, A. Maslow & others;
Modern Management theories: Peter Drucker.
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 Classical Theory of Management
The classical management theory was
introduced during the Industrial Revolution
to improve factory productivity and other
businesses.
While less common in today's society, this
management type may still benefit some
organizations.
The classical management theory is a style
of management that emphasizes hierarchy,
specialized roles and single leadership for
optimized efficiency in the workplace.
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 Principles of Classical Theory of
Management
Scientific management should be used to determine
the most efficient way to do a job.
Employees are selected to perform tasks based on their
skills and specializations.
Operations should be streamlined as much as possible.
Decisions are made by a single person or by a select
few authority figures.
Productivity is the primary goal.
Increased profit is given priority.

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 Concepts of Classical Theory of
Management
The classical management theory holds that an ideal
workplace implements the following concepts:
1. Centralized Structure of Leadership
2. Labor Specialization
3. Wage Incentives

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 Centralized Structure of Leadership
The classical management theory holds that three
levels of leadership should oversee a workplace.
The first level is business owners and/or executives
with the highest level of authority to set the
organization's long-term goals.
The second level consists of middle management
overseeing managers and setting department-level
goals.
The third level comprises supervisors or managers
who oversee the day-to-day operations of a company.

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 Labor Specialization
This concept focuses on an "assembly line" set up
within an organization.
This structure involves breaking down large tasks or
projects into smaller tasks assigned to employees.
Workers are typically responsible for only one specific
task to prevent multitasking and increase productivity.

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 Wage Incentives
The classical management theory emphasizes
employees' physical needs over job satisfaction or
social needs.
This theory holds that these physical needs can be met
through income and monetary incentives and uses the
opportunity for wage increases to motivate employees.

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 Bureaucracy introduced by Max Weber
 One of the most important thinkers in modern organizational
theory, Max Weber (1864-1920), is the 'father of the bureaucratic
management theory.'
 Weber was a German sociologist and political economist that
viewed bureaucracy in a positive light, believing it to be more
rational and efficient than its historical predecessors.

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 Bureaucratic Management Theory
 Weber's theory of bureaucratic management also has two
essential elements.
 First, it entails structuring an organization into a hierarchy.
 Secondly, the organization and its members are governed by
clearly defined rational-legal decision-making rules.
 Each element helps an organization to achieve its goals.
 An organizational hierarchy is the arrangement of the
organization by level of authority in reference to the levels above
and below it.
 For example, a vice-president of marketing is below the
company's president, at the same level as the company's vice
president of sales, and above the supervisor of the company's
social media department.
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 Contd….
 Each level answers to the level above it, with the ultimate leader
of the organization at the top.
 The easiest way to understand the term rational-legal decision-
making rules is to think of it as a set of explicit and objective
policies and procedures that governs how an organization
functions.
 Examples of rational-legal decision-making rules include human
resources rules and policies or the regulations governing who is
entitled to unemployment insurance.

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 Scientific Management Theory by F W
Taylor
F.W. Taylor or Fredrick Winslow Taylor, also known
as the ‘Father of scientific management’ proved with
his practical theories that a scientific method can be
implemented to management.
Taylor gave much concentration on the supervisory
level of management and performance of managers
and workers at an operational level.

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 Principles of Scientific Management
Theory
Five principles of Scientific management Theory:-
 Science, not the Rule of Thumb.
Harmony, not discord.
Mental Revolution.
Cooperation, not Individualism.
Development of Every Person to his Greatest
Efficiency.

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 Science, not the rule of Thumb
This rule focuses on increasing the efficiency of an
organisation through scientific analysis of work and
not with the ‘Rule of Thumb’ method.
Taylor believed that even a small activity like loading
paper sheets into boxcars can be planned scientifically.
This will save time and also human energy.
 This decision should be based on scientific analysis
and cause and effect relationships rather than ‘Rule of
Thumb’ where the decision is taken according to the
manager’s personal judgement.

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 Harmony, not Discord
Taylor indicated and believed that the relationship
between the workers and management should be
cordial and completely harmonious.
Difference between the two will never be beneficial to
either side.
Management and workers should acknowledge and
understand each other’s importance.
Taylor also suggested the mental revolution for both
management and workers to achieve total harmony.

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 Mental Revolution
This technique involves a shift of attitude of
management and workers towards each other.
Both should understand the value of each other and
work with full participation and cooperation.
The aim of both should be to improve and boost the
profits of the organisation.
Mental Revolution demands a complete change in the
outlook of both the workers and management; both
should have a sense of togetherness.

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 Cooperation, not Individualism
It is similar to ‘Harmony, not discord’ and believes in
mutual collaboration between workers and the
management.
Managers and workers should have mutual
cooperation and confidence and a sense of goodwill.
 The main purpose is to substitute internal competition
with cooperation.

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 Development of Every Person to his
Greatest Efficiency
The effectiveness of a company also relies on the
abilities and skills of its employees.
 Thus, implementing training, learning best practices
and technology, is the scientific approach to brush up
the employee skill.
To assure that the training is given to the right
employee, the right steps should be taken at the time of
selection and recruiting candidates based on a
scientific selection.

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 Process Management by Henry Fayol
Henri Fayol was one of the first theorists to
define functions of management in his 1916
book “Administration Industrielle et Generale”.
Henri Fayol identified 5 functions of
management, which he labelled: planning,
organizing, commanding, coordinating and
controlling.
Henri Fayol theorized that these functions were
universal, and that every manager performed
these functions in their daily work.
Henri Fayol also identified 14 general principles
of management and organizing.
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 Contd….
Planning:-Managers must plan for future
conditions, develop strategic objectives and
secure the achievement of future goals.
Therefore, managers must evaluate future
contingencies affecting the organization, and
shape the future operational and strategic
landscape of the company.
Organizing:-Managers must organize the
workforce in an efficient manner and structure
and align the activities of the organization.
Managers must also train and recruit the right
people for the job, and always secure a
sufficiently skilled and educated workforce.
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 Contd….
Commanding:-Managers must supervise subordinates
in their daily work, and inspire them to achieve
company goals. Likewise it is the responsibility of
managers to communicate company goals and
policies to subordinates. The commanding of
subordinates should always be consistent with
company policies, and every manager should treat
subordinates in line with the standards of the
company.
 Coordinating:-Managers must harmonize the
procedures and activities performed by the company,
meaning that every activity of each organizational
unit should complement and enrich the work of
another.
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 Contd…
Controlling:-Managers must control that
company activities are in line with general
company policies and objectives. It is also
the responsibility of the manager to
observe and report deviations from plans
and objectives, and to make initiatives to
correct potential deviations.
The five functions theory of Henri Fayol is a
very normative and functional view on
management.

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 14th Principal of Management or
Fayolism
Henry Fayol, also known as the Father of
Modern Management Theory, gave a new
perception on the concept of management.
He introduced a general theory that can be
applied to all levels of management and
every department.
He envisioned maximising managerial
efficiency.
Today, Fayol’s theory is practised by the
management to organise and regulate the
internal activities of an organisation.
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  The fourteen principles of management created by Henri
Fayol are explained below:-
1. Division of Work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest to the General Interest
7. Remuneration of Personnel
8. Centralization and Decentralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of Tenure of Personnel
13. Initiative
24 14. Esprit de Corps
 Contd…
Division of Work:-The principle of division
of work suggests that to achieve the overall
goal of an organization, the work should be
divided into separate jobs and employees
need to be allocated to each of these jobs
based on their skills and interests.
The idea is to promote specialization in the
job the employee is assigned to with the
assumption that performing the same job
on a regular basis will result in greater
efficiency.
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 Contd…
Authority and Responsibility:- The basis of this principle
is that the person assigned with a task should given a
certain amount of authority to carry out the task.
In addition to that he needs to assume the
responsibilities attached with the task and be
accountable to his supervisor.
There should be a balance between authority and
responsibility.
Responsibility without authority would hinder individual
performance.
Authority without responsibility would lead to
inefficiency, misuse of power and wastage of
resources.

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 Contd…
Discipline:- In order to run the organization
smoothly and effectively, it is important to
have a sense of discipline in terms of
adherence to organizational policies, rules
and regulations.
An organization may have its own reward-
punishment mechanism, general and
specific rules and assign supervisors to
oversee the activities of the employees in
order to ensure discipline.
An employee needs to be obedient to the
authority and abide by the rules of the
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organization.
 Contd…
 Unity of Command:- According to this principle, an
employee needs to be accountable to only one boss.
Only one supervisor should guide the employees under
him. Having several supervisors will lead to confusion
and hinder performance on the job.
 Unity of Direction:-The principle of unity of direction
puts emphasis on the fact that only one manager should
guide the actions of a particular department or a
function or a group of people. For instance, the
production department should have only one manager
who will oversee the activities of that department only .
All the employees to the department will be accountable
to that manager. This ensures that the activities are
directed towards achieving a common goal or objective.

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 Contd…
Subordination of Individual Interest to the General
Interest:-As per this principle, there should be harmony
between individual interests of the employee and the
organization’s interest as a whole.The organization’s
interest should be prioritized over individual interests
for the benefit of the organization in its efforts to
achieve a common goal.
 Remuneration of Personnel:-Compensation for
performance should be fair and equitable. Henry Fayol
takes into account both monetary and non-monetary
compensation for good performance. Non-monetary
compensation results in greater motivation levels and
develops a bond between the employees and the
organization as a whole.

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 Contd…
 Centralization and Decentralization:- This principle suggests
that while there should be delegation of power to lower levels
of management to carry out certain tasks, the task of making
important decision should be centralized at the top level
management. There should be a balance between
centralization and decentralization to ensure harmonious
progress of the organization.
 Scalar Chain:-There should be a line of authority from the top
level to the bottom level establishing a hierarchy in the
organization to channel the flow of communication.
 Order:-According to this principle,it is responsibility of the
managers to ensure that there is social order in the
organization apart from a work environment that is clean,
safe and healthy. The employees need to have the right
amount of resources at their disposal so that the organization
can function smoothly.
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 Contd…
 Equity:- The management should treat all the
employees fairly and equally. The employees must be
placed at the right jobs at the right time and must be
treated impartially.
Stability of Tenure of Personnel:- High employee
turnover will adversely impact an organization. To
reduce absenteeism and turnover, employer must be
provided with job security with a stability in their
tenure.
Initiative:- According to Fayol, employees must be
encouraged to come up with new ideas. Ideas are a
source of strength for the organization. To keep
employees engaged and interested, management
should encourage employees to take initiative.
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 Contd…
 Esprit de Corps:- Fayol suggests that the
management should contribute to the
development of culture within an
organization and an atmosphere of trust
and mutual understanding. This will
enhance the morale of employees and they
will be motivated to work in unity and
promote team spirit in the organization.
 In conclusion, the 14 Principles of
Management the pillars of any
organisation. They are integral for
prediction, planning, decision-making,
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process management, control and
 Neoclassical Theory of
Management
As the name suggests, Neoclassical Consists
of two parts: Neo and classical.
 Neo means new, and Classical refers to the
work done by A Group of Economists in the
18th and 19th centuries.
In The Classical Theory, Management Focus
was on job content And physical resources.
Classical management theorists considered
humans as an Appendage To A Machine.
However, Critics were of The View That This
Theory Lacks Compassion Toward People.
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 Contd…
The Organizations Working On This
Principle Are Keeping Emotional Beings In
The Same Category As Machines.
With Neoclassical Organizational Theory,
Theorists Put Forward Incorporating
Behavioral Sciences Into Management To
Address The Shortcomings Of Classical
Theory.

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 Features of Neo Classical
Approach
The Business Organization is a Social System.
The Human Factor is the most critical element in
this Social System.
Social And Psychological Factors:- It play a crucial
role In determining productivity and employee
satisfaction.
The Management should also develop social and
leadership skills apart from technical skills.
They should think more about the Welfare of
Workers.
Productivity in an Organization is directly related
to Employee Morale.

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 Human Relation Theory by Elton
Mayo
While the classical theories emphasized the
importance of formal structure, it ignored
the most crucial element of managing an
organization, i.e., the human nature.
Elton Mayo is generally recognized as the
father of the Human Relations Movement.
Also known as the “behavioural theory of
organization” or “human relations
approach”.

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 Principles of Human Relations
Theory
 Individual:- Each individual in an organization is
motivated by different needs and should be considered
as interacting with several social and economic factors
within the organization.
 The Work Group:- Social interactions between workers
result in an informal structure within the formal structure
of an organization and this organization thrives on the
synergistic benefits that results from the co-ordination
and team spirit among the different work groups in the
organization.
 Participative Management:-Communication is crucial to
the efficiency of an organization. To ensure that
communication flows freely across levels, workers at
each level of the organization are encouraged to
participate in the decision-making process.
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 Features of Human Relations
Theory
 It focuses on the human aspect of an organization
rather than a formal structure.
 It identifies organization as an informal body where
each individual is provided with an opportunity to
voice out his needs. The concept of informal
organization overcomes the shortcomings of a formal
organization with emphasizes hierarchy over people’s
needs.
 The concept of an informal organization has resulted in
decentralization enabling people to decide their own
plans of actions to take responsibility for their work.
 Decentralization has given rise to a flat structure
within an organization as compared to the tall
structure of hierarchy in classical theory.
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 Behavioural Science Approach by
A. Maslow and others
 Behavioral Science Theory combines elements of
psychology, sociology, and anthropology to provide a
scientific basis for understanding employee behavior.
 Objectives of Behavioral Science Theory:-The objective of
behavioral science is the ability to predict future employee
behaviors. The main propositions of the behavioral science
approach can be summarized as under:-
 An organization is a socio-technical system
 The interpersonal or group behavior of people in the
organization is influenced by a wide range of factors.
 The goals of the organization are to be harmonized with an
understanding of the human needs multitude of attitudes,
perceptions, and values are prevalent amongst employees
and these characterize their behavior and influence their
performance.

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 Contd….
 Building upon the work of these scholars, several
sociologists and psychologists contributed early on to
the development of behavioral Science Approach to
Behavior Management Theory including:
 Need Hierarchy Theory - Abraham Maslow, an eminent
U.S. psychologist, gave a general theory of motivation
known as Need Hierarchy Theory in his paper published
in 1943. Maslow made assumptions that people need
to satisfy each level of need, before elevating their
needs to the next higher level e.g. a hungry person's
need is dominated by a need to eat (i.e survival), but
not to be loved, until he/she is no longer hungry. The
level of needs include Physiological, Safety, Social, Ego
or Self Esteem, Self-Fulfillment or Self-Actualization.

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 Contd….
Theory X & Y - Douglas McGregor was a
social psychologist. Theory X, the employee
is lazy and avoids responsibility. These
employees need coercion and control. This
type of person is the rational economic
man. Theory Y, the employee likes working,
accepts or seeks responsibility. These
employees need space to develop
imagination and ingenuity. This type of
person is the self-actualizing man. This
approach identifies just two extreme types
of employee; but, it laid the groundwork for
41 how management deals with employee
 Contd….
 Two-Factor Theory - Frederic Herzberg found that from
his research, in workplace there actually two factors
that influence motivation - Motivators and Hygiene.
 Motivators include: Achievement, Recognition, Nature
of the Work, Responsibility, Advancement.
 Hygiene includes: Company Policy and Recognition,
Supervision of Technical work, Compensation,
Interpersonal Relations - Supervision, Working
Conditions.
 While motivators promote employee satisfaction,
hygiene prevents dissatisfaction.
 This work provided an additional framework for how
individual relationships and environmental factors
contribute to employee motivation.
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 Modern Management Theories:-
Peter Drucker
Peter Drucker, often referred to as the "father of
modern management," made significant
contributions to the development of management
theory.
 His ideas shaped contemporary management
practices and helped transition the focus of business
organizations from purely operational efficiency to a
more strategic, human-centered approach. His key
works, such as The Practice of Management (1954),
Management: Tasks, Responsibilities, Practices
(1973), and Innovation and Entrepreneurship
(1985), offer a comprehensive framework for
understanding modern management.

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 Ideas from Peter Drucker
Theory
 Management by Objectives (MBO): One of Drucker’s most
influential ideas, MBO is a process where managers and employees
define clear, achievable objectives together. It encourages goal-setting,
performance measurement, and alignment between individual efforts
and organizational goals. MBO shifts focus from controlling tasks to
managing results, empowering employees to have a say in the
objectives they work toward.
 The Knowledge Worker: Drucker foresaw the rise of the "knowledge
worker," who uses specialized knowledge rather than physical labor as
their primary contribution. He recognized that knowledge would
become the most valuable resource in the economy, shifting
management's focus from controlling manual workers to enabling and
empowering intellectual workers to innovate and solve complex
problems.

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 Contd….
 Decentralization: Drucker advocated for
decentralization of authority within organizations,
believing that centralization stifled innovation and
responsiveness. Decentralization allows managers and
employees at different levels to make decisions that
affect their work and enables a more flexible and
adaptive organization structure.
 The Role of Innovation and Entrepreneurship:
Drucker viewed innovation as the central function of
business and saw entrepreneurship as essential for
organizational survival and growth. He believed that
businesses must consistently innovate to remain
competitive and that managers should foster
entrepreneurial thinking within the organization.

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 Contd….
Management as a Practice, Not a Science: Drucker
believed that management is more of a liberal art than
a hard science, meaning that managers must consider
the social, human, and ethical dimensions of decision-
making. Good management is about understanding
people, situations, and environments and making
informed judgments.
Customer-Centric Approach: Drucker emphasized
the idea that the purpose of business is to create and
serve customers. This marked a significant shift from
previous management approaches that were
production-centric. He stressed that businesses must
continually strive to meet customer needs and adapt to
changing market conditions.

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 Contd….
 Importance of People and Organizational Culture:
Drucker argued that people are the most important asset
of any organization. Effective management, in his view,
requires understanding human nature, fostering a
positive organizational culture, and developing
employees’ strengths. He emphasized leadership,
communication, and trust as key elements in
management.
 Effective Decision-Making: Drucker focused heavily on
decision-making as a critical function of management. He
outlined a systematic process for making decisions that
included identifying the problem, defining the criteria for
decision-making, considering alternatives, and choosing
the best solution based on long-term consequences.

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 Contd….
Corporate Social Responsibility:
Drucker was one of the early proponents of
corporate social responsibility (CSR),
arguing that businesses had a broader
responsibility to society beyond profit
maximization. He believed that businesses
should contribute to the welfare of their
communities, creating value not just for
shareholders but also for employees,
customers, and society at large.

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 Impact and Legacy
 Peter Drucker’s theories revolutionized how we think
about management and leadership in organizations.
His humanistic approach to management placed the
focus on people, knowledge, and innovation rather
than just systems and processes. His influence is still
seen today in practices like goal-setting, performance
management, decentralized decision-making, and the
emphasis on creating value for customers and
society.
 Drucker’s work laid the foundation for contemporary
management practices that balance operational
efficiency with creativity, social responsibility, and
human resource development, making him a key
figure in modern management thought.
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