Unit 2

Perspectives in
Management
Introduction
The origin of management can be traced back to the days when man started living in groups.
Management was developed along with the development of civilization. Once the people
started to live in family, society, they started developing management process knowingly or
unknowingly. Joint family can be taken as good example of management since early era. As
per the human development, such traditional practice of management has also changed.
Today, management has several principles. Many scholars has contributed to develop
different management techniques. In general, we can classify different perspective into:
Classical theory, human relations and behavior science perspective, decision science
perspective, management science perspective, system theory and contingency perspectives
which shall be studied further.
Classical perspective in management
The classical theory signifies the beginning of the systematic study of management
organization. It is often called the traditional theory. It can be traced historically to the 19th
century prototype industrial and military organizations. The classical theory incorporates
three viewpoints: (1) Taylor’s Scientific Management (2) Fayol’s Administrative Management;
and (3) Weber’s Ideal Bureaucracy (an organization based on rules and regulations, formal
relations, specialization, etc.).
Salient features of classical approach are as follows:
• Division of labour and specialization, structure, scalar and functional processes and span of
control.
• Emphasis organization structure for co-ordination of various activities.
• Ignored the impact of external environment. It treats organizations as closed systems.
• Centralization of authority.
• Interests of the organisation should prevail if there is conflict between individual and
organization.
• People at work could be motivated by the economic rewards which can be called rational
economic person
A. Scientific Management theory
The impetus for the scientific management approach came from the first industrial revolution.
Because it brought about such an extraordinary mechanization of industry, this revolution
necessitated the development of new management principles and practices. The main
contributors to scientific management were Frederick W. Taylor, Henry L. Gantt, Frank Gilbreth,
Lillian Gilbreth and Harrington Emerson.

F.W. Taylor (1865-1915) was the first person who insisted on the introduction of scientific
methods in management. He launched a new movement during the last decade of 19th
century which is known as ‘Scientific Management’. That is why, Taylor is regarded as the
father of scientific management. Taylor was an American engineer who responded to the
challenges of management around the turn of the century. During that period, productivity
was very low, labour became extremely dissatisfied and industries had to face frequent strikes
and lockouts. Taylor’s contribution was a system based on science whereby lower labour cost
could be achieved simultaneously with higher wages. He suggested the change in the mental
attitudes of the workers and the management to bring harmony in the industry.
Scientific management means application of scientific methods to the problems of
management. Taylor advocated scientific task setting based on time and motion study,
standardization of materials, tools and working conditions, scientific selection and training of
workers and so on. It is to be noted that Taylor’s thinking was confined to management at the
shop level. However, he demonstrated the possibility and significance of the scientific analysis
of the various aspects of management. To sum up, he laid emphasis on following principles:-
• Science, not rule of thumb.
• Harmony in group action, rather than discord.
• Maximum output in place of restricted output.
• Scientific selection, training and placement of the workers.
• Almost equal division of work and responsibility between workers and managers.

The basic idea behind the principles of scientific management is to change the mental
attitudes of the workers and the management towards each other. Taylor called it ‘Mental
Revolution’ which has three implications:
• all out efforts for increase in production;
• creation of the spirit of mutual trust and confidence; and
• inculcating and developing the scientific attitude towards problems.

Limitation of Scientific Management Theory

• Man as machine
• Believes in financial incentives only.
• Ignored physiological and sociological aspects of worker.
• Lack of unity of command
• Focused on individual performance rather than group and team performance.
B. Administrative Management Theory or Management process
This theory is propounded by Henry Fayol mining engineer by profession. This process
involves certain functions like planning, organising, directing and controlling. His contribution
is taken as revolutionary action in modern management so, he is also known as father of
modern management. He laid down fourteen principles of management which according to
him have universal applicability. According to Fayol, functions and principles developed are
important for managerial success. These elements can apply not only to business organization
but also universally in political, military, religious, philanthropic and several other areas.
Further, he divided general and industrial management into:-
1. Technical activities :– production, manufacture, adaptation
2. Commercial activities :- Buying, selling and exchange
3. Financial activities:- search for and optimum use of capital
4. Security activities:– Protection of property and person
5. Accounting activities:- stock estimation, cost, balance sheet, statistics
6. Managerial activities:- planning, organizing, coordinating, control
In addition to above general and industrial management functions, Fayol has fourteen
priciples, which are as below:-
1. Division of work 13. Espirit of corporation /espirit de
corps
2. Authority and responsibility (strength in unity)
3. Discipline 14. Initiative
4. Unity of command
5. Unity of direction
6. Emphasis of common interest
7. Renumeration
8. Centralisation
9. Scalar chain
10. Order
11. Equity
12. Stability of tenure
• Contribution of Administrative Management Theory
o Five mangement function are common in any organization
o Fourteen management principles are universally accepted in any organization.
o This theory serves as guide for modern management behaviours.

• Criticism/Limitation of administrative theroy

o Limited application for complex and dynamic environment
o Cannot be applied universally in all situation as his claim.
o Human behavior and relation is totally ignored.
o Workers are treated as tools rather than resources.
C. Bureaucratic Theroy of Management
Max Weber (1864-1920), who was a German sociologist, proposed different characteristics
found in effective bureaucracies that would effectively conduct decision-making, control
resources, protect workers and accomplish organizational goals. Weber defined bureaucracy
as, an ideal form of organization whose activities and objective are rationally thought out and
whose divisions of labour are explicitly spelled out. Further, bureaucracy is defined as system
of government through department managed by state officials, not by elected representative
where role of employees are formal and hierarchical in bureaucratic organizations.
It is characterized as below:-
• Division of work
• Hierarchy of positions
• Rules and regulations
• Impersonal Conduct
• Staffing and career development
• Technical competence
• Official records
Contribution of Bureaucratic theory
• Useful in managing big and complex organization (army, government, multinational
organizations etc.)
• Decisions made on the basis of clear rules and regulations
• Technical competence of the employees to increase efficiency
• Proper selection of employees for right person at right job.

Limitations/Critisims of Bureacratic theory

• Bureacracy is rigid system, but generally described as rational legal system which is not
applicable in all organization
• Doesnot prioritise human centiments and relations
• Lengthy and time consuming
• Doesnot include innovation, initiation and flexibility.
Human Relation and Behavior Science Theory of Management
Employees/ workers cannot be motivated only by monetary incentives or rewards instead they
should be treated morally. Managers should understand their psychology to motivate them.
Group dynamics, participative management, two way communication, personality
development, non financial rewards or motivation in management are important aspects of
these perspective. Which shall be studied further.
Human Relation Theory
A. Hawthorne Studies (1922-1932).
Elten Mayo and his research team from Harvard University conducted as series of research.
Among several group of workers at the Hawthrone Plant of Western Electric Company in
Chicago. Their experiments are:-
• Illumination Experiment:- This experiment was conducted to establish relationship between
output and illumination. The output tended to increase every time as the intensity of light
was improved. But the output again showed an upward trend when the illumination was
brought down gradually from the normal level. Thus, it was found that there is no consistent
relationship between output of workers and illumination in the factory. There were some
other factors which influenced the productivity of workers when the intensity of light was
increased or decreased.
• Relay Assembly Room Experiment: In this experiment, a small homogeneous work-group of
girls was constituted. Several new elements were introduced in the work atmosphere of this
group. These included shorter working hours, rest pauses, improved physical conditions,
friendly and informal supervision, free social interaction among group members, etc.
Productivity and morale increased considerably during the period of the experiment. Morale
and productivity were maintained even if improvements in working conditions were
withdrawn. The researches concluded that socio-psychological factors such as feeling of being
important, recognition, attention, participation, cohesive work- group, and non-directive
supervision held the key for higher productivity.
• Bank wiring observation room experiment:- These experiments were conducted to find out the
impact of small groups on the individuals. In this experiment, a group of 14 male workers were
formed into a small work group. The men were engaged in the assemble of terminal banks for
the use in telephone exchanges. The work involved attaching wire with switches for certain
equipment used in telephone exchanges. Hourly wage for each worker as fixed on the basis of
average output of each worker. Bonus was also payable on the basis of group effort. It was
expected that highly efficient workers would bring pressure on less efficient workers to increase
output and take advantage of group incentive plan. However, the strategy did not worked and
worker established their own standard of output and this was enforced vigorously by various
methods of social pressure. The worker cited various reasons for this behavior like fear of
unemployment, fear of not increasing output , desire to protect slow workers etc.
• Mass Interviewing Programme:- The researchers interviewed a large number of workers with
regard to their opinions on work, working conditions and supervision. Initially, a direct
approach was used whereby interviewers asked questions considered important by managers
and researchers. Later, this approach was replaced by an indirect technique where the
interviewer simply listed to what the employees had to say. The findings confirmed the
importance of social factors at work in the total work environment
Conclusions of Hawthorne Studies
• Social Unit
• Group Influence
• Group Behavior
• Motivation
• Supervision
• Working conditions
• Employees Morale
• Communication
• Balanced approach
• Non economic reward
• Conflicts
Criticism of Hawthorne or Human relation approach
• Lack of scientific validity
• Over emphasis on group
• Over streching of Human relations
• Limited focus on work
• Stress on socio-physhological factors

B. Behavioral Science Theory

There are many perspective which deal with behavioral aspects of worker and their productivity. Some of
important behavioral science perspectives are explained below:-

1. Theory of Participatory Management (Mary Parker Follett)

Follet propounded democratic and participatory theory of management. She pointed out the need for the
concept of group and association to be introduced in the practice of management. She advocates the
democratization of the work force.
2. Theory of Human Needs (Maslow’s Hierarchy of Needs)
Maslow hypothesized that within every human being, there exists a hierarchy of five needs
which helps in employee motivation and productivity.
• Physiological: Includes hunger, thirst, shelter, sex and other bodily needs.
• Safety: Security and protection from physical and emotional harms.
• Social: Affection, belongingness, acceptance and friendship.
• Esteem: Internal factor such as self respect, autonomy and achievement and external factors
such as status, recognition and attention
• Self actualization: Drive to become what is capable of becoming (growth, achieving one’s
potential and self fulfillment)
3. McGregor’s Theory X and Theory Y
Douglas McGregor invented the Theory X and Theory Y, also known as “hard guy, soft guy”
approaches of managing people in the organization. It states that, people’s commitment to
work in organization is influenced by assumptions managers make about people. One set of
assumption is called theory X, which describes employees with relatively negative view. And
another set of assumption is called theory Y, which describe employees positively.
4. Two Factor Theory (Frederick Herzberg)
This theory is also called theory of Motivation. According to this theory, all factors cannot
motivate employees. Some factors just protect from demotivation and others can motivate
employees. Due to the reason Herzberg classified those factors into two categories, they are:-
a) Hygiene Factors or dissatisfiers:- In presence of of these factors in organization, employees
cannot be motivated but in its absence, employees gets dissatisfied. Example:- policies,
working conditions, supervision, salary and benefits, organization image.
b) Motivating factors:- These factors really helps employees to be motivated. These factors
are thus causes for greater productivity and efficiency. Example:- challenging job,
achievement, recognition, responsibilites, personal growth.
5.Theory Z (Japanese Management Style)
This theory focus on increasing employee loyalty towards organization, which believes on the
job for life with a strong focus on well being of employees (on the job and off the job). This
focus on management to promote stable employment for high productivity, high employee
morale and satisfaction. Some characters of this theory are long term employment and job
security, collective responsibility, collective decision making, slow evaluation and promotion,
moderately specialized career, concern of family life too.
• Contribution of Human Relations and Behavioral science perspective
 Shifted focus of technical approach of management to human and social side of the
organization.
Non monetary motivational perspective.
Emphasis on quality of work life.
Emphasis on informal organization system.
Organizational behavior as new discipline of study.
Non financial incentives and rewards such as recognition, appreciation.
• Limitations of Human Relations and Behavioral science perspective
Complex and vague.
Over emphasis on human variables
Informal groups and personal relationship may not always improve productivity.
More assumptions
Situational factors are ignored.
• Decision Theory
Herbert Simon, Luther Gulik and Lyndall Urwick have been the major contributor to this
management thought. This theory focuses on managerial decisions. Decisions are made
through rational choice among different alternative available. It is a choice making activity and
choice determines our activity.
1.Bounded rationality: rational decision making is constrained by limitation of knowledge,
resource etc.
2.Satisficing: Maximization is not possible in decision making .Decision make should “satisfice”
and achieve the satisfactory outcome administrative man always satisfice.
This theory advocates that decision making should be rational. The rational approach to
decision making should involves the following steps:
3.Define the problems 6. Evaluate the result of action
4.Identify relevant alternatives
5.Evaluate the alternatives.
6.Select the best course of action
7.Implement the action
Contribution of Decision Theory
Rational decision making depending upon the mathematical tools.
Effective decision making on the basis of proved theory.
Limitations
Limited to economic variables
Limited and narrow
Focuses only on decision making
Management Science theory
This approach is also called ‘Mathematical’ , ‘Operations Research’ or ‘Quantitative’ approach,
which was originated via military science developed during second world war by British
Government to find out solution of unique problems. British government constituted a team of
expert including scientists, mathematician and physicists to find out the causes of loss in war and to
identify wining strategy. That team recommended operation research model an new managerial
tool to win the war. The British army got significant success following that approach. Then US and
other countries also followed the approach which is now called Management Science Theory. The
focus of this approach is on planning, designing and implementing strategies through mathematical
models. Managers should predict everything on the basis of proved mathematical and statistical
perspectives. This theory is also known as mathematical or quantitative approach of management.
Quantitative techniques can be operation research, linear programming, queuing theory, game
theory, simulation and model building, PERT etc. In these days, this theory is acceptable to solve
problems regarding planning productions, inventory management, operation management and
transportation problems. Advanced computer and information technology have extended the
application of management science theory to many other areas of business.
Large and complex organizations use this theory for decision making. This theory believes on logical
process for maximizing the productivity and managerial efficiency. Quantitative Management.
Management Information System and Operation Management are the main areas of Management
Science Theory.
Contributions
• Helps to develop quantitative tools for decision making.
• New frontiers for managers
• Contribution on production and operation
Limitations
• Ignores importance of people relationship.
• Over emphasis on management science techniques .
• Not suitable for non routine or unpredictable managerial decision
• The System Theory of Management
During the 1960, management researcher began to analyze organization from a systems
perspective, a concept taken from physical science. A system is a combination of two or more
interrelated or interdependent parts in a whole unit. A system is an established arrangement of
components which leads to attainment of particular objectives according to plan. The two basic
types of systems are closed system (which do not interact with their environment) and open
system (which dynamically interact with their environment).
Business Organization are perceive as open adaptive system. Any organism can be considered as
an energy system which has inputs, transformation process and outputs. In general, the term
system is applied to any activity or any collection of facts, ideas or principles which are so
arranged as to present a united a whole. All operation of system will be methodical, thorough and
regular and above all as per plan to achieve set objectives. In business many division and
departments are organized on functional bases and all act as coordinated whole to achieve the
basic objectives of the firm. E.g. the inputs for a university would be students, teaching materials,
books, money and so on. The transformation process would consist of lectures, seminars,
assignments, research, study, discussion, counseling etc. The output would be educated, cultured
and discipline individuals ready to enter the real world of business or employment.
• The major features of system are:
1.Every system is always focusing on a goal.
2.A particular system has some subsystem .Each subsystem interact with each other.
3.System may be open or close.
4.There is always a unity of action in each and every subsystem to achieve an overall system
goal.
5.System always has a boundary, which separate it from environment.
6.System depends upon the flow of information in and outside its boundary.
7.The emphasis is given to the effective feedback for system function control.
Contribution
• Holistic view of organization
• Inter-relationship among subsystem for synergetic effects
• Strategic plans to tackle environmental effect.
• Useful for large and complex organization
Limitations
• Too abstract which is intangible in real sense
• Difficult to apply in small organization
• Lack of guidelines for managers regarding functions and duties.
• No specific tools of management suggested by this theory.
The Contingency Theory
The contingency theory can be described as “if, then” theory, i.e. If this is the way my situation
is, then this is the best way for me to manage. It states that, organization and even the units
within the same organization are diverse –in size, goals, work activities etc. So one best way, or
universally applicable management is not possible. Thus, management depends upon the
situation and should act according to the situation. The major contingency variables are:
• Organizational Size: As size increase, so do the problems of coordination. For instance, the
type of organizational structure appropriate for an organization of 50,000 employees is likely
to be inefficient for an organization of 50 employees.
• Routineness of Task Technology: To achieve its purpose, an organization uses technology.
Routine technologies require organizational structure, leadership styles and control system
that differ from those required by customized or non-routine technologies.
• Environmental Uncertainty: The degree of uncertainty caused by environmental changes
influences the management process. What works best in a stable and predictable environment
may be totally inappropriate in a rapidly changing and unpredictable environment.
• Individual Differences: Individual differences in terms of their desire for growth, autonomy,
tolerance of ambiguity, and expectations. These and other individual differences are
particularly important when mangers select motivation techniques, leadership styles and job
• Contributions
This theory is the break through to think from well established traditional management
principles to flexible practices.
This theory encourages managers to identify the contingency variables to solve the problem.
Managers can make decision independently. So, any problems can be solved quickly and
differently.

• Limitations
Suggest situational decision making but does not recommend any probable solutions
Managers may sometime mislead in search of situation of specific problems
Emerging Management Concepts
Business environment now a days is more complex and challenging. Globalization, open
market economy, frequent changes in political legal environment, technological inventions and
development, technology transfer, FDI etc. are some causes which make business environment
more unpredictable and complex. In order to overcome those issues, new management
concept is being emerged, some of them are:-
1. Workforce diversity
Without human resources, it is difficult to attain organizational goals. From planning to
implementations of plans and output evaluation, human resources are very important. But, it
is very difficult task to hire and place right man at right place. In modern organizations, there
are different types of human resources in terms of age, gender, caste, race, economic status,
social status, geographical location. They might have separate goals (individual goals).
Management for such human resource is difficult. If human resource is managed properly,
organization can enjoy benefit, which are:-
• Varieties of perspective
• Increased creativity
• Increased productivity
• Improved performance
• Branch reputation
• Better decision making
• Higher employee engagement and reduced turnover.
• Improved hiring results.
Limitations
• Poor focus on leadership qualities
• Chances of conflict
• Decrease in mutual cost
• Creating communication problems
• Increase in complaints
• Difficult to apply.
2. Knowledge Management
Knowledge management is the process of collecting, organising, classifying and disseminating
information throughout an organization, making it purposeful to needy people. Generally,
there can be two types of knowledge as tacit knowledge and explicit knowledge. Tacit
knowledge is related with personal experience, skill, understanding and knowledge gained by
personal study and working experience in various level. Whereas, explicit knowledge can be
obtained in written forms such as working mannuals, guidelines, legal circulars, booklets etc. if
any organization has proper knowledge management process, they can be implied in
organization for better results. Derivation of knowledge comprise of:-
Data
Information
Knowledge
wisdom

Further, in modern organization, knowledge management system is being developed and

utilised. In general, knowledge management process has different stages, they are
• Knowledge discovery:- includes tacit knowledge and explicit knowledge and they are
reconfigured, rearranged, recategorised.
• Knowledge capture:- includes act of converting tacit knowledge into explicit knowledge. Further,
knowledge can be captured from outside organization like customers, suppliers, competitors.
• Knowledge sharing:- includes process of sharing knowledge which has been recorded in the
form of tacit or explicit. This can be done by means of various books, research paper, trainings,
lectures, presentation etc.
• Knowledge application:- it is the use of created knowledge for formulating plans, policies and
decisions and the implementation of decisions.
Core considerations for a knowledge management program
This progrom should integrate following five important areas:-
• People
• Processes
• Technology
• Structure
• Culture
Steps to knowledge management implementation

• Establish knowledge management program objective

• Prepare for change management
• Define high level process as a foundation
• Determine and priotize technology needs.
• Assses current state
• Built knowledge managmeent implemantation roadmap.
• Implementation
• Measurement and improve knowledge management program
3. Outsourcing
Getting goods and services for improving quality of goods and services, delivery, and price
from other organizations is called outsourcing. In outsourcing, organizations contract for the
goods and services with other organizations which are more competent in those areas.
Organizations can go for outsourcing for whole products or parts of product, process or
management in which area they have low competency. Suppose a company A is producing
shoes. It is technologically competent for party-shoes but weak in sport-shoes. In this
situation company A can contract for sport-shoes with the company B which is more
competent in producing sport-shoes. In this process, A can concentrate its efforts to the
competent sector Le party-shoes and can supply sport-shoes with the same brand name at
same level of quality to the market. Similarly, airlines companies are outsourcing meal for the
long journey passengers from five star hotels. Instead of buying trucks, many suppliers
outsource transportation companies for distribution of goods. Nowadays, business
organizations are outsourcing in the following sectors:
• Management professionals
• Supply of human resources
• Certain process of final production
• Compelete production
• Distribution of goods and services
General objectives for adoption of outsourcing in modern organization are:-
• Reduce cost of production
• Maintain quality of goods and services
• To supply goods and services promptly
• To improve managerial efficiency
• To reduce over dependency on internal resources
• To manage risk

4. Learning Organization
This concept explains as the organization should be converted into learning center to create new
knowledge and methods to solve different problems. Only the knowledge is the way to lead today’s
competitive market. So, it is most important to give emphasis on learning different techniques to
become more competitive. Knowledge is not bounded with any age, gender and level of organization.
So, managers need to create free learning environmnet to its employees within the organization to
make them globally competent.
• Features of learning organization
System thinking
Personal mastery
Mental models
Shared vision
Team learning