International Academy of Management & Entrepreneurship

Evolution of management

MODULE 2

MODULE 2

Evolution of management Thought. Contribution of F.W.Taylor, Frank & Lillian Gilbreth, Henry Gantt, Henri Fayol, Elton Mayo, Mary Parker Follet, Rensis Likert, Chestard Bernard, Douglous McGregor, Peter Drcker, Mickel Porter and C.K. Prahalad.

Evolution Of Management Thought

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Systematicmanagement

Administrativemanagement

Quantitativemanagement

Systemstheory

Current andfuture revolutions

Scientificmanagement

Humanrelations

Organizationalbehavior

Bureaucracy

Classical Approaches Contemporary Approaches

Contingencytheory

Systematic Management• Key concepts

• systematized manufacturing operations• coordination of procedures and processes built into internal

operations• emphasis on economical operations, inventory management, and cost

control• Contributions

• beginning of formal management in the United States• promotion of efficient, uninterrupted production

• Limitations• ignored relationship between an organization and it environment• ignored differences in managers’ and workers’ views

Scientific Management• Key concepts

• used scientific methods to determine the “one best way’• emphasized study of tasks, selection and training of workers, and

cooperation between workers and management• Contributions

• improved factory productivity and efficiency• introduced scientific analysis to the workplace• piecerate system equated worker rewards and performance

• Limitations• simplistic motivational assumptions• workers viewed as parts of a machine• potential for exploitation of labor

Bureaucracy• Key Concepts

• structured network of relationships among specialized positions• rules and regulations standardize behavior• jobs staffed by trained specialists who follow rules

• Contributions• promotes efficient performance of routine operations• eliminates subjective judgment by employees and management• emphasizes position rather than the person

• Limitations• limited organizational flexibility and slowed decision making• ignores the importance of people and interpersonal relationships• rules may become ends in themselves

Administrative Management• Key concepts

• Fayol’s five functions and 14 principles of management• executives formulate the organization’s purpose, secure employees,

and maintain communications• managers must respond to changing developments

• Contributions• viewed management as a profession that can be trained and

developed• emphasized the broad policy aspects of top-level managers• offered universal managerial prescriptions

• Limitations• universal prescriptions need qualifications for contingencies

Human Relations• Key concepts

• productivity and employee behavior are influenced by the informal work group

• should stress employee welfare, motivation, and communication• social needs have precedence over economic needs

• Contributions• psychological and social processes influence performance• Maslow’s hierarchy of need

• Limitations• ignored workers’ rational side and the formal organization’s

contributions to productivity• research overturned the simplistic belief that happy workers are more

productive

Quantitative Management

• Key concepts• application of quantitative analysis to management

• Contributions• developed specific mathematical methods of problem analysis• helped managers select the best alternative among a set

• Limitations• models neglect nonquantitative factors• managers not trained in these techniques may not trust or

understand the techniques’ outcomes• not suited for nonroutine or unpredictable management decisions

Organizational Behavior

• Key concepts• promotes employee effectiveness through understanding of

individual, group, and organizational processes• stresses relationships among employees/managers• assumes employees want to work and can control themselves

• Contributions• increased participation, greater autonomy, individual challenge and

initiative, and enriched jobs may increase participation• recognized the importance of developing human resources

• Limitations• some approaches ignored situational factors, such as the

environment and technology

Systems Theory• Key concepts

• organization is viewed as a managed system• management must interact with the environment• organizational goals must address effectiveness and efficiency• organizations contain a series of subsystems• there are many avenues to the same outcome• synergies enable the whole to be more than the sum of the parts

• Contributions• recognized the importance of the relationship between the

organization and the environment• Limitations

• does not provide specific guidance on the functions of managers

Contingency perspective

• Key concepts• situational contingencies influence the strategies, structures, and

processes that result in high performance• there is more than one way to reach a goal• managers may adapt their organizations to the situation

• Contributions• identified major contingencies• argued against universal principles of management

• Limitations• not all important contingencies have been identified• theory may not be applicable to all managerial issues

Contribution towards management

• F.W.Taylor• Frank & Lillian Gilbreth• Henry Gantt• Henri Fayol• Elton Mayo• Mary Parker Follet• Rensis Likert• Chestard Bernard• Douglous McGregor• Peter Drcker• Mickel Porter• C.K. Prahalad.

F.W.Taylor

Four Principles to increase efficiency:

1. Study the way the job is performed now & determine new ways to do it.

Gather detailed, time and motion information. Try different methods to see which is best.

2. Codify the new method into rules. Teach to all workers.

3. Select workers whose skills match the rules set in Step 2.

4. Establish a fair level of performance and pay for higher performance.

Workers should benefit from higher output.

Frank & Lillian Gilbreth

Frank and Lillian Gilbreth refined Taylor’s methods.Made many improvements to time and motion

studies.Time and motion studies:

1. Break down each action into components.2. Find better ways to perform it.3. Reorganize each action to be more efficient.

Gilbreths also studied fatigue problems, lighting, heating and other worker issues.

Frank Gilbreth

• Motion study• Time Study• One best way• Training of personnel• Three position plan of promotion (each worker should

be considered to occupy three positions: a. the job he held before promotion to his present position b. his present position and c. the next higher job

• Part of his work, then would be teaching the man below him and learning from the man above him. In this way, he would qualify for promotion himself and help to provide a successor to his current job.

Lillian Gilbreth

• It should be noted that FBG was greatly assisted by Lillian Gilbreth whom he married in 1904

• Both of them used motion picture films to analyze and improve motion sequences

• Both developed the process of chart and the flow diagram to record process and flow patterns used in a work situation

• They emphasized written instructions to avoid confusion and misunderstanding (the white list card system)

Fayol’s PrinciplesFayol’s PrinciplesHenri 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. Line of Authority: a clear chain from top to bottom of the firm.5. Centralization: the degree to which authority rests at the very

top.6. Unity of Direction: One plan of action to guide the

organization.

7. Equity: Treat all employees fairly in justice and respect.

Fayol’s PrinciplesFayol’s Principles

8. Order: Each employee is put where they have the most value.

9. Initiative: Encourage innovation.

10. Discipline: obedient, applied, respectful employees needed.

11. Remuneration of Personnel: The payment system contributes to success.

12. Stability of Tenure: Long-term employment is important.

13. General interest over individual interest: The organization takes precedence over the individual.

14. Esprit de corps: Share enthusiasm or devotion to the organization.

Henry Gantt

• Task and Bonus Plan• Daily Balance Chart (Gantt Chart)• Humanizing Science of Management• Important of Leadership• Training of Workers• Social Responsibility of Business

Elton Mayo

• He has been called the founder of the “human relations school.”

• He became famous on account of the Hawthorne experiments

• These experiments had a significant impact on management thought, and considerably influenced the “human relations movement.”

• Experiments conducted in the Hawthorne Plant of the Western Electric Company in Chicago – from 1927 to 1932.

Hawthorne studies

Three general phases

• Test Room Studies : the object being to assess the effect of single variables upon employee performance. They were experimental in nature

• Interviewing Studies: these were largely concerned with improving employee attitudes and were psychological in nature

• Observations Studies: these were undertaken to understand and describe the factors influencing the informal organization of work groups and were sociological in nature

Mary Parker Follet

– An influential leader in early managerial theory– Held a horizontal view of power and authority in

organizations

• Suggested workers help in analyzing their jobs for improvements—the worker knows the best way to improve the job.

• If workers have relevant knowledge of the task, then they should control the task.

Chestard Bernard

• While Fayol developed the principles of management, Barnard proved that such principles could be applied in practice

• He defined organization as : “ a system of consciously coordinated activities or forces of two or more persons.”

• He believed people in organization contributed services and not themselves

• Barnard tried to analyze how organization functions as a ‘living body.’

Douglas McGregor

Douglas McGregor proposed the two different sets of assumptions about workers.

– 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 workers greater latitude, and

create an organization to stimulate the workers.

Douglas McGregor

THEORY X THEORY Y

Work is inherently distasteful to most people

Work is as natural as play, if the conditions are favorable

Most people are not ambitious, have little desire for responsibility, and prefer to be directed

Self-control is often indispensable in achieving organizational goals

Most people have little capacity for creativity in solving organizational problems

The capacity for creativity in solving organizational problems is widely distributed in the population

Motivation occurs only at the psychological and safety levels

Motivation occurs at the social, esteem, and self-actualization levels, as well as physiological and security levels

Most people must be closely controlled and often coerced to achieve organizational objectives

People can be self-directed and creative at work if properly motivated

Peter Drucker

• Drucker is repeatedly preaching a philosophy of management, that of management by objectives and self-control

• He pleaded for creative management instead of bureaucratic management

• He said that managers should go beyond decentralization, and design principles of taskforce team, simulated decentralization and the systems organizations

• Managers should learn to lead people rather than contain them• He said that the Innovative org – the org that resists stagnation rather

than change – is a major challenge to management• More and more organizations which are innovative and productive

for society, economy and the individuals should come up• His first line in “practice of management” – “The manager is the

dynamic, life-giving element in every business.”

Drucker’s 7 tasks to be performed by tomorrow’s manager

• He must manage by objectives• He must take more risks and for a longer period ahead• He must be able to make strategic decision• He must be able to build and integrated team• He must be able to communicate information fast and

clearly• He must be bale to see the business as a whole and to

integrate his function with it, and • He must be able to relate his product and industry to

the total environment