Makerere University Business SchoolStrategic Management Course

MANAGEMENT THEORIES

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Introduction• Earliest contributors

– Practicing managers– Social scientists

• More recent theorists– Academicians– Management consultants

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Practicing managers• Reflected on their experiences• To produce rational principles for

– Universal application– Efficiency improvement

• To structure work & organisations• Did not concentrate on human motivation• Classical / scientific

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Early Social Scientists • Human behaviour at work• Started with efficiency, looking at• Physical conditions effect on employees• Ended up in human factors at work

– Motivation, communication, leadership• Called

– Human relations theorists or – Social psychologists

Later social scientists• Organisations as social systems• Contingency theorists

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More recent theorists• Strategic perspective• Involve organisation factors:

– Vision, mission, culture, structure, values, external environment e.t.c

• Build on previous theorists• More inclined to contingency theories

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CLASSICAL MANAGEMENT THEORIES

Henri Fayol (1841 – 1925)• French industrialist & theorist• Mining engineer @ 19 years, MD @ 47• Was practically successful in management• Fayol’s definition of management by industrial

activities:– Technical, commercial, Financial, Security, Accounting,

and managerial• 1st 5 activity groups were taken care of• Managerial activities required establishment of

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Fayol’s Principles of management• Division of work• Authority• Discipline• Unity of command• Individual interests sub-ordination• Remuneration• Centralisation• Scalar chain• Order• Equity• Tenure of office stability• Harmony, and team work

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Comments on Fayol’s principles

• Emphasis on structural organisation nature – bureaucracy

• Fairness, equity e.t.c were not consistent with other main principles

• Not suited for rapid change

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Fredrick Winslow Taylor• Looked at efficiency on shop floor• Was a labourer, up to shop superintendent• Developed scientific managementBackground• Came up after industrial revolution• Dominant requirement was efficiency• Need for systematic of work• Workers only put in minimum effort

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Scientific management principles

• Work study analytical approach• Steps

– Develop a science for each operation to replace opinion & “rule of thumb”

– Determine best method & its timing• Study a job from skilled workers• Eliminate unnecessary actions• Produce best method – standard

– Separate planning & controlling from actual “doing”– Select & train workers

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Principles from Scientific management times

Frank & Lillian Gilbreths• Gilbreths applied scientific management to brick

laying• Used work study method to• Reduce movements per brick from 18 to 5• Current principles from scientific management -

Gilbreths– Therbligs – basic elements of on-the-job-motions– Process charting – process flow charts

Henry Gantt• Was Taylor’s colleague• Developed Gantt charts

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Comments on scientific managementBenefits• Increased productivity• Rational approach – applies measurement• Incentive payments – based on resultsWeaknesses• Rigidity – reduced workers’ role• Work fragmentation• Taylor was over-optimistic on acceptance by both

employees and management• Wages were determined scientifically - no social

considerations

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Bureaucracy – Max Weber (1864 – 1920)• Common meaning

– Red-tape; excess rules, paper work leading to inefficiency• Management theory meaning

– An organisational form with a system of rules and hierarchy of authority

• Authority – acceptance of rule by those whom it is to be exercised on.

• Authority types– Traditional– Charismatic– Rational – legal

• According to Weber, bureaucracy was: – The most rational means of controlling human beings– Indispensable for large scale & complex organisations.

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Bureaucracy main features• A continuous organisation of functions

bound by rules• Specified spheres of competence• A hierarchical arrangement of offices (jobs)• Appointment based on technical

competence• Separation of officials from ownership• Formulated rules, decisions & actions

recorded in writing

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Bureaucracy weaknesses• Rules tend to be more important than

efficiency• Rigid behaviour• Prevents search for alternatives because of

programmed decision making• Damages relationships with clients and

workers• Difficult for change and adaptation

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Human Relations and social psychological schools

• These theorists were academics and social scientists.

• They were concerned with the human factor at work.

• This was contrary to the classical theorists, who concentrated on work itself but not the worker doing the job.

• They dealt with human motivation, group relationship and leadership.

• A few motivation theories are mentioned here after – broad topics (group behaviour and leadership have been left out of this course).

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Early motivation theorists

• Human motivation– Processes by which people seek to satisfy basic

drives, perceived needs and personal goals, which trigger human behaviour.

• Early theorists concentrated on motivation contents (e.g drives, needs) – content theories

• Didn’t focus on process

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Motivation basic model

Motivation has the following components

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Physical /Emotional

Behaviour Satisfaction / Frustration

OutcomeResponseStimulus

Elton Mayo

• Was an Australian psychologist• A researcher in occupational aspects,

– E.g fatigue, accidents, labour turn-over

• Conducted studies for Western Electrics, Chicago, USA (Hawthorne studies)

• Studies were on the worker rather than work• Employees were subjected varying physical conditions

and they didn’t affect productivity• Focus was shifted to social aspects and they related to

behaviour and productivityAbaho Ernest 19

Mayo’s conclusion

• “Man is a social animal”• Individual workers cannot be treated in isolation• Belonging to a group is more important than

monetary incentives and good physical conditions• Informal groups strongly influence workers’

behaviour

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Abraham Maslow (1950 / 60s)

• Physiological needs: Need for food, sleep, sex, e.t.c.• Safety needs: Stable environment relatively free from

threats• Love needs: Group status, affectionate relations with

others• Esteem needs: Self respect, self-confidence• Self-actualisation: Self-fulfilment

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Maslow’s needs - continued

• That people tended to satisfy the above needs systematically

• Main criticism on Maslow’s theory – – Systematic movement up the hierarchy does not

seem to happen practically.

• Maslow’s theory, however, formed a framework to analyse a variety of needs

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D McGregor – Theory X and Theory Y

• Managers’ assumptions about employeesTheory X• That employees are lazy, require coercion and

control• Avoid responsibility, seek security• Similar to a rational economic man suggested

by Schein & Adam Smith)• Strongly related to scientific management

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Theory Y• Opposite of theory X• That people like work• They work as naturally as resting or playing• They don’t have to be controlled coerced

– If committed to objectives• They don’t only accept but seek responsibilities• Similar to Maslow’s higher level needs and

Schein’s self-actualising man• A blend of theory X & Y is more representative

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Later Motivation theories

Theory Z – The Japanese approachW. Ouchi• American exponent of Japanese approach, with• Attempts for western firms to adapt Japanese

style• Based on success of Japanese manufacturing

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Japanese success

• Efficient use of resources, especially peopleStrong personnel-related factors• Mutual trust – employees and management• Employees’ royalty to organisations• Non-specialised career paths – job rotation• Shared decision making• Long term performance appraisal• Collective responsibility

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Remarks on the approach• Some Japanese features are not transferable to

west due to cultural issues• The west needs to develop better the

employee factor, on top of technology• Japanese engineering has “Taylorism” leading

to standard production controls but with improved HR aspects.

Criticism• Slow decision making• Imprisoning lifetime employment

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SYSTEMS & CONTINGENCY APPROACHES

Organisations as systems• Organisations are set up as open social systems. • A system is a collection of inter-related parts, which form

some whole.• Examples of systems are: the human body, a

communication network, and a social system. • A system can be open or closed. • An open system obtains inputs from and discharges

outputs to its environment.• A closed system is self-supporting• Social systems, including all organisations as mentioned

above, are open systems.Abaho Ernest 28

Characteristics of open systems

• They receive inputs or energy from the environment

• They convert inputs into outputs• They discharge outputs into the environment• They are cyclic in nature. • Exercise negative negative entropy.• A stable system is self-adjusting to a steady

state. This is called negative feedback. • Equifinality. Open systems do not have to

achieve their objectives in using one particular method.

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Key variables in an organisation as a system

• People – as individuals or groups

• Technology

• Organisation structures and

• Environment

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Model of an organisation as an open system

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People

Materials

e.t.c

Information

Finance

Production & Marketing activities Planning, organising & control mechanisms Research & Development e.t.c

Products

Services

Ideas

Waste

INPUTS CONVERSION OUTPUTS

Feedback of information & results

Systems - continued

• A system consists of subsystems• An organisation’s boundaries, which are often invisible,

are defined strategically by stating the scope of its activities.

• Subsystems also have boundaries, which are called interfaces.

• Some employees work at external boundaries in such activities as:– Capital raising, Purchasing and Customer interaction

• Internal boundary employees manage interfaces • Some sub-systems tend to be relatively self-contained –

closed.

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Contingency approaches• Contingency builds on systems approach • It recognises organisations to consist of

interdependent components:– External environment, Technology and Human skills

and motivation

• Contingency approach suggests that organisations should look for the most appropriate combination of structural design in a given environment.

• Initially suggested by two American researchers at Harvard called Lawrence and Lorsch (1967) and several others shortly followed.

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Modern approach to management• Current approaches to management are more of

management currently in practice than mere mare management theory.

• Modern management background stems from– Advances in technology, Increased competition and

expanding markets, especially from Asia,– Increasing consumer expectations– Improvements in communication,– General globalisation making the world more inter-

connected than ever before.

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Strategic management approach• Organisations to clearly state a vision and

mission,• Formulation of organisation objectives• External environment analysis• Organisation (internal) analysis• Strategic choice and strategic implementation• Managing change in and around the organisation• Developing and utilising new technology• Developing and utilising skilled labour• Creation of flexible structures but with relative

stability

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