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Principles of Management

EVOLUTION OF MANAGEMENT THOUGHT

EVOLUTION OF MANAGEMENT THOUGHT

TOPIC TOPIC

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Figure Chronological Development of Management Perspectives

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CLASSICAL• SCIENTIFIC• ADMINISTRATI

VE• BEUROCRACY

NEO -CLASSICAL• Hawthrone

Experiments• Human

Relations Movement

• Behavioural Sciences Thinking

MODERN• QUANTITATIV

E• SYSTEM• CONTINGENC

Y

MANAGEMENT APPROACHES

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Figure Subfields of the Classical Perspective on Management

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Focuses on the Focuses on the individual worker’s individual worker’s

productivityproductivity

Focuses on the Focuses on the functions of functions of managementmanagement

Focuses on the Focuses on the overall overall

organizational organizational systemsystem

5Scientific Management: TaylorFrederick W. Taylor (1856-1915)

▫Father of “Scientific Management.

attempted to define “the one best way” to perform every task through systematic study and other scientific methods.

believed that improved management practices lead to improved productivity.

▫Three areas of focus:

Task Performance

Supervision

Motivation2–5

6Task Performance : Scientific management incorporates basic expectations of management, including:▫Development of work standards▫Selection of workers▫Training of workers▫Support of workers

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Supervision: Taylor felt that a single supervisor could not be an expert at all tasks.

– As a result, each first-level supervisor should be responsible only workers who perform a common function familiar to the supervisor.

– This became known as “Functional Foremanship.”

Motivation: Taylor believed money was the way to motivate workers to their fullest capabilities.

Principles1. Science – No rule of thumb.2. Harmony, not discord.3. Co-operation not Individualism.4. Maximum output not restricted.5. Development of each man to his best

capacity and ability.6. Maximum prosperity of employees,

coupled with maximum prosperity of Orgn.

‘Mental Revolution’Eyes off division of surplus, rather focus on

increasing the size of surplus

Techniques..

• Time Study (work Measurement)• Motion Study• Method Study• Fatigue Study• Differential wage rate system• Scientific task planning• Standardization + Simplification• Functional Foremanship

Steps in Scientific Management

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Develop a sciencefor each element ofthe job to replace oldrule-of-thumb methods

Scientifically selectemployees and thentrain them to do the jobas described in step 1

Supervise employeesto make sure theyfollow the prescribedmethods for performingtheir jobs

Continue to plan the work, but use workers to get the work done

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Figure 1.3

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Administrative Management: FayolHenri Fayol (1841–1925)

▫First recognized that successful managers had to understand the basic managerial functions.

▫Developed a set of 14 general principles of management.

▫Fayol’s managerial functions of planning, leading, organizing and controlling are routinely used in modern organizations.

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Administrative Theory Henry Fayol (1841-1925) Father of Adminstrative Management

His Contributions…o 6 Business Activitieso 5 Management Functionso 14 PrinciplesBusiness Activities1.Technical2.Commercial3.Financial Operating activities of

business4.Accounting 5.Security6.Managerial Activity Most Neglected

13Fayol’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.

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Fayol’s PrinciplesFayol’s Principles8. 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.

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Bureaucratic Management

Focuses on the overall organizational system.

Bureaucratic management is based upon: Management responsibilititiesare based on a person’s demonstrated ability to hold the positionBest suitable person fills a particular

position in a bureaucratic organization

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Bureaucracy Max Weber (1864-1920) A German Social Scientist

PrinciplesPrinciplesoDivision of workoRules and RegulationsoHierarchy of AuthorityoTechnical CompetenceoRecord Keepingo Impersonal Relations

Legitimate Authority

Charismatic

Rational

Traditional

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Key points of BureaucracyKey points of BureaucracyAuthority is the power to hold people

accountable for their actions.

Positions in the firm should be held based on performance not social contacts.

Position duties are clearly identified. People should know what is expected of them.

Lines of authority should be clearly identified. Workers know who reports to who.

Rules, Standard Operating Procedures (SOPs), & Norms used to determine how the firm operates. Sometimes, these lead to “red-tape” and other

problems.

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Experiments conducted at a plant at Western Electric Company.

Illumination Experiment Relay Assembly Test room studies Mass Interview Bank wiring observation room study

Conclusion-1.A work group- not a techno economic unit but a

social system2.Workers not only rational economic beings motivated

by money, but also respond to work conditions3.Social+Psychological factors exercise greater control

on employee behaviour.

A) Hawthrone ExperimentsGeorge Elton Mayo (1880-1949)Father of Neo-Classical Approach

B) Human Relations Approach

Pertains to motivating people in orgn to develop team work which effectively fulfills their needs and leads to achieving organisational goals.

Contributions-1.Moral Justification2.Satisfy social and psychological needs to

increase productivity.3.Highlights the people side of orgn.4.A true concern for workers5.Focuses attention on inter-personal

relations + Dynamics6.Stressed on training of people management

skills and managerial styles.

C) Behavioural Science Approach

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Behavioral Perspective

Followed the classical perspective in the development of management thought.▫Acknowledged the importance of human

behavior in shaping management style▫Is associated with:

Mary Parker Follett Elton Mayo Douglas McGregor Chester Barnard

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Mary Parker Follett

Concluded that a key to effective management was coordination.

Felt that managers needed to coordinate and harmonize group effort rather than force and coerce people.

Believed that management is a continuous, dynamic process.

Felt that the best decisions would be made by people who were closest to the situation.

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Elton MayoConducted the famous Hawthorne Experiments.

At Western Electric Co. during 1924-1932.“Hawthorne Effect”

Productivity increased because attention was paid to the workers in the experiment.

Phenomenon whereby individual or group performance is influenced by human behavior factors.

Actually, it appears that the workers enjoyed the attention they received as part of the study and were more productive.

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Maslow’s Hierarchy of Needs•Five levels

▫Physiological – hunger, thirst, shelter, sex▫Safety – security and protection▫Social – affection, interpersonal relationships▫Esteem – self-respect, achievement status▫Self-actualization – achieving full potential

•Usually thought in the form of a pyramid

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Maslow’s Hierarchy of Needs

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SA

Esteem Needs

Social Needs

Security Needs

Physiological Needs

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Douglas McGregor

Proposed the Theory X and Theory Y styles of management.

▫Theory X managers perceive that their subordinates have an inherent dislike of work and will avoid it if at all possible.

▫Theory Y managers perceive that their subordinates enjoy work and that they will gain satisfaction from performing their jobs.

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The Quantitative Perspective

Characterized by its use of mathematics, statistics, and other quantitative techniques for management decision making and problem solving.

This approach has four basic characteristics:1.A decision-making focus2.Development of measurable criteria3.Formulation of a quantitative model4.The use of computers

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Contemporary Management Theory

•The Systems Perspective▫A system is an interrelated set of

elements functioning as a whole. An organization as a system is composed of four elements: Inputs (material and/or human resources) Transformation processes (technical and

managerial processes) Outputs (products and services) Feedback (reactions from the

environment)

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Developed by N. Zaidi

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The Integrated Systems Model

FeedbackFeedback

InputsInputsFrom theFrom theenvironment:environment:HumanHumanMaterialMaterialFinancialFinancialInformationInformation

ProcessingProcessingTransformationTransformationprocess:process:TechnologyTechnologyOperating systemsOperating systemsAdministrative Administrative systemssystemsControl systemsControl systems

OutputsOutputsInto the Into the environmentenvironmentProductProductServicesServicesProfit/lossProfit/lossEmployee behaviorEmployee behaviorInformationInformation

Systems Perspective

• Open systems interact with one another and other environments

• Closed systems do not interact with their environment

• Subsystems recognizes the importance of subsystems because of their interdependence

Developed by N. Zaidi

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Systems Perspective

• Synergy▫Subsystems are more successful

working together than working alone. The whole, working together, is greater than the sum of its parts.

•Entropy ▫A natural process leading to system

decline which can be avoided through organizational change and

renewal.

Developed by N. Zaidi

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Systems Approach• Attempts to explain organisational

behaviour by analysing the structure of orgn.

• It was a result of those orgns that were trying to adapt to the rapid change in business environment.

Features-1. Unified and purposeful system2. Each inter-related parts and subsystems.3. Each system has a boundary- Internal or External4. Open system Vs. Closed systems5. A business enterprise as a open system

(Draws Inputs- convert into output- sends to environment)

Contigency Approach

•Was developed by managers, consultants and researcher who tried to apply the concept of earlier approaches to real life situations.

‘ There is no best way to tackle the problem of management. The

application of management principles and practices is contingent upon the

environment’

Best solution is one which is Best solution is one which is responsive to the pecularities of a responsive to the pecularities of a given situation.given situation.Features1.Mgt is situational.2.Should match or fit its approach to the

requirements of a particular situation.3.Mgt’s success depends on its ability to cope

with its env, it should sharpen its diagonistic skills so as to anticipate and comprehend the environmental change.

4.Mgrs should understand that there is no best way to manage.

The Contingency Perspective•The Contingency Perspective suggests

that universal theories cannot be applied to organizations because each organization is unique – what works in one situation may not work in another

▫This requires managers to identify the key contingencies in a given situation.

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An Integrative Framework of Management Perspectives

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Systems Approach• Recognition of internal

interdependencies• Recognition of

environmental influences

Contingency Perspective• Recognition of the situational

nature of management• Response to particular

characteristics of situation

ClassicalManagementPerspectivesMethods forenhancingefficiency andfacilitating planning,organizing, andcontrolling

BehavioralManagementPerspectivesInsights for moti-vating performanceand understandingindividual behavior,groups and teams,and leadership

QuantitativeManagementPerspectivesTechniques forimproving decisionmaking, resourceallocation, andoperations

Effective and efficient management

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Management in the 21st CenturyWilliam Ouchi’s Theory Z

▫Japanese-style approach to management developed by William Ouchi

Advocates trusting employees and making them feel like an integral part of the organization.

Based on the assumption that once a trusting relationship with workers is established, production will increase.

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Future Leaders Must:

Be thoroughly schooled in the different management perspectives.

Understand the various influences that will have a continuing effect on management thinking

Be aware of how key business environment variables relate to their organization.

Know which elements to select from the various management perspectives that are appropriate for their situation.

Be adaptable to change such that future conditions and developments do not quickly render their chosen approaches obsolete.

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