2. Evolution Of Management Thought

2. Evolution Of Management Thought - Transcript

Session Objectives
To study the importance of management theory and history
To study the early views on management
To understand the pre classical approaches to management
To discuss limitations and lacunae in the pre classical approach
To study the importance of scientific management
To study the importance of Administrative theory
To study the behavioral approach
To understand the human relations movement
To understand McGregor s theory X and theory Y
Why Management Theory
Theory is the conceptual framework for organizing knowledge It is a coherent group of assumptions put forth to explain the relationship between two or more observable facts and to provide a sound basis for predicting future events It provides the blueprint for action Many management theories are derived out of this reality Theories help in communicating efficiently and provide a blueprint for tackling day to day challenges
For example at the manufacturing unit of Ford Motors the employees interact easily and tackle day to day challenges as the manager s fully understand Ford s theory about manufacturing automobiles
Why History
History is important for us in that it helps us to avoid the mistakes committed by others We gain from the experience of others Moreover most of the contemporary management thought is rooted in history We also get to appreciate the influence exercised by social political and economic forces in the process of evolution of management thought
Early Views of Management
Many theorists and practitioners in the pre classical period in the middle and late 1800s contributed valuable ideas that laid the basis for subsequent broader inquiries into the nature of the management Five principal pre classical contributors of management thought in the early era Robert Owen Charles Babbage Andrew Ure Charles Dupin and Henry Robinson Towne
Management Theory

The Pre Classical Contributions and their Pioneering Ideas
Robert Owen 1771 1858 a British Industrialist and reformer
Key ideas
Emphasized the importance of an organization s human resources and claimed that returns from human resource investments would far exceed those in physical resources like machinery and equipment
Advocated better working conditions for workers Also advocated reduction of working hours for children and ensuring a minimum working age for children
Charles Babbage 1792 1871 Father of modern computing
Key ideas
Advocated division of labor to boost efficiency
He laid emphasis on work specialization
The concept of the assembly line in which each worker is responsible for a different repetitive task is based on Babbage s idea
He devised a profit sharing plan that had two parts a bonus that was awarded for useful employee suggestions and a portion of wages that was dependent on factory profits
Andrew Ure 1778 1857 French engineer and Charles Dupin 1784 1873 an academician
Key ideas
They were early proponents in the study of management
They published various papers regarding principles and concepts of manufacturing
Henry R Towne 1844 1924 a mechanical engineer
Key ideas
There is a need to consider management as a separate field of knowledge
His writings have influenced Henry Fayol s contributions to the theory of management
Limitations and lacunae in the Pre classical approach
Pre classical approaches lacked a holistic perspective Such approaches were conceived mainly with an intention to deal with only one specific problem Therefore the focus as per this approach were on operational issues and not on the entire management process
At that point of time management obscurity existed i e there was a lack of awareness among people that management is also a separate discipline
Classical Approach
The classical ideas of management thought can be divided into two separate schools the scientific management school and the administrative school
Scientific Management
Scientific Management

This branch of management is primarily concerned with determining scientifically the best methods of performing any task and for selecting training and motivating employees
Here the emphasis is on
Break up of a job into various constituents
To develop a scientific method for performing each element of the job
Selection of right type of employees is very important
The selected employees have to be imparted training in the areas of newly devised methods
Supervision of employees is also important This will ensure that they follow the prescribed methods
Planning is the prerogative of managers The actual execution of the job is done by the workers
The main objectives of this approach were aimed at boosting productivity and efficiency
The main objectives of this approach were aimed at boosting productivity and efficiency
Major contributors
Frederick W Taylor 1856 1915 father of Scientific management
His philosophy rested on four basic principles
He studied and redesigned jobs
He timed each element of the job
He introduced rest periods to reduce fatigue
He is also associated with the introduction of a piece work pay system
Frank Gilbreth 1868 1924 and Lillian Gilbreth 1878 1972 Motion study
Key ideas
They collaborated on fatigue and motion studies and focussed on ways of promoting the individual worker s welfare
Developed the concept of micro motion study
Lillian pioneered the concept of Industrial Psychology It was primarily her work that drew the owners attention towards worker welfare
Henry L Gantt 1861 1919 a consultant
Key Ideas
His major contribution to management theory is the Gantt chart This chart is used as a tool for scheduling work It is also used for comparing the actual performance with planned performance
He also refined Taylor s piece rate system He was responsible for the introduction of a bonus plan According to this plan a worker gets a bonus if his performance is better as compared to the targets The foreman working in the shop floor also gets incentives based on the performance of workers supervised by him
Limitations of Scientific Management
The focus of scientific management approach was on the job performed by individual employees It did not focus on the aspect of employees working for the entire organization Further the issues that were dealt were more of operational nature
It overlooked the aspect of fulfillment of social needs of employees Instead it laid an overemphasis on the physical and economic needs
It ignored the basic human desire for achieving job satisfaction It only viewed the workers as a tool in the process of getting the work done
Administrative Theory
This theory focuses on various principles that could be used by managers to effectively coordinate the internal activities of an organization
Henry Fayol 1841 1925 a French Industrialist
Key ideas
Business operations of an organization could be divided into six different activities These are Technical commercial financial security accounting and managerial
Emphasis on managerial skills as it was felt that organizations neglected this aspect
Laid down fourteen principles as a guide for effective management ref table 1
Table 1 Principles for effective management

Division of labor
Specialization leads to efficiency
Authority
Formal authority from position and personal authority from intelligence and experience are essential to guide and manage people
Discipline
Respect for the rules of the organization
Unity of command
A subordinate should report to only one superior
Unity of direction
Similar activities should be grouped under one manager
Subordination to common good
Subordination of the individuals so as to fall in line with the goals of the organization
Remuneration
Should be fair both for employees and the organization
Centralization
Power and authority should be concentrated at the upper levels of management
Scalar chain
Chain of authority in an organization should run from the top to the bottom
Order
Co ordination of human and material resources This ensures that these resources are available at the required place and at the required time
Equity
Managers should be kind and fair to their subordinates
Stability
High turnover of employees should be avoided
Initiative
There should be adequate freedom to take initiative
Espirit de corps
Team work
Max Weber 1864 1920 a German Sociologist
He propounded the concept of bureaucracy A rational set of guidelines for structuring the organization in the most effective manner This laid the foundation for the evolution of Modern organizational theory
Limitations of the Classical Approach
Classical approach was more appropriate for simple and stable organizations It is however inadequate for the more dynamic and complex organizations that exist today
It prescribed universal procedures that are not appropriate under all settings
Many viewed employees as only tools rather than as resources
Behavioral Approach
This school of thought lays emphasis on the individual attitudes behaviors and group processes
Group Influences
Mary Parker Follett 1868 1933 a management pioneer
Key ideas
Employees are influenced by groups
Emphasized the concept of power sharing
Recognized desire as a motivation force in individuals
The Hawthorne Studies
A series of experiments were conducted by Elton Mayo at Western Electric s Hawthorne plant between 1927 1932
Effect of illumination on productivity
When the level of illumination was changed for a test group productivity levels for that group went up However the more interesting finding was that the higher level of productivity for the control group continued to exist without making any changes in their physical working environment Another factor that enhanced their productivity could be the reason that these groups were being observed which them feel important Thus the group s productivity was enhanced
Maslow s Need Hierarchy The Human Relations Movement
This emanated from the Hawthorne experiments The proponents of this movement argued that workers primary response is to the social context of the workplace and not the physical or monetary conditions surrounding the work
Abraham Maslow played a major role in giving this movement the required thrust He devised a framework in order to understand the basic motivating factors behind an individual This framework is called the hierarchy of needs
Maslow s Need Hierarchy Model

Physical needs Physiological needs such as hunger thirst shelter
Security needs Need for safety
Social needs Need to be accepted and loved by peers
Ego or status needs Need for recognition and respect
Self actualization To become what you are capable of becoming
The main points to be observed are
As one level of need is fulfilled the individual moves on to the next higher level of needs
A need that is once fulfilled ceases further to remain as a motivating factor
McGregor s Theory X and Theory Y
Theory X holds a relatively negative and pessimistic view of workers It states that people do not like to work They only try to avoid it Managers have to control direct and coerce the workers to work
People do not like to work and try to avoid it
The managers have to control direct and coerce them to work towards achieving organizational goals
People who prefer to be directed avoid responsibility and have little ambition
Theory Y holds a more positive view This theory is based on assumptions that people do not dislike work are internally motivated to achieve the different objectives to which they are committed and that people actively seek and accept responsibility
People by nature do not dislike work
People are committed to their goals depending on the degree to which they receive awards
People are creative and innovative
In many organizational situations their potential is underutilized
Limitations of the Behavioral Approach
Complexity of human behavior makes prediction of human behavior very difficult
Many managers show reluctance towards the adoption of behavioral concepts
Contemporary research findings are not communicated to managers in a comprehensible and practicable form
Modern Approach
Contemporary Approaches to Management

This approach gained credence during the World War II It was the performance of the American manufacturing industry during the War that drew the attention of management theorists
The quantitative management perspective
Quantitative tools and mathematical models were developed in order to facilitate decision making
Application and use of these models has helped in a better understanding of the complex organizational processes
Further there are two fields of study within this approach These are
Management science It focuses on the development of mathematical models a mathematical model is a simple representation of a system process or relationship
Operations management This is an applied management science It deals with improving the efficiency of an enterprise i e It helps to produce goods and services more efficiently
For instance in a retail chain like Pantaloons inventory management is of critical importance There are mathematical models that determine the optimum quantity of stock that should be held when it should order for more etc
Systems Approach
This is an integrating perspective that combines all schools of management thought It offers a holistic view about different management process within the organizations
Organization as a System
System contains a set of inter related elements that function as a whole Various departments within an organization can be considered to be its parts sub systems All these are inter related and inter dependent
Systems View of Organization

System approach has four major components Inputs consists of the following resources namely human material finance and equipment that are required to produce goods and services Transformation processes consist of an organization s managerial and technological abilities applied to convert inputs into outputs Outputs are the products and services produced by the organization Feedback is response that is received about performance and about the status of the organization
Organizations are either open or close systems An organization that does not interact with its environment is considered close On other hand an organization that is classified as an open system tends to be in a dynamic relationship with the environment Such organizations receive inputs from both internal and external sources Outputs are produced by transforming these inputs
Example During the 1970 s Japanese car companies were more open to the environment than the American car companies American companies produced large gas guzzlers that were very popular during the 1950 s whereas Japanese companies continued to produce small cars giving high mileage Japanese cars were products produced as a response to the environment We may also say that they followed an open system at the time of changing consumer needs due to high gasoline prices American car industry responded differently it followed a closed system
The Contingency Perspective
The Classical approach was regarded as a universal approach wherein similar solutions were prescribed for all types of organizations As opposed to this the contingency school advocated a unique solution for every managerial problem This solution depended on the situation These solutions are determined on the premise that appropriate managerial behavior in a given situation depends on the unique elements that are prevalent in that situation
For instance the reasons for motivation for different workers who are working in a factory might be different for each worker One worker may get motivated by money offered another due to the interesting nature of the work while another is motivated due to social recognition Such reasons can be many A manager has to consider the uniqueness of this aspect while dealing with the workers
Emerging Views Type Z Model
William Ouchi a management expert conducted research on both American and Japanese management approaches A new theory called Theory Z was outlined This theory combines the positive aspects of both American and Japanese management styles ref table 2
Table 2 Model Z
Characteristics
American
Japanese
Theory Z
Length of employment
Short term employment
Life time employment
Long term employment
Mode of decision making
Individual decision making
Collective decision making
Consensual decision making
Location of responsibility
Individual responsibility
Collective responsibility
Individual responsibility
Speed of evaluation and promotion
Rapid evaluation and promotion
Slow evaluation an promotion
Slow evaluation and promotion
Specialization of career path
Specialized career path
Non specialized career path
Moderate specialized path
Nature of concern for the employee
Segmented concern for the employee as an employee
Holistic concern for employee as a person
Holistic concern

Limitations of Modern Approach
These models cannot explain or predict the behavior of people
Quantitative skills are over emphasized while other skills like people skills are neglected
These models are based on certain assumptions that may not be entirely true
Summary
Early Views of Management
Robert Owen
Charles Babbage
Andrew Ure and Charles Dupin
Henry R Towne
Classical Approach
Scientific management
Administrative theory
Behavioral Approach
Group influences
Hawthorne experiments
Maslow s hierarchy of needs
Theory X and Y
Modern Approach
Quantitative school
Systems theory
Contingency theory
Theory Z