INTRODUCTION TO

MANAGEMENT COURSE
MODULE 2

THE EVOLUTION AND THEORIES OF

MANAGEMENT
BY PAMELA MUTSINZE
 MODULE TOPICS

This module will trace the historical development of management

The Classical Theory of Management: Scientific Management,

Bureaucratic Management and Administrative Management
The Neo – Classical Theory: Human Relations Approach and
Behavioural Science Approach
The Modern Management Theory: Quantitative Approach, Systems
Approach, Contingency Approach
 Introduction
The various approaches represent a progression of ideas, each
building on from the other and adding to it.
Together they provide a pattern of complementary studies into the
development of management thinking.
The different approaches are not in competition with each other and
no one approach should be viewed as if it were the only approach,
replacing or superseding earlier contributions.
Many ideas of earlier writers are still of relevance today and of
continuing importance in modern management practice.
 Introduction
The classical writers placed emphasis on purpose and structure, and on
the assumption of rational and logical behaviour.
The human relations writers emphasised the importance of the informal
organisation and the psychological and social needs of people at work.
The system approach focuses attention on the interactions between
technical and social variables, and interaction with the external
environment.
Contingency theory highlights possible means of differentiating between
alternative forms of structures and systems of management.
 Why study theories of Management
one need to know where management has been if one is to understand where
it is going.
Understanding these general approaches to the theory and practice of
management can help you appreciate how management has evolved, where it
is today, and where it appears to be headed.
Various approaches in the evolution of management thought are discussed
 Defining Key Terms

Evolution
-the gradual development of something.
-gradual change over time.
-a gradual process of change and development

 Evolution of Management
- gradual development of management
-The evolution of modern management began in the last decades of the
nineteenth century.
Defining Key Terms….contd
Theory / Thought
-the branch of a science or art that deals with its principles or methods, as distinguished from its
practice.
-a formal statement of the rules on which a subject of study is based or of ideas that
are suggested to explain a fact or event or, more generally, an opinion or explanation
-A process of rational thinking often associated with such processes like observational study
and research.
-Management thought refers to the theories that guide management of people in the organizations.
-Management thought is the gathering knowledge about the origin
of management, thinking proper and foundation of management research of different views
about the basic concepts of management
- Initially, these theories developed out of practical experience of managers in the industrial enterprises.
Later on, they borrowed ideas from other fields of study like science, anthropology, sociology etc.
Defining Key Terms….contd
School of thought
- a particular way of thinking,
- the perspective of a group of people who share common characteristics of
opinion or outlook of a philosophy, discipline, belief, social movement,
economics, cultural movement, or art movement.
- A particular idea or set of ideas held by a specific group; doctrine.
- Any idea that a group strongly believes in, be it through practicing this idea in
their everyday life or through fighting for its adoption
Therefore Management school of thought is….

The schools of management thought are theoretical frameworks for

the study of management.

Each of the schools of management thought are based on somewhat

different assumptions about human beings and the organizations for
which they work.
Phases in the Evolution of Management

Modern Management
School / Contemporary
Classical Management Management Theories
School / Theory
• Pre 1800 period • Mid 1950s
• From 1950s onwards
• Late 1800 – early
1900s
Management in Neo – Classical Management
School / Behavioural School /
Ancient Civilization Human Relations School
Phases in the development of Management
The development of management thought can be classified
under four periods:-
 Phases in the development of Management
Ancient Civilization / Classical Human Relations Modern Management
Early Influence Period Management Movement Theories / Contemporary
Theories / School Theories
Scientific Management Human Relations Approach Quantitative Approach
Theory

Bureaucratic Management Behavioural School of Systems Approach

Theory Thought

Administrative Management Contingency Approach

Theory
 1. EARLY INFLUENCES PERIOD
Period prior to 1900
Much was recorded from the ancient history was organisation and administration of
ancient city states and empires. Particularly in China and Greece.
Management existed even during the ancient civilization. People of the olden days
where food gatherers, making their living by hunting, fishing and collecting nuts and
berries.
Even during the primitive period some aspects of management was prevalent.
Primitive society had its codes for the conduct of business, rules regarding the roles of
parents, punishments for wrong doing, rites for the worship of gods etc.
Contributors to Ancient Management
Egyptian government:
The study of Egyptian government through different periods showed their
recognition of the principal of control of an extended operation through
centralized organization.
Babylonian Empire:
The most significant contribution of Babylonians to management thought was
the codes of law which gave us a real sight into their thinking on management.
The concept of responsibility was well recognized in the code.
Contributors to Ancient Management…contd
Hebrews:
The Hebrews had a great contribution in the field of management. It was clearly
stated in the book of Exodus in Bible that Moses made use of the principal of
delegation and exception, personnel selection and training.
Chinese:
The Chinese were aware of certain principals bearing in organizing, planning,
directing and controlling. Records indicate that the Chinese government started
the scientific selection of workmen by means of examination about 120.B.C.
Contributors to Ancient Management…contd
The Administration of the Roman Empire was a complex job. The Romans
effectively used many basic principles of management such as delegation and
scalar chain.
Period 1400 – 1450 merchants in Venice, Italy operated various types of
business organisations e.gs partnerships, trusts and holding companies.
Control emerged in the form of a double entry book keeping system.
There was also standardization of material and systems of inventory control
2. CLASSICAL
MANAGEMENT THEORY
 Introduction
One of the first schools of management thought that developed during the Industrial
Revolution when new problems related to the factory system began to appear.
Emerged from the early 1900. Period was characterised by rise of industrial
revolution and increase in factories.
Managers were unsure of how to train employees (many of them non‐English
speaking immigrants) or deal with increased labour dissatisfaction, so they began to
test solutions.
As a result, the classical management theory developed from efforts to find the one
of the best ways to perform and manage tasks.
Main tasks of managers in the factories were to invent and look for ways to increase
productivity and efficiency.
 Overview of the Industrial Revolution
The Industrial Revolution was the transition to new manufacturing processes
in Europe and the United States, in the period from about 1760 to sometime
between 1820 and 1840.
The Industrial Revolution was a time when the manufacturing of goods moved
from small shops and homes to large factories.
This shift brought about changes in culture as people moved from rural areas
to big cities in order to work.
It also introduced new technologies, new types of transportation, and a
different way of life for many.
Overview of the Industrial Revolution….contd
The Industrial Revolution began in Great Britain in the late 1700s with first
innovations in the textile industry.
Making cloth moved from homes to large factories. Britain also had plenty of coal and
iron which was important to power and make machines for the factories
First Industrial Revolution - The first wave of the Industrial Revolution lasted from the
late 1700s to the mid-1800s. It industrialized the manufacture of textiles and began
the move of production from homes to factories. Steam power and the cotton gin
played an important role in this period.
Second Industrial Revolution - The next wave took place from the mid-1800s to the
early 1900s. During this phase large factories and companies began to use more
technologies to mass produce goods. Important innovations during this period include
the use of electricity, the production line, and the Bessemer steel process.
 The Classical Management Theory
The classical management approach is the theory of management that focuses
on the productivity, output and efficiency of workers, rather than the
differences in behaviour that exist among them.
They represent early works on management and focus on increasing industrial
output by providing financial incentives to employees
This approach merges:-
-bureaucratic;
-administrative and;
- scientific theories of management.
Contributors to Classical Management School
FREDRICK TAYLOR(1856-1915)
HENRY GANTT(1861-1919)
FRANK(1868-1924)
LILLIAN GILBERT(1878-1972)
MAX WEBBER(1864-1920)
HENRY FAYOL(1841-1925)
MARY PARKER FOLLETT(1868- 1933)
CHESTER BARNARD(1886-1961)
 (a) Scientific Management Theory
Pioneered by Fredrick W. Taylor (1856 – 1917) often known as “Father of Scientific
Management”
The system arose from the basic experiments whose aim was to find more efficient
methods and procedures for control.
 Taylor believed that organizations should study tasks and develop precise procedures.
He proposed an objective and systematic method for doing the work in the best way
possible using scientific selection and training methods.
He ensured that there is co-operation and clear division of responsibility between
managers and workers and proper pay for performance.
 Scientific Management Theory…contd
Taylor developed his theory on the basis of his work experience in three companies:
Midvale Steel works, Simond Rolling mills and Bethlehem Steel company.
In 1911 he published a book Principles of Scientific Management
With scientific management Taylor and his contemporaries such as Gantt, Gilbreth and
Emerson stressed on the engineering approach.
He focused on finding the best way to do the job by eliminating wastage of men and
material.
He developed time and motion studies to find optimum time and nature of operations
for successful completion of tasks.
He also introduced differential wage rate system to pay more to productive workers.
 Scientific Management Theory…contd
Scientific management involved investigation of operating problems and trying to determine
the best way to solve problems using scientific methods of research.
The main intention of scientific management theory is to enhance economic efficiency,
specifically labour productivity.
The theory was centred on systematic study of people, behaviour and tasks and used scientific
study of tasks and the workers responsible for these tasks.
Developed after examining the issues relating to inefficiencies in the factory operations.
Mostly used experiments to find the “best method of doing jobs”
Taylor codified and clearly stated practices which had been developing in many well
established factories.
Principles of Scientific Management
Taylor came up with 5 basic principles of Scientific Management:-
1.Replacement of Rule of Thumb by scientific methods.
 A rule of thumb refers to a broadly accurate guide or principle, based on practice rather than
theory. It refers to an easily learned and easily applied procedure or standard, based on
practical experience rather than theory or facts.
2.Co-operation not individualism
 There should be harmony, not discord in group actions
3.Development of Workers to their fullest capacity
4.Maximum Output not restricted output
5.Distribution of Work
.
 Principles of Scientific Management…contd
In line with these five principles;-
Each worker should have a large, clearly defined, daily task
Standard conditions are needed to ensure the task more easily accomplished.
Company leadership should develop a standard method for doing each job using
scientific management.
Workers should be selected for a job based on their skills and abilities.
Work should be planned to eliminate interruptions.
Wage incentives should be offered to encourage increased output.
High payments should be made for successful completion of tasks. Workers
should suffer loss when they fail to meet the standards laid down
KEY ISSUES IN SCIENTIFIC MANAGEMENT
Economic performance
Innovation era
Increased inventions of machines
Productivity
Output
Efficiency
Lower costs
Increase in quality
Improve manager – employee relations
New duties for Managers under scientific management

Taylor listed the following duties:-

The development of a true science

- Performance management, clocking system of time management

The scientific selection, education and development of workmen

- Psychometric tests, assessment centres

Friendly, close co-operation between management and workers.

Benefits From The Scientific Management Theory

1. Hierarchical Structures
Distinct three levels of management, each with clear objectives:-
-top management
-middle management
-first line management

Levels of leadership are very distinct.

Very suitable for medium to big organisations
Benefits From The Scientific Management Theory….contd

2. Division of labour
Characterised by specialization

Complex projects are broken down into simpler smaller tasks

High productivity and higher efficiency

No multi – tasking but specialisation

 Benefits From The Scientific Management Theory….contd

3. Monetary Incentives
Pay system:-
With the theory piecework pay system is followed, where payment is monitored based in
piecework. Here incentive is considered in order to enhance productivity and provide high
wages for employees.
Employees work harder when rewarded with monetary rewards.
There is easy control of employees by management
Employees feel appreciated when rewarded for hard work.
Money is a very good incentive for motivation
Benefits From The Scientific Management Theory….contd

4. Autocratic Leadership
This is the integral part of scientific management theory.
Single leader to make decisions and organising workers
Decisions are made at the top and flowing to the bottom
The approach is beneficial through making of quick decisions
Very ideal for small businesses e.g sole traders
Benefits From The Scientific Management Theory….contd

5. Reduced cost of production

 through mechanisation and use of latest technology
6. Ability to control by management over production.
7. Specialisation:-
Employees become specialists in their field as they do the same task repeatedly; this
makes it easy for the manager to have control over employees.
8. Better management through scientific methods
9. Discovered true capacity of workers
10. Scientific selection of workers
11. Mental revolution on the part of employers and employees.
Criticism Of Scientific Management
Resulted in dissatisfaction from employees with prevailing conditions of employment.
Lack of necessary training on how to be efficient
Criticised for creating assembly – line atmosphere leaving employees doing menial
jobs.
Repetitive tasks. The methods of work are standardised and the worker has to repeat
the same performance time and again. This leads to monotony and kills initiative and
skill. His position is just like a cog in the wheel.
Constant studies and research have shown that increase in productivity can be
achieved in the short run and in the long run worker’s interest is adversely affected
which results in lower productivity.
 Criticism Of Scientific Management….contd

Over reliance on experience

Failed to consider the informal sector
Exploitation of workers – too much pressure to work faster. This resulted in the
rise of unionism.
Use of functional supervisors / foremen resulted in the lack of unity of
command and generation of chaos and confusion.
A very mechanical approach to doing work. It considered workers as robots
without considering the human element. (in factory work, lunch break is only
30minutes). Results in mental and strain
 Criticism Of Scientific Management….contd
Problem of separating planning from doing. The two cannot be separated. There
should be involvement and engagement. The worker has to act in accordance with
the instructions of the foreman. He cannot take initiative and suggest better method
of work.
The approach is individualistic. It over emphasise on individual performance than
group performance.
Wrong assumptions on motivation (people are not only motivated by monetary
rewards only but there are also social needs and egos eg self actualisation.
Narrow application. The scientific management theory only applies where work is
measured quantitatively. It is applicable to factories where productivity is measured
quantitatively. Invention of machines which replaced people created unemployment
Other Contemporary Scientific Management Theorists

H. L GANTT (1861 -1919)

F. Gilbreth (1868 – 1924)
H. Emerson (1853 – 1931)
 H.L GANTT (1861 – 1919)
Worked with Taylor for a time and improved upon Taylor’s ideas.
He believed management was responsible for creating a favourable environment to obtain
worker cooperation.
Gantt’s contributions:-
 the setting up of a well – measured task for a worker thus giving him a goal to achieve. This
made the worker interested in attaining the goal.
He believed management had a responsibility to train workers.
He advocated for proper methods of planning and control. He used graphical recording
systems, machine and man record charts. His charts showed relationship between events in a
production programme and he recognized that total programme goals should be regarded as a
series of interrelated plans that people can understand and follow. The modern day Gantt
Chart
 F. Gilbreth (1868 – 1924)
He started as an apprentice bricklayer and later managed his own business.
He became very interested in the best way of doing a job. This involved doing
the job in the most comfortable position, in few motions.
In operating his system of motion study he identified seventeen basic elements
in job motion and any motion can be broken down into all or some of these
basic elements.
He created a flow process chart, which facilitates the study of complete
operations and not just a single task.
 H. EMERSON (1853 – 1931)
Wrote two important books on the subject of efficiency and emphasised the importance of
correct organisation to achieve higher productivity.
He advocated the now popular “line staff” organisation and set out the following principles of
efficiency:-
o a clearly defined ideal
oCommon sense
oCompetent counsel
oDiscipline
oA fair deal
oReliable, immediate, adequate and permanent records
Principles of Efficiency by Emerson
(cntd….)
oStandardized conditions and operations
oStandards and schedules
oWritten standard practice instructions
oReward for efficiency
odispatching
 .
b Administrative Theory of Management

HENRY FAYOL (1841 – 1925)

 Administrative Management Theory
Administrative management theory attempts to find a rational way to design an
organization as a whole.
The theory generally calls for a formalized administrative structure, a clear
division of labour, and delegation of power and authority to administrators
relevant to their areas of responsibilities.
Basic Elements / Functions of Management
According to Administrative theory of Management, the five basic
elements of management are:
Planning:
Planning is forecasting the future and making a structural plan of action
and determining the goals and objectives of the action. Fayol considers
planning as the most essential function.

Organizing:
Organizing is the creation of an organizational structure that brings
human resources and non-human resources together to work together.
Basic Elements / Functions of Management
Commanding:
The process of giving direction and orders by the superior to the subordinate is known as
commanding.

Coordinating:
There are various divisions in an organization. So, coordinating is the process of bringing the
action of all the divisions and departments and integrating their efforts for the fulfillment of
organizational goals.

Controlling:
Controlling means comparing the actual performance of the organization with the desired
performance level and checking if there is a need for improvement and when a deviation is
found implementing the necessary changes to improve the performance.
Divisions of Industrial Activities
Henry Fayol observed the organization from a manager’s point of view. So, he identified six
major activities in which industrial activities can be divided. They are:
Technical Activities:
This activity is related to the production or manufacturing of goods and services.

Commercial Activities:
This activity is concerned about dealing with sales, purchase, and distribution of goods and
services.

Financial Activities:
This activity is related to the creation of necessary capital and its optimum use for
development and growth.
Divisions of Industrial Activities
Accounting Activities:
This activity is related to the recording of transactions and then preparing the
financial statements.

Managerial Activities:
This activity is considered with the elements of management which are
planning, organizing, commanding, coordinating and controlling.

Security Activities:
This activity is related to the protection of people and property in an
organization by providing safe working conditions, insurance policies, etc.
 Henry Fayol
Developed 14 principles of management based on his management experiences.
These principles provide modern‐day managers with general guidelines on how a supervisor should
organize her department and manage her staff.
Fayol focused on managing the organization as a whole rather than lower levels of organization only.
His theory revolves around:-
-Activities of a business: Technical, commercial, financial, security, accounting and managerial
-Functions of a manager : Planning / organizing / commanding /coordinating/ controlling.
- Abilities of managers: Physical, Mental, Moral, General education, special knowledge and experience.
Principles of management principles, they are still widely used in management theories.
 Henry Fayol (cntd…)
He was qualified mining engineer and managing director of a large French company.
He published a book “General Industrial Management.
Unlike Taylor, he started in management and attempted to develop a science of administration for management.
He believed that there was a universal science of management applicable to commerce, industry, politics, religion,
war, or philanthropy.
He was one of the first practising managers to draw up a list of management principles.
His thinking was that principles would be useful to all types of managers but he did not consider that managers
needed more than the knowledge of management principles in order to manage successfully.
At higher levels he said managers depended less upon technical knowledge of what they were managing and more
on a knowledge of administration.
As a trained engineer, he realised that management of an enterprise required skills other than those he had
studied.
 Henry Fayol (contd….)
He emphasised the role of administrative management and concluded that all activities that occur in
business organisations could be divided into six components:-
i. Technical (production, manufacturing)
ii. Commercial (buying, selling)
iii. Financial (obtaining and using capital)
iv. Security (protection of property and persons)
v. Accounting (Balance sheet, stocktaking, statistics, costing)
vi. Managerial (planning, organising, commanding, coordinating, controlling)
He concluded that the six groups of activities are interdependent and that it is the role of
management to ensure all six activities work smoothly to achieve the goals of an enterprise.
 14 Principles of Management

Division of labour. Work should be divided to assist specialization.

Authority. Authority and Responsibility should be equal.
Discipline. Discipline help workers develop obedience, diligence,
energy and respect.
Unity of command. No subordinate should report to more than one
superior.
Unity of Direction. All operations with the same objective should
have one manager and one plan.
 14 Principles of Management
Subordination of individual interest to general interest. The interest of one individual or group
should not take precedence over the interest of the enterprise as a whole.
Remuneration. Remuneration and methods of payment should be fair.
Centralization. Managers must maintain final responsibility but should delegate certain
authority to subordinates.
Scalar chain. A clear line of authority or chain of command should extend from the highest to
the lowest level of an enterprise. This helps to ensure an orderly flow of information and
supplements the principle of unity of command.
Order. “Ä place for everything and everything in its place”. Proper scheduling of work and
timetables to complete to complete work are important. This can ensure materials are in the
right place at the right time.
 14 Principles of Management
Equity. Employees should be treated with kindness and justice.
Stability of tenure of personnel. Management should work towards obtaining
long – term commitments from staff. Unnecessary turnover of staff is costly and
works against goal accomplishment.
Initiative. Workers should be allowed to conceive and execute plans in order to
develop their capacity to the fullest and feel like an active part of the organisation.
Esprit de corps. Harmony and union help to build the strength of an enterprise. It
is an extension of the principle of unity of command, emphasising the need for
teamwork and importance of communication.
 Contribution of Administrative Theory
Some of the ideas seems evident in present day management thinking and administration.
Fayol’s main contribution was the idea that management was not an inborn talent but a skill that could
be taught.
He created a system of ideas that could be applied to all areas of management.
He laid down basic rules for management.
Industrial Activities
Elements and rules of management
Principles of management
Qualities of Managers
Managerial duties of an organisation
Command
 CRITICISM OF ADMINISTRATIVE THEORY
1.Management Oriented Theory: The administrative management theory is management
oriented. It does not give much attention to the problems of the workers.
2. Lack of Importance to Informal Organization: The administrative management theory does
not give any importance to informal organization or groups. It gives importance only to the
formal organization structure.
3.Concepts Borrowed from Military Science: Some of the concepts of administrative
management theory were borrowed from military science. They tried to apply these concepts
to the social and business organisations. For e.g. Henri Fayol gave importance to
"commanding" and not "directing" the workers.
4.Mechanical Approach: The administrative management theory has a mechanical approach.
It does not deal with some of the important aspects of management such as motivation,
communication and leading.
 c. Bureaucratic Management Theory
Max Weber (1864 – 1920)
Taylor and Fayol directed their attention towards practical problems of
managing, while Weber was more concerned with the basic issue of how
enterprises are structured.
He was a German sociologist who formulated ideas on the ideal management
approach for larger organisations.
He developed a set of ideas about the structure of an organisation that define
what we know as bureaucracy.
 Bureaucratic Management Theory….contd

Weber studied organisations and considered that they can be divided into 3 types:-
a. Traditional – based upon the head, or chief’s authority.
b. Rational – legal. Based upon power which people recognized and accepted in a given
situation.
c. Charismatic. Based upon the exceptional ability or personality of someone who has
charisma.
Bureaucracy is defined as a type of organisation designed to accomplish large scale
administrative tasks by coordinating the work of a large number of persons in a systematic
manner (Appleby)
Bureaucracy is a social invention perfected during the industrial revolution to organise the
direct activities of a business firm. (Warren Bennis)
 Characteristics of a bureaucratic / formal
organisation
These characteristics were described in his book Perspective on Administrative Management.
1. A Division of Labour. In which authority and responsibility are defined very clearly and set out as official
duties.
2. Hierarchy of Authority. Office or positions are organised in a hierarchy of authority resulting in a chain of
command or the scalar principle.
3. Formal selection. All employees selected on the basis of technical qualifications through formal examinations
or by education or training.
4. Career Managers. Managers are professionals who work for fixed salaries and pursue careers within their
perspective fields. They are not owners of the units they administer.
5. Formal rules. Administrators should be subject to strict formal rules and other controls regarding the conduct
of their official duties (these rules and controls would be impersonal and uniformly applied).
 Advantages of Bureaucracy
Impartial application of rules
Clearly defined system of authority
System of procedures for processing work
Division of labour is based upon functional specialization.
 Disadvantages of Bureaucracy

Conflict and confusion among roles

Arbitrary rules
No room for personal growth
Poor communications (red-tape) and numerous informal
organisations
Slow to adapt to change
Inefficiencies in service delivery
2. THE NEO – CLASSICAL
THEORY
1. THE HUMAN RELATIONS APPROACH
2. THE BEHAVIOURAL SCIENCE APPROACH
 Introduction
The criticisms of classical management theory led to the rise of theorists such as George Elton Mayo and
Abraham Maslow, who emphasized the human and behavioural aspects of management.
Generally the scientific management theory emphasised on the worker as a mere tool for improving efficiency.
Since Taylor, much of the emphasis on scientific management has been cantered on the worker, and his / her
relationship to the company, job and fellow workers.
Advances in the sciences of mankind and of behaviour as an individual and in groups e.g psychology and
sociology have revealed a number of factors which have helped in dealing with business and industrial
problems.
Industrial psychology emerged as a specific field about in 1913. It was concerned with problems of fatigue,
monotony and efficiency in work as well as in the design of equipment, lighting and other working conditions.
It later dealt with problems of selecting and training employees and developed techniques of psychological
testing and measurement.
Industrial psychology emphasised the study of large and small groups in industry
 Introduction ……contd

Managers realized that organizations do not improve by only increasing the

efficiency of workers and productivity but work environment also affects
behaviour of workers that ultimately affects the total productivity.
Early Behavioural theorists who contributed their thoughts on organizational
behaviour included among others:-
o Robert Owen– he was a Scottish business man who suggested a utopian
workplace
o Mary Parker Follett – she was a social philosopher who proposed that a
manager is responsible for harmonizing and coordinating group efforts
o
 Introduction ……contd
oHugo Munsterberg – introduced industrial psychology dealing with maximization of
productivity and adjustments of individuals at work.
o Chester Barnard - proposed that organization is not just an economic entity but it is a social
system that needs cooperation among humans working for it. He also thought that managers
should be examining the workplace conditions and then maintains them to create equilibrium
in the state of the workplace.
An understanding of organisational behaviour help managers to understand management,
motivation, teamwork, leadership and conflicts in management.
These theories focus on organizational goals along with satisfaction of human needs. Shift in
focus from workplace conditions to human side of the organization. People- oriented approach
substituted the production- oriented approach
The Neoclassical approach began with the Hawthorne studies in the 1920s. It grew out of the
limitations of the classical theory.
 Introduction…..contd

Under classical approach, attention was focused on jobs and machines. After some time
workers resisted this approach as it did not provide the social and psychological
satisfaction.
Therefore, attention shifted towards the human side of management. George Elton
Mayo (1890-1949) is considered to be the founder to the neoclassical theory.
 He was the leader of the team which conducted the famous Hawthorne Experiments at
the Western Electric Company (USA) during 1927-1932.
 Assumptions of Neo – Classical theory

The neo - classical management theories depend on scientific research in order

to develop any theory about human behaviour at any workplace that could be
helpful to make practical guidelines for employees at managerial levels.
Its overall emphasis is on how to develop helpful tools that managers could use
to improve workers’ performance.
 the theory does not depend on mathematical certainty, since it is about human
behaviour that is very difficult to predict.
 IMPORTANT TO NOTE

There are two main sources of neo - classical theory:

1. The human relations movement (The Human Relations Approach)
- emerged from the work of several sociologists and social psychologists
who researched on how people relate and interact within a group.

2. The behavioural movement (The Behavioural Approach)

- came from the various psychologists who focused their research on
individual behaviour of employees.
A. HUMAN RELATIONS APPROACH / THEORY
A group of theorists led a human relations movement.
The human relation movement was aimed at providing social skills to managers
that they needed to make management-employee relation better.
The basis for human relations movement was the integration of various
disciplines:-
-Industrial psychology
-Social psychology
-Applied anthropology
-Sociology
 Human Relations Approach……contd
It was concerned with the human problems which management encountered.
In 1941 the publications of the results of the psychological experiments of Elton
Mayo at the Hawthorne (Illinois) plant of Western Electric Company was a
notable landmark.
 It revolutionized management thinking by focusing attention on the
components of the job and work satisfaction on the part of the employee.
 Three phases of the Hawthorne
Experiments
a. Test Room Studies
These were to assess the effect of single variables upon employee performance.
A group of women were segregated and variations made in the intensity of illumination, in
temperature, hours of work and rest periods. Their performance was noted.
Surprising results emerged as output rose, even though some changes were made which
made working conditions poorer.
It was established that the more important factors were not incentives or working conditions
but the high esprit de corps that had developed in the group and the more personal interest
shown by the supervisor and higher management.
In themselves, conditions of work, lighting, working hours, rest periods etc could not be
viewed as affecting people’s work.
People subject to the conditions develop attitudes and interpretations which are important
factors.
 Human Relations Approach…..Contd

b. Interviewing Studies

This first study led to an interest in the attitudes of people at the plant towards
their jobs, working conditions and supervision.
A morale survey comprising over 21 000 interviews was taken.
It was not easy though to find out objectively the cause of an individual’s
dissatisfaction.
Human Relations Approach…….contd
c. Observational Studies
These studies were made to study the normal group working.
It was found that the group developed “norms” of conduct, output and
conduct others outside the department.
It became obvious that to each individual in the group the relations with his
/ her fellows were important in his / her motivation.
The study showed the importance of informal organisation in worker
motivation.
It became obvious that the worker was not solely motivated by money.
 Observational studies (contd…)

The term human relations is used to indicate the way in which managers
interact with their subordinates.
Managers must therefore know why employees act in the manner they do
and the psychological, social and other factors which motivate them.
Underlying Assumptions of Human Relations Theory

People are social beings are motivated by social needs.

 A sense of identity is derived from inter personal relationships.
Workers are more receptive to social forces of peer groups than monetary
intensives and management controls.
Workers respond positively to attention from management, co workers and
customers.
The psychological needs of the individual significantly impact group
performance as well and therefore there was a need for the Human Relations
Movement.
Contributions of the Human Relations Theory
The superior’s role was important for morale and productivity.
Group spirit and teamwork were vital to accomplish organisational goals and worker
satisfaction.
Since then, these studies contributed to the growth of human resources management and
human relations and pointing to need of studying in detail the informal group. (this is an area
of study still to be explored).
A business organization is also a social system.
 A worker does not work for money only.
Employee-centric, democratic and participative style of leadership is more efficient.
A worker’s production norm is set and enforced by his group not by time and motion study.
 2. BEHAVIOURAL MANAGEMENT APPROACH / THEORY
After the pioneering attempts of Mayo and his associates, researchers using more sophisticated research
methods developed other models to try to explain what motivates people at the workplace.
They became to be known as Behavioural Scientists rather than members of the human relations school of
thought.
Major proponents of the Behavioural school of thought:-
i. Abraham Maslow – Hierarchy of Needs
ii. Fredrick Hertzberg – Hygiene and Motivation Factors
iii. Douglas McGregor – Theory X and Y
iv. Rensis Likert – Building Work Teams
v. C. Argyris - concept of organizational learning and its impact on a company's growth, effectiveness and
adaptability.
 Behavioural Management Approach (cntd…)

The underlying assumption of the behavioural thinking was based on an

understanding that a person’s needs would enable a manager to use more
accurate methods to motivate subordinates.
A large part of the manager’s task is getting things done through people
therefore he / she must try to understand people’s motivation.
This aspect of management element of directing is concerned with inducing
people to work to the best of their ability.
 Behavioural Management Approach (cntd…)
The behavioural management theory is often called the human relations
movement because it addresses the human dimension of work.
Behavioural theorists believed that a better understanding of human behaviour
at work, such as motivation, conflict, expectations, and group dynamics,
improved productivity.
 The theorists who contributed to this school viewed employees as individuals,
resources, and assets to be developed and worked with — not as machines, as
in the past.
Behavioural Management Approach (cntd…)
Motivation refers to the way urges, aspirations, drives and needs of human
beings direct or control or explain their behaviour.
Motivation is the keenness for a particular pattern of behaviour.
While salary is important, it is not the only important consideration. Workers
had more intrinsic motives for working, like:
oSelf- fulfilment
oAutonomy and empowerment
oSocial status
oPersonal relationships with co-workers
 Contributions of the Behavioural
Approach
Advocates for a situational approach
Builds confidence among employees
Creates a conducive environment
Comparison between Human Relations Approach and Behavioural
Approach
Human Relations Approach Behavioural Approach
Focus on individual behaviour Focus on groups and group behaviour needs

Emphasizes on interpersonal relationships Emphasizes on group relationships

Views worker as ‘social man’ Views worker as ‘self actualising man’

Always views group conflict as a source of new negative Views group conflict as a ideas and innovations.
force.
Views organisation as a social system Views organisation as a socio-technical system

Emphasis on motivation, morale, and job satisfaction Emphasis on group dynamics informal organisation structure
Narrow scope as based on Hawthorn experiments. Wide scope as based on human relations movement
 Contributions of the Neo – Classical Approach / Theory
The Behavioural Management viewpoint reveals that group dynamics,
communication, motivation and leadership are of great importance for managers.
It provides a clear view that behavioural studies can be applied practically.
The theories provide findings about various other disciplines including
psychology, management, anthropology, sociology, and economics.
The Approach shed light upon the importance of employees of an organization
as an important human asset rather than passive tools.
The behavioural management theories focus on the importance of human
behaviour.
 Contributions of Neo – Classical Theory (cntd…)

Humans are an important asset of an organization and if they work in a good

environment and are motivated by their managers, will work more happily. It is human
nature that if a person praises their work, then they will work with more passion and
try to make it even better.
Hawthorne studies also provide this view that making work environment better will
help workers to perform better.
Theory advocates for treatment of workers as human beings. Workers are viewed as
emotional beings than functional components which serve the organisation.
It also provides a better understanding of employees’ needs and managers are able to
adjust the organisational structures to meet those needs.
It advocates for a democratic and informal relationship between the employer and the
employee.
Criticism Of The Neo – Classical Approach / Theory
The theory lacked structures to address group conflicts within the
organisations. It assumes that workers and management will always work
harmoniously.
3. THE MODERN MANAGEMENT THEORY
Consists of three major theories / approaches to management
a. Quantitative Approach
b. Systems Approach
c. Contingency Approach
 The Modern Period (1950 to present).
After, 1960 management thought has been turning somewhat away from the
extreme human relations ideas particularly regarding the direct relation
between morale and productivity.
Present management thinking wishes equal emphasis on man and machine.
The modern business ideologists have recognized the social responsibilities of
business activities and thinking on similar lines.
During the period, the principles of management reached a stage of
refinement and perfection.

The Modern Period (1950 to present).
The formation of big companies resulted in the separation of ownership and
management.
This change in ownership pattern inevitably brought in ‘salaried and professional
managers’ in place of ‘owner managers’.
The giving of control to the hired management resulted in the wider use of
scientific methods of management.
But at the same time the professional management has become socially
responsible to various sections of society such as customers, shareholders,
suppliers, employees, trade unions and other Government agencies.
A. QUANTITATIVE MANAGEMENT APPROACH / MANAGEMENT
SCIENCE APPROACH

Was developed during the World War II era when Britain was faced with many
complex problems.
Operational research teams were set comprising of mathematicians, physicists
and other scientists who pooled their knowledge to solve problems.
After the war, these ideas were applied to industrial problems which could not
be solved by conventional means.
With the development of electronic computer, these procedures became
formalised into a management science / quantitative school.
Quantitative Approach / Management
Science Approach
The management science school differs from classical and behavioural schools in that:-
The classical or scientific management approach concentrates on the efficiency of the
manufacturing process whilst the management science school / quantitative theory
places greater weight on the overall planning and decision making process and regards
the technical efficiency as a tool rather than an end in itself.
The quantitative theory advocates the use of computers and mathematical modes in
planning.
It advocates the evaluation of effectiveness of models. The techniques for evaluating
the effectiveness of the models emphasize their use in managerial decision making, e,g
the return on investment analysis.
The management science theory, by its use of computers and quantitative analysis, has
made it possible to consider the effect of a number of variables in an organisation
which may have been overlooked.
Contributions of the management science /
quantitative school
The contribution of the quantitative management school was greatest in the
activities of planning and control.
The theory introduced techniques such as capital budgeting, production
scheduling, optimum inventory levels, development of product strategies
Criticism of Management Science / Quantitative
theory
However the school of thought is criticised for its inability to deal effectively
with people.
It should be noted that the statistical evidence by itself may not be sufficient as
it may require the more comprehensive techniques of the behavioural school
which stresses the concern for the welfare of staff and seeks to identify the
reasons behind certain behaviour or administrative management approach
 B. THE SYSTEMS APPROACH
Introduction
The influence of the systems approach can be traced to the cybernetics – which is
a branch of mathematics used in the study and design of control of mechanism.
Norbert Weiner wrote the book Cybernetics in 1948.
The basis model used in cybernetics has a number of similarities to the models
used in systems (collection of parts that are dynamically combined and
interrelated into a purposive whole.
The interrelationships are self – regulating and adaptive to the environment. Eg a
thermostat.
The 1960s and 70s saw the gradual change in management thinking with
inclination towards the systems approach.
 Introduction (contd…)
Previous approaches are useful in different circumstances but it is difficult to be sure
which one is the right in a given situation.
In view of this, it is considered that the newer systems and contingency approaches
may provide a more complete integrated approach to the problems of management.
The systems approach is the integration of the classical and behavioural approaches.
It views the organisation in the context of its environment and as a socio – technical
system.
The systems perspective adopted the view that an organization is a system, or an
entity of interrelated parts.
The systems approach is vital since the interaction and interlinking of internal
resources, capabilities and systems very much explain the dynamism and adaptive
nature of organization towards its environment.
 Systems Approach (contd….)
Among the management theories applicable from this view:-
 the Human Resources Management
Organisational Behaviour
organization theory
 resource-based view (RBV) (the
theory of competitive advantage
strategic management (SM)
theories of competitive advantage and collaborative advantage
Competence and innovation (C & I) theory.
The systems perspective is vital since the interaction and interlinking of internal resources, capabilities and
systems very much explain the dynamism and adaptive nature of organization towards its environment.
 System Approach to Management
A system is referred to as a collection of interrelated parts acting together to achieve some goal which exists in the
environment.
Also, system is defined as a set of objects working together with relationships between the objects and their
attributes related to each other and to the environment.
Therefore, system in simple terms in respect to management, it is a set of different independent parts working
together in interrelated manner to accomplish a set of objectives.
The systems approach attempts to reconcile these two earlier approaches and the work of the formal and the
informal writers. Attention is focused on the total work organisation and the interrelationships of structure and
behaviour, and the range of variables within the organisation.
The systems approach encourages managers to view the organisation both as a whole and as part of a larger
environment. The idea is that any part of an organisation’s activities affects all other parts.
Elements of a System
 Elements of Systems Approach
An organization is a unified and purposeful system consisting of several interconnected, interacting and interdependent
parts.
The parts of a system are called sub-systems. Each sub-system influences the other sub-systems and the system as a
whole.
The position and function of each sub-system can be analysed and understood only in relation to other sub-systems and
to organization as a whole
Each sub-system derives its strength by its association and interaction with the other sub-systems. As a result the
collective contribution of the organization is greater than the aggregate of individual contributions of its sub-systems.
This is known as synergy.
Each system has a boundary that separates it from its environment. The boundary determines which parts are internal to
the organization and which are external. For example, employees are within the boundary and creditors; customers are
external to a firm.
The reaction or response of the environment to the output is known as feedback. Feedback is useful in evaluating and
improving the functioning of the system.
Organizations operate on the principle that they have several alternative ways of doing the same thing or achieving the
same goal.
Elements of systems approach
1. INPUTS
Human Resources
Capital
Raw Materials
Information
Technology
 2. Transformation Process
The processing include:-
-Planning
-Organising
-Leading
-Controlling

Employees work activities

Management activities
Technology / operations methods
 3. Outputs
Products and services
Financial results
Information
Human results
4. Feedback
Progress reviews
5. Environment

Opportunities and Constraints

Customers
Community
Government (laws)
Competitors
 Elements of the system

The are also subsystems within the system eg

Union
Shareholders
Board of Directors
 Classification of systems
1. Open systems
An open system actively interacts with its environment. By interacting with
other systems, it tries to establish exchange relationships.
2. Closed systems
A closed system is self contained and isolated from the environment. It is a non-
adaptive system. It does not receive inputs often from other systems and does
not trade with the outside world.
Example: An automatic wrist watch.
 Advantages of the Systems Theory

System approach provides a holistic view of the organisations and emphasises on

their adaptive nature. It increases organisation’s adaptability to environmental
changes. The organisation is studied as a whole and not through its parts. This
enables it to adapt to the needs of the environment. Decisions are made keeping
in mind organisation-environment interface
System approach provides a framework for effective interaction of parts of the
organisation in a specific arrangement for attainment of its goals. It does not focus
on one part of the organisation.
It considers the impact of environment on the organisation and vice versa.
Interaction of external environment with the internal environment is the most
significant contribution of systems theory.
 Advantages of the Systems Theory
System approach, thus, analyses the organisation as an adaptive and dynamic entity.
It facilitates the interaction between organization and its environment.
It guides managers to avoid analysing problems in isolation and to develop an integrated
approach.
It concentrates on end results rather than the means.
It provides an orderly and efficient plan of action.
It develops coordination of the specialized activities.
It provides a good basis of control
It frees management from many daily details of operations management.
 Disadvantages of the Systems Theory

System approach fails to provide uniform approach to management. Management practices

change with changes in environmental variables. No standard set of principles apply to all types
of organisations.
Relationship amongst parts of the organisation is emphasised upon but the exact nature of
inter-dependence is not defined.
Exact relationship between internal and external environment of the organisation is also not
defined.
The approach does not recognize the differences in systems.
Systems philosophy does not specify the nature of interactions and inter-dependencies.
Unpractical: It cannot be easily and directly applied to practical problems.
 C. THE CONTINGENCY APPROACH
This is a modern perspective on management which emphasizes that no single way to manage people or work is best in
every situation.
The approach attempts to integrate the findings of other perspectives.
It encourages managers to study individual and situational differences before deciding on a course of action.
The manager has to try systematically to identify which technique or approach will in a particular circumstance or
context best contribute to the attainment of the desired organisational goals.
The management theories that are applicable from this view are:-
strategic management (SM) theories of competitive advantage and collaborative advantage
competence and innovation (C & I) theory.
This is due to differing environmental and organizational needs and structures that affect an organization coupled with
differing resources and capabilities pertaining to individual organization.
 Contingency Approach…..contd

The most appropriate structure and system of management is therefore dependent upon the contingencies of the
situation for each particular organisation.
The contingency approach implies that organisation theory should not seek to suggest one best way to structure
or manage organisations but should provide insights into the situational and contextual factors which influence
management decisions.
The Contingency approach aims to identify:-
Conditions of a task (scientific management school)
Managerial job (administrative management school)
Persons (human relations school)
As part of a complete management situation and attempt to integrate them all into a solution which is most
appropriate for a specific circumstance.
Contingency Aprroach contd
Contingency approach is an improvement over the systems approach.
The interactions between the sub-systems of an organization have long been
recognized by the systems approach.
Contingency approach also recognizes that organizational system is the product
of the interaction of the sub systems and the environment.
it seeks to identify exact nature of inter-actions and inter-relationships.
This approach calls for an identification of the internal and external variables
that critically influence managerial revolution and organizational performance.
Contingency Approach ….contd
According to this, internal and external environment of the organization is
made up of the organizational sub-systems.
Thus, the contingency approach provides a pragmatic method of
analyzing organizational sub-systems and tries to integrate these with the
environment.
Contingency views are ultimately directed towards suggesting
organizational designs situations. Therefore, this approach is also called
situational approach.
This approach helps us to evolve practical answers to the problems
remanding solutions.
Criticism of the Contingency Approach
It has little theoretical foundation.
There are no universal principles under this approach as in other
theories but the basis is upon each situation.
 Revision Questions
1. Discuss the contribution of the following in the development of management thought:-
(a) Fredrick Taylor
(b) Henri Fayol
(c) Max Weber
(d) Hawthorne Experiments
(e) Abraham Maslow
2. State and explain the Systems Approach and Contingency Approach to management
3. Highlight Henri Fayol’s fourteen principles of management
4. Management evolved over a period of time, can you distinquish the various stages / phases within which
management passed through.