CHAPTER 2: EVOLUTION OF MANAGEMENT THOUGHTS

2.1 Introduction
2.2 Approaches to Management
2.3 Classical Theories Of Management
2.4 Neo-Classical Theories
2.5 Modern Management Theories
Objectives of the Chapter
After studying this chapter you should be able to;
 Explain the difference between scientific management
and administrative management.
 Discuss the major finding in modern management
thought.
 Explain the emerging management trends.
 2.1 Introduction

 The origin of management in the organized way can be traced

as back as the origin of human beings. They earned their
livelihood by hunting that was carried out in groups.
 Later possession of land mass became important hence there
arose conflict between the groups.
 Local conflicts were resolved by power using primitive weapon
system.
 Management practices were undertaken in a scientific way early
18th century when industrial revolution took place.
 World War I saw a marked development in evolution of
management concepts.
 Management as a field of study was considered early 20th
century.
 Management principles like delegation of authority,
empowerment, leadership, scalar chain, unity of command and
motivation were clearly demonstrated in Roman Umpire and
their ability to organize can be seen from its expansion.
 Cont’d

 Two landmarks are most important in the management study.

 One, publication of classical economic doctrines by Adam
Smith in 1776 titled “Wealth of Nations” in which Smith has
argued that the economic advantages the organizations and
societies would gain from the concepts are: 1) division of labor
that promoted 2) skill development. 3) Specialized task
allotment. 4) Time measurement in relation to the quantum of
work performed. Smith concluded that, division of work would
benefit in higher quality of work and higher productivity.
 Two Industrial revolution of eighteenth century, advent of
machine power and subsequent development of infrastructural
facilities of rail road transportation, communication network,
formation of corporations worldwide promoted requirement of
people having increased managerial skills and formalized
management practices, which gave birth to the formal theories
of management in early 1900s
 Cont’d

 The concept of management was not clear till about

mid 20th century.
 There was a contrast between the thinkers.
 However, Classical approach of management which
propagated Scientific Management and General
Administrative Theory was a fabulous development.
 This followed an intensive research work undertaken
by Elton Mayo which is known as How throne studies.
 It was followed by more recent concepts of
Operations Research, process management, systems
approach, total quality management and last but not
the least the contingency approach..
2.2 Approaches to Management

Various schools of thoughts include:

2.1.1 CLASSICAL THEORIES OF MANAGEMENT
1. Bureaucracy
Max Weber (1864-1920) a German sociologist introduced the theory of
Bureaucracy. His major contribution to the theory is the concept of authority,
structure and its inter-se relationship.
Though the bureaucratic model was suggested about 80 years ago but it still
holds good.
(a) Hierarchy of authority exists in the organization, which involves superior
subordinate relationship and chain of command.
(b) Division of work based on competence and functional foremanship.
(c) System of policy, rules, and regulations is necessary to regulate subordinate
behavior and to ensure rationality, objectivity, discipline and control.
(d) In bureaucratic model, rule of law exists that leads to impersonal behaviour
of employees. Relations are based on position in the hierarchy.
(e) Weber suggests standardization of methods, systems, processes, job
contents and tools for smooth operation.
(f) Selection and promotion of employees should be based on competence.
(g) Bureaucracy recognizes legal power derived from the official position held
by an individual.
 Cont’d
2. SCIENTIFIC MANAGEMENT - Taylor
Fredrick Winslow Taylor (1856-1915), Frank Gilberth his wife Lillan Gilberth and
Henry Gantt has done pioneering work in the field of management.
They evolved methods and techniques and transformed the field of
management in which all works were to be done in the scientific way. Taylor’s
work was so unique that he eventually came to be known as the father of
scientific management.
Salient points of scientific management propagated by Taylor are given as
under:
(i) Effective use of human beings in industrial organizations particularly at the
shop floor. He introduced various systems to improve the efficiency of workers.
(ii) Taylor stated that managing workforce is an art. He further defined managing
as ‘knowing exactly what you want men to do and then see that they do it the
best and cheapest way’
(iii) He standardized the work and introduced better methods of doing it.
(iv) Time and Motion study
(v) Introduction of differential piece- rate system of payment offering additional
reward for production beyond the standard laid down.
(vi) Functional foremanship, creating supervisor having direct authority over the
workers
 Cont’d

Features of Scientific Management

 Separation of Planning and doing.
 Functional foremanship.
 Job Analysis.
 Standardization
 Scientific selection and training of workers.
 Financial incentives.
 Economies.
 Mental revolution
 Cont’d

Principles of Scientific Management

 Replacing Rule of Thumb with Science
 Harmony in Group Action
 Co-operation
 Maximum Output and development of workers
 Cont’d

2. PROCESS MANAGEMENT THEORY – FAYOL

 The real father of modern management theory is the
French industrialist Henry Fayol.
 His contribution is generally termed as process
management and administrative management.
 Fayol looked at the problems from the top management
point of view.
 He has used the term ‘administration’ instead of
management emphasizing that there is unity of science
of administration.
 This administrative science can be applied equally well
to public and private affairs.
 Cont’d
General Principles of Management
In order to develop managerial knowledge, he developed
principles of management. These are given below
(i) Division of Labor: Fayol recommended that work of all types
must be subdivided and allotted to number of persons. Sub-
division makes each task simpler and results in greater
efficiency.
(ii) Parity of authority and responsibility: Authority refers to the
right of a superior to give orders to subordinates, take decisions
on specified matter, and use the sources of organization.
Responsibility on the other hand includes obligation with respect
to the performance and achieving goals in a satisfactory manner.
This principle suggests that giving authority without
corresponding responsibility leads to arbitrary and unmindful
use of authority.
(iii) Discipline: In the context of management means obedience,
proper conduct in relation to others and complying with the
rules and regulations of the organization.
 Cont’d
(iv) Unity of command: This principle states that subordinate should receive orders and be
accountable to one and only one superior. It is necessary for stability, orderly functioning of the
organization and accountability
(v) Unity of direction: According to this principle, the efforts of all the members of the
organization should be directed towards common goals.
(vi) Subordination of individual to general interest: What is in the interest of the organization as
a whole must take precedence over the interest of individuals.
(vii) Fair remuneration to employee: Remuneration of employee should be fair and reasonable. It
should be decided on the basis of work assigned, cost of living, financial and position of
business He recommends profit sharing by managers and not by workers. Fayol recommends
non-financial incentives for workers.
(viii) Centralization and decentralization: Centralization means the concentration of all powers at
the top level of management and decentralization means the authority or the power is shared by
middle as well as low level of management. Degree of centralization and decentralization
depends upon the size of the organization, experience of the superiors and ability of
subordinates.
(ix) Scalar chain: Fayol defines scalar chain as the chain of superiors ranging from the top
management to the lowest rank. The chain also determines the line of authority. The principle
suggests that there should be a clear line of authority from top to bottom linking managers at
all levels. It is a chain of command as well as communication.
 Cont’d
(x) Order: The principle is concerned with arrangement of things and placement
of people and Arrangement of things—material order and arrangement of people
— social order. The people should be assigned specific places of work and that
they should be available there and things should be kept at allotted places.
(xi) Equity: means, similar treatment is assigned to people at similar positions.
(xii) Stability of tenure of personnel: Employees should not be moved from their
positions frequently. Period of service in a position should be fixed. The
individual should not be transferred often as it takes time to settle down in the
new appointment. It does not mean that when an employee is due for promotion
and a vacancy exists at a new place, should not be transferred. Individual
interests must have priority over the other aspects of the organization.
(xiii) Initiative: Employees at all levels should be allowed to take initiative in work
related matters. Initiative means eagerness to initiate action without being asked
to do so. However it does not imply freedom to whatever people like to do.
Initiative increases zeal and energy.
(xiv) Esprit de corps: It refers to team-spirit that is harmony in work group and
mutual understanding among workers. Managers must take steps to develop a
sense of belonging among the members of the work group. If there is team-
spirit then everyone comes forward to help each other. It must be remembered
that ‘union is strength’. Written explanation from erring member complicates
matter and all issues should be resolved verbally.
 Cont’d
NEO-CLASSICAL THEORIES
4.Human Relations Era
Human relations era started in 1927 onwards. It was a movement
spearheaded by Elton Mayo. The essence of the movement was the belief
that the key to higher productivity was employee satisfaction. Dale
Carnegie, Abraham Maslow and Douglas McGregor also made the
contribution to above philosophy. In this section we will briefly study the
contributions made by these scientists.
Hawthorne Studies
Hawthorne studies were initially sponsored by National research council
at the Western electric company’s Hawthorne works in Cicero, Illions in
the year 1924 but eventually expanded up to middle of 1930s. Engineers
of the company carried out initial research, the object of the study was to
“examine the effect of various illumination levels on productivity.” The
study envisaged formation of control group and experimental group.
Control group members worked under constant illumination intensity while
the experiment group was subjected to varying intensity levels. It was
expected that the individual output be directly related to intensity of light.
 Cont’d

MODERN MANAGEMENT THEORIES

 Re-engineering
 TOTAL QUALITY MANAGEMENT
 Continuous Improvement
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