Management During Medieval Period

Chapter: 2

Chapter contents

Feudal Organizations Early Writings The Merchants of Venice The Arsenal of Venice: warehousing, assembly line, personnel, standardization, control by accounting, inventory control, cost control. The Sixteenth Century Writers: Sir Thomas Moore, Niccolo Machiavelli

Feudal Organization
The Emergence
With the fall of Roman Empire, the peoples of Western Europe were filling the basic need of self-preservation. The necessity was protection against murder, robbery and violence. The individual sought the protection of a person more powerful than himself and in return he paid the price of subservience, including the loss of individual freedom and the rise of feudal relationship.

Feudal Organization (continued)

The Structure A brief description of the main features of the feudal organization can give us a better idea of the system of the state organization that dominated Europe during these four centuries known as the Dark Ages.

The organization of feudalism was a scalar one with descending grades of delegated authority. At the top of the great feudal pyramid stood the emperor of the king and all the land in his dominions belonged to him. He kept large areas for his personal use and invested the highest nobles with the remainder.

The process of decentralization was further emphasized by the growth of the institution of immunity where the vassal won the right to govern his own territory as he wished. The feudal unit, the manor, became the governmental unit with its one-man court.

Feudal Organization (continued)

The Primary Problem

The primary problem was to determine how to preserve the proper balance between centralized authority and local autonomy. Decentralized operation was necessary to provide the immediate attention and flexibility needed to adjust policies to local conditions. Centralized authority was equally important to insure that all advantages arising out of the total intersection of all the parts would be realized.

Feudalism taught managers that strength of organization was gained through scalar control. They also found that the common interest concept must exist. One major defect of feudalism was the inaccurate assumption that this common interest did exist. The same assumption was also made by the organizers of the Roman, Egyptian and Greek empires.

The Lesson

Finally, feudalism organization taught management that delegation of authority is not abdication. Delegation was conferring not a transferring of authority. The inappropriate delegation of authority by transfer showed that if a manager wished to organize a function on a decentralized basis, the organization must be accomplished on a base of conferred authority, otherwise the sought-after decentralization would turn into disintegration.

Early Writings

During the Dark Ages, virtually no books were written concerning the concepts of management. People lived under hostile conditions and little or no attention was given to concepts as opposed to physical things. Those who wrote were either scribes, members of religious orders or well educated leaders of the court. Books were written by hand and only the most important concepts were worth recording under these circumstances.

Alfarabi 900 AD
- Emphasized Hierarchical Organizational Structure - Listed the traits of a Leader, e.g.,

Great Intelligence Excellent Memory Firmness without weakness Firmness in the achievement of
good Love for justice Love for study Love for truth

Early Writings (continued)

According to Alfarabi, for running a state, these traits-

Must be possessed by one individual

if not found in one person, Two or more individuals my be chosen, who jointly possess these traits
(dual manager ship or control by complementary group)

AlGhazali 1100 AD
- AlGhazali, like Alfarabi, also listed some traits - According to him a King must keep with him Justice Intelligence Patience Modesty - Further, a King must not possess Envy Arrogance Narrow-mindedness Malice

Luca Pacioli 1494 AD

Double Entry Bookkeeping Even today his concepts remain applicable Pointed out the need for internal managerial controls Recommended that memorandum, journal and ledger be numbered and dated Documents for all transactions must be complete in detail They must be recorded permanently Periodic audits must be made for internal checks

Andrea Barbarigo: Merchants of Venice (1418-1449)

Frederic C, Lane chose Barbarigo as representative of Venetian Business Venetian business is of interest to us because The type of business organization employed Use of accounting as managerial device

Merchants of Venice (continued)

Venetian Business Organizations Partnership and joint venture were the main types of business organization of Renaissance Italy Partnerships mainly were used for business firms Joint ventures were used for one-time deals like, explorations etc.

Merchants of Venice (continued)

Partnerships were very tightly organized One man, owner of large capital, would
join with partners of lesser power and wealth The duration of the partnership was specified usually 3 to 5 years Partnerships are renewable.

Merchants of Venice (continued)

Partnerships were centralized However, typical family partnerships were

loose and decentralized in which brothers pooled their inheritance The family partnerships became combination investment trusts and holding company These Partnerships spread among real-estate, government bonds etc.

Merchants of Venice (continued)

These family firms with their enormous

prestige and wealth were able to exert political and economic pressure International business were carried out using legal relationships such as joint ownership and agency Joint ownership usually was a joint venture with limited liability These joint ventures had shares, shareholders,

Merchants of Venice (continued)

Owners shared expenses and profit proportionately Are comparable with the modern day joint stock
companies Besides Joint ownerships, Agencies were also used These commission Agents were paid fixed p.c. of transaction Agents could in turn appoint agents Agents and sub-agents formed a network to support market informational need.

Merchants of Venice (continued)

Loose business organizations were dropped

once the project were completed This offered the flexibility shift from venture to venture, product to product, agent to agent This flexibility gave more success over fixed focus on one type of product

Merchants of Venice (continued)

Accounting as a managerial devise Venetian merchants necessitated a system of documentation and record keeping Showed that an important function of Journal was to serve as the basis for the ledger. Barbarigo had account for goods in process.

Merchants of Venice (continued)

He drew consolidations of accounts so as to

simplify the statement of his net worth. He also used a profit and loss accounts Records relating to cost accounting were found Detailed wages for the spinner, weaver, dyer etc Corresponding prices and materials inventory records were also maintained

The Arsenal of Venice

Maritime power needed to protect trade routes In 1436 Government built a shipyard called the Arsenal In this Venetian Shipyard bookkeeping was just as important as it was in business The Shipyard kept strict accounting of money, materials and men An early form of cost accounting was used All accounts were consolidated into two journals and one ledger The ledgers were kept separate for safe keeping

The Arsenal of Venice (continued)

Three types of expense accounts were recognizedFixed Variable Extraordinary A meticulous record of everything that entered and left the shipyard were kept As Venetian business grew, its Navy also grew. By 16th century Venetian state and the navy were at the zenith of power

The Arsenal of Venice (continued)

The Arsenal of Venice became the industrial plant as a consequence It covered 60 acres of ground and water & employed 2000 workers

The Arsenal of Venice (continued)

Problems associated with large size was also created Such problems, however, were solved, efficiently The Arsenal of Venice was Noted for checks and balances While the top management looked after functions such as financial management, purchasing etc The foreman and the technical advisors headed the actual ship building

The Arsenal of Venice (continued)

The Arsenal had three fold tasks: The manufacture of galleys, arms, and equipment The storage of the equipment until needed The assembly and the refitting of the ships on reserve The management practices of the Arsenal that demand attention are Numbering and warehousing of finished parts Assembly line outfitting of the galleys Personnel practices

The Arsenal of Venice (continued) Standardization of

parts Control by accounting Inventory control Cost control

The Sixteenth Century Writers

Sir Thomas Moore Niccolo Machiavelli

Sir Thomas Moore

Wrote Utopia in an attempt to create the Ideal State Died as he could not reconcile his principles with the desires of the king His ideal state would correct the managerial injustices and abuses present in the British society of his time Moore blamed the ruling class and the ruling elite for the economic ills

Sir Thomas Moore (continued)

They were the unproductive parasites, did not learn a trade nor earned a livelihood, lived on the labour of their farm tenants Moore was contemptuous of the rich for their excesses in consumption, dresses and foods The poor on the other hand were underemployed, even unemployed Added to their misery, the poor squandered their meager money into anti social activities and enjoyment

Utopia emphasized on specialization Economies of mass production was also highlighted in Utopia He was a moralist and a humanist.

Niccolo Machiavelli

Reliance on Mass
consent Cohesiveness Leadership Will to survive