Chapter 1

Lesson No.2
EVOLUTION OF MANAGEMENT THEORY

MANAGEMENT THEORY
 Are collections of ideas that provide the framework for effective management strategy, are implemented in
modern workplaces to motivate and bring the best out of employees.
 These are theories that help improves the management process

EVLOUTION OF MANAGEMENT THEORY

1. SCIENTIFIC MANAGEMENT THEORY (1856-1915)

- This management theory makes use of the step by step, scientific method for finding the single best way for doing
a job.

- The systematic study of the relationships between people and tasks for the purpose of redesigning the work process
for higher efficiency.

- Defined by Frederick W. Taylor in the late 1800’s- (Father of Scientific Management)

- This is also called Taylorism

Taylor’s Scientific Management Principles

1. develop a science for each element of an individual’s work to replace old rule of thumb method;
2. scientifically select and train, teach and develop workers;
3. select workers whose skills match the rules;
4. divide work and responsibility almost equally between management and workers

2. GENERAL ADMINISTRATIVE THEORY (1841-1925)

- The theory concentrates on the manager’s functions and what makes up a good management practice or
implementation.
- The study of how to create an organizational structure that leads to high efficiency and effectiveness.
- Henri Fayol (Father of Modern Management) and Max Weber are the personalities associated with it.

Henri Fayol’s 14 Principles of Management

1.) Division of Labor

- According to this principle, work should be divided among individuals and groups according to their skills and
knowledge. This helps in completing the work with greater efficiency.

2.) Authority and Responsibility

- Managers have the right to give orders and the power to exhort subordinates for obedience.

3.) Unity of Command

According to this principle, employees associated with a particular type of work should report to one superior only. This hel ps in
avoiding confusions in the role of the employees.

4.) Scalar chain

- refers to the hierarchy followed in an organization from top managers to employees working at lower levels. According to the
principle of scalar chain, all communication should pass through proper channels of hierarchy. However in c ase there are any
delays in communication due to hierarchy, there must be provision of cross communication.

5.) Centralization

- According to Fayol, the degree of centralization should be decided to make the optimum utilization of employees’ skills .

6.) Unity of Direction

- It means that there should be one direction in which employees must move to achieve a particular objective. If employees get
pulled into different directions, it may be difficult for them to achieve the objective..

7.) Equity

The principle of equity means fair treatment of all employees. Management must treat all employees equally and should be free
from biases and prejudices.

8.) Order

The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying
career opportunities

9.) Initiative

Managers should allow employees to be innovative and creative.

10.) Discipline

refers to the obedience to authority. Employees must obey and respect the governing policies and rules of the or ganization. In
order to maintain good discipline in an organization, there is a need for good supervision at all levels; clear understanding
between management and workers; and rational use of penalties.

11.) Remuneration of Personnel

- There should be provision of fair wages for workers. The calculation of wages should be done by considering various factors,
such as business environment, cost of living, capacity of organization to pay, and productivity of employees.

12.) Stability of Tenure of Personnel

Management must strive to stabilize the tenure of employees by providing them job security. Increased turnover always results
in inefficient production; therefore, organizations must attempt to reduce it by improving.

13.) Subordination of Individual Interests to the Common Interest

Employees should understand how their performance affects the performance of the whole organization.
14.) Esprit de corps

- It refers to team spirit. Management must adopt new ways to improve team spirit among employees. This helps employees to
work in harmony.

Max Webber’s Principle of Bureaucracy

Bureaucratic management was promoted by Max Webber (1864-1920), who was a German sociologist. According to Webber,
bureaucratic management is the most appropriate administration. He believed bureaucracy was the most efficient way to set up
an organisation, administration and organizations. Max Weber believed it was a better than traditional structures. In a
bureaucracy, everyone is treated equal and the division of labour is clearly described for each employee.

Bureaucracy is an organisational structure that is characterised by many rules, standardised processes, procedures and
requirements, number of desks, meticulous division of labour and responsibility, clear hierarchies and professional, almost
impersonal interactions between employees.

Characteristics of Bureaucratic Management

1. Management by standard rules:

According to Webber, an organization must be governed by a set of rules. Upper level managers must follow these
rules while controlling lower level workers.

2. Division of labor:

Webber promoted the principle of division of labor while assigning the work to all employees. According
to him, the division of labor results in saving a lot of time consumed during changing over from one job to another.

3. Selection of personnel having technical skills: Employees having required technical skills must be hired in order to
perform their jobs efficiently.

4. Hierarchical organizational structure:

In order to be successful, an organization must adopt a hierarchical structure wherein lower level employees
must be under the supervision of higher level managers.

5. Record of all administrative acts, decisions, and rules: An organization must keep a record of all its administrative
activities including policies, rules, and decisions. The record can be used in the future for studying the nature of
activities and people in the organization.

3. TOTAL QUALITY MANAGEMENT (TQM) (1900-2008)

- A management that focuses on the satisfaction of customers, their needs and expectations.
- W. Edward Deming and Joseph M. Juran introduced this customer-oriented idea.

Deming’s 14 Points for Management

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay
in business, and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must
learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality
into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier
for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus
constantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job.
Supervision of management is in need of overhaul, as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to
foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such
exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to t he
system and thus lie beyond the power of the work force.

11. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must
be changed from sheer numbers to quality.

12. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means,
inter alia, abolishment of the annual or merit rating and of management by objective.

13. Institute a vigorous program of education and self-improvement

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

Such a system formed the basis for lessons for top management in Japan in 1950 and in subsequent years. The 14 points
apply anywhere, to small organizations as well as to large ones, to the service industry as well as to manufacturing. They
apply to a division within a company.

Juran’s 10 Steps to Quality Improvement

1. Build awareness of opportunity to improve.

2. Set-goals for improvement.

3. Organize to reach goals.

4. Provide training

5. Carryout projects to solve problems.

6. Report progress.

7. Give recognition.

8. Communicate results.

9. Keep score.

4. ORGANIZATIONAL BEHAVIOR (OB) APPROACH

- Involves the study of the conduct, demeanor, or action of people at work. Research on behavior helps managers
carry out their functions-planning, organizing, staffing, leading and controlling.
- Robert Owen, Mary Parker Follett, Hugo Munsterberg, and Chester Barnard were the early supporters of the OB
Approach.

Robert Owen

 Sir Robert Owen (1771-1858) was a Welsh social reformer and a proponent of human resource management.
 According to him, investing in human resource is better than investing in other assets.
 He advocated that employees should be working because they are interested in it rather than being forced.
 He also propounded that there should be a harmonious relationship between managers and employees in order to
improve the efficacy of production.
 Managers must make workers aware of the organisation’s expectations and support them in meeting those expectations.
 His philosophy and ideas are considered as a forerunner to the development of behavioral approach of management.

Mary Parker Follett

 Mary Parker Follett, or the "Mother of Modern Management," believed that management was "the art of getting things
done through people."
 She offered valuable insight on the importance of "powering with" rather than "powering over," and integrating with
employees to solve conflicts.
 "Leadership is not defined by the exercise of power but by the capacity to increase the sense of power among those
led,“. The most essential work of the leader is to create more leaders."

Follett principles of coordination

 Direct contact. Direct contact between employees and managers helps organizations avoid conflict and
misunderstandings. Holding regular meetings or discussing assignments in person is a simple way to practice this
principle.
 Early stages. Coordination should be learned and mastered straight away. No employee should feel less important than
the next; each has a significant role that compliments the roles of others.
 Reciprocal relationship. Every worker, regardless of their level in hierarchy, is responsible for pulling their weight and
integrating with the rest of the organization. No one person should be trying less or more than another – it's a team
effort.
 Continuous process. Coordination must be maintained. Don't just learn it and forget about it; channel it in everything
you do.

Hugo Munsterberg

 Proposed the psychological tests for the selection of would-be employees in companies

Chester Barnard

 Suggested that cooperation is required in the organizations since it is, manly, a social system.
 he is the author of 'Functions of The Executives'. Which means, he presented a theory of organization and the functions
of executives in organisations.