Chapter 2: The History of Management

Historical perspective of Management

Management Ideas and Practice Throughout History
5000 BCE Sumerians Record keeping
4000-2000 BCE Egyptians Plan, organize, control. Written requests
1800 BCE Hammurabi Controls and written documentation
600 BCE Nebuchadnezzar Wage incentives, production control
500 BCE Sun Tzu Strategy
400 BCE Xenophon Management as a separate art
400 BCE Cyrus Human relations and motion study
175 Cato Job descriptions
284 Diocletian Delegation of authority
900 Alfarabi Listed leadership traits
1100 Ghazali Listed managerial traits
1418 Barbarigo Different organizational forms/structures
1436 Venetians Numbering, standardization, interchangeability
1500 Sir Thomas More Critical of poor management and leadership
1525 Machiavelli Cohesiveness, power, and leadership

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Management Approaches
There are four basic approaches to management (Management Approaches), one splits into two,
so technically there are five different approaches to management. When we say “approach” we
literally mean the way we approach management and managerial activities at work. So it is the
active way or method of seeing and dealing with managing at the workplace.

The main four approaches are:

1. Classical Approach
2. Quantitative Approach
3. Behavioral Approach
4. Contemporary Approaches:
1. Systems Approach
2. Contingency Approach
1. The Classical Approach
This approach is all about managing in classical methods. It is about applying the original studies
and researches done on management when it first became an official field of study during times of
war, developed in order to improve productivity, efficiency, and output.
These are the 3 focuses of this approach. The approach also includes several theories, among which
are the:
1. Scientific Theory of Management
2. Administrative theory of Management
3. Bureaucratic theory of management

Moreover, the reason different approaches were created is because people changed. The classical
approach does not concern employee satisfaction or anything from the perspective of employees.
It is too mechanistic. Employees look for more in a job now. They expect to enjoy their job and to
have a reason to do what they do. The classical approach, though is the base of all management, it
does not address those needs and is all about achieving the organization’s goals.
Several approaches can be integrated in management, and this is the case with the classical
approach. It is still in use in almost every company, firm, and organization but in a more complex
way as some of the other approaches are integrated with it.

2. The Quantitative Approach

This approach is about using math and statistics and other quantitative methods to make better
managerial decisions. In other words, management can be dealt with in a quantitative manner to
get more quality results; using numbers and statistics.

3. The Behavioral Approach

The behavioral approach is about being concerned with the individual in an organization. This was
developed when managers began to face issues in dealing with varying circumstances as they could
not understand employee behavior. Classical theory “ignored employee motivation and behavior”.
The behavioral approach viewed employees as humans with human needs and lead to better
treatment and increased motivation. Various contributions were made to this approach over time,
expanding the study to a field in itself.

In fact, employee behavior in management became so important today that it is taught as an official
Bachelor specialization in certain universities around the world, known as Organizational
Behavior (OB).

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4. Contemporary Approaches
Systems Approach:
When using the systems approach, you are looking at the organization as a whole system. You
count your employees, clients, customers, partners, managers, and every stakeholder as a part of
this system, and without any one part, the system would fail. If you fail to take care of one part,
the system would collapse. So using this approach, you take actions and make decisions while
taking the whole company and any possible effects that would happen to it into consideration. All
the components that make up the organizational system are simplified into 4 parts as shown in the
image below:
A system is an integrated set of elements functioning as a whole. An organization as a system is
composed of four elements.

1. Inputs – material or human resources

2. Transformation process – Technological and managerial process
3. Output – Products or services
4. Feedbacks – reaction from the environment
There are 2 main kinds of systems; an open system and a closed system.

1. Open system
2. Closed system
3. Sub-system
Contingency Approach:

Holds that there are no universal management theories and that the most effective management
theory or idea depends on the kinds of problems or situations that managers are facing at a
particular time and place.

The best management practice comes from applying a bit of all the approaches, especially where
needed. However, there has never been a time with a more dynamic business environment than
today’s and where people cared so much for their quality of life and job satisfaction. Thus, although
all the approaches are still very useful, the Contingency and Behavioral approach is probably the
most prominent these days.

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Management Theories
What do we mean by Management Theories?

Management theories are the set of general rules that guide the managers to manage an
organization. Theories are an explanation to assist employees to effectively relate to the business
goals and implement effective means to achieve the same.

General Management Theories:

There are four general management theories.

1. Frederick Taylor – Theory of Scientific Management.

2. Henri Fayol – Administrative Management Theory.
3. Max Weber - Bureaucratic Theory of Management.
4. Elton Mayo – Behavioral Theory of Management (Hawthorne Effect).

1. Frederick Taylor’s Theory of Scientific Management:

Taylor’s theory of scientific management aimed at, improving economic efficiency, especially
labor productivity. Taylor had a simple view about, what motivated people at work, - money. He
felt that, workers should get a, fair day's pay for a fair day's work, and that pay, should be linked
to the amount produced. Therefore, he introduced the, DIFFERENTIAL PIECE RATE SYSTEM,
of paying wages to the workers:

 If Efficiency is greater than the defined Standard, then workers should be paid 120 % of
Normal Piece Rate.
 If Efficiency is less than standard, then workers should be paid 80% of Normal Piece
Rate

Four Principles of Scientific Management are:

1. Time and motion study: - Study the way jobs are performed and find new ways to do them.
2. Teach, train and develop the workman with improved methods of doing work. Codify the
new methods into rules.
3. Interest of employer & employees should be fully harmonized so as to secure mutually
understanding relations between them.
4. Establish fair levels of performance and pay a premium for higher performance.

2. Henri Fayol’s Administrative Management Theory:

Henri Fayol known as the Father of Management laid down the 14 principles of Management. -

1.Division of Work.
2.Equity.
3.Discipline.
4.Initiative.
5.Authority and Responsibility.
6.Esprit De Corps.
7.Subordination of Individual Interest to General Interest.
8.Stability of Tenure.
9.Remuneration.
10.Unity of Direction.
11.Centralization.
12.Scalar Chain.
14.Unity of Command.

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3. Max Weber’s Bureaucratic Theory of Management:

Weber made a distinction between authority and power. Weber believed that power educes
obedience through force or the threat of force which induces individuals to adhere to regulations.
According to Max Weber, there are three types of power in an organization: -

1. Traditional Power – largely tied to tradition or custom

2. Charismatic Power – ability to persuade and charm
3. Bureaucratic Power -- elites' capacity for control, and limits individuals' freedom in
society.

Features of Bureaucracy:

1. Division of Labor.
2. Formal Hierarchical Structure.
3. Selection based on Technical Expertise.
4. Management by Rules.
5. Written Documents.
6. Only Legal Power is Important.
7. Formal and Impersonal relations.

4. Elton Mayo’s Behavioral Theory of Management:

Elton Mayo's experiments showed an increase in worker productivity was produced by the
psychological stimulus of being singled out, involved, and made to feel important. Hawthorne
Effect, can be summarized as “Employees will respond positively to any novel change in work
environment like better illumination, clean work stations, relocating workstations etc. Employees
are more productive because they know they are being studied.

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