Chapter

2 – Historical foundations of management

Learning objectives:
• What can be learned from pre-classical management thinking?
• What can be learned from classical management thinking?
• What ideas were introduced by the human resource approaches?
• What is the role of quantitative analysis?
• What is unique about the systems view and contingency thinking?
• What are the continuing management themes of the 21st century?
Historical foundations of management
• Organisations exist in social and historical context.
• Understanding the historical context enriches our understanding of the theories that were generated.
• Understanding history helps us avoid the mistakes of others.
• Understanding history helps us build on the successes of others.
• Protestant work ethic.
• Robert Owen (1771–1858)
• Charles Babbage (1792–1871)
• Andrew Ure (1778–1857) and Charles Dupin (1784–1873)
• Dominated by focus on technical aspects of production and the individual characteristics of the pioneer, rather
than generalised ideas about managing.
Classical approaches to management










Scientific management
• Scientific management emphasises careful selection and training of workers, and supervisory support.
• The four guiding action principles are:
1. Develop for every job a ‘science’ that includes standardised work processes and proper working
conditions
2. Carefully select workers with the right abilities for the job
3. Carefully train and incentivise workers
4. Support workers with carefully planned work.
• Practical lessons from scientific management:
1. Make results-based compensation a performance incentive
2. Carefully design jobs with efficient work methods
3. Carefully select workers with the ability to do these jobs
4. Train workers to perform to the best of their abilities
5. Train supervisors to support workers so they can perform jobs to the best of their abilities.
• Motion study
1. The science of reducing a task to its basic physical motions.
Administrative principles
• Henri Fayol identified the following rules or duties of management:
1. Foresight – complete a plan of action.
2. Organisation – provide and mobilise resources.
3. Command – lead, select and evaluate workers.
4. Coordination – fit diverse efforts together.
5. Control – making sure things happen according to plan.
• Fayol also set forth a number of ‘principles’:
• The scalar chain principle
1. There should be a clear and unbroken line of communication from the top to the bottom in the
organisation
• The unity of command principle
1. Each person should receive orders from only one boss
• The unity of direction principle
1. One person should be in charge of all activities that have the same performance objective
• Fayol also set forth a number of ‘principles’:
• The scalar chain principle
1. There should be a clear and unbroken line of communication from the top to the bottom in the
organisation
 • The unity of command principle
1. Each person should receive orders from only one boss
• The unity of direction principle
1. One person should be in charge of all activities that have the same performance objective
• Mary Parker Follet and administrative principles:
1. Organisations as ‘communities’ where individuals combine their talents for a greater good.
2. Making every employee an owner creates feelings of collective responsibility.
3. Business problems involve a wide variety of factors that must be considered in relationship to one
another.
4. Private profits should always be considered in the interest of the public good.
• Bureaucracy (Max Weber)
1. A rational and efficient form of organisation founded on logic, order and legitimate authority.
• The defining characteristics are:
1. Clear division of labour
2. Clear hierarchy of authority
3. Formal rules and procedures
4. Impersonality
5. Careers based on merit.
Behavioural approaches to management










The Hawthorne studies and human relations
• 1924: The Hawthorne studies
– how economic incentives and physical conditions of the workplace affected workers’ output, e.g. better
lighting would improve performance.
– failed to find this relationship; determined ‘psychological factors’ interfered with experiment.
• 1927: Elton Mayo began further research into effect of worker fatigue on output.
– Again failed to find any direct relationship between physical conditions and output; productivity
increased regardless.
• Mayo concluded that new ‘social setting’ in the test room accounted for increased productivity:
– Group atmosphere. The workers shared pleasant social relations with each other.
– Participative supervision. Test-room workers were made to feel important, were given a lot of
information, and asked for opinions. This was not the case in their regular jobs, or for other workers.
• The Hawthorne effect: The tendency of people singled out for special attention to perform as expected.
• The Hawthorne studies showed that people’s feeling and relationships with co-workers, and the ‘work group’,
should be important to management.
• Set the stage for:
– The human relations movement: Managers using good human relations will achieve productivity.
– Organisational behaviour: The study of individuals and groups in organisations.
Maslow’s theory of human needs
















Maslow’s theory is based on two principles:
 – The deficit principle: Satisfied need is not a motivator of behaviour. People act to satisfy ‘deprived’
needs, those for which a satisfaction ‘deficit’ exists.
– The progression principle: The five needs exist in a hierarchy of ‘prepotency’. A need at any level only
becomes activated once the next-lower-level need has been satisfied.
Alderfer’s ERG theory of human needs
• Existence
• Relatedness
• Growth
McGregor’s Theory X and Theory Y
• McGregor’s theory – managers should give more attention to the social/self-actualising needs of people at work.
– Theory X assumes people dislike work, lack ambition, are irresponsible and prefer to be led.
– Theory Y assumes people are willing to work and accept responsibility, and are self-directed and creative.
– Self-fulfilling prophecies occur when people act in ways that confirm another’s expectations.
Quantitative approaches to management
• Management science (or operations research)
– Describes the application of mathematical techniques to analyse and solve management problems.
• Mathematical forecasting
– Makes future projections that are useful in the planning process.
• Inventory modelling
– Helps control inventories by mathematically establishing how much to order and when.
• The essence of the quantitative management approach includes these characteristics:
– There is a focus on decision-making that has clear implications for management action.
– The techniques use ‘economic’ decision criteria, such as costs, revenues and return on investment.
– They also involve mathematical models that follow sophisticated rules and formulas.
Modern approaches to management
• Modern approaches recognise that:
– No one model or theory applies universally in all situations or to the exclusion of the others.
– People are complex and variable. They have many different needs that can change over time. They
possess a range of talents and capabilities that can be developed.
– Managers should respond to individual differences.
Systems thinking
• Systems thinking:
– A system is a collection of interrelated parts working together for a purpose.
– Chester Barnard defined organisations as cooperative systems in which individual contributions are
integrated for a common purpose.
– A subsystem is a smaller component of a larger system.
– Open systems transform resource inputs from the environment into product outputs.
Organisations as complex networks of interacting subsystems












Contingency thinking
• Contingency thinking
– Tries to match managerial responses with the problems and opportunities specific to different settings,
particularly those posed by individual and environmental differences.
– Recognises that what is a good structure for one organisation may not work well for another, and what
works well at one time may not work as well in the future as circumstances change.
• Contingency thinking
– Asks questions like “What if?”
– Recognises that “it all depends….”.
Quality and performance excellence
Principles of TQM:
• Exceed the external customers needs
• Through the internal customer
• Teams
• Minimal variation (and comebacks)
 • Less waste
• Continuous improvement
• Supplier partnership
• Reduced cycle time
Learning organisations
The Learning Organisation is characterised by:
• A provision of learning spaces
• A willingness to experiment
• No blame – mistakes are seen as an opportunity to learn
• Celebration of diversity
• Truly shared vision
• Rewards learning
Knowledge Management:
• Data Collection, organisation and dissemination
• Leveraging knowledge for a competitive advantage
Contemporary management challenges
• Flattening the hierarchy
• Managing diversity
• Managing change
• New technology
• Organisational design
• Globalisation
• Ethics and social responsibility
• Quality
• Service
Summary:
• What can be learned from classical managerial thinking?
• What ideas were introduced by the human resource approaches?
• What is the role of quantitative analysis in management?
• What is unique about the systems view and contingency thinking?
• What are continuing management themes of the 21st century?