Slides on Management Theory

1. THE EVOLUTION
OF
MANAGEMENT
THEORIES
THE EVOLUTION
OF
MANAGEMENT
THEORIES

2. Evolution of Management Theories
Modern managers use many of the practices, principles
and techniques developed from earlier concepts and
experiences.
The Industrial Revolution brought about the emergence
of large-scale business and its need for professional
managers
Theories portray the different perceptions regarding
how management should be undertaken.

3. Categories of Theories
The Classical School of Thought i.e.
- Classical Organisational Theory
- Scientific Management
Behavioural Science School i.e.
- The Human Relations School
- Behavioural Science School
 New Developments in Management
- Systems Theory
- Contingency Theory

4. Evolution of Management Theory
Evolution of Management Theory
1940 2000
Administrative Management
Behavioral Management
Scientific Management
New Developments in Management

5. Classical School of Thought

Scientific Management - Frederick Taylor
and others
Classical Organisational Theory -
Administrative management Theory
(Henry Fayol and Max Weber)

6. Core Ideas of Classical School of
Thought
Application of science to the practice of management.
Development of basic management functions.
Articulation and application of specific principles of
management.
- Evolved in response to the shift from handicraft to
industrial production.
- Emphasis is on economic rationality of people and
organizations i.e. motivated by economic incentives, they
make choices that yield the greatest monetary benefits.

7. Scientific Management theory
Scientific Management theory
1st management theory after the industrial
revolution.
Main objective was to scientifically
determine the best method of work in order
to improve productivity.

8. Scientific Management theory
Scientific Management theory
Evolution of Scientific Management
 Began in the industrial revolution in the late 19th century as:
 Managers of organizations began seeking ways to better
satisfy customer needs.
 Large-scale mechanized manufacturing began to supplant
small-scale craft production in the ways in which goods were
produced.
 Social problems developed in the large groups of workers
employed under the factory system.
 Managers began to focus on increasing the efficiency of the
worker-task mix.

9. Scientific Management theory
Scientific Management theory
Scientific Management
 The systematic study of the relationships between people and
tasks for the purpose of redesigning the work process for
higher efficiency.
Defined by Frederick Taylor in the late 1800’s to replace
informal rule of thumb knowledge.
Taylor sought to reduce the time a worker spent on each
task by optimizing the way the task was done.
 Other proponents are The Gilbreths; Frank (1868-1924)
and Lillian (1878-1972) Gilbreth, Robert Owen, Charles
Babbage, Adam Smith and Henry C Gantt,

10. Frederick Taylor’s Theory of Scientific
Management (1856-1915)
 Father of Scientific Management
Believed that decisions based upon tradition and rules of
thumb (Principles of repeatiton) should be replaced by precise
procedures developed after a careful study of an individual at
work i.e.
 He carried out Times and motion studies at Bethlehem
Steel Company and developed a better method for
performing that job that reduced on the amount of time
spent doing work

11. Taylor’s Theory of Scientific Management
He advocated for:
- Scientific selection of workers to increase
productivity i.e. selecting workers whose
skills match the jobs to be performed.
- Training of workers
- Differential pay rate system / piece rate pay
system

12. The 5 Principles of Scientific Management
The 5 Principles of Scientific Management
 Replace the rule of thumb work methods
with methods based on scientific study of
tasks
 Scientifically select, train and develop each
worker rather than passively leaving them to
train themselves
 Cooperate with the workers to ensure that
the scientifically developed methods are
being followed.

13. The 5 Principles of Scientific Management
The 5 Principles of Scientific Management
 Establish a differential pay –rate system
Taylor observed that workers did as little work as possible but
with this wage system, employees would work harder.
 Divide work nearly equally between managers
and workers so that managers apply scientific
management to planning the work and workers
actually perform the tasks.
 Each group taking over the work for which its best fitted
instead of the former condition in which responsibility
largely rested with the workers.

14. Weaknesses with Taylor’s Scientific
Management
Taylor assumed people are rational and motivated primarily
by the desire for money hence disregarding the social
needs.
Specialized jobs became very boring, dull and demotivated
workers leading to reduced productivity.
Ignores individual differences – the most efficient way of
working for one person may be inefficient for the other.
Ignores the fact that the economic interests of workers and
management are rarely identical.
Underrated the power of trade unions and government in
determining working conditions & workers’ wages.

15. Application of Taylor’s Theory of Scientific
Management in the Modern Workplace
 Assembly Line Plants as Prototypical Examples-
work is highly specialized (Division of labour)
 System of Remuneration (quotas - commission) –
payment system according to performance
 Re-Design – Reengineering - Data is used to refine,
improve, change, modify, and eliminate
organizational processes
 Benchmarking – copying better methods of
performance from others
 Lean Manufacturing – producing at minimal costs
 Training of workers

16. Adam Smith’s - Job specialization
Adam Smith’s - Job specialization
Adam Smith, 18th century economist, found firms
manufactured pins in two ways:
 Craft -- each worker did all steps.
 Factory -- each worker specialized in one step.
Smith found that the factory method had much
higher productivity.
 Each worker became very skilled at one, specific task.
Advocated for breaking down the total job to allow
division of labor i.e. job specialization to increase
productivity through creation of experts (highly
skilled workers)

17. The Gilbreths- Time and Motion Studies
The Gilbreths- Time and Motion Studies
Disciples of Frederick Taylor i.e. collaborated on Time and
Motion studies and focused on ways of promoting the individual
workers welfare.
Using the motion Picture cameras, they tried to find out the most
economic motions for each task of the brick layer in order to
upgrade performance and reduce fatigue.
The Gilbreths developed a 3 position plan intended to serve as an
employee development program i.e.
1st step – To do present job very well
2nd Step – Prepare for a higher position well
3rd Step – Train a successor
 They observed that workers should be doers, learners and
teachers

18. Other Followers’ of Taylor
Henry L. Gantt – Project Scheduling – The Gantt Chart
A protégé and associate of Frederick Taylor.
He designed the Gantt chart i.e. a project scheduling model for
increasing the efficiency of project execution and completion.
Criticized the differential pay system to be unfair and advocated
a bonus system i.e.
- The supervisor should earn a bonus for each worker who
reached the daily standard and extra bonus if all workers reached
it.
Advocated for training of workers to do a better job

19.  Robert Owen
 Known as Father of Personnel Management. He believed workers
performance was influenced by the total environment in which they
worked.
 Worked towards building cooperation between management and
workers
 Believed that workers should be treated as human beings. He
suggested that investment in human beings is more profitable than
investment in any physical resource
 Introduced new ideas of human relations (better working
conditions to improve productivity) i.e.
 provision of better housing for workers
 reduced working hours,
 rest pauses,
 training of workers,
 education for workers’ children e.t,c

20. Charles Babbage
 He was a British mathematics professor at Cambridge
university
 contributed to the introduction of scientific methods to
management through:
 advocating for the principle of division of labor (emphasized
work specialization)
 work measurement
 optimum utilization of machines
 cost reduction and
 wage incentives.
Note : For contributions of Scientific management to today’s
modern management, look at the contributions of all the
proponents

21. Classical Organizational Theory
Administrative Management Theory - emphasizes the
manager and the functions of management
Focuses on managing the total organization rather than
individuals.
Stipulates how organisations should be run, structured and the
functions of Management i.e. stipulates principles needed to
manage complex Organisations.
Major proponents are Henry Fayol and Max Weber

22. Administrative Management Theory
Administrative Management Theory
 Henry Fayol
Theory of Bureaucracy developed by Max
Weber

23. Henry Fayol’s Administrative Theory
Henry Fayol (1841-1925)
 Father of Modern Management, was a French industrialist
who developed a framework for studying management
 Was first to identify the specific management functions of
1. Planning
2. Organizing
3. Leading
4. Controlling
 He developed 14 universal principles of management

25. Henry Fayol’s Administrative Theory
Lessons from the Henry Fayol’s Administrative Theory
 The management process can be separated into
interdependent functions (departments)
 Management is a continuous process.
 Management is a largely, though not an entirely,
coherent (logical) process
 The functional approach is useful because it specifies
what managers should do.
 Fayol’s major functions of management are
recognized as the main objectives of modern
managers

26. Weber’s Theory of Bureaucracy
Max Weber (1864-1920)
 German Sociologist and the Father of
Modern Sociology
 Developed the concept of bureaucracy as a
formal system of organization and
administration designed to ensure
efficiency and effectiveness

27. Weber’s Theory of Bureaucracy
Bureaucracy allows for the optimal form of authority -
“rational authority”
Three types of Legitimate Authority
 Traditional Authority - past customs; personal
loyalty
 Charismatic Authority - personal trust in character
and skills
 Rational Authority - rational application of rules or
laws

28. Weber’s Principles(Features) of Bureaucracy
Weber’s Principles(Features) of Bureaucracy
Routinisation of activities
Appointment based on competence
Hierarchy of authority
Bound by written rules and regulations
Specialization of work
Separation of official (management) from ownership
of the organization
Fair evaluation and reward
System of task relationships
Focused vision

29. Weber’s Theory of Bureaucracy
Application in the Modern Workplace
 Large organizations guided by countless rules and
regulations
 Existence of task relationships (departments)
 Presence of a clear hierarchy of authority in most
organizations
 Use of authority in many organizations to get things done.
 Presence of a vision (direction) in many organization
 Existence of separation of management and ownership in
many large organizations
 Centralization of power in the managers in many
organizations

30. Weber’s Theory of Bureaucracy
Criticisms/ Weaknesses
 Delays in decision making due to long hierarchy and
centralization of power
 Characterized with close supervision which caused tension in
some occasions
 Routinastion of work creates monotony leading to boredom
hence reduced productivity
 Not suitable in dynamic environment – is not flexible
 Work can be brought to a stand still incase one individual is
missing in the process due to high work specialisation
 Focus may be put on following rules and procedures instead
of the real goals.

31. Criticisms of Classical School of
Thought
No one is entirely driven by economic motivations.
People’s choices and behavior are dictated by other
factors such as social needs, security and self-esteem.
There is no such thing as “the best way” to do a job
Extreme division of labor tends to produce monotony
and reduce overall skill levels.
People are managed like machines.
Introduction of newer machines led to job elimination

32. BEHAVIORAL SCIENCE SCHOOL- Core
Concepts
BEHAVIORAL SCIENCE SCHOOL- Core
Concepts
 Developed in reaction to the Scientific Theory of
Management which emphasized standardization of jobs,
processes and technologies to maximize economic return.
Focus shifted to the human side of organizations.
The best way to motivate, structure and support employees
- The study of how managers should behave to motivate
employees and encourage them to perform at high levels and
be committed to the achievement of organizational goals.

33. BEHAVIORAL SCIENCE SCHOOL- Core
Concepts
BEHAVIORAL SCIENCE SCHOOL- Core
Concepts
The need for workers to find intrinsic value in their
jobs.
The positive impact of social relationships on worker
productivity.

34. BEHAVIORAL SCIENCE SCHOOL
BEHAVIORAL SCIENCE SCHOOL
The Human Relations School; The
Hawthorn Studies and Human Relations
(Elton Mayo), Mary Parker Follett and
Chester Benard
The Behavioral Scientists School;
Abraham Maslow, Douglas McGregor,
Chris Agyris and Fredrick Hertzberg .

35. Human Relations School
•Elton Mayo (1880–1949) was an
Australian psychologist, sociologist,
went to Harvard University.
• Spent most of his career at Harvard
Business School as Professor of
Industrial Research.
• Main focus was on the people
working in an organization.

36. The Hawthorne Studies
The Hawthorne Studies
Study of worker efficiency at the Hawthorne Works
of the Western Electric Co. during 1924-1932.
 Worker productivity was measured at various levels
of light illumination.
 Researchers found that regardless of whether the
light levels were raised or lowered, productivity
rose.
The experiments were an attempt to put Taylor’s ideas
in practice.
Mayo decided that the traditional financial incentives
were not causing productivity improvements.

37. The Hawthorne Studies
The Hawthorne Studies
Productivity increases when workers believe
that they are being observed closely.
Employees perform better when managers and
co-workers make them feel valued.
Financial rewards are not necessarily conducive
to increasing worker productivity.
Workers care about self-fulfillment, autonomy,
empowerment, social status and personal
relationships with co-workers.

38. Mary Parker Follet - 1925
The Psychological Foundations of Business Administration
Pioneered the notion of participative leadership.
Suggests that organizations are communities involving networks
of groups.
Workers and managers equally share power and responsibility
for decision making and therefore, their outcomes.
She thus emphasizes participative decision making to improve
performance i.e. motivates workers because they feel valued

39. Chester Barnard - 1938
Proposes the acceptance theory of
authority, that organizational
goals will be achieved and
managerial authority will be
accepted if workers believe that
their individual needs are being
met i.e.
Workers will easily accept
instructions given to them once
their individual needs have been
met.

40. Contributions of the Human Relations
School
Contributions of the Human Relations
School
Mayo advocated for employee participation in decision making
to enhance motivation
He advocated for improvement of employee welfare
Acceptance of informal groups in work places
 Provision of harmonious work environment.
All the above are important motivators that increased
productivity, and concluded that man is a social being driven by
social needs and that attention must be given to the social needs
if you want to increase productivity.

41. Behavioral Scientists School –core
concepts
The fulfillment of emotional needs of workers is
important in achieving economic goals.
Employee satisfaction and working conditions are
important in achieving worker productivity.
Workers are intrinsically motivated to work when they
feel a sense of belonging and participate in decision
making.
Workers desire diverse and challenging work.

42. Douglas McGregor’s X and Y Theory
Douglas McGregor
 Developed Theory X and Theory Y
Theory X: best represented the views of
scientific management
Theory Y: represented the views of human
relations approach.
Douglas McGregor believed that theory
Y was the best philosophy for all
managers.

44. Theory X and Y
Theory X and Y
 General assumptions of employee behavior
and Managerial Behavior
 Theory X: the average worker is lazy, dislikes work
and will do as little as possible.
 Managers must closely supervise and control through
reward and punishment.
 Theory Y: workers are not lazy, want to do a good
job and the job itself will determine if the worker
likes the work.
 Managers should allow the worker great latitude, and
create an organization to stimulate the worker.

45. Abraham Maslow-1954; Motivation
and Personality
Hierarchy of Needs Theory
Advanced a theory that
employees are motivated
by a hierarchy of needs
that they seek to satisfy

46. Limitations of Abraham Maslow
 There is little evidence to suggest that people are motivated
to satisfy only one need level at a time, except in situations
where there is a conflict between needs.
Maslow's hierarchy also has difficulty explaining cases such
as the "starving artist" in which a person neglects lower needs
Maslow's hierarchy makes sense from an intuitive standpoint
but there is evidence that contradicts the order of needs
specified by the model e.g. some cultures appear to place
social needs before any others

47. Fredrick Herzberg - Two Factor
Theory
17 April 1923 – 19 January 2000
An American psychologist
To better understand employee
attitudes and motivation, he
performed studies to determine
which factors in an employee's
work environment caused
satisfaction or dissatisfaction

48. Fredrick Herzberg - Two Factor
Theory
He developed the motivation-
hygiene theory to explain these
results.
He called the satisfiers motivators
and the dissatisfiers hygiene factors
Using the term "hygiene" in the
sense that they are considered
maintenance factors that are
necessary to avoid dissatisfaction
but that by themselves do not
provide satisfaction.

49. Two Factor Theory "The Dual
Structure Theory"
Proposed the Motivation-Hygiene Theory (1959) of job
satisfaction.
People are influenced by two sets of factors:

50. Implications of Two Factor Theory to
Management
Management not only must provide hygiene factors to
avoid employee dissatisfaction, but also must provide
factors intrinsic to the work itself in order for employees to
be satisfied with their jobs i.e.
Job enrichment is required for intrinsic motivation, and it
is a continuous management process.
The job should have sufficient challenge to utilize the full
ability of the employee

51. Criticisms of Two Factor Theory to
Management
The two-factor result is observed because it is
natural for people to take credit for satisfaction
and to blame dissatisfaction on external factors.
Job satisfaction does not necessarily imply a
high level of motivation or productivity.

52. Chris Agyris
Chris Agyris focuses on the interpersonal
relationships that exists with organizational
structures and includes the effects of personality
and social interaction on the positive results of a
business or work group.

53. NEW DEVELOPMENTS
The Systems Approach (Katz and Kahn)
The contingency school (Burns and
Stalker)
William Ouchi’s Theory Z

54. The Systems Approach
What Is a System?
 A collection of parts operating interdependently to
achieve a common purpose
Systems Approach
 Posits that the performance of the organization as a
whole is greater than the sum of the performance of its
parts
Seeks to identify all parts of an organized activity
and how they interact
Four major concepts underlie the systems approach

55. Four Major Concepts underlying
the Systems Approach
Specialization: a system is divided into smaller
components allowing more specialized
concentration on each component.
Grouping: to avoid generating greater
complexity with increasing specialization, it
becomes necessary to group related disciplines
or sub disciplines.

56. Four Major Concepts underlying the
Systems Approach
Coordination: as components and subcomponents of a
system are grouped, it’s necessary to coordinate the
interactions among groups.
Emergent properties: dividing a system into subsystems
(groups of component parts within the system), requires
recognizing and understanding the “emergent
properties” of a system; that is, recognizing why the
system as a whole is greater than the sum of its parts i.e.
the outcome of working as a whole.

57. Systems Approach
The systems approach views the organization as a
unified, powerful system composed of interrelated
parts.
This approach urges managers not to look at separate
parts of the organization but rather to look at it as a
whole and as part of the larger whole environment

58. Contingency Theory
Contingency Theory
Assumes there is no one best way to manage.
 The environment impacts the organization and
managers must be flexible to react to environmental
changes.
 The way the organization is designed, control systems
selected, depend on the environment.
 Different situations require different managerial
responses
 Suggests that each organization is unique
The appropriate managerial behavior for
managing an organization depends (is
contingent) on the current situation in the
organization.

59. Theory Z - Japanese Management" style
Theory Z - Japanese Management" style
William Ouchi (1980s) researched the
cultural differences between Japan and USA.
 USA culture emphasizes the individual, and managers
tend to feel workers follow the Theory X model.
 Japan culture expects workers to be committed to the
organization first and thus behave different from the USA
workers.
 Theory Z focused on increasing employee loyalty to the
company by providing a job for life with a strong focus on
the well-being of the employee, both on and off the job.
 Promotes stable employment, high productivity,
and high employee morale and satisfaction.

60. Characteristics of Theory Z
Characteristics of Theory Z
 Long-term employment
Collective responsibility
Collective decision-making
Slow evaluation and promotion – promotion
within.
Moderately specialized careers
Concern for a total person, including their
family

61. HOME WORK
HOME WORK
New Trends in management – Re-
engineering, Total Quality
Management, MBWA, MBO, ROM,
McKinsey 7-approach