1. Principles of Management
Chapter 2
The Evolution of
Management Thought
© 2009 South-Western, Cengage Learning 2|1

2. Chapter Objectives
• Identify two key assumptions supporting the
universal process approach, and briefly describe
Henri Fayol’s contribution.
• Discuss Frederick W. Taylor’s approach to
improving the practice of industrial management.
• Identify at least four key quality improvement
ideas from W. Edwards Deming and the other
quality advocates.
• Describe the general aim of the human relations
movement and explain the circumstances in
which it arose.
© 2009 South-Western, Cengage Learning 2|2

3. Chapter Objectives (cont’d)
• Explain the significance of applying open-system
thinking to management.
• Explain the practical significance of adopting a
contingency perspective.
• Describe what “management by best seller”
involves and explain what managers can do to
avoid it.
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4. Figure 2.1: Management
Is a Global Affair
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5. The Practice and
Study of Management
• The systematic study of management did not begin in
earnest until after 1900.
• The Egyptian pyramids required managed effort.
• Information Overload
– Management has not had a systematically recorded body of
knowledge until recently.
– Today, vast amounts of relevant information are readily
available in print and electronic media.
• An Interdisciplinary Field
– The manifold increase in management theory information is due
largely to its interdisciplinary nature in drawing from several
fields (e.g., psychology, mathematics, economics, history, and
engineering).
© 2009 South-Western, Cengage Learning 2|5

6. No Universally Accepted
Theory of Management
• There are several approaches to the theory and
practice of management.
– The universal process approach
– The operational approach
– The behavioral approach
– The systems approach
– The contingency approach
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7. Universal Operational Behavioral Systems Contingency
Process
Henry Fayol Frederick Taylor The Hawthorne Chester I. Barnard
Studies
Frank & Lillian General Systems
Gilbreth Theory
Elton Mayo
Henry Gantt
Mary Parker Follet
Walter Shewhart
Douglas
Kaoru Ishikawa McGregor
W. Edwards
Deming
Joseph M. Juran
Armand V.
Feigenbaum
Philip B. Crosby
© 2009 South-Western, Cengage Learning 2|7

8. The Universal Process Approach
• Universal Process Approach
– Assumes all organizations require the same rational
management process
• Core management process remains the same regardless of
the purpose of the organization.
• The management process can be reduced to a set of
separate functions and related principles.
© 2009 South-Western, Cengage Learning 2|8

9. Henri Fayol’s
Universal Management Process
• Fayol published Administration Industrielle et
Générale in 1916.
– He divided a manager’s job into five functions:
• Planning
• Organizing
• Command
• Coordination
• Control
– He developed 14 universal principles of
management.
© 2009 South-Western, Cengage Learning 2|9

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11. Henri Fayol’s Universal
Management Process (cont’d)
• Lessons from the Universal Process Approach
– The management process can be separated into
interdependent functions.
– Management is a continuous process.
– Management is a largely, though not an entirely,
rational process.
– The functional approach is useful because it specifies
what managers should do.
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12. The Operational Approach
• Frederick W. Taylor’s Scientific Management
– Developing performance standards on the basis of
systematic observations and experimentation
• Standardization of work practices and methods to reduce
waste and increase productivity
• Time and task study of workers’ efforts to maximize
productivity and output
• Systematic selection and training of workers to increase
efficiency and productivity
• Differential pay incentives based on established work
standards
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13. Figure 2.2: Taylor’s
Differential Piece-Rate Plan
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14. Taylor’s Followers
• Frank and Lillian Gilbreth
– Refined time and motion study methods for use in
work simplification
• Henry L. Gantt
– Refined production control and cost-control
techniques
– Developed the Gantt chart for work scheduling of
projects
– Early advocate of the importance of the human factor
and the importance of customer service over profits
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15. The Quality Advocates
• Walter A. Shewhart
– Introduced the concept of statistical quality control
• Kaoru Ishikawa
– Proposed a preventive approach to quality
– Developed fishbone diagram approach to problem
solving
• W. Edwards Deming
– Based his 14 principles on reformed management
style, employee participation, and striving for
continuous improvement
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16. The Quality Advocates (cont’d)
• Joseph M. Juran
– Proposed the concept of internal customers,
teamwork, partnerships with suppliers, and
brainstorming
– Developed Pareto analysis (the 80/20 rule) as a tool
for separating major problems from minor ones
• Armand V. Feigenbaum
– Developed the concept of total quality control
• Philip B. Crosby
– Promoted the idea of zero defects (doing it right the
first time)
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17. The Operational Approach
• Lessons from the Operational Approach
– A dedication to finding a better way is still important.
– Using scientific management doesn’t dehumanize
workers.
– Quality advocates, inspired by the scientific
approach, have been right all along about the
importance of quality and continuous improvement.
– The operational approach fostered the development
of operations management.
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18. The Behavioral Approach
• The Human Relations Movement
– An effort to make managers more sensitive to their
employees’ needs
– Arose out of the influences of
• The threat of unionization
• The Hawthorne studies
• The philosophy of industrial humanism
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19. Figure 2.3: The Human
Relations Movement Pyramid
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20. The Behavioral Approach (cont’d)
• The Threat of Unionization
– The Wagner Act of 1935 legalized union-
management collective bargaining, promoting the
growth of unions and union avoidance by firms.
• The Hawthorne Studies (1924)
– The study’s results that productivity was strongly
affected by workers’ attitudes turned management
toward the humanistic and realistic viewpoint of the
“social man” model.
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21. The Philosophy
of Industrial Humanism
• Elton Mayo
– Emotional factors were more important determinants
of productive efficiency than were physical and logical
factors.
• Mary Parker Follett
– Managers should be aware of how complex each
employee is and how to motivate employees to
cooperate rather than to demand performance from
them.
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22. The Philosophy of
Industrial Humanism (cont’d)
• Douglas McGregor
– Developed Theory X and Theory Y
• Theory X: Management’s traditionally negative view of
employees as unmotivated and unwilling workers
• Theory Y: The positive view of employees as energetic,
creative, and willing workers
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24. Organizational Behavior
• Organizational Behavior
– A modern research-oriented approach seeking to
discover the causes of work behavior and to develop
better management techniques
• Lessons from the Behavioral Approach
– People are the key to productivity.
– Success depends on motivated and skilled
individuals committed to the organization.
– Managerial sensitivity to employees is necessary to
foster the cooperation needed for high productivity.
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25. 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 whole is greater
than the sum of the performance of its parts
• Analytic versus synthetic thinking: Outside-in thinking versus
inside-out thinking
• Seeks to identify all parts of an organized activity and how
they interact
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26. The Systems Approach
• Chester I. Barnard’s Early Systems Perspective
– Wrote Functions of the Executive
– Characterized all organizations as cooperative
systems
– Defined principal elements in an organization as
• Willingness to serve
• Common purpose
• Communication
– Strong advocate of business ethics
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27. Figure 2.4: Barnard’s
Cooperative System
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28. General Systems Theory
• General Systems Theory
– An interdisciplinary area of study based on the
assumptions that everything is part of a larger,
interdependent arrangement
• Levels of systems
– Each system is a subsystem of the system above it.
– Identification of systems at various levels helps
translate abstract systems theory into more concrete
terms.
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29. Figure 2.5: Levels of Living Systems
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30. General Systems Theory (cont’d)
• Closed Versus Open Systems
– Closed system: A self-sufficient entity
– Open system: Something that depends on its
surrounding environment for survival
• New Directions in Systems Thinking
– Organizational learning and knowledge management
• Organizations are living and thinking open systems that learn
from experience and engage in complex mental processes.
– Chaos theory
• Every complex system has a life of its own, with its own rule
book.
– Complex adaptive systems
• Complex systems are self-organizing.
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32. Systems Approach
• Lessons from the Systems Approach
– Managers now have a greater appreciation for the
importance of seeing the whole picture.
– Manager should not become preoccupied with one
aspect of organizational management while ignoring
other internal and external realities.
– The systems approach tries to integrate various
management theories.
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33. The Contingency Approach
• Contingency Approach
– A research effort to determine which managerial
practices and techniques are appropriate in specific
situations.
– An open-system perspective
• How subsystems combine to interact with outside systems
– A practical research orientation
• Translating research findings into tools and situational
refinements for more effective management
– A multivariate approach
• Many variables collectively account for variations in
performance.
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34. Figure 2.6: The
Contingency View: A Compromise
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35. The Contingency Approach
• Lessons from the Contingency Approach
– Approach emphasizes situational appropriateness
rather than rigid adherence to universal principles
– Approach creates the impression that an organization
is captive to its environment
© 2009 South-Western, Cengage Learning 2 | 35

36. The Era of Management by
Best Seller: Proceed with Caution
• Management in the Mainstream
– Gurus and Best Sellers
• Peter Drucker—author and first management guru
• Peters and Waterman’s bestseller In Search of
Excellence
– What’s Wrong with Management by Best Seller?
• Academics point to shoddy research and selective
inclusion of anecdotal evidence.
• It encourages simplistic thinking: Upper
management assumes that there is a one-size-fits-
all solution that’s a magic bullet quick-fix to solve
the organization’s problems.
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37. Table 2.4: A Sampling of
Business Management Best Sellers
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39. Summary
• Management is an interdisciplinary and
international field that has evolved over the
years.
• The operational approach has evolved from
scientific management to operations
management.
• Quality advocates teach the strategic
importance of high-quality goods and services.
• Management has turned to the human factor in
the human relations movement and
organizational behavior approach.
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40. Summary (cont’d)
• Under the systems approach, modern
organizations are viewed as open systems.
• The contingency approach stresses situational
appropriateness rather than universal principles.
• A quick-fix is unlikely to solve an organization’s
unique problems.
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41. Terms to Understand
• Universal process • Organizational
approach behavior
• Operational approach • System
• Scientific • General systems
management theory
• Operations • Closed system
management • Open system
• Human relations • Contingency
movement approach
• Theory Y • Multivariate analysis
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