Development of managementthoughtManagement thought refers to the theories that guide management of people in the organisationsInitially, these theories developed out of practical experience of managers in the industrial enterprises. Later on, they borrowed ideas from other fields of study like science, anthropology, sociology etc.
Management theories Pre-scientific theories Classical theoriesa. Taylor’s scientific management theoryb. Fayol’s administrative theoryc. Weber’s bureaucracy theory Behavioral theoriesa. Human relations theoryb. Behavioral science theory Modern management theoriesa. Quantitative theoryb. Systems theoryc. Contingency theoryd. Operational theory
Pre-scientific ManagementTheoriesImportant contributions are made by- Charles Babbage- James Montgomery- Robert Owen- Andrew Ure- Charles Dupin- Henry Robinson Towne- James Watt and Mathew Robinson Boulton Watt- Captain Henry MetcafeThese theories solved specific organizational problems but these are not universally accepted theories that can be applied to all organisations
Classical theoriesThey represent early works on management and focus on increasing industrial output by providing financial incentives to employees. The classical approach was developed through three main streams: Scientific management, Administrative theory and Bureaucracy
Taylor’s scientific theoryTaylor developed his theory on the basis of his work experience in three companies: Midvale Steel works, Simond Rolling mills and Bethlehem Steel company. He is regarded as Father of Scientific Management.He focused on finding the best way to do the job by eliminating wastage of men and material. He developed time and motion studies to find optimum time and nature of operations for successful completion of tasks.He also introduced differential wage rate system to pay more to productive workers.
Principles of Taylor’s theoryRule of thumb should be replaced with scienceThere should be harmony, not discord in group actions.Cooperation, not individualismMaximum output, not restricted outputDevelopment of workers to their fullest capacity.
Techniques of scientificmanagement given by TaylorTime studyMotion studyScientific task planningStandardization and simplificationDifferential piece rate systemFunctional foremanshipHigh speed steel
Evaluation of Taylor’s theoryBetter management through scientific methodsDiscovered true capacity of workersScientific selection of workers Mental revolution on the part of employers and employees.In addition to Taylor, several other persons like Henry L Gantt, Harington Emerson, Frank Gilbreth and Lillian Gilbreth also supported and contributed in scientific management movement.LimitationsUnrealistic assumptionsMechanistic approachExploitation of labourImpracticableNarrow view
Fayol’s Administrative theoryFayol focused on managing the organisation as a whole rather than lower levels of organisation onlyHis theory revolves around-Activities of a business: Technical, commercial, financial, security, accounting and managerial-Functions of a manager : Planning / organizing / commanding /coordinating/ controlling.- Abilities of managers: Physical, Mental, Moral, General education, special knowledge and Experience- Principles of management
Principles of management Division of work Authority and responsibility Unity of command Unity of direction Discipline Subordination of individual interest to general interest Remuneration Centralization Scaler chain Order Equity Stability of tenure of personnel Initiative Espirit-de-corps
Evaluation of Fayol’s TheoryHis principles are widely accepted in business and non-business world.He pioneered in highlighting the principles of managementCriticismToo formalVagueInconsistencyPro-management biasHistorical value
Taylor and Fayol – A comparisonBasis of comparison Taylor FayolAim To increase production at To increase overall the shop level production of the organizationFocus On improving workers’ On improving overall output through work administration through simplification and general principles standardizationManagement View From bottom to top From top to bottomResults Scientific observation and Universal truths developed measurement from personal experiencesPersonality Scientist PractitionerMajor contribution Science of industrial A systematic theory of management managementPerspective Narrow WiderAspects studied Micro aspect-management Macro aspect-management of jobs of total organaization
Max Weber’s Bureaucracy theoryMax Weber(1864-1920), a German sociologist introduced the rational-legal authority system/model to manage the business organizations. His model is characterized by- Division of work- Rules and regulations- Hierarchy of authority- Technical competence- Record keeping- Impersonal relations
Evaluation of Weber’s theory Advantages of specialization Rationality leads to efficiency Leads to optimum utilization of resources Depersonalization leads to equal treatment of all the workers Facilitates growth of large scale organizationsLimitations Ignores the sentiments of human beings Hampers human creativity and innovativeness Ignores the role of informal organizations Strict rules make the organizations procedure- oriented rather than goal- oriented Written rules and regulations deny the benefits of open communication Views organizations as closed systems with little or no interaction with the environment.
Behavioural theoriesThese theories focus on organisational goals along with satisfaction of human needs.Shift in focus from workplace conditions to human side of the organisationPeople- oriented approach substituted the production- oriented approachTwo important theories: - Human relations theory - Behavioural science theory
Human relations theoryElton Mayo, the father of Human relation approach focuses on increasing organizational productivity by increasing the morale of workersResults were obtained through experiments: - Test room studies (a) Illumination experiment (b) Relay assembly room experiment - Interviewing studies - Observation studies
Results of the experimentInformal groups are important complements to formal groupsSocial groups are more important than financial incentives to motivate the workersWorker is a social man rather than rational man motivated by financial incentivesWork is considered as a group activity and not as operations performed by individuals.Social and psychological factors influence employee behaviour and productivity more than physical work conditios
Evaluation of the theoryFocus on organizational efficiency through satisfaction of social and psychological needs of the workersParticipative management is better than authoritarian management.Design of the theory: social needs are secondary to physiological needsAnalysis of the theory: group dynamics may not be as important as emphasized upon.Interpretation of the theory: cordial relations are over emphasized . Conflict of opinion also generates new ideasHuman relations philosophy: informal relations are as important as formal motivation, communication and leadership styles
Behavioural science theoryIt applies scientific vision to human relations theoryConcepts from Psychology, Sociology and Anthropology are applied to study human behaviourPsychology – Study of individual behaviourSociology – Study of human behaviour in groupsAnthropology - Study of human behaviour as individuals and members of groupsConcepts from various disciplines are tested before applying them in business organisations.
Continued……………..Several sociologists and psychologists like Abraham Maslow, Federick Herzberg, MC Gregor, Douglas, Rensis Likert, Kurt Lewin, Keith davis, Charles Angris,George Homans and others have made significant contribution to the development of this approach.This approach is an extension and improvement of human relations movement. As this approach suggested that individuals differ in their attitudes, perceptions, their needs and goals also differ from organisation’s needs and goals. So the need is to achieve fusion between organisation’s goals and human needs.
Human relations theory andBehavioural science theory- AcomparisonHuman relations Behavioural Approach1. Focus on individual behaviour and Focus on groups and group behaviourneeds.2. Emphasizes on interpersonal Emphasizes on group relationships.relationships.3. Views worker as ‘social man’ Views worker as ‘self actualising man’4. Always views group conflict as a Views group conflict as a source of newnegative force. ideas and innovations.5. Views organisation as a social system Views organisation as a socio-technical system6.Emphasis on motivation, morale, and 6.Emphasis on group dynamics andjob satisfaction informal organisation structure6. Narrow scope as based on Wide scope as based on HumanHawthrone experiment relations movement.
Modern management theories These theories are responsive to environment changes They view organisations as dynamic open systems having multiple objectives Management is multi-disciplinary and draws knowledge from various fields to solve complex business problems They forecast environment changes through scientific techniques and discount them to the present business situations These theories include: - Quantitative theory - Systems theory - Contingency theory - Operational theory
Quantitative theoryIt uses the services of quantitative specialists to apply inter-disciplinary techniques to solve business problemsIt includes: - Management science: it uses mathematical models like PERT, CPM, Simulation etc. to solve business problems. - Operations management: It applies quantitative techniques of inventory management, statistical quality control etc. to manage the production and delivery of goods and services
Continued……… -Management information system: It uses computer based information to make business decisions
Evaluation of QuantitativetheoryIt uses quantifiable data to frame mathematical models and handles complex decision- making problemsIt uses comprehensive information through computers which could not otherwise have been availableLimitations- It cannot be applied to study human behaviour as it cannot be predicted through mathematical equations- The models may be used more for analysing the results than used for making decisions
Continued………….- All the variables affecting the business decisions cannot be quantified in numeric terms- It may land up making satisfying decisions rather than optimum decisions because of constraints of time and cost to collect the relevant data.
Systems ApproachAs per this approach organisation is viewed from a systems point of view.The main elements of systems approach are as follows: Organisation as a purposeful system consisting of several interconnected and interdependent parts. The parts or components of a system are called sub- systems. The position and function of each subsystem can be analyzed and understood only in relation to the other sub-systems and to the organisation as a whole. Synergy effect. Every system has a boundary that separates it from its environment.
Feedback is useful in evaluating and improving the functioning of the system.