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CHAPTER TWO
EVOLUTION OF MANAGEMENT THOUGHT
2.1 Introduction
For centuries scholars and business people alike have tried to understand the practice of
management. But as in most social sciences, management has no generally accepted theory. It
borrows principles from different fields as they best suit one’s needs. The present position of
management has evolved over a long period of time. In order to understand what management
is and what it involves today, we better look through its historical development.
Management as a theory is the result of the twentieth century, but management as a practice is
as old as the human civilization. Knowledge about management comes from the field of
management itself as well as many other fields. Most of the early writers were practicing
executives who described their own experience from which they developed broad principles.
2.2 What is theory?
Theory is part of a science or an art that attempts to explain the relationships between and
among its underlying principles. Theories generally give people a reason for doing things one
way rather than another. A theory is a principle or set of principles that explains or accounts for
the relationship between two or more observable facts or events. As managers we will have in
our disposal many ways of looking at organizations and at the activities, performance, and
satisfaction of employees. Each of these ways may be more useful in dealing with some
problems than with others. For example, a management theory that emphasizes the importance
of a good work environment may be more useful in dealing with a high employee turnover rate
than with production delays. Because there is no single universally accepted management
theory, we must be familiar with each of the major theories that currently coexist.
What does theory contribute to the practice of management? The theories and principles of
management make it easier for us to understand underlying processes and on that basis what
we must do to function most effectively as managers. Without theories all we have are intuition,
hunches and hope-all of which are of limited use in today’s increasingly complex organizations.
For the sake of convenience, scholars generally group the development of management into
four major stages as:
 Management in antiquity,
 Classical management theory,
 Neo classical theory and
 Modern approaches.
1. Management in Antiquity/ Management in ancient times
This stage of management covers the time between the beginnings of man’s cooperative effort
to the start of his attempts to study management scientifically about 1880. Management as a
theory is the results of the twentieth century, but as practice it is as old as the human
civilization. When people could not achieve their needs independently, they started to organize
themselves into groups and as the groups become large, things become complex and
application of management become inevitable. The groups elected an individual who had the
skills to set objectives, group and assign activities, coordinate members and control their
performance, all of which are management practices- the so called functions of management.

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During that time, the contribution given by religious and military groups to management
thought were significant and undeniable.
Monumental accomplishment
The Egyptians organized their people and slaves to build their cities and pyramids. Construction
of one pyramid required the labor of 100,000 people working for 20 years. Planning, organizing,
and controlling were essential elements of those projects and other feats, many of which are
long term. The ancient Egyptians had long term planners and advisors as did their
contemporaries did in china. Through these groups even in ancient time, people accomplished
surprising events. Generally, had there not been considerable skills in the various management
functions, those wonderful accomplishments like the Obelisk of Axum, the Great Wall of China
and Harer (Jegol), the Pyramids of Egypt, the Temple of Lalibela, the Castle of Gondar, and the
terraces of Konso would not have been possible.
Religious institution
Many concepts of authority were developed in religious context. One example is Roman Catholic
Church was one of the most effective formal organizations in the history of western civilization.
The church had a set of well-defined objectives and effective and efficient organizational set up
to achieve them. It introduces hierarchy of authority and staff concept. The bible /Exodus 18 =
13-26/- This is the advice, which was given by Jethro, the father-in-law of Mosses, to the
Mosses. It includes the following.
(i) "Ordinances & Laws" should be taught to the people. In modern terms,
organizations need to have a statement of policies, rules, & procedures.
(ii) "Leaders are selected & assigned to be the rulers thousand's, hundred's, fifty's, and
rulers of ten's. In modern terms, it is the base for delegation of authority (Span of
management)
(iii) "These rulers should administer all routine matters, & should bring only the
important questions." In modern terms, it is related to the exception principle.
 Military organizations also contributed in their own simplistic way to the development of
managerial practices though there was little use of theory in it. Even so, their techniques of
authority-relationships between individuals and groups, direction, motivation, and
communication underwent considerable improvement over the years.
Introduction of mass production, large scale industry, the use of complex and expensive
machines, extended market, etc. made things very complex. In addition, maintaining
harmonious relationships between the employer and the employees was a problem. These
factors brought the need to more thoughtful, resourceful, and dynamic management.
Management on traditional lines became useless. Rule of thumb could no longer exist and gave
way to logical and rational principles and scientific approaches. That is, industrial revolution
brought about changes of management practices employed during that period.
Below some of the major scholars of the time and their contributions are discussed.
1) Robert Owen (1771-1858): He was a successful copartner and manager of the cotton
mills of New Lanark, Scotland from 1800-1828. He was one of those individuals who
developed approaches for how to increase productivity by making the work easier to perform
and how to motivate the workers to take advantage of their new methods. He disliked the
process of industrialization in England that was built on tough, cheap and brutal exploitation

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of labor in unsatisfactory working conditions. He recognized human resources as valuable as
financial and material resources. He focused on rewards rather than punishment to increase
output. He experimented in the field of management and recommended the following
techniques:
 Prohibited employment of children whose age was under ten and recommended sending
them to school
 Reducing the workday to 10 ½ hours with no night work for children.
 Provided housing and marketing facilities to the employees
 improved working conditions within the factory through the provision of meal, bath and
others services
 Proposed that the basic managerial philosophy and formula for success should be
combining the production and people side of an organization. That is, attention should be
paid not only to productivity but also to employees.
Because of his emphasis on the workers, he is regarded as the father of modern personnel
management.
2) Charles Babbage (1792-1871): he was a British professor of mathematics. In 1832 he
published on ‘the economy of machinery and manufacturers’, a study that presented the fruit
of his observations of the factory floor. He become convinced that the application of
scientific principles to work processes would both increase productivity and lower expense.
He was an early advocator of division of labor, profit sharing plans and bonus systems as
ways to achieve better relations between management and labor. By division of labor
Babbage meant the division of work into discreet processes that could be mastered quickly
by one person.
He was interested in:
Division of labor
Development of scientific principles
Sought ways to analyze and control manufacturing costs
Advocated dividing work into mental and physical activities
Determining the price and costs for all tasks to be done
3) James watt and Bolton
 They were focus on market research, costing, planned machine layout in terms of work
flow
Attempted production planning
Developed methods of calculation of cost and profits
Training and development of workers and managers
Studied payment by results
Welfare programs
4) Adam Smith (1776- ): in his book titled ‘Wealth of Nations’ advocated the concept of
specialization. He saw three advantages of division of labor; the development of skill, saving
of time and the possibility of using specialized tools.
Despite the suggestion given by early theories, owners and managers did not begin to raise the
concern of the problem of material and human efficiency. They raised the issue when market
was becoming saturated, demand for greater profits and when competition was becoming keen.
Their emphasis on cutting costs and increasing efficiency led to the emergency of the classical
school of management thought.
However, the study of how managers achieve the results is predominantly a 20th
century
phenomenon. In the early stages, management study could not develop because of

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 Low esteem to business in society
 The different approaches of economists, political scientists, sociologist, etc towards
business organizations
 Treatment of management as an art and not as a science
 The attitudes that successful managers are born not made
The situation in the 20th
century changed due to the following factors:
i. The development of capitalism and the emergence of industries forced originations to be
efficient or to find ways for efficiency
ii. The complexities of organizations increased due to:
 The increasing size of organizations
 High degree of division of labor and specialization
 Increase in government regulations and controls
 Organized trade unions
 Pressure of various conflicting interest groups in society
2. Classical Management Theory
Serious attention to management was given in the early 20th
century. One of the most critical
problems facing managers at that time was how to increase the efficiency and productivity of
the workforce. This theory includes the work of different individuals during the late 19th
century.
The works are probably known as scientific management, classical administrative/organizational
theories and bureaucracy.
I. Scientific Management Theory: this theory is mainly sought to determine scientifically the
best methods for performing any task. It applies scientific methods in the work place and in
other managerial activities. It concentrated on the problems of lower level managers. This
period was characterized by:
 The need to expand productivity
 Expanding business and readily available capital
 Shortage of skilled labor
Management’s primary goal and responsibility was to find ways to increase the efficiency of
workers. They basically sought ways of increasing productivity by using existing labor more
efficiently. Fredric Winslow Taylor and his associates such as the Gilberths, Henry Lawrence and
Gantt, and Harrington Emerson built a body of principles that now constitute the essence of
scientific management.
Fredric Winslow Taylor (1856-1915): the birth of scientific management is generally
credited to Fredric Winslow Taylor. His main concern was to improve productivity in scientific
methods. For his concern on scientific methods, Taylor is known as the “father of scientific
management”. According to Taylor, scientific management focused on discovering ‘one best
way’ of doing jobs, determining the optimum work pace, training people to do the job properly
and rewarding successful workers.. He began developing his ideas after he joined Midvale Steel
Company in Philadelphia-USA. While working in different positions for a total of eight years, he
observed certain problems in factory operations.
Taylor conducted a study and developed some principles so as to mitigate problems. In 1909,
he published principles of scientific management. The principles were considered as the
principles of scientific management/ Taylor’s principles. They are:

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- Development of a science of work (best methods of work) for each element with clearly
stated laws, rules and principles to replace the old guess work and rule of thumb methods.
- Scientific selection, training and development of workers. Workers must be studied just like
machines and be developed so that each worker can be given responsibility for the task that
best suited him/her.
- Relating together the best methods of work and the scientifically selected, trained, and
developed worker, ensuring ability-job- fit.
- Establishing heartily/close cooperation or harmony between management and labor
regardless of the need for division of labor and assignment of tasks and responsibility.
- Introducing differential piece rate system of pay to improve worker’s performance. Workers
who surpass their previous performance standards should earn more with the differential
piece rate plan. The greater the output an individual produces, the greater the pay would
be. He thought that an incentive system rewarding fast workers and penalizing slow workers
would encourage them to adopt the new working methods.
- The need of complete mental revolution with the view that exact knowledge about every
step is essential to both parties. Both workers and managers must be developed to the
fullest extent possible and there must be mutual interest towards a common goal. Both
parties must reach on consensus with regard to fair day’s work and fair day’s pay. He
believed that both parties must strive for maximizing output.
- Emphasizing the importance of functional foremanship, that is, people can bear/accept dual
command. According to this principle, a worker is to receive orders from a number of
functional foremen.
Henry L. Gantt (1861-1919): was a contemporary and colleague of Taylor at Bethlehem
steel Company, and he strongly supported the ideas of scientific management propounded by
Taylor. He also emphasized the concept of mutuality of interest between management and
employees. He stressed the need to appreciate that “in all problems of management, the
human element is the most important”.
Gantt made improvements in Taylor’s incentive system and developed what is known as the
task and bonus plan. This is the foundation of many incentive plans in our times. Under this
incentive plan, the worker is paid a guaranteed day wage whether or not he completes the
standard work. But if he completes four hour’s work in three hours, he is paid for four hours. In
remunerating employees, he believed that Taylor’s differential piece rate system (if no
performance, no payment) of payment is inhuman and provided a guaranteed minimum daily
wage and workers receive a bonus for completing their daily tasks and performing above the
standards.
He also emphasized on the social responsibility of managers, that is, manages should not only
be responsible to the owner’s interest but also to the needs of the society at large. They should
concentrate in providing services rather than profits as the ultimate goal.
Gantt is best known for his graphic system of planning and control system that is still used
today. His charts know as "Gantt Chart" enables managers to visualize the completion stage
of various projects, such as procurement of materials, manufacturing and shipping. By these
means managers coordinate related activities, avoid delays, and otherwise make sure that
deadlines are met. The Gantt chart is regarded by some social historians as the most important
social invention of the 20th
century.
Frank and Lillian Gilbreth: were husband & wife and regarded as important contributors to
scientific management. Frank Gilbreth (1868-1924) became interested in motion study and

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reduced the number of movements in bricklaying from eighteen to five. This increased
productivity of bricklayers from 120 to 250 bricks per hour. Frank emphasized the need for
developing or discovering the “one best way of doing a given task”. Whereas Lillian (1887-
1972) held that the most important cause of workers’ dissatisfaction was the lack of
management’s interest in them. They emphasized that management should understand their
needs and personality.
Frank Gilbreth’s system became known as speed of work and the speed came not from
rushing the workers to work faster but from cutting down unnecessary motions. He identified
eighteen on the job motions and called them THERBLIGS-Gilbreth spelt backwards with the
transposition of one letter, T&H. The on the job motions are: (i) search, (ii) find, (iii) select, (iv)
grasp, (v) position, (vi) assemble, (vii) use, (vii) disassemble, (ix) inspect, (x) load transport,
(xi) pre-position, (xii) release load, (xiii) transport empty, (xiv) wait when avoidable, (xv)
avoidable delay, (xvi) rest for overcoming fatigue, (xvii) plan, and (xviii) hold.
Frank Gilbreth also invented a flow chart which showed the progress of an entire operation
through time and various tasks involved in it. Every operation is broken down into tasks which
enable the identification and elimination of unnecessary motions. Lillian assisted her husband
and expended on his work after his death.
Limitations and criticism of scientific Management
According to Taylor, "Scientific Management is an art of knowing exactly what you want your
men to do and seeing that they do it in the best and cheapest way". In Taylors view, if a work
is analyzed scientifically it will be possible to find one best way to do it. Although it is accepted
that the scientific management enables the management to put resources to its best possible
use and manner, yet it has not been spared of severe criticisms. Thus, the major criticism
towards the scientific management can be seen from two perspectives; such as the workers
perspective and the employer perspectives described as follows:
Worker’s Viewpoint:
1. Unemployment: Workers feel that management reduces employment opportunities from
them through replacement of men by machines and by increasing human productivity, less
workers are needed to do work leading to chucking out from their jobs.
2. Exploitation: Workers feel they are exploited as they are not given due share in increasing
profits which is due to their increased productivity.
3. Monotony: Due to excessive specialization the workers are not able to take initiative on
their own. Their status is reduced to being mere cogs in wheel. Jobs become dull. Workers
lose interest in jobs and derive little pleasure from work.
4. Weakening of Trade Union: To everything is fixed & predetermined by management. So
it leaves no room for trade unions to bargain as everything is standardized, standard output,
standard working conditions, standard time etc. This further weakens trade unions, creates
a rift between efficient & in efficient workers according to their wages.
5. Over speeding: the scientific management lays standard output, time so they have to rush
up and finish the work in time. These have adverse effect on health of workers. The
workers speed up to that standard output, so scientific management drives the workers to
rush towards output and finish work in standard time.

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Employer's Viewpoint:
1. Expensive - Scientific management is a costly system and a huge investment is
required in establishment of planning dept, standardization, work study, training of
workers. It may be beyond reach of small firms. Heavy investment leads to increase in
overhead costs.
2. Time Consuming - Scientific management requires mental revision and complete
reorganizing of organization. A lot of time is required for work, study, standardization &
specialization. During this overhauling of organization, the work suffers.
II. Classical Administrative and Organizational Theories
This theory is another body of ideas developed at the same time as scientific management.
These ideas focused on the problems faced by top managers of large corporations. Since this
branch of the classical Administrative approach focused on the management of an organization
as a whole while scientific management focused on the management of work. Its two major
purposes were to:
a. Develop basic principles that could guide the design, creation and maintenance of large
corporations and
b. Identifying the basic functions of managing organizations.
Engineers were the prime contributors to scientific management; practicing executives were the
major contributors to classical organization theory. As with scientific management, there were
many contributors to the classical organization theory. Henry Fayol, Mary Parker Follet and
Chester Bernard are among the major contributors.
a) Henry Fayol (1841-1925): is perhaps the greatest contributor to the field of classical
administrative and organizational theory. Now he is regarded as "the father of modern
operational management."
He published a book titled “Administration Industrielle et Generale” in 1916 and that brought to
light the distillation of his lifetime’s experience of managerial work.
He identified /classified business activities in to six. These are:
1. Technical activities: - These include activities of production and manufacturing.
2. Commercial activities:- These include activities of buying, selling or exchange
3. Financial activities:- These activities include searching for & optimum use of capital
4. Security activities: - These include protection of property and persons.
5. Accounting activities:- These include recording and taking stock of costs, profits &
liabilities, keeping balance sheets, and compiling statistics; and
6. Managerial activities: - These include planning, organizing, commanding, co-
coordinating and controlling.
Although Fayol’s assessment of the importance of management has considerable merits, his
greatest contribution to management theory is his 14 principles of management. Fayol
considered the principles to be flexible and adaptable-not rigid rules or immutable laws.
His 14 principles of management are discussed below:
1. Division of Work: Specialization increases output by making employees more efficient.
2. Authority: Managers must be able to give orders, and authority gives them this right.
3. Discipline: Employees must obey and respect the rules that govern the organization.

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4. Unity of command: Every employee should receive orders from only one superior.
5. Unity of direction: The organization should have a single plan of action to guide
managers and workers.
6. Subordination of individual interests to the general interest: The interests of any
one employee or group of employees should not take precedence over the interests of the
organization as a whole.
7. Remuneration: Workers must be paid a fair wage for their services.
8. Centralization: This term refers to the degree to which subordinates are involved in
decision making.
9. Scalar chain: The line of authority from top management to the lowest ranks is the scalar
chain.
10. Order: People and materials should be in the right place at the right time.
11. Equity: Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel: Management should provide orderly personnel
planning and ensure that replacements are available to fill vacancies.
13. Initiative: Employees who are allowed to originate and carry out plans will exert high
levels of effort.
14. Esprit de corps: Promoting team spirit will build harmony and unity within the
organization.
b) Mary parker Follett (1868-1933): another contributor to the administrative school was
American Political Scientist M.P. Follett. Her work in 1920’s focused on how organizations cope
with conflict and the importance of goal sharing among managers. She emphasized the human
elements in the organization and the need to discover and join up individual and group
motivation. She believed that the first principle for both individual and group success is the
capacity of organized thinking. She believed that people could reach tier maximum potential
only through groups. She emphasized for the first time on the importance of individuals-
managers workers. No one can become a whole person except as members a group; human
beings grow through tier relationships with others in the organization.
C) Chester I. Bernard: was another American theorist of the administrative school. He was
president of New Jersey Bell Telephone Company. In his 1938 work, The Functions of the
Executives, Bernard argued that managers must gain acceptance for their authority. He
advocated the use basic management principles and cautioned managers to issue no order that
could not or would not be obeyed. According to Bernard, people come together in formal
organization to achieve ends that they cannot accomplish working alone. But as they pursue the
organization’s goals, they must also satisfy individual needs. An enterprise can operate
efficiently and survive only when the organization’s goals are kept in balance with the aims and
needs of the individuals working for it. To meet their personal goals within the confiners of the
formal organization, people come together in informal groups. To ensure its survival, the firm
must use these informal groups effectively.
III. Bureaucratic Theory
The chief advocate of the bureaucratic theory was Max Weber (1864-1920). Weber was a
professor of law and economics who wrote about social, political and economic issues. Weber
was the first to describe the principles of bureaucracies- rational organizations based on the
control of knowledge. Bureaucracy can be defined as management approach based on formal
organizational structure with a set of rules and regulations.
Weber believed that all bureaucracies have the following characteristics:

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Authority hierarchy: Positions organized in a hierarchy with a clear chain of command
Division of labor: Jobs broken down into simple, routine, and well-defined tasks
Formal Rules and regulations: System of written rules and standard operating procedures
Impersonality: Uniform application of rules and controls, not according to personalities
Formal Selection: People selected for jobs based on technical qualifications
Records: A bureaucracy needs to maintain complete files regarding all its activities.
He was mainly concerned with the issue of how organizations are structured. He believed in one
best organizational structure. Bureaucracy emerged out of the organization’s need for order,
precision and the workers’ demand for impartial treatment and rationality. Bureaucracy was
developed as a creation of personal subjugation, nepotism, cruelty, and the capricious and
subjective judgment which occurred during the early day of industrial revolutions. Rationality
implies goal directedness and impartiality implies objectivity in interpersonal relations.
However, bureaucracy is not free from defects, i.e., it has some ugly faces like the following:
 Bureaucratic organizational structure consists of hierarchies with many levels having
inflexible and routine procedures and rules. Night mares and red tapes, run around,
ocean of paper work, unhelpful clerks, and officials all combining to produce more
frustration than service for customers and clients.
 Bureaucracy tends to become rigid and unable to adjust to novelty in its environment.
Decision making tend to be categorized or choices are previously programmed. Workers
are expected to work to the prevailing rules nothing more, that is, employees are
encouraged to do only the work specified in their job description-no more no less. This
condition prevents spontaneous cooperation of people at work to solve unexpected
problems.
 The insensitivity to people that comes from inflexible adherence to routine procedures
and rules are another bad reputation of bureaucracy.
Merits and Demerits of Classical Management Approach
Classical management theory has contributed a lot to development of management theories.
 The greatest contribution of this school of thought was that it identified management as
an important element of organized society. Management has increased in importance.
 It resulted in overall improvement in factory management by saving time, eliminating
unnecessary motions, and bringing the application of science in areas of management.
Using the scientific methods, workers became more efficient and productive as they learn
new and better methods of doing the work.
 The identification of management functions such as planning, organizing and controlling
provided the basis for training new managers.
 It has also resulted in many management techniques being used today such as time and
motion analysis, work simplification, incentive systems, production scheduling, personnel
testing and budgeting.
 This school opened the door for the next important school: the behavioral/ the human
relations school.
However, classical management theory has some limitations as discussed below:
 The theory viewed workers merely as an economic being focusing only on the
improvement of productivity. Advocators believed that workers are motivated primarily by

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a desire to earn money to satisfy their needs. In the real world, however, financial gain is
not the only thing that matters people and thus workers are likely to go out for strike over
job conditions rather than salary demands and leave the job if they are unhappy in it.
 The advocators failed to recognize that one method of doing things is less appropriate in
a dynamic environment. To be the fittest, as the working environment changes the way
to perform the task must be changed. Moreover, following only one method makes the
work to be repetitive and highly repetitive jobs often produce boredom and alienate
employees from their job.
 They overlooked social needs of the workers. They failed to consider informal groups in
the organization by stressing only on the formal relationships in the organization.
3. Neo Classical /Behavioral Management Theory
This theory consists of human relations and behavioral movements. It is built on the bases of
classical management theories. It modified, unproved, and extended the classical theory. Unlike
classical theory which emphasized on job content and management of physical resources,
behavioral theory gave greater emphasis to the man behind the machine and stressed on the
importance of individual as well as group relationship in the workplace. Below the two branches
of neo classical theory are discussed.
A. Human Relations Movement
The term human relations refer to the manner in which managers interact with subordinates.
To develop good relations, followers of this approach believed, managers must know why their
subordinates behave as they do and what psychological and social factors influence them. This
branch emphasizes on the social environment of an organization.
The most profound contribution to the human relations school came from the studies of
Professor Elton Mayo, an Australian psychologist. He has conducted the studies at Western
Electric Company in Chicago, USA which spanned for eight years period and popularly known as
“Hawthorne Studies”. These studies were divided into five major phases as:
First sage (1924-1927): this stage was designed to prove the impact of physical
surroundings such as noise, light, etc on productivity. Two groups of comparable performance
were isolated from the rest and located in separate parts of the plant. One group, the control
group, had a consistent level of lighting; the other group, the experimental group, had its
lighting varied. To the surprise of the researchers, the output of both groups increased. Even
when lighting of the experimental groups was reduced to a very low level, they still produced
more. This stage is often called the illumination experiment.
Second Stage (1927-1929): this stage became known as the Relay Assembly Test Room.
The objective was to make a closer and more detailed study of the effects of different physical
conditions on productivity. At this stage there was no deliberate intention to analyze social
relationships and employee attitudes. Six women workers in the relay assembly test section
were segregated from the rest in a room of their own the light, temperature and humidity were
carefully regulated. By discussing with the women, changes in rest periods and lunch times
were made in timing and length. Productivity increased whether the conditions were made
better or worse. Later, the working week was changed but once again productivity increased.
The women’s reaction to the changes, i.e., increased output regardless of whether conditions
improved or worsened, has come to be known as “the Hawthorne Effect”. That is to say the

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women were responding not so much to the changes because they were the center of
attention- a special group.
Third Stage (1928-1930): before the relay assembly test had come to an end, the company
had decided to implement an interview program designed to ascertain employee attitudes
towards working conditions, their supervision and their jobs. The interviews were conducted by
selected supervisors, first in structured basis and next in unstructured basis. Before the
program was conducted, about 20,000 employees were interviewed and the pool of material
amassed was used to improve several aspects of working conditions and supervision. It also
became clear from the responses that relationships with people were an important factor in the
attitudes of employees. This phase is referred to as massive interview program.
Forth stage (1932): this was known as the bank wiring observation room. Here fourteen men
in the bank wiring were removed to a separate observation room where apart a few differences
their principal working conditions were the same as those in the main wiring area. The aim was
to observe a group working under more or less normal conditions over a period of six months or
so. The group was soon developing its own rules and behavior-it restricted production in
accordance with its own norms; it short circulated the company wade incentive scheme and in
general protected its own sectional interests against those of the company. The supervisors
concerned were powerless to prevent this situation. The group has developed its own unofficial
organization-run in such a way that it was able to protect itself from outside influences while
controlling its internal life too.
Final stage (1936): this stage was based on the lessons learned from the earlier studies. It
was mainly employees’ relations and took the form of personnel counseling. The counselors
encouraged employees to discuss their problems at work and the results led to improvements in
personal adjustments, employee-supervisor relations and employee-management relations.
The main conclusions drawn from these studies are:
 Individual workers cannot be treated in isolation, but must be seen as members of a
group.
 The need to belong to a group and have status within it is more important than monetary
incentives or good physical working conditions.
 Supervisors and managers need to be aware of these social needs and cater for them if
workers are to collaborate with the official organization rather than work against it.
B. The Behavioral Science Approach
The individuals in the behavioral science branch of the neo classical approach believed that man
is much more complex than “the economic man” description of classical approach and “the
social man” description of the human relations approach. The emphasis of the behavioral
science approach is on the nature of work itself and the degree to which it can fulfill the human
need to use skills and abilities. Behavioral scientists believe that an individual is motivated to
work for many reasons in addition to making money and forming social relationships. They also
focused on communication, motivation and leadership areas.
The behavioral management school brought the human dimensions of work firmly into the
mainstream of management thought. The results continue today. Many managers today work
hard to discover what employees want from work, how to enlist their cooperation and
commitment; and how to unleash their talents, energy, and creativity. The behaviorists
integrated, for the first time, ideas from sociology, anthropology and psychology with
management theory. One result of the behavioral school was the creation of positions for

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professional resource managers. This theory paved ways to modern day employee assistance
programs.
The major limitation of behavioral management theory is its complexity. It does not yield quick
or simple conclusions, and it does not conclusively explain or predict the actions of individuals
or groups. Behavioral theory becomes even more complicated in light of the facts that people
are motivated by more than one need at any given time and that they must constantly reconcile
conflicting demands. No simple formula can always motivate all individuals in the work place.
What is more, people’s needs change with time, making the same person tough to manage one
day and a delight the next.
4. Modern Approaches
Modern management theories indicate further refinement, extension and synthesis of all
classical and neo classical management approaches. Classical approach satisfied the basic
economic needs of the organization and the society. Neo classical approach tried to satisfy
security and social needs of employees. Modern management must have the twin primary
objective of productivity (classical approach) and employee’s satisfaction-neo classical
approach. The earlier theorists considered their respective views as best and universally
applicable, that is, they were highly biased towards their own view and they did not try to take
even the good ideas from others. One simply criticizes the other and rejects in its totality. They
studied management by taking things independently. They assumed that the whole is explained
in terms of its parts.
Under the modern approach, we have the following streams:
a) The Management Science Approach
The management scientists, led by operations researchers and systems analysts see
management as “a system of mathematical models and processes”. They hold that since
managing a logical and rational process, it can be expressed in terms of mathematical
relationships and models. New mathematical and statistical tools are applied in the field of
management. Particularly, it can be employed in decision making with respect to complex
problems such as resource allocation, replacement of capital equipment, inventory control,
production scheduling, and quality control and so on. This will lend exactness to management
process and substitute certainty for guesswork, knowledge for judgment, hard facts for
experience. Some of the quantitative techniques suggested are liner programming, critical path
method, economic order quantity, queuing theory, probability theory and so forth.
b) Systems Approach
In this approach an organization was viewed as organic and open system which is composed of
interacting and interdependent parts, called subsystems. From the systems perspective,
management involves managing and solving problems in each part of the organization but
doing so with the understanding that actions taken in one part of the organization affect other
parts as well. Each part tightly linked to other organizational parts; no single part of an
organization exists and operates in isolation from the others. Thus, in solving problems,
managers must view the organization as a dynamic whole and try to anticipate the unintended
as well as the intended impacts of their decisions.
The systems approach views the elements of an organization as interconnected. The approach
also views the organization as linked to its environment. Organizational effectiveness, even

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survival, depends on the organization’s interaction with its environment. A system has the
following features:
 System: a set of interrelated parts that work together to achieve common objective. A
company, a university, a human body are examples of a system.
 Subsystems: set of related parts those works together to achieve a common objective
are known as subsystems or components.
 Open and closed system: open systems interact freely with their environment. Closed
systems, on the contrary, do not interact with their environment.
 Input- transformation process-output system: an open system receives inputs from
its environment which it transforms into outputs.
 Synergy: this shows the fact that “the whole is greater than the sum of its parts”.
 System boundary: is the boundary that separates each system from its environment. It
is rigid in closed system and flexible in open system.
 Feedback: the part of system control in which the results of actions are returned to the
individual, allowing work procedure to be analyzed.
c) The Contingency Approach
Contingency/situational management theory states that management actions and leadership
styles should be dependent up on the circumstance/situation confronting the manager. The
contingency approach can be summarized as “it all depends” device. Right and proper conduct
under one set of circumstances may totally fail under another set. Since no two problems
possess identical details, neither should any solution. Several solutions and approaches may be
possible and might yield equally good results.
In short, this theory emphasizes that there is no one best way of performing any managerial
task and it all depends on confronting the managers. This theory tells managers look to their
experience, the past and consider many options before choosing alternatives.
d) The Decision Approach
This approach looks upon management process as a decision making process. In the view of the
decisional theorists, since the performance of various management functions can be studied
from the study of the process of decision making, the entire field of management can be studied
from the process of decision making. They have expanded their area of theory building from the
decision making process to the study of the decision, the decision maker and the social and
psychological environment of the decision maker. The decision theorist started with a small area
of decision making and then looked at the entire field of management through this keyhole.