Philosophical aspect of management

1. Unit 2. Philosophical
Aspect of Management
*THE CLASSICAL PHILOSOPHY
* BEHAVIORAL MANAGEMENT PHILOSOPHY
*SYSTEM AND CONTINGENCY PHILOSOPHY
*EMERGING ISSUES AND CHALLENGES IN NEPALESE BUSINESS

2. Early Development of Management
 Study of Management as a discipline after industrial revolution i.e in 18th century.
With the passage of time and emergence of large and global organization
management developed adopting various multidisciplinary discipline and different
management theories.
Before the classical theories, notable contributors on the field of management are:
Robert Owen( 1771- 1858): Recognized human element in industry and added
workforce environment influence performance.
Professor Charles Babbage (1792- 1871): Management of an enterprise should be based
on accurate data.
Henry Robinson towne (1844-1924) : Management requires combinations of
professionals skills for successful management process.
Captain Henry Metcalfe (1847- 1927) : Developed system of controls.

3. A. Classical Philosophy
 Stated that workers only have physical and economic needs.
Advocate specialization of labor, centralized leadership and
decision making, and profit maximization.
Some of the influential classical philosophies of management
are:
1. Scientific Management Theory
2. Administrative Management Theory
3. Bureaucratic Theory

4. 1. Scientific Management Theory
 Fredrick Winslow Taylor (1865- 1915) is known as the father 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 a best and
cheapest way.
Scientific management is that kind of management, which conducts a
business or affairs by standards established by facts, or truths gained
through systematic observation, experiment or reasoning.
Process of systematically improving the efficiency of task through a
systematic analysis.

5. Principles of Scientific Management
1. Development of science for each part of an individual’s job –
Replacement of rule of thumb.
-Work assigned to any employees should be observed, analyzed with
respect to each and every element, part and time involved in it.
-Decision on the management should be based on facts and by the
application of scientific decisions,
2. Scientific selection, training, and development of workers
-Workers should be selected scientifically with a designed procedure.
-Physical, mental and other requirements for each and every job should
be specified.
-Workers Should be trained to fit the job and provided opportunities for
the development of working capabilities.

6. Principles Contd..
3. Co-operation between management and workers – Harmony not discord
- No individualism
- Interest of employers and employees should be harmonized.
4. Division of work and responsibility
- Managers & workers responsibility should be separated.
- Planning and execution should be separate process.
5. Mental Revolution
-Management should create suitable workers condition and solve problem scientifically.
-Workers should be provided handsome remuneration to boost up their morale in order
to gain disciplined , loyal and sincere discharging of task.

7. Advantages of scientific management
 Mass Production : Promotes efficiency techniques
Job Design: Specialization and standardization of works
Employee Management: Promotes Proper selection, training and
compensation to workers
Training and Development of workers
Scientific Methods: introduced rational and scientific methods to
solve the management problems.

8. Limitations of Scientific Management
 Mechanistic
Neglect Human factor
Best Way: Believed one best way of doing all business.
Monotonous Work : Promotes higher production via undue
pressure to workers.
Individual Focus does not favor group work.

9. 2. Administrative Management Theory
 Henry Fayol (1840-1925) developed the theory of
administrative management.
Attempts to find a rational way to design an organizational
as a whole.
 Calls for formalized administrative structure, a clear
division of labor, and delegation of power and authority to
administrators.

10. Principles of Administrative Management
Theory
Division of Labor – work : Right work to Right person
Authority and responsibility – Superiority & responsibility
Unity of command – One superior and one command
Unity of direction – one plan and one action
 Equity ( Justice) – Fairness and impartial treat to the employees
Order –Social order (Authorities) and material order ( Safety and
efficiency)
Discipline – obedience and proper conduct

11. Principles of Administration management
contd..
 Initiative – Encouraging initiation from employee
Fair Remuneration –Fair, sufficiently and rewarding remuneration
Stability of Tenure of personnel –Sufficient work time to learn and excel
Scalar chain –Clear line of authority linking all levels of management
Subordination of individual interest to general interest
Centralization and Decentralization
Esprit de corps

12. Contribution/Advantage
 Functions of management – Identified Managerial
Functions
Universal Principles
 Managerial Skills- physical, mental, moral, educational,
technical and experiential
Profession – Regarded management as a profession

13. Limitations of Administrative
Management Theory
 Principles applicability issues – More like mechanistic in
nature
Limited Application – Application issue in complex and
dynamic nature if business.
Negligence of Human Aspect

14. 3. Bureaucratic Management Theory
 Max Weber (1864-1920) developed the bureaucratic theory of
management.
Contains two essential elements:
* Structuring an organization into hierarchy and
* Having clearly defined rules and procedures to run the
organization.

15. Characteristics of Bureaucratic
Organization
 Division of work : Achieve specialization through proper assignment of specialization.
Administrative Hierarchy : Rights and duties at each level are developed and defined.
Impersonal Relationship : No impact should be created by personal and human relationship or
feeling. Organization functions should be based on rules and regulation.
Official Rules: Organizational decisions should be made on the basis of rules, policies and
procedures.
Official Record: Scientific management of records and information.
Work System : Well defined procedures for conducting organizational activities.

16. Characteristics contd..
 Technical Competency: employees Skills and talent competency are
emphasized and based for the selection and promotion.
Job Security
Fixed Remuneration : Remuneration should be predetermined and maintained.

17. Principles of Bureaucratic Management
Theory
 Formal Hierarchical Structure
- Each levels controls the level below and is controlled by level
above.
-Power and authority , Responsibilities and duties are clearly defined
for each position within the hierarchy.
Division of labor (Functional specialization)
-Division of work into different parts or processes which are
performed by one or group of workers according to their ability and
interest.
-Employees are chosen and placed based on their interest and skills.

18. Principles contd..
 Formal/Impartial selection process
-All employees are treated equally.
-Employees are hired and promoted on the basis of qualification.
Expertise, performance and experience.
-There exist formal rules regulations for employee selection.
Career orientation (Focus on technical quality)
- Bureaucratic organization is career oriented.
-If an employees follows the rules and regulations and performs well
he/she has opportunity for long term career growth.

19. Principles Contd..
 Formal Rules and Regulation
-Bureaucratic management is based rules and regulation.
-It uses rules to exert control.
-Therefore Lower level executes the decisions made by the higher levels.
-Rules also protect employees against unfair behavior of management .
Impersonality (Impersonal relationship)
-Bureaucratic management treats all employees equally and similar to
customers it do not allow individual differences to influence them.
-Prevents favoritism and nepotism.

20. Principles contd..
 Formal Record Management
-Management takes decisions based on the past information and
records.
-Different rules and policies are formulated as required by situation,
they act as a reference for future activities.

21. Contribution of Bureaucratic
Management
 Rational Decisions
-Bureaucratic Management operate under rules and regulations, all decisions are made
on objective basis.
 Maximum efficiency
-Focuses on division of work.
- Facilitates specialization through proper assignment of responsibility and
accountability.
 Proper Control
-Rights and duties at each level are clearly defined.
Removal of ambiguity(inexactness)
-Organizational activities under bureaucratic management are strictly carried on the
basis of rules and procedures.
-Unity of command and unity of direction are clear thus removes ambiguity.

22. Contribution contd…
 Specialized Services
- Division of labor facilitate specified responsibility of employees,
departments and units, this allows organization to provide
specialized service to customers.
 Clear career path
- Employee promotion and development are well defined thus there
is clear career path for the employees.
Reference
-Bureaucratic management maintain scientific records and
information related to the past and present trends.

23. Limitation of Bureaucratic Management
 Ignorance of Human Aspect
-Rules and regulation are over emphasized, the human aspects such as relationship,
culture, and values are not given priority.
Lack of strategic vision
-Bureaucratic management design employees to focus more on present activities.
- Underestimated development of long term plan and strategic via employees.
 Minimum Performance
-Employees perform their duties based on existing rules and procedures, they are far
from using their ideas and creativity.
Discourage in the acceptance of responsibility
- Due to fear od punishment or loosing jobs, the employees amah be reluctant to take
responsibilities.

24. Limitation contd..
 Delay in communication and decision making
-Bureaucratic management has existence of lengthy formalities and
rules thus create delay in communication and decision making.
Lack of personal initiation
- Employees focus more on rules and regulation rather than taking
personal initiation for improved performance.
Not suitable for business organization
-Requires high degree of flexibility to deal with environmental
dynamism.

25. B. Behavioral Philosophy
 Human Relation and behavioral theories are the extended and improved form of the
traditional theories.
The labor unions, sociologist, and psychologists criticized the scientific management or
ground of being less human.
 According to the theory competent management respect the differences in culture,
concepts, opinions, and needs of human.
 This theory give high priority to human relation behaviors.
Human relation behaviors may be studied under two parts
- Human relation theories that gave importance to people in the organization.
-Behavioral theories that emphasizes interpersonal relationship and employee
behaviors.

26. A. Human Relation Movement-
Hawthorne Studies.
 Puts human being as its center aspect for management.
Professor Elton Mayo and his associates began the experiment to prove the importance of
people than the machines for productivity.
The experiment was conducted in the Hawthorne plants of the western electricals in the spring
of 1927 in Chicago, USA.
 The study was conducted in four phases:
-Illumination Experiments
-Relay assembly test room experiment
-Mass Interviewing program
-Bank wiring observation room experiment.

27. 1. Illumination Experiment
 To find out how varying levels of illumination (amount of light at
the workplace, a physical factor) affected the productivity.
It consisted series of studied of test groups in which the levels of
illumination varied but the conditions were held constant.
It was found that the test productivity of test groups was affected
marginally through illumination.

28. 2. Relay assembly test room experiments
 This experiment were deigned to determine the effect of change in job conditions on group
productivity.
In this experiment;
A small homogeneous working group of give girls was selected.
Several new elements were introduced in the working environment such as shorter working
hours, proper rest periods, improved physical conditions, friendly supervision, and free social
interaction among the group of members.
During the experiment productivity and morale increased. The researcher concluded that
workers output increased by the need of recognition, security and sense of belongingness.

29. 3. Mass Interviewing Program
 The researcher initiated a three year long interviewing program
with more than 21000 employees to find out the reasons for an
increase in production.
The questions on the interview were related to supervision,
insurance plans, promotion, and salaries.
The result of the interviewing program recognized the importance
of informal groups for the first time.
It was discovered that workers behavior was influenced by group
behavior.

30. 4. Bank wiring observation room
 In this experiment; a group of 14 male workers was formed into a small work
group.
The workers were involved in attaching wire with switches for certain
equipment used in telephone exchanges in the bank wiring room.
The workers were placed under observation for six months.
The workers pay was dependent on the performance of the group as whole.
It was thought that the efficient workers would put pressure on the less
efficient workers to complete the work;
Contrary to this, it was found that the group established its own standard of
output, and social pressure was used to achieve the standard of output.

31. Contributions of Hawthorne studies
 Highlighted importance of social and psychological factors for workers productivity
and job satisfaction.
It has found that the informal relation among workers influence the workers behavior
and performance more than formal relation in the organization.
Employee will perform better if they are allowed to participate in the decision making
affecting their interest.
When employees are treated with respect and dignity, their performance will improve.
Financial incentive alone cannot increase the performance, social and psychological
needs must satisfied along.
Good communication between superiors and subordinates improves relations and the
productivity.

32. Limitation
 Applicability issues since experiment was conducted on controlled
environment and may not be applicable in real organizational
situations.
Productivity also depends upon technological and other factors;
thus this theory emphasize human aspect as important factor.
 Place much emphasizes on group decision making, in many
situation organization are compelled to make individual decisions.

33. B. Emergence of Organizational Behavior/
Behavioral Science Approach
 Behavioral science approach advocates the importance of people’s
behavior for effectiveness of management.
Behavioral approach develops concepts of motivation, leadership,
communication, teamwork and reward.
This perspective shifted the attention of management from
mechanical view towards employee to the psychological, attitudes
and behaviors of individual (Humanistic view).
It provides important insights into the importance of motivation,
group dynamism, and interpersonal relationship in organizations.

34. a. Maslow’s Needs Hierarchy Theory
 According to Maslow, Needs exists in hierarchy.
Only when lower order needs are satisfied can higher order needs
be activated and serve as sources of motivation.
Maslow’s theory is based on the human needs comprising a five
tier model depicted as hierarchical levels within a pyramid.
This theory believed that once a given level of needs is satisfied, it
no longer serves to motivate a person. Then, the next higher level of
need emerges.

35. Maslow’s Need Hierarchy

36. Maslow’s Need Hierarchy Contd..
 Biological/Physiological Needs
- Includes needs that are vital for survival.
- Physiological needs like air, water, food, clothing, Shelter and sex.
 Security/Safety needs
-Includes physical, environmental, and emotional safety and protection such as
job security, financial security, protection from animals and natural calamities,
family security and health security.
Social Belongingness
-Needs of feeling loved and accepted.
-Includes the need for love, affection, care, belongingness and friendship.
-At this level, the need for emotional relationship drives human behavior.

37. Maslow’s Need Hierarchy Contd..
 Esteem/Ego Needs
-Higher order and egoistic needs.
-Related to prestige and status of the person.
-According to Maslow, they are two types
*Self Esteem : It is intrinsic and includes self confidence, achievement,
competence, self respect, independence, and freedom which are self realized.
*Esteem of others: It is extrinsic and includes status, recognition ,attention and
appreciation which are achieved through others.
 Self Actualization Needs
- Full use and exploitation of talents, capabilities, and potentials.
-Self actualizing people are self aware, concerned with the personal growth, less
concerned with the opinions of others, and interested in fulfilling their potential.

38. Contribution of Maslow’s Theory
 Clear Explanation: Theory explains why a person behaves
differently in different situation.
 Comprehensive : Provides comprehensive view of human needs.
Clear Prescription : It allows a managers to analyze the unsatified
needs of employee for motivation purpose.

39. Limitation of Maslow’s Theory
 Non testable and must be viewed as as theoretical statement or
base.
Clinically Derived theory and its units of analysis is individual. The
model is based on relatively small sample of subject.
 The need classification is somewhat artificial. Needs cannot be
classified into 5 steps hierarchy.
 The need priority model may not apply at all times in all places.

40. b. Herzberg’s Two factor Theory
 Also called the dual factor theory of motivation or hygiene theory of
motivation.
 Herzberg conducted a widely, reported motivational study on about 200
accountants and engineers employed by firms in and around Pittsburgh,
Pennsylvania USA.
He used the critical incident method of obtaining data for analysis.
The professional Respondents were asked two questions:
- When did you feel particularly good about your job – What turned you on ?
- When did you feel exceptionally bad about your job – what turned you off?

41. Herzberg’s Two Factor Contd..
 Tabulating these good and bad feelings, Herzberg concluded that
- Job satisfiers are related to job content.
-Job dissatisfiers are associated to job context.
Herzberg labeled job satisfiers as motivators and called the
dissatisfiers as hygiene factors.
Taken together they became knows as Herzberg’s two factor theory
of motivation.

42. 1. Hygiene/Maintenance Factors
 Related to the conditions (environment) under which a job is
performed.
This factor have power to make people make dissatisfied and are
prerequisites for satisfaction at work, but their presence alone will
never make people satisfied at work.
 Examples are: Safety, salary, security, working environment,
working conditions etc.

43. 2. Motivating Factors
 Motivating factors in the Herzberg’s theory have the power to
make moderately satisfied people highly satisfied, but have no
impact on satisfaction if hygiene factor are not already in place.
Examples factors: Achievement, recognition, advancement,
empowerment, responsibility and intrinsically interesting work.

44. Contribution of Herzberg’s Two Factor
Theory
 This theory provides tools of satisfy as well as motivate the
employees.
This theory states that financial benefits are not only the
motivating factors.
It advocates the concept of job enrichment in motivation.

45. Limitations of Herzberg’s Two factor
theory
 This theory provides an explanation of job satisfaction . Hence it is not really a
theory of motivation.
 Person may dislike the part of his/her job, yet still think the job is acceptable,
ignores the situational circumstances.

46. McGregor’s Theory X and Y
 In 1960, Douglas McGregor, an American social psychologist, developed
theory X( Negative) and theory Y(Positive) suggesting two aspects of
human behavior at work.
Theory X
-Traditional Theory of management philosophy that states people want to
avoid works as much as possible, meaning that they do not wish to take
responsibility.
-People are motivated through financial incentives and people must be
continuously controlled, thus system of rewards and punishment works
best for them.

47. General Assumptions of Theory X
 People tend to resist change and also avoid responsibilities.
The authoritarian leadership style is the most appropriate leadership
style.
The work motivation comes through financial incentives.
People should be monitored and controlled closely to make them work
effectively. Therefore system of rewards and punishment works best for
them.
People prefer to be led by others rather than lead others.
People are generally poor decision makers.

48. Theory Y
 Theory Y assumes that people are inherently happy to work.
They are motivated to pursue objectives.
There is no need of rewards and punishment system.
People are prepared to take responsibility for everything they do
and want to use their creativity in solving probelems.

49. Assumptions of Theory Y
 People like to work as natural as play or rest.
People are committed to the objectives and exercise self control and direction
to achieve them. They are fully conscious of their job.
People do not inherently have qualities like avoidance of responsibilities, lack
of ambition and emphasis on security. They are all consequences of experience.
The rewards should address satisfaction o f ego and actualization needs, not
just financial needs.
People always tend to be creative to solve organizational problems.
All employees in an organization are given equal chance to develop their skills.

50. Contribution
 Guides management to develop motivational techniques.
Helps management to carry managerial activities from human point
of view.
Provides practical assumption about human behavior.
 This theory is easy to understand and apply

51. Limitations
 People cannot be only put into two extremes of theory X and Y.
Job itself may not be the key to motivation for the employees.
Human behavior is relative and variable.

52. Contribution of Behavioral Theory
 Identification and recognition of the role of human elements in
organization.
Recognition of leadership as important component of effective
management.
Emphasis on the role of non financial rewards for employee
motivation.
Provide base for organizational behavior which is very important for
management success.

53. Limitations Behavioral Science Theory
 Lays over emphasis on behavioral aspect. Neglects the economic
dimension of job satisfaction.
Not much useful since it is very difficult to identify, analyze and
predict human behavior.
Does not consider the situational Variables.
Not applicable universally to all organization.

54. C. System Philosophy
 System
System is a set of interrelated and interdependent parts working
together as a network.
System should not be viewed as a individual part rather it should be
understood as whole.
System Theory
- System Theory assumes that an organization should be viewed as
an open system.
-Organization constantly interacts with the environment and
involved in transformation of input into output.

55. System View of an Organization
External Environment
Input Stage
Raw Materials
Money & Capital
Human Resources
“Org Obtain inputs
from environment”
Conversion Stage
Process
Machinery
Computers
Human Skills
“Org transforms inputs
and adds value to them”
Output Stage
Goods
Services
“Organization Releases
outputs to its
environment”
Sale of outputs allow org to
obtain new supplies of inputs

56. Components of System Theory
Components of
System Theory
Inputs
Processing
Outputs
The Environment
Feedback

57. Elements of System Theory
 Goal Oriented : Established for the attainment of certain goal.
 Subsystem: Business is the subsystem of the wider social system.
Synergy : System builds synergy. i.e outcomes of a system is greater than outcomes of
an individual.
System Boundary: Open or closed system
 Flow: Flows in the inputs-processing-outputs direction.
Feedback: System gets feedback from the environment. It helps to improve and
redefine the system.
Open or closed system: Interaction or no interaction with the outside/external
components.

58. Contribution of System Theory
 System Theory provides a conceptual framework for viewing an
organization.
It enhances the interrelationship and coordination among the
various parts or subsystem of the organization.
It gives equal importance to both internal and external context of
an organization.
It provides a good basis for planning, executing and controlling.

59. Limitations
 The system theory does not offer specific tools and technique for
practicing managers.
Criticized as being too abstract and vague.
Fails to specify the nature of interaction and interdependence
between and organization and its environment.

60. Contingency Theory /Situational or
practical approach to management.
 Contingency Theory assumes no best way to solve management problems in
organization. Believes management is situational in nature.
It assumes that management principles are not universal in nature as there is
no best style of management.
Management has “If” & “Then” approach where “if” is independent variable
and “then” is dependent management variable or the technique to be adopted
to deal with the situation.
For e.g If the workers have strong physiological needs, then financial motivators
should be adopted..

61. Contingency Theory contd..
 Focuses on multivariate nature of organizations and helps organization to
operate under different situations.
It provides a framework for solving problems, according to the environmental
conditions.
It advocates organizational adaptability to both internal and external
environment and fit between these two.

62. Contingency view of an organization
Characteristics
of the
environment
Determine the
design of an
organization’s
structure and
control system
Organizations in stable
environments choose a
mechanistic structure-
Centralized authority, vertical
communication flows, control
theough strict rules and
procedures.
Organizations in changing
environments choose an organic
structure- decentralized authority,
horizontal communicaton flows,
cross departmental cooperation.

63. Major contingency factors
 Organization Size: Activities to be performed by the management
are determined by the size of the organization.
Nature of task and technology: An organization uses technology to
convert the input into output and if technology has been used
regularly it requires stable structure, control system, and leadership.
 Environmental Uncertainty: Structure suitable for stable
environment may not be suitable for unstable environment.

64. Contribution/Advantages of contingency
theory
 It integrates different school of thought and applies them as per
the needs of the situation.
It brings pragmatic solutions to every problem .
 It depends on multivariate analysis. Hence, it takes all the possible
variables or factors that affects the situation re into consideration.
It does not follow a pre designed organizational structure. The
organizational structure is developed based on situation or
environment.

65. Limitations
 Does not follow the principle of universality of principles which are
often applied to management.
It is argued that contingency approach was already asserted by
Fayol. He also advocated flexibility in management.
It may be costly and time taking to analyze the situation.
It is not possible for managers to determine all the factors relevant
to the decision making situation. Moreover, it is difficult to establish
a perfect relationship among these factors.

66. Emerging Issues and challenges in
Nepalese Business
 Increased Private investment in core business
Business with heavy investment and high level of managerial capability.
Electricity, communication etc,
Growing Urban Population
Specialization, industrialization, and consequent economic development.
Growth rate : 3.21% -World Bank 2015
42% total population in urban area.
Rising informed and educate customers
Changing role of the government: facilitator from regulator
Rising economic agenda
Use of modern technology

67. Contd…
 Integration to the world economy: WTO, SAARC, BIMSTEC
Shifting socio cultural values
Shift towards service industry
Workforce diversity