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  2. 2. UNIT II DEVELOPMENT OF MANAGEMENT THOUGHT I. CLASSICAL APPROACH A classical approach to management can be divided into three separate schools; scientific management, administrative theory and bureaucratic management. This approach dates back to the industrial revolution, placing reliance on the management principles as a unity of command. The achievement of a balance between authority and responsibility, division of labor, and delegation to establish relationships between management and their subordinates. 1. Bureaucratic 2. Scientific 3. Administrative 4. Human relations approach (NEO-CLASSICAL APPAROACH) II. MODERN APPROACH 1. Behavioural 2. Quantitative 3. Systems 4. Contingency approach
  3. 3. CLASSICAL approach (Theories ) Bureaucratic Approach Scientific Approach Administrative Approach Human relations approach (NEO- CLASSICAL APPAROACH) MODERN (Theories) Behavioural Approach Quantitative Approach Systems Approach Contingency Approach
  4. 4. Development of management thought Classical Approach to management thought:  From 1880, a set of principles and concepts about organisation and management began to developed extensively.  Now known as classical approach or traditional approach.  Principles of management got developed in this phase.  Major highlights of this approach is universal nature of management.  It also provides a scientific basis for management practice.
  5. 5. Development of management thought 1. Max Weber’s Bureaucratic Approach to Management thought (1880-1920): He observed that bureaucracy is the most efficient form for a complex organisation. He believed in strictly following rules which would make bureaucracy highly efficient form of organisation founded on principles of logic, orders and legitimate authority . Weber maintained 3 types of power in an organisation viz. traditional , charismatic and Bureaucratic or rational –legal.
  6. 6. Development of management thought 1. FEATURES OF BUREAUCRATIC ORGANISATION  Clear act of division of labour based on competence and functional specialization.  A well-defined hierarchy of authority.  A bureaucrat seeks rationality, objectivity and consistency for his organisation.  Interpersonal relations are based on positions and not on personalities.  A system of rules covering the duties and rights of employees.  A system of procedures based upon technical competence.  Bureaucracy recognises only legal power and authority given to each position in the organization.
  7. 7.  Table 1.3 Characteristics of Bureaucratic Theory ( Characteristics) Description 1. Specialization of labour  Jobs are broken down into routine, well-defined tasks so that members of the organization know what is expected from them and they can become competent enough to do a particular subset of tasks. 2. Formal rules and procedures  Written rules and procedures should specify the desired behaviours from members of the organization, facilitate coordination, and ensure uniformity. 3. Impersonality  Rules, procedures, and sanctions should be applied uniformly regardless of individuals.
  8. 8.  Table 1.3 Characteristics of Bureaucratic Theory  Characteristics Description 4. Well-defined hierarchy Multiple levels of positions must be designed carefully keeping in mind the reporting relationships among levels. This should provide for supervision, handling of exceptions, and ability to establish accountability of actions. 5.. Career advancement based on merit  Selection and promotions should be based on the qualifications and performance of members.
  9. 9.  EVALUATION OF BUREACRATIC ORGANISATION  It does not recognise the importance of human relations in an organisation.  Preferred in government – static organisation  It is not considered ideal in dynamic business organisation because of 1. Rigidity 2. Higher cost of controls 3. Difficulty of coordination and communication. 4. Resistance to change 5. Limited scope to develop HR 6. Blind faith in rules and regulations
  10. 10. 2. Scientific Approach to Management thought 3. Frederick Winslow Taylor  Mechanical engineer  · Frederick Winslow Taylor was an American mechanical engineer who sought to improve industrial efficiency. He is regarded as the father of scientific management and was one of the first management consultants.  Born: March 20, 1856, Philadelphia, Pennsylvania, United States  Died: March 21, 1915, Philadelphia, Pennsylvania, United States  Spouse: Louise Spooner (m. 1884–1915)  Education: Stevens Institute of Technology, Phillips Exeter Academy, University of Pennsylvania  Awards: Elliott Cresson Medal
  11. 11. Development of management thought 2. Scientific Approach to Management thought (1900-1930)  More contribution by Frederick Winslow Taylor known as Father of Scientific Management – Management as a science.  According to F. W. Taylor , “ Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and the cheapest way.”  About F. W. Taylor  - born in 1856-  -left college studies- worked as an apprentice pattern maker and machinist in 1875.  -1878, joined Midvale Steel works in Philadelphia (USA)machinist – chief engineer(1884) –engineer –evening study.  Career of 26 years- 3 companies- Midvale steel, Simonds Rolling Machine and Bethlehem Steel- conducted various experiments to study the problems and attitude of workers .
  12. 12. F.W. Taylors Principles of Management  One best way  Scientific selection of workers  Development and training of workers  Harmony in group action.  Maximum output  Cordial relations between managers and workers.
  13. 13. F.W. Taylors Principles of Management  One best way: According to him work standards and practices could be established through experimentation and observation.  Scientific selection of workers: Management duty to determine the kind of work for which employee was suitable.  Development and training of workers: He supported internal promotion of employees. Development and training should be in keeping with the promotion policy of the organisation.  Harmony in group action: Proper understanding among group members brings about best performance without loss of time.  Maximum output: He supported efficiency and improved production. Eventually both Employers and Employees stand to gain due to maximum output.  Cordial relations between managers and workers. To ensure smooth implementation work, cordial relations between managers an d workers is of great importance.
  14. 14. F.W. Taylors contributions/techniques of scientific Management  Soldiering – workers put less efforts resulting into limited output and low productivity.  Time Study and Motion study: TS is the art of observing and recording time required to do each detailed element of an industrial operator.  Motion study: refers to the study and analysis of the movements of an operator performing job so that attempts can be made to remove irrelevant movements from the process.  Fatigue study: Fatigue means tiredness caused by continuously performing one or more activities. “negative appetite for work”. – psychological, emotional and behavioural aspects of fatigue.  Mental revolution: It involves a complete revolution on the part of workers relating to their work, fellow workers and towards employer.  Differential payments: introduced differential piece wage plan. High wage for production and above standard and low wage plan below the standard.  Standardization: It is maintained in respect of instruments and tools , period and amount of work , working conditions , cost of production etc.  Separation of planning and doing/Functional foremanship-introduced 2 new concepts. The work should be planned by a foreman and not the workers.  Four , six and eight specialist foremen who would give orders to an individual workers.
  15. 15. BENEFITS OF SCIENTIFIC MANAGEMENT 1. Application and use of scientific methods / replacement of traditional rule of thumb method. 2. Planning and control 3. Appointing specialist 4. Standardization 5. No arbitrary rule 6. Increased outputs and profits 7. Benefits to workers and society 8. Encourage research 9. Cooperation and understanding
  16. 16. LIMITATIONS OF SCIENTIFIC MANAGEMENT 1. Workers did not enjoy freedom of choice. 2. Too much emphasis on division of work resulted into breaking the work into smaller parts. 3. Payment based on performance brought about ill-feeling among workers. 4. Every job was measured and rated scientifically. 5. Planning and control was given exclusively in the hands of managers.
  17. 17. Administrative Approach to Management thought: (1916-1940):  Contribtion of Henry Fayol  Mary parker follet Henri Fayol was a French mining engineer and director of mines who developed a general theory of business administration. He and his colleagues developed this theory independently of scientific management but roughly contemporaneously. Born: July 29, 1841, Constantinople, Turkey Died: November 19, 1925, Paris, France Education: Ecole nationale supérieure des mines de Saint-Étienne
  18. 18. Administrative Approach to Management thought: (1916-1940):  Contribtion of Mary Parker Follet  · Mary Parker Follett  Social Worker  · Mary Parker Follett was an American social worker, management consultant and pioneer in the fields of organizational theory and organizational behavior.  Born: September 3, 1868, Quincy, Massachusetts, United States  Died: December 18, 1933, United Kingdom  Education: University of Cambridge, Thayer Academy, Radcliffe College
  19. 19. Administrative Approach to Management thought: (1916-1940):  Contribution of Henry Fayol 14 principles.  One more contributor Mary Parker Follet.  She proposed four principles as guide to management thinking.  Coordination by direct contact of responsible people.  Coordination in the early stages  Coordination as the reciprocal relating to all factors in the situation.  Coordination as a continuing process.
  20. 20. Administrative Theory:  While the proponents of scientific management developed principles that could help workers perform their tasks more efficiently, another classical theory – the administrative management theory – focused on principles that could be used by managers to coordinate the internal activities of organizations. The most prominent of the administrative theorists was Henri Fayol.  Henri Fayol (1841-1925)  It focused on principles that could be used by managers to coordinate the internal activities of organizations.
  21. 21.  Henri Fayol (1841-1925) is considered as the father of the administrative management theory, with a focus on the development of broad administrative principles applicable to general and higher managerial levels.  Fayol was a French mining engineer-turned-leading industrialist and successful manager.  In 1916, he authored a book in French titled General and Industrialist Administration.
  22. 22. Fayol opined that all actions of business enterprises could be divided into six groups: 1. Technical 2. Commercial 3. Financial 4. Security 5. Accounting 6. Managerial
  23. 23.  Fayol’s primary focus was on this last managerial activity because he felt that managerial skills had been the most neglected aspect of business operations. He explained management in terms of five functions: planning, organising, commanding, coordinating and controlling. 
  24. 24. Henri Fayol (1841-1925) Fourteen principles:  Division of work  Authority and responsibility  Discipline  Unity of command  Unity of direction  Subordination of the individual interest to the general interest  Remuneration  Centralization:  Scalar chain  Order  Equity  Stability  Initiative  Espirit de corps (team spirit)
  25. 25.  CONTRIBUTION OF THIS APPROACH TO MANAGEMENT THOUGHT.  Fayol gave definition of management  He provided basic terminology and concepts in the form of division of labour, unity of command, scalar chain and centralization.  His principles have become point of reference to today’s business organization.  According to Follet in a good organisation people develop themselves by contributing to the development of the organisation.
  26. 26.  ·  G. Elton Mayo  Psychologist  · George Elton Mayo was an Australian psychologist, sociologist and organization theorist. He lectured at the University of Queensland from 1911 to 1923 before moving to the University of Pennsylvania, ...  Born: December 26, 1880, Adelaide, Australia  Died: September 7, 1949, Guildford, United Kingdom  Education: University of Adelaide  Books: The human problems of an industrial civilization
  27. 27. Contributions of Behavioral Thinkers to Management Thought Name Period Contribution Mary Parker Follet 1868- 1933 Advocated the concept of ‘power sharing’ and integration Elton Mayo 1868- 1933 foundation for the Human Relations Movement; Abraham Maslow 1908 – 1970 motivated by a hierarchy of needs Douglas McGregor 1906- 1964 Theory X and Theory Y personalities Chris Argyris - Classified organizations based on the employees’ set of values
  28. 28. Development of management thought 4. Human Relations Approach to management thought (1930-1950):  They Are called neo-classical.  More stress on human and social factors in organization.  Elton Mayo and Hawthorne experiments is the contribution of this approach.  Elton Mayo conducted Hawthorne studies at Hawthorne plant of Western Electric Company in 1927 to 1932.  Some of the findings are as follows.
  29. 29. PHASES OF HAWTHORNE EXPERIMENTS 1. Illumination experiments- 1924-1927 2. Conclusion: Other factors than light were important. 2. Relay assembly Test Room Experiment (1927-1929) 2 groups of female – each group in a separate room – changes in breaks , working hours etc. output increased in both control rooms . Conclusion: social relationship among workers had greater effect on productivity rather than working conditions. 3. Mass Interviewing Programme(1928-1930) 21000 employees interviwed- 3 years Conlusion: Productivity can be increased if workers are allowed to talk freely about the matters that are important to them. 4. Bank Wiring Observation Room Experiment(1932) 14 male workers – 6 months Conclusion: Group has established their own standards of output and these standards were implemented through social pressure.
  30. 30. Development of management thought 1. Employee’s behaviour is influenced by mental attitudes and emotions including prejudices. 2. The workers in a group develop a common psychological bond uniting them as a group in the form of informal organization. 3. In managing and motivating employee groups, human and social motivation plays greater role than financial incentives. 4. Management must understand that a typical group behaviour can dominate individual preferences. 5. When workers are given special attention by management, the productivity is likely to increase irrespective of actual changes in the working conditions.
  31. 31. MODERN APPROACH TO MANAGEMENT THOUGHT 1. Behavioural approach to management thought (1950-70)  More mature version of human relations approach  Study of Attitudes, behaviour, performance of individuals and groups organisations.  Assumptions:  An organisation is a socio-technical system.  It is important to recognise individual differences in the needs, attitudes, perceptions and values of people who work in organisation.  Work and interpersonal behaviour of people in organisation is influenced by various factors.
  32. 32.  This approach is an enhanced and more developed version of the human relations approach to management. Douglas McGregor, Abraham Maslow, Kurt Lewin, Chester Barnard, Mary Parker Follett, George Romans, Rensis Likert, Chris Argyris and Warren Bennis are some of the foremost behavioural scientists who made significant contributions to the development of the behavioural approach to management. These scientists were more rigorously trained in various social sciences (such as psychology, sociology and anthropology). They use more sophisticated research methods. 
  33. 33. Behavioural approach to management thought (1950-70)  Human needs and organizational goods should be joined together.  Conflicts in organisation are unavoidable.  Contribution:  Behavioural scientists have contributed to our understanding of individual motivation , group behaviour , interpersonal relationship and the importance of work to human beings.  Managers are made more sensitive towards the needs of subordinates.  New findings are noted in the areas of leadership, communication, conflict resolution and organizational change.
  34. 34. MODERN APPROACH TO MANAGEMENT THOUGHT 2. Quantitative approach to management thought (1955 onwards)  It includes the application of statistics, optimization models, information models and computer simulations. More specifically, this approach focuses on achieving organizational effectiveness.  Three main branches:  Management Science  Operations Management and  Management Information Systems.
  35. 35. 1. Management Science ◦ The management science approach visualizes management as a logical entity, expressing management in terms of mathematical symbols, relationships, and measurement data. ◦ Also known as the operations research approach, it is applied in areas like capital budgeting and cash-flow management, production scheduling, product strategy development, human resource planning, and inventory management. ◦ Various mathematical tools like queuing theory, linear programming, PERT, CPM, decision theory, simulation, replacement, probability theory and sampling, time-series analysis, and index numbers are used to minimize the error in management decisions.  It stresses the use of mathematical models and statistical methods for decision- making.
  36. 36. 2. Operations Management ◦ The operations management approach is primarily concerned with production management and its related areas. In fact, it is difficult to draw a line between management science and operations management. Most of the mathematical tools mentioned earlier are used in operations management. Moreover, this approach also helps in decision making in other functional areas like finance, marketing, and human resource management.  It deals with the effective management of the production process and the timely delivery of an organization’s products and services.
  37. 37. 3. Management Information Systems ◦ The management information systems approach focuses on designing and implementing computer-based information systems for use by management. ◦ It converts raw data into information inputs, which are subsequently used by management for decision making. ◦ Modern management information systems help in enterprise-wide decision making, integrating all functions of management. ◦ Enterprise-wide decision support systems (such as human resource information systems) are used for critical or strategically important decisions, as these provide valuable information inputs.  Management information systems focuses on designing and implementing computer-based information systems for business organizations.
  38. 38. MODERN APPROACH TO MANAGEMENT THOUGHT 2. Quantitative approach to management thought (1955 onwards)  STEPS IN Q APPROACH  1 model is constructed  2. standards are established  3. data collection  4 mathematical calculations – take decision based on results
  39. 39. MODERN APPROACH TO MANAGEMENT THOUGHT 2. Quantitative approach to management thought (1955 onwards)  CONTRIBUTIONS OF QUANTITATIVE APPROACH  1. Quantitative Approach has contributed to decision making in planning and control.  2. It has enabled large organisations to effectively solve problems.  3. It is useful in capital budgeting, inventory control, production scheduling etc  4. It uses various computerised techniques for data processing.
  40. 40. System approach to management thought (1970 onwards)  A common drawback of the classical, behavioural and quantitative schools is that they weigh down one characteristic of the organisation at the expense of others. While the classical approach emphasises the ‘task’ and ‘structure’, the behavioural approach emphasises ‘people’ and the quantitative approach emphasises ‘mathematical' decision- making’  An extension of the quantitative school of thought is the systems theory approach.
  41. 41. MODERN APPROACH TO MANAGEMENT THOUGHT 3. System approach to management thought (1970 onwards)  This approach considers the organization as a whole because of the interdependent nature of activities, requiring the organization to interact with external environmental factors.  In this competitive scenario, organizations cannot function in isolation. It has to operate in open systems, interacting with the environment. Whether it is new-product development or employee selection, the organization has to consider them as open systems, as its decisions are interrelated and interdependent with the environmental situation.
  42. 42. Systems Theory Resources  Labor  Materials  Capital  Machinery  Information Managerial and Technological Abilities  Planning  Organizing  Staffing  Leading  Controlling  Technology  Goods  Services  Profits and losses  Employee  satisfaction Inputs Transformation process Outputs Feedback
  43. 43.  FEATURES OF SYSTEMS APPROACH  1. An organisation comprises of many sub-systems.  2. All the sub-systems are inter- related.  3. The sub-parts should be studied in their inter- relationships rather than in isolation.  4. The organisation provides a demarcating line that separates it from other systems. It determines the internal and external parts.  5. The organisation is responsive to environmental effect. It is vulnerable is the changes in environment.  6. An organisation is a system consisting of many interrelated and interdependent parts or sub-systems. These elements are then arranged in an orderly fashion. 
  44. 44.  FEATURES OF SYSTEMS APPROACH  1. 7. As a system, an organisation draws inputs (energy. Information, materials, etc) from its environment. It transforms these inputs and returns the output into the environment in the form of goods and services.  8. Every system is a part of a super system.  9. Organisation is an open system and it interacts with its environment. It is also a dynamic system as the equilibrium in it is always changing.  10. Management is expected to regulate and adjust the system to secure better performance.  11. Management is multidisciplinary as it draws and
  45. 45. MODERN APPROACH TO MANAGEMENT THOUGHT 3. System approach to management thought (1960 onwards)  Synergy is the phenomenon of open systems of management by which the total system is more than a simple sum of its parts. It means that if a manager effectively coordinates the efforts of related sub-systems, the result will be greater than the sum total of such independent efforts, that is, 2 + 2 will be greater than 4.  The systems approach to management is also important because it helps in avoiding entropy. Entropy is a syndrome wherein systems and processes eventually decay. By relating the organization to the environment, following a systems approach, such a situation can be averted.
  46. 46. MODERN APPROACH TO MANAGEMENT THOUGHT 4. Contingency / situational approach to management thought (1970 onwards)  According to this approach, management values and concepts of various schools have no universal applications. In other words, there is no optimal or single best way of doing things under all conditions.  Methods and techniques, which are highly effective in one situation, may not work in other situations. Results differ because situations differ.  Accordingly, the contingency approach suggests that the task of managers is to try to identify which technique will best contribute to the attainment of management goals in a particular situation. Thus, managers have to employ a sort of situational sensitivity and practical selectivity.
  47. 47. Origin & Development of Contingency Theory  The Contingency approach is the outcome of research studies conducted by Tom Burns, G. W. Stalker, John Woodward, Lawrence, Lorsch and others. Through their analysis they co-related the structure of an organization to the surrounding environmental conditions. In the Fifties of the last century Burns and Stalker (both from UK) analysed the environments and structures of several British and Scottish firms.
  48. 48. Contingency Theory Systems Viewpoint How the parts fits together •Individual •Group •Organization •environment Behavioral Viewpoint How managers influence others •Interpersonal Roles •Informational Roles •Decisional Roles Traditional viewpoint What managers do •Plan •Organize •Lead • Control Contingency Viewpoint Managers’ use of other view points to solve problems •External environment •Technology •Individuals
  49. 49. MODERN APPROACH TO MANAGEMENT THOUGHT 4. Contingency / situational approach to management thought (1970 onwards)  FEATURES OF CONTINGENCY APPROACH  1. Management is externally situational: the conditions of the situation will determine which techniques and control system should be designed to fit the particular situation.  2. Management is entirely situational.  3. There is no best way of doing anything.  4. One needs to adapt himself to the circumstances.  5. It is a kind of “if” “then” approach.  6. It is practically suited.  7. Management policies and procedures should respond to environment.  8. Managers should understand that there is no best way of managing. It dispels the universal validity of principles.
  50. 50. MODERN APPROACH TO MANAGEMENT THOUGHT 4. Contingency / situational approach to management thought (1970 onwards)  Merits of contingency approach 1. It is open minded. Universal validity of principles. 2. It gives the importance to the judgement of the situation and not the use of specific principles. 3. It has wide ranging applicability and practical utility in organisation and management. 4. It focus attention on situational factors that affects the management strategy. Demerits of contingency approach 1. Literature available in this approach is inadequate. 2. Difficult to use in practical due to many reasons. 3. It lacks theoretical base.