CH 2 PPT (1).pptx

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THE EVOLUTION OFMANAGEMENT
THEORY
CHAPTER 2

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M a j o r L e a r n i n g O u t c o m e s
After this discussion, you should be able to:
 Describe management theories and relate
them to management practices
 Recognize the importance of management
and the skills needed in management
 Explain how management theory serves as
the basis for understanding contemporary
management practices
 Appreciate the importance and contribution
of management theory and practice
towards the success of organizations.

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THE SCHOOL OF MANAGEMENT
THOUGHT
The concept of management has been around for
thousands of years
• It has been practiced in some form or the other since the
dawn of civilization (A Practical Perspective of
Management).
• Ever since human beings started living together in
groups, techniques of organization and management
were evolved.
• Organized endeavors, directed by people, responsible for
planning, organizing, leading and controlling activities
have been in existence for thousands of years.
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The Evolution…Cont’d
• Some scholars trace application of management far back as 5000
B.C., when ancient Sumerians used written records to assist in
governmental and commercial activities.
 The review of various civilization indicates that Management was
important to the:
 Construction of the Egyptian pyramids
 The Axum Civilization and its developments
 The rise of the Roman Empire and the Roman Catholic Church
 The Commercial success of the 14th century Europe
 The Chinese Civil Service, military organizations
and the Great Wall
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In the development of our understanding
of management theories, it is useful to
look at the following major management
approaches.
•Pre-classical development
•Classical Theory/Approach
•Neo-classical Theory/Approach
•Modern Management Theory/Approach
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• Pre-classical development: set the
theoretical background to the concept of
management
• The classical approaches that focus on
developing universal principles for use in various
management situations.
• The neo-classical approaches that focus
on human need, the work group, and the role of social
factors in the workplace.
• The modern approaches that focus on the
systems view of organizations and contingency
thinking in a d
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y
8 namic and complex environment.

1. Pre-classical Development
Management theories got its start during the
Industrial Revolution when companies were
interested in maximizing the productivity and
efficiency of their workers in a scientific way.
Two pre-twentieth-century events played
significant roles in promoting the study of
management.
First is Adam Smith’s contribution in the field
of management and 59

Smith stated economic advantage that
organization and society can gain from the
division of labor.
He claimed division of labor
increased productivity by increasing each
worker’s skill and agility,
by saving time lost in changing tasks, and
by creating labor-saving inventions and
machinery
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 Industrial Revolution: The substitution of
machine power for human power, which in
turn, made it more economical to manufacture
goods in factories.
The advent of
machine power,
mass production,
the reduced transportation costs that followed
a rapid expansion of the railroads and
lack of governmental regulation also fostered

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In general, the advent of industrial revolution
promoted the introduction of large scale
mechanized production and
the resulted growth of trade, industry and
commerce
necessitated the study of management.

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2. The Classical Theories
Assumption: People are rational
The classical theory includes three theories of
management. These are:
•Scientific Management Theory
Fredrick W. Taylor
•Process Management Theory
(Administrative Theory)
Henri Fayol
•Bureaucracy Theory
Max Weber
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1. Scientific Management (SM) Theory:
Getting the Most out of Workers
• SM theory arose in part from the
need to maximize profit and minimize
costs of production.
• SM management also known as F.W.Taylor
“Taylorism” was founded by Frederick W.
Taylor.
• Taylor was a mechanical engineer with a
background in steel production.
• Taylor reacted against the inefficiency and
resource waste of the post industrial
revolution era
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Scientific Management….Cont’d
• Taylor proposed that management could be
a true science and that productivity could be
increased by systematic application of
scientific principles.
• SM is a systematic method of determining
the best way to do a job and specifying the
skills needed to perform it.
• SM is the systematic study of the
relationships between people and tasks to
redesign the work for higher efficiency.
– Taylor sought to reduce the time a worker
spent on each task by optimizing the way
the task1-
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The Four Principles of S. Mgt
Four Principles of Taylor to increase efficiency:
1. Develop for every job a “science” that
includes rules of motion, standardized
work implements, and proper working
conditions.
2. Scientifically select workers with the
right abilities for the job.
3. Carefully train workers to perform the
job and give them incentives to
cooperate with the job “science.”
4. Support workers by carefully planning
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their work and by smoothing the way as

Process Management/
Administrative Theory:
Getting the most out of management
• Henri Fayol (1841-1925) H.Fayol
– General and Industrial Management
– Principles and Elements of Management -
how managers should accomplish their
managerial duties.
– Primary Focus: Management
– More Respect for worker than Taylor
• Workers are motivated by more than
money
• Equity in worker treatment
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Administrative …Cont’d
Five Elements of Management
1.Planning: the primary management
function. It is the formulation of future
courses of action.
2. Organizing: the process of bringing together
physical, financial and human resources and
establishing relations among them for the
achievement of goals.
3. Commanding: influencing the work
behavior of others to realize
organizational goals.
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4. Coordination: the task of integrating
the acts of separate units of an
organization to accomplish the
organizational goals effectively.
5.Controlling: the process of ensuring
that acts of subordinates and use of
resources is in conformity with the pre
determined goals.
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Administrative …Cont’d

Henri Fayol, developed a set of 14 principles:
1.Division of Labor: makes each task simpler and results in
greater efficiency.
2. Authority and Responsibility:
Authority is the right of a superior to give orders to
subordinates, take decisions, use the sources of org.
Responsibility is obligation with respect to the performance and
achieving goals in a satisfactory manner.
3.Unity of Command: Employees should receive orders and
be accountable to one and only one have only one superior.
4. Scalar Chain: There should be a clear line of authority from
top to bottom linking managers at all levels.
5.Centralization: the degree to which authority
rests at the very top.
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Fayol’s 14 Principles

6. Unity of Direction: The efforts of all the members
of
the org. should be directed towards common goals. One plan
of action to guide the organization.
7. Equity: Treat all employees fairly in justice and
respect.
8. Order: Each employee and other resources is put where
they have the most value.
9. Initiative: Encourage workers to act on their own, to
take initiative that benefits the organization.
10.Discipline: Means obedience, proper conduct in
relation to oth1
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rs and complying with rules and regulations
of the organization.
Principles…Cont’d

11. Remuneration of Personnel: The
payment system should be fair and reasonable. It
should be decided based on achieved results, cost of
living, financial position of the org.,…
12.Stability of Tenure: Long-term
employment helps employees develop the skills they
need to improve their contributions to the org.
13.Subordination of individual
interest to the general interest :
What is in the interest of the organization as a
whole must take precedence over the interest of
the
individuals.
14.Esprit de corps: Team-spirit that is harmony
Principles…Cont’d

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• The German sociologist Max Weber (1864-1920)
developed a theory of bureaucratic management
• Weber stressed the need for a hierarchy
governed by regulations and line of authority.
• Weber considered the ideal organization to be a
bureaucracy:
-whose activities and objectives were
rationally thought out and
-whose divisions of labor were spelled out.
M.Weber
Bureaucracy Theory of Management
Max Weber (1864-1920)

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Bureaucracy refers to:
• Organization with a legalized formal and
hierarchical structure.
• A formal system of organization and
administration to ensure effectiveness and
efficiency.
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Bureaucracy…Cont’d

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Bureaucratic Principles
• Division of Labor
Jobs are broken down into simple, routine,
and well-defined tasks.
• Authority-Hierarchy
Offices or positions are organized in a
hierarchy, with each lower one
controlled and supervised by a higher
one
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Principles….Cont’d
• Impersonality
Rules and controls are applied uniformly,
avoiding involvement with personalities
and personal preferences of employees.
• Formal Rules and Regulations
To ensure uniformity and to regulate the
actions of employees,
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there is,
dependence on rules
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Three types of Legitimate Authority
– Traditional Authority - past customs;
personal loyalty
– Charismatic Authority - personal trust in
character and skills
– Rational Authority - rational application
of rules or laws
Weber’s Legitimate Authority

Neo-classical Theory
Human Relations School:
Elton Mayo (1880-1949)
• Recognized employees as individuals
with concrete, human needs, as parts
of work groups, and as members of a
larger society
• Emphasizes enlightened treatment of
workers and power sharing between
managers and employees.
• Emphasized satisfaction of employees’
social/psy
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c
8 hological needs. 1-26

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The Hawthorne Studies
• Study of worker efficiency at the
Hawthorne Works of the Western
Electric Co. during 1924-1932.
– Worker productivity was measured at
various levels of light illumination.
– Researchers found out that regardless of
the rise or lowering of light illumination
levels, productivity rose.
• Actually, it appears that the workers
enjoyed the attention they received
as part of the study and were more
productive.

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Hawthorne Studies…Cont’d
• It emerged from these researches that productivity,
motivation to work and morale are related to the
social organization of work and psychological
factors, and not to the physical factors
Mayo Concluded that
 Individual behavior and feelings are closely related.
 Group influences significantly affected individual
behavior.
 Group standards established individual output.
 Money as a motivator was less a factor in determining
output.
 Group standards, group sentiments and security
provided by the group were responsible for higher
productivity.
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Human Resource Approach
Douglas McGregor proposed the two
different sets of worker assumptions.
 Theory X: Assumes the average worker is
lazy, dislikes work and will do as little as
possible.
• Managers must closely supervise and
control through reward and punishment.
 Theory Y: Assumes workers are not lazy,
want to do a good job and the job itself will
determine if the worker likes the work.
• Managers should allow the workers
greater atitude, and create an
organization to stimulate the worker.
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Theory X Vs Theory
T h eor y Y
Employee are not
lazy
Must create work
setting to build
initiative
Provide authority
to workers
T he o ry X
Employees are
lazy
Managers must
closely supervise
Create strict rules
& defined rewards
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Behavioural Sciences Approach
 It stressed upon groups and group behaviour.
 It focused on group relationships.
 It refined the Human Relations approach and has a
wide scope. It is much more systematic study of
human behaviour in organization.
 It was pioneered by Feith Davis, Rensis Likert and
others.
 The behaviourists studied group dynamics,
informal organization leadership, motivation and
participative management.
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Systems Theory
System is defined as an organized, unitary
whole composed of two or more
interdependent parts, components, or sub
systems and delineated by identifiable
boundaries from its environmental supra-
system.”
Modern Management Theories
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Systems Considerations
• Systems theory provides an analytical framework
for viewing an organization as ORGANISM.
• An open system interacts with the
environment.
• A closed system is self-contained.
– Closed systems often undergo entropy and lose
the ability to control itself, and fails.
• Synergy: performance gains of the whole
exceed the components i.e. the whole is
greater than sum of its parts
– Synergy is only possible in a coordinated system.
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The Organization as a System
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Mathematics/Quantitative Approach
• It emphasizes that the organization or decision
making is a logical process and it can be expressed
in terms of mathematical symbols and
relationships, which can be used to solve corporate
problems and conduct corporate affairs.
• This approach focuses attention on the
fundamentals of analysis and decision making.
• This brings together the knowledge of various
disciplines like Operation Research and
Management Science for effective solution of
management problems. 84

The Decision Theory Approach
The decision theory approach looks upon the
management process as a decision making process.
It is true that every task of the manager involves
decision-making.
The totality of management is however, something
more than decision making.
The core tasks of the modern manager are innovating
and integrating the organization with its external
environment

Contingency Mgt Theory
 Approaches depend on
 the variables of the situations
 Draws on all past theories in attempting
to analyze and solve problems
 Summarized as an “it all depends”
device
 Tells managers to look to their
experiences and the past and to
consider many options before choosing
 Encourages managers to stay flexible
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Contingency….Cont’d
• Assumes there is no one best way to
manage.
– The environment impacts the
organization and managers must be
flexible to react to environmental
changes.
– The way the organization is
designed, and selected control
systems depend on the environment.
• Technological environment change
rapidly, so must managers.
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